Robinsons Retail Holdings, Inc.’s net income attributable to equity holders of the parent company declined by 4.1% to PhP1.6 billion in the first half of 2020 as the business performance was affected by the various lockdowns imposed by the government to curb the spread of the COVID-19 pandemic. The full impact was felt in the 2nd quarter of 2020 with net income attributable to equity holders of the parent company at PhP719.1 million, down by 33.2% compared to the previous year.
Consolidated net sales posted 2.9% decline in 1H 2020 to PhP75.0 billion and 12.4% in 2Q to PhP34.9 billion. Sales were impacted by the temporary closure of the stores considered non-essential during the Enhanced Community Quarantine (ECQ) imposed by government starting March 17, 2020. Majority of the Company’s stores across all formats resumed operations only in May 16, 2020 following relaxed quarantine restrictions. However, operating hours have been shortened and foot traffic is down.
Blended same store sales growth (SSSG) was negative 3.8% in 1H 2020 and negative 13.9% in 2Q. The SSSG of the supermarket and drugstore segment eased in the second quarter, from high double-digit SSSG in the first quarter but still remain high relative to historical levels, with 1H 2020 SSSG at 16.4% and 6.9%, respectively. The SSSG of the rest of the formats were negative in 1H 2020, contracting further in the second quarter versus the first quarter as the stores were closed for six weeks, compared to only two weeks in the first quarter. While convenience stores are considered essential, approximately 30% of the stores were temporarily closed during ECQ due to lack of manpower, absence of public transportation and closure of offices in buildings where the stores are located. The CVS segment was also affected by the imposition of curfew and liquor bans.
Gross profit margins compressed by 200bps to 20.9% in 1H 2020 and 320bps to 19.8% in 2Q, primarily due to the temporary closure of non-essential stores.
Social distancing measures and regular disinfection of premises remain strictly implemented in stores. Operating expenses decreased by 10.4% to PhP13.9 billion in 1H 2020 and 21.4% to PhP6.2 billion in 2Q, despite the Company incurring expenses related to COVID-19, including financial support to employees and sanitation costs. However, the decline in operating expenses did not fully offset the impact of gross margin compression and the shortfall in net sales, as EBITDA margin dropped by 50bps to 8.2% in 1H 2020 and 110bps to 8.2% in 2Q.
The balance sheet of Robinsons Retail remains strong with a net cash position of over PhP29.4 billion as of end June 2020. The company spent a total of PhP635.5 million in capital expenditures.
Excluding the franchised stores of The Generics Pharmacy, Robinsons Retail ended June 2020 with a total of 1,890 stores comprising of 262 supermarkets, 49 department stores, 222 do-it-yourself stores, 512 convenience stores, 520 drugstores and 325 specialty stores.
Digitalization remains one of Robinsons Retail’s key strategic pillars. The Company accelerated its ecommerce initiatives via third party platforms and launching its own ecommerce sites. Southstar Drug, through its website southstardrug.com.ph, began to offer online ordering and delivery services on March 11. Likewise, gorobinsons.ph went live to the public on June 3 to offer delivery services for food and grocery items from Robinsons Supermarket. Meanwhile, the Company’s investments in ecommerce platforms such as BeautyMNL and Growsari are showing strong GMV growth of 24% and 116% year-on-year in 1H 2020, respectively.