Puregold Price Club Inc., the country’s second largest grocery retailer, is eyeing to put up another 25 stores this year as it continues to acquire existing chains of smaller competitors.
“We plan to open another 25 new organic stores this year. At the same time, we are also looking at acquiring existing groceries,” Leonardo Dayao, president of Puregold’s parent, Cosco Capital Inc., told reporters the sidelines of the supermarket chain’s annual stockholders’ meeting in Alabang, Muntinlupa City.
The company intends to focus on expanding its footprint in the Visayas and Mindanao, “where Puregold is not yet well represented.”
Puregold spends about P40 million for each 1000 square-meter grocery store. The estimate does not require the construction of a new building.
If a building would have to be constructed, the company has to spend between P100 and P150 million. With a new building, the company earns more from rent from tenants such as banks, restaurants and drug stores.
“We do not have a specific number of existing stores that we intend to acquire this year. It would really depend on the opportunities, and on the decision of family-owned groceries to retire, when their children do not want to continue the business,” Dayao noted.
The acquisition price of existing grocery stores is based on the net income of the establishment.
“Our offer in acquiring existing or retiring groceries is based on… net income. We offer them eight to 12 times of their net income as the purchase price,” Dayao said.
As of end-2015, Puregold has 298 stores nationwide. These include 255 Puregold, 10 S&R, and 16 S&R New York Style stores.
Last year, Puregold bought 17 NE Bodega and Budgetlane Supermarket outlets.
“We just have to make sure that the existing, incoming stores which we would acquire won’t be concentrated in one place. We do not want to duplicate them and cater to the same area or community,” Dayao noted.