PH 7-Eleven operator nets P1.32B

A 7-Eleven store Photo by LEO M. SABANGAN II.

The country’s leading convenience store operator Philippine Seven Corp. (PSC) saw a 12.1-percent growth in net profit last year to P1.32 billion, as full-year earnings were shored up by robust business in the fourth quarter.

For the fourth quarter alone, PSC’s net profit surged by 25.8 percent year-on-year to P669.6 billion, the company disclosed to the Philippine Stock Exchange on Wednesday.

Amid tougher competition, PSC unlocked higher earnings from long-existing as well as newly-built stores.

PSC president and chief executive officer Jose Victor Paterno, said: “2017 was far from our best year in terms of both same-store sales growth and new store openings. The latter was a deliberate profit-taking move in response to reduced competitive activity, resulting in higher average new store sales, and the former due to high base effects in 2016.”

“We had initially relied on an increase in SKU (stock keeping unit) count to increase sales, but it failed to deliver as much as hoped. The bright side to all this is that in our struggle to improve sales for the year, we ended up laying the foundation for same store sales growth in the future by running experiments on assortment and looking deeper into pricing, as well as expanding new lines like coffee and fried chicken. Some of this started bearing fruit towards the end of the year – coffee went from 780 to 1180 stores, and chicken from 80 to 340, for example,” he explained.

Same-store sales – which excluded the impact of new stores to allow better year-on-year comparison- grew by 3.7 percent during the fourth quarter, driven by new product launches and improved assortment.

The year started with a 4.4 percent decline in same-store sales in the first quarter, brought about by high base year effect. However, sales started to improve in the second and third quarter by posting growth of 1.2 percent and 4.1 percent, respectively.

Retail sales of all stores for the full year went up by 18.2 percent to P37.5 billion, mainly driven by the increase in the number of operating stores.

PSC ended last year with a nationwide store network of 2,285, up by 290 or 14.5 percent from the previous year. New stores added during the year totaled to 317 against 27 closures.

Of total stores, 54 percent are franchise-operated while the rest are owned by head office.

Moving forward, PSC seeks to focus on increasing sales per store. It has lined up various programs – such as expanding merchandise assortment and launching of new food and beverage items – to differentiate itself from competitors.
The e-commerce business was also launched to take advantage of growing customer preference towards innovation and convenience.

For this year, PSC has budgeted at least P3.5 billion for capital expenditures, mostly to open new stores, renovate old ones and acquire equipment for new product launches.