Results Presentation forFirst Six Months of
Fiscal Year Ending
February 29, 2016

October 7, 2015
J. Front Retailing Co., Ltd.
YAMAMOTO Ryoichi, President

Today’s Agenda

Ⅰ． 1H FY2015 Results
Ⅱ． 2H and Full FY2015 Forecast
Ⅲ． Initiatives toward Medium-Term Growth1

1H
1H FY2015
FY2015 Results
Results2

1H FY2015 Consolidated Results
Operating income increased for 4 consecutive years, marking a record highsince J. Front Retailing’s inception
Operating income and ordinary income were both above June forecast,driven by strong department store sales
Posted extraordinary loss of ¥9.3 bn caused by rebuilding of main building of
Daimaru Shinsaibashi store and decision to close of Chiba Parco(Millions of yen, %)Fiscal year
endingFeb 29, 2016

1H
results

Change% change

Change% change

Net sales

573,310

15,685

2.8

2,310

0.4

Gross profit

120,377

1,400

1.2

(523)

(0.4)

SGA

98,664(1,908)(1.9)(2,736)(2.7)

Operating income

21,713

3,308

18.0

2,213

11.4

Ordinary income

23,071

5,163

28.8

3,171

15.9

Net income

15,008

7,207

92.4

(1,492)

(9.0)

YoY

Vs. Jun forecast

3

1H FY2015 Segment Information
Department Store Business posted strong sales mainly in urban flagshipstores due to thorough cost management.
Parco Business increased sales and profits due to expansion of Fukuoka
Parco and renovation of existing stores.
Wholesale Business was on a recovery trend, and in Other Businesses,
J. Front Design & Construction performed well due to interior finish work.
(Millions of yen, %)Net sales

Fiscal year
endingFeb 29, 2016

Results

Department StoreOperating income

Vs. Jun forecast

YoYchangeVs. Jun forecast

YoYchangeChange373,542

1.4

942

0.3

12,144

39.5

2,144

21.4

Parco

139,103

4.5(1,797)

(1.3)

6,571

6.1

171

2.7

Wholesale31,827

12.4

3,327

11.7

720

42.5

190

36.0

Credit

5,064

(3.2)

(236)

(4.4)

1,322

(26.2)(278)(17.3)

Other

49,639

3.2

1,139

2.3

1,060

(13.5)

(90)

(7.8)

Results% change

Change % change

41H FY2015 Daimaru Matsuzakaya Department Stores
Store operations strengthened to meet market changes and acquisition of
new customers proved successful.
Mar to Aug sales increased 2.1% YoY, up 3.5% compared to two years earlier.
Duty-free sales, as indicator of inbound tourist spending, were up 4.5-fold YoY
and duty-free sales share was 5.5%.
Monthly sales (% change YoY)(%)

Duty-free sales share

(%)

30.0

8.0
23.0

20.0

7.0

6.9

YoY

6.0
4.2

0.0

3.0

6.9
4.1

2.7
(2.0)

5.0
4.2

4.0

3.7

3.0

Vs. year before last

(10.0)

5.5

5.0
6.6

2.8 2.8

2.8

n

4.9

5.4

Se
p
O
ct
N
ov
D
ec

10.0

6.0

6.0

7.2

11.6

2.0
1.5

(20.0)

1.0(23.0)

2014

2015

l
Au
g

Aug

Ju

Jul

Ap
r
M
ay
Ju
n

Jun

M
ar

May

b

Apr

Fe

Mar
2015

Ja

0.0

(30.0)

5

1H FY2015 Daimaru Matsuzakaya Department Stores
YoY sales were up in 5 flagship stores and sales in 7 flagship stores were
up compared to two years earlier.
Sales exceeded Jun forecast due to brisk buying by foreign tourists andJapanese wealthy people.
Thorough management of costs including ad expenses drove up operating
income.
(Millions of yen, %)Fiscal year
endingFeb 29, 2016

1H
results

Net sales

332,378

Gross profit
SGA

YoY
ChangeVs. Jun forecast% change

Change% change

6,752

2.1

2,578

0.8

78,141

998

1.3

241

0.3

66,866(2,704)(3.9)(2,034)(3.0)

