Slide 1: Quarterly Financial Results for the Six Months Ended September 30, 2022
For the Six Months Ended September 30, 2022 Quarterly Financial Results Vega corporation Co., Ltd. / Securities code: 3542 Copyright 2022 VEGA corporation. All Rights Reserved. 1
Slide 2: Agenda
1 Business Description Overview of Quarterly Financial Results 2 for the Six Months Ended September 30, 2022 3 Report on LOWYA Business 4 Report on DOKODEMO Business 5 Appendix Copyright 2022 VEGA corporation. All Rights Reserved. 2
Slide 3: Business Description
1 Business Description Copyright 2022 VEGA corporation. All Rights Reserved. 3
Slide 4: LOWYA Business Model
LOWYA Business Business Model In addition to offering private brand (PB) products at the flagship store (the Company’s e-commerce website) and other e-commerce marketplace stores, products of other companies’ brands are offered at the flagship store. The Company started a new wholesale business in S
Slide 5: DOKODEMO Business Model
DOKODEMO Business Business Model Operate a cross-border e-commerce platform with all functions including settlement, logistics and CS, which enables seller companies to offer Japanese products to overseas users Japan Overseas Seller T he Company Users companies Displayed in 5 languages, Orders with
Slide 6: Difference in Sales Recognition Methods
Difference in Sales Recognition Methods LOWYA business is a D2C* business of furniture and interior sundries DOKODEMO business is a cross-border e-commerce platform business that has a model that earns commissions according to the value of merchandise sold GMV Promotion Gross Net Sales Merchandise E
Slide 7: Overview of Quarterly Financial Results for the Six Months Ended September 30, 2022
2 Overview of Quarterly Financial Results for the Six Months Ended September 30, 2022 Copyright 2022 VEGA corporation. All Rights Reserved. 7
Slide 8: Financial Highlight
Financial Highlight LOWYA business implemented significant reductions in SG&A expenses to counteract the rising cost of sales ratio caused by the depreciation of the yen. DOKODEMO business continued to perform well with GMV at 161.2% YoY due to disciplined upfront investment. Although profits are pr
Slide 9: Financial Results for the Three Months Ended September 30, 2022
Financial Results for the Three Months Ended September 30, 2022 Net sales: 4,086 million yen, Operating profit: 53 million yen (Million yen) Fiscal year ended Fiscal year ending Mar. 31, 2022 Mar. 31, 2023 YoY 2Q results Sales ratio 2Q results Sales ratio Net sales 4,072 100.0% 4,086 100.0% 100.4% (
Slide 10: Financial Results for the Six Months Ended September 30, 2022 (1Q-2Q Cumulative)
Financial Results for the Six Months Ended September 30, 2022 (1Q-2Q Cumulative) Net sales: 8,286 million yen, Operating profit: 115 million yen (Million yen) Fiscal year ended Fiscal year ending Mar. 31, 2022 Mar. 31, 2023 YoY 1Q-2Q results Sales ratio 1Q-2Q results Sales ratio Net sales 8,587 100.
Slide 11: Quarterly Net Sales and Operating Profit
Quarterly Net Sales and Operating Profit Profit progressed faster than the pace initially anticipated due to cost reductions, despite a reactionary decline in sales from the previous year's levels. However, the cost of sales ratio is rising due to ongoing depreciation of the yen, and controlling pro
Slide 12: Quarterly SG&A Expenses Ratio (against Net Sales)
Quarterly SG&A Expenses Ratio (against Net Sales) The Company reexamined its SG&A expenses to account for the rising cost of sales ratio, and reduced them by 4.7 pt (214 million yen) from the same period last year. (%) 4.7 pt reduction 54.4 54.2 55.3 Advertising expenses 2.6 52.2 51.0 51.9 51.5 1.9
Slide 13: Causes of Increase/Decrease in Quarterly Operating Profit
Causes of Increase/Decrease in Quarterly Operating Profit The Company reduced SG&A expenses by 4.7 pt (214 million yen) YoY by consolidating distribution bases, improving the efficiency of delivery and advertising, and relocating the Tokyo Office, thereby enhancing its ability to withstand the risin
Slide 14: Balance Sheet
Balance Sheet Inventory decreased, and cash and deposits increased significantly. The Company has sufficient cash and deposits to meet its debt obligations and there continue to be no concerns about financial soundness. (Million yen) Current fiscal year Current fiscal year Previous fiscal year Previ
Slide 15: Report on LOWYA Business
3 Report on LOWYA Business Copyright 2022 VEGA corporation. All Rights Reserved. 15
Slide 16: Management Indicators
LOWYA Business Management Indicators Membership of the flagship store has grown steadily, and the ratio of sales to repeat customers has increased solidly, but GMV fell short of last year’s levels. (Million yen) Timeframe used Three months ended Three months ended Scope Item YoY for calculation Sept
