J. Front Retailing Co., Ltd. · TSE:3086
J. Front Retailing — FY2022 Earnings Presentation
44 slides from J. Front Retailing's earnings presentation, Apr 11, 2023
Slide 1: Presentation of Results for Fiscal Year Ended February 28, 2023
～ Turning Point for Regrowth ～ Presentation of Results for Fiscal Year Ended February 28, 2023 April 11, 2023 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 I. Overview of FY2022 Results II. H1/Full FY2023 Forecast III. Progress of Medium-term Business Plan 1
Slide 3: Overview of FY2022 Results (IFRS)
Overview of FY2022 Results (IFRS) 2
Slide 4: Consolidated PL (IFRS)
Consolidated PL (IFRS) Gross sales up, mainly in mainstay Department Store, and business profit up despite unplanned cost increases Operating profit and profit down due to loss on business liquidation of Matsumoto PARCO and impairment losses on some stores Year-end dividend is ¥16 per share, as plan
Slide 5: Segment Performance (1) Department Store Business (IFRS)
Segment Performance (1) Department Store Business (IFRS) Consumption of high-end products remained strong throughout the fiscal year, and inbound sales grew rapidly from H2 Business profit up despite unplanned increase in SGA, but operating profit down due to impairment losses Revenue Business profi
Slide 6: Daimaru Matsuzakaya Department Stores Major Store Sales
Daimaru Matsuzakaya Department Stores Major Store Sales Comparable store sales in H2 improved to a decrease of 2.2% from FY2019 and a decrease of 7.8% from FY2018 Kobe and Nagoya stores, which have strength in regular customers, showed positive growth compared to both FY2019 and FY2018 Tokyo store s
Slide 7: Daimaru Matsuzakaya Department Stores Inbound Sales Trends
Daimaru Matsuzakaya Department Stores Inbound Sales Trends Rapid growth in inbound sales due to relaxation of border control in October 2022 Currently driven mainly by tourists from East Asia, such as Hong Kong, Taiwan, and South Korea, excluding mainland China Duty-free sales trends (directly manag
Slide 8: Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) H2 FY2022
Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) H2 FY2022 SGA analysis (Millions of yen) Decrease in Increase in operational 948 rent expenses Increase in costs Increase in ad expenses 1,776 377 25 68 Decrease in operational Increase in rent expenses costs Increase in (188) 406 ad expenses
Slide 9: Segment Performance (2) SC Business (IFRS)
Segment Performance (2) SC Business (IFRS) Improved mainly in core urban stores, but impact of easing of lease contract conditions continued in some stores Loss on business liquidation of Matsumoto PARCO and impairment losses at Shizuoka PARCO also had an impact Revenue Business profit Operating pro
Slide 10: Segment Performance (3) Developer Business (IFRS)
Segment Performance (3) Developer Business (IFRS) Sales of J. Front Design & Construction and PSS rose, but profits were affected by the termination of operations of some real estate rental properties Business profit and operating profit exceeded October forecast; significant decrease in operating p
Slide 11: Segment Performance (4) Payment and Finance Business (IFRS)
Segment Performance (4) Payment and Finance Business (IFRS) As Department Store performance was on a recovery track and external transaction volume grew steadily, annual fee income also increased Both business profit and operating profit increased significantly and exceeded October forecast due to s
Slide 12: Segment Performance (5) Other (IFRS)
Segment Performance (5) Other (IFRS) Mainstay Daimaru Kogyo posted higher sales and profits due to strong performance in automotive-related parts and industrial materials Total sales and profits decreased due to the effect of deconsolidation of Dimples’ following the partial transfer of its shares R
Slide 13: Consolidated BS (IFRS)
Consolidated BS (IFRS) Total assets decreased ¥71.9 billion from the end of the previous fiscal year, mainly due to a reduction in cash and deposits and depreciation Interest-bearing liabilities (excluding lease liabilities) were ¥249.1 billion, achieving the mid- term plan target one year ahead of
Slide 14: Consolidated CF (IFRS)
Consolidated CF (IFRS) Net cash provided by operating activities was ¥65.4 billion, an increase of ¥15.6 billion from the previous year due to improved profit level Net cash used in investing activities was ¥13.3 billion; free CF of ¥52.1 billion was secured Reduced cash and deposits on hand, which
Slide 15: H1/Full FY2023 Forecast (IFRS)
H1/Full FY2023 Forecast (IFRS) 14
Slide 16: Business Environment Awareness
Business Environment Awareness ＋） COVID-19 will be reclassified to Class 5 next month, further normalizing economic activity ＋） Consumer confidence is improving due to high level of wage increases in Japan －） Global inflation continues due to soaring raw and other material costs －） Financial concern