Operating income

11,275

3,703

48.9

2,275

25.3

Ordinary income

10,801

3,521

48.4

2,701

33.3

Net income

1,802(2,066)(53.4)(2,898)(61.7)
6

2H
2H andand FullFull FY2015
FY2015 Forecast
Forecast

7

2H FY2015 Consolidated Forecast
Increase in real wages and continuing improvement in employment situation
will positively affect consumer spending.
Uncertain outlook for global economy and increasingly “polarized” domestic
consumption
Carefully forecast with close eye on environmental changes and without
being affected by optimistic mood.
(Millions of yen, %)Fiscal year
endingFeb 29, 2016

YoY

Vs. Jun forecast

2H forecast
Change% change

Change% change

Net sales

606,689

14,786

2.5

689

0.1

Gross profit

127,422

2,660

2.1

(478)

(0.4)

SGA

1,136

1.1

(265)

(0.3)

Operating income

102,135
25,286

1,524

6.4

(214)

(0.8)

Ordinary income

23,428856

3.8(1,172)(4.8)

Net income

10,491(1,675)(13.8)(1,009)(8.8)
8

2H FY2015 Segment Information
Department Store Business is expected to increase sales mainly in flagship
Daimaru Matsuzakaya stores but sales in suburban/rural stores are carefully
forecast.
Forecast for Parco Business factors in full contribution of expansion of“Fukuoka Parco” and renovation of existing stores.
Credit Business is expected to increase sales and profits due to active efforts
to acquire new cardholders.
(Millions of yen, %)Net sales

Operating income

Fiscal year
endingFeb 29, 2016

2H
forecast

Department Store

395,657

1.1

1,057

0.3

15,555

7.4

(45)

(0.3)

Parco

149,396

5.9

(4)

(0.0)

6,128

1.1

(72)

(1.1)

Wholesale

31,372

1.0

(128)

(0.4)

719

28.1

49

7.3

Credit

5,635

9.4

(65)

(1.1)

1,797

10.1

(53)

(2.9)

Other

51,3604.4 (1,440)

(2.7)

1,299

9.0

(251)

(16.1)

YoY% change

Vs. Jun forecast
Change % change

2H
YoY
forecast % change

Vs. Jun forecast
Change % change

92H FY2015 Daimaru Matsuzakaya Department Stores
Driven by flagship stores including Nagoya store whose massive renovation isunderway and Tokyo and Sapporo stores
Shinsaibashi store will rebuild its main building, which will decrease floor space
40% from Jan, but minimize negative impact through promotions.
Increase sales and profits by continuously strengthening sales to inbound tourists
and wealthy customers(Millions of yen, %)Fiscal year
endingFeb 29, 2016

YoY

Vs. Jun forecast

2H forecast
Change% change

Change% change

Net sales

351,021

4,880

1.4

2,921

0.8

Gross profit

82,358

1,149

1.4

558

0.7

SGA

68,633

(16)

(0.0)

333

0.5

Operating income

13,724

1,164

9.3

224

1.7

Ordinary income

12,398

1,277

11.5

(2)

(0.0)

Net income

6,297(1,645)(20.7)

(3)

(0.0)
10

Full FY2015 Consolidated Forecast
Revised up forecasts of operating income and ordinary income by ¥2 bn,
respectively, against Jun forecast.
Operating income is expected to increase for 6 consecutive years, highest
since J. Front Retailing’s inception.
Plan to increase annual dividend for 5 consecutive years by ¥1 from last yearto ¥26 per share.
(Millions of yen, %)Fiscal year
endingFeb 29, 2016

YoY

Full year
forecast

ChangeNet sales

1,180,000

Gross profit
SGA

Vs. Jun forecast% change

Change% change

30,471

2.7

3,000

0.3

247,800

4,061

1.7

(1,000)(0.4)

200,800

(772)

(0.4)

(3,000)(1.5)

Operating income

47,000

4,833

11.5

2,000

4.4

Ordinary income

46,500

6,020

14.9

2,000

4.5

Net income

25,500

5,533

27.7

(2,500)(8.9)
11Initiatives
Initiatives toward
toward Medium-Term
Medium-Term Growth
Growth12

