Luxury retailer SSI cuts capex to P400M

By Denise A. Valdez, Senior Reporter

SPECIALTY retailer SSI Group, Inc. is cutting its 2020 capital expenditure (capex) budget by a third as it recalibrates expenses to adjust to the coronavirus pandemic.

“Total capex budget for 2020 is now at P400 million from an original budget of P1.2 billion,” SSI Vice-President for Investor Relations Ma. Margarita A. Atienza told BusinessWorld in an e-mail.

The adjusted capex is 58% lower than the company’s 2019 capex of P961 million.

“We also continue to look for ways to cut costs, where possible, to operate our brick and mortar stores more efficiently,” Ms. Atienza added.

The reduction is part of SSI’s strategy to cope with the coronavirus outbreak, which continues to restrict people from leaving their homes for non-essential activities.

The company is reducing expenses and optimizing cashflows to ensure it has sufficient cash reserves to survive the pandemic.

In a meeting with stockholders last Thursday, SSI President Anthony T. Huang said the company is also exploring ways to rationalize the group’s store network.

SSI has 583 stores as of end-June, already lower than the 593 stores it had in the same period last year. Mr. Huang said the group is trying to pivot to e-commerce platforms, given the changing behavior of consumers.

“To address current operating conditions, we are working to increase the channels through which our customers can interact with us, as a complement to our brick and mortar store network,” he said in the stockholders’ meeting.

To support this expansion in e-commerce, Ms. Atienza said SSI has an existing e-commerce business development group, which will work on driving growth for the segment.

In the medium term, SSI’s target is to get 20% of its sales from e-commerce platforms, up from less than 5% last year. Mr. Huang said the changing consumer behavior has already pushed this figure to around 12-13% at present.

SSI is the Philippine retailer of brands such as Gucci, Prada, Kate Spade, Zara, Marks & Spencer, Gap, Lacoste, Banana Republic, Muji, Lush, TWG, SaladStop, and Shake Shack.

During the first semester, the company swung to a net loss of P476.29 million, a turnaround from its P345.94 million profit in the same period last year, as its revenues were halved to P5.04 billion.

Shares in SSI at the stock exchange closed at P1.23 each on Friday, down four centavos or 3.15% from the earlier day.

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