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Food & Beverage

Supersize beef bowls fuel rally in Japan's Yoshinoya

Shares hit one-year high after return to quarterly profit

Yoshinoya's XXL beef bowl costs 780 yen, compared with 380 yen for a regular beef bowl. (Photo by Ryosuke Eguchi)

TOKYO -- Shares in Japanese restaurant operator Yoshinoya Holdings have touched a one-year high as a new larger size of its signature gyudon bowls of beef on rice has proved a hit.

The stock at one point rose to 2,149 yen on Thursday before ending the session at 2,142 yen, up 4.5% from the prior day.

The Tokyo-listed group surged 14% over two days on heavy buying, mostly by retail investors, driven by the announcement of strong March-May quarter earnings on Tuesday.

Yoshinoya reported quarterly net profit of just over 1 billion yen ($9.23 million), swinging from a net loss of 388 million yen in the year-earlier period. The company topped its full-year profit forecast of 100 million yen in just one quarter.

Customers flocked to buy extra-extra-large beef bowls that debuted in March. The popularity of this new size -- which at 723 yen is about double the price of a regular bowl -- led to higher same-store sales.

Overall sales grew 6% on an increase in customer traffic, which was fueled in part by discounts. Yoshinoya competes with Sukiya chain operator Zensho Holdings and Matsuya Foods for fans of gyudon, a Japanese fast-food staple.

Mitsubishi UFJ Morgan Stanley Securities on Wednesday raised its target price on the stock to 1,900 yen from 1,800 yen.

In the year-earlier quarter, Yoshinoya posted an operating loss despite an increase in sales because of higher costs for ingredients and labor. The loss sent its share price tumbling.

This week's reporting of its first net profit in six quarters sparked a rally that has brought the stock to where it was before last year's sell-off.

Yoshinoya is rushing to renovate restaurants into self-serve locations, which is expected to lead to higher sales and lower personnel costs over the long term.

But "concentrating on a period of renovations runs the risk of a decline in sales," said Seiichiro Samejima, an analyst at the Ichiyoshi Research Institute.

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