Seria operates 100-yen stores, buying products from manufacturers and selling them at a flat price of JPY100 (plus tax). As of March 31, 2021, Seria had 1,742 directly managed stores (1,633 in FY03/20) and 45 franchised stores (46 in FY03/20). Seria distinguishes itself through the use of point-of-sale (POS) data and systematic management of product orders and inventories. As a result, Seria has higher GPM, OPM, and sales per store than its competitors. Seria uses an internally developed POS data driven ordering support system. The company began seeing results from this in FY03/09. From that point to FY03/21, annual sales growth averaged 9.4% and operating profit 24.4%. (Over the same period, average annual sales growth at competitor Can Do Co., Ltd. [TSE1: 2698] was 1.2% and operating profit 14.2%. For Watts Co., Ltd. [TSE1: 2735], sales grew 4.0% and operating profit grew by 4.5% during the period.)

In the early 2000s, Seria was third in the industry and facing financial difficulties. Back then the 100-yen store sector was dominated by market leader Daiso Sangyo Co., Ltd. (unlisted). Industry trends included diversifying the product range (Daiso sold 90,000 products), relying on the intuition and experience of store staff for ordering and inventory management, and highly dense product displays. In 2003, the founder’s nephew and current president, Eiji Kawai, joined the company as managing director. Kawai had gained experience at the Ogaki Kyoritsu Bank, Ltd. (TSE1: 8361) developing systems based on statistical methods. He became central to the data-driven reforms from 2004, leading Seria to grow faster than industry peers. In this environment, Seria was the first 100-yen store operator to introduce a POS system (2004) and a proprietary ordering support system (2006). It also developed a new store design (2007). In these ways, Seria took an objective, data-driven approach to product ordering and inventory management, paring down product numbers to create stores that felt more spacious and offering a product lineup more appealing to women. As a result, the company has achieved results surpassing those of competitors.

Seria reports only parent earnings (no subsidiaries). In FY03/21, directly managed stores accounted for 98.4% of sales (98.3% in FY03/20). Seria had 1,742 (1,633 in FY03/20) stores and sales per store of JPY117mn (JPY112mn in FY03/20). Comparable store sales have been in a longer-term uptrend, driven by increasing repeat customers and drawing customers away from other 100-yen stores.

GPM has risen from 41.0% (FY03/11) to 43.3% (FY03/21), trending upward due to both directly managed stores and sundries comprising a higher share of sales. GPM is also affected by forex fluctuations, as the company imports most of its merchandise.

SG&A expenses are mainly personnel and rent expenses, which are affected more by the number of stores than by sales. The company has seen its SG&A expense ratio fall and OPM grow as sales per store have risen.

Trends and outlook

In FY03/22, sales were JPY208.1bn (+3.7% YoY), operating profit was JPY20.9bn (-1.7% YoY), recurring profit JPY21.3bn (-0.0% YoY), and net income JPY14.3bn (-2.9% YoY). While an increase in the store count drove sales growth, all profit items from operating profit and below fell owing to a 2.1% YoY decline in comparable store sales.

For FY03/23, Seria forecasts sales of JPY216.8bn (+4.2% YoY), operating profit of JPY17.5bn (-16.3% YoY), recurring profit of JPY17.5bn (-18.0% YoY), and net income of JPY11.9bn (-16.8% YoY). The company expects stay-at-home demand to taper off and consumer sentiment to worsen in FY03/23. The projection assumes a decline in comparable store sales by 1.8% YoY (-3.0% YoY in 1H and -0.7% YoY in 2H).

Over the medium term, Seria plans to open new stores and grow sales at existing stores, which we think should allow it to maintain sales and profit growth of about 10%.

Strengths and weaknesses

We see Seria’s strengths as an ordering system using proprietary algorithms to manage inventories and reduce lost sales opportunities, customer draw through its uncluttered stores and product lineup, and ample cash to open new stores as opportunities arise. We also see three weaknesses: growing competition with other store formats, a growth strategy focusing only on taking share away from other 100-yen stores, and less attractive store locations than competitors. (See the Strengths and weaknesses section for details.)

Key financial data

Income statement		FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)		Par.	Par.	Par.	Par.	Par.	Par.	Par.	Par.	Par.	Par.	Est.
Sales		98,246	109,393	118,336	130,983	145,328	159,114	170,482	181,476	200,682	208,084	216,800
	YoY	4.9%	11.3%	8.2%	10.7%	11.0%	9.5%	7.1%	6.4%	10.6%	3.7%	4.2%
Gross profit		41,445	46,214	50,129	55,502	62,387	68,671	73,746	78,551	86,989	90,262
	YoY	6.1%	11.5%	8.5%	10.7%	12.4%	10.1%	7.4%	6.5%	10.7%	3.8%
	Gross profit margin	42.2%	42.2%	42.4%	42.4%	42.9%	43.2%	43.3%	43.3%	43.3%	43.4%
Operating profit		8,314	10,192	10,521	12,016	15,171	16,479	16,790	17,604	21,269	20,918	17,500
	YoY	7.7%	22.6%	3.2%	14.2%	26.3%	8.6%	1.9%	4.8%	20.8%	-1.7%	-16.3%
	Operating profit margin	8.5%	9.3%	8.9%	9.2%	10.4%	10.4%	9.8%	9.7%	10.6%	10.1%	8.1%
Recurring profit		8,261	10,242	10,644	12,063	15,218	16,500	16,857	17,683	21,357	21,347	17,500
	YoY	6.3%	24.0%	3.9%	13.3%	26.2%	8.4%	2.2%	4.9%	20.8%	0.0%	-18.0%
	Recurring profit margin	8.4%	9.4%	9.0%	9.2%	10.5%	10.4%	9.9%	9.7%	10.6%	10.3%	8.1%
Net income		4,802	6,194	6,720	7,951	10,533	11,316	11,517	12,070	14,726	14,301	11,900
	YoY	11.9%	29.0%	8.5%	18.3%	32.5%	7.4%	1.8%	4.8%	22.0%	-2.9%	-16.8%
	Net margin	4.9%	5.7%	5.7%	6.1%	7.2%	7.1%	6.8%	6.7%	7.3%	6.9%	5.5%
Per-share data (split-adjusted; JPY)
No. of outstanding shares at year-end ('000 shares)		37,920	37,920	37,920	37,920	75,840	75,840	75,840	75,840	75,840	75,840
EPS		63.3	81.7	88.6	104.9	138.9	149.2	151.9	159.2	194.2	188.7	158.2
EPS (fully diluted)		-	-	-	-	-	-	-	-	-	-
Dividend per share		7.5	10.0	12.5	15.0	20.0	30.0	50.0	55.0	65.0	70.0	70.0
Book value per share		284.3	358.3	438.4	530.5	654.5	783.7	885.2	989.2	1,123.6	1,228.9
Balance sheet (JPYmn)
	Cash and cash equivalents	13,240	14,655	17,221	21,487	29,301	35,979	40,070	42,288	53,593	58,246
Total current assets		26,437	29,057	32,327	38,892	48,289	56,103	62,023	68,685	79,393	85,067
Tangible fixed assets		7,812	8,317	9,511	10,292	11,826	13,758	16,937	19,155	21,170	22,034
Investments and other assets		7,779	8,550	9,117	9,840	10,535	11,728	12,645	13,494	14,747	15,496
Intangible assets		224	231	203	163	117	78	89	95	82	100
Total assets		42,253	46,157	51,160	59,189	70,768	81,669	91,697	101,430	115,394	122,699
	Accounts payable	6,528	5,977	5,986	7,210	8,255	8,603	8,918	9,931	11,095	11,580
	Short-term debt	2,724	2,072	1,521	1,080	1,069	642	645	648	675	671
Total current liabilities		14,201	13,968	13,586	15,011	17,476	18,303	19,151	20,644	23,570	23,365
	Long-term debt	5,180	3,610	2,696	2,132	1,599	1,616	1,517	1,462	1,408	1,312
Total fixed liabilities		6,487	5,017	4,326	3,943	3,654	3,929	5,409	5,766	6,613	6,875
Total liabilities		20,689	18,985	17,912	18,955	21,131	22,232	24,561	26,411	30,184	30,241
Total net assets		21,563	27,171	33,247	40,234	49,637	59,436	67,136	75,019	85,209	92,458
Total interest-bearing debt		7,904	5,682	4,217	3,212	2,668	2,258	2,162	2,110	2,083	1,983
Cash flow statement (JPYmn)
Cash flows from operating activities		5,622	7,854	8,711	10,382	14,113	13,843	13,706	16,202	19,447	17,650
Cash flows from investing activities		-2,321	-3,075	-3,387	-3,517	-4,054	-4,599	-8,134	-4,141	-7,919	-2,339
Cash flows from financing activities		-1,587	-3,332	-2,858	-2,497	-2,244	-2,615	-4,467	-4,837	-5,220	-7,742
Financial ratios
ROA (RP-based)		20.1%	23.2%	21.9%	21.9%	23.4%	21.6%	19.4%	18.3%	19.7%	17.9%
ROE		24.8%	25.4%	22.2%	21.6%	23.4%	20.7%	18.2%	17.0%	18.4%	16.1%
Equity ratio		51.0%	58.9%	65.0%	68.0%	70.1%	72.8%	73.2%	74.0%	73.8%	75.4%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Recent updates

