J. Front Retailing Co., Ltd. · TSE:3086
J. Front Retailing — FY2023 Earnings Presentation
60 slides from J. Front Retailing's earnings presentation, Apr 15, 2024
Slide 1: Results for Fiscal Year Ended February 29, 2024 and FY2024-FY2026 Medium-term Business Plan
～ Aiming to Be a Shin Retailer. ～ Presentation of Results for Fiscal Year Ended February 29, 2024 and FY2024-FY2026 Medium-term Business Plan April 15, 2024 J. Front Retailing Co., Ltd. Create and Bring to Life “New Happiness.”
Slide 2: Today's Agenda
Today’s Agenda I. Overview of FY2023 Results II. H1/Full FY2024 Forecast III. FY2024-FY2026 Medium-term Business Plan 1
Slide 3: FY2023 Results and FY2024 Forecast
FY2023 Results and FY2024 Forecast WAKABAYASHI Hayato Director and Managing Executive Officer Senior Executive General Manager, Financial Strategy Unit J. Front Retailing Co., Ltd. Create and Bring to Life “New Happiness.” 2
Slide 4: FY2023 Consolidated PL Results (IFRS)
FY2023 Consolidated PL Results (IFRS) Both gross sales and revenue increased mainly in the mainstay Department Store Business and SC Business Despite an impairment loss on the Daimaru Shimonoseki store, operating profit also rose due to gain on sale of fixed assets and other factors Year-end dividen
Slide 5: Consolidated KPIs in the Previous Medium-term Plan Period
Consolidated KPIs in the Previous Medium-term Plan Period Operating profit exceeded pre-COVID-19 levels, with ROE of 8.1% and ROIC of 5.1% Interest-bearing liabilities (excluding lease liabilities), which once exceeded ¥300.0 billion, was significantly reduced (Millions of yen, unless otherwise stat
Slide 6: FY2023 Segment Information (IFRS)
FY2023 Segment Information (IFRS) (Millions of yen, unless otherwise stated) Gross sales Revenue Fiscal year ended YoY vs. Oct forecast YoY vs. Oct forecast February 29, 2024 Results Results % Millions of yen % Millions of yen Department Store 747,855 13.7) 14,455) 239,125 10.8) 3,825) SC 296,951 16
Slide 7: FY2023 Segment Information: Main Reasons for Changes
FY2023 Segment Information (IFRS): Main Reasons for Changes Department Store Business ➢ Brisk spending on luxury items. Consumption by wealthy people, mainly gaisho customers, continued to be strong. Gaisho sales exceeded ¥200.0 billion. ➢ Inbound sales accelerated further from Q3 to Q4, with annual
Slide 8: FY2023 Daimaru Matsuzakaya Department Stores Major Store Sales
FY2023 Daimaru Matsuzakaya Department Stores Major Store Sales Comparable store sales store sales maintained double-digit YoY growth in H2, with three core stores achieving double-digit growth compared to FY2018 Sapporo store sales increased significantly in Q4 thanks to the effect of renovation, wh
Slide 9: FY2023 Gaisho Sales and App Sales
FY2023 Daimaru Matsuzakaya Department Stores Gaisho Sales and App Sales Quickly exceeded pre-COVID-19 levels with gaisho sales of the Department Store Business, which continues to increase sales, exceeding ¥200.0 billion There are 2.20 million app users contributing to increased per-customer spend,
Slide 10: FY2023 Daimaru Matsuzakaya Duty-free Sales
FY 2023 Daimaru Matsuzakaya Department Stores Duty-free Sales Quarterly sales growth accelerated to a record 12.0% above FY2019 results Sales share by country: China 52.3%, Taiwan 13.1%, Hong Kong 7.8%, South Korea 7.0%, etc. It is estimated that there is a lot of room for growth in the number of to
Slide 11: FY2023 Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)
FY2023 Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) H2 FY2022 SGA analysis (Millions of yen) Decrease in packing and Increase in Decrease in Increase in transportation personnel operation other SGA costs expenses Decrease in costs Increase in (119) (15) 60 Increase in packing and (80) 1
Slide 12: FY2023 Parco Major Store Transaction Volume
FY2023 Parco Major Store Transaction Volume Grew mainly in urban stores such as Shibuya PARCO and Shinsaibashi PARCO, where inbound sales increased significantly Q4 saw a positive change in comparable stores compared to FY2018, Ikebukuro and Nagoya are scheduled for large-scale renovations in the fu
