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Edited Transcript of PGOLD.PS earnings conference call or presentation 13-Aug-19 7:00am GMT

Q2 2019 Puregold Price Club Inc Earnings Call

Ermita, Manila Aug 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Puregold Price Club Inc earnings conference call or presentation Tuesday, August 13, 2019 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anthony G. Sy

Puregold Price Club, Inc. - President of S & R Membership Shopping

* John Marson T. Hao

Puregold Price Club, Inc. - VP of IR

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Conference Call Participants

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* Alvin Joseph Arogo

BofA Merrill Lynch, Research Division - Research Analyst

* Hannah Le

Hansabay Pte Limited - Investment Analyst

* Karisa Garcia Magpayo

Macquarie Research - Analyst

* Nico Yosman

Morgan Stanley, Research Division - Research Associate

* Utkarsh Mehrotra

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to Puregold's second quarter 2019 results briefing.

John Hao, please begin.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [2]

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Good afternoon, everyone, and thank you for joining Puregold's first half 2019 results briefing.

I have here with me Mr. Anthony Sy, the President of S&R. And then we believe that we have sent or I have sent out the presentation already this lunch, so I hope you were able to get a copy of the presentation of Puregold. We also have Ms. [Ging Altura], the CFO of S&R, as well joining the call.

So going to Slide 6. As of June 2019, we have opened 12 new Puregold store and 1 S&R warehouse club. We also closed down 1 Puregold store and 1 S&R QSR during the period. We're currently operating 419 stores with about 550,000 square meters of net leasable area.

For our financials, I would like to take note that we have restated our quarterly numbers to PFRS 16 already since the first quarter. We do not give out pre-PFRS numbers, unlike other companies, and our numbers are already comparable apples to apples.

So consolidated net sales expanded by 11.3% in the first half of 2019 to PHP 71 million. Puregold stores accounted for around 78% of the consolidated sales, and 22% coming from S&R. For consolidated gross profit, it grew by 7.5% to PHP 11.8 million, with gross profit margin at 16.6%. Consolidated operating income or EBIT increased by 4.8%, with operating margin at 6.7%.

Consolidated net income declined by 4.8% in the first half of 2019. Consolidated net profit margin is at 4%. Without the onetime gain from Lawson in 2018, consolidated core net income grew by 8.4% to PHP 2.83 billion with a net margin of around 4.1%. For Puregold only, the net margin is at 3%, while S&R net margin is at 7.5%. Excluding the onetime gain, Puregold-only core net income is flat, with a net margin of 3% or lower by 0.3% versus last year.

For Slide 7. Puregold accounts for 78% of revenues and about 59% of profits, while S&R accounted for 22% of revenue and 41% of profits. Our same-store sales growth for Puregold in the first half is 6.2%, while for S&R, it achieved a 9.3% SSSG in the first half.

For Puregold, same-store ticket is up 9.5%, while same-store traffic is down negative 3%. We think that consumers are trying to save on transportation expenses, going less frequently to the store, but at the same time, they just buy more items in the cart every time they visit the store. While for S&R, they experienced both positive same-store traffic and same-store ticket size growth in the first half.

Slides 8 and 9 show you our breakdown per store format per region. 52% of the stores are hypermarkets. 25% are supermarkets, and 10% Extra. Around 13% are coming from S&R and its QSR stores.

Slide 10 will show you our net sales growing 11.3% and GP growing at 7.5%. I would like to note that there is an accounting change at the end of 2018. This is where our other income is now brought up to the COGS.

And on Slide 11. This will show our other operating income. It's now only around 2.1% of revenue because of the new accounting change as of end 2018. Operating expenses is up 9.4% to PHP 8.5 billion, while EBITDA went up by 5.8% to PHP 6.65 billion. As a percentage to sales, OpEx has decreased by -- consolidated OpEx has decreased by 0.2%. The company continued its efforts to cut down on cost. For Puregold only, we have reduced our OpEx as a percentage to sales by 0.3% from 7.5% last year to 7.2% in 2019, while for S&R the reduction was 0.1% from 14.7% last year to 14.6% this year.

