[Company analysis] Aeon Co., Ltd. (イオン)

「Aeon Co., Ltd. (イオン)」is operating in 11 countries around the world, and in terms of sales scale, it is the largest retailer in Asia and 12th largest in the world. This company carries out almost all types of retail business, from large-scale supermarkets to convenience stores, shopping malls, and specialty stores. However, the English conversation companies with similar names,「Aeon Corporation of Japan(イオン)」or「Ion Cosmetics(イオン化粧品)」have no capital or personal relationship with「Aeon」. The number of consolidated employees is approximately 25,336.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Aeon Co., Ltd.
Company name (Japanese)	イオン
Date of establishment	September 1926
Headquarters location	〒261-8515 千葉県千葉市美浜区中瀬1-5-1
Capital	22,007
Consolidated sales	8,518,215
Consolidated operating profit	212,256
Consolidated total assets	10,049,680
Consolidated capital	1,875,364
Capital adequacy ratio	18.7%
Consolidated number of employees	25,336

 

 

 

2. Summary and Features

 
「Aeon」is the Japan's largest retail company, and its sales volume is significantly higher than other Japanese retail  company including「Seven & I Holdings Co., Ltd.(セブン&アイ・ホールディングス)」which is famous for its convenience store chain business. In the case of「Aeon」, they have conducted convenience store business under the name of「Ministop」. The current name, "Aeon," was began relatively recently in 2008. In the past, it was called 「Jusco(ジャスコ)」 . 

The beginning of today's「Aeon」is「Shinoharaya(篠原屋)」, a cloth and accessory store founded in Yokkaichi, Mie prefecture in 1758. After its founding, the 6th president Okada Soichiro (岡田惣一郎) opened「Okadaya Kimono Fabric Store(岡田屋呉服店)」, a kimono shop. Then his son, Okada Takuya(岡田卓也) established「Jusco(ジャスコ)」 , the direct precursor of the current「Aeon」.

From its begining,「Aeon」has been following Okada Takuya's words, "Open a store in the area where raccoons and foxes appear", which means open new store in the area with a large transient population. This company continued to open stores mainly in large-scale suburban shopping centers.

So far,「Aeon」has expanded its sales scale by repeating M & A with other competitive supermarkets. Especially, price competition is intense due to the characteristics of the supermarket industry. However, through this strategic expansion,「Aeon」has been able to reduce the procurement cost of private brand (PB) to the utmost. With this advantage, they have overcome the low price competition. As a current large-scale M & A, they purchased「Carrefour Japan」in 2005 and「Nihon Techno Structure Co., LTD.(日本テクノストラクチャア)」and「Carrefour Malaysia」in 2012.

「Aeon Cinema」, which is located in「Aeon Mall」, has the top market share in the Japanese movie theater industry, although it is not a retail business. However, the reservation rate is low and the profit rate is not so high. 「Welcia Yakkyoku Co., Ltd.,」which is under the umbrella of「Aeon」, has the highest market share in drugstore chain industry as of 2016, even surpassing「Matsumotokiyoshi Holdings Co.,Ltd.(マツモトキヨシホールディングス)」.

Recently, the retail industry, including department stores, is suffering from poor performance due to online shopping. but in the case of「Aeon」hasn't suffered that much because their core products is fresh food. So, the supermarket business is still profitable. In addition, this company is also focusing on the financial business. At present, sales from its financial business are not comparable to the retail business. But thanks to the「AEON Bank」and「WAON」that can carry out electronic money settlement, credit card services and etc, its profit margin is quite high.

 

 

 

3. Major Business

 

■ Retail business
Retail business including「Aeon Mall」,「Ministop」and「Welcia Pharmacy」. They are expanding into almost all types of retail fields, and they are leveraging the economies of scale obtained through strategic M & A to maintain the top position in Japan.

■ Financial business
After securing customers in the retail business, this company promoted their "financial business" to their customer. As a result, AEON's financial business made a great success, and now they have over 3 trillion yen in bank deposits, which is comparable in size to regional banks.

■ Real estate business
「Aeon」conducts the real estate business as a "developer". Basically they build a commercial facility "AEON MALL" and receive rental income from its tenant. Besides, by developing the area around "AEON MALL", they can achieve additional profit.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		8,210,145	8,390,012	8,518,215
Consolidated operating profit		184,739	210,273	212,256
Consolidated total assets		8,750,856	9,452,756	10,049,680
Consolidated net assets		1,862,410	1,916,737	1,875,364
Breakdown of sales	General Supermarket business	2,877,650	2,875,424	2,851,900
	Shopping mall business	3,195,308	3,225,229	3,221,964
	Drugstore business	623,512	710,624	793,547
	General financial business	329,923	363,824	391,363
	Developer business	242,517	257,579	279,365
	Service・Specialty store business	583,940	580,713	585,824
	International business	396,617	416,431	434,291
	Others	78	806	3,915
	Adjustments	-39,401	-40,622	-43,956