Improving Gross Profit Margins through Merchandising and Logistics Reform

「Under the “Maintenance and improvement of gross margin” initiative, as in the previous consolidated fiscal year, we worked to maintain and improve gross margin on the sales side by strengthening full-price sales centered on magazine tie-in products. However, full-price sales remained sluggish due to insufficient product freshness, while store discounts increased as a result of promotional measures aimed at optimizing inventory, and inventory write-downs were recorded. Together with the impact of foreign exchange movements and other factors, these developments caused the gross margin to fall 2.5 percentage points year on year to 61.6%.」

「売上総利益率は61.6％と前年同期比 2.5ポイント低下いたしました。」

「COX CO.,LTD.'s first-quarter results showed lower profit, as growth in e-commerce revenue was offset by weak store sales and a higher cost ratio.」

「In addition to the impact of foreign exchange, sales struggled during the full-price selling period and inventory valuations were reviewed, resulting in a 2.2-percentage-point deterioration in the gross margin.」

「However, as sales struggled during the full-price selling period and we consequently reviewed inventory valuations, the gross margin deteriorated by 0.4 percentage points.」

「Regarding the maintenance and improvement of the gross profit margin, the Company continued from the previous consolidated fiscal year to strengthen full-price sales centered on magazine tie-up products, restrain discount sales and promote careful utilization of carryover products through events, e-commerce and other channels. On the procurement side, it sought to reduce procurement costs by increasing the proportion of production in the ASEAN region while monitoring foreign exchange risk and narrowing its supplier base. As a result, the gross profit margin improved by 0.8 percentage points.」

「On the procurement side, the Company sought to mitigate risk by reducing procurement costs through sourcing from China and the ASEAN region and by entering into forward foreign exchange contracts. As a result, the deterioration in the gross profit margin was limited to 0.2 percentage points.」

「Under its merchandising reforms, the Company continued from the previous consolidated fiscal year to restrain discount sales and promote careful utilization of carryover products through events, e-commerce and other channels. In addition, increasing summer inventory in preparation for an extremely hot summer and lingering heat contributed to sales growth in August. On the procurement side, the Company sought to mitigate foreign exchange risk by reducing procurement costs through sourcing from China and the ASEAN region. As a result, the deterioration in the operating gross profit margin was limited to 0.1 percentage points.」

「Under its merchandising reforms, the Company continued from the previous consolidated fiscal year to restrain discount sales and promote careful utilization of carryover products through events, e-commerce and other channels. It also sought to reduce procurement costs through sourcing from China and the ASEAN region while monitoring foreign exchange risk. As a result, the gross profit margin improved by 1.2 percentage points.」

「Under its merchandising reforms, the Company promoted restrained discounting and careful utilization of carryover products through events, e-commerce and other channels. On the product side, it sought to reduce procurement costs by expanding sourcing from China and the ASEAN region while taking measures against foreign exchange risk. As a result, the gross profit margin improved by 4.9 percentage points.」

「Under its merchandising reforms, the Company promoted restrained discounting and careful utilization of carryover products through events, e-commerce and other channels. On the product side, it sought to reduce procurement costs by expanding sourcing from China and the ASEAN region while taking measures against foreign exchange risk. As a result, the gross profit margin improved by 5.1 percentage points, while ending product inventory was reduced by ¥350 million from the same period a year earlier.」

「On the product front, the Company continued from the previous consolidated fiscal year to restrain discount sales and carefully utilize carryover products through events, e-commerce and other channels. As a result, the gross profit margin improved by 5.7 percentage points, while ending product inventory was reduced by ¥279 million from the same period a year earlier.」

「On the product front, the Company continued from the previous consolidated fiscal year to restrain discount sales and carefully sell carryover products through events, e-commerce and other channels. As a result, the gross profit margin improved by 3.9 percentage points, while ending product inventory was reduced by ¥466 million from the same period a year earlier.」

「On the product front, the Company continued to restrain discount sales and review its product launch schedule, while also reviewing the valuation of carryover products. As a result, the gross profit margin rose to 57.8%, up 0.4 percentage points from the previous year, while ending product inventory was reduced by ¥454 million from the previous year.」

「On the product front, the Company continued to restrain discount sales and review its product launch schedule, while also reviewing the valuation of carryover products. As a result, the gross profit margin remained at the previous year's level, while product inventory at the end of the nine-month consolidated period was reduced by ¥161 million from the same period a year earlier.」

「The Company revised its discount measures during the sale period, the number of product styles and production volumes. As a result, the gross profit margin improved by 1.7 percentage points year on year, while ending product inventory was reduced by ¥289 million from the same period a year earlier.」

「On the product front, the Company increased the proportion of full-price products sold in stores in March and April, mainly through the tie-up products described above, and revised its discount measures. As a result, full-price sales grew substantially. Meanwhile, a review of the carrying values of products carried over from the previous fiscal year improved the gross profit margin by 0.1 percentage points.」

「The Company revised its monthly procurement plans, changed promotions during the sale period and expanded overseas direct sourcing, among other initiatives. The gross profit margin rose to 57.4%, up 5.6 percentage points from the previous year, while inventory was reduced to 86.5% of the previous year's level.」

「On the product front, the Company increased procurement volumes of key winter products while revising promotions during the Black Friday period. As a result, the gross profit margin improved by 4.4 percentage points, and product inventory was reduced to 76.3% of the level a year earlier.」

