J. Front Retailing Co., Ltd. · TSE:3086
J. Front Retailing — H1 FY2021 Earnings Presentation
46 slides from J. Front Retailing's earnings presentation, Oct 12, 2021
Slide 1: Presentation of Results for First Six Months of Fiscal Year Ending February 28, 2022
～ No Change, No Full Recovery ～ Presentation of Results for First Six Months of Fiscal Year Ending February 28, 2022 October 12, 2021 YOSHIMOTO Tatsuya President and Representative Executive Officer J. Front Retailing Co., Ltd. Create and Bring to Life “New Happiness.”
Slide 2: Today's Agenda
Today’s Agenda III. Overview of H1 FY2021 Results III. H2/Full FY2020 Forecast III. Progress of Medium-term Business Plan 1
Slide 3: Overview of H1 FY2021 Results (IFRS)
Overview of H1 FY2021 Results (IFRS) 2
Slide 4: Consolidated PL (IFRS)
Consolidated PL (IFRS) Prolonged impact of COVID-19 such as local and national government’s requests to close stores, shorten business hours and restrict admission Achieved business profit; business profit above, operating loss and loss below June forecast Paid interim dividend of ¥14 per share, up
Slide 5: Segment Performance (1) Department Store (IFRS)
Segment Performance (1) Department Store (IFRS) Slower recovery than expected in Q2 due to 5th wave of COVID-19 Business loss above forecast partly due to decreased profit margin in spite of efforts to further reduce SGA Operating loss below forecast due to increase in other operating income includi
Slide 6: Daimaru Matsuzakaya Department Stores Major Store Sales
Daimaru Matsuzakaya Department Stores Major Store Sales Sales improved more than 10 points from Q1 to Q2 compared to FY2019 but recovery slowed down Kobe and Nagoya stores that have strong regular customers such as gaisho customers recovered steadily Tokyo and Umeda stores that heavily depend on rai
Slide 7: Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)
Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) H1 FY2021 (Millions of yen) SGA analysis Decrease in packing and Decrease in personnel expenses transportation Decrease in costs (1,503) depreciation (799) Decrease in (2,161) (204) (261) other SGA Decrease in Decrease in (5,018) (633) ad exp
Slide 8: Segment Performance (2) SC Business (IFRS)
Segment Performance (2) SC Business (IFRS) Affected by closure and reduced business hours due to declaration of state of emergency and priority preventative measures Achieved both business profit and operating profit through efforts to reduce cost and SGA Entertainment struggled due to continued res
Slide 9: Segment Performance (3) Developer Business (IFRS)
Segment Performance (3) Developer Business (IFRS) Existing real estate rental properties including use of transferred properties performed steadily as expected Increase in orders received by J. Front Design & Construction for large scale projects in Tokyo and Kyushu areas also contributed Revenue be
Slide 10: Segment Performance (4) Payment and Finance Business (IFRS)
Segment Performance (4) Payment and Finance Business (IFRS) Steadily recovered in spite of slow recovery of transaction volume affected by temporary closure of department stores, etc. Both business profit and operating profit above June forecast partly due to reduction of SGA Transaction volume per
Slide 11: Segment Performance (5) Other (IFRS)
Segment Performance (5) Other (IFRS) Revenue increased driven by Daimaru Kogyo whose sales of automotive parts were strong and Dimples’ on which impact of COVID-19 was improved Comparison to June forecast of Daimaru Kogyo was affected by more prolonged impact of COVID-19 than expected Business profi
Slide 12: Consolidated BS (IFRS)
Consolidated BS (IFRS) Total assets decreased ¥30.6 billion compared to previous year end partly due to depreciation and sale of Neuve A Interest-bearing liabilities decreased ¥8.6 billion compared to previous year end due to repayment of lease liabilities Ratio of equity attributable to owners of p
Slide 13: Consolidated CF (IFRS)
Consolidated CF (IFRS) Operating CF decreased ¥2.4 billion due to increase in working capital as well as decrease in operating loss Free CF was ¥12.3 billion, up ¥3.9 billion YoY partly due to reduction of investment Net cash provided by financing activities decreased ¥99.3 billion YoY in reaction t
Slide 14: H2/Full FY2021 Forecast (IFRS)
H2/Full FY2021 Forecast (IFRS) 13
Slide 15: Business Environment Awareness
Business Environment Awareness ◆ Assume that restrictions on travel and request to shorten business hours will be eased gradually ◆ Assume that restriction on entry of inbound tourists to Japan will not be eased in current fiscal year ◆ However, consider measures with “multiple scenarios” in prepara
