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Company Update : RALS, Waiting in the Wings
Monday, May 28, 2018       12:52 WIB

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Waiting in the Wings
  • Potentially better Ramadan sales this year.
  • Supermarket business remains key revenue contributor, for now.
  • Competing for Jakarta Smart Card (KJP) spending.
  • Jak Grosir, a new distribution channel for KJP is a threat for .
  • Management to refocus in core business of selling fashion merchandise

Potentially better Ramadan sales this year. We recently visited two Ramayana stores located in in Kramat Jati&Palmerah. As of 4M18, these stores recorded sales growth of +7%yoy and +3%yoy, respectively. The store manager also share their optimism that this year's Ramadan sales will start to peak up in June 1st and expect sales to be better than last year. This view is in line with management as they expect sales to grow 27% yoy in May while targeting growth 11% yoy for blended May - June 2018.
Supermarket business remains key revenue contributor, for now. 's supermarket business remains a key contributor with Robinson supermarket contributing 55% of revenue and fashion accounting for 45% (direct purchase 30%, and consignment 15%). As a grade C-store where the revenue hovers around Rp4bn-5bn per month, this store also have no premium direct purchase such as  RA Jeans  (Raffi Ahmad) or  A2T  (Ayu Ting Ting). However, our discussion with management recently shows that will close down eight supermarkets after Ramadan. The empty space will be filling by F&B such as JCo Donuts, Watsons, Sport Station, and . The management also added that the fastest growing JCo Donuts store is in Sorong, located in Ramayana building.
Competing for Jakarta Smart Card (KJP) spending. The provincial government of Jakarta has launched a new grocery store called Jak Grosir, located 1km from ' Kramat Jati store specially created for use by Jakarta Smart Card holders, Jakarta civil servant employees, and registered traders. Although the allowance for KJP has been increased this year (+15% yoy, Jak Grosir is a threat for supermarkets as it is not only bigger, but also cheaper (its prices are 5%-12% lower than at ). Jak Grosir also distributes subsidized daily needs such as meat, chicken, fish, rice and milk for Jakarta Smart Card holders at very low price (50%-74% cheaper). New components are also coming this year, which are fish and UHT Milk.
Jak Grosir, a new distribution channel for KJP is a threat for . The government will open more Jak Grosir (the closest is in June 2018 in Seribu Island) while opening up distribution center and Jak Mart in smaller traditional market. Along with Jak Grosir, the local government already unveils new outlets located in 16 traditional markets, with the potential of up to 150 outlets in Jakarta area. We think that this will be negative news for especially to the branches where supermarkets become a key revenue driver such as Kramat Jati, Palmerah, and Kebayoran Lama. Nevertheless, our discussion also reveals that KJP contribute only around 10%-15% to monthly sales.
Management to refocus in core business of selling fashion merchandise. We expect margin to improve this year. will implement internal merchandising system in order to control products age and pricing. Previously there is no internal merchandising system as everything are done mostly verbally. This, according to , is the reason why margin is declining last year. is a purchasing power and Ramadan story. Although visiting two outlets might not completely give a clear picture, we think that this is an early indicator of better spending during Ramadan and Lebaran this year.

Sumber : IPS RESEARCH

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