PETALING JAYA: Aeon Co (M) Bhd has earmarked RM251 million for capital expenditure (capex) this year with an emphasis on building a new retail model that integrates its offline and online shopping offerings through digitalisation as a strategic cornerstone.

For this digital emphasis, the group’s managing director, Shafie Shamsuddin, disclosed that it has allocated 40% of its capex towards technology and information technology systems, while the remainder will be used for renovations, maintenance, and remodelling of its stores.

“We have a clear direction to move forward and we will further grow the new retail ecosystem that is demand-based and more attuned to present market dynamics, customer consumption patterns and behaviours,” he told the media following Aeon’s AGM today.

“Technology, digitalisation and innovation will be game changers for Aeon,” he said.

Shafie said Aeon will be expanding 13 new specialty stores that it is developing this year, and renovating 11 outlets in malls to link them to its online business

He said the renovations will be done in preparation for the launch of its e-commerce offering, My Aeon To Go, on Aug 2.

For example, Aeon’s store in Wangsa Maju will be renovated to link its general merchandise department and supermarket to its integrated distribution hub to get it ready for the digitalisation.

Shafie said Aeon expects the e-commerce platform to contribute an estimated 2% towards its total revenue and the contribution is projected to grow to 15% in the next five years.

With regard to its performance this year, he reckoned that the group had done pretty well prior to the latest round of lockdown, as revenue remained flattish for the January-May period compared with the corresponding period in 2020.

“However, due to the movement control order 3.0 (MCO 3.0), this has dipped a little but we are hopeful. With the ongoing vaccination efforts, we hope to match last year’s revenue, if not more.”

Given the current economic situation, the managing director said, for 2021, Aeon will strive to match its performance last year, at the very least.

For comparison, net profit for FY2020 fell 62% to RM41.42 million from RM109.229 million in the preceding year, while it reported a revenue of RM4.05 billion, a 10.7% decline from RM4.54 billion in 2019, given the challenges posed by the outbreak of the Covid-19 pandemic.

Shafie said the expectation takes into account the difficult context this year due to the higher number of days of closure as well as the emotional impact from the rising number of new Covid-19 cases which swelled to a range of 4,000 to 9,000 in the MCO 3.0 period.

The group’s latest annual report showed that it has “deferred and cancelled” its capex for FY2020 to RM46.4 million, a 83% decline from RM274.2 million in the previous year.