Oct. 6 (Bloomberg) -- Aeon Co., Japan’s largest supermarket retailer, posted a first-half loss for the second straight year as the nation’s deepest postwar recession cut demand for clothes and food.

The net loss was 14.7 billion yen ($165 million) for the six months ended August, compared with a loss of 16 billion yen a year earlier, the company said in a statement today. Sales dropped 3.1 percent to 2.53 trillion yen.

The operator of Jusco and Saty supermarkets is introducing cheaper store-brand products, including 880 yen denim jeans and 100 yen cans of beer, to lure customers hurt by falling wages and rising unemployment. Japan’s supermarket sales fell for the ninth straight month in August.

“Spending remained in the doldrums,” Aeon said in the statement. “We have been pursuing a low-pricing strategy and cutting costs” to improve profitability.

The company, based in Chiba prefecture near Tokyo, maintained its forecast for full-year net income of between 7.5 billion yen and 15 billion yen. Sales may rise 0.2 percent to at least 5.24 trillion yen in the year ending February.

Aeon shares fell 2 percent to 830 yen, before the earnings were announced. The stock has lost 7 percent this year, compared with a 9 percent gain in the benchmark Nikkei 225 Stock Average.

More Discounts

The retailer last week cut prices of 100 imported items, including beef and wine, as it benefits from a stronger yen. Discounts by supermarkets and other retailers are helping push down the country’s consumer prices, which dropped by the most in at least 38 years in August.

Sales at stores open at least a year at Aeon Retail Co., which operates supermarkets for the parent company, slipped 6.2 percent in the six months ended Aug. 20, while the number of visitors increased 0.7 percent, the company said last month.

The company booked a one-time charge of 14 billion yen, as its credit card unit, Aeon Credit Service Co., set aside money for potential losses for customer refunds on overcharged interest payments.

U.S. clothing unit Talbots Inc., which posted a net loss of $24.5 million in the three months ended Aug. 1, is also weighing on Aeon’s earnings.

Workers’ wages have fallen for 15 straight months, and unemployment rate fell to 5.5 percent in August from a record 5.7 percent the previous month.

Seven & I Holdings Co., Japan’s largest retailer, posted a 35 percent drop in first-half net income last week.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net.

Last Updated: October 6, 2009 02:48 EDT