Village Vanguard Co., Ltd. · TSE:2769

Village Vanguard — Q2 FY2014 Earnings Presentation

47 slides from Village Vanguard's earnings presentation, 2014

1. Slide 1: FY2014 2nd Quarter Financial Results and Forecast Report

   FY2014* 2nd Quarter Financial Results and Forecast Report *Fiscal year ending May 31, 2014

2. Slide 2: Note

   Note The current plans, forecasts, strategies, etc. described herein are based on information available at the time the document was published and assumptions relating to uncertain factors that may affect results. Actual results in the future may differ from the projections made due to various uncer

3. Slide 3: Income statement (Consolidated)

   Income statement (Consolidated) FY2012 ending May 31 (results) FY2013 ending May 31 (results) FY2014 ending May 31 (results /forecast) (Unit: Millions of yen) Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 results Q3 (f) Q4 (f) results Sales 10,158 20,163 32,442 42,942 10,167 20,399 32,903 43,765 10,238 20,240 32,38

4. Slide 4: Balance Sheet (Consolidated)

   Balance Sheet (Consolidated) (Unit: Millions of yen) FY2012 ending May 31 (results) FY2013 ending May 31 (results) FY2014 ending May 31 (results /forecast) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 results Q2 results Q3 (f) Q4 (f) Current Assets 23,825 25,002 24,695 24,914 25,387 27,989 27,149 21,775 23,286 24,630

5. Slide 5: Cash Flow Statement (Consolidated)

   Cash Flow Statement (Consolidated) (Unit: Millions of yen) FY2012 ending May 31 (results) FY2013 ending May 31 (results) FY2014 ending May 31 (results /forecast) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 results Q2 results Q3 (f) Q4 (f) Cash flow from operating △1,053 △773 △876 558 △520 △616 △1,198 18 △2,517 △3,26

6. Slide 6: Village Vanguard Company Profile (single entity)

   Village Vanguard Company Profile (single entity) © Village Vanguard corporation, All rights reserved. P.5

7. Slide 7: Company Profile

   Company Profile Stand-alone store Mail-based store ■ Village Vanguard ■Diner Based on the concept “exciting book store,” Village Vanguard offers a fusion of Authentic hamburger shop based on the diverse products including books, magazines and CDs from a unique perspective image of an American diner

8. Slide 8: Product Merchandising (1)

   Product Merchandising (1) In presenting our products, unique displays are used throughout the store to make a creative space that is Example: a corner themed on “Harajuku Girls” fun for customers Once upon a time Example: a corner themed on “World Travel” there was a single long zipper.. Browse scen

9. Slide 9: Product Merchandising (2)

   Product Merchandising (2) © Village Vanguard corporation, All rights reserved. P.8

10. Slide 10: Product Merchandising (3)

    Product Merchandising (3) © Village Vanguard corporation, All rights reserved. P.9

11. Slide 11: Product Selection

    Product Selection At each store, we study the expressions of our customers and then select the product lines. Product popularity varies depending on the store. Stars indicate products Freaks Shibuya Parco Store new style Aeon Mall Shibuya Udagawa Store recommended by the (Tokyo, in-store shop) (Toky

12. Slide 12: Sales Strategy

    Sales Strategy Sales and purchasing decisions are delegated to stores Marketing ■Pursue customer needs at each store Store managers have considerable discretion Purchasing ■Directly reflect customers’ needs ■Unique challenge to discover new needs Head Office Displays Authority ■Provide a creative sp

13. Slide 13: Employment

    Employment Customer Part-time Full-time Employee Employee Employ person understanding the company deeply Give Part-time the ordering anything of the product Practical OJT is carried out a long period © Village Vanguard corporation, All rights reserved. P.12

14. Slide 14: Store Network (single entity)

    Store Network (single entity) Store data as of Nov. 30, 2013 *Figures in parentheses indicate the number of franchise stores Stores in Japan: 400 *Figures in red indicate an increase/decrease from the previous term Tohoku area Directly managed Hokkaido area DM: 22 sotre 387 DM: 16 Aomori VV 329 FC:

15. Slide 15: Results for Village Vanguard Corporation (single entity)

    Results for Village Vanguard Corporation (single entity) © Village Vanguard corporation, All rights reserved. P.14

16. Slide 16: Income statement (single entity)

    ＰＬ FY2012 ending May 31 (results) FY2013 ending May 31 (results) FY2014 ending May 31（単位：百万円） (results /forecast) (Unit: Millions of yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 results Q2 results Q3 (f) Q4 (f) Sales 9,305 18,169 29,423 38,932 8,949 17,490 28,472 37,758 8,603 16,383 26,725 35,850 Compared to for

17. Slide 17: Balance Sheet (Consolidated)

    Balance Sheet(Consolidated) (Unit:Millions of yen) FY2012 ending May31(results) FY2013 ending May31(results) FY2014 ending May31(results/forecast) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1results Q2results Q3 (f) Q4 (f) Current Assets 21,972 22,536 22,307 21,854 22,852 25,229 24,387 19,234 19,902 20,750 20,509 20,

