Vega Corporation Co., Ltd. · TSE:3542
Vega — Q3 FY2020 Earnings Presentation
39 slides from Vega's earnings presentation, February 2020
Slide 1: Quarterly Financial Results for the Nine Months Ended December 31, 2019
Quarterly Financial Results for the Nine Months Ended December 31, 2019 Vega corporation Co., Ltd. Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 2: Financial Highlight
■ Financial Highlight Net sales: 9,840 million yen (99.6% YoY) Results Overview Operating profit: 13 million yen ((166) million yen in previous corresponding period) ・ Net sales at the flagship store increased by 42.9% YoY, and its sales ratio increased to 34.4% Quarterly net sales reached a record
Slide 3: Overview of Quarterly Financial Results
Overview of Quarterly Financial Results for the Nine Months Ended December 31, 2019 2 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 4: Quarterly Sales
■ Quarterly Sales Net sales decreased by 10.7% YoY as a reaction to the consumption tax hike Gross margin steadily improved due to strategy focused on profit efficiency Net sales Gross profit (Million yen) margin Net sales 4,000 Gross profit margin 60.0% 3,341 3,407 3,371 3,541 3,440 3,163 3,500 3,3
Slide 5: Quarterly Operating Profit
■ Quarterly Operating Profit Operating profit increased by 128 million yen YoY due to gross margin improvement and profit improvement Operating profit by reduction in fixed costs, despite a decrease in net sales (Million yen) 250 207 YoY changes 200 187 2Q +115 million yen 144 150 3Q +128 million ye
Slide 6: Quarterly SG&A Expenses Ratio
■ Quarterly SG&A Expenses Ratio (%) 2.6 2.9 1.9 2.5 1.8 3.3 2.1 2.1 1.7 2.8 2.5 1.9 1.2 1.1 1.7 2.8 1.6 2.4 2.6 14.7 12.6 2.7 11.8 12.5 12.6 11.9 2.7 2.7 10.4 10.5 9.7 9.5 9.8 12.5 11.5 11.6 12.2 11.1 11.3 10.2 8.9 9.7 9.9 10.0 24.7 26.5 27.0 27.8 27.5 27.6 27.4 28.0 24.4 23.9 22.8 1Q 2Q 3Q 4Q 1Q 2Q
Slide 7: Statement of Income
■ Statement of Income Net sales were almost flat as a reaction to the consumption tax hike Gross margin improved as a result of product lineup revisions (Million yen) Nine months ended Nine months ended Sales ratio Sales ratio Change YoY December 31, 2018 December 31, 2019 Net sales 9,882 100.0％ 9,8
Slide 8: Balance Sheet
■ Balance Sheet Product inventory decreased by 192 million yen as optimization of product inventory has progressed steadily since the end of the previous fiscal year The Company repaid 500 million yen in loans in 2Q (Million yen) Previous fiscal year Nine months ended Previous fiscal year Nine month
Slide 9: Report on LOWYA Business
Report on LOWYA Business 8 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 10: Net Sales by Sales Channel: LOWYA Businesses
■ Net Sales by Sales Channel <LOWYA Businesses> Net sales at the flagship store increased by 42.9% YoY Sales are smoothly shifting to the flagship store Rakuten Amazon Net sales by sales channel Yahoo * Ratios shown below are YoY comparisons Flagship store Rakuten marketplace store: down 25.6% Flags
Slide 11: Net Sales by Sales Channel: Flagship Store
Flagship ■ Net Sales by Sales Channel <LOWYA Businesses store > Flagship store ratio increased from 21.5％ in the previous 3Q to 34.4% Quarterly net sales reached a record high Net sales despite a reaction to the consumption tax hike Flagship (Million yen) Flagship store store ratio Marketplace store
Slide 12: Online Advertising Expenses: Flagship Store
■ Online Advertising Expenses <LOWYA Businesses Flagship store > Efficient online advertising resumed in 2Q The number of visitors increased by 40.1% YoY Number of visitors (Million UU) 6.00 5.19 Online advertising expenses Million UU Number of visitors 5.00 3.71 million UU 4.00 3.00 2.00 1.00 0.00
Slide 13: Delivery Expense Ratio: LOWYA Businesses
■ Delivery Expense Ratio <LOWYA Businesses> The Company optimized product inventory, reviewed the product lineup Delivery and curbed delivery expenses despite staged rises in delivery expenses expense ratio （％） 20 Packing and shipping costs ratio 17.9 18.0 17.9 17.6 17.1 16.3 16.1 April July Decembe
Slide 14: Management Indicators: LOWYA Businesses
