Whether higher orders convert into revenue and whether tailoring delays are resolved are the key first-half focus

First-quarter revenue was ¥1,358 million, down 13.1% year on year, while operating profit was ¥26 million, down 75.2%. The company explained that orders themselves exceeded plan, but tailoring after orders were received took time, causing shipments of some products to be pushed into the second quarter and beyond. Accordingly, rather than attributing the entire revenue decline to deteriorating demand, the most important point to verify in the first half is whether the time lag from order receipt to shipment has been resolved.

In the first quarter of the previous year, revenue was ¥1,563 million and operating profit was ¥106 million. Against the 13.1% decline in revenue this time, operating profit fell 75.2%, a much sharper decline, suggesting that fixed-cost burdens and upfront expenses may have continued to weigh on profit in addition to the timing shift in revenue recognition. Second-quarter standalone revenue and operating profit need to be separated from cumulative figures to determine whether the recovery in shipments has translated into a recovery in profit.

The full-year plan is revenue of ¥6,070 million, operating profit of ¥158 million, ordinary profit of ¥120 million and net profit of ¥104 million. Under a mechanical 50% benchmark that does not account for seasonality, the first half would require revenue of ¥3,035 million, operating profit of ¥79 million, ordinary profit of ¥60 million and net profit of ¥52 million. These are not first-half targets indicated by the company, but they are useful progress benchmarks for assessing whether the current full-year plan can be maintained.

First-quarter orders diverged, with furisode orders up 12.2% year on year and general kimono and other products down 11.7%. In the first-half results, it will be important to see whether the company discloses the amounts of these orders, order backlog, the value of products undergoing tailoring and scheduled shipment timing. We will assess from both the order and shipment sides whether the increase in furisode orders is translating into actual revenue and whether the decline in general kimono orders is temporary or reflects a sustained drop in demand.