Robinsons Retail Holdings, Inc.

Good afternoon, everybody. Thank you for joining us to review Robinson's details and audit the results for the first quarter of this year, 2025. I am Gina Dipali, the company's investor relations officer. The speakers for this call are the following. Stanley Koh, our president and CEO. Eileen Kasiban, our CFO. Christine Tuarez, the managing director of the big formats for the full segment. Joanne Arceo, the Group General Manager of the Drugstore segment. Selena Chua, the Group General Manager of Robinsons Department Store, Toys R Us, Solacanide Espacio. Ted Sobono, the Group General Manager of DIY and Vents. Joven Santos, the Group General Manager of the Appliance segment. Chairman Romina Gautamite is also on the call. Last question. It's the agenda for this afternoon's call. We will provide an overview of our financial performance and share key updates across our organization. As a reminder, for the Q&A session, please use the Q&A function on the Zoom dashboard to write in your questions. Please leave initially the maximum of any questions. And you can log in if you have additional questions. With that, I will turn you over to Stanley.

Thank you, Gina. Good afternoon, everyone. Here are the highlights by results for the first quarter of 2025. Consolidated net sales increased by 4.2% to $47.8 billion. Lended same-store sales growth came in at 3%. Cross-profit accelerated by 6.2% to $11.6 billion. EBIT increased by 2.7% to $1.9 billion. And net income to parent dropped 85%. to 760 million as reported in the one-time gain from the PPI-R bank merger last year. Consolidated net sales came in at 47.8 billion, up by 4.2%. Same-store sales growth accelerated to 3% from last year. Growth was supported by additional selling days as Holy Week shifted to April, partially offset by the lack of one day in February this year versus last year, as 2024 was a late year. The absence of an extra day reduced February sales by approximately 3.6%, with February SSSG adjusting to 4.4% when excluding the late year impact. The business units that posted above average growth for the period were drugstores, department stores, and specialty stores. Now, a deeper look at our P&L. Even grew by 2.7% to 1.9 billion, driven by an increased category mix and an improved category mix and continued vendor support, which helped offset the one-time increase in salaries and wages arising from enhanced recognition of work leaves. and other employee benefits and full-parter effect of the increase in minimum wage last year. Net income attributable to parent declined to 760 million, primarily due to the high base last year, which included a substantial gain from the PPI RBI measure, including one-time items for earnings increased by 4.9%, to 1.2 billion due to higher EBIT and lower interest expense. In terms of segment contributions, the core stable businesses accounted for 81% of total sales and 86% of total EBITDA. Meanwhile, our discretionary formats comprised 19% of total sales and 14% of total EBITDA, respectively. As of March 2025, our store count reached 2,448 comprising 760 food segment stores, 1,131 drug stores, 50 department stores, 225 DIY stores, and 282 specialty stores. Additionally, we have 2,116 franchise PGP stores. Turning you over to Tim for the food segment.

The food segment recorded net sales growth of 3.4% to 2.9 billion, driven by 3% same-store sales growth. supported primarily by the third consecutive quarter of increased basket size. Gross margin improved by 40 bps to 22.7, driven by higher penetration of private label and imported products, as well as higher vendor support. EBITDA grew by 3.3% to 2.4 billion, broadly in line with top-line growth as gross margin expansion offset the increased impersonal cost. Next speaker will be Joanne for the drugstore segment. Good afternoon. The drugstore segment posted 7.5% increase in net sales, driven by 3.2% same-store sales growth and the contribution from 59 newly opened stores. Gross margin expanded by 140 bps to 22.3%, supported by stronger vendor funding and increased penetration of house grants. EBITDA rose by 7.1%. to 806 million as the solid downtime growth helped offset the impact of higher operating expenses related to store expansion and increased DC costs associated with new systems and facilities. Turning over to Selina. Net sales for the department stores that went rose by 5.6%, driven by strong same-store sales of 5%. Growth was supported by strong performance of shoes, Beauty and apparel supported by marketing events such as Shoes and Bags Travel Fair and International Women's Month. Broad's margin remained stable at 31.4% as promotions were offset by higher vendor support. Ibiza increased by 3.5% due to the segment's strong top-time performance. Turning you over to Ted for the DIY segment.

