FY2014 Result Report(April 1, 2014 –March 31, 2015)

May, 2015
Oisix Inc.

FY2014 Highlights

Results□【14 consecutive years the best sales】】
・Sales
18,060 million yen, +13.5% YoY・Operating Profit
648 million yen, -12.4% YoY・Net Profit
347 million yen, -20.5% YoY
A rise in promotion costs after the number of subscribers to the E-commerce businesssurpassed the target.
A deviation of 90 million yen in operating profit at the Kichijoji store, and the posting of
an impairment loss worth 110 million yen.

□Number of Subscribers：： 96,718 （+18% YoY））

E-commerce（Oisix.com)

・Promotional efforts stepped up and services enhanced to see a growth of subscribers□Upgrading Service
・The number of subscribers to the KitOisix premium time-saving course
surpassed 18,000□Brick-and-Mortar shop
・Signs of business expansion in the Shop in Shop business despite problems
with revenue at the Kichijoji store

Others（not Oisix.com））□Overseas (Oisix HongKong)
・Net sales hit record high in the lunar new year season in February□Media/Novelty
・Adopted as a novelty item by a large client□Fulfillment outsourcing service
・A new service launched in E-commerce site construction and contracted distribution

1１．FY2014 Result

２．FY2015 Strategy

2Overview of FY2014
A rise in subscribers caused net sales to grow to 18,060 million yen and the growth rate to risefrom 9.1% to 13.5%
Meanwhile, a deviation from the planned figure occurred in the store business, and an
impairment loss concerning noncurrent assets at the Kichijoji store was posted. These
resulted in a 20.5% year-on-year decline in net profit, falling to 347 million yen.

□FY2014 Result□Sales（million yen）(¥m)

20,000FY2013

FY2014

YoY

18,00016,00014 consecutive
years
the best sales

18,00014,000Sales

15,90918,060+13.5%
12,00010,000Operating Profit

740

648

▲12.4%
8,000
6,000

Recurring Profit

775

668

▲13.8%
4,000
2,000

Net Profit

436

347

▲20.5%
03

Overview of FY2014
Comparison of initial budget between the first half and second half
The growth rate rallied as subscribers expanded through promotional activities in the first half
intended to make profits in the second half. This achievement was close to what was envisioned in
the initial plan. However, a profit deviation occurred at the Kichijoji store.

□Sales□Operating profit（billion yen）
12

10

（ million yen ）Growth rate
+13.6% YoY
Growth rate
+13.4% YoY

800
700
600

8
500
6

4

400

8.3

8.2

10.0 9.6

670

300

550

200
2
100
0

0

80

70

budget上期 actual

下期 actualbudget

上期 actualbudget下期 actualbudget

1H

2H

1H

2H

4

Overview of FY2014
Quarterly transition
Net sales rallied on a full-year basis to attain a growth rate of 13.5%. In the fourth
quarter, profit was twice the level as that in the same period a year earlier.

+13.5% (full-year, YoY)

■ FY2013■ FY2014

Sales

+9%
YoY

■ FY2013■ FY2014

Operating
Profit

+17%
YoY

+13%
YoY

+102%
YoY

About 2 times in 4Q

▲76%
YoY

▲76%
YoY

+14%
YoY

+28%
YoY

5

① EC business ≪Major indicator≫（１）Numberof Subscribers（１）
The number of subscribers, which is the most important indicator, grew by
15,000 from 82,000 to 97,000, which is above the target of 95,000.
100,000

96,718+17.8% YoY（+14,637 ）

95,00093,47091,54090,00087,01885,00082,08180,00076,93775,97175,00074,81974,86573,865

2Q

3Q

4Q

77,47575,81670,0001Q

FY2012

1Q

2Q

FY2013

3Q

4Q

1Q

2Q

3Q ※

4Q

Target（95,000）

FY2014* In October 2014, 2,261 subscribers to the Oisix-Recruit Point Site were integrated.

