Aeon Co, Japan's second largest retailer, is to spin-off its Jusco shoe business into a separate subsidiary as part of moves to shake-up its struggling general merchandise operations.

It also plans to follow a similar strategy with its other businesses, including clothing, in an attempt to overhaul the retail format that offers clothing, food and household goods under one roof.

The company is trying to offset a slowdown consumer spending, which pushed it to a net loss was JPY14.7bn (US$165m) for the six months ended August. Sales dropped 3.1% to JPY2.53 trillion.

Even though it has been cutting prices and costs in an attempt to improve profitability, the firm has struggled to compete with specialty retailers like Fast Retailing's Uniqlo casual clothing chain.

As part of its turnaround plans, Aeon has already started to trim its assets.

Earlier said this month it said it will divest its controlling stake in loss-making US women's wear chain Talbots to focus on businesses in China and South East Asia.