FY2014 1H Result Report(April 1, 2014 – September 30, 2014)

August, 2014
Oisix Inc.

FY2014 1H Highlights
We stepped up public relations activities to increase the number of subscribers,
which resulted in a sales boost of 13% year on year. Operating profit increased by
24% more than forecasted after fixed cost reductions.
Cultivating seeds for growth [upfront investment period]

Results- Sales: 8,300 million yen, up 13% year on year,
hitting a record high for the 14th consecutive year
- Operating Profit: 89 million yen, down 76% year on year

We improved the level of services and stepped up
promotional activities

E-commerce（Oisix.com)

Others（not Oisix.com）- Improved the level of KitOisix, Oichika and other services, which
helped increase subscribers- Stepped up PR activities to increase subscribers to 91,000,
an increase of 9,000 from the beginning of the fiscal year
- Developed skills to capture subscribers- Increased recognition of the Oisix brand by increasing brand exposure
opportunities

Improvement of the level of other services- Brick & Mortor shop
Revamp of delicatessens at Kichijoji- Oisix HongKong
Upgrade of subscription service- Fulfillment Outsourcing Start Subscription service of MI Deli
1

Contents

1. FY2014 1H Result

2. Present Situation

3. FY2014 2H Strategy

4. Appendix
2

FY2014 1H Strategy
Transition of sales/operating margin & Theme of Key activities
FY2014 ”Focus on distinction”

Sales

Maximize sales and profit

operating margin

FY2013 ”Focus on balance”
Increasing subscribers- Control promotional activities- Achieve profitability in the yearend selling season- Prepare for continued growth- Upgrading services- Active promotion of EC business

113% YoY
107% YoY

116% YoY

110% YoYFY2013 Actual
109% YoYFY2014 Forecast
115% YoY

3

Overview of 1H FY2014
As the growth rate went up, sales stood at 8,300 million yen, up 13% year on year (with a
9% rise in the firs※
t quarter and a 17% rise in the second) to achieve a half-year sales
growth for the 14th fiscal year.
Operating profit was 89 million yen, down 76% year on year. It increased by 24% morethan initially forecast.
(¥m)
FY2013
1H

FY2014
1H

YoY

Forecast
1H

Achievement rate

Forecast
year

Progress
year

7,375

8,366

113.4%

8,274

101.1%

18,30045.7%

Operating Profit

368

89

24.3%

72

124.6%

750

12.0%

Recurring Profit

386

100

26.0%

83

121.0%775

13.0%

Net Profit

230

55

24.2%

50

111.8%

465

12.0%

Sales

*The growth rate of FY2013: 107％(1H YoY), 109%(year YoY)
4

SalesFirst-half sales rose for the 14th consecutive year and increased 13%
year on year to 8,360 million yen.
（billion yen）

10

8.36

9

14 consecutive years
the best sales

8
7
6
5
4
3
2
1
0

'1
上期 '2
上期 '3
上期 '4
上期 '5
上期 '6
上期 '7
上期 '8
上期 '9
上期 '10
上期'11
上期'12
上期'13
上期'14
上期'15
上期
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008FY2009FY2010FY2011FY2012FY2013
FY2014
FY2000
1H

1H

1H

1H

1H

1H

1H

1H

1H

1H

1H

1H

1H

1H

1H

5

Operating Profit
For the first half, operating profit fell 76% year on year due to increased
promotional activities but increased by 24% more than initiallyforecasted after fixed cost reductions.
（million yen）

（million yen）

400

Achievement rate

124%

350
300
250
200
150
100
50
0

'11
上期
FY20101H'12
上期 FY2012'13 上期 FY2013'14 上期
FY2011
1H

1H

1H

'15
上期
FY2014
1H

Forecast

Actual6

Number of Subscribers
The number of subscribers steadily increased by around 9,000 to 91,500.
We will aim to attain 95,000 by the end of this fiscal year.
100,000

95,00095,000Growth rate

91,54020.7%
90,000（＋15,724 ）Progress
73.2%

87,018Growth rate
1.3% (＋

85,00082,081997)
80,00075,97175,81674,81974,86575,00077,47576,93773,86570,00065,000
1Q

2Q

3Q

FY2012

4Q

1Q

2Q

3Q

FY2013

4Q

1Q

End of
FY20142Q
FY20147

ARPU： Average Revenue Per User

As a result of service enhancement, the frequency of purchases andthe value per purchase grew from the same period a year earlier.
（yen）

