2003 Oct 24
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2003 INTERIM RESULTS 　 MAINTAINS CONTINUOUS GROWTH THROUGH EFFECTIVE OPERATING STRATEGIES AND PROMPT RESPONSE TO CUSTOMERS NEEDS

(HONG KONG, 24 October 2003) - AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Company") (Stock code: 984) and its subsidiaries (the "Group") today announced its unaudited interim results for the six months ended 31 August 2003.

During the period under review, the Group's turnover recorded an increase of 15.8% to HK$2,085 million when compared to the corresponding period in the previous year. Profit attributable to shareholders increased by 21.3% to HK$5.9 million. This growth was mainly attributable to the Group's successful operating strategies which provide value-for-money products at reasonable prices and quality services. The Group's diversified merchandise mix and effective cost measures were additional critical factors contributing to these satisfactory results.

As at 31 August 2003, the Group maintained a healthy financial position with no bank borrowings and net cash balances of HK$550 million (February 2003: HK$409 million). With its effective cost controlling measures, staff costs against turnover dropped from 10.3% to 9.5% while rental costs against turnover also fell from 9.7% to 8.8%.

The Board of Directors declared an interim dividend of 1.0 HK cents for the six months ended 31 August 2003.

Mr. Kazumasa Ishii, Managing Director of AEON Stores, said, "Despite the SARS epidemic, which seriously impacted the entire economic environment in Hong Kong in the first half of the year, our Hong Kong operations successfully recorded a 6.3% increase in our sales performance, which rose to HK$1,602 million. Profit from operations also recorded an increase of 117% to HK$21.7 million. This was attributable to our prompt replenishment and steady supply of personal and home cleaning products at reasonable prices, which guaranteed our valued customers of the best protection. Therefore, SARS had little impact on our daily operations and business performance. Among the various departments, the food section recorded significant growth and outperformed other sections during the review period."

In view of the promising response from its "$10 Plaza" flagship shop in Causeway Bay, the Group opened its second "$10 Plaza" outside its General Merchandise Stores (GMS) in Kowloon City in August, marking a milestone as the Group tapped into this niche market in Kowloon.

Apart from its Hong Kong operations, operations in the PRC also reported growth in sales of 64.3%. The increase in sales was attributable to the operation of six GMS in South China as compared to only three GMS in the same period last year. However, its operating results recorded a loss of HK$13 million as the new stores are still in their initial investment stages and as the Teem Plaza Store was partially closed for three months of renovation.

Building on the Group's solid foundations in the Hong Kong market with eight GMS stores and two "$10 Plaza" stores outside GMS, spread across major residential areas with high customer flows, the Group is currently seeking suitable locations to open more GMS to further enlarge its market share in the retail industry in Hong Kong. In addition, the satisfactory results of the "$10 Plaza" offer expansion opportunities for the Group. The Group aims to open a new "$10 Plaza" in Yuen Long in the second half of the year.

As the overall Hong Kong market sentiment in Hong Kong has improved, especially after the relaxation of travel restrictions for individual mainland travellers and the announcement of the Closer Economic Partnership Arrangement ("CEPA"), the management believes that the pick up of the general economy will benefit the Group as a whole.

Mr. Ishii added, "With regard to the enormous growth and booming opportunities in the PRC, we plan to set up an additional GMS in Shenzhen. This second GMS in Shenzhen is expected to commence operations by the end of 2004. The Foshan Store will also open in mid-2004, bringing a new shopping experience to Foshan citizens. We will continue to undertake a prudent approach, closely monitoring the operations of our existing GMS and constantly reviewing our expansion rate, to enable us to maximize economies of scale in the long term, and benefit our returns."

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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