Supermarket operator Mycal announced measures yesterday (23 January) designed to revive the ailing company within three-years. It also brought bad news for investors, slashing earnings estimates for its fiscal year, which is due to end on 28 February, because of extraordinary losses. The company now expects to deliver news of a group net loss of ¥105bn rather than a ¥4bn group net profit, and a pre-tax loss of ¥6bn instead of ¥16bn pre-tax profit.
Business renovation is essential if Mycal is to achieve a decrease in its group interest-bearing debts to ¥750bn from their current value of ¥1.16 trillion. The other main goal for the company is to post a pre-tax profit in February 2004 of ¥32bn on revenue of ¥1.56 trillion.
The cost-saving measures include the closure of 50 stores and the reduction of the group’s workforce by 19%, representing a cut of 2,700 jobs.
Savings of nearly ¥280bn are expected through the sale of the shareholdings Mycal holds in subsidiaries. The process of offloading non-core businesses may include the sale of shares in credit card service company Mycal Card and sports club operator People Co.
The company also revealed that it has plans to fund its restructuring with a loan of ¥120bn, about which it is in talks with seven main lenders, and that it plans to sell real estate holdings to a subsidiary of Credit Suisse First Boston Corp. The sale of 20 store sites, which will then be leased to Mycal, will bring in cash of ¥12bn.
The struggles at Mycal are part of a wider picture of Japanese retailing. According to figures released yesterday (23 January) by the Japan Chain Stores Association, supermarket sales across the nation in December fell 6.5% from 1999, on a same store basis. For the entire of 2000, sales at Japanese stores were down 5.1% on the previous year.
Mycal Co.(J.MYL or 8269)
| GROUP | New Forecast For Year To 2/01 | Prior Forecast |
| Sales | 1,720,000 | 1,810,000 |
| Pretax profit | -6,000 | 16,000 |
| Net profit | -105,000 | 4,000 |
Source: Dow Jones International News
| PARENT | New Forecast For Year To 2/01 | Prior Forecast |
| Sales | * | 1,050,000 |
| Pretax profit | 1,000 | 8,000 |
| Net profit | -58,000 | 4,000 |
* unchanged
Source: Dow Jones International News
