IZUMI CO., LTD.
3-3-1 Futabanosato, Higashi-ku, Hiroshima, 732-8555, Japan https://www.izumi.co.jp/（in Japanese）
Our IR website | Our sustainability website |
https://www.izumi.co.jp/corp/ | https://izumi.co.jp/sustainability/ |
e_ir/ | （in Japanese） |
IZUMI CO., LTD.
IZUMI CO., LTD.
Integrated Report 2024
ManagementValue Creation Story Management Philosophy / Editorial Policy and ContentsPart.1
Value Creation
Story
philosophyManagement Philosophy
Filling our employees with pride and
joy as we continue contributing to communities and our customers' lives
Part.2
Value Creation
Strategy
Part.3
Sustainability Management
Part.4
Business and
Stock Information
Vision
Four Dreams / 2030 Long-Term Vision
➡See page 5 | ➡See page 12 |
Action Plan
- We prioritize our sense of gratitude.
- We carry out our work with pride.
- We carry out our work both quickly and carefully.
4. We promise safety and security.
5. We are there for our customers.
L E C T |
Part.1 | Part.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value Creation Story | Sustainability Management | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Management Philosophy / | Materiality and Structure for Sustainability | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
......................Editorial Policy and Contents | 01 | Promotion....................................................... 29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Our DNA and the Izumi Group's Growth | Governance | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
........................................................Trajectory | 03 | Report on Ransomware .............................. 39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
............Three Strengths and Four Dreams | 05 | Environment .................................................. 40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Overview | 07 | Notes on Our Human Resources Strategy.. 43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial and Non-Financial Highlights | 09 | Society ............................................................ 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value Creation Model .................................. 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Our Six Types of Capital and Case Studies | Part.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
of the Value We Offer Society .................... 13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business and Stock Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Part.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company and Stock Information | 49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value Creation Strategy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Message from the President ..................... 15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outline and Current Progress of Our | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medium-Term Management Plan ............. 19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Strategy | 21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
M&A Strategy | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Strategy | 25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Area Strategy | 27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DX Strategy | 28 |
Editorial Policy
Our Integrated Report 2024 provides a comprehensive summary of our medium- to long-term growth strategy as well as sustainability-related and other non-financial data, all aimed at achieving our 2030 Long-Term Vision and our goal of positioning the Company at the heart of our communities. As part of our efforts to further increase our corporate value, the Izumi Group will continue to work toward closer communication with our shareholders, investors, and other stakeholders.
Reporting Period
March 1, 2023 - August 31, 2024
(including some activities after September 2024)
Reference Guidelines
- The IFRS Foundation, International Integrated Reporting Framework
- GRI Sustainability Reporting Standards
- Ministry of Economy, Trade and Industry, Guidance for Collaborative Value Creation 2.0
Date of Publication
October 2024
01 | 02 |
DNAValue Creation Story Our DNA and the Izumi&Group's Growth Trajectory
HiRealizingstorya wide range of value creation while inheriting
the three "DNAs"
Since its founding, our Company's DNA has comprised the concepts of innovation, challenge, and speed. We will carry forward this legacy and continue
build a bright future for local communities.
Part.1
Value Creation
Story
Part.2
Value Creation
Strategy
Part.3
Sustainability Management
Part.4
Business and
Stock Information
2008 | 2021 | ||||||||
60th anniversary of | |||||||||
1995 | 1998 | Izumi's founding | |||||||
Izumi returns to | |||||||||
1961 | Stores openings in Kyushu begin | Opened "Youme Town | its roots in Hiroshima | ||||||
Takamatsu," one of the | |||||||||
Izumi Co., Ltd. Established | 1987 | 1990 | largest stores in western Japan | ||||||
First supermarket opened | 1973 | 2002 | 2017 | ||||||
Listed on the First Section of | Launched Youme Town, | ||||||||
Suburban shopping | the Tokyo Stock Exchange | a large-scale, locally driven | Conducted first M&A, | LECT opens with themes of | |||||
Operating revenue | and took over the business | ||||||||
center Gion store opened | (currently Prime Market) | shopping center | of Nikonikodo Co., Ltd. | culture, food, and living | |||||
1961 | 1970 | 1980 | 1990 | 2000 | 2010 | 2020 |
Fiscal 2023
471,166
million yen (726,281 million yen)*
Fiscal 2024 (forecast)
527,300 million yen
(798,300 million yen)*
- The Accounting Standard for Revenue Recognition was applied from the beginning of FY2022. The figures before the Accounting Standard for Revenue Recognition was applied are shown in parentheses for reference.
(FY)
DNA
1
Innovation
We will change the way we think and explore new opportunities instead of accepting the status quo.
In 1950, our founder established a clothing wholesaler, Yamanishi Shoten Co., Ltd., against the background of the increase in demand for clothing. In the 1960s, we were the third-largest growth company in Japan in clothing manufacturing and wholesale, but looking ahead to the future, we entered the unknown world of retail. We opened our first Izumi supermarket as the first comprehensive supermarket in the Chugoku and Shikoku regions. Instead of being satisfied with the current situation, we have continued to take the next step to carve out our future.
DNA
2
Challenge
We will remain positive,
never fear anything, and be bold in action.
In the early 1970s, travel by bus and train was the main mode of transportation, and stores in downtown areas and in front of stations were doing well. However, our founder predicted that the popularization of automobiles would change people's lifestyles, and in 1973 he opened a large-scale store called the "Gion Shopping Center" (currently Yume Terrace Gion) in the suburbs with parking lots. On the day of opening, the area was so crowded that there was a heavy traffic jam. Actions that do not fear failure will lead to the creation of new value.
