Rebuilding the Business to Return to Profitability

「As a result, for the current interim consolidated accounting period, the Group reported net sales of ¥25,953 million, down 4.0% year on year, an operating loss of ¥499 million, compared with an operating loss of ¥213 million in the same period of the previous year, an ordinary loss of ¥421 million, compared with an ordinary loss of ¥149 million, and an interim net loss attributable to owners of the parent of ¥555 million, compared with an interim net loss of ¥299 million.」

「For the current consolidated fiscal year, net sales were ¥58,448 million, down 3.4% year on year, and operating income was ¥1,298 million, down 52.2%.」

「Operating profit was ¥1.30 billion, ordinary profit was ¥1.44 billion, and net income was ¥4.11 billion.」

「As a result, the group's net sales for the six months ended 30 September were ¥27,042 million, down 3.1% year on year; operating loss was ¥213 million, compared with operating income of ¥599 million in the same period of the previous year; ordinary loss was ¥149 million, compared with ordinary income of ¥678 million; and interim net loss attributable to owners of the parent was ¥299 million, compared with interim net income of ¥457 million.」

「As a result, for the current interim consolidated accounting period, the Group reported net sales of ¥27,902 million, down 0.9% year on year, operating income of ¥599 million, down 16.5%, ordinary income of ¥678 million, down 13.8%, and interim net income attributable to owners of the parent of ¥457 million, down 38.5%.」

「As a result, for the cumulative first quarter of the current consolidated fiscal year, the Group reported net sales of ¥15,378 million (down 3.7% year on year), operating income of ¥747 million (down 27.8%), ordinary income of ¥730 million (down 28.7%) and quarterly net income attributable to owners of the parent of ¥590 million (down 34.1%).」

「As a result, for the current consolidated fiscal year, the Group reported net sales of ¥61,353 million, up 5.3% year on year, operating income of ¥3,047 million, up 36.3%, and ordinary income of ¥3,184 million, up 30.7%.」

「The current fiscal year is the second year of the Medium-Term Management Plan announced on 14 April 2022. While continuing to work on improving the gross margin and controlling SG&A expenses, the Company completed the renewal of its e-commerce platform in September, and is also opening new physical stores and renovating existing stores. It is actively promoting sales expansion measures aimed at achieving its targets for the final year. As a result, for the cumulative third quarter of the current consolidated fiscal year, the Group reported net sales of ¥44,603 million, up 6.4% year on year, and operating income of ¥1,727 million, up 68.0%.」

「As a result, for the cumulative second quarter of the current consolidated fiscal year, the Group reported net sales of ¥28,155 million, up 10.6% year on year, operating income of ¥718 million, compared with an operating loss of ¥317 million in the same period of the previous year, ordinary income of ¥787 million, compared with an ordinary loss of ¥141 million, and quarterly net income attributable to owners of the parent of ¥744 million, compared with a quarterly net loss of ¥246 million.」

「As a result, for the cumulative first quarter of the current consolidated fiscal year, the Group reported net sales of ¥15,969 million, up 11.2% year on year, operating income of ¥1,035 million, up 106.0%, ordinary income of ¥1,025 million, up 72.6%, and quarterly net income attributable to owners of the parent of ¥896 million, up 60.2%.」

「To resolve this situation, the Company implemented measures to restore its underlying earnings capacity and carried out business-structure reforms in accordance with the “Regeneration Plan” announced on 14 April 2020. It also implemented measures to improve KPIs and promote business growth by continuing the structural reforms under the “Medium-Term Management Plan (fiscal years ending February 2023 to February 2025)” announced on 14 April 2022. As a result, for the current consolidated fiscal year, the Company reported operating income of ¥2,235 million and net income attributable to owners of the parent of ¥2,155 million, while cash flow from operating activities was an inflow of ¥4,215 million.」

「The Company achieved a return to operating profitability for the cumulative third quarter of the current consolidated fiscal year.」

「The Company achieved operating profitability in the first quarter and substantially reduced the second-quarter operating loss compared with the fiscal year ended February 2022, putting it on track to achieve its full-year plan.」

「The Company achieved operating profitability in the first quarter, increasing the likelihood of achieving its full-year operating income target.」

「The gross margin was maintained at approximately the targeted level through measures including lower procurement costs, stronger inventory management and reinforcement of the full-price sales structure in both physical stores and e-commerce, reaching 48.0% on a cumulative basis, an improvement of 9.7 percentage points from the previous year. SG&A reductions also progressed more than expected, but could not offset the decline in gross profit resulting from the shortfall in net sales against plan. Although operating income improved substantially from the previous year, the targeted return to profitability was not achieved.」

「Meanwhile, business-structure reforms under the company-wide “Regeneration Plan” are progressing smoothly. By reducing procurement costs, strengthening inventory management and maintaining a full-price sales structure in both physical stores and e-commerce, the Company maintained its gross margin at the targeted level, reaching 49.6% on a cumulative basis, an improvement of 9.2 percentage points from the previous year. SG&A reductions also progressed more than expected, and operating income, ordinary income and quarterly net income attributable to owners of the parent improved substantially from the previous year.」

「Meanwhile, the structural reforms under the “Regeneration Plan,” being pursued company-wide, are progressing smoothly. By reducing procurement costs, strengthening inventory management and focusing exclusively on full-price sales in both physical stores and e-commerce, the Company maintained its gross margin at the targeted level, reaching 47.0% on a cumulative basis, an 8.5 percentage-point improvement from the previous year. SG&A reductions also progressed more than expected, enabling the Company to exceed its plan for operating income, ordinary income and quarterly net income attributable to owners of the parent.」

