7-Eleven income jumps 25% to P224M in Q2 on higher sales

MANILA, Philippines - The local licensee of the 7-Eleven convenience store chain reported strong profit growth in the second quarter as retail sales picked up despite intense competition in the convenience store sector.

In a regulatory filing, Philippine Seven Corp. (Philseven) said its net income jumped 25 percent to P224 million in the second quarter from P179.8 million a year ago.

“Retail sales of all stores during the April to June period went up 21.9 percent to P5.3 billion from P4.2 billion last year,” Philseven said.

Store count climbed by a quarter to 1,121 stores as of end-June from 893 branches a year ago, with franchise stores accounting for 66 percent of the store network, Philseven said.

The latest data allowed Philseven to record a 9.4-percent growth in earnings to P323.9 million in the first half from P296.1 million in the same period last year.

In the first semester, same-store sales rose 14.5 percent to P9.77 billion from P8.54 billion while revenue from merchandise sales improved 14.4 percent to P7.98 billion from P6.98 billion.

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

“It 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,” it added.

Japanese convenience store giant Lawson Inc. will enter the Philippine market while FamilyMart Co. Ltd. and the Gokongwei family’s Ministop are expanding their presence nationwide.

For 2014, Philseven more than doubled its capital expenditures to P2 billion to open 300 new stores and renovate close to 100 existing branches. In January, Philseven opened its 1,000th convenience store located at the IT Building of the Greenfield District in Mandaluyong City.

Philseven, which is banking on the robust retail market and franchising to maintain its position as the country’s largest convenience store chain, aims to hit 2,000 stores in the next three to four years. The company doubled its footprint from 500 stores in 2010 to 1,000 early this year.

There are more than 52,000 7-Eleven branches worldwide in countries inclu-ding  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.