FY2015 (6/14-5/15) Results Explanatory Meeting
July 17, 2015
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. Kasai or Mr. Tamura (045-914-8241) in the Corporate Planning office.

1

FY2015 (6/14-5/15) Results Explanatory Meeting■FY2015 Consolidated Results
1. Profit and Loss Statement
3. Statement of Cash Flows

2. Balance Sheet
4. ROE and Dividend■Results for Each Business Company
1. Profit and Loss Statement 2. New Store Openings
3. Sales by Segment 4. Sales 5. Gross Profit Margin
6. Prescription Section 7. SG&A Expenses 8. Care Business■Growth Strategy
1. Growth Strategy – Create SD 2. Care Business
3. Medium-term Vision 4. FY2016 Forecasts (Consolidated)2

FY2015
Consolidated Results(06/2014 – 05/2015)3

1. FY2015 Consolidated Profit and Loss Statement
FY2014FY2015(consolidated)(consolidated)(million yen)

Share
(%)

(million yen)

Share
(%)

YoY
change(%)% ofprojection(%)

Net sales

197,483

100.0

213,918

100.0

108.3

98.9

Gross profit

52,00426.3

57,516

26.9

110.6

99.8

SG&A
expenses

42,99721.8

46,787

21.9

108.8

98.7

Operatingprofit9,006

4.6

10,728

5.0

119.1

104.7

Recurringprofit9,470

4.8

10,982

5.1

116.0

104.6

Net profit

5,779

2.9

6,561

3.1

113.5

107.6

4

2. FY2015 Consolidated Balance Sheet(million yen)

May 31, 2014(consolidated)

Total assets

May 31, 2015
(consolidated)

81,140 88,767

Change+7,626

Current assets

46,88951,512 +4,623

Fixed assets

34,25037,253 +3,003

Total liabilities
Current liabilities
Fixed liabilities

36,015 42,807
33,8502,164+6,791

39,384 +5,533
3,422 +1,258

Total net
assets45,125 45,960+834

Total liabilities
and net assets

81,140 88,767+7,626Main causes of changes

Total assets
・ Cash equivalent and accounts
receivable +1,900 million yen
・ Merchandise +1,664 million yen
・ Opening new stores, etc.
Fixed assets +3,003 million yen
Total liabilities
・ Accounts payable +2,944 million yen
・ Income taxes payable+1,048 million yen
・ Asset retirement obligation+1,115 million yen
Total net assets
・ Share buyback -4,392 million yen
・ Decline due to 1,300 million yen
in dividends
・ Net profit +6,561 million yen

53. FY2015 Consolidated Statement of Cash Flows(million yen)

Cash flow fromoperatingactivities

FY2014FY2015(consolidated)(consolidated)

Major breakdown

Change7,249 11,811 +4,561

Cash flow frominvestingactivities-6,281-4,975 +1,305

Cash flow fromfinancing
activities-1,417-5,901

Change in cash
and cashequivalents-449-4,484

・ Net profit before taxes 10,537 million yen
・ Depreciation
3,139 million yen
・ Corporate taxes paid -3,566 million yen

・ Acquisition of fixed tangible assets due
to store openings and renovation-3,694 million yen
・ Joint loans for constraction-1,042 million yen
・ Construction in progress-466 million yen

933 +1,382

Opening balanceof cash and cash
equipments

19,785 19,335-449

Closing balanceof cash and cash
equipments

19,335 20,268+933

・ Dividend payment
・ Share buyback-1,300 million yen-4,392 million yen

64. ROE and Dividend
IntendIntendROE
ROEMoreMoreThanThan15%
15%【％】

Change in ROE

StableStableandandSustainable
Sustainable
Increasein
Increase inDividend
Dividend【yen】

Change in dividend per stock

80

25
20
15.6％

14.8％

14.4％

58yen

60
50yen

15

54yen

45yen

14.1％

10

30yen

40

13.5％

20

5
0

30yen

65yen

35yen

34yen

45yen
20yen

20yen

FY2012FY2013

28yen

30yen

FY2014FY20150
FY2011FY2012FY2013

FY2014FY2015FY2011

7

Results for Each BusinessCompany81. FY2015 Profit and Loss Statement (Create SD)
FY2014(million yen)

