Robinsons Retail Holdings, Inc. ($RRHI)

Good afternoon. Thank you for joining us to review Robinsons Retail's unaudited results for the first quarter of 2026. I'm Angelo Torres, the company's Corporate Planning and Investor Relations Officer. So the speakers for this call are the following: Mr. Stanley Co, our President and CEO; Mr. Christine Tueres, our Managing Director for the Big Formats of the Food segment; Ms. Mariel Crisostomo, Group General Manager of the Drugstore segment; Ms. Carmina Quizon, Group General Manager of Robinsons Department Stores; Toys R Us, Sole Academy, and Spatio; Mr. Ted Sogono, Group General Manager of the DIY segment; and Pets; Ms. Christine Sanchez, Deputy General Manager of Toys R Us; Ms. Mylene Kasiban, our CFO; and our Chairman, Ms. Robina Gokongwei-Pe; and Adviser for Corporate Planning Gina Dipaling are also here with us in the call. [indiscernible] is the agenda for this afternoon's meeting. We will provide an overview of our financial performance and share key updates across the organization. [Operator Instructions] With that, I will turn you over to Mr. Stanley Co, our CEO and -- President and CEO, to discuss our financial highlights.

Good afternoon, everyone. For our first quarter financial highlights, net sales increased by 10.3% to PHP 52.8 billion, driven by a 4.1% same-store sales growth, new store contributions and the full quarter consolidation of Premiumbikes. Same-store sales growth was driven by higher basket sizes in the Food and our Drugstore segments. This resulted in EBIT increasing by 3.7% to PHP 2 billion or core net earnings growing by 6.2% to PHP 1.3 billion. Net income to [indiscernible] declined to PHP 489 million, driven by higher interest expenses and losses from associates. This section shows a detailed breakdown of our P&L for the first quarter. I'd like to highlight that net sales and core earnings were up by 10.3% and 6.2%, respectively. Effective this year, we have reclassified [indiscernible] from the Food segment to a new segment [indiscernible] B2B to better reflect the underlying performance of our Food segment's [ 4 ] banners. All operating segments achieved positive net sales growth in the first quarter with double-digit growth in specialty stores, B2B and drugstores. The notable increase in specialty stores was due to the consolidation of Premiumbikes. Food and drugstores continue to be our largest segments, accounting for 73% of net sales, 90% of EBITDA in the first quarter. The other segments, mainly the department stores, DIY specialty and B2B contributed the remaining 27% of net sales and [indiscernible] we opened 19 stores in the first quarter, mostly under the Food and Drugstore banners, bringing our total store count 2,782. Our store count is now comprised of 805 Food segment stores, 1,187 drugstores, 51 department stores, 234 DIY stores and 505 specialty stores. And in addition, we have 2,167 franchise stores of GP. Passing over to Christine for the Food segment.

Good afternoon. For like-for-like comparison, prior year Food segment figures were restated to exclude the impact of [indiscernible] Food segment net sales rose 7.4% to PHP 28.3 billion, underpinned by 3.9% same-store sales growth, which was supported by double-digit increase in basket size. EBITDA grew faster than revenues, up 11.8% to PHP 2.7 billion, reflecting higher gross profit from vendor support and increased penetration of important products of [indiscernible] handing over to Mariel for Drugstore segment.

The Drugstore segment started the year with net sales growing double digits in the first quarter, reaching PHP 10.4 billion. EBIT [indiscernible] rose to 8.5%, driven by sustained demand for prescription and OTC drugs and [indiscernible] EBITDA climbed by 5.1% to PHP 847 million as growth in the top line push on the impact of higher operating expenses from store expansion. [indiscernible].

Department store, SSSG increased to 1.5% in the first quarter as the resilient performance [indiscernible] was offset by the intense competition from new players in other regions. Meanwhile, incremental sales from the new store in the [indiscernible] which opened in April last year [indiscernible] total net sales to PHP 3.5 billion, up 4.1% year-on-year. EBITDA declined to PHP 31 million in the first quarter [indiscernible] DIY recorded 4.6% net sales growth in the first quarter, reaching PHP 2.8 billion, driven by the introduction of new items and successful marketing events. SSSG came in at 3%, a turnaround versus minus 1.9% last year. EBITDA came in at PHP 245 million, higher by 2% as the recovery [indiscernible] was offset by lower distribution center income and [indiscernible].

