Research Coverage Report by Shared Research Inc.
Transcript of Research Coverage Report by Shared Research Inc.
Oisix ra daichi / 3182
COVERAGE INITIATED ON: 2019.07.10
LAST UPDATE: 2021.01.29
Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to
provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate,
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always present opinions from company management as such. Our views are ours where stated. We do not try to
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Research Coverage Report by Shared Research Inc.
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INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent
earnings. First-time readers should start at the business section later in the report.
Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3 Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5 Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 6
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------ 6 Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 8
Quarterly trends and results ----------------------------------------------------------------------------------------------------------------------------------- 8 Business ------------------------------------------------------------------------------------------------------------------------------------------------ 23
Business model --------------------------------------------------------------------------------------------------------------------------------------------------- 23 Overview ----------------------------------------------------------------------------------------------------------------------------------------------------------- 23
Market and value chain---------------------------------------------------------------------------------------------------------------------------- 42 Japanese families ------------------------------------------------------------------------------------------------------------------------------------------------- 42 Japan’s organic food market --------------------------------------------------------------------------------------------------------------------------------- 45 Japan’s online food retail market --------------------------------------------------------------------------------------------------------------------------- 46 Japanese farms ---------------------------------------------------------------------------------------------------------------------------------------------------- 47 Competition ------------------------------------------------------------------------------------------------------------------------------------------------------ 48 Strengths and weaknesses ------------------------------------------------------------------------------------------------------------------------------------ 49
Historical results and financial statements -------------------------------------------------------------------------------------------------- 50 Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 50 Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 51 Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 52 Historical performance ---------------------------------------------------------------------------------------------------------------------------------------- 53
Other information ---------------------------------------------------------------------------------------------------------------------------------- 75 History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 75 Corporate governance and top management --------------------------------------------------------------------------------------------------------- 80 Dividend policy -------------------------------------------------------------------------------------------------------------------------------------------------- 81 Major shareholders (as of end-September 2020) ----------------------------------------------------------------------------------------------------- 81 Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 82 Profile ---------------------------------------------------------------------------------------------------------------------------------------------------------------- 82
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Executive summary
Business overview
◤ Oisix ra daichi is an online and catalog retailer specializing in the sale and delivery of fresh food products and ingredients. The
company takes pride in offering products that are safe, delicious, and of high added value, including organic vegetables,
specially cultivated agricultural products, and additive-free processed foods. It says its business concept goes beyond a simple
food delivery service as it aims to provide solutions to bring more value to customers’ dining tables once the products are
delivered to their homes. It had about 339,000 subscribers (customers) across all brands at end-March 2020 and forecasts
sales of JPY90bn in FY03/21.
◤ Suppliers and pricing: The company sources exclusively from producers (farmers) and processed food manufacturers that
fulfill its safety and quality standards, so both purchase and sales prices are in the premium range. Its gross profit margin is
about 50%.
◤ Business model: In contrast to the typical e-commerce website, where the majority of sales are accounted for by one-off
purchases, most Oisix ra daichi customers are subscribers to a weekly home delivery service. Each week, customers can add or
delete items as necessary from a recommended list of products found in their shopping carts. Because the orders received
from customers are then passed along to producers, the company can usually avoid holding inventories at its distribution
centers (with the exception of items that have long shelf lives and can be easily handled), allowing it to keep spoilage costs
below those of other sellers (including online supermarkets and brick-and-mortar retailers). For last mile delivery, the
company uses Yamato Transport (which allows customers to specify delivery times) and chartered trucks that run on
scheduled delivery routes.
◤ Key performance indicators (KPIs): Core KPIs are the number of subscribers, order size, and purchase frequency
(per-customer order count over a given period), with the number of subscribers having the greatest effect on sales growth.
Customer spending per order is relatively stable due to the presence of a minimum order amount for free delivery while
purchase frequency is generally determined by the lifestyles of the target customer base. Growth in the number of subscribers
is affected by the amount the company spends in advertising. The company has three brands—Oisix, Daichi wo Mamoru Kai
(Daichi), and Radish Boya, which are managed as individual segments. The segment profit to sales ratio, before advertising
expenses is about 20% for all brands. Segment profit is defined by the company as “sales minus costs that can be linked to
each business segment.”
◤ Growth driver: A growth driver for the Oisix brand is the popularity of the Kit Oisix meal kit among customers seeking to
save time in meal preparation. Kit Oisix meals are also attractive and photograph well for posting on social media. The
company’s basic strategy in the short term is to communicate the safety, security, and convenience of Kit Oisix to acquire new
customers.
◤ Sales growth targets by brand: The growth rate of different brands varies depending on the stage that particular business
is in; at its growth driver Oisix brand, the company hopes to see sales continue to grow at about the same pace seen in recent
years, roughly 20% per annum. At the Daichi and Radish Boya brands, it will first focus on creating new products and services
that better meet customer needs and have sales move into a second growth stage, after which it expects annual growth rates
running above 10% in the long term.
◤ Brands, customers, business segments: The name Oisix ra daichi combines the names of Oisix, Radish Boya (merged
October 2018), and Daichi wo Mamoru Kai (Daichi; merged October 2017). Main customers for Oisix are in their 30s and 40s,
late 50s or over for Daichi, and 40s and 50s for Radish Boya. Because the different brands target different customer needs, the
company is able to successfully differentiate them and aims to maintain all three brands while at the same time pursuing
synergies in marketing and fulfillment. Radish Boya was operating in the red before the acquisition, but quickly moved into
the black after Oisix ra daichi increased earnings per delivery by applying its KPI-focused management system. The company
reports four business segments–the home delivery businesses of Oisix, Daichi, and Radish Boya, and the Other businesses
segment, which includes retail stores. Subscriber counts at end-March 2020 were 245,000 for Oisix (+18.8% YoY), 37,000 for
Daichi (-7.5% YoY), and 57,000 for Radish Boya (-9.6% YoY).
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◤ Push into US market: In April 2019, the company announced it would acquire US-based Three Limes Inc., which runs a
vegan meal kit home delivery service under the brand name Purple Carrot. The company is looking to get Purple Carrot on a
profitable footing as soon as possible with the application of the management expertise it has built up in the meal kit
subscription business through its operation of Oisix, Daichi, and Radish Boya. At the same time, it is using the recipes
developed by Purple Carrot as the basis for selling vegan meal kits in Japan through its Kit Oisix meal kit service.
◤ Main competitors: Having acquired Daichi and Radish Boya, Oisix ra daichi does not compete with any large domestic
companies in the premium price range. Businesses such as consumer cooperatives, supermarkets, online food retailers, and
convenience stores are not direct competitors in all respects, as each has its own appeal depending on the consumer’s
particular situation and budget.
Trends and outlook
◤ For FY03/20, the company reported consolidated sales of JPY71.0bn (+11.0% YoY), operating profit of JPY2.5bn (+6.7% YoY),
net income attributable to owners of the parent of JPY790mn (-66.9% YoY), and EBITDA of JPY3.6bn (+14.0% YoY). Progress
versus full-year company forecasts was sales 101.5%, operating profit 112.1%, and EBITDA 112.3%, meaning that these
results all achieved company targets. Since March 2020 there has been increased demand for home delivery due to the
spread of the novel coronavirus disease, leading to increase to sales of approximately JPY900mn and to operating profit of
approximately JPY250mn, mainly in domestic home delivery businesses. However, net income only amounted to 79.0% of the
full-year company forecast. Net income failed to reach the level forecast due to the recording of a JPY300mn impairment loss
for goodwill amortization as an equity method non-operating expense, in consideration of the uncertain future outlook for
affiliated company equity method affiliate Welcome Co., Ltd. (DEAN & DELUCA), which has temporarily closed stores.
◤ Revised FY03/21 company forecast: On January 28, 2021, the company announced revisions to its full-year earnings forecast.
It now forecasts sales of JPY97.5bn (previously: JPY90.0bn), operating profit of JPY6.5bn (JPY5.0bn), EBITDA of JPY8.0bn
(JPY6.4bn), net income attributable to owners of the parent of JPY4.0bn (JPY2.5bn), and EPS of JPY105.76 (JPY66.10). In its
previous full-year FY03/21 forecast announced October 22, 2020, Oisix ra daichi had assumed that the novel coronavirus
pandemic would gradually converge from autumn 2020. However, through end-Q3, demand for food delivery services
continued to increase ahead of assumptions due in part to the effect of a third wave of the viral infection. As a result, the
number of subscribers and ARPU (average monthly spend per customer) increased more than previously assumed,
particularly in the domestic home delivery business, and the company now expects sales to exceed the previously announced
forecast. The company also expects profit to surpass the previously announced forecast due to increased sales and the profit
margin improving on lower distribution and delivery cost accompanying the rise in ARPU.
◤ Medium-term business plan: Oisix ra daichi does not release any future guidance in the form of a medium-term business plan.
In its 1H FY03/20 results briefing materials, the company indicated that its policy is to improve the segment profit margin in
the medium- to long-term by approximately 3.0–5.0%, strengthening profitability through reducing the ratio of fixed
operations, improving product costs, as well as costs associated with the distribution center and delivery. The company also
indicated additional initiatives based on the current situation in its full-year FY03/20 results briefing materials.
Strengths and weaknesses
◤ Shared Research sees the company’s strengths as its relationships with producers and manufacturers that provide access to a
stable supply of quality food, a unique distribution network that connects producers with consumers, and product
development that addresses latent consumer needs with such offerings as Kit Oisix.
◤ Weaknesses in our view are the difficulty of having the value of organic food recognized by consumers who are satisfied with
supermarket-quality food, the company’s focus on both safety and convenience, which pushes up prices and limits the market,
and the tendency of prices that include delivery charges to jump in tandem with rises in distribution costs.
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Key financial data
Source: Shared Research based on company data; per-share data is adjusted for stock splits.
Simple YoY comparisons of consolidated sales and earnings are not possible, because Daichi and Radish Boya were added to the consolidated financial
statements from end-FY03/17 and end-FY03/18 respectively. (Note that only the balance sheet is consolidated as of financial year-end.)
Income statement FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21(JPYmn) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons. Est.Sales 12,610 14,576 15,909 18,060 20,159 23,017 39,987 64,026 71,041 97,500
YoY - 15.6% 9.1% 13.5% 11.6% 14.2% 73.7% 60.1% 11.0% 37.2%Gross profit 6,033 6,995 7,611 8,609 9,861 11,199 18,727 30,522 33,818
YoY - 15.9% 8.8% 13.1% 14.5% 13.6% 67.2% 63.0% 10.8% GPM 47.8% 48.0% 47.8% 47.7% 48.9% 48.7% 46.8% 47.7% 47.6%
Operating profit 580 734 741 649 774 753 891 2,312 2,467 6,500 YoY - 26.6% 1.0% -12.4% 19.3% -2.8% 18.4% 159.4% 6.7% 163.5%OPM 4.6% 5.0% 4.7% 3.6% 3.8% 3.3% 2.2% 3.6% 3.5% 6.7%
Recurring profit 596 734 775 669 806 778 937 2,302 1,826 YoY - 23.0% 5.7% -13.8% 20.6% -3.5% 20.4% 145.6% -20.7% RPM 4.7% 5.0% 4.9% 3.7% 4.0% 3.4% 2.3% 3.6% 2.6%
EBITDA 653 862 931 858 1,016 996 1,670 3,154 3,595 8,000 YoY - 32.1% 8.0% -7.8% 18.4% -2.0% 67.7% 88.9% 14.0% 122.5%EBITDA margin 5.2% 5.9% 5.9% 4.8% 5.0% 4.3% 4.2% 4.9% 5.1% 8.2%
Net income 332 339 437 347 539 515 237 2,388 790 4,000 YoY - 2.1% 28.8% -20.5% 55.1% -4.3% -54.0% 906.4% -66.9% 406.2%Net margin 2.6% 2.3% 2.7% 1.9% 2.7% 2.2% 0.6% 3.7% 1.1% 4.1%
Per-share data (split-adjusted; JPY) Shares issued (year-end; '000) 17,853 21,873 22,998 23,681 24,269 31,752 33,102 33,595 34,324 EPS 18.6 18.0 19.6 14.9 22.6 21.9 7.4 71.4 23.2 105.8 EPS (fully diluted) - 17.9 17.1 13.6 21.2 20.9 7.2 70.5 23.0 Dividend per share - - - - - - - - - - Book value per share - 130 147 160 167 288 304 371 409 Balance sheet (JPYmn)
Cash and cash equivalents 829 1,959 2,379 2,659 2,718 5,248 7,236 8,136 7,677 Total current assets 2,546 3,688 4,430 5,061 5,424 10,688 15,262 16,602 18,250 Tangible fixed assets 251 545 624 485 481 785 878 1,008 1,433 Investments and other assets 440 162 312 407 402 943 1,323 2,993 2,170 Intangible fixed assets 165 318 325 378 498 2,636 2,384 2,147 4,235 Total assets 3,402 4,712 5,690 6,332 6,803 15,051 19,847 22,749 26,088
Short-term debt 2 1 1 1 1 12 43 44 39 Current liabilities 1,792 1,788 2,224 2,480 2,867 5,334 8,730 9,450 11,044
Long-term debt 1 3 2 2 1 62 106 96 79 Fixed liabilities 78 86 93 74 70 570 1,069 794 848 Total liabilities 1,870 1,874 2,317 2,554 2,936 5,903 9,799 10,244 11,892
Shareholders' equity 1,531 2,838 3,373 3,778 3,867 9,146 10,046 12,472 14,021 Total net assets 1,531 2,838 3,373 3,778 3,867 9,148 10,048 12,505 14,196 Total interest-bearing debt 2 4 3 3 2 74 150 139 118 Statement of cash flows (JPYmn) Cash flows from operating activities 453 582 712 516 818 665 1,638 3,115 1,080 Cash flows from investing activities -529 -468 -388 -290 -307 -497 -281 -2,216 -1,754 Cash flows from financing activities -2 956 96 54 -452 38 629 6 255 Financial ratios ROA (RP-based) 18.1% 14.9% 11.1% 12.3% 7.1% 5.4% 10.8% 7.5% ROE 15.5% 14.1% 9.7% 14.1% 7.9% 2.5% 21.2% 6.0%
Equity ratio 60.2% 59.3% 59.7% 56.8% 60.8% 50.6% 54.8% 53.7% Total asset turnover 3.59 3.06 3.00 3.07 2.11 2.29 3.01 2.91 Net margin 2.3% 2.7% 1.9% 2.7% 2.2% 0.6% 3.7% 1.1%
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Recent updates
Highlights On January 29, 2021, Oisix ra daichi Inc. announced the total number of treasury shares it acquired through recent off-auction
own share repurchase trading and indicated that it has ceased acquiring treasury shares.
The company disclosed that the total number of treasury shares it acquired through the off-auction own share repurchase trading
(ToSTNeT-3) it announced on January 28, 2021 was the maximum possible 1,466,000 shares (for a price of JPY4.5bn). It does not
plan to acquire more treasury shares based on resolutions passed during the January 28, 2021 meeting of its Board of Directors.
On January 28, 2021, the company announced revisions to its earnings forecast.
Revised full-year FY03/21 forecast
▷ Sales: JPY97.5bn (previously: JPY90.0bn)
▷ Operating profit: JPY6.5bn (JPY5.0bn)
▷ EBITDA: JPY8.0bn (JPY6.4bn)
▷ Net income*: JPY4.0bn (JPY2.5bn)
▷ EPS: JPY105.76 (JPY66.10)
*Net income attributable to owners of the parent.
Reasons for revisions
In its previous full-year FY03/21 forecast announced October 22, 2020, Oisix ra daichi had assumed that the novel coronavirus
pandemic would gradually converge from autumn 2020. However, through end-Q3, demand for food delivery services
continued to increase ahead of assumptions due in part to the effect of a third wave of the viral infection. As a result, the number
of subscribers and ARPU (average monthly spend per customer) increased more than previously assumed, particularly in the
domestic home delivery business, and the company now expects sales to exceed the previously announced forecast. The
company also expects profit to surpass the previously announced forecast due to increased sales and the profit margin improving
on lower distribution and delivery cost accompanying the rise in ARPU.
On the same day, the company announced the acquisition of treasury shares through the Off-Auction Own Share Repurchase
Trading System (ToSTNeT-3).
▷ Method: The company will place orders through brokerages on the Tokyo Stock Exchange’s ToSTNeT-3 to purchase its own
shares at 8:45am on January 29, 2021 at the January 28, 2021 closing price of JPY3,070 (no changes will be made to other
trading systems or trading times). This purchase order will be effective only for the specified trading time.
▷ Total number of shares to be acquired: 1,466,000 (maximum), equating to 3.86% of the total number of shares outstanding
(excluding treasury shares)
▷ Total acquisition price: JPY4.5bn (maximum)
▷ Reason for acquisition: The company will acquire treasury shares in order to ensure a flexible capital strategy in line with future
business development. With regard to its policy for the disposal of treasury shares acquired through the above purchase, the
company is considering using the shares for M&A and capital and business alliances.
On December 11, 2020, Shared Research updated the report following interviews with the company.
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On November 12, 2020, the company announced earnings results for 1H FY03/21; see the results section for details.
For previous releases and developments, please refer to the News and topics section.
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Trends and outlook
Quarterly trends and results
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Seasonal factors: Spend per order tends to be higher in Q3 (October–December) than the rest of the year because of sales of products with a high unit
price including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (food traditionally served at New Year).
Profit particularly spikes in Q3. On the other hand, spend per order tends to be lower during the Obon break in mid-August, when many customers are
away from home. Additionally, seasonal trends have been different in FY03/21 due to the COVID-19 pandemic.
Simple YoY comparisons of consolidated sales and earnings are not possible, because Daichi and Radish Boya were added to the consolidated financial
statements from end-FY03/17 and end-FY03/18 respectively. (Note that only the balance sheets are consolidated as of financial year-end.)
Cumulative(JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 % of Est. FY Est.Sales 16,854 31,720 48,906 64,026 16,265 32,552 52,425 71,041 23,132 47,566 48.8% 97,500
YoY 75.5% 67.5% 63.0% 60.1% -3.5% 2.6% 7.2% 11.0% 42.2% 46.1% 37.2%Gross profit 7,939 15,069 23,313 30,522 7,712 15,357 24,684 33,818 11,579 23,979
YoY 78.9% 70.4% 65.9% 63.0% -2.9% 1.9% 5.9% 10.8% 50.1% 56.1% GPM 47.1% 47.5% 47.7% 47.7% 47.4% 47.2% 47.1% 47.6% 50.1% 50.4%
SG&A expenses 7,329 13,954 21,048 28,209 7,169 14,456 23,086 31,351 9,503 20,003 YoY 70.5% 62.1% 57.6% 58.2% -2.2% 3.6% 9.7% 11.1% 32.6% 38.4% SG&A ratio 43.5% 44.0% 43.0% 44.1% 44.1% 44.4% 44.0% 44.1% 41.1% 42.1%
Operating profit 610 1,115 2,266 2,312 543 900 1,597 2,467 2,076 3,976 61.2% 6,500YoY 331.2% 369.5% 227.2% 159.4% -11.0% -19.3% -29.5% 6.7% 282.3% 341.8% 163.5%OPM 3.6% 3.5% 4.6% 3.6% 3.3% 2.8% 3.0% 3.5% 9.0% 8.4% 6.7%
Recurring profit 626 1,139 2,288 2,302 478 743 1,423 1,826 1,840 3,681 YoY 300.8% 338.7% 214.2% 145.6% -23.7% -34.7% -37.8% -20.7% 284.9% 395.4% RPM 3.7% 3.6% 4.7% 3.6% 2.9% 2.3% 2.7% 2.6% 8.0% 7.7%
EBITDA 808 1,513 2,882 3,154 755 1,348 2,381 3,595 2,419 4,678 58.5% 8,000YoY 152.5% 138.3% 124.8% 88.9% -6.6% -10.9% -17.4% 14.0% 220.4% 247.0% 122.5%EBITDA margin 4.8% 4.8% 5.9% 4.9% 4.6% 4.1% 4.5% 5.1% 10.5% 9.8% 8.2%
Net income 537 894 2,533 2,388 270 390 696 790 1,184 2,452 61.3% 4,000YoY 638.7% 856.2% 653.7% 906.4% -49.7% -56.4% -72.5% -66.9% 337.8% 528.7% 406.2%Net margin 3.2% 2.8% 5.2% 3.7% 1.7% 1.2% 1.3% 1.1% 5.1% 5.2% 4.1%
Quarterly(JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Sales 16,854 14,867 17,186 15,120 16,265 16,287 19,873 18,615 23,132 24,434
YoY 75.5% 59.3% 55.2% 51.5% -3.5% 9.6% 15.6% 23.1% 42.2% 50.0%Gross profit 7,939 7,130 8,244 7,209 7,712 7,645 9,327 9,134 11,579 12,400
YoY 78.9% 61.8% 58.4% 54.1% -2.9% 7.2% 13.1% 26.7% 50.1% 62.2%GPM 47.1% 48.0% 48.0% 47.7% 47.4% 46.9% 46.9% 49.1% 50.1% 50.7%
SG&A expenses 7,329 6,625 7,094 7,162 7,169 7,287 8,630 8,265 9,503 10,500YoY 70.5% 53.7% 49.3% 60.0% -2.2% 10.0% 21.7% 15.4% 32.6% 44.1%SG&A ratio 43.5% 44.6% 41.3% 47.4% 44.1% 44.7% 43.4% 44.4% 41.1% 43.0%
Operating profit 610 505 1,150 47 543 357 697 870 2,076 1,900YoY 331.2% 426.1% 152.9% -76.6% -11.0% -29.3% -39.4% 1767.2% 282.3% 432.3%OPM 3.6% 3.4% 6.7% 0.3% 3.3% 2.2% 3.5% 4.7% 9.0% 7.8%
Recurring profit 626 512 1,149 14 478 265 680 402 1,840 1,841YoY 300.8% 395.9% 145.2% -93.4% -23.7% -48.3% -40.8% 2815.6% 284.9% 594.8%RPM 3.7% 3.4% 6.7% 0.1% 2.9% 1.6% 3.4% 2.2% 8.0% 7.5%
EBITDA 808 705 1,369 272 755 593 1,033 1,214 2,419 2,259YoY 152.5% 123.8% 111.6% -29.9% -6.6% -15.9% -24.5% 346.3% 220.4% 280.9%EBITDA margin 4.8% 4.7% 8.0% 1.8% 4.6% 3.6% 5.2% 6.5% 10.5% 9.2%
Net income 537 356 1,640 -146 270 120 306 94 1,184 1,268YoY 638.7% 1618.6% 575.7% - -49.7% -66.5% -81.3% - 337.8% 960.3%Net margin 3.2% 2.4% 9.5% - 1.7% 0.7% 1.5% 0.5% 5.1% 5.2%
FY03/20
FY03/20
FY03/21
FY03/21
FY03/21FY03/19
FY03/19
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1H FY03/21 results
Overview ▷ 1H FY03/21 sales were JPY47.6bn (+46.1% YoY), operating profit was JPY4.0bn (+341.8% YoY), EBITDA was JPY4.7bn
(+247.0% YoY), and net income attributable to owners of the parent was JPY2.5bn (+528.7% YoY). The growth in home
delivery demand triggered by the COVID-19 pandemic has slowly been settling down, but in Q2 both the subscriber count
and ARPU showed steady growth leading to higher sales.
▷ In the three domestic home delivery businesses, the rise in the number of subscribers added approximately JPY3.5bn YoY to
sales and increased ARPU added JPY6.6bn YoY to sales. Increases in subscribers and ARPU added around JPY900mn and
JPY1.6bn YoY, respectively, to EBITDA. The company essentially resolved the distribution capacity constraints that occurred
at Oisix in Q1 and resumed unrestricted subscriber acquisition during Q2, resulting in about 23,000 new Oisix subscribers
during Q2. ARPU increased 15–20% YoY for all three brands. Home delivery demand grew due to ongoing self-restraint on
summer travel and inter-regional travel to visit families. The rise in ARPU led to greater efficiency of logistics and delivery,
thereby improving segment profit margins.
▷ Oisix restricted new subscriber acquisition primarily in Q1 due to capacity constraints, resulting in savings of about
JPY750mn in sales promotion expenses, which temporarily raised profits in 1H.
▷ From Q3 FY03/20, Three Limes Inc.’s results (trading as Purple Carrot) have been consolidated (including amortization of
goodwill). In 1H, this resulted in a JPY4.1bn YoY boost to sales and a JPY350mn YoY boost to EBITDA.
▷ The company made no further changes to its revised full-year forecast for FY03/21 announced on October 22, 2020. ARPU may
drift lower hereafter, and sales and profit growth rates may gradually decelerate. The forecast is meant to be conservative to
account for the likelihood of a diminishing tailwind from the COVID-19 pandemic. In Q3 and Q4 the company expects to
spend JPY750mn in PR expenses unused in 1H. Separate from the unused portion, it plans to invest in large PR activities in Q4
for the spring season. For details on the forecast, please refer to the Company forecast for FY03/21 section. Progress toward the
full-year forecast (as revised on October 22, 2020) put 1H sales at 52.9%, operating profit at 79.5%, EBITDA at 73.1%, and net
income attributable to owners of the parent at 98.1%.
▷ The company revised upward its initial end-FY03/21 subscriber count target (total) from 362,000 to 389,000 (+27,000 versus
initial plan). Total subscriber count at end-1H was 382,000. For Oisix, it adjusted its end-FY03/21 target for subscriber count
upward from 270,000 to 285,000 (+15,000), since the Oisix subscriber count had already reached 275,000 at end-1H.
▷ The company undertook equity financing in April 2020 (announced in March 2020). The public offering of new shares
together with a separate private placement is expected to bring in net proceeds of up to JPY4,548mn. Of this amount,
JPY3,560mn has been budgeted for investment spending on the company’s new Ebina Distribution Center and computer
systems, with this spending expected to be completed by October 2021. Another JPY880mn has been budgeted for
upgrading core systems, including upgrades of the core system platform for the Radish Boya business; this investment
spending is expected to be completed by March 2023. Any overage above the JPY4,480mn (planned for use as described
above) is slated for use by March 2021 to fund advertising/promotional spending and other working capital needs.
▷ Sayama Station was completed on schedule in October. The company initially planned to operate this satellite center from Q3,
but improvements to existing distribution centers exceeded expectations, so the start of operation of Sayama Station was
pushed back to Q4.
▷ Regarding the business alliance with Ootoya Holdings Co., Ltd. (JASDAQ: 2705) announced in August 2020, in light of the
successful takeover of Ootoya Holdings by Colowide Co., Ltd. (TSE1: 7616), Oisix ra daichi is currently in discussions with the
new management team at Ootoya Holdings and has also begun discussions with Colowide.
▷ Oisix ra daichi announced new initiatives to protect the environment. It plans to adopt its own “green standards” (aiming to
halve greenhouse gas emissions from its production processes within five years) and conduct trials of delivery vehicles
powered by green energy, work to make its packaging more environmentally friendly (changing at least half of its packaging
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to eco-friendly alternatives within five years), enhance efforts to prevent food loss throughout its supply chain centered on its
Kit Oisix meal kits, and promote sales of upcycled foods (made by converting foodstuffs that would otherwise be discarded
into new foods).
Segment information KPIs of the three home delivery businesses
Source: Shared Research based on company data. Notes: In Q1 FY03/20, the company revised the definitions of its KPIs for FY03/19 onward. This has resulted in the loss of continuity with data after FY03/18.
▷ The number of Oisix subscribers has been increasing because of a steady rise in customers purchasing Kit Oisix (185,875 at
end-September 2020, +38% YoY), with new customers attracted by meal kits.
▷ In Q1 and Q2 FY03/21, the number of subscribers and ARPU increased sharply YoY for all three businesses due to the surge in
home delivery demand in the wake of the COVID-19 pandemic. However, the company commented that it thinks ARPU may
drift lower from Q3 onward. There were no changes in the customer demographic of new subscribers among its three brands,
and the company believes that customers who were already interested in the service started using it because of the COVID-19
pandemic.
▷ At Daichi, the number of subscribers declined from Q4 FY03/18 until Q4 FY03/20, while ARPU has been on the rise over the
same period. This reflects changes in services and the company’s ongoing promotions.
▷ The number of Radish Boya subscribers was coming down until Q4 FY03/20 as the company changed the delivery fee schedule
and made other changes aimed at reducing the number of light users (whose order value is below the company’s breakeven
point per order) and otherwise increase profits as opposed to sales. In addition to reducing the number of light users, the
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
No. of subscribers 177,606 186,929 193,461 202,427 221,612 226,187 230,393 239,837 252,303 274,929
ARPU (JPY) 11,558 11,118 11,522 11,173 11,095 10,634 11,379 11,745 13,822 12,986
Average spend (JPY) 6,005 5,973 6,149 6,013 5,884 5,840 6,055 6,166 6,748 6,201
Purchase frequency (x) 1.92 1.86 1.87 1.86 1.89 1.82 1.88 1.90 2.05 2.09
No. of subscribers 44,086 43,775 42,071 40,189 38,517 37,532 37,121 37,127 43,941 44,878
ARPU (JPY) 20,247 19,807 20,226 19,171 20,821 21,159 22,391 21,604 27,117 24,128
Average spend (JPY) 7,899 8,121 8,573 8,046 8,195 8,292 8,732 8,508 9,234 8,610
Purchase frequency (x) 2.56 2.44 2.36 2.38 2.54 2.55 2.56 2.54 2.94 2.80
No. of subscribers 74,240 71,616 66,070 62,935 61,009 59,400 58,528 56,935 62,515 61,822
ARPU (JPY) 17,158 17,076 18,439 17,401 18,202 17,926 19,659 18,621 23,189 20,884
Average spend (JPY) 5,460 5,616 6,114 5,869 6,055 6,060 6,398 6,206 7,028 6,373
Purchase frequency (x) 3.14 3.04 3.02 2.97 3.01 2.96 3.07 3.00 3.30 3.28
No. of subscribers YoY 120.4% 120.0% 118.8% 119.3% 124.8% 121.0% 119.1% 118.5% 113.8% 121.5%
ARPU YoY 97.7% 100.6% 99.4% 96.3% 96.0% 95.6% 98.8% 105.1% 124.6% 122.1%
Average spend YoY 103.2% 104.7% 104.1% 101.5% 98.0% 97.8% 98.5% 102.5% 114.7% 106.2%
Purchase frequency YoY 94.6% 95.9% 95.4% 94.9% 98.4% 97.8% 100.5% 102.2% 108.5% 114.8%
No. of subscribers YoY 97.3% 100.2% 95.9% 89.3% 87.4% 85.7% 88.2% 92.4% 114.1% 119.6%
ARPU YoY 101.8% 99.7% 91.1% 99.6% 102.8% 106.8% 110.7% 112.7% 130.2% 114.0%
Average spend YoY 104.1% 105.5% 102.8% 104.1% 103.7% 102.1% 101.9% 105.7% 112.7% 103.8%
Purchase frequency YoY 98.5% 94.6% 88.4% 95.6% 99.2% 104.5% 108.5% 106.7% 115.7% 109.8%
No. of subscribers YoY 84.3% 81.4% 74.0% 80.6% 82.2% 82.9% 88.6% 90.5% 102.5% 104.1%
ARPU YoY 104.3% 107.4% 107.5% 104.6% 106.1% 105.0% 106.6% 107.0% 127.4% 116.5%
Average spend YoY 99.3% 101.8% 103.8% 111.2% 110.9% 107.9% 104.6% 105.7% 116.1% 105.2%
Purchase frequency YoY 105.0% 105.6% 103.8% 94.3% 95.9% 97.4% 101.7% 101.0% 109.6% 110.8%
FY03/21FY03/20
Radish Boya
FY03/19
Oisix
Daichi
Radish Boya
Oisix
Daichi
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company’s move to focus more resources on making purchase proposals to existing subscribers has led to increases in average
spend.
Seasonal factors: Spend per order tends to be higher in Q3 (October–December) than the rest of year because of sales of products with a high unit
price including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (food traditionally served at New Year).
Profit particularly spikes in Q3. On the other hand, spend per order tends to be lower during the Obon break in mid-August, when many customers are
away from home. Additionally, seasonal trends have been different in FY03/21 due to the COVID-19 pandemic.
Sales and profit by individual segments
Source: Shared Research based on company data. Note: Profit forecasts for individual segments represent the company’s initial forecasts. Profit figures for individual segments are segment profit, defined by the company as “sales minus costs that can be linked to each business segment.”
Goodwill amortization is not reflected in the profit figures shown for individual segments, and is included in adjustments.
