Hero's profit drops 93% amid tougher competition<\/p>\n
The Jakarta Post
\nJakarta<\/p>\n
Publicly listed retailer PT Hero Supermarket said on Friday
\nthat its net profit plunged by 93 percent last year due to the
\nhuge costs of business repositioning amid tougher competition in
\nthe industry.<\/p>\n
In a press statement on Friday, the company said its profit
\ndropped to Rp 2 billion (about US$238,095) last year from Rp 32
\nbillion in 2002.<\/p>\n
Nevertheless, its sales surged by 24 percent to Rp 3 trillion,
\nbut operating profit declined to Rp 43 billion from Rp 48
\nbillion.<\/p>\n
Hero president Ipung Kurnia said the decline was mostly
\nbecause of the company's move in spending Rp 49 billion mainly
\nfor closing down several of its stores. The company also
\nsuffered a declining asset value in its bakery business.<\/p>\n
Analysts said that for the past three years, Hero was under
\npressure from French hypermarket Carrefour, which has opened
\nstores near many Hero markets.<\/p>\n
Hero has difficulties competing with Carrefour because it
\ncannot match the prices offered by the hypermarket giant.<\/p>\n
Analysts also said that Hero had to spend more on operational
\ncosts as a result of the stiffer competition in the retail
\nsector, thus reducing its profit margins.<\/p>\n
In a bid to compete with Carrefour and Dutch hypermarket
\nMakro, the company made the decision to expand its business by
\nopening four hypermarkets of its own, named Giant, as well as
\neight Guardian pharmaceutical stores and four Starmart stores.<\/p>\n
The company also acquired 22 Tops supermarket outlets last
\nyear, which will be rebranded and integrated into the Hero
\nsupermarket family, in a bid to accelerate the expansion of its
\nnetwork at a relatively low cost.<\/p>\n
\"Our key priorities are to reposition our overall business and
\ncontinue to expand Giant and other successful formats,\" said
\nIpung in a statement.<\/p>\n
The company currently operates 222 stores and employs
\napproximately 10,000 people.<\/p>",
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