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Matahari (“Company”) has a deep legacy in Indonesian retail. Beginning its journey on October 24, 1958 with the opening of its first outlet, a children’s fashion store in Jakarta, Matahari went on to open Indonesia’s first modern department store in 1972. Since then, Matahari has established itself as a truly national brand.

Matahari is the largest retail platform in Indonesia, with 155 stores in 81 cities across Indonesia as well as presence online on Matahari.com. For over 60 years, Matahari has provided the growing Indonesian middle class with quality, fashionable and affordable apparel, beauty and footwear products. Matahari employs around 30,000 employees (including consignment SPGs) and partners with around 600 local as well as international suppliers.

The Company has received many industry recognitions – nationally and internationally – including Top 100 Most Valuable Brand by Brand Finance, Most Improved Investor Relations and Top 5 Best Senior Management IR Support in 2022 from Alpha Southeast Asia, Top 10 CSR Donor from IDX, Best Non-Financial Sector and Top 10 Mid-Cap Issuers ASEAN Corporate Governance Awards 2022, Top Digital Company & Best Excellent Service Experience Index Award 2022 from Marketing Magazine, Top 50 Most Valuable Brand Awards 2021 from Brand Finance Indonesia, Top 500 Retail Asia Pacific from Retail Asia, Euromonitor & KPMG; Brand Asia 2018 – Top 3 Most Powerful Retail Brands in Indonesia from Nikkei BP Consulting, Inc. and WoW Brand Award 2019 – Gold Champion from MarkPlus Inc. The Company also received the Netizen’s Brand Choice Award 2018 from Warta Ekonomi. All of these awards reaffirm the Company’s position as one of the leading, most dynamic, and trusted companies in Indonesia. 


To delight customers with aspirational yet affordable fashion that looks good & feels good.


Be a leading omni-channel lifestyle retailer as a customer-centric “House of Specialists”


Reducing Energy Use

Energy-efficient LED lighting is used in all our outlets. Starting in 2013, LED lighting was installed in all new stores, and all existing stores have now been retrofitted. Our investment in LED lighting yielded a 50% reduction in electricity consumption in our large format stores as well as annual savings of approximately 35,000,000 kWh per year, or the equivalent of 24,000 tonnes of carbon emissions every year*). An additional benefit of LED lighting is that it creates a more comfortable store ambience for our customers.
*)note: Faktor emisi karbon 0,6857 kg CO2/kWh/Carbon emission factor of 0.6857 kg CO2/kWh

Managing Waste

The damaging impact of plastic waste on the environment is an increasingly critical global problem, and it is particularly acute in Indonesia. In recognition of this challenge, Matahari switched to biodegradable plastic bags as long ago as 2011. However, given that these bags can still take years to break down, in 2018 Matahari took the initiative of introducing a plastic-free bag made from cassava starch. These bags, which still bear the distinctive Matahari logo, are 100% biodegradable and safe for animals if accidentally ingested. We continued to roll out the cassava-based bags to stores across the country in 2019.
Waste management at our stores and distribution centres is handled in collaboration with third parties. We strive to ensure that such partners comply with the prevailing regulations by, for example, requesting information about their waste management methods, in particular regarding recycling, composting, incineration, disposal to landfill, special storage, and so on.

Social & Community Development

Use of the Local Workforce

Matahari contributes to driving local economic growth by providing decent, fairly compensated work opportunities for local people across Indonesia. We have a policy of hiring locally as far as possible, and the majority of staff at each of our stores are from the local area. The existence of a large format Matahari store has a significant, positive impact on the local economy, particularly in second and third tier cities around the country, from the absorption of local labour, products and services to the payment of local taxes.

Community Empowerment

We are committed to making a positive impact on the communities we serve and to minimizing any negative impacts on the environment and society arising from our operations. We therefore seek to initiate, implement or support programs and initiatives that create value for our stakeholders, who include not just employees, customers and business partners but also the broader communities where we operate.
In addition to the beneficial impact of Matahari stores described above, we also seek to empower communities by investing in a wide range of health, education and livelihood initiatives in partnership with various non-profit organizations, including Yayasan Dompet Dhuafa, LAZISNU, Pendidikan Harapan Papua, UNICEF and the Matahari employees’ association (IKM).