DNA
3
Speed
We will take action now, and won't wait or give up.
We had been considering opening stores in Okayama and Hyogo in order to develop our dominance strategy of store openings in new regions. However, from the perspective of future growth, it became clear that Kyushu has higher population density in some areas and less competition when comparing data between east and west. We also decided to expand into Kyushu due to the low land prices and construction costs. We take immediate action when we see good data. We value that speed.
03 | 04 |
StrengthValue Creation Story Three Strengths and Four Dreams
DreamMaking the most of our three strengths
to realize our four dreams
Over the course of more than half a century since our founding,
we have acquired and nurtured three strengths that support our growth: regional infrastructure, on-site capabilities, and ability to
In the future, we will continue to further refine our 3 strengths realize our 4 dreams in order to become the top store in the
&
Customers
We will be successful in making customers' lives more convenient and comfortable by providing high-quality products and services with
safety and security.
Part.1
Value Creation
Story
Part.2
Value Creation
Strategy
Part.3 | Part.4 | |
Sustainability | Business and | |
Management | Stock Information |
Tenants
We will use "Youme Town" as opportunities
for the further development of tenants
Izumi's 4Dreams
The Izumi Group has dreams.They are the four dreams that have grown together with Youme Town: communities, customers, tenants, and employees. We want to provide "the products new to the region" and "the best products in the region," while connecting and supporting everyone there.This creates new value through surprises and excitement. We will become the top store in the region while connecting broadly and deeply with communities, customers, tenants, and employees. Our dreams will never stop growing larger.
Local communities
We will create economic benefits through job creation, local production for local consumption activities in collaboration with local governments, shopping districts, NPOs, and
other organizations, and cultural rediscovery.
We will also serve as a lifeline for local communities in the event of a disaster.
Employees
We will provide employees with a sense of worth and
enjoyment in contributing to local communities,
and a sense of fulfillment that leads to their personal growth.
by creating successful examples of store creation.
The 3Strengths
that Support Our Growth
Regional Infrastructure
We are working to increase our brand power and maximize our market share in the Chugoku, Shikoku, and Kyushu regions by developing stores through our dominant strategy. We will continue to build a solid regional infrastructure by opening new stores, and M&A and alliances.
On-site Capabilities
In order to become the top store in the region, we have adopted a store-oriented approach where store general managers, store managers, and staff act autonomously in managing stores in ways that best suit the region. As a result, we are able to flexibly and promptly renew our product lineup and expand our services according to the local environment and circumstances.
Ability to Respond to Change
We meet the diverse needs of our customers in three business formats: shopping centers, food supermarkets, and neighborhood shopping centers. In addition, we continue to respond to the changing times by investing in the revitalization of existing stores, and scrapping and building.
05 | 06 |
Value Creation Story Business Overview
We operate stores rooted in the community, with a focus on retail business
Part.1
Value Creation
Story
Part.2
Value Creation
Strategy
Part.3
Sustainability Management
Part.4
Business and
Stock Information
Business Description / Related Data | Operating revenue / Operating profit | ||
We sell clothing, food, and household goods through shopping centers, general | Major Group Companies | ||
merchandising stores (GMS), supermarkets, and other formats. In the GMS | |||
● Youme Mart Kumamoto Co., Ltd. | Operating revenue* | Operating profit* | |
Business, we operate large-scale commercial facilities (shopping centers: SC) | 454,471 | 25,403 | |
● Youme Mart Kitakyushu Co., Ltd. | |||
where three generations of families can have a pleasant time together. In the | ● Yours Co., Ltd. | million yen | million yen |
SM Business, in addition to convenient and community-rooted food supermarkets | |||
● Dailymart Co., Ltd. | |||
(SM), we operate neighborhood shopping centers (NSC). | ■ Operating revenue (million yen) | ||
■ Operating profit (million yen) |
Number of Malls and | Retail Sales | Number of Stores and Malls | |||||||||||
Stores by Area | Net Sales Ratio by Area | by Floor Space | by Business Type | 656,914 | |||||||||
Retail | ● GMS............ 61stores | ||||||||||||
Other areas | Chugoku area | Other areas | Chugoku area | Less than 3,000m2 | 20,000m2~ | ||||||||
Business | 4stores | 91stores | 30.7 | 167.3 | 8.1% | 53.4% | ● SM | 191 | stores | 444,350 | 454,471 | ||
Shikoku area | billion yen | billion yen | ~10,000m2 | ● NSC................ 5stores | 29,589 | 28,609 | |||||||
10stores | 12.6% | ● Other.............. 6stores | |||||||||||
25,403 | |||||||||||||
317.9 | (As of August 31, 2024) | ||||||||||||
263stores | (FY2023) | ||||||||||||
billion yen | |||||||||||||
(FY2023) | |||||||||||||
Kyushu area | Kyushu area | ~20,000m2 | |||||||||||
