TOKYO -- Nitori Holdings, Japan's answer to Ikea, dropped to a new multiyear low during trading Wednesday after institutional investors vented frustration toward the lack of progress in a proposed China expansion.
Shares closed 3% down to 12,285 yen, a level not seen since February 2017. Nitori said it would open 200 outlets in China by 2022, but the furniture seller has opened just one new store so far this fiscal year. The number of Chinese outlets is set to remain at 38 by the time the year ends in February 2020.
Nitori has essentially abandoned a rapid expansion in China, and the company will rework its growth strategy.
Group operating profit is on track to notch a 33rd consecutive record year, climbing 3% to 104 billion yen ($942 million). Regardless, "it has become problematic to expect growth in China, and a question mark hangs over sustainable growth," said an analyst at an international brokerage.
Nitori revealed the change in its China strategy in early April when reporting earnings. The stock price has since traced a downward spiral amid persistent market concerns.
A recovery in Nitori's share price is not anticipated to occur soon. The price-earnings ratio of 19 is roughly on par with the average among Japanese retailers, meaning Nitori would not be perceived as a value stock.