Bach Hoa Xanh, a local minimart chain under Mobile World Investment Corporation (MWG), has shut down hundreds of stores to facilitate a plan to restructure those with ailing business.
There will be more stores with poor performance shutting down while store restructuring is planned for next quarter, according to a representative of the chain.
Data on Bach Hoa Xanh’s website shows that as of July 13, the minimart chain had 1,824 active stores, down by 316 in the past two years.
Many stores in Ho Chi Minh City held clearance sales before closing.
A company representative told Tuoi Tre (Youth) newspaper last week that the closed stores were underperforming while the active stores will operate as normal.
“We have reviewed stores’ performance over the past days to close those which are underperforming and invest more in well-performing ones,” said the representative.
More than 50 percent of 2,100 Bach Hoa Xanh stores reached their revenue targets in May.
The other half are going to be reviewed and those failing to meet their targets will be shuttered.
However, their product suppliers will not be affected.
According to a report on business performance in the first five months of 2020 released by MWG, the operator of Bach Hoa Xanh minimart chain, their revenue reached VND59.3 trillion (US$2.5 billion), up 14 percent over the same period last year
Its net profit was VND2.2 trillion ($93 million), a year-on-year rise of one percent.
Although the profit in May improved compared to the previous month, it was lower than the sharp increase recorded last year before harsh COVID-19 restrictions were enforced in Hanoi and 19 southern provinces and cities.
The corporation said that the growth rate of after-tax profit was lower than that of its revenue because of surging input and operating costs.
Bach Hoa Xanh contributed VND10.5 trillion ($448 million) to MWG, accounting for 18 percent of the revenue.
Changing the store layout, closing underperforming stores, and maintaining healthy inventory by conducting going-out-of-business sales entail costs incurred by Bach Hoa Xanh in the short term.
As planned, all active Bach Hoa Xanh minimarts will operate with a new layout in the third quarter.
The chain will also handle inventory caused by area reduction and lower the number of stock keeping units (SKUs).
In the fourth quarter, Bach Hoa Xanh will substantially complete back-end system automation, including sales forecasting, product portfolio optimization, loss warning and control, and business process streamlining.
The chain will further develop its online channels.
Bach Hoa Xanh is expected to earn an average revenue of VND1.3 billion ($55,425) at each store.
The chain opened 1,000 stores in the four years from 2015, when it was put into service.
The number of stores then rose to more than 2,100 stores in 2021, making it one of the top local retailers in Vietnam.