May 20, 2014 / 6:47 AM / in 3 years

REUTERS SUMMIT-Seven & I sees firm consumption ahead backed by rise in income

* Will monitor June sales to gauge overall consumption trends

* Cold summer, warm winter pose risks for consumption

* 7-Eleven sales so far in May up an average 4 pct - president (Adds details throughout)

By Ritsuko Shimizu

TOKYO, May 20 (Reuters) - Japanese consumer spending will resume a firm trajectory after a dip caused by a sales tax hike last month, supported by a rise in wages and bonus payments, the president of Seven & I Holdings Co said on Tuesday.

President and Chief Operating Officer Noritoshi Murata said that while sales had slipped for big-ticket items in April, consumption trends this month indicate that the impact of a higher sales tax was less pronounced than after the previous increase in 1997.

“We’re not being overly optimistic, but things are looking firm,” he said at the Reuters Japan Investment Summit.

The world’s biggest convenience store operator last month forecast a fourth straight year of record operating profit for the business year to February 2015, backed by plans to open 1,600 new 7-Eleven convenience stores in Japan.

While the last consumption tax increase dragged Japan into a recession and depressed private demand for years, economists are more sanguine about the latest hike, optimistic that Prime Minister Shinzo Abe’s recipe of ultra-easy monetary policy, fiscal spending and promised reforms will reawaken the Japanese economy.

7-Eleven has managed to boost same-store sales for 21 straight months through April, and sales so far in May were averaging about 4 percent higher than the previous year, Murata said.

To gauge broader consumption, Murata said he would monitor sales results in June, when many Japanese will have had time to digest an average wage increase of about 2 percent in the fiscal year that started in April, while some would be receiving their summer bonuses, which are also forecast to rise.

“I think June will be a turning point,” he said, adding that beyond that, a cool summer and warm winter were major risks for consumption.

Seven & I also owns supermarket chain Ito Yokado, department store operator Sogo & Seibu Co and family restaurant chain Denny‘s, among others.

Follow Reuters Summits on Twitter @Reuters_Summits

For more summit stories, see Reporting by Ritsuko Shimizu; Writing by Chang-Ran Kim; Editing by Christopher Cushing and Chris Gallagher

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