SegmentsCumulative (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Sales 16,854 31,720 48,906 64,026 16,265 32,552 52,425 71,041 23,132 47,566
YoY 75.5% 67.5% 63.0% 60.1% -3.5% 2.6% 7.2% 11.0% 42.2% 46.1%Home Delivery: Oisix 6,864 13,769 22,191 29,619 8,308 16,524 26,523 35,830 11,265 23,047
YoY 18.5% 20.0% 20.1% 19.4% 21.0% 20.0% 19.5% 21.0% 35.6% 39.5%Home Delivery: Daichi wo Mamoru Kai 2,769 5,440 8,406 10,902 2,587 5,138 7,937 10,541 3,636 7,094
YoY -0.8% -0.9% -1.2% -2.8% -6.6% -5.6% -5.6% -3.3% 40.5% 38.1%Home Delivery: Radish Boya 5,811 9,926 14,346 18,028 3,771 7,460 11,410 14,981 4,721 9,083
YoY - - - - -35.1% -24.8% -20.5% -16.9% 25.2% 21.8%Other 1,483 2,756 4,199 5,794 1,663 3,529 6,384 9,962 3,601 8,522
YoY 33.6% 27.4% 28.6% 36.3% 12.2% 28.1% 52.0% 71.9% 116.5% 141.5%Adjustments -74 -171 -236 -318 -64 -98 172 -273 -95 -181
Operating profit (segment profit) 610 1,115 2,266 2,312 543 900 1,597 2,467 2,076 3,976 YoY 331.2% 369.5% 227.2% 159.4% -11.0% -19.3% -29.5% 6.7% 282.3% 341.8%Operating profit margin 3.6% 3.5% 4.6% 3.6% 3.3% 2.8% 3.0% 3.5% 9.0% 8.4%Home Delivery: Oisix 970 1,943 3,371 4,036 933 1,868 3,261 4,801 2,367 4,335
YoY 43.9% 39.6% 39.2% 22.7% -3.8% -3.9% -3.3% 19.0% 153.7% 132.1%Segment profit margin 14.1% 14.1% 15.2% 13.6% 11.2% 11.3% 12.3% 13.4% 21.0% 18.8%
Home Delivery: Daichi wo Mamoru Kai 479 960 1,536 1,989 457 885 1,397 1,889 724 1,368 YoY -11.1% -10.9% -6.9% -5.1% -4.6% -7.8% -9.0% -5.0% 58.4% 54.6%Segment profit margin 17.3% 17.6% 18.3% 18.2% 17.7% 17.2% 17.6% 17.9% 19.9% 19.3%
Home Delivery: Radish Boya 1,030 1,765 2,657 3,342 688 1,273 2,001 2,667 899 1,626 YoY - - - - -33.2% -27.9% -24.7% -20.2% 30.7% 27.7%Segment profit margin 17.7% 17.8% 18.5% 18.5% 18.2% 17.1% 17.5% 17.8% 19.0% 17.9%
Other 154 290 479 724 256 557 656 846 391 1,038 YoY -16.8% -24.5% -16.1% -4.7% 66.2% 92.1% 37.0% 16.9% 52.7% 86.4%Segment profit margin 10.4% 10.5% 11.4% 12.5% 15.4% 15.8% 10.3% 8.5% 10.9% 12.2%
Adjustments 2,024 3,844 5,779 7,779 1,792 3,683 5,719 7,736 2,305 4,391 SegmentsQuarterly (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Sales 16,854 14,867 17,186 15,120 16,265 16,287 19,873 18,615 23,132 24,434
YoY 75.5% 59.3% 55.2% 51.5% -3.5% 9.6% 15.6% 23.1% 42.2% 50.0%Home Delivery: Oisix 6,864 6,905 8,422 7,428 8,308 8,216 9,999 9,307 11,265 11,782
YoY 18.5% 21.6% 20.1% 17.6% 21.0% 19.0% 18.7% 25.3% 35.6% 43.4%Home Delivery: Daichi wo Mamoru Kai 2,769 2,671 2,965 2,497 2,587 2,551 2,799 2,604 3,636 3,458
YoY -0.8% -1.0% -1.8% -7.8% -6.6% -4.5% -5.6% 4.3% 40.5% 35.6%Home Delivery: Radish Boya 5,811 4,115 4,420 3,682 3,771 3,689 3,950 3,571 4,721 4,362
YoY - - - - -35.1% -10.3% -10.6% -3.0% 25.2% 18.2%Other 1,483 1,273 1,443 1,595 1,663 1,866 2,854 3,578 3,601 4,921
YoY 33.6% 20.7% 31.2% 61.6% 12.2% 46.6% 97.8% 124.4% 116.5% 163.7%Adjustments -74 -97 -65 -82 -64 -34 270 -445 -95 -86
Operating profit (segment profit) 610 505 1,150 47 543 357 697 870 2,076 1,900 YoY 331.2% 426.1% 152.9% -76.6% -11.0% -29.3% -39.4% 1767.2% 282.3% 432.3%Operating profit margin 3.6% 3.4% 6.7% 0.3% 3.3% 2.2% 3.5% 4.7% 9.0% 7.8%Home Delivery: Oisix 970 973 1,428 665 933 935 1,393 1,540 2,367 1,968
YoY 43.9% 35.5% 38.8% -23.3% -3.8% -3.9% -2.5% 131.6% 153.7% 110.5%Segment profit margin 14.1% 14.1% 17.0% 9.0% 11.2% 11.4% 13.9% 16.5% 21.0% 16.7%
Home Delivery: Daichi wo Mamoru Kai 479 481 576 453 457 428 512 492 724 644 YoY -11.1% -10.8% 0.7% 1.8% -4.6% -11.0% -11.1% 8.6% 58.4% 50.5%Segment profit margin 17.3% 18.0% 19.4% 18.1% 17.7% 16.8% 18.3% 18.9% 19.9% 18.6%
Home Delivery: Radish Boya 1,030 735 892 685 688 585 728 666 899 727 YoY - - - - -33.2% -20.4% -18.4% -2.8% 30.7% 24.3%Segment profit margin 17.7% 17.9% 20.2% 18.6% 18.2% 15.9% 18.4% 18.7% 19.0% 16.7%
Other 154 136 189 245 256 301 99 190 391 647 YoY -16.8% -31.7% 1.1% 29.6% 66.2% 121.3% -47.6% -22.4% 52.7% 115.0%Segment profit margin 10.4% 10.7% 13.1% 15.4% 15.4% 16.1% 3.5% 5.3% 10.9% 13.1%
Adjustments 2,024 1,820 1,935 2,000 1,792 1,891 2,036 2,017 2,305 2,086
FY03/20FY03/19
FY03/20FY03/19 FY03/21
FY03/21
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Except for the personnel expenses related to employees who are not full-time, regular employees (i.e. those that are part-time or contract workers), all
personnel expenses (including wages, salaries, allowance, and mandatory social welfare payments) are recorded under corporate overhead
(adjustments) and not at the individual segment level.
Oisix home delivery business
Sales were JPY23.0bn (+39.5% YoY) and segment profit (defined by the company as “sales minus costs that can be linked to each
business segment”) was JPY4.3bn (+132.1% YoY).
▷ The company was able to boost the number of subscribers to its home delivery service Oisix Club from 239,837 at
end-FY03/20 to 274,929 at end-1H FY03/21. The company essentially resolved the distribution capacity constraints that
occurred at Oisix in Q1 and resumed unrestricted subscriber acquisition during Q2, resulting in about 23,000 new Oisix
subscribers during Q2. In Q1, when Oisix stopped accepting new subscribers, it temporarily redirected leads to Daichi and
Radish Boya, but did not see an uptick in cancellations at either brand after Oisix started accepting inquiries again.
▷ Sayama Station was completed on schedule in October. The company initially planned to operate this satellite center from Q3,
but improvements to existing distribution centers exceeded expectations, so the start of operation of Sayama Station was
pushed back to Q4.
▷ Q2 ARPU rose 122.1% YoY to JPY12,986 in part because ARPU had fallen slightly low in Q2 FY03/20, but also on the success of
the company’s rapid response to changes in consumer demand.
▷ Sales continued to rise for Ouchi Restaurant, which is a service that supports restaurants by selling popular menu items and
food materials from restaurants that have been adversely affected by the drop in people eating out, despite expectations that
customers are spending less time at home compared to Q1. The company expanded the product lineup to 43 items from 23
stores. It is capturing demand for new lifestyles, such as by offering a home-based restaurant experience to families with young
children, or by combining Oisix’s other products with Ouchi Restaurant products. It plans to focus more on the Ouchi
Restaurant service going forward.
▷ Based on a licensing agreement with Walt Disney Company (Japan) Ltd., Oisix launched the Table for Tomorrow project to
create an improved “food future” for children. Its first product is a Kit Oisix meal kit that can be prepared and enjoyed by the
family and will spur children’s interest in food and the meal preparation process. Each kit contains recipes and all the
ingredients needed to produce hamburgers in the shape of Mickey and Minnie Mouse, with original decorative items for the
children to enjoy. In the medium- to long-term, the company plans to offer products and events covering various themes
centered on food.
Daichi home delivery business
Sales were JPY7.1bn (+38.1% YoY) and segment profit was JPY1.4bn (+54.6% YoY).
▷ The Daichi service saw its subscriber count increase from 37,127 at end-FY03/20 to 44,878 at end-1H FY03/21.
Radish Boya home delivery business
Sales were JPY9.1bn (+21.8% YoY) and segment profit was JPY1.6bn (+27.7% YoY).
▷ The number of Radish Boya subscribers rose from 56,935 at end-FY03/20 to 61,822 at end-1H FY03/21. In Q2, the company
worked to improve operations in line with the strategy already in place, and restraints on capturing new subscribers caused the
count to fall slightly from 62,515 at end-Q1.
Other businesses
Sales were JPY8.5bn (+141.5% YoY) and segment profit was JPY1.0bn (+86.4% YoY).
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▷ From Q3 FY03/20, Three Limes Inc.’s results (trading as Purple Carrot) including amortization of goodwill) have been
consolidated. Due to different fiscal year ends, Purple Carrot’s January–June figures were consolidated in 1H.
▷ Purple Carrot achieved a profit again in Q2 (April‒June), as it did in Q1. The impact of the COVID-19 pandemic has resulted in
substantial growth in subscriber count, which grew about 35% QoQ. However, growth in both sales and subscriber count is
gradually slowing. The company believes Purple Carrot’s growth is driven more by one-time COVID-19 related demand
compared to the domestic business as orders fell when the spread of COVID-19 temporarily slowed.
▷ The Hong Kong business moved into the black on a quarterly basis for the first time on increased demand triggered by the
pandemic.
▷ E-commerce delivery support for other companies performed well, with subscribers doubling from end-FY03/20. Additionally,
mobile supermarket service Tokushimaru saw gross merchandising value grow 55% YoY in 1H FY03/21. Meanwhile, 1H sales
reached JPY400mn (versus JPY380mn in 1H FY03/20) for Shop in shop as it made steady progress in developing model Kit Oisix
wholesale stores. On the other hand, 1H sales for the nursery wholesale business came in at JPY410mn (versus JPY500mn in 1H
FY03/20) as it was affected by school closures in Q1, but Q2 performance has recovered to FY03/20 levels.
Progress toward initial full-year forecasts
Source: Shared Research based on company data.
▷ Progress toward initial forecasts at the three home delivery businesses in 1H FY03/21 was higher than it has been for the last
two years.
▷ A simple YoY comparison is not possible for Radish Boya because FY03/19 included 13 months’ worth of results.
▷ In a typical year, the rate of progress for sales toward initial full-year forecasts tends to rise in Q3. Furthermore, spend per order
tends to be higher in Q3 (October–December) than the rest of the year because of sales of products with a high unit price
including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (traditional New Year
cuisine).
For details on previous quarterly and annual results, please refer to the Historical financial statements section.
% of initial full-year forecastsQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Total sales 27.6% 52.0% 80.2% 105.0% 23.2% 46.5% 74.9% 101.5% 29.7% 61.0%
Home Delivery: Oisix 24.7% 49.5% 79.8% 106.5% 23.8% 47.3% 76.0% 102.7% 26.2% 53.6%
Home Delivery; Daichi 24.0% 47.1% 72.8% 94.4% 23.7% 47.1% 72.8% 96.7% 33.1% 64.5%
Home Delivery: Radish Boya 38.0% 64.9% 93.8% 117.9% 24.6% 48.8% 74.6% 97.9% 33.7% 64.9%
FY03/21FY03/20FY03/19
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Company forecast for FY03/21
Source: Shared Research based on company data.
Revised earnings forecast (announced January 28, 2021) On January 28, 2021, Oisix ra daichi announced revisions to its earnings forecast.
Revised full-year FY03/21 forecast
▷ Sales: JPY97.5bn (previously: JPY90.0bn)
▷ Operating profit: JPY6.5bn (JPY5.0bn)
▷ EBITDA: JPY8.0bn (JPY6.4bn)
▷ Net income*: JPY4.0bn (JPY2.5bn)
▷ EPS: JPY105.76 (JPY66.10)
*Net income attributable to owners of the parent.
Reasons for revisions
In its previous full-year FY03/21 forecast announced October 22, 2020, Oisix ra daichi had assumed that the novel coronavirus
pandemic would gradually converge from autumn 2020. However, through end-Q3, demand for food delivery services
continued to increase ahead of assumptions due in part to the effect of a third wave of the viral infection. As a result, the number
of subscribers and ARPU (average monthly spend per customer) increased more than previously assumed, particularly in the
domestic home delivery business, and the company now expects sales to exceed the previously announced forecast. The
company also expects profit to surpass the previously announced forecast due to increased sales and the profit margin improving
on lower distribution and delivery cost accompanying the rise in ARPU.
Reasons for earnings forecast revision On October 22, 2020, the company announced revisions to its full-year FY03/21 earnings forecast.
Revised full-year earnings forecast
▷ Sales: JPY90.0bn (previous forecast: JPY78.0bn)
▷ Operating profit: JPY5.0bn (JPY3.0bn)
▷ EBITDA: JPY6.4bn (JPY4.4bn)
▷ Net income*: JPY2.5bn (JPY1.2bn)
▷ Earnings per share: JPY66.25 (JPY34.96)
*Net income attributable to owners of the parent
(JPYmn) 1H Act. 2H Act. FY Act. 1H Act. 2H Act. FY Act. 1H Act. 2H Est. FY Est.Sales 31,720 32,306 64,026 32,552 38,489 71,041 47,566 49,934 97,500
YoY 67.5% 53.5% 60.1% 2.6% 19.1% 11.0% 46.1% 29.7% 37.2%CoGS 16,651 16,853 33,504 17,195 20,028 37,223 23,587
YoY 65.0% 50.9% 57.6% 3.3% 18.8% 11.1% 37.2% Gross profit 15,069 15,453 30,522 15,357 18,461 33,818 23,979
YoY 70.4% 56.4% 63.0% 1.9% 19.5% 10.8% 56.1% GPM 47.5% 47.8% 47.7% 47.2% 48.0% 47.6% 50.4%
SG&A expenses 13,954 14,256 28,209 14,457 16,894 31,351 20,003 YoY 62.1% 54.5% 58.2% 3.6% 18.5% 11.1% 38.4% SG&A ratio 44.0% 44.1% 44.1% 44.4% 43.9% 44.1% 42.1%
Operating profit 1,115 1,197 2,312 900 1,567 2,467 3,976 2,524 6,500YoY 369.5% 83.1% 159.4% -19.3% 30.9% 6.7% 341.8% 61.0% 163.5%OPM 3.5% 3.7% 3.6% 2.8% 4.1% 3.5% 8.4% 5.1% 6.7%
Recurring profit 1,139 1,163 2,302 743 1,082 1,826 3,681 YoY 338.7% 71.7% 145.6% -34.7% -7.0% -20.7% 395.1% RPM 3.6% 3.6% 3.6% 2.3% 2.8% 2.6% 7.7%
EBITDA 1,513 1,641 3,154 1,348 2,247 3,595 4,678 3,322 8,000YoY 138.3% 58.6% 88.9% -10.9% 36.9% 14.0% 247.0% 47.8% 122.5%EBITDA margin 4.8% 5.1% 4.9% 4.1% 5.8% 5.1% 9.8% 6.7% 8.2%
Net income 894 1,494 2,388 390 400 790 2,452 1,548 4,000YoY 856.2% 939.0% 906.4% -56.3% -73.2% -66.9% 528.0% 287.2% 406.2%Net margin 2.8% 4.6% 3.7% 1.2% 1.0% 1.1% 5.2% 3.1% 4.1%
FY03/20FY03/19 FY03/21
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Reasons for revision
In 1H FY03/21, demand for food home delivery services grew sharply, mainly in Q1, because consumers were required to stay
home as much as possible after a state of emergency was declared to prevent the spread of COVID-19. Although the spike in
demand has slowed in recent months, the number of subscribers and ARPU (average monthly spend per customer) of the
domestic home delivery businesses are recording a steady increase. Consequently, the company expects full-year sales to exceed
its previous forecast. It also raised its profit forecasts because of the sales growth effect and improved margins stemming from
greater efficiency of logistics and delivery associated with the rise in ARPU.
Changes in targets by segment
The following are full-year targets for sales and segment profit, with change versus the initial plan in parentheses.
Changes in end-FY03/21 subscriber count targets
The company revised upward its initial end-FY03/21 subscriber count target (total) from 362,000 to 389,000 (+27,000 versus
initial plan). Total subscriber count at end-1H was 382,000. In 2H, the company expects subscriber count to increase for Oisix
and decrease for Radish Boya and Daichi. The plan takes into consideration the risk of increased churn in 2H, as the company may
see a net decrease in subscriber count if cancellations rise as the COVID-19 pandemic comes to an end.
▷ Oisix subscriber count was revised upward from 270,000 to 285,000 (+15,000). Subscriber count at end-1H was 275,000. In
addition, Oisix was featured on a TV show after the end of Q2, and the company noted that the publicity led to a sustained
increase in trial set orders.
▷ Daichi subscriber count was revised upward from 40,000 to 44,000 (+4,000). Subscriber count at end-1H was 45,000.
▷ Radish Boya subscriber count was revised upward from 52,000 to 60,000 (+8,000). Subscriber count at end-1H was 62,000.
2H outlook
Sales
▷ Positive factors are that sales and profit will continue to increase on the increase in the number of regular subscribers and that
advance orders have been robust for products associated with the New Year’s holiday season.
▷ Negative factors are that ARPU may drift lower hereafter, and sales and profit growth rates may gradually decelerate. The
forecast is meant to be conservative to account for the likelihood of a diminishing tailwind from the COVID-19 pandemic. The
company noted that ARPU temporarily dropped down close to pre-pandemic levels in October 2020, and that this was likely
due to an uptick in customer outings resulting from the government’s Go To campaign aimed at supporting the tourism and
restaurant industries.
Costs
▷ In the Other businesses segment, Purple Carrot has been performing favorably, so Oisix ra daichi expects additional earn-outs
related to the acquisition to occur in Q3.
▷ In Q3 and Q4 the company expects to spend JPY750mn in PR expenses unused in 1H. Separate from the unused portion, it
plans to invest in large PR activities in Q4 for the spring season. As of November 2020, the company plans to carry out PR
activities in 2H regardless of the situation surrounding the COVID-19 pandemic, although the details of the PR activities may
change.
▷ The company plans to fully engage in recruitment activities in 2H as it was unable to do so during Q1 due to the COVID-19
pandemic.
▷ It projects an increase in logistics expenses (about JPY15mn per month) in Q4 with the start of operation of Sayama Station, as
this will generate interfacility product transfer costs.
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Changes in sales and profit by individual segments
As mentioned above, the full-year earnings forecast reflects the risk of a decline in subscriber count and ARPU due to cancellations.
As a result, 2H forecasts (calculated as the difference between full-year forecasts and 1H results) assume a sales decline in all
segments compared to 1H results.
Sales and profit by individual segments
Source: Shared Research based on company data. Profit figures for individual segments are segment profit, defined by the company as “sales minus costs that can be linked to each business segment.”
▷ Oisix: Sales of JPY45.0bn (+JPY2.0bn versus initial forecast) and segment profit of JPY7.0bn (+JPY850mn)
▷ Daichi wo Mamoru Kai: Sales of JPY12.0bn (+JPY1.0bn) and segment profit of JPY2.5bn (+JPY400mn)
Forecasts for Oisix and Radish Boya are based on past growth trends and reflect the risk of earnings fluctuations related to
the COVID-19 pandemic. On the other hand, service improvements have largely been completed at Daichi, and the
segment entered a subscriber expansion phase, with plans to invest in advertising. As such, sales growth at Daichi may
exceed past trends depending on ad performance. At the same time, Daichi has not perfected its customer attraction
formula yet as it was able to capture customers without advertising in Q1 due to the pandemic. Taking all of these factors
into consideration, the company set a more conservative 2H sales forecast for Daichi compared to Oisix and Radish Boya.
▷ Radish Boya: Sales of JPY16.5bn (+JPY2.5bn) and segment profit of JPY3.0bn (+JPY450mn)
▷ Other businesses: Sales of JPY16.5bn (+JPY6.5bn) and segment profit of JPY1.4bn (+JPY500mn)
The company expects a segment profit margin of 4.5% for 2H, which reflects the risk of COVID-19 spreading again as
there are many businesses under the Other businesses segment that would be negatively impacted.
Operating conditions at Q1 FY03/21 results announcement (August 14, 2020) The company left unchanged its full-year forecasts for FY03/21 announced on May 21, 2020, on the grounds that it was difficult
to foresee the impact of the spread of COVID-19.
Full-year FY03/21 company forecast (announced May 21, 2020) For FY03/21, the company is forecasting consolidated sales of JPY78.0bn (+9.8% YoY), operating profit of JPY3.0bn (+26.1% YoY),
net income attributable to owners of the parent of JPY1.2bn (+51.9% YoY), and EBITDA of JPY4.4bn (+22.4% YoY). These
forecasts assume that the request to refrain from going out will gradually ease from June 2020. They are based on a consideration
of the increased demand for home food delivery services on the one hand, but also increased expenses associated with the
(JPYmn) 1H Act. 2H Act. FY Act. 1H Act. 2H Act. FY Act. 1H Act. 2H Est. FY Est.Sales 31,720 32,306 64,026 32,552 38,489 71,041 47,566 42,434 90,000
YoY 67.5% 53.5% 60.1% 2.6% 19.1% 11.0% 46.1% 10.3% 26.7%Oisix 13,769 15,850 29,619 16,524 19,306 35,830 23,047 21,953 45,000
YoY 20.0% 18.9% 19.4% 20.0% 21.8% 21.0% 39.5% 13.7% 25.6%Daichi wo Mamoru Kai 5,440 5,462 10,902 5,138 5,403 10,541 7,094 4,906 12,000
YoY -0.9% -4.6% -2.8% -5.6% -1.1% -3.3% 38.1% -9.2% 13.8%Radish Boya 9,926 8,102 18,028 7,460 7,521 14,981 9,083 7,417 16,500
YoY - - - -24.8% -7.2% -16.9% 21.8% -1.4% 10.1%Other 2,756 3,038 5,794 3,529 6,432 9,962 8,522 7,978 16,500
YoY 27.4% 45.6% 36.3% 28.1% 111.7% 71.9% 141.5% 24.0% 65.6%Operating profit 1,115 1,197 2,312 900 1,567 2,467 3,976 1,024 5,000
YoY 369.5% 83.1% 159.4% -19.3% 30.9% 6.7% 341.8% -34.7% 102.7%Operating profit margin 3.5% 3.7% 3.6% 2.8% 4.1% 3.5% 8.4% 2.4% 5.6%Oisix 1,943 2,093 4,036 1,868 2,933 4,801 4,335 2,665 7,000
YoY 39.6% 10.4% 22.7% -3.9% 40.1% 19.0% 132.1% -9.1% 45.8%Segment profit margin 14.1% 13.2% 13.6% 11.3% 15.2% 13.4% 18.8% 12.1% 15.6%
Daichi wo Mamoru Kai 960 1,029 1,989 885 1,004 1,889 1,368 1,082 2,450 YoY -10.9% 1.2% -5.1% -7.8% -2.4% -5.0% 54.6% 7.8% 29.7%Segment profit margin 17.6% 18.8% 18.2% 17.2% 18.6% 17.9% 19.3% 22.1% 20.4%
Radish Boya 1,765 1,577 3,342 1,273 1,394 2,667 1,626 1,374 3,000 YoY - - - -27.9% -11.6% -20.2% 27.7% -1.4% 12.5%Segment profit margin 17.8% 19.5% 18.5% 17.1% 18.5% 17.8% 17.9% 18.5% 18.2%
Other 290 434 724 557 289 846 1,038 362 1,400 YoY -24.5% 15.4% -4.7% 92.1% -33.4% 16.9% 86.4% 25.3% 65.5%Segment profit margin 10.5% 14.3% 12.5% 15.8% 4.5% 8.5% 12.2% 4.5% 8.5%
FY03/19 FY03/20 FY03/21
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responding to the novel coronavirus pandemic such as promoting remote working, and slowdown of consumer sentiment within
Japan that is expected to follow easing of the request to refrain from going out, on the other hand. The company forecasts
subscriber count at mainstay brand Oisix to increase to 275,000 at end-FY03/21 (up 30,000 subscribers). The Oisix subscriber
count forecast reflects the impact of the recent suspension on new subscriber acquisitions.
▷ According to the results published by the company at end-FY03/20, ARPU for existing subscribers rose by approximately 20%
YoY for all businesses as a result of increased demand for home delivery due to people staying home in response to the spread
of the novel coronavirus disease. However, it was necessary to suspend new subscriber acquisition when the limits of Oisix
shipping capacity was neared to prioritize continuation of services to existing customers. The company recognizes that
immediate measures are necessary because, despite the suppression of PR expenses leading to higher profit in the short term,
the suspension of new subscriber acquisition means the loss of future sales. Although it will be necessary to wait for the new
Ebina Distribution Center to become operational (scheduled for September 2021) for a full-scale increase in shipping capacity,
the company plans to make it through FY03/21 by making use of small SKU service (Sakutto! Oisix), as well as Radish Boya’s
Zama distribution centers, and to establish additional satellite distribution centers in autumn 2020.
▷ The possibility of temporary segment profit being accumulated for the Oisix business in FY03/21, particularly in Q1, has
increased due to the fact that PR expenses will be restrained in the short term due to the constraints of Oisix shipping capacity.
However, as described above, it should be noted that this additional profit will also lead to the loss of future sales.
▷ As described above, as of end-FY03/20, ARPU for existing subscribers has risen by approximately 20% YoY for all businesses as a
result of increased demand for home delivery due to people staying home in response to the spread of the novel coronavirus
disease. However, because the request to refrain from going out was only made forcefully in Japan from March 2020, only a
partial effect has been reflected in Q4 (January–March) FY03/20. Although the company thinks that the one-time rise in ARPU
has ended as of May 2020, ARPU remains at a high level. Its view is that ARPU will eventually fall after the threat of COVID-19 is
countered by vaccines being developed or other solutions and may return to pre-COVID-19 levels, but that the ARPU rise will
be maintained for a certain period of time. When breaking down ARPU into spend per order and purchase frequency, the
company surmises that the effect of a higher purchase frequency tends to remain.
▷ The company commented that needs for some services may increase again for a time if there is a second wave of COVID-19
infections.
Oisix
The company forecasts sales of JPY43.0bn (+20% YoY) and segment profit of JPY6.2bn (+28% YoY), with 275,000 subscribers
(+30,000 YoY) at end-FY03/21. The subscriber forecast factors in the impact of stopping new customer acquisitions for about a
month.
▷ Having reached near shipment capacity, the company suspended new customer acquisitions from March 26 to April 29,
2020. New customer inquiries were directed to Daichi and Radish Boya. Although the company gradually resumed new
customer acquisitions from April 30, it will not be able to do so on a major scale until the completion of a satellite center
(capacity unknown) in fall 2020. The new satellite center will be designed for simple operations, but the company
anticipates a temporary increase in distribution costs, which will not be resolved until the new Ebina Station begins
operation (scheduled for September 2021).
▷ Regarding the company’s policy for new customer acquisitions, in Q1 FY03/21, it plans to acquire new customers who can
be serviced within the maximum shipment capacity, and focus on attracting customers to the small SKU service (Sakutto!
Oisix) in Q2, followed by promotions of the full service in 2H. The company plans to spend its unspent PR budget for April
and May 2020 within the fiscal year to attain its target number of subscribers.
▷ The company estimates that it has lost around 10,000 new subscribers in FY03/21 (not through cancellations, but by being
unable to increase subscribers as expected, because it had to prioritize services to existing customers) due to temporarily
suspending new customer acquisitions and delays in resuming activities to attract new customers.
Daichi wo Mamoru Kai
The company forecasts sales of JPY11.0bn (+4% YoY) and segment profit of JPY2.1bn (+9% YoY), with 40,000 subscribers (+3,000
YoY) at end-FY03/21.
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▷ In FY03/21, the company plans to develop products and services further to improve LTV, while transitioning to a sales
growth phase driven by an increase in subscribers utilizing new services.
▷ The company plans to continue customer acquisitions through new services, because the number of subscribers is
increasing in the short term due to the impact of COVID-19. Daichi has the highest ARPU of the company’s three brands,
which is continuing to rise further. Thus, increasing ARPU is not such a priority at this stage.
Radish Boya
The company forecasts sales of JPY14.0bn (-7% YoY) and segment profit of JPY2.6bn (-4% YoY), with 52,000 subscribers (-5,000
YoY) at end-FY03/21.
▷ The brand is in a streamlining stage. The company plans to halt the subscriber decline in FY03/21 and focus on improving
service standards to prepare for growth beyond FY03/21.
▷ The company is prioritizing resolving operational issues in FY03/21 and expected the subscriber decline to continue.
However, the number of subscribers is trending up due to the impact of COVID-19. The company is rectifying problems
with the service so that new subscribers will continue to use it. As of May 2020, Radish Boya completed a package of
products and services that fit the target market and the company expects it will transition to a new growth phase in 6–12
months’ time.
Others
The company forecasts sales of JPY10.0bn (+5% YoY) and segment profit of JPY900mn (+7% YoY) at end-FY03/21. The company
expects physical retail sales to decline due to the effects of COVID-19 (an estimated JPY2.0bn sales decline excluding sales
contribution of Purple Carrot), but forecasts a sales increase overall due to the full-year contribution of the newly consolidated
Purple Carrot business (JPY2.0bn sales increase). Profit growth is also forecast due to improved Purple Carrot profits.
▷ Purple Carrot: The company expects the demand temporarily boosted by COVID-19 to subside over time, because it is not
a result of improving the standard of services.
▷ Supporting other e-commerce sites: This business is recording steady growth, but the company will consult its alliance
partners as it moves forward with development since COVID-19 may affect their PR spending.
▷ Shop in Shop and ingredient delivery service to childcare facilities: The company does not expect substantial growth of
these businesses. It is more focused on refining touchpoints, because the priority is to generate marketing synergies with
home delivery services with Kit Oisix as the point of contact.
Company forecasts versus results
Source: Shared Research based on company data.
Results vs. Initial Est. FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20(JPYmn) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons.
Sales (Initial Est.) 16,351 18,300 20,000 23,000 38,000 61,000 70,000Sales (Results) 12,610 14,576 15,909 18,060 20,159 23,017 39,987 64,026 71,041
Results vs. Initial Est. -2.7% -1.3% 0.8% 0.1% 5.2% 5.0% 1.5%Operating profit (Initial Est.) 827 750 750 820 670 1,200 2,200Operating profit (Results) 580 734 741 649 774 753 891 2,312 2,467
Results vs. Initial Est. -10.5% -13.5% 3.2% -8.2% 33.1% 92.7% 12.1%Recurring profit (Initial Est.) 833 775 770 830 - - -Recurring profit (Results) 596 734 775 669 806 778 937 2,302 1,826
Results vs. Initial Est. -6.9% -13.7% 4.7% -6.3% - - -EBITDA (Initial Est.) 1,390 2,000 3,200EBITDA (Results) 1,670 3,154 3,595
Results vs. Initial Est. 20.1% 57.7% 12.3%Net income (Initial Est.) 500 465 480 580 390 900 1,000Net income (Results) 332 339 437 347 539 515 237 2,388 790
Results vs. Initial Est. -12.6% -25.3% 12.2% -11.2% -39.2% 165.3% -21.0%
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Since the company’s sales mainly come from subscription services, the difference between initial sales forecasts and results tend
to be small.
