United Arrows Ltd. · TSE:7606
United Arrows — Q1 FY2022 Earnings Presentation
40 slides from United Arrows's earnings presentation, Aug 6, 2021
Slide 1: Fiscal 2022 Three-Month Period Ended June 30, 2021 Earnings Announcement
Fiscal 2022 Three-Month Period Ended June 30, 2021 Earnings Announcement August 6, 2021 UNITED ARROWS LTD. 1
Slide 2: Contents
Contents I. Overview of Business Results for the Three-Month Period Ended June 30, 2021 PP. 3–14 II. Current Situation and Future Action PP. 15–20 III. Message from Matsuzaki Representative Director, President and CEO PP. 21–23 IV. Reference Materials PP. 24–40 Cautionary Statement Descriptions fo
Slide 3: I. Overview of Business Results for the Three-Month Period
I. Overview of Business Results for the Three-Month Period Ended June 30, 2021 3
Slide 4: Performance Summary for the Three-Month Period FY2022
Performance Summary for the Three-Month Period FY2022 Consolidated P/L (for details, see slides 5-8) Sales: ¥25,264 million, YoY increase of 13.8%, decrease of 32.6% over the same period of FY20. Excluding the impact of changes in the consolidation structure and revenue recognition standards, sale
Slide 5: Consolidated P/L Overview
Consolidated P/L Overview Sales were below target but SGA expenses were curbed, and operating loss, ordinary loss, and net loss were less than expected (Millions of yen) 1Q FY20 1Q FY21 1Q FY22 (Apr. 2019 to (Apr. 2020 to (Apr. 2021 to Jun. 2019) Jun. 2020) Jun. 2021) vs. 1Q FY20 vs. 1Q FY21 Sales
Slide 6: Factors behind changes in consolidated gross margin
Factors behind changes in consolidated gross margin Although promoting the consumption of products for spring and summer of last year at outlets has significant impacts, the negative impact is expected to diminish in fall and winter Gross Margin 1Q FY22 vs. 1Q FY20 vs. 1Q FY21 Consolidated 51.5% -
Slide 7: Consolidated SGA Expenses
Consolidated SGA Expenses The ratio of SGA expenses is at a high level due to the delay in sales recovery, but the control of SGA expenses continues (Millions of yen) 1Q FY20 1Q FY21 1Q FY22 (Apr. 2019 to (Apr. 2020 to (Apr. 2021 to Jun. 2019) Jun. 2020) Jun. 2021) vs. 1Q FY20 vs. 1Q FY21 Sales 37
Slide 8: Impact of change in revenue recognition standards
Impact of change in revenue recognition standards Even if the impact of the change in revenue recognition standard is excluded, SGA expenses were kept at the 80% level of the same period of FY20 (Millions of yen) 1Q FY20 1Q FY21 1Q FY22 (Apr. 2019 to (Apr. 2020 to (Apr. 2021 to Jun. 2019) Jun. 202
Slide 9: Non-Consolidated Sales Results by Sales Channel
Non-Consolidated Sales Results by Sales Channel (Millions of yen) 1Q FY20 1Q FY21 1Q FY22 (Apr. 2019 to (Apr. 2020 to (Apr. 2021 to Jun. 2019) Jun. 2020) Jun. 2021) vs. 1Q FY20 vs. 1Q FY21 Non-Consolidated Sales 31,427 18,858 22,919 (8,508) 72.9% 4,060 121.5% Excluding the impact of change in - -
Slide 10: Non-Consolidated Sales Results by Business
Non-Consolidated Sales Results by Business (Millions of yen) 1Q FY20 1Q FY21 1Q FY22 (Apr. 2019 to (Apr. 2020 to (Apr. 2021 to Jun. 2019) Jun. 2020) Jun. 2021) vs. 1Q FY20 vs. 1Q FY21 Total Business Unit Sales 26,809 16,641 19,019 (7,789) 70.9% 2,377 114.3% Excluding the impact of change in revenu
Slide 11: Consolidated B/S Overview
Consolidated B/S Overview Even if the impact of the change in consolidation structure is excluded, inventory decreased 28.2% YoY (Millions of yen) FY21-End FY22 1Q-End As of Mar. 31, 2021 As of Jun. 30, 2021 vs. FY21-End Total Assets 63,619 62,209 (1,410) 97.8% Composition ratio 100.0% 100.0% - -
Slide 12: Consolidated C/F Overview
Consolidated C/F Overview Net cash flows from operating activities were negative, though this improved substantially from 1Q FY21 (Millions of yen) 1Q FY21 1Q FY22 Major components of results (Apr. 2020 to (Apr. 2021 to for 1Q FY22 Jun. 2020) Jun. 2021) Cash flows from operating activities (sub-to
Slide 13: Opening and Closing of Stores in 1Q (Group Total)
Opening and Closing of Stores in 1Q (Group Total) The number of stores at the end of FY22 is expected to decrease by 14 from the end of FY21 due to careful selection of store openings and review of unprofitable stores FY22 1Q Results FY22 Forecasts No. of stores as No. of stores as No. of stores a
