fancl group financial results briefing...status of inbound sales (direct stores) though some impact...

For the period April 1, 2018 to December 31, 2018

FANCL Group Financial Results Briefing

January 30, 2019

Financial Highlights

Results by segment

Direct Store Inbound sales (estimated)Sales breakdown (9-month period)

Results by cosmetics brand

FANCL 42,708 ＋12.6%（Domestic＋13.0%、Overseas＋8.3％）

ATTENIR 8,806 ＋3.8％

boscia 2,052 -11.5％

Nutritional supplements 33,855 ＋26.0％（Domestic＋25.3%、Overseas＋38.1％）

(Unit: 100 million yen)

3©2018 FANCL CORPORATION All Rights Reserved

(Millions of yen)

Nine-monthperiod of FY to

March 2018

Nine-monthperiod of FY to

March 2019Change YoY

Q3 of FY to March 201８

(10-12)

Q3 of FY to March 2019

(10-12)Change YoY

Sales 81,592 93,316 ＋14.4％ 29,734 33,028 ＋11.1％

Cosmetics 49,387 54,108 +9.6％ 17,963 19,107 +6.4％

Nutritional supplements 26,867 33,855 +26.0％ 9,818 11,877 +21.0％

Other 5,337 5,352 ＋0.3％ 1,953 2,043 ＋4.6％HatsugaGenmai 1,726 1,563 (9.4％) 605 568 (6.1％)

Kale Juice 1,993 1,998 ＋0.3％ 707 727 ＋2.8％

Operating income 7,035 10,664 ＋51.6％ 3,298 3,581 ＋8.6％

Ordinary income 7,190 10,604 ＋47.5％ 3,347 3,432 ＋2.5％

Net income 4,839 7,285 ＋50.5％ 2,354 2,435 ＋3.4％

11 10 11 14 18 20 23 2640 33 35

17/1Q 17/3Q 18/1Q 18/3Q 19/1Q 19/3Q

©2018 FANCL CORPORATION All Rights Reserved 4

Advertisingcosts

Personnel costs

Other fixed costs

Othervariable costs

Increase in gross profit

due to growth in sales

Improvementin cost-of-sales

ratio

Salespromotions

costs

FY2018Nine-month periodOperating income

FY2019Nine-month periodOperating income

Fixed costsVariable costs

Positive factors Negative factors

(Millions of yen)

Nine-month period results

Analysis of change in Operating income

359

7,035

10,664

98

8,341

2,3141,009

314813

11/1~7週 12/1~7週 1/1~7週

前期今期Last FY


Status of inbound sales (Direct stores)

Though some impact seen from new China e-commerce laws, sales continue to trend strongly

Inbound sales by quarter

Full-year plan ¥13.8bn(previous year: ¥8.7bn)

18 2023

26

40

33 3530

1Q 2Q 3Q 4Q

前期今期

Average weekly sales (YoY)

(+5 compared to plan)

Nov. 2018 Dec. Jan. 2019

Almost no last minute demand seen

Impacted new e-commerce laws,

stricter airport inspections

+48% YoY(Nov., Dec.)

Last FYThis FY

This FY

+19% YoY(through to third week of Jan.)

Last FY

(Ref.) Existing customer trends (YoY)

*Existing customers who have made a purchase in the past 4 months(12-month moving average)


2016 2017 2018

Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec.

FANCL Cosmetics

Online and

catalogue102% 106% 107% 106% 105% 103% 101％ 101％ 102％ 104％ 104％ 104％

Direct store 96% 100% 101% 102% 102% 102% 101％ 100％ 100％ 101％ 105％ 110％

Supplements

Online and

catalogue115% 123% 129% 133% 130% 123% 116％ 109％ 105％ 103％ 102％ 103％

Direct store 101% 102% 102% 103% 102% 103% 105％ 105％ 106％ 106％ 108％ 111％

Attenir 98% 106% 113% 122% 125% 125% 125％ 122％ 121％ 118％ 112％ 108％

Cosmetics Business


FANCL Cosmetics

■Skincare line renewal

・Moist Refine, Enrich

■WRINKLE CREAM (launched Oct. 2018)

Made a strong start as product capable of

providing an immediate feeling of

skin resilience

Promotions centered around sampling

Sep. 2018

Spring 2019 (Feb., Mar.)

・Whitening line

A unique approach focused on results of

research on the mechanism of skin

spots. For moisture-rich and clear skin

Sales Q3 (YoY) +8%Compared to last renewal +16%

White Force to also be renewed simultaneouslyEnhancing internal and external beauty offerings

Versus plan

Sales 128%

Sampling mainly targeting existing

customers

Q3 Q4Launch large-scale monitor campaign.