Slide 16: Consolidated PL Forecast (IFRS)
Consolidated PL Forecast (IFRS) Forecasts for all profit items remain unchanged from June forecast due to flexible cost management in spite of uncertainty about sales For Department Store, domestic consumption is expected to recover faster from late Q3 to Q4 Plan to pay year-end dividend of ¥15 per
Slide 17: Segment Performance Forecast (1) Department Store Business
Segment Performance Forecast (1) Department Store Business Sales are expected to recover from late Q3 to Q4 in spite of impact of declaration of state of emergency in September Inbound sales are expected not to attain full-scale recovery but to remain at H1 level this year Revenue Business profit (l
Slide 18: Daimaru Matsuzakaya Department Stores Major Store Sales Forecast
Daimaru Matsuzakaya Department Stores Major Store Sales Forecast (%) vs. FY2020 vs. FY2019 Fiscal year ending February 28, 2022 Q3 Q4 H2 Q3 Q4 H2 Forecast Forecast Forecast Forecast Forecast Forecast Shinsaibashi 28.7) 33.8 31.3 (21.5) (4.0) (13.1) Umeda 7.9) 40.8 25.6 (26.0) (5.5) (14.9) Tokyo 11.7
Slide 19: Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) H2 FY2021
Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) H2 FY2021 SGA analysis (Millions of yen) Packing and Other transportation Personnel (5,021) Depreciation costs (1,031) expenses 577 (59) (77) (234) Packing and Other Rent Ad transportation Operational Depreciation expenses expenses costs cost
Slide 20: Segment Performance Forecast (2) SC Business (IFRS)
Segment Performance Forecast (2) SC Business (IFRS) Revenue decreased in H2 affected by exclusion of Neuve A from consolidation in spite of full contribution of Shinsaibashi PARCO Both business profit and operating profit significantly increased in H2 in reaction to rent concessions last year and du
Slide 21: Segment Performance Forecast (3) Developer Business (IFRS)
Segment Performance Forecast (3) Developer Business (IFRS) Real estate rental business including development of new properties is expected to steadily contribute to revenue Revenue and profit are expected to increase in H2 partly due to strengthening of properties in major cities in design and const
Slide 22: Segment Performance Forecast (4) Payment and Finance Business (IFRS)
Segment Performance Forecast (4) Payment and Finance Business (IFRS) Strengthen efforts to acquire new customers by developing new customers in department stores and promoting online sign-up Expected to return to business profit and operating profit in H2 partly due to increase in transaction volume
Slide 23: Segment Performance Forecast (5) Other (IFRS)
Segment Performance Forecast (5) Other (IFRS) In Other segment, revenue and profit of its core company Daimaru Kogyo are expected to decrease in H2 Also affected by exclusion of a subsidiary J. Front Foods from consolidation on February 26 this year Revenue Business profit Operating profit 70,000 62
Slide 24: Consolidated BS Forecast (IFRS)
Consolidated BS Forecast (IFRS) Total assets are expected to decrease ¥63.7 billion YoY partly due to decrease in fixed assets Interest-bearing liabilities are expected to decrease ¥20.8 billion YoY partly due to repayment of lease liabilities Ratio of equity attributable to owners of parent is expe
Slide 25: Consolidated CF Forecast (IFRS)
Consolidated CF Forecast (IFRS) Operating CF is expected to decrease ¥16.4 billion YoY partly due to increase in working capital resulting from business scale recovery Secure free CF of ¥33.0 billion partly due to reduction of investment and revenue from sale of assets Continue to secure enough cash
Slide 26: Progress of Medium-term Business Plan
FY2021 - FY2023 Progress of Medium-term Business Plan 25
Slide 27: Overall Structure of Medium-term Business Plan
Overall Structure of Medium-term Business Plan 3 strategies for revenue recovery and regrowth Real × Digital Strategy Prime Life Strategy Developer Strategy －Department Store: Enhance appeal of stores and use －Develop new solution －Mixed use not limited to stores for media commerce services to reali
Slide 28: Image of Portfolio Transformation
Image of Portfolio Transformation Expand share of Developer, Payment and Finance, Other while steadily growing Department Store, SC ¥80.0 bn “Operating profit” share by segment Developer 40% Payment and Finance Other Other* ¥40.2 bn ¥40.3 bn 1% Payment and 7.0% 6% Finance 4.7% 11% 9.8% Developer 23.
