Restoring Profitability in the Core Business through Merchandising and Service Transformation

「Against this backdrop, the Group is responding to changes in social conditions and the competitive environment surrounding the specialty retail industry in which it operates. It aims to enhance corporate value by establishing a stable two-pillar earnings structure comprising apparel and sundries, while advancing various initiatives to rebuild its growth model.」

「Against this backdrop, taking into account changes in social conditions after COVID-19 and in the competitive environment surrounding the specialty-store industry to which the Company belongs, we are pursuing the second year of the Medium-Term Management Plan. We aim to establish two stable earnings pillars, apparel and general merchandise, advance initiatives to rebuild our growth model, and enhance corporate value.」

「Under the New Medium-Term Management Plan launched in the current consolidated fiscal year, merchandising reforms in apparel advanced against the backdrop of recovering demand for going out. Going forward, we will achieve renewed growth by expanding investment in growth areas, including new store openings and e-commerce. In general merchandise, we will pursue a full-scale revival by supplying competitive products and optimizing the product assortment to match each store format.」

「Taking into account changes in social conditions after COVID-19 and in the competitive environment surrounding the specialty-store industry to which the Company belongs, from the current consolidated fiscal year, the third year of the Medium-Term Management Plan (Business Restructuring Plan), we are pursuing a new three-year New Medium-Term Management Plan. Through this plan, we aim to establish two stable earnings pillars, apparel and general merchandise, advance initiatives to rebuild our growth model, and enhance corporate value.」

「The Group considers its most important challenge in achieving sustained profitability and stabilizing its management base to be moving away from the apparel-dependent business model in place before the outbreak of COVID-19. Based on the Medium-Term Management Plan (Business Restructuring Plan) launched in the previous consolidated fiscal year, we formulated a new Medium-Term Management Plan to respond to various changes in the operating environment. In apparel, we will differentiate our offering by responding sensitively to market trends and customer needs while incorporating new trends. In general merchandise, we will improve product quality and establish an efficient procurement system. By maintaining and strengthening competitiveness in these areas, we will work to establish apparel and general merchandise as two earnings pillars.」

「Against this backdrop, in the second year of the Group’s Medium-Term Management Plan (Business Restructuring Plan), we are further advancing business-structure reforms to establish two stable earnings pillars, apparel and general merchandise, while strengthening governance for procurement and inventory management to secure stable sales.」

「Against this backdrop, in the second year of the Group’s Medium-Term Management Plan (Business Restructuring Plan), we are further advancing business-structure reforms to establish two stable earnings pillars, apparel and general merchandise, while strengthening governance for procurement and inventory management to secure stable sales.」

「Against this backdrop, in the second year of the Group’s Medium-Term Management Plan (Business Restructuring Plan), we are further advancing business-structure reforms to establish two stable earnings pillars, apparel and general merchandise, while strengthening governance for procurement and inventory management to secure stable sales.」

「In regular-size apparel, as a new initiative, the Company opened a physical store for “NOEMIE,” an e-commerce-originated brand targeting Generation Z, on Takeshita Street in Harajuku in October. By strengthening the integration with e-commerce, it is increasing brand awareness and attracting customers. At “illusie300,” it also advanced the shift to a two-pillar earnings structure through active business restructuring, including 5 new store openings and 13 conversions from apparel stores.」

「At “illusie300,” the Company advanced the shift to a two-pillar earnings structure through active business restructuring, including 3 new store openings and 11 conversions from apparel stores.」

「The Company formulated a medium-term management plan aimed at an early recovery in performance and fundamental reform of its earnings structure. It began implementing measures to restructure its business around two earnings pillars, rebuilding a strong apparel business and expanding its successful general merchandise business, as well as strengthening governance for optimizing purchasing and inventory.」

「During the consolidated fiscal year, as people continued to refrain from going out under the state of emergency, the Company implemented measures to improve profitability, including additional closures of unprofitable stores, particularly in its struggling apparel business, and conversions to the ¥300 fixed-price general merchandise store “illusie300,” which continued to perform steadily during the pandemic.」

「To restore performance early in the current fiscal year, the Group had worked by the end of the previous fiscal year to reduce fixed costs through the closure of unprofitable stores and clear inventory by discontinuing brands. However, as people continued to refrain from going out under the state of emergency, it implemented additional measures to improve profitability in its struggling apparel business, including further closures of unprofitable stores and conversions of apparel stores to the ¥300 fixed-price general merchandise store “illusie300,” which continued to perform steadily during the pandemic.」

「Meanwhile, for the ¥300 fixed-price general merchandise store “illusie300,” which continued to expand earnings even during the COVID-19 pandemic, the Company planned to accelerate new store openings while keeping investment to a minimum and actively convert apparel stores that continued to struggle to the illusie300 format, thereby strengthening its earnings base.」

「Under these circumstances, the Group continued to pursue cost reductions and appropriate inventory control and focused on improving profitability, including by shifting to product merchandising aligned with customer needs.」

「Under these circumstances, the Group withdrew the medium-term management plan on which it had been working, with the current fiscal year as its final year. It focused on optimizing inventory control to correct the supply-demand imbalance caused by the COVID-19 pandemic, pursued Group-wide cost reductions and also focused on using public support programs.」

