Rare Stumble by Listed Firm in Japan Fuels Record Drop in Shares
(Bloomberg) -- Shares of apparel-maker Renown Inc. fell by a record 38%, after the company filed for protection from creditors on Friday.
The case marks the the first publicly listed company in Japan that’s filed for civil rehabilitation in the wake of the Covid-19 pandemic. The closure of shopping malls, its main sales channel, has dealt a blow to its earnings and deteriorated its cash flow, a company spokesman said in reply to questions Friday.
“Renown’s stock will become worthless,” said Tomoichiro Kubota, a senior market analyst at Matsui Securities. “Investors will turn growingly wary of companies that are battling a similar situation.”
The stock is set to delist on June 16, following the company’s decision to file to the Tokyo District Court for civil rehabilitation, according to the Tokyo Stock Exchange. Shares closed at 48 yen on Monday, down from 78 yen Friday, marking its biggest such drop since the company went public in 2004.
Renown’s debt totaled about 13.9 billion yen ($129.7 million) as of March 31. Under the trustee appointed by the court, the company plans to seek a sponsor and work to revitalize the business.
The Topix Textiles & Apparels Index lost 1%, with Renown and Sanyo Shokai Ltd. leading declines.
The virus is a particular challenge for apparel makers that have a high reliance on brick-and-mortar department stores, many of which have temporarily halted operations as the country mostly remains in a state of emergency, according to Kubota at Matsui Securities.
But not all manufacturers in the industry have lost investor support. Shares of Workman Co., for example, have risen for a sixth day, its longest such streak since September. Workman produces and retails work uniforms and related goods including gloves and safety shoes.
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