Slide 29: Operating Profit Target by Segment
FY2021 – FY2023 Medium-term Business Plan Operating Profit Target by Segment Full recovery of the Group cannot be achieved without recovery of Department Store Business and Parco SC Business (Millions of yen） Department Store Business SC Business 23,000 25,000 25,000 20,000 20,000 15,000 15,000 10,2
Slide 30: Department Store Business – Response to Changes in Market
FY2021 – FY2023 Medium-term Business Plan Department Store Business – Response to Changes in Market “What will recover,” “what will not recover” and “what will further grow” are becoming clear Urgent to respond to segmentalized fashion market while strengthening strong areas Expected changes in Expe
Slide 31: Department Store Business – Progress of OMO Initiatives (1)
FY2021 – FY2023 Medium-term Business Plan Department Store Business – Progress of OMO Initiatives (1) Digitalization of touch points using app App users App users sales 1.12 million 175.0 billion yen people *As of H1 FY2021 *Result for the last one year Rate of Spend 外商 per app user utilization 75.9
Slide 32: Department Store Business – Progress of OMO Initiatives (2)
FY2021 – FY2023 Medium-term Business Plan Department Store Business – Progress of OMO Initiatives (2) Accelerate digital shift such as OMO (= Online sales target of ¥40.0 billion in medium-term plan) Online sales forecast Online sales forecast by customer type by merchandise category 45,000 45,000 (
Slide 33: Department Store Business – Progress of OMO Initiatives (3)
FY2021 – FY2023 Medium-term Business Plan Department Store Business – Progress of OMO Initiatives (3) Prepare to create OMO shopping sites ● Cosmetics OMO site・・・Plan to launch in February 2022 Can select and buy Can sell online and what I want online or in stores alike! in stores anytime! Can also
Slide 34: Department Store Business – Progress of OMO Initiatives (4)
FY2021 – 2023 Medium-term Business Plan Department Store Business – Progress of OMO Initiatives (4) Evolution of gaisho online activities Purchase share connaissligne of customers in their Online 20s to 40s customer +4.2 pts service started in September 外商 化粧品 アート コネス 他 一般 *The figures is as of H1 F
Slide 35: Department Store Business – Business Model Transformation
FY2021 – FY2023 Medium-term Business Plan Department Store Business – Business Model Transformation Need to drastically overhaul content provided in stores and floor allocation Expand content that adds color to life and creates fulfilling lifestyle Direction of overhaul Expand prime content (luxury,
Slide 36: Department Store Business – Business Model Transformation
FY2021 – FY2023 Medium-term Business Plan Department Store Business – Business Model Transformation Launch business model transformation to “Nagoya-version” department store hybrid one during current Medium-term Business Plan period Achieve top position of gaisho business in terms of assortment, s
Slide 37: Department Store Business – New Content
FY2021 – 2023 Medium-term Business Plan Department Store Business – New Content Entered subscription business AnotherADdress Total number of subscribers 5,260 people 一般 *The figure is as of H1 FY2021. ギフト Create new sustainable consumption style 36
Slide 38: SC Business – New Content
FY2021 – FY2023 Medium-term Business Plan SC Business – New Content Promote development and expansion of timeless content and digital shift Plan to open medical wellness mall Welpa in Shinsaibashi PARCO (November) Broad offering ranging from medical Chance to know health care and care to product sal
Slide 39: Payment and Finance Business – Build Platform for Growth
FY2021 – FY2023 Medium-term Business Plan Payment and Finance Business ー Build Platform for Growth Strengthen product appeal and earning power through renewal of credit cards in January 2021 Changed accounting method for annual membership from lump sum reporting to prorating (IFRS) in H2 2020 Adjust
Slide 40: Developer Business – Deep Cultivation of Key Areas
FY2024 and beyond (next Medium-term Plan and beyond) Developer Business ー Deep Cultivation of Key Areas Preparations for key development areas that have the key to “regrowth” for FY2024 and beyond are making steady progress Department Store and Parco “jointly” create various attractions to show excl
Slide 41: The Group Structure Reform
The Group Structure Reform Reduction of fixed costs (lowering of break-even point) Business model reform HR structure reform Cost structure reform Reduce fixed costs ¥10.0 bn compared to FY2019 Expect to reduce ¥3.7 bn in FY2021 (Including cost, compared to 2019) Consider uncertain business environm
Slide 42: Implementation of Corporate Credo “Service before Profit” = CSV
Sustainability Management Implementation of Corporate Credo “Service before Profit” = CSV Realization of decarbonized society Realization of Promotion of customers’ diversity & healthy/safe/ Integrate secure life inclusion corporate strategies / ７ materiality Clarify long-term business issues goals
Slide 43: Appendix
QQ) 4. FRONT RETAILING Appendix 42
Slide 44: FY2020 Results by Segment
<Reference＞ FY2020 Results by Segment (Retroactive adjustment associated with adoption of new segments) (Millions of yen) Q1 Q2 H1 Q3 Q4 H2 FY2020 Gross sales 113,990) 206,644) 320,635) 213,972) 234,845) 448,818) 769,453) Department Store 63,649) 130,411) 194,060) 132,571) 150,396) 282,967) 477,028)
Slide 45: Fixed Costs Reclassified Due to Store Closure (FY2021 and FY2020)
<Reference> Consolidated total and major subsidiaries Fixed Costs Reclassified Due to Store Closure (FY2021 and FY2020) (Millions of yen, %) First six months of Portion of cost Portion of SGA Total (effect on business profit) fiscal year ending February 28, 2022 TY LY Change TY LY Change TY LY Chang
Slide 46: 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 diff