Good afternoon, everyone. Thank you for joining our 2Q and first half 2025 earnings conference call. I am joined today by our CEO, Ms. Lorraine Belo-Cincochan, and our COO, Ms. Rosemarie Ong. Before I turn over the call to Lorraine for her presentation, I would just like to remind everyone that the presentation, and possibly the Q&A after, will contain forward-looking statements. These statements are subject to risks and uncertainties that could cause results to differ materially from expected. This reminder is also included in the materials distributed and the press release. May I now turn over the call to Ms. Lorraine.
Thank you, Jean. Good afternoon, everyone. Thank you for joining us today for our second quarter and first half 2025 earnings conference call. For the second quarter, our second quarter performance was mostly impacted by the long holidays. Outside of these long holidays, however, our sales performance has been very encouraging and trending upward. In June, our SSSG was already positive and improved further this July. In a nutshell, our net sales for the quarter reached PHP 8.7 billion, lower by 1.9% year-on-year, with a comparable sales decline of 6.1%. Our gross profit margin rate reached 38.5%. Our after-tax net income of PHP 626 million, down by 18.7% year-on-year. EBITDA margin of 13.9% and EBIT margin of 9.5%. The contribution of the higher margin exclusive and in-house brands for the quarter was at 52.3% versus 51.5% same period of 2024.
The company opened one new depot located in Visayas during the quarter, and we opened one depot in Luzon. For total sales breakdown for the quarter, the depot's net sales of PHP 8.369 billion accounted for 96.2% of total net sales during the quarter, down 1.5% or PHP 127 million year-on-year. The DIW stores accounted for 3.2% total net sales with PHP 282 million. DIW net sales grew by 10.5%. Project sales contributed the remaining 0.6%, declining by 59.3% as no new major projects were served during the year. Product categories performing better than average were Paints & Sundries, Furniture, Furnishing and Houseware, and Building Materials. For comparable sales at the depot format, they declined by 5.7%, while the DIW format was up by 5.8%. Project sales lower by 59.3%. Comparable ticket size dropped by 4.6%, as well as comparable transaction count at - 1.6%.
Gross profit of PHP 3.349 billion was down PHP 170 million or 4.8% year-on-year, attributed mainly to lower sales and gross profit margin rates. The gross profit margin rates of both exclusive and in-house brands and non-exclusive brands decreased. For the exclusive and in-house products, the decrease was due mainly to pricing strategy, while for non-exclusive brands, it was mainly because of mix. Operating expenses, including lease-related interest expense, totaled PHP 2.622 billion, up PHP 17.5 million or 0.7% year-on-year, mainly traced to expansion-related expenses, depreciation and amortization, utilities and supplies partly offset by the decline in trucking and rent expenses. Operating other income was PHP 17 million, or 15.1% lower year-on-year at PHP 98 million, in view of lower supplier support and decreased delivery fees from customers, partly offset by higher collection of rent and the recognition of lease liability of the branch that burned down last year.
The decrease in supplier support is mostly due to special promotional activities last year. The structure for which required the recognition of rebates instead of reduction to COGS. Non-operating net other income increased to PHP 5.3 million from last year's net other charges, due mainly to the one-off loss due to fire recognized last year. Net income totaled PHP 626 million, PHP 144 million or 18.7% lower year- on- year. For the first half results, the same premise as the second quarter, but again, as mentioned, we are seeing the sales have been trending upward with our June SSSG breaking into positive territories. We are also seeing the impact of the measures we've implemented to control or minimize expenses. Our net sales for the quarter reached PHP 17.1 billion, was flattish at 0.4% year- on- year, with a comparable sales decline of 4.9%.
Our gross profit margin rate reached 38.7%, a NIAT of PHP 1.16 billion, down by 23% year- on- year. EBITDA margin of 13.3% and EBIT margin of 9%.
Contribution of exclusive and in-house brands at 52.3%. As of June, the company opened a total of three new stores, two new depots located one each in Luzon and Visayas, and one Do It Wilcon format in Metro Manila, and also reopened one depot in North Luzon. On a per format basis, sales from the depot format stores amounted to PHP 16.485 billion, with a flattish PHP 16 million or 0.1% growth year-on-year. Sales from new depots increased total sales by 4.5% year-on-year, while comparable sales declined by 4.4%. The smaller format Do It Wilcon, which includes the original Home Essentials stores, recorded net sales of PHP 540 million or PHP 53 million, or 10.8% increase year-on-year.
