WHILE Massy’s decision to sell its in-store pharmacy assets to SuperPharm Ltd will be a “good deal for both sides”, Massy’s chief executive officer, David Affonso, has said that more importantly, the sale will benefit customers by providing them with improved service while retaining their existing benefits. In an interview with Express Business last Friday, Affonso compared the deal to CVS Health’s management of in-store pharmacies at Target stores in the United States. “We started the pharmacies because we are always trying to innovate in the stores and be ahead of the rest, that is why we have the self-checkouts as well.
We always try to be a few steps ahead, so some years ago we stared the in-store pharmacy as a convenience for the customer, but it has never really been our focus. It is a small part of what we do and part of our strategy is about focus, do the things you do exceptionally well and be as good at them as possible to raise the barrier for anyone else,” Affonso said. “We have in Trinidad SuperPharm who provides an excellent service and runs an excellent pharmacy.
All our customers, all Massy customers also go to SuperPharm so why not let them run it. Our customers will have a much better service provider there. You are still getting your Massy points, you can still cash it across the counter, you can still do all of it,” Affonso said.
Affonso noted that the pharmaceutical sector is highly regulated, and SuperPharm already has the expertise to navigate it effectively. “So it (an in-store pharmacy) is not a simple thing to run but it is a very small part of our business here and we have someone who can provide it better so it is really something to us that makes sense in terms of a benefit to our customers, bringing a better service to our customers, the convenience remains, the Massy points remains. Why would we not do it and we will get to focus on what we do,” he said.
While Affonso praised the benefits of the deal, he declined to reveal the exact cost of the transaction. He, however, believes the benefit to customers would be priceless. “I don’t want to discuss the consideration, but I think it is a good deal for both sides, if you know what I mean, but most of all it makes sense for the customer.
So sometimes the payback comes in terms of if you have a happy customer. So it is not necessarily the deal itself but it is what you bring as a package to the customer,” he said. The sale of Massy’s in-store pharmacy assets to SuperPharm aligns with the company’s vision of ensuring its existing businesses are “properly run and operated as efficiently as possible” as part of its strategy to achieve $25 billion in revenue by 2030—its “2030 North Star” goal.
Affonso also highlighted that Massy will focus on “disciplined capital investment” moving forward. “As (Massy chief financial officer) James (McLetchie) would tell you 70% of all M&As (mergers and acquisitions) fail or don’t deliver. We want to make sure we are always in the 30% because we have had that experience and we know what that feels like.
It doesn’t feel good,” Affonso said. “So we are trying to be very disciplined about it and as I said at the centre set the criteria, make sure these things are bullet proof before we move forward. We are aiming to get to $25 billion in revenue by 2030.
Again that just requires 10% a year growth, organic and M&A and we will get to that number so it is not an outlandish hockey stick, pie in the sky figure. It is all broken down,” he said. Massy makes its US moves In December 2022, Massy paid US$47 million for Rowe’s IGA Supermarkets in Jacksonville, Florida.
“The seven Rowe’s IGA stores have increased our family by over 400 associates and have contributed revenue of $798 million (US$118.4 million) and PBT of $30.3 million ($4.
5 million) in the 9.5 months since acquisition. The acquisition provides the base for the further expansion of the Portfolio’s Retail footprint in the lucrative US market which is consistent with it achieving its ambitious growth objectives,” Massy stated in its 2023 annual report.
In October last year Massy spent US$24.5 million to acquire a warehouse in Jacksonville, Florida. The warehouse Massy purchased is 172,136 square feet and is located in the Imeson International Industrial Park in North Jacksonville.
“The supermarket acquisition is doing excellently. Better than expectations. So we are very happy with that.
The business continues to grow and it was a beachhead investment for us so the real benefit will come as we acquire more and then you don’t have the overhead. So as you add more and more supermarkets the contribution flows right down to the bottom line,” Affonso said. “What I would say which is public knowledge for instance Aldi just bought Winn-Dixie in the United States hundreds of stores.
They have 165 stores that they are looking to get out of seven of them are in the Jacksonville area and that is public knowledge,” he said. McLetchie said that Massy intends to be strategic as it expands into the U.S.
market. “The thing I will add is that we are going to the United States but we are going to specific markets within the States. We are looking for markets, we call them micro markets, but if you think of Jacksonville it is not the first, second, or even third largest market, it is the fourth largest market in Florida.
We find stores that look and feel like a Massy store. As David would say you close your eyes and you feel like you are in a Massy Store. So we are going to look for things that we know how to run well.
The beauty of it is that they are smaller and they are good returns, really good margins and hard currency,” McLetchie said. Affonso pointed out that only about 30% of Massy’s profits currently come from the Trinidad and Tobago market, with the majority being earned internationally. “We are no longer Trinidad-centric.
The majority of the revenue and the profit comes from outside of Trinidad and that’s part of the strategy going forward as well to 2030,” Affonso said. McLetchie added that this strategy also protects Massy against foreign currency exposure. “Primarily because it protects from a currency exposure.
We have multiple currencies that we operate in but it hedges against...
so once again we will always be able to pay our dividends in a way so it protects the long-term investment for our shareholders. That is why it is done like that,” McLetchie said. McLetchie: Committed to Jamaica In January 2022, Massy cross-listed on the Jamaica Stock Exchange.
McLetchie admitted that not much has been done in Jamaica since then, but Massy is committed to correcting that now. “We had a little bump, then we had Covid. Two things happened to be honest we then didn’t have a CFO, it took a long while for me to show up and if I had to admit.
We have been a bit inactive from an investor perspective. We are committed to now being in Jamaica every quarter,” McLetchie stated. McLetchie said that Massy’s presence and scale in Jamaica is not as visible as in T&T.
Last August, Massy completed the acquisition of Industrial Gases Ltd (IGL), the Jamaican distributor of cooking gas and the manufacturer and distributor of industrial and medical gases for a cost of US$140.3 million..
