Nitori Holdings Co., Ltd.
Financial Results Presentation
for the Third Quarter of FY2017

22 December 2017
【DISCLAIMER】
IN-HOUSE TRANSLATION

TSE1st.&Sapporo Code : 9843

Overview of Consolidated Financial Results（Billions of Yen）

Q1-Q3 FY2017 Q1-Q3 FY2016

Change21 Feb-20
F b 20 Nov
N2017(to sales)

21 Feb-20
F b 20 Nov
N2016(to sales)

N t sales
Netl

422 7
422.7

379 0379.0

Gross profit

54 5% 207.1
54 7% 23111 2％230.22302 54.5%
207 1 54.7%
23.1
1 111.2％

SG&A expenses

37 8% 136.936 1% 22
116 7％
159.8
159
8 37.8%136 9 36.1%
22.9
9 116.7％－－(YOY)111 5％
43.7
437 111.5％

Operating income

70.4 16.7%

870.2 18.5%

0.2 100.3％

Ordinaryy income

71.5 16.9%

71.1 18.8%

0.4 100.5％

Profitattributable toowners of parent

51 251.2

12 6%
47.5
475 12.6%

107 7％
3.7
3
7 107.7％

12 1%
12.1%

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2Consolidated Balance Sheets（Billions of Yen）
20 Nov2017

Current assets

20 Feb2017

ChangeMajor factors
on changes

152.8

170.1

(17.3)(Cash and deposits)

48.5

70.5

(22.0)(Inventory)

46.4

48.9

(2.5)

378.3

317.6

60.7

(Property plant and equipment)(Property,284 5
284.5

248 0
248.0

36 5
36.5

La d ＋34.5
Land＋34 5(Investments and other assets)

79.3

55.8

23.5

Investment securities +23.3

531 2
531.2

487 8
487.8

43 4
43.4

73.5

75.7

(2.2)

(Accounts payable - trade)

18.2

16.0

2.2

(Short-term loans payable)

2.0

0.6

1.4

Non-Current liabilities

25.4

17.3

8.1

((Long-termlloanspayable)bl )80
8.0-808.0

Total liabilities

98.9

93.0

5.9

Total net assets

432.3
3 3394.7
3937.636

Total liabilities and net assets

531.2

487.8

43.4

Non-Current assets

Total assets
Current liabilities

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Income taxes payable (4.6)

Net income +51.2

3

Trend in YOY changes
in comparable stores 【1Q-3Q】（％）

【Sales , YOY】

※Sales = Sales based on orders

115110105107 3107.3
104.0

103.3

101.4

102.4

1009590（％）

【No. of Customers・
Average Spend per Customer , YOY】
No of Customers
No.

11511010510095103 1103.1
100.9

104.4

Q1-Q3 FY2017
Sales comp. by product

ChangeFurniture
i

38 ％
38.5％

▲0.5pt0HFa

61.5%+0.5ptAverage spent per customer

107.2
101 7
101.7

104.5

98.9
98
999.7

100.1

Q1-Q3
Q1
Q3

Q1-Q3
Q1
Q3

Q1-Q3
Q1
Q3

Q1-Q3
Q1
Q3

Q1-Q3
Q1
Q3

FY2013

FY2014FY2015FY2016FY201790

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97 997.94

Product with strong sales
Original mattressN sleep
N-sleep

Offer various type of sleeping
comfortability with expansion
in variety
Appeal the quality and the
comfortability continually
through TVCM
Approx.
pp
60% of sales volumeof N-sleep are compressed-rollstyle⇒ Easy to take home
⇒・Easy・Efficient shipment,improvement
pin stockstorage
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5

Product with strong sales

Living storage
TV cocommercial
e ca sshowso s a goodcombination of furniture andbasket
Basket sizes are modularized tofitt perfectly
pe ect y intoto Nitoriʼsto s
furniture
Contributes
Ct ib t tot theth increaseiinithe number of customers sincemost customers purchaserepeatedly