We are also committed to building community resilience in times of urgent need, such as providing financial and in-kind support to communities affected by natural disasters, using a portion of the funds raised from our customers through our in-store charitable giving scheme as well as funds from the Company. In 2019 we contributed to the ongoing rebuilding efforts in Palu, Central Sulawesi, which suffered a devastating earthquake and tsunami in 2018, as well support for the victims of flooding in Tegalluar, West Java.

We seek to ensure that our charitable donations program is fully accountable and transparent by verifying that the funds we donate, whether from the Company or from our customers, are directed to programs and initiatives that deliver maximum impact and sustainable outcomes for the beneficiaries. We therefore conduct thorough due diligence on any prospective implementing partners to ensure that they have a strong track record on supporting and implementing projects that empower communities and people, and that they have a solid reputation for integrity.

Employee-Led Community Outreach

Many of our employees are regularly involved, on a voluntary basis, in community outreach initiatives addressing specific local needs. The Company has lent its support to many of these employee-led projects through the Matahari employee association, IKM, offering funding and organizational support. We believe that such initiatives play a valuable role in strengthening Matahari’s brand equity by creating added value for the communities and reinforcing the deep connection between our stores and the communities they serve.

Prioritizing Local Suppliers

We seek, as far as possible, to make use of domestic products. We believe that this contributes to the improvement of local partners, which, in turn, contributes to building national economic resilience. In addition, prioritizing domestic partners reduces the Company’s exposure to supply chain risks and foreign currency risks while offering advantages in terms of more competitive pricing.

Ensuring Supplier Responsibility

We work with more than 1,000 suppliers throughout the country and we value them as an essential part of our business. However, we seek to work only with partners who share our high standards on responsible, sustainable and ethical business conduct. All our suppliers and contractors are required by law to comply with the labour laws, including regulations on the minimum wage, time off and child labour; environmental laws and regulations; and any other applicable business laws.
While the Company does not yet have a formal Supplier Code, we believe that we have reasonable assurance on their compliance due to the fact that

  1. they are subject to regular external factory inspections by the local authorities;
  2. we make regular visits to the suppliers ourselves; and
  3. we have longstanding working relationships with the majority of our suppliers and are very familiar with their working practices. 

Jika ditemukan bahwa salah satu pemasok atau mitra kami tidak mematuhi kewajiban hukum terkait kesehatan dan keselamatan karyawan, praktik ketenagakerjaan dan mengelola dampak lingkungan, maka hubungan kemitraan dengan Peseroan akan berakhir.

Communication of Anti-Corruption Policy

The Matahari Code of Conduct sets out our strict policies on preventing and eliminating corrupt practices as well as our guidance on dealing with gifts, bribery and conflicts of interest. All of these apply not only to everyone in the Company but also to our third party suppliers, contractors and vendors. Employees, management and suppliers receive regular reminders and refreshment on the Code of Conduct through campaigns, training, gatherings and awareness-raising about our whistleblower mechanism, Suara Matahari.


Social Responsibility for Human Rights

The Company is committed to upholding human rights and, through its compliance with Indonesian labour laws, has guaranteed not to use forced labour, trafficked labour or child labour anywhere in our operations

Social Responsibility for Fair Operations

The Company’s Code of Conduct underlines our commitment to fair and ethical working practices by providing specific guidance on, among other matters, countering corruption, financial and professional misconduct. In addition, employees have the right and are explicitly encouraged to report misconduct or unethical behaviour through a secure confidential whistleblower channel, which protects them against retaliation. More details about the Code of Conduct and the whistleblower mechanism can be found in the Corporate Governance section of Annual Report 2019.


The Company is highly committed to continuously improving its GCG practices while conducting business activities in a transparent, accountable, responsible, independent and fair manner as part of the Group’s efforts to adopt best practice governance to create added value for its shareholders and other stakeholders.

The Company always ensures that the principles of GCG are implemented in all business aspects and all levels within the Company to reach business sustainability by taking into account the stakeholders' interests. The implementation of five GCG principles can be elaborated as follows:

  1. Transparency
    The Company consistently provides clear, accurate, complete and timely information to the shareholders and other stakeholders, in the form of financial statements, investor information, and other relevant materials or disclosures. These are easily accessible on the corporate website, www.matahari.co.id, and disclosed in the Company’s annual reports.
  2. Accountability
    The Management accepts its responsibility to the shareholders and other stakeholders with regard to the implementation of the Company’s strategies and achievement of its objectives, and is ready to account for all its actions and decisions to the Board, the shareholders, and other interested parties. The Board of Commissioners takes responsibility for the effective supervision of Management and its accountability to the shareholders.
  3. Responsibility
    The Company complies with the relevant laws and regulations and respects the rights of all the stakeholders. It also fulfils its responsibility to protect and promote the sustainability of the environment, public welfare and healthy living.
  4. Independence
    The Company manages the business in a professional manner, without any conflict of interest or influence or pressure from any party that is in contravention with the laws and regulations. This is demonstrated in the Company’s objective decision making, which is free of any intervention from third parties.
  5. Fairness
    The Company treats all the shareholders equitably, irrespective of whether they are majority or minority shareholders, and guarantees the rights of the shareholders and stakeholders. The Company therefore always provides the same opportunities to all shareholders to vote and challenge the Company at the AGM, and treats all stakeholders fairly by providing equal opportunities with regard to employment, training, promotion, access to information, and so on.

Implementation of GCG principle

Implementation of GCG principle


Internal Monitoring and Control

Code of Conduct

The Company’s Code of Conduct serves as a reference for everyone in the Company by establishing the standards of behaviour they are expected to display at all times to ensure that the GCG principles of transparency, accountability, responsibility, independence and fairness are upheld in every aspect of the business:

  • The key objectives of the Code of Conduct are:
      • Integrating the Company’s values into employees’ ethical business practices in line with the Company’s vision and mission; and
      • Clearly describing the Company’s values and the acceptable conduct that must be followed by all employees in carrying out their day-to-day duties and responsibilities.
  • Providing basic guidelines for all levels in the Company with regard to the interaction between employers and employees, shareholders, suppliers, Government, and other stakeholders.

The Code is reviewed periodically to ensure that it remains consistent with these objectives.

Content of the Code of Conduct for Business Partners

The Code provides guidance for employees on their interactions with colleagues, employees, shareholders, suppliers, and regulatory officials in the following areas:

  • Improving accountability, transparency, and compliance with existing laws and regulations;
  • Implementing tasks with the highest degree of professionalism and integrity;
  • Avoiding giving or accepting inappropriate corporate gifts, bribery and kickbacks in any form and for any reason, for example: cash and its equivalent, membership/entertainment, unusual discounts, unusual (in terms of frequency and/or value) meals or banquets, fund support for tours or vacations, hampers, bouquets;
  • Avoiding activities which may give rise to a conflict of interest with their work in any form or situation, for example: an employee has a financial interest with vendors, contractors or brokers who have business relations with the Company; an employee operates and manages an enterprise that is related to the Company; an employee uses the Company’s asset for personal benefit; and
  • Protecting the Company’s proprietary information, both during and after an employee’s term of employment with the Company.

Internal Audit

The Internal Audit of the Company functions to provide objective assurance and independent as well as objective consultation that aims to strengthen Internal Control and other specific operational issues. The Internal Audit was established pursuant to a Decree of the Board of Commissioners dated 1 May 2013.

Internal Audit Charter

The Company complies with POJK No. 56/ POJK.04/2015 on the Establishment and Guidelines for the Internal Audit Charter dated 22 June 2020 by having an Internal Audit Charter that specifies the responsibilities of the Internal Audit. In carrying out its duties and responsibilities, the Internal Audit refers to the Internal Audit Charter, which covers the following:

  • The organisational structure of the Internal Audit and its position within the Company;
  • The qualifications, duties, responsibilities and authority of the auditors;
  • The procedures for their appointment, replacement and termination;
  • The plans, guidelines and reporting procedures of the IA;
  • The independence and objectivity of the IA; and
  • The Code of Ethics for the IA.

The Charter is periodically reviewed and updated.

Structure and Position of the Internal Audit

Structurally, the Internal Audit is independent of all the Company’s business units and reports directly to the President Director, as shown in the corporate organisation chart in the Company Profile chapter of this Report. The Internal Audit Unit is led by the Head of RM & IA, who is appointed and dismissed by the President Director, pursuant to a Circular Letter regarding the Appointment of the Head of RM & IA, upon approval of the BoC.
Pursuant to the BoC Circular Letter dated 1 May 2013, Maju Tarigan serves as the Head of the Internal Audit of the Company and reports directly to the President Director of the Company. His appointment was conducted following the merging of the Audit and Social Affairs Division with the Risk Management Division.