6① EC business ≪Major indicator≫（２）ARPU（２）※ARPU: Average Revenue Per User

Due to the rush demand before the consumption tax hike in the fourth quarter of FY2013,
the figure for the fourth quarter dropped year on year. However, it was on the upward trend
on a full-year basis.
（yen）

ARPU：
：Frequency × Unit Price
13,46813,50013,388

ARPU
13,011

Annual Rise Point(3Q)
13,00012,593

12,67812,50012,27812,127
11,866

12,00012,006

12,001The last-minute demand
before the consumption
tax increase

12,441

11,872▲2.6% YoY（▲¥333）
11,50011,000
1Q

2Q

3Q

FY2012

4Q

1Q

2Q

3Q

FY2013

4Q

1Q

2Q

3Q

4Q

FY20147

① EC business ≪Major indicator≫（２）ARPU（２）※ARPU: Average Revenue Per User

The enhanced level of services resulted in a rise in purchase frequency. The value perpurchase in the fourth quarter dropped by 288 yen year on year because of the rush demandprior to the tax hike in the preceding year.
2.20

2.20

Frequency

2.15

2.10

2.15
2.12

2.12

2.10

2.10

2.07

2.13

2.10

2.08

2.06

2.05

+2.3% YoY（+0.05）

1.97

2.00

1.95
1Q

2Q

3Q

4Q

1Q

2Q

FY2012

3Q

4Q

1Q

FY20132Q

3Q

4Q

FY2014×
6,500

Annual Rise Point
(3Q)

6,244

6,300

6,433

6,426

Unit Price

6,057
6,100

5,930
5,900

5,791

5,770

5,756

5,717

5,602

5,700

The last-minute demand
before the consumption
tax increase▲4.8% YoY（▲¥288）

5,828
5,769

5,500
1Q

2Q

3Q
FY2012

4Q

1Q

2Q

3Q
FY2013

4Q

1Q

2Q

3Q

4Q

FY20148

① EC business（３）KitOisix [enhancing services with a focus on premium time curtailment]
KitOisix: The service was further enhanced with an emphasis on the premium and time-saving featureswith the help of the expansion of the easy-to-prepare food market, the number of subscribers for courses
surpassed 18,000 following the release of KitOisix for Kids and KitOisix products developed incollaboration with renowned chefs. The cumulative total sales quantity exceeded 900,000 kits.

□About KitOisix□The number of KitOisix subscribers

18,00020,000- Limited to food materials
that meet Oisix standards- Enabling preparation of
main and side dishes injust 20 minutes- Containing large quantities
of seasonal vegetables□Main activities in FY2014
・Three different courses helped to improve theservice level

18,00016,00014,00012,00010,0008,000

Sold in total

6,000

900,000 Kits

4,000

(as of Mar. 2015)

2,000

0
2Q

3Q
FY2013

4Q

1Q

2Q

3Q
FY20144Q

9

① EC business（４）Unitprices raised with Oichika
４）
Operating malls that deliver the products of other companies’ premium brands
together, Oichika has grown to a scale of monthly net sales of 100 million yen,helping to increase unit prices.

□Sales□Main activities in FY2014
110
million yen(Dec. 2014)（million yen ）600

Expandingdaily foods

500

400

Cooperative
sales promotion
in seasonal
events300

200

Collaboration
products

100

・LeTAO’s bread
・SoupStockTokyo‘ssoup・Jiyugaoka
Granola’s serial
・Sale of brand-specificfukubukuro (bagscontaining a different
and unknown
assortments of items
offered at lower
prices)・A Joel Robuchon
cake made with theuse of Oisix lemons

0
1H
上期

2H
下期

FY2013

1H
上期

2H
下期

FY201410

② Brick-and-Mortar shop business（１）Profit
deviation at the Atré Kichijoji store and the posting of an（１）extraordinary loss
Although profit soared in the fourth quarter, there was a profit deviation of around 90 million yen
from the plan. We considered it difficult to ensure profitability with the initial plan, and posted an
impairment loss worth 110 million yen.
□Trend in the rate of prepared food costs,□About the Atré Kichijoji
which is a key challenge
Good※Apr. 2014=100

140

Media
exposure

TV：：14
Publications：
：34
Web：
：90
Radio cast：：2

Improvement
rate 60%

120

100

80

New
challenges

60▼The Half Meat Off Series, ▼The Fruit-nade items forwith the amount of meat
selection
reduced to half40

