TSI Group Medium
TSI Group Medium
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-
term
term
Management Plan
Management Plan
FY2013 to 2015
FY2013 to 2015
Disclaimer
This Medium-term Management Plan is based on the TSI Group Medium-term
Management Plan for the FY2012 to FY2014 period released in April 2012.
Although our corporate philosophy and mission as well as the themes of the Medium-term
Management Plan have remained unchanged since the plan’s release back in April 2012,
we made certain additions and revisions to our individual group strategies and group growth
scenario in consideration of changing the external environment and internal circumstances.
Any forward-looking statements contained herein including target values are those based
upon management's judgment made on the basis of the information and data that were
obtainable at the time of the creation of this document, and it should be noted that actual
results may potentially differ materially from the statements contained herein owing to
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1.
TSI Group Corporate Philosophy
We create values that brighten up the spirit of people through
fashion and share the joy of living with society.
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1. We deliver new fascination to society through creations that are ahead of the times.
2. We thoroughly implement a product-oriented business that aims to create truly valuable products.
3. It is our joy to change the emotions of our customers to excitement by offering them generous hospitality.
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2.
Form of TSI Group Management
Diversified business areas
Continuous development and acquisition of new brands
Establishment of an optimal business model
The TSI Group’s management policy set out in the TSI Group
Medium-term Management Plan for the FY2012 to FY2014 period
Maximum use of group synergy
Maximum use of group synergy
Management based on the strongest business portfolio
Management based on the strongest business portfolio
Establishment of the “strongest business portfolio” in the fashion
industry
→
Business areas
×
Brands
×
Business model
Execute new market strategies that were difficult to be
implemented by individual companies
3.
TSI Group Business Domain
1. Even though we will discover changing market needs, areas with high sensitivity and fashionareas with high sensitivity and fashionare the central domains, in principle.
2 We will expand business to areas relating to total fashion areas relating to total fashion and move away from the conventional apparel business centered around clothing.
Practical clothing + clothing ornaments
Practical clothing + clothing ornaments Fashion clothing + clothing ornamentsFashion clothing + clothing ornaments Total fashionTotal fashion
Retail Retail --ty pe ty pe SPA SPA
(incl. select shops)
(incl. select shops)
Maker Maker --ty p e ty p e SPA SPA Maker Maker --ty p e ty p e Appare l Appare l Commodity
Commodity FashionFashion
Customer focus e d Customer focus e d Current main business domain GMS clothing Fashion center firm Leading casual SPA
Lifestyle league firm General apparel firm Kanto-based major general apparel firm Kansai-based major general apparel firm Kansai-based general apparel firm Newly emerging young fashion firm Kanto-based casual SPA Kansai-based casual SPA
Business domains that
Business domains that
the TSI Group will pursue
the TSI Group will pursue
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4.
The Themes and Strategic Policies of the Medium-term Management PlanPursue our group growth strategy according to the three themes set out in April 2012
Medium-term Management
Plan themes
Medium-term Management
Plan themes
Central policies
Central policies
(1) Reforming cost
structure
→ Entering a total completion
stage
(2) Improving profitability
→ Seek to achieve an
optimal revenue generation structure
(3) Strengthening group
management
capabilities
Achieve increased profitability for our existing businesses and pursue streamlined management leveraging our group advantages
Pursue an earnings-centric business policy towards achieving 5,000 million yen in operating income
Create synergistic effects through our group realignment program
Achieve renewed growth by implementing a structural reform without sanctuary
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5. Challenges and policies towards achieving renewed growth (marketing policies)
Channel
Channel
Vision
Vision
Domestic
channel
Domestic
channel
EC channel
EC channel
Overseas
channel
Overseas
channel
Rebuild a high profitability brand portfolio and store network
Grow our EC channel sales to 10% of our total group sales
Enhance our local brand capability
Market assessment
Market assessment
Fashion-related
consumption other than that of apparel and clothes/sundries is expanding
Recovery of apparel consumption is uncertain
Make our actual stores and EC stores borderless (allow the
customer to try on clothes at actual stores before buying them at EC stores)
Sophisticate our action to meet customer needs (need to get ordered item as soon as possible!)
