2021 Mar 25
AEON Stores (Hong Kong) Co., Limited

AEON STORES SETS A NEW REVENUE RECORD AT HK$10 BILLION IN 2020 AMID CHALLENGES

AEON Stores (Hong Kong) Co., Limited (“AEON Stores”or the“Group”; Stock code: 984) has announced today its annual results for the year ended 31 December 2020. During the year under review, the outbreak of the novel coronavirus (“COVID-19”) and the subsequent prolonged containment measures brought great challenges to the Group's business in Hong Kong and Mainland China (“PRC”). Nonetheless, the Group still achieved a new record in revenue, as well as improved profitability, with a number of measures implemented to mitigate the pandemic's impact on its business operations.

In the year 2020, the Group's revenue reached HK$9,961.9 million (2019: HK$9,493.8 million), up 4.9% year-on-year. Gross profit margin was 28.9% (2019: 29.9%). Loss attributable to owners of the Company for the year decreased significantly to HK$36.8 million (2019: HK$188.7 million). The Group maintained a strong cash position with cash and bank balances and short term time deposits amounting to HK$2,001.6 million (2019: HK$1,798.1 million).

The Board has recommended payment of a final dividend of HK5.0 cents (2019: HK5.0 cents) per share. Together with the interim dividend, the Group will pay a total dividend of HK10.0 cents (2019: HK27.0 cents) per share in 2020.

Mr. Isei Nakagawa, Managing Director of AEON Stores, said,“2020 has been a difficult year for us and the whole retail sector, which has challenged the Group to showcase our strengths and competencies. Despite the challenges posed, we never stopped striving for more. To better serve our customers, we carried on upgrading our stores and introducing quality brands under AEON Group to bring new products and shopping experience to customers.”

During the year, the Group continued to maintain effective cost control measures. Consequently, its staff cost declined by 1.5% and its ratio to revenue dropped to 10.7% (2019: 11.3%). Other operating expenses, including advertising, promotion and selling expenses, maintenance and repair expenses, utility expenses, administrative expenses and other expenses, also decreased by 2.2% year-on-year and the ratio of other expenses to revenue was 10.4% (2019: 11.2%).

Hong Kong Operations

In the year 2020, customers' consumption behavior changed significantly. With the majority of the public spending most of their time at home, they have become more aware of the need to improve their living environment as well as overall health and safety. In order to cater to the needs of customers, the Group not only assured the supply of local products, but also sourced merchandise needed by Hong Kong residents from Japan, South East Asia and China by capitalizing on the procurement channels of AEON Group, so as to fulfill its mission of supporting the community.

During the year under review, the Group completed small-scale renovations in three stores in Hong Kong, whereas an extensive renovation took place at one of its core retail outlets, the Tuen Mun store. At the same time, the Group introduced house brands, namely “HÓME CÓORDY”, “iC innercasual” and “KIDS REPUBLIC” in suitable stores, with the aim of bringing high quality products and a new shopping experience to customers. Moreover, the Group added more self-service cashier systems and a “POS Express” mobile payment system in suitable stores in order to quicken the payment process and provide greater convenience to customers.

Revenue from Hong Kong operations for the year increased by 15.5% to HK$4,894.3 million (2019: HK$4,239 million). Segment results improved by HK$177.1 million from a loss of HK$114.8 million last year to a profit of HK$62.3 million this year, attributable to sales growth, implementation of effective business plans and government grants received.

The Group opened 11“Living Plaza”outlets and one lifestyle specialty store“Mono Mono”during the year.

PRC Operations

Amidst the outbreak of the pandemic, the Group continued to enhance the services of its online supermarket in order to address the needs of customers who were unable to leave the house due to COVID-19 preventive measures. The Group obtained government’s approval during the first half of the year to maintain its food business operations and support the commodity needs of the community. In the second half of the year, when the pandemic was brought under control, there was a recovery in the number of in-store customers.

In November, an accidental fire occurred at a store in Dongguan city. No personal injury or death was caused, and the store was fully reopened at end of January 2021. While most of the losses from property damages were compensated by the insurance company, the Group still suffered from the loss of revenue while the store was closed. Revenue of the PRC business for the year dropped 3.6% year-on-year to HK$5,067.6 million (2019: HK$5,254.8 million), with a loss narrowed down to HK$73.0 million (2019: loss of HK$80.6 million).

The Group continued with its store expansion plan and had a net increase of three supermarkets. 

Prospects

The Group believes that COVID-19 will gradually subside in 2021, and consumer sentiment will recover accordingly. Looking ahead, the Group will remain focused on realizing its store expansion plans while also implementing and deepening different measures aimed at improving its results. In particular, the Group will increase the sales share of private label merchandise under the“Topvalu”,“HÓME CÓORDY”,“iC innercasual”and“Sakura Kobo”brands, while providing a wider selection of natural and“green”offers to customers. Endeavours will also be made to invest in digital enhancement for internet business, customer relationship management programs, and expenses management.

In Hong Kong, 2021 will be another year of rapid expansion for the Group's small specialty stores. The Group is aiming to at least open the same number of small specialty stores in 2021 as in 2020. As part of the enhancement of its internet business in Hong Kong, the Group launched cross-border internet sales in January 2021, making merchandise from Japan available to customers in Mainland China. The Group will also carry out small-scale renovations on four of its large stores in order to provide better shopping experience.

Regarding the PRC operations, the Group believes the retail and consumer market will gradually improve in 2021. The Group will continue with its store development plan, with an aim to open eight supermarkets in 2021. Two of these stores were opened in January 2021 and two will be opened in March 2021. In the long term, the Group believes that the PRC market still possesses huge growth potential, and will remain as an important driver of the Group's business development.

Mr. Nakagawa concluded,“Customers spent more time at home in the past year and have become more aware of the improvement in living environment, as well as health and safety. The Group was able to respond swiftly to market changes and capture the opportunities where appropriate, giving us an edge in the current situation. While we are realistic about the challenges that keep emerging in the market, we remain convinced that our proven resilience provides us with what we need to overcome. The Group has successfully introduced several house brands in suitable stores. In the future, we will strive to increase the sales share of private label merchandise under those brands, and also improve our operations through digital enhancement. Adhering to our philosophy of‘Customer First’, AEON Stores is determined to continue serving the communities in which we operate, and bringing better shopping experience and living standard to our customers.”

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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