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Wed, Aug 23, 2006 - Page 10 News List

Wal-Mart Japan reports fivefold jump in 1H losses

AP , TOKYO

Ed Kolodzieski, chief executive of Wal-Mart's Japanese subsidiary, speaks on midterm consolidated financial results during a press conference in Tokyo yesterday.

PHOTO: AP

Wal-Mart's Japanese subsidiary said yesterday its first-half losses grew fivefold, but the unit's chief executive reaffirmed his commitment to Japan even as the US retailer abandons the German and South Korean markets.

Seiyu reported a ¥54 billion (US$465 million) loss for the first six months of the year. The 400-store chain, which doesn't break down quarterly numbers, had racked up a ¥10.6 billion loss the same period last year. First-half sales fell 2.9 percent to ¥468 billion (US$4 billion) from ¥482 billion.

But Seiyu chief executive Ed Kolodzieski, who took office in December, said there were clear signs of progress here in the first half of the year, with comparative store sales rising 1.4 percent, the first year-on-year gain in 14 years. Comparative store numbers measure sales after deleting effects from store openings and closures.

Although first-half sales and profits didn't meet company expectations, Seiyu has reduced costs and expenses, and has been busy opening new stores while closing underperforming stores, Kolodzieski told reporters at a Tokyo hall.

"I am very proud of the accomplishments of our team," he said, adding that the firm remains "on track" in its strategy to improve profitability, remodel stores, beef up its supply chain and other efforts.

While operating profitability was gradually improving, the bigger net loss was due to a one-time write-off for assets.

During the first half, food sales were up 1.7 percent, apparel up 0.8 percent and general merchandise up 3.9 percent on a comparative store basis, he said.

Bentonville, Arkansas-based Wal-Mart Stores Inc, the world's biggest retailer, arrived in Japan in 2002 and increased its stake in Seiyu in December to 53 percent from 42 percent.

Unlike its operations in South Korea and Germany, Wal-Mart has made significant investments in Japan, the world's second largest retail market. The US company has set up a distribution facility, introduced its computerized systems, remodeled stores and opened large-scale supermarkets, which had been relatively rare in Japan.

Wal-Mart runs more than 6,600 stores worldwide in 16 nations, including China and Mexico.

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