Lance Y. Gokongwei
Chairman
Robina Y. Gokongwei-Pe
President and CEO
Dear Stakeholders,
2022 was a year of transformation and transition. We saw the continued reopening of the global economy and sustained recovery across industries.
The Philippine economy performed well and finally exceeded pre-pandemic levels. The country’s gross domestic product (GDP) grew by 7.6% year-on-year, accelerating from the 5.7% growth in 2021. Economic activity remained resilient despite a backdrop of rising inflation, which averaged 5.8% in 2022 (up from 3.9% in 2021) due to elevated food and energy costs.
With pent-up demand as the main catalyst for economic growth as consumption, which has historically accounted for roughly 70% of GDP, rising to 8.3% in 2022 from 4.2% in 2021, consumer confidence strengthened following the country’s gradual return to normalcy – including back to face-to-face classes in schools, return-to-office mandates, increased travel and tourism, and the first normal holiday season in two years. In addition to better mobility, consumer spending was also supported by resilient overseas remittance inflows which were augmented by a depreciating peso, and a strong job market which saw the unemployment rate revert to pre-pandemic levels. Investment spending was also a key contributor to economic growth, expanding by 16.8% year-on-year.
The improving macro outlook encouraged businesses to invest in additional capacity, penetrate new industries and geographies, and simply enhance their existing operations.
The rosy macro conditions in 2022 translated to a banner year for Robinsons Retail resulting in an all-time high consolidated net sale of Php178.8 billion, 16.6% higher year-on-year and breaching pre-pandemic levels. Net income attributable to parent also grew to Php5.8 billion, an all time high and 29.1% higher year-on-year, and our blended same-store sales growth (SSSG) reached a record high at 11.8%. Gross profit accelerated by 20% year-on-year to reach P42.3 billion, while our Earnings before interest and taxes (EBIT) expanded 43.6% year-on-year to another record Php8.7 billion.
While inflation and supply chain risks remain, we were nimble enough to implement changes to our merchandise mix enabling us to continue offering the most relevant products and services for our customers who have increasingly prioritized value-for-money purchases amidst the inflationary environment. We were able to increase shareholder value through share buybacks and higher cash dividends. All these, among others, are intended to future-proof our business over the long-term.
Omnichannel Transition
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Three years ago, we launched our own e-commerce platforms to respond to the disruption caused by COVID-19. Interestingly, it also allowed us to put into play and accelerate our long-term strategy towards omnichannel retailing.
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A few years prior, we already had a clear understanding of the significance of the e-commerce space and recognized that it would be a crucial element of Xour future success. As early as 2015, we already participated in third-party marketplaces. We eventually made strategic investments in digital platforms like GrowSari, which ultimately strengthened our position and allowed us to expand our reach to a wider audience.
This year, our transition to omnichannel retailing made significant progress. In June, we renamed our primary e-commerce platform to GoCart and onboarded three new banners, bringing the total count to 14. We opened 174 new physical stores as we accelerated our store rollout program. By prioritizing both physical and online channels, we truly believe we can generate added value and stay ahead of the curve in a competitive and dynamic business environment.
Growsari continues to be an agent of positive change and inclusive business as it helps sari-sari store owners access merchandise more easily and efficiently, enabling them to improve their businesses’ profitability. Growsari now has an active store network of close to 75,000.
GoTyme, one of only six digital banks licensed to operate by the BSP, was also launched this year. GoTyme seeks to make banking more accessible to Filipinos through a “phygital” (physical + digital) experience. GoTyme users may use their GoTyme account to bank and shop while earning rewards in partnership with Go Rewards.
Across our stores, we offer a free cash-in/cash-out services where customers can top up or withdraw funds from their account. Users also get to earn 3x Go Rewards points if they use their GoTyme card at any of our stores.
As of end 2022, GoTyme now has over 130,000 users with over 80 kiosks deployed in our stores. We currently have a 20% stake in GoTyme.
As it further expands to Visayas and Mindanao, Growsari raised USD110 million in total funding as it closed its Series C funding round this year raising its pre-money to 3.3x from its 2021 Series B funding. We continue to maintain a 14% stake in GrowSari. Edamama, a parent-focused e-commerce platform, also continues to demonstrate market leadership and robust growth. This year, it raised USD20 million in total funds as it closed its Series A funding round. We currently have a 12% stake in edamama.
Transition for Transformation
To further our thrust of creating delightful shopping experiences, we transformed our hypermarket banner Shopwise into an international grocery shopping destination giving customers an opportunity to experience international grocery shopping without the need for a membership.
Beginning with our Antipolo and Makati stores, we will continue to roll out the transformation to our Shopwise stores in the coming year. The new Shopwise features a curated selection of imported goods and exclusive international brands from appliances, home and kitchen essentials, bed and bath, and general merchandise, among others.
At the beginning of this year, we consolidated our stake in our convenience store business as our partner of over 20 years exited their overseas ventures to focus on their home market.