■ Management Indicators <LOWYA Businesses> The number of visitors decreased due to the impact of the consumption tax hike Average customer spend increased as a result of the review of sales prices and product lineup Fiscal year ending Fiscal year ended March 31, 2019 March 31, 2020 Item 1Q 2Q 3Q ４Q
Slide 15: Management Indicators: Flagship Store
Flagship ■ Management Indicators <LOWYA Businesses store > The number of visitors rose as efficient advertising resumed in 2Q Although average customer spend grew smoothly, CVR declined due to the impact of the consumption tax hike Fiscal year ending Fiscal year ended March 31, 2019 March 31, 2020 I
Slide 16: Monthly Sales After Consumption Tax Hike
■ Monthly Sales After Consumption Tax Hike Since October, sales suffered greater-than-expected impact of the negative reaction to a rush in demand before the consumption tax hike (%) 3Q Item September October November December (Oct. –Dec.) YoY value of orders received 142.5 82.2 93.5 92.9 89.9 YoY n
Slide 17: YoY Net Sales After Consumption Tax Hike
■ YoY Net Sales After Consumption Tax Hike Before tax hike After tax hike 180% 169.0% 10/1～ Consumption tax hike 160% 140% Sales of seasonal products remained sluggish mainly due to warm winter 120% 109.3% weather and intensified competition 100% 80% 80.5% 60% Shipment Orders 16 Copyright 2020 VEGA
Slide 18: Initiatives Undertaken by the Third Quarter
Initiatives Undertaken by the Third Quarter (1) Initiatives toward improving profit (2) Initiatives toward increasing access to the flagship store and sales 17 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 19: Initiatives Undertaken: Improving Profit (1)
*Texts in red ■ Initiatives Undertaken by the Third Quarter <(1) Improving Profit＞ show updates in 3Q Continue with 4 initiatives toward “improving profit” (1) Reduce storage expenses Issues Progress in 3Q ・Adjust amount of inventory ・Saved space at some warehouses by adjusting amount of inventory ・
Slide 20: Initiatives Undertaken: Improving Profit (2)
*Texts in red ■ Initiatives Undertaken by the Third Quarter <(1) Improving Profit＞ show updates in 3Q Continue with 4 initiatives toward “improving profit” (3) Improve cost of sales ratio Issues Progress in 3Q ・Completed audits of suppliers for selection, and ・Select and concentrate suppliers consid
Slide 21: Other Initiatives that Contributed to Improving Profit
■ Initiatives Undertaken by the Third Quarter <(1) Improving Profit＞ Other initiatives that contributed to “improving profit” Initiatives Effects Reduced warehouse storage floor space by 15,633 m2 from the end of the (1) Reviewed storage efficiency previous fiscal year by improving storage efficienc
Slide 22: Initiatives Undertaken: New Access
■ Initiatives Undertaken by the Third Quarter <(2) New Access> Provided an “experience” through the combination of the real world and the Internet, leading to an ease-of-shopping experience After Attracting customers Customer visit Experience and examine Purchase purchase Real experience New product
Slide 23: Opening of Pop-up Store
Initiatives Undertaken by the Third Quarter <Opening of Pop-up Store> The 2nd LOWYA pop-up store opened at Iwataya Main Store for a limited period Conducted a display of Christmas products and a gift campaign in conjunction with the store Pop-up store Store Overview ✔ Period: Wednesday, Nov. 27 to T
Slide 24: LOWYA Search by Appearance
Initiatives Undertaken by the Third Quarter <LOWYA Search by Appearance> Released “LOWYA Search by Appearance” employing deep learning technology Developed an in-house image search function featuring artificial intelligence (AI) AI automatically recognizes interior shapes and colors in an image and
Slide 25: New Businesses (R&D) Business
New Businesses (R&D) Business 24 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 26: DOKODEMO Business [Indicators]
■ DOKODEMO Business [Indicators] Membership and the number of APP DLs are growing smoothly Strengthen Customer Relationship Management (CRM) to further increase repeat customers 3Q ended 3Q ended Item December 31, 2018 December 31, 2019 YoY Membership (thousand people) 343 466 135.6% Number of APP D
