(Filed Under wholesale Lingerie News). Sales for the year ended March 31, 2020 at the U.S. division of Wacoal rose modestly while operating income plummeted. One factor in the decline was an $11.5 million dollar operating loss at the company’s recently acquired Lively brand.

Sales at the U.S. division, “on a local currency basis increased by 5.9%” over last year, while “operating income on a local currency basis decreased by 80.5%” for the division. “This significant decrease was due to lower gross profit rate resulting from the higher percentage of sales subject to discounts, the impact of decreased profit from Wacoal America Inc. resulting from higher labor costs and office lease expenses, the impact of inclusion of operating loss of $11.5 million dollars (approximately 1.25 billion yen) from Intimates Online [Lively}, as well as non-recurring expenses incurred for the acquisition.”

Wacoal acquired Lively last summer for $85 million plus substantial potential additional earnouts based on future performance. At the time of of the purchase, Wacoal revealed that Lively had a net lost of $3.728 million on sales of $11.490 million in the year ended December 2018, following a loss of $1.631 million on sales of $5.315 million the year before.

The sales increase at the U.S. division “was due to the inclusion of sales of $11.9 million (approximately 1.3 billion yen) from Intimates Online [Lively], which has been consolidated into our business results since August. Revenue from Wacoal America Inc., which distributes “Wacoal” and “b.tempt’d” brand products, decreased due to the weak over-the-counter sales at department stores (physical stores), while sales from our e-commerce website and third-party e-commerce websites were strong.”

For parent company Wacoal Holdings Corp., which does business in Asia, Europe and all of North America, sales decreased 3.8% during the fiscal year while net income jumped tenfold.

The company earned 3,472 million yen (about $32.3 million at current exchange rates) on sales of 186,760 million yen (about $1.738 billion) during the year ended March 31, 2020, compared to a net profit of just 341 million yen (about $3.2 million) on sales of 194,201 million yen (about $1.807 billion) the year before.

The company also reported that “sales from Wacoal Europe Ltd. on a local currency basis decreased by 3.0% (7.9% on a Japanese yen basis) as compared to such sales for the previous fiscal year. While sales were weak in the United Kingdom due to poor sales at department stores, sales exceeded such sales for the previous fiscal year resulting from the expansion of sales in the North America, France and other European countries up until the third quarter of the current fiscal year. Revenue, however, decreased as a result of weak sales recorded during March which was impacted by the spread of the outbreak.” The Wacoal Europe brands include Fantasie, Freya, Elomi and Goddess.

For the division, “operating income on a local currency basis decreased by 24.6% (28.4% on a Japanese yen basis) as compared to such operating income for the previous fiscal year due to a more aggressive advertising campaign to expand our brand awareness, recognition of expenses incurred for the redesign of our own e-commerce website, and increases in labor costs incurred in connection with the launch of business with departments stores in Spain.”

Wacoal also reported that combined overall sales to Europe and North America declined slightly over the past fiscal year (the company did not break out the continents separately). For the year ended March 31, 2020 combined sales were 30,891 million yen (about $287 million) compared to 31,503 million yen (about $293 million) the year before.

Combined operating income for Europe and North America fell sharply, from 3,059 million yen (about $28 million) for the year ended March 31, 2019, to just 1,311 million yen (about $12 million) in the last fiscal year. —NM

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Published 05-18-2020 by Nick Monjo