Sales have fallen 3.5 per cent to RP3.1 trillion (US$232.7 million) for Indonesian hypermarket chain Matahari Putra Prima (MPPA) for its first quarter.

However, its gross profit margin improved by 120 basis points from RP428.2 billion to RP433.4 billion for the three months to the end of March.

Same-store sales growth remained negative, the group citing the continued challenging retail environment. Net loss for the quarter grew to RP176.7 billion from RP102.8 for the same quarter last year, the result of lower sales and higher expenses.

To reverse the downward trend, CEO Noel Trinder says the group is moving toward everyday low prices instead of a rotating calendar of promotional deals.

“We switched to an everyday low-price model (EDLP) in our fresh-food division (meat and produce) last year, resulting in same-store sales rising 3.6 per cent despite an overall company decline.”

In the third quarter of last year, MPPA shifted to the cost-accounting method, enabling the company to reset and drop prices on 5000 SKUs, including the key mini-market assortment.

“We are in the process of rebuilding trust with our customers supported by our suppliers,” says Trinder.

At the end of March, MPPA had 285 stores across Indonesia (114 Hypermart, three SmartClub, 26 Foodmart, 110 Boston Health and Beauty and 32 FMX). During the quarter it closed one Hypermart, one Foodmart, two Boston Health and Beauty, and 14 FMX stores.