Ladies and gentlemen, good afternoon. It is a pleasure to have you all here with us for today's investor conference held by President Chain Store Corporation. Today's briefing will be hosted by the IR team manager and the rest of our IR team staff. The session will be divided into two parts. First, the IR team will share with investors updates regarding the company's recent business developments and performance. Then, in the second part, we'll move into the Q&A session. Now I'll hand things over to the IR team.
Welcome, everyone, and thank you for taking the time to join us online for President Chain Store's investor conference today. We will begin with a quick update on our recent performance. For the first quarter of this year, PCSC's consolidated revenue grew by 4.4%. This was mainly driven by the solid performance from our core businesses, including 7-Eleven Taiwan, 7-Eleven Philippines, and Cosmed. Our consolidated gross margin also increased slightly, up 0.05 percentage points year-over-year, mainly due to economies of scale, an improved product mix, and ongoing service optimization. On the other hand, both consolidated operating profit and net income after tax saw slight declines compared to the same period last year, down by 0.9% and 1%, respectively.
That was primarily due to rising external costs and our continued investment in store expansion, digital systems, and logistics infrastructure as part of our long-term strategy for growth. Now for the 7-Eleven Taiwan segment specifically, revenue in the first quarter grew by 5.2%, mainly due to ongoing store expansion and stronger same-store sales. As of the end of May, we had 7,131 stores in Taiwan, a net increase of 54 stores since the end of last year. This year, we are focused on improving the operational quality of existing stores and optimizing overall efficiency. Revenue growth mainly came from categories like fresh food, beverages, and CITY CAFE. Subsidiaries like Cosmed continue to perform strongly, demonstrating the benefits of scale. Overall, both Taiwan 7-Eleven and our domestic and overseas subsidiaries have continued to show steady, solid growth. This wraps up our update for Quarter 1 2025.
Thank you for your presentation. I've got a few questions here, and I will go ahead and ask them all on everyone's behalf. Right now, there are over 7,000 7-Eleven stores in Taiwan, and over the past few years, there's been this ongoing talk about how the convenience store market might be reaching saturation. Looking at PCSC's performance, that doesn't really seem to be the case. Could you share your thoughts on why you think the market isn't saturated? Internally, are there any indicators or signs that you are watching for that might suggest we are reaching saturation?
Thanks for the question. First off, we would like to emphasize that convenience is really the core value of convenience stores and also one of our biggest fortes. As long as we continue to stay on top of where customers are heading, their evolving preferences, and changing lifestyles, and respond quickly by adjusting and introducing new products and services, then we will be able to meet this really diverse and fast-changing set of daily needs that we are seeing now. Looking at the situation in Taiwan, we are seeing an aging society, more small households, and more single-person households as well.
Customer demand for nearby and instant access to goods and services just keeps going up. At 7-Eleven, we are responding with diverse lifestyle store formats and flexibly adjusting our product and service mix to suit the needs of different neighborhoods and different lifestyles. That is going to help us strengthen customer reliance on our stores. Beyond just opening more stores, we have also been continuously improving operational quality and store-level efficiency, which has helped us steadily boost our per-store daily sales, PSD sales. On that foundation, we will continue with both steady expansion and store quality upgrades, which will help us capture more market share and maintain our long-term stable leadership position. As for this year, we are aiming to reach a net increase of around 200 stores in Taiwan. That concludes my response. Thank you.
All right. Thank you for the answer. The next question is, if we look at 7-Eleven Taiwan right now, what are your thoughts on online or digital sales? Are there any new attempts in the pipeline? If we include online sales together with services like mobile pickup in a broader sense of digital sales, how much do those account for in total 7-Eleven revenue?
First of all, 7-Eleven Taiwan has a major advantage in terms of our dense store network. We've got over 7,000 locations now, and from early on, we also started building out a very comprehensive logistics infrastructure. That foundation, along with our digital platforms, allows us to link online shopping with our physical stores and create an online-merge- offline model that is unique to us. It helps generate additional revenue, and when customers come to the store to pick up their orders, we often see extra purchases happening at that time.
