Earnings Call: Q3 2026

Jan 8, 2026

Summary

9M sales rose 16.5% and operating profit 11.3%, while net profit benefited partly from fewer extraordinary losses and share-sale gains. Full-year guidance is unchanged, with KASHIYAMA and cosmetics positioned as growth drivers.

Happy New Year. My name is Yasumoto, President and CEO of ONWARD Holdings. Thank you very much for taking the time to attend today's briefing despite your busy schedule at the beginning of the year. I would like to begin today's presentation. Using the PowerPoint Q3 results presentation material, I would like to walk you through our results. Page 5, please. Consolidated financial results highlights for the nine months ended Q3 fiscal year 2025. First, net sales. Net sales increased by 16.5% year-on-year, rising by JPY 24.8 billion to JPY 174.7 billion. Operating profit increased by 11.3% year-on-year, up JPY 1 billion to JPY 9.5 billion. Net profit increased by 32.1% year-on-year, increasing by JPY 1.9 billion to JPY 7.6 billion. Finally, EBITDA increased by 10.2% year-on-year, up JPY 1.3 billion, reaching JPY 13.6 billion. Regarding cumulative net sales through Q3, the drop in temperature began late October, slightly earlier than the previous year. As a result, sales of fall and winter apparel performed well. In particular, Onward Kashiyama Brands, led by Nijyusanku, as well as our made-to-order suit business, KASHIYAMA, operated by Onward Personal Style, showed strong performance, contributing to increased revenue. By brand, UNFILO maintained strong growth with a cumulative increase of 41.6%. Our made-to-order suit business, KASHIYAMA, also continued to grow significantly, posting a 29.1% increase. Chacott COSMETICS sales likewise rose by 28%, reflecting continued strength in the strategically reinforced brand businesses. Our flagship brand, Onward Kashiyama, Nijyusanku, also performed steadily during Q3, resulting in a cumulative 4.3% increase. Looking at sales by distribution channel, department store sales struggled in the first half with a 2.6% year-on-year decline. However, performance rebounded in Q3, resulting in a cumulative decline of 1%, showing a strong recovery trend. Meanwhile, shopping center sales increased by 37%. E-commerce sales rose by 17%. Together with the consolidation effect of WEGO, these channels achieved significant growth. That concludes the overview of net sales. Next, I will move on to profitability. As mentioned earlier, operating profit achieved double-digit growth. One of the driving forces was the stronger control of SG&A in the second half, particularly through the selective and more efficient use of promotional spending, such as coupons and point-based incentives, which are similar to price promotion. Although SG&A continues to trend upward due to exchange rate fluctuations and inflation, we are being able to limit the SG&A ratio increase at 0.1%, keeping it at approximately 50%. We were able to maintain a gross profit margin of 55.5%, nearly the same level as the previous year, supported by strict inventory management. As a result, we achieved an 11.3% increase in operating profit. Net profit rose sharply by 32.1%, partly reflecting the absence of large extraordinary losses recorded in the previous fiscal year as our business structure reforms have largely been completed. In addition, gains from the ongoing reduction of strategically held shares, which we are working on every year, also contributed to extraordinary income. As a result, net income increased significantly, and EBITDA achieved double-digit growth. Overall, we successfully delivered sales and profits growth. This concludes the highlights of our consolidated results for the nine months ended Q3. Page 6, please. Consolidated performance forecast highlights. We have decided to maintain our initial full-year forecasts. Global geopolitical uncertainty has increased since the beginning of the year, and uncertainties related to exchange rates persist. Therefore, we will continue flexible business operations while further strengthening cost controls, particularly in SG&A expenses. Still, given the ongoing uncertainty in the business environment, we have left our initial forecast unchanged, which are net sales JPY 230 billion, operating profit JPY 11.5 billion, net profit JPY 10 billion, EBITDA JPY 17 billion. We aim to steadily achieve these targets. Regarding DPS, we have already paid the interim dividends for the first time of JPY 14 per share. Together with the planned year-end dividend of JPY 16, we aim to deliver a total annual dividend of JPY 30 per share, representing an increase of JPY 4 from the previous fiscal year, in line with our initial plan. That concludes my presentation. I am Yoshida, Director in charge of Finance, Accounting, and Investor Relations. Page 9, please. Cumulative results through Q3 by major business companies. For ONWARD KASHIYAMA CO., LTD. & Holdings, as you find above, performance was driven mainly by the Nijyusanku and UNFILO brands. From late October through November, fall and winter apparel sales performed well, particularly through shopping centers and e-commerce channels. Expense controls also progressed, resulting in increased revenue and profit during Q3. On a cumulative basis, profit still remains slightly lower than last year, but improvement has been achieved. WEGO is a street casual