Wilcon Depot, Inc. Reported a PHP 3.483 Billion Net Income in 2023, Lower by PHP 365 Million, or 9.5% Due to Operating Expenses

Wilcon Depot, Inc., the Philippines’ leading home improvement and finishing construction supplies retailer, reported its full year 2023 results. Net sales of P34.604 billion, increased by 3.1% or P1.033 billion due mainly to the sales generated from the new stores. Gross profit also expanded to P13.694 billion, up 4.3% or P568 million year-on-year. Rising operating expenses, however, mostly contributed by expansion-related expenses lowered net income year-on-year by 9.5% or P365 million to P3.483 billion.

At its meeting on March 20, 2024, the company's board of directors approved the payment of P0.26 in cash dividends per share.

“The softness of the market persisted through the fourth quarter, which led to a modest growth in our topline for the year, 100% of which was contributed by the new stores. Comparable sales dipped by 3.4%, impacting directly our net income as operating expenses conversely continued to grow. It can be noted that in 2022, our comparable sales growth was at an impressive 14.2%, which reflected the robust demand for home improvement products post-mobility restrictions. In 2023, on the other hand, there was an apparent slowdown in home improvement spending not only here but globally as well. Despite this slowdown, we continue to pursue our 100-store goal by 2024, a year earlier than initially planned. We believe that we have to be in the best position to serve our market once home improvement spending rekindles,” said Lorraine Belo-Cincochan, President and CEO of Wilcon Depot.

Ms. Belo-Cincochan also said, “we opened nine (9) stores in 2023 and ended the year with 90 stores. We closed one Home Essentials branch and the other one we replaced with a new depot. We have gotten the approval for the use of “Do It Wilcon” (DIW) as an additional trade name and we shall be completing the renaming of our Home Essentials branches into DIW in 2024. For 2024, we are planning to open two (2) DIW branches and eight (8) depot format stores. Anchoring on our 47-year experience in this sector, we remain confident that we will be able to adapt to the post-Covid home improvement market by being consistently customer-centric and improving our operations to continually give excellent value to our customers even as we expand our market reach.”

Fourth Quarter 2023

Net sales were P8.661 billion, down P187 million, or 2.11%, from the previous year. A 5.1% increase from new outlets was countered by a 7.1% decline in comparable sales. During the quarter, two depots in South Luzon and a Home Essentials location in a Metro Manila mall were the three new stores that opened.

The net sales of depot format stores, which accounted for 95.8% of total sales during the quarter and totaled P8.298 billion, decreased by 3.1%, or P265 million, on an annual basis. The 4.9% rise in net sales from new depots was offset by a 7.9% fall in comparable sales for the format.
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With P192 million in net sales, the Home Essentials format represented 2.2% of total net sales. This represents an increase of 6.7%, or P12 million, from the previous year, mostly attributable to the contribution of new branches. Project sales or sales to big developers accounted for the remaining 2.0%, totaling P171 million, up P65 million or 62.1% from the previous year.

At the end of the quarter, gross profit was P3.446 billion, down P63 million, or 1.8%, from the previous year, mostly due to a drop in net sales. The higher margin internal and exclusive brands contributed more, going from 51.3% to 52.1% year over year, raising the gross profit margin rate to 39.8%.
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During the quarter, operating expenses climbed to P2.378 billion, up P87 million, or 3.8%, from the previous year. The primary cause of the increase is expansion-related costs, specifically those associated with supplies, trucking, depreciation and amortization, and outsourced services. Due to more leases for new branches, the amount of lease-related interest expenditure increased to P167 million, or P18 million, an increase of 11.7%.

The amount of other income (charges) was P108 million, a P6 million, or 4.9%, decrease from the previous year, mostly as a result of reduced rent revenue collection.

As a result, net income for the quarter was P757 million, down P130 million, or 14.7%, from the previous year.

Full Year 2023 Performance

Net sales for 2023 totaled P34,604 billion, up P1.033 billion, or 3.1%, from the previous year. Comparable sales decreased by 3.4%, with new store sales accounting for the entire increase. Throughout the year, two (2) Home Essentials stores and seven (7) depots were among the nine (9) new stores that opened. At the year's end, the corporation had ninety branches. 
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The depots, which accounted for 96.3% of total net sales on a per-format basis, increased by P709 million, or 2.2%, to P33.323 billion year-on-year. Sales from new depots contributed to the growth, while same-store sales fell 4.1% as a result of fewer transactions. With net sales of P741 million, the Home Essentials format contributed 2.1% of total sales. This represents a P100 million, or 15.7%, increase over the previous year, entirely from sales of the format that were below one year. Sales of the format in the same stores decreased by 4.8%. Project sales, which totaled P540 million and increased by P224 million, or 71.0% year-on-year, accounted for the remaining 1.6% of total net sales.

From P13.126 billion at the end of 2022 to P13.694 billion at the end of the year, the gross profit increased by P568 million, or 4.3%, for a gross profit margin rate of 39.6%. The growth in gross profit margin rate, which increased by 50 basis points annually, and higher sales for the period were the primary causes of the increase.

Operating expenses rose P1.061 billion, or 13.5%, from P7.879 billion to P8.94 billion for the year. The primary cause of the increase is expansion-related costs, specifically trucking, salaries, depreciation and amortization, and outsourced services. Due to the addition of new leases for new stores, lease-related interest expenditure grew by P96 million, or 17.7%, year-on-year to P641 million.
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The year's other income (charges) were P526 million, up P103 million, or 24.3%, over the previous year. This increase was mostly attributable to a supplier one-time refund and increased rent collection as a result of the opening of more stores.
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The company's net income for the year was P3.483 billion, which was P365 million (9.5%) less than its gross profit and other income improvements due to a higher growth in operating expenses than gross profit.