Our ratings on Japan-based retail giant Aeon Co. Ltd. (A-/Negative/--) reflect the company's leading position and brand recognition in Japan's retail market, supported by the highest operating revenues of any domestic retail company. They also incorporate its management's strong leadership and ability to quickly implement improvements to operations and its strong performance in nonretail businesses, including shopping center development and financial services, which has somewhat diversified its earnings. However, these strengths are partly offset by difficult conditions in the domestic retail industry, reflecting intense competition and Japan's sluggish economy. In addition, the company has lower profitability than its global peers, although this has been improving. Furthermore, given Aeon's high dependence on debt, Standard&Poor's Ratings Services expects the company's
