2021 Aug 27
AEON Stores (Hong Kong) Co., Limited
(HONG KONG, 27 August 2021) – AEON Stores (Hong Kong) Co., Limited (“AEON Stores” or the “Group”; Stock code: 984) has announced today its interim results for the six months ended 30 June 2021. The Coronavirus Disease 2019 (“COVID-19”) continued in the period. Although there were signs of easing, daily activities around the world were still affected and the retail market was inevitably hit. To address the challenges the pandemic brings and the continuous changes of customers’ behavior under the pandemic, the Group reacted to the market changes as appropriate with its operating strategies to maintain its competitiveness.
In the six months ended 30 June 2021, the Group’s revenue decreased by 6.8% year-on-year to HK$4,807.1 million, yet gross profit margin maintained at 28.2% (2020 1H: 28.2%). The Group recorded a loss attributable to owners of the Company of HK$245.4 million (2020 1H: loss of HK$72 million) for the period. The Group maintained a healthy cash position with cash and bank balances and short term time deposits amounting to HK$1,789.8 million as at 30 June 2021 (31 December 2020: HK$2,001.6 million).
After reviewing the dividend policy, the Board recommended payment of an interim dividend of HK$0.03 per share (2020 1H: HK$0.05 per share) to adhere to its philosophy of bringing returns to shareholders.
Mr. Isao Sugawara, Executive Director and Managing Director of AEON Stores, said, “During the past months, the Group was inevitably affected by the ongoing uncertainties in the market. Nevertheless, understanding Hong Kong people are particularly fond of innovative and quality assured Japanese products, the Group continued to introduce own brands such as “HÓME CÓORDY” and “TOPVALU”, plus capitalize on the procurement channels of AEON Japan to direct import more merchandise from Japan, thus matching the ever changing customer needs and providing customers with brand new shopping experiences, while achieving its strategies to expand and improve.”
Hong Kong Operations
With the COVID-19 pandemic continued, and outbound travel grinding to a halt plus strict social distancing measures, the Hong Kong economy remained weak in the first half of 2021, where consumer activities were also disrupted. On the other hand, the demand for stay at home related items were less than the corresponding period in last year, due to the COVID-19 attack gradually kept under control and the relaxation of dining out restriction measures. Sales performance was therefore affected.
However, the Group remained committed to enhancing shopping experiences to customers during the period. Coming from thought given to consumers’ lifestyle today, the Group completed small scale renovations in 3 stores, and brought in more products that suit the requirements of customers in the neighborhood and seasonal product choices, so as to satisfy different customers’ specific daily needs. Besides, the Group further enhanced its on-line business services by partnering with foodpanda mall since February to offer sales and home delivery services for a variety of supermarket items. The Group’s Hong Kong operations recorded a 7.0% decrease of revenue to HK$2,252.6 million in the first half of the year (2020 1H: HK$2,423.3 million), while loss of the Hong Kong operations increased to HK$105.9 million (2020 1H: loss of HK$66.6 million).
During the period, the Group pressed on with related expansion plan. It opened 2 “Living Plaza” stores and 1 lifestyle specialty store “ものもの (Mono Mono)”, and reviewed and strengthened the store opening, establishment and operation system.
Apart from tense external relations slowing down economic growth in the PRC, the COVID-19 also caused customers’ lifestyles and consumption pattern further tend to shop nearby and online. Consequently, number of customers visited and shopped in shopping centres was adversely affected. Guangzhou, Foshan and Dongguan cities saw rebound of the COVID-19 cases in the period, where the Group’s store business operated in these areas had been significantly affected. Some of these stores had to suspend operations temporarily at the request of the authority.
In the first half year, revenue from the PRC operations dropped 6.6% to HK$2,554.5 million (2020 1H: HK$2,734.4 million) and recorded a loss of the PRC operations of HK$123.4 million (2020 1H: profit of HK$2.1 million).
With the territory-wide vaccination drive in progress and the global economy recovering, consumption desire as well as retail performance are expected to gradually pick up. Facing customers’ changing preferences and the new normal, the Group will react quickly with various measures to improve its performance.
In Hong Kong, the Group has organized various promotional activities and launched different bonus offers to capture related opportunities, especially under the launch of the Consumption Voucher Scheme, so as to bring in revenue as well as help stimulate and revitalize the local economy. As the third “AEON STYLE” store in Hong Kong opened at Gala Place, Mongkok in early August 2021, it provides customers with quality shopping experience and new lifestyle solutions, accelerating the expansion of such successful business model in the Hong Kong market. The new store offers products of the Group’s own “HÓME CÓORDY” brand, proprietary “TOPVALU” brand and TOPVALU Gurinai Natural food products, which are developed with a focus on health and the environment, and also other new products from Japan. Moreover, the Group expects its strategic partnership with DAISO Industries Co., Ltd. will expedite opening of small scale store in the future. In July 2021, the Group has added 3 more independent DAISO Japan shops to its retail network.
Regarding PRC operations, given that the pandemic remains active in Guangdong Province, the Group will continue to respond to the uncertain economic outlook with prudence. The Group will, at the same time, continue to optimize and reform its products and expand differentiation, such as increasing the share of its own brands to improve profitability. Moreover, the Group will also accelerate its digital transformation, including the expansion of O2O and the vigorous promotion of CRM. The Group will move forward with its store expansion plan to open three new stores in the latter half year, in addition to three new stores opened in first half year, thereby achieve the set goal of opening six stores in the Greater Bay Area this year.
Mr. Sugawara concluded, “The pandemic continuously creates challenges to the business environment. AEON, however, is dedicated to supporting the community as usual by staying ahead of market trends while keeping our customers in mind. With that being said, the Group would not have gone this far without the strong support from our customers as well as other stakeholders. The Group would like to express our sincere gratitude to you all and we will continue to fulfil our ‘Everything we do, we do for our customers’ commitment to deliver more delightful shopping experiences to our customers, and create stable returns for shareholders and stakeholders.”
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 9 GMS, 3 independent supermarkets, 55 independent Living PLAZA by AEON, 8 independent Daiso Japan, 2 independent Bento Express by AEON and 3 Mono Mono in densely populated districts in Hong Kong. It also operates 23 GMS, 11 independent supermarkets and 1 shopping centre in Guangdong Province, the PRC.
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AEON Stores (Hong Kong) Co., Limited
Corporate Communication Department