Sogo set to unload three outlets, Osaka flagship

Struggling with massive debts, department store chain Sogo Co. and its group are considering closing and selling four of its 28 domestic outlets, including its flagship store in Osaka, group sources said Tuesday.

The group is also thinking of asking creditor banks to forgive part of the group’s debts, they said.

In addition, the group is drawing up a restructuring plan for its overseas operations, which calls for the sale of its stake in a joint venture in Taiwan, the sources added.

With interest-bearing liabilities of 1.7 trillion yen, the Sogo group announced a restructuring plan in October with cutbacks in the floor space of 13 unprofitable stores.

But it is pursuing a more radical program to achieve a comprehensive restructuring of its group businesses, the sources said.

Sogo said that it has not decided on the concrete details of the restructuring program, but admitted that it is compiling a new plan, to be announced April 20 when it reports on the company’s performance.

In addition to the main store in Osaka, the three other stores under consideration for closure are located in Nagano, Nagano Prefecture, Kisarazu in Chiba Prefecture, and the Tama district of western Tokyo, according to the sources.

The group is also considering selling the equity stake the parent firm holds in affiliates that operate several other Sogo stores.

The group intends to trim its operations to about 10 domestic stores, the sources said.

They said the creditor banks were likely to demand that Sogo President Hiroo Mizushima resign when the group asks for debt forgiveness.

The restructuring comes at a price as it will cost several tens of billions of yen to close the stores, and finding buyers will be difficult, the sources added.