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Japan-Update

Don Quijote sees 2020 profit tracking higher with bigger shops

Discount operator's planned supermarket tie-up to provide additional momentum

TOKYO -- Discount store operator Don Quijote Holdings expects operating profit to reach 60 billion yen ($537 million) for the year ending June 2020, 20% higher than the current target, as the company rolls out mega-stores intended to drive sales and keep supply costs low.

The Japanese company initially aimed for sales of 1 trillion yen and an operating margin of 5%. But the quick opening of new stores put Don Quijote on track to achieve its goal earlier than expected.

Sales grew 9% to 828.7 billion yen last fiscal year, while operating profit climbed 7% to 46.1 billion yen. The operating margin for this fiscal year appears headed for 5.5%.

Don Quijote intends to buy a 40% stake in supermarket operator Uny, a subsidiary of FamilyMart Uny Holdings, by November. Some shuttered Uny supermarkets will be converted into large-scale Mega Don Quijote stores.

Against that backdrop, the discount store operator now expects sales of about 1.1 trillion yen in fiscal 2020, the final year of its medium-term management plan. Don Quijote sees operating profit reaching 60 billion yen as the company maintains its current operating margin.

(Nikkei)

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