Medium-term outlook
Oisix ra daichi does not currently disclose a medium-term business plan. This is because its operating environment has
undergone major changes in recent years following its mergers with Daichi wo Mamoru Kai (Daichi) in 2017 and Radish Boya in
2018, and the acquisition of Three Limes Inc. (which runs a meal kit service under the Purple Carrot name) in 2019. The company
said it has yet to make a decision on the release of a medium-term plan in the future.
We have outlined the company’s thinking on strategy conveyed during our interviews with management as follows. The
following comments do not touch on the short-term effects of the spread of COVID-19. For information about the short-term
effects of COVID-19, please refer to the “Quarterly trends and results” or “Full-year FY03/21 company forecast” sections.
Long term vision The company says it wants to go beyond operating a simple food delivery service, becoming instead a company that enriches
consumer lifestyles by helping to create a more fulfilling dining experience after the delivery is made by providing safe, delicious,
and high value-added food products. In keeping with this aim, it intends to keep the focus on food-related products and is not
thinking about establishing a full-scale business dealing in daily-use goods or any other products outside of foods.
Because the company deals in premium-priced food products, both as a buyer and a seller, the majority of its customers at this
time are in upper-income households that can pay premium prices. Over the long term, however, the company would like to
expand its customer base outside the upper-income household demographic. For its home food delivery business alone, the
company thinks it should be able to grow domestic sales to roughly JPY300bn per annum (which at an average annual growth
rate of 10% would take it another 15 year or so). In this relation, the company noted that online sales of food, beverages, and
liquor still account for only 2.64% of nationwide retail sales in this category (according to the “FY2018 Survey of Infrastructure
Development Status for Data-driven Society in Japan” by the Ministry of Economy, Trade and Industry), but that it expects the
proportion of sales accounted for by e-commerce in this area to rise over the long term and eventually reach roughly the same
level as other product categories.
While the growth rate of its different brands varies depending on the stage that particular business is in, at the Oisix brand, its
growth driver, the company hopes to see sales continue to grow at about the same pace it has seen in recent years, or roughly
20% per annum. At the Daichi and Radish Boya brands, it will first focus on creating new products and services that better meet
customer needs and have sales move into a second growth stage, after which it expects annual growth rates running above 10%
in the long term.
Expanding business domains The domestic home delivery businesses were the mainstay in the past, but in recent years Oisix ra daichi has started full-scale
advances into other business domains, including domestic brick-and-mortar retail sales and overseas home delivery businesses. It
is looking to continue expanding its presence in all three of these business domains. The main pillar of earnings growth is the
food home delivery business.
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Business domains
Source: Company image
The company said it is still undecided as to whether it would try to develop multiple brands in the US, but did not dismiss this as
a possibility at some point in the future.
The company has a locally incorporated subsidiary in Hong Kong and another in Shanghai, China. Yet while believing the Chinese
market has great growth potential, the company said it will be quite some time before it is able to grow its business in the
Chinese market.
With respect to future mergers and acquisitions, the company said it would consider opportunities like Purple Carrot, where it
can leverage its expertise in subscription delivery services and generate synergies, and like DEAN & DELUCA, with strong
attributes it did not already possess that would allow it to expand its presence in a particular business domain. It said it would also
consider companies with functions it does not possess (e.g., engineering and design companies). In all of these cases, the
company said its focus would not be on the growth rate shown by reported earnings but rather on cash flow, and whether the
acquisition would return at least as much cash flow as its investment criteria require. For expansion into businesses with strong
attributes it does not already possess, the company said it will not be able to handle multiple projects simultaneously, and that it
plans to gradually expand the business formats.
Brand lineup In addition to Oisix, the company acquired Daichi wo Mamoru Kai (Daichi) in an absorption-type merger in October 2017 and in
February 2018 acquired Radish Boya, making it a consolidated subsidiary. With these acquisitions, the company now has a total of
three domestic brands. In contrast to its mainstay Oisix brand, which targets customers in their 30s and 40s, the Daichi brand
targets users in their late 50s or older, while Radish Boya targets users in their 40s and 50s. The company is able to successfully
differentiate these brands and aims to maintain all three, through which it can offer subscription services designed to meet the
needs of each age group, while at the same time pursuing synergies in marketing, fulfillment, and other areas. We would note
that Radish Boya was operating in the red before Oisix ra daichi acquired it in February 2018, but has since moved into the black
thanks to the application of Oisix ra daichi’s KPI-focused management system and the resulting improvement in profit per
delivery.
Near-term strategy The growth of the Oisix brand is driven by the popularity of its Kit Oisix meal kits among customers looking to save time in meal
preparation and who therefore value the kit’s convenience. Kit Oisix meals are also attractive and photograph well for posting on
social media, which is another reason they enjoy a good reputation among customers. The company’s basic strategy in the near
term is to go after new subscribers, basing its appeal on the high level of convenience, safety, and security offered by its Kit Oisix
meal kits.
Oisix began selling Kit Oisix meal kits in 2013, but sales growth accelerated from about 2017. The company attributes the pickup in growth to an
increase in favorable media coverage, which helped the meal kit concept become more widely known among the general public, as well as the entry of
other companies into the market.
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Targets for Key Performance Indicators Number of subscribers
The company will focus particularly on increasing its subscriber count.
Spend per order
Because the spend per order is influenced greatly by the minimum order size needed to qualify for free delivery, the company is
looking to keep the value near the current level.
Purchase frequency
The company would like to see the purchase frequency (number of orders placed by a subscriber during a given period) increase
a bit more.
Measures to improve segment profit margins In its 1H FY03/20 results briefing materials, the company indicated that its policy is to improve the segment profit to sales ratio in
the medium- to long-term by approximately 3.0–5.0%, strengthening profitability through reducing the ratio of fixed operations,
improving product costs, as well as costs associated with the distribution center and delivery. The company also indicated
additional initiatives based on the current situation in its full-year FY03/20 results briefing materials. The improvement of segment
profit margins in this context is the effect across all businesses, and the degree of segment profit margin increase would vary
between brands. For example, the effect of the new distribution center will only impact the Oisix brand.
Improving distribution of supplies through VegeNeco Project (to improve segment profit margin by 0.5–1.0pp)
Distribution costs from producer to the company is part of product cost. In the past, producers organized their own shipments,
which incurred labor and cost for both parties. Oisix ra daichi is considering a joint project with Yamato Transport to centralize
shipments at Yamato Transport to streamline the logistics process from producer to the company. A pilot joint collection program
confirmed that procurement and delivery cost savings were possible. The project began in earnest in Q4 FY03/20, and is
expected to be a long-term endeavor.
Cost improvement by accelerating the transition to private brands (to improve segment profit margin by 1.0–3.0pp)
The company seeks to lower product costs and strengthen the upstream processes of the supply chain (manufacturing and
development) by promoting automation of meal kit and salad kit manufacture and bringing processes such as meat processing
and repackaging of fruit and vegetables in house. The company plans to focus on bringing meat processing in house, which
should make a significant cost reduction impact and offers scope for further quality improvement, targeting an in-house
processing ratio of 70% by end-FY03/21 from the current 30% or so. It plans to begin this initiative in FY03/21.
Reduction of operational costs by new Oisix Distribution Center going onstream (to improve segment profit margin by 1.0pp)
The company decided to prioritize the operation of the new Oisix Ebina Distribution Center ahead of increasing capacity and
streamlining due to the rapid growth of the Oisix business. The new distribution center will be used by Oisix and the Solution
Business. Completion is scheduled for September 2021, which will triple shipment capacity versus FY03/20. The company also
plans to progress automation within warehouses. Initial investment is estimated at JPY3.7bn.
Consolidation of collection centers for Radish Boya (to improve segment profit margin by 0.4pp)
The company plans to streamline the supplier distribution network of Radish Boya, which entails producers around the country
individually supplying logistics centers, by setting up a fruit and vegetable collection center to cut distribution expenses. The
company began implementing this program in phases from June 2020.
Encouraging customers to use multiple subscription services (to improve segment profit margin by 0.3–0.5pp)
The company is encouraging customers to use multiple subscription services (e.g., Oisix subscriber occasionally adds a vegan
plan to Kit Oisix) to increase spend per order and reduce the ratio of overheads (operational expenses) to sales. Whereas the
previous focus was on increasing SKU, it has changed its policy due to shipment capacity constraints.
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Capex The company will open its new Ebina Station in September 2021 to expand shipment capacity of Oisix. This capex plan was
scheduled before demand increased in response to the spread of COVID-19. In November 2020, the company commented that
the plan was on track.
▷ The company announced a public offering of new shares in March 2020 and received payments in April and May with
estimated net proceeds of up to JPY4,548mn. Of this amount, JPY3,560mn has been budgeted for investment spending on
the company’s new Ebina Distribution Center and computer systems, with this spending expected to be completed by
October 2021. Another JPY880mn has been budgeted for upgrading core systems, including upgrades of the core system
platform for the Radish Boya business; this investment spending is expected to be completed by March 2023. Any overage
above the JPY4,480mn (planned for use as described above) is slated for use by March 2021 to fund
advertising/promotional spending and other working capital needs.
Shipping system timeline (Oisix: as of November 2020)
▷ From October 2020 to October 2021: Potential increase in shipping capacity up to 50% from current levels.
▷ October 2021 and beyond: Potential increase in shipping capacity up to 200%. The company will consolidate its distribution
bases into the new Ebina Distribution Center to lower core logistics costs and enhance profitability.
Upstream (producer) initiatives There is a limit to the number of households that can afford to eat premium-priced food on a daily basis, but the price points at
which the company sells its meal kits make it hard for it to make inroads into the mass market. Because domestic production of
organic agricultural products is constrained by soil and climate conditions, and thus tends to be very labor-intensive, there is a
limit to how much the company can bring down its own purchasing prices even when buying in greater volume. For these
reasons, in order for Oisix ra daichi to achieve substantial growth, it will need innovations to bring down costs on the production
side. Since the company has no expertise on the production side, it is instead hosting gatherings to give its contract farmers a
forum to share their own expertise with other farmers, investing in agriculture technology ventures, and establishing business
alliances with other companies that do have expertise in this area.
Contributing to society The company states that it will continually evolve the way it connects consumers with producers to create a sustainable society,
and that it will employ business methods that address social issues related to food.
▷ One example of this is its subsidiary, Tokushimaru Inc., which operates a mobile supermarket service for senior citizens. The
company saw growing needs in this area as mega-supermarkets pushed out small, local supermarkets and more and more
supermarkets moved to the suburbs, leaving a growing number of physically impaired elderly without ready access to stores
for their daily shopping needs. According to statistics compiled by the Ministry of Economy, Trade and Industry, there are
more than seven million so-called “shopping refugees” (people without ready access to stores to shop for their daily needs)
nationwide. The company’s Tokushimaru mobile supermarket service is a service aimed at meeting the needs of this large
group of people.
▷ In its 1H FY03/21 results announcement, Oisix ra daichi announced new initiatives to protect the environment. It plans to
adopt its own “green standards” (aiming to halve greenhouse gas emissions from its production processes within five years)
and conduct trials of delivery vehicles powered by green energy, work to make its packaging more environmentally friendly
(changing at least half of its packaging to eco-friendly alternatives within five years), enhance efforts to prevent food loss
throughout its supply chain centered on its Kit Oisix meal kits, and promote sales of upcycled foods (made by converting
foodstuffs that would otherwise be discarded into new foods).
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Business
Business model
Overview
Oisix ra daichi is an online and catalog retailer specializing in the sale and delivery of fresh food products and ingredients. The
company takes pride in offering products that are safe, delicious, and of high added value, including organic vegetables, specially
cultivated agricultural products, and additive-free processed foods. It says its business concept goes beyond a simple food
delivery service as it aims to provide solutions to bring more value to customers’ dining tables once the products are delivered to
their homes.
The company has three domestic brands–Oisix, Daichi wo Mamoru Kai (Daichi), and Radish Boya. They all offer home delivery
services for fresh produce, but do not share the same distribution system and operational flow due to differences in origins and
history. The company plans to improve overall efficiency by consolidating their common functions. However, because the brands’
business focus and the value they offer to customers are different, the company assigns a manager for each brand who
spearheads brand-specific strategies for business operation and product development.
Unless otherwise indicated, the discussion below refers to the company’s three major domestic brands: Oisix, Daichi, and Radish
Boya.
Approach to management accounting
Oisix ra daichi has established a subscription model that generates sustainable profit by rigorously recovering cost per acquisition
(CPA)*1 and managing profit and loss per delivery.
Commitment to managing CPA and LTV The company aims to recover cost at an early stage by managing cost per acquisition (CPA) against the lifetime value (LTV)*2 of a
customer on a profit basis, calculated as “ARPU (average spend per order x average purchase frequency [per-customer order
count over a given period]) multiplied by the segment profit to sales ratio*3 before advertising expenses.”
▷ ARPU per month is about JPY11,000 for Oisix, over JPY20,000 for Daichi, and slightly below JPY20,000 for Radish Boya. These
values are before ARPU increased due to the impact of COVID-19.
▷ The segment profit to sales ratio before advertising expenses is about 20% for all brands.
▷ Daichi and Radish Boya have a longer history than Oisix, and their growth was mainly driven by newspaper ads. Following the
global financial crisis in 2008, subscription rates for paper media declined in tandem with changes in the economic situation of
the company’s target customer base. This meant the same amount of money spent on advertising produced fewer new
customers, and the CPA went up even as the LTV per customer went down.
▷ Oisix was able to adapt to this change because it mainly uses online advertising. Daichi and Radish Boya were slow to adapt,
but since the merger they have adopted the management methods used by Oisix to address the issue. In FY03/19, the Radish
Boya business moved into the black on a segment profit-basis.
*1 Cost per acquisition (CPA): Cost of acquiring one customer. Advertising and promotional expenses divided by number of contracts closed. *2 Lifetime value (LTV): Total value (profit) generated by a customer from when he/she begins transactions with a specific company or brand to when
he/she ends such transactions (customer life cycle). *3 Segment profit to sales ratio: The company uses the term “segment profit” in reference to profit calculated as “sales minus costs that can be linked to
each business segment.”
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Company’s stance on LTV and CPA
Source: Shared Research, based on company data.
Commitment to profit/loss management by delivery unit The company quantifies loss-making deliveries as a percentage of all deliveries, and applies this data to structurally reduce such
loss. According to the company, a delivery unit will be profitable at the segment profit level before advertising expenses if the
spend per order exceeds a certain level.
Profit/loss management by delivery unit
Source: Shared Research based on company data.
Key Performance Indicators
The lifetime value (LTV) of a customer measured on a profit basis is an important metric in analyzing the profitability of a
subscription business model. The company positions components of profit-based LTV as its core KPIs, which it further breaks
down into sub-KPIs it has established, and sets targets for individual indicators.
Segment profit We note that the company’s definition of segment profit is “sales minus expenses that can be linked to business segments;” not
“sales minus variable expenses,” which is its common definition in Japanese management accounting.
The company deducts cost of logistics centers and advertising from sales when calculating segment profit, because they can be
linked to business segments.
Time
CPARecovery
period
CPA
ProfitLTV
Sustained profits
0
Profit
CPA: Cost per acquisitionProfit LTV: Lifetime value of profit
Loss-making deliveries
Average spend per purchaseNumber of customers
Profitable deliveries
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KPI breakdown
Source: Shared Research based on company data.
Core KPIs Core KPIs include the number of subscribers, spend per order, and purchase frequency (per-customer order count over a given
period), with the number of subscribers having the greatest effect on sales growth. Spend per order remains relatively stable due
to the presence of a minimum order amount for free delivery and purchase frequency is generally determined by the lifestyles of
the target customer base. Growth in subscriber count is affected by the amount the company spends in advertising.
Number of subscribers Until end-FY03/19, the definitions of “number of subscribers” differed by brand, but following the company’s push toward more
stringent subscription management, definitions at Daichi and Radish Boya were revised to exclude non-active users.
Cancellation rate Companies adopting a subscription model usually focus on lowering the cancellation rate to ensure a steady increase in
subscribers (regular customers) who are the source of future profit.
▷ According to the company, subscriptions are cancelled because of a mismatch between the sales price and the price range the
customer can tolerate. Some customers also realize after becoming subscribers that regular home deliveries do not suit their
lifestyles.
▷ The number of subscribers to Oisix is rising because new subscriptions are increasing faster than cancellations. Assuming the
cancellation rate does not change, in order to sustain growth the company must continue spending on advertising to win new
subscribers.
▷ Most new Oisix customers are women who adjusted their thinking about the importance of food as a result of pregnancy,
childbirth, and child-rearing, and now want to serve safe and reliable food to their children.
▷ The company is working on lowering the cancellation rate by introducing a dedicated committee responsible for improving
customer satisfaction.
▷ It is relatively easy to cancel the company’s services after the end of the initial free delivery period (in the first three months),
which usually produces a pattern of a sharp increase in subscribers in one quarter followed by a slowdown in the net increase
in the following quarter. According to the company, cancellation rates drop six months into a subscription as customers
become accustomed to regular home deliveries and adjust their lifestyles accordingly.
Profit LTV
Sales LTV
Marginal profit ratio
Subscribers
ARPU
Spend per purchase
Purchase frequency
- CVR- Conversion rate- Churn rateother
- No. of products with high purchase frequency- Beginners' behaviorother
- Close ratio- Sales of specific categories- My Set user ratioother
- Cost ratio- Logistics center expense ratio- Packing and transportation expense ratioother
KPI Sub-KPI (for business management))
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ARPU Buying habits of new subscribers are developed soon after joining so it is crucial to lift ARPU at an early stage through measures to
promote the purchase of products across various categories.
Business processes
Product planning and development The process of commercialization takes one to three months.
▷ The company identifies vegetables whose tastiness growers/sellers have difficulty conveying to consumers, and sells them
under a new, appealing name. For example, it sells juicy turnips with a peach-like sweetness when eaten raw under the name
“Peach Turnip.”
▷ Various improvements are made to packaging and other peripheral items. Assuming produce is used for home cooking, it is
packaged in a way that they can be preserved better in refrigerators or in quantities that can be finished by small families.
▷ Oisix interviews subscribers to identify latent customer needs.
▷ For the Kit Oisix service, the company develops menus so that a minimum of 20 different meal options are available at all times
to prevent boredom.
▷ The company plans and develops processed food products other than Kit Oisix, mainly those processed to the point that they
only require the final cooking stage such as grilling.
▷ In product planning, the company first determines the product design and estimated selling price based on a price range at
which the product is likely to sell. It sets a fair gross margin and then works out procurement.
Marketing Promotions are mostly conducted online (listing ads and social media ads), primarily to attract new customers. The company also
advertises its brand through TV commercials.
▷ As of May 2020, promotions focused on Kit Oisix.
▷ The increase in new Oisix subscribers is mainly driven by Kit Oisix users. The number of Oisix subscribers who are not Kit Oisix
users has been falling slightly.
Procurement The company procures directly from producers. It has contracts with about 1,200 producers for Oisix, 2,700 for Daichi, and 2,400
for Radish Boya. Excluding overlap, the total comes to about 4,000 as of May 2020. The company also procures from around
5,000 food processing companies. The company previously faced a shortage of producers, but the merger with Daichi and
Radish Boya largely resolved the shortage, and the company noted that procurement is no longer a bottleneck to business
expansion as of November 2020. According to the company, the scale of producers tends to expand as the company grows.
Safety and quality standards
▷ Each brand has its own standards and, generally speaking, compliance with these standards raises producers’ costs compared
with traditional farming that uses agrochemicals and chemical fertilizers.
▷ Each brand buys from different suppliers because of differences in their safety and quality standards, although there is overlap
of about 50% between Daichi and Radish Boya, which have similar standards.
▷ The company cultivates new suppliers mainly through referrals from existing suppliers, plant nurseries and seed suppliers, and
fertilizer manufacturers.
Ordering
▷ The company has a structure for supplying fresh produce for as long a period as possible by working with producers all over
Japan, because harvest locations change with the seasons.
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▷ When it comes to forecasting demand, the company reaches a general agreement with producers on approximate order
quantities and prices some 3–6 months prior to actual orders being placed. Buying prices are fixed when these preliminary
agreements are put in place. This arrangement works to the benefit of producers by providing clarity with regard to their
expected future income, while offering the company the benefit of being able to buy at lower prices when market prices rise
above the agreed price. (Put another way, the company has assumed the price risk.) From the consumer’s standpoint, the
company’s prices are stable regardless of market prices, so few customers switch to other companies because of short-term
price fluctuations. Since doing business with the company allows producers to forecast their revenue, the company says they
are more likely to agree to increase the order volume when needed. Thus, the company does not expect supply-side
constraints based on usual rates of business growth.
▷ Weather conditions can make the difference between large and small harvests. If a harvest is poor, the company buys from
suppliers in other regions. If a harvest is larger than expected, the company is not obliged to buy more than the contracted
volume.
▷ The company places individual orders with suppliers after receiving orders from customers and does not hold inventory at
distribution centers with the exception of items that are easy to handle and have long shelf life.
Distribution and processing
▷ The majority of the company’s purchases are made directly from producers.
▷ Processed foods are planned by the company, but manufactured by contract suppliers.
Difference between usual distribution of agricultural products and company’s transactions with producers
Source: Shared Research based on company data.
Japan Agricultural Cooperatives (JA): Cooperatives formed in the spirit of mutual aid to protect and improve farmers’ business operation and
livelihoods to create a better society (JA refers to regional cooperatives and JA Group, an administrative body). JA provides training on agricultural
business and lifestyle management, organizes joint purchases of business and home supplies, oversees joint sales of fresh produce and livestock
products, runs savings and loan services (business and personal loans), establishes facilities for communal use, and operates mutual aid organizations to
prepare for disasters.
Since unprocessed fresh produce is difficult to differentiate from a functional perspective and has a limited shelf life, farmers produce large volumes of
standardized produce for distribution via JA for sale at supermarkets and other retailers.
Procurement from overseas: Although the company sources some items overseas, it currently thinks that overseas procurement is not economically
viable because of the high cost of transportation to Japan (an island country) and quality control requirements for fresh produce.
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Distribution Centers Roles and functions of distribution centers
As of November 2020, each brand had its own distribution center and the facilities have not been integrated. The roles and
functions of distribution centers vary from brand to brand.
▷ All of the company’s distribution centers are leased.
▷ Oisix operates its own distribution centers; Daichi and Radish Boya outsource distribution with the exception of frozen foods.
Oisix initially used third-party distribution centers but subsequently switched to running most of its own distribution centers
after the company it had outsourced to suddenly went out of business.
▷ For order picking, the company has created efficient distribution center operations through the use of a specialized digital
picking system dedicated to handling food delivery.
▷ In Q1 FY03/21, the company established a satellite center devoted to the small SKU service Sakutto! Oisix in Fujisawa (in
Kanagawa Prefecture, like Ebina) in response to the sharp increase in demand for Oisix amid the COVID-19 spread. It also uses
part of Radish Boya’s Zama Station for trial kits.
▷ As an interim solution before the new Ebina Station opens (see below), the company built a new satellite center in Sayama
(Saitama Prefecture) in October 2020. It is expected to cover capacity from Q4 FY03/21 onward until the new Ebina Station
starts operation in October 2021, with an up to 50% increase in capacity (including increased shipping capacity of existing
distribution centers due to the start of operation of Sayama Station). The company plans to use the Sayama satellite center only
temporarily, which will increase logistics costs by about JPY15mn per month while in operation as it will conduct interfacility
product transfers with Ebina Station.
▷ The new Ebina Station for the Oisix brand is due to open in September 2021, with a planned tripling of capacity versus
FY03/20. This will consolidate all distribution for the Oisix brand. The Fujisawa/Sayama satellite center is to close on a phased
schedule and the Zama Station returned to exclusive use by Radish Boya when the new Ebina Station opens. After the new
Ebina Station is up and running, the current Ebina Station will be repurposed as a manufacturing base for Kit Oisix meal kits.
Distribution centers (excluding temporarily operated satellite centers)
Source: Shared Research based on company data.
Ambient Cool Freezing Own Yamato1 ORD Ebina Station Yes Yes Yes Packing and delivery base for Oisix (company's own delivery in Hokkaido) - Yes2 ORD Kit Kitchen (in the Ebina Station) - Yes - Manufacturing function for Kit Oisix - -3 Daichi ORD Narashino Station Yes Yes Yes Packing and delivery base for Daichi wo Mamoru Kai Yes Yes4 ORD Sapporo Station/Hokkaido office Yes Yes - Packing and delivery base for Radish Boya in Hokkaido Yes Yes5 ORD Sendai Depository/Tohoku office (w/o logistics) - - - Delivery base for Radish Boya in Tohoku Yes -6 ORD Itabashi Station/East Metropolitan office - Yes Yes Packing and delivery base for Radish Boya in northern metropolitan area Yes -7 ORD Zama Station/West Metropolitan office Yes Yes Yes Packing and delivery base for Radish Boya in southern metropolitan area and Shizuoka Yes Yes8 ORD Ichinomiya Depository/Chubu office - - - Delivery base for Radish Boya in Tokai Yes -9 ORD Higashiosaka Station/Kansai office Yes Yes Yes Packing and delivery base for Radish Boya in Kansai Yes Yes
DescriptionLast mile
Oisix
Radish Boya
Brand Logistics baseTemperature zones
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Capacity utilization rates
Capacity utilization rates of distribution centers vary between brands and locations. Due to the increase in demand associated
with the spread of COVID-19, logistics capacity of the Oisix brand temporarily tightened in 1H FY03/21, but this was resolved in
2H.
Shipping system timeline (Oisix: as of November 2020)
▷ From October 2020 to October 2021: Potential increase in shipping capacity up to 50% from current levels.
▷ October 2021 and beyond: Potential increase in shipping capacity up to 200%. The company will consolidate its distribution
bases into the new Ebina Distribution Center to lower core logistics costs and enhance profitability.
Inventory
As a rule, the company does not hold inventory of fresh produce at distribution centers, because orders are placed with suppliers
after the company receives orders from customers. For products such as milk and eggs for which there is a risk of damage, the
company orders in volumes that reflect the risk. As an exception, the company holds inventory for products that can be stored at
room temperature, such as bottled water.
Lead times
Deliveries from producers to distribution centers take about a day, dispatching orders from distribution centers takes another day,
and last mile delivery to customers takes another day, so the total lead time is generally about three days. Daichi and Radish Boya
have shorter lead times for last mile delivery, because they charter delivery trucks rather than using regular delivery services and
thus orders delivered to the distribution center in the morning can be delivered to customers the same day. Because this is
generally less time than it takes for fresh food to get to the consumer via traditional channels (going from the market, to the
wholesaler, to the retail outlet, and then to the consumer), the company is able to deliver products that are fresher than those
that can be found in the average grocery store.
Last mile delivery For Oisix, last mile delivery is provided by Yamato Transport (Yamato Holdings’ home delivery service; see reference below on
Japan’s home delivery business). The company uses chartered delivery trucks for Daichi and Radish Boya.
▷ Differences in distribution centers and last mile delivery between brands are mainly attributable to the difference in when the
brands were founded. Daichi (founded in 1975) and Radish Boya (1988) have a longer history than Oisix, and considering the
limited network of refrigerated home delivery services and the associated costs back then, the two brands had no option but
to work with local delivery companies to build their own networks and gradually extend them. In contrast, Oisix was founded
in 2000, when major home delivery companies already had their own refrigerated delivery networks. Thus, the brand was able
to utilize these networks and quickly expand into a nationwide service.
▷ The company commented that it uses Yamato Transport in addition to its chartered trucks, because Yamato offers the best
quality of service.
▷ For chartered delivery, the company works with transport companies in each region to set up regular delivery routes, which
are covered by dedicated delivery trucks. These trucks are marked with the name of the brand, helping to raise its profile in the
community.
The home delivery business in Japan: Japan has a highly developed home delivery industry. Major home delivery companies are Yamato Holdings
(TSE1: 9064), SG Holdings (TSE1: 9143), and Japan Post (TSE1: 6178). A parcel dispatched from Tokyo can be delivered to most regions on the next
day and to all but the most remote locations within two days. Many services allow senders and recipients to specify delivery time in a range of a few
hours. In Japan, the parcel will not be left outside if the recipient is out. The driver leaves a redelivery request form and returns the parcel to the depot.
Specifying the time of delivery minimizes the risk of non-delivery as well as being convenient for the recipient. With the growth of online sales, many
residential properties now have courier boxes so that items can be delivered when the recipient is out. Delivery costs vary according to the size and
weight of the parcel, distance, and whether or not the sender is a major customer. A standard parcel can be delivered for less than JPY1,000, but the
rise in delivery costs in recent years due to the increase in delivery volume and labor shortage has become a widespread problem.
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Business description by segment
Brand concepts Similarities
The company sources food products and ingredients focused on food safety (such as organic vegetables, specially cultivated
agricultural products, and additive-free processed foods), and sells them to consumers online or via mail-order catalogs. The
basic model is the same for Oisix, Daichi, and Radish Boya. The company’s products are high value-added and suppliers are
limited to producers (farms, etc.) and food processing companies that can satisfy the safety and quality standards established by
Oisix ra daichi. This high bar pushes both purchase and sales prices into the premium range.
Although the company does not particularly target certain geographical areas in its marketing strategy, most of its customers
reside in major cities. We understand this is because major cities have a larger percentage of high-income households and a
greater need for buying food online.
Differences
Oisix is a service that was created from the user’s perspective, Daichi from the producer’s perspective, and Radish Boya from an
environmental perspective (see History section of each brand below). This accounts for the differences in the features and
positioning of each brand. The company plans to maintain all three brands and pursue synergies in indirect functions such as
marketing and fulfillment. According to the company, there is little migration of customers between brands.
Comparison of the three brands
Source: Shared Research based on company data Note: Number of subscribers, ARPU, spend per order, and purchase frequency are data for Q4 FY03/20.
Oisix home delivery business History
Dedicated to the user’s perspective from the start, the company chose the name Oisix for the service based on the results of a
survey of potential customers.
▷ At the time of its inception, the company formed an alliance with the trading house Nissho Iwai Corporation (now Sojitz; TSE1:
2768), gaining personnel support and referrals of supplier farms from the Nissho Iwai organic products team.
▷ In the early days of the company, most members of the management team and most employees had little knowledge of
agriculture. However, this inspired them to help consumers learn more about food production and bring them closer to
producers by selling nonstandard/imperfect vegetables that were typically discarded rather than sold and types of vegetables
that farming families produced for their own consumption only, due to the difficulty of maintaining freshness in conventional
retail channels.
Oisix Daichi Radish Boya
Target user Working mothers withyoung children
Older women intwo-person households
Homemakers committed tohousework and parenting
Concept Quick and easy meals you canbe proud of Healthy daily life Self-expression
through consumption
Main customer segment Women in their 30s and 40s Women over 55 Women in their 40s and 50s
How to join Mostly online Mostly online Online and door-to-door sales
How to order Online only Online, telephone,mail order catalog
Online, telephone,mail order catalog
Distribution base(s) One One Six
Last mile delivery 99% outsourced toYamato Transport 85% own delivery service 95% own delivery service
Subscribers 244,740 37,188 57,393
ARPU (JPY) 11,721 22,170 18,681
Price per purchase (JPY) 6,152 8,386 6,296
Purchase frequency (x) 1.91 2.64 3.01
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▷ Oisix has a policy of identifying products consumers want to buy instead of selling what producers want to sell. Based on this
policy, the company will not choose produce because it had a good harvest, but rather, estimates orders based on customer
demand, and coordinates the timing and volume of harvest with producers.
Safety and quality standards
Oisix sells products that enable busy families juggling work, housekeeping, and parenting to enjoy delicious and varied meals
that are easy to make. The brand’s safety and quality standards can be summed up as “ingredients that producers feel
comfortable giving to their own children.” It handles vegetables that are at least certified as “specially cultivated agricultural
products” or meet an even more stringent standard. All processed food must be free of artificial colorings and preservatives, and
the main ingredient must be GMO-free. All fruits and vegetables, dairy products, eggs, fresh fish, and meat are tested for
radioactivity before shipment.
“Specially cultivated agricultural products” are grown by methods that comply with the Ministry of Agriculture, Forestry and Fisheries (MAFF)
“Labeling guidelines regarding specially cultivated agricultural products.” The use of agrochemicals and chemical fertilizers targeted for reduction must
be 50% or less than levels customarily used in the region where the product is grown.
