Struggling Japanese retailer Daiei has raised its full year net profit forecast to JPY50bn (US$422m), up from JPY5bn, citing extraordinary profits from the sale of real estate. However, the group cut estimated operating revenue from JPY1.33trn to JPY1.29trn due to what it described as intensifying competition in the increasingly aggressive Japanese retail sector.
For the first half, Daiei reported group recurring profit of JPY19.6bn, up 128.9% compared to the first half of last year. However, operating revenue dropped 22.3% to JPY672,112m. Net profit for the period also declined 96.8% to JPY13,353m.
While operating revenue declined due to the closure of underperforming outlets and the sale of subsidiaries, improved margins meant operating profit increased 41.9% to JPY25,450m. A good performance from its credit card subsidiary, OMC Card, also contributed to profits, the company said.
Daiei is in the process of reorganising its operations, as its largest shareholder Marubeni Corporation prepares to sell a sizeable stake in the company to AEON, Japan’s largest retailer, in the hope of hastening its rejuvenation.