FY2013 (6/12-5/13) Results
Explanatory
Meeting
FY2014(6/13-5/14) Results
Explanatory Meeting
July 18, 2014
July 19, 2013

The earnings forecasts appearing in this material are based on the business environment at the present time, andthere is the possibility that actual earnings may differ from forecasts for various reasons.
Furthermore, only inquiries in Japanese are handled.
Inquiries should be direct to Mr. Kasakawa or Mr. Tamura (045-914-8241) in the Corporate Planning office.

1

FY2014 (6/13-5/14) Results Explanatory Meeting■FY2014 Consolidated Results
1. Profit and Loss Statement
3. Statement of Cash Flows

2. Balance Sheet■Results for Each Business Company
1. Profit and Loss Statement
2. Sales by Segment
3. Sales4. Gross Profit
5. SG&A Expenses
6. New Store Openings
7. Prescription Operations
8. Assisted-living Fee-charging Nursing Homeand Preventive Nursing Business
9. Social Contribution and Regional Contribution■Growth Strategy
1. Growth Strategy – Create SD 2. Care Business3. Create SD Medium-term Vision 4. FY2015 Forecasts (Consolidated)2

FY2014
Consolidated Results(06/2013 – 05/2014)3

1. FY2014 Consolidated Profit and Loss Statement
Return on assets [ROA] 12.1%
Return on equity [ROE] 13.5%

FY2013(consolidated)(million yen)

FY2014(consolidated)

Share
(%)

(million yen)

Share
(%)

YoY
change(%)% of initialprojection
(%)

% of
adjustmentin projection(％)

Net sales

181,966

100.0

197,483

100.0

108.5

100.6

100.6

Gross profit

48,51026.7

52,004

26.3

107.2

99.9

100.5

SG&A
expenses

38,46721.1

42,997

21.8

111.8

102.7

100.0

Operatingprofit10,043

5.5

9,006

4.6

89.7

88.6

102.9

Recurringprofit10,329

5.7

9,470

4.8

91.7

90.2

102.9

Net profit

5,965

3.3

5,779

2.9

96.9

93.4

113.3

4

2. FY2014 Consolidated Balance Sheet(million yen)
May 31, 2013(consolidated)

May 31, 2014(consolidated)

Main causes of changes

ChangeTotal assets

74,795

81,140+6,344Current assets

45,02046,889+1,869Fixed assets

29,77534,250+4,475

Total liabilities

34,04136,015+1,973Current liabilities

31,86633,850+1,984

Fixed liabilities

2,174

2,164

-10

Total net
assets40,754

45,125+4,371

Total liabilities
and net assets

74,795

81,140+6,344

Total assets
・ Merchandise +2,047 million yen
・Opening new stores, etc.
Fixed assets +4,475 million yen

Total liabilities
・Accounts payable +1,818 million yen

Total net assets
・Decline due to 1,380 million yen
in dividends
・ Net profit +5,779 million yen

53. FY2014 Consolidated Statement of Cash Flows
Major breakdown(million yen)

Cash flow fromoperatingactivities

FY2013

FY2014(consolidated)(consolidated)

8,001

7,249

Change・Net profit before taxes
・Depreciation
・Corporate taxes paid

9,327 million yen
2,300 million yen
4,735 million yen-752

Cash flow frominvesting activities-3,698-6,281-2,583

Cash flow fromfinancing
activities-1,153-1,417-264

Change in cash
and cashequivalents

3,149

-449

-3,599・ Increased acquisition of fixed tangible assets due tostore openings and renovation-1,422 million yen
・ Increased Joint loans for construction-135 million yen
・ Increased Payments for lease and guarantee deposits-80 million yen
・ Increased Construction in progress -371 million yen
・Payments for acquisition of newly consolidated
subsidiaries and others

・Dividends

Opening balanceof cash and cash
equipments

16,635

19,785+3,149

Closing balance of
cash and cash
equipments

19,785

19,335-449

1,380 million yen

6Results for Each BusinessCompany7

1. FY2014 Profit and Loss Statement (Create SD)
FY2013(million yen)

Net sales

FY2014
Share(%)(million yen)

Share
(%)

YoY
change(%)% of initialprojection
(%)

% of
adjustmentinprojection(％)

180,709 100.0 195,841 100.0 108.4 100.5 100.6

Gross profit

48,42626.8

51,90826.5 107.2 100.0 100.6

SG&A
expenses

38,82921.5

43,40622.2 111.8 102.6 100.1

Operatingprofit

9,597

5.3

8,501

4.3

88.6

88.4 103.2

Recurringprofit

9,791

5.4

8,887

4.5

90.8

90.0 103.2

Net profit

5,717

3.2

5,440

2.8

95.1

93.7 115.2

8

2. Sales by Segment

Create SD

FY2013
Sales(million yen)

