---
endpoint: analytics
pattern: Consumer
status: done
latency_ms: 158832
conversation_id: 0cdb7f6e-524f-4b5b-8eb5-a1fac2858152
citations: 0
created: 2026-05-31 20:34:08Z
---

# Is CLSA incrementally more positive/negative on Fast Retailing. If so, why?

**Yes — CLSA is incrementally MORE POSITIVE on Fast Retailing (9983 JP).** Lead analyst Oliver Matthew (CLSA Japan, oliver.matthew@clsa.com) **upgraded the rating from HOLD (HLD) to OUTPERFORM (O-PF) on 10 April 2025** following the 2QFY8/25 results, and has maintained that O-PF stance through the most recent monthly update on 3 June 2025.

## Rating Trajectory

| Date | Note | Rating |
|---|---|---|
| 11 Jul 2024 | Strong global, weak China | O-PF |
| 2 Aug / 3 Sep 2024 | Heat wave / August heat | O-PF |
| 10 Oct 2024 | A strong year, a strong brand | **HLD** (downgraded after 4Q24 results) |
| 5 Nov 2024 → 2 Apr 2025 | Monthly SSS notes, Lifewear, European wonder, Sales spring | HLD |
| **10 Apr 2025** | **Japan margins ramped up** | **O-PF (UPGRADE)** [1] |
| 2 May 2025 | Spring slump | O-PF (maintained) |
| 3 Jun 2025 | May momentum | O-PF (maintained) [6] |

## Why the upgrade — the four-leg rationale from the 10 Apr 2025 note

**1. Decisive 2Q FY8/25 beat, driven by Japan margin expansion**
- Sales +14% YoY, OP +33%, NI +15%; OP came in **17% above consensus**, with Japan profit the dominant swing factor [1].
- Segment detail was the surprise: **Japan Uniqlo sales +14% YoY but OP +48%** — far ahead of CLSA's model; Overseas Uniqlo sales +16% / OP +16%; GU sales +5% / OP +36% [2].
- Regional growth in Uniqlo international: **USA +37%, EU +31%, Other Asia +18%, China only +2%** [2].

**2. Company guidance raised on the back of the beat**
- Sales guidance held at ¥3.4tn, but **OP guidance lifted ¥15bn to ¥545bn** and **NI lifted ¥25bn to ¥410bn** [3].
- CLSA in turn raised its own net-income estimate by **+3.2% for FY8/25** and **+3.3% for FY8/26** [1][8].

**3. Tariff risk reframed as manageable, NOT a thesis-breaker**
- Company assumes only a **2–3% hit to overall profits** from the US market, since US is a small share of the base [1].
- CLSA flagged a ¥10bn 2H profit headwind from combined China + tariff impact, but noted "the tariff impact is more likely to hit in FY8/26 as the newer impacted inventory would arrive in the USA then" — i.e. it's a known/quantified drag, not a surprise overhang [3].

**4. Long runway in EU/USA + valuation pullback created an entry point**
- "The company has a long runway to expand in the EU and USA in terms of store footprint. The USA is currently only 8% of total sales and the EU 10%, and product acceptance seems very good in both so far" [4].
- "The shares have pulled back to a more attractive level. While 35x PE is not extremely cheap, there are few global winners in Japan consumer, so we think the shares can rerate slightly from here" — explicit upgrade trigger [5].

## CLSA forecasts post-upgrade

| FY (Aug y/e) | FY24A | FY25CL | FY26CL | FY27CL |
|---|---|---|---|---|
| Revenue (¥bn) | 3,104 | 3,402 | 3,670 | 3,981 |
| OP (¥bn) | 501 | **556** (CL is 103% of consensus) | 592 | 649 |
| Net income (¥bn) | 372 | 417 | 417 | 451 |
| EPS (¥) | 1,213 | 1,358 | 1,359 | 1,470 |
| EPS growth YoY | 25.6% | 12.0% | 0.0% | 8.1% |
| PE (x) | 38.3 | 34.2 | 34.2 | 31.6 |
| ROE | 22.3% | 21.5% | 18.9% | 17.9% |

Source: CLSA estimates [8].

## Valuation & Target Price

- **Target price: ¥51,853** — unchanged through upgrade and all subsequent monthly notes [1].
- **Methodology**: EV/EBITDA — 17x applied to **blended FY8/26–FY8/27 earnings**.
- As of 2 Jun 2025 priced at ¥47,800, implying **+8% upside to TP** [7].

## Most-recent confirmation (3 Jun 2025 — "May momentum")

The latest CLSA note shows the constructive view is intact and arguably reinforced by trading momentum:
- **May Japan Uniqlo SSS +13.1% YoY**, with customer numbers +12.5% and spend per customer +0.5% [6].
- March-May average SSS **+7.8%** vs CLSA's 6.0% forecast for 3QFY8/25 — i.e. CLSA's own 3Q estimate is now tracking ahead, not behind [6].
- O-PF rating and ¥51,853 TP both reiterated [6].

## Risks CLSA flagged alongside the upgrade

Even with the more positive stance, CLSA explicitly listed the offsetting risks: **China weakness** (the persistent soft spot, sales +2% in 2Q), strong yen, tariff impact on US expansion, slowing earnings momentum, CEO retirement, raw-material cost pressure, M&A overpayment, and unseasonal weather [5][3].

## Bottom line

CLSA's incrementally more positive stance is not a tone shift — it is a discrete **HLD → O-PF rating upgrade** executed on 10 April 2025, driven by: (a) a 17% OP beat with Japan margins the standout driver, (b) raised company guidance and CLSA estimate hikes, (c) reframing US-tariff exposure as a small/known drag, and (d) a post-pullback valuation that CLSA argued could re-rate given Fast Retailing's status as one of the few global winners in Japan consumer. The view has been carried forward unchanged through May (despite a 1.3% YoY April SSS dip — "Spring slump") and is reinforced by May's +13.1% SSS print.

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**Sources**
- [1] Fast Retailing - O-PF (Japan margins ramped up) — CLSA, Oliver Matthew & Vincent Ramsey (10 Apr 2025) — 607955588LinqAlpha.PDF
- [2] Fast Retailing - O-PF (Japan margins ramped up) — CLSA (10 Apr 2025) — 2Q segment detail
- [3] Fast Retailing - O-PF (Japan margins ramped up) — CLSA (10 Apr 2025) — Guidance raised
- [4] Fast Retailing - O-PF (Japan margins ramped up) — CLSA (10 Apr 2025) — Growth runway
- [5] Fast Retailing - O-PF (Japan margins ramped up) — CLSA (10 Apr 2025) — Valuation / upgrade rationale
- [6] Fast Retailing - O-PF (May momentum) — CLSA, Oliver Matthew & Vincent Ramsey (3 Jun 2025) — 607961111LinqAlpha.PDF
- [7] Fast Retailing - O-PF (May momentum) — CLSA (3 Jun 2025) — Priced-on 2 Jun 2025 / TP table
- [8] Fast Retailing - O-PF (Japan margins ramped up) — CLSA (10 Apr 2025) — FY23A–FY27CL financial forecasts

