FamilyMart Co, Japan's third-largest convenience store operator, said first-half profit rose 0.7 percent after it spent less than budgeted on renovation and other costs. Rising overseas profits also contributed to the gain.
Group net income rose to ¥7.9 billion (US$72.4 million) for the six months ended Aug. 31 from ¥7.87 billion in the same period last year, FamilyMart said in a release distributed through the Tokyo Stock Exchange.
The profit was in line with its April forecast. Sales rose 2.3 percent to ¥114.5 billion from ¥111.9 billion.
FamilyMart is reducing costs and also pursuing expansion in Asia to increase profits.
"We're starting to see some good signs in the economy," president Junji Ueda said at a press conference in Tokyo.
Still, "it won't make a dramatic recovery in the second half," he said.
FamilyMart, which is 31 percent owned by Japan's third-biggest trading company Itochu Corp, trimmed its sales estimate by 0.2 percent to ¥228.5 billion for the year ending Feb. 29.
The company maintained its annual net income forecast at ¥13.7 billion, as it plans to cut distribution and other costs.
At home, sales at FamilyMart were hurt by unusually cool, rainy weather in the first half, which reduced demand for ice cream, beer and other chilled products, the company said. The company added a net 80 stores to total 6,093 outlets in Japan in the first half.
Overseas, FamilyMart's area franchisers added 476 stores in Taiwan, Thailand and South Korea, increasing its total in the three markets to 3,586 stores.
Operating profit, or sales minus the cost of goods sold and selling, general and administrative expenses, at FamilyMart's Asian operations rose 79 percent to ¥428 million, while operating profit from its domestic businesses rose 0.8 percent to ¥18.1 billion.
FamilyMart is among the chains that are expanding networks in Asia. The company, which operates Taiwan's second-biggest retail chain, said it will open 25 stores in Shanghai between next month and December after it receives approval from the Chinese government.
The convenience store operator plans to open as many as 200 stores in Shanghai in its next business year starting March 1. It will offer rice balls and other Japanese prepared meals and some Chinese dishes, FamilyMart's Ueda said.
China International Trust & Investment Corp, China's biggest investment company, will be the Chinese partner in a venture led by Ting Hsin International Group (頂新) to set up FamilyMart convenience stores in Shanghai, Taiwan FamilyMart Co (全家超商) said last month.
FamilyMart's rival chains also are targeting China, the world's most populous market. Lawson Inc, Japan's second-biggest convenience store chain, said it aims to operate 300 outlets in Shanghai in a few years from the current 130.
"We have a great chance in Shanghai," president Takeshi Niinami said in a television interview after a press conference in Tokyo yesterday.
"We strongly believe that Lawson's format in Shanghai is better fitted than competitors in the Shanghai market," he said.
Seven-Eleven is also preparing to enter China where its parent Ito-Yokado Co, Japan's largest retailer by sales, has two stores each in Beijing and the western city of Chengdu.
Its chairman Toshifumi Suzuki last week said he reconfirmed that China has high growth potential when he visited recently.
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