Best of Times, Worst of Times: Sell Me This Pen - Have You Met My AI?

Research evidence excerpt

Best of Times, Worst of Times: Sell Me This Pen - Have You Met My AI?

Yugo Shima +81 3 6777 6994 yugo.shima@bernsteinsg.com 7 July 2026

• A deceleration in the global running market — intensified competition among specialty-focused players such as On and Hoka

compressing margins across the performance running category, or TAM growth slowing as the health trend peaks out.

Ryohin Keikaku Co Ltd

Upside risks:

• Japan suburban stores exceed expectations

• China continues to outperform expectations

Downside risks:

• Geographic concentration — East Asia at 71% of overseas sales creates meaningful sensitivity to Chinese macro conditions

and Japan-China geopolitical tensions;

• Execution risk during the FY2028 Western scale-up — repeating past oversized-flagship mistakes would undermine the

structural recovery;

• Competitive erosion in China from local players could weigh on MUJI's pricing power and margin trajectory.

Food & Life Companies

• Structural volatility in seafood procurement costs

• Greater China concentration (c.70% of overseas stores) creating binary exposure to geopolitical tensions and regulatory shifts

• Commercial underperformance of the US flagship delaying Risk Cap removal.

RATINGS DEFINITIONS, BENCHMARKS AND DISTRIBUTION

EQUITY RATINGS DEFINITIONS

Bernstein brand

The Bernstein brand rates stocks based on forecasts of relative performance for the next 12 months versus the S&P 500 for

stocks listed on the U.S. and Canadian exchanges, versus the Bloomberg Europe Developed Markets Large and Mid Cap Price

Return Index EUR (EDME) for stocks listed on the European exchanges and emerging markets exchanges outside of the Asia

Pacific region, versus the Bloomberg Japan Large and Mid Cap Price Return Index USD (JPL) for stocks listed on the Japanese