Belluna Co., Ltd. (9997)
President & CEO Kiyoshi Yasuno
President & CEO
Kiyoshi Yasuno
Corporate Profile
Belluna Co., Ltd.
Code No.
TSE 1st Section
Retail (commerce)
President & CEO
Kiyoshi Yasuno
4-2 Miyamoto-cho, Ageo-shi, Saitama
End of March
Stock Information
Share Price Number of Shares Issued Total Market Cap ROE (Actual) Trading Unit
¥1,004 97,244,472 shares 97,633 million 10.9% 100 shares
DPS (Est.) Dividend Yield (Est.) EPS (Est.) PER (Est.) BPS (Actual) PBR (Actual)
¥15.00 1.5% ¥107.98 9.3 times ¥949.70 1.1 times
*The share price is the closing price on January 9. The number of shares issued was as of the end of 2Q. ROE and BPS are actual results of the previous term.
Earnings Trends
Fiscal Year Net Sales Operating
March 2015 (Actual) 120,689 6,376 10,052 6,394 65.77 12.50
March 2016 (Actual) 131,742 8,366 7,105 3,544 36.45 12.50
March 2017 (Actual) 146,083 10,882 12,188 5,802 59.68 12.50
March 2018 (Actual) 161,673 13,008 13,248 9,665 99.41 12.50
March 2019 (Forecast) 180,000 15,000 15,500 10,500 107.99 15.00
*The estimatesed values are from the Company. *Net income is profit attributable to owners of parent. Hereinafter the same shall apply.

This report outlines Belluna, the financial results for the first half of the term ending March 2019, etc.
Key Points
Company Overview
Belluna is a leading general catalog retailer. In addition to the mail-order business specializing in some genres, this company operates the Retail Store Sales Business, the Solution Business for providing corporations with its know-how and infrastructure that have been nurtured through its mail-order business, and so on. Its strengths and characteristics include a database of customers who are mainly married women, and stable profitability and growth potential based on portfolio management. It also conducts M&A actively. 【1-1 Corporate History】 In 1968, Mr. Kiyoshi Yasuno, who is currently the representative director and president of the company, started the business of selling seals door-to-door under the name of "Yukado." Then, starting with the mail-order sale of clothes, the company started dealing in food products, cosmetics, etc. While operating the Specialty Mail Order Business, the company has enriched its business portfolio, including the Finance Business, Property Business, Retail Store Sales Business, Solution Business, etc. targeted at mail-order customers. In March 2000, the company was listed on the first section of the Tokyo Stock Exchange. Belluna actively conducts M&As to fortify the business base. 【1-2 Management Philosophy】 In addition, Belluna set "Basic Mind," which describes the mindset of Belluna's employees, and "Basic Action," which is a code of conduct. Basic Mind, which is composed of "the awareness as a party involved," "the awareness of profit," "a sense of playing a game," "positive thinking," and "the willingness to grow," and Basic Action, which is composed of "use of others," etc., are what the employees of Belluna should return back to when facing a challenging problem. 【1-3 Market Environment】 According to "Commercial Statistics Table in 2014-Statistics for each business category (retail)" announced by the Ministry of Economy, Trade and Industry on March 9, 2016, the annual sales of products via mail order, catalogs, and the Internet amount to 3.9 trillion yen. Detailed statistics have not been checked, but it seems that the catalog retail market has recently shrunk 1-2%, as competitors in the general mail-order field suffered a significant drop in sales while the online shopping market has grown rapidly. Amid this situation, the General Mail Order Business segment of Belluna, in which catalog retail accounts for 80% of total sales although it is concentrating on online shopping business, increased sales 4.5% in the term ended March 2018, achieving an annual sales growth rate of 4.3% in the past 3 years and expanding its market share steadily. Compared with Scroll and Senshukai, which are competitors in the general mail-order field, Belluna has large sales and market cap, and high profit ratio and capital efficiency. 【1-4 Business Contents】 (1) Segments Belluna operates seven business segments: General Mail Order Business, which is its core business, Specialty Mail Order Business, Retail Store Sales Business, Solution Business, Finance Business, Property Business, and Other Business. The General Mail Order and Specialty Mail Order businesses account for about 80% of total sales. ① General Mail Order Business ◎ Outline The company receives orders for and sells apparel, fashion goods, interior accessories, etc. via catalogs, flyers, and the Internet. ◎ Attributes of subscribers As of the end of March 2018, the number of subscribers is about 18.5 million, and married women in their 40s or older account for about 80% of them. The subscribers aged 65 to 69 years, who are major married