Analysts see steady but uneven growth for PHL retail this year

By Alexandria Grace C. Magno

THE PHILIPPINE retail sector is expected to post positive but uneven growth this year, supported by favorable demographics, steady household spending and continued digital adoption, analysts said.

Challenges such as intense competition and margin pressures will persist, they added.

“The outlook for the Philippine retail sector in 2026 is generally positive, though growth is likely to be uneven across segments and regions,” Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said in a Viber message.

He said retail activity should continue expanding this year, driven by population growth, rising incomes and a gradual shift toward modern and digital retail formats. However, he noted that consumers might remain cautious, prioritizing essentials and lower-priced discretionary items over premium purchases.

“Retailers that focus on scale, efficiency and broad market reach are likely to perform better than those dependent on high-end or purely discretionary demand,” he added.

Marky Carunungan, an investment analyst at F. Yap Securities, described the 2026 retail outlook as balanced. He said consumer spending is expected to remain steady, supported by easing inflation and sustained remittance inflows, even as economic growth moderates and job conditions normalize.

He said a supportive macroeconomic backdrop, including the government’s projected 5% gross domestic product growth, could help underpin demand. Still, he cautioned that retailers would likely contend with tight competition, wage-related cost pressures and softer spending on nonessential goods.

“Retail growth is likely to be earnings-led rather than volume-driven, favoring operators with scale, strong execution and exposure to essential and value-oriented segments,” he said.

Subdued market conditions might still provide enough support to offset some of the sector’s headwinds this year, said Shawn Ray R. Atienza, an equity research analyst at AP Securities, Inc.

“A wage hike-led acceleration in consumer spending could marginally improve margins of listed retailers over time, while a demand recovery in discretionary spending is seen as the overhang from the flood-control mess slowly subsides,” he said in a Viber message.

Retailers’ financial results in 2025 reflected this mixed environment. Several listed firms posted gains due to revenue growth and margin improvements, while others had profit declines linked to higher expansion costs, weak store traffic, bad weather and competitive pressures.

Puregold Price Club, Inc. posted a 5.6% increase in consolidated net income for the first nine months of 2025 to P7.3 billion, supported by solid revenue growth and a modest improvement in gross margins.

Metro Retail Stores Group, Inc.’s third-quarter net income dropped 35.74% to P66.99 million from a year earlier, largely due to higher initial operating costs from network expansion. For the first half of the year, however, it posted a 4.18% increase in net income to P213.25 million.

Construction supply retailer Wilcon Depot, Inc. posted a 15.75% increase in third-quarter net income to P703.37 million. For the first nine months of 2025, its net income declined 11.9% to P1.87 billion, reflecting softer demand in the housing market.

SM Retail, Inc., SM Investments Corp.’s retail arm, reported a 4.69% decline in nine-month net income to P12.2 billion, even as revenue rose 5% to P318.1 billion. Same-store sales grew 3% for department stores and 4% for specialty retail, while food retail revenue climbed 7%.

Robinsons Retail Holdings, Inc. posted a 13.49% drop in third-quarter attributable net income to P872 million.

The third-quarter net income of Philippine Seven Corp., the local operator of 7-Eleven, fell 26.2% to P600.4 million, mainly due to weaker same-store sales caused by prolonged rainy weather. For the first nine months, its net income declined 7.79% to P2.38 billion.

Specialty retailer SSI Group, Inc. posted a 64.99% drop in third-quarter attributable net income to P188.08 million, as weaker demand in its luxury, bridge, and casual wear segments weighed on results.

AllDay Marts, Inc. reported a net loss of P118.09 million for the third quarter, reversing a year-earlier profit, as sales fell in highly competitive markets.

BDO Securities President John Tristan D. Reyes said food retail is expected to remain a bright spot, supported by a growing middle class, urbanization in provincial areas and continued store rollouts.

“As for discretionary spending, we see a gradual recovery as household consumption growth approaches pre-pandemic trends, favoring retailers that have exposure in health and beauty, kids and fashion, as well as the influx of new international brands,” he said.

“Meanwhile, home improvement retailers would continue to experience aggressive pricing discounts amid slower-than-expected residential recovery,” he added.

Analysts said key trends shaping the sector this year include tighter integration between physical and digital channels, wider use of artificial intelligence and data analytics, faster and more flexible fulfillment and greater emphasis on affordability through private-label offerings.

“Retailers that can balance price competitiveness with convenience, trust and customer experience are likely to be better positioned as the sector evolves,” Mr. Arce said.

Puregold shares closed unchanged at P40 on the local bourse. Metro Retail, SSI Group, AllDay Marts, Wilcon Depot and Robinsons Retail ended higher, while SM Investments Corp. and Philippine Seven Corp. finished lower.