Slide 1: Presentation Material FY 2022 2Q
PRESENTATION MATERIAL FY 2022 2Q 2022.10.14
Slide 2: 目 次 (Contents)
目 次 1. Summary 4. Result 2. Our Business ① P&L ① Vision, Mission and Policy (1) GMV ② LOCONDO’s seven initiatives for SDGs (2) Sales ③ Business model (1) LOCONDO’s “ecosystem” that consists of the 3 (3) SG&A businesses (4) Operating profit (2) Sales accumulation model ② B/S (3) Break-even point Mode
Slide 3: 1. Summary
1. SUMMARY • GMV grew to 10.75bn JPY (growth: +9.0%, vs annual plan: 42.1%), and Operating profit grew to 0.41bn JPY (growth: +0.2%, vs annual plan: 40.7% - 45.3%). • GMV grew mainly supported by the recovery of the market, steady growth at EC business and the strong growth at Platform business. The
Slide 4: Our Business
Our Business 4
Slide 5: Our Business: Vision, Mission and Policy
2. Our Business ①Vision, Mission and Policy VISION BE THE ONLY Breaking stereotypes and bring “ONLY LOCONDO CAN DO” MISSION Bring “Revolution” to the industry, and “flexibility” to clients Resolve the voices in shoes/fashion industry, and bring flexible/happy experience to clients. POLICY Fast, Fait
Slide 6: LOCONDO's seven initiatives for SDGs (1/2)
2. Our Business ②LOCONDO’s seven initiatives for SDGs (1/2) ① Think of energy Using LED at warehouse Implemented Big Ass Fans at all floors Control air conditioner at 28℃, and heater at 20℃ ② Think of recycle Using recycled plastics for palette at the warehouse Providing eco-leather (made
Slide 7: LOCONDO's seven initiatives for SDGs (2/2)
2. Our Business ② LOCONDO’s seven initiatives for SDGs (2/2) ⑤ Gives back Providing open space for Yachiyo citizens Build new bus lane together with Yachiyo city and bus company. Providing a rest area for the drivers ⑥ Equality and diversification Fair evaluation system with 50 competencies
Slide 8: Business model: ecosystem of the 3 businesses
2. Our Business ③Business model (1) “ecosystem” that consists of the 3 businesses LOCONDO has 3 businesses connected complementary and the ecosystem creates our own competitiveness. Contents Sharing inventories: Sell Contents • High recognition offline inventories at EC • Omni store IT & logistic as
Slide 9: EC MALL
【EC MALL 】 EC PF Brand LOCONDO has own EC mall （LOCONDO, FASHION WALKER, SWS and waja）and stores in other companies’ EC mall such as Rakuten and Yahoo! Promote business expansion by “increase in number of members” through effective web advertising operations and “increase in the product lineup" incl
Slide 10: EC mall age distribution
【EC mall】Age distribution Realized the balanced portfolio by adding Fashion Walker. Membership basis 1,600 thousand 1,400 1,200 1,000 800 600 400 200 0 -20 20s 30s 40s 50s 60s LOCONDO FASHION WALKER SWS waja TTL 10 (Note) Member with an effective birthday data from our own mall
Slide 11: PLATFORM
【PLATFORM】 EC PF Brand Providing various systems and services that enable centralization of inventories and integration of digital information through DX（Digital Transformation） Promoting "ALL-IN-ONE Package" implementing all the services below and bring perfect omni strategy. BOEM (Official EC) e-3
Slide 12: BRAND
【BRAND】 EC PF Brand There are two major brand businesses, the “brand agency business", which is mainly developed as an exclusive agency for overseas brands, and the "D2C (Direct To Consumer) brand business," which is developed in-house in collaboration with influencers. Through M&A and alliances, we
Slide 13: Business model: sales accumulation model
2. Our Business ③Business model (2) sales accumulation model A model that builds up sales through the cycle below. New buyers → repeat customers → expansion of active user base → enhancement of product lineup → increase in new visitors More visitors from search engine(SEO) Approx. 40% * of new custo
