The company continued to target FY27 net sales of ¥60 billion (~$379.79 million, as per conversion rate of $1 = ¥157.9821 as on October 6, 2026), up 3 per cent year on year (YoY), operating profit of ¥2.10 billion (~$13.29 million), ordinary profit of ¥2 billion (~$12.66 million) and profit attributable to owners of the parent of ¥4.02 billion (~$25.45 million).
Japan’s Sanyo Shokai maintained its FY27 plan despite a wider H1 loss, targeting ¥60 billion (~$379.79 million sales).
H1 net sales fell 4 per cent YoY to ¥25.95 billion (~$164.26 million); operating loss widened and gross margin slipped to 60.4 per cent.
Recovery rests on 11 per cent September retail sales growth, tighter markdowns, full-price selling and e-commerce expansion.
The plan implies second-half (H2) net sales of ¥34.05 billion (~$215.53 million), operating profit of ¥2.60 billion (~$16.46 million) and attributable profit of ¥4.58 billion (~$28.99 million), Sanyo Shokai said in a press release.
The company said in its semi-annual financial results explanatory material that it expects a full-year gross profit margin of 62 per cent and an operating margin of 3.5 per cent.
First-half sales and margins weaken
For the six months ended August 31, 2026, net sales declined 4 per cent YoY to ¥25.95 billion (~$164.26 million), from ¥27.04 billion (~$171.16 million). The gross profit fell to ¥15.67 billion (~$99.19 million) from ¥16.37 billion (~$103.62 million), while selling, general and administrative (SG&A) expenses decreased to ¥16.17 billion (~$102.35 million) from ¥16.59 billion (~$105.01 million).
The company posted an operating loss of ¥0.50 billion (~$3.16 million), compared with a ¥0.21 billion (~$1.33 million) loss a year earlier. Ordinary loss widened to ¥0.42 billion (~$2.66 million) from ¥0.15 billion (~$949,474), while loss attributable to owners of the parent increased to ¥0.56 billion (~$3.54 million) from ¥0.30 billion (~$1.90 million).
The gross profit margin slipped by 0.2 percentage points to 60.4 per cent, while the operating margin deteriorated by 1.1 percentage points to negative 1.9 per cent. The net profit margin was negative 2.1 per cent, compared with negative 1.1 per cent in the prior-year period.
June weakness offsets improved summer KPIs
First-quarter sales reached 101 per cent of the prior-year level, but second-quarter sales fell to 91 per cent. The company cited weaker apparel demand, adverse weather in June and cautious consumer spending amid political and economic uncertainty. Full-price sales and gross margin improved from July after the company tightened markdown controls, although sales remained below the previous year.
The full-price sales ratio rose by 1.7 percentage points YoY to 61.4 per cent, while the average selling price increased by ¥100 (~$0.63) to ¥20,200 (~$127.86). Selling, general and administrative expenses declined by ¥0.42 billion (~$2.66 million), primarily reflecting a ¥0.31 billion (~$1.96 million) reduction in sales commissions linked to lower sales.
Cash rises while inventory and borrowings increase
At August 31, 2026, cash and deposits stood at ¥19.80 billion (~$125.33 million), up ¥0.72 billion (~$4.56 million) YoY, helped by the sale of investment securities. Merchandise and finished goods increased by ¥0.76 billion (~$4.81 million) to ¥9.65 billion (~$61.08 million), reflecting purchases of midsummer and new-brand products.
Second-half recovery rests on full-price sales and channels
Sanyo Shokai expects second-half (H2) gross profit margin to improve to 63.2 per cent and operating margin to reach 7.6 per cent. Preliminary September retail sales rose 11 per cent YoY, led by department stores and directly managed stores, providing support for the maintained forecast.
The company plans to pursue growth through its Japan Luxury proposition, expanded directly managed and multi-brand stores, and e-commerce (EC). It aims to lift the EC sales ratio to 20 per cent by FY2029 while raising the channel’s full-price sales ratio to 40 per cent.
Fibre2Fashion News Desk (SG)
