Integrated
Report2023
Year ended February 28, 2023

Editorial Policy
In March 2021, our five home improvement companies were merged into one
company and relaunched as DCM Co., Ltd. This is both the culmination of 20
years of efforts to bring together home improvement retailers with strong roots
in local communities across Japan to provide better products as well as a “newbusiness foundation” for the coming era.
The purpose of this report is to provide an overview of our history,
an understanding of the strengths we have developed over the years, and basedon these strengths, the initiatives we will pursue under the third medium-term
management plan aimed at realizing our vision for 2030, “Transforming into
an integrated business that comprehensively makes people’s lives more
comfortable.”
We hope to provide shareholders, investors, and other stakeholders witha better understanding of our vision and the value we provide to society, as wellas our business model, operational resources, and business strategies aimed atrealizing value creation with home centers as our core competence.
We encourage readers to review our medium- to long-term growth story,
including our perspectives on sustainability.

Contents
Overview of DCM

4

DCM’s Philosophy

6

The History of DCM’s Value Creation

8

Business Model

10

The DCM Value Creation Story

10

DCM Management Resources

12

Message from the President

14

Medium-Term Management Plan Overview

18

Medium-Term Management Plan Business Strategies

20

Medium-Term Management Plan Financial Strategy

32

Sustainability

34

Corporate Governance42

Risk Management and Compliance

50

Financial Highlights

52

Company Data

54

Organizations Covered
DCM Holdings Co., Ltd., consolidated subsidiaries, and equity–method affiliates.
Period Covered
Fiscal 2022 (March 1, 2022–February 28, 2023)
Includes details of activities conducted since March 2023.
Reference Guidelines
Guidance for Collaborative Value Creation (METI) and International Integrated
Reporting Framework (IIRC)
Forward-Looking Statements
Business forecasts and other statements in this report are based on information
available at time of publication and certain assumptions deemed reasonable by
the Company. Accordingly, actual results may differ materially from forecasts
due to various risks and uncertainties.
Trademarks
All Company, product, and service names mentioned herein are trademarked or
the registered trademarks of each company.

3

Overview of DCM

Group Structure
DCM Holdings Co., Ltd.
Directing and managing the business activities of subsidiaries mainly engaged in
the home improvement retail business by owning shares of the subsidiaries

DCM Co., Ltd.

XPRICE Inc.

MYVOT Fellows, Inc.

Operates a comprehensive
e-commerce site with a focus
on household appliances

Planning and operation of
the common membershipservice MYVOT(Home improvement retail businesscompany)

Operation of home
improvement storesin 37 prefectures

DCM Life Support
Co., Ltd.

Keiyo Co., Ltd.

Inter-group insurance agency
business and residentialbuilding construction
transactions

Operation of home
improvement stores mainlyin the Kanto, Chubu, andKinki regions(Equity-method affiliate)

Consolidated subsidiaries of DCM Co., Ltd.
DCM Nicot Co., Ltd.

Operates home convenience stores in small business areas

Hodaka Co., Ltd.

Specialty shops selling tools, hardware and work supplies for professional use

DCM advanced technologies Co., Ltd.

A group of system engineers further the digital transformation of DCM

Store Network of the DCM Group
Hokkaido

37 prefectures

675

163

storesstores

Chubu
Kinki

56

173
storesstoresTohoku134
stores

Chugoku

32
storesKanto

43
storesShikoku
Kyushu13
stores4

DCM Holdings Co., Ltd. Integrated Report 2023

61
stores

Notes: 1. Number of stores at end of February 2023.
2. Figures exclude 675 stores operated by equity–method
affiliate Keiyo Co., Ltd.

Business Portfolio

As of end of February 2023

Home improvement retail business

Small store and specialty store business

DCM Co., Ltd.

Hodaka Co., Ltd.

(506 stores)(57 stores)

Specialty store offering tools, hardware, work supplies,
and work clothes. Hodaka aims to be a store thatsatisfies everyone, from professionals to generalcustomers, who are particular about their tools.

Keiyo Co., Ltd.
Equity-method affiliate(164 stores)

Through business development leveraging
comprehensive Group strengths, the DCM Group
protects customer lives even in emergency situations
by offering a wide range of disasterprevention equipment in addition to
Common membershipthe best products and services forserviceresolving problems and meeting
MYVOT
needs in support of the desire
for a better life.

E-commerce business
DCM Co., Ltd.
DCM Online

DCM Nicot Co., Ltd.
(112 stores)

Develops stores mainly in rural areas where
shopping is difficult under the conceptof “delivering great convenience tosmall towns.” DCM Nicot supports
the lives of local residents
through the provision of items
needed in everyday life asa home convenience store.

Points accumulate regardless of payment
method, and can be used at a rate of
1 point = ¥1. Using this service, the morecustomers spend, the morethey save.

In addition to offering familiar products
from home improvement retail stores, DCM
Online also provides many new products uniqueto online shopping websites.

XPRICE Inc.

Operates “XPRICE,” one of Japan's largest
e-commerce websites focusing on consumer
electronics. In addition to the online shopping
website, the company has opened stores primarily in
shopping malls, and has received many awards.

Note: MYVOT points cannot be used on XPRICE.

5

DCM’s Philosophy

DCM’s Philosophy
The DCM Group creates value by helping people make their lives and homes more
comfortable through the “do it yourself” (DIY) approach based on the “Do Create
Mystyle” Company Philosophy.

Company Creed

DCM’s philosophy

Serving Creation Unity
Company Philosophy

Do Create Mystyle
While creating new products and services for our customers
and ﬂexibly adapting to changes, we will unite with the local community
to serve society and strive to be indispensable presence.

Principles of Conduct

Servingsociety

Sincere support
Products/services

Customer ﬁrst
Interpersonal bonds

We leverage our specialist
knowledge on products andservices to provide creation

We bring smiles to the local
community while fulﬁlling
our mission to provide
lifestyle infrastructure

Demand Chain Management
for Customer
Always thinking from the customer’s perspective, we will strive to
be a company that achieves both customer satisfaction and progress in distribution.

Conduct Guidelines
Customer ﬁrst

We put ourselves in our customers shoes and think deeply.
Sincere support

CreationUnity

for our customers

for the community

Cooperation withthe local community
Stores
A world connected by stores and digital technologythat enables customers to create safe and enjoyable living environments

We provide products and services
that can bring smiles to our customers.
Cooperation with the local community

We will enrich lives together with our customers.
Teamwork

While fulﬁlling our role,
we will respect our peers and cooperate with one another.

Teamwork

Two DCMs“DCM” has two meanings, referring to both the “Do Create Mystyle” Company Philosophy and“Demand Chain Management for Customer” as our Principles of Conduct.

Company Philosophy

While creating new products and services for ourcustomers and ﬂexibly adapting to changes, we will unite withthe local community to serve society andstrive to be indispensable presence.

6

DCM Holdings Co., Ltd. Integrated Report 2023

Principles of Conduct

Always thinking from the customer’s perspective, we will strive to be
a company that achieves both customer satisfaction and progressin distribution.

Values

DCM Brand Concept

Business Model

Detail 1 The three circle symbol

Message from the President

Detail 3 The DCM typeface and color
Detail 2 The white space on the lower right of the symbol

Medium-Term Management Plan

The three circles in the DCM Group logo represent theCompany Creed: “Serving society, Creation for ourcustomers, and Unity for the community.” By enlarging
the connection between these three circles, we arestrengthening DCM's philosophy and symbolizing thecommitment of all employees to remain close to andsupport customers. The blank space where a circle
should be in the lower right corner of the logo isintended as a space for creativity, expressing our hopethat customers will realize their individual DIY
objectives.
The soft, refined form of the DCM logo conveys“familiarity, trust, and peace of mind,” with the orange
color representing “happiness and enjoyment,” and thebrown color representing “nature and sustainability.”

Brand Story
As “Do Create Mystyle” world view and values, the “Creating your own happiness with DIY” brand story is basedon three key concepts: “Making DIY part of life,” “your style,” and “support.”

Sustainability

Creating your own happiness with DIY
Yes, happiness can be created.

On weekends, I reward myself with a cup of herbal tea.

There are as many ideas to get started as

Corporate GovernanceI carefully cultivate chamomile on my balcony.

there are people in your life.
Therefore, any happiness will be a happinessever made.”that only you can create.

Simply hanging a design sheet on part of a familiar wall

DCM wants to help customers achieve this.

transforms the room into a home café.

We want to give shape to happiness for as

Risk Management and Compliance

My grandmother said, “I'm still using the very first chair you

many customers as possible, each of whom
DIY is not difficult.

comes to us with their own unique feelings.

It's about doing something for someone else, for the world.
There is joy in our lives that can be realizedborn from individual lifestyles, into something that provides

through small changes and ideas.

great happiness, like an invisible tool.

We want our customers to believe this, which

Financial Highlights

With a little ingenuity, you can turn thoughts, which areis why we welcome them again today.

7

The History of DCM’s Value Creation

Taking on the challenge of creating newvalue based on the team spirit of 20,000
members who share the same passion
for customers.
Toshihiro Hisada, Chairman and CEO

History of DCM
 ahma Co., Ltd., Daiki Co., Ltd., and Ishiguro Shouten Corp.
K(later Homac Corp.) entered the home improvement retail business

1970s and 1980s

 CM Japan Holdings Co., Ltd.
D
established as a holding company(currently DCM Holdings Co., Ltd.)(September)

2006
2003
 ahma Co., Ltd., Daiki Co., Ltd., and Homac Corp.
K
formed a business and capital alliance (February)DCM Japan Co., Ltd. established as a joint purchasing
company (May)8

DCM Holdings Co., Ltd. Integrated Report 2023

 ompany name changed toC
DCM Holdings Co., Ltd. (June)

2010
2009
 C site launched (July)E
Private brand products launched underthe “DCM Brand” (November)

Corporate GovernanceRisk Management and Compliance
Financial Highlights uroganeya Co., Ltd. joined
K
the Group and changed its
name to DCM Kuroganeya
Co., Ltd. (December)

Sustainability

2016

Medium-Term Management Plan2017

Message from the President

2015 apital and businessC
alliance with Keiyo
Co., Ltd. formed, andit became an
equity-method
affiliate (January)Business Model ahma Co., Ltd., Daiki Co., Ltd., andK
Homac Corp. changed their names to
DCM Kahma Co., Ltd., DCM Daiki Co.,
Ltd., and DCM Homac Co., Ltd. (March)
Sanwado Corp. joined the DCM Groupand changed its name to DCM Sanwa
Co., Ltd. (July)theorizing the ideal state of how we should be for thesake of customers as the central axis. We tried to keep
our thinking focused on the customer, rather thanaligning to the way one of the operating companies
conducts business.
Furthermore, rather than presenting the ideal state
top-down, each person in charge had repeateddiscussions to find the optimal solution from thecustomer’s perspective through trial and error until they
were satisfied. Therefore, although it took time, I believe
we were able to construct the new style of DCM
objectively while integrating the three companies as theissues were cleared one by one. At the core of ouractions was ambition to “leave the past behind,cooperate, and create something new to become
the overwhelming No. 1.” Therefore, we now havea corporate culture that does not care about which
company employees originally came from. In this way,
we have been able to deepen our product development,
shelf space allocation, and new services through trial
and error—all aimed at increasing customer convenience.
It is truly gratifying that we were able to move forward
to the 2021 integration after having prepared well.
We believe home centers will be called upon evenmore to evolve beyond being a retailer of goods tobecoming a form of lifestyle infrastructure in light of thesocial issues facing Japan, such as a declining birthrate,
aging population, and depopulation of rural areas. To
achieve this, we must continually address our customers’changing needs and provide solutions that surpass their
expectations. Through discussions and trial and error in
the process of management integration, we have beenable to accumulate the ability to respond to changes inthe environment, as well as develop the power to think
about how to solve problems. Based on the solidmanagement foundation we have built and the lofty
aspirations of all our employees, we at DCM will strive
to realize our Company Philosophy, “Do Create Mystyle:
Giving Shape to Your Dreams for Life,” and to achievesustainable growth. We look forward to your continued
support.

Values

I would like to first introduce our history to date as we
publish our first Integrated Report, which will explain
DCM’s value creation story and medium- to long-termbusiness strategy to our stakeholders.
After dawning in the 1970s, Japan’s home
improvement retail industry enjoyed remarkable growthin the 1980s and 1990s. The home center market
expanded rapidly as many companies from various
business formats entered the market nationwide.
By 2000, however, the market had transitioned froma growth phase to a maturity, and there was a growing
awareness of the inevitable impact of a declining
population on the future. With this long-term outlook,
the starting point for the DCM Group was a group of
like-minded individuals who came together to “establish
an overwhelming No. 1 position in the Japanese home
improvement retail industry and grow toward thefuture.” These individuals were representatives of Kahma
Co., Ltd., Daiki Co., Ltd. and Homac Corporation.
We first established a joint purchasing company,
DCM Japan Co., Ltd., in 2003 to strengthen our
procurement capabilities.
At that time, the name “DCM” was chosen to
represent “Demand Chain Management,” or reforming
logistics from the perspectives of customers, rather thanthe conventional concept of retail of efficiently
purchasing and selling products made by manufacturers.
In 2006, DCM Japan Holdings Co., Ltd. (renamed DCM
Holdings Co., Ltd. in 2010), a joint holding company, wasestablished for the purpose of implementing more
unified business operations, and group management
was launched with three operating companies under
its umbrella.
I am occasionally asked how DCM was able tosuccessfully integrate three listed companies as if they
had originally been a single entity? Indeed, all threeoperating companies were already well established intheir respective markets at the time, and their employees
were proud to work for them. In promoting themanagement integration of these three companies, ourbasic policy was to consider how we could achieve this, ive home center operating companies merged to form DCM Co., Ltd. (March)FDCM Philosophy established (March)

2021

2019
 YVOT launchedM
as a common
membership service(June)2022
 ystems Division spun off and DCM advanced technologies Co., Ltd. establishedS(January)Hodaka Co., Ltd. transferred from divisional management structure to
an independent company (March)
XPRICE Inc., operator of one of Japan’s largest e-commerce websites centeringon household appliances, joined the Group (March)Store names unified to “DCM” (September)

9

Business Model

The DCM Value Creation Story
A value creating business that achieves a more comfortable life and living through DIY

Do Create Mystyle
くらしの夢をカタチにWe will create new products and services for our customers, flexibly respond tochange, unite with the community, and achieve the form of an indispensable
company that serves society.

