Consolidated Results for the First Three Quarters of...
Transcript of Consolidated Results for the First Three Quarters of...
January 13, 2011Unihair Co., Ltd.
Consolidated Results for the First Three Quarters of Fiscal 2011, ended November 30, 2010
This handout contains forward-looking statements that are based on management’s estimates, assumptions and projections at the time of presentation.
A number of factors could cause actual results to differ materially from expectations. Amounts less than a full unit are omitted, and percentages are rounded to one decimal place.
Progress on Medium-term Management Plan
Medium-term Management Plan Roadmap: All Domestic Operations
1
Fiscal 2011 Fiscal 2012 Fiscal 2013
Bring faltering performance to an end and return to profitability through the merger of Aderans, Fontaine into Aderans Holdings.
Boost productivity through personnel reassignments.
Promote business improvement to raise productivity and enhance efficiency.
Selectively invest in promising areas of the domestic women’s market as well as new marketing channels to attract more interest from women.
Apply a scrap-and-build approach to salons, depending on performance contributions, and foster higher profitability.
Key actions are described on the following page.
All Domestic Operations
• Executed three-company merger designed to eliminate duplicate functions, accelerate decision-making processes and make the structure of executive responsibility more transparent.
• Changed company name to Unihair Co., Ltd.• Relocated head office—in May—to facilitate the creation of a global headquarters and make three-company merger
as effective as possible.
Medium-term Management Plan Roadmap: All Domestic Operations
Three-Company Integration
Sales Recovery
Improved Efficiency
• Prepared the organization/human resources structure for the three-company merger.• Closed the Niigata office.
• Seeking stronger business structure to underpin recovery in sales. Established Sales Coordination Division. • Integrated organization/human resources at Fontaine and Aderans by shifting them to the Eastern Japan Sales Division and Western Japan Sales Division, respectively. • Promoting conversion of salons to Fontaine Couture format, remodeling existing salons and maintaining scrap-and-build process to create an efficient, streamlined salon network.
Cost-Reduction Projects
• Working to eliminate excess and cut back-office costs through three-company integration.• Trimming costs through head office relocation, along with reassignment of personnel from back-office divisions to
marketing divisions.• Enhancing efficiency and cutting costs by establishing optimal structure for production and distribution.• Reducing costs through centralized purchasing system.• Integrating and improving IT systems.
Actions Launched and/or Completed during First Three Quarters of Fiscal 2011
2
Fiscal 2011 Fiscal 2012 Fiscal 2013
Halt the dwindling number of clients by promoting products and services at flat rates.
Expand client base in the medium term through flat rate options and maintain stable profits.
Explore the potential of total hair services highlighting Bosley’s hair-transplant techniques and develop this business.
Promote business by reinforcing joint activities with affiliated clinics.
Aderans and Bosley (Men’s market)
• Reinforced measures to correct deviation from established in-house practices for sales to repeat clients.
• Worked to improve customer service.
Rekindled demand from
one-time clients
Expanded domestic client
base
• Executed new advertising campaigns to improve the Aderans brand image.• Presented clear pricing with flat-fee Aderans Hair Club.• Launched new products: Aderans Premium Club and Aderans Gold• Trade-in Campaign
Actions during First Three Quarters
Medium-term Management Plan Roadmap: Aderans
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Fiscal 2011 Fiscal 2012 Fiscal 2013
Enrich product selection to facilitate access to range of wigs, from ready-made to custom-made, throughout the salon network.
Execute effective advertising campaigns to improve the Fontaine brand image and have it permeate the market.
Enrich product lineup based on market needs.
Fontaine (Women’s market)
• Number of Fontaine Couture-converted salons: 54 salons added during first three quarters for a total of 72 salons, as of November 30, 2010.
Enhanced visibility of Fontaine brand
Actions during First Three Quarters
Significantly expanded number of Fontaine Couture salons
• Continuous advertising on television to boost Fontaine profile.• FONTAINE flagship salon opened in Ginza, Tokyo, on November 25.
Expanded depth of demand(Age range: 60s to 80s)
Medium-term Management Plan Roadmap: Fontaine
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Introduced a new wig • Launched new ready-made wig, Ready-made fluffy
• Ran television commercials highlighting the appealing features of Fontaine wigs.
• Held try-on events.
