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Retailer poised for expansion

Posted on January 03, 2013 10:14:26 PM [ BusinessWorld Online ]
PUREGOLD Price Club, Inc. is set to start by the middle of this year its expansion outside Luzon with the opening of two stores in Cagayan de Oro (CdO) and Davao cities, even as the firm eyes land for possible new branches in the Visayas, officials said yesterday.
PUREGOLD’s store along Aurora Boulevard in Quezon City is one of the Cubao commercial district’s landmarks. 
“This year we will continue our expansion, and we will be expanding geographically. For 2013, definitely we will be in Mindanao already.
S&R Davao in Matina is opening this year, by around April or May,” Leonardo B. Dayao, Puregold president, told reporters over lunch yesterday at Summer Palace restaurant in Edsa Shangri-La, Mandaluyong City.
“This is the first S&R in Davao, and the first Puregold presence in Mindanao,” Jimmy F.P. Perez, Puregold investor relations officer, said at the same luncheon.
S&R Membership Shopping, established in the Philippines in 2000, is a US-based supermarket brand that offers exclusive membership for licensed businesses and individuals. It has four stores in Metro Manila and one store each in Cebu and Pampanga catering to upscale shopping segments.
In May last year, Puregold shareholders approved the company’s acquisition of Kareila Management Corp., operator of S&R, by way of a share swap deal worth some P16.5 billion.
That same month, Puregold acquired Gant Group, operator of Parco Supermarkets. The latter owned and operated 19 Parco Supermarket branches located in various sites in Metro Manila, Rizal, and Bulacan, according to Parco Supermarket’s Web site.
Upon completion, S&R Davao is expected to feature 5,000 square meters of net selling area, which is typical for stores under this brand, Mr. Perez said.
Following S&R Davao will be a Puregold supermarket in Cagayan de Oro later this year.
“Puregold CdO may open in the middle [of the year] to the third quarter of 2013. We are currently constructing the building, which was an old supermarket and department store consisting of four floors called Ororama,” Mr. Dayao said.
“We will have different tenants there such as drugstores, fastfood, services and banks.”
Mr. Dayao said the generally good experience of various retail outlets in Mindanao encouraged Puregold to set up shop on the island.
“We are optimistic even if it’s a new market. From what we have gotten from other retailers -- especially those in the grocery and drugstore operations -- they have had a very good experience in Mindanao,” he said.
Provinces in the Visayas are also in the company’s sights, though there are no definite plans yet.
“We’re not excluding any of the big islands: Panay, Cebu, Negros, Leyte, Samar, and Bohol,” Mr. Dayao said without elaborating.
“If ever, we expect to open stores near each other and we’ll most likely be doing at first in two or three islands because of logistics and supervision reasons,” he added.
Puregold was incorporated in 1998 to engage in buying, selling, distribution and marketing wholesale or retail goods.
The company had said in March 2012 that it had allotted about P3 billion for store development last year.
Mr. Perez said yesterday this would likely be the budget for store expansion this year, but details -- such as possible upward revision of its financial and store targets -- will be finalized before the company’s investors’ briefing next month.
As of end-2012, Puregold stores totaled 156 -- consisting of Puregold, S&R, and Parco, another chain the company acquired last year -- with net selling area totaling about 305,000 square meters, a 42% increase from 2011 levels, Mr. Perez added.
Puregold grew its net income by 66.67% to P1.80 billion as of September 2012 from P1.08 billion in the same nine months the previous year due to contributions of stores that opened in 2011. In the same comparative periods, net sales -- gross sales and sales discounts -- rose by 45.29% to P39.14 billion from P26.94 billion, while cost of sales grew by 42.19% to P32.87 billion from P23 billion.
Puregold announced in August last year that it had raised its full-year consolidated net sales target growth to 50% from 25%. The company had reported P38.99 billion in net sales in 2011.
The firm said higher sales will be derived from the full-year operations of 38 new Puregold stores opened in 2011, operations of nine new Puregold stores opened in the first half last year, as well as newly acquired S&R and Parco stores.
Shares of Puregold slipped by five centavos or 0.15% to close at P35.25 apiece yesterday from P32.30 last Wednesday. -- Franz Jonathan G. de la Fuente       
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