Descente ended the first half of its financial year on Sept. 30 with a net loss of 1,265 million yen (€10.2m-$12.0m), against a profit of ¥2,210 million for the year-ago period, as the economic impact of the pandemic hit its revenues. They declined by 34.9 percent to ¥42,897 million (€345.1m-$407.0m). The gross margin dipped by 3.3 percentage points to 53.5 percent and its operating loss reached ¥2,499 million (€20.1m-$23.7m), versus a profit of ¥2,638 million last year.
A sequential recovery was recorded in the second quarter, with revenues going down by 25 percent to ¥27.3 billion (€220.4m-$257.7m) as compared to the same quarter of the previous year. The gross margin narrowed by 2.1 percentage points to 53.2 percent. Operating results benefited from a reduction in marketing expenses, and the company managed to post a net quarterly profit of ¥753 million (€6.0m-$7.1m), 59 percent below the year-ago level.
For the first half, the company’s sales declined in all categories, mainly due to coronavirus-related restrictions and the cancellation or downsizing of various events and competitions, with athletic wear sales falling by 36.6 percent, golf losing 28.9 percent and outdoor tumbling by 43.4 percent.
The company said the importance of the business in South Korea and China had increased in recent years, so it has divided its Asia segment into South Korea, China and Others, from the first quarter of the 2020 fiscal year.
Meanwhile, since it decided to eliminate all U.S. and European subsidiaries that were included in the Europe/Americas segment, Descente noted that the importance of the business in these regions has declined, and it has decided to include these regions in the Other segment, affecting comparisons with the previous financial year.
Sales of the Descente brand grew in China, but were down in Japan and South Korea. Arena, Le Coq Sportif and Umbro struggled in all regions.
Despite the decreases, Descente said the results for the first half of the year exceeded its initial forecast. However, it maintained its guidance for the full year because the outlook for the business impact of the Covid-19 remains uncertain. Sales are expected to decline by 19 percent from the previous year, but operating income should progress by 32 percent.
