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February 14, 2008 |
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SEIYU LTD: Incurs US$195.5 Billion of Net Loss in 2007 Seiyu Ltd., the Japanese subsidiary of U.S. retail giant Wal- Mart Stores Inc., posted net loss for year ended Dec. 31, 2007, of JPY20.9 billion (US$195.5 million), twice its earlier forecast of JPY10.4 billion, various reports say. The company cited weak sales in its clothing lines and household goods, and a write down of its assets. Bloomberg News says that the company's annual revenue dropped 0.9% to JPY952 billion from a year earlier. Reuters notes that Seiyu's write down of the value of ten stores contributes to its overall net loss by JPY6.5 billion. Wal-Mart has applied its discounting strategy to Seiyu's goods but the scheme did not produce the desired result. The Journal relates that the "Everyday Low Price" backfired because local consumers equated low price with low quality. This setback, according to the Wall Street Journal, raised new doubts about Seiyu's plans to turn around its business. Wal- Mart first invested in the Japanese company in 2002, but it failed to make a profit since then. Reuters said in a December report that Wal-Mart has already invested more than US$1 billion in Seiyu, but it only saw temporary upswing in sales in Japan's stiffly competitive retail industry. According to Bloomberg, Wal-Mart said in October last year that it would pay as much as JPY100 billion to fully own Seiyu, which has 400 stores in Japan. By taking full control of the company, Bloomberg suggests that it would Wal-Mart implement cost cutting measures, renovations and expansion programs. Based on Seiyu's December filing with the Tokyo Stock Exchange, Wal-Mart raised its ownership to 96% of the Japanese company. About Seiyu Ltd. Tokyo-based, The Seiyu, Ltd. -- http://www.seiyu.co.jp/ -- is a Japanese company that is involved in two business segments. The Retailing segment, together with its subsidiaries, develops daily products, operates general merchandise stores (GMSs), supermarkets and shopping malls and provides information and services. This segment is also engaged in the prepared food business, the operation of specialty stores for mobile phones, the procurement of overseas original products, as well as the provision of recruitment services and the ordering of gift products. The Real Estate segment is involved in the leasing of real estate properties, in addition to the development and management of properties, such as commercial facilities. Seiyu has 17 subsidiaries and two associated companies. Seiyu Ltd. incurred a net loss of JPY17.77 billion in the year ended December 31, 2005, versus a loss of JPY12.32 billion in 2004. It also posted a JPY55.79 billion loss in 2006. |
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