ARPU：Frequency × Unit Price

14,000

ARPU
Annual Rise Point(3Q)

Growth rate
3.6%（＋¥435.2）

13,46813,50013,011
13,00012,593
12,50012,27812,127

12,006

12,001

11,866

12,00012,441The last-minute demand
before the consumption
tax increase

11,872

11,500

1Q

2Q

3Q

FY2012

4Q

1Q

2Q

3Q

FY20134Q

1Q

2Q

FY20148

Frequency & Unit price
The frequency of purchases soared after the improvement of services such as themonthly fixed-rate service for three dairy products.
Due to improvements in KitOisix, Oichika, and other services, the unit price rose.
2.20

Frequency

2.15
2.10

2.12
2.10

2.10

2.07

2.10

2.06

2.05

Growth rate
1.7%（＋0.03）

1.97

2.00
1.95

1Q

2.13

2.15

2.12

2Q

3Q

4Q

1Q

2Q

FY2012

3Q

4Q

1Q

FY20132Q

FY2014×（yen）

Unit Price

6,500

6,426

Annual Rise Point
(3Q)

6,400

Growth rate
1.9%（＋¥111.0）

6,244

6,300
6,200

6,057

6,100

5,930

6,000
5,900

5,791

5,770

5,800

5,756

5,717

5,602

5,700
5,600
5,500

1Q

2Q

3Q

FY2012

4Q

1Q

5,828

The last-minute demand
before the consumption
tax increase

2Q

3Q

FY20134Q

1Q

2Q

FY2014

9

Contents

1. FY2014 1H Result

2. Present Situation

3. FY2014 2H Strategy

4. Appendix
10

Present situation of services
For the first half, we stepped up promotional activities with an emphasis on
increasing subscribers for harvest in the second half while upgrading services
mainly in the EC business.
(a) KitOisix(b) Oichika①EC business (Oisix.com)(1) Upgrading services(c) Outlet service(d) Improvement of selling spaces(e) Shift to smartphones(2) Active promotion(a) Development of acquisition(b) Increase recognition②Others (not Oisix.com)(1) Brick & Mortor shop

(2) Oisix HongKong(3) Fulfillment Outsourcing
11① EC business(1) Upgrading services(aaa)KKKitOOOisisisixxxの強化(bbb)OOOチ
強
の
カ
i 化

①EC事業

（１）サービスレベルの向上(((c)c)c)ッ
レ
ス
の
ア化
ウ
ー
サ
ト
ビ
強

(ddd)売場の魅力の向上

(eeeマ
ス
)ホ
化への対応

（２）プロモーションの強化(aaa獲) 得スキキキルの向上(bbb)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(a)KitOisix [Responding to needs for shortening meal preparation times]
In response to market needs for easy-to-prepare food materials, we launched KitOisix in July 2013.
It allows users to prepare main and side dishes in twenty minutes. It is popular mainly amongcustomers wishing to shorten the time spent on meal preparation.
Higher demand of half processed foodProcessed food Japanese

Cut vegetables Japanese

1⼈当たりカット野菜年間販売
bought per person

1ヶ⽉に家計が購⼊する調理
bought per month

Cut vegetables Japanese bought per（yen） 7,600

1,400（yen）

person
1⼈当たりカット野菜販売⾦額
Processed food Japanese
1ヶ⽉に購⼊する調理⾷品
bought per month

7,500

1,200

7,400

1,000

7,300

800

7,200

600

7,100

400

RenewalMore Delicious &More Convenience(31st July)- Limited to food materials that meet Oisix standards
7,000

Source:
出所：総務省家計調査
Ministry of Internal Affairs and Communications
出所：農畜産業振興機構
Agriculture & Livestock
Industries Corporation

200- Enabling preparation of main and side dishes in just 20 minutes- Containing large quantities of seasonal vegetables

0

6,900
2009年度
20092010年度
20102011年度
20112012年度
201212

① EC business(1) Upgrading services(aaa)KKKitOOOisisisixxxの強化(bbb)OOOチ
強
の
カ
i 化

①EC事業

（１）サービスレベルの向上(((c)c)c)ッ
レ
ス
の
ア化
ウ
ー
サ
ト
ビ
強

(ddd)売場の魅力の向上

(eeeマ
ス
)ホ
化への対応

（２）プロモーションの強化(aaa獲) 得スキキキルの向上(bbb)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(a)KitOisix [Responding to needs for shortening meal preparation times]

