Good afternoon, everyone, and thank you for joining us today for our first quarter 2026 earnings conference call. I am joined today by Ms. Lorraine Belo-Cincochan, our President and CEO, and Ms. Rosemarie Ong, our COO and SEVP. Before we start, we want to take a moment for something a little bit different. As we have disclosed last week, Ms. Rose is retiring in June, and this will be her final earnings call with us. Ms. Rose has been with us through a lot of change and growth and also a few misses. For nearly a decade, she has been the one many of you have come to know so well on these calls, conferences, and meetings, walking you through our operational performance, answering your tough questions, and always being incredibly transparent and helpful with a dose of levity sprinkled here and there.
Today, before we proceed with the earnings call proper, I would like to hand things over to her for a few minutes. Ms. Rose, the floor is yours. I know I speak for everyone on this call when I say thank you for sharing your knowledge and insights about Wilcon, our industry, and market. We learn so much. Ms. Rose?
Yes. Thank you, Jean, for that very generous introduction. Good afternoon, everyone. As you may have heard, I will be retiring from Wilcon, the love of my life, effective June 15. I would like to take this opportunity to thank you all for your trust and support throughout the years. I am really very grateful for the opportunity to have worked with all of you with such an engaging and insightful investor and analyst community. A heartfelt thank you first to the analysts who have covered us with such diligence and sharp insights. Thank you for challenging us, especially me, and of course, for making us better. You always try to bring out the best in us. To our investors who have believed in our story since the beginning and stayed with us through the ups and downs.
You have all become valued partners on this journey, and I am deeply grateful for your patience and some shared sense of humor, especially when I have my share of bloopers along the way. I am most specially thankful that many of these professional relationships have grown into lifelong friendships that I will cherish forever. What I have learned after all this time is that numbers only tell a part of the story. Behind every quarterly result, every forecast, and every model lies something more important. The people, the talented teams working tirelessly, our customers whose needs and behaviors have evolved and are being served by us. Of course, the market that constantly reminds us that the power of adaptability and resilience is really very important. What may appear to be a simple number or a spreadsheet often represents years of hard work, strategic decisions, and unwavering perseverance.
The work we've done was far from easy, but no doubt rewarding and fulfilling. As I step back from my role, I leave knowing that Wilcon is in very capable hands. Lorraine will share with you the results later, but I would say that the company is doing quite well, and I believe this momentum will continue. I am leaving on a higher note. While I may be retiring from the corporate world, I am sure that I will be bumping into some of you in events. Please don't hesitate to say hi to me. Thank you again for making these years very rewarding. I leave with great pride in what we have accomplished together. It has truly been an honor and a pleasure to meet, converse, and connect with all of you.
Wishing you all continued success and, of course, strong returns, and I hope that a good comeback for the Philippine market. Take care, everyone, and have a good afternoon.
Thank you again, Ms. Rose, and we will still surely see you around. Let's start. But before turning over the call to Ms. Lorraine, just a short reminder that this call may contain forward-looking statements that are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from expectations. This disclaimer is likewise included in the press release and the presentation materials distributed to you earlier. Ms. Lorraine?
Okay. Thank you, Jean. Good afternoon, everyone. Thank you for joining us today at our first quarter 2026 earnings conference call. For this quarter's performance, our net sales for the quarter reached PHP 9.17 billion, higher by 9.1% year-on-year with a comparable sales growth of 4.7%. Our gross profit margin rate contracted to 37%, after-tax net income of PHP 563 million, up by 4.9% year-on-year. EBITDA margin of 12.5% and EBIT margin of 7.9%. The company opened three stores in Luzon during the quarter. For total sales breakdown, the Depot net sales of PHP 8.828 billion, comprising 96.3% of total net sales, rose by 8.8% or PHP 713 million year-on-year. Traced mainly to same-store sales growth of 4.6%, with new store sales accounting for the remaining 4.2% increase. The DIW stores, meanwhile, accounted for 3.1% of total net sales, with PHP 285 million.
