Daiei, Inc. (TYO:8263) operates supermarkets, discount stores, department stores, and specialty shops in Japan. Its other businesses include restaurants, hotels, and real estate services. The company faces a challenging consumer spending environment in Japan as the economy recovers from the March 2011 earthquake.
The company operates two business segments:
As of February 2011, Daiei had 26 consolidated subsidiaries and six associated companies.
The Japanese government is considering a few tax measures as means of financing post-quake reconstruction. These measures include (i) a 10% increase in income tax for 3-5 years (yielding an ¥1.3 trillion annually), (ii) a modest increase in consumption tax (a 2-3% increase from FY2012 onward for two-three years only; each 1% increase would raise around ¥2.5 trillion), and (iii) a possible increase in electricity charges related to the nuclear power plant problems and a higher burden for the public. On the other hand, recovery may continue as aggregate retail same-store sales in Japan recovered to 1.4% year-over-year growth in April from a 3.5% decline in March following the earthquake.
Consumers may continue to rein in spending if the Japanese economy remains lackluster for the time being. Consumer spending could remain weak for a longer period in light of deteriorating employment and income coupled with rapid cooling of consumer sentiment. Sales of discretionary goods will likely be sluggish as this trend continues. Some analysts see consumer sentiment as unlikely to recover until 2012, given the nuclear power plant issue and political uncertainty.
Daiei competes in the Japanese consumer goods retail space in Japan. Selected competitors include: