Village Vanguard Co., Ltd. · TSE:2769

Village Vanguard — FY05/13 Earnings Presentation

44 slides from Village Vanguard's earnings presentation, 2013

  1. Slide 1: FY05/13 Results Presentation

    FY05/13 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 FY05/12 FY05/13 FY05/14 (Million Yen) Q1 Q2 Q3 Q4 Q1 Act. Q2 Act. Q3 Act. Q4 Act. Q1 Est. Q2 Est. Q3 Est. Q4 Est. Sales 10,158 10,005 12,279 10,500 10,167 10,232 12,504 10,862 10,416 11,140 13,308 12,082 SG&A 3,460 3,593 3,806 3,826 3,665 3,991 4,083

  4. Slide 4: Balance Sheet (Consolidated)

    Balance Sheet (Consolidated) Balance Sheet FY05/12 FY05/13 FY05/14 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Est. Q2 Est. Q3 Est. Q4 Est. Cash & Deposit 2,586 2,865 2,773 3,570 2,721 4,009 3,201 2,995 1,934 3,078 4,299 3,647 Inventories 17,827 19,175 19,007 18,669 19,439 21,271 21,303 16,697 17,215 1

  5. Slide 5: Cash Flow (Consolidated)

    Cash Flow (Consolidated) Cash Flow Statement FY05/12 FY05/13 FY05/14 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Est. Q2 Est. Q3 Est. Q4 Est. Operating Cash Flow -1,053 -773 -876 558 -520 -616 -1,198 18 -1,867 -2,014 -825 -258 Change in Inventories -881 -2,228 -2,056 -1,720 -770 -2,597 -2,615 -2,689 -5

  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 Standalone Store Mall-located Store ■Village Vanguard ■Diner Our concept is “Exciting Book Store”. By bringing together various products An old-school hamburger shop such as books, variety goods, and CDs, our stores have a unique feel. modeled after an American diner. ■Other Formats ■new

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

    Examples of Our Merchandising Approach (1) We offer merchandise by creating a unique retail space aimed at entertaining the customer Merchandise themed around “Harajuku Girls” Once upon a time, For example, merchandise themed around “World Travel” there was a very long zipper… Listen to music while

  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 ■Focus on customer needs in each store Store Manager has Purchasing absolute 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 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: Store Network (Parent)

    Store Network (Parent) Store data as of end-May 2013 393 stores nationwide * Figures in parentheses indicate the number of FC stores Tohoku * Figures in red show there were changes in the number from Q3. 378 directly managed (DM) Hokkaido DM 22 326 VV format DM 16 Aomori 39 new style format FC 1 5 4

  14. Slide 14: Village Vanguard – Results (Parent)

    Village Vanguard – Results (Parent) © Village Vanguard corporation, All rights reserved. P.13

  15. Slide 15: Income Statement (Parent)

    Income Statement (Parent) Parent Income Statement FY05/12 FY05/13 FY05/14 (million yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Est. Q2 Est. Q3 Est. Q4 Est. Sales 9,306 8,863 11,254 9,509 8,949 8,541 10,983 9,286 8,750 8,659 11,162 9,777 Gross Profit 3,738 3,432 4,501 3,690 3,464 3,313 4,271 3,517 3,379 3,349 4,

  16. Slide 16: Sales by Category

    Sales by Category Sales by Category FY05/11 FY05/12 FY05/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 SPICE (Parent) 6,780 6,461 8,609 7,177 7,361 6,999 9,216 7,684 7,217 6,958 9,205 7,718 (Internal Sourcing Team) 1,752 1,770 2,713 2,088 2,217 2,214 3,116 2,310 2,066 2,056 2,846 2,299 (Other

  17. Slide 17: Operating Profit Analysis

    Operating Profit Analysis (Million Yen) 3,000 2,800 2,600 -609 Increase in operating profit from new stores (less than 13 months Decrease in operating profit Decrease in operating profit due to non-store since opening): 68 million yen 2,400 at existing stores:▲255 operational factors: -127 million y

  18. Slide 18: Store Openings

    Store Openings FY05/11 FY05/12 FY05/13 FY05/14 Plan Actual Actual Plan and Actual Q1 Q2 Q3 Q4 FY FY FY Plan Actual Plan Openings 46 38 25 17 2 8 4 6 20 Village Vanguard 39 30 20 13 1 7 1 5 14 new style 7 7 5 3 1 1 1 0 3 QK 0 1 0 0 0 0 1 0 1 Diner 0 0 0 0 0 0 1 1 2 FC 0 0 0 1 0 0 0 0 0 Closures 15 13

