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H&L grows sales but not profits

Published:Friday | March 4, 2016 | 3:00 AMNeville Graham
The Rapid True Value store on Constant Spring Road, Kingston.

Hardware & Lumber Limited grew sales by $300 million last year, but the gains did not flow to the bottom line.

The hardware retailer made net profit of $163.7 million off sales of $7.44 billion at year end December 2015. That compares to profit of $217 million from sales of $7.14 billion in 2014, when its costs to run the business were lower.

The fall-off in profit was even more stark when the tax effect on pension benefits are taken into consideration. Comprehensive income then falls to $88 million, from $274m the year before.

H&L reportedly spent nearly $100 million between

mid-2014 and mid-2015 renovating most of its 10 Rapid True Value and six AgroGrace stores. In March 2015, H&L announced the relocation and expansion of its AgroGrace Mandeville store as a demonstration of its 'commitment to maintaining market leader position in a highly competitive landscape'.

Two months later, then parent company GraceKennedy Limited indicated that the retail chain was up for sale. Its 58.15 per cent stake was eventually sold to Argyle Industries Inc in January of this year at $18.50 per share.

Argyle has since made an offer at the same price to other minority shareholders, which remains open to today, March 4. Market filings already indicate that GK's primary partner in H&L, Pan Jamaican Investment Trust, will sell its 20.8 per cent holdings to Argyle.

The price paid by Argyle values H&L at $1.49 billion, which is in close alignment with the company's net book value of $1.42 billion.

At year end December, the company reported $2.7 billion of assets of which $1.9 billion was held as stock.

neville.graham@gleanerjm.com