The DIY segment remained challenged during the quarter. posting negative SSSG of 1.9%. This was primarily due to supply chain issues, which affected store productivity and the merchandise congestion. Despite the top-line pressure, cross-margin expanded by 50 bits to 33.7%, supported by the introduction of new items and higher DCPs. However, the improvement in our project was affected by higher operating expenses, It's always in a decline with a bit of a movement. So give me over to Joey.

Good afternoon. The specialty segment net sales rose by 5% to 3.3 billion, supported by the reversal of SSSG to positive 5.1%, led by double-digit growth in toys, mass merchandise, and lifestyle sneakers. Toys grew on strong demand for trading cards, action figures, and blind boxes. Mass merchandise recovered as stock availability normalized, while lifestyle sneakers benefited from the successful launch of the on-cloud shoe brand. EBITDA declined to 129 million due to 80-bit growth margin contraction to 28.3%, largely driven by prolonged clearance of face-out SKUs and savers following the cessation of corporate sales. All saver stores were converted to Robinson's appliances by March 31, 2025, simplifying the appliance segment's operating model and reducing costs. Improvements are expected in the coming quarters.

Thank you. Our tri-stack conversion cycle rose 28.2 days in Q1 this year from 25.6 days last year. The increase is due to higher inventory days in Q1. at 82.1 versus 79.6 in Q1 2024, as well as increased stocks of event products due to strong demand. Moving on to our balance sheet, we are in a net deposition of 11.6 billion as of March. We have total borrowings worth 12.8 billion, mainly due to the acquisition loan for the BPI shares we purchased in January 2023. As of March 2025, our debt relief into the BPI share purchase amounted to 10.8 billion. Even with a net debt position, our balance sheet remains healthy with a net debt-to-equity ratio of only 0.12x. ROA and ROE normalized to 3.6% and 6.7% respectively due to the absence of the one-time gain from the V2I and Farbank merger and downtime. In terms of CAPEX, organic CAPEX for all segments in Q1 this year increased to 9,162,000,000. compared to 846 million in the same period last year. Half of the capex was allocated to the food segment, followed by 20% for drugstores, 18% for specialty, 8% for DIY, and 5% for department store. Now I'll turn you over to Scott.

Now allow me to update you on some of our minority investments in the GoTime, GoSave, and GoStart. On GoTime, first quarter 2025 results, Total customers reached 6.1 million from 2.8 million last year, strengthening its position as one of the fastest-growing digital banks in the Philippines. Transaction count also sustained its growth momentum as the bank continues to scale. And total bank kiosks are at 528, and 396 of these are located inside our stores. All same score count in the Philippines. So the 471 as of March 2025 nearly doubled from 238 stores last year. This led to sales increasing by 2.2x to $94 million for the first quarter. Its operations are also supported by four distribution centers. Moving on to G2M, the parent company of Grocery. Total platform value or the total value of all the business lines rose 27% year-on-year to $216 million, driven by the continued growth in coverage and active customers. Grocery operates in 24 key cities across the country. Let me update you on some key corporate developments across the business. We were recently recognized as one of Asia Pacific's best companies of 2025 by Time Magazine and Sevista. Ranking 7th out of the 23 companies from the retail, wholesale, and consumer goods sector, while we were one of the 29 Philippine companies included in the list of 500 from across the region. The ranking was based on employee satisfaction, revenue growth, and ESP metrics. We were also named as Best Retail Company in the Philippines by Finance Asia 2025, Asia's Best Companies poll, particularly participated in by investors and financial analysts. We have gathered close to 700 attendees for this year's PGP Franchising Summit and Uncle John's Franchise Appreciation Night. We congratulated our franchisees for their achievements and community impact in 2024. Our food and drugstore segments held their annual Trade Partners Night in February and March to recognize and thank our trade partners for helping us serve our customers better every day. The Platinum Awardees were Coca-Cola, Europe Pacific, Avogadro Philippines for the food segment, and Nestlé for the drugstore segment. For our sustainability highlights, we participated in the Carbon Disclosure Project, or CDP, for the first time in 2024 and received a C rating each for climate, forest, and water, an encouraging baseline as we build on our environmental strategies ratings from A to B-. We also expanded our food rescue program to 105 stores in 2024, from 37 in 2023, recovering over 109,000 kilos of surplus food since 2023, translating to 458,000 meals served, nearly 300,000 kilos of carbon emission avoided, and over 2 million in disposal cost savings. This is our guidance for full year 2025. We are looking at the next store additions of 130 to 170 with bulk of new stores coming from food and drug stores. Meanwhile, we are aiming for a blended SSSG of 2 to 4%. Our cost margins, we are guiding for a 20 to 30 years expansion for the year. And finally, we are earmarking 5 to 7 billion for organic capital expenditures. This ends our presentation for the First quarter results, we will now open the floor for Q&A session. Good afternoon.

