Self-Transformation of DESCENTE

ITOCHU has identified the further expansion of sports related business in the textile field as one of its key strategies. The core of this is DESCENTE, which manufactures and sells sportswear and related products.

Since FYE 2013, DESCENTE continued to increase its earnings, especially in its South Korea business. However, from FYE 2016 onward, financial results had fallen and had been consistently below initial plans due to deteriorating profitability despite increased sales. As management reforms became a more pressing issue, after ITOCHU made a tender offer bid for DESCENTE, Shuichi Koseki was appointed president in June 2019. Since then, he has confidently undertaken these reforms with an eye on the external environment and strengths of the company. He completed divestment of the longstanding loss-making European and U.S. businesses and adopted a strategy to focus management resources on three markets of Japan, South Korea, and China, which, since then, has steadily borne fruits. To resolve the overreliance on South Korea business, DESCENTE shifted to focusing on profit, instead of sales, and implemented a fundamental restructuring aimed at improving profitability in Japanese business. In addition, the China business was reborn through a partnership with the ANTA Group, one of the world’s leading sports companies. The partnership enables a revitalized DESCENTE China to combine the manufacturing power of DESCENTE with the sales power of the ANTA Group, thereby expanding the number of stores and significantly increasing earnings. Moreover, following the end of South Korea’s boycott of Japanese products, DESCENTE has currently realized a well-balanced earnings structure underpinned by the three pillars of Japan, South Korea, and China.

In its medium-term management plan “D-Summit 2023,” DESCENTE laid out three key items: implementing strategies by regions for Japan, South Korea, and China; improving profitability of the Japanese business; and enhancing its manufacturing capability. In particular, in the Japanese business, the company is transforming its business model from a wholesale-centric to a direct-to consumer business that sells through the customer contact points of its own directly managed stores and e-commerce. DESCENTE will leverage the strengths of having its own R&D center and factories to conduct manufacturing that fulfills consumer needs and thereby enhances earnings. Amid continuing struggles in the apparel industry during the pandemic, DESCENTE aims to achieve further growth by working to differentiate itself in the sports sector, which is its strength.

Self-Transformation of YANASE

YANASE is Japan’s largest imported car dealer with a sales and service network encompassing around 240 locations and a customer base of over 200,000. YANASE has established strong, long-lasting bonds of trust with customers by offering products and services that meet individual customer needs through its handling of eight automobile brands, sales of new and used cars, aftersales services, and its financial and insurance business.

Since YANASE became a consolidated subsidiary in FYE 2018, ITOCHU has accelerated its shift to a hands-on management style and worked to expand its value chain and strengthen its earnings base. YANASE centers on sales of new and used imported cars, especially Mercedes-Benz, its mainstay brand. In addition, YANASE has spun off its used car division into a separate company, which has newly lined up quality, domestically produced used cars to complement the imports. YANASE is actively working to supplement brick-and-mortar sales with online sales. YANASE is also working to establish a new earnings base by expanding customer contact points and meeting diversifying customer needs through the strengthening of its used car business. YANASE is focusing on further strengthening its used car value chain by expanding its used car service network and consolidating its used car auction operating company.

Moreover, YANASE implemented exit criteria and revised its investment criteria with the aim of reorganizing and closing unprofitable stores and handling new brands. In addition to dealing with unprofitable stores based on the new criteria, the company is steadily building up its sales track record. As part of its efforts to strengthen its brand portfolio in luxury imported car sales, YANASE recently added Porsche to its lineup.

In addition to reinforcing after-sales services and retail by expanding its lineup of used cars, to meet diversifying needs going forward, the company will strive to differentiate itself from competitors and forge even stronger relationships with customers. To this end, YANASE offers exceptional experiential events and items exclusively available through a website dedicated to owners.