Stationery and Office Supplies Limited (SOS) continues to see its profitability and revenues soar, during the September 2023 third quarter, as a result of the phenomenal performance of its SEEK brand of notebooks.
The brand, which was acquired in 2018, has been one of the best-performing areas of the business. Revenues from the SEEK brand during the quarter under review, climbed to J$37.5 million, up from J$27 million in the same period last year.
In August this year SEEK chalked up its highest-ever monthly revenue of nearly J$17 million. In the first nine months of 2023, SEEK has already exceeded its total revenue for the entire year of 2022.
In total SOS experienced a 39 per cent increase in revenues and pre-tax profit rising by 24 per cent, as company continues its upward financial streak, recording a three per cent increase in revenue for the third quarter. Year-on-year, revenues increased from J$473.1 million to J$487.9 million, while pre-tax profit grew from J$87.2 million to J$107.9 million.
Managing director Allan McDaniel explains about the strategy employed in growing the seek brand noting “by strategically focusing on the back-to-school period, the SEEK manufacturing division implemented a comprehensive plan to improve accessibility. This targeted approach led to a surge in revenues, culminating in a historic achievement for the company.”
According to him, “this achievement not only marks a milestone for the first nine months of the year but also underscores the success of the division’s strategy in capitalising on key sales periods.” Referring to the quarter’s overall performance, McDaniel remarks, “even with a marginal increase in revenues, the combination of an increase in the gross profit percentage and only a slight uptick in expenses demonstrates our continuing improvement in earnings. SOS was able to continue to grow all aspects of the business, and this is exactly what we’re aiming for.”
Gross profit margin improved to 54.1 per cent from 51.4 per cent while expenses rose by nine per cent, increasing from J$158.8 million to J$172.6 million. McDaniel shares that the modest rise in expenses coupled with an improvement in gross profit margin represents SOS’ investment in future growth and expansion, which have been yielding results.
Investments reaping rewards
One such investment is the EVOLVE furniture line, which saw an increase in average monthly sales to just under J$10 million in the third quarter. Launched in 2022, the product line expanded this year to include a variety of new items such as meeting tables, podiums, reception furniture, and credenzas, along with a broader selection of options for the existing range of chairs.
Another investment that bore fruit during the quarter for SOS was the completion of the construction of its new warehouse at Beechwood Avenue, which created an additional 5,000 sq. feet of storage space. Meanwhile, the warehouse expansion at the company’s Montego Bay branch is now 90 per cent complete.
It is set to complement the company’s expansion of its delivery fleet, which will strengthen its market share in the parish and surrounding areas. This is even as revenues at the branch rose by 11 per cent this quarter.
McDaniel argues that SOS’s strategic growth has not only bolstered its market presence but has significantly improved its operational efficiency.
“As SOS expands, our increased purchasing power allows us to buy in bulk, resulting in better product pricing by sourcing directly. Additionally, the growth in container shipments from the Far East secures us lower shipping rates,” the SOS managing director explained.
SOS continues to benefit from the financial advantages of these reduced expenses. Earnings per share for the quarter was J$.04, based on the new share quantity after the company’s July 9-to-1 stock split, which increased its ordinary shares from 250,120,000 to 2,251,080,000.