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SM allots P5 billion for retail expansion

Posted on March 31, 2013 10:58:06 PM [ BusinessWorld Online ]
By Franz J. G. de la Fuente, Reporter
SM RETAIL, Inc., which operates various supermarkets and department stores under holding firm SM Investments Corp., has allotted an estimated P5 billion to grow its portfolio by up to 35 new stores nationwide, in line with expectations of double-digit sales growth.
SM RETAIL, Inc. will spend about P5 billion for the opening of between 30 to 35 stores in 2013, three of which will be department stores.
“We expect to open between 30 to 35 stores. There will be three department stores and the rest are in the retail. Breakdown not yet available as locations are still being identified,” said Corazon P. Guidote, SM Investments senior vice-president for investor relations, in an e-mail on Monday last week when asked about SM Retail’s expansion plans this year.
In total, the new stores could cost “about P5 billion,” she added.
In comparison, SM Retail last year opened 34 stores consisting of five SM Department Stores, four SM Supermarkets, 18 SaveMore (neighborhood grocery) stores, and seven SM Hypermarkets.
“SM Retail will continue to expand its market reach in order to service the needs of consumers particularly in areas where organized retail is either nonexistent or limited,” Ms. Guidote said of SM Retail’s expansion in 2013.
SM Retail is the unlisted retail arm of Sy-led SM Investments. As of end-2012, SM Retail’s store network numbered 46 department stores, 37 SM Supermarkets, 37 SM Hypermarkets, and 82 SaveMore stores, for a total of 202 stores.
In 2013, SM Retail is expected to ride on the wave of robust spending associated with the upcoming election campaign and post double-digit sales growth for the full year.
“Elections are always good for consumption spending. For this year we are looking at growth of 8 to 10% in overall sales. Operating costs will also be well-managed, as we continue to find ways to be more efficient, particularly in energy consumption and logistics,” Ms. Guidote said.
SM Retail grew its net income last year by 12.5% to P6.6 billion year on year on the back of improved sales, which rose by 7.6% to P159.50 billion versus the year previous.
Ms. Guidote declined to elaborate on SM Retail’s plans to introduce new retail brands this year.
“The department store (SM Department Stores) is always on the lookout for new and interesting international brands. It is, however, too early to mention any names at this time,” she said.
In December last year, Teresita T. Sy-Coson, SM Investments vice-chairman, told reporters that SM Retail was is looking to bring in two foreign clothing brands to the country this year to boost its fashion portfolio, which currently consists of fast-fashion retailers Forever 21 and Uniqlo.
SM Retail allotted roughly P65 billion in capital spending this year, a record figure up from P56.80 billion in 2012, mostly for its flagship mall and condominium development units: SM Prime Holdings Corp. and SM Development Corp.
On Jan. 7, SM Investments announced that SM Prime and SM Retail signed an initial deal with shopping mall operator Waltermart Group for a joint venture expected to be sealed within the year to further grow the Waltermart branch network under current management, pending further negotiations and due diligence transactions. SM Investments posted a full-year net income of P24.7 billion last year, or 16.51% higher than 2011’s P21.2 billion, while revenues rose by 12% to P223.9 billion versus P199.9 billion, due to the strong performance of all its businesses led by banking and retail.
Shares of SM Investments leaped by P56.00 to P1,115.00 apiece last Wednesday from P1,059.00 last Tuesday. Financial markets were closed on March 28 and 29 in observance of Maundy Thursday and Good Friday, respectively.

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