Same store sales for this format grew by 6.6%, while the rest of the increase was contributed by below one-year sales of the new DIWs.
The remaining 0.5% of the total net sales were accounted for by project sales or sales to major institutional accounts, which amounted to PHP 84 million or PHP 143 million, a PHP 143 million or 62.9% year-on-year decline due mainly to the decrease in the number of projects by major developers served. Comparable sales declined by 4.9% as comparable ticket size continued to trend lower year-on-year in view mainly of mix in pricing, while comparable number of transaction was flattish at - 0.3%. Gross profit for the first half of 2025 decreased by PHP 226 million or 3.3% year-on-year to total PHP 6.613 billion, traced mainly to a lower blended gross profit margin rate of 38.7%, from 39.8% for the first half in 2024.
The lower gross profit margin rate was driven mainly by mix for non-exclusive products and pricing strategy for exclusive and in-house brands. Exclusive and in-house brands accounted for 52.3% of total sales. Operating expenses, including lease-related interest expense, increased by PHP 209 million or 4.1% to amount to PHP 5.286 billion. The increase is mainly due to the height in depreciation and amortization for new stores added from the second half of 2024 to the first six months of this year. Supplies, utilities, and salaries partly offset by the decrease in trucking and rent. Operating other income totaled PHP 194 million, lower by PHP 49.7 million or 20.4% year-on-year, driven mainly by the decrease in supplier support and other fees with the completion of special marketing promotions by suppliers.
Non-operating net other income amounted to PHP 19 million, higher by PHP 16 million or 696.6%, due mainly to the one-time charge of the initial loss due to the fire recognized last year. As a result, net income amounted to PHP 1.163 billion, PHP 348 million or 23% lower year-on-year. WDI's total assets totaled PHP 41 billion as of June 30th, higher by 4.8% or PHP 867 million from end 2024. Total liabilities amounted to PHP 17.3 billion, higher by 13.7% or PHP 2.1 billion versus PHP 15.2 billion balance at the end of 2024. Total equity amounted to PHP 23.5 billion, with 1.3% or PHP 313 million lower versus end 2024 in view of the dividends distributed in second quarter. We continue to be bank debt-free with the company's liabilities consisting mostly of trade payables and lease liabilities recognized under the IFRS 16 guidelines.
The six months 2025 actual CapEx investments decreased by PHP 2.1 billion or 65.9% compared to last year. The decrease is mainly from capital expenditures on new stores, warehouses, IT infrastructure, and software. Here are our historical margins. Here is our dividend history. For every year since we have listed, we have given our cash dividends and remain committed to distributing cash dividends consistently every year. We still have the same growth strategies, but for our store network expansion, while we still will continue to open branches, we're also focused on improving the profitability of old stores, which may entail physically downsizing the operating areas of certain branches to reduce OpEx. Our store network expansion plans, this remains a key growth strategy. We can calibrate store openings as to timing, given the continued softness of the market.
Three new stores were opened during the first half, and as of now, we can still do five for the second half, but we're flexible should a couple spill over to next year. We will continue to enhance profitability of in-house and exclusive brands to increase their contribution and to diversify further our product portfolio. We are continuously improving our physical and online store layout and features and other customer experience enhancements. In fact, to reflect the changing preferences of customers in their home improvement path to purchase, we shall be changing our store layout initially in our two biggest stores. Further strengthen and increase our brand awareness and visibility through more relevant and relatable marketing campaigns and promotions. Thank you, and let me turn you back over to Jean for our Q&A.
Thank you, Lorraine. For our question and answer portion, you may click the raise hand icon if you want to ask any questions from our top panelists, or type your questions in the chat box and we will get to it later in the call. Theresa?
Hi, good afternoon. Just on the GPM, can you elaborate more on the reason for the decline year-on-year in the second quarter? I think this is despite increased sales contribution of in-house and exclusive brands.
Yes. Sorry for the echo. Hold on. Okay. Because both, the gross profit margin rates of both the in-house and exclusive brands and the non-exclusive brands, they both declined. For the exclusive and in-house brands, it's more on the pricing strategy, on the change in pricing strategy. For the non-exclusive brands, it's more on the mix. If you have noticed, in the last couple of years, Paints & Sundries has been growing really, we can call it exponentially, every year double-digit growth for Paints & Sundries. Paints & Sundries is the category with the lowest margin. It's growing, the other categories are declining, and hence it's pulling down the blended margin. For the exclusive and the in-house brands, as early as late last year, we've kind of changed, we've refreshed our pricing. On a year-on-year comparison, we're not yet apples to apples in terms of our pricing strategy.