Slide 12 will show you our consolidated EBIT, which is up 4.8% to PHP 4.8 billion, while net income is at PHP 2.8 billion, down 4.8%. Excluding the onetime gain, core net income grew by 8.4% in the first half of 2019.

Slides 13 and 14 will show you the key financials for Puregold and S&R, respectively.

So Puregold revenues is up 9.8%, while S&R is up 17%. GP margin for Puregold declined by 0.9%, which is now at 15.1% versus 16% last year, while S&R improved its GPM to 22.1% from 21.6% last year.

For Puregold only, the second quarter gross profit margin was weaker than expected due to the reduction of supplier support, example marketing and promotions, despite inflation coming down in the first half of 2019. Suppliers are still feeling the rising costs due to the TRAIN Law last year. So during the first half of 2019, suppliers cut their marketing and promotional budgets. And we're hoping that this will come back in the second half of 2019, as there are more -- [the base is] seasonally stronger during the second half of the year.

For S&R. S&R is benefiting from the lower ForEx versus last year.

EBITDA margin for Puregold is at 7.7%, while S&R is at 15.2%. Net margin for Puregold is 3%, while for S&R it's 7.5%.

So going to Slide 15, we will see that our inventory days has come down to 59.2 days, and trade payable days is at 19 days. We continue to avail of continued early payment discounts coming from the supplier, but we're also looking to increase our trade terms with our suppliers going forward from the current normal 30 days to at least [just] 45 days for new suppliers.

So Slide 16 will show you our CapEx budget. We changed it to only 2 QSRs for this year instead of the 10 in the early part of this year.

So that ends the briefing. We now open the floor to Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question, Hannah from Hansabay.

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Hannah Le, Hansabay Pte Limited - Investment Analyst [2]

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I have a question regarding the gross profit margins of Puregold stores. So if you exclude the other income that you include in the COGS, for a like-to-like comparison, so what is the gross profit margins for Puregold stores for this quarter for Q2? And can you give more explanation regarding the decline in the gross profit margins?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [3]

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Well, we just answered it during the briefing earlier. So the decline in the GP margin is due to the less marketing and promo coming from the suppliers. So the GP margin was affected.

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Hannah Le, Hansabay Pte Limited - Investment Analyst [4]

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And so if you exclude the other income in your COGS, what will be the gross margin for Puregold stores?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [5]

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Well, we don't have that answer. You want us to exclude the, I don't know, other -- it's already excluding the other income. It's...

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Hannah Le, Hansabay Pte Limited - Investment Analyst [6]

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Because you said there's an accounting change since the end of 2018, right? And so there is some other income that you include in the COGS. So if you exclude it out, what will be the gross profit margins?

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Unidentified Company Representative, [7]

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[I don't know. I mean it --] We do not give it out. [It is the] PFRS. [In order for you to]...

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [8]

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We already followed the new standard, so we don't compute it anymore the way you want us to compute [it].

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Hannah Le, Hansabay Pte Limited - Investment Analyst [9]

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Sure. So how much is the amount?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [10]

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Which one?

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Unidentified Company Representative, [11]

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[You want the operating] income?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [12]

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Just a moment.

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Unidentified Company Representative, [13]

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[Around 2019. I don't know].

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [14]

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We don't want to give it out.

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Hannah Le, Hansabay Pte Limited - Investment Analyst [15]

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Okay. So it's not disclosed, yes.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [16]

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Yes, it's not disclosed.

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Unidentified Company Representative, [17]

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[You know the]...

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Operator [18]

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Our next question, [Harry Wolclinton] from [Virgin].

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Unidentified Analyst, [19]

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I -- yes. I just wanted to double-check what the accounting change was that you mentioned. Is that contracts with customers? And then on the second question, just where you managed to save in terms of OpEx. I know you briefly mentioned that in Puregold it was more than S&R, but in terms of the line items and effects, that would be really helpful.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [20]

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Well, the accounting change in end of last year, what we did is we brought up 4 line items in the other income to COGS. So we already explained that in the first quarter briefing, in the end full year 2018 briefing. And the other accounting change that we did this year is the PFRS 16, which involves the rental expenses. So...

