Japanese department store operators saw duty free sales slump during the key Lunar New Year holiday, one of the first indications of how hard the nation’s retail sector will be hit by the novel coronavirus outbreak in China.
Takashimaya Co. duty-free sales during the seven days of the lunar holiday plunged plunged almost 15% compared with the holiday period last year (the dates of the Lunar New Year change each year). Isetan Mitsukoshi Holdings cited concerns over the virus as a reason its duty free sales slumped 10% during the period.
Sales at Sogo & Seibu Co., a division of Seven & I Holdings Co., dropped 15%, while J Front Retailing Co., which operates the flagship Ginza Six complex, saw revenue decline 5%.
Chinese visitors have become a key source of income for upmarket retailers in Japan as the nation’s tourism industry has flourished, helping to make up for a declining population and an increasingly spendthrift younger population.
The drop in tourists from China, who make up almost one-third of arrivals and more than that in spending, could hardly have come at a worse time. Retailers are already dealing with headwinds of a sales tax increase last year, as well as an unseasonably warm winter. Cosmetics maker Kose Corp. last week slashed its full-year profit outlook 19% due to a decline in tourists amid the outbreak. Bloomberg
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