Released monthly sales data for April 2022

2022-05-06

Seria Co., Ltd released monthly sales data for April 2022.

月次動向

		FY03/22
		Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	1H	2H	FY
All stores		14.3%	7.1%	-0.3%	3.0%	5.0%	8.4%	6.4%	2.3%	1.0%	0.1%	-2.7%	1.2%	6.2%	1.4%	3.7%
Comparable stores		7.2%	-1.5%	-7.0%	-2.7%	-1.3%	2.4%	1.2%	-2.5%	-3.8%	-4.8%	-7.6%	-3.9%	-0.6%	-3.6%	-2.1%
	Customer count	9.5%	2.3%	-4.6%	-2.5%	-3.9%	1.2%	1.0%	-2.1%	-2.8%	-3.6%	-7.3%	-3.7%	0.2%	-3.0%	-1.4%
	Customer spend	-2.0%	-3.7%	-2.5%	-0.3%	2.7%	1.2%	0.2%	-0.4%	-1.0%	-1.2%	-0.4%	-0.2%	-0.8%	-0.5%	-0.6%
Store count (end of month)		1,756	1,758	1,770	1,776	1,777	1,775	1,787	1,804	1,819	1,813	1,815	1,833	1,775	1,833	1,833
	Openings	17	7	15	8	5	5	16	18	15	2	5	24	57	80	137
	Closures	3	5	3	2	4	7	4	1	-	8	3	6	24	22	46

		FY03/23
		Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	1H	2H	FY
All stores		1.3%												1.3%		1.3%
Comparable stores		-3.4%												-3.4%		-3.4%
	Customer count	-3.1%												-3.1%		-3.1%
	Customer spend	-0.4%												-0.4%		-0.4%
Store count (end of month)		1,839												1,839		1,839
	Openings	10												10		10
	Closures	4												4		4

Share buyback through ToTNeT-3

2022-02-21

On February 18, 2022, Seria Co., Ltd. announced the purchase of treasury shares through the TSE's Off-Auction Own Share Repurchase Trading System (ToSTNeT-3).

Details of acquisition

Type of shares to be acquired: Common shares of the company
Total number of shares to be acquired: Maximum of 600,000 shares (0.79% of total shares issued [excluding treasury shares])
Total value of shares to be acquired: Maximum of JPY1.7bn

Trends and outlook

Quarterly trends and results

Quarterly results

Cumulative		FY03/21				FY03/22				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Sales		48,642	97,389	150,119	200,682	51,991	103,386	157,751	208,084	97.7%	213,000
	YoY	11.1%	10.7%	11.4%	10.6%	6.9%	6.2%	5.1%	3.7%		6.1%
Gross profit		20,932	42,055	64,941	86,989	22,473	44,775	68,387	90,262
	YoY	10.7%	10.6%	11.5%	10.7%	7.4%	6.5%	5.3%	3.8%
	Gross profit margin	43.0%	43.2%	43.3%	43.3%	43.2%	43.3%	43.4%	43.4%
SG&A expenses		15,853	32,372	48,833	65,720	17,207	34,255	51,767	69,344
	YoY	6.1%	8.2%	7.8%	7.8%	8.5%	5.8%	6.0%	5.5%
	SG&A ratio	32.6%	33.2%	32.5%	32.7%	33.1%	33.1%	32.8%	33.3%
Operating profit		5,078	9,683	16,108	21,269	5,265	10,520	16,620	20,918	95.1%	22,000
	YoY	28.2%	19.4%	24.3%	20.8%	3.7%	8.6%	3.2%	-1.7%		3.4%
	Operating profit margin	10.4%	9.9%	10.7%	10.6%	10.1%	10.2%	10.5%	10.1%		10.3%
Recurring profit		5,129	9,731	16,166	21,357	5,279	10,636	16,895	21,347	97.0%	22,000
	YoY	28.8%	19.7%	24.1%	20.8%	2.9%	9.3%	4.5%	0.0%		3.0%
	Recurring profit margin	10.5%	10.0%	10.8%	10.6%	10.2%	10.3%	10.7%	10.3%		10.3%
Net income		3,486	6,602	10,967	14,726	3,526	7,155	11,404	14,301	95.3%	15,000
	YoY	30.5%	20.8%	25.0%	22.0%	1.1%	8.4%	4.0%	-2.9%		1.9%
	Net margin	7.2%	6.8%	7.3%	7.3%	6.8%	6.9%	7.2%	6.9%		7.0%
Quarterly		FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales		48,642	48,747	52,730	50,563	51,991	51,395	54,365	50,333
	YoY	11.1%	10.3%	12.8%	8.1%	6.9%	5.4%	3.1%	-0.5%
Gross profit		20,932	21,123	22,886	22,048	22,473	22,302	23,612	21,875
	YoY	10.7%	10.5%	13.1%	8.7%	7.4%	5.6%	3.2%	-0.8%
	Gross profit margin	43.0%	43.3%	43.4%	43.6%	43.2%	43.4%	43.4%	43.4606%
SG&A expenses		15,853	16,519	16,461	16,887	17,207	17,048	17,512	17,577
	YoY	6.1%	10.3%	7.1%	7.9%	8.5%	3.2%	6.4%	4.1%
	SG&A ratio	32.6%	33.9%	31.2%	33.4%	33.1%	33.2%	32.2%	34.9%
Operating profit		5,078	4,605	6,425	5,161	5,265	5,255	6,100	4,298
	YoY	28.2%	11.1%	32.3%	11.2%	3.7%	14.1%	-5.1%	-16.7%
	Operating profit margin	10.4%	9.4%	12.2%	10.2%	10.1%	10.2%	11.2%	8.5%
Recurring profit		5,129	4,602	6,435	5,191	5,279	5,357	6,259	4,452
	YoY	28.8%	10.9%	31.4%	11.5%	2.9%	16.4%	-2.7%	-14.2%
	Recurring profit margin	10.5%	9.4%	12.2%	10.3%	10.2%	10.4%	11.5%	8.8%
Net income		3,486	3,116	4,365	3,759	3,526	3,629	4,249	2,897
	YoY	30.5%	11.6%	31.8%	14.0%	1.1%	16.5%	-2.7%	-22.9%
	Net margin	7.2%	6.4%	8.3%	7.4%	6.8%	7.1%	7.8%	5.8%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Sales by segment