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Unidentified Analyst, [21]

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Yes. I got it. I -- just if you could remind me on the COGS. What were the 4 line items that you brought up?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [22]

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The 4 line items before was listing fee, display allowance, endcap/pallet income and merchandising support.

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Unidentified Analyst, [23]

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Got it. And the second question was just on the OpEx...

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [24]

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On the OpEx -- sorry. What's the question, again, on the OpEx?

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Unidentified Analyst, [25]

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So just a bit more clarity on where you managed to save in terms of the OpEx. I know you mentioned it was more in the Puregold than S&R, but what specifically were the cost items that were sort of reduced?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [26]

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Well, we reduced some -- resizing some of the stores, which will [affect], we resized some stores, which will also affect the utilities and manpower resources for certain stores that we have resized. So all of those OpEx translated to a decline of 0.3% on the Puregold-only operating expenses.

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Unidentified Analyst, [27]

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Okay. And when you say you resized them, you just -- they're all brought down in terms of [store] space?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [28]

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Yes. Some stores, they were resized from -- let's say, where previously 1,500 square meters, it was reduced to 1,000 square meters.

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Operator [29]

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Our next question, Alvin from Philippine Equity Partners.

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [30]

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I have 5 questions, if you don't mind. Let's just go one by one to make it more clear. First question is you mentioned that you cannot disclose the amount of those other income you brought up at the COGS level, but would you be able to at least share how big of a driver this was in terms of that cut in the GP margin of Puregold? Was it like the entire reason or just around 50%, 60%? Rough color will do.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [31]

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The entire reason is because of the less supplier support. That's why our GP margin is coming down this way for Puregold.

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [32]

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Okay. Okay. Second question is I think you mentioned that you're hoping that this would improve in the second half of this year. So far, have you seen any improvement in the month of July and first 2 weeks of August?

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Unidentified Company Representative, [33]

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[No, we don't]...

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [34]

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We cannot see it yet at the moment. Probably in the fourth quarter.

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [35]

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Fourth. Okay. Got it...

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [36]

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We're hoping to -- that it will be in the fourth quarter.

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [37]

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Fourth quarter, hoping. Okay. Got it. Third question is were you -- would you be able to provide any update on how the PHP 4.7 billion top-up placement proceeds were used so far this year?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [38]

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It's in our cash and balances. So yes.

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [39]

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Okay. Will this be most likely used for M&A, CapEx or debt payment? Or is it still something that you're not yet sure?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [40]

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We plan to use it for possible M&A, but at the moment, we have nothing to disclose as to the which M&A it will be. We'll...

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [41]

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But the process of looking at the -- but the process of looking for a prospect has begun in terms of an M&A?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [42]

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Yes. The -- all is in their hands already. So...

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [43]

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Okay. Got it. I think this is -- fourth question is any follow-up action regarding that increase in authorized capital in Feb, meaning are you looking for a stock dividend? Is there a capital raising or equity raise that you see?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [44]

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No equity raising that we are doing. The increase in authorized capital is an exercise done by the company in relation also to the possible M&A. So if ever we don't want to buy them in cash, we can also use shares to acquire the company if...

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [45]

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Okay. So it's for an optionality to do a share swap. Okay...

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [46]

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Yes.

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [47]

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Okay. And last question is I think you mentioned that the benign ForEx, at least in the first half, helped S&R's GP margin. What -- I'm just curious. What's the ForEx level that would -- you think would hurt the GP margin of S&R? Is it PHP 53, PHP 54?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [48]

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The question is a little bit tricky because you're asking what ForEx will hurt our GPM...

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [49]

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Yes, what level?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [50]

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If the ForEx, let's say, becomes PHP 53 or PHP 55, we can always adjust pricing on the S&R products, so which may or may not hurt our margin.

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Alvin Joseph Arogo, BofA Merrill Lynch, Research Division - Research Analyst [51]

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Okay. So up to PHP 54 or PHP 55, you think there's scope for you to pass it on and not hurt the volumes too much.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [52]

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Well, historically when we reached PHP 54 or PHP 55 in other years, so far, there was no slowdown in terms of buying from the customer.

