Aeon Co. Ltd.

S&P Global Ratings acknowledges a high degree of uncertainty about the evolution of the coronavirus pandemic. The consensus among health experts is that the pandemic may now be at, or near, its peak in some regions but will remain a threat until a vaccine or effective treatment is widely available, which may not occur until the second half of 2021. We are using this assumption in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly. The negative outlook on Aeon reflects our view that, despite its financial discipline, there is an at least one-in-three chance of its financial standing failing to recover

...The pandemic, if its impact endures, is likely to lower Aeon's EBITDA by about Ñ100 billion in fiscal 2020. Japan-based retailer Aeon Co. Ltd. partially closed its large-scale Aeon stores and shopping malls in Japan and abroad from January to May in 2020 to help mitigate the spread of coronavirus. In addition to the direct impact of the store closures, various factors will likely push down profit in the course of normalizing business operations, such as depressed consumer spending and additional costs to maintain social distancing. Diversified business formats in its mainstay retail units are likely to mitigate partially the impact of the coronavirus. This is because Aeon is likely to maintain robust sales of food products and other necessities, as it meets demands from stay-at-home consumers while sales of apparel and other discretionary items are likely to decline. Same-store sales in Japan for the three months from March to May in 2020 declined 40%-80% at major services and specialty...

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