Vega Corporation Co., Ltd. · TSE:3542
Vega — Q3 FY2021 Earnings Presentation
53 slides from Vega's earnings presentation, Jan 29, 2021
Slide 1: 3Q FY2021 Business Results
3Q FY2021 BUSINESS RESULTS Januar y 29 2021 Quarterly Financial Results for the Nine Months Ended December 31, 2020 Vega corporation Co., Ltd. / Securities code: 3542 Copyright 2021 VEGA corporation. All Rights Reserved.
Slide 2: Agenda
1. Overview of Quarterly Financial Results for the Nine Months Ended December 31, 2020 2. Report on LOWYA Business 3. Report on DOKODEMO Business 4. Financial Results Forecast 5. Return to Shareholders (Dividends and Benefits) 6. Appendix Copyright 2021 VEGA corporation. All Rights Reserved. 1
Slide 3: Financial Highlight
Financial Highlight Net sales 4,363 million yen (137.9％ YoY) 3Q Operating profit 249 million yen (－ ％ YoY ((14) million yen in previous Results corresponding period)) Overview First Net sales 14,247 million yen (144.8％ YoY) nine months Operating profit 1,407 million yen (10,127.5％ YoY) Progress has
Slide 4: Overview of Company-wide Businesses
Overview of Company-wide Businesses Leverage the know-how, which we acquired through LOWYA’s D2C business, for DOKODEMO Exercise the power of creative content and technology to promote the two businesses Products Customers Process Furniture Sales In Japan Attract (e-commerce website Delivery CS and
Slide 5: Overview of Quarterly Financial Results for the Nine Months Ended December 31, 2020
1 Overview of Quarterly Financial Results for the Nine Months Ended December 31, 2020 Copyright 2021 VEGA corporation. All Rights Reserved. 4
Slide 6: Statement of Income
Statement of Income Achieved a 37.9% increase in net sales and a 263 million yen increase in operating profit from the operating loss in the previous 3Q (Million yen) Three months Three months ended Sales ratio ended Sales ratio Change YoY Dec. 31, 2019 Dec. 31, 2020 Net sales 3,163 100.0％ 4,363 100
Slide 7: Statement of Income (Cumulative)
Statement of Income (Cumulative) Achieved a 44.8% increase in net sales and a 10,027.5% increase in operating profit (Million yen) Nine months Nine months ended Sales ratio ended Sales ratio Change YoY Dec. 31, 2019 Dec. 31, 2020 Net sales 9,840 100.0％ 14,247 100.0% +4,406 144.8% Gross profit 5,546
Slide 8: Net Sales / Quarterly
Net Sales / Quarterly Net sales grew by 37.9% YoY to 4,363 million yen Gross margin continued to improve to 60.5% Net sales（Million yen) +37.9% 6,000 65.0% Net sales 5,349 Gross profit margin 5,000 62.5% 4,534 4,363 4,000 3,729 60.0% 3,371 3,541 3,440 3,356 60.5% 3,320 60.1% 2,969 3,163 59.3% 3,000
Slide 9: Operating Profit / Quarterly
Operating Profit / Quarterly Operating profit came to 249 million yen, maintaining significant YoY growth since the first half （Million yen） 1,000 Dual measures of cost reduction and the enhancement of the flagship store bring results 800 748 Began to strengthen 600 Recovered profitability by the fl
Slide 10: Increases and Decreases in Operating Profit
Increases and Decreases in Operating Profit (Million yen) Sales Cost of sales Positive factor Negative factor Delivery expenses ↓341 Selling expenses ↓100 Personne l expenses Advertising ↓165 expenses R&D expenses Fixed ↓70 costs ↓123 249 ↓4 ↓59 (14) ＋263 million yen YoY Three months ↑1,129 Three mo
Slide 11: SG&A Expenses Ratio / Quarterly
SG&A Expenses Ratio (against Net Sales) / Quarterly (％) 56.8 57.2 57.4 56.5 55.4 55.5 2.9 1.9 54.2 53.9 2.6 2.5 51.7 2.1 1.8 3.3 2.8 2.5 1.9 1.2 3.3 50.4 2.1 1.6 0.6 4.7 2.4 4.5 1.0 12.6 44.9 11.8 12.5 14.7 12.6 1.0 11.9 10.6 3.0 10.7 10.4 0.6 10.3 8.1 12.5 11.5 11.1 11.6 12.2 11.6 11.3 10.6 10.2 7.
