Puregold allots P2.64B for 2016 capital expenditures

MANILA, Philippines – Puregold Price Club Incorporated, the country’s second largest supermarket chain owned by billionaire Lucio Co, said it will spend P2.64 billion ($55.81 million) in capital expenditures for 2016, primarily for new grocery outlets and convenience stores.

John Hao, Puregold investor relations head, said the company will be spending P1 billion ($21.15 million) to build 25 new Puregold stores; P1 billion ($21.15 million) to open two S&R membership shopping branches; P450 million to launch 75 branches of convenience store chain Lawson; and P150 million ($3.17 million) for 10 branches of S&R New York Style Pizza restaurants.

Puregold Vice President for Operations Antonio de los Santos said the firm invested P3.4 billion ($71.90 million) in 2015 but this included P1.5 billion ($31.72 million) for acquisitions. (READ: Puregold to spend P5.5B in capital expenditures for 2015)

Puregold has made two acquisitions this year – the 9-store supermarket chain NE Bodega owned by Nueva Ecija-based retailer NE Incorporated and an 8-store grocery chain called Budgetlane. (READ: Lucio Co’s Puregold acquires BudgetLane supermarket chain)

As of end-September 2015, Puregold has 267 stores nationwide, including 9 S&R branches and 13 S&R New York Style Pizza restaurants. That’s aside from the 17 stores of NE Bodega and Budgetlane.

Possible acquisitions

Puregold’s capital spending for 2016 does not include possible acquisitions, a strategy that the company has adopted to expand its portfolio.

The company is focused on North Luzon and Visayas-Mindanao as areas for expansion, but it also continues to explore other areas in Metro Manila, like Pateros.

Despite the aggressive expansion, Hao said the company expects slower growth in net income and revenues next year, compared to 2015.

He explained that the base of Puregold has become bigger, making it difficult to maintain an aggressive growth rate.

But the company will also continue to open at least 25 stores annually over the next 5 years, Hao said.

Store sales are also expected to be maintained at 3% next year.

For the first 9 months of 2015, Puregold reported a consolidated net income of P3.2 billion ($67.67 million), up 6.5% compared to P3 billion ($63.45 million) in the same period in 2014.

Puregold consolidated net sales increased by 12.6% to P67.33 billion ($1.42 billion) for the first 9 months of 2015 due to the strong consumer demand.

Income from operations grew to P4.58 billion ($96.86 million) in the first 3 quarters of 2015, up by 6.6% versus the P4.29 billion ($90.81 million) during the same period last year. 

Share price of Puregold on Friday closed at P33.75 ($0.71) per share, down 0.74% from the Thursday’s close. – Rappler.com

$1 = P47.24