Robinsons Retail Holdings, Inc.

It's already 4 o'clock. Good afternoon, everybody. Thank you for joining us. We have 500 results for the full year of 2024. I am Gina Dipali, the Company's Investor Relations Officer. The speakers for today are standing for our newly appointed President and CEO, Mayreen Kasiman, our CFO. Christine Tuarez, the managing director of the big formats for the food segment. Joanne Arceo, the group general manager of the drugstore segment. Nina Pruest-Luisa, the general manager of Robinson's department store and duty. Ted Sogono, the group general manager of DIY and Pets. And Jody Sanfos, the group general manager of our appliances segment. Our chairman, Ms. Robina Gokumolpe, is also in this call. That is the agenda for this afternoon's call. We will provide an overview of our financial performance and outlooks on our minority investments. As a reminder for the Q&A session, please use the Q&A function on your Zoom.org to invite in your questions. Please limit initially to a maximum of three questions, including follow-ups. You may queue back into the Q&A box for additional questions. If you would like to ask your questions live, you may use the raise hand function. With that, I will now turn you over to Stanley, our President of CAO.

Thank you, Gina. Here are the highlights for results for the fourth quarter of 2024. Consolidated net sales increased by 5.3% to 56.8 billion. Blended same-store sales growth came in at 3.4%. Cross-profit accelerated by 8.7%, 38.8 billion. EBIT grew faster by 20.9% to 3.4 billion. Cornette earnings registered at 2.3 billion, higher by 21.5% versus last year. And net income to parent of 2.5 billion, 62.4% higher. For the fall year 2020 for highlights, consolidated net sales of 199.2 billion, higher by 3.7%. Blended sales for sales growth of 1.5%. Cross-profit rose by 5.5% to 48.1 billion. EBIT came in at 9.8 billion, higher by 9.1%. For net earnings, surged by 12.3% to 6.3 billion. And net income to parent amounted to 10.3 billion, 2.5x higher. This is mainly due to the one-time gain from the DPI from the stock merger. Despite minor disturbances in the fourth quarter, including six typhoons from late October to mid-November, same-store sales growth accelerated to 3.4%, supported by easing inflation, translated to strong holiday season sales. Full-year SSSG ended at 1.5%, And the healthy fourth quarter performance was driven by the food, drugstore, and department store segments. Now, a deeper look at our P&L. EBIT saw an acceleration in the fourth quarter, driven by improved category means, continued vendor support, and savings from the rationalization of underperforming stores in the prior quarters. This full year, EBIT higher by 9.1%, eclipsing top-line growth. Net income to Peret grew by 62.4% to 2.5 billion in the fourth quarter, delivered by a reversal of Forex losses to Gates, lower losses from Associates following the reclassification of full-time, with our stake reduced from 20% last year to 19%, and the write-off of the investment in Beauty M&L in the fourth quarter of 2023. Net income to Peret for the year reached 10.3 billion, 2.5x higher than last year, benefiting mainly from a substantial gain from the DPI R-bound temperature. Core earnings, excluding one-time items, increased by 21.9%, 2.3 billion in the fourth quarter, with four-year core earnings rising 12.3%, 6.3 billion. In terms of segment contributions, the four stable businesses accounted for 78% of total sales, and 80% of total EBITDA, respectively, in 2024. Meanwhile, our discretionary formats comprise 22% of total CIS and 20% of total EBITDA, respectively. And as of December 2024, our score accomplished 2,453, comprising 761 food segment stores, 1,133 drug stores, 50 department stores, 227 DIY stores, and 282 specialty stores. Additionally, we have 2,150 franchise DGP stores. For the year, we added 60 net new stores, primarily under the drug store banner. Next speaker is Ting Tuarez for the food segment.

