Nitori Holdings and Ryohin Keikaku are both considered to benefit from a stronger yen, but their underlying businesses are contrasting. Nitori's key drivers are a return to the domestic market and high margins, while Ryohin Keikaku is being driven by overseas growth, with the view expressed that the impact of foreign exchange is limited.
Nitori Holdings and Ryohin Keikaku are both treated as stocks that benefit from a stronger yen, but their underlying businesses differ. Nitori's earnings are driven primarily by high profitability and a recovery in domestic sales, while Ryohin Keikaku is being driven by overseas growth, and the impact of foreign exchange is said to be limited.
Nitori's operating margin on sales was high at approximately 13.8% based on the previous fiscal year's results. Its high private-label ratio, at approximately 90%, and high proportion of internally developed products are considered strengths. The recovery in same-store sales through domestic store reforms and the launch of new products has also been noted.
Nitori is likely to benefit from a stronger yen in terms of foreign exchange risk, but the impact is considered limited because it purchases products overseas and imports them into Japan. It has reportedly already entered into forward exchange contracts at ¥156.4 to the US dollar through the fiscal year ending March 2027. Meanwhile, Ryohin Keikaku's expanding overseas operations mean that the impact of a stronger yen is viewed as relatively limited.
Ryohin Keikaku's earnings are being driven mainly by growth in overseas markets, and the view has been expressed that the impact of foreign exchange is smaller than for Nitori. Nitori, by contrast, is focusing on a recovery in sales through a return to the domestic market and stronger promotional activity, and while it is maintaining its policy of increasing dividends in the current fiscal year, attention is also needed on cost factors.