Financial Condition of Sales Organizations and Sharp Changes in Channel Inventory
First written in FY2016. 15 of 30 entries say "Mitigated", first in FY2019. Latest entry: FY2026.
The whole theme swung hardest in 2026: 19 of 65 companies on the "Worse" side.
- FY2026MitigatedAnnual report
「For the fiscal year, as of the end of March 2026, we estimate that distribution inventory had declined from the end of March 2025. Although some sales companies and products still had excess inventory, various data indicate that distribution inventory had converged at almost an appropriate level. Meanwhile, actual sales by the sales organization had continued to exceed purchases from us, or our sales, and we believe a certain level of regular customers had been maintained toward a recovery in sales.」
The company states that distribution inventory had declined from the end of the previous fiscal year and converged at almost an appropriate level, while actual sales by the sales organization exceeded purchases from us and a certain level of regular customers had been maintained. - 2026-05-14WorsenedEarnings
「The expansion of sales offices and BMs remained sluggish, and we struggled considerably.」
The company reported sluggish expansion of sales offices and beauty managers and difficult sales conditions, highlighting challenges in the sales organization. - FY2026-H1Distribution inventory normalisation alongside the continued lack of recovery in sales companies' actual salesAnnual report
「As of the end of the interim accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year and believe that inventory at most sales companies had converged at an appropriate level. Meanwhile, analysis of the latest financial reports collected from sales companies indicates that, although the three-year COVID-19 pandemic had ended, actual sales by sales companies had not yet recovered.」
The company states that distribution inventory at sales companies had converged at an appropriate level, while actual sales by sales companies had not yet recovered, indicating that inventory conditions had improved while sales remained a challenge. - FY2025Added concerns about repayment of zero-zero loansAnnual report
「There are also concerns about the impact of repayments of so-called zero-zero loans provided during the COVID-19 pandemic on the cash flows of small and medium-sized enterprises. Some sales companies may experience difficulties with their cash flows, which could affect our results.」
The risks relating to distribution inventory and the financial condition of sales companies now also include concerns about sales companies' cash flows due to repayments of zero-zero loans. - FY2025-H1RestatedAnnual report
「Except for certain products at some sales companies, distribution inventory at sales companies and elsewhere had converged at an appropriate level. We will continue to manage credit on a sales-company-by-sales-company basis and take preventive measures to ensure that excess inventory does not build up within the sales organization.」
The company continues to believe that distribution inventory had converged at an appropriate level except at some sales companies and for certain products, and continues to prevent excess inventory through credit management by sales company. - FY2024MitigatedAnnual report
「For the fiscal year, as of the end of March 2024, we estimate that distribution inventory had declined from the end of March 2023. Although some sales companies and products still had excess inventory, various data indicate that distribution inventory had converged at almost an appropriate level. Meanwhile, actual sales by the sales organization had continued to exceed purchases from us, or our sales」
The company indicated that distribution inventory had declined from the end of the previous fiscal year and converged at almost an appropriate level. Actual sales by the sales organization had also exceeded purchases from us. - FY2024-Q3MitigatedAnnual report
「As of the end of the third-quarter accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year and believe that inventory at most sales companies had converged at an appropriate level. Meanwhile, analysis of the latest financial reports collected from sales companies indicates that, despite the impact of the three-year COVID-19 pandemic, actual sales by the sales organization had continued to exceed purchases from us, or our sales, and we believe efforts toward further sales recovery are important.」
The company believes that distribution inventory had declined from the end of the previous fiscal year and converged at an appropriate level at most sales companies. Actual sales by the sales organization had also continued to exceed purchases from us. - FY2024-Q1RestatedAnnual report
「As of the end of the first-quarter accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year and believe that inventory at most sales companies had converged at an appropriate level.」
The company continues to believe that inventory at most sales companies had converged at an appropriate level. Exceptions remained at some sales companies and for certain products. - FY2023MitigatedAnnual report
「Based on various data, although some sales companies and products still had excess inventory, distribution inventory had converged at almost an appropriate level, and we believe the inventory adjustments that had continued in recent years had almost ended.」
Although excess inventory remained at some sales companies and in some products, distribution inventory had converged at almost an appropriate level, and the company indicated that inventory adjustments in recent years had almost ended. - FY2023-Q3MitigatedAnnual report
「As of the end of the third-quarter accounting period, we believe actual sales by sales companies remained solid and estimate that distribution inventory had declined from the end of the previous fiscal year. Based on our analysis of the data, excess inventory had been eliminated except at some sales companies.」
