Vega Corporation Co., Ltd. · TSE:3542
Vega — Q1 FY2021 Earnings Presentation
46 slides from Vega's earnings presentation, Jul 31, 2020
Slide 1: 1Q FY2021 Business Results
1Q FY2021 BUSINESS RESULTS JULY 31 2020 Quarterly Financial Results for the Three Months Ended June 30, 2020 Vega corporation Co., Ltd. / Securities code: 3542 Copyright 2020 VEGA corporation. All Rights Reserved.
Slide 2: Overview of Quarterly Financial Results
1. Overview of Quarterly Financial Results for the Three Months Ended June 30, 2020 2. Report on LOWYA Business 3. Report on DOKODEMO Business 4. Revision to the Financial Results Forecast 5. Disclosure Enhancements 6. Appendix Copyright 2020 VEGA corporation. All Rights Reserved. 1
Slide 3: Financial Highlight
Financial Highlight Results Net sales 5,349 million yen （ 161.1 ％ YoY） Overview Operating profit 748 million yen （ 10,226.6 % YoY） Net sales and profit increased substantially, exceeding plans. Operating profit increased by 10,126.6% YoY Combined with the impact of the novel coronavirus, the smooth
Slide 4: Impact of Novel Coronavirus on the Market
Impact of Novel Coronavirus on the Market The furniture and interior market and their e-commerce portion grow rapidly due to an increase in demand for furniture and more frequent use of e-commerce as people spend more time at home Initial forecast Increase in ② ① e-commerce usage Furniture and inter
Slide 5: Overview of Quarterly Financial Results
1 Overview of Quarterly Financial Results for the Three Months Ended June 30, 2020 Copyright 2020 VEGA corporation. All Rights Reserved. 4
Slide 6: Statement of Income
Statement of Income Achieved a 61.1 % increase in net sales and a 10,126.6 % increase in operating profit, each setting a record high on a quarter-by-quarter basis (Million yen) Three months Three months ended Sales ratio ended Sales ratio Change YoY June 30, 2019 June 30, 2020 Net sales 3,320 100.0
Slide 7: Net Sales / Quarterly
Net Sales / Quarterly Net sales were the highest on record, at 5,349 million yen Gross margin continued to improve to 59.3% even as the business environment improved Net sales（Million yen) 6,000 65.0% Net sales Gross profit margin 5,349 5,000 62.5% 4,000 3,729 60.0% 3,371 3,541 3,440 3,356 3,320 3,1
Slide 8: Operating Profit / Quarterly
Operating Profit / Quarterly Achieved highest ever operating profit of 748 million yen （Million yen） Dual measures of cost 1,000 reductions and the enhancement of the flagship store bring results 800 748 Began to strengthen 600 the flagship store for Recovered profitability by further growth improvi
Slide 9: Increases and Decreases in Operating Profit
Increases and Decreases in Operating Profit (Million yen) Positive factor Sales Cost of sales Negative factor Delivery expenses ↓726 Selling expenses Personnel ↓293 expenses Advertising Fixed expenses R&D expenses costs ↓149 748 ↓31 ↓101 ↑33 ↓13 ＋741 million yen YoY 7 Three months ↑2,024 Three month
Slide 10: SG&A Expenses Ratio / Quarterly
SG&A Expenses Ratio / Quarterly (%) 56.8 57.2 57.4 56.5 55.4 55.5 2.9 1.9 54.2 2.6 2.5 51.7 2.1 1.8 3.3 2.8 2.5 1.9 1.2 3.3 2.1 1.6 0.6 2.4 12.6 44.9 11.8 12.5 14.7 12.6 11.9 10.6 3.0 10.4 0.6 8.1 12.5 11.5 11.1 11.6 12.2 11.6 11.3 10.2 7.8 16.3 16.1 17.1 17.6 17.9 18.0 17.9 17.7 16.6 10.3 11.0 10.7
Slide 11: Balance Sheet
Balance Sheet Cash and deposits increased by 1,196 million yen due to a substantial increase in revenue and profit (Million yen) Three months Three months Previous fiscal year ended Previous fiscal year ended (as of March 31, 2020) (as of March 31, 2020) June 30, 2020 June 30, 2020 Current assets 4,
Slide 12: Report on LOWYA Business
2 Report on LOWYA Business Copyright 2020 VEGA corporation. All Rights Reserved. 11
Slide 13: 2-1. Report on LOWYA Business
2-1. Report on LOWYA Business Copyright 2020 VEGA corporation. All Rights Reserved. 12
Slide 14: LOWYA Business: Report for the Three Months Ended June 30, 2020
LOWYA Business: Report for the Three Months Ended June 30, 2020 Achieved outstanding results, as a rapid rise in e-commerce demand for furniture added to continued smooth progress in the enhancement of the flagship store and an improvement in profitability (Million yen) Three months Three months end
Slide 15: LOWYA Business: Sales Ratio by Sales Channel
