Financial Results for FYE May 2021
July 15, 2021
The earnings forecasts in this document are based on the business environment as of the time of writing. Actualresults may differ from projections due to a variety of factors. Note also that inquiries should be submitted inJapanese.
Inquiries: Hironori Abe or Ryota Kimura (hdinfo@create-sd.co.jp), Corporate Planning Office.

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FYE May 2021 Results
1. Statement of Income 2. Balance Sheet 3. Statement of Cash Flows
4. Store Openings/Closings 5. Performance Highlights

6. Statement of Income (Non-Consolidated)FYE May 2022 Plan1. Targets for Consolidated Performance for FYE May 2022
2. Growth Strategy 3. Response to Lifestyle Changes
4. Promotion of Digital Transformation (DX)
5. Contribution to Community Health
6. Capital Investment and Dividends
7. Promotion of Sustainable Management
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FYE May 2021 Results31. Consolidated Statement of Income for FYE May 2021
■Sales and profits have risen steadily for three consecutive years
FYE May 2020
Results(Millions of yen)FYE May 2021 Results

Share(%)(Millions of yen)

Share(%)

YoYchange(%)

Vs plan(%)

Net sales

319,588100.0

338,476

100.0105.9

100.0

Gross profit

88,98627.8

93,365

27.6

104.9

100.4

SG&A expenses

71,192

22.3

74,735

22.1

105.0

99.5

Operating profit

17,793

5.6

18,629

5.5

104.7

104.3

Ordinary profit

18,2105.7

19,061

5.6

104.7

104.3

Profit attributable toowners of parent

12,254

3.8

12,376

3.7

101.0

100.6

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2. Consolidated Balance Sheet for FYE May 2021
Total assets(Millions of yen)

Total assets

153,423

163,824+10,401

Total liabilities

Current assets

Total liabilities

Current assets

67,186

66,64691,084+539

87,162Total netassets■ Current assets+3,921

・Increase in accounts receivable+1,160・Increase in products+3,524■ Non-current assets+6,479・Property, plant and equipment+4,011・Intangible assets+ 337

・Investments and other assets+2,129■ Total liabilities+539+3,921

Total net assets

Non-current

Breakdown of change

assets

86,776

66,261

Non-current
assets

96,638+149

・Advance receipts+944

・Liabilities related to retirement benefits
・Accounts payable
・Accrued income taxes+9,86172,740+6,479End of May 2020

・Provision for points■ Total net assets
・Retained earnings

+195
–444
–490

+9,861+9,721

End of May 2021
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2. Consolidated Statement of Cash Flows for FYE May 2021
(Millions of yen)FYE May2020

FYE May2021

ChangeCash flows fromoperating activities

22,765

11,572–11,193

Cash flows frominvesting activities–10,507–10,424+83

Cash flows fromfinancing activities–3,053–2,655+397

Change in cash and cash
equivalents

9,204–1,506–10,711

Cash and cash equivalents
at end of period

40,788

Breakdown of change■Cash flows from operating activities–11,193
・Change in inventories–2,527・Change in trade payables–4,777・Change in income taxes paid

–1,784■Cash flows from investing activities+83–1,50639,282

Capital investment/depreciation andamortizationFYE May
2020

FYE May2021

・Expenditures associated with store openings■Cash flows from financing activities+397
・Payment of dividends

ChangeCapitalinvestment

9,982

11,107+1,125

Depreciation andamortization

3,521

3,655

+133

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3. Store Openings/Closings
Store openings/closings and renovations
・Store openings: 39 drug stores / 34 prescription drug storesStoreopening

Kanagawa

Tokyo

Shizuoka

Chiba

Saitama

Ibaraki

Aichi

Total

Drug stores

2571310239

Prescriptiondrug stores

2450311034

Store closings: 5 drug stores (1 for S&B, 1 after completion of contract, and 3 to improve management efficiency) / 2 in-store
prescription drug stores (1 to improve management efficiency and 1 after completion of contract)

・Renovations of existing stores: 30 stores (28 drug stores / 2 prescription drug stores)