Slide 14: Progress at Group Companies
Progress at Group Companies COEN CO., LTD. (February–April) Increased in both revenue and income • Sales: ¥2.2 billion, up 23.5% YoY, down 18.6% over 1Q FY20 (excluding changes in revenue recognition standards: up 25.5% YoY, down 17.3% over 1Q FY20) • Revenue and income increased as a rebound from
Slide 15: II. Current Situation and Future Action
II. Current Situation and Future Action 15
Slide 16: Current Situation: change over the same period of FY20 by channel
Current Situation: change over the same period of FY20 by channel Although retail sales in May fell sharply due to the extension of the state of emergency and the expansion of the coverage area, they are gradually recovering 120% 109.8% 110.4% Online 103.9% 98.6% 100% 87.3% Total for the entire co
Slide 17: Current Situation: change over the same period of FY20 by region
Current Situation: change over the same period of FY20 by region In the Kanto region (outside Tokyo), where a state of emergency was not declared, the level remained at 80% of the same period of FY20. The negative margin is limited unless retail stores are closed Hokkaido/Tohoku Kanto (Outside Tok
Slide 18: Current Measures and Future Policies
Current Measures and Future Policies 1. Measures from April to the present • Flexible distribution of salespersons Supporting sales activities by flexibly assigning sales staff of temporarily closed stores to operating stores and headquarters offices • Expanding contact points through online means
Slide 19: New action (1)
New action (1) We will propose affluent lifestyles for a new era and continue to set a standard for lifestyle culture Our first outdoor label A new brand that enriches our Establishment of contact points new daily lives for corporate customers Our first outdoor label "koti BEAUTY & "CITEN" is a ne
Slide 20: New action (2)
New action (2) We will propose affluent lifestyles for a new era and continue to set a standard for lifestyle culture Communicating wellness and Starting the sale of selected sustainability alcohol We inherited the trademark of the legendary surf shop From August, we open the "UNITED ARROWS BOTTLE
Slide 21: III. Message from Matsuzaki, Representative Director, President and CEO
III. Message from Matsuzaki, Representative Director, President and CEO 21
Slide 22: What values should the UA LTD. Group provide?
What values should the UA LTD. Group provide? With sincerity and a sense of beauty, we continually create new tomorrows for our customers, setting the standard for lifestyle culture Past – ☞ Expanding opportunities to Present – Present provide values by increasing Future ☞ Increase the value of th
Slide 23: Source of Corporate Brand Value
Source of Corporate Brand Value Keeping these three elements in step with the times and providing things that are half a step ahead of customers' expectations Service Products ☞ High level of customer service ☞ Selection of products Service Products ☞ CRM ☞ SCM Understanding each Satisfy customer
Slide 24: IV. Reference Materials
IV. Reference Materials 24
Slide 25: Consolidated P/L Plan for FY22
Consolidated P/L Plan for FY22 Dividend payout ratio is set at 31% provisionally, and the resumption of dividends is scheduled to take place at ¥19 annually, aiming to return to profitability on a full-fiscal-year basis (Millions of yen) FY20 Full Fiscal FY21 Full Fiscal FY22 Plan Year Year vs. 1Q
Slide 26: FY22 Group Management Policy
FY22 Group Management Policy Medium-Term Management Plan for FY21 through FY23 Basic Policy: “Weather the crisis and regain our earnings power” 1. Drastically review the revenue structure 2. Regain earnings power FY22 Group Management Policy Major reforms toward sustainable growth and future F
Slide 27: FY22 Group Management Policy
FY22 Group Management Policy Major reforms toward sustainable growth and future For customer satisfaction in a new era • Required achievement of the operating income and productivity plan (operating income plan per person) 1. Assessment of underperforming businesses, stores, labels and subsidiarie
Slide 28: New Medium-Term Management Plan From FY2021 to FY2023
New Medium-Term Management Plan From FY2021 to FY2023 28
Slide 29: Changes in the market environment due to the COVID-19 pandemic
