7-Eleven operator boosts 1st-semester profit by 38%

MANILA, Philippines—The operator of the 7-Eleven chain in the country grew its first-semester net profit by 38.3 percent to P164.3 million year on year as it opened more convenience stores while resilient domestic spending boosted sales of each store.

In a regulatory filing, Philippine Seven Corp. reported that system-wide sales went up by 29.1 percent in the first six months to P6.5 billion, driven mainly by the increase in store base and improved average sales registered by mature stores.

“Higher average sales can be attributed to external factors, such as solid economic growth and good weather conditions,” the company said.

Internally, the company also implemented a new inventory management system and promotion programs to boost sales.

As of end-June, PSC had a store count of 746 boosted by 59 new stores even as it closed two during the first six months of the year. The retail chain employs 654 people in its stores and various support units.

New franchise operators boosted PSC’s six-month franchise revenues by 27.1 percent year on year to P315.3 million. This also increased the ratio of franchised stores to 66 percent of all stores from 62 percent in the same period last year.

Cash flow as measured by earnings before interest, taxes, depreciation and amortization (Ebitda) in the first semester grew by 35.6 percent year on year to P469.1 million. Ebitda margin increased to 7.2 percent from 6.8 percent in the same period last year.

For the second quarter alone, PSC’s net profit increased by P26.3 million to P107.9 million, also attributed to improved sales, higher margins and continued store expansion. This profit translated to a 3.5 percent return on sales and 6.5 percent return on equity.

The improvement in earnings was mainly due to the significant increase in operating income, which expanded by almost five times to P52.9 million at the end of the second quarter year on year.

Meanwhile, the six-month net profit translated to earnings per share (EPS) of P0.47 per share, an improvement from the P0.34 EPS in the same period last year.

PSC has also acquired under a long-term lease agreement a 3,200-square-meter covered warehouse space in Pasig City with warehouse capacity to serve roughly 1,200 7-Eleven stores from a previous 600 stores.