An apparel contract manufacturer posted a loss almost as big as its entire revenue

Kafka, founded in Nagoya in May 2005, built its business making clothing under other companies' brands rather than its own: jackets, coats and other women's wear, plus children's and men's clothing, produced under OEM and ODM contracts for apparel makers. Kafka supplied fabric free of charge to subcontracted sewing factories in China, the Philippines and within Japan, then sold the finished goods to its client brands.

The model required Kafka to hold significant inventory — fabric committed to factories, goods in production, finished stock awaiting delivery — all exposed to currency risk since materials and overseas manufacturing were priced against a fluctuating yen. A sustained weak yen made every stage of that pipeline more expensive to fund.

For the fiscal year ending April 2026, Kafka reported revenue of approximately ¥5.933 billion — and a net loss of approximately ¥4.579 billion, wiping out nearly the company's entire top line in red ink and pushing it into severe negative net worth. The heavy inventory burden that the business model required left it without the cash cushion to absorb a currency shock of that scale.

On July 21, 2026, the Nagoya District Court granted Kafka's bankruptcy petition, with total liabilities of approximately ¥6.045 billion owed to around 110 creditors — a two-decade contract manufacturer undone by a business model that carried currency and inventory risk it had no way to hedge once the yen moved against it.