Net loss of P1,6 billion in the third quarter of 2020 (3Q20)

The company posted a net loss of P1.6 billion in the third quarter (3Q), a reversal of P1.7 billion in net profits in the same period a year earlier. However the most recent result is a substantial recovery from P10.2 billion net loss in the second quarter (2Q). Revenues stood at P30.0 Billion, down 31 percent year-on-year (YoY) but a 28 percent quarter-on-quarter increase (QoQ), as more shops were reopened here and abroad. JFC has now incurred around P 2.9 Billion of P7.0 Billion restructuring costs – reduction in headcounts in stores and head offices, closing of domestic and foreign stores, including three Commissioners in the Philippines.

SSSG decline has eased as expected

Same-store revenue growth (SSG) recovered by 15 percentage points from 2Q to-35.3 per cent in 3Q. JFC reopened about 92% of its stores in the Philippines as of 3Q, but had to briefly shutter about 10% in August when Metro Manila and the surrounding provinces returned to MECQ. CBTL suffered hardest to reopen when the brand just restored around 83 per cent of the network, with further permanent shop closures looming.

Recommendation

We recommend to continue to hold JFC. We’ve increased our goal price by 7% to PHP 182.10 after we’ve rolled out our 2021 forecasts.

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