SM Investments Corporation (SM) is spending some P600 million to P900 million to convert three warehouse club branches of subsidiary Pilipinas Makro Inc. into SM Hypermarkets to boost weaker sales.

In an interview, SM chief financial offier Jose Sio said Makro has 15 branches nationwide and they have already converted the one in Mandaluyong into a Hypermart while two more have been closed down for conversion.

Sio noted that those up for conversion are branches which have been found to be ill-suited for the market they are in while the remaining 12 branches that will retain the Makro brand will also undergo some changes so that their inventories will be more saleable to consumers in their neighborhoods.

He said each conversion costs about P200 million to P300 million which is spent mostly for construction, said SM Hypermarket executive vice president Robert Kwee.

Already closed for conversion are Makro stores in Makati and Novaliches.

The Makati branch is expected to be reopened as SM Hypermarket by the end of September while the Novaliches branch should be open sometime in the last quarter of 2009.

Aside from the three branches that have been closed, Makro has outlets in Pampanga, North Harbour in Manila, Imus in Cavite, Bantangas, Sucat in Paranaque, Las Pinas, Cainta in Rizal, Cubao, Iloilo, Cagayan de Oro, Davao and Cebu.

SMIC expects to exceed its 12 percent growth target in profits this year after it reported a 14 percent growth in net income to P7.4 billion for the first half of 2009 from P6.5 billion during the same period in 2008.