Slide 14: Profit structure: break-even point model
2. Our Business ③Business model (3)profit structure – Break-even point Model- A business model in which the operating profit on sales improves once sales exceeds the break- even point. (1) GMV, (2) Marginal profit ratio (= gross margin ratio – variable cost ratio) and (3) Fixed costs are Key Perform
Slide 15: MTB and LTV
MTB and LTV 15
Slide 16: Overview of the Mid-term business plan (MTB)
3. MTB and LTV ①Overview of the Mid-term business plan (MTB) • We will take over Reebok Japan business as one of the core brand to LOCONDO business. We will start to manage the Reebok operation from Oct 1st 2022 under the newly established joint-venture company between LOCONDO (66%) and ITOCHU Corpo
Slide 17: EC ratio in the fashion market
3. MTB and LTV ②EC ratio in the fashion market The current EC ratio in the domestic fashion market is about 19%. It is expected to increase to approx. 40% in 2030, where the EC market size will be approx. 3.5 trillion JPY. EC ratio 2030 fashion EC market size * Clothing, shoes, bags (expected) 2020
Slide 18: MTB and LTV: GMV
3. MTB and LTV ③GMV Get 3% of the market share in the 3.5 trillion JPY market; 100 billion JPY (USD approx. 1bn) We will increase our GMV to JPY 40 Bn in three years through (a) organic growth by aggressive investment, (b) Reebok business, and (c) additional M&A (EC or D2C brands) GMV : JPY Oku,
Slide 19: GMV by business FY2021 to FY2030
3. MTB and LTV ③GMV (unit; JPY 100MM) FY 2021* FY 2030 (rough number) Reebok • Brand’s GMV at EC handled only by New M&A – no.8 LOCONDO Inc (Non- (50) consolidated) is Brand New M&A – no.7 counted under Brand (50) New M&A – no.6 (50) • Reebok business will New M&A – no.5 be handled by RBKJ LOCONDO L
Slide 20: GMV growth drivers by business
3. MTB and LTV ③GMV (unit: JPY 100MM) 2021 2030 CAGR key growth drivers (Actual*) (rough) Utilize the ecosystem to strengthen the lineup of items. Organic LOCONDO 12 36 + 13％ growth through aggressive promotion. Reebok will be the additional driver Standardizing the lineup of items and inventory wit
Slide 21: MTB and LTV: fixed cost
3. MTB and LTV ④fixed cost The new warehouse will be fully operational from June 2022, and no further expansion is expected for at least five years thereafter. Other costs are planned to increase gradually along with GMV Includes; 60 [Rent] LOCOPORT III Start renting all floors (100,000 m2) [Others]
Slide 22: Operating profit and aggressive investment
3. MTB and LTV ⑤operating profit and Aggressive investment We will invest into aggressive promotion controlling minimum ROE level at 10% (ROE in FY21 : 13.3%) when demand & supply situation is good. When we think the situation is not good or we need more cash for additional M&A, we will maximize our
Slide 23: RESULTS
RESULTS 23
Slide 24: Result: P&L
4. Result ①P&L (unit; JPY 100MM) GMV increased by 9.0% YoY mainly by healthy growth of EC business as well as through the strong growth at PF business. Gross profit ratio declined due to the accounting standard change and the lower gross profit ratio at SWS *1, but we could achieve +0.2% growth at O
Slide 25: P&L (1) GMV
4. Result ①P&L (1) GMV（unit; JPY 100） Growth at LOCONDO.jp and M&A of SWS and waja drove + 5% growth at our own E-malls. BOEM kept showing a strong growth at + 25%, and LOCOCHOC also shown the strong growth at + 58%, resulted + 7% growth as a whole Growth rate Total GMV + 7% 5,177 Others (stores, wh
Slide 26: P&L (2) Revenue
