Don Quijote Holdings. Co., Ltd.

Q3 Results for FY 2017
Earnings Results
July 1, 2016 - March 31, 2017

May 8 ,2017

0Earnings summary
Consolidated(Millions of yen)

9 months to Mar. 2017
Actual9 months to Mar. 2016

Share

YoY

ActualShare

Net sales

619,987

100.0%

108.9%

569,547

100.0%

Gross profit

163,905

26.4%

107.7%

152,134

26.7%

SGA

126,76720.4%

108.2%

117,197

20.6%

Operating profit

37,1386.0%

106.3%

34,937

6.1%

Recurring profit

36,006

5.8%

102.1%

35,249

6.2%

Profit attributable toowners of parent

26,977

4.4%136.7%

19,732

3.5%

EPS(Yen)170.59-136.7%

124.83-• Consolidated and same store sales went up 8.9% and 2.3% YoY respectively. Our measures as a price leader perfectly met the needs ofcustomers and successfully expanded the customers’ wallet share. Tax-free sales for inbound customers have never experienced thenegative growth. The drop in per-customer spending hit the bottom last summer and the sharply rising customer traffic is contributing tothe strong inbound consumption.
• GPM went down 0.3pts. Offering daily necessity at competitive price was our focus to deal with the tough consumption environment.
Gross profit amount increased due to the greater sales by having more repeat customers and gaining larger market share.
• SGA is well-controlled for existing stores. The change in organization structure and measures taken for better efficiency are bearing fruit.
The personnel cost naturally increased for aggressive new store openings.
• OP went up by 6.3%, Profit attributable to owners of parent was up 36.7%, both beat YoY results and our guidance.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

1Same-store sales
125.0%

120.0%= Customer traffic= All stores= Customer spending= Existing stores

115.0%

110.0%

105.0%

100.0%

95.0%

90.0%

85.0%
2014
Sep.
Existing stores

2015
Mar.
2016 Jan.

2015
Sep.
May.

2016
Mar.
June.

July.

Aug.

2016
Sep.

2017
Mar.

Feb.

Mar.

Apr.

Sep.

Oct.

Nov.

Dec.

Feb.

Mar.

Sales

105.9%

105.8%

101.9%

105.4%

101.3%

102.4%

103.7%

99.6%

102.6%

102.2%

102.2%

102.6%

2017 Jan.
102.6%

102.1%

103.2%

Customer traffic

102.0%

102.6%

99.2%

101.1%

98.2%

99.9%

101.9%

98.9%

101.2%

100.7%

101.6%

102.5%

102.7%

101.6%

103.6%

Customer spending

103.9%

103.1%

102.8%

104.2%

103.1%

102.5%

101.8%

100.7%

101.3%

101.5%

100.6%

100.2%

99.9%

100.5%

99.6%

Existing store count

221

220

222

223

226

232

236

239

236

238

239

240

244

244

245

• DQ SSS went up 2.3%, traffic +1.7% and spending +0.5% for first nine months period. (July-March)• Strong SSS is largely due to our honest and swift response to budget-conscious customer behaviors.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

2

Sales breakdown by product category
9 months to Mar. 2017

Consolidated(Millions of yen)

ActualShare

9 months to Mar. 2016
YoY

ActualShare

Home electrical appliances

53,121

8.6%

113.8%

46,663

8.2%

Miscellaneous household goods

133,37721.5%

114.3%

116,729

20.5%

Foods

203,39432.8%

113.5%

179,251

31.5%

Watches & fashion merchandise

121,72819.6%

104.8%

116,207

20.4%

Sporting goods & leisure goods

41,1286.6%

102.6%

40,087

7.0%

Other products

46,769

7.5%

91.7%

50,9919.0%

Total retail store business

599,51796.7%

109.0%

549,928

96.6%

Rent income

15,4502.5%

105.2%

14,690

2.6%

Other business

5,020

0.8%

101.8%

4,929

0.8%

619,987

100.0%

108.9%

569,547

100.0%

Total

Home appliances : Smart phone accessories took the lead. Popular apps encouraged the mobile batteries. Wireless headsets were strong.
Household goods : Consumables became more popular among domestic and inbound customers. Seasonal items were brisk
associated with temperature fluctuation.
Foods: Chocolates were the best contributors. Our pricing strategy for daily items such as milk and bread won customers’
wallet share. MEGA attracted more family customers by perishables thanks to its price. Meat and delis were good.

