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)

<ul>
<li>Core inflation rates remain stubbornly high and real wages are still falling. </li>
<li>Surveys suggest one more major round of price hikes in October but the government still thinks prices will stabilise below its 2% target by the end of the year.</li>
<li>The increases are lowering consumer confidence – bad news for most retailers, although major discount chains are making hay while the sun, well, doesn’t shine.</li>
</ul>


Core inflation rates remain stubbornly high and real wages are still falling. 
Surveys suggest one more major round of price hikes in October but the government still thinks prices will stabilise below its 2% target by the end of the year.
The increases are lowering consumer confidence – bad news for most retailers, although major discount chains are making hay while the sun, well, doesn’t shine.


Japanese Prices Rise Again; 60% of Consumers Feeling the Pinch and Looking for Better Value

Equity Bottom-Up

<p>The merger of <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co., Ltd. (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> is just one symptom of the growing concentration of market share in the drugstore sector.</p><p>But the sector's leaders are no longer just battling for dominance in drugstore retailing; increasingly drugstores are evolving far behind this niche sector.</p><p>Drugstore retailing is growing faster than any sector other than e-commerce because drugstores are positioned to meet customer needs for well-being, health and, nowadays, a broad range of daily necessities including food, and so becoming ever more integrated into consumers’ daily shopping experience.</p><p>Their eclectic ranges also mean they perform well in the middle of natural disasters and crises of various forms and many chains have seen good results thanks to earthquakes, extreme weather and especially thanks to Covid, but this doesn’t fully explain the sector’s success.</p><p>Crises may have helped, but Japan’s top drugstores are today some of the country’s best retailers in their own right.</p><p>The following is a complete, in-depth review of the drugstore sector, including rankings, KPIs, and future trends on the sector and the potential winners.</p><p><strong>Jun Tsuruha, the current <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> CEO, was widely quoted last year as saying the sector would soon be dominated by just “four or five” major firms. This is far from fantasy, with Tsuruha, <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a>, Matsukiyo-Cocokara, <a href="https://www.smartkarma.com/entities/cosmos-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:3797:1" rel="noopener">Cosmos Pharmaceutical (3349 JP)</a> and <a href="https://www.smartkarma.com/entities/sugi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:9255:1" rel="noopener">Sugi Holdings (7649 JP)</a> the most likely contenders.</strong></p>

The merger of Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) and Cocokara Fine (3098 JP) is just one symptom of the growing concentration of market share in the drugstore sector.But the sector's leaders are no longer just battling for dominance in drugstore retailing; increasingly drugstores are evolving far behind this niche sector.Drugstore retailing is growing faster than any sector other than e-commerce because drugstores are positioned to meet customer needs for well-being, health and, nowadays, a broad range of daily necessities including food, and so becoming ever more integrated into consumers’ daily shopping experience.Their eclectic ranges also mean they perform well in the middle of natural disasters and crises of various forms and many chains have seen good results thanks to earthquakes, extreme weather and especially thanks to Covid, but this doesn’t fully explain the sector’s success.Crises may have helped, but Japan’s top drugstores are today some of the country’s best retailers in their own right.The following is a complete, in-depth review of the drugstore sector, including rankings, KPIs, and future trends on the sector and the potential winners.Jun Tsuruha, the current Tsuruha Holdings (3391 JP) CEO, was widely quoted last year as saying the sector would soon be dominated by just “four or five” major firms. This is far from fantasy, with Tsuruha, Welcia Holdings (3141 JP), Matsukiyo-Cocokara, Cosmos Pharmaceutical (3349 JP) and Sugi Holdings (7649 JP) the most likely contenders.