Slide 13: FY2023 Consolidated BS Results (IFRS)
FY2023 Consolidated BS Results (IFRS) Total assets were ¥1,114.7 billion, down ¥6.2 billion from the end of the previous fiscal year, mainly due to sale of assets Interest-bearing liabilities (excluding lease liabilities) were ¥213.9 billion, a reduction of ¥35.1 billion from the end of the previous
Slide 14: FY2023 Consolidated CF Results (IFRS)
FY2023 Consolidated CF Results (IFRS) Net cash provided by operating activities was ¥90.6 billion, up ¥25.2 billion YoY, due to profit growth and proceeds from sale of assets Net cash provided by investing activities was ¥13.4 billion mainly due to sale of shares, despite renovation investments Secu
Slide 15: FY2024 Consolidated PL Forecast (IFRS)
FY2024 Consolidated PL Forecast (IFRS) Despite the positive outlook for the consumption environment, the impact of a reduction in floor space and increased renovation costs due to large-scale renovation in Nagoya and other projects A rebound of ¥3.5 billion from gain on sale of residences in Develop
Slide 16: FY2024 Segment Information (IFRS)
FY2024 Segment Information (IFRS) (Millions of yen, unless otherwise stated) Gross sales Revenue Fiscal year ending YoY YoY February 28, 2025 Forecast Forecast Millions of yen % Millions of yen % Department Store 799,800 51,945) 6.9) 257,800 18,675) 7.8) SC 298,400 662) 0.2) 61,300 2,569) 4.4) Devel
Slide 17: FY2024 Segment Information: Main Reasons for Changes
FY2024 Segment Information (IFRS): Main Reasons for Changes Department Store Business ➢ Despite the temporary impact of sales floor renovations, sales are expected to increase due to growth in spending by affluent people and inbound sales. ➢ Business profit is expected to increase by ¥1.9 billion Yo
Slide 18: FY2024 Daimaru Matsuzakaya Major Store Sales Forecast
FY2024 Daimaru Matsuzakaya Department Stores Major Store Sales Forecast Expected to increase YoY, compared to 2019 and 2018 due to strong consumption by affluent people and inbound tourists Double-digit sales growth is expected for the Shinsaibashi store, which will benefit greatly from inbound sale
Slide 19: FY2024 Daimaru Matsuzakaya Departments Stores SGA Analysis (IFRS)
FY2024 Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) FY2024 SGA analysis (Millions of yen) ・Increase in repair expenses resulting from renovation (¥700 mn) ・Increase in commissions due to sales growth (¥600 mn) ・Increase in outsourcing and temporary staffing expenses (¥300 mn) ・Increase
Slide 20: FY2024 Consolidated BS Forecast (IFRS)
FY2024 Consolidated BS Forecast (IFRS) Total assets are expected to be ¥1,120.0 billion, an increase of ¥5.2 billion from the end of the previous fiscal year, mainly due to asset acquisitions Interest-bearing liabilities (excluding lease liabilities) are expected to be ¥225.0 billion, an increase of
Slide 21: FY2024 Consolidated CF Forecast (IFRS)
FY2024 Consolidated CF Forecast (IFRS) Net cash provided by operating activities is expected to be ¥67.0 billion due to a decrease in profit before tax as well as an increase in working capital and income tax payments Net cash used in investing activities is expected to be ¥64.0 billion, with a plan
Slide 22: Share Buyback
Share Buyback “Achieve growth with profitability” and “optimize the amount of equity capital and strengthen shareholder return” to improve capital profitability over the medium to long term Class of shares to be acquired Common shares Total number of shares that Up to 8,000,000 shares can be acquire
Slide 23: FY2024-FY2026 Medium-term Business Plan
FY2024-FY2026 Medium-term Business Plan ONO Keiichi President and Representative Executive Officer J. Front Retailing Co., Ltd. Create and Bring to Life “New Happiness.” 22
Slide 24: Review of the Previous Medium-term Business Plan
Review of the Previous Medium-term Business Plan 1) Real × Digital Strategy 4) Restructuring ・No. of Department Store app users: 2.19 mn (Feb 29, 2024) ・Reduction of fixed costs: ・Department Store app sales: ¥269.3 bn (FY2023) ¥15.1 bn (cumulative total for FY2021-FY2023) ・GINZA SIX achieved record
