According to Reuters, Seiyu's 2007 loss is now expected to double previous expectations, at 20.9 billion yen, or $196 million, for the year. (This will be the sixth straight year it's posted a loss.) Its same-store sales slumped 1.2% in 2007. The company also intends to write down the value of 10 stores, taking a charge of 6.5 billion yen.
With American consumers increasingly troubled, investors might appreciate any retailer's attempt to hedge its bets with a bit of foreign-market diversity. But back in October, I noted that while Wal-Mart wouldn't retreat from Japan, the country may be a difficult market to conquer. Japanese consumers covet quality over low price, stripping Wal-Mart of one of its historical advantages. In addition, the country has a stable population, forcing retailers to steal market share from one another -- and Japan's already thick with rivals vying for the upper hand.
While Wal-Mart's Seiyu struggles, fellow U.S. retailer Costco
I've gotten a lot less bearish on Wal-Mart lately as recession looms. Although last month's Wal-Mart comps lagged, its performance in the preceding months suggested that it'd still be shoppers' first resort in penny-pinching times.
Then again, Wal-Mart clearly needs a better strategy than "always low prices" to succeed in the long run. Here in the States, it's making some headway with new environmental initiatives. If Wal-Mart can turn Seiyu around, in a far different culture than it faces domestically, it may give investors another heartening sign that the Bentonville behemoth is learning to think outside its own big box. Unfortunately, Wal-Mart's efforts in Japan thus far seem decidedly boxed in.