Stock Commentary

Wilcon soars in Q2 but lockdown hurt profits

Merkado Barkada

Wilcon [WLCON 22.00 5.77%] posted a Q2/21 profit of P643 million, up 2594% from Q2/20 profit of P24 million, and up 6% from Q1/21 profit of P604 million. Gross revenue was almost double, and H1 gross profits were up over 57% thanks to, according to WLCON, “product mix within the exclusive and in-house brands classification”.

WLCON said that the return to movement restrictions in Q2 of this year might have hurt the company more had it been forced to close (as had happened during the first lockdown in 2020), and that the e-commerce site that it launched last year may have mitigated some of the damage.

On the downside, operating expenses were up over 20% y/y, mostly due to actually having employees in the stores not stuck at home due to lockdown, and having more stores to staff than in 2020. WLCON said that the leases for the new stores added 13% to its lease expense.


The “wIlCoN pUtTiN uP vIdEo gAmE nUmBaZz” narrative is kind of tired; it’s true that the company is performing well, but it’s kind of just an accident of math that makes putting up a solid quarter looks so good. If they’d have made P20 million in Q2/20 instead of P24 million, the y/y percentage increase in net income would have been around 3,100% instead of “just” 2,594%. We’ve talked before about how it’s almost like we just have to ignore the 2020 data at certain times, and this is one of those times: WLCON’s Q2/20 numbers don’t tell us anything about how well WLCON performed at its business.

We can’t compare this quarter to Q2/20 and draw many conclusions other than “WLCON does way more sales when the stores are open”. What I feel is more useful is to compare WLCON’s last quarter to the same period the year before COVID, which would be Q2/19, when WLCON had a net profit of P510 million. So, despite having more stores (due to expansion) and more channels to purchase (due to the internet) and a better product mix, WLCON was only about 20% better this quarter than it was 2 years ago.

That’s not nothing, but it’s certainly sobering compared to the cotton candy of the headline number. And let’s not even talk about what it would mean should WLCON be forced to actually close its stores again for any length of time because of the return to any kind of hard lockdown.



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