Impact of COVID-19 on sales, consumption and the business environment

「As COVID-19 has subsided, economic activity has picked up, and the economy is on a gradual recovery track, supported by improvements in corporate performance and the employment and income environment.」

「During the six months ended in the current consolidated fiscal year, the Japanese economy was on a recovery trend as economic activity and consumption moved toward normalization and stabilization while the impact of COVID-19 eased further following its reclassification as a Category V infectious disease, despite various uncertainties, including rising resource prices, yen depreciation and higher prices.」

「During the three months ended in the current consolidated fiscal year, the Japanese economy was on a recovery trend as economic activity and consumption moved toward normalization while the impact of COVID-19 eased further following its reclassification as a Category V infectious disease, despite various uncertainties, including rising resource prices, yen depreciation and higher prices.」

「Although various uncertainties remain, including higher resource prices resulting from the situation in Russia and Ukraine, inflation concerns and the rapid depreciation of the yen in foreign exchange markets, sales through various channels, including department stores and mass retailers, remained strong, centered on seasonal products, due in part to the recovery in the flow of people following the easing of activity restrictions and the effects of the extreme heat. The Group’s sales are also trending toward recovery.」

「Since late March of this year, restrictions on activities have been eased, the flow of people has recovered, and favorable weather has supported strong sales of seasonal products through various channels, including department stores and mass retailers. The consumer market has shifted toward recovery, and the Group’s sales are also in the process of recovering, but」

「Even after the state of emergency declared at the end of September last year was lifted, personal consumption remained sluggish due to concerns about a resurgence of infections and other factors. From January this year, it deteriorated again as infections with the Omicron variant spread rapidly.」

「The fashion accessories industry faced difficult conditions, with weak consumption continuing even after the state of emergency was lifted due to concerns about a resurgence of infections. This was in addition to voluntary restraints on going out following the issuance of the third state of emergency since April, requests for shorter business hours at commercial facilities, and the significant impact of unfavourable weather caused by torrential rains from July to August.」

「Although vaccination was progressing toward containing COVID-19 during the first 6 months of the second quarter, the extension of the state of emergency declaration through the end of September limited the recovery in sales, resulting in the recognition of an operating loss.」

「Conditions in the fashion accessories industry have remained difficult due to sluggish consumption resulting from intermittent declarations of a state of emergency and the issuance and subsequent expansion of the areas covered by priority preventive measures in response to the increase in new COVID-19 cases, requests for people to refrain from going out, and requests for commercial facilities to reduce operating hours.」

「In addition to requests from local governments for people to refrain from going out due to the effects of the third and fourth waves of COVID-19, a state of emergency declaration was reissued in some regions from April 2021. Accordingly, the impact of COVID-19 continues and is still considered to be affecting the Group’s business activities to some extent. In reflecting the impact of COVID-19 in the accounting estimates, the company expects to continue to be affected at least during the next consolidated fiscal year.」

「The impact of COVID-19 continues and is still considered to be affecting the Group’s business activities to some extent. Accordingly, in reflecting the impact of COVID-19 in the accounting estimates, the company expects to continue to be affected at least during the next consolidated fiscal year.」

「Although the operating environment has begun to show signs of recovery, the impact of COVID-19 continues and is still considered to be affecting the Group’s business activities to some extent. Accordingly, in reflecting the impact of COVID-19 in the accounting estimates, from the third quarter onward of the current consolidated fiscal year the company has assumed that, although the impact remains uncertain, sales and other indicators are expected to recover.」

「The operating environment in the fashion accessories industry also became generally severe due to temporary closures and reduced operating hours at commercial facilities and direct-operated stores, as well as a sharp cooling of personal consumption caused by requests for people to refrain from going out. Against this backdrop, the Group reorganized its operations from the current fiscal year to promote manufacturing and sales aligned with market needs in response to changes in the market environment, including the closure of its main sales channel, department stores. It also began expanding sales channels for specialty stores and mass retailers, growth areas, and strengthening its retail business through its e-commerce business and “+moonbat” direct-operated store business. However, excluding the e-commerce business, which achieved substantial sales growth, the Group was unable to conduct sufficient sales activities because commercial facilities were forced to close temporarily for extended periods due to requests for people to refrain from going out and restrictions on corporate activities following the declaration of a state of emergency. As a result, although the partial recovery in personal consumption following the lifting of the declaration and the reopening of commercial facilities enabled the Group to focus on sales centered on spring and summer products, sales were ¥1,849 million, down 51.5% from the same quarter of the previous year.」

「From the standpoint of preventing the spread of COVID-19, scheduled events and bargain sales were canceled one after another, while voluntary restrictions on going out caused a sharp decline in visitor numbers at department stores and other venues. As a result, sales of winter merchandise and the launch of the spring/summer selling season were significantly affected.」