Slide 12: Balance Sheet
Balance Sheet Maintained a sound financial foundation, including inventory levels (Million yen) Previous fiscal year Nine months Nine months Previous fiscal year (as of March 31, ended ended (as of March 31, 2020) 2020) Dec. 31, 2020 Dec. 31, 2020 Current assets 4,964 5,932 Current liabilities 2,242
Slide 13: Report on LOWYA Business
2 Report on LOWYA Business Copyright 2021 VEGA corporation. All Rights Reserved. 12
Slide 14: 2-1. Report on LOWYA Business
2-1. Report on LOWYA Business Copyright 2021 VEGA corporation. All Rights Reserved. 13
Slide 15: LOWYA Business: Report for the Three Months Ended December 31, 2020
LOWYA Business: Report for the Three Months Ended December 31, 2020 We continued to make smooth progress in the enhancement of the flagship store and the improvement in profitability (Million yen) Three months Three months ended Sales ratio ended Sales ratio YoY Dec. 31, 2019 Dec. 31, 2020 Net sales
Slide 16: LOWYA Business: Sales Ratio by Sales Channel
LOWYA Business: Sales Ratio by Sales Channel Flagship store sales increased by 92.7% YoY, from 1,076 million yen to 2,075 million yen The proportion of sales at the flagship store rose from 34.4% in the previous 3Q to 48.7% Flagship store 49.5% 48.7％ Net sales (Million yen) Marketplace stores 46.4%
Slide 17: LOWYA Business: Change in Monthly Net Sales
LOWYA Business: Change in Monthly Net Sales The impact of demand for furnishing home offices, etc., which drove sales in the first half, subsided. However, monthly net sales from October to December all marked YoY increases of over 30.0%, maintaining high growth rates. Net sales (Million yen) FY2020
Slide 18: LOWYA Business: Net Sales by Sales Channel
LOWYA Business: Net Sales by Sales Channel The flagship store remained the main sales channel, while marketplace stores also contributed to sales steadily Net sales by sales channel ・Ratios shown below are YoY comparisons Rakuten Amazon PayPay Flagship store Flagship store: (*1) up 92.7％ Rakuten sto
Slide 19: LOWYA Business: Cost of Sales Ratio and Delivery Expense Ratio
LOWYA Business: Cost of Sales Ratio and Delivery Expense Ratio Continuous cost reductions have proven effective, and cost of sales ratio and delivery expense ratio reached a level where stable business operation can be maintained However, cost of sales ratio may be affected if a shortage of marine c
Slide 20: LOWYA Business: Management Indicators
LOWYA Business: Management Indicators We maintained high growth in the number of visitors compared to the previous year primarily at the flagship store. The number of new products introduced increased as a result of initiatives for developing LOWYA into a platform Fiscal year ended March 31, 2020 Fi
Slide 21: 2-2. Report on LOWYA Flagship Store
2-2. Report on LOWYA Flagship Store Copyright 2021 VEGA corporation. All Rights Reserved. 20
Slide 22: LOWYA Business: Trial phase starts to make LOWYA a platform
LOWYA Business: Trial phase starts to make LOWYA a platform Commenced offering products of other companies’ brands at the flagship store Moved into a trial phase in November 2020 A brand originated in Munich, Germany A lifestyle shop targeted at people developing design-conscious furniture who enjoy
Slide 23: LOWYA Business: Trial phase starts to make LOWYA a platform
LOWYA Business: Trial phase starts to make LOWYA a platform Gaining visitors after the system replacement without any issues, we saw a steady increase in the number of orders Having experienced stockout due to favorable sales from the beginning of offering, we are responding to inventory control iss
Slide 24: LOWYA Business: Trial phase starts to make LOWYA a platform
