Latest Business Results

In the third quarter of the fiscal year ending in June 2024, the Japanese economy initially showed a gradual recovery in personal consumption to the pre-COVID-19 crisis level as the economy normalized. However, the pace of recovery is slowing as prices continue to rise and real wages, which have not been able to keep up with wage growth, remain negative. In addition, the persistently weak yen, geopolitical risks, such as the protracted Russia-Ukraine War, and the tense situation in the Middle East, continue to cause uncertainty affecting the global economy. As a result, consumers show increasing awareness of the need to protect their lives.

Second-hand Online Business

(Second-hand business for individuals)

・Opening of the Hiroshima Purchasing Base and Osaka Higashisumiyoshi Purchasing Base (September 2023) for expanding operations to more areas

・Opening of the Kinshicho branch office to increase contact center capacity (November 2023)

・More buyers and reallocation of sales personnel for purchasing second-hand items at customers’ homes for the growth of these purchases

・Review of the optimal purchase channel according to merchandise and quantities

・Serious consulting sales activities for the purchase of second-hand items at the customers’ homes

・Expansion of product categories through the launch of the preowned vehicle dealer business

・Promotion of DX measures to improve productivity (Scoring at Purchase, Root Arrangement Tool, and Business System update)

(Agricultural equipment)

・Further expand overseas sales channels, streamline operations, and increase the scale of transactions with domestic corporations to increase the transaction volume of used agricultural equipment and to level seasonality.

・Opening of Kita-Kanto No. 2 yard (January 2024) to secure inventory capacity to accommodate the expansion of transaction scale.

・Multilingualization of overseas cross-border e-commerce sites.

(Oikura)

・IT system investments to increase the earnings of Oikura as a second-hand distribution platform

・Cooperation with the local governments for public-private sector initiatives that contribute to accomplishing the SDGs (increase the second-hand distribution of consumer products to reduce the amount of second-hand products in the trash and the environmental impact of these products)

・Conduct sales activities focused on acquiring new franchisees

Media Business

・Maintenance activities for articles in this business to accommodate updated search engine algorithms

・Capturing advertising needs in line with demand periods and streamlining costs related to creative

Mobile & Telecommunications Business

・New rate plans that match customers’ needs and make 5G communications easier for increasing new service subscriptions

・Service agreements with longer terms as customers ask to change from 4G to 5G and activities to decrease cancellation

・TVCM started on a trial basis to increase awareness (from February 2024)

As a result, net sales were 13.258 billion yen, 18.8% higher than in the third quarter of the previous fiscal year. Operating profit was 106 million yen, 169.1% higher than in the third quarter of the previous fiscal year; and ordinary loss was 227 million yen mainly due to a loss on valuation of derivatives under non-operating expenses, compared with a profit of 89 million yen one year earlier. Loss attributable to owners of the parent was 651 million yen, compared with a loss of 106 million yen one year earlier, mainly due to impairment loss under extraordinary losses.

Overview by Business Segment

・Second-Hand Online Business

This business, which is the core business of the Market Enterprise Group, buys and sells second-hand merchandise using only the Internet and operates no brick-and-mortar stores.

To purchase second-hand merchandise, this business operates the takakuureru.com comprehensive purchasing website for all types of merchandise and other purchasing websites for specific categories of merchandise. Second-hand merchandise is sold by posting goods simultaneously on many websites, including Yahoo! Auctions, Rakuten, Amazon, Mercari, ReRe, our e-commerce site, and others. The main targets of this business are large or expensive merchandise and merchandise in large quantities. These types of merchandise are not suitable for C2C transactions because of the difficulty of packaging and sending these items. Using the C2B2C structure instead gives people confidence about the quality of merchandise and other aspects of these transactions due to the inclusion of a reputable company as an intermediary. During the past few years, we have used the knowledge acquired by operating this business to start a second-hand agricultural equipment business. In addition to operating this business in Japan, we plan to diversify this business using synergies with other group businesses, such as exporting used agricultural equipment. There are also numerous initiatives underway for enlarging the base of operations for Oikura, an Internet platform that matches sellers of second-hand items, which are ordinary consumers, with buyers, which are second-hand stores.

Results by category during the third quarter are as follows.

