TOKYO (AFP) - Debt-saddled retailer Daiei said its first half net profit slumped nearly 50 percent while its top executive stepped down to take responsibility for confusion over plans to rescue the ailing company.
Japan's third-largest supermarket chain, which is trying to restructure under debts of nearly 10 billion dollars, said group net profit in the six months to August fell 48.6 percent from a year earlier to 1.18 billion yen (10.8 million dollars) as sales dropped 5.8 percent to 935 billion yen.
Pressed by its creditor banks, Daiei this week reversed an earlier decision and agreed to seek help from the Industrial Revitalization Corp. of Japan, a government-backed bailout body.
Daiei president Kunio Takagi said Friday he took the blame for confusion over the fate of the group and would accordingly step down.
"I am resigning as president and chief executive, effective October 22," Takagi told a news conference. "I apologize for causing trouble with the parties involved."
Takagi, who assumed the post in 2001, stressed that Daiei's recurring profit has improved since he took over while acknowledging that sales have been lacklusture in the face of growing competition.
For the six months, recurring profit rose 32.9 percent to 16.6 billion yen.
Takagi said he would remain a board member while the company tries to work out a medium-term revival plan.
He said he was confident profits would recover in the second half to February after Christmas and New Year sales as well as sales celebrating the league victory of its professional baseball team.
He said Daiei had had no choice but to seek government help as banks, including main creditor UFJ Bank, were under intense pressure to reduce their non-performing loans.
Prime Minister Junichiro Koizumi has made reform of the bank sector and reduction of its bad loan burden one of his key objectives in efforts to kickstart the economy.
For its part, UFJ Holdings is trying to cut its bad loans before a planned merger with Mitsubishi Tokyo Financial Group.
The company said sales at Daiei Inc. declined as the core retail business slumped while the disposal of the Fukuoka Dome stadium, home to the Daiei Hawks, and hotel and other leisure facilities in the southern city of Fukuoka all hit the figures.
It said reshaping of its retail outlets and an improvement in the financing business helped boost recurring profit. The net profit figures were distorted by a one-off gain taken the previous year, it added.
Daiei also blamed a record number of serious typhoons that hampered weekend shopping this summer.
The company did not provide a net profit forecast for the current year to February 2005 but left its other estimates unchanged at 40 billion yen in recurring profit on revenue of 1.86 trillion yen.
In April, Daiei had set a full-year net profit target of 41 billion yen.