44 slides from J. Front Retailing's earnings presentation, Apr 12, 2022
Slide 1: Presentation of Results for Fiscal Year Ended February 28, 2022
～ No Change, No Full Recovery ～ Presentation of Results for Fiscal Year Ended February 28, 2022 April 12, 2022 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 FY2021 Results II. H1/Full FY2022 Forecast III. Progress of Medium-term Business Plan 1
Slide 3: Overview of FY2021 Results (IFRS)
Overview of FY2021 Results (IFRS) 2
Slide 4: Consolidated PL (IFRS)
Consolidated PL (IFRS) Core businesses such as Department Store and SC recovered steadily but impact of COVID-19 was more prolonged than expected Returned to profitability in all profit/loss items, operating profit and profit were above October forecast Year-end dividend is ¥15 per share as planned
Slide 5: Segment Performance (1) Department Store (IFRS)
Segment Performance (1) Department Store (IFRS) Recovered steadily until December but recovery slowed down due to rapid spread of 6th wave of COVID-19 in January Returned to business profit due to additional effort to reduce SGA, operating profit (loss) was greatly affected by restructuring Revenue
Slide 6: Daimaru Matsuzakaya Department Stores Major Store Sales
Daimaru Matsuzakaya Department Stores Major Store Sales Sales improved 5.5 points from Q3 to Q4 compared to FY2019 but recovery slowed down Kobe store that has strong regular customers increased sales in both Q3 and Q4 compared to FY 2019, Nagoya store also increased sales in Q4 Tokyo store recovere
Slide 7: Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)
Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) H2 FY2021 Decrease in packing and Decrease in SGA analysis (Millions of yen) transportation depreciation Decrease in costs Decrease in Decrease in (22) operational (890) 112 (16) 89 (58) (2,597) rent expenses ad expenses costs Increase in Inc
Slide 8: Segment Performance (2) SC Business (IFRS)
Segment Performance (2) SC Business (IFRS) Impact of COVID-19 such as closure and reduced business hours was more prolonged than expected, easing of conditions was partially continued SGA decreased greatly in both H1 and H2 mainly due to transfer of Neuve A (end of June) Revenue Business profit Oper
Slide 9: Segment Performance (3) Developer Business (IFRS)
Segment Performance (3) Developer Business (IFRS) Revenue decreased YoY mainly because construction period of J. Front Design & Construction extended due to COVID-19 Real estate rental was strong, operating profit was above October forecast because gain on sale of real estate was recorded Revenue Bu
Slide 10: Segment Performance (4) Payment and Finance Business (IFRS)
Segment Performance (4) Payment and Finance Business (IFRS) Revenue increased greatly because annual fee income increased due to recovering performance of Department Store and effect of card renewal SGA reduction also contributed, both business profit and operating profit were ¥0.7 billion above Oct
Slide 11: Segment Performance (5) Other (IFRS)
Segment Performance (5) Other (IFRS) Core business Daimaru Kogyo struggled, revenue and profit decreased partly due to transfer of all shares in J. Front Foods Dimples’ will be excluded from consolidation after FY2022 because part of its shares were transferred on February 28, 2022 Revenue Business
Slide 12: Consolidated BS (IFRS)
Consolidated BS (IFRS) Total assets decreased ¥70.8 billion YoY partly due to reduction of cash and deposits, sale of assets, depreciation Started to right-size cash and deposits on hand, reduced interest-bearing liabilities (excluding lease liabilities) ¥42.2 billion Ratio of equity attributable to
Slide 13: Consolidated CF (IFRS)
Consolidated CF (IFRS) Operating CF was ¥49.8 billion due to increase in working capital in spite of profit improvement Secured free CF of ¥44.5 billion due to reduction of investment and sale of assets such as shares of Dimples’ Reduced cash and deposits on hand, which were reserved for COVID-19, t
Slide 14: H1/Full FY2022 Forecast (IFRS)
H1/Full FY2022 Forecast (IFRS) 13
Slide 15: Full recovery = ¥40.3 billion
Business Environment Awareness ◆ Sales to affluent customers in Japan remain strong, focus store investment on strengthening luxury ◆ Spending by and traffic of middle-class customers are recovering but slowly ◆ Expect inbound not to change visibly until end of current fiscal year ◆ Prepare risk sce
Slide 16: Consolidated PL Forecast (IFRS)
