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UPDATE 1-Japan retailer Aeon forecasts modest profit growth

Published 04/14/2011, 02:38 AM
Updated 04/14/2011, 02:40 AM
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* 2011/12 oper profit forecast to rise 1.5 pct to 175 bln yen

* Q4 operating profit rises 6.5 pct to 79 bln yen

* Shares down 6.8 pct since March 11 quake, deeper than Nikkei (Adds details)

TOKYO, April 14 (Reuters) - Japan's Aeon Co forecast on Thursday a 1.5 percent rise in operating profit this financial year, with demand for basic goods likely to limit the impact of a post-quake decline in overall consumer spending for the nation's second-biggest retailer.

The March 11 earthquake and tsunami, along with the ensuing nuclear crisis and power shortages, have hurt consumer sentiment and are expected to hit discretionary spending.

Still, analysts expect demand for food and other essentials to help general retailers such as Aeon weather the downturn.

The retail conglomerate, which competes with Japan's Seven & I Holdings , forecast 175 billion yen ($2.1 billion) in operating profit for the year that began in March. That is slighly lower than the average estimate of 178.9 billion yen in a poll of 13 analysts by Thomson Reuters I/B/E/S.

Last week, Seven & I forecast a slightly higher 1.9 percent gain in annual operating profit.

For the fourth quarter of its business year that ended in February, Aeon booked a 6.5 percent rise in operating profit to 79 billion yen.

That capped a year when the operator of department stores, supermarkets and shopping malls bolstered profitability with cost cuts while sales rose on pent-up demand after shoppers had made deep spending cuts against a weak economic backdrop.

But the devastation caused by the 9.0 magnitude earthquake has dealt retailers a fresh blow.

Aeon shares have fallen 6.8 percent to 926 yen since last month's quake, compared with a 5.9 percent drop in the benchmark Nikkei average .

They finished 0.4 percent higher ahead of the earnings report, versus a 0.1 percent rise in the main index. ($1 = 83.890 Japanese Yen) (Reporting by James Topham; Editing by Edmund Klamann)

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