brand targeting younger consumers and promoting youth culture and lifestyle through shopping centers and street-side stores. As WEGO was consolidated from October of the previous fiscal year, the comparison is between 9 months this year and 2 months last year. WEGO recorded net sales of JPY 18.9 billion, and operating profit of JPY 1.2 billion, contributing significantly to consolidated revenue and profit growth. Even on a simple year-on-year comparison, sales increased by 7%. Onward Personal Style, which focuses on customized suit for both men and women, continued to expand its store network and achieved ongoing revenue growth. Cumulative sales increased by 29%, and operating profit improved significantly, turning from a JPY 90 million loss in the previous fiscal year to a JPY 160 million profit, now being able to generate positive profit. ONWARD Corporate Design, which operates B2B uniform production, collaborative merchandise, and space design for offices and schools, experienced slightly lower revenue due to difficulties in securing large uniform projects during the first 9 months. Operating profit declined by JPY 160 million. However, we aim to win more orders in Q4. Chacott benefited significantly from Chacott COSMETICS sales, achieving a 28% year-on-year increase in net sales and higher profits overall. Creative Yoko, which handles pet character goods, recorded higher sales but lower profits due to upfront expenses. However, through cost controls starting in Q4, we expect profits to return to initial plan levels. Yamato achieved 17.4% net sales growth and 31% operating profit growth, supported by expansion in public sector business, including childcare support services and corporate businesses. Moving on to overseas. In Europe, with JOSEPH as the core business, sales and profits increased due to recovery in wholesale operations, et cetera. In the United States, net sales declined due to the sales of golf business in the previous year. However, operating losses improved, resulting in a JPY 0.2 billion improvement in earnings. Next, Asia. Asia consists of the Dalian factory and sales operation in China, including Hong Kong. Thanks mainly to ONWARD Personal Style customized suit strong performance, factory efficiency improved, which led to increased sales and profit. As a result, overseas subsidiaries as a whole recorded a 4% year-on-year revenue increase of JPY 0.6 billion and successfully turned operating profit from a JPY 300 million loss into a JPY 122 million profit. Page 10, net sales by channel. Let me focus on the numbers with orange highlights. Department store sales declined by 1%, with their sales composition ratio decreasing by 5.3 percentage points to 25.5%. In contrast, shopping centers and other channels saw a 36.9% increase in sales, with their composition ratio rising by 5.9 percentage points to 46.3%. As a result, total physical store sales increased by 20.6%. E-commerce sales increased by 17% year-on-year, with an e-commerce sales ratio of 28.2% and an in-house e-commerce ratio of 79%. Page 11, strategically enhanced brands results. As mentioned earlier, the Nijyusanku brand improved significantly due to successful fall and winter product development, increasing from 0.6% growth in the first half to 4.3%. Suits brand, KASHIYAMA, in addition to sales growth at existing stores, expanded into suburban shopping centers and achieved 29.1% sales growth. Chacott COSMETICS achieved 28% growth through expanded distribution channels and strong seasonal products. UNFILO, as shown in the top right, grew the brand recognition and increased sales by 41.6% through enhanced digital strategies and new customer acquisition. WEGO achieved 6.5% sales growth on a nine-month comparable basis through strengthened fall and winter apparel and accessories development. Yamato also recorded 17.4% sales growth as a result of channel restructuring and shift to direct sales structure, strong performance in B2B, and hometown tax gift businesses. This concludes strategically enhanced brands results. Page 13, full year consolidated performance forecast. As explained earlier, based on the first nine months result, we have decided to keep the full year forecast unchanged. Page 14, performance forecast by major business companies. I will not cover the numbers company by company, but for major operating companies, Onward Kashiyama and the holdings company plan full year net sales of JPY 115 billion and operating profit of JPY 7.2 billion, representing year-on-year sales growth of approximately JPY 1.4 billion and JPY 10 million in operating profit. Number 8, domestic subtotal is expected to achieve net sales growth of approximately JPY 23.8 billion and operating profit growth of JPY 1.4 billion, including the contribution from WEGO. Net sales will be JPY 109.9 billion, operating profit approximately JPY 6.8 billion, out of which contribution coming from WEGO will be approximately JPY 18.5 billion and JPY 1.3 billion respectively. Number 12, overseas subtotal is expected to achieve net sales of JPY 22.6 billion and operating profit of approximately JPY 400 million, representing year-on-year growth of approximately JPY 800 million and JPY 500 million respectively, returning to profitability. This concludes my presentation. In addition to Q3 results, I would now like to report on the progress of ONWARD