Expansion of sales channels for Neo Silk human collagen cosmetics

「Revenue from the business in the first quarter of the current consolidated fiscal year fell 19.5% year on year to ¥536 thousand, as sales to domestic mail-order distributors declined. As a result, the business recorded an operating loss of ¥398 thousand, compared with an operating loss of ¥252 thousand in the previous year, due to the decline in revenue.」

「The business sells cosmetics mainly through domestic mail-order channels. However, because sufficient promotional activities, including advertising, could not be conducted, revenue was ¥2.679 million, down 48.1% year on year, and the business recorded an operating loss of ¥609 thousand, compared with operating income of ¥1.164 million in the previous year.」

「Revenue in this business during the interim consolidated accounting period was centered on domestic mail-order sales but declined 53.5% year on year to ¥1.384 million because sales to distributors decreased. Operating results also deteriorated, resulting in an operating loss of ¥322,000, compared with operating profit of ¥723,000 in the same period of the previous year.」

「Revenue in this business is centered on domestic mail-order sales. However, the high retention rate among subscription customers and a slight increase in new customers lifted revenue to ¥5.160 million, up 34.0% year on year.」

「Revenue in this business during the interim consolidated accounting period was centered on domestic mail-order sales and increased 41.3% year on year to ¥2.977 million, owing to higher sales to distributors.」

「The company expected B2B sales in the Chinese market to resume as the COVID-19 situation subsided, but expansion in the Chinese market has still not progressed. It has been unable to exchange information directly with its local agent and has no clear outlook for sales.」

「The company is pursuing a collaboration with a luxury ryokan in a hot-spring resort area in Gunma Prefecture. It is also reviewing its sales strategies for the Chinese and European markets.」

「The company established a cross-border e-commerce channel for China and began sales, but the response in mainland China remains limited and the impact on revenue is minor. As a result, revenue was ¥4.021 million, down 69.9% year on year, and the operating loss was ¥13.344 million, compared with an operating loss of ¥12.565 million in the same period of the previous year.」

「The company established a cross-border e-commerce channel for China and began sales, but the response in mainland China has been limited and the impact on revenue has been minor.」

「The company established a cross-border e-commerce channel for China and began sales in late June, but the response in mainland China has been limited and the impact on revenue has been minor.」

「For domestic mail-order sales, the company changed from direct sales to individual customers to sales through distributors. As a result, revenue declined because of lower wholesale prices to distributors, but expenses related to domestic mail-order sales were significantly reduced. The company also established a cross-border e-commerce channel for China, and sales began in late June.」

「Sales of the domestic mail-order Frais Vent cosmetics series, which contains Neo Silk®—Human Collagen I, declined year on year, but sales in the European market were recognized and increased compared with the previous year. Regarding B2B sales to the Chinese market, the company has been unable to exchange information directly with its local agent because of restrictions and other issues related to the COVID-19 pandemic, and has no clear outlook for resumption. It will reconsider the matter based on conditions after the Beijing Olympics.」

「In Europe, revenue was recognized from sales of products marketed in Japan, the Frais Vent Neo Silk series. Sales of the cosmetic ingredient Neo Silk®—Human Collagen I are also progressing smoothly in Europe, and revenue recognition is expected from the third quarter onward.」

「Sales of the domestic mail-order Frais Vent cosmetics series, which contains Neo Silk®—Human Collagen I, increased slightly year on year. For sales to China, the company is sharing information with its local agent and proceeding with the manufacture of products for the Chinese market. In Europe, orders for Frais Vent are increasing, and revenue recognition is expected from the second quarter onward. Sales of the cosmetic ingredient Neo Silk®—Human Collagen I are also progressing smoothly, and higher revenue is expected from the third quarter onward. As a result, segment revenue was ¥1.875 million, up 5.5% year on year, and the operating loss was ¥3.796 million, compared with an operating loss of ¥5.695 million in the same period of the previous year.」

「Sales to China will resume through existing distributor channels, and the company will work to expand distribution through new sales channels, following the successful resolution of the trademark registration issue. See the 31 March 2021 announcement, “Notice Regarding Completion of Registration of the ‘frais vent’ Trademark by Neo Silk Cosmetics Co., Ltd.”」

「Regarding the trademark issue in China, exchanges of information with the authorities have gradually become more active, and the issue is expected to be on track for resolution by around May 2021. In Europe, sales of Frais Vent and the cosmetic ingredient Neo Silk®—Human Collagen I have begun, but promotional activities are constrained and sales remain limited because of the significant impact of the spread of COVID-19.」

「In Europe, the Frais Vent mail-order website has been completed and sales have begun. Sales of the cosmetic ingredient developed by the company, Neo Silk®—Human Collagen I, have also begun in the European market.」