Slide 17: Consolidated PL Forecast (IFRS)
Consolidated PL Forecast (IFRS) Mainstay Department Store and SC Businesses, which are expected to see a significant increase in top line, will drive performance improvement Business profit, operating profit, and profit will all significantly increase despite cost increases due to soaring utilities
Slide 18: Breakdown of Profit Forecast by Segment
Breakdown of Profit Forecast by Segment Review mainly Department Store and SC Businesses to reflect actual conditions such as consumption trends and cost increasing factors (Billions of yen) FY2023 forecast vs. mid-term plan Department Store 22.9 (1.2) Business profit SC 7.0 (5.6) Developer 6.4 2.9)
Slide 19: Trends in Key Performance Indicators and Comparison to Mid-term Plan
Trends in Key Performance Indicators and Comparison to Mid-term Plan Reflect actual conditions such as delayed recovery of middle class consumption due to longer- than-expected impact of COVID-19 Revised down forecasts for business profit and operating profit, but aims to achieve an ROE of 7.0% as s
Slide 20: Trends in Dividends per Share
Trends in Dividends per Share After COVID-19, we will continue to improve dividend levels steadily each year while monitoring earnings recovery 40 Ordinary dividend Commemorative dividends (Yen) 35 2 30 25 20 35 36 33 33 15 31 28 29 27 27 25 22 10 18 16 16 14 14 5 0 (FY) 2008 2009 2010 2011 2012 201
Slide 21: Segment Performance Forecast (1) Department Store Business
Segment Performance Forecast (1) Department Store Business Affluent consumers are expected to maintain strong consumption, and the effect of renovation of luxury and other areas implemented since last year is also expected to increase Inbound sales are expected to reach ¥44.0 billion (more than 70%
Slide 22: Daimaru Matsuzakaya Department Stores Major Store Sales Forecast
Daimaru Matsuzakaya Department Stores Major Store Sales Forecast Double-digit sales growth at many key stores due to sustained consumption by affluent customers and recovery of inbound consumption Particularly, sales of Shinsaibashi and Sapporo stores are expected to have a significant boost from in
Slide 23: Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) FY2023
Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) FY2023 SGA analysis Packing and (Millions of yen) transportation Personnel costs expenses ・Increase in commissions due to sales growth (¥1.3 bn) (647) (279) ・Increase in supplies expenses due to higher utilities expenses (¥1.5 bn) Depreciatio
Slide 24: Segment Performance Forecast (2) SC Business (IFRS)
Segment Performance Forecast (2) SC Business (IFRS) Sustained strong performance at Shibuya and Shinsaibashi PARCO and the effect of core store renovations implemented sequentially since the previous year Despite unexpected cost increases in utilities and other expenses, easing of tenant conditions
Slide 25: Segment Performance Forecast (3) Developer Business (IFRS)
Segment Performance Forecast (3) Developer Business (IFRS) Plan to record a gain on sale of development properties that have been upgraded in value by J. Front City Development (business profit) J. Front Design & Construction expects to receive orders mainly for the Group construction and large-scal
Slide 26: Segment Performance Forecast (4) Payment and Finance Business (IFRS)
Segment Performance forecast (4) Payment and Finance Business (IFRS) Expect an increase in commission income, etc. due to higher transaction volume at department stores and external merchants Expect to exceed the mid-term plan due to stable increase in annual fee income and higher average spend per
Slide 27: Segment Performance Forecast (5) Other (IFRS)
Segment Performance Forecast (5) Other (IFRS) Forecast higher sales and profits at mainstay Daimaru Kogyo, mainly in its Automotive Department Revenue Business profit Operating profit 60,000 55,922 57,000 1,400 1,300 1,400 1,200 50,000 1,200 1,200 1,000 924 1,000 899 40,000 800 800 30,000 600 600 20
Slide 28: Consolidated BS Forecast (IFRS)
Consolidated BS Forecast (IFRS) Total assets are expected to be ¥1,100.0 billion, a decrease of ¥20.9 billion from the end of the previous fiscal year, due to depreciation and other factors Interest-bearing liabilities (excluding lease liabilities) are expected to be ¥225.0 billion, and D/E ratio wi
Slide 29: Consolidated CF Forecast (IFRS)
Consolidated CF Forecast (IFRS) Net cash provided by operating activities is expected to be ¥75.0 billion, an increase of ¥9.5 billion from the previous year, mainly due to higher profit Net cash used in investing activities is expected to be ¥20.0 billion due to renovation investment in Department
