Chapter 2

Revie w o f Busine ss Nikke Business Divisions

Consumer Goods& Services
Evolving with society todeliver convenience and prosperity

Executive Officer
General Manager of Consumer Goods & Services Division

Hiroshi Fujii
Results of the 2nd year of the 2nd medium-term management plan(fiscal year ended November 2022)(Unit: Million yen)

1st year

2nd year

3rd year (final year)

Fiscal year ended November 2021

Fiscal year ended November 2022

Fiscal year ending November 2023

Medium-term
plan

Results

Medium-term
plan

Results

Difference

Medium-term
plan

Sales

17,00018,68517,500

16,802

Forecast*(698)

20,70022,000Operating income

1,100

1,410

1,250953

(297)

1,550

1,200

Operating margin

6.5％

7.6％

7.2％

5.7％

(1.5 points)

7.5％

5.5%

Evaluation*Announced in January 2023

Performance by business segment for the fiscal year ended November 2022
Note: Sales distribution was calculated based on group-wide sales excluding sales of “Others” and adjustment divisions (3,720 million yen). Operating
income distribution was calculated based on the total amount of segment income excluding “Others” and the adjustment amount (-1,584 millionyen).

Consumer Goods& Services
Breakdown
Bedding andbusiness supplies
Household goods
Hobby and craft
OthersSales distribution

23%
49%
18%
9%

Consumer Goods Operating income distribution& Services
Breakdown
Bedding andbusiness supplies
Household goods
Hobby and craft
Others

1,682 million yen

16.0%

14%
37%
20%
29%

953 million yen

7.8%

Changes in ROIC (return on invested capital)
ROIC

2022

2018

2019

2020

2021

(fiscal year ended November)

5.1％

7.1％

6.8％

10.1％

5.5％

Main products and services• Bedding and business supplies: Bedding, airline blankets, disaster supply blankets• Household goods: Lifestyle appliances and miscellaneous goods, goods for 100-yen shops, furniture, film for tablets and computers• Hobby and craft: Stamping ink and stamps, horse riding goods, knitting yarn
• Others: Container sales, insurance agency

25

Nikke Group Integrated Report 2023

Horse riding goods

Bedding

EC business (lifestyle appliances and miscellaneous goods)

Stamping ink and stamps

Business overview● Development of products and services without fixation on existing business fields; pioneering of new businesses● Maximizing our trading company functions to propose and realize strengthened foundations for sales, e-commerce,

and logistics both inside and outside Nikke GroupKey policies● Discover and develop new businesses with an open mindset, and actively enter into different industry fields without

being restricted by existing business frameworks● Strive for business with high future potential and social impact in all areas, from upstream to downstream

Sustainable management-focused medium-term management plan and strategy
Business advantage

Business strategy

The mission of the Consumer Goods & Services Division is todeliver the products and services that customers need in their
daily lives, and to do so in the most optimal way. We work
every day to develop, innovate, and improve products andservices that will meet this standard. In recent years, our focus
has been on increasing the rate of e-commerce in bedding andbusiness supplies, household goods and infection control
supplies, hobby and craft, and other fields, centered on the twoGroup companies of Miyako and AQUA.* In addition, throughThanko, which joined Nikke Group last year, we will advancefurther upstream while acquiring and expanding saleschannels.

The focus of our division is on increasing the rate ofe-commerce in our business, prioritizing both B2B and B2C
and pursuing greater sharing of know-how and structures
within the Group. With regard to logistics, we will work onstronger coordination with logistics companies that can provide
efficient, effective, and environmentally friendly services. Inoverseas business, we will utilize Nikke Group’s trading
company functions and collaborate with overseas mail orderand e-commerce companies to create a system to deliver thebest products at the right time. To this end, we will also actively
pursue M&A of companies possessing functions that willaugment and supplement our existing business.

*On October 1, 2022, the e-commerce-focused AQUA Inc. absorbed and mergedwith Niceday Inc. in order to further expand and grow business.

Risks and opportunities
We recognize that the global increase in the cost of raw
materials and crude oil, along with rapid depreciation of theyen, represents a business risk by inviting an increase inproduct procurement costs. Additionally, we view the supply
chain disruptions caused by the pandemic and international
conflicts to be major risks. At the same time, however, webelieve that by fully leveraging our trading company functions,and by adapting quickly and flexibly to current conditions,
unconstrained by the existing business framework, we candevelop new markets while securing sales opportunities.

Products brimming with originality
In November 2022, we acquired 80% of all issued
shares of Thanko, Inc., a company which, under themotto of “interesting and useful,” manufactures andsells products
brimming withoriginality. By
welcoming Thanko
into Nikke Group, weaim to further expand
our e-commercebusiness.

Nikke Group Integrated Report 202326