Specialist retailers leave department stores behind

The Japanese retail sector is a two-tier market, divided between old-fashioned, underperforming retailers such as department stores and promising, young specialist retailers. Fund managers agree that old-style department stores face a number of significant structural problems. Mark Urquhart, fund manager, Japan, at Baillie Gifford, says department stores have large debts because they expanded too fast in the bubble era of the late 1980s early 1990s and took out bank loans against their property values; the property values subsequently collapsed and they were left with the loans. Japanese b...