Cumulative			FY03/21				FY03/22
(JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Sales			48,642	97,389	150,119	200,682	51,991	103,386	157,751	208,084
	YoY		11.1%	10.7%	11.4%	10.6%	6.9%	6.2%	5.1%	3.7%
	Directly managed stores		47,772	95,812	147,678	197,508	51,192	101,845	155,474	205,110
		YoY	10.9%	10.7%	11.5%	10.7%	7.2%	6.3%	5.3%	3.8%
		% of total	98.2%	98.4%	98.4%	98.4%	98.5%	98.5%	98.6%	98.6%
	Franchised stores		647	1,198	1,781	2,289	538	1,052	1,593	2,076
		YoY	20.3%	15.0%	12.8%	8.6%	-16.8%	-12.2%	-10.6%	-9.3%
		% of total	1.3%	1.2%	1.2%	1.1%	1.0%	1.0%	1.0%	1.0%
	Other		222	378	658	884	261	488	684	896
		YoY	43.2%	-0.8%	-4.4%	-13.8%	17.6%	29.1%	4.0%	1.4%
		% of total	0.5%	0.4%	0.4%	0.4%	0.5%	0.5%	0.4%	0.4%
Quarterly			FY03/21				FY03/22
(JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales			48,642	48,747	52,730	50,563	51,991	51,395	54,365	50,333
	YoY		11.1%	10.3%	12.8%	8.1%	6.9%	5.4%	3.1%	-0.5%
	Directly managed stores		47,772	48,040	51,866	49,830	51,192	50,653	53,629	49,636
		YoY	10.9%	10.5%	13.0%	8.6%	7.2%	5.4%	3.4%	-0.4%
		% of total	98.2%	98.5%	98.4%	98.6%	98.5%	98.6%	98.6%	98.6%
	Franchised stores		647	551	583	508	538	514	541	483
		YoY	20.3%	9.3%	8.6%	-3.8%	-16.8%	-6.7%	-7.2%	-4.9%
		% of total	1.3%	1.1%	1.1%	1.0%	1.0%	1.0%	1.0%	1.0%
	Other		222	156	280	226	261	227	196	212
		YoY	43.2%	-31.0%	-8.8%	-33.1%	17.6%	45.5%	-30.0%	-6.2%
		% of total	0.5%	0.3%	0.5%	0.4%	0.5%	0.4%	0.4%	0.4%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Sales by product category

Cumulative			FY03/21				FY03/22
(JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Sales			48,642	97,389	150,119	200,682	51,991	103,386	157,751	208,084
	YoY		11.1%	10.7%	11.4%	10.6%	6.9%	6.2%	5.1%	3.7%
	Sundries		47,738	95,797	147,614	197,024	51,364	102,207	155,733	204,988
		YoY	10.9%	10.7%	11.4%	10.7%	7.6%	6.7%	5.5%	4.0%
		% of total	98.1%	98.4%	98.3%	98.2%	98.8%	98.9%	98.7%	98.5%
	Foods and snacks		889	1,526	2,386	3,487	575	1,074	1,859	2,886
		YoY	23.5%	12.6%	8.7%	3.8%	-35.3%	-29.6%	-22.1%	-17.2%
		% of total	1.8%	1.6%	1.6%	1.7%	1.1%	1.0%	1.2%	1.4%
	Other		14	64	119	170	52	104	158	209
		YoY	-17.6%	42.2%	95.1%	123.7%	271.4%	62.5%	32.8%	22.9%
		% of total	0.0%	0.1%	0.1%	0.1%	0.1%	0.1%	0.1%	0.1%
Quarterly			FY03/21				FY03/22
(JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales			48,642	48,747	52,730	50,563	51,991	51,395	54,365	50,333
	YoY		11.1%	10.3%	12.8%	8.1%	6.9%	5.4%	3.1%	-0.5%
	Sundries		47,738	48,059	51,817	49,410	51,364	50,843	53,526	49,255
		YoY	10.9%	10.4%	12.9%	8.4%	7.6%	5.8%	3.3%	-0.3%
		% of total	98.1%	98.6%	98.3%	97.7%	98.8%	98.9%	98.5%	97.9%
	Foods and snacks		889	637	860	1,101	575	499	785	1,027
		YoY	23.5%	0.3%	2.3%	-5.4%	-35.3%	-21.7%	-8.7%	-6.7%
		% of total	1.8%	1.3%	1.6%	2.2%	1.1%	1.0%	1.4%	2.0%
	Other		14	50	55	51	52	52	54	51
		YoY	-17.6%	78.6%	243.8%	240.0%	271.4%	4.0%	-1.8%	0.0%
		% of total	0.0%	0.1%	0.1%	0.1%	0.1%	0.1%	0.1%	0.1%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Comparable store sales at directly managed stores

Cumulative		FY03/21				FY03/22
		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Comparable-store sales (directly managed)		5.0%	4.0%	4.5%	3.7%	-0.6%	-0.6%	-1.0%	-2.1%
	Customer count	-0.6%	0.3%	1.2%	0.5%	2.2%	0.2%	-0.3%	-1.4%
	Customer spend	5.6%	3.7%	3.3%	3.2%	-2.7%	-0.8%	-0.6%	-0.6%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Store openings and closures