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Operator [53]

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There are currently no questions in queue. (Operator Instructions) Our first question, Utkarsh from JPMorgan.

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Utkarsh Mehrotra, JP Morgan Chase & Co, Research Division - Analyst [54]

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I have 2 questions, if I may. So if I can just start on your comment on resizing stores. I just wanted to get a better sense. Is this a new strategy? And then are you looking to resize more stores going forward as well? If that is the case, can you share your plans how many stores and what [service type a month]? And then maybe I can ask the other 2 post this.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [55]

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We only resized a few stores. We -- the resizing is really part of our operations review. And when we see that certain stores can be resized and the sales will not be dramatically affected -- so in that way we're able to reduce several things: rental costs, electricity and manpower inside that particular store. So this is all dependent on how some of these stores are performing. And if we can rationalize these, the store sizes, the better for us going forward, but all the new stores that we're opening right now are smaller stores. Especially when we go to provincial areas, you can see that we're still opening hypermarkets. Some people are asking why you're still opening hypermarket stores when all over the world people are going to smaller formats. For us, when we go to the new provincial areas, we want to open the hypermarket store formats, meaning it's a complete assortment and all the categories are present, but the store size is smaller compared to the hypermarket stores that we opened in Metro Manila. So normally the Metro Manila hypermarket stores are 3,000 square meter, 4,000 square meter. When we go to provincial areas, it's only, let's say, 1,500 to 1,800 square meter in size. And then for those in Metro Manila, the ones that we're opening in Metro Manila are the smaller-format stores, the Extra or the minimart stores. So these are maybe 300 square meter in size.

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Utkarsh Mehrotra, JP Morgan Chase & Co, Research Division - Analyst [56]

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Got it. And also just to follow up on the M&A question earlier. I just wanted to understand. I mean, is the strategy similar to [street] where you go out for smaller provincial names? Or has that changed because the balance sheet strength is quite large and then you have quite a significant amount of cash? So would you be also able to or willing to take up something larger in size?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [57]

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Well, the top-up placement is around PHP 4.7 billion. Our Chairman said that what he's looking at for this particular M&A is something bigger compared to what we have previously acquired before. The last three that we acquired were supermarket chains doing 5 to 10 store each. So he's looking at something bigger for this M&A.

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Utkarsh Mehrotra, JP Morgan Chase & Co, Research Division - Analyst [58]

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Got it. Just to follow up there: So just in terms of the strategy there in M&A. So is the strategy to continue and cement our position in the supermarket and hypermarket side or also probably looking to get into newer verticals or online? What's -- just a sense in terms of strategy. What's the strategy there on the medium to longer term?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [59]

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The M&A is still supermarket and hypermarket. So we're not going into a new format or online retailer. No, that's not our -- that's not what we are -- that's not what we intend to acquire.

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Utkarsh Mehrotra, JP Morgan Chase & Co, Research Division - Analyst [60]

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Got it, very clear. One last maintenance question from me. So just wondering on the S&R ticket. It was quite large. So just wondering if you could break it down between, let's say, basket size as well as pricing. How much was pricing in that?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [61]

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Just a moment. Sorry. We don't have that information for S&R in terms of the increase in ticket size.

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Operator [62]

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Our next question, Nico Yosman from Morgan Stanley.

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Nico Yosman, Morgan Stanley, Research Division - Research Associate [63]

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Just maybe one question from me, the GP margin question again. The contraction accelerates in the second quarter of 2019 and, you mentioned, because of the inflation impact, but shouldn't the inflation actually improve in the second quarter? So wondering what drives the acceleration in the margin contraction. Is it like a particular 1 or 2 supplier that lowered their support? Or is it true for all your major suppliers?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [64]

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Well, I didn't correlate lower inflation with supplier support. What I said was there was reduced supplier support because of marketing. And they cut down on their variable costs, which is marketing and promo, due to higher costs for them, for the supplier, due to the TRAIN Law last year. So this year, it's coming down already. That's why we are hoping that they will -- or that the marketing and promo support will come back or will be increased in the second half of this year.

