■ Business Overview

1. Trends in the Furniture and Household Products Business

San-ei Corporation <8119> has its largest business segment in the Furniture and Household Products sector. This business has a high OEM ratio of around 90% of revenue, and it has grown along with the expansion of major customers represented by Ryohin Keikaku. The sales composition ratio from Ryohin Keikaku and its subsidiaries is 52.0% (for the fiscal year ending March 2024, across all segments), making it a significant presence. The company's own E-Commerce interior shop "MINT" is expected to achieve further growth as a new sales channel. It sells over 1,000 items on Rakuten Market and Yahoo! Shopping, featuring reasonably priced high-quality beds and mattresses, antique-style furniture, interiors, garden exteriors, outdoor goods, etc., which align with consumer needs. The company has its own factory (about 4,000 square meters) in Malaysia as a development base capable of manufacturing its own brands and OEM products, as well as ODM proposals.

2. Trends in the Apparel and Accessories Business

In the apparel and accessories business, while OEM is also conducted, the sales ratio of brand businesses is larger in comparison to the Furniture and Household Products sector. One of the brands handled is "BIRKENSTOCK," which celebrates its 250th anniversary and offers historically significant comfort sandals and shoes. This product range includes items managed by the subsidiary Benexy Co., Ltd., which operates retail operations. Traditionally, specialized "BIRKENSTOCK" stores were launched, but a contract will end in September 2024, and there is a transition to direct select shops such as "BENEXY" and "Quorinest." Additionally, other notable brands include footwear "OrthoFeet" featuring hands-free and anatomical insoles, Belgian brand bags "Kipling," and eco-friendly select brand product groups under "Our EARTH Project."

3. Trends in the Home Appliance Business

In the OEM business, the Chinese subsidiary Sanfa Electric Products (Dongguan) Co., Ltd. and the Hong Kong subsidiary Sanfa Electric Manufacturing Co., Ltd. manufacture and export small home appliances. In the brand business, they manufacture and sell their own brand of cooking appliances "Vitantonio," beauty appliances "mod's hair," and commercial cooking equipment "MULTI CHEF." Hot-selling products from "Vitantonio" include hot sandwich makers and cordless bottle blenders. The brand is well-known for proposing unique lifestyles that enjoy making hot sandwiches at home and original drinks. Currently, with the decline of stay-at-home demand, the company is challenging brand revitalization. In the post-COVID era, demand for beauty appliances is on the rise. In addition to hair dryers and hair irons, the "mod's hair compact ion heat brush" is also achieving strong sales. Segment performance is struggling due to a decrease in factory operating rates, and efforts are underway to streamline production facilities and production systems.

(Written by FISCO Guest Analyst, Hideo Kakuta)