That, in turn, helps lift our PSD sales. That's an overview of how our established infrastructure plays to our goals. Now, when we talk about online sales, we are really referring to two parts. One is e-commerce related, and the other is our proprietary digital service platform. If you combine both, they currently account for the high single digits of the total 7-Eleven Taiwan revenue. That's roughly the 7%-9% range. Let me break that down. First, on the e-commerce related services side, we have really strong logistics and system capabilities. Paired with a dense store network, we are able to meet the parcel pickup needs of all the major e-commerce platforms. At the same time, we are also actively building out our own first-party platforms. That would include examples like MyShip and iOPEN Mall.
Going forward, we will keep improving the platform experience, tapping into new business opportunities, and working more closely with cross-border e-commerce partners. We are also integrating back-end logistics resources to support stable growth in this area. On the digital services side, this goes back to our ability to generate extra sales through digital platforms. Currently, we are leveraging our OPEN POINT app to offer several kinds of functions like mobile pickup, iPre-order, i-Group Buying, and food delivery. These services break free from the traditional in-store display and shopping hour limitations, they help build the habit of ordering online and picking up in store for the customers, which really showcases the value of our online-offline integration. That also helps drive up PCSC sales performance.
If we zoom out to look at things from the group level, not just 7-Eleven Taiwan, but the broader group, this includes e-commerce platform parcel logistics from President Transnet and Wisdom. We also have online revenue from businesses like books.com.tw, as well as Cosmed's e-commerce platform and food delivery. When we combine all of that, group-level e-commerce and digital businesses now account for the low to mid-tens of total consolidated revenue, so somewhere around 13%-14%. That concludes my response. Thank you.
Okay. Thank you for the explanation. The next question is about OPEN POINT. Over the past few years, the company's been working to integrate OPEN POINT usage across the group. Do you have any concrete results you can share with us, like has this shared system actually improved the performance of subsidiaries?
Thanks for that question. Looking back around 2019 or 2018, when we first started developing the points system, we had just a few million members at the time. In the past few years, we have been aggressively integrating both internal and external group resources and expanding the platform's functions. Now we've seen membership grow to over 18 million users. Member transactions now account for over 50% of our revenue. As for the points themselves, customers can use them to redeem products, transfer to friends and family, convert to cash discounts, or even use them to pay bills. The flexibility and convenience factor really makes them almost like a kind of virtual currency, and that has helped increase both customer stickiness and usage frequency. Right now, group businesses like Cosmed and the Uni-President Department Store, and even Starbucks, have already completed membership integration.
That has helped us streamline member operations across the board. At the same time, it's driven up both revenue and PSD sales for those businesses. Starting in 2021, we also began actively expanding partnerships beyond the group, covering all kinds of lifestyle scenarios like food, clothing, housing, transport, education, and entertainment. In the past two years, we have been expanding OPEN POINT usage to overseas channels, including Japan and the Philippines. That enables cross-border points accumulation and redemption. It really extends our ecosystem and broadens usage touchpoints. This year, we also launched OPEN PRIMA, a membership subscription plan. We will continue bringing in new partners like Yahoo and Carrefour to further expand the ecosystem and increase point circulation. Looking ahead, we will keep growing the ecosystem through multiple approaches, whether it's mobile payment, points, or our member engagement.
We want to scale up the points ecosystem, drive more cross-channel consumption, and make better use of the data to boost revenue and strengthen member loyalty. In the long run, we believe that OPEN POINT will continue to be the core engine powering the group's digital transformation and the deepening of our membership ecosystem. We are confident that it will keep generating real benefits and competitive advantages for all of our businesses. Thank you.
The next question is about Cosmed. We see that Cosmed's performance over the past few years have really stood out, and maybe in a year or two, it could even surpass Watsons in terms of scale. Does the company have any specific goals for Cosmed's domestic development? Also, is there any plan for expansion overseas?