Business development

Management
resources

The unity of our highly-motivatedapproximately 20,000 employees

Store strategy

Medium to longterm threats
and opportunities
Threats

Database rooted in know-how andcommunities to meet DIY needs

Ability to develop unique products that giveconsideration to people and the environment
and that can be found nowhere else

Structural changes tosociety and customer
needs
Globalization ofbusiness conditions,homogenization of
the home
improvement retailer
business

Expandingthe areas in which
we do businessthrough promotionof mergers andacquisitions

Transformation into an
business that comprehen
people’s lives more

Move from a company thatto a company that compre
provides fulﬁlling
Taking on the challenge of creatingof home improvement retailers~Revitalizing stores and expanding thewe do business~

Sustainably creating bothand shareholder value

Embrittlement ofgrowth prerequisites

Nationwide network of over 670 storesthat function as information hubs andallow us to cooperate with communities

Supply chain which can put
information to good use and which
can stably supply products

Financial foundation, which has theﬁnancial muscle necessary formergers, acquisitions and investments
and varied procurement methods
10

DCM Holdings Co., Ltd. Integrated Report 2023

Opportunities
Permeation of DIY inlife and living
Growing
expectations as social
infrastructure

Better in-housebrand productdevelopment
structure

Business Strategy

Values

Business Model

Value offeredby DCM

Message from the President

Materiality groups[Valuable to DCM]
Products and services that arecommunity-based and conceived
from a customer’s point of view

• Achievement of a comfortable andsustainable community life and living• Promotion of circular economy anddecarbonization through products and stores

Important bases supporting
living in communities whereaging population and the fallingbirthrate is progressing
Afﬂuent lifestyles forcustomers accented with DIY• Creation of a workplace where a diverse arrayof human resources can be active andrespecting human rights

Offering of products andservices that give consideration
to the environment andresource conservation, lifestyle
proposals• Construction of supply chain that gives
consideration to the environment and society

Products and services fordisaster prevention and damage
limitation, support for recovery

areas in which

Risk Management and Compliancea new generation• Support of strong community
resilience against disasters

Social infrastructure that can stably
supply the products necessary forlife, living and work

Corporate Governancesells products
hensively
lifestyles[Valuable to society and theenvironment]

Sustainability

Further pursuitof low-cost
operation

integrated
sively makes
comfortable• Deepening of relationships withcustomers with whom we create
new value

A sense of purpose andmotivation in working at DCM
developed through the feelingsof gratitude from customers

Medium-Term Management Plan

moving forward

corporate
Financial Highlights

Creation of
our own unique
BOPIS* style• Stronger corporate governance* BOPIS : Buy Online Pick-up In Store• Regional and community development

11

Business Model

DCM Management Resources

A workforce of about 20,000
highly motivated employees
Under the long-term business concept “transforming into an integrated business that comprehensively
makes people’s lives more comfortable,” to realize the Company Philosophy ”Do Create Mystyle,”
approximately 20,000 employees work together to continue creating new value for society, customers,
and communities. Our core value lies in human resources and organizational capabilities that enable us
to collaborate as a group of DIY professionals with high aspirations and clear vision.

Expertise in meeting DIY-related needs anddatabases derived from local communities
In addition to having the largest number of DIY advisors* in the industry who possess expert DIY
knowledge and skills enabling them to comprehensively support customer DIY activities, we strive tosatisfy customer DIY needs and uncover potential demand by leveraging know-how accumulated overmany years. Based on the characteristics of each region and the results of proprietary data analysis, we
also respond to customer needs and expectations with sales floors that offer product lineups optimized
for each season.
* Professional DIY advisors certified by the Japan DIY•HC Association

Ability to develop unique and original productsthat are people- and eco-friendly
We want to deliver “valuable products” offering “satisfactory quality” at a “reasonable price,” and basedon this concept, we are focused on highly original private brand (PB) products that contribute toenriching customer lives. To this end, we consider raw materials, packaging, and other elements that arepeople- and eco-friendly, and have established an organization and human resources capable ofpromoting sustainable procurement and managing quality and intellectual property throughout the
supply chain.

12

DCM Holdings Co., Ltd. Integrated Report 2023

Values

Business Model
Message from the President
Medium-Term Management Plan

A nationwide network of over 670 stores that can gather andprovide information in collaboration with their communities

Sustainability

We cooperate with customers and their immediate communities to ascertain customer and community
lifestyles and needs, while making new proposals and providing information with regard to eachproblem faced by customers through a nationwide network of over 670 stores (excluding equity–method
affiliate Keiyo Co., Ltd.). Each store has different role and concept depending on whether they are large,
medium, or small in size, and provide services that make full use of DX. We respond to customer needs
and expectations by enabling them to use these different types of stores as necessary in accordancewith their requirements.

Corporate Governance

A supply chain able to ensure a dependable supplyof products and relevant data

Risk Management and Compliance

We collaborate with approximately 1,600 business partners in product development, supply, logistics,
and other business activities to establish a system enabling us to stably provide products nationwide.
Further, through collaborations with leading business partners in each field, we are able to collect thelatest information on society, markets, products, and other factors, facilitating rapid responses to changes.

Financial Highlights

Established access to financing from diverse
sources for funds needed for investment and M&As
In addition to new business format developments that require capital investment and upfront
investment for business expansion, including new store openings, store renovations, and systemdevelopments through a financial base offering diverse procurement methods, we proactively invest via
M&A in the home improvement retail business and other areas with growth potential.

13Message from the President

With teamwork cultivated through corporate
integration, we are creating a newgeneration of home improvement stores.
Yasunori Ishiguro
President and COO

Home improvement stores that continuallychange to meet customer needs
The company name “DCM” is derived fromthe concept of “Demand Chain Management,”
distribution reform from the customer’s
perspective. This is the opposite of the moreconventional “supply chain management,”
incorporating the idea of emphasizing the needs ofthe customer rather than the convenience of the
supply side. This approach is reflected in our
Principles of Conduct, “Demand Chain
Management for Customer: Always thinking fromthe customer’s perspective.”
In 2016, at the time of the 10th anniversaryof the establishment of DCM Holdings Co., Ltd.,we adopted as our new company philosophy“Do Create Mystyle.” The slogan reflects our aim
to be a company that helps customers realize theirideas and desires, which we call “Mystyle,” by
doing and creating. The needs of customers arediverse, and the dreams they have for their lives
continually change with the times. Our pledge torespond flexibly to such changes, and to change
ourselves, is also embodied in this philosophy.
In March 2021, when DCM Co., Ltd. wascreated by integrating five home improvementcompanies, we established a value system basedon the company philosophy of “Do Create
Mystyle.” We formulated the Principles of Conduct

14

DCM Holdings Co., Ltd. Integrated Report 2023

Values
Business Model
Sustainability
Corporate GovernanceRisk Management and Compliance
Financial Highlights

Home improvement stores have changed with thetimes. More intense competition from companies
in other industries entering the market has had
an effect, but the biggest factor is the changes incustomers. When I entered this industry around30 years ago, customers were eagerly buying
products to make their lives easier. Durable
consumer goods such as the “big three” oftelevisions, washing machines, and refrigerators,
along with automobiles, were becoming
widespread. But I think that underlying this trend
was that the sort of smaller items that make life
just a little more convenient had yet to reachhouseholds.
Time went on, and as consumer goods
became more common in households to a certain
extent, a growing need emerged not only for
products that make life more convenient, but thosethat enrich people’s lives, such as gardening, DIY,and pet supplies. Stores needed to expand anddeepen their product lineup to meet such needs.
Further, in recent years, as more companies
adopted work-from-home schemes in response to
the COVID-19 crisis, employees became able towork without going to the office. With this change
in lifestyle, more people began dreaming oftrading their small downtown apartment fora large house in the suburbs where they could
keep pets and have a garden, and raise theirchildren in areas with fresh air. Demographic
trends such as the declining birthrate, aging
population, and concentration of population incities have supported this trend, allowing people
to purchase vacant houses in the suburbs at
a lower cost. This in turn has driven demand forrenovation of the houses that have been acquired.
In response, we have expanded our offerings in
the field of DIY renovation.
Homeowners can of course hire a contractor
for renovation work, but more and more people
are adopting the mindset that they want to dowhat they can on their own. This is partly to keep
costs down, but also because they are attracted tothe idea of doing it themselves. We first noticed
this market trend and changing needs toward
DIY and home renovation around 2010, andreflected it in our store management and productdevelopment. As a test, we purchased a vacanthouse in Sapporo, Hokkaido, and had our
employees try to renovate it. We found that it wasalmost impossible to renovate a house using only
the products that were available at DCM stores at
the time. Based on this experience, we expanded
the sales floor to include products that
homeowners would need for renovation, and sales
exceeded our expectations. Up to that point, I thinkit’s fair to say that our company, or anyone in thehome improvement industry, had not been able
to capture the latent needs and interests ofcustomers. Afterward, we developed a “DIY
renovation” format where customers could gain
hands-on experience with reform in the store, or
receive advice from an employee with specialized
knowledge when purchasing products. This was
implemented from an early stage, and has become
one of our strengths.
I consider DIY to encompass not only home
improvement, but also gardening, keeping pets,and enjoying the outdoors, and even cooking andMedium-Term Management Plan

Capturing the essence of DIY and pioneering
potential markets

Message from the President

to embody this system, drawing on employeegenerated ideas, mainly from younger employees.
I was extremely pleased to see that “teamwork”
featured so prominently alongside our aspirations
for customers and local communities. This isbecause it was the employees themselves who
included the concept of teamwork, with all
employees working with mutual respect andcooperation as they fulfilled their roles. I truly felt
the mindset of employees united for the sakeof customers.

15

Message from the President

cleaning. In other words, DIY is an activity that you
do on your own, in the way that you want. In thatsense, by looking at the DIY domain more broadly,
we are able to meet the needs of today’s
customers who are seeking to enrich their lives
and find solutions, not just buy things. We wantto make stores more interesting, and offer new
formats to uncover potential markets. One
example is developing the DIY market in urban
areas. Until now, DIY has generally been
associated with life in suburban areas witha house and a garden, rather than the city center.
In 2022, we opened DCM DIY place, a new type ofurban-centered store in Ebisu, Tokyo, to offer DIY
ideas and experiences tailored to customers livingin the city center, and develop demand.

Strategy for a new-generation, customercentric home improvement store
DCM Holdings is currently implementing its third
Medium-Term Management Plan, covering the16

DCM Holdings Co., Ltd. Integrated Report 2023

period of fiscal 2023 to fiscal 2025, which aims
to advance toward achieving our long-termbusiness vision for 2030 of “transformation into
an integrated business that comprehensively
makes people’s lives more comfortable.” The first
medium-term management plan (fiscal 2017 to
fiscal 2019) and the second (fiscal 2020 to fiscal
2022) focused on the business integration and fullconsolidation of the home improvement operatingcompanies under our corporate umbrella. This
third plan aims for full-fledged growth building on
our business strategy of creating a “newgeneration home improvement center.”
The first step is to further strengthen theareas most desired by customers, such as DIY
renovation, gardening, pet supplies, and leisure,allowing us to provide greater convenience,
specialization, and depth. At the same time, weare developing competitive store formats for large,
medium, and small stores. At large-scale stores,
we have already introduced expert consultation asa section of the sales floor, so the key will be how
to expand this to medium and small-sized stores.
Home improvement stores in Japan have mainly
been run as general merchandise stores, so store
operations have been standardized based on thesame concept, regardless of store size. In thislatest business plan, we will clarify the roles andconcepts of each store according to size. The
product lineup and certain services will be refined
to best suit the store size, but even our small
stores will continue to be “convenientneighborhood home improvement stores” forcustomers. We are working to build a unique
BOPIS (Buy Online Pick-up In Store) style service,so that even if a small store does not have thespecific items a customer wants, the process ofacquiring them will be as smooth as possible.
Customers will be able to order what they needfrom our e-commerce site, or with assistance fromstore staff, and have it delivered to the store thefollowing day or day after.
In addition, when arranging sales floors, weare paying more attention to the balance between
staples (regular products) and seasonal items.
Utilizing accumulated information on local needs,
we will create sales spaces that offer a full line ofregular products, along with the seasonal items
most in demand in a particular area. This will
ensure that even small stores with limited sales

Message from the President
Medium-Term Management Plan
Sustainability

Message to stakeholders
Rather than thinking about the future of home
improvement centers, we try to envision the home
improvement centers of the future, and throughback casting seek to evolve beyond the imagination
or expectations of stakeholders.
We hope you will notice and appreciate ourefforts, teamwork, and the changes we make toachieve this. Thank you for your continued support.

Corporate GovernanceRisk Management and Compliance

The driving force for the DCM Holdings mediumterm management plan is the 36-Month Project,
an internal, cross-sectional organization withexecutive officers as task leaders. Under thisproject, we will execute a PDCA cycle over thethree years (36 months) of the plan period, andsteadily implement the measures necessary toachieve the plan targets. For each task, we set
themes that must be resolved for DCM to realize
its aim of being “an integrated group of businesses
that help people live more comfortably,” including
store strategy and product development, as wellas such factors as customer contact points, humanresource strategies, and digital transformation(DX) measures. The 36-Month Project is
a company-wide program that must be carriedthrough to conclusion, while at the same time, it isan initiative that anticipates the changes in society
and customer needs, so it inevitably includes
themes related to ESG and SDGs. As such, themeasures for the 36-Month Project are closely
linked to initiatives to promote sustainability.
Promoting sustainability is nothing special for
DCM Holdings. This is because the basic

philosophy of DIY, taking care of things and using
them for a long time, and doing the things that you
can on your own, overlaps with SDGs. Accordingly,
we believe that by creating a solid plan for the
36-Month Project, and having all employees
implement it as part of their daily work, we cannaturally contribute to a sustainable society.
In addition, we encourage the appointment ofyoung employees to implement the 36-Month
Project. We feel that by including young people invarious measures such as the 36-Month Project,and in the process give them the opportunity tothink about larger issues, take on challenges, andexperience setbacks and successes, that we willdevelop the next generation of leaders. I am
particularly hopeful that we will develop humanresources able to create systems to respond tochange, and systems that are more convenient
and rational.

Business Model

Sustainable value creation throughDCM-style projects

Valuesareas will offer the best product lineup in the area
during certain periods and for certain categories.

