Lawson sees profits tumble; plans to fight back with rice balls

Lawson Inc., Japan’s second-largest convenience store chain, said Tuesday it posted a consolidated net profit of 4.56 billion yen during the March-August period, down 60.2 percent from the same period last year.

The firm attributed the sharp fall to the cost of a multiyear investment project involving a new information system that will connect its outlets and headquarters. The project is expected to cost 68 billion yen through the 2003 business year.

Net profit came to 42.36 yen per share, and Lawson is paying a midterm dividend of 20 yen per share.

The chain, which operates 7,648 outlets nationwide and 92 in Shanghai, said group operating revenue stood at 131 billion yen, down 1.6 percent from the same period in 2001, and that operating profit fell 11.1 percent, to 20.7 billion yen.

The firm logged a one-time special loss of 15.2 billion yen for the period, including 4.4 billion yen to cover early retirement incentives offered as part of its restructuring efforts.

Lawson trimmed 216 people from its 3,700-strong payroll and plans to cut a total of 400 for the full year through February 2003.

Lawson President and CEO Takeshi Niinami said the firm will launch aggressive investment in the second half of the business year, with 3 billion yen earmarked for developing new food items, mainly rice balls, and more TV commercials.

Due to the new investments, the firm lowered its group earnings forecast for the full year to an operating profit of 33 billion yen, down 9.6 percent, and a net profit of 8.1 billion yen, down by 19 percent.

Meanwhile, FamilyMart Co., the third-largest convenience store chain, announced Tuesday it posted a group net profit of 7.87 billion yen for the six months through Aug. 31, 46.1 percent up from the same period last year.

Consolidated operating revenue for the March-August period was 111.9 billion yen, up 10.7 percent, and group operating profit was 15.6 billion yen, up 13.1 percent.

Group profit came to 81.21 yen per share, and the firm is paying a midterm dividend of 19 yen per share.

FamilyMart attributed the improvement to brisk sales during the World Cup soccer championships. The company was one of the official corporate sponsors for the Japanese team.

It also cited restructuring efforts designed to enhance cost-effectiveness and the steady growth of business in Taiwan.

Against this background, the chain revised its group earnings forecast upward for the full year through February 2003, with consolidated net profit estimated to reach 12.8 billion yen, or 49.7 percent higher than the previous year.