JINS Holdings 3046
ジンズホールディングス
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2021-12-03
2021-11-19
2021-10-08
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Iidabashi Grand Bloom 30F 2-10-2, Fujimi, Chiyoda-ku Tokyo, Japan 102-0071
Summary
Specializes in eyewear business centering on glasses. Offers competitive prices by applying the SPA (Specialty store retailer of Private label Apparel) model to eyewear business. While aiming for further increase in market share in prescription products, it actively seeks to create markets for nonprescription eyewear.
DistributorsSpecialty Retail
Key dates
2010-07-27
Coverage initiation
Executive summary
JINS Holdings’ core business revolves around selling eyewear, namely eyeglasses. A set of the company’s eyeglasses consists of the frame, lens, and an eye exam offered at three main price points: JPY5,000, JPY8,000, and JPY12,000. JINS Holdings’ biggest selling points are clarity in pricing and quick turnaround time from eye exam to eyeglasses delivery. The company says its market share by sales value is roughly 16%. The average pricing for a set of JINS eyeglasses at about JPY8,700 is below the market average of JPY21,000, which means the company’s market share by sales volume (number of pairs sold) exceeds its market share on a value-basis.
The differentiating factor for the company is its application of the SPA (Specialty store retailer of Private label Apparel) business model to the eyewear industry. Prior to the company’s entry, the industry standard was to purchase a third-party manufactured frame, combine it with a pair of lenses purchased from a lens manufacturer, then sell it to the customer. In contrast, JINS Holdings internally develops almost all frames and outsources manufacturing to factories in China, South Korea, and Vietnam. The company purchases frames that meet the needs of consumers (changing preferences) in proper quantities and sells them off until inventory runs out. This allows it to maintain high gross profit margins even at low price points. Occasionally, when demand for a product is considerably higher than expected, the company will place additional orders.
While vision correction may be the primary purpose for glasses, JINS Holdings is also actively developing the market for non-prescription glasses. For example, the company’s JINS Screen glasses block the blue light emitted from PCs and smartphones to reduce eye strain, and by bringing those who do not need vision correction into the eyewear market with products such as this, the company has effectively created a new market. Moreover, it remains focused on further opening the market by taking a different approach from operators in the traditional eyewear market by promoting glasses as a daily fashion item, and advancing glasses that help to prevent the progression of myopia, as well as glasses that can predict drowsiness and measure the ability to concentrate through the use of eyewear-mounted sensors.
The company also operates overseas. While it considers China to be the largest overseas market, it also has operations in the US, Taiwan, and Hong Kong. Overseas eyewear sales in FY08/21 were JPY12.7bn, but only accounted for 19.9% of overall sales, indicating substantial room for overseas growth moving forward.
Earnings trends
For FY08/21, the company reported full-year consolidated sales of JPY63.9bn (+6.0% YoY), operating profit of JPY5.0bn (-10.1% YoY), and net income of JPY3.3bn (+95.1% YoY). Sales improved mainly in the domestic eyewear business amid a reaction to voluntary restraints on business activity in FY08/20 following the nationwide declaration of a state of emergency. However, consumer spending had yet to recover, and sales increased only 6.0% YoY. Operating profit declined due to increased advertising expenses mainly on TV commercials for JINS 1DAY contact lenses. Net income increased, benefiting from the tax impact associated with the liquidation of a subsidiary.
The company's forecast for FY08/22 is sales of JPY70.7bn (+10.6% YoY), operating profit of JPY6.3bn (+24.8% YoY), net income of JPY3.3bn (+0.2% YoY), and an annual dividend of JPY45.0 per share, representing a dividend payout ratio of 31.8% on forecast earnings. The company plans to improve the convenience and functionality of its services as well as introducing new services to encourage customers in their 20s and 30s, the company's main target group, to purchase via the e-commerce site and to use the company app. The company will also focus on the development of new products such as eyeglasses-type medical equipment that uses violet light to impede the onset of nearsightedness. In terms of profitability, the company is looking to implement digital transformation (DX) measures in areas such as store operations, product management at the head office, and performance management, and to reduce costs through optimization and efficiency.
