Results Presentation for FY Ended Feb 2014
Medium-term Business Plan for FY 2014-16April 11, 2014
J. Front Retailing Co., Ltd.
YAMAMOTO RyoichiPresident

Today’s Agenda

Ⅰ． FY 2013 Results
Ⅱ． FY 2014 Forecast
Ⅲ． FY 2014-16 Medium-term Business Plan

1

FYFY 20132013 ResultsResults2

FY 2013 Consolidated Results
Record high operating profit, ordinary profit and net profit since JFR’s inception
Ordinary profit and net profit above 2Q forecast. Operating profit over ¥40 bn.

¥1 higher year-end dividend than original forecast, up ¥2 YoY in totalcombined with interim dividend.
（Millions of yen）

YoY

FY endedFeb 2014

ActualSales
Operating profit
Ordinary profit
Net profit

1,146,319
41,81640,502
31,568Vs. 2Q forecast

Change% change

Change% change

53,563
10,9598,300
19,385

4.9
35.5
25.8
159.1

(13,681)
(684)
502
2,568

(1.2)
(1.6)
1.3
8.9
3

FY 2013 Segment Information
Department Store Business increased sales and profits due to strong sales ofDaimaru Matsuzakaya Department Stores and Hakata Daimaru
Parco Business (included in consolidation from 2H of FY ended Feb 2013)
contributed full year
Transferred all shares in Peacock Stores and excluded Supermarket Businessfrom consolidation（Millions of yen)

Sales

Operating profit

FY ended Feb 2014

ActualDepartment Store
ParcoWholesale
CreditOther768,928
268,292
63,2739,444
88,576

YoY (%)

2.5
94.6
5.1
9.9(1.7)

ActualYoY (%)

22,98012,017
1,127
3,186
2,961

24.4
103.7
(29.2)
8.0(7.3)
4

FY 2013 Daimaru Matsuzakaya Department Stores

Nagoya store
Effect of renovation of food floor spilled out to women’s accessories and luxury
brand floors.
Active joint promotion with adjacent Nagoya ParcoYoY sales growth of 9.7% without increasing floor space

5FY 2013 Daimaru Matsuzakaya Department StoresTokyo store
YoY sales growth of 35.6% in 1H due to expansion in Oct 2012
Remained positive in 2H offsetting backlash following robust
sales at the time of reopening in the previous year
Steadily gaining loyalty from new customers after store expansion

6

FY 2013 Daimaru Matsuzakaya Department Stores
Almost all stores including successfully renovated Nagoya and Tokyo storesincreased sales YoY
Strategically improved luxury and jewelry departments at flagship stores proved
successful
Achieved steady results by systematic company-wide measures to strengthenbase of regular customers（Millions of yen）

FY 2013 flagship stores
YoY sales change (%)

YoY
FY ended Feb 2014

Sales (all stores)
Sales (existing stores*)
Operating profit
Ordinary profit
Net profit

Actual678,286
668,731
19,65818,008
7,508

Change%change17,76527,857
4,196
3,818
1,834

2.7
4.3
27.1
26.9
32.3

Shinsaibashi
Umeda
Tokyo
Kyoto
Kobe
SapporoNagoya
Ueno

1.3
（2.0)
17.10.8
2.95.09.70.0*Existing stores exclude LaLaport Yokohama, Shinnagata and Ginza stores.

7FYFY 20142014 Forecast
Forecast

8

FY 2014 Consolidated Forecast
Increase sales and profits in spite of recognition of severe business environment
such as sales tax hike and closing of Ginza store
Aim at the 5th consecutive YoY increase in and record levels of operating
profit and ordinary profit
Net profit is expected to decrease because gain on sales in Peacock Stores(¥18.4 bn) was recorded in the previous year.
（Millions of yen）

YoY
FY endingFeb 2015

1H
forecast

Sales

562,000
17,40016,2006,600

Operating profit
Ordinary profit

Net profit

YoY

Change%changeFull year
forecast

Change%change3,307(525)(693)(13,864)

0.6 1,172,000
43,000(2.9)
41,000(4.1)
19,000(67.7)

