Aug 10 (Nikkei) - Earnings season in Japan is highlighting a recent plunge in inbound spending and its impact on drugstore chains, cosmetics makers and department stores previously favored by big-spending Chinese tourists.
Drugstore operator Matsumotokiyoshi Holdings on Friday reported its first net profit drop in two and a half years for the April-June quarter, posting a 2% year-on-year decline to 6.5 billion yen ($61.3 million). Tax-free sales -- under Japan's tax exemption program for foreign visitors -- were essentially flat after surging 34% in April-June 2018.
The company cited higher travel costs as a contributing factor, referring to the impact of a softer yuan. The Chinese currency averaged about 16 yen to the yuan last quarter, compared with the 17 yen level a year earlier.
Beijing's requirement that all online retailers register with the government and pay taxes has put off businesses that buy goods in Japan for sale online in China. Purchases by these resellers at drugstore chain Sundrug dropped by half on the year for the three months through June, with the company's previously brisk sales of over-the-counter drugs and cosmetics slumping amid this trend.
Total sales to foreign visitors by four major cosmetics makers slid 15% year on year last quarter. Pola Orbis Holdings cut its 2019 earnings forecast, citing a poor showing by its Inner Lock dietary supplement for skin care. The company's sales to foreign visitors slipped 20% in the April-June quarter, compared with an 11% gain a year earlier.
Kose saw demand from inbound tourists fall 17% -- the first decline in nine quarters and a sharp turnaround from a 77% increase a year earlier -- while Fancl's sales growth in the segment slowed from 122% to 15%.
Sales to foreign visitors last quarter slid 15% for four major cosmetics makers. (Photo by Motokazu Matsui)
At Isetan Mitsukoshi Holdings, growth in tax-free sales slowed to just 1% amid a drop in buying by resellers. The department store operator managed a modest 3% rise at its flagship Ginza location, a magnet for foreign tourists.