Strengthening of Department Store Business
Overhaul sales floor layout to adapt to market changes
Thoroughly scrutinize sales floor productivity in each store
Reduce low productive sales areas and shops

Expand productive sales areas
Introduce new categories/brands
Strengthen our response to markets with growth potential
Selected priority stores to be strengthened
Tokyo
東京店

Kobe
神戸店

Sapporo札幌店

Nagoya名古屋店

13

Priority Store ー (1) Nagoya
Massive renovation of 30% of total sales floor areafrom spring 2015 to spring 2016
Expand men’s clothing / women’s accessories
and introduce new categories<Floors to be renovated and timing>
South

Main

9-10
8

Fall 20157

Spring 20156
5
4

Fall 2015
Yodobashi
CameraSpring 2016

North

Spring 2015
Spring 2015

Spring 20163
Spring 2016
Men’s floor

2
1
B1
B2

Spring 201514

Priority Store － (2) Daimaru Tokyo
Sustainable growth by making maximum use of improved access
High-rise office building will be completed
nearby (fall 2015)
Large home electronics store will open
nearby (fall 2015)
Tohoku Shinkansen will be extended to
Hokkaido (spring 2016)

Maximize
Maximizeability
abilitytotoattract
attractcustomers
customersandbuild
customerloyaltyand build customer loyalty

AcquireAcquirenew-rich
new-richcustomers
customers
ExpandExpandmen’s
men’sfurnishings
furnishings
andwomen’saccessories
and women’s accessories
15

Priority Store － (3) Sapporo (4) Kobe
SapporoExpand luxury by introducing “Prada” (Oct 9)Expand “women’s accessories floor”(2H FY2015)

Kobe
Rebuild “men’s floor” (FY2016)
Renew “watches/jewelry floor” (FY2016)16

Active M&A to Become Multifaceted Retailer
Sep 2007

Daimaru and Matsuzakaya integrated management
to establish J. Front Retailing.

Mar 2011

Converted StylingLife Holdings into equity method associate

Mar 2012

Converted Parco into equity method associate

Aug 2012

Converted Parco into consolidated subsidiaryDec 2013

Converted Forest into consolidated subsidiaryApr 2015

Concluded capital and business agreement with Senshukai

May 2015

Converted Senshukai into equity method associate

17

Purpose of Capital and Business Alliance with “Senshukai”
Our strengths• Store network in major cities across Japan• Daimaru/Matsuzakaya are recognized as
department store brand.
(long established, prestigious, trusted, etc)

Parco/Plaza are recognized by young people.
(fashionable, etc)

• Strong sales to wealthy people and middle tosenior ages (approx 6 mn customers)(*Daimaru Matsuzakaya Department Stores has
130,000 gaisho accounts.)• Department store expertise(store development, sales service, etc) etc

Senshukai’s strengths• Major mail order company
Entered EC business early*Internet sales are more than 70% of mail order sales• Strong sales to volume group/women in their
30s to 50s
15 mn registered customers/approx 4 mn
annual purchasers (Approx 20% of pregnant
women are its customers and maternity catalogs
reach 50% of pregnant women.)• High ability to develop original products• Mail order expertise (product planning/inventory
management/logistics management) etc

Highly complementary in business fields and customer bases
Both companies will be able to expand existing fields and develop new businesses.

Expand wings as multifaceted retailer

18

Three Projects with “Senshukai”
Focus on 3 projects to early create synergy between two companies

Merchandise project
Test sales of each other’s PB products using both companies’ sales channels
Put in place and strengthen organization’s operating system in 2H FY2015 toexpand sales of each other’s products
Study initiatives to jointly develop original products

Department store web projectUse Senshukai’s expertise and fulfillment developed through e-commerce
Prepare to renew website including expansion of product range
Renew system in fall 2016 to greatly expand online sales

JFR online rebuilding projectUse resources and expertise of Senshukai as catalog retailer
Streamline operations of logistics and call centers
Review catalogs to increase sales efficiency and reduce costs

19

Urban Dominant Strategy
Urban Dominant Strategy is
Business
Businessmodel
modeltotoactively
activelyincrease
increaseappeal
appealof
ofwholewholearea
area
andandgrow
growalong
alongwithwithlocal
localcommunity
community

