Improving margins through product strategy and SG&A efficiency

「The company focused on improving profitability by optimizing operating costs and inventory levels.」

「In catalog-based mail order, the company focused on improving profitability by improving the efficiency of customer acquisition and optimizing the scale of promotional activities, while passing on the increase in raw material costs to prices for its core tea products.」

「Across the Group, sales and profit declined as we focused on optimizing advertising expenses in existing businesses while actively investing in overseas operations as a source of growth.」

「In sales targeting catalog retail and EC, the company worked to improve customer-acquisition efficiency and optimize the scale of sales promotion. It also actively invested in future growth areas, including its EC business targeting the United States and the development of new wholesale customers in Japan and overseas. However, revenue was ¥5,570 million, down 11.5% from the previous interim consolidated accounting period, due to factors including contraction of the supplements market following the red yeast rice issue at another company and intensifying competition as the number of competing stores in EC marketplaces increased. Segment profit was ¥131 million, down 23.7%, due to cost-push factors such as raw material and delivery costs.」

「In the retail business, active investment in overseas operations as a potential source of growth resulted in a loss.」

「As a result of higher purchasing prices and delivery costs and upfront investment overseas, the segment loss was ¥224 million, compared with a segment loss of ¥32 million in the same quarter of the previous year.」

「In the retail business, the company focused on promotions commemorating its 40th anniversary and the launch of limited-edition products, while actively pursuing customer acquisition for catalog sales. It also worked to expand its range of original products and improve sales promotion efficiency. In the EC area, it invested in such initiatives as acquiring businesses from 2 companies engaged in cross-border EC. Revenue declined, particularly because of intensifying competition as the number of competing sellers in EC marketplaces increased and sluggish growth in the EC business targeting China. Profit was also affected by higher operating costs, including purchasing prices and delivery costs. As a result, revenue was ¥2,344 million, down 10.5% year on year, and the segment loss was ¥165 million, compared with segment profit of ¥1 million in the same quarter of the previous year.」

「Profit was affected by increases in operating costs such as purchase prices and delivery costs.」

「In the retail business, the company focused on reducing SG&A expenses as procurement costs rose amid broad-based inflation. In the EC area, it expanded sales promotion centered on increasing users of its proprietary app and using LINE and social media, focused on the digital shift, reviewed creative materials for customer acquisition and worked to optimize the allocation of advertising and sales promotion expenses. Although revenue declined, particularly due to the previously mentioned factors such as the reversal of the COVID-19 demand surge in EC marketplaces, the company reviewed operating costs such as purchasing prices and utility expenses and worked to improve profitability. As a result, revenue was ¥3,870 million, down 6.5% year on year, and the segment loss was ¥32 million, compared with a segment loss of ¥89 million in the same quarter of the previous year.」

「The company reviewed costs, including sales promotion expenses, to absorb increases in operating costs such as purchasing prices and utility expenses, and worked to improve profitability. As a result, revenue was ¥2,619 million, down 8.1% year on year, and segment profit was ¥1 million, compared with a loss of ¥1 million in the same quarter of the previous year.」

「Profit growth was sluggish because the cost-of-sales ratio rose, partly as a result of the weaker yen.」

「Revenue from the retail business was ¥5,503 million, down 14.0% year on year, and the segment loss was ¥85 million, compared with segment profit of ¥205 million in the same period of the previous year.」

「In the retail business, the company launched the functional foods “Meta Home Tea Plus,” “Triple Meta Guard” and “Aka no Megumi Aojiru Sukkirina,” strengthened sales promotion through PR activities on social media and campaigns, and focused on digital initiatives to improve convenience using LINE features. However, customer numbers remained sluggish due to deteriorating customer-acquisition efficiency. In its EC marketplaces, the company focused on improving the cost-effectiveness of advertising placements and increased gift orders by opening a LINE Gift store and strengthening sales promotion at events. Overseas sales were difficult, as China’s lockdown had a significant impact on sales activities. As a result, revenue was ¥4,137 million, down 13.9% year on year, and the segment recorded a loss of ¥89 million, compared with profit of ¥211 million in the same quarter of the previous year.」