Cumulative		FY03/21				FY03/22
(stores)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Net increase in directly managed stores		23	55	93	109	28	33	77	91
	Openings	32	69	110	141	39	57	106	137
	Closures	9	14	17	32	11	24	29	46
Net increase in franchise stores		-	-	-	-1	-1	-	-2	-2
	Openings	-	-	-	-	-	1	1	1
	Closures	-	-	-	1	1	1	3	3
Quarterly		FY03/21				FY03/22
(stores)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Net increase in directly managed stores		23	32	38	16	28	5	44	14
	Openings	32	37	41	31	39	18	49	31
	Closures	9	5	3	15	11	13	5	17
Net increase in franchise stores		-	-	-	-1	-1	1	-2	-
	Openings	-	-	-	-	-	1	-	-
	Closures	-	-	-	1	1	-	2	-

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Number of stores

		FY03/21				FY03/22
(stores)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Directly managed stores		1,656	1,688	1,726	1,742	1,770	1,775	1,819
	YoY	6.2%	6.7%	7.1%	6.7%	6.9%	5.2%	5.4%
	Color the Days	-	1,230	-	1,295	-	1,339	-
	Other than Color the Days	-	458	-	447	-	436	-
Franchised stores		46	46	46	45	44	45	43

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

(Reference) Can Do quarterly results

Store count			May 2020	Aug 2020	Nov 2020	Feb 2021	May 2021	Aug 2021	Nov 2021	Feb 2022
Store count			1,044	1,046	1,065	1,079	1,128	1,141	1,180	1,197
	YoY		2.8%	1.2%	1.4%	2.8%	8.0%	9.1%	10.8%	10.9%
	Directly managed stores		710	705	710	711	719	733	771	785
		YoY	0.7%	-1.7%	-1.7%	-1.1%	1.3%	4.0%	8.6%	10.4%
		Net increase	-9	-14	-9	-8	8	14	60	74
		Openings	5	9	16	16	13	20	64	64
		Closures	14	23	25	25	5	6	12	12
Cumulative (JPYmn)			Mar–May/20	Mar–Aug/20	Mar–Nov/20	Mar/20–Feb/21	Mar–May/21	Mar–Aug/21	Mar–Nov/21	Mar/21–Feb/22
Sales			18,122	36,336	54,302	73,141	18,514	36,281	54,291	72,435
	YoY		0.8%	2.1%	1.4%	1.2%	2.2%	-0.2%	0.0%	-1.0%
Gross profit			6,881	13,855	20,757	27,970	7,051	13,866	20,774	27,739
	YoY		-0.4%	0.9%	0.4%	0.2%	2.5%	0.1%	0.1%	-0.8%
	Gross profit margin		38.0%	38.1%	38.2%	38.2%	38.1%	38.2%	38.3%	38.3%
SG&A expenses			6,473	12,962	19,682	26,267	6,635	13,481	20,438	27,170
	YoY		-0.5%	-1.4%	-1.4%	-1.7%	2.5%	4.0%	3.8%	3.4%
	SG&A ratio		35.7%	35.7%	36.2%	35.9%	35.8%	37.2%	37.6%	37.5%
Operating profit			408	893	1,075	1,702	417	386	337	570
	YoY		1.7%	53.2%	48.7%	41.1%	2.2%	-56.8%	-68.7%	-66.5%
	Operating profit margin		2.3%	2.5%	2.0%	2.3%	2.3%	1.1%	0.6%	0.8%
Quarterly (JPYmn)			Mar–May/20	Jun–Aug/20	Sep–Nov/20	Dec/20–Feb/21	Mar–May/21	Jun–Aug/21	Sep–Nov/21	Dec/21–Feb22
Sales			18,122	18,214	17,966	18,839	18,514	17,767	18,010	18,144
	YoY		0.8%	3.4%	0.0%	0.6%	2.2%	-2.5%	0.2%	-3.7%
Gross profit			6,881	6,974	6,902	7,213	7,051	6,815	6,908	6,965
	YoY		-0.4%	2.2%	-0.7%	-0.4%	2.5%	-2.3%	0.1%	-3.4%
	Gross profit margin		38.0%	38.3%	38.4%	38.3%	38.1%	38.4%	38.4%	38.4%
SG&A expenses			6,473	6,489	6,720	6,585	6,635	6,846	6,957	6,732
	YoY		-0.5%	-2.3%	-1.3%	-2.6%	2.5%	5.5%	3.5%	2.2%
	SG&A ratio		35.7%	35.6%	37.4%	35.0%	35.8%	38.5%	38.6%	37.1%
Operating profit			408	485	182	627	417	-31	-49	233
	YoY		1.7%	166.5%	30.0%	29.8%	2.2%	-	-	-62.8%
	Operating profit margin		2.3%	2.7%	1.0%	3.3%	2.3%	-	-	1.3%

Source: Shared Research based on Can Do materials
Note: Figures may differ from company data due to differences in rounding methods.
Note: In order to enable comparisons with the company’s results, cumulative results are calculated based on the sum of quarterly results of three-month periods from March to February of the following year.

(Reference) Watts quarterly results

Store count			May 2020	Aug 2020	Nov 2020	Feb 2021	May 2021	Aug 2021	Nov 2021	Feb 2022
Store count			1,234	1,240	1,269	1,293	1,330	1,364	1,563	1,579
	YoY		3.0%	4.0%	4.4%	5.6%	7.8%	10.0%	23.2%	22.1%
	Directly managed stores		1,208	1,215	1,244	1,268	1,307	1,341	1,536	1,554
		YoY	3.3%	4.4%	4.6%	5.8%	8.2%	10.4%	23.5%	22.6%
		Net increase	10	17	46	70	39	34	268	286
		Openings	28	57	99	131	49	91	297	328
		Closures	18	40	53	61	10	18	29	42
Cumulative (JPYmn)			Mar–May/20	Mar–Aug/20	Mar–Nov/20	Mar/20–Feb/21	Mar–May/21	Mar–Aug/21	Mar–Nov/21	Mar/21–Feb/22
Sales			13,628	26,813	39,507	52,432	12,730	25,084	38,810	53,591
	YoY		5.0%	4.1%	2.7%	1.4%	-6.6%	-6.4%	-1.8%	2.2%
Gross profit			5,172	10,315	15,229	20,197	4,893	9,744	15,047	20,658
	YoY		5.9%	5.9%	4.8%	2.8%	-5.4%	-5.5%	-1.2%	2.3%
	Gross profit margin		37.9%	38.5%	38.5%	38.5%	38.4%	38.8%	38.8%	38.5%
SG&A expenses			4,718	9,333	13,755	18,129	4,522	9,160	14,186	19,437
	YoY		0.5%	-0.6%	-1.6%	-2.0%	-4.2%	-1.9%	3.1%	7.2%
	SG&A ratio		34.6%	34.8%	34.8%	34.6%	35.5%	36.5%	36.6%	36.3%
Operating profit			454	982	1,474	2,068	371	584	861	1,221
	YoY		141.4%	180.4%	164.5%	81.9%	-18.3%	-40.5%	-41.6%	-40.9%
	Operating profit margin		3.3%	3.7%	3.7%	3.9%	2.9%	2.3%	2.2%	2.3%
Quarterly (JPYmn)			Mar–May/20	Jun–Aug/20	Sep–Nov/20	Dec/20–Feb/21	Mar–May/21	Jun–Aug/21	Sep–Nov/21	Dec/21–Feb22
Sales			13,628	13,185	12,693	12,925	12,730	12,354	13,726	14,780
	YoY		5.0%	3.2%	-0.1%	-2.7%	-6.6%	-6.3%	8.1%	14.4%
Gross profit			5,172	5,143	4,913	4,968	4,893	4,851	5,303	5,611
	YoY		5.9%	5.8%	2.5%	-2.7%	-5.4%	-5.7%	7.9%	12.9%
	Gross profit margin		37.9%	39.0%	38.7%	38.4%	38.4%	39.3%	38.6%	38.0%
SG&A expenses			4,718	4,614	4,422	4,374	4,522	4,638	5,027	5,250
	YoY		0.5%	-1.8%	-3.6%	-3.4%	-4.2%	0.5%	13.7%	20.0%
	SG&A ratio		34.6%	35.0%	34.8%	33.8%	35.5%	37.5%	36.6%	35.5%
Operating profit			454	529	491	594	371	213	277	360
	YoY		141.4%	225.6%	137.4%	2.5%	-18.3%	-59.6%	-43.7%	-39.3%
	Operating profit margin		3.3%	4.0%	3.9%	4.6%	2.9%	1.7%	2.0%	2.4%

