Village Vanguard Co., Ltd. · TSE:2769
Village Vanguard — Q1 FY05/13 Earnings Presentation
46 slides from Village Vanguard's earnings presentation, October 2012
Slide 1: Q1 FY05/13 Results Presentation
Q1 FY05/13 Results Presentation
Slide 2: Note
Note: Any current plans, forecasts, strategy projections, expressions of confidence and other statements made by us in these materials are premised on the information that was available at the moment of the initial publication and on models that depend on uncertain factors that could impact future e
Slide 3: Income Statement (Consolidated)
Income Statement (Consolidated) Income Statement FY05/11 FY05/12 FY05/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Est. Q3 Est. Q4 Est. Sales 9,360 9,124 11,398 9,925 10,158 10,005 12,279 10,499 10,167 9,948 12,173 10,593 SG&A 3,120 3,265 3,401 3,429 3,461 3,593 3,806 3,826 3,665 3,934 4,097 4,185
Slide 4: BS (Consolidated)
BS (Consolidated) Balance Sheet FY05/11 FY05/12 FY05/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Est. Q3 Est. Q4 Est. Cash & Deposit 3,045 3,378 3,582 3,972 2,586 2,865 2,773 3,570 2,721 3,120 3,294 3,076 Inventories 16,182 17,044 16,726 16,950 17,827 19,175 19,007 18,669 19,439 19,922 19,296 19,
Slide 5: CF (Consolidated)
CF (Consolidated) Cash Flow Statement FY05/11 FY05/12 FY05/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Est. Q3 Est. Q4 Est. Operating Cash Flow -730 -347 -111 1,143 -1,053 -773 -876 558 -520 -84 -634 902 Change in Inventories -644 -1,506 -1,191 -1,415 -881 -2,228 -2,056 -1,720 -770 -1,252 -627 -5
Slide 6: Parent Company Village Vanguard Corporation
Parent Company Village Vanguard Corporation © Village Vanguard corporation, All rights reserved. P.5
Slide 7: What We Do
What We Do Standalone store Mall-located Store ■Village Vanguard ■Diner Our concept is “Exciting Book Store”. By bringing together various products such as An old-school hamburger shop books, variety goods, and CDs, our stores have a unique feel. modeled after an American diner. ■Other Formats ■new
Slide 8: Examples of Our Merchandizing Approach (1)
Examples of Our Merchandizing Approach (1) Merchandise themed around “365-days of Camera living” We offer merchandise by creating a unique retail space aimed at entertaining the customer Merchandise for Camera Lovers Toy Camera “HOLGA” ・Camera-shaped Shoulder bag Very popular among For example, merc
Slide 9: Examples of Our Merchandising Approach (2)
Examples of Our Merchandising Approach (2) © Village Vanguard corporation, All rights reserved. P.8
Slide 10: Examples of Our Merchandising Approach (3)
Examples of Our Merchandising Approach (3) © Village Vanguard corporation, All rights reserved. P.9
Slide 11: How Do We Sell?
