Philippine Seven Corp. (PSC) president and CEO Jose Victor P. Paterno reported that only 10 percent of its 2,916 stores nationwide were open through the enhanced communication requirement declared two months ago.
Not used to shutting down stores unless for renovation, Paterno said, in an online forum, the pandemic created a unique problem for 7-Eleven: “We have some complications, we’re not used to closing. Many stores didn’t have locks.” PSC owns 45 percent of its stores, the rest are franchises.
But Paterno admits PSC has more serious problems than locking up its stores as he expects the entire retail industry to get hammered by the pandemic.
“The decline in customer traffic in the second part of March was significant as only one member of the household is allowed to go outside to get their essential needs. The resulting increase in basket size is not sufficient to cover for the drop in transactions,” said PSC in a first quarter report.
PSC was off to go a start in 2020 as system-wide sales of 7-Eleven stores surged 12.7 percent in the first quarter this year to P14.126 billion, from P12.535 billion during the same period last year. This despite the Taal Volcano eruption in January which forced the temporary closure of 30 stores.
“The solid sales performance in 2019 continued up to the first quarter of 2020. Same store sales grew by low double digits during the first two months of 2020. This was driven by successful brands Crunch Time fried chicken and City Blends freshly-brewed coffee. The surge in service transactions also lifted commission income,” PSC said.
But higher sales did not translate to more profits as PSC suffered a 7.1 percent drop in net income to P103.8 million in the first quarter of 2020, from P112.2 million during the same period last year due to higher merchandise costs (up 13.5 percent) and expenses (up 11 percent).
PSC said 65 percent of as the ECQ disrupted the supply chain and made it difficult for staff to go to work due to the establishment of checkpoints and the shutdown of public transport.
“The decline in customer traffic in the second part of March was significant as only one member of the household is allowed to go outside to get their essential needs. The resulting increase in basket size is not sufficient to cover for the drop in transactions,” said PSC.
But its operations have stabilized after some areas have been downgraded to a general enhanced community quarantine which allowed more people movement and less strict checkpoints