Renewed focus on strengthening House of Rose’s core directly operated store division

「Under the medium-term management plan, House of Rose directly operated stores continue to focus on “bare-skin care,” one of our strengths, and work to strengthen sales capabilities. Specifically, with “exfoliation care” as the signature area, we seek to improve customer satisfaction by combining the experiential value of hands-on customer service and hand washing with product value and the store environment.」

「Using exfoliation care as its signature area, the company will focus on improving customer satisfaction by combining the experiential value of touch-based customer service and hand-wash services with product value and the store environment.」

「To improve customer convenience and streamline store operations, the company unified the points customers earn on purchases across all stores under a single ID, a system it fully introduced in the second half of last year. This has increased the number of registered members and improved the customer visit rate, and the company will continue working to strengthen relationships with customers.」

「For directly operated House of Rose stores, under the medium-term management plan, the company will rebuild, strengthen and establish its core strength, “Bare-Skin Care.” It will pursue these initiatives consistently across product development, sales promotion, training and external communications, with the aim of further enhancing the value of the House of Rose brand and improving profitability.」

「At directly operated House of Rose stores, the company is working to improve performance by further strengthening one-to-one, touch-based customer service through hand-wash services. In this service, the customer’s hand is treated as the face, and staff explain facial-cleansing techniques while touching the customer’s hand and using products such as facial cleansers. This is one of the company’s strengths. The company is also conducting training for selected stores from its specialty-store channel to strengthen sales capabilities at its stores.」

「Sales of Moisture Controller, the moisturizing serum renewed in September, have remained strong. Sales of the cleanser in the Milcure Pure moisturizing-care line also grew substantially following stepped-up sales efforts, and skincare cosmetics sales increased steadily. However, the store count had fallen by 11 from the end of the previous year-on-year period to 31 December, owing mainly to the closure of unprofitable stores. As a result, cumulative sales declined 2.6% year on year, although sales on an existing-store basis remained broadly at the level of the same period a year earlier.」

「As the second quarter progressed, these negative factors gradually subsided. Skincare sales generated through hand-wash services grew, while cooling powders and refreshing body-care products performed well amid the exceptionally hot weather. In September, the company substantially renewed its core skincare product Moisture Controller (a moisturizing serum) and significantly strengthened its sales promotions. The product received strong customer support and made a major contribution to the increase in sales. Sales at directly operated House of Rose stores recovered, rising approximately 2% year on year in the second quarter alone, but fell 2% year on year on a cumulative basis because of the difficult first-quarter performance.」

「At House of Rose directly operated stores, we resumed hand-wash demonstrations, which had been restricted during the pandemic. In this sales method, one of our strengths, staff regard the customer's hand as the face and explain how to wash it while touching the customer's hand using facial cleansers and other products. We are working to improve performance by further strengthening sales capabilities through personalized customer service involving physical contact, while increasing sales of skincare cosmetics. As a result, sales of skincare and makeup cosmetics exceeded those of the previous year. However, for body-care cosmetics sold only during this period, we launched a new line focused on functionality, but its appeal to customers, including its design, was weak and sales fell substantially short of plan. In addition, some general merchandise products that had contributed to sales during this period each year could not be procured due to raw-material sourcing issues, contributing to the decline in business sales. As these products had also contributed to attracting new customers, new-customer numbers declined substantially. Furthermore, hair-care cosmetics got off to a slow start in the summer sale held from late June, and the quarter started under generally difficult conditions. As a result, sales for the quarter declined approximately 7% year on year.」

「House of Rose directly operated stores fell below the initial plan in the first quarter due to the impact of the seventh wave of COVID-19, but gradually began to recover thereafter. However, customer traffic on weekends and during holiday periods was sluggish in part because restrictions were eased from autumn onward and the nationwide travel assistance program was introduced. During the current fiscal year, while the pandemic restricted our core strength of customer service involving physical contact, we established the Sales Education Department at the beginning of the fiscal year and focused on practical training to further strengthen customer service and sales capabilities. In promotional activities, we also focused on measures supporting customer traffic and skincare sales, as well as strengthening brand recognition through social media. As a result, existing-store sales increased 3.9% from the previous fiscal year, with customer numbers showing a similar increase.」

「On the product side, we expanded seasonal gifts to attract new customers and worked to strengthen sales of moisturizing products. On the store side, the number of stores at the end of December was down 6 from the end of the same period of the previous year due to facility closures and the closure of unprofitable stores. Sales for October through December were therefore slightly below the previous year, but increased slightly on an existing-store basis, and we believe the underlying sales trend remained firm. Cumulative sales at House of Rose directly operated stores for the current fiscal year increased 3.4% year on year.」

