TOKYO -- Japan has been a bright spot in the worldwide gloom over LVMH, Kering and other luxury groups. A big reason: Chinese tourists taking advantage of a weak yen.
A 30-year-old Chinese woman who gave her name as Snow bought a bag and two accessories from a Gucci shop at the Matsuya department store in Tokyo's Ginza district this month. The total came to about 520,000 yen ($3,390).
This was Snow's first visit to Japan with her boyfriend, but they did no sightseeing during their seven-day stay in Tokyo.
She was not alone in boosting her buying power.
"With the effect of the weak yen, shopping is quite affordable," said a 22-year-old Chinese man who visited Japan in June. "You could buy a Bulgari necklace that costs 368,000 yen in mainland China for 300,000 yen in Japan."
"The clothes I bought for 80,000 yen when I visited Japan in 2018 cost 5,000 yuan at the time, but now they've gone down to 4,000 yuan," the man said.
The Japan effect could be seen in luxury groups' results for the quarter ended June.
Burberry this month reported a 21% drop in same-store sales from a year earlier, excluding currency effects. The Asia-Pacific, the U.K.-based group's top-selling region, saw a 23% decline.
Sales slowed in China, Burberry's largest market. The only increase was in Japan, where sales rose 6%. Demand from locals in Japan remained soft, but strong tourism spending from Asia, especially China, provided a boost, according to Burberry.
The same was true for LVMH Moet Hennessy Louis Vuitton. Sales continued to fall in Asia excluding Japan -- a category that includes China. Only in Japan itself did the Louis Vuitton parent see double-digit growth, which the company credited to shopping by Chinese customers.
Spending on luxury goods has fallen in China as the economy has lost steam. But designer brands still hold cachet for Chinese consumers, some of whom are joining the rising numbers of international visitors to Japan.
Around 17.8 million people visited Japan in a January-June tally from the Japan National Tourism Organization, marking a first-half record. South Korea was the top place of origin, followed by China, Taiwan and the U.S. Spending by foreigners visiting Japan came to 2.14 trillion yen for the April-June period, according to the Japan Tourism Agency -- a quarterly record.
Big department stores have benefited from tourists' luxury shopping. Isetan Mitsukoshi Holdings' three flagship stores in Tokyo, including the Isetan Shinjuku store, saw sales grow 20.2% on the year in the July 1-15 period. Designer bags and purses sold well, helping tax-exempt sales double from a year earlier. Daimaru Matsuzakaya Department Stores, a J. Front Retailing group company, enjoyed a 21.9% increase in tax-exempt sales over the same period.
Tax-exempt sales at department stores in fiscal 2023 came to 428.2 billion yen, data from the Japan Department Stores Association shows -- nearly triple the year-earlier level. The figure exceeded 400 billion yen for the first time in a single fiscal year in comparable data going back to October 2014.
Correction: Paragraph 3 of this article has been amended to show that Snow and her boyfriend were visiting Japan, not China.