18. Slide 18: Cash Flow Statement (Consolidated)

    Cash Flow Statement (Consolidated) （ Unit: Millions of yen ） FY2012 ending May 31 (results) FY2013 ending May 31 (results) FY2014 ending May 31 (results /forecast) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 results Q2 results Q3 (f) Q4 (f) Cash flow from operating △950 △1,061 △1,132 102 △159 △685 △1,060 △101 △1,910

19. Slide 19: Components of Sales by Product Genre

    Components of Sales by Product Genre (Unit: Millions of yen) FY2012 ending May 31 (results) FY2013 ending May 31 (results) FY2014 ending May 31 (results /forecast) Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 results Q3 (f) Q4 (f) results SPICE 7,361 14,360 23,576 31,260 7,217 14,175 23,380 31,098 7,078 13,575 － －

20. Slide 20: Analysis of Operating Profit

    Analysis of Operating Profit (Unit: Millions of yen) Decrease in operating profit due 600 to factors other than store management: -292 million yen <Main factor:> 400 Shareholder special benefit expenses: -105 million yen Decrease due to other factors: - 283 million yen 604 Increase in operating <Mai

21. Slide 21: Plans for Opening Stores

    Plans for Opening Stores FY2011 FY2012 FY2013 FY2014 ending May 31 (results /forecast) ending ending ending May 31 May 31 May 31 (results) (results) (results) Q1 Q2 Q3 Q4 通期 Initial Initial Initial Initial Initial FY FY FY forecast results forecast results forecast forecast forecast forecast forecas

22. Slide 22: Year-on-year Sales at Existing Stores

    Year-on-year Sales at Existing Stores （％） Year-on-year Sales at existing stores Policy of “prioritizing strong-selling products in terms of selling order and Introduction of special area manager position” and closely relying on data led system (Mar. 2010) led to maintaining to emphasizing strong-sel

23. Slide 23: Theme 1: Towards Sales Recovery

    Theme 1 Towards Sales Recovery Use stand-alone stores in Tokyo as model and extend know-how to other stores Purchasing network High sales stand-alone unique to each store stores in Tokyo Delegation of purchasing decisions to staff Actively introduce new products Product turnover and renovations lead

24. Slide 24: Inventory Control

    Theme 2 Inventory Control FY2012 FY2012 FY2012 FY2013 FY2013 FY2013 FY2013 FY2014 FY2014 (Unit: Millions of yen) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Cash flow from operating activities -1,061 -1,132 102 -159 -685 -1,060 -101 -1,910 -2,678 Net income before tax 1,098 2,390 2,696 522 707 1,764 -2,743 176 -696

25. Slide 25: Titicaca Company Profile (single entity)

    Titicaca Company Profile (single entity)

26. Slide 26: Company Profile (Titicaca)

    Company Profile (Titicaca)  Company name Titicaca Corporation  Shareholder Village Vanguard Corporation (100%)  Business Import and sales of ethnic fashions and daily goods  Head office 2-2-3 Shin-Yokohama, Kohoku-ku, Yokohama, Kanagawa, Japan  President Hitoshi Kinami  Established July 2005 (

27. Slide 27: Store Openings

    Store Openings Store data as of Nov. 30, 2013 Figures in red indicate that there was an increase/decrease from Aug. 31, 2013. Stores in Japan: 119 Directly managed: 118 Hokkaido area DM: 5 Franchised: 1 Tohoku area Aomori Hokkaido 2 DM: 8 5 Akita １ Iwate 1 Hokuriku area Yamagata Miyagi DM: 7 2 2 2 N

28. Slide 28: Store Exterior Appearance

    Store Exterior Appearance Store Exterior Appearance Here, we introduce the Titicaca stores newly opened in this term. Aeon Mall Inagawa Opened Oct. 4 Aeon Mall Naratomigaoka Aeon Mall Makuharishintoshin Opened Nov. 22 Opened Dec. 17 P.25

29. Slide 29: Store Interior Appearance

    Store Interior Appearance P.26

30. Slide 30: 2nd Quarter FY2014 Financial Results Report (Titicaca, single entity)

    2nd Quarter FY2014* Financial Results Report (Titicaca, single entity) *Fiscal year ending March 31, 2014 P.27

31. Slide 31: Main Results Figures and Management Indicators

    Main Results Figures and Management Indicators 売上高 Sales 期末店舗数 No. of stores at end of term （Millions of yen） 131 （Millions of yen） 経常利益 Recurring profit 売上高経常利益率 Recurring profit margin 8,000 140 800 14.8% 16.0% (forecasted) 130 7,000 700 14.0% 120 12.2% 6,000 106 110 600 12.0% 7,227 8.6% 5,000 100

32. Slide 32: Results

    Results Income Compared to forecast Sales 92.8% Recurring profit 68.7% Existing stores 97.2％（-77 million yen） Wholesale/Franchise 97.4％（-2 million yen） statement New stores 93.8％ (-57 million yen） Year-on-year No. of stores: Net increase of 25 stores FY2013 Q2 year-on-year sales at all stores 125.9％

