Village Vanguard Co., Ltd. · TSE:2769

Village Vanguard — Q3 FY05/2012 Earnings Presentation

43 slides from Village Vanguard's earnings presentation, 2012

  1. Slide 1: Q3 FY05/12 Results Presentation

    Q3 FY05/12 Results Presentation

  2. Slide 2: Note

    Note: Any current plans, forecasts, strategy projections, expressions of confidence and other statements made by us in these materials are premised on the information that was available at the moment of the initial publication and on models that depend on uncertain factors that could impact future e

  3. Slide 3: Income Statement (Consolidated)

    Income Statement (Consolidated) Income Statement FY05/10 FY05/11 FY05/12 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Est. Sales 8,630 8,273 10,290 9,456 9,359 9,125 11,397 9,926 10,158 10,005 12,279 11,229 SG&A 2,799 2,879 3,069 3,117 3,120 3,265 3,401 3,429 3,460 3,593 3,806 3,731 Labor 1,248

  4. Slide 4: BS (Consolidated)

    BS (Consolidated) Balance Sheet FY05/10 FY05/11 FY05/12（Result and Estimate） (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Est. Current Assets 20,290 21,231 21,267 22,145 22,205 23,053 22,984 23,782 23,825 25,002 24,695 26,639 （％） 82.0 82.5 82.8 83.5 82.8 83.2 82.8 81.9 81.7 82.0 81.7 83.7 Cash

  5. Slide 5: CF (Consolidated)

    ＣＦ（Consolidated） Cash Flow Statement FY05/10 FY05/11 FY05/12 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Est. Operating Cash Flow -292 -146 298 1,647 -730 -347 -111 1,143 -1,053 -773 -876 1,632 Change in Inventories -872 -1,796 -1,183 -1,335 -644 -1,506 -1,191 -1,415 -881 -2,228 -2,056 -1,457

  6. Slide 6: Parent Company Village Vanguard Corporation

    Parent Company Village Vanguard Corporation © Village Vanguard corporation, All rights reserved. P.5

  7. Slide 7: What We Do

    What We Do Stand-alone Shopping Center ■Village Vanguard ■Diner Our concept is “A bookstore where you can play.” By bringing together various An old-school hamburger shop products such as books, variety goods, and CDs, our stores have a unique feel. modeled after an American diner. ■QK ■new style “E

  8. Slide 8: Examples of Our Merchandising Approach (1)

    Examples of Our Merchandising Approach (1) Merchandise themed around “365-days of Camera We offer merchandise by creating a unique retail living” space aimed at entertaining the customer Camera Lover other than Camera Toy Camera“HOLGA” ・Camera-shaped Shoulder bag Very popular among For example, merc

  9. Slide 9: Examples of Our Merchandising Approach (2)

    Examples of Our Merchandising Approach (2) © Village Vanguard corporation, All rights reserved. P.8

  10. Slide 10: Examples of Our Merchandising Approach (3)

    Examples of Our Merchandising Approach(3) © Village Vanguard corporation, All rights reserved. P.9

  11. Slide 11: How Do We Sell?

    How Do We Sell? We delegate both purchasing and sales decisions to the store level Marketing Store Pursue customer needs in each store Manager has absolute Purchasing discretion ■ Reflect customer needs directly ■ Unique challenge to discover new needs Head Office Proposition Authority ■ POP, zone c

  12. Slide 12: Hiring Strategy

    Hiring Strategy Hiring Strategy Full Time Customer Temp Staff Employee ■ Hiring people who really understand the company ■ Even temporary staff are allowed to make purchasing decisions ■ Long-term practical on-the-job training © Village Vanguard corporation, All rights reserved. P.11

  13. Slide 13: Sourcing Teams

    Sourcing Teams Role Functions The teams assumes the role of in-house (1) Reducing costs by taking advantage of economies of scale (2) "Product ct refining" effe wholesaling teams, proposing products to stores through marketing activities. (2) Creating competition to promote a "product refining" effe

  14. Slide 14: Store Openings (Parent)

    Store Openings (Parent) Store data as of end-Feb 2012 * Figures in parentheses indicate the number of FC stores. 382 stores nationwide Tohoku * Figures that show an increase or decrease over Q3 are in red. 360 Directly Managed (DM) DM 21 312 VV format Hokkaido 35 New style format Break DM 16 Aomori