Strengths and weaknesses
Shared Research thinks JINS Holdings’ strengths are 1) price competitiveness under the SPA business model, 2) creative strength in the non-prescription eyeglasses market, and 3) a corporate culture focused on continually taking on new challenges. Its weaknesses are 1) inability to capture the volume zone in the eyeglasses market, 2) inventory control, and 3) global development. (For further details, see “Strengths and weaknesses” section.)
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods.
Recent updates
Monthly sales data for November 2021
On December 3, 2021, JINS Holdings Inc. announced monthly sales data for November 2021.
Monthly trends (JINS)
Monthly sales data for October 2021
JINS Holdings Inc. announced monthly sales data for October 2021.
Monthly trends (JINS)
Trends and outlook
Quarterly trends and results
Note: Taiwanese subsidiary was added to consolidated results in Q1 FY08/19. Q3 FY08/20 results include a charge-off of JPY1.2bn for fixed costs under extraordinary losses, these costs having been incurred during the period when the company’s stores were temporarily shut down as a result of the COVID-19 pandemic.
Note: The company exited the Accessories business at end-FY08/20.
Note: Q3 FY08/20 results include a charge-off of roughly JPY1.2bn to cover fixed costs, booking the charge as extraordinary losses as these costs had been incurred during the period when the company’s stores were temporarily closed as a result of the COVID-19 pandemic. The costs were broken down as follows: personnel costs of approximately JPY750mn, depreciation of approximately JPY110mn, and rent expenses of roughly JPY230mn.
Full-year FY08/21 results (out October 8, 2021)
Overview
*Net income attributable to owners of the parent
Sales improved 6.0% YoY due to an increase in the store count, higher e-commerce sales, and a rebound after the voluntary curtailing of operations in FY08/20 in the domestic eyewear business. Sales also rose 3.2% versus FY08/19.
Operating profit came to JPY5.0bn (-10.1% YoY), with OPM of 7.9% (-1.4pp YoY). Gross profit increased mainly due to strong sales of products with a high GPM, but operating profit declined due to increased advertising spending and higher personnel costs associated with store expansion.
Gross profit was JPY50.4bn (+8.0% YoY), and GPM was 78.9% (+1.4pp YoY). In Japan, sales of high value-added products with a high GPM performed well, including Ultra Light Airframe, the top-of-the-line model from the Airframe series that sells for JPY12,000. GPM has been on the rise in recent years with improvement in the product mix. New customers tend to purchase eyeglasses for JPY5,000, but repeat customers often buy high value-added items for JPY12,000; the increase of high-end purchases by such repeat customers is one reason for the rise in GPM.
SG&A expenses were JPY45.4bn (+10.4% YoY), and the SG&A ratio was 71.0% (+2.8pp YoY). In addition to high personnel and rent costs due to store expansion, advertising expenses increased with the broadcast of TV commercials for contact lenses. R&D expenses also increased due to a project to develop eyeglasses-type medical equipment that uses violet light to control the progress of myopia.
Net income attributable to owners of the parent improved YoY. In FY08/20, the company posted a JPY662mn loss related to its exit from the accessories business and a JPY1.2bn loss related to temporary store closings mainly in the domestic eyewear business, so total losses booked in FY08/21 were down YoY.
Progress versus full-year company forecast
The company announced a downward revision of its full-year company forecast at the announcement of the financial results for Q3 FY08/21. Progress toward the updated full-year company forecast was 98.3% for sales, 88.6% for operating profit, 89.6% for recurring profit, and 95.4% for net income.
After the downward revision announcement, the number of confirmed COVID-19 infections grew more than expected, and comparable store sales were down 25.8% YoY in June 2021, 10.4% YoY in July, and 17.0% YoY in August, and overall sales ultimately fell short of the company's revised full-year forecast. Sales tend to be highest in Q4 (June–August), as demand for both eyeglasses and sunglasses rises during summer vacation. The Q4 slowdown therefore affected the company's ability to achieve the full-year forecast. JINS Holdings says that updating of its sunglasses lineup, enhancement of advertising activities, and the launch of new products did not go as well as initially planned. However, it continued to open new stores despite the difficult environment and comparable store sales rose 2.3% for the full year.
The company says its share of the domestic eyeglasses market in 2020 was 16.1% (+1.7pp YoY). While its share has grown by about 1pp each fiscal year, the FY08/21 rise was the largest since a 2.5pp rise in 2013, when sales of JINS PC glasses surged.
