Retail & Wholesale

May 2008

Ferragamo Japan To Cut Prices To Stimulate Demand
Ferragamo Japan Ltd., the importer and marketer of Salvatore Ferragamo goods, will next week slash prices on some of its women's bags and other products by an average of about 10%. The move will mark the first time ever in the world that the Italian fashion brand has cut prices. While other prestigious brands are raising prices to cope with higher materials costs, Ferragamo Japan will buck the trend amid concern about a potential slump in Japanese luxury spending. On Tuesday, five items each in women's bags, women's shoes and men's shoes will have new, lower prices. The proportion of these 15 items to total sales is unclear, but the company says they are all strong sellers. For instance, the price of a women's tote bag will be reduced 11.8% from 85,000 yen to 75,000 yen, and a pair of women's driving shoes will sell for 58,000 yen instead of 60,000 yen, a 3.3% reduction. The price tag on a pair of men's shoes will come down 9.8% from 82,000 yen to 74,000 yen. (The Nikkei; Saturday, May 31, 2008)

Don Quijote's Pretax Profit Likely To Hit Record
General discount store operator Don Quijote Co. is expected to post a record 17.5 billion yen in group pretax profit for the year ending June 30, up 11% on the year, thanks to robust sales of daily goods and a growing proportion of high-margin products. The profit gain is likely to top a previous estimate by about 1 billion yen. Sales are seen rising 33% to top 400 billion yen. Earnings at home improvement store operator Doit Co., which Don Quijote acquired last fiscal year, will be fully reflected in group results. And a 2007 acquisition, supermarket operator Nagasakiya Co., contributed roughly 60 billion yen in sales. On a parent-only basis, 21 newly opened stores are sharply boosting sales of daily goods and food products. Same-store sales, however, are expected to dip around 3.5% because human resources have been devoted to ushering Doit and Nagasakiya into the group. Don Quijote's profitability is improving due to an inventory reduction for low-margin home electronics and higher rental income from tenants, offsetting rising expenses, such as personnel costs associated with adding group firms. As a result, group operating profit is estimated to jump 23% to 16.7 billion yen. Net profit is projected to rise 3% to about 11 billion yen despite extraordinary losses on store closures. Don Quijote is expected to notch another record pretax profit for the year ending June 2009. It plans to limit store openings to seven or so, while converting some Nagasakiya supermarkets into Don Quijote discount stores. (The Nikkei; Thursday, May 29, 2008)

Okamura To Open London Branch To Lift Office Chair Sales
Okamura Corp. will step up its sales efforts in the U.K., launching a branch in London by this autumn to reach out to local design firms. With this move, the office furniture manufacturer seeks to buoy European sales in the year ending March 2010 to 1 billion yen, up about 50% from fiscal 2007. Okamura had until now planned to create a sales agent network for the entire European market through its single branch in the region in Rotterdam, the Netherlands. But now that this branch covers about 20 countries, the company has decided to establish a presence in London, a major market where demand for office space is booming. In the U.K., where Okamura has been selling high-end office chairs through an agent, chairs and other office furniture are often picked by architectural design firms. Having a local branch will enable Okamura to step up its marketing to design firms. In Europe, Okamura's Japanese-made office chairs are imported and sent to a warehouse in Rotterdam, then shipped for sale in each European market. (The Nikkei Business Daily; Wednesday, May 14, 2008)