MUJI Has Almost Stagnated Growth In The Three Quarter.

From the January 5th earnings report of the brand parent company, the almost stagnant growth in the three quarter means that the 200 store is also MUJI.

A turning point in China.

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MUJI Muji, a 0.8% increase in sales in the three quarter of the Chinese market, is close to stagnation, while the comparable growth rates in the previous two quarters were 4.7% and 5.4% respectively.

In the first three quarters of November 30, 2016, the sale of MUJI Muji China sold 38 billion 659 million yen, or about 2 billion 201 million 500 thousand yuan (RMB to Japanese yen exchange rate of 17.56), an increase of 3.6%, an increase of 29.4% in fixed exchange rate and a 10.5% increase in real terms.

Thanks to the popularity of the middle class, which was deeply sought after by China in pursuit of quality life, MUJI Muji has been expanding rapidly in the mainland market by 30-50 stores in 2012, reaching 100 at the end of 2013. In December 12, 2016, with the brand of Binjiang Baolong City store opened in Hangzhou, the number of brands in China reached 200. This is also the 2017 year target of the MUJI Muji parent company Ryohin Keikaku Co. Ltd. (7453.T) Co., Ltd. for the brand presupposition.

The development of MUJI Muji in China, which was launched in 2005, was not smooth sailing in the first year of Zara. Its development in the Chinese market was slow because of its high price. However, with the rapid development of the Chinese economy in the past 10 years, especially in 2012, the radical expansion strategy led by its Japanese colleague Uniqlo UNIQLO rapidly emerged in the Chinese market, while in 2011 and 2010, the number of new MUJI MUJI products in China was only 12 and 8.

MUJI Muji's China expansion strategy was implemented by Naoyuki Yamamoto Yamamoto Naomiyuki. He joined the Ryohin Keikaku Co. Ltd. product plan as early as 1991, and was appointed as managing director of Muji (Shanghai) Commercial Co., Ltd. in 2011.

Yamamoto Naomiyuki, who was a purchasing general manager of MUJI Muji as an interview with the mainland media, has been paying attention to MUJI's Muji related procurement and logistics capabilities in addition to advocating the lifestyle of the brand. He also said that the average return time for mainland stores was 15.9 months.

According to the world clothing and shoe net, the MUJI Muji parent company Ryohin Keikaku Co. Ltd. Co., Ltd., the best quality plan for the year ended in the 2016 fiscal year of February 29, 2016, China's sales surged by 20.4%. Even in China, the figure was also higher than the 14.3% in fiscal 2015 and 14.5% in fiscal 2014.

Strong growth in the same store and expansion of new stores, in the 2016 fiscal year, the company's revenue rose by 45.7% in Renminbi, only slightly less than 2015 in the 2015 fiscal year. If the actual yen settlement reached 2016 in fiscal year 63%, or even higher than 62.2% in the 2015 fiscal year.

The rapid expansion of MUJI Muji and the international fast fashion industry in China benefited from the turning point in 2012.

In 2012, China's luxury market went downhill and ushered in recession, making the fast fashion brand a new favorite of retail real estate, because Zara, Uniqlo UNIQLO, H&M's big store mode can attract customers to replace the luxury of Louis Vuitton Louis Weedon and other luxury goods for shopping malls.

However, in 2016, the Chinese apparel industry was ushering in a new turning point, including Uniqlo, UNIQLO, H&M and other fast fashion brands, which had slowed to a single digit growth in China. Among them, Uniqlo UNIQLO's Greater China profit even recorded a decline in the 2016 fiscal year ending August. By the end of the year, the fast fashion group Gap Inc. (NYSE:GPS) in the Chinese market has even seen a wave of closing.

The decline of the public garment industry is mainly due to the decline of the real disposable income of the population in the past two years due to the slowdown in China's economy, the rise in house prices and the collapse of the stock market.

According to the statistics of China's National Bureau of statistics, the sales of Chinese clothing market increased by only 5.1% in November 2016, the worst in the past 8 months, 4.4% only in March, and 6.9% in 1-11 months.

For MUJI Muji China's three quarter performance, Tang Xiaotang, founder of No Agency Agency, a luxury goods and apparel retailing research and consulting firm, said that the overall Chinese clothing market was weak in 2016, including the slowdown in the channels of e-commerce, but Muji slowed down faster than expected.

