Sanyo Shokai Sees “End of Struggles” Despite Six Consecutive Fiscal Years of Losses from Burberry Losses

Where is the brilliance of “Burberry Blue Label” and “Burberry Black Label”?

In late March, Sanyo Shokai announced a downward revision to its consolidated forecasts for the fiscal year ending February 2022. Initially forecasting sales of 41.5 billion yen, operating income of 100 million yen, and ordinary income of 50 million yen, the company revised these figures to sales of 38.6 billion yen, operating loss of 1 billion yen, and ordinary loss of 700 million yen, resulting in losses for the sixth consecutive fiscal year. Although the initial projection was for the company to return to profitability, it was strongly affected by sluggish sales due to the extension of the Corona disaster and soaring fuel, raw material, and transportation costs.

Nevertheless, compared to the operating loss of 8.913 billion yen and ordinary loss of 9.036 billion yen in the fiscal year ended February 2009, the current loss is a significant improvement, and we believe that Sanyo Shokai’s predicament is finally coming to an end.

The biggest cause of Sanyo Shokai’s protracted predicament is the termination of its licensing agreement with Burberry for the 2015 spring/summer collection. The licensing agreement between Sanyo Shokai and Burberry was 40 years long, and by the 2010s it was said to have accounted for around half of Sanyo Shokai’s total sales. （In the 2010s, the Burberry business is said to have accounted for around half of Sanyo Shokai’s total sales (the Burberry business was not disclosed). Since sales of around 50 billion yen will suddenly disappear, it is only natural that the business performance will deteriorate. The Corona disaster, which has been continuing since 2020, has resulted in six consecutive fiscal years of losses.

In addition to the loss for six consecutive terms, I am personally shocked by the fact that sales have shrunk from over 100 billion yen to 38.6 billion yen. Although the withdrawal from unprofitable businesses due to the double whammy of the Barbary loss and the Corona disaster was a factor, it must have been difficult to steer the company through such a shrinkage.

The dissolution of the contract was inspired by the success of “Burberry Blue Label” in Japan?

Burberry has become so popular in Japan, no doubt due to Sanyo Shokai’s steady efforts over the past 40 years. Some have criticized Sanyo Shokai for relying too much on licensed brands, and while that is accurate, I still personally appreciate Sanyo Shokai’s efforts to date to a certain extent. Above all, it can be said that the catalyst was the Burberry Blue Label launched in 1996 and the Burberry Black Label launched in 1998, which were aimed at young people.

The Burberry Blue Label for young ladies, launched in 1996, became explosively popular when the popular singer Namie Amuro was used as a model, and this, combined with the popularity of Amurer, led to a tremendous surge of interest in the brand. This success led to the launch of the Black Label for young men in 1998, which received strong support from men in their 20s and 30s. The cool young businessmen of the time were wearing Black Label ties and shirts in droves.

Some in the apparel industry criticize Sanyo Shokai for starting these two lines on its own and weakening the brand value, but personally, I would like to give credit to the company for changing the Burberry brand, which had been aimed at older men, into a brand that attracts the attention of young people.

Before 1997, there were very few young people who wore Burberry or paid attention to Burberry, and even in department stores, Burberry was only sold in the middle-aged section. Also, speaking personally, I think that Sanyo Shokai’s policy at the time was not necessarily a mistake, considering that Burberry’s home country has been promoting the brand’s trend-fashion orientation since the termination of the contract with Sanyo Shokai. To stretch my imagination further, I think that the success of Burberry Blue Label in Japan may have been an inspiration for Sanyo Shokai.

The fact that Sanyo Shokai’s Burberry business has grown to an estimated annual sales of 50 billion yen or so is unquestionably due to the success of the Blue Label and Black Label.

The licensing agreement with “Burberry” still continues to this day…

Well, everyone, do you know what is happening to the very popular Blue Label and Black Label now?

Although Sanyo Shokai has been in the red for six consecutive terms since Burberry’s demise, it has not been idle. It has launched a new licensed brand “Mackintosh London” as a replacement for Burberry. It also launched “Crestbridge Blue Label” and “Crestbridge Black Label” as replacements for Blue Label and Black Label.

However, the reality is that none of these brands have grown to the same level of sales as Burberry, even after six years have passed. This can be clearly seen from the fact that sales have fallen to 38.6 billion yen.

In fact, the “Crestbridge” brand is widely known in the apparel industry, but it is not so well known to the general public.

The use of the brand name “Burberry” and the use of the Burberry horse mark and the “Burberry check pattern” which is a peculiar tartan check were prohibited by the termination of the license agreement with Burberry, but the use of the brand name “Crestbridge” and the house used in Crestbridge were prohibited. The use of the checkered pattern was allowed.

From the perspective of Burberry’s headquarters, this is a recognition of the brand’s 40 years of success in nurturing the brand and pioneering the youth market.

However, no matter how much it is a new licensed brand with Burberry headquarters, it is meaningless if it is not well known to the general public, and even if we say “check pattern,” Burberry check and house check are different in pattern itself, so they cannot be sold in the same way. It is not possible.

In addition, Crestbridge has continued to appoint designers Yasuhiro Mihara and Yasutoshi Esumi as creative directors since its inception and spring/summer 2009, respectively, and has put in a fair amount of effort, but there has been no discernible effect.

It has been 25 years since the big hit debut of Blue Label and Black Label, and it will be extremely difficult to recapture the brilliance of yesteryear since consumer behavior, fashion preferences, and sales channels have completely changed between the youth of those days and the youth of today.