■Performance Trends
1. Financial Summary for the Fiscal Year Ending March 31, 2024
Art Nature's consolidated financial results for the fiscal year ended 2024/3 were sales of 42,850 million yen (down 0.8% from the previous fiscal year), operating income of 2,654 million yen (down 25.7% from the same period), ordinary profit of 2,724 million yen (down 22.9% from the same period), and net income attributable to parent company shareholders of 1,462 million yen (down 22.0% from the same period).
In the Japanese economy, normalization of economic activity progressed due to the fact that the positioning of the novel coronavirus infection under the Infectious Diseases Act was changed to class 5 in 2023/5, etc., and private consumption and inbound demand are recovering, but prices are rising due to the progression of depreciation of the yen and rising prices of raw materials and energy prices, etc., and the future is still uncertain. Under such an environment, the company has formulated a medium-term management plan “Art Nature Advance Plan” with the fiscal year ending 2024/3 as the first year, promoted business activities for a leap forward to “art nature that opens up the next generation,” and by taking on various issues by utilizing the group's strengths, it has increased its performance and hair industry share, and developed and expanded businesses in new fields.
As a result, there was a slight decrease in sales and profit compared to the previous fiscal year, but it surpassed the revised plan and achieved the second sales since listing. The reasons for the decline in sales include repeat sales, after-sales service, and the fact that although Julia Auger was doing well, new sales struggled for both men and women, and sales promotion was suppressed by mail order that switched to an emphasis on profit. Price revisions were also carried out, but since price sensitivity is low because they are expensive products, the impact on repeat sales was small, and it seems that price revisions were a factor in the increase in sales. On the profit side, on the other hand, the sales cost ratio declined due to depreciation of yen, high prices, and an increase in stylist labor costs associated with treatment improvements, and although advertising costs and other sales expenses were suppressed, the SG&A fee ratio also rose due to an increase in labor costs associated with treatment improvements and a review of asset removal debts, leading to a decline in operating profit margins. Also, while impairment losses at stores were recorded as extraordinary losses, the negative range of corporate tax adjustments widened because the Chinese subsidiary was scheduled to be liquidated. Note, the reason that performance was not achieved compared to company forecasts at the beginning of the fiscal year is that unit price reviews of asset removal debts and impairment losses at stores etc. also had an impact, but mainly because post-COVID-19 consumption was directed more towards travel and eating out than expected, and new sales were sluggish due to poor response to inquiries via the internet, which is increasing.
As for the male business, while introducing new products, repeat sales remained at almost the same level compared to the previous fiscal year due to promotion of customer retention measures, but new sales declined drastically, resulting in a decline in sales and profit. As for the business for women, repeat sales increased due to version upgrades of “Feelin,” etc., but since the explosive response settled down 2 years after release, it did not easily lead to new sales, and sales and profit declined. As for the ready-made products business for women, sales and profit increased by nearly 2 digits due to improvements in Julia Auger's functions, an increase in the number of tries due to a recovery in visits to commercial facilities where they move in, and strengthening the sales system due to reviews of in-store operations, etc.
As for new products, the main brands in each business continued to be introduced to the market twice a year. “Feelin” launched the “Feelin 4,” which has further improved breathability and fit in spring, and the “Feelin Ultra Fit,” which is even more wind-resistant, in the fall, and the relatively inexpensive wig “Touch de Beaute (TV mail order only)” that does not hold up with a pin in the strong “Julia Auger.” As for men's wigs, new commercial characters were adopted from fall at the same time as the introduction of new products such as the wig “Reca Phantom” with no visible knots and the “Marplash Premium,” which improved the transparency of the scalp with assisted hair. Furthermore, store openings and relocations were actively promoted, and 2 new stores were opened, “Julia Auger Aeon Mall Takasaki Store” and “Ladies Art Nature Mitsukoshi Nihonbashi Salon,” but above all, the “Ladies Art Nature Mitsukoshi Nihonbashi Salon” has become a highly convenient store by attaching custom-made wigs and ready-made wigs to department stores with many high-end customers. “Julia Auger” also opened stores in unopened areas such as Takasaki. Events are also being actively promoted, and the “Julia Auger 15th Anniversary Grand Thanksgiving Day” and the first comprehensive exhibition “Art Nature Festival 2023 in Osaka” with a full lineup of notable products were held, and were well received.
(Written by FISCO Visiting Analyst Miyata Hitomitsu)