Summary of Recent Financial Results (Updated July 14, 2020)
◆Retail car sales were on a par with the same period of the previous fiscal year, gross profit per unit fell.
In the first quarter of the fiscal year under review (March 1, 2020 to May 31, 2020), retail car sales from all directly managed stores totaled 34,769, up 1.9% from the same term last year even under the circumstances where Japanese and local governments had requested people to refrain from going out given the spread of COVID-19.
Meanwhile, gross profit per unit fell due to a temporary (from April to mid-May) reduction in retail prices. In addition, gross profit per wholesale unit decreased due to a sharp auction price decline in April and May.
◆SG&A expenses decreased.
SG&A expenses decreased because cost control was implemented, including a reduction, etc. of advertising expenses.
Net sales fell with the decline in the number of visitors to stores due to the effects of COVID-19. However, operating profit increased following a fall in SG&A expenses.
◆Increase factor of extraordinary loss
Following requests by national and local governments to stay at home, and the declaration of a state of emergency by the Japanese government as a measure to stop the spread of COVID-19, stores in Japan and Australia shortened business hours and temporarily closed. Fixed expenses, etc. generated during this temporary closing period were recognized as a COVID-19-related loss under extraordinary losses.
Summary of Recent Financial Results (Updated April 14, 2020)
◆ Retail car sales and gross profit per unit recovered
Retail car sales from directly managed stores totaled 132,988 (up 6.8% YoY). In the previous fiscal year, retail car sales per store and gross profit per unit fell due to changes in the price setting of used car sales and the store sales strategy. However, in the fiscal year under review, a range of improvement measures contributed to an enhancement in the accuracy in retail price setting and an increase in the sales and profit of accessories. As a result, both retail car sales per store and gross profit per unit recovered.
◆ SG&A expenses increased due to store management expenses
SG&A expenses increased because of store management expenses resulting from new store openings.
◆ Australian subsidiary
The new Melbourne-based car dealer group in Victoria, Australia that was acquired in October 2018 became our subsidiary in the previous consolidated fiscal year (its financial results were consolidated for the period from October 1, 2018 to February 28, 2019). As a result, it contributed to an increase in net sales in the fiscal year under review.
◆ Factors for increases in non-operating expenses and extraordinary losses
Associated with the syndicated loan agreement signed in the current term, an arrangement fee was paid to an arranger financial institution, and the expenses were recorded in non-operating expenses and interest expenses.
Under the management policy of establishing a solid foundation toward the next growth stage by deciding whether to invest in or withdraw from businesses with an emphasis on capital efficiency, the following measures were undertaken: closing of some directly managed stores, review of the introduction of a business system, reduction of the business in New Zealand and withdrawal from the business in China whose full-scale operation had been considered. These measures resulted in an increase in equity method investment losses from the level in the previous fiscal year and extraordinary losses, such as loss on retirement of non-current assets, loss on closing of stores, impairment loss and loss on valuation of investment securities.