Slide 1: Earnings Results Briefing for the Fiscal Year Ending March 31, 2016
Earnings Results Briefing for the Fiscal Year Ending March 31, 2016 May16 2016 KOMEHYO Co., Ltd. Securities code: 2780 (Second Section, Tokyo and Nagoya Stock Exchanges) The IR strategy department TEL +81-52-249-5366
Slide 2: INDEX
INDEX １．Overview of Financial Results for the Fiscal Year P.02 Ending March 31, 2016 ２．Business status P.10 ３．Plan for the Fiscal Year Ending March 31, 2017 P.23 ４．Medium-term Management Plan P.32 ５．Reference Information (Company Profile, etc.) P.36 Note: This document is an English translation of a
Slide 3: Overview of Income Statement
Overview of Income Statement Consolidated net sales: posted a new record high Consolidated FY2014 FY2015 FY2016 Change YoY (Millions of yen) (‘13.4-’14.3） (‘14.4-’15.3) (‘15.4-’16.3) Net sales 40,212 43,199 45,903 ＋2,704 106.3％ Gross profit 12,627 13,168 13,061 △107 99.2％ Gross profit margin 31.4% 3
Slide 4: Operating income increase and decrease factor (Consolidated)
Operating income increase and decrease factor（ Consolidated ） Gross profit margin decreased 2.0 pt. with higher general & administrative expenses due to new store openings (Millions of yen) 4,000 Rents +129 Maintenance expenses + 94 3,500 Personal expenses + 50 Selling expenses △ 18 3,000 3,129 Sale
Slide 5: Overview of Income Statement (Non-consolidated)
Overview of Income Statement Non-consolidated net sales: posted a new record high Non-consolidated FY2014 FY2015 FY2016 Change YoY (Millions of yen) (‘13.4-’14.3） (‘14.4-’15.3) (‘15.4-’16.3) Net sales 35,176 38,507 40,554 ＋2,046 105.3％ Gross profit 10,733 11,363 11,090 △273 97.6％ Gross profit margin
Slide 6: Selling, General and Administrative Expenses
Selling, General and Administrative Expenses General & administrative expenses including rents increased due to active new store openings Consolidated FY2015 FY2016 Change YoY (Millions of yen) Selling, General and Administrative Expenses 10,038 10,271 ＋232 102.3% Selling expenses 1,887 1,868 △18 99
Slide 7: Profit Margin Trend
Profit Margin Trend Operating income margin decreased as gross profit margin decreased, which offset a decrease in SG&A expenses （％） Consolidated （％） Non-consolidated 35 35 30.9 31.4 30.5 30.2 30.5 29.5 30 28.1 28.5 30 28.0 27.3 24.8 24.1 23.4 23.9 23.2 23.3 25 22.4 25 22.9 22.3 21.4 20 20 Gross pro
Slide 8: Overview of Balance Sheet
Overview of Balance Sheet Products decreased due to improved inventory control Consolidated Non-consolidated Liabilities and Net Liabilities and Net Assets Assets Assets Assets Cash and (Millions of yen) (Millions of yen) Current deposits Cash and 3,145 liabilities Current 2,799 5,509 deposits 6,404
Slide 9: Statement of Cash Flows
Statement of Cash Flows Cash flows from operating activities were stable, partly due to the effects of inventory reductions (Millions of yen) Consolidated Non-consolidated (Millions of yen) FY2014 FY2015 FY2016 FY2014 FY2015 FY2016 4,500 4,500 4,257 3,322 3,500 3,500 2,848 2,855 2,854 2,704 2,500 2,
Slide 10: By Segment
By Segment Tire and Wheel segment posted strong results (Millions of yen) FY2014 FY2015 FY2016 Change YoY Net sales 35,473 38,874 41,175 +2,300 105.9％ Fashion Brand Operating income 2,763 2,979 2,611 △367 87.7％ Operating margin 7.8% 7.7％ 6.3％ △1.4pt － Net sales 4,637 4,232 4,640 +408 109.6％ Tire and
Slide 11: Business status
１．Overview of Financial Results for the Fiscal Year P.02 Ending March 31, 2016 ２．Business status P.10 ３．Plan for the Fiscal Year Ending March 31, 2017 P.23 ４．Medium-term Management Plan P.32 ５．Reference Information (Company Profile, etc.) P.36 10
Slide 12: External Environment(1) Domestic Economy, and Business Sentiment
