Shift from B2B wholesale to B2B2C and B2C direct sales

「In addition, for company-operated stores and department-store sales operated by the Company or other companies, we promoted the development of sales-floor production services and worked to strengthen earnings power. As a result, B2C business net sales for the six months ended 30 September were ¥2,082 million, up 19.0% year on year, while the operating loss was ¥90 million, compared with an operating loss of ¥57 million in the same period of the previous year.」

「Through these initiatives, we improved the profitability of company-operated stores while growing the e-commerce business, steadily advancing the transformation of the retail business portfolio. As a result, retail business net sales for the fiscal year were ¥2,517 million, up 12.5% year on year, and operating profit was ¥87 million, up 235.6%.」

「Under our business portfolio strategy, wholesale sales through department-store channels, which we position as a business requiring structural reform, remained challenging against a backdrop of consumer thrift preferences and a slowdown in inbound demand. Meanwhile, EC channels, mass-retailer channels and domestic and overseas OEM sales, which we are focusing on as businesses to accelerate growth, expanded steadily.」

「In the wholesale business, department-store channels were affected by external conditions such as consumers’ preference for economizing and weaker inbound demand. At the same time, we pursued structural reform by expanding Company-led sales areas, increasing our share through collaboration with other companies, and promoting the development of sales-floor production services.」

「In the wholesale business, for legwear and underwear sold through department-store channels, we shifted from the conventional B2B perspective to a B2B2C perspective and implemented a sales strategy aimed at building long-term relationships with customers.」

「We focused on expanding sales in business areas where synergies are expected. For example, タビオ株式会社 began offering socks under our licensed “Polo Ralph Lauren” brand through its online store and at some of its “靴下屋” and “Tabio” specialty sock stores, following the capital and business alliance formed last November.」

「As a result, retail business net sales for the fiscal year were ¥2,137 million, compared with ¥2,070 million in the previous fiscal year, representing an increase. However, partly due to higher promotional expenses to expand the e-commerce business, the operating loss was ¥0 million, compared with an operating loss of ¥67 million in the previous fiscal year.」

「In the retail business, we focused on developing products for the e-commerce market. Among autumn and winter products, sales of hiking socks and competitively priced leggings were strong. Sales of bags operated by センティーレワン株式会社 were solid, particularly business bags, as more companies shifted from teleworking back to office attendance. At Happy Socks company-operated stores, customer numbers increased as the number of visitors to Japan rose, and sales of Japan-exclusive products featuring traditional Japanese patterns and collaboration socks with Star Wars were strong. Promotional gift items tailored to various events were also well received, resulting in higher sales than in the previous year. As a result, retail business net sales for the nine months ended 31 December were ¥1,449 million, up 2.4% year on year, while the operating loss was ¥48 million, compared with an operating loss of ¥78 million in the same period of the previous year.」

「As a result, retail business net sales for the three months ended 31 March were ¥537 million, up 0.7% year on year, while the operating loss was ¥2 million, compared with an operating loss of ¥26 million in the same period of the previous year.」

「As a result, retail business net sales for the fiscal year were ¥2,070 million, compared with ¥1,953 million in the previous fiscal year, representing an increase. However, partly due to higher promotional expenses to expand the e-commerce business, the operating loss was ¥67 million, compared with an operating loss of ¥61 million in the previous fiscal year.」

「In the retail business, we began selling “はかないくつした,” which had been well received on the crowdfunding platform “CAMPFIRE” in May. Sales were solid, partly due to the effectiveness of our publicity activities. As a result, retail business net sales for the nine months ended 31 December were ¥1,415 million, compared with ¥1,309 million in the same period of the previous year, while the operating loss was ¥78 million, compared with an operating loss of ¥89 million in the same period of the previous year.」

「In the retail business, our company-operated stores opened a Happy Socks Candy Café, where customers can enjoy Happy Socks socks, candy and original tea, as well as “HitoAshi (ヒトアシ),” a concept store offering mainly our original products and items related to the feet, such as shoe insoles. We also began new store operations in collaboration with companies from other industries. To improve purchasing convenience for our main customer base of older people, we began over-the-counter sales at post offices and the catalog mail-order service “くつしたお届け便,” which accepts orders by telephone.」