Bad
The rate of
preparedfood costs
stayed high－The rate of prepared food costs stayed highuntil the fourth quarter
・A low operation rate of production plants
・Poor productivity based on production ofmany different product items in small
quantities for the purpose of product development

20- Replacements andwithdrawals of some items- Integration of production
bases- Improvement inproduction efficiency

0
Apr. May.
Jun. 7月
Jul. Aug.
Oct. Nov. Dec. 1月
Jan. 2月
Feb. Mar.
4月
5月 6月
8月 Sep.
9月 10月11月12月
3月

11② Brick-and-Mortar shop business（２）Expansionof Shop in Shop（２）
Launch of shops inside Queens Isetan supermarkets in addition to Tokyu Store
supermarkets to achieve a 74% rise in net sales from the beginning of fiscal year
□Sales of Shop in Shop

□Main activities in FY2014
・New shops set up in the Futako
Tamagawa Store and the Toritsu Daigaku
Store
Shops in agreater numberof Tokyu Stores（thousand yen）
24,000+74%(annual)

22,00020,00018,000▼Futako Tamagawa (Jul. 2014)

・New shops set up in the 4 stores (Shakujikoen, Mejiro, Shinagawa, Suginami)

16

16,00014
13

14,00012
1112,000Introduction ofshops inQueens Isetan

10(shops)
10,0004月 5月 6月 7月 8月 9月 10月 11月 12月 1月 2月 3月▼Shakuji-koen (Apr. 2014)▼Mejiro (Nov. 2014)－A 74% rise in net sales from the beginning of fiscal year
－A 16% year-on-year growth in sales per shop.

12

③ The other businessImagesOverseas
Biz(OisixHongKong)

Overview□Hit record high sales of around 40 million yen
during the lunar new year season in February- Profit on sales maximized by organizing events- Services revamped to boost revenues by
establishing a model for repeated purchases□Adopted as a novelty item for the Kinmugi
promotion campaign, which led to the delivery
of a total of 76,000 Oisix vegetable sets

Media/
Novelty Biz

Oisix
Fulfillment
Service(contracted
service)- Brisk orders as prizes in a tie-up with the Suntory
Kinmugi beer-like beverage- Expanded media exposure contributed to brandrecognition.
□Operation of new services in E-commerce sites andcontracted distribution- Introduction of a regular purchase model to the
E-commerce site of M.I. Deli
- Response to temporary needs focusing on busy
seasons, such as Christmas and St. Valentine’s Day
13

１．FY2014 Result

２．FY2015 Strategy

14

Financial Result Forecast for FY2015
With the growth of subscribers, net sales are forecasted to reach the 20,000 million yen mark.
While addressing the transport fare hike by Yamato Transport and making capital investments inbusiness expansion, we have set a target of increasing operating profit by 16% to 750 million yen.

(million yen)

FY2015

Sales

YoY

1H

YoY

2H

YoY

20,000

+11%

9,300

+11%

10,700+10%

Operatingprofit

750

+16%

250

+181%

500

-11%

Recurring
Profit

770

+15%

260

+160%

510

-10%

Net Profit

480

+39%

160

+198%

320

+10%

(Full year)

15

The target number of subscribers
In addition to service improvement and the enrichment of KitOisix courses,
we will conduct highly efficient promotional activities in an effort to achieve
a cumulative total of 110,000 subscribers by the end of fiscal year.
120

110

The number of subscribers（thousand）

97

100

80

82

76

74

FY2011FY2012

60

49
40
40

34
27

20

0

FY2007

FY2008FY2009FY2010FY2013

FY2014FY2015（Target）

16

FY2015 Strategy
In order to meet the sales profit target for the fiscal year ending March 2016, we
will intensively carry out activities ① to ③. At the same time, we will conduct
activity ④ to speed up business growth in the future.
Strengthening
the basis for
growth①Capital investment in business expansion②Growth of mainstay E-commerce business
Organic
GrowthActivity for
Future③Contribution of non-E-commerce businesses torevenues④ Research and development in the domain of foodcombined with health care17①Capital investment in business expansion（１）Construction of a new production plant（２）Inauguration of the new distribution center18

①Capital investment in business expansion（１）（Oisix Dining Center））（１）Construction of a new production plant（
To keep up with the growth in KitOisix shipments, we will construct a new production
facility in June 2015 in an aim to increase our production capacity and to lower the cost rate.

