Aeon Co. will cut spending on stores at home and slow expansion in China as it battles the worst retail market in at least three decades, Chief Financial Officer Masaaki Toyoshima said.

Japan's largest supermarket chain will delay a target for 100 China stores by two years until February 2012 and reduce its three-year, ¥800 billion capital spending plan.

"This is the toughest climate I've seen," Toyoshima said in an interview Monday at Aeon's headquarters in Chiba Prefecture. "It's looking tougher by the month."

Aeon's efforts to reverse six quarters of declining operating income by closing unprofitable outlets and cutting labor costs are being hampered as Japan's consumer confidence falls to a record low and job prospects worsen. Meanwhile, slowing sales growth in China is delaying attempts by the operator of Jusco general merchandise stores and the U.S. clothing chain Talbots Inc. to reduce reliance on the shrinking domestic market.

Sales growth at its 23 general merchandise stores and four supermarkets in China has slowed to less than 5 percent since November from about 20 percent growth in the first 10 months of the year, Toyoshima, 56, said.

Aeon had planned to have 100 stores in China by February 2010 as its competes with Wal-Mart Stores Inc. and Carrefour SA in the fastest-growing major economy.

"With the slowing economy in China, 2012 is a more realistic target," said Toyoshima, who joined Aeon in 1974.

An alliance formed in December with trading house Mitsubishi Corp. would help efforts to expand in China, Toyoshima said. Mitsubishi, which will become the biggest shareholder in Aeon, with a 5.05 percent stake, could help with procurement, warehousing and transport in China, he said.

There is also the opportunity for a closer alliance in procurement and financial services between Ministop Co. and Lawson Inc., the two companies' convenience-store affiliates, he said.

The company may also work with Mitsubishi and local partners as it considers opening stores in Indonesia and Vietnam, he said.