Struggling retailer Daiei Inc. reported Friday a consolidated net loss of 511.2 billion yen for the year through February, with the firm having booked hefty restructuring costs.
The supermarket chain had a tough year in its mainstay retail business; its prospects are no less dismal for the current business year, as it lacks effective measures that promise to lure shoppers back quickly.
The firm, which operates 263 stores nationwide, has been trying to turn itself around with the help of the state-backed Industrial Revitalization Corp. of Japan.
On Friday, company officials said operating profit dropped 18 percent from the previous year to 42.39 billion yen, on revenue of 1.83 trillion yen, down 8 percent from a year earlier.
“Our financial restructuring has been progressing on schedule,” Daiei’s interim head, Yoshiaki Takahashi, told a news conference, referring to the firm’s debt-reduction program. “But our core retail business has failed to regain traction with customers.”
Daiei’s same-store sales, or turnover from outlets that have been open at least 13 months, dropped 8 percent from a year earlier. Its mainstay general merchandise stores, in particular, have been bludgeoned by weak sales.
Takahashi acknowledged that these stores, which carry a wide range of items, including clothing, household goods and groceries, have failed to attract shoppers.
As part of efforts to revamp its retail business, the company plans to focus new store openings on outlets that specialize in foodstuffs, a category in which the retailer has enjoyed relatively solid sales.
As for general merchandise stores, Daiei said it will invite specialty shops, including casual clothing retailer Uniqlo, to be tenants. It also said it will spend heavily on refurbishing existing stores. These measures will by carried out by a new management team comprising well-known executives from outside the firm.
Fumiko Hayashi, former president of BMW Tokyo Corp., will become Daiei’s chairwoman and chief executive, while Yasuyuki Higuchi, president of Hewlett-Packard Japan Ltd., will be its president and chief operating officer.
While Daiei officials lauded the incoming management as the best team ever, the two new top officials have no retail experience and face a daunting task.
Even industry leaders Aeon Co. and Ito-Yokado Co. are bogged down by weak showings among their general merchandise stores, and Daiei officials admit there is no quick fix.
For the current business year through next February, Daiei expects operating profit to drop to 42 billion yen, on revenue of 1.67 trillion yen. It expects to book a net profit of 403 billion yen, however, thanks to debt-waivers by major creditors.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.