President Chain Store Corp (PCSC, 統一超商), the nation’s largest convenience store operator, yesterday said that same-store sales at its 7-Eleven outlets are expected to grow more than 6 percent this year from last year, as the company is focusing on store remodeling rather than outlet expansion to attract customers.
Net income from the company’s convenience store business is likely to increase by a double-digit percentage this quarter from a year earlier, PCSC president Ray Chen (陳瑞堂) told a media briefing.
“Bigger stores with distinct characteristics are more valuable to us,” Chen said.
The company has developed many stores featuring diverse themes, such as displaying children’s books or featuring cat themes, he said.
PCSC expects about 73 percent of its 7-Eleven stores to be expanded to more than 99.17m2 this year, with 30 percent among the new stores featuring different themes, Chen said.
The company’s revenues from 7-Eleven stores totaled about NT$133 billion (US$4.07 billion) last year, growing by less than 1 percent from the previous year.
However, the company’s consolidated revenue increased 2.52 percent year-on-year to NT$205.5 billion last year.
“We are confident about this year,” Chen said.
PCSC operates a group of retail chains including the 7-Eleven convenience stores in Taiwan, Shanghai and the Philippines, as well as the coffee chain Starbucks in Taiwan and Shanghai.
The company has decided to pay a record-high cash dividend of NT$7.2 per share with a payout ratio of 90.85 percent, despite its earnings per share dropping 0.82 percent to NT$7.92 last year and net income decreasing 9.8 percent to NT$8.24 billion.
Chen said the declining profit last year was mainly due to lower non-operating income and a rise in operating expense resulting from adjustment in its profit distribution program.
“We are focusing more on our core business this year,” Chen said, adding that PCSC plans to continue integrating its business units in China and seeks to maximize profits by closing loss-making stores.
The Shanghai 7-Eleven business is likely to turn profitable this year and stores in China’s northeastern Shandong Province will begin remodeling this year, the company said.
“We see our growth momentum this year mainly coming from the 7-Eleven business in the Philippines and the Starbucks operation in Shanghai,” Chen said, as the two markets grew especially quickly last year.
The company became the biggest shareholder of Philippines 7-Eleven in 2000 and operates more than 1,600 stores there. The number is expected to reach more than 1,900 by the end of this year, the company said in a statement.
The company also aims to have more than 1,200 Starbucks cafes in Shanghai this year, from more than 900 last year, which generated more than 4 billion yuan (US$614.8 million) in sales last year.
CIMB Securities Ltd said in a client note yesterday that the outlook for President Chain's same-store sales this year still depends on overall consumption and company’s execution.
"Despite PCSC’s many initiatives, we are concerned about supermarkets opening smaller stores stocked with cheaper-priced goods to compete with convenience stores," CIMB analyst Jack Lin (林泓彥) said in the note. "We also observe more direct rivalry between 7-Eleven and FamilyMart (全家便利商店) for locations in the same area. But we doubt the market is big enough to support these two in the long term."
Taiwan FamilyMart Co, the nation’s No. 2 convenience store chain, yesterday said that its net income shrank 1.38 percent to NT$1.28 billion last year, with earning per share of NT$5.72, while revenue increased 3.07 percent to NT$57.79 billion.
The company cited an investment loss of NT$53 million in Puppetmotion Entertainment Co (偶動漫娛樂) for the decrease in net income.
This story has been updated since it was first published.
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