What: Even though the Shinjuku flagship aims for the stars, the lack of Chinese tourists is still heavily felt in Japanese department stores.

Why it is important: Isetan-Mitsukoshi is facing a situation where regional stores are struggling and the Tokyo flagships are doing extremely well. They might end up closing down some locations, just like what they did in China earlier this year, or in Thailand, in order to maximise their profitability.

In Japan, in spite of the reopening of the borders and the subsequent rise of duty-free sales, the absence of tourists from Mainland China is still felt. Chinese tourists represented in 2019 10m people,  i.e. a third of the total number of tourists entering the country, but they usually spent a disproportionate amount of money compared to the other nationalities.

It is evaluated that the Japanese department store market is currently trading -10% on the first 9 months of the year compared to 2019, however, in the case of Isetan-Mitsukoshi, the situation is a bit better as they are currently trading at +23.8%, with the Tokyo Shinjuku flagship even projecting to revert to the 2018 record year sales level (other regional stores are reported to be in a different situation as they currently trade at -18% compared to pre-Covid).

Analysts do not expect Chinese tourists to return before at least the second half of 2023, which is even seen as a very optimistic date.

Isetan-Mitsukoshi improves sales but feels the pinch of no Chinese tourists