Malaysia may have an Aeon megastore in 2 years

KUALA LUMPUR: The first mega-store that will house both department store-cum-supermarket operator Aeon Co (M) Bhd and Aeon BiG (M) Sdn Bhd’s hypermarket chain could be ready in two years.

Aeon Co (M) managing director Nur Qamarina Chew Abdullah said the maiden megastore will be  outside the Klang Valley.

“It’s still in the planning stage,” she told The Edge Financial Daily after the group annual general meeting and extraordinary general meeting (EGM) yesterday.

Both retailers are looking to collaborate and open large-scale shopping centres that are able to capture a bigger market segment. Aeon BiG is wholly owned by Japan’s Aeon Co Ltd, which has a 51% stake in Aeon Co (M).

In January, then managing director of Aeon BiG, Nagahisa Oyama, had told The Edge that both parties had been holding monthly meetings to plan the development.

Oyama had also said that either party could manage the mall. Both retailers had felt that such a collaboration will be successful given that both Aeon Co (M) and Aeon BiG are complementing each other in Mid Valley Megamall.

Meanwhile, Nur Qamarina expects Aeon Co (M)’s retail space to increase by over 2.5 million sq ft by the end of next year from 11 million sq ft now.

This comes with the opening of five new stores by end-2015. Three store openings this year are expected to contribute 1.5 million sq ft, while another two, to open next year, will add another 1 million sq ft of retail space.

The store openings will be in Bukit Mertajam, Taiping and Quill City Mall here. Next year, the retailer is expected to open in Shah Alam, Klebang in Perak and possibly Kota Baru.

A total of RM700 million has been set aside as capital expenditure for store openings, renovation and land acquisition.

On expansion into Terengganu, Pahang and Sarawak, Aeon Co (M) executive director Poh Ying Loo said this could happen in five years.

The group operates 30 stores in the country, out of which 12 are owned by it.

However, Poh said it has no plans to set up a real estate investment trust (REIT).

On whether the assets it owns will instead be injected into Aeon REIT in Japan, he said: “There is no intention (to do so) for the time being.”

For the first quarter ended March 31, 2014 Aeon Co (M) saw its net profit slip 8.3% to RM46.9 million from RM51.1 million a year ago due to higher utility rates, promotional expenses and higher expenses from new store openings.

Revenue, however, rose 8.8% to RM945.5 million from RM869.2 million, thanks to strong festive season sales.

Going forward, Aeon Co (M) chairman Datuk Abdullah Mohd Yusof expects the group’s growth to be spurred by both existing stores and new store openings.

Aeon will also find ways to circumvent potential obstacles to growth, particularly with the loss of sales when the goods and services tax (GST) is implemented beginning April 1, 2015, which will coincide with traditionally weak periods for retailers from March to June.

“The experience in Japan [which raised the consumption tax hike to 8% this year on April 1, 2014] is that initially, there will be a drop. And then it picks up,” said Abdullah.

Nur Qamarina hopes to introduce a different promotional strategy to drive sales and stabilise the impact from the GST.

This article first appeared in The Edge Financial Daily, on May 16, 2014.


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