The country’s leading convenience store operator, Philippine Seven Corp. (PSC), grew its net profit in the first six months by 19.4 percent year-on-year to P533.2 million, citing the favorable impact of recent individual income tax cuts on consumer spending.
For the second quarter alone, PSC’s net profit rose by 18.9 percent year-on-year to P342.7 million, buoyed by the 19.2-percent expansion in sales to P11.55 billion.
The licensee of 7-Eleven stores reported to the Philippine Stock Exchange yesterday that system-wide sales had gone up by 22.7 percent year-on-year in the first semester to P22.2 billion, driven by the increase in the number of operating stores and better same-store sales growth.
The retailer added 299 stores to end the six-month period with 2,386 stores across the Philippines.
PSC said the Tax Reform for Acceleration and Inclusion (TRAIN) had favorably affected sales by increasing customer count and average basket size.
“The lower personal income tax strengthened the purchasing power of the middle class and the excise tax on sugar-sweetened beverages increased selling price but no significant decline in volume occurred,” PSC said in a disclosure to the Philippine Stock Exchange.
The tax reform law, which took effect at the start of 2018, included provisions that lowered personal income taxes and imposed an excise tax on sugar sweetened beverages.
Of its nationwide store count of 2,386 stores at the end of the second quarter, there were 1,866 7-Eleven stores in Luzon (906 of which are in Metro Manila), 331 in Visayas and 189 in Mindanao.
Franchisees control 54 percent of all stores while the remaining 46 percent are corporate-owned.
This year, PSC has budgeted P3.5 billion in capital expenditures to support its store expansion strategy. Bulk of this amount is allocated to new store opening, store renovation and equipment acquisition.
“The company remains on track when it comes to pursuing its store expansion program. It continues to invest in opening new stores in existing and new markets even if competition had slowed down. The capacity-building expenditures on logistics assets and organizational capability have produced favorable results,” PSC said.
“The focus of the organization going forward will be on increasing sales per store. There are various programs lined up covering expanding merchandise assortment and launching of new food and beverage items to serve as differentiation compared with other channels. The e-commerce business was launched to take advantage of growing customer preference toward innovation and convenience,” it added.