Philippine Seven Corp. (PSC), the local franchisee of 7-Eleven convenience stores, saw its net income surge nearly 28 percent last year on an expanded store network and improved margins.
In a statement, the company said its net income rose 27.9 percent to P873.3 million last year from P682.6 million in 2013 due to “improvement in operating margins and continued store expansion all over the country.”
The 2014 profit translates to earnings per share of P1.91 from P1.49 in the previous year.
Jose Victor Paterno, PSC president and chief executive officer, said the company is confident that it will stay at the top of the convenience store hierarchy due to the sustained momentum in earnings and store expansion despite tightening competition in the convenience store arena.
“PSC has taken steps to protect and expand its leadership in light of increased competition, recognizing that rewards for market share are especially strong in the convenience store sector. This involves not only an increased pace of expansion in areas contested by competition, but strategic entry into new territories. The latter may be unprofitable for the first few years due to the high fixed costs of logistics, but we believe will later be rewarded with strong first mover advantages,” Paterno said.
A number of big Philippine firms are currently focused on their own strategies to venture into the convenience store format, mostly via joint ventures with foreign brands.
At the moment, 7-Eleven remains the leading player in the fast-growing convenience store arena despite the entry of relatively newer players in the local market. These include the Ayala group’s FamilyMart, Puregold Price Club Inc’s Japanese import Lawson, the Gokongwei family’s Ministop, the Villar group’s All Day chain, SM group’s Alfamart and the lesser known Circle K based in the US.
“Last year we entered Panay and built on our entry into Negros and Cebu the years prior. This year we will be entering Mindanao via Davao and CDO [Cagayan de Oro],” Paterno added.
Store sales of both company-owned and franchised 7-Eleven units advanced by 19.3 percent to P20.6 billion from P17.2 billion a year earlier.
To date, 7-Eleven has 1,282 outlets nationwide, a 27.1-percent increase from the 1,009 stores it had in the previous year. Some 63 percent of these outlets are franchised while the rest are company-owned.
PSC-owned stores increased by 286 additional outlets in 2014 while 13 stores closed down.
Earlier, PSC said it would increase its capital expenditures this year by more than 50 percent to P3 billion from P2 billion in 2013 for accelerated store expansion amid tightening competition.
It also said it aims to expand its store network to 2,000 outlets in the next three to four years to strengthen its foothold as the leading convenience store chain in the Philippines.