7-Eleven operator Philippine Seven Corp. (PSC) posted 12.9-percent year-on-year growth in its first-quarter net income to P112.9 million on improved operating margins and continued store expansion nationwide.
Total systemwide sales of both company-owned and franchised 7-Eleven outlets rose 24.2 percent to P5.5 billion from P4.43 billion a year earlier.
As of end-March, the convenience store chain had 1,341 stores nationwide, expanding by 292 stores from 1,049 as of the same time last year.
“The 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,” Jose Victor Paterno, president and chief executive officer, said in a statement.
“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,” the PSC chief said.
“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 Cagayan de Oro,” he added, referring to city and provincial locations in the central and southern Philippines.
Other competitors in the local convenience store business are presently focused on forming joint ventures with foreign store brands.
Among them are the Ayala group’s FamilyMart, Puregold Price Club Inc’s Japanese import Lawson, the Gokongwei family’s Ministop, Villar group’s All Day chain, and SM group’s Alfamart, along with other small players that include Budget Mart, Circle K and Good Day.
Earlier, PSC announced it was expanding its capital expenditure by more than 50 percent to P3 billion from P2 billion in 2013 for accelerated store expansion this year amid tightening competition in the convenience stores’ retail segment.
It also said it would try to expand its store network to 2,000 in the next three to four years to strengthen its foothold as the leading convenience store chain in the Philippines.