External Environment(1) Domestic Economy, and Business Sentiment Uncertainties due to an abrupt slowdown in China’s economy and other factors Stock price Business Current business sentiment DI 1-year-ahead business sentiment DI (yen) sentiment DI Nikkei 225 (monthly closing price) 15 20,000 China sh
Slide 13: External Environment(2) Secondhand Market
External Environment(2) Secondhand Market Secondhand market is expanding Secondhand market Trends 15,966 The number of the dealer in 760,000 secondhanded articles permission of annual sales 14,916 (100 million yen) 740,000 720,000 13,594 700,000 12,590 680,000 660,000 11,443 11,274 640,000 620,000 6
Slide 14: External Environment(3) Reuse market according to the product
External Environment(3) Reuse market according to the product Brand name products and clothing are on a growing trend in terms of both growth rate and market size Market ratio Domestic retailreuse market size(FY2014) (%) 18 (100 million yen) 16 Brand-name products 14 2,310 12 10 Game/media Clothing/
Slide 15: External Environment(4) Ranking in the Secondhand industry
External Environment(4) Ranking in the Secondhand industry Secondhand sales amount :No.3､ Brand-name products sales amount:No.1､Clothing/accessories sales amount:No.6 Secondhand sales amount(FY2014) Brand-name products sales amount(FY2014) G B KOMEHYO S K Others 10.7% KOMEHYO D 2.1％ Market size B 23
Slide 16: Initiative(1) Opening of New Stores
Initiative(1) Opening of New Stores Opened 9 stores in FY2016 ; Small-scale 5 stores､ Purchasing Center 2 stores、LINK SMILE 1 store、urca jewel １store 【FY2016 1H store open】 KOMEHYO KOMEHYO KOMEHYO KOMEHYO Sakae Central Park Store Kobe Motomachi Store Purchasing Center Purchasing Center April 29, 201
Slide 17: Initiative(2) Talent Development
Initiative(2) Talent Development Buyer development through original curriculums by a dedicated division Single-item Multiple-item Total No. of buyers buyers buyers Able to evaluate Able to evaluate (in operation) 1 item 2 items or more FY ended March 176 persons 110 persons 286 persons 2016 Final te
Slide 18: Initiative(3) Purchase from Individual Customers
Initiative(3) Purchase from Individual Customers Purchases from individual customers remained solid Amount of FY2014 FY2015 FY2016 purchase from (‘13.4- (‘14.4- (‘15.4- Change YoY individual ’14.3） ’15.3) ’16.3) customers Purchasing 15,089 16,596 17,537 ＋941 105.7％ Center Home delivery 805 841 887 ＋
Slide 19: Initiative(4) Online Sales
Initiative(4) Online Sales Leveraging omni channel retailing, leading customers from online stores to physical stores and vice versa FY2016 Net sales Net sales No. of products (Millions of yen) YoY sold YoY All online stores 6,309 103.1％ 134.2％ 【Percentage of online sales by channel】 【Roles of smart
Slide 20: Initiative(5) Member's Card
Initiative(5) Member’s Card Integrated management of customer information, covering physical and online stores Card members(FY2016) No. YoY Total members 602,000 120.2% KOMEHYO apps App that can be used as a member card of KOMEHYO Co., Ltd. Outstanding points, purchasing history, selling history, KO
Slide 21: Initiative(6) KOMEHYO Auction
Initiative(6) KOMEHYO Auction Sales to secondhand dealers in Japan No. of Trade volume Frequency (FY2016) YoY member companies Restaurant auction Monthly JPY17,900 114.5％ (Jewelry, 3 days million watches, bags) 655 Apparel Monthly JPY330 auction 146.8% 1 day million (Clothing) KOMEHYO auction KOMEHY
Slide 22: Initiative(7) KOMEHYO HONG KONG
Initiative(7) KOMEHYO HONG KONG Sales to secondhand dealers abroad FY2016 Net sales KOMEHYO approx. HONG KONG 2 billion yen LIMITED ・ Onsite staff for overseas contacts ＮＪＫＰ auctions ・Participation in NJKP auctions ・ Jewelry show ・ Expansion of B2B business Jewelry show 21
