June 2003 date for Sogo-Seibu duet due

The once-mighty Sogo department store is due to emerge from bankruptcy as a relative lightweight, and is expected to join Seibu as a sister company under a holding entity in June 2003.

Sogo, which filed for protection from creditors with debts of up to US$1.5 billion in July 2000, is under court approval to emerge from bankruptcy, and its now troubled sponsor, Seibu, is likely to join a group under pressure to rationalise operations.

Creditors have yet to approve Seibu's own rehabilitation planning, but many analysts reckon that consolidation with Sogo is inevitable.

Seibu is seeking a US$19 million bailout from major creditors, as it struggles to extricate itself from massive group losses.

Ironically, Sogo is ready to provide its struggling would-be partner with a capital injection of some US$4.1 million, possible due to an ample cash flow.

In the wake of bankruptcy, Sogo closed nine unprofitable outlets, and cut its workforce to around 3,300 by the end of February 2003. It also sold and liquidated assets of more than 150 group companies, at home and abroad.

Meanwhile, Sogo received an influx of executive talent from Seibu, while co-operating with its sponsor on procurement, distribution and merchandising.

Due to cost-cutting efforts, Sogo has managed to make itself rather better looking than its white knight. It managed to report an operating profit of just under US$30.7 million for the year ending February 2002. And Sogo announced a profit of just over US$50 million, the year ending February 2003.

Sogo is due to open a new Osaka store in autumn 2005, built on the same location as its previous outlet, with a space of 62,000 sqm. Many expect this to be a symbol of Sogo's revival.

from Masayuki Aoki, Osaka Office