Sat, Feb 04, 2017 page10

• Furniture tycoon eyes Japan’s apparel market entry

  • Bloomberg
  • • 
    • 
    • 

  Nitori Holdings Co is considering buying an apparel chain in Japan, a move that would pit the furniture seller against rivals, including Fast Retailing Co, Asia’s largest clothier.

  The home furnishing retailer would look for a company with 100 to 200 stores as cash from operations has been increasing by as much as ￥30 billion (US$266 million) a year, Nitori chief executive officer Akio Nitori, 72, said in an interview on Wednesday.

  Nothing specific has been decided, he said.

  

  Akio Nitori, chairman and chief executive officer of Nitori Holdings Co, poses at a Nitori Co store in Tokyo on Wednesday.

  Photo: Bloomberg

  “If we’re going to get into apparel, M&A’s [merger and acquisition] probably the best way to do it,” said Nitori, wearing a pink necktie and gray jacket. “There isn’t enough choice now for shoppers. If you go to a shopping center, it’s all clothes for young people and not a lot for the middle-aged at a reasonable price.”

  Nitori is contemplating a bet on clothing for older shoppers in a country where people older than 60 make up about a third of the population while accounting for almost half of consumer spending.

  Even as Japan’s population has declined and aged, the home furnishings chain has increased profit for 29 years straight.

  Analysts estimate net income will jump 21 percent in the fiscal year ending next month, the fastest growth since 2011.

  Nitori shares have gained 27 percent in the past year.

  Steady profit increases have also helped Nitori stockpile cash. Net cash more than doubled to ￥36 billion in the year ended on Feb. 20 last year, while analysts estimate the figure will jump to ￥56.5 billion for the 12 months ending this month, according to data compiled by Bloomberg.

  The company’s performance has also helped its CEO amass a fortune worth an estimated US$3 billion, according to the Bloomberg Billionaires Index.

  That compares with Fast Retailing chairman Tadashi Yanai’s US$16.6 billion net worth, according to the index.

  Still, a push into the competitive retail clothing market may be risky in an economy where stagnant wages have left consumers less eager to spend.

  “It’s hard to imagine Nitori entering the apparel business with fashion or street wear,” said Masafumi Shoda, a Tokyo-based analyst at Nomura Securities Co.

  Casual home wear and accessories like aprons “may match with the home fashion business that Nitori is trying to grow,” he added.

  Nitori opened its first furniture store in 1967 on the northern island of Hokkaido and initially focused on selling in suburban areas.

  In recent years, it has been establishing stores in the middle of the nation’s biggest cities, including one in Tokyo’s Ginza shopping district and another in Nagoya.

  While clothing may provide a new avenue of growth for Nitori, the chairman’s optimism can also be seen in his bullish on the outlook for its chain of about 430 stores as of last year.

  The goal is to operate 3,000 locations in 15 years’ time, with 1,000 of those in China and another 1,000 elsewhere overseas, he said.

  The company targets sales of ￥3 trillion in 2032, well on the way to much bigger rival IKEA Group’s global revenue in the year to August last year, the equivalent of ￥4.3 trillion.

  “IKEA’s like a giant, from our point of view,” Nitori said. “But as long as we’re in this business, we’d like to go abroad and make IKEA’s numbers our goal.”
• Most Popular

  • 1

    Kevin de Bruyne bids Manchester City farewell

  • 2

    Napoli bag 2nd Serie A title in 3 years

  • 3

    Taiwanese duo knocked out of Malaysia Masters

  • 4

    Cannes Critics’ Week honors ‘Left-Handed Girl’

  • 5

    Taiwan in Time: Adjusting internal borders during the Qing Dynasty