Puregold allots P5 billion to acquire stores and expand reach
MANILA, Philippines — Puregold Price Club Inc. is setting its sights on acquiring stores to expand its footprint in areas where the grocery chain is not operating as part of efforts to reach record profits this year.
A total of P5 billion of the P12 billion recently raised through corporate notes is allotted for “M&A opportunities,” the company said in a disclosure to the stock exchange on Thursday. While the firm did not go into specifics, Puregold said it would “pursue acquisitions and expand into new geographic locations.”
The strategy comes in tandem with opening 25 new Puregold stores and 2 S&R warehouse stores. As of September and with only 3 months left into the year, the company has built all its targeted S&R warehouse facilities, while constructing 16 Puregold outlets.
The grocery operator was one of the few companies that benefited from consumers stocking up on essential goods to avoid going out and contracting the coronavirus disease-2019 (COVID-19). Net income went up 10.9% year-on-year to P5.05 billion in the first 9 months. Consolidated net margin was at 4.2%.
“We are confident that our company will achieve another record year in terms of net profits for the full year 2020 despite the challenges brought about by COVID-19," Lucio Co, company chairman, said.
Broken down, consolidated net sales rose 10.1% annually to P121.14 billion, buoyed by foot traffic in S&R stores that rose 13.4% from January to September. This partially offset a traffic decline of 25.7% in standalone Puregold stores.
The company also attributed the growth to “robust consumer spending and pantry loading prior to the COVID quarantine as well as the continued store operations even during ECQ period.” An enhanced community quarantine (ECQ) was in effect from March to June in Luzon, where 89% of 455 Puregold branches were located.
Meanwhile, 9-month income from operations grew to P8.5 billion, up by 11.8% year-on-year, financial statements showed.
In total, Puregold operates 393 Puregold stores, 20 S&R supermarkets and 42 S&R New York Style Pizza stores.
Last month, Puregold went into the financial markets to raise P12 billion even while the company remained awash with cash. The bond offer was well received and allowed the firm to lock in affordable interest rates for debt analysts believed it can easily settle.
Apart from the P5 billion of that amount that would go to M&A hunt, P4.5 billion was set aside to boost inventory supplies by up to 2 weeks, P2 billion to improve logistics, while the balance of P500 billion will fund S&R store renovations and solar power projects 8 of those stores.
As of 12:46 p.m., shares at Puregold were trading down 1.3% to P41.65 apiece.
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