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San Diego Retail Business Closes Manila Operations

San Diego, California-based retail giant PriceSmart, which had the distinction of being the first non-Filipino business to take advantage of liberalized retail laws in the Philippines, has decided to close all its affiliated stores in Manila, the Philippines. Reports state that the warehouse chain stopped operating last week on the islands after local partner William Go remitted some $4.78 million dollars in a loan to PriceSmart`s parent company in San Diego.

A buyout in August 2005 by the group of Go (maker of the "Fat and Thin " brand of tamarind balls snacks, which are a local delicacy in the area - in the Philippines they are known as "champoy"), made PriceSmart a fully local operation, but the local brand had still maintained its U.S. name. The agreement in August of `05 also left Go with an $8.85 million debt to the chain`s parent company, which will mature in 2012. The keeping of an original brand name is often seen as key to a business`s survival in a lonely market.

With the decision to close its stores in the Philippines, PriceSmart decided to record a "full impairment" after the $4.78 million from Go was received, and wrote off the $20 million in losses that had accumulated since 2001. Local retailers, including a major Filipino-Chinese retail chain, are interested in leasing the warehouse space being vacated by PriceSmart for their own businesses.