Sogo - Company History

Sogo opened in 1830 not on the main street of new kimono fabric, which the long-established houses held, but on the back street of the second-hand trade, where anyone with a little credit could start. Over three generations of the same shop name it moved up into gofuku, spread from Osaka to Kyoto and Kobe, and by the turn of the century had begun setting sundries and art beside the cloth — the first outline of a department store.

Incorporated in December 1919, Sogo spent two decades building: a larger Kobe store at Sannomiya, and on Shinsaibashi a marble-and-glass block of 11,000 tsubo that announced it as a full department store. The buildings were paid for with borrowings that cost the founding family its control in 1935, and the same reflex — commit first, find the money afterwards — carried the company through requisition by the occupation forces into a Tokyo store that lost money from the day it opened. Sales of $12.2M (¥4bn) in the year to February 1953 had grown to $41.7M (¥15bn) by the year to February 1961, but by then three straight years of net losses had already ended the dividend.

In 1962 an Industrial Bank of Japan man, Mizushima Hiroo, was made president as an arbiter between warring shareholders, and stayed at the top for more than thirty years. He pulled the company out of its losses with a rationalisation drive, then built a store network by a method of his own: every new store its own company, financed by local banks against the land beneath it, with rising land values revalued to wipe out the accumulated losses. Sales at the listed parent rose from $49M (¥18bn) in the year to February 1962 to $2.5B (¥311bn) in the year to February 1992, the year the group reached the top of the industry — and the same design ran backwards once land stopped rising.

In April 2000 Sogo asked its main banks to write off ¥639bn and the whole of the sitting management resigned; in July, after public anger at the use of public money to rescue one company, it filed instead for civil rehabilitation with liabilities of ¥1.87tn, the largest failure of an operating company in Japan up to that time. What followed was not a return to independence but a succession of owners — first Seibu's methods, then Seibu's holding company, then Seven & i, and finally an American fund.