The major rating factors for Aeon Co. Ltd. are as follows: Stabilizing group franchise, backed by a strategy of differentiating itself from its peers, particularly in suburban shopping centers, which are attracting more customers. Diversified business franchise in Japan, and overseas businesses that account for 10% of total revenues and 22% of operating profit. A moderate financial profile, backed by progress in net debt reductions, despite active M&A activities and store opening plans. Expected delays in realizing low-cost operations, an essential component of its every-day-low-prices merchandizing strategy, given its still low unconsolidated profitability for the rating. Aeon maintains adequate liquidity, backed by diverse funding sources and a well-spread maturity structure for existing debt. As of fiscal 2003 (ended February 2004),