FY2015
Share(%)(million yen)

Share
(%)

YoY
change(%)% ofprojection(%)

Net sales

195,841100.0

212,274

100.0

108.4

98.9

Gross profit

51,90826.5

57,476

27.1

110.7

99.8

SG&A
expenses

43,40622.2

47,358

22.3

109.1

98.7

Operatingprofit8,501

4.3

10,118

4.8

119.0

104.9

Recurringprofit8,887

4.5

10,366

4.9

116.6

104.8

Net profit

5,440

2.8

6,256

2.9

115.0

108.7

9

2. New Store Openings

Create SD

34 new OTC stores and 26 ethical pharmacies were opened(of which 5 was dedicated prescription drug store)
New store openings by area

New stores
opened in
FY2015Kanagawa

Tokyo

Shizuoka

Chiba

Aichi

Other

Total

13
15
3

6
4
1

5
0
0

4
0
0

5
1
1

1
1
0

34
21
5

OTC
in-store
pharmacies
Dedicatedprescription
drug stores

Store closing 3 were S&B , 1 was contract expiration ,3 were management efficiency enhancement
Kanagawa

Tokyo

Shizuoka

Chiba

Aichi

Other

Total

246
66

77
20

64
12

23
1

9
5

27
5

446
109

Rate of pharmacy
establishment
in OTC stores

26.8%

26.0%

18.8%

4.3%

55.6%

18.5%

24.4%

dedicated prescription
drug stores

17

8

0

3

1

1

30

OTC
Total numberof stores asof the end of
FY2015in-store pharmacies

10Create SD

3. Sales by Segment
FY2014FY2015

Sales(million yen)

Share
(%)

YoY
change(%)

Sales(million yen)

Medical andhealth products

44,629

22.8

108.4

49,309

23.2

110.5

(O T C)34,170

17.5

103.7

35,522

16.7

104.0

(Prescription)

10,4585.3

127.1

13,7876.5

131.8

Cosmetics

31,094

15.9

106.0

31,780

15.0

102.2

Food products

72,334

36.9

110.5

80,886

38.1

111.8

Daily products

35,689

18.2

107.8

37,505

17.7

105.1

Other

12,0936.2

104.0

12,793

6.0

105.8

Total

195,841

100.0

108.4

212,274

100.0

108.4

Share
(%)

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

11Create SD

4. SalesYoY
YoY+8.4％+8.4％ vs.
vs. Budget
Budget -1.1％-1.1％ Existing
Existingstoresstores+0.1％+0.1％ YoY
YoY
・Maintained
・Maintained8%
8%increase
increasethroughthroughstore
storeopenings
openingsduring
duringprevious
previous
term
termforforthethetop
toplineline
・Plan
・Planwaswasnotnotachievedachievedduring
duringthethesecondsecondquarter
quarterdue
dueto
tothe
thetaxtax
increase,increase,and
andstore-opening
store-openingplan
planwaswasnotnotachievedachieved
・Existing・Existingstoresstoresarearereactivatedreactivatedby
bypromoting
promotingparallel
parallelestablishment
establishmentofofdispensaries,
dispensaries,refurbishment,
refurbishment,andandimproved
improvedproductproductlineup
lineupMonthly changes in the existing store sales year-on-year

115%
104%

4Q

1Q

2Q

3Q

YoY
-1.2%
vs. Budget -0.9%

YoY
+0.4%
vs. Budget -1.5%

YoY
+0.8%
vs. Budget +0.3%

YoY
+0.4%
vs. Budget +1.5%

102%

100%

98%

80%
96%
Jun.

Jul.

1H

2H

YoY
-0.4%
vs. Budget -1.2%

YoY
+0.6%
vs. Budget +0.9%

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

FY
YoY
+0.1%
vs. Budget -0.1%
Mar.

Apr.

