TOKYO -- Big-spending foreign tourists appear to have helped Isetan Mitsukoshi Holdings to post strong half-year results.
For the April-September period, the Japanese department store operator's group operating profit is estimated to have increased slightly over 20% on the year to around 7.5 billion yen ($65.4 million), lifted by strong performance of its flagship stores in central Tokyo.
The department store operator's sales are picking up, despite uncertainty about earnings for the fiscal year through March due to such factors as an increase in premium allowances for early retirement programs.
Sales are estimated to have increased 2% to around 590 billion yen. Although the company has not disclosed its first-half forecast, its operating profit likely surpassed the market projection of 6.2 billion yen.
Strong sales were led by robust consumption by foreign visitors to Japan. Sales of stores in areas with many foreign tourists were brisk. The company's flagship Isetan Shinjuku main store and Mitsukoshi Ginza store saw their sales jump 3% and 9% from the same period last year, respectively. Sales of Sapporo Marui Mitsukoshi in Sapporo, in northern Japan, also rose 5%.
By product, sales of miscellaneous goods jumped 7%. Cosmetics gained popularity among foreign visitors, and watches and jewelry were also selling well among wealthy consumers, thanks to higher stock prices.
Sales of clothes and products for children were also up 5%, buoyed by robust consumption by grandparents as they spend more time with their grandchildren due to an increase in the number of working women.
Rising personnel and other costs are expected to push down the company's full-year net profit by 33% from last year to 10 billion yen. Starting in fiscal 2017, the company plans to solicit more voluntary retirement. The company's earnings could deteriorate further if early retirement-related losses swell.