AEON displays confidence in retail as it inks nine year lease

AEON has inked a nine year lease for a mega store at Domain Mall, Yau Tong. The principal business of the Group is the operation of retail businesses through chain stores such as “AEON STYLE”, “AEON” and “AEON SUPERMARKET” in Hong Kong and the PRC.

Due to the nature of its retail businesses, the group has to enter into tenancy agreements for the leasing of retail stores from time to time. According to AEON, the retail fronts contribute to and maintains the group’s scale of operation which in turn benefits the group in lowering the overall operation costs. Along with the store space, the company has also rented one internal advertising light box on Ground Floor and two outdoor advertising banner spaces outside the building facades for the display of the company’s name and advertising of the company’s business at the premises.

The total base rent payable under the Tenancy Agreement during the term is approximately HK$147.2 million, which is subject to the turnover rent which may be imposed pursuant to the terms and conditions of the tenancy agreement. The rent has been offered by the company after taking into consideration the prevailing market rent for comparable premises in the vicinity of the premises.

Meanwhile, in August AEON announced that for the six months ending in June 30 2021, AEON’s revenue fell by 6.8% year-on-year to HK$4.807.1 million, and the gross profit margin remained at 28.2% (first half of 2020: 28.2%). Sugawara Isao, executive director and managing director of AEON Department Store , said: "In the past few months, the group has inevitably been affected by market uncertainties. However, the group understands that Hong Kong people are particularly fond of innovative and quality-assured Japanese products.”

He added that the company will continue to introduce its own brands such as "HÓME CÓORDY" and "TOPVALU" from Japan, and make use of Japan’s AEON Group’s strong product procurement network to expand directly imported Japanese products to meet changing customer needs. Isao added that the company will provide a new shopping experience and implement strategies for improvement and improvement. 

In Hong Kong, the group re-planned the layout of three stores in accordance with the current lifestyle of customers. At the same time, it introduced more products that cater to the needs of regional customers and seasonal products, and implemented a comprehensive care for each customer. In addition, the group began to cooperate with foodpanda mall in February to provide online sales and home delivery services for a variety of supermarket items, further strengthening the group's online business. 

The group however believes that with the widespread implementation of the vaccination program and the recovery of the global economy, consumer sentiment and retail performance will gradually pick up.

In the Hong Kong business, in order to seize the opportunity, especially with the launch of the consumer voucher program, the group has organised various promotional activities and launched different product offers. It is hoped that not only will it bring revenue to the group, it will also stimulate and revitalise the local economy. In early August 2021, the group opened the third "AEON STYLE" in Hong Kong at Jialefang in Mong Kok. In addition to providing its own brand "HÓME CÓORDY", "TOPVALU" products and focusing on "human health and friendly to the natural environment" and developed In addition to TOPVALU Gurinai Natural foods, it also introduces more new Japanese products, in order to bring customers a high-quality shopping experience and brand-new lifestyle solutions, and accelerate the expansion of this successful store model in the Hong Kong market. 

In addition, the group will accelerate digital transformation, including the expansion of O2O and the vigorous promotion of CRM. 

The group will also continue to implement the plan to open new stores, taking into account the three new stores opened in the first half of the year, and three new stores will be opened in the second half of this year, in order to achieve the goal of opening six stores in the Greater Bay Area throughout the year.

Isao added: "Although the epidemic continues to pose challenges to the business environment, AEON is still ahead of market trends, and always serves and supports the community from the perspective of customers. This difficult period really depends on the strong support of customers and all walks of life. I sincerely thank you all, and will continue to work hard to achieve the purpose of all for customers, provide more pleasant shopping experience to customers, and create stable returns for shareholders and stakeholders at the same time."

Overall in Hong Kong, the value of total retail sales in June 2021, provisionally estimated at HK$28.1 billion, increased by 5.8% compared with the same month in 2020. The revised estimate of the value of total retail sales in May 2021 increased by 10.4% compared with a year earlier. For the first half of 2021, it was provisionally estimated that the value of total retail sales increased by 8.4% compared with the same period in 2020.

(Photo courtesy: AEON Stores Hong Kong)