TOKYO — Isetan Mitsukoshi Holdings said Tuesday that its first-half net profits dropped by more than 20 percent year on year, due largely to falling sales of high-priced items to international tourists in Japan, and lower tax-free sales.
Both a stronger yen and higher Chinese customs duties on products bought overseas have bit into the sales and profits of Japan’s largest department store operator. For the six months ended Sept. 30, the company’s net profits fell by 23.3 percent to 8.34 billion yen, or $79.3 million at average exchange for the period.
Isetan Mitsukoshi’s operating profits for the period plummeted 57.9 percent on the year to 6.1 billion yen, or $58 million.
The retailer posted first-half net sales of 582.17 billion yen, or $5.54 billion, a decline of 5.2 percent compared with the same period the previous year.
On Oct. 28, Isetan Mitsukoshi issued a profit warning saying that it had also lowered its full-year sales and profit guidance due to weaker-than-expected results in the first half. It now sees net profits for the 12 months ending March 31 falling 51 percent to 13 billion yen, or $115.57 million at current exchange. This is only half of its previous forecast of 26 billion yen, or $231.14 million.
The company expects operating profits to drop 27.5 percent to 24 billion yen, or $213.4 million. This is down 35.1 percent from its earlier forecast of 37 billion yen, or $328.9 million.
Annual net sales are now expected to slip 2.9 percent to 1.25 trillion yen, or $11.11 billion. The retailer’s previous forecast had sales coming in at 1.36 trillion yen, or $12.09 billion.