Skip to main content

Metro Retail Stores Group Posts Modest Gains Amid Margin Pressure and Cash Strain



Cebu City, Philippines — Metro Retail Stores Group Inc. (MRSGI) reported a slight improvement in profitability for the nine months ended September 30, 2025, as revenue growth was tempered by rising operating costs and a sharp drop in cash reserves.

Sales and Revenue Performance

Net sales climbed 4.1% year-on-year to ₱28.70 billion, driven by a 4.6% increase in food retail and 2.8% growth in general merchandise. Rental income surged 10.8% to ₱307.2 million, boosting total revenue to ₱29.0 billion, despite a 0.9% decline in same-store sales. 

Margins and Expenses

Gross margin held steady at 21.7%, but operating margin slipped to 1.63% from 1.81% last year as operating expenses jumped 8.7% to ₱6.06 billion. Higher utilities, personnel costs, and depreciation from new store openings weighed on profitability. Net income edged up 4.2% to ₱213.3 million, while finance costs rose slightly to ₱381.0 million.

Liquidity and Cash Flow

Cash reserves fell 69% to ₱711.5 million, reflecting heavy capital spending of ₱1.21 billion, dividend payouts, and debt servicing. Although operating cash flow improved to ₱962.6 million, free cash flow remained negative. The current ratio stood at 1.47x, with the quick ratio at 0.35x, signaling tight liquidity. 

Operational Metrics

Inventory levels increased by ₱713.8 million, pushing days-in-inventory to 81 days, while payables averaged 66 days. The cash conversion cycle was approximately 25 days, underscoring working capital pressure ahead of the holiday season. 

Debt and Lease Obligations

Outstanding loans totaled ₱2.31 billion, down from ₱2.66 billion at year-end, while lease liabilities remained significant at ₱5.25 billion, despite recent space reductions that generated a ₱119.9 million gain.

Valuation and Dividend Yield

Metro Retail Stores Group trades at ₱1.14 per share on the Philippine Stock Exchange, giving it a market capitalization of about ₱3.7 billion. The stock’s price-to-earnings ratio (P/E) stands at 5.7x, well below sector averages, suggesting the market is pricing in modest growth and operational risks. The price-to-book ratio is approximately 0.39x, reinforcing its undervalued status relative to its assets. 

For income investors, MRSGI offers an annual cash dividend of ₱0.06 per share, translating to a dividend yield of roughly 5.2% at current prices. The payout ratio is about 31%, leaving room for reinvestment while maintaining shareholder returns. The last ex-dividend date was April 23, 2025, with payment made in May. 

Outlook

Management faces the dual challenge of sustaining growth while curbing cost inflation and preserving liquidity. Analysts point to the need for tighter inventory control, cost optimization, and selective expansion to protect margins and cash flow. 

Subscribe to Support Independent Research

Comments

Post a Comment

Popular posts from this blog

From Meralco to Rockwell: How the Lopezes Restructured to Put Rockwell Land Under FPH’s Control

  The Big Picture In the span of just a few years, the Lopez family executed a complex corporate restructuring that shifted Rockwell Land Corporation firmly under First Philippine Holdings Corporation (FPH) —even as they parted with “precious” equity in Manila Electric Company (Meralco) to make it happen. The strategy wove together property dividends, special block sales, and the monetization of legacy assets, ultimately consolidating one of the Philippines’ most admired property brands inside the Lopezes’ flagship holding company.  Laying the Groundwork (1996–2009) Rockwell began as First Philippine Realty and Development Corporation and was rebranded Rockwell Land in 1995. A pivotal capital infusion in September 1996 brought in three major shareholders— Meralco , FPH , and Benpres (now Lopez Holdings) —setting up a tripartite structure that would endure for more than a decade.  By August 2009 , the Lopezes made a decisive move: Benpres sold its 24.5% Rockwell stake...
Post a Comment
Read more

ABS-CBN Faces Financial Crisis as TV5 Exits Over ₱1B Dispute: Why Lopez Group Must Use Its ₱50B Windfall to Rescue Its Media Flagship

TV5’s termination of its partnership with ABS-CBN over a ₱1 billion payment demand exposes deep financial cracks. With ₱13 billion in payables and cash reserves down to ₱718 million, the Lopez Group must act fast—using its ₱50 billion windfall from First Gen’s sale to Enrique Razon—to prevent a collapse that could damage its entire credit reputation. When TV5 , backed by the Manny Pangilinan group , pulled the plug on its partnership with ABS-CBN and demanded a ₱1 billion payment , it wasn’t just a broken deal—it was a warning shot. A signal that the financial cracks in ABS-CBN are widening, and the tremors could shake the entire Lopez Group . The numbers are stark: ABS-CBN’s SEC filing shows ₱13 billion in trade and other payables , a ₱11 billion working capital deficit , and cash reserves down to ₱718 million . These aren’t minor hiccups—they’re existential threats. When a major partner like TV5 walks away over unpaid obligations, others will take notice. Talent agencies, event venue...
Post a Comment
Read more

BDO’s Premium Under Pressure: Why Investors Should Watch CASA, Margins, and Cyber Risk

BDO Unibank has long been the crown jewel of Philippine banking—commanding scale, profitability, and a valuation premium that peers struggle to match. But its latest quarterly filing and sector trends suggest that the next chapter may be more challenging than the last. The Margin Squeeze Begins The first red flag is in the funding mix. Current and savings accounts (CASA)—the cheapest source of funds—slipped from about 71.5% at end-2024 to 66.6% by September 2025. Time deposits surged by nearly ₱300 billion. This isn’t just a footnote; it’s a structural shift that raises funding costs. Combine that with the Bangko Sentral ng Pilipinas’ rate-cut cycle—policy rate now at 4.75% and likely heading lower—and you have a classic margin squeeze: loan yields fall faster than deposit costs. For a bank with ₱5.27 trillion in assets, even a 10–20 basis point hit to net interest margin (NIM) can shave billions off earnings. Consumer Credit: A Quiet Risk BDO’s consumer book is growing, but so a...
Post a Comment
Read more