Metro Retail Stores Q3 profit deciines 90%

METRO RETAIL Stores Group, Inc. (MRSGI) posted a 90% decline in net income in the third quarter, weighed down by higher expenses.

In a regulatory filing, MRSGI said it earned P12.62 million during the July to September period, lower than the P132.97 million profit it posted a year ago.

For the first nine months of the year, the company’s profit fell 20% to P274.6 million, from P344.3 million during the same period in 2015.

“Overall, the decrease in net income is due to operating losses sustained from the opening of new stores,” MRSGI said.

Net sales in the third quarter rose 2% to P7.82 billion, from P7.63 billion during the same period last year. For the nine-month period, net sales rose 6% to P23.73 billion, as it opened four new stores in the last four quarters. Samestore sales grew by 2.9%.

However, increase in salaries and wages, rent expenses, overhead expenses and depreciation expenses offset the company’s positive sales growth.

MRSGI said net income for all stores slipped by P70 million from asset disposals, linked to their acquisition of Wellworth Department Stores.

The Wellworth department stores were owned by SIAL Specialty Retailers, Inc., a joint venture between Ayala Land, Inc., and the SSI Group.

Cost of sales for the third quarter rose 4% to P6.31 billion, bringing the nine-month total to P19 billion, 6.8% higher than the same period last year.

In a statement, MRGSI Chairman and Chief Executive Officer Frank S. Gaisano said the company will continue to focus on improving sales and cost efficiencies.

“Store-level profitability will be our priority in subsequent months as we strive to achieve our targets in newly-opened stores and new markets,” he said.

Shares in MRSGI fell 10% to P4 apiece on Monday. —