Japan's Indexes Extend 3-day Rally, Seven & I and Fast Retailing In Focus After Earnings

Akira Ito
11 Oct, 2024
Tokyo

Market indexes in Japan advanced for the third consecutive session and traded at two-week highs. 

The Nikkei 225 stock average gained 0.5% and the broader Topix index edged lower 0.1%. 

The yen drifted lower to 148.68 against the U.S. dollar as investors lowered expectations of another rate increase in the imminent future. 

Financial markets in Tokyo traded volatile over the last four weeks amid rising geopolitical tensions, and a rebound in crude oil prices also stoked fears of resurgent inflation. 

Volatility in the yen has also overshadowed market sentiment in stocks, with the yen dropping as low as 161.68 in early July but managed to recover to the 140 mark. 

The Bank of Japan commenced its rate increase cycle in March, followed by the second rate increase in July, and signaled additional rate hikes. 

However, the central bank policymakers have stressed several times that future rate increases are likely but not imminent, and the central bank needs time to review the impact of recent rate increases on the economy. 

 

Japan Stock Movers 

The Nikkei 225 stock average increased 0.5% to 39,582.32, and the broader Topix index declined 0.1% to 2,708.65. 

For the week, the Nikkei 225 edged higher by 0.5% and the Topix index decreased by 1%. 

Fast Retailing surged 5.5% to ¥54,220.0 after the parent company of Uniqlo reported better-than-expected earnings. 

Revenue in the fiscal year ending in August increased 12.2% to 3.1 trillion yen, net profit rose 25% to 393.6 billion yen, and diluted earnings per share rose to 1,210.81 yen from 964.48 yen a year ago. 

For the full year, the company increased its dividends to 122.7 billion yen from 88.93 billion yen, an increase in payout ratio to 33.3% from 30% a year ago. 

Revenue in Japan increased 4.7% to 932.2 billion yen, and operating profit soared 32% to 155.8 billion yen. 

Warmer weather in the fiscal second half and the surge in tourism supported the rise in sales at domestic stores. 

Same store sales in the first half contracted 3.4% as a result of the warm winter, but sales rebounded in the second half to 11.7% as the company took advantage of longer summer weather temperatures. 

Revenue at international stores increased 19.1% to 1.72 trillion yen, and operating profit soared 24.9% to 283.4 billion yen. 

In fiscal year 2025, the company expects consolidated revenue to increase 9.5% to 3.4 trillion yen, operating profit to rise 5.8% to 530 billion yen, profit before income taxes to rise 5% to 585.0 billion, and profit attributable to owners of the parent to rise 3.5% to 385.0 billion yen.

Seven & I declined 1.4% to ¥2,292.0, and the parent company of Seven 11 announced restructuring to lift its stock price. 

Revenue for the six-month period ending August increased 8.8% to 6.03 trillion yen, net income declined 26.3% to 167.2 billion yen, and diluted earnings per share fell to 20.08 yen from 30.28 yen. 

The company also reiterated its plans to lower its total annual dividend to 20 yen per share from 113 yen in the previous year. 

The company estimated full-year revenue in the fiscal year 2025 to increase 3.5% to 11.87 trillion yen, net income attributable to shareholders to fall 27.4% to 163 billion yen, and diluted earnings per share of 62.74 yen. 

Sales at domestic stores declined to 462.4 billion yen compared to 470.7 billion yen as consumers battled rising prices.