Tokyo residents haunted by the memory of how the March 11 earthquake shut the world’s busiest subway system are returning to bicycle travel, doubling the sales of retailer Asahi Co. (3333) in the area last month.
“I was in Tokyo when the earthquake hit, and everything stopped,” company President Susumu Shimoda said in an interview. “Trains stopped, buses were in chaos and cars were jammed. Within that, you could just see bicycles swimming through. Some of our stores stayed open until 4 a.m. to meet the surge in demand.”
Asahi, the best performer on the 146-member Topix (TPX) Retail Trade Index this year, has gained 13 percent since the magnitude-9 temblor and the ensuing tsunami. Tokyo’s subway system, which transports about 8 million riders daily, halted operations on March 11, forcing commuters to wait hours for taxis, search for a place to spend the night, or walk home.
Among those who walked was Hiroko Indei, 35, who works for Conzzeta AG (CZH)’s Mammut Sports Group. She was one of the luckier Tokyo residents as a co-worker who has served as an Alpine guide helped her. If not for that, the walk home might have been longer than the 3-1/2 hours that she endured, Indei said.
Bicycle sales for Osaka-based Asahi doubled in the Kanto region since March 11 through the beginning of this month, Shimoda said in Tokyo. While growth will slow, sales will keep increasing as oil prices rise, he said. The Kanto region, which includes Tokyo, has about a third of Japan’s estimated 128 million people.
The increased interest in bikes has helped other companies. Bicycle gears and brakes maker Shimano Inc. (7309) has gained 7.1 percent in Osaka since the quake, after losing 1.5 percent in the year through March 10.
“If Asahi are saying that their sales are increasing, then we should be able to expect an increase in orders for us as well,” Yoshihiro Hirata, Shimano’s head of accounting, said yesterday. “We have seen orders increase after the disaster.”
Shimano trades at 2.3 times its price-to-book ratio while Asahi is at 3.3 times. That compares with a ratio of 1.5 for the Nikkei 225 Stock Average (NKY) and 1.2 for the broader Topix index.
The gains of Asahi and Shimano since March 11 have outpaced the Topix, which has lost 9.6 percent in the period. The bicycle retailer, which isn’t connected to Asahi Breweries Ltd., climbed 1.1 percent to 1,537 yen at the 3 p.m. close of trading in Tokyo. The stock has surged 40 percent this year. Shimano shares slipped 0.5 percent to 4,240 yen today.
“In addition to the disorder in the public transportation system, rising gasoline prices are also boosting the demand for bicycles,” said Akinori Sato, an analyst at Daiwa Securities Capital Markets Co. who has a “neutral” rating on Asahi and an “outperform” rating on Shimano. “This isn’t a phenomenon for just the Kanto region, but for the whole country.”
Michael Badilla, an immigrant from the Philippines who has lived in Tokyo for a decade, bought a bike for 20,000 yen ($242) on March 16 from a Costco Wholesale Corp. (COST) store near Tokyo. “I wanted a bicycle as it’s tiresome to walk to the shops, and gasoline prices are high,” he said. “Then the earthquake happened on March 11, and I heard about how my friend left her office at 4 in the afternoon and got home at 11 at night.”
Taiwan’s Giant Manufacturing Co. (9921), the world’s biggest bicycle maker according to data compiled by Bloomberg, said its wholly owned unit in Japan saw revenue rise 23 percent in March. Still, the impact on Giant will probably be “short term,” Jeffrey Sheu, a spokesman, said by phone yesterday.
The Japanese unit sold 90,000 Giant brand bikes in 2010 and expects 10 percent growth this year, Sheu said. The Taiwanese company also sells bicycles in Japan through Hodaka Co., of which it owns 49 percent.
Asahi forecasts that revenue will increase 15 percent to 32.9 billion yen in the current fiscal year ending Feb. 20, 2012, with net income rising 11 percent to 2.4 billion yen, it said April 4.
“Normally we would be really happy if in ordinary circumstances, sales grew by this much, but this time my feelings are mixed,” Shimoda said. “I do feel a responsibility to keep supply up for the demand.”
The bicycle seller plans to boost its stores 33 percent to 315 in the next two years, Shimoda said. Sales should grow to 50 billion yen a year by then, with an increase in market share to 20 percent from 12 percent now, he said. By 2017, the plan is to have 500 stores, with sales of 60 billion yen to 70 billion yen, he said, more than double the 28.7 billion yen in revenue in the last fiscal year.
“Bicycle demand has been increasing since the earthquake, especially around Tokyo,” said Miyuki Kimizuka, an official at the Japan Bicycle Promotion Institute. About 9.5 million bicycles were sold in Japan last year, according to the institute.
Japan may enter a brief recession this quarter as a result of the earthquake, Asian Development Bank chief economist Rhee Chang Yong said on March 15. The quake and tsunami, which led to what Prime Minister Naoto Kan described as the country’s worst crisis since World War II, has left almost 28,000 people dead or missing, according to the National Police Agency.
“The timetable for trains and buses is disorderly,” said Hiro Suzuki, a 24-year-old employee of a game machine maker in Tokyo. “My colleagues who live in Tokyo say that it’s really difficult when the trains stop running. They’re pretty envious that I can ride my bike to work.”
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