China travel warning deals blow to Matsuya Ginza duty-free sales

Duty-free sales at Japanese premium fashion and lifestyle retailer Matsuya Co.’s flagship Ginza stores fell about 15% last month from a year earlier, marking the first sign that Japan’s retail sector is being hit by geopolitical tensions with China.

Although local sales at Ginza stores rose 9.5% in November, it wasn’t enough to prevent overall revenue from slipping 1.2%, the company said in a statement Monday. Sales at its Asakusa outlet dropped 23%. 

The slump in inbound spending underscores how diplomatic tensions between China and Japan since mid-November are weighing on retail sales. Beijing’s travel warning triggered nearly half a million cancellations of Japan-bound air tickets by Chinese airlines in just three days. Tour groups also scrapped pre-booked trips and hotel stays.

The fallout has extended beyond tourism. Dozens of concerts by Japanese artists in China were abruptly scrapped in late November. The cancellations came as Beijing stepped up pressure on Tokyo following remarks by Prime Minister Sanae Takaichi on Taiwan, despite her subsequent clarifications.

Matsuya said the impact remains largely contained for now, cushioned by resilient domestic consumption. Duty-free sales accounted for 37% of Ginza store revenue, down from the previous month. The company said it will closely track trends around year-end, New Year holidays and the Lunar New Year.

Shares of Matsuya fell 1.6% Monday. The stock has nearly doubled this year. 

Matsuya Ginza has long ranked among Tokyo’s top shopping stops for Chinese visitors, cultivating its appeal through official accounts on WeChat and Xiaohongshu and targeted promotions throughout the year.

Department-store Takashimaya Co. said duty-free sales dropped 3.1% in November from a year earlier, citing weaker sales of luxury brands, while overall revenue rose 3.5% for the period. H2O Retailing Corp., which operates Hankyu and Hanshin department stores, said duty-free sales were slightly below in November from a year earlier while total sales rose 3.6%.

Rival J Front Retailing Co., operator of Daimaru and Matsuzakaya department stores, reported a 4.2% increase in November sales. The company cited robust inbound demand and strong purchases of autumn and winter apparel by domestic customers as temperatures fell. Duty-free sales across its stores rose 14% from a year earlier, driven by higher traffic and increased average spend per visitor. 

Isetan Mitsukoshi Holdings Ltd. said combined sales at its Mitsukoshi and Isetan stores rose 1.4% in November. Demand for cashmere and premium coats, along with higher sales of luxury watches among both domestic and overseas customers, supported growth.