25,681
1,184
498(12,568)

2.2
2.8
1.2(39.8)
9FY 2014 Segment Information
Include effect of closing of Ginza store (down 1.4%) and sales tax hike (down1.0%) in sales forecast of Daimaru Matsuzakaya (down 0.5%)
Parco Business is expected to increase sales and profits due to opening ofNagoya Zero Gate and Fukuoka Parco new building
For Other Businesses, Forest will be included in consolidation from 1H FY 2014
（Millions of yen）

Sales
FY endingFeb 2015

Department StoreParcoWholesaleCredit
Other

Operating profit

1H
forecast

YoY(%)

Full year
forecast

YoY
(%)

1H
forecast

YoY(%)

Full year
forecast

364,700
134,200
32,8005,000
51,800

(2.5)
2.2
5.2
14.4
18.0

766,600
277,300
67,20010,100104,100

(0.3)
3.4
6.2
6.9
17.5

8,000
6,000
600
1,690
1,170

(7.9)
2.6
7.4
16.4
(24.1)

24,000
4.4
12,050
0.3
1,200
6.4
3,370
5.8
2,380 (19.6)

YoY(%)

10Four Consecutive Years of Dividend GrowthInterim dividend for FY ending Feb 2015 is expected to be ¥6, up ¥1 YoY
Year-end dividend is planned to be ¥12 per share due to share consolidation
at a rate of one share for every two shares as of Sep 1
On a pre-share consolidation basis, annual dividend will be ¥12, up ¥1 YoY,
four consecutive years of growth（Yen）

Annual dividend per share※12.0

10.0

8.0

6.0

4.0

2.00.0FY ended Feb 2011 FY ended Feb 2012 FY ended Feb 2013 FY ended Feb 201411
FY ending Feb 2015
※Forecast for FY ending Feb 2015 is shown on a pre-share consolidation basis.
(forecast)

FY ended Feb 2009

FY ended Feb 2010

FYFY 2014-16
2014-16 Medium-term
Medium-term BusinessBusiness PlanPlan

12

Review of Previous Medium-term Plan (2011-13)
Sep 2007

Daimaru and Matsuzakaya integrated management toestablish a holding company J. Front Retailing

Mar 2010

Completed integration by merging Daimaru and Matsuzakaya
to establish Daimaru Matsuzakaya Department StoresObjectives of management plan for FY 2011-13

Establishment of new department store modelGroup-wide growth as multi-retailer
13

Review of Previous Medium-term Plan (2011-13)
Establishment
Establishmentof
ofnew
newdepartment
departmentstore
storemodel
model

Expansion of target customers
Expansion of range of products
and prices in particular

Increase of management efficiency

Achieved through expansion of Umeda and Tokyo stores andrenovation of Nagoya and other main stores
14

Review of Previous Medium-term Plan (2011-13)
GrowthGrowthas
asmulti-retailer
multi-retailer

Made ＳＬＨ an equity method affiliate (2011)

Made Parco a consolidated subsidiary (2012)

Made Forest a consolidated subsidiary (2013)

Sold Peacock Stores to change the business structure of the Group15

Recognition of Business Environment for FY 2014-16
Demographic shifts
Globalization
Sophisticated ICT
Intensified competition across categories of business and industry
Two-stage sales tax hike
Expansion of senior market
Expansion of consumer market targeting overseas visitors to Japan
Polarization of consumption

Successful adaptation to market changes will create great business opportunities

16

Recognition of Business Environment for FY 2014-16
Two big projects are under way
Ginza area redevelopment project (Nov 2016)

Ueno store south wing rebuilding project (fall 2017)

Negative factors due to the suspension of operations
during the current medium-term business plan period

17Positioning of FY 2014-16
FY 2014-16

FY 2017-

Phase of increasing profitability
and building foundations

Phase of dramatic growth

Radically
Radicallystrengthen
strengthencompetitivenesscompetitivenessandprofitability
asmulti-retailer
and profitability as multi-retailer

Develop
Developbusinessbusinessmodel
modelenabling
enablinggrowth
growthwith
withcommunities
communities(Strategy(Strategyforforurbanurbandominance)
dominance)