women, make up 31.4% of the population of this age group in Japan, indicating an overwhelming market share. The number of loyal subscribers, who are defined as subscribers who have purchased products within 2 years after registration, was 5.08 million in the term ended March 2018. Despite some fluctuations, it is steadily increasing. Belluna employs about 70 merchandiser, and offers more fashionable products than leading supermarkets and women's apparel shops. In addition, the company offers a variety of unrivaled catalogs targeted at customers in their 50s to 70s. Accordingly, it won overwhelming support from married women. ◎ Customer segments Female customer segments are divided into three ones: "Mrs" for customers in their 50s or older, "Ranan" for customers in their 40s, and "Ryu-Ryu" for customers in their 30s. The company offers products tailored for the preferences and needs of each age group. ◎ Efforts for developing e-commerce Catalogs are primary sales channels, but the company has been striving to promote online shopping in recent years. For "Ryu-Ryu" targeted at customers in their 30s, the sales via e-commerce (EC) now account for over 60%, and the ratio of EC sales is steadily growing for Mrs and other segments. ② Specialty Mail Order Business By specializing in specific genres, the company adds characteristics to its product lineup, prices, and services. Therefore, the company can retain customers easily, and receive orders from repeat customers. ③ Retail Store Sales Business Aiming for a synergistic effect between the mail-order, online, and physical store sales channels, the company is targeting customers who are unreachable by mail-order by placing kimono and apparel stores in shopping centers and shopping malls. In Japanese clothing field, the company operates "BANKAN" and "Wamonoya," which sell kimono and Japanese clothing-related products. In addition them, Sagami Group Holdings Co., Ltd., a seller of jewelry and other goods, was reorganized into a consolidated subsidiary in Jun. 2018. Sagami Group Holdings runs stores under the two brand names "Sagami" and "Tokyo Masuiwaya." They possess abundant knowledge and know-how about kimono culture and how to handle kimono, and excel in helping customers get dressed. Apparel stores BELLUNA offer casual clothes at low prices, targeted mainly at women in their 40s and 50s. The store area is about 30 tsubo (≒ 100 m2) for Japanese clothing stores, and 80 to 100 tsubo (≒ 265 to 330 m2) for apparel stores. The Japanese clothing stores are highly profitable, because there is a high average spending per customer. As of the end of Sept. 2018, there were 82 Japanese clothing stores and 64 apparel stores (not including Sagami and Tokyo Masuiwaya). The total number of stores was 146. ④ Solution Business By utilizing the know-how and infrastructure that have been nurtured through the mail-order business for many years, Belluna offers the "service of enclosing promotional flyers" and the "mail-order agency service" to corporations. In the service of enclosing promotional flyers, the company encloses the flyers, product samples, etc. of client companies with products and catalogs and ships them to customers, by utilizing its enormous customer database. It is possible to narrow down target customers according to the needs of client companies. Accordingly, client companies can expect effective sales promotion. "The mail-order agency service" is to offer a series of functions, including the infrastructure and know-how of Belluna, to enterprises that sell products by mail order. Belluna comprehensively undertakes the tasks of managing stocks at distribution warehouses, operating call centers, and shipping products to customers. Even enterprises that are starting the mail-order business do not need to prepare their own infrastructure, and they can offer products and services swiftly at low prices. ⑤ Retail Store Sales Business It is a consumer finance business utilizing the database developed through the mail-order business. The company mainly introduces loans to mail-order customers by enclosing flyers, etc. Since the company possesses the data of the past purchases and payments by customers, credibility is high and the balance of loan receivables is expanding steadily, while the percentage of credit losses is low compared with other companies. Its profitability is high, partially because the cost for reeling in borrowers is low as mail-order customers are targeted. ⑥ Property Business The company leases real estate, such as office buildings, operates hotels, and so on. ⑦ Other Business The company operates the wholesale business targeted at department stores and co-op shops, and the insurance business. 