SM Investments Corp. (SMIC), the listed holding conglomerate of tycoon Henry Sy Sr., has a number of reasons to be cheerful these days despite the challenges brought by global financial crisis.

Its retail business, for instance, is strongly weathering a perceived slowing economy as sales of department stores alone grew 7.05 percent in January to December 7, according to SM senior vice president for operations Jorge T. Mendiola.

“The economy never really suffered a decline. Of course in the first and second quarters we saw a slowdown because of the oil and rice supply crises during those periods but things have stabilized now. [The country’s fundamentals are really] very resilient,” he said in an interview Wednesday.

The group, which has four core businesses, lists retail as its top income contributor this year, alongside the shopping malls. At the end of the nine-month period, retail sales and the malls contributed the bulk of SMIC’s reported net income, accounting for 39 percent and 38.1 percent, respectively. The real-estate business, meanwhile, accounted for 9.5 percent, while the banks contributed 13.4 percent.

The retail group posted a net income of P2.2 billion from P1.8 billion a year earlier as sales revenues grew 6 percent to P79.1 billion. For the year, the retail group has opened a total of 10 stores: one department store, two supermarkets, two hypermarkets and five SaveMore stores. In total, the group now has 93 outlets composed of 32 department stores; 35 supermarkets, 12 of which are SaveMore branches; 11 hypermarkets; and 15 Makro outlets. For the rest of the year,it is scheduled to inaugurate seven more stores consisting of two department stores, two supermarkets, a SaveMore branch and two hypermarkets.

While 2009 is expected by some to be a challenging year, SMIC is still seeing growth although the figures may not be as high as what is projected this year.

Tessie Sy-Coson, vice chairman of SMIC, has earlier admitted they are calibrating their growth according to the global situation. “We are looking at maybe single-digit growth for the group for both topline and bottomline.

“We don’t know what is going to happen in the future. Having said that, we have to tighten our belt next year and study which areas we can reduce costs,” she said.

But all projects will remain on track, she emphasized. SMIC ended the first nine months with a 14-percent jump in net profit to P9.6 billion as consolidated revenues grew 17 percent to P97.4 billion.  “The second half of 2008 gives us more reason to be optimistic about meeting our targets.

We have since seen drastic cuts in gasoline and food prices, which combine well with a weak peso as they provide a boost to many of our customers, including families of overseas workers who earn in US dollars. As such, we view the fourth quarter of the year with greater optimism. It’s the time when consumer spending heightens owing to the holiday season,” SMIC president Harley T. Sy said.

In a related development, SM Prime Holdings Inc., owner and operator of all the SM shopping malls, is set to open its 33rd mall on Friday in Baliuag, Bulacan.

SM City Baliuag occupies 93,000 square meters (sq.m.) of land and has a gross floor area of 61,554 sq.m. Its total leasable area is 42,171 sq.m. with two of its anchor tenants—SM Department Store and SM Hypermarket—occupying 18,985 sqm and 9,507 sq.m. of floor space, respectively. It is located approximately 40 kilometers from the Edsa-Balintawak interchange of the North Luzon Expressway.

As in all other SM Prime malls, SM Baliuag features several stores and services for shopping, dining, entertainment, health and wellness. Among its facilities are an 824-sq.m. food court, four cinemas with a combined seating capacity of 1,241, and parking for over 500 vehicles. Other mall tenants include Jollibee, KFC, Gerry’s Grill, SM Appliance, Watsons, National Bookstore, Ace Hardware and Worlds of Fun, among others.

Earlier, SM Prime launched SM City Marikina, the SM Megamall Bridgeway and SM City Rosales in Pangasinan. The Annex at SM City North Edsa is also set to open on December 12. All these increase the total gross floor area of SM malls by 9 percent to 4.3 million sq.m.  For next year, the company may borrow P5 billion for continued expansion and refinancing of debts.

It plans to build three new malls in Naga (Bicol), Pamplona (Las Piñas) and Rosario (Cavite) and expand SM Rosales (Pangasinan) and SM North Edsa. By the end of 2009, the company will have a total of 36 malls under its portfolio with a total gross floor area of 4.5 million sq m.

For China operations, it’s plan is to establish one mall a year, including one next year in Chongquing with two more planned in 2010 and 2011 to be located in Suzhou and Zibo in Guangdong province.