Slowing sales in China due to political problems
Need to expand business in non-China markets while seeing China as the key market
Action points
Action points
Develop new businesses
designed to deliver new lifestyles and values
Address our low profitability businesses on a group-wide basis
Build an EC platform with a view to implementing our O2O
strategy
Perform a rebranding for our EC site
Expand sales in Hong Kong, Singapore and Europe markets
Make JILLSTUART our flagship Asian brand
Business domains the TSI Group will pursue in coming years
6. Specific measures aimed at enhancing our profitability (1)
Our previous main business domains
Fashion clothing
Clothes and sundries
Lifestyle
Sundry
Sports
Cafe
・・・
General “fashion”
“Fashion” as defined by the TSI Group
Expand our business domains in the overall fashion market without being
constrained to the apparel business
Opening store in a drive-in
A family golf casual wear store Lifestyle idea type shop selling non-apparel goods as well
Event held under a clothing, food and living theme
A shop containing a cafe
The TSI Group’s aspiration: “Pursue fashion’s potential”
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Want to get a wider range of people enjoying golf
(1) Expand our business domains: Develop new businesses with a view to engaging in
M&A transactions
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Specific measures aimed at enhancing our profitability (2)
Our domestic channel
Our domestic channel
(2) Consider developing a business format capable of leveraging our group advantages
(3) Address the low profitability business and store issues on a group-wide basis
・・・Currently, negotiations are also underway for running
multiple foreign brands in Japan
Launch in spring 2013 “PEARLY GATES THE GREEN GOLF
STORE,” a family line golf casual store format for the “PEARLY GATES” brand
Launch “laule’a sunny side store,” an adult surf and resort
lifestyle idea shop format, in spring 2013
Open “free peddler market,” a café-equipped lifestyle idea
shop format that sells sundries, interior goods and flowers
Launch in spring 2013 “Planet blue world,” an LA taste select
shop format half of whose goods are living-related items
Hold the “MHL. COMMUNITY MART” event as a new clothing,
food and living item retailing format Want to promote
8.
Specific measures aimed at enhancing our profitability (3)
Channel
Channel
Specific measures
Specific measures
EC channel
EC channel
Overseas
channel
Overseas
channel
(1) Expand our Hong Kong business: Create synergistic effects by unifying our locally-based companies in 2013
- Expand our operations in Hong Kong and Southeast Asia - Secure a local subsidiary marketing base in Singapore
(2) Expand overseas sales of MARGARET HOWELL - Invest aggressively in different European countries
(3) Make JILLSTUART our flagship brand in Asia
- Continue to promote the localization of the JILLSTUART brand through an enhanced
collaboration with our domestic headquarters
(4) Expand the business for Beijing Tsubomi Clothing Limited.
- Seek to expand the business by launching new format-based operations other than
existing female clothing operations
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(1) Step up the collaboration between our non-virtual stores and EC in terms of purchasing activities
- Develop an EC platform in order to pursue our O2O
(Online-to-Offline) strategy
(2) Launch “aptm.945 TOKYO”, a web-originated new brand - Implement an EC and store combination strategy
･･･Currently, preparations are also underway for launching
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9. Our sales value targets by sales channel
Overseas channel
EC channel
Domestic channel
185.5 billion yen
in total 180.0 billion yen
in total 9.3 billion yen
(5.0% of the total)
13.4 billion yen (7.2% of the total)
162.8 billion yen (87.8% of the total)
155.1 billion yen (86.2% of the total)
166.2 billion yen (85.2% of the total)
175.0 billion yen (83.3% of the total)
10.1 billion yen (5.6% of the total)
14.8 billion yen (8.2% of the total)
195.0 billion yen in total
210.0 billion yen in total
11.6 billion yen (5.9% of the total)
15.0 billion yen (7.1% of the total)
17.2 billion yen (8.8% of the total)
20.0 billion yen (9.5% of the total)
FY2012 Actual FY2013 Target FY2014 Target FY2015 Target FY
A e Y Y e Y Y e Y Y
e e ye ye % ye % ye %
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10. Our challenges and policies towards achieving renewed growth (production and logistics)
Our production-related challenges and policies to address them
(1) Medium-term strategic tasks we should carry out
1) Rebuild our overseas production bases in a forward-looking manner
2) Streamline our domestic production platform
3) Revise and realign our domestic and overseas logistics base functions
(2) Our challenges and policies to address them
Individual task
Individual task Our challengeOur challenge
Rebuild our
overseas production bases
Rebuild our
overseas production bases
A rapid increase in wage levels in China’s coastal areas and in Thailand and Vietnam Mismatch between cost levels and technology and quantity levels in the ASEAN region
Foreign exchange (weak yen) risk
Our policies to address challenge
Our policies to address challenge
Relocate 20% of our east and north China area production to other country
Develop our business in new ASEAN areas
Seek to put in place an overseas factory designed for small-lot production
Optimize our
domestic production platform
Optimize our
domestic production platform
Secure a sufficient level of labor force in Japan
Secure small-lot production platform-based subcontractor factories
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11. Our future supply chain picture
Shanghai area
Beijing area South Korea
Inland China
Singapore
Hong Kong
Japan
Vietnam
Shanghai area
Beijing area South Korea
Inland China
Singapore Vietnam
Logistics base Our own factory Commissioned
factory
Sales base
Logistics bases
Logistics base Hong Kong
Japan
Now
Future
Logistics base Our own factory Commissioned
factory
12. Our group organizational platform
Currently, the TSI Group is in operation under a three-tier structure consisting of TSI
HOLDINGS subsidiaries Tokyo Style and SANEI-INTERNATIONAL whose many
subsidiaries are operating under their umbrellas, respectively (please see “Our current
organizational chart” shown on the next page).
For an apparel company, “speedy action” is the key to success in running a business. A
multi-layered organizational platform is detrimental to our decision-making speed.
It is for this reason that we think it reasonable for our individual business entities to operate
as “flexible and small teams of efficient personnel” with backup support provided by the TSI
HOLDINGS on a company-wide basis in the event of such entities needing additional
corporate resources.
