Bridge Report:（9997）Belluna Term ended March 2021

President & CEO Kiyoshi Yasuno	Belluna Co., Ltd. (9997)

 

Company Information

 

Stock Information

* The share price is the closing price on July 26.
*Each Number is based on the earning results of FY 3/21.

 

Earning trends

* Unit: Million yen, yen.
*Net income is profit attributable to owners of parent. Hereinafter the same shall apply.

 

This report outlines Belluna, the financial results for the term ended March 2021, fiscal year ending March 2022 earnings estimates and etc.

 

Table of Contents

Key Points
1. Company Overview
2. Fiscal Year ended March 2021 Earnings Results
3. Fiscal Year ending March 2022 Earnings Estimates
4. Management Policy and Activities
5. Conclusions
<Reference: Regarding corporate governance>

 

Key Points

• In the term ended March 2021, sales grew 14.8% year on year to 206.4 billion yen. Meeting the demand from housebound consumers amid the COVID-19 pandemic, the General Mail Order Business and the Specialty Mail Order Business performed well. In-store sales declined, due to the decrease of visitors to stores. Gross profit margin rose 0.5 points, while gross profit increased 15.7%. SG&A expenses, including media costs and fares, augmented 11.7% year on year, but this was offset, and operating income grew significantly by 52.6% year on year to 15.7 billion yen. Ordinary income increased 62.8% year on year to 16.8 billion yen, due to the revenues from subsidies, the reduction of loss on valuation of derivatives, etc. Sales and profit exceeded the initial forecast considerably, and also topped the second revised forecast announced in January 2021.

   

• In the term ending March 2022, sales are projected to rise 19.1% year on year to 246 billion yen and operating income is forecast to grow 11.2% year on year to 17.5 billion yen. The mail-order industry is expected to see the continuous growth of demand due to the changes in consumers’ lifestyles and purchase behavior amid the COVID-19 pandemic. The General Mail Order Business is expected to see a significant sales growth this term, too. The kimono-related business and the property business are projected to recover. The company plans to pay a dividend of 19.00 yen/share, up 2.5 yen from the previous term. The expected payout ratio is 14.7%. This term is the final fiscal year of the fourth management plan, so the company aims to attain goals steadily, before launching the fifth management plan.

   

• The General Mail Order Business, which is the mainstay, has been sluggish for the past few terms, but its sales and profit grew considerably, as the company met the demand from people staying home via online shops and improved business efficiency. This term, too, the General Mail Order Business is expected to see a double-digit growth of sales and a rise in profit, and serve as a growth driver.

   

• In addition, the development of the kimono-related business is noteworthy. As the company aims to increase sales and post profit this term and then achieve sales of 310 billion yen in the term ending March 2025, the kimono-related business, whose CAGR is estimated to be 11.8% in the coming 4 years, is indispensable like the General Mail Order Business and the property business. We would like to pay attention to the endeavor and business progress of the company, which aims to shift from the sunset industry to the sunrise industry, while seeing how they will stir the needs from those who are interested in kimono rather than those who already wear kimono.

   

1.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

◎Management Philosophy

Origin of our business	To contribute to our customers’ lifestyle and happiness, by taking an international perspective to be the first company to provide a wide range of customers across the nation with an abundance of food, clothing, lifestyle and recreational products and services, with superior systems and planning for improved convenience, economy, fashion and assortment.
Ideal employees of our company	Our employees approach challenges with a cheerful and positive attitude, to do whatever possible to proactively improve customer satisfaction and broaden their abilities, in order to always maintain the confidence of our customers.
Ideal state of our company	We aim to develop overwhelming superiority as we compete with other companies in the areas of food, clothing, lifestyle and recreational goods and services, and with an image of stability, growth, continuity, and profitability to become an excellent company that attracts capable personnel and makes a contribution to society.

