Tokyo, July 27 - The Japanese unit of Wal-Mart Stores Inc., Seiyu Ltd., will post an operating loss for the first half of the year as weak sales sidelined its forecast return to profit, the Nikkei business daily said on Friday.
Shares of Seiyu fell 3.1 percent in late afternoon trade, compared with a 1.6 percent drop in the Tokyo index of retail stocks.
Seiyu, 53 percent owned by the world's largest retailer, likely suffered an operating loss of 2 to 3 billion yen ($17 million to $25 million) in the six months to June, falling well short of its forecast 2.8 billion yen profit, the newspaper said.
Wal-Mart has struggled since its 2002 arrival in the world's second-largest retail market, leading some analysts to suggest the retailer should pull out of Japan -- as it did from South Korea and Germany last year.
Seiyu has posted five straight years of losses since Wal-Mart first took a small stake in the company, although it has forecast a return to profit this year.
The U.S. company has invested more than $1 billion in the 390-store Japanese supermarket chain, remodelling 70 locations last year, but has yet to see anything more than temporary upswings in sales.
Seiyu's first-half same-store sales fell 1 percent year-on-year, dragged down by weak sales of clothing and electric appliances, as well as poor weather, the Nikkei said.
A spokesman for Seiyu, which is scheduled to announce its results on Aug. 14, said the report was speculation.
The U.S. retailer's strategy of selling discounted products in bulk may not be conducive to shopping habits in Japan, where consumers tend to buy groceries more often and in smaller amounts.
While Seiyu has benefited from Wal-Mart's knowledge of cost-efficient distribution and information systems, its store layouts and product development have failed to impress Japanese shoppers, the Nikkei said.