Watches & Fashion : Luxury watches hit the bottom. Casual wear, underwear, shoes and bags were robust.
Sports & Leisure :Workout equipments, character toys and seasonal event items including party costume made a stable growth.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

3

The number of stores(Number of stores)

FY2015FY2016FY2017-1Q

FY2017-2Q

FY2017-3QDon Quijote

183194

195

196

197

MEGA

3639394040

New MEGA

4155616467

Others32393940

42Total stores in Japan

292327

334

340

346

Overseas1414141414Grand Total

306

341348354

360

Domestic opening

33

40

1066

Domestic closure

105

3002335

766Net increase• 22 new stores opened in 9 months : 8 Don Quijote, 10 New MEGA, 1 MEGA, 2 Doit and 1 Kyo-yasu-do.
• 3 DQ stores closed for relocation and renovation.
• 32 new stores will be opened in FY2017.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

4

Key components in SG&A
Consolidated(Millions of yen)

9 months to Mar. 2017
Actual9 months to Mar. 2016

Share

YoY

ActualShare

Net sales

619,987

100.0%

108.9%

569,547

100.0%

Salary allowance

48,2527.8%

109.5%

44,056

7.7%

Rent

17,2012.8%

111.6%

15,415

2.7%

Commission paid

14,0082.3%

104.9%

13,350

2.3%

Depreciation and amortization

10,3561.7%

108.3%

9,560

1.7%

Others36,9506.0%

106.1%

34,815

6.2%

SGA

126,76720.4%

108.2%

117,197

20.6%• SGA to sales ratio went down 0.2 pts to 20.4%. Increase in personnel cost for new stores were in line with our expectation.
• The change in organization structure and measures taken for better efficiency bear fruit for cost reduction.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

5

Sales and profit by business（Millions of yen）

Sales, profit and loss by segment from Jul. 1, 2016, to Mar. 31, 2017
Consolidated
Sales to external customers

Retail store

Rent incomeOthers

Total

Adjusted amount

Consolidated

599,517

15,4505,020

619,987-

619,987374

14,8907,081

22,345(22,345)-

Total

599,891

30,34012,101

642,332(22,345)619,987

Segment profit

19,673

12,5205,009

37,202(64)

37,138Internal sales or transfers
between segments（Millions of yen）

Sales, profit and loss by segment from Jul. 1, 2015, to Mar. 31, 2016
Consolidated
Sales to external customers

Retail store

Rent income

Others

Total

Adjusted amount

Consolidated

549,928

14,691

4,928

569,547-

569,547

11

13,322

5,947

19,280(19,280)-

Total

549,939

28,013

10,875588,827(19,280)

569,547

Segment profit

19,673

10,6384,870

35,181(244)

34,937

Internal sales or transfers
between segmentszProfit in the retail business was 19.7 billion yen which is our mainstay.

• Profit in the tenant leasing business was 12.5 billion yen.
• Profit in other business was 5.0 billion.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

6Balance Sheet（Millions of yen）
As of Mar. 31,
2017

Change fromJun. 30, 2016

Total current assets

219,333

23,356

Cash and deposits

74,059Merchandise（Millions of yen）
As of Mar. 31,2017

Change from
Jun. 30, 2016

Total current liabilities

155,054

7,059

31,165

Accounts payable

81,054

10,860118,061661

Short-term liabilities*

25,672(7,252)

410,372

45,781

Total noncurrent liabilities

201,20333,177306,397

14,345Long-term bonds

75,690(781)

Buildings

116,017

7,903

Long-term borrowings

84,812

39,730Land

169,810

4,625Long-term payables
under fluidity lease receivables

21,164(5,712)

16,034(971)

Total liabilities

356,257

40,236

5,521(1,331)

Net assets

273,448

28,901

87,941

32,407

Total shareholders' equity

252,171

20,38339,185

3,540

Non-controlling interests

19,8496,853

629,705

69,137

Liabilities and net assets

629,705

69,137

Consolidated

Total noncurrent assets
Total property, plant and equipment

Total intangible assets
Goodwill
Total investments and other assets

Lease and guarantee deposits

Total assets

Consolidated* Short-term liabilities = Short-term loans payable + Current portion of long-term loans payable + Current portion of bonds• Cash & deposits : We financed long-term bank borrowing for capital investment. Sales are strong and inventory is well-controlled.
• Merchandise: Inventory increased for 22 new stores. Inventory level for existing stores is normalized.

