Incoming Daiei chief sees return to profits in ’12

Kyodo News

Struggling supermarket chain Daiei Inc. will aim to return to the black in the 2012 financial year by reviewing its store structure and expanding sales of private-brand products, its incoming president said.

Michio Kuwahara, who will take the helm at Daiei in May, said in a recent interview that he plans to include the target in the company’s midterm business plan to be compiled around the middle of next month.

The retailer has scrambled to turn its operations around through its capital ties with trading house Marubeni Corp., its top shareholder, and retail giant Aeon Co. after it sought financial aid from the state-backed Industrial Revitalization Corp. of Japan.

For financial 2009 that ended in February, Daiei’s sales dropped below the ¥1 trillion mark for the first time in 32 years on sluggish demand for clothing and other products.

The firm also booked an operating loss of ¥1.16 billion, falling into the red from a year-earlier profit of ¥5.93 billion. However, Daiei’s net loss for the latest reporting year came to ¥11.89 billion, smaller than the previous year’s loss of ¥23.67 billion.

Kuwahara, 62, currently Marubeni’s senior executive vice president, said Daiei will likely log a net loss for the next two years as it carries out a review of its store assets.

“What we did not foresee (in the rehabilitation plan) was the impact of the Lehman shock,” Kuwahara said.