US retailer Wal-Mart is hoping a revamp of its Japanese subsidiary Seiyu will boost profits from the business.

Wal-Mart said yesterday (2 October) that it believes a series of moves will improve earnings at Seiyu, which became a fully-owned subsidiary of the world's largest retailer after posting losses in 2007. 

Earlier this week, Seiyu announced that it would remodel around 100 of its existing large-format stores over the next two years.

"Through the remodelling, large-size stores will have a significantly enhanced product assortment with [an] expanded, self-operated sales floor in order to meet customers' diverse shopping needs ranging from fashion, food and interior to home entertainment, and will aim to offer a comprehensive assortment in all such categories at the best prices," a spokesperson for Wal-Mart told just-food.

The company will also look to open additional small-scale stores that offer food and daily consumables in urban areas.

Wal-Mart also indicated that Seiyu would be "actively exploring" M&A opportunities to strategically expand its store portfolio.

However, Seiyu has also announced a number of cost-cutting measures designed to increase profitability. It will close approximately 20 existing stores that are incompatible with the retailer's store format strategy, streamline its head office operations and consummate the merger and consolidation of its wholly-owned regional retail subsidiaries, resulting in job cuts.

Building on these cutbacks, the group also said it would also reorganise its store management structure to make it "leaner, more efficient and responsive".

As part of this initiative, the company will be offering an early retirement programme for around 350 salaried employees. These individuals will receive a special severance payment in addition to their ordinary retirement allowance.

"Seiyu's announcements this week are consistent with what we've been saying since the tender offer was announced last fall, that 100% ownership of Seiyu is not only affirmation of our commitment to the Japanese market, but would allow us to accelerate the changes needed to achieve our goal of long-term success and growth in Japan through Seiyu. The changes announced are just part of that process," the Wal-Mart spokesperson added.