(Translated from Tsuhan Shinbun News)
Ordinary Profit Ranking: Half of the top 70 companies had decreased profit – with the total ordinary profit adding up to 144.4 billion yen, 1.3% down from the previous year.
A survey on ordinary profit in the “44th Sales Ranking of Companies with Mail-Order / Online Sales and Distance Learning Business” revealed that among the top 70 companies, half had a decrease in profit.
The total amount of ordinary profit of the top 70 companies was 144,455,990,000yen (1,298,364,160 US dollars), which was a 1.3% decrease and 1,881,120,000 yen (16,910,464 US dollars) decrease in value compared to the previous survey. Since there are differences in survey targets between this year and last year’s survey, the numbers cannot simply be compared, however, including large companies using catalogs as their main media, there was an overall decline in profit. As part of measures to cope with the compulsory indication of total amount of sales tax on each product (beginning April 2004), companies reduced their prices equal to the amount of the tax, which led directly to the tendency of profit decrease.
Benesse Corporation had an increase of 30%, earning over 23.2 billion yen, and restored themselves to the top position after 3 years. The difference between they and the second company was 10 billion yen size. On the other hand, many companies ranked second and under reported a decrease in their ordinary profit. Belluna decreased by 8.0%. The company’s ratio of ordinary income to net sales was 8.8%, declining by 0.9% from the previous year, although this was the highest among the companies with mail-order / online sales using catalogs.
Nissen and Senshukai both reported big decreases in rates of ordinary profits, at 15% and 28% respectively. Since last fall, Nissen has had an increase in revenue, obtained by marking down the price of the products by the amount of sales tax. On the other hand, however, there has been an increase in the cost of sales and a decrease in purchase price per customer, which has led to a decline in profit. The main cause of the decreased profit in the case of Senshukai was the increased rates of goods returned and a decrease in purchase price per customer. Investment in specialized channels on CS broadcasting was a big factor for Dinos’ profit decrease.
There were 26 companies that reported an increase in their profit, almost half of the number from last year’s 47. Most of these companies expanded their business mainly through the internet. With the foundation they have built up to this point, they have succeeded in gaining customers and promoting sales efficiently.
Ratio to net sales
The ratio of ordinary income to net sales, which indicates efficiency, was continuously high in companies dealing with cosmetics or health foods as their main quotient materials, maintaining the 10% to 20% mark. The highest of these was Yamada Bee Farm’s 24.8%, reporting the same ratio as the previous year, followed by Dr.Ci:Labo (20.4%) and Saishunkan Seiyaku (19.3%), also reporting similar member as in last year’s survey. Coming next, Kobayashi Pharmaceutical (13.6%), Jimos (13.3%), and Attenir (13.1%) have shown high ratios to net sales.
Attention should be paid also to mail-order / online sales channels on television. Jupiter Shop Channel showed a ratio of 12.2%, which was a 2.9% increase from last year, and rival company QVC Japan showed an even higher ratio of 16.9%. Net sales for QVC Japan were 5.4 billion yen lower than that of Jupiter, but it was the victor in the ratio analysis.
Component ratio of the top 10 companies was 1.8 points down, although totaled a 57.5 billion yen increase - due to the rising of the overall market.
Dividing every ten companies of the top 200 companies in the “Ranking Chart on Common Profit at Closing of Accounts for Fiscal 2004” (attached), the component ratio of the total net sales of the top 10 companies was 1.8 points down from the survey conducted at the same period of the previous year. The total net sales of the top 10 companies were 1,000,013,860,000 yen (8,877,964,288 US dollars) which represented a 57,553,000,000 yen (510,946,368 US dollars) increase in value, and a 5.3% increase in rate. However, since there was an expansion of total net sales of all the 200 companies of 10.5% and 290,670,000,000 yen (2,580,521,984 US dollars) in value, the component ratio of the top 10 companies declined.
On the other hand, both component ratio of total net sales of all companies in the “11th to 20th “ and “21st to 30th “ groups increased from last year. It can be said that these classes of companies are the key for the future growth of the market.
The groups with decreased component ratio were the “1st to 10th” (1.8%) and “31st to 40th” (0.6%), while other groups increased.
Looking at the increase and decrease in total net sales in value, group “1st to 10th” had a 5.3% of increase from last year. Since the total net sales of each company in this group are large, the increase/decrease rate of each company has a big influence on the overall size. Moreover, since the overall sales of the market as a whole expanded, a company with the same amount of sales from the previous year might be ranked lower. For example, a company with 10 billion yen net sales would be ranked 60th in the previous survey, while it is ranked 66th in this survey. If a company had 4 billion sales, it was ranked 117th last year, and ranked down at 127th this time, showing the growth of the market.
The class with the highest increase/decrease rate was “141st to 150th” group with a 22.5% increase and over 3 billion to 3.4 billion yen increase in sales value, followed by “131st to 140th” group with 20.5% increase. The “11th to 20th” group had the third biggest increase, at 19.6%. The members of this group include companies with remarkable growth such as Sunny Health, Jupiter Shop Channel, Otsuka Corporation, and QVC Japan. Although Japanet Takata‘s revenue decreased in the first half year (affected by its leakage of personal data), it aims to recover this term. The balance of the groups up to 170th had a 12% to 17% increase.
On the other hand, the group with the smallest increase/decrease rate was the “31st to 40th” group with a 2.0% increase. Although the total net sales increased in this class, the revenue decreases of its members, Takashimaya, Tokyu Department Store, Sumisho-otto, and Image (the former Simree), slowed down group growth. Three classes under 170th also experiences small increases under 10%. These results showed that many companies with net sales of 2.4 billion yen or under had revenue declines. Among them, however, companies specialized in online sales, experiencing revenue increase in the first term, such as Naturum, Magaseek, Oisix, and Start Today, are expecting a continuous increase this term, despite their small size.