The format's net sales grew 10.4% or PHP 27 million year-on-year, with SSSG of 1.6%. The remaining 0.6% of the total net sales was contributed by project sales or transactions with major institutional accounts, which totaled PHP 56 million, reflecting an increase of PHP 22 million or 62.9% compared to the previous year. Product categories performing better than average were Paints & Sundries, Electrical & Lighting, Furniture & Houseware, Building Materials, and Plumbing & Sanitary Wares. Comparable sales for the Depot format were up 4.6%. Likewise, in Do It Wilcon format, at 1.6%. Project sales comprised the remaining 0.6%, totaling PHP 56 million for the quarter and growing 62.9%. Comparable ticket size increased by 4.5%, while comparable transaction count was flattish at 0.2%. For the quarter, gross profit totaled PHP 3.394 billion, up 4% or PHP 131 million year-on-year.
Higher sales growth of the lower margin non-exclusive products, coupled with a decline in the gross profit margin rate of select categories, contracted the blended GPM rate to 37%. The contribution of exclusive and in-house brands dropped to 51.7%. Operating expenses, including lease-related interest expense, rose to PHP 2.771 billion, up 4.1% or PHP 108 million year-on-year. The increase is traced mainly to the increase in depreciation expense for both new leases and store buildings. In view of the new stores open, utilities, trucking, and outsourced services. Operating other income of PHP 103 million is higher by 6.8% or PHP 7 million year-on-year, due mainly to the improved collection of supplier-related fees and rental income, partly offset by the decrease in delivery fees and other customer charges. Total other income, including interest income, totaled PHP 120 million, increasing by 8.7% or PHP 10 million over the same period last year.
Net income for the quarter totaled PHP 563 million, 4.9% higher or PHP 26 million year-on-year. WLCON's total assets amounted PHP 41 billion as of March 31, higher by 0.8% or PHP 315 million from December 31, 2025. Total liabilities amounted to PHP 17.1 billion, higher by 8.9% versus PHP 15.7 billion balances at the end of 2025, mainly due to additional lease liabilities.
Total equity amounted to PHP 23.7 billion, with 4.3% decrease of PHP 1.1 billion versus December 31, in view of the declaration of dividends of PHP 0.4 or 40 centavos rather per share, equivalent to PHP 1.64 billion. We continue to be bank debt-free with the company's liabilities consisting mostly of trade payables and lease liabilities recognized under IFRS 16 guidelines. Capital expenditure for the quarter amounted PHP 417 million, covering construction of new stores, renovations, store and transport equipment, IT infrastructure, and software. This is our historical margins.
Our dividend history for every year since we have been listed, we have given out cash dividends, and for this year we have declared our highest payout to date, reaching 67% of our 2025 net income. We remain committed to distributing cash dividends consistently every year. For our growth strategies, we are focusing on growing our store network thoughtfully, expanding into the right markets while doubling down on the locations that are doing well and with potential upside. By refining our product mix and building a brand that people truly value, we're ensuring long-term success. At the same time, we're constantly improving how we connect with our customers to make every interaction smoother, faster, and more meaningful as we scale further. We want to grow where it counts and perfect what works.
We're gradually moving away from depending too much on generic growth of our longtime core products and toward a portfolio of products that are relevant to our customers, which they are seeking out and which we're proud to stand behind. Even if this means a temporary margin squeeze as we develop our advantage in carrying these products, it will still result in improved returns on our investments. By strengthening our brand and making our digital and physical shops easier to use, we're building a business that doesn't just get bigger, it gets better. Thank you. May I turn you over back to Jean for our Q&A.
Thank you, Lorraine. We're opening the floor for your questions. You may click the raise hand icon or type your questions in the chat box. Anyone wants to throw the first question? Karisa, yes?
Yes, hi, good afternoon. Thank you for the call. Just wanted to ask if you could expound on what led to the GPM contraction in the first quarter. Did you do further discounting? How do you see margins trending this year given the Middle East conflict? Will you be able to pass on incremental costs via price increase?
Yes, sure. A lot of factors. There's the sales mix. The Paints & Sundries, again, was the top nurture, growing by close to 20%. It's the category with the lowest margin, so there's that. Number two, actually, our discounting has declined year-on-year. I'm not sure if you recall that before we said we wanted price refreshes. From the beginning, we kind of adjusted already our pricing of our products, and now we're seeing more clearly the impact of that as the old inventory gets sold and the new ones coming in with the new prices and all that. We're seeing the effect of that also. There are categories that even the in-house brands categories, that their GP margin has kind of reduced. Yeah. For the full-year, it will all now depend on the mix.