Medium-term Management Plan Roadmap: Fontaine
FONTAINE flagship salon featuring ladies’ wigs opened in Ginza, Tokyo, on November 25
Floor Space 411.64 m2 (First floor: 193.13 m2 , second floor: 218.51 m2 )
Number of Staff 18
Main Products Custom-made and ready-made wigsMore than 270 styles available.
Facilities Three wig setting rooms, two counseling rooms, one scalpcareroom, and four VIP rooms
Price Range ¥1,890 (Poste (postiches, or small hairpieces) and ready-made wigs) ~ ¥1.26 million (Fontaine Premium and custom-made wigs) *Prices include tax
Main Target Women, primarily those 50 and older, who see wigs as a fashion accessory to have fun with. Women, local or just visiting, who like shopping in Ginza.
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Fiscal 2011 Fiscal 2012 Fiscal 2013
Boost sales to beauty and hairdressing salons.
Boost sales of ladies’ wigs for medical use.
Boost sales to girls—‘tweens and teenagers—and women in their 20s, who are particularly fashion-conscious.
New Businesses
• Assigned staff with business expansion in mind.
• Trained people to take charge of projects.
• Expanded Loves Change salon network.
Actions during First Three Quarters
Medium-term Management Plan Roadmap: New Businesses
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Medium-term Management Plan Roadmap: Overseas OperationsFiscal 2011 Fiscal 2012 Fiscal 2013
Promote fashion wig retailing operations.
Market research
Europe
North America
Improve profitability through consolidation of U.S. companies under one roof and through organizational restructuring.June
Integrate brands.
Promote one-stop solutions hinging on the Bosley brand.
Explore potential of business presence in South America.
Start business activitiesin South America.
Prepare to establish European headquarters.
Establish European headquarters, which will centralize functions and strengthen marketing capabilities.
Undertake market research and prepare for the start
of Bosley business.Launch activities in key markets, starting with Sweden.
Integrate brands and products.
Promote fashion wig retailing operations.
Consider entry into markets where the Group has yet to establish a presence.
Gradually begin operations in other countries with demand potential.
Worldwide Draft market entry strategy for ARI’s hair-regeneration technique
Men
Women
Men
Women
7Key actions are described on the following page.
• Integrated hair-transplant business (under Bosley Inc.) and wig business (under Aderans Hair Goods, Inc.)
• Undertook brand integration/elimination and centralization of logistics operations.
• Aderans Research Institute completed first protocol of Phase 2 FDA (U.S. Federal Drug Administration) clinical trials. Delivering solid results.
Medium-term Management Plan Roadmap: Overseas Operations
Actions during First Three Quarters of Fiscal 2011
North America
Europe
• Implemented incentive scheme to encourage growth.• Held first global conference on supply chain management and information technology
on August 2 and 3 at Tokyo head office as part of preparations to integrate European operations according to function.
• Undertook market survey on Bosley business and began looking at expansion into uncharted areas.
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Medium-term Management Plan Roadmap: Overseas Operations
Fiscal 2011 Fiscal 2012 Fiscal 2013
The Rest of Asia
China
July onward
Prepare for the start of services. Begin services.
Execute thorough review of business to bring swift return to profitability.
Explore possibility of turning Bosley into a viable business in South Korea.
Explore potential of Bosley business in China.
Withdraw from markets where the potential for a return to profitability is unlikely.
September
Promote fashion wig retailing operations in Taiwan and Singapore.
Prepare for and establish Chinese headquarters.
Raise the curtain on the ladies’ fashion wig business with the opening of a flagship salon.
Men
Women
Men
Women
Expand sales through aggressive salon development (more than 90 locations over he next three years).
9Key actions are described on the following page.
Medium-term Management Plan Roadmap: Overseas Operations
Actions during First Three Quarters of Fiscal 2011
China
The Rest of Asia
• Recruited team of professionals for business in China and established headquarters structure.• Formed business alliance for Bosley business with Huashan Hospital Jingan Branch, attached
to Fudan University.• Opened FONTAINE flagship ladies’ wig salon in Shanghai, China, on September 28.• Opened two locations of Loves Change ladies’ wig salons in Shanghai, China, on December
20.
• Men’s custom-made wig business shrinking while ladies’ fashion wig business expanding, especially in Singapore and Taiwan.
• Poorly performing salons in Thailand, Malaysia and South Korea were closed.
