Robinsons Retail Holdings, Inc. (RRHI) Q4 FY2025 Earnings Call Transcript & Summary

Good afternoon. Thank you for joining us to review Robinsons Retail's unaudited results for full year 2025. I am Angela Torres, the company's Corporate Planning and Investor Relations Officer. The speakers for this call are Stanley Co, our President and CEO; Ms. Christine Tueres, out managing director of the Big Formats of the Food segment. Ms. Mariel Crisostomo, our Group GM for the drugstore segment; Ms. Carmina Quizon, our Group General Manager for Robinson's Department Store, Toys R Us, Sole Academy, and Spatio. Mr. Ted Sogono our Group General Manager for DIY, and Pats; Ms. Celina Chua, our General Manager for Daiso and Super50 and Ms. Mylene Kasiban, our CFO; our Chairman, Ms. Robina Gokongwei-Pe an adviser for corporate [indiscernible] executives are also in the call today. [indiscernible] is the agenda for this afternoon's call. We will provide an overview of our financial performance and share key updates across the organization. [Operator Instructions]. So with that, I turn over to our CEO, Mr. Stanley to discuss our financial highlights.

Good afternoon, everyone. Here are the highlights of RRHI's fourth quarter results. Net sales increased by 7% to PHP 61.1 billion. Blended same-store sales grew [indiscernible]. Gross profit and EBIT grew double digit [indiscernible] billion and PHP 3.8 billion respectively. Net earnings rose to PHP 2.9 billion up by 9.9%. Net income to parent increased by 5.3% to PHP 2.6 billion. Earnings per share grew 38.4% to PHP 2.39 per share due to the lower number of outstanding shares from the DFI retail buyback last May [indiscernible]. Here are the highlights of RRHI's full year 2025 results. Net sales up by 5.7% to PHP 210.4 billion blended same-store sales growth registered at 3.3%. Gross profit rose to PHP 51.7 billion and PHP 10.5 billion respectively. [indiscernible] earnings grew by 6% to PHP 6.7 billion and net income to parent decreased by 44.3% to PHP 5.7 billion due to the absence of the onetime gain from the BPI-RBank merger in 2025. Now a deeper look at our P&L. Fourth quarter and full year net sales were driven by strong same-store sales growth, new stores and onetime consolidation of Premiumbikes starting December 2025 under the specialty segment. EBIT increased double digits to PHP 3.8 billion fourth quarter and by 7.4% to PHP 10.5 billion for fourth year [indiscernible]. Net income to parent grew 5.3% in the fourth quarter to PHP 2.6 billion by full year decline to PHP 5.7 billion [indiscernible]. And fourth quarter earnings rose to 9.9% to PHP 2.5 billion in fourth quarter and 6% and PHP 6.7 billion [indiscernible] positive net sales growth in the fourth quarter and full year 2025 [indiscernible] large segment accounting for 79% of net sales and 82% of EBITDA in 2025. The discretionary formats, department stores, DIY and specialty stores contributed the remaining 21% of net sales and 18% EBITDA. In 2025, we opened 94 new stores, mostly under the Food and Drugstore banners and added 216 acquired stores from Premiumbikes bringing our total count 2,763. Our store count is comprised of 799 food segment stores, 1,173 Drugstores, 51 Department Stores, 234 DIY stores and 506 Specialty Stores and in addition we have 2,154 franchised stores of TGP. Passing over to Tin for the Food segment.

Good afternoon. Food segment net sales grew 6.2% to PHP 35.6 billion in fourth quarter, supported by 2.9% same-store sales growth and contribution of [indiscernible]. Full year sales increased to 4.6% to PHP [indiscernible] billion. EBITDA rose 7.6% in fourth quarter to PHP 3.5 billion bringing full year EBITDA to PHP 11.2 billion up 6% outpacing revenue growth. This was driven by stronger vendor support and higher penetration private label and imported products. Now, I will turn over to Mariel for Drug Stores.

