Wacoal Holdings CorpTSE: 3591

Consolidated Business Results for the Six Months Ended September 30, 2024

Nov 11, 2024 at 7:47 AM UTC · Issued by Wacoal Holdings Corp

[Translation]

[IFRS]

					November 11, 2024
Listed Company: Wacoal Holdings Corp.				Stock Exchange: Tokyo
Code Number:	3591	(URL: https://www.wacoalholdings.jp/)
Representative: (Position) Representative Director, President and CEO	(Name)	Masaaki Yajima
For Inquiries:	(Position) Corporate Officer, Head of Corporate Planning Dept.	(Name)	Katsuya Hirooka
Scheduled semiannual report submission date: November 14, 2024	Tel: +81 (075) 682-1010

Scheduled dividend payment start date:	December 6, 2024
Supplementary materials regarding business results:	Yes

Explanatory meeting regarding business results:Yes (for institutional investors, analysts and the press)

(Amounts less than 1 million yen have been rounded)

1. Consolidated financial results for the six months ended September 30, 2024 (from April 1, 2024 to September 30, 2024)

Consolidated Business Results

							(% indicates increase (decrease) from the corresponding period of the previous fiscal year)
		Revenue				Business	Operating		Profit (Loss)		Profit (Loss)
					Profit	Profit (Loss)	Before Taxes

		Millions of Yen %				Millions of Yen %	Millions of Yen	%	Millions of Yen	%	Millions of Yen	%
Six-Month ended
September 30,	90,167	(5.2)		2,304	(39.6)	11,551	-	12,815	-	8,715	-
2024
Six-Month ended
September 30,	95,130	(2.4)		3,816	(12.2)	(3,384)	-	(2,739)	-	(4,396)	-
2023

		Profit (Loss)				Total	Basic Earnings	Diluted Earnings
		Attributable to				Comprehensive
					(Loss) per Share	(Loss) per Share
		Owners of Parent				Income

		Millions of Yen %	Millions of Yen %	Yen		Yen
Six-Month ended
September 30,	8,773	-	1,854	(77.4)	159.69		159.05
2024
Six-Month ended
September 30,	(4,404)	-	8,193	(28.4)	(76.09)		(76.09)
2023

(Note) Business profit is calculated by subtracting cost of sales, and selling, general and administrative expenses from revenue.

Consolidated Financial Condition

			Equity Attributable to	Ratio of Equity
	Total Assets	Total Equity	Attributable to
	Owners of Parent
			Owners of Parent

	Millions of Yen	Millions of Yen	Millions of Yen	%
As of September 30, 2024	288,858	210,133	206,965	71.6
As of the end of Fiscal	294,029	215,142	211,829	72.0
Year (March 31, 2024)

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2. Status of Dividends

		Annual Dividend
End of First	End of Second		End of Third	Year-End
Quarter	Quarter		Quarter

Total

	Yen	Yen	Yen	Yen	Yen
Fiscal Year Ended March 31, 2024	-	50.00	-	50.00	100.00
Fiscal Year Ending March 31, 2025	-	50.00
Fiscal Year Ending March 31, 2025			-	50.00	100.00
(Estimates)

(Note) Revision of estimated dividends announced	during the latest	quarter: No

3. Forecast of Consolidated Business Results for the Fiscal Year Ending March 31, 2025 (April 1, 2024 - March 31, 2025)

(% indicates increase (decrease) from the previous fiscal year)

Profit Before

Profit

Basic Earnings

Revenue

Business Profit

Operating Profit

Attributable to

Taxes

Owners of

per Share

Parent

Millions of Yen %

Millions of Yen

Yen

Annual

181,000 (3.3)

(2,500)

4,800

6,900

4,500

81.91

(Note)

