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Muji’s Parent Company Ryohin Keikaku Reports Record Profits Amid Global Expansion

Boosted by aggressive international growth and strategic pricing, Ryohin Keikaku's profits soar, marking a robust post-pandemic recovery
Japan
r 7453.TSE Mid and Small Cap 2000
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Ryohin Keikaku, the parent company of global lifestyle brand Muji, has achieved a remarkable financial milestone, with its operating profit soaring to a historic high of 13.8 billion yen ($95.3 million) for the quarter ending November. This nearly threefold increase is a result of strategic price adjustments and the relaxation of China’s stringent COVID-19 policies.

The company’s operating revenue saw a significant 19% jump, reaching 162.9 billion yen, while its net profit escalated by 2.5 times to 9.8 billion yen. A crucial element in this financial surge was the company’s aggressive expansion strategy, which included the inauguration of 28 new stores in Japan, representing about 40% of its annual target for the country.

In East Asia, particularly China, Ryohin Keikaku’s sales were notably buoyant, contributing to approximately 30% of its operating revenue. This region’s 4.3% growth in same-store sales is attributed to a mix of local product development and the resurgence of economic activities post-lockdown.

Domestically, the company witnessed a 12.7% increase in overall same-store sales, which encompassed e-commerce. Products such as cosmetics and kitchenware saw high demand. The strategy of raising prices on select items by an average of 25% in January 2023 significantly enhanced the company’s operating profit margin, elevating it by 4.8 percentage points to 8.5%.

Despite a consistent performance in same-store sales, Ryohin Keikaku observed a decrease in customer footfall for nine consecutive months through December. Nonetheless, the company maintains its financial projections for the fiscal year, anticipating a 10% increase in operating revenue to 640 billion yen and a 50% surge in net profit to 33 billion yen.

Ryohin Keikaku’s President Nobuo Domae emphasized the company’s commitment to fair pricing and production efficiency. Strategies include heightened advertising, optimization of supply chains, and an increase in in-house production, all aimed at reducing costs and sustaining growth.

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