Seven-Eleven serves up treat in Tokyo

RETAILING in deflation-hit Japan is no easy occupation but Seven-Eleven Japan, which runs more than 10,000 stores, has earned a reputation as the company that does not disappoint investors.

Its credentials are founded on 23 consecutive years of full-year profit growth as it opens more outlets, and refines its talent for offering just what people want from their convenience stores.

Thursday was another good day as the company posted a 12.4% rise in half-year net profit to 49.99bn yen (£274m). It said the performance - above its target for full-year profit growth of 8.4% - was driven by cost cuts and booming sales of popular lunch boxes.

The ready-made meals, plus salads and rice-ball snacks, account for about a third of company sales, but contribute a disproportionate sum to bottom-line profits.

There had been concern among some investors and analysts that Japan's lousy summer this year may have dented sales, with temperatures at their coolest in a decade.

But Seven-Eleven Japan's state-of-the art inventory tracking system had kept its managers in touch with shifts in demand, allowing them to respond speedily. The company, which controls an estimated onefifth of the corner-shop market, rose 230 yen or 6.3% to 3880 yen. What proved a boon for Seven-Eleven Japan also cast its listed parent in a favourable light. Ito-Yokado, which controls a shade over 50% of Seven-Eleven Japan, gained 260 yen or 6.6% to 4230.

Ito-Yokado said its net profit for the six months to August ballooned 192% to 23.24bn yen. That was despite a 8% decline in group operating profit to 99.43bn yen.

Ito-Yokado runs head to head with larger department-store rivals. Its pressing concern at the moment is fashioning an adequate response to Wal-Mart, the largest shareholder in Japan's Seiyu. Seiyu added six yen to 361.

Broker UBS Warburg also stirred activity in the retail sector, initiating coverage of Toys 'R' Us-Japan with a buy rating and price target of 3000 yen. The Jasdaq-listed company, controlled by the US parent, surged 210 yen or 10.6% to 2190 yen.

The wider market weakened amid jitters about the yen's strength. The Nikkei 225 dipped 10.76 points to 10,531.44. KDDI, the telecoms group, added 10,000 yen or 1.6% to 656,000 yen on the launch of a broadband offering.

Hong Kong shares rose, led by TVB, which was HK$1.40 or 4% better at HK$36.40. The broadcaster said it would boost advertising rates next year as the local economy strengthened.

The Hang Seng index advanced 42.11 points or 0.4% to 11,762.91. Strength came from bargain-hunting in exporter Li & Fung, up 20 cents or 1.5% at HK$13.15, and conglomerate Wharf, up 70 cents or 3.5% at HK$20.85.

Australian shares received a lift from jobs data that showed 43,300 new posts added last month and the jobless rate steady at 5.8%. The All Ordinaries index closed 9.2 points higher at 3257.0.

Miners led the upswing. Rio Tinto put on 54 cents or 1.6% to A$34.69, while BHP Billiton rose 20 cents to A$11.16.

Foreign buying helped Seoul, where the Korea Composite Stock Price Index rose 7.2 points to 729.96, up 1%.