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Furniture retailer Otsuka Kagu posts ¥2.03 billion first-half loss, warns of potential insolvency

Kyodo

Struggling furniture retailer Otsuka Kagu Ltd. warned on Tuesday of a possible major financial problem going forward as it reported a first-half loss.

The Tokyo-based company, which is looking for a business and capital partner, warned investors of potential insolvency in its January to June financial report, saying it has “events or circumstances that cast important doubt on the assumption of going concern.”

Otsuka Kagu did not hold a news conference to report the six-month earnings, but it said in the financial statement, “Countermeasures are in the process of being implemented” to address financial concerns, without giving details.

It has been in tie-up talks with companies including Taiwan’s Abico Group, according to people familiar with the matter.

The upscale furniture retailer, which has been bleeding red ink since the year ended in December 2016, said it posted a net loss of ¥2.03 billion ($18 million) in the six months to June.

Last week, it revised downward its net earnings outlook for the full year to December to a loss of ¥3.4 billion from a previously estimated profit of ¥1.4 billion.