Japan's top apparel chain sales tipped to fall 50-60% in April

Ecommerce channels are not enough to buoy sales.

Japan’s top apparel chains are projected to see a decline in same store sales by 50-60% in April, according to a Jefferies report.

Over a third of stores were estimated to be closed for most of the month, and about 70% operating with significantly reduced hours. “We think compliance with voluntary restrictions increased as the month progressed,” Jefferies’ equity analyst Michael Jon Allen said.

Although these companies are refocussing on expanding their ecommerce channels, data from fashion label United Arrows suggested that they are not enough to replace the stores. The company holds the highest reliance on ecommerce in the group at 20.9%, but even with this jumping 25%, its contribution to total growth is just 5.2%.

“In ordinary times, 5.2% would be a monster contribution in comparison with flat store sales, but in comparison with 50% to 80% declines in store sales, 5.2% is almost nothing,” Allen noted.

Markets have been noted to be trying to price in a recovery. “Based on recent price trends, the market could easily react positively to the worst monthly sales data on record. It is appropriate, in our view, to begin discounting a recovery long before it happens, but also in our view, the market is still complacent about the scale and scope of this recovery,” he said.