Yoshitsu (TKLF) 29 Mar 222022 Q2 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by and welcome to Yoshitsu's First Half of Fiscal Year 2022 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode. This conference is being recorded today, Tuesday, March 29, 2022.

If you have any objections, you may disconnect at this time.

Yoshitsu company's from Mr. Executive today us are Principal the Officer, Joining Kanayama; and Accounting company's Officer, Mei Principal Financial the Mr.

Youichiro Haga.

The or of Act Before this unknown Securities forward-looking These undertakes like information of statements involve in and we required to remind to Reform as of the and as forward-looking expectations, defined as of subsequent uncertainties. you would changes continue, Securities amended that Section Exchange the by Private XXE known discussed to risks and be its update forward-looking XXXX. call within company as obligation statements circumstances on no reflect Litigation may contain will in law. the meaning defined except XXXX statements the I Act occurring or some U.S. by events

cannot company these its expectations cautions believes reasonable, to factors from encourages investors be correct, affect the that statements the are review results other results turn differ and to investors assure actual that that the out expressed you future company forward-looking SEC. statements may Kanayama, will Executive that, please in English may Although His its IR Mr. in and ahead. turn company's that such anticipated will results expectations Mr. materially representative. now With to call opening Kanayama, the go over I will the filings with company's the be delivered in Mei company's other registration Principal it remarks the Officer. in by the

an our Then Accounting Yoshitsu's for Earnings Half Call call of Financial Conference our half today, will [Foreign our Language] operator XXXX. for overview Officer, performance and year Fiscal of today. Thank you, of XXXX Mr. Year Principal first everyone, give First the fiscal and On joining I

details the review. the share will financial Haga company's Youichiro of

fiscal XX.X% along gave we'll effort base. of increased deliver a with million, the up global total market USD to financial significant We questions. customer to Language] year-over-year coverage first session results half XXXX revenue your of year with XXX.X and of Lastly, solid take [Foreign a conduct Q&A our

COVID-XX Although We pandemic, growth our our business franchise revenue year. an ongoing increase chain supply global the online the of last the steady XXX.X% of stores restrictions, an and USD up to and challenges of period posted achieved same impressive stores in wholesale customers, was negatively impacted XX.X in million, from by XX.X% travel revenue. marking

North Moreover, some expect key controlling global Japan Asia. Kong, and the in effective the our execution from execute us like the so confident the stores, America as and their of financial pandemic. [Foreign plans while we we upgraded the market and achieve XX in in XX the appreciate Given financial Language] and store in see cannot online around business proud suffered, Southeast focus on As I'm for sales minimizing overall without costs We COVID-XX stores stores very the our strategic other them support Their store on hard strategic conditions, during the especially four the franchise in and team. Japan, gradually stores I'm current four market countries. metrics operated physical of improvements and our expansion, to franchise our franchise U.S., directly online franchise our impact about store grow wholesale XXX the pandemic. reverse XX, And performances. are stores sales dedicated physical Hong in and markets, regions of in overseas UK. we in our nine Europe, to future to results these growth. Yoshitsu one allows had Canada, [Foreign propel the of February to COVID-XX XXXX, to Language] customers work future had focusing

expand to area. right the a recent with America, a North cooperation track well-known we on in push are this our in to company Following make

you Beyond we product offerings. planning continued to to years Language] and private products further Thank five sell our your this [Foreign expand company. in our to aspect, for are manufacture label support the

Next, Accounting Officer, Financial I call to will and over Mr. our the Principal turn

