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Pandemic woes trigger 2020 earnings decline for Ace Indonesia

During the pandemic, Ace Indonesia continued to sell through its online store

During the pandemic, Ace Indonesia continued to sell through its online store

A pandemic-weakened economy that led to a rise in overall unemployment, a decline in spending power and reduced store visits saw Ace Indonesia's financial performance drop in 2020, although digital innovations and promotions cushioned its fall. In its 2020 annual report, the company reported a 9 per cent decrease in sales to 7.412 trillion Indonesian Rupiah (IDR, EUR 423.68 mio). A 5.2 per cent rise in operating expenses to IDR 2.806 trillion (EUR 168 mio) added pressure on its comprehensive net income, which dropped 14.7 per cent to IDR 833.8 bn (EUR 50 mio).

"The Covid-19 pandemic has forced economic activity to decline due to significant restrictions on physical activity," Ace Indonesia said. Southeast Asia's biggest economy shrank by 2.07 per cent in 2020, the first time it had contracted since the 1998 Asian financial crisis. The unemployment rate surged to a decade-high of 7.07 per cent in August 2020 due to this.

Ace Indonesia said that because of the economic environment, it had postponed several store openings. However, it still opened 14 new Ace Hardware locations and five Toys Kingdom branches, even as it closed three outlets.

The company said it stemmed the fall in earnings by making use of digital assets as alternative sales channels. It redesigned its mobile app for memberships so that it could be used to buy products. The app has been rebranded as MISS Ace (Mobile Interactive Shopping Solutions). Ace Indonesia also migrated its catalogue to a digital platform that allows customers to buy products just by clicking on their images, and continued to sell through, its online store. The retailer also made use of messaging service Whatsapp to allow customers to contact outlets for purchases and have these delivered for free "with a minimum transaction and within a certain radius from the store".

Ace Indonesia is pinning its hopes on a better economy this year, as the government targets 4.5 to 5.5 per cent economic growth and as Covid-19 vaccines are rolled out. "The company is targeting positive sales growth in 2021, in line with the recovery of general economic conditions. The company will also continue its expansion carefully considering the development in these financial circumstances," Ace Indonesia stated.

Ace Indonesia operates 208 Ace Hardware stores with a retail space of 506 400 m² and ten Ace Xpress branches with a retail space of less than 1 000 m². It also has 57 Toys Kingdom outlets.

|27 May 2021 | 12:53

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