The company states that distribution inventory had declined from the end of the previous fiscal year and excess inventory had been eliminated except at some sales companies. It also believes that actual sales by sales companies remained solid. - FY2023-Q2MitigatedAnnual report
「As of the end of the second-quarter accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year and believe that inventory at most sales companies had converged at an appropriate level.」
The company indicated that distribution inventory had declined from the end of the previous fiscal year and converged at an appropriate level at most sales companies. - FY2023-Q1MitigatedAnnual report
「As of the end of the first-quarter accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year and believe that inventory at most sales companies had converged at an appropriate level. Meanwhile, analysis of the latest financial reports collected from sales companies indicates that actual sales by the sales organization had continued to exceed purchases from us, or our sales, and we believe a certain level of customers had been retained toward a recovery in sales.」
The company indicated that distribution inventory had declined from the end of the previous fiscal year and converged at an appropriate level at most sales companies. Actual sales by the sales organization had also continued to exceed purchases from us. - FY2022MitigatedAnnual report
「Based on various data, although some sales companies and products still had excess inventory, distribution inventory had converged at almost an appropriate level, and we believe the inventory adjustments that had continued in recent years had almost ended.」
Although excess inventory remained at some sales companies and in some products, distribution inventory had converged at almost an appropriate level, and the company indicated that inventory adjustments had almost ended. - FY2022-Q3MitigatedAnnual report
「As of the end of the third-quarter accounting period, we believe actual sales were strong, partly due to the sales impact of the new Ivy Cosmos II product, and estimate that distribution inventory had declined from the end of the previous fiscal year. Based on our analysis of the data, excess inventory had been eliminated except at some sales companies.」
The company states that, partly due to the sales impact of the new product, distribution inventory had declined from the end of the previous fiscal year and excess inventory had been eliminated except at some sales companies. - FY2022-Q2MitigatedAnnual report
「As of the end of the second-quarter accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year. Based on our analysis of the data, excess inventory had been eliminated except at some sales companies.」
Distribution inventory had declined from the end of the previous fiscal year, and the company states that excess inventory had been eliminated except at some sales companies. - FY2022-Q1MitigatedAnnual report
「(1) Actual sales by sales companies continued to increase despite the COVID-19 pandemic. (2) Total cost of sales at sales companies exceeded ¥5 billion. (3) Inventory levels at sales companies had converged at almost an appropriate level, except at some sales companies.」
The company believes that actual sales by sales companies continued to increase and that inventory levels had converged at almost an appropriate level except at some sales companies, while total cost of sales exceeded ¥5 billion. Concerns regarding distribution inventory and the financial condition of sales companies are described as easing. - FY2021MitigatedAnnual report
「Based on various data, although some sales companies and products still had excess inventory, distribution inventory had converged at almost an appropriate level, and we believe the inventory adjustments that had continued in recent years had ended.」
Although excess inventory remained at some sales companies and in some products, distribution inventory had converged at almost an appropriate level, and the company indicated that inventory adjustments had ended. - FY2021-Q3MitigatedAnnual report
「As of the end of the third-quarter accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year. Although some product imbalances remained, we believe inventory had approached an appropriate level. Excess distribution inventory had been almost eliminated except at some sales companies.」
Distribution inventory had declined from the end of the previous fiscal year and approached an appropriate level, although some product imbalances remained, while excess inventory had been almost eliminated except at some sales companies. - FY2021-Q1RestatedAnnual report
「As of the end of the first-quarter accounting period, we estimate that distribution inventory had declined from the end of the previous fiscal year, although we still believe it was somewhat high. Meanwhile, despite the spread of COVID-19, the sales organization has maintained resilient sales capabilities. We believe that restoring actual sales value at the sales organization remains important. Excess distribution inventory was moving toward resolution except at some sales companies.」
The company estimates that distribution inventory had declined from the end of the previous fiscal year and that excess inventory was moving toward resolution except at some sales companies, but continues to believe that inventory remained somewhat high. - FY2020-Q3RestatedAnnual report
「As of the end of December 2019, during the cumulative third-quarter period, we estimate that distribution inventory had declined from the end of March 2019, although we still believe it was above an appropriate level. Meanwhile, based on various data we collect, we estimate that actual sales by the sales organization remained relatively solid, and believe that excess distribution inventory was moving toward resolution except at some sales companies.」
