Slide 1: Financial Results Briefing Materials
I am Tsujiguchi, the head of the Planning Section. Thank you for taking time out of your busy schedule to join us today. 1
Slide 2: Contents
Contents 1. FY2/24 Financial Results P. 3 - 12 2. FY2/25 Business Forecasts P. 14 - 16 3. Medium-term Management Plan P. 18 - 52 Medium-term Management Plan 2024 Review The New Medium-Term Management Plan 2027 2 Today, I will begin by explaining the results of our performance for the fiscal year end
Slide 3: Summary of financial results
First, I will provide a summary of the financial results. For the fiscal year ended February 2024, we were able to achieve record highs in sales and each of our profit categories. Even with raw material price hikes, we were able to secure gross profit by reviewing product unit prices, etc. We were a
Slide 4: Consolidated results for FY ended February 2024
Next, we would like to talk about the consolidated results for the fiscal year ended February 2024. The respective results are shown in the slide. First, as an external factor, moving COVID-19 to Class 5 in May has led to a noticeable increase in the flow of people in many places. On the other hand,
Slide 5: Sales by business
Next, sales by business are as shown. Net sales increased YoY in all domestic and overseas operations. The initiatives of each project are explained on page 10 and beyond. 5
Slide 6: Consolidated SG&A expenses breakdown
The following is a breakdown of consolidated SG&A expenses. Personnel expenses increased 5.9% from the previous year due to wage increases implemented in April, which are 6.5% for full-time employees and 5.2% for part-time employees. This wage increase has also led to the hiring of new part-time emp
Slide 7: Consolidated balance sheet
The following is a breakdown of the consolidated balance sheet. Total assets increased 6.2% from the end of the same period last year. The main factor was an 181.5% increase in investment securities compared to the end of the same period last year. Total liabilities decreased by 0.2% from the end of
Slide 8: Shimamura business: existing store sales and customers
Continuing further, I will explain the results of the Shimamura business regarding existing store sales, the number of customers, and the average spend per customer across all stores. Despite challenging weather conditions for the apparel business, we focused on offering products less affected by te
Slide 9: Shimamura business: gross profit, price reductions, inventory
Next, we will explain the results of the Shimamura business in terms of gross profit, price reductions, and inventory. Gross profit increased 4.8% from the previous year, up 0.5 percentage points in percentage terms. This was due to an improvement in the markup rate, mainly through the expansion of
Slide 10: Key challenges: Shimamura business brands
Next, I will explain the results of our efforts on the key challenges. In the Shimamura business, we worked on the evolution of our brands, PB, and co-developed brands with suppliers and JB as part of efforts to strengthen product competitiveness. In PB, we expanded the high-priced CLOSSHI PREMIUM,
Slide 11: Avail and Birthday businesses
Next, we will discuss the Avail and Birthday businesses. In the Avail business, we strengthened our ability to propose trends, centered on JB. CHIP CLIP in JB has strengthened the Korean taste. In addition, SUREVE in JB has launched a collaborative project with Heisei Brand. As a result, JB sales in
Slide 12: Chambre, Divaro, Si meng le and EC businesses
Next, I will explain our efforts in the Chambre, Divaro, Si meng le（Taiwan）, and EC businesses. In the Chambre business, sales of outerwear and accessories, for which JB has strengthened its product lineup, increased. The influencer project launched in JB's "tsukuru & Lin." was effective in terms of
Slide 13: Contents
Contents 1. FY2/24 Financial Results P. 3 - 12 2. FY2/25 Business Forecasts P. 14 - 16 3. Medium-term Management Plan P. 18 - 52 Medium-term Management Plan 2024 Review The New Medium-Term Management Plan 2027 13 Next, I will explain our business forecast and management policy for the fiscal year en
Slide 14: FY2/25 business forecasts
Each numerical forecast is as shown. For the fiscal year ending February 2025, we forecast net sales of JPY659.6 billion, a 3.9% increase over the previous year. We will focus on promoting and strengthening product offerings and sales power in each business segment to boost existing store sales. To
Slide 15: Management policy for FY ending February 2025
Next, I will explain our management policy for the fiscal year ending February 2025. The unifying theme is Next Challenge 1st: Changing the Obvious. During the three years of the previous medium-term management plan, we laid a solid foundation. This year, all departments will take on new challenges.
Slide 16: Store opening, closing and renovation plan
Next, I would like to explain the opening/closing and renovation plan. We plan to open 43 new stores and close 16 stores, for a net increase of 27 stores. As a result, the number of stores at the end of the fiscal year ending February 2025, is expected to be 2,254. We will promote the relocation and
Slide 17: Contents
Contents 1. FY2/24 Financial Results P. 3 - 12 2. FY2/25 Business Forecasts P. 14 - 16 3. Medium-term Management Plan P. 18 - 52 Medium-term Management Plan 2024 Review The New Medium-Term Management Plan 2027 17 Next, I will explain our medium-term management plan.