Net sales for Drug stores grew double digits in Q4, reaching PHP 10.7 billion, while full year sales increased by 10.5% to PHP 39.6 billion. Q4 SSSG reached [ 8.9% ] on strong demand for cough and cold remedies bringing full year SSSG to 6.4%. Strong top line growth, higher penetration of house brands and price adjustments help lift EBITDA by 22.3% to PHP 1.1 billion in Q4 and 15% to PHP 3.5 billion for the full year [indiscernible]. Department store SSSG was minus [indiscernible] in the fourth quarter impacted by intense competition [indiscernible] stores affected by [indiscernible] PHP 5.9 billion supported by the opening of the new [indiscernible] store. For the full year SSSG was minus 1.5% while net sales grew by 1.5% to 16.9 billion. Gross profit grew by 1.1% to PHP 1.8 billion in Q4 and 2.4% to PHP 5.3 billion, outpacing top line growth [indiscernible] due to higher vendor support. However, EBITDA declined to PHP 487 million in the fourth quarter and PHP 1 billion for the full year due to negative SSSG.

DIY recorded 5% sales growth in the fourth quarter, reaching PHP 3.4 billion, driven by the double growth in [indiscernible] strong demand for typhoon [indiscernible] full year, sales grew 1.8% to PHP 12 billion. Gross margin expanded by 19.1% to PHP 1.3 billion in the fourth quarter, supported by the introduction of new higher-margin items and closed the year at PHP 4 billion, up by 4.4%. EBITDA doubled to PHP 534 million in the fourth quarter. Full year EBITDA rose 9.7% to PHP 1.5 billion. Turning over to Mr. [indiscernible] .

Specialty segment sales grew 20.1% to PHP 5.5 billion in the fourth quarter with the 1 month consolidation of Premiumbikes, bringing full year sales to PHP 16.1 billion, up by 9.9%. Excluding Premiumbikes, sales rose 6.4% with all formats posting growth. EBITDA expanded 13.8% in the fourth quarter, mainly driven by the higher dealer incentives from Premiumbikes. However, full year EBITDA declined to PHP 812 million, primarily due to clearance activities in appliances and mass merchandise.

Moving on to the working capital, RRHI's cash conversion cycle rose to 18 days, driven by higher inventory days as 80 days and stocks of retail products increased to meet strong demand. On balance sheet, net debt rose to PHP 26.6 billion, largely driven due to the acquisition loan used for the DFI share buyback in May 2025. Despite this, the balance sheet remains sound with net debt to equity at 0.35x. ROA and ROE normalized to 3.3% and 7.1%, respectively, following the absence of a one-off gain from the [indiscernible] merger in 2024. Organic CapEx amounted to PHP 6 billion, up by 17%. Food accounted for 69%, followed by drug stores at 10%. I'll pass you on now to Stanley.

Now allow me to update you on some of our minority investments, namely, O!Save, GoTyme, and GrowSari and BPI. O!Save's net sales jumped 2.2x to PHP 524 million in 2025, supported by its rapid store expansion. O!Save ended 2025 with 797 stores from over 400 in 2024. GoTyme's customer base increased by 3 million to 8.3 million in 2025. The rise in customer count helped fuel the strong growth in the total transaction value. GrowSari's total platform value or the value of all its business lines increased by 13% to PHP 887 million due to the continuous growth in coverage. And meanwhile, BPI's net income improved by 7% to PHP 66.6 billion, supported by sustained loan growth and dividends per share grew by 10% to PHP 4.36 per share. Let me update you on some key corporate developments across the business. Last October 2025, the Institute of Corporate Directors awarded Robinsons Retail 2 Golden Arrow Awards during the ASEAN Corporate Governance Scorecard Golden Arrow Awards 2025, up from 1 Golden Arrow the previous year. This award [indiscernible] the company's ongoing efforts to strengthen its corporate governance practices and ensuring that our directions are guided by fairness, stewardship and long-term value for our stakeholders. Robinsons Retail was named to Time Magazine and Statista Best Companies in Asia Pacific 2026, a ranking of 500 companies based on employee satisfaction sustainability transparency and financial performance. RRHI is [indiscernible] companies included in the list. Effective January 1, 2026, we announced several key management changes in RRHI. Mariel Crisostomo has been appointed as the Group General Manager of the Drugstore business. Mark Tansiongkun has stepped down from his role of VP for Procurement and Administration and will now lead Premiumbikes following the retirement of Mr. Jo Pojol, the previous GM of Premiumbikes. Jo will continue to serve as an adviser until June 2026 [indiscernible] Ms. Angela Endrino, who is now the new VP for Procurement and Administration. Lastly, [indiscernible] has succeeded Mr. [indiscernible], who retired from his post as VP for [indiscernible] Human Resources. Gabby will continue to serve as adviser for HR until June 2026. For our full year 2026 guidance, we are targeting net store addition of 130 to 170, still mostly from our Food and Drugstore segments. Store expansion will be supported by organic CapEx of around PHP 5.7 billion. And we are also looking at a 2% to 4% same-store sales growth for the year and around 15 to 20 [indiscernible] expansion in gross margins. This ends our presentation for the full year 2025 results. We will now open the floor for Q&A.

