Philippine luxury retailer eyes record sales on revenge spending

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Photo from: Nikkei Asia

By Nikkei Asia

The Philippines’ largest retailer of luxury brands like Hermes and fast-fashion labels such as Zara is poised for record sales and profit this year, its president told Nikkei Asia, as shopping-starved Filipinos splashed out on fashion when the economy reopened from pandemic restrictions.

But SSI Group is just “cautiously optimistic” for 2023, as stubbornly high inflation threatens to increase expenses while a possible recession overseas could be problematic for its inventory, company President Anthony Huang said in an interview last week.

For this year, though, Philippine Stock Exchange-listed SSI is confident of beating results for 2019 before coronavirus-triggered lockdowns hammered revenue and profit.

“I think for 2022, it’s going to be another record year for us,” Huang said.

SSI’s January-to-September results have already eclipsed its nine-month performance in 2019, with net sales rising 5.4% to 15.7 billion pesos ($285 million) and net income climbing 76.2% to 918 million pesos over the same period.

“I think there’s been a lot of savings over the past two years. People haven’t really been traveling, so, they’ve been spending their money locally,” he said.

The executive added that SSI’s main upper-income customer base is also “somewhat least affected” by a weak Philippine currency and high inflation, which soared to a 14-year high last month.

The country’s consumption-driven economy — which grew 7.6% in the third quarter — is underpinned by outsourcing revenues and foreign remittance inflows that remained robust despite the pandemic. In a report last month, the World Bank said the Philippines has seen its middle class expand in the last three decades as the economy grew, but income inequality is one of the highest in East Asia.

Revenue in the Philippine luxury retail market is projected to reach $323.4 million in 2027 from $270.2 million in 2022, according to data provider Statista. SSI’s results reflect a global trend during the pandemic as consumers opt to “invest” their savings “in pieces of high quality and craftsmanship,” Huang said.

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