TOKYO — Isetan Mitsukoshi Holdings posted a net loss of more than 40 billion yen, or $365 million, for its most recent fiscal year, as department stores in Japan continue to struggle with the fallout from temporary closures and reduced traffic resulting from the COVID-19 pandemic.
Japan’s largest department store operator said it recorded a yearly net loss of 41.08 billion yen for the 12 months ended March 31. This followed a loss of 11.19 billion yen in the previous year.
The retailer also posted an operating loss of 20.98 billion yen. In the same period a year earlier, its operating profit dropped 46.4 percent to 15.68 billion yen.
Isetan Mitsukoshi recorded yearly net sales of 816.01 billion yen, down 27.1 percent from the 1.12 trillion yen it achieved a year prior.
In a statement, the company cited the economic stagnation resulting from the pandemic as the principle reason for its poor performance. It noted that in the second quarter of 2020, which ran from April through June, Japan’s real GDP contracted by 7.9 percent compared with the previous quarter, and 28.1 percent at an annualized rate.
Japan is in the midst of an extended state of emergency in some areas, its third since the start of the pandemic. While each has differed in terms of length and severity, department stores have been among the hardest hit retailers, with many stores closing temporarily or shortening operating hours. The company said stores in China, Southeast Asia and the U.S. have also been affected by temporary closures.
In addition, travel restrictions imposed by the Japanese government have resulted in a steep drop in the number of shoppers from overseas, which prior to the pandemic contributed heavily to department store sales. Between January and December 2020, the number of international visitor arrivals to Japan was down by 87.1 percent on the year, according to provisional figures from the Japan National Tourism Organization. For the first three months of 2021, visitor arrivals dropped by 99.6 percent compared with the same period in 2019.
While Isetan Mitsukoshi acknowledged that the future remains uncertain and that the pandemic is likely to continue affecting business, it said that sales of value-added, big-ticket items such as luxury brand goods, watches and jewelry have been favorable, particularly at its Isetan Shinjuku and Nihonbashi Mitsukoshi flagship stores in Tokyo.
The retailer has also seen some amount of success with online sales. Last June, it launched both a revamped e-commerce site and a new shopping app, which it says gives customers a seamless department store shopping experience, even without visiting a physical store in person. Driven by the success of measures such as online ordering of food home delivery and a dedicated cosmetics e-commerce site, Isetan Mitsukoshi said it achieved a yearly online sales total of more than 30 billion yen.
The company also released its guidance for the current financial year, ending March 31, 2022. It expects to reenter the black with a net profit of 1 billion yen and operating profit of 3 billion yen. However, it forecasts that its net sales will fall a further 45.2 percent to total 447 billion yen.