In today’s briefing:
- Japan Apparel Diversification: TSI Tries New Markets
- Workman Wins as Decathlon Closes Japan Stores
- Certainly the Increase in Share Repurchases Is to Be Commended, But……
- Toshiba (6502) Fresh Buy Zone
- Japan Apparel Reset: Onward Looks to E-Commerce for Growth
- Sanyo Shokai: More Unfulfilled Promises
Japan Apparel Diversification: TSI Tries New Markets
- TSI seems to be following a strategy of diversify or die. It is using its vast cash resources to invest in and build new businesses with some success.
- But it also has a couple of compelling brands in strong growth sectors, particularly in golf, providing growth of nearly 50% last year in one case.
- This isn’t enough to sustain overall growth however and more needs to be done to get on to a more secure footing.
Workman Wins as Decathlon Closes Japan Stores
- Decathlon entered the Japanese retail market in 2017 with the opportunity to take a significant share of a growing sports and athleisure sector.
- But the French firm is already retreating: it will close its two stores and focus on online and wholesaling.
- The market is poorer for but it does leave the market wide open for Workman – which built a consumer chain to combat Decathlon – to become dominant.
Certainly the Increase in Share Repurchases Is to Be Commended, But……
- I would like to discuss the points on the Nikkei article, “Acceleration of Share Buybacks Suggests Undervaluation.”
- Companies should clarify their capital allocations policy. My analysis shows that companies that raised valuations could articulate capital allocation policies and communicate with investors on growth investment and shareholder returns.
- Since information asymmetries between managers and investors exist, attention should be paid to capital allocation. My analysis shows that companies that retired treasury stock 3 or more-times have higher valuations.
Toshiba (6502) Fresh Buy Zone
- Toshiba bull trend remains intact with buy support at 5,200/300 above the 5,000 bull/bear pivot. Macro PT remains at 6,500.
- RSI buy support to gel with the price buy zone. Sell volumes on the pullback have been tepid in line with a correction.
- 5,000 breakout point is the bull/bear inflection point and the more aggressive buy zone (low odds of being met).
Japan Apparel Reset: Onward Looks to E-Commerce for Growth
- All of Japan’s big apparel firms have radically restructured but there is a lot more work to be done.
- Onward has done a great job of transitioning to e-commerce but this is not enough to sustain the business and provide new sources of growth.
- Trading will improve but slowly and more dynamism is needed in brand development and marketing.
Sanyo Shokai: More Unfulfilled Promises
- Sanyo Shokai has posted losses in every year since FY2016 despite promising a return to profit on an annual basis too.
- Its latest 3-year plan is typically optimistic but, equally typically, lacks real substance as to just where this growth will come from.
- Of all Japan’s larger apparel firms, Sanyo Shokai has the least promising outlook and that is saying something.
Before it’s here, it’s on Smartkarma
