Japan's Seven & I Q1 profit falls in retail slump

TOKYO, July 2 (Reuters) - Japan's largest retailer Seven & I Holdings (3382.T) posted a profit decline in its first quarter on Thursday, hurt by weak consumer spending amid a recession, and kept its full-year outlook.

The company said its operating profit fell 17.5 percent to 58.6 billion yen ($606 million) for March-May, dragged down by its department stores and supermarkets, as cost-cutting efforts failed to offset a sharp fall in sales.

The operator of Seven-Eleven stores said its convenience store business enjoyed solid sales during the period, with sales in Japan lifted by growth in tobacco sales.

For the full year ending in February, the company kept its forecast for 1.1 percent growth in operating profit to 285 billion yen, slightly above an average forecast of 282.8 billion yen in a poll of 18 analysts by Thomson Reuters.

Department stores and supermarkets are among the hardest hit in a retail slump as thrifty consumers defer purchases of clothing and non-essential items or defect to cheaper specialty stores like Uniqlo.

Seven & I shares have shed about 25 percent so far this year, underperforming a 7 percent fall in the Tokyo stock exchange's retail sub-index .IRETL.T. ($1=96.65 Yen) (Reporting by Taiga Uranaka; Editing by Dhara Ranasinghe)