Domestic eyewear
The external environment remained difficult with the decrease in international visitors due to the pandemic and customers' tendency to avoid busy shopping districts, especially in city centers, in line with the government's declaration of a state of emergency. Amid such an environment, sales improved on the success of a free trial campaign for JINS 1DAY contact lenses, supported by advertising measures that included TV commercials, and a favorable reception for the JINS Pokémon Model line of products, which feature Pokémon designs unique to JINS.
Comparable store sales (Customer traffic and average customer spend)
Comparable store sales rose 2.4% YoY, with customer traffic up 1.4% and average customer spend up 0.9%. Although there was a rebound YoY after up to 360 stores were temporarily closed in April and May 2020, growth was sluggish due to a slump in comparable store sales as the number of confirmed COVID-19 infections grew more than expected in Q4 FY08/21.
Customer traffic recovered to levels seen in FY08/19, prior to the pandemic. With an eye on future growth, the company is enhancing measures to increase customer traffic and the number of items sold. Such measures include working to shorten the replacement cycle of glasses and increase customer traffic by targeting children and those over age 45, to supplement its main customer base of younger adults.
Average customer spend continued its upward trend as the average price per pair of eyeglasses rose to JPY8,700 (versus JPY8,250 in FY08/20). The sales weighting for eyeglasses in FY08/21 was 29% at the JPY5,000 price point (versus 35% in FY08/20), 53% at the JPY8,000 price point (versus 49%), and 18% at the JPY12,000 price point (versus 16%). The price mix is improving as ratios of purchases at the upper price points increases, especially at the JPY12,000 price point. However, it is problematic that the ratio of sales at the JPY5,000 price point, which is used to attract new customers, has fallen below 30%, and the company believes it needs to improve the quality of its JPY5,000 products.
Store openings and closings
The company opened 27 stores and closed eight, for a total of 434 stores in Japan, which was essentially in line with the initial plan. While opening stores mostly in shopping centers, it closed some stores in city centers where rents are high and others that had seen a major drop in inbound demand. 60% of the company's stores are in shopping centers, 30% in train and subway station buildings, and 10% in the suburbs. In terms of sales trends by location, stores in shopping centers have recovered to pre-pandemic levels, and suburban roadside stores have even achieved roughly 20% growth from pre-pandemic levels, but stores in city centers are still seeing sales dwindle. Against this backdrop, the company plans to open even more suburban stores.
Contact lenses
Sales of contact lenses were JPY972mn (+181.5% YoY). This was achieved thanks to the popularity of the free trial-use campaign for JINS 1DAY contact lenses, along with advertising measures including TV commercials. Half of the new customers brought in by the campaign are now making regular purchases, so the company expects sales to continue rising. It injected some JPY600mn into promotions, but still secured profit.
99% of the company's contact lens sales occur online, and only 22 stores sell contact lenses. To sell contact lenses over the counter, qualified personnel have to be present, but the company does not have an adequate number of such personnel, and the time required to serve customers means that adding personnel would not be profitable, since the profit margin on contact lenses is so narrow. For these reasons, the company is conducting rollout to brick-and-mortar stores on a small scale and instead uses TV commercials to drive customers to its e-commerce site, with the head office handling shipping and other services.
Many younger adults, the company's main target group, use both eyeglasses and contact lenses. By capturing contact lens demand and encouraging those new customers to purchase eyeglasses as well, the company aims to increase sales in both product lines.
E-commerce
Domestic e-commerce sales grew to JPY3.4bn (+35.3% YoY). Customer traffic grew 66.1% YoY, but the average customer spend fell 18.6% YoY. Customer traffic increased because of the contact lens campaign, but contact lenses have a lower unit price than eyeglasses, so the average customer spend decreased as the ratio of contact lenses rose. The campaign helped the company add 2.2mn app members, for a total of JPY8.7mn, meaning JINS now has a contact point with more than 10% of the roughly 80mn people who wear glasses, and it plans to leverage that in its strategies hereafter.
Company approach on revenue structure
JINS Holdings is targeting GPM of 75% (in recent years, it has been 74–77%), SG&A ratio of 55% (recently 64–68%), and OPM of 20% (recently 8–12%). Factors behind the deviation from its targets include sales per store growing more slowly than expected and the increasingly heavy burden of fixed costs. Rather than focusing on reducing costs, the company plans to increase sales per store from about JPY110mn currently to JPY150mn and strengthen e-commerce sales to bolster sales company-wide, reducing the SG&A ratio to 55%.
