Improving selling prices and gross margins by expanding higher-value-added products

「In the dress-shirt section of the department-store channel, sales were 92% of the year-earlier period due to stronger consumer thrift and the shift toward more casual office fashion. However, the gross margin improved by 0.7 percentage points year on year through revised transaction terms associated with the shift to a sell-through sales model, sales of original high-priced products mainly at major urban department stores, and appropriate retail pricing. We will continue to expand our product lineup and strengthen our sales structure around original brands in an effort to increase market share.」

「Our sales policies of consolidating the CHOYA brand under a single company and converting it into shops, together with promoting our role as lead operator of jointly operated stores, lifted the share of ready-made dress shirts to 76% and that of custom shirts to 79% at the end of the current consolidated fiscal year, up 1 percentage point and 3 percentage points, respectively, from the end of the previous consolidated fiscal year.」

「In the dress-shirt section of the department-store channel, our ongoing sales policies of converting the CHOYA brand into dedicated corners, consolidating operations under a single company and converting them into shops lifted the share of ready-made dress shirts to 77% and the share of custom shirts to 77% at the end of the current interim consolidated accounting period, up 2 percentage points for each from the end of the previous consolidated fiscal year. As a result, sales and gross profit exceeded the year-earlier period, although the gross margin declined by 0.7 percentage points year on year due to the recent surge in costs and other factors. For ready-made dress shirts, we are strengthening proposals for new styles and price ranges suited to regional and store characteristics. In addition to CHOYA advanced easy-care and slim-fit shirts, Clean Fit, launched in September with an adjusted size balance between the front and back panels, also got off to a strong start. We will also seek to attract more FAN customers by expanding our women's shirt lineup scheduled for launch in December 2024.」

「Although gross profit was affected by the surge in product costs caused by the weaker yen against the US dollar, we worked to revise transaction terms and strengthen sales of original products with high gross margins. Cost reductions through production adjustments brought gross profit to ¥3,209 million, an increase of ¥405 million from the year-earlier period, and lifted the gross margin to 28.0%, an improvement of 3.4 percentage points from the year-earlier period.」

「For fall/winter 2023 products, some items struggled because of the lingering summer heat, but the results of delivery-price negotiations conducted continuously since the previous fiscal year and a review of the foreign-exchange hedging method improved the gross margin.」

「Spring/summer 2023 products performed well, particularly dress shirts, partly due to the extremely hot summer, and net sales were broadly in line with plan. Gross profit also exceeded the planned level, reflecting the results of delivery-price negotiations conducted continuously since the previous fiscal year and a review of the foreign-exchange hedging method.」

「We revised delivery prices and retail prices from the second half of the previous consolidated fiscal year and executed foreign-exchange hedges flexibly. As a result, for the cumulative first quarter of the current consolidated fiscal year, consolidated net sales were ¥3,421 million, compared with ¥3,161 million in the year-earlier period; operating income was ¥276 million, compared with ¥41 million; ordinary income was ¥339 million, compared with ¥112 million; and net income attributable to owners of the parent was ¥281 million, compared with ¥103 million.」

「Although gross profit was affected by higher raw-material prices and the surge in product costs caused by the weaker yen against the US dollar, we worked to revise transaction terms and strengthen sales of original products with high gross margins. Cost reductions from closing 2 factories in China and consolidating domestic production into a single company during the previous consolidated fiscal year brought gross profit to ¥2,804 million, an increase of ¥778 million from the year-earlier period, and lifted the gross margin to 24.6%, an improvement of 3.6 percentage points from the year-earlier period.」

「In the department-store channel, we continue to focus on converting CHOYA brand offerings into dedicated corners and shops. By implementing sales expansion measures, including opening the second CHOYA SHIRT SHOP in the men's clothing department of Keio Department Store, sales of ready-made dress shirts reached 126% of the year-earlier period and gross profit 127%, while sales of custom shirts reached 112% and gross profit 120%, respectively, maintaining an upward trend in both sales and gross profit.」

