Trading on the Tokyo Stock Exchange today [Tuesday] saw shares in Japanese retailer Seiyu soaring, following rumours that it and its equity partner Wal-Mart will together sell discount goods from China at certain Seiyu stores.

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The products will probably include casual clothing manufactured in China and other areas in Asia where Wal-Mart does business, and consumer prices will reflect Wal-Mart’s massive buying power. They will be sold in specially renovated Seiyu stores, primarily in the Tokyo area. The outlets may bear the Wal-Mart name.


If the new ranges sell well, in 2004 the two companies may set up supercentres combining a large-scale discount store and a food shop.


Shares rose over 8% during early trading on rumours of the strategic shift, even though no concrete details have been released. If Wal-Mart is upping its cooperation with Seiyu, this will ease worries that the US giant is not intending to exercise its option to raise its stake in Seiyu to 33.4% by the end of this year from 6.1%.


Analysts consider it crucial that Wal-Mart exercise this option to ensure Seiyu’s long-term success, and had reacted with concern to rumours that Wal-Mart was considering entering Japan with a different retailer instead of Seiyu, sending shares tumbling in early June.

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But even before Sunday’s report, analysts were noting that the alliance appeared to be on track, noted Reuters. “Seiyu’s comprehensive alliance with US retailing giant Wal-Mart appears to be proceeding on schedule, and following the full-scale adoption of several Wal-Mart systems, we expect solid improvement in margins,” West LB Panure analyst Jun Kawahara said in a report last week in which he upgraded Seiyu’s rating to “outperform” from “hold”.