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6

Product with strong sales
Fall/Winter products
Fall/Winter products, mainly“N-warm”
N warm series, have shownstrong sales because of thetemperature drop
The sales of seasonal
coordination series has
exceeded that of the previousyear
The sales of kotatsu-related
products increased inconsequence of suggestion
coordination plans on TVCM andi storesint
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7Consolidated Sales
Net sales（Billions of Yen）

422.7 (111.5%）
379.0
379 0

【Net sales】

AmountStore sales(Global)¥383.7bil. 110.2%

E-commerce

YOY¥22.0bil. 133.2%

B to B¥2.8bil. 116.8%

Renovation sales¥4.1¥4 1bil.
bil 104.0
104 0%

Rent income¥5.2bil. 115.1%

Others

¥4.7bil. 140.0%

Total¥422.7bil. 111.5%

Sales comp. by region

Q1-Q3 FY2016

Q1-Q3 FY2017

Copyright 2017 Nitori Holdings All Rights Reserved

Hokkaido

4.7％ △0.3pt KinkiTohoku5.6％ △0.5pt &Shikoku

Chugoku

7.4％ △0.4pt

Kanto

31.3％ +1.2pt Okinawa

Kyusyu&8.6％ △0.4pt

Hokuriku&Koshinetsu

5.4％ △0.3pt EC

5.2％ +0.9pt

Chubu&Tokai

10.2％ △0.3pt Others

6.4％ +0.5pt

Eastern

47.2% +0.0pt Western

41.2% △1.4pt■不許複製印刷配布

15.2％ △0.4pt

8Nitori business(B to B)
Good sales to mainly offices and hotels

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9Interior Renovation Business8/21〜10/1
System Kitchen Campaign
By providing products withaffordable price line(¥159,000(¥159 000*),) theth saleslsteadily increased
The sales of system kitchen
during the campaign wasover 200% in comparison tothat of the previous year

*before tax/ installation, assembly, delivery fee is not included

Copyright 2017 Nitori Holdings All Rights Reserved

OperatingOtiiincome andd llaborb
productivity improved
significantlysg
ca t y by dividing
d d g thet e
work between sales andconstruction and byreviewing
iiththe pastt saleslmethods■不許複製印刷配布10Gross profit ・ SG&A expenses（Billions of Yen）

【Gross profit】

230.2（111.2%）

207.1

Q1-Q3 FY2016

AmountYOY¥46.6bil. 110.6%

11.0% △0.1pt

Rents¥24.7bil. 121.2%

5.9% +0.5pt

Deliverycharge¥19.9bil. 112.9%

4.7% ＋0.1pt

Advertising¥11.7bil. 109.6%

2.8% △0.1Pt

Outsourcing¥10.0bil. 130.2%

2.4% +0.3Pt

Store fixtures
expense¥6.3bil. 296.8%

1.5% +0.9Pt¥8.2bil.

Capital investment【Gross profit margin】+0.2pt
54.7%+0.8pt△1.2pt
FX impact
applied to theinventory¥48.8bil.

p54.5% （△0.2pt）

COGSreduction

Q1-Q3 FY2016
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Ratio toChangesales

Personnel

Depreciation

Q1-Q3 FY2017

FX impact
applied to thepurchase(¥105.59/$⇒¥105.07/$)【SG&A】

Q1-Q3 FY2017■不許複製印刷配布

11No. of stores as of 20 Nov 2017

５０９Stores(+３８)

３９０(+17)８（+４）

DECO HOME

６１(+10)(Taiwan)２７（±０）(USA)

５(China)

１８（+７）

Prefecture

No. ofstores

Prefecture

No. ofstores

Prefecture

No. ofstores

Hokkaido

20 (±0)

Yamanashi

3Shimane

2H kk idHokkaido

20 (±0)

