Note: This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translation and the Japanese original, the Japanese original shall prevail.
J. FRONT RETAILING Co., Ltd. assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translation.

[Securities code: 3086]
May 2, 2019
To Our Shareholders

YAMAMOTO Ryoichi,
Director, President and Representative
Executive Officer
J. FRONT RETAILING Co., Ltd.
10-1, Ginza 6-chome, Chuo-ku, Tokyo

Notice of Convocation of the 12th Annual Shareholders Meeting
You are cordially invited to attend the 12th Annual Shareholders Meeting of J. FRONT RETAILING Co.,
Ltd. (hereinafter the “Company”). The meeting will be held as described below.
If you are unable to attend the meeting in person, you may exercise your voting rights in writing or
via the Internet. In each case, you are requested to exercise your voting rights so that your vote isreceived by 6:00 p.m. on Wednesday, May 22, 2019 (JST).

Details
1. Date and time:Thursday, May 23, 2019, at 10:00 a.m. (JST) (Reception opens at 9:00 a.m.)
2. Venue:
NEW PIER HALL, 11-1, Kaigan 1-chome, Minato-ku, Tokyo
3. Purpose of the meeting:
Matters to be reported: 1. Business Report, Consolidated Financial Statements, and Non-consolidated
Financial Statements for the 12th fiscal year (from March 1, 2018 to February
28, 2019)
2. Audit reports of the Accounting Auditor and the Audit Committee on
Consolidated Financial Statements for the 12th fiscal year
Matters to be resolved: Proposal: Election of Thirteen (13) Directors
4. Decisions made for convocation:
Please refer to Guide to the Exercise of Voting Rights on pages 3 to 4.
* If you are attending the meeting in person, please submit the enclosed voting form at the reception of the meeting.
Please note that persons who are not shareholders who can exercise voting rights, such as proxies who are
not shareholders, and accompanying persons, will not be admitted. (The accompanying persons ofshareholders with disabilities are exempt and will be admitted.)

-1-







Of the documents attached to Notice of Convocation of the Annual Shareholders Meeting, Notes toConsolidated Financial Statements and Notes to Non-consolidated Financial Statements are provided
on the Company’s website in accordance with relevant laws and regulations and Article 16 of theCompany’s Articles of Incorporation, hence are not indicated on this Notice of Convocation.
Consolidated Financial Statements and Non-consolidated Financial Statements, which have been
audited by the Audit Committee and the Accounting Auditor, shall include not only the documents
stated in this Notice of Convocation, but also Notes to Consolidated Financial Statements and Notes
to Non-consolidated Financial Statements, which are provided on the Company’s website.
If any amendments to Reference Materials for Shareholders Meeting, Business Report, Consolidated
Financial Statements or Non-consolidated Financial Statements are made, the revised version will be
provided on the Company’s website.
The Company’s website: https://www.j-front-retailing.com/

Please note that no gift will be provided at the Shareholders Meeting or in the live relay venues in
Osaka and Nagoya. The Company appreciates your understanding.

-2-

Guide to the Exercise of Voting Rights
Attending the Shareholders Meeting in Person
Please submit the enclosed voting form at the reception of the meeting.
*You do not need to exercise your voting rights either by postal mail or via the Internet.
Attending a live relay venue
The live relay venues are not recognized as the venue of the shareholders meeting under the Companies Act.
Please exercise your voting rights either by postal mail or via the Internet before arriving.
If you are unable to attend the meeting in person, please exercise your voting rights by either of the following
methods.
Exercising voting rights by postal mailPlease indicate on the enclosed voting form whether you approve or disapprove of the proposal, and returnthe completed form to us.
Exercise due date: Received by 6:00 p.m. on Wednesday, May 22, 2019 (JST)To institutional investors
To exercise voting rights at this meeting, institutional investors can use the electronic voting rights exercise
platform for institutional investors operated by ICJ, Inc.
Exercising voting rights via the Internet
Please read the following items before exercising voting rights via the Internet.
Exercise due date: Received by 6:00 p.m. on Wednesday, May 22, 2019 (JST)(Instructions concerning the exercise of voting rights via the Internet)
How to scan QR code
You can log in to the voting website without entering your login ID and temporary password printed on thevoting form.
1. Scan QR code printed on the voting form (at right).
*“QR code” is a registered trademark of DENSO WAVE INCORPORATED.
2. Follow the directions that appear on the screen to input approval or disapproval to each proposal.
The QR code can be used for login only one time.
If you need to exercise your voting rights again or exercise your voting rights without using the QR code,see “How to enter login ID and temporary password.”
How to enter login ID and temporary password
Voting website: https://evote.tr.mufg.jp/
1. Access the voting website.
2. Enter the “Login ID” and the “Temporary password” shown on the voting form and click the “Login”
button.
3. Set a new password.
4. Follow the directions that appear on the screen to input approval or disapproval to each proposal.
To prevent unauthorized access by parties other than shareholders and the alteration of shareholder votes,
shareholders voting via the Internet will be asked to change their “temporary password” on the voting
website.
You will receive a new “Login ID” and a new “temporary password” with each convocation notice fora Shareholders Meeting.
If you exercise your voting rights both in writing and via the Internet, we will only accept the exerciseof your voting rights via the Internet as effective.
If you exercise your voting rights more than once via the Internet, we will only accept the last exerciseof your voting rights as effective. If you exercise your voting rights more than once by using yourpersonal computer, smartphone and mobile phone, we will only accept the last exercise of your voting
rights as effective.
-3-

* Fees for accessing the voting website (Internet access fees, telephone charges, packet communication
fees, etc.) shall be borne by the shareholder.
* Exercising voting rights via the Internet may not be possible depending on your Internet environment,
and settings, including the use of firewall and anti-virus software.
For inquiries about the system, please contact:
Corporate Agency Division (Help Desk)
Mitsubishi UFJ Trust and Banking Corporation(Toll free) 0120-173-027(available 9:00 a.m. – 9:00 p.m., only in Japan)-4-Reference Materials for Shareholders Meeting
Proposal and Reference Information
Proposal: Election of Thirteen (13) Directors
The terms of office of all 13 Directors will expire at the conclusion of this Annual Shareholders Meeting.
Accordingly, based on the decision of the Nomination Committee, the Company has made the number of
Director candidates 13, and proposes the election of those candidates. The candidates for the Directors are as
follows.
Furthermore, of the candidates for Director, please refer to “3. Matters relating to corporate officers,” “6.
Operation of the Board of Directors,” and “7. Operations of each Committee” in the Business Report
regarding issues such as the status of activities of five Outside Directors who are proposed for reappointment
and status of operations of the Board of Directors and each committee.
The Company’s approach to the composition of the Board of Directors
In selecting candidates for the Board of Directors, the Company takes the perspective of strengthening
management supervision functions, and, within the scope of the Articles of Incorporation, considers thenumber and balance of supervisors and executives. With regard to the composition of the Board of Directors
by the proposed candidates for Director, the Company has decided to maintain a total of 13 Directors. In
order to promote management from a stronger shareholder-oriented perspective and to strengthen thefunctions of the Company’s statutory three committees (nomination, audit, and remuneration committees),
the Company has increased the number of Outside Directors by one, resulting in seven Internal Directors andsix Outside Directors.
In selecting candidates for Outside Director, the Company selects persons from the point of view of Board
diversity who have experience as managers not in the retailing industry that forms the core of the Company’sbusiness but in manufacturing and other non-retail industries, and who have expertise in legal and other fields,
a global perspective, and M&A experience. With regard to the Audit Committee in particular, the Company
has decided to commission the role of Committee Chairperson, previously served by an internal Nonexecutive Director, to an Outside Director. In selecting new candidates for Director, the Company willprioritize the financial sector experience that is one of the human asset requirements for members of the Audit
Committee, as well as abundant knowledge of compliance and ESG.
With regard to candidates for internal Non-executive Directors, wide-ranging practical experience within
the Group and specialized knowledge in fields such as finance are standards set by the Company. As forcandidates for Directors who engage in business execution, the Company has selected a President andRepresentative Executive Officer, a person responsible for the Group’s core business which is the Department
Store and PARCO Businesses, and a Senior Executive General Manager of Financial Strategy Unit who hasa high level of knowledge that will enable the execution of strategic financial policies demanded by ourshareholders and investors.

-5-

No.

Committee to belong(The “◎” mark indicates thecandidates of Chairperson.)

Name

Nomination

Audit

○

Remuneration○

1

KOBAYASHI Yasuyuki

Reappointment

Non-executive

2

TSUTSUMI Hiroyuki

Reappointment

Non-executive○

3

MURATA SoichiNewNon-executive○

4

TACHIBANA
FUKUSHIMA Sakie

Reappointment

Non-executive

OutsideIndependent

◎

○

5

OTA Yoshikatsu

Reappointment

Non-executive

OutsideIndependent

○

◎

6

ISHII Yasuo

Reappointment

Non-executive

OutsideIndependent

○

○

7

NISHIKAWA Koichiro

Reappointment

Non-executive

OutsideIndependent◎

8

SATO Rieko

Reappointment

Non-executive

OutsideIndependent○

9

UCHIDA Akira

New

Non-executive

OutsideIndependent○

10

YAMAMOTO Ryoichi

Reappointment

Executive

11

YOSHIMOTO Tatsuya

Reappointment

Executive

12

MAKIYAMA Kozo

Reappointment

Executive○○

Executive
13 WAKABAYASHI Hayato Reappointment(Notes) 1. SATO Rieko is recorded under the name of KAMATA Rieko in the family register.
2. The Company plans to elect ten Executive Officers who do not concurrently serve as Directors at a Board of
Directors meeting that is to be held after this Annual Shareholders Meeting.
Reappointment
New
Non-executive
Executive
OutsideIndependent

Candidate for reappointment as Director
Candidate for new Director
Candidate for Director who does not concurrently serve as Executive Officer
Candidate for Director who concurrently serves as Executive Officer
Candidate for Outside Director
Independent officer whose status as such is registered with the stock exchange(Reference) The Company’s criteria for determining independence of Outside Directors are as follows.
In appointing the Company’s Outside Directors, we select individuals who maintain a high degree of
independence and consequently are not susceptible to conflicts of interest involving the Company’s
shareholders. An individual does not meet the criteria for independence if one or more of the items listed
below apply to that individual.
(i) Person who executes business in the J. Front Retailing Group (the “Group”)(ii) Major shareholder of the Company (including person who executes business thereof; the same applies
with items (iii) to (vi) below)(iii) Major business partner of the Group(iv) Person affiliated with a law office, audit firm, consultancy or other entity that receives payment otherthan executive compensation of more than a certain amount from the Group(v) Recipient of donations of more than a certain amount contributed by the Group(vi) Related party in cases where the party is engaged in an arrangement involving a reciprocal officer
appointment with the Group(vii) Person with respect to whom any of items (i) to (vi) has applied at any point over the last five years(viii)Spouse or relative within the second degree of consanguinity of a person with respect to whom anyof the items (i) to (vii) applies-6-With respect to the above, “person who executes business” refers to an Executive Director, an Executive
Officer, and any other employee; “major shareholder” refers to a shareholder who holds voting rights
accounting for no less than 10% of the Company’s voting rights; “major business partner” refers to abusiness partner whose transactions with the Group account for 2% or more of the Company’s annual
consolidated net sales or the business partner’s annual net sales for any of the fiscal years over the last
five years; “a certain amount” refers to an annual amount of ¥10 million in any of the fiscal years overthe last five years.

-7-

No.

Name
(Date of birth)

KOBAYASHI
Yasuyuki(March 30, 1951)
Gender: Male
Number of theCompany’s shares
owned (shares):35,8001

Number of other sharesas stock-based
remuneration not yet
granted (shares):10,037
Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1973
May 2003
January 2004
September 2007
January 2008

March 2010

May 2010
May 2012
April 2013
May 2013
May 2015
May 2016
May 2017

Joined The Daimaru, Inc.
Corporate Officer, General Manager of Sapporo Store
General Manager of Tokyo Store
Corporate Officer of J. Front Retailing Co., Ltd.
Director and Corporate Officer of The Daimaru, Inc.
Deputy Executive General Manager of Department Store Operations
Headquarters and Executive General Manager of Merchandising
Management Unit, Head OfficeDirector and Corporate Officer, Senior Executive General Manager ofSales and Marketing Headquarters and Senior General Manager ofMerchandising Strategy Promotion Unit of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Director and Corporate Executive Officer
Director of Parco Co., Ltd. (present)
Managing Executive Officer and Senior Executive General Manager ofAffiliated Business Unit of J. Front Retailing Co., Ltd.
Director, Managing Executive Officer
Director, Senior Managing Executive Officer
Representative Director
Director, Chairperson of Board of Directors (present)

Tenure as Director (atthe conclusion of thisMeeting):
approx. 6 years

Reasons for nomination as candidate for Director-KOBAYASHI Yasuyuki has extensive experience and insight related to the Group business overall. This has involved ensuring
the success of the Daimaru Sapporo store opening project in a Department Store Business company, and demonstrating his
ability as a facilitator in promoting merchandising strategy. Furthermore, he served as Senior Executive General Manager of theAffiliated Business Unit of the Company from April 2013 and was in charge of the Wholesale Business, the Credit Business andother business areas besides the Department Store Business. Since May 2017, he has striven to further improve corporate
governance as the Chairperson of the Board of Directors. As such, the Company has judged that an Internal Director withthorough knowledge of the roles and expectations of individual businesses with respect to the Group’s strategy serving as the
Chairperson of the Board of Directors and conducting supervisory operations that consider all stakeholders will lead to theimproved corporate value and sustained growth of the Group and has accordingly appointed him as a candidate to continue
serving as Director.
-The Company has entered into an agreement with KOBAYASHI Yasuyuki to limit the liability of damages stipulated in
Paragraph 1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

-8-

No.

Name
(Date of birth)

TSUTSUMI Hiroyuki(February 3, 1958)
Gender: Male
Number of the Company’s
shares owned (shares):16,3982

Number of other shares asstock-based remuneration
not yet granted (shares):
5,855
Special interests between
the Company and the
Candidate:
None

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1980
March 1993
March 2001
September 2007
March 2010
May 2013
March 2016
May 2017

Joined The Daimaru, Inc.
General Manager of Accounting Division of HONG KONG DAIMARU
LIMITED
General Manager of Finance Headquarters of The Daimaru, Inc.
General Manager of Finance Division, Administration Headquarters of
J. Front Retailing Co., Ltd.
General Manager of Finance Division, Administration Unit of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Executive Officer, Senior General Manager of Finance Division,
Administration Unit of J. Front Retailing Co., Ltd.
Executive Officer, Senior General Manager of Finance and Accounting,
Financial Strategy Unit
Director of J. Front Retailing Co., Ltd. (present)
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Department Stores Co. Ltd. (present)

Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14
Tenure as Director (at theconclusion of thisMeeting):
approx. 2 years

Reasons for nomination as candidate for Director-TSUTSUMI Hiroyuki has abundant insight in relation to finance and accounting, having consistently accumulated experiencein the fields of finance since March 1989. He is highly knowledgeable of the business characteristics and financial positions
through the guidance he provided in regard to the consolidated settlement of accounts to each business operating subsidiary incooperation with the accounting auditors after his appointment as Senior General Manager of Finance Division in May 2013.
He has also been instrumental in guiding the preparation for the Company’s voluntary adoption of IFRS as Senior General
Manager of Finance and Accounting, Financial Strategy Unit since March 2016. As such, the Company has judged that he is acompetent professional who is capable of helping ensure the improved corporate value and sustained growth of the Group by
utilizing his abundant experience related to finance and accounting in his supervision as a Director, which is essential for theCompany’s sound operations, and has accordingly appointed him as a candidate to continue serving as Director.
-The Company has entered into an agreement with TSUTSUMI Hiroyuki to limit the liability of damages stipulated in Paragraph
1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

-9-

No.

Name
(Date of birth)
New Candidate

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1980
March 2000

MURATA Soichi

3(September 9, 1956)

September 2002

Gender: Male

January 2005
January 2006

Number of the Company’s
shares owned (shares):12,689Special interests between
the Company and the
Candidate:
None

January 2010
May 2010
April 2013

May 2013
May 2017

Joined The Daimaru, Inc.
Senior Manager of Men’s Wear & Accessory Division of Osaka Umeda
Store
Senior Manager of Business Planning Department of Business Planning& CS Promotion Division of Osaka Umeda Store
Deputy General Manager of Osaka Umeda Store
Deputy General Manager of Osaka Umeda Store and General Manager
of Planning Office for New Umeda Store of Head Office
Executive Store Manager of Osaka Umeda
Corporate Officer and Executive Store Manager of Daimaru Osaka
Umeda
Corporate Executive Officer, Executive General Manager of Sales &Marketing Headquarters and Senior General Manager of Merchandising
Strategy Promotion Unit
Director and Corporate Executive Officer
Managing Executive Officer, Senior Executive General Manager of
Administration Unit and in charge of Compliance of J. Front RetailingCo., Ltd. (present)

Reasons for nomination as candidate for Director-MURATA Soichi has broad insight based on abundant experience in the field of department store sales. He has led new store
planning for, and served as Executive Store Manager of Daimaru Osaka Umeda store, as serving on the management team of adepartment store operator, and Executive General Manager of Sales & Marketing Headquarters, the core of the Department
Store Business. Moreover, after being appointed as Managing Executive Officer of the Company in May 2017, he served as
Senior Executive General Manager of the Administration Unit and mainly in charge of compliance and the entire Group’s sharedservices. As such, the Company has judged that he is a competent professional who is capable of helping ensure the improved
corporate value and sustained growth of the Group by fulfilling appropriate management supervisory function, utilizing his
abundant knowledge based on his experience, and has accordingly appointed him as a new candidate serving as Director.
-The Company plans to enter into an agreement with MURATA Soichi to limit the liability of damages stipulated in Paragraph
1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 10 -

No.

Name(Date of birth)
Outside Director
Independent

TACHIBANA
FUKUSHIMA Sakie(September 10, 1949)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
June 1980
September 1987
August 1991
June 1993
May 1995
September 2000

Gender: Female
Number of the Company’s
shares owned (shares):
5,500

4

Number of other shares asstock-based remuneration
not yet granted (shares):

1,933
Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

May 2001

September 2007
May 2009
March 2010
July 2010
August 2010
June 2011
May 2012
June 2013
June 2016

Joined Braxton International
Joined Bain & Company, Inc.
Principal Consultant of Japan Branch Office of Korn/Ferry International
PartnerMember of the Board of Korn/Ferry International (Global
Headquarters)
Regional Managing Director of Korn/Ferry International-Japan
Member of the Board of Korn/Ferry International (Global
Headquarters)
President and Representative Director of Korn/Ferry International-Japan
Member of the Board of Korn/Ferry International (Global
Headquarters)
President and Representative Director of Korn/Ferry International-Japan
Chairman and Representative Director
Outside Director of Bridgestone Corporation
President and Representative Director of G&S Global Advisors Inc.
(present)
Asia Pacific Senior Advisor of Korn/Ferry International
Outside Director of Ajinomoto Co., Inc. (present)
Outside Director of J. Front Retailing Co., Ltd. (present)
Outside Director of Mitsubishi Corporation
Outside Director of USHIO INC. (present)

Tenure as Outside
Director (at the conclusionof this Meeting):
approx. 7 years

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-TACHIBANA FUKUSHIMA Sakie has broad insight based on her abundant experience in internal and external governance asa director at a U.S. company’s global headquarters and as an outside director at numerous Japanese companies. In addition, she
has gained corporate management experience as the President of a foreign-owned human resource consulting company’s local
Japanese branch, and accordingly possesses in-depth knowledge regarding global human resources. Based on that, she has
contributed to ensuring more effective meetings of the Board of Directors since being appointed as Outside Director of theCompany in May 2012, by adequately providing advice and oversight with respect to the direction of overall management andother such matters, from the independent and objective viewpoint. From May 2017, she has contributed to improving corporate
value and sustained growth from a professional perspective as the chairperson of the Nomination Committee in areas such asadequate selection of management personnel. In light of her track record, the Company has judged that in acting as an Outside
Director she is likely to contribute greatly to management of the Group. As such, she has been appointed as a candidate tocontinue serving as Outside Director.
-TACHIBANA FUKUSHIMA Sakie is an independent officer who has been given the obligation by the Tokyo Stock Exchange
and the Nagoya Stock Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with TACHIBANA FUKUSHIMA Sakie to limit the liability of damages stipulated
in Paragraph 1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 11 -

No.