Slide 27: DOKODEMO Business [Distribution]
■ DOKODEMO Business [Distribution] The Company kept the ratio of repeat customers at 60% or higher while curbing advertising expenses Advertisement investment will resume as soon as (Million yen) the LOWYA business has been rebuilt New customers GMS Repeat customers GMS Ratio of repeat customers 250
Slide 28: DOKODEMO Business [Enhancement of Measures]
■ DOKODEMO Business [Enhancement of Measures] Brand refinement to expand the target area Aiming to increase access through design renewal and Instagram enhancement DOKODEMO website Official Instagram @dokodemo.en 27 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 29: Shareholder Benefits Program
Shareholder Benefits Program 28 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 30: Decided benefits to shareholders
■Decided benefits to shareholders Decided benefits to shareholders ＜Eligible shareholders＞ Shareholders recorded or registered on the shareholders list as of March 31, 2020, who hold one unit of shares (100 shares) or more ＜Details of benefits＞ Number of Details Timing of grant shares held To be sen
Slide 31: Appendix
Appendix 30 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 32: LOWYA Business: Positioning
■ Appendix LOWYA Business: Positioning Establishing the fast interior category in the “trendy & low price” space of the furniture and interior products market High price High-class High-class overseas antique furniture furniture High-quality standard Traditional furniture Select fashionable furnitur
Slide 33: LOWYA Business: Service Vision
■ Appendix LOWYA Business: Service Vision As a provider of “fast interior,” Offer “memorable experiences” that go beyond value expected by customers Fulfill satisfaction and inspiration by creating design that reflects a variety of tastes and trends. 32 Copyright 2020 VEGA corporation. All Rights Re
Slide 34: Business Model Characteristics
■ Appendix Business Model Characteristics D2C business model conducting the entire procedure inhouse (Direct to Consumer) Product Online Marketing Import Warehouse (Attracting customers） Delivery CS Development sales Customers Views Designing, buying Manufacturing by Style coordination Order managem
Slide 35: LOWYA Business, Customer Data
■ Appendix LOWYA Business, Customer Data (Male vs. Female, Area Distribution, and Generation Distribution) Showing higher ratio of female in their 30’s, mainly in the Tokyo metropolitan area (October 2019 to December 2019) Ratio of male Area distribution Age distribution vs. female ■ Kanto 37.9 ％ ■
Slide 36: DOKODEMO Business: Proportion of Deliveries by Country
■ Appendix DOKODEMO Business: Proportion of Deliveries by Country based on GMS Proportion of deliveries by country based on the GMS ratio is widely distributed centering on Asia Canada China 4.3％ Proportion of deliveries by country 2.4％ South Korea Hong Kong 3.1％ US Latin America Middle East Europe
Slide 37: DOKODEMO Business: Sales Ratio by User Data and Category
■ Appendix DOKODEMO Business (Sales Ratio by User Data and Category) Female users in their 30’s are increasing Calculation period: October to December 2019 <User data> <User data> Sales ratio by Gender Age category Food & Alcohol 10 - 19 7 . 4％ Baby & Maternity 3.1％ 4.1％ 20 - 24 15.9％ Other Male 8.3
Slide 38: Synergy of Company-wide Businesses
■ Appendix Synergy of Company-wide Businesses Share each system in LOWYA fulfillment service with DOKODEMO and aim for its maximization <Past performance> *Experience in global marketing (57 million DLs for game apps) B to B to C Warehouse Marketing EC Delivery CS sharing (Attracting customers) Mark
Slide 39: Views and forecasts in this document
Views and forecasts in this document were prepared based on the judgment of the Company at the time of preparation. These statements are based on current expectations, forecasts, and assumptions that are subject to risks, and contain uncertainties that could cause actual outcomes to differ materiall