 

In addition, Belluna set “Basic Mind,” which describes the mindset of Belluna’s employees, and “Basic Action. “Basic Mind” 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,” while “Basic Action” is composed of “1. Collecting information,” “2. Case studies,” “3. Utilizing data,” “4. Testing theories,” “5. Use of others,” “6. Intellectual understanding,” “7. Discussion” and “8. Reporting, contacting, and consulting.” These are what the employees of Belluna should return to when facing a challenging problem.
In addition, the company considered “CCBSKKKS” (C: Change, C: Challenge, B: Brushing up, S: Speed, K: (Kizuki) Awareness, K: (Kaizen) Improvement, K: (Kyakushikou / Kyakumichaku) Customers’ perspective and getting closer to customers, S: Case studies of SA class corporations) as a common factor in growing corporations and recognizes it as a milestone for its own growth.

 

1-3 Market Environment・Competitors in the same business

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.
Promoting further understanding of the growth strategy will be necessary for an increase in PER and PBR.

 

◎Comparison of major mail-order companies

* Unit: Million-yen, yen, x.
*Sales and operating income are the values estimated by the company for this term.
*ROE is the actual result of the previous term.
*Market Cap, PER and PBR are the values calculated from the closing prices on July 14, 2021.

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 70% of total sales.
In order to further clarify business content, Belluna has classified its business into eight segments: General Mail Order Business, Cosmetics and Health Foods Business, Gourmet Business (including wine and Japanese sake), Nursely Business, Database Use Business, Kimono-related Business, Property Business, and Other Business in the fiscal year ending March 2022.

 

(Produced by Investment Bridge with reference to the material of Belluna.)

 

(Produced by Investment Bridge with reference to the material of Belluna.)

 

①General Mail Order Business
◎Outline
The company receives orders and sells apparel goods, fashion goods, interior accessories, etc. mainly via e-commerce (via PCs and smartphones), catalogues and flyers.

 

(E-commerce, smartphone application)

 

(Major catalogs)

(Taken from the website of Belluna)

 

◎Attributes of subscribers
As of the end of March 2021, the number of subscribers is about 21.4 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 36.1 % of the population of this age group in Japan, indicating an overwhelming market share.

 

(Taken from the reference material of the company)

 

The number of loyal subscribers, who are defined as subscribers who have purchased products within 2 years after registration, was 5.11 million in the term ended March 2020.
Despite some fluctuations, it is steadily increasing.

 

(Produced by Investment Bridge with reference to the material of Belluna)

 

Belluna employs about 70 merchandisers, and offers more fashionable products than leading supermarkets and women’s apparel shops. Particularly, designs focusing on hiding Mrs’s figures which change with age are well-received by its user.
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 “ GeeRA(former Ryu-Ryu)” for customers in their 30s. The company offers products tailored for the preferences and needs of each age group.

(Produced by Investment Bridge with reference to the material of Belluna.)

 

◎Efforts for developing e-commerce
As a result of the efforts, online shopping has become the main driving force in attracting new customers.
In the term ended March 2021, the ratio of e-commerce increased significantly, meeting the demand from housebound consumers amid the spread of COVID-19.

(Produced by Investment Bridge with reference to the material of Belluna)

 

②Specialty 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.

 

Main genre	Catalog/website	Outline
Food products, flowers, and wine	Belluna Gourmet	Belluna handles food products and flowers. In addition to the sale of individual products, it offers a “periodic distribution service” for delivering products to subscribers every month, a “gift service” for mid-summer gifts, and so on.
	My Wine CLUB	Belluna directly imports wines that are rare in Japan, and won the largest share in the mail-order market for wine in Japan for 12 consecutive years (fiscal 2008 to fiscal 2019).
Cosmetics	Ozio	Belluna deals in cosmetics and supplements, such as facial washes, skin lotions, and milks, for which safety is pursued. It is composed of 18 different types of amino acids, collagen, hyaluronic acid, etc. "Eggshell Membrane Beauty Serum: Beauty Opener," which is made from an eggshell membrane that provides firmness, gloss, elasticity, and moisture, is the number one domestic seller.
	Nachu life	All-in-one cosmetics are mainly handled. Especially, the company offers products composed of mainly skin-friendly plant ingredients. As for the all-in-one cosmetic product "Royal Jelly Mocchiri Gel" for the mature skin, the company has sold over 11 million products. Together with Ozio, the company is also working on developing overseas markets such as Taiwan.
Supplements	Refre	Belluna deals in healthy food products and supplements made from ingredients selected rigorously The company is working to develop products suitable for senior customers to enhance lives of married women in a healthy and enjoyable way. The company also focuses on securing the safety of food and the quality of products, preventing health hazards, and so on.
Mail order for nurses	Nursery infirmière	Belluna operates “Nursery,” which offers products at reasonable prices, and “infirmière,” whose attractive features are its rich product lineup and collaborative products with other brands. It has an overwhelming share in the mail-order market for nurses.