Now let me open the floor for Q&A. We have a question on the question-and-answer box. So this is from Karisa Magpayo. She's asking for the supermarket business. What was the food retail sales for fourth quarter and full year 2025, excluding Uncle John's. The food retail SSSG in the fourth quarter and full year of 2025, excluding Uncle John's and how much was it driven by transaction count and basket size? Maybe...

Thank you for the questions. So Food segment, excluding Uncle John's, I'll start with [indiscernible] sales did about PHP 34 billion, that's up about 6% SSSG 3.2%, [ GP ] margin of about 23.2% and EBITDA margin of 9.7%. So that's full -- sorry, [indiscernible] 2025 is [indiscernible] for full year net sales of about PHP 119 million, up by 4.8%, SSSG of 3.6% [ GP ] margin of 22%, sorry 22.4% and EBITDA margin of 8.9%.

We also have another question from Bernadine Bautista of JPMorgan. He's asking about Premiumbikes, what is the exact [indiscernible] sales, EBITDA and net [indiscernible] Premiumbikes for full year 2026.

Sales of about PHP 500 million. We can only provide EBITDA, that's about PHP 60 million, but the company is positive at the net income level. For 2026, we're still expecting the company to provide -- to generate very good growth given the demand for motorcycles...

Bernadine has a follow-up question. He's asking what is the breakdown of the target [indiscernible] stores opening the addition of...

Okay. This is the breakdown is about [indiscernible] for the food business and then that would be supermarkets. Drugstores 70 to 80, DIY around 5, Specialty [indiscernible] that includes Premiumbikes of around 10.

[Operator Instructions] [indiscernible] has a question. He's asking what's the percent contribution of private label to total sales for supermarket and drugstores in terms of full year 2024 and 2025.

For supermarkets it's about 8% and for drugstores -- blended for drugstores is 10% so that includes TGP -- excluding TGP for about 4%, for Rose Pharmacy and Southstar Drug.

We also have another question from [ Dale ]. What's the SSSG [indiscernible] fourth quarter? And how did it compare on previous quarters? Are we seeing any recovery in terms of SSSG? And if so, where is the recovery coming from?

Thanks, [ Dale ]. 4Q SSSG [indiscernible] was actually at 3.1%. Sequentially, this is improving from the third quarter and second quarter with [indiscernible] demand basket size is also improving for the business.

[ Dale ] has a follow-up question. He's asking what's the target for Uncle John's for 2026?

We're looking to add maybe on a net basis, maybe 20 to 30...

We have a question from [ Teresa ]. She's asking on supermarket. For the fourth quarter SSSG, how much was driven by transaction [indiscernible] basket size?

Transaction by basket size for fourth quarter was about 6% [indiscernible] .

[ Bernadine ] has a similar question for the food segment and [indiscernible]. So she is also asking how are SSSG [indiscernible] different for the different formats and she is asking about [indiscernible] different SSSG sales for different formats.

