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. 

Equity Bottom-Up

We have been bullish about <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a> since 2017 and since then the share price has surged from ¥1,600 to more than ¥10,000 before declining from late last year.Workman continues its relentless expansion and plans to reduce the number of its original Workman stores to just 200 while investing heavily in its consumer-oriented chain, including its new Joshi format targeting women.Thanks to the new product lines and focus on consumers, same-store sales rose 14.2% last year, a remarkable achievement at any time let alone in a pandemic – per customer sales only rose 0.3% but footfall jumped 13.8%. This is not a fluke – in the last five years, the average daily number of customers to Workman stores has increased from 107 to 166.The outdoor and workwear retailer remains a solid long-term bet and with the share price well off its peak with a possible further fall in the short-term, long-term investors may find a good opportunity to buy in.

We have been bullish about Workman Co Ltd (7564 JP) since 2017 and since then the share price has surged from ¥1,600 to more than ¥10,000 before declining from late last year.Workman continues its relentless expansion and plans to reduce the number of its original Workman stores to just 200 while investing heavily in its consumer-oriented chain, including its new Joshi format targeting women.Thanks to the new product lines and focus on consumers, same-store sales rose 14.2% last year, a remarkable achievement at any time let alone in a pandemic – per customer sales only rose 0.3% but footfall jumped 13.8%. This is not a fluke – in the last five years, the average daily number of customers to Workman stores has increased from 107 to 166.The outdoor and workwear retailer remains a solid long-term bet and with the share price well off its peak with a possible further fall in the short-term, long-term investors may find a good opportunity to buy in.

The <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a> momentum continues as the workwear retailer carves out an increasing share of the casual apparel and sports/outdoor market. Its latest experiment to target women has been well received, leading to plans to expand the new banner quickly, a move that will transform Workman’s position in the market, resulting in significant growth in both sales and profits. There is now talk of Workman adding further sub-brands as it builds share in the consumer market.

The Workman Co Ltd (7564 JP) momentum continues as the workwear retailer carves out an increasing share of the casual apparel and sports/outdoor market. Its latest experiment to target women has been well received, leading to plans to expand the new banner quickly, a move that will transform Workman’s position in the market, resulting in significant growth in both sales and profits. There is now talk of Workman adding further sub-brands as it builds share in the consumer market.

Workman Plans 400 Workman Joshi Stores as It Expands Share of Consumer Market

Thematic (Sector/Industry)

Like most lifestyle segments, the outdoor apparel &amp; equipment market contracted in 2020 but this is a blip in an otherwise sustained multi-year expansion. Long-term growth is being driven by both expanded supply and demand as consumers of all ages embrace the great outdoors for the first time in generations and suppliers rush to equip them.This has benefited retailers such as <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a>, <a href="https://www.smartkarma.com/entities/goldwin-inc" target="_blank" data-smartkarma-citation="entities:410:1" rel="noopener">Goldwin Inc (8111 JP)</a> and <a href="https://www.smartkarma.com/entities/snow-peak-inc" target="_blank" data-smartkarma-citation="entities:7218:1" rel="noopener">Snow Peak Inc (7816 JP)</a> but it also means that a number of other retailers have entered the market, creating new competition, including <a href="https://www.smartkarma.com/entities/bic-camera-inc" target="_blank" data-smartkarma-citation="entities:11328:1" rel="noopener">Bic Camera Inc (3048 JP) </a>and <a href="https://www.smartkarma.com/entities/kohnan-shoji-co-ltd" target="_blank" data-smartkarma-citation="entities:5662:1" rel="noopener">Kohnan Shoji (7516 JP).</a>

Like most lifestyle segments, the outdoor apparel &amp; equipment market contracted in 2020 but this is a blip in an otherwise sustained multi-year expansion. Long-term growth is being driven by both expanded supply and demand as consumers of all ages embrace the great outdoors for the first time in generations and suppliers rush to equip them.This has benefited retailers such as Workman Co Ltd (7564 JP), Goldwin Inc (8111 JP) and Snow Peak Inc (7816 JP) but it also means that a number of other retailers have entered the market, creating new competition, including Bic Camera Inc (3048 JP) and Kohnan Shoji (7516 JP).

Japan's Outdoor Market Expands 3.2% in 2019 but Contraction in 2020

Event-Driven

The Japanese sports retail market has traditionally been dominated by four big retailers, <a href="https://www.smartkarma.com/entities/alpen-co-ltd" target="_blank" data-smartkarma-citation="entities:17762:1" rel="noopener">Alpen Co Ltd (3028 JP)</a>, <a href="https://www.smartkarma.com/entities/xebio-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13955:1" rel="noopener">Xebio Holdings (8281 JP)</a>, Mega Sports (owned by <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> and <a href="https://www.smartkarma.com/entities/himaraya-co-ltd" target="_blank" data-smartkarma-citation="entities:5307:1" rel="noopener">Himaraya Co Ltd (7514 JP)</a>. With <a href="https://www.smartkarma.com/entities/mitsubishi-corp" target="_blank" data-smartkarma-citation="entities:20668:1" rel="noopener">Mitsubishi Corp (8058 JP)'s</a> financial and supply chain support, Himaraya overtook Mega Sports a few years ago but Himaraya’s sales have since contracted and Mitsubishi gradually reduced its stake while still retaining its core supply role.Mitsubishi will now divest all shares and end its supply relationship too, leaving Himaraya open to takeover.Given that sports/outdoor is one of the few sure growth markets, Himaraya won’t lack for potential suitors.This is a time of transition for the big multi-brand sports retailers. The number of stores increased up to 2018 but last year the total number of stores began to contract for the first time since 1990 with new competitors emerging, including <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a> and Decathlon.