Duties and Responsibilities

As stated in the Internal Audit Charter, the Internal Audit Unit carries out the following duties and responsibilities:

  • Prepare and execute the annual Internal Audit Plan;
  • Evaluate the implementation of the Company’s internal control and risk management systems, recommending areas for improvement and monitoring the effectiveness of the recommended follow-up actions;
  • Evaluate the efficiency and effectiveness of the Company’s performance in key strategic areas, including finance, accounting, operations, human resources, marketing and information technology;
  • Conduct special audits and/or investigations as required;
  • Prepare reports on the audit findings for the President Director, the Board of Commissioners and the Audit Committee;
  • Provide objective information as well as value-added recommendations for the improvement of the activities under review at all management levels;
  • Monitor, analyse, and report on the implementation of followup actions on the recommended improvements;
  • Cooperate with the Audit Committee;
  • Design programs for quality assessment activities conducted by the Internal Audit Unit.

Whistleblowing System

As referred to in the Company Code of Conduct, the Company provides the official mechanism for a whistleblower to report misconduct. This mechanism, ‘Suara Matahari’, is part of our internal control system and plays a critical role in our commitment to fair working conditions.

Suara Matahari offers a range of confidential channels through which employees and other stakeholders can report if they genuinely suspect that a violation of the Code of Conduct or other misconduct has taken place, remaining anonymous if they wish. The Company’s whistleblowing policy, including the procedures and contact numbers for reporting, has been disseminated to all our employees, management, suppliers and business partners.

Suara Matahari has some features that support its accessibility, trustworthiness and effectiveness:

  1. Numerous hotline channels, including toll-free phone lines, Short Message Services/SMS, website, email and mailbox;
  2. Promotion of anti-fraud awareness and the whistleblowing program to all management, employees and suppliers;
  3. Experienced contact centre operators who handle incoming reports;
  4. Forensic investigation experts follow up the incoming reports and present the issues to management;
  5. Recommendations for improvements.

Suara Matahari is under the management of an independent third-party administrator, Deloitte, to ensure objectivity and effectiveness. The setting ensures that informants have complete anonymity and protection. The Risk Management and Internal Audit Division monitors the incoming reports' status and consolidates them for reporting to the Board of Directors and the Risk Management Committee.

Suspected misconduct or violations of the Code of Conduct can be reported through any of the following channels:

  • Hotline: Informants can contact Suara Matahari on +62 21 2350 7056; they have the right to remain anonymous if they choose.
  • SMS: Reports can be sent by SMS to +62 81586709196.
  • Email: Reports can be sent via email to suaramatahari@tipoffs.info. The informant’s email address will not be disclosed without permission.
  • Website: Reports can be sent via the Suara Matahari Website at http://suaramatahari.tipoffs.info. Reports should provide as much information as possible about the suspected violation.
  • Mail: Reports can be sent via regular mail to Suara Matahari PO Box 3670/JKP 10036, Central Jakarta.

Reports submitted in writing must be accompanied by a disclosure cover sheet, which can be downloaded from the Suara Matahari website. Informants should provide at least the following information to ensure that the appropriate actions can be taken:

  1. Name(s) of those involved;
  2. Name of a witness (if available);
  3. Information about the incident, including date, time and location;
  4. Evidence;
  5. The related nominal or assets; and
  6. The frequency of the incident(s).

The Suara Matahari operator receives the whistleblowing report through one of the above channels and assigns a unique, anonymous reference number to the informant, which he or she can use when requesting information about the progress of the case.

The report is sent to a Deloitte analyst for assessment. The results are returned to the Company’s representative within one working day.

The Risk Management and Internal Audit Division determine further investigation and clarification actions. Later on, this division will present the results to the Risk Management Committee to decide on the penalties or sanctions on the suspects and determine any internal control improvements or other changes the Company needs to make.

The Company guarantees to protect informants who report in good faith from any retaliation by the allegation's subject. Informants have the following options regarding the disclosure of their identity:

  1. Full disclosure: the informant is willing to disclose his/her identity to Deloitte and the Company.
  2. Partial anonymity: the informant is willing to disclose his/her identity only to Deloitte. In this case, Deloitte will keep the informant’s identity confidential from the Company.
  3. Full anonymity: the informant is unwilling to disclose his/her identity to either Deloitte or the Company. The Company guarantees to protect informants who report in good faith from any retaliation by the allegation's subject

Throughout 2022, 136 cases were reported, in which 94 cases were received via Suara Matahari and 42 cases through other reporting channels. The cases involved internal and external parties, which includes alleged breaches on code of conduct, conflict of interests, stealing of merchandises, manipulation of sale transactions (discounts are not matched with approved promotion), and sexual harassment. All cases have been investigated, with 75 proven cases, 35 unproven cases, and 26 undergoing cases during the publication of this Annual Report. 