158stores | 119.9billion yen | 25.9% | 2021 | 2022 | 2023 | (FY) |
(As of August 31, 2024)(non-consolidated basis and excluding stand-alone XSELL stores)
Operating revenue* | Operating profit* | ||
We are engaged in businesses that complement our retail business. These include | Major Group Companies | 44,644 | 5,702 |
card businesses such as credit cards, electronic money, travel, and insurance | ● Youme Card Co., Ltd. | million yen | million yen |
agency services, as well as facility management, construction, cleaning, security | ● Izumi Techno Co., Ltd. | ■ Operating revenue (million yen) | |
services, and designated management services. In addition, we also operate a | ● Izumi Food Service Co., Ltd. | ||
■ Operating profit (million yen) | |||
food service business centered around food courts in Izumi stores. | ● Youme Delica Co., Ltd. | ||
Retail- | 96,419 | ||||||||||||||||||
Total number of | Number of management | Number of directly-operated and franchised Izumi Food | |||||||||||||||||
peripheral | "Yumeca" cards issued | contracts for public facilities | Service stores | Number of franchised stores | |||||||||||||||
Businesses | (ten thousands) | Number of directly-operated stores | |||||||||||||||||
899 | 974 | 1,023 | 56 | 57 | 60 | 73 | 73 | 74 | |||||||||||
10 | |||||||||||||||||||
9 | 9 | ||||||||||||||||||
44,664 | |||||||||||||||||||
40,625 | |||||||||||||||||||
5,702 | |||||||||||||||||||
4,321 | 4,664 | ||||||||||||||||||
2021 | 2022 | 2023 (FY) | 2021 | 2022 | 2023 (FY) | 2021 | 2022 | 2023 (FY) | 2021 | 2022 | 2023 (FY) | ||||||||
2021 | 2022 | 2023 | (FY) | ||||||||||||||||
Operating revenue* | ■ Operating revenue (million yen) | ||||||||||||||||||
5,297 | ■ Operating profit (million yen) | ||||||||||||||||||
Other | In addition to our original wholesale business, we are also engaged | Major Group Companies | million yen | 5,079 | 5,488 | 5,297 | |||||||||||||
● Yamanishi Co., Ltd. | |||||||||||||||||||
Businesses | in the real estate leasing business. | Operating profit* | 1,004 | ||||||||||||||||
● Izumi Real Estate Co., Ltd. | 632 | 650 | |||||||||||||||||
650 | |||||||||||||||||||
million yen | 2021 | 2022 | 2023 (FY) | ||||||||||||||||
* The operating revenue and operating profit in each business include adjustments between segments.
07 | 08 |
Value Creation Story Financial and Non-Financial Highlights
*1 The Accounting Standard for Revenue Recognition was applied from the beginning of FY2022 | ||
Financial Highlights | *2 | Operating profit and profit attributable to owners of parent are not affected by the change in revenue recognition standards |
*3 | From FY2020,"(net) sales ratio" is referred to as "operating profit margin" |
Part.1 | Part.2 | Part.3 | Part.4 | |
Value Creation | Value Creation | Sustainability | Business and | |
Story | Strategy | Management | Stock Information |
Operating revenue | Operating profit*2 / Operating profit margin*3 | |||||||
471,166million yen | profit | 31,425yen | profit margin 6.7% | |||||
Operating | million | Operating | ||||||
(million yen) | (million yen) | Operating profit | Operating profit margin (%) | |||||
Profit attributable to owners of parent*2 / Profit margin*3
to owners of parent 20,485yen | margin4.3% | |
Profit attributable | million | Profit |
(million yen) | Profit attributable | Profit margin | (%) |
to owners of parent |
ROIC*4 / ROE
ROIC 6.4％ | ROE 7.5％ | |||||
(%) | ROIC | ROE | ||||
800,000 | 744,349 679,778 676,800 | |||||
600,000 | ||||||
*1 | ||||||
471,166 | ||||||
400,000 | 460,140 | |||||
200,000 | ||||||
0 | ||||||
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
80,000 | 7.3*1 | 6.7 | 7.5 | ||
60,000 | 5.5 | 5.4 | 5.0 | ||
4.5 | |||||
40,000 | 35,781 | 34,717 | 33,644 | ||
31,888 | 31,425 | 2.5 | |||
20,000 | |||||
0 | 0 | ||||
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
50,000 | 5.0*1 | 5.0 | ||||||||||||||||
40,000 | 3.6 | 3.6 | 4.3 | 4.0 | ||||||||||||||
30,000 | 2.8 | 3.0 | ||||||||||||||||
20,000 | 19,953 | 23,053 | 23,204 | 23,188 | 20,485 | 2.0 | ||||||||||||
10,000 | 1.0 | |||||||||||||||||
0 | 0 | |||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
15 |
10 | 9.6 | 10.3 | 9.6 | 9.0 | ||
7.5 | ||||||
6.0 | ||||||
5 | 7.1 | |||||
6.6 | 6.4 | 6.4 | ||||
0 | ||||||
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
*4 Operating profit after tax / (Interest-bearing liabilities + Equity capital + Non-controlling shareholder interest)
Total capital turnover
0.97 times | ||||||||
(times) | ||||||||
3 | ||||||||
2 | ||||||||
1.53 | 1.39 | 1.41 | ||||||
1 | *1 | 0.97 | ||||||
0.97 | ||||||||
0 | ||||||||
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
Equity ratio
57.3%
(%) | ||||
60 | 53.0 | 55.4 | 57.3 | |
43.7 | 47.5 | |||
40 | ||||
20
0
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
Earnings per share (EPS)
286.47yen
(yen) | ||||||
400 | ||||||
300 | 278.45 | 321.72 | 324.45 | 324.36 | 286.47 | |
200 | ||||||
100 | ||||||
0 | ||||||
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
Dividend per share / Dividend payout ratio
per share | 89.0 yen | payout ratio 31.1% | ||
Dividend | Dividend | |||
(yen) | Dividend per share | Dividend payout ratio (%) | ||
150 | 28.7 | 31.1 | 30 | |||
25.8 | 26.5 | 26.8 | ||||
100 | 83.0 | 86.0 | 87.0 | 89.0 | 20 | |
80.0 | ||||||
50 | 10 | |||||
0 | 0 | |||||
2019 | 2020 | 2021 | 2022 | 2023 | (FY) |
Non-FinancialHighlights Aggregation scope: Izumi Co., Ltd.
