Summary of Consolidated Financial Results for the Fiscal Year Ended February 28, 2023
[Japanese GAAP]
April 4, 2023
Company name:
Adastria Co., Ltd.
Listing: Tokyo Stock Exchange
Stock code:
2685
URL: https://www.adastria.co.jp
Representative:
Osamu Kimura, Representative Director and President
Contact:
Itsuo Iwakoshi, Senior Executive Officer, General Manager of
Administration Division, Head of Corporate Planning Office
Tel: +81-3-5466-2060
Scheduled date of Annual General Meeting of Shareholders:
May 25, 2023
Scheduled date of payment of dividend:
May 10, 2023
Scheduled date of filing of Annual Securities Report:
May 26, 2023
Preparation of supplementary materials for financial results:
Yes
Holding of financial results meeting:
Yes (for investors)
Note: The original disclosure in Japanese was released on April 4, 2023 at 15:30 (GMT +9).
(All amounts are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Fiscal Year Ended February 28, 2023 (March 1, 2022 – February 28, 2023)
(1) Consolidated results of operations
(Percentages shown for net sales and incomes represent year-on-year changes)
Net income
Net sales
Operating profit
Ordinary profit
attributable to owners
of the parent
Million yen
%
Million yen
%
Million yen
%
Million yen
%
Fiscal year ended Feb. 28, 2023
242,552
20.3
11,515
75.4
12,026
47.3
7,540
53.3
Fiscal year ended Feb. 28, 2022
201,582
9.6
6,564
756.1
8,166
173.9
4,917
–
Note: Comprehensive income
Fiscal year ended Feb. 28, 2023:
8,019 million yen
(up 51.9%)
Fiscal year ended Feb. 28, 2022:
5,280 million yen
(-%)
Net income per
Diluted net
ROE
Ratio of ordinary
Ratio of operating
share
income per share
profit to total assets
profit to net sales
Yen
Yen
%
%
%
Fiscal year ended Feb. 28, 2023
166.37
–
13.3
11.5
4.7
Fiscal year ended Feb. 28, 2022
108.72
–
9.4
8.4
3.3
Reference: Equity in earnings of affiliates
Fiscal year ended Feb. 28, 2023:
(0) million yen
Fiscal year ended Feb. 28, 2022: – million yen
(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen
%
Yen
As of Feb. 28, 2023
111,392
60,762
53.3
1,309.96
As of Feb. 28, 2022
97,957
54,963
55.1
1,192.62
Reference: Shareholders’ equity
As of Feb. 28, 2023:
59,407 million yen
As of Feb. 28, 2022: 53,963 million yen
Note: At the end of the previous fiscal year, the provisional accounting treatment for the business combination was finalized , and, for the fiscal year ended February 2022, the initial allocation of acquisition costs due to the provisional finalization of accounting treatment was significantly revised. The reported amounts reflect these changes.
(3) Consolidated cash flow position
Cash flows from
Cash flows from
Cash flows from
Cash and cash
equivalents at end of
operating activities
investing activities
financing activities
the period
Million yen
Million yen
Million yen
Million yen
Fiscal year ended Feb. 28, 2023
13,460
(9,963)
(4,398)
16,343
Fiscal year ended Feb. 28, 2022
3,504
(7,780)
(3,251)
16,863
2. Dividends
Dividend per share
Total
Dividend
Dividend on
payout ratio
equity
1Q-end
2Q-end
3Q-end
Year-end
Total
dividends
(consolidated)
(consolidated)
Yen
Yen
Yen
Yen
Yen
Million yen
%
%
Fiscal year ended Feb. 28, 2022
–
25.00
–
30.00
55.00
2,510
50.6
4.8
Fiscal year ended Feb. 28, 2023
–
25.00
–
35.00
60.00
2,739
36.1
4.8
Fiscal year ending Feb. 29, 2024
–
30.00
–
35.00
65.00
31.4
(forecast)
3. Consolidated Forecast for the Fiscal Year Ending February 29, 2024 (March 1, 2023 – February 29, 2024)
(Percentages represent year-on-year changes)
Net sales
Operating profit
Ordinary profit
Net income attributable to
Net income per
owners of the parent
share
Million yen
%
Million yen
%
Million yen
%
Million yen
%
Yen
Full year
260,000
7.2
14,000
21.6
14,000
16.4
9,400
24.7
207.27
* Notes
Newly added: 1 (Adastria (Thailand) Co., Ltd.)
Excluded: –
Note: Please refer to the section “3. Consolidated Financial Statements and Notes, (5) Notes to Consolidated Financial Statements, Changes in Accounting Policies” on page 16 for further information.
