Wilcon Depot Sets ₱3.8-B CapEx

Wilcon Depot Inc. is allotting P3.8 billion for capital expenditures (CapEx) this year, mainly to fund its aggressive expansion program that includes the opening of 10 to 14 stores this year—higher than its initial target for 2023.

Photo Insert: Because of the stepped-up expansion, Wilcon will be hitting its 100-store target one year earlier.

Company president, Lorraine Belo-Cincochan, said during the firm’s recent annual stockholders’ meeting that P3 billion of this year’s CapEx budget is for its expansion program, which also includes warehouses and renovations aside from the construction of new stores.

“The company is looking to open eight to ten stores for 2023 but may exceed this target barring any major disruptions and despite expecting a much-muted growth for the year versus 2022 growth,” she said.

Because of the stepped-up expansion, Wilcon will be hitting its 100-store target one year earlier. The company is still looking to open a majority of depot formats in the medium-term even if more smaller formats than usual will be opened in the coming years.

Belo-Cincochan said they will be opening smaller store formats in smaller communities called Welcome Home Essentials to cater to homeowners with smaller projects, whether they are building or renovating smaller spaces.

Meanwhile, she explained that earnings this year may be more muted because, with the record performance of Wilcon in 2022, the company is coming off a very high base.

Belo-Cincochan said the further opening of travel and other outside-the-home leisure activities, especially in the second quarter with its multiple long weekends, shifted spending focus away from the home.

She added that the firm’s rapid expansion program may also affect their performance because “the pre-operating expenses is, very frankly, deadweight. So that may impact also the bottom line, but we remain hopeful, but we just don't like to promise that it's going to be as a blockbuster as it was last year, I think it would be kind of foolish for us to expect given the base effect.”

However, Belo-Cincochan noted that the construction sector is expected to grow faster than the 7.0% improvement it realized last year and the full recovery of the sector will be in 2024.

Thus, she said “We're still very bullish. Although we've experienced some customers trading down some of their requirements but… (our product offerings) cover the whole spectrum of the market so we have economy lines.”

Nonetheless, Belo-Cincochan said the company is looking beyond short-term fluctuations and continues to focus on expanding its store network and enhancing its product offerings, adapting its store formats, and merchandising to different markets.

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