Shakey’s sales growth rises to plus 13%; Earnings up 7% as cost pressures persist, but Company affirms double-digit growth target for the year
Shakey’s Pizza Asia Ventures (PSE: PIZZA), the Philippines’ leading chained full-service restaurant, saw systemwide sales growth rise to plus 13% during the first 6 months of the year, an increase from the 10% seen in the first quarter.
Systemwide sales, a measure of total sales for both company-owned and franchised stores, stood at Php4.6 billion as of end June 2018. In the second quarter alone, it rose to Php2.4 billion, a growth of 16% versus the same period last year.
This was on the back of an acceleration in same-store sales growth (SSSG), with the Company posting a 9% SSSG during the second quarter relative to the 2% in the quarter before.
SSSG for the first half currently stands at 5%, the high end of the Company’s twelve-month target of 3 to 5% for the year.
“We are pleased to see SSSG back to within full year targets post the roll out of new products, marketing initiatives, and an incremental price increase,” said Vicente Gregorio, President and CEO of PIZZA.
“Though the seasonal slowdown brought about by rains has already begun, we are now in preparations for the forthcoming “-ber” months – the start of the holiday sales uptick in the Philippines. We look forward to launching a fresh round of campaigns meant to take advantage of this positive boost in consumer sentiment,” he added.
For the six months ending June 2018, the Company grew total revenues by 9% year-on-year to Php3.7 billion. In the second quarter alone, revenues were up 12% to Php1.9 billion.
During the quarter, Shakey’s also successfully opened five new outlets bringing its nationwide store count to 217.
It expects to end 2018 with 228 stores in the Philippines, consistent with the goal of having 20 net new local stores this year. In addition, a store in Dubai, the Company’s second outlet internationally, recently opened and strong sales there continue to be supported by a large overseas Filipino base.
In terms of profitability, PIZZA’s earnings grew by 7% in the first half, a slower increase relative to topline as a result of persistent cost pressures. This led to a net income of Php396 million during first six months of 2018, relative to the Php371 million generated the year before.
It also saw first half consolidated gross profit rise at a tempered rate of 4%, to Php1.1 billion, while earnings before interest, taxes, depreciation and amortization (EBITDA) grew at a faster clip of 7%, to Php725 million.
Nonetheless, the Company was able to maintain its industry-leading margins of 29% for gross profit and 20% for EBITDA as of end June 2018. PIZZA’s return on sales and return on equity likewise held steady at 11% and 20%, respectively.
“Despite the slight compression in our margins year-on-year, we remain above average in terms of our profitability metrics and see this as an advantage in weathering competitive headwinds,” said Gregorio.
He added, “Moreover, there are a number of opportunities to maximize scale, increase efficiencies, and manage overhead to cushion cost pressures and meet our double-digit earnings growth target for the year. However, we do expect managing higher input costs, a depreciating peso, and continuously rising inflation to remain a challenge in the short to medium term.”
Shakey’s has been creating over 40 years of great times and great memories in the Philippines. Having started its first store in Metro Manila in 1975, Shakey’s now operates nationwide with a store count of more than 200 stores. Shakey’s is one of the leading operators of Fast Casual Restaurants in the Philippines, focused on family casual dining. It maintains market leadership in both the chained pizza full-service and chained full-service restaurant categories. Shakey’s believes its superior value arises from its differentiated menu offerings, high-quality products, and a mission to consistently provide great times and great memories to every Shakey’s guest.