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Isetan Mitsukoshi to close Isetan Kichijoji

by Editor on May 13, 2009

As part of efforts to accelerate the company’s revitalisation, Isetan Mitsukoshi said it will shut down its Kichijoji store - Kichijoji is a fashionable suburb of Tokyo - in March 2010. The 20,758 sqm store had sales of ¥17.4 billion in FY2008, down 6.5%, and employs 415 staff, and was refurbished just four years ago. This is the third closure announced recently. The company already closed the doors of two Mitsukoshi department stores earlier in May - the Ikebukuro store in central Tokyo and its Kagoshima store in Kyushu. Isetan Mitsukoshi is suffering like all major department stores, many which have seen sales fall each month since October by more than 10% - and as much as 20% in some cases as detailed in our JapanConsuming monthly report. Last week the company announced it only managed a tiny net profit for FY2008, of ¥4.68 billion from sales of ¥1.427 trillion. Sales at Isetan stores fell 13% on year in April, following similar falls in February and March, and marking the ninth straight month of decline. Mitsukoshi sales fell 14% in April, the 12th consecutive month of decline. Thanks to store closures and cost cutting, the company forecasts its net profit will grow more than fourfold to ¥20 billion in FY2009, despite a forecast 10% fall in sales to ¥1.280 trillion.

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Uniqlo keeps them coming

by Editor on May 8, 2009

Fast Retailing’s Uniqlo chain continues to post strong gains despite the general collapse in apparel consumption. Uniqlo’s same-store sales rose 19.2% in April, a huge gain the company attributed to the hot weather, more active instore promotions and investment in tv marketing. Footfall rose 17.6% and, as encouraging, average spend per customer rose 1.3%. Overall the 755 directly operated stores managed a gain of 26% in Arpil with traffic up 24.4%. During the month, 13 new stores were opened, including the large format store in Shinjuku (west exit), and nine were closed. Uniqlo’s performance is in striking contrast to much of the rest of the apparel industry. As the May 2009 issue of JapanConsuming shows, almost all other apparel retailers, including supermarkets and department stores, have been seeing sales fall as much as 20% year on year. Even the stronger specialty retailers like Point, United Arrows and Shimamura, have seen like for like sales fall and are dependent on store expansion to maintain overall sales growth.

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Good start in Tokyo for Forever 21

by Editor on May 5, 2009

Forever 21 had a strong start in Harajuku at the end of last month. The first Japanese store for the US apparel chain opened on the first day of Golden Week, helping boost queues which looked to be around 1,500 to 2,000 prior to the opening – although the huge number of press almost outnumbered customers. Forever 21 was swamped all day, with more thronging to the store after seeing the plethora of customers walking around Harajuku post shop with the distinctive bright yellow shopping bags. Security were warning those joining the queue to expect a three hour wait. The initial response from customers and bloggers looks positive with most surprised by the low prices – with t-shirts at ¥450 and jeans at ¥1,550, the store is significantly cheaper than Uniqlo. The chain has made sure its policy of refreshing items daily has hit the press, prompting consumers to buy immediately rather than risk something disappearing. Forever 21 is expected to move quickly to expand its store network both in city centres and shopping malls – various pundits are suggesting at least 100 stores are planned for Japan and rumours of a multi-store tie up with Aeon are rife. If the store is as popular as H&M, it should turn a profit quickly; H&M’s two Japanese stores continue to post daily sales in excess of an impressive ¥15 million a day.

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Lawson acquisition of am/pm delayed

by Editor on April 4, 2009

As outlined in the latest edition of JapanConsuming, M&A isn’t an easy option for convenience stores. The complexities of the franchise system, with each chain applying different conditions and making different demands on their member stores, mean years of slow change, even when back office functions can be integrated relatively quickly. The Circle K Sunkus merger officially began right back in 2001, but the two companies continue to struggle with this issue with no real timetable for full integration fo the two chains.

Now, after two months of positive announcements, Lawson has suddenly put its planned acquisition of am/pm on hold (see Nikkei). The deal was due to complete on 30 March, but Lawson has now announced an indefinite delay for further negotiations.

As JC and other sources pointed out last month, the deal would create the largest CVS chain in the Tokyo region, exceeding format leader, Seven Eleven. The initial announcement brought a slew of rumours of further deals, particularly a potential tie-up between Lawson and Ministop, both of which have affiliations to Mitsubishi Shoji. Equally, with consolidation at the top of the sector, Familymart announced it would be open to potential merger proposals, and as it is owned by Itochu and Itochu has a business tie-up with Uny, the owner of Circle K Sunkus… well you get the picture. There’s already a lot of informal ties out there and with new convenience stores increasingly difficult to open both in terms of finding good locations and cost, and Seven Eleven so far ahead of everyone else, M&A would seem a highly probable strategy.

While on paper the Lawson / am/pm deal seems like a good move, the potential synergies from the proposed Y14.5 billion buyout may be outweighed by other considerations, and it isn’t overly surprising that Lawson has decided to have a closer look. The additional issue that It would be taking on something like ¥20 billion in interest bearing debt doesn’t help either. In the long run, most analysts expect Lawson go ahead with the deal given the opportunity to move closer to Seven Eleven in terms of scale, although it could well force better terms before reaching agreement. The potential of future M&A moves in the convenience store sector are less certain, however.

