J. Front Retailing Co., Ltd. · TSE:3086
J. Front Retailing — Investor Day (July 2022)
67 slides from J. Front Retailing's investor day presentation, Jul 21, 2022
Slide 1: J. Front Retailing IR Business Strategy Presentation
Ｊ．Front Retailing IR Business Strategy Presentation July 21, 2022
Slide 2: Today's Agenda
Today’s Agenda ■Department Store Business Business Strategy ～Prime Life Strategy～ SAWADA Taro President and Representative Director Daimaru Matsuzakaya Department Stores Co. Ltd. ■SC Business (Parco) Business Strategy ～Rebranding of Building Based on Shibuya～ IMAEDA Tatsumi Director and Managing Exe
Slide 3: Department Store Business Strategy: Prime Life Strategy
Department Store Business Business Strategy ～ Prime Life Strategy ～ SAWADA Taro President and Representative Director Daimaru Matsuzakaya Department Stores Co. Ltd.
Slide 4: Agenda
Agenda 1. Medium-term Business Plan Department Store Business Sales 2. The Company’s Gaisho Strategy (1) Strategy Overview and KPIs (2) Organization of Customers (3) Improvement of Content (4) Diversification of Touch Points 1
Slide 5: 1. Medium-term Business Plan Department Store Business Sales
1. Medium-term Business Plan Department Store Business Sales 2
Slide 6: Department Store Business Sales: Scenario for FY2023
Department Store Business Sales: Scenario for FY2023 Recover gross sales to FY2019 level in FY2023 and ensure operating profit of ¥23.0 billion “Duty-free sales” and “cash sales excluding duty-free sales” were most affected by COVID-19 pandemic Expect “gaisho sales” to be ¥205.0 billion in FY2
Slide 7: 2. The Company's Gaisho Strategy (1) Strategy Overview and KPIs
2. The Company’s Gaisho Strategy (1) Strategy Overview and KPIs 4
Slide 8: The Company's Gaisho Strategy
The Company’s Gaisho Strategy 3 basic elements of gaisho business (1) Enrich DB by increasing and organizing customers and deepen customer understanding (2) Find and improve valuable content (3) Diversify touch points and connect customers and content online and offline Gaisho (1) (3) (2) Organizati
Slide 9: KPIs for Achieving Gaisho Sales of ¥205.0 billion in FY2023
KPIs for Achieving Gaisho Sales of ¥205.0 billion in FY2023 Aim to achieve gaisho sales of ¥205.0 billion in FY2023 by strengthening each of 3 initiatives Aim to continuously grow after FY2023 by reviewing value of gaisho and evolving business model (Hundreds of millions of yen) Organization of cust
Slide 10: 2. Gaisho Strategy (2) Organization of Customers
2. The Company’s Gaisho Strategy (2) Organization of Customers 7
Slide 11: Organization of Customers Using App (1)
Organization of Customers Using App (Enrichment of Database) (1) Touch points with all customers including gaisho customers using app are steadily expanding and deepening Department store industry’s highest rating and largest number of effective users Effective users User sales 1.4 mn people ¥20
Slide 12: Organization of Customers Using App (2)
Organization of Customers Using App (Enrichment of Database) (2) Relationship with gaisho customers deepens after they sign up for app • Create touch points that provide 24/7 connection to customers • Acquire customer online behavior data such as website browsing data and email response data and a
Slide 13: Extraction of Potential Customers Using Data
Extraction of Potential Customers Using Data Customer analysis using not only purchase data but also behavior FY2023 target data enabled us to extract potential customers (prospects) ¥2.0 bn Q1 FY2022 results 《 Use of logistic regression analysis 》 Purpose: To find potential customers ¥0.38 bn Cus
Slide 14: Acquisition of New Gaisho Customers
Acquisition of New Gaisho Customers Target number of gaisho accounts for FY2023: 168,000 accounts (up 4,300 accounts from FY2021） • Created online sign-up system and acquired many accounts Average spend per new account customer in FY2021 almost doubled from FY2019 (¥1,470,000 in FY2021, ¥740,000
Slide 15: Characteristics of Young Gaisho Customers
