2000 May 10
AEON Stores (Hong Kong)

JUSCO Announces 1999/2000 Annual Results

Rebounds From Loss to Register a Net Profit Of HK$32.5M Significantly Outperforms Other Retailers
Takes a Positive But Prudent View for the Retail Market in 2000

(HONG KONG, MAY 10, 2000) - General Merchandise Stores (GMSs) operator JUSCO Stores (Hong Kong) Co., Limited (the "Company") (Stock code: 984) and its subsidiaries (the "Group") today announced the audited consolidated results for the year ended February 29, 2000.

The Group's turnover increased by 18.5% to HK$3,277 million in comparison to last year's figure of HK$2,765 million. During the year under review, the Group recorded a profit of HK$32.5 million against a loss of HK$23.3 million in the pervious year. Earnings per share were 12.51 cents.

The Board of Directors has recommended a final dividend of 4 HK cents (1999: Nil).

Mr. Sozaburo Yamazaki, Managing Director of JUSCO Stores (Hong Kong) Co., Limited, said, "Although the retail market continued to be hampered by low consumer spending and keen competition, we are glad to report that the Group was able to achieve satisfactory results."

Last year was an extremely challenging year for retailers. Consumer spending continued to be very cautious in view of moderate disposable income. In order to attract consumption, large price discounts were offered, which shrank profit margins for most retailers even further. According to government statistics, retail sales declined 8.1% in value and 1.5% in volume in 1999. Department store sales fell even further dropping 11.4% in value.

Mr. Yamazaki explained, "JUSCO's positive performance was mainly attributable to our customer-oriented promotion strategies, persistent and effective cost control systems and the full year operation of our 9 sizable GMSs. With commitment and focus on our business strategies, we have maintained a leading position in the industry with a strong and loyal customer base."

The Group also recorded significant growth during the seasonal sales at Christmas and Chinese New Year, with sales surging by 15% and 20% respectively compared with the previous year. Compared to the overall retail market with 5.7% and 6.1% growth in sales in December 1999 and February 2000 respectively, JUSCO has substantially outperformed the market.

Apart from the Hong Kong operations, the Teem Plaza Store in Guangzhou Tianhe Place, right next to the Guangzhou Metro railway, also achieved excellent results during the year. Benefiting from high traffic volumes as well as aggressive promotional strategies, the Teem Plaza Store attracts an average flow of 50,000 customers per day. Despite the keen competition in the area, it managed to achieve impressive sales growth of 34.9% during the year.

Looking to the future, Mr. Yamazaki, said, "Supported by recent Government statistics, we strongly believe that the retail market is on its way to recovery. However, the moderate increase in family incomes, keen competition and shrinking profit margins due to deflation, are still affecting the operating environment. Thus, while remaining positive, the management is also taking a prudent view for the retail market in 2000. We will be fully alert to the ever-changing business environment and customer demand, and will ensure a prompt response to market conditions."

In order to increase its market competitiveness, JUSCO has decided to renovate two stores, the Kornhill and Lok Fu Stores, in the coming financial year. The renovation of the Kornhill Store will be completed at the end of June 2000, making it the most up-to-date GMS in JUSCO's portfolio. The Group has also leased additional space on Level 3 of Lok Fu Shopping Center II to extend the Lok Fu Store. The expanded store will meet the strong customer demand being experienced in the area.

JUSCO will also be establishing a new store in Guangzhou which is scheduled to open in June 2000. The new store will be opened on the second and third floors of China Plaza, with a total floor area of 14,000 square meters. The opening of the second GMS store at China Plaza in Guangzhou City will help accomplish the Group's aim to expand into the PRC market.

Regarding its business strategies, the Group will continue to strengthen its customer driven strategies, including the launch of effective promotional campaigns and the provision of a wider range of quality products at a more competitive price, in particular fresh food items. In addition, an in-house privilege shopping card - J CARD will also be launched in the second half of the year. The Group believes that the J CARD will retain its valuable and loyal customers on the one hand, and encourage frequent visits on the other.

Mr. Yamazaki concluded, "With the gradual pick up of the economy, together with our successful business strategies, healthy financial position and solid foundations with 10 stores operating in Hong Kong and the PRC, JUSCO is well positioned to capture the many market opportunities for a promising future. We are committed to providing better services for our customers as well as to maximizing returns for our shareholders in the years to come."

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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