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Food, Japan, JapanConsuming, M&A, Convenience stores, Sogo shosha

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Jeans for ¥990 at g.u.

by Editor on March 12, 2009

gu_jeans Fast Retailing announced a new low price for jeans in Japan - at just ¥990 or eight euros. While cheap, there are cheaper clothing sources in Japan these days including one company that will sell you trousers for just ¥140 . The cheaper jeans are to be old through the low price chain, g.u. g.u. was launched by Fast Retailing in 2006 but has just 56 store currently, much less than originally forecast, and has made a loss until now. With Uniqlo itself selling so well over the last year as the crisis pushes consumers to low priced chains, Fast Retailing sees an opportunity for its low cost brand.

To make it more attractive, Fast Retailing will now cut g.u. prices further; originally the brand’s range was priced at around 30% less than Uniqlo but 80% of the new ranges will sell for less than 50% of the price of Uniqlo product. To achieve this aim, merchandise is being sourced from factories in Cambodia where wages are particularly low. Confident of the price appeal, Fast Retailing will expand the chain to 200 stores in the next five years with sales of ¥50 billion, six times the current turnover. For this year, the low priced jeans alone are expected to sell some 500,000 pairs.

At a press conference, president Tadashi Yanai explained the difference in the two brands: “Uniqlo offers top-notch quality at affordable prices, while g.u. provides so-so quality at the lowest possible prices.” While there may be some impact on Uniqlo jeans sales, the greatest impact will likely be on supermarkets and specialty chains selling low priced domestic brands.

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Gap to take rejected LV site in Ginza

by Editor on March 5, 2009

Reports are emerging that the site given up by Louis Vuitton for a new flagship in Ginza will be taken over by Gap. Gap plans to open in the new 12-storey Hulic Sukiyabashi Building, renting office space on upper floors and operating a store that is expected to run to around 2,000 sqm of sales space. The opening is due for February 2011. Gap will also open a new flagship in Harajuku this November. Located opposite Harajuku station, the new 2,000 sqm store will replace the existing flagship at Omotesando/Meiji Dori crossing which will close due to the rebuilding of the site, although Gap is expected to return to this location once rebuilt.

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Uniqlo founder is Japan’s richest man

by Editor on March 3, 2009

In the latest rich list from Forbes magazine, Tadashi Yanai has been named as Japan’s richest individual in 2008 with a total estimated worth of US$6.1 billion. Yanai, who likes to present a humble face to the world, is unlikely to be too happy with the accolade, at least in public. The top 40 also included Seven & I founder, Masatoshi Ito, ABC Mart’s Masahiro Miki, and Muneaki Masuda from CCC. The only woman in the list was Hiroko Takei, widow of Takefuji founder Yasuo Takei.

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J Front snaps up Sogo Shinsaibashi

by Editor on February 20, 2009

J Front has agreed a deal with Seven & I to buy the Sogo flagship store in Shinsaibashi in Osaka. The Daimaru-led company is believed to have agreed a payment of ¥37 billion for the store which has been loss making since its relaunch - while sales for 2008 stood at ¥44 billion, they have been falling at double digit rates over the last year. The 40,000 sqm Sogo store will be merged with the Daimaru store next door, creating a 78,000 sqm emporium, making it the third largest store in the country after Matsuzakaya Nagoya (another J Front store) and Tobu Ikebukuro. While J Front has not announced plans for the space, it is likely that it will use the merger to create a new space for specialty chain tenants given the already excess department store capacity in Osaka, and the poor sales of the sector. Seven & I is currently overhauling the Millennium Retailing business through merger of head office operations and review of stores for sale and closure.

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Department store sales down 9% in January

by Editor on February 20, 2009

Department store sales fell 9.1% year on year in January to ¥613.18 billion. This was the biggest fall in monthly sales since records began in 1965 and the 11th month of falling sales. Once again, art and jewellery fell the most, down 19% and apparel was down 11.9%. Tokyo stores fared worse than the nationwide average, down 9.6%.

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H&M does ¥2 billion in 2 months

by Editor on February 3, 2009

H&M released its annual report at the end of January and revealed that its Japanese subsidiary managed to rake in no less than ¥2.1 billion (198 million SEK) in just two months. The sales include the openings of the first two stores but only until the end of the company’s financial year which is November 30. Since the first two stores only opened 13 September and 8 November, this means ¥2 billion in sales from two stores over 102 trading days in total. That’s ¥20 million a day. H&M said in the report that “The reception of the two new H&M stores in Tokyo was fantastic and sales surpassed the company’s high expectations.”

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Rakuten bucks retail sales trends

2 February 2009 E-commerce

As in other countries, as consumers lose confidence and worry about their wallets, e-retailers are gaining thanks to competitive prices and ease of shopping. So too in Japan where Rakuten, the country’s biggest online shopping mall, hit record sales of ¥75 billion in December on a wide range of goods. Rakuten said that women’s clothing, [...]

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