May

12

4. Sales

Create SD

Expansion of the dispensing pharmacy
Sustained
Sustainedstrong
strongperformance
performancefor
fordispensary
dispensarysales
salesthatthathave
havebeen
been
promotingpromotingimprovement
improvementin
inspecialty
specialtywithout
withoutbeing
beingaffectedaffectedby
bythe
the
tax
taxincrease
increase
The⇒21
Thedispensing
dispensingpharmacy
pharmacy⇒
21storesstoresopened
openedThe⇒+18.3%
Theexisting
existingstore
storesales
salesininprescription
prescriptionoperations
operationsYoY
YoY⇒+18.3%

Renovation of existing stores・・Expansion
Expansionof
ofthe
thedispensing
dispensingpharmacy
pharmacy
・・Department
Departmentrevamped
revampedto
tomatchmatchthethesalessalesmix
mix
・・Expanded
Expandedintroduction
introductionof
ofmeatmeatasasadditional
additionalproductproductlineup
lineupto
toenhanceenhanceconvenience
convenience
Grown
Grownasasaacategory
categorythat
thatcancanearnearnsales
salesand
andgrossgrossprofits
profitsthroughthroughwell-establishedwell-establishedoperations
operations
Renovation
Renovationof
of66
66storesstoresExpanded⇒237
Expandedintroduction
introductionof
ofmeatmeat⇒
237stores
storesFY2015
FY201513

Create SD

5. Gross profit margin
Gross
Grossprofit
profitmargin
margin27.1％
27.1％
YoY
YoYchangechange+0.6pt+0.6pt vs.
vs. Budget
Budget changechange+0.3pt+0.3pt・Recoil・Recoilfollowing
followingexceptional
exceptionaldemand
demandpriorpriortototax
taxincrease
increasein
inthe
the1st1st
half
halfcaused
causeddownturn
downturnmainly
mainlyfor
forH&B
H&B
・In
・Inthethe2nd2ndhalf,
half,recovered
recoveredfrom
fromthetherecoil,recoil,and
andOTCOTCpharmaceuticals
pharmaceuticals
andanddispensing
dispensingboosted
boostedgross
grossprofit
profitrate
ratedueduetotoepidemic
epidemicof
ofcolds
colds
andandincrease
increasedispersal
dispersalof
ofpollenpollen・Improved
・Improvedgross
grossprofit
profitrate
ratebybypromoting
promotingEveryday
EverydayLow
LowPrice
Price(EDLP),(EDLP),
reinforced
reinforceddevelopment
developmentof
ofcorecorecategory
categoryproducts,
products,andandgrowth
growthofofdispensary
sectordispensary sector
Quarter changes of gross profit & gross profit margin Line graph : Gross profit margin

Bar graph : Gross profit（Unit : hundred million yen）

27.7

170

26.7
Gross profit FY2015（Unit : hundred million yen）

15.5期 売上総利益率（％）

150

（％）

27.8

26.5

26.8
26.7

26.2

Gross 14.5期
profit margin
FY2015
売上総利益率（％）

28.0

26.0

25.7

（％）

156

130

Gross profit margin FY2014
（％）

136

137

1Q

2Q

1H
YoY +9.4％
vs. Budget -3.2％

110

145
2H
YoY +11.9％
vs. Budget +2.7％
3Q

24.0
FY
YoY +10.7％
vs. Budget -0.2％
22.0

4Q

14

5. Gross profit margin

Create SD

Promoting Everyday Low Price (EDLP)
Restrained
Restrainedreduction
reductionin
ingross
grossprofit
profitrate
ratewhile
whileadvertising
advertisinglow
lowprices
pricesforforsmallsmalltrade
tradearea
areabybyadopting
adoptingEDLP
EDLPper
peritem
itemrather
ratherthanthan
temporary
temporarydiscounts
discountsusing
usingflyers
flyersMerchandise measure
Improvement
Improvementin
ingross
grossprofit
profitrate
ratewithout
withoutincreasing
increasingthe
theselling
sellingprice
price
bybymixing
mixingdifferent
differentrates
rateswhile
whileclearlyclearlypresenting
presentingcorecorecategory
category
products
productsof
ofthe
thedrugstore
drugstorewithout
withoutslanting
slantingtowards
towardsmass
massdisplay
displayofoflow-price
low-priceproducts
products