【1-5 Characteristics and Strengths】 ① Customer database and know-how mainly for married women, which have been nurtured through the mail-order business for about 40 years As mentioned in the section of business contents, about 80% of over 18 million subscribers of Belluna are married women in their 40s or older. Belluna's female subscribers aged 65 to 69 years, who are dominant among married women, account for 31.4% of the population of this age group in Japan. The competitive customer database and know-how, which have been developed through the mail-order business for about 40 years, are significant features that contribute to the creation of corporate value. In the mail-order sale business, which is its mainstay, Belluna won strong support from married women by proposing products that can meet their needs based on the requests from customers, etc. grasped through sales and purchase activities and questionnaire surveys. In the finance business, the company earn sales and profit stably by utilizing its database. In the solution business, the company creates new business opportunities by offering its customer database, know-how, and infrastructure. ② Stable profitability and growth potential based on portfolio management Another characteristic of Belluna is the business model called "portfolio management," which actualizes stable growth potential and profitability by conducting business in a multifaceted manner while utilizing its managerial resources nurtured through the mail-order business. Based on this business model, the company disperses the risks of changes in social situations and economic trends, allows each business to exert its strengths as a mainstay, brings out the synergy among businesses, and actualizes stable profitability and growth potential. 【1-6 Shareholder Return】 Belluna determines dividends while considering its business performance and strategic investments for mid-term growth. This term, the company plans to pay 15 yen/share, up 2.5 yen/share from the previous year. The company has been implementing a shareholders' benefit plan, and gives benefits twice a year to shareholders who hold 100 or more shares as of the end of March and the end of September every year. For the purposes of expressing gratitude to shareholders and deepening shareholders' understanding, the company announced the enrichment of the shareholders' benefit plan in November 2017, adding complimentary coupons that can be used in Belluna Net. There is no revision to the criteria for receiving shareholders' benefits, the date of issuance of coupons, or their effective periods. 【1-7 ROE analysis】 Due to the increase in net income margin, ROE exceeded 10% in the term ended Mar. 2018. The estimated margin for this term is 5.8%, and ROE will probably exceed 8%, which is the goal of the third management plan. We would like to expect that they will make efforts to increase it further.
First Half of Fiscal Year March 2019 Earnings Results
Sales increased, while operating income declined year on year. Both sales and profit exceeded estimates. Sales were 79.1 billion yen, up 5.7% year on year, led by the Specialty Mail Order and Retail Store Sales businesses. Sales for the General Mail Order business declined. Operating income was 3.8 billion yen, down 9.0% year on year. The Specialty Mail Order business contributed to its increase in profit, but operating income fell due to the cost of distribution and M&A-related expenses. Ordinary income grew 19.6% to 6.6 billion yen. Gain on valuation of derivatives rose 1.3 billion yen year on year. Both sales and profit exceeded their respective estimates. ◎General Mail Order Business Sales and profit declined. Sales decreased due to the catalog's issue being postponed. Profit fell due to increased shipping fees. Although sales did not reach estimates, profit was higher than expected. ◎Specialty Mail Order Business Sales and profit grew. In addition to favorable sales in the cosmetics business, the profitability in the healthy food product business (refre) and the mail-order business targeting nurses improved, increasing profit significantly. Sales did not reach the estimate, but profit was higher than expected. ◎Retail Store Sales Business Sales and profit rose. Sales and profit were affected by unfavorable weather, but increased due to the consolidation of Sagami Group Holdings Co., Ltd. Both sales and profit exceeded estimates. ◎Solution Business Sales and profit shrank. the transactions with major clients decreased, and the performance of the service of enclosing promotional flyers was stagnant. Both sales and profit fell short of estimates. ◎Finance Business Sales and profit rose. The balance of loan receivables in the domestic consumer finance business increased. Sales were smaller than expected, but profit was in line with the estimate. ◎Property Business Sales and profit declined. Although increased sales in the hotel business contributed, there were no sales of real estate. Costs related to the opening of new hotels also increased. Sales