Throughout 2025, the global economy continued to move within an increasingly complex dynamic, shaped by geopolitical pressures, financial market volatility and adjustments in monetary policies across major economies. Nevertheless, Indonesia was able to maintain macroeconomic stability and preserve its growth momentum. Bank Indonesia recorded a relatively stable Rupiah exchange rate towards the end of the year, while national economic performance remained resilient, supported by strong domestic demand.
Based on official data from Indonesia Central Statistics Agency (BPS), Indonesia’s economy grew by 5.11% (year-on-year) in 2025, reaffirming the structural resilience of the national economy amid global uncertainties. The trade sector, including wholesale and retail trade, once again served as a key pillar of growth, contributing approximately 13.17% to Indonesia’s Gross Domestic Product (GDP). Strong household consumption, driven by the expanding middle class and increasingly digital-savvy consumer behaviour, remained the primary engine of sectoral performance.
Within this environment, the Board of Commissioners is of the view that the national retail industry faces both intensifying competition and expanding opportunities. Shifting consumer preferences toward more personalised and integrated shopping experiences, along with rapid digitalisation, require retail players to continuously adapt at both strategic and operational levels.
The Board of Commissioners is of the view that the formulation of the Company’s strategy in 2025 was developed through a well-structured and measured approach, responsive to industry dynamics, and grounded in robust governance and risk management foundations. The strategic focus on strengthening the O+O model, selective store network expansion, acceleration of digitalisation and reinforcement of the core product portfolio is considered highly relevant in addressing shifts in consumer behaviour and the evolving landscape of the health and beauty retail industry in Indonesia.
In the process of defining the strategy, the Board of Commissioners observed that the Board of Directors had taken into account a wide range of strategic considerations, including macroeconomic conditions, the competitive industry landscape, changing consumer preferences and the Company’s internal readiness. The strategy was designed not only to drive short-term growth, but also to support the long-term sustainability of the business model, with operational efficiency, digital capabilities and risk management positioned as key pillars.
From an implementation perspective, the Board of Commissioners noted that the Board of Directors demonstrated consistency and discipline throughout 2025. The measured expansion of the store network, with a strategic focus on the Outer Islands and nonJakarta regions, reflects the successful translation of strategic direction into concrete operational actions. New store openings were pursued not merely to achieve quantitative growth, but also with careful consideration of location quality, market potential and the long-term sustainability of each store’s performance.
The acceleration of digital transformation also stood out as a key area in the Board of Commissioners’ assessment of strategy execution in 2025. The optimisation of digital platforms, the strengthening of marketplace channels, and the development of live commerce and social commerce were viewed as effective in expanding market reach and enhancing customer engagement. The Board of Commissioners considers these initiatives not only a response to market trends, but also an integral part of the Company’s evolving business model.
In terms of performance management, the Board of Commissioners is of the opinion that the achievement of financial results above target reflects the effectiveness of the strategy implemented. Strong sales growth, improved profitability and the increasing contribution of digital channels indicate that the Company’s strategy not only drove higher volumes, but also enhanced the quality of earnings through improved cost efficiency and more disciplined margin management.
The Board of Commissioners also placed particular emphasis on the integration of human capital and corporate culture in the implementation of the 2025 strategy. Strengthening competencies, leadership capabilities, and a collaborative, performance-driven culture is viewed as a critical enabler in ensuring that the strategy is executed consistently across all levels of the organisation. In this regard, the Board of Commissioners noted the Board of Directors’ strong commitment to developing adaptive talent capable of responding to ongoing change.
Within the sustainability context, the Board of Commissioners observed that the integration of environmental, social, and governance (ESG) aspects into the 2025 strategy has progressed in line with the Company’s policy direction. Initiatives related to energy efficiency, responsible supply chain management, and community empowerment form important elements that reinforce the sustainability of the business model while strengthening stakeholder trust.
Throughout 2025, the Board of Commissioners has effectively carried out its oversight function over the formulation and implementation of the Company’s strategy through regular meetings with the Board of Directors, quarterly performance reviews, and the provision of constructive strategic guidance. With the support of the Audit Committee, oversight also extended to the strengthening of internal control systems and risk management to ensure that every step of expansion and transformation remained within prudent and well-controlled parameters.
