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July
2008
Starbucks Japan To Expand
From City Centers To Maintain Growth
Starbucks Coffee Japan Ltd. has seen sales at existing outlets fall year
on year for four consecutive months, prompting the coffee shop chain to
try and maintain growth by opening new branches in suburban areas as well
as busy urban centers. While Starbucks Corp. of the U.S. is downsizing its
operations, the Japanese firm still seems to have room to expand its
business. By actively opening new stores, it increased sales by 15% and
pretax profit by 34% for the year ended March, marking record results in
both categories for the fourth straight year. For fiscal 2008, the company
expects sales to grow 9% to 99 billion yen and pretax profit to rise 4% to
7.2 billion yen. Sales at existing shops have declined year on year for
four straight months through May, when sales fell 2.1% on a 2.7% drop in
customer traffic. Starbucks Coffee Japan attributes the sales decline
mainly to weakening consumer spending. Per-customer sales, including food,
average 500 yen, compared with 340 yen at Doutor Coffee Co. Another factor
that has probably affected sales is that McDonald's Co. (Japan) has
improved the quality of its coffee while keeping the price at 100 yen per
cup. Starbucks is seeking continued growth with a strategy of expanding
from the centers of major cities. The firm has set up coffee shops mainly
in flourishing shopping districts, but it has become more difficult to
find new locations there. In the current fiscal year, the company plans to
actively open new outlets in highway parking areas, neighborhoods around
railway stations and in hospitals. It also intends to increase the number
of branches offering drive-through service. The company opened a store on
the campus of the University of Tsukuba in mid-March, and plans to open
one in a park in Toyama in September. It hopes to set up 100 new outlets
this fiscal year, similar to last year's 98, and have 876 in operation
nationwide by next March. (The Nikkei Marketing Journal; Wednesday, July
9, 2008)
Seven & I Op Profit Tops
Aeon's On Convenience Store Business
Convenience store operations helped Seven & i Holdings Co. secure
operating profit that was more than triple rival Aeon Co.'s in the
March-May quarter. Seven & i reported Tuesday that operating profit
came to 71 billion yen, about the same as in the year-earlier period.
Aeon's operating profit plunged 20% due to its heavy reliance on general
merchandise stores. The two retailers both saw lackluster clothing sales
during the quarter. Sales at Seven & i rose 2% to 1.39 trillion yen.
Subsidiary Millennium Retailing Inc., which oversees Sogo Co. and Seibu
Department Stores Ltd., saw operating profit plunge 15% because of higher
expenses for store makeovers and slumping sales of clothing and luxury
items. Seven & i's supermarket operations, which are centered around
subsidiary Ito-Yokado Co., were also bogged down by sagging clothing
sales. Convenience store unit Seven-Eleven Japan Co., which earns 60% of
group operating profit, logged a 4% profit gain, buttressing group
results. Seven-Eleven Japan plans to open 1,000 stores and close 600 this
fiscal year. Operating profit at financial services unit Seven Bank soared
63% as more customers used its ATMs at convenience stores. Seven & i
Food Systems Co., which operates Denny's and other restaurants, intends to
close 140 locations, or about 20% of its total, over the next three years.
(The Nikkei; Wednesday, July 9, 2008)
Fast Retailing: Uniqlo June
Same-Store Sales Up 0.7% Y/Y
Fast Retailing Co. said Wednesday that
same-store sales at its Uniqlo casual clothing store chain in June rose
0.7% on year for the second straight month of gains. But the company said
an earlier than usual start to the rainy season this year reduced the
number of shoppers, thus moderating the sales growth. Fast Retailing also
said the number of customers visiting its stores fell 1.3% on year in June
on a same-store basis. (Dow Jones; July 2, 2008)
Kirin Likely Missed Interim Op
Profit Target On Soft Drink Slump
Kirin Holdings Co. is expected to report a group operating profit of about
55 billion yen for the six months through June, up 28% on the year but
falling short of an earlier forecast of a 38% jump. The smaller profit
growth is attributed largely to the soft drink business, which faced
intense competition. Consolidated sales are estimated to have increased
24% to 1.04 trillion yen, in line with an earlier projection. Sales of
Kirin's low- and no-malt beer generally met targets. But commercial demand
turned out to be weak, leading to a steeper-than-expected decline in beer
sales. Still, the alcohol business apparently reached a profit goal thanks
to cost cuts. Kirin's profitability was undermined by the soft drink
business, where green tea and other beverages recorded poor sales due to
severe competition for market share. Heavy spending on sales and promotion
weighed on the segment's performance. The firm's pharmaceutical operations
were buoyed by the acquisition of Kyowa Hakko Kogyo Co., which turned in
strong results thanks in part to licensing antibody drugs to U.S. firm
Amgen Inc. However, Kirin Pharma Co. did poorly after the government
lowered its mandated prices for the Nesp and Espo anemia treatments.