LOWYA Business: Trial phase starts to make LOWYA a platform Expand both product brands and categories primarily for sundries 36 KARE products and 21 WTW products * As of January 2021 Actively market products of other companies’ brands to increase touchpoints with customers Copyright 2021 VEGA corpor
Slide 25: LOWYA Business: Renewal of official application
LOWYA Business: Renewal of official application With enhanced shopping convenience on smartphones, the application was highly rated after the renewal ■ Smooth browsing of products on smartphones ■ Equipped with AR, LOWYA 360 and other technologies ■ Push notification about sale and new product infor
Slide 26: LOWYA Business: SNS
LOWYA Business: SNS LOWYA Official Instagram - Number of followers exceeds 600,000 Gains followers at the rate of 100,000 persons per 3 months (*) Number of followers as of January 2021 Copyright 2021 VEGA corporation. All Rights Reserved. 25
Slide 27: Exclusive Flagship Store Project LOWYA ADDICT
LOWYA Business: Exclusive Flagship Store Project “LOWYA ADDICT” Special website featuring cinematic product lineup themed on '90s Romance Copyright 2021 VEGA corporation. All Rights Reserved. 26
Slide 28: LOWYA Business: Winter interior arrangements
LOWYA Business: Winter interior arrangements Interior arrangements focused on a sense of season and tastes Copyright 2021 VEGA corporation. All Rights Reserved. 27
Slide 29: 2-4. LOWYA Business – Future Development
2-4. LOWYA Business – Future Development Copyright 2021 VEGA corporation. All Rights Reserved. 28
Slide 30: 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 31: 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 Begin trial operation from 3Q Platform model Selection model Original shop model Pro
Slide 32: 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 towards improving profit expansion Establish the brand Penetration of the brand Build up fans 100 billion yen Flagship store ・ Marketplace stores Fi
Slide 33: Report on DOKODEMO Business
3 Report on DOKODEMO Business Copyright 2021 VEGA corporation. All Rights Reserved. 32
Slide 34: DOKODEMO Business: Business Model
DOKODEMO Business: Business Model A platform with all functions necessary for cross-border e-commerce, including settlement, logistics and CS Seller companies are limited to Japanese companies, but products are delivered to users in countries and regions round the world Japan Global Direct delivery
Slide 35: DOKODEMO Business: Management Indicators
DOKODEMO Business: Management Indicators Gross merchandise sales continued to show a high growth rate, while membership and the number of APP DLs increased smoothly The number of products and the number of brands decreased YoY, as handling of reusable products declined due to the partial suspension
Slide 36: DOKODEMO Business: Gross Merchandise Sales (GMS)
DOKODEMO Business: Gross Merchandise Sales (GMS) GMS grew by 257.1% YoY Repeat customer GMS remained high, accounting for 56.9% (Million yen) New customer GMS Repeat customer GMS Ratio of repeat customers 700 GMS 257.1 ％ 100.0% Increase 600 80.0% 500 66.0% 64.9% 56.9% 60.0% 400 300 40.0% 200 20.0% 1
Slide 37: DOKODEMO Business: Proportion of Deliveries by Country
DOKODEMO Business: Proportion of Deliveries by Country Based GMS Deliveries to Asia, primarily Taiwan, account for 90% of GMS Canada 1. 5% Proportion of deliveries by country France South Korea Middle East 0. 8% 1. 0% Latin Hong Kong US Oceania 0.4% America Africa 2.9% Europe 2.1% 0.05% 0.01% 11.1 %
Slide 38: Financial Results Outlook
4 Financial Results Outlook Copyright 2021 VEGA corporation. All Rights Reserved. 37
Slide 39: Cumulative Progress Rate
Cumulative Progress Rate Full-year forecast remains unchanged after the impact of the second declaration of a state of emergency was taken into account A cumulative progress rate of approx. 80% was achieved against the lower forecast range for all indicators during the nine months ended December 31,
