Financial Results for Q2 of FYE May 2023
(June 1, 2022 to November 30, 2022)
January 12, 2023
The earnings forecasts in this document are based on the business environment as of the time of writing. Actual results
may differ from projections due to a variety of factors. Note also that inquiries should be submitted in Japanese.
Inquiries: Hironori Abe or Ryota Kimura (hdinfo@create-sd.co.jp), Corporate Planning Office.

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Consolidated Results for H1 of FYE May 2023
1. Consolidated Statement of Income
2. Consolidated Balance Sheet
3. Performance Highlights (Non-Consolidated)

Initiatives in H2 of FYE May 2023
1. New store openings
2. Sales measures at drug stores

3. Sales measures at prescription drug stores
4. Promotion of sustainability

Revised FYE May 2023 Plan
1. Key Points of Revised Plan for Consolidated Performance
2. Revised FYE May 2023 Plan (Consolidated)
Reference: Progress on Medium-term Management Plan
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Results for H1 of FYE May 2023

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1. Consolidated Statement of Income for H1 of FYE May 2023
FYE May 2022
H1 Results

FYE May 2023
H1 Results(Millions of yen)

Share (%)

(Millions of yen)

Share (%)

YoY
change (%)

Vs planNet sales

173,823

100.0

187,392

100.0

107.8

102.8

Gross profit

46,96827.0

50,989

27.2

108.6

103.8

SG&A expenses

38,12521.9

41,754

22.3

109.5

99.8

Operating profit

8,843

5.1

9,235

4.9

104.4

127.0

Ordinary profit

9,088

5.2

9,451

5.0

104.0

126.0

Profit attributableto owners of parent

6,167

3.5

6,412

3.4

104.0

125.0

(%)

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2. Consolidated Statement of Income for H1 of FYE May 2023
May 31, 2022
Total assets
176,910

Total
Current liabilities
assets70,58798,115

Nov. 30, 2023
Total assets
185,601(+8,690)
TotalCurrent liabilities
assets74,29996,031(+3,712)(-2,084)(Millions of yen)

■ Current assets -2,084
Cash and deposits-5,219Merchandise+1,636■ Non-current assets +10,774
Land+6,973

Buildings and structures+3,765■ Liabilities +3,712
Accounts payableNoncurrent
assets78,795

Total net
assets106,323

Noncurrent
assets89,570(+10,774)

Total net
assets111,301(+4,978)+1,864

Liabilities related to retirement benefits+187■ Total net assets +4,978Retained earnings+4,9585

3. Performance Highlights (Non-Consolidated)■ Store openings/closings and renovations
No. of store openings in H1 ofKanagawa
FYE May 2023

Storeopening

Store closings: 1 drug store (after completion of contract),
1 dedicated prescription drug store (after completion ofcontract)

Tokyo

Shizuoka

Chiba

Saitama

AnnualDrug stores

1023

10

16

Prescription drugstores

15523

126

・ Renovations: 14 stores (revised merchandising: 2 stores; supported prescription drug storeopenings: 12 stores)■ No. of Stores as of November 30, 2022Closings: 1 Yuri Store (to improve management efficiency)

No. of stores as ofNovember 30, 2022

Kanagawa

TokyoShizuoka

Chiba

Aichi

OtherAnnual

Drug stores

399

1139250

1829701

In-store pharmacies

187502323

108301

Rate of in-store
pharmacies
Dedicated prescription
drug stores

46.9%

44.2%

25.0%

46.0%

55.6%

27.6%

42.9%

257020135

Yuri Store

4000004

Total no. of stores

428

1209252

1830740
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3. Performance Highlights (Non-Consolidated)■ H1 YoY net sales comparison at existing stores:103.6% (OTC: 102.8%; prescriptions: 110.6%)
H1 plan: 100.9% (OTC: 99.9%; prescriptions: 109.7%)
FYE May 2022

+8.0+5.6+6.0+4.0+2.0+4.1+1.1+0.8+0.5+1.2+1.9-0.4+0.8+0.0-2.0

FYE May 2023

-0.1-4.0-3.1-6.0+5.1+2.3

FYE May 2023 Plan

+5.8+2.4-0.4-2.6-4.6-8.0

June

July

Aug.

Sept.

Oct.

Nov.