  19. Slide 19: Year-on-Year Retail Sales at Comparable Stores

    Year-on-Year Retail Sales at Comparable Stores （％） YoY sales at comparable stores “Strong seller occupying appealing The dedicated Area Manager system spots in the sales rankings” introduced in March 2010, leading to Over-focusing on strong sellers 100.8% YoY sales at existing stores based on data l

  20. Slide 20: Measures Focused on Achieving a Sales Recovery

    Theme 1 Measures Focused on Achieving a Sales Recovery Moving from “standardized basic operations” to “job content that increases creativity” ■ 6th issue of staff magazine ⇒ learn basic skills Enhancing ■ Special issue: successful stores ⇒ case studies Skills ■ Companywide customer service training

  21. Slide 21: Next-Generation Operating Performance Management System

    Theme 2 Next-Generation Operating Performance Management System Change in inventory valuation method: Early valuation write-downs based on past inventory turnover rates Under the previous method: (Figures are given as an example for illustration purposes and bear no relation to actual figures) Purch

  22. Slide 22: Inventory Control

    Theme 3 Inventory Control (Million Yen) FY05/11 FY05/12 FY05/12 FY05/12 FY05/12 FY05/13 FY05/13 FY05/13 FY05/13 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Cash Flow from Operations 1,042 -950 -1,061 -1,132 102 -159 -685 -1,060 -101 ■Net Income before Tax 3,065 672 1,098 2,390 2,696 522 707 1,764 -2,743 ■Net Change

  23. Slide 23: Titicaca

    Titicaca i | Me Company Profile: a Sane A 3 i273 Py ~ 2225 i ¢ gt ek » » > ok Sst > ™ as SK 4 at ac ¢ “6 ara, =x ae 5} wy % ” y >} a . ‘ > > > J

  24. Slide 24: Company Overview (Titicaca)

    Company Overview (Titicaca)  Company name: Titicaca Co.  Shareholder composition: Village Vanguard Co., Ltd. (100%)  Business: Import and sales of ethnic fashions and variety goods  Headquarters: 2-2-3 Shin-Yokohama, Kohoku-ku, Yokohama, Kanagawa Prefecture  Representative: Hitoshi Kinami, Mana

  25. Slide 25: Titicaca Store Network

    Titicaca Store Network Store data as of end-May 2013 Figures in red show there were changes in the number from end-February 2013 108 Stores Nationwide 106 Directly Managed (DM) Hokkaido 2 Franchise (FC) Stores DM 4 Tohoku Hokkaido 4 DM 5 Akita 1 Iwate 1 Hokuriku Yamagata Miyagi DM 7 1 2 ETHIC Kyoto

  26. Slide 26: Titicaca Store Entrances

    Titicaca Store Entrances New stores opened during Q4 Kobe Harborland umie Opened April 16 AEON Mall Osaka Dome AEON Mall Higashi Kurume Opened May 28 Opened April 18 © Village Vanguard corporation, All rights reserved. P.27

  27. Slide 27: Interior of Titicaca Stores

    Interior of Titicaca Stores © Village Vanguard corporation, All rights reserved. P.28

  28. Slide 28: Titicaca ETHIC opened in Omotesando and Kyoto Teramachi

    Branding Strategy Titicaca ETHIC opened in Omotesando (Tokyo) and Kyoto Teramachi as flagship stores to spread the Titicaca concept Store Concept Become a bridge between producers and consumers, and contribute to society by promoting ethical consumption Spread Info •Excellent locations as informatio

  29. Slide 29: © Village Vanguard corporation, All rights reserved. P.30

    © Village Vanguard corporation, All rights reserved. P.30

  30. Slide 30: Titicaca - Results

    Titicaca - Results Income Statement Results vs. forecast: Sales 101.0% Recurring profit 92.6% Comparable stores 101.5% (+30 million yen) Wholesale/Franchise stores: 89.5% (-15 million yen) New stores 105.2% (+37 million yen) Net increase in stores YoY: 22 FY03/13 cumulative: All-store comparison YoY

  31. Slide 31: Titicaca - Results SG&A vs. Budget Operating Profit YoY

    Titicaca - Results SG&A vs. Budget Operating Profit YoY ・SG&A vs. Q4 budget: +1.5% (+45 million yen) •OPM at 12.9% vs. 15.2% in Q4 FY03/12 •Ratio of corporate overhead to sales at 12.2% vs. 12.1% in Q4 FY03/12 (Million Yen) Increased (Million Yen) expense from 1,200 magazine and 3,030 other advertis

