TOKYO -- Drugstore chain Welcia Holdings' operating profit likely rose 16% to about 28 billion yen ($264 million) in the year ended in February as new stores and an acquisition led to higher sales.
The figure would mark a record for the Japanese company and top its forecast of 26.9 billion yen.
Sales apparently grew 12% to about 695 billion yen, 3 billion yen higher than the company projected. Welcia has about 1,700 locations, up 10% from a year earlier. More than 100 stores were opened in Japan and overseas. The September acquisition of Marudai Sakurai Pharmacy, a peer based in northern Aomori Prefecture, also contributed to the higher sales tally.
Same-store sales grew about 6%, with extended operating hours helping to lift foot traffic. Among previously acquired drugstores, many had closed at 8 p.m. or 9 p.m. Welcia pushed closing times back to midnight or switched to 24-hour operation. Food offerings were broadened, spurring sales of frozen food and bento box meals, especially among male customers. Cold weather in the latter half of the year also pushed up sales of cold medicine and other high-margin products.
An increase of stores featuring prescription counters helped improve Welcia's gross profit margin by about 1 percentage point to around 30%. Its pharmacy business boasts a profit margin of about 40%.
The greater purchasing power from Welcia's aggressive acquisition strategy has helped lower procurement costs. Labor costs rose due to the longer store hours and increased hiring of pharmacists, but Welcia managed to offset the costs with strong sales and streamlining efforts.
In the year ending February 2019, Welcia plans to open more new stores and continue to add prescription counters to newly acquired locations.
Results for the year ending February 2018 are due out on April 11.