Hero: net revenue down but profitability improved

Date : 02 November 2016

Hero's result for the third quarter of 2016 sees sales in the food operations impacted by both negative like-for-like sales and store closures while profitability has been improved.

Fresh sales positive

Improving fresh produce has been a focus of the retailer's food business and the fresh categories reported positive sales despite the decline in other categories. The retailer is taking action to restore sales growth in these categories, and is improving its supply chain efficiency.

Strong performance of Guardian and IKEA

Guardian is making good progress with its store rationalization programme. Profitability improved significantly from strong like-for-like sales growth and well managed store operating expenses.

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 rationalisation

Total operating store numbers decreased by 61 in the nine months. As at 30th September 2016, Hero operated 465 stores, comprising 55 Giant Ekstra, 148 Giant Ekspres and Hero Supermarket, 261 Guardian Health and Beauty stores and 1 IKEA store.

The retail trading environment is expected to remain difficult for the remainder of the year, especially for the Food business where initiatives are being implemented to improve performance. The Health and Beauty and Home Furnishings businesses have been more resilient and the outlook for these formats remains positive. said Stephane Deutsch, President Director.

To learn more about Indonesia: click here.

To read store visit reports of Dairy Farm, including Giant Ekstra and Giant Ekspres in Indonesia: click here.

Shirley Zhu, Programme Director, IGD Singapore

Based in Singapore, Shirley heads up all of IGD's research on Southeast Asia. Contact Shirley at [email protected] for further insight on the region.