LISTED information technology (IT) retailer Upson International Corp. saw a 13.7% drop in its 2023 net income to P464.20 million from P537.86 million the prior year due to pre-opening costs and lower gross margin.
“Net income declined 13.7% to P464.2 million as a result of lower gross margin and pre-opening costs, helped by other income mainly through promotional support from suppliers, such as volume-based rebates and sell-out incentive programs as well as inventory price protection to drive demand and replacement cycles,” Upson International said in a stock exchange disclosure on Monday.
Despite the lower net income, the company’s revenues rose by 5.8% to P10.01 billion in 2023 from P9.46 billion in 2022, led by revenue growth from new stores, which have operated for less than one year.
In terms of product category, Upson said computers were its primary sales growth driver led by midrange laptops, followed by printing and communication products. The sales growth partly offset the lower sales of storage and components.
The company said that the Visayas market had the fastest sales growth followed by Northern Mindanao.
“2023 was a year of investment and transition, evolving from being privately held to becoming a public company,” Upson International Chief Executive Officer Arlene Louisa T. Sy said.
“For the first time in our history, revenues surpassed P10 billion as we increasingly reap the benefits from our expanding footprint. This strong foundation is what we will build on this year. Our focus is on serving our customers better to unlock the full potential of the new stores and deliver sustainable and profitable growth,” she added.
Upson International saw an 8.9% increase in cost of inventories to P7.93 billion, resulting in a lower gross margin at 20.8% from 23% in 2022. The decline in gross margin was due to revenue mix and lower product margin rates from increased promotions, including product bundling and price discounts.
Operating expenses climbed by 9.5% to P1.68 billion from P1.53 billion in support of the company’s strategic growth initiatives, specifically relating to store and warehouse network expansion.
“These higher expenses were mostly lease payments, contracted and other services, depreciation and amortization, and personnel-related costs. As a percentage of sales, operating expenses were slightly up from 16.2% to 16.7% in 2023,” Upson International said.
Upson International opened 25 new stores in 2023, ending the year with an overall store count of 232.
Its store brands include Octagon, Micro Valley, Gadget King, Octagon Mobile, and concept stores.
The company carries 115 tech brands in its portfolio. The company previously introduced 12 tech brands including AUKEY, ESR, Garmin, MOMAX, Verbatim, MONOCOZZI, and Cricut to expand its product offerings. It also began to set up Apple product corners in select stores.
On Monday, Upson International shares were unchanged at P1.02 apiece. — Revin Mikhael D. Ochave