Specialty segment net sales dropped 40.5% to PHP 4.6 billion due to the consolidation of Premiumbikes [indiscernible] and businesses. However, SSSG declined due to weakness in mass merchandise. Excluding Premiumbikes, Specialty segment net sales rose by 1.3%. EBITDA declined to PHP 123 million, better category is in Appliances and -- the contribution from Premiumbikes were weighed down by [indiscernible] activities in Mass Merchandise. Handing over to [indiscernible].

Thank you. Moving on to the working capital. RRHI's cash conversion cycle declined to 24.6 days in the first quarter, driven by lower inventory days of 80.1 reflecting SKU rationalization. In terms of balance sheet, net debt increased to PHP 29.3 billion as of March 31 following the acquisition loan related to [indiscernible] share buyback in May 2025. Leverage remains manageable with net debt to equity at 0.41x. ROE was largely unchanged [indiscernible] in terms of CapEx, organic CapEx amounted to PHP 1.2 billion, up by 27.4%, reflecting store expansion and renovation activities. Food accounted for 66% followed by drugstore at 12%. I'll turn over to Stanley.

Now allow me to update you on some of our minority investments namely O!Save, GoTyme, GrowSari and BPI. O!Save's net sales jumped to 2.2x to PHP 195 million in the first quarter of 2026, supported by double-digit same-store sales growth and rapid store expansion. O!Save ended the first quarter with 808 stores. GoTyme's customer base from 6.1 million to 9.1 million in first quarter. Rise in customer count helped fuel the growth in total transaction value and net operating income [indiscernible]. GrowSari's total platform value or the value of its business line increased by 21% to $266 million due to the continued growth in coverage [indiscernible] in the first quarter, supported by double-digit loan growth and higher-fee income. Net income rose by a modest pace of 1.7% due to higher OpEx and provisioning costs. On Corporate development, March 27, JE Holdings, RRHI's largest shareholder expressed its intention to conduct a tender offer to reach 95% ownership in RRHI for [indiscernible] proponents with a view to [indiscernible] company. RRHI's Board of Directors subsequently approved this voluntary listing of its shares to the stock exchange on the same day. JE Holdings will withdraw the tender offer if 95% ownership [indiscernible] and there will be no second round of the tender offer. The proposed voluntary delisting will be voted on at May 27 Annual Shareholders -- Stockholders Meeting, requiring approval from at least 2/3 of outstanding shares with no more than 10% assembly. The transaction is also subject to regulatory approvals from the SEC [indiscernible]. Yesterday, the RRHI Board approved a cash dividend of PHP 2 per share, which is independent on the tender offer price of PHP 28.3 [indiscernible] primarily from the Food and Drugstore segment, same-store sales growth of 2% to 4% and organic CapEx of around [indiscernible] and our gross margin target is 24.6% to 24.8% for the full year. We know that there could be a downside risk to this guidance if the conflict in the Middle East is prolonged. And to mitigate potential impacts, we have implemented various security measures, including SKU rationalization, protection rights, tighter manpower controls, rental negotiations and more targeted marketing activities among others. This end our presentation for the first quarter results. We will now open the floor for Q&A.

The first question is from [ Pareza Goridi ] from the Q&A box [ starting ] questions. Supermarkets at Uncle John's can you provide sales, [indiscernible] EBITDA and SSSG in the first quarter? How much of supermarkets SSSG was driven by traffic and basket size? And for Uncle John, what was SSSG and how the [indiscernible].

Okay, so Food segment, Supermarkets, excluding Uncle John's, in terms of sales, up 7.4% to PHP 26.6 billion, gross profit margin of 24.6%, SSSG of 3.9%, EBITDA margin of 9.6%. This is supermarket ex Uncle John's. And for Uncle John's only, sales of about PHP 1.7 billion in first quarter, this is up 7%, SSSG of 4.4%, EBITDA -- sorry, GPM of 39.6% and EBITDA margin of 8.1%. In terms of basket size and transaction count for pool, double-digit basket size growth in the first quarter. Traffic was down around 6%. Okay. Follow-up questions from [ Karissa, ] what drove the [indiscernible] turnaround in DIY stores, SSSG?

It's basically introduction of new items and some marketing events.

