KOBE, Japan >> Daiei Inc., Japan's most indebted retailer, will probably miss its earnings target because sales continue to decline, the Nihon Keizai newspaper said without citing anyone. Newspaper reports
Daiei may miss
earnings forecastBy Yasue Aoi and Norie Kuboyama
Bloomberg News
The nation's third-largest retailer will probably miss its forecast of a 2 percent sales rise for its second half ending Feb. 28, the paper said. It also will likely miss its full-year target of ¥20 billion ($166 million) in parent current profit, or pretax profit from operations, the newspaper said.
Daiei, which still has about ¥1.69 trillion in debt, received two bank bailouts last year and is implementing a cost-cutting plan to improve operations under the industry revival law. Progress so far has been disappointing, an analyst said.
"It is extremely difficult" for Daiei to meet its earnings forecasts because the company still has unprofitable stores, said Takashi Yanahira, an ING Securities Japan Ltd. senior analyst, who has a "sell" rating on Daiei. The retailer also has failed to offer products that attract shoppers, he said.
January same-store sales fell 1.6 percent from a year ago, declining for a fifth straight month, Daiei spokesman Minoru Sano said. They were dragged down by a 4.1 percent drop in home appliance sales and a 1 percent decline in food sales, he said. Same-store sales exclude the impact of store openings and closings, measuring results at stores open at least a year.
Store closings
Daiei has closed 59 stores since last March, and now has 265 outlets. It plans to close another store next month. The retailer's Hawaii stores have not been included in the cuts made so far.The company is "in a tough situation" in the second half, Sano said, adding that sales at stores open at least a year will probably fall this month. He wouldn't comment on the report that Daiei may miss its forecasts.
Daiei's shares, which have lost two-fifths of their value in the past year, fell ¥1 to close at ¥136 in trading on the Tokyo Stock Exchange.
In October, the retailer reported a 20 percent fall in first- half group operating profit, or sales minus the cost of goods sold, on sales of ¥1.16 trillion, citing falling prices and weak consumer spending. It would need second-half sales of about ¥976 billion to achieve its full-year forecast of ¥2.14 trillion.
Daiei Inc.