The rating on Aeon Co. Ltd. reflects the company's leading position and brand recognition, its strong management 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 eased the negative impact from earnings volatility in the company's retail businesses to some extent. However, these strengths are partly offset by difficult conditions in the retail industry, which reflect intense domestic competition as well as uncertainties over Japan's economy. The company also has a high dependence on debt. Given these weaknesses, Standard&Poor's Rating Services expects Aeon's financial profile to remain weak for the current rating for the next year or two. Aeon owns one of