Financial Highlights

17

Medium-Term Management Plan Overview

Overview and Promotion System of Third Medium-Term Management Plan
Review of the second medium-term management plan
The second medium-term management plan (fiscal 2020 to2022) was positioned as the final finishing touches to theintegration of the home center business companies under
DCM Holdings and preparations for growth. Due to theunexpected outbreak of the COVID-19 pandemic, there weresocial factors such as complete changes in people’s lifestyles
and behavior patterns, but the Company responded flexibly
and appropriately to these changes and was able to achieve
results that exceeded our expectations.
In particular, with regard to DIY, gardening, and pet
products, areas in which we had been focusing onstrengthening product development and on proposals atstores since before the pandemic, business performance
grew significantly following the changes in lifestyles and theemergence of latent needs, including 1) Increases in timespent at home and leisure time; and 2) Growing awarenessof health and healing needs. As store enhancements, we also
worked on the remodeling and introduction of, for example,
the highly specialized home improvement (HI) DIY Reform*1
and Quick Parts*2 zones primarily in large stores. Through theacquisition of shares of XPRICE Inc., which operates one of
the largest home appliance-focused EC sites in Japan,
we believe that we were also able to form the foundation forstrengthening the EC business, integrating EC and store
business, and for sending customers each other’s way.

Second Medium-Term Management Plan: Results(Unit: Millions of yen)
Fiscal 2022
targets

Fiscal 2022
results

Net sales

433,000

469,782

Gross profit margin

33.6%

33.3%

Operating profit

25,00030,068Operating profit
margin5.8%

6.4%

Ordinary profit

24,40029,555

Profit attributable toowners of parent

16,40018,135

ROE

7.5%

7.5%

Evaluation*1 DIY Reform: This is a store zone where customers who are carrying out
renovation or repair work by themselves can gather together the tools andmaterials they will need. They can also receive renovation assistance, such as
wallpaper replacement experience, for free.
*2 Quick Parts: This is a parts zone that provides electrical materials andplumbing parts for craftsmen and DIYers. Having more than 10,000 items instock, if a customer places an order by phone, we will prepare those items thatare in stock within 60 minutes.

Overview and promotion system of third medium-term management plan
Based on the concepts of “Taking on the challenge of creating a new-generation of home improvement retailers” and “Revitalizing
stores and expanding the areas in which we do business,” under our third medium-term management plan (fiscal 2023 to 2025)
we aim to achieve net sales of ¥550 billion, operating profit of ¥38 billion, and ROE of 8.5% in fiscal 2025.
Priority Measures(1) Store strategies	Pursuing a store strategy centered on enhancing existing
stores by the clarification of roles by store size and theforming of in-store remodeling teams, we will strive tocreate stores that have a more familiar feel and are moreconvenient.
(2) Further pursuit of low-cost operations
	Creating a rational system through shelving allocationand logistics reforms as well as DX promotion andactively developing store IT tools, we will devise ways toreduce store duties and improve efficiency and engage in
low-cost operations.
(3) Building of unique BOPIS style	We built our unique Buy Online Pick-up In Store (BOPIS)
style by promoting the seamless integration of stores andonline businesses. We will strive to improve conveniencefor our customers by creating new forms of home centers.
(4) Deepening of private brand product development system	
Focusing on the development of products in areas with
distinct business characteristics (DIY, gardening, pet
supplies, SDGs-related) and products in the mid-pricerange, we will work to expand the proportion of sales ofprivate brand products and improve the gross profit margin.

18

DCM Holdings Co., Ltd. Integrated Report 2023

(5) Expansion of business domains by M&A promotion
	We aim to expand the home center area and expand
sales channels for private brand products. Towardachieving our goal of becoming an integrated group ofbusinesses that help people live more comfortably,	we will also actively promote collaboration and cocreation through M&A with the aim of expanding
business domains by means of collaborations withdifferent industries and functional enhancements.
(6) Human capital strategies
	We will work to create a culture that respects individual
values and an environment that facilitates growth andself-fulfillment. In addition to fostering in employees anawareness of the benefits of raising corporate value, forexample through the introduction of an employee stock
ownership plan (ESOP) trust, we will work to encourage
health management among employees.
(7) Sustainability
	
Aiming to remain a company that creates value by helping
people make their lives and homes more comfortablethrough the DIY approach, we contribute to social issues
such as environmental protection and social mission,
which are linked to the eight objectives and 22 material
goals (materialities) of the SDGs, as home centers. At thesame time, we will strive to build a managementfoundation that supports sustainable growth.

Values
Business Model

Third Medium-Term Management Plan: Fiscal 2025 numerical targets and notional fiscal 2030 targets(Unit: Millions of yen)

Fiscal 2030 targets (image)*

Net sales

469,782

550,000

900,000

Gross profit margin

33.3%

35.0%

38.0%

Operating profit

30,06838,00063,000Operating profit margin

6.4%

6.9%

7.0%

Ordinary profit

29,55537,50063,000

Profit attributable toowners of parent

18,13522,80040,000

ROE

7.5%

8.5%

Continuously 10.0% or more

Medium-Term Management Plan

Fiscal 2025 targets

Message from the President

Fiscal 2022 results

Move from being a company that sells products to a company that comprehensively provides fulfilling lifestyles

Mission ❶Evolve with the goal of enabling local customers to enjoy a convenient and fulfilling lifestyle

Mission ❸Promote a digital shift strategy to enhance customer convenience

Mission ❷Aim to support professionals and support DIY by strategically developing multiple businesses, including new business models

Revitalizing stores and expanding the areasin which we do business(1) Growth investments with emphasis on investment
profitability(2) Management that is aware of capital efficiency(3) Consideration given to flexible acquisition of treasury stocks(4) Strengthening of human capital management andsustainability

Financial Highlights

Sustainability creating both corporate
and shareholder value(1) Store strategy(2) Further pursuit of low-cost operations(3) Creation of our own unique BOPIS style(4) Better in-house brand product development structure(5) Expanding the areas in which we do business throughpromotion of mergers and acquisitions

Risk Management and Compliance

Taking on the challenge of creatinga new-generation of home
improvement retailers

Corporate Governance

Third medium-term management plan
(Fiscal 2023 to 2025)

Transforming into an integrated business that comprehensively makes people’s lives more comfortable

Sustainability

Long-term business plan

* In the case of the (notional) fiscal 2030 targets, expansion of the scale of sales is expected through M&A, etc.

The 36-Month Project, an in-house, cross-company organization that promotes the achievementof the medium-term management plan and long-term business plan
Mandala chart
Development of new typesof business/Enhanceexisting stores

Human resource strategy

Raising of corporate value

Construction of nextgeneration logistics

Realization of Long-TermBusiness Plan

DX promotion

Construction of HI
comprehensive type ofbusiness and service system

Product reforms

Expansion of customer
points of contact

The 36-month project, which consists of eight tasks,
will serve as the engine for achieving the plans in thethird medium-term management plan. Each task is led
by an executive officer, who takes responsibility forcarrying out the task. Since each task is also linked tothe priority issues of the SDGs, promoting the 36-monthproject will not only contribute to the achievement of
the medium-term management plan but also toenhancing the Company’s sustainability.

19Medium-Term Management Plan Business Strategies (1)Store Strategies
Previously, regardless of the size of the store, our basic policy had been standardized store management based on thesame concept. In what was a necessary measure to promote sales floor area efficiency following the integration of
the five home improvement companies, the sales floor areas became one. To aim for further growth, henceforward
we are dividing roles and concepts into large, mid-sized, and small stores, in dominant areas centered around large
stores. We believe that it is necessary to manage stores in a way that makes customers’ lives more convenient as
a whole by allowing customers to use stores properly in accordance with that occasional need. To that end, we willrenovate 223 existing stores over the three-year period of the third medium-term management plan and realize
low-cost and speedy existing store enhancements by having an in-house team of specialists handle the renovations.
The breakdown of the 223-store enhancement plan assumes 23 large stores (total of 120 stores), 86 mid-sized
stores (240), and 114 small stores (260). We plan to evolve nearly half of our stores into stores that follow the
new policy.
There follows an explanation of what kind of concepts we will have for large, mid-sized, and small stores in theyears to come.

Previous store strategy
Same store operation regardless of store size

Creation ofsame stores

Large store
Same conceptMid-sized store
Small store

Standardized
store
operations

Vision from now on
Differentiate optimal roles and concepts in accordance with store scale

Creation of
optimalstoresOptimalproduct
lineups

Optimalservices

Mid-sized
store

Large store

Store size
Net sales

Large store
Mid-sized store
Small store(Including DCM Nicot)

20

Floor area

Optimaloperations

Small
store

Numbers ofstoresExisting store
enhancement plan
2023-2025

More than ¥1 billion

4,950 m2 or more

120 stores

23 stores

More than ¥400 million but
less than ¥1 billion

1,980 m2 or more but
less than 4,950 m2

240 stores

86 stores

Less than ¥400 million

Less than 1,980 m2

260 stores

114 stores

DCM Holdings Co., Ltd. Integrated Report 2023

Valuesa “buzz” and excitement to customers by allowing them tofeel the "fun to create and fun to think" through our sales
floor areas.
At large stores, highly experienced veteran employees
are placed in charge of DIY services, and we are providingthem with systems that can solve a variety of customer
problems.

Quick Parts

Pet Expo

Leisure Field

Sustainability

DIY Reform

Medium-Term Management Plan

* Sumairu Helper: This is a service by which specialist staff members make home
visits and can respond to housing concerns, from minor problems to renovations.

Message from the President

As regional flagship stores, the large stores are not limited tooffering a wide range of highly specialized product lineups
and services such as “Sumairu Helper”.* As represented by
DIY Reform, customers will be able to do things themselvesthat they had previously thought obvious to ask
a professional, and we will provide opportunities so that
customers can perhaps dream up their own usage scenarios
from our sales floor area arrangements. Rather than simply
being a place to buy things, we aim to be a store that delivers

Business Model

Large-scale stores: Stores that combine comprehensiveness and specialization

Small
store

Regional
characteristics
Expertise

Small stores: Community-based stores Lifestyle variety stores
Financial Highlights

Mid-sized
store

Risk Management and ComplianceIn addition to the “lifestyle variety store that supports local
lifestyles” element that is the role of our small stores, ourmid-sized stores introduce the areas of expertise that are
most needed in the region and raise our level of contribution
to local customers. Specifically, we cover regional
characteristics that include coastal, mountainous, and urban
areas, and deploy sales floor areas that specialize in, forexample, gardening, pets, and leisure. Not stopping at justa one-time enhancements, we will also continue to makestore improvements to better match the characteristics ofeach region by means of ongoing area marketing.

Corporate GovernanceMid-sized store: Lifestyle variety store + α

Due to floor space limitations, the reality is that it is difficult
for small stores to offer a full range of products. Our small
stores do however stock a solid lineup of basic products that
customers in their areas need in their daily lives and thereby
support local lifestyles.
Even in small stores, we are also sure to make space fora seasonal sales floor area (a sales floor area that changes
frequently according to the season or theme) while deploying
a wide range of products that are appropriate for seasonal
items or are in keeping with local events and are needed atthat time. Based on this policy, we provide products that arenecessary for everyday life and for solving those "little
troubles" and propose ways to spend the four seasons thatare typical of that region.
For highly specialized and other products, we deliver
the products that our customers need by collaborating withthe large stores in dominant areas or by utilizing EC store
pickup services.

21

Medium-Term Management Plan Business Strategies Columns

ColumnOverview of Hodaka Co., Ltd.
Hodaka is a specialty store for professionals offering a variety ofbeautiful, top-notch products that are both durable and longlasting, first-class sales floors that make products easy to see,understand, and purchase, and first-rate employees possessing an
accumulated wealth of product and business knowledge who aretrustworthy and responsive, all of which ensure that craftsmen canshine on the job and engage in first rate work.
Founded in 2008 with the aim of contributing to the continuationof Japanese craftsmanship culture and techniques, Hodaka
narrows its focus to target craftsmen rather than the vast home
center customer segment. The company made a new start inMarch 2022, transitioning from an operating structure consisting
mainly of divisions within DCM Co., Ltd., to a consolidated subsidiary.
Hodaka operates 57 stores in 23 prefectures across Japan (as of end of February 2023), with sales exceeding ¥20.0
billion. Since many craftsmen work in different locations across Japan, and some customers travel to Hodaka stores fromneighboring prefectures where Hodaka has no presence, we hope to open stores in all 47 prefectures as soon as
possible to meet the needs of all craftsmen. We expect to expand to 100 stores nationwide by the end of February
2026, the final year of the third medium-term management plan.
To expand the number of store openings, we will accelerate growth in this business by continuously developing humanresources capable of making proposals and introducing new products that meet the needs of craftsmen while providing
products and services at consistently high standards.

Hodaka net sales and store numbers(Millions of yen)

(Stores)

28,00080

Net sales
Number of stores

24,00021,47770

19,93820,00057

60

16,931
16,00014,34012,697

12,00010,074

8,000

32

36

50

49
45

40

39

30

4,000

0

22

20

18/2

DCM Holdings Co., Ltd. Integrated Report 2023

19/2

20/2

21/2

22/2

23/2

10

Values

ColumnBusiness Model

Overview of DCM Nicot Co., Ltd.

Message from the President

We proactively open stores in rural areas where shopping isdifficult under the concept “delivering great convenience to small
towns.” To facilitate the provision of items needed in everyday life
as a home convenience store, in addition to daily necessities, we
also aim to become a convenient shop providing frequently used
tools and materials, seasonal products, everyday clothing, andgroceries. Further, we maintain minimal lineups of home
appliances, sofas, beds, and other home furnishings. In terms ofcommunity-based efforts, we are also conscious of seasonality andlocal brands, with each store offering a different variety of products
on sales floors that incorporate regional characteristics.

Medium-Term Management Plan

DCM Nicot has two main types of stores, one that carries groceries if there are no supermarkets nearby and grocery
shopping is inconvenient, and another type of store that does not carry groceries.

Sustainability

Products not carried by DCM Nicot can be quickly delivered to customers from DCM stores with e-commerce shippingbases, which provides convenience to customers and enables us to leverage Group synergies.

Corporate Governance

We will continue to open stores in regions where even traveling to urban areas for shopping is inconvenient, enabling
DCM Nicot to facilitate enjoyment in the daily lives of regional customers, reduce their burdens, and increase theirhappiness, with plans to expand to 125 stores by the end of February 2026, the final year of the third medium-term
management plan. In addition, to ensure DCM Nicot stores remain in the communities where they are opened, we will
pursue even lower cost operations and exhaustive operational manual advances to support regional lifestyles.

