SALES, EARNINGS FLAT IN HALF AT TOKYU DEPARTMENT STORE
TOKYO — Weak consumer spending for apparel and other goods resulted in virtually flat first-half sales and profits at Tokyu Department Store.
Earnings for the six months ended July 31 edged up 0.5 percent to $7.8 million (936 million yen) at current exchange rates, while operating profit dropped 8.1 percent to $28.2 million (3.38 billion yen). Sales crept ahead 0.7 percent to $1.35 billion (161.5 billion yen).
Sales of women’s apparel decreased 2 percent, contributing to a 1.3 percent decline in overall apparel sales to $574 million (69 billion yen). Sweaters and blouses triggered the strongest demand in apparel, which made up 39.6 percent of Tokyu’s entire business, the company said in a statement.
“Domestic economic conditions didn’t show signs of a strong recovery in the first half of 1997 because of continuing weakness in personal consumption and the decline in the public’s investments,” Tokyu stated.
Tokyu added that the “severe conditions” faced by the department store sector were somewhat offset by a hike in Japan’s consumption tax, which induced some consumers to make purchases before the increase took effect on April 1.
Japan’s consumption tax was raised to 5 percent from 3 percent.
For the six months, sales eased 1.5 percent at Tokyu’s stores, but volume in its direct mail business, which includes the large-sizes division, grew 11.5 percent.
Gross margin slipped to 24.3 percent from 24.5 percent. Selling, general and administrative expenses were cut by $2.5 million (300 million yen), but Tokyu’s costs of running its credit card business, remodeling stores and distributing merchandise climbed $5 million (600 million yen).