2002 May 10
AEON Stores (Hong Kong)

JUSCO ANNOUNCES 2001/ 2002 ANNUAL RESULTS TURNOVER INCREASES 9.6% TO HK$3,721 MILLION WHILE PROFIT FROM OPERATIONS RISES 12.2% TO HK$109 MILLION

EXPANDING AT FULL SPEED INTO HONG KONG AND PRC

(HONG KONG, 10 MAY 2002) - General Merchandise Stores (GMS) operator JUSCO Stores (Hong Kong) Co., Limited (Stock code: 984) and its subsidiary ("JUSCO" or the "Group") today announced the audited consolidated results for the year ended 28 February 2002.

The Group's turnover rose 9.6% to HK$3,721 million in comparison to last year's figure of HK$3,394 million. Profit from operations also recorded highly positive growth of 12.2% from 2001's HK$97 million to this year's HK$109 million. However, profit attributable to shareholders dropped to HK$77 million due to the increase in income tax expenses which amounted to HK$32 million. Earnings per share were 29.60 HK cents. (2001: 35.48 HK cents)

The Board of Directors has recommended a final dividend of 9.5 HK cents (2001: 13.0 HK cents) per share. The total dividend for the year will be 11.5 HK cents (2001: 14.0 HK cents) as an interim dividend of 2.0 HK cents was declared during the year.

Mr. Kazumasa Ishii, the newly appointed Managing Director of JUSCO, said, "Despite the difficult operating environment in the year under review, we are delighted that JUSCO managed to achieve satisfactory results with remarkable growth in both turnover and profit from operations. This outstanding achievement is mainly attributable to our proven business strategies such as the enrichment of merchandize assortment, the sourcing of quality goods at competitive costs and the launching of attractive promotional campaigns. JUSCO has also maintained a very strong and solid financial foundation with no bank borrowings and cash on hand of over HK$350 million at the year-end date. This healthy financial position provides us with strong back-up to capture the opportunities ahead."

During the review year, the Group's gross profit margins rose from the previous year's figure of 27.8% to 28.2% this year. Staff costs against turnover decreased from 9.8% to 9.7% while rental costs against turnover increased slightly from 8.5% to 8.9% because of the Kornhill Store has enjoyed certain months of free rent during its renovation in 2000 and some of the land leases have been renewed during the year under review. Interest expenses reduced significantly from last year's HK$1.2 million to this year's HK$125,000.

2001 was a year of daunting challenges for Hong Kong's retail sector. The operating environment remained difficult as the economy continued to suffer sluggish growth brought about by the downturns in the stock and property markets, prevalent salary cuts and mounting unemployment. These depressing factors in turn led to consumers' reluctance to spend.

Commenting on JUSCO's performance, Mr. Ishii said, "In spite of the adverse economic circumstances, JUSCO continued to thrive with the support of our successful business strategies and solid experience in the retail market. Our Hong Kong stores recorded a growth in sales of 8.8% to HK$3,178 million. Profit from operations also recorded an impressive surge of 18.7% to reach HK$75 million. During the review year, our Lok Fu Store underwent renovation and expansion. With different departments re-structured and the size of the supermarket doubled, the renovated store gave customers a fresh shopping experience and a more comfortable shopping environment, which succeeded in attracting higher customer flows."

JUSCO's strategy of direct sourcing of a wide range of merchandize at competitive costs has successfully boosted its sales during the year under review. Additionally, JUSCO also launched a series of promotional campaigns during the year to lure customers. Among which, the "Towards 15th Anniversary" Lucky Draw signified the climax of the programs. Following this, the Grand Gold Lucky Draw was held in the Chinese New Year to reward JUSCO's regular patrons. Mr. Ishii continued, "The sourcing strategy together with these attractive promotional campaigns succeeded in increasing customer flows at our stores, which not only boosted our sales through attracting new customers but also consolidated our loyal customer base even further."

Having gained entry into WTO, the PRC is playing an increasingly important role in the global economy. With spectacular GDP growth of over 7% last year and the continuously rising living standards of its people, the PRC presents a market with tremendous opportunities.