The Japanese sports retail market has traditionally been dominated by four big retailers, Alpen Co Ltd (3028 JP), Xebio Holdings (8281 JP), Mega Sports (owned by Aeon Co Ltd (8267 JP)) and Himaraya Co Ltd (7514 JP). With Mitsubishi Corp (8058 JP)'s financial and supply chain support, Himaraya overtook Mega Sports a few years ago but Himaraya’s sales have since contracted and Mitsubishi gradually reduced its stake while still retaining its core supply role.Mitsubishi will now divest all shares and end its supply relationship too, leaving Himaraya open to takeover.Given that sports/outdoor is one of the few sure growth markets, Himaraya won’t lack for potential suitors.This is a time of transition for the big multi-brand sports retailers. The number of stores increased up to 2018 but last year the total number of stores began to contract for the first time since 1990 with new competitors emerging, including Workman Co Ltd (7564 JP) and Decathlon.

Japan Sports Retail in Flux as Mitsubishi Ditches Himaraya

<a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a>, one of Japan’s best performing retailers, plans to increase the pace of growth, with up to 200 new stores in the next three years.The furniture chain will also invest around ¥200 billion in logistics to support the expansion, as well as rapidly grow its fashion chain, N+. The latter has been dismissed as a gimmick by some analysts but we think the project has serious potential. Nitori is clearly a world class retailer. While Nitori achieved gross margins of 56% last year and operating margins of 16.7%, Fast Retailing had a gross margin (based on 2019 numbers i.e. a more normal year) of 48.9% and operating margin of 11%. Inditex (for the year ending January 2019) had a gross margin of 56.7% and operating margins equal to Nitori.Nitori has also just concluded its takeover of <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a> with lots of promise for synergies.With people forced to stay at home in 2020, the nesting instinct took hold and Nitori had a particularly good year. If all goes well, FY2020 will not only be its 34th consecutive year of record results, but also see the fastest profit growth so far.

Nitori Holdings (9843 JP), one of Japan’s best performing retailers, plans to increase the pace of growth, with up to 200 new stores in the next three years.The furniture chain will also invest around ¥200 billion in logistics to support the expansion, as well as rapidly grow its fashion chain, N+. The latter has been dismissed as a gimmick by some analysts but we think the project has serious potential. Nitori is clearly a world class retailer. While Nitori achieved gross margins of 56% last year and operating margins of 16.7%, Fast Retailing had a gross margin (based on 2019 numbers i.e. a more normal year) of 48.9% and operating margin of 11%. Inditex (for the year ending January 2019) had a gross margin of 56.7% and operating margins equal to Nitori.Nitori has also just concluded its takeover of Shimachu Co Ltd (8184 JP) with lots of promise for synergies.With people forced to stay at home in 2020, the nesting instinct took hold and Nitori had a particularly good year. If all goes well, FY2020 will not only be its 34th consecutive year of record results, but also see the fastest profit growth so far.

Nitori: A New Pace of Expansion in Home and Now Apparel

Japan

WORKMAN CO., LTD. designs, produces, and retails work uniforms and related goods including work gloves and safety shoes.  The Company operates its own stores and franchise stores located throughout eastern Japan.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Workman Co Ltd (7564 JP)

Workman Targets 1,500 Stores

Workman is a phenomenon in Japan. The company is one of the fastest growing retailers in Japanese history, carving out a leading share in the still...

Michael Causton

Japan's Outdoor Market Expands 3.2% in 2019 but Contraction in 2020

Japan's outdoor market is one of few segments to see solid growth in recent years and while the market will dip in 2020, will grow well in the next...

Michael Causton

Japan Sports Retail in Flux as Mitsubishi Ditches Himaraya

Mitsubishi will divest its long-standing holding in sports retailer, Himaraya. With the sports retail market in flux, Himaraya is a likely target...

Michael Causton

Nitori: A New Pace of Expansion in Home and Now Apparel

Nitori is about to accelerate expansion in its core market while absorbing Shimachu and likely expanding that. It is also about to build out its...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Workman Targets 1,500 Stores

Workman is a phenomenon in Japan. The company is one of the fastest growing retailers in Japanese history, carving out a leading share in the still...

Michael Causton

Workman Plans 400 Workman Joshi Stores as It Expands Share of Consumer Market

Workman continues to transition from being a trades retailer to a consumer discount giant. Its new banner targeting women is now being expanded...

Michael Causton

Japan's Outdoor Market Expands 3.2% in 2019 but Contraction in 2020

Japan's outdoor market is one of few segments to see solid growth in recent years and while the market will dip in 2020, will grow well in the next...

Michael Causton

Japan Sports Retail in Flux as Mitsubishi Ditches Himaraya

Mitsubishi will divest its long-standing holding in sports retailer, Himaraya. With the sports retail market in flux, Himaraya is a likely target...

Michael Causton

Nitori: A New Pace of Expansion in Home and Now Apparel

Nitori is about to accelerate expansion in its core market while absorbing Shimachu and likely expanding that. It is also about to build out its...

Michael Causton