Name(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1964
June 1991

Outside Director
IndependentOTA Yoshikatsu

July 1994(December 28, 1941)
Gender: Male
Number of the Company’s
shares owned (shares):
8,300

5

Number of other shares asstock-based remuneration
not yet granted (shares):
1,933
Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

June 1995
June 1999
August 2003
October 2003
April 2006
April 2009
June 2012
April 2013
June 2014
May 2015
June 2017

Joined Minolta Camera Co., Ltd.
Director, General Manager of Copying Machine Business Division andGeneral Manager of Copying Machine Sales Division
Director of Minolta Co., Ltd.
Executive General Manager of Information Device Business
Management Unit and Executive General Manager of Information
Device Sales UnitManaging Director
President and Representative Director
Director and Vice President, Representative Executive Officer ofKonica Minolta Holdings, Inc.
President and CEO of Konica Minolta Business Technologies, Inc.
Director, President and CEO of Konica Minolta Holdings, Inc.
Director, Chairman of the Board of Directors
Outside Director of YAMAHA CORPORATION
Director, Chairman of the Board of Directors of KONICA MINOLTA,
INC.
Special Advisor
Outside Director of J. Front Retailing Co., Ltd. (present)
Honorary Advisor of KONICA MINOLTA, INC. (present)

Tenure as Outside
Director (at the conclusionof this Meeting):
approx. 4 years

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-OTA Yoshikatsu has abundant insight gained through his extensive experience acting as a manager of a company that is a holding
company. In that capacity, he promoted the corporate merger between Minolta Co., Ltd. and Konica Corporation, and has served
as a chairman of the board of directors of a company with committees (currently a company with three committees (nomination,
audit and remuneration committees)). Accordingly, since being appointed as Outside Director of the Company in May 2015, hehas contributed to ensuring more effective meetings of the Board of Directors by adequately providing advice and oversightwith respect to promoting Group management, change in the form of corporate organization of the Company, and other suchmatters, from the independent and objective viewpoint. From May 2017, he has contributed to fair and objective operation of
the executive remuneration system, including the stock-based remuneration system, as the chairperson of the Remuneration
Committee. In light of his track record, the Company has judged that in acting as an Outside Director he is likely to contribute
greatly to management of the Group. As such, he has been appointed as a candidate to continue serving as Outside Director.
-OTA Yoshikatsu is an independent officer who has been given the obligation by the Tokyo Stock Exchange and the Nagoya
Stock Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with OTA Yoshikatsu to limit the liability of damages stipulated in Paragraph 1,
Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 12 -

No.

Name(Date of birth)
Outside Director
Independent

ISHII Yasuo

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1970
June 2000
January 2001

(September 4, 1947)
March 2003
Gender: Male
Number of the Company’s
shares owned (shares):
2,700

6

Number of other shares asstock-based remuneration
not yet granted (shares):
1,933
Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14
Tenure as Outside
Director (at the conclusionof this Meeting):
approx. 2 years

June 2003
June 2004
April 2005
June 2008
June 2011
June 2013
May 2015

May 2017
May 2018

Joined Yamanouchi Pharmaceutical Co., Ltd.
Director of the Board, Director of Ethical Products Marketing
Department of Sales & Marketing Division
Director of the Board of Yamanouchi Pharmaceutical Co., Ltd. andChairman of Yamanouchi Europe B.V.
Director of the Board of Yamanouchi Pharmaceutical Co., Ltd.,
Chairman of Yamanouchi U.K. Limited and Chairman of Yamanouchi
Europe B.V.
Managing Director of the Board of Yamanouchi Pharmaceutical Co.,Ltd.
Senior Corporate Executive
Senior Corporate Executive of Astellas Pharma Inc. and Chairman &CEO of Astellas Pharma Europe Ltd.
Executive Vice President and Representative Director of Astellas
Pharma Inc.
Vice Deputy Chairman and Representative Director
Retired from the office of Vice Deputy Chairman and Representative
Director
Outside Audit & Supervisory Board Member of J. Front Retailing Co.,Ltd.
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd. (present)
Director of Daimaru Matsuzakaya Department Stores Co. Ltd. (present)

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-ISHII Yasuo has long-standing overseas work experience and possesses insight based on his abundant experience in the field ofglobal corporate management outside the retail industry, such as special familiarity with business development in overseas
countries. Since May 2017, he has served as an Outside Director of the Company and contributed to ensuring more effective
meetings of the Board of Directors by actively and assertively furnishing advice with respect to overall management strategy
such as strengthening the holding company functions aimed at swift decision making for business execution. Furthermore, in
the Audit Committee, he has contributed to maintaining and strengthening the Company’s governance through providing suitableadvice as required based on his abundant experience and in-depth knowledge. In light of his track record and abundant insight,
the Company has judged that in acting as an Outside Director he is likely to contribute greatly to management of the Group. As
such, he has been appointed as a candidate to continue serving as Outside Director.
-ISHII Yasuo is an independent officer who has been given the obligation by the Tokyo Stock Exchange and the Nagoya Stock
Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with ISHII Yasuo to limit the liability of damages stipulated in Paragraph 1, Article
423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 13 -

No.

Name(Date of birth)
Outside Director
Independent

NISHIKAWA
Koichiro(July 12, 1947)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1970
August 1995
June 2001
April 2003
June 2003
January 2006

Gender: Male
Number of the Company’s
shares owned (shares):
1,300

7

Number of other shares asstock-based remuneration
not yet granted (shares):
1,933
Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

April 2007
April 2010
April 2012
March 2014
May 2015

May 2017
May 2018

Joined Hitachi, Ltd.
Vice President of Hitachi America, Ltd.
Managing Officer, General Manager of Global Business Development
Division of Hitachi, Ltd.
Managing Officer, Manager of Business Development Division
Executive Officer, Manager of Business Development Division
Vice President and Executive Officer, in charge of Business
Development
Senior Vice President and Executive Officer, in charge of Business
Development
Senior Vice President and Executive Officer of Hitachi Cable, Ltd.
Senior Advisor of Hitachi Research InstituteOutside Director of Kyowa Hakko Kirin Co., Ltd.
Outside Audit & Supervisory Board Member of J. Front Retailing Co.,Ltd.
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd. (present)
Director of Daimaru Matsuzakaya Department Stores Co. Ltd. (present)

Tenure as Outside
Director (at the conclusionof this Meeting):
approx. 2 years

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-NISHIKAWA Koichiro possesses suitably useful insight even with respect to financial matters from his practical experience inbusiness alliances, M&A, business reforms, and his involvement in numerous important international negotiations. Since May
2017, he has served as an Outside Director and contributed to ensuring more effective meetings of the Board of Directors byactively and assertively furnishing advice to the Board of Directors with respect to matters such as taking risks regarding new
business and M&As, advancing progress management and results verification for corporate management strategies, and thesuitability of numerical-target based planning. Furthermore, in the Audit Committee, he has contributed to maintaining andstrengthening the Company’s governance through providing suitable advice as required based on his abundant experience andin-depth knowledge. In light of his track record and abundant insight, the Company has judged that in acting as an Outside
Director he is likely to contribute greatly to management of the Group. As such, he has been appointed as a candidate to continue
serving as Outside Director.
-NISHIKAWA Koichiro is an independent officer who has been given the obligation by the Tokyo Stock Exchange and the
Nagoya Stock Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with NISHIKAWA Koichiro to limit the liability of damages stipulated in Paragraph
1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 14 -

No.

Name(Date of birth)
Outside Director
Independent

SATO Rieko(November 28, 1956)
Gender: Female
Number of the Company’s
shares owned (shares):300

8Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1984
August 1989
July 1998
June 2004
June 2012
June 2015
October 2016
May 2018

Registered as attorney at law
Shearman & Sterling LLP
Partner of Ishii Law Office (present)
External Audit & Supervisory Board Member of Ajinomoto Co., Inc.
Outside Corporate Auditor of NTT DATA CORPORATION (present)
Outside Director of The Dai-ichi Life Insurance Company, Limited
Outside Director of Dai-ichi Life Holdings, Inc. (present)
Outside Director of J. Front Retailing Co., Ltd. (present)

Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
11/11
Tenure as Outside
Director (at the conclusionof this Meeting):
Approx. 1 year

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-SATO Rieko possesses abundant experience as an outside director and outside audit & supervisory board member at othercompanies, in addition to having made a career in handling many projects with in-depth and specialized knowledge as an attorneyat law specializing in corporate legal affairs. At the Board of Directors and each committee of the Company, she has contributed
to maintaining and strengthening the Company’s governance through providing active advice and recommendations mainly
regarding corporate legal affairs from an objective perspective. In light of her track record, the Company has judged that in
acting as an Outside Director she is likely to contribute greatly to management of the Group. As such, she has been appointed
as a candidate to continue serving as Outside Director.
-SATO Rieko is an independent officer who has been given the obligation by the Tokyo Stock Exchange and the Nagoya Stock
Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with SATO Rieko to limit the liability of damages stipulated in Paragraph 1, Article
423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 15 -

No.

Name(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company

Joined Toray Industries, Inc.
Executive Vice President of Toray Industries (America), Inc.
Outside Director
General Manager on Special Assignment of Corporate Strategic
Independent
Planning Division 1, General Manager on Special Assignment ofCorporate Communications Dept. of Toray Industries, Inc.
UCHIDA Akira
June
2004
Counsellorof Corporate Strategic Planning Division, and Counsellor of(October 4, 1950)
Investor Relations Dept.
June 2005
Member of the Board, General Manager of Finance and Controller’s
Gender: Male
Division
Number of the Company’s
9President, Toray Holding (USA), Inc.
shares owned (shares):
Senior Vice President (Member of the Board), General Manager of
1,000 June 2009
Finance and Controller’s Division
Special interests between
President, Toray Holding (USA), Inc.
the Company and the
Candidate:June 2012
Senior Vice President (Member of the Board), in charge of CSR;
None
General Manager of General Administration and Legal Division,
Investor Relations Dept., Corporate Communications Dept., andAdvertising Dept., Tokyo Head Office
June 2016
AdviserMarch 2019
Retired from Adviser
Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-UCHIDA Akira possesses broad experience and knowledge in the corporate division, as a manager in charge of management
planning and IR, and as the person responsible for the finance and accounting division. In addition, as a member of the Councilof Experts Concerning the Corporate Governance Code for which the Financial Services Agency and Tokyo Stock Exchange act
as secretariat, and as a member of follow-up committees, he has been involved in formulation and promotion of said code, andpossesses a high level of expertise in corporate governance. The Company has judged that he will be able to perform a role inoverseeing management, and has appointed him as a new candidate serving as Outside Director.
- The Company plans to register UCHIDA Akira as an independent officer who has been given the obligation by the Tokyo Stock
Exchange and the Nagoya Stock Exchange to protect ordinary shareholders.
-The Company plans to enter into an agreement with UCHIDA Akira to limit the liability of damages stipulated in Paragraph 1,
Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.
New Candidate

April 1975
June 1996
June 2000- 16 -

No.

Name(Date of birth)

YAMAMOTO
Ryoichi(March 27, 1951)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1973
May 2003
September 2007

Gender: Male
Number of the Company’s
shares owned (shares):79,366

10

Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

March 2008
March 2010
September 2012
April 2013
May 2017

Joined The Daimaru, Inc.
President and COO and General Manager of Department StoreOperations, Group Headquarters
Director of J. Front Retailing Co., Ltd.
In charge of Sales Reform and Out-of-Store Sales (gaisho) Reform
Promotion
Executive General Manager of Department Store Operations
Headquarters and Planning Office for New Umeda Store, Head Officeof The Daimaru, Inc.
Director of Matsuzakaya Co., Ltd.
Executive General Manager of Sales Headquarters, Head Office of The
Daimaru, Inc.
President of Daimaru Matsuzakaya Department Stores Co. Ltd.
President of Daimaru Matsuzakaya Department Stores Co. Ltd. andPresident of Daimaru Matsuzakaya Sales Associates Co. Ltd.
President and Representative Director of J. Front Retailing Co., Ltd.
Director, President and Representative Executive Officer (present)

Tenure as Director (at theconclusion of thisMeeting):
approx. 11 years and 9monthsReasons for nomination as candidate for Director-YAMAMOTO Ryoichi possesses broad-based insight and a high-level overview gained through his abundant experience
spanning overall retail operations. Since being appointed as President of the Company in 2013, he has been precisely andefficiently managing business of the Group overall. In addition to formulating a new Group Vision that showed the direction ofmanagement strategies that is necessary considering the external environment surrounding the Group and leading its permeation,
he has been demonstrating strong leadership in positioning the corporate governance code at the center of change and reform ofcorporate management toward realizing where the overall Group strives to be in ten years. In light of his track record, theCompany has judged that he is a competent professional who is capable of helping ensure the improved corporate value andsustained growth of the Group by executing business acting as a Director, and has accordingly appointed him as a candidate tocontinue serving as Director.

- 17 -

No.

Name(Date of birth)

YOSHIMOTO
Tatsuya(April 13, 1956)
Gender: Male
Number of the Company’s
shares owned (shares):49,45911

Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1979
March 2000
January 2008
May 2008
January 2010

March 2010
May 2012
April 2013

May 2013
May 2017

Joined The Daimaru, Inc.
Senior Manager of Preparatory Office for Opening Sapporo Store ofPlanning Office for Sapporo Store, Head Office
General Manager of Tokyo Store
Corporate Officer, General Manager of Tokyo Store
Corporate Officer, General Manager of Sales Planning Promotion
Division and Marketing Planning Promotion Division of Department
Stores Coordination Division of J. Front Retailing Co., Ltd.
Corporate Officer of Daimaru Matsuzakaya Department Stores Co. Ltd.
Senior General Manager of Management Planning Division
Director and Corporate Officer
President and Representative Director of Daimaru Matsuzakaya
Department Stores Co. Ltd. (present) and
President and Representative Director of Daimaru Matsuzakaya Sales
Associates Co. Ltd. (present)
Director of J. Front Retailing Co., Ltd. (present)
Representative Managing Executive Officer (present)

Tenure as Director (at theconclusion of thisMeeting):
approx. 6 years

Reasons for nomination as candidate for Director-YOSHIMOTO Tatsuya serves as Representative Director of Daimaru Matsuzakaya Department Stores Co. Ltd., and hasabundant experience and insight related to the Department Store Business overall, particularly encompassing areas such as
business management, planning and store operations. He has been involved in executing existing high-quality department store
business strategy taking the roles and expectations of the Department Store Business with respect to the Group’s strategy into
account, and formulating a new Department Store Business Strategy in reaction to the massive changes in the external
environment. He has been demonstrating swift and resoundingly effective leadership based on a strong results-oriented approach
aimed at realizing these initiatives. In light of his track record, the Company has judged that he is a competent professional who
is capable of helping ensure the improved corporate value and sustained growth of the Group in acting as a manager of a major
business subsidiary, and has accordingly appointed him as a candidate to continue serving as Director.

- 18 -

No.

Name(Date of birth)

MAKIYAMA Kozo
(August 28, 1958)
Gender: Male

12

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1981
March 2004
March 2007

Number of the Company’s
shares owned (shares):17,100March 2008

Special interests between
the Company and the
Candidate:
None

May 2008
March 2009
March 2010
March 2011
May 2011
May 2013
May 2017

Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

Joined Parco Co., Ltd.
Executive Officer, Executive General Manager of Store Operation
DivisionManaging Executive Officer, Executive General Manager of StoreManagement Division
Senior Executive Officer, Senior Executive General Manager of StoreOperation Headquarters and Executive General Manager of StoreManagement Division
Director and Senior Executive Officer
Supervisor of Store Operation Division
In charge of Store Management
In charge of Business Management
Director and President and Representative Executive Officer (present)
Director of J. Front Retailing Co., Ltd. (present)
Managing Executive Officer (present)

Tenure as Director (at theconclusion of thisMeeting):
approx. 6 years

Reasons for nomination as candidate for Director-MAKIYAMA Kozo serves as Representative Executive Officer of PARCO Co., Ltd., and has abundant experience and insight
related to the business management and store operations of PARCO. Drawing on a sufficient understanding of PARCO businessroles and expectations with respect to Group’s strategy, he promotes the management vision leveraging attributes of the PARCO
Business, and while demonstrating resoundingly effective leadership based on his ability to act as a unifying force within theorganization, he proactively continues taking on the challenges of expanding into business fields. In light of his track record, theCompany has judged that he is a competent professional who is capable of helping ensure the improved corporate value andsustained growth of the Group in acting as a manager of a major business subsidiary, and has accordingly appointed him as a
candidate to continue serving as Director.

- 19 -

No.

Name(Date of birth)

WAKABAYASHI
Hayato(August 31, 1961)
Gender: Male
Number of the Company’s
shares owned (shares):
6,359

13

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1985
April 1998
April 2007
February 2009
July 2013

Special interests between
the Company and the
Candidate:
None

May 2015

Number of attendance at
the Board of Directors
meetings for the 12th
fiscal year:
14/14

March 2016

Tenure as Director (at theconclusion of thisMeeting):
approx. 3 years

September 2015

May 2016
March 2017
May 2017
May 2018

Joined Matsushita Electric Industrial Co., Ltd. (present Panasonic
Corporation)
President of Panasonic Financial Center Malaysia Co., Ltd.
Director and Chief Executive Officer of Matsushita Electric (China)
Finance Limited
Finance Planning Team Leader (Manager), Headquarters Finance & IR
Group of Panasonic Corporation
General Manager, Finance & IR Group, Corporate Strategy Division
and Finance Planning Team Leader (Director)
Joined J. Front Retailing Co., Ltd.
In charge of Finance Policy, Administration Unit
Executive Officer
In charge of Financial Strategy and Policy, Administration Unit
Senior Executive General Manager of Financial Strategy Unit (present)
and in charge of Finance Policy
Director (present)
In charge of Financing and Finance Policy
Managing Executive Officer (present)
Senior General Manager of Financing and Finance Policy Division(present)

Reasons for nomination as candidate for Director-WAKABAYASHI Hayato has pursued a career mainly in the financial realm of Panasonic Corporation and its group companies,
and as such has adequate insight and sufficient experience related to financial policy with respect to enhancing financial standing,
improving levels of cash management and other such initiatives. As such, he was invited into the Group in May 2015 and has
established and promoted a financial strategy encompassing the entire Group. From 2016, he has led the transition to IFRS withan eye to the future, and began its application during the current Medium-term Business Plan. In addition to such achievements
and in-depth financial insight, he has the commensurate abilities as a management professional in terms of his strategic andtransformation-minded leadership, strong results-oriented approach and other such attributes. As such, the Company has judgedthat he is a competent professional who is capable of helping ensure the improved corporate value and sustained growth of theGroup by executing business acting as a Director, and has accordingly appointed him as a candidate to continue serving as
Director.

- 20 -

[Reference Document for the 12th Annual Shareholders Meeting]Business Report (From March 1, 2018 to February 28, 2019)
1. Current status of the corporate group(1) Business summary and results
In the fiscal year under review, although the Japanese economy remained on a gradual track ofrecovery due to increased capital investment and improvement in the employment environment mainly
fueled by the robust momentum of domestic corporate earnings, there was lack of stability in the second
half of the year as exemplified by corporate earnings improvement which has stalled due to increased
concerns about economic slowdown on the back of growing uncertainty in the overseas economy. There
were up and down trends in personal spending. The upturn reflects positive signs such as robust luxury
goods consumption amidst continued improvement in the employment and income environments. On
the other hand, unease as to what lies ahead brought about by the increased burden of social security,
as well as the impact of unseasonable weather and large-scale natural disasters, negatively affected
personal spending.
Promote initiatives for the transformation of our business portfolio and realize discontinuous
growthAmid this environment, the J. Front Retailing Group (hereinafter the “Group”) has worked to realize
its Group Vision, “Create and Bring to Life ‘New Happiness,’” by undertaking the initiatives for thesecond year of the “FY 2017–FY 2021 Medium-term Business Plan.” Such initiatives included, inpursuit of reform of our business portfolio, (i) the “Multi Service Retailer Strategy” to expand businessfields; (ii) the “Urban Dominant Strategy” to grow along with the community centered on stores; (iii)the “ICT (Internet, Communication, and Technology) Strategy, which looks toward the IoT era,” when
all manner of things will be connected to the Internet; (iv) innovation of existing business including the
Department Store Business and the PARCO Business, (v) rebuilding of corporate social responsibility(CSR) from the perspective of environment, society, and governance (ESG); and (vi) strengthening of
our foundations of business that support growth.
(i) As part of the initiatives to expand business fields under the “Multi Service Retailer Strategy,” weproceeded with the preparations for opening of unlicensed preschools that provide high-quality
infant childcare service. In addition, in the three key businesses with high management efficiency(the Credit and Finance Business, the personnel recruitment business and the design andconstruction contracting business), we formulated new plans for the achievement of the Mediumterm Business Plan under the new management system, and at the same time, worked to strengthen
the personnel and organizational foundations that allow for the steady promotion of the strategy interms of both proactive and defensive aspects.
(ii) Under the “Urban Dominant Strategy,” we worked to increase the charm of the communities
through such efforts as development of areas surrounding the flagship stores based on each area
strategy in addition to holding of events in collaboration with the communities. We also worked to
expand the real estate leasing business taking advantage of the Group’s favorable locations in theurban areas. In addition, we steadily promoted redevelopment of the new main building of the
Daimaru Shinsaibashi store planned to open in fall 2019 and new Shibuya PARCO, with an eye
towards the success of the large-scale redevelopment projects following GINZA SIX and Ueno
Frontier Tower.
(iii) Under the “ICT Strategy, which looks toward the IoT era,” we started building a customer database
to utilize customer data held by each Group company integrally as the Group’s common asset inorder to establish the “Lifetime Service Hub concept” under which we aim to strengthen lifetime
relationships with customers and maximize their lifetime value through provision of new products
and services. At the same time, we continued with IT infrastructure development efforts at eachGroup company with a primary focus on improved security, whereby promoted the ICT Strategy
in terms of both proactive and defensive aspects.
(iv) As part of the initiatives to innovate the Group’s core Department Store Business and PARCO
Business, we not only developed new arranging sales areas in the Department Store Business and- 21 -