Overseas, Australian dairy products maker National Foods Ltd., which was
acquired last year, apparently fell short of a target as it failed to
fully pass higher costs of fruit juice and other ingredients on to
customers. But Australian brewer Lion Nathan Ltd. apparently enjoyed
robust results. (The Nikkei; Wednesday, July 2, 2008)
June
2008
Seven & I's March-May
Operating Profit Seen At Record Y71.5bn
Seven & i Holdings Co. is expected to report a record group operating
profit of roughly 71.5 billion yen for the three months ended May 31 on
strong earnings from its convenience store unit and financial businesses.
With high gasoline prices keeping more consumers from driving to
restaurants, more people appear to be buying boxed lunches and other
prepared meals at convenience stores. Group pretax profit is estimated to
have edged 1% higher to about 70 billion yen on operating revenue of
around 1.4 trillion yen, an increase of 3%. Operating profit climbed 1%
from the year-ago period. Seven-Eleven Japan Co.'s same-store sales rose
more than 1%. In addition to the shift in consumer trends resulting from
costly gasoline, an improved array of fried and other fast foods buoyed
the convenience store chain operator. Seven-Eleven Japan's operating
profit, which generally accounts for three-fifths of the group figure,
appears to have climbed 5%. The group's financial business, including
Seven Bank, logged steady earnings growth on increased ATM traffic at
convenience stores. In the restaurant segment, the closure of unprofitable
branches helped to narrow losses. And the supermarket segment's operating
profit is expected to hold steady with weak apparel sales canceled out by
cost-cutting efforts. However, operating profit at Millennium Retailing
Inc. apparently plunged by double digits on slumping sales of clothing and
luxury goods. The unit oversees the Sogo and Seibu department stores. (The
Nikkei; Friday, June 27, 2008)
Aeon Mall's March-May Net
Profit Seen Soaring To All-Time High
Aeon Mall Co.'s group net profit likely surged 69% on the year to some 5.3
billion yen for the March-May period, a record for a fiscal first quarter,
thanks largely to a sustained rise in revenue after a merger last August.
Operating revenue is pegged at more than 30 billion yen, up 83%. The
marriage with fellow shopping mall developer and Aeon Co. group member
Diamond City Co. continued to bolster Aeon Mall's earnings. And compared
with the sum of both firms' revenues in the same period last fiscal year,
operating revenue grew more than 1%. Revenue from two shopping centers
completed last fiscal year also played a part in the rise. Although sales
have been slumping since spring as consumers cut back on outings amid
higher gasoline prices, rent income likely rose 0.5% after a round of
hikes. Group operating profit apparently climbed 53% to around 8.5 billion
yen as higher revenue cushioned the blow of upfront investment in new
developments. Aeon Mall plans to open four new malls later this fiscal
year and more shopping centers next fiscal year. For the full year ending
February 2009, group net profit is expected to increase 20% to 21 billion
yen. (The Nikkei; Thursday, June 26, 2008)
Sharp's New 108-Inch LCD
Display Is World's Largest
Sharp Corp. announced Friday that it has developed a 108-inch LCD panel
designed for use as a display in commercial applications. Measuring 2.38 x
1.34 meters, it is the world's largest LCD to date and ratchets up the
competition between LCDs and plasma panels for large indoor displays.
Sharp's new display has roughly 2 million pixels, giving it a picture
quality comparable to a full-high-definition television. The company will
price it at around 11 million yen and expects to sell 3,000 units over the
next two years. The first unit will be used in the main lobby of a cinema
complex that Shochiku Co. will open in Tokyo's Shinjuku District in July.