Slide 18: Flow of explanation
The flow of the explanation is as shown. First, I will explain a review of the previous medium-term management plan, which ended in February 2024. Next, I will explain the new Medium-Term Management Plan 2027. 18
Slide 19: Previous medium-term plan performance evaluation
The main performance evaluation of the previous medium-term management plan is shown in the slide. Although the number of new store openings did not meet the initial plan, other items significantly exceeded it for the fiscal year ended February 2024. Regarding store openings, there was a shortfall o
Slide 20: Sales trend under previous plan
The sales trend is as shown in the table. It bottomed out in the fiscal year ended February 2020 and we recovered from there. We were able to achieve our initial sales plan one year ahead of schedule. On the other hand, sales in the EC business did not reach the plan. This is because priority was gi
Slide 21: Evaluation by business
Next is a project-specific evaluation. In all businesses, sales per store rose, providing a foundation for growth to expand store openings. In terms of operating profit margin, the Shimamura business maintained a high-profit level and was able to establish itself as a profit-based business. On the o
Slide 22: Basic policy of previous plan
Next, I would like to talk about the basic policy. The policies and implementation items for each year are shown below. Over its three-year period, the previous medium-term management plan “Reborn” lived up to its name ,returning the Shimamura Group to its original brilliance while laying the founda
Slide 23: Efforts on key challenges
Next, I would like to Efforts key challenges. First, with respect to strenghthen product appeal, we improved brand power by strengthening our planning capabilities for PB, JB, influencers/characters, and other products. In strengthening the supply chain, we were able to establish a production system
Slide 24: Evaluation of ESG activities
Finally, I will explain our ESG activities. First, an evaluation of our ESG activities. We achieved our targets for all of our environmental and governance initiatives. On the other hand, with regard to “social” initiatives, the “ratio of female managers” and “employment rate of people with disabili
Slide 25: External evaluation of ESG activities
Next, I would like to evaluation of ESG activities external parties. Our ESG activities during the three years of the previous mid-term management plan have been well received, particularly in the area of governance. External parties evaluation, the company was selected for inclusion in four of the
Slide 26: Evaluation of capital policies
See page 26. Next, I would like to discuss the evaluation of capital policies. ROE has remained around 9% due to growth in net income, achieving a high return on capital. Capital expenditures fell short of the plan, mainly due to a shortfall in actual results compared to the initially planned number
Slide 27: Main tasks for the new plan
In light of the above, the main tasks for the new medium-term management plan are as shown. That’s all from me. 27
Slide 28: Medium-Term Management Plan 2027
I am Suzuki, the President. Thank you very much for taking time out of your busy schedule today to participate in the financial results briefing. I will explain the new Medium-Term Management Plan 2027. The flow of the explanation is as shown. 28
Slide 29: Basic policy
First, let me explain the basic policy. The unifying theme of the new medium-term management plan is The Next Challenge: Pursuing Further Growth. We will continue to enhance the resilience of the Shimamura Group by undertaking various challenges with the creativity of all employees. We will also exp
Slide 30: Main numerical plans
Here are the main numerical plans. The Company at sales of JPY719 billion, an operating income of JPY66 billion, an operating margin of 9.2%, an ROE of about 8.0%, and plans to open 150 new stores in Japan over the next three years. 30
Slide 31: Overall structure of the plan
Next, I would like to discuss the overall structure of the Medium-Term Management Plan 2027. We will embody the three policies to realize the :Long-Term Management Plan 2030: Growth Strategy, and Reinforcement of the Business Base and Foundations, and Intiaives to Solve ESG Issues. 31
Slide 32: Growth strategy: restructuring business portfolio
Next, I would like to discuss the growth strategy. First, let me explain the restructuring of the business portfolio. Please see the four frames for the fiscal year ending February 2027. The revenue-based business in the bottom right, the Shimamura business, will continue to maintain high profitabil
Slide 33: Existing store sales growth and store openings
Next, I would like to discuss the growth of existing store sales and the expansion of business scale through aggressive store openings. Firstly, within the increasingly polarized domestic apparel market, we perceive the mass volume market, where we are positioned, as expanding. In that growing mass
Slide 34: Strengthening product appeal
Next, I would like to talk about strengthening of product appeal. In terms of Increase Bland Power, we will develop mega-hit items, expand high-priced products, and evolve our brand and planned products to increase store loyalty. In our efforts to Expand Product Lineup, we will focus on expanding pr
Slide 35: Strengthening sales power
Next, I would like to discuss the strengthening of sales power. Utilize customer management systems to promote individualized marketing based on gender, age, purchase history, etc. This will allow for customerspecific sales promotions, a review of flyer distribution areas, and sales floor configurat
Slide 36: New store openings, relocations and renovations
Next, we will discuss new store openings, existing store relocations, and renovations. The plans for store openings and renovations are as shown. We plan to open 150 stores over the next three years. We also plan to renovate 150 stores over the next three years. The main measures are described in th