Risk Management

We are committed to identifying and managing the risks that inevitably arise during the normal course of business in order to minimise any potential negative impacts on the achievement of the Company’s strategic business objectives, reputation, and business continuity and sustainability. Matahari’s integrated, company-wide approach to risk management is led by the Risk Management Committee, the Audit Committee, the Internal Audit and the Company’s External Auditors, which work together to identify, evaluate and mitigate risks by reviewing risk parameters in various areas, particularly critical systems, areas affecting costing and/or profitability, fraud, and abuse of authority.

Matahari’s Enterprise Risk Management (ERM) framework describes the Company’s risk management objectives, strategy, governance, organization, methodology, monitoring and reporting processes. This enables us to identify and address risks proactively in strategic areas in every part of the organization. While the Board of Directors, the Board of Management and the relevant committees and management functions have overall accountability for risk management, with the ERM we seek to drive ownership of risks at every level of the organization by engaging all employees, business partners and other stakeholders in identifying, monitoring and managing risks. The ERM framework covers:

  1. Risk identification, measurement, monitoring and control, including awareness;
  2. Risk management infrastructure, including organizational structure, governance systems, data collection, analysis methods, policies and procedures and reporting; and
  3. Corporate culture, including training, performance measurement, value development and rewards.

The Company has developed a road map for implementing risk management processes across the organisation via several functions in Loss Prevention, Security and Safety, to protect corporate assets.

At the same time, the Risk Control Awareness and Assessment Program was implemented continuously to ensure that all stakeholders (including business partners) understand and support the Company-wide risk management approach. From this we have developed a risk treatment, risk tolerance and risk control matrix. Regular Internal Control Newsletters/Bulletins and Compliance updates, which contain information on key risks, best practices in risk mitigation and new regulations, were distributed to all business process owners several times a year. As part of our overall approach to risk management, we maintain a zero tolerance policy towards integrity issues.

