By Kosaku Narioka
Japanese drugstore operator Welcia Holdings saw a sharp decline in its shares on Tuesday morning following a 19% drop in net profit for the first quarter. The decrease was attributed to higher costs and a reduction in pandemic-related government subsidies.
As of now, Welcia’s shares are down by 10%, trading at 2,788.0 yen after experiencing an initial drop of 11%.
For the quarter ending in May, Welcia reported a net profit of Y5.13 billion ($36.3 million), compared to Y6.32 billion in the same period last year. Despite the decline in profit, the company’s revenue for the first quarter increased by 11% from the previous year to Y298.27 billion. This boost was mainly driven by strong sales in the cosmetics sector and a recovery in demand from international travelers.
However, Welcia stated that the decrease in government subsidies tied to the pandemic and the significant rise in energy costs have adversely impacted their bottom line.
Despite these challenges, Welcia Holdings has maintained its earnings projections for the fiscal year ending in February 2024. The company expects revenue to grow by 7.5% to Y1.230 trillion and net profit to increase by 3.6% to Y28.00 billion.