| TOKYO, April 8
TOKYO, April 8 The rise in Japan's sales tax to
8 percent that took effect last week has driven a boom-and-bust
in sales of high-priced items like jewellery but passed with
little impact on sales of daily necessities, two leading
Japanese retailers said on Tuesday.
Takashimaya Co, Japan's third-biggest department
store operator, said the last-minute rush of demand in March had
been stronger than the company anticipated, especially for items
like watches, jewellery and luxury brands. As a result,
Takashima sees a pullback in sales starting this month that will
continue through summer, the company's president said.
Meanwhile, FamilyMart Co, Japan's third-largest
convenience store chain, said its sales were up by about 1
percent over the past week since the tax hike took effect,
excluding lower sales of cigarettes which had surged beforehand.
"We think the consumption tax factor will have played out in
the March-April period," FamilyMart President Isamu Nakayama
said at a news conference called to announce earnings.
Financial projections by retailers like Takashimaya and
FamilyMart will indicate how big a hit businesses expect to
consumption after the sales tax hike. That, in turn, will be key
to whether the Bank of Japan decides to expand its quantitative
The BOJ stuck to its existing monetary stimulus on Tuesday,
saying Japan was on track to meet its 2 percent inflation target
by April next year.
But the imposition of the sales tax hike to 8 percent from 5
percent and the prospect of a further increase to 10 percent in
2015 has clouded the economic outlook.
The last rise in the sales tax in 1997 dragged Japan into a
recession and depressed private demand for years.
Japanese consumers spent more aggressively on higher-priced
items like art works in the run-up to the tax than Takashimaya
had expected, based on its experience in 1997, President and
Chief Executive Shigeru Kimoto told a news conference.
For April, the retailer forecasts a 14 percent drop in
sales, followed by a nearly 6 percent decline in May and then an
almost 4 percent drop in the three months to August.
"From April we're seeing the reaction," Kimoto said. "The
pullback could be a bit more than we expected this month."
Department stores like Takashimaya saw a spike in demand
before the sales tax hike with consumers snapping up watches,
jewellery and other big-ticket items.
Takashimaya's domestic department store sales in March
jumped 33 percent from the year before. Isetan Mitsukoshi
Holdings Ltd and J.Front Retailing Co Ltd's
Daimaru Matsuzakaya saw spikes of 24 percent and 35 percent
Last week, Seven & I Holdings Co, operator of the
7-Eleven chain and owner of Sogo and Seibu department stores,
unveiled plans for a record pace of expansion at home, unfazed
by the sales tax increase.
For its part, FamilyMart said it would look to open 1,600
stores in the current fiscal year, and annual sales at Japan's
convenience stores taken together could grow another 20 percent
to become a $115-billion market.
Takashimaya is seeking to cushion the impact of the expected
snapback in sales with a promotion offering 1,000 yen coupons on
items priced 10,000 yen or more. It said it would look to offset
the reduced sales with lower costs, including reduced spending
on rent after buying a bigger stake in the building that houses
its store in the Tokyo hub of Shinjuku.
(Editing by Kevin Krolicki/Mark Heinrich)