Strong Q4 sales boost Philippine Seven profit

THE PHILIPPINE licensee of the 7-Eleven chain of convenience stores relied on the strength of a strong fourth-quarter performance to turn in a double-digit growth in earnings last year.

Philippine Seven Corp. (PSC) reported a 12.1% jump in net income to P1.32 billion last year from P1.18 billion in 2016, according to a disclosure to the stock exchange on Wednesday.

In the fourth quarter, earnings climbed nearly 26% to P669.6 million from P532.1 million, allowing PSC to improve on a flat performance in the first nine months of the year.

“2017 was far from our best year in terms of both same store-sales growth and new store openings,” PSC President and Chief Executive Officer Jose Victor P. Paterno was quoted in a statement as saying.

“The latter was a deliberate profit-taking move in response to reduced competitive activity, resulting in higher average new store sales, and the former due to high base effects in 2016. We had initially relied on an increase in (stock keeping units) count to increase sales, but it failed to deliver as much as hoped.”

Same-store sales, which excludes the impact of newly opened stores, continued their positive momentum in the final quarter, growing by 3.7% on the back of new product launches and improved assortment.

The first quarter saw a 4.4% decline in same-store sales brought about by high base year effect, before recovering in the second and third quarter by expanding 1.2% and 4.1%, respectively.

7-Eleven ended the year with a network of 2,285 stores, up 14.5% from 1,995 branches in 2016, after adding 317 new outlets and shutting down 27 stores.

Retail sales of all stores went up by 18.2% to P37.5 billion from P31.8 billion a year ago, driven by the increase in the number of operating stores.

PSC is hiking its capital expenditure budget to P3.5 billion this year, higher than the P2.5 billion spent last year, to support the opening of at least 300 stores, Head of Finance Lawrence M. de Leon said in a mobile phone message.

A hundred stores will be opened each in Metro Manila and Luzon and the remainder will be in Visayas and Mindanao, Mr. De Leon said.

7-Eleven is training its sights this year on increasing sales per store through various programs covering expanding merchandise assortment and launching of new food and beverage items to serve as differentiation compared with other channels.

The convenience store also rolled out an e-commerce business to capitalize on the growing customer preference towards innovation and convenience.

Shares in PSC shed P1 or 0.8% to end at P124 each on Wednesday. —