Gross profit margin
GPM has been trending upward with increased sales of high margin, high value-added products; the company does not, however, expect GPM to exceed the current level. The company’s JPY5,000 eyeglasses are priced to attract new customers, but in recent years sales at that price point have fallen, and the company hasn't acquired enough first-time buyers. In light of this, the company is considering changing models and expanding its lineup of JPY5,000 eyeglasses to secure customer traffic. The company is also willing to lower its GPM. It recognizes that its strength lies in selling quality products at low prices and will focus on raising the appeal of its JPY5,000 products.
SG&A ratio
A high SG&A ratio is another challenge the company is facing, although it hopes to lower the ratio by opening more suburban roadside stores, which tend to have lower rent than stores in city centers and shorter business hours that allow savings on personnel costs.
In addition, there is still room for efficiency improvement in backroom operations at stores, such as processing and assembling eyeglasses. The current utilization rate of the processing machines in stores is about 20%, but the company aims to improve the rate for machines and personnel alike by having eyeglasses customers have ordered online processed at stores during what would otherwise be downtime. The centralized processing center for online orders has a capacity equivalent to JPY2.4bn worth of eyeglasses per year, so any excess can be processed at stores for shipment. In FY08/21, online orders were JPY3.0bn, so stores handled the excess JPY600mn in orders.
Overseas eyewear
Sales and profit improved YoY, driven by favorable performance in China.
China: 170 stores (15 opened, seven closed)
The success of the Chinese government's measures to mitigate the spread of COVID-19 led to some YoY rebound in business, resulting in higher sales. OPM improved to 5.1% (from 0.6% in FY08/20). A lower burden in fixed costs accompanied the increase in sales, and the Chinese government's support measures included social insurance premium exemptions.
The company closed seven stores, resulting in a higher closure rate than in Japan. Sales per store in China tend to be less than JPY40mn, which is lower than other regions (JPY110mn in Japan and JPY97mn in Taiwan), and there is a heavy burden of fixed costs, making it difficult to secure profitability.
Taiwan: 38 stores (nine opened, one closed)
Although the Taiwan business was performing well until Q3, the number of COVID-19 cases increased rapidly from May 2021 onward, causing the business to fall into the red in Q4, which in turn meant that operating profit declined YoY, and OPM deteriorated to 9.4% (from 18.8% in FY08/20).
Hong Kong: Six stores (none opened, none closed)
Demonstrations brought on by political unrest subsided and earnings entered a recovery trend. Q4 moved into the black, and operating loss narrowed for the full year.
US: Six stores (one opened, none closed)
Operating loss widened despite higher sales. Due to the pandemic, the company had to operate under various restrictions, including restrictions on admission to stores, as there was a lengthy lockdown in California, where the company operates.
Under these circumstances, JINS focused on e-commerce sales of eyeglasses, and online sales tripled YoY. As a result, brick-and-mortar and online sales each accounted for 50% of the sales composition. In the US, customers purchase eyeglasses based on prescriptions from board certified optometrists, which eliminates the need for in-store eye exams and facilitates online purchasing.
Full-year company forecast for FY08/22
Note: Figures may differ from company materials due to differences in rounding methods.
FY08/22 company forecast figures
*Net income attributable to owners of the parent
In regard to the COVID-19 pandemic, JINS Holdings has assumed the number of infections will increase again, the vaccination rate will progress, and antiviral drugs will be widely available in March 2022.
The company expects operating profit of JPY1.1bn in 1H and JPY5.2bn in 2H. It anticipates operating loss in Q1 FY08/22 due to its plan to open 14 new stores in Japan (including five suburban roadside stores), accompanied by increased advertising spending. It expects COVID-19 to be largely contained from Q2 onward, leading to improved performance and expanded profit especially in 2H.
The company plans to improve the convenience and functionality of its e-commerce site and app, and introduce new services to encourage customers in their 20s and 30s, the company's main target group, to purchase via the site and use the app. The company will also focus on the development of new products such as eyeglasses-type medical equipment that uses violet light to impede the onset of nearsightedness. In terms of profitability, the company is looking to implement digital transformation (DX) measures in areas such as store operations, product management at the head office, and performance management, and to reduce costs through optimization and efficiency.
