Improving the gross profit margin by determining appropriate profitability by product code and customer

「In particular, for our core wholesale business, we are working to establish a sales approach focused on profitability and, in response to the risk of higher costs resulting from yen depreciation and persistently high raw material prices, are shifting production to Southeast Asia, utilizing tariff reduction and exemption measures under RCEP (Regional Comprehensive Economic Partnership), and thoroughly reviewing maritime transportation methods and arrangements.」

「Against this backdrop, since fiscal 2022 the group has been implementing the “Revitalize Plan,” thoroughly adopting a sales approach focused on earnings, integrating the organization of its core wholesale business, strengthening comprehensive proposals combining individual items, and developing functional and environmentally considerate materials and products.」

「The company worked to pass some of the cost increases resulting from persistently high raw material prices and the yen’s depreciation into selling prices, while consistently pursuing a sales approach that secures appropriate profitability. As a result, revenue for the cumulative third quarter of the current consolidated period was ¥44,142 million, down 7.9% year on year, while operating profit was ¥1,025 million, up 316.6% year on year.」

「Restoring earnings power in the wholesale business, the company’s greatest challenge, involves curbing low-profitability orders won through price competition while thoroughly adopting a sales approach that secures appropriate profit by increasing value added. As a result, revenue in the cumulative first quarter of the current consolidated period remained broadly at the previous year’s level at ¥14,660 million, down 0.1% year on year. Along with an improved gross profit margin of 22.8%, up 4.0 percentage points year on year, operating profit was ¥415 million, compared with an operating loss of ¥87 million in the same period of the previous year, and ordinary profit was ¥446 million, up ¥421 million year on year, marking a return to profitability.」

「Against this backdrop, to restore earnings power, the company has worked to secure appropriate profit for each product code and reflect higher costs in selling prices, while developing a structure capable of making comprehensive proposals covering product planning, design and production.」

「Against this backdrop, to restore earnings power, the company has worked to secure appropriate profit for each product code from the order-taking stage and has negotiated price increases to reflect higher costs. As a result, revenue for the cumulative third quarter of the current consolidated period was ¥47,906 million, up 16.4% year on year. In terms of earnings, logistics and other costs increased with higher revenue, but the gross profit margin improved to 18.9%, up 0.9 percentage points year on year.」

「This fiscal year, to restore earnings power, we are working to negotiate the pass-through of higher costs into selling prices and to secure an appropriate profit for each product code.」

「Against this backdrop, the Company is strengthening negotiations with customers to secure appropriate profit margins by product number from the order-taking stage for its core existing wholesale business, and expects margins to improve from orders for autumn and winter products.」

「To restore earnings power, we will make every effort to secure an appropriate profit for each product code from the order-taking stage onward.」

「The Company has adopted “Back Home” (a return to its roots) as its company-wide theme and is working to improve its gross profit margin by securing appropriate profit margins for each customer, while expanding the planning of high-value-added product lines and strengthening proposals. By continuing these initiatives, it will devote every effort to recovering its earning power.」

「The company has also pursued order-taking activities focused on securing appropriate profit margins for each product and customer.」

「Against this backdrop, the Company adopted “Back Home” (a return to its roots) as its company-wide theme and, to restore performance quickly, has been strengthening proposals by reviewing and developing high-value-added product lines, while securing appropriate profit margins for each product and customer.」

「On the other hand, through efforts to improve the gross profit margin by reviewing low-margin products and reduce selling, general and administrative expenses, operating profit increased by ¥1,250 million from the previous fiscal year to ¥101 million (the previous fiscal year recorded an operating loss of ¥1,148 million), while ordinary profit increased by ¥1,309 million to ¥209 million (the previous fiscal year recorded an ordinary loss of ¥1,099 million).」

「Meanwhile, the company recognizes that its efforts to review low-margin products and reduce selling, general and administrative expenses are beginning to produce a certain level of results.」

「Under the “Back Home” (back to basics) theme, we will continue to strengthen product planning capabilities, secure appropriate margins for each product and customer through collaboration with partner factories, and stabilize quality. We will also pursue, as medium- to long-term goals, the development of distinctive products using our original materials and through collaboration with external specialists, as well as the exploration of new retail businesses, while making every effort to recover and raise earnings capacity in the short term and over the medium to long term.」

「Going forward, under the theme of “Back Home” (a return to our roots), we will focus on recovering our earning power by developing trend-driven products, determining appropriate profitability for each product and customer, and stabilizing production processes and improving quality through collaboration with contract manufacturers.」

「Second is to strengthen the company’s focus on profit. Rather than pursuing sales growth alone, we will use the information systems revamped last fiscal year to carefully determine the appropriate balance between selling prices and costs at each stage, from order receipt through ordering and procurement, and work to secure appropriate profit for each product and customer.」

「In addition, the company is again strengthening its efforts to assess profitability by product number, specifically by identifying appropriate product costs and setting accurate prices that reflect logistics, labor and property costs, with the aim of steadily improving profitability.」

「We will work to improve the gross profit margin while determining the appropriate profitability of each product code and each customer.」