When convenience store operator Lawson unveiled a 10% price hike on its popular chicken nuggets last year, investors weren’t convinced it would go down well. After all, the product had been sold at ¥200 ($1.45) pre-tax for 36 years, since it first hit the shelves in 1986.
Fast forward to July 2023, and Lawson’s share price has reached a 4½-year high of ¥7,320 after the company reported brisk earnings in the three months to May. Its quarterly net profit doubled from the same period last year.
"Looking at the reaction to Lawson, retailers appear to be passing on rising costs more than investors have been expecting,” and that’s supporting the stock, said Kengo Yamamoto, a fund manager at Norinchukin Zenkyoren Asset Management.