Derrimon sales down a third, even as it moves beyond write-down

Derrimon Trading Company Ltd saw revenue fall by a third to $2.96 billion in the first quarter ended March 2026, a decline of more than $1.3 billion, as the supermarket and distribution group grappled with supply chain disruptions and softer consumer demand.
It comes on the heels of the more than $3 billion in inventory write-downs and a cyberattack in 2025.
“The reduction in consolidated revenue can be attributed to supply chain issues which affected the timely availability of inventory within the quarter, along with softer consumer demand which impacted all segments of [the] group,” the company said in its financial statements posted to the Jamaica Stock Exchange.
Despite the sharp revenue decline, management pointed to improving margins as evidence that its turnaround is gaining traction. Gross profit more than doubled to $944.2 million — meaning the company earned significantly more from each dollar of sales, even as overall sales volume contracted. 
The quarterly net loss narrowed 73 per cent to $169.3 million from a restated loss of $628.1 million a year earlier. At the parent company level, Derrimon returned to profitability, posting a net profit of $77.1 million, compared to a net loss of $611.37 million in the prior year.
For nearly two years, the botched implementation of an enterprise resource planning (ERP) system meant the company could not accurately see its costs, margins or inventory. Now that visibility has been restored, the true profitability of each product line is becoming clear, but the business is operating at a leaner scale while it rebuilds supplier relationships and inventory levels.
The write-downs forced a restatement of the company’s financial statements, triggered breaches of banking covenants, and led to a suspension of trading in its shares on the Jamaica Stock Exchange.
“The losses would have been in total over $3 billion. So, it’s very painful,” Chairman Derrick Cotterell told the Financial Gleaner about the write-down. “When we saw the magnitude of the issue internally as an executive on the board, we had to really get the thing properly investigated and ensure that we got to the bottom of the issues so we can move forward,” he said.
Q1 shows early signs of stabilisation
Management said the March-quarter loss was smaller than in previous periods, as efforts to repair margins and improve operational visibility began yielding results. The first quarter reflected lingering supply constraints, inventory rebuilding, and the continued correction of pricing and costing data across the business.
“We have had to be going through and repairing the margins,” Cotterell said. “We’re not 100 per cent there, because it’s still 60,000 items and we’re repairing that,” he added.
Chief Executive Officer Ian Kelly said the company also faced inventory and supplier challenges early in the year as it sought to rebuild normal operating levels.
“You have to shore up your inventory and your supply side of your business,” Kelly said, noting that supply issues affected parts of the distribution operation during the quarter.
While revenues remained under pressure, management believes the first quarter was significant because it marked the first reporting period in which the executives were once again able to accurately assess the performance of individual stores and business units.
“Between January and now, we’re able to see the things that allow us to run our business on a daily basis,” Kelly said. “We see our margins, we see our inventory, we see our sales. Daily, hourly, we see what we have selling below any targeted level,” he added.
That visibility is central to management’s contention that Derrimon’s challenges were largely operational and technological, rather than evidence of a fundamentally broken business model.
ERP crisis and cyberattack
Derrimon previously operated on Retail Express, a proprietary retail management system, before deciding to migrate to Microsoft Business Central, a full ERP platform intended to integrate purchasing, inventory management and accounting functions.
According to Cotterell, the implementation went badly wrong.
“We had a poorly implemented ERP,” he said, explaining that the project, which started around late 2022, was plagued by configuration issues, flawed data transfers, and customisation problems.
The situation was compounded by a cyberattack in 2023 that forced Derrimon to abandon its legacy platform and migrate entirely to the new ERP environment before many of the implementation problems had been resolved.
“The Israelis who were contracted to deal with the cybercrime came and said to us that we had to move everything over to the new system,” Cotterell said. “The new system was a mess.”
He said the company effectively operated without reliable business intelligence for nearly two years.
“We lost visibility of the business for about two years as a retail business,” Cotterell said. “We never thought it would have been two years. We thought it would have been three to six months, but the issues took much longer to resolve than any of us anticipated,” he said.
At the heart of the problem were inventory valuation and unit-of-measure errors that distorted gross margins and product costs.
Describing the experience, Cotterell compared it to flying an aircraft without instruments.
“You can’t fly the plane without proper instruments. You can’t fly it blind. That’s what was a major issue as well,” he said.
While management acknowledged uncertainty about the full impact of the cyberattack and ERP breakdown, the executives stopped short of saying that cash had been stolen.
“We can’t say that for certain,” Cotterell said. “We don’t have evidence that anybody’s stealing the cash,” he explained.
However, he conceded that weak controls created opportunities for wrongdoing.
“Is it possible that people could have stolen some stuff? It is possible, because when you can’t manage inventory properly and can’t see margins properly, it gives the opportunity for people to do nefarious things,” he conceded.
Kelly stressed that independent audits pointed to implementation failures rather than missing sales.
“The cash was there,” he said. “What we were not seeing is the profitability of it, and that is what impacts the whole inventory and the margins,” Kelly said.
He added that local and overseas audits both identified configuration and set-up issues as the primary causes of the inventory and margin distortions.
However, the audited financial statements for 2025, signed off by PricewaterhouseCoopers, indicated among other things, that the group had accumulated deficits of $2.32 billion, a gearing ratio of 76 per cent, and was in breach of certain financial covenants with no formal waivers obtained from its lenders. Management has prepared cash flow forecasts to support the going concern assumption.
Arosa shutdown
The company is also restructuring operations to improve efficiency.
Cotterell disclosed that Derrimon has shut the Arosa manufacturing facility and moved production to third-party manufacturers under co-manufacturing arrangements. Arosa previously manufactured a range of sausages and processed meats. The move is expected to reduce costs substantially, although management does not expect the full benefits to emerge until later this year.
“We have subcontracted out the production,” he said. “By [the] fourth quarter, we start to see some improvement to the Arosa numbers significantly in terms of sales, but we are already seeing a significant reduction in costs,” Cotterell added.
The closure affected about 30 workers through redeployment, reassignment and separation.
“Some have been reassigned, some are working in the subcontracted plants, and some have moved on to other ventures,” Cotterell said.
No guidance on Q2
Management declined to give any indication of second-quarter performance ahead of the release of June-quarter results.
“Can’t comment on that yet,” Cotterell said, when asked about the outlook.
Kelly indicated that the company expects to meet the customary reporting deadline of 45 days after quarter-end, putting the Q2 report due in mid-August.
The return of Derrimon’s shares to trading follows a period of suspension while regulators reviewed the restatements and disclosures. Cotterell said regulators recently reacted favourably to the company’s submissions, allowing trading to resume after the necessary approvals were obtained.
For shareholders, management’s message is that the painful write-down cycle is largely complete.
“We can see where we are now,” Cotterell said. “We can see it on a store-by-store basis,” he added.
Kelly was equally emphatic: “The fact is, we see our margins now, we see our inventory now, we see our sales now,” he said.
After more than two years of operating with impaired visibility and absorbing billions of dollars in adjustments, Derrimon is betting that clearer data, tighter controls and lower operating costs will allow the group to rebuild profitability from a much more stable foundation. Whether that foundation is stable enough remains an open question: the company’s own auditors have flagged material uncertainty about its ability to continue as a going concern.
neville.graham@gleanerjm.com