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MarketScreener Homepage  >  Equities  >  Tokyo  >  Fast Retailing Co., Ltd.    9983   JP3802300008

FAST RETAILING CO., LTD.

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Fast Retailing : Japan's Fast Retailing likely hit by South Korea boycott; succession plans in focus - analysts

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10/09/2019 | 12:25am EDT
FILE PHOTO: A Uniqlo store is seen on 5th Ave in New York

TOKYO (Reuters) - A South Korean boycott of Japanese goods is seen dragging down sales at Fast Retailing Co Ltd's Uniqlo stores, denting otherwise strong financial results due to be announced on Thursday by Asia's biggest fashion group, analysts said.

But another focus will be on succession plans after founder Tadashi Yanai, Japan's richest person according to Forbes, turned 70 earlier this year.

Analysts on average expect operating profit of 258.6 billion yen ($2.41 billion) for the year ended August, up 9.5% from a year prior, Thomson Reuters data showed. They see a 14% rise in the current year, helped by strength in China and new markets.

Some have been marking down forecasts since Uniqlo and other Japanese businesses were targeted by South Korean boycotts amid a diplomatic spat - a reminder of risks that come with overseas expansion. The company opened its first store in India last week and is also expanding in markets such as Malaysia and Indonesia.

Sales in South Korea, which account for around 8% of sales in Fast Retailing's flagship Uniqlo business, fell 40% year-on-year in July and more in August, the Nikkei reported.

J.P. Morgan analyst Dairo Murata recently lowered his Fast Retailing earnings forecast for the current year by 4.6% and cut his price target on the shares to 68,000 yen from 70,000 yen.

The shares last traded at around 61,300 yen, up 15% in the year to date.

"We foresee a double-digit decline in sales and a roughly 40% fall in operating profit for the South Korea business," Murata said in a client note, adding that the yen's appreciation against China's yuan was another near-term negative factor.

Fast Retailing's biggest growth market in recent years has been China, where it opened its first Uniqlo store in 2002 and now has over 700 locations. The company has said it expects Greater China revenue to grow to 1 trillion yen in fiscal 2022.

The Japan market, by contrast, has shown little growth. Uniqlo's September same-store sales data showed a 4.2% decline from a year earlier, with analysts saying they had expected stronger sales ahead of a consumption tax hike this month.

SUCCESSION

Another key focus on Thursday will be succession planning. Previously, Yanai said he would retire at 65 but shelved such plans when the time approached.

He has said he does not want his two sons to take the top job, though both were promoted to the ranks of company directors last year.

The next leader will be tasked not only with maintaining growth in China but also addressing long-term problems, such as its struggle to establish its brand in the United States. Investors are also keen for more results from recent technology investments including automated checkout and state-of-the-art logistics systems.

Possible successors include finance chief Takeshi Okazaki, who joined Fast Retailing from McKinsey & Co in 2011, and Pan Ning, head of Uniqlo's China operations.

Maki Akaida, head of Uniqlo's Japan operations, is also considered a candidate after Bloomberg News reported Yanai as preferring a female leader.

($1 = 107.1600 yen)

(Reporting by Ritsuko Ando; Editing by Christopher Cushing)

Stocks mentioned in the article
ChangeLast1st jan.
FAST RETAILING CO., LTD. 0.38% 68260 End-of-day quote.26.17%
NIKKEI 225 -0.09% 22451.86 Real-time Quote.10.95%
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Financials (JPY)
Sales 2020 2 444 B
EBIT 2020 289 B
Net income 2020 188 B
Finance 2020 552 B
Yield 2020 0,79%
P/E ratio 2020 37,2x
P/E ratio 2021 33,4x
EV / Sales2020 2,62x
EV / Sales2021 2,32x
Capitalization 6 967 B
Technical analysis trends FAST RETAILING CO., LTD.
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 65 260,00  JPY
Last Close Price 68 260,00  JPY
Spread / Highest target 12,8%
Spread / Average Target -4,39%
Spread / Lowest Target -29,7%
EPS Revisions
Managers
NameTitle
Tadashi Yanai Chairman, President & Group CEO
Takeshi Okazaki CFO, Director & Group Senior Executive Officer
Masaaki Shintaku Independent Outside Director
Toru Hambayashi Independent Outside Director
Nobumichi Hattori Independent Outside Director
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