Seven & I shares rise on department store closure

* Seven & I to close department store in central Tokyo

* Move is positive for earnings -analyst

* Department stores have been hit by weak sales, competition

By Taiga Uranaka

TOKYO, Jan 27 - Shares in Seven & I Holdings <3382.T> rose nearly 4 percent on Wednesday on moves by Japan's largest retailer to overhaul its struggling department store operations.

The company, which also runs Seven-Eleven convenience stores, said it has decided to close a store in central Tokyo's trendy Ginza district, where rival department store chains and global luxury brands have their flagship shops.

"Given the difficulty in improving profitability, it's a good decision to close or convert stores," said Shun Tanaka, retail analyst at SMBC Friend Research Center. "It's a positive move for Seven & I's earnings."

While sales at the Ginza outlet have been relatively low, it has a symbolic significance to customers as well the company.

The Nikkei business daily reported Seven & I was also considering shutting three more of its 28 department stores. The company denied this.

Seven & I, which has a wide-ranging retail operations including supermarkets, acquired the Sogo and Seibu department store chains in 2006.

They and rival upscale chains have been among the hardest hit by a prolonged retail slump as consumers in Japan cut back spending on designer clothes and luxury brand items.

Seven & I's department store business has been a drag on its earnings. The division suffered an operating loss of 2.2 billion yen for the nine months ending in November, down from a 9.7 billion yen profit a year earlier.

In an interview with Reuters last week, Seven & I President Noritoshi Murata said the firm may consider closing more department stores after shutting one and selling another to a rival last year. [ID:nTOE60H07O]

Since peaking at 9.7 trillion yen in 1991, Japan's department store sales have declined by about a third, amounting to 6.6 trillion yen last year.

Shares of Seven & I were up 3.6 percent at 1,995 yen at midday, outperforming a 0.3 percent gain in the benchmark Nikkei average <.N225>.