ABC-Mart,Inc. (2670.T) fair value

ACCE thesis

ABC-Mart is Japan's largest footwear retailer by store count, selling third-party sneakers, athletic and casual shoes through its ABC-Mart and Mall Shoes stores and its online channel, with its own-brand and exclusive-model lines making up part of the mix. Its edge is a dense domestic store network and sourcing relationships with the major athletic brands, which give it access to limited-release product that drives traffic and repeat visits. The main near-term driver is the continued mix shift toward higher-margin sneakers and its ongoing store rollout and online build-out, which support the 4.7% revenue growth in the data. Now it looks interesting because it trades at 15.1x trailing and 16.4x forward earnings against a 16.3% operating margin and a 50.4% gross margin, a combination that is worth checking against the company's history and peers. Forward P/E above trailing is worth understanding, since it implies the market expects near-term earnings to be softer than the last twelve months, which is the first question to test in a deeper review.