Retail major Mobile World has placed at least four of its chain store brands on its restructuring chopping block, with fourth quarter closures possibly reaching 200 outlets.
Dien May Xanh (electric and electronic home appliances), The Gioi Di Dong (mobile phones), Bach Hoa Xanh (grocery) and AVASports (sportwear) chains had already seen a total of 69 outlets closed as of October.
Listed on the Ho Chi Minh Stock Exchange (HoSE) as MWG, the group had a total of 5,751 stores as of October, down 27 from the start of the year.
It closed 32 The Gioi Di Dong, three Dien May Xanh, 22 Bach Hoa Xanh and 12 AVASport outlets, while boosting the number of An Khang pharmacies by 40 to 544 and adding two AVAKids outlets.
The group said in a report that the stores closed and slated for closure were inefficient in terms of revenue and profit generation. It said the board of directors would constantly monitor outcomes to make necessary adjustments.
Nguyen Duc Tai, the group’s chairman, had revealed the intention to close around 200 outlets at a mid-November meeting with investors and analysts.
Tai said the closures would not result in any significant revenue loss with sales shifting to nearby stores.
Thus far, the The Gioi Di Dong (mobile phones) and Dien May Xanh (electric and electronic home appliances) chains have been the "golden egg laying hen" generating most of the group’s revenues and profits.
However, in a difficult economic environment, the purchase of non-essential products like phones, laptops and household electronics items has declined, the group said.
For instance, Jan-Oct revenues from the The Gioi Di Dong and Dien May Xanh chains fell 21% year-on-year to VND70.2 trillion ($2.89 billion).
Besides lower sales, the businesses were also caught up in a pricing war that cut profit margins and shop efficiency.
For many years, the retail giant had followed a policy of constant shop expansion to acquire greater market shares. However, since last year, it has reconsidered this.
It began revamping the Bach Hoa Xanh grocery chain first, closing more than 400 outlets in a few months.
Alongside the closures, the group began prioritizing product quality, customer experience and the reduction of operating and shipping expenses.
With these adjustments, the revenue per Bach Hoa Xanh store rapidly increased to more than VND1.7 billion ($70,030) in October, up from VND1.1 billion ($45,314) in May 2022. The chain’s revenue for the first 10 months of this year was VND25.3 trillion ($1.04 billion), a 13% rise over the same period last year, with that of October alone climbing 29%.
Other chains that have had outlets closed include new ones include AVASport, AVAFashion, AVACycle (bicycles) and AVAJi (jewelries).
In the first quarter of 2023, MWG announced plans to close its entire Bluetronics chain in Cambodia, citing small market size and complicated tax policies. The chain had been operating in neighboring country since 2017 and was seen as a stepping stone for the group’s Southeast Asia expansion plans.
As of September 30, the group had 68,374 employees, down 5,634 from the beginning of the year, saving VND535 billion ($22.03 million) in staff costs.
The MWG ticker closed Friday at VND38,550 ($1.59) per share.