Strengthen new customer

acquisitions

Price: ¥3,456 (incl. tax)


/

Attenir boscia

① New expansions *as of Dec. 2018

US

・Expansion to over 1,000 stores including Ulta, Nordstrom, etc. ・Store opening in Amazon’s Luxury Beauty Category

Europe, Near and Middle East

・Launch of sales to Sephora - 240 stores in Europe and 25 stores in Near and Middle East・Launch of sales to 220 Boots UK stores

Full moisture care linePrima Moist

An evolved form of Inner Beauty Clock skincareLaunch: January 21, 2019

Aging care lineDress Lift

Launch of cross-border e-commerce targeting China

November 2018

Test launch(wholesale sales to

store operators)

From next FY onward

Open own flagship store

Struggling sales to Sephora North America Revising sales plan for this fiscal year

Expecting to return to growth trajectory next fiscal year

×② Expansion of number of items handled

Health Business

©2018 FANCL CORPORATION All Rights Reserved

Naishi Support - Foods with Function Claims

Retention rate(Online and catalogue sales)

TV ad

11

■Major growth through expansion to wholesale channel and active promotion

high

Low

CalolimitEnkin

Naishi Support

Periodic delivery service sales rate

(Online and catalogue sales)

Apr. 2018 Dec. 2018

7 times

60％

Drugstore POS results

High sales results in line with Calolimit

Calolimit

Enkin

18/12

Naishi SupportTV ad

No. of periodic delivery service

customers

18/04 18/07 18/10

Sales


Cross-border e-commerce targeting China

Line-up of around 40 itemsParticularly strong sales of

Age-Bracket Based Supplements

Successfully launched cross-border e-commerce targeting China on October 30 at Tmall Global

Exhibition booth at the 1st China International Import Expo (CIIE)

Introducing cross-border e-commerce and products

The FANCL booth

Promotion of the FANCL brandand cross-border e-commerce

Future plans

Roll out expansion to JD Worldwide / Kaola.com / Red / WeChatMall

Channel

Launch of new member services in April 2019


Online and catalogue / Direct store channels

Direct store: New FANCL Shops

Effect of store renovations

・ Light user customer groups +119%

Opening stores in carefully selected high quality locations, and promoting upgrades of existing stores into ‘New FANCL Shops’ with enhanced

internal and external beauty offerings

Online and catalogue: New CRM strategy

No. of customers(Compared with before the previous medium-term management plan)

・Overall +34%Acquired many customers through

advertising-led growth strategy.Plan to intensify development of middle/heavy

user customer groups.

Aim for CRM which creates FANCL fans through preferential treatment and tokens of

appreciation

Evolve point

services

Special gifts

Free shipping for orders over 10,000 yen

NEW NEW

・ Domestic sales (YoY) +5%(compared with non-renovated stores)

[Example proposals]・ BC beauty concentrate + collagen ・ Mutenka FDR + Aller Support

Enhancement of internal and

external beauty offerings

Full year outlook

Full-year outlook to March 2019


(Millions of yen)FY to March 2018 FY to March 2019 Change YoY

Sales 109,019 122,000 ＋11.9％

Cosmetics 66,048 71,350 ＋8.0％

Nutritional supplements 35,933 43,700 ＋21.6％

Other 7,037 6,950 (1.2％)HatsugaGenmai 2,248 2,000 (11.1％)

Kale Juice 2,615 2,650 ＋1.3％

Operating income 8,448 12,200 ＋44.4％

Ordinary income 8,650 12,300 ＋42.2％

Net income 6,191 8,400 ＋35.7％

Sales breakdown (full year)

Results forecasts by cosmetics brand

FANCL 56,320 ＋10.2（Domestic＋10.8%,Overseas＋5.1％）

ATTENIR 11,720 ＋6.1％

boscia 2,600 -16.6％

Nutritional supplements 43,700 ＋21.6％（Domestic＋21.4％,Overseas＋24.8％）

【Assumptions behind the plan】

Inbound sales:13.8bn(The previous fiscal year 8.7bn)


125

8,448

12,200

399

9,219

2,6151,030

1,160935

Fixed costsVariable costs

Positive factors Negative factors

(Millions of yen)

Plan

Advertisingcosts

Personnel costs

Other fixed costs

Othervariable

costs

Increase in gross profit

due to growth in sales

Improvementin cost-of-sales

ratio

Salespromotions

costs

Full-year outlook: Analysis of change in operating income

FY to March2018

FY to March2019

VISION2030-Make the world healthier and more beautiful-


2nd Medium-Term Management Plan「ACTION 2020」～Creating the future～

ALL‐FANCL,ONE‐FANCL ～NEXT FANCL～

November,2018Free cakes gifted to all personnel

to commemorate record high monthly sales

FY2019～2021 FY2022～2031

VISION2030

Maintain growthtrajectory, raise

profitability. Establish a robust

platform for overseas growth

2nd Medium-Term PlanACTION 2020 Strong growth of

overseas businessTargeting 25% overseas

sales ratio in FY2031

3rd Medium-Term Plan and beyond

fancl group financial results briefing...status of inbound sales (direct stores) though some impact...

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