Japan's Lawson sees overseas business turning profitable next FY

By Taiga Uranaka and Ritsuko Shimizu TOKYO (Reuters) - Japanese convenience store chain operator Lawson Inc <2651.T> expects its overseas business to turn profitable in the next business year, led by growth in China, where it entered 20 years ago but has been struggling so far. Sadanobu Takemasu, who became president and chief operating officer on Wednesday, also said in an interview with Reuters the company would accelerate overseas store openings this business year. The bulk of the expansion would come in and around Shanghai, where he expects the number of stores to double to 1,000 over the next three years. Lawson opened its first store in China in 1996, but it has not been able to transplant its success in Japan. Lawson convenience stores in China currently number around 690. "We have finally topped 500 stores in Shanghai area. In convenience store business, once you pass that scale, things start to change, including relationship with suppliers and property developers," he said. Lawson has previously forecast an operating loss of 2.9 billion yen ($26.4 million) for its overseas operations in this business year ending in February 2017. Lawson lags far behind its rivals overseas. There are over 40,000 Seven-Eleven stores globally outside Japan. FamilyMart Co <8028.T> has about 5,900 stores overseas, including 3,000 in Taiwan. Lawson has only 790 stores outside Japan. In addition to China, it has stores in Indonesia, Thailand, the Philippines and Hawaii. Takemasu said the company is looking for opportunities to enter other southeast Asian countries, such as Vietnam and Malaysia. He also said the company is studying possibilities of opening stores in Europe and the mainland United States, though it has no specific plan at this moment. Takemasu, 46, began his career at Mitsubishi Corp <8058.T>, which owns over one-third of the company. Asked about consumer sentiment in Japan, Takemasu said he "cannot take an optimistic view" towards consumer spending, citing uncertainty surrounding the economy. Prime Minister Shinzo Abe is expected to announce later on Wednesday his decision to delay a national sales tax hike originally planned for next April by 2-1/2 years. The delay comes as scepticism grows about the government's three-year campaign to revive the economy, with recent data showing retail sales fell in April for the second consecutive month. Amid tepid consumer spending, however, the convenience store industry is bucking the overall trend. Lawson's same-store sales in April rose 1.5 percent from a year earlier. "Convenience store sales are not so sensitive to overall economic trends," Takemasu said. (Reporting by Taiga Uranaka; Editing by Chang-Ran Kim and Muralikumar Anantharaman)