Expansion of the dispensing pharmacy
The
Thedispensary
dispensarysector,
sector,whose
whosegrowth
growthrate
rateisishigh,high,hashasexpanded,
expanded,sosoits
itssalessalescomposition
compositionratio
ratiohas
hasincreased,
increased, boosting
boostingthe
theoverall
overallgross
grossprofit
profitrate
rate

15

6. Prescription Section

Existing stores comparisons

FY2015
Share
(%)

YoY
change(%)

13,787

100.0

131.8

5,605

40.7

(million yen)

Net sales
Gross profit

Create SD

Sales year-on-year+18.3%
Prescription year-on-year +12.6%
Sales in prescription operations and the number ofprescriptions issued
Line graph:
Number of prescriptions issued(unit: 10,000)

Bar graph: Sales(unit : hundred million yen)

135.2

180

160

158
160
140
140

125

・Promotion
・Promotionof
ofgenericgenericproductproductusage
usage
Usage
rate
is
60.7%
(quantity
basis)
Usage rate is 60.7% (quantity basis)
・Promotion
・Promotionof
ofstandardized
standardizedpharmacies
pharmacies
56
standardized
pharmacies
56 standardized pharmaciesFY2015
FY2015((+21
pharmacies
year
on
year
+21 pharmacies year on year))・Promotion
・Promotionof
ofmedication
medicationguidance
guidance
byvisit
by visit
Collaboration
Collaborationwith
with6868nursingnursingfacilities
facilities(demandfrom9
newfacilities)(demand from 9 new facilities )

120

100

106

120

92

100

80

137

80
104

80
60

82

60

40

68
55
40

FY2011FY2012FY2013

FY2014FY201520

16

7. SG&A Expenses

Create SD

ExpenseExpenserate
rate22.3％
22.3％ YoY
YoYchangechange+0.1pt+0.1pt vs.
vs. budget
budget -0.1pt-0.1ptMinimized
Minimizedany
anyincrease
increasein
insales,sales,general,
general,andandadministrative
administrativeexpenses
expensesforforvarious
variousfactors
factorsthat
thatcause
causeincreased
increasedcosts,
costs,suchsuchasaspersonnel,
personnel,
construction,
construction,and
andelectricity
electricitycosts,
costs,withwithconsidered
consideredbalancebalancebetween
betweennecessarynecessaryinvestment
investmentand
andcostcostcutting
cutting
Advertising expenses

Restrained costs compared to previous term for increase in storesby reviewing sales promotion method
Utilities expenses

Continuing on from the previous term, changed store lighting toLEDs in 1st quarter, changed electricity provider, and curtailed
electricity consumption with in-store power-saving measures
Building expenses

Restrained any increase in construction costs by reviewing store
specifications and competitive bidding to cope with the rise inconstruction materials and labor costs17

8. Care BusinessWelllife
SALON DAYFee-charging
Fee-chargingNursing
NursingHome
Homebusinessbusiness
・Improved
・Improvedoccupancy
occupancyrate
ratebybyreinforcing
reinforcingsales
sales⇒Occupancy⇒Occupancyrate
rate75.0％
75.0％FY2015（YoY
FY2015（YoYchangechange+11.4pt）+11.4pt）
・Environmental
・Environmentalimprovements
improvementsthroughthroughrefurbishment
refurbishmentofofequipment
equipmentand
andfurniture
furniturewithin
withinthe
thefacility
facility

