Banking on COVID-19 pandemic-resilient demand for essential consumer goods, retailer Puregold Price Club Inc. is expanding its online grocery shopping capability while building more physical stores this year using about P3.4 billion in fresh capital outlay.
Online grocery shopping using the Puregold mobile app will be made available in 100 Puregold stores by the end of 2020 from the current 40 stores, the company disclosed to the Philippine Stock Exchange on Tuesday.
“We expect changes in consumer shopping behavior due to the COVID-19 situation,” Puregold said, explaining the need to expand its grocery shopping services.
Due to social distancing needs amid the COVID-19 pandemic, some experts expect consumers to lessen their trips to grocery stores but buy in bigger volume moving forward. Online shopping has likewise surged during the two-month lockdown of Luzon and other key regions.
But Puregold will nonetheless continue its brick-and-mortar expansion. This 2020, it is set to open a total of 25 new Puregold stores and has opened two S&R membership shopping warehouses—one in New Manila, Quezon City, and another in Circuit Makati. “This will provide our shoppers better convenience especially now that travel is limited due to quarantine,” the disclosure said.
Of the total capital outlays for this year, about P1 billion will be spent to open the 25 new Puregold stores while P1.6 billion was spent for the opening of two new S&R hubs.
About P200 million was earmarked to open 10 new quick-service restaurant (QSR) outlets while P600 million was budgeted for maintenance outlays.
These outlays will be “funded by internally generated cash and short term untapped bank credit lines if necessary,” the disclosure said.
As of end-2019, Puregold group had a total of 436 stores nationwide. These included 380 Puregold stores, 18 S&R membership stores and 38 S&R New York Style QSR with a total net selling area of about 565,000 square meters.
Unlike in previous years, Puregold did not offer any guidance on sales growth or margins for this year given the volatile environment arising from the COVID-19 pandemic.
In 2019, Puregold booked a consolidated core net income of P6.75 billion, up 16 percent from the previous year. Consolidated net margin stood at 4.4 percent for the year.
Consolidated net sales last year rose by 9.5 percent to P154.49 billion, 77 percent of which was contributed by the Puregold network and 23 percent came from S&R membership warehouse clubs and S&R New York Style Pizza stores.
Excluding the impact of newly opened stores, Puregold stores registered same store sales growth (SSSG) of 4.6 percent in 2019, which the company said was stronger than expected.
S&R registered 8.3 percent in SSSG during the same period.
“Our 2019 SSSG was driven by higher consumer spending fueled both by minimum wage inflation in 2018 and easing inflation in 2019,” the company said.
Puregold’s operating income last year grew by 11.3 percent to P11.38 billion.