Normalizing the MD Cycle and Adjusting Inventory

「In addition to sluggish full-price sales due to insufficient product freshness, increased store discounts resulting from promotional measures aimed at optimizing inventory, inventory write-downs and the impact of foreign exchange movements caused gross margin to fall 2.5 percentage points year on year to 61.6%.」

「下期においては重点商品の開発・販売強化によるプロパー販売比率の向上及び在庫水準の適正化を進め、収益性の改善に取り組んでまいります。」

「On the other hand, the company was unable to respond adequately to climate changes, including unstable weather with sharp temperature fluctuations in March and April and the prolonged summer from September onward, and struggled significantly during the full-price selling periods for each seasonal product line. Although sales recovered from the second half of December as temperatures fell in the fourth quarter, this was insufficient to offset the declines through the third quarter.」

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

「During the summer merchandise campaign, the increase in summer merchandise inventory contributed to sales growth in August.」

「The review of the summer merchandise campaign in preparation for extremely hot weather and lingering heat led to an increase in summer merchandise inventory, contributing to sales growth in August.」

「The main components of the decrease were ¥359 million in corporate tax payments and a ¥225 million increase in inventories, among others.」

「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.」

「As a result, the gross profit margin rose 0.4 percentage points year on year to 57.8%, while ending merchandise inventory decreased by ¥454 million year on year.」

「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.」

「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.」

「The Company controlled inventory by revising its procurement plans for July and August and also revised 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.」

「Because COVID-19-related temporary store closures and reduced operating hours resulted in excess inventory, spring/summer products were marked down earlier than June.」

「In the second half, the Company revised its product plans and implemented quick-response measures for best-selling products, shortening the lead time from production to stores. Although sales began to recover from November, same-store customer traffic did not recover, and annual same-store sales remained at 93.3% of the previous year's level, causing sales to diverge from the initial plan.」

「However, as a result of strengthened measures such as quick-response production of best-selling products from the second quarter onward, same-store sales recovered to 99.1% in August.」

「In the first quarter, the Company launched products ahead of the season not only in terms of color but also in changes to materials and sleeve lengths. However, sales were affected by an insufficient assortment of products suited to changes in temperature and insufficient quantities of products suitable for actual demand, among other factors, and same-store sales failed to grow.」

「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.」

「However, from April onward, the Company was unable to respond to unstable weather changes. Although it strengthened promotions for Golden Week and Mother's Day, customer traffic failed to grow and the Company struggled. In addition, early-summer and summer products fell substantially short of plan, disrupting the merchandising cycle. As a result, same-store sales for the nine-month consolidated period were 96.9% of the previous year's level.」

「Regarding improvements in inventory sell-through management, the Company aims to rebuild a system-based inventory control structure and began testing an automated transfer system at ikka in September. The system is now operating with an increased number of product styles, and the proportion of full-price sales for the products covered has improved.」

「Regarding improvements in inventory sell-through management, the Company aims to rebuild a system-based inventory control structure and began testing an automated transfer system at ikka in September. Products that have been on sale for a certain period are automatically reallocated based on each store's sell-through performance, improving the proportion of full-price sales for the products covered.」

「Regarding improvements in inventory sell-through management, the Company aims to rebuild a system-based inventory control structure and began testing an automated transfer system at ikka in September.」

「Regarding improvements in inventory sell-through management, the Company is preparing to rebuild its system for inventory control with the aim of commencing full-scale operations from the third quarter.」

「The Company worked to maintain appropriate inventory levels and improve product freshness, contributing to increases in customer traffic and gross profit. As a result, inventory turnover days were reduced by 12.7 days from the previous fiscal year.」

「At the end of the third quarter, inventory value remained below the previous year's level, and early-fall, fall and winter inventory was also substantially reduced from the previous year. This improved product freshness and contributed to increases in customer traffic and gross profit. Accordingly, inventory turnover days were reduced by 21.5 days in November alone and by 6.5 days cumulatively from March through November, improving inventory efficiency. The gross profit margin also improved by 0.3 percentage points from the previous year.」

「Sales during Golden Week, after the inventory corrections had been completed, exceeded the previous year's sales. At the end of the first quarter, the proportion of high-summer products in inventory exceeded the previous year's level, representing an improvement from the previous year. Inventory value at the end of the second quarter was also below the previous year's level, and summer inventory was substantially reduced from the previous year. The impact of inventory on the third quarter onward and the next fiscal year has therefore diminished.」

「In response, the Company made normalization of the merchandising cycle its top priority, proceeded with seasonal product transitions and completed inventory corrections before Golden Week, ahead of the full-scale launch of the early-summer and summer selling season.」