Preventive
PreventiveNursing
Nursingbusinessbusiness・Development
・Developmentofof「SALON「SALONDAY
DAYRefre」,
Refre」,aamassage-typemassage-typeday
dayservice
service
Handling
Handlingfor
forincreased
increasedproportion
proportionof
ofpeople
peopleneedingneedingnursing
nursingcarecarethroughrevisionoftheLong-Term
Care
InsuranceActthrough revision of the Long-Term Care Insurance Act
・Day・Dayservice
servicecenters
centers77facilities
facilitiesopened
opened→Day→Dayservice
servicecenters
centers41
41facilities
facilities
Rehabilitation-type
Rehabilitation-typeday
dayservice
service38
38facilities
facilities
Massage-type
Massage-typeday
dayservice
service33facilities
facilities((In-store
centers
10
facilities
In-store centers 10 facilities Stand-alone
Stand-alonecenters
centers31
31facilities
facilities))
Long-termLong-termcare
caresupport
supportcenters
centers22centers
centers18

Growth Strategy

19

1. Growth Strategy – Create SD
Opening
OpeningNew
New Stores
Stores40
40newnew drugstores
drugstores・Opening
・Openingof
ofstoresstoresin
inKanto
Kanto(mainly(mainlyin
inKanagawa
Kanagawaprefecture
prefecture))and
and
Tokai
Tokairegions
regions・Development
・Developmentof
ofbusinessbusinesscategory
categoryof
ofsmallsmallurban-styleurban-stylestoresstores・Addition
・Additionof
ofnew
newproductproductlineups
lineupsfor
forlarge
largestoresstoresDispensing
Dispensingpharmacy
pharmacy

In-store
In-storepharmacies
pharmacies10
10storesstores
Dedicated
Dedicatedprescription
prescriptiondrugstores
drugstores55storesstores・Opening
・Openingof
ofstoresstoreswith
withparallel
parallelestablishment
establishmentof
ofhighlyhighlyprofitableprofitabledispensaries
dispensariesconnect
connectto
tomedical
medicalinstitutions
institutions
・Opening
・Openingof
ofstoresstoresnear
neargeneralgeneralhospitals
hospitalsor
orin
inclinic
clinicmalls
malls

Total number of stores as of the end of FY2016
OTC 483 stores（In-store pharmacies 118 stores ）Dedicated prescription drugstores 34 stores20

1. Growth Strategy – Create SD
Renovation of existing stores
Activation
Activationofof existing
existingstoresstores⇒⇒35
35storesstores・Continuing・Continuingon
onexpansion
expansionof
ofthe
thedispensing
dispensingpharmacy,
pharmacy,department
department
revamped
revampedto
tomatchmatchthethesalessalesmix,
mix,andandintroduction
introductionof
ofmeatmeat
・Improvement
・Improvementof
ofmerchandizing
merchandizingfor
forurban-styleurban-stylestoresstores

Improve
Improveservices
services
Reinforcement
Reinforcement ofofserviceservicefunction
functionsupplementing
supplementingstoresstores〈Integration〈Integrationofof EC,
EC,custom-orders,custom-orders,and
andhomehomedeliveriesdeliveries
into
intooneoneorganization
organization〉〉
・Ordering・Orderingitems
itemsisisaasupplementary
supplementarystore
storeservice
servicemainly
mainlyfor
forH&B
H&B
・Purchases
・Purchasesdelivereddeliveredto
topeople
peoplewho
whoreally
reallyneedneedaadelivery
deliveryservice
servicebybycharging
charging
・Deliver
・Delivermedical
medicalsupplies,
supplies,daily
dailynecessities
necessitiesto
tothe
thenursing
nursingfacilities
facilities
ininconjunction
conjunctionwith
withmedicine
medicinefor
forhomehomedeliveriesdeliveries21

1. Growth Strategy – Create SD
ProfitProfitCreation
Creation・Continuously・Continuouslypromote
promoteaffordability
affordabilitythroughthroughEDLP
EDLPininsmallsmalltrade
trade
areas,
areas,and
andensureensureprofit
profitthroughthroughaamixture
mixtureof
ofgross
grossprofit
profitrates
ratesbybyexploring
exploringprofitableprofitableproducts
products
・Product
・Productlineups
lineupssuited
suitedto
tostorestoresize,
size,location,
location,and
andregional
regionalcharactercharacter

Introduction
Introductionof
of Joyful
JoyfulGoods
Goods
Introduce
Introducesundry
sundrygoods
goodsthat
thatprovide
providepleasurepleasurefor
forshopping,shopping,and
andexploreexplorenew
newcustomers
customerswithout
withoutreducing
reducingthe
thegrossgrossprofit
profitrate
rate

Introduce
IntroduceNew
New Sales
SalesPromotion
Promotion
Smartphone
Smartphoneapps,
apps,CATALINACATALINAMarketing,Marketing,etc.
etc.