did not reach the estimate, but profit was higher than expected. ◎Other Business Sales grow, but loss augmented. Sales of the wholesale business grew, but loss increased due to upfront costs in the costume rental business. Both sales and profit fell short of estimates. Current assets increased 3.9 billion yen from the end of the previous term, as trade receivables and inventory assets grew due to the M&A of Sagami Group Holdings Co., Ltd., etc. Noncurrent assets grew 9.1 billion yen due to the increase of property, plant and equipment, including the shops of Sagami Group Holdings Co., Ltd. and total assets rose 13 billion yen to 209 billion yen. Total liabilities augmented 8.5 billion yen to 111.4 billion yen, due to the increase in trade payables and short-term debts, etc. Net assets rose 4.5 billion yen to 97.5 billion yen, due to the increase in retained earnings, etc. As a result, capital-to-asset ratio dropped 1.1 points from the end of the previous term to 46.0%. Operating CF was mostly unchanged. The deficit of investing CF grew due to purchase of shares of subsidiaries. There was no payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation, that was recorded in the same period last term. As a result, the surplus of financing CF grew. The cash position improved.
Fiscal Year March 2019 Earnings Estimates
No revision to the earnings estimates. Sales and profit estimated to grow. There is no revision to the earnings estimates. It is estimated that sales will grow 11.3% year on year to 180 billion yen and operating income will rise 15.3% year on year to 15 billion yen. The dividend amount is to be 15.00 yen/share, up 2.5 yen/share from the previous term. The estimated payout ratio is 13.9%. This estimate indicates that sales are slightly falling below the estimate, but operating income is exceeding the estimate. Sales are expected to increase in all segments, particularly the four main businesses. In addition to steady progress in the General Mail Order business, it is anticipated that the company will reach its budget for operating income, thanks to the Specialty Mail Order business, which has been actively increasing new customers and doing away with unprofitable media.
Management policy and activities
Considering the current business environment, Belluna plans to take the following measures for each business. (1) Management policy (External environment) The company formulated management plans for flexibly responding to changes in external environments such as consumer sentiment, the advance of the Internet, and logistics, by improving aspects of the internal environment such as "developing portfolio management," "managing M&As," and "expediting growth in each business." (Summary of the previous term, and positioning of this term) This term is the final fiscal year of the third management plan, and the company is making an effort to achieve record sales and profit. They were able to grow by embracing changes in the external environment. In addition to achieving the goals for this term, the company will be laying the groundwork for the fourth management plan. (2) Measures for each business Belluna will expand and strengthen its major 4 business by achieving "the stable growth of General Mail Order Business," "expanding Specialty Mail Order Business," "Expanding Retail Store Sales Business and improving its revenue," and "strengthening Property Business for maturing the portfolio." ① Stable growth of the General Mail Order Business Although the augmentation of delivery costs still has some impact on business, the company is laying the groundwork for the fourth management plan, aiming to increase growth potential and profitability. In detail, the company will pursue (1) the enhancement of product competitiveness, (2) the upgrading of online shops, (3) the improvement of Ryu-Ryu (targeted at young customers), and (4) synergetic effects among catalogs, the Internet, and real shops. 【Expansion of catalog retail】 In the final year of the fourth short-term management plan, the company aims to achieve sales of 100 billion yen, with the themes of "Revival of Paper," "Increased Exposure to Paper," "Enhancement of Product Capabilities," and "Customer-Oriented and Customer-Friendly." Although this is the age of the Internet, the company will once again pursue the merits of paper, while meeting the needs of customers. 【Upgrading of online shops】 The company will focus on laying the groundwork for the fourth short-term management plan. They will release products that have a high turnover and are available only at online shops, continue to expand sales of standard products, fine-tune production and operation, conduct system development and increase the number of store openings for online shopping malls. 