Hero to open more stores this year

Hero to open more stores this year

The Jakarta Post, Jakarta

More giants and heroes are coming!
You can take this literally as leading Indonesian retailer PT
Hero Supermarket is set to open five more of its hypermarkets,
trading under the name Giant in Java, including Jakarta, and up
to six more Hero supermarkets this year.

"We are responding to the hypermarket challenge as we feel
that it is a part of the modern retail scene," Hero corporate
secretary Vivien Goh said on Tuesday, mentioning that the
investment would be funded out of the company's internal reserves
and bank loans.

She said the expansion would require about Rp 150 billion
(about US$16.5 million) in capital expenditure, although she did
not give details.

Aside from opening more hypermarkets, the local supermarket
chain, established in 1971, will also open more of its smaller
operating units, like Guardian pharmacies and Starmart
minimarkets, with around 20 outlets each set to be opened.

The company expects the plan will help to at least maintain
the firm's 27 percent growth in sales this year. In 2004, the
retailer booked Rp 8.5 trillion in sales and earned net income of
Rp 34.3 billion.

Hero's aggressive move seems to be in line with a growth trend
for hypermarkets, which last year saw the number of outlets
double from 24 in 2002, with the figure predicted to triple this
year.

The country's retail industry is reported to produce annual
turnover of Rp 600 billion, according to a study by AC Nielsen.

Despite its major expansion plan, however, the company has a
problem on its hands as it is facing a lawsuit filed by PT
Matahari Putra Prima -- the holder of a 7.78 percent stake in
Hero -- in the South Jakarta District Court.

Matahari, along with two individual shareholders, allege that
Hero has been managed to serve the interest of certain
shareholders and third parties -- in this case Pan-Asian retail
group Dairy Farm.

The suit also alleges that Hero provided misleading
information in relation to a tender offer process carried out by
Dairy Farm subsidiary Nallaca BV earlier this year -- a move that
in the end change Hero's ownership structure.

In its rejoinder, Hero says that the suit is baseless and that
the firm intends to context the action in court, with the action
scheduled to commence on March 31. Hero argues that the company
has not caused any losses to shareholders and that the third
party alleged to have interfered was in fact one of its own
shareholders.

The tender offer resulted in a change in Hero's ownership
composition as Nalacca bought 20.42 percent of the shares from
the public.

As of today, PT Hero Pusaka Sejati owns 50.10 percent of the
shares, while the Mulgrave Corporation BV -- another subsidiary
of Dairy Farm -- holds 12.23 percent, Matahari 7.78 percent and
retail investors 9.47 percent. (003)