The company’s response to the Great East Japan Earthquake: We summarize the company’s response to the Great East Japan Earthquake, because
it is a specific example of its action policy. After the earthquake and the disasters that followed, the company did its utmost to continue operating, but
experienced disruptions in supply and delivery as a result of distribution networks. The nuclear power plant accident in Fukushima caused radioactive
contamination in surrounding areas and consequently food contamination. The company set up a testing structure based on the Ministry of Health,
Labour and Welfare’s 2002 “Manual on radiation measurement of food in emergency situations” to confirm for itself that the food it sells is what
“producers feel comfortable giving to their own children” and began testing all of its product items on March 18, 2011, shortly after the disasters struck
on March 11.
Main services
Oisix (Oisix main store)
Every Thursday at 19:00, Oisix places a recommended list of items for the weekly subscription boxes in the customers shopping
carts, to which they can add or remove products as necessary before the deadline.
▷ The company generally has more than 1,000 products available.
▷ Fresh produce accounts for just over 20%, Kit Oisix about 20%, and other perishables (such as dairy and eggs) 15–20% of
sales.
▷ Products are delivered on a day of the customer’s choice by third-party delivery service Yamato Transport. Delivery is free on
orders over JPY6,000 (excluding tax), lowered from JPY8,000 in February 2019 to encourage light users to buy more
frequently.
▷ The deadline for orders is generally 10am two days before the delivery date (except for deliveries on Sundays, Mondays, and
Tuesdays and those to remote locations for which the deadline can be as early as 10am five days before the delivery date).
Customers can cancel the week’s delivery if they wish, provided it is before the deadline.
▷ This ordering method allows customers to plan their orders around recommended products, reducing the time it takes to plan
menus and helping them make new discoveries in each order. Orders can be customized, which minimizes the stress of
customers ending up with products they do not need or not receiving items they do need. Meanwhile, the method helps the
company because it provides a guaranteed sales channel provided customers do not cancel. As the supply of agricultural
products is not always stable, the system also allows the company to make adjustments by including or excluding an item from
the subscription box depending on availability.
▷ The company refers to removing an item from the subscription box as abandonment. Abandonment refers to items that
subscribers have decided not to buy. Each customer makes a maximum of 52 selections per year, which enable the company
to make recommendations that suit each customer’s food preferences.
Customers can choose from four subscription box plans and switch between them at any time. The default option at registration
is the Kit Oisix menu plan for two people.
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▷ Kit Oisix menu plan: Main contents are the Kit Oisix meal kit consisting of prepared ingredients and seasonings, and food items
that help save time, such as pre-sliced vegetables. The plan caters to customers with busy lifestyles who wish to make tasty
meals. In addition to the previous options of two or three servings per meal, a new four-serving option has been added
(doubling the two servings option) to accommodate the recent trend of sheltering in place due to COVID-19.
▷ “Delicious selection” plan: This plan provides an all-around combination of seasonal fresh produce, unusual vegetables, and
easy-to-use daily goods. Kit Oisix is not part of this plan. This plan is for customers who like to enjoy tasty vegetables.
▷ Chanto Oisix plan: This plan provides an evening meal recipe and ingredients set combining vegetable-based ingredients for
three or five days (Chanto Oisix) as well as time-saving ingredients. This plan is for busy customers who like to enjoy tasty
vegetables while saving time. Customers can choose between three-day and five-day plans.
▷ “Mothers and expectant mothers” plan: This plan is centered on products that have undergone radioactivity testing, offering
organic vegetables and other ingredients that can be used for baby food, with monthly advice from a nutritionist for specific
cases such as pregnancy and children. This plan is for expectant mothers and those with young children.
Examples of subscription box offerings (from the Kit Oisix menu plan)
Source: Shared Research based on company website
A trial set is available for first-time customers wishing to try out Oisix at a discounted price. The content of the trial set varies from
season to season. As of November 2020, the trial set included Kit Oisix, vegetables, and milk. It is priced at JPY1,980 including
delivery. The company informs customers who purchase a trial kit of various promotional campaigns and encourages them to
become subscribers.
Kit Oisix meal kit
We discuss the company’s growth driver Kit Oisix here in greater detail.
▷ Kit Oisix is a meal kit of all the necessary ingredients in measured amounts that allows users to make a main dish and side dish
in 20 minutes. More than 20 meal options are provided, which change weekly to prevent boredom. Some kits use recipes
supervised by popular chefs and cooking experts so that users can enjoy restaurant-quality meals at home. All menus include at
least five different vegetables and only use ingredients that satisfy the Oisix safety and quality standards. Users must provide
commonly used seasonings, but since all meal ingredients are prepared in the correct quantities, no food is wasted despite
cooking for small numbers of people. Cooking is made simple, because recipe instructions with photographs are provided to
minimize the risk of failure. Recipes are designed to look attractive when served and make appealing photographs, which is
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greatly appreciated by consumers. Consumers can choose from a range of use-by dates (same day, two days after delivery,
four days after delivery, and 22 days after delivery). Prices are mainly in the JPY1,000–1,500 range for two people. Kit Oisix is a
product that has successfully captured changing consumer preferences, because it saves time, no food is wasted, and the
meals are photogenic.
▷ Kit Oisix was launched in 2013, but its growth started to accelerate around 2017. The company thinks this is due to increased
awareness of meal kits, which were taken up by an increasing number of media, and market expansion as more companies
entered the market.
▷ About 50% of Oisix subscribers use Kit Oisix. Calculated as 250,000 subscribers x 50% x JPY1,300 (unit price) x 2 kits x 12
months x 2 times per month (purchase frequency), Kit Oisix sales can be estimated at JPY7.8bn per year, which equates to
about 20% of the sales generated by the Oisix brand.
▷ The company is working to reduce food loss throughout the supply chain with a focus on Kit Oisix. Reducing food loss for Kit
Oisix is relatively easy, as the company is able to substantially reduce losses at the harvest site by easing size standards, and can
balance the supply and demand of richly harvested crops by incorporating them into the menu. Additionally, the kit is
designed for customers to use up all the ingredients, which reduces household food loss by two-thirds.
Kit Oisix meal kit
Source: Shared Research based on company data.
Kit Oisix meal kit recipe sheet with instructions and photographs
Source: Shared Research
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Sakutto! Oisix (small SKU service)
A new service launched in response to customer demand for a quick and efficient shopping experience that emerged amid the
COVID-19 spread. Customers can choose from Kit Oisix and 500 or so popular product items. The service can be provided by a
satellite center with limited facilities, because it only deals with a set number of food products. According to the company, it is a
profitable (efficient) service because of the small SKU.
▷ ARPU for the Sakutto! Oisix service was in line with that of other services. While the service limits the number of SKU, the
company has been successful in promoting sets that qualify for free shipping.
Ouchi Restaurant
The Ouchi Restaurant service sells popular menu items and food materials from restaurants. The company launched the service in
April 2020 to support restaurants that have been adversely affected by the drop in people eating out due to the COVID-19
pandemic. The company says the service is capturing demand for new lifestyles, such as by offering a home-based restaurant
experience to families with young children, or by combining Oisix’s other products with Ouchi Restaurant products.
Sanchoku Otoriyose Ichiba (“Direct from the producer market”)
This is a service that delivers select seasonal produce from producing areas nationwide. This service can be used for gifts. Delivery
dates are not usually specified, because products are delivered to customers when they are tastiest. Prices include delivery
charges.
Oitoku (Oisix regular delivery service)
Daily necessities such as water and health drinks are delivered to the customer’s home. Once a customer registers for this service,
regular deliveries are scheduled automatically. Customers can change delivery dates if they wish. Prices are 10% less than buying
items individually.
Customers (consumers)
The company’s main customer base is women in their 30s and 40s. Many of its offerings like Kit Oisix help busy mothers with
young children save time.
▷ According to the company, many customers take an interest in Oisix services during pregnancy or after having a child.
▷ Customers can order using a smartphone app. Use of smartphone browsers and the smartphone app each account for 40% of
orders and PC browsers for about 10%.
Daichi wo Mamoru Kai home delivery business History
Daichi wo Mamoru Kai (Daichi) was launched in 1975. Company representative Kazuyoshi Fujita was struck by the propositions of
Small Is Beautiful by E.F. Schumacher and Fukugo osen (“The complex contamination”) by Sawako Ariyoshi that the endless
pursuit of productivity does not result in human happiness and that the use of agrochemicals and chemical fertilizers is toxic for
society and people. After hearing from doctors and farmers about growers’ dilemma that agrochemicals were necessary to
produce vegetables that could be sold on the market, he founded Daichi based on the idea that there would be no need to use
toxic agrochemicals if sales channels could be found for imperfect vegetables. As more women entered the workforce in the early
1980s, the number of collaborative purchasing organizations gradually declined. Home delivery was considered a solution and in
1985 Daichi began a trial service of night-time deliveries from local delivery centers to homes nearby. The service proved popular
with customers and became the foundation of today’s home delivery services.
Significance of merger with Daichi
Before the merger, Oisix and Daichi had different strengths. By integrating their businesses, they believed they could expand
target customer bases to cover more diverse needs and a broader age range.
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Strengths of Oisix and Daichi before the merger
Source: Shared Research based on company data.
Safety and quality standards
Daichi stands out for the large share of agrochemical-free products (88% were grown without the use of agrochemicals based on
the company’s 2014 shipments). As a rule, most are also herbicide-free, with weeds controlled by other methods. Processed
foods are free from colorings, preservatives, and additives that improve texture, along with artificial seasonings such as amino
acids to enhance umami. Of the 1,500 or so food additives permitted in Japan, Daichi products only used about 3% as of April
2015.
Main services
Starting January 2019, new subscribers are required to sign up for a subscription box.
▷ Fresh fruits and vegetables account for about 30% of sales and other perishables (dairy, eggs, etc.) for 15–20%.
▷ Subscription box offerings are updated at 13:30 every Monday. Customers can change the content of their orders as long as it
is before the deadline, which is usually 12:30 four days before the delivery date. (The deadline is earlier for orders delivered on
Friday, Saturday, or Sunday, and for remote areas, and can be 12:30 seven days before the delivery date at the earliest.)
▷ Daichi has general and regular subscribers. Regular subscribers pay an annual fee of JPY1,000 or monthly usage fee of JPY180,
in exchange for benefits such as a 10% discount on purchases and lower delivery charges. For this reason, the majority of
customers are regular subscribers.
▷ Delivery is free on purchases of JPY15,000 or more (excluding tax). Deliveries to remote areas incur an additional delivery
charge. In areas where the company uses chartered trucks, the delivery date and time cannot be specified, because it is a
scheduled delivery run.
▷ A low-priced Daichi trial set priced at JPY1,980 including delivery is available for first-time purchases by non-subscribers. The
contents of the trial set vary from season to season. As of November 2020, the trial set consisted of vegetables, eggs, and pork.
The company informs customers who purchase a trial kit of various promotional campaigns and encourages them to become
subscribers.
Contents of a Daichi subscription box (seasonal vegetables plan)
Source: Shared Research based on company website
Oisix Daichi
Online marketing capability Good network withquality producers
Product development flair(e.g., Kit Oisix)
Range of organic andagrichemical-free products
Efficient delivery centers In-house distributioninfrastructure
Highly convenient service
Strengths
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Customers (consumers)
Daichi’s main customer base is women aged over 55. The service targets married couples seeking safe food.
▷ Subscribers tend to be older, because the generation that grew up in the years when Japan experienced severe pollution
problems is aging.
▷ Daichi subscribers tend to begin subscription from their 50s onward, are more health-conscious in their eating habits, and
remain subscribers for longer than subscribers of child-rearing age. The churn rate is also the lowest among the three brands.
Consequently, the company thinks there is little risk of business shrinkage so long as it targets seniors and offer solid products
and services.
▷ Orders break down roughly by channel into registration with subscription clubs (20%), online orders (40%), and paper
catalog orders (40%). The share of online orders is increasing.
▷ Spend per order tends to be higher with paper catalogs, which are easier to view all the way through.
Radish Boya home delivery business History
Radish Boya started out as an environmental NPO seeking to create a sustainable society. It was launched in 1988 as a
subscription-based home delivery service for organic vegetables. Since that time, it has worked to develop safe food distribution
systems and spread organic and environmentally sound farming by providing consumers safe and delicious foods and other
environmentally friendly products. The brand name is derived from radishes (a vigorous vegetable that grows well in poor
soil)—its Latin root radix, which means the origin of all things, and boya (a colloquial Japanese word meaning young boy),
expressing the company’s desire to pass on the origin of all things (life force) to the next generation. In the beginning, Radish
Boya was supported by Daichi.
Significance of acquiring Radish Boya shares
Radish Boya was a wholly owned subsidiary of NTT Docomo before Oisix ra daichi acquired its shares. Oisix ra daichi acquired all
shares in Radish Boya from NTT Docomo, and the two companies formed a business and capital alliance regarding a meal kit
business. In July 2019, they plan to launch a dedicated service “d-meal kits.” As part of the alliance agreement, NTT Docomo
acquired a 3% stake in the company through an allotment of shares to a third party (capital increase) and dispatched an outside
director to Oisix ra daichi.
Safety and quality standards
Radish Boya sells organic and low-agrochemical vegetables that pass its own environmentally friendly production standards
called RADIX. The basic thinking behind RADIX is as follows:
▷ Products must be safe and tasty.
▷ Products must be grown in a sustainable and environmentally friendly way.
▷ Product information must be available to the public.
▷ The company must form partnerships with producers and manufacturers.
▷ The company must set prices that are acceptable to both producers and customers.
▷ The company must constantly present alternative ideas in pursuit of even better products.
Main services
Most customers use a subscription delivery service, for which two plans are offered. They are “Select service” (a combination of
vegetables, fruit, and processed food) and “Palette” (vegetables in season). “Tasty regular delivery” (seasonal foods) and
“Registered service” (3% discount on regular items) are optional additions to the subscription service.
▷ Fresh produce accounts for 40% of sales and other perishables (dairy, eggs, etc.) for 15–20%.
▷ Subscribers are free to make changes to plans and products. They do not have to purchase recommended sets and can
remove some items from the sets or instead choose from approximately 12,000 items from the website or paper catalog. They
can change to a different plan until a week before the delivery date.
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▷ Subscribers can set their own delivery frequency (once every one, two, or four weeks). The company’s chartered delivery
trucks run on a set schedule, but cost less (free for orders of JPY5,000 or more). Yamato Transport allows recipients to choose
their delivery date, but charges more for delivery (free for orders of JPY8,000 or more).
▷ Deadlines for orders depend on the content, but are generally about five days before the delivery date.
▷ Subscribers pay no annual fee in the first year and pay JPY1,000 (exclusive of tax) from the second year onward.
A low-priced Radish Boya trial set is available for first-time purchases by non-subscribers. The contents of the trial set vary from
season to season. As of November 2020, the trial set consisted of vegetables, fruit, and eggs. It is priced at JPY1,980 with no
delivery charge. The company informs customers who purchase a trial kit of various promotional campaigns and encourages
them to become subscribers.
Customers (consumers)
Radish Boya’s main customer base is women in their 40s and 50s. The service targets homemakers who like to express themselves
through cooking.
▷ Orders break down roughly by channel into registration with subscription clubs (45%), online orders (25%), and paper
catalog orders (25%). The share of online orders is slowly increasing.
▷ Spend per order tends to be higher with paper catalogs, which are easier to view all the way through.
Subscription clubs (quasi-regular purchases) are a service that delivers rare items and discounted products over several installments.
Other businesses The following are the company’s services that fall under Other businesses. Excluding Purple Carrot, their impact on sales and
segment profit is limited.
Purple Carrot
In April 2019, the company announced it would acquire US-based Three Limes Inc., which runs a home delivery service of vegan
meal kits under the Purple Carrot brand. Purple Carrot’s fiscal year ends in December, whereas Oisix has a March year-end. Thus,
Purple Carrot’s results for the October–December quarter are consolidated with the company’s January–March quarter results.
Reasons for acquisition
▷ Purple Carrot sells plant-based meal kits that are healthy and environmentally friendly. Oisix ra daichi decided to acquire the
brand, because they share the commitment to delivering safe, tasty, and high value-added products to customers.
▷ It plans to get Purple Carrot back into the black and accelerate growth as quickly as possible by applying its management
expertise in the food subscription business gained through the operation of Oisix, Daichi, and Radish Boya. The company has
begun rolling out vegan meal kits in Japan based on the recipes put together by Purple Carrot.
History
Founded in 2014, the brand sells healthy plant-based meals. The founder was inspired by Seth Godin’s book Purple Cow:
Transform Your Business by Being Remarkable and named the service Purple Carrot in tribute.
Main services
Purple Carrot is a home delivery service specializing in vegan meal kits.
▷ The business is based on a subscription model of weekly deliveries to the 48 contiguous states of the US.
▷ Two plans: 2 Serving Plan (for singles or small families) delivers three dinner menus for two every week at USD11.99 per
serving, and the 6 Serving Plan (for larger families) delivers two dinner menus for six every week at USD7.99 per serving.
Subscribers can also purchase breakfast and lunch as add-ons.
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▷ Purple Carrot offers a variety of vegan menus including the Quick and Easy menu (all meals take less than 30 minutes to cook),
the High Protein menu (high in plant-based protein), and the Chef’s Choice menu (gourmet meals).
▷ Subscribers can switch plans or cancel at any time.
▷ There is no delivery charge.
▷ Orders can be placed online through PC and smartphone websites.
▷ Unlike Oisix ra daichi’s domestic services, Purple Carrot does not leverage safety and quality standards to recruit subscribers.
Example of Purple Carrot delivery
Source: Company website
Customers (consumers)
▷ Approximately 80% of Purple Carrot customers are part-time vegans who use the service because they believe plant-based
diets are tasty and good for their health and/or the global environment.
▷ About half of the customers are health-conscious households (families), 30% are female millennials, and the remaining 20%
senior couples. Women account for a large share of the customer base with those in their late 30s to mid-40s making up the
bulk. Customers are relatively high income.
Operations
▷ According to the company, Purple Carrot is strong in marketing, but there is room to improve packaging and distribution.
▷ The brand is operated through three distribution centers based in New Jersey, Las Vegas, and Chicago and can deliver
products to 48 states within two days. Logistics operations are outsourced.
Business in Japan
In Japan, Purple Carrot products are sold on the Oisix site, and sales are included under Oisix segment sales.
Overseas business (excluding the US)
The company has subsidiaries in Hong Kong and Shanghai.
Hong Kong
The company began providing a service in Hong Kong, sourcing agricultural products from Japan and delivering them by Yamato
Transport to subscribers.
China
In 2017, the company launched a service in Shanghai targeting Japanese residents. Agricultural products and processed foods
grown in China under the same standards as Oisix in Japan are delivered to subscribers using Yamato Transport and chartered
trucks. The China business cannot import agricultural products from Japan due to Chinese import restrictions.
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Retail store business
“Shop-in-shop” physical stores
The company runs physical stores to raise the profile of its brands, respond to customers’ needs to top up their supplies, and
attract new subscribers. The company sets up display areas for each brand in partner supermarkets to sell fresh produce and
processed foods that satisfy brand standards. As of September 2020, the company had 150 shop-in-shop stores.
Shop-in-shop sales prices are generally the same as home delivery prices, but since products are sold wholesale to supermarkets,
GPM is lower than for the home delivery businesses.
Source: Shared Research based on company data.
Ingredient delivery service for childcare facilities (Radish Boya)
Using the Omakase Boya ordering system, orders are placed and processed simply by entering data such as food item, number of
portions required, and delivery date. In February 2017, the company began offering free menus and nutrition consultation
service provided by qualified nutritionists to daycare centers that subscribe to the delivery service. As of September 2020, the
company served 412 daycare centers.
Solution Business
Oisix ra daichi EC Consulting (E-commerce/CRM consulting)
Oisix ra daichi offers companies solution and support services harnessing its expertise acquired in operating its own businesses,
including repeat marketing, improving user interface and user experience (UI/UX) of websites, food logistics in three temperature
bands, acquisition of new e-commerce customers, and omni-channels. Projects in this business include supporting the
e-commerce sites ISETAN DOOR (operated by department store Isetan Mitsukoshi Holdings [TSE1: 3099]) and DEAN & DELUCA
(operated by the company’s equity method affiliate Welcome Co., Ltd.).
d-meal kits powered by Oisix
Through a capital alliance between the company and NTT Docomo, Inc. (TSE 1: 9437), starting July 2019, meal kits will be made
available through d-market, the telecom carrier’s e-commerce portal site also available to subscribers of other telecom carriers.
The basic package called d-meal Regular Delivery includes five meal kits (two portions each) delivered once a week. Each kit is
priced in the range of JPY980–1,600. An optional service Tasty Breakfast Passport is also available to Regular Delivery subscribers
for an additional JPY1,280 per month. This service offers customers the option of choosing up to three additional food items such
as milk and bread per weekly order. According to the company, d-meal kits stand out for their menu offering (menus for five
meals offered each week), time-saving function (some kits require just five minutes to prepare two dishes), and reward points
(d-points rewarded to subscribers).
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Ad Oisix (Ad placement service for Oisix subscribers)
This ad placement service reaches some 300,000 households, including viewers accessing the e-commerce site Oisix.com (1.2mn
unique users per month) and subscribers to the Daichi and Radish Boya home delivery services. Prior approval is required to
ensure online ads satisfy advertising standards for all menus, and ads inserted in parcels and tie-up ads meet safety standards.
Tavelty (Oisix ra daichi seasonal vegetable novelties)
The company leverages its expertise on services, products, and home delivery acquired in its home delivery businesses to offer
novelty gifts, including combination packages, Kit Oisix, gift vouchers (for online orders), and gift catalogs (for mail order using
postcards).
Other subsidiaries
Tokushimaru Inc.
This mobile supermarket service targets senior citizens. Having developed operational expertise for long-term management of
mobile food stores, the company collaborates with local supermarkets (suppliers) and independent business operators (sales
partners) to sell food in small trucks in neighborhoods where senior citizens live. There were 614 operating units as of
end-September 2020. The business is already profitable, but the company will prioritize infrastructure expansion over profitability
until this number rises to 1,000. As of November 2020, the company plans to increase operating units by 200 units per year.
A Tokushimaru mobile food store
Source: Shared Research based on company data
CRAZY KITCHEN Co.
CRAZY KITCHEN operates a made-to-order catering service and event hosting business. The company explains that CRAZY
KITCHEN’s strength lies in its ability to comprehensively design the dining experience (space, time, and communication) rather
than just designing the meal itself.
Fruit Basket Co.
Founded in February 1987 in Kannami, Shizuoka Prefecture as a company responsible for the processing of agricultural products
for the Daichi Group, Fruits Basket manufactures jams, juices, cakes, and other products.
Karabiner. inc
Karabiner is a nearshore* contractor, mainly engaging in outsourced development of e-commerce systems and websites.
*Nearshore outsourcing entails the partial or complete outsourcing of systems development work to a contractor based relatively close by, as opposed
to “offshore” outsourcing to distant contractors, which are often located overseas.
Affiliates
Welcome Co., Ltd.
With a focus on lifestyle enrichment, Welcome engages in a variety of businesses in the retail and restaurant sectors. Additionally,
it sells imported food products, manufactures and sells processed foods, and operates cafés. The brands operated by Welcome
include the well-known specialty food store DEAN & DELUCA.
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▷ In March 2016, Welcome received an irrevocable license for trademark rights in Japan from DD US. Regardless of the
operational status of DD US, Welcome has full authority to operate the DEAN & DELUCA business in Japan.
▷ From a legal standpoint, Welcome’s license is thoroughly protected to ensure operations of the DEAN & DELUCA business in
Japan without influence from unforeseen circumstances, including the bankruptcy of DD US.
Nihon Agri, Inc.
Nihon Agri is a one-stop export service for Japanese agricultural products, seeking out producers who wish to export their
products, buying their products, organizing distribution, and selling to overseas retailers, wholesalers, and importers. Its mission
is to increase Japan’s agricultural exports and spark a structural change in Japanese agriculture so that producers can make more
money if they grow high quality crops.
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Market and value chain
Japanese families
Average spending on food Average monthly household spending on food in Japan has generally been around JPY60,000 to JPY70,000.
▷ The company’s monthly ARPU varies between brands and seasons, but is in the JPY11,000–JPY20,000 range.
Average household expenditure
Source: Shared Research based on the National Survey of Family Income and Expenditure, Ministry of Internal Affairs and Communications (MIC)
Household income Due to the premium prices of its products, Oisix ra daichi targets households with above average annual income, particularly
those with income of over JPY8mn, because they can spend in the premium price range.
▷ The 2017 Comprehensive Survey of Living Conditions released by the Ministry of Health, Labour and Welfare indicated that
households with above average annual household income accounted for 38.9% of the total, while those with annual
household income over JPY8mn account for 21.2% of the total.
▷ 64.8% of households with children, which likely include Oisix’s target customers, had annual household income that exceeded
the overall average. 35.6% of these households had annual income of over JPY8mn.
0 20 40 60 80
Food
Home-related
Utilities
Household appliances
Clothing and shoes
Healthcare
Transportation and communication
Education
Entertainment
Other consumption spending
(JPY'000)
1999
2004
2009
2014
2019
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Distribution of household by income
Source: Shared Research based on the “Comprehensive Survey of Living Conditions 2019,” Ministry of Health, Labour and Welfare (MHLW)
Two-income households Households where husband and wife both work could face time constraints that make having dinner together with the family or
preparing packed lunches to take to work or school a challenge. Two-income households have been on the increase in recent
years, making time-saving menus a priority.
Dual-income households
Source: Shared Research based on Annual Health, Labor and Welfare Report (MHLW), White Paper on Gender Equality (Cabinet Office), Special Survey of the Labour Force Survey (MIC), Labour Force Survey (MIC)
Externalization ratio The ratio of spending on restaurant meals to total household spending on food peaked in the second half of the 1990s and has
been trending down thereafter, whereas the ratio of spending on restaurant meals, take-out lunch boxes (bento), and
supermarket take-out meals to total household spending on food (externalization ratio) has been constant. We can thus surmise
that spending on take-out meals such as bento and supermarket take-outs is on the rose. We estimate that the need for Kit Oisix
(which combines the attributes of take-out meals and home cooking) is growing.
Total - 100.0% - 100.0% - 100.0% - 100.0% - 100.0% - 100.0%Less than 0.5 1.2% 1.2% 2.0% 2.0% 0.9% 0.9% - - 0.2% 0.2% 1.3% 1.3%
0.5 to 1.0 6.4% 5.2% 12.6% 10.7% 3.6% 2.8% 2.8% 2.8% 1.8% 1.6% 8.3% 7.0%1.0 to 1.5 12.7% 6.3% 24.6% 12.0% 7.4% 3.8% 17.2% 14.4% 4.0% 2.3% 16.5% 8.2%1.5 to 2.0 19.0% 6.3% 36.9% 12.3% 11.1% 3.7% 31.0% 13.8% 6.2% 2.1% 25.1% 8.6%2.0 to 2.5 25.9% 6.9% 48.6% 11.7% 15.8% 4.7% 47.6% 16.7% 9.3% 3.1% 34.1% 9.0%2.5 to 3.0 32.6% 6.7% 59.8% 11.1% 20.4% 4.7% 59.9% 12.2% 11.8% 2.6% 42.9% 8.8%3.0 to 3.5 39.7% 7.1% 70.5% 10.7% 25.9% 5.5% 71.3% 11.5% 14.9% 3.1% 51.7% 8.7%3.5 to 4.0 45.4% 5.7% 78.0% 7.5% 30.9% 4.9% 80.6% 9.3% 18.2% 3.3% 58.4% 6.8%4.0 to 4.5 51.0% 5.6% 83.6% 5.6% 36.4% 5.5% 86.8% 6.2% 22.8% 4.6% 64.0% 5.5%4.5 to 5.0 55.9% 4.9% 87.3% 3.7% 41.9% 5.5% 90.0% 3.3% 28.0% 5.1% 68.5% 4.5%5.0 to 6.0 64.6% 8.7% 92.0% 4.7% 52.3% 10.5% 94.8% 4.7% 40.4% 12.4% 75.5% 7.0%6.0 to 7.0 72.6% 8.1% 94.8% 2.8% 62.8% 10.4% 96.5% 1.7% 53.4% 13.0% 81.3% 5.8%7.0 to 8.0 78.8% 6.2% 96.2% 1.4% 71.0% 8.3% 96.8% 0.3% 64.4% 11.0% 85.3% 3.9%8.0 to 9.0 83.7% 4.9% 97.3% 1.1% 77.7% 6.6% 97.4% 0.6% 73.2% 8.8% 88.5% 3.2%9.0 to 10.0 87.7% 4.0% 98.0% 0.7% 83.2% 5.5% 97.4% - 79.7% 6.5% 91.4% 2.9%
10.0 or more 100.0% 12.3% 100.0% 2.0% 100.0% 16.8% 100.0% 2.6% 100.0% 20.3% 100.0% 8.6%
Ratio of households withaverage income ofJPY5.6mn or less
Median (JPY'000)
Income class
(JPYmn)
All households Aged households Other households Single-parenthouseholds
C umulativ efrequencydistribution
Relativ efrequencydistribution
C umulativ efrequencydistribution
Relativ efrequencydistribution
C umulativ efrequencydistribution
Relativ efrequencydistribution
C umulativ efrequencydistribution
Relativ efrequencydistribution
61.1% 89.8% 48.3% 93.1%
437 255 572 257
35.2% 72.5%
672 339
Households withchildren
Households with65-years-old or older
C umulativ efrequencydistribution
Relativ efrequencydistribution
C umulativ efrequencydistribution
Relativ efrequencydistribution
5,750
12,450
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
1980 1985 1990 1995 2000 2005 2010 2015
('000)
Two-income householdsHouseholds with homemaker
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Ratio of spending on restaurant meals to total household spending on food, and meal outsourcing ratio (includes take-out meals)
Source: Shared Research based on “Food Service Market Size Estimate 2019” released by the Japan Food Service Association (JF)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Food externalization ratio (incl. bento)
Eating out ratio
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Japan’s organic food market The company sells food and ingredients with an emphasis on safety, including organic vegetables, specially grown agricultural
products, and additive-free processed foods to consumers. Below we discuss the organic food market, which operates on a
similar concept as the company’s products.
A Yano Research Institute survey found that the market for organic produce and processed foods is worth about JPY180bn and is
forecast to grow approximately 10% between 2017 and 2022. We expect the company’s market share to increase, because its
sales growth rate has been higher than 10%. Given that the company posted sales of about JPY40bn in FY03/18, we do not
expect market size to be a constraint on its growth.
Japan’s organic food market
Source: Shared Research based on 2017 data published by the Yano Research Institute
Based on a 2016 survey by Organic Village Japan of 500 consumers who buy organic food at least once a week, consumers
bought organic food from major supermarket chains (25.2%), local supermarkets (18.1%), natural food stores (10.8%),
cooperatives (instore and home delivery; 9.9%), department stores (6.7%), and online (6.5%). Based on this classification system,
we think the company fits into the “online” group, with other channels accounting for over 90% of sales. This suggests significant
scope for growth.
119,830 118,870 120,840 122,000 125,000 127,500 130,050 132,651 135,341 138,010
50,910 51,350 51,900 52,450 53,500 54,565 55,650 57,870 57,300 58,400170,740 170,220 172,740 174,450 178,500 182,065 185,700 190,521 192,641 196,410
0
50,000
100,000
150,000
200,000
250,000
2013 2014 2015 2016 2017 2018F 2019F 2020F 2021F 2022F
Agricultural products
Processed foods
(JPYmn)
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Japan’s online food retail market Many food items are fresh food with a limited shelf life, often requiring refrigeration or freezing for storage and transport. Foods
with a soft or delicate texture can also be damaged in transit. For these reasons, food is not easy to sell by mail-order and is a
segment of the consumer market where mail-order (including online sales) has made slow progress.
According to a Ministry of Economy, Trade and Industry (METI) report “FY2019 International Economic Research Project for
Construction of an Economic Growth Strategy for Internal and External Economy (E-Commerce Market Survey),” the market size
for B2C sale of food, beverages, and liquor via e-commerce channels amounted to JPY1.8tn (+7.77% YoY). The e-commerce ratio
was 2.89% of overall commercial transactions in this category. Although the food market is substantial, the e-commerce ratio is
far lower than for home appliances, AV equipment, PCs and peripherals (32.75%) and books, video and music software
(34.18%).
