Seiyu Incurs 10.59 Bil. Yen Group Net Loss in 1st Half of 2005

Aug. 18–TOKYO — Supermarket chain operator Seiyu Ltd. reported 10.59 billion yen in group net loss in the first half of the 2005 business year through Dec. 31, three times more than the 2.88 billion yen loss marked a year ago.

Seiyu, a unit of U.S. retail giant Wal-Mart Stores Inc., said its earnings were weighed down by various expenses, including hefty expenditures for repaying long-term borrowings and costs to purchase fixed assets for opening new outlets.

The Tokyo-based company incurred 6.92 billion yen in pretax loss and 2.48 billion yen in operating loss in the January-June period on a consolidated basis, a turnaround from 515 million yen and 4.88 billion yen in profit a year ago, respectively.

Its group sales fell 5.4 percent to 482.03 billion yen, reflecting a fall in sales of clothing and housing items.

Existing store sales fell 4.5 percent in the reporting period, though sales improved somewhat in the second quarter from the first quarter due to the company’s accelerated efforts to reduce cases in which it runs out of stock of some goods and promotional measures, Seiyu said.

Chief Executive Officer Noriyuki Watanabe said at a press conference that the company’s operating strategy did not work well partly because “there was some confusion among employees concerning renewal of the order and sales systems.” Seiyu will continue to pay no dividends in the first half of 2005.

For the current calendar year, Seiyu expects to incur 7.5 billion yen in group net loss and 3 billion yen in pretax loss on 992 billion yen in sales, maintaining its earnings estimates lowered in late July.

In 2004, the company reported 12.32 billion yen in group net loss and 501 million yen in pretax profit on 1,031.53 billion yen in sales.

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