(Millions of yen)

Risk Management and Compliance

DCM Nicot net sales and store numbers(Stores)

28,000170

Net sales
Number of stores

24,000150
20,03917,586

19,636130

18,155
112

16,031
16,00012,00095

19,815

100

104

106

110

109

90

8,000

70

4,000

50

0

18/2

Financial Highlights

20,000

19/2

20/2

21/2

22/2

23/2

30

23

Medium-Term Management Plan Business Strategies (2)Further Pursuit of Low-Cost Operations
There is a reason why the Company engages in low-cost operations as one of its business strategies. Efforts to
reduce the cost of business operations and lower the break-even point may seem easy, but reviewing mature store
operations requires that careful and more effective experimentation and drastic changes in operations based on chain
store theory be deployed without causing confusion. In the process of carrying out numerous M&A transactions andorganizational changes, the Company has been accumulating experience in the making of ongoing business reforms.
This is enabling us to gain a deep understanding of the nature of our business and boldly pursue low-cost operations
without compromising its essence. This can be said to be a major strength of the DCM corporate group. Even in thesehighly uncertain times, we believe that leaner management will be made possible by further strengthening theefforts we have made to date.

Differentiation, standardization, and simplification tailored to the times ahead
Our frontline operations, in which we have been carrying out
improvement activities on an ongoing basis, are adapting not
only to recent changes, such as soaring logistics costs andrising personnel expenses due to the labor shortages inrecent years, but also to changes in the next few years. We
are thus seeking to transition to optimal operations that canbe achieved at a lower cost than at present. It has also
become important to incorporate improvements in employee

Initiative 1

Reviews of ordering/deliveries/replenishment frequency

As an example, we had been separating deliveries from
distribution centers to stores several times a week but havebeen conducting reviews of the number of deliveries in
response to the impending 2024 logistics crisis and otherfactors we are facing. Not limiting our response to simply
reducing the number of deliveries per week, by combining
measures—such as increasing the truck loading efficiency
during delivery, specifying delivery times that do not place

Initiative 2

working environments and sustainability into our operations.
Under such circumstances, we will reconsider the three
concepts of differentiation, standardization, andsimplification, which are deemed important in chain store
theory when advancing a multistore approach andimprovements in productivity, while promoting changes toour business domains that will enable us to better adapt
to change.

any undue strain on our partner logistics companies as wellas curbing logistics costs—we are also promoting a reductionin the logistics-related impact on the environment. On thestore side, by concentrating the delivery of products morethan we have in the past, new operations will be required for
product acceptance and inspection systems, and thus we arepromoting responses while working to deepen cooperation
with our partner logistics companies.

Deliveries by aisle and gondola, efficient delivery of odd-shaped items, and facing
challenges of measures to avoid being out of stock

With regard to the delivery of products from distribution
centers to stores, we are strengthening our efforts to reducethe burden of inspection and display work at stores by
sorting products by aisle and gondola prior to delivering
them. Also, home centers handle a large number of oddshaped items, but delivery efficiency for such difficult to packitems is generally not good. While effectively utilizing theassets at its disposal, the Company is setting up sorting
facilities for odd-shaped items as close as possible to storesand promoting other initiatives that include the building ofa system to conduct deliveries in an efficient manner.
Improving delivery efﬁciency while
reducing environmental impact

Morning
MondayIn matters relating to the inventories of best-selling
products, it is important to not cause product shortages
by maintaining appropriate inventory levels at distribution
centers. In addition to order lots that vary depending on the
product, there are however other difficulties, such as thedifferences in details that must be taken into consideration
when forecasting demand. To improve inventory
management, we are working to streamline our operations
by devising simplifications centered on reviews of complex,
wide-ranging order conditions and by setting standards toensure that appropriate inventory levels are maintained.
Afternoon

Evening

Conducting reviews of truckclasses and numbers of vehicles

Tuesday
WednesdayThursday
DCM Product Distribution Center

FridayHaving reviewed the delivery methods that we had previously been using, we will efﬁciently
deliver products to stores by combining afternoon and evening deliveries into one.

24

DCM Holdings Co., Ltd. Integrated Report 2023

Valuesstore worker man-hours by promoting the installation ofself-service point-of-sale (POS) cash registers that feature
improved operability. Furthermore, the procedures involved
to sign up for insurance when selling bicycles have been
greatly simplified.
As an example of our making use of customers’ mobile
devices, we developed an app that allows them to check thesales floor on their smartphones, enabling customers tosearch for product display locations by using the app. In theyears to come, we will resolve store problems at storesthrough the promotion of DX and devise ways to reduce thenumber of tasks and improve efficiency. Consequently, at thesame time we will be endeavoring to ensure that more of ouremployees’ time can be devoted to improving customer
service at our stores.

Message from the President

Medium-Term Management Plan

To promote the creation of the mechanisms needed for
low-cost operations, we are working on the active utilizationof digital technology. Previously when digitizing store
operations, there were aspects in which software andsystems were prioritized and promoted, and these were notentirely suitable for improving work efficiency at stores. In
recent years, however, we have changed our approach tosolving store problems by communicating closely with thoselocations that use the existing systems and mechanisms.
Providing a specific example of the results obtained isthe development and implementation of our freshness
management app. As an alarm sounds for products that areclose to their expiry dates when registering them on the app,
we are contributing to a significant reduction in the numberof working hours store staff spend in the checking ofproducts. We are also devising ways to reduce the number ofBusiness ModelDX promotion: Work reduction and efficiency improvements by development of store IT tools

Examples of initiatives

Sustainability
Corporate GovernanceRisk Management and ComplianceFreshness management app to check expiry dates

Installation of self-checkouts

Column

DCM advanced technologies Co., Ltd. (DCM-AT) wasestablished in 2022 as a wholly owned subsidiary of
DCM Co., Ltd. to employ talented human resources andrealize speedily, with high quality and at low cost thedigital transformation for which the DCM Group isaiming. DCM-AT’s greatest strength lies in its mid-careerhire employees, who possess excellent digitaltechnology expertise and are characterized by being
composed of business-side employees who are familiar
with important practical matters in the business
operations of home centers. This system enables useroriented systems development compatible with on-site
operations, which in turn leads to increased motivationfor on-site employees and contributes to the realizationof low-cost operations. Enabling developers toexperience the shop floor front lines for themselves also
assists the efficiency of systems development. Even in

Financial Highlights

Overview of DCM advanced technologies Co., Ltd.
the case of large-scale projects for which we have towork on systems development while obtaining thecooperation of an IT vendor, we are striving to develop
fast, high-quality, low-cost systems by accumulating
discussions on an equal footing from the system
planning stage. So that employees can fully demonstrate
their IT skills, we have put in place work systems—suchas telework, fair evaluation and compensation based ona job-based personnel system as well as a fulfilling
welfare program—while providing environments inwhich they can devote themselves to their work withpeace of mind. By having DCM-AT play a central role ina variety of collaborations and business reforms in the
DCM Group as well as in digital transformation for the
future, we will strengthen our ability to respond tochange and improve productivity while assisting inraising the Group’s corporate value.

25

Medium-Term Management Plan Business Strategies (3)Building of Unique BOPIS Style
Due to the evolution of the digital society and the further acceleration of the advances in online shopping anddelivery services brought about by the effects of the COVID-19 pandemic, consumers are now able to choose moreconvenient purchasing methods by using their computers and smartphones. On the other hand, online shopping
business operators are being required to review their business content due to soaring logistics and delivery costs
brought about by labor shortages as well as high costs and commodity prices. Under such circumstances, we will
demonstrate our strengths in developing both stores and our EC business by reinforcing our in-store pick-up (BOPIS:
Buy Online Pick-up In Store) initiatives to provide our customers with even greater convenience.

Building of unique BOPIS style under full-scale deployment
We are gradually expanding the service areas where
customers can receive products purchased via our DCM
Online EC site at each DCM Group store. Combining thestrengths of having more than 800 stores in operation
nationwide, including Keiyo Co., Ltd., with the convenience of
our own EC site where customers can place orders anytime,
anywhere, we will make full-scale efforts to form andestablish new ways of making purchases that takeadvantage of the BOPIS style, which enables customers toreceive EC-purchased products at stores. The benefits forcustomers who purchase products via EC and choose to pickthem up at stores include, 1) Lower shipping costs, 2)
Customers can pick up the goods at any time, 3) Can secure
the required quantity of products needed in advance, 4) Can
purchase products that are not in stores, and 5) Facilitates
product returns in cases where the usability or impression
gained of a product turns out to be different.
Having customers come to stores in the BOPIS styleincreases opportunities for them to gain hands-on experienceof a range of in-store products. We also believe that we canwork to set ourselves apart from EC businesses that do not
operate stores through increased communications withcustomers at stores and thereby ascertaining their needs.

EC siteProducts

Products

Home
delivery

BOPIS(In-store pick-up)

Specific example of BOPIS style use 1. In-store pick-up of bicycle
Among the products handled by home centers are many thatcannot be handed over as they are from stock. Bicycle sales
give one example of how customers can be provided witha high degree of convenience by means of the BOPIS style.
First, customers can access not only the EC site but also the
QR code posted on the embedded leaflet and easily place anorder with their smartphones from a wide product lineup that
far exceeds a store’s inventory. For customers who havepurchased a bicycle via EC, the assembly and maintenance ofthe bicycle can be completed in advance at the pick-up store
for a specified visit date and time, and thus they are never
kept waiting when they visit the store. If customers bring intheir unwanted bicycles, we can take them off their hands forfree and smoothly provide services such as security
registration and bicycle maintenance packs (insurance with
benefits).

Benefits of purchasing a bicycle using the BOPIS style
Crime prevention
registration number
123456

Free shipping forin-store pick-up!

26

DCM Holdings Co., Ltd. Integrated Report 2023

Assembled, maintained
and handed overby DCM staff

Free collection of
unwanted bicycles
Limited to bicycles brought into
store
Maximum of one unwanted bicycle
per bicycle purchased

Customers can complete theircrime prevention registrations
and apply for bicycle
maintenance packs in store.

Values

we mainly stock daily necessities that are purchased
frequently, but when it comes to numbers of products thatexceed that, it is necessary to visit a larger DCM store thatcarries a more extensive product lineup. By having customers
use the BOPIS style at those stores, even if the product theywant is unavailable at the nearest DCM Nicot, we are able
to deliver products to customers quickly by supplying DCM
Nicot stores with products from large DCM stores that
handle EC shipments within the dominant area.

Message from the President

In addition to its home centers, the DCM Group has several
store brands, including DCM Nicot and Hodaka, and operates
stores of different sizes in 37 prefectures nationwide. By
having formed the stores within the Group into a networkby means of the same BOPIS style system, we are able toprovide our customers with uniqueness and even greater
convenience.
For example, at DCM Nicot home convenience storesthat are opened in areas with relatively small populations,

Business Model

Specific example of BOPIS style use 2. Improved convenience in areas where shopping is difficult

Medium-Term Management Plan

Provide store
inventory

DCM Nicot

Large DCM store

Sales floor area: Approx. 990 m2

Sales floor area: At least 4,950 m2

Sustainability

Order products
unavailable in store

Corporate Governance

Expanding number of facilities serving as EC shipment bases to 20 nationwide by fiscal 2025

Hokkaido
Higashi Kariki Store

Financial Highlights

Shikoku, Chugoku and Kyushu
Stores to open in Kyushu within 2023

Risk Management and Compliance

As of March 2023, the number of stores that can ship orders
placed via EC from stores was five, but we plan to add threestores in 2023 and expand to 20 stores by the end of fiscal
2025. By increasing the number of stores that can handle
orders placed via EC, it will be possible to shorten the leadtime from order to product delivery, and the shortened
product transportation distances will also serve to reducetransportation costs. This will also lead to a reduction ingreenhouse gas emissions.
If the BOPIS style gains in widespread popularity, thiswill simultaneously improve customer convenience andproduct management efficiency.

TohokuStores to open in 2023
Kanto and Koshin
DCM Ageo Store(Saitama Prefecture)
Kanto and Koshin
DCM Shiroi Store(Chiba Prefecture)Tokai
DCM Atsuta Store (Aichi Prefecture)
Hokuriku and Kinki
Shikoku, Chugoku and Kyushu Stores to open in 2023
DCM Matsumae Store (Ehime Prefecture)

As of March 2023: Five facilities
Scheduled to be added in 2023: Three facilities

27

Medium-Term Management Plan Business Strategies (4)Deepening the Private Brand (PB) Product Development System
Basic policy for PB product development
In developing PB products, DCM’s basic policy is to develop
only unique products that offer new value to customers,
including their selling prices, as “DCM brands.” This policy
will remain unchanged in the process of increasing the PB
ratio to 35% of net sales in the medium term and to 50% in
the long term. To increase the PB ratio, we will continue tooffer new products that are unique to DCM by linking eachorganization that is involved in “products x sales floor x
sales promotion.”In the past few years, the pace of product development
had slowed to some degree, as the COVID-19 pandemic
reduced the frequency of direct visits to overseas business
partners and made it difficult to communicate face-to-face.
That said, we believe we are now in an environment where
we can work on PB product development at a faster pace
now that borders are reopening in many countries, including
Japan. We intend to raise the gross profit margin to 35% in
the medium term and to 38% in the long term, driven by anincrease in the percentage of PB products in our sales mix.

Trends in PB product sales composition ratio andmedium- to long-term targets

Gross profit margin trends andmedium- to long-term targets

(%)

50.0%

60.0

(%)

39.0
38.0

50.0
A company
40.0

38.0%

36.0

B company

35.0

30.0

35.0%

DCM
20.0

B company

37.0

34.0

26.2%

32.0

10.0

35.0%

DCM

33.0

A company

33.3%

31.0

0.0

30.0
2016

2020

2025

2030 (CY)

2016

2020

2025

2030 (CY)

Focusing on product development in areas with strong business characteristics (DIY, gardening, petcare products, SDGs-related)
In the category of product development, gardening, DIY andpet care products and SDGs-related products, in which we
can demonstrate our strengths as a home improvement
retailer, are priority areas in the current medium-term
management plan. In particular, we intend to further
strengthen our product proposals for gardening and DIY,
which are aligned with our customers’ pursuit of eco-friendly
lifestyles. We aim to enrich our customers’ lives through DIY
by further deepening the fusion of plants and gardening.
For pet care products, we will strengthen our fortes andtake on the challenge of developing new products in a genre
where we have not been able to develop sufficient productsin the past, as people are increasingly moving towarda lifestyle of living with pets after the pandemic.

