Goldwin, the Japanese outdoor apparel brand, reported that first-quarter sales ended June 30 were slightly down, in line with expectations, due to brand exits. Despite this, operating profit rose by double digits year-over-year, driven by improved gross margins.
Ordinary profit and profit to shareholders dropped year-over-year due to foreign exchange losses at YOC (Youngone Outdoor Co., Ltd.) in South Korea. The joint venture, which distributes The North Face in Korea, was impacted, while Goldwin continues distributing The North Face in Japan.
Goldwin’s portfolio of brands, both owned or licensed, includes Goldwin, The North Face, Helly Hansen, Woolrich, Icebreaker, Macpac, Fischer, Sunski, Neutralworks, Play Earth Kids, Canterbury, Speedo, And Per Se, Allbirds, and Profecio.
In the first quarter, total sales for Goldwin reached ¥23,878 million ($161 mm), down 2.9 percent year-over-year, primarily due to a decrease in revenue of approximately ¥600 million resulting from the termination of four brands during the previous fiscal year.
Goldwin noted that sales missed internal plans in May due to cold weather but outperformed in April and June thanks to in-store proposals. Spring product sales were slow during cooler months, rebounding in late June as temperatures rose. High-performance Climate Adaptation Products are driving sales.
Regarding The North Face, Goldwin said sales of midsummer apparel products, such as T-shirts and hats, were sluggish in the first quarter, but sales of thin-shell products outperformed. Outside apparel offerings, the market inventory of The North Face classic bags returned to normal, leading to increased sales. The introduction of the Vectiv 3.0 footwear range also has been “well received,” said Goldwin. Cost reductions helped improve The North Face’s gross profit margin.
Goldwin’s overall gross profit was ¥12,646 million, up 1.7 percent year-over-year (y/y), with gross margins improving 250 basis points to 53.0 percent. Goldwin said of the margin improvement, “One of the main factors was controlling the pressure of rising costs by proceeding with product procurement in the fall of last year, when the exchange rate was relatively stable. In addition, selective price raises of about 10 percent on average for about 30 percent of our product lineup contributed to the improvement of the gross profit margin.”
Selling, general and administrative expenses reached ¥19,567 million, down 0.2 percent year-over-year. Goldwin stated that one-time costs in the year-ago period, including a head office relocation expense of ¥500 million and a J-ESOP expense of ¥600 million, were not repeated during the latest period. However, advertising expenses, commission expenses, and rent expenses increased year-over-year.
Operating profit totaled ¥2,079 million, up 13.1 percent year-over-year.
Net sales of Youngone Outdoor Corporation, its Korean joint venture, remained at the same levels as the corresponding period of the previous fiscal year; however, the share of profit from the business accounted for by using the equity method was ¥1,630 million, down 30.3 percent y/y, reportedly due to fluctuations in exchange rates. As a result, ordinary profit amounted to ¥3759 million, down 11.7 percent year-over-year.
Similarly, profit attributed to owners of the parent was ¥3,289 million, down 12.9 percent year-over-year.
Goldwin reaffirmed its full-year guidance, projecting sales of ¥140,500 million, up 6.3 percent; operating profit of ¥25,900 million, up 18.2 percent; ordinary profit of ¥33,900 million, up 10.0 percent; and profit attributable to owners of parent of ¥25,400 million, up 1.9 percent.
Image courtesy The North Face
