7-Eleven trims profit

MANILA, Philippines - 7-Eleven operator Philippine Seven Corp. reported a 13.3 percent drop in its net income in the first three months of the year due to lower same store sales.

In a disclosure to the Philippine Stock Exchange Friday, PSCP said net income slid to P158.1 million, representing a 13.3 percent decline year on year due to the 2.5 percent decrease in same-store sales.

Systemwide sales grew 14.1 percent to P8.4 billion due to increased number of operating stores, which rose by 22.7 percent or by 376 stores to end the quarter with 2,031 stores all over the Philippines.

PSC said 46 new stores were added to its inventory during the period, while 10 stores were closed down.

At present, Luzon accounts for the largest share of 7-Eleven stores in the country at 1. 65 million while 261 and 121 stores are located in Visayas and Mindanao, respectively.

The convenience store operator said franchisees control 55 percent of all stores while the remaining 45 percent are corporate-owned.

Despite the lower financial results, PSC president and CEO Jose Victor Paterno expects earnings to improve for the rest of the year.

“We take Q1’s disappointing results as a challenge to do better at increasing sales per store – even as we continue to manage for the long term as far as investment in new stores, logistics assets, and organizational capability,” Paterno said.

“We are now comfortable where we are with both, and turn our focus to growing same store sales in a sustainable manner, particularly with regards to packaged goods. We expect our efforts to begin bearing fruit in early Q3, even beyond the low base effects of last year,” Paterno added.

For this year, PSC has earmarked P3.5 billion for capital expenditures, particularly to support its store expansion strategy. Bulk of the amount will be used for new store openings and renovation, and equipment acquisition.