Wal-Mart Japan’s Losses Increase
Tokyo Wal-Mart Stores Inc.’s Japan unit, Seiyu Ltd. said it likely lost twice as much money in 2007 as previously forecasted due to slumping sales and a charge to write down the value of some stores, according to Reuters.
The retail giant has invested approximately $2.2 billion in the Japanese division since 2002. However, the supermarket remains mired in the red amid tough competition with rivals such as Aeon Co.
Seiyu, which Wal-Mart has a 96% stake in, said it now expects to post a group net loss of 20.9 billion yen for 2007—its sixth straight loss. The loss puts the company at a deficit of 10.4 billion yen.
Seiyu’s same-store sales fell 1.2% in 2007, due to sluggish demand for apparel and household goods. After reevaluating their earnings potential based on recent sales data and surrounding competition, the retailer also said it will book a charge of 6.5 billion yen to write down the value of about 10 stores.
Sam’s lands—with flat-screens ablaze’smack-dab in the land of the Giants
LINDEN, N.J. —Sam’s opened one of its latest generation warehouse clubs in Linden, N.J., a location that puts it in a densely populated suburb just outside of New York’s borough of Staten Island. The club is the first in New Jersey’s Union County and plugs a 30-mile coverage gap between units in Secaucus and East Brunswick.
The 137,000-square-foot club is part of the latest generation prototype that Sam’s has been rolling out. In fact, the Linden debut was one of five Sam’s launches in January, the others being in Auburn, Ala.; Port St. Lucie, Fla.; Gilbert, Ariz.; and Las Vegas.
An attached liquor store makes the Linden club somewhat unique. “Not many Sam’s Clubs have that,” said unit manager Trina Rumph. New Jersey food retailers are not allowed to sell liquor in their stores, but may operate or lease space for an adjoining store. Sam’s doesn’t own the attached liquor store, Rumph noted, but, as a common amenity in New Jersey food retailing, it will represent a familiar convenience to club members.
Mohamed Khan, a Sam’s market manager, said some of the features that the retailer has been adding in recent years should play well in Linden, including ancillary services, such as optical, an expanded electronics section, updated produce operation and an expansive pharmacy and health care department. Kahn pointed out that non-members “can come in and take advantage of our $4 prescriptions.” Although only members can purchase OTC drugs and health and beauty care products, Sam’s wanted to extend its pharmacy services to the entire community, Kahn said.
Sam’s made much of food in the introduction. The Linden club’s grand opening celebrations included seven road shows with seafood, cake and Italian food events, the last sponsored by vendor George DeLaillo Co. Fresh food represents about 30% of the Linden store, Kahn said.
Fresh food takes more space in latter day Sam’s Clubs and has a higher profile. Produce is particularly conspicuous. Although some expansion of assortment has occurred, Kahn said much of the bigger look is attributable to merchandising, including the addition of open face vertical cooler units for fruits and vegetables.
In its latest prototypes, Sam’s makes the electronics department stand out in the front of the store. The displays of flat-screen televisions in the Linden unit are massive, and the club opened just in time for the Jersey-based New York Giants to play in the Super Bowl. Sony also has its own mid-aisle merchandising system that features laptops, digital cameras and other electronics.
The Linden Sam’s also devotes considerable space to seasonal and furniture displays, including a riding mower and full living room set, merchandised around a flat-screen TV, naturally. The club takes local demographics into consideration too, offering Hispanic-oriented items in multiple departments and mounting promotional displays of Maxi-Cocina pressure cookers and Goya groceries during the opening.
The new Sam’s major competition will be a BJ’s unit operating just around the corner on Routes 1 & 9, an important commuter artery in the Garden State’s New York City suburbs. One feature that will make the BJ’s a particularly difficult rival is its gas station—something Sam’s lacks—which is a definite draw both for price-pressured New Jersey drivers looking for a break on fill-ups and even more so for folks traveling over from New York, where fuel generally costs 30 cents to 40 cents more per gallon.
Costco to open in Australia in ’09
BELLEVUE, WASH. —At its annual shareholders meeting on Jan. 29, Costco announced that it’s on track to open 29 new stores in fiscal 2008. When asked about international expansion, chairman of the board Jeffrey Brotman said the chain plans to “open in Australia sometime next year.”
Costco evp and cfo Richard Galanti later confirmed that the company is searching for sites in Sydney, Brisbane and Melbourne. “We’re looking at opening there in 2009 if everything goes as expected,” he said. The move Down Under would be the first new country Costco has entered in more than eight years. The company, however, said it still isn’t ready to test the waters in China. Brotman said that the move is “still undecided, though we’re taking a hard look at it.”
Ceo Jim Sinegal noted the 531-store chain plans to open 29 new stores this year after opening 31 last year. “We have more than that in the pipeline right now, but that’s the number we think we’ll complete,” he said. He also reaffirmed earlier projections that Costco could eventually open 1,025 stores worldwide with more than 700 warehouses in the United States, 50 in the United Kingdom, 49 in Japan and more than 100 in Canada. And he said those numbers are always subject to change.
“When we first opened in Canada, we thought we might be able to build 10 stores up there,” said Sinegal. Canada currently has 75 stores with four new stores added since September 2007.
Costco continued to push eco-friendly ideas in stores last year. Sinegal said the company increased the number of stores powered by solar energy to 13 and that it may install solar panels at 25 more. He said the average cost of converting a warehouse to solar power is $745,000, but that the cost savings would recoup that investment in three to five years.