Seven & I may fall after profit plunges on(70216)

Seven & I may fall after profit plunges on

Seven & I Holdings Co., the world s largest convenience retailer, may fall in Tokyo trading today after reporting a 57 percent drop in profit.

Net income was about 40 billion yen ($449 million) in the year to Feb. 28, less than half the previously forecast profit of 109 billion yen. Earnings were hurt by charges for outlet closures and a writedown in its department-store unit, the Tokyo-based owner of the 7-Eleven brand said in a preliminary earnings statement yesterday.

Seven & I in January announced plans to shut a Seibu outlet in Tokyo, after Japan s department stores sales slumped for 23 months, weighed down by stagnant wages. The nation s biggest retailer took a charge of about 40 billion yen on goodwill for the department-store unit, operator of the Sogo and Seibu brands.

It s not a good time to buy Seven & I, as it may take time for the domestic economy to recover, said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. in Tokyo. Seven & I needs to review its department-store business given the tough environment and focus on its convenience stores.

Seven & I fell 0.4 percent to 1,985 yen yesterday on the Tokyo Stock Exchange, before the earnings were released. The stock has fallen 2.7 percent in the past year compared with a 24 percent gain in the benchmark Topix index.

The company s sales slipped 9.4 percent to 5.12 trillion yen, compared with its forecast of 5.18 trillion yen. Operating profit fell 21 percent to 223 billion yen, as revenue from supermarkets and department stores declined more than the company estimated, it said.

The retailer said it will buy a 21.58 percent stake in Tower Records in Japan for 1.6 billion yen.

7-Eleven stores and their competitors are an integral part of Japanese life, particularly in urban areas. Customers at a conbini, as the outlets are known, can buy concert tickets, pay bills and taxes as well as have clubs sent to golf courses or skis delivered to resorts. Lawson Inc. is Japan s second-largest convenience store operator.

7-Eleven Inc., which started as an ice house in Dallas more than eight decades ago, has more than 36,000 stores in at least 16 markets, according to its Web site. It was taken private in 2005 by Seven & I, its largest shareholder.

Seven & I may fall after profit plunges on

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