Wal-Mart affiliate Seiyu suffers

Wal-Mart's name could appear on Seiyu megastores next year

Wal-Mart's Japanese affiliate, Seiyu, has reported growing losses and revealed that it may use Wal-Mart branding for new store openings.

Japan's fourth-largest supermarket chain said first-half losses were 10.59bn yen ($96m; £53m), compared with a 2.88bn yen loss a year ago.

The US firm has the option of raising its stake in Seiyu - key to its Japan strategy - to 50.1% by the end of 2005.

Seiyu said new megastores due to open in 2006 could use the Wal-Mart name.

Complex challenges

Seiyu is predicting a loss of 7.5bn yen for the full year to December, against analysts forecasts of 7.95bn yen.

If it makes a loss, this would be its fourth consecutive year of losses.

Wal-Mart currently owns about 40% of Seiyu and has another option to raise that to 66.7% by the end of 2007.

Japan's complex distribution systems have proved challenging for many overseas retailers, experts have said.

But a year ago, Wal-Mart was reported to be interested in acquiring another troubled Japanese supermarket chain, Daiei.

Reporting its results earlier this month, Wal-Mart said high oil prices were hurting profits as well as limiting customers' capacity to spend more.

Its profits were up 6% on a turnover that was 10% higher. But its international profits rose only 0.3% in spite of a 12% sales rise.