The companywhich runs 7-Eleven convenience stores in Japan and the United States, as well as the upscale Japanese department stores Sogo and Seibu and Ito-Yokado supermarketssaid Thursday its group net profit for the just-ended fiscal year sank to 44.88 billion [image-nocss] yen ($481 million) from 92.34 billion yen.
In addition to the slump in consumption, the company blamed amortization of department store-related goodwill, store asset writedowns and store closure costs, said the report.
Revenue fell 9.5% to 5.111 trillion yen from 5.65 trillion yen, while operating profit slipped 20% to 226.67 billion yen from 281.87 billion yen.
Japanese retailers are struggling with flagging demand as consumers fret over the uncertain income and employment outlook, the newspaper said. In addition to persistent weakness in consumption, poor weather during the summer took a toll on store sales, it added.
Against this backdrop, c-store operator FamilyMart Co. also reported year-to-year declines in its revenue and profit for its full business year Thursday, said the Journal. FamilyMart's net profit fell 8.2% to 15.1 billion yen from 16.45 billion yen. Its revenue declined 3.2% to 278.18 billion yen from 287.34 billion yen.
At a news conference outlining the company's earnings, Seven & i Holdings president Noritoshi Murata said that "a self-sustained recovery in consumption has not been established," while yen-pinching consumers are seeking cheaper goods for daily necessities.
But Murata said its group earnings have already bottomed out and there are some bright spots: Sales at Sogo and Seibu department stores in March grew year-to-year for the first time in 25 months, as wealthy people started spending on luxury goods such as jewelry and watches.
For the full year ending February 2011, Seven & i expects its net profit to more than double to 100 billion yen. It also projects a 5.9% rise in operating profit to 240 billion yen and a 1.7% rise in revenue to 5.2 trillion yen.
He said the company's earnings recovery would depend in large part on cost cuts. Its targets for same-store sales in each business segment are "somewhat conservative and not high," as it is hard to tell the future course of the economy. For instance, Seven & i expects same-store sales at its c-store business, the company's biggest profit driver, to remain flat for the fiscal year ending February 2011 after falling 2.1% for the just-ended year. But he left open the possibility that the company would revise upward its same-store sales target in keeping with a gradually recovering economy, said the report.
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