Dairy Farm International Holdings says it will shut its loss-making Wellsave supermarket joint venture in Japan, incurring an estimated US$40 million closing cost. The company said intense competition had eroded Wellsave's profitability and had prompted the decision to close the venture. The move is the latest of several closures and sell-offs by Dairy Farm's new management aimed at the retail group's less profitable divisions. Wellsave, which operates in eastern Japan, is 60 per cent owned by Dairy Farm and 40 per cent owned by Seiyu, a Japanese retailer. The Wellsave venture was launched in September 1995 to capture a slice of the discount supermarket business in Japan. Dairy Farm's regional director for North Asia, Robert Neslund, said: 'Since we first opened, a number of existing, conventional Japanese supermarkets have become aggressive, low-cost promoters, and have significantly weakened Wellsave's competitive advantage.' Three of the 14 Wellsave supermarkets would close by the end of next month and the rest by mid-year. Mr Neslund said Dairy Farm's share of the trading loss in 1997 was $9 million and the business was incurring a monthly loss of about $1.2 million. The closure costs were estimated at $40 million, which included losses that would arise in the process. The decision follows other closures that have taken place since former Kmart Corp executive vice-president Ronald Floto became Dairy Farm's chief executive last June. In September, Dairy Farm agreed to sell its 49 per cent stake in dairy products maker Nestle Dairy Farm; in October, it decided to sell its Spanish supermarket chain Simago and, in December, it said it would close its 39 remaining Mannings drugstore outlets in Taiwan. Dairy Farm is the Singapore-listed retail arm of the Jardine Matheson group.