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Friday, July 25, 2003

Rainy season pours cold water on recovery

Sectors reliant on summer sun take big hit as clouds refuse to budge


By TAIGA URANAKA, TOMOKO OTAKE and AKEMI NAKAMURA
Staff writers

The rain clouds hovering over most of Japan are not just drenching people -- they are also blighting the earnings outlook for corporate Japan.

News photo
Sun loungers on Yuigahama Beach, a popular summer spot in Kamakura, Kanagawa Prefecture, sit vacant thanks to the prolonged rainy season.

From breweries to amusement parks and air conditioner retailers, a plethora of businesses that count on the scorching summer sun have taken a beating during this year's prolonged rainy season.

This could put a brake on the nascent economic recovery seen in recent months -- although some other firms are praying for the heavens to open.

Kirin Brewery Co. officials have voiced frustration at the low mercury readings, claiming that the mild summer has further bludgeoned sales of beer and "happoshu," a low-malt beerlike beverage.

Sales of beer and happoshu have been on a downward trend anyway, suffering amid the prolonged economic slump and a recent tax hike.

"Among alcoholic beverages, beer is one of the most prone to weather changes," said Hiroki Umezawa, an official at Kirin's corporate communications department. "The past data shows that a 1-degree upward change in the temperature prompts the consumption of an additional 900,000 large bottles of beer and happoshu in the domestic market."

Takashimaya Co., the country's largest department store chain, said the cold summer is hurting sales of women's clothing.

The negative impact of the gloomy weather is especially pronounced in the Kanto region, where July sales of women's apparel through Monday had dropped 5 percent from a year earlier. Stores in Kansai logged a 1.2 percent decline in the same category.

"Seasonable merchandise such as no-sleeve and thin-fabric clothes haven't moved much this year," said company spokeswoman Yukiko Masumoto. The stores have brought forward the introduction of late summer items, she added.

Mitsukoshi Ltd., one of Takashimaya's rivals, has seen its sales of swimwear and other women's items fall in July.

"For department stores, it is best that the summer is hot and the winter is cold," spokesman Ichiro Fujii said.

Yamada Denki Co., an electrical appliance chain, said that same-store sales of air conditioners in July through Monday were down 36 percent from a year earlier. It added, however, that other appliances, including personal computers and refrigerators, are selling better than last year.

Amusement parks boasting outdoor swimming pools have been hit by the lingering rainy spell.

At Tokyo Summerland Co., the number of visitors during the first four days after schools closed for summer recess July 19 stood at 12,300, down 38.5 percent from the same period in 2002, according to the company.

The firm operates a huge park, including outdoor and indoor swimming pools, rides, a camp site, a golf course and tennis courts, in Akiruno City in western Tokyo.

"It was extremely hot at this time last summer, so our business was brisk," said spokesman Satoshi Shibata, adding that last year's big crowds are making this year's figures look worse.

Yet the whimsical weather is not breaking everyone's heart.

For Tokyo Electric Power Co., the cool weather comes as a huge relief. The giant power company has been scrambling for months to avert a power outage in the summer, when electricity demand usually hits its peak.

A defect coverup scandal that broke last August forced Tepco to close all of its 17 nuclear power plants for safety checkups in April.

Tepco President Tsunehisa Katsumata told a meeting of journalists Wednesday that low temperatures this year have "helped greatly."

"Energy consumption in July is lower than last year's levels by more than 15 percent," he said. "That also means reduced revenue for us, but we can't complain."

Meanwhile, some businesses want more than just drizzle; they want thunderstorms.

While not directly related to the prolonged rainy spell, Meizanso, a beachfront hotel in the hot spring resort of Gamagori in Aichi Prefecture recently started offering a special summer deal tied to the weather.

Guests paying a minimum of 10,001 yen per night get 30 percent of their money back if there is a rainfall of 30 mm or more on the day of their stay.

The deal was facilitated via a weather derivatives contract sealed with a major bank, which would compensate the hotel for rainy weather.

Thus far there have been no cases of reimbursement. Yet the hotel is looking forward to the first one, according to an official.

"It would be kind of disappointing if nothing happens and the campaign is over," the official said.



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