「In the department-store channel, we continue to increase our share by converting CHOYA brand offerings into dedicated corners and shops. As a result, sales of ready-made dress shirts were 118% of the year-earlier period and gross profit was 113%, while sales of custom shirts were 114% and gross profit was 115%, respectively, with both sales and gross profit turning to an upward trend.」

「In addition, to revive the SWAN brand, we plan to launch dress shirts made from the popular knit fabric for the spring 2023 season.」

「We are seeking to expand our market share by developing more casual, differentiated products suited to working from home and telework across our dress, casual and women's lines, including Windot Biz Polo (a highly breathable, no-iron business polo shirt), Biz T (a business T-shirt designed to be worn with a jacket), Quick Dry Polo Shirt (a casual shirt made from quick-drying cotton-blend knit fabric), and EcoVero Soft Blouse (a soft blouse made from environmentally friendly rayon).」

「Sales of custom shirts and women's shirts exceeded the previous year, as our share expanded after some department stores consolidated their custom-shirt operations with a single company, while orders increased for women's shirts using functional materials that prevent sweat stains and show-through, among other features.」

「Sales of knit-fabric shirts and women's shirts designed for the shift toward more casual offices continue to grow. Our share of custom shirts at department stores and internet sales and other channels also remain firm.」

「Under these conditions, although our group struggled during the first half of the summer season due to the cool summer and other factors, sales of knit-fabric shirts grew against the backdrop of the shift toward more casual business styles, high-performance easy-care shirts also remained firm, our share of custom shirts at department stores expanded, and internet sales and other channels grew.」

「At mass retailers and men's clothing specialty stores, we also strengthened our offering of business casual and women's shirts, and functional shirts with advanced easy-care properties performed well.」

「In response to rising costs, we also need to raise product selling prices. As a measure, we will build an integrated custom-shirt platform covering orders received in stores and online through cutting, sewing and finishing at our domestic and overseas factories, and seek to expand the custom-shirt business by proposing high-value-added custom shirts based on this platform.」

「Meanwhile, the increase in internet sales, the rollout of dress shirts through concession counters at mass retailers, and the increase in orders for custom shirts for specialty stores at company-owned factories have progressed smoothly.」

「② In response to the above cost increases, we need to raise product selling prices. As a measure, we will strengthen our lineup of high-value-added design products, including custom shirts, and enhance proposals for value-added materials through collaboration with material manufacturers.」

「Sales through other channels are performing steadily, including the expansion of internet sales, the growth of concession sales of dress shirts at mass retailers, and increased orders for made-to-order shirts for specialty retailers at directly operated factories.」

「As a measure to address this, we will strengthen the lineup of high-value-added design products, including made-to-order shirts, while strengthening proposals for value-added materials through collaboration with material manufacturers.」

「In addition, the cost ratio continues to improve due to the expansion of internet sales, increased sales of value-added products, and the growth of concession sales of dress shirts at mass retailers, among other factors.」

「Meanwhile, the cost ratio improved from the same period of the previous year due to the expansion of internet sales, increased sales of value-added products, and the growth of concession sales of dress shirts at mass retailers, among other factors.」

「Meanwhile, the gross margin improved from the same period of the previous year due to the expansion of internet sales, increased sales of value-added products, and the growth of concession sales of dress shirts at mass retailers, among other factors.」

「New products using functional materials developed through our own proposals have steadily increased their market share, while low-priced products benefiting from production in Bangladesh have also been newly adopted by customers. We expanded sales channels for products that respond to changes in the business environment and meet market needs.」

「As a measure to address this, we will strengthen the lineup of high-value-added design products and other offerings, while strengthening proposals for value-added materials through collaboration with material manufacturers.」

「As a measure to address this, we will strengthen the lineup of high-value-added design products and other offerings, while strengthening proposals for value-added materials through collaboration with material manufacturers.」

「As a measure to address this, we will strengthen the lineup of high-value-added design products and other offerings, while strengthening proposals for value-added materials through collaboration with material manufacturers.」

「As a measure to address this, we will strengthen the lineup of high-value-added design products and other offerings, while strengthening proposals for value-added materials through collaboration with material manufacturers.」