Overall, the Board of Commissioners concludes that the 2025 strategy was well formulated and executed with consistency and discipline, as reflected in the Company’s solid performance, enhanced competitiveness, and the continued strengthening of its brand position within the industry. Going forward, the Board of Commissioners encourages the Board of Directors to maintain this momentum by continuing to uphold the principles of prudence, sustainable innovation, and the reinforcement of business fundamentals as the foundation for longterm growth.
The Board of Commissioners has reviewed and remains positive to the Company’s business prospects in 2026 prepared by the Board of Directors. Official projections indicate that Indonesia’s economic growth is expected to range between 5.0%–5.2% (year-on-year), supported by resilient household consumption, continued investment growth, and sustained macroeconomic stability
The retail industry is projected to remain on a solid medium-term growth trajectory, with an estimated compound annual growth rate (CAGR) of approximately 5.4% for the 2026–2032 period. The Company’s core segment, health, beauty, and personal care, is expected to grow at a pace exceeding the industry average in line with rising consumer awareness of health and self-care.
The Board of Commissioners fully supports the Board of Directors in the implementation of the Company’s strategic direction to strengthen its national store network, accelerate digital sales channels, and continuously enhance customer experience. Supported by increasingly solid business fundamentals, the Board of Commissioners is confident that the Company is well positioned to sustain healthy and long-term growth.
The Board of Commissioners is of the view that the implementation of Good Corporate Governance (GCG) principles in accordance with OJK Circular Letter No. 32/SEOJK.04/2015 regarding the Guidelines of Listed Companies serves as the fundamental pillar in safeguarding business sustainability, strengthening stakeholder trust, and ensuring that the Company’s growth remains sound and well controlled. Throughout 2025, the Board of Commissioners, together with the Board of Directors, continued to reinforce the application of GCG principles across all aspects of the Company’s management, encompassing transparency, accountability, responsibility, independence, and fairness.
In carrying out its oversight function, the Board of Commissioners actively monitored the execution of strategy, financial performance, the effectiveness of internal controls, and the implementation of risk management. Such oversight was conducted through regular meetings of the Board of Commissioners and joint meetings with the Board of Directors. Through these forums, the Board of Commissioners provided strategic direction, constructive feedback, and recommendations for improvement to ensure that key policies and strategic decisions remained aligned with the Company’s long-term interests.
The role of the Audit Committee under the Board of Commissioners formed a critical part of governance strengthening. Throughout 2025, the Audit Committee actively reviewed the financial statements, assessed the effectiveness of internal control and risk management systems, monitored compliance with prevailing laws and regulations, and evaluated follow-up actions arising from both internal and external auditors. The Board of Commissioners is of the opinion that the oversight function carried out through the Audit Committee has been effective and has contributed meaningfully to safeguarding the integrity of the Company’s financial reporting while mitigating operational and compliance risks.
Furthermore, the Board of Commissioners ensured that the Company’s governance practices continued to be aligned with applicable regulatory requirements as well as with relevant governance standards for publicly listed companies. Regulatory compliance is viewed not merely as an obligation, but as an integral part of building a credible, professional, and highly competitive corporate governance framework.
In 2025 and up to the date of issue of this Annual Report and Sustainability Report, there was no change in the composition of the Board of Commissioners. The Board of Commissioners currently comprises six commissioners, including the President Commissioner and Independent Commissioner, four Commissioners and one Independent Commissioner.
The Board of Commissioners extends its highest appreciation to the Board of Directors and all employees for their leadership, dedication, and commitment in driving the Company’s performance throughout 2025 amid increasingly dynamic industry challenges. Our sincere gratitude is also conveyed to the shareholders for their continued trust, to our business partners and suppliers for the sustained synergy and collaboration, and to our loyal customers for their enduring confidence and loyalty. The synergy, integrity and professionalism cultivated among all stakeholders form the essential foundation that enables the Company to strengthen its performance, enhance its competitiveness and create sustainable long-term value.