Slide 25: Business Environment Awareness
Business Environment Awareness Consumption ・Generational change in key purchasers, progress in globalization (inbound tourist demand, etc.) ・Growing desire for “connections of empathy, support, and trust” that satisfy the heart ・A further increase in awareness of “circularity” from the cycle of prod
Slide 26: What We Value for FY2030
What We Value for FY2030 Values Synergies As 25
Slide 27: What We Value for FY2030 (1): Three Values
What We Value for FY2030 (1) Three Values 26
Slide 28: Three Values = Vision for FY2030
Three Values = Vision for FY2030 With the retail business at the core, expand the circle of “co-creation” with stakeholders and provide three types of co-creation value → Co-creation of excitement Create and share excitement with customers and employees Co-creation of excitement → Co-prosperity with
Slide 29: Three Values = Vision for 2030
Three Values = Vision for FY2030 ー Vision for 2030 ー Evolve into a “value co-creation retailer group” that continues to provide three types of co-creation value with overwhelming support from premium and aspirational consumer group in Japan and overseas ❖ Each store refines its own individuality to
Slide 30: What We Value for FY2030 (2): Three Synergies
What We Value for FY2030 (2) Three Synergies 29
Slide 31: Synergy (1) Area
Synergy (1) Area Compete in 7 key cities with “areas” Population Growth potential through Sapporo of Hokkaido expansion centered on the 5.22 mn development of properties owned by the Group Population of Kyoto Pref Population of Hyogo Pref 5.46 mn 2.57 mn × areas Kyoto Tokyo Population of Fukuoka Kob
Slide 32: Synergy (2) Customer
Synergy (2) Customer Pursue and combine the strengths of the customers of Department Store and Parco Expand and deepen “premium and aspirational consumer group” Premium Aspirational Nature of Department Store’s strengths ＋Development of the younger generation by GINZA SIX × Nature of Parco’s strengt
Slide 33: Synergy (3) Content
Synergy (3) Content Implementation of new business model in retail business Up to the present 2030 Purchase/Rental/ Business model Purchase/Rental Owning Store + Business field Store +α Digital ＋ Global Individual companies' Combination of Capability connoisseurship and connoisseurship and procureme
Slide 34: Positioning of the Current Medium-term Business Plan: Phase of Change
For 2030 Positioning of the current Medium-term Business Plan (FY2024-FY2026) “Phase of Change” For rapid growth in 2030, boldly take on the challenge of deepening, evolving, and exploring as a retailer group While in the upfront investment phase, also maintain capital profitability 33
Slide 35: Current Medium-term Plan as a Phase of Change
Current Medium-term Plan as a “Phase of Change” That Leads to Dramatic Growth Phase of Phase of Phase of change rapid growth recovery FY2027-FY2030 FY2021-FY2023 FY2024-FY2026 Full-fledged growth 90,000 Recovery from Deepening of of the Group COVID-19 retail/evolution Progress on of synergies develo
Slide 36: Overall Composition of FY2024-FY2026 Medium-term Business Plan
Overall Composition of FY2024-FY2026 Medium-term Business Plan 2021 2023 2024 2026 2027 2030 Phase of recovery Phase of change Phase of rapid growth Deepening of retail Evolution of the Group synergies (1) Expand domestic and overseas customer base (1) Expand the Group customer base Expand the cover
Slide 37: Numerical Plan
Numerical Plan Key performance indicator FY2026 target Change vs. FY2023 Business profit ¥52.0 billion +17.3% ROE 8.0% or more +0.0 pts or more ROIC 5.0% or more +0.0 pts or more Interest-bearing ¥285.0 billion +¥71.1 billion liabilities*1 GHG emissions*2 -58% -3 pts Ratio of women in management pos
Slide 38: Business Profit by Segment
Business Profit by Segment Profit growth driven by growth mainly in Department Store and SC resulting from deepening of retail Developer is in the investment phase, while Payment and Finance incurs upfront costs to promote card unification (Billions of yen) 60.0 52.0 Payment and 50.0 3.5 Finance 44.
