Pan Pacific International's Annual Profit Jumps 22% as Donki Traffic, Tax-Free Sales Drive Growth
Pan Pacific International (TYO:7532) posted record annual profit, driven by stronger customer traffic, robust domestic retail sales, and record tax-free sales, while productivity gains offset higher labor and energy costs.The Japanese retailer posted an 8.8% increase in net sales to 2.45 trillion yen and a 22% rise in profit attributable to owners of the parent to 110.1 billion yen for the year ended June 30, according to its earnings presentation.Operating income rose 7.7% to 174.8 billion yen.The discount store business was a key growth driver, with sales rising to 1.55 trillion yen and operating income reaching 110.7 billion yen.Same-store sales increased by 5%, while customer traffic rose by 1%, as pricing strategies and promotions helped attract shoppers.Meanwhile, tax-free sales reached a record 228.6 billion yen, up 31%, supported by stronger demand from customers across Asia, Europe, and the U.S.Sales growth from mainland China visitors slowed, while customer acquisition in other Asian markets, Europe, and the U.S. remained strong.Private-label and original-equipment-manufacturing sales also continued to expand, rising 19.7% to 379.6 billion yen and contributing to profitability. The company plans to develop a new strategy to accelerate business growth.For fiscal 2027, PPIH expects net sales to rise 9.9% to 2.69 trillion yen and operating income to increase 2.4% to 179.0 billion yen.Excluding Olympic Group, sales are forecast to rise 5.6% to 2.58 trillion yen and operating income 5.2% to 184.0 billion yen.The company expects to allow gross margin to decline temporarily as it prioritizes customer traffic and responds to changing consumer behavior, while investing in new stores, human capital, marketing, and AI.Olympic Group is expected to post an operating loss of 5 billion yen in fiscal 2027 as PPIH invests in its transformation. The company plans to convert Olympic stores into Don Quijote, MEGA Don Quijote, or Robin Hood formats, targeting sales of 200 billion yen and a 6% operating margin over the longer term.