Medium-term efforts to “increase asset value” and “monetize real estate”

20Ginza 6-chome Redevelopment
Preparations are in steady progress toward opening of world classquality commercial complex at Ginza 6-chome.
Develop large-scale complex with retail facilities, offices, cultural
facilities and tourist hub
Approx 250 tenants will open on retail floors.
Rooftop garden<Offices> 7-12F/13F (partial)<Retail> B2-6F/13F (partial)

OperateOperateall
allsalessalesfloors
floorsofof
approxapprox46,000
46,000㎡
㎡with
with
other
retailspace
holdersother retail space holders<Cultural facilities> B3F<Tourist hub> 1F

Cross section from B1F to rooftop (subject to change)

Scheduled to open in Nov 201621

Rebuilding of South Wing of Ueno Store
Draw new crowds to the area by rebuilding south wing of Ueno store
Redevelop the area around the store at the same time to propose newfunctions desired by the area
Build business model to contribute with local community to revitalizing
the area and grow along with local community

Matsuzakaya
Ueno(main)
Annex【Total floor area】 Approx 42,000 ㎡【Construction】
B1F: Daimaru Matsuzakaya Department Stores(South)*being rebuilt

Art
SportsOkachimachi
Panda Hiroba

1-6F: Parco
7-10F: Cinema complex
12-22F: Offices

mont ･ bell

【Total project cost】 Approx ¥21.3 bn(including cost of renovation-related work of main building of Matsuzakaya Ueno store)

22

Urban Dominant Strategy ー “Two New Projects”
Redevelopment plan to draw new crowds to area

SHINSAIBASHISHIBUYA
Build more solid foundation toward “dramatic growth” in FY2017 and beyond 23

Shinsaibashi Store Rebuilding Project
Radically strengthen competitiveness of Shinsaibashi store as core of
redevelopment of Shinsaibashi area
Draw new crowds to Shinsaibashi area and contribute to further
revitalizing the area
Study specific plan to maximize potential of Shinsaibashi area
<Map of Daimaru Shinsaibashi store and its surroundings>
Crysta Nagahori (Daimaru COM Development)

White Avenue(Daimaru COM Development)

Shinsaibashi
Zero Gate

Midosuji
Daimaru
Shinsaibashi(Main)(South)*The photo is for illustrative purposes only.

*

Shinsaibashisuji(North)Commercial complex(Daimaru COM Development)

denotes the stores operated by Shinsaibashi store.

24

Actions during Rebuilding of Shinsaibashi StoreOperate full-line department store efficiently in 40,000 ㎡ space including foodfloor in north wing.
Focus on sales and services to inbound foreign tourists to Japan in south wing.
Increase events outside Shinsaibashi store for its loyal customers andstrengthen cooperation in the area including Umeda store
North wing

13,14F Restaurants, event hall, etc
Art/kimono/jewelry/watches/eyewear/gifts
12F
Men’s clothing
11F
Men’s clothing
10F
9F
Children’s clothing
8F
Men’s casual/golf
7F
Women’s clothing
6F
Homeware
Women’s clothing
5F
4F
Women’s clothing
3F
LuxuryWomen’s shoes/fashion jewelry/select2F
1F
LuxuryB1
B2

Cosmetics/women’s accessories

Food

Keep number of existing brands
Attract inbound tourists
South wing

Popular tenants
Popular tenants
Popular tenants
Popular tenants
Tax refund counter/Japanese cosmetics

Japan quality stores/suitcases

Kansai Tourist Center
Popular boutiques/popular tenants

Esthetic salon
25

Shibuya Udagawa Area Redevelopment
Parco Co., Ltd., as scheduled executor of “Udagawa-cho 15 Development
Project” including existing Shibuya Parco, submitted proposal to Tokyo
Metropolitan Government for “urban planning as special urban renaissance
district” in accordance with Act on Special Measures Concerning Urban
Renaissance.
<Overview>
Developer

Parco Co., Ltd.

