TAKASHIMAYA NET FALLS 41 PERCENT, MITSUKOSHI BACK IN BLACK FOR HALF

TOKYO — Two large Japanese department stores — Takashimaya and Mitsukoshi — experienced declines in first-half sales and their apparel businesses, as consumers continued to keep a tight rein on personal spending in the aftermath of the Asian financial crisis.
However, Mitsukoshi returned to profitability in the half.
For the six months ended Aug. 31, Takashimaya’s net profits dropped 41 percent to $14.1 million from $23.9 million in the first half of fiscal 1999. The prior-year profits included a $1.1 million extraordinary gain attributable to the sale of stock. The company’s sales dropped 2.8 percent, to $4.4 billion from $4.6 billion during the same period last year. Dollar figures are converted from the yen at current exchange.
Operating profit at Takashimaya dropped 45.8 percent during the half, to $20.8 million from $38.3 million in the 1999 half.
“For the first half of the year, the nation’s economy was considered on the recovery phase, judging from an increase in [gross domestic product],” the company said in a statement. “However, an increase in public investment pumps up the whole economy while personal consumption has not shown full-scale recovery yet.”
The retailer cited stagnant personal income, slow consumption due to unstable employment market and more competition in the retail industry as factors negatively affecting its business.
Apparel sales, which made up 36.7 percent of overall sales at Takashimaya, dropped 4.6 percent to $1.63 billion. Women’s wear sales dropped 2.8 percent while men’s and children’s wear declined 6.8 percent and 3.6 percent, respectively. Customer counts were off 0.6 percent.
For the full fiscal year, Takashimaya projects net profits of $37 million, 19.5 below 1999 levels. Sales are expected to decline 1.5 percent to $9.2 billion.
At Mitsukoshi, net profits were $19.6 million compared to last year’s first-half net losses of $122.5 million. Sales dropped 2.7 percent to $3 billion. Operating profits increased 26 percent to $35.9 million.
Apparel sales, responsible for 34.2 percent of volume in the half, decreased 4.6 percent to $1 billion. Women’s wear dropped 0.4 percent while sales of men’s wear and kids’ wear dropped 14.5 percent and 4.5 percent, respectively. Mitsukoshi reported that it reduced personnel costs by $25.6 million.
For fiscal year ending Feb. 28, 2001, Mitsukoshi expects a 0.2 percent increase in sales to $6.3 billion and a 15.6 percent decline in net profits to $29.6 million. By 2003 the retail group expects generate consolidated annual sales of $9.3 billion, according to the firm.

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