Business

Daiei's sales slipped in May for third straight month

Sales at supermarket chain operator Daiei Inc. slid 3 percent in May from a year earlier on a same-stores basis for the third consecutive monthly decline, company officials said Tuesday.

They blamed the decline on bad weather and the introduction on April 1 of a regulation requiring retailers to attach price tags reflecting the 5 percent consumption tax. They said this gave consumers the impression of a price increase.

Daiei forecasts its same-store sales for the current business year to Feb. 28 to fall 1 percent from the previous year.

The struggling retailer expects a parent-only pretax profit of 20 billion yen for the current year, the final of its three-year revival strategy.

“The profits so far have been in line with the plan,” a Daiei official said.

Daiei’s main creditor, UFJ Bank, has expressed readiness to re-examine the feasibility of the restructuring plans of its large-scale corporate borrowers.

Analysts said that means Daiei needs to boost sales during the summer shopping season, when workers receive their bonuses.

Daiei is focusing on group-wide cost cutbacks and folding up unprofitable business segments. Under the restructuring plan unveiled in 2002, UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank agreed to forgive 170 billion yen in loans to Daiei and add 230 billion yen in debt-for-equity swaps.

Coronavirus banner