SMIC consolidates retail businesses

CONGLOMERATE SM Investments Corp. (SMIC) is consolidating all its retail businesses under one roof, creating an even bigger retailing enterprise with combined sales of P264 billion under SM Retail Inc.

Following the same strategy previously taken with the property side of the business, SMIC’s board approved the merger of allied retailing businesses with SM Retail, 77.3 percent of which the conglomerate will own after the merger.

“The merger adds both greater diversity and a more extensive footprint to SM Retail’s portfolio and is consistent with our goal of simplifying our corporate structure. It is similar to the consolidation we undertook in 2013 to create our large-scale, mixed-use property business. As a result, SM Retail will be even better positioned to address the growing needs of Filipino consumers and we expect the merger to be accretive to SM Retail earnings in future years,” said Harley Sy, SMIC president.

The combined entity will have 1,927 outlets and 2.4 million square meters of gross floor area across a diverse portfolio of food, household appliances, DIY (do it yourself store), furniture, apparel, footwear, pharmaceuticals/cosmetics and specialty retailing stores.

The portfolio will serve a wide range of Filipino consumer needs in both staple and discretionary goods categories and will continue to leverage extensive synergies across the SM group, SMIC said.

The related companies folded into SM Retail included Ace Hardware, SM Appliance Center, Homeworld, Our Home, Toy Kingdom, Watsons, Kultura, Baby Company, Sports Station and several other specialty stores. Together, they operate 1,374 outlets and in 2015 delivered total revenues of P53 billion.

SMIC said the merger would complement the existing retail portfolio of SM Retail Inc., which includes 53 SM department stores, 44 hypermarkets and 213 supermarkets as well as majority stakes in the local operations of Alfamart, Forever21, Crate & Barrel and other specialty and apparel retailers in addition to a minority stake in Uniqlo.

In 2015, SM Retail posted P211.4 billion in sales, up by 7 percent. Net income rose by 17 percent to P6.8 billion for the year.