Bridge Report:（9997）Belluna Fiscal Year ended March 2024

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

Company Information

Stock Information

*The share price is the closing price on June 13. Each number is based on the results of the fiscal year ended March 2024. ROE and BPS are those as of the end of the previous fiscal year.

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 fiscal year ended March 2024 etc.

Table of Contents

Key Points
1. Company Overview
2. Fiscal Year ended March 2024 Earnings Results
3. Fiscal Year ending March 2025 Earnings Estimates
4. Measures for Realizing Management Conscious of Capital Cost and Share Price
5. Conclusions
<Reference: Regarding corporate governance>

Key Points

• In fiscal year ended March 2024, sales decreased 1.9% and operating income fell 12.7% year on year. While the Property Business saw a significant increase in sales, the Apparel & Goods Business, which is the mainstay, experienced a decline in sales. Although gross profit margin improved, SG&A expenses increased. Regarding non-operating results, increased foreign exchange gains led to a 5.0% decrease in ordinary income and a 21.3% drop in net income. The year-end dividend was set at 10.25 yen/share, for a total of 20.50 yen/share per year, representing a year on year increase of 0.50 yen/share.

   

• For fiscal year ending March 2025, the company expects a 4.2% increase in sales and a 17.5% increase in operating income compared to the previous fiscal year. The company views the expansion of foreign tourism demand as an opportunity and plans to focus on the Property Business, particularly hotel development, as a key growth driver. In the Apparel & Goods Business, the goal is to recover the number of new customers to an appropriate level and also the number of repeat customers to make the profitable early. The projected dividend is 29.00 yen/share (including 14.50 yen/share at the end of the first half).

   

• Fiscal year ended March 2024 saw a decline in sales and profit mainly due to challenges in the Apparel & Goods Business, which negatively impacted the mail-order segment. Despite this, the Property Business is fully on truck, with numerous hotels being developed in popular tourist destinations like Hokkaido and Kyoto. The number of foreign visitors to Japan has already exceeded the pre-COVID-19 level, and further growth is expected. The ratio of the Property Business’ sales to total sales increased from 9.4% in the previous fiscal year to 14.9% in fiscal year ended March 2024, and its high-profit margin suggests it will significantly boost profit in the future.

   

• For fiscal year ending March 2025, a 17.5% increase in operating income is projected. The Property Business will continue to lead growth, while the Apparel & Goods Business is expected to improve through the increase of new customers and the improvement in efficiency. Although the Database Utilization Business with a high profit margin is projected to see a decline in both sales and profit in fiscal year ending March 2025 its future potential remains noteworthy. They announced measures for realizing business administration conscious of capital cost and share price, and enhanced shareholder return. Although their shareholder return may seem modest compared to other companies announcing bold returns, it is seen as a step toward correcting the current stock price, which has significantly dropped below a price-to-book ratio of 1.

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. In April 2022, following the market reorganization, the company got listed on the Prime Market of TSE.

1-2 Management Philosophy

◎Management Philosophy

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 Business Contents

(1) Segments
There are four major segments: “the Mail Order Business,” “the Kimono-Related Business,” “the Property Business,” and “Other Business.” The Mail Order Business is composed of five businesses: “the Apparel & Goods Business,” “the Cosmetics & Health foods Business,” “the Gourmet Business (including wine and sake),” “the Nurse-Related Business,” and “the Database Utilization Business.”

(Produced by Investment Bridge with reference to the earning results of FY 3/24 of Belluna.)

➀ Mail-Order Business
The mail-order business consists of five categories: "apparel & goods business," "cosmetics & health foods business," "gourmet business (including wine and sake)," "nurse-related business," and "database utilization business.”

* Initiatives to promote EC
As a result of the company's efforts so far, online sales have become the main route for acquiring new customers.
The company has also captured the "demand from people staying at home" caused by the spread of COVID-19, and its EC ratio has increased significantly. The company will continue to focus on marketing through social media to further strengthen its business.

①-１． Apparel & goods business (former general mail-order business)
◎ Overview
In addition to clothing, the company offers a wide variety of products, including fashion accessories and interior goods, for all generations. In order to provide higher quality items at reasonable prices, the company has established know-how in product development and efficient product management by utilizing data on its more than 22 million members. In addition to flyers and catalogs, the company is strengthening communication through web media such as those for PCs and smartphones.

