Earnings Call: Q4 2026

Apr 9, 2026

Summary

FY 2025 delivered double-digit growth across sales and profit, and the ¥10 billion net profit milestone was reached a year early. FY 2026 guidance targets further growth, while the FY 2030 plan prioritizes strategic brands and higher-margin businesses.

My name is Michinobu Yasumoto, the President and CEO of ONWARD HOLDINGS. Thank you all for taking the time to join us despite your busy schedule. First, I will present the highlights of our consolidated results for FY 2025, followed by the highlights of our consolidated forecasts for FY 2026. Please turn to page 4 of the PowerPoint presentation in our results presentation material. First, for FY 2025, net sales increased by 13.6% year-on-year to ¥236.8 billion. Operating profit increased by 14.3% year-on-year to ¥11.6 billion, and net profit increased by 18.5% year-on-year to ¥10.1 billion. EBITDA was ¥17.2 billion, an increase of 11.3% year-on-year. We were able to achieve double-digit growth in both sales and profit across the board. The main factors, broken down by brand, are listed on page 5. The primary factor was the steady and strong performance of the businesses we had designated as strategic enhanced brands for FY 2025. Page 5 lists our six brands. Nijyusanku, now entering its 33rd year, is facing challenges in the department store retail sector overall, but we are implementing various measures to address this. We have been advancing initiatives such as product strategies for the long summer season, sales support, and the integration of online and offline channels. Thanks to these efforts, the business performed steadily, achieving a 5% increase in sales. As for UNFILO, we have established e-commerce operations in shopping centers, achieving a 35.5% increase in sales and experiencing rapid growth, surpassing ¥10 billion in sales. The second section covers the apparel businesses of our group companies. KASHIYAMA, the made-to-order brand operated by ONWARD PERSONAL STYLE, also saw a 33.3% increase in sales, returned to surplus, and is performing well. Regarding WEGO, which became a wholly owned subsidiary in October 2024, sales increased by 7.5% based on a simple consolidation of figures prior to September. It is beginning to generate synergies effectively within the Onward Group. In the wellness business sector, outside of apparel, CHACOTT COSMETICS, operated by CHACOTT, saw a 22% increase in sales, and we are accelerating our expansion into new distribution channels such as drugstores, which are new for the Onward Group. In the gift business, YAMATO achieved a 15.6% increase in sales. In addition to its core gift catalog business, new initiatives such as corporate-focused services, the hometown tax donation return gifts business, and services for local governments, have proven successful. Against the backdrop of this strong performance in our brand businesses, we have achieved double-digit growth in both sales and profit. On page 4, the third point details sales of distribution channel. Regarding department store sales, due to store closures and other factors, gross sales decreased by 2%. On the other hand, sales through shopping centers increased by 29%, and e-commerce sales rose by 12%, offsetting the decline in department store sales and resulting in double-digit overall sales growth. Regarding operating profit, while there are various trends in rising costs affecting the gross profit margin, we further advanced thorough inventory management, resulting in a 0.2 point improvement in gross profit margin to 54.7%. Regarding SG&A expense, while upward trends in labor costs and logistics expenses continue, we achieved efficiency gains in store operations, including multi-brand stores and the promotion of OMOs mentioned earlier, and thoroughly optimized advertising and promotional expenses through a digital shift. As a result, SG&A expense decreased by 0.2 percentage points in the second half. For the full year, we have managed to keep SG&A ratio at 49.8%. As a result, the operating margin remained at 4.9%, on par with the previous year. Regarding our overseas operations, listed second from the bottom, we achieved our long-cherished goal of returning to an operating profit for the first time in 11 fiscal years. This figure represents the total across all regions. Although our U.S. operations remain slightly in red, we aim to turn them profitable by fiscal year 2026. We had established a midterm management plan targeting net profit of JPY 10 billion for fiscal year 2026. As a result of the above, and thanks to your support, we were able to achieve this in fiscal year 2025, one year ahead of schedule. These are the highlights for fiscal year 2025. Next, please turn to page 6. As you can see, these are the highlights