28

DCM Holdings Co., Ltd. Integrated Report 2023

Furthermore, we intend to offer good products at affordable
prices by proposing high-priced products offered by othermakers in the mid-tier range through PB development.
We are approaching the SDGs priority issues froma variety of angles. In recent years, our focus has been on
using raw materials that have as minimal environmental
impact as possible. Previously, raw materials with low
environmental impact tended to be more expensive,
but as society as a whole has become more aware of theimportance of a circular society, they can now be utilized
without sacrificing cost compared to the past. We are also
taking measures such as using environmentally certified
materials for product packaging.

Values

ColumnBusiness ModelIntellectual property and quality control initiatives at DCM• Patent rights• Design rights• Trademark rights• Unfair Competition Prevention Act• Act against Unjustifiable Premiums andMisleading Representations• Act on Pharmaceuticals and Medical Devices• Household Goods Quality Labeling Act• The Plant Variety Protection and Seed Act• Act on Welfare and Management of Animals• Quality design

Medium-Term Management Plan

Procurement Policy(1) Legal compliance and ethics(2) Human rights and labor(3) Environment(4) Safety and health(5) Ensuring product safety andquality

Sustainability
Corporate GovernanceIn terms of the SDGs and quality control, we check the status of compliancebased on the Code of Conduct of our Procurement Policy, with which all
DCM suppliers are required to comply with. In addition to the items (1)through (4) listed on the right, which are common items for retailers in
Europe, the U.S., and Japan, a feature of DCM is its inclusion of (5) “ensuring
product safety and quality” to reflect its responsibilities as a manufacturer.
When evaluating a supplier’s factory, we scrutinize its social
responsibility and quality according to an assessment sheet we have
prepared, and we also refer to reports from third-party organizations.
During the period of the third medium-term management plan, we plan
to conduct assessments of all new transaction factories and all factories withtransaction value above a certain level.

Main items to be verified in terms ofintellectual property and quality
control when developing PB products

Message from the President

The Intellectual Property and Quality Control Department supports productdevelopment from the perspectives of legal compliance, quality, security, andsafety to ensure that our customers can use our DCM brand PB products,
more safely and with peace of mind.
In developing PB products, we thoroughly check in advance for potential
infringement of any intellectual property rights such as patents, designs,
trademarks, and copyrights before consulting with the Product Development
Committee, which makes decisions on commercialization. This reduces therisk of development delays due to violations of intellectual property rights
once product development is fully in progress. We also work to enhance thevalue of the DCM brand by filing design and trademark registrations for
products we are developing as needed.

Product development idea contest by employees “Pikka! Egg”

Financial Highlights

Can be used regardlessof where the drive
recorder is installed.

Risk Management and Compliance

Example of a product that was
eventually commercialized
DCM Aluminum Car Sunshade

As an effort to link the voices and ideas of our employees to product development,
we hold a product development idea contest called Pikka! Egg. All employees are
eligible to subject their ideas for the contest, and outstanding ideas will receive
awards and a chance to be commercialized into products. The program is anindispensable part of our aim for product development from the customer’s
viewpoint by utilizing ideas from employees, who are also consumers.
In fiscal 2022, we received more than 2,500 applications from various storesand departments. The Pikka! Egg contest has three award categories: Golden Egg,
Silver Egg, and Boiled Egg, and 15 entries were eligible for the awards in fiscal
2022. All of the following criteria must be met for an idea to receive the highest
Golden Egg award:(1) High contribution to people’s lives(2) Product must be expected to be in demand after commercialization(3) Product must be unique
Examples of ideas that have won the Golden Egg award include a small
holder for bottle washers and cooking and serving chopsticks, aluminum car
sunshades, and foldable kitchen mats.

Comes with two
suction cups

29Medium-Term Management Plan Business Strategies (5)M&A Strategy
Approach to M&A strategy
growing our sales network of products including PB
products, reduce procurement costs, and enhance
profitability through the development of new products.
The Group has also worked to reduce costs by, for example,
unifying the business model of its stores. Furthermore, theexpansion of business areas has provided greater
opportunities for mobility and career advancement for theemployees of each Group company.
The domestic home improvement retail market ismaturing. For this business to continue to grow amid social
challenges such as a declining birthrate, aging population,and depopulation in rural areas, we believe it is critical toestablish an overwhelming No. 1 position and to be
a company that can appropriately identify changing customer
needs and continue to enhance their convenience. We hope
to continue to increase the number of colleagues who will
join us in pursuing our aspirations.

Eleven companies have joined the DCM Group since theestablishment of DCM Japan Holdings Co., Ltd. (renamed
DCM Holdings Co., Ltd. in 2010) in September 2006.
Expanding our business scale through M&A is a key strategy
for us. Our approach to M&A, including capital participation
and business transfers, follows two basic aspects: 1) growthof the home improvement retailer business through capital
participation and alliances with other home improvement
retailers, and 2) various alliances, cross-industrial
partnerships, and functional reinforcement to become an
integrated business that comprehensively makes people’s
lives more comfortable.
Until now, we have made capital participation andbusiness acquisitions in peer companies to grow our home
improvement retailer business and enhance our corporate
value by expanding our catchment area and purchasing
power. In the past, we were able to increase sales by

M&A transition
Area expansion through capital participation in and alliances with other home improvement center retailers
Company nameYears

Major areas

Capitalparticipation/
alliances

O-JOIFUL CO., Ltd.

December 2007

Osaka Prefecture, Nara Prefecture,
Wakayama Prefecture, Mie Prefecture

Acquiring majority
ownership

Home Center Sanko Co., Ltd.

June 2008

Kumamoto Prefecture, Fukuoka Prefecture

Acquiring majority
ownership

Home Expo Co., Ltd.

October 2014

Aichi Prefecture

Acquiring majority
ownership

The home improvement retail business of
Fujita Sangyo Co., Ltd.

October 2014

Hokkaido

Business transfers

Sanwado Corp.

July 2015

Aomori Prefecture, Hokkaido, Akita Prefecture

Acquiring majority
ownership

The home improvement retail business of
UNY Holdings Co., Ltd.

June 2016

Aichi Prefecture, Gifu Prefecture, Nara Prefecture,
Mie Prefecture

Business transfers

Kuroganeya Co., Ltd.

December 2016

Yamanashi Prefecture, Kanagawa Prefecture,Tokyo

Acquiring majority
ownership

Keiyo Co., Ltd.

January 2017

Kanto, Koshin, Tokai, Kinki, Tohoku

Equity-method
affiliates

T.O. Retailing Co., Ltd.

July 2021

Hokkaido

Capital andbusiness alliances

Kanseki Co., Ltd.

July 2022

Tochigi Prefecture, Ibaraki Prefecture, Fukushima
Prefecture, Gunma Prefecture

Capital andbusiness alliances

Enhancing functions to realize an integrated lifestyle comfort company
Company name

XPRICE Inc.

30

DCM Holdings Co., Ltd. Integrated Report 2023

Years

March 2022

Major areas

Capitalparticipation/
alliances

Operation of one of Japan’s largest e-commercesites focusing on home appliances

Acquiring majority
ownership

Valuesto the mutual flow of customers between virtual and real
stores in the establishment of the BOPIS (buy online, pick up
in-store) business model that we are focusing on. We arealso striving to revitalize our sales floors by selling MAXZEN,a PB product of XPRICE in real stores, as well as other home
appliance PB products with the potential for further expansion.
In addition to the investment in the e-commercebusiness, XPRICE, we will consider partnerships andinvestments in other industries to become an integrated
business that comprehensively makes people’s lives more
comfortable, including housing equipment; renovation, reuse,
and recycling; pro-use tools; and online services.

Message from the President

Medium-Term Management Plan

As we move forward in our initiatives to become an
integrated business that comprehensively makes people’s
lives more comfortable, we will not only expand our home
improvement business through M&A, but also aim for M&A
and business collaboration to maximize the enrichment ofpeople’s lives by supplementing elements and businessdomains that are lacking in response to uncertain socialchanges ahead. Based on this approach, in March 2022,
we made a subsidiary of XPRICE, Inc., an e-commerce
platform focused on home appliances. In addition tostrengthening the e-commerce business, which has beenlacking, XPRICE is expected to make a significant contribution

Business Model

Various alliances, cross-industrial alliances and functional enhancements to become an integrated
business that comprehensively makes people’s lives more comfortable

Integrated business that comprehensively makes
people’s lives more comfortable

Sustainability

Renovation

Reuse andrecyclePro-use tools

Corporate Governance

Housingequipment

Online DX

Home
improvement store
area expansion

Risk Management and Compliance

Specialty storesHome improvement center
ColumnXPRICE was founded in 2004 as a website operator focusing
on home appliances and has since continued to grow while
expanding its product range. XPRICE not only sells its
mainstay home appliances products at competitive prices,
but also works to maximize customer convenience and peaceof mind by offering nationwide coverage for appliance set up
and installation, extended warranties, support for appliancerecycling, and diverse payment methods.
Additionally, the company offers approximately 100
items under its MAXZEN private brand. These cost-effective
home appliances that thoroughly pursue a balance between
functionality and price have earned a loyal following.
Cumulative sales of MAXZEN brand products have exceeded
1.3 million units.

Financial Highlights

Introduction to XPRICE Inc.

Xtreme

PRICE

The company name was coined by combining extreme (or theultimate) and price. The brand embodies XPRICE’s ambition toprovide the ultimate service unique to home appliance e-commerce
at a price customers can trust.

31Medium-Term Management Plan Financial Strategy

Financial Strategy
Cash Allocation
The third medium-term management plan assumes cumulative operating cash flow of ¥120 billion over the threeyear period plan. In principle, DCM’s policy is to use cash flow generated by our business activities for investments ingrowth. The Company also intends to use debt as needed to achieve both investment in growth and shareholder
returns.

Capital investment

Growth investments and shareholder returns

With regard to capital investment during the third mediumterm management plan, in addition to plans to open 52 newstores, including those in the Pro Shop Hodaka and DCM
Nicot formats, we plan to renovate 223 existing stores toclarify and optimize the role of each store size. We forecast
investing ¥39 billion to execute this store strategy.
Additionally, DCM Holdings has budgeted investment of¥15 billion in systems and logistics. This investment includes
reducing tasks at stores, streamlining logistics and head
office operations to pursue even lower cost operations aswell as that for expanding EC shipping locations and app
development to build and strengthen DCM’s unique BOPIS
business model.

In the third medium-term management plan, we intend toproactively consider and implement expansion of the home
improvement center business or M&A in business fields
where growth is projected in the future, to promote theenhancement of corporate value. Meanwhile, we have set theminimum dividends at ¥6.0 billion for a single year and ¥18.0
billion cumulatively, assuming the dividend level ismaintained at that of final year of the second medium-term
management plan. We intend to consider share buybacks ina dynamic manner, taking into account the potential forinvestment in growth, such as M&A, while balancing
medium- to long-term improvement of corporate value andthe improvement of capital efficiency.

Capital investment
Billions of yen

Capitalinvestment¥54 billion
Operatingcash flow(3-yearcumulative total)¥120 billion

Debt usedas needed

Item

Medium-term management
plan period

New store and remodelinginvestment

39

(13)

System and logistics-related
investment

15

(5)

Total

54

(18)

Figures in parentheses represent single-year capital investment projections.

Growthinvestment

Growth investment and shareholder returns
Billions of yen

Item
Growth investment (M&A, etc.)

Medium-term management
plan period50~100Share buybacks

Shareholder
returns

Dividends

18(6)Figures in parentheses indicate projected dividends for a single fiscal year.
* Dividends shown are the minimum amount that would be paid if the level of dividends
in the final year of the second third medium-term management plan is maintained.

32

DCM Holdings Co., Ltd. Integrated Report 2023

Values
Business Model

Shareholder Return Policy• Continue to consider flexible share buybacks with a view to improving capital efficiency• Hold approximately 5% of total shares issued and outstanding, and cancel any surplus (consider
using for M&A, etc.)

Corporate Governance(%)

ROE (right axis)

9.0

8.6

Share buyback ratio
Dividend payout ratio

7.9

Risk Management and Compliance100

Sustainability

Share buyback
policy(%)

Medium-Term Management Plan

• Decided to aim for an annual dividend payout ratio of 35%• Continue to increase dividends in line with profit growth, aiming for a payout ratio of 40% in the future

Dividends

120

Message from the President

DCM Holdings’ policy is to determine the annual dividend with a target payout ratio of 35%. At the same time, wewould like to aim for a dividend payout ratio of 40% in the future, with a view to continuously increasing dividends inline with profit growth.
The Company’s policy is to consider flexible implementation of share buybacks with a view to maintaining andimproving capital efficiency while sustaining financial soundness (measured by the equity ratio and other indicators)
for sustainable growth.
The acquired treasury shares will be held at approximately 5% of the total number of shares issued andoutstanding to prepare for future strengthening of the business base including M&A and utilization through stock
options, and similar measures. As general rule, any surplus shares will be cancelled.

7.5

7.4

7.1

6.9
6.6

6.8
6.2

5.8

80

6.6
6.0

75.0

71.7

71.0
Financial Highlights

65.1
60

56.0
51.1
39.7

45.4

47.4
23.6

20.7

40

38.1

18.0

11.0

28.8
20
25.4

0

13/2

27.3

14/2

30.4

15/2

49.4

41.7

27.5

28.8

16/2

17/2

39.0

3.0

23.3

30.0
4.9

32.4

18/2

30.0

27.1

25.1

26.1

19/2

20/2

21/2

22/2

32.0

23/2

0.0

33

Sustainability 1

Promotion of Sustainability Management
Concept and promotion structure for sustainability management
Home centers are stores that support DIY, in other words,
repairing the things we own by ourselves and using themcarefully for a long time. In this sense, they have always had
a strong connection with sustainability. In recent years, withthe depopulation of regional areas and the aging of the
population combined with declining birthrates, the role ofproviding products and services that help the elderly as wellas supporting the livelihood of rural areas has been added to
the roles these stores play. Home centers are also providing
disaster prevention expertise and supplies in times ofdisaster in an environment where natural disasters are
becoming more frequent.
In the pandemic, these outlets supported daily life
and work, and also contributed to helping people lead more
comfortable lives in transition to the new lifestyles.
In addition, products and lifestyle-related knowledge that
address recent environmental issues and rising energy prices
are also of high interest to customers. Thus, home centers are
increasingly expected to function as the infrastructure for
local lifestyles.

