Postponement of System Replacements for Beauty Salons and Decline in Units Sold

「To capture replacement demand from existing customers more reliably and acquire new users, we will strengthen promotional activities around the release of “Sacla PREMIUM Plus - DX Partner for Beauty -,” the latest version of the “Sacla Series” DX system for beauty salons.」

「In the beauty ICT business, the company was certified by the Ministry of Economy, Trade and Industry as a DX Certified Business Operator and an IT Implementation Support Provider, making its products and content services eligible for IT Introduction Subsidies. In addition, inquiries from some existing users increased, including for equipment replacement demand associated with the end of Windows 10 support through October this year, enabling the company to secure profit above its initial outlook.」

「Inquiries have been increasing from some existing users, including for demand to replace equipment associated with the end of Windows 10 maintenance through October this year.」

「Entering the third quarter, more projects involved postponing orders for system sales, or merchandise sales, including through renewed leases, or postponing delivery dates. This was due to factors including the consolidation of existing stores and postponement of plans to open new stores because of a shortage of hairstylists, higher prices and increased repayment burdens on institutional loans obtained during the pandemic.」

「As economic activity recovered in the post-COVID period, joint sales with distributors and exhibitions were gradually resumed, revitalizing sales activities. In addition, tailwinds including the higher adoption rate for IT introduction subsidies,対応 to the invoice system and DX promotion enabled us to secure orders and an order backlog substantially above the initial outlook.」

「In the ICT business for beauty salons, orders, a leading indicator, substantially exceeded the initial outlook and secured a backlog, supported by tailwinds including DX promotion, the higher adoption rate for IT introduction subsidies, and対応 to the invoice system.」

「In system sales, or merchandise sales, there was substantial demand for system replacements using IT Introduction Subsidies. The company's efforts as a DX Certified Business Operator since February also made a significant contribution to performance. As a result, revenue for the fiscal year was ¥1,492.420 million, an increase of 6.9% from the previous fiscal year.」

「Orders, a leading indicator, remained strong. In system sales, or product sales, orders in both the first and second quarters exceeded the same periods of the previous year, while in the third quarter the adoption of users' applications for IT introduction subsidies provided a tailwind, enabling us to secure orders above the initial outlook.」

「In system sales, or merchandise sales, revenue exceeded the previous period's results, but in-person sales were affected by restrictions on going out, resulting in sales below the initial outlook. However, orders significantly exceeded the previous period's results and are recovering.」

「System sales, or merchandise sales, were affected by postponed orders and the suspension of in-person sales amid the pandemic, resulting in sales below forecast, but they are gradually recovering.」

「System sales, or merchandise sales, have been affected by the suspension of in-person sales activities and user seminars on system use, but the number of orders is beginning to recover through sales activities conducted via the web.」

「In particular, due to the impact of the state of emergency declaration, there were no orders for large-scale projects from April through June. Orders began to recover around mid-August, but the third wave of infections from late October led us to expect the pandemic to continue.」

「However, the spread of coronavirus infections since March has had a significant impact on the system sales division, our main source of revenue. The pandemic continues, with no end in sight. Our users have also been significantly affected, and many beauty salons have been forced to close. Nevertheless, beauty salons are gradually returning to their usual sales levels.」

「As a result, we also suspended sales activities from late March, and orders for merchandise, including system products, fell 12% below the initial outlook, mainly because customers deferred decisions or postponed purchases of replacements.」

「Contrary to the initial forecast, unit sales remained strong, led by replacements, and rose approximately 30% from the same quarter of the previous year.」

「Replacement demand in response to the consumption tax increase implemented in October 2019 exceeded the initial outlook, and unit sales rose 11% from the fiscal year ended October 2018.」

「Orders from previously inactive small-scale users have also turned strong, benefiting from IT introduction subsidies for the consumption tax increase scheduled for October this year, including the multiple tax rates, and the approaching end of Windows 7 support. Orders from medium- and large-scale users have remained strong.」

「(b) Orders for the salon system "Sacla" remained strong in the second quarter. We also won a new exceptionally large-scale project. Subsidies for the consumption tax increase and the end of Windows 7 support provided tailwinds not only for new sales discussions but also for delayed medium- and large-scale replacement projects. Together with the synergistic effect of the service for handling Rakuten Points launched in April, this resulted in strong orders.」

「Orders, a leading indicator, remained strong for new projects, as described above. In the cumulative first quarter, orders significantly exceeded recorded sales, and the order backlog had increased by nearly 30% from the beginning of the period. Orders for new large-scale projects in progress are expected from the second quarter onward, and the order backlog is expected to increase.」

「However, throughout the year, orders for replacements of other companies' systems and additions of new stores remained firm. Together with the results of VID Co., Ltd., this resulted in higher revenue and profit.」

「In the ICT business for beauty salons, replacement orders from large, multi-location salons, which had included strong software customization demand, have temporarily run their course, and we are currently in the period of discussions with the next group of target customers regarding replacements. Meanwhile, progress on replacement projects for medium-sized salons, where replacement timing has arrived, has slowed somewhat. Customers appear to be cautious about purchasing amid concerns over weaker consumer spending caused by torrential rain disasters and extreme heat. Inquiries for new large-scale projects remain firm.」

「In the ICT business for beauty salons, as salon activity began to recover, replacement orders from users, particularly multi-location salons, recovered sharply in the first quarter. Deliveries progressed smoothly in the second quarter, resulting in significant revenue growth.」

「In the ICT business for beauty salons, orders for product sales exceeded the year-earlier period, including large replacement projects expected in the first half, medium-sized projects and new customers, including Mod's Hair FC stores, whose progress had been delayed. Orders increased 35.1% year on year.」

「Orders recovered substantially in the second half of the fiscal year, from May through October, partly due to the effects of promoting mutually beneficial sales alliances with beauty distributors, an initiative pursued since the previous fiscal year, and strengthening Web network solutions.」

「In the ICT business for beauty salons, delayed orders for large-scale replacement projects began to be received steadily in the third quarter, and orders for new large-scale projects from users of other companies also increased as a result of the strategic sales alliances promoted since the previous fiscal year.」

「In sales of systems for beauty salons, eligible salons have tended to see declining sales due to increased website listing fees and the issuance of discount coupons. As a result, they have been postponing system replacements, and unit sales have declined.」