Puregold plans to open 25 new stores this year

INQUIRER FILE PHOTO

MANILA, Philippines—Supermarket chain operator Puregold Price Club Inc. is investing around P3 billion to expand its nationwide store network by 25 more stores and keep itself poised for faster growth through more acquisitions.

This year, Puregold sees consolidated net sales growing by 20 percent over the P73.2 billion level reported last year, including additional turnover from new stores to be opened this year, according to materials disclosed to the Philippine Stock Exchange on Tuesday. This suggests a net sales level of P87.84 billion this year.

In 2013, Puregold grew its net income by 46 percent to P3.96 billion as sales were boosted by acquisitions and new store openings while margins improved as upscale S&R Membership Shopping grew its contribution. Last year, it chalked up a gross profit margin of 17.4 percent, improving from a level of 16.1 percent in 2012. In terms of net profit margin, Puregold logged a 5.4 percent margin last year, likewise rising from 4.7 percent in 2012.

This year, Puregold said it was aiming to sustain the gross and net profit margins seen last year.

The 20 percent growth in net sales this year is expected to come from the 156 Puregold and S&R stores in operation as of end-2012, the first full year of operations of 40 new Puregold and 2 S&R stores opened in 2013, the first full year operations of 15 Company E stores acquired in 2013 and additional growth from 25 new Puregold stores to be opened this year.

Of 25 new Puregold stores targeted to open this year, 10 already opened in the first quarter, the company said.

The grocery chain of businessman Lucio Co ended 2013 with a consolidated store count of 213 Puregold and S&R stores in operations. It now has more grocery chain outlets than the SM group, which ended last year with 193 food retail outlets.

In an interview, Puregold president Leonardo Dayao said the group managed to increase margins last year despite stiff competition in the local retail industry because S&R now accounts for a bigger part of the pie.

“S&R is starting to increase its contribution,” Dayao said.

Excluding the impact of new store openings and the new stores acquired by the group in 2013, Dayao said some store sales were flat, partly due to the opening of some Puregold stores in places too close to existing stores.

This self-cannibalization strategy is meant to ward off the entry of competition within the vicinity. In the short-term, this gnaws on the sales of the nearest existing store in the same network. “But this is just temporary. It will correct eventually,” Dayao said.