2009 Sep 21
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2009 INTERIM RESULTS　REVENUE INCREASES BY 8% TO HK$2,815.7 MILLION

(HONG KONG, 21 September 2009) - AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Group") (Stock code: 984) announced its interim results for the six months ended 30 June 2009.

The Group recorded revenue of HK$2,815.7 million, representing a moderate 8% growth from HK$2,601.1 million for the last corresponding period. The sustained growth was mainly driven by the new stores added during the period as well as special promotions to boost sales in the economic downturn. The promotional sales, however, caused gross profit margin to drop to 31.9%. Mainly due to the below expectation performance of the south China business as affected by the undesirable economic environment, profit attributable to shareholders recorded HK$55.7 million (2008: HK$110.1 million).

Basic earnings per share were 21.42 HK cents (2008: 42.35 HK cents). The Board of Directors resolved to declare the payment of an interim dividend of 9.6 HK cents (2008: 19.3 HK cents) per share.

During the review period, staff cost to revenue improved from 11.0% to 10.4% while rental cost to revenue was up slightly from 10.1% to 11.3%. The Group maintained a stable net cash position with cash and bank balance of HK$1,485 million as at 30 June 2009 (31 December 2008: HK$1,619 million) and short-term bank borrowings of HK$141 million (31 December 2008: HK$152 million).

Mr. Lam Man Tin, Managing Director of AEON Stores, said, "We are pleased to announce that we have maintained stable business in the first half of 2009. During the period, the Hong Kong economy was still weak with unemployment rate rising and consumption sentiment declining as affected by the global financial turmoil. Riding on our rich operating experience in overcoming adversity, we stand firm against the challenging environment and was able to sustain revenue growth."

Amid the undesirable economic environment, the Group's Hong Kong operations were able to record a 7% growth in revenue to reach HK$1,585.9 million against HK$1,488.8 million in the last corresponding period, thanks to the new stores added and rounds of promotional sale launched during the period. Segment result for the period rose 11% from HK$85.3 million to HK$94.9 million, mainly attributable to increased revenue and effective cost saving measures.

During the period, the Group opened two stores in Shatin and Lai Chi Kok which delivered satisfactory performances. JUSCO Tsuen Wan Store was renovated and re-opened in May with an enhanced shopping environment to serve consumers with strong spending power in the district.

Separately, attributable to the new stores opened in Foshan and Shenzhen and full six months contribution from AEON Huizhou Shopping Centre, the Group's PRC operations recorded an 11% increase in revenue, rising to HK$1,229.9 million from HK$1,112.3 million in the last corresponding period. However, since the south China region was not spared in the global economic downturn, the established stores felt the pressure from the unfavourable market environment. This, together with the newly opened stores still in investment stage and the impairment loss arising from refundable prepaid rental of HK$13 million not being accepted in arbitration, contributed to loss of the PRC operations of HK$3.2 million (2008: profit of HK$65.1 million) for the period.

Looking forward, Mr. Lam commented, "As the Hong Kong economy is expected to remain weak given the slow resolution of the global financial crisis, consumers will continue to be cautious in spending, which will be a challenge to the Group's business. However, there are signs that the retail market is gradually recovering. We believe the retail market will take time to pick up, but we are positive about the performance of our operations in Hong Kong in the medium to long run."

To maintain sales performance in the tough market environment, the Group will carry out more innovative and effective sales promotion campaigns. It will also target to open one more store in Tseung Kwan O in December 2009 to meet the demand of the growing number of residents in the district. The Group also hopes the negative impact on the retail industry brought by the environmental levy scheme on plastic shopping bags, which has been implemented since July 2009, will recede when the public gradually gets used to the scheme.

With the Chinese Government having promptly launched different initiatives to stimulate domestic consumption, the management believes the PRC market, especially economies in south China, will rebound gradually later this year. To capture related opportunities, the Group plans to open two more stores in Guangzhou in the second half of 2009, so as to achieve greater economies of scale, boost its brand in the PRC and ultimately accelerate growth in the market.

"To meet with the emerging potential when the markets in Hong Kong and the PRC revive, we will continue to look for more locations suitable for opening more stores to strengthen our retail outlet network and to offer more customers unique and comfortable one-stop shopping experiences." concluded Mr. Lam.

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About AEON Stores
AEON Stores was established in Hong Kong in 1985 and listed on the Hong Kong Stock Exchange in 1994. The Group is mainly engaged in the operation of general retail businesses (General Merchandise Stores and Independent Supermarkets). Currently, it operates 10 GMS, 2 independent supermarkets, 31 independent Living PLAZA by AEON, 31 independent Daiso Japan, 4 Mono Mono, 4 KOMEDA'S Coffee and 1 JELYCO DO By KOMEDA'S Coffee in densely populated districts in Hong Kong. It also operates 21 GMS and 17 independent supermarkets in Guangdong Province, the PRC.

For more information：
AEON Stores (Hong Kong) Co., Limited
Corporate Communication Department
Tel.：（852）2165 0777
Email：aeonpr@aeonstores.com.hk