Aeon says fiscal '08 may end in a loss

Retailer Aeon Co. revised downward on Wednesday its group earnings forecast for the 2008 business year and warned it may fall into the red for the first time in seven years due to sagging consumer demand and special losses linked to its U.S. clothing unit The Talbots Inc.

For its irregular fiscal year from last Feb. 21 through Feb. 28 this year, Aeon said it now expects to log figures between a net loss of ¥2.5 billion to a net profit of ¥2.5 billion, compared with its earlier projection of a net profit of ¥11 billion to ¥15 billion.

If the company falls into the red, it will be the first time since fiscal 2001.

Aeon also said it incurred a group net loss of ¥29.45 billion for the nine months that ended in November, falling into the red from ¥31.92 billion in net profit logged a year earlier.

The company reported an operating profit of ¥65.92 billion, down 18.3 percent, on sales of ¥3.88 trillion, up 2.7 percent.

Aeon, which operates Jusco and MaxValu supermarkets, said its U.S. apparel chain incurred ¥19.5 billion in impairment losses linked to its decision to sell the J. Jill brand unit.

Aeon also incurred ¥25.1 billion in fresh losses in connection with costs to shut down some of its stores.

In addition to the special losses, the company's earnings were also hurt by consumer sentiment soured by the global economic downturn, leading to a drop in sales of clothing and other household items.

For the full business year, Aeon said it expects group operating profit of between ¥126 billion to ¥131 billion, down from an earlier projection of ¥165 billion to ¥175 billion on sales of more than ¥5.2 trillion, also lower than its earlier forecast of more than ¥5.4 trillion.