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Japan's Seiyu to Cut Workforce Again

TOKYO - Seiyu, the troubled Japanese supermarket group in which Wal-Mart holds 37.8 percent, today announced it would cut up to 25 percent of its full-time workforce as part of an ongoing reorganization, according to published reports.

Seiyu said it would cut 1,500 to 1,600 full-time jobs through voluntary retirement and reduce the tiers of store management from six to four. In addition, Seiyu plans to increase the number of part-time employees to 85 percent of total staff by 2007 from the current 73 percent.

Masao Kiuchi, president of Seiyu, said the cuts -- Seiyu's third round in two years -- would help boost productivity. He said annual sales per full-time worker were Y100m ($943,000), about half the level of some of Seiyu's competitors.

"We have been learning about financial stability and management skills from Wal-Mart, and we have made progress. But when it comes to productivity, we are only finally at the point of tackling this," said Kiuchi. "This is something that we probably needed to do much earlier."

Wal-Mart has defended its acquisition of the small stake in Seiyu, which it increased last year and can raise again to 66.7 percent by the end of 2007.

Under Wal-Mart's guidance, Seiyu had seen a 40 percent productivity improvement in the running of distribution centers, the company said. Seiyu has begun introducing Wal-Mart's sales and inventory information system, which will be rolled out to half of the company's 400 stores by the end of this year. In addition, it has increased the range of private label brands and the number of items imported through Wal-Mart's global purchasing network.

Seiyu plans to open its first supercenter this year, although the company said it would not match the size and scope of Wal-Mart's U.S. supercenters.
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