All financial benchmarks returned poor results as company’s struggles persisted

Stationery & Office Supplies Ltd (SOS) is admitting the company has been struggling since the start of the year with the latest quarterly returns showing up the extent of its challenges.

For the first nine months of the year, SOS is down in all financial benchmarks compared to last year given the overall numbers. Revenues are down 23 per cent from $933.21 million for the nine-month period ended September 2019 to $711.68 million for the nine months ended September 2020.

In terms of gross profits, this was down 1.5 per cent from 48.9 per cent to 48.1 per cent while pre-tax profit nose-dived from $114 million to $28.63 million for the period under review. However, the company managed to cut its expenses by 10 per cent from $353.78 million in 2019 to $317.77 million in September 2020.

In their just released quarterly report to shareholders, SOS directors state that, “it is clear that we have not reached 2019 levels, but what must be noted is that after the initial fallout in the second quarter of 2020 when COVID-19 caused major disruptions in all aspects of the Jamaican economy, we have been able to increase sales in the third quarter of 2020 by 77 per cent over the second quarter of 2020”.

The directors declare that 2020 has been a trying year for the company, pointing out that it can no longer compare itself from year to year, as 2019 and 2020 are drastically different.

STRIVING FOR GROWTH

However, the directors were quick to note that, “SOS will continue to grow by adjusting to the new norm, listening to our customers and understanding their changing needs. This is what we have done and will continue to do”.

At the end of the third quarter, SOS’s total assets had decreased year on year by one per cent ($865M – $876M). This slight decrease in total assets was due to a large reduction in receivables and pre-payments.

However, prepayments decreased as the company had to control the amount of inventory needed with the almost 25 per cent reduction in revenues. The earning per share for the third quarter of 2020 was $0.03, a decrease of $0.06 compared to $0.09 at the end of the third quarter of 2019.

For the nine months ended September 30, 2020, earnings per share now stand at $0.11, down $0.34 from the $.45 seen at this time in 2019.

THIRD QUARTER OUT-TURN MIRED IN DIFFICULTIES

The third quarter of 2020 continued to be difficult, with the effects of COVID-19 still present. It was during this quarter that the country saw the biggest spike in cases, rising as high as 210 confirmed cases in one day during the month of September.

Following the third quarter of 2020, in which SOS suffered its first loss for a quarter since joining the Jamaica Stock Exchange in 2017, the company has been able to rebound and begin to post positive results once again. During the third quarter of 2020, SOS was again able to post a profit and had no months in which a loss was experienced, even though the number of confirmed average daily cases of COVID-19 was higher than that experienced in the second quarter.

It was also during this quarter that the company’s new 8,000 sq. foot warehouse was completed on its property at 34 Collins Green Avenue. SOS took the opportunity to hold its 2020 annual general meeting in the new warehouse and was able to show its shareholders the latest expansion.

During the quarter, it was announced that SOS had acquired the adjoining property at 36 Collins Green Avenue at a value of $15 million. This property will be used for future expansion, as SOS continues to grow.