Friday, October 11, 2013
Consumption Recovery Spotty For Retail
TOKYO (Nikkei)--The rebound in consumer spending has not been a boon to all retailers, as individuals flock to indulgences and specialty items while keeping their purse strings tight for everyday necessities.
Total pretax profit at 57 major retail firms rose 3% on the year for the March-August half. Department stores flourished on a boom in big-ticket spending with the rise of the stock market, especially those with wealthy customers and flagship stores in major metropolitan areas.
J.Front Retailing Co. (3086), parent of Daimaru Matsuzakaya Department Stores Co., saw pretax profit soar 53% to a record high, thanks to strong sales of jewelry and luxury brands at its Tokyo and Nagoya locations. "The strength of the stock market is creating a significant wealth effect," says President Ryoichi Yamamoto.
Takashimaya Co.'s (8233) pretax profit rose 15% to 13.4 billion yen, and it revised its full-year forecast upward as well. Watch sales for the first half jumped 40%, and Rolexes, which retail for 700,000 yen to 1 million yen, were especially popular, with sales up about 70%.
Meanwhile, big convenience stores are drawing in women and elderly customers with appealing products and accessible services. The three major chains all posted record pretax profits for the half.
Seven & i Holdings Co. (3382) stepped up development of own-brand products, and plans to install coffee machines in 16,000 stores this fiscal year. Lawson Inc. (2651) is expanding its lineup of vegetables and low-calorie foods. FamilyMart Co. (8028) is also working on its private brands, as well as prepared foods.
Specialty stores performed well, able to attract customers with unique products. ABC-Mart Inc.'s (2670) sales of fashionable and functional shoes increased, and furniture retailer Nitori Holdings Co.'s (9843) cooler bedclothes were a hit in the summertime.
But supermarkets have suffered as budget-conscious consumers fail to escape the deflation mindset. Operating profit in Aeon Co.'s (8267) supermarket segment plunged 60% despite rising for the company overall. At Seven & i, Ito-Yokado Co.'s same-store sales slumped 3.6%.
Tobu Store Co.'s (8274) pretax profit fell 6%, due in part to competition from such other sectors as convenience stores, and it revised its full-year forecast downward. Daiei Inc. (8263) continued to run an operating loss.
About half of the 57 retailers saw earnings deteriorate from a year earlier, showing clear winners and losers amid the consumption recovery.
(The Nikkei, Oct. 11 morning edition)