Domestic eyewear
JINS Holdings expects sales growth due to improvement in comparable store sales and new stores openings. Although the lingering impact of the pandemic will weigh on 1H sales, store openings and recovery at existing stores in 2H should lead to YoY sales growth for the full year. The forecast does not factor in so-called revenge consumption (where consumers purchase more freely after escaping the restrictions of the pandemic) or recovery in inbound demand.
Comparable store sales growth
The company expects comparable store sales for domestic eyewear to be down 6.5% YoY in 1H and up 12.6% YoY in 2H, for full-year growth of 3.0%. However, compared to FY08/20 before COVID-19 became widespread, it expects comparable store sales to be down 3.9% in 1H and up just 0.2% in 2H, with full-year FY08/22 ultimately falling short of full-year FY08/20.
The company expects the average customer spend to decline, but plans to sell a larger number of eyeglasses. Since it intends to enhance sales efforts for JPY5,000 eyeglasses to match the timing of recovery in consumer purchasing as the pandemic subsides, it expects the average price per pair of eyeglasses to fall to JPY8,650 (-JPY50 YoY), but aims to sell some 6.24mn pairs (+9.3% YoY).
E-commerce sales growth
JINS Holdings expects e-commerce sales to grow 24.7% YoY to JPY4.2bn, but this will still fall short of the 35.3% growth seen in FY08/21. It believes e-commerce sales will continue to grow for some time, but that the pace of growth will slow.
Store openings and closings
Plans call for 37 new store openings (including 21 suburban roadside stores) and five closings. The company targets more store openings in residential areas. Some of the suburban roadside stores will take time to increase customer traffic and achieve profitability, but the company will enhance its sales promotions with the aim of improving profitability as early as possible. Suburban roadside store profitability is improving and tends to reach the all-store average within two years of opening, and the recurring profit margin tends to exceed theall-store average in three years or so. Suburban roadside stores tend to become integral to the community as time passes, leading to growth in customer traffic.
Profitability
The company projects GPM of 78.1% (-0.8pp YoY). It expects the ratio of eyeglasses sold at the low-margin JPY5,000 price point to increase, and new accounting standards will lead to an increase of approximately JPY200mn in the cost of goods sold.
The SG&A ratio looks set to fall to 69.2% (-1.8pp YoY). Sales growth and an increase in the ratio of roadside stores should result in 0.3pp and 0.7pp declines in the personnel cost ratio and rent ratio respectively. The rent-to-sales ratio is about 14% for stores located in shopping centers, but no more than 10% for suburban roadside stores. The personnel cost ratio is also lower because of shorter business hours at roadside stores.
Overseas eyewear
The company aims to improve customer experience, for example by upgrading the e-commerce site, and is looking to boost profitability by enhancing the ability of brick-and-mortar stores to attract customers and by opening new stores.
China
With a net increase of 10 stores (versus eight in FY08/21), the store count will be 180 at end-FY08/22.
One of the reasons sales growth has been sluggish in China is that many dealers offer low-priced eyewear there, so the company cannot differentiate itself on the basis of price as it does in Japan. Instead, it plans to differentiate itself by supplying made-in-Japan products. To this end, a new Japanese factory built by an affiliated Chinese plant will manufacture eyeglasses domestically and export them to China.
Aiming to grow sales, the company launched its e-commerce site in May 2021 to collect customer data including visit frequency and purchase history. It also operates stores on China’s largest online shopping sites, Tmall.com and JD.com, but securing customer traffic on its own e-commerce site is a looming challenge.
Taiwan
With a net increase of 10 stores (versus eight in FY08/21), the store count will be 48 at end-FY08/22.
Hong Kong
With a net increase of one store (no increase in FY08/21), the store count will be seven at end-FY08/22. The impact of political demonstrations has subsided, and government stimulus measures have triggered recovery from the slump caused by the COVID-19 pandemic, so JINS Holdings is targeting its first profit in Hong Kong in FY08/22.
US
With no new store openings (versus two in FY08/21), the store count will be six at end-FY08/22. The company expects e-commerce sales to grow 156% YoY, while sales at brick-and-mortar stores grow 31%. Customers can try on eyeglasses and see the products up close at physical stores, so the company will retain them for their advertising function, while referring customers from physical stores to its online store.