• Payables associated with the liquidation of receivables : 28.3 billion yen was financed by asset-backed loans.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

7

Cash flows and Capital expenditure（Millions of yen）

Consolidated Cash Flows
9 months to Mar.
2017
Cash and equivalents at beginning of period
Cash flows from operating activitiies
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash and equivalents
Cash and equivalents at end of period

44,49642,850(32,634)
21,042
31,37975,8759 months to Mar.
2017
Cash flows*
Net increase (decrease)

51,29225,156(35,826)
23,49812,24963,541

Change(6,796)
17,694
3,192(2,456)
19,13012,334（Millions of yen）

Consolidated Capital Expenditures

Capital expenditures

9 months to Mar.
2016

33,564
34,666
1,102

9 months to Mar.
2016

34,94927,219(7,730)Change(1,385)
7,447
8,832

* Cash flows = Net income + Depreciation and amortization + Extraordinary loss - Dividend• Cash flow from operating activities was 42.9 billion yen positive.
Positive factors : 46.1 billion yen of income before income taxes, 11.8 billion yen of depreciation and amortization etc.
Negative factors : 7.7 billion yen of gain from sale of fixed asset, 3.0 billion yen of gain from sale of equity affiliate and12.8 billion yen for tax payment.
• Cash flow from financing activities was 21.0 billion yen positive driven by 26.0 billion yen of net increase of long-term borrowings and3.5 billion yen of dividend payment were negative factors.
• Capex was 33.6 billion yen (DQ: 17.8 bil, Nagasakiya: 2.0 bil, JAM: 11.4 bil). Free cash flow was 1.1 billion yen positive.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

8

Earnings summary for Q3
Consolidated(Millions of yen)

3 months to Mar. 2017
Actual3 months to Mar. 2016

Share

YoY

ActualShare

Net sales

202,293

100.0%

109.3%

185,102100.0%

Gross profit

53,26626.3%

108.3%

49,192

26.6%

SGA

42,471

21.0%

106.6%

39,82621.5%

Operating profit

10,7955.3%

115.3%

9,366

5.1%

Recurring profit

9,078

4.5%

96.8%

9,376

5.1%

Profit attributableto owners of parent

10,5185.2%

191.3%

5,499

3.0%

EPS(Yen)

66.50-

191.2%

34.78-

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

9

Sales breakdown by product category for Q3
Consolidated(Millions of yen)

3 months to Mar. 2017
ActualShare

3 months to Mar. 2016
YoY

ActualShare

Home electrical appliances

17,631

8.7%

114.1%

15,4498.4%

Miscellaneous household goods

45,59522.5%

118.8%

38,395

20.7%

Foods

69,40934.3%

114.2%

60,80032.9%

Watches & fashion merchandise

35,93217.8%

100.0%

35,917

19.4%

Sporting goods & leisure goods

10,6845.3%

104.9%

10,188

5.5%

Other products

16,551

8.2%

93.1%

17,770

9.6%

Total retail store business

195,80296.8%

109.7%

178,519

96.4%

Rent income

5,100

2.5%

103.0%

4,953

2.5%

Other business

1,391

0.7%

85.3%

1,630

0.9%

202,293

100.0%

109.3%

185,102100.0%

Total

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

10Key components in SG&A for Q3
Consolidated(Millions of yen)

3 months to Mar. 2017
Actual3 months to Mar. 2016

Share

YoY

ActualShare

Net sales

202,293

100.0%

109.3%

185,102100.0%

Salary allowance

16,1288.0%

106.6%

15,136

8.2%

Rent

5,814

2.9%

112.3%

5,178

2.8%

Commission paid

4,583

2.3%

101.1%

4,535

2.5%

Depreciation and amortization

3,564

1.8%

104.5%

3,411

1.8%

Others12,381

6.1%

107.0%

11,566

6.2%

SGA

42,471

21.0%

106.6%

39,826

21.5%

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

11

Forecast for fiscal June 2017
Consolidated

FY2017 Revised forecast(Millions of yen)Plan

FY2016 Results

Share

YoY

ActualShareYoYNet sales

822,000

100.0%

108.2%

759,592

100.0%

111.1%

Gross profit

217,500

26.4%

107.7%

201,89326.6%

111.1%

SGA

172,000

20.9%

108.4%

158,70820.9%

111.3%

Operating profit

45,5005.5%

105.4%

43,1855.7%

110.4%

Recurring profit

44,8005.5%

102.3%

43,7975.8%

109.1%Net profit

31,5003.8%

126.3%

24,9383.3%

107.7%EPS(Yen)199.15-126.2%

157.76-107.3%

Capital expenditure

45,000-87.3%

51,570-97.8%

Depreciation

14,3001.7%

107.5%

13,3011.8%

114.0%• Full year forecast revised. Net sales up 2 billion, OP up 0.5 billion, RP down 0.7 billion and NP up 4 billion,against our initial forecast.
• Don Quijote SSS forecast : DQ SSS forecast : +1.7% for full year and flat for Q4.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

12