How Do We Sell? We delegate both purchasing and sales decisions to the store level Marketing ■Pursue customer needs in each store Store Manager has Purchasing absolute discretion ■Reflect customer needs directly ■Unique challenge to discover new needs Head Office Proposition Authority ■POP, zone cre
Slide 12: Hiring Strategy
Hiring Strategy Full Time Customer Temp Staff Employee ■ Hiring people who really understand the company ■ Even temporary staff are allowed to make purchasing decisions ■ Long-term practical on-the-job training © Village Vanguard corporation, All rights reserved. P.11
Slide 13: Sourcing Team
Sourcing Team Role Two Functions The team assumes the role of in-house wholesaling teams, proposing products (1) Reducing costs by taking (2) Creating competition to promote to stores through marketing activities. advantage of economies of scale a “product refining” effect Manufacturers and External
Slide 14: Store Network (Parent)
Store Network (Parent) Store data as of end-August 2012 395 stores nationwide * Figures in parentheses indicate the number of FC stores * Figures in red show there were changes in the number from Q4. Tohoku 378 directly managed (DM) DM 22 Hokkaido 327 VV format DM 16 Aomori 38 new style format FC 2
Slide 15: VV – Results (Parent)
VV – Results (Parent) © Village Vanguard corporation, All rights reserved. P.14
Slide 16: Parent Income Statement
Parent Income Statement Parent Income Statement FY05/11 FY05/12 FY05/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Est. Q3 Est. Q4 Est. Sales 8,783 8,403 10,775 9,315 9,306 8,863 11,255 9,509 8,949 8,223 10,660 9,089 Gross Profit 3,501 3,403 4,353 3,739 3,739 3,431 4,501 3,690 3,464 3,136 4,110 3,5
Slide 17: Sales by Category
Sales by Category Sales by Category FY05/11 FY05/12 FY05/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 SPICE (Parent) 6,780 6,461 8,609 7,178 7,361 6,999 9,216 7,684 7,310 (Internal Sourcing 2,217 2,093 Team) 1,753 1,770 2,713 2,088 2,214 3,117 2,310 (Other) 5,028 4,691 5,896 5,089 5,144 4,78
Slide 18: OP Analysis
OP Analysis (Million Yen) 800 Decrease in OP due to other Decrease in OP at existing factors 700 -59 million yen stores -255 million yen Main factors: Increase in OP from new stores (less Higher inventory write- than 13 months since opening) downs 67 million yen -58 million yen 600 -255 27 -59 500 7
Slide 19: Store Openings
Store Openings FY05/10 FY05/11 FY05/12 FY05/13 Plan and Actual Actual Actual Actual Q1 Q2 Q3 Q4 FY Init. Init. Init. Init. Init. FY FY FY Act. Est. Est. Est. Est. Plan Plan Plan Plan Plan Openings 34 46 38 7 8 8 5 4 1 6 9 25 23 Village Vanguard 30 39 30 6 6 5 4 3 0 6 8 20 18 new style 1 7 7 1 2 3 1
Slide 20: Year on Year Retail Sales at Existing Stores
Year on Year Retail Sales at Existing Stores 既存店売上昨対 YoY sales at existing stores The dedicated Area Manager system introduced in March 2010, leading to 114 “Strong seller occupying appealing 100.8% YoY sales at existing stores spots in the sales rankings” for cumulative FY05/11 (until March 112 Ove
Slide 21: Recovering Sales: Factors behind Sluggish Sales and Future Scenario
Theme 1 Recovering Sales: Factors behind Sluggish Sales and Future Scenario Short-Term Issues Medium-Term Issues Store manager training lagged behind aggressive store openings, Purchasing resulting in some store managers’ insufficient capabilities and weaker in-store product offerings. FY05/12 Sudde
Slide 22: Recovering Sales: Strengthen In-Store Product Offerings
Theme 1 Recovering Sales: Strengthen In-Store Product Offerings Village Vanguard’s Vision Background 2006 Unearth Consumer Needs Hit merchandise debuted. Disseminate Information Learned to make money just by selling hit merchandise. 2007 Stores put hot-sellers at easy-to-see spots. Village Vanguard
