Changing trends and short product life cycles

「For figure products, the Company launched “HORROR美少女 Sadako” based on another company’s IP, “Manhattan Cafe” from “Uma Musume: Pretty Derby,” “Frieren” from “Frieren: Beyond Journey’s End” and “Hand Model/L-GRAY-” from its own IP “ARTIST SUPPORT ITEM.” Although these products contributed to sales in the category, the number of hit products driving sales declined from the previous fiscal year, and sales for the category as a whole remained sluggish.」

「In the bishoujo plastic model market, sales for the category as a whole remained sluggish because competition among companies remained intense and the number of products sold during the period declined. Sales for the category as a whole also remained sluggish because the number of hit products driving sales declined compared with the same period of the previous year.」

「Because approximately 1 to 2 years is required from planning through sales, the company may be unable to offer products that reflect changes in customer preferences, or may be delayed in doing so. In addition, a sharp deterioration in economic conditions that significantly curtails consumer purchasing activity could affect the company's performance. The wholesale business, which accounts for approximately 60% of the company's sales, is basically an order-based business. The company is taking steps to avoid significantly misjudging sales volumes, or market demand, relative to production volumes and ending up with excess inventory. However, if it becomes necessary to record impairment losses or disposal losses on manufactured products, this could affect the company's performance.」

「In terms of changes in trends and economic fluctuations, hobby-related products such as the characters handled by the company tend to be subject to rapidly changing trends and short product life cycles. To address these factors, the company continually plans, manufactures and sells new proprietary products. However, because approximately one year is required from planning through sales, the company may be unable to offer products that reflect changes in customer preferences, or may be delayed in doing so. In addition, a sharp deterioration in economic conditions that significantly curtails consumer purchasing activity could affect the company's performance.」

「Because the hobby products featuring characters and other properties handled by the company are subject to rapidly changing trends, their product life cycles tend to be short. To address this, the company is constantly planning, manufacturing and selling new proprietary products. However, because it takes approximately 1 year from planning to sales, the company may be unable to provide products that reflect changes in customer preferences, or may be delayed in doing so. A sharp economic downturn that significantly curtails consumer purchasing activity could also affect the company's operating results.」

「As a result, net sales for the fiscal year were ¥7,374.415 million, down 11.1% year on year; operating income was ¥228.451 million, down 16.1%; ordinary income was ¥231.434 million, down 5.4%; and net income was ¥75.390 million, down 45.2%, partly due to the recording of ¥109.740 million in impairment loss as an extraordinary loss.」

「As a result, during the second quarter cumulative period, the company actively pursued the initiatives described above, and figure sales performed steadily, but model kit sales struggled to grow. Net sales were ¥3,557.830 million, down 13.9% year on year; operating loss was ¥51.542 million, compared with operating income of ¥78.371 million in the same quarter of the previous year; ordinary loss was ¥72.076 million, compared with ordinary income of ¥54.813 million; and quarterly net loss was ¥52.116 million, compared with quarterly net income of ¥33.466 million.」

「As a result, during the first quarter cumulative period, the company actively pursued the initiatives described above for its proprietary IP products, and figure sales performed steadily, but model kit sales struggled to grow. Net sales were ¥1,600.860 million, down 6.8% year on year; operating loss was ¥97.793 million, compared with an operating loss of ¥112.075 million in the same quarter of the previous year; ordinary loss was ¥105.517 million, compared with an ordinary loss of ¥121.303 million; and quarterly net loss was ¥76.450 million, compared with a quarterly net loss of ¥87.346 million.」

「Although the company actively pursued the proprietary IP initiatives described above, net sales for the fiscal year were ¥8,294.627 million, down 5.9% year on year; operating income was ¥272.177 million, down 60.0%; ordinary income was ¥244.573 million, down 60.3%; and net income was ¥137.558 million, down 67.2%.」

「As a result, despite actively pursuing the initiatives described above for the company's proprietary IP products, sales did not reach the level of sales of products related to the anime series "Frame Arms Girl" in the same quarter of the previous year. Net sales were ¥5,743.100 million, down 12.7% year on year; operating income was ¥25.881 million, down 94.6%; ordinary income was ¥4.142 million, down 99.0%; and quarterly net loss was ¥3.269 million, compared with quarterly net income of ¥291.566 million in the same quarter of the previous year.」

「As a result, despite actively pursuing the initiatives described above for the company's proprietary IP products, sales did not reach the level of sales of products related to the anime series "Frame Arms Girl" in the same quarter of the previous year. Net sales were ¥4,130.227 million, down 12.2% year on year; operating income was ¥78.371 million, down 80.6%; ordinary income was ¥54.813 million, down 84.6%; and quarterly net income was ¥33.466 million, down 86.2%.」

「Although the company actively pursued the above initiatives for its proprietary IP products, sales did not reach the level recorded for products related to the anime series "Frame Arms Girl" in the same period of the previous year. Net sales were ¥1,718.167 million, down 28.3% year on year.」

「In North America and Europe, the latest Star Wars film, "The Last Jedi," was released in December 2017, but interest in Star Wars temporarily levelled off, while products related to the American comic franchise DC COMICS performed steadily. Because the wholesale business, which accounts for 70% of the company's sales, is basically an order-based business, the company is working to avoid situations in which it significantly misjudges sales volume, or market demand, and production volume and is left with excessive inventory. However, if it becomes unavoidable to write down or dispose of manufactured products, this may also affect the company's performance.」

「Because the hobby products featuring characters and other properties handled by the company are subject to rapidly changing trends, their product life cycles tend to be short. To address this, the company is constantly planning, manufacturing and selling new proprietary products. However, because it takes approximately 1 year from planning to sales, the company may be unable to provide products that reflect changes in customer preferences, or may be delayed in doing so. A sharp economic downturn that significantly curtails consumer purchasing activity could also affect the company's operating results.」