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OPA salon Yuyuan salon
Consolidated Results(March 1, 2010 to November 30, 2010)
Consolidated Results for First Three Quarters of Fiscal 2011
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters
YOY change
(¥)
YOYchange
(%)
Net sales 43,533 35,005 -8,528 -19.6
Cost of sales 9,943 7,090 -2,844 -28.6
Gross profit 33,599 27,915 -5,684 -16.9
SGA expenses 35,342 34,062 -1,280 -3.6
Operating loss -1,742 -6,147 -4,405
Operating income ratio - - -
Ordinary loss -1,738 -6,297 -4,559
Extraordinary loss -1,201 -5,205 -4,004Income before income taxes -2,938 -11,502 -8,564
Income taxes 2,315 6,223 3,908
Net loss -5,240 -17,725 -12,485
Capital expenditures 1,590 1,516 -74
Depreciation/Amortization 1,768 1,463 -305
EBITDA 26 -4,684 -4,710
Cash balance 11,208 11,907 699
(Millions of yen, %)
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Consolidated Results for Third Quarter of Fiscal 2011
Fiscal 2010Third Quarter
Fiscal 2011Third Quarter
YOY change (¥)
YOYchange (%)
Net sales 13,129 11,344 -1,785 -13.6%
Cost of sales 3,272 2,035 -1,237 -37.8%
Gross profit 9,856 9,308 -548 -5.6%
SGA expenses 11,412 10,939 -473 -4.1%
Operating loss -1,555 -1,630 -76
Operating income ratio - -
Ordinary loss -1,648 -1,603 44
Net loss -1,627 -12,262 -10,636
(Millions of yen, %)
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13,129
11,344
-92 -805
-136
43,533
35,005
-1,747
-2,309
-2,422
-2,050
Businesses from which the Group has withdrawn
Operations in North America
Three-Quarter Status• The decrease in sales reflects efforts to correct a deviation from established in-house practices for sales to repeat clients and the absence of contributions from businesses from which the Group withdrew.• The drop in sales began showing sign of ending, mainly due to enhanced brand image, new product releases, and rapid conversion to Fontaine Couture salon format.
Sales to women
Year-on-Year (First Three Quarters)
13
Consolidated Net Sales for First Three Quarters of Fiscal 2011
(Millions of yen)(Millions of yen)
Fiscal 2010Third Quarter Only
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters
Fiscal 2011Third Quarter Only
Impact of efforts to prevent sales outside established parameters (rough estimate)
Year-on-Year (Third Quarter Only)
Businesses from which the Group has withdrawn
Operations in North America
Sales to women
Impact of efforts to prevent sales outside established parameters (rough estimate)
-752
600
-1,555-1,631
-675
-6,147
-1,742
-1,047
-1,640
-1,847
120
Gross profit on sales outside established sales practices
Year-on-Year (First Three Quarters)
During First Three Quarters (March 1 to November 30) • Lower income due to emphasis on adherence to established sales practices and lack of sales from businesses from which the Group withdrew.• Lower SGA expenses lightened the weight of the operating loss.
In Third Quarter Only (September 1 to November 30) • The operating loss is showing signs of reversing.
SGA expenses in businesses from which the Group has withdrawn
Lower gross profit
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(Millions of yen)(Millions of yen)
Fiscal 2010Third Quarter Only
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters
Fiscal 2011Third Quarter Only
Consolidated Operating Loss for First Three Quarters of Fiscal 2011
Year-on-Year (Third Quarter Only)
Decrease in sales to women
Decrease in sales from other businesses
Lower SGA expenses
212 162
1,892
216
-39-77
2,042
729
7,545
556
197-117
-1,309
6,490
Fiscal 2011Third Quarter Only
Business Results (Aderans) for First Three Quarters of Fiscal 2011
Year-on-Year Sales (First Three Quarters)
During First Three Quarters• Efforts to prevent sales outside established parameters led to lower sales. • Customer transactions down, owing to increase in Aderans Hair Club contracts.
In Third Quarter Only• Department store corners and directly operated salons, mainly those
specializing in ready-made wigs, secured higher sales on the switch to Fontaine Couture format.
• Steady increase in sales to repeat customers.
Repeat ClientsNew Clients
15
(Millions of yen)(Millions of yen)
Fiscal 2010Third Quarter Only
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters
Impact of efforts to prevent sales outside established parameters (rough estimate)
Decrease in sales to new clients
Increase in sales to repeat clients
Three-Quarter Status: Marketing strategies took hold, brand image improved, and sales to new and repeat customers are showing signs of recovery.