Slide 23: Strengthening Sourcing Team
Theme 2 Strengthening Sourcing Team Sourcing Team Q1 Shipment YoY Shipment of Merchandise via Warehouses Robust direct shipment from supplies to Shipment via New Merchandise stores, weak shipment via warehouses Warehouse: Value YoY Shipment (Million Yen) Japan: Shipment Value of New Items Launched i
Slide 24: Inventory Control
Theme 3 Inventory Control FY05/11 FY05/11 FY05/11 FY05/11 FY05/12 FY05/12 FY05/12 FY05/12 FY05/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Cash Flow from Operations -718 -523 -214 1,042 -950 -1,061 -1,132 102 -158 ■Net Income before Tax 502 1,015 2,371 3,065 672 1,098 2,390 2,696 522 ■Net Change in
Slide 25: Company Profile: Titicaca
Company Profile: Titicaca © Village Vanguard corporation, All rights reserved. P.24
Slide 26: Company Overview (Titicaca)
Company Overview (Titicaca) Company name: Titicaca Co. Shareholder composition: Village Vanguard Co., Ltd. (100%) Business: Import and sales of ethnic fashions and daily goods Headquarters: 2-2-3 Shin-Yokohama, Kohoku-ku, Yokohama, Kanagawa Prefecture Representative: Hitoshi Kinami, Managi
Slide 27: Titicaca Store Network
Titicaca Store Network Store data as of end-August 2012 Figures in red show there were changes in the number from end-May 2012 86 stores nationwide 84 Directly Managed (DM) Hokkaido 2 FC Stores DM 1 Tohoku Hokkaido 1 DM 5 Akita 1 Iwate 1 Hokuriku Yamagata Miyagi ETHIC Kyoto DM 6 1 2 Teramachi Niigat
Slide 28: Outside of Titicaca Stores
Outside of Titicaca Stores Shibuya Store AEON MALL LakeTown store Youme Town (Tokyo) (Saitama) AEON MALL Chiba Izumo store New Town store (Shimane) (Chiba) Early days Now Started as a folk art shop, Warm, natural store Image of a Mexican resort with signs and store fixtures interior, emphasizing hot
Slide 29: Outside of New Stores
Outside of New Stores New Store Design Concept “Cheer customers up with colorful stores full of fun!” These new stores were designed in the motif of Mexican resort hotels. Wooden racks, glass lamps and hanger closets used for merchandise display are actually brought from Mexico, adding a real Mexica
Slide 30: Titicaca ETHIC opened in Omotesando and Kyoto
Branding Strategy Titicaca ETHIC opened in Omotesando and Kyoto Teramachi to spread Titicaca store concept Shop Concept Bridge producers and consumers, and contribute to society by promoting ethical consumption Spread Info •Good location as info hub •Equipped with press room (Omotesando) •Free space
Slide 31: Overview of Titicaca ETHIC
Overview of Titicaca ETHIC Omotesando store Kyoto Teramachi store © Village Vanguard corporation, All rights reserved. P.30
Slide 32: © Village Vanguard corporation, All rights reserved. P.31
© Village Vanguard corporation, All rights reserved. P.31
Slide 33: Titicaca - Results
Titicaca - Results Titicaca Income Statement FY03/11 FY03/12 FY03/13 (Million Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Est. Q3 Est. Q4 Est. Sales 580 720 630 625 827 1,148 977 1,016 1,207 1,695 1,435 1,462 Gross Profit 390 473 412 397 554 798 654 672 807 1,038 946 911 Operating Profit 67 114 53 3 109 275
Slide 34: Titicaca - Results
Titicaca - Results SG&A vs. Budget OP YoY -2.8% vs. budget (-18 million yen) •OPM at 13.7% vs. 13.2% in Q1 FY03/12 •Ratio of corporate overhead to sales at 12.2% vs. 12.5% in Q1 FY03/12 Increase in OP at new stores 665 250 +77 million yen Slower hiring Decrease in OP from closures -15 million yen -1
Slide 35: Titicaca - Results