Revision

of forecast of

consolidated business

results announced

during the latest

quarter: Yes

*Notes

Significant changes in scope of consolidation in the current six-month period: None
Changes in accounting policies and/or accounting estimates:
1. Changes in accounting policies required by IFRS: None
2. Changes in accounting policies other than (i) above: None
3. Changes in accounting estimates: None
Number of Issued Shares (Common Stock)

Six-Month ended	Fiscal Year ended
September 30, 2024	March 31, 2024

Number of issued shares (including

treasury stock) as of the end of:

55,500,000 shares

61,000,000 shares

Number of shares held as treasury

stock as of the end of:	1,316,317 shares	5,931,669 shares
(iii) Average number of shares during	54,938,466 shares	57,878,570 shares
six-month ended September 30):

*These quarterly financial statements are exempt from the review procedures.

*Cautionary Statement regarding Forecast of Business Results

(Cautionary note on forward-looking statements)

The forecast of business results is based on reasonable information we obtained as of the date hereof and, due to various risks, uncertainties and other factors arising in the future, actual results in the future may differ largely from the estimates set out in this document. For notes on conditions used for the forecast of business results and cautionary statements

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regarding forecast of business results, please see "1. Overview of Business Results - (3) Qualitative Information regarding Forecast of Consolidated Business Results" on page [•] of the attached materials.

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Table of Contents for Attached Materials
1.	Overview of Business Results -----------------------------------------------------------------------------------------	5
(1)	Business Results Overview of the Six-Month Period --------------------------------------------------------------	5
(2)	Explanation Related to Consolidated Financial Condition --------------------------------------------------------	9
(3)	Qualitative Information regarding Forecast of Consolidated Business Results -------------------------------	10
2.	Condensed Six-Month Consolidated Financial Statements and Accompanying Notes ------------------------	11
(1)	Condensed Six-Month Statement of Financial Position -----------------------------------------------------------	11

Condensed Six-Month Consolidated Statement of Profit or Loss and Condensed Six-Month Consolidated

	Statement of Comprehensive Income -------------------------------------------------------------------------------	13
(3)	Condensed Six-Month Consolidated Statement of Changes in Equity -----------------------------------------	15
(4)	Condensed Six-Month Consolidated Statement of Cash Flows --------------------------------------------------	16
(5)	Notes to Condensed Six-Month Consolidated Financial Statements -------------------------------------------	17
	(Segment Information) -----------------------------------------------------------------------------------------------	17
	(Notes on Going Concern) -------------------------------------------------------------------------------------------	18

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1. Overview of Business Results

Business Results Overview of the Six-Month Period
1. Performance Overview of the Six-Month Period ended September 30, 2024

					(Millions of Yen)
	Previous Consolidated		Current Consolidated	Increased/(Decreased) from
	Six-Month Period		Six-Month Period	Previous Consolidated
	(From April 1, 2023 to		(From April 1, 2024 to	Six-Month Period
	September 30, 2023)		September 30, 2024)
	Amount		Amount	Amount		%
Revenue	95,130	90,167	(4,963)		(5.2)
Cost of sales	41,446	39,111	(2,335)		(5.6)
Gross profit	53,684	51,056	(2,628)		(4.9)
Selling, general and administrative expenses	49,868	48,752	(1,116)		(2.2)
Business profit	3,816	2,304	(1,512)		(39.6)
Other income	748	10,268	+9,520		-
Other expenses	7,948	1,021	(6,927)		(87.2)
Operating profit (loss)	(3,384)		11,551	+14,935		-
Finance income	1,333	992	(341)		(25.6)
Finance expense	152	295	+143		+94.1
Share of profit of investments accounted for using	(536)	567	+1,103		-
equity method
Profit (loss) before taxes	(2,739)	12,815	+15,554		-
Profit (loss) attributable to owners of parent	(4,404)	8,773	+13,177		-

During the current consolidated six-month period (April 1, 2024 - September 30, 2024), business conditions surrounding our group were affected by continued sluggish sales of women's innerwear, our core product in major countries. Domestically, our e-commerce business remained strong, but our retails stores struggled due to the impact of the closings of certain stores in the mass retailer channel and the sluggish growth in the number of customer visits at our existing stores. Sales from our business in the United Sates remained weak due to the continued impact of the restraint on purchases by some of our wholesale customers resulting from the concerns over economic slowdown caused by the high interest rate policy. Sales from our business in Europe was strong, particularly in continental Europe, as the inflation subsided and the overall economy was on a recovery trend. The recovery in sales from our business in China fell below our expectations due to the sluggish growth in consumer spending as a result of the prolonged deterioration in business confidence.