worked to improve profitability through such efforts as expanding the product and service lineup
to respond to inbound tourism demand and the affluent customer market, but also promoted
development of the new main building of the Daimaru Shinsaibashi store to realize the new
department store business model. In addition, in the PARCO Business, we promoted initiatives tobring in new tenants in response to the changes of the times including experience-focusedconsumption and services and to improve communication with customers with the smartphone app“POCKET PARCO” serving as the starting point, while continuing with projects for developing
new Shibuya PARCO, Kinshicho PARCO, etc.
(v) As part of our ESG initiatives, namely “environment, society and governance,” toward realizationof sustainable society, we positioned ESG as the concept of the highest priority in the Group’sbusiness activities and formulated the “Sustainability Policy” as the overall ESG policy. In addition,
we identified five priority issues toward “realization of sustainable society” such as “contribution
to low-carbon society” and started Group-wide initiatives including formulation of action plans toachieve medium- to long-term goals.
(vi) As part of our initiatives to strengthen our foundations of business and in terms of the financial
policy, we continuously worked to conduct operation management based on separate balance sheet
for each of the flagship department stores and realize capital optimization at each operatingcompany, with the aim of building the management structure with high capital efficiency. In
addition, we worked to increase free cash flows by taking steps to boost investment efficiency andimprove earnings through business management based on investment criteria and businesswithdrawal criteria. Furthermore, we took measures to prepare for the new lease accounting
standards based on the International Financial Reporting Standards (IFRS) in the interest of
implementing effective management based on appropriate asset evaluation.
In the Group’s administrative systems innovation which aims for improved management efficiency,
we promoted automation of processes in the sales and back-office divisions by expanding theapplication of robotic process automation (RPA). We also worked on infrastructure developmentin the office environment including enhanced information security and introduction of businesstools for improved productivity.
In reforming personnel affairs with respect to the Group’s organizations, the Human Resources
Strategy Unit was newly established in May to transform the central concept of its personnel affairs
policy into the “human resource power” that generates new value toward achievement of
discontinuous growth and further strengthen the Group-wide initiatives to that end. In addition,with an eye toward achievement of the goals set in the Medium-term Business Plan, we continued
with efforts to acquire specialized human resources who are capable of playing a leading role in
new business fields, optimally allocate each of the human resources within the Group dependingon their capabilities, competence, aspiration and motivation and foster organizational culture thatenables transformation into an inventive makeup.
We worked to strengthen the compliance system by, for example, creating manuals for preventing
recurrence of incidents of violation of laws and regulations and providing training as part of ourcompliance management initiatives. Efforts have also been made to strengthen the operational
aspects and thoroughly implement improvement measures based on the regular and real-time
activity reports.
As a result of various measures including those mentioned above, consolidated revenue for the fiscal
year under review was ¥459,840 million, down 2.1% year on year, due mainly to the effect of the sales
decline from sale of a consolidated subsidiary in the previous fiscal year and the weak sales in thewholesale business and the design and construction contracting business, despite the sales increase in
the Department Store Business, the Real Estate Business and the Credit and Finance Business. Bothrevenue and profit declined with operating profit amounting to ¥40,891 million, down 17.5% year on
year, due to an increase in selling, general and administrative expenses including expenses for renewalof POS cash registers in the Department Store Business and recording of loss following the decision tocease operations of a rural store in the PARCO Business, in addition to the decline as a pullback afterrecording of gain on sales of non-current assets and proceeds from sales of shares of a consolidated
subsidiary in the previous fiscal year, despite a profit increase in the Real Estate Business. Profit before
tax was ¥42,126 million, down 12.7% year on year, and profit attributable to owners of parent was¥27,358 million, down 4.0% year on year. In addition, profit/shareholders’ equity (ROE) was 6.8%,- 22 -

down 0.7 percentage points year on year, and the ratio of equity attributable to owners of parent to total
assets was 40.1%, up 1.4 percentage points year on year.
J. Front Retailing Co., Ltd. (hereinafter the “Company”) has decided to pay year-end dividend of ¥18
per share. As a result, the annual dividend with the addition of an interim dividend of ¥17 per share is¥35 per share, marking eight consecutive years of ordinary dividend increases excludingcommemorative dividends (¥1 each for the interim and year-end dividends) paid in the previous fiscal
year.
Revenue and operating profit by business segment of the corporate group(Millions of yen)
12th fiscal year
(Current fiscal year)(Fiscal 2018)

11th fiscal year
(Fiscal 2017)
Business segment

Revenue
Results

Operating profit

Composition

Results%
Department StoreBusiness

Revenue

Composition

Results%

Operating profit

Composition%

274,308

58.4

26,65953.8

275,44159.9

PARCO Business

91,621

19.5

11,752

23.7

89,969Real Estate Business

13,427

2.9

4,131

8.3

16,995Credit and FinanceBusiness

10,176

2.2

2,742

5.5

10,573

Total

389,534

83.0

45,285

91.4

Other

117,845

25.0

4,744

9.6

Adjustments(37,465)

(8.0)

(483)

(1.0)

Consolidated total

469,915100.0

49,546100.0- 23 -

Results

Composition%

24,194

59.2

19.6

5,445

13.3

3.7

4,664

11.4

2.3

2,360

5.8

392,979

85.5

36,665

89.7

104,250

22.7

3,507

8.6

(37,389)

(8.2)

717

1.7

459,840

100.0

40,891100.0

Results by segment are as follows.
<Department Store Business>
We have set the cornerstones of the store strategy as strengthening of ability to attract manycustomers and expansion of the customer base and worked to increase value provided by stores and toheighten their profitability. As part of the initiatives to strengthen the ability to attract many customers,
we opened “KiKiYOCOCHO” as a new arranging sales area comprised of “Cosmetics,” “Foods” and“Goods” on the women’s clothing floor of the Daimaru Sapporo store. Moreover, under the “Urban
Dominant Strategy,” we worked to increase the charm and create the lively atmosphere of the areas inwhich each of the stores is located through such efforts as development of areas surrounding the storeswith particular focus on the priority areas in addition to holding of events in collaboration with thecommunities and the local governments.
The initiatives to expand the customer base included prior introduction of a mobile app to the
Daimaru Tokyo store to increase the number of ID customers and building of a foundation for the newcustomer strategy to strengthen the relationships with customers. We also continued efforts to acquire
new customer accounts in response to the expanding affluent customer market and promoted building
and maintenance of the operation support system that utilizes ICT with an eye toward establishment of
a new out-of-store sales (gaisho) business model. In addition, we worked to strengthen the ability to
attract many customers through expansion of the cosmetic sales space in a flagship store, information
distribution utilizing social networking services (SNSs) and expansion of sales areas able to handle
mobile payment to ensure handling of the increased number of overseas visitors to Japan.
It should be added that we decided to cease operations of the Daimaru Yamashina store as of March
31, 2019, based on the judgment of it being difficult to anticipate improvement in its earnings amidst
recent changes in the economic environment and fiercer competitions.
Despite various measures including those mentioned above, revenue saw only a slight increase to¥275,441 million, up 0.4% year on year, due mainly to shortened operating hours and/or temporary
store closing necessitated by frequent occurrence of natural disasters, etc. in the areas where the storesare located and struggles in the clothing sales. Operating profit was ¥24,194 million, down 9.2% year
on year, due to depreciation associated with the redevelopment of the Daimaru Shinsaibashi store,
investment for the purpose of securing safety and peace of mind, including investment in store facilities
such as renewal of POS cash registers, air-conditioning systems and elevators, and an increase in the
selling, general and administrative expenses following the up-front investment aimed at future growth,in addition to the decline as a pullback after recording of gain on sales of non-current assets in theprevious fiscal year.
Net sales by product and by company and store of the Department Store Business (Japanese GAAP)
are as follows.

- 24 -

Net sales by product of the Department Store Business
Product

Amount(Millions of yen)
Year-on-year changes

Composition%%

Men’s clothing andhaberdashery

50,5286.8(0.8)

Ladies’ clothing andhaberdashery

216,897

29.2

(1.2)

Children’s clothing andhaberdashery

14,741

2.0(5.6)

Kimono, bedding and otherclothing

10,0291.3(6.2)

Personal belongings

66,3998.9(2.3)

Furniture

5,886

0.8

(3.9)

Home appliances

532

0.1

(6.4)

Household goods

22,286

3.0(4.2)

Food products

170,790

23.0

(1.3)

Food halls and cafes

21,5852.9(1.8)

General goods

11.7

140,284

18.9

Services

2,804

0.4

(1.7)

Other

20,6282.7(8.4)

Elimination
Total

(54)

(0.0)

－

743,340

100.0

0.4

- 25 -

Net sales by company and store of the Department Store BusinessCompany / Store

Amount(Millions of yen)
Year-on-year changes

Composition%%

Daimaru Matsuzakaya Department Stores Co. Ltd.
Daimaru
Osaka Shinsaibashi store

87,72311.8

4.4

Osaka Umeda store

66,0548.9

1.5

Tokyo store

81,30510.9

2.8

Kyoto store

68,732

9.3(0.0)

Yamashina store

3,634

0.5

(3.7)

Kobe store

78,354

10.5

(5.0)

Suma store

8,399

1.1

(5.4)

Ashiya store

6,605

0.9

(2.3)

Sapporo store

66,9069.0

2.7

Sub total

467,71662.9

0.6

Matsuzakaya
Nagoya store

119,170

16.0

1.3

Toyota store

7,134

1.0

(4.6)

Ueno store

39,9695.4

1.5

Shizuoka store

21,143

2.8(1.0)

Takatsuki store

8,389

1.1

(2.5)

195,80726.3

0.7

663,52389.2

0.6

The Hakata Daimaru, Inc.

54,831

7.4(0.0)

The Shimonoseki Daimaru, Inc.

13,3521.8(3.6)

Kochi Daimaru Co., Ltd.

11,6871.6(4.2)

Sub total
Sub total

Elimination
Total

(54)

(0.0)

－

743,340

100.0

0.4

<PARCO Business>
We promoted renovation to strengthen the growth areas such as food products and wining and dining,
health and beauty and the areas related to experience-focused consumption in the store business, withan eye toward strengthening of the PARCO store brands. We also promoted introduction of “UP NEXT,”a space for cultivating and fostering new shops and brands. The customer relationship management(CRM) strategy has been in constant motion through such efforts as enhancement of the functions of
the “POCKET PARCO” smartphone app in pursuit of further strengthened relationships with customers.
In addition, we opened Harajuku ZERO GATE and Sannomiya ZERO GATE and continued working
on development projects for the opening of Kinshicho PARCO, new Shibuya PARCO, SAN-A UrasoeWest Coast PARCO CITY, north wing of the Daimaru Shinsaibashi store, among others, with an eye
toward realization of a new commercial facility model.
It should be added that we decided to cease operations of Utsunomiya PARCO as of May 31, 2019,in light of, among others, changes in the commercial environment surrounding the store; we alsodecided to cease operations of Kumamoto PARCO as of February 29, 2020, the expiration date of thebuilding lease agreement, in light of, among others, aging of the building and changes in the commercial
environment surrounding the store.
Despite various measures including those mentioned above, revenue was ¥89,969 million, down
1.8% year on year, due mainly to closing of unprofitable stores in the specialty store business andstruggles in the clothing sales and rural and suburban stores. Operating profit was ¥5,445 million, down
53.7% year on year, due to a decrease in gross profit following the decrease in revenue and recordingof loss, etc. following the decision to cease operations of the above two stores.

- 26 -

<Real Estate Business>
We worked to strengthen the real estate lease business through efforts to increase the leased floorarea mainly in the priority areas such as Ueno, Nagoya, Kyoto, Shinsaibashi and Kobe. GINZA SIX
and Ueno Frontier Tower opened in FY 2017 as part of the large-scale redevelopment projects
performed well and contributed to the improvement of the business results throughout this fiscal year.
We also worked to develop the areas surrounding the Daimaru Kyoto store and the Daimaru Kobe store.
In addition, we steadily worked on initiatives to effectively utilize assets and expand business by, forexample, commercial development of Nippon Life Sakaemachi Building (provisional name) with theaim of contributing to the increased charm of the Nagoya Sakae area and joint promotion of thedevelopment of Nishiki 3-chome District 25 with Nagoya City Government.
As a result of various measures including those mentioned above, revenue was ¥16,995 million, up
26.6% year on year and operating profit was ¥4,664 million, up 12.9% year on year, despite the decline
as a pullback after recording of gain on sales of non-current assets in the previous fiscal year.
<Credit and Finance Business>
We proactively worked on acquisition of new cardholders and initiatives to increase the credit card
utilization rate and the transaction volume. As a result of these efforts, revenue was ¥10,573 million, up
3.9% year on year, due to increases in revenues from the affiliated store fees and interest income frominstallment sales. However, operating profit was ¥2,360 million, down 13.9% year on year, due toincreased costs to renew issued cards and payment commissions as well as increases in expenses for
up-front investment in strengthening of the system to realize medium- to long-term growth centeredaround payment and financial services and recruitment of specialized human resources.
<Other>
Personnel recruitment business Dimples’ recorded increases in both revenue and profit thanks toincreases in sales and gross profit associated with increased outsourcing contracts from non-Groupcustomers, while design and construction contracting business J. Front Design & Construction recorded
decreased revenue due mainly to an impact from the decline as a pullback after recording of large
projects in the previous fiscal year, but recorded increased profit thanks to thorough profit management.
However, wholesale business Daimaru Kogyo recorded significant decreases in both revenue and profit
due to struggles in the mainstay electronic devices division. As a result, revenue in the Other was¥104,250 million, down 11.5% year on year, and operating profit was ¥3,507 million, down 26.1% year
on year.

- 27 -

(2) Status of capital investment
The basic approach taken regarding the Group’s recurring capital investment is to keep suchinvestment within the scope of the amount of depreciation. In the current fiscal year total capital
investment was ¥39,873 million, which was a result of recurring investment combined with proactive
implementation of strategic investment.
(i) Major facilities completed during the current fiscal year
The main investments in the PARCO Business included asset purchases associated with new store
opening of the Kinshicho PARCO, Sannomiya ZERO GATE and Harajuku ZERO GATE.
(ii) New establishments and expansions of major facilities with ongoing construction works during thecurrent fiscal year
Mainly, in the Department Store Business this included ¥10,956 million for rebuilding of the mainbuilding of the Daimaru Shinsaibashi store, and in the PARCO Business this included theconstruction of a new building associated with the redevelopment project of the Shibuya PARCO.
(iii) Sales, removals and losses of major non-current assets
Not applicable.
(3) Status of procurement
The Group’s basic policy is to source funds needed for business activities using internally generated
funding. Moreover, when the need arises for business investment or other expenditures, such funds areprocured mainly by issuing bonds and borrowing from financial institutions, with consideration placedon maintaining financial soundness.
As a general rule, Group subsidiaries do not procure funds from financial institutions, but instead we
promote centralized and streamlined means of procuring funds by means of intra-Group financing using
a cash management system.
For the current fiscal year, based on the above policy, we have procured ¥20.3 billion via long-termborrowings from financial institutions. However, the balance of interest-bearing liabilities was ¥174.3
billion, down ¥9.8 billion compared with February 28, 2018, as a result of repayment of borrowings.
[Reference]

Consolidated Statement of Cash Flows (Summary)(From March 1, 2018 to February 28, 2019)(Millions of yen)AmountItem

Cash flows from operating activities
34,870Cash flows from investing activities(26,836)
Cash flows from financing activities(21,274)
Net increase in cash and cash equivalents(13,240)
Cash and cash equivalents at beginning of period
38,883
Effect of exchange rate changes on cash and cash equivalents
16
Cash and cash equivalents at end of period
25,659(Note)
Amounts have been rounded down to the nearest one million yen.

(4) Issues to be addressed
In an environment that continues to change at a speed that has never been seen before, the Group haschanged the direction of its business operations significantly toward discontinuous growth and has beenpromoting the “FY 2017-FY 2021 Medium-term Business Plan” for two years since its launch to realize
the Group Vision “Create and Bring to Life ‘New Happiness.’”
Looking back these two years, we opened unprecedented new types of commercial complexes, suchas GINZA SIX and Ueno Frontier Tower, and have otherwise steadily promoted initiatives for the- 28 -

transformation of business portfolio. However, we have seen some deviations between achievements
and the initial plan in businesses other than the Department Store Business and the Real Estate Businessand recognize the need to further improve the execution capability in order to realize future growth of
the Group as a whole.
In Fiscal 2019, we expect that the environment in which the Group operates will be tougher as
uncertainty in the global economy will increase and a consumption tax hike is scheduled in the domestic
market. Moreover, we have to face not only an increased competition within the industry and businesscategory on the back of digital technology evolution and changing values toward consumption, but alsochanges in the environment occurring at a more-than-anticipated speed, including the appearance of
new products, services, and industries that did not exist in the past and are now replacing existing
markets and industries that are declining.
Fiscal 2019 is the third year under the current Medium-term Business Plan, and we recognize theneed for faster implementation of growth strategy designed to realize discontinuous growth andtransform our business portfolio, in order to make sure that we achieve the performance targets set forthin the Medium-term Business Plan. In addition, ESG initiatives aiming to realize sustainable society
and sustainable business growth at the same time are a core management issue, and we recognize that
we are required to incorporate such initiatives in all business activities.
Based on the recognition outlined above, we will implement growth strategies steadily to realize
sustainable growth of the Group and medium- to long-term enhancement of corporate value. First of all,we schedule a successful completion of major redevelopment projects, such as the new main buildingof the Daimaru Shinsaibashi store and new Shibuya PARCO, which are scheduled to open this fall. We
also plan to expand the three key businesses including the Credit and Finance Business as well as new
business areas and will take concrete steps to realize the “lifetime service hub concept” designed tomaximize lifetime values of customers. In addition, we will promote the corporate-wide implementationof a new customer strategy and revamping of the gaisho business model in the Department StoreBusiness and the rebuilding of the PARCO brand through store business reform in the PARCO Business.
To strengthen the business foundation to support these growth strategies, we will also work on,among others, human resource development to promote strategies, management structure
improvements through the more efficient use of capital, and productivity improvements through thereform of the Group business operation system. We look forward to the continued support and guidanceof all our shareholders.
Group Growth Strategy
a. Multi Service Retailer Strategy
We will strengthen the three key businesses that we consider to be highly efficient and have a highgrowth potential. At the same time, we will accelerate the expansion of new business areas to realize
the Group Vision.
1) Business area expansion and revenue growth in the three key businesses
 In the Credit and Finance Business, we will work on the provision of new settlement services
including the development of card products designed to further fortify customer relationship and thediversification of settlement methods anticipated in the future including cashless settlement, torealize medium- to long-term growth. In addition, leveraging the strengths of the Group such as apremier customer base and store assets, we will work on the provision of new financial services that
fit different life stages of customers.
 In the personnel recruitment business, we will strengthen the employment agency business due toits high growth expectations and expand business areas, such as the provision of solutions to theglobalization of labor markets.
 In the design and construction contracting business, we will expand business areas by, for example,
strengthening the design business. At the same time, we will strive to increase the number orders
received for interior construction works from inside and outside the Group including the new mainbuilding of the Daimaru Shinsaibashi store. We will also continue to work on strict revenue
management through business structure improvement.
2) Expansion involving new fields of business toward making the Group Vision a reality
 We will work to deliver new services that cater to “increasing diversity of lifestyles” and “increasing- 29 -

diversity in means of seeking enjoyment” and to expand new business areas to transform ourbusiness portfolio. We will also develop businesses including alliances with other companies to cater
to changing values of consumers, such as sharing services.
b. Urban Dominant Strategy
Leveraging Group resources to a maximum extent, we will move toward forging a “business modelfor growth along with regions, with the stores at its core.” This initiative will be primarily led by flagshipstores of the Department Store Business and the PARCO Business and their real estate divisions.
1) Promoting urban development centered on flagship stores We will promote the development of areas surrounding stores, focusing particularly on key areas, toincrease the charm of the communities and strengthen the competitiveness of the area against otherareas. In addition, we will work on the creation of a lively urban environment, for example, by
holding events in coordination with local communities and governments.
2) Realization of a new commercial facility model At the new main building of the Daimaru Shinsaibashi store, we will strive to achieve revenue
growth through the realization of a new department store model.
 At new Shibuya PARCO, we will work to realize the evolution of the PARCO store brand. At thesame time, we will steadily promote new format development, particularly at Kinshicho PARCO,
San-A Urasoe West Coast PARCO CITY, and Kawasaki ZERO GATE (tentative name).
c. ICT Strategy in the IoT Era
We will take concrete steps to realize the “lifetime service hub concept,” which is a mechanism
designed to solidify the lifetime relationship with customers and to maximize their lifetime values. We
will also work on the development of ICT infrastructure to support the strategies of Group companies.
1) Construction of a customer database to maximize lifetime values of customers
 We will continue to work on the construction of an integrated database to aggregate the customer
data held by each Group company and centrally manage them and use the integrated data baseeffectively to realize the provision of new products and services and business development.
2) Development of ICT infrastructure to support the strategies of each Group company.
 We will assist each Group company in the development and implementation of business strategies
designed to take advantage of digital technologies. In addition, we will work to develop ICT
infrastructure that will enable the Group to promote growth strategies and ensure the soundness ofGroup IT at the same time, including the enhancement of information security responses that fits thesituation of each company.
d. Innovating the Department Store Business and the PARCO Business(Department Store Business)
We will strive to strengthen the competitiveness and profitability of the Department Store Businessthrough the implementation of a new department store business model at the new main building of the
Daimaru Shinsaibashi store, corporate-wide implementation of a new customer strategy, and revampingof the gaisho business model.
1) Realization of a new department store business model At the new main building of the Daimaru Shinsaibashi store scheduled to open in fall 2019, we will
work to realize a new store operation model that can achieve growth and profit at the same time.
2) Expanding the customer base and strengthening CRM through the implementation of a newcustomer strategy
 We will strive to expand the customer base by introducing mobile apps and also to provide
customized products and services that fit different life stages of customers by using customer data
effectively.
3) Customer base expansion by revamping the gaisho business model We will strive to expand our customer base by offering information about new products and services
that take advantage of digital technologies and promoting most suitable sales activities that fit theneeds and purchasing traits of customers.