「As the spread of COVID-19 led to substantial restrictions on economic activity, the Group temporarily withdrew the medium-term management plan ending in the current fiscal year, while pursuing Group-wide cost reductions and focusing on optimizing inventory control to correct the imbalance between supply and demand. As demand for fashion declined markedly, it also strengthened sales of hygiene-related products and items addressing “stay-at-home consumption,” particularly at stores in its general merchandise business, to make time spent at home more enjoyable.」

「Under these circumstances, the Group focused on cost reductions and the use of public support programs in response to the spread of COVID-19. In its apparel business, it optimized inventory control to correct the imbalance between supply and demand, while in its general merchandise business it focused on selling hygiene-related products and items for in-home demand, and continued opening ¥300 fixed-price stores under the “illusie300” format as before.」

「Under these circumstances, the Group had actively pursued new store openings, with strengthening the competitiveness of its core businesses as a pillar of the medium-term management plan ending in the current fiscal year. However, as people refrained from going out amid the spread of the infection and commercial facilities across Japan successively closed temporarily after the state of emergency was declared, the Group focused on thorough cost reductions and appropriate inventory control, as well as using public support programs.」

「Under these circumstances, the Group worked to strengthen the competitiveness of its core businesses in line with the medium-term management plan ending in the fiscal year ending February 2021. In its apparel business, it strengthened its focus on trend products and promoted flexible product supply in response to changing conditions. In its general merchandise business, it accelerated new store openings for the ¥300 fixed-price store “illusie300,” developed it into a new core business and worked to create a growth engine by expanding sales through its own e-commerce site and launching sales on new sites.」

「Under these circumstances, the Group worked to strengthen the competitiveness of its core businesses in line with the medium-term management plan ending in the fiscal year ending February 2021. In its apparel business, it strengthened its focus on trend products and promoted flexible product supply in response to temperature and climate changes. In its general merchandise business, it accelerated new store openings for the ¥300 fixed-price store “illusie300” and worked to create a growth engine by developing it into a new core business.」

「Over the past four years, the Company implemented measures to improve merchandising accuracy and, particularly in its apparel business, achieved optimization of product supply and improved merchandise freshness. To further maintain and improve performance, it will enhance the profitability of its core businesses by improving the quality of product supply and sales services across all brands, including those in its general merchandise business.」

「Under these circumstances, the Group formulated a medium-term management plan, with the current fiscal year as its first year, to achieve growth across the Group. In its apparel business, it pursued optimization of product assortments and inventory by improving the accuracy of seasonal merchandising, while in its general merchandise business it worked to further strengthen the competitiveness of its core businesses by reorganizing merchandising across each business format.」

「Under these business conditions, the Group formulated a new three-year medium-term management plan, with the current fiscal year as its first year, to achieve growth across the Group. In its apparel business, it pursued optimization of product assortments and inventory by improving the accuracy of seasonal merchandising, while in its general merchandise business it worked to further strengthen the competitiveness of its core businesses by reorganizing merchandising across each business format.」

「As the business structural reforms carried out over the three years through the previous fiscal year progressed as planned, the Company formulated a new medium-term management plan aimed at growing the Group as a whole. In its apparel business, it pursued optimization of product assortments and inventory by improving the accuracy of seasonal merchandising, while in its general merchandise business it worked to further strengthen the competitiveness of its core businesses by reorganizing merchandising across each business format.」

「Through three years of business structural reforms, the Company reduced inventory in both its apparel and general merchandise businesses and substantially improved merchandise freshness. To maintain and further improve performance, it will further improve and stabilize the profitability of its core businesses by increasing the accuracy of merchandising and improving the quality of both product supply and sales services.」

「Under these circumstances, the Company transitioned to a holding-company structure on 21 August 2017 and continued establishing a profitable operating structure in its core store retail business through パレモ, which became an operating company after changing its corporate name from パレモ分割準備会社. In addition to continuing to focus on inventory optimization and maintaining and improving merchandise freshness, it strengthened measures such as increased recruitment and improved treatment of existing staff to address chronic labor shortages at stores.」

「Under these circumstances, the Company continued optimizing inventory and maintaining and improving merchandise freshness in its store retail business, while accelerating the closure of unprofitable stores and openings under new brands to establish a profitable operating structure in its core businesses. It also strengthened initiatives to secure new sales staff and optimize sales operations at existing stores in preparation for further expansion of store openings from the next fiscal year onward.」

「Under these circumstances, the Company worked to establish a profitable operating structure in its core businesses by optimizing inventory and maintaining and improving merchandise freshness in its store retail business, while focusing on the appropriate allocation of sales staff.」

「Under these circumstances, the Company focused on improving the profitability of its core businesses and merchandise efficiency through measures under “merchandising transformation” and “service transformation,” the pillars of its business structural reforms.」

「Under these circumstances, the Company continued implementing measures under “merchandising transformation” and “service transformation,” as it had in the previous fiscal year, to improve the profitability of its core businesses and merchandise efficiency. It also strengthened initiatives aimed at returning to profitability in net income, including continued closures of unprofitable stores.」

「However, to eliminate these events, the Company has worked to restore earnings in its core businesses by pursuing “merchandising transformation” and “service transformation,” while also reducing losses by closing unprofitable stores and taking other measures.」