TOKYOIsetan Mitsukoshi Holdings said Friday that net profit for the first quarter of its fiscal year dropped 43.5 percent, which a spokesman for the company attributed to lower sales and a change in its membership card system. Rising costs also played a part in the decline.

Japan’s largest department store operator said net profit for the three months ended June 30 totaled 4.95 billion yen, or $45.87 million at average exchange rates for the period. Operating profit fell 47.7 percent to 6.06 billion yen, or $56.13 million.

The company’s first-quarter net sales slipped 4.9 percent on the year to 294.65 billion yen, or $2.73 billion.

“In the period under review, our country’s economy saw a transition to a bullish employment environment, however business conditions remain at a standstill,” the retailer said in a statement.

“Regarding the retail business, domestic consumer spending continues to be stagnant, and demand from inbound tourists, which has been favorable until now, has fallen below levels of the previous year due to a strong yen and increased import duties in China. These factors have led to an exceedingly difficult situation,” it added.

Isetan Mitsukoshi left unchanged its guidance for the fiscal year ending March 31, 2017. It expects net profit to contract by 1.9 percent year-on-year to 26 billion yen, or $231.14 million at current exchange rates.

It predicts its operating profit will grow by 11.8 percent to 37 billion yen, or $328.94 million, and sales will rise 5.7 percent year-on-year to 1.36 trillion yen, or $12.09 billion.

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