On behalf of the Board of Commissioners,
President Commissioner and Independent Commissioner
As of the start of 2025, the Company operated within a global and domestic economic landscape that remained dynamic while presenting significant opportunities. The exchange rate of the Rupiah against the US Dollar, as recorded by Bank Indonesia, stood at approximately Rp16,677 per US Dollar in early December 2025. Despite volatility in the global financial markets, the Rupiah remained relatively stable, providing an important foundation that enabled businesses to formulate their strategies with both confidence and prudence.
Domestically, Indonesia’s economy continued to demonstrate encouraging performance. Based on official data from Indonesia Central Statistics Agency (BPS), Indonesia’s Gross Domestic Product (GDP) grew by 5.39% year-on-year in the fourth quarter of 2025. This figure reaffirms the resilience of the national economic structure amid persistent global challenges. The trade sector, including both large-scale and retail trade, remained a key pillar of the national GDP, contributing approximately 13.17% to overall economic output.
Throughout 2025, the national retail industry landscape was marked by various pressures and challenges. Data from Nielsen and Kantar indicate that during the first half of 2025, retail growth was very limited and tended to weaken, with monthly retail growth ranging between 0.5%–2.0%, and experiencing contraction in several periods, including April 2025 (-0.3%). On an aggregate basis, national retail performance in the second quarter of 2025 recorded growth of only about 1%, reflecting weakened consumer purchasing power amid persistent economic pressures.
These pressures were even more pronounced in the Fast-Moving Consumer Goods (“FMCG”) sector, which serves as a key indicator of household consumption. Based on Kantar Homepanel data, in the second quarter of 2025, FMCG spending in value terms grew by only around 1%, while volume contracted by as much as 3%. Even for in-home FMCG sales throughout the first half of 2025, value growth reached only around 3%, signalling that consumers were increasingly restraining spending and adjusting their consumption patterns.
This condition was further reinforced by Nielsen data showing a decline in consumption volume across various basic necessity categories, both food and non-food, including personal care products such as shampoo, soap, and toothpaste. This phenomenon reflects a “trading down” trend, whereby consumers shift toward more affordable products, opt for smaller pack sizes, and reduce both the frequency and value of their purchases.
From a sentiment perspective, Bank BRI’s Consumer Confidence Report shows that in August 2025, the Consumer Confidence Index (CCI) had weakened to 117.2, with the most significant pressure occurring in the middle and lower-middle income segments, which experienced notable declines in perceptions of income and job availability. This weakening in consumer confidence further constrained the growth outlook for the retail sector, particularly within discretionary spending segments.
Within this challenging landscape, the positive performance recorded by the Company throughout 2025 was not achieved under favourable market conditions, but rather through extra effort, strategic precision, and disciplined execution across all business lines.
The Board of Directors is responsible for actively preparing and reviewing strategic initiatives and policies which are aligned with the Company’s vision, mission, and objectives, with the approval of the Board of Commissioners.
The year 2025 marks a phase of strategic acceleration for the Company. Having successfully navigated the post-pandemic recovery period and delivered sustained growth over the past few years, the Company enters 2025 with a sharper focus on strengthening the foundation for long-term growth. The strategy is no longer driven solely by quantitative expansion, but is directed toward achieving a balance between network growth, the strengthening of digital capabilities, and the enhancement of overall customer experience.
The Company’s core strategy remains anchored in the strengthening of the O+O model as the backbone of business growth. The Board of Directors believes that the future of retail no longer lies in a dichotomy between physical and digital channels, but in the seamless integration of both. Accordingly, throughout 2025, the Company continues to refine its omnichannel shopping experience, enabling customers to interact, transact, and receive the best possible service anytime and anywhere.
On the physical network front, the Company continues to pursue an aggressive yet measured store expansion strategy. Expansion efforts are primarily focused on Outer Islands and non-Jakarta regions as new sources of growth, where demand potential remains high and modern trade penetration is still developing. This approach not only broadens the Company’s market reach, but also reinforces its brand positioning as a national player with a presence across diverse regions throughout Indonesia.
