The reports of Fivimart and Citimart have shown that before the cooperation with the Aeon group, they did not have good financial results. The joining of Japanese partner did not improve their financial situation but even decline sharply.
In early 2015, Japan's Aeon retail group acquired a 30 per cent and 49 per cent stake of Fivimart and Citimart respectively which are two large supermarket chains. This is one of the new moves in abroad investment strategy of the Aeon Group.
In its 30 years of international investment, Aeon is well known for its approach to enter by itself when it does not have any joint venture companies and connect with any local retailer brands. The strategy of Aeon is to develop its own supermarket chain.
However, in Vietnam alone, the Japanese retailer group chose joint ventures with two large supermarket chains in Vietnam including Fivimart and Citimart, which is said to help it grow rapidly and spread to the Southeast Asia market, explained by president of Aeon Motoya Okada.
It was hoped that joint ventures would help two supermarket chains develop more and more when they were supported by Japanese management system. The presence of Fivimart supermarkets within the Aeon shopping malls along with their logo was expected to help sale increase as well as ensure the Japanese quality of goods sold.
However, after two years of merger, Fivimart and Citimart's gains were in cumulative losses.
According to Fivimart's financial report for 2016, the revenue of this supermarket chain reached nearly $54 million, an increase of about 20 per cent compared to the previous year.
Revenue growth is a positive signal for retail businesses such as Fivimart but in 2016, this supermarket system reported a loss of $4.2 million in 2016, almost double that of 2015.
After two years of cooperation with the Japan's group, Fivimart's accumulated loss had risen to nearly $7.5 million.
The main reason for Fivimart's loss was that the huge cost of business management which was higher than the gross profit from the sale of goods in supermarket. Specifically, in 2016, business management costed more than $12 million while gross profit was only $7.9 million. The same thing happened in the previous year.
Citimart's performance was similar to that of Fivimart when its revenue grew by 15 per cent to more than $69 million in 2016.
However, Citimart also reported a total loss of $5.3 million in 2015 and 2016. By the end of 2016, the accumulated loss of this company reached nearly $6.8 million.
Notably, in addition to operating losses, both Fivimart and Citimart had a large debt in banks. By the end of 2016, total debt and finance lease reached about $30 million for the former and nearly $31 million for the latter.
While these supermarkets had losses, Aeon gained higher position in Vietnam retail market over the time with the development of Aeon Mall hypermarkets.
Its system now has four centers and recently started two more centers in Hai Phong and Ha Dong districts, Hanoi. By 2025, Aeon group plans to open 20 shopping centers in Vietnam.
