Bridge Report:（9997）Belluna First Half of Fiscal Year ending March 2025

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

Company Information

Stock Information

*The share price is the closing price on December 12. Each number is based on the results of the first half of the fiscal year ending March 2025. 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 first half of the fiscal year ending March 2025 etc.

Table of Contents

Key Points
1. Company Overview
2. First Half of Fiscal Year ending March 2025 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 the first half of the fiscal year ending March 2025, sales and operating income grew 1.1% and 15.3%, respectively, year on year. The Property Business contributed and the sales in the business of Apparel & Goods increased, offsetting the decline in sales of the business of Cosmetics and Health Foods and the business related to Kimono. In terms of profit, operating income margin rose year on year from 3.2% to 3.7%, as they curtailed the augmentation of SG&A expenses. As forecast by the company, they have raised the interim dividend by 4.25 yen/share year on year to 14.50 yen/share.

   

• There is no revision to the full-year forecast, which calls for a 4.2% year on year increase in sales and a 17.5% year on year rise in operating income in the fiscal year ending March 2025. 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. In the Apparel & Goods Business, the company aims to make the business profitable by returning the number of prospective customers to an appropriate level and recovering repeat rate. There is no change to the dividend, either, so they plan to pay a year-end dividend of 14.50 yen/share.

   

• In the first half of the fiscal year, sales grew and operating income rose by double digits as the Property Business kept contributing. The progress rate of operating income in the Property Business toward the full-year forecast reached 87.6%, and the operating income is expected to exceed the full-year forecast significantly, as there are still many foreign visitors to Japan. The sales of the Property Business accounted for 17.3% of total sales in the first half (15.5% in the first half of the previous fiscal year). As the ratio of sales of the Property Business with a high profit margin increases, it contributes to profit further, so this business is expected to contribute to the medium-term profit growth trend. The Database Utilization Business, which also has a high profit margin, is projected to see decreases in sales and profit in the fiscal year ending March 2025. On the other hand, the loss in the business of Apparel & Goods augmented in the first half, which is an issue. In the second half of the fiscal year, the sales of heavy clothes will increase and there will be some profit, but it is forecast to be not enough to cover the loss in the first half. They hope to make this business profitable, by increasing new customers and streamlining business operations. In addition, the business of Cosmetics and Health Foods saw decreases in sales and profit in the first half of the current fiscal year, showing another issue to be addressed.

   

• At the beginning of the fiscal year, they announced initiatives for realizing business administration conscious of capital cost and stock price, and enriched shareholder return. PBR is much less than 1 and PER is low, so the stock of Belluna seems to be undervalued, when the trend of the rapidly growing Property Business is considered.

   

   

   

1. Company Overview

In the growth domain, they operate the businesses related to Property & Hotels, Cosmetics & Health Foods, Gourmets, and Nurses. In the sustainable domain, they operate the businesses related to Kimono and Apparel & Goods. Moreover, they expand the business related to Database Utilization. In the Mail Order Business, which has been the mainstay, stable profitability, growth potential, etc. are their strengths, as they target mainly women in their 40s and 50s. In recent years, they have been enhancing the Hotel Business. 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

Until the fiscal year ended March 2024, their major segments were the “Mail Order Business,” the “Kimono-Related Business,” the “Property Business,” and “Other business.” Furthermore, the Mail Order Business was composed of the 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.” In the fiscal year ending March 2025, they grouped 8 segments into the “growth domain,” where they will pursue growth potential and profitability, and the “sustainable domain,” where they focus on stable profitability, continuity, and sociality. They aim to allocate managerial resources to them and operate the businesses in an optimal manner.

(Taken from the reference material of the company)

(Produced by Investment Bridge with reference to the earning results of FY 3/25 1H of Belluna.)

①Growth area
The growth area consists of four categories: "Property & Hotel Business," "Cosmetics & Health Foods Business," "Gourmet Business (including wine and sake)," and "Nurse-Related Business."