The company continues to believe that distribution inventory remained above an appropriate level, although it had declined and excess inventory was also moving toward resolution. - FY2020-Q2RestatedAnnual report
「As of the end of September 2019, during the cumulative second-quarter period, we estimate that distribution inventory had declined from the end of March 2019, although we still believe it was above an appropriate level. Meanwhile, based on various data we collect, we estimate that actual sales by the sales organization remained relatively solid, and believe that excess distribution inventory was moving toward resolution except at some sales companies.」
The company continues to believe that distribution inventory remained above an appropriate level, although it had declined and excess inventory was moving toward resolution except at some sales companies. - FY2020-Q1MitigatedAnnual report
「As of the end of June 2019, we estimate that distribution inventory had declined from the end of March 2019, although we still believe it was above an appropriate level. Meanwhile, based on various data we collect, we estimate that actual sales by the sales organization remained relatively solid, and believe that excess distribution inventory was moving toward resolution except at some sales companies.」
Although distribution inventory remained above an appropriate level, it had declined from the end of March, and the company states that excess inventory was moving toward resolution except at some sales companies. - FY2019MitigatedAnnual report
「For the fiscal year, we estimate that distribution inventory as of the end of March 2019 had declined from the end of March 2018, although we still believe it was somewhat high. Meanwhile, based on various data we collect, we estimate that actual sales by the sales organization remained relatively strong, and believe that excess distribution inventory was moving toward resolution except at some sales companies.」
Although distribution inventory remained high, it had declined from the end of the previous fiscal year, and the company states that excess inventory was moving toward resolution except at some sales companies. - FY2019-Q3WorsenedAnnual report
「During the cumulative third-quarter period, revenue was ¥2,215 million, down 38.1% year on year. Because we record revenue when products are shipped to our 243 sales companies, our sales are significantly affected by their purchasing policies. We seek to understand the financial and inventory positions of the sales organization through regular interviews regarding its distribution inventory. However, particularly in connection with key products, there is a risk that we may misjudge the sales companies' prospects for working down their inventory, resulting in excess inventory at the sales companies and subsequent inventory adjustments that cause our sales to stagnate.」
The company describes a structure in which revenue is recorded when products are shipped to 243 sales companies, and more specifically presents the risks of excess inventory and inventory adjustments together with the 38.1% decline in revenue for the cumulative third quarter. - FY2019-Q2MaterialisedAnnual report
「During the cumulative second-quarter period, orders for the key product "Red Power Serum" declined sharply due to adjustments to distribution inventory at sales companies, resulting in revenue of ¥1,739 million, down 49.0% year on year.」
Adjustments to distribution inventory at sales companies affected actual results, reducing orders for the key product and resulting in a 49.0% year-on-year decline in revenue. - FY2019-Q1MaterialisedAnnual report
「Although new products were launched during the first quarter accounting period, the company focused on strengthening sales of inventory held by the sales organization, and sales therefore remained roughly in line with the same quarter of the previous year.」
Inventory within the sales organization became a key focus of sales activities, and sales remained roughly at the same level as the previous year despite the launch of new products. - FY2018MaterialisedAnnual report
「We obtain a general understanding of distribution inventory held by the sales organization through interviews. As of the end of March in the current consolidated fiscal year, we believe inventory stood at a somewhat high level, averaging slightly more than 6 months, compared with slightly more than 5 months in the previous fiscal year.」
Distribution inventory at the sales organization increased from slightly more than approximately 5 months at the end of the previous fiscal year to slightly more than approximately 6 months, and inventory overhang is described as an actual factor behind sluggish sales. - FY2018-Q2MaterialisedAnnual report
「The time required to adjust inventory within higher-tier sales companies」
The company states that inventory adjustments within the sales organization actually took time and, together with sales personnel falling short of their targets, were factors contributing to sales coming in below expectations. - FY2017-Q2MaterialisedAnnual report
「For shipments to sales companies with some financial concerns, revenue is recorded conservatively based on the expected receipt of payment by the normal payment due date. As a result, the amount of products shipped but not recorded as revenue for the cumulative second-quarter consolidated accounting period increased beyond the initial estimate.」
Revenue from shipments to sales companies with financial concerns was treated conservatively, and the amount not recorded as revenue increased beyond the initial estimate. - FY2016First statedAnnual report
「However, if the financial condition of a sales organization deteriorates rapidly in ways that we cannot fully identify, this may affect our results.」
Because sales are recorded on a wholesale basis when products are sold through sales companies, the financial condition of sales organizations and distribution inventory are treated as credit risks.