Under such circumstances, our group has promoted the initiatives to "business model reforms to improve profitability," "growth strategy to achieve VISION2030," "introduction of ROIC management" and "promotion of asset reduction" to achieve goals formulated under the revised three-year medium-term management plan which will end in the fiscal year ending March 31, 2026. During the current consolidated six-month period, we decided to transfer or suspend operations at three production bases in Japan as part of our business model reform (*1). In addition, we have been building a new supply chain that would allow us to provide products flexibly in response to fluctuations in demand and implemented cost structure reform to achieve lean, highly profitable corporate management. As a part of our growth strategy, we have acquired the U.K.-based Bravissimo Group Limited (the "Bravissimo Group") in September through our U.K. subsidiary Wacoal Europe Limited ("Wacoal Europe") to achieve steady growth of our overseas business and to transform our business into a highly profitable structure by aggregating the supply chain (*2). Bravissimo Group operates 25 directly managed retail stores in the U.K. that sell its own brand "Bravissimo" products as well as Wacoal Europe and other brands' underwear and swimwear products, and also operates its own e-commerce website. By working with the Bravissimo Group, Wacoal Europe, which has until now focused on the wholesale business, will be able to expand the number of directly managed stores, which have direct contact with consumers, and will achieve cross-selling of respective products online and offline at e-commerce websites and retail stores. In addition, under the asset-light strategy of selling assets that do not contribute to improving corporate value, we sold the Asakusabashi Building in June and the site of the former Fukuoka Office in August (*3).

As a result of the above, for the current consolidated six-month period, consolidated revenue was 90.17 billion yen (a decrease of 5.2% as compared to the corresponding period of the previous fiscal year) and the

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consolidated business profit was 2.30 billion yen (a decrease of 39.6% as compared to the corresponding period of the previous fiscal year). Although consolidated business profit fell below the level of the corresponding period of the previous fiscal year, it exceeded our initial expectations as a result of our efforts to control selling, general and administrative expenses at each operating entity. We recorded 11.55 billion yen of consolidated operating income (as compared to 3.38 billion yen of consolidated operating loss for the corresponding period of the previous fiscal year) as a result of the gain from sale of property, plant and equipment (9.14 billion yen) related to the Asakusabashi Building and the site of the former Fukuoka Office. Consolidated profit before taxes was 12.82 billion yen (as compared to 2.74 billion yen of consolidated loss before taxes for the corresponding period of the previous fiscal year), and consolidated profit attributable to the owners of parent was 8.77 billion yen (as compared to 4.40 billion yen of consolidated loss attributable to the owners of parent for the corresponding period of the previous fiscal year).

The key exchange rates used for the current consolidated six-month period (the corresponding period of the previous fiscal year) were: 152.63 yen (141.00 yen) to the U.S. dollar; 195.46 yen (177.49 yen) to the Sterling pound; and 21.15 yen (19.75 yen) to the Chinese yuan.

