WILCON Depot, Inc. posted a 32% contraction in earnings in the first quarter, weighed down by higher operating expenses and the closure of stores in late March.
In a regulatory filing on Monday, the home development retailer said its net income for the first three months fell by P155 million to P328 million. Net sales also slipped 2.5% to P5.59 billion.
“Wilcon Depot was not spared from closure when the enhanced community quarantine (ECQ) was imposed by the Philippine government over Luzon on March 17, 2020… We closed all our 44 branches, which accounted for 84% of our net sales in 2020 pre-ECQ,” Wilcon President and Chief Executive Officer Lorraine Belo-Cincochan said in a statement.
Revenues from its depots, which comprised 96.1% of the pie, slid 2.4% to P5.38 billion. Home essentials contributed 14.8% less at P137 million, accounting for 2.5% of the revenues. The remainder is from project sales, which grew 21.1% to P79 million.
Ms. Belo-Cincochan noted Wilcon’s comparable sales was at a negative 8% for the quarter, as 40 of its 52 stores that are at least one-year old are located in Luzon and affected by the ECQ. Before the government imposed lockdown measures in March, she said Wilcon’s comparable sales growth was at 10.7%.
While revenues took a downturn, what really dragged the company’s bottomline was its operating expenses, which expanded 19.7% to P1.43 billion.
“The main factor that pushed net income downward was the increase in operating expenses year-on-year… (It was) traced mainly to the increase in lease and manpower related expenses,” Wilcon said in a statement.
The adoption of a new accounting standard, the Philippine Financial Reporting Standard (PFRS) 16, resulted in the growth of the company’s operating expenses. Add to that the salary increase rolled out across the board for Wilcon employees on April 1, 2019.
Given the declines, Wilcon said it is reducing its network expansion target this year to a maximum of six stores from eight to nine originally. It is also expecting that its topline and bottomline guidance of mid-teens growth is highly unlikely.
“What we are expecting though is a relatively faster recovery when mobility restrictions are lifted with pent-up demand from unfinished construction projects and new demand from the renovation, repair and maintenance market…,” it said.
The company added it is still in a “fairly strong financial position” as it is bank debt-free with cash and placements amounting to P3.93 billion.
Shares in Wilcon at the stock exchange shed 28 centavos or 1.77% to P15.58 each on Monday. — Denise A. Valdez