In 2022, the key risks faced by the Company and its mitigation efforts are summarised below:
Extraordinary Risk The Covid-19 transmissions in Indonesia show a declining trend in early 2022, but right at the end of July 2022, an increase in active Covid-19 cases again occurred. According to data released, there has been a three-fold increase in cases or the equivalent of 6,000 cases in just one month. This condition was prone to affect retail sales in Indonesia, including Matahari’s performance.MitigationDuring the year, the Company closely monitored the consistency of adherence to Covid-19 health protocols in Support Centers and stores to ensure a safe and healthy shopping experience for customers, while also conducting continuous business contingency plan and assessment over the Company’s operations for time to time The Company also made sure that its employees received complete vaccinations. At the time of the compilation of this Annual Report, 100% of the Company who had been vaccinated. Currently, the Company continues to monitor and encourage all employees to receive further/booster vaccinations, andThe Safe Office Management updated company policies from time to time throughout the pandemic, adjusting to regulatory development and restriction level in different areas where Matahari stores operate. Policy updates concerned the re-opening of Matahari stores and work from office for employees with certain restrictions, business travels and other SOPs, campaign/ training on Covid-19 health protocols for all employees, and others.The Company had 28 incidental inspections by Covid-19 Response Taskforce and the local government teams. The visits found 100% compliance with Covid-19 health protocols at all entire visited Matahari stores.
Macroeconomic and Industry Risk In general, economic growth drives rising wages. Thus, the number of consumers who have sufficient income to spend on our product offering increases, and demand may vary. The customer preferences also change rapidly, with new trends emerging.MitigationAs customer-centric company, Matahari has a flexible business model and initiatives to rapidly adapt its merchandising and operations to the changing customer needs and changing macroeconomic or industrial situation. Matahari maintain good relationships with our diverse supplier base, giving us the flexibility to adjust our merchandising strategy to respond to customer preference changes, emerging new trends, and macroeconomics conditions.
Productivity Risk The Company’s financial results are linked to its stores’ productivity, measured by two indicators, i.e., SSSG and merchandise sales per square metre of retail space.SSSG is driven by the store refurbishment program, improvements in the merchandise mix, and the rising income of the target market. The Company’s SSSG from 2017 to 2021 was an average -27.7% and 20.8% in 2022.The sales per square metre are subject to the Indonesian economy’s condition, products’ price point mix, the merchandise attractiveness, as well as the stores’ location, appearance, and operation. Marketing effectiveness and adverse publicity can also affect merchandise sales. The retail space in the metric is the aggregate square metres at the period’s end, not adjusted for any area under refurbishment. Gross sales per square metre of retail space in 2022 were Rp13,162.1 thousand compared to Rp11,364.7 thousand in 2021.Mitigation:To mitigate the risk, we closely monitor the underperforming stores, analyse the causes of the weakness, and take necessary actions. The actions, among others, are store refurbishment, merchandise optimisation, and staff productivity improvement. The Company refurbished 2 stores in 2020 and 4 stores in 2021. Following those efforts, the underperforming stores could be closed, modified, or replaced by new stores in other potential locations. In 2021, we have closed 11 stores.
Expansion Risk Opening a new store may result in the increase in the Company’s expenses, such as rent, salary and wages, depreciation, energy, distribution and insurance expenses. Aside from the mall’s traffic, a new store’s success also depends on synergies from integration with existing operations and optimal merchandise mix and pricing that match consumers’ preferences.  New stores tend to be less profitable in the early years than more mature stores due to lower sales productivity and most operating expenses fixed. It takes time for a new store to recoup the capital investment, which is within 3-4 years. It even takes 4-5 years for the new store’s productivity, net revenue and adjusted EBITDA margin to reach the average level of a comparably sized store.MitigationThe Company identifies and evaluates potential new sites on an ongoing basis to ensure a robust pipeline of new stores. There are financial hurdles that need to be achieved to open a new store. With around two-third sales coming from the consignment vendors, Matahari has the negative working capital to mitigate the risk. The Company takes measures to integrate new stores and develop synergies with the existing operations. In addition, the Company also aims to ensure that each new store has an optimal merchandise mix that matches local consumer preferences and needs.
Merchandise Mix Risk Net revenues on consignment sales made up a significant proportion of the total net revenues, 38.8% in 2021 and 42.4% in 2022 which were derived from the guaranteed minimum gross profit amount and a consignment margin based on consignment sales, which stood at 31.5% in 2021 and 31.4% in 2022.In the meantime, revenue from the Company’s Direct Purchase (DP) goods is a result of its sales performance and prices. The prices are determined by several factors, including the cost of sales, supplier terms with overall supply and demand for retail consumer products in Indonesia, market, seasonality, inventory volume, inventory age, fashion and consumer trends, promotions,