For food basket size is 6% in fourth quarter and 5% for the full year. And then within the food formats, Robinsons Supermarket Marketplace and [indiscernible]. We also have Jonas on the line. Maybe, Jonas, you can comment on basket size and same-store sales for wholesale.

Thanks for the question [ Bernadine ]. Our SSSG in the fourth quarter was around 16%, 15.9% and our basket size grew at around 11% in the same period.

Next question is from Denise Joaquin. She was asking what's the interest expense for the borrowings related to the BPI share acquisition and the buyback of DFI shares for the fourth quarter and full year. And she's also asking the balances of the stores.

For full year, it's around PHP 1.4 billion, which is spreading over [indiscernible] quarters. And the loan balance is around PHP 26 billion.

Interest expense for BPI for full year is...

Full year is PHP 1.4 billion both combined for BPI and the share buyback. So then balance around PHP 25.6 billion for...

The next question we have is from [ John ]. He's asking what's the geographic breakdown for the food segment and store openings this year...

Yes. In the last few quarters, we've been opening more stores outside Metro Manila. So that's about 75% to 80% or even higher for some partners outside Metro Manila. I think this will also be the [indiscernible].

So next question we have is from [indiscernible] asking for 2025 results outperformed expectations despite the narrative of weaker-than-expected demand to GDP figures. So what is the driver [indiscernible] during the quarter?

It's really increase in basket sizes with inflation steady or stable, job market pretty healthy and remittances continuing to grow. This has been supportive of spending from middle class and [indiscernible] middle income to upper income households. So that's that. And then on the margin side, doing things that we can control, adding private label, adding -- or premiumizing the portfolio. So that's helping the business. But we are cognizant of the external risks...

We have another question from [ Wasim ], what's the driver for the strong growth in drug stores? And should we expect the momentum to be sustained this year?

It's price adjustments and higher penetration of [indiscernible].

We have another question from [indiscernible]. She's asking, we saw higher gross profit margin, but EBITDA was flattish for the Food segment in the fourth quarter. What's the cost items driving this?

It's because we're adding stores for the food business. So that's putting some pressure on the OpEx side. But nonetheless, we still expect EBITDA margins to continue. So not the entire GPM expansion flows through EBITDA margin expansion, but we're still seeing EBITDA margins high.

We have a follow-up from [indiscernible], she is asking what's the driving the strong SSSG for Drugstore and should we expect a high single-digit SSSG to be sustained for this?

As mentioned earlier, driven the growth for drugstore is the price adjustment for 2025 and also the higher penetration of [indiscernible] we also anticipate that it will be still good for 2026.

Thanks, Mylene. [indiscernible] asking is can management comment on the time line of its treasury shares retirement?

Thank you, [ Ray ]. So just the background, we got shareholder approval to retire a portion of our treasury shares last September. We're still in the process of getting [ SBC ] approval for this one. So it's still ongoing. So the process is for the [ SBC ] to approve the amendment in our [indiscernible] of incorporation because we have to reflect lower authorized capital there. So that's still in the regulators -- still with the regulators up for approval.

[indiscernible] is double checking what's the basket size growth in the fourth quarter for the Food segment at SSSG?

It's around 7.5%.

[indiscernible] have a follow-up on department stores. Gross profit margins appears to be flattish, but EBITDA margins were down in the fourth quarter. What are the drivers -- cost drivers of this? And any indications of how SSSG is faring so far...

[indiscernible]. For SSSG, we're still trading below versus last year.

[indiscernible] is asking how is SSSG so far this year? So I think this should be a blended basis. And what will drive the expansion in gross profit margin for...

Yes, we're actually doing pretty good in Jan and Feb. We're within that guidance that we provided. In terms of margin expansion, still the same story for us. We're benefiting from scale. And then of course, we're adding -- we're also premiumizing.

Has a similar question, but this pertains to the Food segment. How is it performing so far in...

So just to repeat, Jan and Feb were within the 2% to 4% guidance in terms of SSSG momentum so far is good.