Characteristics of Young Gaisho Customers Sales from gaisho customers in their 20s to 40s in FY2021: ¥36.3 billion (up 38.4% YoY） • Share 28.2% (up 3.8 points YoY) (Reference) Sales from gaisho customers in their 50s and above in FY2021: ¥92.6 billion (up 14.1% YoY) Value provision only for gais
Slide 16: 2. Gaisho Strategy (3) Improvement of Content
2. The Company’s Gaisho Strategy (3) Improvement of Content 13
Slide 17: FY2023 Sales Target of Key Categories
FY2023 Sales Target of Key Categories Sales of 3 key categories in FY2019 were ¥142.0 bn (gaisho share 35%) For FY2023, aim to increase sales ¥63.0 billion to ¥205.0 bn (gaisho share over 40%) • Luxury: ¥144.0 bn (of which: gaisho ¥52.0 bn, cash ¥82.0 bn, duty-free ¥10.0 bn) • Watches: ¥50.0 bn
Slide 18: Gaisho Sales by Merchandise Category
Gaisho Sales by Merchandise Category ⮚ Of gaisho sales of ¥205.0 billion in FY2023, sales of key categories are expected to be ¥85.0 billion (share 41.5%) ⮚ Sales of key categories are expected to increase ¥24.0 billion from FY2021 due to strategic investment (Hundreds of millions of yen) ¥205.0 bil
Slide 19: Improvement of Content (1) Luxury
Improvement of Content (1) Luxury Luxury area of 9 flagship stores in FY2023: Up 16% from 2019 FY2023 sales Promote one boutique per area by taking over popular brands from ¥144.0 bn competitors Of which gaisho ¥52.0 bn 《 Major luxury renovation 》 FY2020 FY2021 H1 FY2022 Kobe store ・Dolce & Gabb
Slide 20: Improvement of Content (2) Watches
Improvement of Content (2) Watches Watch area of 9 flagship stores in FY2023: Up 43% from 2019 FY2023 sales Establish overwhelming position in industry by renovating Nagoya ¥50.0 bn store (creating Japan’s top watch area) Of which gaisho ¥24.0 bn 17 Renovate also in H2 FY2022 and FY2023 to expan
Slide 21: Improvement of Content (3) Art
Improvement of Content (3) Art Hold large scale art events in each store and national touring FY2023 sales art fair D-art,ART produced by a man who organized Art Fair ¥11.0 bn Tokyo Of which gaisho Create synergy through transfer of customers to Parco’s art events and presale ¥9.0 bn 18
Slide 22: Improvement of Content (4) Creation of Special Hospitable Space
Improvement of Content (4) Creation of Special Hospitable Space Create hospitable environment to strengthen relationship with gaisho customers Use local materials for interior with awareness of locality Hold special events for VIPs as not only space for relaxation but also gallery Enter usin
Slide 23: 2. Gaisho Strategy (4) Diversification of Touch Points
2. The Company’s Gaisho Strategy (4) Diversification of Touch Points 20
Slide 24: Diversification of touch points (1): Closed Website connaissligne
Diversification of touch points (1) Closed Website for Gaisho Customers “connaissligne” Closed website for gaisho customers “connaissligne” is equipped with FY2023 Gaisho sales multiple functions including content presentation and commerce via online Target number of people who sign up for FY202
Slide 25: Diversification of touch points (2): Art Media ARToVILLA
Diversification of touch points (2) Creation of Media to Acquire New Affluent Customers ⮚ Launched art media ARToVILLA ⮚ Provide content that makes it easy to own art as art platform that “provides opportunity to meet art they want with curators and collectors ⮚ Also hold events in physical stores i
Slide 26: Diversification of touch points (3): Reorganization of Gaisho
Diversification of touch points (3) Reorganization of Gaisho 《 Sales of dedicated/system staff 》 (Hundreds of millions of yen） Create organization that provides optimal vs. information and services according to buying FY2021 FY2023 FY2021 characteristics Dedicated 918 1,140 24.2％ Standardize and
Slide 27: SC Business (Parco) Business Strategy: Rebranding Based on Shibuya
SC Business (Parco) Business Strategy ～ Rebranding of Building based on Shibuya ～ IMAEDA Tatsumi Director and Managing Executive Officer Parco SC Business Group Parco Co., Ltd.
