Wal-Mart's Japan unit sees 6th straight annual loss
TOKYO (Reuters) - Wal-Mart Stores Inc.'s Japanese retail unit Seiyu Ltd. said it now expects to post its sixth straight annual loss in 2007 on sluggish sales, but dismissed speculation that the results would prompt Wal-Mart to pull out of Japan.
The world's largest retailer has invested more than $1 billion in the 393-store Japanese supermarket chain since 2002, but has yet to see anything more than temporary upswings in sales amid competition with rivals such as Aeon Co..
The continuing losses have raised speculation that Wal-Mart will either prop up the struggling unit or consider withdrawing from Japan as it did from South Korea and Germany last year.
But Seiyu Chief Executive Ed Kolodzieski said on Tuesday Wal-Mart would stay in the world's second-biggest retail market and blamed its poor performance on weak demand for gardening and electrical goods.
"For Wal-Mart Stores, the Japanese market is clearly a very important market," he told a news conference. "I can tell you I have not had one single discussion with senior Wal-Mart executives ever about the topic of leaving Japan."
Wal-Mart, which operates in 15 countries outside the United States, on Tuesday cut its 2008 financial full-year earnings forecast and said its total sales in the second quarter to July 31 were below market expectations.
Chief Executive Lee Scott said Wal-Mart customers around the world remained under economic pressure.
Its strongest performance in its international division, which accounts for around a quarter of total sales, was in Brazil, China and Argentina, Wal-Mart said.
International sales during the three-month period rose 16 percent from a year ago to $21.6 billion.
In Britain, its supermarket group Asda continued to outperform the market, Charles Holley, Wal-Mart's finance chief for its international business said in a recorded call.
BELOW EXPECTATIONS
The performance at Wal-Mart's Japan division, which is worth 10 percent of its international sales, was below Wal-Mart's own sales plan, Holley said.
It comes two months after international competitor Tesco, the world's third-largest retailer, stepped up competition in Japan with plans to open stores under its own name.
Kolodzieski said there were signs of an uptick in Japan, but he fell short of promising a return to profit for 2008.
Seiyu, 53.6 percent owned by Wal-Mart, said it now expects a group net loss of 5.9 billion yen ($50 million) for calendar 2007, worse than the consensus forecast for a loss of 3.1 billion yen in a poll of four analysts by Reuters Estimates. Continued...