of our consolidated performance forecast for fiscal year 2026. Regarding net sales, as this pertains to the latter half of ONWARD VISION 2030, I will provide further details later during the explanation of the vision. Focusing on our pillars of growth, we aim to achieve a 4.3% increase in sales in the first year. We also plan to achieve double-digit growth in operating profit, targeting JPY 12.8 billion. Since the start of this fiscal year, there has been an escalation of various geopolitical risks originating in Middle East. Although the macro environment remains somewhat uncertain and difficult to plan for, we intend to secure double-digit profit growth through various management initiatives. As I mentioned earlier, regarding our overseas operations, we expect to turn our U.S. business, the only one currently showing a slight loss, into a profitable one, thereby achieving operating profitability across all regions, including Europe and Asia. We forecast a 10.9% increase in net profit to JPY 11.2 billion and a 9.3% increase in EBITDA to JPY 18.8 billion. We aim to achieve both sales growth and profit growth across all stages in fiscal 2026 as well. Next, please turn to page 7. I would like to discuss our efforts to enhance shareholder returns. In line with our basic dividend policy, which targets a full-year payout ratio of 40% or higher, and our commitment to consistently implement the interim dividend system introduced in FY 2025, we have already paid an interim dividend of JPY 14 for FY 2025. Moving forward, we plan to pay a year-end dividend of JPY 16 as scheduled, bringing the total full-year dividend to JPY 30. We will implement a JPY 4 dividend increase starting in FY 2024. For fiscal year 2026, we anticipate a 10% increase in dividends, resulting in a total annual dividend of JPY 33. We plan to pay an interim dividend of JPY 16 and year-end dividend of JPY 17. That would be all for the highlights of the consolidated performance forecast and our dividend policy. Hello, this is Shohei Yoshida, Director of Finance, Accounting, and Investor Relations. To get right to the point, I would like to begin my explanation with results by major business companies on page 10. I will outline the key points regarding the breakdown of the consolidated full-year sales increase of JPY 28.4 billion and the operating profit increase of JPY 1.5 billion. Starting with ONWARD KASHIYAMA Plus Holdings at the top. Sales increased by 2% to JPY 2.2 billion, and operating profit rose by 0.7% to JPY 50 million. While sales from department store channels decreased by 4%, sales from shopping centers and e-commerce increased by 5.5%. We reduced inventory and absorbed the increase in SG&A expense, such as investments in personnel costs and new store openings. For item number 2, WEGO. The comparison is on a 12-month versus 5-month basis, resulting in a significant increase in both sales and operating profit. For reference, on a 12-month basis that includes the period prior to consolidation, sales increased by 7.5% by JPY 2.2 billion, and operating profit increased by JPY 800 million. ONWARD PERSONAL STYLE, line number 3, accelerated store openings and achieved significant profit growth. YAMATO, line 7, focused this fiscal year on diversifying its sales channels, including the development of direct sales stores under the Presenter's Room brand, contract work for major corporations, and the expansion of its hometown tax donation gift program. Although the targets were ambitious, we were able to achieve them. As a result, domestic group companies saw a 30% increase in sales to JPY 25.6 billion and a 25% increase in operating profit to JPY 1.4 billion. Overseas in Europe, centered on JOSEPH, profit declined slightly due to the upfront marketing expenses associated with the appointment of a new creative director. However, thanks to the reduction in losses from the sales of the Guam golf course at the end of the previous fiscal year and improvements at J. PRESS, the U.S. saw increased sales and profit. In Asia, efficiency at the KASHIYAMA suit factory operated by ONWARD PERSONAL STYLE improved significantly. Consequently, the subtotal for overseas group companies returned to surplus for the first time in 11 fiscal years as planned, making this a milestone year for the global business restructuring initiative launched in 2019. Page 11 shows the breakdown by the net sales by channel. The figures on the right shows that the department store segment's share decreased by 4.4% from the previous fiscal year, while the shopping center and other segments increased by 5.1%, and e-commerce sales decreased by 0.7%. That's it for the highlights on this slide. Page 14, FY 2026 performance forecast by major business companies. I will explain the progress