FY2024 Second Quarter Business
Results Presentation
November 9, 2023
1. Implementation of Structural Reforms in Line with the Review of the
Medium-term Management Plan and the Revision of Consolidated Earnings Forecasts in Line with the Withdrawal of Subsidiaries
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- Review of Medium-term Management Plan
- The changes in the external environment were quicker than expected, and weaknesses in our supply chain management have become apparent
- Under the new management system, we will thoroughly review the strategies of the medium-term management plan
- In order to shift to a structure that can steadily generate cash, we will start business model reforms
■Policies of Revised Medium-Term Management Plan
Period:FY2024~FY2026 (The previous medium-term management plan will be postponed by one year.)
- Business model reforms to improve profitability
- Growth strategy to achieve VISION 2030
- Introducing ROIC management
- Promoting asset reduction
Implementing business model reforms (supply chain management reforms and cost structural reforms) to restore basic profitability
Carrying out "brand strategy" and "customer strategy," utilizing the power of digital resources and our Company's strengths to lead to further growth
Introducing ROIC management as business management infrastructure that supports measures to enhance profitability and the effectiveness of strategies
Improving capital efficiency by reducing inventories, policy shareholdings, and streamlining real estate holdings
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* For details on this matter, please refer to the "Notice of Dividend of Surplus and Reversal of General Reserve" disclosed on November 9, 2023.
- Implementation of Structural Reforms and Temporary Recording of Structural Reform Expenses
- As part of the medium-term management plan (revised), Wacoal will implement cost structure reforms to improve profitability and achieve sustainable growth
- Temporary structural reform expenses (approximately ¥6 billion) expected to be recorded in FY2024
■Summary of Major Cost Structure Reform
- Withdrawal and consolidation of unprofitable brands
- Withdrawal of poorly performing stores
- Inventory disposal
- Voluntary retirement offer
The streamline of marketing activities and new product development processes by consolidating or abolishing 26 out of 68 (38% of total) product lines comprising the nine core brands
In light of the business environment, we will review the criteria for withdrawing stores, and consider measures including withdrawing stores that do not meet these criteria by the end of the current fiscal year for 22 poorly performing directly managed stores (14% of total of 154 stores), 10 department stores (5% of total of 211 stores), and other stores to improve management efficiency
Inventories determined to be unable to be sold on a continuing basis at stores within the Group due to reasons such as the withdrawal and integration of unprofitable brands and the withdrawal of poorly-performing stores will be disposed of in an appropriate manner in order to improve asset efficiency and profitability
The business situation is more severe than expected. As part of further cost structure reform, we will offer voluntary retirement (for applicants, we will provide support for re-employment through a re-employment support company, providing career development opportunities so employees can continue to use their abilities in new fields.)
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For details on this matter, please refer to the "Announcement Regarding Variances between the Forecast of Consolidated Business Results and Actual Consolidated Business Results for the Six-Month Period ended September 30, 2023, Revisions to the Forecast of Consolidated Business Results, Implementation of Structural Reforms at Our Consolidated Subsidiary, Recognition of Impairment Charges due to Withdrawal and
Liquidation of Our U.S. Consolidated Subsidiary's Business, and Reduction in Executive Remuneration (IFRS)" disclosed on November 9, 2023.
- Impairment Loss on Goodwill Related to Wacoal International (U.S.)
- Decision of the withdrawal from the LIVELY business of Intimates Online, Inc., Wacoal International (U.S.)'s subsidiary, and liquidation of the company
- ¥ 7.43 billion of impairment loss on goodwill was recorded in the second quarter results for FY2024
■Summary
Background to the decision to withdraw from the business and liquidate the company
Impact on 2Q results for FY2024 and full-year results
- Financial results after the acquisition fell short of the plan due to entry by competitors and restrictions on targeted advertising due to heightened restrictions on the use of personal information
- After considering various possibilities for future business development, we determined that it would be difficult to improve the performance of the business and monetization in the future
- We decided to withdraw from the LIVELY business and liquidate IO as part of the business model reforms in the medium-term management plan (revised)
- Total of goodwill impairment loss and inventory valuation allowance ¥7.43 billion recorded as "other expenses" in the second quarter for FY2024 (goodwill impairment: $45.2 million (¥6.37 billion); inventory valuation allowance: $7.5 million (¥1.06 billion))
- In addition to the aforementioned items, we expect to record temporary retirement expenses (negative profit) and reversal of lease liabilities (positive profit)
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For details on this matter, please refer to the "Announcement Regarding Variances between the Forecast of Consolidated Business Results and Actual Consolidated Business Results for the Six-Month Period ended September 30, 2023, Revisions to the Forecast of Consolidated Business Results, Implementation of Structural Reforms at Our Consolidated Subsidiary, Recognition of Impairment Charges due to Withdrawal and
Liquidation of Our U.S. Consolidated Subsidiary's Business, and Reduction in Executive Remuneration (IFRS)" disclosed on November 9, 2023.