4. Result ①P&L (2)Revenue（unit; JPY MM) Revenue declined by 9% after the change of accounting standard, and by 7% before the change. Decrease is mainly due to the increase of contract-type product handling 2,8562,7002,762 2,5892,598 - 9% 2,3102,376 (2,355) (- 7%) 2,190 2,2012,218 (2,213) 1,9801,883
Slide 27: P&L (3) SG&A
4. Result ①P&L (3)SG&A (unit; JPY MM) Although the rent for the new warehouse increased (as planned,) we could improve the SG&A ratio by 2.3% through controlling costs such as optimization of ads and logistics as well as reduction of fees. The change of accounting standards also supports the improve
Slide 28: P&L (4) Operating Profit
4. Result ①P&L (4)Operating Profit (unit; JPY MM) Operating profit decreased by JPY 30MM to 57MM although warehouse costs increased by JPY 123MM 504 485 350 319 303 303 173 145 100 105 87 57 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 1Q 2Q 3Q 4Q 1Q 2Q 3
Slide 29: YoY comparative analysis of operating income
4. Result ①P&L (4) YoY comparative analysis of operating income (Unit: JPY MM) Although the rent for the new warehouse increased, operating profit increased by + 0.2% mainly due to GMV growth, cost reduction such as at ads, and the tax reduction due to the capital reduction + 32 ＋45 △ 170 ＋177 △ 27
Slide 30: Result: B/S
4. Result ②B/S (unit; JPY MM) Debt-free management, financial soundness with equity ratio at 68%. Established RBKJ corporation (subsidiary handling Reebok business) on June 2nd and started the business on Oct 1st. Current Assets 5,714 Current Liabilities 2,404 Deposits received Cash and cash equival
Slide 31: EC mall: number of active users
4. Result ③Each business (1) EC mall : number of active users (unit; K) Total number increased by + 2% YoY Other E-malls 322 356 359 346 348 349 296 287 283 300 306 297 291 265 249 231 220 213 833 829 783 792 788 809 812 Our own E-malls 691 740 578 605 624 624 497 536 386 439 332 2018 2Q 3Q 4Q 2019
Slide 32: EC mall: average shipping price
4. Result ③Each business (1) EC mall : Average shipping price (Shipping basis) Our own E-malls increased by + 3% and other E-malls increased by+ 11% The price basically stays in a reasonable range. 12,638 11,731 11,914 11,720 11,406 10,853 10,074 10,614 10,870 10,935 10,776 10,736 10,355 10,564 10,4
Slide 33: EC mall: return rate
4. Result ③Each business (1) EC mall : Return rate Return rate of our own E-malls have been steady at around 20%. 30% 29% 29% 27% 27% 27% 26% 26% 26% 25% 25% 25% 22% 22% Our own E-malls 21% 20% 20% 20% 20% 19% 18% 18% Excluding D2C 8% 8% 8% 7% 7% 7% 7% 7% 7% 7% 7% 6% 6% 6% 6% 6% 6% 6% 6% 6% 5% 5% Ot
Slide 34: EC mall: number of brands
4. Result ③Each business (1) EC mall : Number of brands The number of brands excluding waja is 3,632. The number of brands including waja is 4,849 4,849 4,644 4,182 3,969 3,838 3,676 3,632 3,426 2,972 3,506 2,648 2,458 2,473 2,546 2,327 2,365 2,126 2,167 2,193 2,097 2018 2018 2018 2018 2019 2019 201
Slide 35: Platform: e-3PL shipment quantity
4. Result ③Each business (2) Platform : e-3PL shipment quantity (10K units) ALL-IN-ONE package started in August 2021 drove the increase of e-3PL shipments by +27%. Our goal is to become “Hub of warehouse” in the shoe industry. 91 85 + 27% 81 71 66 61 63 63 59 56 52 46 44 45 39 37 36 13 2018 2Q 3Q 4
Slide 36: New Reebok Japan: RBKJ Corporation
NEW REEBOK JAPAN RBKJ CORPORATION
Slide 37: Acquisition of Reebok Japan business from Adidas Japan
37 We acquired Reebok Japan business - EC, Wholesales and Retail (store) business - from Adidas Japan RBKJ Corp adidas Japan EC EC Licence Retail Retail Outlet (9 stores) (9 stores) Wholesales Wholesales （shoes）
Slide 38: RBKJ Corp ownership: LOCONDO 66%, ITOCHU 34%
38 RBKJ Corp is 66% owned by LOCONDO and 34% owned by ITOCHU ABG Reebok (global) • Purchase fee • License fee LOCONDO, Inc ITOCHU Corp 66% 34% • Sales commission • Purchase fee • Platform commission • License fee RBKJ
