Japan's Wacoal faces challenges at home but global ops are stronger
Japanese intimates giant Wacoal reported a mixed set of results this week with sales broadly flat but operating profit up, although net profit fell. Yet investors seemed pleased as the company’s shares rose after the announcement.
Net sales in the year to March 31 dipped by 0.1% to ¥195.572 billion, while operating income was up 13.3% to ¥12.534 billion, a pleasing result after profit by that measure had fallen over 20% in the previous year. But net income fell 22.2% to ¥9.745 billion.
While overall sales dipped very slightly, in Wacoal’s domestic business they fell a larger 2% due to a tough environment for wholesale. But consolidated sales from overseas markets rose 7% due to e-tail strength and steady comparable sales in Europe, the US and China.
The increase in operating profit came on the back of initiatives to improve profitability in the domestic business and the rising sales in the overseas ops, as well as from various one-off effects.
The year certainly wasn’t helped by the improvement in the Japanese economy as the environment for the women’s domestic innerwear market “remained difficult, due to a slowdown in the recovery of consumer spending,” with shoppers being increasingly budget-conscious.
But in overseas markets, consumer spending was stable in Europe and the US, “as consumer sentiment remained strong” in America and the employment environment continued to improve in the eurozone area, despite the “significant uncertainty underlying Brexit in Europe."
In China, consumer spending was stable as a result of strong growth in disposable incomes, and retail sales continued to achieve "a high level of growth due to reduced employment uncertainty.”
To respond to all this, Wacoal is focusing its attentions on both the Japanese market and key countries around the world, working to improve the efficiency of its wholesale business structure, and upgrading its omnichannel capabilities for Europe and the US. It’s also boosting product quality and cost competitiveness in China and ASEAN-member countries where its product supply bases are located.
And it will accelerate new shop openings in key locations, while continuing to work on its websites to make them more user-friendly.
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