January 16, 2015

The local license holder of the convenience store hikes its capex to P3 billion to finance its aggressive store expansion.

MANILA, Philippines – Philippine Seven Corporation, the local license holder of convenience store giant 7-Eleven, is raising its capital spending this year by 50% to P3 billion ($68.03 million) to finance an aggressive store expansion strategy.

Specifically, the company plans to open 350 stores this year, with 60% to be franchise-owned and the remaining 40% owned by the company itself.

The capital will come primarily from an internally generated fund, company finance head Lawrence de Leon said.

Jose Victor Paterno, Philippine Seven president and chief executive officer, said the long-term growth prospects are favorable and he believes that the company can sustain its momentum.

In 2014, the firm opened 286 new 7-Eleven new stores, although 13 stores were closed.

The company had a total of 1,282 stores by end-2014 year, according to its disclosure to the Philippine Stock Exchange. This was up by 27% from its 2013 total of 1,009 outlets.

“Philippine Seven has taken steps to protect and expand its leadership in light of increased competition, recognizing that rewards for market share are especially strong in the convenience store sector,” Paterno said.

Increasing competition

Philippine Seven is currently the market leader in the 24-hour convenience store format.

Its closest competitor, MINI STOP, is operated in the country by Robinsons Retail of the Gokongwei clan.

This segment of the retail industry is rapidly expanding, fuelled by the continued growth of the economy and the business process outsourcing industry in particular, further attracting the attention of some of the country’s biggest conglomerates.

Ayala Land, in partnership with the SSI Group and Japanese conglomerate Itochu (which has a majority share in FamilyMart Company Limited), is aggressively expanding Japanese convenience store FamilyMart in the country.

Lucio Co-owned wholesaler Puregold Price Club Incorporated had previously formed a joint venture partnership with Japan’s Lawson to bring the brand to the Philippines.

Not to be outdone, Ayala rival SM Investments Corporation is also planning its own line of convenience stores by partnering with Indonesia’s largest minimart chain, Alfamart. –Rappler.com