7-Eleven slashes store opening this year

Philippine Seven Corporation (PSC), the country’s largest convenience store chain 7-Eleven, is slashing store opening this year to 200 from the original 400 stores on financial difficulties due to the still evolving COVID-19 situation in the country.

“We are scaling back on our capital expenditures while we continue to assess our market development plan. We shall be opening at least 200 stores this year since the contracts were signed and we already broke ground for most of these sites,” said PSC President and CEO Jose Victor Paterno in an email interview.

When asked if they still expect to post profit this year, PSC said it is also difficult to predict earnings potential this year. “The company is doing what is necessary to adapt to the evolving nature of the pandemic,” Paterno said.

Earlier, the company disclosed lost opportunities as a result of the closures of some stores at the onset of the Enhanced Community Quarantine. In April, the company said 22 percent out of the total 2,927 stores were closed, but the number of temporary closures dropped to 11 percent as of May.

As the quarantine restrictions eased up, the number of closed stores to date has gone down further to 5 percent or only 146 stores have remained closed.

Average investment per store ranges from ₱5 million to ₱6 million, about half of which are in the form of movable assets which can be utilized for new stores.

Earlier, the exclusive licensor of 7-Eleven in the Philippines, said it earmarked ₱711 million in Pandemic Support Program (PSP) to help its franchisees. PSC said they began disbursing funds on June 20.

“Well, we’re prepared to commit around that amount for now, so might as well pick a lucky number so that all this ends quicker than we expect,” said Paterno.

“We recognized immediately that the country’s (and the world’s) battle with COVID-19 would be long and painful, so the first thing we did was request our bankers for an increase in our credit lines. Thankfully, they responded quickly and generously, and our next focus became how to deploy this access to capital strategically during the pandemic. The PSP is one such example.”

As of end of first quarter, the company had ₱6.1 billion in cash and ₱1.8 billion in debt. It reported profits of ₱104 million from its 2,916 stores. However, due to the pandemic, 22 percent of its stores were closed as of end April, and 11 percent as of end May. (Bernie CahilesMagkilat)