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Friday, February 4, 2005
Its four stores in Hawaii:
Honolulu: 801 Kaheka St.
More than 30 years
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.
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.
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.