Daiei to miss forecasts, report says

Bloomberg News Service

KOBE, Japan — Daiei Inc., Japan's most indebted retailer, will probably miss its earnings target because sales continue to decline, the Nihon Keizai newspaper said today without citing its source.

Japan's third-largest retailer, which has four stores in Hawai'i, will probably miss its forecast for a sales rise of 2 percent for the second half ending Feb. 28 as sales fell for a fifth month in January, Nihon Keizai said.

It also will likely miss its full-year target of 20 billion yen ($166 million) in parent current profit, or pretax profit from operations, the newspaper said.

January same-store sales fell 1.6 percent from a year ago, declining for a fifth straight month, Daiei spokesman Minoru Sano said. They were dragged down by a 4.1 percent drop in home appliance sales and a 1 percent decline in food sales, he said.

Same-store sales exclude the impact of store openings and closings, measuring results at stores open at least a year.

Sano wouldn't comment on the report that Daiei may miss its earnings forecast.

Daiei's shares, which have lost two-fifths of their value in the past year, fell 1 yen to 136 yen as of 9:42 a.m. in trading on the Tokyo Stock Exchange.

The retailer, which still has about 1.69 trillion yen ($14.1 billion) in debt, received two bank bailouts last year, suggesting that big companies are exempt from a government drive to dispose of bad loans and let weak companies fail.

In October, it reported a 20 percent fall in first-half group operating profit on sales of 1.16 trillion yen, citing falling prices and weak consumer spending.

The retailer would need second-half sales of about 976 billion yen to achieve its full-year forecast of 2.14 trillion yen.