①-1. Property & Hotel 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)

①-2. Cosmetics & Health Foods 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.

(Taken from the website of Belluna)

「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 Refre)

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 16 consecutive years (FY 2008-FY 2023) in a survey of domestic wine sales share. Sake (Japanese liquor) ranked first for the 8th consecutive year.

(Taken from the website of Belluna)

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," recruitment services for nurses.

(Taken from the website of Belluna)

② Sustainable Domain
In the sustainable domain, they operate the three businesses: the “Apparel & Goods,” “Kimono-Related,” and “Other” businesses.

②-1 Apparel & Goods Business
◎ Outline
In addition to clothes, they provide a variety of products, including fashion items and interior goods, for each generation. In order to provide items of higher quality at reasonable prices, they have established the know-how to develop products utilizing data of over 23 million members and manage products efficiently. 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 23 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 customers have been grouped into some segments according to age. The company offers products tailored for the preferences and needs of each age group.

②-2　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.

(Taken from the website of Belluna)

In addition to “BANKAN” and “Wamonoya,” 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.

②-3 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.

③ 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. Compared with the paper media, the online media attracted new customers efficiently.

(Taken from the website of Belluna)

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 23 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 Database Utilization 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 2024, 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 enhanced the initiatives for completing major (material) missions. The company plans to help realize a sustainable society by improving the value of the corporate group, reducing environmental burdens, and offering value to society.
In addition, it set seven major measures to be conducted, and executes sustainability-related measures.

(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. First Half of Fiscal Year ending March 2025 Earnings Results

2-1 Consolidated Business Results

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

Sales and operating income grew.
Sales grew 1.1% year on year to 97.1 billion yen. The sales of the Property Business increased 12.1% year on year, and the sales of the core businesses, including the Apparel & Goods and Data Utilization Businesses, grew, offsetting the declines in sales of the Cosmetics & Health Foods Business and the Kimono-Related Business.
Operating income rose 15.3% year on year to 3.57 billion yen. Gross profit margin rose 0.2 points, and operating income margin increased year on year from 3.2% to 3.7%, thanks to the curtailment of the augmentation of SG&A expenses. Regarding non-operating performance, exchange gain decreased, interest paid increased, and ordinary income declined 4.2% year on year to 4.14 billion yen. Quarterly net income decreased 21.4% year on year to 2.56 billion yen, due to the drop in gain on sale of securities.
As forecast by the company, they have raised the interim dividend by 4.25 yen/share year on year to 14.50 yen/share.

2-2 Trend of each segment

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

Analysis of increases and decreases in sales and operating income

(Taken from the reference material of the company)

◎ Property & Hotel Business
Sales increased, and profit grew considerably.
The sales and profit of the domestic hotel business increased significantly, thanks to the growth of demand for domestic travel and the demand from foreign visitors to Japan. The average daily rate of resort hotels in Japan increased, as the demand for domestic travel to hotels in Hokkaido was strong due to the unbearable heat and hotels were renovated. While competitors were struggling due to the shortage of manpower, they hired more non-Japanese people, who constitute the forte of the company, to keep occupancy rate high. Regarding Japanese urban hotels, average daily rate and occupancy rate increased, because they are located in areas popular among foreign visitors, such as Sapporo, Ginza, Kyoto, and Osaka. In the overseas hotel business, sales and profit increased, a large hotel in Colombo, the former capital of Sri Lanka, entered the third year after opening and has become known among people.

◎ Cosmetics & Health Foods Business
Sales and profit dropped.
In the Cosmetics & Health Foods Business, the number of new customers started increasing, but sales and profit declined, due to the decrease in sales of subscription boxes. In the Health Food Mail Order Business, sales and profit dropped, as they enhanced activities for reeling in new customers with mainly informercials, but did not reach the forecast.

