PHILIPPINE SEVEN Corp., the listed licensor of 7-Eleven convenience stores, is halving its budget for capital expenditures (capex) this year as it suspends expansion plans due to the coronavirus disease 2019 (COVID-19) pandemic.

In a virtual media briefing on Thursday, Head of Finance Lawrence M. de Leon said the company’s capex had been reduced to P2 billion to support the launch of at least 200 new stores.

“About the capital expenditures, we are revisiting our plans. Initially it’s P4 billion. It’s around P2 billion at the moment,” he said.

“Initially we were looking at 400 [new stores]. But because of the pandemic, we’re reevaluating our market developments. So it’s about 200 new stores for this year,” he added.

However, Mr. de Leon noted the situation remains fluid, so the capex budget is still subject to another round of evaluation.

Philippine Seven had 2,864 7-Eleven stores as of end-2019, of which 349 were new and opened within the year. As of end-March, the company was able to open a few new stores, increasing its store network to a total of 2,916 7-Eleven stores.

While the plan is to open at least 200 new stores by year’s end, Philippine Seven President and CEO Jose Victor P. Paterno said some of the existing stores might close due to sustained challenges from the pandemic.

“It depends on the sales, what the landlords say… We’re looking store by store,” he said.

When the COVID-19 outbreak worsened in March and led to the implementation of a lockdown, about 30% of 7-Eleven stores had to temporarily suspend operations.

Since then, the company was able to reopen most of its store base, and only 5% of the stores remain closed to date.

However, Mr. de Leon said the company continued to record a net loss during the April-to-June period. “In Q2, we still incurred net loss, which we will report in August. However, the actual that we had was lower than what was expected initially,” he said.

Profits dropped 7% to P103.82 million in the first quarter because of the temporary closure of stores. In June, it announced a P711-million interest-free, pay-when-able loan program for franchisees to help prevent the permanent closure of stores.

Shares in Philippine Seven at the stock exchange closed flat on Thursday at P125 each. — Denise A. Valdez