(Store brand)

(Taken from the website of Belluna)

◎Attributes of subscribers
The number of subscribers is over 22 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 39.9 % of the population of this age group in Japan, indicating an overwhelming market share.

Characteristics of the Comprehensive Mail-Order Business Membership
It also serves as a lifeline for the elderly and those in rural areas who have difficulty shopping.

(Taken from the reference material of the company)

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.

①-2. Cosmetics & Health food Business
◎ Cosmetics
Ozio Corporation, which handles cosmetics, offers two brands: "Ozio" and "Nachu Life."
In addition, the company launched “Bab2,”which is a brand targeted at young people in April 2023.

「Ozio」
The company offers cosmetics such as face wash, lotion, and milky lotion, and supplements that are designed to be safe. Its eggshell membrane beauty serum "Beauty Opener," which includes eggshell membrane, which is composed of 18 types of amino acids, collagen, hyaluronic acid, and other substances that provide elasticity, luster, and moisture, is the No. 1 selling product in Japan.

「Nachu Life」
Nachu-Life mainly offers all-in-one cosmetics. In particular, the company offers products made mainly from plant ingredients that are gentle on the skin. The sales volume of Royal Jelly Mocchiri Gel, an all-in-one cosmetic for aging skin, exceeded 13 million products. The company is cultivating the overseas market, including Taiwan, for Nachu life and OZIO, and plans to expand its business also in Hong Kong, Singapore, and China.

◎Healthy Food Products
Refre, Inc., which deals in healthy food products and supplements, offers products that support users' health under the concept of "Tomorrow's Body, From Today."
The company carefully selects only the ingredients that have been verified in terms of origin, agricultural methods, data to prove safety, and nutritional analysis, and it conducts quality inspections many times after receiving raw materials.
They also conduct various analytical tests during the manufacturing process to thoroughly pursue product safety. In 2013, the company established the Refre Research Institute, which is working to improve product value, food safety, product quality assurance, and health hazard prevention through health food products.

(Taken from the website of Belluna)

①-3 Gourmet business (including wine and sake)
Gourmet Tomonokai, which deals in food and flowers, offers a nationwide selection of delicious foods, including prepared foods, marine products, sweets, and sake.
The company offers a variety of sales formats, including "hanpukai," in which products are delivered once a month; "single item" sales, in which customers can order what they want when they want it; and "gift" sales, in which products are delivered for mid-year gifts and Valentine's Day.

My Wine Club, a mail order service specializing in wine, offers a large selection of wines that are rare in Japan and imported directly from local markets. The variety, richness, and high quality of the products handled are well-received, and the company has been ranked No. 1 for 15 consecutive years (FY 2008-FY 2022) in a survey of domestic wine sales share.
The sales of sake, too, ranks the highest for a seventh consecutive year, and the annual sales quantity of Osechi (traditional New Year’s food) in the term ended March 2023 was 320,000 sets.

(Taken from the reference material of the company)

①-4 Nurse-Related business
The company offers a full line of nurses' wear, shoes, and goods to fully support nurses in their daily lives.
The company is the No. 1 domestic sales leader in mail-order for nurses. The company has two brands: "Nursery," with its strength in reasonable prices, and "Anfamie," with its wide selection of products and collaboration with other companies' brands and has a dominant share in the mail-order market for nurses.
The company also offers "Nurse Career Next" and "JOB STUDIO," career change support services for nurses.

(Taken from the website of Belluna)

①-5 Database Utilization Business
The company's business consists of enclosed package delivery services, mail-order agency services, and finance business.

Package delivery services
“Belluna Direct,” which utilizes the enormous customer database owned by Belluna, offers a service of enclosing sales promotion items, such as flyers and samples of client enterprises in products and catalogues. It is possible to narrow down target customers according to the needs of client companies. Accordingly, client companies can expect effective sales promotion.

Mail-order agency services
The company provides a series of functions, including Belluna's infrastructure and know-how, to companies engaged in mail-order sales.
The company handles stock at distribution warehouses, operates call centers, and sends products to customers in a comprehensive manner for clients. With this service, enterprises that plan to start mail order business do not require their own infrastructure, and can swiftly provide products and services at low prices.

