Financial Results for FYE May 2023
July 13, 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.

1

FYE May 2023 Results
1. Consolidated Statement of Income

2. Consolidated Balance Sheet
3. Consolidated Statements of Cash Flows
4. Store Openings/Closings (Non-Consolidated)
5. Performance Highlights (Non-Consolidated)FYE May 2024 Plan
1. New Store Openings and Renovation of Existing Stores
2. Sales Measures
3. Capital Investment and Dividends
4. FYE May 2024 Plan (Consolidated)

5. Progress on Medium-term Management Plan

Sustainability Management

2

FYE May 2023 Results31. Consolidated Statement of Income for FYE May 2023
Net sales outperform both plans and those of the previous year, securing
increased sales and profits within SG&A expenses planFYE May 2022 Results(Millions of yen)

Share
(%)

FYE May 2023 Results(Millions of yen)

Share
(%)

YoY
change

Vs
plan

(%)

(%)

Net sales

350,744100.0

380,963

100.0

108.6

101.1

Gross profit

95,57827.3

102,987

27.0

107.8

99.5

Net sales
Successful everyday low price(EDLP) strategy with focus on
daily necessities, in addition
to increased demand due tothe pandemic

Gross profit
SG&A expenses

77,402

22.1

84,075

22.1

108.6

99.4

Operating profit

18,176

5.2

18,912

5.0

104.1

99.8

Ordinary profit

18,665

5.3

19,428

5.1

104.1

100.2

Profit attributableto owners ofparent12,595

3.6

12,925

3.4

102.6

101.8

Despite a boost fromincreased prescription sales,
goods sales dropped owing
to EDLP strategy: Down
0.3pts YoY

SG&A expenses
Amid soaring personnel andutilities costs, SG&A expenses
overall were within plan with
±0pt difference YoY

4

2. Consolidated Balance Sheet for FYE May 2023
May 31, 2022

May 31, 2023

Total assets
176,910

Total assets
194,941

Total
Current liabilities
assets70,587
98,115

Noncurrent
assets78,795(Millions of yen)

■ Current assets +1,516+18,030

Decrease in cash and deposits-4,541

Total
Current liabilities
assets78,532
99,631+7,944

Increase in accounts receivable+2,154

Increase in merchandise+2,881■ Non-current assets +16,514+1,516Land+8,014

Buildings and structures+4,596

Total net
assetsNoncurrent
assets106,323

95,310+16,514

Total net
assets■ Total liabilities +7,944

116,409

Increase in accounts payable+10,086+6,256■ Total net assets +10,086
Retained earnings+9,8915

3. Consolidated Cash Flows for FYE May 2023
■ Consolidated Statements of Cash FlowsFYE May 2022

FYE May 2023
Change(Millions of yen)

(Millions of yen)

16,101

18,985

2,884

Net cash used in investing activities(10,808)(20,491)–9,683

Net cash used in financing activities(2,908)(3,034)–126

Net increase (decrease) in cash and cash
equivalents

2,384(4,541)–6,925

Cash and cash equivalents at end of period

41,667

37,126–4,541

Net cash provided by operating activities■ Depreciation and amortizationFYE May 2022

FYE May 2023
Change(Millions of yen)

(Millions of yen)

Capital investment

11,43021,792

10,362

Depreciation andamortization

3,983

4,351

367
6

4. Store Openings/Closings (Non-Consolidated)■ Store openings/closings and renovations
Store closings: 3 drug stores (3 after completion of contract), 1 dedicated prescription drug store (after completion of contract)

No. of store openings in
FYE May 2023
Drug storesStore
opening Prescription drug
storesKanagawa

Tokyo

Shizuoka

Chiba

Aichi

Other

Annual

17

2

5

6

2

2

34

31

8

7

8

4

2

60

・Renovations: 39 stores (foods enhancement: 8 stores, extension/renovation: 1 store, pharmacy expansion: 2 stores; follow-up
after prescription drug store openings: 25 stores, etc.)■ No. of stores at year end
No. of stores as of
May 31, 2023