B2C e-commerce ratios by category (sale of goods)
Source: Shared Research based on “FY2019 International Economic Research Project for Construction of an Economic Growth Strategy for Internal and External Economy (E-Commerce Market Survey),” METI
1,691.9 1,823.3(+7.77% YoY)
1,646.7 1,823.9(+10.76% YoY)
1,207.0 1,301.5(+7.83% YoY)
613.6 661.1(+7.75% YoY)
1,608.3 1,742.8(+8.36% YoY)
1,772.8 1,910.0(+7.74% YoY)
234.8 239.6(+2.04% YoY)
220.3 226.4(+2.76% YoY)
303.8 322.8(+6.26% YoY)
9,299.2 10,051.5(+8.09% YoY)
0.92%
Total 6.22% 6.76%
9 Other 0.85%
2.88%
8 Office supplies and stationery 40.79% 41.75%
7 Automobiles, motorcycles, parts,other
2.76%
23.32%
6 Clothings and accessories 12.96% 13.87%
5 Home goods, furniture, interior goods 22.51%
34.18%
4 Cosmetics and medicine 5.80% 6.00%
3 Books, video and music software 30.80%
2.89%
2 Home appliances, audio and visualequipment, PC and peripherals, other
32.28% 32.75%
1 Food, beverages, liquor 2.64%
Category2018 2019
Market size(JPYbn) EC ratio Market size
(JPYbn) EC ratio
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Japanese farms Japanese farms are smaller than those of other countries due to Japan’s small land mass and shortage of flat land.
▷ The number of Japanese farms has been on a decline since 2000, with the average age of farmers rising.
▷ The number of smaller farms is falling, but larger farms are increasing.
▷ The company does not gather data on suppliers such as size of farm and age of owner/manager. However, based on an
interview with the company, we understand most of its suppliers are larger farms whose management is younger in age than
average, with no major issues with succession planning.
Farm labor statistics
Source: Shared Research based on the “Census of Agriculture and Forestry in Japan, Survey on Movement of Agricultural Structure,” Ministry of Agriculture, Forestry and Fisheries (MAFF) Statistics Department
Full-time farmer households are defined as farm households whose main source of income is farming and which have at least one household
member aged under 65 self-employed in farming for 60 or more days during the year prior to the survey date.
Of the population engaged in farming, Core agricultural workers are defined as those who are engaged mainly in farming during regular hours.
Number of agricultural management entities by sales value of agricultural products (unit: entities)
Source: Shared Research based on the “Census of Agriculture and Forestry in Japan,” MAFF
Number of agricultural management entities by area of cultivated land under management (unit: entities)
Source: Shared Research based on the “Census of Agriculture and Forestry in Japan,” MAFF; prefectural government data
2000 2005 2010 2015 2016 2017 2018Full-time farmers ('000 households) 500 429 360 294 285 268 252Core agricultural workers ('000) - - 2,051 1,754 1,586 1,507 1,451Average age ‐ ‐ 66.1 67.0 66.8 66.6 66.6
Vs. 2005 Vs. 2010 Less than JPY10mn 1,608,887 1,373,593 -14.6% 1,119,685 -30.4%
JPY10–50mn 137,092 118,117 -13.8% 108,547 -20.8% JPY50–300mn 13,594 13,482 -0.8% 15,173 11.6%
JPY300mn or more 1,182 1,384 17.1% 1,827 54.6%
(entities) 20052010 2015
Vs. 2005 Vs. 2010 Less than 5ha 1,899,393 1,564,727 -17.6% 1,262,058 -33.6%
5-20ha 51,634 59,838 15.9% 64,428 24.8% 20-50ha 3,119 6,492 108.1% 8,107 159.9% 50-100ha 459 1,165 153.8% 1,537 234.9%
100ha or more 159 313 96.9% 422 165.4%
(entities) 20052010 2015
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Competition
Organic food e-commerce companies
Having merged with Daichi and Radish Boya, Oisix ra daichi faces no major competition in the premium price range. The
company understands that the remaining competitors in the organic food e-commerce business are small players whose sales
amount to less than 10% of its own sales.
Fast Retailing’s (TSE1: 9983) move into the vegetable business and subsequent withdrawal: Fast Retailing Co., Ltd. moved into online sales of fresh
vegetables in the early 2000s. Like its apparel business, its goal was to sell quality agricultural products at a low price, but the business folded within
two years. It appears that the company could not make the business profitable due to the unstable supply of agricultural products, difficulty of
inventory management, and insufficient provision of distribution and IT systems. This episode illustrates the need for expertise in businesses that handle
fresh produce that is different from the knowledge of the manufacture and sales of industrial products.
Consumer cooperatives
Consumer cooperatives (co-ops), which run food and household goods mail-order services, are a type of business entity that
potentially competes with the company in a broad range of products. According to an interview with the company, an estimated
30–40% of Oisix ra daichi’s customers also use co-op services, but the businesses are not in direct competition because of the
difference in their service offerings. For example, the company mainly sells food and only a limited range of household goods,
food sold by co-ops are lower priced (and of different quality), and co-ops operate scheduled delivery routes and thus customers
cannot specify delivery dates. For these reasons, we understand consumers tend to use both services, switching between the two
depending on the situation and the items they need.
Supermarkets and online food retailers
It is difficult to specify the range of businesses that compete with Oisix ra daichi. From the perspective of a food retailer,
supermarkets would be included in the scope, while as a mail-order business, online retailers would also qualify as rivals.
However, their models differ in that supermarkets mainly operate physical stores (their trade areas are limited but customers can
obtain goods on the spot) and many online retailers mainly sell non-food items. For these reasons, we regard these businesses as
often complementary rather than competing.
Convenience stores
With so many accessible convenience stores in Japan, consumers can readily obtain takeout meals, sandwiches, bread, and other
food items for a reasonable price of about JPY500–1,000 per meal. Broadly speaking, convenience stores compete with
restaurants and supermarkets. They compete with the company in the sense that they reduce opportunities for home cooking
and affect the scale of its business, but since convenience store products prioritize convenience, they are differentiated from the
company’s safe, high value-added products.
Japan Agricultural Cooperatives (JA)
Products distributed via Japan Agricultural Cooperatives (JA) are mainly standardized, low value-added agricultural products that
are separate from the company’s mainly high value-added products. Some JA organizations function as suppliers of the company.
Japan Agricultural Cooperatives (JA): Cooperatives formed in the spirit of mutual aid to protect and improve farmers’ business operation and
livelihoods to create a better society (JA refers to regional cooperatives and JA Group, an administrative body). JA provides training on agricultural
business and lifestyle management, organizes joint purchases of business and home supplies, oversee joint sales of fresh produce and livestock
products, runs savings and loan services (business and personal loans), establishes facilities for communal use, and operates mutual aid organizations to
prepare for disasters.
Since unprocessed fresh produce is difficult to differentiate from a functional perspective and has a limited shelf life, farmers produce large volumes of
standardized produce for distribution via JA for sale at supermarkets and other retailers.
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Strengths and weaknesses
Strengths
◤ Relationships with producers and manufacturers that provide access to a stable supply of quality food: Oisix ra
daichi’s concept goes beyond a simple food delivery service as it aims to provide solutions on how to bring more value to
customer dining tables once products are delivered to their homes. Its priority is to deliver safe, delicious, high value-added
products sourced only from those producers and processed food manufacturers that satisfy its safety and quality standards.
Because it is looking to secure a stable supply, the company believes it is important to develop trust with those producers and
processors that meet its standards. From the producer’s standpoint, doing business with Oisix ra daichi gives them the benefit
of clarity when it comes to forecasting future income (both in terms of unit prices and volumes), and on this basis many have
built up strong, long-term relationships with the company.
◤ Unique distribution network that connects producers with consumers: Since unprocessed fresh produce is difficult to
differentiate from a functional perspective and has limited shelf life, farmers generally grow large volumes of standardized
produce, which is distributed for sale at supermarkets and other retailers via Japan Agricultural Cooperatives (JA), a mammoth
organization central to all aspects of Japanese agriculture. Although this distribution system is efficient, it has disadvantages
such as lack of direct contact between growers and consumers, which can undermine growers’ motivation; growers losing
touch with consumer needs; and the commoditization of agricultural products, because consumers are not aware of who
grows the produce they buy. Buying directly from producers and selling directly to consumers solves these problems.
◤ Product development that addresses latent consumer needs with such offerings as Kit Oisix: The Oisix meal kits have
become a growth driver thanks to fulfilling consumer need for time-saving meals and gaining popularity on social media for
providing photogenic meals. The company is also adept at naming unusual vegetables that consumers are not familiar with in
a way that piques their interest. For instance, it sells juicy turnips with a peach-like sweetness when eaten raw under the name
“Peach Turnip”. The company not only excels in sourcing quality food, but has the ability to develop products that capture
latent consumer needs by mainly focusing on their lifestyles. The combination of these two strengths allows the company to
differentiate itself in the food business, which has a relatively low entry barrier.
Weaknesses
◤ Value of organic food unrecognized by the mass market of consumers satisfied with supermarket-quality food: In
Japan, many consumers are satisfied with the pricing, quality, and safety of the food sold at supermarkets, and organic food is
not widely recognized in the mass market. The company’s products are high value-added, because it only buys from
producers (farms) and manufacturers of processed foods that satisfy its safety and quality standards. For that reason, they are
priced about 30–50% higher than at supermarkets and other retailers. The prices of organic foods in Europe and North
America are about 30% higher than supermarket prices. Shared Research believes that either a shift in public awareness or
lower prices are essential if the company’s products are to reach the mass market in Japan, where awareness of ethical
consumption is still low.
◤ Focus on both safety and convenience pushes up prices, limiting the market: Through Kit Oisix and other services, the
company sells items that exceed the government standards set for specially cultivated agricultural products (which are more
labor-intensive because fewer agrochemicals and chemical fertilizers are used), packaging them to also meet the need for
convenience. Consumers may be willing to use products that are both safe and convenient, but to those whose concern is
only safety or only convenience, the price points on the company’s products will seem a bit high. For that reason, the
company’s main customers are those who see the high prices on its offerings as reasonable when considering both the safety
and the convenience provided.
◤ Tendency of prices that include delivery charges to jump in tandem with rises in distribution costs: The labor
shortage in Japan has led to a sharp rise in distribution costs (including personnel costs). Oisix ra daichi depends heavily on
manual labor to do the order picking for the many perishable and fragile food products it handles (such as eggs), as well as its
door-to-door delivery service to customers. The labor-intensive nature of these tasks makes the company more vulnerable
than brick-and-mortar retailers to sharp increases in delivery costs, and has pushed up the delivery-inclusive prices, especially
in the case of small-value orders.
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Historical results and financial statements
Income statement
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Simple YoY comparisons of consolidated sales and earnings are not possible, because Daichi and Radish Boya were added to the consolidated financial
statements from end-FY03/17 and end-FY03/18 respectively. (Note that only the balance sheet is consolidated as of financial year-end.)
SG&A expense breakdown
Source: Shared Research based on company data. Note: Figures may differ from company materials due to differences in rounding methods.
Source: Shared Research based on company data.
The company keeps the SG&A expenses-to-sales ratio at about 43–45% of sales.
▷ Sales promotion costs are about 5–6% of sales.
▷ Packing and transportation costs are about 12–15% of sales.
▷ Salaries and allowances are 5–6% of sales.
Fixed costs
▷ According to the company, fixed costs as of March 2020 are roughly JPY640mn per month or JPY7.7bn per year.
Income statement FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20(JPYmn) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons.Sales 12,610 14,576 15,909 18,060 20,159 23,017 39,987 64,026 71,041
YoY - 15.6% 9.1% 13.5% 11.6% 14.2% 73.7% 60.1% 11.0%CoGS 6,576 7,581 8,298 9,451 10,298 11,818 21,260 33,504 37,223Gross profit 6,033 6,995 7,611 8,609 9,861 11,199 18,727 30,522 33,818
GPM 47.8% 48.0% 47.8% 47.7% 48.9% 48.7% 46.8% 47.7% 47.6%SG&A expenses 5,454 6,262 6,871 7,961 9,086 10,446 17,835 28,209 31,351
SG&A ratio 43.3% 43.0% 43.2% 44.1% 45.1% 45.4% 44.6% 44.1% 44.1%Operating profit 580 734 741 649 774 753 891 2,312 2,467
YoY - 26.6% 1.0% -12.4% 19.3% -2.8% 18.4% 159.4% 6.7%OPM 4.6% 5.0% 4.7% 3.6% 3.8% 3.3% 2.2% 3.6% 3.5%
Non-operating income 22 26 36 23 34 30 63 111 63 Non-operating expenses 5 26 1 3 2 4 17 122 705 Recurring profit 596 734 775 669 806 778 937 2,302 1,826
YoY - 23.0% 5.7% -13.8% 20.6% -3.5% 20.4% 145.6% -20.7%RPM 4.7% 5.0% 4.9% 3.7% 4.0% 3.4% 2.3% 3.6% 2.6%
Extraordinary losses 15 155 49 113 - - 327 154 78 Income taxes 249 239 289 208 268 263 372 -243 966
Implied tax rate 42.9% 41.4% 39.8% 37.5% 33.2% 33.8% 60.9% -11.3% 55.2%- - - - - 0 1 6 -8
332 339 437 347 539 515 237 2,388 790 YoY - 2.1% 28.8% -20.5% 55.1% -4.3% -54.0% 906.4% -66.9%Net margin 2.6% 2.3% 2.7% 1.9% 2.7% 2.2% 0.6% 3.7% 1.1%
Net income attributable to non-controlling interests
Net income attrib. to owners of the parent
SG&A breakdown FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20(JPYmn) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons.SG&A expenses 5,454 6,262 6,871 7,961 9,086 10,446 17,835 28,209 31,351
Promotion expenses 713 760 879 1,055 803 1,467 2,228 3,504 4,382Packing and transportation expenses 1,739 1,875 2,052 2,458 2,918 3,427 5,062 6,610 8,142Salaries and allowances 555 770 865 978 1,075 1,149 2,287 2,920 3,649Outsourcing expenses 263 375 511 677 1,219 850 2,032 2,551 3,505
SG&A breakdown FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20(% of sales) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons.SG&A expenses 43.3% 43.0% 43.2% 44.1% 45.1% 45.4% 44.6% 44.1% 44.1%
Promotion expenses 5.7% 5.2% 5.5% 5.8% 4.0% 6.4% 5.6% 5.5% 6.2%Packing and transportation expenses 13.8% 12.9% 12.9% 13.6% 14.5% 14.9% 12.7% 10.3% 11.5%Salaries and allowances 4.4% 5.3% 5.4% 5.4% 5.3% 5.0% 5.7% 4.6% 5.1%Outsourcing expenses 2.1% 2.6% 3.2% 3.7% 6.0% 3.7% 5.1% 4.0% 4.9%
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▷ The company aims to keep the rate of increase in fixed costs lower than the rate of increase in sales and keep the ratio of fixed
costs to sales below 10% in the longer term.
Balance sheet
Source: Shared Research based on company data. Note: Figures may differ from company materials due to differences in rounding methods.
Policy on cash holdings The company held approximately JPY7.7bn in cash and deposits as of March 2020, whereas borrowings were less than JPY200mn.
Its policy is to hold the equivalent of 12 months’ fixed costs (JPY7.7bn) in cash.
▷ The company’s policy on cash holdings provides for food-related risks, because it mainly sells fresh food and produce.
▷ The company announced a public offering of new shares in March 2020 and received payments in April and May with
estimated net proceeds of up to JPY4,548mn. Of this amount, JPY3,560mn has been budgeted for investment spending on the
company’s new Ebina Distribution Center and computer systems, with this spending expected to be completed by October
Balance sheet FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20(JPYmn) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons.ASSETS
Cash and deposits 829 1,959 2,379 2,659 2,718 5,248 7,236 8,136 7,677 Notes and accounts receivable 1,303 1,323 1,507 1,786 2,009 3,124 5,416 5,555 6,825 Inventories 138 193 268 307 366 791 1,130 1,403 1,612 Accounts receivable–other 232 162 221 267 290 1,354 1,336 1,309 1,989 Other 103 100 126 132 136 288 421 395 379 Allowance for doubtful accounts -59 -50 -71 -90 -96 -118 -157 -196 -232
Total current assets 2,546 3,688 4,430 5,061 5,424 10,688 15,262 16,602 18,250 Buildings and structures 46 201 287 178 199 248 374 364 681 Machinery, equipment, and vehicles 0 271 276 259 238 435 380 489 543 Other 205 73 62 48 44 102 125 155 209
Total tangible fixed assets 251 545 624 485 481 785 878 1,008 1,433 Goodwill - 92 67 43 18 1,842 1,506 1,137 2,375 Software 146 187 215 284 390 - - - - Software in process 18 39 43 52 85 - - - - Other 0 0 0 0 4 793 878 1,009 1,859
Total intangible assets 165 318 325 378 498 2,636 2,384 2,147 4,235 Investment securities - 0 144 150 150 311 383 1,354 833 Lease and guarantee deposits 97 132 157 161 159 411 752 856 798 Other 343 30 11 96 92 221 187 783 539
Investments and other assets 440 162 312 407 402 943 1,323 2,993 2,170 Total fixed assets 856 1,025 1,261 1,270 1,380 4,363 4,585 6,148 7,838 Total assets 3,402 4,712 5,690 6,332 6,803 15,051 19,847 22,749 26,088
LIABILITIES
Accounts and notes payable 825 885 1,068 1,207 1,353 2,633 4,097 4,240 4,976 Short-term debt 2 1 1 1 1 12 43 44 39 Accounts payable–other 413 518 654 801 1,048 1,926 3,077 3,650 4,277 Accrued expenses 91 100 91 99 104 - - - - Income taxes payable 221 88 207 104 169 199 267 256 652 Provision for loyalty points 120 111 102 74 88 101 148 145 185 Other 119 85 102 194 104 463 1,098 1,115 915
Total current liabilities 1,792 1,788 2,224 2,480 2,867 5,334 8,730 9,450 11,044 Long-term debt 1 3 2 2 1 62 106 96 79 Asset retirement expenses 24 46 60 60 66 106 283 296 322 Retirement benefit obligations - - - - - 19 459 - - Other 54 37 30 12 3 383 232 402 447
Total fixed liabilities 78 86 93 74 70 570 1,069 794 848 Total liabilities 1,870 1,874 2,317 2,554 2,936 5,903 9,799 10,244 11,892 NET ASSETS
Capital stock 324 808 857 886 909 930 1,260 1,284 1,691 Capital surplus 79 563 612 641 664 4,944 5,274 5,298 5,705 Retained earnings 1,128 1,467 1,904 2,251 2,790 3,273 3,510 5,898 6,688 Treasury stock - - - - -496 - -2 -3 -3
- - - - - -1 4 -5 -61 Non-controlling interests - - - - - 1 3 33 175
Total net assets 1,531 2,838 3,373 3,778 3,867 9,148 10,048 12,505 14,196 Working capital 203 113 52 85 -25 -643 -628 -932 -817 Total interest-bearing debt 2 4 3 3 2 74 150 139 118 Net debt (net cash) -826 -1,955 -2,376 -2,657 -2,716 -5,174 -7,087 -7,997 -7,559
Accumulated other comprehensive income
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2021. Another JPY880mn has been budgeted for upgrading core systems, including upgrades of the core system platform for
the Radish Boya business; this investment spending is expected to be completed by March 2023. Any overage above the
JPY4,480mn (planned for use as described above) is slated for use by March 2021 to fund advertising/promotional spending
and other working capital needs.
Fixed assets The company leases distribution centers and the only fixed assets with high unit prices that it owns are Kit Oisix equipment,
which has a working life of 15 years. Thus, its balance sheet is relatively light on the assets column.
Accounts payable These include accounts payable for outsourcing fees associated with sourcing supplies and distributing products.
Source: Shared Research based on company data. Note: Figures may differ from company materials due to differences in rounding methods.
Working capital The company’s cash conversion cycle is almost zero, because the term of payment for sales is generally shorter than the term of
payment for supplies, and as a rule no inventory in held at distribution centers.
▷ Payments [from customers] billed in a particular month are due at the end of the following month.
▷ Payments [to suppliers] billed in a particular month are due 45 days after the end of the month.
▷ As a general rule no inventory is held at distribution centers, the exception being products that have long shelf lives and can be
easily handled.
Cash flow statement
Source: Shared Research based on company data. Note: Figures may differ from company materials due to differences in rounding methods.
Profit margins FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20(JPYmn) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons.
Gross profit 6,033 6,995 7,611 8,609 9,861 11,199 18,727 30,522 33,818GPM 47.8% 48.0% 47.8% 47.7% 48.9% 48.7% 46.8% 47.7% 47.6%Operating profit 580 734 741 649 774 753 891 2,312 2,467OPM 4.6% 5.0% 4.7% 3.6% 3.8% 3.3% 2.2% 3.6% 3.5%EBITDA 653 862 931 858 1,016 996 1,670 3,154 3,595EBITDA margin 5.2% 5.9% 5.9% 4.8% 5.0% 4.3% 4.2% 4.9% 5.1%Net margin 2.6% 2.3% 2.7% 1.9% 2.7% 2.2% 0.6% 3.7% 1.1%
Financial ratios ROA (RP-based) 18.1% 14.9% 11.1% 12.3% 7.1% 5.4% 10.8% 7.5%ROE 15.5% 14.1% 9.7% 14.1% 7.9% 2.5% 21.2% 6.0%Working capital 203 113 52 85 -25 -643 -628 -932 -817Current ratio 142.1% 206.3% 199.1% 204.0% 189.2% 200.4% 174.8% 175.7% 165.3%Quick ratio 128.6% 189.9% 181.4% 186.4% 171.7% 180.2% 157.1% 156.7% 147.2%OCF / Current liabilities 0.3 0.3 0.4 0.2 0.3 0.2 0.2 0.3 0.1Net debt / Equity -54.0% -68.9% -70.4% -70.3% -70.2% -56.6% -70.5% -63.9% -53.2%OCF / Total liabilities 0.2 0.3 0.3 0.2 0.3 0.1 0.2 0.3 0.1Cash conversion cycle (days) -4.2 -0.3 -0.4 0.4 0.9 -3.0 -2.3 -0.3 1.4Change in working capital -90 -61 33 -110 -618 15 -304 115
Cash flow statement FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20(JPYmn) Parent Parent Parent Parent Parent Cons. Cons. Cons. Cons.Cash flows from operating activities (1) 453 582 712 516 818 665 1,638 3,115 1,080
Pre-tax profit 581 578 726 555 806 778 610 2,151 1,748 Depreciation 56 104 131 165 185 209 395 457 594 Amortization of goodwill - 24 24 24 24 35 384 385 506 Change in working capital -170 88 48 60 92 -112 -103 311 -1,266
Cash flows from investing activities (2) -529 -468 -388 -290 -307 -497 -281 -2,216 -1,754 Purchase of tangible/intangible fixed as -282 -434 -219 -230 -305 -316 -480 -961 -1,259 Free cash flow (1+2) -76 114 324 226 511 168 1,357 900 -674
Cash flows from financing activities -2 956 96 54 -452 38 629 6 255
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Historical performance
Q1 FY03/21 results
Overview ▷ Q1 FY03/21 sales were JPY23.1bn (+42.2% YoY), operating profit was JPY2.1bn (+282.3% YoY), EBITDA was JPY2.4bn
(+220.4% YoY), and net income was JPY1.2bn (+337.8% YoY). Demand for home delivery amid the spread of COVID-19
exceeded the company’s initial forecast. The number of subscribers and ARPU increased, mainly for domestic home delivery
businesses.
▷ In the three home delivery businesses, the rise in the number of subscribers added approximately JPY1.2bn YoY to sales and
increased ARPU added JPY3.7bn YoY to sales. Increases in subscribers and ARPU added around JPY300mn and JPY950mn
YoY, respectively, to EBITDA. Although Oisix suspended new subscriber acquisition for about a month, it gradually resumed
adding primarily small-SKU service subscribers from May. Subscribers of Daichi and Radish Boya went up due to a natural
increase in inquiries and customers applying for Oisix (which suspended accepting new subscribers) being directed to
these services. ARPU increased a sharp 25–30% YoY for all three brands. The segment profit margins improved, since the
distribution cost per delivery is not materially affected by an increase in ARPU. The company said the retention rates of new
subscribers were higher than expected across all three businesses.
▷ Oisix suspended new subscriber acquisition for about a month due to capacity constraints, resulting in a loss of around
10,000 net increase in subscribers. As a result, the company saved JPY650mn in sales promotion costs, which temporarily
raised profits in Q1.
▷ Q1 progress versus full-year company forecasts was sales 29.7%, operating profit 69.2%, EBITDA 55.0%, and net income
98.7%. Versus the company’s Q1 forecasts, sales were 119%, operating profit 176%, and EBITDA 160%. The company had
already factored in the impact of the COVID-19 pandemic to a certain extent when it drafted the full-year forecasts. However,
the effects of COVID-19 have continued on longer than the company had originally anticipated, prolonging the period in
which earnings were boosted thanks to higher segment profit margins due to increased ARPU and budgets for new sales
promotions left unused. As such, the results came in higher than the forecasts.
▷ The company left unchanged its full-year forecasts for FY03/21 announced on May 21, 2020, on the grounds that it was
difficult to foresee the impact of the spread of COVID-19. In Q2, the company expects increased demand associated with
shorter summer vacation and consumers refraining from inter-regional travel to visit their families. It also expects reduced
spending on new promotions, because shipment capacity constraints have not been fully resolved. In Q3, the company
assumes the usual spike in sales in response to year-end and new year holiday shopping season promotions. Meanwhile, it
anticipates initial one-time expenditures and distribution costs increases associated with the Sayama Station distribution center,
which is slated to start up in October 2020 to expand Oisix shipment capacity. Fall PR expenses at Oisix, after the Sayama
Station comes on line, also add to the equation. The company thinks that ARPU may drift lower from Q3 onward to pre-COVID
19 levels. In Q4, the company anticipates a drop in profit margins, because it plans a large-scale spring PR campaign for growth
in FY03/22 onward, which entails spending any unused budget for FY03/21 as well.
▷ The company undertook equity financing in April 2020 (announced in March 2020). The public offering of new shares
together with a separate private placement is expected to bring in net proceeds of up to JPY4,548mn. Of this amount,
JPY3,560mn has been budgeted for investment spending on the company’s new Ebina Station distribution center and
computer systems, with this spending expected to be completed by October 2021. Another JPY880mn has been budgeted for
upgrading core systems, including upgrades of the core system platform for the Radish Boya business; this investment
spending is expected to be completed by March 2023. Any overage above the JPY4,480mn (planned for use as described
above) is slated for use by March 2021 to fund advertising/promotional spending and other working capital needs.
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Segment information KPIs of the three home delivery businesses
Source: Shared Research based on company data. Notes: In Q1 FY03/20, the company revised the definitions of its KPIs for FY03/19 onward. This has resulted in the loss of continuity with data after FY03/18.
▷ The number of Oisix subscribers has been increasing because of a steady rise in customers purchasing Kit Oisix (160,112 at
end-June 2020, +24.6% YoY), with new customers attracted by meal kits.
▷ In Q1 FY03/21, the number of subscribers and ARPU increased sharply for all three businesses due to the surge in home
delivery demand in the COVID-19 pandemic. ARPU increased a sharp 25–30% YoY for all three brands. This peaked Apr–May,
when a state of emergency was declared by the Government, but orders have continued to expand above normal levels since
June. Existing customers tended to buy additional products that they previously purchased at supermarkets. However, the
company thinks that ARPU may drift lower from Q3 onward to pre-COVID 19 levels.
▷ At Daichi, the number of subscribers declined from Q4 FY03/18 until Q4 FY03/20, while ARPU has been on the rise over the
same period. This reflects changes in services and the company’s ongoing promotions.
▷ The number of Radish Boya subscribers was coming down until Q4 FY03/20 as the company changed the delivery fee schedule
and made other changes aimed at reducing the number of light users (whose order value is below the company’s breakeven
point per order) and otherwise increase profits as opposed to sales. In addition to reducing the number of light users, the
company’s move to focus more resources on making purchase proposals to existing subscribers has led to increases in average
spend.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
No. of subscribers 177,606 186,929 193,461 202,427 221,612 226,187 230,393 239,837 252,303
ARPU (JPY) 11,558 11,118 11,522 11,173 11,095 10,634 11,379 11,745 13,822
Average spend (JPY) 6,005 5,973 6,149 6,013 5,884 5,840 6,055 6,166 6,748
Purchase frequency (x) 1.92 1.86 1.87 1.86 1.89 1.82 1.88 1.90 2.05
No. of subscribers 44,086 43,775 42,071 40,189 38,517 37,532 37,121 37,127 43,941
ARPU (JPY) 20,247 19,807 20,226 19,171 20,821 21,159 22,391 21,604 27,117
Average spend (JPY) 7,899 8,121 8,573 8,046 8,195 8,292 8,732 8,508 9,234
Purchase frequency (x) 2.56 2.44 2.36 2.38 2.54 2.55 2.56 2.54 2.94
No. of subscribers 74,240 71,616 66,070 62,935 61,009 59,400 58,528 56,935 62,515
ARPU (JPY) 17,158 17,076 18,439 17,401 18,202 17,926 19,659 18,621 23,189
Average spend (JPY) 5,460 5,616 6,114 5,869 6,055 6,060 6,398 6,206 7,028
Purchase frequency (x) 3.14 3.04 3.02 2.97 3.01 2.96 3.07 3.00 3.30
No. of subscribers YoY 120.4% 120.0% 118.8% 119.3% 124.8% 121.0% 119.1% 118.5% 113.8%
ARPU YoY 97.7% 100.6% 99.4% 96.3% 96.0% 95.6% 98.8% 105.1% 124.6%
Average spend YoY 103.2% 104.7% 104.1% 101.5% 98.0% 97.8% 98.5% 102.5% 114.7%
Purchase frequency YoY 94.6% 95.9% 95.4% 94.9% 98.4% 97.8% 100.5% 102.2% 108.5%
No. of subscribers YoY 97.3% 100.2% 95.9% 89.3% 87.4% 85.7% 88.2% 92.4% 114.1%
ARPU YoY 101.8% 99.7% 91.1% 99.6% 102.8% 106.8% 110.7% 112.7% 130.2%
Average spend YoY 104.1% 105.5% 102.8% 104.1% 103.7% 102.1% 101.9% 105.7% 112.7%
Purchase frequency YoY 98.5% 94.6% 88.4% 95.6% 99.2% 104.5% 108.5% 106.7% 115.7%
No. of subscribers YoY 84.3% 81.4% 74.0% 80.6% 82.2% 82.9% 88.6% 90.5% 102.5%
ARPU YoY 104.3% 107.4% 107.5% 104.6% 106.1% 105.0% 106.6% 107.0% 127.4%
Average spend YoY 99.3% 101.8% 103.8% 111.2% 110.9% 107.9% 104.6% 105.7% 116.1%
Purchase frequency YoY 105.0% 105.6% 103.8% 94.3% 95.9% 97.4% 101.7% 101.0% 109.6%
FY03/21FY03/20
Radish Boya
FY03/19
Oisix
Daichi
Radish Boya
Oisix
Daichi
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Seasonal factors: Spend per order tends to be higher in Q3 (October–December) than the rest of year because of sales of products with a high unit
price including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (food traditionally served at New Year).
Profit particularly spikes in Q3.
Sales and profit by individual segments
Source: Shared Research based on company data. Note: Profit forecasts for individual segments represent the company’s initial forecasts. Profit figures for individual segments are segment profit, defined by the company as “sales minus costs that can be linked to each business segment.”
