Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

The following is a review of how physical retailers are progressing online and includes a unique ranking of the TOP 50 Online Retailers by sales, platforms sold on and growth.
Japanese retailers were famously behind peers in other markets to tackle e-commerce but many have caught up and become world class such as <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> and <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP). </a>
More worrying for those lagging behind such as <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, estimates suggest that online will have some role in 50% of purchasing transactions by 2025.
Despite retailers' efforts, the big three online malls, Amazon, Rakuten and Yahoo! Shopping still control half of the e-commerce market for merchandise.

The following is a review of how physical retailers are progressing online and includes a unique ranking of the TOP 50 Online Retailers by sales, platforms sold on and growth.
Japanese retailers were famously behind peers in other markets to tackle e-commerce but many have caught up and become world class such as Fast Retailing (9983 JP) and Nitori Holdings (9843 JP). 
More worrying for those lagging behind such as Seven &amp; I Holdings (3382 JP), estimates suggest that online will have some role in 50% of purchasing transactions by 2025.
Despite retailers' efforts, the big three online malls, Amazon, Rakuten and Yahoo! Shopping still control half of the e-commerce market for merchandise.

Tip of the Iceberg: Omnichannel 50% of Japan Retail in 2025

The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come.

The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come. 

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

Only 35 new SCs are expected to open this year, the lowest number in more than two decades and five of these will be rebuilds of other shopping facilities. At the same time, the character of new malls is changing, with dining making up 24% of new sales last year, up nine points, and merchandise tenancies accounting for only just over half. There are serious implications for the wider retail industry, particularly fashion and lifestyle specialty chains.

Only 35 new SCs are expected to open this year, the lowest number in more than two decades and five of these will be rebuilds of other shopping facilities. At the same time, the character of new malls is changing, with dining making up 24% of new sales last year, up nine points, and merchandise tenancies accounting for only just over half. There are serious implications for the wider retail industry, particularly fashion and lifestyle specialty chains.

Japan Shopping Mall Development Stalls in 2021

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Quantitative Analysis

Since our Original on <a href="https://www.smartkarma.com/insights/asia-dividend-forecasting-the-rise-and-fall-of-dividends-across-asian-companies" target="_blank" data-smartkarma-citation="insights:43022" rel="noopener">Asia Dividend Forecasting | The Rise and Fall of Dividends Across Asian Companies</a>, published on Sep 30 2020, this is our first quarterly update. Our models take into account latest reported fiscal year-end financials to provide updated results. We also discuss companies where there is notable change in our conviction level based on updated data.
At the webinar in October, there was also a request for conducting price movement analysis corresponding to forward dividend growth/cut for our back-test results. This analysis is now available. Our results show a high correlation between price movements and dividend growth/cut, suggesting that users of our models will benefit from guiding their investment decisions based on dividend growth/cut outlook.

Since our Original on Asia Dividend Forecasting | The Rise and Fall of Dividends Across Asian Companies, published on Sep 30 2020, this is our first quarterly update. Our models take into account latest reported fiscal year-end financials to provide updated results. We also discuss companies where there is notable change in our conviction level based on updated data.
At the webinar in October, there was also a request for conducting price movement analysis corresponding to forward dividend growth/cut for our back-test results. This analysis is now available. Our results show a high correlation between price movements and dividend growth/cut, suggesting that users of our models will benefit from guiding their investment decisions based on dividend growth/cut outlook.

Asia Dividend Forecasting | Quarterly Update 1.0

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> delivered its 1QFY21 results on 14th Thursday with operating profit surpassing consensus estimate by more than 11%. However, the company’s 1QFY21 consolidated revenue was 2.5% below consensus. Despite mixed Q1 results, Fast Retailing's flexibility and resilience in the time of COVID is highly commendable as YoY revenue decline narrowed to just 0.6% YoY in 1QFY21 while operating profit improved by 23.3% YoY. With the FY+2 EV/OP multiple at 28.5x, 43% above the past three-year average, the market has generously compensated Fast Retailing for its commendable performance amidst COVID-19.
Though the company has maintained FY21 revenue and OP guidance at ¥2,200bn (4% below pre-pandemic revenue) and ¥245bn (8% below pre-pandemic OP) respectively, consensus revenue estimate is 5.5% above guidance while OP estimate is 9.7% above guidance, indicating that the market expects FY21 revenue and profitability to be above the pre-pandemic level.
On the surface, 1QFY21 revenue and OP growth indicate that everything is on track to meet FY21 consensus. However, this may not be entirely accurate as 1QFY20 was affected by the Hong Kong protests and the South Korea Boycott. Thus, Fast Retailing could be vulnerable to downside risks, if it fails to return revenue and profitability to the pre-pandemic level in FY21.

Fast Retailing (9983 JP) delivered its 1QFY21 results on 14th Thursday with operating profit surpassing consensus estimate by more than 11%. However, the company’s 1QFY21 consolidated revenue was 2.5% below consensus. Despite mixed Q1 results, Fast Retailing's flexibility and resilience in the time of COVID is highly commendable as YoY revenue decline narrowed to just 0.6% YoY in 1QFY21 while operating profit improved by 23.3% YoY. With the FY+2 EV/OP multiple at 28.5x, 43% above the past three-year average, the market has generously compensated Fast Retailing for its commendable performance amidst COVID-19.
Though the company has maintained FY21 revenue and OP guidance at ¥2,200bn (4% below pre-pandemic revenue) and ¥245bn (8% below pre-pandemic OP) respectively, consensus revenue estimate is 5.5% above guidance while OP estimate is 9.7% above guidance, indicating that the market expects FY21 revenue and profitability to be above the pre-pandemic level.
On the surface, 1QFY21 revenue and OP growth indicate that everything is on track to meet FY21 consensus. However, this may not be entirely accurate as 1QFY20 was affected by the Hong Kong protests and the South Korea Boycott. Thus, Fast Retailing could be vulnerable to downside risks, if it fails to return revenue and profitability to the pre-pandemic level in FY21.

Fast Retailing: Upbeat Consensus Unlikely to Be Met in 2QFY21

Japan

FAST RETAILING CO., LTD. operates a chain of clothing stores, UNIQLO, throughout Japan and in other markets overseas including UK, China, Hong Kong, South Korea, US, France, Singapore and Russia.  The Company designs, manufactures, and retails its own line of casual clothing.

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Fast Retailing (9983 JP)

Tip of the Iceberg: Omnichannel 50% of Japan Retail in 2025

We have compiled a unique ranking of the top 50 E-commerce retailers in Japan and provide an analysis of winners and losers among retailers now and...

Michael Causton

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

An in-depth update for investors in Japan's retail and consumer space on Japan's retail sector by retail type as well as a review of the impact of...

Michael Causton

Japan Shopping Mall Development Stalls in 2021

The collapse in new shopping mall development in Japan does not just affect real estate developers but also the wider retail industry, especially...

Michael Causton

Asia Dividend Forecasting | Quarterly Update 1.0

We incorporate latest reported financial data to provide updated results for our Asia Dividend Forecasting models. We also ran an insightful price...

Ankit Agrawal, CFA

Fast Retailing: Upbeat Consensus Unlikely to Be Met in 2QFY21

Implied consensus revenue and OP growth for December 2020 to August 2021 period seem excessive, making an earnings miss or downgrade very likely in...

Oshadhi Kumarasiri

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