7-Eleven Owner Surges on Forecast for Record Profit: Tokyo Mover

April 5 (Bloomberg) -- Seven & I Holdings Co. rose by the most in four years in Tokyo trading after the owner of the 7-Eleven convenience-store brand said a weaker yen and adding stores will help boost profit to an all-time high this year.

The retailer climbed 10 percent to 3,400 yen as of the close in Tokyo, the biggest gain since Feb. 27, 2009.

Net income may rise 23 percent to 170 billion yen ($1.8 billion) in the year ending February 2014, the Tokyo-based retailer said in a statement yesterday after the market closed. The outlook assumes an exchange rate of 92 yen versus the dollar, the company said, a level that would increase the value of earnings from its 7-Eleven Inc. unit in the U.S. by about 6.6 billion yen, according to estimates by Taketo Yamate and Hiroko Yamada, analysts at Credit Suisse Group AG in Tokyo.

The exchange rate basis of the retailer’s profit forecast “still leaves some room for upside,” Yamate and Yamada wrote in a note to clients today. The profit growth forecast “appears achievable overall,” they said.

Record Stores

Seven & I plans to open a record 1,500 new convenience stores in Japan this fiscal year, tapping demand as consumers increasingly rely on the shops for meals formerly purchased at grocery stores or fast-food outlets. The operator of Ito-Yokado supermarkets and 7-Eleven convenience stores, Japan’s biggest chain, said operating profit will probably rise 15 percent to 340 billion yen.

Seven & I President Noritoshi Murata said the weaker yen and gains in Japanese stock prices were starting to increase domestic consumption. The benchmark Nikkei 225 Stock Average has gained about 26 percent this year, while the Japanese currency has dropped about 10 percent versus the dollar.

The yen’s decline comes as Prime Minister Shinzo Abe named Haruhiko Kuroda to replace central bank Governor Masaaki Shirakawa, while vowing to do “whatever is necessary” to end deflation.

The Bank of Japan said yesterday it will double the monetary base by the end of 2014 through buying government bonds, the central bank yesterday in Tokyo, in Japan’s biggest round of quantitative easing. Consumer stocks climbed in Tokyo today with supermarket operator Aeon Co. gaining as much as 6.8 percent, Uniqlo seller Fast Retailing Co. adding as much as 7.6 percent and J Front Retailing Co. rising as much as 10 percent.

To contact the reporter on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net