Japan's Descente Ltd. reported sales increased 16.3 percent to ¥23.4 billion ($229mm) in the first fiscal quarter ended June 30, as a big increase in sales of Athletic Wear offset slight declines in Golf and Outdoor sales during the company’s slowest period of the year.
In Asia, the Japanese apparel company's sales surged 41.7 percent to ¥14.0 billion ($137mm), resulting in a segment profit of ¥1.61 million ($16mm), an increase of 81.0 percent from a year earlier. Golf and Athletic sales were strong and Outdoor sales remained strong in China, Hong Kong and North Korea.
In Japan, sales declined 8.4 percent to ¥9.35 billion ($92mm), resulting in an operating loss of ¥1.77 billion ($17mm), up 71.08 percent from ¥1.03 billion ($10mm) a year earlier. Descente attributed the plunge to having to increase its reserves for sales returns 4.5-fold in the wake of an April 1 increase in Japan’s sales tax from 5 to 8 percent. The increase prompted shoppers to mob stores in March and make last minute impulse buys they later returned. Athletic sales were flat and sales of Outdoor and Golf products declined.
Sales were negligible in North America, where Descente only sells ski apparel.
Sales of Athletic Wear grew 24.7 percent to ¥16.4 billion ($161mm), with strong performances by Arena Swimwear, flat sales of Le Coq Sportif and Umbro and lower sales of Descente-branded apparel. Golf sales grew 0.6 percent to ¥5.9 billion ($58mm) as gains by Lanvin Spall offset declines at Munsingewar and Le Coq Sportif. Outdoor Clothing sales fell 0.1 percent to ¥1.08 billion ($11mm). Marmot sales were flat, while Descente enjoy strong sales in North Korea.
Descente reported gross profit increased 21.1 percent to ¥13.0 billion ($127mm), or 55.5 percent of net sales, up 220 basis points from the same quarter a year ago. Net income reached ¥63 million ($600,000), compared with a loss o ¥22 million (-$200,000) a year earlier.
Descente affirmed its May forecast, which calls for fiscal 2015 net income to grow 7.4 percent to ¥4.8 billion on a 9.1 percent increase in net sales, which are forecast to reach ¥120 billion.
In addition to its own brand, Descente’s companies and affiliates manufacture and distribute a broad array of global sports apparel brands for cycling, golf, outdoor, racquet, snow sports and volleyball under license for the Asian markets, including China, Hong Kong and Korea. Licensed brands include Cutter & Buck, Lecoq Sportif, Marmot, Munsingwear and Umbro.