Slide 1: MARUI GROUP's Innovation and Corporate Value Improvement Targeting Sustainable Growth
MARUI GROUP’s Innovation and Corporate Value Improvement Targeting Sustainable Growth September, 2016
Slide 2: A Look at MARUI GROUP
１ A Look at MARUI GROUP
Slide 3: Overview of MARUI GROUP
Overview of MARUI GROUP 1931 Founded: (Initially sold furniture through monthly installment payments) Business Retailing, FinTech activities: * Unique business model merging retailing and finance 29 stores primarily in Kanto but also in Tokai, Stores: Kansai, and Kyushu Cardholders: 6.1 million (As
Slide 4: Performance Trends: 8th Consecutive Year of Higher Operating Income Anticipated
Performance Trends: 8th Consecutive Year of Higher Operating Income Anticipated ・Moved on to stage of sustainable growth and corporate value improvement through co-creation management and business model transformation after overcoming crisis including two losses (Billions of yen) (Yen) 100 ¥103.0 11
Slide 5: Co-Creation Management: Open Innovation with Customers
Co-Creation Management : Open Innovation with Customers “Creditability should not be assigned to customers; it should be built together with customers.” (Founder: Chuji Aoi) Amalgamation of co-creation efforts Hakata Marui Gold card with no annual fees More than 3 million pairs sold! Rakuchin Kirei
Slide 6: Co-Creation Management: Creation of Corporate Value Together with All Stakeholders
Co-Creation Management: Creation of Corporate Value Together with All Stakeholders 5
Slide 7: Innovation Targeting Sustainable Growth
2 Innovation Targeting Sustainable Growth ① Customer innovations ② Retailing innovations ③ Credit card innovations
Slide 8: Customer Innovations
Customer Innovations
Slide 9: Customer Innovations: Questionable Sustainability of Youth-Oriented Business in Japan
Customer Innovations: Questionable Sustainability of Youth-Oriented Business in Japan Previously Going forward Diversity Youth-oriented & Inclusion Provide products, services, and stores that bring joy to all customers regardless of age, gender, or physical characteristics 8
Slide 10: Increase in Customer Numbers Following Expansion of Target Age Groups
Increase in Customer Numbers Following Expansion of Target Age Groups ・Seven consecutive years of increased purchase numbers following expansion of customer age groups after comprehensive revision of products, sales floors, stores, customer service, etc. ■Number of Purchases 92 million 7 consecutive
Slide 11: New Market Created through Inclusive Sizes: Private Brand Shoes
New Market Created through Inclusive Sizes: Private Brand Shoes ・Rakuchin Kirei Shoes co-created with customers unprecedented best seller with more than 3 million pairs sold ・New market created through addressing needs of customers excluded by industry standards ■Foot Sizes of Adult Japanese Women a
Slide 12: Forward-Looking Initiatives
Forward-Looking Initiatives ・Evolve forward-looking initiatives for bringing joy to all customers leading up to Tokyo 2020 Olympic and Paralympic Games ■Facilities that can be enjoyed ■Initiatives for supporting regardless of disability LGBT community 11
Slide 13: Retailing Innovations
Retailing Innovations
Slide 14: Retailing Innovations: Transition toward Business Model Focused on Shopping Centers
Retailing Innovations: Transition toward Business Model Focused on Shopping Centers Previously Going forward Department Shopping Stores Centers Convert all department stores to real estate-model shopping centers over five years beginning with FY2015 (excluding some exceptions) 13
Slide 15: Reason for Transition to Shopping Centers: Shift of Focus from Physical Goods to Fulfilling Lifestyles
Reason for Transition to Shopping Centers: Shift of Focus from Physical Goods to Fulfilling Lifestyles ・Shift in focus of Japanese consumption from physical goods to fulfilling lifestyles dating back 30 years ■Focus on Physical Goods vs. Fulfilling Lifestyles (Source: Public Opinion Survey Concernin
Slide 16: Reason for Transition to Shopping Centers: Long-Term Social Needs for Experience Consumption
Reason for Transition to Shopping Centers: Long-Term Social Needs for Experience Consumption ・Increase in consumption of experiences (telecommunications, eating out, leisure, etc.), but sharp decline in consumption of goods (clothing (apparel) consumption plummeted to 60% of 1995’s level) ■Consumpti
Slide 17: Reason for Transition to Shopping Centers: Ability to Respond to Diverse Needs
Reason for Transition to Shopping Centers: Ability to Respond to Diverse Needs ・Difficult environment for department stores and chain stores focused on goods, but strong growth of shopping centers capable of providing both goods and experiences ■Sales Amounts by Store Type (1995 indexed to 100) Shop
Slide 18: Plan and Progress in Transition to Shopping Centers and Fixed-Term Rental
Plan and Progress in Transition to Shopping Centers and Fixed-Term Rental: ¥0.9 Billion Income Improvement in FY2016 ・Complete transition to shopping centers and fixed-term rental by FY2019, target income improvement of ¥7.0 billion through business model transformation Income improvement ■Income Im
Slide 19: Co-Creation Store Development: Hakata Marui
Co-Creation Store Development: Hakata Marui ・First next-generation shopping center Marui store (opened in April 2016), departure from traditional concept of Marui through co-creation store development with customers Co-Creation Store Focus on Restaurants Development with Customers and Sundries Aggre
