Ito-Yokado Co. lost its position as Japan's No. 1 retailer to Aeon Co. in terms of group sales in the year that ended Feb. 29.

But Ito-Yokado said Thursday that its net profit grew 15 percent to 53.63 billion yen, thanks to the strong performance of its convenience store subsidiary Seven-Eleven Japan Co.

Sales at the supermarket chain for the 12-month period were virtually flat at 3.542 trillion yen, slightly short of the 3.546 trillion yen reported by Aeon for the same period the previous day.

Aeon in November acquired the failed supermarket chain Mycal Corp., which helped boost its group sales.

It is the first time in five years that Japan's No. 1 retailer has changed in terms of sales.

Ito-Yokado maintained the No. 1 position since it overtook Daiei Inc. in the year to February 1999.

Like Aeon, Ito-Yokado was hit by unusual weather patterns, which had a detrimental effect on sales of seasonal lines of clothing items and other household merchandise.

As a result, the operating profit generated by Ito-Yokado's supermarket business plunged 37 percent to 21.1 billion yen.

Despite the poor performance in its mainline business, the company's solid results came on the continued strength of Seven-Eleven Japan, in which Ito-Yokado has a stake of 50.6 percent.

Earnings were also bolstered by the improved performance of banking subsidiary IY Bank Co. The operator of automated teller machines at Seven-Eleven convenience stores is expected to post its first-ever profit in the year that ended in March.

In the current business year, Ito-Yokado forecasts a net profit of 62 billion yen on revenue of 3.56 trillion yen.

The company said it will step up its cost-cutting efforts by streamlining store operations and using more part-time workers.

Separately, Seven-Eleven Japan, the country's largest convenience store chain, on Thursday reported another record earnings year on the back of aggressive store openings.

Its net profit for the year through February was up 12 percent to 93.14 billion yen, while revenue increased 12 percent to 474.28 billion yen.

Sales at all Seven-Eleven stores in Japan, including those run by franchisees, were up 6 percent to 2.34 trillion yen.

During the year, the company continued its aggressive expansion drive, opening more than 900 stores and bringing its number of domestic outlets to 10,303. The company also operates 53 stores in Hawaii.

And the company is not likely to slow down. For the current fiscal year, it plans to open 950 new stores, while closing 300.

The chain's solid showing is also attributable to a growing range of original brand items, including beer and ice cream.

The company said that 50 percent of sales generated by Seven-Eleven in the reporting year were those of original items, with officials adding that they are targeting a larger share.