AND ST Holdings posts a 34.6% jump in H1 operating profit as markdown discipline lifts margin, but a payment to retiring directors holds net income flat

AND ST Holdings Co., Ltd. (株式会社アンドエスティHD), the Tokyo-listed group whose Adastria subsidiary runs casual-fashion chains GLOBAL WORK, niko and..., LOWRYS FARM and studio CLIP, said operating profit rose 34.6% to ¥10.731bn in the six months to August 31, even as revenue grew a more modest 1.9% to ¥152.11bn, according to the company's interim (決算短信) results, filed September 30.

Profit outgrew sales because the group's margin improved rather than its prices or its store count. Gross margin rose 1.3 points to 56.5%, which the company attributed to better buying terms and tighter inventory control that cut markdown selling, even as the yen stayed weak and input costs kept rising. Selling, general and administrative costs rose more slowly than sales too: the SG&A ratio fell 0.3 points to 49.5%, as leaner advertising spending -- down to 2.7% of sales from 3.1%, partly the comparison against a flagship-store opening a year earlier -- offset higher personnel costs from pay rises. Operating margin improved 1.8 points to 7.1%, and ordinary profit rose 42.0% to ¥11.066bn.

Domestic apparel holds up, growth concentrates in a handful of brands

Domestic apparel and goods sales, still 87.5% of the group total, rose 3.2% to ¥133.1bn, which the company said reflected firm casual-wear demand, merchandise it moved quickly to match trends, its multi-brand, multi-company structure and promotions including television advertising and point-back campaigns. Karrimor International Corp., which joined the group in April 2025 and now counts for the full half, also added to the total.

Among Adastria's own named brands, growth was uneven. niko and... (+8.8% to ¥19.348bn), LOWRYS FARM (+8.1% to ¥13.105bn), studio CLIP (+5.3% to ¥12.819bn) and Lepsim (+13.7% to ¥9.915bn) all grew briskly, while flagship brand GLOBAL WORK's sales were essentially flat, up 0.1% to ¥26.124bn, as the company pulled back on discounting -- a trade-off that cost it top-line growth but, set against the gains elsewhere, still lifted its profitability. JEANASIS (-0.5%) and BAYFLOW (-3.8%) declined, and group company Element Rule's sales fell 4.3% on weak spring-summer ranges and the comparison against a hit product a year earlier.

Growth outside Japan, except where the group just exited

Overseas apparel and goods sales, reported in yen, fell 11.4% to ¥11.014bn, but the comparison is distorted: Adastria completed the sale of its equity stake in its former US business, Velvet, LLC, in July 2025, so last year's half still carried US revenue that this one does not. Strip out the market the company has left and growth was broad. Mainland China sales rose 24.2% to ¥2.774bn on new standard-format stores and a cross-channel e-commerce push, even as the country's property slump kept weighing on consumer spending there; Hong Kong rose 16.2% and Taiwan 22.5%, both on continued multi-brand store openings; and the smaller Southeast Asian markets grew faster still, Thailand up 42.3% and the Philippines up 13.4%, both still early in building out their store counts.

Across the half the group opened 42 stores and closed 24, ending August with 1,692 stores, 23 more than a year earlier. E-commerce accounted for 27.3% of domestic sales, including the company's own channels at 14.3%. Its own "and ST" marketplace and media platform, which also lets outside brands open stores within it, added a million members over the year to 22.7 million, 8.1 million of them active.

A one-off payment erased the gains lower down

None of that improvement reached the bottom line. Net income attributable to shareholders fell 0.6% to ¥5.951bn, even as operating and ordinary profit both rose sharply, because the company booked a ¥1.23bn special loss for 特別功労金, special merit payments, alongside smaller store-impairment and disaster-related losses. Shareholders approved those payments at the May annual meeting for two directors who stepped down there: Michio Fukuda, on the board since 1971 and president from 1993, and Osamu Kimura, president from 2021, according to the company's notice of meeting. Set that one-off aside and the half's profit growth would have reached the net-income line too, rather than being offset there.

Guidance held, despite running ahead of plan

Adastria left its full-year forecast unchanged from the one it issued April 6: revenue of ¥314.0bn, up 3.2%; operating profit of ¥17.2bn, up 4.1%; and net income of ¥10.5bn, up 10.5%. The interim dividend was set at ¥45 per share and the full-year forecast stays at ¥90, both unchanged from a year earlier. By the company's own account in its results briefing, H1 operating profit already ran roughly ¥1.5bn ahead of its internal plan, yet it chose to hold guidance rather than raise it, saying only that it aims to keep beating plan through the second half. The pattern underneath the numbers is a company picking margin over volume: domestic growth is coming from selling what it already stocks more carefully rather than from an aggressive run of new stores, and its overseas growth is now concentrated in Greater China and Southeast Asia with the US chapter closed.