Finance Business
It is a consumer finance business utilizing the database cultivated in the mail-order business. This business is operated by Sunstage Co., Ltd., which is a subsidiary of Belluna. Since the company offers loans to mail-order users, it is characterized by the fact that many of its customers are women, who are the main targets of mail-order sales. Another strength of this business is its ability to provide credit using mail-order usage history.

(Taken from the website of Belluna)

② Kimono-Related business
The company has opened stores selling kimonos and kimono-related products in shopping centers and malls.
The company also rents hakama for graduation ceremonies for university students.

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.
It is also endeavoring to cultivate future customers among young women who do not currently own kimonos through promotional campaigns.

(Taken from the website of Belluna)

③ Property Business
The company operates a real estate business that leases office buildings and commercial facilities and engages in value-added real estate revitalization and development, as well as a hotel business.

(Taken from the website of Belluna)

④ Other Business
Friendly Inc., which is a subsidiary of Belluna, operates the wholesale business targeted at department stores, co-ops, etc. by utilizing the know-how for planning products. It also operates insurance business.

1-4 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 22 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 39.9% 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.

Currently, the growth of the hotel business is noteworthy. In the term ended March 2023, sales and profit grew considerably, as the effects of the restrictions on transportation in Japan and the restrictions on entry to Japan decreased and the improved occupancy rate of newly opened hotels in the previous fiscal year. Also in the term ended March 2023, it showed continued growth, thanks to the easing of restrictions on activities inside and outside Japan, the recovery of demand from foreign visitors to Japan, and the contribution of newly opened hotels and hotels acquired through M&A.
In particular, “Jozankei View Hotel,” which is a spa and resort hotel with 647 guest rooms (one of the largest in Hokkaido) acquired in May 2021 and opened in August after renovation, received many awards in Hokkaido, where customers from inside and outside Japan are expected to increase, so the company thinks that it will contribute to the business significantly.

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.

1-5 Sustainability

The company established a “Sustainability Promotion Committee” as an organization for cross-sectoral discussions and promotion. Centering around this committee, the company clarifies issues to be tackled and accelerates activities for realizing a sustainable society.
In addition, it set seven major measures to be conducted, and executes sustainability-related measures while enlisting cooperation from stakeholders, including employees.

(Taken from the reference material of the company)

1-6 ROE analysis

*This figure is created by Investment Bridge Co., Ltd. based on disclosed materials.

The company targets ROE of 8.0% for the fiscal year ending March 31, 2025, the final year of its fifth management plan.

2. Fiscal Year ended March 2024 Earnings Results

2-1 Consolidated Business Results

*Unit: Million yen. Net income is net income attributable to owners of parent.

Sales and profit declined.
Sales decreased 1.9% year on year to 208.2 billion yen. Although the Property Business saw a significant sales increase of 54.4% year on year, and the Database Utilization Business also experienced sales growth, the Apparel & Goods Business, which is the mainstay, saw a 15.9% year on year decline in sales due to a slowdown in order receipt caused by price increases and a drop in the number of new customers due to the limiting of the number of printed media issued.
Operating income decreased 12.7% year on year to 9.78 billion yen. While gross profit margin improved 1.5 points, SG&A expenses increased. Ordinary income decreased 5.0% year on year to 11.83 billion yen due to increased foreign exchange gains. Despite recording gains from the sale of securities as a special profit, the recording of impairment losses led to a 21.3% year on year decrease in net income, which amounted to 5.83 billion yen.
The year-end dividend was set at 10.25 yen/share. Namely, the annual dividend was 20.50 yen/share, up 0.50 yen/share from the previous fiscal year.

2-2 Trend of each segment

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

(Taken from the reference material of the company)

◎Apparel & goods business
Both sales and profit declined.
The impact of the yen's depreciation and the soaring costs of raw materials and supplies led to an increase in procurement costs as well as the costs associated with printed media such as catalogs and flyers. To prioritize profitability, the company revised product prices and limited the quantity of printed media issued. Although the price increase led to a rise in the average spending per order, the number of orders showed a tendency to slow down. Additionally, the reduction in the issuance of printed media resulted in a decrease in the number of new customers and a decline in the number of active customers.

