SM malls defy cost surge with stronger sales
Sy family-led SM Prime Holdings Inc. said mall foot traffic remained resilient in the first quarter, defying concerns that rising fuel costs would dampen consumer activity.
In a media briefing on Tuesday, Steven Tan, president of SM Supermalls, said visitor traffic “did not drop at all.” Instead, it matched last year’s levels despite elevated transport costs and global volatility.
“It’s exactly the same, but the sales went up to nearly double digit,” Tan said. He pointed to stronger tenant performance even as external pressures mounted.
This steady traffic helped underpin SM Prime’s recurring income, with malls continuing to drive earnings growth amid weakness in its residential segment.
The property giant reported a first-quarter net income of P11.66 billion. This was nearly flat from P11.65 billion a year ago, as higher costs offset modest revenue gains.
Total revenues rose 2 percent to P33.3 billion. This was thanks to stronger rental income and other revenues, which cushioned a decline in real estate sales.
Mall revenues climbed 8 percent to P20.4 billion, accounting for 61 percent of the group’s total. This was attributed to high occupancy and demand for experiential offerings.
SM Prime president Jeffrey Lim said the mall business continued to anchor performance, even as the residential segment weighed on overall results.
“If you look at the first quarter, malls have still grown,” Lim said. He noted that softer housing demand dragged earnings during the period.
Lim added that while fixed rental income remained stable, variable rents—linked to tenant sales—benefited from stronger mall spending.
Despite the upbeat first-quarter showing, Lim cautioned that risks remain, particularly if external shocks persist in the coming months.
“We expect that the crisis, if this will persist, will definitely affect the second quarter onwards,” he said, citing lingering volatility.
The company is also reassessing its capital expenditure plan of about P100 billion. It is deferring select projects and redevelopment activities to manage risks.
Lim said SM Prime was taking a “holistic” approach, working closely with tenants, suppliers and contractors to navigate rising costs.
“We have to prepare and make sure that we will be able to withstand this volatility,” he said.
Still, Tan said strong consumer turnout in malls offers a positive signal for the months ahead, even as management remains cautious.
