Risk of inventory and opportunity losses due to excess or insufficient inventory
First written in FY2019-Q2. 16 of 34 entries say "Mitigated", first in FY2019. Latest entry: FY2027-H1.
The whole theme swung hardest in 2022: 14 of 40 companies on the "Worse" side.
14 other companies' latest entry also says "Mitigated".
- FY2027-H1MitigatedAnnual report
「This resulted from improvements in inventory management by the apparel brands and the reduction in working capital, mainly due to the impact of holidays at the fiscal year-end, both of which were positive factors for cash flow.」
Improved inventory management by the apparel brands contributed to higher operating cash flow, while inventories also declined by approximately ¥1.6 billion. - FY2026MitigatedAnnual report
「We shifted our policy toward a strategy of strategically restricting winter merchandise purchases and giving top priority to improving the full-price sell-through rate and optimizing inventory. Although these efforts produced results for the next fiscal year, including improvements in cash flow and gross margin,」
Apparel brands prioritized curbing purchases and improving full-price sell-through rates, advancing measures to address inventory risk. Although inventories increased including the impact of consolidating Right-on, the company explained that it had optimized inventory and working capital in its existing businesses. - FY2026-H1MaterialisedAnnual report
「We recognize in all seriousness that challenges remain, both qualitatively and quantitatively, in addressing climate change, the precision of merchandise planning, and production and sales control.」
The difficult spring/summer and hot autumn sales campaigns exposed challenges in product design and production and sales controls as a difficulty in balancing inventory clearance with the preservation of gross profit. - FY2025MitigatedAnnual report
「Excluding the impact of newly consolidated companies, inventories were reduced from the end of the previous consolidated fiscal year on an underlying basis.」
Working capital increased as a result of the consolidation of エムシーファッション, but excluding that impact, inventories were reduced from the end of the previous fiscal year on an underlying basis. - FY2025-H1MaterialisedAnnual report
「The spring and summer sales campaign during the current interim consolidated accounting period was also the first campaign in which inventory valuation loss rules were applied on a quarterly rather than semiannual basis. Although some brands appeared to struggle somewhat with balancing inventory clearance and gross profit, overall performance and cash conversion in the brand business progressed smoothly, supported by strong e-commerce sales and other factors.」
Under the application of quarterly inventory valuation loss rules, some brands continued to find it difficult to balance inventory clearance with the preservation of gross profit. At the same time, the company explained that overall performance and cash conversion in the brand business were progressing smoothly, supported by e-commerce sales and other factors. - FY2025-Q1MaterialisedAnnual report
「During the six months ended the first quarter, some brands struggled to balance inventory clearance with maintaining gross profit, partly because this was the first spring selling season in which the merchandise valuation loss rules were applied on a quarterly basis.」
During the spring sales campaign, when the company first applied its quarterly inventory valuation loss rules, some brands found it difficult to balance inventory clearance with the preservation of gross profit. - FY2024-Q3Continued increase in inventoriesAnnual report
「The main factor was a roughly ¥3.9 billion increase in inventories, while right-of-use assets declined by approximately ¥4.6 billion due to amortization over the contractual terms of store properties, the equity-method investment in W&D Investment Design Investment Business Limited Liability Partnership, a jointly controlled entity of the company, declined by approximately ¥1.7 billion following the receipt of distributions, and deferred tax assets declined by approximately ¥1.9 billion.」
Inventories continued to increase against a backdrop including early procurement, rising by approximately ¥3.9 billion from the end of the previous consolidated fiscal year by the end of the third quarter. No excess inventory or discount-related losses were reported. - FY2024-Q2Inventory buildup due to advance purchasingAnnual report
「The main factors were approximately ¥2.0 billion in higher income before taxes for the quarter and approximately ¥1.8 billion in lower cash outflows resulting from a decrease in the final consumption tax payment, both positive factors for cash flow. These were more than offset by a roughly ¥3.1 billion change in trade and other payables resulting from early procurement, which was a negative factor for cash flow.」
Early procurement made trade and other payables a negative cash-flow factor of approximately ¥3.1 billion, while inventories also increased by approximately ¥4.1 billion. No excess inventory or discount-related losses were reported. - FY2024-Q1Increase in inventory value due to early procurementAnnual report