(*1) For details, please see our press release "Notification Regarding the Consolidation and Reorganization of Production Bases of a Consolidated Subsidiary (Domestic Manufacturing Subsidiary)" announced on August 26, 2024: https://www.wacoalholdings.jp/en/ir/topics/files/wacoalholdingsnews20240826_1en.pdf

(*2) For details, please see our press release "Announcement Regarding Acquisition Bravissimo Group Limited (a U.K. company) through our U.K. Subsidiary (i.e., change in subsidiaries following acquisition of shares)" announced on September 26, 2024: https://www.wacoalholdings.jp/en/ir/topics/files/wacoalholdingsnews20240926_1en.pdf

(*3) For details, please see our press release "Announcement Regarding Transfer of Fixed Assets" announced on August 26, 2024: https://www.wacoalholdings.jp/en/ir/topics/files/wacoalholdingsnews20240826_2en.pdf

Business Overview of Our Reportable Segments

										(Millions of Yen)
		Previous Consolidated		Current Consolidated
		Six-Month Period		Six-Month Period	Decreased from Previous
		(from April 1, 2023 to		(from April 1, 2024 to	Six-Month Period
		September 30, 2023)		September 30, 2024)
		Amount	Distribution		Amount	Distribution	Amount		%
		Ratio (%)		Ratio (%)

Total Revenue	95,130	100.0		90,167	100.0		(4,963)		(5.2)
	Wacoal Business (Domestic)	47,275	49.7		45,006	49.9		(2,269)		(4.8)
	Wacoal Business (Overseas)	35,028	36.8		34,549	38.3		(479)		(1.4)
	Peach John	5,502	5.8		5,165	5.7		(337)		(6.1)
	Other	7,325	7.7		5,447	6.1		(1,878)		(25.6)

		Previous Consolidated		Current Consolidated
		Six-Month Period		Six-Month Period	Increased/(Decreased) from
		(from April 1, 2023 to		(from April 1, 2024 to	Previous Six-Month Period
		September 30, 2023)		September 30, 2024)
		Amount	% to Sales		Amount	% to Sales	Amount		%

Operating Profit /(Loss)	(3,384)	-		11,551	12.8		+14,935		-
	Wacoal Business (Domestic)	1,303	2.8		8,497	18.9		+7,194		+552.1
	Wacoal Business (Overseas)	(5,023)	-		2,783	8.1		+7,806		-
	Peach John	(37)	-		(44)	-		(7)		-
	Other	373	5.1		315	5.8		(58)		(15.5)

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Wacoal Business (Domestic)

During the current consolidated six-month period, although sales from the retail stores continued to struggle due to a decrease in the number of customer visits, growth of our e-commerce business underpinned the overall sales performance. While the external environment remains challenging due to the effects of the continuing depreciation of the Japanese yen and the rising cost of raw materials, the profit margin remained at the same level as in the corresponding period of the previous fiscal year as a result of a growth in high-margin channels such as our e-commerce websites.

As for trends by products, sales from products such as "Wireless Gravity-Defying Care Bra" and "Hugging Bra" were strong, in addition to "Synchro Bra Top" which has continued to sell well since the first quarter of the current fiscal year.

As a result of the above, revenue attributable to our "Wacoal Business (Domestic)" segment was 45.01 billion yen (a decrease of 4.8% as compared to such revenue for the corresponding period of the previous fiscal year), exceeding our expectations. In line with the revised medium-term management plan, we expect to record a decrease in revenue for the current fiscal year as a result of withdrawal of underperforming stores and delivery adjustment aimed at optimizing in-store inventory. Operating profit was 8.50 billion yen (an increase of 552.1% as compared to such operating profit for the corresponding period of the previous fiscal year), a significant increase compared to the corresponding period of the previous fiscal year and our expectations, due to the gain on sale of property, plant and equipment (7.68 billion yen) related to the sale of the site of the former Fukuoka Office.

Wacoal Business (Overseas)

Sales from Wacoal International Corp. (U.S.) fell below the level of the corresponding period of the previous fiscal year on a local currency basis due to the impact of the business withdrawal of Intimates Online, Inc. ("Intimates Online"). Sales from our retail stores of Wacoal America, Inc., which distributes "Wacoal" brand, continued to struggle as certain wholesale customers curbed their purchases, causing a slowdown in delivery, and its e-commerce website also struggled to attract customers due to the restrictions on advertising distribution. However, sales from third-party e-commerce websites continued to remain strong.