(Second-hand business for individuals)

Operations started at the Hiroshima Purchasing Base and Osaka Higashisumiyoshi Purchasing Base in September 2023 to support the expansion of operations to more areas and increase the volume of purchases to meet the very strong demand of consumers for services for purchasing second-hand items, and at the Kinshicho branch office in November 2023 to increase contact center capacity. We also hired and trained buyers who visit customers for this purchasing service. Various resources were prepared as a result of these investments, and revenue per purchase increased while maintaining the number of purchases at the same level as a result of continued efforts to develop a full-scale consulting business for purchasing second-hand items at customers’ homes and optimization of purchasing channels, and a review of sales personnel assignments, including contact centers, which serve as important touch points with customers, and promotion of the various DX measures mentioned above. In addition, in September 2023, we began dealing with preowned vehicles in earnest as a new merchandise item.

As a result of these efforts, profitability in the second-hand business for individuals steadily improved, and revenue for the third quarter of the fiscal year exceeded the projections made at the end of the interim period.

(Agricultural equipment)

In January 2024, we opened the Kita-Kanto No. 2 yard to expand the inventory capacity. Supplies declined temporarily in January and February due to seasonal factors, such as a slowdown in trading activity every year, but remained stable throughout the Nine Months Ended March 31, 2024. Sales were strong, especially in overseas sales, as measures had been taken since the previous quarter. As mentioned above, the gross margin declined as a result of the continuous strengthening of corporate purchases to stabilize procurement, but we were able to maintain profitability due to strong sales.

(Oikura)

In the Oikura business, we kept investing in IT systems as a second-hand platform to build a larger and more powerful base for long-term earnings. Public-private sector collaboration involving the SDGs is another major theme of this business. We are establishing partnerships with the local governments to increase the utilization of markets for used consumer goods to reduce the volume of waste materials and the environmental impact of discarded items. At the end of March 2024, there were 119 of these partnerships, 25 more than at the end of December 2023, and the population coverage ratio (ratio of the total population of the local governments with the partnership to the total population of Japan) was 30.9%. Thus, efforts to increase the number of purchase requests progressed steadily, and the number of franchisees and sales remained stable. In addition, the expansion of cooperation with the local governments has lowered the cost of acquiring purchase requests and strengthened the profit structure, and the number of purchase requests through Oikura is expected to continue to increase, so there is no change in the outlook for an increase in the number of franchisees and revenues in line with the increase in the number of cooperation with local governments in the future.

Sales increased 29.1% to 7.921 billion yen, and segment profit increased 64.8% to 357 million yen.

・Media Business

The media business uses the Internet to distribute useful information concerning purchasing activities to people interested in smart consumption. This business operates nine Internet media in five categories.

　・iPhone Kakuyasu SIM Tsushin, SIMCHANGE and KASHI･ONE, which have information about mobile phones and services

　・Takakuureru.com Magazine and Oikura Magazine, which have information about selling and disposing of items

　・Beginners and Outlet Japan, which have information about buying items

　・Saiyasu-Syuuri.com, which has information about repairing items

　・UMM (Used Machine Market), a platform for buying and selling used agricultural equipment

We have been taking risk measures, such as diversifying our article contents and maintaining them in response to search engine algorithms. Although the search rankings of major media were affected mainly as a result of the core algorithm changes in the search engine implemented by Google, which led to the selection of high-quality content, the ranking of our media content has recovered in some areas. In addition, the third quarter is usually a period of high advertising demand, and in the third quarter of the current consolidated fiscal year, as a result of appropriately capturing such demand and conducting cost management, business revenues are beginning to show signs of recovery.

As a result, sales decreased by 11.9% to 506 million yen, and segment profit decreased by 21.1% to 260 million yen.

・Mobile & Telecommunications Business

Consolidated subsidiary MEmobile Co., Ltd. is the primary component of this business. This company provides telecommunication services that are less expensive, simpler, and easier to understand. The main service, which uses the Kashimo brand (an abbreviation for the phrase “smart mobile” in Japanese), is an Internet connection service that uses a mobile Wi-Fi router.

During the third quarter, a large number of customers were sent to this business from our mobile phone and services media as collaboration with the media business increased. In addition, this business increased its exposure to media operated by other companies, such as new pilot TV commercials from February 2024. As of March 31, 2024, we had more than 90,000 contract lines, and we will continue to increase revenues by securing recurring income (income recorded monthly over the term of the user’s contract) by accumulating the number of contract lines and one-time income (income recorded all at once when a new line is acquired).

Because of these numerous marketing initiatives, sales increased by 7.5% to 4.881 billion yen and segment profit increased by 16.8% to 312 million yen.