CO2 emissions*5 /
CO2 emission reduction rate (relative to FY2013)*5
19.2 t-CO2 | 21.9 | ||||||
CO2 | ten | CO2 emission | |||||
emissions | thousand | reduction rate | % | ||||
(ten-thousand t) | CO2 emissions | CO2 emission | (%) | ||||
reduction rate |
40 | 0 | |||||
21.2 | 16.1 | 24.3 | 21.9 | |||
30 | 25 | |||||
24.6 | 20.7 | 50.0 | ||||
20 | 19.4 | 18.6 | 19.2 | 50 | ||
10 | 12.3 | 75 | ||||
0 | 100 | |||||
2013 | 2020 | 2021 | 2022 | 2023 | 2030 | (FY) |
(base year) | (target) | |||||
*5 Scope1-2 |
Food waste recycling rate /
Food loss reduction rate (relative to FY2018)
Food waste | 43.1 | Food loss | 66.1 | ||||
recycling rate | % | reduction rate | % | ||||
(%) | Food waste recycling rate | Food loss reduction rate | |||||
70 | 63.6 | 66.1 | 70.0 | |
56.7 | ||||
40.6 | 41.6 | 40.8 | 43.1 | |
35 | ||||
33.9 |
0
2018 | 2020 | 2021 | 2022 | 2023 | 2030 | (FY) |
(base year) | (target) |
Labor productivity*6
871ten thousand yen
(ten thousand yen)
1000 | 950 | ||||||
854 | 871 | ||||||
750 | 785 | 798 | 803 | ||||
500 | |||||||
250 | |||||||
0 | |||||||
2019 | 2020 | 2021 | 2022 | 2023 | 2025 | (FY) | |
(target) |
*6 Gross profit per employee (Calculated on a non-consolidated managerial accounting, directly-managed and existing store basis)
Ratio of women in managerial positions*7
11.0 | |||||||
％ | |||||||
(%) | |||||||
20 | 20.0 | ||||||
15 | |||||||
10 | 8.0 | 9.7 | |||||
11.0 | |||||||
6.3 | 6.2 | ||||||
5 | |||||||
0 | |||||||
2019 | 2020 | 2021 | 2022 | 2023 | 2030 | (FY) | |
(target) |
*7 Standards stipulated in the Act on Promotion of Women's Participation and Advancement in the Workplace
09 | 10 |
Value creation | ||||
Value Creation Story | Value Creation Model | Part.1 | Part.2 | |
Value Creation | Value Creation | |||
Story | Strategy |
Part.3
Sustainability Management
Part.4
Business and
Stock Information
● Reduction of food waste | ● Promotion of health | ● Reduction of risk of natural disasters | |||
Social Issues | ● Promotion of food recycling | ● Measures against climate change | ● Response to declining birthrate | ||
● Construction of circular society | ● Efficient energy use | and aging society | |||
Providing opportunities and places for people to connect using commercial facilities as platforms
Local Communities
We will bring economic ripple
Financial capital
- Growth investments: 155.0 billion yen (including the revised second Medium-Term Management Plan and M&As)
Manufactured capital
- Number of malls and stores: 263*1
- Number of plants: 4 *1
- Amount of capital investment in stores: 105.0 billion yen (revised second Medium-Term Management Plan)
Intellectual capital
- Product lineup and product development capabilities that meet local needs
- Sales floor arrangement and management skills
- Production power of store facilities
- Private brand "zehi"
- User insight information from purchase data, etc.
Inputs
Changes in External Environment
Demographics | Digital Transformation | Industry Environment | ||
● Population decline | ● Technology | ● Increased competition | ||
● Declining birthrate | evolution | ● Expansion of | ||
and aging population | ● Big data | e-commerce market | ||
● Change in household | ● Complete | ● Diversification of | ||
composition | digitalization | consumption behavior |
Prolonged inflation | Sustainability | |
● Decrease in real wages | ● Change in | |
● Polarization of | consumer needs | |
consumption | ● SDGs | |
● Changes in lifestyles | ● Frequent natural | |
disasters |
Retail Business
GMS Business SM Business | Second | |
Medium-Term | ||
Management | ||
Plan | ||
(FY2021-FY2025) | ||
Business | ➡See page 19 | |
activities | ||
➡See page 7 |
Providing"good things at low prices" in each product/service field for diversifying and polarizing consumer behavior
Providing an environment where people can choose diverse and flexible ways of working and actively participate as members of local communities
Financial Value (FY2023)
Operating revenue | ROE |
471,166 | 7.5% |
million yen | |
Operating profit | Equity ratio |
6.7% | 57.3% |
Profit attributable to | Dividend payout ratio |
owners of parent company 31.1
20,485million yen %
Outputs
effects and also play a role in providing lifelines during disasters.
Customers
We will be successful in making customers' lives more convenient and comfortable by providing high-quality products and services with safety and security.
Employees
Through autonomous human resource development, we will take pride and joy in contributing to the local community and create a sense of fulfillment that leads to personal growth.
