Expanding the Sales Mix of Private-Brand Products and Improving the Operating Margin

「The gross margin rose to 34.3%, up 3.8 percentage points year on year. The company analyzes this as the result of a higher sales mix of NB (national brand) products, which have relatively high margins, following the ongoing enhancement of the Shobido brand's value, together with higher product prices resulting from the shift to higher-value-added products.」

「The gross margin improved significantly to 31.9%, up 5.6 percentage points from the previous fiscal year, driven by strong sales of in-house-developed products, higher selling prices and the expansion of higher-margin e-commerce sales.」

「Although the weaker yen increased the cost of sales, the gross margin rose significantly to 30.5%, up 4.2 percentage points year on year, as all in-house-developed products performed well following the improvement in product appeal described above, and sales to inbound visitors and e-commerce remained strong.」

「By reducing sourced products with low margins and continuously raising the share of higher-margin in-house-developed products, sales of in-house-developed products increased to ¥17,850.067 million, up 4.7% from the previous fiscal year. Their share of sales rose 1.9 percentage points, from 83.4% in the previous fiscal year to 85.3%.」

「The company revised prices when shifting to higher-priced products with greater value added and when introducing new products. However, the gross margin declined 0.4 percentage points year on year to 26.3% as sales to variety stores, where apparent margins are low, increased, while the yen weakened significantly and raised the cost of sales for in-house-developed products manufactured overseas.」

「Although the weaker yen increased the cost of sales, the shift to higher-value-added products and the contribution to price revisions from the company's high-turnover business model, which it excels at, covering product proposals, planning, design, production and logistics and bringing products to market in a short period, enabled it to maintain the same gross margin as in the year-earlier period at 27.0%. ... Operating profit increased 37.8% year on year to ¥333.071 million.」

「By reducing sourced products and switching to products developed in-house, sales of in-house-developed products increased significantly to ¥17,048.235 million, up 25.2% from the previous fiscal year. Their share of sales rose 4.6 percentage points, from 78.8% in the previous fiscal year to 83.4%.」

「We secured increases in both operating profit and ordinary profit through strengthening our management foundation, centered on the selection and concentration we have pursued in recent years in terms of the number of products handled and sales destinations, the shift from sourced products to products developed in-house, fixed-cost reductions, faster decision-making through a major organizational overhaul, and a review of our personnel and compensation systems.」

「The gross margin fell 3.5 percentage points year on year to 26.7%, mainly because sales of OEM products rose sharply. Although their headline margins are low, these made-to-order products generate profits stably and efficiently because they are not subject to returns, while the impact of yen depreciation increased the cost of sales of own-planned products manufactured overseas.」

「During the nine-month period of the first quarter of the consolidated fiscal year under review, the yen depreciated sharply and the cost of sales surged. Nevertheless, we steadily implemented measures undertaken over the past several years, including selective concentration in the number of products handled and customers served, switching from purchased products to products planned in-house, reducing fixed costs, accelerating decision-making through a major organizational overhaul, strengthening the management platform centered on reviewing personnel compensation systems, and developing products planned in-house such as cosmetics and cosmetics accessories. As a result, we secured higher operating profit.」

「By reducing purchased products and gradually switching to products planned in-house, sales of products planned in-house increased 24.5% year on year to ¥13,620,920 thousand, and their sales mix rose 1.3 percentage points from 77.5% in the previous fiscal year to 78.8%.” “The operating margin was 3.7%, compared with 2.5% in the previous corresponding period.」

「Sales of products planned in-house increased 22.2% year on year to ¥9,707,365 thousand, while their sales mix rose 0.9 percentage points from 76.6% in the previous corresponding period to 77.5%.」

「In the nine-month period of the second quarter of the consolidated fiscal year under review, revenue increased 13.9% year on year to ¥8,083,772 thousand as consumption recovered following the lifting of the state of emergency, and gross profit increased 15.1% year on year to ¥2,444,452 thousand. The gross margin improved 0.3 percentage points year on year to 30.2%, mainly due to improved product capabilities and rigorous profitability management.」

「We feel that the initiatives we have continued through the previous fiscal year, including the selection and concentration of SKUs and business partners, the shift from sourced products to products planned in-house, fixed-cost reductions, faster decision-making through a major organizational overhaul, and strengthening the management foundation centered on reviewing personnel and compensation systems, together with the development of planned products such as cosmetics, cosmetic accessories and hygiene products, are steadily beginning to produce results.」

「The sales mix of products planned in-house rose to 77.0% from 73.5% in the previous consolidated fiscal year, including sales from Beauty Door Co., Ltd., which became a wholly owned subsidiary through an acquisition of shares at the beginning of the fiscal year. In addition, active efforts to review the products handled and transaction terms improved the gross margin to 29.5%, up 0.8 percentage points from the previous consolidated fiscal year.」

「Sales of products planned in-house were nearly flat at ¥7,946,988 thousand, up 0.6% year on year, while their sales mix rose substantially to 76.2% from 72.7% in the previous corresponding period. Net gross profit was ¥3,172,063 thousand, down 1.3% year on year, but the effects of reviewing the products handled since the previous fiscal year continued to emerge steadily, and the net gross margin rose 0.8 percentage points year on year to 30.4%.」

