Descente, benefitting from the consolidation of its Arena and Le Coq Sportif businesses in China and the equivalent of €17.6 million in non-operating income, reported improved sales and profits in Q2. Total revenues increased by 2.8 percent to ¥27,162 million (€181.9m) from ¥26,425 million for the period ended June 30.
Operating income slipped by 25 percent to ¥1,951 million (€13.1m), hurt by the absence of a one-time gain of ¥470 million in the year-ago period. Net income was 36 percent higher year-over-year to ¥3,191 million (€21.4m) and gross margin was 200 basis points to 60.8 percent from 58.8 percent due to the consolidation. Period end inventory was up 9.8 percent year-over-year to ¥23,779 million (€159.3m).
Regionally, the group experienced a net sales decline in South Korea and Japan, but an increase in China. Operating income fell by 85 percent in China to ¥19 million due to the amortization of goodwill related to the consolidation of affiliates and other expenses. But sales in China improved to ¥3,209 million (€21.5m) from ¥1,065 million in the year-ago period. Japan operating income fell by 48 percent to ¥714 million (€4.8m) from ¥1,376 million as revenues declined by 8 percent to ¥11,079 million (€74.2m).
South Korea sales tumbled by 3.4 percent to ¥112,274 million (€82.2m) as the region’s operating profit fell by 9 percent to ¥1,115 million (€7.5m) for the period. Umbro sales in South Korea, however, rose by 14.7 percent to ¥2,412 million (€16.2m), which the company attributed to rising interest in the brand from Gen Z consumers.
Descente’s current FY23 outlook calls for 5.3 percent annual sales growth to ¥127,000 million (€850.9m) and operating income growth of 9.1 percent year-over-year to ¥8,500 million (€57.0m). Net profit for the 12 months is forecast to grow by 4.3 percent year-over-year to ¥11,000 million (€73.7m).
