INTERVIEW: Ex-Chairman Rules out Financial Aid to Otsuka Kagu

August 13, 2018

Tokyo- Katsuhisa Otsuka, the founder and former chairman of Otsuka Kagu Ltd. has rejected the possibility of giving financial support to the struggling Japanese furniture retailer.

"That will never happen," Otsuka said when asked about possible financial assistance to his old company in a recent interview with Jiji Press. "I'd do that from the beginning if I were to do so."

Otsuka resigned as chairman of the company after losing a proxy fight to his daughter Kumiko, the firm's president, in 2015. He later established furniture retailer Takumi Otsuka Co.

Under Kumiko since 2015, Otsuka Kagu has strengthened its lineup of mid-priced products, a major change from its longtime focus on high-end items.

With the change, she "ignored customers that helped Otsuka Kagu grow" into a major furniture retailer, her father said.

"Having low-priced products (in the company's product lineup) has surely diluted Otsuka Kagu's brand image," he said.

"We managed the company in a healthy manner more than 40 years" until the founder lost management control, he suggested.

Last week, Otsuka Kagu said it expects a net loss of 3,426 million yen in the year to December, a sharp deterioration from its previous estimate.

The former chairman said Otsuka Kagu's sales are falling and he expects a larger net loss in the year.

But the company would be able to reconstruct its business if banks give it necessary financial support, he said.

In March, Otsuka Kagu set up an event hall for seminars and other uses in part of its Shinjuku showroom and commissioned its operation to TKP Corp., a meeting room rental service company with which the furniture retailer formed a capital alliance last year. The Shinjuku showroom operates in a borrowed building.

The founder questioned the Otsuka Kagu decision, saying the business in Shinjuku has been in red since he was chairman. The rent for the building is high and Otsuka Kagu should have returned it, he said.

Asked about his daughter, he said, "There have been no consultations."

"She probably wants to come in her heart but there must be reasons that prevent her from doing that," the father said.

"She has a strong sense of responsibility," he said. "I want her to take good care of herself." Jiji Press