Cost Reduction and Return to Operating Profitability

「The Company promoted company-wide expense optimization, including optimizing advertising and promotional expenses and reviewing its store strategy to improve its cost structure.」

「The Company also promoted company-wide expense optimization. As a result, for the six months ended September 30, net sales were ¥10,510 million, up 4.9% year on year; operating profit was ¥112 million, up 310.5%; ordinary profit was ¥352 million, up 219.2%; and interim net profit attributable to owners of the parent was ¥217 million, compared with an interim net loss attributable to owners of the parent of ¥8 million in the previous fiscal year, resulting in increases in both revenue and profit year on year.」

「As a result, for the six months ended September 30, net sales were ¥10,021 million, up 8.6% year on year; operating profit was ¥27 million, compared with an operating loss of ¥126 million in the previous fiscal year; ordinary profit was ¥110 million, compared with an ordinary loss of ¥26 million in the previous fiscal year; and interim net loss attributable to owners of the parent was ¥8 million, compared with an interim net loss attributable to owners of the parent of ¥55 million in the previous fiscal year.」

「Operating profit for the fiscal year was ¥552 million, down ¥251 million year on year, and the operating margin was 2.8%, compared with 4.1% in the previous fiscal year.」

「As a result, for the nine months ended December 31, net sales were ¥13,797 million, down 3.1% year on year, and operating loss was ¥377 million, compared with operating profit of ¥371 million in the previous fiscal year.」

「As a result, for the six months ended September 30, net sales were ¥9,226 million, down 5.7% year on year; operating loss was ¥126 million, compared with operating profit of ¥340 million in the previous fiscal year; and ordinary loss was ¥26 million, compared with ordinary profit of ¥420 million in the previous fiscal year.」

「As a result, for the first quarter of the fiscal year, net sales were ¥4,030 million, down 4.5% year on year; operating loss was ¥580 million, compared with an operating loss of ¥283 million in the previous fiscal year; ordinary loss was ¥519 million, compared with an ordinary loss of ¥248 million in the previous fiscal year; and, after recording a ¥191 million tax benefit adjustment, quarterly net loss attributable to owners of the parent was ¥355 million, compared with a quarterly net loss attributable to owners of the parent of ¥130 million in the previous fiscal year.」

「Operating profit for the fiscal year was ¥803 million, up 18.2% year on year, and the operating margin was 4.1%, compared with 3.6% in the previous fiscal year.」

「As a result, for the nine months ended December 31, net sales were ¥14,244 million, up 4.6% year on year; operating profit was ¥371 million, up 58.3%; ordinary profit was ¥491 million, up 37.2%; and profit attributable to owners of the parent was ¥359 million, up 143.0%, resulting in increases in both revenue and profit year on year.」

「As a result, for the six months ended September 30, net sales were ¥9,730 million, up 6.4% year on year; operating profit was ¥284 million, up 55.3%; ordinary profit was ¥420 million, up 26.4%; and profit attributable to owners of the parent was ¥310 million, up 98.6%, resulting in increases in both revenue and profit year on year.」

「As a result, for the first quarter of the fiscal year, net sales were ¥4,195 million, down 3.6% year on year; operating loss was ¥310 million, compared with an operating loss of ¥15 million in the previous fiscal year; ordinary loss was ¥248 million, compared with ordinary profit of ¥21 million in the previous fiscal year; and quarterly net loss attributable to owners of the parent was ¥130 million, compared with a quarterly net loss attributable to owners of the parent of ¥34 million in the previous fiscal year.」

「Operating profit for the fiscal year was ¥588 million, down ¥23 million year on year, and the operating margin was 3.1%, compared with 3.3% in the previous fiscal year.」

「In the previous fiscal year, personnel expenses, rent and depreciation expenses incurred during temporary closures were recorded as extraordinary losses due to the nationwide spread of COVID-19. In the current fiscal year, personnel expenses and other costs were recorded as selling, general and administrative expenses as usual. In addition, SG&A expenses increased year on year partly because management support fees rose as the Company strengthened its collaboration with RIZAP Group, Inc. and its group companies to reinforce its management base during the COVID-19 pandemic.」

「As a result, for the six months ended September 30, net sales were ¥9,141 million, up 5.6% year on year; operating profit was ¥183 million, up 16.4%; ordinary profit was ¥332 million, up 0.7%; and profit attributable to owners of the parent was ¥156 million, up 3.6%.」