Outcomes
2030 Long-Term Vision
Challenge of co-creation with local communities overflowing in
"you me (dreams)"
Achievement of a 300-store network
Human capital
● Number of consolidated |
Materiality |
Non-financial Value
(as of the end of February 2024)
Tenants
centered on the Chugoku, Shikoku and Kyushu regions.
employees*1 |
Full-time: 5,058 |
Part-time employees: 12,016 |
(full-time equivalent) |
Social and relationship capital
- "Youme" brand nurtured for over 60 years since our founding
- Opportunities to hear customer feedback
- Enhancing relationships through dialogue
Natural capital
Other Businesses
Three Strengths
➡See page 5
Retail peripheral | ➡See page 29 |
Business | |
Sustainability
Management
➡See page 29
CO2 emissions reduction
(relative to FY2013)
21.9%reduction
Food waste recycling rate
43.1%
Food loss reduction rate
(relative to FY2018)
66.1%
Plastic bag usage reduction rate
Ratio of women in managerial positions (Izumi standard)
(Standards stipulated in the Act on Promotion of Women's Participation and Advancement in the Workplace)
11.0%
"zehi" sales results 9,000million yen
Digital currency "Yumeca (e-money)" total number of cards issued 10.23million
We will create successful cases of store creation through "Youme Town," and use them for further mutual development.
Business Partners
Through this cooperative structure, we will fulfill our social responsibility in manufacturing processes and aim for a sustainable society.
Shareholders and
Operating revenue of 1 trillion yen and operating
profit margin (net sales ratio) of 5.5%*5
(FY2030)
*5
Figures before the application of the Accounting
Standard for Revenue Recognition. After the application
of this accounting standard,
operating revenue will be 740.0 billion yen and the operating profit margin (operating revenue ratio) will be 7.1%.
- CO2 emissions: 19.2 ten-thousand t-CO2*2
- Food waste recycling amount 3,422t *2
*1 As of August 31, 2024 *2 FY2023
Management Philosophy
Filling our employees with pride and joy as we
continue contributing to communities and our customers' lives
➡See page 1
(relative to FY2018)
69.2%
Number of agreements signed with local governments, etc.
112*3
*3 As of the end of June 2024
Number of Youme App members
2.11million Labor productivity*4
871ten thousand yen
Investors
We will improve corporate value by maintaining and improving high levels of capital efficiency and realizing an optimal capital structure.
*4 Gross profit per employee (Izumi-only managerial accounting, directly-managed and existing store basis)
11
12
Value Creation Story
Our Six Types of Capital and Case Studies of the Value We Offer to Society
Part.1
Value Creation
Story
Part.2
Value Creation
Strategy
Part.3
Sustainability Management
Part.4
Business and
Stock Information
Utilizing and building on our six types of capital to continue providing value to society
Description | Key KPIs | FY2025 targets | FY2023 results | Challenges | Initiatives going forward | |||||
Description | ● ROE | ● 8.7% | ● 7.5% | |||||||
*10% or more in the medium- | Our risk-averse management | Alongside promotion of | ||||||||
While maintaining the Company's financial | to long-term | |||||||||
health, we proactively pursue investment for | ● ROIC | ● 6.9% | ● 6.4% | style allows us to improve | investment for growth based on | |||||
growth and shareholder returns, and work to | *Operating profit after tax / (Interest-bearing | *7% or more in the medium- to | financial stability but offers poor | our area strategy, we will work to | ||||||
liabilities + Equity capital + Non-controlling | long-term | |||||||||
increase our capital efficiency. Through these | shareholder interest) | prospects for future growth, | optimize our use of capital, | |||||||
● PER | ● 15-20 or more in the medium- | ● 12.1 | ||||||||
commitments, we will continue to increase our | which we see as a significant | through shareholder returns and | ||||||||
Financial | to long-term | |||||||||
corporate value going forward. | ||||||||||
● PBR | ● 1.5-2 or more in the medium- | ● 0.9 | factor behind our price-to-book | other factors, in the aim of | ||||||
capital | Strengths related to this capital | |||||||||
to long-term | ratio (PBR) of under 1. | generating returns on capital that | ||||||||
High stability, ample cash flow from operating | ● Equity ratio | ● 50% (for the time being) | ● 57.3% | exceed its cost. | ||||||
activities. | ● Dividend payout ratio | ● 30% or more (progressive | ● 31.1% | |||||||
dividend policy) | ||||||||||
Description | In light of the rising barriers to | We will concentrate on | ||||||||
We will continue working to increase the strength of our | ● Number of malls and stores | ● - | ● 263 stores | |||||||
brand and maximize our share of the market in the Chugoku, | (300 stores in FY2030) | As of August 31, 2024 | opening stores due to soaring | narrowing the focus of our | ||||||
Shikoku, and Kyushu regions through store development | ● Cash flow from investing | ● FY2021-FY2025 | ● 24.7 billion yen | construction costs, it is | store opening plan, strengthen | |||||
based on our strategy aimed at achieving dominance in these | ||||||||||
activities | 155.0 billion yen | necessary to shift from a | competitiveness by revitalizing | |||||||
Manufactured | specific regional markets. | |||||||||
growth strategy centered on | existing stores, and achieve | |||||||||
capital | Strengths related to this capital | ● Operating profit (operating profit margin) | ● 41.0 billion yen (6.9%) | ● 31.4 billion yen (6.7%) | ||||||
Secured share in the market through our strategy for regional | store openings. | growth through M&As and | ||||||||
● Operating revenue | ● 590.0 billion yen | ● 471.1billion yen | ||||||||
dominance, location-based advantage over competitors, high | alliances. | |||||||||
operating profit margin. | ||||||||||
Description | Our challenge is to increase | Alongside moving forward with our | ||||||||
