Development of the Internet and e-commerce and dependence on mall contracts

「In the e-commerce market, although the market continues to expand, the business environment remains challenging, owing to higher procurement prices resulting from increased uncertainty surrounding overseas affairs and foreign-exchange fluctuations, rising logistics costs, and intensifying competition as new entrants increase.」

「Although we kept pace with price competition from other companies and cautiously passed on increases in procurement costs, sales of PB (private-label) products remained sluggish and traffic at domestic malls declined. Despite an increase in the average transaction value, the number of purchases fell below the previous year, resulting in sales at 95.4% of the year-earlier period.」

「In domestic e-commerce sales, we sought to secure profit by cautiously passing on increases in procurement costs while keeping pace with price competition from other companies. Although the average transaction value, or purchase amount per order, increased by 2.8% from the year-earlier period, traffic at domestic malls continued to decline and the number of purchases fell below the previous year, resulting in sales at 90.6% of the year-earlier period.」

「At Yahoo! Shopping, the number of visits declined as a result of the mall's cost controls on its initiatives. However, the average transaction value was flat and the conversion rate edged up by 0.2% year on year, allowing us to limit the decline in sales relative to the overall downturn. Sales were 93.0% of the year-earlier period.」

「●Yahoo! Shopping: The mall shifted its customer-acquisition initiatives from attracting new customers to retaining existing customers, while also scaling back promotional measures such as bonus points. Although we tried to make up the shortfall by holding our own sales campaigns and distributing coupons, sales remained weak at 90.8% of the previous fiscal year.」

「At Yahoo! Shopping, sales across the mall were recovering on rush demand ahead of changes to the hometown tax donation rules, but the mall continued to scale back its promotional measures. Although we tried to make up the shortfall through our own sales campaigns and coupon initiatives, sales remained weak at 83.6% of the year-earlier period.」

「At Yahoo! Shopping, new customers declined as various customer-acquisition initiatives at the mall shifted from targeting new customers to existing customers, while promotional measures such as bonus points were also significantly reduced. Although we tried to make up the shortfall through our own sales campaigns and coupon initiatives, sales remained weak at 78.7% of the year-earlier period.」

「At Yahoo! Shopping, traffic across the mall stagnated as the mall significantly scaled back various customer-acquisition initiatives and promotional measures such as bonus points. The conversion rate also declined. Although we tried to make up the shortfall through our own sales campaigns and coupon initiatives, sales remained weak at 81.4% of the year-earlier period.」

「Orders at the kaola store have been suspended as a result of changes by the mall operator to its store-opening procedures,」

「Although overseas sales have been challenging, including reduced exposure as a result of the mall operators' policies prioritizing local stores,」

「In addition to our own website, our main site, we operate stores on internet shopping malls such as Rakuten Ichiba and Yahoo! Shopping. If the terms of our agreements with internet shopping mall operators are changed to our disadvantage as a result of changes in the operators' policies or other factors, or if it becomes difficult to continue those agreements, our profitability may be affected.」

「In addition to our own website, our main site, we operate stores on internet shopping malls such as Rakuten Ichiba and Yahoo! Shopping. If the terms of our agreements with internet shopping mall operators are changed to our disadvantage as a result of changes in the operators' policies or other factors, or if it becomes difficult to continue those agreements, our profitability may be affected.」

「In addition to our own website, our main site, we operate stores on internet shopping malls such as Rakuten Ichiba and Yahoo! Shopping. If the terms of our agreements with internet shopping mall operators are changed to our disadvantage as a result of changes in the operators' policies or other factors, or if it becomes difficult to continue those agreements, our profitability may be affected.」

「In addition to our own website, our main site, we operate stores on internet shopping malls such as Rakuten Ichiba and Yahoo! Shopping. If the terms of our agreements with internet shopping mall operators are changed to our disadvantage as a result of changes in the operators' policies or other factors, or if it becomes difficult to continue those agreements, our profitability may be affected.」

「Our business is centered on our WEB business, and we consider further development of the internet and e-commerce to be a fundamental condition for our future growth. However, if unforeseen factors impede the development of the internet and e-commerce, our operating results and financial condition may be affected.」