Seven & I Net Falls as Japan s Lower Wages Cut Sales(70276)

Seven & I Net Falls as Japan s Lower Wages Cut Sales

Seven & I Holdings Co., the world s biggest convenience-store operator, said nine-month profit slumped 32 percent as lower wages sapped demand for clothes and food in Japan.

Net income totaled 69.3 billion yen ($752 million) for the nine months ended November, compared with 101.7 billion yen a year earlier, the Tokyo-based owner of the 7-Eleven brand said in a statement today. Aeon Co., Japan s second-largest retailer, had a net loss of 9.93 billion yen in the same period, it said separately today.

Seven & I and Aeon are introducing instant noodles, jeans and other products under their private brands to offer lower prices and lure customers. Salaries have dropped for 18 straight months and the nation s retail sales are down for the last 15 months as Japan emerges from its worst post-war recession.

There s nothing they can do to spur sales in this environment, said Mitsuo Shimizu, an analyst at Cosmo Securities Co. in Tokyo. Their private brands are doing much better now and should help improve profit margins.

Seven & I, Japan s largest retailer that offers the Seven Premium store brand, said sales declined 12 percent to 3.82 trillion yen. Operating profit plunged 22 percent to 170.7 billion yen, with profit from the company s supermarket division down 83 percent.

Profit Outlook

The company maintained its full-year earnings estimates. Net income is likely to rise 18 percent to 109 billion yen in the year ending February and sales may drop 8.3 percent to 5.18 trillion yen.

Seven & I fell 0.1 percent to 1,985 yen on the Tokyo Stock Exchange before the earnings were released. The stock plummeted 38 percent last year compared with the 19 percent gain in the benchmark Nikkei 225 Stock Average. Aeon, which is down 8.9 percent in the past year, was unchanged at 796 yen.

Operating profit from Seven & I s convenience store business, which includes 7-Eleven Inc. in the U.S, fell 12 percent. It receives franchise fees for the 7-Eleven brand from companies including Dairy Farm International Holdings Ltd., which runs the chain in China and Hong Kong, Taiwan s President Chain Store Corp. and Thailand s CP All Pcl.

Hurt by slumping sales at general merchandize stores, Aeon s sales slipped 3.9 percent to 3.73 trillion yen. Operating profit dropped 15 percent.

The company, based in Chiba prefecture near Tokyo, reiterated its full-year net income forecast of between 7.5 billion yen and 15 billion yen. Sales may rise 0.2 percent to at least 5.24 trillion yen in the year ending February.

Seven & I Net Falls as Japan s Lower Wages Cut Sales

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