The Jakarta Post
Publicly listed retailer PT Matahari Department Store has announced that it will close all of its stores for 14 days and reduce salaries to cope with the impacts of the COVID-19 pandemic.
The Lippo Group subsidiary closed all of its stores in Indonesia starting March 30 until at least April 13, with the resumption of operations depending on the latest developments in the country, the company said in a statement posted on the Indonesia Stock Exchange (IDX) website on Tuesday.
The move was aimed at supporting the government’s call for physical distancing as well as to protect employees from contracting the virus.
The company said it was also reviewing all nonessential operating expenses to drastically reduce spending, including working with landlords for significant rental concessions, curtailing all marketing spending for the medium term and implementing a business travel ban.
“We are also reducing labor expenses through a combination of reduced working hours, unpaid leave and management salary cuts, with senior leaders taking the deepest reductions,” the company said in the statement.
The coronavirus disease has infected more than 1,600 people in the country with at least 150 fatalities as of Wednesday afternoon, disrupting business activities as citizens are told to stay at home to slow the spread of the illness.
Matahari would also eliminate noncommitted capital expenditure and delay the opening of four new stores to later in the year.
The retailer’s shareholders would not receive any dividends this year as the management was withdrawing its previous recommendation of a dividend payout and was proposing suspending any payment of dividends at the upcoming annual general shareholders meeting to anticipate prolonged pressure on consumer demand and traffic.
The company pocketed Rp 1.37 trillion (US$81.8 million) in net profit last year, up 24.5 percent compared to its achievement in 2018. The significant increase in profit was primarily caused by efficiency measures, as the company managed to reduce its costs despite only booking a 0.31 percent increase in revenue to Rp 10.28 trillion in 2019.
Matahari chief executive officer Terry O’Connor said in Tuesday’s statement that the retail environment had deteriorated sharply in March, a total opposite of the condition in January and February that met its expectations.
“We are now operating in a very uncertain environment where the health of our staff and conservation of our cash resources are our paramount priority to emerge from this COVID-19 pandemic period in good corporate health,” he said.
Matahari stocks, traded at the Indonesia Stock Exchange with the code LPPF, dropped 6.8 percent on Thursday morning. The stocks have lost more than 68 percent of their value in the last year versus a 29 percent loss recorded by the main gauge, the Jakarta Composite Index (JCI).