Puregold shares climb after higher first-quarter profit

By Heather Caitlin P. Mañago, Researcher

SHARES in Puregold Price Club, Inc. rose last week after the retailer posted higher first-quarter (Q1) earnings.

Philippine Stock Exchange (PSE) data showed that Puregold was the sixth most actively traded stock last week, with 22.89 million shares valued at P1.06 billion traded from May 11 to 15.

The listed retailer closed at P45.85 per share on Friday, up 4.4% from its P43.90 finish a week earlier. The stock outperformed both the services sector’s 3.3% gain and the benchmark Philippine Stock Exchange index’s (PSEi) 0.3% increase during the period.

Since the start of the year, Puregold shares have climbed 20.7%, trailing the services sector’s 26.6% growth but outperforming the PSEi’s 1.3% decline.

“[Puregold’s] opening price this week was a direct market reaction to what was a genuinely strong quarterly print,” Regina Capital Development Corp. Equity Analyst Jasper Timoteo A. Ondap said in an e-mail.

He said the company’s net income and consolidated net sales “came in well above what we had penciled in.”

Aniceto K. Pangan, equity trader at Diversified Securities, said the stock’s gains were driven by “double-digit revenue growth… and more than 20% income growth in the [first quarter].”

In a regulatory filing on Wednesday last week, Puregold reported a 23.7% increase in attributable net income to P3.26 billion in the January-to-March period from P2.64 billion a year earlier.

Gross revenue rose 12.1% to P59.76 billion from P53.32 billion previously.

In a separate statement, the company said first-quarter growth was supported by positive same-store sales growth (SSSG). Puregold stores posted a 5.4% increase due to higher basket sizes, while S&R Warehouse Clubs recorded 12% growth on higher customer traffic.

Puregold said earnings growth was “driven by strong topline growth and complemented by improvement in gross margins.”

Mr. Ondap said S&R’s performance may reflect “more frequent, normalized shopping rather than bulk buying.”

Despite the retailer’s strong first-quarter results, analysts said geopolitical tensions in the Middle East may continue to weigh on consumer spending and inflation in the coming months.

“We may expect the growth to be carried over in the [second quarter] on a lighter effect due to the high inflation effect of the Middle East conflict that negatively affects disposable income in March, April, and going forward,” Mr. Pangan said in a Viber message.

He added that inflationary pressures could persist if disruptions involving the Strait of Hormuz continue to affect global markets.

Mr. Ondap said Puregold’s staples-heavy product mix could provide some protection as consumers shift toward lower-cost goods, although S&R’s discretionary segments may face greater risks if household spending weakens further.

“We’ll have to see how [the second quarter] plays out to see the full effect of the conflict to [Puregold’s] performance,” he said.

“The coming months remain shaky if macro conditions don’t improve, due to tighter spending, a shift to budget options, and higher input and transportation costs, all of which may hit consumers and retailers alike.”

For the next trading week, Mr. Pangan identified immediate support at P45.90 and resistance at P47.15.

Mr. Ondap placed support between P43 and P43.90, while resistance levels were seen between P47 and P49.