Masan closes 433 VinMart stores to cut losses
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Masan has closed 421 VinMart+ convenience stores and 12 VinMart supermarkets this year as it restructures the retail business it acquired this year from Vingroup. Most of the closed stores were in Ho Chi Minh City. The closure has resulted in a cut in losses for its VinCommerce subsidiary, with the earnings before interest, taxes, depreciation and amortization (EBITDA) margin increasing from negative 6.7 percent in the first nine months of last year to negative 2.8 percent in the same period this year, Masan said in a release.
Most of the 433 outlets had revenues 50 percent lower than optimal levels required to achieve breakeven and posted a combined loss of VND239 billion ($10.3 million) this year before their closure.
VinCommerce hopes to reach breakeven EBITDA in the last quarter and achieve 10 percent revenue growth over the third quarter. Its gross profit is set to be improved by optimizing product assortment and renegotiating terms with suppliers, the release said.
“Improved profitability from closing underperforming locations is expected to be fully realized in 2021.”
The company also opened 57 new VinMart+ outlets and one new VinMart supermarket in the first nine months, launched three new concept VinMart+ store formats in Ho Chi Minh City and Hanoi with more fresh products and an improved layout to understand consumer behavior and design model stores for the next round of expansion.
As of the end of September VinCommerce had 2,646 outlets, 122 of them supermarkets.
Masan acquired VinCommerce from Vietnam’s biggest private company, Vingroup, in January this year and owns a 83.74 percent stake in it.
Questions & Answers
Q.What proportion of Masan's retail outlets are supermarkets?
What proportion of Masan's retail outlets are supermarkets?
As of the end of September, VinCommerce operated 2,646 outlets in total. Of these, 122 were supermarkets, with the remaining 2,524 being convenience stores.
Q.When does Masan expect to fully realise the benefits of closing underperforming stores?
When does Masan expect to fully realise the benefits of closing underperforming stores?
Masan expects to fully realise the improved profitability resulting from these closures in 2021. The company anticipates reaching breakeven EBITDA in the last quarter of this year.
Q.What steps are being taken to improve VinCommerce's gross profit?
What steps are being taken to improve VinCommerce's gross profit?
VinCommerce plans to improve its gross profit by optimising the product assortment available in stores and by renegotiating terms with its current suppliers.
Q.How much was the combined loss from the underperforming stores before their closure?
How much was the combined loss from the underperforming stores before their closure?
Before their closure, the 433 underperforming outlets collectively posted a loss of VND239 billion ($10.3 million) this year. Their revenues were also 50 percent lower than optimal levels.
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