A Message from Management

A Message from Management

A Message to Our Shareholders

Michinobu Yasumoto
Representative Director
and President

The conclusion of the fiscal year ended February 28, 2019 (FY02/19) marked the end of our 72nd fiscal period.
The business domain of the Onward Group is “Bringing enrichment and color to people’s lives.” We propose fashions as a part of living culture. By creating new lifestyles and values, we aim to contribute to the enrichment of people’s lives.
In FY02/19, we continued to improve the product value of our core brands and augment customer service. In addition, we worked to reinforce highly profitable businesses and business fields where we see growth potential, such as e-commerce.
In FY02/20, we will promote the three growth strategies under the medium-term management plan commencing that year: roll out the “Creation First Business,” accelerate the “Factory to Customer (F2C) Business,” and develop the “High-Quality Lifestyle Business.”
Going forward, we will continue striving to satisfy our shareholders and all other stakeholders by providing high-quality products and services. I ask for your ongoing understanding and support of these efforts.

Business Environment and Operating Performance

During FY02/19, the Japanese economy was characterized by ongoing improvements in corporate earnings and the employment and income environment, and personal consumption rebounded. However, consumer sentiment included pockets of weakness, affected by record-level natural disasters, such as typhoons and earthquakes. Economic conditions were resurgent in Europe and the US, but the scope of the upturn was limited by such factors as trade issues, Brexit, and other political uncertainties.
The apparel and fashion industry was marked by changes in consumer purchasing intentions, leading to the diversification of sales channels, a shift toward e-commerce, and a more frugal approach toward clothing. As a result, the overall competitive environment remained challenging.
Against this backdrop, the Onward Group enacted the initiatives of its medium-term management plan that ended in FY02/19. We sought to steadily bolster earnings by enhancing the product value of our core brands and augmenting customer service. In addition, we worked to reinforce highly profitable businesses and areas of business where we see growth potential, such as e-commerce.

Consolidated Operating Performance in FY02/19
Net sales: ¥240,652 million (-1.0% YoY)
Operating profit: ¥4,461 million (-13.7% YoY)
Ordinary profit: ¥5,161 million (-12.9% YoY)
Profit attributable to owners of parent: ¥4,948 million (-7.8% YoY)

Overview by Business Segment

Note: The Company’s reportable segments have changed, effective from FY02/19. Figures given below for FY02/19 have been retroactively adjusted to reflect the new classifications.

Apparel Business

In the domestic business, we continued to concentrate our management resources on the e-commerce business. Groupwide, earnings from e-commerce rose 25.8% year on year, contributing substantially to overall sales. At Onward Kashiyama, a core operating company, sales of brands such as Jiyuku, ICB, and J.PRESS grew, with online sales accounting for a growing proportion of the total, while sales of Nijyusanku, Kumikyoku, and gotairiku were down year on year. Domestic affiliates Onward Trading and Onward Global Fashion reported lower sales. Overall, the Domestic Business generated lower sales and higher profits than in the preceding fiscal year, due to thorough efforts to withdraw from unprofitable businesses and brands and curtail operating expenses. Overseas, sales from the Jil Sander business continued to grow as its new creative team refreshed the brand. In North America, we succeeded with promotions leveraging the new J.PRESS flagship store, and e-commerce sales expanded, leading to earnings improvement. In Europe, we logged temporary expenses due to changes in the content of certain agreements in the production business and the withdrawal from unprofitable stores, leading to higher sales but lower profits from the overseas business overall. As a result, both sales and profits were down for the Apparel Business as a whole.

Lifestyle Business

From FY02/19, we have renamed the Other Business as the Lifestyle Business and brought a number of companies into the segment—specifically Chacott and Creative Yoko — in an effort to expand the Lifestyle Business.
In the Lifestyle Business, profits improved at Creative Yoko, which plans and sells pet fashion and character goods, and Kokobuy, which manufactures and sells organic hair care and skincare products. The Lifestyle Business as a whole, however, posted lower sales and profits, mainly due to the impact of the resort business, which was affected by a downturn in Japanese tourists to Guam.

Outlook for FY02/20

Looking ahead, we expect the Japanese economy to remain in a state of modest recovery. Nevertheless, the outlook remains opaque, clouded by such concerns as political uncertainty in Europe and the future direction of US economic policy. We believe the apparel and fashion market will continue to grow more global and digital, leading to increasingly severe competition.
Under these circumstances, the Onward Group will continue working to steadily bolster earnings by enhancing the product value of our core businesses and augmenting customer service. We will also develop new businesses in areas where we see growth potential.
In the Domestic Business, we aim to raise profitability of core businesses centered on Onward Kashiyama. We will also seek to expand new business domains.
Overseas, we will strive to expand our global business by leveraging our production base in Europe and strategically expanding in the Asian market, driving a higher rate of growth for the Onward Group.

Consolidated Forecast for FY02/20
Net sales: ¥256.0 billion (+6.4% YoY)
Operating profit: ¥5.5 billion (+23.7% YoY)
Ordinary profit: ¥5.7 billion (+10.4% YoY)
Profit attributable to owners of parent: ¥5.5 billion (+11.1% YoY)