To address such these needs, we have been focusing onsustainability management since fiscal 2022. Its aim is totransform into an integrated company that makes people’s
lives more comfortable, transitioning from a company thatsells goods to one that comprehensively provides affluent
lifestyles, as well as continuously and stably increasing
corporate value. We have identified eight priority issue
groups and 22 materialities for promoting the SDGs to
identify the threats and opportunities for the Company posedby social issues from a medium- to long-term perspective,
looking ahead to 2030, and to achieve both a sustainable
society and increased corporate value.
Initiatives to address the 22 priority issues areincorporated into the “36-Month Project,” a cross-Company
organization that is the driver of the medium-term
management plan. We will continue to work toward theachievement of the 22 priority issues in the third mediumterm management plan, and will steadily give shape to its
various initiatives.

Overview of eight priority issue groups and 22 materiality issues
E

S

S

G

Core subjects of
ISO 26000

Consumer issues

No.

I

Environment
E

Fair operating
practicesII

Materiality group<Why?>

Achievement of
a comfortable andsustainablecommunity life andlivingPromotion of
circular economy
anddecarbonization
through products
and stores

Environment

III
S

Consumer issues

IV

34

Deepening ofrelationships withcustomers withwhom we create
new value

Support of strong
community
resilience against
disasters

DCM Holdings Co., Ltd. Integrated Report 2023

No.

Materialities <What will we do?>1

Creation of lifestyle support home improvement
retailers loved by people and communities

2

Evolution of lifestyle support and convenientservices for all types of people

3

Introduction of new businesses in line with theneeds of communities

4

Creation of hardware-specialized stores tosupport professionals and DIY

5Development and sale of products that contribution toa fulfilling life, resource recycling and decarbonization

6

Reduction in product packaging and containers

7

Promotion of collection and reduction of wastematerial, reuse, and recycling at stores

8

Promotion of energy conservation at stores andexpansion of renewable energy use

9

Pursuit of product quality and improvementsthat reflect customer opinions

10

Evolution of business and services throughdigital transformation

11

DIY education and information transmission at
stores12

Establishment as community disaster prevention
base

13

Development and sale of disaster prevention
supplies

Main relevant SDGs

S

Core subjects of
ISO 26000

G

Materiality group<Why?>V

Creation ofa workplace wherea diverse array ofhuman resources
can be active andrespecting humanrightsHuman rights

Labor practices
S

Fair operating
practices

E

VI

VII

Stronger corporate
governanceS
Community involvementand development

E

VIII

Regional and community
development

14

Respect for human rights, promotion of diversity
and women in the workplace

15

Human resources development and creation of
workplaces that are easy to work in

16

Allocation of human resources to high-added
value tasks through digital transformation

17

Promotion of CSR procurement

18

Promotion of CO2 emission reduction andeffective utilization of resources in logistics

19

Stronger corporate governance and responsible
dialogue with stakeholders

20

Compliance and prevention of corruption

21

Risk management

22

Contributions to environmental conservation and community
formation through cooperation with communities

Main relevant SDGs

Medium-Term Management Plan

Organizational
governanceG

Construction of
supply chain thatgives consideration
to the environmentand society

Materialities <What will we do?>Message from the President

G

No.

Business Model

No.

ValuesE

Sustainability

Materiality importance map
are materiality numbers

Extremely highPromotion of collection andreduction of waste material,
reuse, and recycling at stores

8

Promotion of energy conservation at stores andexpansion of renewable energy utilization

Respect for human rights, promotion ofdiversity and women in the workplace

DIY education and informationtransmission at stores

11

1

5

Development and sale of4
Establishment as
products that contribution to acommunity disaster
fulﬁlling life, resource recycling
19 and decarbonization
prevention baseCreation of hardware-specialized
Stronger corporate governancestores to support professionals
and responsible dialogue withand DIY
stakeholders

12

14

15

20

Compliance and preventionof corruption
Promotion of CSR procurement

17

18

Evolution of lifestyle support10
and convenient services for all
types of people
Evolution of business andservices through digitaltransformation
Introduction of new businesses inline with the needs of communities

2

Promotion of CO₂ emission
reduction and effective utilization 3of resources in logistics

Pursuit of product quality and improvementsthat reﬂect customer opinions

22

9

21
Risk management

Allocation of human resources
to high-added value tasks
through digital transformationHigh

Development and sale of 13
disaster prevention supplies

16

Financial Highlights

Contributions to environmental
conservation and community
formation through cooperation
with communities

7 6

Risk Management and Compliance

Human resources development and creation of
workplaces that are easy to work in

Creation of lifestyle support
home improvement retailers
Reduction in productloved by people and communities
packaging and containers

Corporate GovernanceImportance from stakeholder’s perspective

Numbers in

High

Extremely highImportance from management perspective
Proactive materiality groups
Materiality group I:

Achievement of a comfortable and sustainablecommunity life and living
Materiality group II: Promotion of circular economy and decarbonization
through products and stores
Materiality group III: Deepening of relationships with customers with whom
we create new value
Materiality group IV: Support of strong community resilience against
disasters

Protective materiality groups
Creation of a workplace where a diverse array of humanresources can be active and human rights are respected
Materiality group VI: Construction of supply chain that gives considerationto
the environment and society
Materiality group VII: Stronger corporate governanceMateriality group V:

Materiality group VIII: Regional and community development

35

Sustainability 2

Human Capital Management
Linking Business and Human Resources Strategies
Based on our Company Philosophy ”Do Create Mystyle,” we aim to transform into an “integrated business that comprehensively
makes people’s lives more comfortable.” We are working to increase customer convenience through the creation of “newgeneration home centers” with clearly defined store strategies, the development of products that enrich people’s lives, and theformation of new purchase patterns combining the convenience of physical stores with e-commerce websites.
We believe the driving force behind the realization of this goal is the diversity and creativity of our human resources andtheir desire for self-growth. In creating an environment where a diverse array of human resources respect individual values andplay active roles, and by proactively supporting human resources development and autonomous learning, we are promoting thecreation of an organization that is able to maximize the capabilities of each individual employee. We aim to achieve sustainablegrowth and enhance corporate value by increasing engagement through support aimed at realizing employee wellbeing, andfostering an awareness among employees of the need to enhance corporate value.
Realizing Wellbeing
Increase employee engagement
Foster awareness of corporate valueenhancement

Company

Employees  
1 Human resources development
We view the development of human resources who will leadthe next generation as an important issue in terms ofenhancing corporate value over the medium to long term.
Accordingly, we are developing human resources in tandemwith management in order to realize our medium-term
management plan through 2025 and our long-term businessconcept for 2030. To ascertain gaps between current humanresources and the ideal we are aiming for, we centralized the

management of human resources information, and startingin fiscal 2022, revamped our training system. In addition tosystematized training for the development of humanresources from a medium- to long-term perspective,
we reassign select human resources for training purposes
and proactively appoint them to projects and internal tasks
in an effort to develop human resources that will serve asa foundation for growth.

Centralized management of human resources information
We introduced a talent management system to centrally
manage human resources information. By centrally managing
basic employee information as well as training history, skills,
and career goals, then utilizing this information forrecruitment, job assignments, skills development, and rapid

selection for placements in new positions, we aim to
maximize performance. Further, future management
personnel candidates are grouped by generation for use in
selective training, policy-based assignments, and promotion
to various project leadership positions.

Systematized training for the development of human resources from a medium- to long-term perspective
We emphasize the importance of employees who arecapable of autonomous self-development, and in support ofthis ideal, we have created an environment in which all
employees can learn on their own. In terms of specific efforts,
we introduced tools enabling employees to view educational
videos created in house, and facilitate an environment inwhich learning can take place anytime, anyplace, and asoften as necessary. Additionally, by subsidizing a portion of
the course fees for a video service providing educational
content centered on business skills, employees can learn
both operational skills as well as a wide range of otherbusiness-related skills.
Regarding the development of future management
personnel for the realization of our long-term businessconcept, in addition to providing standard level-based
training for candidates grouped by generation, we havecandidates participate in training for next-generation

36

DCM Holdings Co., Ltd. Integrated Report 2023

executives focused on exchanges with other companies
and liberal arts studies, creating a system that is able tocontinuously produce human resources with broad
perspectives and high degrees of insight.
To ensure human resources possess expert knowledge
and diverse skills, we also provide specialized educationand training aimed at acquiring qualifications. We view the
securing of IT personnel as a particularly important issue,
and our system subsidiaries have established a structure inwhich mid-career hires and professional human resources
who can be immediately effective are able to learn from one
another.
Training is conducted with the specific aim of developing
professional human resources who are able to manage
projects after three years on the job through bothprofessional education and OJT led by mid-career hires, aswell as video learning and the acquisition of IT qualifications.

Values

DCM Holdings education structure

Executives

New
employees

Professional training

Other

GLOBIS Unlimited Learning

Senior management training
Store manager training (update training)
Newly appointed store manager training

IT
Buying techniques
Product development
Marketing
Legal affairs
Quality and intellectual
property
Logistics
Finance
Etc.

Mid-career training
Design thinking training
Diversity training
Female employee
exchange meetings

Assistant store manager and floor staff training (update training)
Newly appointed assistant store manager and floor staff training

Select senior management
training
Select high-mid level training(liberal arts studies)
Select mid-level training

Newly appointed chief and foreman training
Third year training

Select junior training

Second year training
Product knowledge workshops

Message from the President

Regularemployees

Next-generation management
candidate training

Executive training

Online video learning tools

Managers

Level-based training

Business Model

Video learning andself-development

New employee training

DIY•HC Association-certified DIY advisors in the industry,
which differentiates us from our competitors.
To enhance our expertise, we are also expanding support
for the acquisition of qualifications in gardening, bicycles, pets,
social welfare, remodeling, and other areas. As an example,
we are proactively engaged in the acquisition of second-classelectrician certifications with the aim of ensuring employees
not only sell products, but are also professionals that
customers can rely on, possessing highly specialized
knowledge and skills and an ability to provide comprehensive
assistance, from customer-centric proposals, to advice andinstallation. Further, while streamlining and promoting DX in
business systems, we encourage employees to strategicallyacquire qualifications, including efforts to systematicallypromote the proactive acquisition of IT passports, to obtain
the basic IT knowledge required to work in an IT society.

Sustainability
Corporate Governance

DCM qualifications acquisition system Recommended qualifications

Risk Management and Compliance

1. Qualifications leveraging home center strengths• DIY advisor• Green advisor

2. Qualifications necessary for enhancing specializations• Bicycle safety mechanic• Counselor specializing in welfare
equipment• Operations chief of asbestos• Pet care adviser• Registered seller• Petroleum equipment technicalmanager

3. Qualifications to be strategically acquired for the realization of
long-term business plans• IT passport

Financial Highlights

The DCM long-term business concept is aimed at becominga group that not only sells products, but transforms into an
integrated group of businesses that help people live more
comfortably as an “integrated business that comprehensively
makes people’s lives more comfortable,” and we view theacquisition of qualifications as one means of realizing ourlong-term business concept. Home centers have many highly
specialized product areas, and meeting the diverse needs ofcustomers requires high levels of expertise and skill.
To provide customers with lifestyle propositions rather thansimply selling products, we must improve our level ofcustomer service and skills.
We believe it is necessary to both acquire specialized
knowledge through work experience, as well as to acquire
high levels of expertise and skills through the acquisition ofqualifications. DCM views the acquisition of qualifications as
one aspect of human resources development, and aims tofoster an awareness of self-directed learning, create a culturethat encourages active self-development, and develop
employees who can serve customers with confidence.
To this end, the "DCM Qualification Acquisition System"
was established to actively encourage employees to acquirevarious qualifications. We established an environment thatfacilitates the acquisition of qualifications by increasing
company subsidies for examination fees, expanding the scopeof eligible employees, and adding supplementary
qualifications. We remain particularly active in DIY, which isone of our strengths, and possess the largest number of Japan

Medium-Term Management Plan  
2 Supporting the acquisition of qualifications• Second-class electrician

Utilizing the DCM advisor in-house qualification and certification system
In addition to the DCM Qualification Acquisition System,
we established DCM Advisor, an in-house qualification andcertification system unique to DCM, to measure the degree ofunderstanding with respect to basic product knowledge.
DCM Advisor aims to provide all employees with
opportunities to improve their product knowledge andcultivate continuous self-learning. We strive to develop bothbasic product knowledge as well as personnel who can
respond appropriately to customer requests.
To this end, we have prepared an educational
environment using books and videos to improve productknowledge in support of DCM Advisor certificationacquisition. Additionally, product knowledge workshops, inwhich participants learn by using actual products, aim to help

employees acquire knowledge and skills through classroom
lectures as well as hands-on experiences.
The DCM Advisor was introduced as an annual internal
certification system in fiscal 2021, with all employees,
including partner employees (part-time employees), subject
to this examination. Anyone can easily take this examination
using DCM’s in-house system.
As certification enables employees to respond to
customers with confidence, partner employees areproactively taking on the challenge, with approximately
1,500 employees in total certified in fiscal 2022. DCM willcontinue to expand and advance this program as part of its
efforts to create an organization where employees cancontinue learning on their own.

37

Sustainability 3  3 Promoting the active participation of diverse human resources
We promote diversity and inclusion so that all employees
recognize and respect each individual so every employee canmaximize their abilities while making the most of diversity.

We pursue diversity and inclusion through three approaches
promoting (1) the active participation of women, (2) the active
participation of seniors, and (3) internal appointments.

Promoting the active participation of women
In promoting diversity and inclusion, DCM believes that theemployment and active participation of women in particular
is essential for responding to increasingly diverse market
needs. Currently, the percentage of female employees among
full-time employees is 14.3%, growing approximately 3% inrecent years. Over the past several years, nearly half of all
new hires have been women, and with the ratio of female
employees expected to increase going forward, we believe it
is imperative to create an environment in which women canplay active roles. We are striving to create an environment
in which women can develop their careers so they remain
active long after marriage, childbirth, raising children, andother life events.
In order to proactively create an environment in which
women can work comfortably, we conducted a survey amongfemale employees aimed at gathering opinions and gaging
awareness regarding current female employee workstyles
and ascertaining actual working conditions. Based on thesurvey results, we identified issues that need to beaddressed in order for DCM Holdings to promote the active
participation of women.
As one of the measures to achieve this goal, we holdfemale employee exchange meetings internally. The purposeof these meetings is to create a new community amongfemale employees, alleviate concerns regarding careerdevelopment, work-life balance, and other issues, foster

mutual awareness and empathy, and provide opportunities
for future system and corporate culture reforms.
In addition to exchange meetings held internally, we also
conduct exchange meetings with female employees fromother companies. These are opportunities to gain insights
and motivation leading to individual career development thatinternal meetings alone cannot provide.
Along with the creation of this environment, we conduct
training for all managers on diversity and inclusion andchildcare support systems to promote an understanding ofthese issues among employees through their managers.
In this way, we are working on two fronts, creating anenvironment that promotes the success of female employees
and encouraging understanding among all employees.
Through these efforts, we are working to create anenvironment facilitating the active participation of female
employees, with the goal of achieving a ratio of 7% or more
female employees in management positions by fiscal 2030
(3.2% as of March 2023).