and targets of ONWARD VISION 2030 later. But in conjunction with that, and to make the progress of our business growth easier to understand, we have reorganized the subtotals for presentations starting in fiscal year 2026. For the full fiscal year, under item number 4, the domestic fashion segment subtotal, we plan for a 2% increase in sales and a 9.2% increase in operating profit, driven primarily by ONWARD PERSONAL STYLE. For item number 8, the overseas fashion segment, in addition to top-line growth of over 10% at JOSEPH and J. PRESS, we plan to expand WEGO in Asia, targeting a 17% increase in sales and a 39% increase in operating profit. For the fashion segment total, we plan to achieve a 4% increase in sales and an 11% increase in operating profit. For the wellness segment subtotal, we have added Cosmé de Beauté, which handles nail products on line 13 to our group of companies, and we plan to achieve a 9% increase in sales and a 17% increase in operating profit. We also plan to achieve an operating profit margin of 8.2%. Finally, regarding the corporate design business, we plan for a 1.3% increase in sales and a 10% increase in operating profit. Based on the above plans, we project a 4.3% increase in consolidated total sales and a 10.3% increase in operating profit. Page 16. Finally, the financials. On the balance sheet, inventory stood at JPY 49.7 billion, an increase of JPY 3.9 billion from the end of the previous fiscal year. With an inventory turnover ratio of 2.2, we aim to return to pre-COVID turnover levels as soon as possible. Fixed assets decreased by JPY 2.5 billion. As liquidity improved and debt, such as accounts payable and borrowings decreased, the equity ratio and current ratio improved. Please turn to page 18. Regarding investments, capital expenditures totaled approximately JPY 6 billion, and when combined with the JPY 4.5 billion in M&A investments, total investments amounted to JPY 10.5 billion. Page 19 shows the key financial indicators. As noted here, ROE in the lower section has exceeded our target of 10%. For FY 2026, we aim to maintain at least 11%. Regarding ROIC, it stood at 5.9% at the end of this fiscal year, an improvement of 0.4% from the previous period and will continue to work on further improvements. That concludes my presentation. Thank you very much. Now, since the first five years of the ONWARD VISION 2030 have concluded, I would like to review our progress to date and explain our future direction leading up to fiscal year 2030. Please turn to page two of the ONWARD VISION 2030 material. You will see three pie charts lined up. The one on the far left represents the situation five years ago in fiscal year 2021, when we launched this long-term management plan, Vision 2030. Although that was the most challenging fiscal year, immediately preceding the COVID-19 pandemic, we have used this year as our starting point to illustrate the recent results for fiscal year 2025, as I explained earlier, and the target we aim to achieve in the final year of Vision 2030 plan, fiscal year 2030. First, in fiscal year 2020, due to the COVID-19 pandemic, which led to store closures and stay-home measures, group sales contracted significantly, driven primarily by a decline in physical store sales. On the other hand, it was also a year in which e-commerce grew substantially. I will explain the breakdown by distribution channel later, but the group's consolidated net sales were JPY 174.3 billion, and the vision began from this point. Looking at sales by business segment at this stage, our core fashion business accounted for just over 70% at JPY 124.3 billion. The wellness segment accounted for approximately 20% at JPY 34.1 billion, and the corporate design business, which was operated under the company name Onward Shoji at the time, accounted for 9% at JPY 15.8 billion. This is how we began. Within the fashion business, nearly JPY 36 billion was generated overseas, meaning that approximately 30% of the fashion business came from overseas markets. Subsequently, over the five years following the launch of the vision, we implemented structural reforms and pursued growth strategies. We also consolidated new businesses, including WEGO, into our consolidated financials. In the most recent fiscal year, FY 2025, the weight of the fashion business increased slightly, largely due to the impact of WEGO, accounting for 73.5% of total sales or JPY 174 billion. The wellness segment remained largely flat at JPY 45.5 billion, while the corporate design segment saw a slight decrease in weight, though its sales actually increased slightly. We have been reforming our business with a focus on fashion throughout the five years of the COVID-19 pandemic. Overseas sales now account for roughly half of the total. This