Daiei warns of
operating loss, blames tax

From staff and wire reports

Weaker sales because of a higher consumption tax in Japan will result in red ink for Japanese retail chain Daiei Inc., which is also a major retail force in Hawaii.

Daiei, which owns Ala Moana Center and four grocery and general merchandise stores on Oahu, said it expects an operating loss equal to $193 million for the fiscal year ending Feb. 28.

That is a big shift from its previous estimate of a $54.2 million operating profit. Daiei had posted a small profit, equal to $4.6 million, in the previous year.

The company said its sales in Japan will fall short of initial estimates because the tax rise last April to 5 percent from 3 percent and financial-sector worries combined to dampen domestic consumption.

Daiei said it expected 1997-98 parent operating revenues to total $19.2 billion, down from the firm's earlier estimate of $19.7 billion. Actual revenues in the previous year were equal to $19.4 billion.

The company said it should post a net profit for the current year of $7.7 million because of the sale of an amusement park and shares in a 6,000-store convenience retailer in Japan.

Daiei had said earlier it also might float a stock offering for Ala Moana Center.