Wacoal Corp. of Kyoto, Japan reported net sales for the fiscal year ended March 31, 2004 decreased 0.3% on a yen basis to 163.2 billion yen ($1,566.1 million), compared to 163.7 billion yen a year ago. Operating income decreased to 3.0 billion yen ($29.0 million) compared with 7.3 billion yen in 2003. Net income increased 0.1% on a yen basis to 2.9 billion yen ($27.8 million). Earnings per American Depositary Share (5 shares of common stock) were 99.3 yen ($0.95) on 29,245,000 average ADS shares outstanding compared to 97.4 yen earnings per American Depositary Share with 29,754,000 shares outstanding in the prior year.
Wacoal declared cash dividends of 15.0 yen per share, up 1.5 yen from the previous year.
In the first half of the year, the Japanese economy started to show signs of recovery primarily in the corporate business sectors, however consumer spending showed little response. The second half continued the swing to recovery in corporate business sectors, which eventually helped increase consumer confidence and spending, most notably in consumer electronics and household goods. On the other hand, the women's apparel business suffered throughout the year from unseasonable weather conditions, excessive rain in the beginning of the year, a cool summer, and an unseasonably warm winter. The unusual weather conditions during the year had a negative impact on Wacoal's core innerwear business, as well as the seasonal swimwear business.
In this environment, Wacoal strove to strengthen its core intimate apparel businesses by developing new “trend” products, improving and expanding its merchandising expertise, and continuing the rollout and launch of new direct retail stores. The direct retail stores, which started 3 years ago, have become a credible sales channel as the brand identity and image of the products are now on the way to establishing their position in the various targeted markets.
Other highlights include, the continued expansion and development of the two mail order catalog businesses, which market outerwear and fashion items as well as intimate apparel and the successful launch of an additional intimate apparel catalog. In the wellness product group, “CW-X” has continued to grow its product line of sports conditioning apparel and further increase brand recognition.
In overseas operations, domestic sales of affiliates in the Asian markets suffered a decline in the first half of the year primarily due to the outbreak of the “SARS” disease and the consequences of the Iraq war. The second half improved significantly and regained most of the lost momentum except for a few isolated areas. In the U. S. market, sales of Wacoal America, Inc. and the “Wacoal” brands also experienced a large negative impact from the aftermath of the Iraq War and the continued threats of terrorism in the first half of the year. However, Wacoal America experienced a significant turnaround in the second half of the year, which resulted in sales for the current year exceeding the previous year's results for overseas operations.
Net sales of Wacoal for this fiscal year decreased by 0.3 percent compared with the previous year to 163.2 billion yen.
The Company has focused on increased efficiencies and implementing structural changes; however, the inclusion of a one-time charge of 2.6 billion yen for impairment charges of long-lived assets, resulted in an operating profit for this fiscal year of 3.0 billion yen, a decrease of 58.5 percent from the previous year. Net income before taxes for this fiscal year fell by 1.6% to 4.5 billion yen, and the Net Income increased by 0.1% to 2.9 billion yen.
Billion Million
of Yen of US$
2004 2003 2004
Net Sales 163.2 163.7 1,566.1
Cost of Sales 84.6 85.3 812.4
Selling, general and administrative
expenses 75.5 71.1 724.7
Operating Income 3.0 7.3 28.9
% of net sales 1.8% 4.4%
Other income and expenses 1.5 (2.7) 14.6
Income (Yen) before income taxes,
Equity in net income of
affiliated companies and
minority interests 4.5 4.6 43.5
Income taxes 2.5 2.5 24.2
Equity in net income of affiliated
companies 1.0 1.0 9.9
Minority interests (0.1) (0.2) (1.4)
Net income 2.9 2.9 27.8
By Product Category
Foundation garments and Lingerie 115.7 116.7 1,110.3
Sleepwear 11.8 12.7 113.5
Children's underwear 2.6 2.5 24.8
Outerwear and sportswear 10.4 9.4 99.9
Hosiery 1.8 1.7 17.3
Other Textiles and related products 4.7 4.3 44.7
Housing, Interior development and
others 16.2 16.3 155.6
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Total 163.2 163.7 1566.1
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FORECAST FOR THE FISCAL YEAR 2005
Billions Millions
of Yen of US$
2005 2005
Net Sales 166.0 1,593.4
Operating Income 13.6 130.5
Income before income taxes,
Equity in net income of
affiliated companies and
Minority Interests 13.6 130.5
Net income 8.0 76.8
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