14000

The cumulative total number of sets sold exceeded 500,000. It was covered by a number of media
outlets. We will enhance services with a focus on premium time curtailment in addition to regular time
curtailment.
The number of
ThemeOverview
KitOisix subscribers-Mainly offering staple dishes
that children love

More than
12000

13,000（as of Sep. 30, 2014）

For Kids-The taste can be changed tosatisfy adults.
- Weekly delivery of culinary delights
produced by nine professionals including
a chef who has been awarded a Michelin
star

10000

With Chef-Working with other companies todevelop sets embodying various
concepts

8000

Sold in total
6000

Collaboration

500,000 Kits

- Currently collaborating with Cookpad
Inc.
-Developing a frozen version of KitOisix toprolong the use-by date for offering greate
convenience(as of Sep.18, 2014)
4000

Frozen-Providing extra value unique to frozen
food

13

① EC business(1) Upgrading services(aaa)KKKitOOOisisisixxxの強化(bbb)OOOチ
i 化
強
の
カ

①EC事業

（１）サービスレベルの向上(((c)c)c)ッ
レ
ス
の
ア化
ウ
ー
サ
ト
ビ
強

(ddd)売場の魅力の向上(eeeマス) への対応化ホ（２）プロモーションの強化(aaa獲) 得スキキキルの向上(bbb)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(b) Oichika [Responding to premium food needs]
We launched the Oichika mall-type service at 10 locations in May 2013, offering Oisix products as wellas other companies' premium products. We have expanded to 75 locations.

75 locations

14

① EC business(1) Upgrading services(a)KitOisixの強化(b)Oiチカ の強化①EC事業（１）サービスレベルの向上(c)アウトレットサービスの強化（２）プロモーションの強化(a)獲得スキルの向上(d)売場の魅力の向上(e)スマホ化への対応(b)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(b) Oichika [Responding to premium food needs]
The user base is expanding as the number of stores increases and its website improves.
They deal in original products developed in alliance with Joel Robuchon and other premium brands.

Premium Brands

Collaboration products
White potage
with large onions

Burnt potage
with “Creamy caramel”
sweet potatoes

Cake au chocolat citron

Cake au ananas coco

Soy sauce takikomi-gohan mix
of “Aromatic grifola” &salmonTomato takikomi-gohan
mix of “Mushrun” &Akadori

LA BOUTIQUE deJoël Robuchon

NINBEN15

① EC business(1) Upgrading services(a)KitOisixの強化(b)Oiチカ の強化①EC事業（１）サービスレベルの向上(c)アウトレットサービスの強化（２）プロモーションの強化(a)獲得スキルの向上(d)売場の魅力の向上(e)スマホ化への対応(b)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(c) Outlet service
Supporting the eating life amid the tax hike and soaring vegetable prices, our Outlet Service is strong.
Turning poor weather into business opportunities, it has made contributions to agricultural producers as
well.
□Transition of outlet vegetable’s sales□”Fuzoroi” (non-standard items)

320%

Selling non-standard items and equivalents at around 30% lower prices
than normalApples with black spots

Overgrown lettuce□Good buys after a good harvest
Fast growing vegetables and those harvested in larger quantities than
expected

Chamame brownish soybeansthat grew quickly due to hightemperatures16

① EC business(1) Upgrading services(a)KitOisixの強化(b)Oiチカ の強化①EC事業（１）サービスレベルの向上(c)アウトレットサービスの強化（２）プロモーションの強化(a)獲得スキルの向上(d)売場の魅力の向上(e)スマホ化への対応(b)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(d) Improvement in attraction of selling spaces
VIP

Services formothers- Products offered exclusively to VIP customers-Loyalty point services and sale exclusively for
VIP customers- Proposing recipes using seasonal vegetables-Subscription plans exclusively for
expecting and child-rearing mothers-Offering baby food and infant foodmatched with children's ages in months

Reservation- Exclusive offers to subscribers- Swift delivery of seasonal food materials

Monthly fixedrate service forthree dairy
products- Exclusive offers to subscribers-Offering dairy products at lower prices in themonthly fixed-rate service- Widening the items covered by the service17

① EC business(1) Upgrading services(a)KitOisixの強化(b)Oiチカ の強化①EC事業（１）サービスレベルの向上(c)アウトレットサービスの強化（２）プロモーションの強化(a)獲得スキルの向上(d)売場の魅力の向上(e)スマホ化への対応(b)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(e) Responding to the shift to smartphones
With the increase in smartphone users, we've enhanced usability of our smartphone site andconducted sales promotions through the site to boost smartphone subscribers to around 20,000.
□Transiton of the number of smartphone subscribers

About 4 times

20,730in a year and a half

Apr.

