Once the darling of Japanese stock investors, department stores have lagged the recent broad market rally and could fall further behind as a strong yen dents tourist spending power.
Low confidence stemming from economic uncertainty has also crimped tourist budgets with data compiled by the Japan Department Stores Association showing tax-free inbound sales at over 80 department stores across the country fell by 41% in May from a year earlier. The number of shoppers also slid, despite the tally of visitors setting a new record.
¡°The yen has gotten a bit stronger, which makes them feel like the deal isn¡¯t as good anymore,¡± said Tetsuo Seshimo, a portfolio manager at Saison Asset Management. ¡°Even if tourists visit Japan, whether they want to make purchases will depend on the level of confidence they have,¡± he added referring to their conviction in the economic strength of their home country.
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