Slide 28: Agenda
Agenda ＜Rebuilding of Building Branding based on Shibuya ＞ 1. Medium-term Business Plan Parco SC (Store Business) Revenue 2. Parco’s Starting Point Shibuya PARCO Maintains Strong Performance 3. Spread Success of Shibuya PARCO (1) Shinsaibashi PARCO (2) Nagoya PARCO and Ikebukuro PARCO (3) Pursue Par
Slide 29: 1. Medium-term Business Plan Parco SC Revenue
1. Medium-term Business Plan Parco SC (Store Business) Revenue 2
Slide 30: Operating Revenue Plan of Store Business
Operating Revenue Plan of Store Business Operating revenue is planned to exceed ¥50.0 billion in FY2023 due to renovation effect of flagship stores such as Nagoya PARCO and Ikebukuro PARCO as well as new store effect of Shibuya PARCO and Shinsaibashi PARCO ¥49.0 billion ¥47.9 billion ¥44.5 billion S
Slide 31: 2. Parco's Starting Point Shibuya PARCO
2. Parco’s Starting Point Shibuya PARCO Maintains Strong Performance 4
Slide 32: Targets and "5 Constituents" of Shibuya PARCO
Targets and “5 Constituents” of Shibuya PARCO Targets are “Non-age,” “Genderless,” and “Cosmopolitan” Composing content is “5 elements” + sustainability Mix them and create floors that enhance each other’s attractiveness FASHION ENTERTAINMENT ART ＆ CULTURE TECHNOLOGY FOOD SUSTAINABILITY 5
Slide 33: Shibuya PARCO Maintains Strong Performance (1)
Shibuya PARCO Maintains Strong Performance (1) Strong relations of trust with creators and artists with whom Shibuya PARCO built its 43 years ● Realized “highly sensitive fashion zone” that brings together thoughts of various fashion creators ● Also strengthened luxury and pop-up and built unique
Slide 34: Shibuya PARCO Maintains Strong Performance (2)
Shibuya PARCO Maintains Strong Performance (2) “Media center” function that brings together various entertainment equipment and communicates every day ●5 facilities operated by Entertainment Department Multi-layered communication by creators in various industries PARCO Theater WHITE CINEQUINTO (mo
Slide 35: Shibuya PARCO Maintains Strong Performance (3)
Shibuya PARCO Maintains Strong Performance (3) Propose unique experiential value, create system for provision through real × online channels ● Connect various creators and artists to events and product planning and develop limited projects ● Create systems that allow people to enjoy both in real w
Slide 36: Shibuya PARCO Maintains Strong Performance (4)
Shibuya PARCO Maintains Strong Performance (4) PARCO and tenants as one communicate in Japan and overseas ●Digital promotion using SNS ＜Instagram＞ 52,000 followers ＜Facebook＞ 153,000 followers *Largest number of Japanese commercial facilities. Of which 30,000 from Taiwan, 19,000 from Hong Kong, et
Slide 37: Shibuya PARCO Maintains Strong Performance (5)
Shibuya PARCO Maintains Strong Performance (5) Created system for selling to remote areas using online tools ●“PARCO ONLINE STORE” About half of fashion shops in Shibuya PARCO participate Cross-border type that can accept orders from overseas ●Collaboration with live stream commerce for greater Ch
Slide 38: Shibuya PARCO Maintains Strong Performance (6)
Shibuya PARCO Maintains Strong Performance (6) Event-based projects that provide experience and exclusivity available only in real world ●Frequently conduct entire-store projects that deliver Shibuya PARCO’s concept and message ●Hold events using real stores (roof + indoor event space) 1st Anniver
Slide 39: Shibuya PARCO Maintains Strong Performance (7)
Shibuya PARCO Maintains Strong Performance (7) Attract customers from super wide area + inbound customers through unique content & communication ●Approximately 30% of sales are from “rural areas & overseas” Leisure destination for people who love fashion, art, and culture <Usage of PARCO Card by r
Slide 40: Know-How Acquired from Shibuya PARCO
Know-How Acquired from Shibuya PARCO ■Elements spread to each flagship store Setting of targets such as ”Non-age,” “Genderless,” and “Cosmopolitan” is effective in urban stores Identify important content of urban SC such as ”fashion,” “art & culture,” “entertainment,” “food,” and “technology”
Slide 41: 3. Spread Success of Shibuya PARCO
3. Spread Success of Shibuya PARCO (1) Shinsaibashi PARCO (2) Nagoya PARCO and Ikebukuro PARCO (3) Pursue Parco’s Uniqueness 14
Slide 42: Targets and Concept of Shinsaibashi PARCO