Year-on-Year Sales (Third Quarter Only)
8,274
7,047
2,2042,104
Impact of efforts to prevent sales outside established parameters (rough estimate)
Decrease in sales to new clients
Increase in sales to repeat clients
96
139
143
186
177
247
206
222
230
229
208
171
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Key Business Indicators (Aderans)
Number of Aderans Hair Club Contracts(Year-on-year change (%))
Television commercials prompted an increase in the number of contracts for the flat-rate Aderans Hair Club.
16
13,121
5,088
9,709
362
-2,412-1,000
5,450
3,560
1,852
3,238
201186-523
2,039
Impact of efforts to prevent sales outside established parameters (rough estimate)
Decrease in sales of custom-made wigs at Fontaine salons
Increase in sales of ready-made wigs for department stores and directly operated salons
During First Three Quarters• Impact of efforts to prevent sales outside established parameters (rough estimate)
streamlined sales.• Sales of custom-made wigs declined. (Sales to new clients down ¥1.8 billion, and
to repeat clients, down ¥600 million)• Sizzling hot days led to fewer sales in the summer.
Decrease in sales of custom-made wigs for new clients
In Third Quarter Only• Department store corners and directly operated salons, mainly those
specializing in ready-made wigs, secured higher sales on the switch to Fontaine Couture format.
• Steady increase in sales to repeat customers.
Ready-madeCustom-made
17
(Millions of yen)(Millions of yen)
Fiscal 2010Third Quarter Only
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters
Fiscal 2011Third Quarter Only
Business Results (Fontaine) for First Three Quarters of Fiscal 2011
Increase in sales of ready-made wigs
Increase in sales of custom-made wigs for repeat clients
Three-Quarter Status: Sales showing signs of bottoming out, as marketing strategies take hold, brand recognition climbs higher, Fontaine Fluffy attracts more attention, more Fontaine Couture salons are open, and telephone inquiries are rising.
Year-on-Year Sales (First Three Quarters) Year-on-Year Sales (Third Quarter Only)
5,413 5,27718,209
15,159
Key Business Indicators (Fontaine)
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Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.Aggregate number of salons converted to
Fontaine Couture format20 24 24 26 30 37 46 62 72 78
Year-on-Year Change (%) in Sales through Department Stores/Directly Operated Salons and Fontaine Couture Salons
Update on Sales at Fontaine Couture-Converted Salons
• Steady expansion in sales at Fontaine Couture salons substantiated by 119% jump in December 2010 over corresponding month a year earlier.
• Sales at salons other than Fontaine Couture locations also increased, up 110% year-on-year as of December 2010.
5,693
2,005
5,751
362-1,130
-429
750
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters
1,882
620
1,886
134-130
-620
MHR Bosley
19
(Millions of yen)(Millions of yen)
Fiscal 2010Third Quarter Only
Fiscal 2011Third Quarter Only
Business Results (Bosley) for First Three Quarters of Fiscal 2011
Year-on-Year Sales (First Three Quarters) Year-on-Year Sales (Third Quarter Only)
During First Three Quarters• Closure of some MHR sales offices, due to merger, led to lower revenues.• Bosley increased revenues.
Three-Quarter Status: Earnings significantly improved by merger and reduced SGA expenses.
In Third Quarter Only• Bosley steadily expanded revenues.
7,698
6,501 2,502
Closure of some MHR
sales offices
Bosleyincreased revenues
Bosleyincreased revenues
Closure of some MHR sales offices
Yen appreciation
erodes converted amount.
Yen appreciation
erodes converted amount.
-302
1
133
MHR Bosley
20
(Millions of yen)(Millions of yen)
Fiscal 2010Third Quarter Only
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters Fiscal 2011
Third Quarter Only
Business Results (Bosley) for First Three Quarters of Fiscal 2011
During First Three Quarters
• Rebounded into the operating black, thanks to merger and successful review of SGA expenses.
In Third Quarter Only• Higher revenues underpinned favorable operating income.