◎ Gourmet Business
Sales declined slightly, but profit rose.
Computer costs augmented, as they upgraded their system for improving their service level. On the other hand, the ratio of expenses to sales improved through the rationalization of costs for advertisement, including the issuance of the media, and the revision of product prices, so sales declined, but profit grew.

◎ Nurse-Related Business
Sales and profit decreased.
In the Mail Order Business for nurses, procurement costs augmented because the yen weakened and the prices of raw materials rose steeply, so they revised product prices and reduced the circulation of the media in some sales channels while focusing on profitability, but sales and profit declined.

◎ Kimono-Related Business
Sales and profit dropped.
In the business of sale of traditional Japanese clothes, sales and profit decreased, due to the drop in the number of customers who have purchased a product in the past one year due to the closure of money-losing stores conducted from the previous fiscal year to the current fiscal year. BANKAN Wamonoya Co., Ltd. kept improving profitability through low-cost operations. In the costume rental business, the number of orders for rental of the hakama for commencement ceremonies increased significantly as competitors withdrew from this business, so related expenses augmented. Consequently, sales grew and profit declined.

◎ Apparel & Goods Business
Sales grew, but profit declined.
Procurement costs augmented due to the yen depreciation and the skyrocketing of raw material prices, so they curtailed advertisement costs. As they made product prices well-balanced and concentrated on the improvement in product competitiveness, response rate improved, the number of new customers and the number of customers who have purchased a product in the past one year increased.

◎ Other business
Sales and profit decreased.
In the apparel wholesale business, sales and profit decreased as client companies kept reducing operations and inventory was disposed of earlier than scheduled. In the travel agency business, sales grew, but profit dropped, as they actively advertised travel plans while prioritizing growth potential.

◎ Database Utilization Business
Sales and profit grew.
In the business of enclosure and distribution services, sales and profit grew, as the circulation of the media in the Mail Order Business for apparel and goods decreased, but the enhanced marketing targeted at existing clients paid off and new services were promoted. In the fulfillment service business, they increased new clients steadily, but the sales from existing clients decreased and personnel expenses augmented, so profit dropped. In the finance business, they increased new clients efficiently, so sales and profit grew.

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 5.6 billion yen from the end of the previous term to 306.3 billion yen, as cash and deposits, inventory assets, etc. rose. Total liabilities rose 5.7 billion yen from the end of the previous term to 170.2 billion yen mainly due to the increase in long -term interest-bearing debts. Net assets decreased slightly to 136.1 billion yen year on year, due to the decline in valuation difference on available-for-sale securities. As a result, capital-to-asset ratio decreased 0.9 points from the end of the previous term to 44.1%.

◎Cash Flows

*Unit: Million yen

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

Operating cash flow increased and the deficit of free cash flow shrank significantly, thanks to the decrease in other current assets and the increase in accounts payable.
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.
There is no revision to the full-year forecast, 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 in the fiscal year ending March 2025. 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 return the number of prospective customers to an appropriate level and recover repeat rates to enhance business scale and efficiency, targeting early profitability.
There is no revision to the year-end dividend, so they plan to pay 14.5 yen/share, up 4.25 yen/share from the previous fiscal year. For the full year, the dividend amount will increase 8.50 yen/share year on year to 29.00 yen/share. The forecast dividend payout ratio is 35.1%.

The following section describes the budget for each segment.
The Property & 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　Regarding Each Business

≪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).

Thriving hotel 1: GINZA HOTEL by GRANBELL (102 guest rooms)
In the first half of the fiscal year, sales stood at 600 million yen, up 57.5% year on year, and operating income was 146 million yen, up about 14 times year on year.

Thriving hotel 2: Granbell Hotel Kyoto (105 guest rooms)
In the first half of the fiscal year, sales stood at 441 million yen, up 18.6% year on year, and operating income was 149 million yen, up 24.5% year on year.

Thriving hotel 3: Granbell Hotel Susukino (300 guest rooms)
In the first half of the fiscal year, sales stood at 687 million yen, up 19.2% year on year, and operating income was 200 million yen, up 30.8% year on year.

