Sales boost fails to preserve profit for Aeon Hong Kong

Increased sales by Aeon Hong Kong failed to preserve profit in difficult half.
Overall sales in Aeon Hong Kong stores dropped 10.5 per cent during the six months to June 30, however China operations provided some respite.
Despite the partial closure of the Kornhill and Whampoa stores for renovation, group revenue rose by 0.8 per cent to HK$4.5367 billion (US$585.1 million), mainly attributable to the China segment and the full-period contribution of new stores.
Gross profit margin fell from 31.1 per cent to 29.8 per cent, mainly due to promotional activities and clearance sales prior to refurbishments of the Kornhill and Whampoa stores.
Increased running expenses saw last year’s profit of $48.7 million flip to a loss of $82.9 million. Revenue from the group’s Hong Kong business dropped 2.6 per cent to $1.8245 billion.
At June 30, the group had 48 stores, the same as at December 31, in densely populated residential and commercial districts across Hong Kong.
A revamp of the merchandise mix and improved back-end support services, plus the contribution from new stores reinforced by a late winter sales spike, helped boost China revenue by 3.3 per cent to $2.7122 billion.
However, the segment profit dropped by 39.5 per cent to $12.2 million from $20.2 million, mainly because new stores were still at investment stage. With the opening of a store in Panyu in February, the group had 31 outlets in south China as at June 30.
To enhance its competitiveness in the challenging market, the group introduced a new business model, “Aeon style”, a proven concept brought in from Japan.
Re-opening in July, the Kornhill store was transformed into the first “Aeon style” store outside Japan. The concept involves a fresh store layout, an enhanced merchandise mix and a more stylish and comfortable shopping environment.
Novel elements introduced in Kornhill include delicatessen counters plus the new Glam Beautique, a health and beauty shop, as well as Adult Study stationery.
Meanwhile, the group continues to explore potential opportunities for small-scale store expansion. In July and August|, three stores were opened in Fo Tan, Wong Tai Sin and Tai Po, with three more to follow in Fortress Hill, Yuen Long and Sha Tin by end of the year.

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