Matsushita Electric Industrial Co. already markets a 103-inch plasma
display for indoor applications that is priced at around 6 million yen. As
its selling point, Sharp will trumpet the ability of the giant LCD panel
to provide sharp contrast even in bright settings. (The Nikkei; Saturday,
June 14, 2008)
New Tokyo Multiplex To Sell
World's Priciest Movie Tickets
Movie studio Shochiku Co. will open a multiplex theater featuring two
private viewing rooms with high-end sofas. The 30,000 yen fee for the
two-person private rooms will be the most expensive movie tickets in the
world, according to Shochiku. Slated to open its doors July 19, Shinjuku
Piccadilly will be Japan's largest multiplex with 10 screens. Besides the
two Platinum rooms for private viewings, the building will also be fitted
with 22 special seats from European furniture makers. Tickets for those
will cost 5,000 yen apiece. Patrons of the special services will have
access to a luxury salon, where they can view books and other materials on
films while enjoying wine and champagne. Shochiku will position the new
building as a model for operating movie theaters. (The Nikkei Business
Daily; Friday, June 13, 2008)
M'shita To Release 1st TV
With Built-In Cable Receiver In N America
Matsushita Electric Industrial Co. will introduce in North America in
October the world's first television capable of receiving cable
broadcasting without a separate receiver, company sources said. The firm
will launch 42-inch and 50-inch plasma models with built-in receivers that
will allow users to enjoy two-way communications, such as video-on-demand
services. The TVs will be priced at an estimated 1,800 dollars and 2,500
dollars, respectively. The company plans to add a 30-inch LCD model next
year, and aims for annual sales of 2-3 million units of flat-panel TVs
with built-in cable receivers in five years from now. In the U.S., about
30 million TVs are sold annually, and around 60% of households subscribe
to cable TV. Matsushita, which seeks to sell 2 million TVs there in fiscal
2008, hopes the new products will give it a boost amid the intensifying
market competition. Matsushita developed the TVs with cooperation from
major cable broadcasters, including Comcast Corp. (The Nikkei; Sunday,
June 8, 2008)
Seiyu To Import 100 Wal-Mart
Store Brand Items By Year's End
Seiyu Ltd. will start importing around 100 store brand products from U.S.
parent Wal-Mart Stores Inc. by the end of the year, in response to the
growing price-consciousness of Japanese consumers. The move was disclosed
on Thursday by Seiyu Chief Executive Officer Edward Kolodzieski during a
visit to Wal-Mart headquarters. Costs will be kept low by shipping the
items directly to Japan from production sites in Southeast Asia and other
nearby areas. The imported food products and everyday goods will be ones
that sell well at Wal-Mart stores in the U.S. and Europe. Seiyu already
imports some store brands made by the Wal-Mart group, such as its recent
launch of Member's Mark frozen shrimp, which is the private brand of
Wal-Mart's membership-only warehouse club Sam's Club. In August, Seiyu
will start importing canned peanuts, candy, beverages, processed foods,
paper products and other goods under Wal-Mart's signature Great Value
brand. Although Seiyu already sells products with the Great Value logo, it
currently selects the firms that produce them, which are often different
than those that supply its U.S. parent. Seiyu will also bolster ties with
Wal-Mart group firms outside the U.S., such as importing more store brands
from U.K. supermarket chain Asda. Store brands now account for about 5% of
Seiyu's overall sales, and the retailer has announced a plan to boost this
to 10% within three years. (The Nikkei; Saturday, June 7, 2008)
Magazine Publishers Offering
Carbon Credits With Subscriptions
An increasing number of magazine publishers are introducing programs that
link subscriptions to carbon dioxide emissions credits. As early as
September, Tokyo publisher Hachette Fujingaho will introduce a carbon
offset subscription program for the Marie Claire women's magazine. Asahi
Shimbun Publications Inc. will launch a similar program for its Aera
weekly magazine the same month. A portion of the annual subscription fees
for these magazines will be used to purchase carbon dioxide emissions
credits generated by greenhouse gas reduction programs certified by the
United Nations. Because the publishers will foot the bill for purchasing
the credits, subscription fees will be unchanged. Through such programs,
the publishers hope to turn consumers concerned about the environment into
readers by giving them a way to easily contribute to the reduction of
carbon dioxide emissions. The initiatives are expected to reduce CO2
emissions by 365kg per year per subscriber. (The Nikkei; Thursday, June 5,
2008)
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