「However, by reducing procurement costs, strengthening inventory management and focusing exclusively on full-price sales in both physical stores and e-commerce, the gross margin was 50.1%, above expectations. Selling, general and administrative expense reductions also progressed more than expected, reducing the operating loss.」

「For the current consolidated fiscal year, the Group reported net sales of ¥37,930 million, an operating loss of ¥8,913 million, an ordinary loss of ¥9,036 million and a net loss attributable to owners of the parent of ¥4,988 million.」

「However, as described in “2. Analysis of Financial Position, Operating Results and Cash Flows by Management (6) Significant Events and Other Matters Concerning the Going-Concern Assumption,” the Company has strengthened its financial foundation through new borrowings under agreements with its transaction banks, as well as the sale of cross-held shares and owned real estate. By implementing the “Regeneration Plan” announced on 14 April 2020, the Company aims to minimize the impact in the current consolidated fiscal year and achieve sustained operating profitability from the following consolidated fiscal year onward.」

「As a result, for the cumulative second quarter of the current consolidated fiscal year, the Group reported net sales of ¥15,328 million, an operating loss of ¥5,712 million and an ordinary loss of ¥5,738 million.」

「As a result, for the cumulative first quarter of the current consolidated fiscal year, the Group reported net sales of ¥5,753 million, an operating loss of ¥2,996 million and an ordinary loss of ¥3,144 million.」

「As a result, revenue for the current consolidated fiscal year was ¥68.868 billion, operating loss was ¥2.875 billion, ordinary loss was ¥2.899 billion, and net loss attributable to owners of the parent was ¥2.685 billion.」

「The company recorded operating losses for 3 consecutive fiscal years from the fiscal year ended December 2016 through the fiscal year ended December 2018, and is also expected to record an operating loss for the current consolidated fiscal year, the fiscal year ending February 2020.」

「During the cumulative third quarter of the current consolidated fiscal year, sales increased slightly year on year and operating profit and ordinary profit also improved, owing to stronger sales measures during the summer clearance sale, enhanced promotion of full-price merchandise from September onward, and rush demand ahead of the consumption tax increase. As a result, revenue for the Group's cumulative third quarter was ¥42.105 billion, up 1.7% year on year, operating loss was ¥2.140 billion, and ordinary loss was ¥2.165 billion.」

「As a result, for the cumulative second quarter of the current consolidated fiscal year, the Group reported net sales of ¥29,735 million (up 1.6% year on year), an operating loss of ¥863 million (compared with an operating loss of ¥807 million in the same period of the previous year), an ordinary loss of ¥827 million (compared with an ordinary loss of ¥738 million), and a quarterly net loss attributable to owners of the parent of ¥606 million (compared with quarterly net income of ¥3,006 million in the same period of the previous year).」

「During the cumulative first quarter of the current consolidated fiscal year, the Company secured an increase in net sales by implementing marketing initiatives that had previously been held back. In addition, while investing in marketing initiatives, it pressed ahead with reducing selling, general and administrative expenses, achieving a return to operating and ordinary profitability.」

「Operating loss was ¥2.176 billion, compared with an operating loss of ¥1.907 billion in the previous year, and ordinary loss was ¥1.950 billion, compared with an ordinary loss of ¥1.941 billion in the previous year.」

「During the cumulative third quarter of the current consolidated fiscal year, revenue declined because of the summer heat and weather conditions from September onward. However, as a result of efforts to improve gross profit and reduce selling, general and administrative expenses, all profit measures improved. Revenue for the Group's cumulative third quarter was ¥41.389 billion, down 6.5% year on year, operating loss was ¥2.259 billion, compared with an operating loss of ¥2.814 billion in the same period of the previous year, and ordinary loss was ¥2.209 billion, compared with an ordinary loss of ¥2.933 billion in the same period of the previous year.」

「As a result of efforts to improve the gross profit margin and reduce selling, general and administrative expenses, operating performance improved from the previous year. Revenue for the Group's cumulative second quarter was ¥29.266 billion, down 8.2% year on year, operating loss was ¥807 million, compared with an operating loss of ¥1.626 billion in the same period of the previous year, and ordinary loss was ¥738 million, compared with an ordinary loss of ¥1.709 billion in the same period of the previous year.」

「During the cumulative first quarter of the current consolidated fiscal year, revenue declined year on year because the company implemented structural reform measures, including withdrawing from unprofitable businesses and sales areas. However, operating performance improved substantially through an improved gross profit margin and control of selling, general and administrative expenses.」

「Revenue for the current consolidated fiscal year was ¥62.549 billion, down 7.5% year on year, operating loss was ¥1.907 billion, compared with an operating loss of ¥8.430 billion in the previous year, and ordinary loss was ¥1.941 billion, compared with an ordinary loss of ¥8.196 billion in the previous year.」

「During the cumulative third quarter of the current consolidated fiscal year, revenue declined because of measures accompanying business-structure reform, including discontinuing brands and closing unprofitable stores. However, as a result of improving gross profit and reducing selling, general and administrative expenses, all profit measures improved significantly from the previous year. As a result, revenue for the Group's cumulative third quarter was ¥44.272 billion, down 7.5% year on year, and operating loss was ¥2.814 billion, compared with an operating loss of ¥8.304 billion in the same period of the previous year.」

「During the second quarter of the current consolidated cumulative period, net sales declined because brands were discontinued as part of the business structure reform, but profitability improved as a result of efforts to improve the gross profit margin and reduce selling, general and administrative expenses.」

「Operating loss was ¥251 million (operating loss of ¥518 million in the same period of the previous year), and ordinary loss was ¥309 million (ordinary loss of ¥567 million in the same period of the previous year).」

「We will implement the following specific structural reform and growth strategy measures to rebuild the business and return to profitability.」