Puregold expansion lifts Cosco income

THE RELENTLESS expansion of its grocery network sustained the growth momentum of Puregold Price Club, Inc. last year, giving a boost to the bottom line of parent company Cosco Capital, Inc.

Puregold pocketed P5.53 billion last year, 10.5% higher compared to the P5 billion in 2015, the retailer said in a disclosure to the stock exchange on Thursday.

Consolidated net margins stood at 4.9%, slightly lower than the 5.1% reported in a regulatory filing 2015.

“Our 2016 same store sales growth of 6.2% for Puregold stores and 4.4% for S&R stores were driven by continued strong consumer demand even after the elections,” Puregold President Ferdinand Vincent P. Co was quoted in the statement as saying.

Consolidated net sales climbed 15.9% year on year to P112.6 billion from P97.17 billion, benefiting from the healthy sales expansion in existing stores and the contribution of 26 newly opened Puregold stores and two S& R Membership Warehouse outlets.

For this year, the listed company will build 25 new Puregold branches and two S& R Membership Warehouse to sustain sales momentum.

At end 2016, Puregold group was operating a total of 329 stores nationwide comprising 277 Puregold stores, 12 S& R membership shopping warehouse, 23 S&R New York Style QSR, nine NE Bodega Supermarkets and eight Budgetlane Supermarkets.

Puregold’s earnings lifted the net income attributable to equity holders of Cosco Capital, which rose 5.42% to P4.73 billion, according to a separate disclosure.

Retail accounted for 59% of Cosco Capital’s total profits, followed by the commercial real estate with 22% and liquor distribution with 16%. Specialty retailing composed of Liquigaz Philippines Corp. and Office Warehouse, Inc., contributed 7% to net income.

“Our strength in retailing shows through the continued growth in our grocery, liquor, and office supplies and technology products retail businesses,” Cosco Capital President Leonardo B. Dayao was quoted in a separate statement as saying.

“Despite challenges in the LPG ( liquefied petroleum gas) space, we believe that 2017 would be a better year for Liquigaz. Cosco Capital is continuously investing in our subsidiaries to support its growth momentum, in addition to actively seeking for new strategic business opportunities in the retailing space.” Mr. Dayao said.

Revenues from liquor distribution inched up 4% to P5.9 billion on the back of an 18% uptick in volume of cases sold during the year.

Office Warehouse grew its revenues from 71 outlets by 18% to P1.54 billion, while Liquigaz suffered a 24.7% decline in revenues to P8.93 billion mainly due to the decline in global LPG prices during the year.

Commercial real estate segment saw 4% drop in revenues to P2.33 billion, resulting in a net income of P1.02 billion in 2016.

Shares in Puregold added 30 centavos or 0.69% to P43.85 apiece, while shares in Cosco were unchanged at P8.50 each on Thursday. —