Yeah, you can still see really the difference. I think by quarter it should be kind of stabilized unless, again, Paints & Sundries will increase further its contribution to sales, which is fine with us. It's just that it has been outpacing the growth of other categories.
Thanks, Jean. The outlook in the second half would be, are you looking at some margin improvement or flattish? What's the outlook moving forward?
Maybe more of how the second quarter looks like. The thing is, if we go back to our, say, 2022 up to even 2020, mid last year, and how we price our products, it might affect. For our exclusive and the in-house brands, we've already grown because of that strategy. For the fourth quarter, it was the initial implementation. There was not enough increase in the volume to pull up the sales. But in the first quarter and parts of the second quarter, except for the long holidays spell, our in-house and the exclusive brands grew double digits. Even with the refreshed pricing, the volume more than made up for it. We're kind of going to continue for a while until really the market will go on full reversal from its softness.
Thanks, Jean. Since you mentioned June and July, can you share the same-store sales growth for those months in particular? Are you seeing this sustained so far in August?
It was positive in June, but still very low single digit. But in July, we're already mid. This was despite the rains. But during the rains, of course, no one was going out and no one was doing any construction projects. It went back to still positive, but very low positive. But in the last four days, was it four? Yeah. The last week when the rain stopped, it's like the sales rallied back and went back up to mid-single digit, and which hopefully, week by week it's still increasing. Hopefully, the trend will continue until the end of the year. We'll be able to sustain it, hopefully.
Sorry. My last question, is there any change to your same-store sales growth guidance for full year? I recall in the first quarter you mentioned low single digit. Are you keeping to it?
I think we kind of corrected it a bit to, no, it is still low. Yeah. Yeah, low.
As low as it was.
Actually, our year to date SSG is now lower than our first quarter. I mean, lower, meaning lower negative. Yeah. Then our first quarter, I think, was - 3.8%, and then it increased because of the second quarter performance. But year to date, it is now lower than our I mean, lower negative, meaning better than our first quarter.
No change.
Of what we would want. Yeah. Yeah, no change. It's lower, but while we are positive, really, it's up to you guys. But we're very positive. But, Lorraine is. You ask Lorraine if she's gonna commit to it, to a higher one. And Ms. Rose. Ms. Rose or Lorraine.
As long as the trend continues, yeah.
Yeah. There is a possibility. If the trend really continues, there is a possibility that it's gonna end up higher.
Thank you, Ms. Alger. I'll come back to the queue later. Thank you.
Nadine? Yes.
Nadine, thanks for the opportunity. Just wanted to get a follow-up on the positive indications for June and July. Can you share more color on whether this was driven by basket size or transaction count? Are you seeing the uplift coming more from professionals or retail? Which regions are showing recovery already?
Yeah, it's transaction count.
Yeah.
Meaning, yeah, the customers really are now going back. Our basket size or our ticket size, because it's also affected by the shift in pricing strategy, that's one. Also because Metro Manila stores improved a lot. Although our provincial stores improved ahead of Metro Manila stores. But with the Metro Manila stores.
Bigger impact.
Metro Manila has a bigger impact, that is one. Metro Manila has the lower basket size. They are buying more. The provincial one would really be more bulky items.
Yeah. Surprisingly, it is really the areas of South Luzon, Bicol area. They are doing well. Even tourists are visiting also. The stores are now really, they are passing out, especially those that we opened recently. Like those that we opened last year. I think the visiting zones, like visiting stores that we went are all doing good.
Yes, Sangam.
Lorraine.
You are on mute.
Yeah, hi. Thank you for the opportunity. I just wanted to ask, understand, since you said that you are looking at a positive SSG, is it as an exit run rate for the year, or is it for the full year? Could you just clarify that?
Oh, for the full year. Yes. Because every time, if we would have just mid-single positive SSG for the rest of the year, it should pull up the whole year number. Because for year to date now, we're lower than
4.9%, right?
The first quarter. Yes. Yeah. So if this will continue, I think we can pull up the whole year's SSG growth rate.
Given that the first half was -4.9% versus the Q1, which was closer to -7%, right? Would it be fair to say that Q2 actually was mathematically, it shows that Q2 is actually a positive SSG, or if not positive, a very low negative SSG?
