Uniqlo Owner, Seven & i To Set Tone for Japan's Consumer Sector
Net income across corporate Japan likely declined about 13% in the quarter ended June, similar to the March period, weighed down by the automotive and other discretionary segments, Bloomberg Intelligence senior equity strategist Laurent Douillet said.
Japan's household spending rose the most since the summer of 2022 in a sign that consumers may be getting used to persistent inflation. The main factors driving the increased outlays include tourism, spending on cars, and eating out.
The status of talks between Seven & i and Circle K parent Alimentation Couche-Tard Inc. will be closely followed after the Canadian company said in late June it expects a resolution soon. A successful deal would be the largest-ever foreign acquisition of a Japanese company.
Lower fuel prices and volumes may have further weighed on profitability at Seven & i, BI analyst Lea El-Hage said. 'Investors will be watching for strategic updates on the US business and any developments around the Couche-Tard acquisition proposal.'
Fast Retailing operating profit growth likely slowed in the quarter that ended in May. It may need to expand the flagship Uniqlo chain overseas to boost earnings as Japan's shrinking population acts as a drag on growth, even as wages rise, BI said. Europe and North America remain bright spots.
In South Korea, Samsung Electronics Co.'s hit from US tariffs may be smaller than feared after Vietnam agreed on a 20% levy on exports to the US, down from the 46% rate announced in April, BI said. With most of its smartphones made in Vietnam and shipped to the US, the tariff impact on operating profit is expected to be limited to 3%–5%, which could be partially offset by cost-cutting measures, BI added.
Highlights to look out for:
Monday: LG Energy Solution second-quarter operating profit likely rose 63%, consensus shows. Battery shipments likely remained solid and earnings momentum from the energy storage system is expected to get stronger, DAOL Investment & Securities said.
Tuesday: Samsung Electronics second-quarter operating profit may have remained steady quarter-on-quarter, BI said. DRAM shipments likely rose on quarter from pull-in demand ahead of US tariff hikes, while NAND chips might have returned a profit as average selling prices stabilized, BI added.
Wednesday: No major earnings of note.
Thursday: Fast Retailing third-quarter operating profit likely rose about 4% on the back of higher contributions from both Uniqlo Japan and its international businesses, estimates show. The company's budget casualwear brand, GU, may succeed as the next growth engine, BI said.
Friday: No major earnings of note.
With assistance from Shinhye Kang.
This article was generated from an automated news agency feed without modifications to text.
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