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File photo – Workers making shoes at the PT Shoe Bata factory in Cibening, Purwakarta, West Java, some time ago.
JAKARTA, KOMPAS – Footwear manufacturer PT Shoes Bata Tbk announced on Friday (5/3/2024) the cessation of operations at its factory in Purwakarta, West Java. The explanation is the decline in footwear sales over the past four years, despite the company’s continued efforts to increase sales.
The announcement was made in a briefing paper published on the Indonesian Stock Exchange (EIB) website. The company, founded in the Czech Republic in 1894 and present in Indonesia since 1931, was listed on the Indonesian capital market in 1982 under the name BATA. .
“The company can no longer continue production at the Purwakarta plant due to decreased visitor demand for the type of product manufactured at the Purwakarta plant. The factory’s production capacity exceeds the sustainable source of Indonesian suppliers,” said PT Secretary Sepatu Bata. Tbk, Hatta Tutuko, in the data release document.
It further explains that such a policy will need to be followed after suffering to cope with losses and demanding situations in the industry due to the Covid-19 pandemic and immediate adjustments in customer behavior. They have known this challenge for 4 years.
PT Shoes Bata Tbk sales chart in 2021-2023.
In its 2023 financial report, the company announced a five per cent cut in the selling price to Rs 609. 6 billion from the 2022 selling price of Rs 643. 4 billion. This cut is in line with the 2023 production volume, which is only 1. 15 million pairs of shoes. and sandals, up to 1. 8 million pairs of shoes last year.
At the same time, the company recorded an increase in total losses of Rs 188. 4 billion, compared to Rs 107. 2 billion in 2022. The current year’s losses also increased from Rs 106. 1 billion to Rs 190. 5 billion last year. 2023 is basically due to damage to constant assets and aging inventory.
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This monetary functionality was achieved despite the company’s efforts for sales. The highlight of his inventions over the past year comes with optimizing marketing by engaging influencers in hopes of increasing visitor traffic to the company’s online platform.
In the data disclosure report, it was also stated that the corporate presents product inventions with designs and technologies that prioritize comfort with today’s taste (comfort with taste).
The company also still has 458 outlets in Indonesia.
The corporation is also reorganizing the products it will sell to points of sale to generate more optimal sales. They have also organized a loyalty program and exclusive gifts as rewards for Bata Club member customers. Finally, to the continuing education of workers through other educational programs, online and offline.
Illustration – Visitors stand out among the discounts presented ahead of Eid al-Fitr at the Park Mall in Semarang, Central Java, on Sunday (3/31/2024).
Amid those efforts, Bata will have to make up for its losses by promoting assets in the form of land and the construction of Graha Bata in South Jakarta’s Cilandak domain, valued at 64 billion rupees. The asset, which covers 1,993 square meters, will be purchased through PT Simatupang Jaya Realty. This was announced on the EIB’s website on 8 March 2024.
By the end of 2023, Bata will employ 366 employees, which is a minimum compared to last year’s 380 employees. The company also still has 458 outlets across Indonesia.
The upheavals Bata faces must be divorced from the overall functionality of the footwear industry in the country. The Indonesian Footwear Association (Aprisindo) has stated that the domestic footwear industry has not yet returned to normal since the Covid-19 pandemic. Dynamics have also influenced this phenomenon.
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Aprisindo chief executive Firman Bakri, contacted separately, said the slowness was felt even during this year’s Ramadan and Idul Fitri dynamics. This is characterized by the inability of many stores to fill their Eid stocks, as well as a decline in sales of some local brands in the medium and low-end market segments, compared to Eid in 2023.
“2024 will also be full of challenges, starting with food inflation and others. “During the last Eid, several brands targeting the mid and low segments experienced a decline to the same time in 2023. What is certain is that this also affects footwear. manufacturers,” he said.
File photo – Workers finish shoe production in Cikupa, Tangerang, Banten, Tuesday (4/30/2019).
As for the closure of the Bata plant, according to him, it must be separated from the losses due to falling orders with prices that are not balanced with income, such as high workers’ wages and unbalanced selling prices.
Although he is still waiting for further explanations from the company, Firman believes that Bata’s activities in Indonesia will continue, especially in the retail sector. In addition to production in Purwakarta, Bata still has a business plan in the form of maklun orders (shoe orders from other factories) for its brand,” he said.
The significant decline in consistent percentage values of BATA has occurred since mid-2023. The company’s constant percentage value has fallen below one hundred rupees since mid-January 2024. On Friday (03/05/2024), the inventory value of BATA was only 95 rupees consistent with with percentage.
According to RTI Business, the majority of BATA’s shares, 82. 01 percent, are held by the foreign company Bafin Nederland BV. In the meantime, the rest is up to the public. Through the fourth quarter of 2023, Bata’s registered capital fell to IDR 183 billion, to IDR 676 billion for the same time in 2022.
Chart of the inventory market functionality of PT Shoes Bata Tbk in 2023.
When contacted, market watcher William Hartanto opined that the company’s policy of shutting down plant operations would have a negative effect on BATA shares.
“The plant is the issuer’s asset to generate profits. I found that BATA was also behind in publishing financial reports and within a year, the value of the constant percentage went from six hundred rupees to 90 percent rupees. That’s not a smart indication,” said Guillermo.
He asked investors to wait until the issuer provides an explanation on the case and the reasons for the delay in the release of the monetary report. “Only from there will we be able to check whether BATA’s actions are advisable or not,” he said.