No, it is negative. It is higher than the first. The first quarter is, I think, 3.6%.
3.6%.
I do not have it here.
I do not have the first quarter numbers in here. Okay.
Yeah.
What gives you the confidence that going into the second half, especially now that July is also done, we are in August, are there signs which you can elaborate a bit in terms of what is giving us that confidence that the second half will be able to more than offset the -4.9% SSG, resulting in a positive SSG for the full year on a blended basis?
Yeah. Well, if we are just going to analyze the trend, right? Usually the second half, really, in terms of absolute amount, it would have the higher sales. Therefore, it will have more weight. But also last year, in the second half, Not one month reached PHP 3 billion in sales, and we already did in June and July. If the usual trend continues, that it is going to be increasing in the second half, then the base is not even PHP 3 billion.
Got it.
Yeah. We're basing it on that, and also even in the macro, we are not seeing another war, et cetera, or whatever beyond our control. We're not seeing anything that could disrupt it or reverse the trend.
Got it. But when we listen to the housing companies like SM or Megaworld, et cetera, they have been talking about new launches, a lot of inventories getting liquidated, things improving on that front, and absorption happening. When will all these start getting reflected into our numbers? Because when you look at the project numbers, project numbers were down a lot. Even though it's very small, but somewhere, this sentiment on new house buying or renovation. Old houses, et cetera, will start.
Yeah.
To get reflected in our numbers, right?
And if I may. Yeah. The movement that we saw are mainly on the residential, especially I mentioned Antipolo area, South Luzon, and some parts of Visayas and Mindanao. They're mostly residential. Yeah, because you mentioned SM, these big developers, they're concentrated more on low-rise developments.
Would it be fair to say that.
Yeah. We'll definitely benefit from it, but maybe there's a lag of six months t o a year as we're finishing or maybe after turnover.
Got it. Do you see the improvement coming in terms of the renovation demand, et cetera, and is that seen across your product categories or is it more related to tiles?
It's more the hard construction. More like the hard lines, tiles, sanitary wares. It's starting to win major constructions.
Got it.
We're actually seeing some increase in.
Sorry, your voice is not audible.
We're actually seeing. Can you hear me?
Yeah.
We're actually seeing some increase in the hard lines, as was mentioned by Ms. Rose. Tiles, the sanitary ware. That means it's full-on construction that's happening. That's kind of the indicator why we're seeing better and better trends moving forward.
That should actually help your margin profile, right? Given that with better demand, your discounting should come down, and also the fact that you will be able to have a better product mix. Shouldn't this result in better gross and operating margins in the second half compared to the first half?
The gross. Sorry the echo is so bad. The gross profit margins, maybe not so much, but operating margin should be improving.
Because of the pricing.
Yeah, because of the price refresh. We just do
It's not that easy.
Got it.
[inaudible] to come back and, hey, this is the price before.
Sorry, again, your voice was very feeble.
Because you are in being. What I'm saying is it's not that easy to come back like we did the price refresh, right? We just readjusted pricing, and so obviously that kind of hit the gross profit. Now that we're seeing some demand or increasing demand for hard lines, it's not that easy to go, okay, this was the price before. It's not that easy, and customers still expect discounting. What happens is we did the price refresh, and now they're buying in bulk because they're doing construction, but they still expect the discounting.
Got it. The last question from my end before I jump back into the queue would be on your inventory, because inventory was moving up, right? How do you see the inventory levels and the inventory situations?
Well, actually. [inaudible] p art of the.
Total.
Success also of our exclusive and our in-house brands, because we deliberately only replenishment and bought the items that did well because of the discounting. Because we now know really that these are the items that are a hit or are what customers are looking for. We stocked up on that. Of course, the more expensive ones.
Are there. Because it will not spoil or anything, then we could push this product some more when demand really would go full blast. Recovery will increase more than it is increasing now. We are still going to be in that eight months thing despite the price refreshes that we've been doing, because that's why it also took time for us to really adjust the price to what the customers are willing to spend. Because the products that we're. We cannot be selling those at prices that will result in super low margins or even in a loss. Anyway, we were not. Because, in retail, you cannot really know for sure if it's the color red or if it's the size. If the 60 by 60 will do it and 80 by 6 or whatever.
