the 5th Mid-term Business Plan September 14, 2016 Ci:z Holdings Co., Ltd.

Transcription

1 the 5th Mid-term Business Plan September 14, 2016 Ci:z Holdings Co., Ltd.

2 Index 1. Background of Formulation of the 5th Mid-term Business Plan 2. Basic Plan 3. Three-year Plan 4. Directions of Individual Business Operations 5. The Capital and Business Tie-up with the Members of the Johnson & Johnson Family of Companies 6. Numerical Targets in the Final Fiscal Year of the Business Plan 1

3 1. Background of Formulation of the 5th Mid-term Business Plan Review of the 4th Mid-term Business Plan Ⅰ Premise 1: Recovery of growth of existing business operations The measures taken toward excellent customers worked favorably, which successfully increased the Mail purchase unit price. However, the incentive for customers to move on from their first purchase to repeat purchases was weak, and the purchasing rate of the customers with a short purchasing history didn t increase much in comparison with expectations. In addition, the acquisition of new clients tended to gradually decrease. Order Sales Whole sale Sales increased due to expansion of the number of drugstores which handle products of Dr. Ci:Labo and the number of products handled at stores. Inbound demand from foreign tourists greatly contributed to sales increases. Counseling -Type Sales Strengthened counseling capability contributed to increase the purchase unit price of excellent customers. Nonetheless, due to a decrease in the number of customer visits to stores, the number of newly acquired customers dropped. Overseas Business Overall sales increased, because wholesale sales were launched in major regions, brand recognition increased due to fortified public relations in mass media, there was a sales increase in existing stores, and sales strengthened at duty-free shops. 2

4 1. Background of Formulation of the 5th Mid-term Business Plan Review of the 4th Mid-term Business Plan Ⅱ Premise 2: Cultivate new business Purchased medical aesthetic company Ci:z Labo Co., Ltd. in the final year of the 4th Mid-term Business Plan. Couldn t achieve the sales target, as the timing of acquisition was delayed. But the company is expected to contribute to increasing sales throughout the 19th fiscal year and beyond. Premise 3: Full-scale expansion of overseas operations In July 2016, the Group announced the conclusion of a capital and business tieup in overseas operations with member companies of the Johnson & Johnson Family of Companies, becoming a partner of their overseas operations. The partnering occurred in the final year of the 4th Mid-term Business Plan, so that the business operation will start in the 19th fiscal year or later. 3

5 1. Background of Formulation of the 5th Mid-term Business Plan The 2nd Mid-term The 3rd Mid-term The 4th Mid-term The 5th Mid-term Business Plan: The Business Plan: The rapid Business Plan: The Business Plan: The growth period expansion period stable growth period change period Established the basis of growth Increased new customers by acquisition of customers who drastically, due to clarification of seek novelty. target customers and appealing by mass marketing, resulting in rapid business growth. The speed of acquiring new customers slowed down, and the driving force of growth shifted to continuity of existing customers. To transit to a phase in which growth will be driven by utilization of strengths and assets since the Group transformed to a holding company system. Brand values A customer of the Group data base which has a Strengths which has medical and assets more than 10 background. million people s data Execute the management strategy of the Group to utilize the accumulated strengths and assets which create values. 4

6 2. Basic Plan The 5th Mid-term Business Plan Ⅰ. Enhance the brand values Solicit the brand values which only companies with a medical background can provide and recreate the values of our Group. Enhance the brand values by enriching product quality through product improvement. Grow into a truly global l brand by utilizing i increased reliability of medical cosmetics in foreign countries. Ⅱ. Utilize the customer database Initiate and expand new business which effectively utilizes our database, which has data on more than 10 million customers. Strengthen provision of products and services to facilitate turning dormant customers into active customers, with the participation of all group companies. 5

7 2. Basic Plan Revitalize customers by collaborating with new business which is attractive to customers Expansion of the business of the Group Aesthetic Salon Business, Ci:z Labo Co., Ltd. Brand values of the Group which has a medical background. Strengths and assets A customer data base which has more than 10 million people s data OTC pharmaceutical business New brands 6