◎Cosmetics & Health foods Business
Slight decrease in sales, and increase in profit.
In the Cosmetics Business, sales and profit increased due to the favorable increase of new domestic e-commerce customers during the fresh period and the expansion of domestic wholesale sales. In the Health foods Business, sales decreased due to a decline in the number of regular mail-order customers. However, profit increased as a result of advertising initiatives focused on profitability.

◎Gourmet Business
Sales increased and profit declined.
The growth rate of sales slowed due to the resumption of dining out and drinking out as the COVID-19 pandemic subsided. In addition, procurement costs rose due to the weak yen and soaring prices of raw materials and supplies, and the cost of sales ratio worsened despite a revision of selling prices for some products.

◎ Nurse -Related Business
Sales decreased, while profit increased.
The company's strategy was to maximize profitability by reducing the number of print publications produced for each season and re-evaluating the number of publications themselves. The number of orders also showed an improvement trend due to the company's focus on receiving corporate orders.

◎ Database Utilization Business
Sales increased, but profit decreased.
In the insertion and accompanying service, the acquisition of new clients and the development of new services progressed smoothly. However, sales and profit decreased due to the reduction in the number of printed media issued and the decline in the number of product shipments in the Apparel & Goods Business. In the fulfillment service, although the acquisition of new clients was smooth, sales increased, but profit decreased due to rising labor costs and other expenses. In the finance business, bad debts were increasing, but sales and profit increased due to the smooth acquisition of new customers.

◎ Kimono -Related Business
Sales declined and profit grew.
In the kimono sales business, sales decreased due to the withdrawal of unprofitable stores, a decrease in the number of visitors to existing stores, and a decline in the purchase price per customer. On the other hand, profit increased due to continued cost-cutting efforts. In the costume rental business, sales and profit increased due to new initiatives such as expanding early order receipt sessions for hakama for graduation and offering pre-shooting services.

◎ Property Business
Both sales and profit increased significantly.
In the hotel business, the end of the COVID-19 pandemic led to a recovery in domestic travel, business trips, and foreign demand, resulting in higher occupancy rates and room rates for existing hotels both domestically and internationally. In addition, new hotels in Japan contributed to the full-year results, resulting in an increase in both sales and profit.

◎ Other Business
Both sales and profit declined.
In the restaurant business, sales and profit increased due to a recovery in demand for dining out following the end of the COVID-19 pandemic and the opening of new stores. In the apparel wholesale business, sales and profit decreased due to the continued decrease of client operations.

2-3 Financial Condition and Cash Flows

◎Main BS

*Unit: Million yen. Electronically recorded payables are included in trade payables.

*This figure is created by Investment Bridge Co., Ltd. based on disclosed materials.

Total assets increased 15.0 billion yen from the end of the previous term to 300.6 billion yen, as cash and deposits, property, plant and equipment, etc. rose. Total liabilities rose 5.3 billion yen from the end of the previous term to 164.5 billion yen mainly due to the increase in long -term interest-bearing debts. As retained earnings grew etc., net assets increased 9.7 billion yen from the end of the previous term to 136.1 billion yen. As a result, capital-to-asset ratio increased 1.1 points from the end of the previous term to 45.0%.

◎Cash Flows

*Unit: Million yen

*This figure is created by Investment Bridge Co., Ltd. based on disclosed materials.

Operating cash inflow increased due to higher depreciation expenses, and the cash outflow from investing activities shrank due to a reduction in expenditures for the acquisition of tangible fixed assets. As a result, the deficit of free cash flow decreased significantly.
The cash inflow from financing activities dropped due to a decrease in income from long-term borrowings. The cash position improved.

3. Fiscal Year ending March 2025 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 are expected to increase 4.2% YoY and operating income 17.5% YoY in FY 3/25.
For fiscal year ended March 2024, the company projects sales to rise 4.2% year on year to 217 billion yen, and operating income to increase 17.5% year on year to 11.5 billion yen. The company views the further expansion of demand from foreign visitors to Japan as an opportunity and will focus on the Property Business, centered around hotel operation, as a key growth driver. Additionally, the company will prioritize stable growth in specialized business areas less affected by consumer sentiment, such as the Cosmetics & Health Foods Business, Gourmet Business, and Nurse-Related Business. In the Apparel & Goods Business, the company aims to recover the number of new customers to an appropriate level and improve repeat rates to enhance business scale and efficiency, targeting early profitability.
The dividend amount will increase 8.50 yen/share year on year to 29.00 yen/share (including an interim dividend of 14.50 yen/share). The forecast dividend payout ratio is 35.1%.