Slide 17: Quarterly GMV and Net Sales
LOWYA Business Quarterly GMV and Net Sales Net sales slightly fell short of the previous year’s 2Q results, which were a high hurdle with the impact of the declaration of a state of emergency, as a result of the impact of a decline in stay-at-home demand resulting from an increase in outings. (Milli
Slide 18: Quarterly GMV by Sales Channel
LOWYA Business Quarterly GMV by Sales Channel The reactionary decline in stay-at-home demand had a big impact on the flagship store, resulting in a slight decline in the flagship store ratio from the previous year. (Million yen) Flagship store Marketplace stores and wholesale Flagship store ratio 60
Slide 19: Monthly GMV at Flagship Store
LOWYA Business Monthly GMV at Flagship Store In addition to the impact of the reactionary decline in stay-at-home demand, the Company curbed sales promotions at the flagship store in order to prioritize profit control and medium- to long-term branding. (Million yen) FY2022 FY2023 YoY 1,200 1,036 1,0
Slide 20: Company-wide Monthly GMV
LOWYA Business Company-wide Monthly GMV The overall LOWYA business was generally within the forecast range, despite the impact of a decline in stay-at-home demand. (Million yen) FY2022 FY2023 YoY 2,000 1,917 1,756 1,575 1,542 1,518 1,479 1,450 1,500 1,416 1,401 1,409 1,409 1,346 1,367 1,341 1,304 1,
Slide 21: Cost of Sales Ratio and Delivery Expense Ratio (vs. GMV)
LOWYA Business Cost of Sales Ratio and Delivery Expense Ratio (vs. GMV) Although the increases in marine container transportation costs and raw material procurement costs showed signs of abating, the continued depreciation of the yen resulted in an increased cost of sales ratio. The delivery expense
Slide 22: KPI of the Flagship Store (Membership)
LOWYA Business KPI of the Flagship Store (Membership) Total membership* of the flagship store has topped 1.25 million people, and is continuing to rise steadily. Total membership of the flagship store (People) 1,400,000 1,252,570 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1Q 2Q 3Q 4Q 1Q 2
Slide 23: KPI of the Flagship Store (Repeat Members)
LOWYA Business KPI of the Flagship Store (Repeat Members) GMV* by repeat members has been on the rise as guest purchasers become members and new members turn into repeat members. GMV by member type (LTM*) (Million yen) Repeat members New members Guest purchasers Repeat member order ratio (%) 24.5% 1
Slide 24: KPI of the Flagship Store (Average Basket Value)
LOWYA Business KPI of the Flagship Store (Average Basket Value) Average basket value remains stable. The average basket value among members is gradually decreasing, but remains on forecast, due to contribution from factors such as an increase in the proportion of low-value repeat orders. Average bas
Slide 25: Decision to Expand into Physical Stores (Wholesale)
LOWYA Business Decision to Expand into Physical Stores (Wholesale) The Company began wholesaling to Aeon Retail Co. in September 2022. Sales floors have been opened in AEON STYLE Makuhari New City (from September 2022) and AEON STYLE Kita Toda (from October 2022). Expansion into other stores is curr
Slide 26: Decision to Expand into Physical Stores (Directly-Managed Store)
LOWYA Business Decision to Expand into Physical Stores (Directly-Managed Store) For the first time since its founding, the Company decided to open a directly-managed store. Between test phases, the Company plans to consider opening directly-managed stores in other regions. Location: Kyudaishinmachi,
Slide 27: Outline of the Business Strategy
LOWYA Business Outline of the Business Strategy In light of changes to the external environment, accelerate GMV growth by newly expanding into physical stores. Internal Environment External Environment As a result of our focus on Before the COVID-19 pandemic After the COVID-19 pandemic capturing gro
Slide 28: Strategy for Physical Stores
LOWYA Business Strategy for Physical Stores Leverage the assets cultivated by specializing in the e-commerce market and being involved consistently in the full value chain of planning, manufacturing, and sales, to the maximum extent. Attracting Customers Based on our online customer base, we possess
Slide 29: Building an OMO Structure
LOWYA Business Building an OMO Structure By adding the options of directly-managed stores and wholesalers to the channels for awareness, purchase, and reception, we can set the channels on multiple tracks all at once. Awareness Purchase Reception Delivery Flagship store Computers SEO Mobile devices
Slide 30: Target Market