FY2014

Share
(%)

YoY
change(%)

Sales(million yen)

Share
(%)

YoY
change(%)

Medical and healthproducts

41,184

22.8

109.2

44,629

22.8

108.4

(O T C)32,958

18.2

106.9

34,170

17.5

103.7

(Prescription)

8,226

4.6

119.8

10,4585.3

127.1

Cosmetics

29,335

16.2

105.0

31,094

15.9

106.0

Food products

65,463

36.2

109.5

72,334

36.9

110.5

Daily products

33,092

18.3

105.4

35,689

18.2

107.8

Other

11,633

6.5

97.9

12,0936.2

104.0

180,709 100.0

107.1

195,841 100.0

108.4

Total

* “Other” includes items such as stationery, baby products, clothing, pet products, gardening products, and film development services.

93. Sales

Create SD

For existing stores, sales 101.1%, number of customers 100.0% year on year
・Strengthening of prices for daily necessities such as daily foods and daily products
・Review of point-system sales promotion and implementation of measures to increase
the number of customer visits before and after the consumption tax increase
Monthly change in sales and number of customers
in existing stores compared to the previous year
125%
120%

Strengthening ofprices for
Daily necessities

110%

Special demand before
the consumption tax
Increase and demandrecoil afterward

Sales

115%

Number ofcustomers
Strengthening ofprices on flyers

105%
100%
95%
90%

Modification of sales
promotion methods
Jun.2013 JulyF Y2014(6/13-5/14)

Aug.

Ju n .
2013

Ju ly

Sep.
Au g.

Oct.

Se p.

Nov.

Oc t .

No v.

Dec.
T h e fir sth alf ye ar

Jan.2014

Feb.

Mar.

De c .

Jan .
2014

Fe b.

Mar .

Apr .

Apr.
May.

May
T h e se c o n dh alf ye ar

T o t al

Ne t Sale s

100.0

98.5

98.9

97.9

98.0

103.2

99.4

101.8

102.7

101.9

123.2

90.7

95.6

102.7

101.1

Nu m be r o f
C u st o m e r

99.3

99.2

99.0

98.6

98.0

103.4

99.5

102.7

103.1

101.1

104.3

94.8

97.2

100.5

100.0

10

3. Sales

Create SD

Modification of sales promotion methods
Steep reduction in costs through in-house production of the reward
card system in 2012. Decrease in the rate of point use due to abolition of
reward coupon distributed each 400 points※Point ticket※Old reward card

※Current reward card

Distribution of Kuripon ticket to customers
whose points have reached the level
permitting use for purchase※Kuripon ticket

Rise in the point use rate and increase in customer visit frequency,
number of items purchased, and amount of purchase per customer
113. Sales

Create SD

2. Promote the renovation of existing storesthe remodeling of 52 stores
Number of in-store pharmacies
Addition of the specialty to stores ⇒ 12 stores
Adjustment of the sales floor
Change to a sales floor makeup matching the sales makeup
Addition to the production line-up and improvement of
store fixtures at the same tim⇒ 30 stores

Increase the sale of packaged meat
Reinforcement of the store model in small trade areas withfrequent customer visits, by improvement of convenience⇒ 32 stores
12

3. Sales

Create SD

3. Increasing the number of stores that offer a homedelivery service for customers
148 stores
introduction

FY201349 stores

FY2014

197 stores

The ratio changes after purchase product delivery service introduction inearlier period of sales amount of the shop in progress for six months

Number ofdeliveryMonthly change in sales
compared to the previous year
125%

200
200件

The number ofdelivery

120%
115%

180
180件

Introduction store

160
160件

110%
140件
140
105%
120件
120
100%
100件
100

95%
90%

Existing
store

80件
80

85%
'12/12月 Jan.2013'13/1月Dec.2012

2月
Feb

3月
Mar.

4月
Apr.

5月
May

6月
Jun.2013

7月
July

8月
Aug.

9月
Sep.

10月
Oct.

11月
Nov.

12月
Dec.

'14/1月Jan.2014

2月
Feb.

3月
Mar.

4月
Apr.