We will first read questions sent via the Zoom Q&A facility. But if you would like to ask your questions live, please do so, but please use the recent function. We have a few questions coming in from the Q&A box. This would be from Nadine Bautista of JP Morgan. Number one, What is SSSG for supermarkets and CVS in the first quarter?

Okay. The same-store sales growth versus supermarket. Supermarket is up by 3.4% for the first quarter, while for Uncle John's, it's at negative 3.2%.

What's the next question? Next question. Any divergence in basket size and transaction contents in the different food business segments, which formats are showing positive and or negative basket sizes?

We have seen a good trend in terms of basket size. For the food segment, basket size is up by 3.7%. Okay, thank you.

Our third question, can you share further on the intensity of supplier support for food in the first quarter of this year versus point five of 2021? Okay. Nadine will get back to you on this one. But thank you for sending the question. Last question from Nadine for now. Can you please repeat how sales for SSG figures would be if we adjust for the timing of 4D and BTR?

4.4. Yeah. For fair, it should be around 4.4% from 0.8%. Okay.

Okay. Thank you, Nadine. Okay.

I can answer, Nadine. Yeah, okay. Vendor support gets up by 13%.

Vendor support is up 13% just to repeat in the first quarter relative to 42,000. Okay, just a reminder for the audience in the virtual floor, if you have more questions coming in or if you have any clarifications from the presentation earlier, Please send over your questions via the facility or just simply raise your hand. Okay, we have a question from Paolo Garcia. Breakdown for the 1QSSG for the various brands or banners of supermarkets, namely Robinson Supermarket, Robinson's Easy Marketplace, and ShopPoints.

Robinson Supermarket, 3.7% SSSG. Marketplace is at 5.3%. Shopwise at 1%. Robinson's EC Mart at 2.1%. Uncle John's, as mentioned, it's negative 3.2%.

Okay, thank you. Next question will be from Dan Brian Guo. He has two questions. The first one, how many OSAVE stores are you projecting for this year or for FY25? And for next year, FY2026? And what is your timeline for Okay, maybe let's try to answer the first question, which is related to USAID.

All right, Jonas is on the line.

Sure, can do that, yeah. So for 2025, we are projecting close to 800 stores by the end of the year, and for 2026, we are projecting more than 1,100 stores.

Okay, thank you, Jonas. Dan Bryant's second question is, this is on Go time, so what is your timeline for the profitability of GoTime and what are your near-term targets for this business going forward?

I think GoTime is looking to break even in the second half of 2026.

Thank you. We have a few follow-up questions from Nadine. This is on DIY. Can you please elaborate on the supply chain issues and merchandise congestion? that were mentioned earlier, and what exact OPEX items grant EBITDA margins for this BU?