Thank you, Stan. Food segment net sales grew by 6.1% to $33.5 billion in fourth quarter. driven by 4.1% same-store sales growth, supported by higher transaction count and a basket cycle increase for the second consecutive quarter. Phone year net sales reached $220.3 billion, up by 4.6%, with same-store sales growth at 2.3%. Increased vendor support and stable demand for important products boosted gross margins by 30 dips to 22.7%. As a result, EBITDA increased by 13.7% to 3.2 billion in fourth quarter, bringing the full year total to 10.6 billion, higher than the top-line growth rate of 6.1%. Now I hand you over to Joanne for your question. Good afternoon. Net sales in the drugstore segment increased by 5.9% to 9.5 billion in the fourth quarter, with full-year sales rising by 7.3% to 35.8 billion, primarily driven by renewed stores. Same-store sales growth slowed down to 1.6% in the fourth quarter from a high base of 8.6%, the same period of last year, due to lower OPC demand, and sales were impacted by the six major typhoons that hit Luzon during the quarter. Full-year savings store sales growth was at 3.2%. Gross margin expanded by 140 bits to 22.3% during this period, lifting full-year margin by 50 bits to 21.5%, driven by vendor support and higher house grant penetration. Full-year EBITDA grew by 2.1% to 3.1 billion, slower than complying growth due to store expansion, and higher GC costs from new systems and facilities. Turning it now over to Nina. Same-store sales growth in the department store segment accelerated in the fourth quarter to 6.6%. Fueled by higher customer spending during a strong holiday season, net sales per year grew by 2.1% to $16.6 billion. Gross margin improved by 50 bps to 30.4% in Q4, then 30 bps to 30.9% for the full year, driven by increased vendor support, higher DCPs, and improved category mix. Higher operating expenses attributable to rent, personal costs, and marketing efforts for this after launch contributed to the slight decline in addition to $1.2 billion. Turning it over to Ted.

Good afternoon. The DIY segment recorded net sales down 3.3 billion pesos in the fourth quarter, down 1.8%, with fiscal year net sales reaching 11.8 billion, impacted by an industry-wide slowdown that resulted to intensified competition. Gross margin expanded by 160 bps to 30.2% in the fourth quarter, driven by the introduction of new items and closed the year at 32.4%, returning to the 32% level last seen in 2020. Improved gross margins and cost savings from the closure of 11 underperforming stores, growth 8% increase in EBITDA to 1.3 billion for the year. Next speaker is Rumi.

SSFG for the special piece segment turned positive at 1.7% in the fourth quarter, Following four consecutive quarters of negative SSSG, driven by the strong performance of toys and pet retail, full-year SSSG ended at minus 3.9%. Gross margins improved significantly, accelerating by 340 bps to 28.6% in fourth quarter, supported by improved category mix, increased vendor support, and higher DCPs. This brought the year-to-date gross margin, the 28.7%, up by 200 BPS. The robust top-line growth and gross margin expansion fueled the increase in EBITDA by 65.2% to P380 million in the fourth quarter. For the full year, EBITDA reached P866 million.

Okay, moving on to working capital. This year's working capital is at 14.6 days versus 13.7 days, largely due just to the tight career and holidays. Moving on to the balance sheet, we are in a net position of 6.8 billion as of mid-2024. We total borrowings of 23 billion, largely due to the acquisition loan for the BPI shares we purchased in January 2023. As of December 2024, our debt related to the BPI Our share purchase is at 12.1 billion. Even with a net debt position, our balance sheet continues to be strong with a net debt-to-equity ratio of 1.07. ROA and ROE increased to 6.3% and 12.6% respectively due to the one-time gain from the UPI-ARBAN merger, which we recognized in the first quarter. In terms of capital expenditures, impacts for all segments in 2024 reached 5.2 billion compared to 4.2 billion last year. Majority of, or 58.6% of CAPEX was allocated to the food segment, followed by 13% for DIY, 12.9% for drugstores, 9.3% for specialty, and 6.2% for department store. So I'll turn you over now again to Stanley.