Although it expects to post an operating loss again in FY08/22, the company aims to move into the black in FY08/23 by enhancing e-commerce sales and curbing head office costs and other overhead.
FY08/22 initiatives
In the Japanese eyewear market, the average price per pair of eyeglasses has been trending downward, but the number of people who need eyeglasses is growing as the myopia rate among young people rises. JINS Holdings seeks to capture demand for low-priced eyewear among young people and recognizes that there is ample room to increase domestic eyewear sales. It plans to expand earnings by enhancing its e-commerce efforts, promoting digitalization, and reducing costs. In addition, it will employ advanced initiatives such as JINS MEME and continue R&D for future growth.
Improving store utilization rates
There is still room for efficiency improvement in backroom operations at stores, such as processing and assembling eyeglasses. The current utilization rate of the processing machines in stores is only about 20%.
The number of online orders has been growing in recent years, to the extent that orders have now exceeded the capacity of the centralized processing center. The company is having those excess orders processed at stores during what would otherwise be downtime, thus improving the utilization rate of both processing machines and personnel. For this reason, the company has no plans to expand the centralized processing center for at least the next three years, despite expecting the number of online orders to continue growing.
Capital and business tie-up with FITTINGBOX S.A.
In June 2021, the company announced a capital and business alliance with France's FITTINGBOX S.A., the digital eyewear company. The companies will work together to promote the digital transformation (DX) of the eyewear purchasing experience and to improve customer convenience by leveraging digital technologies. In this vein, the company is improving the way glasses are sold online with the JINS brand e-commerce site, where customers can access services like a 3D virtual try-on or a Lens Simulator to check their vision while wearing optional lenses. It plans to expand its e-commerce business by introducing the system in China and the US, where e-commerce solutions are expanding.
JINS MEME
In October 2021, the company launched a new model of JINS MEME, a wearable device that integrates a sensor and battery in the nosepiece of a pair of eyeglasses. It links to a smartphone app via Bluetooth, allowing the app to analyze data collected by the sensor to check a user's health and mental state.
The original model came out in November 2015, but sales were sluggish due to its relatively high price (JPY27,300), a small number of frame designs (just three), poor wearing comfort, and limited usage scenarios. The new model of JINS MEME is more reasonably priced at JPY19,800 and revised specifications allow it to be attached to a variety of frames. In addition to allowing users to check information based on complex analysis of posture, time seated continuously, number of steps taken, and other data, the new model allows users to track levels of tension, emotional stability, drowsiness, and concentration based on blink intervals and other factors.
Using research results from JINS MEME, the company established Think Lab workspaces, developed based on the concept of "the best place in the world to concentrate," in Shiodome (Minato Ward, Tokyo) and Ginza (Chuo Ward, Tokyo). It is currently verifying uses of JINS MEME through a series of experimental efforts, intending to develop derivative businesses.
Results versus initial estimates
Note: Figures may differ from company materials due to differences in rounding methods.
Medium-term outlook
The company is not one to put out medium-term business plans outlining specific numerical targets for sales, operating profit margins or ROE. In September 2014, JINS Holdings launched its new brand vision, Magnify Life, and since then has focused on developing eyewear products that would bring new value and managing its operations with the aim of creating a new eyewear market.
Shared Research believes medium- to long-term growth drivers for the company are likely to include: 1) an improved market share in the domestic eyeglasses market; 2) an expansion in the overseas business, largely on the opening of new stores; and 3) the creation of a new eyewear market in the non-prescription field.
Improving the company’s market share in the domestic eyeglasses market
While it has not disclosed a specific timeline, the company has set a target for 500 eyewear stores in Japan. As of end-FY08/21, the company had 434 stores in Japan. Factoring in domestic market and demographic trends, as well as trends at its competitors, management believes it will be able to expand its sales value-based domestic market share to about 20% (JINS Holdings’ estimated domestic market share in FY08/21 was 16%).
Locations for store openings will likely continue to be in shopping centers and train/subway station buildings, largely due to the overlap between the company’s customers and customers visiting these locations. However, starting in FY08/21, the company has also turned its attention to suburban roadside stores, given changes in consumer behavior since the COVID-19 outbreak began. It believes it can eventually expand its store network to 6–700 locations by increasing the range of candidate locations.