THE local licensee of 7-Eleven convenience stores posted flat earnings for the third quarter of 2018, as investments for its online business dampened sales growth.
In a regulatory filing, Philippine Seven Corp. (PSC) said net income for the three months ending September stood at P202.16 million, compared to its P201.89-million profit in the same period a year ago.
The company attributed the flat results to expenses incurred for its online unit. Without this, PSC said income store operations climbed 31.6% for the July to September period.
“Our digital efforts have led to a more data-driven approach, incorporating incrementality and elasticity to assortment and pricing, respectively. We have spent the last quarter formulating and testing such initiatives, some of which have already entered the scaling phase,” PSC President and Chief Executive Officer Jose Victor Paterno said in a statement.
PSC expects its online initiatives to start contributing to profit growth by next year. While the firm sees potential in the online space, PSC noted that exiting this strategy would not materially affect future earnings should prospects for the sector change.
Meanwhile, system-wide sales rose by a fifth to P10.95 billion for the quarter. At the same time, same-store sales growth (SSSG) accelerated to 7.7% from 6.6% in the previous quarter, driven by more operating stores and better average sales per store.
Despite the slower quarter, PSC’s net income went up by 13% to P735.32 million on a nine-month basis, with system-wide sales at P33.12 billion, 22% higher year-on-year. SSSG also improved to 8.4%.
Stores of 7-Eleven have seen sales increase since the passage of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law, which effectively raised the take-home pay of middle class workers. However, excise taxes on sugar-sweetened beverages have resulted in higher selling prices.
PSC ended September with 2,442 stores under its portfolio, 12.4% higher than the 2,172 it had in the same period a year ago. Of this, 1,898 are located in Luzon — with 912 in Metro Manila, 345 are in Visayas, while 199 are in Mindanao.
Shares in PSC gained 0.46% or 50 centavos to close at P107.50 each on Wednesday. — Arra B. Francia