But once we've established it by, you can call it, testing it out at these price levels, et cetera. Then we stuck to it and then just ordered what's been selling. That's what we were doing. That's why you can probably say, well, why you bought so much more stuff and you have that? Because these stuffs that we bought were actually the ones that were moving at the prices that we've kind of proven that our customers like. Yeah. It's really a whole bunch of balancing that we're doing just so we can improve or stop the income decline. We would have to really wait or until one of a few projects that, new projects that we're trying out will prove to be viable or feasible. Until then, we'll just going to balance things out this way.
Okay. Thank you. All the best.
All right. Thank you, Sangam.
Thank you.
Yes, Tony.
Hi. Hi, Lorraine. Hi, Ms. Rose. Hi, Jean. Just a few questions. The first one, can you help us understand more about the recent updates about the competitive landscape of Philippines, both from the existing competitors in the market and also maybe some potential more influx from the Chinese groups to the country so far? As a follow-up on that, regarding your aggressive pricing strategy for the exclusive brands, is it shared between yourself and also the principal, or how you absorb everything from your side?
What is shared?
The non-exclusive?
Yeah, for the exclusive brands that you give discount.
Oh. Yeah, there is a sharing. It depends, right, Ms. Rose? There is a sharing on the.
[inaudible]
let's say we have a promo or t he marketing share.
Oh, yeah. For non-exclusive, yeah.
No, for exclusive
For exclusive, yeah.
Like Grohe.
Yeah. They provide marketing support. On top of whatever also marketing budget we allocate for exclusive brands. But the suppliers, like those who provide exclusivity to us, for example, Grohe, Kohler, they also provide marketing fund for us. So it's either a percentage of what we bought from them, or probably they would allocate a sum for let's say any marketing activity like.
Or even promo.
Yeah. Even how to incentivize so that we can push more our sales experts, they can push the sales. They provide incentive, like recently they gave a local trip incentive to our. They allocate a budget coming from them. Especially at this time when competition is really very tough, almost all the suppliers, even the local suppliers, they do a lot of marketing activities. Either instantaneous discount or gratification that they give to the customers or even to the sellers. I mean, the customer experts or the promoters.
On average, can you share how much discount did you give to the customer on the exclusive brands? Is that a 50/50 percent split between you?
It depends. It can be an all passed on by the supplier, or it can be a 50/50 sharing between Wilcon and the supplier.
Because we're also open to subsidize, to collaborate with them, because, of course, especially at this time, we really want to push the high-end brands. Because most of the national exclusive brands that we carry, they're on the higher end segment of the market.
Even the.
Right.
There's some non-exclusives like for American Standard.
Yeah, American Standard, even SCG. They also provide, they allocate a budget for us.
Right. Given the industry dynamics, can you share the color on the competitive landscape? I'm not sure what's your view, after the demand come back to the sector again. Do you think you can reprice back to the same level as before? Or you think this is the new optimal level that you need to attain?
For us, we still stick to our core. For example, for the branding, the image. Although we mentioned that in order to counter competition, because everybody are cutting prices, everybody are promoting low price strategy. For us, we still stick to our core. We still stick to our target market, which is the middle, high-end segment of the market, and a little more on the middle class. However, I guess as long as the market continue to. We're very positive that the market will. We see a lot of activities. We see light, as Jean mentioned. We're expecting a good result for the second half of the year. For us to remain to our core, I guess we can retain our existing market, our existing target market. Because we don't intend to go low.
Just to give you a background of the market, it is very fragmented because many are really resorting to low price strategy. Many are really cutting prices. Even those who are active, even the high-end. Can you imagine those really focused on the high-end boutique type?
They are now selling China products. For us, we stick to our core for our private label brands. It is really more quality because our value proposition is really we are the trusted building partner. We do not want our customers to sacrifice the quality of the products that they buy from us over price. So it is really more quality. Because after all, you are building a house, so it has to be sturdy, it has to be stable, it has to be of quality. We see a lot of sellers selling in different platforms, whether warehouse, whether it is TikTok or whether it is social media.
These are mostly disposable items. They are low price, but they are disposable. We do not want to tarnish the image of [Non-English content] ?
Tarnish.
We do not want to tarnish the image of Wilcon, that we are the trusted building partner. For us, I think we are still confident that we are still the market leader because people, I mean, our competitor follow us. For example, we want to expand our market reach. We have created this field customer expert wherein they do sales call.
