President Chain Store Corp (PCSC, 統一超商), which operates the nation’s largest convenience store chain, 7-Eleven, aims to boost its profitability this year by concentrating on profit-making overseas business segments and consolidating money-losing ones, a company official said yesterday.
Slowing down the pace of its overseas expansion, the company would be focusing on China and the Philippines to expand its businesses there, the official said.
“Centralizing the development of certain business sectors and markets is the company’s main strategy [this year],” PCSC president Ray Chen (陳瑞堂) told a media briefing.
The company had been focusing on accelerating its expansion in the Chinese market for several years, by expanding brands and regions, but found it difficult to boost profitability by relying on creating higher scale merits.
Taking Shanghai — a Chinese city with about 20,000 convenience stores — as example, the extraordinary high cost of renting properties made President Chain Store unable to generate profits in China last year, despite experiencing 8.6 percent growth in revenue.
Therefore, the company decided to devise profitable business models in three sectors with higher potential in China, including mini supermarkets, convenience stores and refreshment restaurants, and would only expand new stores under these models in the future, Chen said.
The company plans to raise the number of stores in China to 800 by the end of this year, from 701 recorded at the end of last year.
As a result, Chen said he remained optimistic that President Chain Store would see its sales and profitability in China this year improve from last year.
President Chain Store is also continuing its expansion in the Philippines this year, with the number of stores expected to reach 1,000, from the current 829 stores, citing strong growth in net profits — which were higher than 30 percent — in the region last year.
However, the company has decided to terminate or sell a number of its investments, including leaving the Vietnamese market.
However, Chen remained upbeat about the domestic business and said the company would continue to upgrade current stores this year by converting them into casual restaurants for customers.
Currently, President Chain Store operates 4,852 convenience stores in Taiwan.
The company expected capital expenditure to total NT$4.2 billion (US$140.59 million) for this year.
President Chain posted NT$6.79 billion, or NT$6.53 per share, in net profit last year, up from net income of NT$6.35 billion, or NT$6.11 per share, recorded in 2011, the company said in its financial statement.
The latest research report by HSBC Securities (Taiwan) Co Ltd said that President Chain may see its earnings rise 8 percent this year with its profitable arms of investment and relief of margin pressure.