PERFORMANCE OUTLOOK
For the year ending August 2009, we forecast a 1.9% increase in consolidated net sales, to ¥61,000 million; a 16.7% increase in operating income, to ¥2,400 million, as higher gross profit compensates for increases in personnel and other expenses. We expect a ¥1,503 million rise in ordinary income, to ¥1,900 million, on the back of improved foreign exchange valuations. For the year ending August 31, 2009, we anticipate a return to bottom-line profitability, with net income of ¥250 million. This is despite a higher effective tax rate due to the ongoing absence of tax benefits associated with losses incurred by our European subsidiaries.
We will focus on the growth of Theory business in the current fiscal year along with improving the profitability of other brands. Detail of the initiatives in each region is as follows.
(1）Europe
We will aggressively expand the Theory brand in European countries, such as United Kingdom in addition to the effort for turning around Rosner business to make the business profitable by FYE 2010. Rosner lines in 2008 spring/summer season received favorable feedback from wholesale customers, and we expect sales improvement in 2008 autumn/winter season and thereafter along with effort to streamline expenses.
(2）Japan
We will continue our effort to improve per-store efficiency of Theory brand through renovating and expanding the floor space of existing stores in addition to holding promotional events with department stores cooperation.
Urbanholics Co., Ltd., which has carried out a contemporary casual fashion business in Japan, was merged with Link International Co., Ltd. as of August 31, 2008 in order to implement more efficient management by utilizing management resources of Link International Co., Ltd. We try to make casual business profitable in FYE 2009.
(3）North America
We focus on profitability rather than seeking sales growth in this deteriorating retail market. In addition to Theory, we’ll try to nurture Helmut Lang as another core brand in our group, envisaging the business to be profitable in FYE2010.
UPDATE ON MID-TERM PLAN: LTH2010
LTH’s management announced mid-term plan “LTH2010” in October 10, 2007, which shows “growth with sound profitability” as its keynote strategy. LTH has been pursuing three initiatives under the plan: (1) optimize the brand portfolio, (2) achieve profitability of growing and turnaround brands and (3) ensure steady growth of Theory. The financial targets for the year ending 2010 are ¥80 billion in net sales, ¥6 billion in an operating income and an operating margin of 7.5%.
Due to increasing uncertainty about the world economy, we perceive it necessary to withdraw our numerical goals in mid-term plan “LTH 2010”, i.e. ¥80 billion in net sales, ¥6 billion in operating income in FYE August 2010. Even though, we still stick to our managerial agendas described above and we will continually tackle to achieve 7.5% operating margin in FYE2010.
In FYE August 2008, LTH ceased the Proof brand in Japan, the Jean-Michael Cazabat brand in the United States. In addition, LTH will cease Premise brand business in the United States.
For the year ending August 2009, we forecast a 1.9% increase in consolidated net sales, to ¥61,000 million; a 16.7% increase in operating income, to ¥2,400 million, as higher gross profit compensates for increases in personnel and other expenses. We expect a ¥1,503 million rise in ordinary income, to ¥1,900 million, on the back of improved foreign exchange valuations. For the year ending August 31, 2009, we anticipate a return to bottom-line profitability, with net income of ¥250 million. This is despite a higher effective tax rate due to the ongoing absence of tax benefits associated with losses incurred by our European subsidiaries.
We will focus on the growth of Theory business in the current fiscal year along with improving the profitability of other brands. Detail of the initiatives in each region is as follows.
(1）Europe
We will aggressively expand the Theory brand in European countries, such as United Kingdom in addition to the effort for turning around Rosner business to make the business profitable by FYE 2010. Rosner lines in 2008 spring/summer season received favorable feedback from wholesale customers, and we expect sales improvement in 2008 autumn/winter season and thereafter along with effort to streamline expenses.
(2）Japan
We will continue our effort to improve per-store efficiency of Theory brand through renovating and expanding the floor space of existing stores in addition to holding promotional events with department stores cooperation.
Urbanholics Co., Ltd., which has carried out a contemporary casual fashion business in Japan, was merged with Link International Co., Ltd. as of August 31, 2008 in order to implement more efficient management by utilizing management resources of Link International Co., Ltd. We try to make casual business profitable in FYE 2009.
(3）North America
We focus on profitability rather than seeking sales growth in this deteriorating retail market. In addition to Theory, we’ll try to nurture Helmut Lang as another core brand in our group, envisaging the business to be profitable in FYE2010.
UPDATE ON MID-TERM PLAN: LTH2010
LTH’s management announced mid-term plan “LTH2010” in October 10, 2007, which shows “growth with sound profitability” as its keynote strategy. LTH has been pursuing three initiatives under the plan: (1) optimize the brand portfolio, (2) achieve profitability of growing and turnaround brands and (3) ensure steady growth of Theory. The financial targets for the year ending 2010 are ¥80 billion in net sales, ¥6 billion in an operating income and an operating margin of 7.5%.
Due to increasing uncertainty about the world economy, we perceive it necessary to withdraw our numerical goals in mid-term plan “LTH 2010”, i.e. ¥80 billion in net sales, ¥6 billion in operating income in FYE August 2010. Even though, we still stick to our managerial agendas described above and we will continually tackle to achieve 7.5% operating margin in FYE2010.
In FYE August 2008, LTH ceased the Proof brand in Japan, the Jean-Michael Cazabat brand in the United States. In addition, LTH will cease Premise brand business in the United States.
