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Tax Hike Dents Retail Sales in Japan

Department stores cited a drop in April sales for most categories, while Uniqlo saw same-store sales rise 3.3 percent.

TOKYO — Japanese department stores reported lower sales in April, as a consumption tax hike that went into effect April 1 bit into consumer spending.

By contrast, Fast Retailing said Uniqlo’s same-store sales in Japan grew 3.3 percent in April, despite a 0.8 percent drop in customer numbers. The average purchase per customer was up 4.1 percent over the same month last year.
 
“The warmer weather boosted sales of spring items,” Fast Retailing noted.
 
Department stores had experienced sales growth in March, as shoppers stocked up before the tax increased from 5 percent to 8 percent, as reported.
 
But on Friday, Takashimaya said sales at its 18 stores in Japan dropped 13.6 percent in April, while noting that for the past two months combined, its sales rose 10.3 percent.
 
“April sales fell across every category of merchandise except for prepared foods — including categories such as fine jewelry and designer and specialty clothing and accessories, which saw large sales growth in March,” the retailer said. “In the cumulative total from March, sales increased in each category except prepared foods.”
 
J. Front Retailing, which operates Daimaru and Matsuzakaya department stores, reported sales at the group’s 18 stores in Japan fell 15.3 percent in April, but increased by 11.2 percent when calculated as the cumulative total from March to April.
 
H2O Retailing’s Hankyu and Hanshin department stores said sales fell 7.9 percent in April. Previous to this, the group had reported monthly sales increase for each month so far this year, as well as each month last year.
 
In a report published by the Hong Kong and Shanghai Banking Corporation on April 28, analyst Cathy Chao noted that the impact of the tax increase would be less than initially anticipated.
 
“The tax hike seems to have been very far from the ‘shock and awe’ that many may have feared,” the report said. “Many department stores hosted promotions in March to front-load sales and a drop-off in April was fully expected, but from the several brands that we spoke with during a recent visit to Tokyo, the impact of the tax has had less of an impact than they had originally forecasted. Most brands have seen an improving trend across each week in April.”
 
While Japanese consumers ease back into to their regular spending habits, consumption across the country may also be boosted by the government’s more proactive tourism policy, which so far has led to an increase in overseas visitors.
 
The Japan National Tourism Organization recently reported that the number of foreign visitors to the country was up 22.6 percent in March over the same month last year, to a total of 1.05 million. The number set a new single-month record, and is believed to have partially resulted from an easing of visa regulations for Southeast Asian tourists, as well as visits to Japanese ports by cruise ships from China and other countries.