Daiei proposes 5%
salary cut in Japan

There's no word yet on whether
the wage reductions will extend
to the Hawaii stores

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By Miki Anzai
Bloomberg News

KOBE, Japan >> Daiei Inc., Japan's second-largest retailer, said it plans to cut its workers' annual salaries by 5 percent to boost earnings and trim debt by $6 billion over three years.

Company President Kunio Takagi today told a meeting of store managers that the Kobe-based supermarket operator is seeking approval from its labor union for the salary cuts, which affect about 35,000 workers, company spokesman Mitsuru Sano said.

Daiei had previously said it would seek to lower salaries without saying by how much when it released a three-year restructuring plan Jan. 18. The plan aims to cut 6,000 jobs, or 17 percent of the group work force, close 50 of its 321 stores and reduce group companies to 100 from 169.

Daiei (USA) Inc. General Manager Herbert Gushikuma said he had received no word that the salary cuts would extend to the Hawaii operation.

On the same day, the company asked its main lenders, including UFJ Holdings Inc., to wipe out &YEN420 billion in debt and preferred stocks. In return, Daiei said it would trim debt, excluding at its credit-card unit Daiei OMC Inc., to less than &YEN1 trillion by the end of February 2005 from &YEN1.8 trillion. The credit-card unit owes another &YEN500 billion. Daiei ran into financial trouble after borrowing heavily to expand as Japan was sinking into a decade-long slump. Takagi and other executives have said they will take a 30 percent salary cut.

Daiei shares rose &YEN6, or 5.1 percent, to &YEN123.