Shares of Adastria, a Japanese apparel retailer, experienced a significant surge on Monday morning following the release of robust first-half results and an upward revision of full-year guidance. The company cited price increases and strong consumer spending on fashion as the primary drivers for its success.
Currently, Adastria’s shares are trading 14% higher at 3,280 yen, having peaked at a 16% increase earlier in the day.
During the six-month period ending on August 31, Adastria reported a remarkable 82% jump in net profit, amounting to Y7.09 billion ($47.5 million). Furthermore, the company witnessed an 18% growth in first-half revenue, reaching Y132.90 billion.
The retailer attributed the strong performance in fashion spending to the lifting of pandemic-related restrictions, the return of foreign tourists, and continued improvements in private consumption. Despite the negative impact of a weaker yen on the cost of goods sold, Adastria successfully implemented price increases and limited discounts. Additionally, the company raised worker salaries by an average of 6%.
Based on these encouraging results, Adastria has revised its earnings forecasts for the fiscal year ending in February 2024. The retailer now expects revenue to rise by 11% to Y270.00 billion, up from the previously projected Y260.00 billion. Moreover, net profit is anticipated to increase by 59% to Y12.00 billion, compared to the previous estimate of Y9.40 billion.
In line with its improved financial outlook, Adastria has also raised its dividend projections for the fiscal year. The company plans to pay Y80 per share in dividends, surpassing its previous estimate of Y65 and the Y60 paid in the previous fiscal year.