PromotePromoteomni-channel
omni-channelretailing
retailing

Actively pursue M&A and business alliance with external companies
18

Financial Targets
Targets for FY2016, last year of the plan

Consolidated operating profit
ROE¥50 bn5.8％

60,0007.0(%)

(¥mn)

bn
05
¥
OP. 8%
5Ｅ
ＲＯ

50,000※40,000

6.0
5.0
4.0

30,0003.0※

20,0002.0

10,0001.0

00.0
FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Consolidated operating profit

FY 2014

FY 2016

ＲＯＥ※ROE for FY 2011 and FY 2013 is shown in real terms excluding special factors.

19Financial Targets
Targets for FY 2016 and comparison with FY 2013
(Millions of yen)

FY 2016
targetFY 2013
actualChange%1,200,000

1,146,320

53,6804.7

Gross margin (%)

21.58

21.30

0.28

Gross profit

259,000

244,130

14,870

6.1

SG&A

209,000

202,314

6,686

3.3

Operating profit

50,00041,816

8,184

19.6

28,50013,300
1,400
4,000
2,800

22,98012,017
1,127
3,187
2,505

5,520
1,283
273813
295

24.0
10.7
24.2
25.5
11.8

Operating margin (%)

4.23.6

0.6

ROE (%)

5.8

4.8

ROA (%)

4.8

4.2

Sales

Department Store Business

Parco Business
Wholesale Business
Credit Business
Other Businesses/adjustments※ROE for FY 2013 is shown in real terms excluding special factors.

※

1.0
0.620

Financial Policy
Create operating cash flows of ¥130 bn or moreduring three years starting FY 2014

GrowthGrowth investment
investment ofof ¥110
¥110 bnbn(including(includingstrategic
strategicM&A
M&Ainvestment
investmentofof¥20¥20bn)
bn)

Dividend
Dividend payment
payment withwith
consolidated
consolidated payout
payout ratio
ratio ofof 30%
30% oror moremore21

Department Store Business Strategy
ー Making Stores More Competitive
Accelerate efforts to establish“new department store model”
Make stores more competitive by implementing
regionally adapted store strategy
Selected priority stores

Tokyo

Kobe

SapporoNagoya22

Department Store Business Strategy
ー Strengthening Gaisho (out-of-store) Sales
Expand gaisho customer base andstrengthen sales capabilities
Converted gaisho card to “credit card” (Sep 2013 -)【Purposes of conversion to credit card】
・To improve customer convenience・To drastically improve screening capabilities
・To systematically acquire new customers

Following FY 2013, enhance efforts to acquire
new accounts mainly targeting the urban nouveau riche
Provide extensive values including new products and services
to meet changing needs of affluent customers
23Department Store Business Strategy
ー Original Merchandising
Drastic rebuilding of original merchandising<Points to be addressed>
EnhanceEnhanceproductproductplanning,planning,inventory
inventorycontrol
controlandsalescapabilities
and sales capabilities
Renew
Renewproductproductmanagement
managementsystemsystemIncrease
Increaseproducts
productstotobe
beall
allpurchased
purchasedby
byus
usandanddevelop
developoriginal
originalproducts
products

Contribute to making stores
more appealing and distinctive
Increase gross margin and sales share24

Department Store Business Strategy
ー For Tourists from Overseas
Better serve tourists from overseas
Same-store sales of duty-free products for FY 2013 almost doubled YoY
More items will become duty-free from Oct 2014 (cosmetics, food, etc.)

