Takashimaya Co.'s store sales rose 2.1% in October from a year earlier, the Japanese department store chain said on Nov. 2, as local shoppers bought autumn clothing while spending by foreign visitors stalled. Duty-free sales slipped 0.5%, after a summer in which a weak yen had pushed them sharply higher.

The split matters for investors who have treated Japan's big department stores as a proxy for tourist spending. Excluding duty-free, Takashimaya's sales grew 2.6% (4.6% on a same-store basis), faster than the inbound business. On a same-store basis, which strips out the Sakai and Rakusai stores closed this year, total sales rose 3.8%.

Takashimaya's domestic shoppers carry October

Cooler weather drove demand for jackets, stoles and other autumn clothing and accessories, the company said in its flash report. Same-store sales rose in categories including women's clothing, luxury apparel, men's accessories, kimono, food, art and household goods.

The Nihombashi flagship in Tokyo led the chain with an 11.2% gain. The Senboku store in Osaka Prefecture rose 10.3% and online sales climbed 10.5%. Shinjuku added 6.5%. The Osaka flagship was flat, and Kyoto fell 2.3% including the shuttered Rakusai branch, though the Kyoto store alone rose 1.4%.

The foreign side was weaker. The number of inbound transactions fell 3.2% from a year earlier, while the average spend rose 2.8%, Takashimaya said. Cosmetics, children's hobby goods and household items sold well, and the company said inbound sales were roughly level with a year earlier despite the payback from October 2025, when the Osaka-Kansai Expo drew crowds to the region.

That base was demanding. A year ago Takashimaya reported October store sales up 8.3% and duty-free sales up 15.4%, helped by visitors during China's National Day holiday and strong luxury purchases, according to its release at the time. Jiji Press reported then that the duty-free gain came with higher per-customer spending on luxury jewelry.

The trend has also cooled within 2026. In September, duty-free sales rose 12.8% and the average inbound spend jumped 12.5%, the company said. In July, after the yen briefly weakened past 163 to the dollar, Takashimaya's duty-free sales climbed 26.2%, WWD Japan reported, while rivals Mitsukoshi Isetan, Daimaru Matsuzakaya and Hankyu Hanshin posted duty-free or overseas customer gains of about 22% to more than 50%.

Japan visitor arrivals fall as China travel slumps

National tourism data point to a smaller pool of visitors. Japan received an estimated 3,103,700 foreign visitors in September, down 5.0% from a year earlier, according to the Japan National Tourism Organization (JNTO). Arrivals for the first nine months totaled 30,730,200, down 2.9% from the same period of 2025.

The decline is concentrated in mainland China. Chinese arrivals fell 44.5% in September to 430,800, and were down 55.5% for the year to date, the JNTO figures show. China, once a mainstay for luxury buying at department stores, has dropped to third place among source markets this year behind South Korea and Taiwan.

Other Asian markets have partly filled the gap. South Korean arrivals rose 25.6% in September to 842,300, and Taiwan rose 13.0% to 595,600. Hong Kong visitors fell 3.0% to 145,000 in September, though they are up 7.7% for the year. Arrivals from Singapore rose 6.2%, while Malaysia fell 19.5% and Indonesia was nearly flat. Long-haul travel softened: U.S. arrivals dipped 3.2% and Australian arrivals fell 6.1%.

A new tax refund system starts in November

November brings a structural change. From Nov. 1, Japan replaced on-the-spot tax exemption for tourists with a refund model: visitors now pay the 10% consumption tax at checkout and claim it back after completing procedures before leaving the country, JNTO said. Capital Times has explained the refund overhaul and how it affects shoppers.

October sales may also have been lifted by shoppers buying before the switch, though Takashimaya's report did not address that. Retailers and analysts will watch whether the extra step at the airport damps impulse purchases of cosmetics and mid-priced goods, the categories that held up best for Takashimaya last month.

The company's report is one of the earliest reads on Japanese consumption each month. The broader picture has been mixed: retail sales fell for a second month in September even as factory output rebounded.

The next data points arrive this month. JNTO's estimate of October visitor arrivals is expected later in November, and Takashimaya's November flash report, the first full month under the refund system, is due in early December.