Virus slashes visitors to Japan, sending retailers to seek help
Visitors to Japan in March slumped to levels not seen since Japan's economic heyday in the 1980s after the coronavirus pandemic shut down global travel, an early sign the impact the drop will have on retailers that thrived on tourist spending.
Visitors in March fell 93% from a year earlier to 193,700 people, the steepest drop on record, figures from the Japan National Tourism Organization show. That's the fewest since 1989, the year when the Nikkei 225 stock average hit its all-time high.
Then considered a tourism backwater with a reputation for expensive prices and a lack of foreign-language skills, Japan has become a major destination for international travelers in recent years after Prime Minister Shinzo Abe's efforts to lure more tourists. Aided by government steps to relax visa approvals, visitors to the country jumped almost four-fold since 2012 to 31.9 million last year, buoying sectors from cosmetics and consumer goods to hospitality.
Japan had been targeting a record 40 million arrivals this year, when it was originally scheduled to host the now-delayed Tokyo 2020 Olympic Games. That goal was doubled from a previous push to attract 20 million visitors, a milestone that was achieved five years ahead of schedule.
Department stores and retailers, which had become dependent in recent years on the steady flow of tourists, are now seeking financing to weather the steep drop in sales, which have also been exacerbated by local measures to contain the virus. While closures aren't mandatory, many have voluntarily shut stores and reduced their hours.
J Front Retailing Co. is planning to issue commercial paper and seeking a credit line. The operator of Daimaru and Matsuzakaya department stores warned earlier this week that the pandemic will reduce profit by about 33 billion yen this year. The retailer is planning to procure enough working capital to last a year, according to spokeswoman Chie Sugiya. The company declined to give a figure for total financing.
"We expect our cash to decrease as sales drop. We plan to secure more funding than usual for the time being, for our financial safety," Sugiya said.
Visitors from South Korea, China and Taiwan plunged between 97% and 99% from a year earlier. The largest source of visitors was the U.S., with 23,000 arrivals, despite a decline of 87%. Multiple nations placed Japan on travel advisory lists during the past two months as the coronavirus pandemic spread worldwide. Japanese traveling overseas also fell 86% to 272,700 people.
Isetan Mitsukoshi Holdings Ltd. is asking banks for a 80 billion yen credit line, NHK reported earlier Wednesday. The company doesn't have a problem with financing for the time being, and nothing has been decided, a spokesperson said by email.
Takashimaya Co. has issued 30 billion yen of commercial paper and is seeking a credit line to pay rent and salaries for employees while sales have dropped, said spokesman Shutaro Kurosu.
Japan still has the lowest number of infections among the Group of Seven nations, with about 8,100 confirmed to have contracted the new coronavirus.