Slide 39: Deepening of Retail (1) Department Store
Deepening of Retail (1) Department Store Expand and deepen highly engaged customers Promotion of the development of Making top identifiable customers who use app into next generation customers gaisho customers ✓ Actively develop next generation customers with high ✓ Further retain top purchasing app
Slide 40: Deepening of Retail (1) Department Store: Digital Touch Points
Deepening of Retail (1) Department Store Expand customers and upgrade CRM by evolving digital touch points <Comparison of spend per customer Significantly increase the number of app users to 3.50 mn between app users and non-app users> *Results in FY2023 (FY2026 target +1.31 mn vs. FY2023) Gaisho ・
Slide 41: Matsuzakaya Nagoya Store Large-scale Renovation Project
Deepening of Retail (1) Department Store Matsuzakaya Nagoya store large-scale renovation project <Key points> ・Significantly renovate a total of 8 floors ・Expand content for prime consumers ・Strengthen the development of affluent next generation MZ ・Demonstrate synergies with PARCO and Nishiki 3-cho
Slide 42: Deepening of Retail (2) Parco
Deepening of Retail (2) Parco Large-scale renovation of key stores by strengthening IP content and luxury items ・ Business base for fostering and disseminating overseas content Shibuya ・ First major renewal planned after rebuilding (2025) ・Renovation of entertainment and pop culture Nagoya ・Strength
Slide 43: Major Renovation of Nagoya PARCO
Deepening of Retail (2) Parco Major renovation of the east building and west building of Nagoya PARCO <Key points> ・Renewal of concept of east building Significantly strengthen POP culture content 名古屋 ・Ladies floors of west building Renovate fashion floors to accommodate the sensible consumption of
Slide 44: A New Landmark in Nagoya Will Be Born
Evolution of the Group Synergies A new landmark in Nagoya will be born Nishiki 3-chome District 25 Project (tentative name) <Key points> ・ Four uses: commercial facilities, hotel, offices, and cinema complex ・ The Group will operate new high- 池袋 end commercial facilities on two basement floors and f
Slide 45: Gradually Materialize Pipelines in 7 Key Cities
Evolution of the Group Synergies Gradually materialize pipelines in 7 key cities <Major pipelines announced> ・Nishiki 3-chome District 25 Project (tentative name) (2026) ・Shinsaibashi Project (tentative name) (2026) Sapporo ・Tenjin 2-chome South Block Station-Front East-West Area Project (tentative
Slide 46: First, Realize Synergies in the Nagoya Area
Evolution of the Group Synergies First, realize synergies in the “Nagoya” area Nishiki 3-chome District 25 BINO Sakae Project (tentative name) Isemachi-dori Otsu-dori Hisaya-odori Hisaya-odori Matsuzakaya Nagoya store Hirokoji-dori Nagoya Nishiki 3-chome District 25 Project (Scheduled to open in 202
Slide 47: Participate in Tenjin Big Bang
Evolution of the Group Synergies Participate in Tenjin Big Bang Tenjin 2-chome South Block Station-Front East-West Area Project (2030) Fukuoka PARCO Hakata Daimaru Attract customers from East Asia ➢ On February 16 this year, the Urban Planning Promotion Council submitted an urban planning proposal t
Slide 48: Exchange, Own, and Collaboratively Develop Content and Services
Evolution of the Group Synergies Exchange, own, and collaboratively develop content and services Development of content Holding company Department Store/Parco through M&A Acquisition of content Combination of connoisseurship and networking skills In-house development of content Conversion to a stand