Titicaca - Results Comparable Store Sales +7.0% vs. Q1 FY03/12 150% Higher monthly sales YoY Higher monthly sales YoY for 18 consecutive months 140% for 49 consecutive after the earthquake months 130% (Feb 2008-Feb 2011) 121.1% 118.4% 120% 112.8% 112.2% 110% 109.9% 104.6% 100% Existing stores on whi
Slide 36: Growth Strategy
Growth Strategy Hiring Strategy Allocate personnel costs in FY03/13 in line with Titicaca growth Stores -6% vs. plan •Despite active hiring at both new and existing stores, hiring fell behind budget. •Increase sales by raising staff counts particularly at stores showing robust performance. HQ Divisi
Slide 37: Village Vanguard Webbed
Village Vanguard Webbed Company Overview Company name: Village Vanguard Webbed Corporation Shareholder composition: Village Vanguard Co., Ltd. (100%) Online shopping site Business: e-commerce of books, goods, CDs, DVDs, etc. Headquarters: 1-908 Kamiyashiro, Meito-ku, Nagoya, Aichi Prefecture
Slide 38: Village Vanguard Webbed PL
Village Vanguard Webbed Results ■Sales YoY (Order Value Basis) (Thousand Yen) FY05/12 FY05/13 (Actual) (Results and Plan) PL FY Q1 Q2 Q3 Q4 (Actual) (Actual) (Plan) (Plan) (Plan) Sales 100,292 24,042 56,611 104,177 137,633 新サイトでの営業 Operating a store Vs. Plan on the new site (%) 51.4% 94.8% 2011年4月～
Slide 39: Overseas Subsidiaries
Overseas Subsidiaries © Village Vanguard corporation, All rights reserved. P.38
Slide 40: Enter Overseas Markets
Overseas Subsidiaries Enter Overseas Markets Village Vanguard Titicaca Japan Japan 395 stores (including franchises) 86 stores (including franchises) * As of end-August 2012 Increase Store Counts in Japan * As of end-August 2012 Enter overseas markets and increase store counts overseas ●September 20
Slide 41: Village Vanguard (Hong Kong) Limited Company Overview
Village Vanguard (Hong Kong) Limited Company Overview Company Name: Village Vanguard (Hong Kong) Limited Shareholders: Village Vanguard Co., Ltd. (80%) Era-Bee Limited (20%) (Development of Japanese language education and culture-related businesses) Business: Retail sales exhibiting a fusion o
Slide 42: Village Vanguard (Hong Kong) Limited Results
Village Vanguard (Hong Kong) Limited Results Inside Store FY05/12 FY05/13 (Results and Plan) (Thousand Yen) FY Q1 Q2 Q3 Q4 Sales 106,168 27,403 59,787 97,094 131,580 Vs. Plan -4,097 - - - YoY Change -8,851 -2,233 +7,396 +12,842 +22,411 GP 37,119 11,075 23,915 38,837 52,632 Vs. Plan -1,524 - - - YoY
Slide 43: TITICACA HONG KONG LIMITED Company Overview
TITICACA HONG KONG LIMITED Company Overview Company name: Titicaca Hong Kong Limited Shareholders: Village Vanguard Co., Ltd. (100%) Business: Import and sales of ethnic fashions and daily goods Headquarters: Flat 1606, 16/F., Nathan Center, 580 Nathan Road, Mongkok, Kowloon Representative
Slide 44: TITICACA HONG KONG LIMITED Results
TITICACA HONG KONG LIMITED Results Inside Store World Trade Center in Causeway Bay, Hong Kong FY05/13 (Results and Plan) (Thousand Yen) Q1 Q2 Q3 Q4 (Actual) (Plan) (Plan) (Plan) Net Sales 3,726 8,000 14,000 20,000 Vs. Plan (%) 186.3% - - - YoY (%) - - - - GP 1,940 5,112 8,947 12,782 Vs. Plan (%) 170
Slide 45: Village Vanguard (Taiwan) Ltd. Company Overview
Village Vanguard (Taiwan) Ltd. Company Overview Company name: Village Vanguard (Taiwan) Limited Shareholders: Village Vanguard Co., Ltd. (100%) Business: Retail sales exhibiting a fusion of books, SPICE (variety goods) and new media (CDs, DVDs, others) based on the idea of a “bookstore where y
Slide 46: Village Vanguard (Taiwan) Ltd. Results
Village Vanguard (Taiwan) Ltd. Results Inside Store FY05/13 (Results and Plan) (Thousand Yen) Q1 Q2 Q3 Q4 Sales 2,474 10,400 21,900 33,000 Vs. Plan -1,025 - - - GP 878 4,368 9,198 13,860 Vs. Plan -591 - - - OP -10,535 -14,107 -16,745 -19,767 Vs. Plan -681 - - - RP -10,533 -14,107 -16,745 -19,767 Vs.