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7-Eleven Operator to Spend P1.5 Billion
Jun 24, 2012 Corporate News
Business World Online

LISTED RETAILER Philippine Seven Corp., which operates the 7-Eleven chain, is looking to spend over P1 billion this year to expand and refurbish its network of convenience stores, a company official said.

“For the whole year, the company’s entire capex will be around P1.5 billion, mostly from internal funds, mostly for our new stores. We aim to end the year with 870 stores, compared to 690 last year,” Lawrence M. De Leon, Philippine Seven finance division manager, told BusinessWorld in a telephone interview.

Most of the company’s new stores will be built in Luzon, given the robust growth of existing 7-Eleven stores here.


“We experienced favorable yields in these areas, particularly in NCR (National Capital Region) and some of the provinces. Our stores here have performed within our expectations,” Mr. De Leon said.


In addition, Philippine Seven is looking to spend 15-20% of its 2012 capex to refurbish existing stores to feature more relaxed lighting and new trim for shelves and gondolas.


“[The upgrade] will put more emphasis on our food service category, not on the packaged foods or the general merchandise [categories] because we see this category as our point of differentiation among our competitors,” Mr. De Leon explained.


Five 7-Eleven stores already boast of this so-called “Store of the Future” format, with at least 100 more set to undergo the facelift in the near future, he added.


Philippine Seven is also targeting to renew a previously-inked deal that allowed the company to build 7-Eleven stores in certain Caltex fuel stations, on the back of recent positive feedback from various Caltex franchisers.


“Right now, we have 25 [stores in Caltex stations]. We expect to add at least 20 more this year,” Mr. De Leon said.


Philippine Seven also recently completed the acquisition of a 3,200-square-meter covered warehouse space in Pasig City, which is seen to increase the company’s total covered storage area to 16,000 square meters.


This storage expansion doubled the warehouse’s capacity to roughly 1,200 7-Eleven stores from a previous 600 stores, Mr. De Leon said.


“In the next two years, we might extend this again,” he added.


For the remainder of the year, Philippine Seven is bullish it can sustain the growth it incurred in the year’s first three months.


“[Our] first quarter has been very favorable as we benefitted from the country’s good economic and weather conditions. Our figures went beyond our expectations. We hope the trend will continue for the rest of the year,” Mr. De Leon said.


Philippine Seven hiked its first quarter net income by 51.86% to P56.34 million from P37.10 million last year on the back of growth in merchandise sales and franchise revenues.


Revenues increased by 36.57% to P2.95 billion versus P2.16 billion last year, while total expensed grew by 36.02% to P2.87 billion from P2.11 billion in year-ago levels.


Philippine Seven was incorporated in 1982, acquiring the operating license for 7-Eleven stores in the Philippines from Texas-based 7-Eleven, Inc.


After opening its first 7-Eleven store in Quezon City in 1984, the firm now operates 714 branches as of end-March, more than 60% of which are franchise stores. -- Franz Jonathan G. de la Fuente


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