is due to our global business restructuring, where we withdrew from loss-making operations in Italy and South Korea, causing our overseas business to shrink significantly, while our domestic business nearly doubled. Looking back over these five years, we have indeed weathered the pandemic with the fashion business at the center. As for our future direction, we are maintaining our original target of JPY 300 billion in sales for fiscal year 2030. Regarding the breakdown, the fashion segment is projected to account for JPY 200 billion, or two-thirds of the total. Compared to the current 73.5% mix, we anticipate this proportion will decrease slightly. On the other hand, the weight of the wellness segment and the corporate design segment is expected to increase respectively, aiming to represent one-third or JPY 100 billion. The background to this is that in the wellness and corporate design segments, the profit margin level of 8% targeted from the beginning was already achieved in financial year 2025. We would like to increase the scale of the wellness and corporate design segments while maintaining the current profit margin. On the other hand, the fashion segment faces the challenge that its profit margin is lower compared to wellness and corporate design segments. How we will increase the profit margin in this core fashion segment will be a key issue, along with scaling up other segments over the next five years. On page three, we first outline our vision for the fashion segment. Net sales in the fashion segment have increased by JPY 50 billion over the past five years, rising from JPY 124.3 billion in fiscal year 2020 up to JPY 174 billion. Over the next five years, while net sales itself are projected to increase by JPY 26 billion, which may not seem like a significant increase, I'd like you to take a look at the breakdown. As we have been pursuing a multi-brand strategy, the key is that we aim to improve profit margins by clearly identifying the brands we will focus on and prioritizing them through a strategy of selection and concentration. Strategically enhanced brands include Nijyusanku, J. PRESS, which also includes business in the U.S., and Made to Order Suit KASHIYAMA, casual brand UNFILO, and casual brand WEGO targeting teens. Specifically, we plan to focus our management resources, namely people, goods, and capital on these five brands in order to improve our operating profit margin. As of FY 2020, the combined sales of these five brands was less than JPY 30 billion. However, by FY 2030, we aim to increase this up to JPY 160 billion, more than five times the FY 2020 sales, and 1.6 times the level of FY 2025. As we scale up these five brands, we are currently experiencing a wide range of cost increases. Therefore, centered on these five strategically enhanced brands, we intend to improve profitability in the fashion segment by enhancing our procurement capabilities, particularly our ability to source materials at low cost, and by increasing sales at individual stores to boost operational efficiency. As for our overseas strategy, since we achieved overall profitability in our overseas operations in FY 2025, we must continue to expand the scale looking ahead to the future, including the period beyond 2030. I am fully aware that this is a challenge we must address amid declining birth rates and a shrinking population, so we intend to accelerate our global expansion in a phased manner. First and foremost, we expect J. PRESS U.S. operations and WEGO's Asian operations to take the lead starting in FY 2026. Moving forward, we plan to focus our efforts on transforming the fashion segment into a more profitable business. On page 4, we list several specific initiatives. As for Nijyusanku, which is a flagship brand now entering its 33rd year since the launch. While high product quality is a given, we are living in an era where people spend money on supporting their favorite things, and fashion brands are no exception. We aim to enhance customer communities. It's not just about buying and selling products. We want to foster vibrant communities with our customers. To achieve this, we believe it's necessary to establish several larger street-side directly operated stores. We recently opened our first store in Aoyama, and we plan to expand our network of directly operated stores of Nijyusanku in major cities across the country. We aim to broaden our customer base by combining this strategy with our existing shops, with department stores, our directly managed e-commerce platforms, and ONWARD Closet. We aim to further expand our business of Nijyusanku, which already has a scale of JPY 36 billion, to reach a diverse customer base, including younger customers and international customers. Since the profit margin of Nijyusanku