2004 May 14
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2003 / 2004 ANNUAL RESULTS TURNOVER INCREASES 16% TO HK$4,609 MILLION PROFIT SIGNIFICANTLY INCREASES 40% TO HK$86 MILLION

(HONG KONG, 14 May 2004) - AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Company") (Stock code: 984) and its subsidiaries (the "Group") today announced the audited consolidated results for the year ended 29 February 2004.

Turnover increased 16% from HK$3,961 million to HK$4,609 million. Profit from operations was recorded at HK$111 million with an increase of 34% while profit attributable to shareholders substantially increased approximately 40%, reaching HK$86 million. During the year, one new General Merchandise Stores (GMS) was opened in the PRC and three JUSCO $10 Plaza were opened in Hong Kong. Earnings per share were 33.02 HK cents. (2003: 23.59 HK cents)

The Board of Directors has recommended a final dividend of 13.0 HK cents (2003: 9.0 HK cents) per share. The total dividend for the year will be 14.0 HK cents (2003: 9.0 HK cents) as an interim dividend of 1.0 HK cent was paid during the year.

As at 29 February 2004, the Group maintained a healthy financial position with no bank borrowings and with a cash balance of approximately HK$830 million (2003: HK$400 million). With its effective cost control measures, staff costs against turnover dropped from 9.6% to 8.9% while rental costs against turnover also fell from 9.2% to 8.0%.

Mr. Kazumasa Ishii, Managing Director of AEON Stores, said, "During the year under review, the retail industry was very volatile. The global consumer market in the first half of the year was hard hit by the various unfortunate events, suppressing general consumer sentiment. However, the economy rebounds gradually in second half of the year. We are proud to be well prepared as we always provide the best and reasonably priced merchandise for our customers. Therefore we were not seriously affected during the difficult period in the early part of the year while we rode on the growth of the economy in the second half. As a result, we are pleased to present these encouraging results to our shareholders."

Sales in Hong Kong recorded a growth of 8% to HK$3,493 million, and profit from operations grew 26% to HK$100 million. During the Severe Acute Respiratory Syndrome ("SARS") period, GMS became one of the most popular spots for shopping as they provided daily necessities at reasonable prices in a clean and hygienic environment. The philosophy of guaranteeing "safety", "confidence" and "trust" became the Group's competitive advantage during this difficult period.

After repeated and unsuccessful negotiations with the landlord of Tsz Wan Shan Store, the management, after deliberation, decided not to renew the lease upon expiration. The store was closed in January 2004 and recorded HK$8 million closure costs. The Group believes that the closure will not generate any material impact on the daily operations as the Group can allocate the resources to other GMS.

During the year, the Group opened three JUSCO $10 Plaza strategically located in Kowloon City, Yuen Long and Sheung Wan. All these shops are located outside GMS in high-density residential and commercial areas, providing quality goods at bargain prices.

For the year ended 29 February 2004, operations in the PRC reported substantial growth in sales of 51% to HK$1,115 million, while profit from operations increased 208% to HK$11 million. The GMS in the PRC reported growth in sales of all stores. In addition, the significant improvement of the PRC operation was attributable to an additionally opened Zhongshan Store in July 2003 and the first full-year operation of the Zhuhai and Shenzhen Stores. Moreover, increasing brand recognition of the "JUSCO" brand also boosts the customer flow and stimulates the transactions. During the year, the Teem Plaza Store underwent renovation and a part of the store was closed for three months. Thanks to the survey conducted by the Group's marketing team, a new supermarket was opened after resumption of operation to satisfy the local demand.

Looking to the future, the Group will continue to look for sites to open new GMS in both Hong Kong and the PRC that can serve the communities in high-density residential areas to take full advantage of busy customer traffic.

By the end of May 2004, Tseung Kwan O ("TKO") Store will resume full operation after 3-month renovation. The supermarket in the TKO Store has been expanded and strengthened, and has become the largest among all of other GMS in Hong Kong. The Group will also maintain the momentum of expanding the market share of the JUSCO $10 Plaza in this niche market and to open new JUSCO $10 Plaza both inside and outside the GMS, providing ultimate shopping convenience for the customers.

Two GMS, in Foshan and Shenzhen, will be opened in 2004. In the long run, the Group aims to establish the JUSCO brand name in the PRC through developing chain-store operations. This will in turn lead to the achievement of economies of scale in logistics and merchandise sourcing. The Group will continue to conduct market research and maintain regular store monitoring to adapt the store layout, merchandise mix, and product display to cater to the needs and demands of local customers, thereby maximising customer satisfaction.

Mr. Ishii concluded, "The PRC market remains as our major focus in the new year. Although competition in the PRC retail sector is expected to remain intense, we believe there is abundant room for expansion. We differentiate ourselves as the pioneer of GMS operation in the PRC, providing one-stop shopping convenience and quality merchandise for customers. We will continue to promote the concept of GMS and expand our operation in the China market. Also, we rolled out the "AEON Code of Conduct" to provide excellent services and making immediate response to our customers needs. Our target is to keep providing the best of our best to our customers, in fulfillment of our motto 'Everything we do, we do for 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