Matahari Denies Breach of Contract Allegations by Pasaraya

Matahari Department Store was recognized by news portal Warta Ekonomi as one of Indonesia's top 100 companies. (JG Photo)

By : Sarah Yuniarni | on 9:41 PM January 17, 2018
Category : News

Jakarta. Matahari Department Store, Indonesia's largest retailer of apparel, beauty and home products, has denied breach of contract allegations by mall operator Pasaraya Tosersajaya.

This follows the closing of Matahari's stores at Pasaraya's malls in Manggarai and Blok M, both in South Jakarta, last year.

"We have carried out all our responsibilities as a tenant, as stipulated in the agreement. The accusation that we are liable for service charges is incorrect and in fact, Pasaraya still retains our security deposit, which is more than enough to cover the lease and service charge payments," Miranti Hadisusilo, corporate secretary and legal director of Matahari Department Store, said in a statement on Wednesday (17/01).

Matahari filed a lawsuit against Pasaraya on Sept. 25 last year for breach of contract and failure to honor an agreement between the two companies. Pasaraya responded by filing a lawsuit against the retailer in December.

Matahari said its management did not experience any goodwill from Pasaraya, which prompted the retailer to close down the two stores in September and file a lawsuit against the mall operator for compensation.

The retailer said it continuously analyses the financial performance of its 155 stores in 73 cities across the archipelago and that those at Pasaraya Manggarai and Pasaraya Blok M had not been profitable since they were opened in June 2015.

Matahari said it had suffered billions of rupiah in losses, partly due to Pasaraya's failure to honor its initial commitment to improve the malls and come up with a new concept within two years after the stores' opening.

Besides these two stores, Matahari also closed down its stores at Mall Taman Anggrek in West Jakarta and Lombok City Center in West Nusa Tenggara last year.

Meanwhile, state-run news agency Antara quoted Mulyadi, a lawyer representing Pasaraya Tosersajaya, as saying that his client filed a lawsuit against Matahari in the South Jakarta High Court on Dec. 17 for breach of contract.

He said Matahari has yet to pay the Rp 29 billion ($2.17 million) service charge on the 16,000-square-meter retail space it leased inside Pasaraya's two malls, which has been due since June last year.

Mulyadi added that Matahari broke the 11-year lease agreement, signed in 2015, with its unilateral and irresponsible decision to end the partnership.

Matahari opened eight new outlets last year, including a specialty store for the company's in-house fashion brand, Nevada, at Pakuwon Mall in Surabaya, East Java, on Dec. 15. The new store is part of the company's strategy to expand its business to small- and medium-sized cities in Indonesia, while closing down less profitable stores in bigger cities.

Matahari increased the number of department stores it operates to 155 in 2017, up from 151 the year before.

The Jakarta Globe and Matahari Department Store are both affiliated with the Lippo Group.

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