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Revenue dip for Indonesia’s Hero Supermarket

With its store rationalisation program largely completed, Dairy Farm International Holdings’ Indonesian subsidiary Hero Supermarket had a 4 per cent drop in net revenue for its latest nine months, with net profit of RP45 billion (US$3.4 million).

Hero owns the Ikea rights for Indonesia and operates Guardian health and beauty stores as well as its grocery operation.

President/director Stephane Deutsch says the retail trading environment is expected to remain difficult for the rest of the year, especially in the food sector.

“The health and beauty and home furnishings businesses have been more resilient, and the outlook for these formats remains positive,” he says.

Store closures hit the food business in the third quarter as well as weak consumer confidence and the timing of the Eid Mubarak holiday. While like-for-like sales were negative for food, they were positive for both health and beauty and home furnishings.

Overall profitability improved nonetheless, which the group says is partly because of good progress in reducing expenses. Initiatives are being taken to enhance sales growth in food while sustaining the progress on margins.

Total sales for the nine months dipped to RP10,470 billion, but improved margins and tighter cost controls helped boost the net profit  significantly against the previous year’s net loss of RP31 billion.

Improvements to the fresh produce offer have been a focus, says the company, with the

category generating positive sales. Other categories declined, however, and initiatives are being taken to restore sales growth.

Action is also being taken to improve supply-chain efficiency and to make better use of the group’s distribution centres.

In health and beauty, Guardian’s store rationalisation program is progressing well, says the group, with strong like-for-like sales growth and well-managed running expenses improving profitability significantly.

In home furnishings, Ikea produced strong sales growth and improved margins, resulting

in higher profits. The Ikea online sales channel went live in the third quarter.

Store numbers overall were reduced by 61 for the nine months. As at September 30, the group had 465 stores, comprising 55 Giant Ekstra, 148 Giant Ekspres and Hero Supermarkets, 261 Guardian Health and Beauty stores and 1 Ikea store.

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