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mid a slowdown in sales experienced by many major retailers, home-improvement and lifestyle products retailer PT Ace Hardware Indonesia has achieved double-digit growth in profits and is unceasingly expanding its network of stores.

Ace Hardware, a subsidiary of PT Kawan Lama Sejahtera, believes that this year is going to be another promising year, as it will open 15 regular Ace Hardware stores and five stores with a new concept it calls “Ace Express”.

“We are trying to create a smaller store format, so that we can expand quicker. Aside from [opting for a smaller size], we will also make the Ace Express’ store arrangement fresher,” Ace Hardware president director Prabowo Widyakrisnandi said in a public statement on Friday.

In the second quarter of 2018, the company plans to open Ace Express stores in three locations, namely in the TangCity Mall in Tangerang, Veteran in Bintaro and at the Green Ville area in West Jakarta, on a 2,000-square-meter space per store.

As of the end of the first quarter of this year, the retailer operates 147 Ace Hardware stores and 30 Toys Kingdom outlets that sell various toys for children.

Ace Hardware Indonesia posted stellar first-quarter results with a year-on-year (yoy) increase of 21.5 percent in net revenue to Rp 1.57 trillion, while its net profit grew even more strongly at 35.5 percent yoy to Rp 208.9 billion.

First-quarter same-store sales growth (SSSG) — a financial metric used to track sales growth at existing locations that have been opened at least for a year — stood at 13.8 percent, versus 5 percent in the first quarter of 2017.

“By region, ex-Java retained the strongest SSSG with 19.4 percent, which we attribute to the recovery of commodity prices,” Mirae Asset Sekuritas Indonesia analyst Christine Natasya stated in a research note last month.

Ace Hardware explained that its strong performance was supported by the fact that it targeted the middle-to-upper income segment instead of low-income customers.

“Our target market is middle-to-high income customers that we believe were not really impacted by the weakening in purchasing power,” Prabowo said.

Furthermore, he explained the company was lucky, since competition in the market was not that strong given that not many competitors were offering products with the same concept.

“There are many other, indirect competitors, like Sogo and Metro, which also sell housewares, but they are not competing head to head with us,” he said.

He added that one of its competitors that sold a similar range of home improvement products was MR D.I.Y., but that retailer was targeting the middle-to-low-end segment.

Despite the big opportunities, Ace Hardware is also encountering challenges this year, due to the weakening of the rupiah against the US dollar, as 80 percent of Ace Hardware’s products are imported.

Facing this problem, the company said the effect of the rupiah depreciation would be minimal if it did not happen drastically over a short period of time. The rupiah traded at Rp 14,107 to a US dollar on Friday evening.

“[However], if the rupiah continuously depreciates for a long term with a big spread as well, then it is possible for us to adjust our pricing,” he said.

On Friday, during the annual shareholder’s meeting, Ace Hardware announced a dividend payout ratio of 50 percent from its 2017 net profit, equivalent to Rp 22.81 per share.