DESCENTE 1Q FY2021 Earnings August 6, 2021
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DESCENTE 1Q FY2021 Earnings August 6, 2021 Disclaimer: This is an AI English translation of the original Japanese-language Consolidated Financial Summary of DESCENTE LTD. (the Company) for 1Q of the fiscal year ending March 31, 2022 and is provided for reference purposes only. Readers are advised that the Company does not guarantee the accuracy of the content contained in this report. In the event of any discrepancy between this translation and the Japanese original, the Japanese original shall prevail. Description of the Terms Definitions of Terms Segment: Classified according to country and area of the location of the company. Example: Net sales from DESCENTE LTD. to JV in China is counted in Japan segment. *Segment changed from [Japan-Asia-Europe/Americas] to [Japan-South Korea- China] from FY2020. Area: Classified according to country and area of the location of the customer. Example: Net sales from DESCENTE LTD. to JV in China is counted in China area. Business Year: <Japan> April-March Example: 1Q=April-June <Overseas Subsidiaries/Affiliate> January-December Example: 1Q=January-March *Group internal sales is eliminated in neither of these cases. (Not Counted) Rules for Numerical Description The number is truncated and percentage is rounded off. 1 Matters Related to Changes in Reportable Segments In recent years, the importance of our business in South Korea and China has increased, therefore the Company has changed its reportable segments up to FY2019 Asia to South Korea, China and Others from the FY2020. As a result of the resolution to liquidate all U.S. and European subsidiaries that were included Europe/Americas segment until FY2019 the importance of the business of Europe/Americas subsidiaries has declined. As a result, the business of Europe/Americas have been included in Others. Segment information for each quarter of FY2019 is prepared by the segment classification method after the change. Japan Segment South Korea Segment China Segment Sales Sales Sales Sales of DESCENTE KOREA and DESCENTE Sales of DESCENTE LTD. and consolidated GLOBAL RETAILS subsidiaries in Japan Sales of consolidated subsidiaries in China Including the following Including the following Product sales to overseas consolidated Sales royalties for overseas locally planned • • subsidiaries and equity method affiliated products • Product sales to overseas consolidated Non-operating profit and loss Non-operating profit and loss subsidiaries and equity method affiliates Gain or loss on investment of an equity method Gain or loss on investment of three equity affiliate in South Korea, etc method affiliates in China, etc 2 1. 1Q FY2021 (1)Financial Summary (2)Area and Brand Review (3)Number of Stores 2.Plan for FY2021 3 Results of 1Q FY2021 (Consolidated) 1. 1Q FY2021 (1)Financial Summary In the first quarter (Japan: April-June, Overseas: January-March), both sales and profits increased, with a significant recovery from the previous year, when the impact of the new coronavirus was greatest. (Unit: JPY million) FY2021 FY2020 FY2021 FY2021 1st Quarter 1st Quarter Previous Revised YoY performance performance Forecast Forecast Net sales 22,481 15,553 +44.5% 103,000 103,000 Operating income 1,032 ▲ 3,159 - 3,100 4,250 ( % ) 4.6% ▲ 20.3% - 3.0% 4.1% Ordinary income 1,561 ▲ 3,149 - 4,300 6,800 ( % ) 6.9% ▲ 20.2% - 4.2% 6.6% Profit attributable to 1,133 ▲ 2,018 - 3,000 5,000 owners of parent ( % ) 5.0% ▲ 13.0% - 2.9% 4.9% 4 Segment (based on the company location) Sales (Consolidated) 1. 1Q FY2021 (1)Financial Summary Sales increased in Japan, South Korea and China segment. (JPY 0.1billion) Sales 301 307 Europe/Americas 294 300 Europe/Americas 4 7 5 13 YoY +¥6.9 billion(+45%) 224 0 Others Asia Asia 9 200 186 181 166 China 155 Japan +¥4.68 B 2 117 8 South Korea South Korea +¥2.36 B (Currency Factor of +¥0.63 billion) 100 93 Japan China(Incl. Hong Kong/Taiwan) +¥0.09 B 115 116 Others 107 97 ▲¥0.21 B 50 0 FY2017 FY2018 FY2019 FY2020 FY2021 1Q 1Q 1Q 1Q 1Q Note: FY2021 = FY ending March 31, 2022 5 Income (Consolidated) 1. 