- 30 -

(PARCO Business)
We will work to restructure the store business and the real estate business, while striving to create
new revenue sources by entering into new business areas including businesses related to existing
businesses as well as new businesses.
1) Rebuilding the PARCO brand through the execution of store business reform We will strengthen PARCO’s 50th anniversary events as well as anniversary events at individual
PARCO stores. We will also promote renovation works in major stores to strengthen store business.
2) Successful opening of new development projects in Fiscal 2019
 We will make steady efforts to ensure a successful opening of new development projects ranging
over four different formats, including new Shibuya PARCO, Kinshicho PARCO, San-A Urasoe West
Coast PARCO CITY, and Kawasaki ZERO GATE (tentative name).
3) Re-strengthening related businesses that contribute to store business and infrastructure
improvement
 We will re-strengthen the entertainment business in conjunction with the opening of new Shibuya
PARCO and help the space engineering and management business to win contracts for the
management of new PARCO development projects.
e. ESG Strategy
Under the newly formulated sustainability policy, we will promote initiatives to meet the goals set in
the five areas of materiality (key issues) that will contribute to the realization of “sustainable society”
and “sustainable corporate growth.” We will also aim to realize sustainable growth of the Group andmedium- to long-term enhancement of its corporate value through ongoing efforts to strengthen
corporate governance functions.
1) Promotion of initiatives to meet the goals set in the areas of materiality (key issues)
 We will make steady progress in the initiatives to meet the goals set in the five areas of materiality,
while holding explanatory meetings and offering information externally to promote the internal andexternal understanding of our ESG activities.
* The five areas of materiality identified by the Company: (i) contribution to low-carbon society,(ii) management of the entire supply chain, (iii) local community involvement, (iv) promotionof diversity, and (v) a better work-life balance.
 We will promote store development from the ESG perspective at the new main building of the
Daimaru Shinsaibashi store and new Shibuya PARCO.
 We will review the business continuity plan (BCP) for disasters and other emergencies for possible
improvements and also develop measures for the contribution and support to local communities.
2) Further strengthening the Group governance functions
 We will continuously ensure managerial transparency, soundness and compliance as the core ofcorporate governance of the Group, while strengthening corporate governance by speedy decisionmaking at each Group company aiming execution of its strategy and improving the accuracy ofinternal controls.
Strengthening Business Foundation<Group human resources policy>
 With the aim of becoming a company with human resource development excellence to achievesustainable growth, we will work on the reconstruction of human resource management, including
the hiring of diverse workforce and the development of experts, transformation to a human resource
system that encourages creation and challenge, realization of a better work-life balance, andresponses to workstyle diversity.
<Group financial policy>
 To construct a management structure with high capital efficiency that is consistently above the costof equity, we will promote a balanced capital policy that is designed to simultaneously satisfy theneeds for strategic investments, shareholders’ return enhancement, and equity capital enhancement.
We will also ensure appropriate accounting and reporting under the new IFRS lease accounting
standards that were introduced in January 2019.
<Innovating the Group’s administrative systems>
 To build a foundation to support growth strategy, we will strive to improve productivity bypromoting business automation through the expansion of the application of RPA at each Group- 31 -

company, particularly in the Department Store Business, and by expanding the use of shared services
in the back office operations of each Group company, particularly in the wholesale business.
<Implementation and strengthening of compliance management> We will endeavor to further strengthen group compliance management by raising awareness aboutcompliance through education and training, improving and strengthening the compliance checking
system, and developing and enforcing of measures to prevent recurrence of misconducts.

- 32 -

(5) Status of assets and profit or loss
Changes in assets and profit or loss of the corporate group(Millions of yen, unless otherwise stated)Japanese GAAP
Category
Net sales–International Financial Reporting Standards (IFRS)

9th fiscal year
(Fiscal 2015)

10th fiscal
year(Fiscal 2016)

1,163,564

1,108,512－

Category
Gross sales－ Revenue

Operating profit

48,03844,580Business profit

Ordinary profit

47,91044,425––10th fiscal
year(Fiscal 2016)

11th fiscal
year(Fiscal 2017)12th fiscal
year(Fiscal 2018)

1,134,342

1,138,981

1,125,153

452,505

469,915459,840

44,89846,24745,514－－－－－ Operating profit

41,72749,54640,891

Operating profit/net sales

4.1%

4.0%

Operating profit/
revenue

9.2%

10.5%

8.9%

Profit before incometaxes

34,69840,550

Profit before tax

42,60848,271

42,126

Profit attributable toowners of parent

26,313

26,950

Profit attributable toowners of parent

27,052

28,48627,358

Total assets

1,019,146

1,050,109

Total assets

1,005,069

1,022,348

1,029,573

Net assets

440,594

465,839

Total equity

421,444

450,887

468,485

Equity383,699406,336

Equity attributableto owners of parent

368,571395,519

412,700

Equity ratio

37.6%

38.7%

Ratio of equity
attributable to owners ofparent to total assets

36.7%

38.7%

40.1%

Cash flows fromoperating activities

36,79936,239Cash flows fromoperating activities

33,76457,07934,870Cash flows frominvesting activities(39,741)(30,353)

Cash flows frominvesting activities(27,952)(19,030)(26,836)

Free cash flows(2,942)

5,886Free cash flows

5,812

38,048

8,034(2,097)(31,048)(21,274)

Cash flows fromfinancing activities(1,041)(2,189)Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

28,147

31,846

Cash and cash equivalents
at end of period

31,86738,88325,659Return on equity (ROE)

6.9%

6.8%

Profit/shareholders’equity (ROE)

7.6%

7.5%

6.8%

Return on assets (ROA)

4.7%

4.3%

Operating profit/total
assets (ROA)

4.2%

4.9%

4.0%

Basic earnings per share(EPS) (Yen)

100.42103.04

Basic earnings per share(EPS) (Yen)103.43108.92104.55

Net assets per share (Yen)

1,467.05

1,553.60

Equity attributable toowners of parent per
share (Yen)

1,409.20

1,511.91

1,576.68

Price earnings ratio (PER)

13.10%

16.75%

Price earnings ratio (PER)

16.69%

17.91%

11.79%
17.00

Interim dividend (Yen)

13.00

14.00

Interim dividend (Yen)

14.00

16.00

Year-end dividend (Yen)

14.00

14.00

Year-end dividend (Yen)

14.00

19.00

18.00

Dividend payout ratio

26.9%

27.2%

Dividend payout ratio

27.1%

32.1%

33.5%

Ratio of dividends to net
assets

1.8%

1.9%

Ratio of dividends
attributable to owners ofparent

2.0%

2.3%

2.2%

(Notes) 1. The type of profit used for the calculation of ROE under IFRS is profit attributable to owners of parent, and thetype of profit used for the calculation of ROA under IFRS is operating profit.
The type of profit used for the calculation of ROE under Japanese accounting standards is profit attributable toowners of parent.
2. Gross sales are calculated by converting certain transactions recognized as revenue under IFRS on a net basis toamounts on a gross basis. Specifically, we converted sales from purchase recorded at the time of sale (shoka
shiire) of the Department Store Business and Other (Daimaru Kogyo) to a gross amount and the net amounttransactions of the PARCO Business to tenant sales (gross basis). Business profit is calculated by deducting costof sales and selling, general and administrative expenses from revenue.
3. Ratio of dividends to net assets is calculated using equity.

- 33 -

(6) Status of significant parent company and subsidiaries(i) Relationship with the parent company
No items to report.
(ii) Status of major subsidiaries(Millions of yen, unless otherwise stated)
Capital(Millions of yen
unless otherwise
stated)Name

Ratio of ownershipby the Company(%)

Major business

Daimaru Matsuzakaya Department Stores
Co. Ltd.

10,000

The Hakata Daimaru, Inc.

3,037

69.9

Department Store Business

480

100.0

Department Store Business

The Shimonoseki Daimaru, Inc.
Kochi Daimaru Co., Ltd.
PARCO Co., Ltd.
Parco (Singapore) Pte Ltd

100.0

Department Store Business

300

100.0

Department Store Business

34,367

65.2

PARCO Business
PARCO Business

S$4 million

65.2

NEUVE A Co., Ltd.

490

65.2

PARCO Business

PARCO SPACE SYSTEMS Co., Ltd.

490

65.2

PARCO Business

PARCO Digital Marketing Co., Ltd.

10

65.2

PARCO BusinessJAPAN RETAIL ADVISORS Co., Ltd.

10

65.2

PARCO Business

JFR Card Co., Ltd.

100

100.0

Credit and Finance Business

Daimaru Kogyo, Ltd.

1,800

100.0

Wholesale Business

Daimaru Kogyo International Trading(Shanghai) Co., Ltd.

US$2 million

100.0

Wholesale Business

Daimaru Kogyo (Thailand) Co., Ltd.

THB202 million

99.9

Wholesale BusinessTaiwan Daimaru Kogyo, Ltd.

NT$60 million

100.0

Wholesale Business

100

100.0

Design and construction
contracting and manufactureand sale of furniture

Dimples’ Co., Ltd.

90

100.0

Staffing service

J. Front Foods Co., Ltd.

100

100.0

Restaurant

Consumer Product End-Use ResearchInstitute Co., Ltd.

100

100.0

Merchandise test and quality
controlAngel Park Co., Ltd.

400

50.2

Parking

JFR Service Co. Ltd.

100

100.0

Commissioned back-officeservice, leasing and parking
management

JFR Information Center Co., Ltd.

10

100.0

Information service

J. Front Design & Construction Co., Ltd.

Daimaru Matsuzakaya Sales Associates Co.
Ltd.

90

100.0

Commissioned sales and store
management operations

Daimaru Matsuzakaya Tomonokai Co., Ltd.

100

100.0

Specified prepaid transaction
service(iii) Matters relating to specified wholly-owned subsidiaries(Millions of yen)
Name
Daimaru Matsuzakaya
Department Stores Co. Ltd.

Address
18-11, Kiba 2-chome, Koto-ku,Tokyo- 34 -

Total book value

Total assets of theCompany

222,130

415,927

(7) Major businesses
The Department Store Business, the PARCO Business, the Real Estate Business, the Credit and
Finance Business, and Other including wholesale business, design and construction contracting,manufacture and sale of furniture, parking, and leasing.
(8) Major sales offices(Department Store Business)
Name

Location

Name

Location

Daimaru Matsuzakaya
Department Stores Co. Ltd.
Head Office
Daimaru Osaka Shinsaibashi store
Osaka Umeda store
Tokyo store
Kyoto store

Koto-ku, Tokyo
Chuo-ku, Osaka
Kita-ku, Osaka
Chiyoda-ku, Tokyo
Shimogyo-ku, Kyoto

Matsuzakaya

Yamashina store
Kobe store

Yamashina-ku, Kyoto
Chuo-ku, Kobe

The Hakata Daimaru, Inc.

Chuo-ku, Fukuoka

Suma store

Suma-ku, Kobe

The Shimonoseki Daimaru, Inc.

Ashiya store

Ashiya, Hyogo

Shimonoseki,
Yamaguchi

Sapporo store

Chuo-ku, Sapporo

Kochi Daimaru Co., Ltd.

Kochi, Kochi

Nagoya store
Ueno store
Shizuoka store
Takatsuki store
Toyota store

Naka-ku, Nagoya
Taito-ku, Tokyo
Aoi-ku, Shizuoka
Takatsuki, Osaka
Toyota, Aichi(PARCO Business)
Name

Location

Name

PARCO Co., Ltd.
Headquarters
Shibuya Head Office
Sapporo PARCO
Sendai PARCO
Utsunomiya PARCO
Urawa PARCO
Shintokorozawa PARCO
Ikebukuro PARCO
PARCO_ya Ueno
Shibuya PARCO
Hibarigaoka PARCO
Kichijoji PARCO
Chofu PARCO
Tsudanuma PARCO
Matsumoto PARCO

Toshima-ku, Tokyo
Shibuya-ku, Tokyo
Chuo-ku, Sapporo
Aoba-ku, Sendai
Utsunomiya, Tochigi
Urawa-ku, Saitama
Tokorozawa, Saitama
Toshima-ku, Tokyo
Taito-ku, Tokyo
Shibuya-ku, Tokyo
Nishi-Tokyo, Tokyo
Musashino, Tokyo
Chofu, Tokyo
Funabashi, Chiba
Matsumoto, Nagano

NEUVE A Co., Ltd.

Shibuya-ku, Tokyo

Location

Shizuoka PARCO
Nagoya PARCO
Hiroshima PARCO
Fukuoka PARCO
Kumamoto PARCO
Sapporo ZERO GATE
Harajuku ZERO GATE
Nagoya ZERO GATE
Kyoto ZERO GATE
Shinsaibashi ZERO GATE
Dotonbori ZERO GATE
Sannomiya ZERO GATE
Hiroshima ZERO GATE
PediSHIODOME

Aoi-ku, Shizuoka
Naka-ku, Nagoya
Naka-ku, Hiroshima
Chuo-ku, Fukuoka
Chuo-ku, Kumamoto
Chuo-ku, Sapporo
Shibuya-ku, Tokyo
Naka-ku, Nagoya
Shimogyo-ku, Kyoto
Chuo-ku, Osaka
Chuo-ku, Osaka
Chuo-ku, KobeNaka-ku, Hiroshima
Minato-ku, Tokyo

PARCO SPACE SYSTEMS Co., Shibuya-ku, Tokyo
Ltd.

PARCO Digital Marketing Co., Ltd. Shibuya-ku, Tokyo
Parco (Singapore) Pte Ltd
Singapore(Note)The Shibuya PARCO was closed temporarily for rebuilding. We plan to reopen it in 2019.

(Real Estate Business)
Name

Location

Daimaru Matsuzakaya Department Stores Co. Ltd.
Real Estate Business Division
Koto-ku, Tokyo
GINZA SIX
Chuo-ku, Tokyo
Ueno Frontier Tower
Taito-ku, Tokyoand others- 35 -(Credit and Finance Business)
Name

Location

JFR Card Co., Ltd.

Head Office: Takatsuki, Osaka
Office:Tokyo 3, Osaka 2, Kyoto 1, Kobe 1, Sapporo 1, Nagoya 1,
Shizuoka 1(Other subsidiaries)
Head Office: Osaka 9, Nagoya 1, Shanghai 1, Thailand 1, Taiwan 1(9) Status of employees(i) Employees of the corporate group
Category

Number of employees

132
2,421
1,541
51
133
2,417
6,695

J. FRONT RETAILING Co., Ltd.
Department Store Business
PARCO Business
Real Estate Business
Credit and Finance Business
Other

Total
(Note) Other than the employees above, the number of dedicated employees is 1,697 and the number of fixed-term
employees is 1,884.

(ii) Employees of the Company
Number of employees

Average age

132
46.1
(Note) Other than the employees above, the number of dedicated employees is one and the number of fixed-term
employees is 18.

(iii) Employees of major subsidiaries
Name

Number of
employees

Average age

1,981

47.3

471

42.0

Daimaru Matsuzakaya Department
Stores Co. Ltd.
PARCO Co., Ltd.

(10) Status of major creditors
Major creditors of the corporate group
Creditor
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

Amount payable

Creditor(Millions of yen)Amount payable

29,103

Mizuho Bank, Ltd.

11,22015,161

Sumitomo Mitsui Trust Bank,
Limited8,978(11) Other important matters relating to current status of the corporate group
No items to report.

- 36 -

2. Matters relating to shares of the Company(1) Number of shares authorized:
1,000,000,000 shares(2) Number of shares issued:

270,565,764 shares(3) Number of shareholders:

117,086(4) Major shareholders
Name of shareholders

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Nippon Life Insurance Company
Japan Trustee Services Bank, Ltd. (Trust Account 9)
J. Front Retailing Kyoei Supplier Shareholding Association
The Dai-ichi Life Insurance Company, Limited
MUFG Bank, Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account 5)
JP Morgan Securities Japan Co., Ltd.
JP MORGAN CHASE BANK 385151(Note)

Number of shares held(Thousands of shares)

Shareholding ratio(%)

23,913
13,822
9,828
6,822
6,129
5,732
4,998
4,941
4,693
3,861

9.05
5.23
3.72
2.58
2.32
2.17
1.89
1.87
1.77
1.46

Shareholding ratio is calculated by deducting treasury shares (6,587 thousand shares). Treasury shares do notinclude shares of the Company owned by the officer remuneration BIP trust.

- 37 -

3. Matters relating to corporate officers(1) Names, etc. of Directors

Position in the Company

Name

Areas of responsibility in the Company
and important concurrent positions
outside the Company

Attendanceat themeetings ofthe Board of
Directors

Limitedliability
agreements(Note 3)(Note 2)

Director

KOBAYASHI
Yasuyuki

Chairperson of the Board of Directors
Member of Nomination andRemuneration Committees
Director of PARCO Co., Ltd.

100%
14/14

Yes

Director

DOI Zenichi

Chairperson of Audit Committee
Outside Director of Hakuyosha Co., Ltd.

100%
14/14

Yes

Director

TSUTSUMI
HiroyukiMember of Audit Committee
Audit & Supervisory Board Member of
Daimaru Matsuzakaya Department
Stores Co. Ltd.

100%
14/14

Yes

TACHIBANA
FUKUSHIMA
Sakie

Chairperson of Nomination Committee
and member of Remuneration
Committee
President and Representative Director of
G&S Global Advisors Inc.
Outside Director of Ajinomoto Co., Inc.;
Outside Director of USHIO INC.

100%
14/14

Yes

Director (Outside)

OTA Yoshikatsu

Chairperson of Remuneration Committee
and member of Nomination Committee
Honorary Advisor of KONICAMINOLTA, INC.

100%
14/14

Yes

Director (Outside)

ISHII Yasuo

Member of Audit Committee
Director of Daimaru Matsuzakaya
Department Stores Co. Ltd.

100%
14/14

Yes

Director (Outside)

NISHIKAWA
Koichiro

Member of Audit Committee
Director of Daimaru Matsuzakaya
Department Stores Co. Ltd.

100%
14/14

Yes

Director (Outside)

SATO Rieko(Note 1)

Member of Nomination, Audit andRemuneration Committees
Attorney at law
Outside Corporate Auditor of NTT
DATA CORPORATION
Outside Director of Dai-ichi Life
Holdings, Inc.

100%
11/11

Yes

Director (President andRepresentative Executive
Officer)

YAMAMOTO
RyoichiMember of Nomination andRemuneration Committees

100%
14/14

Director (Representative
Managing Executive
Officer)

YOSHIMOTO
Tatsuya

100%
14/14

Director (Managing
Executive Officer)

MAKIYAMA Kozo

100%
14/14

Director (Managing
Executive Officer)

SAWADA Taro

Director (Outside)

Director of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Director of PARCO Co., Ltd.

100%
11/11

Director (Managing
WAKABAYASHI
100%
Executive Officer)
Hayato14/14(Notes) 1. SATO Rieko is recorded under the name of KAMATA Rieko in the family register.
2. Number of the meetings of the Board of Directors attended / Number of the meetings of the Board of Directors
held during the individual’s tenure this fiscal year (Details of attendance at each committee meeting are given in
the following item (2).)
3. The Company enters into agreements limiting liability for damages such that are stipulated in Paragraph 1, Article
423 of the Companies Act, pursuant to Paragraph 1, Article 427 of the said Act, with the relevant individuals(marked as “Yes” in the “Limited liability agreements” column). These agreements limit the amount of their- 38 -

liability for damages to the higher of either ¥12,000,000 or the minimum amount of liability such that is stipulated
in Paragraph 1, Article 425 of the said Act.
4. Audit Committee member TSUTSUMI Hiroyuki gained across-the-board experience into finance and accounting
and due insight into finance and accounting matters between 1981, his second year since joining The Daimaru,Inc., and his appointment as Director of the Board in May 2017.
5. Audit Committee member NISHIKAWA Koichiro has due insight into financial matters, having been involved
in areas such as business alliances, M&A and management reform, and also through his experience in multiple
important international negotiations.
6. Chairperson of Audit Committee DOI Zenichi and Audit Committee member TSUTSUMI Hiroyuki are full-time
Audit Committee members. We aim to improve the effectiveness of supervisory roles by having as full-time
Audit Committee members two Directors from in-house who are Directors who do not execute business and who
have specialist knowledge of specific areas of our business based on a thorough understanding of in-houseorganizations and business operations. The Chairperson of Audit Committee has been chosen from amonginternally promoted Directors who do not execute business from the standpoint of achieving a smooth transition
from the Audit & Supervisory Board system.

