for Aeon to be as interesting as it wants to be. This came out more strongly than ever when Aeon leadership in Tokyo faced investors with results for its first fiscal quarter ending 31 May: they lamented the thriftiness of their compatriots and admitted to their own missteps in dealing with it. Even so, the quarter was far from being a disaster: operating revenue grew by 14.6 per cent year on year to 2,942.0 billion yen (US$18 billion). Profit attributable to shareholders was 13.8 billion yen (US$86 million), up from a loss in the base year of 6.6 billion yen. Digging a little deeper under the top line, the story isn’t completely positive. Sales growth across its portfolio of retail brands in Japan would have been very subdued had it not been for its network of drugstores, bulked up nearly 100 per cent since the year-ago quarter to about 5,700 stores by the January 2026 acquisition of the Tsuruha chain. This raised year-on-year sales in the health and wellness category by just under 90 per cent, with an assist from same-store sales growth of 4.3 per cent. Meanwhile, total sales at the company’s general merchandise stores in Japan grew by 3.9 per cent, and sales at supermarkets in Japan were down by 0.4 per cent. In the supermarket business, the company is pushing development and launch of items under its Top Valu private brand. Greater penetration of private-label merchandise will support gross margin growth, but it also underscores Japanese consumers’ heightened value-consciousness. The persistent thriftiness of Japanese consumers has pushed the company to increase the number of so-called Top Valu ‘mega items’ (items with annual sales above one billion yen) from 100 up to 300. Hiroaki Egawa, Aeon’s CFO, observed regarding the Japan business that “there has been no major change in consumers’ tendency toward thrift and selective spending”. Executive officer Motoyuki Shikata admitted that the company had erred by placing too much emphasis on price-matching for national brands to the detriment of its private brands like Top Valu, which would now be at the centre of the company’s pricing strategy. Clearly, the company believes that the parsimonious mindset of the average Japanese consumer will be lasting, and there is no point waiting for a cyclical change. Private brands will be the centrepiece of the company’s plans to grow margins and profits. The big surge in health and wellness stores has materially changed the composition of company revenues: for the quarter, the revenue contribution from its general merchandise stores was 31 per cent, then 26 per cent from its supermarkets, 22 per cent from health and wellness (up from 13 per cent last year) and 4 per cent from discount stores. Aeon’s shopping mall development business, which mainly comprises rents collected from specialty store tenants at its domestic and overseas malls, accounts for another 6 per cent. Its international stores generated another 6 per cent. By region, Aeon still derives more than 90 per cent of its operating revenue and almost 70 per cent of its operating profit from Japan, but it is still working hard on generating growth in China and Asean, particularly the latter, where revenues and operating profit rose by 17 per cent and 40 per cent respectively in the May quarter. Sales at existing malls in Vietnam grew by nearly 30 per cent year on year. Despite the positive results from China malls thanks to the company’s mall revitalisation programme, same-store sales growth for the company’s retail stores there remained negative (down 6.2 per cent). Another new mall in Vietnam There can be no doubt about Aeon’s ambitions in Vietnam, where it opened its eighth mall in Da Nang on 3 July. The mall’s exterior design is nothing unusual – it’s the classic massive Aeon shoebox – but inside it has more than 20,000sqm of leasable area. About half of the tenants are seeing Da Nang for the first time. This is not the first major mall in Da Nang – Vincom has had one there for a decade – but Aeon’s arrival is a shot in the arm for the city’s commercial vitality and a major attraction for both local consumers and tourists. And it is a step up in quality from what the incumbents had there. The mall is actually part of a mixed-use project including offices, residences and a hotel that sit atop the retail, and is well aligned with Aeon’s strategy of turning its malls into what it calls ‘community co-creation malls’, partnering closely with local governments like Da Nang’s to drive regional economic development. As in Japan, revenue growth at Aeon’s malls in both Vietnam and Cambodia – where it has three, all in Phnom Penh – is heavily reliant on dining, amusement and services as opposed to straight-up retail. Look ahead, not behind For the whole fiscal year, the company is planning for 12 per cent operating revenue growth, operating profit growth above 25 per cent, and profit to the owners roughly flat with 2025. This is no change from its guidance at the end of the last fiscal year and the company is confident that its suite of fixes for what ails it – the shift to private brands in Japan, mall upgrades in China and expansion in Asean – will be effective in delivering on its targets. Further reading: Can Aeon’s co-creation malls offset slowing consumer demand across Asia?