— ADVERTISEMENT —
Starbulletin.com



Friday, February 4, 2005



art
FL MORRIS / FMORRIS@STARBULLETIN.COM
Daiei's Kaheka Street store drew a steady stream of customers yesterday.




Daiei faces
shutdown
or sell-off

Hawaii's four Daiei stores will be sold or closed, according to press reports yesterday in Japan.

Tracking Daiei

Its four stores in Hawaii:

Honolulu: 801 Kaheka St.
Pearl City: 850 Kamehameha Highway
Kailua: 345 Hahani St.
Waipahu: 94-144 Farrington Highway

More than 30 years
in Hawaii

A glance at Daiei (USA) Inc.'s Hawaii history:

Nov. 19, 1972: Japan's largest supermarket chain, founded in 1957 with 124 outlets in Japan, opens its first overseas store in Hawaii with a 17,000-square-foot outlet in Pearlridge Shopping Center. It becomes the largest Japanese food product store in Hawaii, with 60 percent of the merchandise coming from Japan.

Oct. 31, 1975: Daiei closes its Pearlridge Phase 1 store to move to a new location.

Nov. 18, 1975: The supermarket chain opens an expanded 120,000-square-foot, three-story store in Pearlridge Phase 2 that includes restaurants. Fifty percent of the merchandise is bought in the United States. There are 112 employees hired locally.

April 23, 1980: Daiei purchases three Holiday Mart stores and converts them into Daiei outlets, giving the subsidiary four Hawaii stores overall. The new stores are in Honolulu on Kaheka Street, Kailua and Pearl City.

April 30, 1986: The Pearlridge store closes due to disappointing sales.

Nov. 30, 1995: Daiei opens its fourth store in Waipahu at the old GEM (Government Employees Mutual) store location.

1999: Daiei signs a deal to sell one of its prize properties, Ala Moana Center, to General Growth Properties for $810 million.

Feb. 1, 2005: Alexander & Baldwin Properties Inc., a subsidiary of Alexander & Baldwin Co., purchases the land beneath the 105,000-square-foot Kaheka Street store that Daiei was leasing from CEC Hawaii Inc. The fee-simple interest in the 176,000-square-foot parcel is sold for $19.3 million.

Feb. 3, 2005: Reports circulate in Japan that parent company Daiei Inc. is selling its 12 stores in China to Beijing-based Wumart Stores Inc. and is seeking a buyer for its four Oahu stores.

Source: Daiei (USA) Inc.

Daiei (USA) Inc. spokeswoman Theresa Chang would not comment on the press reports. But Kozo Yamagishi, chairman of Daiei's Hawaii operations, spoke with local store managers yesterday and assured them that "business is going to be as usual," Chang said last night.

Chang said all Daiei plans are being made by the state-run Industrial Revitalization Corp. of Japan, which oversees parent company Daiei Inc.

A spokeswoman at Daiei Inc. in Tokyo said last night that no decision has been made about the Hawaii stores and that the company has not provided any information to employees or suppliers.

Daiei employs about 1,000 people on Oahu and subleases space to dozens of business tenants at its locations in Honolulu, Kailua, Pearl City and Waipahu. Since it opened in Hawaii in 1972, Daiei has become a local favorite thanks to its combination of Asian goods, low prices on general merchandise, and fresh produce and meat.

Under the direction of the IRCJ, Daiei is struggling to overcome $9 billion in debt by selling assets, laying off workers and entertaining investment offers. U.S. retailer Wal-Mart Stores Inc. was a leading contender to buy Daiei assets but was rejected late last month.

The Japanese-based Web site Nikkei English News first reported the sale of stores in Hawaii and China yesterday, followed by Nihon Keizai Shimbun and Kyodo News, all of which cited anonymous sources. The online version of the Nihon Keizai story, in Japanese, reported that the Hawaii stores and 12 in China would be sold, according to Chang and an independent translator contacted by the Star-Bulletin.

However, an English-language version of the same story indicated the Hawaii stores would close. Kyodo also said the stores would close.

No time line was indicated in any of the reports, though the Nihon Keizai said no buyer had been found for the Hawaii stores. Beijing-based Wumart Stores Inc. was reported to be the buyer of the China stores.

The reports said Daiei will concentrate on its core supermarket business in Tokyo and Osaka as part of a financial restructuring supervised by the IRCJ.

Chang said yesterday she had received no communication from Daiei's offices in Japan.

