JFC Q1 profit: P2.5-B (down 7.5% y/y)

Jollibee [JFC 233.00, down 0.8%] [link] posted a Q1 net income of P2.5 billion (-7.5% y/y, +7.2% q/q), with a 18.9% systemwide sales (SWS) increase to P103.2 billion, and a 5.5% same store sales growth (SSSG) rate. The company’s press release focused on the 14.6% y/y revenue growth and a 17.6% y/y increase in operating income, and framed its margin expansion (by 30 basis points) as a result of “disciplined execution positioning [JFC] well for sustained value creation and long-term growth.” The domestic business was led by the Mang Inasal unit (+15.3% y/y sales), followed by Jollibee (+13.3%) and Chowking (+9.9%).

MB bottom-line: Jollibee spent 56% more this quarter on advertising and promotions, and I’m curious to see if that was a blip or the first chapter in a new strategy to drive sales. JFC didn’t give any insight into how its advertising spend was allocated by brand or region, and that’s another thing that would be fascinating to learn. I’m surprised to see Mang Inasal’s sales increase so much. I feel like that store has fallen out of favor completely with my family, friends, and colleagues, so the resurgence kind of goes against my own personal experience. Q2 and Q4 are traditionally “big” quarters for JFC, so I expect it to do better as the year progresses. The key for JFC will be its Q3 hold. 

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