(2) Attendance at the meetings of each committee
Name
KOBAYASHI Yasuyuki

Nomination Committee

Audit Committee

100% (13/13)

Remuneration Committee
100% (7/7)

DOI Zenichi◎100% (17/17)

TSUTSUMI Hiroyuki

100% (17/17)

TACHIBANA FUKUSHIMA Sakie◎100% (13/13)

100% (7/7)

OTA Yoshikatsu

100% (13/13)◎100% (7/7)

ISHII Yasuo

100% (17/17)

NISHIKAWA Koichiro

100% (17/17)

SATO Rieko

100% (10/10)

100% (12/12)

100% (5/5)

YAMAMOTO Ryoichi
100% (13/13)
100% (7/7)(Note) The “◎” mark indicates Chairperson. (**/**) indicates number of the meetings of each committee attended / numberof the meetings of each committee held during the individual’s tenure this fiscal year.

- 39 -

(3) Names, etc. of Executive Officers
Position in the Company

Name

President andRepresentative Executive
Officer

YAMAMOTO
Ryoichi

Representative Managing
Executive Officer

YOSHIMOTO
Tatsuya

Areas of responsibility in the Company and importantconcurrent positions outside the Company

President and Representative Director of Daimaru Matsuzakaya
Department Stores Co. Ltd.
President and Representative Director of Daimaru Matsuzakaya Sales
Associates Co. Ltd.

Managing Executive Officer MAKIYAMA Kozo

Director, President and Representative Executive Officer of PARCO
Co., Ltd.

Managing Executive Officer SAWADA Taro

Senior Executive General Manager of Management Strategy Unit andin charge of Risk Management

WAKABAYASHI
HayatoSenior Executive General Manager of Financial Strategy Unit andSenior General Manager of Financing and Finance Policy Division

Managing Executive Officer FUJINO Haruyoshi

Senior Executive General Manager of Business Development UnitManaging Executive Officer

Managing Executive Officer ARISAWA Hisashi

Senior Executive General Manager of Affiliated Business UnitManaging Executive Officer MURATA Soichi

Senior Executive General Manager of Administration Unit and in
charge of Compliance

Executive Officer

TADATSU
Takehiko

Senior Executive General Manager of Human Resources Strategy Unit
and Senior General Manager of Group Human Resources
Development Division
Executive Officer and Executive General Manager of Human
Resources Development Division of Daimaru Matsuzakaya
Department Stores Co. Ltd.

Executive Officer

MAKITA Takayuki

Executive Officer

NAKAYAMA
TakashiExecutive Officer

IWATA Yoshimi

Senior General Manager of Budget and Management Support
Division, Financial Strategy Unit

Executive Officer

NINOBE Mamoru

President and Representative Director of JFR Card Co., Ltd.

Executive Officer

KONDO Yasuhiko

President and Representative Director of J. Front Design &Construction Co., Ltd.

Executive Officer

ONO Keiichi

President and Representative Director of Dimples’ Co., Ltd.

Senior General Manager of Management Planning Division andGroup Communication Promotion Division, Management Strategy
Unit
Senior General Manager of Group Digital Strategy Division and New
Business Division, Management Strategy Unit

(Reference)
Executive Officers’ areas of responsibility in the Company and important concurrent positions outside theCompany have been changed on March 1, 2019 as follows:
Name

Areas of responsibility in the Company and important concurrent
positions outside the Company

SAWADA Taro

Senior Executive General Manager of Management
Strategy Unit, in charge of Risk Management, and Senior
General Manager of New Business Division
FUJINO Haruyoshi In charge of Special Assignments from President
NAKAYAMA
Senior General Manager of Group Digital Strategy
Takashi
Division, Management Strategy Unit

- 40 -

(4) Total amount of remuneration, etc. to Directors and Executive Officers
Totals by category of remuneration, etc.
(Millions of yen)

Number ofpayeesDirector

9

Total amount ofNonremuneration,
Performanceperformanceetc.
Basiclinked(Millions of yen) remuneration Bonuses stock-based linked stockbased
remuneration
remuneration
207

155

–

–

51

[of which, Outside Director]

[6]

[88]

[72]

–

–

[15]

Executive Officer

15

556

236

138

181

–

(Notes)

Total
24
763
392
138
181
51
1. Other than the above, the total amount of remuneration, etc. received by Outside Directors from subsidiaries of
the Company in the current fiscal year is ¥5 million.
2. In the above table, the remuneration, etc. for Directors of ¥207 million includes ¥3 million (including ¥3 million
for an Outside Director) paid to one Director (one of whom is an Outside Director) who held the post between
March 1 and May 24, 2018.
3. Sums of remuneration, etc., for performance of duties paid to Directors who concurrently hold other posts are
given in the Executive Officer row.
4. Beginning in the fiscal year ended February 28, 2018, to ensure steady execution of the Medium-term Business
Plan for realizing the Group Vision, the Company has adopted the stock-based remuneration system using a trust
for officers (a system of granting the Company’s shares to officers (in certain cases, the Company’s shares areconverted into cash within the trust and cash in the amount equivalent to their conversion value is paid) inaccordance with the officers’ rank and level of achievement of the Medium-term Business Plan, etc.) The stockbased remuneration in the above chart is the total recorded as expenses for the period under review according toJapanese accounting standards. It is divided into performance-linked stock-based remuneration corresponding todegree of achievement of single fiscal year results and degree of achievement of the Medium-Term Business
Plan targets, as well as non-performance-linked stock-based remuneration for Directors who do not executebusiness.
5. Figures in the “bonuses” and “performance-linked stock-based remuneration” columns represent amounts
recognized as provisions (expenses) (standard amounts) before adjustment for the results of performance
evaluation for the fiscal year ended February 2019. The actual amounts to be paid will be determined by a meetingof the Remuneration Committee scheduled for or after April 2019.

(5) Outline of method for determining policy regarding decisions on amounts of remuneration, etc.
of each corporate officer or calculation method thereof, and contents of such policy(i) Policy on determining remuneration for Directors and Executive Officers
Beginning in the fiscal year ended February 28, 2018, to ensure steady execution of theMedium-term Business Plan for realizing the Group Vision, the Company has formulated the
Officer Remuneration Policy including the introduction of a stock-based remuneration system forofficers.
<Basic policy for officer remuneration>
The officer remuneration system of the Company is operated under the following basic policy
with a view to realizing the Group Vision. The same basic philosophy is also established by
Daimaru Matsuzakaya Department Stores, which is one of the major subsidiaries of the Group.
・ Contribute to the sustainable growth of the Group and medium- to long-term enhancement ofcorporate value.
・ A highly performance-based remuneration system that provides incentives to Executive
Officers both for accomplishing objectives set under management strategies and businessplans, and for achieving targets with respect to corporate performance.
・ Remuneration levels that can secure and retain human resources who have the desirable
managerial talent qualities required by the Company.
・ Increase shared awareness of profits with shareholders and awareness of shareholder-focusedmanagement.
・ Enhanced transparency and objectivity in the remuneration determining process.

- 41 -

<How to determine remuneration levels>
To make quick responses to changes in the external environment and the market environment,
the Company adopts officer remuneration levels of companies in the same industry (department
store, retailer) and companies of a comparable size (selected based on market capitalization andconsolidated operating profit) in other industries as a benchmark and compares the remunerationlevels of its Executive Officers and Directors with the benchmark annually. The same treatment
shall apply to the Directors and Executive Officers of Daimaru Matsuzakaya Department Stores.
<Composition of remuneration>[Executive Officers]
Remuneration for Executive Officers shall comprise (i) basic remuneration (monetary
remuneration) in accordance with rank (position), (ii) bonuses (monetary remuneration) based on
individual evaluations conducted each business year, and (iii) performance shares linked to theconsolidated performance achievement rate, etc. provided in the Medium-term Business Plan as astock-based remuneration system.

Type ofremuneration
Basic
remuneration(fixed)Payment
methodPayment basis

Determined separately for each rank (position)

Composition of
remuneration
Officers
President other thanPresidentMonthly
payment in
cash

38.5%

45.4%

Annualpayment in
cash

23.0%

27.3%

38.5%

27.3%

Base amount by rank (position) × Evaluation factor *1*1 Determined based on the following quantitative andqualitative evaluation using a balanced scorecard.
Evaluation
weights

Details

Bonuses(variable)

Quantitative
Financial
evaluation
perspective
70%

Qualitativeevaluation
30%

Consolidated
revenue

21%

Consolidated
operating profit

28%

ROE

21%

Customer perspective
Process perspective
Organizational and human resource
perspective

30%[Short-term: 40%] Base amount by rank (position) × Performanceachievement factor *2*2 Calculated based on the following measures of achievement*3
Evaluation
weights

Details
Performancelinked stockbased
remuneration(variable)

Consolidated operating profit

20%

Basic earnings per share

20%[Medium-term: 60%] Base amount by rank (position) ×
Performance achievement factor *4*4 Calculated based on the following measures of achievement *3
If free cash flow and ROE targets are not met, the amount paid
will be cut by 50% (if only one of the targets is not met, by25%).
Evaluation
weights

Details
Consolidated operating profit

30%

Basic earnings per share30%- 42 -

Annualpayment instocksAt theexpiration of
the term ofeach Mediumterm Business
Plan in stocks

*3 The performance-linked factor for performance-linked stock-based remuneration is calculated by the following calculation
method:Performance target achievement
Performance-linked factor
150% or more

2.0

50% or more, but less than 150%

(Actual results ÷ Target – 0.5) × 2

Less than 50%0(Reference) Financial performance for the previous fiscal year (March 2017 to February 2018) and thepayment status of performance-linked remuneration for Executive Officers
Type of remuneration
Bonuses
Performancelinked stockbased
remuneration

Financial
perspective
Short-term
Medium-term

TargetResults

Consolidated revenue¥472,000 million¥469,915 million

Consolidated operating profit¥49,000 million¥49,546 million

ROE
Consolidated operating profit
Basic earnings per share
Consolidated operating profit
Basic earnings per share

7.5%

7.5%

¥44,500 million¥49,546 million¥101.32¥108.92¥56,000 million¥141.47–

Regarding bonuses and performance-linked stock-based remuneration paid to Executive Officers as partof their remuneration, etc., the amount of bonuses provisioned for in the previous fiscal year was ¥118
million and the total target amount of performance-linked stock-based remuneration (short-term) was ¥55
million, whereas the total actual bonuses paid based on performance results was ¥115 million and the total
amount of performance-linked stock-based remuneration (short-term) paid was ¥65 million.
[Directors who do not execute business]
Remuneration for Directors who do not execute business shall consist only of fixed
remuneration, which shall be (i) basic remuneration (monetary remuneration) in accordance withrank (position) and (ii) non-performance-linked stock-based remuneration, which is not linked toperformance.
<Stock acquisition and holding>
Any shares of the Company acquired by Executive Officers as stock-based remuneration shallcontinue to be held by respective Executive Officers at least for three years from the grant date of
the shares (or at least for one year after they retire from the office of Executive Officer). The
purpose of this requirement is to deepen the common interest of shareholders and officers. In
particular, the purpose of granting shares of the Company to Executive Officers who areresponsible for business execution as performance- linked stock-based remuneration is to provide
additional incentive to them to work for the improvement of the financial performance andcorporate value of the Company from the medium- to long-term perspective.
(ii) Procedures for determining remuneration for Directors and Executive Officers
To ensure the appropriateness of the level and amount of remuneration, and the transparency ofdecision-making processes, independent Outside Directors account for the majority, and decisions
are made by deliberation and resolution of a Remuneration Committee headed by an independent
Outside Director. The Remuneration Committee determines the policy on deciding the contents ofindividual remuneration to management personnel of the Company and Daimaru Matsuzakaya
Department Stores, and these contents themselves.
It is planned that the Remuneration Committee shall meet at least four times a year. Futurerevisions of the officer remuneration system will be undertaken based on Medium-Term Business
Plan periods.
In addition, the Company appoints external remuneration consultants with a view to introducing
objective viewpoints from outside the Company and expertise on officer remuneration systems.
With their support, the Company reviews its remuneration levels and remuneration system in lightof external data, economic environment, industry trend and business conditions, among others.
- 43 -

(6) Matters relating to Outside Directors
Important concurrent positions

TACHIBANA
FUKUSHIMA Sakie
Independent(Note)

Relationships between the Company
and organizations where importantconcurrent positions are held
Relationship with specified affiliatedbusiness operator
Attendance at the meetings of theBoard of Directors
Attendance at the meetings ofCommittees to which she belongs

President and Representative Director of G&S Global
Advisors Inc.
Outside Director of Ajinomoto Co., Inc.
Outside Director of USHIO INC.
No special relationships exist
No items to report
100% (Attended all 14 meetings held during tenure thisfiscal year)
Nomination
100% (Attended all 13 meetings held
during tenure this fiscal year)
Remuneration 100% (Attended all 7 meetings held
during tenure this fiscal year)[Major activities during current fiscal year]
Tachibana Fukushima Sakie contributes to ensuring more effective meetings of the Board of Directors by drawing on pointsof view and perspectives that vary from those of the Internal Directors in providing advice and oversight through suchactivities as serving as a leader in executive sessions that consist only of Outside Directors. She does so based on her
abundant experience and knowledge in governance both in Japan and abroad gained as a director at a U.S. company’s global
headquarters and as an outside director at numerous Japanese companies, and using her corporate management experienceand in-depth knowledge regarding global human resources gained as the president of a foreign-owned human resource
consulting company’s local Japanese branch.
She also serves as the Chairperson of the Nomination Committee and a Remuneration Committee member. As the
Chairperson of the Nomination Committee, she endeavors to strengthen the management personnel function by promoting
the deliberation on the succession plan and the Board of Director structure that should be adopted by the Company and its
major subsidiaries, the determination of officer personnel change proposals, and the confirmation of the pooling status ofsenior management candidates for the future.
Important concurrent positions
Honorary Advisor of KONICA MINOLTA, INC.
Relationships between the Company
No special relationships exist
and organizations where importantconcurrent positions are held
Relationship with specified affiliated No items to reportOTA Yoshikatsu
business operator
Independent
Attendance at the meetings of the
100% (Attended all 14 meetings held during tenure this(Note)
Board of Directors
fiscal year)
Attendance at the meetings ofNomination
100% (Attended all 13 meetings held
Committees to which he belongs
during tenure this fiscal year)
Remuneration 100% (Attended all 7 meetings held
during tenure this fiscal year)[Major activities during current fiscal year]
Ota Yoshikatsu contributes to ensuring more effective meetings of the Board of Directors by drawing on points of view andperspectives that vary from those of the Internal Directors in providing advice and oversight with respect to promoting Groupmanagement, holding company functions for a company with three committees (nomination, audit and remunerationcommittees) and other such matters. He does so based on his extensive experience and abundant knowledge as a corporate
manager, underpinned by his background which includes promoting the corporate merger between Minolta Co., Ltd. andKonica Corporation, acting as a manager of a company that, like this Company, is a holding company, and serving as achairman of the board of directors of a company with three committees (nomination, audit and remuneration committees).
He also serves as the Chairperson of the Remuneration Committee and a Nomination Committee member. As the
Chairperson of the Remuneration Committee, he endeavors to strengthen the management personnel function by promoting
the improvement of the policy for the determination of officer remuneration amounts and the calculation method thereof,
the determination of specific remuneration amounts to be paid, and the review and revision of the evaluation system todetermine officers’ bonuses.

- 44 -

Important concurrent positions

Director of Daimaru Matsuzakaya Department Stores
Co. Ltd.
Daimaru Matsuzakaya Department Stores Co. Ltd. is awholly-owned subsidiary of the Company.

Relationships between the Company
and organizations where important
ISHII Yasuo
concurrent positions are held
Relationship with specified affiliated No items to report
Independent
business operator(Note)
Attendance at the meetings of the
100% (Attended all 14 meetings held during tenure thisBoard of Directors
fiscal year)
Attendance at the meetings of
Audit
100% (Attended all 17 meetings held
Committees to which he belongs
during tenure this fiscal year)[Major activities during current fiscal year]
Ishii Yasuo contributes to ensuring more effective meetings of the Board of Directors by drawing on points of view andperspectives that vary from those of the Internal Directors in providing advice and oversight with regard to management
activities in general including optimal strategic organization and views on securing and educating internal human resourceson which such an organization is based, coordination between strategy-setting departments and strategy-execution
departments, and points to be noted when embedding strategies in line departments. He does so based on his global
management experience in the areas other than the retail sector and advanced knowledge developed through broad
experience in the field of management planning. In particular, he has long-standing work experience abroad and thoroughknowledge of overseas business development.
He also serves as an Audit Committee member and endeavors to strengthen the audit function by engaging in exchange of
opinions and consultation from the perspectives of legal compliance and appropriateness on the business execution of
Directors and Executive Officers as well as matters submitted to the Board of Directors for deliberation or matters requiring
monitoring as determined by the Audit Committee.
Important concurrent positions
Director of Daimaru Matsuzakaya Department Stores
Co. Ltd.
Relationships between the Company
Daimaru Matsuzakaya Department Stores Co. Ltd. is aand organizations where important
wholly-owned subsidiary of the Company.
NISHIKAWA
concurrent positions are held
Koichiro
Relationship with specified affiliated No items to report
Independent
business operator(Note)
Attendance at the meetings of the
100% (Attended all 14 meetings held during tenure thisBoard of Directors
fiscal year)
Attendance at the meetings of
Audit
100% (Attended all 17 meetings held
Committees to which he belongs
during tenure this fiscal year)[Major activities during current fiscal year]
Nishikawa Koichiro contributes to ensuring more effective meetings of the Board of Directors by drawing on points of view
and perspectives that vary from those of the Internal Directors in providing advice and oversight with regard to theidentification of uncertainties associated with new businesses and M&A projects and the appropriateness of the testing ofrisk scenarios, clarification of key items in strategy proposals, and improvement of embeddedness of strategies within andoutside the Company through quality improvements in strategy documentation including financial indicators. He does sobased on his experience in the areas of business tie-ups, M&A, and management reform and adequate financial expertisedeveloped through ample experience in many important international negotiations.
He also serves as an Audit Committee member and endeavors to strengthen the audit function by engaging in exchange of
opinions and consultation from the perspectives of legal compliance and appropriateness on the business execution of
Directors and Executive Officers as well as matters submitted to the Board of Directors for deliberation or matters requiring
monitoring as determined by the Audit Committee.

- 45 -

Important concurrent positions

SATO Rieko
Independent(Note)

Relationships between the Company
and organizations where importantconcurrent positions are held
Relationship with specified affiliatedbusiness operator
Attendance at the meetings of theBoard of Directors
Attendance at the meetings ofCommittees to which she belongs

Attorney at law
Outside Corporate Auditor of NTT DATACORPORATION
Outside Director of Dai-ichi Life Holdings, Inc.
No special relationships exist
No items to report
100% (Attended all 11 meetings held during tenure thisfiscal year)
Nomination
100% (Attended all 10 meetings held
during tenure this fiscal year)
Audit
100% (Attended all 12 meetings held
during tenure this fiscal year)
Remuneration 100% (Attended all 5 meetings held
during tenure this fiscal year)[Major activities during current fiscal year]
Sato Rieko contributes to ensuring more effective meetings of the Board of Directors by drawing on points of view andperspectives that vary from those of the Internal Directors in providing advice and oversight with regard to, among others,
areas that are related to defensive corporate governance in general, such as effective implementation method of internal audit
and internal controls and new ways to ensure effective functioning of each department of the holding company, and risks
associated with new business creation that is linked to growth strategy. She does so based on her experience as a lawyer
specialized mainly in corporate legal affairs, handling a number of cases utilizing her advanced expertize.
She also serves concurrently as a Nomination Committee member, a Remuneration Committee Member, and an Audit
Committee member. As an Audit Committee member, she endeavors to strengthen the audit function by engaging in
exchange of opinions and consultation from the perspectives of legal compliance and appropriateness on the businessexecution of Directors and Executive Officers as well as matters submitted to the Board of Directors for deliberation or
matters requiring monitoring as determined by the Audit Committee.
(Note) The above-mentioned Outside Directors are independent officers, which are required to be put in place by the Tokyo
Stock Exchange, Inc. and Nagoya Stock Exchange, Inc. for the protection of general shareholders.

- 46 -

4. Matters relating to Accounting Auditor(1) Name of Accounting Auditor
Ernst & Young ShinNihon LLC(2) Amount of remuneration, etc. of Accounting Auditor(i) Amount of remuneration, etc. to be paid by the Company¥152 million(ii) Total cash and other financial profits to be paid by the Company and its¥270 million
subsidiaries(Notes) 1. Among the significant subsidiaries of the Company, PARCO Co., Ltd. and its five subsidiaries are auditedby auditing firms other than the Accounting Auditor of the Company. PARCO Co., Ltd. is audited by
KPMG AZSA LLC.
2. The audit agreement entered into by the Accounting Auditor and the Company does not clearly distinguishthe amount being derived from the audit under the Companies Act and that being derived from the audit
under the Financial Instruments and Exchange Act, and the two amounts cannot be practicallydistinguished from each other. Therefore, the amount in (i) above indicates the total of these two kinds ofamounts.

