DENKYO GROUP HOLDINGS CO.,LTD.

Business Details

Handled by Denkyosha Co., Ltd., Yamato Musen Denki Co., Ltd., Apix International Co., Ltd., and CCP Co., Ltd. The business sells household appliances purchased from manufacturers to specialty mass retailers such as consumer electronics stores and home centers, mail-order companies, and other retailers, while also developing in-house planned and manufactured products (including OEM and private-brand goods). The major customer is Edion Corporation (sales of ¥9,796 million in the fiscal year under review). The segment mainly handles seasonal appliance categories and promotes product proposals under the concept of "comfort and pleasantness."

Recent Overview

Sales decreased 5.6% year on year to ¥40,577 million, and the segment fell into a loss of ¥51 million.

During the current period, the segment was directly hit by consumers' increasingly selective spending tendency and sluggish sales in the seasonal appliance category, with sales to external customers decreasing 5.6% from ¥42,967 million to ¥40,577 million. Although efforts were made to improve the gross margin and reduce selling, general and administrative expenses, the impact of the sales decline was significant, and the segment fell from a profit of ¥62 million in the prior period to a loss of ¥51 million. In addition, an impairment loss of ¥17 million was recorded in the Household Appliances Sales Business. Meanwhile, sales to the major customer Edion were ¥9,796 million, slightly exceeding the prior period's ¥9,701 million.

Key Products

Growth Drivers

• Improving gross margin by strengthening the development and discovery of high value-added in-house planned and original products
• Enhancing proposal capabilities to business partners and developing new sales channels through the Group Joint Business Meeting
• Strengthening manufacturer functions and expanding the product lineup through the Group integration of CCP Co., Ltd.
• Strengthening strategic initiatives in the mail-order/e-commerce business and the BtoB/workplace markets
• Restructuring the cost structure through improving the gross profit margin and reducing selling, general and administrative expenses
• Promoting measures for a V-shaped sales recovery in the final year of the Medium-Term Management Plan (FY2024–FY2026)

Risks

• High dependence on the seasonal appliance category, creating demand fluctuation risk from climate change (record-breaking heat waves, warm winters) and consumers' selective spending
• Continued decline in overall market vitality and sluggish sales due to growing consumer thrift and defensive spending awareness
• Concentration of sales on the major customer (Edion) (¥9,796 million in the fiscal year under review) and risk of changes in transaction terms
• Profit pressure from rising import costs due to the continued weak yen and persistently high labor and logistics costs
• Intensifying cross-format competition in the specialty mass retail industry and intensifying competition in private-brand product development
• Continued occurrence of impairment losses in the Household Appliances Sales Business segment (¥17 million in the current period)
• Risk of rising energy prices and raw material costs due to escalating tensions in the Middle East