SegmentsCumulative (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Sales 16,854 31,720 48,906 64,026 16,265 32,552 52,425 71,041 23,132
YoY 75.5% 67.5% 63.0% 60.1% -3.5% 2.6% 7.2% 11.0% 42.2%Home Delivery: Oisix 6,864 13,769 22,191 29,619 8,308 16,524 26,523 35,830 11,265
YoY 18.5% 20.0% 20.1% 19.4% 21.0% 20.0% 19.5% 21.0% 35.6%Home Delivery: Daichi wo Mamoru Kai 2,769 5,440 8,406 10,902 2,587 5,138 7,937 10,541 3,636
YoY -0.8% -0.9% -1.2% -2.8% -6.6% -5.6% -5.6% -3.3% 40.5%Home Delivery: Radish Boya 5,811 9,926 14,346 18,028 3,771 7,460 11,410 14,981 4,721
YoY - - - - -35.1% -24.8% -20.5% -16.9% 25.2%Other 1,483 2,756 4,199 5,794 1,663 3,529 6,384 9,962 3,601
YoY 33.6% 27.4% 28.6% 36.3% 12.2% 28.1% 52.0% 71.9% 116.5%Adjustments -74 -171 -236 -318 -64 -98 172 -273 -95
Operating profit (segment profit) 610 1,115 2,266 2,312 543 900 1,597 2,467 2,076 YoY 331.2% 369.5% 227.2% 159.4% -11.0% -19.3% -29.5% 6.7% 282.3%Operating profit margin 3.6% 3.5% 4.6% 3.6% 3.3% 2.8% 3.0% 3.5% 9.0%Home Delivery: Oisix 970 1,943 3,371 4,036 933 1,868 3,261 4,801 2,367
YoY 43.9% 39.6% 39.2% 22.7% -3.8% -3.9% -3.3% 19.0% 153.7%Segment profit margin 14.1% 14.1% 15.2% 13.6% 11.2% 11.3% 12.3% 13.4% 21.0%
Home Delivery: Daichi wo Mamoru Kai 479 960 1,536 1,989 457 885 1,397 1,889 724 YoY -11.1% -10.9% -6.9% -5.1% -4.6% -7.8% -9.0% -5.0% 58.4%Segment profit margin 17.3% 17.6% 18.3% 18.2% 17.7% 17.2% 17.6% 17.9% 19.9%
Home Delivery: Radish Boya 1,030 1,765 2,657 3,342 688 1,273 2,001 2,667 899 YoY - - - - -33.2% -27.9% -24.7% -20.2% 30.7%Segment profit margin 17.7% 17.8% 18.5% 18.5% 18.2% 17.1% 17.5% 17.8% 19.0%
Other 154 290 479 724 256 557 656 846 391 YoY -16.8% -24.5% -16.1% -4.7% 66.2% 92.1% 37.0% 16.9% 52.7%Segment profit margin 10.4% 10.5% 11.4% 12.5% 15.4% 15.8% 10.3% 8.5% 10.9%
Adjustments 2,024 3,844 5,779 7,779 1,792 3,683 5,719 7,736 2,305 SegmentsQuarterly (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Sales 16,854 14,867 17,186 15,120 16,265 16,287 19,873 18,615 23,132
YoY 75.5% 59.3% 55.2% 51.5% -3.5% 9.6% 15.6% 23.1% 42.2%Home Delivery: Oisix 6,864 6,905 8,422 7,428 8,308 8,216 9,999 9,307 11,265
YoY 18.5% 21.6% 20.1% 17.6% 21.0% 19.0% 18.7% 25.3% 35.6%Home Delivery: Daichi wo Mamoru Kai 2,769 2,671 2,965 2,497 2,587 2,551 2,799 2,604 3,636
YoY -0.8% -1.0% -1.8% -7.8% -6.6% -4.5% -5.6% 4.3% 40.5%Home Delivery: Radish Boya 5,811 4,115 4,420 3,682 3,771 3,689 3,950 3,571 4,721
YoY - - - - -35.1% -10.3% -10.6% -3.0% 25.2%Other 1,483 1,273 1,443 1,595 1,663 1,866 2,854 3,578 3,601
YoY 33.6% 20.7% 31.2% 61.6% 12.2% 46.6% 97.8% 124.4% 116.5%Adjustments -74 -97 -65 -82 -64 -34 270 -445 -95
Operating profit (segment profit) 610 505 1,150 47 543 357 697 870 2,076 YoY 331.2% 426.1% 152.9% -76.6% -11.0% -29.3% -39.4% 1767.2% 282.3%Operating profit margin 3.6% 3.4% 6.7% 0.3% 3.3% 2.2% 3.5% 4.7% 9.0%Home Delivery: Oisix 970 973 1,428 665 933 935 1,393 1,540 2,367
YoY 43.9% 35.5% 38.8% -23.3% -3.8% -3.9% -2.5% 131.6% 153.7%Segment profit margin 14.1% 14.1% 17.0% 9.0% 11.2% 11.4% 13.9% 16.5% 21.0%
Home Delivery: Daichi wo Mamoru Kai 479 481 576 453 457 428 512 492 724 YoY -11.1% -10.8% 0.7% 1.8% -4.6% -11.0% -11.1% 8.6% 58.4%Segment profit margin 17.3% 18.0% 19.4% 18.1% 17.7% 16.8% 18.3% 18.9% 19.9%
Home Delivery: Radish Boya 1,030 735 892 685 688 585 728 666 899 YoY - - - - -33.2% -20.4% -18.4% -2.8% 30.7%Segment profit margin 17.7% 17.9% 20.2% 18.6% 18.2% 15.9% 18.4% 18.7% 19.0%
Other 154 136 189 245 256 301 99 190 391 YoY -16.8% -31.7% 1.1% 29.6% 66.2% 121.3% -47.6% -22.4% 52.7%Segment profit margin 10.4% 10.7% 13.1% 15.4% 15.4% 16.1% 3.5% 5.3% 10.9%
Adjustments 2,024 1,820 1,935 2,000 1,792 1,891 2,036 2,017 2,305
FY03/20FY03/19
FY03/20FY03/19 FY03/21
FY03/21
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Goodwill amortization is not reflected in the profit figures shown for individual segments, and is included in adjustments.
Except for the personnel expenses related to employees who are not full-time, regular employees (i.e. those that are part-time or contract workers), all
personnel expenses (including wages, salaries, allowance, and mandatory social welfare payments) are recorded under corporate overhead
(adjustments) and not at the individual segment level.
Oisix home delivery business
Sales were JPY11.3bn (+35.6% YoY) and segment profit (defined by the company as “sales minus costs that can be linked to each
business segment”) was JPY2.4bn (+153.7% YoY).
▷ The company was able to boost the number of subscribers to its home delivery service Oisix Club from 239,837 at
end-FY03/20 to 252,303 at end-Q1 FY03/21. The company estimates it would have boosted subscriber members to about
262,000 (10,000 more than reported) had it not been for distribution capacity limitations and if it had been able to fully utilize
its advertising budget.
▷ ARPU for the Sakutto! Oisix service was in line with that of other services. While the service limits the number of SKU, the
company has been successful in promoting sets that qualify for free shipping. Customer satisfaction also appears to be higher
than the company had anticipated. The plan is to continue acquiring new subscribers in Q2 centered mostly on Sakutto! Oisix.
▷ The company plans to conduct a large-scale spring PR campaign in Q4 FY03/21 and will utilize any unused funds previously
earmarked for advertising, to support growth from FY03/22. In other words, the Q4 PR expenditure will likely exceed the
unused budget from Q1 of around JPY650mn. The company expects the fall PR campaign to be smaller than the one next
spring.
▷ In April 2020, the company launched its Ouchi Restaurant service that supports restaurants by selling popular menu items and
food materials from restaurants that have been adversely affected by the drop in people eating out. The number of partner
restaurants has expanded sharply since it was launched, increasing to 16 restaurants and 24 items. Customer satisfaction is high
at over 80% and given the possibility that the COVID-19 outbreak could become protracted, the management is committed to
continue providing this support and expand the product offerings.
▷ In addition, the company launched its Oisix Ouchi Travel service in August to support local municipalities hard-hit by the falloff
in tourism by marketing local specialties.
▷ Distribution capacity is currently a bottleneck for expanding subscriber numbers, but the addition of the Sayama Station from
October 2020 should resolve the capacity restraints in the near term. Details are as follows.
Announcement of distribution center expansion (June 25, 2020)
▷ Facility name (provisional): Oisix Sayama Station
▷ Property location (scheduled): Sayama, Saitama Prefecture
▷ Scheduled start of operation: October 2020
▷ Increased shipping capacity following expansion: The company expects to be able to cover all capacity requirements up to the
start of operation of the new Ebina Station distribution center in October 2021 (up to 50% increase from current levels,
including impact of increased shipping capacity of existing distribution centers due to the start of operations at the Sayama
Station).
▷ Initial investment: Approximately JPY300mn (vehicles, warehouse management system, initial leasing cost of premises, etc.)
Shipping system timeline (Oisix: as of August 2020)
▷ Up to October 2020: Shipping capacity increased by about 10%.
▷ From October 2020 to October 2021: Potential increase in shipping capacity up to 50% from current levels.
▷ October 2021 and beyond: Potential increase in shipping capacity up to 200%. The company will consolidate its distribution
bases into the new Ebina Distribution Center to lower core logistics costs and enhance profitability.
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Daichi home delivery business
Sales were JPY3.6bn (+40.5% YoY) and segment profit was JPY724mn (+58.4% YoY). The Daichi service saw its subscriber count
increase from 37,127 at end-FY03/20 to 43,941 at end-Q1 FY03/21 on increased new inquiries stemming from organic internet
searches and successful referrals from Oisix customer services.
Radish Boya home delivery business
▷ Sales were JPY4.7bn (+25.2% YoY) and segment profit was JPY899mn (+30.7% YoY).
▷ The number of Radish Boya subscribers rose from 56,935 at end-FY03/20 to 62,515 at end-Q1 FY03/21 on increased new
inquiries stemming from organic internet searches and successful referrals from Oisix customer services.
▷ The number of Radish Boya subscribers increased temporarily owing to ongoing service improvements. The company
anticipates a short-term drop in subscribers before entering a phase of sustainable growth.
Other businesses
Sales were JPY3.6bn (+116.5% YoY) and segment profit was JPY391mn (+52.7% YoY).
▷ The earnings results of Three Limes Inc. (trading as Purple Carrot) including amortization of goodwill were included in
consolidated results from Q3 FY03/20. Due to different fiscal year ends, consolidated Q1 FY03/21 results include Purple
Carrot’s January–March figures.
▷ Both sales and profit of brick-and-mortar businesses such as nursery wholesale declined in contrast to solid growth in overseas
businesses and e-commerce support to other companies. Overall sales and profits increased YoY thanks to consolidation of
Purple Carrot (adding JPY1.6bn to sales and JPY100mn to operating profit).
▷ Purple Carrot returned to profitability on a quarterly basis earlier than expected as the COVID-19 outbreak boosted demand.
Demand had been increasing locally since March and looks to have peaked in Apr–May (to be consolidated in Q2). The
number of subscribers as of end-March 2020 was up about 30% QoQ. The company plans to continue expanding its
subscriber base to a scale where it can remain profitable even after the extraordinary boost to ARPU winds down. Purple Carrot
has marketed its meal kits through Whole Foods Markets (a subsidiary of Amazon and the largest organic foods retailer in the
US) since July 2020.
▷ The brick-and-mortar business has been gradually recovering to pre-COVID-19 pandemic levels since June.
Other Topics Concludes business tie-up with Ootoya Holdings Co., Ltd (JASDAQ: 2705) (August 14, 2020)
The company decided to develop the Ouchi Ootoya Subscription business (provisional) with Ootoya, bringing together the
company’s expertise in marketing and distribution of subscription delivery services and Ootoya Holdings’ brand power, healthy
recipe development, and store networks. In the new business, the partners plan to develop meal kits and frozen dishes and lunch
boxes. The aim is to allow customers using the company’s regular delivery services as well as customers of Ootoya restaurant
chains to easily prepare home meals that are consistent with the value Oisix ra daichi provides. This is a joint business with other
brands, similar to the d-meal kits and ISETAN DOOR projects. There had been some reports of a possible capital partnership, but
no mention of this was included in the company’s press release.
▷ The two companies are currently in negotiations to grow the Ouchi Ootoya Subscription business over the longer term (3–5
years) to the scale of around JPY3bn on a transaction value basis.
▷ In a survey of Oisix subscribers, Ootoya was ranked as the most satisfying restaurant in the Japanese food category. The
company saw this result as a reflection of the high affinity between Oisix subscribers and Ootoya.
▷ Details of measures to be taken will be determined through negotiations between the two parties.
▷ The impact of the business alliance on the company’s consolidated earnings results for FY03/21 is yet to be determined, but
the company thinks the alliance will lead to enhancing both parties’ enterprise value in the medium- to long-term. The
company will make prompt announcements if it becomes clear that the alliance will have a significant impact on earnings.
▷ Since July 10, 2020, Colowide Co., Ltd. (TSE1: 7616) has been conducting a tender offer to acquire enough shares in Ootoya
HD to make it a consolidated subsidiary. On August 25, Colowide disclosed it had reduced the lower limit of the tender and
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extended the time frame for the offer to September 8. Oisix ra daichi stated that its treatment of the business alliance following
the completion of the tender offer remains undecided, as based on Colowide’s disclosure material, Colowide appears to have
no information on the details of the business alliance agreement between Oisix ra daichi and Ootoya HD, nor is it clear how
Colowide will handle the agreement once the tender offer is concluded.
Progress toward initial full-year forecasts
Source: Shared Research based on company data.
▷ The three home delivery businesses made strong progress in Q1 FY03/21.
▷ A simple YoY comparison is not possible for Radish Boya because FY03/19 included 13 months’ worth of results.
▷ In a typical year, the rate of progress for sales toward initial full-year forecasts tends to rise in Q3. Furthermore, spend per order
tends to be higher in Q3 (October–December) than the rest of the year because of sales of products with a high unit price
including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (traditional New Year
cuisine).
Full-year FY03/20 results
Overview Full-year FY03/20 sales were JPY71.0bn (+11,0% YoY), operating profit was JPY2.5bn (-6.7% YoY), EBITDA was JPY3.6bn (+14.0%
YoY), and net income was JPY790mn (-66.9% YoY).
▷ Progress versus full-year company forecasts was sales 101.5%, operating profit 112.1%, and EBITDA 112.3%, meaning that
these results all achieved company targets. Around February 2020, the company expected to attain its full-year sales target, but
thought it may undershoot [profit] forecasts slightly because of the impact of typhoons in fall 2019, one-time expenses
associated with expanding Kit Oisix, and Purple Carrot recording an operating loss. However, since March 2020 there has been
increased demand for home delivery due to the spread of the novel coronavirus disease, leading to increase to sales of
approximately JPY900mn and to operating profit of approximately JPY250mn (including roughly JPY100mn in cost savings from
suspending new customer acquisition), mainly in domestic home delivery businesses. However, net income only amounted to
79.0% of the full-year company forecast. Net income failed to reach the level forecast due to the recording of a JPY300mn
impairment loss for goodwill amortization as an equity method non-operating expense, in consideration of the uncertain future
outlook for affiliated company equity method affiliate Welcome Co., Ltd. (DEAN & DELUCA), which has temporarily closed
stores.
▷ In FY03/19, 13 months (March 2018–March 2019) of Radish Boya’s results were included following its consolidation. Excluding
Radish Boya’s results for March 2018 from full-year FY03/19, sales for the period were up 13.8% YoY, operating profit up 10.0%,
net income down 65.9%, and EBITDA up 16.6%.
▷ According to the results published by the company at end-FY03/20, ARPU for existing subscribers rose by approximately 20%
YoY for all businesses as a result of increased demand for home delivery due to people staying home in response to the spread
of the novel coronavirus disease. However, it was necessary to suspend new subscriber acquisition when the limits of Oisix
shipping capacity was neared to prioritize service continuation to existing customers. The company recognizes that immediate
% of initial full-year forecastsQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Total sales 27.6% 52.0% 80.2% 105.0% 23.2% 46.5% 74.9% 101.5% 29.7%
Home Delivery: Oisix 24.7% 49.5% 79.8% 106.5% 23.8% 47.3% 76.0% 102.7% 26.2%
Home Delivery; Daichi 24.0% 47.1% 72.8% 94.4% 23.7% 47.1% 72.8% 96.7% 33.1%
Home Delivery: Radish Boya 38.0% 64.9% 93.8% 117.9% 24.6% 48.8% 74.6% 97.9% 33.7%
FY03/21FY03/20FY03/19
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measures are necessary because, despite the suppression of PR expenses leading to higher profit in the short term, the
suspension of new subscriber acquisition means the loss of future sales. Although it will be necessary to wait for the new Ebina
Distribution Center to become operational (scheduled for September 2021) for a full-scale increase in shipping capacity, the
company plans to make it through FY03/21 by making use of small SKU service (Sakutto! Oisix), as well as Radish Boya’s Zama
distribution centers, and to establish additional satellite distribution centers in autumn 2020.
▷ The possibility of temporary segment profit being accumulated for the Oisix business in FY03/21, particularly in Q1, has
increased due to the fact that PR expenses will be restrained in the short term due to the constraints of Oisix shipping capacity.
However, as described above, it should be noted that this additional profit will also lead to the loss of future sales.
▷ For FY03/21 the company forecasts sales of JPY78.0bn (+9.8% YoY), operating profit of JPY3.0bn (+21.6% YoY), net income
attributable to owners of the parent of JPY1.2bn (+51.9% YoY). The company forecasts EBITDA of JPY4.4bn (+22.4% YoY).
These forecasts assume that the request to refrain from going out will gradually ease from June 2020. They are based on a
consideration of the increased demand for home food delivery services on the one hand, but also increased expenses
associated with the responding to the novel coronavirus pandemic such as promoting remote working, and slowdown of
consumer sentiment within Japan that is expected to follow easing of the request to refrain from going out, on the other hand.
The company forecasts subscriber count at mainstay brand Oisix to increase to 275,000 at end-FY03/21 (up 30,000
subscribers). The Oisix subscriber count forecast reflects the impact of the recent suspension on new subscriber acquisitions.
▷ The listing of the company’s shares was transferred to First Section of the Tokyo Stock Exchange on 9 April, 2020.
▷ The company undertook equity financing in April 2020 (announced in March 2020). The public offering of new shares
together with a separate private placement is expected to bring in net proceeds of up to JPY4,548mn. Of this amount,
JPY3,560mn has been budgeted for investment spending on the company’s new Ebina Distribution Center and computer
systems, with this spending expected to be completed by October 2021. Another JPY880mn has been budgeted for
upgrading core systems, including upgrades of the core system platform for the Radish Boya business; this investment
spending is expected to be completed by March 2023. Any overage above the JPY4,480mn (planned for use as described
above) is slated for use by March 2021 to fund advertising/promotional spending and other working capital needs.
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Segment information KPIs of the three home delivery businesses
Source: Shared Research based on company data. Notes: ARPU and purchase frequency are monthly figures. Average spend is per order. At Daichi and Radish Boya, changes in how subscriber count is defined have resulted in the loss of continuity with data after Q4 FY03/18.
▷ The number of Oisix subscribers has been increasing because of a steady rise in customers purchasing Kit Oisix (150,093 at
end-March 2020, +35.0% YoY), with new customers attracted by meal kits.
▷ At Daichi, the number of subscribers has been declining since Q4 FY03/18 while ARPU has been on the rise since the same
quarter. This reflects changes in services and the company’s ongoing promotions.
▷ The number of Radish Boya subscribers has been coming down for some time as the company changed the delivery fee
schedule and made other changes aimed at reducing the number of light users (whose order value is below the company’s
breakeven point per order) and otherwise increase profits as opposed to sales. In addition to reducing the number of light
users, the company’s move to focus more resources on making purchase proposals to existing subscribers has led to increases
in average spend.
▷ According to the results published by the company at end-FY03/20, ARPU for existing subscribers rose by approximately 20%
YoY for all businesses as a result of increased demand for home delivery due to people staying home in response to the spread
of the novel coronavirus. However, because the request to refrain from going out was only made forcefully in Japan from
March 2020, only a partial effect has been reflected in Q4 (January–March) FY03/20. Although the company thinks that the
one-time rise in ARPU has ended as of May 2020, ARPU remains at a high level. Its view is that ARPU will eventually fall after the
threat of COVID-19 is countered by vaccines being developed or other solutions and may return to pre-COVID-19 levels, but
that the ARPU rise will be maintained for a certain period of time. When breaking down ARPU into spend per order and
purchase frequency, the company surmises that the effect of a higher purchase frequency tends to remain.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
No. of subscribers 147,474 155,827 162,891 169,664 179,942 189,352 197,272 205,976 225,553 230,556 236,836 244,740
ARPU (JPY) 11,833 11,057 11,587 11,602 11,562 11,127 11,534 11,183 11,244 10,616 11,384 11,721
Average spend (JPY) 5,817 5,704 5,908 5,925 6,002 5,973 6,150 6,015 5,887 5,839 6,056 6,152
Purchase frequency (x) 2.03 1.94 1.96 1.96 1.93 1.86 1.88 1.86 1.91 1.82 1.88 1.91
No. of subscribers 45,300 43,687 43,864 44,993 44,111 43,835 42,996 40,210 38,571 37,587 37,257 37,188
ARPU (JPY) 19,884 19,875 22,209 19,240 20,122 19,386 21,848 19,758 21,232 21,443 23,679 22,170
Average spend (JPY) 7,589 7,700 8,336 7,726 7,770 7,553 8,529 7,811 7,990 8,026 8,472 8,386
Purchase frequency (x) 2.60 2.58 2.67 2.49 2.59 2.57 2.56 2.53 2.66 2.67 2.79 2.64
No. of subscribers 88,087 87,951 89,224 78,062 74,949 72,101 66,233 63,144 61,507 59,927 58,655 57,393
ARPU (JPY) 16,457 15,896 17,149 16,639 17,277 17,177 18,988 17,264 18,301 18,277 20,028 18,681
Average spend (JPY) 5,501 5,518 5,889 5,278 5,460 5,616 6,114 5,869 6,055 6,060 6,398 6,296
Purchase frequency (x) 2.99 2.88 2.91 3.15 3.16 3.06 3.11 2.94 3.02 3.02 3.13 3.01
No. of subscribers YoY 124.8% 125.4% 124.7% 123.5% 122.0% 121.5% 121.1% 121.4% 125.3% 121.8% 120.1% 118.8%
ARPU YoY 97.9% 95.4% 96.9% 97.2% 97.7% 100.6% 99.5% 96.4% 97.2% 95.4% 98.7% 104.8%
Average spend YoY 99.0% 98.4% 98.9% 100.9% 103.2% 104.7% 104.1% 101.5% 98.1% 97.8% 98.5% 102.3%
Purchase frequency YoY 98.5% 97.0% 98.0% 96.6% 95.1% 95.9% 95.9% 94.9% 99.0% 97.8% 100.0% 102.7%
No. of subscribers YoY 100.5% 95.6% 94.5% 97.5% 97.4% 100.3% 98.0% 89.4% 87.4% 85.7% 86.7% 92.5%
ARPU YoY 94.3% 99.1% 104.2% 100.9% 101.2% 97.5% 98.4% 102.7% 105.5% 110.6% 108.4% 112.2%
Average spend YoY 99.8% 102.3% 104.7% 102.7% 102.4% 98.1% 102.3% 101.1% 102.8% 106.3% 99.3% 107.4%
Purchase frequency YoY 93.9% 96.6% 100.0% 98.4% 99.6% 99.6% 95.9% 101.6% 102.7% 103.9% 109.0% 104.3%
No. of subscribers YoY 96.2% 95.4% 98.6% 88.7% 85.1% 82.0% 74.2% 80.9% 82.1% 83.1% 88.6% 90.9%
ARPU YoY 98.8% 97.4% 98.3% 102.8% 105.0% 108.1% 110.7% 103.8% 105.9% 106.4% 105.5% 108.2%
Average spend YoY 99.2% 99.5% 102.4% 98.1% 99.3% 101.8% 103.8% 111.2% 110.9% 107.9% 104.6% 107.3%
Purchase frequency YoY 99.7% 98.0% 96.0% 104.7% 105.7% 106.3% 106.9% 93.3% 95.6% 98.7% 100.6% 102.4%
FY03/20
Radish Boya
FY03/19
Oisix
Daichi
Radish Boya
Oisix
Daichi
FY03/18
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Change in the definition of “number of subscribers”: Until end-FY03/19, the definitions of “number of subscribers” differed by brand. Following the
company’s push toward more stringent subscription management, definitions at Daichi and Radish Boya were revised to exclude inactive users. While
KPI figures for FY03/18 and FY03/19 have been retroactively restated to reflect this change, continuity is not maintained for figures prior to FY03/18.
Seasonal factors: Spend per order tends to be higher in Q3 (October–December) than the rest of year because of sales of products with a high unit
price including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (food traditionally served at New Year).
Profit particularly spikes in Q3.
Sales and profit by individual segments
Source: Shared Research based on company data. Note: Profit forecasts for individual segments represent the company’s initial forecasts. Profit figures for individual segments are segment profit, defined by the company as “sales minus costs that can be linked to each business segment.”
Goodwill amortization is not reflected in the profit figures shown for individual segments, and is included in adjustments.
SegmentsCumulative (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Sales 9,602 18,936 30,008 39,987 16,854 31,720 48,906 64,026 16,265 32,552 52,425 71,041
YoY 78.5% 76.7% 75.3% 73.7% 75.5% 67.5% 63.0% 60.1% -3.5% 2.6% 7.2% 11.0%Home Delivery: Oisix 5,790 11,470 18,481 24,799 6,864 13,769 22,191 29,619 8,308 16,524 26,523 35,830
YoY - - - - 18.5% 20.0% 20.1% 19.4% 21.0% 20.0% 19.5% 21.0%Home Delivery: Daichi wo Mamoru Kai 2,790 5,487 8,508 11,215 2,769 5,440 8,406 10,902 2,587 5,138 7,937 10,541
YoY - - - - -0.8% -0.9% -1.2% -2.8% -6.6% -5.6% -5.6% -3.3%Home Delivery: Radish Boya 5,811 9,926 14,346 18,028 3,771 7,460 11,410 14,981
YoY - - - - - - - - -35.1% -24.8% -20.5% -16.9%Other 1,109 2,164 3,264 4,251 1,483 2,756 4,199 5,794 1,663 3,529 6,384 9,962
YoY - - - - 33.6% 27.4% 28.6% 36.3% 12.2% 28.1% 52.0% 71.9%Adjustments -88 -185 -246 -278 -74 -171 -236 -318 -64 -98 172 -273
Operating profit (segment profit) 142 238 693 891 610 1,115 2,266 2,312 543 900 1,597 2,467 YoY -16.7% -12.3% 10.7% 18.4% 331.2% 369.5% 227.2% 159.4% -11.0% -19.3% -29.5% 6.7%Operating profit margin 1.5% 1.3% 2.3% 2.2% 3.6% 3.5% 4.6% 3.6% 3.3% 2.8% 3.0% 3.5%Home Delivery: Oisix 674 1,392 2,421 3,288 970 1,943 3,371 4,036 933 1,868 3,261 4,801
YoY - - - - 43.9% 39.6% 39.2% 22.7% -3.8% -3.9% -3.3% 19.0%Segment profit margin 11.6% 12.1% 13.1% 13.3% 14.1% 14.1% 15.2% 13.6% 11.2% 11.3% 12.3% 13.4%
Home Delivery: Daichi wo Mamoru Kai 539 1,078 1,650 2,095 479 960 1,536 1,989 457 885 1,397 1,889 YoY - - - - -11.1% -10.9% -6.9% -5.1% -4.6% -7.8% -9.0% -5.0%Segment profit margin 19.3% 19.6% 19.4% 18.7% 17.3% 17.6% 18.3% 18.2% 17.7% 17.2% 17.6% 17.9%
Home Delivery: Radish Boya 1,030 1,765 2,657 3,342 688 1,273 2,001 2,667 YoY - - - - - - - - -33.2% -27.9% -24.7% -20.2%Segment profit margin - - - - 17.7% 17.8% 18.5% 18.5% 18.2% 17.1% 17.5% 17.8%
Other 185 384 571 760 154 290 479 724 256 557 656 846 YoY - - - - -16.8% -24.5% -16.1% -4.7% 66.2% 92.1% 37.0% 16.9%Segment profit margin 16.7% 17.7% 17.5% 17.9% 10.4% 10.5% 11.4% 12.5% 15.4% 15.8% 10.3% 8.5%
Adjustments 1,257 2,853 3,951 5,253 2,024 3,844 5,779 7,779 1,792 3,683 5,719 7,736 SegmentsQuarterly (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Sales 9,602 9,334 11,072 9,980 16,854 14,867 17,186 15,120 16,265 16,287 19,873 18,615
YoY 78.5% 74.8% 73.1% 69.1% 75.5% 59.3% 55.2% 51.5% -3.5% 9.6% 15.6% 23.1%Home Delivery: Oisix 5,790 5,680 7,011 6,318 6,864 6,905 8,422 7,428 8,308 8,216 9,999 9,307
YoY - - - - 18.5% 21.6% 20.1% 17.6% 21.0% 19.0% 18.7% 25.3%Home Delivery: Daichi wo Mamoru Kai 2,790 2,697 3,021 2,707 2,769 2,671 2,965 2,497 2,587 2,551 2,799 2,604
YoY - - - - -0.8% -1.0% -1.8% -7.8% -6.6% -4.5% -5.6% 4.3%Home Delivery: Radish Boya - - - - 5,811 4,115 4,420 3,682 3,771 3,689 3,950 3,571
YoY - - - - - - - - -35.1% -10.3% -10.6% -3.0%Other 1,109 1,054 1,100 987 1,483 1,273 1,443 1,595 1,663 1,866 2,854 3,578
YoY - - - - 33.6% 20.7% 31.2% 61.6% 12.2% 46.6% 97.8% 124.4%Adjustments -88 -97 -61 -32 -74 -97 -65 -82 -64 -34 270 -445
Operating profit (segment profit) 142 96 455 199 610 505 1,150 47 543 357 697 870 YoY -16.7% -5.0% 28.3% 56.4% 331.2% 426.1% 152.9% -76.6% -11.0% -29.3% -39.4% 1767.2%Operating profit margin 1.5% 1.0% 4.1% 2.0% 3.6% 3.4% 6.7% 0.3% 3.3% 2.2% 3.5% 4.7%Home Delivery: Oisix 674 718 1,029 867 970 973 1,428 665 933 935 1,393 1,540
YoY - - - - 43.9% 35.5% 38.8% -23.3% -3.8% -3.9% -2.5% 131.6%Segment profit margin 11.6% 12.6% 14.7% 13.7% 14.1% 14.1% 17.0% 9.0% 11.2% 11.4% 13.9% 16.5%
Home Delivery: Daichi wo Mamoru Kai 539 539 572 445 479 481 576 453 457 428 512 492 YoY - - - - -11.1% -10.8% 0.7% 1.8% -4.6% -11.0% -11.1% 8.6%Segment profit margin 19.3% 20.0% 18.9% 16.4% 17.3% 18.0% 19.4% 18.1% 17.7% 16.8% 18.3% 18.9%
Home Delivery: Radish Boya - - - - 1,030 735 892 685 688 585 728 666 YoY - - - - - - - - -33.2% -20.4% -18.4% -2.8%Segment profit margin - - - - 17.7% 17.9% 20.2% 18.6% 18.2% 15.9% 18.4% 18.7%
Other 185 199 187 189 154 136 189 245 256 301 99 190 YoY - - - - -16.8% -31.7% 1.1% 29.6% 66.2% 121.3% -47.6% -22.4%Segment profit margin 16.7% 18.9% 17.0% 19.2% 10.4% 10.7% 13.1% 15.4% 15.4% 16.1% 3.5% 5.3%
Adjustments 1,257 1,596 1,098 1,302 2,024 1,820 1,935 2,000 1,792 1,891 2,036 2,017
FY03/18
FY03/18 FY03/20FY03/19
FY03/20FY03/19
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Except for the personnel expenses related to employees who are not full-time, regular employees (i.e. those that are part-time or contract workers), all
personnel expenses (including wages, salaries, allowance, and mandatory social welfare payments) are recorded under corporate overhead
(adjustments) and not at the individual segment level.
Oisix home delivery business
Sales were JPY35.8bn (+21.0% YoY) and segment profit (defined by the company as “sales minus costs that can be linked to each
business segment”) was JPY4.8bn (+19.0% YoY).
▷ The company was able to boost the number of subscribers to its home delivery service Oisix Club from 205,976 at
end-FY03/19 to 244,740 at end-FY03/20. This was approximately 10,000 more subscribers than initially forecast.
▷ The company suspended new customer acquisition for about a month from late March to late April 2020 due to a boost in
demand associated with the spread of COVID-19, but has gradually resumed new customer acquisition beginning in May.
Daichi home delivery business
Sales were JPY10.5bn (-3.3% YoY) and segment profit was JPY1.9bn (-5.0% YoY).
▷ The Daichi service saw its subscriber count decline from 40,210 at end-FY03/19 to 37,188 at end-FY03/20, falling below the
initial target of 40,000. It is taking longer than the company expected for the subscriber count to start recovering.
▷ Spend per order and purchase frequency was up from FY03/19 due to an increase in regular customers.
Radish Boya home delivery business
Sales were JPY15.0bn (-16.9% YoY) and segment profit was JPY2.7bn (-20.2% YoY).
▷ The number of Radish Boya subscribers declined from 63,144 at end-FY03/19 to 57,393 at end-FY03/20. This is close to the
company’s initial target of 58,000, indicating that the company’s decision to prioritize improvement of service quality proved
correct.
