2010 Mar 19
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2009 ANNUAL RESULTS　REVENUE GROWS BY 10% TO HK$5,897.9 MILLION

(HONG KONG, 19 March 2010) - AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Group") (Stock code: 984) today announced its annual results for the year ended 31 December 2009.

During the year, the Group recorded a 10% increase in revenue to HK$5,897.9 million from HK$5,373.6 million in 2008, mainly attributable to the new stores added in Hong Kong and the PRC and the success of sales promotion efforts. Gross profit margin dropped slightly to 33.1% (2008: 34.9%). Mainly due to the PRC operations that performed below expectation and several new stores still in investment stage, profit attributable to shareholders for the year dropped to HK$167.1 million (2008: HK$271.5 million). Earnings per share were 64.29 HK cents (2008: 104.44 HK cents).

The Board of Directors recommended payment of a final dividend of 22.6 HK cents (2008: 27.9 HK cents) per share. Together with the interim dividend of 9.6 HK cents (2008: 19.3 HK cents) already paid, the total dividend for the year will amount to 32.2 HK cents (2008: 47.2 HK cents) per share.

During the year under review, staff costs to revenue was down slightly from 10.9% to 10.3% thanks to effective cost control measures and improved efficiency in manpower deployment. Rental costs to revenue rose to 11.1% from 9.7%. If the one-off impairment loss of prepaid rental was excluded, the ratio would have been 10.8%. As at 31 December 2009, the Group maintained a sound net cash position with cash and bank balance of HK$1,904 million (2008: HK$1,619 million) and bank borrowings of HK$170 million (2008: HK$152 million).

Mr. Lam Man Tin, Managing Director of AEON Stores, said, "In 2009, the economy has yet to fully recover from the downturn sparked by the global financial crisis that started in the second half of 2008. However, with solid experience and strong foothold in the region, we are pleased to have achieved satisfactory results amid the still challenging operating environment during the year."

As affected by the financial turmoil, the Hong Kong economy remained weak in 2009 especially in the first quarter. With consumers cautious in spending, the retail market and the Group's operations experienced added pressure. Despite that, the Group's Hong Kong operations were able to record a 5% increase in revenue to HK$3,271.3 million (2008: HK$3,107.8 million) with the launch of various kinds of sales promotions, the new stores added and renovated stores reopened during the year. The growth is particularly significant with the JUSCO Tsuen Wan Store was renovated in the middle of the year with an enhanced product mix and ancillary facilities. Overall segmental results grew by 7% to reach HK$265.9 million (2008: HK$249.2 million), demonstrating the Group's resilience in the adverse operating environment.

Active in expanding its sales distribution network, the Group opened five stores in Lai Chi Kok, Shatin, North Point, Ap Lei Chau and Tseung Kwan O respectively during the year. All new stores have been well-received by customers, particularly the new store in Tseung Kwan O riding on the strong relationship with residents built from before the Group withdrew from the district in 2007. JUSCO Tsuen Wan Store was renovated and reopened in May with enhanced shopping environment and specially selected collections of merchandise to serve customers with growing spending power in the district.

The economy in south China was also affected in the economic downturn and presented pressure on the Group's operations. For the PRC operations, the Group recorded a 16% increase in revenue to HK$2,626.6 million in 2009 (2008: HK$2,265.8 million), mainly attributable to the additional sales contribution from new stores opened in Foshan, Shenzhen and Guangzhou and full year contribution from AEON Huizhou Shopping Centre. However, with the performance of existing stores below expectation because of the slack economy, the new stores still in investment stage and the impairment loss arising from the refundable prepaid rental of HK$13 million not being accepted in arbitration, the PRC operations recorded loss of HK$17.1 million (2008: profit of HK$95.9 million) for the year.

As consumer sentiment is expected to improve, the Group remains cautiously optimistic about the outlook and will continue to adopt active sales promotion to attract customers. In February 2010, the Group closed the JUSCO Lok Fu Store which will be relocated to MegaBox mid-this year. The new store will be the Group's largest store in Kowloon East. Separately, in view of huge potential in the virtual shopping platform for customers with busy schedules and wanting to save time in shopping, the Group actively embarks on providing online shopping services for customers. The Group will invest more resources in developing the related businesses. Meanwhile, the Group will continue to look for suitable locations for new retail outlets and explore new business models to speed up business expansion and meet the changing needs of customers.

As the economic stimulus measures promptly launched by the Chinese Government to counter the global economic downturn in 2008 have been yielding results, the Group expects to see domestic demand and consumption in the PRC grow notably in the months ahead. In order to capture the reviving demand, the Group opened a store in Baiyun District, Guangzhou in January 2010. And the Group targets to open two more new stores in south China by end of this year. The Group will continue to increase retail outlets at suitable locations and it plans to introduce independent supermarkets in the PRC so as to benefit from economies of scale.

"Looking ahead, riding on our strong and long-term relations with local communities, established distribution network, well diversified business and clear expansion roadmap, we are confident that we can capture the emerging opportunities arising from the recovering retail market and bring in satisfactory returns to shareholders," concluded Mr. Lam.

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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