Japan Retailers Shed Double Digits in March

The disaster is biting into the county's retail.

TOKYO — Uniqlo, Isetan Mitsukoshi and Takashimaya reported double-digit drops in March sales, providing the latest indications of how much Japanese consumers are holding back in the immediate aftermath of the earthquake and tsunami disaster.

This story first appeared in the April 4, 2011 issue of WWD.  Subscribe Today.

Uniqlo’s corporate parent Fast Retailing said same-store sales at the fast-fashion chain slid 10.5 percent last month. The comp figures refer exclusively to Uniqlo’s Japan operations. Despite the drop, a Fast Retailing spokesman said the company was encouraged by the demand for some key spring items like chinos, cargo pants and machine washable sweaters.

Isetan Mitsukoshi said preliminary March sales at its nine Isetan stores dropped 28.4 percent and those at its 14 Mitsukoshi stores fell 22.8 percent. Similarly, Takashimaya said sales at its 14 stores in Japan slid 17.3 percent in March. The retailer specified that sales at some of its Tokyo locations dropped more than 30 percent.

J. Front Retailing, which operates 21 Daimaru and Matsuzakaya department stores, said March sales dropped 9.6 percent. Matsuzakaya branches in the Tokyo neighborhoods of Ueno and Ginza saw their sales drop 29.6 percent and 28.9 percent, respectively, it said.

The Japanese department stores’ March sales data seem to indicate that business in other parts of Japan, excluding Tokyo, is holding up better. J. Front said March sales at the Osaka Umeda branch of Daimaru rose 0.3 percent. Takashimaya said its Osaka store’s sales rose 0.5 percent for the month, while Isetan Mitsukoshi said sales at its Hiroshima store rose 1.3 percent.

Three weeks after the quake and tsunami slammed northeastern Japan, life in Tokyo is gradually resuming a somewhat normal rhythm, although most retailers have cut back on their operating hours to conserve electricity amid an energy shortage. Rolling blackouts in the surrounding areas of the city are expected to continue through the summer at least. And while the worrying situation at an overheated nuclear plant in Fukushima seems stable at the moment, it’s still unresolved. The cooling process could take months.

Those concerns and disruptions to daily life are likely to weigh on consumers’ minds.

“Essential apparel items such as underwear and outerwear are unlikely to suffer from the fallout of the earthquake and tsunami. However, accessories and other nonessential wear such as swimwear are expected to see sales shrinking as Japanese consumers reassess their needs versus wants on the fashion front,” according to a recent report from researchers at Euromonitor.

The luxury goods business is considered particularly vulnerable. Even before the natural disaster and ensuing nuclear crisis occurred, Japanese consumers were shunning expensive labels in the face of economic uncertainty. But it’s also true that the Japanese market for those products is becoming less important than it once was, as demand in China and other developing countries grows exponentially.

On Thursday, LVMH Moët Hennessy Louis Vuitton’s Bernard Arnault downplayed the business implications of the Japan disaster. “The impact should be quite limited, in spite of everything,” he told shareholders.

Meanwhile, retailers are coming to grips with damage to their infrastructure. Uniqlo has a network of 829 stores in Japan, and 160 of them suffered some sort of damage and were closed at various points. As of the end of March, 14 were still shuttered. One of those reopened Friday and seven more are due to open “soon,” according to a spokesman. He said the Japanese chain has six stores in quake- and tsunami-affected areas that are so badly damaged they won’t be reopened at any point in the near future.

Hennes & Mauritz took a particularly cautious approach to its business in Japan after the quake. It shuttered its Tokyo stores for days longer than some of its competitors like Gap and Forever 21. It also temporarily relocated its Japan offices to Osaka.