United Arrows Ltd. · TSE:7606
United Arrows — Q1 FY2024 Earnings Presentation
41 slides from United Arrows's earnings presentation, Aug 7, 2023
Slide 1: First Quarter FY Ending March 2024 Financial Results Briefing
For the First Quarter of Fiscal Year Ending March 31, 2024 Financial Results Briefing 2023.08.07 UNITED ARROWS LTD ¥ UNITED ARROWS LTD.
Slide 2: Table of Contents
ep. 04-21 | Q] Overview of FY24 1Q Business Results Table of Contents Tab | e of ep. 35-36 | 05 Message from Yoshinori Matsuzaki, Contents Representative Director, President and CEO pp. 22-34 | Q2 Progressin Sustainability Initiatives pp. 37-41 | O04 Reference Materials
Slide 3: Cautionary Statement
Cautionary Statement Earnings forecasts and descriptions other than objective facts contained in this document are based on decisions made by UNITED ARROWS LTD. in light of information obtainable as of the date of this report and, therefore, include risks and uncertainties. Actual earnings may diffe
Slide 4: Overview of FY24 1Q Business Results
Overview of FY24 1Q Business Results UNITED ARROWS LTO. PAGE | 4
Slide 5: Overview of FY24 Business Results
01 Overview of FY24 10 Business Results Summary Sales and gross margin exceeded the previous year's level, and each income below operating income exceeded plan due mainly to improvement in non-consolidated business performance Consolidated Sales Gross margin SGA expenses ¥32, 155 million 55.0 « ¥1 5
Slide 6: Overview of FY24 Business Results: Non-consolidated sales
01 Overview of FY24 10 Business Results Non-consolidated sales By Channel YoY vs. sales YOY Business Unit ¥24,742 million 19 go +0.8pt (82.2% vs. sales) Retail ¥17,099 million 19 G9 +0.5pt (56.8% vs. sales) Online ¥7,085 million iog3, opt (23.6% vs. sales) Outlet, etc. ¥5,343 million ios 19 -0.8pt (
Slide 7: Overview of FY24 Business Results
01 Overview of FY24 10 Business Results BS Opening and Closing of Stores Balance of short- and Inventory 3Mresults long-term loans payable ¥2,160 million ¥20, 373 million Opened 5 and Closed 2 vs. FY23-End 86.3% vs. FY2310-End 106.5% No. of stores as of period-end 301 COEN CO., LTD. UNITED ARROWS TA
Slide 8: Sales were ¥32,155 million, 108.4% YoY
Sales were ¥32,155 million, 108.4% YoY. Gross profit was ¥17,678 million, 109.3% YoY and vs. sales were 55.0%, up 0.4 percentage points (pt) YoY. SGA expenses were ¥15,176 million, 105.9% YoY, and vs. sales were 47.2%, down 1.1 pt YoY. Operating income was ¥2,502 million, 135.0% YoY and vs. sales we
Slide 9: Consolidated gross margin was 55.0%, up 0.4 pt YoY
Consolidated gross margin was 55.0%, up 0.4 pt YoY. Gross margin of UNITED ARROWS LTD. was 55.0%, up 0.5 pt YoY. Total business unit fell 0.8 pt, mainly due to higher costs of spring outfits caused by currency fluctuations and the expansion of discount price sales for VIP customers in June. This yea
Slide 10: SGA expenses
The amount and rate of SGA expenses are as explained earlier. Vs. sales were 47.2%, down 1.1 pt YoY. Advertising expenses were ¥720 million, 123.6% YoY and vs. sales were 2.2%, up 0.3 pt YoY due mainly to an increase in advertising costs. Personnel expenses were ¥5,429 million, 106.0% YoY, due to an
Slide 11: Non-consolidated sales were ¥29,894 million, 110.4% YoY
Non-consolidated sales were ¥29,894 million, 110.4% YoY, and total business unit sales were ¥24,742 million yen, 110.8% YoY. Retails were ¥17,099 million, 110.6% YoY. The recovery in the Tokyo area, which was affected by the COVID-19 pandemic, was remarkable. Online was ¥7,085 million, 109.3% YoY, a
Slide 12: Trend-Conscious Market sales
Trend-Conscious Market centered on UA and BY had sales of ¥16,486 million, 113.2% YoY. Basic Trend-Conscious Market centered on GLR had sales of ¥8,255 million, 106.2% YoY. Trend-Conscious Market with a high proportion of the Tokyo area, where the recovery is remarkable, grew significantly. In both
Slide 13: Total assets were ¥55,808 million
Total assets were ¥55,808 million, 91.2% compared with the end of the previous period. Current assets were ¥36,854 million, 88.6% compared with the end of the previous period due to a decrease in cash and deposits, merchandise, and accounts receivable-other. Noncurrent assets were ¥18,954 million, 9
