Daiei Inc. said Saturday it will scrap a sales tieup with Yamada Denki Co., a move that will force the troubled retail giant to review its strategy for increasing slumping sales of household appliances.

The two signed the deal in October last year. It was canceled after Yamada Denki, a major home electronics discounter, closed a sales outlet in Daiei’s Yokosuka store in Kanagawa Prefecture on Friday night. Daiei described the move as “a failure to implement the contract.”

The cancellation nullifies a plan for Yamada to become a tenant at five more Daiei stores by spring.

Yamada Denki opened seven outlets at Daiei stores before the two formed the tieup. Those outlets will continue to operate despite the latest move.

The outlet in question opened in December 2002. Yamada Denki told Daiei later that month it would close the outlet in January and end the business accord, according to Daiei.

Daiei said it had asked Yamada Denki to rethink the move, but to no avail. Daiei indicated it may consider taking legal steps against Yamada Denki.

Yamada Denki said it was unable to narrow differences with Daiei over pay and other working conditions at the five outlets.

“We proposed a meeting of the two firms’ presidents, but Daiei rejected the proposal,” a Yamada Denki official said.

The closure of the Yokosuka outlet was not a unilateral action by Yamada, the official said.

Daiei has been trying to drastically reduce operations at its household-appliance division. On a same-store basis, sales in the March-August first half of fiscal 2002 dropped a sharp 25.7 percent from the year before.

Seibu to make cuts

Seibu Department Stores Ltd. plans to close or downsize operations at four of its 23 outlets as part of continued efforts to promote restructuring, sources close to the company said Saturday.

The plan came to light following news report Friday that the troubled department store is considering asking Mizuho Corporate Bank and other creditor banks for financial support worth 230 billion yen.

The four outlets are said to be in Hakodate in Hokkaido, Toyohashi in Aichi Prefecture, Kawasaki in Kanagawa Prefecture, and Sendai in Miyagi Prefecture.

Under the plan, the stores will reduce sales space through such measures as attracting tenants.

Seibu plans to decide by the end of February 2008 whether to close the four after studying sales figures following the restructuring.

The firm also plans to cut about 2,000 jobs, the sources said.

Along with around 1,000 employees scheduled to retire, Seibu plans to slash another 800 jobs in an early-retirement program to begin this month.

Seibu is expected to ask as early as Tuesday for debt forgiveness and conversion of debt into equity from Mizuho Corporate Bank — its main creditor bank and one of the two core banking units of Mizuho Holdings Inc. — and five other creditor banks.

Seibu will also seek help from Credit Saison Co., an affiliated consumer credit company, via a debt-equity swap worth some 10 billion yen.

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