Slide 23: Initiative(8) Tire and Wheel
Initiative(8) Tire and Wheel Sale of tires, wheels, and vehicle parts Net sales FY2016 (Millions of Composition YoY yen) Tires/wheels 4,065 87.6％ 107.7％ Parts (incl. labor 574 12.4％ 125.4％ charge) Craft website homepage Segment total 4,640 100.0％ 109.6％ 【Strengthen of sales】 ・Summer tires ・Customize
Slide 24: Plan for the Fiscal Year Ending March 31, 2017
１．Overview of Financial Results for the Fiscal Year P.02 Ending March 31, 2016 ２．Business status P.10 ３．Plan for the Fiscal Year Ending March 31, 2017 P.23 ４．Medium-term Management Plan P.32 ５．Reference Information (Company Profile, etc.) P.36 23
Slide 25: FY2017 plan
FY2017 plan Increased profit and revenue are forecasted on both consolidated and non-consolidated bases (full-year) Consolidated FY2017 YoY FY2017 plan YoY (Millions of yen) 1H plan Net sales 21,000 100.3% 48,000 104.6% Operating income 930 81.0% 2,850 102.2% Ordinary income 930 81.2% 2,850 103.9% N
Slide 26: Key Issues to Be Addressed(1)
Key Issues to Be Addressed(1) Enhancing new store openings and store management 1.Manage and analyze customer 【 KOMEHYO Umeda Store】 information increase number of February 2017 (planned) returning customers 2. Implement various promotion initiatives increase number of new customers 3. Opening s
Slide 27: Key Issues to Be Addressed(2)
Key Issues to Be Addressed(2) Strengthening Product Control Function 1.Enhance the product maintenance system, including processing, repairing and cleaning 2. Review the product management system/schemes Jewelry inspection More efficient supply system, reduced management costs, and enhanced authen
Slide 28: Key Issues to Be Addressed(3)
Key Issues to Be Addressed(3) Enhancing Ｅ-Commerce/IT 1. Improve EC sites, enhance 【Sponsoring an SNS linked TV coordination with physical stores for Program “#モデる [modeling]” 】 marketing On air from April 3, 2016 Started sponsoring a new TV program by TV 2. Implement various initiatives Asahi “#モデる
Slide 29: Key Issues to Be Addressed(4)
Key Issues to Be Addressed(4) Enhancing Talent Development 1.Strengthen leader development through training programs such as those for next- generation leaders and coaching 2. Enhance development of buyers in line with store opening plans Newly-appointed manager training program 3. Establish and enh
Slide 30: Key Issues to Be Addressed(5)
Key Issues to Be Addressed(5) New Business Initiatives 1.Establish overseas bases strengthen overseas business 2.Develop new customers expand corporate business Jewelry fair 3.Examine new operation methods strengthen auction business Products ＮJKP diamond auction presented 29
Slide 31: Key Issues to Be Addressed(6)
Key Issues to Be Addressed(6) Increasing Sales/Revenue of Tire and Wheel Business 1.Strengthen original auto supply higher profit margin 2.Expand sale channels through e- commerce sites 3.Become more appealing through SNS develop new customer bases 4.Reform logistics functions greater operatio
Slide 32: Shareholder return
Shareholder return Dividend changes Dividend(yen) Payout ratio(％) 40 Fiscal year-end dividend Interim dividend Payout ratio 40 36.2 35 Forecast 32 35 30 30 28 29.3 26 30 25 16 20 23.0 19 25 24.8 15 19.4 18.5 20 16.6 10 16.0 15.5 15.0 16 15 5 13.2 0 10 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Slide 33: Medium-term Management Plan
１．Overview of Financial Results for the Fiscal Year P.02 Ending March 31, 2016 ２．Business status P.10 ３．Plan for the Fiscal Year Ending March 31, 2017 P.23 ４．Medium-term Management Plan P.32 ５．Reference Information (Company Profile, etc.) P.36 32
Slide 34: Medium-term Basic Targets (Consolidated)