Targets and Concept of Shinsaibashi PARCO Branding based on elements of Shibuya and characteristics such as “collaboration with Daimaru Shinsaibashi store” and “location directly connected to station” Building targets “Non-age” “Genderless” “Cosmopolitan” Building concept “NEW COMPLEX Building
Slide 43: Shinsaibashi PARCO Key Content "Tangible Goods"
Shinsaibashi PARCO Key Content “Tangible Goods” Develop and evolve more than Shibuya by acquiring department store’s customers, inviting large scale shops, etc. ● Brought together both “differentiated” and “sustainable” luxury, designers, select shops, etc. and beauty & fashion goods that increase
Slide 44: Shinsaibashi PARCO Key Content "Intangible Goods"
Shinsaibashi PARCO Key Content “Intangible Goods” Expanded provision of experience, which could not be incorporated in Shibuya for size reason Opened first directly managed “coworking space” and “wellness mall” ● Experience for self improvement ・ “GLOBE ENGLISH SCHOOL” “cookpadLive cafe” ・ “Tsuruy
Slide 45: Shinsaibashi PARCO "Art/Culture" "Technology"
Shinsaibashi PARCO “Art/Culture” “Technology” Created pop culture zone that can attract customers from across the world Many art works are installed in the building ●One of largest bases in western Japan for presenting experience-based culture toward the world With wide selection of power content,
Slide 46: Synergy Creation between Shinsaibashi PARCO and Daimaru Shinsaibashi
Synergy Creation between Shinsaibashi PARCO and Daimaru Shinsaibashi Strengthen collaboration with department store including shopping in both stores, content, and joint events Perform well in spite of opening amid COVID-19 pandemic (Operating revenue: ￥1.5 billion in FY2020 (opened in Nov), ¥4.
Slide 47: Branding of Nagoya PARCO Building (1)
Branding of Nagoya PARCO Building (1) Add “food” and “cosmetics” to essences of Shibuya and Shinsaibashi Ground and other floors are under large scale renewal Bring together and strengthen “genderless,” “food,” and “culture” toward completion of renewal in spring 2023 Realize expansion of presen
Slide 48: Branding of Nagoya PARCO Building (2)
Branding of Nagoya PARCO Building (2) 【Status of renewal in spring 2022】 Renewal of entire 1F of west building ・ Actively introduced Tokai area’s first differentiated merchandising ・ In fashion, “genderless” and “street luxury” shops perform well ・ Art & culture perform well, favored mainly by MZ
Slide 49: Branding of Ikebukuro PARCO Building (1)
Branding of Ikebukuro PARCO Building (1) Spread success factors of Shibuya, completed large scale renewal of ground and other floors in spring 2022 Concept of renewal As gateway to city that aims to be “global art and culture city,” provide “meeting” space with themes of “Non-age,” “Genderless,”
Slide 50: Branding of Ikebukuro PARCO Building (2)
Branding of Ikebukuro PARCO Building (2) Renovation theme of and shops invited to each floor B1F of main building: Renewed approximately 50% Invited brands with high communication ability such as influencer brands 2F of main building: Converted to unisex floor. Promoted differentiation with common
Slide 51: Pursue Parco's Uniqueness (1) Event
Pursue Parco’s Uniqueness (1) “Event” Events that provide valuable experience attracted many customers even amid COVID-19 pandemic Actively held buzz events in all stores and contributed to attracting customers and increasing transaction volume ■Popular content toured around all stores Animation
Slide 52: Pursue Parco's Uniqueness (2) Collaboration with Characters
Pursue Parco’s Uniqueness (2) “Collaboration with Characters” Continue collaboration with popular characters. Realize nationwide unique large scale projects such as communication through media, sales promotion, events, and sale of exclusive products ©Disney Grand Bazar winter 2021 Shibuya 2nd anni
Slide 53: Pursue Parco's Uniqueness (3) Pop-up Shop
Pursue Parco’s Uniqueness (3) “Pop-up Shop” Highly evaluated by luxury brands that aim to acquire new customers To motivate customers to visit stores, strengthen pop-up shops in each store, promote content development through collaboration between headquarters and each store 【Shibuya】 FENDI × SK
Slide 54: Promotion of ROIC Management: To Enhance Corporate Value
Promotion of ROIC Management ～ To Enhance Corporate Value ～ WAKABAYASHI Hayato Director and Managing Executive Officer Senior Executive General Manager, Financial Strategy Unit J. Front Retailing Co., Ltd.