□Optimization of items to be produced□Expected effects

Production plant①①

BeforeIncrease in
shipments

Delicatessen

Meat

Processed
fish

Salad

Increase incapacity

Reduction incost rate

Kit

Producing KitOisix and other products suited forprocessing on the line at the new plant

After

Production plant①①－Capacity to ship nearly4times thecurrent level－A production line designed exclusively
for the production of KitOisix products tolower the KitOisix production
cost

Production plant②②

Developmentof newproducts－Freezing technologies and low-speedpress systems have opened the way for
yet a higher speed in thedevelopment of frozen vegetables,
healthy beverages, and other products
prepared by processing fresh vegetables
and fruit.

NEW
Delicatessen

Meat

Processed
fish

New

Salad

Kit

19

①Capital investment in business expansion（２）（２）Inauguration of the new distribution center (the Second Oisix Station)
In August 2015, the new distribution center (the Second Oisix Station) will begin operation.
It will optimize fulfillment to help increase the shipping capacity and mitigate the impact of
the increase in shipping fares by Yamato Transport.

Increase in Yamato
Transport’s shipping
fares

Suppression of fulfillment costs by means of
optimization

Before

1st Oisix Station ＠Ebina

The increase in Yamato Transport’s
shipping fares will generate a costburden of around 100 million yen per
year.
Kichijoji
Nationalcustomers

BeforeClient’s
Customers
Brick-andMortar shop

1st Oisix Station ＠Ebina

2nd Oisix Station ＠Saitama

After

Kichijoji
Nationalcustomers

Shop in
Shop

Some customers
in the Metropolitan
area

After
+100
million yen

Ebisu

Client’s
Customers

Some customers
in the Metropolitan
area

Ebisu

Shop in
Shop

Brick-and-Mortar shop20

②Growth of mainstay E-commerce business（１）Increasing subscribers（２）Uplifting ARPU

21

②Growth of mainstay E-commerce business（１） Increasing subscribers(a) Continue to focus efforts on fast-selling KitOisix courses
The current fiscal year is the third year in which KitOisix has been marketed. We will carry out
positive advertising activities, introduce time-saving products that are not Kit-type, and gain
media exposure in a bid to boost KitOisix subscribers.

Progress

The number of total sold kits

Establishment
Creation- Launched as a product for
preparing main and side
dishes in 20 minutes in
response to the need of busy
mothers to save time
- Working hard on basic service
constructions while taking incustomer feedback- Making new attempts suchas KitOisix for Kids, products
developed in collaboration withchefs, and products developedin collaboration with othercompanies- Carrying out publicity activities
within the current capacity- Stabilizing operations toimprove the cost rate

- Increasing production capacity to pave
the way for positive publicity activities- Releasing premium time-saving
products that are not Kit-type, such as
KitOisix for staple side dishes andfrozen KitOisix- Developing Kits in collaboration orother Kits in response to trends toboost media exposure

500,000

FY2013

FY2014FY201522

②Growth of mainstay E-commerce business（１） Increasing subscribers(b) Fostering seasonal courses by capitalizing on promotional skills
Capitalize on publicity skills built up through experience in the preceding fiscal
year to promote seasonal courses as mainstay services in an effort to increase
the number of subscribers□Flow of acquisition subscribers
Measures cases
Attracting
customers- Working harder to attract customers
by working with other companies tobring them to Oisix- Attracting customers through eventsand other offline approaches- Re-approaching past purchasers

Sales oftrial sets

- Increasing the purchase ratio throughgamification- Conducting A/B testing with great
frequency to improve the landing page
- Constant enhancement of theapplication form

Conversion
tosubscribers- Organizing and integrating businessmail and sales promotion mailmessages to improve communications- Improving the script for follow-up phone
calls