I hik
Ishikawa

5Hi
Hiroshimahi

12Aomori

6 (±0)

Toyama4

Yamaguchi

5Akita4

Fukui

2Kagawa

4Iwate3

Hokuriku & Koshinetsu

31Tokushima

2

Yamagata

4

Shizuoka

12 (+1)

Kochi

3

y g
Miyagi

7

Aichi

25 ((+1))

Ehime

6

Fukushima

5Mie

7

Chugoku & Shikoku

42Tohoku

29 (±0)Gifu

10 (+3)

Fukuoka

TTokyok47 (+9)

Ch
Chubu
b &T
Tokaik i

54 (+5)

Oit
Oita

5

Kanagawa

26 (+3)Osaka

31 (+3)Miyazaki

3

Saitama

28 (+4)Kyoto

12 (+1)

SagaChiba

22 (+1)Nara

5

Nagasaki

3Gunma6Hyogo23 (+1)

Kumamoto

6 (+1)

gTochigi

8 (±0)()

Shigag7

Kagoshimag

7 (+1)()

Ibaraki13

Wakayama

5Okinawa

4

Kanto

150(+17) Kinki

83 (+5)

Niigataii

8Tottorii

2Nagano9Okayama

6

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19 (+1)

3 (+1)

Kyushu & Okinawa

50 (+4)

Japan459(+31)
12Store openings in Japan
Urban area

Small
population area

Deco Home

Nitori Express

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13

Store openings in China
First store openings in North & South China
Tianjin

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14

Nitori China
Launch online
furniture sales
Start of online furniture sales
through Nitori Chinaʼs own
websiteProviding after-sales service
efficiently by limiting theonline sales area to that withreal stores
Planning to expand on theonline sales area by linking
with upcoming new store
openings
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15

Nitori China

Visionin 2022
200 storesConstruction of nationwide
product collection andsupply system
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openedplanl16

Major indicators of management efficiency（1）Sco Numpe ber︵Group︶
Nine monthsIndicator

unit

1

Return on assets％Over
11 25％
11.25％

○14.0

16.2

13.6

15.0

15.4

2

Total asset turnoverTi
mesOver 1.5

×0.83

0.86

0.80

0.87

0.93

3

OrdinaryO
diincomeimargin％Over 10％

○16.9

18.8

16.9

17.3

16.5

4

Earnings per share¥Over ¥75

○458.6 429.6 317.5 289.2 256.6

5Return on equity％Over
11.25%

○12.4

13.6

10.9

11.612.76E it ratio
Equityti％O
Over60％

○81 2
81.2

80 3
80.3

77 9
77.9

76 5
76.5

73 0
73.0

7

Interest coverage

TimesOver 20○1,676 1,689

918750455

8Sales growth rate％

Over 10％

○11.5

13.2

7.8

9.5

11.2

9

Ordinary income
growthth ratet％Over 10％

×05
0.5

26.1

5.2

14.7

1.1

Ratio of gross profit to％Over 48％

○54.5

54.7

52.8

52.2

52.3

R ti off break-even
Ratio
bk％

Under 80％

○65.4

61.8

64.2

63.1

64.7

10 sales

11 point to salesTarget

2017.11

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2016.11 2015.11 2014.11 2013.11■不許複製印刷配布

