Japanese department-store operator Takashimaya will close its Shanghai department store after years of losses, and exit China, InsiderRetailHK reported.
The company said it would recommend to shareholders at a special meeting on August 25 that its Shanghai Takashimaya Co. subsidiary be liquidated after it failed to negotiate a rent reduction from its Chinese landlord. Assuming approval — essentially a formality — the store will close on the same date, the report said.
Located in the city’s Changning District, the store had sought to deliver an authentic Japanese-style department store experience, and Takashimaya says it had developed “a large local following.”
However, figures supplied by the company show net sales rose from US$59.2 million in the year to February 2017 to US$65.44 million last year and then slumped to just US$29.78 million this year. The division’s loss attributable to shareholders was US$15 million in 2017, US$28.84 million last year and US$14.28 million this year, the report said.
Takashimaya says the proposed dissolution and liquidation may lead to a further loss for the parent company of US$18.69 million to US$28.04 million.
In a statement, Takashimaya said the lack of profitability is largely due to tough competition within the industry coupled with delays and changes in development projects for adjacent commercial facilities.
“These problems have been compounded by China’s economic slowdown and falling consumer spending, which reflect the protracted US-China trade friction. In view of these developments, the board of directors concluded that it was no longer feasible for Shanghai Takashimaya to continue.”
The Japanese company will now focus its growth and expansion planning to Southeast Asia where it sees greater opportunities. It currently has stores in Singapore, Bangkok and Ho Chi Minh City, Vietnam. According to sources, the company will expand the Ho Chi Minh City store to carry more items suited to families and is considering opening another department store in Vietnam.
Takashimaya isn’t the only foreign retailer that has struggled to win over China’s internet-savvy consumers. Last week, French supermarket chain Carrefour SA said it has found buyers for its Chinese business after several difficult years in the country.