JR East Railway Co., formerly a division of Japan National Railways, is buying Kiknokuniya’s 17-store chain of high-end Tokyo-area food supermarkets.

The deal will see JR East open new stores to further boost retail operations in its lucrative station malls, which already clock up JPY1trn (US$11.2bn) in annual sales.

However, JR East saw net income fall 22.5% in the six months to September 2009 to JPY94.5bn, versus 2008.

Kinokuniya is privately-held and a JR East spokesperson refused to comment on the financial details of the deal, which is expected to be completed before April.