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Furniture retailer Otsuka Kagu warns of potential financial distress

This undated photo shows Kumiko Otsuka, president of Japanese furniture retailer Otsuka Kagu Ltd. (Kyodo)

TOKYO (Kyodo) -- Struggling furniture retailer Otsuka Kagu Ltd. warned on Tuesday of a possible financial problem going forward as it reported a first-half loss.

    The Tokyo-based company, which is looking for a business and capital tie-up partner, said in its January to June financial report it has "events or circumstances that cause important doubt on the going concern assumption," warning investors of potential insolvency.

    Otsuka Kagu did not hold a news conference to report the six-month earnings, but it said in the financial statement, "Countermeasures are in the process of being implemented" to address financial concerns without giving details.

    It has been in tie-up talks with companies including Taiwan's Abico Group, according to people familiar with the matter.

    The retailer of upscale furniture, which has been bleeding red ink since the year ended in December 2016, said it posted a net loss of 2.03 billion ($18 million) in the six months to June.

    Last week, it revised downward its net earnings outlook for the full year to December to a loss of 3.4 billion yen from a previously estimated profit of 1.4 billion yen.

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