By Alexandria Grace C. Magno
THE PHILIPPINE high-end retail sector faces headwinds as economic pressures and reputational concerns temper luxury spending, while tourism and holiday bonuses provide some support, analysts said.
“Holiday spending and bonuses may have a positive impact on luxury demand, but the primary target market for these products may reduce purchases due to reputational concerns, especially after the recent public spending controversy,” said Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc., in a Viber message.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said economic fundamentals such as rising incomes, improving employment, and foreign tourism support luxury demand, but anti-corruption reforms could dampen discretionary spending.
“Although I’m not familiar with company-specific factors, sales may have been negatively impacted by weather disruptions that reduced the number of business and working days, increased competition from local, foreign, and online retailers,” he also said.
“Next year, if economic growth improves and wages rise faster, we may see improvement in the discretionary goods sector. For now, optimism is limited unless policy and political reforms are implemented,” Mr. Erece said.
Luis A. Limlingan, head of sales at Regina Capital Development Corp., noted that recent consumer surveys show generally cautious spending intentions across income groups, with the high-income segment least concerned.
“Tourism provides some support to high-end retail, but it does not fully offset the generally cautious domestic spending environment,” he said in a Viber message.
Specialty retailers, including SSI Group, Inc., are navigating mixed conditions, analysts added.
The listed retailer, which manages international brands, reported a 64.99% drop in third-quarter attributable net income to P188.08 million from P537.18 million a year earlier, due to weaker sales in its luxury, bridge, and casual wear segments. Revenue for the three months ending September fell 0.93% to P6.9 billion, while net sales declined 0.9% to P6.88 billion.
Online brokerage COL Financial Group, Inc. said the revenue drop partly reflected a recent SAP migration, and weaker consumer spending caused by typhoons and political uncertainty.
“Management expects fourth-quarter performance to benefit from seasonal tailwinds, with November trends showing improvement after a soft October,” COL Financial said.
According to SSI, third-quarter weakness stemmed mainly from lower sales in luxury and bridge segments, down 3.8%, and casual wear, down 2.9%, reflecting softer discretionary spending.
Following the third-quarter performance, Mr. Erece expressed cautious optimism: “We may see good growth for [SSI] and similar brands as higher holiday bonuses and Christmas spending drive demand for discretionary goods.”
Other Philippine Stock Exchange-listed chains primarily focus on supermarkets, drugstores, and mass-market formats, catering to everyday consumer goods, unlike SSI Group, which targets luxury and specialty retail. The closest high-end competitors on the exchange are Robinsons Retail Holdings, Inc., and conglomerates such as SM Investments Corp. through their retail subsidiaries.