8 2. Basic Plan Provision of high value solutions to customers for their daily life. Corporate Philosophy Ci:z Holdings, Providing Health and Beauty inspired by Medical Expertise. Daily treatment, skincare with products of Dr. Ci:Labo Special occasions. When customers want to use sophisticated beauty techniques. For skin issues customers want to solve securely. Aesthetic treatments by Ci:z Labo Co., Ltd. For the troubles customers want to solve intensively. OTC pharmaceuticals Collaborate with clinics and hospitals when customers have persistent troubles. 7

9 3. Three-year Plan Strengthen measures for existing and dormant customers. Business of Dr. Ci:Labo Initiate operation of a new customer system Develop markets for dispensing pharmacies, hospitals and clinics. Esthetic -Salon Division Reinforce outlets and jointly run shops with Ci:z Labo Co., Ltd. Expansion of the number of shops 20 shops Development of franchises Target: 50 shops OTC pharmaceuticals Purchasing OTC Pharmaceutical manufacturers Launching sales of 4-5 products (including OEM) Overseas Business Royalty income Market expansion in Asia, mainly in Greater China Expansion of new markets in North America and Latin America July, 2016 July, 2017 July, 2018 July,

10 4. Directions of Individual Business Operations Business Operations of Dr. Ci:Labo Co., Ltd.: Direction of its Market Expansion Solidify a stable customer base by enhancing the convenience of existing customers and striving for effective approaches to acquisition of new customers. Aspire to establish a sales channel system which recommends proper products according to the age groups of customers. Mail Order Sales Wholesale Counseling- Type Sales Start introduction of the new customer system Ci:Labo 33 (January 2017) To fortify relationships with customers. Strengthening sales at drugstores Reinforce Labo Labo brand products at drugstores. Cultivate sales routes to dispensing pharmacies and hospitals Measures to expand the new customer base Raise the level of customers from using product samples to purchasing products. Initiate introduction of starter kits for first-time purchasers. Door-to-door sales Counseling-Type Sales Mail Order Sales Wholesale NEW distributors Door-to-door sales (Retired beauty staff sell products with a community based sales method.) (Age) 9

11 4. Directions of Individual Business Operations Business Operations of Dr. Ci:Labo Co., Ltd.: Product Development Aqua-Collagen Gel Create medicated Aqua-Collagen-Gel whitening products in the second half of the fiscal year ending July 31, Improve Aqua-Collagen-Gel series products which were popular p in limited time sales, and make them standard products during the FY2018. Establish a new pillar in the Aqua-Collagen-Gel series. Divide merchandise in the series into segments by sales outlet, and raise the sales levels of products besides Enrich-Lift. Cultivate sales channels of the Sensitive series into hospitals and clinics. Fortify the 5000 series for sales at drugstores Create a series for VC100. Cultivate the customer segment of those between their late 20s and 35 years old. which the company hasn t been able to capture fully. Underpin sales outlets in e-commerce and drugstores, in order to take in the above mentioned customer segment. Labo Labo Brand Add new product line ups to cultivate the young generation. Elevate the presence of products of Dr. Ci:Labo at drugstores. 10

12 4.Directions of Individual Business Operations Aesthetic Salon Business: Expansion of Ci:z Labo Co., Ltd. (million) 4,000 3,500 3,000 2,500 2,000 1,500 1, % 25.0% 20.0% 0% 15.0% 10.0% 5.0% 0.0% Increase the ratio of sales of goods: From 15% to over 25% Enrich product development by cooperation with Dr. Ci:Labo Co., Ltd. Develop brands in the high hprice range. Aspire to improve sales as well as Sales opereting profit ratio before goodwill depreciation maintaining high profitability. Increase the number of salons: From 20 salons to 50 salons in the next three years. Schedule establishment of the salons which provide highly sophisticated treatments to customers mainly in metropolitan areas, as well as the new style of salons in local cities where customers can access aesthetic treatments easily. Expand the number of local salons, by incorporating the franchise system and the system to support aestheticians to be independent. Actively engage in overseas expansion, focusing on Taiwan. 11

