Kumiko Otsuka, Former President of Otsuka Kagu, Returned to the Front Lines of Management after a Two-and-a-half-year Absence

The “Furniture Store Princess” returns to the frontlines of management.

It has been two and a half years since she resigned from all positions at Otsuka Kagu. Kumiko Otsuka, 55, the former president of Otsuka Kagu, will become an outside director of Melco Holdings, an IT equipment manufacturer, as of June 26. Kumiko’s personal relationship with Melco’s president Hiroyuki Maki was the impetus for her selection as an outside director.

The family feud between Kumiko and Katsuhisa, the founder and father of Otsuka Kagu, began around ’14, nine years ago. The father and daughter were in violent conflict over management policy. Kumiko dismissed her father as president and took the helm of the company herself, but the company’s performance deteriorated sharply.

Although the company avoided bankruptcy by becoming a subsidiary of home electronics giant Yamada Denki (now Yamada Holdings Co., Ltd.), Otsuka Kagu as a company ceased to exist. Kumiko retired from all positions at Otsuka Kagu in October 2008.

FRIDAY Digital reported on December 12, 2007, the detailed background of Kumiko’s failed management of Otsuka Kagu until it became a subsidiary of Yamada Denki. We would like to reproduce the article and look back at Kumiko’s true face and the family turmoil between father and daughter–.

She hit the desk repeatedly and said, “I don’t understand!

Don’t you have any better ideas?”

On the sixth floor of Otsuka Kagu’s headquarters building in Ariake, Tokyo. In the glass-walled president’s office, Kumiko, then head of the company, often sighs in front of the executives.

I strongly sense the president’s impatience. During meetings, he taps his fingers on the desk in rapid succession, or leans back in his chair and twirls a ballpoint pen while looking into the air. They work until late at night, and even after 1:00 a.m., work e-mails are sent to employees.

Even during the day, he spends too much time going to the cafeteria, or he is giving instructions while eating a sandwich in the president’s office. Irritated, he says, ‘I don’t get it! ‘ He would often reprimand his subordinates.

Kumiko’s impatience is understandable. Her father Katsuhisa’s shift from upscale to low-priced was a huge failure. The company is in dire straits due to poor management. Sales for the January-September period of 2007 totaled approximately 21 billion yen, down 23% from the same period last year. Operating loss amounted to nearly 3 billion yen. This marks the fifth consecutive year of sales decline and the sixth consecutive year of operating loss.

The main bank is beginning to harden its attitude. It is said that “Kikyo Kikaku,” the asset management company of the family that owns Otsuka Kagu, is said to owe the bank approximately 500 million yen as of the most recent financial statement. The main bank has probably determined that there is no way to repay the debt. All 860,000 shares of Otsuka Kagu owned by “Kikyo Kikaku” were sold to the market as collateral.

By the end of September, Otsuka Kagu’s bank balance had fallen to 2.2 billion yen. The company is losing 500 million yen in cash every month. At this rate, the company would run out of funds by March 2008. There was nothing left to do.

(A reporter for a business magazine) “One company has teamed up with Otsuka Kagu, which is in such dire straits.

Yamada Denki is making final adjustments in the direction of making Otsuka Kagu a subsidiary. About 20 employees of Otsuka Kagu have already been transferred to about 10 Yamada Denki stores. Since Yamada Denki’s theme is ‘Kurashimaru Marugoto,’ the company probably wanted to acquire Otsuka Kagu’s sales network and repair know-how in order to grow from a single electronics mass retailer.

Kumiko suffered a painful business failure. Whether she can clear her name as an outside director of a major IT equipment manufacturer remains to be seen.