「As a result, revenue was ¥2,851 million, down 9.9% year on year, and the segment loss was ¥1 million, compared with segment profit of ¥136 million in the same quarter of the previous year.」

「In the retail business, the company promoted its digital shift by introducing product information through social media, enhancing video content and adopting various electronic payment services, and worked to improve customer convenience, but struggled as it was unable to offset the decline in response to catalog media. In its EC marketplaces, sales of childcare-related and pet-related products remained strong, but growth lagged behind the same period of the previous year due to the decline in stay-at-home consumption following the easing of restrictions on going out and delays in the arrival of products sourced overseas. As a result, revenue was ¥1,299 million, down 12.7% year on year, and the segment recorded a loss of ¥14 million, compared with profit of ¥40 million in the same quarter of the previous year.」

「In the retail business, the company worked to reduce costs, focusing on improving the cost-effectiveness of advertising placements and catalog distribution, promoted orders through its smartphone app, and advanced its digital shift by introducing content that customers could enjoy at home, including information delivered through AR and live streaming. As a result, revenue was ¥4,806 million, up 5.7% year on year, and segment profit was ¥211 million, compared with a loss of ¥6 million in the same quarter of the previous year.」

「The Company worked to reduce costs, primarily by improving cost-effectiveness through more efficient advertising placements and catalogue distribution.」

「Profit was also pressured by the increased proportion of products with high cost-of-sales ratios.」

「Selling, general and administrative expenses were unchanged year on year, mainly due to a review of advertising expense management.」

「The company worked to improve profitability by reviewing its advertising budget and shifting toward cost-effective products such as “hugm (ハグム)” for new customer acquisition. As a result, revenue was ¥4,544 million, down 1.8% year on year, and the segment loss was ¥6 million, compared with a loss of ¥77 million in the same period of the previous year.」

「Although the review of advertising operations improved the profit margin, the segment loss was ¥2 million, compared with a loss of ¥34 million in the same quarter of the previous year.」

「Operating profit was ¥81 million, down 24.3% year on year, ordinary profit was ¥88 million, down 27.6%, and net profit attributable to owners of the parent was ¥51 million, down 28.0%, as the proportion of products with high cost-of-sales ratios increased.」

「Cost of sales increased by ¥1,447 million from the previous consolidated fiscal year to ¥4,084 million, mainly because the sales mix shifted toward products with higher cost-of-sales ratios, such as furniture, in the retail business. The cost-of-sales ratio consequently rose by 7.8 percentage points to 44.0%.」

「The segment recorded a loss of ¥77 million, compared with profit of ¥129 million in the same quarter of the previous year, due to aggressive investment in advertising and sales promotion expenses for customer acquisition and the impact of higher shipping charges, among other factors.」

「Segment profit was ¥129 million, up 237.4% year on year, mainly because sales of products with low cost-of-sales ratios increased.」

「Cost of sales increased by ¥107 million from the previous consolidated fiscal year to ¥2,637 million, mainly because the sales mix shifted toward products with higher cost-of-sales ratios, such as food products, in the wholesale business. The cost-of-sales ratio consequently rose by 1.6 percentage points to 36.2%.」

「Cost of sales decreased by ¥82 million from the previous consolidated fiscal year, mainly due to lower purchases in the wholesale business, while the cost-of-sales ratio improved by 1.7 percentage points to 34.6%.」

「Revenue was ¥1,488 million, down 4.9% year on year, while segment profit was ¥61 million, up 492.3% year on year, due to the lower cost-of-sales ratio and reduced selling, general and administrative expenses.」

「The cost-of-sales ratio improved by 1.3 percentage points from the previous consolidated fiscal year to 36.3%, mainly because the sales mix shifted toward core products with higher margins in the retail business.」