13 4.Directions of Individual Business Operations OTC pharmaceutical business. The data base of 10 million customers The Contact center where customers can consult about their skin troubles Count on strengthening and expansion of the customer base by incorporating the OTC pharmaceutical business. The OTC products play a role in facilitating reactivation of dormant customers, as new products are solicited to dormant customers. The pharmaceuticals can appeal to customers as a means to provide direct solutions, while soliciting the functions of cosmetics becomes difficult year after year. Support a wide variety of skin troubles customers have. Products: For acne and whitening. Medications which are difficult to purchase at shops. Sales outlets: Contact center and e-commerce Detailed proposals which meet customers needs Daily care: Cosmetics and supplements Intensive care: OTC pharmaceuticals Development plan: Purchase one company within one-two years. Develop 4-5 products within three years. The Group can expect to be able to directly provide solutions to the skin troubles of all generations, which enables us to deepen relationships with our customers more than before. 12

14 5. The Capital and Business Tie-up with the Members of the Johnson & Johnson Family of Companies Why make an alliance with the members of the Johnson & Johnson Family of Companies (hereafter referred to as J&J)? & Directions in business Aspiring to grow into true global brands which people all over the world love to use for many years to come. Aspiring to quickly incorporate the rapidly growing medical cosmetics field in the world market and reinforce it. Strong affinity Both companies provide products and services which were backed by medical knowledge, so that cooperation can easily produce synergy. Directions Backed Corporate philosophy Corporate philosophy which places the customers first. Helps all people who suffer from skin problems. We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. (Extract from the credo of Johnson & Johnson Group.) 13

15 5. The Capital and Business Tie-up with the Members of the Johnson & Johnson Family of Companies Alliance in foreign countries J&J is responsible for selling our products outside Japan and the royalty income from the sales amount will be a pillar of our income. J&J s overseas address Expansion of sales outlets in Asia, in particular in Greater China Cultivation of new markets in North America and Latin America regions Growth as global brands Gain support of KOLs* by making use of store opening and digital marketing, and dramatically enhance brand strength and recognition. By using the budget for marketing which is difficult to spend in our company, J&J aggressively carries out marketing activities in terms of not only quality but also volume. Secondary effects KOL: Abbreviation of Key Opinion Leader Rapid improvement in brand recognition overseas is expected to create a large impact on inbound ddemand dand dtravel retail in Japan. 14

16 5. The Capital and Business Tie-up with the Members of the Johnson & Johnson Family of Companies Alliance in Japan Consider selling J&J products by utilizing the sales outlets of our company, product development by utilizing the technologies J&J has, etc. 1 st step Publicize the significance of the tie-up with J&J to customers of mail-order sales and create a feeling of expectation. Especially, convey the values of efforts made by the companies which have medical backgrounds. 2 nd Step Sell skincare products and facial devices through Contact center and e-commerce. Seek product sales and development under the names of our company brands, by 3 rd Step utilizing J&J s technologies, etc. Utilize a cross-selling measure to existing customers as well as a measure of soliciting provision of new values to dormant customers in order to revitalize them. J&J has many attractive body care products in its product lines. As the focus of Dr. Ci:Labo is face care products, the J&J s product lines can complement our product lines, and it s possible to cross-sell as well as to stimulate new demand. 15

17 6. Numerical Targets in the Final Fiscal Year of the Business Plan Sales Target in the Final Fiscal Year by Business Type Business of Dr. Ci:Labo Domestic Overseas Esthetic-Salon Bisiness New brands and products Total Sales Target in the Final Fiscal Year by Business Type (Million) 41, , , ,000 49,000 Average annual growth rate 4.8 % % % Royalty income will be the main source of net sales in overseas operations. OTC business is not included in the performance targets. The figures will be included in the targets, once the size of acquisition, etc. is determined. Key performance indicators in the final fiscal year Target of operating income Target of net profits index Indicator for returns to stockholders Target in ROE 11,000 (Million) 7,500 (Million) % 20 % 16

18 Future outlook contained in these materials include outlook relating to the outlook for the future and forecasts based on a plan, as of September 14, It includes risks and uncertainties that performance outlook would fluctuate in the future due to changes in economic conditions, both domestically and overseas, industry trends, product supply and demand and progress made in new technologies. We assume no responsibilities with respect to any errors or omissions with respect to the data used in these materials. Therefore, in making an investment decision, no reader should act on the basis of any of the outlooks presented herein and make decisions regarding investments based upon your own judgment. In addition, with respect to comments contained herein regarding the outlook for the future, except when such procedures are required by law, changes may be made to such outlook without any advance notice. 17