UPDATE 1-Isetan Mitsukoshi closes shops amid tough times
(Adds details and company comment)
TOKYO, Sept 25 (Reuters) - Isetan Mitsukoshi Holdings (3099.T), Japan's largest department store chain, said it would close six stores in its first major restructuring since the firm was formed through the merger of two rival retailers.
Japanese department stores have been struggling to maintain profits in the face of a shrinking population, weak economy and growing competition from rivals such as drugstores and suburban shopping malls.
Japan's overall department store sales have declined for the past 10 years, during which nearly 1.5 trillion yen ($14.2 billion) in sales, or nearly the entire sales of the country's largest chain, has disappeared, data by Japan Department Store Association shows.
"We have determined that we will not be able to keep these stores in such a tough time," President Kunio Ishizuka told a news conference announcing the closure of six Mitsukoshi stores.
When announced last year, the merger was billed as a combination of equals, but the Isetan branded stores, popular among trend-conscious youth, have been widely seen to have an upper hand over Mitsukoshi department stores, which caters to an older and more upmarket clientele.
The company plans to close a large store in the busy Ikebukuro area of Tokyo, and sell the building and land on which it stands for 75 billion yen ($709 million), generating a profit of about 15 billion yen. The other 5 stores are located outside major cities.
The company said it was calculating the move's impact on its earnings forecast for the current business year to March 2009.
Ishizuka said it planned no more store closures when it unveils a three-year strategy plan in November.
He rejected media speculation that the firm would close more of its loss-making Mitsukoshi stores in Europe. Mitsukoshi has seven stores in Europe, but plans to close three of them in Germany.
Shares in Isetan Mitsukoshi rose 2.3 percent to 1,264 yen on Thursday, outperforming a 0.9 percent fall in Tokyo's benchmark Nikkei average .N225. ($1=105.81 Yen) (Additional reporting by Nathan Layne; Editing by Rodney Joyce)
