Review of Low-Margin Transactions and Existing Business Models in the Textile Business

「In the apparel e-commerce business, a growth business, consumers broadly supported the design and quality of several brands sold through television shopping, and sales remained solid. However, margins declined because products were sold at markdowns to optimize inventory, while higher expenses also caused profit to decline.」

「In the apparel e-commerce business, a growth business, consumers broadly supported the design and quality of existing brands sold through television shopping, and sales remained strong. In addition, several newly launched brands got off to strong starts. As a result, although total sales declined due to the partial withdrawal from the textile business, profitability improved and profit increased substantially.」

「Beginning in the current interim consolidated accounting period, we changed our reportable segments, reorganized the textile-related business, abolished the Textile Business Headquarters and established the Business Development Headquarters. We added the business-development-related segment as a reportable segment to develop new businesses and business models and promote the growth of businesses with future potential.」

「In the Group’s television-shopping business, sales of seasonal products remained strong, supported by their selection for major events on television-shopping channels. However, sales declined substantially because transactions in the other businesses slated for withdrawal had ended, while profit improved as expenses decreased.」

「During the previous consolidated fiscal year, we had decided, with a view to improving future profitability, to focus on the television-shopping business, where expansion is expected, and withdraw from the other businesses in the textile-related segment. The withdrawal from certain of those businesses was completed at the end of the second quarter of the current consolidated fiscal year. Accordingly, our Osaka Branch and Fukui Sales Office were closed as of 30 September 2023.」

「In the Group’s television-shopping business, we advanced planning proposals and launched a new brand. However, we had decided to withdraw from the other businesses and were progressively winding down transactions in the businesses slated for withdrawal, resulting in a substantial decline in sales and a deterioration in profit, partly due to the costs associated with the withdrawals.」

「With a view to improving future profitability, we decided to focus on the television-shopping business, where expansion is expected, and withdraw from the other apparel wholesale and textile businesses.」

「With a view to improving future profitability, we decided to focus on the television-shopping business, where expansion is expected, and withdraw from the other businesses in the textile-related segment. We plan to complete the withdrawal from those businesses no later than during the next consolidated fiscal year.」

「Although women’s apparel for television shopping, whose planning proposals were highly rated and whose number of sales brands increased, and highly stretchable knitted fabrics for men’s suits grew, the Group was significantly affected by intensified price competition for mass retailers and home-improvement stores. In addition, production and logistics disruptions caused by lockdowns in China and major typhoons resulted in missed sales opportunities. Sales therefore declined substantially and profit deteriorated. As a result, textile-related sales were ¥959 million, down 46.5% year on year, and the segment recorded a loss of ¥61 million, compared with a loss of ¥11 million in the same period of the previous year.」

「The Group was significantly affected by delivery disruptions resulting from logistics chaos in China, the main production base for mass-retail customers, and intensified price competition, particularly for home-improvement stores. Although women’s apparel for television shopping and knitted fabrics for men’s suits made from functional materials grew, sales declined substantially overall and profit also deteriorated. As a result, textile-related sales were ¥474 million, down 49.0% year on year, and the segment recorded a loss of ¥16 million, compared with a loss of ¥2 million in the same period of the previous year.」

「In the Group’s apparel wholesale business, sales of fabrics for specialty retailers and COVID-related applications declined, but sales of men’s apparel for key customers with mass-retail distribution and women’s apparel for television shopping grew, supported by the Group’s strong planning capabilities, resulting in higher sales. Profit, however, declined as margins fell under the overall impact of higher raw-material and logistics costs, as well as the acceleration of inventory disposals. As a result, textile-related sales were ¥3,391 million, and the segment recorded a loss of ¥57 million.」

「In the Group’s apparel wholesale business, sales of high-end fabrics for specialty retailers and department-store apparel, as well as fabrics for COVID-related applications, declined. However, sales of men’s apparel for key customers with mass-retail distribution and standard apparel for customer-attracting home-improvement stores grew, supported by the Group’s strong planning capabilities amid new lifestyles such as telework and stay-at-home demand. Sales therefore increased, but profit declined as margins fell under the overall impact of higher raw-material costs and other factors. As a result, textile-related sales were ¥1,792 million, up 4.1% year on year, while the segment recorded a loss of ¥11 million, compared with profit of ¥11 million in the same period of the previous year.」

「In the Group’s apparel wholesale business, consumer purchasing patterns changed with the emergence of new lifestyles such as telework and stay-at-home demand. Sales volume to specialty apparel retailers and fabric sales for department-store apparel declined, while sales of standard apparel for key customers with mass-retail distribution and for customer-attracting home-improvement stores increased, supported by the Group’s strong planning capabilities even during the COVID-19 pandemic. Sales therefore increased, but profit declined as margins fell under the overall impact of higher raw-material costs and other factors.」

「In the Group’s apparel wholesale business, consumer purchasing patterns changed with the emergence of new lifestyles such as telework and stay-at-home demand. Sales volume to specialty apparel retailers and fabric sales for department-store apparel declined, while sales volume of men’s homewear for mass retailers and women’s apparel for television shopping, which received high evaluations for its planning proposals, increased. Functional apparel, including moisture-wicking and cooling products for home-improvement stores, and mask-related products also grew, resulting in increases in both sales and profit.」

