Aeon dissolves partnership with Viet Nam’s Fivimart as losses linger
Aeon dissolves partnership with Viet Nam’s Fivimart as losses linger
Retail giant AEON has terminated its tie-up with Ha Noi-based Fivimart after four years of co-operation due to losses.
Aeon, a major Japanese retailer, and Nhat 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 Viet 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 VND1.07 trillion (US$45.64 million) to VND1.3 trillion during the 2015-17.
However, Fivimart posted a loss of VND60 billion in 2015, which later widened to VND96 billion a year later. In 2017, the local supermarket chain reported a loss of VND23 billion, resulting in an accumulated loss of VND197 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 VND1 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 VND272 billion and VND11.8 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 VND91 billion in 2015 and VND33 billion in 2016, resulting in an accumulated loss of VND157 billion at the end of 2016.
Aeon considers Viet 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 Hai Phong City and one in Ha Noi’s Ha Dong District.
