Wilcon FY23 profit: P3.5-B (down 9.5%)

Wilcon [WLCON 43.00 unch] [link], the home improvement and construction products retailer owned by William Belo, revealed that its FY23 net income was P3.5 billion, which was down 9.5% from the P3.8 billion it posted in net income the previous year. WLCON reported that net sales were up 3% to P34.6 billion, gross profit was up 4% to P13.7 billion, but that its operating expenses were up 9.5% to P3.5 billion. The company said that the net sales increase was from the contributions of new stores, but that the “expansion-related expenses” from opening those stores caused its operating expenses to rise and lower its overall net income for the year. WLCON also referred to the “softness of the market” as another reason for its failure to exceed its FY22 profitability, as evidenced by the 3.4% drop in same-store sales. WLCON said that it is still pushing toward its “100-store goal by 2024” and is planning to open two Do It Wilcon branches and eight depot format stores in hopes of being “in the best position” once “home improvement spending rekindles.”

MB bottom-line: I get the feeling that investors are starting to lose patience with WLCON, especially after this year of generally disappointing results. The stock is down 47% since the start of 2023 and down 24% since the start of 2024. It’s trading at a 52-week low and at levels that investors haven’t seen since May 2021, back when the first few delta variant cases of COVID were first detected in the country and we were locked down under “general community quarantine”. If this weakness if derivative of a high interest rate environment, then the recent news of “higher for longer pa more” is probably not a great sign for FY24. If I were an investor (I’m not), I’d be happy to see the management team sticking to its long-term expansion plan. Sure, these numbers aren’t great, but WLCON’s growth has always been tied to its footprint, so maybe shareholders will be rewarded for eating all these elevated expansion costs with thicc future profits. Maybe!

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