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Daiei to skip annual dividend payment, cut 3,000 jobs.

TOKYO, March 25 Kyodo Huge debts-ridden leading supermarket chain operator Daiei Inc. announced Thursday it will forgo an annual dividend payment because of poor earnings in its 1998 business year, which ended Feb. 28. The announcement followed an extraordinary board meeting Thursday, where Daiei executives also decided on a three-year restructuring plan that calls for a reduction of 3,000 jobs and halving the number of directors. This is the first time for the nation's largest retail chain to skip a dividend since its listing in 1971. Daiei, based in Kobe, paid a dividend of 13.25 yen a share, including an extraordinary dividend, in the 1997 business year. Daiei, with interest-bearing debts worth 2.6 trillion yen, trimmed its unconsolidated pretax profit estimate for the previous business year to 1 billion yen from the 5 billion yen profit projected in October. The downward revision stems from sluggish personal consumption and costs of a sales campaign late last year when major supermarket chain operators promoted sales by giving discounts equal to the 5 % consumption tax, company officials said. Daiei also revised downward its consolidated net balance estimate to a loss of 42 billion yen, a turnaround from its earlier projection of a 500 million yen profit. The three-year restructuring plan aims at concentrating resources on the core retail business in Japan. Group firms that incur losses in fiscal 2000 , which begins in March 2000, will be liquidated and land, property and other idle assets will be sold, the plan says. In the current business year, 20 loss-making outlets are expected to be closed. To curb personnel costs, retirement incentives will be offered and no additional recruitment is planned during the 1999 business year apart from those already hired. There will be no regular new hiring in the next business year 2000. Daiei Vice President Jun Nakauchi, the eldest son of Daiei founder and Chairman Isao Nakauchi, offered to give up his post to take the blame for the chain's business slump, company officials said. The board is expected to accept his offer and demote him to managing director at a meeting slated for next Tuesday, they said. Nakauchi, 43, joined the company in 1980 and had been long expected to succeed his father as president. In January, the elder Nakauchi, the company's president and chairman, handed over his presidency to Tadasu Toba, then vice president, to take responsibility for the sales slump that has been fueled by the nation's protracted recession. At a press conference Thursday, the elder Nakauchi said he will stay in his current post of chairman because he, as founder, should not assume his responsibility in the form of resignation. He also said that although Daiei's diversification strategy has not been wrong, the company needs to return to its core retail business because Japan's recession is more serious than expected. But Daiei will retain three operations based in the city of Fukuoka -- a hotel chain, the Daiei Hawks professional baseball team and its domed ballpark, Nakauchi added.
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Comment:Daiei to skip annual dividend payment, cut 3,000 jobs.
Publication:Japan Weekly Monitor
Geographic Code:9JAPA
Date:Mar 29, 1999
Words:500
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