「As a result, for the first quarter of the fiscal year, net sales were ¥4,352 million, up 13.7% year on year; operating loss was ¥15 million, compared with an operating loss of ¥174 million in the previous fiscal year; and ordinary profit was ¥21 million, compared with an ordinary loss of ¥137 million in the previous fiscal year.」

「In addition to implementing diverse sales initiatives, including expanding online-offline integration (OMO) through online events and online counselling, renewing the e-commerce system and introducing group-wide loyalty points, we will continue improving usability to enhance the customer experience (CX), accelerate digital transformation (DX) and strengthen our earnings base, while maintaining rigorous cost control and responding to external factors such as COVID-19.」

「As a result, for the cumulative third quarter of the current fiscal year, sales were ¥13,109 million, down 4.5% year on year; operating income was ¥325 million, down 20.7%; ordinary income was ¥489 million, down 10.4%; and quarterly net income attributable to owners of the parent was ¥228 million, down 31.7%.」

「As a result, for the cumulative second quarter of the current fiscal year, sales were ¥8,655 million, down 8.6% year on year; operating income was ¥157 million, down 72.2%; ordinary income was ¥330 million, down 49.9%; and quarterly net income attributable to owners of the parent was ¥151 million, down 63.2%.」

「As a result, for the cumulative first quarter of the current fiscal year, sales were ¥3,829 million, down 10.0% year on year; the operating loss was ¥174 million, compared with operating income of ¥55 million in the same period of the previous year; the ordinary loss was ¥137 million, compared with ordinary income of ¥108 million; and the quarterly net loss attributable to owners of the parent was ¥153 million, compared with quarterly net income attributable to owners of the parent of ¥94 million.」

「On the earnings front, in addition to contributions from new products and services, reductions in procurement costs improved the cost-of-sales ratio to 24.4%, an improvement of 2.8 percentage points from the previous fiscal year. Although rents and depreciation increased as a result of investments for growth, including new store openings and renovations, the Company pursued thorough cost controls, including restraining advertising expenses in light of consumer spending trends. As a result, operating income and ordinary income increased significantly.」

「Meanwhile, the Company increased earnings by improving the efficiency of sales initiatives in the women's lingerie and related businesses and improving profitability through a logistics review in the maternity and baby-related businesses. Operating income and ordinary income for the cumulative third quarter were both the highest since the Company transitioned to consolidated accounting in the fiscal year ending March 2015.」

「In the women's lingerie and related businesses, operating income improved steadily as a result of continuously reviewing sales initiatives from the beginning of the fiscal year and other measures. Consequently, sales were ¥7,873 million, up 7.4% year on year, and segment income was ¥577 million, compared with a loss of ¥495 million in the same period of the previous year.」

「During the cumulative first quarter of the current fiscal year, the Company improved its earnings base in its core women's lingerie and related businesses by optimizing sales prices and taking other measures. It also built a new earnings base by operating bridal and hair salon businesses to provide services tailored to customers' life stages. As a result, sales were ¥4,256 million, up 4.9% year on year; operating income was ¥55 million, compared with an operating loss of ¥425 million in the same period of the previous year; ordinary income was ¥108 million, compared with an ordinary loss of ¥370 million; and quarterly net income attributable to owners of the parent was ¥94 million, compared with a quarterly net loss attributable to owners of the parent of ¥407 million. The Company began the fiscal year in the black.」

「On the earnings front, in the women's lingerie and related businesses, stable deliveries of the core Curvaceous product series and improved gross profit margins resulting from the optimization of sales promotion measures, including discounts, combined with efficient implementation of promotions such as television commercials, led to a significant improvement of 9.8 percentage points in the operating margin from the second quarter. As a result, operating income for the third quarter of the current consolidated fiscal year, the 3 months from October through December, was ¥366 million, compared with an operating loss of ¥121 million in the same period of the previous year. The Company achieved its highest third-quarter operating income since the fiscal year-end change in the fiscal year ending March 2013, and achieved profitability for the October-to-December period for the first time in 10 years.」

「For the cumulative second quarter of the current fiscal year, sales were ¥8,618 million, up 17.9% year on year; the operating loss was ¥519 million, compared with operating income of ¥514 million in the same period of the previous year; the ordinary loss was ¥565 million, compared with ordinary income of ¥461 million; and the quarterly net loss attributable to owners of the parent was ¥704 million, compared with quarterly net income attributable to owners of the parent of ¥623 million. Expenses increased year on year because the Company continued to make upfront growth investments, including strengthening promotions aimed at medium- to long-term growth, expanding its store network and promoting recruitment centered on body stylists, or store sales staff.」