- Revision of Consolidated Earnings Forecasts for FY2024 and Target Values for Medium-Term Management Plan (Revised)
- Revision of earnings forecasts disclosed on May 12 due to the impact of structural reform expenses and impairment losses associated with the withdrawal of subsidiaries, in addition to sluggish sales in all major regions
- Through the implementation of the medium-term management plan (revised), we aim to improve the effectiveness of management and recover business performance
■Revisions to the Forecast of FY2024 Business Results | ■Figures planned in the final year of the | ||||||||||
(vs initial plan) | medium-term management plan | (Billion of yen) | |||||||||
(Billion of yen) | |||||||||||
initial plan | revised plan | Planning | FY2025 | FY2026 | Difference from | ||||||
(May 12 Disclosure) | (November 9 | difference | (initial plan) | (Revised medium-term | initial plan | ||||||
Disclosure) | management plan) | ||||||||||
Revenue | 205.0 | 196.0 | -9.0 | 220.0 | 203.0 | -16.0 | |||||
Business Profit | 6.0 | 1.7 | -4.3 | 16.0 | 13.0 | -3.0 | |||||
Impairment losses on | ー | -7.3 | -7.3 | ー | ー | ー | |||||
U.S. business | |||||||||||
Structural reform | ー | -6.0 | -6.0 | ー | ー | ー | |||||
expenses(Wacoal) | |||||||||||
Operating Profit | 6.0 | -12.0 | -18.0 | 16.5 | 13.0 | -3.5 | |||||
Net profit attributable | 4.8 | -10.8 | -15.6 | 12.5 | 10.0 | -2.5 | |||||
to owners | |||||||||||
6% | 7% | +1% | |||||||||
ROE | ー | ー | ー | ||||||||
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For details on this matter, please refer to the " Announcement Regarding Variances between the Forecast of Consolidated Business Results and Actual Consolidated Business Results for the Six-Month Period ended September 30, 2023, Revisions to the Forecast of Consolidated Business Results, Implementation of Structural Reforms at Our Consolidated Subsidiary,
Recognition of Impairment Charges due to Withdrawal and Liquidation of Our U.S. Consolidated Subsidiary's Business, and Reduction in Executive Remuneration (IFRS)" and "Notice of Dividend of Surplus and Reversal of General Reserve" disclosed on November 9, 2023.
2. | FY2024 2Q Financial Overview |
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Executive Summary for FY2024 2Q (Jul-Sep)
Revenue
46.3 billion yen
<YoY>-¥2.14billion(-4.4%)
<Planning difference>-¥5.56billion(-10.7%)
➢ In the second quarter, the business environment became more severe, and all segments fell significantly below the plan
FY2024 | 1Q | FY2024 2Q | |||||
Results | YoY | Planning difference | Results | YoY | Planning difference | ||
Wacoal business(Japan) | 23.77 | -0.72(-2.9%) | -1.53(-6.0%) | 23.50 | -0.87(-3.6%) | -0.24(-9.3%) | |
Wacoal business(Overseas) | 18.84 | +0.64(+3.5%) | -0.56(-2.9%) | 16.19 | -0.70(-4.2%) | -2.21(-12.0%) | |
Peach John business | 2.77 | -0.18(-6.2%) | -0.23(-7.7%) | 2.73 | -0.34(-11.0%) | -0.52(-15.9%) | |
Other businesses | 3.41 | +0.02(+0.6%) | +0.0(+0.3%) | 3.92 | -0.23(-5.5%) | -0.43(-10.0%) | |
Business Profit
1.4 billion yen
<YoY>ー¥0.52 billion(-26.5%)
<Planning difference>-1.06billion(-42.2%)
- In addition to the impact of the decline in sales, the impact of a deterioration in the sales profit ratio due to the recording of valuation losses and other factors
(billions of yen) | ||||||||
FY2024 | 1Q | FY2024 2Q | ||||||
Results | YoY | Planning difference | Results | YoY | Planning difference | |||
Wacoal business(Japan) | 0.31 | -0.56(-64.1%) | +0.21(+211%) | 0.67 | -0.15(-17.7%) | -0.33(-32.6%) | ||
Wacoal business(Overseas) | 1.83 | +0.66(+55.7%) | +0.23(+14.5%) | 0.51 | -0.13(-20.3%) | -0.54(-51.4%) | ||
