Jakarta – Publicly-listed retailer PT Hero Supermarket said on Friday its net profit had plunged by 93 percent last year, due to the cost of repositioning its business activities amid tightcompetition in the country's retail sector.

In a press statement on Friday, the company said its profit had dropped to only Rp 2 billion (about US$238,095) last year, from Rp 32 billion in 2002. Sales surged by 24 percent to Rp 3 trillion, but its operating profit declined to Rp 43 billion fromRp 48 billion.

Hero president Ipung Kurnia said the company had closed down several of its stores and impaired its bakery business and other assets, at a cost of Rp 49 billion, which he said was largely to blame for the decline.

Analysts said that for the past three years, Hero had been under pressure from French hypermarket operator Carrefour, which has opened outlets near Hero outlets. Hero cannot match the prices offered by the French hypermarket.

Analysts also said that Hero had larger operating costs as a result of stiffer competition in the retail sector, thus reducing its profit margin.

In a bid to compete with hypermarket giants such as Carrefour and Dutch Makro, during 2003 Hero had tried to expand its business by opening four Giant hypermarket outlets, eight Guardian pharmaceutical outlets and four Starmart stores.

The company had also acquired 22 Tops supermarkets in May last year – to be re-branded and integrated into the Hero supermarket chain – in a bid to accelerate the expansion of its network at a relatively low cost.

"Our key priorities are to reposition our supermarket business and continue to expand Giant and other successful formats," said Ipung in a statement.

The company currently operates 222 outlets and employs approximately 10,000 people.