THE HENRY Sy-led SM retail chain plans to convert two more Makro wholesale outlets into SM Hypermarkets, banking on the success of the strategy for the erstwhile Makro outlet in Mandaluyong.

Robert Kwee, executive vice-president of SM Hypermarkets, said Makro outlets in Makati and Novaliches would be turned into hypermarkets by the end of September and in the last quarter, respectively.

‘Sales doubled after we converted our Mandaluyong branch into a hypermarket. We have already closed Makati and Novaliches, reducing the group’s total Makro branches to 12 outlets,’ Mr. Kwee said.

But Jose T. Sio, chief financial officer of SM Investments Corp., the listed holding firm of the Sy family, said the mall, banking, and property conglomerate won’t sell its shares in the Dutch-German chain of warehouse clubs,

The SM group is just not comfortable in certain Makro locations, he said.

Mr. Kwee said converting a Makro outlet into a hypermarket would cost the company around P200 million to P300 million, the bulk of which would go to construction expenses.

Unlike a hypermarket which is a department store and a supermarket rolled in one, a Makro outlet caters to wholesale buyers.

The Sy family became engaged in the business through Pilipinas Makro, operator of Makro stores in the country. Pilipinas Makro was originally a partnership among the Sy family, the Ayala group and SHV Holdings N.V. of the Netherlands until the Ayala group sold its 28% stake in 2004.

Three years later, SM Investments folded the Makro stores into its retail operations and increased its ownership in Pilipinas Makro to 60%. Aside from the three outlets mentioned, Makro stores can be found in Cubao, Las Piñas, Cainta in Rizal, Imus in Cavite, and Cebu City.

For the rest of the year, the SM retail group is scheduled to inaugurate one department store, one supermarket, six SaveMore branches, and four hypermarkets. By end of the year, the group will have 36 department stores, 27 supermarkets, 24 SaveMore branches, 19 hypermarkets, and 12 Makro outlets.

While Makro has been performing poorly, the SM retail group and the conglomerate’s property unit continued to push profits of the holding company up by 16% to P4.46 billion from April to June.