No. of stores at year end
Kanagawa

TokyoShizuoka

Chiba

Aichi

OtherTotal

Drug stores

374

10588471827659

In-store pharmacies

14336181586226

Rate of in-store
pharmacies

38.2%

34.3%

20.5%

31.9%

44.4%

22.2%

34.3%

266020236Supermarkets

5000005

Total no. of stores

405

111

8849

1829700

May 31, 2021
Dedicated prescription
No. of stores
drug stores

7

3. Store Openings/Closings
Store openings
Integration with Cremo format (Northport Mall)+■Large, more than 990 m2 non-foodstore in a shopping center・One of Create’s largest assortments ofmerchandise■→One of the largest assortments of merchandise in
the healthcare, beauty, and daily necessities
categories in the region

・Emphasis on ease of buying and choosing→Grouping by use and function

・Adding “joy of choosing” that is only
possible at a physical store
・In-store prescription drug stores8

4. Performance Highlights
Monthly trend in YoY sales■Existing stores: Up 0.2% YoY (1H: Up 3.8%; 2H: Down 3.4%)

Reactionary drop following
previous year’s consumption
tax hike

Reactionary drop following previous year’s
COVID-19-related demand

Reduction of operating hours and continuation of voluntary suspension of sales promotions thatlead to crowding of stores

Gradual expansion of EDLP products: July94. Performance Highlights
Net sales -Net sales by segment■Demand for products related to preventing infection (masks and disinfectants) and quarantining (foodand daily necessities) was up, but demand for makeup and general drugs for the common cold was
down associated with people voluntarily staying home and lifestyle changes.
■The percentage of sales accounted for by prescriptions was up to 9.7%, despite the impact of fewer
prescriptions associated with fewer exams.

FYE May 2020 Results
Net sales(Millions of yen)

Share (%)

FYE May 2021 Results
Net sales(Millions of yen)

Share (%)

YoY change(%)

79,85625.3

89,417

27.0

112.0

OTC

50,895

16.1

57,418

17.3

112.8

Prescriptions

28,9619.2

31,9999.7

110.5

40,82312.9

40,906

12.3

100.2

Food products

127,39340.3

130,882

39.4

102.7

Daily products

51,30516.2

53,859

16.2

105.0

Other*

16,8695.3

16,848

5.1

99.9

Total

316,249100.0

331,914

100.0

105.0

Medical and health products

Cosmetics* “Other” includes stationery, baby products, clothing, pet products, and gardening products.

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4. Performance Highlights
Gross profit margin/SG&A ratio■Gross profit margin: 27.77% Down 0.24 pts YoY<Factors pushing gross profit margin down><Factors pushing gross profit margin up>

・Downward pressure from expansion of EDLP

・Boost from increase in prescriptions as aproducts

percentage of sales

・Decreased sales of makeup and general drugs

・Increase in sales of masks, disinfectants, andfor the common coldother high margin products■SG&A ratio: 22.53% Down 0.18 pts YoY
Personnel expense ratio: 11.96% Up 0.03 pts YoY
Other expense ratio: 10.57% -0.21 pts YoY<Factors pushing SG&A down>
・Lower expenses for sales promotions and points<Factors pushing SG&A up>

・Active hiring of pharmacists ahead of accelerated
store openings

due to voluntary suspension of sales promotions

・Increase in repair expenses associated withincreased investment in 2H

・Decrease in utility expenses

・Increase in expenses associated with increase incashless transactions

114. Performance Highlights
Dispensing department -Net sales/No. of prescriptions/prescription unit price■Sales at all stores: Up 10.5% YoY

Sales at existing stores: Up 6.9% YoY

・Number of prescriptions down and unit prices up in 1H due to fewer exams and longer-term prescriptions, but
demand bounced back from previous year in 2H for overall increase of 3.0% in number of prescriptions and 3.8%in unit prices
・Gross margin up 1.9 pts despite impact of price revision in April
FYE May
2020
Results

FYE May2021
1H results

YoYchange

FYE May
2021
Cumulative

YoYchange

Sales at all stores (millions of yen)

28,961

15,218110.1

16,781110.9

31,999110.5

No. of prescriptions (thousands)

3,072

1,572

102.7

1,717

111.4

3,290

107.1

Prescription unit price (yen)

9,282

9,523

107.1

9,632

99.6

9,580

103.2

27,704

14,697

106.8

16,092107.0

30,789106.9No. of prescriptions (thousands)

