MPPA Indonesia reports positive net profit

Date : 01 November 2016

Supported by Q3 results, MPPA returned to a net profit of IDR32.6bn (US$2.5m) for the first nine months in 2016. The retailer will continue to renovate its existing stores and roll out new formats.

Like-for-like sales decline

Like-for-like growth for YTD 2016 and Q3 2016 decreased by 2.9% and 8.9% respectively. This was mostly due to the seasonal shift of Lebaran from third quarter to second quarter and continued low purchasing power in Sumatera and Kalimantan, which account for about 30% of MPPA's revenue.

Growth strategy

The retailer has announced its growth strategy:

  • New formats: continue to roll out new formats including Generation 7 Hypermart, Foodmart Fresh, Foodmart Primo, SmartClub, Foodmart Express and Boston Combo
  • Accelerate network expansion: over 60% of new stores in 2016 will be opened in outer islands. New store opening will focus on penetration outside Java where there is less competition and typically higher profitability
  • Renovation: renovate 60 stores over 5 years
  • Enhance retail management: expand logistic network; build leadership in fresh food; direct sourcing capability; private label and direct import development: target to 5.0-10.0% of sales
  • New Channels: establish wholesale division and further develop ecommerce

Noel Trinder, CEO of MPPA said, “Although Q3 was difficult, sales started to show improvement late in the quarter. Actions taken earlier in the year have produced a significant reduction in merchandise inventories to a sustainable level to support future growth. Store expansion continues with 15 new locations opened through 9M 2016.

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To read a store visit report of MPPA: 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.