(Produced by Investment Bridge with reference to the material of Belluna)

 

◎ Efforts for the shift to e-commerce
In each category, e-commerce ratio has increased remarkably. The majority of new customers were acquired through online shopping.

 

(Produced by Investment Bridge with reference to the material of Belluna)

 

➂Retail 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 to them, Sagami Group Holdings Co., Ltd. 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
The traditional Japanese apparel stores "BANKAN" and "Wamonoya," which has a high average spending per customer, can be characterized by high profitability they have improved, and presently, the company is working to permeate the market with their “Sagami” brand. It is also endeavoring to cultivate future customers among young women who do not currently own kimonos through promotional campaigns.
Apparel stores BELLUNA offer casual clothes at low prices, targeted mainly at women in their 40s and 50s.

 

As of the end of March 2021, there are 91 Japanese clothing stores ("BANKAN" and "Wamonoya,") and 86 apparel stores. The total number of stores is 177.

(Produced by Investment Bridge with reference to the material of Belluna)

 

④Solution 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 receiving, shipping, and storing products at distribution centers and operating call centers (managing both inbound and outbound calls).
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.

 

⑤Finance 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.

(Produced by Investment Bridge with reference to the material of Belluna)

 

⑥Property Business
The company leases real estate, such as office buildings, operates hotels, and so on.

 

⑦Other Business
The company operates the wholesale business targeted at department stores and co-op shops, and the insurance business.

1-5 Characteristics and Strengths

➀Customer 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 20 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 36.1% of the population, 1 in 3 people 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.

 

②Building a new successful business model and challenges
Within a corporate culture that values endeavors, Belluna is working to construct a new successful business model and establishing a track record rather than maintaining the status quo.

 

In the General Mail Order Business, the fashion e-commerce mall "RyuRyumall" targeted at young people launched in 2018 continues to grow in terms of order receipt and total distribution amount. In the Specialty Mail Order Business, the "Eggshell Membrane Beauty Serum: Beauty Opener" has grown to achieve the largest domestic sales, beginning to contribute to the profit of new products.
In addition to strengthening the mail order business targeted at men and handling more champagne, Belluna will begin focusing on the online sales of products targeted at nurses and caregivers, which is a large market.
Moreover, the company will actively engage in M&A to further strengthen online sales.

 

③Stable 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(FY3/21), the company plans to pay 16 yen/share, up 1 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.

 

	100 to 499 shares	500 to 999 shares	1,000 or more shares
Shareholders can choose any of the following: “General mail-order coupon,” “Coupon exclusively for online shopping,” and “Belluna’s product (food product/wine)”	Worth 1,000 yen	Worth 3,000 yen	Worth 5,000 yen
Accommodation coupon of Urabandai Lake Resort	1 coupon	2 coupons	4 coupons
Accommodation coupon of Le Grand Kyu Karuizawa	1 coupon	1 coupon	1 coupon

*The accommodation coupon of Le Grand Kyu Karuizawa is distributed once a year (issued in early December).

1-7 ROE analysis

 

In the term ended March 2021, due to the increase of net income margin, ROE recovered to the double-digit level. The goal of the fourth management plan is to achieve ROE of 10.5% by the end of the final year of the plan in the term ending March 2022. If the company can improve total asset turnover rate, it will be able to achieve a higher ROE.

 

2. Fiscal Year ended March 2021 Earnings Results

2-1 Consolidated Business Results

*Unit: Million yen. Gross profit is gross profit - net. Quarterly net income is quarterly profit attributable to owners of parent. Ratio to forecast1 and forecast2 are ratios to the initial forecast and the revised forecast announced in January 2021, respectively.