The contribution of the in-house and exclusive brands declined to below 52%. If we could get that up to over 52.5%, then we can still pull up the GP margin to 37.5%-38% for the year.
Thanks, Jean. Can you share some indications on how same-store sales growth trended in April, and what is your outlook for same-store sales growth this year?
It's going up. April is doing good, actually. Am I allowed to say that, Jean?
Yeah.
So far, April is okay because also it's a bit of a high season because summer. It may be because of a confluence of being summer, so construction is in full swing, and also because people are trying to catch the old price because we haven't really done any real price adjustments. So we've been really deferring price adjustments, although we've had some here and there. Generally speaking, contractors, professionals are basically working to lock in so that their contracts are at a cost that makes sense for them to continue doing business. So that's been the trend that we're seeing.
I've been speaking with our stores and quite a few have been inquiring if we will be increasing prices, and basically, we encourage them to lock it in because obviously we have price increases. Our costs have also increased, obviously, everybody has a higher logistics cost. So that's what we've been seeing so far in April, and seems to be in May, it's continuing since summer is still construction season.
Thanks, Lorraine and Jean. That's all from me.
Thanks. Thanks, Karisa. Anyone else? Sangram. Sangram. Sorry. The chat room. Yeah. We'll get to the chat questions after Sangram.
Yeah. Hi. Thank you. Thank you for the opportunity. First of all, thanks a lot, Rose, for all the meetings that we have had in the past and patiently answering all our queries. So wish you all the best in future. So, and look forward to meet you whenever we are there in Manila again. Regarding the outlook, could you help us understand how's the Hello?
Hello. Yes.
Yeah. Hi. Could you help us understand the demand scenario? Especially last time around when we spoke, we did say that competition has slowed down considerably. That gives us some benefits on the pricing side as well. Now given that we are into the second, third month of the crisis, and even the logistics costs, et cetera, are also moving up. How is the scenario with regards to availability of goods, one, and two, in terms of pricing, is it easy to pass on the prices of the new goods that are coming into the inventory? Vis-a-vis the older discounted prices. How is the customer behavior here? Because when we look at the sales, SSSG at 4.6% and average transaction volumes at 4.2% or ticket size is going up, et cetera, it definitely shows that adoption is happening.
But whether it's actually happening with the newer prices coming through, could you help us understand that? That would be my first question.
For the pricing, we haven't actually done any price increases. The increase on the SSSG is not really reflective of price increase, though we have increased in certain products like Paints & Sundries, it's directly connected to oil prices, petroleum products. By and large, most of the products that we have, we have not increased prices. It's not that. Your question on buying behavior, what's been going on. Okay, so yes, we can pass on the price increase. Historically, that's what we normally do. The challenge right now is basically everything is going up. Like inflation going up, costs of everything going up. So wallet share is shrinking. When you're constructing or building something, the first thing that you pay money for is the structural, which is cement, steel. And that has all gone up because obviously it's commodity and it's really reliant on transportation.
In terms of buying behavior, what I noticed, especially when I've been talking to our stores, is, like I mentioned earlier, they're recalculating their costs. Especially if they have a contract with a customer to build a home. And there's probably downtrading. They want to have a certain level of quality in servicing the customer because they've had this agreement. But of course, they have to make money as well. I would see that there would be, okay, instead of this, we would just, okay, we can buy this. And then you would assume, naturally, they would think about buying cheaper. Cheaper beyond our target, our pricing. They'd go into a lower price. So behavior-wise, I think most of our customers, because they're used to a certain level of quality, they would still prefer to buy from us.
They would downtrade for products that are a bit lower so that it would fit the original budget, because most of the budget got consumed by steel and cement. The rest of it, maybe there's not much left over, they'd buy cheap. They'd probably go to smaller hardwares or lower quality products. That's how I'm seeing the behavior, because the budget is fixed. The homeowner's not going to say, "Hey, here, additional 20%, 30% for the budget." That's not what's going to happen. What we do is we assure our customers that for tile, our core product, tile, sanitary, we have not increased prices, and we, in fact, have stocks. We've mentioned earlier if we have problems acquiring stock. Nothing out of the ordinary. Normal production hiccups sometimes. It's fine for us.
