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Japan-Update

Yamada Denki operating profit likely up 10% for April-December

Japanese retailer buoyed by large appliances, smarter sales approach

Refrigerators and other white goods sold well at Yamada Denki stores like this one in Tokyo's Setagaya Ward.

TOKYO -- Yamada Denki's operating profit apparently rose about 10% on the year to around 47 billion yen ($411 million) for the nine months ended December on robust sales of profitable home appliances and a review of how its stores are run.

Sales are seen down 4% at some 1.15 trillion yen. The electronics retailer had enjoyed a boost from closeout sales in the same period of 2015, when it shuttered 90 or so unprofitable locations. Though more customers replaced televisions with high-definition 4K models this fiscal year, the benefits were limited.

But profit margin improved greatly this time around. Yamada Denki has been renovating some 200 branches a year since fiscal 2014, cutting floor space for computers, cameras and other products where prices have plunged, while expanding offerings in such large home appliances as refrigerators and washing machines.

The Japanese market's home appliance shipments grew by value for the first time in three years in 2016 on growth in single-person households and working couples. The retailer assigned experienced salespeople during busy shifts to promote high-performance appliances and reduce excessive discounting. Such changes at stores are believed to have helped lift gross profit margin about 1 percentage point to roughly 30%.

Yamada Denki also curbed increases in labor costs through such means as lower retirement pay and other pension reforms.

April-December results come out Thursday. For the full year ending March 31, the company sees sales rising 1% to 1.63 trillion yen and operating profit climbing 23% to 71.4 billion yen. While sales are lagging, Yamada Denki is expected to maintain its forecast on expectations of profit growth.

(Nikkei)

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