Specialty Stores: Autumn Investment Strategy Post-interim Results

This investor presentation sets out Morgan Stanley MUFG's autumn investment strategy for Japan's specialty store sector after the interim results. Jun-Aug results were hit by weak sales in a cool summer, with apparel, drugstores and others struggling, while SG&A ratios worsened; Ryohin Keikaku, ABC-Mart and Kusuri no Aoki delivered higher sales and lower SG&A ratios. Apparel gross margins broadly improved but depended on inventory versus clearance, and Tsuruha prioritized margin improvement as sales growth stalled. Medium-term premises are population decline, aging (baby boomers turn 80 in 2027-29) and rising labor costs;