Kanagawa

Tokyo

Shizuoka

Chiba

Aichi

Other

AnnualDrug stores

404

113

94

55

20

31

717

In-store pharmacies

203

53

28

28

13

9

334

50.2%

46.9%

29.8%

50.9%

65.0%

29.0%

46.6%

25

7

0

2

1

1

36

Supermarkets

5

0

0

0

0

0

5

Total no. of stores

434

120

94

57

21

32

758

Rate of in-store
pharmacies
Dedicated prescription drug
stores7

5. Performance Highlights (Non-Consolidated)■ YoY net sales comparison at existing stores (cumulative):104.6% (H1: 103.6%, H2:105.5%)└ OTC: 103.7% Prescriptions: 111.7%(%)
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FYE May 2023
FYE May 2022
9.7

10

5.6

4.1

5

5.1

2.7

1.2

0.8
0

-0.4

-0.1

0.8

0.6

-0.4

3.2
1.7

3.8
4.0
0.2

-1.4

-3.1

-5

6.8

6.4

5.8

-0.8

-4.6
-10
June

July

Aug.

Seasonal
products strong
owing toextreme heat

Increased demand
due to seventh
wave of COVID-19
infections

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Successful EDLP strategy primarily for daily necessities due torising prices and need for households to save money
Increased demand
due to eighthwave of COVID-19
infections

More people going out andgreater movement withreclassification of COVID-19
as a Class 5 disease85. Performance Highlights (Non-Consolidated)■ Net sales by segment
FYE May 2022
Results

FYE May 2023 Results

Net sales(millions of yen)

Share
(%)

Net sales(millions of yen)

Share
(%)

YoY
change(%)

94,15927.4

104,590

27.8

111.1

OTC

57,35016.7

61,110

16.2

106.6

Prescriptions

36,80810.7

43,479

11.6

118.1

Cosmetics

42,07512.2

44,519

11.8

105.8

Food products

136,43739.6

151,719

40.4

111.2

Medical andhealth products

Medical and healthproducts
・ Increased sales of common cold
medicines, antigen test kits, etc.
・ Increased demand forprescriptions with promotion of
in-store pharmacies
Prescriptions as a percentage ofsales: Up 11.6% (+0.9pts)

Cosmetics
・ Recovery trend for makeup
cosmetics, etc., thanks to increased
opportunities for going out

Food products
Daily products

54,815

15.9

57,172

15.2

104.3

Other*

16,8694.918,134

4.8

107.5

Total

344,357

100.0

376,135

100.0

109.2

・ Increased sales thanks tosuccess of EDLP strategy,
primarily for daily necessities* “Other” includes stationery, baby products, clothing, pet products, and gardening products.

10

5. Performance Highlights (Non-Consolidated)■ Gross profit margin / SG&A ratio
Gross profit margin: 27.2% Down 0.3 pts YoY –0.4 pts vs target
Suppression factors:
・ EDLP strategy
・ Lower demand due to reactionary drop in facial masks and sterilization-related products
Boosting factors:
・ Increase in prescriptions as percentage of sales
・ Increased sales of antigen test kits, pharmaceuticals, etc.

SG&A ratio: 22.5% ±0.0 pt YoY –0.4 pts vs target
・ Personnel expense ratio: 12.4% Down 0.2 pts YoY –0.2 pts vs target
Missed target factors:
・ Reduced personnel costs through person-hour control on site (existing store person-hours: 98.1% YoY)

・ Other expense ratio: 10.1% Up 0.1 pts YoY –0.2 pts vs target
Missed target factors:
・ Thorough energy-saving measures where possible (electricity use at existing stores: 93.9% YoY)11

5. Performance Highlights (Non-Consolidated)■ Prescription drug store department
FYE May2022 Results

FYE May 2023
Results

YoYchange(%)

Sales at all stores (millions of yen)

36,80843,479118.1

No. of prescriptions (thousands)

3,817

4,605

120.6

Prescriptions and sales
remained firm
・ Promotion of in-store pharmacies

9,467

9,221

97.4

36,59740,885

111.7

No. of prescriptions (thousands)

3,793

4,312

113.7

Prescription unit price (yen)

9,472

9,275

97.9

Prescription unit price (yen)Sales at existing stores (millionsof yen)Home-based dispensing
sales (millions of yen)・ Increased demand for acuteprescriptions, influenza, pollen allergy,
etc.
Prescription unit price down to 97.9%

Impact of previous year's

1,314

1,334

101.5

No. of stores offering homebased dispensing services

157

187

+30

No. of prescriptions (thousands)

88

89

100.1

medical service fee revisions
only in Q4 (April/May) solimited in FYE May 2023

Gross profit margin at all
stores (%)

・ Gross profit margin 42.8% (down 0.1 pts)

