United Arrows Ltd. · TSE:7606
United Arrows — Q3 FY2024/3 Earnings Presentation
47 slides from United Arrows's earnings presentation, Feb 7, 2024
Slide 1: Financial Results Briefing
For the Nine Months of Fiscal Year Ending March 31, 2024 Financial Results Briefing 2024.02.07 UNITED ARROWS LTD. 1
Slide 2: Table of Contents
P04 – P26 | 01 Overview of FY24/3 3Q Business Results Table of Contents P27 – P37 | 02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan P38 – P40 | 03 Progress in Sustainability Initiatives P41 – P42 | 04 Message from Yoshinori Matsuzaki, Representative Director, President, and CEO
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 FY24/3 3Q Business Results
01 Overview of FY24/3 3Q Business Results PAGE | 4 4
Slide 5: Consolidated results: sales ¥99.7 billion, operating income ¥5.8 billion
01 Overview of FY24/3 3Q Business Results Consolidated Although sales cleared the previous year's level and gross margin was maintained at the same level as the previous year, operating income and other profits decreased due to an increase in SGA expenses Consolidated sales Operating income Net inco
Slide 6: Consolidated Gross Margin
01 Overview of FY24/3 3Q Business Results Consolidated Gross Margin FY24/3 • Consolidated gross margin remained the YoY 9M pt difference same level as the previous year Consolidated 52.7% 0.0pt • UA LTD. improved by 0.1pt from the previous year. Although the total business unit was UNITED ARROWS LTD
Slide 7: Consolidated SGA Expenses
01 Overview of FY24/3 3Q Business Results Consolidated SGA Expenses (Millions of yen) Change/pt FY23/3 9M FY24/3 9M YoY • Consolidated SGA expenses were ¥46,761 million, difference 105.7% YoY, and vs. sales were 46.9%, up 0.9 pt YoY Total SGA expenses 44,247 46,761 2,514 105.7% vs. sales 46.0% 46.9%
Slide 8: Non-consolidated results
01 Overview of FY24/3 3Q Business Results Non-consolidated Sales exceeded the previous year, gross margin also improved from the previous year, and the negative number of customers purchasing at existing stores improved by 0.8 percentage points from the first half Existing stores YoY Non-consolidate
Slide 9: Non-consolidated by channel
01 Overview of FY24/3 3Q Business Results Non-consolidated by channel: As retail sales continued to improve, online sales also exceeded the previous year • Both retail and online sales improved from the (Millions of yen) FY2023 FY2024 previous year, the composition ratio of the Change/pt YoY 9M 9M d
Slide 10: Non-consolidated By business: Trend-conscious Market remained strong
01 Overview of FY24/3 3Q Business Results Non-consolidated By business: Trend-conscious Market remained strong • Trend-conscious Market centered on UA and (Millions of yen) BY continue to grow due to recovery in urban FY2023 9M FY2024 9M Change YoY Total business unit sales 72,980 77,938 4,957 106.8
Slide 11: Non-consolidated Gross margin continues to improve
01 Overview of FY24/3 3Q Business Results Non-consolidated Gross margin continues to improve • Recovered to 52.5%, the highest level since FY16/3, and approximately 53% excluding the impact of the change in revenue recognition standards • Although the negative impact of higher costs remains in Busin
Slide 12: Financial impact of transition to UA Club
01 Overview of FY24/3 3Q Business Results Financial impact of transition to UA Club Assuming future use of the Due to the difference in the increase, a portion of the Convert old “points” held by return rates, the amount The increased amount will be increase was lumped into the members to “miles” wh
Slide 13: Selected as a DX Certified Business Operator
01 Overview of FY24/3 3Q Business Results Selected as a “DX Certified Business Operator” by the Ministry of Economy, Trade and Industry Certified as ready for DX promotion in compliance with the basic matters of the “Digital Governance Code” Our initiatives for DX April 2021 Established DX Promotion
Slide 14: Consolidated P/L
01 Overview of FY24/3 3Q Business Results Consolidated P/L PAGE | 14 Sales were ¥99,704 million, 103.8% YoY. Gross profit was ¥52,578 million, 103.8% YoY and vs. sales was 52.7%, same level as the previous year. SGA expenses were ¥46,761 million, 105.7% YoY, and vs. sales was 46.9%, up 0.9 pts YoY.
