7-Eleven franchisor posts 78% profit jump in 2010

MANILA, Philippines - Philippine Seven Corp. (PhilSeven), the franchise holder for the country’s largest chain of convenience stores, reported a 78- percent jump in net income last year to P276.9 million on increased systemwide sales and new store openings.

In a financial report submitted to securities regulators, the 7-Eleven franchisor said system-wide sales, the measure of sales of all corporate and franchise-operated stores, rose 29 percent to P9.1 billion, largely driven by the higher number of operating stores and improvement in same store sales.

“Sales went up as a result of better weather conditions coupled by a favorable effect of a recovering economy and higher spending during the election season,” PhilSeven said.

Revenue from merchandise sales went up 26 percent to P7.6 billion while cost of goods sold climbed 28 percent to P5.6 billion, resulting to a gross profit of P2 billion, allowing the company to meet its profit guidance for the year.

New operators boosted franchise store count by 27 percent and expanded franchise revenues by 46 percent to P442.8 million.

Marketing income continued to support corporate earnings by delivering P338.8 million, an increase of 43 percent from the 2009 level.

EBITDA (earnings before interest, taxes, depreciation and amortization), on the other hand, amounted to P684.5 million, 55 percent higher than the previous level, for an EBITDA margin of 7.5 percent.

Earnings per share jumped 77 percent to P0.92. The company’s share price likewise doubled to P14 at the end of 2010.

In spite of the growing competition in the convenience store business, PhilSeven maintains its leadership in the industry with a market share of 47 percent, followed by Mini-Stop at 28 percent and Mercury Drug at 24 percent.

PhilSeven ended 2010 with a total of 551 stores, higher by 105 stores (net of seven store closures during the year) compared with the store count in 2009 which stood at 446. The retail chain of convenience stores is sustained by a manpower complement of 956 employees engaged in store operations and in various support service units.