Source: Shared Research based on Watts materials
Note: Figures may differ from company data due to differences in rounding methods.
Note: In order to enable comparisons with the company’s results, cumulative results are calculated based on the sum of quarterly results of three-month periods from March to February of the following year.

(Reference) Comparable store sales

Source: Shared Research based on each company material
Note: YoY changes in comparable store sales are calculated based on comparisons with simple three-month averages from the previous financial year.

(Reference) OPM

Source: Shared Research based on each company’s data
Note: Accounting periods between the company and Can Do and Watts vary by one month. For example, OPM from March–May at Can Do and Watts has been displayed alongside OPM at the company from April–June.

(Reference) Average sales and service wages in Tokyo, Osaka, and Nagoya areas

(JPY)		Apr–Jun/20	Jul–Sep/20	Oct–Dec/20	Jan–Mar/21	Apr–Jun/21	Jul–Sep/21	Oct–Dec/21	Jan–Mar/22
Sales and services		1,040	1,054	1,064	1,053	1,059	1,067	1,079	1,074
	YoY	-0.3%	0.4%	-0.4%	-1.1%	1.9%	1.3%	1.4%	2.0%
All categories		1,078	1,086	1,093	1,090	1,091	1,099	1,109	1,104
	YoY	2.6%	2.3%	1.0%	0.8%	1.2%	1.2%	1.4%	1.3%

Source: Shared Research based on Recruit Jobs Co., Ltd. “Survey of Average Wages for Part-time Workers at Time of Recruitment”

Full-year FY03/22 results

Sales: JPY208.1bn (+3.7% YoY)
Operating profit: JPY20.9bn (-1.7% YoY)
Recurring profit: JPY21.3bn (-0.0% YoY)
Net income: JPY14.3bn (-2.9% YoY)

Initiatives

Under the theme of “pursuing attractiveness as a 100-yen store,” the company enacted the following measures.

Following its opening of a satellite office in Osaka in FY03/21 to strengthen product development systems and expand its customer base, the company launched a Tokyo satellite office with the goal of advancing the collection of information. The company has assigned staff from its merchandise division to this new satellite office.

Strengthened relationships with corporate partners that can lead to multiple-store projects and focused store openings in new areas.

Improved efficiency throughout the company through enhanced systems utilization. Introductions of successor self-checkout registers resumed following the company's July 2021 decision to utilize the successor-model. With introductions made at 127 stores in Q4 (January–March 2022), self-checkout registers are now present at 258 stores. For these stores, the company is implementing measures aimed at increasing their rate of usage, including by expanding the range of compatible payment cards.

Store openings and closures, store count, and comparable store sales at directly managed stores

Seria moved forward with store openings and closures while monitoring profitability. In FY03/22, the company opened 137 directly managed stores (141 in FY03/21) and closed 46 directly managed stores (32). Meanwhile, the company opened one franchised store (none) and closed three (one). As of end-FY03/22, Seria had 1,833 directly managed stores (1,742 at end-FY03/21) and 43 franchised stores (45), totaling 1,876 stores (1,787).

Comparable stores sales at directly managed stores fell 2.1% YoY. This was mainly in reaction to higher comparable store sales a year ago due to the lifting of a state of emergency offsetting a decline in sales caused by temporary store closures under the state of emergency. In addition, performance incurred unexpected impact from snowfall during the busy year-end holiday season in 2021 and the Valentine's Day season in 2022.

Performance

Sales came to JPY208.1bn (+3.7% YoY).

Sales at directly managed stores were JPY205.1bn (+3.8% YoY). Directly managed stores accounted for 98.6% of total sales (+0.2pp YoY). Franchised store sales were JPY2.1bn (-9.3% YoY), accounting for 1.0% of total sales (-0.1pp YoY).

By sales category, sales of sundries came to JPY205.0bn (+4.0% YoY), making up 98.5% of total sales (+0.3pp YoY). Sales of foods and snacks were JPY2.9bn (-17.2% YoY), accounting for 1.4% of total sales (-0.4pp YoY).

Gross profit was JPY90.3bn (+3.8% YoY), with GPM at 43.4% (+0.0pp YoY). The increase in overall GPM was due to a rise in the share of sales associated with sundries, which have a relatively high GPM.

SG&A expenses were JPY69.3bn (+5.5% YoY). The SG&A expense ratio rose 0.6pp YoY to 33.3%.

As a result, operating profit totaled JPY20.9bn (-1.7% YoY), recurring profit JPY21.3bn (-0.0% YoY), and net income JPY14.3bn (-2.9% YoY).

Full-year company forecast

		FY03/22			FY03/23
(JPYmn)		1H Act.	2H Act	FY Act.	1H Est.	2H Est.	FY Est.
Sales		103,386	104,698	208,084	105,500	111,300	216,800
	YoY	6.2%	1.4%	3.7%	2.0%	6.3%	4.2%
Cost of sales		58,610	59,211	117,821
Gross profit		44,775	45,487	90,262
	YoY	6.5%	1.2%	3.8%
	Gross profit margin	43.3%	43.4%	43.4%
SG&A expenses		34,255	35,089	69,344
	SG&A ratio	33.1%	33.5%	33.3%
Operating profit		10,520	10,398	20,918	8,600	8,900	17,500
	YoY	8.6%	-10.3%	-1.7%	-18.3%	-14.4%	-16.3%
	Operating profit margin	10.2%	9.9%	10.1%	8.2%	8.0%	8.1%
Recurring profit		10,636	10,711	21,347	8,600	8,900	17,500
	YoY	9.3%	-7.9%	0.0%	-19.1%	-16.9%	-18.0%
	Recurring profit margin	10.3%	10.2%	10.3%	8.2%	8.0%	8.1%
Net income		7,155	7,146	14,301	5,800	6,100	11,900
	YoY	8.4%	-12.0%	-2.9%	-18.9%	-14.6%	-16.8%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Company forecast for FY03/23

Seria plans to open 150 directly managed stores (137 in FY03/22), and close 40 (46). It does not plan on opening a franchised store (opened one in FY03/22) but will be closing one (three).

