Puregold Price Club net profit tripled to P1.54B in 2011

The Puregold Price Club in General Mariano Alvarez, Cavite, is one of 31 Puregold stores in South Luzon. Puregold reported that it tripled its net profit in 2011 to P1.54 billion. PHOTO FROM GMACAVITE.COM.

MANILA, Philippines—Retailer Puregold Price Club Inc. tripled its net profit in 2011 as an aggressive store expansion program and robust retail trade in the country jacked up its sales volume.

In a disclosure to the Philippine Stock Exchange on Thursday, the flagship retailing arm of Filipino-Chinese businessman Lucio Co reported a net income of P1.54 billion in 2011, compared to P510.37 million in 2010. Last year’s results translated to earnings per share (EPS) of P0.97 or more than double the P0.40 EPS a year ago.

In a regulatory filing, Puregold reported that net sales in 2011 surged by about 33 percent to P38.99 billion from P29.11 billion a year ago.

Puregold’s rising profitability was fueled by an expansion in operations. In 2011, it opened 38 new stores to end with 100 stores. It has also gained from strong retail trade in turn driven by resilient consumer spending in the country.

“Puregold is still one of the companies that have displayed above-market earnings growth and it is still a play on the consumer economy and if you go through what has been happening in Philippine GDP [gross domestic product], retail trade has been improving for the last four quarters, so this company is expected to continue to maintain growth momentum,” said Jose Mari Lacson, head of research at stock brokerage Campos Lanuza & Co.

Of its store network in 2011, 61 consisted of hypermarkets (Puregold Price Club), which caters to both resellers and retail market;28 of supermarkets (Puregold Jr.), which caters to retail consumers; and 11 of discounters (Puregold Extra). As to locations, 53 stores are in Metro Manila, 16 in North Luzon and 31 in South Luzon.

Bulk of its earnings comes from the hypermarket segment.

For 2011, cost of sales also increased by nearly 31 percent to P33.45 billion from a year before.

Meanwhile, net cash flow from operating activities increased to P1.36 billion from P1.1 billion a year ago.

Puregold plans to double the number of its stores by 2015 as it expands into untapped areas within Metro Manila and Luzon and forays into Visayas and Mindanao.

The retailer also recently announced plans to merge with affiliate S&R Membership Shopping, which has been catering to the upscale market, to consolidate Co’s retailing businesses into a publicly listed vehicle catering to all market segments.

Puregold’s shares closed 6.45 percent lower at P21.75 per share on Thursday, giving it a market capitalization of P46.5 billion.