(3) Content of non-audit service
Consulting service for the International Financial Reporting Standards (IFRS), etc.
(4) Rationale for Audit Committee’s agreement on remuneration of the Accounting Auditor
The Audit Committee furnished its agreement with respect to the amount of remuneration, etc.
provided to the Accounting Auditor, which has been deemed appropriate upon conducting a review
regarding audit appropriateness with respect to the Accounting Auditor’s audit plan, its execution ofduties, the basis used for calculating remuneration estimates and other factors.
(5) Policy for determining dismissal or non-reappointment of Accounting Auditor
The Audit Committee is to take necessary measures that include dismissing the Accounting Auditor
upon gaining consent of all Audit Committee members, or otherwise making a decision on proposals to
dismiss or not reappoint the Accounting Auditor submitted to the Shareholders Meeting, in the eventthat the Audit Committee deems it appropriate to dismiss or otherwise not reappoint the Accounting
Auditor, either if there are grounds for dismissal as provided for in Article 340, Paragraph 1 of theCompanies Act of Japan, or if a situation arises whereby the audit of the Company has been significantly
impeded such as would be the case if the supervisory authorities were to issue an order requiring
suspension of auditing activities.
(6) Rationale for Audit Committee’s decision on reappointment of Accounting Auditor
The Audit Committee decided to reappoint Ernst & Young ShinNihon LLC, as a result ofcomprehensive considerations, following the evaluation of the appropriateness and validness of audit
activities by the Accounting Auditor based on the Accounting Auditor Evaluation Standards establishedby the Audit Committee.
5. Basic ideas on corporate governance(1) Role of corporate governanceWe believe that ensuring sustainable growth of the Group and increasing corporate value over the
medium to long term is paramount to realizing ideals of the Group Philosophy. Accordingly, the role ofcorporate governance in the JFR Group must be to help enable us to realize the ideals of the Group
Philosophy.
The Company assumes responsibility as a pure holding company for ensuring managerialtransparency, soundness and compliance centered on corporate governance of the Group, with the aimof realizing the ideals of the Group Philosophy.

- 47 -

(2) Relationship with shareholders
Our shareholders are the providers of the Company’s capital and act as the main source of theGroup’s corporate governance. Accordingly, the Company respects shareholder rights to the maximum
extent (including those of minority shareholders and foreign shareholders), and substantively ensures
their rights.
The Company treats its shareholders equitably and impartially, in accordance with types and numbersof shares held by shareholders. Moreover, neither the Company nor the Group provides property
benefits to any person, such that relate to the exercise of the rights of specific shareholders.
(3) Information disclosure
We believe that promoting constructive dialogue with our shareholders and investors helps the Group
achieve sustainable growth while increasing corporate value over the medium to long term. The
Company is committed to timely and appropriate disclosure of information premised on constructive
dialogue, and through such initiatives maintains and develops trusting relations with its stakeholders.
The Company discloses important information of the Group in a timely and appropriate manner, in
accordance with Japan’s Financial Instruments and Exchange Act and other such laws and regulations,as well as in accordance with rules for timely disclosure stipulated by financial instruments exchanges
on which the Company’s shares are listed. Even in cases where such laws, regulations and the timely
disclosure rules do not apply, the Company recognizes information deemed useful to shareholders,investors and other stakeholders as important with respect to its corporate activities as called for bysociety. As such, the Company proactively discloses such information in an impartial and swift mannerusing appropriate means, and with the added aim of facilitating more extensive understanding regarding
the Group.
(4) Roles and responsibilities of the Board of Directors, etc.
Directors, who were appointed by the shareholders and were entrusted with management of theCompany, carries out the roles and responsibilities in the Board of Directors as listed below. They doso in accordance with their fiduciary responsibility and accountability to shareholders, and with the aimof realizing the ideals of the Group Vision. Accordingly, these roles and responsibilities include:(i)

Indicating the overall direction that Group management is to take, by engaging in constructive
discussions with respect to the Group Vision, Group Medium-term Business Plan, GroupManagement Policy and other management fundamental policies, and carrying out multifacetedand objective deliberations that include evaluation of risks with respect to the aforementioned;(ii) Appropriately making decisions in terms of overall policy and plans pertaining to Groupmanagement on the basis of the direction noted above and overseeing progress and results of theplans;(iii) Developing an environment conducive to encouraging offense-oriented management geared toachieving discontinuous growth;(iv) Taking steps to build and develop internal control systems of the Group overall, and otherwise
overseeing the operational status of such systems;(v) Overseeing conflicts of interest between related parties; and(vi) On the basis of summary reports furnished by the Nomination Committee, overseeing progress ofsenior management team succession planning, personnel assignment plans pertaining tomanagerial talent and management team training, as delegated to the Nomination Committee.
The Company is currently adopting a company with three committees (nomination, audit andremuneration committees) as organizational structure. The reasons are as follows.
(i)

The Company will strengthen the oversight function for business execution of the Board of
Directors by separating oversight from execution. In addition, the Company aims to promotesophistication of strategy by having the Board of Directors actively include the insights of external
persons in order to hold rigorous discourse on important strategic issues relating to the Groupmanagement.
- 48 -

(ii) The Company will enable decisions of business execution to be delegated to Executive Officers,
clarify the authority and responsibility, and carry out speedy management decision making.
(iii) The Company will improve the transparency and objectivity of management by transitioning to acompany with three statutory committees (nomination, audit and remuneration committees). The
majority of the members of each of these committees are outside officers.
(iv) The Company will build a governance structure that is easy to understand from global perspectives,
such as those of overseas investors.
6.

Operation of the Board of Directors
Composition of the Board

8 Directors who do not execute business (including 5 Outside Directors) and 5
Directors who concurrently serve as Executive Officer

Major roles

The Board of Directors shall discuss and resolve matters defined in the Companies
Act and/or the Articles of Incorporation, as well as matters relating to management
strategies, such as the Group Medium-Term Business Plan and Management Policy,
and matters relating to important business execution, such as asset acquisition, newbusiness development, and M&As.

Operational status

Held at least once every month, in principle. With one-third or more of Directors
being independent Outside Directors, the Board of Directors functions as a venue
for constructive discussions and deliberations, beyond being solely a decisionmaking body for important matters, and is a key to the enhancement of corporate
governance.

Comment from Chairperson of
the Board

As Fiscal 2018 was the second fiscal year following the transition to a company
with three committees (nomination, audit, and remuneration committees), we
prioritized the supervision of the progress status of the Medium-term Business Plan,as part of our efforts to strengthen the supervisory function of the Board of
Directors. More specifically, individual strategies set forth in the Medium-term
Business Plan are incorporated in the annual plan for Board of Directors meeting
agenda in advance and their progress status was examined accordingly. The Boardof Directors took time to discuss challenges and response measures if there was a
deviation from target values.
As a result, we were able to clarify more specific measures to help the Company toachieve the targets with regard to individual strategies.
In addition, based on the recommendations of the Board of Directors, the Company
has adopted a mechanism to increase the effectiveness of strategies for Fiscal 2019
Group Strategy by clarifying relevant KPIs (key performance indicators) and work
responsibilities individually.
We endeavor to continue into this year to have discussions with the executive sidethat are designed to improve the quality of strategies from the perspective of
stakeholders, sharing a sense of crisis and speed with the executive side and to fully
exert functional capabilities of management oversight by the Board of Directors,
and strive to contribute to the increase in corporate value through the realization of
the Group Vision and the achievement of the Group Medium-term Business Plan.

Director
KOBAYASHI Yasuyuki(Evaluation of effectiveness of the Board of Directors)
In October 2018, the Company performed the fourth evaluation of the effectiveness of the Board of
Directors. The evaluation was performed based on a method of summarizing and analyzing the resultsof individual interviews and direct observation of the Board of Directors conducted by a third-party
organization. Evaluation items included the contribution of the Board of Directors to the entire Group,composition of the Board of Directors, and content of deliberations at the Board of Directors, as wellas the effectiveness of functions of the Nomination, Remuneration, Audit, and Governance Committees.
The evaluation results were reported to, and challenges were deliberated by the Board of Directors.
While it was recognized that the Company had continued its efforts both in form and substance, we
received a lower evaluation score for some of the evaluation items. We recognize this as a result ofhigher expectations for us to resolve essential issues to enhance corporate value, which arose from thefact that the governance structure framework of the Company has been enhanced to a higher level,
rather than as an indication of an actual decline of effectiveness of the Board of Directors.
It was also recommended that the Company, as a holding company, should further enhance thediscussion on group strategy, business portfolio, and capital policy and resource allocation. In response,- 49 -

we improved key agenda selection and planning processes.
In addition, based on the recognition that to further enhance the effectiveness of the Board of
Directors, it is essential for the Company to promote these efforts in coordination with efforts tostrengthen execution, we enhanced the functions of the Governance Committee, which was to discuss
governance issues, and reorganized it as Management Council. As an advisory body to the President
and Executive Officer, the responsibilities of the Management Council are, among others, to seek active
advice from Outside Directors on management issues in general rather than only on governance issues
and to function as a forum in which Outside Directors can discuss their concerns.
We will strive to continue into this fiscal year to share the issues based on the evaluation of theeffectiveness of the Board of Directors, and improve the effectiveness of the Board of Directors.
7. Operations of each Committee(1) Nomination Committee
Composition of Committee

4 Directors who do not execute business (including 3 Outside Directors) and 1
Director who concurrently serves as Representative Executive Officer

Major roles

The Nomination Committee determines the contents of proposals on thenomination and dismissal of Directors submitted to shareholders’ meetings, andreports to the Board of Directors upon consultations from the Board of Directors
regarding the nomination and dismissal of management personnel of the Company
and major business subsidiaries, as well as the chairpersons and members ofindividual committees, and other matters.

Number of meetings held /Number of meetings attended

13/4 out of 5 members attended all 13 meetings. Director Sato, who was elected as
Director in May 2018, also attended all 10 meetings held during her tenure.

Comment from Chairperson of
the Committee

The Nomination Committee ensures the objectivity, transparency and rationality
not only for the determination of effective composition of the Board of Directors
and the election of Directors including Outside Directors but also for the electionof Executive Officers of the Company and Executive Officers of major businesssubsidiaries. This involves utilizing in-house personnel evaluation information as
well as assessment data by a third party organization, and obtaining opportunities
to get to know candidate’s personalities and ideas through conducting interviews,
etc., as necessary.
Moreover, the Nomination Committee has been carrying out a series of discussions
on top management succession plans, examining schemes to systematically develop
the next generation of officer candidates and regularly confirming the status ofachievements by the candidates.
The Nomination Committee will secure management personnel necessary forcontinuous growth and development of the Company, and strive for the election of
the right person in the right place.

Director (Outside)
TACHIBANA FUKUSHIMA
Sakie- 50 -

(2) Audit Committee
Composition of Committee

5 Directors who do not execute business (including 3 Outside Directors)

Major roles

In accordance with the overall policy and plan determined by the Board of
Directors, the Audit Committee audits the execution of business by Directors andExecutive Officers, important matters submitted to the Board of Directors, andother individual matters the Audit Committee considers necessary.

Number of meetings held /Number of meetings attended

17/4 out of 5 members attended all 17 meetings. Director Sato, who was elected as
Director in May 2018, also attended all 12 meetings held during her tenure.

Comment from Chairperson of
the Committee

The Audit Committee, in accordance with the Rules of Audit Committee, Audit
Standards, and Practice Standards for Audit concerning Internal Control System,
etc., formulated an audit plan for the current fiscal year, conducted the audit, andreported its contents to the Board of Directors. In particular, the Audit Committee
established a mechanism to ensure coordination with the Internal Audit Division,
Accounting Auditor and auditors of the Group companies to further strengthencommunication and audited the developmental and operational status of internal
control systems established by the Board of Directors and the progress status of key
strategies in the second year of the Group Medium-term Business Plan, as key audit
items of the Audit Committee.
From the standpoint of further improving audit effectiveness and accuracy, theAudit Committee also deliberated on such topics as revisions of various rules of the
Audit Committee, functional improvements of the Internal Audit Division, and theroles of auditors of the Group companies and reported the deliberation results to theBoard of Directors.
The Audit Committee will continue to work to establish a high quality corporate
governance structure that is worthy of social trust and to conduct audits in a fair andimpartial manner to contribute to the growth of the Group and the enhancement of
its corporate value.

Director
DOI Zenichi- 51 -

(3) Remuneration Committee
Composition of Committee

4 Directors who do not execute business (including 3 Outside Directors) and 1
Director who concurrently serves as Representative Executive Officer

Major roles

The Remuneration Committee determines the policy on deciding the contents ofindividual remuneration to management personnel of the Company and major
business subsidiaries, and these contents themselves.

Number of meetings held /Number of meetings attended

7/4 out of 5 members attended all 7 meetings. Director Sato, who was elected as
Director in May 2018, also attended all 5 meetings held during her tenure.

Comment from Chairperson of
the Committee

Pursuant to the Officer Remuneration Policy resolved on May 25, 2017, theRemuneration Committee has raised the allocation percentage to performancebased remuneration (bonuses and stock-based remuneration). At the same time, it
ensured transparency and objectivity by disclosing the composition of remuneration
including stock-based remuneration as well as performance indexes and formulasthat will determine the level of stock-based remuneration.
For bonuses, which reflect the status of individual officer’s achievements, theRemuneration Committee reviewed evaluation items, the status of performanceindexes established, evaluation rank determination process, and evaluation results
at the end of the interim period and at the end of the fiscal year, to ensure greater
fairness and objectivity in evaluation results.
In addition to ensuring proper operation of the remuneration system, theRemuneration Committee also examined the overall level of officer remuneration,
the ratio of performance-linked remuneration, and current trends on stock-based
remuneration for officers, through a third-party organization, to ensure thatappropriate remuneration systems and levels are always maintained.
The Remuneration Committee will continue to strive for the operation of a fair andhighly rational remuneration system.

Director (Outside)
OTA Yoshikatsu

8. System and policies of the Company(1) Systems to ensure properness of operations <Basic Policy to Build Internal Control System>(Revised on May 24, 2018)
This is a basic policy relating to building an internal control system for appropriate execution of
overall business within the corporate group comprising J. FRONT RETAILING Co., Ltd. and its
operating companies. By specifically promoting this policy, the Group aims to contribute to increasing
corporate value.
 J. Front Retailing aims to realize corporate governance that is a structure for transparent, fair, swift
and resolute decision-making with due attention to the perspectives of shareholders and also
customers, employees and communities in order to ensure the sustainable growth of the Groupand increase corporate value over the medium to long term. The Company has therefore adopted
the company with three committees (nomination, audit, and remuneration committees) in order tostrengthen the oversight function and decision-making function for business execution of theBoard of Directors by clearly separating management oversight and execution functions.
 In order to achieve our best possible corporate governance structure, it is important that the
President and Representative Executive Officer takes and hedges various risks (uncertainties)
within the corporate group to build an internal control system capable of appropriate and efficientbusiness execution.
 The internal control system is a structure that companies should establish to control internal risks(uncertainties) with a view to realizing sustainable, stable growth. Specifically, the systemcomprises the following Group management system, risk management system, legal compliancesystem, internal audit system, and audit committee system.
I.

Group Management System(1) Board of Directors
 The Board of Directors shall perform an oversight function by monitoring the Executive Officers’- 52 -

and Directors’ execution of business.
 The Board of Directors shall discuss and resolve matters defined in the Companies Act and/or the
Articles of Incorporation, as well as the Group Vision, the Group Medium-term Business Plan,
overall policy and plan for the Group management, M&As, the Group financing plans, and otherindividual important matters relating to the Group management. In order to speed up businessdecisions and execution, the task of determining matters involving business execution other than
the above shall be delegated to execution, with the exception of matters which have a material
impact on the Group management.
 For monitoring action, decision making and the like by the Board of Directors, a certain number
or more of highly independent Outside Directors shall be appointed, having no risk of a conflictof interest with the Company’s shareholders, and being able to provide judgments independently
from top management and make decisions appropriately.
 To ensure effectiveness of objective management oversight, in addition to the Outside Directors,
internally promoted Directors who do not execute business and who are well informed about
internal information shall also be appointed.
 To further strengthen oversight function while conducting smooth operation of the Board of
Directors, an Internal Director who does not execute business shall be selected as the chairpersonof the Board of Directors.
(2) Management execution framework
 The Company shall clearly separate management oversight and execution and strengthen the
Board of Directors’ oversight function while delegating authority for execution to enable swift
management decision-making. Meanwhile, execution shall be controlled by having the following
framework.
 Each corporate division shall have a mission statement that clearly states its mission, and the
responsibilities of execution are clarified, such as the targets, roles, risks, and interdivisional
cooperation.
 Execution shall formulate the major Group management policies and individual important matters,
and oversee business execution of operating companies. The Board of Directors shall discuss anddetermine (approve) the suitability of major policies and plans that execution has prepared as wellas individual important matters.
 The execution bodies shall be the Management Strategy Unit, Business Development Unit,
Affiliated Business Unit, Financial Strategy Unit, Human Resources Strategy Unit andAdministration Unit, and Executive Officers shall be appointed as the head of the units, throughwhich the Company shall achieve swift and efficient business execution.
 The Affiliated Business Unit shall provide management support for operating companies andconduct business management of operating companies to increase the Group’s corporate value.
 The Group Management Meeting, the Group Results and Strategy Examination Meeting, theGroup Liaison Meeting, the JFR Liaison Meeting, the JFR Division Managers’ Meeting shalldiscuss the overall policy and plan and other matters for the Group management, as well as
checking on the progress of management strategies and sharing information between management,
and so forth.
 The Company shall construct systems to raise overall efficiency of the Group such as theintroduction of the Group’s common accounting system in principle and promotion of centralized
management of the Group funds.
 The Company has adopted the International Financial Reporting Standards (IFRS) voluntarily in
the interest of implementing effective management based on appropriate asset evaluation,
applying business management that gives emphasis to the profit of the current period andincreasing convenience for overseas investors by improving the international comparability offinancial information.
(3) System to secure appropriateness of financial reporting With regard to internal controls over financial reporting, the Company shall be in compliance with- 53 -

Japan’s Financial Instruments and Exchange Act and various associated laws and regulations, andconstruct an internal company system to secure the legality and appropriateness of its financial
reporting. In addition, all operating companies shall also construct the same system.
II. Risk Management System(1) Risk Management Committee
 The Company shall establish the Risk Management Committee as an advisory body to the
President and Representative Executive Officer with regard to risk management. The committee
is chaired by the President and Representative Executive Officer and comprises Executive Officers
and others.
 An officer shall be put in charge of risk management in order to promote the operation of risk
management.
 Each operating company shall put departments and responsible persons in charge of promoting
compliance and risk management, and carry out daily supervision and direction of risk.
 The Risk Management Committee shall systematically manage and address strategic and otherrisks as a whole from a company-wide perspective, enabling management decisions from theperspective of risk management.
 For risks involved in business operations, the Risk Management Committee shall carry out
evaluations and management, and for important risks, the committee shall periodically report on
the risk management status to the Board of Directors.
 Risks to be addressed shall be managed by the ESG Promotion Division by reviewing a Risk List
and Risk Map, which centrally lists all the risks in the Group at any time.
 Of the risks involved in business operations that are identified, for particularly serious items, theRisk Management Committee shall deliberate over and determine a policy in response, and shall
respond to them by having the Company and operating companies execute the policy.
 The Risk Management Committee shall coordinate with the Revitalization Plan Review
Committee, which shall discuss business revitalization for unprofitable or low-profit businesses,
ascertain the management status of operating companies, and share risk recognition within
execution.
(2) Execution control
 Under the direction of President and Representative Executive Officer, the Company shall put aperson in charge of execution control within the ESG Promotion Division in the Management
Strategy Unit to strengthen internal control over execution. The person responsible shall develop
and manage the control environment at the Company and the operating companies.
 The person in charge of execution control shall develop and manage the internal controls regarding
the Companies Act and the internal control system regarding the Financial Instruments andExchange Act at the Company and the operating companies.
 The person in charge of execution control shall clarify the mission and risk responsibility in eachdivision and strengthen links between departments by developing and managing the mission
statements for each corporate division.
 The person in charge of execution control shall coordinate with the Audit Committee, the Internal
Audit Division, the corporate divisions and operating companies to share information and remedy
any deficiencies that occur in the internal controls.
(3) Crisis risk response
For crisis events such as large-scale earthquakes, fires and accidents, crisis management shall becontrolled by the “Emergency Response Headquarters” headed by the President andRepresentative Executive Officer.
III. Legal Compliance System(1) Compliance Committee
 The Company shall establish the Compliance Committee as an advisory body to the President and- 54 -

