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Japan-Update

Convenience store chain Lawson's profit hit by productivity push

Nine-month operating profit seen falling 6% on store investments

Lawson is helping franchise owners with utility bills and food disposal costs.

TOKYO -- Lawson's group operating profit likely shrank 6% on the year to around 54 billion yen ($476 million) for the nine months ended in November, as the convenience store operator increased spending to cope with labor shortages in Japan.

Gross operating revenue, the equivalent of sales, apparently grew 7% to a little over 490 billion yen. As more women and retirees re-enter the work force, Japan's convenience stores are competing to capture demand for ready-to-eat meals. Lawson revamped its prepared food offerings, a move that appears to have helped lift same-store sales in the March-November period.

On the cost side, the retailer began distributing tablets to stores in August to make it easier to order merchandise. Since November, it has been installing cashier machines that dispense change automatically, letting inexperienced clerks handle checkout with ease.

Rising hourly wages for part-time workers contribute to a tough environment for franchise managers. Lawson responded by helping pay their utility bills and disposal costs for leftover prepared meals, in turn squeezing its own profit. Preparations for a new banking business also added to Lawson's costs.

For the full year through February, the company expects operating profit to decline 7% to 68.5 billion yen. Lawson announces March-November results Jan. 10. 

(Nikkei)

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