「The absence of delivery delays caused by China's lockdowns, unlike in the previous fiscal year, and advance purchasing resulted in a roughly ¥1.6 billion change in trade payables and other payables, which was a negative factor in cash flow.」
Against a backdrop of early procurement, inventories increased by approximately ¥700 million from the end of the previous fiscal year. Although the increase in inventory value was confirmed, there is no statement that excess inventory or discount-related losses arose. - FY2023Increase in inventory value due to higher costsAnnual report
「Inventories at the end of the current consolidated fiscal year were ¥26.097 billion, an increase of approximately ¥2.7 billion from the end of the previous consolidated fiscal year. Although purchase volumes declined as a result of purchase controls, the value of purchases increased against a backdrop of higher costs attributable to rising global energy prices and higher purchase prices resulting from the weaker yen.」
Although purchase volumes declined, the value of inventories increased by approximately ¥2.7 billion because higher costs and the weaker yen raised unit purchase prices. This was not explained as resulting from excess inventory or discount-related losses. - FY2023-Q3Inventory buildup from sourcing fall/winter and spring/summer merchandiseAnnual report
「The main factor was a roughly ¥6.0 billion increase in inventories, mainly of fall/winter (AW) and the following spring/summer (SS) merchandise, while property, plant and equipment declined by approximately ¥1.2 billion and right-of-use assets by approximately ¥3.4 billion, partly due to store closures.」
Inventories increased by approximately ¥6.0 billion due to the procurement of autumn/winter merchandise and merchandise for the following spring/summer season. The increase in inventories was quantified, but there is no statement that excess inventory or discount- or disposal-related losses arose. - FY2023-Q2Inventory increase due to early procurement of autumn/winter merchandiseAnnual report
「This was mainly because merchandise for the current autumn/winter (AW) season was procured early and in sufficient quantities, resulting in an approximately ¥4.5 billion increase in inventories.」
As a result of procuring sufficient autumn/winter merchandise early, inventories increased by approximately ¥4.5 billion from the end of the previous consolidated fiscal year. Although changes in inventory management occurred, there is no statement that excess inventory or discount-related losses arose. - FY2022Inventory reduction amid the impact of a newly consolidated companyAnnual report
「Although inventories increased by approximately ¥3.2 billion due to the impact of a newly consolidated subsidiary, they declined by approximately ¥1.7 billion as the company thoroughly controlled purchases and cleared inventory, and phased out some brands during the current consolidated fiscal year.」
Inventories increased as a result of the consolidation of Narumiya International, but the company offset part of the impact by curbing purchases, clearing inventory and discontinuing brands. - FY2022-Q3MitigatedAnnual report
「Learning from the previous year, particularly the first half, when discount-related losses worsened profitability, the company focused on improving gross margins in both stores and its e-commerce business during the current period.」
To address the discount-related losses that emerged in the previous year, the company managed the timing and volume of purchases in both its stores and e-commerce business and prioritized full-price sales. As a result, the gross margin rose by 3.7 percentage points year on year, while inventories also declined by approximately ¥600 million. - FY2022-Q2MitigatedAnnual report
「In response to the previous year's experience, when increased discount sales to clear spring merchandise led to a sharp decline in margins, the company controlled the timing and volume of purchases in advance during the current fiscal year and worked to improve profitability by emphasizing sales centered on full-price merchandise across most brands. As a result, gross margin increased 4.8 percentage points year on year.」
To address the margin decline caused by inventory clearance and discount sales that emerged in the previous year, the company managed the timing and volume of purchases and promoted full-price sales, improving the gross margin by 4.8 percentage points. - FY2022-Q1MitigatedAnnual report
「In response to the previous year's experience, when increased discount sales to clear spring merchandise that had lost sales opportunities in the first quarter led to a sharp decline in margins, the company controlled the timing and volume of purchases in advance during the first quarter and worked to improve profitability by focusing sales on full-price merchandise across most brands. As a result, gross margin increased 4.0 percentage points year on year.」
