J. Front Retailing sees annual profit down by a third after quake
today Apr 12, 2011
April 12 - Japanese department store chain J. Front Retailing Co forecast its operating profit to fall by nearly a third this business year to below analyst estimates as shoppers curb spending on high-end goods following last month's massive earthquake.
Daimaru department store, operated by J. Front Retailing (photo by 663highland under the terms of GNU Free Documentation License)
Department stores in the world's third-largest luxury market had seen earnings start to recover in recent months as customers returned following a slump in demand incited by the global financial crisis three years ago.
But a 9.0 magnitude earthquake and tsunami in northeast Japan on March 11, which triggered Japan's worst-ever nuclear crisis and an electricity shortage in the Tokyo metropolitan area, made that pick-up trend short-lived.
J. Front, which operates the Daimaru and Matsuzakaya department stores, forecast 14 billion yen ($165 million) in operating profit for the financial year that began in March, down 31 percent from the previous year. The forecast is below the average estimate of 20.8 billion yen in a poll of 11 analysts by Thomson Reuters I/B/E/S.
Department stores and luxury goods retailers are the most vulnerable retailers in the aftermath of the disaster, analysts say, as consumers focus spending on food and other essentials, which supports supermarket and convenience store operators.
Last week, rival department store chain Takashimaya forecast a 12 percent drop in annual operating profit.
For the business year that ended in February, J. Front booked a 9.4 percent rise in operating profit to 20.32 billion yen, higher than its 19 billion yen forecast.
Since the earthquake, shares of J. Front have fallen 12.1 percent to 343 yen, underperforming a 6.8 percent drop in the benchmark Nikkei average.
($1 = 84.600 Japanese Yen)
(Reporting by James Topham; Editing by Chris Gallagher)
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