 

Sales and Profit increased. Both sales and profit exceeded its revised estimate
Sales grew 14.8% year on year to 206.4 billion yen. Meeting the demand from housebound consumers amid the COVID-19 pandemic, the General Mail Order Business and the Specialty Mail Order Business performed well. In-store sales declined, due to the decrease of visitors to stores. Gross profit margin rose 0.5 points, while gross profit increased 15.7%. SG&A expenses, including media costs and fares, augmented 11.7% year on year, but this was offset, and operating income grew significantly by 52.6% year on year to 15.7 billion yen. Ordinary income increased 62.8% year on year to 16.8 billion yen, due to the revenues from subsidies, the reduction of loss on valuation of derivatives, etc. Sales and profit exceeded the initial forecast considerably, and also topped the second revised forecast announced in January 2021.

 

 

2-2 Trend of each segment

*Unit: Million yen. The composition ratio of income means the ratio of income to sales. Ratio to forecast1 and forecast2 are ratios to the initial forecast and the revised forecast announced in January 2021, respectively.

 

◎General Mail Order Business
Sales and profit grew.
Partly due to the spread of COVID-19, the demand for mail-order services, mainly for miscellaneous goods and at-home clothes, increased, and the company met that demand. As sales grew, cost ratio and media rate improved. Although losses were expected at the beginning of the fiscal year, cost rate and media ratio improved due to the increase in revenue, resulting in a significant increase in profit.

 

◎Specialty Mail Order Business
Sales and profit grew.
Partly due to the spread of COVID-19, especially the Mail Order Business for Nurses and the Gourmet/Wine Business performed well.

 

◎Retail Store Sales Business
Sales dropped, and a loss was posted.
This business was affected by the shortening of business hours and temporary closure implemented under the developers’ policy for preventing the spread of COVID-19.

 

◎Solution Business
Sales and profit grew.
The mail order agency service and the service of enclosing promotional flyers performed well, and JOBSTUDIOPTE. LTD., which newly became a subsidiary, contributed.

 

◎Finance Business
Sales and profit rose.
The balance of loan receivables in the domestic consumer finance business increased. In view of the status of the spread of COVID-19, advertisement was reduced.

 

◎Property Business
Sales and profit decreased
The hotel business was affected by the restraint of travel in Japan promoted by the government and the restrictions on foreign people’s entry to Japan for preventing the spread of COVID-19.

 

◎Other Business
Sales grew, and profit turned positive.
Although the golf course operation business, restaurant business, accommodation booking business, etc. struggled due to the spread of COVID-19, Mime Co., Ltd., which is operating the costume rental business, saw a decrease of COVID-19-caused cancellations compared with the previous fiscal year and became profitable.

 

2-3 Financial Condition and Cash Flows

◎Main BS

*Unit: Million yen

 

Total assets increased 17 billion yen to 240.2 billion yen thanks to the increase in cash and deposits and property, plant and equipment, etc. Total liabilities rose 6.3 billion yen to 126.9 billion yen due to the increase in trade payables, etc. As retained earnings grew etc., net assets increased 10.7 billion yen to 113.2 billion yen. As a result, capital-to-asset ratio decreased 1.2 points from the end of the previous term to 46.9%.

 

◎Cash Flows

*Unit: Million yen

 

The positive range of Operating CF increased, and free CF turned positive, due to the increase in quarterly net income before taxes and other adjustments, etc.
Financing CF turned negative, due to the decrease of short-term interest-bearing debts, etc. The cash position improved.

 

3.Fiscal Year ending March 2022 Earnings Estimates

3-1 Full-year Earnings Estimates

*Unit: Million yen. The estimated values are those announced by the Company. Net income is profit attributable to owners of parent.

 

Sales and profit are estimated to increase
Sales are projected to rise 19.1% year on year to 246 billion yen and operating income is forecast to grow 11.2% year on year to 17.5 billion yen. The mail-order industry is expected to see the continuous growth of demand due to the changes in consumers’ lifestyles and purchase behavior amid the COVID-19 pandemic. The General Mail Order Business is expected to see a significant sales growth this term, too. The kimono-related business and the property business are projected to recover. The company plans to pay a dividend of 19.00 yen/share, up 2.5 yen from the previous term. The expected payout ratio is 14.7%. This term is the final fiscal year of the fourth management plan, so the company aims to attain goals steadily, before launching the fifth management plan.

 

3-2 Trends of each segment

*Unit: 100 million yen. The composition ratio of income means the ratio of income to sales.

