TOKYO -- Walmart plans to relist Japanese unit Seiyu on the stock market, hoping to revive the struggling business with an approach more tailored to the local market, as the U.S. retail giant tries to reshape its global operations to focus on the key markets of China and India.
The relisting plan, mentioned in Seiyu's three-year business plan, comes at a time when its main American business is under tremendous pressure from Amazon.com and other e-tailers. As the parent loses the wherewithal to support low-performing overseas units, revamping those operations has become imperative.
Walmart could list either Seiyu itself or its holding company, Walmart Japan Holdings, though it intends to retain a majority stake. While the time frame remains unclear, Walmart Japan CEO Lionel Desclee called listing a long-term aspiration in the plan. There had been speculation that the U.S. parent was searching for a buyer for the Japan unit, but Walmart apparently abandoned this plan.
The American big-box retailer also hopes it will be easier for Seiyu to raise funds as a listed company, unlocking more business options for its Japan unit going forward.
Walmart aims to enhance Seiyu's independence. The business plan also called for the retailer to focus on expanding its online grocery business and improving its fresh and prepared food offerings. Desclee, who took over as Walmart Japan CEO in March, said he aims to strengthen Seiyu's connection to Japanese consumers as a community-based company.
The two companies originally struck up a capital and business alliance in 2002. Then Seiyu was delisted from the Tokyo Stock Exchange in 2008, when Walmart made it a wholly owned subsidiary.
After its acquisition and delisting, Seiyu adopted a Walmart-style "every day low price" strategy, but struggled to compete with drugstores and other discount retailers. Walmart Japan reported a 200 million yen ($1.87 million at current rates) net loss for 2016, broke even in 2017 and logged a 66 million yen loss last year.
As Seiyu struggled to gain traction among local consumers, speculation emerged that the company intended to sell Seiyu and exit Japan, though the company denied it in a comment last July.
While retailers and real estate investment funds expressed interest, eyeing Seiyu's stores in prime locations, Walmart received no offers it considered acceptable for a unit that had been expected to fetch 300 billion yen to 500 billion yen. "Walamart appears to have decided on listing as it could not find a buyer," said one source in the financial sector.