Network expansion is not carried out uniformly, but rather through a selective approach based on location potential, demographic profiles, and community purchasing power. Each new store opening is carefully assessed to ensure compliance with the Company’s operational and profitability standards. In this way, the expansion strategy is aimed not merely at increasing the number of stores, but at safeguarding the quality of performance at every growth point.
On the digital front, 2025 represents a year of strengthening the platform-based transaction ecosystem. The Company continues to optimise its proprietary platforms while expanding strategic collaborations with various marketplaces, digital healthcare services, and social commerce channels. Live commerce and community-based interactive campaigns have become key drivers of digital sales growth, while also serving as effective touchpoints to build deeper emotional engagement with customers.
The Company also places data and analytics at the core of its strategic decision-making. Throughout 2025, the utilisation of customer data, shopping patterns, and consumer preferences has been further strengthened to support marketing strategies that are more precise, personalised, and aligned with real customer needs. Through this data-driven approach, the Company is able to deliver more relevant product offerings, improve conversion rates, and strengthen customer loyalty.
From a product portfolio perspective, the Company’s 2025 strategy is directed toward reinforcing its core categories, namely health, beauty, and personal care, in line with the growing public awareness of health and self-care. The Company actively expands partnerships with both global and local brands, introduces exclusive products, and strengthens its private label portfolio as a sustainable source of margin growth.
Human capital remains an inseparable strategic pillar. The Board of Directors recognises that business acceleration can only be achieved with the support of talent that is adaptive, resilient, and strongly customeroriented. Accordingly, throughout 2025, the Company continues to strengthen its competency development and leadership programmes, as well as foster a collaborative, performance-driven work culture, so that all employees can grow in tandem with the Company’s business expansion.
Within the sustainability framework, the 2025 strategy is also directed toward reinforcing responsible business practices. The Board of Directors oversees the integration of environmental, social, and governance (ESG) aspects into the Company’s business processes, ranging from operational energy efficiency and responsible supply chain management to community empowerment initiatives. Sustainability is not viewed as a complementary element of strategy, but as a fundamental pillar that strengthens the Company’s long-term business resilience.
Amid the slowdown in the retail industry and the pressure on purchasing power experienced by most market players, the Company was still able to deliver solid growth. As of 31 December 2025, the Company successfully recorded net sales of Rp2.77 trillion, representing a 34.35% increase compared to the previous year and exceeding the budget target by 6.66%. Profitability also strengthened markedly, with EBIT of 2025 amounting to Rp133.65 billion, growing by 63.64% compared to the previous year and standing 14.29% above the established target. This achievement demonstrates that the Company’s strategy was not only resilient in a weakening market, but also capable of generating competitive performance relative to overall industry conditions.
This growth was underpinned by balanced contributions from both offline and online channels. The offline channel recorded 22.15% year-on-year growth, while the online channel expanded more aggressively by 75.32% yearon-year. Digital channel performance emerged as one of the main drivers of accelerated growth, supported by the increasing adoption of online shopping among customers and the continued optimisation of the Company’s O+O platform ecosystem.
This growth becomes even more meaningful when viewed against the performance of the FMCG sector and the national retail industry, which were generally in a low-growth phase and, in some cases, experiencing volume contraction. Accordingly, the Company’s achievements in 2025 reflect its success in managing external pressures through the optimisation of its O+O model, precise selection of expansion locations, and the strengthening of its value proposition to customers amid evolving consumer behaviour.
On the physical expansion front, the Company continued to strengthen its national presence through measured new store openings, with a focus on regions that offer high growth potential. The number of stores increased from 179 at the end of 2024 to 190 by June 2025, and continued to expand to 226 by the end of 2025. Expansion was predominantly concentrated in Outer Islands and non-Jakarta regions, which collectively accounted for more than 60% of total new store openings throughout the year. This strategy reinforces the Company’s commitment to expanding access to health and beauty retail services across emerging cities in Indonesia.
Sales performance at newly opened stores also delivered highly encouraging results. In the second quarter of 2025, the Company successfully opened 16 new stores, posting average sales performance of 14% above target. Several locations even achieved sales levels of up to 70% above target, reflecting the success of the Company’s location selection, store format strategy, and concept differentiation.