Consolidated PL Forecast (IFRS) Core businesses such as Department Store and SC are expected to greatly increase top line and drive improvement in performance Though costs will increase due to aggressive investment for growth, restructuring will be accelerated to reduce fixed costs Plan to pay inter
Slide 17: Segment Performance Forecast (1) Department Store Business
Segment Performance Forecast (1) Department Store Business Invest aggressively in renovation of flagship stores, mainly luxury, jewelry, watches, to boost sales Driven by spending by affluent customers, followed by middle class due to recovery of traffic, expect inbound sales to be ¥10.0 billion Rev
Slide 18: Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)
Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS) ・Increase in reaction to transfer of fixed costs during closure LY (¥0.8 bn) ・Increase in commissions due to sales increase (¥2.2 bn) FY2021 (Millions of yen) ・Increase in repair expenses resulting from renovation (¥1.8 bn) ・Increase in suppl
Slide 19: Segment Performance Forecast (2) SC Business (IFRS)
Segment Performance Forecast (2) SC Business (IFRS) Large-scale renovation in PARCO flagship stores such as Ikebukuro, Nagoya, Hiroshima and Sendai Strengthen efforts to attract more customers in entertainment and diversify revenue streams Revenue Business profit Operating profit 60,000 57,100 7,000
Slide 20: Segment Performance Forecast (3) Developer Business (IFRS)
Segment Performance Forecast (3) Developer Business (IFRS) Revenue is expected to increase in design and construction-related business due to renovation investment of Department Store and Parco Business profit is expected to decrease partly due to upfront expenses for new project development, operat
Slide 21: Segment Performance Forecast (4) Payment and Finance Business (IFRS)
Segment Performance Forecast (4) Payment and Finance Business (IFRS) Commission income, etc. is expected to increase due to increase in transaction volume resulting from continuing recovery of Department Store performance Also factored in steady increase in annual fee income and sales increase of in
Slide 22: Segment Performance Forecast (5) Other (IFRS)
Segment Performance Forecast (5) Other (IFRS) Expect core business Daimaru Kogyo to improve performance but affected by exclusion of Dimples’ from consolidation, etc. Revenue Business profit Operating profit 70,000 61,755 1,400 1,252 1,400 1,199 60,000 54,900 1,200 1,100 1,200 50,000 1,000 1,000 900
Slide 23: Consolidated BS Forecast (IFRS)
Consolidated BS Forecast (IFRS) Total assets are expected to decrease ¥42.9 billion partly due to reduction of cash and deposits on hand to appropriate level Reduce interest-bearing liabilities (excluding lease liabilities) to ¥270.0 billion, roughly same as FY2019 level Ratio of equity attributable
Slide 24: Consolidated CF Forecast (IFRS)
Consolidated CF Forecast (IFRS) Operating CF is expected to increase ¥7.1 billion YoY due to profit increase Mainly Department Store and SC plan aggressive capital investment to ensure profit in future Free CF is expected to decrease ¥19.5 YoY due to significant increase in investment expenditure Ba
Slide 25: Progress of Medium-term Business Plan
FY2021 - FY2023 Progress of Medium-term Business Plan 24
Slide 26: What to Do in 2nd Year of Medium-term Plan: Change gear
What to Do in 2nd Year of Medium-term Plan ー “Change gear” for full recovery and regrowth For full recovery Accelerate Department Store / SC business model transformation Management restructuring For regrowth Strengthen systems/initiatives to change business portfolio Investment for future 25
Slide 27: Department Store: Promote Digitalization Centering on App
For Full Recovery Department Store ー Promote Digitalization Centering on App Customer touch points through app are steadily expanding and deepening and sophistication of CRM is greatly improving FY2021 KPI Results YoY Sales to app users ¥187.7 bn +37.6 % Share of total sales of Department Store 38.8
Slide 28: Department Store: Expand OMO
For Full Recovery Department Store ー Expand OMO Launch the Company’s unique OMO websites, further evolve connaissligne (Millions of yen) Online sales 45,000 (by customer category) 40,000 35,000 Cash, card and other customers Gaisho customers 30,000 25,000 20,000 15,000 10,000 5,000 0 FY2019 FY2020 F
Slide 29: Department Store: Deepen Prime Life Strategy
For Full Recovery Department Store ー Deepen Prime Life Strategy Develop and deeply cultivate young affluent customers by improving content and using digital sales Luxury mall GINZA SIX performs well due to significant increase in purchase share of customers in their 20s Credit sales Sales share by a