LOWYA Business: Sales Ratio by Sales Channel Flagship store sales increased by 192.6% YoY from 841 million yen to 2,463 million yen The proportion of sales at flagship store rose from 25.6% in the previous 1Q to 46.4% Flagship store Net sales (Million yen) Marketplace stores 46.4％ 50.0% Flagship sto
Slide 16: LOWYA Business: Net Sales by Sales Channel
LOWYA Business: Net Sales by Sales Channel As the flagship store became our main sales channel, initiatives for implementing a full-scale D2C business model progressed smoothly * D2C (Direct to Consumer) is a format of business that involves direct sales exclusively online. Net sales by sales channe
Slide 17: LOWYA Business: Cost of Sales Ratio and Delivery Expense Ratio
LOWYA Business: Cost of Sales Ratio and Delivery Expense Ratio Cost of sales ratio and delivery expense ratio continued to improved, as we continued reviewing sales prices and product lineup amid an upturn in the business environment （％） Cost of sales ratio 20 Delivery expense ratio 48 cost ratio 47
Slide 18: LOWYA Business: Management Indicators
LOWYA Business: Management Indicators E-commerce demand for furniture increased and the number of visitors grew rapidly (up 197.4% at the flagship store), as the spread of the novel coronavirus changed consumption behavior and work styles Fiscal year ending Fiscal year ended March 31, 2020 March 31,
Slide 19: 2-2. Report on LOWYA Flagship Store
2-2. Report on LOWYA Flagship Store Copyright 2020 VEGA corporation. All Rights Reserved. 18
Slide 20: LOWYA Business: New Products
LOWYA Business: New Products Continue to add new products carefully selected for outstanding designs and trendiness Copyright 2020 VEGA corporation. All Rights Reserved. 19
Slide 21: LOWYA Business: SNS
LOWYA Business: SNS Proactive utilization of SNS A collaboration project with a YouTuber 798 450k NaN LOWYA | Interior Products | Furniture Now welcoming “everyone’s posts” #LOWYA Visit our online store at the URL below. Offering trendy furniture for various tastes, all at low prices Momochi Momochi
Slide 22: LOWYA Business: LOWYA Day
LOWYA Business: LOWYA Day Held a LOWYA Day customer reward event on June 8 Daily sales exceeded 300 million yen, an increase of 426.3％ YoY A record sales Total （Million yen） 300 300 mln yen ●Increased by 426.3％ YoY June 8 daily sales 2018 - 2020 ●Highest daily sales ever in the Marketplace stores Co
Slide 23: LOWYA Business: Projects
LOWYA Business: Projects Implemented the “STAY HOME” project Providing a range of ways to overcome the “awkwardness” of time at home. Spend comfortable Propose lifestyles to and stylish time “enjoy home living” at home Dare to set up a tent at home and secure your personal space An innovative propos
Slide 24: LOWYA Business: Initiatives to Improve Profitability
LOWYA Business: Initiatives to Improve Profitability Improve profitability by lifting the proportion of sales made through the flagship store, in addition to existing initiatives Improved profitability Higher proportion of sales through flagship store Existing initiatives PayPay 6 . 4 ％ Amazon ●Redu
Slide 25: 2-3. LOWYA Business – Future Development
2-3. LOWYA Business – Future Development Copyright 2020 VEGA corporation. All Rights Reserved. 24
Slide 26: Future Development: Full-scale D2C
Future Development: Full-scale D2C Shift to flagship store as the main way of attracting customers and the main sales channel Establish the D2C business model by attracting customers through flagship store Attracting customers and selling through flagship store Marketing Product development Import W
Slide 27: Future Development: Further Investment in Advertising
Future Development: Further Investment in Advertising Increase advertising expenses and expand advertising media Aim for further growth in the number of visitors Increase advertising expenses Strengthen SNS and expand media 160000000 16000000 Advertising expenses 140000000 14000000 Unique users (UU)
Slide 28: Future Development: Business Model Transformation
Future Development: Business Model Transformation Expand product categories in line with the increase in visitors Commence offering products developed by other companies in addition to existing products we developed Platform model Selection model Original shop model Product Product Product lineup li
Slide 29: Future Development: Target Total Distribution Volume of 100 Billion Yen
Future Development: Target Total Distribution Volume of 100 Billion Yen Low recognition High recognition Gaining a foothold Brand recognition and scale toward improving profit expansion Establish the brand Penetration of the brand Build up fans 100 billion yen Flagship store ・ Marketplace stores Fix