Slide 49: Examples of Building a System for Content Co-creation
Examples of Building a System for Content Co-creation CVC fund Business succession fund Established by JFR and IGP* Established by JFR, Development Bank of Japan, and IGP* in October 2022 in March 2024 ・Use exploration capabilities with startups ・Pass on local content to the future ・Combine ideas an
Slide 50: What We Value for FY2030 (3): As One
What We Value for FY2030 (3) As One 49
Slide 51: As One (1) Mix of Human Resources
As One (1) Mix of Human Resources Promote human resources strategy and exchange of human resources to integrate the Group’s “knowledge” The future created by “autonomous Well-Being individuals” = Creation of “New Happiness” Realization of Well-Being Realization of the Group Vision “Job satisfaction”
Slide 52: As One (2) Card Integration
As One (2) Card Integration Integrate customers and strengthen the Payment and Finance Business through card unification Unify card issuers for PARCO, GINZA SIX, and Hakata Daimaru to JFR Card Co., Ltd. Also consider integrating the points of Daimaru Matsuzakaya Department Stores, PARCO, and GINZA S
Slide 53: As One (3) System Integration
As One (3) System Integration Establish the Group-wide system Redesign of operations and systems, Operational reform of finance and including point and payment services Accounting accounting divisions by eliminating business continuity risks, upgrading Payment and trade payables, based on the Group
Slide 54: Finance Strategy: Improve Capital Profitability
Finance Strategy Improve capital profitability ROIC ＞ WACC (Currently recognized as 4.0-4.5%) ROE ＞ Cost of shareholders’ equity (Currently recognized as 7.0-7.5%) FY2026 Segment ROIC target WACC Department Store 10.5% 4-5% SC 4.0% 3-4% Developer 4.3% 3-4% Payment and Finance 3.4％ 2-3% New ― 8-10% C
Slide 55: Cash Allocation
Cash Allocation Ensure a balance between investment and returns Cash in Cash out ・Retail ¥58.5 bn ・Developer ¥59.0 bn ・Other Business evolution Operating cash flows ¥7.5 bn and maintenance ¥220.0 bn ¥125.0 bn Growth investment ・Strengthening content Up to ¥50.0 bn ・M&A Sale of assets, etc. ¥5.0 bn ・
Slide 56: Investment Plan (Resource Allocation)
Investment Plan (Resource Allocation) Growth investment to deepen retail and for the future of the Group Actively invest in retail such as the Matsuzakaya Nagoya store, starting this fiscal year to generate results as soon as possible Large-scale development investment related to the Fukuoka Tenjin
Slide 57: Shareholder Return
Shareholder Return Increase shareholder return Increase payout ratio to 40% or more this fiscal year (previously 30% or more) Achieve sustainable profit growth and thereby continue to increase dividends Also implement share buybacks while monitoring share prices and balance sheet conditions, with an
Slide 58: Accomplish "3, 3, 1"
Accomplish “3, 3, 1” Values Synergies As 57
Slide 59: One Team
Change in a Way That Contributes to Increasing Corporate Value The Group moves toward true “fusion” One Team Promote changes that maximize the Group’s potential and contribute to sustainable improvement of corporate value 58
Slide 60: https://www.j-front-retailing.com
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 may dif