In the digital business line, growth acceleration became increasingly evident. As of 31 December 2025, sales through the Company’s own platform rose to Rp97.79 billion from Rp80.07 billion in the same period of the previous year, representing a 22.14% growth. Marketplace activity also continued to strengthen, with total transaction growth reaching 123.93% year-on-year and active member growth of 45.98%. The TikTok live commerce channel emerged as one of the new growth engines, recording a sales surge of more than 313.06% compared to the previous year.
From a market share perspective, the Company’s position in the modern trade personal care segment continued to strengthen. By mid-2025, Watsons’ market share increased to approximately 17.90%, up from around 16.44% in 2024. This improvement was driven by network expansion, consistent marketing campaigns, and the Company’s continued success in maintaining its position as a leading destination for health and beauty products in Indonesia.
On the branding front, the Brand Equity Index (BEI) results also demonstrated sustained dominance. Watsons continued to lead in brand strength across major cities, including non–Greater Jakarta areas such as Palembang and Samarinda, which recorded the highest scores throughout 2025. This position underscores the success of the Company’s brand strengthening strategy not only in primary cities, but also in emerging growth markets.
The Company’s growth momentum throughout 2025 was further marked by the achievement of a strategic milestone of 200 Watsons stores in Indonesia, which was celebrated in mid-2025. This accomplishment represents an important chapter in the Company’s national expansion journey and further solidifies its position as one of the largest health and beauty retail networks in Indonesia.
As the Company looks ahead to 2026, it enters a period in which macroeconomic fundamentals and the dynamics of the national retail industry point to increasingly open opportunities, provided they are captured through the right strategy and operational agility. Official projections from Bank of Indonesia indicate that Indonesia’s economy is expected to continue growing in the range of 5.0%– 5.2% year-on-year in 2026. This outlook reflects the continued strength of domestic demand, particularly household consumption, which remains a key driver of the retail sector in which the Company operates.
From a macro-monetary perspective, the relatively accommodative interest rate environment following the adjustment of the Bank Indonesia policy rate (BI-Rate) continues to provide room for improved liquidity and purchasing power. The combination of economic growth, monetary stability, and consumer behaviour that has largely returned to a “post-pandemic normal” creates a conducive environment for the expansion of modern retail, both offline and online.
Industry trends further indicate that Indonesia’s retail market remains on a medium-term expansion trajectory. Based on the latest projections from industry research institutions, the national retail market is expected to grow at a compound annual growth rate (CAGR) of approximately 5.4% during the 2026–2032 period. Within this context, the health, beauty, and personal care product categories, the Company’s core segments, are projected to record higher growth than the overall industry average, in line with rising consumer awareness of healthy lifestyles, hygiene, and self-care.
Moreover, the acceleration of digitalisation and the adoption of online lifestyles continue to strengthen online business and omnichannel platforms as key pillars of growth. National online business volumes and digital transactions are expected to rise significantly through 2026, supported by high internet and smartphone penetration across Indonesia. For the Company, this trend represents a substantial opportunity to further increase the contribution of digital sales, expand its reach among millennial and Generation Z consumers, and deepen customer loyalty through digital programmes, membership initiatives, and integrated online-offline engagement.
From a geographic and demographic perspective, ongoing urbanisation and the rising purchasing power in secondary cities and regions outside Java present a new frontier for growth. Alongside the continued expansion of the Company’s store network in non-Java regions and beyond major metropolitan areas, the Company is strategically positioned to capture demand from these segments, which have historically been relatively underserved by large modern retail players. This is fully aligned with the Company’s store expansion and omnichannel distribution strategy that has been progressively rolled out.
On the operational front, 2026 also represents an important momentum for further optimising cost efficiency, supply chain management, and digital integration. This includes the continued utilisation of customer data and analytics to design more effective marketing campaigns, improve inventory management, and deliver more personalised customer service. This approach is expected to help the Company safeguard profitability while supporting sustainable long-term growth.
With the favourable combination of external drivers, including stable economic growth, retail market expansion, consumer digitalisation, urbanisation, and shifting preferences, together with the Company’s internal strengths in its store network, integrated online-offline channels, strong brand awareness, and solid operational capabilities, the Company enters 2026 with a robust foundation to continue executing its strategic expansion agenda.