Slide 20: Successes from Co-Creation: Hakata Marui
Successes from Co-Creation: Hakata Marui ・Massive support from customers of all ages due to co-creation store development, record-breaking customer and card application numbers for new store opening ■Performance in 1st Month after Opening Customers: 1.1 times higher Purchases: 2.2 times higher Card
Slide 21: Credit Card Innovations
Credit Card Innovations
Slide 22: Credit Card Innovations: Change from Past Role of Supporting Retailing
Credit Card Innovations: Change from Past Role of Supporting Retailing Previously Going Forward In-house card Multipurpose card Stores positioned Support for as venues for retailing issuing cards Cash advances Card shopping Cardholders: 6.1 million; Card transactions: ¥1.4 trillion (FY2016) 21
Slide 23: Business Structure Transformation: Card Innovation
Business Structure Transformation: Card Innovation Going Back to Starting Point of Merging Retailing and Finance ・Five consecutive years of increased operating receivables after overcoming crushing blow dealt by Money Lending Business Act revision through card innovation ■Operating Receivables Setti
Slide 24: Industry-Leading Level of Operating Income per Active Card
Industry-Leading Level of Operating Income per Active Card ・High-value-added business model [Cardholders] [Card Transactions] [Operating Income] 25.6 25.9 ¥4,530.0 ¥4,470.0 ¥37.0 million million billion billion billion ¥22.0 billion ¥1,310.0 6.1 ¥7.0 billion million billion EPOS Company Company EPOS
Slide 25: Sustainability of Credit Card Business: Comparison of Payment Methods by Country
Sustainability of Credit Card Business: Comparison of Payment Methods by Country ・Predominately cash used for payment in Japan, significant room for growth of credit card payments ■Distribution of Payment Methods by Country Cash 17％ 15％ Cash Debit Checks cards 52％ Bank transfers Credit cards 24％ 70％
Slide 26: Medium-to-Long-Term Consumption Outlook: Trend toward Cashless Purchasing
Medium-to-Long-Term Consumption Outlook: Trend toward Cashless Purchasing ・Annual average growth of 7% in card shopping transactions despite unchanged figures for household spending, expected to increase further due to government drive to install infrastructure leading up to 2020 ■Card Shopping Tran
Slide 27: Medium-Term Management Plan (FY2017–FY2021)
3 Medium-Term Management Plan (FY2017–FY2021)
Slide 28: Medium-Term Management Plan (FY2017–FY2021)
Medium-Term Management Plan (FY2017–FY2021) １．Redefinition and reorganization of businesses Stores Retailing Omni-channel retailing Facility management and distribution Credit cards FinTech Financial services IT ２．Co-creation of corporate value with shareholders and other investors ・Realization of o
Slide 29: Retailing: Balance Sheet and ROIC Forecasts
Retailing: Balance Sheet and ROIC Forecasts ・Advance transition to shopping centers and fixed-term rental and conduct omni-channel retailing to achieve ROIC of more than 5.3% ■Balance Sheet Forecasts ■Operating Income and ROIC Forecasts More than 5.3% Liabilities Liabilities ¥60.0 ¥100.0 billion bil
Slide 30: FinTech: Balance Sheet and ROIC Forecasts
FinTech: Balance Sheet and ROIC Forecasts ・Increase operating receivables to ¥260.0 billion, procure funds through liabilities to maintain equity ratio of 10%, and strengthen insurance and other financial services to achieve ROIC of more than 4.1% ■Balance Sheet Forecasts ■Operating Income and Total
Slide 31: Realization of Optimal Capital Structure: ROIC and WACC Forecasts
Realization of Optimal Capital Structure: ROIC and WACC Forecasts ・Procure funds through low-cost liabilities in FinTech and utilize shareholders’ equity in Retailing ・Raise overall ROIC and lower capital costs ■ROIC and WACC Forecasts ROIC WACC ４％ ＞ ２～3％ ROIC 3.3％ ≦ WACC 3.3～3.7％ FinTech Liability
Slide 32: Realization of Optimal Capital Structure: Targeted Balance Sheet
Realization of Optimal Capital Structure: Targeted Balance Sheet ・Set amount of operating receivables as upper limit for interest-bearing debt and expand balance of debt to represent 90% of this amount ・Target equity ratio of approx. 30% over medium-to-long term ■Balance Sheet Forecasts ■Operating I
Slide 33: Realization of Optimal Capital Structure: Cash Flow Forecasts
Realization of Optimal Capital Structure: Cash Flow Forecasts ・Forecast ¥230.0 billion for 5-year aggregate core operating cash flow over period of medium-term management plan ・Allocate cash to growth investments and shareholder returns to realize ongoing growth and improved capital efficiency ■Cash
Slide 34: EPS and Dividend Forecasts: High Growth Coupled with High Returns
EPS and Dividend Forecasts: High Growth Coupled with High Returns ・Target record-high EPS of ¥130 through business growth and capital measures (realize 10-year average EPS growth rate of more than 20%) More than ¥130 ・Institute stable, long-term dividend increases in conjunction with income growth ■
Slide 35: KPI Targets of Medium-Term Management Plan
KPI Targets of Medium-Term Management Plan FY2016 FY2021 ROE ６％ More than 10% ROIC 3.3％ More than 4% EPS ¥71 More than ¥130 More than Operating income ¥29.6 billion ¥50.0 billion 34
Slide 36: Forward-looking statements contained in this presentation
Forward-looking statements contained in this presentation are based on information available at the time of preparation and on assumptions that have been deemed to be rational. Actual performance may differ greatly due to a variety of factors. Any inquiries may be directed toward the Investor Relati