Slide 14: Cash flows
Cash flows from operating activities led to a decrease in cash of ¥1,040 million, cash flows from investing activities reduced cash by ¥818 million, cash flows from financing activities led to a decrease in cash of ¥2,582 million, and cash and cash equivalents were ¥4,111 million. The main breakdown
Slide 15: Subsidiary trends
Subsidiary trends are as shown on the slide. 15
Slide 16: Five stores opened and two closed over 3 months
Five stores opened and two closed over the 3-month period. The number of stores totaled 301 at the end of 1Q. 16
Slide 17: Retail Stores Opened/Closed
01 Overview of FY24 10 Business Results UNITED ARROWS LTD. Retail Stores Opened/Closed 3M results Full-year forecast No.of stores at No.of stores at theprevious Opened Closed “°% "853! Opened Closed tre period-end perlod-end Forecast) UNITED ARROWS LTD. Total 215 5 1 219 9 5 219 Trend-Conscious Mark
Slide 18: UA CREATIVITY strategy and gross margin improvement
As stated in UA CREATIVITY strategy, which is one of the three main strategies of the Medium-Term Management Plan, the improvement of gross margin is a major contributor to higher profitability. Approximately 80% of our merchandise is imported from overseas, and currency fluctuations inevitably affe
Slide 19: Contributors to gross profit margin improvement
Contributors to the improvement in gross profit margin are an increase in the full price sales ratio and a decrease in the cost ratio. As stated in the long-term vision, we are moving away from a sales-expansion approach based on mass production and mass consumption, and switching to a strategy of i
Slide 20: New membership program UA Club
A new membership program “UA Club” was launched in August 2023 with the aim of “connecting with customers widely and deeply,” a slogan of the Medium-Term Management Plan. With the UA Club, we will switch from the previous system where points were rewarded for purchases to a miles & coupons system ba
Slide 21: UA MULTI strategy: test marketing in Shanghai
As part of the UA MULTI strategy in its Medium-Term Management Plan, we launched test marketing in Shanghai, China. A pop-up shop was opened at Grand Gateway 66, a commercial facility in Shanghai, China, over two months from May 12 to July 11, 2023. The lineup included UNITED ARROWS, BEAUTY&YOUTH an
Slide 22: Progress in Sustainability Initiatives
02 Progress in Sustainability Initiatives 22
Slide 23: History of sustainability activities
History of our sustainability activities are as follows. October 1999 (at the time of listing) to present The Company’s Corporate Philosophy System includes the “Our Commitment: Creating Five Values” and positions the creation of value for stakeholders as an important mission of the Company (Five: c
Slide 24: Outlines of the three activities
These are outlines of the three activities established in August 2022. 24
Slide 25: Long-term quantitative targets for 2030
These are the long-term quantitative targets for 2030 and the results for 2021 (the fiscal year ended March 2022), which is the first year of the activities. The results for 2022 are also showed later. 25
Slide 26: Sustainability promotion system
This is the system for promoting sustainability. We have a Sustainability Committee composed of directors, executive officers, and full-time outside directors. As shown in the second paragraph of the page, the Committee regularly meets every month to deliberate on policies and initiatives related to
Slide 27: Main discussions of the Sustainability Committee
This page shows the main discussions of the Sustainability Committee in the previous fiscal year. Every month, the Committee discussed mainly the three themes of SARROWS. 27
Slide 28: Results of long-term targets for 2022
Here are the results of each long-term target for the previous fiscal year (2022). As a point to note, the disposal rate of goods is subdivided. Until 2021, the target was set at 0.1% for disposal of all products, but in 2022, the target was set at 0.0% for the disposal of textile products. Especial