Medium-to long-term outlook

Medium- to long-term management strategy

Seria formulates three-year medium-term management plans on a rolling basis, updating them annually. However, it does not release numerical targets.

Double-digit annual sales growth to continue on increases in store count and comparable store sales

Shared Research thinks Seria can achieve annual profit growth of around 10% over the medium term given its store opening strategy and the fact that GPM has room to grow.

Company plans net increase of 100 to 150 directly managed stores per year

At end-FY03/21, Seria had 1,742 directly managed stores (net increase of 109 stores, +6.7% YoY). The company’s strategy is to open an average of 150–200 stores a year from FY03/21 onward. It plans to close about 50 stores a year. In FY03/22, the company plans to open 150 directly managed stores and close 38 for a net increase of 112.

Seria says it costs around JPY40mn to open a new store. Stores are mainly staffed by part-time employees. The company says what limits new store openings is viable locations, rather than money or people. Seria targets commercial areas with a population of 20,000 potential customers per store. With the four leading 100-yen store companies having a total of roughly 8,000 stores as of May 2021 (Daiso with about 3,600, Seria with about 1,800, Can Do with about 1,120, and Watts with about 1,330), Seria considers the market to be saturated. It says, however, that it can grow by taking market share away from competitors. Seria has achieved and maintained sales per store that outpace competitors by introducing a POS system (2004) and an ordering support system (2006), and by launching new Color the Days stores from FY03/09 (in FY03/21, Seria’s sales per store were JPY117mn, compared with JPY88mn at competitor Can Do in FY11/20 and JPY39mn at Watts in FY08/20.) As a result, since FY03/14 Seria has been receiving a growing number of requests primarily from shopping centers to open stores after its competitors’ leasing agreements come to an end.

As of May 2021, the company expects a yearly pace of 150 store openings. According to the company, upon the end of a lease with existing 100-yen stores belonging to a competitor, the shopping centers which rent the storefronts may renew the lease at a higher rental fee or switch to a different 100-yen store, such as Seria. However, in recent years many competitors have accepted the higher rental fees. As a result, there are many cases of 100-yen stores renewing their leases, slowing the pace of transfers between different 100-yen stores.

Sales per store, comparable store sales YoY

Seria’s sales per store (sales at directly managed stores divided by the average number of directly managed stores during the year) have grown by an average of 3.1% per year between FY03/09––when the ordering support system began having an effect––and FY03/20. During this period, YoY growth of comparable store sales averaged 1.8% per year.

Comparable store sales have mostly grown YoY because the number of repeat customers who regularly visit grows over time, and because Seria is gradually taking customers away from competitors due to better inventory management and a more competitive product lineup. The company said that it adapted to shifts in demand following the Tohoku Earthquake in March 2011 and consumption tax hike in April 2014 with no inventory shortfalls, and this helped boost customer growth subsequently. Shared Research attributes Seria’s competitive product lineup to a proprietary ordering support system that helps it manage inventories and pinpoint popular products, which competitors cannot emulate.

Comparable store sales growth (YoY)

		FY12/03	FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
Comparable-store sales YoY		5.0%	0.2%	3.8%	-0.1%	2.8%	3.1%	1.2%	-0.1%	-0.6%	3.7%
	Customer count YoY	4.8%	1.8%	2.6%	-0.2%	1.8%	1.6%	1.0%	0.0%	-0.1%	0.5%
	Customer spend YoY	0.1%	-1.6%	1.2%	0.1%	1.0%	1.4%	0.1%	-0.2%	-0.5%	3.2%

Source: Shared Research based on company data

Likely to see sales growth, higher GPM, and lower SG&A expense ratio

Shared Research estimates that Seria can achieve annual profit growth of around 10% on average. We think that sales could grow as the number of store openings and comparable store sales increase. Although there is limited room for improving GPM, a lower SG&A expense ratio could push up OPM. The company’s SG&A expenses are mostly fixed costs linked to store count, and the structure is such that the SG&A expense ratio decreases as comparable store sales increase.

Over the medium term, the company plans to take market share away from competitors. Shared Research thinks Seria will hold back on efforts to raise profitability in favor of driving an industry shakeout, by putting its resources into products and services. If this is the case, we believe Seria will maintain current profitability levels.

GPM has moderate upside

Increasing the percentage of directly owned stores and the ratio of sundries contributed to GPM growth over the past decade. According to a Shared Research estimate, the difference in GPM between directly owned stores and franchised stores, as well as the difference between sundries and food, is approximately 20%. As such, a one percent increase in the sales mix for either directly owned stores or sundries should account for 0.2pp increase in GPM.

In FY03/21, directly managed stores made up 98.4% of sales (from 94.3% in FY03/11), and sundries accounted for 98.2% of product sales (90.0% in FY03/11). Accordingly, the GPM rose to 43.3% from 41.0%. At end-FY03/21, sales compositions of directly managed stores and sundries were 98.4% and 98.2%, respectively, the company says GPM still has some room to grow, but will offer limited value.

Over half of SG&A expenses linked to store count; comparable store sales growth to lower SG&A-to-sales ratio

SG&A expenses are mostly personnel (41.9% of SG&A expenses in FY03/20) and rent (33.1%). Others include depreciation and amortization (5.9%), utilities (4.7%), and packing and transportation expenses (3.4%). The majority of personnel and rent expenses, depreciation and amortization costs, and utilities expenses are linked to store count. Shared Research therefore estimates that 60–70% of SG&A expenses fluctuate according to store numbers.

As expenses linked to store count remain fixed even as sales per store rise, higher sales per store push down the SG&A-to-sales ratio and lead to higher OPM. For instance, at an SG&A expense ratio of 33% (with 70% of SG&A expenses linked to store count), a 1% rise in sales at existing stores has a 0.23pp positive impact on OPM, assuming other factors are constant.

Seria expects comparable store sales to continue rising, lowering the SG&A expense ratio in the medium term.

On the other hand, changes in hourly wages for part-time workers cause personnel expenses to fluctuate. Shared Research calculated average hourly wage for the year for the chart below based on a study by Recruit Jobs Co., Ltd. “Survey of Average Wages for Part-time Workers at Time of Recruitment.” Since 2015, average hourly wages in Tokyo, Osaka, and Nagoya areas have continued to rise. Seria plans to enhance store operational efficiency and curtail an increase in personnel expenses at store level.