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Nico Yosman, Morgan Stanley, Research Division - Research Associate [65]

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Correct. And maybe to ask another way: In 1Q, you saw your GP margin decline 50 basis point year-on-year. And in 1 half, it accelerates to 90 basis point decline even though the inflation in second quarter is not worse than the first quarter. So I'm just wondering what changed dramatically in the second quarter that drives the cut in supplier. Is it only 1 or 2 supplier that cut their support, or is it across -- all your suppliers have done the same?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [66]

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This is across a lot of the suppliers. So it could be just because of timing. If I were in their shoes, I will also not do a lot of marketing and promo in the second quarter this year because I know that consumers will continue to spend because of the elections in May. So if I'd rather save my bullet, I'll use it in the second half of the year, where the share of business is bigger compared to first half -- first quarter and second quarter.

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Operator [67]

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Our next question, [Livro] from [Alviva Capital].

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Unidentified Analyst, [68]

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John, a couple of questions from me. The first one is, could you help us understand roughly how much is supplier support as a percentage of sales?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [69]

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Sorry. We don't give that out. That's the secret sauce of Puregold.

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Unidentified Analyst, [70]

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Right. Okay. I mean just -- okay. So I mean would it be possible to help us understand that decline in supplier support? Was it almost all of the supplier support that have declined? Or was it half? Or was it just a 10%, 20% decline? Looking at the extent of supplier support only year-on-year.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [71]

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I don't know how to answer your question. But most of the reduction in the GPM, the decline, is due to the supplier support. So what I can say is, second half, hopefully, we will be -- hopefully, the timing will be -- there's going to be more coming in, in the second half. We also want our GPM to improve based on our sales mix as we introduce more house brand. Last year, it's only 1% of sales. So if we can double it or triple it by end of this year as we introduce a lot of new house-brand SKU, then that will help in the declining GPM.

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Unidentified Analyst, [72]

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Sure. And the decline, would you be able to elaborate more on whether it's more of new product launches? Or is it more of promotional spending that they wanted to pass on with the consumers? Or what kind of supplier support is this, listing fees or what?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [73]

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More on the marketing and promotional spending.

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Unidentified Analyst, [74]

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Okay. Got it. And then how are Aling Puring sales so far first half of 2019?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [75]

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They're about 27% of revenue coming from Aling Puring.

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Unidentified Analyst, [76]

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Okay. And how much of a growth for Aling Puring was there? I mean, if -- how much did Aling Puring sales grow year-on-year in terms of growth rates?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [77]

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It's about the same. So maybe -- as a percentage of total sales.

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Unidentified Analyst, [78]

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Okay. And what was the reason why you closed down one S&R store?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [79]

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No, not -- the one S&R where -- it's QSR. QSR.

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Unidentified Analyst, [80]

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Okay. And one S&R store is opened during the quarter.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [81]

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In the first quarter, yes.

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Unidentified Analyst, [82]

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Right. And the second quarter, none. Will that be right?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [83]

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None, correct.

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Unidentified Analyst, [84]

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Okay. Got it. And the expansion pace of the other stores that you meant to open this year. So we have, I think, 3 stores left. How is the progress coming along on the expansion?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [85]

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We're -- continue building the 3 stores.

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Unidentified Analyst, [86]

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Okay. And it's expected to be completed by...

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [87]

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We're looking at the last -- towards the last month of the year, either the -- either in November or December, depending on the pace of our construction, so -- but 3 of the stores are already in multiple stages of completion.

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Unidentified Analyst, [88]

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Okay. And so we shouldn't expect any delays towards January or February. Will that be correct?

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [89]

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There might be, depending on the weather conditions that we are currently experiencing right now. Frankly, we're slightly delayed right now based on our projected schedule. So we're in stages of catching up right now. So I couldn't -- at this point in time, we couldn't nail down the opening date yet, as of now.

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Unidentified Analyst, [90]

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Okay. Sure, understood. So I mean, for us to kind of anticipate, I think, the preopening expenses would come in around the third quarter or late third quarter of this year, will that be...

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [91]

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Third quarter, there will be no -- definitely, on the third quarter, there will be no store -- new store opening. If any, it will be -- definitely, we will open in the -- 1 store in the fourth quarter. We're assessing the opening dates of the other 2.