Changes in the market environment due to the COVID-19 pandemic The market environment has significantly changed against a background of changes in society caused by the COVID-19 pandemic Behavior to avoid Suppressing Changes in closed spaces, Expansion of consumption due to crowded places, and Avo
Slide 30: Issues the Company Must Deal With amid the COVID-19 pandemic
Issues the Company must deal with amid the COVID-19 pandemic Delayed recovery in • Delayed recovery in sales of stores located in commercial facilities in large cities commercial facilities in compared to those in the suburbs of regional cities large cities • Decline in the advantage of locations,
Slide 31: The Company's Strengths to Survive the COVID-19 Pandemic
The Company’s Strengths to Survive the COVID-19 Pandemic Possible to solve problems by utilizing the Company’s strengths 1. Strong trust-based relationships 2. Ability to address the evolving 3. High composition ratio of online with customers needs of customers sales • Strong capability of physica
Slide 32: Preconditions for the Period of the Medium-Term Management Plan
Preconditions for the Period of the Medium-Term Management Plan (From FY2021 to FY2023) In light of changes in the market environment, priority has been put on improvement in profitability for the period of the Medium-Term Management Plan 1. Recovery in commercial facilities in large cities may ta
Slide 33: New Medium-Term Management Plan for the Period from FY2021 to FY2023
New Medium-Term Management Plan for the Period from FY 2021 to FY 2023 Basic policy: “Weather the crisis and regain our earnings power” 1. Drastically review the revenue structure 2. Regain earnings power Financial targets (partly modified in light of the COVID-19 pandemic) Consolidated operat
Slide 34: Drastically Review the Revenue Structure
New Medium-Term Management Plan “Drastically Review the Revenue Structure” • Determining unprofitable subsidiaries, businesses and stores (closure of stores/streamlining, etc.) - Expecting to close consolidated stores by around 10% at this stage, and continue to consider closure/streamlining • Str
Slide 35: Regain Earnings Power: Improvement in revenue of core businesses
New Medium-Term Management Plan “Regain Earnings Power” • Improvement in revenue of core businesses 1. Improvement in terms of merchandise • Changes in season-based merchandise, introduction of seasonless products to deal with climate change • Product development focusing on the new normal Strengt
Slide 36: Regain Earnings Power: New era business and OMO
New Medium-Term Management Plan “Regain Earnings Power” • Business development in line with the new era • New business development with a concept focusing on the new normal • Business conditions for which multi-store openings are not assumed, based on the Company’s e-commerce site • Acquiring our
Slide 37: Matrix of Issues and Matters to Be Handled in the Medium-Term Plan
The Matrix of Issues the Company Must Deal With and Matters to Be Handled in the New Medium-Term Management Plan Delayed Acceleration of recovery in Further Decline in Problem casualization Inventory commercial strengthening product unit regarding cost of business efficiency facilities in online s
Slide 38: Steps to Recover Earnings and the Breakdown of Improvements
Steps to Recover Earnings and the Breakdown of Improvements First half: Switching to a structure that can secure profit; Latter half: Building the foundation for new business growth Aiming to improve operating income by ¥13,500-14,500 million for the next two years Switching to a low cost structur
Slide 39: Movements in the Consolidated Gross Margin
Movements in the Consolidated Gross Margin (Degree of Impact) FY19 FY20 FY21 Full Fiscal Full Fiscal Full Fiscal 1H 2H Year 1H 2H Year 1H 2H Year Gross margin for the fiscal year 51.5% 51.4% 51.4% 51.7% 50.1% 50.8% 42.9% 47.0% 45.2% Gross margin for the corresponding period of the previous fiscal
Slide 40: Trends in the Consolidated SGA Expenses to Sales Ratio
Trends in the Consolidated SGA Expenses to Sales Ratio FY19 FY20 FY21 1H 2H Full Fiscal Year 1H 2H Full Fiscal Year 1H 2H Full Fiscal Year Total of SGA Expenses 47.3% 42.2% 44.5% 46.4% 44.2% 45.2% 55.8% 46.6% 50.6% Advertising Expenses 2.4% 2.1% 2.2% 2.3% 3.1% 2.7% 3.0% 2.6% 2.8% Personnel Expense