CONVENIENCE STORES HELPED BY SMOKERS Seven & I said its Seven-Eleven stores in Japan postedsame-store sales growth during the first quarter, helped byhigher tobacco sales after the introduction of ID-requiringcigarette vending machines. Many smokers have opted to buytobacco at convenience stores rather than go to the trouble ofregistering for the special ID cards. The tough spending environment has also prompted theretailers to take a more drastic approach to overhauling theiroperations, converting unprofitable supermarkets into discountstores. For the full year ending in February, Seven & I kept itsforecast for 1.1 percent growth in operating profit to 285billion yen, slightly above an average forecast of 282.8 billionyen in a poll of 18 analysts by Thomson Reuters. Seven & I’s supermarket chain Ito-Yokado and rival Aeon CoLtd (8267.T) have been slashing prices and expanding offeringsof cheaper store-brand items to lure back shoppers but they havefailed to stem the sales decline. But it said a stronger yen dented profits from itsconvenience store operations in the United States, while groupearnings were also hurt by accounting changes. The firm, which also operates more than 12,000 Seven-Elevenstores in Japan and 6,300 in the United States, said salescontinue to grow at its convenience store business.

Seven & I said its operating profit fell to 58.65 billionyen ($606 million) in the March-May quarter from 71.08 billionyen a year earlier. “So in the second half, I expect its cost-cutting andefforts to improve profit margins to catch up with fallingsales, leading to a profit recovery to a certain degree,” hesaid. But when youconsider the unusually steep sales drop since the Lehman shocklast year, the negative trend is likely to soften later thisyear,” said Shun Tanaka, a retail analyst at SMBC FriendSecurities, referring to the collapse of U.S investment bankLehman Brothers in September. Seven & I and its rivals are suffering from a retail slumpamid Japan’s deepest post-war recession, as consumers deferbuying clothing and non-essential items or defect to cheaperspeciality stores such as casual apparel chain Uniqlo, which onThursday reported strong sales growth in June “The first half is the toughest period. * Seven & I posts quarterly profit decline, keeps outlook Japan * Department stores and supermarkets suffer sharp salesfalls * 7-11 stores post growth but yen dents U.S.

business * Lawson reports growth, Uniqlo June sales up 6.4 pct By Taiga Uranaka TOKYO, July 2 (Reuters) – Japan’s largest retailer, Seven &I Holdings (3382.T), reported a 17.5 percent drop infirst-quarter profit as cost-cutting failed to offset sharpsales declines at its department stores and supermarkets. “But if this is not the case, we will not shy away fromstating our opinions and showing solidarity with those,including members of the British embassy, that have been putunder pressure.” (Writing by Noah Barkin, editing by Ralph Boulton) Currencies Bonds. NineIranian employees at the British embassy in Tehran were takeninto custody, although most have since been freed.”The leadership in Iran must know that if they choose apath of reason, then we want Iran to develop prosperously,”Merkel said. Wecannot drop the issue of a nuclear-armed Iran just because ofthe current situation. That would be completely wrong.” The West accuses Iran of using a nuclear research programmeas a cover for developing nuclear weapons. Iran denies theaccusation and says the work is intended for peaceful generationof electrical energy.After days of mass protests following the elections, securityforces used tear gas and batons to disperse demonstrators. “I strongly support President (Barack) Obama’s offer to Iranof direct talks We will accompany this in a united way.