TOKYO — Isetan Mitsukoshi Holdings said Wednesday that its net profit for its most recent fiscal year fell by more than 40 percent. A spokesman for the company attributed the drop to lower sales, higher expenses and a smaller tax benefit compared with the previous year.
For the 12 months ended March 31, Japan’s largest department store operator’s net profit was down 43.5 percent on the year to 14.98 billion yen, or $138.5 million at average exchange rates for the period.
The retailer’s yearly operating profit was down 27.7 percent to 23.94 billion yen, or $221.4 million.
Isetan Mitsukoshi saw a year-on-year sales decline of 2.6 percent, totaling 1.25 trillion yen, or $11.59 billion. Both clothing sales and tax-free sales to overseas visitors fell, contributing to the overall drop. Tax-free sales have been declining at department stores in Japan due to a slowing in the growth of incoming visitors, as well as increased customs duties in China that have discouraged Chinese travelers from engaging in the kind of shopping sprees that were common in Japan in recent years.
In March, the company announced that its then-chief executive officer Hiroshi Onishi would step down, to be replaced by Toshihiro Sugie on April 1. It also closed two poorly performing stores at the end of March. The spokesman said that while Sugie’s business plan is to focus on the more profitable stores in city centers, such as the Isetan flagship in Tokyo’s Shinjuku district, there are no plans for additional closures at this point.
Isetan Mitsukoshi also released its guidance for the current fiscal year, ending March 31, 2018. It expects net profit to decline by 33.2 percent to 10 billion yen, or $88.9 million at current exchange rates.
The company is predicting its yearly operating profit will drop 24.8 percent to 18 billion yen, or $160 million. It forecasts sales growth of 0.9 percent to 1.27 trillion yen, or $11.25 billion.