Allow me to update you on some of our minority investments. OSAVE score count in the Philippines stood at 401 as of December 2024, almost double from 207 last year. Sales have increased by 2.3 times to $237 million. To support its continued expansion, OSAVE opened a new warehouse in Villasiz, Pangasinan last November 8. Now on G2M, which is the parent company of Rosari, Rosari's total e-commerce platform sales value sold under the Saudi market amounted to $872 million in the fiscal year 2024. 24% increase year-on-year driven by the continuous growth in coverage and adoption of its 100,000 monthly active source. The company operates in 23 PCPs across the Philippines. Two-time spirit. Time Group achieved unicorn status last year with a $1.5 billion valuation after a $250 million funding round led by one of the world's largest financial services platforms, Nubank. This serves as a testament to underlying growth prospects of the wider Time Group. On the other hand, Votime Bank continued to post strong growth in terms of customer transaction count. Total bank liaise reached 570 in the end of 2024 and 402 of which are located in our HI stores. This is our guidance for full year 2025. We are looking at a 10-store addition of 130 to 170 in both of the new stores coming from the food and drug stores. Meanwhile, we are aiming for a blended SSSG of 2% to 4%. On cross margins, we are guiding for a 20 to 30 BIPs expansion for the year. And finally, we are earmarking 5 billion to 7 billion for organic capital spending. This ends our presentation for FOI 2024 results. We will now open the floor for Q&A session. Thank you. Thank you, sir. Good afternoon, everyone.

So we will first read questions sent by Zoom Q&A facilities. But if you would also like to ask your questions live, you can do so using the real-time function. We actually got a question from a Philippine equity partner prior to the call. His set of questions are, first one, how much of the remaining debt are used to acquire the BPI shares as of the end of the year? What is the target date to fully pay the loan? And then what's the interest rate and maturity of the debt? And if we can provide what is the parent level of cash, parent cash, as of end 2024?

Yeah, the target date to fully pay the loan is in 2027. Yes, it's 2027. And then the interest rate is 6.25. That's the price of part of it. The last repricing was last month, January. And on the cash of the parent, it's very minimal.

Okay. Thank you. There are some questions from the P&A box. First one is from Rainier Yu. Thank you for the presentation. Can you share more color on the recovery of department store sales growth and was the improvement in specialties gross profit margin due to price increases or more category mix?

We had a printed partner store. We had one store for sure. And it's also on the category such as beauty, home, and shoes and bags.

For the specialty segment, the GPM increase is more into the category mix through sale events than price increases.

Okay, thank you. Next question is from Nadine of J.P. Morgan. So the first question is, what is the same-star sales growth breakdown for food? For the food segment between basket size and consumption count, do you see any divergence in trends across the four markets? That's the first question.

Hi, Nadine. Dean here. So our AS, our Robinson supermarket, as of end of 2024, had an SSSG of 1.8%. Market base at 5.6%. Shop was at 4.1%. Raw business, Easy Mart, negative 0.2%, and Uncle John's at 2.4%.

Okay, Nadine's second question is on the department store business. Can you share color on the drivers of the 6.6-inch store sales growth that was answered earlier? But she does have a few follow-up questions on the segment. So which geographies are driving department store sales, and which ones are lagging? What is causing the divergence between GPM expansion and slightly lower EBITDA margins in the fourth quarter, which is caused by discounting or any promotional activities?

For the geography at this point in the now, that is driving the highest growth, the zone is flat. And for the second one is

But this cost is very, very nasty. Higher, higher, higher, higher expense and pre-operating expenses can be started. Any other questions? We also had to move out some, we had to move out, we had to clean out some merchandise for the year.

Thank you. And then Nadine's third question is for the DIY business segment. So what's driving negative change to our sales growth? Is this due to basket size or consumption count? And what caused EBITDA margins to drop in the fourth quarter?

It's the consumption count that's affecting us. For EBITDA margins on the fourth quarter, it's lower because some promoter related to the last part of the

Thank you. Next set of questions are from Carissa Macquarie. This is on supermarkets. SSSG in fourth quarter and FY24 excluding Uncle John's. How is this broken down between transaction count and ticket size?

SSSG in fourth quarter excluding Uncle John's is at 4.4%. While full year 2024, it's at 2.5, 2.4%. For the full year?

Yeah, for the full year.

Okay, for the full year transaction count, it's a plus 5.1%. In basket size. Basket size is at negative 2.9 if it's full year.

Yeah. Thank you. Follow-up on supermarkets, what is net sales, GP, and EBITDA? Also in the fourth quarter, excluding Uncle Johnny's.

