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FamilyMart to close 500 stores to boost profits.

TOKYO, Feb. 26 Kyodo

(EDS: ADDING COMMENTS, EARNINGS REVISION)

FamilyMart Co., a major convenience store chain operator, announced Monday it will close 500 unprofitable outlets in its nationwide 5,200-store chain over the next business year to Feb. 28, 2002.

The Tokyo-based company also said it plans to close an additional 450 outlets in the subsequent business year to February 2003 in order to improve overall profitability and maximize individual store profits.

The move reflects widening differentials between profitable and unprofitable outlets in the convenience store industry, industry analysts said.

FamilyMart President Michio Tanabe told a press conference that more than half of the 500 outlets slated to close are ''old stores'' that have been operating for over 10 years, adding that he wants to improve the overall quality of the store chain.

The company plans to open 450 new outlets during the next business year to February 2002, which will result in a net reduction of 50 stores in fiscal 2001, it said.

In contrast, Lawson Inc., another major convenience store chain operator, closed 350 outlets in the last business year to February 2000 while simultaneously opening 712 new stores.

FamilyMart will be the first major convenience store chain operator to reduce its overall number of outlets, and market analysts will watch closely whether such a move improves profitability as expected, they said.

Uichiro Niwa, president of Itochu Corp., the largest shareholder in FamilyMart, said his company will continue supporting the convenience store chain operator in its development of new products and overseas businesses.

He also said the planned closures ''will improve the quality of FamilyMart's affiliates and their profitability.''

In a related movement, FamilyMart revised downward its earnings projection for the 2000 business year ending Feb. 28, with consolidated net profit down 37.5% to 8.1 billion yen and group pretax profit down 13.1% to 25.6 billion yen.

It had forecast a group net profit of 15.5 billion yen and a group pretax profit of 30.8 billion yen as of April last year.

Sluggish sales combined with the disposal of retirement allowances have brought about the downward revision, it said.
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Publication:Japan Weekly Monitor
Date:Mar 5, 2001
Words:357
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