SSI Group Inc. has increased its capital expenditures (capex) this year to more than P2 billion in a bid to expand its leasable retail space.
SSI President Anthony Huang on Monday said the company is looking at building an “additional 21,000 square meters (sqm) of retail space this year,” which translates to over P2 billion capex.
He said in a press briefing after the company’s annual stockholders’ meeting that the current allocation compared with the P1.5 billion that was announced earlier through capital spending. This would have involved only an expansion of leasable space by up to 19,000 sqm .
Marti A. Atienza, vice president and investor relations head, also said in the same briefing that the firm intends to spend P1.7 billion next year for 16,000 sqm to 17,000 sqm more of retail space in line with its expansion initiative.
But Huang explained the expansion program depends largely on the masterplan of major commercial retail operators and the number of malls they intend to open.
New stores usually turn up a profit only after two to three years, Huang noted, which means the stores that opened last year may contribute to the company’s earnings by 2017.
From the aggressive expansion efforts this year, Huang said the company expects to grow in double-digit terms for the whole of 2015 in both the bottom line and top line performance.
“… For the year, 19 percent to 22 percent growth in both top line and net income,” Huang said.
Last year, the company added 35,000 sqm of retail space and acquired 22 brands which brought its total brand portfolio to 106 from 84.
Besides luxury brands, Huang said the FamilyMart and WellWorth ventures are doing well, with FamilyMart closing 2014 with 90 convenience stores. WellWorth opened two units in both May of 2014 and 2015.
“For the first quarter, we ended at 100 stores [for FamilyMart]. Today, we have 103 stores. We see approximately 150 stores by the end of this year,” Huang said.
“Out of the 150 stores target, about 40 to 45 is supposed to be franchised, of which 33 are already approved franchises. But out of the 33, only 12 are operational. It is taking longer than we expected, but we’re still optimistic that we can reach 150 by yearend,” he added.
In the first quarter of the year, the company saw a 22 percent increase in net income to P267 million from a year earlier and revenues rose by 19 percent to P4 billion.