「In its mail-order business, the company launched a trial campaign for the universally designed Minna no Kutsushita soft gauze socks in conjunction with newspaper advertising through Kutsushita Otodoke-bin, a catalogue mail-order service that accepts orders and enquiries by telephone and delivers to customers' homes, supporting customers who have difficulty visiting stores or are unfamiliar with online shopping. The product became a hit, selling 15,000 pairs under a single style number.」

「In the retail business, we launched new sales methods to improve customer purchasing convenience and worked to expand sales by increasing the number of purchasing customers. In mail-order sales, we launched the catalog mail-order service “くつしたお届け便,” which accepts orders by telephone and delivers them to customers’ homes, to support customers who have difficulty visiting stores or are unfamiliar with online shopping. We also worked to acquire new customers through advertising in newspapers.」

「With regard to the retail business, which we have positioned as a future growth segment and an investment target, we aim to enhance business value by developing new retail formats that provide new customer experiences through the Happy Socks and ナイガイ company-operated store businesses. At the same time, we will develop an asset-light sales network through e-commerce and catalog mail-order sales. We have set as a management indicator an increase in retail segment sales as a percentage of consolidated net sales, from 14% in the fiscal year ended January 2021, and aim to build a business portfolio that supports our future growth strategy.」

「In online sales, the company changed from having Sentire One Co., Ltd. sell legwear products to operating the business directly from September 2020, with the aim of expanding sales by broadening the product lineup and increasing specialist expertise.」

「Against this backdrop, the Group focused on the basic strategies of the Fourth Medium-Term Management Plan, including developing new sales channels and expanding sales through company-operated stores and the NAIGAI online shop, in response to changes in its operating environment,」

「Against this backdrop, the Group considered it an urgent issue to respond to changes in its operating environment by rebuilding its business structure from one overly dependent on wholesale into one supported by both wholesale and retail businesses. It began revising the trajectory of the Fourth Medium-Term Management Plan, including efforts to develop new distribution channels and expand sales through company-operated stores and the NAIGAI online shop. However, voluntary restrictions on outings and limits on corporate activities following the declaration of a state of emergency led commercial facilities to close temporarily for extended periods, creating conditions in which sufficient sales activities could not be conducted.」

「We began operating our own shops in department stores and joint independently operated shops in cooperation with apparel and accessories companies, and started building a B to B to C business model that sells directly to consumers through our own store operations. We launched directly operated stores in Japan for Happy Socks, a Swedish-origin brand sold in 90 countries worldwide, and currently operate 6 permanent stores and 1 outlet store. We are also rolling out pop-up shops nationwide on an ongoing basis and actively advancing the development of new stores to expand the scale of the business.」

「As a new business, the company launched a direct-to-consumer retail business integrating physical stores and online sales to develop new customer touchpoints.」

「Happy Socks, which launched its directly operated store business in January 2019, focused on operating 4 permanent stores in Harajuku, Shinjuku, Marunouchi and Sapporo, as well as a booth at “The Rolling Stones Exhibition” held at TOC Gotanda Messe and pop-up shops at Yokohama Minato Mirai Tokyu Square and other locations, launching the retail business as planned.」

「The legwear business, which has been centered on wholesale, worked to evolve its wholesale business into a consumer-focused business model while further strengthening competitiveness and profitability. As a new business, the company launched directly operated Happy Socks stores and began its retail business with 4 permanent stores and pop-up shops.」

「③ Entry into the retail business To develop new customer touchpoints, we will build a direct-to-consumer retail business model integrating physical and online sales in addition to our existing mail-order business. In January 2019, we entered into a domestic sales agreement with the Swedish-origin global brand Happy Socks and launched a directly operated store business.」

「In our core legwear business, the Group considers it an important strategic issue to shift from a conventional business model focused exclusively on B to B wholesale to B to B to C and B to C direct sales models that connect directly with end consumers.」