LOWYA Business Target Market While continuing to position the expansion of the e-commerce market as a driver of growth, expand the target market to the physical store market in light of the current low rate of e-commerce shift. Future target market Domestic market for furniture, interior, and periph
Slide 31: Recognition Rate Raising Effects of Expansion into Physical Stores
LOWYA Business Recognition Rate Raising Effects of Expansion into Physical Stores Recognition of retailers specializing in e-commerce is low compared to the scale of sales, and the recognition rate of LOWYA remains at just 15.4%. The expansion into physical stores can also be positioned as a means t
Slide 32: Strategy for the Flagship Store (the Company's E-commerce Website)
LOWYA Business Strategy for the Flagship Store (the Company's E-commerce Website) Partial review of the mid-term strategy for the flagship store (the company's e-commerce website) in light of the serious consideration of expansion into physical stores Attract more customers Enhance product lineup St
Slide 33: Report on DOKODEMO Business
4 Report on DOKODEMO Business Copyright 2022 VEGA corporation. All Rights Reserved. 33
Slide 34: DOKODEMO Business Management Indicators
DOKODEMO Business Management Indicators While memberships and the number of app DLs increased smoothly, average basket value grew and GMV continued to show a high growth rate Three months ended Three months ended Item YoY September 30, 2021 September 30, 2022 GMV (million yen) 773 1,246 161.2% (+472
Slide 35: DOKODEMO Business GMV and Net Business Income
DOKODEMO Business GMV and Net Business Income GMV rose 61.2% year on year. The strong demand for certain products caused by the spread of the COVID-19 pandemic in Taiwan in 1Q has receded, but the Company has continued to maintain growth trend while limiting upfront investments, as planned. GMV Net
Slide 36: DOKODEMO Business GMV
DOKODEMO Business GMV Repeat customer GMV increased further, accounting for 81.2% (Million yen) Repeat customer GMV New customer GMV Ratio of repeat customers 81.2% 1,600 1,573 75.1% 70.7% 1,400 77.3% 72.7% 357 1,246 68.5% 1,200 65.0% 64.9% 64.4% 64.7% 234 1,021 1,056 1,000 56.2% 56.9% 52.6% 263 49.
Slide 37: Ratio of GMV by Delivery Destination Area
DOKODEMO Business Ratio of GMV by Delivery Destination Area Deliveries to Asia, mainly Taiwan, account for more than 90% of GMV By region By country Middle East 0.2% Oceania 0.7% Europe 0.9% North America Korea 2.9% US 0.3% Hong Kong 3.2% Taiwan 6.0％ 86.3％ Malaysia Asia 0.3% Philippines 0.3％ 95.4％ S
Slide 38: Appendix
5 Appendix Copyright 2022 VEGA corporation. All Rights Reserved. 38
Slide 39: Net Sales
Net Sales The Company has maintained growth trend since its founding Net sales Commenced expansion into (Million yen) Increased delivery fees Spread of physical stores due to delivery crisis COVID-19 June 2016, listed on the stock exchange 16,300 ~ 19,313 17,300 16,832 12,977 13,322 13,570 10,960 8,
Slide 40: Impact of a New Revenue Recognition Standard
LOWYA Business Impact of a New Revenue Recognition Standard As a new accounting standard for revenue recognition (new Revenue Recognition Standard) has been applied from the fiscal year ended March 31, 2022 (FY2021), which has created a difference between GMV and sales, the Company has newly announc
Slide 41: Market Scale (Past Trend)
LOWYA Business Market Scale (Past Trend) The furniture and interior e-commerce market is a growth market, expanding with a CAGR of 5.51% (2016-2020). The rate of e-commerce shift remains relatively low compared to other products, and the further progress of e-commerce shift is forecast. E-commerce m
Slide 42: Positioning
LOWYA Business Positioning Establishing a position in the “trendy & low price” space of the furniture and interior products market High price High-class High-class antique overseas furniture High-quality furniture Trendy area standard Traditional furniture furniture Select fashionable furniture Simp
Slide 43: Purchaser Data
LOWYA Business Purchaser Data Showing higher ratio of females in their 20s to 30s, and in the Kanto region by area Age distribution Ratio of male vs. female Area distribution 60 and older 2% 50 to 59 Other 7% Male Kyushu 14% 40 to 49 16% 29 and 36% 8% younger Kanto Female Tokai 30 to 39 45% 64% 9% K
Slide 44: DOKODEMO Business Market Scale
DOKODEMO Business Market Scale Even with a platform specialized for seller companies in Japan, massive markets present abundant opportunities BtoC cross-border e-commerce market scale (billion dollars) *1 Cross-border e-commerce usage by region (2018 ) *2 Have never used Have used before Middle East
Slide 45: IR Inquiries
IR Inquiries vega_ir@vega-c.com 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 act