In April, we launched a contest and got the help of our customers in finding the new name of our convenience stores. After several months and with over 80,000 participants, the Uncle John’s name gained the highest number of votes and was selected.
Truly, the name Uncle John’s is apt for not only is it everyone’s favorite fried chicken and the banner’s number one product, but it is also a celebration of the legacy of our founder Mr. John L. Gokongwei, Jr.
Even with this change, we have kept the same products our customers have loved all these years while adding exciting ready-to-eat offerings and new products.
This year, we also consolidated our stake in our DIY business and have rebranded our big box hardware stores to Handyman Do it Best. We believe that Handyman Do it Best would have a more significant recall among consumers.
We announced the planned merger of our associate Robinsons Bank Corporation, where we maintain a 40% stake, with the Bank of the Philippine Islands (BPI) and with the latter being the surviving entity.
With this, we hope to generate synergistic value for all our stakeholders through this transaction. Synergies include being able tap the extensive consumer customer base of BPI to cross sell our retail products and services, while our suppliers and service providers will be able to tap BPI’s commercial loans to finance their working capital requirements as they expand their business with us translating to better service levels for us.
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we hope to generate synergistic value for all stakeholders
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Transition for Better Good
At Robinsons Retail, our commitment to sustainability remains robust as we continue to integrate sustainable practices into our operations.
This year, we finetuned and recalibrated our sustainability strategy based on relevant social and environmental trends that have the potential to affect our business and our stakeholders. These focus areas are responsible sourcing; product and service excellence; employee development, diversity, and inclusion; and environmental action.
On responsible sourcing, we will recalibrate our Supplier Accreditation policies in 2023 to make sure we source our products responsibly as we see the increasing value of supply chain sustainability. We will conduct pilot runs among the Supermarket and Drugstore segments’ top vendors and plan to implement this in other segments later on.
We will continue to explore more micro, small, and medium enterprise (MSME) vendor partnerships across all the business segments, as we recognize our role in providing livelihood to more Filipinos through forging meaningful working partnerships with small-hold businesses. In 2022, we were able to partner with close to 2,000 MSMEs.
Our over 500 TGP franchisees also help in our collective efforts to contribute to nation-building, as we empower local entrepreneurs grow their business, provide employment, and make quality and affordable healthcare accessible to underserved communities throughout the country.
On product and service excellence, we will expand product offerings that are certified healthier and sustainably produced. We are also looking forward to leveling up overall customer service through our digitalization initiatives, conducting more customer satisfaction surveys, and increasing our overall customer complaints resolution rate.
We will also continue to expand our range of generic medicines within Southstar Drug and Rose Pharmacy, as well as continue to engage with our stakeholders through various community initiatives like the Run for Wellness and the Cancer Warriors Run.
On employee development, diversity, and inclusion, we will be expanding the scope of our Robinsons Retail Academy’s training programs and using data-driven approaches to craft training programs suitable to the evolving competency needs of our employees.
We plan to conduct more education campaigns on key employee topics such as diversity, equity, and inclusion (DEI), anti-discrimination, and other sustainability topics.
We target to improve our performance management system as we establish connections between individual goals and department/ company objectives. We know that employees feel engaged when they know their purpose within the organization and how they play a role to achieving the objectives of the total organization.
On environmental action, we will be scaling up our plastic collection and diversion initiatives across all business segments as we try to meet the 80% plastic neutrality target by 2028. This year, through our combined efforts, we were able to collect over 11,500 plastic bottles—which will be recycled and turned into plastic chairs for public schools.
We will also be deliberate in contributing to climate change mitigation and adaptation by conducting a climate risk assessment to identify the financial implications of climate risks across our major business hotspots and by finalizing our low-carbon transition roadmap in the coming two to three years.
This year, we were able to partner with volunteer groups and nonprofit organizations whose work in creating meaningful impact in society continue to inspire us to do better every day: Ateneo Center for Educational Development, Association of Mouth and Foot Painting Artists Philippines, Cancer Warriors Foundation, Caritas Manila, Childhope Philippines Foundation, Communities Organized for Resource Allocation, Feeding Metro Manila, The Foundation Foundation, Friends of Hope, Leah Borbon Hope of Angels, Lions Club of Marikina Valley, Philippine Foundation for Breast Care, Right Start Community Development, Save Philippine Seas, Scholars of Sustenance, Tahanang Walang Hagdanan, Thrive Foundation, Virlanie Foundation, World Vision Development Foundation, and the UP Men’s Basketball Team, among others.
In collaboration with the Gokongwei Brothers Foundation, ever since 2017, we were able to support 184 pharmacy students across the country to complete their college education. This year, we are very proud of our 21 scholars who passed the 2022 Pharmacy Licensure Examination and will continue to root for them as they continue their journey.