「Sales of products planned in-house were nearly flat at ¥5,429,764 thousand, down 0.1% year on year, while their sales mix rose substantially to 76.0% from 71.6% in the previous corresponding period. Similarly, net gross profit was ¥2,161,335 thousand, down 2.5% year on year, but it turned to a 4.2% year-on-year increase in the second quarter of the consolidated fiscal year under review as the effects of reviewing the products handled since the previous fiscal year began to emerge. The net gross margin rose 1.1 percentage points year on year to 30.3%.」

「Sales of products planned in-house declined slightly to ¥2,840,670 thousand, down 4.7% year on year, while their sales mix rose substantially to 76.6% from 72.3% in the previous corresponding period. The Company attributes this to the effects of reviewing the products it handles, an initiative undertaken since the previous fiscal year. Similarly, net gross profit was ¥1,138,546 thousand, down 7.8% year on year, but the net gross margin rose 0.7 percentage points year on year to 30.7%.」

「Although the Company reduced purchased products, the sales mix of products planned in-house rose to 73.5% from 72.6% in the previous corresponding period, while the net gross margin remained broadly unchanged at 28.7%.” “The operating margin was 0.8%, compared with 1.6% in the previous corresponding period.」

「Efforts to reduce production costs and review transaction terms improved the net gross margin to 29.6%, up 0.4 percentage points year on year, although net gross profit declined 13.2% year on year to ¥3,213,319 thousand.」

「Efforts to reduce production costs and review transaction terms improved the net gross margin to 29.2%, up 0.2 percentage points year on year, although net gross profit declined 12.8% year on year to ¥2,216,671 thousand.」

「As a result of efforts to reduce production costs and review transaction terms, net gross profit declined 9.7% year on year to ¥1,235,158 thousand, but the net gross margin improved from 28.9% in the previous corresponding period to 30.0%. Broad-based controls on selling, general and administrative expenses reduced them 14.8% year on year to ¥1,083,174 thousand, resulting in operating profit of ¥151,984 thousand, up 57.0% year on year.」

「Sales of products planned in-house were ¥12,806,488 thousand in the fiscal year ended September 2018 and ¥12,189,931 thousand in the fiscal year ended September 2019.」

「On the cost side, although we continued reviewing our procurement structure and strengthening inventory management, growth in OEM products, including those for ¥100 shops, increased the mix of relatively lower-margin products. As a result, the overall gross margin declined, and net gross profit was ¥3,700,046 thousand, down 7.1% year on year.」

「On the cost side, although we continued reviewing our procurement structure and strengthening inventory management, the gross margin declined because OEM products, including those for ¥100 shops, grew at a high rate. Net gross profit was ¥2,540,761 thousand, down 2.7% year on year.」

「On the cost side, although we continued reviewing our procurement structure and strengthening inventory management, the gross margin declined because OEM products, including those for ¥100 shops, grew at a high rate. As a result, net gross profit was limited to ¥1,368,071 thousand, up 0.9% year on year.」

「Sales of products planned in-house were ¥11,734,562 thousand in the fiscal year ended September 2017 and ¥12,806,488 thousand in the fiscal year ended September 2018.” “In particular, regarding economic fluctuations, we intend to expand our handling of relatively high-margin products planned in-house so as to stabilize performance even during downturns.」

「The gross margin declined because, in addition to the strong growth of lower-margin OEM products among products planned in-house, we sought to improve product quality amid intensifying competition and costs rose due to higher manufacturing expenses.」

「On the cost side, the gross margin declined because, in addition to strong growth in lower-margin products among those planned in-house, competition intensified, product quality was improved, and costs rose due to higher manufacturing expenses.」

「Sales of products planned in-house were ¥12,357,994 thousand in the fiscal year ended September 2016 and ¥11,734,562 thousand in the fiscal year ended September 2017.” “Regarding economic fluctuations, we intend to expand our handling of products planned in-house, which have relatively high margins, so as to stabilize performance even during downturns.」

「In the consolidated fiscal year, we adopted “taking on new businesses, new sales channels, new sourcing bases and new products” as our guiding principle, and are pursuing the following priority initiatives: ① making a group-wide, thorough effort in the Cosmetic Contact® business (Note 1); ② focusing on sales of proprietary products; ③ deepening business with key customers; and ④ expanding transactions involving OEM products (Note 2) and custom-order products (Note 3).」

「In the consolidated fiscal year, we adopted “taking on new businesses, new sales channels, new sourcing bases and new products” as our guiding principle, and are pursuing the following priority initiatives: ① making a group-wide, thorough effort in the Cosmetic Contact® business (Note 1); ② focusing on sales of proprietary products; ③ deepening business with key customers; and ④ expanding transactions involving OEM products (Note 2) and custom-order products (Note 3).」

「② Focusing on sales of products planned in-house」

「Sales of products planned in-house reached approximately 70% of consolidated sales in the fiscal year ended September 2016, and we expect this percentage to rise further against the backdrop of these initiatives. Going forward, we intend to actively pursue improvements in the operating margin.」