As of Feb. 28, 2023:
48,800,000 shares
As of Feb. 28, 2022:
48,800,000 shares
2) Number of treasury shares at the end of the period
As of Feb. 28, 2023:
3,449,391 shares
As of Feb. 28, 2022:
3,552,459 shares
3) Average number of shares outstanding during the period
Fiscal year ended Feb. 28, 2023:
45,322,871 shares
Fiscal year ended Feb. 28, 2022:
45,229,961 shares
Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2023 (March 1, 2022 – February 28, 2023)
(1) Non-consolidated results of operations
(Percentages represent year-on-year changes)
Net sales
Operating profit
Ordinary profit
Net income
Million yen
%
Million yen
%
Million yen
%
Million yen
%
Fiscal year ended Feb. 28, 2023
196,727
13.0
10,384
87.7
10,238
53.6
6,626
49.1
Fiscal year ended Feb. 28, 2022
174,065
8.2
5,533
263.6
6,667
140.2
4,443
–
Net income per share
Diluted net income per share
Yen
Yen
Fiscal year ended Feb. 28, 2023
146.20
–
Fiscal year ended Feb. 28, 2022
98.25
–
(2) Non-consolidated financial position
Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen
%
Yen
As of Feb. 28, 2023
86,314
51,251
59.4
1,130.13
As of Feb. 28, 2022
78,983
46,973
59.5
1,038.14
Reference: Shareholders’ equity
As of Feb. 28, 2023: 51,251 million yen
As of Feb. 28, 2022:
46,973 million yen
Note 1: The current financial report is not subject to audit by certified public accountants or auditing firms.
Note 2: Cautionary statement with respect to forward-looking statements
Forward-looking statements in this report are based on currently available information and certain assumptions judged to be reasonable. These statements are not promises by Adastria regarding future performance. Actual results may differ significantly from these forecasts for a number of factors. Please refer to the section “1. Overview of Results of Operations
(4) Outlook” on page 7 regarding preconditions or other related matters for the forecast shown above.
Adastria Co., Ltd. (2685) Summary of Financial Results for February 2023 Fiscal Year
Contents of Attachments
1. Overview of Results of Operations
2
(1)
Results of Operations
2
(2)
Financial Position
6
(3)
Cash Flows
6
(4)
Outlook
7
(5)
Basic Policy on Profit Distribution, and Dividend Plans for the Current and Next Fiscal Years
8
2. Basic Approach for the Selection of Accounting Standards
8
3. Consolidated Financial Statements and Notes
9
(1)
Consolidated Balance Sheet
9
(2)
Consolidated Statements of Income and Comprehensive Income
11
(3)
Consolidated Statement of Changes in Equity
13
(4)
Consolidated Statement of Cash Flows
15
(5)
Notes to Consolidated Financial Statements
16
Going Concern Assumption
16
Changes in the Scope of Consolidation or Application of the Equity Metho d
16
Changes in Accounting Policies
16
Segment Information
17
Per Share Information
19
Subsequent Events
19
– 1 –
Adastria Co., Ltd. (2685) Summary of Financial Results for February 2023 Fiscal Year
1. Overview of Results of Operations
(1) Results of Operations
Consolidated results
(Million yen)
FY2/22
FY2/23
YoY change
YoY change
(Mar. 1, 2021 – Feb. 28, 2022)
(Mar. 1, 2022 – Feb. 28, 2023)
(Amount)
(%)
Net sales
201,582
242,552
40,969
20.3
Operating profit
6,564
11,515
4,950
75.4
Ordinary profit
8,166
12,026
3,860
47.3
Net income attributable
4,917
7,540
2,622
53.3
to owners of the parent
Japan slowly returned to normal consumer activity during the fiscal year that ended in February 2023 as the number of people going out increased as restrictions on various activities ended. However, there was a brief upturn of infections caused by the Omicron variant. Overall, the business climate was better than in the previous fiscal year and sales were higher than one year earlier in every month of the fiscal year for all stores and on an existing store basis. The outlook for the economy remains uncertain because of the yen ‘s rapid depreciation, the rising cost of resources and energy and worldwide inflation because of the Ukraine crisis. However, the desire of consumers to buy apparel and other fashion products remains strong .
The Adastria Group announced a medium-term management plan on April 13, 2022 with the following strategies for growth and is taking numerous actions to accomplish these goals.
Growth Strategy Ⅰ Multi-Brand,Multi-Category
Grouping of brands according to roles for improved
profitability and growth
Growth Strategy IⅠ
Digital Customer Interactions and Services
Accelerate growth of our EC site and create a fun EC
community
Growth Strategy ⅠII
Glocal
Develop models in Mainland China and cultivate
Southeast Asia
Growth Strategy ⅠV
New Business
Establish a food and beverage business and create new
appeal
Consolidated net sales increased 20.3% year-on-year to 242,552 million yen, operating profit increased 75.4% to 11,515 million yen, ordinary profit increased 47.3% to 12,026 million yen, and net income attributable to owners of the parent increased 53.3% to 7,540 million yen.
