Supermarket chain Seiyu Ltd. said Tuesday that huge appraisal losses on its shares in a subsidiary dragged it into the red on a consolidated basis over the six-month period ending Aug. 31.
The firm racked up a net loss of 22.4 billion yen in the half-year term.
Its group operating revenue came to 580.8 billion yen, a year-on-year rise of 7.4 percent, while its operating profit stood at 12.7 billion yen, a 22.9 percent increase from the same period a year before, company officials said.
A large portion of this group net loss resulted from appraisal losses on its shares in Tokyo City Finance Co., a nonbank lender.
Seiyu President Masao Kiuchi said these shares would be acquired by a financial institution by the end of the year. The supermarket operator lopped 22.7 billion yen off the shares’ book values ahead of the move.
Kiuchi did not provide any further details on the sale, such as the name of the buyer, stating merely negotiations are in their final stages.
By dispensing with the nonbank lender, Seiyu will reportedly be able to reduce its interest-bearing debts by up to 150 billion yen.
This should cut its debt total to less than 500 billion yen by the end of the current business year, which runs through February.
The firm’s interest-bearing debts stood at 609 billion yen as of the end of August.
Earlier this year, the supermarket operator forged a deal to operate under the auspices of Wal-Mart Stores Inc., the world’s largest retailer.
With the U.S. giant set to become Seiyu’s major shareholder by the end of 2005, Seiyu’s interest-bearing debts have widely been viewed as a stumbling block to Wal-Mart fully culminating the buyout.
Seiyu, which operated 241 outlets as of the end of August, said the value of sales from stores that had been in business for at least a year stood at 99 percent of last year.
Company officials said that while the number of customers and items per purchase exceeded the previous year’s figures, declining prices cut into revenue.
The average price per item purchased stood at 95.1 percent of the figure recorded a year ago.