7-Eleven operator introduces modular stores in bid for a profitable 2021
Leading convenience store operator Philippine Seven Corp. (PSC) plans to spend about P1 billion to expand its store network to 3,250 by yearend, in support of its goal to return to a profitable growth path this year.
Part of the new store rollout would consist of smaller-format, modular 7-Eleven stores that could be built in just 30 days, PSC president Jose Victor Paterno said in a press briefing on Thursday ahead of the company’s annual stockholders’ meeting.
The modular stores, which have a smaller footprint of about 120 square meters each, would be built closer to the residential clusters as part of the firm’s strategy to operate closer where the consumers are, especially as the pandemic continues to restrict mobility. In most cases, these modular stores can even be relocated to areas where rental rates are cheaper.
The P1-billion capital expenditure budget this year would be enough to build at least 200 new stores, said Lawrence de Leon, PSC head of finance.
To date, only 20-30 percent of local 7-Eleven stores are located in residential hubs.
“It’s a blue ocean opportunity for us,” Paterno said.
Towards the last two quarters of the year, and barring further negative developments such as the spread of the more contagious Delta variant, Paterno said the company could be able to return to profitability. However, a return to prepandemic earnings level could take two to three years, he said.
In 2019, or the last full year before the pandemic, PSC earned a net profit of P1.44 billion, which reversed to a net loss of P419.7 million last year. In the first quarter of this year, net loss stood at P299.66 million.
“We have taken the view that in unprecedented times like these, stakeholders are better served by a focus on long-term market position rather than short-term financial results, so long as cash flow permits,” Paterno said.
PSC managed to open 174 new stores in 2020, 50-percent lower versus its 2019 numbers. Its end-2020 total stood at 2,987 stores.
“We have more confidence in our new model and we will be expanding again in pretty different areas than we were originally targeting. We are underweighting CBDs (central business districts) and overweighting residential (areas),” Paterno said.
“[We] remained vigilant as we initiated efforts that helped safeguard the health and safety of our employees, franchisees and customers. We implemented a business continuity plan that supported our stores and minimized the impact of the pandemic on our business. Most of our 7-Eleven stores remained operational to serve the communities where we are present,” PSC chair Jose Pardo said during the stockholders’ meeting.
About 75 percent of franchisees availed of PSC’s pandemic support program, allowing them to continue operations and keep their staff employed.