Supermarket chain Daiei Inc. held an extraordinary shareholders’ meeting Friday in Kobe to introduce its new management team, including five new board members from its top shareholder, trading house Marubeni Corp.
Among the five, Vice President Toru Nishimi, 58, is a former senior vice president with Marubeni. After the meeting, the new nine-member board promoted Nishimi to the post of president, replacing Yasuyuki Higuchi, 48, effective the same day.
Daiei Chairwoman Fumiko Hayashi, 60, stayed on, but is no longer CEO because the post has been abolished. Higuchi was also named an adviser, but waived retirement benefits for the post.
“With Marubeni becoming Daiei’s top shareholder, our chances of reviving our business have improved because we can now count on the strengths of a general trading house,” Higuchi said at the start of the meeting.
“We will continue to stick with our policy of bolstering our core operations, including food sales,” he said.
As part of that effort, Daiei announced Friday that it is closing three money-losing outlets. Fashion Depot Suita in Osaka Prefecture will close Nov. 19, followed by D-Mart Satte in Saitama Prefecture on Dec. 31 and Topos Noge in Yokohama on Jan. 7.
As of June, the company had closed 54 outlets, in line with the retailer’s reconstruction program drawn up with the help of the government-backed Industrial Revitalization Corp. of Japan. Another outlet, in Shizuoka Prefecture, was shuttered Sept. 30.
Later this month, Marubeni is expected to choose supermarket chain Aeon Co., Japan’s largest, as Daiei’s main ally to help it strengthen its marketing capabilities.
The deal would create a mammoth retailing group with annual sales of 6 trillion yen.
Marubeni has been looking for a retail partner to back Daiei’s reconstruction since the trading house raised its stake to 44.64 percent in August by purchasing 33.67 percent of Daiei’s shares from IRCJ.
Wal-Mart Stores Inc. of the United States recently dropped its bid to team up with Daiei.
Daiei’s aggressive discounting made it the country’s largest retailer at one time, but it plunged into financial crisis after its rapid diversification eroded its profitability.
In December 2004, it gave up trying to turn itself around and turned to the government-backed bailout agency for help. IRCJ sold its stake in Daiei to Marubeni in August after the company’s reconstruction plan got on track, but Daiei still owes IRCJ 140 billion yen.
Later in the day, newly appointed Daiei President Toru Nishimi said his priority in turning around the supermarket chain is to further reduce interest-bearing liabilities.
“I think we should halve the debt in order to become a company that can stand on its own feet and conduct business without restraint,” Nishimi told a news conference in Tokyo.
With IRCJ help, Daiei reduced the consolidated interest-bearing debts to 793.8 billion yen as of the end of May from more than 2 trillion yen in fiscal 2001.
Daiei is reportedly looking to sell some of its stakes in its subsidiaries OMC Card Inc. and Maruetsu Inc., but Nishimi declined to confirm.
Nishimi stressed that he is now president of Daiei and will not act under the influence of Marubeni.
“I am fully committed to Daiei’s rehabilitation and will take whatever measures will benefit,” he said.
Asked if Marubeni realizes Daiei’s turnaround led by IRCJ and the trading house failed and that is why Marubeni is looking for a major retailer to be Daiei’s partner, Nishimi said Marubeni helped Daiei execute various reforms that the retailer would otherwise not be able to. Analysts say Marubeni would not have sought a Daiei partner had the turnaround succeeded.
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