Durrant Pate/Contributor

Fontana posted yet another good quarterly result with both revenues and profits advancing during the third quarter (Q3), as the business blossoms with the addition of four new locations, stemming from its acquisition of the Monarch pharmacy brand.

Revenue for the quarter totalled J$2.2 billion, a 15.3 per cent increase over the J$1.9 billion made in the corresponding quarter of 2024. Net profit closed at J$102.8 million, or 10.6 per cent more than last year.

Operating profit rose 25 per cent to J$148.1 million, up from J$118.5 million in 2024. Earnings before interest, taxes, depreciation, and amortisation (EBITA), a measure of a company’s profitability, grew 11.9 per cent to J$570.8 million, up from J$510.2 million last year. 

A provision for corporate income taxes of J$19.6 million was made for this quarter. This resulted in earnings per share moving from J$0.07 last year to J$0.08 for Q3 this year. 

Cost of sales and expenses went up

Cost of sales increased by 15.4 per cent in line with the sales growth, as gross margins for Q3 remained constant at 37.4 per cent. Gross profit for the review period was J$835.9 million, up 15.2 per cent from the J$725.7 million in 2024. 

Operating expenses stood at J$687.7 million, up from J$607.2 million last year, reflecting an increase of 13.3 per cent. This increase was mainly driven by staffing costs as the Monarch acquisition added team members in mid-March in preparation for the phased opening of the four new locations, which are being transitioned into Fontana locations. 

The first Monarch location to transition to a new Fontana Pharmacy in Tropical Plaza was opened at the end of March. Through effective and efficient management, the rate of growth in gross profit is outpacing expense growth. 

Finance costs grew 38.4 per cent, moving from J$45.5 million in Q3 last year to J$63 million this quarter, mainly attributable to foreign exchange losses on the lease liability (IFRS16) as well as accrued loan interest on the new bond used to finance the Monarch acquisition. 

Balance sheet performance

Other income improved to J$37.2 million, up 7.2 per cent, up from J$34.8 million last year, as the management continues to roll out new initiatives. Total assets at the end of the quarter stood at J$6.9 billion or 21.8 per cent above the J$5.7 billion recorded in the same period in 2024. 

This increase resulted primarily from increases in inventory, fixed assets and goodwill due to the acquisition of the Monarch chain of pharmacies, which was financed by a second bond issue of J$650 million. Cash and cash equivalents remain strong at J$1.7 billion, up 15 per cent from 2024. 

Shareholders’ equity grew 9.7 per cent to J$3.1 billion, up from J$2.8 billion in the prior corresponding quarter. During the current quarter, management is continuing with the implementation of its new integrated POS system for the pharmacy department, as well as additional modules of the new HR software, coupled with payroll integrations. 

New locations being opened 

This move will result in improved efficiencies in the business operations. Fontana executed its due diligence exercise for the Monarch acquisition proficiently and was able to open the first of four stores on March 28. 

For CEO Anne Chang, “We are excited about the additional four locations from the Monarch acquisition and have spent the last several weeks renovating and re-stocking the stores with a wide array of new products. We have now re-opened THREE of the stores (Barbican Loshusan, Portmore Sovereign, Tropical Plaza) and are making the necessary changes to open the fouth store at Sovereign Centre shortly. This will expand our reach and allow us to serve more customers at their convenience.”

During the review quarter, Fontana also concluded preparations for the launch of its luxury brand cosmetics concept – Ora by Fontana. Through this concept, Fontana is the exclusive retailer of Fenty cosmetic products in Jamaica as well as popular luxury perfumes. The brands were successfully launched in Kingston and Montego Bay in early April, and customer response has been overwhelmingly positive. 

Chang is anticipating that with these initiatives, the business will continue to grow its customer base, increase revenues, and further strengthen the Fontana brand in the market.