Peach John business | 0.18 | -0.22(+55.9%) | -0.12(-41%) | 0.11 | -0.37(-77.8%) | -0.13(-54.3%) | ||
Other businesses | 0.05 | +0.12(ー) | +0.05(ー) | 0.16 | +0.12(ー) | -0.06(-29.1%) | ||
Operating Loss
-6.1 billion yen
<YoY>-¥7.64 billion
<Planning difference>ー¥8.11 billion
- An operating loss was recorded due to a decrease in business profit and impairment loss at Wacoal International (U.S.) due to IO's withdrawal from the business and liquidation
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FY2024 2Q(Jul-Sep): Business Conditions at Major Subsidiaries(Japan)
Wacoal 2Q sales trend | vs FY2023 |
vs FY2020 |
Peach John 2Q sales trend | vs FY2023 |
Note: The graph shows the monthly figures before the adjustments in settling accounts. (Including internal sales Excluding the impact of change in revenue recognition)
Note: Graphs are monthly figures based on internal management of PJ (Japan) (Including internal sales, Excluding receiving shipping charges)
97 | 93 | ||
91 | 100 | ||
76 | |
69 | 65 |
Jul. Aug. Sep.
Revenue (including internal sales, Excluding the impact of change in revenue recognition)
- vs FY2023 2Q -6% vs FY2020 2Q -31%(-32%)
【Topics of FY2024 2Q】
- Same as in the first quarter, sales of mid-range products have been sluggish, although sales of high-end products have been strong (mainstay Wacoal and Wing models have been sluggish)
Store basis Sales by Channel(% Change)
department stores:-1%(vs FY2020 -34%) directly-managed stores:+2%(vs FY2020 -9%)
GMS, Supermarket:Wacoal -1%(vs FY2020 -34%) Wing -9%(vs FY2020 -34%) Own EC:+8%(vs FY2020 +77%)
100
97 90
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Jul. Aug. Sep.
Revenue (including internal sales)
- vs FY2023 2Q -10%
【Topics of FY2024 2Q】
- Following the first quarter, sales of new products were sluggish
- Due to sluggish growth in the number of EC visitors, sales declined significantly compared with YoY
Sales by channel(Japan)
Own EC:-24%
Retail stores:-5%
Other EC:+1%
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FY2024 2Q(Jul-Sep): Business Conditions at Major Subsidiaries(US)
Wacoal America 2Q sales trend | vs FY2023 | IO Inc. 2Q sales trend | vs FY2023 |
Note: The graph shows the monthly figures before the adjustments in settling accounts. (Including internal sales)
Note: The graph shows the monthly figures before the adjustments in settling accounts. (Including internal sales)
98 | 95 | 94 | |
100 | |||
【Revenue】 including internal sales, local currency basis
- vs FY2023 2Q -4%
【Topics of FY2024 2Q】
- Strengthened purchasing control by business partners in dedicated EC
- Sales declined due to sluggish EC sales of other companies despite a recovery trend at physical stores
Store basis Sales by Channel(% Change)
Physical store:+1% EC Total:-6%
(Own EC:+5% Department store EC:-8% dedicated EC:-20%)
83 | 86 | 100 |
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Jul.Aug. Sep.【Revenue】 including internal sales, local currency basis
- vs FY2023 2Q -31%
【Topics of FY2024 2Q】
- Although we proactively invested in advertising until August in the previous year, in the current fiscal year, we held back on investing in sales promotion to improve profitability. Same as in the first quarter, sales declined due to sluggish growth in the number of visitors
Sales by channel(% Change)
IO EC:-41%
Directly managed store:-24%
Wholesale:+32%
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Wacoal Holdings Corporation published this content on 20 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 December 2023 08:22:32 UTC.