August 22, 2014 2:00 am JST

Bic Camera sees operating profit up 50% for fiscal 2014

 TOKYO -- Bic Camera's group operating profit for the year ending this month is likely to jump 50% to around 20 billion yen ($190 million), thanks to brisk sales of big-ticket items such as high-end televisions and air conditioners.

     The Tokyo-based electronics mass merchandiser had previously forecast a 13% increase to 14.8 billion yen.

     But sales this month appear to be slowing a bit as consumers hold back on discretionary spending. In addition, typhoons have dampened demand. Nonetheless, Bic Camera expects operating profit to climb to a record level for the first time in three years, provided weather and other factors do not take the steam out of consumer demand.

     Sales are seen edging up 2% to around 820 billion yen, slightly above the guidance of 813 billion yen.

     On a parent-only basis, monthly sales in March -- just before the April launch of the nation's consumption tax hike -- soared 57% on the year. In a last-minute buying frenzy, shoppers grabbed expensive 4K TVs. On the back of electricity rate hikes, consumers purchased energy-saving air conditioners and refrigerators. Also, the ending of the Microsoft Windows XP operating system stirred up a tailwind for Bic Camera, touching off replacement demand for personal computers.

     Sales dropped 10% in April from a recoil in demand, but bounced back to a year-earlier level the next month. By contrast, rivals Yamada Denki and Edion are still struggling to overcome the post-tax-hike slump.

     Bic Camera has boosted its purchasing leverage by joint procurement with Kojima, which became a subsidiary in 2012. Integrating merchandise management and other systems has also resulted in lower expenses.

     With many of its stores located in central Tokyo and other urban areas, Bic Camera benefited from an influx of foreign tourists, who increasingly purchase such items as rice cookers, beauty equipment and luxury watches.

     An improved profit margin is another earnings driver. With consumers giving preference to high-function appliances, Bic Camera sees unit prices steadily rising even after the sales tax hike. Electronics manufacturers' strategy to control output effectively keeps prices from plunging, thereby giving a push to gross margin ratio.

     The company's net profit is expected to come in above the projected 7.7 billion yen. Bic Camera is on track to offset such extraordinary losses as those incurred from the closing of unprofitable stores.