KLE plans redesign of business model
KLE CEO Gary Matalon
KLE Group says it will redesign the offerings in its local operations amidst the coronavirus (COVID-19) pandemic.
CEO Gary Matalon reckons that the strength of the KLE brand will enable the company to achieve this mission.
Commenting in the financial report for the quarter ending March 31, 2020, Matalon said actions taken by the government to protect the population from the COVID-19 pandemic has had an extreme impact on the company’s ability to conduct business.
For the quarter ending March 31, KLE experienced losses of $20.1 million compared to a profit of $332,000 in the corresponding quarter of 2019.
Though revenue for the company climbed to $ 72.67 million up from $49.72 million, KLE still tracked behind expectations after the addition of a Usain Bolt’s Tracks and Records restaurant in Montego Bay.
Cost of sales and administrative and other costs climbed.
“Management has made an attempt at planning using projections derived from emerging information related to the health and economic crisis we are facing. The situation has become increasingly more difficult”, Matalon said.
However, he stated optimistically that “opportunities in the restaurant industry going forward can be great once the model [being pursued] is successfully adjusted to take advantage of the new realities.”
Adjusting to COVID-19, Matalon said, “will require some fresh capital and investment.”
“We look forward to this challenge and feel, once the capital is in place, we are well-positioned, both in brand and expertise to successfully make the changes necessary,” he added.
In 2019 KLE had focused efforts on raising capital and growing the business, following a strategy established by the board and management.
This strategy included the growth of the footprint for Tracks and Records in Jamaica, which targeted five locations on the island by 2021.
The acquisition of the Ocho Rios and Montego Bay assets was the first step towards this.
The 2019 targets also included a major renovation of the Kingston location to include upgraded technology and a fresh look and feel.
The company was also planning a significant reduction in debt, which would have repositioned the balance sheet and prepared it for the second phase of growth including further international expansion through the franchising model.
However, 2020 came with COVID-19 and the business model will now have to be adjusted, Matalon said.
The CEO said that the company is currently renegotiating expiring sponsorship contracts with partners for the 2020 financial year.
However, Matalon noted that uncertainty from the effects of the pandemic has delayed this process, making it difficult to close deals.
KLE will “continue to employ cost savings strategies and monitor key performance indicators to improve efficiencies and achieve profitability,” according to Matalon.