Rebuilding the OEM and ODM business to emphasize distinctive characteristics and strengths

「In addition, to become a partner that works alongside customers to address and resolve their challenges, we are working to strengthen cross-functional product planning by using our skills in developing functional materials and decarbonised and circular materials, as well as our expertise in characters and intellectual property.」

「Beginning in fiscal 2025, the Group launched a new medium-term management plan, “Create Future with Passion,” covering fiscal 2025–2027. Through strengthening its core apparel and textile wholesaling business, the Group aims to establish sustainable profitability and achieve sustainable growth, while rigorously pursuing management that is conscious of the cost of capital and share price.」

「We are currently implementing the Revitalize Plan (Plan to Restore Profitability) to strengthen our earnings base. In the core wholesale business, we are working to establish a sales approach focused on profitability while taking steps to shift production to Southeast Asia, utilize tariff reduction and exemption measures under RCEP (the Regional Comprehensive Economic Partnership), and thoroughly review ocean freight methods and arrangements to address the risk of higher costs resulting from the weaker yen and persistently high raw material prices.」

「First, regarding the recovery of profitability in the wholesale business, our core business, we will work to develop multitask personnel capable of managing the entire sales process while standardizing sales processes such as planning, proposals and production, in order to establish a sales approach focused on profitability.」

「Regarding the recovery of profitability in the wholesale business, our biggest challenge, we are working to enforce a sales approach that curbs low-margin orders won on price while securing appropriate profit by increasing added value. We will continue to review the entire operating process from planning, proposals, production and logistics, clarify and share company-wide standards, and develop production bases in South and Southeast Asia after production was temporarily shifted back to China during the COVID-19 pandemic, thereby firmly establishing a profitable business structure. As a result of these initiatives, net sales for the first quarter of the current consolidated fiscal year remained at approximately the previous year's level, at ¥14,660 million, down 0.1% year on year. However, with the gross profit margin improving to 22.8%, up 4.0 percentage points year on year, operating income was ¥415 million, compared with an operating loss of ¥87 million in the same period of the previous year, and ordinary income was ¥446 million, an increase of ¥421 million year on year, resulting in a return to profitability.」

「For our core wholesale (B2B) business, we will develop multitasking personnel, with each employee able to propose multiple items and master the entire business process from planning, proposal and production through sales, and establish parallel teams capable of serving each major customer with a small number of highly capable employees.」

「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.」

「This fiscal year, the Company is pursuing four priority measures: “recovering the existing wholesale business,” “strengthening the retail business,” “planning and proposing distinctive product lines,” and “collaborating with companies in other industries.”」

「Against this backdrop, some businesses are producing results, including the launch of a new brand for families in collaboration with a major mass retailer, increased sales from expanding its brand portfolio in the golfwear retail business, a recovery in fabric exports to European brands, and the start of exclusive sales of the Italian natural cosmetics brand L'Erbolario.」

「This fiscal year, the Company is pursuing four priority measures: “recovering the existing wholesale business,” “strengthening the retail business,” “planning and proposing distinctive product lines,” and “collaborating with companies in other industries.” Specifically, it is beginning to achieve results through a total casualwear initiative for ladies’ and men’s apparel with a major GMS, e-commerce sales of internally developed products, and coordination proposals using influencers with a major specialty-store chain, but believes that these initiatives must be strengthened further and that products capable of communicating its values need to be developed.」

「The company will establish multiple specialist organisations and strengthen collaboration with external expert teams in preparation for developing new categories and launching new retail businesses (B2C and D2C).」

「Specifically, first, together with a team of external specialists, we are undertaking a comprehensive reform of the sales process, including product planning that communicates distinctive features from the consumer's perspective, a renewed focus on the materials and patterns needed for that purpose, and diversification of sales promotion methods.」

「During the cumulative first quarter of the current fiscal year, the Company carried out an organizational restructuring at the beginning of the fiscal year and adopted an age-segmented structure for both its ladies’ and baby and kids’ apparel businesses, while reviewing the planning and proposal process and working to improve product-planning capabilities with the involvement of external specialists.」

「As part of the organizational restructuring, the company will again review its planning and proposal process and seek to improve its planning capabilities, with the involvement of external experts.」

「In light of these circumstances, we established “Back Home” (a return to our roots) as the company-wide theme for the year and focused on strengthening our product-planning capabilities, securing appropriate profit margins for each product and customer, and stabilizing quality through collaboration with production partner factories, thereby working to regain our strengths.」

「Against this backdrop, in order to break away from the trend of declining revenue and earnings since the previous fiscal year, the company has been working to restructure its core apparel business, which comprises OEM manufacturing under customer specifications and ODM manufacturing involving services from the product-planning and proposal stage.」

「On 1 November, despite being midway through the third quarter, the company reorganized its sales operations. It temporarily dissolved the Sales Department, which had been established in March 2015 as an organization structured by sales channel, consolidated human resources into the Sales Department, an organization structured by item, and reorganized the Sales Department with a focus on womenswear. This led the company to re-examine its trend-following approach to planning and design and begin developing products that combine the ability to set trends with strong fashion appeal and communicate freshness.」

「During the cumulative second quarter of the current fiscal year, the Company has been reviewing operations from the planning and proposal stage, including materials, design, functionality and fashion appeal, as it works to restructure its OEM business, which involves contract manufacturing under customers’ brands, and its ODM business, which involves contract manufacturing from the planning stage.」

「In particular, toward rebuilding the OEM and ODM businesses, we began reviewing operations from the planning and proposal stage, including materials, design, functionality and fashion appeal, but」

「The first issue the Group must address this fiscal year is the restructuring of its OEM and ODM businesses. Building on the OEM and ODM businesses that have been the Company’s strengths, it will focus on offering products that communicate individuality and distinctive features to consumers, while developing and proposing products with distinctive materials, designs and functionality, and above all, strong fashion appeal, with the aim of recovering market share.」