Daiei denies pullout from Hawai'i

Advertiser Staff and News Services

KOBE, Japan — Daiei Inc. will sell its four Hawai'i supermarkets as part of a plan to reduce its $17.5 billion debt, according to a report in the Nihon Keizai newspaper, Japan's leading economic daily.

Daiei's supermarket on Kaheka Street in Honolulu sits on property that would be attractive to U.S. big-box retailers. But the company denied a Japanese newspaper's report yesterday that it was selling its four Hawai'i stores. Advertiser library photo • August 2001

Mitsuru Sano, a Daiei spokesman, said the company has begun taking "administrative proceedings" to transfer three unprofitable supermarkets in Dalian, China, to a local Chinese interest. But he denied that the company is considering a withdrawal from Hawai'i.

"The report is wrong. We will continue operations (in Hawai'i)," said Sano, without elaborating.

Sano said Daiei is still working out a bailout plan with its main banks, with details to be announced at the earliest possible date.

Daiei Inc. started negotiating last week with banks on a three-year restructuring plan to reduce debt and to close unprofitable businesses, and the company said it was ending its involvement in supermarket operations in Dalian, China, which was also reported earlier by the Nihon Keizai newspaper.

Selling its Hawai'i stores could bring to an end 30 years of merchandising its unusual blend of discount goods and Japanese food selections for Island residents.

The company's first Hawai'i store, at Pearlridge Center, was also its first outside Japan. It offered more than 1,000 items, a little more than half from Japan. It later added stores in Honolulu, Kailua, Pearl City and Waipahu, and closed the Pearlridge store.

Last year, local retail analysts said they believed that Daiei would divest the Hawai'i stores, whether they were profitable or not.

Selling the four Hawai'i stores, each about 100,000 square feet on leasehold land, would generate little cash. But getting rid of the stores would reduce expenses and allow the company to better focus on operations at home, analysts said.

Of Hawai'i's four Daiei stores, the Kailua location is the most valuable, according to Roger Lyons, retail specialist at CB Richard Ellis Hawai'i Inc. That's because it potentially provides enough space for a big-box retailer such as Costco or Lowe's Home Improvement Warehouse, both of which have been unable to find space in Windward O'ahu.

The Honolulu store on Kaheka Street also is in a desirable location, given the intent of Wal-Mart, Sam's Club and Home Depot to find a location for a store in town.

Bloomberg News Service contributed to this report.