7-Eleven franchiser doubles profit on robust sales

MANILA, Philippines - Philippine Seven Corp. (Philseven), the local licensee of the 7-Eleven convenience store chain, doubled its profits in the first quarter on robust store sales.

The operator of the country’s largest convenience store network aims to protect and expand its industry leadership, the company said in a disclosure.

Its net income more than doubled to P113.9 million in the first quarter from P56.3 million in the same period last year.

“The strong earnings results can be attributed to better-than-expected sales during the quarter,” the company said.

System-wide sales, which represent revenues of all corporate and franchise-operated stores, climbed a third to P4.16 billion “largely driven by the opening of new stores and complemented by higher sales registered by mature stores,” it added.

“Although sales benefited from better weather and a better economy, bulk of the increase was due to the effects of the sin tax law on the tobacco category,” Philseven said.

As of end-March, Philseven had 847 stores, up by 133 stores or 19 percent from a year ago. Franchise revenues surged 114 percent to P304.7 million from P142.2 million a year ago given more franchised stores.

Philseven said its bottom line was boosted by marketing income, or suppliers’ support from various promotion programs, that rose nearly 40 percent to P70.6 million.

“Historically, bulk of marketing income is earned during the latter part of the year through more promo activities slated and annual volume rebates,” Philseven said.

General and administrative expense, which is comprised of store operating and selling as well as headquarters expenses, gained 25.5 percent to P1.1 billion due to higher number of operating stores.

For the rest of the year, Philseven expects continuous growth in its operations.

“The management believes that the company can sustain momentum moving forward to meet store expansion and profit goals,” Philseven said.

In the short term, Philseven said it plans to protect its industry leadership and expand its market reach in the long term given the strength of the convenience store sector.

There are around 50,250 stores 7-Eleven branches in the world including countries like Japan, Taiwan, Thailand, South Korea, China, Malaysia, Mexico, Canada, Singapore, Australia, Indonesia, Norway, Sweden and Denmark.

Philseven secured the right to operate 7-Eleven stores in the Philippines from Texas-based 7-Eleven Inc. in 1982. Philseven is 56.59-percent owned by President Chain Store (Labuan) Holdings Ltd., a Malaysia-based investment holding firm.