They are retail. They are not really projects. They are not institutional. Although we have a team that caters to institutional, to big institutional projects like hospitalities, big developers. For us, on the retail end, we also cater to projects that do not go to our stores. Those areas that are not being tapped by the stores, because we identify them by area. For example, we are in let us say Butuan area, and we saw opportunities in nearby communities wherein we are 30 km or 25 km away from them. So we created field customer expert.
For these customer experts to go on call, to visit the sites, to visit projects. Would you imagine, we launch it and many of our competitors are following us. They are retail, and yet they have these people also going around and looking for opportunities, looking for small projects, residential projects. They even copy the way we term the field customer experts. Even our best deals, we do best deals instead of price off or price discount. You know what they term? Fresh deals or no, best deals or yeah, same.
One competitor copied.
Yeah, one competitor copied best deals. Exactly, best deals. I guess we're comfortable being the market leader because they just follow us, and we just have to be always innovate, always be trying to be a step ahead of them and trying to do things different from what they're doing or from what they copy from us.
Mm-hmm. Got it. When it comes to your in-house brand, I believe most of your products are imported from China and maybe some from Vietnam. Can you share what kind of discussion did you have with your suppliers recently, given the global trade tensions and the tariff and everything? What's going to be the impact to your cost of imported goods?
What would be the impact to our cost?
Yeah. Is it going to be cheaper or.
You can unmute.
Yeah. The impact would basically be. Okay. The impact would basically be there would be an influx of Chinese-made goods nearby in the region because they will have trouble with exporting to the biggest market, right? The U.S. We will most likely be initially, I don't know if flooding is the right word, but have a lot of cheaper imports. But on top of that, there would also be other products that maybe they're not so cheap, because the market is not so big now, there will be initial overcapacity. They will be looking to markets that are not anti-dumping. We don't have any anti-dumping here. There will definitely be that. We have, of course, the online marketplaces where they don't pay taxes, it's very fast for them to just ship and deliver here.
I think eventually there will be market forces. The suppliers, if they really cannot find a regular, steady buyer, they will close shop. I mean, eventually, right? In China. We will most likely see a lot of imports that are substandard, but perhaps even okay standards because they have capacity and they want to sell wherever. We're seeing it actually in online shops, because that's the easiest for them, lower barrier to entry. We're also seeing, or I'm seeing like on TikTok, Facebook Marketplace, these videos of warehouses where they sell Building Materials, things that we actually also sell. You can come in and buy, and then this would probably be not receipted. Also the importers would also be able to import maybe lot offers. That's kind of the landscape that we will be seeing.
On the good side of that, I think, is that because there will be so many suppliers with capacity, we will be able to get better pricing.
We would be able to buy at a better price because, well, they need to sell the product. And we would be able to get better terms. It is really about being able to service the customer, warranty being able to have the product, that what we say is the product is actually the product, and being able to warehouse and deliver and all that, the whole supply chain and the whole customer experience thing. That is kind of the flip side. The other side of it is going to be so many things like solar lights. I see it all over social media.
That is the reality of what is going on because of this overcapacity in China. And then there was a question there, how much of it is imported? All our in-house brands, almost 95%, I think, Jean, are from China. We have a few from maybe Vietnam and India, but really significantly it is.
Europe.
Some from Europe also. Sorry, I forgot Europe. Mostly it is China. Oh, 80%-85%. Yeah.
Yeah, that's overall, including the local, the non-exclusives, right? The locally produced, because we would have HCG, Mariwasa also, and other smaller
The in-house brands.
The in-house brands, yeah, around
80%.
90%.
90% now?
85%-90%.
Yeah, from China. But we have other countries.
India, Vietnam.
Yeah.
Europe.
Yeah.
When can we expect to see the better price?
[inaudible]
Sorry?
Sorry, the.
Sorry, can you hear me?
Sorry. There.
When can we expect to see the impact and the benefits to the better price that you're going to negotiate with the supplier?
It's happening now. In fact, we haven't increased our price for the last.
Now we're lowering it.
I know. That's why. We haven't increased our price.
Yeah, the price to us t o us is the question.
Yes. The price that you buy from your supplier.
It's always different, you know, all the time, the price. It's really the freight that's hurting us now, right? Yeah, more on the freight.
No, here and there, we've already benefited from that.
Okay.
From the pricing. But let's say compared to when we refreshed our prices, right? We refresh it within 10%-20%. Hence, the net effect is now what you see in our.
Yeah. So we don't get as big a margin.
No.
Because we refreshed it.
Yeah
But it kind of improved because we got better prices.
Yes.