「In the Group’s apparel wholesale business, consumer purchasing patterns changed with the emergence of new lifestyles. Sales volume to specialty apparel retailers and fabric sales for department-store apparel declined, while sales volume of men’s homewear for mass retailers and women’s apparel for television shopping increased, supported by telework and stay-at-home demand and by the high evaluations of our planning proposals and product quality. Functional apparel, including moisture-wicking and cooling products for home-improvement stores, and mask-related products also grew, leaving sales and profit broadly unchanged from the same period of the previous year. In addition, the withdrawal from the underperforming apparel retail and legwear businesses during the previous consolidated fiscal year resulted in a substantial decline in sales, but profitability improved as fixed costs were reduced. As a result, textile-related sales were ¥2,663 million, down 27.3% year on year, and segment profit was ¥27 million, compared with a loss of ¥160 million in the same period of the previous year.」

「In the Group’s apparel wholesale business, consumer purchasing patterns changed with the emergence of new lifestyles. Sales volume to department stores and specialty apparel retailers declined, while sales volume of homewear for mass retailers and women’s apparel for television shopping increased, supported by telework and stay-at-home demand and by the high evaluations of our planning proposals and product quality. Functional apparel, including moisture-wicking and cooling products for home-improvement stores, as well as mask-related products, also grew.」

「The withdrawal from the underperforming apparel retail and legwear businesses during the previous consolidated fiscal year resulted in a substantial decline in sales, but profitability improved as fixed costs were reduced. As a result, textile-related sales were ¥866 million, down 29.0% year on year, and segment profit was ¥10 million, compared with a loss of ¥68 million in the same period of the previous year.」

「As announced on 20 August 2019, we decided to withdraw from the apparel retail and legwear businesses, which had continued to underperform in the textile-related business, and completed the withdrawals in February 2020.」

「In the apparel retail business, sales volume declined as unprofitable stores were closed. In the legwear business, sales volume declined because the rollout of products reflecting market trends and customer needs was insufficient. In addition, during the third quarter of the current consolidated fiscal year, we proceeded with inventory disposals associated with the withdrawal from these businesses.」

「From this perspective, as announced on 20 August 2019, we decided to withdraw from the apparel retail and legwear businesses, which had continued to underperform in the textile-related operations, and plan to complete the withdrawal during the current consolidated fiscal year.」

「In the legwear business, we advanced proposals for licensed-brand products and new products, but sales volume declined because our rollout of products reflecting market trends and customer needs was insufficient and the development of new sales channels was delayed.」

「We focused on improving profitability by enhancing our planning capabilities and strengthening proposal-based sales to expand sales through new channels, but sales volume declined substantially due to inventory adjustments at some customers. Profit, however, improved as a result of cost reductions.」

「In the textile-related business, amid major changes in the operating environment, we will pursue fundamental reforms of underperforming businesses while advancing the development of products and proposals based on the keywords “health,” “comfort” and “functionality.”」

「In the Group’s apparel wholesale business, we focused on planning proposals, proposals for high-value-added domestic materials and stronger management of overseas supplier factories. However, the delayed launch of new customer development, pursued while scaling back low-margin transactions, led to a substantial decline in sales volume and a decline in profit.」

「In the Group’s apparel wholesale business, we focused on planning proposals, proposals for high-value-added domestic materials and stronger management of overseas supplier factories. However, the launch of new customer development, pursued while scaling back low-margin transactions, was delayed, and existing customers also struggled to grow, resulting in substantial declines in sales volume and profit.」

「In the Group’s apparel wholesale business, we focused on strengthening planning proposals and factory management, as well as proposal-based sales through information sharing with the apparel retail business. However, sales volume declined substantially as we significantly scaled back low-margin transactions. In the apparel retail business, we increased sales through our web store and worked to strengthen overseas production quality control and reduce the cost ratio, but sales volume and profit both declined due to fierce price competition in the retail market, store closures and the effects of unseasonable weather.」

「In the Group’s apparel wholesale business, we worked to share planning functions and product information with the apparel retail business and focused on developing new products and cultivating customers. However, amid challenging conditions, including the scaling back of low-margin transactions, sales volume declined substantially and profitability deteriorated.」

「In apparel retail, although the range of products available through the online store expanded, overall business volume declined because unprofitable stores were closed. However, profitability improved as the company strengthened product planning and proposal capabilities and reduced procurement costs and expenses.」

「In the Group's apparel wholesale business, the company worked to share planning functions and product information with the apparel retail business and focused on developing new products and acquiring customers. However, market needs remained challenging, resulting in lower business volume and profitability.」

「In textiles, the company will seek to expand the scale of the business by broadening the range of products handled and strengthening its planning and proposal capabilities in wholesale, while operating the retail business more efficiently.」

「In apparel retail, business volume declined due to the scaling back of underperforming brands and the closure of unprofitable stores, as well as bad weather from summer through early autumn. However, profitability improved slightly as the company reviewed product planning and store operations, enhanced its online store and reduced expenses. In legwear, although the company strengthened proposal-based sales of high-performance, new-design and new-concept products, business volume declined and profitability deteriorated amid sluggish consumer spending and intense industry competition.」

「In the Group's apparel wholesale business, business volume increased substantially through stronger planning and proposal capabilities, proposals for developing new products and the acquisition of new customers. Continued efforts with its main factories in China and expense reductions also resulted in a substantial improvement in profitability. In knitted fabrics, although shipments of materials and sports-related products were sluggish, business volume increased overall and profitability improved as new products, including original fabrics for men's suits and other applications, increased through the development of new products.」

「In the Group's apparel wholesale business, business volume increased substantially through stronger planning and proposal capabilities, proposals for developing new products and the acquisition of new customers. Continued efforts with its main factories in China and expense reductions also resulted in a substantial improvement in profitability.」

「In the textile business, the company will seek to improve earnings by reviewing low-margin transactions and the existing business model, reducing fixed costs and moving toward higher value-added business.」