Sales from Wacoal Europe exceeded the level of the corresponding period of the previous fiscal year on a local currency basis due to the growth in sales from Germany and France. Particularly in Germany, sales are steadily increasing due to an increase in the number of customer visits to our e-commerce website as a result of successful marketing investments and we recorded the highest monthly sales in July. The impact of the acquisition of the Bravissimo Group, which was completed on September 26, 2024, had a minimal impact on the consolidated statement of profit and loss for the current consolidated six-month period.

Wacoal China Co., Ltd. continued to struggle as sales at both our retail stores and e-commerce websites remained weak despite our efforts to participate in the promotional events at department stores and to approach existing customers by conducting campaigns such as reward points.

As a result of the above, revenue attributable to our "Wacoal Business (Overseas)" segment on a Japanese yen basis was 34.55 billion yen (a decrease of 1.4% as compared to such revenue for the corresponding period of the previous fiscal year). Operating profit was 2.78 billion yen (an operating loss of 5.02 billion yen for the corresponding period of the previous fiscal year) mainly due to the profit improvement following the business withdrawal of Intimates Online and the positive impact of business at Wacoal Europe.

Peach John

During the current consolidated six-month period, sales from third-party e-commerce websites continued to remain strong as a result of the positive impact of the new site openings. Sales from our e-commerce website, however, continued to struggle despite our sales promotion activities, including discounts, aimed at improving purchase rate. Sales from our directly managed stores also fell below the level of the corresponding period of the previous fiscal year as our sales promotion activities, including campaigns featuring famous celebrities and the "30th Anniversary Project", failed to attract new customers and to improve purchase rate to the level we expected.

As a result of the above, revenue attributable to our "Peach John" segment was 5.17 billion yen (a decrease of 6.1% as compared to such revenue for the corresponding period of the previous fiscal year). We recorded an operating loss of 0.04 billion yen (as compared to 0.04 billion yen of operating loss for the corresponding period of the previous fiscal year) due to the impact of the decreased revenue and the rising prices of unit costs, despite our efforts to control selling, general and administrative expenses in line with sales trends.

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Other

Sales from Lecien Corporation increased because of the strong sales of its private brand products and embroidery products. On the other hand, operating profit decreased due to the absence of the foreign exchange gains which we recorded during the corresponding period of the previous fiscal year. While sales from Ai Co., Ltd. slightly decreased from the corresponding period of the previous fiscal year, operating profit increased as a result of increased profit margin as the company narrowed the number of stores and shifted the focus of its sales channels to e-commerce.

As described in the "Notice Concerning Share Transfer Involving a Change in Consolidated Subsidiaries"

which we announced on May 15, 2024, Nanasai Co., Ltd. has been excluded from the scope of our consolidation following the share transfer, starting from the current second quarter.

As a result of the above, revenue attributable to our "Other" business segment was 5.45 billion yen (a decrease of 25.6% as compared to such revenue for the corresponding period of the previous fiscal year). Operating profit was 0.32 billion yen (a decrease of 15.5% as compared to such operating profit for the corresponding period of the previous fiscal year) due to the impact of the weak business performance at Nanasai Co., Ltd. as of the current first quarter.

Please see our press release "Notice Concerning Share Transfer Involving a Change in Consolidated Subsidiaries" announced on May 15, 2024:https://www.wacoalholdings.jp/en/ir/topics/files/wacoalholdingsnews20240515_6en.pdf

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(Reference) Revenue and Operating Profit/ (Loss) of Major Subsidiaries

Revenue

					(Millions of Yen)
Previous Consolidated	Current Consolidated
Six-Month Period	Six-Month Period	Increased/(Decreased) from
(from April 1, 2023 to	(from April 1, 2024 to	Previous Six-Month Period
September 30, 2023)	September 30, 2024)