Slide 30: Progress of Medium-term Business Plan
FY2021 - FY2023 Progress of Medium-term Business Plan 29
Slide 31: Final Year of Mid-term Plan: ROE
Final Year of Mid-term Plan Business profit ROE Operating profit Expected to achieve 7% “Full recovery” will be carried over Urgent need to break away from the business portfolio overly dependent on existing retail business An important year to ensure the baton is passed on for regrowth 30
Slide 32: Department Store Business: Promotion of Digitalization of Touch Points
Department Store Business ー Promotion of Digitalization of Touch Points Steady expansion and deepening of contacts with customers through app, and significant progress in CRM sophistication Steady results by uncovering new customers through regression analysis targeting gaisho customers Trends in th
Slide 33: Department Store Business: Deepen Prime Life Strategy
Department Store Business ー Deepen Prime Life Strategy Progress in developing and deeply cultivating young affluent customers by enriching content and utilizing digital sales Strengthening of events, etc., was also be successful, resulting in double-digit growth in gaisho sales in FY2022 compared to
Slide 34: Department Store Business: Evolution of GINZA SIX
Department Store Business ー Evolution of GINZA SIX Born through integrated development of two blocks including the former site of Matsuzakaya Ginza store, in the direction of “operating no department store” Continue unique evolution as Ginza’s premier “luxury mall” through COVID-19 Customers in thei
Slide 35: SC Business: Strategy Restructuring
SC Business ー Strategy Restructuring Shibuya Shinsaibashi PARCO PARCO ✓ One and only next-generation commercial space ✓ Promote acquisition of new rich customers ✓ 3-D promotion using social media and the entire building ✓ Wellness mall that gives new motivation to visit the store ✓ New challenge as
Slide 36: Developer Business: Reinforcement of Promotion System
Developer Business － Reinforcement of Promotion System Strengthen the system for promoting developer strategies for development in eight key areas in seven cities Establishment of new company J. Front City Development Sapporo (in front of station) ✓ Spun off Parco's developer business ✓ Strengthen t
Slide 37: Payment and Finance Business: Strategic Shift from a Mid- to Long-term Perspective
Payment and Finance Business － Strategic Shift from a Mid- to Long-term Perspective Strengthen collaboration with Department Store and expand growth base by promoting card customer acquisition Expansion of card customers ・Renewed Daimaru Matsuzakaya Card (January 2021) ・Expansion of membership onlin
Slide 38: CVC Fund Launched
CVC Fund Launched Promote creation of new businesses and reform and innovation of existing businesses in the Group J. Front Retailing VC (partner) Management/ know-how Investment Capital gain Investment CVC fund Startup Startup Startup First, started collaborating with startups in the areas of “meta
Slide 39: Exploration of Metaverse/Web 3 Area
Exploration of Metaverse/Web ３ Area Create new spaces using digital technologies at the Group level while leveraging real stores <Customer creation (community) / space creation> Department PARCO Store Creation of experience value by leveraging Web 3 strengths of real world Metaverse Facilities devel
Slide 40: Development of Digital Human Resources
Development of Digital Human Resources Launched challenging efforts to develop 1,000 core digital human resources Digital designer Data analyst FY2024 FY2030 100 people 1,000 people Imagine assigning at least one digital human resource to each division of each Group company Improve productivity thro
Slide 41: Entry into Esports Business
Entry into Esports Business Made XENOZ Co., Ltd., which owns the esports team SCARZ, a subsidiary in November last year Create new experience value through collaboration with Department Store, Parco, and other Group companies Photo credit: SCARZ Acquire a new customer base centered on the Generation
Slide 42: Focus on Mid- to Long-term Growth
Focus on Mid- to Long-term Growth Navigate uncertain times and create the future Enhance portfolio resilience Innovation of existing businesses ＋ Creation of new businesses A new approach that is not an extension of the conventional one is essential Create innovation by gathering diverse “wisdom” “C
Slide 43: Sustainability Management and Value Creation
Sustainability Management and Value Creation Practice of Corporate Credo ＝ CSV Social Financial Human Manufactured Intellectual relationship Natural capital capital capital capital capital capital Organization ability Opportunity Management strategy Risk Governance × Improve Social Economic Strength
Slide 44: 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