Slide 40: Return to Shareholders (Dividends and Benefits)
5 Return to Shareholders (Dividends and Benefits) Copyright 2021 VEGA corporation. All Rights Reserved. 39
Slide 41: Dividends
Dividends We plan to pay our first dividends since listing (10 yen per share) in FY2021 First, we aim to pay dividends at DOE* of around 2.0% consistently from FY2022 onward *DOE: Dividend on Equity Ratio Our stance on dividends • Focus on growth over the medium to long term, place top priority on s
Slide 42: Benefits
Benefits Shareholders as of March 31, 2021 who hold one unit of shares (100 shares) or more can choose one of the shareholder benefit options (1) and (2) below. Details of benefits Number of shares held Details (1) 20％ discount coupon for the LOWYA flagship store 100 shares or more (2) Donation wort
Slide 43: Appendix
6 Appendix Copyright 2021 VEGA corporation. All Rights Reserved. 42
Slide 44: LOWYA Business / Furniture and Interior E-commerce Market Scale [Growth (1)]
Appendix: LOWYA Business / Furniture and Interior E-commerce Market Scale [Growth (1)] Even as the furniture and interior market remains flat since before the advent of the novel coronavirus, e-commerce is a growth market, expanding with a CAGR* of 5.26% (from 2015 to 2019) *CAGR: Compound Average G
Slide 45: LOWYA Business / Furniture and Interior E-commerce Market Scale [Growth (2)]
Appendix: LOWYA Business / Furniture and Interior E-commerce Market Scale [Growth (2)] Further growth in the scale of the Japanese B to C e-commerce market was forecast even before the advent of the novel coronavirus The rate of e-commerce shift for furniture and interior products remains relatively
Slide 46: LOWYA Business / Market Scale [Short- to Medium-term Outlook]
Appendix: LOWYA Business / Furniture and Interior E-commerce Market Scale [Short- to Medium-term Outlook] If it is assumed that the past growth rate will continue, the furniture and interior e-commerce market is expected to grow to 396.7 billion yen by 2024 The market is forecast to expand even more
Slide 47: LOWYA Business / Market Scale [Long-term Outlook]
Appendix: LOWYA Business / Furniture and Interior E-commerce Market Scale [Long-term Outlook] The furniture and interior e-commerce market is expected to continue to expand, with the advance of the shift to e-commerce. In addition, by enhancing merchandising in peripheral domains, we will look to th
Slide 48: 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 antique overseas High-quality furniture furniture standard Traditional furniture furniture Selec
Slide 49: LOWYA Business / Service Vision
Appendix: LOWYA Business / Service Vision Offer “memorable experiences” As a provider of “fast interior” that go beyond value expected by customers Fulfill satisfaction and inspiration by creating design that reflects a variety of tastes and trends. Copyright 2021 VEGA corporation. All Rights Reserv
Slide 50: 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 2020 to December 2020) Ratio of male Area Age distribution vs. female distribution ■ Kanto 40.8 % 29
Slide 51: DOKODEMO Business / Market Scale
Appendix: DOKODEMO Business / Market Scale B to C cross-border e-commerce is a giant, trillion-dollar market Only around 6% of Japanese have experience using cross-boarder e-commerce, but in other regions it is used by more than half the population. Even with a platform specialized for seller compan
Slide 52: IR Inquiries
IR Inquiries vega_ir@vega-c.com Copyright 2021 VEGA corporation. All Rights Reserved. 51
Slide 53: Forward-looking statements notice
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