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Daiei likely to post net loss on extra 240 bil. yen loss.

TOKYO, Nov. 22 Kyodo

Financially troubled retailer Daiei Inc. is expected to post an unconsolidated net loss for the current fiscal year due to huge cost overruns for restructuring, company sources said Wednesday.

On top of an extraordinary loss worth 240 billion yen in the fiscal year ending February next year, the supermarket chain operator is forecast to incur a net loss of more than 130 billion yen, a sharp turnaround from the previous year's profit of 1.12 billion yen, the sources said.

The extraordinary loss is estimated to accrue from costs for the planned closure of dozens of loss-making outlets and disposal of subsidiaries by the fiscal year-end, they said.

With the aim of slashing the group's interest-bearing debts of more than 2 trillion yen, Daiei also plans to sell off most of its shareholdings in convenience chain operator Lawson Inc. in the year ending February 2002 and all its remaining equity stake in information and publishing concern Recruit Co. in the following fiscal year.

Daiei earlier this year sold a 20% equity stake in Lawson, previously almost fully owned by the Daiei group, and reduced its group's 35% stake in Recruit to some 10% by selling shares back to the publishing house.

For the current fiscal year, the company is negotiating severing some low-performing affiliates from its consolidated account for transfer to a company run by its founder and former chairman Isao Nakauchi, the sources said.

The sell-off is aimed at preventing Daiei from falling into a deficit net worth on a consolidated basis, they said.

Operating about 300 stores nationwide, it also plans to shut down some 30 of 60 deficit-ridden stores by the end of February, more than the earlier planned 10 to 20 outlets, and slash some 1,000 jobs from its 13,776-strong workforce.

All these plans are projected to form part of Daiei's new three-year restructuring plan to be launched in the next fiscal year. The plan is due to be announced early next month upon approval by its four major creditor banks, the sources said.

Through the envisaged improvement in operational efficiency and enhanced sales and product development efforts, Daiei aims to earn more than 20 billion yen in unconsolidated pretax profit from the fiscal year that ends in February 2002, they said.

After the restructuring plan is formalized, the company will convene in February next year a special general shareholders meeting to launch a new management regime under Kunio Takagi, a president-designate adviser.

Currently, the presidency has been vacant since Tadasu Toba stepped down in early October over his alleged involvement in shady stock deals in a group company, with Vice President Hiroshige Sasaki serving as acting president
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Comment:Daiei likely to post net loss on extra 240 bil. yen loss.
Publication:Japan Weekly Monitor
Geographic Code:9JAPA
Date:Nov 27, 2000
Words:448
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