ENVALITH
株式会社ナイガイ logo

NAIGAI CO.,LTD.

8013・Standard Market・Textiles & Apparels

Official website
株式会社ナイガイ logo
NAIGAI CO.,LTD.8013

Business

Naigai Co., Ltd. is a textile products manufacturer of socks and other items founded in 1920, comprised of the company and 6 consolidated subsidiaries. In its core Wholesale Business, the company outsources production of in-house brand and licensed brand socks, aprons, pajamas, and other items to partner manufacturers in Japan and overseas, and wholesales them to department stores, mass retailers, specialty stores, etc., while also exporting overseas. In the Retail Business, the company operates directly-operated stores (7 stores at fiscal year-end) and conducts direct sales via internet mail order and catalog mail order. The Thai subsidiary RONDEX (Thailand) CO., LTD. handles rubber thread manufacturing, Intext Co., Ltd. handles logistics, and Sentire One Co., Ltd. conducts e-commerce sales of leather products and other items. Consolidated net sales for FY2026 (ending March 2026, January) were ¥13,356 million.

Business Model

The company primarily outsources production to domestic and overseas partner manufacturers, earning approximately 81% of net sales by wholesaling in-house brand and licensed brand products to department stores, mass merchandisers, and specialty stores. The remaining approximately 19% consists of direct sales through directly-operated stores and e-commerce, with the high-gross-margin Retail Business serving as the driver of profitability improvement. Collaboration with Tabio Corporation and overseas exports also function as revenue sources, and the expansion of transactions with mass merchandisers through OEM/ODM Supply Services has been a growth driver in recent years.

Company Strengths

A specialized manufacturer that has focused on the planning, manufacturing, and sales of socks and other legwear since its founding in 1920. Continuous investment in functional product development, including obtaining medical device manufacturing and sales licenses and establishing 'Naigai Lab,' underpins its differentiation.

In the Retail Business for FY2026 (ending January 2026), net sales reached ¥2,517 million (up 12.5% year on year) and operating profit reached ¥87 million (up 235.6% year on year), achieving substantial increases in both revenue and profit. In the Legwear E-commerce Business, both sales and operating profit significantly exceeded plan, with progress in acquiring new customers and improving profitability.

As of the end of FY2026 (ending January 2026), the equity ratio stood at 55.6%, with net assets of ¥6,868 million. Cash and cash equivalents amounted to ¥2,964 million, maintaining sufficient liquidity for business activities while continuing to repay borrowings.

ENVALITH's Perspective

In Q1 of FY2027 (ending January 2027), net sales rose sharply to ¥3,441 million (up 23.0% year on year), but the operating loss narrowed only slightly to ¥202 million (versus a loss of ¥209 million in the same quarter of the prior year). The full-year forecast calls for net sales of ¥15,500 million, operating profit of ¥50 million, and net income of ¥70 million, projecting a return to profitability. However, having already recorded an operating loss of ¥202 million in Q1, the company would need to secure ¥252 million in operating profit over the remaining three quarters. Even factoring in seasonality, this target appears difficult to achieve, and the risk of a downward revision to the forecast warrants close monitoring.

Having recorded an operating loss in Q1 following an operating loss in the previous consolidated fiscal year, the company itself recognizes that the material event raising substantial doubt about its going-concern assumption continues to exist. External factors, such as heightened consumer frugality due to rising prices and the structural contraction of the department store channel, are acting as headwinds. Whether the measures under "N-Challenge 2027" (e-commerce expansion, mass retailer channel expansion, and fixed-cost optimization) succeed and operating cash flow turns positive is the key to resolving the material event concerning the going-concern assumption, and represents the most critical monitoring indicator for investment decisions.

The ordinary loss for Q1 improved significantly to ¥129 million from ¥303 million in the same quarter of the prior year, but this was largely driven by an external factor—a swing in foreign exchange gains/losses, from a foreign exchange loss of ¥91 million in the prior-year quarter to a foreign exchange gain of ¥78 million this quarter. Excluding the impact of exchange rate fluctuations, the underlying improvement in earnings is limited, with the operating loss narrowing by only ¥7 million (from ¥209 million to ¥202 million). The revenue gains from the mass retailer and e-commerce businesses were absorbed by increased selling, general and administrative expenses (from ¥1,208 million to ¥1,283 million), and the progress of cost structure reform needs to be assessed carefully.

Growth Strategy

Transforming its business portfolio around e-commerce, mass retailers, and overseas markets as growth axes, the company aims to become a 'Personal Solutions Company' by 2030

Full-scale rollout of socks and underwear under the licensed brand "Champion" for mass retailers. Operational since the first quarter of FY2027 (ending January 2027), it has become a key driver pushing BtoB business sales up 25.6% year-on-year for the same quarter. Synergies with character brand products have also been confirmed, and revenue expansion in the mass retailer channel continues.

Through product measures responsive to customer needs and customer acquisition measures utilizing SNS and other channels, the e-commerce business's sales and profitability have both exceeded plan. Overall BtoC business sales grew 16.3% year on year for the same quarter. The company aims to strengthen its proprietary e-commerce channel to shift customer touchpoints toward a company-led model and improve profitability.

In response to cost-conscious consumer sentiment and changes in the retail floor environment affecting department store wholesale, the company has begun restructuring its profit structure. It is promoting a shift to a sales-floor production model, converting from a model dependent on other companies to one where the company itself leads sales-floor operations, aiming to strengthen profitability. However, weakness in the department store channel continues, and it is expected to take time before the effects of the restructuring materialize.

The effects of structural reforms implemented in the previous fiscal year, including the withdrawal from unprofitable stores, became apparent in the first quarter of the current fiscal year, with strong performance on an existing-store basis and ongoing improvement in profitability. The company will continue to optimize fixed costs and improve inventory efficiency, aiming to establish a stable earnings base.

Both in the previous consolidated fiscal year and in the current first quarter, the company recorded an operating loss, and the material event casting significant doubt on the going concern assumption persists. The company aims to achieve positive operating cash flow through a combination of measures including e-commerce expansion, mass retailer channel expansion, fixed cost optimization, and improved inventory efficiency. While continued financing from financial institutions has secured cash on hand, the timing of achieving profitability remains the most critical issue.

Last updated: July 17, 2026