Increased uncertainty in the apparel market due to a slowing global economy, a stronger yen and weak consumer spending

「During the six-month consolidated accounting period, Japan’s economy remained in an extremely unstable environment, with energy prices surging and supply chain disruptions continuing amid heightened tensions in the Middle East, as well as the yen undergoing a historic depreciation. In addition, with regard to the climate and natural environment directly linked to apparel consumption, the slow rise in temperatures since June delayed the start of summer apparel consumption, while repeated natural disasters also affected personal consumption, which consequently lacked strength.」

「During the interim consolidated accounting period, personal consumption remained weak, with a strong preference for saving, including in apparel, as real wages struggled to keep pace with high prices for food, daily necessities and other items despite continued wage increases.」

「Personal consumption in Japan during the six-month consolidated accounting period was on a recovery trend, supported by wage increases and inbound demand. However, consumption of apparel remained cautious because of the impact of higher prices for food and other goods resulting from the yen’s depreciation.」

「During the cumulative consolidated first quarter, spending on high-priced goods by affluent consumers, driven by inbound demand and rising stock prices, showed strong growth in the apparel market. However, spending on everyday apparel remained sluggish as the yen's depreciation and higher prices pushed up the cost of food products generally and fuel.」

「During the consolidated fiscal year, Japan's domestic apparel market was on a recovery trend as the flow of people increased with the convergence of the COVID-19 pandemic. However, apparel spending remained lackluster due to preferences for lower prices, the entrenched casual trend and rising prices for daily necessities.」

「During the nine-month period ended 31 December, apparel market conditions continued to recover, primarily because the easing of the COVID-19 pandemic increased opportunities for people to go out.」

「The normalization of economic activity, wage increases under the annual spring wage negotiations and continued accommodative fiscal and monetary policies supported the economy, and the Japanese economy showed signs of a gradual recovery, with personal consumption also beginning to recover. However, the long-term decline in apparel spending has continued because of higher food and utility prices.」

「Although economic activity is returning to normal and consumer sentiment is expected to recover, cautious purchasing of apparel has continued because of rising prices, particularly for food and utilities.」

「During the cumulative consolidated second quarter, we recognize that the business environment has become increasingly challenging. Consumer behavior has changed significantly in response to the COVID-19 pandemic, while raw material prices and ocean freight rates have remained high due to the prolonged situation in Ukraine, and costs have risen as a result of the yen's sharp depreciation.」

「The Ukraine crisis further accelerated the rise in raw material prices, while the sharp depreciation of the yen since March made increases in retail prices, particularly for food, increasingly evident. Wages, meanwhile, remained sluggish, and consumer sentiment stagnated.」

「Although the apparel market remained sluggish, business conditions were expected to remain extremely difficult this fiscal year due to persistently high raw material costs, ocean freight rates and processing costs, as well as the continuing depreciation of the yen.」

「During the cumulative third-quarter period, real GDP for July–September turned negative for the first time in 2 quarters, and concerns about a resurgence of infections remained even after the state of emergency was lifted in October. Personal consumption of apparel therefore remained weak.」

「During the cumulative second-quarter period, the effects of intermittent declarations of a state of emergency associated with the spread of COVID-19 continued, and spending on apparel remained below pre-pandemic levels.」

「During the cumulative first-quarter period, with no end to the COVID-19 pandemic yet in sight, the effects of shortened operating hours at commercial facilities and restrictions on going out associated with the declaration of a state of emergency continued. Overall, apparel market conditions remained below 2019 levels before the pandemic, except at major suburban specialty-store chains strong in low-priced, high-functionality and staple products.」

「Personal consumption returned to positive growth in the July–September quarter for the first time in 4 quarters, helped by the retreat of the second wave of COVID-19, the Go To campaign and the payment of special fixed benefits. However, it did not recover the substantial decline recorded up to that point. Fashion consumption also remained slow to recover, except at some major specialty retailers.」

