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Japan-Update

High-end appliances, exclusive TVs buoy Yamada Denki profit

Margins improve as Q1 results poised for best in five years

Funai Electric is supplying TVs exclusively to Yamada Denki in what is proving a profitable move for the retailer.

TOKYO -- Japanese electronics retailer Yamada Denki's first-quarter group pretax profit apparently grew by roughly 20% on the year, with high-margin and exclusive goods selling strongly.

The pretax profit likely topped 7 billion yen ($63.1 million), reaching a five-year high for the April-June period. A soft yen provided a rebound from a foreign exchange loss recorded a year earlier as well.

Sales apparently edged up to around 365 billion yen. Audiovisual equipment recovered from a trend of fading demand. More personal computing devices -- primarily tablets -- moved off the shelves, turning sales around to growth. Pricier televisions such as 4K sets also showed strength, helping compensate for an overall drop in unit sales. In white goods, however, unseasonable June weather stunted sales for products such as air conditioners, keeping growth minimal.

Gross profit margin likely improved by nearly 1 percentage point. High-performing, high-unit-price appliances including washing machines sold more amid a rise in dual-income households. Yamada also offered TVs provided exclusively to the company by Funai Electric starting in June. The sets sold well as customers appeared to find them reasonably priced, while the exclusivity arrangement made them less costly to procure than those from other companies.

But Yamada faced increasing losses in housing operations, which the retailer is cultivating as a new business. Though orders are strong, personnel costs and other expenses are climbing as the company takes on more sales reps. Adding bargain homebuilder Yamada Wood House to the group's earnings sheets also deepened the red ink, as the company apparently suffered an operating loss. Earnings in housing operations are seen improving in the fiscal year's second half.

April-June earnings are due out Thursday. Yamada probably will maintain its guidance for the year ending in March, as earnings in and after summer carry more weight for the company, the strong first quarter notwithstanding. The retailer projects sales growing 2% to 1.6 trillion yen, with net profit climbing 36% to 47 billion yen.  

(Nikkei)

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