(Bloomberg) -- Earnings from Japan’s Fast Retailing Co. and Seven & i Holdings Co. should show how retailers are chasing growth overseas to make up for a lagging local consumer sector.
7-Eleven operator Seven & i’s operating income may disappoint on weak consumer sentiment. The report will be overshadowed by the $38.7 billion takeover approach by Alimentation Couche-Tard Inc., which may spark a restructuring of Seven & i’s businesses, including listing of subsidiaries or asset sales. The company is exploring the sale of part of its stake in Seven Bank Ltd. and has approached buyers for their retail and supermarkets units, people with knowledge of the matter said.
Uniqlo owner Fast Retailing will likely post steady growth in operating profit, mainly fueled by its international business. Its flagship hot-weather clothing may capture robust demand during the summer season, Bloomberg Intelligence analysts Catherine Lim and Trini Tan said.
In South Korea, Samsung Electronics Co. should shed light on the health of the technology sector and how it’s faring in the artificial intelligence space. Micron Technology Inc.’s strong results last month bode well for Samsung’s third-quarter earnings. Higher average selling prices for memory chips used in AI applications and new folding phone models bolstered its operating profit and margin. Watch for any comments on potential job cuts.
LG Energy Solution Ltd. remains challenged by weak battery demand and pricing amid a slowdown in electric vehicles sales in Europe and the US.
Highlights to look out for:
Tuesday: Samsung’s (005930 KS) job cuts are in focus as thousands of workers in Southeast Asia, Australia and New Zealand may be let go as it struggles to keep up with rivals in AI-related products. Quarterly net income probably grew 56%, the slowest in three quarters, estimates show.
- LG Energy Solution’s (373220 KS) third-quarter net income probably halved, according to consensus. Tepid EV demand in Europe and the US will continue to be a drag in the near term, BI said. The company is cutting more costs and shifting more resources to its energy storage businesses.
Thursday: Fast Retailing (9983 JP) full-year operating profit growth probably kept pace with the previous year, expanding 25%, helped by contributions from its Uniqlo chain overseas. Plans to open about 80 stores annually in greater China may fuel a 13% annual gain in Uniqlo sales in the region over 2023-2026, exceeding the 3% growth in its domestic market, BI said, citing consensus.
- Seven & i’s (3382 JP) second-quarter operating profit likely slid for the second straight quarter, consensus shows. Overseas convenience store operations continue to be a revenue driver, while operating income declined across all segments except superstore operations.
- Tata Consultancy Services (TCS IN), a bellwether for IT sector earnings, is expected to show a pickup in deals from the financial sector. TCS revenue is projected to have grown 5.1% in constant currency terms, the highest in five quarters. The sub-segments of capital markets, investment banking and cards and payments are showing signs of recovery, according to ICICI Securities. Weakness from UK clients will need to be monitored, brokerage Motilal Oswal said.
(Updates throughout)
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