Timing mismatch in revenue recognition due to delays in delivering ordered products

「In the Core Value segment, the introduction of a new sales management system in the traditional apparel and jewelry business has begun to accelerate product deliveries. However, changes to store processes and adjustments to system operations took longer than expected, and some of the acceleration effect is expected to be deferred to the second half.」

「The issue of delayed deliveries was gradually resolved by reviewing the delivery progress management system and taking other measures. As deliveries concentrated in the fourth quarter, the company was able to respond as planned.」

「Revenue was ¥4,646 million (down 2.1% year on year) due to the impact of delivery delays affecting some products.」

「In the Kimono and Jewelry business, customer traffic at stores and joint large-scale exhibition sales events exceeded the previous year's levels. However, concerns over stagnant personal consumption due to sustained price increases affected average spend per customer, and deliveries of ordered products also progressed less than in the previous fiscal year. As a result, revenue was ¥4,743 million (down 2.9% year on year).」

「In the Kimono and Jewelry business, customer traffic at stores and sales at joint large-scale exhibition events continued to recover and increase. In addition, expedited deliveries of ordered products contributed to revenue of ¥9,821 million (up 1.2% from the previous fiscal year).」

「During the quarter, in addition to the impact of temporarily closing some stores following the issuance of a state of emergency and abruptly canceling the final day of a large exhibition sales event, deliveries of ordered products stalled, among other factors.」

「During the quarter, in addition to the impact of temporarily closing some stores following the issuance of the third state of emergency and abruptly canceling the final day of a large exhibition sales event, deliveries of ordered products stalled and were pushed into the following quarter.」

「At the stores acquired from 株式会社かのこ in November 2019, the company has been preparing the operating and management environment and introducing store-management expertise from its existing Kimono business, with a focus on improving profitability. During the current fiscal year, undelivered ordered products caused expenses to be recorded ahead of the earnings contribution.」

「In the Kimono and Jewelry business, the increase in promotional expenses resulting from a change in the timing of joint exhibition sales events held by a consolidated subsidiary, as well as the impact of undelivered products at stores acquired in the third quarter」

「Sales in the kimono retail division remained firm, rising 0.8% year on year, owing to strong performance at the joint exhibition and sales event held in the second quarter and efforts to accelerate deliveries of ordered products.」

「Jewelry Retail revenue declined 9.0% year on year, while Kimono Retail revenue remained firm, increasing 1.3% year on year, partly because deliveries of ordered products progressed smoothly.」

「Accounts receivable increased by ¥285 million following the introduction of a collection-guaranteed shopping credit system in November 2018. However, inventories of merchandise decreased by ¥71 million as deliveries of ordered products were expedited, and security deposits and guarantee deposits decreased by ¥68 million, leaving the balance broadly unchanged from the previous year.」

「In the Kimono and Jewelry business, the Kimono Retail division renovated 2 stores and held Kimono events at 59 venues nationwide as opportunities to wear kimono, among other efforts to attract new customers. Orders remained firm at 100.0% of the same quarter of the previous year, but delays in delivering ordered products shifted revenue recognition into the following quarter. As a result, revenue was ¥2,426 million (down 3.0% year on year) and the segment recorded a loss of ¥38 million (compared with segment income of ¥27 million in the same quarter of the previous year).」