Representative Executive Officer regarding the operation of compliance management. The
President and Representative Executive Officer shall be the chairperson and the members of thecommittee shall be corporate lawyers, Executive Officers and others.
 An officer shall be put in charge of compliance in order to promote the operation of compliancemanagement.
 At operating companies, departments and responsible persons shall be put in charge of promotionof compliance and risk management, and shall carry out daily supervision and direction ofbusiness operations that are in accordance with laws and regulations and internal company rules.
 The Compliance Committee shall work to develop the foundations of compliance management
such as internal company rules, operation management manuals and formulation of management
systems. In addition, the committee shall periodically formulate and track progress on compliancepenetration activities such as e-learning, through departments in charge of promotion ofcompliance at each company.
 The Compliance Committee shall periodically request reports from persons in charge of promotionof compliance at operating companies regarding the status of compliance management in theirrespective areas of responsibility, and take proper rectification measures. In addition, thecommittee shall formulate guidelines and measures to prevent recurrence to be followed and takenby the Group as a whole, and implement the said guidelines and measures.
(2) Whistle-blowing system The Company shall establish the “JFR Group Compliance Hotline” as the whistle-blowing systemof the Group that also extends beyond companies (to a corporate lawyer), which may be used by
all persons working at the Company and operating companies.
 The hotline’s policy shall be to maintain strict confidentiality regarding notifications and reports
and shall not disclose the personal information of whistleblowers to a third party without theirconsent; to be careful to avoid identification of the whistleblower when investigating the facts;
and to ensure that whistleblowers are not subjected to disadvantageous treatment in terms of
personnel affairs or any other aspect.
 For hotline reports concerning management personnel, the Company shall build a structure
whereby the reports are submitted directly to the Audit Committee and subjected to directions
from the Audit Committee so as to secure an independent reporting route.
IV. Internal Audit Structure The Company shall establish an independent Internal Audit Division under the direction of the
President and Representative Executive Officer. In accordance with internal audit rules and under
the direction of the President and Representative Executive Officer, the Internal Audit Division
shall audit the operations of the Company and operating companies or properly report the resultsof audits of operations, examine the properness and effectiveness of the processes for theiroperations, and provide guidance, advice and proposals to all departments at the Company and tooperating companies.
 To further enhance corporate governance by strengthening auditing functions, the Company shallclarify links between the President and Representative Executive Officer, the Audit Committee
and the Internal Audit Division. Specifically, the Company shall adopt a double-reporting system
where both the President and Representative Executive Officer and the Audit Committee shallreceive reports. When the reports are made, the audit report and the improvement report shall bereported together to realize swift measures.
 Appointments and transfers of persons responsible for the internal audit departments shall be
subject to advance approval by the Audit Committee.
V. Structure of the Audit Committee
 The Audit Committee shall audit the legality and suitability of the execution of duties by the
Executive Officers and Directors.
 To aim to maintain and improve the accuracy of audits, two full-time Audit Committee members
shall be appointed from among the Internal Directors who do not execute business as Audit- 55 -

Committee members, one of whom shall be the chairperson of the Audit Committee.
 As an organization in charge of assistance for the Audit Committee’s duties, the Audit Committee
Secretariat has been established within the Board of Directors Secretariat.
 Regarding personnel affairs related to the Audit Committee Secretariat organization and staff
members, the Audit Committee’s advance approval is required to ensure independence.
 The Audit Committee shall have periodic meetings with the President and Representative
Executive Officer to share information. Moreover, the Company’s Executive Officers andDirectors may be asked to attend Audit Committee meetings to provide reports and opinions asnecessary.
 The Audit Committee shall regularly coordinate with the Internal Audit Division to share
information. Moreover, the Accounting Auditor, outside experts and others may be asked to attend
Audit Committee meetings to provide reports and opinions as necessary.
 The Audit Committee members shall report to the Audit Committee on the status of audits of thefollowing matters:
 Matters resolved by or reported to the Board of Directors
 Matters identified by the Audit Committee as issues
 Internal audit implementation status and results (audit report, improvement report, etc.)
 The Audit Committee members shall attend the Group Management Meeting and other meetings,
inspect important documents associated with the execution of duties, such as circular approvalmemos, and request explanations from officers and employees of operating companies asnecessary.
 Operating companies shall submit the necessary audit reports and perform other duties if requested
to do so by the Audit Committee.
 The Audit Committee shall have periodic meetings and the like with Audit & Supervisory Board
Members of the operating companies to enhance and strengthen the auditing of the entire Group.
 The Audit Committee may request expenses deemed necessary for performing the duties from theCompany, and the Company shall bear them.
VI. Other(1) System for storage and management of information
 For documents relating to the execution of duties by Executive Officers and Directors, inaccordance with the rules on document management, each responsible department shall carry out
document storage and management during the stipulated period and shall develop a system toenable inspections of such documents at any time.
 For minutes and related documents regarding meetings chaired by Executive Officers andDirectors, and other important documents relating to the execution of duties by Executive Officers
and Directors, each responsible department shall carry out document storage and management andshall develop a system to enable inspections of such documents at any time.
(2) Digital information security
 Senior Executive General Manager of the Business Development Unit shall control digital
information management of the Company, and shall report periodically and whenever necessaryon the status of digital information management and related matters to the Board of Directors, theAudit Committee, the Management Meeting and the President and Representative Executive
Officer.
(2) Operational status of systems to ensure properness of operations <Basic Policy to Build Internal
Control Systems>
The Company endeavors to maintain its internal control systems and properly operate such systems
on the basis of its “Basic Policy to Build Internal Control Systems.” Details regarding the overall statusof such operations during the current fiscal year are as follows.

- 56 -

I.

Group Management System(1) Board of Directors(i) The Board of Directors is comprised of highly independent Outside Directors who have no riskof a conflict of interest with the Company’s shareholders, Internal Directors who own deep
understandings about the business environment and issues surrounding the Group, andDirectors who do not execute business. It functions to oversee the execution of duties by
Executive Officers and Directors.
(ii) The Board of Directors is comprised to meet that one-third or more of Directors are independent
Outside Directors who are able to provide judgments independently from top management andmake decisions appropriately, and also that the majority of Directors are independent Outside
Directors and/or internally promoted Directors who do not execute business and who are wellinformed about internal information.
(iii) The Board of Directors discusses important matters concerning the Group management such as
the ESG initiatives and the strategies for the following fiscal year over multiple meetings. By
ensuring that matters and issues pointed out at a Board of Directors meeting will be reported bya responsible Executive Officer or discussed again at future meetings, we realize a consistent
PDCA cycle. In addition, briefings will be provided to Outside Directors prior to the Board of
Directors meetings for fuller discussions at such meetings. The effectiveness of the Board of
Directors is being improved through these initiatives.
(iv) The meetings of the Board of Directors were held 14 times in the current fiscal year. The Boardof Directors regularly confirms and shares information regarding the progress status of theMedium-term Business Plan in addition to matters defined in the Companies Act and/or the
Articles of Incorporation, based on the schedule planned in advance. In the event of a case thatis deviating from targets, the Board of Directors thoroughly examines its causes and the effectof countermeasures, striving for a steady progress of the Medium-term Business Plan.
(v) Evaluations of the effectiveness of the Board of Directors are performed by a third-party
organization each fiscal year to continuously and further improve the effectiveness of the Boardof Directors by resolving any identified issues.
(2) Management execution framework(i) The Company has the Management Strategy Unit, Business Development Unit, AffiliatedBusiness Unit, Financial Strategy Unit, Human Resources Strategy Unit, and Administration
Unit as the execution bodies, and Executive Officers are appointed as the head of the units andexecute business swiftly. The Affiliated Business Unit provides support for the Group’s
operating companies and conduct business management.
(ii) Each division of the Company has a mission statement that clearly states the responsibilities of
Executive Officers, such as the targets, roles, risks, and interdivisional cooperation, striving forthe clarification and strengthening of Executive Officers’ roles.
(iii) The roles and responsibilities of the Company as a holding company are narrowed down toformulating overall policy and plan for the Group management, such as the Group Vision,
Group Medium-term Business Plan, M&As, the Group financing plans, along with the
management and progress control of that said plans, and proper allocation of the Group’s
management resources.
With regard to matters related to business execution at operating companies, in order to promote
speedy management decisions and the clarification of management responsibilities, delegation
rules have been established, and operated accordingly, aimed at prompt decision-making andexecution by respective operating companies, except for important matters concerning theGroup management.
(iv) In the current fiscal year, the Group Management Meeting, the Group Results and Strategy
Examination Meeting, the Group Liaison Meeting, the JFR Liaison Meeting, and the JFR
Division Managers’ Meeting were regularly held for discussion on business strategies andinformation sharing among divisions.
(v) The Company introduced the Group’s common accounting system in principle and promotes
centralized management of the Group funds and efforts to raise overall efficiency of the Group.
- 57 -

(vi) The Company has developed a framework that it is making use of to carry out financial strategy
with the aim of heightening profitability of invested capital. Accordingly, for new investment
projects entailing funds beyond a certain amount, the Company has established the Investment
Plan Review Committee which scrutinizes profit and loss targets and performs verification froma financial perspective encompassing assessment of suitability in terms of quantitative aspects
of investment plans. For all existing businesses, the Company has established the Revitalization
Plan Review Committee which draws up plans for revitalizing poorly performing businesses
and withdrawing from such operations, upon performing verification of financial aspects fromthe perspective of investment recovery.
In the current fiscal year, the meetings of the Investment Plan Review Committee were held
four times and the meetings of the Revitalization Plan Review Committee were held four times.
(vii) With regard to internal controls over financial reporting, the Company is in compliance withJapan’s Financial Instruments and Exchange Act and various associated laws and regulations.
The Company and operating companies maintain and operate internal company systems tosecure the legality and appropriateness of financial reporting.
II. Risk Management System(1) Risk Management Committee(i) The Company has established the Risk Management Committee as an advisory body to the
President and Representative Executive Officer with regard to the operation of risk management.
The committee is chaired by the President and Representative Executive Officer and comprises
Executive Officers and others.
The Risk Management Committee identifies and evaluates risks (uncertainties) based on regular
discussions on them, prioritizes and reflects them in the strategies, and monitors thecountermeasures.
(ii) The meetings of the Risk Management Committee were held four times in the current fiscal
year. Identifying risks surrounding the Company, the Risk Management Committee particularly
discussed and determined “corporate risks,” which are considered to have significant impact oncompanies. In addition, information was shared and advice was provided on risks identified byeach of operating companies of the Group based on the Company’s risks, to promote risk
management.
(2) Execution control(i) Under the direction of President and Representative Executive Officer, the Company has put aperson in charge of execution control within the ESG Promotion Division in the Management
Strategy Unit. The person develops and manages the internal controls regarding the Companies
Act and the internal control system regarding the Financial Instruments and Exchange Act at
the Company and operating companies.
During the current fiscal year, there was no important weakness to be disclosed found in theinternal controls regarding the Companies Act and the Financial Instruments and Exchange Act.
(ii) Moreover, the Company has developed and managed the mission statements for each corporate
division, while clarifying the mission in each division and strengthening links between
departments.
(iii) For crisis events such as large-scale earthquakes, fires and accidents, the Company has
established a system in which crisis management is controlled by the “Emergency Response
Headquarters” headed by the President and Representative Executive Officer. The “Emergency
Response Headquarters” was set up to confirm the countermeasures by the operating companies
in the wake of the Hokkaido Eastern Iburi Earthquake and Typhoon No. 24 in the current fiscal
year.
III. Legal Compliance System(1) Compliance Committee(i) The Company has established the Compliance Committee as an advisory body to the President
and Representative Executive Officer regarding the compliance operation. The President andRepresentative Executive Officer shall be the chairperson and the members of the committee
shall be corporate lawyers, Executive Officers and others.
(ii) Departments and responsible persons in charge of promotion of compliance and risk
- 58 -

management are also put at operating companies, and carry out daily supervision and directionof business operations that are in accordance with laws and regulations and internal company
rules.
(iii) The Compliance Committee of the Company draws up a policy for addressing matters involving
serious compliance-related violations, and continuously oversees development of thefoundations of compliance system and the status of implementation through close collaboration
with departments in charge of promoting compliance in the Group’s operating companies.
Seven meetings were held during the current fiscal year, and deliberations were conducted on
topics such as the “compliance action plans (education, surveys, etc.)” and the “compliancesystems for operating companies.” In addition, the Committee discussed reasons andcountermeasures against compliance-related violations at operating companies and provided
instructions to implement specific measures to prevent recurrence.
(iv) In addition to posting the JFR Group Compliance and Risk Management Manual on the intranet,
education via reporting lines and e-learning seminars were offered to promote the awareness ofcompliance.
(v) Practical training was provided concerning “matters requiring compliance in sales activities” ateach of the operating companies, and education was provided on topics such as “harassment”
and “information security” through utilization of e-learning in the current fiscal year.
(2) Whistle-blowing system(i) The Company has established the “JFR Group Compliance Hotline” whistle-blowing systemthat also extends beyond companies (to a corporate lawyer), which may be used by all persons
working at the Company and operating companies.
(ii) For hotline reports concerning management personnel, the Company has built a structure
whereby the reports are submitted through the hotline desk to the Audit Committee andsubjected to directions from the Audit Committee.
(iii) 24 reports were received in the current fiscal year. The reports included ones related topersonnel and labor issues.
(3) Other
Daimaru Matsuzakaya Department Stores Co. Ltd., a subsidiary of the Company, takes thesituation, in which the company received an on-site inspection by the Japan Fair Trade
Commission (hereinafter the “JFTC”) in the preceding fiscal year, to heart, and has reinforced its
monitoring to ensure legal compliance. As a result, the company detected a violation of the Act on
Prohibition of Private Monopolization and Maintenance of Fair Trade in delivery charges oncustomers for gifts, etc.
Daimaru Matsuzakaya Department Stores has voluntarily reported the violation by making anapplication under the JFTC’s leniency program, and it has stopped the conduct that was inviolation with the Act and fully cooperated in the JFTC’s investigation.
Since such actions were recognized, Daimaru Matsuzakaya Department Stores has not received
any cease and desist order or surcharge payment order. However, the Group is taking this matter
seriously and sincerely and will work with Daimaru Matsuzakaya Department Stores to continue
to further strengthen the compliance system of the Group.
IV. Internal Audit Structure(i) The Company has established an independent Internal Audit Division under the President andRepresentative Executive Officer. The Internal Audit Division verifies and evaluates theeffectiveness of systems of corporate governance, risk management and compliancemanagement, in addition to performing audit on business operations of the Company and eachof the Group companies.
(ii) The Company adopts a double-reporting system to the President and Representative Executive
Officer and the Audit Committee, and audit results are reported on a regular basis. In so doing,
the reports are made with particular focus on the details of improvement measures against
matters pointed out in the audits to realize swift measures.
(iii) The reports were made to management in attendance of President and Representative Executive
Officer ten times during the current fiscal year, including “results of audit on JFR, Daimaru
Matsuzakaya Department Stores, and the operating companies,” “Gaisho Risk Research- 59 -

Committee,” and the “evaluation of internal controls over financial reporting.”
Structure of the Audit Committee(i) Two full-time Audit Committee members are appointed from among the Internal Directors who
do not execute business, and one of them shall be the chairperson of the Audit Committee.
(ii) In accordance with the overall policy and plan determined by the Board of Directors, the Audit
Committee audits the execution of business by Executive Officers and Directors, importantmatters submitted to the Board of Directors, and other individual matters the Audit Committee
considers necessary, as well as the status of establishing and implementing internal controls,
and then prepares audit reports.
(iii) The Audit Committee receives explanations on the audit policy and plan prior to the audit fromthe Accounting Auditor, and receives explanations and reports on the audit results and expresses
its opinions including requests on audit items, and in addition, exchanges of opinions with the
Accounting Auditor is carried out on a regular basis.
(iv) To grasp important decision-making processes and the status of the execution of duties, fulltime members of the Audit Committee not only attend important committees and other meetings,
such as the Group Management Meeting, but also peruse important documents relating to the
execution of business such as approval circulars.
(v) The meetings of the Audit Committee were held 17 times in the current fiscal year. Discussions
were mainly on the Rules of the Audit Committee and the selection of the Accounting Auditor.
VI. Other(i) Documents relating to the execution of duties by Executive Officers and Directors and theminutes of the important meetings and committees such as the meetings of the Board of
Directors and the Group Management Meeting are being accurately recorded and prepared, andinformation is being properly stored and managed.
(ii) The Company reports periodically and whenever necessary on the status of digital information
management and related matters to the Board of Directors, the Audit Committee, the GroupManagement Meeting and the President and Representative Executive Officer.
V.

(3) Basic policy regarding control of the Company
I.
Contents of basic policy
The Company believes it is necessary for the party controlling the Company’s financial andbusiness policy decisions to be a party who sufficiently understands the financial and business detailsof the Group and the sources of the Group’s corporate value, continuously and sustainably ensuresthat the corporate value of the Group and, by extension, the common interests of shareholders areserved, and enables further improvement in this area.
As the Company is a listed enterprise, the Company’s policy regarding its shareholders is that, ingeneral, they are determined through free market transactions on the financial instruments market.
Furthermore, even in the case of a purchase of shares of the Company above a certain scale byspecific shareholders or specific groups (hereinafter “Large-Scale Purchase”), if this Large-Scale
Purchase will contribute to the corporate value of the Group and, by extension, the common interestsof its shareholders, the Company believes that this should not be rejected outright and that, ultimately,
the decision on whether to accept or reject it should be left to the discretion of the Company’s
shareholders.
Nevertheless, a Large-Scale Purchase that involves a serious risk of causing damage to thecorporate value of the Group may be envisaged. This may include a Large-Scale Purchase that, inview of its purpose and other factors, would demonstrably harm the Group’s corporate value; one
with the potential to involve substantial coercion of shareholders to sell shares of the Company; or
one that would not provide sufficient time and information for the Company’s Board of Directors
and shareholders to consider factors such as the details of the large-scale purchaser’s proposal, or for
the Company’s Board of Directors to make an alternative proposal.
A party attempting this kind of Large-Scale Purchase, which would not contribute to the corporate
value of the Group and, by extension, the common interests of its shareholders (hereinafter, the“Large-Scale Purchaser”), would not be appropriate as a party controlling the Company’s financial- 60 -

and business policy decisions. Accordingly, the Company believes that it is the duty of theCompany’s Board of Directors, which is entrusted by the shareholders to manage the Company, torespond to this kind of Large-Scale Purchase by ensuring that processes such as provision of
information by the Large-Scale Purchaser and considerations and evaluations by the Company’s
Board of Directors are carried out, and securing sufficient time for the Company’s Board of Directors
and shareholders to consider the details of the Large-Scale Purchaser’s proposal in order to prevent
damage to the corporate value of the Group and, by extension, the common interests of its
shareholders.
II.

Frameworks contributing to realization of basic policy
Since the foundation of Daimaru and Matsuzakaya, the Group has been engaged in businesses ofkimono fabric stores and department stores for many years based on the corporate philosophies andtraditional spirits of these businesses, which are: “Service before profit (those who place service
before profit will prosper),” “Abjure all evil and practice all good” and “In doing good to others, we
do good to ourselves.”
The Company believes that the sources of the Group’s corporate value are the relationships oftrust it has established with customers and with society, which have been refined on the basis of thesephilosophies and spirits.
Accordingly, in order to exemplify the principles of “customer-first principle” and “contribution
to society,” which are in common with these philosophies and spirits, the Company has establishedthe following basic philosophies of the Group: “to aim at providing high quality products and services
that meet the changing times and satisfying customers beyond their expectations” and “to aim atdeveloping the Group by making a broad contribution to society as a fair and trusted business entity.”
Based on these basic philosophies, the Company implements a wide range of measures, under theGroup Vision of “Create and Bring to Life ‘New Happiness,’” in order to make a contribution tosecuring and enhancing the corporate value of the Group and, by extension, the common interests ofshareholders.