  32. Slide 32: Titicaca - Results Comparable Store Sales Store Openings

    Titicaca - Results Comparable Store Sales +12.3％ vs. FY03/13 (full year) * FY denoted by color Higher monthly Higher monthly sales sales YoY for 24 YoY for 49 consecutive consecutive months months (Feb 2008-Feb 2011) Comparable stores on which the earthquake had no impact: +4.1% YoY FY03/09 FY03/10

  33. Slide 33: Growth Strategy

    Growth Strategy Tasks to Ensure Growth in the Next FY and Beyond ① Upgrade Production/Delivery ② Develop Human Resources Management System Aggressive store openings have led to large variation in store Delays in delivering inventory due to weakness in some HQ functions manager standards ①Investment

  34. Slide 34: Village Vanguard Webbed

    Village Vanguard Webbed © Village Vanguard corporation, All rights reserved. P.35

  35. Slide 35: Company Overview (Village Vanguard Webbed)

    Company Overview (Village Vanguard Webbed)  Company name: Village Vanguard Webbed Corporation Online shopping site  Shareholder: Village Vanguard Co., Ltd. (100%)  Business: Online retailer, real estate media site operation  Headquarters: 2-2-3 Shinyokohama, Kohoku-ku, Yokohama, Kanagawa  Repre

  36. Slide 36: Village Vanguard Webbed - Results

    Village Vanguard Webbed - Results (Thousand Yen) ■ Sales YoY (Order Value Basis) PL FY05/13 FY05/14 180.0% 163.6% Q4 Q1 Q2 Q3 Q4 163.7% (Actual) (Plan) (Plan) (Plan) (Plan) 160.0% Sales 134,934 41,361 108,421 221,188 343,603 Vs. Plan (%) 129.5 138.4% (Difference) （＋30,756） — — — — 140.0% 135.8% 140.

  37. Slide 37: Overseas Subsidiaries

    Overseas Subsidiaries © Village Vanguard corporation, All rights reserved. P.38

  38. Slide 38: Village Vanguard (Hong Kong) Limited Company Overview

    Village Vanguard (Hong Kong) Limited Company Overview  Company Name: Village Vanguard (Hong Kong) Limited  Shareholders: Village Vanguard Co., Ltd. (80%) Era-Bee Limited (20%) (Development of Japanese language education and culture-related businesses)  Business: Retail sales exhibiting a fusion o

  39. Slide 39: Village Vanguard (Hong Kong) Limited

    Village Vanguard (Hong Kong) Limited PL Store Locations FY05/13 Results FY05/14 Plan (Thousand Yen) 6 stores (as of May 31, 2013) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 27 69 127 178 47 107 205 297 4 Vs. Plan -4 +9 +20 +37 - - - - YoY Change -2 +17 +42 +69 +20 +38 +78 +118 6 1 3 GP 11 4 25 24 19 43 65 77 2 5

  40. Slide 40: Titicaca Hong Kong Limited Company Overview

    TITICACA HONG KONG LIMITED Company Overview  Company name: Titicaca Hong Kong Limited  Shareholders: Village Vanguard Co., Ltd. (100%)  Business: Import and sales of ethnic fashions and daily goods  Headquarters: Room 1901, 19/F, Entrepot Centre, 117 How Ming Street, Kwun Tong, Kowloon  Represe

  41. Slide 41: Titicaca Hong Kong Limited

    TITICACA HONG KONG LIMITED Results (Thousand Yen) Inside Stores FY05/13 (Actual) FY05/14 (Plan) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (Actual) (Actual) (Actual) (Actual) (Plan) (Plan) (Plan) (Plan) Net Sales 3,775 18,249 55,540 91,610 45,069 119,665 205,990 285,154 Vs. Plan 188.8％ 228.1％ 183.6％ 216.8％ - - - - YoY

  42. Slide 42: Village Vanguard (Taiwan) Limited Company Overview

    Village Vanguard (Taiwan) Limited Company Overview  Company name: Village Vanguard (Taiwan) Limited  Shareholders: Village Vanguard Co., Ltd. (100%)  Business: Retail sales exhibiting a fusion of books, SPICE (variety goods) and new media (CDs, DVDs, others) based on the idea of a “bookstore wher

  43. Slide 43: Village Vanguard (Taiwan) Limited Results

    Village Vanguard (Taiwan) Limited Results Inside Store FY05/13 Results FY05/14 Plan Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (Thousand Yen) Sales 2 8 16 23 7 15 25 32 Vs. Plan -1 -0 -3 -7 - - - - YoY - - - - +5 +7 +9 +9 GP 0 -2 0 2 3 6 9 12 Vs. Plan -0 -0 -2 -4 - - - - YoY - - - - +2 +8 +9 +10 OP -10 -20 -28 -35 -3

  44. Slide 44: ED VWnGe VoNGUARD

    ED VWnGe VoNGUARD

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