As we work to continuously nurture shareholder and stakeholder value, we are proud to have been recognized as one of Asia’s outstanding companies in the consumer discretionary sector in Asiamoney’s 2022 Outstanding Companies Poll. Over 958 fund managers, buy-side analysts, bankers, and research analysts responded to the Asiamoney poll and ranked listed companies across 12 Asian markets based on financial performance, management team excellence, investor relations, and CSR activities.
We were recognized this year by the Institute of Corporate Directors with a 1 Golden Arrow Award for our work in continuously improving our corporate governance standards and practices based on the assessment results of the ASEAN Corporate Governance Scorecard in 2021.
Policies and implementation of corporate governance standards and practices from over 260 publicly listed companies across five key categories such as rights of shareholders, equitable treatment of shareholders, role of stakeholders, disclosure and transparency, and board responsibility were assessed. We are one of only 85 listed companies recognized.
We were also recognized for our continuing efforts in doing good for our people. With our culture of merit, collaborative action, and gender equality and inclusivity, we continue to work hard towards being a top employer of choice by creating a workplace that nurtures and inspires talent.
We were recognized by the Philippine Daily Inquirer and Statista in their 2023 edition of “The Philippines’ Best Employers”. The list featured 300 of the country’s most well-loved employers culled from over 100,000 evaluated recommendations from 11,000 employees.
Riding the Momentum in 2023
For 2023, we intend to capitalize on the sustained recovery of consumption in the Philippines as well as building upon the strong momentum that the organization has achieved this year.
Specifically, we are looking to accelerate our store rollout program across most of our formats. This should enable us to broaden our market coverage especially in underserved areas that appear ripe for modern trade penetration. Within our stores, we aim to further improve efficiency through changes in category mix, higher indent and private label penetration, and optimizing logistics costs. We are also working doubly hard to ramp up the rebranding initiatives for Shopwise, Uncle John’s, and the big box format of Handyman Do it Best. We believe that the refreshed and rebranded stores will attract foot traffic, thereby driving SSSG.
Meanwhile, we will take our omni-channel presence a notch higher in 2023. For GoCart, we aim to improve user interface and experience for the website and mobile app. We will also add more stores and banners under its coverage, allowing us to tap a wider online customer base across key cities in the Philippines. Next, we will continue to work with our partners in the digital space. For instance, we can help improve the merchandise mix for Growsari, and accelerate GoTyme’s bank kiosk and cash-in/cash-out rollout across our store network, among other initiatives.
While it is definitely encouraging to see our businesses benefit from renewed economic activity post-pandemic, we cannot simply rest on our laurels. Inflation remains elevated, supply chain bottlenecks persist, and competition has intensified. Nonetheless, we are confident that with proper execution,our retail ecosystem will continue to be the shopping destination of choice for Filipino consumers.
2022 was truly a year of transitions. We saw the Filipinos take to the polls and elect a new President. We also saw the passing of one of history’s longest serving monarchs and the succession of a new one.
Within Robinsons Retail, we also saw transitions within our Board of Directors. Mr. Antonio L. Go who was elected as Independent Director on July 4, 2013 left the Board after having reached the nine- year term limit. We are truly grateful for Mr. Go’s guidance and exemplary service to Robinsons Retail that helped shape the Company to what it is today.
We also welcomed two new Independent Directors. In April, Mr. Enrico S. Cruz joined the Board. He occupies the seat vacated by Ambassador Roberto R. Romulo who passed in January. Mr. Cruz brings with him a wealth of experience from an illustrious career in finance and investment banking. In August, we welcomed Mr. Cesar G. Romero to the Board. He occupies the seat vacated by Mr. Go. Mr. Romero brings invaluable energy and retail expertise to the Board after having been a long time senior leader at a global energy giant, which also happens to be the world’s largest single- branded retailer. We warmly welcome Mr. Cruz and Mr. Romero to the Board and we are confident that their knowledge and expertise will contribute significantly to our continuing journey in retail.
As we reflect on the past and look towards the future, we are filled with a sense of optimism for what lies ahead. Despite the challenges posed by the year that has been, we have remained committed to providing our customers with exceptional service and quality products. We continued to adapt to new technologies and embraced new ways of doing business, and as a result, we have continued to grow and expand.
Looking ahead, we are hopeful that we will continue to thrive in the years to come. The future of retail is bright, and we are well positioned to take advantage of the many opportunities that lie ahead. We will continue to invest in new technologies and innovative solutions that will enable us to provide an even better customer experience.
At the same time, we remain committed to our core values of entrepreneurial mindset, stewardship, and integrity. These values are the foundation of our shared successes and we will continue to uphold them in everything we do.
As we move forward, we would like to acknowledge and thank all our stakeholders for your continued support and dedication to our ambition of bringing joy to every Filipino with better choices. Together, we have achieved great things and we are confident that we will continue to do so in the years to come.
Our hearts are filled with gratitude and thanks. Our hearts are content.
Sincerely,
Lance Gokongwei
Chairman
Robina Gokongwei-Pe
President and CEO