We utilize our store-oriented management system to | ● Number of Youme Card holders | ● - | ● 8.1 million holders | average purchase value per | response to polarization in consumer | |||||
facilitate tailoring of product ranges and services to | ● Number of Youme App members | ● 2.5 million users | ● 2.11 million users | existing customer while bringing | behavior, we will utilize the Youme | |||||
App and other tools to enhance our | ||||||||||
the needs of each store's local community. We will | in new customers. To meet it, | |||||||||
● E-commerce transactions | ● 5.0 billion yen | ● 2.1 billion yen | sales promotions tailored to the | |||||||
also continue to utilize customers' purchasing data to | we must make effective use of | |||||||||
Intellectual | ● zehi sales | ● 12.0 billion yen | ● 9.0 billion yen | individual. We will also promote | ||||||
inform our responses to their diversifying lifestyles. | Card holder purchasing data and | |||||||||
initiatives aimed at increasing | ||||||||||
capital | Strengths related to this capital | ● Budget product sales | ● 4.0 billion yen | ● 1.8 billion yen | increase our points of contact | customer convenience through our | ||||
Number of Youme Card holders, number of Youme App | (Izumi-developed products only) | |||||||||
with customers. | online supermarket, e-commerce | |||||||||
users, high level of customer support for zehi. | ||||||||||
website, and other services. | ||||||||||
Description | Data collected from Izumi Co., Ltd.; | Connecting our management | We will promote concrete | |||||||
We are aiming to create working environments that | non-consolidated | and human resources strategies | policies aimed at meeting the | |||||||
● Cumulative total of Izumi University attendees | ● 100 | ● 78 | ||||||||
give our employees, who come from a range of | as we put our human capital | six key challenges we have | ||||||||
● Human capital ROI | ● 63.0% | ● 47.9% | ||||||||
different backgrounds, the option to choose flexible | ||||||||||
management practices in place | identified in relation to human | |||||||||
*((Operating profit + labor costs) / labor costs) - 1 | ||||||||||
ways of working, and that allow them to thrive in their | ||||||||||
● Employee engagement scores | ● 67 (+5) / 67 (+5) / | ● 62 (±0) / 62 (±0) / | will be challenging. We must | capital: human resources | ||||||
own ways, based on their drive and abilities, without | ||||||||||
(Company philosophy and strategies / personal | 65 (+6) / 65 (+2) | 60 (+1) / 64 (+1) | also develop and implement | development, increasing | ||||||
Human | reference to their gender, age, educational | |||||||||
growth / wellbeing / feeling appreciated) | *Change relative to FY2022 shown in brackets | *Change relative to FY2022 shown in brackets | concrete strategies to unlock | employee engagement, hiring | ||||||
background, or related factors. | ● Attrition rate (within three years | ● 20.0% | ● 25.2% | |||||||
capital | the maximum potential and | and retention, DE&I, promoting | ||||||||
Strengths related to this capital | of joining the Company) | |||||||||
High degree of employee autonomy, workforce highly | ● Ratio of women in managerial positions | ● 14.0% | ● 11.0% | value that each individual can | health management, and | |||||
skilled in fresh food handling, etc. | ● Number of internal reports received | ● 180 | ● 138 | offer the Company. | compliance. | |||||
Description | ● Number of agreements signed with | |||||||||
By providing spaces for local people to relax and | ● − | ● 112 | Once we have concluded | We will further initiatives both | ||||||
working to increase the appeal of local areas through | local governments, etc. | As of the end of June 2024 | ||||||||
agreements with local | allowing us to contribute to local | |||||||||
collaboration with governmental bodies and industry, | ● Properties of which Izumi is the | ● 14 | ● 10 | |||||||
Social and | we aim to become central figures in the drive to | governments and other bodies, | communities and delivering | |||||||
revitalize communities. | officially designated management | we must advance concrete | business results for Izumi. | |||||||
entity | ||||||||||
relationship | The "Youme" brand nurtured for over 60 years since | initiatives and deliver positive | ||||||||
Strengths related to this capital | ||||||||||
capital | our founding, close community ties through | outcomes. | ||||||||
collaboration with local governments, etc. | ||||||||||
Description | Data collected from Izumi Co., Ltd.; | (FY2030 targets) | ||||||||
In order to build a decarbonized, | non-consolidated | ● 50% | ● 21.9% | |||||||
● Reduction of CO2 emissions | We must not only work to | We will explore potential | ||||||||
recycling-oriented society that can exist in | ||||||||||
associated with store operations | ||||||||||
harmony with nature, we will continue working | (compared to FY2013) | ● 70% | ● 43.1% | reduce our own CO2 emissions | initiatives aimed at reducing | |||||
to reduce environmental impacts by curbing our | ● Food waste recycling rate | (Scopes 1 and 2) but also Scope | not only Izumi's CO2 | |||||||
Natural | CO2 emissions, reducing food loss, expanding | ● Food loss reduction rate | ● 50% | ● 66.1% | 3 emissions. | emissions but those | ||||
our stock of sustainable products, and more. | (compared to FY2018) | throughout our supply | ||||||||
capital | ||||||||||
Strengths related to this capital | ||||||||||
● Reduction in plastic bag usage | ● 80% | ● 69.2% | chains. | |||||||
Joint initiatives with customers and local | ||||||||||
(compared to FY2018) | ||||||||||
communities. | ||||||||||
Case Studies of the Value We Offer to Society
Meat raised at local high school sold in Izumi stores
As part of our work to promote local production for local consumption, we sold meat raised by local high school students in Izumi-operated stores.
