TOKYO—Isetan Mitsukoshi Holdings Co. Ltd. said Tuesday that its first-half net profit plunged 90 percent on a combination of factors including a strong yen and sluggish macroeconomic conditions.
Net profit for the six months ended September 30 slumped 90.1 percent to 413 million yen, or $4.65 million at average exchange rates for the period. The company said it suffered various losses, including a 6.09 billion yen, or $68.56 million, special loss on valuation of its shareholdings.
Sales at Japan’s largest department store retailer slid 6 percent to 579.92 billion yen, or $6.53 billion.
The company said that unusually warm temperatures bit into sales of fall-winter clothing. Similarly, Fast Retailing Co. Ltd. has blamed the warm weather for hurting sales of heavier items at Uniqlo.
Isetan Mitsukoshi also said that store closings and renovations of its Mitsukoshi store in Ginza, which closed various selling floors at different points in time, weighed on its financial performance.
Yasuhiro Suzuki, executive manager of investor relations at Isetan Mitsukoshi, said that 2009 was a difficult year for the Japanese economy and 2010 has not been much better. But the executive said the retailer doesn’t plan to drastically change its strategy.
“If possible, we don’t want to lower prices, but we’d like to be able to offer customers higher quality goods for their money,” he said at press conference here.
The retailer swung back into the black on the operating level, where profit totaled 917 million yen, or $10.33 million, compared to a loss a year earlier. Isetan Mitsukoshi said that it is working toward achieving an operating profit of 30 billion yen, or $369.53 million at current exchange, for the 2013 fiscal year.
The retailer reiterated its previous forecasts for the full-year ending March 31, 2011. It expects net profit to come in at 12 billion yen, or $135.12 million, and sales at 1.24 trillion yen, or $13.96 billion.
Isetan Mitsukoshi also announced Tuesday that it will open its second location in the Chinese city of Tianjin in spring 2012. The 269,100-square-foot store will be wholly owned and operated by Isetan Mitsukoshi, after talks with a local company fell through. During the first half of 2011 the retailer plans to set up a local company that will be in charge of the store’s operations. The retailer currently operates four stores in China.
Also on the international front, Isetan Mitsukoshi set up a representative office in Vietnam’s Ho Chi Minh City in October. The main purpose of the office will be to research the local market and investigate the potential for the retailer to open department stores there.