Tobacco sales lift Japan convenience stores in July

Tue Jul 22, 2008 8:06pm BST
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By Taiga Uranaka

TOKYO (Reuters) - Japan's major convenience store chains are set to post double-digit sales growth in July, a welcome boost after years of weak revenue, as cigarette smokers shun new ID-requiring vending machines and flock to their stores.

After seeing same-store sales fall or post only meagre growth for months, FamilyMart Co Ltd (8028.T: Quote, Profile, Research) and Lawson Inc (2651.T: Quote, Profile, Research) have seen revenue pick up from May as use of a new ID function became compulsory in more parts of Japan.

Shares in both firms have rallied 22 percent over the last three months, outperforming a 4 percent fall in Tokyo stock exchange's retail sub-index .

FamilyMart, the nation's No. 3 convenience store operator, said July same-store sales are up 14-15 percent so far, its biggest monthly sales jump in at least 17 years.

Japan's No. 2 operator Lawson said it is seeing double-digit same-store sales this month, the best growth since it went public eight years ago. An industry source said Seven-Eleven, a unit Seven & I Holdings Co Ltd (3382.T: Quote, Profile, Research), was seeing growth of close to 10 percent.

Vending machines began to require the special smart ID card, called Taspo, in certain areas of the country from March and the requirement now covers all areas of Japan.

"To be frank, the Taspo factor is the top reason for the growth," said a source at one of the companies, who declined to be identified.

Convenience store chains, wary of anti-smoking sentiment, have been reluctant to refer publicly to the windfall nature of their sales boost.  Continued...