Sourcing is not that big of an issue at this point in time. Just really the increase in the shipping cost, basically because of the bunker fuel surcharge.
Would that mean that ideally, when there is downtrading happening, shouldn't your private labels or exclusive brands actually move up in terms of the overall sales?
Yes. Correct. Q1
But in Q1 they were actually coming down. The contribution from your private label and exclusive actually came down. One of the reasons for your GP margins contraction also, right?
Yeah. Because when they downtrade, the price is lower.
Yeah, but wouldn't your private label contribution increase when they downtrade?
But it's cheaper per unit. But it's cheaper per unit. If you buy a tile
Okay.
Right?
It is 500. And maybe you downtrade, and then it is 300 or 200. You buy the same quantity. You won't buy more quantity for your project. So you pay the 300 versus the 500, something like that.
Got it. So going forward, how should one look at the growth for the rest of the year? Because this Q1 and so far in April and May, you have weathered the situation pretty well in terms of your SSSG and volume growth. If the situation improves going forward, I am not saying that inflation cools off, inflation might remain at current levels. If it doesn't deteriorate from here on, can one see a double-digit growth for the year? Or a high single-digit growth like what we have done so far in the first four months, five months? And what I am trying to say, because we have a low base last year also.
Yeah.
That should definitely support us in our journey.
For total sales growth, yeah, we can definitely see a double digit. If this trajectory will continue, and the war wouldn't really affect the demand side of things, we can certainly see a double-digit growth for the top line.
But on the margin side, do you see this 37% growth being the bottom, or do you see further erosion happening?
Hopefully it is the bottom. It's actually even below what I've always said that
the sustainable GP margin will be is for us. But then because the contribution of our in-house brands and exclusive brands dipped below 52%, then definitely that was an issue. But if we can keep our contribution up. The thing is, the non-exclusive brands, for example, let's not talk about paints, let's talk about tiles. They're also fighting for their lives. So pricing-wise, they've been very competitive. And of course, internally, we also don't discourage, for example, the unit or the team that's in charge of the non-exclusive brands. Of course, they're also working hard to keep their sales up. And management, of course, anything to keep the sales up, we encourage. But of course, not to the point that we would be losing money. So that's what's happening.
And since the non-exclusive part is more competitive and you would have competitors while this Middle East war has cooled the intensity of competition, especially for the direct imports. You would still have the brick-and-mortar players also, as I said, fighting to survive. So in terms of pricing, it's more competitive then. And it's usually because of the unfair comparison. We are being tagged as very expensive and all that. We have the perception for Wilcon is for that. So at least those directly comparative items, we have to be competitive or the same with our competitors. But all these things, it's a very dynamic business. So you navigate through it and then sometimes it's just cut off.
Like next cut-off or next quarter, a big sale here and there might change things. Then we'll be talking about That's why sometimes, the quarterly results, you'd be contradicting yourself by the end of the year. But what we are sure that we're going to do is that we have to protect our market share, and of course, still push for margin expansion through our own product. Then again, if you will prioritize it, we want first our customers to stay with us, and even those who looked elsewhere for their products will come back to us. So that's our priority now. Then we'll just have to, as what Lorraine said in her report, there may be temporary margin squeeze as we navigate and recalibrate our merchandising, how we sell. But definitely, the goal remains to be growth everywhere in every aspect.
Got it. Finally, the logistics costs, do they get captured under the gross margin levels, or do they come under operations?
Both. From the manufacturer, for example, from China, so the logistics cost from China all the way to our main warehouse, that's captured in the cost of goods. From our main warehouse to our stores and to our customers, that's captured under OpEx.
Okay. So that's why you have a double impact on both gross margin-
Yes
as well as your
Correct
EBITDA margin.
Yeah. Sometimes it's also the timing of the shipments.
Because sometimes it's difficult to- Because you lease your truck, for example. You lease your truck on a monthly basis, or you have a three-year contract or whatever. Then, if for this month, there are 100 shipments, then the payment gets divided into But the next month you have 50 shipments, then the trucking cost for that month will be distributed to a lot less products.
