Japanese retail giant Aeon warned yesterday that it may suffer its first annual net loss in seven years as the recession prompts consumers to tighten their purse strings.
The supermarket operator said it made a net loss of ¥29.4 billion (US$313 million) in the nine months to November, partly because of a one-off loss of ¥19.5 billion at its US subsidiary, Talbots Inc.
The group downgraded its earnings forecast for the year to February, estimating a result ranging from a net loss of ¥2.5 billion to a profit of ¥2.5 billion.
Japanese shoppers, no strangers to belt-tightening following the 1990s economic slump, are growing more frugal again as the country battles another recession.
“Because of the impact of the global financial crisis, our customers are increasingly saving money,” Aeon chief financial officer Masaaki Toyoshima told a news conference.
“Prospects for the economy have become more and more uncertain. It is too risky to paint a rosy outlook,” Toyoshima said, warning that the tough situation was likely to continue into next year.
For the nine months to November, operating profit dropped 18.3 percent from a year earlier to ¥65.9 billion, although revenue gained 2.7 percent to ¥3.88 trillion.
As well as the loss at Talbots Inc, which was linked to sales of a brand held by the US subsidiary, a stronger yen also trimmed its earnings overseas.
Toyoshima said the company hoped to avoid falling into the red but could not rule out a loss if the value of its shareholdings declines further.
Aeon forecast operating profit of between ¥126 billion and ¥131 billion on revenue of ¥5.2 trillion.
The company had earlier forecast a net profit of up to ¥15 billion, operating profit of up to ¥175 billion and revenue of ¥5.4 trillion.
Toyoshima also said the company would “drastically” review its investment and management strategies, including plans open new outlets at home.