42.9

42.8

–0.1pts

12

FYE May 2024 Plan

13

1. New Store Openings and Renovation of Existing Stores
Increased market share in areas with in-store pharmacies brings
greater competitiveness for individual stores
No. of stores No. of storesas of May 31, as of May 31,
2023
2024

■New store openings
Drug stores: 50 stores (Previous year: 34 stores)
Prescription drug stores: 60 stores (Previous year: 60 stores)

・ Greater dominance in existing store areas‣ Promotion of different types of store openings‣ Focus on development of highly competitive large-scale
stores together with land purchases

・ Provision of quick, one-stop shopping

Drug stores

717

761

In-store pharmacies

334

394

46.6%

51.8%

36

36

Supermarkets

5

6

All stores

758

803

Rate of in-store
pharmacies
Dedicated prescription
drug stores‣ Concessionary type store openings…Store openings in collaboration with Yuri Store, local supermarkets,
fresh produce stores‣ Cooperation with neighboring medical institutions…Invitations to medical institutions, in-clinic type store openings■ Existing store renovations
Planned renovations 30 stores

14

2. Sales Measures (Drug Store Department)
Respond to changes in consumer behavior and growing need forhouseholds to save money post-COVID■ Strengthen sales centered on health and beauty products
・ Respond to increased demand post-COVID with OTC medicines, makeup
cosmetics, seasonal products, etc.
…Increased opportunities to go out, movement of people, and self-medication, etc.

・ Develop new and update private brand products(New: 40SKU Updated: 29SKU)…Secure price advantage
compared to non-branded products,
strengthen product proposals■ EDLP strategy
・ Continue to promote EDLP strategy…Keep prices unchanged for some products to attract customers amid increases in prices

・ Rigorous low-cost operations…As all costs such as labor and utility costs increase, control store operating costs byimproving and reviewing work efficiency

15

2. Sales Measures (Prescription Drug Store Department)
Strengthen community-based family pharmacy functions while seeking
greater dominance in prescription drug stores
April 2022: Impact of medical service fee revision
We expect a drop in sales and profits of approximately 1 billion yen/year with reductions to thebasic dispensing fee and premiums for local support system from April 2023

■ Response to revision of medical fees
・ Promotion of in-store pharmacies: Covered byincreased demand for prescriptions…Number of prescriptions at existing stores YoY
114.1%

・ Calculations of premiums for local support system…Target for number of stores calculated 135 stores(+48 stores YoY)

‣ Training of family pharmacists …Target 330
pharmacists (+49 pharmacists YoY)
‣ Expansion of home-based demand …No. ofpatients 3,800 (+300 YoY)

■ Use of inventory management system
・ Reduce waste loss and prevent shortages ofprescription drugs by utilizing inventory between
storesYoYchangeFYE May
2023
Results

FYE May2024 Plan

43,47950,336

115.8

4,605

5,529

120.1

Prescription unit
price (yen)

9,221

8,966

97.2

Sales at existing
stores (millions of yen)

43,37247,721

110.0

4,592

5,241

114.1

9,227

8,986

97.4

42.8%

41.6%

–1.2
pts

Prescription drug
store department
Sales at all stores(millions of yen)

No. of prescriptions(thousands)

No. of prescriptions(thousands)

Prescription unit
price (yen)Gross profit margin at
all stores

(%)

16

3. Capital Investment and Dividends■Trend in capital investment
Plans to continue aggressive capital investment… New stores and renovations, land purchases, distribution centers, system investments, etc.
⇒ In FYE May 2024, in addition to opening 50 stores, increasing the number of large-scale
stores, acquiring land and buildings, we expect a deposit of 2.7 billion yen for the constructionof a new distribution center, planning record high investment of 28 billion yen

28.0(Billions of yen)

21.7

9.7

11.6

9.9

11.1

11.3

FYE May 2018 FYE May 2019 FYE May 2020 FYE May 2021 FYE May 2022 FYE May 2023 FYE May 2024
(Plan)

17

3. Capital Investment and Dividends■ Dividends per share
Continuous dividend increase over past 12 years…Stable and continuous dividend increase52+2⇒ For FYE May 2023, dividend increased by 6 yen,up 2 yen from initial plan
Stock split in December 2015
Dividend before FY May 2016 retroactively
calculated to after stock split price

(Yen)

27
15

17

18

19

31

34

36

40

44

46

50

54
(Forecast)(Initial target)