Gear to DIY. [indiscernible] is asking, should we expect positive SSSG for the segment in full year 2026? And what are the drivers of the improvements in GP and EBITDA margin fourth quarter? Do you see further expansion for 2026? And if so, what will be the key driver?

For SSSG for DIY segment, we think positive SSSG will be the same for the full year. In terms of drop in GP and EBITDA, it's because we've added a number of higher-margin new items. So we've improved the mix, plus there's less clearances sales across...

Ther is a question from John on SSSG on the January and February, he is asking if this are similar to the fourth quarter number of 3.1% or even better?

[indiscernible]

[indiscernible] is asking any color we can share for our sales plan this year in terms of strategies for store openings?

Yes, [ Jonas ]. Do you want to take this one.

Sure, happy to. I mean this year is going to be a continued year of further expansion as well. We are planning to open between 300 and 500 stores across [indiscernible]. So, we continue to roll out at the same time, we also continue to consolidate this year across all aspects...

Next question we have is from [indiscernible]. The question reads, could you say how much dividends you receive -- BPI for the full year?

It's about PHP 1.4 billion store positive gain on BPI.

Is asking what is the reason for the margin contraction in specialty segment for the fourth quarter...

It's combination of some clearance sales and mass merchandise and appliances plus the 1 month contribution of Premiumbikes, it's actually a bit lower margin compared to the rest. But nonetheless, it's growing very fast in terms of top line.

We have a question from [ Matthew ]. The question reads, does RRHI have a goal for private label penetration for both the food and drugstore sites.

For food, we planned to -- intend to continue increasing the mix from private labels. So right now, we're about 8. We intend to bring this further up consistently every year. Same goes for the drugstore business.

[ John Lam ] has a question is asking for the department store segment's average ticket size for the fourth quarter and how does it compare in the fourth quarter of 2024?

It's about 1,100 and it's about 1.3% higher.

[ Paolo Garcia's ] question reads what's the asset management's appetite for dividend this year? Are there any plans to increase your payout?

[ Paolo ], the policy is 40% [indiscernible] for previous year and net income...

Next question is from [indiscernible], Given the broader portfolio and capital allocation review at the [ JG Summit level ], are there any plans to do the same for RRHI? May we know what is the management view on capital allocation, dividends and improving return on equity?

We're doing that regardless if the group is doing that or not. We're constantly watching over our portfolio, adding banners or brands that we think that makes sense to us. We're also continuing to grow the existing businesses. In terms of capital allocation, maybe around 30% to 35% of EBITDA -- for CapEx, 10 to 15 each for dividends, tax payments and the balance for principal repayments, working cap and [ M&As ].

We have another question from [ Paolo Garcia ]. He's asking what's the private label penetration for the Food segment in 2024?

It's about 7.2%, [ Paolo ].

Has a question for the DIY segment. He's asking how we see the bottom for this segment.

Yes, the view is we've seen the bottom for DIY and I think that it's going to be more positive from here on.

Also has a question for the specialty segment. He's asking if the company is looking to add more brands in the portfolio? And any guidance that we could share in terms of gross profit margin with Premiumbikes embedded in specialty segment?

For now, we're -- of course, we -- there's an opportunity we look at it. But for now, there's none. We're working on continuing to grow the business for Premiumbikes. In terms of GPM, as you know, the 2-wheelers gross margin would be lower than the rest of specialty. But what we're happy with this one is underlying demand is pretty good and should be able to continue to post good growth for our group.

Next question is from [ Paolo Garcia ]. How many stores that will save [indiscernible] have in Visayas? And are there new store openings for both O!Save and UJ going to be focused [indiscernible].

For UJ, [indiscernible] is going to be a big focus for 2026 expansion. The target is about 10 stores.

10 stores UJ, Visayas. [indiscernible].

We have around 30 stores there at this stage. And while we will grow there this year as well, just given the number of stores that we opened in the year, still the vast majority of it will be open...

At this point, there are no more questions coming in, and we can now close this earnings call.

If there are no further questions, we will end the call. Thank you, everyone, for your time. We look forward to seeing you in the next earnings call. Thank you.

Thanks.