...AEON's earnings are likely to remain low despite business restructuring and drastic measures to revive unprofitable businesses. We expect Japan-based retailer AEON Co. Ltd.'s earnings, excluding those of its financial services unit, to remain low. We consider it unlikely that the company's competitiveness and earnings power in retail, including its core general merchandising store (GMS) and supermarket businesses, will strengthen in the short run. Competition has been intensifying with specialty stores that engage in both manufacturing and sales. Sales of private-label brand products are growing only gradually. AEON has pursued various reforms, such as the restructuring of its retail units and reform of specialty stores. Nevertheless, we think it is unlikely that the performance of its core retail units will stage a sustained recovery in the coming year or two. Our view takes into account such factors as waning consumer confidence, rising labor costs, and a consumption tax hike scheduled...
