Wilcon third quarter sales flat on drop in foot traffic

Wilcon Depot saw flat sales in the third quarter owing to a marked drop in same store sales as well as reduced transactions. In its report to the Philippine bourse, the Philippines' dominant home improvement retailer disclosed that net sales for July to October 2023 hit 8.79 bn Philippine pesos (PHP, EUR 146.736 mio), a 0.1 per cent uptick as comparative sales declined 5.7 per cent and number of transactions fell 7.5 per cent in old stores owing to a drop in foot traffic. Shoppers raised their spending slightly as ticket size inched up two per cent during the period to help prop up sales.

For the January to October period, net sales went up 4.9 per cent to PHP 25.94 bn. The company's depots, which are the big box format, contributed 96.5 per cent of the sales, while Home Essentials, the smaller format, accounted for 2.1 per cent. The rest came from project sales. "The increase was mainly driven by the contribution of new stores as comparable sales growth declined by 2.1 [per cent] for the period. Comparable ticket size expanded by 3.5 [per cent] offset by the drop in transaction count by 5.4 [per cent]," Wilcon noted.

Company chief executive and president Lorraine Belo-Cincochan said the sales growth was not enough to cover operating expenses, over half of which were used for expansion. "Overall demand for major home improvement and finishing construction supply continues to be soft for retail," she said.

But the executive added that big developers are ramping up projects, leading to a 75.5 per cent increase in project sales. "Although project sales only account for 1.4 per cent of total net sales, the buyers of these projects are potential Wilcon customers," she added.

The company opened two new stores during the third quarter, bringing the total number of outlets opened for the year to six. Two underperforming stores were closed, keeping the store count at 87.

Belo-Cincochan said that the company plans to add four new stores by the end of the year. She added that the company's plan to have 100 stores operating will be achieved by 2024, a year earlier than planned.

Earlier, Thai home improvement retailing powerhouse Siam Global House announced plans to enter the Philippine market by 2024. The entry will be done in partnership with the operator of the Philippines' biggest top grocer, Cosco. Analysts believe that the entry of the Thai giant can shake up the Philippine home improvement sector.