Home is where the profit fries

While its international offensive supports an impressive narrative, the multinational giant’s overseas operations are not delivering convincing numbers and are considered a drag on overall profitability.

The clearest evidence lies in the group’s own segment mix. International operations already account for 41.6 percent of revenues, or about P126.9 billion, and the foreign store footprint has grown to roughly 6,800-plus outlets, nearly double the home-market base.

Yet for all that scale, the international business contributed only 19 percent of global operating income in 2025 and, more troublingly, just 12.5 percent of global net income after tax.

The home market, by contrast, generated 81 percent of global operating income, effectively carrying the entire group.

Boardroom insiders told Nosy Tarsee that some officials of the local giant are pushing for a strategic reset.

If the domestic business remains the profit engine while the international side absorbs capital, complexity and management attention without delivering proportional earnings, then the company may need to reconsider whether “global scale” remains the right objective.

A company with one exceptional home-market franchise should not feel compelled to subsidize a patchwork of weaker overseas bets simply to preserve a narrative.

The weak links are not hard to find. In one major overseas market, operating income collapsed to just P336.6 million, down 69.4 percent year on year, with the business still carrying recurring losses and net operating loss carryovers.

One international brand saw systemwide sales fall 13 percent and same-store sales decline 6.8 percent, posting a net loss of P321.6 million.

Another recorded systemwide sales down 15.1 percent, while other brands posted soft same-store performance.

Even more telling, the group permanently closed 380 stores in 2025, with 286 of those closures coming from international markets.

Profitability abroad remains structurally weaker. International operating expenses and advertising consumed 15.2 percent of revenues, compared with 9.7 percent in the home market, while international operating margin stood at just 3 percent, versus 9.2 percent domestically.

Despite the expansion narrative, the overseas business appears to be growing into a less attractive economic profile.

This would be easier to sustain if the group had a fortress balance sheet. It does not.

The company ended 2025 with about P203.7 billion in total debt, P168.7 billion in net debt, a current ratio of 0.92 times, and interest coverage of just 3.13 times.

Short-term debt stood at roughly P14.7 billion, long-term debt at P19.2 billion, and senior debt securities at P52.7 billion. The balance sheet is not conducive to continued aggressive expansion.

Capital expenditure is unlikely to ease that pressure. The group spent P15.47 billion on capex in 2025, up 29.2 percent year on year, and is guiding another P13 billion to P16 billion in 2026.

One can admire the company’s confidence while still asking the obvious question: why keep feeding a global expansion machine when the mature home-market business is the one paying the bills?