▷ The reduction of unprofitable orders was completed in 1H. In 2H, the company implemented measures to improve operations,
which led to lower cancellation rates (approximately 15pp lower YoY in Q4). By encouraging subscribers to utilize multiple
subscription services, the company improved customer experience, and increased the number of customers who continue to
subscribe after the first eight weeks by about 20pp.
Other businesses
Sales were JPY10.0bn (+71.9% YoY) and segment profit was JPY846mn (+16.9% YoY).
▷ From Q3 FY03/20, Three Limes Inc.’s results (trading as Purple Carrot) including amortization of goodwill) have been
consolidated. Due to different fiscal year ends, Purple Carrot’s July-December figures were consolidated this quarter. The
number of Purple Carrot subscribers increased approximately 20% YoY, due in part to the effect of TV publicity.
▷ In Q4 FY03/20, sales from projects supporting other companies’ e-commerce sites grew due to a rise in home delivery demand
as consumers stayed home to prevent the spread of COVID-19. However, the company stopped new customer acquisitions to
prioritize services to existing customers, because these new services shared the same shipment facilities with the Oisix home
delivery service. Mobile supermarket service Tokushimaru recorded around 10% increase in daily sales, because customer
traffic and spend per customer both increased due to consumers staying home. Gross merchandising value grew 35.4% YoY to
JPY10.7bn in FY03/20.
▷ Equity method affiliate Welcome Co., Ltd. (DEAN & DELUCA), which temporarily closed stores, recorded a sharp decline in Q4.
The company booked around JPY300mn in goodwill impairment as a non-operating expense (equity method loss), since the
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outlook for the business remains uncertain. This has reduced Welcome-related goodwill amortization by around JPY90mn per
year.
Other information Net income declined by JPY1.2bn due to the absence of additional deferred tax assets (stemming from reductions in corporate
taxes as a result of the merger with Radish Boya) the company recognized in FY03/19.
Qualitative impact of COVID-19 spread
▷ There has been a change in consumer needs as consumers are more likely to have meals at home, more opportunities for
eating lunch at home, increased demand for vacuum-packed foods for lunch, sales growth of pantry items like canned foods,
a greater need for meal kit options that serve three people, and items associated with cooking as a hobby. The company
plans to implement initiatives in response to these emerging needs. A potentially negative trend is consumer preference for
low-priced products. In planning services going forward, the company intends to study customer trends after the global
financial crisis of 2007–2008.
▷ The company has been interviewing users to gain an accurate understanding of consumer needs and visiting producer
regions to deepen relationships with farms, but the spread of COVID-19 has limited these activities, which the company has
had to do online instead.
▷ In terms of supply, there have been some temporary shortages, which the company plans to resolve by increasing the
volume of crops agreed with contract growers. In previous years, the company had suffered surplus stocks due to
contracting volume which was too large, but it has been more successful in selling the full contracted volume by substituting
items between brands while fulfilling the safety and quality standards of each brand. The company sees little supply risk,
because producers earn more if they increase contract volumes.
▷ For distribution centers, the company is raising hygiene management standards and taking steps to ensure that any adverse
impact from an employee testing positive for COVID-19 can be minimized.
▷ As of May 2020, more than 80% of headquarters employees were working a full schedule remotely.
Progress toward initial full-year forecasts
Source: Shared Research based on company data.
▷ Progress in the Oisix businesses in full-year FY03/20 exceeded forecasts for the period. However, progress for Daichi wo
Mamoru Kai (Daichi) and Radish Boya fell below initial forecasts.
▷ A simple YoY comparison is not possible for Radish Boya because FY03/19 included 13 months’ worth of results.
▷ In a typical year, the rate of progress for sales toward initial full-year forecasts tends to rise in Q3. Furthermore, spend per order
tends to be higher in Q3 (October–December) than the rest of the year because of sales of products with a high unit price
including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (traditional New Year
cuisine).
Q3 FY03/20 results
Overview Cumulative Q3 FY03/20 sales were JPY52.4bn (+7.2% YoY), operating profit was JPY1.6bn (-29.5% YoY), EBITDA was JPY2.4bn
(-17.4% YoY), and net income was JPY696mn (-72.5% YoY).
% of initial full-year forecastsQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Total sales 25.3% 49.8% 79.0% 105.2% 27.6% 52.0% 80.2% 105.0% 23.2% 46.5% 74.9% 101.5%
Home Delivery: Oisix 24.1% 47.8% 77.0% 103.4% 24.7% 49.5% 79.8% 106.5% 23.8% 47.3% 76.0% 102.7%
Home Delivery; Daichi 25.7% 50.6% 78.5% 103.5% 24.0% 47.1% 72.8% 94.4% 23.7% 47.1% 72.8% 96.7%
Home Delivery: Radish Boya - - - - 38.0% 64.9% 93.8% 117.9% 24.6% 48.8% 74.6% 97.9%
FY03/20FY03/19FY03/18
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▷ Progress versus Q3 company forecasts was sales 101%, operating profit 91%, and EBITDA 95%. The company noted that there
were no major changes in the business environment since 1H and sales progressed on target vs forecasts. However, the
company missed its EBITDA target due to one off rise in expenses to deal with the increased demand for Kit Oisix (JPY360mn,
which reflects higher-than-expected costs associated with Kit Oisix order volume that rose faster than projected), lost profit
including opportunity losses from typhoons (JPY100mn, including a JPY54mn extraordinary loss, mainly in the Oisix brand),
and lower-than-targeted profit improvement at Three Limes Inc. (Purple Carrot).
▷ Progress versus full-year company forecasts was sales 74.9%, operating profit 72.6%, EBITDA 74.4%, and net income 69.6%.
The full-year forecast announced on May 14, 2019 was left unchanged. Advertising expenses tend to increase in Q4 as April is a
month of many life changes for users, and the company indicated it would decide advertising volumes while monitoring
progress in sales and earnings.
▷ In Q3 FY03/19, 10 months (March–December 2018) of Radish Boya’s results were included following its consolidation.
Excluding Radish Boya’s results for March 2018 from cumulative Q3 FY03/19, sales for the period were up 10.8% YoY,
operating profit down 27.3%, recurring profit down 35.8%, and net income down 71.7%.
Segment information KPIs of the three home delivery businesses
Source: Shared Research based on company data. Notes: ARPU and purchase frequency are monthly figures. Average spend is per order. At Daichi and Radish Boya, changes in how subscriber count is defined have resulted in the loss of continuity with data after Q4 FY03/18.
▷ The number of Oisix subscribers has been increasing because of a steady rise in customers purchasing Kit Oisix (141,292 at
end-December 2019, +49.0% YoY), with new customers attracted by meal kits.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
No. of subscribers 147,474 155,827 162,891 169,664 179,942 189,352 197,272 205,976 225,553 230,556 236,836
ARPU (JPY) 11,833 11,057 11,587 11,602 11,562 11,127 11,534 11,183 11,244 10,616 11,384
Average spend (JPY) 5,817 5,704 5,908 5,925 6,002 5,973 6,150 6,015 5,887 5,839 6,056
Purchase frequency (x) 2.03 1.94 1.96 1.96 1.93 1.86 1.88 1.86 1.91 1.82 1.88
No. of subscribers 45,300 43,687 43,864 44,993 44,111 43,835 42,996 40,210 38,571 37,587 37,257
ARPU (JPY) 19,884 19,875 22,209 19,240 20,122 19,386 21,848 19,758 21,232 21,443 23,679
Average spend (JPY) 7,589 7,700 8,336 7,726 7,770 7,553 8,529 7,811 7,990 8,026 8,472
Purchase frequency (x) 2.60 2.58 2.67 2.49 2.59 2.57 2.56 2.53 2.66 2.67 2.79
No. of subscribers 88,087 87,951 89,224 78,062 74,949 72,101 66,233 63,144 61,507 59,927 58,655
ARPU (JPY) 16,457 15,896 17,149 16,639 17,277 17,177 18,988 17,264 18,301 18,277 20,028
Average spend (JPY) 5,501 5,518 5,889 5,278 5,460 5,616 6,114 5,869 6,055 6,060 6,398
Purchase frequency (x) 2.99 2.88 2.91 3.15 3.16 3.06 3.11 2.94 3.02 3.02 3.13
No. of subscribers YoY 124.8% 125.4% 124.7% 123.5% 122.0% 121.5% 121.1% 121.4% 125.3% 121.8% 120.1%
ARPU YoY 97.9% 95.4% 96.9% 97.2% 97.7% 100.6% 99.5% 96.4% 97.2% 95.4% 98.7%
Average spend YoY 99.0% 98.4% 98.9% 100.9% 103.2% 104.7% 104.1% 101.5% 98.1% 97.8% 98.5%
Purchase frequency YoY 98.5% 97.0% 98.0% 96.6% 95.1% 95.9% 95.9% 94.9% 99.0% 97.8% 100.0%
No. of subscribers YoY 100.5% 95.6% 94.5% 97.5% 97.4% 100.3% 98.0% 89.4% 87.4% 85.7% 86.7%
ARPU YoY 94.3% 99.1% 104.2% 100.9% 101.2% 97.5% 98.4% 102.7% 105.5% 110.6% 108.4%
Average spend YoY 99.8% 102.3% 104.7% 102.7% 102.4% 98.1% 102.3% 101.1% 102.8% 106.3% 99.3%
Purchase frequency YoY 93.9% 96.6% 100.0% 98.4% 99.6% 99.6% 95.9% 101.6% 102.7% 103.9% 109.0%
No. of subscribers YoY 96.2% 95.4% 98.6% 88.7% 85.1% 82.0% 74.2% 80.9% 82.1% 83.1% 88.6%
ARPU YoY 98.8% 97.4% 98.3% 102.8% 105.0% 108.1% 110.7% 103.8% 105.9% 106.4% 105.5%
Average spend YoY 99.2% 99.5% 102.4% 98.1% 99.3% 101.8% 103.8% 111.2% 110.9% 107.9% 104.6%
Purchase frequency YoY 99.7% 98.0% 96.0% 104.7% 105.7% 106.3% 106.9% 93.3% 95.6% 98.7% 100.6%
FY03/20
Radish Boya
FY03/19
Oisix
Daichi
Radish Boya
Oisix
Daichi
FY03/18
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▷ At Daichi, the number of subscribers has been declining since Q4 FY03/18 while ARPU has been on the rise since the same
quarter. This reflects changes in services and the company’s ongoing promotions.
▷ The number of Radish Boya subscribers has been coming down for some time as the company changed the delivery fee
schedule and made other changes aimed at reducing the number of light users (whose order value is below the company’s
breakeven point per order) and otherwise increase profits as opposed to sales. In addition to reducing the number of light
users, the company’s move to focus more resources on making purchase proposals to existing subscribers has led to increases
in average spend.
Change in the definition of “number of subscribers”: Until end-FY03/19, the definitions of “number of subscribers” differed by brand. Following the
company’s push toward more stringent subscription management, definitions at Daichi and Radish Boya were revised to exclude inactive users. While
KPI figures for FY03/18 and FY03/19 have been retroactively restated to reflect this change, continuity is not maintained for figures prior to FY03/18.
Seasonal factors: Spend per order tends to be higher in Q3 (October–December) than the rest of year because of sales of products with a high unit
price including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (food traditionally served at New Year).
Profit particularly spikes in Q3.
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Sales and profit by individual segments
Source: Shared Research based on company data. Note: Profit forecasts for individual segments represent the company’s initial forecasts. Profit figures for individual segments are segment profit, defined by the company as “sales minus costs that can be linked to each business segment.”
Goodwill amortization is not reflected in the profit figures shown for individual segments, and is included in adjustments.
Except for the personnel expenses related to employees who are not full-time, regular employees (i.e. those that are part-time or contract workers), all
personnel expenses (including wages, salaries, allowance, and mandatory social welfare payments) are recorded under corporate overhead
(adjustments) and not at the individual segment level.
SegmentsCumulative (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3Sales 9,602 18,936 30,008 39,987 16,854 31,720 48,906 64,026 16,265 32,552 52,425
YoY 78.5% 76.7% 75.3% 73.7% 75.5% 67.5% 63.0% 60.1% -3.5% 2.6% 7.2%Home Delivery: Oisix 5,790 11,470 18,481 24,799 6,864 13,769 22,191 29,619 8,308 16,524 26,523
YoY - - - - 18.5% 20.0% 20.1% 19.4% 21.0% 20.0% 19.5%Home Delivery: Daichi wo Mamoru Kai 2,790 5,487 8,508 11,215 2,769 5,440 8,406 10,902 2,587 5,138 7,937
YoY - - - - -0.8% -0.9% -1.2% -2.8% -6.6% -5.6% -5.6%Home Delivery: Radish Boya 5,811 9,926 14,346 18,028 3,771 7,460 11,410
YoY - - - - - - - - -35.1% -24.8% -20.5%Other 1,109 2,164 3,264 4,251 1,483 2,756 4,199 5,794 1,663 3,529 6,384
YoY - - - - 33.6% 27.4% 28.6% 36.3% 12.2% 28.1% 52.0%Adjustments -88 -185 -246 -278 -74 -171 -236 -318 -64 -98 172
Operating profit (segment profit) 142 238 693 891 610 1,115 2,266 2,312 543 900 1,597 YoY -16.7% -12.3% 10.7% 18.4% 331.2% 369.5% 227.2% 159.4% -11.0% -19.3% -29.5%Operating profit margin 1.5% 1.3% 2.3% 2.2% 3.6% 3.5% 4.6% 3.6% 3.3% 2.8% 3.0%Home Delivery: Oisix 674 1,392 2,421 3,288 970 1,943 3,371 4,036 933 1,868 3,261
YoY - - - - 43.9% 39.6% 39.2% 22.7% -3.8% -3.9% -3.3%Segment profit margin 11.6% 12.1% 13.1% 13.3% 14.1% 14.1% 15.2% 13.6% 11.2% 11.3% 12.3%
Home Delivery: Daichi wo Mamoru Kai 539 1,078 1,650 2,095 479 960 1,536 1,989 457 885 1,397 YoY - - - - -11.1% -10.9% -6.9% -5.1% -4.6% -7.8% -9.0%Segment profit margin 19.3% 19.6% 19.4% 18.7% 17.3% 17.6% 18.3% 18.2% 17.7% 17.2% 17.6%
Home Delivery: Radish Boya 1,030 1,765 2,657 3,342 688 1,273 2,001 YoY - - - - - - - - -33.2% -27.9% -24.7%Segment profit margin - - - - 17.7% 17.8% 18.5% 18.5% 18.2% 17.1% 17.5%
Other 185 384 571 760 154 290 479 724 256 557 656 YoY - - - - -16.8% -24.5% -16.1% -4.7% 66.2% 92.1% 37.0%Segment profit margin 16.7% 17.7% 17.5% 17.9% 10.4% 10.5% 11.4% 12.5% 15.4% 15.8% 10.3%
Adjustments 1,257 2,853 3,951 5,253 2,024 3,844 5,779 7,779 1,792 3,683 5,719 SegmentsQuarterly (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3Sales 9,602 9,334 11,072 9,980 16,854 14,867 17,186 15,120 16,265 16,287 19,873
YoY 78.5% 74.8% 73.1% 69.1% 75.5% 59.3% 55.2% 51.5% -3.5% 9.6% 15.6%Home Delivery: Oisix 5,790 5,680 7,011 6,318 6,864 6,905 8,422 7,428 8,308 8,216 9,999
YoY - - - - 18.5% 21.6% 20.1% 17.6% 21.0% 19.0% 18.7%Home Delivery: Daichi wo Mamoru Kai 2,790 2,697 3,021 2,707 2,769 2,671 2,965 2,497 2,587 2,551 2,799
YoY - - - - -0.8% -1.0% -1.8% -7.8% -6.6% -4.5% -5.6%Home Delivery: Radish Boya - - - - 5,811 4,115 4,420 3,682 3,771 3,689 3,950
YoY - - - - - - - - -35.1% -10.3% -10.6%Other 1,109 1,054 1,100 987 1,483 1,273 1,443 1,595 1,663 1,866 2,854
YoY - - - - 33.6% 20.7% 31.2% 61.6% 12.2% 46.6% 97.8%Adjustments -88 -97 -61 -32 -74 -97 -65 -82 -64 -34 270
Operating profit (segment profit) 142 96 455 199 610 505 1,150 47 543 357 697 YoY -16.7% -5.0% 28.3% 56.4% 331.2% 426.1% 152.9% -76.6% -11.0% -29.3% -39.4%Operating profit margin 1.5% 1.0% 4.1% 2.0% 3.6% 3.4% 6.7% 0.3% 3.3% 2.2% 3.5%Home Delivery: Oisix 674 718 1,029 867 970 973 1,428 665 933 935 1,393
YoY - - - - 43.9% 35.5% 38.8% -23.3% -3.8% -3.9% -2.5%Segment profit margin 11.6% 12.6% 14.7% 13.7% 14.1% 14.1% 17.0% 9.0% 11.2% 11.4% 13.9%
Home Delivery: Daichi wo Mamoru Kai 539 539 572 445 479 481 576 453 457 428 512 YoY - - - - -11.1% -10.8% 0.7% 1.8% -4.6% -11.0% -11.1%Segment profit margin 19.3% 20.0% 18.9% 16.4% 17.3% 18.0% 19.4% 18.1% 17.7% 16.8% 18.3%
Home Delivery: Radish Boya - - - - 1,030 735 892 685 688 585 728 YoY - - - - - - - - -33.2% -20.4% -18.4%Segment profit margin - - - - 17.7% 17.9% 20.2% 18.6% 18.2% 15.9% 18.4%
Other 185 199 187 189 154 136 189 245 256 301 99 YoY - - - - -16.8% -31.7% 1.1% 29.6% 66.2% 121.3% -47.6%Segment profit margin 16.7% 18.9% 17.0% 19.2% 10.4% 10.7% 13.1% 15.4% 15.4% 16.1% 3.5%
Adjustments 1,257 1,596 1,098 1,302 2,024 1,820 1,935 2,000 1,792 1,891 2,036
FY03/18
FY03/18 FY03/20FY03/19
FY03/20FY03/19
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Oisix home delivery business
Sales were JPY26.5bn (+19.5% YoY) and segment profit (defined by the company as “sales minus costs that can be linked to each
business segment”) was JPY3.3bn (-3.3% YoY).
▷ The company was able to boost the number of subscribers to its home delivery service Oisix Club from 205,976 at
end-FY03/19 to 236,836 at end Q3 FY03/20. The 235,000-subscriber target was reached in Q3, earlier than initially forecast. It
appears that subscriber count benefitted strongly from the company’s services being featured on TV programs and from
large-scale promotional activities enacted by management in Q1.
▷ Purchase frequency grew YoY on efforts to improve the order rate, narrowing the YoY drop in ARPU. More specifically,
purchase frequency benefitted from shifts to the Chanto Oisix service and an increase in Oisix Prime Pass users.
▷ Chanto Oisix was inspired by the results of a user survey indicating the desire of some consumers to avoid using pre-cut
vegetables. The Chanto Oisix service provides ingredients and recipes for either three or five days of meals and is designed to
provide a balanced alternative to Kit Oisix, which provides cut and processed ingredients that make it easy for consumers to
prepare meals, and meals that require consumers to buy individual ingredients. Chanto Oisix provides a set menu for a given
number of days, which leads consumers to use the company’s products for a larger portion of the food on their dinner tables.
According to the company’s survey, purchasing frequency is about 30% higher for Chanto Oisix customers than for users of
other services. Factoring in differences between Chanto Oisix and Kit Oisix buyers, management expects Chanto Oisix to follow
Kit Oisix as the company’s next strategic product.
▷ The idea behind Oisix Prime Pass is similar to that of Amazon Prime. The flat-rate service offers a variety of benefits, which in
turn contributes to increased purchasing frequency among Prime Pass users.
▷ Purple Carrot’s Vegan Kit sold about 30,000 units in its first two months.
▷ Segment profit declined slightly, impacted by sales promotion costs and investment in logistics capacity to achieve accelerated
growth.
Daichi home delivery business
Sales were JPY7.9bn (-5.6% YoY) and segment profit was JPY1.4bn (-9.0% YoY).
▷ The Daichi service saw its subscriber count decline from 40,210 at end-FY03/19 to 37,257 at end Q3 FY03/20. However, the
pace of the subscriber decline slowed and it is expected to bottom out in 2H. While continuing to develop services and
products that meet target needs, the company intends to explore subscription base expansion using new services from Q4.
Radish Boya home delivery business
Sales were JPY11.4bn (-20.5% YoY) and segment profit was JPY2.0bn (-24.7% YoY).
▷ The reduction of unprofitable customers was completed in 1H, and service improvement remained the priority over new
subscriber gains. As a result, the number of Radish Boya subscribers declined from 63,144 at end-FY03/19 to 58,655 at end Q3
FY03/20.
▷ ARPU growth continued, as its efforts dubbed “operational excellence” measures gained traction.
▷ In cumulative Q3 FY03/19, 10 months (March–December 2018) of Radish Boya’s results (excluding wholesale sales) were
included following its consolidation. Excluding Radish Boya’s results (excluding wholesale sales) for March 2018 from
cumulative Q3 FY03/19 figures, sales fell 11.1% YoY and segment profit 16.7% YoY.
Other businesses
Sales were JPY6.4bn (+52.0% YoY) and segment profit was JPY656mn (+37.0% YoY).
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▷ From Q3 FY03/20, Purple Carrot’s results (including amortization of goodwill) have been consolidated. Due to different fiscal
year ends, Purple Carrot’s July-September figures were consolidated this quarter.
▷ Progress in profit improvements at Purple Carrot fell short of the company target. However, Oisix says Purple Carrot’s profit
margins are improving with the introduction of Oisix’s operational and KPI management techniques. The company plans to
prioritize operational improvements to reduce the cancellation rate as competition in the US vegan food market intensifies. As
for Purple Carrot, operational improvements aimed at reducing the cancellation rate and service creation will take priority, and
the company will conduct initiatives targeting profit, including member acquisition focused on future growth and efforts to
raise ARPU (as purchasing frequency is not particularly high because the service targets part-time vegans).
▷ In Q3 FY03/19, 10 months (March–December 2018) of Radish Boya’s wholesale business results were included following its
consolidation. Excluding Radish Boya’s wholesale business results for March 2018 from cumulative Q3 FY03/19 figures, sales
were up 55.3% YoY and segment profit up 42.0% YoY.
Other information Net income declined by JPY1.2bn due to the absence of additional deferred tax assets (stemming from reductions in corporate
taxes as a result of the merger with Radish Boya) the company recognized in FY03/19.
Business continuity planning (BCP) improvements
The company plans to review its disaster response manual in the near term and is planning a review of its BCP, including
investments to facilitate quick and systematic responses to disasters on the scale of the recent typhoons.
Impact from the spread of COVID-19
There are now patients in Japan suffering from COVID-19, which is said to have originated in Wuhan, China. While it is still
difficult to estimate the quantitative impact from the outbreak, conditions as of February 18, 2020 are as follows:
In Hong Kong, the number of customers using the company’s services on a trial basis has increased, as has the number of new
subscribers.
Japan is seeing an increase in demand for services targeting mothers. Moreover, the growing consumer tendency to stay at home
appears to be bolstering expectations for increased demand for home delivery services. The company has also strengthened
efforts to ensure hygiene at its logistics facilities.
Equity-method losses
The company recorded cumulative Q3 equity-method losses of JPY198mn. As in 1H, losses were primarily tied to investment
losses in equity method affiliates Welcome Co., Ltd. and Nihon Agri, Inc.
Progress toward initial full-year forecasts
Source: Shared Research based on company data.
▷ Progress in the Oisix businesses in cumulative Q3 was low compared to FY03/18 and FY03/19.
▷ A simple YoY comparison is not possible for Radish Boya because cumulative Q3 FY03/19 included 10 months’ worth of results.
▷ In a typical year, the rate of progress for sales toward initial full-year forecasts tends to rise in Q3. Furthermore, spend per order
tends to be higher in Q3 (October–December) than the rest of the year because of sales of products with a high unit price
% of initial full-year forecastsQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Total sales 25.3% 49.8% 79.0% 105.2% 27.6% 52.0% 80.2% 105.0% 23.2% 46.5% 74.9%
Home Delivery: Oisix 24.1% 47.8% 77.0% 103.4% 24.7% 49.5% 79.8% 106.5% 23.8% 47.3% 76.0%
Home Delivery; Daichi 25.7% 50.6% 78.5% 103.5% 24.0% 47.1% 72.8% 94.4% 23.7% 47.1% 72.8%
Home Delivery: Radish Boya - - - - 38.0% 64.9% 93.8% 117.9% 24.6% 48.8% 74.6%
FY03/18 FY03/20FY03/19
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including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (traditional New Year
cuisine).
1H FY03/20 results
Overview 1H FY03/20 sales were JPY32.6bn (+2.6% YoY), operating profit was JPY901mn (-19.3% YoY), EBITDA was JPY1.3bn (-10.9% YoY),
and net income was JPY390mn (-56.3% YoY).
▷ Progress versus 1H company forecasts was sales 100%, operating profit 117%, and EBITDA 107%. There were PR expenses of
JPY230mn for the Oisix brand and one-off expenses of JPY200mn to improve logistics capacity, but the company is progressing
according to forecasts. The company commented that trends in the number of Oisix members and progress toward resuming
growth of Daichi and Radish Boya were on track, and it was increasingly confident about the subscription model for food.
▷ After the calculation of 1H results, operations were partially suspended at the Oisix Ebina Distribution Center due to the
suspension of transportation facilities caused by Typhoon 19 (Hagibis) in October 2019. As a result, lost profit of approximately
JPY100mn is expected (due to factors including reduced sales and losses on disposal of products), primarily in the Oisix brand,
but the company maintains that it will recover without revisions to its full-year forecasts. Progress versus full-year company
forecasts was sales 46.5%, operating profit 40.9%, EBITDA 42.1%, and net income 39.0%.
▷ The company indicated that its policy is to improve the segment profit to sales ratio in the medium- to long-term by
approximately 3.0–5.0%, strengthening profitability through reducing the ratio of fixed operations, improving product costs,
as well as costs associated with the distribution center and delivery. (See the Medium-term outlook section for details)
▷ In 1H FY03/19, seven months (March–September 2018) of Radish Boya’s results were included following its consolidation.
Compared with 1H FY03/19 results that exclude Radish Boya’s results for March 2018, sales for 1H FY03/20 were up 8.1% YoY,
operating profit down 13.9%, EBITDA down 6.6%, and net income down 52.5%.
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Segment information KPIs of the three home delivery businesses
Source: Shared Research based on company data. Notes: ARPU and purchase frequency are monthly figures. Average spend is per order. At Daichi and Radish Boya, changes in how subscriber count is defined have resulted in the loss of continuity with data after Q4 FY03/18.
▷ The number of Oisix subscribers has been increasing because of a steady rise in customers purchasing Kit Oisix (134,895 at end
September 2019, +54.6% YoY), with new customers attracted by meal kits. Although the purchase frequency appears to be
declining, the company noted that this is due to an increase in the number of light users.
▷ At Daichi, the number of subscribers has been declining since Q4 FY03/18 while the average spend per order and purchase
frequency have been on the rise. This reflects changes in services and the company’s ongoing efforts to focus promotions only
on those channels that produce customers with high lifetime values.
▷ The number of Radish Boya subscribers has been coming down for some time, but the downtrend has picked up momentum
since Q2 FY03/19, when the company changed the delivery fee schedule and made other changes aimed at reducing the
number of light users (whose order value is below the company’s breakeven point per order) and otherwise increase profits as
opposed to sales. In addition to reducing the number of light users, the company’s move to focus more resources on making
purchase proposals to existing subscribers has led to increases in average spend since Q2 FY03/19.
Change in the definition of “number of subscribers”: Until end-FY03/19, the definitions of “number of subscribers” differed by brand. Following the
company’s push toward more stringent subscription management, definitions at Daichi and Radish Boya were revised to exclude inactive users. While
KPI figures for FY03/18 and FY03/19 have been retroactively restated to reflect this change, continuity is not maintained for figures prior to FY03/18.
Seasonal factors: Spend per order tends to be higher in Q3 (October–December) than the rest of year because of sales of products with a high unit
price including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (food traditionally served at New Year).
Profit particularly spikes in Q3.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
No. of subscribers 147,474 155,827 162,891 169,664 179,942 189,352 197,272 205,976 225,553 230,556
ARPU (JPY) 11,833 11,057 11,587 11,602 11,562 11,127 11,534 11,183 11,244 10,616
Average spend (JPY) 5,817 5,704 5,908 5,925 6,002 5,973 6,150 6,015 5,887 5,839
Purchase frequency (x) 2.03 1.94 1.96 1.96 1.93 1.86 1.88 1.86 1.91 1.82
No. of subscribers 45,300 43,687 43,864 44,993 44,111 43,835 42,996 40,210 38,571 37,587
ARPU (JPY) 19,884 19,875 22,209 19,240 20,122 19,386 21,848 19,758 21,232 21,443
Average spend (JPY) 7,589 7,700 8,336 7,726 7,770 7,553 8,529 7,811 7,990 8,026
Purchase frequency (x) 2.60 2.58 2.67 2.49 2.59 2.57 2.56 2.53 2.66 2.67
No. of subscribers 88,087 87,951 89,224 78,062 74,949 72,101 66,233 63,144 61,507 59,927
ARPU (JPY) 16,457 15,896 17,149 16,639 17,277 17,177 18,988 17,264 18,301 18,277
Average spend (JPY) 5,501 5,518 5,889 5,278 5,460 5,616 6,114 5,869 6,055 6,060
Purchase frequency (x) 2.99 2.88 2.91 3.15 3.16 3.06 3.11 2.94 3.02 3.02
No. of subscribers YoY 124.8% 125.4% 124.7% 123.5% 122.0% 121.5% 121.1% 121.4% 125.3% 121.8%
ARPU YoY 97.9% 95.4% 96.9% 97.2% 97.7% 100.6% 99.5% 96.4% 97.2% 95.4%
Average spend YoY 99.0% 98.4% 98.9% 100.9% 103.2% 104.7% 104.1% 101.5% 98.1% 97.8%
Purchase frequency YoY 98.5% 97.0% 98.0% 96.6% 95.1% 95.9% 95.9% 94.9% 99.0% 97.8%
No. of subscribers YoY 100.5% 95.6% 94.5% 97.5% 97.4% 100.3% 98.0% 89.4% 87.4% 85.7%
ARPU YoY 94.3% 99.1% 104.2% 100.9% 101.2% 97.5% 98.4% 102.7% 105.5% 110.6%
Average spend YoY 99.8% 102.3% 104.7% 102.7% 102.4% 98.1% 102.3% 101.1% 102.8% 106.3%
Purchase frequency YoY 93.9% 96.6% 100.0% 98.4% 99.6% 99.6% 95.9% 101.6% 102.7% 103.9%
No. of subscribers YoY 96.2% 95.4% 98.6% 88.7% 85.1% 82.0% 74.2% 80.9% 82.1% 83.1%
ARPU YoY 98.8% 97.4% 98.3% 102.8% 105.0% 108.1% 110.7% 103.8% 105.9% 106.4%
Average spend YoY 99.2% 99.5% 102.4% 98.1% 99.3% 101.8% 103.8% 111.2% 110.9% 107.9%
Purchase frequency YoY 99.7% 98.0% 96.0% 104.7% 105.7% 106.3% 106.9% 93.3% 95.6% 98.7%
FY03/20
Radish Boya
FY03/19
Oisix
Daichi
Radish Boya
Oisix
Daichi
FY03/18
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Sales and profit by individual segments
Source: Shared Research based on company data. Note: Profit forecasts for individual segments represent the company’s initial forecasts. Profit figures for individual segments are segment profit, defined by the company as “sales minus costs that can be linked to each business segment.”
Goodwill amortization is not reflected in the profit figures shown for individual segments, and is included in adjustments.
Except for the personnel expenses related to employees who are not full-time, regular employees (i.e. those that are part-time or contract workers), all
personnel expenses (including wages, salaries, allowance, and mandatory social welfare payments) are recorded under corporate overhead
(adjustments) and not at the individual segment level.