5月
May

60件
60

In-depth examination of stores based on the surrounding environment andefficient input of delivery service concentrated in stores with strong needs for it
13

4. Gross Profit

Create SD

Original plan ratio, 100.0%. Rose 7.2% year on year
The first half year
Implementation of initiatives to increase sales and the number of customers
by strengthening of prices for daily necessities with a high consumption
frequency (mainly daily foods, beverages, and daily products),
and strengthening of prices for flyer products
The second half year
Continued strengthening of prices for daily necessities while carefully
monitoring the decline due to recoil after the consumption tax increase
Meanwhile, adjustment of sales-pitch prices on flyers and narrowing downof regular products with price appeal
Assurance of a gross profit of 100.0% relative to the initial plan by maintenanceof the improved sales and number of customers
145. SG&A Expenses

Create SD

2.6% higher than forecast.
Plan difference +1,109 million yen
Personnel expenses
0.9% higher than forecast. Plan difference +189 million yen(Rose 9.6% year on year)
・Increase in man-hours in response to the consumption tax increase・Increase in man-hours due to response to the disruption of distribution
by heavy snows
・Increase in personnel hiring costs due to recruitment of qualified personnel
along with establishment of in-store pharmacies

Utilities expenses
6.8% higher than forecast. Plan difference +123 million yen(Rose 28.9% year on year)
・ Fuel costs increased due to fuel price adjustments
・ An increase due to higher basic rates
15

5. SG&A Expenses

Create SD

Repair expenses
53.3% higher than forecast. Plan difference +262 million yen(Rose 45.2% year on year)
・ Advance investment for switch to LED lighting for storesSupplies expenses
37.3% higher than forecast. Plan difference +247 million yen(Rose 36.7% year on year)
・Sales floor remodeling expenses such as bread, wine, the meat
・Equipment expense of the new stores

Other expenses
・Increase in payment handling fees due to increased payment with credit cards
・Increase in miscellaneous costs accompanying the increase in home deliveries

16

6. New Store Openings

Create SD

42 new OTC stores and 26 ethical pharmacies were opened(of which 2 was dedicated prescription drug store)

New store openings by area
Kanagawa

OTC
New stores
opened in
FY2014in-store
pharmacies
dedicatedprescription
drug stores

19
13
1

Tokyo

Shizuoka

Chiba

Aichi

Other

Total

16
6
1

2
1
0

2
1
0

2
2
0

1
1
0

42
24
2

Increase in stores due to acquisition & M&A of New Drug Co., Ltd. including
4 OTCs, 2 in-store pharmacies, and 1 dedicated pharmacy

2 stores were closed (1 in Kanagawa, 1 in Shizuoka)

OTC

Total
number of in-store
stores as of pharmacies
the end of dedicatedprescriptio
FY2014n drugstoresKanagawa

Tokyo

Shizuoka

Chiba

Aichi

Other

Total

236

72
16
7

61
12
0

20
1
3

4
4
0

26
4
1

419
88
25

51
14

Rate ofpharmacy
establishment
in OTC stores

21.0
％

17

7. Prescription Operations
26 new stores opened(24 in-store pharmacies and 2 dedicatedprescription drug store)

Create SD

113 stores at the end of FY2014(88 in-store pharmacies and 25
dedicated prescription drug stores)

Store distribution of Kanagawa

In-store pharmacies
OTC stores
Rate of pharmacy
establishment in OTC stores

21.0% (up 4.1 pt from the previous term)

18

7. Prescription Operations
FY2014(million yen)

Net sales
Gross profit(Home service
operations)

Net sales

10,458
4,146

Share
(%)

100.0

YoY
change(%)

127.1

Sales in prescription operations and the number ofprescriptions issued
Graph:
Number of prescriptions issued(unit: 10,000)

11,000

39.6

125

131.6
10,000

Share

757

Existing stores comparisons
Sales 16.0%
Prescriptions 7.1%
Bar graph: Sales(million yen)

FY2014(million yen)Create SD

(%)

100.0

106

YoY
change
(%)

139.3

8,000

120

92

9,000

140

100

80
71

80

7,000

10, 45860

6,000

Medication guidance by visit
Collaboration with 59 nursing
facilities(demand from 14 new facilities)

8, 226
5,000
4,000
3,000

40

6, 865
5, 59320

4, 658FY2010FY2011FY2012FY2013

FY20140

19

8. Assisted-living Fee-charging Nursing Homeand Preventive Nursing BusinessWell life
SALON DAY

Action of the pay nursing home business・Large-scale renewal of "well Haym Tokyo"
・Switch to flexible pricing
Action of preventive nursing business・Upbringing and fixation of the talented personby the improvement of staff training
Number of day service centers
・Opened 4 day service centersat the end of FY2014
creating a network of 34 centers
・Stand-alone centers: 26
Long-term care support center 1 center ・In-store centers: 820

9. Social Contribution and Regional Contribution
Social contribution“Let’s walking” event
・Holding in three areas outside Kanagawa Prefecture
・Holding of health counseling at sites near the finish line
Clean campaign in Kataseenosima
・Clean-up of shorelines in cooperation with public
service foundation
Regional contribution

