7-Eleven franchisor posts 38% earnings hike

MANILA, Philippines - Philippine Seven Corp., the country’s biggest convenience store operator, grew its net earnings by 38.3 percent in the first half this year to P164.26 million on the back of higher revenues.

In a financial report submitted to the Philippine Stock Exchange, Phil-Seven, the local franchisor of the global convenience store chain brand 7-Eleven, said it registered a 35.3 percent rise in revenues in the first semester of 2012 to P6.32 billion on strong merchandise sales.

Merchandise sales accounted for the lion’s share of total revenues, rising 36.5 percent to P5.72 billion.

Systemwide sales increased 29.1 percent to P6.5 billion at the end of first half, largely due to the increase in store base and improved average sales registered by mature stores.

New franchise operators boosted franchise revenues, expanding 27.1 percent to P315.3 million. This also increased the ratio of franchise stores to 66 percent of all stores from 62 percent a year earlier.

This year’s net income translated into an earnings per share of P0.47, significantly higher than the previous level’s P0.34 per share.

EBITDA (earnings before interest, taxes, depreciation and amortization) amounted to P469.1 million, up 35.6 percent, for an EBITDA margin of 7.2 percent.

Marketing income climbed 35.8 percent to P215.16 million owing to the continuing support by the suppliers in various marketing activities.

Commission income from phone cards, bills payment and consigned goods, surged 69.8 percent to P29.8 million. This was attributed to a huge increase in sales of e-load and phone cards as well as a reliable and convenient payment collection service to the public.

Commission received from bills collection jumped 71 percent while sales from consigned goods likewise increased 25 percent.

Cost of goods sold and administrative expenses, however, went up 35 percent to P6.09 billion.

“As can be seen from the favorable first half results, [Phil-Seven] remains on track towards meeting its store expansion and profit goals for the year. This shall enable 7-Eleven in protecting its strong hold in the fast growing CVS industry and allowing it to enhance shareholder value,” the company said.

To sustain its growth and further enlarge its footprint, Phil-Seven is planning to expand in Cebu, the major city in the Visayas. “This trade area is considered vital and necessary to be dominant in this region,” it said.

Phil-Seven has been exerting efforts to penetrate areas outside Luzon. Its goal is to be the best retailer of convenience for emerging markets by taking advantage of economies of scale, technology, people and a widely-recognized brand.

The company opened 59 new stores and closed two in the first half, bringing its total branch network to 746. 

Its goal is to hit 1,000 stores by 2013. To achieve this, Phil-Seven is building an additional warehouse to adjoin the 12,800-square-meter central storage facilities in Pasig.   The new building will add 3,200 sqm for a total covered storage area of 16,000 sqm on 2.2 hectares of land.