Slide 30: Examples of Revitalization of Physical Stores
For Full Recovery Department Store ー Examples of Revitalization of Physical Stores Daimaru ＧＩＮＺＡ Kobe ＳＩＸ Expanded space for luxury items and watches, Total sales in December were above FY2019 level, created lounge record high Greatly expanded Louis Vuitton as freestanding Customers in their
Slide 31: Department Store: Hybridization / Revenue Stream Diversification
For Full Recovery Department Store ー Hybridization / Revenue Stream Diversification Need to radically overhaul content provided in stores and floor allocation Expand content that provides excitement to daily life and brings fulfilling lifestyles Direction of overhaul Expand prime content (luxury, ar
Slide 32: SC: Intensively Strengthen Key Flagship Stores
For Full Recovery SC － Intensively Strengthen Key Flagship Stores Large-scale renovation with focus on 5 stores including Ikebukuro, Nagoya, Sendai, Hiroshima, Urawa for revenue improvement Nagoya PARCO Renovation area share Large-scale renovation with genderless and ageless as keywords 35 % Fir
Slide 33: SC: Full Operation and Evolution of Shibuya and Shinsaibashi
For Full Recovery SC － Full Operation and Evolution of Shibuya and Shinsaibashi Shibuya Shinsaibashi PARCO PARCO One and only next generation commercial space Promote acquisition of nouveau riche customers 3D promotion using SNS and entire building Wellness mall as new motivation to visit th
Slide 34: Management Restructuring
For Full Recovery Management Restructuring Reduction of fixed costs (lowering of break-even point) Business model reform HR restructuring Cost restructuring Reduce fixed costs ¥10.0 bn or more compared to FY2019 (FY2021 – 2023 cumulative total target ) FY2021 results △¥4.3 billion (Plan at beginning
Slide 35: Reorganization of Holding Company
For Regrowth Reorganization of Holding Company Create new divisions and actively invest and fuse Parco’s HRs to strengthen promotion of the Group strategy (Newly created division) (Purpose) Business Portfolio Prepare/implement plans concerning business portfolio transformation to realize discontinuo
Slide 36: Direction of Portfolio Transformation (1)
For Regrowth Direction of Portfolio Transformation (1) Developer Business Consider promoting large-scale complex development in prime locations where the Group’s flagship stores are located Develop mixed use including non-commercial such as residence, hotel, office, as well as commercial Accelerate
Slide 37: Direction of Portfolio Transformation (2)
For Regrowth Direction of Portfolio Transformation (2) Investment in business development Content M&A Synergy with existing businesses management Development of new businesses Innovation of existing businesses Alliance Growth fund Return from investment investment* ¥10.0 billion CVC fund *Including
Slide 38: Direction of Portfolio Transformation (3): Investment in human capital
For Regrowth Direction of Portfolio Transformation (3) Investment in human capital Set up of HR portfolio Hiring of specialized and pool HR development talents (Support for growth) ・Select young HRs who lead ・Hire professional career next generation ・New development plan ・Ratio of holding company’s
Slide 39: Sustainability Management and Value Creation
Sustainability Management and Value Creation Integrate corporate strategy / business strategy with sustainability management Corporate Credo Service before Profit Abjure all evil and practice all good Group Vision Create and Practice of CSV Bring to Life Proposal for “New Happiness” (Creating Shared
Slide 40: 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 × Social Economic Improve value va
Slide 41: Appendix
QQ) 4. FRONT RETAILING Appendix 40
Slide 42: FY2021 Results by Segment
＜Reference＞ FY2021 Results by Segment (Retroactive adjustments due to merger with DMSA) (Millions of yen) Q1 Q2 H1 Q3 Q4 H2 FY2021 Gross sales 190,665 211,483 402,148 221,199 251,933 473,132 875,281 Department Store 114,793 132,957 247,750 141,357 166,736 308,094 555,845 SC 50,440 52,539 102,979 55,
Slide 43: Transfer of Fixed Costs Resulting from Closure
<Reference> Consolidated total and major subsidiaries Transfer of Fixed Costs Resulting from Closure (FY2021 and FY2020) (Millions of yen) Transfer to cost Transfer to SGA Total (effect on business profit) FY2021 FY2020 Change FY2021 FY2020 Change FY2021 FY2020 Change Personnel expenses 243 1,124 (8
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 diff