Monday, 24 May 2010

Operator of 7-Eleven chain triples profits

NJC Morales
BusinessWorld
http://www.bworld.com.ph/main/content.php?id=11414

PROFITS OF listed Philippine Seven Corp., the local licensee of convenience store chain 7-Eleven, more than tripled to P50.1 million in the first quarter due to economic recovery and aggressive marketing strategies.

Further expansion has been set by Philippine Seven for the year in a bid to take advantage of higher consumer spending.

System-wide revenue, a measure of sales of all corporate- and franchise-operated stores, rose by 24.5% to P2 billion.

EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 86% to P133 million, from P71.6 million year on year.

The firm said higher earnings allowed it to expand through internally generated funds.

“The improvement in sales can be attributed to various factors such as the positive effect of a recovering economy, good weather conditions, and increased spending in connection with the national and local elections,” Philippine Seven said in its financial report.

In the first three months of the year, Philippine Seven increased stores by 27% or 99 stores to 470, employing a total of 1,136 workers.

“Intensified promotion activities capitalizing on the election campaign implemented at the store level also contributed to sales growth,” Philippine Seven said.

Moreover, new franchisees like oil company Chevron Philippines, Inc. “boosted the store base and resulted into higher franchise revenues of P96.6 million.”

The company said it “plans to achieve the 500th store milestone during the year.”

Philippine Seven secured the exclusive right to operate 7-Eleven stores in the Philippines from Texas-based 7-Eleven, Inc. in 1982.

7-Eleven derives its revenues from retail sales of merchandise, commissions, rentals, and franchising activities.

Shares in Philippine Seven, whose profits went up by 84% to P155.8 million last year, were last traded on May 20 at P12 each.

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