Robinsons Retail allots P2B more to repurchase stocks

Gokongwei-led retailer Robinsons Retail Holdings Inc. (RRHI) has earmarked an additional P2 billion to buy back stocks from the open market, bringing its budget to improve shareholder value to P4 billion.

“We are confident in the growth trajectory of Robinsons Retail as we venture into more adaptive and agile means of doing business. Our buyback program is in line with our capital allocation policy, which involves our strategies for organic growth, M&As (mergers and acquisitions), e-commerce and higher dividend payouts. We also remain committed in maintaining a strong balance sheet, which provides financial resilience for the company,” Robina Gokongwei-Pe, RRHI president and CEO, disclosed to the Philippine Stock Exchange (PSE) on Monday.

On March 9, 2020, shortly before the coronavirus-prompted lockdowns, RRHI’s board already approved an initial budget for the buyback program.

Companies with sufficient retained earnings typically buy back their shares when they feel their shares are undervalued by the market. The shares improve dividend prospects as repurchased shares are lodged in the company’s treasury, thereby reducing the number of outstanding shares that are entitled to dividends.

RRHI said it had a strong net cash position to support the new share buyback program.

As of March 5 this year, RRHI has repurchased 24.7 million shares from the trading facilities of the PSE for P1.5 billion.

RRHI saw a 25.2-percent drop in attributable net profit to P2.93 billion last year. While its grocery business performed well, mandatory lockdown protocols dragged down sales of stores catering to discretionary consumer items.

For the full year, RRHI’s group-wide net sales fell by 7.3 percent to P151 billion.

Blended same store sales declined by 8.9 percent for full year 2020 as RRHI’s nonessential formats were closed for eight weeks. The supermarket segment, classified as essential business and thus exempted from COVID-19-related lockdown, grew by 7.7 percent.

Although part of the essential segment, RRHI’s drugstores segment ended flat, as same-store sales of prescription drugs slowed down in the second half of the year, with less people visiting hospitals. The department store, do-it-yourself (DIY) and convenience store segments saw a decline in same store sales in 2020 but showed improvement in the fourth quarter as quarantine restrictions eased.

Same store sales exclude the impact of newly opened stores to allow a more accurate comparison of growth trends.

RRHI has been fast-tracking its e-commerce presence, capitalizing on the shift in buyer preference towards online marketplaces, which was made more pronounced by the pandemic.

—DORIS DUMLAO-ABADILLA INQ