Ailing Kanebo Ltd.'s mainstay cosmetics business began operations Friday under the state-backed Industrial Revitalization Corp. of Japan to pay off the group's huge debts.
"There was a virtual absence in brand strategy" for the firm's 60 brands and 2,500 cosmetics products, said Kanebo President Kenji Chishiki, who will also head the new Kanebo Cosmetics Inc. "We intend to pursue a policy of scrap and build, concentrating our scarce resources strategically."
Kanebo will receive aid money from creditors and the IRCJ on condition that the new cosmetics company increases sales volume by a minimum of 37 percent to 192 billion yen during the current fiscal year, and continues to expand sales to 197.9 billion yen in fiscal 2005 and 207.8 billion yen in fiscal 2006.
Hope for the ailing Kanebo group hinges on its healthy cosmetics business, placing a heavy burden on the new company to pull the rest of the group forward.
But even before the birth of the new company, the going has been rough. Given the likelihood that new executives will not be able to keep their posts at the end of the three years, the IRCJ was unable to find an outside cosmetics specialist to chair Kanebo Cosmetics Inc., IRCJ Director Ryutaro Katayama said. Fellow IRCJ Director Kunihiko Yogo was appointed to fill the slot Friday.