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Impact on Japanese orders too early to call after quake

Fashion retailers and brands had begun reopening their stores in Japan as Drapers went to press but the medium-term impact on sales in the wake of last week’s devastating earthquake remained unclear.

Shares in Japan and in European luxury businesses such as Burberry, Louis Vuitton owner LVMH, Gucci owner PPR and Hermès tumbled following the earthquake. The disaster struck a week ago today and led to in a tsunami that is thought to have killed up to 10,000 people and caused subsequent explosions at the country’s nuclear power plants.

The FTSE 100 fell to a low for the year to date on Monday, with luxury British heritage brand Burberry the largest faller, down 5.5%.

The Japanese market represents 11% of global luxury sales and contributes about 19% of sales for Hermès, 9% for LVMH, 16% for PPR and 7% for Burberry.

Simon Carter, owner of the eponymous menswear brand, said it was too early to predict what impact the quake would have on sales in the region. However, he said his wholesale business, whichhas more than 200 doors in Japan contributing about 15% of total sales, hadn’t had any orders cancelled as Drapers went to press.

Carter said communication was difficult due to electricity blackouts and transport issues. He added: “I think short term it will be total paralysis…undoubtedly it will affect sales, but I think it will be just this short-term shock.”

Carter predicted the Japanese market would make a swift recovery and said that the Japanese would spend money in the country to help boost the economy through adversity. He said: “The Japanese could become quite introspective; oddly this could become more of a problem.”

Luca Solca, senior analyst at Bernstein Research, agreed that despite the short-term emotional impact, consumer demand could revert back within a matter of weeks.

He added: “The conclusion is that, assuming the [explosions at] nuclear power plants can be managed and as much as this is a huge human tragedy, the business impact for luxury and fashion could be modest.”

UK Fashion and Textile Association director of international affairs Paul Alger said the organisation had received calls from about 15 designers seeking clarification about the situation in Japan.

Alger stressed it was key for the industry to show solidarity to those in Japan. He said: “It’s a case of trying to find out what companies can do to help those in Japan. If it is to hold or cancel orders, so be it.

“I would expect there to be a refocus on essentials as Japan tries to rebuild itself and fashion might not be the top priority.”

Designer Paul Smith, who has about 200 shops in Japan including one in Sendai, the worst affected city, said he was “extremely saddened to hear of the tragic events in Japan”. He said his first concern was for his store staff and added: “So far I have word that everyone is safe and accounted for. We are still waiting for further details on the situation and how everyone will be affected.”

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