CP All Plc, the operator of 7-Eleven convenience stores, remains committed to adding around 700 new stores this year with projected capital expenditure of 11.5-12 billion baht, despite the ongoing negative impacts of pandemic restrictions.
Of the total spending, store expansion is estimated to cost around 3.8-4 billion baht, with store renovation making up 2.4-2.5 billion baht.
Investment in new projects, subsidiaries and distribution centres is estimated at 4-4.1 billion baht, while fixed assets and IT systems are projected at 1.3-1.4 billion, according to the company's statement to the Stock Exchange of Thailand.
Kriengchai Boonpoapichart, the company's chief financial officer, said CP All will put more effort into increasing revenue in the second half of this year as well as controlling operating costs.
The merchandise mix will be adjusted, with more popular items such as vegetables and fruit, and in proper package sizes to suit consumer behaviour and spending power, he said.
In the first half of this year, the company opened 311 new convenience stores, compared with 377 new stores in the same period of 2020.
The new stores were mostly opened in upcountry areas because the spread of Covid-19 is less severe there than in Greater Bangkok.
The company plans to continue expanding delivery services, which currently accounts for 10% of total sales.
CP All operates 12,743 branches.
"We believe our performance will be much better if the government relaxes its tight lockdown measures," Mr Kriengchai said.
CP All reported consolidated revenue of 138 billion baht in the second quarter of this year, up 7.5% year-on-year, with a net profit of 2.19 billion baht, down by 24.2%.
Higher revenue was attributed to the company's adjustment of merchandising and service strategies, including the online-to-offline strategy of each business unit to cope with the current Covid-19 situation, given the advantage of the low base from the same period of last year.
However, at the end of the second quarter, when the pandemic situation worsened, the government imposed various control measures including less mobility and travel along with night curfews in highly infected provinces, all of which had a negative impact on the retail business.
Tareetip Wongsaengpaitoon, senior vice-president of Kasikorn Securities Plc, said CP All's earnings are likely to be pressured in the third quarter of this year.
Apart from lockdown measures in 29 dark red provinces, the company also faces night-time curfews in several provinces, leading between 60-70% of 7-Eleven stores to close at 8pm, which is a peak sales period, she said.
"However, if the lockdown is relaxed in the third quarter, its sales are forecast to improve, but at a slower pace because the stores are limited to local consumption," Ms Tareetip said.