Wilcon confirms internal talks on international expansion

Wilcon [WLCON 17.68 unch; 0% avgVol] [link] clarified a report by BusinessWorld containing remarks by WLCON’s CEO, Lorraine Belo-Cincochan, that there are “many possibilities” with international expansion, and that it might be “in Southeast Asia or Asia, particularly where it’s closer logistically.” WLCON said that Ms. Belo-Cincochan’s remarks were made in response to a question, and confirmed that there have been internal discussions about international expansion, but that “it is not yet in the immediate future”. WLCON has set a capex budget of P2.2 billion this year to push the needle on its goal to have 100 stores.

MB bottom-line: I don’t know exactly what country WLCON has been considering, but my bet would be on Vietnam. The American do-it-yourself chain, Ace Hardware, opened its first store there in late 2019 and (at that time) aimed to be the largest hardware retail chain in the country by opening 20-40 stores over the next 10 years. Based on my impatient Google Map searching, it looks like they only have four stores around central Ho Chi Minh, which feels like a dramatic under-performance of its growth target. Does this mean there’s a massive home hardware market gap that WLCON could fill, or is Ace Hardware’s disappointing Vietnamese growth a symptom of some other product/market fit problem? If I were a WLCON shareholder (which I’m not), I’d be wary of the huge costs and uncertainties that come with international expansion, and I’d be concerned (absent a great presentation from management about the profit potential) about the company becoming distracted with thoughts of growing outward before it clearly squeezed as much as it could out of the platform that it’s built here. It feels like there are still plenty of ways for WLCON to crawl up and down the value chain, and even to move horizontally into other adjacent markets.

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