Okay, so from here, including Uncle John's, it's at 113.2. Gross profit is at 21.3%. And EBITDA is at 3.9.

Thank you. Then this is just Uncle John's. What was same-store sales growth in 4.2 and 4.3?

Same-store sales growth for Uncle John's in 2.4% and 91% for 4.4%. 91%. 91%.

91%. Thank you.

Thank you. Next, we have three questions from Tawon Ratanaga. First one is, can you help us have a better picture of the competitive landscape in the drugstores market as well as Robinson Street, those competitive edges compared to the other players? And how many drugstores do you plan to have eventually?

So currently, actually, the market is flat. for the drugstore market. So we're actually growing faster since we're growing at 7%. In terms of expansion, we're leading also because we've opened 98 stores last year. So we're one of the fastest, if not the fastest, in terms of expansion. In terms of competitive edge, one is, of course, the rate of expansion. So we plan to sustain that this year at 200 stores, 100 for South Star and Rose combined. and then 100 also for TGD. Another advantage is our omni-channel presence. So aside from offline, we're strengthening our e-com business. So right now, the share of the business for that is substantial at 3.4%. And while we're maintaining also competitive, I mean, having a competitive device, this is the market.

Okay, thank you. The one second question is for the DIY segment. So CapEx, the DIY was quite substantial last year. Can you remind us what you invested in for this segment in 2024 and what are your plans for this business this year?

We converted four former stores and these are averaging like 2,500 square meters. We also opened eight stores in a convenience store. Thank you, Ted.

The third question is for Kwan. Can you comment on the rationale behind the SSSG gut guidance or target of 24% for this year, which is lower than expected GDP?

I think for us, GDP is more comparable to All-store sales growth will be comparable to GDP growth. And that will include expansion, new stores that we will open in the year. For same-store sales growth, the total 4% target is really because the historical same-store sales growth of RHI is like between that range.

Okay, thank you. Nadine has... Few follow-up questions. Can I confirm that EasyMark posted negative to same-star sales growth in the fourth quarter? And may I ask what's driving the same-star sales decline for EasyMark?

Negative 0.2%.

Negative 0.2%. Negative 0.2%. Negative 0.2%.

Negative 0.2%. Negative 0.2%.

That's almost like. Okay. And then Nadine has a question for Jose. What was the new store sales growth in the fourth quarter and how is this broken down into basket size and perception count? What is annual store opening target and how many more new stores can this, the new warehouse service?

Nadine, maybe I can answer a few. Seeing store sales growth and then basket size and transaction count, I think we need to ask the management of OSE. We're just a minority shareholder here. But as far as I know, store opening is about 300 this year, and each of the warehouse service 100 stores.

Join us. Would you like to answer?

Hi, Jonas. Hello?

Yes, we can hear you, Jonas. Fantastic. All right. So yeah, thanks for asking. So the same-store sales growth for the year is 27%, 37.3%. And that comes also from increased transaction count.

Thank you, Jonas. Next set of questions from Clarissa again. This is on supermarkets. How much did private labor contribute to sales for a full year from 2004?

7.2%. 7.2% from, yeah, 6.8%. Thank you.

And then my next question is for Uncle John. How much did Ready2Eat contribute to sales for full year?

40%.

Okay, 40%. Next one, Grocery. How is Grocery doing? How much does it contribute to sales?

It's around 10%.

10% of sales. Okay. and still growing over the years. Okay, still from Teresa, any sales trends that you saw in January of last, sorry, in January 2025, did you see an improvement in SSS2?

Yes. It's a question.

January 2024, so she probably... January 2025.

Ah, yeah, we are seeing... Improvement in same-store sales would be more or less the same as in January 2024.

Okay, some housekeeping questions. Tax rate was relatively low at 12% in 2024. So what's the reason behind this and what is the sustainable tax rate that we can assume moving forward?

Yeah, it's because of the one-time gain on the BPIR bank merger. On an ongoing basis, it should be around 20%.

Okay, thank you. And for last question, can you provide a breakdown of next store additions in 2025?

