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)

In June, the government’s rebate scheme that simultaneously aimed to reduce the burden of its October 2019 tax increase while also promoting cashless payments, came to an end. But there’s more to come.The initial scheme will be replaced in September by an entirely new one, this time to promote the My Number citizen registration system alongside, again, cashless payments.The new scheme requires consumers to choose one provider only. This will push payment providers to compete with ever more ferocity and, by this time next year, we are likely to see just one or two winners and a whole bunch of losers.

In June, the government’s rebate scheme that simultaneously aimed to reduce the burden of its October 2019 tax increase while also promoting cashless payments, came to an end. But there’s more to come.The initial scheme will be replaced in September by an entirely new one, this time to promote the My Number citizen registration system alongside, again, cashless payments.The new scheme requires consumers to choose one provider only. This will push payment providers to compete with ever more ferocity and, by this time next year, we are likely to see just one or two winners and a whole bunch of losers.

Government Fuels Japan Cashless Payments War

'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.

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/983/original/2020-07-09_06-09-15.png?1594242712" class="editor-image img-responsive" data-smartkarma-image-id="144983"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/988/original/2020-07-09_06-49-18.png?1594244977" class="editor-image img-responsive" data-smartkarma-image-id="144988"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/984/original/2020-07-09_06-12-06.png?1594242743" class="editor-image img-responsive" data-smartkarma-image-id="144984"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/986/original/2020-07-09_06-11-29.png?1594242800" class="editor-image img-responsive" data-smartkarma-image-id="144986"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/987/original/2020-07-08_07-13-50.png?1594243049" class="editor-image img-responsive" data-smartkarma-image-id="144987"></figure><div class="content-caption">Source • Japan Analytics</div>
<a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon (8267 JP)</a>-  Despite the strong performance from the group's grocery and drugstore chains, the Aeon group reported its first-ever quarterly operating loss on a 2% decline in sales. Aeon's full-year forecast for operating income of ¥100 billion suggests a further 42% erosion from the TTM results. Partly driven by an improving trend in residual income generation, the company's shares have risen by 35% over the last twelve months, outperforming the market and the Retail Sector by 36% and 26%, respectively. We consider the shares overvalued and recommend profit-taking. In the long-term, a rationalisation of the minorities - one of the largest for any listed Japanese company - is required here.
DAILY STATS
</div><hr><div>29 Quarterly Results</div><div><ul>
<li>
Results Score: 9 Positive / 0 Neutral / 29 Negative</li>
<li>
Average Results Score Change: -3.4</li>
<li>
Average % Change in Revenue: -9.8% Quarter YoY / +0.8% Rolling TTM YoY</li>
<li>
Average Operating Profit Margin Change: -1.4ppt</li>
</ul></div><hr><div> 13 Annual • 11 Interim Forecasts/Revisions</div><div><ul>
<li>
Annual Forecast/Revision Score: 5 Positive / 2 Neutral / 6 Negative</li>
<li>
Interim Forecast/Revision Score Change: 2 Positive / 1 Neutral / 8 Negative</li>
<li>Average Forecast/Revision Score Change: -5.5</li>
</ul></div>


Source • Japan Analytics
Aeon (8267 JP)-  Despite the strong performance from the group's grocery and drugstore chains, the Aeon group reported its first-ever quarterly operating loss on a 2% decline in sales. Aeon's full-year forecast for operating income of ¥100 billion suggests a further 42% erosion from the TTM results. Partly driven by an improving trend in residual income generation, the company's shares have risen by 35% over the last twelve months, outperforming the market and the Retail Sector by 36% and 26%, respectively. We consider the shares overvalued and recommend profit-taking. In the long-term, a rationalisation of the minorities - one of the largest for any listed Japanese company - is required here.
DAILY STATS
29 Quarterly Results

Results Score: 9 Positive / 0 Neutral / 29 Negative

Average Results Score Change: -3.4

Average % Change in Revenue: -9.8% Quarter YoY / +0.8% Rolling TTM YoY

Average Operating Profit Margin Change: -1.4ppt
 13 Annual • 11 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 5 Positive / 2 Neutral / 6 Negative

Interim Forecast/Revision Score Change: 2 Positive / 1 Neutral / 8 Negative
Average Forecast/Revision Score Change: -5.5


🇯🇵 JAPAN • Results & Revisions 8th July - Aeon Group - Sum < Parts

Equity Bottom-Up

Seven Premium, <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 Holding's (3382 JP)</a> private brand range, continues to grow strongly. It is now the leading private brand programme in the country and provides the group with one positive outcome at the end of a difficult 12 months but it isn't enough to prop up a business with too many failing parts.

