Sundrug Co., Ltd. · TSE:9989

Sundrug — FY3/22 Earnings Presentation

24 slides from Sundrug's earnings presentation, May 13, 2022

1. Slide 1: FY3/22 Results Briefing Presentation

   FY3/22 Results Briefing Presentation May 13, 2022 Copyright (C) SUNDRUG CO, LTD. ALL RIGHTS RESERVED.

2. Slide 2: Contents

   Contents  FY3/22 Results Summary  FY3/23 Full-Year Guidance  Management Issues and Medium-term Business Plan Copyright (C) SUNDRUG CO, LTD. ALL RIGHTS RESERVED. 2

3. Slide 3: FY3/22 Results Summary

   FY3/22 Results Summary Copyright (C) SUNDRUG CO, LTD. ALL RIGHTS RESERVED. 3

4. Slide 4: FY3/22 Financial Highlights

   FY3/22 Financial Highlights FY3/22 results Net sales Operating income Store openings ¥648.7 billion ¥34.0 billon 84 stores YoY +2.3％ YoY -8.8％ YoY +33.3％  Impact of pullback from COVID-19 / stay-at-home demand  Performance at station front-type stores remained weak  84 stores opened – new record

5. Slide 5: Consolidated Income Statement

   Consolidated Income Statement (millions of yen) FY3/21 FY3/22 Reference: Previous reporting basis Results Results Guidance Breakdown Breakdown YoY change Vs. guidance Breakdown Results Breakdown YoY change Net sales 634,310 100.0% 648,734 100.0% 2.3% -1.2% 656,600 100.0% 656,759 100.0% 3.5% Gross pr

6. Slide 6: Consolidated Income Statement By Business

   Consolidated Income Statement By Business (millions of yen) FY3/21 FY3/22 Drugstore Reference: Previous reporting basis business Results Results Guidance Breakdown Breakdown YoY change Vs. guidance Breakdown Results Breakdown YoY change Net sales 422,251 100.0% 424,825 100.0% 0.6% -1.7% 432,140 100.

7. Slide 7: Store Openings

   Store Openings  Target achieved on increase in openings of free-standing suburban-type stores FY3/20 FY3/21 FY3/22 Net No. of Net No. of Net No. of stores increase stores increase stores Openings Closures increase Drugstore business +6 876 +27 903 60 - 17 +43 946 Discount store business +15 292 +21

8. Slide 8: Same-Store Sales

   Same-Store Sales  Impact of pullback from COVID-19 / stay-at-home demand Same-store sales growth by business (YoY) Drugstore business Discount store business (%) (%) 30 FY3/21 FY3/22 30 FY3/21 FY3/22 21.6 20 15.1 20 13.4 7.7 7.5 9.8 10.8 7.8 8.4 8.4 9.7 10 3.9 4.2 3.1 10 6.2 5.6 2.8 0.7 -0.9 3.6 -2

9. Slide 9: Net Sales By Category

   Net Sales By Category  Impact from pullback in demand for infection prevention products / food products and stay-at-home demand (millions of yen) FY3/21 FY3/22 Drugstore business Reference: Previous reporting basis Results Results Breakdown Breakdown YoY change Results Breakdown YoY change Health c

10. Slide 10: Consolidated Balance Sheet

    Consolidated Balance Sheet FY3/21 (millions of yen) FY3/22 (millions of yen) (millions of yen) Total assets: 308,528 Total assets: 325,768 (Equity ratio 66.5％) (Equity ratio 67.7％) Current assets +5,275 Cash and cash equivalents +2,835 Liabilities Liabilities Accounts receivable +693 Inventories +51

11. Slide 11: Consolidated Cash Flows

    Consolidated Cash Flows FY3/21 FY3/22 Operating Investing Operating Investing (millions of yen) (millions of yen) cash flows cash flows cash flows cash flows -20,659 Financing -17,901 Financing 31,682 cash flows 31,761 cash flows -8,187 -8,064 86,495 86,495 89,330 80,699 Opening balance Closing bala

