(Filed Under Financial and General Interest News). For the six months ended September 30, at Wacoal International Corp., the U.S. division, “overall sales” as well as operating income “on a local currency basis” both exceeded results for the same period last year.

For the American division of Tokyo-based Wacoal Holdings Corp., the “negative effects of inventory controls conducted by our customers,” in this country, “were offset by the steady performance of sales (mostly of our core Wacoal brand products) at department stores in the United States, and sales from our e-commerce website also showed favorable performance.”

The results at the U.S. division were favorably impacted “due to the improvement in profits from sales resulting from containing manufacturing costs and the results of our efforts to control PR related expenses.” Despite the improved performance in dollars in this country, overall sales and operating income, “on a yen converted basis” both “largely fell below the results” for the same six months in 2015.

Interestingly, while Wacoal did not break out figures for the United States, it did provide a chart showing that the combined sales for Europe and North America for the six months ended September 30 fell to 15,910 million yen (about $152.2 million) compared to 18,676 million yen for the same six month last year. Operating income plummeted for the combined regions to 1,088 million yen (about $10.4 million) compared to 2,152 million yen in the six month of 2015.

For parent company Wacoal Holdings, which operates in many other territories around the world, including Japan, China and Europe, overall net sales were 102,412 million yen, (about $979 million dollars at current conversion rates), a decrease of 3.1% as compared to 105,715 million yen last year. Net income for the first half year was 9,200 million yen (about $88 million dollars), an increase of 23.0% as compared to 7482 million yen last year.

Explaining the overall picture, Wacoal reported sales for the six months “fell below the results for the corresponding period of the previous fiscal year due to a slowdown in our wholesale business of women’s innerwear products, mainly at department stores and general merchandise stores, despite the favorable performance of our directly managed stores of Wacoal Corp., our core operating entity in our domestic [Japanese] business. Further, while demand in the United States and Europe has been showing a recovery trend, sales from our overseas business decreased due to the impact of the appreciation of the yen and poor sales trends in China. As a result, our group’s overall sales fell below the results for the corresponding period of the previous fiscal year. In terms of profit, overall operating income largely fell below the results for the corresponding period of the previous fiscal year due to an increase in selling, general and administrative expenses which resulted from our domestic business and costs accrued in connection with the reorganization proceedings by a subsidiary located in France. Nevertheless, operating income still exceeded our initial plan. Income before income taxes and equity in net income of affiliated companies largely exceeded the results for the corresponding period of the previous fiscal year as a result of gain on sales of property, plant and equipment which was recorded during the first quarter of the current fiscal year.”

The company added, “With respect to Wacoal Europe, in the United Kingdom, although sales from specialty stores and sales through e-commerce websites showed favorable performance, sales at department stores showed weak performance. Demand in the Eurozone area showed a recovery since the summer with a steady trend.” The company continued that “sales in North America and Eurozone countries were inflated by the influence of the weak Sterling pound. As a result, total sales on a local currency basis (Sterling pound) exceeded the results for the corresponding period of the previous fiscal year, but sales on a yen converted basis fell largely below the results for the corresponding period of the previous fiscal year. With regard to profit, we recorded an operating loss due to costs incurred for the reorganization proceedings by our subsidiary.”

In China, “sales at department stores showed poor sales trend, and sales from third-party e-commerce websites also showed weak performance in contrast to the strong performance seen during the previous fiscal year. As a result, overall sales, which were also impacted by the temporary suspension of shop openings and the closure of underperforming shops for La Rosabelle, our brand targeting the middle-class market, fell below the results for the corresponding period of the previous fiscal year. In terms of profit, operating income largely fell below the results for the corresponding period of the previous fiscal year due to an increase in labor costs, in addition to decreased sales and a decline in the sales profit rate.

As a result of the above, overall sales and operating income, on a yen converted basis, attributable to our “Wacoal Business (Overseas)” segment both fell below the results for the corresponding period of the previous fiscal year.”

Finally, at the company’s Peach John brand, “sales from our domestic directly managed retail stores (mainly in existing shops) showed steady performance and sales through third-party e-commerce websites also largely expanded. Sales from our mail-order catalogues, however, largely fell below the results for the corresponding period of the previous fiscal year due to the impact of a decrease in the number of existing customers and the poor performance in early spring, offsetting the higher number of users who visited our renovated website and the gradual increase in new customers beginning in the summer. On the other hand, with respect to our overseas subsidiaries, our directly managed retail stores in Hong Kong performed well, and sales in China also largely expanded. As a result of the above, overall sales and operating income attributable to our “Peach John Business” segment both fell below the results for the corresponding period of the previous fiscal year.” — NM

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Published 11-01-2016 by Nick Monjo