Tokyo, April 7 - Japanese retailer Aeon Co Ltd posted its first profit fall in a decade on sluggish sales in Japan and its struggling U.S. apparel unit, Talbots Inc, but forecast a recovery this year.
Aeon, Japan's second-biggest retail group after Seven & I Holdings, kicks off the earnings season for a sector finding it difficult to grow earnings due to weak consumer spending in a mature market.
Seven & I is expected to announce its first full-year operating profit fall in six years when it reports on Thursday, dragged down by its U.S. convenience store unit 7-Eleven Inc and its Ito-Yokado supermarkets in Japan.
But Aeon, which runs a sprawling network of businesses including drug stores and shopping malls, forecast group operating profit of 165 billion to 175 billion yen ($1.62-$1.72 billion) in the year to February, a gain of 6 to 13 percent.
The forecast compares with the market consensus of 166.2 billion yen in a poll of 10 analysts by Reuters Estimates.
Aeon said it had set itself a relatively low bar this business year with consumers likely to tighten their purse strings given the shaky economic outlook and the wealth destroyed by a sharp fall in Japanese stocks.
"We expect a very tough year, so our forecast is rather conservative," Aeon Executive Vice President Masaaki Toyoshima told a news conference. "The consumer spending situation in the countryside is especially severe."
Aeon said operating profit fell 18 percent to 156.04 billion yen for the year ended on Feb. 20, though the result was 4 billion yen above a forecast announced in February when it cut its outlook.
Sluggish consumer spending has cut into revenues at Aeon's supermarkets, with parent-only same-store sales slipping 0.4 percent last year. It has also been hit by a sharp downturn at majority-owned Talbots.
Talbots announced a turnaround strategy last week that included plans to open Talbots premium outlet stores while curtailing the expansion of its J. Jill chain until the performance at existing stores improves.
Shares of Aeon fell 44 percent over the past year through Friday's close, underperforming a 23 percent decline in the benchmark Nikkei average
Aeon's stock closed Monday up 1.8 percent at 1,329 yen, compared with the Nikkei's 1.2 percent gain.