17Major indicators of management efficiency (2)Sco Numpe berIndicator

unitTarget

2017.112016.11 2015.11 2014.11 2013.11

Sale of furniture and home furnishing

12 Sales per tsubo

K Over ¥950K

○

1,011

980

922
9918
98888

13 Stock turnoverTi
mesOver 9×5.9

5.8

5.4

5.7

6.0

Ti
mes

Over 2.9

○39
3.9

39
3.9

39
3.9

41
4.1

42
4.2

Ratio of profit％

Over 20％

○

31.0

34.2

31.0

32.331.7

Ratio of real estate cost％

Under 25％

○22.0

20.6

22.1

22.0

22.5

17 cost to gross profit

Ratio of sales promotion％

Under ６％

○5.7

5.8

6.2

6.2

6.2

18 Labor productivity

M

Over ¥10M○19 Sales floor per labor

Tsubo

Over 60

×34 2
34.2

37 0
37.0

38 3
38.3

39 8
39.8

42 4
42.4

20 tsubo

K

Over 150K

○155

167

135139132

21 Stock per tsubo

K

Under 90K

○78

77

8177

7130〜35

○

33.1

33.2

33.0

32.6

32.3

14

Operating assets
turnover15 distribution

16 to gross profit

Operating income perg ageg of labor
22 Average

Results （○won/×lost）
Copyright 2017 Nitori Holdings All Rights Reserved

18.30 19.25 18.03 18.55 19.04○18×4 ○19×3 ○13×9 ○15×7 ○15×7■不許複製印刷配布

18TOPICS

Logistics
Unattended/intelligent transport
robotic system

Devanning assist machine

Launched for the first time inJapan, Butler brings productstorage shelves to workers. AIp
robots significantlygyempoweredimproved the working efficiency.

Joint development with Murata
Machinery Ltd.
Machinery,Ltd By using aconveyor with vertical andhorizontal head swing function anda specificifi work
kbbench,h it allowsllffor
easy unloading.

ButlerCopyright 2017 Nitori Holdings All Rights Reserved

EL-De/VANEL
De/VAN■不許複製印刷配布

20

Human resource development

Nitori US seminar
Nitoriʼs the most investment
in education.
Participants experience“prosperous
prosperous home livingliving”
firsthand, and share Nitoriʼsmission and vision.
Expanded the educational
opportunity for national
staffs by holding the seminarin Chinese for the first time.
1,097 Participants in2017(from Nitori group)
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21

Future Measures2022¥1 tril.
in net sales
1,000 stores【Change in business environment】
・Globalizationl b lii・Expansion of business area
・ChangeChange in products comp.
comp【Change in external environment】
・Competition with differentindustries
・Advancement in technology
・Problems
P bli logistics
inl i ti anddemployment

Copyright 2017 Nitori Holdings All Rights Reserved【Future【Ftmeasures】】
・new core system
y・new logistics system
・O2O
O2O(Online to Offline)■不許複製印刷配布

22

Store roll-out plan in FY 2017
StoreTaiwanUSAChinaTotal

End ofQ3

３９８

６１２７

５１８ ５０９Q4Net
increase＋６＋２±０±０＋６ ＋１４End ofFY2017

４０４６３２７５２４ ５２３ChiChina＋６USA±０Taiwan±０Japan＋８Copyright 2017 Nitori Holdings All Rights Reserved■不許複製印刷配布

23Plan in FY 2017
（Billions of Yen）

ChangeFY2017 Plan

FY2016

Net sales

568.0

512.9

Gross profit

309.0 54.4% 278.2

54.2% 30.8 111.0%

SG&A expenses

210.0 37.0% 192.5

37.5% 17.5 109.1%(to sales)－(to sales)－(YOY)

55.1 110.7%

Operatingpg
income17 4%99.0990 17.4%

85 785.7

16 7% 13.3
16.7%
115 4%
13 3 115.4%

Ordinary
income17 6%
100.01000 17.6%

87 5
87.5

17 1% 12.5
17.1%
114 2%
12 5 114.2%

12 1%
68
5 12.1%68.5

59959.9

117%
11.7%

Profit attributable
tto owners off
parent2%
114.2%
86 1148.6

No change of plan
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24

【DISCLAIMER】
Th forecasts
Thefandd projected
jd operating
iresults
l containedi d iin thishi report are bbasedd on iinformation
fiavailable at the time of preparation, and thus involve inherent risks and uncertainties.
Accordingly, readers are cautioned that actual results may differ materially from thoseprojected as a result of a variety of factors.