In order to pursue such business strategy that is optimal for the Group, we aim to
eventually turn all our group companies into subsidiaries that operate directly under the
umbrella of the TSI HOLDINGS, thereby building a flat group organizational platform
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* Spun off from Tokyo Style and SANEI and realigned
Ｘ Ｘ Ｘ Ｘ Ｘ Ｘ Ｘ Ｘ Other subsidiary Ｘ Ｘ Ｘ Ｘ
Apparel subsidiary Function company
* Turned from Tokyo Style’s and SANEI’s subsidiaries into TSI HOLDINGS subsidiaries
13. A picture of our post-realignment organizational platform
Appare l subsi diary Overse as su bsidiary Other subsidi ar y … TSI Production Network
(production function com
pa ny) Appare l subsi diary Se w ing su bs id ia ry … -Administration divisions-Accounting, HR, general affairs, system, public
relations
-Marketing divisions-Store development ,
EC Consolidat e overlapping divi sions … Appare l subsi diary O ve rse as su bs id ia ry Other subsidi ar y … Appare l subsi diary … Our current organizational chart
The former Tokyo Style Group
The former SANEI Group
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Ｘ
Ｘ
Ｘ
Apparel subsidiary Apparel subsidiary
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14.
The Group Growth Scenario
Our assumptions
changed
Sales ：147.8
Operating income ：-6.9
Operating income rate：-4.6%
Sales ：220
Operating income ：5
Operating income rate：2.3％
y (2) Improving profitability
FY2013 FY2014 FY2015
Target 2.
A M
M
Sales ：188.5
Operating income ：-13
Operating income rate：-0.7%
●Results (billions of yen)
● the Mid-term
management plan
(billions of yen)
(1) Reforming cost structure
● Forecasts (billions of yen) FY2012
Structural reform without sanctuary
Structural reform without sanctuary Continuous growthContinuous growth
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Target 1.
Structure reform without sanctuary
Structure reform without sanctuary
Implemented a cost structure reform for Tokyo Style
First half of 2013 ending February
15. The implementation status of our cost structure reform
Second half of 2013 ending February
A cost reduction of 1,343 million yen achieved by implementing the structure reform program plus an additional cost reduction of 762 million yen
Withdraw from unprofitable business…Close five brands of TOKYO STYLE.
Close low-yielder/unprofitable stores.…Close approx. 394 unprofitable stores of TOKYO STYLE.
Discontinuation of branch system at TOKYO STYLE
Cost structure Advertising expenses/Logistics costs/General expenses
Sale and closure of some factories
Ｉmplementation of
early retirement support system
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Reduced items Reduction due to the cost
structure reform Additional cost reduction
Personal costs -903
Logostics costs -40
Advertising expenses -400
Others ─
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16. Revision to our targets for 2015 ending February
Changing external environment and internal circumstances
○Revised our target values for 2015 ending February due to changes made to our assumptions concerning sales
Declining sales caused by the implementation of cost structure reform for Tokyo Style
on a non-consolidated basis
Non-consolidation of kate spade Japan due to sale of shares in the firm
Target value revision resulting from our overseas marketing strategy modification
Alteration to our M&A strategy
Kept our operating margin target unchanged despite the sales target revision
Our original targets for 2015 ending February
announced in April 2012 announced in April 2013 Change from the original targets
220 billion yen 195 billion yen A reduction of 25 billion yen
5 billion yen 4.5 billion yen A reduction of 0.5 billion yen
Operating margin 2.3% 2.3% +0.0ｐｔ
Net Sales
Our revised targets for 2015 ending February
17. Our numerical targets for the years to FY2015 (2016 ending February)
Aim to achieve operating income of 5 billion yen and operating margin of 2.4%
for FY2015
Achieve continuous growth by enhancing our earnings capability
Achieve continuous growth by enhancing our earnings capability
FY
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e e y e y e % y e % y e %
e I e y e ye ye % y e %
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% % ｐｔ % ｐｔ % ｐｔ
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18.
A picture of our earnings for the years to FY2015 (2016 ending February)Net Sales 180.0 billion yen
Operating income 1.2 billion yen
FY2013 Forecasts Net Sales 210.0 billion yen Operating income 5.0 billion yen
Net Sales 195.0 billion yen
Operating income 4.5 billion yen
FY2014 Targets Net Sales 185.5 billion yen Operating income -1.3 billion yen
FY 2012 Actual
FY2015 Targets
Income growth due to shrinking loss of Tokyo Style
Income growth due to an elimination of Tokyo Style’s loss and the measure to address its low profitability business line
Income growth due to shrinking losses from new brands
Sales decline caused by Tokyo Style’s store closing and subsidiary share sale
Sales increase caused by priority brand sales growth, new brand development and EC business expansion
Sales increase caused by priority brand sales growth, new brand development, EC business expansion and overseas sales growth
+15.0 billion yen
+15.0 billion yen
5.5 billion yen
+2.5 billion yen
+3.3 billion yen