Slide 55: Agenda
Agenda 1. Financial Goals for 2030 2. ROIC Business Management Policy 3. Cash Allocation: Balance between Growth and Efficiency 1
Slide 56: 1. Financial Goals for 2030
@ J. FRONT RETAILING 1. Financial Goals for 2030
Slide 57: History of Business Portfolio
History of Business Portfolio Expanded domain to non-retail including real estate and finance in addition to retail Adopt ROIC to strengthen management of invested capital profitability of non-retail business Department Store Department Store ＋ Parco Retail ＋ Non-retail PL PL, BS (ROA, ROE) PL,
Slide 58: Illustrated Portfolio Transformation
Illustrated Portfolio Transformation Increase weight of non-retail and promote business portfolio transformation Aim to achieve consolidated operating profit of ¥80.0 billion, ROE of 10% 10.0% ROE 7.0% 7.0% 5.0% or more Full recovery ROIC ¥80.0 bn 5.2% Non-retail 5.0% Developer, Growth accompani
Slide 59: ROIC Target
ROIC Target Introduced ROIC by business as KPI to realize growth accompanied by revenue Set ROIC by business above WACC by business FY2023 ROIC target WACC FY2030 ROIC target Department 6% 5% 6 - 7% Store SC 5% 4.5% 5 - 6% Developer 4% 4% 4 - 5% Payment and ≧ 3% 3% 3 - 5% Finance WACC of new bus
Slide 60: Illustrated BS by Business (FY2030)
Illustrated BS by Business (FY2030) Estimated future BS by business that reflects business characteristics Developer and Payment and Finance control interest-bearing liabilities with specified D/E ratio Developer Payment and Finance Consolidated BS Liabilities Total Total Liabilities assets asse
Slide 61: 2. ROIC Business Management Policy
2. ROIC Business Management Policy 7
Slide 62: ROIC Business Management Policy
ROIC Business Management Policy Enhance corporate value by sophisticating business portfolio management and investment management Disseminate ROIC in the Group by setting ROIC tree / KPI by business Business portfolio Sophistication of Setting and management of ROIC tree / KPI by business manage
Slide 63: Business Portfolio Management
ROIC tree / Business Portfolio Management Business portfolio Investment management KPI by business Determine key investment areas centering on growth and capital profitability and also considering potential HD determines whether or not business is viable considering business characteristics, bus
Slide 64: Sophistication of Investment Management
ROIC tree / Business Investment Sophistication of Investment Management portfolio management KPI by business Ensure that planned average ROIC is above WACC when making investment decision Manage ROIC as well as PL figures when monitoring Investment decision (analysis of plan) Monitoring (analysi
Slide 65: 3. Cash Allocation: Balance between Growth and Efficiency
3. Cash Allocation: Balance between Growth and Efficiency 11
Slide 66: Cash Allocation
Cash Allocation Until FY2023, improve financial foundation for full recovery For regrowth from FY2024 onward, make full-scale growth investment while promoting streamlining Full recovery phase Regrowth phase Cash-in (- 2023) (2024 -) Sale of assets Developer Business Investment Non- Payment and
Slide 67: Website and forward-looking statements
Website https://www.j-front-retailing.com Create and Bring to Life “New Happiness.” Forward-looking statements in this document represent our assumptions based on information currently available to us and inherently involve potential risks, uncertainties and other factors. Therefore, actual results