Yes.
Right. Okay.
So we
It's clearer then.
Yeah. That's why we were able to refresh it by such a substantial amount from our normal.
Because we were already able to get the refreshed prices. I mean, better prices.
[inaudible]
Better, yeah. Better.
Got it. Thank you very much. That is all I have.
Okay, thanks. Theresa, it is at you.
Yes. Just two questions. Can you share what the cost containment measures that were implemented? You mentioned being able to contain costs.
Yeah. For trucking is the most notable one. It's two quarters in a row.
Yeah, we reduced the number of the number of. On the operations side, though, we rationalized our manpower. We keep on opening store, but we never increased the number of hires. In fact, what we did is we cut some of the. We transferred them to nearby stores. So we reduced the manpower by 20% or 15%? 15%- 20% by a lot. On the store level. On the store level. As far as equipment, like trucking, we reduce the number of trucks that we provide. Even we lease to our.
Lease to the.
Yeah, from the third party. For example, one store would lease, let's say three to four trucks. We cut it into half. That's a big adjustment for operations. We try to commission other third party wherein they would deliver directly to the customers. Because the lease agreement that we have is that they deliver it, but they pass through the warehouses. This time, the customer would directly transact with a third party. Like for example, Lalamove, Transportify. They would just pick up from the store. What we did is we get the inventory from the store rather than the lease agreement that we have with the previous third party wherein they would turn around, they would go to the warehouse, and then deliver it to the customer. That's a big reduction on the operating side. What else?
Yeah. Another one, but this one, the impact would probably still be maybe next year or years after, because it will involve a lot of work first, is that we've identified some stores that we want to physically lessen the operating, cut the operating area so that we will need less people, less utilities, less air con, we may need less air con, and hopefully less lease, less rental. We'll see how. Anyway, we will be working on it. And we're already in the planning stage on really outing, et cetera. But the impact of that, but the more immediate ones really is the trucking and some manpower, although the impact, we'll see it in the third quarter for the minimum wage adjustment.
But we've reduced the number of minimum wage earners. So we'll see what's the offset. But at least, in terms of the increase will kind of be controlled, because we have less number of people that we have to adjust the salaries of. So, what else? Yeah. I think that's the more notable. We have some little ones that not as great an impact, but we're still thinking of other ways we can. And even the systems, right? We're meeting with providers to offering systems that will improve our processes so that we will need less people. So yeah.
Thank you. My last question. What's driving the good same-store sales growth of DIW? I see that the recovery there has been faster than in depot. So what's driving this? And is the trend towards the smaller format?
I think we hit it right because we locate it in a more. We mentioned it's closer to the community, so it's not anymore like a depot wherein you really have to. It's a destination place. This one is very accessible to residential. Like for example, our Morong, it's doing well. Our Uptown, Cagayan de Oro, it's also doing well. Even our Tagaytay, those three exceeded their targets. Even the one that we just recently opened in Cubao, the first store that we opened this year in Metro Manila. I guess it's really the location and the mix of the product because it caters more to the community, more to small repairs. It's not anywhere like before the small version of a Wilcon Depot. It's really more catering to the needs of that specific market, wherein they do small repairs, they do small renovation.
If ever they would look for, let's say, like for example, we've experienced in Mindanao, that Uptown, they're looking for high-end tiles. We just direct them to the big depot that is nearby. Number one is the location, and number two is the right product mix that we put in it. It's more compact. It's less intimidating. It's not like the big depot. Yeah, I guess.
Yeah.
Moving forward, I think we will be opening more DIWs.
Those new ones even carry the old Home Essentials that are.
Yeah.
Not doing so well.
Will you be opening more of them?
Yeah, probably more like, we will still name it Depot, but really more not large format like the ones that we opened in Metro Manila, but more fit to the size of the area.
Yeah.
Like what we are doing now, Jean mentioned. We are also rationalizing the size and reconfiguring the size of this. I think we will realize it by next year, or last quarter of this year. We are planning to reduce, or I would say rationalize the size of eight of our big stores.
Thank you. That is all from me.
In 2026, can we expect a revival in the space in 2026 or later?
If the trend continues until the end of the year.
Yeah, the property market.
2026 would be rosy.
With Ms. Rose.
It will be me, very colorful.
Okay. Any more questions? Any more questions? If there are no more questions, then we will end this call. Again, thank you everyone for joining us this afternoon, and see you in our next earnings conference call.
Thank you.