He pointed out that the main reason is that Muji has a smaller scope for the middle class customers. "Although China has 100 million middle class, it has a wide range, and only 10% of them can be Muji, and this part of consumer spending is more affected by the economy and stock market."

Although the Shanghai stock index of China's A shares, which was under the control of Liu Shiyu, increased by 8%, the Shanghai composite index plunged by 12.31% in the whole year, by the A share trading mechanism at the beginning of 2016.

In addition, the sharp depreciation of the renminbi also stimulated China's capital outflow.

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In addition to the weak performance of the mainland market in the three quarter, the MUJI MUJI Hongkong market recorded a rare decline in the three quarter, a decrease of 2.9% compared with a 5.9% increase in sales.

During the period, the Taiwan and South Korean markets recorded an increase of 0.7% and 10.2% respectively over sales.

Affected by the weakening of the mainland market, by the end of the three quarter of November, the market for MUJI Muji in Southeast Asia was only 0.8% of that in sales. The sales recorded at fixed exchange rate increased by 17.8%, mainly due to 33 net increase shops in the period, of which the mainland China's market grew by 23 shops in the three quarter.

Tang Xiaotang said that the 200 shops will be a bottleneck for MUJI Muji in China. Whether or not it will break will depend on more uncertainties. If the brand continues to adopt a price reduction strategy, the market capacity can reach 400-500.

However, he said that at present, exchange rate fluctuations are very unfavorable to the price reduction strategy of MUJI Muji, and the profits of two-way brands are suppressed. From the perspective of the company's expansion strategy, it is more desirable to open a shop, that is, to make profits, rather than to develop through the strategy of opening stores and closing stores.

Tang Xiaotang predicted that MUJI's Muji could expand in fiscal year 2018, down from about 40 in the current fiscal year to about 30.

Due to the depreciation of the RMB and the opening of a large number of new stores, the operating profit in the three quarter of the Southeast Asian market, which was dominated by China, plunged 38.9% to 2 billion 318 million yen, which was 3 billion 796 million yen in the same period last year, and the operating profit rate dropped by 770 basis points to 11.6%. In the same period, the overall operating profit of the group increased by 0.8% to 9 billion 893 million yen, mainly due to the sharp increase in the operating profit 32% of the Japanese local market.

By the end of the three quarter of November 2016, the overall sales of Ryohin Keikaku Co. Ltd. Co., Ltd. had recorded an increase of 7.4% to 85 billion 146 million yen, of which 58 billion 741 million yen was sold in the Japanese domestic market, an increase of 10.9% over the previous year, accounting for 68.9%; sales of 19 billion 998 million yen in the Southeast Asian market dominated by China, with a slight increase of 1.4% over the same period last year, and a decline of 5.8% to 4 billion 172 million yen in the US and Europe, and an increase of 8.8% to yen in the western South Asia and Pacific markets.

In the first three quarters of 2016, the overall sales of Ryohin Keikaku Co. Ltd. Co., Ltd. recorded 246 billion 500 million yen, an increase of 8.8% over the 226 billion 475 million yen compared with the previous year. The company expected revenue growth of 9.5% in the 2017 fiscal year ended February, with a 29 billion 651 million operating profit during the period, an increase of 14.5% over the previous year, while the operating profit rate increased by 60 basis points to 12%.

From the three quarter's performance, the Ryohin Keikaku Co. Ltd. company's good plan business is hanging upside down at home and abroad, which is mainly stimulated by its domestic market's continuous price reduction strategy.

At the beginning of November last year, the group again indicated that it would continue to take actions to reduce the prices of 300 commodities, such as spring and summer clothing and food, launched early this year.

Ryohin Keikaku Co. Ltd. said that due to the global economic instability and the increasing awareness of consumers' savings, the company improved its ability to collect customers by reducing the price of conventional products.

As to whether the Chinese market is going to depreciate, the Ryohin Keikaku Co. Ltd. company has not made a clear plan, but Tang Xiaotang expects that the Chinese market will continue to implement the price reduction strategy. "At present, the Chinese market is still the market dominated by price war," he said. In order to expand the scale and market of customers, the only effective strategy for MUJI Muji is to continue to reduce prices.

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