HONG KONG SAR – OutReach Media – November 24, 2023 –
HONMA Golf Limited (“HONMA”; together with its subsidiaries, the “Group”; HKEx stock code: 6858), one of the world’s most prestigious golf brands, announces unaudited consolidated interim results for the six months ended September 30, 2023 ( the “Period”).
Financial Highlights
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Due to increased market competition and adjustments in consumers’ willingness to spend resulting from the economic downturn, total revenue was JPY 13,194.8 million (equivalent to USD 93.9 million) , a decrease of 11.6% compared to the same period of the 2022/23 financial year.
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Net profit for the period amounted to 3,329.5 million JPY (equivalent to 23.7 million USD), an increase of 7.8% compared to the same period of the 2022/23 financial year. Net profit margin for the period was 25.2%, up 4.6 ppt year-on-year.
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Net operating cash flow remained positive and amounted to JPY 3,251.3 million (equivalent to USD 23.1 million) for the period.
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An interim dividend of JPY 1.5 per share represented approximately 27.3% of the Group’s distributable profits as of September 30, 2023.
Major achievements
During the six months ended September 30, 2023, the Company faithfully followed its growth strategies while carefully protecting its financial strength and cash flows by implementing efficiency improvement initiatives through optimization of distribution channels and retail operations in the face of challenging market conditions.
As a result, the Company not only recorded sales growth in the clothing sector and self-operated chains during the period, but also recorded strong net profit growth and improvement in profit margin. net, demonstrating the Group’s excellent management capabilities and its commercial resilience in a volatile environment. .
Steady growth in the Japanese market, adjustments in the Chinese and Korean markets
Geographically, the Group’s main markets recorded different commercial dynamics compared to the same period last year. Revenues from Japan and Hong Kong increased by 5.6% and 11.2%, respectively, driven by a strong rebound in consumer demand, continued marketing activities to increase brand awareness and HONMA products, and the successful activation of various HONMA products. Mainland China, on the other hand, saw revenue decline by 13.0%, with the overall economy and retail market experiencing significant slowdowns. Korea also recorded a 7.0% drop in sales, reflecting the Group’s decision to optimize its distribution network ahead of the launch of its new products in the first quarter of 2024.
Continued growth in the clothing sector; The performance of golf clubs hampered by the Chinese market
In terms of products, the Group has actively promoted the growth of the clothing industry and transferred its clothing business in China to independent stores. During the period, clothing sector revenue increased by 2.1% year-on-year, especially clothing sales from China increased by 21.4%, despite weak consumer confidence. consumers in China.
Golf club revenues, however, posted a 12.5% decline during the period, mainly due to a 26.3% decline in golf club sales in China. Nevertheless, golf club revenues in Japan increased significantly by 20.1%. Revenues from specialty models also increased by 34.5%, as younger golfers opted for individualism which was reflected in specialty models.
Sales of golf balls remained stable and fell slightly by only 2.2% following an upward adjustment in retail prices to cope with the depreciation of the Japanese yen in recent years.
Expanded retail presence with modernization of independent stores, while continuing channel adjustment in North America and Europe
From a channel perspective, the Group has continued to maintain an extensive sales and distribution network which has enabled it to cater to a wide customer base in its target markets.
Throughout the period, the performance of independent stores remained strong, showing a steady increase of 13.2% compared to the six months ended September 30, 2022, mainly driven by strong growth in Japan and China of 30 .7% and 23.6%, respectively. Revenues from third-party retailers and wholesalers decreased by 22.5% for the same period, mainly due to lower sales in China due to the challenges faced by the industry as well as the shift of the Group’s apparel business towards self-operated channels.
North America and Europe continue to benefit from the largest number of golfers, but with varied market conditions. During the six months ended September 30, 2023, the Group continued to reprioritize its distribution strategy in North America and Europe by focusing on a smaller but leading group of accounts, those most able to represent HONMA and pursue consumers in the super-premium and premium sectors. -performance segments. At the same time, the Group continued to optimize its organization and its cost base in both markets in order to properly anchor its short and medium-term growth in a context of economic uncertainties.
Following this strategic adjustment, in North America, the Group opened six points of sale (“POS”) and closed 116 points of sale during the six months ended September 30, 2023, thereby reducing its total number of points of sale to 235 as of September 30, 2023. During the Period, in Europe, the Group opened 45 new points of sale, leading to a modest point of sale network of 80 locations.
Pursue super premium and high performance segments: focus on club products that exemplify Japanese craftsmanship and innovative world-class technology
During the Period, following the Group’s decision to strengthen and focus its product offering on the super-premium and premium-performance consumer segments in order to increase its market penetration, the Group revised its product strategy in enriching its TOUR WORLD club offering to include a performance enhancement series. and modernizing its BERES family of clubs with a modern and sophisticated design and development approach to appeal to today’s golfers.
HONMA remains committed to applying cutting-edge technologies and Japanese craftsmanship to the design, development and manufacturing of a comprehensive line of superbly designed, performance-oriented golf clubs. HONMA has applied many of its groundbreaking proprietary technologies to the design and development of its latest BERES AIZU and TW757, designed for wealthy and passionate golfers. The company aims to launch the next generation of BERES and several new products under the Tour World family of clubs in 2024.
Redefine the HONMA brand and create a 360-degree brand experience
HONMA has launched various programs to improve its global brand positioning and communication with target consumers. To redefine the HONMA brand as a dynamic, relevant and global brand among young, internet-savvy golfers, HONMA has completely revamped its global website and social media platforms while making regular visual and content updates and frequent updates of all its digital offerings in order to continually promote brand and product awareness in order to attract young golfers. HONMA’s rapid increase in digital communications across earned and paid media has contributed to continued improvement in organic traffic, conversion and other digital engagement matrices such as bounce rate and time on channel. site, among others.
HONMA has engaged leading design and marketing agencies to renovate its retail space to deliver the ultimate brand experience and customizable consumer journey in key markets. During the six months ended September 30, 2023, HONMA opened 11 new stores in China and one in other parts of Asia, systematically applying the new retail visual identity, design concept and retail elements. customer experience using cutting-edge technology. HONMA also upgraded several shop-in-shops in the United States, Japan and China using the same design concept to ultimately present the same space and consumer experience in all of its major markets.
Business Outlook
Going forward, the Group will continue to execute its long-term growth strategies to build a leading global golf lifestyle business, leveraging the heritage of the HONMA brand, its distribution network in expansion, its innovative technologies and its traditional Japanese know-how.
The Group will also continue to enhance and transform HONMA brand value into customer loyalty through multiple branding and marketing strategies; further increase the Group’s market share in domestic markets by maintaining its leading position in the super-premium segment while making solid inroads in the fast-growing premium-performance segment; anchor sustainable growth in North America and Europe based on the updated product and distribution strategy; develop complementary off-club product lines to offer customers a complete golf lifestyle experience; and pursue product innovation and development to meet the latest market trends.
Mr. LIU Jianguo, Chairman of the Board, President and Executive Director of HONMA Golf Limitedsaid: “While many challenges remain during the second half of the financial year, we are confident in our ability to mitigate the negative impacts of these uncertainties and will seize every possible opportunity to propel growth, preserve cash flow and optimize operational efficiency to foster a solid foundation for medium and long term development with respect to our brand, products, distribution channel, employees and supply chain. We strive to promote sustainable business development and strive to create long-term value for all our shareholders.
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The issuer is solely responsible for the content of this announcement.
