October 16, 2013

PGOLD targets 500 store branch network

During the company's celebration of its 200th store opening, Puregold chairman Lucio Co announced that the company plans to eventually have a branch network of 500 stores across the country.

This is based on 500 cities and first class municipalities that the company has identified as potential store sites. So far, the company is present in only 88 of these areas.

Our take: Given management’s target of opening at least 25 Puregold stores and one S&R branch per year and its track record of opening 48 stores in the last three years, we believe PGOLD can achieve its target in eight years through organic growth alone. This can be shortened if the company resorts to more acquisitions.
Currently, PGOLD stores are concentrated in south Luzon and the greater Metro Manila area. It is now expanding in North Luzon and Mindanao with future stores also planned for the Visayas.

This strategy should enable the company to achieve its plan of becoming a nationwide supermarket chain. More importantly, we also view this positively as the strategy should ease same-store cannibalization through the expansion in new markets. - WealthSec