Across Taiwan department stores see profits sink

Sandra Chuang, The China Post

Affected by economic slowdown, gross profit of department stores and retailers for the first half of the year dropped for the first time since 1991, falling 2.58 percent from the same period last year, according to a recent survey by the Department Stores and Retailers Association. The survey showed that from January through June, the gross profits of Taiwan’s major department stores totaled NT$67.9 billion, down NT$1.8 billion, or 2.58 percent, from the NT$69.7 billion of last year. Of the island’s five market divisions, the Kaohsiung area performed the worst, down nearly 10 percent from the same period of the previous year.

Retailers said that the retail industry recorded a 7.8 percent growth last year. As customers gradually reduced their budgets for consumption, the retail market this year began to experience first decline in sales since the early ’90s.

According to the survey, the gross profit for the first half of the year in the Taipei area showed a drop of 3.8 percent, down further from the 3.4 percent decline of the first quarter this year. Gross profits in the Kaohsiung area were down 9.8 percent, compared with the 14 percent drop for the first quarter of the same year. Even the emerging markets such as the Taichung area only gained 4.7 percent growth in the first six months of this year. The figures show that in the Taipei area the total gross profits of Shin Kong Mitsukoshi’s three branches declined 6 percent, nearly twice as much as the average drop-off rate for the overall market. Only SOGO’s Taipei branch, Idee, Mingyao, Dayeh Takashimaya, Te An and Han Shin were relatively stable.

The retail market in Kaohsiung area continued its deterioration due to rising jobless rate and gradual outward migration of local industries. Companies including Han Shin, SOGO, Sin Kong Mitsukoshi, Da Li Isetan President and Far Eastern posted negative growth in the Kaohsiung market during the first half of this year, compared with the same period of 2000.

Overall gross profits for the first quarter in the Taichung area totaled NT$12.7 billion, adding over NT$600 million, or 4.7 percent from the same period last year. However, the gross profits of the two top department stores in Taichung — Kuangsan SOGO and Chung Yo — showed a decline of nearly 20 percent from one year earlier. Meanwhile, Far Eastern and Chien Tai Dai Maru closed their Taichung branches at the end of last year. As for Taoyuan, Hsinchu, and Chungli, the overall market growth was 1.1 percent. In these areas, the newly opened department stores including Far Eastern’s Taoyuan branch, SOGO’s Hsinchu and Chungli branches showed positive growth while others revealed declines in the first half of the year. Analysts said the newly opened department stores had intensified competition in Taiwan’s retail market. Shin Kong Mitsukoshi’s Taichung branch, which just opened last October, had earned a gross profit of NT$4.14 billion in the first half of this year, taking a market share of over 30 percent in the Taichung area. In the coming October, there will be two big shopping malls — Core Pacific City and Breeze Center — opening in the Taipei area and one re-opened department store — FE21 Mega — in Kaohsiung. Aiming to enhance their competitiveness, rivals such as Printemps, SOGO, New York New York, and Asiaworld Shopping Mall have planed to renovate their department stores in the near future.