Thank you. Next question, how do you see the Middle East conflict affecting or impacting the company sales and margins? In terms of top line, we did see some slowdown in April, but we also wanted to point out that April last year was actually a strong month because of electron-related spending, but there could be some impact on the consumer already, although our staples business are still doing okay. It's the discretionary formats that we're seeing some challenges. In terms of costs, there are some vendors who will be increasing prices, but our strategy here is to pass on costs eventually. So we're actively looking at how things will play out. But as mentioned earlier, there are austerity measures also in place for us to protect profitability. How did sales trend in March and so far in April, which formats are doing well and which are more challenged? Yes. For March, it was a pretty good month as well. Actually, Jan, Feb and March were all resilient. We did see [indiscernible] spending in the first quarter. But in April, we did see some slowdown, but essentials are still holding up, doing well. It's the discretionary format that could be affected if things play out on a prolonged basis. I think Uncle John's SSSG for April?

[indiscernible].

Yes, it's around [indiscernible] SSSG. Next question is from [ Jeanette of JPMorgan. ] Thank you for the briefing. How are you currently impacted by the high fuel cost? How big is fuel as percent of CapEx? How are you managing this cost pressure? Fuel cost, I think logistics would be around 1%, transportation would be around 1% of sales. We're doing a lot of cost operative measures across the business to manage this impact. But this is a reality we have to face. But again, we have a lot of mitigants that we're implementing across the business to manage this impact over the near term. What drove the basket size growth of Food segment in the [indiscernible].

[indiscernible] Items are actually growing double digit across all categories, we actually have seen as well growth for Q1. We have seen a slight [indiscernible].

Thank you. Sorry, we missed this comment. Did you say Uncle John's SSSG for April was 4%? Yes, that's correct. The next question is from [ Matthew Ross. ] Thank you for the briefing. Did you see an increase in private label purchases on the food side? And are you still seeing suppliers [indiscernible] Yes, and yes. Next question is from [indiscernible] Financial. Could you share the 1Q interest expense amounts related to financing of BPI and dairy farm related loans, respectively?

It's around PHP 700 million in total.

Thank you. At this point, there are no questions here [Operator Instructions] Okay, can you please provide some color around the [ strength ] of Uncle John's SSSG in April because we thought this was the discretionary spend, which we speak. Uncle John's is actually not categorized under discretionary, it's staples and it's under the Food segment.

Categories growing currently are non-alcohol beverage, and the beverage -- the alcoholic beverage categories.

Okay. So at this point, there are no more questions coming in. Okay. So we have a follow-up from [indiscernible] is the recovery of DIY likely going to be sustained for the rest of the year?

We think so.

Thank you. What is the planned store opening for Uncle John's this year?

Probably 50 stores.

50 stores is the target. Okay. When will the copy of the parents opinion for the tender offer be disseminated to shareholders? So that's actually part of the definitive information statement that we uploaded on PSE Edge about 2 weeks ago, April 15 -- a little over 2 weeks ago. So you can download that on PSE Edge. Number two, while not standard practice in the Philippines, does RRHI Board have any plan of endorsing the tender offer? Answer is no. What we got approval for was for the voluntary delisting of the shares. So tender offer is being conducted by JE Holdings, which is a different entity. Next, thank you for the presentation. Have you seen a spike in sales for Premiumbikes?

No, not necessarily. I guess it's also driven by certain constraints on supply, but we were informed by the major manufacturers that supply will normalize within April and May this year.

Thank you, Stanley. Second question, I might have missed it, but where was [indiscernible] reclassified? So it was previously under the Food Group. But for starting this year, we have reclassified it to a new segment called B2B. This is essentially to better reflect the operating performance of our Food business. And then next question is, do you hedge for FX?

Yes. We do not have forwards with the banks, but we have a natural hedge because we have a business center where we are using dollars and the rest, any difference, we pass it on to the customers and pricing.

Thank you. We have a follow-up question from Jeanette of JPMorgan on the planned delisting of the company. Could you give us an update on the approvals from regulators and any estimated time line can you share? Jeanette, the first milestone that we're looking at really is the May 12 Annual Shareholders' Meeting. So that's in a little less than 2 months -- 2 weeks' time from today. So this is when shareholders will vote for the voluntary delisting. And depending on the outcome, that's when the tender offer would proceed. So it's May 12, the first milestone. That's what we can share now as of today. Okay, at this point, there are no more questions coming in. We can all end the call.

Okay. Thank you, everyone.

Thank you.

Thank you.