12. Slide 12: FY3/23 Full-Year Guidance

    FY3/23 Full-Year Guidance Copyright (C) SUNDRUG CO, LTD. ALL RIGHTS RESERVED. 12

13. Slide 13: FY3/23 Guidance (Consolidated)

    FY3/23 Guidance (Consolidated)  Full-year guidance ⇒ Net sales ¥693.6 billion, operating income ¥35.4 billion (millions of yen) Consolidated Drugstore business Discount store business Guidance Guidance Guidance Breakdown YoY change Breakdown YoY change Breakdown YoY change Net sales 693,600 100.0%

14. Slide 14: Management Issues and Medium-term Business Plan

    Management Issues and Medium-term Business Plan Copyright (C) SUNDRUG CO, LTD. ALL RIGHTS RESERVED. 14

15. Slide 15: Medium-term Business Plan

    Medium-term Business Plan Targeting consolidated net sales of ¥1 trillion FY3/26 targets Net sales Operating income Number of stores ¥1 trillion ¥60.0 billion 1,750 stores Operating margin 6.0％ Business strategy Strengthen Reinforce Store openings M&A dispensing pharmacy EC business business Reinfor

16. Slide 16: Business strategy: Format strategy

    [Business strategy] Format strategy  Combine formats to cover different sales channels, areas and customer segments Suburban locations Station front locations Free-standing Local shopping Extend trading areas store areas Expand target Neighborhood Downtown customer segments shopping center Drugstor

17. Slide 17: Business strategy: Store openings

    [Business strategy] Store openings  Increase number of store openings Store development tasks Response measures  Strengthen property information gathering capabilities Drugstore business Expand store development team 37 staff as of March 31, 2021 41 staff as of March 31, 2022 Initiatives to furthe

18. Slide 18: Business strategy: Reinforce EC business

    [Business strategy] Reinforce EC business  Active in various sales channels Reinforce e-commerce sales  Offer more products online / expand sales channels ※Image E-commerce business sales • Increase number of products • Dec 2021・・・Store opened in JRE Mall • Sep 2021・・・Sales agent outlet opened in

19. Slide 19: Business strategy: Strengthen dispensing pharmacy business

    [Business strategy] Strengthen dispensing pharmacy business  Initiatives to capture dispensing demand in Japan’s aging society As of March 31, 2022 Opening more dispensing pharmacies Standalone pharmacies: 31 stores Drugstore pharmacies: 84 stores Working to open more Dispensing results FY3/2022 di

20. Slide 20: Reinforcement of business base: Digitization

    【Reinforcement of business base】 Digitization  Use customer data to increase customer loyalty Sundrug Group Digital-derived sales My store Official card members registration Sundrug app As of Mar. 31, 2022 No. of Customers Proportion of digital sales: 26.5% 2.22 million 26.1 million (+9.0 ppt YoY)

21. Slide 21: Reinforcement of business base: Improve productivity

    【Reinforcement of business base】 Improve productivity  Initiatives to further improve operational efficiency Started introducing electronic shelf labelling Gross profit +1.0%・labor cost -3.5%  FY3/22: Introduced at 20 stores  FY3/23: Planned introduction at 100 stores  Capital investment: Projec

22. Slide 22: Promote sustainability management

    【Reinforcement of business base】 Promote sustainability management  ESG/SDG initiatives moving from design and launch phase to PDCA cycle phase  Promote sustainability management > support progress monitoring using KPIs, coordinate with business partners, enhance ESG disclosure Category Progress s

23. Slide 23: Shareholder Return Policy

    Shareholder Return Policy  Dividend policy – Pay stable, continuous dividends based on (Yen) a dividend payout ratio of 30% or higher 90 July 2016 40% Repurchased 2 million shares 33.6% 32.3% 34.8% Dividend per share 34.8% 80 35% July 2014 32.2% Payout ratio 70 Repurchased 2.58 million shares 28.3%

24. Slide 24: Contact

    Contact SUNDRUG Co., Ltd. Financial Department 【Address】 1-38-1 Wakamatsu-cho, Fuchu-shi, Tokyo 183-0005 【Phone】 042-369-6211 This document contains information on current business plans, earnings forecasts and projections that constitute forward-looking statements. These forward-looking statements

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