VISION 2030, which was launched in fiscal year 2021. ONWARD VISION 2030 is a 10-year long-term plan established during the COVID-19 pandemic. As fiscal year 2025 marks the midpoint of this plan, we will provide a detailed update at the full year results announcement in April. Today, I will briefly highlight key points. VISION 2030 is built on three pillars: fashion, wellness, and corporate design. Today, I will focus on the growth strategy for the made-to-order suit KASHIYAMA business in the fashion domain and the current status of the cosmetics business strategy in the wellness domain. First, the current status of made-to-order suit KASHIYAMA business, which is the major pillar in the fashion domain growth strategy. Previously, customer touchpoints were concentrated in centrally located urban stores with wide commercial areas. From Q3, however, we have accelerated expansion into, especially, suburban shopping centers. Specifically speaking, Otakanomori Shopping Center in Nagareyama City, Chiba Prefecture, an area with a population of 200,000 to 300,000 should be a typical example. We launched a trial as our marketing activity to test whether a store in suburban area could operate successfully. Since opening, reservations have been extremely strong. In Q3, we could observe similar trends taking place at Aeon Mall locations in suburban Fukuoka, Hiroshima, Fuchu, and Okazaki. These results we found in Q3 give us strong confidence that we can establish effective customer touchpoints in suburban markets, not only in urban centers. Talking about customer demographics. From before, Onward Group has had a lot of customers in their 50s who value high-quality suits. In addition, new format stores have been able to attract customers in their 20s who are searching for suits for coming-of-age ceremony, and who are attracted by the appealing prices starting from JPY 30,000, and students searching suits for job interviews. But still, we were not being able to reach out enough to customers in their 30s and 40s, important working age segment, which we are now being able to capture a lot at these suburban shopping center stores. Based on these results, we plan to actively expand similar touchpoints nationwide in suburban markets with populations of 200,000 to 300,000. We aim to surpass JPY 10 billion in sales by fiscal year 2026 and grow this KASHIYAMA business into a core business with sales of JPY 30 billion by fiscal year 2030, which is the final year of ONWARD VISION 2030. We also plan to introduce a premium price range for made-to-order suits starting in fiscal year 2026. For this segment, we will establish a Made in Japan production base under the KASHIYAMA premium line in partnership with domestic factories. While our existing offerings below JPY 80,000 will continue to be produced primarily at our Dalian smart factory in China to achieve democratization of made-to-order suits, higher priced products exceeding JPY 80,000 or so, including items priced at JPY 100,000 and above, will focus on Made in Japan production. Through this dual approach, we aim to expand KASHIYAMA's touchpoints across street-side stores, shopping centers, and department stores from fiscal year 2026 onwards. This concludes the growth strategy for made-to-order suit brand KASHIYAMA. We are seeing very encouraging results. Next, I'd like to explain our cosmetics business strategy, which serves as the core of our wellness domain. Under ONWARD VISION 2030, we have positioned the wellness domain as a key growth area, supporting richer and more fulfilling lifestyles through gifts, pet, cosmetics, and related products, which cater to customers' new sense of value. While fashion apparel remains our core business, as we approach our 100th anniversary next year, we believe the wellness domain should become a second major pillar in response to climate change and evolving business environments. This is what we strongly believe under our group strategy. Our cosmetics business, including Chacott COSMETICS for makeup and skincare, Cocobuy organic hair care products under the brand name of product, have continued to grow steadily. There has been a missing piece, which is nail care. Now, as announced in a press release on December 18 last year, we have decided to acquire 100% of the shares of Cosmé de Beauté, a nail care company, making it a wholly owned subsidiary. Consolidation is scheduled to begin in early March. The acquisition completes our cosmetics portfolio across makeup, skincare, hair care, and nail care, covering skin, hair, and nails, thereby enhancing synergies with our fashion businesses. By leveraging our group's customer base, including our membership platform, we aim to increase awareness of cosmetics products and accelerate growth through cross-selling. The cosmetics business also offers attractive profit margins. As shown on page 19, Cosmé de Beauté's operating margin exceeds 25%. Compared to the group's overall operating margin of approximately 5%, cosmetics business delivers a disproportionately high profit contribution, i.e. profit contribution is bigger than the sales contribution. For these reasons, we intend to further strengthen and expand the cosmetics business to enhance the overall profitability of the group. That concludes my explanation of the cosmetics strategy within the wellness domain. Thank you very much.