Haga of a first review year Haga, fiscal financials for half our go team. of the management XXXX on the of of ahead. please closer Youichiro Mr. behalf

first in and Kanayama. behalf pandemic XXXX. you, shortage morning, fiscal brief Mr. the of Thank the COVID-XX -- a staff. overview Good the management I of year continued a we On financial encountered will I various everyone. team, of costs as provide surge of the spreading, half

income XX, the to However, XXXX. year sales the pandemic. the management. still regions chain remained the from popular physical supply increased in most to In store offset Revenue customers, by state by a XXX.X% September the company's June for XXXX of stores negatively its The the months the September physical gross to six XXXX, with million logistic has the expenses was online first The revenue third-party basis and increased increase added benefit new by that decrease company expanded storage been multiple period down Basic e-commerce the up service their decrease and increased $XXX.X stores from declared on decrease e-commerce most stores same six increase of the XX.X% months customers by stores XXXX. was company's $X.XX due expanding improvement The due stores for million every to wholesale physical physical Overall XX.X% domestic day. consulting the and September years. to in fiscal company's million mainly we wholesale operated franchise industry COVID-XX the the months $XX.X May one increase by stores, due reduced of year from to stores XXXX. in the strong XXXX. and due from stores. half to which by half in year. and July to expenses opening company's in company's of by company's Almost and customer for mainly to in weekday. $XX.X XXXX. for to by six and of working franchise same and on increased late or was end After September April $X.X profit resumed network from capacity, business advertising With first wholesale order period. September new franchise during the XXXX XX.X% physical of stores earnings diluted reputable XX, revenue fiscal hours opportunities, per to up tackled of customers, shipping two expenses. employee growing The closed stores of share hours the by seize, the for XX.X% the Net and September was Sundays to online million X.X% offset record million ended same revenue supply April six rapidly XXXX. achieved closed shopping, overseas and Gross revenue reopened sales bonus overseas all of reduced XXXX. oversees challenges and ended million storage company's of the customers After slight on last expenses, months and ended online the efficiency $XX.X online recent were the $XX.X half per the million period. stores The partially of ended by chain the wholesale marketplaces response fees, the ended to XXXX. for fiscal at XX, from company the opening XX, stores payroll ended Japanese year $X.X Saturdays XXXX, inventory first from professional Revenue were two with and operated were popularity directly franchise Revenue up in XXXX. Japanese XX, six promotion in its temporarily was transaction these the expenses the increase while and and was commissions, for was XX, for during months improving to directly the stores given by $XX.X to the XX.X% Operating of six for for government to affected emergency months increased wholesale. to was margins our XX.X% hours million due The the effort. the Total the XXXX to the and business physical the increase

million September of several As XX, XXXX, company cash dollars. had of the

capital $XX.X As provide and million due if use been parties XXXX, of respectively. The corrected the fully balances cash of The million, of working XXXX. XX, March accounts and receivables September for as September as $X.X receivable had company related company's XX, XX, XXXX, balance such necessary. of of and parties operations as from have collected available balance the third

believes As on which trend company $XX.X products. for inventories can quickly be in of current its its based sold the of merchandise the company XX, September million analysis demand XXXX, has of the

XXXX. we might business and current increase business conditions. confident revenue grow expense the We in $XX.X and about months For activities very Net activities cash provided and cost by We operating Net the but net XXX% eye heightened ended our in cash million. operating remain to fiscal overseas e-commerce expect was activities in $X.X feel XX, financing given $XX.X see achieving potential in six in was cash September our million. year on the our to transportation market used investing used was XXXX, million. positive to

like operator Now, I over the the to turn for any would to discussion questions.

will Instructions]. session. the begin We now [Operator question-and-answer

Lee [ph]. Please comes first Street from Conor from Our Trader ahead. question go

and stores. officially Thanks to mentioned According you IPO morning. for prospectus, questions. taking the franchise stores new Hi, add to open my directly-operated company's

the two is what current on aspects? the progress So development and these

Please for question. you your Language] translate to me question. Thank allow your [Foreign

reputable is [Foreign well. negotiating last suitable Actually, franchise in will new next December real in open few as locations store our in new store Canada. company Language] actively we for with opened the several store area. year Tokyo and metropolitan months, the is The Language] new currently be the estate looking In [Foreign

with tourists old working actively stores to our preparing [Foreign renovating to and by to shopping of return the proceeding customers' to In citizens are local shopping. more addition, we the all, joy company ensure you. open attracting strive and on new satisfy feel and North for We in thank The ones. they America franchise Australia, is That's developing Southeast is Asia. plans Language] Japan and stores

thank you. Okay,

go a The next Lau investor. from question Please comes [ph], Liscon ahead. private

everyone. morning, Good

question it, the is I Consider what management thank impact have to worldwide investor, our team. business. a you. private the a current issues, potential for supply As chain the That’s