In strengthening the foundation for sustainable longterm growth, the Company continues to place the implementation of good corporate governance as an integral part of its corporate culture. Throughout 2025, the Company consistently applied all principles of corporate governance in accordance with OJK Circular Letter No. 32/SEOJK.04/2015 on the Guidelines for Public Company Governance, ensuring that every strategic policy, decision-making process, and operational activity was carried out in a transparent, accountable, responsible, independent, and fair manner. This governance implementation is not merely oriented toward regulatory compliance, but is also directed at strengthening business resilience and maintaining the trust of all stakeholders.
From a sustainability perspective, throughout 2025 the Company continued to position sustainability as a core element of its future growth strategy. This commitment is realised through the alignment of the Company’s sustainability agenda with the United Nations Sustainable Development Goals (SDGs) as a framework for achieving a balance between economic performance, social responsibility, and environmental protection.
As part of the implementation of this strategy, environmental, social, and governance (ESG) considerations have become increasingly integrated into the Company’s core business processes. The Company continues to encourage the use of more efficient and environmentally friendly technologies to reduce the environmental impact of its operations. At the same time, the Company strengthens synergies with suppliers through the implementation of responsible procurement practices, while also maintaining its active role in community empowerment through social programmes, educational initiatives, and efforts to strengthen the economic capacity of surrounding communities.
Energy efficiency and conservation remained one of the Company’s key focus areas in 2025. In line with SDG 13: Climate Action, the Company recognises the importance of controlling energy consumption as part of its efforts to mitigate greenhouse gas emissions. Accordingly, a number of initiatives have been implemented consistently, including the optimisation of air-conditioning systems, tighter control of lighting usage, the adoption of energy-efficient equipment and renewable energy as well as the application of automatic power-saving features on electronic devices.
In 2025, the Company’s total energy consumption from diesel and electricity amounted to 31,267 GJ, with an energy intensity of 0.00041 GJ per product sold. From an emissions perspective, the Company recorded Scope 1 greenhouse gas (GHG) emissions of 516.90 tonnes of CO2 equivalent, with an emission intensity of 0.011 kg CO2e per product sold. These figures serve as an important evaluation baseline for the Company when formulating more focused emission control measures in the periods ahead.
Externally, the Company continues to face challenges related to the uneven level of consumer awareness of more sustainable products across market segments. While global trends indicate rising demand for environmentally friendly products, adoption in the domestic market still requires sustained educational efforts. Accordingly, throughout 2025, the Company intensified educational campaigns, expanded collaborations with industry stakeholders, and strengthened sustainability narratives within its product marketing strategies to encourage stronger demand for responsible products and practices.
Internally, the challenge of enhancing employee understanding and capability in relation to sustainability issues also remains an important focus. In 2025, the Company continuously expanded its socialisation and education programmes on sustainability values and their relevance to business continuity. The Company also continued to develop its online training platform, which contains a wide range of sustainability-related materials, and requires all new employees to complete mandatory sustainability training as part of the onboarding process. These efforts are aimed at strengthening a culture of responsibility and ensuring that sustainability principles are internalised across all levels of the organisation. From a policy perspective, management also continues to refine internal regulations focused on energy efficiency and resource conservation as part of its ongoing efforts to mitigate environmental impacts in a sustainable manner.
In 2025, there was no change in the composition of the Board of Directors. The Board of Directors currently comprises two directors, including one President Director and one Director.
For the achievements attained throughout 2025, the Board of Directors would like to extend its highest appreciation to all stakeholders who have played an important role in the Company’s journey. Our sincere gratitude is conveyed to the shareholders for their continued trust and support, to the Board of Commissioners for their strategic guidance and constructive oversight, and to all employees for their dedication, professionalism, and collaborative spirit that consistently serve as the main driving force behind the Company’s performance. We also express our appreciation to our business partners, suppliers, and loyal customers who continue to place their trust in the Company. The trust and synergy that have been built together form the foundation that enables the Company to move forward, strengthen its performance, and create sustainable value for all stakeholders.
On behalf of the Board of Directors,
President Director