Sales of Akitakata-yaki, new culinary specialty of Akitakata, Hiroshima Prefecture
Working with the city of Akitakata to bring new energy to its local communities, Izumi developed our own take on Akitakata-yaki (a savory pancake), received certification from the city as a vendor of this dish, and began sales in November 2023.
Opened Ube City Childcare Support
Center withinYoumeTown Ube
We launched the center in May 2023, under a comprehensive partnership agreement with Ube City. The space is being used by families with young children to exchange information and discuss parenting.
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Value Creation Strategy
Message from the President
Part.1
Value Creation
Story
Part.2
Value Creation
Strategy
Part.3
Sustainability Management
Part.4
Business and
Stock Information
We are working to steadily achieve the goals of the 2030 Long-Term Vision
Yasuaki Yamanishi President and Representative Director
Top Message
About the Ransomware Attack
Strengthening DX Investment with a Balanced Offense and Defense
On February 15, 2024, several servers operated by the Company were hit by a ransomware attack, which destroyed and encrypted our data. This caused a shutdown of our store ordering system, disrupting in-store services and product selection at all Group stores, and partially disrupting our e-commerce site and sales promotion activities. This system failure led to the suspension of use of various other systems, including our e-mail system. As a result, we were forced to use telephone, fax, and mail for internal communications, significantly impacting accounting, accounting and closing, and other operations.
After the attack was discovered, the entire Group worked together to ensure business continuity and early recovery. By May, all systems were largely back to normal. However, the total damage amounted to approximately 2.9 billion yen, including lost "sales" opportunities due to a decrease in the number of customers.
The use of digital technology is an extremely important element of our growth, and we will be investing approximately 16 billion yen in DX over the next five years under the Second Medium-Term Management Plan (MMP2) we are currently promoting. However, the damage caused by this incident has revealed a major problem. The majority of our DX investment has gone into "offense," such as improving operational efficiency and services, and not much weight was placed on "defense," such as security.
As the importance of digital technology increases, so does the risk of it failing. If we are going to make aggressive DX investments, we must reinforce our "defense" as much as our "offense. As a manager, I deeply regret that I failed to recognize this. In promoting DX in the future, we intend to establish a double or even triple-layered strong security system with the help of information security professionals. The recent ransomware attack has also prompted the Company to undertake a complete review of its business processes. We will aim for a "creative reconstruction" that will evolve the company into a better state, not just a mere restoration.
Summary of FY2023
We strengthened our role"at the heart of our communities" in two senses
In FY2023, the downgrading of COVID-19 to a Class 5 infectious disease in May led to a rapid recovery in the movement of people, which had stagnated across the country. This initiated a turnaround in the performance of the Company's retail business, especially the Youme Town general merchandise store (GMS), resulting in a 2.4% YoY increase in consolidated operating revenue for FY2023.
The long-standing restrictions on movement and activity imposed during the COVID-19 pandemic have been lifted, allowing our GMS to function as intended. This is symbolized by the sharp
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Value Creation Strategy Message from the President
Part.1 | Part.2 | Part.3 | Part.4 | |
Value Creation | Value Creation | Sustainability | Business and | |
Story | Strategy | Management | Stock Information |
increase in food and beverage-related sales at our larger stores that coincided with the downgrade to Class 5. We imagine this to be the result of many people spending more time enjoying eating out with friends and family again. As part of the life industry, we are overjoyed to once again be a place at the heart of our communities where people gather.
The turnaround in sales was also due to the effects of
strategic new store openings and investments in the revitalization of existing stores. In FY2023, we opened three new stores in Fukuoka and Hiroshima prefectures, and made large investments in the revitalization of 12 existing stores to rejuvenate them and provide added value. For example, Youme Mart Buzen (Buzen City, Fukuoka Prefecture), which underwent a major renovation in April, saw a 17% increase in net sales over the previous year. Operating profit decreased due to the cost of opening new stores, aggressive investment in the revitalization of existing stores, and increases in labor costs and SG&A expenses. However, profit was higher than the initial plan, and we believe we have been able to maintain the increase in real profitability that we have achieved.
Steady progress was also made in our efforts to be "at the heart of our communities" in one other sense. While many regional cities are experiencing depopulation and economic decline, we are working with government and industry in a number of regions to revitalize local communities and create cities with growing populations. Having gained the understanding of many local governments regarding this management stance, we were able to conclude comprehensive agreements with many local governments where we opened stores in FY2023. In the future, we would like to contribute to the revitalization of each municipality by making proposals tailored to their situation regarding matters such as the development of safe and secure communities, development, environmental and industrial promotion, and improving resident services.
Progress of the Second
Medium-Term Management Plan
We will greatly increase our presence in the Kyushu area through two M&As
To achieve the goals of MMP2, in FY2024 we will continue to aim to increase earnings through the opening of new stores, the revitalization of existing stores, and M&A, while also accelerating our dominance strategy in each area. In FY2024, we plan to open new stores in Nagasaki, Kumamoto, and Hiroshima prefectures, as well as continue to pursue the large-scale revitalization of existing stores in various locations.
