(Source: Business World | 27 March 2016)
Metro Retail Stores Group, Inc. (MRSGI) is commencing its five-year expansion program with the opening of seven stores that will capitalize on the rising consumer spending in the Philippines.
MRSGI Vice-President for Business Development Joseph Conrad M. Balatbat said in an e-mail the new stores — which will be located in Luzon and Visayas — will add approximately the midpoint of the planned 36,000 square meters (sqm) to 60,000 sqm of gross floor area (GFA).
“Most of our expansion will come from organic growth composed of stand-alone stores and stores opening in the malls of our partner developers like Ayala Land, Inc. We continue to look at acquisition opportunities at the right price but there are still quite a number of cities and municipalities with good sites,” Mr. Balatbat said.
Of the total, the department stores will lead the charge this year as the two proposed launches have an approximate size of 25,000 sqm.
The Visayan retail giant is targeting to double its footprint in five years, translating to the opening of additional 50 to 70 stores, Mr. Balatbat said in November.
MRSGI is aiming to achieve “similar growth rates in net sales, same-store sales and net income this year as we did in 2015,” Mr. Balatbat said.
The Gaisano-led multi-format retailer net profit rose at an annual clip of 20.6% to P758.6 million last year. Net sales climbed 13.9% year on year to P32.3 billion, with same-store sales growth at 8.8%.
MRSGI is ramping up its capital expenditure this year that will be mostly funded by the proceeds from its P4-billion initial public offering in November, Mr. Balatbat said. He declined to give specific figures, noting that it will be difficult to compare capital spending on an annual basis since the company came from a restructuring prior to the first-time share sale.
London-based market research firm Euromonitor International Ltd. is forecasting a 6.7% growth in the retail sector this year, faster than most estimates on Philippine economic growth, Mr. Balatbat said.
“Being a consumption-driven economy, the driver of this growth is the overall growth of the economy, the continued growth of the BPO sector and the steady stream of remittances,” he said.
For MRSGI, the biggest challenges is “our network expansion and further reduction of our operating expenses.”
In terms of securing land or space for expansion, Mr. Balatbat said it has become a bit more crowded in recent years as the big retailers and mall developers have been expanding as well.
“We have to rely on our relationship and familiarity with property owners in certain areas to give us that edge. We are also fortunate to have developer partners who create the destination and invite us to anchor their malls,” he said.
Shares in MRSGI climbed two centavos or 0.51% to close at P3.92 each last Wednesday.
— By Krista Angela M. Montealegre