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TOKYO — Isetan Mitsukoshi Holdings Ltd. issued its first set of quarterly earnings since the April merger of Isetan Co. Ltd. and Mitsukoshi Ltd., which created Japan’s biggest department store group.
This story first appeared in the August 15, 2008 issue of WWD. Subscribe Today.
The retailer said Thursday that it posted a net profit of 7.67 billion yen, or $73.5 million at average exchange rates for the April-June quarter. Sales were 353.95 billion yen, or $3.39 billion, for the period.
The Tokyo-based company didn’t provide year-earlier results since Isetan and Mitsukoshi were still separate companies as of last year. But Isetan Mitsukoshi said severe competition between department stores in Japan and sluggish consumption caused the group’s sales, especially of apparel, to decrease from the year earlier.
“The economic condition in Japan is in a slowdown phase due to the world’s sluggish economy after the subprime loan problem from the U.S., increasing prices in raw materials and foods and [Japan’s] political disorders,” the company said, referring to Japan’s internal political struggles, a recent scandal at the Social Insurance Agency and other domestic matters.
Adding to the concerns was the government’s statement earlier this week that Japan’s economy contracted by 0.6 percent in the April-June quarter, stirring fears among analysts that the nation is sliding back into a recession. The contraction was blamed on declining exports and consumer demand, and was the first in more than a year.
Operating profits at Isetan Mitsukoshi in the quarter were 7.08 billion yen, or $67.8 million dollars.
The retailer said sales suffered despite the fact that Tokyo’s new subway line, which stops directly below Isetan’s flagship in Shinjuku, has brought more customers to the store and the two retailers launched a special advertising campaign touting the merger.
On a brighter note, the company said the opening of two stores in China boosted overseas sales.
In May, the new company issued full-year forecasts for the fiscal year ending March 31, 2009. The company expects to post net profit of 33 billion yen, or $303 million, operating profit of 34 billion yen, or $312 million, and sales of 1.54 trillion yen, or $14.14 billion, on a consolidated basis. �