Nova Faces Massive School Closure

Now the shit is really hitting the fan. It was bad enough for Nova that getting punished by METI in June forever branded them a dishonest company, but with media reports saying that they are looking to close nearly 200 schools, Nova is now a dishonest and financially struggling company. Great PR work, boys.

The Mainichi Shimbun

NOVA looks to shut down schools amid financial crisis

Major English language teaching chain NOVA is considering shutting down a large number of schools, it emerged on Thursday.

NOVA's income from lesson fees has decreased since the Ministry of Economy, Trade and Industry issued the language school a partial business suspension order over its practices. Because of this, the school is apparently pushing for a turnaround, hoping to cut costs by trimming and merging unprofitable schools.

NOVA currently operates more than 900 schools, but problems with efficiency have emerged.

Officials close to the group said NOVA has already been trimming and merging schools, focusing on unprofitable schools with low student numbers, but in the future the chain will also apply the move to major schools in cities where rents are high and there is more than one school in the same area. As many as 100 schools could be affected.

The language school will reportedly make considerations for students, allowing them to take lessons at other nearby schools.

Kyodo News

Nova considers closing at least 200 school branches

OSAKA — Nova Corp, reeling from a fraudulent-advertising scandal, is considering shutting down at least 200 out of its about 900 school branches around late September to turn around its operations, sources close to the matter said Thursday.

The nation's largest English-language school operator plans to close mainly money-losing school branches, but the company is being compelled to close some of the 200 because it has failed to pay their rents, the sources said.

Nova, headquartered in Osaka Prefecture, has been facing a business slump amid decreases in the number of enrolled students following the scandal.

In mid-June, the company was ordered by the Ministry of Economy, Trade and Industry to suspend part of its business for six months for lying to consumers about its services when soliciting students.

Nova said in a statement that the company has not officially made any decision on the closures and will disclose information when necessary.

The scandal prompted many of its students to end their enrollment and contract cancellations will likely increase further, the sources said.

The total number of enrollees peaked at some 480,000 around June and Nova itself had said in August that the number of its students will likely plunge 19.2% year on year by September.

Slated to be shut down are school branches located mainly in Tokyo and major cities in Osaka, Aichi and Hyogo prefectures where rents are high. The company has already picked about 50 school branches, including Nova Kids schools, for the shutdown.

The total number of closures will likely be well over 200 because some landlords are threatening evictions due to defaults on rent payments and Nova itself is offering to vacate some of the properties it has been using, some of the sources say.

The 200 include school branches which were shut down in late August and so far this month, as well as those slated for shutdown by the end of next month, the sources added.

Meanwhile, Nova is believed to be running short of funds because it is falling behind in employee salary payments, according to the sources.

One employee said experienced workers with families have already been leaving the company in droves. "As far as I know, rumors about the downsizing seem to be true," she said.

Comment: Evictions! To say that "Nova is believed to be running short of funds" is the understatement of the year. Nova can't pay it's employees, it's slow to pay out refunds, and now it can't pay the rent. It's coffers are empty.

Also worth a read: Japan Economy News & Blog