Japan's Bic Camera likely fell short of profit estimate
Foreigners pull back on bulk buying of pricey electronics
TOKYO -- Electronics retailer Bic Camera is expected to report an operating profit of about 22 billion yen ($194 million) for the year ended in August, flat on the year and missing its forecast as foreign tourists' appetite for big-ticket items waned.
The Tokyo-based company had projected a 5% increase in profit to 23 billion yen. A drop-off in volume sales to Chinese tourists took a toll, as did higher-than-expected sales and administrative costs linked to store openings and renovations. Efforts to consolidate logistics facilities with unit Kojima also pushed up costs.
Sales likely rose 1% to roughly 790 billion yen, short of the 800 billion yen guidance.
In the first half through February, operating profit apparently shrank about 20% on the year to 9.3 billion yen, as an "explosive shopping spree" by tourists from abroad ebbed. But in the second half, profit looks to have shot up 23% to some 12.6 billion yen, thanks in part to brisk sales of beauty equipment and lower-priced washing machines with limited functions.
Visitors to Japan are shifting from purchasing such high-value items as watches and rice cookers to things like beauty equipment and cosmetics.
The retailer opened three large stores, in Hiroshima, Nagoya and the Tokyo electronics town Akihabara. At the company's stores overall, high-end digital cameras and 4K ultrahigh definition televisions sold well. Sales of drugs and Japanese sake increased, as did tax-free sales. Store renovations and other efforts held customer traffic steady.
A fuller lineup of high-margin private-label products lifted profitability, with the overall gross margin improving nearly 1 percentage point to 27.7%.
Bic Camera will announce the full-year results Oct. 12. The company is expected to see earnings growth in the current year that started this month.