We have high expectations that two recent M&As will advance our growth strategy. The first of these is the M&A of SUNLIFE, Co., Ltd., which became a subsidiary in May 2024. The company operates SM chain with four stores in Oita Prefecture, but it excels in terms of its product selection and creating sales areas that are closely connected to small trading areas, and is very popular with local customers. We hope to take advantage of this M&A to increase our presence in Oita City, where we have yet to establish a foothold. At the same time, we hope to create broad synergies between their supermarkets and our GMS Youme Town Beppu by complementing each other's functions.
The other important M&A is that of the Kyushu operations of Seiyu Co., Ltd. Through this M&A, the Group will take over 69 stores operated by Seiyu under the SUNNY brand and other brands in the Kyushu region (62 of which are in Fukuoka Prefecture). Seiyu's Kyushu operations have many stores in favorable locations in Fukuoka City, as well as in Kumamoto, Nagasaki, Saga, and Oita prefectures. It also has net sales of approximately 97 billion yen (actual results for the fiscal year ending December 31, 2022). This succession of operations has increased the Group's total number of stores to 263 (as of August 31, 2024).
The above two M&As are expected to significantly increase our presence in the Kyushu area. Fukuoka, in particular, is the largest market among our priority target areas, and we are very proud to have taken over the SUNNY brand, which has formed a solid dominance in this area over the last 60 years. Since Fukuoka is located between Kumamoto and Hiroshima prefectures, where we have been focusing our efforts, strengthening our dominance here is expected to have various effects. This includes strengthening the product appeal of the entire Group and improving the efficiency of logistics and sales promotion.
There are many elements of SUNNY's business that we can learn from, such as its ability to procure fresh food, the strong reputation of its prepared foods and private brand products, and the efficient operations it has developed in the field. We believe that the knowledge and expertise that SUNNY has cultivated can be used to build a new format for our food supermarkets and strengthen the competitiveness of our GMS' food departments. Just as Youme Town created a new presence amongst GMSs, we hope that this M&A will be a powerful catalyst for the creation of a model for our "new SM business" we hope to establish.
Responding to Increasingly
Polarized Consumer Needs
We will enhance our response to the demand for lower prices by developing new private brands
In terms of product strategy, we recognize that our challenge remains to restore and increase the number of customers who visit our stores through merchandising that better meets the diverse consumption needs of our customers. In response to the rapid rise in prices, consumers are increasingly polarized between those seeking high value-added and looking for low-priced products. We regret that we were unable to sufficiently respond to this polarization in FY2023. Inflation increased faster than expected in the second half of the year, in particular, and the decrease in consumers' purchasing power has exceeded tolerable levels. As a result, appealing to affordability has become the main battleground, and we were unable to sufficiently respond to the demand for low prices.
From FY2024 onward, we intend to further respond to consumer polarization in order to improve our competitiveness. To meet the demand for high value-added products, we will expand our product lineup to meet diversifying customer preferences, including quality and health consciousness. This will include zehi, our own brand of prepared foods and processed fresh foods, as well as through our kore-uma product quality certification process. On the other hand, to respond to the demand for low prices, we will promote measures such as the introduction of Seven & i Holdings' SEVEN The PRICE, their price-focused private brand, as well as partnering with the Nichiryu Group, which engages in joint purchasing and product development in the area of daily necessities. In addition, we intend to focus on developing our own private brand, as well as developing exclusive budget products in collaboration with manufacturers to meet customer demand.
Sustainability Initiatives
We will advance down-to-earth
initiatives in the areas of environment,
society, and economy
In order to promote sustainability management, the Company has developed a Basic Sustainability Policy. At the same time, it has established a Sustainability Committee chaired by myself as an advisory body to the Board of Directors with a goal of achieving sustainable management and our growth strategies.
I see the sustainability of local communities and customers, which is also our first materiality, as being the most important aspect of sustainable management. As a company that has grown as a player in "life industry" with close ties to the communities in which we operate, we see employees, customers, and community as being one in the same. Employees are customers, and they are part of the community. Therefore, I recognize that the environmental, social, and economic challenges faced by each community are directly linked to the management challenges of the Group.
For example, in the area of the environment, we are fundamentally reexamining the issue of food loss, which is closely related to our business, from the perspective of resource recycling for the entire region. We are currently working to not only reduce food loss within our own business, be are also promoting region-wide collaborations with our suppliers, producers, and other partners. Based on this down-to-earth approach, we are systematically working on diversity, promotion of women's participation and advancement, the development of the next generation of leaders, health management, and other issues.
I believe that our various sustainability initiatives are ultimately about energizing local communities and enriching the lives of our customers. Working hand-in-hand with local communities, we will continue to steadily engage in activities that benefit society and our own sustainability, all while gaining a bigger picture and learning from the perspectives of the younger generation.
Message to Stakeholders
We will enrich local communities
regions and customers by
furthering our domination strategy
As part of our Long-Term Vision, we have announced our goal of having 300 stores and operating revenue of one trillion yen* by 2030. The goal is not simply to expand the size of the company. What we are really striving for is to build a system in which we can take responsibility for enriching the lives of our customers, and an environment where our employees can work with high motivation every day.
The prerequisite to achieving this is "becoming number one in the region." Based on this belief, we have consistently pursued a dominance strategy. "300 stores and one trillion yen1*" is less of a numerical target, and more of a rough estimate of the number that will result if our dominance strategy proceed smoothly in our current areas of operation.
How far can our "creative reconstruction" following the unexpected ransomware attack go? What results will our large M&As in the Kyushu area produce? I believe that FY2024 will be a significant year in the Company's history from a number of perspectives. I hope that all of our all stakeholders will continue to have high expectations for Izumi's future.
*The number before the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29)
President and
Representative Director
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