「Although requests to refrain from going out and temporary closures and shortened business hours at commercial facilities associated with the spread of COVID-19 were gradually easing following the lifting of the government’s state of emergency, fashion consumption remained below the previous year’s level, with recovery slow except at some major specialty retailers.」

「However, the substantial impact of requests to refrain from going out and shortened business hours and temporary closures at commercial facilities associated with the spread of COVID-19 made order-taking and sales activities extremely difficult, resulting in net sales of ¥11,718 million, down 26.1% year on year.」

「In the apparel market during the nine-month period ended 31 December, in addition to temperatures remaining higher than normal, the trend toward “wait-and-see ordering” among specialty stores and GMS retailers, whereby the timing of orders is carefully determined based on actual demand at stores, intensified. As a result, winter apparel sold poorly and advance orders remained sluggish. Against this backdrop, net sales for the nine-month period ended 31 December amounted to ¥46,979 million, down 7.6% year on year.」

「However, performance for the second quarter was affected by sluggish sales of summer merchandise due to record low sunshine and low temperatures in July, as well as an increasing tendency among specialty-store chains and general merchandise stores to place orders cautiously after observing store conditions, resulting in difficulties in order-taking activities.」

「During the cumulative first quarter, performance was affected by temperatures in March and April remaining lower than normal, as well as by stronger consumer demand for actual needs in the volume zone (the general price range), which led specialty-store chains and GMS operators to place orders more cautiously based on in-store conditions, a tendency known as pull-in ordering (placing orders cautiously after observing in-store conditions). As a result, order-taking activities, particularly for women's apparel, faced a difficult environment.」

「During the consolidated fiscal year, personal consumption, which accounts for approximately 60% of real GDP, remained weak throughout the year. In particular, in the volume-zone apparel market, the Company's core business, consumers continued to prefer lower prices, accompanied by intense price competition among suppliers.」

「In the current fiscal year, against the backdrop of continued consumer preference for low prices in the apparel market and the resulting intense price competition among suppliers, we have adopted “Back Home” (a return to our roots) as our theme and are focusing on regaining our strengths.」

「In the current fiscal year, against the backdrop of continued consumer preference for low prices in the apparel market and the resulting intense price competition among suppliers, we have adopted “Back Home” (a return to our roots) as our theme and are focusing on regaining our strengths.」

「This fiscal year, in response to intensifying price competition among suppliers amid consumers’ preference for lower prices in the apparel market, the Company has adopted “Back Home” (a return to its roots) as its company-wide theme and is focusing on restoring its strengths.」

「During the fiscal year, Japan’s economy saw consumer spending, which accounts for 60% of real GDP, turn positive in the short term as increased utility spending due to the severe cold this winter boosted results, although it remained weak over the year as a whole. In particular, household spending on clothing-related items continued its downward trend of several years, while consumers’ preference for low-priced clothing remained deeply entrenched.」

「During the cumulative first-quarter period, real consumption expenditure remained below the same period of the previous year, while spending on apparel continued to show little growth.」

「During the consolidated fiscal year, real household consumption expenditure remained below the previous year's level throughout the year in the area of personal consumption, which accounts for approximately 60% of real GDP. Spending on apparel in particular remained weak.」

「During the cumulative nine-month period, Japan's economy remained difficult, with real household consumption expenditure declining year on year for 8 consecutive months, while personal consumption accounts for approximately 60% of real GDP. Conditions remained particularly severe in the apparel market.」

「During the 6-month period ended 30 September, Japan’s economy saw real household consumption expenditure remain below the previous year for 5 consecutive months. In particular, spending on clothing showed no prospect of recovery; private consumption accounts for approximately 60% of real GDP.」

「Uncertainty has remained high due to the slowing global economy and the rapid appreciation of the yen. The apparel market has also shown no overall signs of recovery, affected by prolonged weakness in consumer spending, including consumers’ preference for saving and the shift toward lower prices.」