Recovery in sales and improvement in profitability through the revitalization of the シャルレ business

「As measures to address the material uncertainty related to the going concern assumption, our group is working on the following initiatives to stabilise its business and finances, achieve sustainable improvement in its income and expenditure, and resolve or improve the situation: ・Review of the product portfolio ・Reduction of procurement costs ・Reduction of inventory losses ・Optimisation of customer service ・Reduction of workload through digitalisation」

「During the interim consolidated accounting period, as a basic policy under the medium-term management plan, we are developing the organisational structure needed to transition to a unique business model that combines the strengths of door-to-door sales with the convenience of mail-order sales, in preparation for fundamental structural reform of the core Charle business.」

「In October 2024, our group partially reviewed the basic strategic policy and key strategic items under the medium-term management plan (April 2024 to the fiscal year ending March 2029). We also formulated the long-term vision “Charle Group Vision 2035,” with the fiscal year ending March 2035 as its target, and are advancing initiatives toward its realisation based on the group management strategy policy. Going forward, we will pursue business structure reform in stages to restore and expand the performance of the group as a whole and enhance corporate value.」

「Against this backdrop, under the medium-term management plan currently being implemented (April 2024 to the fiscal year ending March 2029), our group has repeatedly considered key issues including “rejuvenating the sales organisation” and “renewing the existing business model.” We determined that business structure reform centred on our business model would require a considerable amount of time for infrastructure development, including renewal of the order processing system, and that creating earnings benefits would require a long-term perspective. Accordingly, in October 2024, we partially reviewed our group’s long-term vision and medium-term management plan.」

「Period A five-year plan covering April 2024 to the fiscal year ending March 2029 (fiscal years 50 to 54) ① Rebuilding the Charle business (a) Charle business reform ・Strengthening the Charle business foundation: Transitioning to and establishing a B-to-C model combining door-to-door and mail-order sales ・Strengthening the marketing strategy: Expanding health food sales and developing and launching new products, among other initiatives ・Advancing the rebranding strategy: Rebuilding the corporate concept and strengthening product and business PR, among other initiatives」

「Against this backdrop, under the medium-term management plan currently being implemented (April 2022 to the fiscal year ending March 2027), we pursued business strategies including the development of an environment conducive to business recovery, attractive product development and corporate branding under the theme of “Rebuilding the Charle business,” as part of our business structure reform, while assessing changes in the external environment arising from increasingly diverse work styles and lifestyles.」

「Against this backdrop, the Group entered the second year of its 5-year medium-term management plan and is working to carry out more far-reaching business structure reforms in stages under each business strategy based on its existing management strategy, with the aim of growing as a group company. It is also responding flexibly to changes in the plan and considering new initiatives. Regarding the first of its two basic strategies, revitalizing the シャルレ business, the Group is developing its future direction while pursuing each business strategy, including improvements to the business environment, development of attractive products and corporate branding, in response to changes in the external environment such as the diversification of work styles and lifestyles.」

「Regarding revitalization of the シャルレ business, the company is reviewing its future direction while assessing changes in the external environment, including the diversification of work styles and lifestyles. Based on this future direction, it continues to pursue business structure reforms, including improvements to the business environment, development of attractive products and corporate branding.」

「The Group has pursued a 5-year medium-term management plan beginning in the current consolidated fiscal year. Regarding revitalization of the シャルレ business, one of the two basic strategies for growth and recovery in business performance, it continues to study reforms to the current business model to introduce a direct-order and direct-shipping (BtoC) model, as part of its business structure reforms, as well as the detailed design and execution plan for a new business plan to introduce a new sales program. To strengthen its brand and marketing strategy, it continues to work on redefining the value of its corporate brand, reorganizing its product brands and developing products in areas including femtech and frailty.」

「The Group has pursued a 5-year medium-term management plan beginning in the current consolidated fiscal year. Regarding one of its two basic strategies, revitalizing the シャルレ business, it continues to study reforms to the current business model to introduce a direct-order and direct-shipping (BtoC) model, as well as the detailed design and execution plan for a new business plan to introduce a new sales program. To strengthen its brand and marketing strategy, it continues to work on enhancing the value of its corporate brand, reorganizing its product brands and developing products in areas including femtech and frailty.」

