Expansion of the ICT Business for Beauty Salons and One-Stop Service Delivery

「In the Beauty ICT business, we are promoting a shift from a revenue structure centered on product sales of systems for the beauty industry to a recurring-revenue model. While reducing the volatility risk of system sales, we are accelerating the expansion of recurring revenue and strengthening initiatives to stabilize the earnings base and achieve further growth.」

「In the beauty ICT business, we are building up recurring revenue streams, including maintenance, content and new fee-based services, in addition to system sales, or product sales, which are a core revenue pillar.」

「During the interim consolidated accounting period, order acquisition, a leading indicator of sales, progressed above the initial outlook. We steadily built up projects scheduled to generate sales during the consolidated fiscal year, establishing a solid foundation for achieving the budget. In the third quarter, we will release the latest version of the Sacla series, the DX system for beauty salons, “Sacla PREMIUM Plus - DX Partner for Beauty -,” and will steadily capture sales of DX-support products using IT Introduction Subsidy 2025, as well as special replacement demand associated with the end of Windows 10 support.」

「Against this backdrop, we are actively releasing new products for beauty salons, “salon tablet,” and for beauty distributors, “smartphone terminal.”」

「Against this backdrop, we invested in core areas to establish a foundation for sustainable growth, including expanding the business scale of beauty ICT services, enhancing the functionality of our proprietary application software in line with the expansion of DX systems, and recruiting experienced personnel. As a result, during the first-quarter consolidated cumulative period, net sales were ¥410.711 million, up 7.8% year on year, and segment profit was ¥31.708 million, up 6.4% year on year.」

「As a result, sales for the consolidated fiscal year were ¥1,684.035 million, up 12.8% from the previous consolidated fiscal year, and segment operating profit was ¥164.186 million, up 13.4%.」

「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.」

「As a result, during the second-quarter consolidated cumulative period, net sales were ¥821.110 million, up 8.3% year on year, and segment profit was ¥89.533 million, down 11.7% year on year.」

「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.」

「Supported by strong orders, deliveries of large projects proceeded smoothly, resulting in performance substantially above the previous period. As a result, sales for the consolidated fiscal year were ¥1,492.420 million, up 6.9% from the previous consolidated fiscal year, and segment operating profit was ¥144.776 million, up 60.5%.」

「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.」

「This business provides one-stop services ranging from in-house software development, sales, salon customer-acquisition support and system maintenance. We operate from 7 locations nationwide: Sendai, Miyagi Prefecture; Oyama, Tochigi Prefecture; Chuo-ku, Tokyo; Nagoya, Aichi Prefecture; Osaka, Osaka Prefecture; Hiroshima, Hiroshima Prefecture; and Fukuoka, Fukuoka Prefecture.」

「Although our sales activities were also suspended from late March, we gradually became able to resume sales activities from July.」

「In the core ICT business for beauty salons, sales activities have been suspended, and operations are focused on customer support conducted through working from home, or telework.」

「As a result, during the first-quarter consolidated cumulative period, net sales were ¥395.949 million, up 28.7% year on year, and segment profit was ¥26.302 million, compared with a loss of ¥26.022 million in the same period of the previous year.」

「In the ICT business for beauty salons, deliveries to multi-location beauty salons proceeded smoothly from April 2019, while replacement demand related to the consumption tax increase implemented in October 2019 exceeded the initial outlook. The number of units sold increased 11% from the fiscal year ended October 2018.」

「In the core ICT business for beauty salons, orders for the beauty salon system “Sacla” remained strong in the third quarter, following the second quarter. The beauty salon and sales management systems ordered in the first half were delivered and accepted as customization was completed, contributing to sales. The Company is also strengthening its delivery operations ahead of the consumption tax increase taking effect in October.」

「In the beauty salon industry, the target market for the core ICT business for beauty salons, various subsidy and grant programs for system installations to support the consumption tax increase scheduled for October this year, including the multiple-rate tax system, and the end of support for Windows 7 provided tailwinds for expanding sales of the Company's systems, both to new customers and for replacements. Orders therefore exceeded the strong results of the same period of the previous year. As a result, the order backlog at the end of the second-quarter consolidated cumulative period was nearly twice the level at the beginning of the period.」

「However, new large-scale projects have increased unusually sharply since August of the previous year, and the system development division is operating at full capacity. Meanwhile, an extra-large project for which delivery preparations had been completed during the previous period and which was scheduled for delivery during the first-quarter consolidated cumulative period was postponed at the customer's request, resulting in a major earnings setback. Orders, a leading indicator, remained strong for new projects as noted above. During the first-quarter consolidated cumulative period, orders substantially exceeded sales, and the order backlog increased by nearly 30% from the beginning of the period.」

「The ICT business for beauty salons exceeded both the previous period's results and the initial outlook, driven by strong orders from new customers, including customers switching from other companies' products, orders associated with existing customers opening new salons, and the consolidation of VID Co., Ltd. as a subsidiary.」

「In the beauty salon industry, the main customer base for the ICT business for beauty salons, the recovery trend that began around last summer continued, and salons became more active in opening new locations and investing in equipment. As a result, replacement purchases, additional installations at new locations and new system installations all substantially exceeded the initial outlook.」

「Sales of products, including large replacement projects expected in the first half, medium-sized projects, and new customers such as Mods Hair FC stores whose progress had been delayed, exceeded the same period of the previous year (up 35.1% year on year). As a result, the backlog of product orders at the end of the first quarter increased 71% from the beginning of the period.」

「The business struggled as customers waited to replace their POS cash register and customer management systems for beauty salons. However, orders recovered substantially in the second half of the fiscal year (May to October), supported by mutually beneficial sales alliances with beauty distributors, which the company had prioritised since the previous fiscal year, and by the strengthening of its web network solution. In addition, many large-scale projects whose deliveries had been delayed by software customisation and other factors were recorded as sales in the fourth quarter.」

「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.」

「The company is pursuing new customer acquisition for the second half of the fiscal year through alliances with beauty distributors and users as new sales channels.」

「Against this business environment, our group listed its shares on the JASDAQ market of the Tokyo Stock Exchange on 27 December 2016, and expanded its operations by placing greater emphasis on investment in product development for its core ICT business for beauty salons, expanding sales channels, and advertising and promotional activities to enhance corporate value.」

「In this business, the company provides one-stop services ranging from development, sales and customer acquisition support to maintenance. It operates from 8 locations nationwide: Sapporo, Hokkaido; Sendai, Miyagi; Utsunomiya, Tochigi; Chuo-ku, Tokyo; Nagoya, Aichi; Osaka, Osaka; Hiroshima, Hiroshima; and Fukuoka, Fukuoka.」