SSI Group Inc. the country’s largest specialty store retailer, on Wednesday said it is cutting capital spending this year to P600 million for new store openings, less than half of last year’s actual spending of P1.5 billion, as it embarks on a rationalization program.
The company intends to open new stores while shutting down non-performing ones as it continues to capitalize on the country’s growing affluent market, said Anthony Huang, SSI Group president.
“At this point, we are both opening new stores as well as rationalizing some stores. The expansion and closing down will be both based on the store’s performance,” Huang said on the sidelines of the company’s stockholders’ meeting.
“In the case of Mindanao, we are closing stores in Cagayan de Oro [CDO], General Santos, and Zamboanga City. We are also closing down some stores in Bacolod. Our sales there are not meeting our expectations,” Huang said.
As of end-December 2015, the retailer had 792 stores carrying 117 brands, with a total store area of nearly 150, 000 square meters.
“The country’s robust economy is closely related to our performance. As you can see for the past five years, we have continuously grown and this is brought about by the increasing affluence of our country,” Huang noted.
Although some stores will be shut down, new ones will be opened in Metro Manila and Metro Cebu where bulk of the expansion will be focused.
“Metro Manila and Metro Cebu are doing very well for us, so we would like to continue expanding in those areas. Some of them work, some of them don’t, which is normal. Our Davao City operation is doing very well, as well as in the province of Pampanga,” he added.
Marti Atienza, the retailer’s vice president for investor relations, said they would close some 10,000 square meters of stores across all categories and brands, while also opening about 5,000 square meters of store space.
Atienza noted that each of SSI Group’s stores has an average floor area of 100 square meters, depending on the brand and products that are being sold.
SSI merchandise range from luxury and bridge apparel (affordable luxury) to casual wear and fast fashion, footwear, accessories and luggage, food, home and decor.
For its premium luxury apparel and accessories, it carries brands such as Hermes, Gucci and Salvatore Ferragamo, while for the popular fashion category it offers Zara, Berska and Stradivarius, among others.
For casual wear, SSI Group sells Lacoste, Gap and Old Navy. For its luggage offerings, it sells Samsonite, while Payless Shoesource belongs to its value-priced trendy footwear.
Its high-quality food and beverage selections include TWG and Oliviers & Co., while home furnishings brands include Muji and Pottery Barn.
“In those smaller markets, we think it might have been too early for us to open a lot of stores there,” Atienza said, referring to the shutting down of stores in CDO and the cities of Zamboanga and General Santos.
“Thus, we decided to close down some of them while at the same time, open stores which will be mainly in central developed areas such as Metro Manila and Metro Cebu,” she added.
When asked which stores will be included in its rationalization program, she said, “We are not focused on a particular brand or store. The expansion as well as the closure would be across all categories. The way we operate is not on a per-category basis but on a per-store basis, regardless which category a particular store belongs,” Atienza said.