Wilcon to open 9 stores this year

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(Source: Business World | June 19, 2018)

Wilcon Depot, Inc. is accelerating its five-year expansion plan by targeting nine-store opening this year, allowing it to hit its goal of 65 stores one year ahead of schedule.

“We have many funds sitting in the bank, and all the sites are ready. The economy is really moving up quite good, so we’re capitalizing on that. And also its to stay ahead of competition,” Wilcon Founder and Chairman Emeritus William T. Belo said in a briefing after the company’s annual shareholders’ meeting in Ortigas Center on Monday.

The listed home improvement and construction supply retailer announced in 2017 its plan to open 29 new stores by 2021. Of this, 16 will be located in Luzon, five in Visayas, and eight in Mindanao.

So far, Wilcon has already opened five stores last year and another two during the first half of 2018. Starting this June, the company will be opening a new store every month to reach nine by the end of the year.

Wilcon has scheduled seven store openings in 2019, and another eight by 2020, for a total of 65 stores in the next two years.

Each store will cost about P180 million, and up to P250 million, including inventory. The company has P4 billion worth of funds left for its store expansion, taken from the proceeds of its P7-billion initial public offering last year.

Amid the aggressive store expansion, Wilcon also looks to add high-margin products to its portfolio to improve its profits.

“This will add on our product lines that will give us better margins like lighting fixtures… And we are still getting into appliances, and the PPR (polypropylene random) pipings. These are the three major product categories that we want to focus in the next three years,” Mr. Belo said.

These new offerings are expected to lift gross profit margins to 31% this year, versus 29.7% in 2017.

This year, Wilcon expects its net income to grow by mid-teens, helped by a top-line growth of mid- to high-teens. This will be supported by a 5% projected growth in same store sales. For the first quarter alone, Wilcon has already recorded a 5.2% same-store sales growth.

“So there’s quite a possibility that we might exceed the 5% given that we’ve already hit the 5.2% despite the first quarter being a weak quarter,” Wilcon Investor Relations Officer Mary Jean G. Alger said during the briefing.

Asked how the company will be affected by the weakening peso, Mr. Belo noted no immediate effects since most imports have been in their inventory for six to seven months.

“The price increase that we have been doing for the year doesn’t really increase significantly. That’s the beauty of having more inventory. The increase gradually comes, we spread it out with the ones that we have so we do average it,” Mr. Belo said.

Meanwhile, the company said it will be launching an e-commerce platform by the end of the year. The online store is set to complement Wilcon’s brick and mortar business, with its initial phase to be made available to Metro Manila customers only.

“We expect the e-commerce platform to contribute to enhancing sales of our stores… We want to drive customers to get to know Wilcon, those that go online. Because we’ll be able to provide a ‘pay online, pick up service’, so we want to be able to drive customers into our stores and see what we have to offer,” Wilcon President and Chief Executive Officer Lorraine Belo-Cincochan said during the briefing.

Wilcon will offer DIY (do-it-yourself) products and electrical items typically needed in houses or condo units, among others, on its online platform.

Shares in Wilcon went down by 3.18% or 38 centavos to close at P11.56 apiece at the stock exchange on Monday.

 

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