Higher expansion costs curb Wilcon profit
Lower sales and higher costs associated with network expansion dragged down the first-semester earnings of home improvement retailer Wilcon Depot Inc. by 23 percent to P1.16 billion.
The Belo family-led company on Tuesday said its sales during the period had declined by 0.4 percent to P17.12 billion due to slower foot traffic in May, or election season, as well as the long Easter holidays in April.
Operating expenses, including lease-related interest cost, grew by 4.1 percent to P5.3 billion on the back of hikes in depreciation and amortization for new stores, supplies, utilities and salaries. Lower expenses related to trucking and rent helped offset these higher costs.
In the first semester, Wilcon opened three new stores and reopened a depot that was burned down in April last year. This brings its total network to 103 stores across the country.
Sales from depot-format stores were flat at P16.5 billion, while the smaller Do-It-Wilson format grew by 10.8 percent to P540 million.
“While some of the impact of the measures we’ve implemented will be spread out up to next year, we are already seeing improvements especially in trucking,” Wilcon president and CEO Lorraine Belo-Cincochan said in a statement.
“While we’re still pursuing our store network expansion, we’re also working on improving the profitability of old stores, given the changes in their respective markets,” she added.
Operating other income also slid by 20.4 percent to P194 million on lower supplier support and other fees due to the completion of special marketing promotions, according to Wilcon.
