2000 Oct 27
AEON Stores (Hong Kong)

JUSCO Announces 2000 Interim Results Reports Turnaround From Loss To Profit Of HK$7.66 Million

ENRICHES MERCHANDISE MIX BY PROVIDING VALUE FOR MONEY PRODUCTS EMPHASISES ON COST CONTROLLING SYSTEMS

(HONG KONG, October 27, 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 unaudited consolidated results for the six months ended August 31, 2000.

During the period under review, the Group reported a rebound with a profit of HK$7,662,000 against a loss of HK$17,583,000 in the previous period. Earnings per share was 2.95 HK cents when compared to a loss per share of 6.76 HK cents in the last corresponding period. The Group's turnover however decreased slightly from HK$1,505 million to HK$1,440 million. The decrease was mainly due to the 4-month temporary closure for the renovation of the Kornhill Store during the review period.

The Board of Directors has declared an interim dividend of 1 HK cent per share (1999: Nil).

Mr. Sozaburo Yamazaki, Managing Director of JUSCO Stores (Hong Kong) Co., Limited, said, "We are pleased to announce a turnaround during the period under review. Retail sales suffered a slowdown induced by the deteriorating economic situation and the volatile financial markets caused by the economic crisis in 1997. Cautious spending in the past few years has therefore held back consumer purchasing will. However, retail sales in 2000 have recorded significant growth as shown by recent Government statistics. According to the Government's Census and Statistics Department, total retail sales increased by 5% in value and 10% in volume for the first eight months of 2000 over the same period a year ago."

The Group's gross profit margin increased by 1.7% to 27.7% while the rental cost against turnover decreased from 10.1% to 8.7% for the review period. As at August 31, 2000, the Group maintained a healthy financial position with a cash balance of HK$118 million and no bank borrowings.

During the review period, the Kornhill Store underwent renovation and was re-opened in June 2000. The newly renovated GMS introduced the most up-to-date GMS concepts from Japan. The renovated Kornhill Store has recorded double-digit growth in sales after its re-opening. Total investment costs were around HK$90 million, which were generated from internal resources and short term bank borrowings, of which HK$74 million was incurred in the first half of the financial year while the remainder will be incurred in the second half of the financial year.

Apart from the Kornhill Store, the Lok Fu Store will be carried out renovation and expansion in two phases in the second half of this year and the first half of next year, with total investment costs around HK$60 million. Of this sum, HK$40 million will be incurred in the second half of the financial year and the remaining HK$20 million will be incurred in the next financial year.

Mr. Yamazaki explained, "The newly renovated store will provide a comfortable shopping environment to our valued customers. I am looking forward to sharing similar success in the Lok Fu Store as we have experienced at the Kornhill Store."

Apart from the Hong Kong operations, the second GMS at China Plaza in Guangzhou City commenced operations in June 2000 in view of the promising market potential in the PRC as well as the success of the first GMS in the PRC – the Teem Plaza Store. Investment in China Plaza Store was approximately HK$33 million. Among which, HK$10 million was incurred in last financial year while HK$23 million has been incurred in the current financial year. The capital investment was financed by internal resources and short term bank borrowings.

The Group's customer oriented promotional strategies helped to effectively stimulate customer spending, enabling the Group to achieve its satisfactory results. The Group will therefore continue to launch various creative and attractive promotional campaigns in the coming year.

In September, the Group opened a "$10 Plaza" at the Tuen Mun Store. Over 4,000 items are exclusively imported from Japan and sold at the standard price of HK$10. More than 300 new items will be introduced every month. Customers' responses have been very encouraging and the Group is planning to introduce this concept to other JUSCO stores as well.

The Group is scheduled to launch a J CARD under its Frequent Shopper Programme in November 2000. J CARD provides benefits and exclusive privileges to reward loyal customers. The introduction of J CARD is aimed at consolidating a loyal customer base which enables the Group to further understand their purchasing patterns. With this valuable information in hand, the Group can have a more specific merchandising focus to satisfy the needs and favour of these customers.

In view of the popularity of the Internet, the Group will launch its on-line shopping mall JUSCOCITY (www.juscocityhk.com) at the end of this year. JUSCOCITY will enhance both the communications and connections between JUSCO and its customers and will also provide exclusive merchandise and free information services to the community. The investment cost is approximately HK$1 million.

Looking to the future, Mr. Yamazaki, said, "With regard to the gradual market recovery, the Group is ready to capture the many opportunities ahead with its solid financial position and leading market position in the industry. Additionally, the effective cost controlling systems and its diversified merchandise mix have made significant contributions to the Group's success during the review period."

 

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  CONDENSED CONSOLIDATED INCOME STATEMENT

• CONDENSED CONSOLIDATED INCOME STATEMENT

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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 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