III. Framework to prevent parties deemed inappropriate in light of basic policy from controlling thefinancial and business policy decisions of the Company
At present, the Company has not specifically stipulated a concrete framework for a case in whicha Large-Scale Purchaser appears, commonly known as takeover defense measures.
Nevertheless, the Company believes that, in order to prevent damage to the Group’s corporate
value if a Large-Scale Purchaser appears, it is necessary to carefully examine the impact a LargeScale Purchase would have on the Group’s corporate value after ascertaining certain information
about the Large-Scale Purchaser. Such information would include the nature of the Large-Scale
Purchaser, the purpose of the Large-Scale Purchase, the Large-Scale Purchaser’s proposed financial
and business policies and their policy for handling shareholders, the Group’s customers, business
partners, employees, the communities that surround the Group and other stakeholders.
Accordingly, if this occurs, the Company will establish an independent committee composed of
Outside Directors and experts with viewpoints that are independent from the Company’s Internal
Directors. If the Company judges that the said Large-Scale Purchaser is inappropriate in light of theaforementioned basic policy after considering advice and opinions from the committee, the Company
will act to secure the Group’s corporate value and, by extension, the common interests ofshareholders by taking necessary and appropriate countermeasures.
IV. Judgment of the Company’s Board of Directors regarding concrete framework and reasons for such
judgment
Various measures formulated by the Group are formulated based on the Group’s basic philosophy,
and are intended to further build up the relationships of trust with customers and with society, which
are the sources of the Group’s corporate value. Therefore, the Company believes that these measures
are in line with the contents of the basic policy and contribute to securing and enhancing the corporate
value of the Group and, by extension, the common interests of shareholders.
Furthermore, if the Company takes necessary and appropriate countermeasures against a LargeScale Purchaser judged to be inappropriate in light of the basic policy, the fairness, neutrality andrationality of this judgment will be ensured by making it in consideration of advice and opinions- 61 -

from an independent committee whose independence from the Internal Directors of the Company isassured. Accordingly, the Company believes that these measures would not damage the corporate
value of the Group or the common interests of shareholders, and that they are not intended to maintainthe positions of the officers of the Company.
(4) Basic Capital Policy
The Company believes that any increase in free cash flow and improvement in ROE should help toensure its sustainable growth and increase corporate value over the medium to long term. To such ends,
the Company promotes a capital policy that takes a balanced approach to undertaking strategic
investment, enhancing shareholder returns, and expanding net worth being equipped to address risks.
Moreover, in procuring funds through interest-bearing liabilities, we aim to achieve an optimal
structure of debt to equity in a manner cognizant of our funding efficiency and cost of capital, carriedout on the basis of having taken into consideration our capacity for generating free cash flows and ourbalance of interest-bearing liabilities.
A business strategy where higher sales are accompanied by profits and a financial strategy(encompassing the capital policy) that heightens profitability of invested capital are essential elementswith respect to improving free cash flows and ROE. In addition, we believe it is crucial that we achieve
maximization of the operating profit and sustainable improvement of the operating profit margin bystrengthening our core businesses and concentrating management resources on initiatives such as
business field expansion and active development of new businesses.
(5) Policy regarding decisions on dividends of surplus, etc.
The Company’s basic policy is to appropriately return profits. Hence, while maintaining andenhancing its sound financial standing, the Company strives to provide stable dividends and target a
consolidated dividend payout ratio of no less than 30%, taking profit levels, future capital investment,
free cash flow trends and other such factors into consideration. The Company also gives consideration
to the option of purchasing its own shares as appropriate, in accordance with aims that include
improving capital efficiency and implementing a flexible capital policy.
(6) Sustainability Policy(i) Aiming for sustainable society
The society we live in is facing various social issues inside and outside Japan, including abnormal
weather, water resource crises, resource depletion, widening disparity, underemployment, and humanrights issues. Among these issues are environmental risks that have been particularly evident in recent
years, and the environment surrounding us is drastically changing due to global warming and theworsening global environment. Corporations are required to make even more contributions to asustainable society in line with the international initiatives by, for example, addressing climate changein accordance with the Paris Agreement and the social issues listed in the “Sustainable Development
Goals (SDGs)” adopted by the United Nations. Initiatives toward environment, society, and governanceby corporations are thus indispensable.
Whereas Daimaru and Matsuzakaya, which are the cornerstones of the Group, have carried out
business activities in their long history spanning 300 to 400 years under the corporate credos “Service
before profit” and “Abjure all evil; pursue all good,” representing their commitment to pursuing theright path. Our Group Vision “Create and Bring to Life ‘New Happiness’” has been newly establishedbased on these concepts. Now we are engaged in business activities aiming at realization of happy futureof our customers, always bearing life of each and every one of them in mind.
We have many places where we communicate with customers, including retail stores. These places
allow various people to get together and meet each other, including customers, employees, business
partners, and residents in the local community. Local communities where people rooted in play a vitalrole in maintaining these communication places rich. Such communities should be sustained as
touchpoints brimming with energy at all times. To this end, we believe it important to pass down the
global environment that supports these whole activities smoothly to the future generations. This means- 62 -

that, in order for us to Create and Bring to “Life New Happiness” as we aspired, it is important tomaintain the communication places; and this can only be achieved with sustainable society.
(ii) Five materiality issues (key issues)
We have set the places of communication with customers as one of the key areas that the Company
designates for the sustainability management and are seriously making concerted efforts to realize asustainable society on our own initiative. In this endeavor, we have received various opinions fromstakeholders through questionnaires and have had repeated discussions at the Management Meetings
and the Board of Directors meetings. As a result, we identified five materiality issues that we need toaddress: “contribution to a low-carbon society,” “management of the entire supply chain,” “coexistencewith local communities,” “promotion of diversity” and “realization of work-life balance.” We believe
our efforts to address these materiality issues will contribute to achieving the global “Sustainable
Development Goals (SDGs).” Among these five materiality issues, the management team puts thegreatest focus on “contribution to a low-carbon society (actions against climate change),” which is anurgent issue. We are addressing this issue as the mission of a member of society and developed the “JFR
Eco Vision” with an eye to 2050 to help realize a sustainable society. Based on this Vision, we will aim
to achieve both the resolution of environmental issues and corporate growth.
In view of the above matters, we are committed to fulfilling our environmental and social
responsibilities to customers toward the achievement of a sustainable society, and at the same time, asa Multi Service Retailer, will pursue the creation of “new happiness” of life of each and every
stakeholder. At the same time, we will continue achieving sustainable growth by strengthening corporate
governance to tirelessly continue these initiatives.
(7) IR Policy
Under the basic philosophy that “we aim at developing the Group by contributing to society at large
as a fair and reliable corporation,” the Company promotes IR activities for the purpose of maintaining
and developing relations of trust with stakeholders including shareholders and investors. By accurately
and plainly disclosing important information about the Company in a fair, timely and appropriatemanner, we aim to improve management transparency and help stakeholders better understand theCompany.

- 63 -

Consolidated Financial Statements
Consolidated Statement of Financial Position (As of February 28, 2019)
Item
AssetsAmountCurrent assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other current assets

211,281
25,659132,943
7,324
38,3497,004

Non-current assets
Property, plant and equipment
Goodwill
Investment property
Intangible assets
Investments accounted for using
equity method
Other financial assets
Deferred tax assets
Other non-current assets

818,291
471,238523
197,162
4,489
17,616

Item
Liabilities
Current liabilities
Bonds and borrowings
Trade and other payables
Other financial liabilities
Income tax payables
Provisions
Other current liabilities(Millions of yen)Amount275,028
31,320138,938
32,252
8,174
1,851
62,490Non-current liabilities
Bonds and borrowings
Other financial liabilities
Retirement benefit liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities

286,059
143,058
38,48629,003
5,176
60,455
9,880

Total liabilities
EquityTotal equity attributable to owners ofparentCapitalCapital surplus
Treasury shares
Other components of equity
Retained earnings

561,087

96,2258,280
22,754Non-controlling interests
Total equity
Total liabilities and equity
Total assets
1,029,573(Note) Amounts have been rounded down to the nearest one million yen.

- 64 -

412,700
31,974
212,210(15,090)
14,745
168,861
55,784
468,485
1,029,573

Consolidated Statement of Profit or Loss (From March 1, 2018 to February 28, 2019)(Millions of yen)
Item

Amount459,840(247,443)

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Other operating profit
Other operating expense

212,396(166,882)
3,237(7,860)Operating profit
Finance income
Finance costs
Share of profit (loss) of investments accounted for using equity
method40,891
1,104(1,170)

Profit before tax
Income tax expense

42,126(12,950)

Profit29,176

Profit attributable to:
Owners of parent
Non-controlling interests

27,358
1,817(Note)

ProfitAmounts have been rounded down to the nearest one million yen.

- 65 -

1,301

29,176

Consolidated Statement of Changes in Equity (From March 1, 2018 to February 28, 2019)(Millions of yen)
Equity attributable to owners of parent
Other components of equity

Balance as of March 1, 2018
Effect of changes inaccounting policies
Balance reflecting changes
in accounting policies
ProfitExchangedifferenceson translationof foreign
operations

Financial assets
measured at fair
Remeasurements ofvalue throughdefined benefit
other
plans
comprehensive
incomeCapitalCapitalsurplusTreasuryshares31,974

211,864(15,244)

(43)

(15)

15,831–

15,772

–

–

–

–

–

–

–

–

31,974

211,864(15,244)

(43)

(15)

15,831–

15,772

–

–

–

–

–

–

–

–

Cash flow
hedges

Total

Other comprehensive
income

–

–

–

(70)

60

(530)

(1,186)(1,727)

Total comprehensive income

–

–

–

(70)

60

(530)

(1,186)(1,727)Purchase of treasury shares

–

–

(8)

–

–

–

–

–

Disposal of treasury shares

–

(0)

0

–

–

–

–

–

Dividends

–

–

–

–

–

–

–

–

Changes in ownershipinterests in subsidiaries

–

1

–

–

–

–

–

–

Share-based paymenttransactions

–

343

162

–

–

–

–

–

Transfer from othercomponents of equity toretained earnings

–

–

–

–

–

(466)

1,186

719

Other

–

–

–

29

(49)

–

–

(19)

–

345

154

29

(49)

(466)

1,186

699

31,974

212,210(15,090)

(83)

(5)

14,834–

14,745

Total transactions withownersBalance as of February 28,
2019

Equity attributable to ownersof parent

Balance as of March 1, 2018
Effect of changes inaccounting policies

Retainedearnings

Total

Noncontrollinginterests

151,151

395,519

55,368450,887

Total

487

487

–

487

Balance reflecting changes
in accounting policies

151,639

396,006

55,368451,374

Profit27,35827,358

1,817

29,176–(1,727)58(1,668)

Total comprehensive income

27,35825,631

1,875

27,507Purchase of treasury shares

–

(8)

–

(8)

Disposal of treasury shares

–

0

–

0

(9,417)(9,417)(942)(10,359)

Changes in ownershipinterests in subsidiaries

–

1

(516)

(515)

Share-based paymenttransactions

–

505

–

505

Transfer from othercomponents of equity toretained earnings

(719)

–

–

–

Other comprehensive
incomeDividends

–

(19)

–

(19)

Total transactions withownersOther(10,136)(8,937)(1,459)(10,396)

Balance as of February 28,
2019

168,861

412,700

55,784

468,485(Note)

Amounts have been rounded down to the nearest one million yen.

- 66 -

Non-consolidated Financial Statements
Non-consolidated Balance Sheet (As of February 28, 2019)
Item
AssetsCurrent assets
Cash and deposits
Short-term loans receivable fromsubsidiaries and associates
Other

Non-current assets
Property, plant and equipment
Buildings and structures
Other

Intangible assets
SoftwareInvestments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable fromsubsidiaries and associates
Other
Deferred assets
Bond issuance cost

(Note)

Amount29,3199,416
17,143
2,758

386,456
147
117
29

195
195

386,1131,157
313,151
71,375
429
151
151

Item
Liabilities
Current liabilities
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for bonuses
Provision for directors’ bonuses
Provision for officer remuneration
BIP trust
Other(Millions of yen)Amount14,067
12,390
516
138
168
138
100
615

Non-current liabilities
Bonds payable
Long-term loans payable
Provision for officer remuneration
BIP trustDeferred tax liabilities
Other

91,53050,00039,425

Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings
Retained earnings brought
forwardTreasury shares

105,597

Valuation and translation adjustments
Valuation difference on available-for-salesecurities

Total net assets
Total assets
415,927
Total liabilities and net assets
Amounts have been rounded down to the nearest one million yen.

- 67 -

434
12
1,658

310,317
31,974
249,075
9,474
239,601
43,593
43,593
43,593(14,326)12
12
310,329
415,927

Non-consolidated Statement of Income (From March 1, 2018 to February 28, 2019)(Millions of yen)
Item

AmountOperating revenue
Dividend income
Consulting fee income

13,2685,501

18,770General and administrative expenses

4,843

Operating profit
Non-operating profit
Interest income
Dividend income
Reversal of allowance for loan losses
Other

13,926
418
125
19
29

Non-operating expenses
Interest expenses
Other

424
108

Ordinary profit
Extraordinary income
Reversal of provision for loss on businessliquidation

593

532
13,987Extraordinary losses
Loss on sales of shares of subsidiaries andassociates
Profit before income taxes
Income taxes - current
Income taxes - deferred

20

20

85

85
13,922

18
6

Profit(Note) Amounts have been rounded down to the nearest one million yen.

- 68 -

25
13,897

Non-consolidated Statement of Changes in Equity (From March 1, 2018 to February 28, 2019)(Millions of yen)
Valuation andtranslation
adjustments

Shareholders’ equity
Retainedearnings

Capital surplus

Capital stock

Balance as of February 28,
201831,974

Cumulative effects ofcorrection of errors
Restated balance as ofMarch 1, 2018

31,974

Other retained
earnings
Legal capital Other capitalsurplussurplus7,500

241,575

1,974(1,974)

9,474

239,601

Retainedearnings
brought
forward39,199TreasurysharesTotal shareholders’equity(14,480)

305,769

Valuationdifference on
available-forsale securities

33–

39,199(14,480)

305,769

Total net
assets

305,802–33

305,802

Changes of items during
the fiscal year
Dividends of surplus(9,503)(9,503)(9,503)

Profit13,897

13,897

13,897

(8)

(8)

(8)

162

162

162

Purchase of treasury
shares
Disposal of treasury
shares0

Net changes of items
other than shareholders’equityTotal changes of items
during the fiscal year
Balance as of February 28,
2019(Note)

(21)

(21)

–

–

0

4,393

153

4,547

(21)

4,526

31,974

9,474

239,601

43,593(14,326)

310,31712

310,329

Amounts have been rounded down to the nearest one million yen.

- 69 -

THE AUDIT REPORT OF INDEPENDENT AUDITORS CONCERNING THE CONSOLIDATEDFINANCIAL STATEMENTS (COPY)

Report of Independent Auditors
April 5, 2019
The Board of Directors
J. Front Retailing Co., Ltd.

Ernst & Young ShinNihon LLC
Kazunori Takenouchi(seal)
Certified Public Accountant
Designated and Engagement Partner
Yoshihisa Shibayama(seal)
Certified Public Accountant
Designated and Engagement Partner
Hiroshi Matsuura(seal)
Certified Public Accountant
Designated and Engagement Partner

Pursuant to Paragraph 4, Article 444 of the Companies Act, we have audited the accompanying consolidated
financial statements, which comprise the consolidated statement of financial position, the consolidated
statement of profit or loss, the consolidated statement of changes in equity and the notes to the consolidated
financial statements of J. Front Retailing Co., Ltd. (the “Company”) applicable to the fiscal year from March
1, 2018 through February 28, 2019.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in conformity with the latter part of Paragraph 1, Article 120 of the Regulation on Corporate Accountingthat allows companies to prepare consolidated financial statements with the omission of a part of thedisclosure items required under the designated International Financial Reporting Standards (“IFRS”), andfor designing and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and results of operations of the J. Front Retailing Group, which consisted of theCompany and consolidated subsidiaries, applicable to the 12th fiscal year from March 1, 2018 throughFebruary 28, 2019 in conformity with the latter part of Paragraph 1, Article 120 of the Regulation on
Corporate Accounting that allows companies to prepare consolidated financial statements with the omissionof a part of the disclosure items required under IFRS.

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Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

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THE AUDIT REPORT OF INDEPENDENT AUDITORSCONCERNING THE NON-CONSOLIDATED FINANCIAL STATEMENTS (COPY)

Report of Independent Auditors
April 5, 2019
The Board of Directors
J. Front Retailing Co., Ltd.

Ernst & Young ShinNihon LLC
Kazunori Takenouchi(seal)
Certified Public Accountant
Designated and Engagement Partner
Yoshihisa Shibayama(seal)
Certified Public Accountant
Designated and Engagement Partner
Hiroshi Matsuura(seal)
Certified Public Accountant
Designated and Engagement Partner

Pursuant to Item 1, Paragraph 2, Article 436 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement of changes
in equity, the notes to the financial statements and the related supplementary schedules of J. Front RetailingCo., Ltd. (the “Company”) applicable to the 12th fiscal year from March 1, 2018 through February 28,
2019.
Management’s Responsibility for the Financial Statements and the Related Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and therelated supplementary schedules in accordance with accounting principles generally accepted in Japan, andfor designing and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the financial statements and the related supplementary schedules thatare free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements and the related supplementaryschedules based on our audit. We conducted our audit in accordance with auditing standards generally
accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and the related supplementary schedules are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the related supplementary schedules. The procedures selected depend on theauditors’ judgment, including the assessment of the risks of material misstatement of the financial
statements and the related supplementary schedules, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentationof the financial statements and the related supplementary schedules in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements and the related supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the financial statements and the related supplementary schedules referred to above present
fairly, in all material respects, the financial position and results of operations of the Company applicable tothe 12th fiscal year from March 1, 2018 through February 28, 2019 in conformity with accounting principles
generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

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THE AUDIT REPORT OF AUDIT COMMITTEE MEMBERS

Audit Report
The Audit Committee has audited the performance of duties by Directors and Executive Officers of J. Front
Retailing Co., Ltd. (the “Company”) during the 12th fiscal year from March 1, 2018 through February 28,
2019. We hereby report as follows regarding the method and results of the audit.
1. Method and content of audits
With respect to the resolution of the Board of Directors concerning the matters stipulated in Item 1 (b) and(e), Paragraph 1, Article 416 of the Companies Act, as well as the system (the internal control system)
developed based on such resolution of the Board of Directors, we received regular reports regarding thestatus of establishment and operation of such system from Directors, Executive Officers and employees,
and others, requested explanations as necessary, expressed opinion thereon, and executed audits throughthe following methods.
(i) In accordance with audit policies stipulated by the Audit Committee and the division of duties, etc., Audit
Committee members, in coordination with the departments in the Company related to internal control,
participated in key meetings, received reports from Directors, Executive Officers, and others regarding thematters related to the performance of their duties, and when necessary, requested explanations of thosereports. Audit Committee members also reviewed key decision documents, and conducted surveys of theoperations and assets of the head office and of other principal places of business. Further, regarding
subsidiaries, Audit Committee members worked to communicate with Directors, Executive Officers, Audit& Supervisory Board Members, and other parties at those subsidiaries, and when necessary conducthearings with them regarding their business.
(ii) Additional consideration was given to the basic policy set forth in Item 3 (a), Article 118 of theRegulation for Enforcement of the Companies Act and activities set forth in Item 3 (b), Article 118 of thesame Ordinance, as noted in the Business Report, based on the status of deliberations at the meeting of theBoard of Directors and other key meetings.
(iii) While monitoring and reviewing the audit of the Accounting Auditor to ensure they maintained an
independent position and conducted their audits fairly, Audit Committee members received reports fromthem regarding the performance of their duties, and when necessary, asked for further explanation regarding
those reports. Audit Committee members also received notice from the Accounting Auditor in accordancewith “the system for ensuring appropriate execution of their duties” (as enumerated in each Item of Article
131 of the Regulation on Corporate Accounting) in compliance with the “Quality Control Standards
Relating to Auditing” (adopted by the Business Accounting Deliberations Council in October 28, 2005),
and, where necessary, Audit Committee members requested further explanation regarding that notice.
Based on the above methods, Audit Committee members proceeded to review the Business Report with the
supplementary schedules, the non-consolidated financial statements (which consist of the non-consolidatedbalance sheet, the non-consolidated statement of income, the non-consolidated statement of changes inequity, and the notes to the non-consolidated financial statements) with the supplementary schedules, andthe consolidated financial statements (which consist of the consolidated statement of financial position, theconsolidated statement of profit or loss, the consolidated statement of changes in equity, and the notes tothe consolidated financial statements) for the current fiscal year.
2. Audit Results(1) Results of Audit of Business Report, etc.
(i) The Audit Committee confirms that the Business Report and the supplementary schedules conformed tothe applicable laws and regulations, and the Articles of Incorporation, and that they accurately present thesituation of the Company.
(ii) With respect to the performance of duties by Directors and Executive Officers, the Audit Committee
found no improper acts or important violation of applicable laws and regulations or the Articles ofIncorporation.

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(iii) The Audit Committee confirms that decisions by the Board of Directors regarding the Company’s
internal control systems are fair and adequate, and found no areas that require mention regarding thedescription of the internal control systems in the Business Report and the performance of duties by Directors
and Executive Officers. As stated in the Business Report, Daimaru Matsuzakaya Department Stores Co.
Ltd., a subsidiary of the Company, takes the situation, in which the company received an on-site inspection
by the Japan Fair Trade Commission (the “JFTC”) in the preceding fiscal year, to heart, and has reinforced
its monitoring to ensure legal compliance. As a result, the company detected a violation of the Act on
Prohibition of Private Monopolization and Maintenance of Fair Trade in delivery charges on customers forgifts, etc. Daimaru Matsuzakaya Department Stores has voluntarily reported the violation by making anapplication under the JFTC’s leniency program, and it has stopped the conduct that was in violation with
the Act and fully cooperated in the JFTC’s investigation. Since such actions were recognized, Daimaru
Matsuzakaya Department Stores has not received any cease and desist order or surcharge payment order.
However, the Audit Committee confirms that the Company and J. Front Retailing Group (the “Group”) aretaking this matter seriously and sincerely and will continue to further strengthen the compliance system of
the Group.
(iv) The Audit Committee confirms that the basic policy regarding those who control the determination of
the Company’s financial and operational policies, as noted in the Business Report, is fair and adequate. The
Audit Committee confirms that activities set forth in Item 3 (b), Article 118 of the Regulation for
Enforcement of the Companies Act, as noted in the Business Report, are in line with this basic policy, are
not harmful to the common interest of the Company’s shareholders, and are not intended to maintain thepositions of corporate officers of the Company.
(2) Results of Audit of Non-consolidated Financial Statements and Supplementary Schedules
The Audit Committee confirms that the methods used and results achieved by the Accounting Auditor, Ernst& Young ShinNihon LLC, are fair and adequate.
(3) Results of Audit of Consolidated Financial Statements
The Audit Committee confirms that the methods used and results achieved by the Accounting Auditor, Ernst& Young ShinNihon LLC, are fair and adequate.
April 9, 2019
Audit Committee
J. Front Retailing Co., Ltd.
DOI Zenichi(seal)
Chairperson of Audit Committee (full-time)
TSUTSUMI Hiroyuki(seal)
Audit Committee member (full-time)
ISHII Yasuo
Audit Committee member(seal)NISHIKAWA Koichiro
Audit Committee member(seal)SATO Rieko
Audit Committee member(seal)(Note) Audit Committee members, namely, ISHII Yasuo, NISHIKAWA Koichiro and SATO Rieko are
Outside Directors as prescribed in Item 15, Article 2 and Paragraph 3, Article 400 of the Companies
Act.

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