Cebu-based retailer Metro Retail Stores Group, Inc. (MRSGI) posted a P24.3 million increase in operating income in the first quarter of 2020.
The growth was driven mainly by a 10 percent increase in revenue and a lower increase rate of operating expenses at 4.6% due to disrupted operations brought about by the COVID-19 pandemic.
Gross margin percentage to sales decreased by 89 bps on account of higher share to business of food retail, slower department store sales, and compliance with government-imposed pricing protocols. Still, total margins for the period grew by 5.3%.
On the expense side, MRSGI incurred additional overhead costs for newly opened stores including the partial re-opening of the flagship store in Cebu City. This was offset by the temporary closure of all department stores due to the lockdown at the close of the period, resulting to the 4.6% decrease for the quarter.
Non-core income decreased by P97.4 million, mainly due to the last tranche of insurance recoveries which tapered to P104.4 million vs. P190.5 million a year ago. The results for the period also reflect the net impact of PFRS 16, which amounted to P20 million after tax, lower compared to the prior year. Net income after tax for the period declined by P54.9 million or 87.3% versus the previous year.
Impact of COVID-19
Buoyed by the growth of its food retail business, the Company’s first quarter net sales amounted to P8,495.9 million, a 9.9% increase from P7,728.4 million in 2019. Total food retail figures increased by 19% over the same period last year as demand rose further with the effect of the enhanced community quarantine.
While blended same-store sales reflected a year on year growth of 3%, total general merchandise business declined by 10.6% due to the Covid19-related disruption in all department stores.
As Luzon and Visayas start to ease its quarantine restrictions, MRSGI affirms its commitment to continue serving the interests of its customers, employees, shareholders and the general public and contributing to the economic recovery. Regular disinfection of all touchpoints and high traffic areas in the stores before, during, and after operating hours have been rolled out.
Metro Supermarket Market! Market! was recently recognized for its food safety and sanitation practices by the Societe Generale de Surveillance (SGS) Philippines, a leading inspection, verification, testing and certification body.
Metro supermarkets, hypermarkets, and pharmacies remain open to ensure that shoppers have access to basic goods and essential items that they need. Meanwhile, Metro department stores will soon open in areas under GCQ and MECQ.
Metro Retail has likewise recently launched the first phase of its e-commerce program where customers can order products via call, text, and online. It has likewise forged partnerships with online grocery operators to make its products available to the growing communities that these entities serve.
Cash Dividend Declaration
Consistent with MRSGI’s commitment to its shareholders, on May 14, 2020, the Company’s Board of Directors approved the declaration of cash dividends amounting to P205.76 million or P0.06 per share, to stockholders of record as of May 29, 2020 to be paid on June 15, 2020. As of the end of the first quarter, MRSGI maintained a healthy balance sheet with cash resources amounting to P2.45 billion