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Japan|How did “Look Holdings” Succeed to Survive?

Mar 1, 2019.Ichiro KumegawaTokyo, JP
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The final result of the Japanese company's final accounts in December were released in February. Among the large-scale clothing companies, LOOK Holdings, in stark contrast to the serious deficit from Sanyo Shokai, has received a lot of attention.

With an operating profit of 1.657 billion yen (+ 13.6%), recurring net profit of 1.821 billion yen (+ 4.3%), net income 2.166 billion yen (+41.0%), and sales of 44.01 million yen (+ 2.3%), the dividend for the end of December 2018 increased significantly from 6 yen in December to 30 yen.

Because the operating income is 1.6 billion yen, with sales of 44 billion yen, the operating margin makes up for only 3.7%. If you compare it to a luxury brand company with an operating profit margin of 20% ~ 30%, it may not appear to be a high gross profiting company, however in comparison to other large scale enterprises, a profiting margin ratio of 3.7% is a noteworthy figure showing that the business is steadily progressing.

LOOK Holdings is currently an import company based on importing brands such as Marimekko, IL BISONTE, A.P.C. and DENHAM. Direct sales stores have also become the main force, and the sales ratio of department store channels has been less than 50%. Compared with other middle-age and older women, middle-aged and older men, the format of clothing companies that sell and distribute in department stores are completely different.

The company had a significant increase in sales when it was the authorized manufacturer of the second brand line of Marc Jacobs and the exclusive distributor of TORY BURCH. However, because both brands each established their Japanese company, LOOK Holdings lost its distribution rights, resulting in a decline in sales. In the past two years, the company has begun to promote the transformation of the business while filling in the vacancy of TORY BURCH. The results are still positive. The company also found that it no longer appealed to middle-aged and elderly customers within department stores.

In addition, the company subsidiary Idlook in Korea increased its operating profit by 870 million yen to 15.96 billion yen, supporting the company's performance. It is also decisively different from most other apparel companies that have no overseas strategy at all. It is not so much a clothing company as a fashion enterprise after its complete transformation.

The company will sell the current Nakameguro Head Office building at the price of 2 billion yen and move its headquarters to Aoyama. Leaving Nakameguro, which was once considered as the “Renownlook” era, the company now has a defined goal as a more unique fashion enterprise. Perhaps it’s a successful surviving example of today's non-brand SPA company.

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