33. Slide 33: Results

    Results Selling, general and administrative expenses and budget comparison Year-on-year operating profit ・Year-on-year operating profit ratio fell from 18.5% in the ・Compared to FY2014 Q2 forecast: 99.7％ second quarter of FY2013 to 8.9%in the current term. （monetary difference: -3 million yen） ・Rati

34. Slide 34: Results

    Results Year-on-year sales of existing stores Year-on-year FY2014 Q2 97.0％ *A different color is used for each fiscal year. 150% 140% Year-on-year results over 100% After earthquake, year- for 49 consecutive on-year results over 100% 130% for 24 consecutive months months from Feb. 2008 to Feb. 2011

35. Slide 35: Growth Strategy

    Growth Strategy Issues in achieving Titicaca growth ①Implementing production/delivery date control system ②Train personnel Sufficient operating functions not in place, Actively open new stores , causing causing delays in product supply delivery dates differences in ability between store managers ①In

36. Slide 36: Village Vanguard Webbed Corporation

    Village Vanguard Webbed Corporation © Village Vanguard corporation, All rights reserved. P.42

37. Slide 37: Company Profile

    Company Profile （Online shopping site） Company name Village Vanguard Webbed Corporation http://vvstore.jp S h a r e h o l d e r s Village Vanguard Corporation 100% B u s i n e s s Internet sales operations, real estate media operations Head o ffice 2-2-3 Shin-Yokohama, Kohoku-ku, Yokohama, Kanag

38. Slide 38: Year-on-year Sales Results

    Year-on-year Sales Results （Unit: Thousands of yen） ■Year-on-year sales FY2013 FY2014 (based on value of orders from customers) PL Q4 Q1 Q2 Q3 (revised Q4 (revised 180.0% （results） （results） （results） forecast) forecast) 163.7% 163.6% Sales 134,934 34,304 73,468 133,589 189,868 160.0% Compared to fo

39. Slide 39: Towards Further Growth

    Towards Further Growth Internet sales (Village Vanguard online store) Real estate media (Village Real Estate) http://vvstore.jp http://vv-realestate.com Village Real Estate... ① Cultivate creators and develop exclusive online products is real estate media showcasing rental ② Distribute top-selling o

40. Slide 40: Overseas Subsidiaries

    Overseas Subsidiaries © Village Vanguard corporation, All rights reserved. P.46

41. Slide 41: Village Vanguard (Hong Kong) Limited Company Profile

    Village Vanguard (Hong Kong) Limited Company Profile  Company name Village Vanguard (Hong Kong) Limited  S h a re h o ld e rs Village Vanguard Corporation 80% Era-Bee Limited 20% （※ Expansion of Japanese education business, culture business ）  B u s i n e s s Retail business selling books, SPICE

42. Slide 42: Village Vanguard (Hong Kong) Limited

    Village Vanguard (Hong Kong) Limited Results Store openings FY2013 results FY2014 results and forecast Stores: 8 (as of Nov. 30) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 （Unit: Millions of yen） Sales 27 69 127 178 47 99 154 194 Difference compared to forecast ▲4 ▲+9 +20 +37 ▲2 ▲7 - - 4 Difference compared to 8 ▲2 +1

43. Slide 43: TITICACA HONGKONG LIMITED Company Profile

    TITICACA HONGKONG LIMITED Company Profile  Company TITICACA HONGKONG LIMITED n a m e Village Vanguard Corporation 100%  Shareholders Import and sales of ethnic fashions and ethnic variety goods  Business Room 1901, 19/F, Entrepot Centre, 117 How Ming Street,  Head office Kwun Tong, Kowloon  Pre

44. Slide 44: TITICACA HONG KONG LIMITED

    TITICACA HONG KONG LIMITED (Unit: Millions of yen) Results Store interior appearance FY2013 (results) FY2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (results) (results) (results) (results) (results) (results) (forecast) (forecast) Sales 3 18 55 91 84 162 246 325 compared to 188.8% 228.1% 183.6% 216.8% 187.7% 135.6%

45. Slide 45: Village Vanguard (Taiwan) Limited Company Profile

    Village Vanguard (Taiwan) Limited Company Profile  Company Village Vanguard (Taiwan) Limited n a m e Village Vanguard (Taiwan) Limited  Shareholders Village Vanguard Corporation 100%  Business Retail business selling books, SPICE (variety goods), new media (CDs, DVDs) presented in fusion display

46. Slide 46: Village Vanguard (Taiwan) Limited

    Village Vanguard (Taiwan) Limited Results Store interior appearance (Unit: Millions of yen) FY2012 ending May 31 (results) FY2014 ending May 31 (results and forecast) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 2 8 16 23 5 16 25 31 Compared to ▲1 ▲0 ▲3 ▲7 ▲1 +0 - - forecast (%) Compared to - - - - +3 +8 +9 +8 pre

47. Slide 47: CHygntn /35Vy ES

    CHygntn /35Vy ES

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