We're looking at 40 to 50 for the food segment, 80 to 100 for the drugstore, 5 to 10 for DIY, and then another 5 to 10 stores for specialty stores, and one development store.

Okay. Next set of questions from Denise of... Well, financial, what drove the significant recovery in the margin for specialty?

Mainly gross margin expansion through category mixed sales, improved vendor support, and DCP collected. So far, no significant opportunity that we see, especially in the third quarter, that would affect supply.

Thank you. And then there's a second question. Additionally, could you share your expectations in terms of opportunities and risks for the specialty segment for 2025? Yeah. Nothing significant. All right. Thank you. Joyce Ramos, CLSA. Can you share indications for a consumption count and AC growth rates. Are you referring to basket size growth rates, Joyce, for staples and discretionary last January?

I think we still expect a suction quantity value. The same as those basket size.

Next, this is Rainier Yu. Can you share the contribution of OSAME?

Thank you for the presentation.

Can you Expounding your equity earnings, what associates or units accounted for in $458 million? And what is the outlook for 2021?

Okay, coming from Rosary. Rosary.

Rosary. Rosary. Rosary.

Rosary. Okay. Next is from Tony. What was the interest expense related to borrowings last year? How much dividend from BPI did you receive in 2024?

Interest expense around 900 million, dividend around 1.3. Okay.

Next from Teresa. For the 40 to 50 new stores for the food segment this year, is this skewed towards supermarkets or the big formats? Yes. Or a smaller format such as EasyMark and Uncle John's?

It's a smaller format.

Okay. Next, it's from Daniel Rowe. Congrats on the quality performance. What are the capital management targets for this year? Can the management commit to raising the dividends and continuing to share by that?

On the dividends, I don't think the absolute amount will be reduced. It could be either maintained or maintained.

Yes, Apollo, can you compare the store growth at OSAVE through that of DALI is the store expansion of both OSAVE and DALI slowing down? Yes.

Jonas, can you answer?

Yeah, I mean, I cannot answer for Dali. I'm not sure whether they're slowing down or not. For us, at least, we are not slowing down. Our store expansion will continue on the fast phase in 2025 to 2026.

I don't know what is following up on the live app.

On the buyback, we have 400 million peso balance on the buyback. Right now, we're focusing our buyback program. Very limited amount yet.

Okay. Next is from Daniel. Sorry, Rainier Yu. Which categories within department stores outperform in the fourth quarter? And do we expect the same for this year?

For Q4, it's toys.

um, code and beauty more or less between the same. Okay.

Um, if you still have any follow-up questions, um, so using the rate side function or send them through Q&A. Okay. So this is, we got another question. Um, this is from Nadine. Do you have more event proposal? How do they decide store expansion sites? Can you share color on? store economic metrics for OSAVE, like margins, payback, and requirements. So I'll mute you again.

Sure, thanks. I mean, our expansion is highly decentralized. As you are probably aware, we are growing simultaneously in different parts of the country, depending on where our warehouses are currently located. We have separate teams for each of those regions, looking simultaneously. And the primary factor that we're looking at is density and population.

Thanks. Next, Carissa, how many scores did you close down last year and what is the breakdown like?

Okay.

We closed around 10 Uncle John's store.

Yeah, for AC Mart.

For AC Mart, sorry. For drugstore, we closed down 19 stores. Okay.

For DIY, it's 8 stores. For Amazon, 10, and 2 for Disney. 2 for No Breath. Department Store, 1.

Okay. Next is from Neil Maderahe. When do you expect discretionary segment revenues to reach 2019 levels?

We're expecting it to happen this year.

Okay, and then Nadine has, I think Nadine's clarifying if she could get any color on story economic metrics for OSD, like margins, the impact required capex. Jonas?

Right, so the required capex per store is around 100K USD. margins and payback highly depends on location where we are in that moment, given that the, our business model is based on the volume growth. It's less of an importance for us at this particular stage.

Thank you, Jonas. Okay. So at this point, there are no more questions coming in and we cannot answer any.

Okay. Thank you, everyone. See you in our next earnings follow-up.