Thanks for the question. Regarding Cosmed's development, both domestic and international, right now, our top priority is still in the domestic Taiwan market. As of May 2025, we had 509 stores across Taiwan. That would be a net increase of 18 stores so far this year, and store expansion has been picking up steadily. We are also focused on improving the in-store experience and creating a more walkable, enjoyable space, basically enhancing the overall shopping environment to better meet customer needs from all perspectives. Looking at a broader market trend perspective, we are seeing growing awareness around health, rising demand for skincare and cosmetics, and of course, the continued effects of an aging society. All of that points to continued growth potential in the health and beauty retail space. To support Cosmed brand growth, we are rolling out several strategies.
First, we are diversifying our store formats and continuing our pace of expansion. Second, we are optimizing our product mix, covering categories like pharmaceuticals, drugstore items, beauty products, and daily essentials. Third, we are enhancing different registered services like offering pharmacist consultations, as well as having in-store beauty advisors to support customers. Finally, we will also be strengthening our digital channels and pushing for more offline and online integration, OMO integration, and that will help us improve the online shopping experience and membership services. Through all of this, we aim to boost customer stickiness and same-store performance and continue to build Cosmed's overall brand momentum. Thank you.
Okay. Thank you. The next question, Starbucks Taiwan reported over TWD 800 million in net profit back in 2015, and their revenue has grown a lot since then. Net profit hasn't really broken past that TWD 800 million mark. Has the company looked into why that is? Is there any chance we will see net margins above 9% again in the future?
In terms of Starbucks profitability, there are a few structural issues at play. First off, on the external side, we have been seeing impacts from climate abnormalities, general global economic and political instability, and as a result, we are seeing fluctuations in raw material prices, namely coffee beans. Domestically, we have also had rising utility and labor costs, which together have really pushed up operating expenses. This is something that the entire global coffee industry has been dealing with. On top of that, in 2018, we increased our stake in Starbucks Taiwan, and that came with some changes in our contract terms with the brand licensor. It also raised the bar for new store development.
In 2019, we implemented the IFRS 16 accounting principle, which also affected our profit numbers to some extent. Having said that, if we strip out those factors, our 2024 pre-tax net profit actually still shows growth compared to 2015. From an operational standpoint, Starbucks Taiwan has remained resilient. We have been leveraging economies of scale, our brand strength, and supply chain integration in order to respond to these cost pressures. Earlier this year, we made some pricing adjustments to reflect cost changes to stabilize our sales performance and to help improve our overall profit structure. As of May, Starbucks revenue has been growing at a mid-single-digit rate. Going forward, we will continue to focus on innovation, digital member engagement, and expanding high value-added product lines.
At the same time, we will continue to work on increasing operational efficiency and stabilizing costs so we can gradually improve profitability. Thank you.
All right. Moving on. 7-Eleven Philippines saw really strong growth over the past few years. Starting in the second half of last year, it seems like that momentum started to slow down. What is the company's view on what caused this, and when do you think growth will pick up again?
7-Eleven Philippines has always been one of the group's key growth drivers. After the pandemic, we continued expanding store count and scaling operations, and that has helped us drive steady gains in both revenue and profit. That really helped solidify our market position locally. It is true that starting from the second half of 2024, we ran into some short-term challenges.
There were a few contributing factors, including abnormal weather conditions, changes in e-cigarette sales regulations, downtime in one of the e-money issuers, which affected the e-wallet system, and of course, inflation, which softened the overall consumer spending. All of that led to slower PSD growth. Having said that, from what we see so far in the first half of this year, the impact of those issues has been gradually easing. We will continue to closely monitor the consumer market and see how each store is performing. Now, while there are short-term hurdles, 7-Eleven Philippines still has high market share in the country, and they have a strong operational foundation and the flexibility to adapt quickly. That gives us a lot of confidence in its medium to long-term growth potential.
Looking ahead, we will stick with our fast expansion strategy and continue to strengthen our product mix, especially in areas like fresh food, coffee, and daily essentials. We will also keep enhancing service offerings to boost commission-based income. Overall, we remain very confident in the Philippine market. We will be increasing our stake there, and we expect that as the external environment continues to improve, growth momentum will gradually return, and 7-Eleven Philippines will keep making a solid contribution to the group. Thank you.
