A global specialty retailer selling household goods, apparel and fashion items, and food under a single brand: MUJI (Mujirushi Ryohin). The bulk of sales come from Japan and increasingly, China.
Multiline RetailSpecialty RetailFood & Staples Retailing
Executive summary
Business overview
Retail chain store operator selling apparel, household goods, and food under the Mujirushi Ryohin and MUJI brand names. Well known for simple designs that eschew excessive ornamentation and processing. Mujirushi Ryohin started out in 1980 a private label brand established by Seiyu, a large general merchandise store; in 1989 the brand was spun off from Seiyu and established as a separate company under the name Ryohin Keikaku. Ryohin Keikaku products are founded on three core principles: selection of materials, process streamlining, and simplification of packaging. It has loyal, repeat customers that value products that are low priced, simple, natural, anonymous, and conserve resources.
As of end-FY08/21, the company had 1,002 stores in operation worldwide, of which 456 were in Japan. The company’s 546 stores overseas are spread out across East Asia (mainly China), Europe, North America, Southwest Asia and Oceania, the Middle East, and other regions. Japan accounts for 65.5% of consolidated operating revenue, East Asia 27.7%, Europe and Americas 3.9%, and Southwest Asia and Oceania 3.0%. While its domestic business continues to grow, the more rapid growth outside Japan means the proportion of consolidated operating revenue coming from overseas is rising steadily.
By merchandise category, apparel (including apparel, accessories, shoes, and handbags) accounted for 37.4% of sales, household goods (including cosmetics, furniture, and linens) 46.8%, food (including retort foods and snack food) 12.1%, and other products 3.7% (FY08/21).
Trends and outlook
For FY08/21, Ryohin Keikaku reported consolidated operating revenue of JPY453.7bn (+13.0% YoY), operating profit of JPY42.4bn (+154.8% YoY), recurring profit of JPY45.4bn (+163.7% YoY), and net income attributable to owners of the parent of JPY33.9bn (versus loss of JPY6.9bn in FY08/20). Both operating revenue and profit increased YoY on the back of brisk sales at the Domestic business and improved performance at the Overseas business. Operating revenue beat the pre-pandemic figure for FY08/19, and so did all levels of profit. Net income attributable to owners of the parent reached a record high.
In April 2022, Ryohin Keikaku announced a revision to its full-year FY08/22 forecast. This revised forecast calls for operating revenue of JPY470.0bn (+3.6% YoY), operating profit of JPY38.0bn (-10.5% YoY), recurring profit of JPY40.5bn (-10.7% YoY), and net income attributable to owners of the parent of JPY27.0bn (-20.4% YoY). In short, the company expects a YoY increase in operating revenue and decreases in all profit categories. The company is working to broaden the customer base centered on price revisions, and open new stores mainly in Japan and mainland China. The revised forecasts were JPY10.0bn lower for operating revenue, JPY7.0bn lower for operating profit, JPY4.5bn lower for recurring profit, and JPY5.0bn lower for net income attributable to owners of the parent. It expects net income attributable to owners of the parent to decrease YoY, attributable mainly to one-time profit posted in the prior period, including gains from forgiveness of lease surrender obligations in the US business (JPY3.1bn).
The company announced next medium-term business plan in April 2021. In terms of quantitative targets, under its next medium-term plan the company targets FY08/24 consolidated sales of JPY700bn (JPY450bn from Japan, JPY250bn from overseas) and operating profit of JPY75bn for an operating profit margin of 11% with targets for ROA and ROE of 15% or better. Long term, the company targets FY08/30 consolidated sales of JPY3.0tn and operating profit of JPY450bn, representing an operating profit margin of 15% with targets for ROA and ROE of 15% or higher.
Looking out to FY08/30, the company has set its sights on making its products and stores an essential part of everyday life for consumers and becoming an active part of local communities, contributing to both community building and problem solving. By region, the medium-term plan calls for focusing the bulk of its resources on its operations in Japan and Mainland China, where it looks to grow earnings while at the same time laying the groundwork for a new business model centered around individually managed stores to meet the needs of local communities. In Southeast Asia and Oceania, plans call for price cuts and a broader lineup of everyday goods; in terms of store strategy, plans call for steadily increasing the size of stores in the region through a combination of new store openings and the remodeling/replacement of existing stores. In India, Europe, and North America, the main focus during the period covered by the medium-term plan will be business restructuring.
Strengths and weaknesses
Shared Research believes the company’s key strengths are 1) its unique brand, 2) its strong potential as a global retailer, and 3) management that is strong on execution. Major weaknesses include 1) a lack of internal manufacturing capabilities and limited ability to control the production costs of many of the items its sells, 2) a lack of a strong online presence and online retail strategy, and 3) inventory management. (See the “Strengths and weaknesses” section for details.)
Key financial data
Note: The company conducted a 10-for-1 stock split with an effective date of September 1, 2019. Per-share data has been retroactively adjusted to reflect the impact of this split. FY08/20 and FY08/21 figures are compared to the same 12-month period the previous year.
Recent updates
Releases monthly sales data (Overseas)
Ryohin Keikaku Co., Ltd. announced monthly sales data (Overseas) for April 2022.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Comparable stores are considered those open for at least two years.
Note: Licensed stores are wholesale client firms other than FamilyMart and com KIOSK stores.
Note: Directly managed comparable stores are stores in operation for the full September 2020–August 2021 period. Stores closed for 30 or more days are excluded.
Releases monthly sales data (Domestic)
Ryohin Keikaku Co., Ltd. announced monthly sales data (Domestic) for April 2022.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Comparable stores are considered those open for at least two years.
Note: Licensed stores are wholesale client firms other than FamilyMart and com KIOSK stores.
Note: Directly managed comparable stores are stores in operation for the full September 2019–August 2020 period. Stores closed for 30 or more days are excluded.
MUJI products to be sold at Lawson stores nationwide
On April 28, 2022, Ryohin Keikaku Co., Ltd. announced that it will begin rolling out MUJI products for sale at Lawson-brand convenience stores operated by Lawson, Inc. (TSE Prime: 2651).
The initial rollout beginning in May 2022 will target approximately 5,000 stores in the Kanto and Koshinetsu regions within the first six months, followed by further nationwide expansion during 2023. Ryohin Keikaku and Lawson have been conducting proof of concept trials since June 2020, with 110 stores participating as of April 2022.
The product lineup includes about 200 items that are fundamental to daily life such as socks, toning water, retort curry pouches, notebooks, and baumkuchen cake. MUJI products will be placed on multiple shelves with dedicated promotional materials, and the plan is to further expand the product lineup based on store location and customer needs.
Revisions to full-year earnings forecasts for FY08/22
On April 14, 2022, Ryohin Keikaku Co., Ltd. announced a revision to its full-year forecasts for FY08/22.
Revision of full-year forecasts for FY08/22
Reasons for the revision
In 1H FY08/22, operating revenue reached a record high as the number of stores increased, but operating profit and other categories below declined, falling short of the plan due to sluggish operating gross profit as apparel products struggled. In March 2022, the company continued to face difficulties in this area, and as such adjusted its domestic forecast downward. The company also adjusted its forecast for mainland China downward in light of the reinforcement of behavioral restrictions in mainland China since March. This has had a significant impact on economic activity due to the country's zero-Covid policy
Releases monthly sales data (Overseas)
Ryohin Keikaku Co., Ltd. announced monthly sales data (Overseas) for March 2022.