How Hello Kitty Took Over the World
Investors in Sanrio have made 10 times their money as the iconic Japanese brand expands digitally
2 min
Hello Kitty is celebrating her 50th birthday this year. Sanrio , the Japanese company behind the iconic character, has much to cheer about too.
Sanrio’s share price is at a record high after surging 10-fold from its trough in 2020. The company is delivering record profits with strong revenue growth. Operating profit last quarter rose 80% from a year earlier.
Sanrio’s young chief executive, Tomokuni Tsuji —14 years younger than Hello Kitty—probably deserves some applause. He took over the helm from his grandfather in 2020. Sales and profit had been sliding for years when the pandemic arrived. Sanrio had created some of the best-known franchises around the world, but it wasn’t harnessing the full potential of its large portfolio of cute characters.
Tsuji has put younger management in place and finally expanded into the digital world. That includes marketing its characters through social media and other online platforms and ramping up its e-commerce business. It is also expanding its high-margin licensing business, with Sanrio’s characters now gracing products from microwave ovens to sneakers. The licensing business not only is more profitable but also allows more local designs and creates more contact points in overseas markets.
As a result, Sanrio’s business outside of Japan is booming, particularly in China and the U.S. Its profit contribution from abroad, including royalties payment from overseas subsidiaries to the parent company, nearly doubled year on year in the June quarter. Sanrio struck a deal with China’s e-commerce giant Alibaba in 2022 to license its characters in the country. But the U.S. is among its fastest-growing markets: Sales in the Americas grew 141% year on year last quarter. The younger generation is increasingly familiar with Sanrio’s characters given the company’s strong presence on social media.
And the company has also managed to diversify itself away from reliance on Hello Kitty. She has long been Sanrio’s most recognizable character, but the company has developed new characters and done a better job of promoting some existing ones. Hello Kitty accounted for around 30% of Sanrio’s gross profit in product sales and licensing in the fiscal year ended March, compared with 76% a decade earlier. Cinnamoroll, a puppy with white fluffy fur, was voted Sanrio’s top character in an online poll by the company.
The company is also using different types of media to market its characters. It has a Netflix show called “Aggretsuko,” which features an angry red panda struggling with office life, that has been airing for five seasons. A Hello Kitty movie with Warner Bros. is in the making.
Sanrio’s stock now trades at 34 times forward earnings, which isn’t cheap at face value. But if the company can manage to continue its overseas expansion with new characters, it could bring not just cuteness overload, but profit overload too.
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Australian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market. The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index. …
Continue reading “ASX falls 0.7 per cent as miners and property stocks retreat”
Borrowers cannot control the Reserve Bank, but they can control how exposed their household budget is to its next decision. The RBA meets on 29 September with inflation concerns still elevated and major-bank economists increasingly bringing forward their rate-rise calls. Fixed mortgage rates have also been moving, reducing the value of waiting for perfect certainty. …
Continue reading “What mortgage holders should do before the next RBA decision”
2 minAustralian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market.
The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index.
Energy was the notable exception, gaining more than one per cent as Brent crude traded above US$103 a barrel. Oil had moved higher amid uncertainty surrounding potential US diesel-export restrictions and broader geopolitical supply risks. The move supported energy producers but renewed concern about inflation inputs across transport and the wider economy.
Gold shares were weak even as spot bullion remained historically elevated. The All Ordinaries Gold index fell about 2.25 per cent, showing that equity performance can diverge from the commodity because of valuation, currency, operating and company-specific factors.
Zip was a prominent loser, falling 11.38 per cent after the company reported short sales after the previous close. Nine Entertainment also weakened after UBS analysts warned of near-term revenue challenges associated with its advertising-supported subscription tier.
Premier Investments led larger winners despite caution about the retail environment. Breville, in which Premier owns a significant stake, also appeared among leading movers. In the broader ASX 300 screen, Myer gained 11.43 per cent and MAAS Group rose 7.93 per cent, while Lotus Resources fell 10.53 per cent. These percentage moves should be checked against company announcements and trading liquidity before attributing causes.
The Australian dollar was broadly flat at US70.38 cents. Spot gold was around US$4,280 an ounce, Brent crude approximately US$103.08 a barrel and iron ore near US$96.90 a tonne late in the session.
The rate outlook remains the central domestic catalyst. Labour-market weakness has not eliminated the possibility of an RBA increase next week, leaving banks, listed property and other rate-sensitive sectors exposed to changing expectations.
Market dashboard
S&P/ASX 200: 8,702, down 0.72 per cent.
All Ordinaries: 8,897, down 0.66 per cent.
Best sector: Energy, up more than one per cent.
Weakest areas: Real estate and materials were the major drags; confirm final sector percentages before publication.
Material winner: Premier Investments led the large-company gainers. Confirm its final closing move from the ASX before publication.
Material loser: Zip, down 11.38 per cent.
ASX 300 percentage leader: Myer, up 11.43 per cent.
ASX 300 percentage laggard: Zip, down 11.38 per cent.
AUD/USD: Approximately US$0.7038, broadly flat.
Mirzaian is a senior director within CBRE’s Development NSW business, operating across the company’s Western Sydney and North Sydney offices
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