Maxie gives up on New Kingston
Published:Sunday | October 17, 2010 | 12:00 AM
Avia Collinder, Business Writer
Maxie Department Store Limited, a family-run chain spread across town centres nationwide, has relocated its New Kingston store to a more "tradable" location in a bid to control losses and boost turnover in a soft market for ready-to-wear apparel.
The chain, which is owned by the Williamses from Clarendon, has already closed two stores since the recession, and is overhauling others.
In late September, Maxie closed its New Kingston store, transferred the stock, and reopened for business three weeks later, on Monday, October 11, at The Springs Plaza on Constant Spring Road in the city.
The New Kingston store was a loss-maker for the group despite an overhaul of inventory, money invested in marketing the location in 2009, and sales growth in the past two years, Marlene Williams, the group chief financial officer (CFO), said last Wednesday.
Sales up
"We did a lot of improvement in the store, including putting in more attractive merchandise. Sales went up by 25 per cent in 2009 and had improved by an additional 15 per cent in 2010," she said.
"But, we had to factor in expenses, which included rental paid in US dollars, meaning that rental goes up whenever the dollar devalues ... . We have not been able to pay the bills. Even this year when the dollar was relatively stable, the store could not pay for itself."
New Kingston, a business district, is not, as Williams noted, a traditional area for ready-to-wear shopping, and so customer traffic was poor.
"We did, however, have loyal customers, who shopped with us during the day, but evening and weekend shoppers were few," she said.
The relocation followed the shuttering of the Christiana store in June 2009, and Spanish Town in 2008, both of which were also loss-makers.
Still, sales throughout the chain remain anaemic, with only three per cent growth since the start of the year, compared to the similar period in 2009. Factored for inflation, which is running at an annual 12.6 per cent, sales have actually declined in real terms.
'We are by no means happy with this figure because inflation is way above that, and operating expenses keep rising," said the financial officer.
Each store is operated as a franchise by a member of the family. The head office and distribution centre, which operates under the name Teri Max Service Limited, provides warehousing, accounting, and marketing group activities.
Revenue decline
"The recession is affecting us in many ways. However, we are constantly trying to react to the marketplace," Williams said, noting that stores making losses in 2009 were especially those in the bauxite belt, causing the entire chain to experience an overall decline in revenue of 15 per cent for the year.
"We made losses in 2009 at most locations," the CFO admitted.
But, according to her numbers, the chain has fared better than the sector in which it trades.
The entire ready-to-wear retail sector experienced declines in sales of 20-25 per cent in 2009 compared to 2008, she said, while Maxie's fell by 15 per cent.
With nine locations still open, Williams is nevertheless cautiously optimistic about the chain's survival.
"We are doing well despite the harsh realities of doing business in Jamaica. We are hoping that things will turn around soon because no business can survive much longer like this. The business environment is really not business friendly. We have a lot invested in the island of Jamaica. We are a Jamaican company, owned by Jamaicans, and we do employ over 200 staff, plus seasonal workers. Therefore, we try our best to stay afloat and ahead of the competition because we have a lot to lose if we close."
Maxie offers what Williams calls mid-price apparel, giving customers "value for their dollar, but not cheap" clothing.
The company wants to set up stores in new locations but says those plans are on hold until business makes a comeback.
"We do plan to make further improvements to our branches islandwide like we did in New Kingston," said the CFO. "We plan to standardise and make the older locations more efficient."
The cost of the relocation within Kingston was limited, she said, to refurbishing and advertising as stock and fixtures from the New Kingston and other locations were reused.
The company has spent an undisclosed sum - secured through a Development Bank of Jamaica loan - on installing solar panels in order to reduce rising electricity costs.
"One location has already been outfitted and we are pleased with the results," she said.
The company has also been saving money by switching from disposable packaging to reusable bags given to customers.
"We encourage them to reuse and recycle ours and other earth-friendly bags. It amazes me how sometimes doing the right thing actually costs less," Williams said.
Maxie was established in 1972 by Vincent and Madge Williams, with the first store in May Pen. Expansion started in 1997 after son Terrence Williams, now CEO, joined the business. The group's chairman is Vincent Williams.
Along with the new location in The Springs, other Maxie stores are located in May Pen, Linstead, Ocho Rios, Mandeville, Montego Bay, Portmore Town Centre, Santa Cruz, and St Ann's Bay.