Philippine Seven Corporation, the local licensee of 7-Eleven Convenience Stores, has reported a 12.9 per cent growth in net income for the first quarter of 2015.
The company says the increase is the result of improved operating margin and its aggressive 7-Eleven Philippines store expansion program across the nation.
The network of company owned and franchised stores’ sales rose by 24.2 per cent from P4.4 billion (US$98.9 million) in the first quarter to 2014 P5.5 billion (US$123.6 million) in the latest quarter. First quarter net profit reached P112.9 million ($2.5 million).
At the end of the quarter, PSC had built its network to 1341 stores – an increase of 292 year-on-year.
The company said the rate of earnings growth was slower than top-line growth due to the increased spending attributed to expanding the logistics infrastructure of the company. PSC has been building the capacity of its distribution center to support its expansion in the different parts of the country, including the islands in the Visayas and in DavaoCity.
Jose Victor Paterno, president and CEO, said PSC has taken steps to protect and expand its leadership in light of increased competition, recognising that rewards for market share are especially strong in the convenience store sector.
“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,” he 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.”
For 2015, the company will be increasing its capital expenditures budget by more than 50 per cent to support its accelerated store expansion strategy.
Philippine Seven Corporation operates the largest convenience store network in the country. It acquired from Southland Corporation (now Seven Eleven Inc.) of Dallas, Texas the license to operate 7-Eleven Philippines stores in December 1982 and listed on the Philippine Stock Exchange in February, 1998.
