China drives modest revenue rise for Aeon Stores

Revenue for Aeon Stores (Hong Kong) grew 0.7 per cent last year to HK$9 billion (US$1.1 billion), mainly driven by sales in Mainland China and the full-period contribution of new stores.

This was in the face of weak consumer sentiment, economic uncertainties and an unusually warm winter, as well as the partial closure of two stores for transformation into Aeon Style stores.

Gross profit margin was slightly adjusted to 31.2 per cent (2015: 31.7 per cent), mainly because of promotional activities and clearance sales before the partial closure of the Kornhill and Whampoa stores.
The group recorded a loss attributable to shareholders of $23.2 million, compared with profit of $93.2 million in 2015.
Capital expenditure for opening stores and renovations in Hong Kong and China amounted to $470.1 million.

Aeon Stores says the warm winter saw overall retail sales in Hong Kong fall by 8.1 per cent. The segment’s performance was significantly affected by the partial closure of the Kornhill store from March to June, and the Whampoa store from May to early August.

Nevertheless, Hong Kong revenue increased by 0.1 per cent to $3.8 billion, while there was a segment loss of $82.5 million (2015: profit of $76.7 million).

New business model

To better address the ever-changing needs of customers, the group introduced into Hong Kong its new business model, Aeon Style, a concept proven in Japan. Different from a traditional general merchandise store (GMS) with floors and layout planned by departments, Aeon Style defines each floor by lifestyle.

Moreover, the group continued its efforts to develop its exclusive brands in Hong Kong, including the introduction of Adult Study, Cantovole Bakery and Glam Beautique as well as further expanding its AeonBody and ROU outlets.

Seven small-scale stores were opened last year, with 54 stores across Hong Kong at December 31, compared with 48 a year earlier.

During the year, revenue in China grew by 1.1 per cent to $5.2 billion, with profit increasing 18.8 times to $41.3 million.

The group opened a GMS in Panyu in the first half of the year, and at the end of December had 31 stores in south China.

Looking ahead, the group expects the working environment to stay challenging in Hong Kong with its economic volatility. The group will therefore continue to focus on optimising sales performance and exploring cost-control measures.

The group will also continue to roll out Aeon Style stores as well as introduce Aeon Style elements into established stores.

In January, the group opened a small-scale store in Kai Tak, and will continue to explore opportunities to open small-scale stores in Hong Kong.

The group is still cautiously optimistic about China’s economy and regards its business there as a major growth driver. It plans prudent expansion through new stores, with four planned for this year.

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