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Ito-Yokado Co. said Thursday its operating profit plunged 64 percent to 8.8 billion yen on a parent-only basis for the year that ended on Feb. 28, dragged down by dismal apparel sales.

The results of Japan’s second-largest retailer and those of its larger rival, Aeon Co., underscored the recent weak performance of general merchandise stores being aided by other businesses.

The parent-only figures are considered better reflective of the retailer’s main general merchandise businesses since they do not include the subsidiaries.

Ito-Yokado said its consolidated operating profit rose 2 percent to 211.95 billion yen on revenue of 3.62 trillion yen, up 2 percent from a year earlier.

The company attributed the group’s earnings growth to a strong showing by its subsidiary convenience store chain Seven-Eleven Co. and IY Bank.

Seven-Eleven, which has more than 10,000 outlets in Japan, enjoyed solid earnings growth thanks to its aggressive store openings.

The chain’s net profit rose 3 percent to 96.33 billion yen, on revenue of 502.52 billion yen, up 6 percent from a year earlier.

“The biggest cause for the sharp profit drop was apparel,” Noritoshi Murata, Ito-Yokado’s chief financial officer, told a news conference.

He said slow clothes sales forced stores to mark down prices, which in turn hurt profit.

“Fixing the apparel line is (general merchandise outlets’) biggest challenge,” he said.

To reverse the decline, the retailer recently set up a new unit made up of outsiders to revamp its apparel line and invited fashion legend Yukio Fujimaki to head it.

Fujimaki is famous for his work as a fashion buyer for Isetan department stores and leading the rehabilitation of sock maker Fukusuke Corp.

Aeon, which operates the Jusco retail chain and Maxvalu supermarkets, said its profits were driven by its credit card and shopping mall developer businesses.

In its fiscal 2004 results announced Wednesday, Aeon’s net profit rose 12 percent to 62.06 billion yen, on revenue of 4.2 trillion yen, up 18 percent from the previous year.

In Aeon’s parent-only results, however, operating profit dropped 28 percent to 17.39 billion yen.

Aeon President Motoya Okada told a news conference Wednesday that weak apparel sales dragged down the general merchandise outlets’ performance.

In order to revamp sales, he said the retailer will focus on opening more stores at shopping malls, as those locations attract more customers and the stores have stronger sales.

“Apparel and home fashion sales are 5 percentage points higher at stores situated in shopping malls than stand-alone outlets,” Okada said.

“We will actively scrap stand-alone stores and switch to shopping malls and super centers.”

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