Slide 15: Consolidated P/L 3Q (3 months)
01 Overview of FY24/3 3Q Business Results Consolidated P/L 3Q (3 months) PAGE | 15 15
Slide 16: Consolidated Gross margin
01 Overview of FY24/3 3Q Business Results Consolidated Gross margin FY24/3 YoY 9M pt difference Consolidated 52.7% 0.0pt UNITED ARROWS LTD. 52.5% 0.1pt Total business unit sales - -0.3pt Outlet, etc. - 4.7pt COEN CO., LTD. - -1.9pt UNITED ARROWS TAIWAN LTD. - 3.8pt PAGE | 16 Consolidated gross margi
Slide 17: Consolidated Gross Margin 3Q (3 months)
01 Overview of FY24/3 3Q Business Results Consolidated Gross Margin 3Q (3 months) YoY FY24/3 3Q pt difference Consolidated 53.2% -0.6pt UNITED ARROWS LTD. 53.1% -0.7pt Total business unit sales - -0.3pt Outlet, etc. - 1.7pt COEN CO., LTD. - -0.5pt UNITED ARROWS TAIWAN LTD. - 5.3pt PAGE | 17 17
Slide 18: Consolidated SGA Expenses
01 Overview of FY24/3 3Q Business Results Consolidated SGA Expenses (Millions of yen) Change/pt FY23/3 9M FY24/3 9M difference YoY Total SGA expenses 44,247 46,761 2,514 105.7% vs. sales 46.0% 46.9% 0.9pt - Advertising expenses 2,124 2,852 727 134.3% vs. sales 2.2% 2.9% 0.6pt - Personnel expenses 15
Slide 19: Consolidated SGA Expenses 3Q (3 months)
01 Overview of FY24/3 3Q Business Results Consolidated SGA Expenses 3Q (3 months) (Millions of yen) Change/pt FY23/3 3Q FY24/3 3Q difference YoY Total SGA expenses 15,780 16,543 763 104.8% vs. sales 40.8% 42.8% 1.9pt - Advertising expenses 829 924 94 111.4% vs. sales 2.1% 2.4% 0.2pt - Personnel expe
Slide 20: Non-consolidated Sales by Channel
01 Overview of FY24/3 3Q Business Results Non-consolidated Sales by Channel (Millions of yen) FY2023 FY2024 Change/pt YoY 9M 9M difference Non-consolidated sales 87,816 92,286 4,469 105.1% Total business unit sales 72,980 77,938 4,957 106.8% vs. sales 82.3% 82.7% 0.4pt - Retail 49,901 53,362 3,461 1
Slide 21: Non-consolidated Sales by Business
01 Overview of FY24/3 3Q Business Results Non-consolidated Sales by Business (Millions of yen) FY2023 9M FY2024 9M Change YoY Total business unit sales 72,980 77,938 4,957 106.8% Trend-conscious Market 48,447 52,642 4,195 108.7% Basic Trend-conscious Market 24,533 25,295 762 103.1% Existing store sa
Slide 22: Consolidated BS
01 Overview of FY24/3 3Q Business Results Consolidated BS PAGE | 22 Total assets were ¥60,316 million, 98.6% compared with the end of the previous period Current assets were ¥40,881 million, 98.3% from the end of previous period This was due to a decrease in cash and deposits, and increases in merch
Slide 23: Consolidated CF
01 Overview of FY24/3 3Q Business Results Consolidated CF (Millions of yen) FY23/3 9M FY24/3 9M Major breakdown of the results for the term Cash flows from operating activities 4,432 2,558 (sub-total) Income before income taxes 6,118 Decrease in provision for bonuses (1,378) Cash flows from operatin
Slide 24: COEN CO., LTD. and UNITED ARROWS TAIWAN LTD.
01 Overview of FY24/3 3Q Business Results COEN CO., LTD. Saw decrease in both revenue and income February - October • Sales were ¥6.8 billion, 89.4% YoY • Both sales and gross margin were lower than the previous year, and despite efforts to suppress SGA expenses, both revenue and income decreased •
Slide 25: Opening and Closing of Stores
01 Overview of FY24/3 3Q Business Results Opening and Closing of Stores Results for 9-month period Opened 9 Closed 6 No. of stores at the 3Q end 301 Full-year forecast Opened 12 Closed 9 No. of stores at the period-end 301 Results for 9-month period Full-year forecast No. of stores at No. of stores
Slide 26: UA LTD. Retail Stores Opened/Closed
01 Overview of FY24/3 3Q Business Results UA LTD. Retail Stores Opened/Closed Results for 9-month period Full-year forecast No. of stores at No. of stores at No. of stores at the previous Opened Closed Opened Closed the period end the 3Q end period end (forecast) UNITED ARROWS LTD. Total 215 8 3 220
Slide 27: Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan PAGE | 27 27
Slide 28: Three Key Strategies
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan Three Key Strategies Strategy Strategy Strategy • Grow and expand existing • Brand development for • Promote OMO businesses business expansion • Optimize the supply chain Top-line growth • Global expansion Improvement of gross marg
Slide 29: Improve employee engagement
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan UA CREATIVITY Strategy: Strengthen brand power - Expansion of investment in human capital Improve employee engagement Goal Significantly improved employee engagement score *1 80.0 2023 survey • The positive response rate increased
Slide 30: Generation Z ranked UA LTD. No.1 for mutual respect among employees
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan UA CREATIVITY Strategy: Strengthen brand power - Expansion of investment in human capital Generation Z ranked UA LTD. No.1 with high scores for “mutual respect among employees” *1 Favorable evaluation factor - A culture where emplo
Slide 31: Three Key Strategies