Slide 37: Ramp up store openings in urban areas
Next is about ramp up store openings in urban areas. In addition to the dominant suburban-centered strategy thus far, Shimamura will reinforce store openings in densely populated urban areas where there are currently no Shimamura stores. In response, we increased the number of employees in the store
Slide 38: Renovate and relocate stores
Next, we will discuss renovate to improve store loyalty. Over the next three years, we plan to renovate 150 stores to boost existing store sales and to enhance store loyalty through improvements in the shopping environment for customers. Up until now, the remodeling had been carried out mainly at th
Slide 39: Expansion of domestic EC business
Next, I would like to discuss the expansion of our domestic EC business. We aim for an EC sales of JPY11 billion and an EC ratio of 1.6% at the end of February 2027. In our product strategy, we aim to meet our numerical targets by increasing the variety of EC-only products and items that are hard to
Slide 40: Measures to expand domestic EC
Next, I would like to discuss specific measures to expand the domestic EC business. Currently, each business operates its own EC site, but we will unify and operate EC sites under the Shimamura Group. Other initiatives involve expanding EC supplier deliveries, enhancing the convenience of in-store p
Slide 41: Challenge of new overseas business
Next is the challenge of new overseas business. The flow of establishing a new overseas business is as shown. First, we will establish a cross-border EC operation through an agency to explore potential locations for opening new stores and acquire expertise in cross-border EC in the fiscal year endin
Slide 42: Medium-term human resources strategy
Next, I will explain “Reinforcement of the Business Base and Foundations”. First, I will discuss the “Medium-Term Human Resources Strategy”. Our management mission to our employees is to strive to improve working conditions and the workplace environment so that each employee can achieve self-fulfill
Slide 43: Increase productivity through digitalization
Next, I would like to talk about increase productivity through digitalization. We will utilize a customer management system to improve the accuracy of store openings through trade area analysis, optimize products, sales promotions, and sales floors, and utilize the app to implement customer service
Slide 44: Supply chain restructure
Next is the supply chain restructure. We will restructure the current supply chain in response to the risk of product procurement resulting from changes in the external environment and the inadequate capacity in domestic logistics due to the scale expansion. As part of specific initiatives in produc
Slide 45: Initiatives to solve ESG issues
Next, I will explain "initiatives to solve ESG issues. The Shimamura Group's management mission is to create a "good company" for all stakeholders. In order to achieve our management mission, we will promote sustainable "Shimamura-style ESG activities" through our core business in order to achieve o
Slide 46: KPIs for ESG initiatives
Next, I would like to discuss KPIs for "initiatives to solve ESG issues. For environmental initiatives, we set numerical targets for recycling store resources, reducing GHG emissions, and purchasing sustainable products. For social initiatives, in addition to the ratio of female managers and the emp
Slide 47: Capital policy: KPIs and resource allocation
I will explain our capital policy. First, let’s talk about KPIs. ROE will be maintained at around 8.0%, above the cost of shareholders’ equity. The dividend payout ratio will be about 35.%, and DOE will be about 3.0%. The liquidity ratio on hand is planned to be four to six months. Next is the polic
Slide 48: Investments for growth
Next, I would like to discuss investments for growth. Investments for growth are based on investments to expand the scale of our business and to improve the quality of our stores, products, human resources, and DX. Also, they will increase productivity to improve our business performance and contrib
Slide 49: Shareholder returns
Next, I would like to discuss shareholder returns. Our basic policy for shareholder returns is to provide stable returns to shareholders by continuously increasing dividends through improved performance in each fiscal year. By incorporating the DOE index, we will ensure stable returns even in the fa
Slide 50: Retained earnings and capital efficiency
Next, I would like to discuss retained earnings and capital efficiency. Retained earnings will be used to establish a stable financial base by maintaining sufficient cash reserves to enable aggressive growth investments, in addition to preparing for risks such as economic downturns. Capital efficien
Slide 51: Management conscious of cost of capital and stock price
Next, I would like to discuss measures to achieve management that is conscious of the cost of capital and stock price. Our return on capital has remained around 9.0% ROE, surpassing our cost of capital. However, we are concerned that our accumulated retained earnings may lead to a deterioration in o
Slide 52: Maintaining ROE above cost of capital
Finally, I would like to talk about our efforts to maintain ROE above the cost of capital. In terms of profitability, we will restructure our business portfolio and streamline expenses to enhance our operating margin. Regarding efficiency, we will optimize our asset holdings by maximizing return on
Slide 53: Disclosed information
Here is our disclosed information. The schedule for disclosing financial results on the corporate website is as shown. The Medium-Term Management Plan 2027 is disclosed on our corporate website. We also plan to release our first Integrated Report in late August. Our corporate website also provides v
Slide 54: Closing
This concludes the explanation of the financial results for the fiscal year ended February 2024, of SHIMAMURA Co., Ltd., as well as the Medium-erm Management Plan 2027. Thank you for your attention. 54