Got it. Finally, in terms of the real estate sector in Philippines, when you look at the commentary from the big players, they are all pulling back on their new launches. They are trying to liquidate the inventory, which is taking its own time, et cetera. Amidst this situation where new launches or new building are not happening, is renovation picking up? Because that's also a cycle which has
Yeah
post-COVID, one or two years, and then, we have had these three years of
Yeah
slack period. Somewhere the renovation period, the cycle should also start to kick in, right?
Yeah
this year, and it's supposed to have kicked in from last year, but at least this year it definitely should come in, right?
Yes.
So
Definitely, because our Metro Manila SSSG, after a lot of quarters of negative growth, is now positive this quarter. Metro Manila is now positive SSSG this quarter, and with the decline in new units sold, definitely these are all renovation projects.
Got it. Thank you. I'll come back in the queue.
Okay. We'll
Excuse me, Jean?
Yes. Oh, hi, John.
Hi. Sorry, I couldn't find the hand button. So I'm John Watson.
Okay, go ahead.
Thank you. A couple of ones. A simple one is, what was the sort of CapEx roadmap for the next few years? The other one is more conceptual. I traded PHP 30 a while ago, and I guess everybody had this idea, Philippines is a growing economy, growing middle class, where people are going to go to your stores instead of the mom and pops.
Correct
when they're going to do their renovations or build a new house. I guess since then, we've always had a big de-rating of the company. Then we've had these succession of crises. We're not in this sort of steady state, 5%+ GDP growth, growing middle class and so on. I suppose the question is, can we get back to that kind of IKEA in its first flush of youth kind of thing, and rapid growth and big same store sales, or has that sort of thing gone, and we're now in this kind of new era where there's more competition online and so on?
Yeah.
Maybe the middle class is not growing, and we're never going to get back there, so we're going to just have real sort of messy kind of future that's not so great. What do you think?
Well, actually, pre-pandemic, we were in this space, like 4%- 6% SSSG year-on-year. It was only because of the pandemic that we experienced a wild ride, right? I mean, our sales plunged and then flew off the roof. When we first listed, the growth pace that we envision Wilcon to have, it's right about like this. It was not something like 2021, 2022, because that one was really all about because of the pandemic.
Okay. Well, I guess the question is, can we get back to this kind of more regular sort of pace of growth, or has the competitive landscape changed? Or the economy, because we got hurt by the scandals last year and so on. I'm just wondering if the Philippines itself and the middle class, if we can get back to some kind of regular kind of growth or if things are changing, I don't know.
Well, the Philippines has gone through a lot of something like this in the past. Wilcon has been here for almost 50 years and has weathered everything, and there would have been periods of incredible growth or steady growth. Wilcon has experienced all those. What our expectation is that?
The landscape really, I think. Okay, so we rely of course, on the middle-class market to grow. That's the bigger market that we want to address. There's that. As long as the middle market, and obviously the more premium market grows, then they want to buy in modern retail trade. For the Philippines, that's kind of what we see. That's where we want to grow with in the Philippines. That also goes for geographic areas. There would be areas where the growth is a little slower than in Metro Manila. We kind of chase that growth to the cities or the provinces in the Philippines. In that sense, we do look at it. I understand what you're asking. You want to see maybe a steady growth, steady middle class growing and everything.
That's something we also want and that we also sort of expect, especially when we open in a provincial area or a region where we know that there's a lot of opportunity to upgrade or build houses. Given all of that is really the hope whenever we open new stores, and we do have some more sites and locations that we're looking at. I mentioned earlier in my report, we do want to be more thoughtful also on the regions where we are, where we operate. Maybe perhaps we need to add one or two more to augment the existing store. But generally speaking, we've already covered all of the regions in the Philippines, except maybe for war-torn areas. We kind of don't want to go that way. But generally, we are in all the major areas. The other side of that is competition.
Obviously when there's growth and then there's opportunity, competition is there. The way the competition is working out is there's e-commerce, which is kind of no stopping them from going in with no tax. There's no anti-dumping from the government side. That still remains to be the market segment where very cheap and very quick repair work, they will buy through online. Then there would be smaller mom-and-pop or very small, like should I mention MR.DIY? Things like that, like convenience store types, that will eat at small repair work. Then there's the other side, which is direct importing. There would be businesspeople as well, and engineers, architects perhaps, or contractors that would go direct and buy direct, and that would be bypassing us. Therefore, that kind of dampens our growth.