Amount	Distribution	Amount	Distribution	Amount		%
Ratio (%)	Ratio (%)

Wacoal Corp.	44,569	46.9	42,094	46.7	(2,475)	(5.6)
Wacoal International Corp. (U.S)	15,111	15.9	14,402	16.0	(709)	(4.7)
Wacoal Europe Ltd.	10,055	10.6	11,490	12.7	＋1,435	＋14.3
Wacoal China Co., Ltd.	5,161	5.4	4,525	5.0	(636)	(12.3)
Peach John Co., Ltd.	5,502	5.8	5,165	5.7	(337)	(6.1)
Lecien Corporation	1,326	1.4	1,486	1.6	＋160	＋12.1

*Revenue from external customers only

								(Millions of Yen)
	Previous Consolidated		Current Consolidated
	Six-Month Period		Six-Month Period		Increased/(Decreased) from
Operating Profit/(Loss)	(from April 1, 2023 to		(from April 1, 2024 to		Previous Six-Month Period
September 30, 2023)		September 30, 2024)

	Amount	% to Sales		Amount	% to Sales		Amount	%

Wacoal Corp.	1,400	3.1		9,761	23.2		＋8,361	＋597.2
Wacoal International Corp. (U.S.)	(6,716)	-		1,233	8.6		＋7,949	-
Wacoal Europe Ltd.	800	8.0		940	8.2		＋140	＋17.5
Wacoal China Co., Ltd.	(220)	-		(248)	-	(28)	-
Peach John Co., Ltd.	(37)	-		(44)	-	(7)	-
Lecien Corporation	89	6.7		53	3.6	(36)	(40.4)

Explanation Related to Consolidated Financial Condition
1. Assets, Liabilities and Total Shareholders' Equity

Our total assets as of the end of the current consolidated six-month period were 288,858 million yen, a decrease of 5,171 million yen from the end of the previous fiscal year, mainly due to a decrease in other financial assets.

Our total liabilities were 78,725 million yen, a decrease of 162 million yen from the end of the previous fiscal year, mainly due to decreases in trade and other payables and deferred income taxes, despite an increase in borrowings.

Equity attributable to owners of parent was 206,965 million yen, a decrease of 4,864 million yen from the end of the previous fiscal year, mainly due to purchase of treasury stock.

As a result of the above, ratio of equity attributable to owners of parent as of the end of the current consolidated six-month period was 71.6%, a decrease of 0.4% from the end of the previous fiscal year.

Cash Flows

Cash and cash equivalents as of the end of the current consolidated six-month period were 37,568 million yen, an increase of 4,021 million yen from the end of the previous fiscal year.

(Cash Flow Provided by Operating Activities)

Cash flow provided by operating activities was 5,293 million yen, an increase of 1,201 million yen as compared to the corresponding period of the previous fiscal year, after adjustments to our net profit of 8,715 million yen for changes in assets and liabilities, depreciation, amortization, income tax expense and other items.

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(Cash Flow Provided by Investing Activities)

Cash flow provided by investing activities was 3,867 million yen, a decrease of 1,805 million yen as compared to the corresponding period of the previous fiscal year, mainly due to proceeds from sale of property, plant and equipment, despite purchase of a subsidiary.

(Cash Flow Used in Financing Activities)

Cash flow used in financial activities was 4,196 million yen, a decrease of 3,855 million yen as compared to the corresponding period of the previous fiscal year, mainly due to repurchase of treasury stock.

Qualitative Information regarding Forecast of Consolidated Business Results

We have revised our forecast of consolidated business results for the fiscal year ending March 31, 2025 since we announced such forecast on May 15, 2024. For details, please see the "Announcement Regarding Variances between the Forecast of Consolidated Business Results and Actual Consolidated Business Results for the Six-Month ended September 30, 2024, Revisions to the Forecast of Consolidated Business Results (IFRS)' announced today.

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