Lawson Japan expecting profit turnaround
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Japanese convenience store chain Lawson is expecting a 4 per cent growth in net profit for its half-year to August, defying a projected 7 per cent decline.
Lawson Japan attributes the swing to strong sales of salads and other private-label items. Lower costs for store closings also appear to have helped.
The Tokyo-based retailer says it expects to report a group net profit of around ¥23.5 billion (US$208 million) instead of the ¥21 billion it forecast in July.
Gross operating revenue is likely to rise 7 per cent to nearly ¥330 billion. The operating profit is predicted to ease 3 per cent at nearly ¥39 billion. Lawson had projected a 6 per cent drop.
In-house products, which have higher profit margins, have helped boost revenue. Lawson sold out all 2.5 million servings of a cream roll cake in just two weeks, part of a new line of sweets introduced in June.
The chain also found success with its salad offerings, which it increased from 16 to 26 in response to consumer health consciousness.
Same-store sales rose 1 per cent on the year during the half. Meanwhile, the chain closed about 150 locations, a third fewer than in the year-earlier period.
Questions & Answers
Q.What is the revised net profit expectation for Lawson Japan for the half-year to August?
What is the revised net profit expectation for Lawson Japan for the half-year to August?
Lawson Japan now expects a group net profit of around ¥23.5 billion (US$208 million). This is a 4 per cent growth, defying an earlier projected 7 per cent decline for the period.
Q.What factors contributed to the improved profit outlook for Lawson Japan?
What factors contributed to the improved profit outlook for Lawson Japan?
The turnaround is attributed to strong sales of salads and private-label items, which have higher profit margins. Also, lower costs from fewer store closings than anticipated also helped the financial performance.
Q.How did Lawson's private-label products perform in the market?
How did Lawson's private-label products perform in the market?
In-house products with higher profit margins boosted revenue significantly. For example, a new cream roll cake, part of a line introduced in June, sold 2.5 million servings in just two weeks.
Q.What changes did Lawson make to its salad offerings and why?
What changes did Lawson make to its salad offerings and why?
Lawson increased its salad offerings from 16 to 26 different varieties. This expansion was a direct response to growing consumer health consciousness, which proved successful for the chain.
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