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan Three Key Strategies Strategy Strategy Strategy • Grow and expand existing • Brand development for • Promote OMO businesses business expansion • Optimize the supply chain Top-line growth • Global expansion Improvement of gross marg
Slide 32: Aiming to expand business by responding to challenges to achieve long-term vision
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan The UA MULTI Strategy: Brand development for business expansion Aiming to expand business by responding to challenges to achieve long-term vision Issue along the Age Axis Issue along the Brand Axis Issue in terms of business Main c
Slide 33: Launch of ATTISESSION, a women's brand aimed at the MZ generation
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan The UA MULTI Strategy: Brand development for business expansion Launch of “ATTISESSION”, a women's brand aimed at the MZ generation* Expand customer base to MZ generation • Team formation selected from next-generation in-house memb
Slide 34: ATTISESSION: Taste and pricing
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan The UA MULTI Strategy: Brand development for business expansion Launch of “ATTISESSION”, a women's brand aimed at the MZ generation Taste and pricing that resonates with the target generation Main products and price ranges Tops ¥7,
Slide 35: Launched UNITED ARROWS BEAUTY, a cosmetics brand for millennials
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan The UA MULTI Strategy: Brand development for business expansion Launched UNITED ARROWS BEAUTY, a cosmetics brand for millennials Leveraging UA brand name recognition to advance into the cosmetics market • Available in a total of 6
Slide 36: UNITED ARROWS BEAUTY: Differentiated lineup and pricing
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan The UA MULTI Strategy: Brand development for business expansion Launched UNITED ARROWS BEAUTY, a cosmetics brand for millennials Differentiated lineup, pricing that is easy to use day-to-day Product lineup BB Cream ¥2,530 Rich seru
Slide 37: Aim for ¥40.0 billion in new apparel businesses and ¥25.0 billion in derived businesses
02 Major Initiatives in FY24/3 3Q of the Medium-Term Management Plan The UA MULTI Strategy: Brand development for business expansion Aim for ¥40.0 billion in new apparel businesses and ¥25.0 billion in apparel derived businesses and non-apparel businesses over the long term Planning for this initiat
Slide 38: Progress in Sustainability Initiatives
03 Progress in Sustainability Initiatives PAGE | 38 38
Slide 39: Code of Conduct consent forms and on-site audits
03 Progress in Sustainability Initiatives Promoting collection of Code of Conduct for Conducting on-site audits of domestic partner Business Partners consent forms factories • collection rate • Completed 5 auditing projects scheduled for FY2024/3. (2 projects for 74.3 FY 2023/3) Result at the end of
Slide 40: Support for the 2024 Noto Peninsula Earthquake
03 Progress in Sustainability Initiatives Support for the 2024 Noto Peninsula Earthquake • Donation of UA miles If the customers use their UA miles to make a donation, we will make the donation to Peace Winds Japan, a certified NPO, on their behalf. Funds collected will be used for emergency support
Slide 41: Message from Yoshinori Matsuzaki, Representative Director, President, and CEO
04 Message from Yoshinori Matsuzaki, Representative Director, President, and CEO PAGE | 41 41
Slide 42: CEO message: Three Key Strategies
04 Message from Yoshinori Matsuzaki, Representative Director, President, and CEO Three Key Strategies providing excitement - connecting with customers widely and deeply PAGE | 42 Thank you very much for your continuous support. Three quarters of the first year of the medium-term management plan have
Slide 43: Reference Materials
05 Reference Materials PAGE | 43 43
Slide 44: Take steps to provide new value
05 Reference Materials: FY24 Group Management Policy providing excitement - connecting with customers widely and deeply Take steps to provide new value PAGE | 44 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 f
Slide 45: Three strategies: UA CREATIVITY, UA MULTI, UA DIGITAL
05 Reference Materials: FY24 Group Management Policy Three Key Strategies Strategy Strategy Strategy • Grow and expand existing • Brand development for • Promote OMO businesses business expansion • Optimize the supply chain Top-line growth • Global expansion Improvement of gross margin • Strengthen
Slide 46: Consolidated Business Plan
05 Reference Materials: Overview of FY24 Business Plan Consolidated Business Plan (Millions of yen) YoY Change/vs. sales pt FY2023 Results FY 2024 Plan difference Sales 130,135 138,300 8,164 106.3% Gross profit 67,178 72,100 4,921 107.3% vs. Sales 51.6% 52.1% 0.5pt - SGA expenses 60,816 65,100 4,283
Slide 47: Non-consolidated Sales Plan
05 Reference Materials: Overview of FY24 Business Plan Non-consolidated Sales Plan (Millions of yen) FY2024 FY2024 FY2024 1H YoY 2H YoY Full YoY Non-consolidated sales 54,562 104.9% 70,812 106.6% 125,375 105.9% Retail + Online Existing Stores - 106.3% - 108.1% - 107.3% Retail Existing Stores - 104.9