and manufacturer recommendations.MitigationThe Company has the opportunity to adjust the merchandise margins when we enter into an agreement with a vendor or renew the contract, which typically occurs on a biannual basis. Management believes that the mutually symbiotic relations with consignment vendors and the strength of the Company’s brand will ensure the consignment margins to remain stable for the foreseeable future.Meanwhile, given the considerable diversity in our DP goods range, the pricing strategy for a specific product does not significantly impact the Company’s net revenue. However, sales and profitability in a given period may be materially influenced by discounts, rebates, or other national level promotional activities designed to increase market share and/or clear aged inventory. The Company has the flexibility to adjust the price and gross profit margin on DP goods.Sales performance of all brands that we have must also meet the expectation on a store-by-store basis and overall Company’s performance. The Company regularly reviews each brand’s performance and may have to take necessary actions, such as discontinuing the brand.
Operating Expenses Risk The Company’s main components of operating expenses are rent, depreciation, employee costs, and marketing. As the business grows, operating expenses may increase in line with the increased volumes or due to other factors such as inflation.Operating expenses as a percentage of merchandise sales decreased from 24.7% in 2021 to 22.6% in 2022.The Company’s rent expenses were Rp178.1 billion in 2021 and Rp525.4 billion in 2022, contributing 7.0% and 18.7%, respectively, of the Company’s operating expenses for the
corresponding periods.The Company’s depreciation and amortisation expenses are derived from fixed assets, right- of-use assets and software. Depreciation and amortization expenses were Rp913.0 billion in 2021 and Rp776.5 billion in 2022, contributing 35.9% and 27.6% respectively, of the Company’s operating expenses for the corresponding periods. Salaries and allowances as a percentage of merchandise sales were 7.9% in 2021 and 6.8% in 2022. The decrease was primarily due to natural attrition, contract expiration, and the multiskilling project. Marketing expenses (predominantly promotional and advertising costs in digital advertising media, SMS, etc) decreased by 21.5% in 2021 and increased by 59.5% in 2022.Mitigation During the pandemic, the Company was keeping strict control over non-essential expenses. Matahari maintains the growth in operating expenses at manageable levels through rigorous cost control programs, including leveraging the bargaining power to negotiate better prices with suppliers.With regards to occupancy cost, the Company typically entered into long-term contracts to reduce the risks associated with rent increases. The Company also negotiated with the landlords, aiming for a more flexible rental scheme and lower charges to reduce the pandemic impact.In terms of labor components, the Company aimed to ensure the competitive wages compared to other retailers. Matahari managed to optimise the headcount requirement with the focus on the power brands, stores with healthy profitability, and single warehouse.Various initiatives like multi-tasking, labor scheduling, multi-shifts and others enable Matahari to operate with a lower headcount than in the past. Having said that, the Company would be looking at selectively increasing its headcounts at a lesser velocity than sales recovery to maintain operating leverage or in an agile way to leverage seasonal opportunities. That said, the Company will always maintain the necessary minimum to provide the best service to customers. In addition, Matahari has also replaced the security staff in Matahari stores with Prevention Associates (PA), who were fewer in number but still delivered adequate internal control.The Company has maintained a low level of inventory shrinkage (the loss of merchandise for any reason between the point of delivery from suppliers and point of sale) through tight inventory control. The Company also deployed an in-house distribution team, equipped with an electronic article surveillance system for high-priced merchandise. The inventory shrinkage for consignment goods was beyond the Company’s undertaking.
Risk of Seasonality Matahari stores experience sales seasonality several times in a year, mainly linked to Eid al-Fitr, Chinese New Year, Christmas, school holidays and the Back-to-School moments in June-July. Because the dates of several holidays change from year to year, the sales peak and results in a given interim financial period may or may not be directly comparable to results from the preceding interim period or to the corresponding period in prior years. The number of pay periods spanned by a particular peak season may also drive sales higher.Mitigation To tap the seasonal sales momentum, such as Eid al-Fitr, Chinese New Year, Christmas, school holidays and the Back-to-School event, the Company secures the seasonal merchandise well in advance. Moreover, to maximise sales traction, the Company activate specific promotions and advertising linked to those main events and holidays.The Company also takes thoughtful moves to anticipate the high store traffic during the events by having more seasonal staff in stores and sufficient points of sales.
Risk of Geographical Diversity Matahari stores in Java contributed a significant share of our merchandise sales (56.7% in 2021 and 57.9% in 2022), while the remaining stores are located outside Java, spread across the country.Mitigation Matahari’s logistic capabilities manage to reach out to the farthest area in Indonesia, such as Aceh and Papua. Meanwhile, to reach out to our customers in areas that we do not have any physical store presence yet, the Company provides e-commerce platform, Matahari.com, and official store in marketplace.
Competition Risk Indonesia’s retail industry is becoming increasingly sophisticated in several areas: merchandise mix and quality; store location, design, and ambience; inventory; price; customer service; credit availability; and advertising. The Company is presently Indonesia’s largest department store retailer targeting the middleincome segment. However, the Company faces growing competition from new entrants to the market, including international operators, existing department stores, and specialty retailers. Despite high barriers to entry in our target market, the actions taken by our competitors as well as our proactive actions and responses may impact the Company's performance. In particular, the more intense competition in Java also yields lower Merchandise Sales per square meter of retail space than the total average across all regions.Mitigation To keep pace with evolving trends and customer preferences, the Company has collaborated with several global fashion brands as their distributor in Indonesia. To minimise the risks associated with such initiatives in the future, the Company focuses more on data-driven pilots, with small test rollouts leading to more nationwide
