“I want them to keep it up—competition is a source of development,” Fast Retailing’s Yanai told reporters following an earnings release in October when asked about the threat of Workman. “We created a new market and so has Workman,” he said. “The clothes have functionality and I think they’re very good.”
But others, such as Citigroup Inc., say that while Workman has performed strongly in casual wear, growth in the category may be hitting a wall.
“It seems that the boost generated by the expansion of the existing format to include casual wear is reaching its limit,” Citigroup analyst Yingqiu Zhang wrote in a note this month after the company’s same-store sales for February fell 3.7% year on year, the first such decline since September 2017.
Workman declined to make any of the company’s executives available for an interview. Beisia Group, which is behind the family’s various businesses, declined to make Yoshio Tsuchiya available for an interview. The 88-year-old entrepreneur, who rarely speaks to media, established a supermarket operator in the late 1950s and built it into a retail empire with Workman as the flagship listed entity.
The conglomerate counts home-center chain Cainz Co., shopping-center operator Beisia Co. and Workman as the largest of its 28 companies, according to a Toyo Keizai report in December. They’re followed by convenience-store operator Save On Corp., consumer-electronics retailer Beisia Denki Co. and car-goods shop Auto R’s Co.
Those six chains account for 90% of the group’s revenue, according to the Toyo Keizai report. In an interview for the article, Tsuchiya said the group’s sales topped 1 trillion yen for the first time in the 12 months ended October.
Tsuchiya and his family may be worth more than $8 billion when its holdings in the other group companies, which are privately held, are also included. That makes them among the richest people in Japan, according to the Bloomberg Billionaires Index. But the family’s gains have grown harder to come by in recent months, with Workman shares losing more than a fifth of their value from a recent high in July.
William O’Neil has removed Workman’s stock from its firm’s “focus” basket in the recent selloff, but Amin says that’s just because it’s going through a “technical breakdown.”
The company, meanwhile, is set for a new challenge. It plans to open a new category of stores called WORKMAN Girl, which offer casual and outdoor gear for women. It has only one such store and aims to launch 399 more in 10 years.
Over the longer term, Workman’s prospects remain good, according to Amin.
“It’s a great company, well-managed with a clear, unique focus,” he said. “Sales growth has been phenomenal on a month-on-month basis over the past three to four years,” he said. “Clearly they’ve been doing something well.”
This article was provided by Bloomberg News.