「At House of Rose directly operated stores, we reorganized the Education Department as the Sales Education Department at the beginning of the fiscal year and have focused on practical training to strengthen and balance sales capabilities and further improve customer satisfaction. The results have gradually begun to spread. We also advanced a three-brand store rollout comprising the existing House of Rose, Be-Prime for urban department stores with a highly selective customer base, and the semi-self-service Oh! Baby format targeting younger customers. By leveraging the characteristics of each brand and reaching a broad range of customers, we worked to increase customer numbers and sales. Sales at House of Rose directly operated stores struggled against the plan in the first quarter due in part to the impact of the pandemic, but recovered in the second quarter and increased 6.4% year on year as new-customer numbers grew.」

「On the product side, seasonal limited-edition products with a refreshing feel and makeup cosmetics that can be used comfortably during the pandemic were well received and contributed to higher sales and new-customer numbers. The Education Department was reorganized as the Sales Education Department at the beginning of the fiscal year, and we have been developing sales staff while strengthening practical sales and customer service capabilities. The results have gradually begun to spread. Sales for the quarter increased approximately 11% year on year, but fell short of the initial plan.」

「At House of Rose directly operated stores, we are developing three branded store formats: the existing House of Rose, Be-Prime for highly selective urban department stores, and the semi-self-service Oh! Baby format centered on Oh! Baby products. By leveraging the characteristics of each format, we aim to reach a broad range of customers, increase total customer numbers and improve customer satisfaction.」

「Until the state of emergency and other restrictions were lifted, sales and customer numbers remained sluggish partly because the timing and content of sales initiatives differed from the previous fiscal year. However, sales gradually recovered from November onward. The winter sale, the largest event, which began in late December, also outperformed the previous year on an existing-store basis.」

「Under these circumstances, the Company reorganized its operations, including establishing a department to promote the organizational strengthening of its online shopping business and the revitalization and operational efficiency of House of Rose directly operated stores. It is also working to restore performance weakened by the pandemic while pursuing various cost reductions, including lower tenant rents.」

「In the House of Rose directly operated store business, some stores in affected areas were temporarily closed or operated for shorter hours following the issuance of the state of emergency and other measures. During this time, the head office worked to respond by accepting product orders by telephone from customers, while operating stores strengthened customer service capabilities and enhanced sales initiatives amid restrictions on service involving physical contact with customers' skin during the pandemic.」

「In the directly operated store product sales business, we will pursue greater efficiency through organizational restructuring and strengthen our earnings base. We will also enhance measures to increase customer numbers, which declined during the pandemic, and improve customer visit frequency. In addition, we plan to expand social media activities, launch seasonal limited-edition products and introduce products that help customers manage their lifestyles during the pandemic, in order to complement efforts to improve brand recognition and attract new customers.」

「At our core House of Rose directly operated stores, we worked to restore performance while thoroughly implementing infection-control measures, despite restrictions on our core sales approach of touching customers' skin. As a sales initiative, we expanded sales of the high-performance Concentrate Cream, previously sold only at department-store locations, to all stores including specialty stores from September. The product received renewed high praise, particularly for its functionality, and sales exceeded expectations. For the annual winter sale held from late December, we thoroughly implemented advance reservations and delivery services to avoid congestion during the sale. Although customer numbers declined, these measures helped secure sales and increase average selling prices.」

「Following the issuance of the state of emergency, nearly all of our core House of Rose directly operated stores were forced to close for varying periods. During this time, the head office established systems for accepting customer orders, encouraged customers to use online shopping and arranged shipment of products ordered through mail-order channels. Nevertheless, store sales in April and May declined 63.5% year on year. After the state of emergency was lifted, stores gradually reopened, and all stores had reopened by June. However, while infection-control measures were in place, the pandemic restricted our core sales approach of providing service that involved touching customers' skin, causing sales to decline and making skincare sales particularly challenging. Regarding store openings and closures, 7 stores were closed, mainly due to the closure of facilities including Sogo & Seibu, while 5 replacement stores were opened. As a result, the number of stores at the end of the second quarter was 205, down 2 from the beginning of the fiscal year.」

「For the House of Rose directly operated store business, the closure of 5 Sogo & Seibu stores and others has already been confirmed, and given current market conditions, approximately 10 store closures are expected in total. Although replacement stores are also planned, as the number of stores declines we will substantially reorganize and revitalize the organization, develop high-priority stores and further strengthen existing stores, with the aim of further increasing earnings power per store.」

「In the core House of Rose directly operated store sales business, sales to existing customers declined substantially in October due to the backlash following the rush demand ahead of the consumption tax increase. Although sales subsequently began to recover, the impact continued to some extent during the December winter sale. However, measures to counter the decline, including the limited launch of 3 types of 200g Oh!Baby body scrubbers and initiatives to encourage repeat visits, were effective. The decline remained relatively limited, with new-customer numbers increasing. Regarding store openings and closures, we opened 2 stores but closed 8 due to the closure of facilities where stores were located and the closure of unprofitable stores. In addition to the decrease in the number of stores, sales declined 6.5% year on year due to the effects of typhoons and the consumption tax increase.」