【Synergetic effects among catalogs, the Internet, and shops】 The synergistic effects due to collecting and utilizing a list of users will increase response in the mail-order business, improve CVR in the online business, and enhance sales at physical stores. Through sales growth, it is possible to offset the burden of expenses for effective TV commercials. ② Expansion of the Specialty Mail Order Business The company will continue to focus on training. In particular, the cosmetic mail-order "Ozio" is expected to grow. The company is the number one domestic seller of mail-order wine for the tenth consecutive year and of Nihonshu (Japanese sake) for the second consecutive year, and will further strengthen their position in the Specialty Mail Order business. In addition to domestic growth, they will also strengthen overseas development, including the cross-border EC in Taiwan, which is currently experiencing rapid growth. ③ Expansion of Retail Store Sales Business and increase in revenue *Japanese clothing shops The company has opened three stores so far this term. There were 82 stores as of the end of Sept. 2018. Although sales and profit fell in the first half due to late deliveries, the company aims to recover in the second half, achieving their budget. As reported in the latest report, Belluna acquired "Sagami Group Holdings Co., Ltd.", which sells kimono, jewelry, etc., by TOB, and reorganized it into a consolidated subsidiary in Jun. 2018. Sagami Group Holdings runs stores under the two brand names "Sagami" and "Tokyo Masuiwaya." They possess abundant knowledge and know-how about kimono culture and how to handle kimono, and excel in helping customers get dressed. They also employ a large number of experienced and reliable veteran employees, and have the advantage of being able to reduce costs through concentrated procurement. However, due to the shrinking kimono market, sales in the most recent fiscal year (FY 2/2018) were 16 billion yen, an operating loss of 70 million yen. The company plans to work steadily and surely towards achieving a 10% operating income margin over the medium to long-term with awareness reforms, balancing supply and demand in business, getting back on the road towards growth, and reviving the kimono culture. *Apparel shops Opening 20 to 50 stores each year, the company aims to have established 200 stores in FY 3/2022. They expect to achieve their goals, allowing for a 10% margin of error. ④ Property Business In this fiscal year, the company opened three new hotels. The "Le Grand Galle Hotel" (Sri Lanka) and "Le Grand Karuizawa Hotel & Resort" were opened in July 2018, and the Westin Maldives Miriandhoo Resort was opened in October. The company will manage leases, hotels, and development in a balanced manner. ⑤ New Business Belluna is developing "Nursing Business" and "Mini Belluna." As for the nursing business, the company is preparing for the dispatch of nurses and other workers by utilizing the database accumulated through the thriving mail-order businesses targeted at nurses: "Nursery" and "infirmiere." They said that customers' response is favorable. As for the overseas expansion of Mini Belluna, the company will concentrate on cosmetics, healthy food products, nursing business, and property business, and develop a Belluna model suited for the local situation.
Sales exceeded estimates, and were larger than those in the same period in the previous term. Operating income declined, but still reached the estimated target, and business is progressing as planned. It is expected that the company will achieve its sales and profit targets for the full year. Although the market environment is uncertain, we would like to pay attention to how much the company's performance will improve in the second half with respect to the full-year estimate, and their specific efforts and goals for the fourth short-term management plan.
<Reference: Regarding corporate governance>
◎Organization type, and the composition of directors and auditors ◎Corporate Governance Report Last Update: December 20, 2018. <Basic policy> Our basic policy for corporate governance is to streamline business operation by allowing operating officers to have the authority and responsibility for their businesses under the policy determined by the board of directors, and establish compliance systems and effective management systems by enhancing the fairness and transparency of business administration. In addition, we organized a compliance committee inviting outside intellectuals, granting it authority, so that a third party's viewpoint would be reflected in management decisions. <Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)> <Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)> We disclose the compliance with each principle of the corporate governance code under "Our Efforts Towards the Corporate Governance Code" at the following company website (corporate governance).
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