Mar.

Jun.

Jul.

Aug.

Sep.

FY2013

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

Mar.

Jun.

Jul.

FY2014

Aug.

Sep.

18

① EC business(2) Active promotion(a)KitOisixの強化(b)Oiチカ の強化①EC事業（１）サービスレベルの向上(c)アウトレットサービスの強化（２）プロモーションの強化(a)獲得スキルの向上(d)売場の魅力の向上(e)スマホ化への対応(b)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(a) Development of skills to capture subscribers and increase in new subscribers
In addition to service enhancement with KitOisix and Oichika, we invested in sales promotions and built up
skills to capture subscribers to gain a number of new customers that was nearly double the level attained in thesame period a year earlier.

□ Increase in new subscribers□Development of skills to capture subscribers-Success in actions in response to the shift tosmartphones

about 2 times(YoY)

Evolutionsof 1H-Development of a model for gaining
customers at real stores through events-Development of a model for gaining
customers through social networking sites-Increase in the rate of customers shifting to
subscribers-Collaboration with Rakuten Checkout, whichallows users to log in and to pay with the useof their Rakuten IDs

Challengesof 2H-Enhanced public relations activities for
KitOisix-Launch of a smartphone app

1Q

2Q

3Q
FY20134Q

1Q

2Q

and other attempts will be made.

FY201419

① EC business(2) Active promotion(a)KitOisixの強化(b)Oiチカ の強化①EC事業（１）サービスレベルの向上(c)アウトレットサービスの強化（２）プロモーションの強化(a)獲得スキルの向上(d)売場の魅力の向上(e)スマホ化への対応(b)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業(b) Increase recognition of the Oisix brand by increasing brand exposure opportunities
Oisix brand name recognition is being increased by expanding Shop in Shop at Queens Isetan supermarkets,selling the Vegeel private label, vegetable-based beverages at JR railway stations and convenience stores andlaunching a service delivering salads to offices.

Shop in Shop

Queen’s Isetan

Wholesale of Vegeel-Convenience stores・“Three F”

Tokyu Store

Salad Oisix for Office-Others(already introduced)
・Tokyu Store・SHIDAX・Kitano Ace
・DEAN & DELUCA・toks-Vending machines at JR railway stations

20

(a) KitOisixの強化(b) Oiチカ の強化①EC事業（１）サービスレベルの向上(c)アウトレットサービスの強化（２）プロモーションの強化(a)獲得スキルの向上(d)売場の魅力の向上(e)スマホ化への対応②Topics of other businessImages(1) Brick &Mortor shop(b)露出機会の向上②その他事業（１）店舗事業（２）海外事業（３）ソリューション事業

Overview- Delicatessens have been revamped by adding the Half Meat
Off series, featuring the amount of meat reduced to half theordinary amount or less
- A number of opportunities for media exposure, such as...
- Selected in the Adomatic Tengoku TV show episodefocusing on Kichijoji- An event with TV personality Taiyo Sugiura- The regular delivery service model has been upgraded(2) Oisix
HongKong(3)
Fulfillment
Outsourcing- Customer satisfaction has been increased by localizing
customer support- Regular delivery service was started by Isetan Mitsukoshi
Food Service Ltd.
- A new client project was put into action

21

Contents

1. FY2014 1H Result

2. Present Situation

3. FY2014 2H Strategy

4. Appendix
22

FY2014 2H Strategy
Transition of sales/operating margin & Theme of Key activities
FY2014 ”Focus on distinction”

Sales

Maximize sales and profit

operating margin

FY2013 ”Focus on balance”
Increasing subscribers- Control promotional activities- Achieve profitability in the yearend selling season- Prepare for continued growth- Upgrading services- Active promotion of EC business

113% YoY
107% YoY

116% YoY

110% YoYFY2013 Actual
109% YoYFY2014 Forecast
115% YoY23

①Controlling sales promotion costs
For the second half, we will aim to increase subscribers by around 3,500 while
controlling sales promotion costs.
200 million yen for sales
promotion

About +3,500
610 million yen for sales
promotion

subscribers

95000

About +9,000
subscribers

91540

82081

Beginning of期初
FY2014

1H

中間

End of期末FY201424

②Maximize revenue year-end sales
Maximize revenue by delivering Osechi (traditional Japanese New Year meal)and other high value-added year-end items to customers captured in the first half.