「Against this backdrop, the Group formulated a new 5-year medium-term management plan beginning in the current consolidated fiscal year and has pursued it in order to carry out more far-reaching business structure reforms in stages in response to the prolonged spread of the infectious disease and changes in the Group's business environment during the previous consolidated fiscal year, and to grow as a group company. Regarding the first of the two basic strategies, revitalizing the シャルレ business, the Group conducted detailed studies on introducing a direct-order and direct-shipping (BtoC) model to revitalize the sales organization and a new sales program. To strengthen its brand and marketing strategy, it worked to develop products in areas including femtech and frailty, in addition to enhancing the value of its corporate brand and reorganizing its product brands. It also made progress in line with plan on its respective targets for work-style reform and initiatives related to the SDGs.」

「Under the new medium-term management plan, the company changed the implementation period to 5 years, from April 2022 to the fiscal year ending March 2027, in order to carry out more far-reaching business structure reforms in each business strategy based on its existing management strategy and to grow as a group company.」

「Against this backdrop, in the ladies' innerwear and related products sales business, the company has worked to promote the development of new Business Members, strengthen sales support, establish a digital environment for business activities and develop and promote sales channels other than door-to-door sales.」

「In terms of sales activities, restrictions were placed on sales-support activities amid the spread of COVID-19, including the cancellation of events for Mate members and customers and the voluntary suspension of travel support. However, by shifting and strengthening support activities centered on information dissemination through social media and online channels, the activity level of business members remained broadly flat, while the number of newly developed business members increased.」

「In terms of sales activities, although some regions repeatedly faced states of emergency and restrictions on sales activities, the Company strengthened online activities and actively supported business members, particularly in developing new members. As a result, the number of newly developed agencies and authorized dealers grew, contributing to organizational revitalization.」

「Beginning this consolidated fiscal year, the ladies’ innerwear and related sales business began operating a substantially revised business system and new rules. As a result of actively pursuing sales-support activities focused on communicating and embedding them among business members, the number of new agencies and authorized dealers increased, while the number of contract cancellations was kept from increasing to a certain extent.」

「Against this backdrop, our group implemented a three-year medium-term management plan from April 2019 through the fiscal year ending March 2022 and actively pursued the 2 basic strategies of “revitalizing the Charle business” and “creating a new pillar through new business development.” However, the COVID-19 pandemic has had a substantial impact on product sales and business member activity in the sales business for women’s innerwear and related products. We are considering a review of the medium-term management plan and medium-term management indicators ending in the fiscal year ending March 2022, and plan to disclose the results in April 2021.」

「During the second quarter of the consolidated fiscal year, the company acquired all shares of 株式会社田中金属製作所 and 株式会社ＷＡＴＥＲ ＣＯＮＮＥＣＴ and included them in the scope of consolidation. It also changed the Group's reporting segments from the former single segment to 2 segments: the Group's core ladies' innerwear and related products sales business, and the newly added business of manufacturing and selling ultrafine bubble technology products and related products operated by the 2 new consolidated subsidiaries.」

「The company consolidated its sales offices from 8 branches into 2 eastern and western locations and established a sales support structure capable of exercising comprehensive sales capabilities. It also changed the participation and promotion requirements for the シャルレ business, reviewed its incentive scheme and developed its training framework.」

「Quarterly net income was ¥230 million, down 20.7% year on year, after the consolidation of the branches into 2 locations in connection with a review of the sales structure resulted in an extraordinary loss of ¥100 million from branch closures.」

「Against this backdrop, from April 2019 the company formulated a 3-year medium-term management plan ending in the fiscal year ending March 2022. Based on the two basic strategies of revitalizing the シャルレ business and creating a new pillar through new business development, it actively pursued business reforms and recovery in business performance, including improvements to the business environment for the シャルレ business and a review of its product development structure.」

「Against this backdrop, from April 2019 the company formulated a 3-year medium-term management plan ending in the fiscal year ending March 2022. Based on the two basic strategies of revitalizing the シャルレ business and creating a new pillar through new business development, it actively pursued management reforms and recovery in business performance under a new management structure.」

「For the シャルレ business, the company has pursued business structure reforms since April 2019 and aims to return to growth by reviewing its business system and products, thereby putting a stop to the long-running decline in sales.」