Corporate News

Puregold boosts spending plans to branch out from ‘saturated’ Metro Manila

Posted on December 12, 2015

PUREGOLD Price Club, Inc. is hiking its 2016 capital expenditure budget amid plans to expand its network organically, with the Lucio L. Co-owned supermarket operator seeing a slight slowdown in sales and profit growth next year.

The country’s second-largest retailer is spending P2.6 billion next year, higher than the estimated investment of P1.9 billion for 2015, Puregold Investor Relations Officer John T. Hao told reporters on Friday.

For 2016, sales and earnings are expected to grow in the low-teens level -- slower than this year’s goal of low- to mid-teens -- due to a high base effect, Cosco Capital, Inc. President Leonardo B. Dayao said. Cosco Capital is the parent of Puregold.

Next year’s growth will be accompanied by a 3% expansion in same-store sales, which is at the high-end of the 2-3% target for the entire 2015, Mr. Hao said.

The company is allocating P1 billion to roll out 25 Puregold stores, with launches focusing on North Luzon, the Visayas and Mindanao. The firm is likewise earmarking P1 billion to open two S&R Membership Shopping outlets outside Metro Manila, P450 million to launch 75 Lawson convenience stores and P150 million to add 10 quick-service restaurants.

Lawson, which started operations this year, will end the year with 15 stores -- lower than the original 50 stores it had intended to open this year.

From 2016 to 2020, Puregold is rolling out 25 stores every year, excluding acquisitions, Mr. Hao said. The company has been opening at least 25 Puregold stores since listing in the Philippine Stock Exchange in 2011.

The capex program for the year excludes its war chest for acquisitions, but Puregold continues to explore opportunities to accelerate growth, Mr. Hao said.

Puregold shelled out P1.5 billion for acquisitions last year. The firm took over nine supermarkets owned by NE, Inc. in February and eight supermarkets operating under the trade name Budgetlane in August.

The company last week opened its first Puregold store in Cotabato, becoming the first major retailer to enter that market, Mr. Dayao said.

“Most of our stores are in Metro Manila so there’s saturation. We have a wide footprint in Metro Manila, but there are some areas where we are looking for best location like Pateros and Makati,” Puregold Vice-President for Operations Antonio E. De Los Santos said.

Consolidated net income rose 6.5% to P3.2 billion in the first nine months of 2015. Consolidated net sales increased 12.6% year-on-year to P67.33 billion.

At end-September, Puregold was operating 267 stores nationwide, including nine S&R stores, and 13 S&R New York Style restaurants. The tally excludes the 17 stores of NE and Budgetlane Supermarket.

Shares in Puregold slid 25 centavos or 0.74% to close at P33.75. -- Krista Angela M. Montealegre