Proactive involvement in nursing facilities
・Holding of nursing seminars for facility staff
・Acquisition of qualifications for activities as a senile
dementia Supporter
Healthy event with the local government
・Participation in planning to a food education fair anda healthy seminar
21

Growth Strategy

22

1. Growth Strategy – Create SD
New development program■42 new drug stores
・Develop stores with focus on Kanagawa, Tokyo, and Shizuoka■28 in-store pharmacies
・Addition of the specialty to OTC stores・Achieve 25% of rates of the drugstore establishment of the OTC stores■5 dedicated prescription drug stores■Expansion of new facilities that undertake
home delivery of medication■Development of the personal domiciliary market
through approaches in important point area23

1. Growth Strategy – Create SD
Business policy
100.3% or more increase in sales year on year

OTC stores
・Improving product line-up and addition of a new article
・75 remodeling stores・Delivery service for customers
Prescription drug stores
・Improvement in waiting time for receipt ofprescription medicine
・Promotion of use of generic pharmaceuticals
・Expansion of new facilities that undertake
home delivery of medication
24

1. Growth Strategy – Create SD
Profit improvement■Review of the sales promotion
・New sales promotion offering incentives for good customers
・Flyers sales promotion
・EDLP sales promotion
・Sales promotion at the time of the new store opening■Development of new private-brand products and renewal ofexisting products
・Development centered around cosmetics and daily-use articles
・The package renewal of the existing PB products and improvement of the quality■Intensive sale・Improvement of profits by intensive sales of seasonal items
in all stores■Review of how to sell・Improvement of the higher/lower-margin profit product mix by review of sales
promotion items and method of deployment25

1. Growth Strategy – Create SD
Cost control■Utilities expenses
・Complete an LED change of the store illuminationin July to down the running cost

■Store-opening costs
・Review of building specifications and interior
decoration / decoration specifications
・Reduction of the equipment procurement costby the competitive bidding■Personnel expenses
・Work improvement by the assist ordering system

26

1. Growth Strategy – Create SD

New action
1. Improve services by making use of the EC website
Provide goods including those that are not sold at the stores,
targeting the reward card members
・Grant points in the same way when customers purchase goods at stores
・Allow customers to receive purchased goods at stores as well as home
※Homepage image※Notice poster

Provision of convenience through operation fusedwith stores27

1. Growth Strategy – Create SD
2. Introduce the application of the assist orderingsystem into all sections storewide

・Alleviation of the burden of ordering work
・Prevent a stock out
・Rationalization of inventories
・Alleviation of replenishment work
By these effects…
・ Improvement of the customer satisfaction by the increase of
the waiting on customers time・Realization of the low cost operation
・Improvement of profit and increase in trustworthiness inthe eyes of customers due to reduction of product outage28

1. Growth Strategy – Create SD

3. The new action in merchandising
・Introduction of the sum side dish・Introduction experiment of the
hot snack4. New approaches to sales
promotion utilizing smartphones・Experiment of the "LINE@"
sales promotion
・Introduction experiment of"The prescription application"29

2. Care BusinessPreventive nursing business■Opening of 10 centers
Long-term care support center,2 establishments Number of facilities,
users change

Number of users

Number of facilities■Profit improvement
・Switch from “10 capacity system"to "15 capacity system"
・The fall prevention, developmentof the training program of thecare prevention including thedementia prevention

50

3,000

45
40

2,500

2,054

35

2,000

1,649

30
25

1,500

1,096

20
15
10

321

5

10

24

30

34

44
1,000
500

0

0
FY2011FY2012FY2013

FY2014FY2015(plan)

30

3. Create SD Medium-term Vision
Decreasing birthrate of the population when aging,"a post-baby boom generation" becomes 75 years old or older
in 2025, and a market changes around an urban area
In aged society, our company add specialty and convenience
as a business model of the narrow commercial domain and build
a new business condition of the high visit frequency

Creating a system to contribute to society as a comprehensive
healthcare support company in cooperation with community
medical facilities314. FY2015 Forecasts (Consolidated)
FY2014(consolidated results)(million yen)

Share
(%)

FY2015(consolidated projection)(million yen)

Share
(%)

YoY Change(%)

197,483 100.0 216,200

100.0

109.5

Gross profit

52,00426.3

57,652

26.7

110.9

SG&A expenses

42,99721.8

47,407

21.9

110.3

Operating profit

9,006

4.6

10,245

4.7

113.8

Recurring profit

9,470

4.8

10,5004.9

110.9

Net profit

5,779

2.9

6,100

2.8

105.5

Net sales32