By  on August 10, 2012

TOKYO — Isetan Mitsukoshi Holdings said Friday that its first quarter net profit plummeted 64.1 percent, due to a high comparative base on extraordinary gains from a year ago.

Japan’s largest department store operator posted a first-quarter net profit of 6.07 billion yen, or $75.77 million at average exchange rates, for the three months ended June 30. Last year the company booked a large one-time gain on a tax benefit linked to the merger of its two parts, Isetan and Mitsukoshi. Last year's first-quarter net profit was 16.9 billion yen, or $207.14 million.

First-quarter operating profit rose 38.1 percent to 6.91 billion yen, or $86.17 million.

Isetan Mitsukoshi said that its sales for the quarter edged up just 0.1 percent to total 290.36 billion yen, or $3.62 billion.

The company said the department store business in Japan continues to face difficult market conditions. As such, Isetan Mitsukoshi has announced plans to remodel some of its most important flagship stores in Tokyo over the next few years. Construction got underway in sections of Isetan Shinjuku in May, and Mitsukoshi Nihonbashi will also be getting a facelift.

Isetan Mitsukoshi has also started directing some of its focus toward more specialized, small format stores, such as a dedicated beauty store in Shinjuku and an upscale, travel-focused store at Tokyo's Haneda airport.

The retailer cut its net profit guidance for the year ending March 31, but left its operating profit and sales forecasts unchanged. It now expects net profit to fall 50.8 percent on the year to 29 billion yen, or $369.3 million at current exchange rates. This is down from a previous forecast of 31 billion yen, or $394.77 million.

The company is predicting operating profit for the year will grow 4.9 percent to 25 billion yen, or $318.36 million.

Isetan Mitsukoshi expects to see full-year sales remain flat at 1.24 trillion yen, or $15.79 billion.

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