Lockdown exemption fails 7-Eleven as operator swings to red

MANILA, Philippines — Prolonged lockdowns did not spare the local operator of 7-Eleven convenience stores, who sees hardships to persist this year even after the economy has mostly reopened.

Philippine Seven Corp. registered a net loss of P419.7 million for the entire 2020, reversing the preceding year’s P1.4 billion in profits, the company reported to the stock exchange on Friday.

Like majority of businesses, the firm attributed its lackluster financial performance on the “adverse impact of lockdown restrictions.” Convenience stores were largely exempted from prohibitions and were allowed to operate, but for 6 months, public transport was suspended to minimize people movements and control infections.

That, in turn, meant losing employees manning counters in 7-Eleven stores because they cannot reach their workplaces. This has forced closures with “fewer than 7%” of 7-Eleven’s 2,978 branches temporarily shut down. Stores that were operating round-the-clock in normal times also had to cut working hours because of curfews.

As a consequence, earnings inevitably suffered. Same-store sales plummeted 18.4% year-on-year in 2020 even as the number of outlets rose 4% in the same period. The broader system-wide sales sank 17.7% from year-ago levels, pulling down operating income by a hefty 84.8%.
 
Going into 2021, the future still looks bleak after Metro Manila and four nearby urban areas shifted back to tougher lockdowns last March 27.

“Our financial performance has been abysmal, and when our profit and growth numbers will return depend on not just the pandemic and how the Philippines navigates it’s end, but on how quickly our online and offline pivots take root, if at all,” Jose Victor Paterno, president, said in a statement.

“In times like these, we believe it is better to look not at numbers and forecasts but instead at one’s position relative to others caught in the same fierce – and unpredictable – storm,” he added.

That said, signs of recovery are emerging on a quarter-on-quarter basis. In the final 3 months of last year, PSC notched P165.6 million in profits, a turnaround from two consecutive quarters of losses. This was particularly buoyed by a 14.3% increment in same-store sales as Christmas shoppers went out.
 
Still, the fourth quarter figure was down 77.9% year-on-year. But on a system-wide basis, the company said it was able to generate “strong level of cash flow to enable it to support its product and market development plans moving forward.”

“A handsome payoff can’t be expected given the economic pain ahead, but what we can say is we look forward to turning the dials again soon enough,” Paterno said.

On Friday, shares in PSC gained 0.88% to cap the week at P103 each.