Factors thisyear☆ Negative factor in June: Average temperatures lower than previous year through end of month★ Positive factors in July-August: Increase in opportunities to go out, impact of heat wave (seasonal cosmetics,makeup, summer heat products)★ Positive factors in July-November: Growth of medical and health products category amid spread of COVID-19★ Positive factors in September-November: Successful EDLP measures, including for daily necessities, led toincrease in number of customers and sales per customer amid increase in economizing as cost of living rose7

3. Performance Highlights (Non-Consolidated)■ Net sales ―Net sales by segment―
・ Growth in medical and health products category arising from 7th wave of COVID-19 (common cold medicines,medical products, and antigen test kits)

・ Increase in prescriptions as percentage of sales with promotion of in-store pharmacies at drug stores (up 0.9pts
YoY)・ Growth of food products with successful EDLP measures, primarily for daily necessitiesFYE May 2022

FYE May 2023

H1 Results

H1 Results

Net sales(millions of yen)

Share (%)

Net sales(millions of yen)

Share (%)

YoY change(%)

45,72926.8

51,050

27.6

111.6

OTC28,258

16.6

30,588

16.5

108.2

Prescriptions

17,471

10.2

20,461

11.1

117.1

Cosmetics

20,90712.3

22,286

12.1

106.6

Food products

67,795

39.7

73,549

39.8

108.5

Daily products

27,79716.3

28,907

15.7

104.0

8,324

4.9

8,870

4.8

106.6

170,553

100.0

184,664

100.0

108.3

Medical and health products

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

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3. Performance Highlights (Non-Consolidated)■ Gross profit margin: 27.4% Up 0.2 pts YoY
Boosting factors: Increase in prescriptions as a percentage of sales,increase in sales of medical and health products category■ SG&A ratio: 22.7% Up 0.3 pts YoY
・ Personnel expense ratio: 12.5% Down 0.1 pts YoY
Suppressing factors: Optimization of staffing through man-hour control andreview of the number of mid-career hires
・ Commissions paid vs. sales: 1.3% Up 0.1 pts YoY
Boosting factors: Cashless campaigns carried out by municipalities(Kanagawa Pay: July–October, QR code payment perk campaign, etc.)
・ Utility expenses vs. sales: 1.1% Up 0.3 pts YoY
Boosting factors: Increase in utility expenses associated with sharp rise inelectricity prices■ Operating margin: 4.7% Down 0.1 pts YoY
93. Performance Highlights (Non-Consolidated)■ Dispensing department ―Net sales/No. of prescriptions/prescription unit price―・ Negative impact of last year’s revision of medical fees is minor as
reduction of basic dispensing fee does not apply this year
FYE May 2022
H1 Results

FYE May 2023
H1 Results

YoY change(%)

17,471

20,461

117.1%

No. of prescriptions (thousands)

1,847

2,179

118.0%

Prescription unit price (yen)9,3029,164

98.5%

17,37019,218110.6%

No. of prescriptions (thousands)

1,835

2,035

110.9%

Prescription unit price (yen)

9,311

9,232

99.1%

Home-based dispensing sales (millions of yen)

670

618

92.2%

No. of stores offering home-based dispensing services

154

169

+1545

44

96.2%

43.6

43.7

+0.1 pt

Sales at all stores (millions of yen)

Sales at existing stores (millions of yen)

No. of prescriptions (thousands)

Gross profit margin at all stores (%)

10Initiatives in H2 of FYE May 2023

111. New store openings■ H2 store openings/closings

Forecast as of November 30, 2022

・Drug stores: 19 stores (Full-year forecast: 35 stores)
・Prescription drug stores: 35 stores (Full-year forecast: 61 stores)
H1 store
openings

H2 store
openings

Full-year
store opening
Forecast

Drug stores

16

1935

In-store
pharmacies

26

35

61

Dedicatedprescription
drug stores

000

11

(Fresh producestores)(Fresh producestores)(Increasemanagementefficiency)(Including 3 fresh producestores)

20

365759 stores

Yuri Store0

Total no. ofstores

16

Full-yearstore
closings

3(Completion ofcontract)01(Completion ofcontract)

1May 31, 2023
No. of Stores(Forecast)

718 stores
335 stores(In-store pharmacy rate:46.7%)

36 stores
5 stores12

2. Sales measures at drug stores■ Renovations to revitalize
existing stores
・ Enhancement of fresh produce lineup
and promotion of in-store pharmacies→ Planned 2H renovations: 30 stores(Full-year forecast: 44 stores)

・ Renovations to enhance fresh produce: 11 stores→ Improve convenience by reviewing product lineup
・ Renovations to expand prescriptions: 2 stores→ Enhance cooperation with invited medicalinstitutions
・ Supported prescription drug store openings:
16 stores
・ Store rebuilds: 1 store■ Merchandise/sales measures
・ Continuation of EDLP measures and improvement ofselling prices in limited-time-only sales→ Draw attention to EDLP and increase number of customers
and sales per customer
・ Promotion of mix and match measures→ Promote bulk buying with sales of product sets, increase
number of items purchased
・ Development of new private brand (PB) products andrevamping of existing PB products→ Secure price advantage amid successive name brand (NB)
price hikes
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3. Sales measures at prescription drug stores■ Greater dominance in prescription
drug stores└Prescription drug store opening forecast for thisyear: 61 stores(Year-end ： 46.7% rate of in-store pharmacies quickly)