「Regarding the trademark issue in China, the company is actively exchanging information with the authorities. In Europe, the mail-order website for Frais Vent has been completed, and sales are scheduled to begin.」

「Shipments to Europe have started. Regarding the trademark issue and sales to China, the company had continued to gather information from the authorities and take measures concerning registration of the “frais vent” trademark, the name in the Latin alphabet. However, the spread of COVID-19 made it impossible to contact the authorities and business partners. As a result, sales to China could not resume and declined substantially year on year.」

「In this business, domestic mail-order sales of the Frais Vent cosmetics series, which contains Neo Silk—Human Collagen I, decreased slightly year on year. Sales to China also declined substantially because sales have not resumed at this stage, as the company is gathering information from the authorities and taking measures regarding the registered trademark “frais vent,” the name in the Latin alphabet. Preparations to begin sales in Europe in the fourth quarter are progressing smoothly.」

「In this business, sales of the domestic mail-order cosmetics series Frais Vent, which contains Neo Silk®—Human Collagen I, were roughly in line with the same period of the previous year. However, sales to China declined substantially year on year because they have not fully resumed. See the 27 September 2019 disclosure, “Progress Report on Sales to China by Neo Silk Cosmetics Co., Ltd., a Consolidated Subsidiary.”」

「Preparations are currently under way to resume sales in China.」

「Sales to China began after approval was obtained, increasing revenue. However, shipments for sales to China scheduled for the fourth-quarter consolidated accounting period are expected in the second quarter of the fiscal year ending March 2020 because of issues including product delivery and discussions with the Chinese sales distributor regarding the handling of intellectual property rights and other matters. In addition, development of sales channels to Southeast Asia, including Taiwan and Vietnam, is under way. For the cosmetic ingredient Neo Silk® human collagen I, efficacy testing in Europe was completed by the European distributor, and sales began.」

「In this business, domestic mail-order revenue from the FREVAN series of cosmetics containing Neo Silk® human collagen I declined, but sales to China began after approval was obtained, increasing revenue. However, in the third-quarter accounting period, shipments to China are scheduled to be pushed back to the fourth quarter and beyond because of issues including product delivery and discussions with the Chinese sales distributor regarding the handling of intellectual property rights and other matters. As a result, segment revenue was ¥40.058 million, up 196.7% year on year, and operating profit was ¥322 thousand, compared with an operating loss of ¥7.703 million in the same period of the previous year. The business posted a profit.」

「In this business, domestic mail-order revenue from the FREVAN series of cosmetics containing Neo Silk® human collagen I declined, but sales to China began after approval was obtained. As announced in the medium-term management plan, we expect revenue to expand substantially going forward. As a result, segment revenue was ¥37.122 million, up 414.8% year on year, and operating profit was ¥8.231 million, compared with an operating loss of ¥4.810 million in the same period of the previous year. This business posted a profit for the first time.」

「Sales of the FREVAN series of cosmetics containing Neo Silk® human collagen I have been approved in China, and sales to China will finally begin from the second quarter. As announced in the medium-term management plan, we expect revenue to expand substantially going forward.」

「Sales to Southeast Asia began in the current fiscal year, increasing revenue. We have also applied for sales approval with a view to beginning sales in China. In addition, preparations for global sales, centered on Europe, of the cosmetic ingredient Neo Silk-human collagen I are being advanced jointly with a European distributor. As a result, segment revenue was ¥21.267 million, up 54.1% year on year.」

「In the cosmetics-related business, domestic mail-order revenue from the FREVAN series containing Neo Silk-human collagen I declined, but sales to Southeast Asia increased steadily. Preparations for sales to China are also under way. For the cosmetic ingredient Neo Silk-human collagen I, preparations for global sales, centered on Europe, are being advanced jointly with a European distributor.」

「The products are sold directly to consumers through mail order, and test sales have also begun at drugstores mainly in northern Kanto, Shinshu and Tohoku. With expansion overseas also in view, we are seeking overseas distributors and will develop the business for the cosmetics industry and consumers worldwide.」

「In addition, sales of FREVAN cosmetics containing Neo Silk human collagen began from the third quarter at 9 key cosmetics locations of a major drugstore chain.」

「From the second quarter, we have been developing efficient advertising activities aimed at acquiring new customers. We have also continued activities including direct mail and outbound calling.」

「From the second quarter onward, we will conduct efficient advertising activities, continue direct mail and outbound calling, work to acquire new members and improve the repeat-purchase rate among members, and conduct sales activities targeting major mass retailers to expand our distribution network.」

「To widely establish the raw material and cosmetics containing it in the cosmetics industry, we will reduce manufacturing costs and expand distribution channels to major companies handling cosmetic ingredients, OEM manufacturers and major drugstore chains.」