「On the product front, the Company controlled inventory by revising its procurement plans for July and August amid challenging economic conditions, while also revising promotions during the sale period. As a result, the gross profit margin improved by 4.3 percentage points.」

「In response to declining sales caused by the spread of COVID-19, the Company revised its procurement plans as needed, reduced inventory and increased the proportion of full-price sales. As a result, the gross profit margin improved by 8.9 percentage points.」

「In addition, gross profit amounted to ¥6,838 million, as the gross profit margin deteriorated by 3.4 percentage points from the previous year due to the disposal of spring/summer products for which sales opportunities had been missed and fall/winter inventory carried over from the previous year.」

「In addition, gross profit amounted to ¥4,033 million, as the gross profit margin deteriorated by 4.1 percentage points from the previous year because spring/summer products were marked down earlier than June due to excess inventory resulting from temporary store closures and reduced operating hours caused by COVID-19.」

「Meanwhile, the gross profit margin improved by 3.4 percentage points from the previous year through the use of AIMD, an AI solution, lower cost ratios resulting from a review of product sourcing methods and initiatives to strengthen full-price sales.」

「During the nine-month consolidated period, the company reviewed its product decision-making process and changed to an integrated product-development approach combining merchandising and sales. As a result of reviewing the mix of long-lead-time production and quick-response production, the gross profit margin improved by 4.1 percentage points from the previous year.」

「During the six-month consolidated period, the company reviewed its product decision-making process and changed to an integrated product-development approach combining merchandising and sales. As a result, the gross profit margin improved by 4.6 percentage points from the previous year.」

「The gross profit margin improved by 3.3 percentage points year on year and selling, general and administrative expenses were 90.2% of the previous year’s level, in line with plan. However, sales fell short of plan as the number of customers at existing stores struggled at 85.4% of the previous year’s level.」

「As a result of disposing of inventory following the sales shortfall against plan, the gross profit margin for the nine-month period deteriorated by 2.6 percentage points year on year to 52.8%.」

「Gross profit was affected by the disposal of excess carried-over products held at the beginning of the period and the early disposal of stagnant inventory resulting from the first-quarter sales shortfall against plan. As a result, the gross profit margin deteriorated by 3.6 percentage points year on year to 51.1%, and the operating loss for the six-month period expanded from the previous year.」

「The shortfall in sales against plan and the resulting deterioration in inventory turnover days led to the early disposal of stagnant inventory. The resulting shortfall in the gross profit margin against plan contributed to the deterioration in company-wide performance.」

「Regarding “advancing SPA reform,” the company reduced price changes and sourcing costs, increased the turnover of fresh merchandise, raised the proportion of full-price sales and worked to improve the gross profit margin. Beginning inventories for the fiscal year were reduced by approximately 30% from the previous year. As the company brought forward the season and increased turnover through fresh merchandise, the price-change rate and inventory turnover days improved year on year. As a result, the gross profit margin improved by 1.3 percentage points year on year.」

「Beginning inventories for the fiscal year were reduced by approximately 30% from the previous year. As the company brought forward the season and increased turnover through fresh merchandise, the price-change rate improved by 2.0 percentage points year on year and inventory turnover days improved by 3.5 days. As a result, the gross profit margin improved by 1.4 percentage points year on year.」

「Beginning inventories for the fiscal year were reduced by approximately 30% from the previous year. As the company brought forward the season and increased turnover through fresh merchandise, the price-change rate improved by 2.8 percentage points year on year and inventory turnover days improved by 8.1 days. As a result, the gross profit margin improved by 1.9 percentage points year on year.」

「Regarding “advancing SPA reform,” the company is working to improve the gross profit margin by reducing price changes and sourcing costs, increasing the turnover of fresh merchandise and raising the proportion of full-price sales. Beginning inventories for the fiscal year were reduced by approximately 30% from the previous year. As the company brought forward the season and increased turnover through fresh merchandise, price changes improved by 3.2 percentage points year on year and inventory turnover days improved by 17.8 days. As a result, the gross profit margin improved by 2.1 percentage points year on year.」

「As a result, the gross profit margin deteriorated by 0.2 percentage points year on year in the first quarter, but improved by 0.8 percentage points in the second quarter, 2.3 percentage points in the third quarter and 8.1 percentage points in the fourth quarter, resulting in a 2.7-percentage-point improvement for the full-year period. Procurement of products for direct-import sales, an initiative to improve product sourcing costs, progressed as planned, and the sourcing cost ratio improved by 3.0 percentage points from the previous year.」

「As a result, the gross profit margin deteriorated by 0.2 percentage points year on year in the first quarter, but improved by 0.8 percentage points in the second quarter and 2.3 percentage points in the third quarter, resulting in a 1.0-percentage-point improvement for the nine-month period.」

「At its core business, ikka, the company brought forward the season for apparel and strengthened full-price sales. As a result, the gross profit margin improved by 0.2 percentage points during the first half. Inventories at the end of the second quarter were also below the previous year’s level, and summer inventories were substantially lower than a year earlier, reducing the inventory impact from the third quarter onward and into the next fiscal year.」

「Regarding “improving the gross profit margin through merchandising and logistics reform,” the company made normalising the merchandising cycle disrupted by last year’s warm winter its top priority and proceeded with the seasonal transition. Procurement of products for direct-import sales, an initiative to improve product sourcing costs, progressed as planned in the first quarter.」