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Japan|What is the Driving Force Behind Discount Chain, Don Quijote? The Breakthrough of 29th Consecutive Year in Profit Increase

Aug 22, 2018.Ichiro KumegawaTokyo, JP
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Among the summer news consisting mainly of the Obon Festival, Koshien Baseball Championships, and sweltering weather reports, Japanese discount chain store, Don Quijote Holdings gave an account during their settlement meeting that occured on August 13th. In June, this year’s fiscal accounts rose to 13.6% which is 941.5 billion yen (US$ 8.509 billion*)  operating income by 51.6 billion yen (US$466 million*) (11.1%↑), with an ordinary income of 57.2 billion yen (US$ 516 million*) (25.7% ↑), and a net income of 36.4 billion yen (US$ 328 million*) (10.0%↑). This has been the 29th consecutive year-on-year increase in revenue and earnings since its founding.

The next numerical target will be for the 30th consecutive year (by end of June 2019)  to increase revenue with a turnover of 1 trillion yen (US$9.37 billion*) and to open 500 stores by June 2020. As a discount and supermarket business, a negative image has been bestowed upon it -- three employee deaths that occurred in 2004 due to arson, store’s unappealing decor, long working hours, and fraud incident by former managing director in 2011. Even though foreign inbound consumption has been a help to Japan’s economy, the somewhat analogue-like cheap looking store has become a driving force in the stagnant Japanese retail industry. This may be a critical moment. However, as a retail business, it’s ability to attest to changes along with it’s stable financial ability is a known fact.

Already, FamilyMart Holdings together with Don Quijote started developing a new business model that first opened in February 2018 called "MEGA Don Quijote UNY". The former has now opened 6 stores and the plans to open 20 stores by 2019.

Expansions abroad are taking form, starting with Singapore's "DON DON DONKI", as the first overseas store, which performed exceptionally well and recently opened the second store two months ago. Stores are also expected to open in Thai as well. In addition to the previous mentioned numerical target, the final goal set by President Ohara Kaji is to have an annual operating income of 100 billion yen (US$903 million*). With this momentum, the company will surely grow sufficiently.

One of the biggest rumors going around saying that Walmart is looking for a potential  buyer to sell Seiyu supermarket. "If these are the facts, we’re certainly interested." says President Ohara upon hearing the news. With Don Quijote Holdings rich financial resources, it’s likely to create a major restructuring of the industry as it starts to acquire corporate companies one by one.

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