I have seen, so we see in some regions in the Philippines where it is very easy for them to just do import, deliver to their warehouse, and then just buy it. What happens is they will buy certain things from us, and then they will import directly certain things that they can get a better deal from. As to whether that is something that is sustainable for their business, I do not know. It depends how they manage customs and all of these logistics costs. All of this is like a confluence of events and the market and how we are growing, like the Philippines is growing. The middle class, we would like to think, is also growing, barring all this inflation and things like that. The growth that we have, maybe you are looking for like, okay, middle class is growing, we are also growing together with it.
All of these other factors, they are kind of the ones dampening our growth. The steady state, because they see that, oh, Wilcon is growing, you can just kind of directly go import and search online. Then you can go direct to the factory or buy on TikTok. That is kind of the thing that has been hampering our growth. Not to say that we are not an option anymore, because when you construct something, when you renovate something, you want to be assured of the quality that you are putting in your home. Then sometimes you forget that, okay, I forgot to order this. I will not have the time or the cash flow to order online or order from a factory and bring it in, wait for the customs clearance, and have it delivered to my job site.
There is still a big market where we still service, just that there is this part where there are all these enterprising, I suppose, or business people. They are in this business, and they do it that way. They make it into a business. So they build condo units, I do not know, townhouses, maybe low-cost housing. They will import it, and then they will sell it. There is that part of the market where I think it is growing, but that is the competition side of it. That is not retail. That is how it is working right now in the market. We work with it because that is why we have all these product categories. We have Building Materials. If you will see, our Building Materials grew, our Paints & Sundries grew, because you cannot really import Paints & Sundries. It is very difficult.
There are all these things that we can offer to them, but we have to work with them. If they want to import certain things and other things they do not have that cash flow maybe, we are there to serve them. That is why I mentioned we want it to be more, okay, whatever it is that we want to service the customer, that is where we will be. Sometimes it is a local brand, and that is why partly the GP is a bit affected because sometimes it is a local brand that we have to kind of compete a bit on price, especially in provincial areas where it is really all about price.
Sometimes it's the same brand, the same thing, but because we want to get the whole volume or we want to service the whole project, we will go down on price on some things, especially now that people want to look at their budget. So in that sense, the growth is there, but we're kind of like, I don't know if cat and mouse is the right way of saying it. It's like, okay, they do this, then we do this. We adjust. This is where we're going, but then they come in, okay, we import or we do TikTok and things like that just comes in and then we just kind of adjust on the product mix and the way we sell. I don't know if that answers your question.
No, that's a great answer. Thank you, Lorraine and Jean. The only thing I'll say is if you look at the whole addressable market you've got, I'm back a few years ago with that competition then. You've got the new competition coming in. Do you still think you've got the same kind of market share? Obviously, you're growing, but are you growing as fast as the market? Faster? Or have you lost a bit of share because of all these different things?
Okay. Not really losing market share, but with the online thing, there is this whole world that we can still tap because we've never been big on online. The past few months or the past year, we've been dipping our toes into this online thing and mining the marketplaces for information. There is a whole new world there of merchandise and opportunities that we haven't even tapped. So, there are always growing pains and we're still kind of harnessing our skills to be successful in getting a part of that market. So in terms of addressable market, it hasn't shrunk at all. In fact, I would like to believe that it even expanded, and it's just really up to us when we can really also participate in that expanded area of the market.
Thank you very much, Jean. I'll step back and give somebody else a turn.
Okay. We will read the questions here in the chat box. From Christina, hi. You were asking about the outlook for our project sales given the property sector affects budget spots. Lorraine, maybe you want to answer that.
We're doing a bit of a reorganization. We are actually folding in institutional accounts or project sales into our regular sales, since we are less than 1% contribution on project sales. Given the current situation of the property sector, what's been happening actually is they've been pushing more for horizontal developments. So they're doing subdivision or residential areas, especially outside Metro Manila where they have property, and usually by and large that's sold by lot, right? So the homeowner is the one in charge of putting up or building the home, and not so much as building a vertical condo unit.
What happens is it will now be on a per house engagement, and so institutional, like we have with Ayala, the big conglomerates, big real estate developers, we'll be folding in the servicing of those accounts to our sales, which will have a division that will handle that. The rest we want to take opportunity in the horizontal developments where our stores, wherever, close in proximity to the development, they'll be the ones to handle the sales of the individual homes or properties for development. Yes. So that's what we've been doing, is we've been really seeing the writing on the wall for that.
