On October 15, following the announcement of its interim financial results, which showed increases in both revenue and profit, Takashimaya revised upward its full-year earnings forecast. For the fiscal year ending February 2027, the company raised its forecast for operating revenue from the ¥503.0 billion announced in April to ¥509.1 billion (up 3.4% year on year), and its operating profit forecast from ¥57.5 billion to ¥59.0 billion (up 10.2%). In addition to strong inbound tourism demand, sales to domestic customers have also remained firm. Its overseas businesses have also contributed to the improved outlook, benefiting from favorable exchange rates.

Business remained strong in September as well. Although the growth rate slowed somewhat, in-store sales increased 2.4% year on year. Inbound tourism was once again the main driver. While the number of purchases remained almost unchanged from the previous year (up 0.3%), average spending per purchase increased 12.5%, and tax-free sales rose 12.8%, contributing to overall sales growth. Although the number of visitors from China has declined, limiting growth in the overall number of inbound visitors, demand for high-value goods among inbound tourists remains strong against the backdrop of the weak yen. Isetan Mitsukoshi Holdings also recorded a 36.5% year-on-year increase in tax-free sales in September.

On November 1, Japan introduced a new refund-based system for tax-free shopping, which supports inbound tourism demand. Under the previous system, visitors presented their passports or other required documents at the point of purchase and bought goods at prices excluding consumption tax. Under the new refund system, however, visitors initially pay the tax-inclusive price. Retailers electronically transmit purchase record information to the National Tax Agency, and, upon departure from Japan, customs officials inspect and verify the purchaser and the goods subject to the tax exemption. The consumption tax portion is then refunded. This change was prompted by the widespread abuse of loopholes in the previous system, particularly the fraudulent resale of tax-free goods. However, the refund method itself is already used in many countries, so travelers accustomed to shopping overseas are unlikely to find it unfamiliar.

There are, however, some potential disadvantages, including higher upfront spending during the trip, additional procedures at departure, and a time lag before refunds are received. Retailers also incur costs to adapt to the new system, including initial expenses for system integration with approved tax-free sales data transmission providers* and training for store staff.

On the other hand, the new system also simplifies certain aspects of the process. For example, the distinction between consumable goods and general goods has been eliminated. Restrictions on the locations where tax-free counters can be installed, which were previously limited to designated commercial facilities, have also been lifted. This means that entire local shopping districts or tourist destinations can potentially be designated as tax-free shopping areas. The benefits could be significant for both tourists and small retailers.

There may still be some temporary confusion during the transition. However, this does not mean that demand itself will decline. I hope that not only department stores and large commercial facilities, but also entire local communities, will develop strategies to expand tax-free sales—in other words, sales of goods to overseas visitors that are effectively treated as exports.

*Approved tax-free sales data transmission provider: A business operator authorized by the Commissioner of the National Tax Agency or the Director of the competent tax office to electronically transmit passport information and purchase record information to the National Tax Agency on behalf of tax-free shops.
 

Takashi Mizukoshi, the President
This Week’s Focus, October 18 – October 22, 2026
(Note: Certain verb tenses in this English version have been adjusted to reflect the timing of publication.)