BAROQUE JAPAN LIMITED

Business Details

An SPA company operating more than 10 brands including MOUSSY, AZUL BY MOUSSY, and RODEO CROWNS WIDE BOWL, organized into four business categories: Fashion Building/Station Building, Shopping Center, Department Store, and Footwear. Its primary customer base is women in their late teens to 40s. It operates 330 domestic stores (253 directly-operated, 77 franchise) and 5 overseas stores (1 directly-operated, 4 franchise), selling through a combination of physical stores, its own e-commerce platform (SHEL'TTER), external e-commerce malls, and wholesale channels.

Recent Overview

Q1 sales down 3.6%, operating profit down 84.9%; full-year forecast maintained

In Q1 of FY2027 (ending February 2027) (March-May 2026), sales were ¥12,169 million (down 3.6% year-on-year) and operating profit was ¥76 million (down 84.9% year-on-year), a significant deterioration. Key factors included delays in turning around AZUL BY MOUSSY, weak consumption of department store brands, inventory clearance at SC brands, and rising supply chain costs. On the other hand, MOUSSY, SLY, rienda, LAGUA GEM (existing-store sales at 121.3%), and RODEO CROWNS WIDE BOWL performed well. As subsequent events, the company disclosed the transfer of fixed assets in Meguro-ku, Tokyo (a gain on sale of ¥363 million to be recorded in FY2027 ending February 2027) and a resolution to close The SHEL'TTER TOKYO Tokyu Plaza Omotesando 'Omokado' store (closing date undecided). The full-year forecast (sales of ¥52,970 million, operating profit of ¥1,352 million) remains unchanged.

Key Products

Growth Drivers

• Continued growth in existing-store sales for core FB/SB brands such as MOUSSY, SLY, and rienda
• Rapid growth of LAGUA GEM (Q1 existing-store sales at 121.3% year-on-year)
• RODEO CROWNS WIDE BOWL maintaining double-digit existing-store growth
• Planned recording of a ¥363 million gain on sale from the transfer of fixed assets (property in Meguro-ku, Tokyo) in FY2027 (ending February 2027)
• Improved cost structure through reduction in selling, general and administrative expenses (down ¥92 million year-on-year)
• US Wholesale Business sales exceeding the prior year level (Japanese-made premium denim for high-end department stores and select shops)
• Expected operational efficiency gains from the launch of the core system (software in progress, ¥3,079 million)

Risks

• Ongoing mismatch with the traditional customer base amid the mid-overhaul of product development and marketing strategy for the core brand AZUL BY MOUSSY, creating significant downward pressure on overall performance
• Growing bifurcation of personal consumption and rising cost-consciousness strengthening preference for inexpensive, practical items, posing a risk of declining customer traffic across the apparel industry generally
• Turmoil in the Middle East driving up crude oil prices and causing raw material shortages, raising costs across the entire supply chain and compressing gross profit margin
• Risk that inventory clearance at SC brands will continue to weigh on gross profit margin
• Risk of continued weak consumption of high-priced domestic brands within the department store brand category
• Risk of profit deterioration in the US business due to rising selling, general and administrative expenses
• Risk of future increased depreciation burden associated with the capitalization of core system investments, including software in progress of ¥3,079 million
• Financial impact (currently under review) of asset retirement costs, etc., associated with the closure of The SHEL'TTER TOKYO Tokyu Plaza Omotesando 'Omokado' store
• Cash and deposits decreased by ¥2,681 million from the prior fiscal year-end (to ¥8,638 million), reducing liquidity on hand after dividend payments
• Need to revise product mix and input timing due to climate change (risk of unsold seasonal merchandise)