「The core House of Rose directly operated store sales business is working to further strengthen sales capabilities for skincare cosmetics, and the proportion of skincare sales increased by approximately 4 percentage points from the same period of the previous year.」

「In the core House of Rose directly operated store business, we are working to further strengthen existing stores and increase the number of customers per store during the current fiscal year.」

「At our core House of Rose directly operated stores, we continued to focus on strengthening sales capabilities centered on skincare cosmetics, while closing unprofitable stores and consolidating store locations. In promotional activities, we enhanced our ability to communicate through social media and worked to increase total customer numbers, focusing on the declining number of new customers. As a result, the proportion of skincare cosmetics sales increased. On an existing-store basis, both new-customer and existing-customer numbers exceeded those of the previous fiscal year, driven by specialty stores located in station buildings and fashion buildings.」

「In the core House of Rose directly operated store sales business, the new Excellage aging-care skincare line performed well. The Classic Pooh bath and body-care series, which underwent a major renewal in November to mark its 20th anniversary, was also well received, particularly at specialty stores. Promotional initiatives including social media contributed to new-customer acquisition. Regarding store openings and closures, we opened 3 stores and closed 10 due to the closure of unprofitable stores and facilities where stores were located. Sales declined 2.7% year on year due to the decrease in the number of stores, but on an existing-store basis, department-store locations maintained roughly the previous year's level, while specialty-store sales and customer numbers both exceeded the previous year. Profitability also improved substantially due to the closure of unprofitable stores and a lower cost of sales ratio.」

「In the core House of Rose directly operated store sales business, we worked to strengthen sales capabilities for skincare cosmetics and increase total customer numbers, including new customers, as a key priority. In September, we launched the renewed Excellage aging-care skincare line, which received strong support from its initial launch and contributed to sales. The refreshing Mint Leaf series also grew during the exceptionally hot summer, and other seasonal limited-edition products generally performed well. In promotional activities, we implemented various measures, including social media campaigns, to attract customers. Regarding store openings and closures, we opened 1 store but closed 6 due to the closure of unprofitable stores and facilities where stores were located. Sales declined 2.8% year on year due to the decrease in the number of stores, but on an existing-store basis they remained broadly at the previous year's level and store profit increased.」

「In the core House of Rose directly operated store sales business, we worked to increase total customer numbers, including new customers, as a key priority while strengthening sales of skincare cosmetics, expanding promotional activities and seasonal limited-edition products. In recent years, we have closed unprofitable stores to improve store profitability. As the number of stores declined by 12 from the same period of the previous year, sales fell 2.5% year on year and total customer numbers also declined. However, on an existing-store basis, sales were maintained at approximately the same level as the previous year, while total customer numbers and new-customer numbers increased slightly.」

「In the core House of Rose directly operated store sales business, we worked to strengthen sales of our core skincare line and enhance earnings power per store. Sales of skincare cosmetics increased from the same period of the previous year. Regarding the key issue of increasing new customers, the number of new customers and sales to new customers both increased year on year in the third quarter, supported in part by measures including the use of social media. However, sales declined slightly, by 1.0% year on year, partly because we continued closing unprofitable stores, as in the previous fiscal year.」

「In the core House of Rose directly operated store sales business, we focused on strengthening consultative sales centered on the Milky Pure and Refining White skincare lines, expanding products and implementing measures including advertising to attract new customers. To strengthen earnings power per store, we continued closing unprofitable stores, as in the previous fiscal year. By the end of the second quarter, we had opened 2 stores and closed 3, resulting in a net decrease of 2 stores from the end of the same period of the previous year.」

「In the core House of Rose directly operated store sales business, we worked to increase sales and attract new customers by strengthening sales of our core skincare cosmetics, introducing seasonal limited-edition products and implementing related promotional measures. We also opened 1 new store during the quarter. However, sales declined slightly, by 0.3% year on year, due in part to the decrease in the number of stores following the closure of unprofitable stores in the previous fiscal year.」

「Throughout the year, the core House of Rose directly operated store business worked to strengthen sales capabilities, focusing primarily on skincare cosmetics from the Milky Pure and Refining White skincare lines. As a result, the proportion of skincare sales at directly operated stores increased, as did the proportion of directly operated store sales in consolidated net sales.」

「As a result of optimizing the number of sales staff and closing unprofitable stores, average customer spending and sales per staff member increased slightly. However, sales declined 2.8% year on year due to the decrease in the number of stores and the resulting decline in customer numbers. Even so, sales at existing specialty stores increased 1.9%.」

「In the core House of Rose directly operated store sales business, we strengthened consultative sales centered on the Milky Pure and Refining White skincare lines and promoted one of the key initiatives for the current fiscal year, namely strengthening earnings power per store. For popular body-care products, we also implemented various measures, including advertising, to attract new customers.」

「In sales operations, we will focus on further strengthening our core House of Rose directly operated store business, while pursuing management rationalization and greater efficiency to steadily improve performance.」