Wilcon Depot, Inc., the country’s leading home improvement and finishing construction supply retailer, reported an unexpected increase in first-quarter sales driven by customers and clients with ongoing projects who frontloaded orders in March to avoid anticipated price hikes caused by soaring fuel costs.
In a disclosure to the Philippine Stock Exchange, Wilcon said sales in the first quarter reached PHP9.17 billion, 9.1 percent higher than in the same period last year.
The unexpected sales growth enabled the company to realize a 4.9 percent increase in net income to PHP563 million in the first quarter versus the same period last year.
“We are pleased to report sustained positive same-store sales growth for the third successive quarter,” said Lorraine Belo-Cincochan, Wilcon president and CEO.
“Overall sales results exceeded our expectations, particularly in March, which faced a challenging high-base comparison from the prior year. This outperformance may have partly been driven by advance purchases from customers with ongoing projects, who accelerated buying in anticipation of potential price increases linked to rising oil prices amid the ongoing conflict in the Middle East.”
Ms. Belo-Cincochan also credited the momentum to the company’s continued operational improvements.
“We’ve implemented some strategic initiatives to improve our customer service and these upgrades are helping us drive higher conversions and bigger ticket sizes through a much better customer experience and smarter merchandising.”
“As of now, we’re still on track to open eight stores this year. We have opened three in the first quarter and we intend to finish the five remaining new stores as these are already in various stages of construction. While the situation in the Middle East creates some uncertainty and may temporarily disrupt our growth trajectory, we’re confident in our direction and the resilience of our business. We’re staying agile and prudent, as always, and are prepared to navigate any headwinds that come our way.”
Higher sales growth of the lower margin non-exclusive products coupled with the lower gross profit margin rates of select categories contracted blended GPM rates to 37.0 percent.
The contribution of exclusive and in-house brands dropped to 51.7 percent. Operating expenses including lease-related interest expense rose to PHP2.771 billion, up 4.1 percent or P108 million year-on-year.
The increase is traced mainly to the increase in depreciation expense for both new leases and store buildings and equipment in view of the new stores opened, utilities, trucking and outsourced services.