The next question is, in what product segment do you have greater pricing power than competition? Are you keeping product price? Is it selective or general, and in what products do you have price increases?
Everything is affected by logistics costs. We have target margins, right? Everything that has a price increase in terms of logistics, if it doesn't meet that target margin, we will generally have a price increase. We want to cut all the costs. Not all the costs, be more cost-effective in bringing in goods. Simply, we want to fill up the container. We really want to put in all the products so that it's cheaper to bring it in. Doing all these measures, but when it hits that certain ceiling where the price is just we can't really absorb it anymore, we will increase price. The most affected will be the heavy products. That's tile, sanitary wares. What else is heavy? Building materials.
That's why tile adhesives, chemicals, they have gone up in price because they're very heavy products like cement and steel. Where we have as pricing power, I can't really say, like, okay, we sell this very cheap because we have a dominance of this. I don't think so because as I mentioned, there's Alibaba, there's online, TikTok and everything, so that erodes.
Okay. What else? Yeah, we'll be selective, though, because we want to see what the market is able to absorb, meaning, has our competition increased prices? Normally we're the last to increase prices. For now. What is the breakdown of the 8 store openings this year? All in Luzon. Yeah. I think it's all in Luzon. Yeah. And with one Do It Wilcon. Your press release mentioned a degree of stockpiling in first quarter 2026. How was growth in April? I think this was already answered. April growth was still good. Could you provide some color on the increase in project sales? Those were sales actually closed maybe months ago, maybe a year ago, and just got delivered. So that's projects that is. It's not a reflection of the sales and the effort of the team for that period.
Because we only recognize sales upon delivery, and project sales, they're usually closed like months or even years before that. Could you share some insight as to when you could pass further to consumers? I think that's been answered. How much pressure are you currently seeing from increasing costs, if any? I also answered. Could you share how competitors are faring given the current cost environment? The smaller ones, I think by talking to non-exclusive suppliers, they think the sales from us outpace those of our competitors, especially the smaller ones. They've also increased prices on the normally, like adhesive chemicals, things like that really had to increase prices. So they've increased, and then we followed after that. Because we have stock. So we have inventory buffer. They don't normally have that much of an inventory buffer, so they would have price increases.
Generally, they would also have price increase on delivery charge. Because it is bulky product, you usually have to pay quite a bit for delivery charge. They would increase their prices before us. Actually, we haven't increased our delivery charges even if the price of diesel has increased twice, 2x already, or 3x . There is another question here from John on CapEx for the next few years. We are still looking to open six to eight stores per year. I mean, in real prices, not counting how high the inflation will be. I think we will be good between PHP 2 billion-PHP 2.5 billion per year. To what extent was the decline in sellables attributable to unfavorable sales mix versus deliberate pricing initiatives to support the volumes?
I can't really It is more on the sale of the mix than the deliberate. Because when we deliberately price our products to have a lower margin, the sales is not that high. It is really the mix that is impacting more than the margin. What led to the 31% year-on-year decline in the trade payability interest expense? Yes, it is going to be a temporary high point. But for this quarter, meaning the second quarter, there would be a notable increase, I guess, because the 36 or so leases that expired last year and we were able to extend for another year, will expire May 31, at the end of this month. We will have new lease contracts for these expiring leases, and that should, again, increase lease payabilities, and then it follows that the lease interest expense will also increase.
It is only because the interest expense for these expiring leases were the lowest. That is the last five months. It is just that. It is very temporary. The last one here. Is the store opening target of eight new stores set in stone, or is it flexible, subject to change given geopolitical, Actually, it is more on I mean, it is set in stone, but the only thing that could delay it is regular construction delays. Weather. Yeah, because the construction is already in motion, so you can't really stop it. Already ordered the materials and everything. It is really going to be more expensive for us to delay it. In connection to that, our customers, when they are in the middle of their projects, that is why they are just forward buying the products because they can't stop the construction. It is kind of the sustaining.
Any more questions? I think the time is right there. Thank you again, everyone, for joining us today, and see you in our next earnings call. Thank you.