With Daiei Inc. expected to take Aeon Co. as its business partner, analysts say Daiei still faces a big challenge to turn its business around.
Although Daiei has reduced its interest-bearing liability and returned to the black, analyst Hidehiko Aoki at Merrill Lynch Japan Securities Co. said Daiei's rehabilitation begun in April 2005 under the Industrial Rehabilitation Corp. of Japan did not improve Daiei's retail earnings and competitiveness.
"Daiei has received a huge amount of financial aid, but the financial support merely helped Daiei to stop bleeding," Aoki said. "Daiei will need to map out its own retail strategy based on a new concept" that appeals to customers.