Weakened sales and rising operating costs have led to a first half net loss of US$3.4 million for Japanese retailer Aeon’s Hong Kong and China division.

Despite a 16.4 per cent increase in revenue, its profit in Hong Kong dropped by 60.5 per cent to HK$23.8 million due to surging costs.

Similarly, it lost HK$125.2 million in the mainland China citing economic growth slowdown and rising operating costs as the reasons.

MD Christine Chan said the company is also experiencing a decrease in its customer base.

Aeon says it expects slower economic growth and stock market volatility will further affect the retail industry and consumer sentiment.

However, it still sees great potential for further business growth and will continue to cautiously expand.

“We will make the effort to change our stores and make a solid rebound,” said Chan.

Aeon, which operates department stores and supermarkets, has 43 stores in Hong Kong and 28 in China.

The retailer is one of the bidders for Hong Kong supermarket chain ParknShop.