(7126) Global Style - New Analyst Report 7/5

◆ Company Overview
・Global Style is an enterprise that plans and sells custom suits with “GINZA Global Style” as its core business category.

◆ Consolidated financial results for the 3rd quarter of the fiscal year ending 2014/7
・The financial results for the cumulative period of the 3rd quarter of the 24/7 fiscal year (hereafter, first half) were sales of 8,375 million yen (up 6.8% from the same period last year) and operating income of 436 million yen (down 21.2% from the same period). The opening of 5 new stores (excluding business type changes) contributed to the increase in sales. On the profit side, gross profit margin improved slightly from the same period last year, but an increase in store opening costs led to a decline in profit.

◆ Earnings Forecast for the Fiscal Year Ending July 24
・Regarding the 24/7 financial results, Global Style has left unchanged its initial plan of sales of 12,183 million yen (up 17.1% from the previous fiscal year) and operating profit of 744 million yen (up 12.8% from the same period).
・The Securities Research Center (hereafter, our center) predicted almost the same level as the company plan for the 24/7 period. For the 25/7 fiscal year, sales were forecast to be 13,823 million yen (up 13.7% from the previous fiscal year) and operating profit of 880 million yen (up 17.7% from the same period). Points such as opening 5 new stores, year-round contributions for “GINZA Global Style PREMIUM” stores in their 2nd year of operation, and maintenance of gross profit margins were assumed.

◆ Future highlights
・Our center predicted a 13.7% increase in sales compared to the previous fiscal year for the 25/7 fiscal year, a 12.4% increase in sales for the 26/7 fiscal year, and the operating margin on sales to rise to 6.6% in the 26/7 fiscal year.
・In predicting global style performance, the question of which store business type to open is an important point. From recent store opening trends, it can be seen that store business types have come to be used properly between super cities and regional core cities. In particular, regional core cities are places where the company has not focused much until now, and whether store openings in regional core cities will accelerate in the future will be one of the points of interest.