3,056

1,509

98.9

1,639

107.1

3,148

103.0

Prescription unit price (yen)

9,282

9,590

107.9

9,682

100.1

9,638

103.8

1,396

701

102.3

698

98.3

1,400

100.3

135

152

+20154+19154+19

No. of prescriptions (thousands)

8946103.247104.9

93104.1

Gross profit margin at all stores (%)

41.0

43.1+2.4

42.7

+1.5

42.9+1.9

Sales at existing stores (millions of yen)Home-based dispensing sales(millions of yen)

No. of stores offering home-based
dispensing services(%)

FYE May2021
2H results

YoYchange(%)

(%)

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4. Performance Highlights
Dispensing department -Net sales/No. of prescriptions/prescription unit price■Sales at existing stores: Up 6.9% YoY (Number of prescriptions: Up 3.0%; Unit prices: Up 3.8%)
・Number of prescriptions down and unit prices up through 3Q due to fewer exams and longerterm prescriptions, but demand bounced back from previous year in 4Q

135. Non-consolidated Statement of Income for FYE May 2021
FYE May 2020
Results(Millions of yen)

Share(%)

FYE May 2021 Results(Millions of yen)

Share(%)

YoYchange(%)

Vs plan(%)

Net sales

316,249100.0

331,914

100.0

105.0

100.0

Gross profit

88,61028.0

92,189

27.8

104.0

100.4

SG&A expenses

71,832

22.7

74,795

22.5

104.1

99.5

Operating profit

16,777

5.3

17,393

5.2

103.7

104.7

Ordinary profit

17,1705.4

17,813

5.4

103.7

104.6

Profit attributable toowners of parent

11,693

3.7

11,765

3.5

100.6

103.3

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FYE May 2022 Plan

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1. Revised FYE May 2022 Plan (Consolidated)■Sales and profits expected to increaseFYE May 2021
(Consolidated Results)(Millions of yen)

Share (%)

FYE May 2022 (Consolidated Targets)(Millions of yen)

Share (%)

YoY change (%)

338,476

100.0

352,600

100.0

104.2

Gross profit

93,365

27.6

95,880

27.2

102.7

SG&A expenses

74,73522.1

76,500

21.7

102.4

Operating profit

18,6295.5

19,3805.5

104.0

Ordinary profit

19,061

5.6

19,8005.6

103.9

Profit attributable toowners of parent

12,376

3.7

12,770

3.6

103.2

Assumptions

Net sales

・Store openings: 41 stores (40 drug stores / 1 dedicated prescription drug store)

Impact from change in standard16
for revenue recognition

・Store closings: 4 stores (3 drug stores / 1 dedicated prescription drug store)

Net sales: -2,890 million yen

・Existing stores: Up 0.6% YoY

Gross profit margin: -0.6 pts

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2. Growth Strategy
Accelerate promotion of in-store
prescription drug stores
Promote continued opening ofin-store prescription drug storesand launch of dispensing
operations at existing stores toachieve target of 50% of storeswith in-store prescription drug
stores by end of May 2024
■New store openings

May 31, 2021
No. of stores(Results)

FYE May 2022
No. of storeopenings

Drug stores

659

In-store pharmacies

226

Rate of in-store pharmacies

34.3%

Dedicated prescription drug stores

36

Supermarkets

5All stores

700

Drug stores40

In-store pharmacies

49

Dedicated prescription drug stores

1All stores

41

・Plan to open record high numberDrug stores696

of prescription drug storesIn-store pharmacies

275

Rate of in-store pharmacies

39.5%

40 drug stores / 50 prescription
drug stores・Continue pursuit of dominance inexisting areas
・Promote collaboration with
regional medical institutions(Plan)

May 31, 2022
No. of stores

Dedicated prescription drug stores

36

Supermarkets

5All stores

737(Plan)

Note: Planned closings: 3 drug stores / 1 prescription drug store

173. Response to Lifestyle Changes
Strengthening of competitiveness of existing stores
Respond to changes in lifestyles and purchasing behavior arising fromCOVID-19 and focus on achieving short-time, one-stop shopping■Existing-store renovations: 32 stores■Review of sales promotion methods

