Strengthening SCM through production in optimal locations and production bases outside China

「By using digital technologies such as PLM and RFID, we are improving visibility and efficiency across the entire supply chain, shortening production lead times and reducing disposal losses.」

「PLM partners primarily working with Onward: May 2024 25 → March 2025 81」

「As a result of systematically optimizing product inventory levels, gross profit margin declined, but the SG&A ratio to sales decreased through measures including improved store operating efficiency resulting from the expansion of multi-brand stores.」

「In addition, although the gross profit margin declined as the company systematically optimized inventory levels, the ratio of selling, general and administrative expenses to revenue declined because increases in personnel expenses resulting from wage increases and advertising expenses were offset by more efficient store operations following the expansion of multi-brand stores.」

「Our group is advancing product planning, production and logistics reform aimed at speeding up and optimizing the manufacturing process and supply chain through digitalization, achieving appropriate pricing, and improving traceability. By sharing information and integrating data with business partners, we will continue building a more visible and efficient supply chain.」

「In addition, due to the results of the global business-structure reforms and progress in improving product supply-chain efficiency, the operating margin rose from the previous fiscal year, and the consolidated third quarter saw higher revenue and higher profit at every stage of the income statement.」

「Gross profit margin continued to rise, driven by the clear benefits of the global business structural reforms and progress in improving product supply-chain efficiency.」

「The benefits of the global business structural reforms undertaken since fiscal 2019 became clearly evident, and gross profit margin improved as a result of greater efficiency in the product supply chain.」

「Our group is advancing product planning, production and logistics reform aimed at speeding up and optimizing the manufacturing process and supply chain through digitalization, achieving appropriate pricing, and improving traceability.」

「As part of building a product planning, production and logistics platform, we decided to introduce a product lifecycle management (PLM) solution through a partnership with U.S.-based Centric Software, which supports digital transformation (DX). This will enable information sharing and data integration across the entire product lifecycle, from planning, procurement and production through logistics and sales, making costs and production progress visible and enabling the provision of optimal products. We will continue to advance digitalization across the entire manufacturing process, shortening production lead times and optimizing procurement costs.」

「Our group is fundamentally committed to producing products in optimal locations. Specifically, in China, we are strengthening cooperation with partner factories, making active use of our group factories, and improving the efficiency of logistics bases. We are also expanding production bases outside China, including in Vietnam, to secure stable production capacity.」

「As a result, compared with the previous method, cost of sales for the current consolidated fiscal year decreased by ¥2,165 million, while gross profit, operating income, ordinary income and profit before income taxes increased by the same amount.」

「As a result, compared with the previous method, cost of sales for the cumulative third quarter of the current consolidated fiscal year decreased by ¥997 million, while operating income, ordinary income and profit before income taxes increased by the same amount.」

「As a result, compared with the previous method, cost of sales for the cumulative second quarter of the current consolidated fiscal year decreased by ¥537 million, while operating income, ordinary income and profit before income taxes increased by the same amount.」

「Some consolidated subsidiaries of our group had previously used, as the carrying amount on the consolidated balance sheet, an amount obtained by systematically writing down the book value of inventories at a fixed rate when a specified period had elapsed since acquisition. However, as strengthened inventory management accompanying logistics reform and inventory centralization made it possible to comprehensively collect and analyze sales data on the inventory period and sales method for each individual item, we decided to change the method from the first quarter of the current consolidated fiscal year to a method of writing down book value in stages according to the inventory period, in order to more appropriately reflect the fair value of inventories. As a result, compared with the previous method, cost of sales for the cumulative first quarter of the current consolidated fiscal year decreased by ¥477 million, while operating income, ordinary income and profit before income taxes increased by the same amount.」

「The Group’s basic policy is to produce products in the most suitable locations. Specifically, in China it is strengthening cooperation with partner factories, making active use of Group factories and improving the efficiency of logistics bases, while also expanding production bases outside China, including in Vietnam, to secure stable production capacity.」