Average hourly wages in Tokyo, Osaka, and Nagoya areas (monthly averages)

(JPY)		2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
All categories		945	945	946	948	955	969	988	1,010	1,033	1,060	1,085
	YoY	-	0.0%	0.1%	0.2%	0.7%	1.4%	2.0%	2.3%	2.3%	2.6%	2.3%
Sales and services		931	933	938	935	937	948	970	994	1,021	1,049	1,055
	YoY	-	0.2%	0.6%	-0.3%	0.2%	1.2%	2.3%	2.5%	2.7%	2.7%	0.6%

Source: Shared Research based on Recruit Jobs Co., Ltd. “Survey of Average Wages for Part-time Workers at Time of Recruitment”

Other: Unenthusiastic about developing overseas over the medium term

Daiso, the leader in the 100-yen store sector, is aggressively expanding overseas. Of Daiso’s 5,892 stores (as of February 2021), 2,272 are located in 24 countries and regions outside Japan. By comparison, in FY03/21, overseas sales accounted for only 0.3% of Seria’s sales, or JPY654mn (-19.7% YoY), decreasing YoY. Seria is unenthusiastic about developing overseas over the medium term, because it sees ample opportunities for growth in the Japanese market.

Other: No intention to launch products other than 100-yen

The three other 100-yen store majors are expanding their lineups of higher priced products outside the 100-yen category, with 300-yen sections inside their 100-yen stores. They also operate 300-yen stores. As of May 2021, Seria intended to stick to 100-yen stores. The company said there was plenty of scope to grow as a sole 100-yen store operator. Further, the company said that consumers could shop at Seria with peace of mind in the knowledge that all products cost JPY100, which distinguishes it from its competitors.

Financial strategy

Seria’s balance sheet has a high proportion of cash and deposits. At end-FY03/21, cash and deposits totaled JPY53.6bn, making up 46% of total assets.

Seria mainly uses cash and deposit on store openings. According to the company, opening one store requires around JPY40mn. Opening 150 stores in line with the company’s FY03/22 forecast would thus necessitate cash expenditures of JPY6.0bn; 200 stores would require JPY8.0bn. The company keeps cash in reserve for store openings so that it can take advantage of sudden opportunities that may arise due to rapid changes in the operating environment.

Thinks acquisitions are not necessary to grow

Seria says it does not need to make acquisitions in order to grow, as it plans to take market share away from competitors. While the company recognizes that acquisitions could accelerate economies of scale, it doubts such activity would deliver technological or other benefits. Seria believes acquiring a competitor would be a drain on finances and operations, requiring Seria to remodel stores, retrain employees, revise product offerings, and close redundant stores.

Sales: JPY50.6bn (+8.1% YoY)
Gross profit: JPY22.0bn (+8.7% YoY), GPM: 43.6% (+0.2pp YoY)
SG&A expenses: JPY16.9bn (+7.9% YoY), SG&A expense ratio: 33.4% (-0.1pp YoY)
Operating profit: JPY5.2bn (+11.2% YoY), OPM: 10.2% (+0.3pp YoY)

Business

Business model

Main source of earnings: Running 100-yen stores throughout Japan (directly managed stores account for 98.4% of total sales)

Seria operates 100-yen stores (stores that sell products for a fixed price of JPY100 plus tax) throughout Japan. Most of its stores are directly managed, but the company also wholesales products to franchised stores and sells products to large customers. Product sales from directly managed stores are Seria’s main source of earnings. In FY03/21, directly managed stores accounted for 98.4％ of total sales (98.3% in FY03/20).

Sales by segment

			FY12/03	FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
Sales			93,634	98,246	109,393	118,336	130,983	145,328	159,114	170,482	181,476	200,682
	YoY		12.3%	4.9%	11.3%	8.2%	10.7%	11.0%	9.5%	7.1%	6.4%	10.6%
	Directly managed stores		89,072	93,930	105,221	114,178	127,237	141,694	155,546	167,140	178,342	197,508
		YoY	13.3%	5.5%	12.0%	8.5%	11.4%	11.4%	9.8%	7.5%	6.7%	10.7%
		% of sales	95.1%	95.6%	96.2%	96.5%	97.1%	97.5%	97.8%	98.0%	98.3%	98.4%
	Franchised stores		3,522	3,250	3,121	2,938	2,543	2,301	2,298	2,178	2,107	2,289
		YoY	-3.5%	-7.7%	-4.0%	-5.9%	-13.4%	-9.5%	-0.1%	-5.2%	-3.3%	8.6%
		% of sales	3.8%	3.3%	2.9%	2.5%	1.9%	1.6%	1.4%	1.3%	1.2%	1.1%
	Other		1,038	1,064	1,051	1,218	1,202	1,332	1,268	1,162	1,026	884
		YoY	-7.7%	2.5%	-1.2%	15.9%	-1.3%	10.8%	-4.8%	-8.4%	-11.7%	-13.8%
		% of sales	1.1%	1.1%	1.0%	1.0%	0.9%	0.9%	0.8%	0.7%	0.6%	0.4%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Products

20,000 products, mostly sundries

Seria sells some 20,000 products (a single Seria store stocks an average 15,000), comprising sundries (98.2% of sales in FY03/21) and foods and snacks (1.7%). Foods and snacks account for a lower percentage of the sales mix than at competitors. Each month, Seria changes out 400–600 product offerings, or around 6,000 each year. Popular items are nets for kitchen sink drains and dry-cell batteries. The company considers popular items those that are purchased 10 or 20 times per 10,000 customer visits. (Most products are purchased only four or five times per 10,000 visits.)

Main products

Category	Main products
Sundries	Makeup, accessories, sanitary supplies, health products, bath and toiletry items, cleaning supplies, laundry items, detergent, kitchen items, tableware, baking items, interior goods, home decorations, storage items, character goods, wrapping items, bags and pouches, toys, umbrellas and rainwear, automotive and bicycling accessories, clothing, paper, writing materials, stationery, office and store items, gardening items, fake flowers, sewing supplies, pet items, DIY supplies, handicraft items, general electronics items, digital items, seasonal items*
Foods and snacks	Candy, ice cream, jellies, Western sweets, Japanese sweets, chocolate, biscuits, baked sweets, chewing gum, gummies, rice crackers, shrimp crackers, beans, delicacies, drinks, coffee, Western tea, cocoa, Japanese tea, retort-packaged and precooked foods, canned goods, bottled items, processed foods, seasonings, noodles, rice-based foods, dried foods, flour-based foods, confectionery ingredients, seasonal items*

* Items sold seasonally for short periods, such as at mid-summer, Halloween, Christmas, New Years, and Valentine’s Day

Sales by product category

			FY12/03	FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
Sales			93,634	98,246	109,393	118,336	130,983	145,328	159,114	170,482	181,476	200,682
	YoY		12.3%	4.9%	11.3%	8.2%	10.7%	11.0%	9.5%	7.1%	6.4%	10.6%
	Sundries		86,682	92,981	104,628	113,793	126,656	141,299	155,274	166,840	178,038	197,024
		YoY	15.5%	7.3%	12.5%	8.8%	11.3%	11.6%	9.9%	7.4%	6.7%	10.7%
		% of sales	92.6%	94.6%	95.6%	96.2%	96.7%	97.2%	97.6%	97.9%	98.1%	98.2%
	Foods and snacks		6,779	5,096	4,633	4,436	4,241	3,934	3,757	3,563	3,360	3,487
		YoY	-17.1%	-24.8%	-9.1%	-4.3%	-4.4%	-7.2%	-4.5%	-5.2%	-5.7%	3.8%
		% of sales	7.2%	5.2%	4.2%	3.7%	3.2%	2.7%	2.4%	2.1%	1.9%	1.7%
	Other		171	169	131	105	84	94	82	78	76	170

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Sundries make up a high proportion of sales composition, trending upwards

Around half the products Seria offers are standard products offered by other retailers, and its procurement sources are similar to those of its competitors. At Seria, sundries account for a rising portion of the sales mix, while the ratio of foods and snacks is shrinking. Although foods and snacks are generally considered effective at attracting customers, their GPM is lower than for sundries. Seria is using its in-house developed ordering support system to shift the lineup from foods and snacks to sundries, while managing the impact of this move on store sales. Lowering the sales mix of food is helping the company succeed in boosting the overall GPM.