・Renovations, including increased floor area andadditions

・Review of EDLP products

・In-store prescription drug stores→Promote bulk buying with sales ofproduct sets

・Collaboration with fresh produce category→Collaboration with Yuri Store supermarket
and change of format to combination drug store■Expansion and review of lineup
・Expansion of fresh and frozen foods andinstant food products→Ensure convenience with one-stop shopping

・Review of flyer and sales promotion content■Strengthening of customer service
capabilities
・Foster and rebuild corporate culture
・Customer service education utilizing tablets→Standardize and streamline educational
content

・New development and revamping of private
brand (PB) products

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4. Promotion of Digital Transformation (DX)
Improvement of customer and patient experience
Utilize digital tools to provide customers and patients with a new experience■Optimization of marketing■Response to diverse transaction methods

・Update point system

・Cashless transaction ratio: 46.4% (May 31, 2021)

・Update official smartphone app→Osaifu Hippo transaction ratio: 20.1% (up 8.1 pts→Shift to sales promotions that better
correspond to customer characteristicsYoY)・Add support for QR code transactions (July 2021–)→Rakuten Pay, auPAY, d Pay, Merpay■Enhancement and verification of new services
・Store inventory EC (mobile orders with in-storepickup)

46.4%
36.5%

・Delivery of EC products via lockers
・Support for online instructions for taking
prescription drugs

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5. Contribution to Community HealthEnhanced Professionalism
Promote development of pharmacies that will be chosen by patients in thecommunity in the aim of becoming a company that contributes significantly tocommunity health in a super aging society■Promotion of certification as
pharmacies partnered with regional
medical institutions■Promotion of shift to digitalprescriptions→Promote people-focused work and establish
system for patients→Improve patient satisfaction and promote
reduced burden on stores

・Promote people-focused work・Utilize prescription transmission app→Promote follow-up during prescription period andactive role of medical assistants

・Support for online instructions for taking
prescription drugs

・Expand home-based dispensing services

・Introduce dispensing equipment→Target for end of May 2022: 178 stores(additional 24 stores)

・Streamline operations utilizing tablets

・Participate in various occupational associations
・Establish system for responding to demand for
aseptic prescriptions20

6. Capital Investment and Dividends
Trend in capital investment

Trend in dividends■Planning aggressive capital investment■10 consecutive years of dividend increases→New stores, renovations, land purchases, system→Dividend increased 2 yen from initial plan in FYE May

2021

investments, etc.

Stock split carried out in December 2015

Includes 4 billion yen for new
construction of in-house distribution
centerNumbers prior to FYE May 2016 restatedto reflect stock split(Plan)(Forecast)21

7. Promotion of Sustainable Management
Management philosophy
We value being close to our customers and interacting with themThrough interaction with local customers, we aim to become a company that contributes to community
health as a lifeline protecting daily life and resolve social issues to realize a sustainable society.
Important issue

Example initiative

Business activities
conducted from standpointof environmental
conservation (E)・Acquisition and maintenance of ISO14001 certification at all stores (waste reduction, efficient utilizationof resources, etc.)
・Improvement of energy efficiency, including air conditioning and lighting
・Reduction of CO2 emissions by improving efficiency of distribution

Contribution to healthy lives
in the community (S)・Improvement of convenience in small trade area by enhancing expertise through in-store prescription
drug stores and carrying food products・Contribution to community health in home-based services and nursing care domain
・Promotion of healthy living among local residents by holding health consultations and eventsRealization of society inwhich people want tocontinue working indefinitely(S)・Creation of job satisfaction by conducting periodic individual interviews based on work-life balance
・Enhancement of programs such as childcare leave and reduced working hours and establishment ofworking environments that are pleasant for womenManagement considering
medium- to long-term best
strategies (S)・Thorough adherence to company creed, management philosophy, and code of conduct by all
employees
・Store openings based on strict criteria to minimize closings・Development of opinion gathering tools such as postcards addressed to the President’s Office andongoing improvement activities

Promotion of corporate
governance (G)・Establishment of Audit and Supervisory Committee with 2 members who are outside directors
・Risk identification, analysis, evaluation, and swift OODA loop at meetings of the board of directors
・Timely disclosure of information, including non-financial information

SDGｓ

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