Improve
Improvestore
storeenvironment
environment
EnhanceEnhanceproductproductline-up
line-upandandservices
services
Attract
Attractmoremorecustomers
customersusing
usingdigital
digitalandandoverseas
overseasmedia
media 25Parco Business Strategy
Actively opening new stores in urban areas
to strengthen business baseParcoFall 2014

Open Fukuoka Parco new building

Spring 2015 Expand Fukuoka Parco main building
2016

Aim to open Sendai new building

Zero Gate business
Fall 2014

Open Nagoya Zero Gate

Spring 2016 Open Sapporo Zero Gate
Seven or more developments during 2014-16

Renovate approx. 15% of floor space every year26

Affiliate Business Strategy
Focus on Credit Business and Staffing andCommissioned Sales Operations Business
Credit Business
Enhance efforts to acquire new accounts
Encourage shift from reward cards for cash
purchases to credit cards
Increase external member stores and improve
cardholder privileges
Staffing and Commissioned Sales Operations Business
Use expertise cultivated throughDepartment Store Business
Increase profits outside the Group, mainly inhighly specialized areas27

Increase of Management Efficiency
Further promote efficient use of costs and assets
Enhancement
Enhancementof
ofhumanhumanproductivity
productivitythroughthroughorganizationalorganizationalandandhuman
humanresource
resourcereformreformReduction
Reductionand
andefficientefficientuse
useofofassets
assets
Logistics
LogisticsreformreformGroup-wide improvement of management efficiency
28

Strategy for Urban Dominance
Shinsaibashi, Kobe and Kyoto stores have “developed storesin their surroundings” to revitalize the areas where they operate

29Strategy for Urban Dominance
Expand expertise to “develop shops around department stores”
and gather the Group’s total power
Virtual(e-commerce site)

Physical
The Group’s assets in areas having brick-and-mortar storesincluding department stores as their core

Alliance with external companies and organizations30

Ginza Redevelopment Project
Create world class quality commercial facilities
Develop large-scale complex with retail facilities, offices, cultural facilities and tourism hub
Rooftop garden<Offices> 7F-12F/13F (partial)<Retail> B2F-6F/13F (partial)

OperateOperateall
allfloors
floorsofof
approx.
approx.46,000
46,000㎡㎡with
withotherretailspaceholders
other retail space holders<Cultural facilities> B3F<Tourism hub> 1F

Cross-section from B1F to rooftop (subject to changes)

Scheduled to open Nov 201631

Rebuilding of “South Wing” of Matsuzakaya Ueno StoreCreate new buzz in Okachimachi area, Ueno
Develop business model enabling contribution to local revitalization
with local people and growth with communities【Total floor area】 Approx. 42,000 ㎡【Construction】
B1F: Food floor of Daimaru Matsuzakaya
Department Stores
1F- 6F: Parco
7F-10F: Cinema complex
12F-22F: Offices【Total project cost】 Approx. ¥20 bn
including cost of renovation-related work of
the main building of Matsuzakaya Ueno store

Scheduled to open in fall 201732

Redevelopment of Shinsaibashi Area
Radically increase competitivenessof Shinsaibashi area
Develop early the redevelopment project centered on department store andinvolving use of real estates and commercial facilities in its surroundings
Daimaru Shinsaibashi
White Avenue(Daimaru COM Development)
Zero Gate Dotonbori

Zero Gate Shinsaibashi

MidosujiUmeda
South wingNorth wing
Main building

Stores around(Daimaru Shinsaibashi)
Daimaru Shinsaibashi east annex

Stores around(Daimaru Shinsaibashi)

Nagahori underground mall
(Daimaru COM Development)

33

Omni-channel Retailing
Beef up efforts to create our own omni-channel model
ＥＣOFFLINE

BlogONLINEＳＮＳEmailSeamless interactions with customers

Click & CollectEndless Aisle
coming soon

Expand product line-up, suppliersand coverage
Add new initiatives

coming soon

Establish fulfillment

Use Forest’s expertise

34Corporate Culture and CSR
Organizations full of creativity and spirit of challenge
Provide employees with opportunities to challenge
Create system under which those who challenge high goals are recognized
Active recruitment from outside

Diversity management
Meet diversifying customer needs
Make workforce diversity a source of competitivenessIn particular, promote the involvement and appointment of women

Compliance management and CSR management

Contribute to society at large as a fair and reliable company,
as well as ensuring legal compliance35Website

http://www.j-front-retailing.com
http://www.facebook.com/J.FrontRetailing

Forward-looking statements in this document represent our assumptions based on information currently available to us and inherently involve potential
risks, uncertainties and other factors. Therefore, actual results may differ materially from the results anticipated herein due to changes in various factors.

36