  15. Slide 15: VV – Results (Parent)

    VV – Results (Parent) © Village Vanguard corporation, All rights reserved. P.14

  16. Slide 16: Parent Income Statement

    Parent Income Statement Parent Income Statement FY05/10 FY05/11 FY05/12 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Est. Sales 8,271 7,827 9,888 9,008 8,783 8,402 10,776 9,315 9,306 8,863 11,254 10,291 Gross Profit 3,351 3,130 3,994 3,582 3,500 3,403 4,354 3,739 3,739 3,431 4,501 4,184 SG&A 2,

  17. Slide 17: Sales by Category

    Sales by Category Sales by Category FY05/10 FY05/11 FY05/12 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 SPICE (Parent) 6,193 5,926 7,785 6,904 6,780 6,461 8,609 7,177 7,361 6,999 9,216 - (Internal Sourcing Team) 1,578 1,565 2,297 1,904 1,752 1,770 2,713 2,088 2,217 2,214 3,116 - (Other) 4,614

  18. Slide 18: Store Openings

    Store Openings FY05/ FY05/ FY05/ FY05/12(Plan and Actual) 09 10 11 Actual Actual Actual Q1 Q2 Q3 Q4 通期 Full Full Full Year Year Initial Initial Initial Initial Revised Initial Revised Actual Actual Actual Year Plan Plan Plan Plan Plan Plan Plan Opening 59 34 46 11 10 5 8 1 6 8 14 25 38 Village 42 30

  19. Slide 19: OP analysis

    OP analysis （単位：百万円） ▲53 ▲256 Decrease in OP due to higher 380 HQ costs −145 million yen Main reasons for higher costs: ・Distribution costs related to increased sales share of the internal sourcing teams ▲257 ・Preparation costs for POS ▲53 introduction ▲ ・Personnel transfer costs 1,272 Decrease in O

  20. Slide 20: Comparable Store Sales Year on Year

    Comparable Store Sales Year on Year Introduction of Dedicated Area Manager system (from March 2010) led to the loss of core store managers from flagship stores. However, pre-Tohoku quake “Strong sellers at appealing spots cumulative FY05/11 sales were +0.8% YoY in the sales ranking order” Over-focus

  21. Slide 21: Theme 1: Improving front-line capability and recovering sales

    Theme 1 Improving front-line capability and recovering sales From around the time the number of stores reached about 300, comparable store sales stopped increasing. Record high store increase Change in store increase and comparable store sales YoY As of February 29, 2012 FY5/2006 FY5/2007 FY5/2008 F

  22. Slide 22: Theme 2: Sourcing teams, efforts to improve cost-to-sales ratios

    Theme 2 Sourcing teams, efforts to improve cost-to-sales ratios Sourcing team, change in cost-to- Merchandise sales ratios over the four terms handled by the sourcing teams 1 Directly source d products Domestic suppliers 3 Imported products In Q3, the cost-to- Overseas suppliers V.V.'s storage Store

  23. Slide 23: Theme 3: Inventory Control

    Theme 3 Inventory Control FY05/10 FY05/10 FY05/11 FY05/11 FY05/11 FY05/11 FY05/12 FY05/12 FY05/12 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 （Million Yen） Cash Flow From Operations 380 1,756 -718 -523 -214 1,042 -950 -1,061 -1,132 ■Net Income Before Tax 2,498 3,256 502 1,015 2,371 3,065 672 1,098 2,390 ■Net Increas

  24. Slide 24: Company Profile: Titicaca

    Compa ny Prof ile Titicaca © Village Vanguard corporation, All rights reserved. P.32

  25. Slide 25: Outside Titicaca Stores

    Outside Titicaca Stores Lake Town You Me Town Shibuya store store store (Shibuya, Tokyo) (Koshigara , Saitama) (Beppu, Oita) Early days Now Started as a folk art shop, with signs and store fixtures Warm, natural store interior, Image of a Mexican resort hand-made by staff, in order emphasizing color

  26. Slide 26: New Titicaca Stores

    New Titicaca Stores Laforet- Laforet-Harajuku Nigata store Yodobashi Umeda store Opened January 28, 2012 Opened February 24, 152 sq/m 2012 119 sq/m Design of the new store With With the the design design based based on on the the motif motif ofof an an authentic authentic Mexican Mexican resort reso

  27. Slide 27: Inside Titicaca Stores

    Inside Titicaca Stores © Village Vanguard corporation, All rights reserved. P.39

  28. Slide 28: Store Openings

    Store Openings Store data as of end-February 2012 * Figures in parentheses indicate the number of FC stores. 73 Stores Nationwide (75) Tohoku * Figures that increased or decreased from end- September 2011 are in red. 71 DM stores (73) DM 4 2 FC stores (2) Figures in parentheses indicate the number o

