Our Vision for the Future

「Core Competence」×「Innovation」⇒Global Challenge

All connections will be based on platforms via ICT and digital.
A well-balanced business between AI and people is what we aim in the future.
NEW RETAIL that Baroque Japan think is everything evolving and expanding, of things going on in Baroque “NOW”.

※1 ICT...Information and communications technology

Key strategies

The strategies for the revised medium-term plan have been established for the following reasons: (1) review of the domestic business structure following unexpectedly poor results in the January 2018 period; (2) a new direction taken by Belle in their China strategy due to the change in major shareholder; and (3) the need to update the medium-term plan released in March 2017 to reflect recent developments in the business environment.
The revised plan charts a course for Baroque over the five-year period from 2020 to 2024 that involves a combination of reforms and challenges in the NEW RETAIL era, including specific numerical targets of JPY 100 billion in turnover, JPY 8.5 billion in operating profit, and JPY 8.7 billion in ordinary profit by 2024. The plan also calls for an increase in the net overseas sales (proportion of overseas retail sales) from the current 24.0% to 33.0% by 2024.
Capital investment is also expected to reach a cumulative total of around JPY 10 billion over the five-year period. This includes efficiency measures such as system upgrades and logistics enhancements as well as new store openings and refurbishments in Japan, along with investments for “change” in the form of new store openings in foreign territories other than China, new business ventures, and M&A.

Consolidated Performance Targets

(12 month results as reference)
(New Medium-Term Plan Targets)
Sales JPY 67.73 billion JPY 100 billion
Gross Profit JPY 38.05 billion JPY 56 billion
Operating Profit JPY 4.67 billion JPY 8.5 billion
Operating Profit Ratio 6.9% 8.5%
Ordinary Profit JPY 4.67 billion JPY 8.7 billion
Net Profit JPY 3.04 billion JPY 5.7 billion
Overseas Sales Ratio* 24.0% 33.0%
ROE 16.3% 20.0%

*Overseas sales are based on retail sales base

Capex Plan during the New Medium-Term Plan Period

Capital investment under the revised medium-term plan

1Active global expansion (Wholesale + Store Opening)

Pursue overseas expansion while concentrating mainly on MOUSSY (Japanese-made stretch denim jeans and other items that are popular overseas) and ENFÖLD, which is attractively priced and offers trendsetting styles similar to Western brands.
Use wholesale tasting events in all territories as a springboard for new store openings, with a target of 90 new stores in foreign territories other than China generating at least one-third of total overseas sales by 2024. Maximize the strength of the Japanese brand to accelerate global expansion in the optimal form.

Proactive global expansion (wholesale + new retail outlets)

※2 JV...
*Joint venture

2Sustainable expansion of China business

While Chinese economy has been slowing down, we aim to invest for the future to accelerate growth when Chinese economy returns to a recovery phase. While carefully considering large-scale store openings, we continue to expand NEW RETAIL stores and strengthen EC platform. For brands we have introduced overseas, the retail expansion strategy will be maintained in “cruise mode,” meaning a net increase of 20-30 new stores per year, while introducing improvements in efficiency.

Sustainable expansion of China business

4Accumulating, analyzing and utilizing data through NEW RETAIL

We have been conducting repeated trials for NEW RETAIL for over 10 years now. Three key outcomes to date are: (1) substantial improvements in store efficiency following the introduction of RFID※3 technology; (2) while data storage is essentially a question of cost, interpreting the data requires skilled analysts; and (3) cashless payment is entrenched in China, providing an excellent foundation for data marketing. Therefore, we will enhance customer experience via three key initiatives, in the following order of priority: (1) using RFID systems to improve product and inventory tracking efficiency; (2) developing digital marketing strategies based on consumer purchasing data; and (3) embracing cashless payment systems. At the same time, we are pursuing the establishment of the NEW RETAIL model as a means of boosting sales and improving efficiency.

※3 RFID...
Radio Frequency Identification. RFID tags are encoded with ID information that is exchanged wirelessly via electromagnetic or radio waves at distances ranging from a few centimeters to several meters, depending on the frequency.

Priorities of our NEW RETAIL initiatives

  1. 1More efficient store operating costs
  2. 2Effective utilization of accumulated data
  3. 3Cashless operation
  4. 4Adopting effective NEW RETAIL models

5Develop new businesses and categories through Open Innovation
(including M&A)

With the progress in ICT and the advent of new diverse business models, we are committed to proactively investing in innovative ventures with the potential to complement and strengthen the reach of the apparel industry. We are also committed to proactively investing in e-commerce infrastructure for the NEW RETAIL model, while also enlisting business partners, joint ventures, startups, and M&A where possible as a means of augmenting internal investment. We have also begun a company-wide recruitment process for the next-generation content development project NEXT IS YOU, with the aim of coming up with new projects. In the medium to long term, Baroque will commit up to JPY 10 billion in financial support for promising business concepts and venture projects with the potential to become the next big thing in the future.

Our New Business Domain

Conceptual diagram of the new business domains at Baroque

8Promoting Supply Chain Management (SCM) reforms
9Restructuring stores and head office organization

We are anticipating more difficult times ahead due to two main factors: the falling birthrate and aging population in Japan, which means the potential purchaser segment is shrinking; and a corresponding decline in the younger demographic, which impacts on our ability to recruit the best possible people to the organization. As such, our primary focus at the moment should be on maximizing profits. In addition to boosting sales, we will promote SCM reforms in order to maximize gross profit on sales. We will also seek to reduce selling and administration expenses through a restructuring of the retail network and streamlining of head office operations. We will work towards becoming a more dynamic organization to achieve maximum corporate value.