PH retailers find diversity a drag amid pandemic

Published April 10, 2020, 12:00 AM

by manilabulletin_admin

SM Investments Corp. supermarkets in Metro Manila have drawn queues of customers each day since the Philippines imposed a lockdown to contain the coronavirus outbreak on Luzon island, the nation’s economic engine and home to most of its population. Yet the demand for staples won’t offset losses from its other shuttered stores, analysts say.

The Philippines other retail giant Robinsons Retail Holdings Inc. and SM Investments have been forced to close department and specialty stores amid the lockdown. Both companies’ shares are down at least 17 percent this year, while those of Puregold Price Club, Inc., which focuses only on supermarkets, are up 4 percent after a 42 percent rally since March 19, when the nation’s benchmark equity index posted a record loss.

“Investors are switching their retail holdings to Puregold,” Rachelle Cruz, an analyst at AP Securities Inc., said in interview. “Pure supermarket plays and less diversified retailers face better prospects as discretionary spending is cut and will take time to recover even when the lockdown is over.”

The mid-March domestic quarantine and global disruptions leave the Philippines facing its first recession since 1998. With consumer spending accounting for 70 percent of the nation’s gross domestic product – and Luzon’s 60 million people contributing much of that, the government predicts a full-year economic contraction of as much as 0.6 percent in the absence of mitigating measures if the impact of the virus extends to June. Restrictions on Luzon were ex¬tended Tuesday until the end of this month from April 12 due to sustained growth in virus cases.

Consumer demand has weak¬ened across the Philippines, even though the lockdown isn’t nationwide, according to Teresita Sy-Coson, vice chairman at SM Investments, owner of the nation’s biggest retailer and shopping mall operator. There are “fewer buyers in stores nationwide” and online buying is limited.

SM will miss its 2020 retail sales target and Sy-Coson is “hopeful” of a second-half rebound on expectations consumer spending picks up as restrictions are eased. This year’s expansion plans have been postponed, she said. (Bloomberg)

 
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