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Unidentified Analyst, [92]

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Okay. Right. But because you have to hire people ahead of time. Maybe you have to pay the rental ahead as well. So those kinds of expenses will be coming up on the third quarter. Will that be correct?

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [93]

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Right now, we're very careful to not hire too early or have too much overhead. So to be more precise: We're currently starting to do our hiring for 1 store as of the moment. And it will be carried in the third quarter.

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Unidentified Analyst, [94]

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Okay. Got it, got it. Sorry, just going back to that question about the S&R store closure. I mean the reason why I said it was because, the first quarter of 2019, you had 4 stores in North Luzon, 2 stores in South Luzon. And then in -- by first half, you had 3 stores in North and South Luzon each.

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [95]

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Yes. I want to clarify. It's not -- it's 1 QSR store. That's a quick-serve restaurant that was closed, not a warehouse, not a full-size warehouse. It's a restaurant format. It's a quick-serve restaurant.

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Unidentified Analyst, [96]

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Okay. Right, but in the presentation it was under the S&R format. So I should take that as the presentation have wrong numbers. Will that be correct?

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Unidentified Company Representative, [97]

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[The] QSR, it is...

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [98]

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Maybe if you were to look at Slide 9...

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Unidentified Company Representative, [99]

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[On] 6, page, Slide 6...

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [100]

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Slide -- okay. Slide 6...

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Unidentified Company Representative, [101]

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[You have the] 1 S&R...

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [102]

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It's 1 S&R QSR. Slide 6. And then if you were to -- yes. So...

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Unidentified Analyst, [103]

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Okay. Sure, got it. That's fine.

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [104]

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Okay.

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Operator [105]

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Our next question, Karisa from Macquarie.

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Karisa Garcia Magpayo, Macquarie Research - Analyst [106]

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On S&R, given that the first half SSSG is tracking above 3% to 5%, your original target of 3% to 5% for the year, do you expect SSSG to slow down in the second half? Or is there upside to the target?

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [107]

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When we originally [had] our SSSG, we were -- we know that we have 3 new stores that are coming online...

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Unidentified Company Representative, [108]

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4...

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [109]

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Well, we had 4, but the -- 3 will be in Metro Manila. So we anticipate that these will -- all these 4 new stores will -- there's a certain expectation of cannibalization on our existing stores. So that was how we made our projection on the 3% to 4% SSSG for 2019.

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Karisa Garcia Magpayo, Macquarie Research - Analyst [110]

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Yes, I see. So if you don't open the other 2 stores, then there will be upside to the 3% to 5% SSSG at least for this year because there'll be less sales cannibalization happening. Is that correct?

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [111]

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We would hope so, yes. We would rather open the stores.

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Karisa Garcia Magpayo, Macquarie Research - Analyst [112]

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Yes. And also -- yes. On the membership count, may I get the membership count of S&R in the first half; and what the growth was on a year-on-year basis, consolidated and same-stores' basis?

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Anthony G. Sy, Puregold Price Club, Inc. - President of S & R Membership Shopping [113]

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Our -- on a consolidated basis year-to-date 2019, we have 855,000 members. And then for like-for-like, we have 787,000 members. So in terms of growth on a consolidated basis, there's a slight decline of 3.6%, and then on an SSSG there's a decline of around 7%.

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Karisa Garcia Magpayo, Macquarie Research - Analyst [114]

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Right. And lastly, may I get the inventory days for Puregold and S&R separately?

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [115]

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For Puregold only, the inventory days is 55 days, while for S&R it's 73 days.

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Operator [116]

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There are currently no questions in queue. (Operator Instructions) As there are no further questions, I will now hand the session back to John Hao. Please go ahead, sir.

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John Marson T. Hao, Puregold Price Club, Inc. - VP of IR [117]

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Thank you for listening to the call. We hope to see you -- or we hope to hear from you again in our 9 months briefing this November. Thank you very much. If you have other questions, please feel free to email us, and we will try to answer you the best that we can.

Thank you.

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Operator [118]

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Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.