□（ex）
□（ ）Effect of form improvement
BeforeAfter

Page transition
rate increased

1.6 times23

②Growth of mainstay E-commerce business（１） Increasing subscribers(c) Developing a course that will become a third pillar next to theseasonal course and the KitOisix course□Candidate-1. Mama course【Service overview】】- A product recommendation service for
proposing products matched with the infant’s
age in months- Developing products containing necessary
nutrients based on the age in months- Link between content for the specific age inmonths and product planning□Candidate-2. Senior course【Service overview】】- Web usability with great visibility- Development of small-sized products for small
households- Enrichment of functional food products thatmeet health needs24

②Growth of mainstay E-commerce business（２）Uplifting ARPU(a) Launch of a smartphone app
Upgrades of the smartphone app and increase in downloads to raise
the ARPU□Images□Effect of introducing App.
- Push notification to prevent users
from forgetting to make purchases
or cancellations□Trend in the purchase value oflow spending users

Improvement
rate 3.7%- Improvement in responsivenessand usability to help increase thenumber of items purchased by low
spending users- Facilitate acquisition of userpurchase data to boost the speedof user interface improvement
BeforeAfter

25

③Contribution of non-E-commerce businesses torevenues（１）Contribution of store business and officedelivery business to revenues（２）Launch of new services in the Oisix
Fulfillment Service

26

③Contribution of non-E-commerce businesses to revenues（１）（１）Contribution of store business and office delivery business torevenues
Place a focus on development and implementation of new formats in the Shop in Shop business
Structural reforms to improve profitability at medium-sized stores□Expansion of Shop in Shop
・Set up island-type displays for mainly
marketing fresh vegetables and fruit

Present
・Development and implementation of new
formats: products to be displayed inrefrigeration cases, daily-delivered products,
and private brand products, etc.

□Medium&Small-sized stores and Office delivery
mediumsized
store

smallsized
store

・Reforms of earnings structure toensure profitability- Organizing events and taking other actions toboost capability to attract customers- Structural reforms through improvements inzoning and the selection of goods- Continued improvement in the efficiency of
producing prepared food products・Operated as a place for testing
hypotheses on medium-sized
stores and the Shop in Shopmodel while maintaining
profitability

FY2015・Improvement in Salad Oisix for
Offices

Officedelivery- Improvement in capacity to gather
feedback from customers- Reviews and withdrawals of certain
items- Improvement in extra value, such asproviding calorie intake indications27

③Contribution of non-E-commerce businesses to revenues（２）（２）Start of marketing support services in the Oisix
Fulfillment Service (Oiful MJ)
Began marketing support services amid mounting needs for marketing support
Commissioned to offer a one-stop service that encompasses consulting on marketing,
implementation, and fulfillment□ Growth in number of companies
commissioning the fulfillment service
The number of clients

Oisix Fulfillment Marketing Support(Oiful MJ)

92
as of Mar. 2014

□Features of new service

1.Offering expertise based on the practical experience
nurtured in repeat marketing
2.Providing not only consulting and advice but also
support for implementation
3.Offering the service on a pay-per-action basis in acommitment to producing results□Clients
as of Mar. 2015

-The number of clients commissioning ecommerce fulfillment grew, but it takes a
lot of time to win contracts.
- Clients are found to also have needs formarketing support.

・The service was set to serve M.I. Deli and DEAN &DELUCA when it was first started.
・ For the current fiscal year, we will be serving no
more than 10 clients.

28

④ Research and development in the domain of foodcombined with health care（１）Launch of highly nutritious vegetablesections（２）The Food Innovation Lab (tentatively named)is due to be established this coming fall.

29

④ Research and development in the domain offood combined with health care
（１）（１） Launch of highly nutritious vegetable sections
Setting up the Kikubeji section with a collection of highly nutritious
vegetables to start selling 10 different highly nutritious vegetables□Overview□Products

Relaxation
Tomatoes- Rich in GABA, which helps
people relax and sharpens
their concentration- GABA content that is 10
times that of sprouted brown
rice, which is high in GABA
- Sweet and deep taste

RunnerBananas- High in magnesium, which
stimulates the functions ofdifferent enzymes- Extremely chewy in texture
and substance, making it
ideal as a nutritional
supplement while doing
sportsSection name：： Kikubeji
Products：： 10 different highly nutritious
vegetables (at the start)
Start date：： 14th May, 2015

□Background- The food functionality labeling system boosted publicattention to vegetables rich in nutrition and nutrients.
- We set up a section specializing in functional andnutritional vegetables because there used to be nosuch section on the Internet.
* The food functionality labeling system is a system under whichfood functionality may be labeled at the responsibility of anenterprise or other business after submitting a predetermined
notification based on scientific grounds. This system went into
effect in April 2015.