Seven Premium, Seven &amp; I Holding's (3382 JP) private brand range, continues to grow strongly. It is now the leading private brand programme in the country and provides the group with one positive outcome at the end of a difficult 12 months but it isn't enough to prop up a business with too many failing parts.

Seven Premium: Private Label Now 22% of All Seven & I’s Group Sales

<a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a> is Japan’s largest retail conglomerate by revenues but it struggles to make respectable profits.Now, as with Seven-Eleven at <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>, Aeon may have found the high margin star subsidiary it has been looking for: Welcia Holdings.Welcia is the country’s leading drugstore chain and is growing strongly, exceeding ¥1 trillion in sales for the first time and forecasting an increase to ¥1.8 trillion through 2023.Last year, it made almost as much profit as the whole of Aeon combined but there are plenty of opportunities to extract more profit from this sector.Like most Japanese drugstore stocks, Welcia is currently trading at historically high levels thanks to a surge in sales from March onwards (see below for details)  but with more consolidation coming in the sector led by the leaders, Welcia is a solid buy when dips in the market provide an opportunity.

Aeon Co Ltd (8267 JP) is Japan’s largest retail conglomerate by revenues but it struggles to make respectable profits.Now, as with Seven-Eleven at Seven &amp; I Holdings (3382 JP), Aeon may have found the high margin star subsidiary it has been looking for: Welcia Holdings.Welcia is the country’s leading drugstore chain and is growing strongly, exceeding ¥1 trillion in sales for the first time and forecasting an increase to ¥1.8 trillion through 2023.Last year, it made almost as much profit as the whole of Aeon combined but there are plenty of opportunities to extract more profit from this sector.Like most Japanese drugstore stocks, Welcia is currently trading at historically high levels thanks to a surge in sales from March onwards (see below for details)  but with more consolidation coming in the sector led by the leaders, Welcia is a solid buy when dips in the market provide an opportunity.

No one really knows what will happen after the initial shock of the coronavirus fades away. Many observers in Japan, expert and otherwise, are already predicting a completely new world in one way or another, but the reality is likely more prosaic.What is certain is that the Japanese consumer economy will recover and it is just a question of when.The most likely effect of the crisis is that it will catalyse a period of change already in process and which also happens to be one of the most dramatic and far-reaching seen so far in retail.But there is one trend that may well reverse as more businesses go under or contract, providing relief for many retailers: the labour shortage and rise in wages.The following offers an in-depth review of both the impact of the current crisis and implications as well as the long-term trends in Japanese retailing, providing insight into which sectors, formats and specific companies will win and lose in the next three years.For a short read, we provide the conclusions and winners and losers first.

No one really knows what will happen after the initial shock of the coronavirus fades away. Many observers in Japan, expert and otherwise, are already predicting a completely new world in one way or another, but the reality is likely more prosaic.What is certain is that the Japanese consumer economy will recover and it is just a question of when.The most likely effect of the crisis is that it will catalyse a period of change already in process and which also happens to be one of the most dramatic and far-reaching seen so far in retail.But there is one trend that may well reverse as more businesses go under or contract, providing relief for many retailers: the labour shortage and rise in wages.The following offers an in-depth review of both the impact of the current crisis and implications as well as the long-term trends in Japanese retailing, providing insight into which sectors, formats and specific companies will win and lose in the next three years.For a short read, we provide the conclusions and winners and losers first.

After Covid: The Future for Japanese Retail: Winners & Losers

Japan

AEON CO., LTD. operates general merchandise stores, supermarkets, and convenience stores throughout Japan. The Company is also engaged in women's and casual clothing store business, development business of commercial property, and financing service through the subsidiaries.

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Aeon Co Ltd (8267 JP)

Government Fuels Japan Cashless Payments War

In June, the government’s rebate scheme that simultaneously aimed to reduce the burden of its October 2019 tax increase while also promoting...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 8th July - Aeon Group - Sum < Parts

Aeon (8267 JP)- Despite the strong performance from the group's grocery and drugstore chains, the Aeon group reported its first-ever quarterly...

Campbell Gunn

Seven Premium: Private Label Now 22% of All Seven & I’s Group Sales

Seven Premium, Seven & I Holding's (3382 JP) private brand range, continues to grow strongly. It is now the leading private brand programme in...

Michael Causton

Welcia: Aeon’s Profit Machine

Aeon Co Ltd (8267 JP) is Japan’s largest retail conglomerate by revenues but it struggles to make respectable profits.Now, as with Seven-Eleven at...

Michael Causton

After Covid: The Future for Japanese Retail: Winners & Losers

No one really knows what will happen after the initial shock of the coronavirus fades away. Many observers in Japan, expert and otherwise, are...

Michael Causton

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