TOKYO (Reuters) - Wal-Mart Stores Inc’s (WMT.N) Japanese unit, Seiyu Ltd 8268.T, boosted its annual loss forecast by 76 percent due to a charge to cut about 7 percent of its work force as it battles sluggish sales.
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 tough competition with rivals such as Aeon Co (8267.T).
Seiyu is headed for its sixth straight annual loss in 2007, giving rise to speculation that Wal-Mart may consider withdrawing from Japan, the world’s second-largest retail market, as it did from South Korea and Germany last year.
Seiyu, 53.6 percent owned by Wal-Mart, said it would offer early retirement for 450 employees out of a group work force of about 6,500. The program mainly targets headquarters staff and there are currently no plans for shop closures, Seiyu said.
It will book a charge of 4.5 billion yen ($39.15 million) for the program, and accordingly widened its 2007 group net loss forecast by that amount to 10.4 billion yen. The retailer kept its forecasts for operating profit and sales unchanged.
Seiyu, which eliminated about 1,600 jobs in 2004, said this would be the last time it needed to carry out big job cuts.
“I don’t think we will need this kind of restructuring (in the future),” Seiyu Chief Operating Officer Toru Noda told a news conference, adding that he also did not expect the retailer would need to close stores.
Prior to the earnings announcement, shares of Seiyu ended down 7.5 percent at 86 yen. The stock has shed about 38 percent since the start of 2007, underperforming a 22 percent fall in Japan’s retail sector subindex during the same period.
It has lost four-fifths of its value since Wal-Mart first took a small stake in May 2002.