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More 7-Eleven stores close down amid alcohol ban, high operating expenses

Jakarta Post - December 22, 2016

Winny Tang PT Modern Internasional, the operator of 7-Eleven convenience stores in the country, has reported a shrinking sales figure in the first nine months of this year, mainly due to increasing operating expenses and the continued effects of the implementation of the alcohol ban regulation in minimarkets.

The company on Thursday reported that its net sales stood at Rp 660.7 billion (US$49.1 million) in the January-September period, down by 31.4 percent from Rp 962.8 billion collected in the same period last year.

Modern Internasional finance director Chandra Wijaya said the company's operating expenses had jumped by 17.3 percent year-on-year to Rp 397.3 billion in the third quarter.

"The increase in operating expenses was caused by the company's consolidation and restructuring strategy, including from the closing down of some underperforming 7-Eleven stores," he said during the company's public expose in Jakarta.

Convenience stores were previously prohibited from selling any kind of alcohol, including beer, as former trade minister Rachmat Gobel issued a regulation on the control of alcohol in April last year in a bid to "protect young generations from the dangers of alcohol".

However, five months after that the ministry, under minister Thomas Trikasih Lembong, relaxed the policy and handed the rights to control alcohol production, distribution and sales to regional administrations, including the Jakarta administration.

Modern Internasional, however, sees such a regulation as hurting businesses, as it had to close down 25 underperforming 7-Eleven stores this year alone. The sales of alcohol contributes roughly 10 percent of the total sales of 7-Eleven stores, Modern Internasional director Henri Honoris said.

"Next year, we will continue to evaluate and take necessary actions to improve our financial performance, which includes the possibility of closing down more underperforming stores," Henri said. (win/hwa)

Source: http://www.thejakartapost.com/news/2016/12/22/more-7-eleven-stores-close-down-amid-alcohol-ban-high-operating-expenses.html.

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