Wilcon Depot, Inc., the country’s leading home improvement and finishing construction supplies retailer, on Thursday reported a 2.1 percent decline in first-half net income to P1.82 billion as total sales slowed on the face of rising operating expenses.
The net income decline was moderated by the growth gross profit margin and increase in operations-related other income.
“We had a slower growth in the second quarter mainly due to the decline in foot traffic in our old stores. We have a high base since there was pent up demand for the same period last year as we just came out of the Omicron surge plus there was a slowdown in private construction especially in April with its consecutive long weekends,” said Lorraine Belo-Cincochan, Wilcon president and chief executive officer.
“While our sales still grew modestly in the 2nd quarter, this was not enough to cover the increases in our fixed costs, which comprises the bulk of our opex,” she added.
Despite the decline in bottomline, Wilcon said it intends to pursue its expansion plan that has so far resulted in the opening of four new stores in the first half, the scheduled opening of another depot before the end of July, seven undergoing construction while several more are on the drawing boards but are set to open in 2024.
Net sales in the first half increased 7.6 percent to P17.152 billion, driven mainly by the contribution of new stores. The company opened four new stores but closed smaller format branches, ending the half with 85 stores. The depot format accounted for 97 percent of net sales, the home essentials format 2 percent and the remaining 1 percent by project sales.
Gross profit increased by 9.9 percent to P6.77 billion driven mainly by the expansion in gross profit margin to 39.5 percent from 38.6 percent. In-house and exclusive brands’ margin increased enough to overturn the impact of the slight drop in contribution to net sales to 50.7 percent from 51.1 percent.
Operating expenses including lease-related interest expense increased 21.4 percent to P4.68 billion while expansion-related expenses primarily drove the increase particularly depreciation and amortization and manpower expenses.