Mr. Ishii continued, "Apart from our Hong Kong operations, the Group's two PRC stores also recorded satisfactory performance, with a surge in turnover of 14.4% to HK$543 million, against last year's HK$475 million. This is partly due to our China Plaza Store operating for a full year as compared to its nine-month operations in the previous financial year. Besides, in 2001, JUSCO signed an agreement to set up a joint venture in Shenzhen for the establishment of a GMS there which targets to commence operations in the third quarter this year. Our Group will finance our share of capital contributions amounted to HK$33 million from internal resources and short-term borrowings. We expect this to provide us with a strong growth driver in the years to come."

One of the important strategies JUSCO has been pursuing is the establishment and popularization of its in-house brands. One of which is "Top Valu", which is the practical realization of JUSCO's "value-for-money" concept. Under this brand, there are product lines with names such as¡u¦@Àô«Å¨¥¡v and "The Select". These in-house private labels are not only popular but also strengthen JUSCO's product differentiation from its competitors. As such, the Group is planning to roll out another house brand merchandize, introducing products which are currently not covered by "Top Valu".

Looking to the future, Mr. Ishii said, "Regarding our recent development in Hong Kong, we plan to open two to three more GMS in the next three years. Moreover, following the inauguration of a "$10 Plaza" inside our Tsuen Wan Store in March 2002, we will open another "$10 Plaza" inside our Whampoa Store in May. More importantly, our first "$10 Plaza" outside JUSCO's existing GMS Stores will soon commence operations. This flagship "$10 Plaza" is the largest HK$10 store among the existing industry players in Hong Kong."

Mr. Ishii continued, "Apart from Hong Kong operations, in view China's tremendous development potential, we will increase our tempo and power to expand into its retail market. Our target is to open at least 10 new stores in Southern China in the next five years and devote a great deal of effort to establishing our in-house brands in the PRC. 8 May 2002 has seen the opening of our new store at Dongguan. Following this, our new stores at Shenzhen and Zhuhai will also commence operations later this year. The total investment cost of these three new GMS amounted to HK$112 million and we will finance it by internal resources and short-term borrowings. "

Mr. Ishii concluded, "Our satisfactory performance in the past year owes much to the ceaseless effort and spectacular leadership of Mr Sozaburo Yamazaki. This year, Mr Yamazaki would return to Japan to take up a new position. On behalf of all JUSCO staff, I would like to take this opportunity to express our sincere thanks to him. Building on his accomplishments, our solid financial foundation, JUSCO is well-positioned to further strengthen our foothold in the Southern China retail industry in the years to come."

Biography of Mr. Kazumasa Ishii:
Mr. Kazumasa Ishii, aged 51, was appointed Managing Director of the Company on 10 May 2002. He joined AEON Co., Ltd. in 1974 after his graduation from the Doshisha University with a bachelor's degree in commerce. Mr Ishii joined JUSCO since 1990 and was promoted to Operations General Manager in 1993. He became Director of the Company in 1994. In 1995, he retired as the Director of the Company as he moved to Guangdong, the PRC for the establishment of Guangdong JUSCO Teem Stores Co., Ltd. and acted as its Managing Director. In 2002, he is appointed as Vice-Chairman of Guangdong Chain Operations Association and is the first and only non-Chinese taking up this post.

Biography of Mr. Kazumasa Ishii:
Mr. Kazumasa Ishii, aged 51, was appointed Managing Director of the Company on 10 May 2002. He joined AEON Co., Ltd. in 1974 after his graduation from the Doshisha University with a bachelor's degree in commerce. Mr Ishii joined JUSCO since 1990 and was promoted to Operations General Manager in 1993. He became Director of the Company in 1994. In 1995, he retired as the Director of the Company as he moved to Guangdong, the PRC for the establishment of Guangdong JUSCO Teem Stores Co., Ltd. and acted as its Managing Director. In 2002, he is appointed as Vice-Chairman of Guangdong Chain Operations Association and is the first and only non-Chinese taking up this post.

> Back to the directory

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 merchandise stores (GMS). Currently, it operates 10 GMS, 2 independent supermarkets, 33 independent Living PLAZA by AEON, 30 independent Daiso Japan, 1 independent Bento Express by AEON and 4 Mono Mono and 3 KOMEDA'S Coffee in densely populated districts in Hong Kong. It also operates 21 GMS and 15 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