Puregold set to open more stores in 2012, upgrades sales growth target

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. is set to open more stores than originally programmed and expects to grow its sales twice faster than earlier expected this year on the back of resilient consumer spending and recent acquisitions.

In a disclosure to the Philippine Stock Exchange on Wednesday, Puregold said that based on its latest guidance, consolidated net sales could rise this year by 50 percent from P39 billion in 2011. The earlier forecast was only a growth of 25 percent but this was before the acquisition of upscale S&R Membership Shopping and Parco Department Store chains.

Puregold also plans to expand its store network by 31 new stores this year, more aggressive than the 25 additional network planned at the beginning of the year.

In the first half, Puregold had 134 stores, including the S&R and Parco chains. It opened five hypermarkets in La Trinidad, Benguet; San Jose del Monte, Bulacan; Muntinlupa City; Batangas City; and Cauayan, Isabela, and likewise opened four supermarkets in Los Baños, Laguna; General Trias, Cavite; Quezon City; and Pasay City.

Of Puregold’s revised target of 31 new store openings, nine have been achieved in the first semester. In its disclosure, the company said the remaining 22 new stores are in various stages of construction.

These new stores include 17 new hypermarkets, 11 supermarkets and three “extra” stores.  Puregold hypermarkets cater to both resellers and retail market and supermarkets to retail consumers while “extra” are discount stores.

In terms of geographical location, 11 of these new stores will be located in South Luzon, nine in Metro Manila and 11 in North Luzon.

For the full year, Puregold aims to keep consolidated gross and net profit margins of 14.5 percent and 4.5 percent, respectively. Same store net sales were expected to grow by 4 percent for Puregold and 15 percent for S&R.

In the six-month period ending June, Puregold jacked up its net sales by 34.4 percent to P23.27 billion. The opening of new stores in 2011 contributed 68.2 percent of the total increase in net sales.

Puregold grew its first-semester net profit by 32 percent year on year to P1.03 billion as new acquisitions and store openings boosted sales. About 55 percent of the six-month profit was generated during the second quarter at P565 million, which stood 39 percent higher than the level a year ago.

The acquisition in June of the six-store S&R chain and 19 Parco supermarkets, contributed 15.1 percent of the total increase in the group’s net sales.

Capital spending for this year is kept at about P3 billion, to be funded by the balance of the initial public offering proceeds in the amount of about P2 billion, and internally generated funds.