The next question is about your operations in China. The Chinese economy is facing serious challenges right now. How does the company assess the outlook for 7-Eleven in Shanghai and Zhejiang? In the short term, what level of losses would be considered acceptable?
As the investor mentioned, China's overall macro environment is still pretty unstable at the moment. That's why we are approaching the market with a mindset that's both proactive and cautious. We are keeping a close eye on consumer trends, store-level performance, and market developments. Based on what we observe, we will make timely adjustments to store expansion pace and to our product mix to ensure operational stability. At the same time, we are actively promoting our franchise system.
We are looking for high-potential locations and aiming for better contract terms to improve both performance and overall efficiency. In terms of short-term losses, we are still expanding and investing in these regions, so some losses are to be expected. Those losses remain within our forecasts and are fully under control. We are continuously reviewing financial indicators and store-level economics to make sure we are on track for steady, healthy development across the board. Thank you.
Thank you. Next question. If we add up President Transnet, Wisdom Distribution Service, Retail Support International, and Uni-President Cold Chain together, the combined revenue is close to TWD 30 billion, with a net income surpassing TWD 2 billion. You could say President Chain Store Corporation is now the biggest logistics company in Taiwan. When we dig a bit deeper, external revenue for the logistics segment is only in the low tens as a percentage. The question is, given the scale, do you see more opportunity for external revenue growth in logistics?
Currently, as the group's online and offline operations continue expanding in scale, the primary mission of our logistics business is still to support internal delivery needs, especially for fresh food and daily multi-drop deliveries for 7-Eleven. These services are highly time sensitive, and our logistics team has proven its ability to provide stable and efficient support.
We are definitely still thinking long term going forward. We have already started implementing our logistics integration plan across the northern, central, and southern regions of Taiwan, and that includes new logistics parks equipped with automation, smart warehousing systems, and green logistics infrastructure aimed at meeting future distribution needs while also boosting operational flexibility. Once internal demand is well supported in the future, and if our logistics system has excess capacity, we will definitely look to expanding outward. We will actively explore opportunities to provide logistics and warehousing services to third-party clients, which will help maximize efficiency and improve overall business performance. Thank you.
The next question: When is Dream Plaza expected to open? Will it be included under the Uni-President Department Store Corp.? More broadly, what is the group's outlook on entering the department store business?
Dream Plaza will be operated by a branch of Uni-President Department Store Corp. In terms of positioning, we are taking a different approach from our existing department stores. The concept is to create a kind of urban oasis that would be a space that combines comfort and lifestyle offerings where shopping and leisure can coexist. It is going to be a new kind of commercial venue that emphasizes experience. Right now, the plan is to bring in Taiwan's very first Starbucks flagship store as a part of this location, and the opening is currently scheduled for the second half of 2025. As for the group overall, we currently operate Uni-President Department Store and Dream Mall in Kaohsiung, among others, and we see that they are growing quite steadily.
With consumer behavior shifting and digitalization picking up pace, we have observed that the market is gradually moving towards an omni-channel model. As a group, we are focusing on integrating physical and digital channels and using diverse touchpoints to engage with customers. The goal is to elevate the overall experience, increase stickiness, and strengthen our competitive edge in both retail and lifestyle consumption. Thank you.
Thank you. Recently, FamilyMart listed its food service subsidiary. Mercuries & Associates Holding has also been spinning off its brands for separate listings, and Tesco International has similar plans in motion. Does President Chain Store Corporation ever consider listing any of its own subsidiaries, maybe to tap into capital markets for growth instead of relying solely on the parent company for funding?
At President Chain Store, we remain focused on our core business operations and continue to strengthen our overall competitiveness through a diversified business portfolio. As for our food service or other subsidiaries, at this stage, we don't have any concrete plans to spin them off or pursue separate listings.
Thank you for the response. Due to time constraints, that concludes today's investor conference. We would like to thank all the management who joined us, and of course, thank you to all the investors and participants as well. Thanks again, everyone. Thank you