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

<p style="text-align: center;"><strong>• RESULTS - 7th APRIL •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/374/original/image_44350750721617829220885.png?1617829221" class="editor-image img-responsive" data-smartkarma-image-id="199374"></figure><p><strong>RESULTS</strong> - All of the larger caps reporting on Wednesday scored negatively, with <a href="https://www.smartkarma.com/entities/bell-system24-holdings-inc" target="_blank" data-smartkarma-citation="entities:27224:1" rel="noopener">Bellsystem24 (6183 JP)</a> faring the worst - the company is also forecasting only single-digit growth in FY22. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/375/original/image_88110638531617829511197.png?1617829511" class="editor-image img-responsive" data-smartkarma-image-id="199375"></figure><p style="text-align: center;"><strong>• FORECASTS/REVISIONS - 7th APRIL •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/376/original/image_19503684441617829618279.png?1617829618" class="editor-image img-responsive" data-smartkarma-image-id="199376"></figure><p><strong>FORECASTS/REVISIONS</strong> - Welcia's FY22 projection of a decline in net income confirms the market's pessimism towards drugstores. <a href="https://www.smartkarma.com/entities/dip-corp" target="_blank" data-smartkarma-citation="entities:6209:1" rel="noopener">DIP (2379 JP)</a> compensated for poor fourth-quarter results and a weak interim forecast with a full-year forecast of record sales and a return to 30% operating margins in the second half.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/377/original/image_45189507451617831214172.png?1617831214" class="editor-image img-responsive" data-smartkarma-image-id="199377"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/378/original/image_70346033161617831341739.png?1617831342" class="editor-image img-responsive" data-smartkarma-image-id="199378"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/379/original/image_97042980771617831451634.png?1617831452" class="editor-image img-responsive" data-smartkarma-image-id="199379"></figure>

• RESULTS - 7th APRIL •RESULTS - All of the larger caps reporting on Wednesday scored negatively, with Bellsystem24 (6183 JP) faring the worst - the company is also forecasting only single-digit growth in FY22. • FORECASTS/REVISIONS - 7th APRIL •FORECASTS/REVISIONS - Welcia's FY22 projection of a decline in net income confirms the market's pessimism towards drugstores. DIP (2379 JP) compensated for poor fourth-quarter results and a weak interim forecast with a full-year forecast of record sales and a return to 30% operating margins in the second half.

🇯🇵 JAPAN • Results & Revisions 04/​​​07 - Bellsystem24, Welcia & DIP

<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Drugstore <a href="https://www.smartkarma.com/entities/cawachi-ltd" target="_blank" data-smartkarma-citation="entities:19359:1" rel="noopener">Cawachi (2664 JP)</a> had the 'best' trailing results announcement; however, our scoring methodology highlights the decline in earnings momentum - while the revised full-year forecasts fall short of TTM implying pre-COVID levels of profitability. <a href="https://www.smartkarma.com/entities/tokyo-steel-mfg-co-ltd" target="_blank" data-smartkarma-citation="entities:16195:1" rel="noopener">Tokyo Steel (5423 JP)</a> is the obvious 'worst' pick. Both, however, should be of interest to Japan value investors.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/319/original/2021-01-25_05-29-27.png?1611520184" class="editor-image img-responsive" data-smartkarma-image-id="184319"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/320/original/2021-01-25_05-40-08.png?1611520819" class="editor-image img-responsive" data-smartkarma-image-id="184320"></figure></section><div class="content-caption"> Source for all charts &amp; tables: Japan Analytics</div>

• BEST &amp; WORST •Drugstore Cawachi (2664 JP) had the 'best' trailing results announcement; however, our scoring methodology highlights the decline in earnings momentum - while the revised full-year forecasts fall short of TTM implying pre-COVID levels of profitability. Tokyo Steel (5423 JP) is the obvious 'worst' pick. Both, however, should be of interest to Japan value investors. Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​​22 - Cawachi & Tokyo Steel

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>Our best and worst pairing from Friday's announcements is consumer loan leader <a href="https://www.smartkarma.com/entities/acom-co-ltd" target="_blank" data-smartkarma-citation="entities:8897:1" rel="noopener">Acom (8572 JP)</a> and <a href="https://www.smartkarma.com/entities/tokyo-steel-mfg-co-ltd" target="_blank" data-smartkarma-citation="entities:16195:1" rel="noopener">Tokyo Steel (5423 JP)</a>. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/047/original/2020-10-24_12-36-01.png?1603510588" class="editor-image img-responsive" data-smartkarma-image-id="167047"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/048/original/2020-10-24_12-37-30.png?1603510670" class="editor-image img-responsive" data-smartkarma-image-id="167048"></figure></section><div><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></div>
<hr>
<div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div>
<hr>
<div><p style="text-align: center;"><strong>23 Quarterly Results</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 39% Positive / 9% Neutral / 52% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -0.2 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -8.2% Quarter YoY / -5.8% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -0.4ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 22%</p></li>
</ul></div>
<hr>
<div><p style="text-align: center;"><strong>31 Annual • 23 Interim Forecasts/Revisions</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 29% Positive / 16% Neutral / 55% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 39% Positive / 17% Neutral / 43% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -3.9 points</p></li>
</ul></div>
</div>

