March 28, 2014 2:00 am JST

Lawson seen hitting record net profit for fiscal 2013

TOKYO -- Lawson Inc.'s net profit apparently rose 15% for the year ended Feb. 28 to set a second straight annual record, thanks in part to brisk sales of such profitable products as fresh foods prepared in-store.

     The Japanese convenience store operator likely logged a net profit of around 38 billion yen ($369 million), beating the 35.9 billion yen guidance. A stricter site evaluation process for new locations also contributed by lowering the number of unprofitable stores.

     Gross operating revenue, equivalent to sales, appears to have remained flat at nearly 490 billion yen, falling short of the 503 billion yen forecast. The changeover from directly managed stores to franchise locations proceeded faster than expected.

     Pretax profit probably climbed 5% to around 69 billion yen, edging past the 68.4 billion yen guidance. Lawson's freshly prepared foods, which are slightly more expensive but focus on flavor and quality ingredients, were strong sellers. Bulk purchasing of ingredients lifted gross profit margins for products at the store level as well.

     These factors helped the firm absorb the costs of up-front investment in new businesses such as home delivery.

     President and Chief Executive Officer Takeshi Niinami, who has driven Lawson's growth in the roughly 12 years since he assumed the role, will be replaced in May by Chief Operating Officer Genichi Tamatsuka.

     Although many pressing issues face the company, such as the consumption tax hike next month and fiercer competition, it is expected to maintain an upward profit trend next fiscal year.

(Nikkei)