・ As of May 31, 2024: In-store pharmacy rate of50% (forecast)・Strengthen cooperation with neighboring medicalinstitutions■ Response to last year’s revision ofmedical fees
└Reduction of basic dispensing fee in April 2023
Premiums for local support system→ Expansion of stores addressing home-based
demandTarget for May 31, 2023: 187 stores
As of November 30, 2022: 169 stores→ Promotion of “family pharmacist” training

Premiums for generics dispensing system→ Strengthening of initiatives centered on stores notincluded in calculation due to 5% increase in genericdrug usage rate (usage rate of less than 80%)
Target for May 31, 2023: 320 stores
As of November 30, 2022: 279 stores

Target for May 31, 2023: 287 pharmacists
As of November 30, 2022: 239 pharmacists

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3. Sales measures at prescription drug stores■ Introduction of inventory
management system■ Addressing of demand for eprescriptions

・ Reduce losses on medical and healthproducts through visualization ofinventory at other stores and improved
inventory efficiency
・ Improve profit margin throughbookkeeping

・ Some stores have set up demand response
system to prepare for start of operations onJanuary 26→ Curb decline in profit associated with reductions
in basic dispensing fees starting in April 2023

→ Online eligibility verification instrument
To be introduced at all stores by end of March→ Modify prescription management system→ Apply for pharmacist qualification certificate (HPKI)
card■ Addition of prescription functionality
to official smartphone app
・ Improve convenience for patients
Prescription forwarding function
Electronic prescription record
Prescription drug dose check function
Drug consultation chat function
Online instructions for taking prescription drugs

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4. Promotion of sustainability■ Disclosure of information basedon TCFD recommendations
・ August 2022: Endorsed TCFD recommendations→ Disclosed climate change-related information on website including (1) governance, (2)identification of risks and opportunities, (3) risk management system, and (4) trends in
Scope 1 and Scope 2 emissions< https://www.createsdhd.co.jp/company/sustainability/tcfd/tabid/143/Default.aspx > (in Japanese only)

・ Will continue to enhance quality and quantity of information disclosures■ Promotion of white logistics through streamlining
・ Change to method of consolidating, sorting, and delivering sales promotion materials
that were previously sent individually by each manufacturer to stores via courier→ Aim to reduce CO2 emissions by improving work efficiency atstores and reducing number of shipments
・ Promote white logistics by establishing a new facility
and improving delivery efficiency, including fresh food16

Revised FYE May 2023 Plan171. Key Points of Revised Plan for Consolidated Performance■ Revised full-year forecasts
1H

Full-year
Vs initialtarget

Initial target

Revised plan

Vs initialtarget

187,392+5,122

371,300

376,800+5,5007,270

9,235+1,965

16,97018,950+1,980

Ordinary profit

7,500

9,451+1,951

17,40019,380+1,980

Profit attributable toowners of parent

5,130

6,412+1,282

11,44012,700+1,260

Initial target

Results

182,270

Operating profit(Millions of yen)

Net sales

H2 positive factors(1) Strong results in products to combat infection andcommon cold-related products due to recent
spread of COVID-19(2) Strong results expected in allergy products (pollenlevels this year predicted to be double what theywere the previous year)

H2 negative factors(1) Uncertainty over future due to COVID-19(2) Concern over weaker consumption arising fromrush to raise product prices and soaring utility
expenses(3) Reduction of basic dispensing fee and premium for
local support system due to last year’s revision of
medical fees (starting in April 2023)
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2. Revised FYE May 2023 Plan (Consolidated)FYE May 2022 Results

Revised FYE May 2023 Plan

Full-year(Millions of yen)

Share(%)(Millions of yen)

Share(%)

YoYchange(%)

Net sales

350,744100.0

376,800

100.0

107.4

Gross profit

95,57827.3

103,550

27.5

108.3

SG&A expenses

77,40222.1

84,600

22.5

109.3

Operating profit

18,176

5.2

18,9505.0

104.3

Ordinary profit

18,665

5.3

19,3805.1

103.8

Profit attributable toowners of parent

12,595

3.6

12,700

3.4

100.8

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Reference: Progress on Medium-term Management Plan
■ Net sales target (consolidated)(Billions of yen)

450(Revised plan)
376.8 billion yen

400
350

350.7

FYE May 2025 targets:
420.0

371.3

Net sales 420 billion yen
Ordinary margin

5.0%

No. of stores

850

300

In-store pharmacy rate
55.0%

250
FYE May2022

FYE May2023

FYE May2024

FYE May2025■ Expected progress on Medium-term Management Plan
・ Progress ahead of schedule in first year with net sales of 376.8 billion and ordinary
margin of 5.1%.
・ Store openings expected to fall short of plan this year, but will make up for delay nextyear by reviewing development system and store opening criteria and adjusting area ofstore openings.
・ Rate of in-store pharmacies to progress mostly according to plan.
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