1Q FY2021 (1)Financial Summary • Operating income increased significantly as gross profit increased. • Non-operating income increased and ordinary income increased significantly due to the recovery of business performance of “le coq sportif” and “arena” brand and the continuing growth of “DESCENTE” brand, by equity-method affiliates in China. (JPY million) 2,000 1,196 1,068 1,561 577 1,133 982 1,116 1,032 Impact 764 975 (JPY Million) FY2021 FY2020 451 in Profit* 0 354 Operating income 1,032 ▲ 3,159 + 4,191 Non-operating income 569 197 + 372 Non-operating expenses 39 187 + 148 ▲ 2,000 ▲ 2,018 Ordinary income 1,561 ▲ 3,149 + 4,710 Extraordinary income 50 403 ▲ 353 ▲ 3,149 Extraordinary loss 0 0 + 0 ▲ 3,159 ▲ 4,000 Total income taxes 477 ▲ 727 ▲ 1,204 FY2017 FY2018 FY2019 FY2020 FY2021 Profit attributable to 1,133 ▲ 2,018 + 3,151 1Q 1Q 1Q 1Q 1Q owners of parent Operating income Ordinary income Profit attributable to owners of parent Impact in profit* + contributes to increased earnings, ▲ contribute to decreased 6 Note: FY2021 = FY ending March 31, 2022 earnings Sales and Operating Income by Segments (Consolidated) 1. 1Q FY2021 (1)Financial Summary • Profits increased in all segments. • Operating income of Japan segment in the 1st quarter alone was black for the first time in 13 years. (JPY 0.1billion) Sales (JPY million) Operating Income 301 307 2,197 Europe/Americas 294 300 Europe/Americas 2,000 4 7 5 13 224 0 Others 1,000 762 Asia Asia 9 200 181 186 174 166 China 107 0 155 0 2 117 8 ▲ 10 South Korea ▲ 34 ▲ 40 ▲ 218 ▲ 494 100 93 Japan ▲ 1,000 115 116 107 97 ▲ 1,486 50 ▲ 2,000 0 FY2017 FY2018 FY2019 FY2020 FY2021 ▲ 3,000 ▲ 2,595 1Q 1Q 1Q 1Q 1Q Japan South Korea China Other Segment Change Note: FY2021 = FY ending March 31, 2022 7 Forecast Sales and Profit in Japan / South Korea / China (≠Consolidated profit/loss) 1. 1Q FY2021 (1)Financial Summary Both sales and profits in all segments are on smooth path to achieve the plan Local Net Sales Ordinary Income Net sales of consolidated subsidiary+Net sales of equity Segment profit/loss+share of profit of entities accounted for (JPY 0.1 billion) method affiliate – internal transactions (JPY 0.1 billion) using equity method 1,540 80 1500 68 60 545 28 1000 40 20 その他 合計 15 515 20 中国 中国 6 20 韓国 8 韓国 500 0 2 316 日本 Adjustment 日本 197 2 101 ▲ 26 480 ▲ 1 51 117 ▲ 20 93 ▲ 4 0 50 97 ▲ 1 ▲ 40 ▲ 31 FY2020 FY2021 FY2021計画Plan FY2020 FY2021 1Q 1Q FY2021計画Plan 1Q 1Q 8 Note: FY2021 = FY ending March 31, 2022 Balance Sheet (Consolidated) 1. 1Q FY2021 (1)Financial Summary Total assets increased compared to the previous year due to an increase in fixed assets resulting from the acquisition of Descente China Holding Limited in the third quarter of the FY2020, in addition to an increase in current assets due to an increase in deposits and receivables in line with an increase in sales. (Includes 4.5 billion yen due to internal exchange effects) (JPY million) 2019/6/30 2020/6/30 2021/6/30 Current liabilities Current liabilities 26,530 Current liabilities 21,690 Non-current Current assets 22,428 Non-current liabilities Current assets liabilities 70,964 Non-current 11,108 Current assets 62,682 4,824 58,394 liabilities 6,516 Net assets Net assets Net assets 76,178 80,072 Non-current 67,836 Non-current Non-current assets assets assets 42,853 43,905 38,387 Total assets 113,817 Total assets 96,781 Total assets 106,588 Equity ratio 66.9% Equity ratio 70.1% Equity ratio 75.1% 9 1. 1Q FY2021 (1)Financial Summary (2)Area and Brand Review (3)Number of Stores 2.Plan for FY2021 10 Area (base on the customer location) Sales (Consolidated) 1. 1Q FY2021 (2)Area and Brand Review Sales increased in Japan, South Korea and China area. (JPY 0.1 billion) 307 301 294 300 5 2 5 2 22 2 5 20 16 224 1,400 Europe/Americas 0 1,200 0 1,000 200 18 800 162 164 166 600 Other2 Asian5 Countries16 5 155 400 16422 2 166 15510 11318 0 1 200 2 1389 2 113 0 China112 (incl.Hong 103 Kong/Taiwan) 13 48 93 100 FY2018FY2019FY2020FY2021 112 89 South Korea 111 103 93 1Q 1Q 1Q 1Q Japan 48 0 FY2017 FY2018 FY2019 FY2020 FY2021 1Q 1Q 1Q 1Q 1Q Overseas Ratio 63% 63% 65% 69% 59% Note: FY2021 = FY ending March 31, 2022 11 Brand Sales (Consolidated) 1. 1Q FY2021 (2)Area and Brand Review • Sales increased for our main 5 brands. • Sales of “arena” brand, which the sales were suffering by COVID-19, recovered and increased in all areas. (JPY 0.1 billion) 307 301 294 300 29 31 27 14 12 15 22 22 19 224 Others 27 27 23 11 umbro 200 18 15 arena 84 84 82 155 23 31 1429 27 272212 2722 Munsingwear231915 1811 84 84 82 11136 612315 13 123 129 127 4413 11 le coq66 sportif 95 6 61 13 DESCENTE 100 44 123 129 127 95 66 0 FY2017 FY2018 FY2019 FY2020 FY2021 1Q 1Q 1Q 1Q 1Q Note: FY2021 = FY ending March 31, 2022 12 Brand Sales (Japan) 1. 1Q FY2021 (2)Area and Brand Review • Driven by “DESCENTE” and “le coq sportif”, sales increased significantly.