ATSUGI CO., LTD.

Business Details

Atsugi Co., Ltd. and its consolidated subsidiaries manufacture, procure, and sell Legwear (stockings, tights, etc.) and Innerwear. The major customer is Shimamura Co., Ltd. (approximately 27% of net sales). In addition to domestic wholesale sales, the company is promoting D2C (Own Online Shop / EC Mall) sales as a key initiative. Production bases are located domestically and in China (Yantai), and OEM sales are also conducted.

Recent Overview

Both sales and profit worsened; medium-term management plan withdrawn for a fundamental review

Net sales of the Textile Business for FY2026 (ending March 2026) were ¥20,156 million (down 2.3% year on year), and operating loss expanded to ¥1,495 million (compared with a loss of ¥1,378 million in the prior period). Legwear sales decreased 4.8% due to lower volume despite higher unit prices, while Innerwear sales increased 0.9% supported by strong OEM and EC performance. Rising procurement costs due to the weak yen, persistently high raw material, fuel, logistics, and labor costs, and delays in reviewing the production system at the company's own factory in China worsened manufacturing costs. An impairment loss of ¥221 million was recorded on fixed assets in the Textile Business. Following a significant shortfall in the first year of the plan, the company withdrew its medium-term management plan, which had targeted FY2028 (ending March 2028) as its final year, and began a fundamental review of its earnings structure.

Key Products

Growth Drivers

• Expansion of OEM (original equipment manufacturing) sales: maintaining strong performance mainly in the Innerwear segment
• Increase in Innerwear sales through EC and clothing specialty store channels
• Improvement in unit prices through the market launch of high-value-added products with added functionality
• Development of new customer segments through new product launches targeting Generation Z
• Cost reduction through investment in automation equipment at the company's own factory in China (Yantai) (in progress)
• Value enhancement through expansion of healthcare products and entry into medical applications
• Cost reduction through strengthening the supply system in ASEAN

Risks

• Persistently high procurement costs due to the continued weak yen
• Rising manufacturing costs due to sustained increases in raw material and fuel prices, logistics costs, and labor costs
• Shrinking demand for Legwear due to growing consumer cost-consciousness and frugality
• Deterioration of manufacturing costs due to delays in reviewing the production system at the company's own factory in China
• Risk of additional impairment of fixed assets in the Textile Business (¥221 million recorded in the current period)
• Risk of sales concentration in a specific customer (Shimamura Co., Ltd.) (approximately 27% of net sales)
• Increased strategic uncertainty following the withdrawal of the medium-term management plan
• Continued decline in Legwear sales volume due to shrinking sales floor space at major sales channels (mass retailers)

Business Details

This is the real estate segment operated by Atsugi Co., Ltd. Its main business activities are the Purchase & Sale of Subdivided Land and the Land & Building Leasing business. While the Textile Business continues to record operating losses, this segment functions as the sole profitable segment supporting the Group's overall earnings. Leasing of land owned in Ebina City, Kanagawa Prefecture began newly in October 2024, and the full-year contribution of this rental income in FY2026 (ending March 2026) resulted in increased sales and profit.

Recent Overview

Increased sales and profit due to full-year contribution of Ebina City land leasing, with net sales up 9.1% and operating income up 10.9% year on year

In FY2026 (ending March 2026), the Real Estate Business recorded net sales of ¥697 million (up 9.1% year on year) and operating income of ¥538 million (up 10.9% year on year). The main factor was the full-year contribution of rental income from land owned in Ebina City, Kanagawa Prefecture, which began in October 2024. This partially offset the Textile Business's operating loss of ¥1,495 million, contributing to the Group's overall earnings, and continued from the prior period as the Group's only profitable segment.

Key Products

Growth Drivers

• Full-year contribution of new revenue from the leasing of land owned in Ebina City, Kanagawa Prefecture, which began in October 2024 (first full-year contribution in FY2026 (ending March 2026))
• Expansion of leased properties under the policy of promoting effective utilization of owned assets
• Possibility of increased emphasis on utilizing real estate assets under the Group's earnings structure reform, which includes a policy of advancing the sale of cross-shareholdings and other assets

Risks

• Risk of decreased earnings due to lower occupancy rates or falling rents on owned real estate
• Risk of asset value impairment due to deterioration in real estate market conditions
• Risk that overall Group financial deterioration due to the expanding loss in the Textile Business could constrain investment capacity in the Real Estate Business
• Risk of increased holding costs due to rising interest rates
• Risk of unclear direction for asset utilization strategy following the withdrawal of the medium-term management plan

Business Details

The 'Others' segment consists of three businesses: Group Home Operation for elderly people with dementia, Procurement & Sale of Nursing Care Products, and Electricity Sales from Solar Power Generation. It consolidates businesses not included in the Textile or Real Estate reportable segments. Although it accounts for a small proportion of the Group's overall net sales (approximately 2.9% in FY2026 (ending March 2026)), it generates stable operating income.

Recent Overview

Operating income decreased 8.3% year on year due to maintenance costs incurred for solar power generation equipment, among other factors

In FY2026 (ending March 2026), the 'Others' segment recorded net sales of ¥615 million (down 0.1% year on year) and operating income of ¥75 million (down 8.3% year on year). Electricity sales from solar power generation remained steady, but the incurrence of maintenance costs for power generation equipment, among other factors, weighed on operating income. Group Home Operation and nursing care product sales continued to perform steadily.

Key Products

Growth Drivers

• Securing stable earnings through steady performance of Group Home Operation
• Earnings contribution from steady performance of nursing care product sales
• Stable securing of electricity sales revenue from solar power generation

Risks

• Risk that electricity sales revenue from solar power generation is affected by weather and sunlight conditions, and risk of earnings pressure from increased maintenance costs for power generation equipment
• Risk of shrinking demand due to intensifying competition in nursing care product sales and consumers' growing frugality
• Limited contribution to overall Group performance due to the small scale of the segment (net sales of ¥615 million)