Slide 30: Report on DOKODEMO Business
3 Report on DOKODEMO Business Copyright 2020 VEGA corporation. All Rights Reserved. 29
Slide 31: DOKODEMO Business: Management Indicators
DOKODEMO Business: Management Indicators Membership and the number of APP DLs are growing smoothly Strengthen Customer Relationship Management (CRM) to further increase repeat customers Three months Three months Item ended ended YoY June 30, 2019 June 30, 2020 Gross Merchandise Sales (million yen) 1
Slide 32: DOKODEMO Business: Gross Merchandise Sales (GMS)
DOKODEMO Business: Gross Merchandise Sales (GMS) GMS grew by 31.0% YoY while curbing advertising expenses Considering resuming investment, based on progress towards achieving financial results forecast for the fiscal year ending March 31, 2021 (Million yen) New customers GMS Repeat customer GMS Rati
Slide 33: DOKODEMO Business: Proportion of Deliveries by Country
DOKODEMO Business: Proportion of Deliveries by Country Based on GMS Deliveries to Asia, primarily Taiwan, account for 77.4% of GMS Canada Proportion of deliveries by UK 5.2 ％ country 1.7 ％ South Korea Middle East 2.0％ US 1.1％ Hong Kong Oceania Latin America 8.7 ％ 0.2％ 2.3％ 9.9 ％ Europe 5.0% North Am
Slide 34: Revision to the Financial Results Forecast
4 Revision to the Financial Results Forecast Copyright 2020 VEGA corporation. All Rights Reserved. 33
Slide 35: Revision to the Financial Results Forecast
Revision to the Financial Results Forecast The Company has revised its full-year forecast upward, in view of the increases in revenue and profit in the three months ended June 30, 2020 Net sales and profit forecasts have been presented in the form of ranges, as it is difficult to accurately predict
Slide 36: Net Sales Forecast
Net Sales +32.6% to 47.4% YoY (+19.2%～32.5% compared to the initial forecast) Main Assumptions 18,000~20,000 18,000 to 20,000 (Million yen) 20,000 The number of visitors increased rapidly during the three months ended June 30, 2020, as a result of changes in consumption behavior and work styles due
Slide 37: Operating Profit Forecast
Operating Profit +1,359.9% to 1,703.4% YoY (+261.7% to 346.8% compared to the initial forecast) (Million yen) 1,700~2,100 Main Assumptions 2,000 Operating profit increased at a substantially faster pace than initially expected during the three months ended June 30, 2020. 1,500 The Company will conti
Slide 38: Image of Financial Results for the Fiscal Year Ending March 31, 2021
Image of Financial Results for the Fiscal Year Ending March 31, 2021 During the three months ended June 30, 2020, the Company achieved net sales and operating profit that exceeded the initial forecast As shown under “Main Assumptions,” no assumption is made regarding the possible reinstatement of a
Slide 39: Disclosure Enhancements
5 Disclosure Enhancements Copyright 2020 VEGA corporation. All Rights Reserved. 38
Slide 40: Disclosure of Monthly Net Sales
Disclosure of Monthly Net Sales The Company now discloses monthly net sales in the LOWYA business (in the form of a flash report: actual figures and comparison with the same month in the previous year; for each calendar month, released during the following month), commencing from the results for Jul
Slide 41: Appendix
6 Appendix Copyright 2020 VEGA corporation. All Rights Reserved. 40
Slide 42: Appendix: 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 Trendy area High price High-class High-class overseas antique furniture High-quality furniture standard Traditional furniture Select fashiona
Slide 43: Appendix: LOWYA Business / Service Vision
Appendix: LOWYA Business / Service Vision As a provider of “fast Offer “memorable experiences” interior” that go beyond value expected by customers Fulfill satisfaction and inspiration by creating design that reflects a variety of tastes and trends. Copyright 2020 VEGA corporation. All Rights Reserv
Slide 44: Appendix: 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 ( A p r i l 2 0 2 0 t o J u n e 2 0 2 0 ) Ratio of male Area Age vs. female distribution distribution ■ Kanto
Slide 45: IR Inquiries
IR Inquiries vega_ir@vega-c.com Copyright 2020 VEGA corporation. All Rights Reserved. 44
Slide 46: Disclaimer on forward-looking statements
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