is already quite high, we intend to further scale up our operations. As for J. PRESS, we will expand its brand business through collaboration between the United States and Japan. Originally, J. PRESS was founded on the East Coast of the United States and is now celebrating its 124th anniversary. Our New York and Tokyo headquarters will work in tandem to open street-side directly operated stores in major cities across both Japan and the United States. In addition to this, we plan to leverage our directly managed e-commerce platform and wholesale operations, among others, to expand our customer base, strengthen our branding, and return to our roots as a traditional style American brand. As for KASHIYAMA business, it has already turned profitable, and we are on the verge of reaching JPY 10 billion in sales. With the expansion into department stores and the acceleration of store openings in shopping centers and other locations, this fiscal year, we are on track to surpass the JPY 10 billion mark. Moving forward, we will drive an omnidirectional store expansion strategy across directly operated stores, department stores, and e-commerce. We aim to achieve JPY 25 billion in fiscal year 2030. As mentioned earlier, we are targeting a minimum of JPY 45 billion for Nijyusanku and JPY 20 billion for J. PRESS. As for KASHIYAMA, we are currently promoting a business model which is unique, even on a global scale, that directly links our directly operated sewing factories with our stores, which has become a key competitive advantage. We will also strengthen our production platform both domestically and internationally to ensure it is efficient enough to support sales of JPY 25 billion or higher. Fourthly, UNFILO surpassed JPY 10 billion in sales. We aim to scale up to over JPY 25 billion in 5 years. Our biggest challenge is increasing brand recognition. Until now, the brand presence has primarily been through ONWARD Closet Select and e-commerce. Moving forward, we plan to strengthen our standalone brand stores. We will open our first standalone store in Tokyo at the end of this month. Finally, as for WEGO, that brand already has a scale of JPY 32.5 billion and has turned profitable since joining the Onward Group. Structural reforms were implemented in a short period of time, resulting in profits exceeding JPY 1 billion last fiscal year. Our focus going forward is on expanding into the Asian markets and strengthening directly managed e-commerce. Specifically regarding Asia, we have decided to open street-side flagship stores in Taipei and Shanghai this fall. As for Taiwan, we plan to open an additional 20 stores over the next 5 years. As for China, we have a channel strategy to focus primarily on e-commerce, including live commerce. With a focus on Taiwan and China, the Asian market features a large number of young customers and many regions with warm climates, which we believe makes it a market that is a perfect fit for WEGO. Centered on 5 brands, we intend to first strengthen the fashion segment. We consider this to be of utmost importance, focusing on the fashion business. In addition, on Page 5, regarding wellness and corporate design segments, these segments essentially have high margin. So we intend to steadily increase scale. In the wellness segment, we have identified 3 key businesses, cosmetics, gifts, and IP/pet. Centered on these 3 businesses, sales stood at JPY 34.1 billion 5 years ago. Net sales reached JPY 45.5 billion in fiscal year 2025, and we aim to grow it up to JPY 70 billion by fiscal year 2030. Recently, Cosmé de Beauté became a wholly owned subsidiary, and we intend to continue actively leveraging M&A opportunities moving forward. Our goal is to strengthen our groupwide structure to support our customers' lifestyle from a diverse perspective in addition to fashion. As for IP, as we announced in the recent press release, we have a character named Sirotan, a harp seal, which is now entering its 27th year. It has been decided that this character will be adapted into an animated series set to air on TV Asahi's terrestrial network starting this October. This IP already has a very passionate fan, and we are hoping that this will significantly boost its awareness. This marks the first time the ONWARD Group has fully committed to IP business, including, shall we say, character licensing business. While it's a new venture for us, we are currently preparing to strengthen our efforts starting this fall with a fully equipped team in place. Finally, regarding our corporate design business segment for corporate clients. While net sales have shown only modest growth over the past five years, our solid customer base of over 2,000 companies remains strong. In addition to our existing services, such as the planning, production, and