• BEST &amp; WORST •
Our best and worst pairing from Friday's announcements is consumer loan leader Acom (8572 JP) and Tokyo Steel (5423 JP). 
Source for all charts &amp; tables: Japan Analytics

DAILY STATS

23 Quarterly Results

Results Score: 39% Positive / 9% Neutral / 52% Negative
Average Results Score Change: -0.2 points
Average % Change in Revenue: -8.2% Quarter YoY / -5.8% Rolling TTM YoY 
Average Operating Profit Margin Change: -0.4ppt
Percentage Making Quarterly Losses: 22%


31 Annual • 23 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 29% Positive / 16% Neutral / 55% Negative
Interim Forecast/Revision Score Change: 39% Positive / 17% Neutral / 43% Negative
Average Forecast/Revision Score Change: -3.9 points



🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​​​​​​23 - Canon MJ, Cawachi, T Steel, Morning*J, Acom

Japan

Cawachi Ltd. operates a chain of drug stores in the Tohoku and Chubu regions. The Company's stores sell products such as pharmaceuticals, cosmetics, health products, foodstuffs, and household consumable goods.  Cawachi also operates a chain of pharmacies.

Price Gauge
52-week Range	0.00 - 0.00
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Cawachi Ltd (2664 JP)

Japanese Prices Rise Again; 60% of Consumers Feeling the Pinch and Looking for Better Value

Japanese consumer markets have three big trends: higher prices/squeezed incomes, doubling of single households and more people feeling the pinch....

Michael Causton

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

The Japanese drugstore sector has seen a big merger but there will be more as the sector not only consolidates down to a few leaders but also...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 04/07 - Bellsystem24, Welcia & DIP

RESULTS - All of the larger caps reporting on Wednesday scored negatively, with Bellsystem24 (6183 JP) faring the worst - the company is also...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 01/22 - Cawachi & Tokyo Steel

Drugstore Cawachi (2664 JP) had the 'best' trailing results announcement; however, our scoring methodology highlights the decline in earnings...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/23 - Canon MJ, Cawachi, T Steel, Morning*J, Acom

• BEST & WORST • Our best and worst pairing from Friday's announcements is consumer loan leader Acom (8572 JP) and Tokyo Steel (5423 JP).

Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japanese Prices Rise Again; 60% of Consumers Feeling the Pinch and Looking for Better Value

Japanese consumer markets have three big trends: higher prices/squeezed incomes, doubling of single households and more people feeling the pinch....

Michael Causton

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

The Japanese drugstore sector has seen a big merger but there will be more as the sector not only consolidates down to a few leaders but also...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 04/​​​07 - Bellsystem24, Welcia & DIP

RESULTS - All of the larger caps reporting on Wednesday scored negatively, with Bellsystem24 (6183 JP) faring the worst - the company is also...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​​22 - Cawachi & Tokyo Steel

Drugstore Cawachi (2664 JP) had the 'best' trailing results announcement; however, our scoring methodology highlights the decline in earnings...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​​​​​​23 - Canon MJ, Cawachi, T Steel, Morning*J, Acom

• BEST & WORST • Our best and worst pairing from Friday's announcements is consumer loan leader Acom (8572 JP) and Tokyo Steel (5423 JP).

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 04/07 - Bellsystem24, Welcia & DIP

🇯🇵 JAPAN • Results & Revisions 01/22 - Cawachi & Tokyo Steel

🇯🇵 JAPAN • Results & Revisions 10/23 - Canon MJ, Cawachi, T Steel, Morning*J, Acom