Slowing tax-free demand following the China shock and the end of Chinese shopping sprees

「Sales and profit declined partly because inbound demand settled down and duty-free sales decreased.」

「The decline was due to the failure of visitor numbers from China to recover as the downturn in the Chinese economy, including the property slump, affected Chinese tourists, who had previously accounted for most foreign visitors to Japan. In 2024, visitor numbers had recovered to just over 70% of the 2019 level and this did not lead to a recovery in sales.」

「The decline was due to travelers from China, 大黒屋’s main source of foreign customers, remaining at 70% of their peak level.」

「The decline was due to the failure of Chinese tourist arrivals to recover. Restrictions on group-tour travel by the Chinese authorities, which had been expected to be lifted for Chinese tourists who had previously accounted for most foreign visitors to Japan, were not lifted until 10 August last year. In addition, the downturn in the Chinese economy following the property slump and other factors prevented a recovery in visitor numbers. As a result, arrivals in 2023 remained 75% below 2019 levels and did not lead to a recovery in sales.」

「The decline was due to Chinese tourists, who account for most foreign visitors to Japan, continuing to travel in small numbers until the Chinese authorities lifted the ban on group tours on 10 August this year, despite the expected lifting of restrictions on group-tour travel, as well as a decrease in inventory levels, with inventories at ¥1,748 million, down ¥181 million from the previous period.」

「The decline was due to the absence of inbound demand from Chinese tourists traveling to Japan in tour groups, because the Chinese authorities did not lift the expected restrictions on group-tour travel even after the current period began, as well as a substantial decrease in inventory levels, with inventories at ¥1,459 million, down ¥627 million from the previous period.」

「Sales are gradually returning toward pre-COVID levels as inbound demand recovers following the lifting of travel restrictions on 11 October last year, although restrictions on travelers from China remain in place.」

「Sales are gradually returning toward pre-COVID levels as inbound demand recovers following the lifting of travel restrictions on 11 October this year.」

「First, at 大黒屋, the Group’s core company, sales for the current consolidated fiscal year were ¥17,103 million, an increase of ¥4,783 million, or 38.8%, from the previous fiscal year, as recovery from the impact of COVID-19 in the prior year continued, resulting in a substantial increase in sales.」

「大黒屋’s monthly sales turned higher year on year in the current fiscal year, reaching ¥1,181 million in April, ¥1,551 million in May and ¥1,347 million in June. Performance is expected to recover from the second quarter onward.」

「In the subsequent second quarter of the consolidated fiscal year, sales showed signs of recovery at ¥3,278 million, down ¥656 million year on year, or 16.6%, as stores resumed normal operating hours and requests to refrain from going out were gradually lifted.」

「First, at 大黒屋, the Group’s core company, sales for the cumulative first quarter of the current consolidated fiscal year were ¥1,906 million, down ¥2,101 million year on year, or 52.4%, due to the impact of COVID-19. The main factor at 大黒屋 was a ¥2,033 million, or 71.7%, year-on-year decline in merchandise sales at physical stores, resulting from the sharp drop in foreign tourists and requests to refrain from going out under the state of emergency.」

「The decline in duty-free sales of ¥784 million from the previous period affected results. However, considering that duty-free sales had increased substantially by ¥1,077 million year on year in the previous period, they remained generally steady. Although domestic sales were affected by the consumption tax increase from October of the previous year, they remained limited and stable compared with the previous tax increase in 2014, increasing by ¥64 million year on year, or 1.0%.」

「The decline in duty-free sales of ¥405 million from the previous period affected results. However, considering that duty-free sales had increased substantially by ¥828 million year on year in the previous period, they remained generally steady. Domestic sales increased by ¥231 million from the previous period, partly due to rush demand ahead of the consumption tax increase from mid-September onward.」

「The number of foreign visitors to Japan increased by approximately 31.19 million in 2018, up 8.7% year on year, according to the Japan National Tourism Organization, and continued to trend upward. As a result, 大黒屋’s sales for the consolidated fiscal year were ¥16,812 million, an increase of ¥1,646 million, or 10.9%, year on year.」

「This was because sales to foreign tourists, which had been recovering since the previous period, increased further by ¥1,077 million year on year, or 27.1%, while total sales increased by ¥1,190 million year on year.」

「This was mainly due to sales to foreign tourists increasing by ¥543 million year on year, or 45.6%.」

「Sales to foreign tourists, which had been sluggish, increased by ¥1,225 million year on year, or 44.5%, while in-store merchandise sales increased by ¥1,311 million, or 18.1%.」

「At Daikokuya, sales have continued to recover since the fourth quarter of the previous consolidated fiscal year, partly as a result of the inventory optimisation measures implemented during that year. During the first-quarter consolidated cumulative period, sales also reflected a strong domestic economy, stable foreign exchange rates with limited volatility, and continued growth in inbound visitors, which reached 13.75 million as of the end of June 2017, up 17.4% year on year. Daikokuya's first-quarter sales were ¥3,690 million, up ¥116 million, or 3.3%, year on year.」

「However, as a result of these swift measures, inventory turnover had returned to its previous level from January 2017. With the domestic economy performing well and exchange rates stable, sales had begun to increase year on year.」

「The yen, which traded at around ¥120 per US$ in 2015, strengthened further in 2016. From April 2016 it traded below ¥110 per US$, and from July it strengthened further to the low ¥100s per US$, partly due to the impact of the UK’s June decision to leave the EU. As branded goods became relatively more expensive for foreign tourists, duty-free sales weakened further.」

「In 2016, the yen’s appreciation accelerated, and from April 2016 the yen strengthened to below ¥110 per US$. As branded goods became relatively more expensive for foreign tourists, duty-free sales weakened further. As a result, 大黒屋’s cumulative first-quarter sales were ¥3,553 million, down 18.9% year on year.」

「At 大黒屋, sales of high-priced goods slowed in the second half due to the slowdown in duty-free demand following the so-called China shock in July 2015 and the impact of the Chinese government’s stance, reportedly amounting to a ban on so-called luxury shopping sprees, from the end of the previous year.」