InRetail Peru Earnings Call: Growth Amid Targeted Headwinds

InRetail Peru Corp ((INREF)) has held its Q4 earnings call. Read on for the main highlights of the call.

InRetail Peru Corp’s latest earnings call struck a cautiously optimistic tone, as management balanced solid top-line growth, strong cash generation and heavy investment with frank acknowledgment of pressure points. Core retail and pharmacy formats are expanding and performing well, yet shopping malls, distribution and higher costs continue to weigh on margins and segment results.

Consolidated Revenue Growth

Consolidated revenues rose 6.3% in Q4 2025 and 5.2% for the full year, even after extraordinary impacts across the portfolio. Management signaled confidence for 2026, guiding to high single-digit consolidated revenue growth once the planned PEN 200 million decline in noncore distribution revenues is stripped out.

Adjusted EBITDA and Net Income Performance

Adjusted EBITDA increased 4.9% in Q4, leaving full-year EBITDA roughly flat versus 2024 as segment headwinds offset retail strength. Net income jumped 14.1% in the quarter to PEN 335 million, helped by noncash foreign exchange gains that cushioned the impact of higher financial expenses.

Strong Food Retail Results and Store Expansion

Food Retail remained the star performer, with revenues up 7.4% in Q4 and 7.1% for 2025, supported by robust same-store sales at Mass and Makro. Profitability also improved, as Q4 gross profit rose 9.8% with gross margin at 24% and adjusted EBITDA up 7.9%, underpinned by nearly 300 net new Mass stores and new Plaza Vea openings.

Pharma Growth, Network Expansion and Cash Generation

The pharmacies unit delivered 6.2% revenue growth in Q4, with same-store sales advancing 5.4% and about 109 net new locations in 2025, taking the chain to roughly 2,500 outlets. The business generated modest adjusted EBITDA growth of 1.5% in Q4 and strong cash flow, underscoring its role as a defensive and cash-generative pillar.

Logistics and Distribution Investments

InRetail continued to invest heavily in logistics, inaugurating a new 85,000 square meter pharma distribution center with capacity of about one million units per day next to its main retail hub. The company also opened nine distribution centers dedicated to the Mass format, reinforcing a scalable platform designed to support future store growth.

CapEx and Investment Plan

Capital expenditures reached PEN 401 million in Q4 and roughly PEN 1.5 billion for 2025, reflecting an aggressive expansion agenda. Looking ahead, management plans around PEN 2.7 billion in CapEx over the next three years, with nearly half directed to Food Retail and more than 300 new stores slated for 2026.

Improved Liquidity and Capital Structure Execution

The group ended 2025 with a consolidated cash balance of PEN 1.9 billion, comfortably above earlier guidance, highlighting strong liquidity. During the year, it refinanced around PEN 2 billion in bank debt and replaced shopping mall bonds with roughly USD 500 million in new issues, leaving short-term debt at only about 5% of total borrowings.

Manageable Leverage Metrics

Consolidated net debt stood at PEN 5,110 million at year-end, translating into a net debt to adjusted EBITDA ratio of about 1.7 times. By segment, leverage remained moderate, with Food Retail at 2.1 times and Pharma at a more conservative 1.0 time, giving the company room to fund growth.

ESG and Social Impact Achievements

Management highlighted continued ESG progress, including a fifth consecutive inclusion in the S&P Global Sustainability Yearbook and more than 18 million food rations donated. Programs such as Peru Pasion supported around 290 entrepreneurs and drove over PEN 36 million in SME sales, while carbon footprint reductions and energy savings added both environmental and financial benefits.

Shopping Malls Progressive Recovery Indicators

Shopping mall revenues edged up 0.4% in Q4, with tenant sales growing a healthier 7.5% and gross margin at about 66.8%, suggesting early signs of stabilization. Management expects adjusted EBITDA in this segment to recover toward 2024 levels by 2026, helped by the low comparison base and gradual normalization.

Shopping Malls Earnings Decline in 2025

Despite the late-year improvement, shopping malls suffered a 15.4% drop in adjusted EBITDA for 2025 and a 1.5% decline in Q4 to PEN 135 million. The segment’s performance was hit by direct and indirect effects from an incident in Turkiye and higher financial costs tied to new bond issuances.

Pharma Distribution Revenue Reduction

The pharma distribution unit posted a 4.7% revenue decline in Q4 as InRetail continued to exit noncore, low-margin and capital-intensive channels. Management flagged an additional PEN 200 million revenue reduction in 2026 from this transformation, noting that these sales historically did not contribute to adjusted EBITDA or cash flow.

Margin and Expense Pressures

Margins faced pressure, particularly in Pharma, where the gross margin dipped to 33.2% in Q4 and full-year EBITDA growth was limited. Across the portfolio, the rapid pace of new store openings, minimum wage hikes and higher logistics costs increased operating expenses and tempered profitability.

One-time Refinancing and Higher Financial Costs

Q4 results were also burdened by PEN 42 million in one-off expenses related to the shopping mall bond refinancing, including structuring fees and derivative unwinds. Even stripping out those items, interest costs rose due to incremental debt and refinancing at higher rates, partially offsetting operating gains.

Impact from Incident in Turkiye

Management underscored that an incident in Turkiye had meaningful direct and indirect repercussions on operations and profitability in 2025. The episode was a key driver of shopping mall underperformance and contributed to what executives described as a challenging start to the year.

Temporary Operational Disruptions and Stock-outs

The company also pointed to temporary stock-outs in high-demand categories in December 2025, which distorted inventory days and working capital metrics. These disruptions are expected to normalize, suggesting no structural issues in supply chains despite the short-term impact.

Slower Mass Store Opening Pace Planned for 2026

After opening more than 600 Mass stores over the past two years, InRetail plans to slow the pace to about 200 new locations in 2026. The strategic shift aims to prioritize store productivity, logistics optimization and operational efficiencies over sheer footprint expansion.

Shopping Mall Leverage Elevated

In contrast to other segments, shopping malls ended Q4 with net debt of PEN 1,514 million and leverage at roughly 3.6 times adjusted EBITDA. The higher ratio reflects both weaker earnings and additional bond issuance, making deleveraging in this unit an important focus for investors.

Forward-Looking Guidance and Strategic Outlook

For 2026, InRetail guides to high single-digit growth in both consolidated revenues and adjusted EBITDA, excluding the planned reduction in distribution sales. The outlook rests on continued Food Retail strength, modest growth in Pharma, an EBITDA recovery in shopping malls, over 300 new stores, one new power center and a three-year CapEx plan of about PEN 2.7 billion.

In summary, InRetail Peru’s earnings call painted a picture of a resilient, cash-rich retailer leaning into growth while managing through pockets of stress. For investors, the investment case hinges on continued momentum in Food and Pharma, successful execution of logistics and CapEx plans, and a gradual recovery and deleveraging in the shopping mall business.