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, mostly derived from robust business in the fourth quarter.
For the fourth quarter alone, the 7-Eleven Philippine operator’s net profit surged by 25.8 percent year-on-year to P669.6 million, the company disclosed to the Philippine Stock Exchange on Wednesday.
Despite tougher competition, PSC unlocked higher earnings from existing and new stores.
PSC president and chief executive Jose Victor Paterno said: “[The year] 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,” he added.
Still, the company should begin to feel this year the impact of tweaking product offerings and price points.
Paterno said in an attempt to improve sales, “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.”
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 in review started with a 4.4-percent decline in same-store sales during the first quarter, brought about by the high base year effect. However, sales started to improve in the second and third quarters.
For this year, PSC has budgeted at least P3.5 billion for capital expenditures. —DORIS DUMLAO-ABADILLA