KOBE, Japan -- Daiei here, Japan's largest supermarket retailer, said the Jan. 17 earthquake in Hanshin was responsible for the company's net loss for the year ended Feb. 28 -- its first net loss since 1988.
The loss amounted to 50.7 billion yen ($52.4 million) compared with net earnings of $5.2 billion a year ago. Sales rose nearly a third to $33.3 billion from $25.5 billion a year ago.
Conversions were made at the rate of one U.S. dollar equals 96.7 Japanese yen for fiscal 1994 and $1 equals 104 yen for fiscal 1993.
Daiei operates 401 superstores (multi-story units of 160,000-200,000 square feet featuring a supermarket on the lower floor and a department store on the upper floors); 4,836 convenience stores, and 1,009 specialty stores (some of which feature food).
The company said extraordinary costs related to the quake "swelled and squeezed profitability," while the destruction of eight superstores and a loss of traffic at other units in the quake-torn Kobe area led to a drop in sales.
However, total sales rose because of the merger in March 1994 of three unconsolidated superstore operations -- Chujitsuya Co., Uneed Daiei Co. and Dainaha -- which a company spokesman told SN added 25% to Daiei's volume.
Daiei said it plans to cut its work force by 2,000-3,000 employees by next Feb. 29, the end of the current fiscal year.
A company spokesman said the labor reductions will take the form of transfers to retail outlets in the Daiei Group, which includes approximately 8,000 units in more than 50 retail categories.
After last year's merger the company opted to retain excess labor and initially called for a labor reduction over three years, the spokesman explained.
However, he said Daiei decided to accelerate its labor reduction plans as part of its restructuring efforts amid the huge loss resulting from the earthquake.