  29. Slide 29: Titicaca – 3Q Results: Income Statement

    Titicaca – 3Q Results 1. Income Statement Met Q3 budget - Sales +3.6%, Recurring Profit 78.8% YoY Titicaca Income Statement FY03/10 FY03/11 FY03/12 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Est. Sales 361 474 416 467 579 720 630 626 826 1,148 977 856 Gross Profit 246 314 272 291 390 473 412

  30. Slide 30: Titicaca – Results (Cumulative)

    Titicaca – Results (Cumulative) Sales vs. Plan: Targets Sales: +3.2% against Q3 plan (+91 million yen) Achieved Existing stores: -0.1% (-6 million yen) Wholesale and FC sales: +1.8% (+2million yen) New stores: +11.4% (+89 million yen) SG&A Costs Within -0.4% against Q3 plan (-5 million yen) Budget v

  31. Slide 31: Results

    Results Comparable stores 3Q +12.5% YoY sales Achieving positive YoY sales for 50 consecutive months (Feb. 2008- Mar. 2012) 123.8% 120.6% 118.6% 115.4% 113.6% 111.7% 121.1% 108.8% 111.0% 105.1% 104.5% Comparable store 106.2% sales for those stores unaffected by March 83.9% 2011’s earthquake +4.1% Yo

  32. Slide 32: Growth Strategy

    Growth Strategy Investment in human resources - increasing the number of managers - FY03/12 FY03/13 4. Head of Sales HQ Block Manager 3 Block Manager 3 Dedicated Area Manager 2 1. Dedicated Area Manager 4 Playing Area Manager 8 2. Playing Area Manager 9 Sub Manager 6 3. Sub Manager 12 Store Manager

  33. Slide 33: Village Vanguard (Hong Kong) Limited

    Village Vanguard (Hong Kong) Limited © Village Vanguard corporation, All rights reserved. P.47

  34. Slide 34: Inside the Store (VVHK)

    Inside the Store （VVHK） Could you be my friend? Bail… HKD930 © Village Vanguard corporation, All rights reserved. P.32

  35. Slide 35: Village Vanguard Hong Kong - Results

    Village Vanguard Hong Kong - Results FY05/11 （Actual） FY05/12（Actual and Plan） Q4 Store Locations （Million Yen） Q1 Q2 Q3 Q4 Q1 Q2 Q3 Est. Sales 36 23 31 28 30 22 32 48 1 Megabox Store Versus Plan(mn) -15 +11 +4 +2 -2 -8 -9 - YoY (mn) - - - - -6 -1 +1 +20 2 DNA Store Gross Profit 15 10 14 9 13 6 14 2

  36. Slide 36: Approaching profitability at the operating level

    Challenges and actions (VVHK) Approaching profitability at the operating level Current status Reducing rent and distribution costs SG&A expenses decreased (87.2% of last year) Sales decreased (93.1% of last year) Megabox Underperformed YoY due to external factors DNA Sales were strong as a result of

  37. Slide 37: Village Vanguard Webbed Limited

    Village Vanguard Webbed Limited (Consolidated from FY05/11 Q4) © Village Vanguard corporation, All rights reserved. P.34

  38. Slide 38: Results and Sales YoY

    Results and Sales YoY (Thousand Yen)) FY 05/12 ■Sales YoY (*Based on value of customers’ orders) (Result and Plan) PL Q1 Q2 Q3 Q4 (Result) (Result) (Result (Plan) Sales 20,720 22,405 32,610 119,430 Market on new Vs. Plan (%) 75.9 53.9 45.2 (Changes) （-6,578） （-19,143） (-39,593) - website Gross Profi

  39. Slide 39: Challenges and actions

    Challenges and actions POP Examples As the second stage, we plan to release 1. Provide fun content! The percentage of items that did a function enabling users to create "a not get clicked at all in a day is my favorite page". unchanged at about 50%. *Customers will be able to display their favorite

  40. Slide 40: Concept and future strategy for the new site

    Concept and future strategy for the new site To stimulate activities within the website, enhance product variety by creating a website where customers can freely participate. Selling VV goods + goods offered by users Selling VV goods Enhance variety of goods Not only goods selected by VV, original g

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  43. Slide 43: Village Vanguard

    2 VUNG VyNGUARD

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