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The Honolulu Advertiser
Posted on: Friday, February 15, 2002

Daiei to renovate stores

By Andrew Gomes
Advertiser Staff Writer

A new chairman and chief executive has been named to take the helm at Honolulu-based The Daiei (USA) Inc., and officials say the retailer's Kobe-based parent remains committed to keeping its four Hawai'i stores.

Kozo Yamagishi, a Daiei Inc. director who most recently developed new-category merchandise for the company, will succeed Isao Nakauchi, who retired late last year as Daiei USA chairman.

Yamagishi, 56, is scheduled to arrive next week. He will relocate here, but remain a Daiei Inc. director. His CEO position in Hawai'i is a new position for Daiei USA, said Takao Iwasa, Daiei USA vice president and treasurer.

Iwasa also said that the company's four Hawai'i stores remain profitable and will not be closed or sold, and that it will initiate a $700,000 to $800,000 renovation of its main Kaheka store this year to be followed by renovations at other stores.

He said the renovation of Daiei's main store, which accounts for more than 40 percent of Hawai'i sales, will be paid for by Daiei USA.

The local retailer of Japanese-oriented general merchandise and groceries also has been adding department managers, merchandise buyers and sales floor staff recently to its payroll of roughly 1,000 employees.

The changes are positive news for employees, vendors and customers of the retailer, whose debt-burdened parent company has been restructuring by selling major assets, subleasing store space, cutting jobs and closing unprofitable operations.

The parent company's reorganization efforts have led to speculation about the fate of its Hawai'i subsidiary. But Iwasa said this week that Daiei USA is profitable and is not involved in its parent company's restructuring.

He emphasized that there are no plans to sell or close the debt-free Hawai'i stores, where sales were up 3 percent last year from the previous year.

Iwasa did not disclose earnings, but said Daiei officials in Japan are proud of the Hawai'i subsidiary, which has 30 years of local roots. More than 400 company officials, Japanese dignitaries and media representatives attended the 1972 opening of Daiei's first Hawai'i store — the company's first outside Japan.

Except for a store in Waipahu that opened in 1994, Daiei's three other stores have been relatively unchanged over the years and in need of renovation.

Iwasa said the Kaheka remodeling will include new signs, store fixtures, parking-lot repaving, refinished floors and roof, as well as improvements to the deli, fish, produce and oriental foods sections.

Renovation plans have been in the works since around early 2000 when Wal-Mart announced plans to build double-decker Wal-Mart and Sam's Club stores three blocks away, Iwasa said. Wal-Mart's plan was canceled, but Kmart is trying to develop a supercenter on the property despite troubles with Chapter 11 bankruptcy reorganization.

If Kmart can pull off the project, it would mean fierce new competition for Daiei. Iwasa said the company's goal is to have renovations complete early next year before Kmart could open its planned store.

Marty Plotnick, president of Honolulu market research firm Creative Resources Inc., said changes planned for Daiei will help the retailer, but that Kmart — if it builds a new store nearby — will be a tough competitor.

"They're going to have to face Kmart nose to nose," he said. "Before, they had the whole Kaheka valley to themselves."

Roger Lyons, vice president of retail services for local real estate firm CB Richard Ellis Hawaii Inc., said he'd have to wait to see how effective the changes turn out, but added that Daiei's planned improvements and new management are positive statements.

"A renewed commitment to Hawai'i is what they need," he said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.