「Expenses have increased compared with the same period of the previous year because the Company has continued to make upfront growth investments, including strengthening promotions aimed at medium- to long-term growth, expanding its store network and promoting recruitment centered on body stylists.」

「On the earnings front, advertising expenses increased year on year because of television commercial and infomercial broadcasting costs and other factors. However, thorough reviews of expenses overall, including improvements in store operating efficiency through store integration, reduced total expenses year on year. Together with the effect of higher sales, this resulted in operating income of ¥393 million, compared with an operating loss of ¥617 million in the same period of the previous year, an improvement of ¥1,010 million, and ordinary income of ¥341 million, compared with an ordinary loss of ¥571 million, an improvement of ¥913 million. The Company achieved profitability for the cumulative third quarter for the first time since the fiscal year ended August 2012, before the change in the fiscal year-end.」

「On the earnings front, advertising expenses increased year on year because of infomercial broadcasting costs and other factors. However, thorough reviews of expenses overall reduced total expenses year on year. Together with the effect of higher sales, this resulted in operating income of ¥514 million, compared with an operating loss of ¥242 million in the same period of the previous year, an improvement of ¥757 million, and ordinary income of ¥461 million, compared with an ordinary loss of ¥212 million, an improvement of ¥674 million. The Company also recorded ¥350 million in extraordinary income, including a gain on the revision of its retirement benefit plan. As a result, quarterly net income attributable to owners of the parent was ¥623 million, compared with a quarterly net loss of ¥73 million in the same period of the previous year, an improvement of ¥696 million. The Company therefore achieved profitability in the second quarter for the first time in 4 fiscal years.」

「On the earnings front, advertising expenses increased year on year in selling, general and administrative expenses because of intensified marketing activities, including infomercials and television commercials. However, thorough reviews of other expenses reduced total expenses year on year. Together with the effect of higher sales, this resulted in operating income of ¥42 million, compared with an operating loss of ¥690 million in the same period of the previous year, an improvement of ¥732 million, and ordinary income of ¥68 million, compared with an ordinary loss of ¥675 million, an improvement of ¥743 million. The Company achieved profitability in the first quarter for the first time in 9 fiscal years.」

「On the earnings front, as the Company pursued business-structure reforms, it worked across the organization to consolidate and close unprofitable stores and review expenses. As a result, improvements progressed in cost of sales and selling, general and administrative expenses, and the Company achieved profitability. Consequently, sales were ¥13,401 million, down 0.6% from the previous fiscal year, and operating income was ¥135 million, compared with an operating loss of ¥600 million in the same period of the previous year.」

「As a result, for the cumulative third quarter of the current fiscal year, sales were ¥9,277 million, down 0.1% year on year; the operating loss was ¥617 million, compared with an operating loss of ¥1,197 million in the same period of the previous year; the ordinary loss was ¥571 million, compared with an ordinary loss of ¥1,129 million; and the quarterly net loss attributable to owners of the parent was ¥361 million, compared with a quarterly net loss attributable to owners of the parent of ¥4,232 million.」

「To resolve these circumstances, the Company will: 1. enhance referral benefits for customers introduced by existing customers and purchase benefits aimed at improving existing customer satisfaction; 2. offer a free monitor program, the Body-Shaping Trial, so customers can experience body shaping; 3. use email newsletters to encourage customers who have not recently visited to return; and 4. actively exhibit booths at events such as Kansai Collection to raise awareness, while continuing expense-reduction measures. As a result, for the cumulative second quarter of the current fiscal year, sales were ¥6,566 million, up 9.0% year on year; the operating loss was ¥242 million, compared with an operating loss of ¥1,036 million in the same period of the previous year; the ordinary loss was ¥212 million, compared with an ordinary loss of ¥985 million; and the quarterly net loss attributable to owners of the parent was ¥73 million, compared with a quarterly net loss attributable to owners of the parent of ¥4,055 million, reflecting extraordinary income of ¥411 million from the sale of the head office land and buildings and other items.」

「The Company will continue expense-reduction measures implemented from the previous fiscal year. As a result, for the cumulative first quarter of the current fiscal year, sales were ¥2,675 million, up 2.8% year on year; the operating loss was ¥690 million, compared with an operating loss of ¥1,026 million in the same period of the previous year; the ordinary loss was ¥675 million, compared with an ordinary loss of ¥989 million; and the quarterly net loss attributable to owners of the parent was ¥898 million, compared with a quarterly net loss attributable to owners of the parent of ¥1,070 million.」

「As a result of continuing to reduce selling, general and administrative expenses from the first half, the Company achieved operating profitability in the second half.」