Medium-term Basic Targets (Consolidated) Achieve sustainable growth focusing on the opening of new stores Consolidated FY2017 FY2018 FY2018 (‘16.4-’17.3) (‘17.4-’18.3) (‘18.4-’19.3) Net sales JPY48.0B JPY52.3B JPY54.0B Operating income JPY2.85B JPY3.25B JPY3.40B Operating margin 5.9％ 6.2％ 6.3％ Store
Slide 35: Net Sales Plan
Net Sales Plan Generate JPY54 billion and JPY48 billion on a consolidated and non- consolidated basis respectively in the fiscal year ending March 31, 2019 Consolidated 52,300 54,000 Non-consolidated Net sales 48,000 Purchases by individual costomers 48,000 (Millions of yen) 46,500 45,903 Net sales
Slide 36: Profit Plan
Profit Plan Achieve sustainable profit growth by increasing net sales Operating income Ordinary income Net income attributable to owners of parent 3,400 3,400 (Millions of yen) 3,250 3,250 3,129 3,162 2,789 2,742 2,850 2,850 Consolidated 2,300 2,200 2,040 1,900 1,696 FY2015 results FY2016 results FY
Slide 37: Reference Information (Company Profile, etc.)
１．Overview of Financial Results for the Fiscal Year P.02 Ending March 31, 2016 ２．Business status P.10 ３．Plan for the Fiscal Year Ending March 31, 2017 P.23 ４．Medium-term Management Plan P.32 ５．Reference Information (Company Profile, etc.) P.36 36
Slide 38: Corporate History
Corporate History ●Opened KOMEHYO Shibuya Koendori Store, Abeno Store ●Opened USED MARKET Osu Store ●Joined Keidanren ●Established Auto Parts KOMEHYO KK (currently AUTO PARTS JAPAN) ●Established KOMEHYO HONG KONG LIMITED ●Acquired CRAFT Co., Ltd. 2015 ●Established Product Center ●Established KOMEHYO
Slide 39: KOMEHYO Business Model
KOMEHYO Business Model Main functions of Product Center ① Thorough confirmation of product authenticity/quality ② Market price management ③ Maintenance ④ Product development speed/cost management ⑤ Stable/appropriate supply of products to stores Quality, market Purchase/procurement Sale price, distr
Slide 40: Business results for the past decade
Business results for the past decade Achieved a V-shaped recovery with store opening, new organizational structure, and subsidiary establishment Consolidated net sales Opened 5 KOMEHYO stores,2 Craft stores Consolidated operating income (100 million yen) (100 million yen) Auto Parts KOMEHYO (current
Slide 41: Group Status
Group Status Sales composition (cumulative FY2016 results) Brand Fashion segment Tire and Wheel segment Buying and selling products including jewelry, Buying and selling tires and wheels as well as precious metals, watches, bags, and clothing provision of services Group net sales KOMEHYO (non- conso
Slide 42: Store Type (1)
Store Type (1) Stores focusing on sale and purchase of jewelry, precious metals, watches, and bags 29 Store (as of March 2016) Large-scale comprehensive reuse store Mid-scale Small-scale Purchasing Center Nagoya Store: Approx. 2,024 Opening stores in large major Opening stores in major cities Openin
Slide 43: Store Type (2)
Store Type (2) Stores focusing on sales and purchase of ladies casual clothing 7 Store (as of March 2016) Main products (sales/purchase): Ladies casual clothing, bags, accessories Operating 7 stores in Aichi 42
Slide 44: Store Type (3)
Store Type (3) Stores focusing on sales and purchase of clothing in the low price range 4 stores (as of March 2016) Main products (sale/purchase): Clothing, bags, accessories Red tags are attached to products and prices are lowered every two weeks 43
Slide 45: Store Type (4)
Store Type (4) Stores focusing on sales and purchase of jewelry, precious metals 1 stores (as of March 2016) Main products (sale/purchase): jewelry, precious metals All goods new finish、Replacement promotion of jewelry、 Development of the remake jewelry、Repair service 44