Fontana Limited reported its best financial year on record, and the analysts of Taking Stock with Kalilah Reynolds say the company still has more room to grow. 

Fontana is a pharmaceutical and retail company with six locations across the island and the seventh underway in Portmore, St Catherine. 

For the year ended June 30, the company recorded $6.3 billion in revenues, up 23% from the previous year, and an 18% increase in net profits to $606 million. 

The company also reported that its gross margins moved to 35.6% from 37.8%.

Financial journalist at the Jamaica Observer, David Rose, said Fontana’s performance was impressive given the current economic climate.

“You have to remember that they’re just a retail location with different businesses attached to them and they do the pharmaceutical part as well. So, for them to grow revenue, against this economic backdrop, by 23% says a lot,” he said. 

He also pointed out that Fontana recently received $500 million in bond money that they have used to pay down their high-interest debt and fund their expansion. 

“They’re using some of it to build out their distribution warehouse in Ferry, St Catherine and another portion of the money is expected to go to two more locations,” he said. 

Fontana is reportedly eyeing locations to add two more branches to its current fleet. This is in addition to its new Portmore location, which is scheduled for completion in 2023. 

“We don’t know where the new locations will be. But it will likely be in one of the high-volume, high-traffic areas …. At the end of the day it really doesn’t matter because Fontana has all the flexibility,” Rose said. 

Head of Asset Management at JN Fund Managers, Hugh Miller, said that Fontana’s leaders are very good at picking locations.

“They have great peripheral vision in terms of choosing their locations and the same peripheral vision when it comes to their merchandising,” he said.

“They have managed to create demand where the traditional pharmacies have not been able to by just observing consumer trends and building inventories for the different seasons and so they are able to sustain foot traffic right through the year,” he added. 

To that extent, Miller said he believes that Fontana’s growth trajectory will only increase, and investors would be good to hold on to the stock instead of flipping it.

The company’s stock closed at $9.35 on September 13, up 25% year to date.