By managing purchase volumes and timing and prioritizing full-price sales, the company made progress in addressing the decline in margins caused by discount sales and inventory clearance that emerged in the same period of the previous year, and the gross margin rose by 4.0 percentage points. - FY2021MitigatedAnnual report
「Inventories at the end of the consolidated fiscal year were ¥21,778 million, a decrease of ¥3,518 million from the end of the previous consolidated fiscal year.」
By curbing purchases and selling through inventory of discontinued brands, the company addressed inventory losses and opportunity losses throughout the year and reduced inventories by ¥3.518 billion. - FY2021-Q3MitigatedAnnual report
「The Company reduced purchases by approximately 20% from the previous year in preparation for the autumn/winter season and pursued sales centered on full-price merchandise to improve the gross margin.」
In light of the accumulation and markdown sales of spring merchandise, purchases were reduced by approximately 20% from the previous year, and efforts advanced to improve inventory efficiency and the gross margin through sales centered on full-price merchandise. A certain degree of margin improvement occurred in the third quarter. - FY2021-Q3MitigatedAnnual report
「The Company reduced purchases by approximately 20% from the previous year in preparation for the autumn/winter season and pursued sales centered on full-price merchandise to improve the gross margin.」
In light of the accumulation and markdown sales of spring merchandise, purchases were reduced by approximately 20% from the previous year, and efforts advanced to improve inventory efficiency and the gross margin through sales centered on full-price merchandise. A certain degree of margin improvement occurred in the third quarter. - FY2021-Q2MaterialisedAnnual report
「As the Company moved to clear spring merchandise inventory that had lost sales opportunities at stores through Golden Week in May, the gross margin fell sharply by 8.0 points year on year to 50.7%, against a backdrop of increased discount sales.」
Discount sales increased as the Company cleared spring merchandise inventory after the loss of sales opportunities due to store closures, causing the gross margin to decline by 8.0 points year on year. The impact of inventory losses materialized as a decline in the margin. - FY2021-Q1MaterialisedAnnual report
「Discount sales increased as the Company moved to clear spring merchandise inventory that had lost sales opportunities at stores through Golden Week in May, causing the gross margin to fall sharply by 6.1 points year on year to 56.9%.」
Discount sales increased as the Company cleared spring merchandise inventory after the loss of sales opportunities due to store closures, causing the gross margin to decline to 56.9%. Inventory risk materialized as an actual decline in the margin. - FY2020-Q2MitigatedAnnual report
「Gross margin improved mainly at apparel brands in the brand business through IT-enabled inventory management and more precise pricing adjustments.」
Improved accuracy in inventory management and selling-price changes through the use of IT advanced measures to address inventory losses and improved the gross margin. Meanwhile, inventories increased due to the replacement of seasonal products. - FY2020-Q1MitigatedAnnual report
「The middle-to-lower brands, which are primarily developed in shopping centers, faced inventory-control challenges in the previous fiscal year. In the current fiscal year, however, they returned to planning and sales centered on full-price merchandise, and inventory efficiency improved, as it had in the second half of the previous fiscal year, leading to improved earnings.」
At mid- to lower-market brands that had remaining issues in the previous fiscal year, a return to planning and sales centered on full-price merchandise improved inventory efficiency and advanced efforts to address inventory risk. - FY2019MitigatedAnnual report
「Inventories, which should be treated as a top priority, declined by ¥106 million from the end of the previous consolidated fiscal year, even after absorbing the impact of newly consolidated entities from M&A and other transactions, resulting in a healthy inventory position.」
To address the risk of markdowns and disposal due to excess inventory and lost sales opportunities due to insufficient inventory, the Company absorbed the impact of new M&A additions, reduced inventory by ¥106 million, and achieved a healthy inventory position. - FY2019-Q3MaterialisedAnnual report
「Gross profit declined due to intensified discount sales to reduce inventories, particularly in the shopping-center channel, against a backdrop of temporary factors such as natural disasters.」
Discount sales to reduce inventories were in fact intensified, resulting in a decline in gross profit. - FY2019-Q2First statedAnnual report
「However, excessive inventory may require substantial discounts or disposal, while insufficient inventory may result in lost sales opportunities, potentially affecting our Group's business and performance.」
Treats inappropriate inventory levels, including discounting and disposal from excess inventory and lost sales opportunities from insufficient inventory, as a separate risk.