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Takashimaya Predicts Profit Slide

Japanese department store operator sees more challenging times ahead.

Takashimaya

TOKYO — Department store operator Takashimaya posted double-digit growth for the fiscal year just completed but warned its performance will be less stellar over the next 12 months in the aftermath of Japan’s massive earthquake and tsunami.

This story first appeared in the April 11, 2011 issue of WWD.  Subscribe Today.

The retailer said it sees net profit falling 38.6 percent to 8.5 billion yen, or $99.78 million at current exchange, for the year ending February 2012. Operating profit will slide 12 percent to 16 billion yen, or $187.83 million, and revenue is seen dropping 2.6 percent to 846.8 billion yen, or $9.94 billion, it said.

This comes after the retailer said last week that sales at its stores in Japan dropped 17.3 percent in March due to effects of the recent earthquake and tsunami and still unresolved problems with overheating nuclear reactors in the northeastern part of the country.

“The situation facing department stores in Japan is very difficult right now because of effects being felt by the great Tohoku earthquake on March 11,” a spokeswoman for the company said. “But centered around stores in Kansai [western Japan], the sales are recovering.”

A spokesman for Takashimaya said in the first week following the earthquake, sales at the retailer’s 18 stores in Japan were down 38 percent compared with normal levels. The following week they were down 22.6 percent, the week after that they were down 8.2 percent and in the first week of April, they were only 1.5 percent lower than usual, signaling that consumer confidence may be returning to the country.

For the year ended in February, Takashimaya’s net profit grew nearly 79.6 percent to 3.85 billion yen, or $160.52 million at average exchange rates for the period. The retailer said cost reduction measures and restructuring drove bottom-line growth.

Operating profit for the year was up 35.3 percent to 18.17 billion yen, or $210.59 million. Revenue fell 0.9 percent to 869.48 billion yen, or $10.08 billion.

Separately on Friday, Onward Holdings also reported guidance for the year ending Feb. 29, 2012. While the company said the effects of the earthquake were taken into account, it is still projecting growth. The retail group expects net profit to increase 28.6 percent to 3.5 billion yen, or $41.09 million. Operating profit is forecast to grow 14.2 percent to 10.2 billion yen, or $119.74 million. The sales guidance shows an increase of 0.1 percent to 244.8 billion yen, or $2.87 billion.

“It’s predicted that consumption and economic activity, including in this industry, will suffer a negative impact from the earthquake and the resulting electricity conservation and planned power outages,” the company said. “In this kind of environment, the group will implement a global growth strategy in which our domestic business maintains stable earnings while our international business will proactively expand its earnings.”

Onward’s net profit for the 12 months ended February of this year rose 24.4 percent to 2.72 billion yen, or $31.52 million. Operating profit was more than double last year’s figure at 8.93 billion yen, or $103.5 million, and sales dropped 1.6 percent to 244.55 billion yen, or $2.83 billion.