Until recently, Tokyo Base was growing by 40-50% a year, but hit a wall in 2018.
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The fashion chain, which focuses entirely on Japanese brands and sources, believes it has fixed the problems in its core chain and online brands and will regain its previous momentum.
Tokyo Base was the fastest growing fashion retailer for three years running but stumbled last year due to slower sales on Zozotown from a failed lower-priced brand and tougher trading at the core Studious select shop chain.
For FY2018, Tokyo Base posted growth of 9.2%, modest by its own standards, to ¥13.9 billion, with operating profit falling 10.7% to ¥1.4 billion.
The Studious chain, which only sells merchandise from Japanese designers and which accounts for around half of the company’s sales, continued to struggle with operating profit down 29% in 1H2018 alone, but Tokyo Base adjusted merchandising in the second half and still managed to achieve an operating margin of just over 10% for the full year.
Tokyo Base cut the Studious chain by three stores to 26 but added one more for United Tokyo, bringing the total to 15. It opened seven stores in its new chain, Public Tokyo.
For the full year, Studious sales fell 3.3% to ¥7.8 billion, while United Tokyo shot up 18.2% to ¥4.8 billion. Public Tokyo added ¥5 billion and the e-commerce operation, Tokyo Department Store, added ¥4.7 billion.
For the coming year Tokyo Base expects to regain momentum, with sales up 19% to ¥16.6 billion and a 30% increase in operating profit to ¥1.8 billion.
Some of this will come from a forecast 10% increase in same-store sales for Studious and United Tokyo following an overhaul of product planning and merchandising teams.
As well as recovery at home, Tokyo Base has significant potential overseas – the business was originally conceived as a global shop window for Japanese design and fashion talent.
Tokyo Base says its first stores in Hong Kong have been a success and it will open the first Studious Tokyo store on the Chinese mainland this August in Shanghai after establishing a subsidiary, and then follow up with a local e-commerce store. It will open Chinese stores for United Tokyo and Public Tokyo in 2021.
Michael Causton is the co-founder and partner at JapanConsuming, a specialist research firm on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market to help subscribers keep up to date with the latest trends and data. JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and consulting on market strategies and future trends.
(Source: Japan Consuming)