MPPA looks outside Java for expansion

JAKARTA. Retail firm PT Matahari Putra Prima (MPPA), which operates a number of supermarkets, hypermarkets and pharmacies, will focus on spreading its wings outside Java this year as other regions have contributed to more than 40 percent of its total sales.

The firm will open no fewer than 50 new outlets, 60 percent of which will be located outside Java, MPPA corporate communication director Danny Kojongian said on Thursday.

“We will open 26 Boston health and beauty stores, 20 Hypermart outlets and six Foodmart outlets in new developing cities,” he told reporters. 

Most of the outlets would be opened in Dumai, Riau; Manokwari, West Papua; Merauke, Papua; Batu Raja, South Sumatra; Tanjung Pandan, Bangka Belitung; and Tanjung Pinang, Riau Islands, according to Danny.

The firm targets to increase its revenue by around 15 to 20 percent this year from Rp 11.9 trillion (US$1.05 billion) last year. 

It would spend between 4 and 5 percent of its projected sales this year to open the new outlets, Danny explained.

He said that many of the outlets would be stand-alone stores because people living in cities outside Java preferred stores with a wider-range of items and spacious parking lots.

“We definitely want to cater to those needs, especially with developing cities outside Java becoming more important as they made up a huge part of our revenue last year,” Danny said.

According to MPPA’s 2013 annual report, cities outside Java contributed 42.4 percent to the firm’s revenue last year, followed by cities in the Greater Jakarta area and cities in Java outside of Greater Jakarta with 31.5 percent and 26 percent contribution, respectively.

MPPA currently has 222 outlets in more than 60 cities across the archipelago.

“The modern retail market in the country currently accounts for only 14 percent of the total market, while it was 53 percent in neighboring country Malaysia,” MPPA director Richard Setiadi said in the same event.

Richard said that MPPA would tap a bigger market as there was still ample room for the retail industry to grow, particularly since 70 percent of the items sold at its Hypermart chain comprised compulsory needs.

MPPA is upbeat that it will pose better growth this year, especially after the divestment of its non-core business, namely Timezone, Times Bookstores, restaurant and property businesses, at end of 2012.

Since the divestment, the company was now able to focus on its core retail business, adding that the firm saw around an 8 percent increase in its same store growth (SSG) in the first quarter this year, Richard added.

MPPA’s retail business recorded a 26.86 percent increase in gross profit to Rp 1.89 trillion last year from Rp 1.49 trillion a year earlier. Operational cost to sales ratio was down to 14.3 percent last year from 19.6 percent in 2004. Shares in MPPA, which has Rp 15.89 trillion market capitalization, closed at Rp 2,955 on Thursday, up 1.03 percent from the previous day. 

Its stocks have soared 52.3 percent so far this year, outperforming the broader Jakarta Composite Index’s (JCI) 11.5 percent gain.