delivery of uniforms and novelty goods, we are now focusing on office space creation business and office interior design business, which is seeing a surge in investment interest from our clients on par with uniforms and other items, particularly from the perspective of talent acquisition. By focusing on this space creative business, which involves the interior design of offices and other business premises, we aim to reach a scale of JPY 30 billion in sales. The points I have just explained are summarized on page 6 for reference. Finally, other than sales figures, I would like to explain our vision for structural reforms over the next five years. One key factor is our customer age composition. As of fiscal year 2020, the number of customers in our membership program centered around ONWARD MEMBERS stood at 3.62 million five years ago. The main challenge was the distribution of our customer age demographics. Customers in their 30s and under accounted for about 25%, one quarter for the total, while those aged 40 and above made up three quarters, indicating that the average age of our customers had risen significantly. This is closely tied to the fact that we have been focusing on our business primarily on department stores. However, recognizing that this approach was unsustainable in the long run, we took various measures. One such step was making WEGO a consolidated subsidiary, and through our KASHIYAMA business, which offers products such as job hunting suits, we are currently seeing a rapid increase in young customers. Through these brand initiatives, the proportion of customers in their 30s and under has now risen to 40% in fiscal year 2025. While our total membership has surged to over 12 million by fiscal year 2025, our goal for the fiscal year 2030 is to reach 20 million members, with 50% of them being in their 30s or younger. Taking into account future lifetime value, we aim to gradually increase the number of customers with whom we can build long-term relationships. Finally, on page 8, you will find the trends in sales composition ratio by distribution channel. The data goes back to about 10 years. In fiscal year 2015, department stores accounted for 70% of our sales. ONWARD Group was truly the leading representative of department stores in the apparel industry at the time, and e-commerce accounted for just over 5% of sales. Looking at FY 2020, while this was certainly influenced by the COVID-19 pandemic and structural reform efforts, that breakdown was roughly one-third each. Department stores, e-commerce, and directly operated stores, which include shopping centers, outlets, and street-side stores, among others. As for FY 2025, there was a return to in-store shopping due to the post-COVID rebound. Additionally, the decline in the e-commerce ratio is due to the consolidation of WEGO, since WEGO's e-commerce ratio was not particularly high to begin with. Our overall e-commerce share temporarily shrank from 35% to 25%. Conversely, the share of directly operated stores and others grew significantly, rising from 34% up to 48%. As for department stores, the composition decreased by about 5%, and this was the situation in FY 2025. By FY 2030, we plan to bring the proportion of sales from online stores and e-commerce back up to 30%, including efforts to further strengthen WEGO's directly managed e-commerce. In particular, we believe that generating 80% of e-commerce sales through our own directly managed high-margin e-commerce channels, such as ONWARD Closet and the directly managed e-commerce sites of each brand rather than third-party platforms, is crucial for ensuring profitability. As for department stores, given that more and more stores are closing every year, we expect it to account for about 20%. However, this does not mean we're downplaying their importance. There are still many flagship stores and department stores across the country that remain highly effective at attracting customers, so we intend to continue our partnership with them in earnest. About 50% will be directly operated stores and others, particularly the street-side stores I mentioned earlier, which offer a high degree of flexibility regarding operating hours, shop holidays, and in-store events. These stores provide significant freedom in building a brand and community that resonates with customers. While we cannot open a large number of such stores all at once due to the cost involved, we plan to proceed step by step, establishing these stores with our strategically enhanced brands in major cities across the country as we identify suitable locations. That concludes the overview of ONWARD VISION 2030. We also intend to continue focusing on human capital management and sustainable management. Thank you very much for your support.