Location

Udagawa-cho 15 and part of Udagawa-cho 14
Shibuya-ku, Tokyo

Intended
purposeStores, offices, business incubation facilities,
commercialization support facilities, cultural facilities(eg theaters), car parking, etc

Land area

Approx 5,380 ㎡

Total floor area

Approx 65,000 ㎡

Number of floors

20 above ground / 3 below ground

HeightPlannedconstruction period

Approx 110 m
March 2017 – September 2019

<Contribution to urban revitalization>
1) Enlivenment of area surrounding Shibuya station
・Develop pedestrian network to enhance foot traffic and energize town
・Enliven area through area management, cultivation of fashion andtheater culture, and communication of trends2) Implementation of local-issue initiatives, improvement of disaster
response and reduction of environmental impact
・Improve community delivery sorting area
・Improve support capabilities for people unable to return home in theevent of disaster・Take measures to reduce environmental impact*From timely disclosure materials dated June 30, 2015

*The photo is for illustrative purposes only.

26

Omnichannel Retailing
Step up efforts to create our own omnichannel model
Click＆
Collect

Snap
Diary

Link shopping site
to SNS posts“Click & Collect” will make more than 100 brands available.
350 shops post on SNS “Snap Diary.”
Further expand and deepen contact points with customers

27

Sustainable Growth toward ROE of 8%
Need to reach ROE of 5.8% in FY2016 as milestone to achieve mid-term
ROE target of 8%
With top priority on profit growth, continue to improve ROE while investing
toward growth
Operating income(Millions of yen)

ROE

(%)

10.0

90,000<Operating income and ROE>
80,000

9.0

8.9

8.0

70,0007.0

6.7

60,000

6.0

5.8

50,000

8.0

5.8
5.0

5.3
40,0004.0
3.6

30,00020,000

2.3

2.6

3.0

2.8

2.0

10,000

1.0
0.0

0
(FY)

2008

2009

2010

2011

2012

2013

2014

2015
2016 2017 and beyond(forecast) (forecast)28

Shareholder Return and Improvement of Capital Efficiency
Continuous dividend increase coupled with steady profit growth targeting dividend
payout ratio of at least 30%
Active shareholder return with eye on growth investment, balance of cash flows, etc
Repurchased own shares of ¥5 bn in Apr to May 2015 and will consider such
repurchase as appropriate to improve capital efficiency<Net income and ROE>
(%)

10.0

35,0008.0

25,000

6.7
5.3

15,0002.3

10,000

2.6

2.8

1.8

7.0

3.6

5.0

1.6

1.4
1.4

20

1.2

3.0

1.4

1.3
1.2

1.2

15

1.0
0.8

10

16

14

14

16

18

22

25

26

0.0
2008 2009 2010 2011 2012 2013 2014 2015
(forecast)

FY

0.6
0.4

5

0.2

1.0

0

2.0
1.8

4.0
2.0

5,000

1.8

1.6

25

6.0

5.8

20,000

(%)

(Yen)
30

9.0

8.9

30,000

DOE

Annual dividend per share

ROE

Net income(Millions of yen)

<Dividend (*) and DOE>

0

0.0
2008
FY

2009

2010

2011

2012

2013

2014

2015
(forecast)

29*Annual dividend per share is shown on post-share consolidation basis.

Strengthen Corporate Governance<New initiatives to strengthen governance>

Strengthen
Strengthenoperation
operationof
ofBoardBoardofofDirectors
Directors
based
basedononthird-party
third-partyinstitution’s
institution’sassessment
assessment
Improve
Improvefunction
functionof
ofHuman
HumanResources
ResourcesandandRemuneration
RemunerationCommittee
Committee
andandensureensureits
itstransparencytransparency
Hold
HoldGovernance
GovernanceCommittee
Committeemeetings
meetingsusing
usingknowledge
knowledgeof
ofOutside
OutsideDirectors
Directors
andandOutside
OutsideAudit
Audit&&Supervisory
SupervisoryBoard
BoardMembers
Members<Continuing initiatives to strengthen governance>

Constructive
Constructivedialogue
dialogueand
andexchange
exchangeof
ofviews
viewswithwithinvestors
investorsand
andanalysts
analysts

Change management to achieve sustainable improvement of corporate value
30

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.

31