22

FYE May FYE May FYE May FYE May FYE May FYE May FYE May FYE May FYE May FYE May FYE May FYE May FYE May FYE May
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024

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4. FYE May 2024 Full Year Plan (Consolidated)FYE May 2023
Results

FYE May 2024 Plan

Full-year(Millions of yen)

Share
(%)

(Millions of yen)

Share
(%)

YoY
changeDifference(%)(Millions ofyen)

Net sales

380,963100.0

404,100

100.0

106.1

+23,137

Gross profit

102,987

27.0

109,640

27.1

106.5

+6,653

SG&A expenses

84,07522.1

90,400

22.4

107.5

+6,325

Operating profit

18,912

5.0

19,240

4.8

101.7

+327

Ordinary profit

19,4285.1

19,800

4.9

101.9

+371

Profit attributable to owners ofparent12,925

3.4

13,000

3.2

100.6

+74

Plan Assumptions:Store openings: 50 drug stores 60 prescription drug stores (59 in-store, 1 dedicated)
Store closings: 6 drug stores
Existing stores YoY change: 100.7% (drug stores 99.5%, prescription drug stores 110.0%)

19

5. Progress on Medium-term Management PlanFYE May2023 Results

FYE May 2024 PlanFYE May 2025
Initial PlanFYE May 2025
Revised Plan

(Millions of yen)

(Millions of yen)

420,000

430,000

Ordinary profit
margin

5.0%

5.0%

850

850

55.0%

55.0%

Medium-termManagement
Plan(Millions of yen)

(Millions of yen)

YoYchange(%)

380,963404,100

106.1

Ordinary profit
margin5.1%

4.9%-0.2pts

No. of stores

758

803

+45

No. of stores

46.6%

51.8%

+5.2

In-store
pharmacy rate

Net sales

In-store
pharmacy rate

Net sales

Net sales: Steady progress toward achieving plan, upward revision to 430 billion yen for
FYE May 2025

Ordinary profit margin: In FYE May 2024, although the gross profit margin is expected
to improve due to an increase in prescriptions as percentage of sales, there will be agreater increase in the SG&A expense ratio so expected to fall slightly below the mediumterm target of 5.0%20

5. Progress on Medium-term Management Plan
520.0

(Billions of yen)
500
5,000

Medium-termManagement Plan

450
4,500

430.0
404.1

400
4,000
350
3,500

Net sales

371.3
350.7

FYE May 2025
Revised Plan
(Millions of yen)

(Millions of yen)

430,000

520,000

5.0%

5.0%

850

1,000

55.0%

65.0%

Ordinary profit margin
No. of stores

300
3,000
FYE
May
2022

FYE
May
2023

FYE
May
2024

FYE
May
2025

FYE
May
2026

FYE
May
2027

FYE
May
2028

FYE May 2028
Revised Plan

In-store pharmacy rate

Basic management strategy
Dominant
community-based
store openings

Promotion of instore pharmacies

Convenience ofquick, one-stop
shopping

Management foundation supporting sustainable growth
Extremely good
customer service

Sustainability
management

Low-cost
operations

21

Sustainability Management■ Excerpts from material issues
Material Issues

Group Direction

Business activities withthe global environment inmind (Environmental)

・ Reduction of greenhouse gas emissions
・ Improved resource and energy efficiency
・ Waste reduction from 3Rs perspective

Example Initiatives
・ Acquisition and maintenance of ISO 14001
certification at all stores・ Improved energy efficiency, including air
conditioning and lighting
・ Reduced CO2 emissions by improving efficiency
in distribution⇒ Plan to build a new distribution center in FYEMay 2025
・ Less food waste by improving order accuracy,etc.
・ Installation of solar panels on rooftops of
distribution centers and stores⇒ 4 stores with solar panels at the end of FYEMay 2023 with plans to gradually expand thisnumberRealization of a rewarding ・ Comfortable and rewarding work
environment
company that values its
・ Diversity and inclusion
employees (Social)

・ Development of human resources andactive participation

・ Creation of comfortable work environment for
women
・ Regular individual interviews from a work-lifebalance perspective
・ Childcare leave system and shortened work hours
system above statutory requirements

・ Job creation at special subsidiary⇒ By Aug. 2023, in annual securities report andCompany website, we will:
・Disclose various information related to humancapital・ Set indicators and targets for all items

22