Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>J. Front is a key beneficiary of improving consumption post-pandemic and a return of inbound tourism.</li>
<li>Q2 sales rose 4.8% on the year. 2H sales guidance +2% YoY looks too conservative given full resumption of inbound tourism.</li>
<li>We believe the stock still represents good value at 0.9x book value.</li>
</ul>


J. Front is a key beneficiary of improving consumption post-pandemic and a return of inbound tourism.
Q2 sales rose 4.8% on the year. 2H sales guidance +2% YoY looks too conservative given full resumption of inbound tourism.
We believe the stock still represents good value at 0.9x book value.


J Front Retailing (3086) | Still in the Bargain Basement

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>Department stores managed a partial rebound in 2021-22 but remain around 19% behind pre-Covid levels overall. As a result, profits remain elusive and the shake up in the industry continues. </li>
<li>On the plus side, luxury sales continue to surge and management is now more engaged than for years.</li>
<li>Although we remain negative on the sector overall, some companies will bounce back strongly as detailed in this in-depth review of the sector.</li>
</ul>


Department stores managed a partial rebound in 2021-22 but remain around 19% behind pre-Covid levels overall. As a result, profits remain elusive and the shake up in the industry continues. 
On the plus side, luxury sales continue to surge and management is now more engaged than for years.
Although we remain negative on the sector overall, some companies will bounce back strongly as detailed in this in-depth review of the sector.


Japan Department Stores: Sales Recovery but the Real Opportunity Is in Margin Growth

<ul>
<li>Japan's government has been more reluctant to open its borders than counterparts in the rest of the world. </li>
<li>Before COVID, Japan welcomed around 31m tourists per annum. The latest cap sets the limit at 18m and drops the requirement for a negative COVID test. </li>
<li>We believe these moves will have a significant positive impact on the retail sector and highlight 3 key beneficiaries</li>
</ul>


Japan's government has been more reluctant to open its borders than counterparts in the rest of the world. 
Before COVID, Japan welcomed around 31m tourists per annum. The latest cap sets the limit at 18m and drops the requirement for a negative COVID test. 
We believe these moves will have a significant positive impact on the retail sector and highlight 3 key beneficiaries


Japan Tourism | 3 Stocks to Buy for Open Borders

Isetan Mitsukoshi Holdings Ltd / Equity Bottom-Up

<ul>
<li>Isetan-Mitsukoshi is dangerously dependent on a small number of wealthy customers for a lot of its revenue.</li>
<li>Wealthy VIP customers account for around half of sales at both Isetan Shinjuku and Mitsukoshi Nihonbashi department stores</li>
<li>But the wealth market is one of the few segments to continue to grow so should be a source of growth even while the rest of its market shrinks.</li>
</ul>


Isetan-Mitsukoshi is dangerously dependent on a small number of wealthy customers for a lot of its revenue.
Wealthy VIP customers account for around half of sales at both Isetan Shinjuku and Mitsukoshi Nihonbashi department stores
But the wealth market is one of the few segments to continue to grow so should be a source of growth even while the rest of its market shrinks.


50% of Sales at Isetan-Mitsukoshi Flagships from Top 5% of Customers

Equity Capital Markets

<ul>
<li>Subscription rental services have become increasingly mainstream and the earlier start ups are now maturing into larger businesses. One of the first, Air Closet, plans an IPO later this month. </li>
<li>Air Closet specialises in renting out clothing from major labels but also in taking away the burden of choice by arranging for styles to be picked in-house.</li>
<li>As well as this growing service, Air Closet has also just launched a rental service for gadgets ranging from kitchen appliances to cameras.</li>
</ul>


Subscription rental services have become increasingly mainstream and the earlier start ups are now maturing into larger businesses. One of the first, Air Closet, plans an IPO later this month. 
Air Closet specialises in renting out clothing from major labels but also in taking away the burden of choice by arranging for styles to be picked in-house.
As well as this growing service, Air Closet has also just launched a rental service for gadgets ranging from kitchen appliances to cameras.


Japan

J. FRONT RETAILING CO., Ltd. is a holding company established through the merger of Daimaru and Matsuzakaya.  J. FRONT RETAILING operates department stores and supermarkets. The Company also manages subsidiaries which operate in wholesale businesses.

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J Front Retailing (3086 JP)

J Front Retailing (3086) | Still in the Bargain Basement

J. Front is a key beneficiary of improving consumption post-pandemic and a return of inbound tourism. The stock is trading at the bargain basement...

Mark Chadwick

Japan Department Stores: Sales Recovery but the Real Opportunity Is in Margin Growth

The Japanese department store sector suffered terribly during the pandemic and is in long-term decline but key companies are rebounding strongly...

Michael Causton

Japan Tourism | 3 Stocks to Buy for Open Borders

Japan has been slow to reopen its borders post COVID. Under pressure to stimulate the economy, Kishida has committed to lifting the cap on...

Mark Chadwick

50% of Sales at Isetan-Mitsukoshi Flagships from Top 5% of Customers

Isetan-Mitsukoshi is focusing on VIPs which already account for 50% of sales at its flagships but this is not enough. Drags on sales and profits...

Michael Causton

Air Closet Files for IPO

Listing this month on the TSE is Air Closet, a fashion rental business within Japan's fast-growing subscription market. It is expanding into other...

Michael Causton

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