I think for the supply chain issues, because we are looking for more efficient operator of our VC, so we changed the operator, and it affected the efficiency, the speed of delivering goods to our stores. I guess what affected our OPEX is more on the supply chain because we want to be more efficient. So we have a higher operating expense.

Okay, thank you, Ted. Next question will be from Priya. Can you give us some color on the consumption segments that's our maximum and minimum interest? Perhaps maybe Thea is referring to the demand trends we're seeing across our different segments.

I think the premium banners are seeing maximum interest considering the higher sales growth. In the case of Pudel, it would be the marketplace.

Thank you. Another question from the JP Morgan team. This is an OSAVE. So on OSAVE, what is SSSG in the first quarter? How are basket size and transaction counts trending for this quarter? And which areas are you targeting for a new OSAVE branches or stores? And how is competition varying with, especially for locating new sites? You want to ask?

All right, so our SSG remains relatively stable at between 25% and 35%. That primarily comes from increased transaction counts. Our basket size remains more or less flat or in marginal growth at the moment, which we attribute to shifting the customer share away from Sari Sari stores to more end consumers, which is good for our business. In terms of new OSEF stores, what areas we're targeting, we're looking at complete Luzon. We grow organically, so we don't really want to jump to different areas. So we try to grow our existing regions, but we expand across Luzon. Increased intensity, we don't really see that at the moment for us. The intensity for new store sites has remained relatively the same compared to the previous years.

Thank you, Jonas. Again, just a reminder for the audience, if you have follow-up questions, please send them over. So we do have a follow-up from Paolo Garcia. Can you provide color on how the food segment is performing for the month of April so far? Are we seeing the SSSG momentum continue from what you saw in the first quarter of this year?

Hi, Paolo. It's actually a nine with a T1 performance.

Thank you. Okay. Again, another one from the JP Morgan. Do you see 5% SSSG for the department store business sustainable for the rest of 2025?

Yes.

The answer is yes. The store team believes that this is sustainable for this year. Sorry, department store... Okay, we can see John there raising his hand. Okay, John, please go ahead and ask your questions.

Hi, sorry, I don't have a chat box with us, but three questions. Two, just clarifying. First is, can we repeat the impact of the calendar timings, i.e. leap year and the impact of Holy Week? And I heard it was... 4.4%? Was that an extra 4.4% boost or would the same store sales have been 4.4% if not for the calendar adjustment?

Additional 3.6% to 4.4%. It was 0.8% in Feb. So an additional 3.6% for the one day.

Okay. So that's for leap year. Would we have any comments on Holy Week? Because I think we have full trading days this quarter versus, I guess, less last quarter.

We need to see for the full year of April so we can then combine March-April versus March-April last year. We still have one day more to go.

Okay, thank you. For OC, did I hear Jonas correct in saying that we're targeting 1,500 stores in 26? No, that's not correct. More than 1,100. 1,100. Okay, thanks, Jonas. Last question for me. Any comments on election-related spending for 1Q, if not 2Q?

I'm not seeing any election spending

Thank you. Any particular reason why you think that might be the case this time around?

It depends on the locations. If there are more candidates running, then you'll see spending, but if there's none... Oh, when I went around the provinces, actually the incompetent are usually the ones that's running. No competition. So no money. No competition, no money. Okay, no money.

Okay, that's it for me.

Thank you. Thank you, John. Okay, we have a few more questions. This is from Nadine. How do you see higher tariffs potentially affecting or impacting RHI? Any changes in supplier sourcing given this backdrop?

Hi, Nadine. Thanks for the question. We have not really seen any significant changes, but then again, we are also anticipating that it could potentially affect us positively with a possible glut in the market. I think we stand to benefit from it. We particularly buy a lot of American-branded products, but then again, the vendors are very much willing to ship out of China, so that could also potentially improve our margins.

Okay, thank you, sir. Okay, so at this point, there are no more questions coming in from the audience, and we can now end this concert. Okay, thanks. Thanks, everyone. See you in the next call. Thank you.