Year-on-Year Operating Income (First Three Quarters)
Year-on-Year Operating Income(Third Quarter Only)
3
84
71
588
836
752
64
531
-28
-120
218
2,008
2,5132,372
221
1,881
-115
-381
Asia North America Europe
21
(Millions of yen)(Millions of yen)
Fiscal 2010Third Quarter Only
Fiscal 2010First Three Quarters
Fiscal 2011First Three Quarters
Fiscal 2011Third Quarter Only
Business Results (Overseas Wig Business) for First Three Quarters of Fiscal 2011
Year-on-Year Sales (First Three Quarters) Year-on-Year Sales (Third Quarter Only)
During First Three Quarters• Favorable developments in all markets.
4,7404,474
1,495Yen appreciation erodes converted amount.North America -125Europe -256
North America -2Europe +115Asia+3
1,347Yen appreciation erodes converted amount.North America -37Europe -83
North America -20Europe -1Asia-7
• Domestic sales (Aderans and Fontaine) on a recovery trend, compared with corresponding period a year ago. • Monthly performance in Japan in December was in the black.
Full-year forecast
Current status
• Aderans sales will be slightly lower than the target announced on October 14, 2010.
• The Fontaine salon business, which hinges on custom-made wigs, appears to be on an uptrend, thanks to television commercials highlighting product features and an increase in try-on events, but sales are now expected to fall below the original target. The revised target is based on third-quarter results.
• The Fontaine department store and directly operated salon business, which focus on ready-made wigs, delivered a 10%-plus year-on-year improvement in sales, thanks to conversion to the Fontaine Couture format, the debut of Ready-made Fluffy, and television commercials encouraging a salon visit. But sales are not projected to reach the level previously announced, prompting this downward revision.
Original Target and Revised Target
Aderans Fontaine
Net Sales
Other domestic operations
22
(Millions of yen)
Fiscal 2011(Original Target announced on October 14, 2010)
Fiscal 2011(Revised Target)
37,535 33,000
-169-3,297
-1,067
Difference between Targets Announced October 15 and Subsequent Revisions
23
-4,533
-1,067
-1,542
-1,755
-335
-1,420
-3,297
-21
-148
-169
Difference between Forecasts
(B-A)
7,141
16,950
11,240
5,710
24,091
9,754
905
10,659
Fiscal 2010Second Half
(Actual)(C)
33,00037,533Total Domestic Sales
2,6003,667Other domestic operations
4597,6009,142Department stores and directly operated salons
-3,75013,20014,955Sub Total
-1,6409,6009,935Repeat clients
-2,1103,6005,020New clients
-3,29120,80024,097Fontaine
-8548,9008,921Repeat clients
-205700848New clients
-1,0599,6009,769Aderans
Second-Half Revised Forecast
(B)
Second-Half Forecast
(Announced October 14, 2010)
(A)
Difference(B-C)
Fiscal 2011
Fiscal 2011 Full-Year Consolidated Performance Forecast
Fiscal 2011(Reference)
Fiscal 2010(Actual)
Revised Full-Year Forecast
Original Targets
(Announced June 10, 2010)
Difference
Revised Targets (Disclosed October 14,
2010)
Difference
Net sales 47,800 56,000 -8,200 52,300 -4,500 57,355
Cost of sales 10,000 11,000 -1,000 10,500 -500 12,867
Gross profit 37,800 45,000 -7,200 41,800 -4,000 44,488
SGA expenses 44,600 47,900 -3,300 45,700 -1,100 49,753
Operating loss -6,800 -2,900 -3,900 -3,900 -2,900 -5,264
Ordinary loss -6,900 -2,700 -4,200 -4,000 -2,900 -5,351
Extraordinary loss -6,700 -4,600 -2,100 -3,300 -3,400 -4,258
Income before income taxes -13,600 -7,300 -6,300 -7,300 -6,300 -9,609
Income taxes 6,200 -2,400 8,600 -2,400 8,600 250
Net loss -19,800 -4,900 -14,900 -4,900 -14,900 -9,851
EBITDA -4,509 -107 -4,365 -1,476 -2,987 -2,884
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(Millions of yen)
Unihair Stock Price Movement
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40th General Meeting of Shareholders (Current director system begins)
Announced treasury stock purchase. Announced DIO management reforms.
Tadao Otsukibecomes president of Aderans Holdings.
41st General Meeting of Shareholders
Unihair is born.
Revised performance and dividend forecasts.
Announced basic agreement on business alliance in hair transplant business in China.
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Announcement of medium-term management plan