Daimaru, Matsuzakaya to Merge in Sept. To Be Japan’s Top Dept. Store
By Kyodo News International, Tokyo
Mar. 14–TOKYO — Daimaru Inc. and Matsuzakaya Holdings Co. said Wednesday they will integrate under a joint holding company in September to become Japan’s biggest department store group.
The two companies’ combined sales of 1.17 trillion yen in the business year to February 2006 top the 1.03 trillion yen posted by industry leader Takashimaya Co.
Daimaru Chairman Tsutomu Okuda, speaking to reporters in Osaka, said the new holding firm will aim to achieve a consolidated operating profit of 60 billion yen on sales of 1.25 trillion yen in the business year through February 2011.
Osaka-based Daimaru and Nagoya-based Matsuzakaya said they will set up headquarters for the holding company in Tokyo.
Their integration may become a catalyst for further industry realignment amid the continuing decline in department-store sales on the back of business expansion by supermarket and shopping-mall operators and the country’s falling fertility rate.
Daimaru and Matsuzakaya themselves said in a joint statement that they expect players in the industry to continue to be integrated into “a small number of business groups that have strong competitiveness.” At present, Daimaru, which opened in 1717 as a kimono shop and now operates 16 department stores from Sapporo to Fukuoka, is the fourth-largest in the industry. Matsuzakaya, opened in 1611 also as a kimono shop, is the eighth-biggest, operating nine outlets mainly in Nagoya, Tokyo and nearby cities.
Daimaru has the biggest market share in the Kansai area centering on Osaka, and other parts of western Japan while Matsuzakaya has the top share in the Chubu area centering on Nagoya in central Japan.
The two, which also run supermarket chains, said their alliance is “ideal” as their stores do not overlap geographically.
By building a stronger nationwide sales network, Daimaru and Matsuzakaya will try to cut operational costs and attract popular brands to their sales floors, they said.
They see increasing their combined sales in the Tokyo area as the largest challenge for their further business growth.
Daimaru will relocate its department store within Tokyo station to a nearby new building this fall and Matsuzakaya has a plan to expand its existing store in Ginza, the capital’s high-end shopping center, with construction work to start as early as 2009.
Daimaru’s Okuda will become president and chief executive officer of the new holding company and Matsuzakaya Chairman Kunihiko Okada will become its chairman.
Daimaru and Matsuzakaya will continue operating their stores under their current corporate names even after the management integration.
Daimaru and Matsuzakaya under the wing of the holding firm will keep their head offices in Osaka and Nagoya, respectively.
Shares of the two companies, both listed on the main section of the Tokyo Stock Exchange, are expected to be delisted on Aug. 28 and those of the holding company are likely to be listed on the bourse on Sept. 3, when the new firm is scheduled to be established.
Each Daimaru share will be exchanged for 1.4 shares of the holding company, while one Matsuzakaya share will be worth one share of the holding firm, they said.
In the business year through February 2006, Daimaru recorded a group operating profit of 30.68 billion yen on sales of 822.58 billion yen.
Matsuzakaya saw a group operating profit of 7.09 billion yen on sales of 343.94 billion yen. It adopted a holding company structure in September last year and its figures for the current year through the end of February will be released this spring.
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