BeautySalad Leaf
Mix

- Beta-carotene content that isthree times that of generalleaf lettuce- Beta-carotene is considered
to help maintain youth.

30

④ Research and development in the domain offood combined with health care
（２）（２） The Food Innovation Lab (tentatively named) is due to be establishedthis coming fall
In response to the growing need for food that meets health needs, we will set up an organization thatengages in the independent research and development of innovative technologies. This organization will
also collaborate with or support other companies and universities.

□ Background of establishment
Percentage of respondents with a particular awareness in relation to food
Healthy
EconomySimplified
Safe
HandmadeHome product
GourmetSource: Created by Oisix Inc. on the basis of Japan Finance Corporation:
Consumer Trend Survey in Fiscal Year 2014

□ Examples of research subjects
A broad range of subjects will be studied:- Technology for enhancing the nutrition of fresh
vegetables and fruit- Collaboration between online health care programs
and commerce- Proposals on dietary lifestyles without specificelements or nutrients□ [Reference] Focus on Food Tech in the
United States
A large number of incubating institutions and funds for food andagricultural technologies are being established amid mounting
health consciousness among consumers and technologicaldevelopment. (Specifically, 15 funds and incubators and 6 cloudfunding platforms were set up in 2014.)- Nearly half of those surveyed are conscious of health inrelation to food.
- An environment has been created through moves such as
An amendment to legislation concerning functional food.
- Gathering momentum towards health through food in themarket following Proposals on genetic tests regarding food
Food Tech Connect [www.foodtechconnect.com]

31

(Official appointment to be made at the 18th
Ordinary General Meeting of Shareholders inJune 2015)

New Management Structure

Two full-time directors will resign (and take the position of advisors). New outside
directors will be invited, and the operating officer system will be upgraded to
improve corporate governance and the management structure.
5 full-time directors

As of Jun. 2014

Takashima

Tsutsumi

Ozaki

FurufuHasegawa

2 outside directors

3 outside auditors

HanadaNakamura

UshidaMoroe

Nakamachi

To take the positionof advisors

As of Jun. 2015

Takashima

3 full-time directors

3 outside directors

3 outside auditors

Tsutsumi

HanadaNakamura

Ozaki

Ushi- Tanaka
da (CEO of JIN
CO., LTD.)Moroe* 8 operating officers

Nakamachi* The appointment of operating officers other than directors began in July 2014.

32

Profile of new outside director Hitoshi Tanaka
Invited as an outside director in the hope that his knowledge and ideas which led tothe commercial success of the JINS PC glasses for computer users and other
innovative products will help expand our business.

□CareerPresident, CEO and Representative Director of
JIN CO., LTD.
Apr. 1981: Joined Maebashi Shinkin Bank (currently, Shinonome Shinkin
Bank).
Apr. 1987: Individually founded JIN Products to engage in the manufacture andwholesale of accessories and miscellaneous goods.
Jul. 1988: Established JIN Ltd. (currently, JIN CO., LTD.) and assumed theposts of President, CEO and Representative Director (to present)
Jun. 2011: Assumes the posts of President, CEO and Representative Director(to present) of BRAND NEW DAY CO., LTD.

□Features of JINS
- A unique SPA system and pricing system were adopted to become
Japan’s leader in glasses sales- Created a light eyewear market with the Airframe.
- Created a new market of functional eyewear with glasses forcomputer users, anti-pollen glasses, moisture retention glasses, andother types of glasses- Different pieces of evidence have been established in the domain ofhealth care through joint studies with universities and medical
institutions- Operating around 300 domestic stores under direct control, as well
as overseas businesses in China and in the United States

33