By Denise A. Valdez, Reporter

EARNINGS of Robinsons Retail Holdings, Inc. (RRHI) dropped in the second quarter despite higher sales due to the impact of a new accounting standard.

The Gokongwei-led retail firm said in a disclosure to the stock exchange Friday its net income attributable to equity holders of the parent stood at P946 million for the April to June period, falling 32.9% from P1.41 billion in the same period last year.

Year-to-date, the attributable net income also slid 32.4% to P1.773 billion from P2.622 in the same period last year.

“In (the second quarter), the company reflected the year-to-date impact of adopting the new accounting standard on leases (PFRS 16) effective January 1, 2019. A right-of-use asset is recognized and amortized over the lease term while interest expense is incurred on the lease liability,” RRHI said.

“The shift to PFRS 16 reduced our net income attributable to parent company to P1.8 billion in the first half of 2019, lower by P481 million or 21.3% versus pre-PFRS 16,” it added.

Interest expenses in the six-month period soared to P1.2 billion from P55 million in the same period last year due to non-cash interest expenses on lease liability.

But RRHI noted the adjustments from adopting the new accounting standard are non-cash and have no effect on the company’s cashflow.

RRHI’S core net income — which excludes interest from bonds, equitized net earnings from the 40% stake in Robinsons Bank, unrealized forex gains/losses and non-recurring expenses-declined 30.3% to P927 million in the three-month period.

Excluding the impact of adopting the new accounting standard, RRHI’s core net income went down 2.2% to P2.2 billion.

The company, which operates Robinsons Department Store and Ministop, recorded a 26.5% jump in net sales to P39.861 billion during the second quarter, bringing first half net sales by 27.7% to P77.211 billion.

RRHI attributed the rise in revenues for the six-month period to a 3.9% same-store sales growth (SSSG), on top of additional sales coming from newly-opened stores and the consolidation of Rustan Supercenters, Inc., which was acquired in November.

SSSG is the growth measure of the company’s existing stores, which investors look at to trust that the growth of RRHI is not driven only by opening new stores.

The company said its supermarket business has now become its biggest growth driver, as this segment now accounts for 54% of total revenues from 46% in the same period last year.

RRHI added the performance of its SSSG in the six-month period is largely due to the 11.2% SSSG from its drugstore segment, followed by 4.3% from supermarkets, 3.6% from do-it-yourself (DIY) stores, 3.6% from specialty stores and 2.3% from conveniences stores.

The whole group’s SSSG was at 3.7% in the second quarter. It is targeting a 2-4% SSSG by the end of 2019.

RRHI noted Rustan Supercenters was able to swing to positive operating income in the second quarter (pre-PFRS 16) from losses that dragged the company’s earnings in the first quarter.

It attributed the improvement to “gains in gross profit brought about by the alignment of trading terms, reduction in operating and corporate expenses and alignment in the depreciation policy.”

RRHI owned a total of 1,920 stores at the end of June, spread among 255 supermarkets, 49 department stores, 211 DIY stores, 518 convenience stores, 510 drugstores and 377 specialty stores. This does not include franchised stores of The Generics Pharmacy.

Among the company’s brands include Robinson’s Supermarket, Robinson’s Department Store, Handyman Do It Best, True Value, Toys R Us, Ministop, Daiso Japan, Costa Coffee, Savers Appliances and South Star Drug.

RRHI has so far spent P1.5 billion from its capital expenditure allocation of P3.5-5 billion for the full year.