— See Separate Table For Detail

TOKYO (MNI) – Japanese department store sales in December appeared
to have posted a slight drop on year, little changed from a 0.5% fall
y/y in November, as solid winter clothing sales were offset by sluggish
corporate spending on gifts, a Market News International survey found.

The Japan Department Stores Association will release December sales
data at 1430 JST (0530 GMT) on Tuesday, Jan. 18.

Combined sales in October rose 0.6% on year, which was the first
gain in 32 months. The association’s data are adjusted to facilitate
comparisons on a same-store basis.

Four of the nine major department stores polled by MNI reported
that the year-on-year change in sales deteriorated in December from
November, three said improved and the remaining two said there was no
change.

That suggests the year-on-year change in combined nationwide
department store sales in December was little changed from the 0.5% fall
in November.

Some stores told MNI that low temperatures had a positive impact on
sales of winter clothing while that corporate demand for year-end gifts
was weak.

Apparel sales accounted for around 35% of overall department store
sales in fiscal 2009, the latest year available for the breakdown.

The Bank of Japan’s Tankan survey headline index — showing
sentiment on current business conditions among large manufacturers —
fell to +5 in December from +8 in September, posting the first drop in
seven quarters.

Meanwhile, department store sales appeared to have marked a
relatively solid growth on year in a period between Jan. 1 and Jan. 13,
thanks to freezing temperatures and improvement in consumer sentiment.

Sales at Takashimaya, one of the largest department stores in
Japan, rose 3% to 4% on year in the Jan 1-13 period, improving from a
drop of 0.7% in the whole of December. A Takashimaya spokeswoman said,
“Consumer sentiment seems to be recovering, although the recovery is not
so strong.”

A spokeswoman at Sogo & Seibu, said, “Demand for luxurious items,
such as clothing with relatively high prices, is improving.”

Sales per customer are increasing at Matsuya and improvement in
year-end bonuses in Japan contributed to January sales, noted a company
spokeswoman.

The weighted average of yearend bonuses paid by 165 major firms
showed a 2.52% gain in 2010, improving from a 15.01% drop seen in 2009,
according to the business lobby Nippon Keidanren.

Looking ahead, the Matsuya spokeswoman said, “Our sales are
expected to improve gradually, although a V-shaped recovery is
unlikely.”

A spokeswoman at Sogo & Seibu, agreed, saying, “We expect our sales
to improve from now on, supported by improvement in sentiment and
economic conditions.”

The Economy Watchers’ Survey index for current conditions in Japan,
which is seen as leading indicator of the economy, rose to 45.1 in
December, posting the second rise in a row, the Cabinet Office said last
week.

skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

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