Descente (8114) Q2 2025 earnings summary

Executive summary

• Net sales rose 4.7% year-over-year to ¥62,818 million in Q2 FY2024, driven by yen depreciation, FX effects, and strong growth of "DESCENTE" and "umbro" brands in Japan and South Korea.

• Ordinary and net income reached record Q2 highs for the third consecutive year, supported by increased equity in earnings of affiliates.

• Operating income declined by 24.5% year-over-year to ¥3,134 million, mainly due to higher SG&A expenses for global promotions.

• Net income attributable to owners of parent increased 10.0% year-over-year to ¥6,238 million.

• Comprehensive income grew 25.1% year-over-year to ¥11,729 million.

Financial highlights

• Gross profit margin improved to 61.1% (+1.3pt YoY) due to higher full-price sales, discount control, and increased DTC sales in Japan.

• SG&A expenses rose 11.0% year-over-year to ¥35,247 million, mainly from higher advertising and promotional costs.

• Ordinary profit climbed 14.2% year-over-year to ¥9,145 million, supported by strong equity-method affiliate performance.

• Cash flow from operating activities rose to ¥2,294 million, up ¥2,057 million YoY, reflecting higher net income and dividend receipts.

• Total assets reached ¥158,520 million, up ¥8,216 million from FY2023 Q4, with notable increases in investment securities and merchandise.

Outlook and guidance

• FY2024 plan targets net sales of ¥130,000 million, operating income of ¥9,000 million, ordinary income of ¥17,000 million, and net income of ¥12,500 million.

• No year-end dividend planned, subject to completion of ITOCHU subsidiary's tender offer.