Thriving hotel 4: The LakeSuite Ko no Sumika, Toya Sunpalace Resort & Spa (404 guest rooms)
In the first half of the fiscal year, sales stood at 2,314 million yen, up 20.6% year on year, and operating income was 554 million yen, up 133.6% year on year.

GINZA HOTEL by GRANBELL	Granbell Hotel Kyoto
Granbell Hotel Susukino	The LakeSuite Ko no Sumika, Toya Sunpalace Resort & Spa (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)

From now on, they will build an annex to The LakeSuite Ko no Sumika, and make efforts to start new businesses of urban hotels and overseas hotels. With the aim of achieving sales of 50 billion yen in the hotel business, they will improve the value of existing facilities and operate new facilities.
≪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】
In the first half of the fiscal year ending March 2025, sales stood at 6,751 million yen, down 9.3% year on year, and operating income was 98 million yen, down 75.7% year on year.
Annual sales and annual operating income are expected to increase 0.7% and 7.5%, respectively, year on year.
・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.

【Gourmet Business (Gourmet)】
In the first half of the fiscal year ending March 2025, sales stood at 12,692 million yen, down 0.1% year on year, and operating income was 56 million yen (a loss of 99 million yen posted in the same period of the previous fiscal year).
Annual sales and annual operating income are expected to increase 1.4% and 3.7%, respectively, year on year.
・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 eight consecutive years.
The unification of brand development and promotion across categories is insufficient. They focus on strengthening cross-business brand development.
By offering added value of information, content, etc. and providing entertainment with food in addition to the product competitiveness, which is their forte, they will strive to increase the fans of the brand and improve KPIs, such as the number of customers who have purchased a product in the past one year, repeat rate, and lifetime value (LTV).

【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 16 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 its sales to around 1 billion yen.
The company's policy is to maintain and expand its overwhelming No.1 position in wine mail-order sales.

【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.

≪3-2-3 Apparel & Goods Business≫
In the fiscal year ending March 2025, they aim to achieve sales of 77.83 billion yen, up 4.8% year on year, and an operating loss of 2.31 billion yen (loss of 2.99 billion yen in the previous fiscal year).

≪3-2-4 Database Utilization Business≫
In the fiscal year ending March 2025, they aim to achieve sales of 16.54 billion yen, down 1.1% year on year, and an operating income of 5 billion yen, down 2.9% year on year.
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 the first half of the fiscal year, sales grew and operating income rose by double digits as the Property Business kept contributing. The progress rate of operating income in the Property Business toward the full-year forecast reached 87.6%, and the operating income is expected to exceed the full-year forecast significantly, as there are still many foreign visitors to Japan. The sales of the Property Business accounted for 17.3% of total sales in the first half (15.5% in the first half of the previous fiscal year). As the ratio of sales of the Property Business with a high profit margin increases, it contributes to profit further, so this business is expected to contribute to the medium-term profit growth trend. The Database Utilization Business, which also has a high profit margin, is projected to see decreases in sales and profit in the fiscal year ending March 2025. On the other hand, the loss in the business of Apparel & Goods augmented in the first half, which is an issue. In the second half of the fiscal year, the sales of heavy clothes will increase and there will be some profit, but it is forecast to be not enough to cover the loss in the first half. They hope to make this business profitable, by increasing new customers and streamlining business operations. In addition, the business of Cosmetics and Health Foods saw decreases in sales and profit in the first half of the current fiscal year, showing another issue to be addressed.
At the beginning of the fiscal year, they announced initiatives for realizing business administration conscious of capital cost and stock price, and enriched shareholder return. PBR is much less than 1 and PER is low, so the stock of Belluna seems to be undervalued, when the trend of the rapidly growing Property Business is considered.

<Reference: Regarding corporate governance>

◎Organization type, and the composition of directors and auditors

◎Corporate Governance Report
Last Update: June 28, 2024.

<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.