successes and fewer costly exits.The Company’s business model is moving toward omnichannel capabilities, which combines up-to-date online sales channels with our extensive store network, which is also designed to deliver added value to sustain our sales growth and enhance our customers’ shopping experience.In 2022, our non-store channels became more active during tight restrictions. We actively traded in our social commerce platforms and official stores in marketplaces.
The Company also continuously improved its offering to offline and online customers, especially loyalty members, through the revamped loyalty program, Matahari Rewards.
To mitigate the impact of competition intensity in certain areas on lower productivity, the Company regularly reviews the stores’ condition and the merchandising mix
and pricing in each store. In the meantime, the Company continuously explore the untapped potential area to grow.
Bank Borrowing and Interest Rates Risk The Company enters into loan agreements and credit facilities for working capital purposes. Matahari may occasionally withdraw the loan.Mitigation After fulfilling the working capital needs, Matahari will repay any withdrawn loan as quickly as possible to minimise the cost incurred. The Company ended the year 2022 with zero bank loan. In the general course, the Company relies on trade payable for the purchase of merchandise from suppliers.
Security Risk At the store level, the Company has a risk exposure related to the security of its merchandise. We have mitigated these risks by installing an advanced Electronic Article Surveillance system, including Closed Circuit Television (CCTV), pedestals, and other store security systems. These measures allow for more effective control over operations by enabling enhanced monitoring in selected stores with a high-risk profile.  MitigationThe Company has mitigated these risks by installing an advanced Electronic Article Surveillance system, including Closed Circuit Television (CCTV), pedestals, and other store security systems. These measures enabled enhanced monitoring in selected stores with a high-risk profile, allowing for more effective control over operations.
Cyber Security Risk (IT) The Covid-19 pandemic has accelerated the Company’s digital transformation process, both in terms of sales and operations. Given the rapid development, the Company carried out assessment on data/information security and cyberattack risk. Moreover, the Company also conducts a Disaster Recovery Test (DR Test) once a year at minimum to ensure the
effectiveness of the system functionMitigation In 2022, the National Cyber and Crypto Agency evaluated the Company’s information security preparedness level (Information Security Index/KAMI), based on completeness
and maturity, identifying the result as “Adequate”. According to Environmental Risk and Mitigation Matahari, the climate change has a significant impact that indirectly
affects the Company’s economic performance. The increasing intensity and frequency of extreme weather events, such as excessive rain or extreme dry season, has caused floods, landslides and fires, as well as rising temperatures and rising sea levels, which may negatively affect the Company’s operation.Moreover, Matahari has stores throughout Indonesia that is geologically in the path of an active earthquake as it is surrounded by the Pacific Ring of Fire. In addition, Indonesia is at the confluence of three continental plates, namely Indo-Australia, Eurasia, and the Pacific which are prone to various natural disasters, such as volcanic eruptions, earthquakes, and tsunamis. This condition may disrupt Matahari’s business operations.
Environmental Risk  & Mitigation  The increasing intensity and frequency of extreme weather events, such as excessive rain or severe dry season causing floods, landslides, fires, rising temperatures, and rising sea levels, may negatively affect the Company’s operation. Moreover, Matahari has stores across Indonesia, which is geologically prone to various natural disasters, such as volcanic eruptions, earthquakes, and tsunamis. Therefore, this condition may disrupt Matahari’s business operations. Matahari has regularly updated the risk mapping of Matahari’s business areas related to environmental risks so that it does not significantly affect Matahari’s operations. This risk assessment helps the Company to value the insurance needed to support the operation sustainability. Matahari has also established a Disaster Recovery Centre (DRC), managed by a third party. All hardware and software have standalone duplicates and will instantly and seamlessly replace the main system in a catastrophic event. The Company conducts Disaster Recovery Test (DR Test) twice a year. 

Information Access

The Company provides public access to the Company’s information and data through reports that the Company produces for capital market regulators and information for shareholders disseminated through the IDX website and the mass media, as well as other information published on the Company’s website or present www. matahari.com/corporate/, available in Indonesian and English. Matahari also provides information about the Company, its stores and products, as well as offers and promotions through the following social media platforms, such as Facebook (Matahari), Instagram (@matahari and @ storyofmatahari), TikTok (tiktokmatahari). In 2022, the Company issued 28 press releases to various media.

External Audit

Audit on the Company’s Consolidated Financial Statements for the year ended December 31, 2021, which include the statements of financial position, statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows, prepared in accordance with Indonesian Financial Accounting Standards.


Tanudiredja, Wibisana, Rintis & Rekan
(Anggota firma dari/member of PricewaterhouseCoopers International Limited)
WTC 3 | Jl. Jend. Sudirman Kav. 29-31 | Jakarta 12920 – Indonesia
T: (62-21) 50992901/31192901
F: (62-21) 52905555/52905050

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