• Kyodo

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The major department store chain Isetan Co. hinted Tuesday that it may expand the scope of its planned capital injection into financially troubled Iwataya Department Store Co., based in Kyushu.

“Capital accounts are important to stabilize business conditions,” Isetan President Nobukazu Muto said, “so we will consider enhancing their capital, if necessary.”

Isetan has envisioned acquiring an 18 percent equity stake in Iwataya by purchasing 750 million yen out of 2.3 billion yen worth of new shares that Iwataya plans to float.

“We have received a request from financial institutions to expand (the planned equity stake),” Muto said, noting the actual share Isetan will acquire in Iwataya has not yet been determined.

Meanwhile, Muto denied suggestions that Isetan may open a new store in Kitakyushu by taking over a building that once housed a branch of the failed department store chain Sogo Co.

“It is difficult to do so unless there is the prospect that we can clearly present the brand image of Isetan,” Muto said.

Upgrade for Isetan?

Moody’s Investors Service Inc. said Tuesday it has placed its Ba1 senior unsecured rating on department store chain Isetan Co. under review for a possible upgrade.

The review “reflects Isetan’s improved cash flow and credit profile, despite weak consumer spending and intensified competition in Japan’s retail industry,” the U.S. credit-rating agency said.

Moody’s said it will assess the strategies deployed by Isetan to maintain its strong operating performance and cash flow amid potentially volatile business conditions.

It will also evaluate Isetan’s efforts to reinforce its overall market position.

Matsuzakaya lifted

Moody’s Investors Service Inc. said Tuesday it has changed the outlook on the B2 senior unsecured long-term debt ratings of the Matsuzakaya Co. department store chain to stable from negative.

The U.S. credit-rating agency said it expects the company “will be able to keep the current market position at its flagship store in Nagoya, which will stabilize its overall earnings and cash flow despite intensified competition in Japan’s retail industry and weak consumer spending.”

With the company expected to continue structural reform of its department store businesses in a bid to improve its earnings and cash flow under its new three-year business plan, Moody’s said it will continue to monitor whether Matsuzakaya can improve its competitive position through effective execution of its business strategy over the medium term.

The B2 ratings “continue to reflect its brand equity in Nagoya, and relatively weak operating performance compared with its peer competitors,” the U.S. credit-rating agency said, adding the ratings also “continue to incorporate that the company continues to enjoy strong support from major lenders.”

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