Slide 29: Circularity initiatives
These are major initiatives under the “Circularity” category in the previous fiscal year. First: Improvement of the regular price sales ratio and inventory turnover ratio. The full price sales ratio of spring/summer and fall/winter in the previous fiscal year reached the highest in the past 10 years
Slide 30: Carbon Neutrality initiatives
These are major initiatives under “Carbon Neutrality” in the previous fiscal year. First: Obtaining approval from Science Based Target initiatives (SBTi) In April 2023, we acquired SBTi approval, which is still rare for Japanese apparel companies Target for Scope 1 and 2 was assessed as a level well
Slide 31: Humanity initiatives
These are major initiatives under “Humanity” in the previous fiscal year. First: Formulation and disclosure of UNITED ARROWS Group Human Rights Policy. UNITED ARROWS Group Human Rights Policy was formulated and disclosed in March 2023. It is based on international principles and guidelines from rele
Slide 32: Other sustainability promotion activities
These are other sustainability promotion activities implemented in the previous fiscal year. First: Complete renewal of the website and highlighting sustainability initiatives. The corporate website was completely redesigned. We highlighted our sustainability initiatives by placing numerical targets
Slide 33: External evaluation improvements
As a result of these efforts, external evaluation has gradually improved. Here are the examples. First: MSCI ESG Ratings The Company’s initial rating of BBB was assigned in 2016 and did not change until 2021, but the rating was upgraded to A in December 2022 Second: FTSE Blossom Japan Sector Relativ
Slide 34: Topics for the current fiscal year
Finally, the topics for the current fiscal year. The Integrated Report will be published, though it has been suspended since 2020 due to the decline in business performance caused by the COVID-19 pandemic. It explains the source of the Company’s value based on the value creation process. The sustain
Slide 35: Message from Yoshinori Matsuzaki, President and CEO
UNITED ARROWS LTO. 03 Message from Yoshinori Matsuzaki, Representative Director, President and CEO PAGE 35 35
Slide 36: CEO message on the Medium-term Management Plan
Four months have already passed since we started the Medium-term Management Plan. I have covered this in the past, but I will again go over the three key strategies for the three years of this plan. The first is the UA CREATIVITY strategy to create new value as a corporate entity and strive to grow
Slide 37: Reference Materials
B uniren annows tro Reference Materials PAGE 37
Slide 38: Management policy for fiscal year ending March 2024
The Group’s management policy for the fiscal year ending March 2024, which is the first year of the Medium-Term Management Plan with the fiscal year ending March 2026 as the final year, is “Provide Excitement: Take Steps toward Providing New Value.” 38
Slide 39: Three strategies of the medium-term plan
To realize this policy, we will promote three strategies: UA CREATIVITY strategy, UA MULTI strategy, and UA DIGITAL strategy. Under the UA CREATIVITY strategy, we will work to grow our existing businesses by opening new stores and growing online sales, and to improve gross margins by enhancing the p
Slide 40: Consolidated forecast for fiscal year ending March 2024
For the fiscal year ending March 31, 2024, we forecast sales of ¥138,300 million, 106.3% YoY, and gross margin of 52.1%, up 0.5pt from the previous year. Gross margin is expected to improve from the previous fiscal year in both the first half and the second half. SGA expenses will be¥65,100 million,
Slide 41: Non-consolidated sales forecast
Non-consolidated sales are expected to be ¥125,375 million, 105.9% YoY. The year-on-year comparison of existing store sales for both retail and online is expected to be 107.3% for the full year, 105.5% for retail, and 111.1% for online. The plan includes the impact of the change in revenue recogniti