Magazines Archives - 2011 May

Japan’s triple disaster sending ripples across various retail segments
Story 6 - News Feature

What short-term and long-term effects will the Japanese disasters of March 2011 have on the retail sector in THE country — and in the rest of the world? Gordon Feller reports.

TO get some perspective, consider the status of just two powerful retail companies in Japan. The top Japanese retailer, Seven & i Holdings Co, announced on April 7 this year that the company expects its earnings to drop 22% this fiscal year as the country’s natural disasters and nuclear crisis crimp consumer spending and boost company costs.

The company runs 7-Eleven convenience stores in Japan and the US, as well as Seibu and Sogo department stores and big-box Ito-Yokado stores. It now forecasts that its net profit will fall to ¥87.5 billion (US$1.07 billion) for the year through to February.

“We expect the quake will strip ¥38.1 billion from our operating profit,” said president Noritoshi Murata as the company reported that earnings doubled for the fiscal year recently ended. Seven & i, Japan’s biggest retailer by sales, expects to record a special loss of ¥26 billion to reflect costs for earthquake-damaged stores for the current fiscal year.

Some 600 of the company’s roughly 13,200 domestic 7-Eleven stores closed after the earthquake, with 60 remaining shut. The company said 100 of its 170 York-Benimaru grocery stores, mainly in northern Japan, closed temporarily.

Similarly, after reporting strong earnings for its latest year, convenience-store chain FamilyMart Co now forecasts that its profit will fall 33%-45% this fiscal year, also attributing it to the March 11 earthquake.

The story only starts with these two companies. The fact is: the effects of the Japanese earthquake disaster are beginning to be felt by retailers across the world. One key factor market is the supply of critical components for all types of goods, including high-end products. The ripple effect is showing up in dozens of retail categories.

To view full story, get a copy of Retail Asia. To subscribe, please download the subscription form from http://www.retailasiaonline.com/subscription.html