Nova projects net loss as rapid expansion backfires

Nova Corp said Friday it expects its group net balance to have fallen into the red in the business year through last March with a loss of 3 billion yen as a result of competition for student enrollment among its own schools. The major English conversation school operator had projected a 200 million yen profit for fiscal 2005. The projected net loss compares with the 204 million yen profit for fiscal 2004.

Nova rapidly increased the number of its schools by around 300 to 994 between October 2004 and March this year. The expansion has caused the company to employ inexperienced managers and suffer from competition among its own schools located close to each other.