 

4. Management Policy and Activities

Belluna’s mid/long-term policy is to aim for the maturation as a general trading company for online shops with 300 billion yen in sales and 30 billion yen in operating income as a benchmark.

 

[4-1 Fifth Management Plan]

The company’s goals for the final fiscal year of its Fifth Management Plan for three years from the fiscal year ending March 2023 to the fiscal year ending March 2025 are as follows.

 

Goal of fiscal year ending March 2025

 

In order to establish a foothold for the Fifth Management Plan, Belluna intends to meet this fiscal year's budget, which is the final year of the Fourth Management Plan.

 

（１）The current term and Fifth Management Plan

*Unit: 100 million yen.

 

(2) Concept of the Fifth Management Plan
The company will focus on the following five points.

 

1. Achieving each segment goal
2. Implementation of e-commercialization (including SNS)
3. Maturation of the portfolio (by widening and strengthening business pillars)
4. Training and enhancing practical human resources
5. Promoting M&A aimed at synergy effect

 

【4-2 Activities in each business segment】

The current situation and activities for growth in the new segments are as follows. The company deems it necessary to improve product competitiveness.

 

(1) General Mail Order Business

*Unit: 100 million yen.

 

(Recent trends and the outlook for this term)

☆	Paper media performed well, and the shift to online services progressed considerably.
☆	RyuRyumall, an EC mall for young fashion, is expected to grow, and the shift to online shops is progressing.
☆	Like in the previous term, 20% growth is expected this term.
☆	In the previous term, business performance improved significantly due to efforts to improve revenues and the increase in demand from housebound consumers.
	This term, the company put importance on growth potential as it has increased new customers steadily, and recognized this term as the year for building a foundation for the Fifth Management Plan.
☆	The company will work to improve the efficiency of increasing new customers, inventory turnover and cost ratio.

 

1. Growth of E-commerce
Both e-commerce orders and RyuRyumall distribution amounts have increased significantly. There is high growth potential for e-commerce, and steady growth is expected to continue this fiscal year.

 

2. Improvement in efficiency for increasing new customers
We were able to create a pattern to increase the efficiency of increasing customers. The efficiency is expected to remain at the same level as the previous term.

 

3. Improvement in inventory turnover and cost ratio
In the previous term, the company reduced cost ratio and curbed the worsening of inventory turnover. Inventory turnover is improving.
This improvement trend is expected to continue this term.

 

*Unit: 100 million yen.

 

(Items on which the company will concentrate from now on)
Belluna will enhance brand development and shift to e-commerce to secure stable growth and profitability.

 

(2) Cosmetics and Health Foods Business

*Unit: 100 million yen.

 

(Recent trends and the outlook for this term)

☆	Belluna’s domestic e-commerce growth and strong cosmetics business expansion in Asia led to a significant increase in its business performance in the previous term.
☆	This fiscal year, sales are expected to level off due to the influence of domestic online advertising regulations.

 

Ozio's e-commerce ratio rose to 52.3% (13.2% in the fiscal year ended March 2017). Overseas business operation is also favorable. Domestically, the development and investment in new products will be accelerated. It also strengthens its overseas expansion.

 

The “Royal Jelly Mocchiri Gel” became a big hit both domestically and overseas. The cumulative sales volume exceeded 11 million products.
Sales of the "Eggshell Membrane Beauty Serum" is also favorable, and its cumulative sales volume exceeded 4 million products, achieving the largest domestic sales.

 

*Unit: 100 million yen.

 

(Key Points of the Fifth Management Plan)
1. Improve product competitiveness
(1) To target new customers (in their 20s and 30s).
(2) Develop products for cross-selling
2. Improve the brand image
(1) Utilize the mass media
(2) Resume in-store sales

 

3. Implement overseas strategies
(1) Cultivate the Southeast Asian market
① Grow business in the markets of Taiwan, Hong Kong
② Challenge to enter the markets in Malaysia, Thailand, and Vietnam

 

(3) Gourmet Food Business (including wine and sake)

*Unit: 100 million yen.

