Financial Highlights
- Revenue decreased by 25.6% to JPY9,814.5 million (equivalent to USD64.8 million), due to ongoing and intensified market competition, economic slowdown, and distribution adjustment.
- Direct-to-Consumer channel grew by 6.5%, led by Japan and China whose DTC revenue rose by 5.4% and 10.0%, respectively.
- Successful new product launch of BERES09; BERES golf clubs’ performance with 18.4% revenue growth in Japan and 49.4% growth in Southeast Asia.
- Revenue from apparels increased by 6.1%, despite the weak consumer sentiment in China and a reduction in total number of stores.
- Gross profit margin improved by 0.9 percentage points to 53.0%.
- Net operation profit (non-IFRS) amounted to JPY 213.50 million.
- Net operating cash flow remained positive and stood at JPY4,024.4 million (equivalent to USD26.6 million) for the six months ended 30 September 2024, recording an eight-year CAGR of 8.4%.
Major Achievements
For the six months ended 30 September 2024, HONMA steadfastly implemented its business strategies while carefully protecting its financial strength and cash flow. Since early 2023, the global golf industry has seen continued, downward adjustments in both the number of rounds played and purchase interest of golfers at different stages and across different markets. These developments echoed management’s decision to strengthen and streamline its product offering around two consumer segments, namely super-premium and premium-performance consumer segments. Despite market headwinds, HONMA’s direct-to-consumer channels and core product categories demonstrated resilience during the Period.
Focusing on Club Products that Best Represent Japanese Craftsmanship and World Standard Innovative Technology in Pursuit of Players in Super-Premium and Premium-Performance Segments
HONMA remains committed to applying cutting-edge technologies and artisan-style Japanese craftsmanship to the design, development, and manufacturing of a comprehensive range of exquisitely crafted and performance-driven golf clubs. HONMA applied several of its revolutionary proprietary technologies to the design and development of its latest BERES and TOUR WORLD products, designed for affluent and avid golfers. Following the launch of BERES 09 in early 2024, the Group gained additional penetration into the super-premium consumer segment, especially in Asia. Revenue from BERES golf clubs rose by 18.4% in Japan and by 49.4% in Southeast Asia. During the same period, Be ZEAL3, a product designed for golfers in the premium performance segment rose by 27 times. In addition, following the launch of several collections of SAKATA Lab putters in early 2024, sales of putters increased by 36.8% for the half year ended 30 September, reconfirming HONMA’s strong brand equity and its ability to cater to both affluent and avid golfers.
Accelerating Apparel Growth to Provide a Complete Golf Lifestyle Experience for Customers
Revenue from apparels increased by 6.1% YOY to JPY1,340.6million for the half year ended 30 September 2024. The profit margin of apparels increased by 29.1 percentage points to 57.3%. Despite weak consumer sentiment and a reduction in the total number of stores in mainland China, apparels sales continued its growth trajectory, achieving 15.9% YOY growth.
Improving Profitable Growth by Focusing on DTC Channels, Contributing 56.1% of Total Revenue
Self-operated stores continued to exhibit strong growth momentum, posting a steady increase of 6.5% for the six months ended 30 September 2024. This growth was driven by continued retail operational improvements in Japan and China (including Hong Kong and Macau), where retail sales grew by 5.4% and 10.0%, respectively. Revenue from third-party retailers and wholesalers decreased by 46.3% during the same period, primarily due to a decline in wholesale revenue from Japan, Korea, and China (including Hong Kong and Macau) as a result of economic slowdown and channel reshuffling in Korea. Revenue from e-commerce grew by 8.1%, with Japan increasing by 18.9% and mainland China by 5.8%. The rapid expansion of digital communications led to improvements in organic traffic, conversion rates, and other digital brand engagement metrics such as bounce rate and time on site, amongst others.
Strong Recovery in Europe and North America Following Channel Optimisation
Following past years’ distribution network optimisation, sales from Europe and North America rose by 92.4% and 23.5% from the six months ended 30 September 2023, respectively, while expanding their profitability.
North America and Europe account for more than 50% of the global golf market. During the six months ended 30 September 2024, HONMA continued to focus on a smaller but premier group of accounts in both markets while continuously implementing its unique direct-to-consumer communication and sales strategy. This direct-to-consumer communication and distribution approach overlays with HONMA’s existing wholesale points of sale and various digital platforms, allowing HONMA to effectively increase its brand and product awareness while owning the entire consumer experience and purchase journey.
Furthermore, the decision to differentiate the TOUR WORLD product offering between tour-inspired players and golfers seeking performance enhancements will significantly bolster HONMA’s growth strategy in North America, where the market has continued to rebound, with an increasing number of golfers gravitating towards premium-performance products.
Business Outlook
Moving forward, HONMA remains committed to its long-term vision of building a world-leading golf lifestyle company. The Group will continue to leverage its brand heritage while embracing innovation and digital transformation. Key focus areas include expanding market share in core markets through the super-premium and premium-performance segments, optimising distribution networks in North America and Europe, developing complementary non-club product lines, and maintaining product innovation that combines traditional craftsmanship with modern technology. HONMA will also continue strengthening its direct-to-consumer channels while enhancing operational efficiency across all markets.
Mr. LIU Jianguo, Chairman of the Board, President and Executive Director of HONMA Golf Limited, said: “During this period of market adjustment, HONMA has demonstrated its resilience by maintaining strong gross margins and growing our direct-to-consumer channels. Our strategic focus on the super-premium and premium-performance segments, combined with our enhanced digital capabilities and streamlined distribution network, positions us well for future growth. We remain committed to our heritage of Japanese craftsmanship while embracing innovation to meet the evolving needs of today’s golfers.”
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About HONMA Golf Limited
HONMA is one of the most prestigious and iconic brands in the golf industry. Founded in 1959, HONMA combines the latest innovative technologies with traditional Japanese craftsmanship to provide golfers across the globe with premium, high-tech and high-performance golf clubs, balls, apparels and accessories.
As the only vertically integrated golf company with rich in-house design, development and manufacturing capabilities, extensive retail footprint in Asia and a diverse range of golf clubs and golf-related products, HONMA is perfectly positioned to continually grow its business in Asia and beyond, benefitting from the return of golfers in mature golf markets such as the US and Japan, as well as from increased participation in emerging and under-penetrated markets such as Korea and China.
In the past couple of years, HONMA has actively re-branded itself in order to re-define the HONMA brand as a dynamic, relevant and premium golf lifestyle brand among younger golfers. The Group renewed its tour presence in Asia by retaining a HONMA team consisting of one veteran and seven female players who are considered rising stars by the golf industry and collaborated with coaches and key opinion leaders in the main Asian markets. The Group also made significant investments into its retail distribution network and digital capabilities in Japan and China to provide a unified and improved consumer experience and journey to its loyal consumers as well as the younger golfers.
