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Pola Orbis Sees Net Sales of ¥41.238 billion for Q1 2013

Posted: May 1, 2013

Pola Orbis provided a summary of its financial results for the first quarter of the fiscal year ending December 31, 2013. Its consolidated operating results for the first three months of 2013 shows ¥41.238 billion in net sales, a 5.9% increase over the same time period in 2012.

In the first quarter of the fiscal year ending December 31, 2013 (January 1–March 31, 2013), in the Japanese economy, the weakening yen and rising stock prices resulting from economic policy and monetary policy affected consumer sentiment. Thus, with personal spending remaining firm, the economy has undergone a partial recovery after the phase of economic deceleration caused by the European fiscal crisis. In the future, although downside risks to the overseas economy will remain, sign of a global recovery, coupled with the effectiveness of monetary policy, will likely lead to a domestic economic recovery.

As for the domestic cosmetics market, due to the recovery momentum in the Japanese economy as a whole, the overall market remains strong. In the overseas cosmetics market, while slowdowns in personal spending are apparent in China and India, the whole Asian region continues to grow slowly. Within this market environment, in the current fiscal year, which is the final year of its three-year medium-term management plan that started in 2011, the Pola Orbis group will continue to improve the profitability of its domestic flagship brands and to expand its brands under development. In addition, the group will also continue to pursue its overseas market expansion, whose linchpins are the two overseas companies that it acquired.

Net income increased 74.3% year on year to ¥1,258 million. This was because the group incurred a loss on business liquidation arising from Pola’s withdrawal from business in the U.S. but consequently recorded a decrease in tax expenses.

For its beauty care division, the company recorded net sales of ¥38.559 billion, a 6.2% increase over the same time period in 2012. The beauty care segment consists of the flagship brands Pola and Orbis; the brands under development—pdc, Future Labo, Orlane, Decencia, and Three, and the overseas brands Jurlique and H2O Plus. Pola is making concerted efforts to boost customer satisfaction. These include aggressively developing sales channels through Pola the Beauty stores, which integrate cosmetics, consulting and esthetic treatments, and through department store outlets; increasing customer contact points through expansion of the door-to-door sales organization; and further enhancing Pola’s sales-process quality and consulting skills. In the domestic market, the group implemented seasonal initiatives. In overseas markets, Pola remains strong as awareness of the brand gradually increases. As a result, Pola recorded net sales above those recorded in the corresponding period of the previous year.

Orbis is striving to rebuild the brand through efforts to streamline sales costs by, for example, working to increase the rate of repeat purchases, improving its skin care-focused product strategy, and increasing its online sales. In the domestic market, the Live Rich anti-aging series, which was launched in February and is sold only online and by catalog, were doing well. Although the restraint of sales discounts as a step of the brand rebuilding caused the temporary decline in the number of customers acquired, the level of amount spent per purchase rose year on year. With the shift to a two-point logistics structure in the second half of last year, the effectiveness of the Orbis’s streamlining of costs has been apparent. In overseas markets, Orbis has continued to work to increase brand awareness. As a result, it recorded net sales on line with those in the corresponding period of the previous year.

Meanwhile, due to strong sales of Three and Decencia, the brands under development recorded net sales above those recorded in the corresponding period of the previous year. Furthermore, the company’s overseas brands saw net sales substantially exceeded those in the corresponding period of the previous year. This is because Jurlique, which joined the group in February of last year, became subject to consolidation from January of this year, Jurlique and H2O Plus enjoyed steady growth in Asia, and exchange rate movements were favorable.

As a result of the factors noted above, net sales—sales to external customers—were ¥38,559 million, up 6.2% year on year, and operating income was ¥1,472 million, up 47.9% year on year.

Find more information on this report from Pola Orbis here.