 

(Recent trends and the outlook for this term)

☆	In the wine category, directly imported products are highly rated online. The ratio of online sales exceeded 50%. The company utilized the largest share in the mail-order market, achieving attractive prices and securing a stable repeat customer base.
☆	Wine and Japanese sake are maintaining stable sales. The sales growth is expected to continue.

 

A special selection set of 11 bottles of wine from around the world attained the number one position in domestic wine set sales in 2020.
Japanese sake sales volume exceeded two million bottles in the term ended March 2021. This fiscal year, they will continue to expand their product lineup and develop new products, aiming at the number one position in mail-order sales for the fifth consecutive year.
112,000 products of Belluna’s original New Year’s food Yui—a three-tiered Japanese dish box, were sold during the fiscal year ended March 2021.

 

 

*Unit: 100 million yen.

 

(Items on which the company will concentrate from now on)
In the wine and Japanese sake business, they will fortify Belluna’s number one position in the industry by promoting quality enhancement, reinforcing the lineup and strengthening brand power.

 

(4) Nurse-Related Business

*Unit: 100 million yen.

 

(Recent trends and the outlook for this term)

☆	In the previous term, mainly sales of consumable medical goods were strong not only for healthcare professionals but also for general customers due to the effects of COVID-19.
☆	Healthcare professionals tend to become repeat customers, so the company expects to see a continuation of this trend in the next term and beyond.

The nurse-related business is being upgraded to e-commerce. infirmière and Nursery accounts for the majority of the market share, and it is expected to grow steadily with the implementation of e-commerce. Belluna also plans to tap into the nursing-care market by taking advantage of its strengths as an SPA company.
The highest sales volumes were all achieved by original products, and high repeat sales were realized through balancing quality and price with SPA production.

 

*Unit: 100 million yen.

 

(Items on which the company will concentrate from now on)
In addition to stabilizing mail-order sales to nurses, Belluna will enter the mail-order market targeting caregivers. Since the market is large, they will pursue the building of a sales structure aiming at becoming a market leader.
As for overseas expansion, they will work toward product sales, with JOBSTUDIO as a foothold.

 

(5) Database Use Business

*Unit: 100 million yen.

 

(Recent trends and the outlook for this term)

☆	The outstanding amount of loans at the end of the previous fiscal year decreased due to changes in the external environment.
☆	Belluna Direct: In the previous fiscal year, the company achieved a steady increase in both sales and profit in accordance with the increase of mail-order customers.
☆	BBS business: The mail order agency service utilizing its own infrastructure is growing, as it met the needs for mail-order services.

 

In the BBS business, which undertakes tasks of call centers and distribution centers, the company mainly deals with the mail order for healthy food products and cosmetic products for repeat customers.
The annual growth rate of customers is 20%, and the retention rate of customers is as high as 70%. Namely, the company possesses a stable foundation for growth.
As call centers specialize in the mail order business, a high response rate and a high customer retention rate have been achieved.
Also, for distribution centers, the company offers services utilizing their group’s scale.
The strengths of the company are the knowledge and consulting capability for adjusting packages flexibly according to the growth state of each customer.

 

*Unit: 100 million yen.

 

(Items on which the company will concentrate from now on)
In finance, Belluna plans to increase the balance and boost growth after COVID-19 subsides.
Belluna Direct aims for steady growth in accordance with the growing number of mail-order customers.
The BBS business will develop new customers and expand infrastructure.

 

(Key Points of the Fifth Management Plan)
1. Finance will contribute to growth potential by utilizing databases.
2. Belluna Direct will expand advertising as the general mail-order market grows.
3. BBS will take advantage of the expansion of the mail-order industry and proactively develop its business.
4. The company will aim to develop this business as a major pillar of revenues following the General Mail-Order Business.
5. Belluna will achieve profits at around a 30% margin.

 

(6) Kimono-Related Business

*Unit: 100 million yen.
(Recent trends and the outlook for this term)

☆	BANKAN and Wamonoya secured a surplus despite a decrease in sales and profit.
☆	This fiscal year, the company will promote the building of a foundation for Sagami to become profitable.

 

The annual sales volume of BANKAN’s original kimono Mujikomon series exceeded 5,000 items.
This product is not targeted at people who already wear kimono, but those who want to wear kimono, as an item for beginners.
Each shop regularly holds Kimono wo Kiru Kai (Kimono wearing session) to provide customers with an opportunity to wear kimono.

