Destroyed By Matahari Department Store, Retailer Owned By Lippo Group, Which Has Closed 13 Stores This Year

JAKARTA - A retailer owned by the Riady family or Lippo Group, PT Matahari Department Store Tbk (LPPF), said it would close six outlets in several locations before the end of 2020. That way, 13 Matahari stores have closed this year due to the COVID pandemic. -19.

Quoted from Matahari's disclosure of information on the Indonesia Stock Exchange (IDX) website, the company's management stated that 6 outlets are planned to be closed until the end of 2020. The details, as many as 4 outlets are in Java Island, 1 in the Bali region, and 1 in Sulawesi Island.

"Thus, the number of our outlets that will operate at the end of 2020 will be 147 from the previous 153," wrote the management of Matahari Department Store, quoted by VOI, Monday, November 30.

In addition, the company also ensures that it will not open new outlets in the fourth quarter of 2020 and the first quarter of 2021.

Matahari management also said, of the 147 operating outlets, 23 of them were included in the watch list to review performance and profitability. This was done to improve the performance of these outlets.

Matahari Management will also continue to communicate with shopping center managers or land owners in order to obtain lower rental costs.

Matahari said it had closed seven large format retail outlets this year. This decision was taken amidst the deteriorating financial performance of the company as a result of the COVID-19 pandemic.

Matahari CEO and Vice President Director Terry O'Connor said, due to the closure of this outlet, the company suffered a loss of IDR 617 billion. These amounts are accumulated for the nine months ended September.

Terry said, the loss was in line with net income which fell 57.5 percent to IDR 3.3 trillion. Meanwhile, gross sales were recorded at Rp. 5.9 trillion or a drop of 57.6 percent over the same period last year.

"The ongoing COVID-19 pandemic has accelerated the closure of underperforming outlets in line with Matahari's efforts to restructure its business. Throughout this year, seven large format outlets and all specialty outlets were closed," he said, as quoted from his official release in the information disclosure at IDX website, Friday, October 23.

Furthermore, Terry admitted, his company had started to recover steadily in July, August and until mid-September. However, when on September 14, the strict PSBB was re-implemented in Jakarta and operational restrictions in other locations caused the company to temporarily close several of its outlets, thus slowing the company's performance during the quarter.

Terry said, to reduce the impact of the pandemic, the company implemented cost tightening, including negotiating efforts to obtain lease relief, which resulted in a decrease in operating expenses by 26.2 percent in the third quarter and 29.3 percent in the January to September period.

Not only that, Terry said, the company has slowly reinstated its policy of cutting wages for its employees. Matahari Department Store targets that the salaries of its employees will fully return in the fourth quarter of 2020.