The company said that low demand had led to huge excess capacity, and that its board of directors had approved on April 30 the decision to halt production. — The Jakarta Post
JAKARTA: P. T. Sepatu Bata, the oldest footwear manufacturer in the country, had ceased production at its only factory in the West Java regency of Purwakarta due to a drop in demand, the company says.
The publicly listed company, which is best known for its Bata and Marie Claire brands, said in a statement that low demand had led to huge excess capacity, and that its board of directors had approved on April 30 the decision to halt production.
“It is the best decision that we could make, based on comprehensive evaluation and negotiations with relevant parties, to enhance efficiency in the company’s operations,” Bata spokesperson Hatta Tutuko said in the statement.
“We are committed to ensuring a smooth transition for employees and partners affected by this change.”
The decision comes after Bata spent the past four years struggling to stay afloat.
Last year, the shoe manufacturer reported a net loss of 190 billion rupiah, an increase of over 80% from a net loss of 105 billion rupiah in 2022, which was more than double the net loss of 51.20 billion rupiah recorded in 2021.
Also in 2023, the company had downsized its workforce 3.6% to 366 employees across all levels, from the factory floor to top management.
Firman Bakri, executive director of the Indonesian Footwear Association, said the problem Bata had experienced reflected the general condition of the national footwear industry, which had not recovered since the pandemic.
He added that sales of footwear brands targeting the middle and lower-middle segments declined during this year’s peak shopping period in April.
Meanwhile, inflation affected the price of basic needs, exacerbating the prolonged challenges to the industry by lowering purchasing power for footwear.
Firman said that although Bata had closed its Purwakarta factory, the company was continuing to manufacture its Bata brand footwear through contract orders with other factories in the country.
“According to the information, the closure of its factory in Purwakarta is due to an order problem, causing the firm to bear a deficit burden,” he said, as quoted by Kontan.
Founded in Czechoslovakia in 1894, the Bata brand entered the Indonesian market in 1931 when it was still under Dutch colonial rule, 14 years before gaining independence in 1945.
PT Sepatu Bata, its local manufacturer, is majority-owned by Dutch investment firm Bafin Nederland BV, which also produces Bata footwear in other countries.
Last year, the company witnessed a 5.3% year-on-year decrease in revenue to 609.6 billion rupiah, citing weakened domestic demand following Covid-19 and intense competition in the footwear market as the main causes.
Bata also experienced an increase in current liabilities and a decline in current assets in 2023, which resulted in its ratio falling to 88.9% last year, compared to 101.5% in 2022.
This indicates the company was racking up short-term debts while it had fewer liquid assets, to repay its liabilities.
The firm has pledged to meet its financial obligations on time by implementing plans for improvement, which includes rejuvenating its physical stores to attract customers, increasing sales of high-margin products and enhancing operational efficiency. — The Jakarta Post/ANN
