Japan Retail

Research evidence excerpt

Japan Retail

Macquarie Equity Research

18 June 2026

Consumer

Consumer Discret Dist & Retail

JapanJapan Retail

Inflation tailwinds: Leaders set to overshoot

Key Points MakiShinozaki LindaHuang, CFA

• Weak relative performance reflects margin stagnation and capital

rotation, not a collapse in demand. Relative share-price performance

Oct 2025 indexed to 100• A sharpened “dual-speed” consumption pattern is driving outsized 130

gains for category leaders.

120• We initiate on Skylark (3197 JP) with an Outperform rating. Ongoing TOPIX Electric appliance

business mix transformation would drive a re-rating from current levels. 110

TOPIX RetailThe new reality of Japan’s retail market under inflation: Japanese 90

consumer stocks are entering a new phase in which inflation is no longer

80just supporting topline growth, but increasingly driving earnings expansion

and valuation re-rating for structural winners. While relative performance 70 S&P500 Specialty Retail

has lagged due to margin pressures and capital rotation into AI, underlying 10 11 2025 12 1 2 3 2026 4 5 6

demand remains resilient, with improving consumer sentiment, particularly Source: FactSet, Macquarie Research, June 2026

among younger cohorts, supporting a gradual recovery in spending power.

Gasoline prices shape consumer

Consumer divergence: Consumers are becoming increasingly polarised, sentiment

with both trading-up and trading-down behaviours intensifying.

Consumption divergence is accelerating not only across income groups but 200(¥/L) Yen/USD（RHS) ¥/USD160

Mar 26:Middle East 140also for individuals. What is becoming increasingly evident is an acceleration 190 tensions

in consumption polarisation, not just across income groups but within 120

180 Gasoline price

individual consumers.