From fiscal year ending March 2025, a new grouping method will be used as shown belo

(Taken from the reference material of the company)

The following section describes the budget for each segment.
The Property and Hotel Business will be the main driver. Many businesses are expected to see increases in both sales and profit.

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

【3-2　Future Growth Businesses】

≪3-2-1 Property & Hotel Business≫
For fiscal year ending March 2025, the company aims for sales of 36.6 billion yen (up 14.3% year on year) and an operating income of 5.35 billion yen (up 25.5% year on year).
Strengths of the Hotel Business
Low-Cost Operation System
(1) Multitasking initiatives
(2) Company-wide participation in low-cost operations

Jozankei View Hotel: Opened in August 2021, 647 rooms	Kyoto Granbell Hotel: Opened in July 2017, 105 rooms
Susukino Granbell Hotel: Opened in September 2021, 300 rooms	Other Hotels

(Taken from the reference material of the company)

Hotels Scheduled to Open in FY 3/26:
■SAPPORO HOTEL by GRANBELL: Scheduled to open in April 2025, 605 rooms

(Taken from the reference material of the company)

■ Otaru Granbell Hotel: Scheduled to open in July 2025, 159 rooms

(Taken from the reference material of the company)

Belluna Group Hotel List

(Taken from the reference material of the company)

≪3-2-2 Specialized Mail-Order Business≫
For fiscal year ending March 2025, the company aims for sales of 60.99 billion yen (up 1.4% year on year) and an operating income of 2.65 billion yen (up 5.9% year on year).

【Cosmetics & Health Foods Business】
・Overview and Characteristics of the Business
A leading company in anti-aging, addressing skin concerns for people in their 40s and beyond.
Strengths include the ability to collect customer reviews, a robust production network, and a fast-paced product development process.
The company aims to expand the domestic market while cultivating overseas markets.
Currently, operations are established in Taiwan, Hong Kong, and Singapore. The company plans to further expand into China, Malaysia, Vietnam, and Thailand to drive growth.
In addition to expanding mail-order sales, the company is focusing on increasing wholesale distribution to drugstores and other retail outlets.

(Taken from the reference material of the company)

【Gourmet Business (Gourmet)】
・Overview and Characteristics of the Business
The company sells club memberships, individual food items, gifts such as mid-year and year-end gifts, osechi (New Year's dishes), flowers, and Japanese sake. Their product lineup is basic compared to competitors. Their strengths include the capability of providing individual products, including cost performance.
Has been No.1 in Japanese sake mail-order sales for seven consecutive years.
The unification of brand development and promotion across categories is insufficient. They focus on strengthening cross-business brand development. They aim to increase brand fans and improve KPIs such as the number of active customers, repeat rate, and lifetime value (LTV) by adding value through information and content and offering entertainment through food.

(Taken from the reference material of the company)

【Gourmet Business (Wine)】
・Overview and Characteristics of the Business
Their strengths include the capability of proposing a variety of package deals for light wine drinkers and cost performance. They use a promotional method combining printed materials and e-commerce, characterized by low entry barriers and high repeat rates.
The company has been No.1 in wine mail-order sales for 15 consecutive years.
(1) In fiscal year ended March 2024, they sold 13 million bottles of wine.
(2) In addition to wine, they will handle whiskey, gin, and other products.
(3) Launched the high-end wine brand "ELEVIN" from the previous fiscal year, with sales of 200 million yen, and aim to expand to a scale of 1 billion yen in the future.
They aim to maintain and expand its overwhelming No.1 position in wine mail-order sales.

(Taken from the reference material of the company)

【Nurse-Related Business】
・Overview and Characteristics of the Business
Primarily a B2C business targeting nurses through mail-order.
The two brands, Anfamie and Nursery, occupy about 60% of the mail-order market share for nurses.
The company holds a dominant No.1 recognition.
As the growth of the nurse population slows, the company aims to expand profitability rather than just sales growth.
They aim to expand the B2B model with growth potential, and will form partnerships with companies for home nursing and nursing care facilities.