Private-brand products and Seria-exclusive products

Private-brand products account for around 10% of product offerings. Seria’s private-brand products tend to be simple and stylish basic goods especially attractive to women (similar to its store design), and are used for branding purposes rather than to boost profitability. Also, approximately 30% of the company’s products are Seria-exclusive products (products manufactured by other companies but sold only at Seria stores).

Procures products from 180 suppliers

Seria has 180 suppliers, the main ones being LEC, Inc. (TSE1: 7874), Echo Kinzoku Co., Ltd. (unlisted, supplies household sundries and DIY items to 100-yen stores), Sun Note Co., Ltd. (unlisted, sells paper products, files and writing instruments to 100-yen stores), and Kyowa Shiko Co., Ltd. (unlisted, makes and sells paper goods).

Most of the 1,787 stores are directly managed; Color the Days stores within shopping centers account for more than half

At end-FY03/20, Seria had 1,787 stores (1,742 directly managed, 45 franchised). Seria’s directly managed stores use rented space averaging 574sqm (174 tsubo) (calculated by Shared Research from the section in Seria’s FY03/20 securities report covering principal facilities). Sales per store were JPY117mn million yen (total sales of directly managed stores / average number of directly managed stores at beginning- and end-FY03/21).

The number of franchised stores continues to fall. Since 2006, Seria has been installing support systems at directly managed stores to manage ordering and inventories. The company is reducing the number of franchised stores, which do not use this system.

Number of stores

			FY12/03	FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
Total number of stores			1,067	1,104	1,173	1,248	1,323	1,424	1,506	1,592	1,679	1,787
	YoY		1.4%	3.5%	6.3%	6.4%	6.0%	7.6%	5.8%	5.7%	5.5%	6.4%
	Directly managed stores		970	1,015	1,090	1,174	1,265	1,369	1,455	1,543	1,633	1,742
		YoY	3.3%	4.6%	7.4%	7.7%	7.8%	8.2%	6.3%	6.0%	5.8%	6.7%
		% of total stores	90.9%	91.9%	92.9%	94.1%	95.6%	96.1%	96.6%	96.9%	97.3%	97.5%
	Franchised stores		97	89	83	74	58	55	51	49	46	45
		YoY	-14.2%	-8.2%	-6.7%	-10.8%	-21.6%	-5.2%	-7.3%	-3.9%	-6.1%	-2.2%
		% of total stores	9.1%	8.1%	7.1%	5.9%	4.4%	3.9%	3.4%	3.1%	2.7%	2.5%

Source: Shared Research based on company data

Store formats

Seria has stores both in shopping centers and as standalones. Stores in shopping centers are more effective at attracting customers. Seria was a latecomer in establishing permanent 100-yen stores compared to its competition. As the scope for opening new stores in shopping centers, which have a relatively high ability to attract customers, was limited in the early 2000s, the company focused on opening standalone stores. Then, as operating performance picked up in the late 2000s, shopping centers began to recognize Seria as outpacing competitors in sales per store and in ability to attract customers. As a result, from around FY03/14 the company has seen an increase in requests to open stores in shopping centers following the conclusion of competitor leases.

Seria’s customer count and sales per store have increased since 2010, due to the introduction of POS and ordering support systems. Seria began developing Color the Days stores in 2007 to attract customers of shopping centers. The company has made a full-fledged effort to increase these stores since FY03/09, and as of May 2021, Color the Days stores surpassed competitors in sales per store (see Competitors section).

Because shopping centers generally charge sales-based rent, among stores within the same business format, stores that bring in more customers are more attractive from the centers’ perspective. Shared Research understands that the shopping centers derive higher synergies from pairing with the leading retailer in a given sector. For example, if a leading company’s ability to attract customers is 10% greater than a second-ranked company, store openings by two leading companies would have 1.21x the ability to attract customers than store openings of two second-ranked companies. The synergy this brings would be even larger for tenants of the shopping center as a whole. Thus, more store-opening opportunities are given to top-ranked companies with higher customer numbers and sales, and less store-opening opportunities are given to second- and third-ranked companies. As noted above, commercial facility operators recognize Seria’s record of solid customer traffic since around FY03/14, and the company has been receiving more requests from shopping centers to open stores when competitor leases expire.

Number of stores by format

			FY12/03	FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
No. of directly managed stores			970	1,015	1,090	1,174	1,266	1,369	1,455	1,543	1,633	1,742
	YoY		3.3%	4.6%	7.4%	7.7%	7.8%	8.2%	6.3%	6.0%	5.8%	6.7%
	Color the Days		240	317	421	531	646	777	911	1,042	1,163	1,295
		YoY	43.7%	32.1%	32.8%	26.1%	21.7%	20.3%	17.2%	14.4%	11.6%	11.3%
		% of directly managed stores	24.7%	31.2%	38.6%	45.2%	51.0%	56.8%	62.6%	67.5%	71.2%	74.3%
	Other than Color the Days		730	698	669	643	619	592	544	501	470	447
		YoY	-5.4%	-4.4%	-4.2%	-3.9%	-3.7%	-4.4%	-8.1%	-7.9%	-6.2%	-4.9%
		% of directly managed stores	75.2%	68.7%	61.3%	54.7%	48.9%	43.2%	37.4%	32.5%	28.8%	25.7%

Source: Shared Research based on company data

Since FY03/09, Seria has been concentrating on switching to the Color the Days format, and as of May 2020 these were the core of the company’s new store openings. Meanwhile, the number of stores in other formats is in a downtrend due to closures. Seria aims to move away from the conventional image of 100-yen stores, using in-store decorations and product displays that appeal to women and increasing the proportion of products targeting women. The stores offer interior, gardening, gift wrapping, and craft ideas, along with food recipes.

Seria explains that its development and expansion of Color the Days stores stems from POS data indicators showing a change in the behavior of consumers visiting 100-yen stores: a shift from impulse buying to planned purchasing. In response, Seria has introduced an ordering support system to manage product lineups, pared down products handled compared with conventional 100-yen stores, and designed stores to make planned purchases easier.

Stores other than Color the Days (standalone)

Color the Days store