TOKYO BASE - Company History

In 2007 a twenty-four-year-old employee of Daytona International, the company behind the Freak’s Store chain, was handed a loss-making shop to fix. Japan’s select-shop trade was then split between Beams, United Arrows, Ships and Tomorrowland, all competing on the same axis: imported European and American labels, whose authority was the selling point, in street-front stores of 130 square metres or more. Japanese designers appeared as accents, never as the shop. Tani Masato’s turnaround plan simply inverted the axis — a store carrying Tokyo brands and nothing else. It opened in Jingumae in 2007 as the first STUDIOUS, editing Sacai, Yohji Yamamoto, The Soloist, Facetasm and Number (N)ine into about 100 square metres, with Western labels deliberately excluded and rent held down.

In December 2008 Tani and a colleague, Nakamizu Hideki, incorporated STUDIOUS as a subsidiary of Daytona, and in 2010 bought the business outright — funded, it is said, with help from Tani’s family, whose Hamamatsu department store Matsubishi lay behind it — turning the company into an independent one. The division of labour set then never really changed: Tani on stores and buying, Nakamizu as CFO on finance and controls, the latter bringing IPO experience from Novarese and running the company from the start as if it were already listed.

The model held because the discipline held. Through the post-Lehman years, when the big chains leaned on markdowns, STUDIOUS kept selling Made-in-Japan brands at full price and defended a gross margin around 53 per cent. Stores followed in Shinjuku, Shinsaibashi and Ikebukuro, ZOZOTOWN from 2011 gave it an online position as the one-stop shop for Tokyo designers, and sales quadrupled in three years — ¥3.08 billion in the year to February 2014, ¥4.47 billion the year after.

In July 2015 the company listed on the Tokyo Stock Exchange’s Mothers market, six and a half years after incorporation and unusually fast for an apparel start-up, with Tani keeping more than 40 per cent of the shares. Alongside the listing he launched UNITED TOKYO, an in-house brand aimed slightly older and broader than STUDIOUS and built on “basic, high-quality, made in Japan”. Owning the product rather than editing it lifted the margin again, and gave the company two different engines in one house — a buyer’s eye and a maker’s. UNITED TOKYO passed 10 per cent of sales within a year, helped by cross-selling inside STUDIOUS stores while its own street-front shops opened.

In September 2016 the name changed from STUDIOUS to TOKYO BASE — a holding-style name for a house of brands, and a statement of intent, since a Hong Kong subsidiary was registered the same month. Promotion to the First Section of the TSE followed in September 2017, two years after Mothers and close to a record for the industry. The year to February 2017 showed why: sales of ¥9.35 billion, a gross margin of 53.3 per cent and an operating margin of 13.8 per cent, against big rivals whose profits were flat or falling. Tani set a target of holding return on equity above 25 per cent.

The first overseas store, STUDIOUS Hong Kong in the IFC Mall, opened in 2017; Tani called it a second founding. Mainland China followed from 2018, with a Shanghai trading subsidiary in March 2019 and stores in Shanghai, Beijing, Chengdu and Ningbo. The Yohji Yamamoto business in particular reached sales alongside local luxury houses. By the year to February 2019 the group had sales of ¥13.95 billion and operating profit of ¥1.41 billion — and a long-term ambition Tani stated repeatedly: to become the LVMH of Asia.

Covid hit a business made of physical stores. Sales for the year to February 2021 fell only 4 per cent to ¥14.67 billion, but operating profit collapsed about 80 per cent to ¥207 million and the company posted its first net loss, of ¥112 million. Tani’s response was to run against the market again: while rivals closed stores and cut staff, TOKYO BASE kept opening in China, on the view that a downturn is when positions change hands. He also narrowed the brands — STUDIOUS was pushed back toward what it had been at the start, a pure editor of Tokyo designers, with its own-label share deliberately cut, while in-house development concentrated on UNITED TOKYO and, from 2020, the athleisure line PUBLIC TOKYO.

The bet appeared to pay. After a fifteen-month transitional period ending January 2022, sales were ¥17.62 billion with net profit back at ¥762 million; the mainland network had reached about twenty stores and China was roughly 15 per cent of sales. Tani fixed a single opening rule — no market where the company could not beat the prior year. But the China business was leaning heavily on one label, Yohji Yamamoto, and the tension between selling Made in Japan as a premium and expanding at mid-price volume had not been resolved.

It surfaced in the year to January 2023. With about thirty mainland stores, discounting on Chinese e-commerce — chiefly Tmall — became habitual and dragged online gross margins below those of the shops, while new stores outran the profitability of existing ones and impairments rose. Sales set a record at ¥19.18 billion; operating profit fell about 80 per cent to ¥215 million and the company reported a net loss of ¥539 million, the largest since listing. The distortion was the familiar one of fast growth: openings first, earnings later.

In March 2024 the company published a medium-term plan to January 2028 in three explicit stages — structural reform, then store expansion, then profit recovery. The first year did the unglamorous work: closing loss-making Chinese stores, ending habitual e-commerce discounting in favour of full-price selling, and resizing the China format to mid-sized shops of about 165 square metres to cut rent and payroll. Sales for the year to January 2025 were ¥20.21 billion with operating profit of ¥1.47 billion, the best since 2019; China turned monthly profitable in the fourth quarter; and the company bought back ¥990 million of its own shares and cancelled ¥1 billion. The plan was, in effect, a promise to stop opening ahead of the numbers.

The expansion stage began in the year to January 2026 with more than fifteen new stores at home and abroad, re-entry into Shanghai and Beijing with the smaller format, and openings beyond the mainland in Hong Kong, Taiwan and Thailand. Sales reached a record ¥23.73 billion, with operating profit of ¥1.96 billion and net profit of ¥1.21 billion, all company highs, achieved while absorbing domestic wage increases. Financial policy stayed conservative even in expansion — ¥3.31 billion of interest-bearing debt against ¥6.27 billion of equity, a capital ratio near 42 per cent, ROE around 19 per cent — with a total payout ratio above 20 per cent and a stated intention to raise the dividend every year.

The brand structure is now settled at three: STUDIOUS as the select shop it began as, UNITED TOKYO and PUBLIC TOKYO as in-house lines at different ages and prices, with “continuous development of new formats” carried as a plan KPI. From one shop in 2007, the group ran roughly 140 stores across Japan, Hong Kong, mainland China and Taiwan by early 2026 — eighteen years spent widening a single idea, mid-price Made in Japan sold to Asia. What remains is the last stage of the plan: whether the network built in the expansion years yields steady profit by the twentieth anniversary in 2028.