TOKYO -- The retailer behind Don Quijote, the Japanese discount chain known for its showy product displays, is set to report a group operating profit slightly exceeding 63 billion yen ($582 million) for the full year ended June, putting it in fifth place among domestic retail rivals.
The record profit at Pan Pacific International Holdings would surpass the 60.7 billion yen generated by the convenience store chain Lawson. Sales at Pan Pacific likely jumped about 40% to over 1.3 trillion yen.
Pan Pacific received a major boost from Uny, the superstore group purchased from FamilyMart Uny Holdings in January. The deal brought in 6 months' worth of sales from the wholly owned subsidiary. The groupwide store count both at home and abroad leapfrogged to 693 as of the end of June, up 275 from a year earlier.
The companies ahead of Pan Pacific in profit are retail leader Seven & i Holdings, the parent of Seven-Eleven Japan; Uniqlo operator Fast Retailing, supermarket group Aeon; and furniture seller Nitori Holdings.
Even without the contribution of Uny, earnings at Pan Pacific would remain strong. Same-store sales at Don Quijote grew 1.2% thanks to the competitive pricing of food, consumables and other daily necessities.
Although supermarkets are losing customers, Don Quijote is drawing shoppers as consumers become thriftier. Don Quijote successfully grew the average sale per customer along with the traffic.
Pan Pacific is making money from tourists as well. Purchases by Chinese travelers have apparently slackened due to the economic slowdown on the mainland, as well as the yen's appreciation against the yuan. But the demand from tourists hailing from Taiwan and Southeast Asia, where the middle class is emerging, has offset the China deficit.
Consumables continue to be hot items among tourists, and tax-free purchases contributed to rising revenues.
During the fiscal year ended June, Pan Pacific converted 10 Uny superstores into jointly run hybrids, sporting such names as Mega Don Quijote Uny. Bold price settings helped boost sales of everyday items and apparel. The extra customer traffic was a boon for food sales as well.
The stores that finished switching to new formats sharpened their focus on gross profit margins, and raised the profit per outlet.
Consolidated profit and sales this current fiscal year are all but certain to advance drastically since Pan Pacific will be incorporating Uny's earnings for the full year. Japan plans to raise the consumption tax in October, but the group is poised to improve its competitive advantage due to its growing legion of repeat customers.