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Business Trends

Japan's retailers boosted by e-commerce and overseas expansion

Majority of biggest companies expect record profits in fiscal 2018

Overseas profit from Fast Retailing's Uniqlo operations shot up more than 60% in the first fiscal half. (Photo by Wataru Ito)

TOKYO -- Earnings growth in the Japanese retail sector is accelerating once again as companies expand beyond their traditional turf by boosting their presence abroad and in cyberspace.

Fourteen of the 20 top publicly traded retailers by market capitalization foresee record net profits in fiscal 2018.

Combined net profit increased 25% on the year at 58 retailers that had released earnings results by Thursday for the year ended February.

Fast Retailing, the company behind the Uniqlo and GU clothing chains, has fared well abroad of late. Business profit in Uniqlo's international operations soared 62% on the year to 80.8 billion yen ($753 million) for the half ended February. This came close to the 88.8 billion yen Uniqlo posted for Japan, itself up 28% on the year.

"The age of Asia is finally here," CEO Tadashi Yanai told reporters on Thursday. He boasted of how "it really strikes me that our products are accepted worldwide."

Uniqlo's Heattech undergarments, for example, are selling briskly in China. Fast Retailing sees overall full-year net profit rising 9% on the year to 130 billion yen -- a second straight annual record.

Muji operator Ryohin Keikaku is also doing well thanks to a strong foreign focus. It had 457 stores abroad at the end of February, compared with 419 in Japan.

Overseas profit roughly quadrupled in four years to account for 40% of Ryohin Keikaku's operating profit in the year ended February.

"Simple yet highly functional items are winning the hearts of consumers around the world," President Satoru Matsuzaki said. The company projects a fourth consecutive year of record net profit this fiscal year.

Convenience store leader Seven & i Holdings forecasts a second straight year of record profit. Its 7-Eleven stores in North America have increased to about 10,000 through acquisitions. "North America offers high growth potential and great opportunity," President Ryuichi Isaka said.

Beyond the brick-and-mortar space, Start Today has stood out from the crowd in apparel e-tailing. Shoppers at its Zozotown online store doubled over three years to 7.2 million last year. Monotaro, which sells maintenance and repair tools to small businesses by mail order, continues to expand its customer base. The company offers more than 15 million products and delivers even small orders quickly.

E-commerce is a focus of big-name retailers as well. Seven & i Holdings' online sales rose 11% to top the 100 billion yen mark last fiscal year. The company now offers a mobile app for internet shopping.

Aeon, which operates general-merchandise stores, aims to increase e-commerce sales to around 1.2 trillion yen in fiscal 2020. It just announced an investment in New York-based e-tailer Boxed.

Nitori Holdings also expects a record profit this fiscal year. The furniture purveyor operates factories and logistics facilities in Vietnam and elsewhere in Asia, importing about 90% of the merchandise it sells in Japan. "We have changed our development operations so we can sell a bed mattress that normally costs 200,000 yen for just 79,000 yen," Chairman Akio Nitori said.

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