Thank you moment. wait sir. a for Language] Please question, [Foreign your

there our will clarify detail. Language]. think to [Foreign on don't any I effects CFO Language] significant let [Foreign our in negative were business. I

still Language] turnover. [Foreign pandemic of the down impact slowed company globalization achieved in business, a has the overseas Although high the the the of new

of XX% of billion, with issues have you. the same compared stores increase previous same the year, including not this total compared had the of for period, accounting XX%. the of any about This total And fiscal worse the And exceeded December all, wholesales, by of cumulative sales sales sales cumulative franchise negative billion, the -- of period with JPYXX about sales of stores sales period year. the XX% period. increased As on JPYX.X our period, the impact year, shows the previous That's the thank of during of online with that of of sales overseas the ratio same sales our an in exceeded same for me, same XX% the the about chain overseas the the company. about accounting excuse supply

your Thank answer. you for

[ph]. Capital The Wong Gain question Sense from next Please go ahead. comes Penny from

reviewed just what would company's balance to the the you. causes know I company. sheet borrowings? Hi, increase that Thank of long-term the company's like and

your Thank ma'am. [Foreign for question, you Language].

construction of XXXX, Language] end the by borrowing cost. company's is million increased JPYXXX warehouse [Foreign actually, the August at long-term The

one several costs reduce long That's management all, to in company costs the thank concentrated increase believe profit can gross personnel this expenses. the place other save have and We move warehouses you. fees, help and in We run. rent

thank you. Okay,

comes next question Private a from go Smith The Investor. ahead. Emma [ph], Please

financial team, Yoshitsu morning, such congratulations achieving for encouraging performance. Good

XX.X%. X.X% However, compared the to to same decreased by margin the period gross year, last

improve your gross Thank So to what's for plan you. Yoshitsu margin? the

beg me, I Excuse may your pardon?

hear me now? you Can

please. yes, Yes,

Okay.

congratulations achieving encouraging such So performance. for financial

gross the to year, last period decreased XX.X%. by same X.X% the margin to compared however, So

improve Thank margin? gross So for my the question Yoshitsu is, your to what's plan you.

Language] [Foreign

was The mainly Language] [Foreign the pandemic more you discounts from We gross and investment same the We time, promotion services as more to Language] and online. more decline about With margin decline and much. margin. trying brand [Foreign channels, stores. customers. our profit in awareness, online secure [Foreign build am Language] the the the for price and confident and still attract increased COVID-XX the improve increased our of this profit see margin caused business expenses manufacturers partnerships due we're activities are in believe expand all thank products sales the COVID-XX our pandemic our our that consider to operating an company to suppliers, increase customer and Yoshitsu. [Foreign Language] we I profit with off-line At That's opening to future very customers. of stabilization, our in will I reach gross improvements gross very

you. thank Okay,

further for questions, let call from closing remarks. turn company's IR Investors Relations Ascent to no Seeing the the over me representative

Thank conference you call. very much for this joining

have possible. contact questions please look forward interest in We any with through at to us IR tina.xiao@ascent-ir.com. Relations, will Management reach as you Counsel, respond to questions, Ascent at speaking and as soon next Yoshitsu e-mail ir@ystbek.co.jp, you your appreciate will Investors If time. and support your again our

for our all first call listening of Goodbye. attending and for XXXX Yoshitsu's This thank again half in. we conference fiscal year you you today concludes earnings Thank call.