Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin. </li>
<li>Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.</li>
<li>Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.</li>
</ul>


We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin. 
Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.
Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.


Fast Retailing (9983) | Another Stylish Quarter

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.

<ul>
<li>
<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> announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.</li>
<li>Notably, Uniqlo International demonstrated robust growth, even from regions (North America &amp; Europe) that were anticipated to underperform in this quarter. </li>
<li>The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.</li>
</ul>



Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
Notably, Uniqlo International demonstrated robust growth, even from regions (North America &amp; Europe) that were anticipated to underperform in this quarter. 
The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.


<ul>
<li>We anticipate a sluggish beginning to the fiscal year with 1Q8/24 earnings reflecting slower growth in Japan, China, and Southeast Asia.</li>
<li>Our forecast for 1Q24 operating profit stands at ¥130 billion, slightly below the consensus estimate of ¥138 billion. Assuming our estimates are accurate, we anticipate a slightly negative share-price reaction.</li>
<li>Our bearish stance on the stock persists, driven by the fact that it trades at a premium to our DCF and at a premium compared to global peers</li>
</ul>


We anticipate a sluggish beginning to the fiscal year with 1Q8/24 earnings reflecting slower growth in Japan, China, and Southeast Asia.
Our forecast for 1Q24 operating profit stands at ¥130 billion, slightly below the consensus estimate of ¥138 billion. Assuming our estimates are accurate, we anticipate a slightly negative share-price reaction.
Our bearish stance on the stock persists, driven by the fact that it trades at a premium to our DCF and at a premium compared to global peers


Fast Retailing (9983) | Q1 Preview - Slight Miss

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. 

<ul>
<li>Uniqlo is such a mainstay of Japanese retailing, and indeed life, that its dominance seems inevitable and unchanging. </li>
<li>Yet it has morphed from a mess of poorly judged acquisitions and failed overseas experiments into Japan’s biggest retail export – and still manages to pull off 20% growth.</li>
<li>Its latest target of ¥10 trillion in 10 years is far-fetched but its history of persistent determination suggests continued expansion is a certainty.</li>
</ul>


Uniqlo is such a mainstay of Japanese retailing, and indeed life, that its dominance seems inevitable and unchanging. 
Yet it has morphed from a mess of poorly judged acquisitions and failed overseas experiments into Japan’s biggest retail export – and still manages to pull off 20% growth.
Its latest target of ¥10 trillion in 10 years is far-fetched but its history of persistent determination suggests continued expansion is a certainty.


Fast Retailing: Great Fundamentals for Uniqlo, Shame About the Share Price

<ul>
<li>While domestic revenues may have slowed, Uniqlo's domestic OP shows upside potential driven by gross margin growth and a gradual reduction in SG&amp;A costs.</li>
<li>Meanwhile, we expect Uniqlo’s International business OP to surpass ¥75bn, driven by a rebound in China demand  and strong momentum in South Korea, SE Asia &amp; Ocenia.</li>
<li>Thus, we see the upcoming earnings as a compelling opportunity for trading <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>.</li>
</ul>


While domestic revenues may have slowed, Uniqlo's domestic OP shows upside potential driven by gross margin growth and a gradual reduction in SG&amp;A costs.
Meanwhile, we expect Uniqlo’s International business OP to surpass ¥75bn, driven by a rebound in China demand  and strong momentum in South Korea, SE Asia &amp; Ocenia.
Thus, we see the upcoming earnings as a compelling opportunity for trading Fast Retailing (9983 JP).


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)

Fast Retailing (9983) | Another Stylish Quarter

Fast Retailing beats Q1 expectations with strong November sales and improved gross margin. Our operating profit estimate revised upwards. Stock...

Mark Chadwick

Fast Retailing: 1QFY24 Earnings

Fast Retailing's Q1 results exceeded expectations, with Uniqlo Int showing strong growth in regions expected to underperform and Uniqlo Japan...

Oshadhi Kumarasiri

Fast Retailing (9983) | Q1 Preview - Slight Miss

Anticipating slow growth in Japan, China, and Southeast Asia, 1Q8/24 earnings are expected to be sluggish, leading to a slightly negative share...

Mark Chadwick

Fast Retailing: Earnings Preview

Uniqlo's domestic OP shows potential with margin growth and cost reduction, while international OP is expected to surpass ¥75bn due to rebounding...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Fast Retailing (9983) | Another Stylish Quarter

​Fast Retailing beats Q1 expectations with strong November sales and improved gross margin. Our operating profit estimate revised upwards. Stock...

Mark Chadwick

Fast Retailing: 1QFY24 Earnings

​Fast Retailing's Q1 results exceeded expectations, with Uniqlo Int showing strong growth in regions expected to underperform and Uniqlo Japan...

Oshadhi Kumarasiri

Fast Retailing (9983) | Q1 Preview - Slight Miss

​Anticipating slow growth in Japan, China, and Southeast Asia, 1Q8/24 earnings are expected to be sluggish, leading to a slightly negative share...

Mark Chadwick

Fast Retailing: Great Fundamentals for Uniqlo, Shame About the Share Price

Insights summarises Uniqlo's strong long-term fundamentals that are providing the basis for the recent results but which are often forgotten as...

Michael Causton

Fast Retailing: Earnings Preview

​Uniqlo's domestic OP shows potential with margin growth and cost reduction, while international OP is expected to surpass ¥75bn due to rebounding...

Oshadhi Kumarasiri

Fast Retailing beats Q1 expectations with strong November sales and improved gross margin. Our operating profit estimate revised upwards. Stock...

Fast Retailing's Q1 results exceeded expectations, with Uniqlo Int showing strong growth in regions expected to underperform and Uniqlo Japan...

Anticipating slow growth in Japan, China, and Southeast Asia, 1Q8/24 earnings are expected to be sluggish, leading to a slightly negative share...

Uniqlo's domestic OP shows potential with margin growth and cost reduction, while international OP is expected to surpass ¥75bn due to rebounding...