(Taken from the reference material of the company)

≪3-2-3 Apparel & Goods Business≫

(Taken from the reference material of the company)

Strategies for Maximizing Revenue Efficiency
1. Adapting to Changing Times
① Products
(1) Revising products, visuals, and copywriting
(2) Enhancing and evolving pricing strategies
2. Responding to Changes in the Times (Paper, Printing Costs, and Exchange Rates)
② Marketing
(1) Reviewing the collection, utilization, and retrieval of customer lists
(2) Enhancing the capability of collecting customer lists, with good results starting to appear
3. Low-Cost Operations

≪3-2-4 Database Utilization Business≫
1. Insertion and Accompanying Services
A service that sends clients' flyers along with catalogs and products. The number of catalogs issued is crucial,
with many handled by other mail-order companies.
2. Task-undertaking Services
Business of undertaking logistics and call center operations. They can utilize surplus logistics centers and call centers.
3. Finance
They focused on acquiring senior customers with low default rates to differentiate from competitors, and this business is progressing as planned.
Acquisition of new customers through the Internet, which is more efficient than paper media, is performing well.

4. Measures for Realizing Management Conscious of Capital Cost and Share Price

【4-1 Improvement of Performance】

(1) To achieve the budgetary objectives for FY 3/25

【4-2 Management conscious of capital efficiency】

(1) Management with a focus on achieving an ROE of 10% or higher
(2) Scrapping businesses that are not expected to be profitable
(3) M&A of companies with synergy and future potential

【4-3 Enrichment of Shareholder Return】

(1) Clarification of the Return Policy
(2) Consideration of share buybacks aimed at improving capital efficiency
The company has positioned profit returns to shareholders through enhanced corporate value as one of its key priorities and has consistently provided continuous and stable dividends. In May, taking into account shareholder expectations, the company's business performance, and capital situation, the company clarified its shareholder return policy to further enhance shareholder returns as follows:
・To pay dividends with a target consolidated dividend payout ratio of 35%, with a minimum Dividend on Equity (DOE) of 1.5%.

<Dividend status>

<Shareholder benefits>

*The coupons can be used for a stay or dinner at a hotel (cannot be used for lunch or a one-day hot spring), dinner at a restaurant (cannot be used for lunch), and the fee for playing golf at Obatago Golf Club on Saturday or Sunday. There is a possibility that the special discount coupon will become unusable at some facilities.

・Consideration of share buybacks aimed at improving capital efficiency

【4-4 Expansion of Investor Dialogue】

(1) In addition to holding interim and year-end financial results briefings, the company will hold analyst briefings for financial results in 1Q and 3Q.

5. Conclusions

In fiscal year ended March 2024, the mail-order business experienced a downturn in sales and profit, primarily due to challenges in the Apparel & Goods Business. Despite this, the Property Business is fully on track, with numerous hotels being developed in popular tourist destinations such as Hokkaido and Kyoto. The number of foreign visitors to Japan has already exceeded pre-COVID-19 levels, and further growth is expected. The sales composition ratio of the Property Business increased from 9.4% in the previous fiscal year to 14.9% in fiscal year ended March 2024. With its high-profit margin, the Property Business is poised to significantly boost future profits.
For fiscal year ending March 2025, a 17.5% increase in operating income is expected, with the Property Business continuing to lead growth. In the Apparel & Goods Business, improvements are anticipated through the increase of new customers and efficiency enhancements. Although the high-margin Database Utilization Business is projected to see a decline in both sales and profit in fiscal year ending March 2025, its future developments remain worth watching.
The company announced measures aimed for business administration conscious of capital cost and share price and enhanced shareholder returns. Although the shareholder returns may seem modest compared to other companies announcing bold returns, it is seen as a step toward correcting the current share price, which has significantly dropped below a price-to-book ratio of 1.

<Reference: Regarding corporate governance>

◎Organization type, and the composition of directors and auditors

◎Corporate Governance Report
Last Update: June 30, 2023.

<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.

<Reason for Non-compliance with the Principles of the Corporate Governance Code (Excerpts)>
Belluna follows all of the principles of the Corporate Governance Code.

<Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)>
The following is based on the codes revised in June 2021.