 

*Unit: 100 million yen.

 

(Items on which the company will concentrate from now on)
To steadily promote the BANKAN and Wamonoya business model within the Group to make them profitable.
To foster the growth potential and profitability of the kimono business as a new pillar and build a high profitability business model with a profit margin of 10% at an early stage.

 

(Key Points of the Fifth Management Plan)
1. Endeavor to shift from the sunset industry to the sunrise industry
* Endeavor to increase growth potential
* Endeavor to increase profitability

 

2. Unify business models into the BANKAN model, which is profitable
* To secure profitability through sales at major exhibitions as well as in stores.
* Cultivate new customers through Enlightening young women who do not have kimono

 

3. Unify the brand names of the Kimono-Related Businesses of Belluna (scheduled in May 2022)

 

4. To develop the business as a major pillar of profitability

 

5. Contribute to the promotion of the kimono culture

 

(7) Property Business

*Unit: 100 million yen.

 

(Recent trends and the outlook for this term)

*Unit: 100 million yen.

 

(Items on which the company will concentrate from now on)
The hotel business is expected to see domestic and inbound international tourism recovering from the term ending March 2023.
The opening of a large building complex in Ginza is expected in the term ending March 2024, with profitability expected to increase further.

 

5.Conclusions

The General Mail Order Business, which is the mainstay, has been sluggish for the past few terms, but its sales and profit grew considerably, as the company met the demand from people staying home via online shops and improved business efficiency. This term, too, the General Mail Order Business is expected to see a double-digit growth of sales and a rise in profit, and serve as a growth driver.
In addition, the development of the kimono-related business is noteworthy. As the company aims to increase sales and post profit this term and then achieve sales of 310 billion yen in the term ending March 2025, the kimono-related business, whose CAGR is estimated to be 11.8% in the coming 4 years, is indispensable like the General Mail Order Business and the property business. We would like to pay attention to the endeavor and business progress of the company, which aims to shift from the sunset industry to the sunrise industry, while seeing how they will stir the needs from those who are interested in kimono rather than those who already wear kimono.

 

Average annual growth rate of sales (FY 3/2021 – FY 3/2025)

(Calculated by Investment Bridge)

 

<Reference: Regarding corporate governance>

◎Organization type, and the composition of directors and auditors

Organization type	Company with audit and supervisory committee
Directors	11 directors, including 2 external ones

 

◎Corporate Governance Report
Last Update: June 30, 2021.

 

<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)>

Principles	Reasons for not implementing the principles
<Supplementary Principle 1-2-(4)>	Taking shareholder composition into account, we post English convocation notices on our website to make it easier for shareholders to examine items on the agenda, whether they are from Japan or overseas. We will consider using an electronic voting platform in the future.
<Supplementary Principle 4-10-(1)>	We currently have two independent outside directors. The independent outside directors express their opinions and provide advice as necessary to both individual directors and the Board of Directors, utilizing their specialized knowledge and extensive experience. From now on, we will consider setting up a voluntary organization whose main members consist of independent outside directors if necessary.
<Supplementary Principle 4-11-(3)>	As for the analysis and evaluation of the effectiveness of the board of directors, we will keep discussing concrete evaluation methods, etc. from the viewpoint of upgrading the functions of the board of directors.

 

<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).

 

Principles	Disclosure contents
【Principle 1-4】	In order to foster good business relations with business partners and carry out business smoothly, we may hold their shares as requested by them. We judge whether or not to invest while comprehensively considering the benefits to our corporate group due to the strengthening of business relations, investment amounts, etc. As for the exercise of voting rights, we check whether proposed bills would degrade shareholder value, and consider the situations of target companies for investment, etc.
【Basic principle 5】	In order to contribute to sustainable growth and the mid/long-term improvement of corporate value, we recognize that we should have constructive dialogues with shareholders also outside general meetings of shareholders and explain our management policy to shareholders clearly and understandably, to win the understanding of shareholders. Therefore, we strive to proactively have dialogues with investors by developing IR systems and holding individual IR meetings and sessions for briefing our company to individual investors in addition to the results briefing session held twice a year, so that they will understand our company more deeply.

 

 

 

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