Rising cost of operations and a slowdown in foot traffic undermined net profit in the nine months through September of Wilcon Depot Inc., a listed home improvement and finishing construction supplier retailer that reported Friday a 7.9 percent decline in net profit to P2.73 billion.
In the third quarter alone, net income dropped 18 percent year-on-year to P908 million. Net sales in the quarter was flat at P8.79 billion while operating expenses was up 11 percent to P2.2 billion.
Operating expenses in the January-September period rose 17 percent year-on-year to P6.56 billion, outstripping the 4.9 percent growth in net sales to P25.94 billion. Cost of goods sold during the period was up 3.9 percent to P15.7 billion.
“Total net sales grew quarter-on-quarter, which is a welcome progress but as expected, the higher base resulted in a decline in comparative sales,” said Lorraine Belo-Cincochan, president and chief executive officer of Wilcon, in a statement.
“Net sales also did not grow enough to cover the increase in operating expenses, over 50 percent of which was contributed by expansion related expenses. Overall demand for major home improvement and finishing construction supply continues to be soft for retail but resumption of projects by major developers increased project sales by 75.5 percent. Although project sales only account for 1.4 percent of total net sales, the buyers of these projects are potential Wilcon customers,” she added.
Belo-Cincochan said despite the subdued financial performance, Wilcon is still pursuing its network expansion plan that envisaged opening 10 new stores this year in line with the goal of operating 100 stores by next year—a year ahead of plan. She said seven new stores have so far been opened in 2023 while two smaller branches were closed.
Gross profit in the nine months rose 6.6 percent to P10.25 billion driven mainly by the expansion in gross profit margin rate to 39.5 percent from 38.9 percent last year.
