Japanese buyers favour cheaper, casual apparel: report

Shimamura is best placed to enjoy this trend.

A clear preference amongst Japanese consumers for lower-end, casual apparel in stand-alone locations closer to home has emerged, according to a report from Jefferies.

“We have no precedent by which to judge the magnitude or duration of this trend, but it is pervasive enough to demand more than casual attention,” Jefferies’ equity analyst Michael Jon Allen commented.

In particular, Shimamura was noted to be best-placed in the industry to capitalise on the trends toward cheap, casual, and local shopping. Changes in management, procurement, merchandise development and store presentations will boost up the firm, the report noted.

On the other hand, United Arrows is amongst the highest end, least casual, and most centrally located amongst apparel retailers. “We think the company can manage a shift toward more casual and lower-priced merchandise while improving margins, but it is fighting an uphill battle,” Allen said.

The hurdle rates for July are especially low, but investors were warned to nonetheless prepare for a probable slowdown. Jefferies found that the market always overrated the importance of this factor, and those who rely too much on it may be setting itself up for disappointment.

“Last July, there were fewer weekends, and it was unseasonably cool. This year, July was similar, so we think the low-hurdle rates will prove immaterial,” the report added.