Promoting the active participation of seniors
DCM has established a system facilitating the self-reportingof “work preferences” and “areas of expertise” so that
employees who have reached the age limit for their role orretirement age can continue to work with vigor utilizing theirindividual strengths in a second career. This includes
positions such as in-house instructors who leverage pastexperience and knowledge, specialized teams responsible forstore renovations, and advisors who respond to consultations
from stores. Recently, many employees have expressedinterest in working for Hodaka, which is expanding store
openings.
As Japan's working-age population is expected to
decline, we intend to further strengthen this system toenable experienced senior personnel to play active roles.

Company
expectations

Motivation ofindividuals
Motivation of individuals
Physical and mental
strength of individuals

Experience andknow-how
Human nature andhuman skills

Human resource
strategy
Necessity in humanresource strategy

MatchExpansion of the role of seniors

Promoting internal appointments
DCM has introduced an internal appointment systemallowing partner employees to take on the challenge of
becoming full-time employees with the aim of enabling
employees who wish to advance their careers to full-timestatus to engage in rewarding work and achieve selfactualization.
The internal appointment system is also intended to
expand opportunities for capable and motivated employees
to play active roles, thereby uncovering promising future
store managers and head office specialists.

38

DCM Holdings Co., Ltd. Integrated Report 2023

For example, a male employee promoted from partner tofull-time employee in 2008 who gained experience in stores
and at the head office is now working as a store manager.
Similarly, a female partner promoted to full-time employee in2011 also gained experience in stores and advanced to store
manager in 2023, taking charge on the front lines.
In fiscal 2022, a total of 40 employees passed theinternal appointment exam. DCM will continue to promoteinternal appointments as part of our career development
efforts to increase the diversity of our human resources.

Values  
4 Promoting diverse workstyles

Business Model

Employee classification system
We have introduced an employee classification system
Blocks and areas coverage
enabling all employees to apply for a range of possible
transfers according to their personal values, lifestyle, andfamily situation, allowing each employee to choose their own
workstyle. There are three employee classifications: “Block,”blocksin which employees choose to work in East, Central, or WestJapan; “Area,” in which employees can limit the scope of their
areas
work location; and “Region,” in which employees are notrequired to relocate. The system allows employees to apply
for an employee classification once a year, so that they can
East Japan blockchange workstyles if their personal circumstances change.
There is also a national employee
classification enabling employees to work
Central Japan block
anywhere in Japan. This system exposes
employees to various regional cultures andlifestyles and broadens the range of theirexperience, which is expected to lead toWest Japan block
personal growth.
Further, we have introduced a “temporary
work location restriction system” enabling
employees to temporarily change theirworkplace to a desired location when theyencounter difficulty relocating due to special
reasons (nursing care, childcare, and other life
events). Employees can utilize this systemwith peace of mind during the approved
period, as the treatment they received prior to approval
is maintained.

Message from the President

310Medium-Term Management Plan

Sustainability
Corporate GovernanceChildcare and nursing care support system
and nursing care leave utilization rate has increased
substantially over the past several years to 60.5%.
Recognition of the importance of a work–life balance has
expanded in recent years, and we will continue to consider
initiatives and systems that can further encourage individual
employee self-realization while respecting diverse values.

Risk Management and Compliance

Our childcare and nursing care support system exceeds all
statutory mandates, and we are working to create anenvironment facilitating easy use of this system so that all
employees can give birth, raise children, and care for family
members with peace of mind. In fiscal 2022, 26 male
employees took childcare leave, and along with employees
utilizing DCM’s maternity leave system, the male childcare  
5 Health management initiatives
Financial Highlights

In order to realize our Company Philosophy, “Do Create
Mystyle,” and create affluent lifestyles together withcustomers, we believe it is essential for employees
themselves to be healthy. To this end, we are making efforts
to reduce long working hours and ensure that employees at
all stores receive health checks by managing health checks
and schedules on a 100% health check basis. We also
proactively recommend specific health guidance for theprevention of lifestyle-related diseases as an opportunity toraise awareness of health promotion, creating anenvironment that makes it easy for employees to receive
health checks with efforts that include scheduling healthchecks during working hours and online health checks in theworkplace. As a result, 53.3% of employees received specifichealth guidance in fiscal 2022.
Stress checks were previously conducted only at
workplaces with 50 or more employees, but since fiscal
2022, we have conducted stress checks at all workplaces forthe purpose of ascertaining and improving conditions in eachlocation.
In fiscal 2022, 12.6% of employees were identified ashaving high stress, and our goal is to reduce this to less than
10% by fiscal 2025.
DCM will continue to proactively promote healthmanagement initiatives to ensure that each and every
employee is healthy in mind and body and motivated to work.

On March 28, 2023, we were certified as a “2023 Health & Productivity
Management Outstanding Organization.”

39

Sustainability 4

Sustainability – TCFD ComplianceEndorsement of TCFD
The DCM Group positions its response to climate change as a material issue within its business strategy, and in April 2023,
the Company announced its endorsement of the Task Force on Climate-related Financial Disclosures (TCFD). We disclose
information in accordance with the framework promoted by the TCFD (governance, strategy, risk management, metrics andtargets), and will contribute to the achievement of a decarbonized society through efforts to address climate change.

GovernanceWe consider the issue of climate change to be of great importance for sustainability, and have put in place a governance structure
centered on Board of Directors oversight and the Sustainability Committee. The Board of Directors receives reports from theSustainability Committee at least once a year regarding climate change issues and sustainability initiatives, including SDGs
materiality, reviews policies and initiatives as appropriate, and monitors and evaluates progress. The Sustainability Committee,
which meets two or more times annually and is chaired by the President and CEO, examines and studies the latest sustainability
trends, including climate change issues, confirms progress and deliberates policies related to sustainability initiatives, andsubmits reports and proposals to the Board of Directors.

Strategy
We clarify the long-term risks and opportunities presented by climate change and performs scenario analyses to create businessstrategy proposals aimed at minimizing risks and maximizing opportunities. Specifically, we conduct analysis conforming to the
1.5°C target, which has become the leading global initiative aimed at limiting the increase in global average temperature since
the Industrial Revolution to 1.5°C, as specified in the COP26 outcome document.

Transition risks
For transition risks, a range of policies and legal regulations have been introduced for the 1.5°C target, with the DCM Group focusing on the
decarbonization scenario (1.5°C to 2°C temperature increase) in which market and reputation changes occur.

Marketchanges

Reputation
changes

Business impact

4°C
increase

Corresponding DCM SDGs Materialities

Carbon tax introduction (DCM)

Introduction of carbon tax results in increased procurement costs forfossil fuels used by vehicles and at stores

Introduction of renewable energy

The cost of procuring electricity will increase due to switching fromelectricity derived from fossil fuels to electricity derived from renewableenergyCarbon tax introduction (in supply
chain)

Introduction of carbon tax will result in increased procurement costs forplastic products such as containers and packaging materials

Stricter regulations on raw
materials for products, etc.

Tighter regulations on fossil fuel-based raw materials will lead toincreased costs due to the switch to reused and recycled materials

Tighter regulations on industrial
waste disposal

Restrictions on fossil fuel-based raw materials are strengthened, andcosts will be incurred for things such as reconsidering plastic films andpackaging

Tighter building standard
regulations

Costs for building new stores and renovations increase due to tightened
regulations based on energy saving laws and construction standards
laws, etc.

Stricter regulations on cargotransport vehicles

Costs incurred due to electrification of cargo transport vehicles at storesand logistics hubs and establishment of charging stations

18: Promotion od CO2 emission reduction andeffective utilization of resources in logistics

Increased scope of information
disclosure

Increased costs due to increased scope of mandatory information
disclosure concerning CO2 emissions

19: Stronger corporate governance and responsible
dialogue with stakeholders

Changes in consumer
environmental awareness andlifestyle

Sales opportunities lost if response to increased consumer
environmental awareness and changes in their lifestyle is delayed

Impact of switch to reusable raw
materials

Decline in sales if switch to reusable raw materials from fossil
resource-based raw materials in products is delayed or if an increase insales price is unavoidable

1: Support home improvement retailers loved bypeople and communities
5: Development and sale of products that contributeto a fulfilling life, resource recycling, anddecarbonization

Structural changes in local
conditions due to climate change

Sales opportunities for agriculture-related products lost if response toshifts in areas suited to agriculture caused by climate change is delayed

Changes in consumer preference,
criticism of the industry, increase in
stakeholder concerns, etc.

Without a suitable response to social and consumer trends that reflect
climate changes, support from stakeholders will decline

Major impact on administration and financial affairs

40

2°C increase (or1.5°C increase)

DCM Holdings Co., Ltd. Integrated Report 2023➡

8: Promotion of energy conservation at stores andexpansion of renewable energy use－

6: Reduction in product packaging and containers
7: Promotion of collection, reduction, reuse, andrecycling of waste at stores—➡

Transition risk

Policies/legal
regulations

Risks for DCM

－

—

➡

Risks/opportunities

Some impact on administration and financial affairs－

9: Pursuit of product quality and improvements thatreflect consumer opinions
19: Stronger corporate governance and responsible
dialogue with stakeholders

No impact on administration and financial affairs (no change)Values

Physical risks

1.5°C increase)

Impact on damage insurance

Damage insurance premiums increase due to increasing frequency andseverity of natural disasters

Store relocation due to rising sea
levelsCosts incurred from unavoidable relocation of coastal area stores due torising sea levels

Increase in air conditioning
equipment

Rising investment, maintenance, and management costs for air
conditioning equipment due to increasing average temperatures

Impact on wood, wooden
products, and gardening products

Procurement costs for wood, wooden products, seeds, and other suchthings will increase due to shifting of areas suitable for agriculture due
to climate change

Increase in illness due to risingtemperatures

If restrictions on movement, shortened business hours, and suspensionof business become unavoidable due to a range of illnesses, this will
result in a loss of sales opportunities

Major impact on administration and financial affairs

4°C
increase

Corresponding DCM SDGs Materialities

12: Establishment as community disaster prevention
base

8: P
 romotion of energy conservation at stores andexpansion of renewable energy use—

Medium-Term Management Plan

Damage caused by increasing
frequency and intensification ofabnormal weather

Damage to stores, disruption of lifelines, lost sales opportunities due todisruption of factories and logistic networks impacted by disasters, andrecovery costs incurred due to increasing frequency and intensity ofnatural disasters and abnormal weather➡

Physical risks

Chronic
physical risks

2°C increase (orBusiness impact

Message from the President

Acutephysical risks

Risks for DCM➡

Risks/opportunities

Business Model

For physical risks, we consider the impact of extreme weather events such as heavy rains caused by continued warming that create disasters
based on the decarbonization scenario (1.5°C to 2°C temperature increase). In the continued warming scenario (2.7°C to 4°C temperature
increase), we considered the impact on store locations and facilities due to rising temperatures, the impact on the DCM Group from damaged
forests, agriculture, and other natural areas, and the impact of a range of infectious diseases on business, among other risks.

21: Risk management

Some impact on administration and financial affairs

No impact on administration and financial affairs (no change)

Opportunities

4°C
increase

Growth in sales centering on DIY and environment-related products
due to lifestyle changes and heightened awareness concerning theenvironment among consumers

Expanded demand for products todeal with heat

Increase in sales opportunities for products to deal with heat resulting
from increase temperatures

Expanded demand for disasterprevention products

Increase in sales of disaster prevention products in relation to increasing
frequency and intensity of natural disasters

Growth of DIY market

Growing consumer awareness of the need to create things on the basisof their own ingenuity and to repair and use these things over the longterm will grow the DIY/reform market and increase sales opportunities
for related products

Policy incentives

Increase in sales opportunities through incentives for purchasing ofsustainable products

1: Creation of lifestyle support home improvement
retailers loved by people and communities
5: Development and sale of products that contribute to afulfilling life, resource recycling, and decarbonization
11: DIY education and information transmission at stores

Provision of emergency supplies
in disasters

Establishment of a business continuity system in areas impacted bydisasters, and improvement of quality in infrastructure for daily life
through stocking of emergency supplies, etc.

12: Establishment as community disaster prevention base
13: Development and sale of disaster prevention supplies

1: Creation of lifestyle support home improvement
retailers loved by people and communities
5: Development and sale of products that contribute to afulfilling life, resource recycling, and decarbonization
9: Pursuit of product quality and improvements thatreflect customer opinions
13: Development and sale of disaster prevention supplies

Markets

Resilience

Corresponding DCM SDGs Materialities

Heightened consumer
environment awareness andchanges in lifestyle

Major impact on administration and financial affairs

Some impact on administration and financial affairs－

1: Creation of lifestyle support home improvement
retailers loved by people and communities
4: Creation of hardware-specialized stores to support
professionals and DIY
11: DIY education and information transmission at stores

Risk Management and Compliance

Opportunities

2°C increase (or1.5°C increase)

Business impact

Corporate Governance

Products andservices

DCM opportunities➡

Risks/opportunities

Sustainability

With regard to opportunities, in the 1.5°C to 2°C temperature rise scenario, there will be growth in demand for products that deal with heatand prevent disasters due to a growing environmental awareness among consumers and their increased resonance with the approach of
repairing things and using resources carefully, and we assume growth in the sales of DIY and environment-related products, as well as
growth in the DIY and renovation market itself, which is at the heart of the home center business.

No impact on administration and financial affairs (no change)

Financial Highlights

Risk management
The Internal Control Committee comprehensively manages Group-wide risks based on risk management regulations, andengages in awareness, guidance, education, and other efforts aimed at preventing and minimizing risks and damage. Climatechange risk is also managed under this risk management system.

