The group looks forward to opening at least eight new stores in the coming months in Hong Kong.
AEON Stores (Hong Kong) Co., Limited (“AEON Stores”) on Wednesday announced its interim results for the six months ended 30 June 2011.
During the period under review, the Group’s revenue rose by 5.9% to HK$3,243.7 million (1H2010: HK$3,062.7 million), mainly attributable to the sustained growth from the PRC operations. Gross profit margin improved to 32.5% from 31.5%, owing to an improved merchandise mix and no store removal sales held during the period. Profit attributable to shareholders surged by 90.6% to HK$218.9 million when compared with HK$114.8 million in the last corresponding period. The significant growth was driven by the strong performance of existing stores and a fair value gain of HK$86.3 million from an investment property in Hong Kong. Excluding the fair value gain, profit would still have achieved growth of 15.5% to HK$132.6 million. Basic earnings per share were 84.19 HK cents (1H2010: 44.17 HK cents).
The Board of Directors recommended payment of an interim dividend of 25.5 HK cents (1H2010: 22.1 HK cents) per share for the six months ended 30 June 2011, according to an AEON Stores report.
During the review period, the ratio of staff cost to revenue rose from 9.8% to 10.3% as a result of retaining all of the staff from the stores closed last year, while the ratio of rental cost to revenue improved from 10.4% to 9.9%.
The Group maintained a net cash position with cash and bank balance of HK$1,771 million (31 December 2010: HK$2,168 million) and bank borrowings reduced to HK$36 million (31 December 2010: HK$47 million) as at 30 June 2011.
Mr. Lam Man Tin, Managing Director of AEON Stores, said, “We are pleased to have achieved outstanding results in the first half of 2011. Leveraging the positive consumer sentiment and our brand recognition, we continued to receive strong support from customers in Hong Kong and south China, which facilitated our persistent growth over the years.”
The Hong Kong economy remained robust during the period under review. Despite the closure of two GMS in 2010, revenue from Hong Kong operations only dropped by 11.9% to HK$1,482.8 million (1H2010: HK$1,682.7 million), and segment profit was only down slightly by 1.6% to HK$96.6 million (1H2010: HK98.2 million). To better fulfill affluent consumers’ demands and expand the income stream, the Group opened AEON MaxValu Prime, its first premium supermarket, at the heart of Tsim Sha Tsui, Hong Kong in June. The store targets customers seeking quality living and a trendy lifestyle. The Group also opened one JUSCO Living PLAZA plus Bento Express at the Tsing Yi MTR Station, one of the busiest MTR stations along the Tung Chung Line, which benefited from strong pedestrian flow.
The Chinese economy continued to expand at an impressive rate in the first half of 2011. Under this favourable backdrop, the PRC operations recorded a revenue growth of 27.6% to HK$1,760.9 million (1H2010: HK$1,380.0 million), thanks to the rising revenue from existing stores and full-period contributions of two new stores in Guangzhou and Dongguan which commenced operations in late 2010. Benefiting from improving operational performance of existing stores, the PRC segment recorded a profit rise of 58.6% to HK$105.4 million, up from HK$66.4 million in the last corresponding period.
Mr. Lam added, “Looking ahead, the Hong Kong economy is expected to remain healthy; however, with uncertainties hovering over the global economy and other factors such as inflationary pressure drawing greater concern, we foresee that consumers will become more cautious with their spending in the second half year. Nevertheless, we remain prudently optimistic about the prospects in the near future and proceed with our expansion plan.”
In Hong Kong, the Group is going to open at least eight new stores in the coming 18 months, including its second largest GMS in the territory in Lai Chi Kok by December 2011, two more GMS in Tsuen Wan by mid-2012 and the end of 2012 respectively, as well as an additional GMS in Kowloon City by 2012. Apart from the JUSCO Living PLAZA in Tsz Wan Shan and Ho Man Tin newly opened in July and August, one more new store will be opened in Kwai Chung by the end of this year. To further capture opportunities from the growing affluent consumer segment on Hong Kong Island, the Group will set up the second AEON MaxValu Prime in Causeway Bay by 2012.
The Group will consider opening new stores at MTR stations when appropriate. During the fourth quarter of 2011, the Group will rename all of its “JUSCO $10 Plaza” stores to “JUSCO Living PLAZA” to enrich the merchandise mix to better cater for customers’ needs.
As for the PRC operations, the Group is optimistic about the outlook of the retail market in south China backed by the continuous economic growth and an increase in the individual income tax allowance in the country. The Group is planning to open six new stores in Guangzhou, where consumers are enjoying a steep rise in disposable income and where the AEON and JUSCO brands are well established and received. There are other projects in the pipeline that are expected to accelerate the Group’s retail network expansion in south China.
“In order to strengthen our foothold and tap tremendous opportunities which are arising in Hong Kong and the PRC, we will continue to look for suitable locations for further business expansion, and also explore new business models to strive for sustainable growth and maximum returns for shareholders,” concluded Mr. Lam.
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