Hardware Chain Plays Its Ace With New Indonesia Store Plans
Retail giant Ace Hardware Indonesia will set aside up to Rp 160 billion ($17.9 million) to open as many as 15 new stores across the nation to cater to the flood of owners of new cars and homes seeking to furnish them.
“Opening up stores is the company’s main strategy in growth and to strengthen our position in retail sector,” corporate secretary Helen Tanzil said in a statement on Wednesday.
Ace opened its newest store in Denpasar on Wednesday.
Helen said the company’s outlet in Bali followed the opening of a similar outlet in Margo City, Depok, and one in Festival CityLink, Bandung, earlier this year. Ace’s store in Bali, covering 1,100 square meters, was its 56th outlet.
The company, which sells home appliances as well as hardware, will later this month open a 2,800-square-meter store in Serpong, Banten.
“Within the first two months of the year, we will have opened four stores, in line with our projection,” Helen said.
She also told the Jakarta Globe that the company had set aside between Rp 150 billion and Rp 160 billion to finance the opening of 10 to 15 stores this year.
Of the company’s plans for new stores, one-third are to be in Greater Jakarta, one-third in other parts of Java and the balance in big cities on Sumatra and Kalimantan.
The company’s new stores are expected to help in increasing its revenue this year by 25 percent to Rp 3 trillion. Helen declined to state last year’s estimated revenue.
In a recent report, Trimegah Securities said an increase in car and home sales in Indonesia would help the company boost its revenue. Trimegah said low borrowing costs had helped Indonesians buy houses and cars.
“We believe this serves as a positive key indicator for Ace’s 2012 performance, as there is a 12- to 15-month time lag between marketing sales transactions and occupancy of property by owners,” Trimegah analyst Paul Raymond Wijaya said in the report. Property occupancy is expected to increase the purchase of furniture and home improvement products.
Car sales rose to a record 894,180 units last year, according to data from Association of Indonesian Automotive Industries (Gaikindo). Paul noted that items linked to cars constituted 9.1 percent of Ace’s sales in the first nine months of 2011.
Trimegah maintained its “buy” recommendation for the stock with a Rp 4,550 target price.
Shares in Ace gained 1.7 percent to close at Rp 4,425 in Wednesday trading on the stock exchange. Its stock has risen 7.9 percent so far this year.