SHOBIDO : 2024年9月期 第2Q決算説明会 書き起こし記事（英語版）

SHOBIDO Corporation

Q2 Financial Results Briefing for the Fiscal Year Ending September 2024

May 31, 2024

Event Summary

[Company Name]	SHOBIDO Corporation
[Company ID]	7819-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Q2 Financial Results Briefing for the Fiscal Year Ending September 2024
[Fiscal Period]	FY2024 Q2
[Date]	May 31, 2024
[Number of Pages]	21
[Time]	15:00 - 15:27
	(Total: 27 minutes, Presentation: 27 minutes)
[Venue]	Webcast
[Venue Size]
[Participants]
[Number of Speakers]	1
	Masahide Terada	President and CEO

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Presentation

Moderator: Now, we will begin the financial results briefing for Q2 of the fiscal year ending September 2024 for SHOBIDO Corporation. Today, our President and CEO, Masahide Terada, will present an overview of our financial results and update investors on the progress of our growth strategy.

We will share and explain the materials on the screen you are viewing, but they were also posted on our website at 3:00 PM today, so you can download and view them there as well.

In addition, we will answer any questions you may have through the inquiry window on our website after the briefing, which will be posted on our website.

Now then, President Terada, please accept my best regards.

Terada: Thank you all for taking the time out of your busy schedules to attend SHOBIDO Corporation's financial results briefing for Q2 of the fiscal year ending September 2024.

I would like to begin by explaining the financial results.

First, let's start with the summary.

In Q2 of the fiscal year ending September 2024, thanks to the recovery of consumer spending and the increase in inbound demand, our company's performance remained strong, continuing from the previous period. We were able to achieve both increased revenue and profits.

This quarter, we continued to focus on our growth strategies, enhancing the product strength to improve the value of the SHOBIDO brand, establishing our position as a manufacturing partner for key sales destinations, and promoting our e-commerce business.

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Additionally, we established a company-wide DX promotion office in January to drive digital transformation within the organization, aiming to further enhance productivity.

For our company, which imports products manufactured in overseas partner factories, the depreciation of the yen by more than JPY10 compared to the same period last year was a significant headwind. However, we were able to counter this by increasing our selling prices and boosting both sales volume and quantities. We believe this is due to our high-turnover business style, which allows us to plan, develop, and launch products that catch the trend and sell in a short period of time.

I will now move on to an overview of the financial results.

First, let's look at the profit and loss (P&L) statement.

As shown in the graph on the bottom left, our business performance has been steadily increasing, and we continue to achieve growth in both sales and profits. Regarding sales, we achieved JPY10.616 billion, an increase of 5.9% compared to the previous year. Our own planned products generated JPY8.926 billion, an increase of 9.3% YoY. The percentage of in-house designed products reached 84.1%, and sales and in-house sales reached a new record high.

Next, the gross profit amounted to JPY2.787 billion, an increase of 4% compared to the previous year.

The gross profit margin was 26.3%. Although we struggled with the effects of the yen depreciation and higher costs, we managed to counter these challenges through increased selling prices and sales volume. As a result, our operating profit reached JPY646 million, up 12.8% YoY.

As for ordinary profit, the elimination of the valuation loss from foreign exchange derivative transactions recorded in the same period last year contributed to a significant increase. Additionally, quarterly net profit saw a substantial rise due to the recording of a gain on the sale of shares from our consolidated subsidiary in China. As a result, ordinary profit increased by 31.2% YoY, and quarterly net profit increased by 64.2% YoY.

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Next is selling, general and administrative expenses.

Regarding SG&A, despite the increase in various costs, particularly logistics and sales promotion expenses, due to strong sales performance, we managed to maintain efficient operations. As a result, SG&A expenses amounted to JPY2.14 billion, a slight increase of 1.6% compared to the previous year.

As for personnel expenses, despite controlling the overall number of employees, the implementation of a performance-based compensation system resulted in a slight decrease. Personnel expenses amounted to JPY809 million, a decrease of 1.4% compared to the previous year, remaining relatively stable.

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As mentioned earlier, our operating profit increased by JPY73 million to JPY646 million compared to the previous year. I would like to explain the factors contributing to this increase in detail.

On the far left, we have the operating profit of JPY573 million for Q2 of the previous fiscal year ended September 2023. Here, the impact of foreign exchange fluctuations is shown, with the average spot rate having changed from JPY137.85 in the previous year to JPY148.24 this year, resulting in a depreciation of the yen by over JPY10. This caused a negative impact of JPY137 million.

Another negative impact of JPY142 million was due to an increase in cost of sales by domestic suppliers. We offset this negative impact by increasing our selling prices, resulting in a positive effect of JPY308 million. And a positive JPY62 million due to an increase in sales volume. These two factors allowed us to counter the negative impact, resulting in an increase in operating profit, as shown on the far right.

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Here is the balance sheet and the cash flow statement.

Although the impact of business expansion has been observed in each of these areas, there are no particular problems.

Next, I will provide a review of the performance up to Q2.

First, here is a summary of sales by business category.

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Apart from general merchandise stores and discount stores, we were able to achieve increased revenue compared to the same period last year.

The growth rates for online shopping, variety stores, and uniform price shops were particularly significant. For online shopping, the strengthening of our own e-commerce platform has begun to show positive effects. As for variety stores and uniform price shops, our efforts to strengthen relationships with key sales destinations have been successful.

This is the trend of sales by product.

Cosmetics saw strong performance, continuing from the previous period, due to enhanced sales efforts towards key sales destinations. Makeup-related cosmetics for uniform price shops, skincare products featuring popular characters for variety stores, and kids' cosmetics performed well, resulting in sales of JPY4.028 billion, an increase of 8.8% compared to the previous year.

Similarly, cosmetic accessories saw strong performance due to enhanced sales efforts towards key sales destinations. Items such as heated curlers and nail-related products performed well, resulting in sales of JPY3.372 billion, an increase of 12.3% YoY.

Contact lens-related products, particularly the high-margin colored lenses, performed well, achieving sales of JPY1.413 billion, an increase of 11.5% YoY.

Regarding fashion accessories, delays in introducing bags and pouches to some key sales destinations resulted in sales of JPY1.247 billion, a decrease of 17.7% YoY.

In the bottom right, you can see a pie chart showing the share of each product category in the total sales. As shown here, cosmetics hold the largest share, accounting for 38% of the total. Following cosmetics, cosmetic accessories accounted for 32%, contact lenses for 13%, fashion accessories for 12%, and other items made up 5% of the total sales.

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Next, let's move on to the performance outlook for the fiscal year ending September 2024.

There is no change in the forecast of financial results from those specifically announced.

We are projecting sales of JPY21 billion, operating profit of JPY1 billion, ordinary profit of JPY990 million, and net profit attributable to the parent company's shareholders of JPY720 million. Earnings per share are expected to be JPY54.51.

We aim to improve profitability through various measures, including enhancing product strength, further strengthening sales efforts towards key sales destinations to expand sales, passing on the cost increases due to yen depreciation to product prices, and reducing costs by reassessing suppliers.

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Next, regarding dividends.

This fiscal year, we plan to distribute a dividend of JPY20 per share. Our company aims for a dividend payout ratio of 40%, except in special circumstances. We are committed to actively returning profits to shareholders in line with future profit growth.

I would now like to continue with an explanation of the progress of our growth strategy.

As you can see here, we have three growth strategies.

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