Descente Ltd. reported sales dropped 12.6 percent in its fiscal year ended March 31, to Japanese ¥124.6 billion ($11.6 bn).
Operating profits tumbled 95.2 percent to ¥379 million ($3.5 mm) from ¥7,935 million a year ago. The Japanese-based company showed a net loss of ¥2.48 billion ($23.1 mm) against a profit of ¥3.94 billion a year ago.
In Japan, sales were down 4.8 percent to ¥56.8 billion ($528 mm). Operating income was down 81.5 percent to ¥396 million (3.7 mm).
Descente said in a statement, “In addition to a slowdown in sales of winter goods due to warm winter, the spread of COVID-19 infection in March led to a decrease in inbound visitors and other purchases, resulting in a decline in overall sales in Japan. In order to improve the profitability in Japan, we are aiming to expand sales of our self-managed sales floor. Although sales of our directly-managed stores and own EC sites rose significantly from the previous year, the scale of sales is still small, and overall profits were significantly lower than the previous year due to a decline in gross profit of wholesale. In the athletic category, sales of “Descente”, “Arena” remained steady, while “Le Coq Sportif” and “Umbro” struggled. As for the golf category, “Descente” performed well, but other brands struggled due to a decline in department store sales.”
In the Asia segment outside Japan, sales were down 18.9 percent to ¥64.3 billion ($597.5 mm). Operating profits were down 89.9 percent to ¥650 million ($6 mm).
Descente said, “In China, sales of “Descente” are growing steadily by equity-method affiliates. In South Korea, sales of “Descente” and other brands declined significantly due to the impact of boycotts of Japanese products from July 2019. Sales of “Umbro” remained firm. In Hong Kong, each brand also struggled due to the protests. As a result, sales and profits in Asia as a whole were lower than the previous year due to the significant impact of lower sales and profits in South Korea.”
In the Europe/Americas region, sales were down 1.6 percent to ¥3.51 billion ($32.6 mm). The segment showed an operating loss of ¥741 million ($6.9 mm) against a loss of ¥765 million a year ago. Sales decreased due to the business suspension of Descente North America Inc. The loss decreased slightly due to the closing of the amortization of goodwill and intangible assets in Inov-8 Group in the previous fiscal year.
Descente said it is not providing an outlook for the current year due to uncertainties tied to the COVID-19 infection. Descente said, “We will announce promptly when rational estimation is possible.”
Photo courtesy Descente
