A Message from Management

A Message from Management

A Message to Our Shareholders

Takeshi Hirouchi
Representative Director
and Chairman
Michinobu Yasumoto
Representative Director
and President

Fiscal year 2017, ended February 28, 2017, marked our 70th business year.
The business domain of the Onward Group is “a world of fashion that gives refreshment and beauty to people’s lives.” Our management philosophy is to propose “fashions” suited to all kinds of life scenes as part of our living culture. By creating new values and lifestyles, we aim to contribute to the enrichment of people’s lives.
In fiscal year 2017, we began executing a new medium-term management plan. We worked to bolster earnings by enhancing product value in our core brands and augmenting customer service. At the same time, we sought to reinforce e-commerce and other businesses that deliver high profitability and that we expect to grow. We also engaged in business restructuring, streamlining businesses and stores and promoting logistics and organizational reforms.
We will continue to pursue selection and concentration of management resources as we work to strengthen the group’s foundations and achieve growth.
We would like to express our gratitude to all our shareholders for their continuing support, cooperation, and trust.

Operating Environment and Overall Performance

In fiscal year 2017, the Japanese economy experienced modest improvements in business earnings and the employment situation, supported by the Japanese government’s economic policies. The outlook remained opaque, however, due to decreasing levels of growth in China and other emerging markets, mounting geopolitical risk in Europe and the Middle East, the UK’s decision to exit the European Union, and the transition to a new administration in the US.
In the apparel and fashion industries, overall store sales faced difficult conditions, owing to frugal personal consumption and cautious purchasing behavior, as well as a substantial downturn in demand from inbound tourists.
In this operating environment, the Onward Group proceeded to implement its medium-term management plan, which commenced in fiscal year 2017. We worked to bolster earnings by enhancing product value in our core brands and augmenting customer service. At the same time, we sought to reinforce e-commerce and other businesses that deliver high profitability and that we expect to grow, thereby pursuing business selection and concentration. Furthermore, in response to the severe market environment we conducted business structure reforms, shifting management resources to growth businesses to strengthen the Group’s foundations and implement growth strategies. We discontinued unprofitable brands, closed unprofitable stores, and reformed logistics and the organization.

Consolidated operating performance in fiscal year 2017
Sales 244.9 billion yen (down 7.1% year on year)
Operating profit 4,203 million yen (up 11.3%)
Recurring profit 5,577 million yen (up 1.3%)
Net income 4,744 million yen (up 10.9%)

Overview of Operations by Segment

Apparel Business

Domestic business was affected by unseasonable weather from summer to autumn, and apparel sales struggled at department stores and other mainstay distribution channels. However, we enjoyed some degree of success stemming from enhanced promotion of major brands at core operating subsidiary Onward Kashiyama Co., Ltd., the expansion of products designed for sale through the e-commerce channel, and the promotion of such measures as unifying store inventory information with ONWARD CROSSET.
Overseas, we secured stable earnings in the manufacturing business in Europe. We moved forward with reorganizations in Asia and North America, leading to improved performance.

Other Business

Our resort business performed favorably, benefiting from efforts to create a stable, ongoing profit structure. In the resort business, however, performance was affected by the divestment of Across Transport Co., Ltd., in the previous fiscal year.

Outlook for Fiscal Year 2018

We believe it will take some time for the Japanese economy to emerge from its ongoing deflation, due to a number of concerns, including the uncertain outlook for the European economy, deceleration in the Chinese economy, and the future direction of the US economy.
We believe conditions in the apparel and fashion industries will remain difficult, owing to ongoing globalization, the onward march of digitalization, and increasingly fierce competition. In this operating environment, the Onward Group will seek to improve product value and enhance customer service in its core businesses with the aim of steadily improving profitability. At the same time, we will develop new business in fields with a promising outlook for growth.
In our domestic operations, we will focus on improving the margins of existing core operations at Onward Kashiyama and other important subsidiaries and on expanding operations in new business fields.
Overseas, we will heighten our growth potential by utilizing our manufacturing platform in Europe to globalize our operations while strategically expanding our Asian business.

Consolidated operating performance forecast for fiscal year 2018
Sales 239.3 billion yen (down 2.3% year on year)
Operating profit 5.7 billion yen (up 35.6%)
Recurring profit 7.1 billion yen (up 27.3%)
Net income 5.3 billion yen (up 11.7%)