A Sad Daiei

The Daiei Inc. (Tokyo), one of Japan's largest supermarket chain operators, is expected to book a loss of $905 million by February 2003, after closing more than 50 stores. The shuttering is part of a restructuring effort to secure financial support for Daiei, which has $17.4 billion worth of debt.

Closures include most of the retailer's 28 “hypermart” discount stores, as well as general merchandise outlets. Daiei has already sold the Ala Moana shopping center in Hawaii for $810 million and may be considering other asset sales, such as its stake in the Daiei Hawks baseball team and real estate in Tokyo's Ginza district.

According to Japanese law, a company with debt can seek government assistance by submitting a plan to return to profit within three years. If approved, the company can then benefit from tax breaks for converting debt into stock and receive preferential treatment for spinning off operations into separate firms. Daiei will announce its new restructuring plan later this month.

The Daiei operates about 120 subsidiaries and is best known for its majority stake in nearly 7700 Lawson convenience stores (the most successful convenience chain in Japan, after 7-Eleven). The retail giant also owns supermarkets, discount stores, department stores and specialty shops. Other operations include restaurants, hotels and real estate businesses. Domestic sales make up more than 90 percent of its revenues.