Fontana beats curfew through online sales

P harmacy chain Fontana Limited, in an effort to snatch back lost opening hours due to stricter curfews measures, has been depending on e-commerce traffic to drive sales.

So far, the strategy is working, so Fontana has ditched its other option of opening earlier in the mornings.

Orders online are up 300 per cent, CEO Anne Chang told the Financial Gleaner this week shortly after the company’s year-end results were posted on the market. But such orders still account for less than five per cent of total sales, she said.

Customers are ordering on Fontana’s website and also through the messaging app WhatsApp, with kerbside pickup at any of the chain’s six locations.

Website orders also allow for local and international delivery. Chang said that a lot of customers go on the website to browse, but then opt for WhatsApp orders and kerbside pickup.

“We introduced a lot of different ways for customers to shop,” she said. “We have a loyal customer base. They reach out to us; we do not have to contact them.”

The group earned $4.5 billion in annual sales revenue at year ending June, and net profit of $276.5 million. Revenue was lower in 2019 at $3.7 billion, but profit higher at $306 million.

The improvement in sales was due to the addition of the sixth and largest location, Waterloo Square at Waterloo Road in Kingston.

Chang said that discounting the new store, same-store sales were up at each location, year on year.

Profit was affected by the onset of the COVID-19 pandemic and the measures to stem its spread. Earnings per share fell to $0.22 from $0.26. The Fontana stock was charging towards $9 when the stock market bottomed in March, but is now trading in the $4 range.

Leaning on its online channels to make up for reduced operating hours turned out to be a pragmatic solution for the company, which encountered limited customer response when it tried opening earlier, with the added downside of inconvenience for staff.

“Generally, early morning does not help us. The Waterloo location doesn’t open until 9 a.m. We tried to open at 8 a.m. with no success,” said Chang.

She added that team members were also challenged due to transport and childcare concerns. “Our staff is 90 per cent women, many of whom are mothers. We try very hard to manage the business with team and family obligations,” Chang said.

Fontana has otherwise been on a learning curve as it copes with the effects of the coronavirus on its business. The company not only operates drug windows, but also sells a range of personal care and cosmetics products, houseware and other consumer goods.

Initially in March, when Jamaica detected its first case of the virus, the company registered an uptick in its pharmaceutical business, but the subsequent curfews within its fourth quarter, which runs from April to June, led to a reduction in opening hours which impacted sales.

“Continued restrictions and curfews, along with significant declines in global tourism, will likely continue to impact our overall business for the remainder of 2020,” Fontana stated in its earnings report.

The company is heavily dependent on imports, which has seen it keeping close watch on its supply chain. The company said it works closely with both local and foreign suppliers to ensure that its inventory remains “fully stocked and prepared for the months ahead”.

Chang said Fontana had significantly moved up its shipping timelines to ensure sufficient inventories are warehoused and ready for dispatch to the six locations as needed.

steven.jackson@gleanerjm.com