Viet Nam News
HÀ NỘI — Retail giant AEON has terminated its tie-up with Hà Nội-based Fivimart after four years of co-operation due to losses.
Aeon, a major Japanese retailer, and Nhất Nam Trade Company – the owner of the Fivimart supermarket chain, agreed on the transfer of the Fivimart chain to a domestic company on September 27, online newspaper cafef.vn reported.
Aeon is expected to offload a 30 per cent stake in Fivimart to a third party. However, the move would not have any impact on its current business in Việt Nam.
Details of the transaction were not disclosed.
On the same day, Fivimart announced a brand change. Starting September 28, Fivimart will no longer use the Aeon logo beside its own logo.
Speculation about the "divorce" between Fivimart and Aeon started in early September.
Since the beginning of their partnership in 2015, Fivimart increased its supermarkets from 10 to 23, while revenue jumped from VNĐ1.07 trillion (US$45.64 million) to VNĐ1.3 trillion during the 2015-17.
However, Fivimart posted a loss of VNĐ60 billion in 2015, which later widened to VNĐ96 billion a year later. In 2017, the local supermarket chain reported a loss of VNĐ23 billion, resulting in an accumulated loss of VNĐ197 billion.
The deal with Aeon was supposed to boost the efficiency of Fivimart’s corporate governance, brand promotion and network, which in reality did not go according to plan.
Fivimart’s cost of goods sold from 2016-2017 was over VNĐ1 trillion, equivalent to 80 per cent of total revenue, according to the company’s financial statement.
Moreover, administrative and financial expenses remained at a high level, reaching VNĐ272 billion and VNĐ11.8 billion, respectively.
Aeon will retain its partnership with Citimart, of which the Japanese retailer acquired a 49 per cent stake in 2015.
However, Citimart also reported a loss of VNĐ91 billion in 2015 and VNĐ33 billion in 2016, resulting in an accumulated loss of VNĐ157 billion at the end of 2016.
Aeon considers Việt Nam’s retail market to have huge growth potential and plans to establish 20 shopping malls by 2020. In addition to the existing four shopping malls, Aeon will shortly launch one in Hải Phòng City and one in Hà Nội’s Hà Đông District. — VNS