SegmentsCumulative (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Sales 9,602 18,936 30,008 39,987 16,854 31,720 48,906 64,026 16,265 32,552
YoY 78.5% 76.7% 75.3% 73.7% 75.5% 67.5% 63.0% 60.1% -3.5% 2.6%Home Delivery: Oisix 5,790 11,470 18,481 24,799 6,864 13,769 22,191 29,619 8,308 16,524
YoY - - - - 18.5% 20.0% 20.1% 19.4% 21.0% 20.0%Home Delivery: Daichi wo Mamoru Kai 2,790 5,487 8,508 11,215 2,769 5,440 8,406 10,902 2,587 5,138
YoY - - - - -0.8% -0.9% -1.2% -2.8% -6.6% -5.6%Home Delivery: Radish Boya 5,811 9,926 14,346 18,028 3,771 7,460
YoY - - - - - - - - -35.1% -24.8%Other 1,109 2,164 3,264 4,251 1,483 2,756 4,199 5,794 1,663 3,529
YoY - - - - 33.6% 27.4% 28.6% 36.3% 12.2% 28.1%Adjustments -88 -185 -246 -278 -74 -171 -236 -318 -64 -98
Operating profit (segment profit) 142 238 693 891 610 1,115 2,266 2,312 543 900 YoY -16.7% -12.3% 10.7% 18.4% 331.2% 369.5% 227.2% 159.4% -11.0% -19.3%Operating profit margin 1.5% 1.3% 2.3% 2.2% 3.6% 3.5% 4.6% 3.6% 3.3% 2.8%Home Delivery: Oisix 674 1,392 2,421 3,288 970 1,943 3,371 4,036 933 1,868
YoY - - - - 43.9% 39.6% 39.2% 22.7% -3.8% -3.9%Segment profit margin 11.6% 12.1% 13.1% 13.3% 14.1% 14.1% 15.2% 13.6% 11.2% 11.3%
Home Delivery: Daichi wo Mamoru Kai 539 1,078 1,650 2,095 479 960 1,536 1,989 457 885 YoY - - - - -11.1% -10.9% -6.9% -5.1% -4.6% -7.8%Segment profit margin 19.3% 19.6% 19.4% 18.7% 17.3% 17.6% 18.3% 18.2% 17.7% 17.2%
Home Delivery: Radish Boya 1,030 1,765 2,657 3,342 688 1,273 YoY - - - - - - - - -33.2% -27.9%Segment profit margin - - - - 17.7% 17.8% 18.5% 18.5% 18.2% 17.1%
Other 185 384 571 760 154 290 479 724 256 557 YoY - - - - -16.8% -24.5% -16.1% -4.7% 66.2% 92.1%Segment profit margin 16.7% 17.7% 17.5% 17.9% 10.4% 10.5% 11.4% 12.5% 15.4% 15.8%
Adjustments 1,257 2,853 3,951 5,253 2,024 3,844 5,779 7,779 1,792 3,683 SegmentsQuarterly (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Sales 9,602 9,334 11,072 9,980 16,854 14,867 17,186 15,120 16,265 16,287
YoY 78.5% 74.8% 73.1% 69.1% 75.5% 59.3% 55.2% 51.5% -3.5% 9.6%Home Delivery: Oisix 5,790 5,680 7,011 6,318 6,864 6,905 8,422 7,428 8,308 8,216
YoY - - - - 18.5% 21.6% 20.1% 17.6% 21.0% 19.0%Home Delivery: Daichi wo Mamoru Kai 2,790 2,697 3,021 2,707 2,769 2,671 2,965 2,497 2,587 2,551
YoY - - - - -0.8% -1.0% -1.8% -7.8% -6.6% -4.5%Home Delivery: Radish Boya - - - - 5,811 4,115 4,420 3,682 3,771 3,689
YoY - - - - - - - - -35.1% -10.3%Other 1,109 1,054 1,100 987 1,483 1,273 1,443 1,595 1,663 1,866
YoY - - - - 33.6% 20.7% 31.2% 61.6% 12.2% 46.6%Adjustments -88 -97 -61 -32 -74 -97 -65 -82 -64 -34
Operating profit (segment profit) 142 96 455 199 610 505 1,150 47 543 357 YoY -16.7% -5.0% 28.3% 56.4% 331.2% 426.1% 152.9% -76.6% -11.0% -29.3%Operating profit margin 1.5% 1.0% 4.1% 2.0% 3.6% 3.4% 6.7% 0.3% 3.3% 2.2%Home Delivery: Oisix 674 718 1,029 867 970 973 1,428 665 933 935
YoY - - - - 43.9% 35.5% 38.8% -23.3% -3.8% -3.9%Segment profit margin 11.6% 12.6% 14.7% 13.7% 14.1% 14.1% 17.0% 9.0% 11.2% 11.4%
Home Delivery: Daichi wo Mamoru Kai 539 539 572 445 479 481 576 453 457 428 YoY - - - - -11.1% -10.8% 0.7% 1.8% -4.6% -11.0%Segment profit margin 19.3% 20.0% 18.9% 16.4% 17.3% 18.0% 19.4% 18.1% 17.7% 16.8%
Home Delivery: Radish Boya - - - - 1,030 735 892 685 688 585 YoY - - - - - - - - -33.2% -20.4%Segment profit margin - - - - 17.7% 17.9% 20.2% 18.6% 18.2% 15.9%
Other 185 199 187 189 154 136 189 245 256 301 YoY - - - - -16.8% -31.7% 1.1% 29.6% 66.2% 121.3%Segment profit margin 16.7% 18.9% 17.0% 19.2% 10.4% 10.7% 13.1% 15.4% 15.4% 16.1%
Adjustments 1,257 1,596 1,098 1,302 2,024 1,820 1,935 2,000 1,792 1,891
FY03/18
FY03/18 FY03/20FY03/19
FY03/20FY03/19
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Oisix home delivery business
Sales were JPY16.5bn (+20.0% YoY) and segment profit (defined by the company as “sales minus costs that can be linked to each
business segment”) was JPY1.9bn (-3.9% YoY).
▷ Brand awareness increased from the spread on social media of transportation advertising using anime characters to depict the
hardships of housework for mothers during the summer holidays, as well as TV publicity in August 2019. As a result, the
company was able to boost the number of subscribers to its home delivery service Oisix Club from to 205,976 at end-FY03/19
to 230,556 at end 1H FY03/20.
▷ The net increase in the number of subscribers in Q2 was around 5,000, which suggests a slowdown from the net increase of
20,000 in Q1. However, this was due to the greater effect of TV publicity and promotions in Q1 boosting the number of
subscribers, whereas some new subscribers who signed up in Q1 likely canceled in Q2. It is relatively easy to cancel the
company’s services after the end of the initial free delivery period (in the first three months), which usually produces a pattern
of a sharp increase in subscribers in one quarter followed by a slowdown in the net increase in the following quarter.
▷ Due to an increase in the number of new light users, purchase frequency and average spend per order declined slightly YoY.
▷ Segment profit declined due to spending on promotional activity and one-off expenses to improve logistics capacity. The
company commented that it expected expenses to improve logistics capacity (short-term expenses arising in 2H onward)
would gradually decline, because it relocated the Kit Oisix processing center to Yokohama near Oisix Ebina Distribution Center
and increased the distribution and manufacturing capacity of Oisix Ebina Distribution Center.
▷ On October 31, the company began selling Purple Carrot brand vegan food (using no animal products or by-products) via the
Japanese Oisix site. It plans to collaborate with US-based Purple Carrot to develop original recipes for the Japanese market and
explore demand for vegan food among Japanese customers. Sales were 20% higher than expected in the first week that Purple
Carrot products went on sale.
Daichi home delivery business
Sales were JPY5.1bn (-5.6% YoY) and segment profit was JPY885mn (-7.8% YoY).
▷ Reflecting cutbacks on low-LTV channels (such as marketing activities to former subscribers), the Daichi service saw its
subscriber count decline from 40,210 at end-FY03/19 to 37,587 at end 1H FY03/20. However, sales declined just slightly as
average revenue per user (ARPU) increased due to controlling new customer acquisition and offering services that meet
customer needs.
▷ The company expects the decline in the number of subscribers to stop in Q3 and aims to boost membership again in 2H by
resuming promotions.
Radish Boya home delivery business
Sales were JPY7.5bn (-24.8% YoY) and segment profit was JPY1.3bn (-27.9% YoY).
▷ During the year, the Radish Boya home delivery service also cut back on promotional spending aimed at bringing in new
subscribers, and instead focused on improving profitability and developing new services. As a result, the number of Radish
Boya subscribers declined from 63,144 at end-FY03/19 to 59,927 at end 1H FY03/20.
▷ In 1H FY03/19, seven months (March–September 2018) of Radish Boya’s results (excluding wholesale sales) were included
following its consolidation. Excluding Radish Boya’s results (excluding wholesale sales) for March 2018 from 1H FY03/19, sales
were down11.4% YoY and segment profit down15.8% YoY.
▷ The percentage of loss-making orders was down to 6% at end Q2 following delivery charge revisions and upselling efforts.
▷ The company expects the decline in the number of subscribers to continue through FY03/20.
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Other businesses
Sales were JPY3.5bn (+28.1% YoY) and segment profit was JPY557mn (+92.1% YoY). In 1H FY03/19, seven months (March–
September 2018) of Radish Boya’s wholesale business results were included following its consolidation. Excluding Radish Boya’s
wholesale business results for March 2018 from 1H FY03/19, sales were up 32.3% YoY and segment profit up 86.4% YoY.
Other topics Income and other taxes
Net income declined by JPY1.2bn due to the absence of additional deferred tax assets (stemming from reductions in corporate
taxes as a result of the merger with Radish Boya) the company recognized in FY03/19.
Equity-method investment loss
The company booked an equity-method investment loss of JPY173mn in 1H FY03/20, mainly related to investment losses in
equity method affiliates Welcome Co., Ltd. and Nihon Agri, Inc. The loss related to Welcome includes around JPY80mn goodwill
amortization recorded at the time of acquisition and one-time loss on store consolidation and other writedowns.
Restrictions on home delivery during Tokyo Olympics
Restrictions may be placed on requested home delivery times during the period of the 2020 Tokyo Summer Olympic Games to
avoid traffic congestion in central Tokyo. Although details are yet to be confirmed, the convenience of the company’s delivery
service is likely to be undermined if restrictions are put in place. This may have a negative impact on the company’s FY03/21
earnings if customers cut back on orders. The company is discussing internally and with delivery companies how to deal with this
risk scenario.
Note: The 2020 Tokyo Summer Olympic Games were postponed to 2021 in March 2020.
Typhoon preparedness
After the calculation of 1H results, operations were partially suspended at the Oisix Ebina Distribution Center due to the
suspension of transportation facilities caused by Typhoon 19 (Hagibis) in October 2019. As a result, lost profit of approximately
JPY100mn is expected (due to factors including reduced sales and losses on disposal of products), primarily in the Oisix brand.
The company says it will strengthen business continuity planning (BCP) in the event of natural disasters to minimize sales decline
and disposal of products. Specifically, the company is working with delivery companies to explore options such as frontloading
delivery. The company commented that the latest typhoon did not have a severe impact on its supplies, because it sources
products from all over Japan.
Progress toward initial full-year forecasts
Source: Shared Research based on company data.
▷ Progress in the Oisix businesses in 1H was high compared to FY03/18 and FY03/19, and low for the Daichi home delivery
business. A simple YoY comparison is not possible for Radish Boya because 1H FY03/19 included seven months’ worth of
results.
% of initial full-year forecastsQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Total sales 25.3% 49.8% 79.0% 105.2% 27.6% 52.0% 80.2% 105.0% 23.2% 46.5%
Home Delivery: Oisix 24.1% 47.8% 77.0% 103.4% 24.7% 49.5% 79.8% 106.5% 23.8% 47.3%
Home Delivery; Daichi 25.7% 50.6% 78.5% 103.5% 24.0% 47.1% 72.8% 94.4% 23.7% 47.1%
Home Delivery: Radish Boya - - - - 38.0% 64.9% 93.8% 117.9% 24.6% 48.8%
FY03/18 FY03/20FY03/19
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▷ The rate of progress for sales toward initial full-year forecasts tends to rise in Q3. Furthermore, spend per order tends to be
higher in Q3 (October–December) than the rest of the year because of sales of products with a high unit price including
Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (traditional New Year cuisine).
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Other information
History
Source: Shared Research based on company data.
Jun 2000 Oisix Inc. foundedLaunched trial e-commerce site Oisix, started selling 20 fresh food items
Sep Established a "food audit committee" as third-party organization for experts and homemakers to audit the safety of foodOct Grand opening of e-commerce site OisixAug 2006 Relocated distribution center to accommodate business growthSep 2010 Established Gochimaru Inc., a joint venture between Recruit Holdings and Oisix
Oisix performs own radiation testing of food before distribution from March 18, 2011Mar 2013 Stock listed on TSE Mothers marketJun 2015 Established manufacturing facility Oisix Dining Center to accommodate increased shipments of Kit OisixMay 2016 Made Tokushimaru Inc., an operator of service for senior citizens and those who have difficulty accessing shops, a subsidiaryDec Began talks regarding management integration of Oisix and Daichi wo Mamoru Kai Co., Ltd. (Daichi)Mar 2017 Oisix and Daichi become group companiesJul Company name changed to Oisix.daichi Inc.Oct Merger with DaichiJul 2018 Company name changed to Oisix ra daichi Inc.Oct Merged with Radish Boya Co., Ltd.Apr 2019 Made Three Limes, Inc., a vegan meal kit service operator with the trade name Purple Carrot, a subsidiary
Aug 1975 Daichi wo Mamoru Shimin no Kai (later renamed Daichi wo Mamoru Kai) established with Toshio Fujimoto as chairmanNov 1977 Made distribution department a separate company to establish Daichi Co., Ltd.Oct 1985 Kazuyoshi Fujita became chairman of DaichiMay 1988 Radish Boya established in alliance between Daichi affiliate Daichi Bussan and Citizen's Recycling Society JapanNov 2009 Company name changed from Daichi Co., Ltd. to Daichi wo Mamoru Kai Inc. (Daichi)Jan 2010 Daichi online store openedAug 2012 Began radiation testing of all fruit and vegetables using simple radiation measurement deviceMay 2013 Business alliance with Lawson Inc.Dec 2016 Began talks regarding management integration of Oisix and DaichiMar 2017 Oisix and Daichi became group companiesOct Merged with Oisix.daichi Inc.
May 1988 Kan Network Inc. establishedBegan subscription-based home delivery service of vegetables grown using little or no agrichemicals in Kanto areaBegan sales of Palette, a selection of organic vegetables and vegetables grown with reduced agrichemical useBegan sales of meat, seafood, processed food, and household goods
Feb 1996 Established Radix, an environmental conservation-oriented production standardJan 2000 Became consolidated subsidiary of Q'Sai Co., Ltd. following share transferAug Company name changed to Radish Boya Inc.Jun 2005 Established Radix product handling standardFeb 2006 Split from Q'Sai by management buyout (MBO)Dec 2008 Stock listed on JASDAQFeb 2010 Launched eRadish, an online store selling organic vegetables and vegetables grown with reduced agrichemical use, additive-free
foods, and eco-friendly household goods (Integrated with Radish Lawson Supermarket established in 2011)Oct 2011 Opened online supermarket offering nationwide delivery, Radish Lawson Supermarket in alliance with Lawson
(now integrated with Radish Boya service)Aug 2012 Became consolidated subsidiary of NTT Docomo (and delisted)Dec Radish Lawson Supermarket integrated with Radish Boya serviceJul 2014 Started supplying foodstuffs to nursery facilitiesFeb 2018 Became consolidated subsidiary of Oisix ra daichi (previously Oisix.daichi)Oct Merged with Oisix ra daichi
Description
Description
Description
Daichi
Radish Boya
Oisix
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The company now has three brands. In addition to Oisix, the company merged with Daichi wo Mamoru Kai (Daichi) in October
2017 and with Radish Boya in October 2018. The name Oisix ra daichi is derived from the names of these three brands.
News and topics
October 2020 On October 22, 2020, the company announced revisions to its full-year FY03/21 earnings forecast.
Revised full-year earnings forecast
▷ Sales: JPY90.0bn (previous forecast: JPY78.0bn)
▷ Operating profit: JPY5.0bn (JPY3.0bn)
▷ EBITDA: JPY6.4bn (JPY4.4bn)
▷ Net income*: JPY2.5bn (JPY1.2bn)
▷ Earnings per share: JPY66.25 (JPY34.96)
*Net income attributable to owners of the parent
Reasons for revision
In 1H FY03/21, demand for food home delivery services grew sharply, mainly in Q1, because consumers were required to stay
home as much as possible after a state of emergency was declared to prevent the spread of COVID-19. Although the spike in
demand has slowed in recent months, the number of subscribers and ARPU (average monthly spend per customer) of the
domestic home delivery businesses are recording a steady increase. Consequently, the company expects full-year sales to exceed
its previous forecast. It also raised its profit forecasts because of the sales growth effect and improved margins stemming from
greater efficiency of logistics and delivery associated with the rise in ARPU.
August 2020 On August 14, 2020, the company announced that it entered a business alliance agreement with Ootoya Holdings Co., Ltd.
(JASDAQ: 2705).
▷ Ootoya and the company decided to develop Ouchi Ootoya Subscription business (provisional), bringing together the
company’s expertise in marketing and distribution specialized for subscription delivery services and Ootoya Holdings’ brand
power, healthy recipe development, and store networks. In the new business, the partners plan to develop meal kits and
frozen dishes and lunch boxes with the aim of enabling customers using the company’s regular delivery services as well as
customers of Ootoya restaurant chains to easily prepare and have meals at home that are consistent with the value Oisix ra
daichi provides.
▷ The two companies are currently in negotiations to grow the Ouchi Ootoya Subscription business to the scale of around
JPY3bn in a transaction value basis.
▷ Details of measures to be taken will be determined through negotiations between the two parties.
▷ The impact of the business alliance on the company’s consolidated earnings results for FY03/21 is yet to be determined, but
the company thinks the alliance will lead to enhancing both parties’ enterprise value in the medium- to long-term. The
company will make prompt announcements if it becomes clear that the alliance will have a significant impact on earnings.
On August 13, 2020, the company announced a comment regarding some news reports on its business alliance with Ootoya
Holdings Co., Ltd.
On the same day, the Nihon Keizai Shimbun (Nikkei) reported on the company’s business alliance with Ootoya Holdings, but the
company said some comments in the report regarding future capital alliance between the two entities were not released by Oisix
ra daichi. The company is in fact negotiating with Ootoya Holdings (JASDAQ: 2705) toward entering a business alliance, and
Ootoya Holdings plans to pass a resolution in this regard in an extraordinary meeting of its board of directors to be held on
August 14. The two companies commented that they would promptly disclose any matters requiring public announcement.
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June 2020 On June 25, 2020, the company announced an update on progress with distribution center expansion.
Distribution center expansion
▷ Facility name (provisional): Oisix Sayama Station
▷ Property location (scheduled): Sayama, Saitama Prefecture
▷ Scheduled start of operation: October 2020
▷ Increased shipping capacity following expansion: The company expects to be able to cover all capacity requirements up to the
start of operation of the new Ebina Station in October 2021 (up to 50% increase from current levels, including impact of
increased shipping capacity of existing distribution centers due to the start of operations at the Sayama Station).
▷ Initial investment: Approximately JPY300mn (vehicles, warehouse management system, initial rental cost of premises, etc.)
Future shipping system and profit profile
▷ Up to October 2020: Shipping capacity increased by about 10%. 1H profits may be additionally enhanced by unutilized
promotional expenses.
▷ From October 2020 to October 2021: Potential increase in shipping capacity up to 50% from current levels. Profit margins are
expected to decline in 2H FY03/21 due to aggressive promotional spending and a deterioration in the distribution cost ratio
due to an increase in distribution bases.
▷ October 2021 and beyond: Potential increase in shipping capacity up to 200%. The company will consolidate its distribution
bases into the new Ebina Station to lower core logistics costs and enhance profitability.
April 2020 On April 28, 2020, the company announced confirmation of the number of shares to be issued through a third-party allotment.
At the meeting of the board of directors on March 19, 2020, the company resolved to conduct an issuance of new shares through
a third-party allotment, as well as issuance of new shares via a (general) public offering and secondary offering of shares (offering
by purchase by the underwriter, and offering by overallotment). The company announced that it had received a notice from
SMBC Nikko Securities Inc., the allottee, to subscribe to all shares to be issued. The following is a summary of the press release,
and has not been created for the purpose of soliciting investment.
▷ Volume of new share issued: 527,000 shares (number of new shares to be issued: 527,000 shares)
▷ Amount to be paid: JPY683mn (JPY1,296.55 per share)
On April 20, 2020, the company announced that it would postpone FY03/20 earnings results announcement.
The company had originally planned to announce its earnings results for FY03/20 on Wednesday, May 13, 2020, but decided to
postpone the announcement to Wednesday, May 21, 2020. Due to the Japanese government’s declaration of a state of
emergency over the spread of COVID-19, there have been delays in the overall process involved in preparing the earnings report
including auditing procedures; accordingly, the company expects it will require time to confirm earnings results. The company
currently has no plan to revise its consolidated earnings forecast for FY03/20, but will make prompt announcements should
matters that require disclosure arise.
On April 1, 2020, the company announced the provision of a supplementary explanation on a series of news reports regarding
US-based Dean & Deluca Inc.
Some media sources reported that Dean & Deluca Inc. (hereinafter “DD US”) filed for Chapter 11 bankruptcy protection in the
US. Oisix ra daichi holds 20.08% of voting rights in Welcome Co. Ltd., which operates the DEAN & DELUCA business in Japan.
Regarding the news reports about DD US, the company provided the following supplementary explanation:
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▷ In March 2016, Welcome received an irrevocable license for trademark rights in Japan from DD US. Regardless of the
operational status of DD US, Welcome has full authority to operate the DEAN & DELUCA business in Japan.
▷ From a legal standpoint, Welcome’s license is thoroughly protected to ensure operations of the DEAN & DELUCA business in
Japan without influence from unforeseen circumstances, including the bankruptcy of DD US.
▷ Therefore, the reported information has no effect on the operation of Welcome and the DEAN & DELUCA business in Japan.
March 2020 On March 30, 2020, the company announced that it had been approved to move its listing to the First Section of the Tokyo Stock
Exchange, with the change to take effect on April 9, 2020.
On the same day, the company announced that its board of directors had approved the pricing of both a new share issue and
secondary share issue, as detailed below.
NOTE: The following summary of the share offering represents a summary of a press release by the company and has not been
prepared for the purpose of soliciting investments.
▷ Share price set for new share and secondary share offering: JPY1,379
▷ Date of record and share price on data of record: Monday, March 30, 2020; JPY1,499
▷ Discount rate: 8.01%
▷ Number of new shares to be offered through public offering: 3,014,000 shares
▷ Syndicate covering transaction period: Thursday, April 2, 2020 through Tuesday, April 28, 2020
The public offering of new shares together with a separate private placement is expected to bring in net proceeds of up to
JPY4,548mn. Of this amount, JPY3,560mn has been budgeted for investment spending on the company’s new Ebina Distribution
Center and computer systems, with this spending expected to be completed by October 2021. Another JPY880mn has been
budgeted for upgrading core systems, including upgrades of the core system platform for the Radish Boya business; this
investment spending is expected to be completed by March 2023. Any overage above the JPY4,480mn (planned for use as
described above) is slated for use by March 2021 to fund advertising/promotional spending and other working capital needs.
On March 25, 2020, the company announced a partial change to the intended use of funds procured from a new and secondary
offering of its common shares.
If net proceeds from the new and secondary share offerings exceed JPY4.5bn (the sum of JPY3.6bn intended for capex required
for operating the new Ebina Distribution Center and JPY880mn for upgrading core systems, including improving the core system
platform of the Radish Boya business) due to a change in the maximum net proceeds accompanying the resolution on the issue
price and other related matters, the company plans to allocate the funds in excess to working capital for advertising and sales
promotion spending by March 2021.
On March 19, 2020, the company announced that it had received approval from the Tokyo Stock Exchange to change its stock
market listing.
With the approval of the Tokyo Stock Exchange, the company will change the listing of its shares from the Mothers market to
either the First Section or Second Section, effective April 9, 2020. The Tokyo Stock Exchange intends make its decision as to
whether the company’s shares will be listed on the First Section or Second Section after the pricing of the company’s new and
secondary stock offering has been fixed (between March 30 and April 2, 2020).
On the same day, the company announced that its board of directors had approved plans for a new and secondary offering of its
common shares.
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Reasons for raising additional capital
Company plans call for using the new capital to help finance 1) the expansion of production capacity to help meet future growth
in demand for the Kit Oisix meal kit product line at its Oisix business, which is still seeing rapid demand growth; and 2) the
construction of its new Ebina Distribution Center, which will help reduce costs related to the use of outside warehouses and
other intermediary logistics services between distribution centers after the new production capacity comes on line, and related
investments in new systems at the new distribution center aimed at boosting worker efficiency by automating
picking/packing-related processes. Should there be any funds left after these investments, the company intends to use the
remaining funds for upgrades in the system platform and other core systems at its Radish Boya business that will give it greater
flexibility when it comes to systems-related capital spending and also help reduce the burden on the Radish Boya business from
systems-related capital spending.
Capital spending plans
At its Oisix home delivery business, capital spending plans call for JPY3.2bn in investments in buildings and equipment at its new
Ebina Distribution Center and JPY470mn in investments in software development, which together are expected to increase the
shipping capacity of the Oisix business by 300% over its current level. Capital spending plans also include JPY880mn for software
development work on systems that will be used in common by all of the company’s business units.
Overview of new and secondary share offering
Public offering of new shares
▷ Number and type of shares: 3,013,600 common shares
▷ Issuing price: Depending on demand for the shares, the issuing price will be fixed using a multiplier of between 0.90 and 1.00
times the closing price of the company’s common stock on a date between Monday, March 30, 2020 and Thursday, April 2,
2020. (If there is no closing price on that day, the closing price on the most recent previous day will be used.)
Secondary offering of shares (seller: company president Kohey Takashima)
▷ Number and type of shares: 500,000 common shares
▷ Issuing price: Depending on demand for the shares, the issuing price will be fixed using a multiplier of between 0.90 and 1.00
times the closing price of the company’s common stock on a date between Monday, March 30, 2020 and Thursday, April 2,
2020. (If there is no closing price on that day, the closing price on the most recent previous day will be used.)
Secondary offering of shares (overallotment)
▷ Number and type of shares: 527,000 common shares
▷ Depending on demand for the shares, the secondary offering through overallotment may be reduced or canceled in its
entirety. A decision in this regard will be made on a date between Monday, March 30, 2020 and Thursday, April 2, 2020.
The sole underwriter for the secondary offering of 527,000 shares through overallotment will be SMBC Nikko Securities Inc.,
which will also serve as the sole underwriter for the public offering of new shares by means of a private placement.
Impact on FY03/20 results
The new and secondary share offerings will have no impact on the company’s financial results for FY03/20.
February 2020 On February 3, 2020, the company announced the appointment of a new chief operating officer.
The company announced that Kenichi Hoshi, a former member of Amazon Japan’s management committee, has joined the
company and will be appointed as the Chief Operating Officer (COO) in April.
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The company went through mergers in 2018 and 2019, and continues to expand its business, currently operating three food
delivery brands: Oisix, Radish Boya, and Daichi wo Mamoru Kai. With the business expansion, the company faces challenges such
as operational evolution. It expects Hoshi to carry out “Productivity Reform,” which supported a high growth rate while
promoting multiple businesses during his time at Amazon Japan.
Corporate governance and top management
Corporate governance (as of end-June 2020)
Source: Shared Research based on company data.
Top management
Source: Shared Research based on company data.
Kohey Takashima, President and CEO
Joined McKinsey & Company’s Japan office in 1998. Founded the current company in June 2000, serving as president and CEO.
Became a member of the board of trustees of TABLE FOR TWO (a nonprofit organization) in 2007 and is still serving in this
capacity; became the representative director of Higashi-no-shoku-no-kai (Eat & Energize the East) association in 2011 and is still
Form of organization and capital structureForm of organization Company with Audit & Supervisory BoardControlling shareholder and parent company NoneDirectors and Audit & Supervisory Board membersNumber of directors under Articles of Incorporation 11Number of directors 10Directors' terms under Articles of Incorporation (year) 1Chairman of the Board of Directors PresidentNumber of outside directors 5Number of independent outside directors 2Number of members of Audit & Supervisory Board under Articles of Incorporation 5Number of members of Audit & Supervisory Board 3Number of outside members of Audit & Supervisory Board 3Number of independent outside members of Audit & Supervisory Board 3OtherParticipation in electronic voting platform YProviding convocation notice in English NoneImplementation of measures regarding director incentives Stock option
Eligible for stock option Inside directors, outside members of Audit &Supervisory Board, employees, other
Disclosure of individual director's compensation NonePolicy on determining amount of compensation and calculation methodology In placeCorporate takeover defenses None
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serving in this capacity; became of director of the board of trustees for the Japan Wheelchair Rugby Federation (a general
incorporated association) in 2018 and is still serving in this capacity.
Dividend policy
Oisix ra daichi has never paid dividends.
The company understands that it has entered a phase of business expansion following business integration with Daichi and
Radish Boya. As such, its priority for the immediate future is to allocate funds for spending necessary for business growth such as
capex.
Major shareholders (as of end-September 2020)
Source: Shared Research based on company data. Note: As of end-March, 2019
Lawson (TSE1: 2651) The company concluded a business and capital alliance with Lawson in March 2017. Collaborations between the two companies
included the sale of Kit Oisix meal kits via Lawson’s online supermarket Lawson Fresh. Lawson was previously the top shareholder
of Daichi, with which it had a capital alliance before the latter’s merger with the company.
Recruit Co., Ltd. Parent company Recruit Holdings (TSE1: 6098) and the company jointly operated Gochimaru Inc., an online and mail-order food
business, starting in 2011.
NTT Docomo (TSE1: 9437) The company acquired all shares in Radish Boya from NTT Docomo Inc. and the two companies have concluded a business and
capital alliance regarding a meal kit business. The two companies launched an e-commerce site for meal kits. As part of the
agreement, NTT Docomo acquired a 3% stake in Oisix ra daichi through a third-party allotment of shares and dispatched an
outside director to Oisix ra daichi.
Kazuyoshi Fujita Kazuyoshi Fujita is the chairman of Oisix ra daichi and was the representative of Daichi before the merger.
Yusuke Tsutsumi Yusuke Tsutsumi is a director, executive officer, and general manager of Solution Business Headquarters at Oisix ra daichi.
Kohey Takashima 4,847,200 12.76%Lawson, Inc. 2,708,136 7.13%Recruit Co., Ltd. 2,648,000 6.97%The Master Trust Bank of Japan, Ltd. (Trust account) 2,134,100 5.62%Custody Bank of Japan, Ltd. (Trust account) 1,866,600 4.91%BNYM NON-TREATY DTT (Standing proxy: MUFG Bank, Ltd.) 1,291,600 3.40%Kazuyoshi Fujita 1,032,516 2.72%NTT Docomo, Inc. 1,000,000 2.63%JP Morgan Bank Luxembourg S.S. 1300000 (Standing proxy: Mizuho Bank, Ltd.) 828,723 2.18%
Yusuke Tsutsumi 720,000 1.90%SUM 19,076,875 50.21%
Top shareholders Shares held Shareholdingratio
Oisix ra daichi / 3182 LAST UPDATE: 2021.01.29 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
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Employees
Source: Shared Research based on company data.
▷ Oisix is continually expanding its headcount as it grows the business.
▷ The increase in the number of employees in FY03/17 is mainly due to the merger with Daichi.
▷ The increase in the number of employees in FY03/18 is mainly due to the merger with Radish Boya.
▷ The average annual salary of Daichi appears to be relatively high, estimated from the difference between FY03/17 and FY03/18.
Profile
Company Name Head Office
Oisix ra daichi Inc. Gate City Osaki East Tower 5F
1-11-2 Osaki, Shinagawa-ku, Tokyo
Phone Listed On
- Tokyo Stock Exchange, First section
Established Exchange Listing
June 2000 March 13, 2013
Website Financial Year-End
https://www.oisixradaichi.co.jp/en/ March 31
IR Contact IR Web
- https://www.oisixradaichi.co.jp/en/investors/
No. of employees FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20Consolidated - - - - 421 680 735 860
Home Delivery: Oisix - - - - 185 222 268 328Home Delivery: Daichi wo Mamoru Kai - - - - 151 132 126 127Home Delivery: Radish Boya - - - - - 223 180 169Other - - - - 85 103 161 236
Parent 163 179 192 210 - - - -Average age 34.6 34.5 34.6 34.1 36.0 39.4 39.9 40.4Average years of service 4.6 4.4 4.5 4.7 5.1 9.2 10.2 9.7Average annual salary (JPY'000) 5,227 5,127 5,066 5,124 5,314 5,622 5,805 5,530
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