22

1. Growth Strategy – Create SD
Measures
Measuresfor
for Low
Low Costs
CostsandandImproved
ImprovedProductivity
Productivity
Improve
Improveefficiency
efficiencyofof overall
overallsupply
supplychain
chainthroughthroughautomated
automatedorderingordering

・Improve・Improvelogistics
logisticsefficiency
efficiencythroughthroughlevelinglevelingof
ofquantities
quantitiesordered
orderedandanddelivereddelivered・Improve・Improveproductivity
productivityby
byreducing
reducingworkload
workloadfor
forstore
storeoperation
operationandandreviewing
reviewingpersonnel
personnelallocation
allocation
Dispensing
DispensingPharmacy
Pharmacy
・Personal
・Personalpharmacies
pharmaciescome
cometruetrueearly
earlybybypromoting
promotingto
toadd
add
dispensaries
dispensariesto
toOTC
OTCin
inthe
thedominant
dominantareas
areas
・Making・Makingof
ofthe
thegrowth
growthplan
planandandimprovement
improvementof
oftraining
trainingcontents
contents
forfordevelopment
developmentand
andeducation
educationof
ofhumanhumanresources
resources
・Administration
・Administrationof
oflegallegalcompliancecompliance232. Care BusinessFee-charging
Fee-chargingNursing
NursingHome
Homebusinessbusiness
ProvideProvidesafe
safeandandcomfortablecomfortableliving
livingenvironment,
environment,
andandincrease
increasethe
thenumbernumberof
ofresidents
residents

・Provide・Providewell-establishment
well-establishmentmeals
mealsandanduniqueuniquefacility
facilityoperation,
operation,suchsuchasasofferingofferingrooms
roomswhere
wherepets
petsareareacceptable
acceptable
・Reinforce
・Reinforcesales
salesactivities
activitiesvia
viawebsite
websiteand
andfacility
facilitytours
tours

Preventive
PreventiveNursing
Nursingbusinessbusiness
Focus
Focusononimproving
improvingthe
theprofitability
profitabilityofof existing
existingfacilities
facilities

・Switch・Switchfrom
fromaa10-personsystem
10-personsystemto
toaa16-person
16-personsystemsystem10
10facilities
facilities

Total number of facilities as of the end of FY2016⇒ 42 facilities
16-person system 18 facilities
10-person system 24 facilities243. Medium-term Vision
Promotion of a business model for small trade areas/frequently
visited by providing a variety of services and pleasure of
shopping in addition to reinforcing specialty and convenience
with due consideration for the rapid aging of society
Specialty

Medium-term Aim

Health & Beauty

ROE

Home medical caremore than 15％

Ethical pharmacy

Service

Care business

Daily necessities

Order service for H&B（EC + Custom-orders）

Home delivery

Convenience

EDLP

Hot snackSum side dishWine

Conjugation of
Smartphone apps

Pleasure of
shopping

Meat
Vegetables

Operating profit ratio

more than 6％
Number of stores

600 stores
Sales component
ratio of prescription

more than 10％25

4. FY2016 Forecasts (Consolidated)
FY2015(consolidated results)

ROE 14.4％

FY2016(consolidated projection)(million yen)

Share
(%)

Net sales

213,918

100.0

Gross profit

57,51626.9

61,00026.8 106.1

SG&A
expenses

46,78721.9

49,86021.9 106.6

Operatingprofit10,728

5.0

11,1404.9 103.8

Recurringprofit10,982

5.1

11,4005.0 103.8

Net profit

6,561

3.1

7,030

3.1 107.1(million yen)

Share
(%)

YoY Change(%)

227,300 100.0 106.3

Transition to Company with Audit and Supervisory Committee
and two outside director system
26