Risk of Higher Delivery Fees and Reduced Business with Carriers

「The outlook remains uncertain due to factors including fluctuations in foreign exchange rates and increases in resource prices, fuel costs, raw material prices and logistics costs.」

「We believe that uncertainty will continue due to factors including labor shortages and higher labor costs resulting from the 2024 problem in the logistics industry, with which we have close ties.」

「Profit increased year on year as a result of continued efforts to improve profitability in various ways, including increasing sales, expanding sales of D2C products, containing rising delivery costs as a logistics initiative, and promoting the selection and concentration of partner warehouses.」

「In terms of profit, the Company implemented various profitability improvement measures, primarily in the EC Marketing business, including the development of private-label products and logistics initiatives. However, it was unable to absorb during the consolidated fiscal year the cost increases resulting from higher procurement prices due to yen depreciation and higher energy prices, as well as higher logistics costs.」

「As increases in procurement prices resulting from yen depreciation and higher energy prices, together with higher logistics costs, outweighed other factors, results remained below the level of the same period of the previous year.」

「As increases in procurement prices resulting from yen depreciation and higher energy prices, together with higher logistics costs, outweighed other factors, results remained below the level of the same period of the previous year.」

「In terms of profit, the Company continued to focus on developing its own private-label products, an initiative it had pursued previously, and on developing high-margin products, while also promoting measures to contain rising delivery costs and the selection and concentration of partner warehouses, among other initiatives,」

「Transportation and packing expenses ¥720.781 million ¥881.131 million」

「As a result of vigorous efforts to improve profitability in various ways, including containing increases in delivery costs, profit increased year on year.」

「Transportation and packing expenses: ¥1,482.950 million」

「Higher costs resulting from worldwide increases in raw material and logistics expenses」

「Although the Company continues to absorb the impact of delivery charge increases,」

「Selling, general and administrative expenses were ¥3,178 million, up 24.3% year on year. The main factor was the increased burden of delivery expenses resulting from continued increases in delivery charges, while」

「Although we continue to absorb the impact of higher shipping charges ourselves, the effects of various profit-improvement initiatives, including optimizing inventory allocation and containing increases in delivery costs, have begun to emerge, in addition to」

「Profit declined year on year as the Company prioritized upfront investment, including absorbing part of the delivery charge increases, increasing upfront investment in adjustments to selling prices and advertising expenses to attract customers following the opening of new stores on PayPay Mall, and increasing promotional expenses through point-reward campaigns and other measures.」

「Profit declined, mainly because the Company absorbed part of this fiscal year's delivery charge increases.」

「Meanwhile, although concerns about continued increases in home-delivery charges and restrictions on total delivery volumes remain in the e-commerce market in which the Group operates, individual consumption in Japan and overseas is trending upward.」

「Meanwhile, although concerns about continued increases in home-delivery charges and restrictions on total delivery volumes remain strong in the e-commerce market in which the Group operates, purchasing by individual consumers in Japan and overseas continues to trend upward.」

「However, products for which the higher delivery charges were passed on did not achieve the expected level of sales,」

「Although personal consumption is showing signs of recovery in the retail industry in which our group operates, the operating environment is becoming increasingly challenging as we are forced to absorb higher costs due to large-scale increases in delivery charges by transport companies and rapid changes in delivery conditions.」

「In logistics, the situation has continued from the previous consolidated fiscal year, with delivery delays caused by staff shortages at delivery companies and pressure on revenue growth from higher per-delivery charges.」

「Meanwhile, the Company is pursuing initiatives to address management challenges, including requests from delivery companies to raise charges and increased advertising expenses to acquire new users. It also conducted write-downs, mainly on overseas inventory products with low turnover.」

「Although consumers' preference for saving and selective consumption is becoming increasingly pronounced in the retail market, purchasing activity among individual consumers in Japan and overseas continues to trend upward in the e-commerce market to which our group belongs, despite concerns including higher delivery charges.」

「If carriers request substantial increases in delivery charges or reduce their business relationships with the Group, the business and performance of the Group may be affected.」