Total number ofsales

170,00025

③Prepare for continued growth(1) Functional upgrades of Oisix Stations
Invest in further growth for the following fiscal years and in functional
upgrades of Oisix Stations to boost profitability□Oisix station @Ebina□Investment on further growth

Productivity
improvement

Enhancement
the backup
system-Introduce frozen food picking
systems-Push ahead with automation (byintroducing box packing systems)- Add box making systems toenhance the backup system

26

③Prepare for continued growth(2) Functional upgrades of central kitchen
Planning to invest in functional upgrades of production bases in order toincrease sales volumes of KitOisix and independently processed products□Central Kitchen @Oisix station□Purpose of investment

Capability
improvement-Respond to growth in shipments of KitOisix
and other products involving complicatedprocesses-Respond to growth in shipments of fresh
meat and processed food, among others

Productivity
improvement-Introduce new production machinery toincrease productivity and to cut production
costs- Boost the operation ratio of production bases

Product
line
expansion
KitOisix

Daily Dish

- Embark on internal manufacturing ofproducts that have been produced byoutsiders to increase the number of items
produced and to cut the cost rate.

Dressed meat27

Topicks of 2H activities

Oct.

- Start collaboration with Rakuten Checkout, which enables login andpayment using Rakuten IDs

Nov.

-Organize Tokyo Harvest as one of Japan's largest harvest
festivals expressing gratitude to farmers across the country

Dec.

-Year-end selling season for promoting items for one-pot meals,
crabs, Christmas cakes as well as Osechi New Year mealsJan.

- Launch of smartphone app expectedFeb.

- Chinese New Year selling season in Hong KongMar.

- Organization of the N-1 Summit as Japan's largest event whereleading farmers gather

28

Contents

1. FY2014 1H Result

2. Present Situation

3. FY2014 2H Strategy

4. Appendix
29

About Oisix

Our mission

Richer foods for more people

Not only a supplier of foods
but also organizer of happy table.

30

Business model
E-commerce system
Our web site, supporting PC & Smart phone, gives orders from customers to suppliers.
Products, once gathered to our DC are delivered to customers. Some are direct from suppliers
Safe foods
for my kids

Flexible Subscription
System（Regular purchase）

No time for
shopping

Visit

おいとく
（Auto Ship）
Occasional Purchase

Order

Order

Kanagawa Pref.
About 6600 m2 3F
since 2012

Producers / Makers

おいくら（Oisix Club）

Delicious
vegetables

Direct from the producer

DeliveryＯｉｓｉｘ Distribution
CenterHarvest & Delivery to DC

Direct delivery from the producers

31Outlook of online market
As more and more women are working, the food delivery market is on the increase.
In addition, the food e-commerce market is expanding year by year. The market shareof e-commerce in food retailing exceeded 1% in 2013.
（billion yen）

Growth of delivery food market

1,000

2,400

22,0452,204

1.9 trillion yen
in 2014

2,200

21,2382,123
20,431
2,043
19,623
1,962

2,000

18,816
1,881
18,075
1,807

1,800

1,600

（billion yen）

17,2601,726
16,806
1,680
16,166
15,735 1,616
1,573

Online food retailing market volume& EC ratio in Japan
1.20%
食品EC市場規模
Market volume
食品EC化率EC ratio

900

1.08%
0.96%

1.00%

800
0.85%

706

CAGR

700

19%

0.80%
605

0.71%

600

532

0.62%

500

0.60%
436
0.48%

400
300

1,400

377
0.42%

0.40%

293
251

200
0.20%
1,200

100
0

1,000

2008
2009 2010年
2010 2011年
2011 2012年
2012 2013年2013 2014年
2014 2015年
2015 2016年
2016 2017年
2017
2008年 2009年
Source：Yano Economy Research Center

0.00%
2007

2008

2009

2010

2011

2012

2013

Source: Ministry of Economy, Trade and Industry

32

Company of the Year – RetailAugust 2014

First prise in Japanese food retailing company

We won “STEVIE WINNER INTERNATIONAL
BUSINESS AWARDS”□Evaluation points

High performance of profit
margin on sales in online
supermarket
Operating profit margin 4.76%(three years’ average)*the global average of food retailing 2-3%,
almost online food retailers under 0.5%

□Japanese prize in the past
・FAST RETAILING・TOYOTA・KAO
33