Daiei has four different landlords on Oahu, including the real estate division of Alexander & Baldwin Inc., which announced a $19.3 million purchase of the 176,000 square feet of land underneath Daiei's Kaheka store on Tuesday.

A&B officials did not know of any developments with Daiei.

The lease on the 105,000-square-foot Daiei Kaheka store runs through 2018, but A&B Chief Executive Allen Doane intimated this week that the property could be redeveloped.

The Nihon Keizai story alluded to the possibility that Daiei will move from the Kaheka store because A&B is known to want to redevelop the property.

Kaneohe Ranch Co., landlord for Daiei in Kailua, likewise has had heard no news from Daiei, according to Kimo Steinwascher, vice president for development and leasing.

"It's news to us," he said. "I certainly hope they keep paying their lease rent."

Daiei's ground lease for its 7-acre parcel in Kailua extends through 2022, so Kaneohe Ranch has not entertained offers for the property from other large retailers.

"We just finished our community-planning process, and because the term is so long, we deferred on doing any planning on that particular property. It was so far out there, it didn't seem relevant," Steinwascher said. The size of the Kailua Daiei store is close to 100,000 square feet. There are other buildings on the property, including a bank and the now-closed Kailua Theatres that sublease from Daiei.

"We certainly welcome sitting down with the Daiei people to understand what their plans are," Steinwascher said.

Daiei's two other landlords could not be reached yesterday.




art
FL MORRIS / FMORRIS@STARBULLETIN.COM
Daiei bought its Kaheka Street store, a former Holiday Mart outlet, in April 1980.




Were the Daiei stores to close, "from a business standpoint, it would be very catastrophic," said Steve Sofos, president of Sofos Realty Corp.

Sofos cited the possible loss of employment for Daiei workers, loss of business for Daiei's local suppliers, loss of revenue for Daiei's small-business tenants, the loss of general excise tax revenue for the government and the potential for severe economic damage to its landlords.

"If you own a shopping center with Daiei as an anchor tenant, if they're closing, there goes all my business," Sofos said. "All the tenants are going to suffer."

On the other hand, such disasters also create opportunities, Sofos said. "Maybe because of that, there's an opportunity for some other big retailer to come in -- someone or something better. It's just a matter of how long it's going to take."

The online news accounts that Richard Matsu read yesterday reported that the Hawaii Daiei stores would close.

The executive vice president for Marukai Corp., Matsu oversees Marukai's membership stores as well as its 99 Cents Superstores in Hawaii.

"I'm very interested," he said. "We'd like to be (in the Daiei spaces) because we'd like to have bigger space," Matsu said.


Freelance writer Peter Serafin contributed to this report.


BACK TO TOP
|

Kobe quake started
Daiei’s financial woes

When a massive earthquake battered Daiei Inc.'s hometown of Kobe, Japan, in 1995, it marked the first of several financial tremors that would follow the retailing giant's Hawaii operations.

The quake, which killed more than 6,000 people, prompted Daiei to report its first annual loss in nearly four decades.

It also marked the beginning of the company's decade-long struggle through the post-bubble Japanese economy and the start of the company's scale-back in Hawaii.

Weeks after the 10th anniversary of the Kobe earthquake, Japanese press reports say Daiei is leaving Hawaii and will sell its four local department stores in a move prompted by its long-running financial woes in Japan.

Daiei, one of Japan's largest retailers, lists more than $9 billion in debt, most of which was amassed during the post-quake economy of the late 1990s.

Those debt woes forced the company to sell one of its prize jewels, Ala Moana Center, in 1999 to General Growth Properties Inc. for $810 million.

The deal remains the single most valuable land transaction in Hawaii.

The debt also has forced the company to close stores in Japan, sell its baseball team, trim its work force and seek a government-led bailout. Several candidates are bidding for pieces of Daiei. U.S. retailer Wal-Mart Stores Inc., which owns 37 percent of competitor Seiyu Inc., was rejected as a candidate late last month.

Daiei also had to sell off its stake in Japan's second-largest convenience store chain and shed its Japan franchises of Wendy's and Big Boy restaurants.


Bloomberg News and Hoover's Inc. contributed to this report.

Daiei Inc.
www.daiei.co.jp


| | | PRINTER-FRIENDLY VERSION
E-mail to City Desk

BACK TO TOP



© Honolulu Star-Bulletin -- http://archives.starbulletin.com

— ADVERTISEMENT —
— ADVERTISEMENTS —

— ADVERTISEMENTS —