William S. Go, PriceSmart Philippines (PSMT) chairman and now majority stockholder of the warehouse shopping firm, announced yesterday that PSMT is allocating from P350 million to P400 million to put up its first provincial outlet in Cebu.
PSMT has actually leased a 2.3-hectare property in the Banilad district of Cebu City for the proposed warehouse shopping outlet.
PSMT is hoping to be able to start construction of the new outlet by the first quarter of next year and start of operation by the third quarter.
Go and E-Class Corp. officially took over management control of PSMT last Aug. 12.
The new management group is still conducting an audit of PSMT’s finances to determine if there is a need to infuse additional capital and how the retail group can be turned around.
Go and his group gained 90 percent control of PSMT following an out-of-court settlement with PriceSmart USA whereby both parties agreed to drop all of their legal filings against each other, both in the US and in the Philippines, and control of PSMT would be completely turned over to Go and E-Class Corp.
The remaining share of 10 percent would continue to be held by First Metro Investment Inc., the investment arm of Metropolitan Bank and Trust Co.
Go and PriceSmart also entered into a one-year agreement for the continued use of the PriceSmart proprietary name, supply chain and system.
After that period, Go and his group can opt to change the name of the retail group.
With its fiscal year ending this month, the group of Go projects PSMT’s losses for 2004 to range from P400 million to P500 million due to illegal disbursements made by the previous American executives of PSMT.
With the takeover, Go and his group will draw up a new financial program and marketing plan for PSMT that will hopefully turn around the retail group.
Part of the turnaround plans include reworking the product mix of PSMT to make the warehouse shopping outlet more affordable to its members.
However, PSMT would continue with the membership system which number almost 60,000.