Slide 39: Nine initiatives of the new business strategy
39 All the IT and logistics are integrated to LOCONDO platform on the day one (Oct 1st) and will start nine initiatives below (New business strategy) immediately 1 2 3 Inventory OMO strategy Product Centralization Accomplishment Speed and agility 4 5 6 Price Place Organization No price increase Conn
Slide 40: Inventory centralization
40 ① INVENTORY CENTRALIZATION NORMAL GLOBAL SPORTS BRANDS GOING FORWARD Inventory for own EC Inventory for Rakuten and Yahoo Inventory for other EC malls Inventory Centralization Inventory for retail stores Inventory for Wholesales … Buyers for each channel and inventory is No divided buyers by chan
Slide 41: OMO strategy accomplishment – ALL IN ONE
41 ② OMO STRATEGY ACCOMPLISHMENT – ALL IN ONE – All the IT and logistics are integrated to LOCONDO platform and accomplish the PMI within a month Retail EC Wholesales (9 stores) LOCOPOS LOCOCHOC BOEM (POS) (web order) LoCORE (core system) e-3PL (logistics)
Slide 42: Speed and agility
42 ③ SPEED AND AGILITY BEFORE AFTER import items import items license items 100％ Imported structure takes more Now it’s available to develop LOCONDO than 1.5 year to develop Japanese driven Japanese product – makes us product and minimum lot is large available realizing speedy and agile development
Slide 43: No price increase / less price cut
43 ④ NO PRICE INCREASE / LESS PRICE CUT NORMAL GLOBAL SPORTS BRANDS GOING FORWARD • More focusing on minimizing the • We will stay the price inventory than maximizing brands • Minimizing the sales and increasing • Price may increase depends on the the profit ratio – realizing the brands “reasonable”
Slide 44: Connectivity to the consumers (store operation)
44 ⑤ CONNECTIVITY TO THE CONSUMERS (STORE OPERATION) BEFORE AFTER SNS is centrally managed by the HQ Each store manage their own Instagram account and implement LINE@ so that realizing more and direct communication with the consumers
Slide 45: Smooth and efficient communication
45 ⑥ SMOOTH AND EFFICIENT COMMUNICATION NORMAL GLOBAL SPORTS BRANDS GOING FORWARD … Large and complicating organization Other than Brand policy, RBKJ can make decisions. structure makes employees’ Flat organization structure and direct internal connectivity/communication inefficient communication to
Slide 46: Ad optimization
46 ⑦ AD OPTIMIZATION NORMAL GLOBAL SPORTS BRANDS GOING FORWARD POP promotion SNS marketing Events Optimized ads Sponsorship Traffic ads … Extremely large global budget, but small Rely the large budget on Reebok global, and diversified ads investment at the local and realizing the optimized and marke
Slide 47: Sophisticated influencer marketing
47 ⑧ SOPHISTICATED INFLUENCER MARKETING NORMAL GLOBAL SPORTS BRANDS GOING FORWARD Limited appearance through SNS Leveraged by the experienced and success stories, diversified appearance can be realized not only by the influencers but also by LOCONDO by ourselves
Slide 48: Respect all athletes
48 ⑨ RESPECT ALL ATHLETES BEFORE AFTER Reebok One Ambassador focused on Not only fitness but also connecting to fitness had selected six influencers all sports scenes. Intending to support 100 professional athletes
Slide 49: Unleashing the potential of the Reebok brand
UNLEASHING THE POTENTIAL OF THE REEBOK BRAND
Slide 50: Disclaimer
Disclaimer • This document contains forward-looking statements that are based on current plans, estimates, forecasts or projections by LOCONDO Inc. as well as LOCONDO Inc.’s business and industry trends. • These forward-looking statements are subject to various risks and uncertainties. • Known or un