As a result of Zetton, Inc. becoming a consolidated subsidiary in February 2022, Adastria is reporting the Apparel and Sundry Goods-related Business and Other (Food and Beverage Business) as separate business segments beginning with the fiscal year that ended in February 2023.
In the Apparel and Sundry Goods-related business segment, sales in Japan were up 14. 5% from one year earlier. Performance benefited from external factors such as the easing of restrictions on store operating hours and favorable weather for sales of spring and summer merchandise. Successful activities involving merchandise, including several hit products that meet the rising demand for clothing for outings, TV commercials, the use of loyalty points and other actions also contributed to segment sales and earnings.
In the Other segment, sales increased due to the acquisition of Zetton, Inc., which operates a food and beverage business in line with Adastria’s growth strategy.
As part of our digital strategy, TV commercials and other initiatives were launched to attract customers and increase awareness of Adastria’s “Dot ST” e-commerce website. Activities include adding merchandise of other companies to enlarge the lineup of products. As a result, the number of members of this website is now 15.5 million, 1.9 million more than at the end of the previous fiscal year. Although pace of sales growth was held down because of the recovery at physical stores, e-commerce sales continue to increase with these sales up 8.9% from one year earlier. E-commerce sales increased in part because subsidiary BUZZWIT Co., Ltd., which operates an e-commerce business, acquired OPEN AND NATURAL Inc., a children’s clothing e-commerce company that is
– 2 –
Adastria Co., Ltd. (2685) Summary of Financial Results for February 2023 Fiscal Year
now a consolidated subsidiary.
In the United States, sales rose 53.5% because of strong consumer spending, growth of wholesale sales because of quality improvements, and higher e-commerce sales. In Taiwan, sales increased 45.6% because of the much lower impact of the pandemic and the success of new brands. In Hong Kong, sales were up 19.6% despite the negative impact of the pandemic in the first quarter. Sales started recovering in the second quarter and new stores and the Hong Kong government’s consumption voucher scheme contributed to sales growth. In Mainland China, although stores were opened in accordance with Adastria’s glocal growth strategy, the increasing severity of the pandemic held sales growth to only 6.3%. As a result, total overseas sales were up 35.6% and operating profit were up 36.1%. All overseas sales information is based on conversions to yen of sales in local currencies.
The weaker yen and higher cost of raw materials had a negative effect on earnings. Several factors contributed to earnings during the fiscal year, including measures to control inventories and limit sales of merchandise at discounts by supplying at the right times, prices and volumes, supply fashions with even more added value, and revise prices of some items to maintain the proper balance between prices the value of merchandise. The addition of Zetton as a new consolidated subsidiary raised the percentage of sales of food and beverages, which have a relatively high gross profit margin, and helped raise the consolidated g ross profit margin. Logistics and “Dot ST” e-commerce website operations were suspended temporarily due to the unauthorized access to the Adastria server in January 2023. This incident reduced opportunities to sell winter apparel and other products. As a r esult, the fourth quarter gross profit margin of apparel and other merchandise sold in Japan was lower than in the same quarter of the previous fiscal year. As a result, the gross profit margin decreased 0.4 percentage point from one year earlier to 54.7%.
Selling, general, and administrative expenses, personnel expenses, and store leasing expenses, which had been held down due to store closures and shortened business hours in the previous fiscal year, increased. Despite this increase, the SG&A to sales ratio decreased 1.9 percentage point to 49.9% and the operating margin improved because of the sales recovery, efficient operation of businesses, and lower advertising expenses caused by the application of the new revenue recognition standard.
Non-operating income includes a subsidy of 231 million yen related to shortened operating hours caused by the pandemic, employment adjustment subsidies of 37 million yen and foreign exchange gains of 291 million yen. A loss on valuation of derivatives of 106 million yen related to shutting down the South Korean business was recorded as a non-operating expense.
There was an extraordinary loss of 592 million yen for the impairment of store assets .
Business segment performance was as follows.
1) Apparel and Sundry Goods-related Business
As a result of the above, sales were 232,927 million yen and segment profit was 12,289 million yen.
Seven stores were added to this business because OPEN AND NATURAL Inc. became a consolidated subsidiary in the first quarter. In addition, we opened 96 stores (including 25 overseas) and closed 91 stores (including 3 overseas), resulting in a total of 1,435 stores (including 95 overseas) at the end of the current fiscal year.
2) Other (Food and Beverage Business)
Sales were 9,665 million yen and segment loss was 263 million yen.
The number of stores at the end of the current fiscal year was 75, a result of the increase of 73 stores due to the acquisition of Zetton, Inc. at the end of the previous fiscal year and opening of 4 stores and closing of 7 stores.
– 3 –
Attachments
Disclaimer
Adastria Co. Ltd. published this content on 04 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 April 2023 06:56:06 UTC.