Metrics and targets
Greenhouse gas emissions from the DCM Group in fiscal 2020 (March 2020 to February 2021) are as follows. For Scope 1 and 2,
we aim to reduce GHG emissions by 4.2% annually in accordance with Science Based Targets (SBT), which are GHG emission
reduction targets consistent with levels required by the Paris Agreement. For Scope 3, we will work to increase calculation
accuracy and look into reductions in collaboration with our business partners.
• The DCM Group’s GHG emissions for FY2020
Scope
1+2 (total)

Reference year

Target year

Targets

FY203042% reduction in emissions

to FY2050

Carbon neutral (net zero)

FY2020

Scope 1 (direct emissions)

12,057 t

Scope 2 (indirect emissions)96,752 t

Scope 1 + 2 (total)

108,809 t

41

Corporate Governance 1

Board of Directors
Directors
Toshihiro Hisada

Yasunori Ishiguro

Chairman and CEO

President and COO
Representative Director andPresident, DCM Co., Ltd.

Chairman of the Board
Nominating Committee Member

Nominating Committee Member

Compensation Committee Member

Compensation Committee Member

Keizo Honda

Toshimitsu Shimizu

Director, Executive Officer
Director and Vice President,
Executive Manager of Business
Operating Headquarters,
DCM Co., Ltd.
Representative Director andPresident, Hodaka Co., Ltd.

Director, Executive Officer,
in charge of Internal Control,
General Affairs and Stocks
Director and Vice President,
Executive Manager of
Administration Headquarters,
DCM Co., Ltd.
Representative Director andPresident, XPRICE Inc.
Director, Keiyo Co., Ltd.

Masayuki Nakagawa

Hiroshi Ogame

Director, Executive Officer, incharge of Corporate Strategy andPublic Relations
Director, Managing Executive Officer
and General Manager, Corporate
Strategy Office, DCM Co., Ltd.
Director, XPRICE Inc.

Director
Representative Director andPresident, CEO, Daiki Axis Co., Ltd.

Koji Jitsukawa

Hisato Kumagai

Director
Representative Director andPresident, Keiyo Co., Ltd.

Director
Audit and Supervisory Committee
Member, DCM Co., Ltd.

Standing Audit and Supervisory Committee Member

42

DCM Holdings Co., Ltd. Integrated Report 2023

Values
Business Model

Independent Outside Directors

Director
External Director, TerraSky Co., Ltd.

Audit and Supervisory Committee Member

Chairman of Audit and Supervisory Committee Member

Chairman of Nominating Committee Member

Nominating Committee Member

Chairman of Compensation Committee Member

Compensation Committee Member

Hitomi Iba

Director
Partner, Nishimura & Asahi

Director
Representative Director andPresident, IBA Company Co., Ltd.

Sustainability

Hikaru Oguchi

Medium-Term Management Plan

Naoki Uno

Director
External Director, The Yamanashi
Chuo Bank, Ltd.

Message from the President

Michio Masukawa

Corporate Governance

Audit and Supervisory Committee Member
Nominating Committee Member
Audit and Supervisory Committee Member

Compensation Committee Member

Risk Management and Compliance

Knowledge, experience, and skills held by Directors of the Company (Skill Matrix)
Name

Post

Yasunori Ishiguro

Representative Director andPresident, COO

Keizo Honda

Director, Executive Officer

Toshimitsu Shimizu

Director, Executive Officer

Masayuki Nakagawa

Director, Executive Officer

Hiroshi Ogame

Director

Koji Jitsukawa

Director

Hisato Kumagai

Director (Standing Audit andSupervisory Committee Member)Michio Masukawa

Outside,Director (Audit and Supervisory
Independent Committee Member)

Naoki Uno

Outside,Director (Audit and Supervisory
Independent Committee Member)

Hikaru Oguchi

Outside,Director (Audit and Supervisory
Independent Committee Member)

Hitomi Iba

Outside,Director (Audit and Supervisory
Independent Committee Member)

●
●

●

●
●

●

●

●
●

●

●

●

●

●

●
●

●

●

●

●

●

●

●

●

●

●

●
●

●

●
●

●
●

●

●

●

●

●
●
●

●

●

ESG

Financial Highlights

Toshihiro Hisada

Chairman and
Representative Director, CEOGeneralFinance and Legal andHR and Talent Sales andIT and DX
International
Management Accounting Compliance
Development Marketing

●

●

●

43

Corporate Governance 2

Corporate Governance
Basic approach
In order to continue to be supported as a "valuable company" by all of our stakeholders, which include customers, business
partners, shareholders, employees, and local communities, as a holding company that supervises and manages the operatingcompanies within the Group, we believe that our mission is to enhance corporate and shareholder value, and that the foundation
for realizing this mission is to strengthen corporate governance. To this end, we will work to revitalize the Board of Directors,
strengthen the auditing system, increase the efficiency of the management structure, and improve the compliance system.

Reasons for adoption of corporate governance system
We have adopted an Audit and Supervisory Committee system based on our determination that an auditing and supervisionsystem implemented by an Audit and Supervisory Committee is effective as a management supervision function. We believe thatby establishing an Audit and Supervisory Committee with organizational auditing authority, we can strengthen the managementmonitoring function and continuously enhance corporate value.
Since DCM’s founding, the Nominating Committee and Compensation Committee, both of which are chaired by independent
external directors, have served as advisory bodies to the Board of Directors. All committees, including the Audit and Supervisory
Committee, are chaired by independent external directors, and a majority of the members are independent external directors,
thereby enhancing the effectiveness of governance.

Approach regarding the Chairman of the Board of Directors
To clarify the responsibility for Group management and execution, strengthen the governance system, and build an execution
system that can flexibly respond to changes in the business environment, we select two representative directors as the Chief
Executive Officer (CEO) and Chief Operating Officer (COO). We believe it is appropriate that the Chairman and CEO serves as
Chairman of the Board of Directors to facilitate and summarize discussions on resolutions at the Board of Directors meetings,
which are proposed mainly by the President and COO to promote discussions from a broad range of perspectives.

Schematic diagram
General Meeting of Shareholders

Independent auditor

Appoints/Dismisses
Works with
Dismisses
Agenda items

Appoints/Dismisses

Audit and
Board of Directors
Audit and Supervisory
Supervisory
7 directors
Committee Committee, etc. 5 members

Reports

Works with

AdviceAudit

Audit/
Oversees
Gives
Instructions
Reports
toWorks with

Reports/
Discusses

Reports

Appoints/Dismisses/Oversees

Representative Director

Nominating Committee
Compensation Committee

Works with

Reports

Sustainability Committee

Works with

Internal Control

Management Strategy / PR

Internal audits

Finance and IR

Disclosure Committee

Operating companies

44

Consults(4 external)

Audit

Internal Control
Committee
Lawyers

Appoints/Dismisses

DCM Holdings Co., Ltd. Integrated Report 2023

General Affairs/Stocks

Values
Business Model

Role of the Audit and Supervisory Committee

Message from the President

The Company's Audit and Supervisory Committee consists of five members, four of whom are independent external directors.
To ensure the effectiveness of its activities, the Company has appointed a standing Audit and Supervisory Committee member.
The Audit and Supervisory Committee is chaired by an independent external director and conducts audits in accordance withestablished audit policies and plans through the use of internal control systems and close coordination with accounting auditors.
The standing Audit and Supervisory Committee member holds regular meetings with the Internal Audit Office in charge ofauditing operations and financial reporting and receives reports and exchanges opinions on the status of audits and exchange
opinions.

Medium-Term Management Plan

Role of the Nominating Committee and Compensation Committee

Sustainability

The Nominating Committee and Compensation Committee were established as advisory bodies to the Board of Directors.
The Nominating Committee deliberates and reports to the Board of Directors policy decisions on the selection of directors andexecutive officers and proposals for the appointment and dismissal of directors, executive directors, and executive officers.
The Compensation Committee reports to the Board of Directors and makes proposals to the Audit and Supervisory Committee
regarding compensation policies and compensation for directors and executive officers.
From the perspective of ensuring independence, Nominating Committee and Compensation Committee members areappointed by Board of Director resolution, chaired by independent external directors, and comprise a majority of independent
external directors as members.
Although these committees are voluntary, the chairmen of both the Nominating Committee and Compensation Committee
report their decisions to the Board of Directors, which has a significant impact on Board of Director decision-making.

Corporate Governance

External Director-only meetings and meetings between External Directors and the President
Opportunities for the four external directors to exchange opinions amongst themselves and exchanges between the President
and the Audit and Supervisory Committee Members (comprising four external directors and one standing Audit and Supervisory
Committee member) are provided on a regular basis and held separately from Board of Director meetings, with opinions fromexternal directors used to improve the effectiveness of the Board of Directors.

Risk Management and Compliance

Evaluating Board of Director effectivenessAs a result of this evaluation process, we havewith the aim of enhancing corporate value, verifying that

confirmed that, at present, the Board of Directors is

the Board of Directors is fulfilling its responsibilities andadequately fulfilling its supervisory function, has anroles, and identifying and continually improving issues

appropriate composition, and engages in discussions

within the Board of Directors.

using the requisite materials and indicators. Evaluation

In fiscal 2022, the Board of Directors shared and

Financial Highlights

We evaluate the effectiveness of the Board of Directors

items include confirmation of “the content and number

discussed responses from all Board members (excludingof proposals submitted to the Board of Directors,”

the chairman), including the four external directors,“the provision of information necessary for making

regarding evaluation items focused on the composition

management decisions,” and “the reporting ofof the Board of Directors, the creation of an environment

appropriate indicators based on medium- and long-term

that stimulates discussions and management decision-

strategies.” Going forward, we will continue conducting

making, monitoring based on medium- to long-term

periodic evaluations to further improve the effectivenessstrategies, and the status of internal controls monitoring.

of the Board of Directors.

45

Corporate Governance 3External Director Roundtable Discussion

Supporting Sustainable Corporate Growth with
Recommendations from External Perspectives

Michio Masukawa
Director, Audit andSupervisory Committee
Member (External)

Hikaru Oguchi

Director, Audit andSupervisory Committee
Member (External)

Hitomi Iba

Director, Audit andSupervisory Committee
Member (External)

Naoki Uno

Director, Audit andSupervisory Committee
Member (External)

Four external directors, each of whom possesses a variety of experiences and expertise and are involved in DCM
management decision-making and the oversight of business execution, discuss the operation of the Board of
Directors and the challenges it faces in creating further corporate value.
Masukawa: Since my appointment as an external
director, DCM has continued to expand throughmanagement integration and M&A strategies. In thiscontext, I believe that my experience in regional bankrevitalization during my time at the Bank of Japan
enables me to make recommendations based on
the feelings of employees when their organization
undergoes a change. The Bank of Japan is also a thinktank that conducts economic research and various
surveys and analyses, so I have knowledge of marketingand sales gained through relationships with a wide
range of companies. Further, I currently serve as
an auditor for an industry organization related to
information systems in the financial sector, so I also
convey the importance of adhering to establishedstandards and rules.
Uno: I have been involved in a wide range ofmanagement roles at a major insurance group, mainly46

DCM Holdings Co., Ltd. Integrated Report 2023

in the IT department, but also in sales planning andcorporate planning. For this reason, I believe that I cancontribute to DCM first and foremost in theestablishment of business processes utilizing IT. I havealso been involved in the integration of information
systems and business processes as the person in chargeof corporate mergers.
I am able to advise how to be careful when
integrating two companies into one under the DCM
growth strategy. Additionally, as an external directorof an IT company that develops systems on quantum
computers, I can offer opinions based on my knowledgeof cutting-edge areas as well as IT implementationand operations.
Oguchi: As a lawyer, I have been involved in thebusiness development of Japanese companies froma legal perspective for over 20 years in various industries,
mainly in Asia. Since DCM does business in variousValues

Iba: I think the “store strategy centered on enhancing
existing stores” and “creation of a unique ‘BOPIS’ style”
stated in the medium-term management plan are thecorrect strategies from both domestic and global
perspectives. Looking at sales changes by channel in the
US and Europe, the growth of the e-commerce channel
is plateauing, and past predictions that physical stores
would become less important as the shift to e-commerce
progresses do not appear to be coming true. My sense isthat DCM is paying attention to important trends thatwill occur in the future, and on that basis, carefully
considers how to grow the Company, then creates
medium-term management plans.

Risk Management and Compliance
Financial Highlights

Iba: Although I was recently appointed in May 2022,
my impression is that the Board of Directors is “openand free in its discussions,” with “each member willingto listen to and consider different points of view ina positive manner.” I am able to express in my own
words what I think is important for DCM's growth. In
addition to Board meetings, I am welcome to participate
in Management Council and other meetings as well as
discussions on new products in the upcoming fiscal year,
which enable me to hear firsthand the arguments andfactual debates behind various strategies and deepen
my understanding of DCM management.

Evaluation of the medium- to long-term
growth strategy

Corporate Governance

Board of Directors Atmosphere

Sustainability

Uno: I have attended a wide variety of board meetings,
from major insurance groups to venture companies, butrarely have I seen a situation where an external director
recommendation caused a company to reconsider thedetails or direction of an agenda item. However, when
we advise DCM against a course of action, theysometimes decide to reconsider without opposition toexternal director opinions or rigid adherence to theconclusions arrived at during internal discussions. This isa very positive corporate culture, and I think it should bemaintained going forward.

Medium-Term Management Plan

Iba: After earning a graduate degree in business, I gained
experience working at the US headquarters of several
companies with a strong consumer marketing focus.
I believe that my experience in launching new businesses
and developing products and services for consumers
facilitates a “fourfold perspective” that is difficult for
DCM to possess internally.
First, is the “customer’s perspective,” which is whatcustomers think. Second, is the “manufacturer’s
perspective,” which is what DCM business partners andothers expect from distribution. Third, is the “future
potential perspective,” which refers to overseas
developments in Asia, the US, and Europe. Fourth, is the“organizational and human resource utilization
perspective,” which based on my management
experience at the headquarters of a global company,
involves the efforts I want to make in supporting
management.

Message from the President

directors. There are no barriers between internal
directors and external directors, so discussions are
extremely impassioned.
Although discussions can sometimes become
emotional, ultimately, objective judgments are madeabout what is beneficial and what is not. Discussions
with external directors often lead to a reconsiderationof internally fixed agendas. This flexibility has beena constant at DCM since I became an external director.

Business Modelcountries, I strive to share practical perspectives,
including compliance with applicable laws andregulations, as well as responsible management andsustainability. In this age of globalization anddigitalization, the application of laws and regulations
is becoming increasingly complex. Taking into accountregulatory trends in other countries, I hope to provide
a unique outside perspective through participation invarious discussions.

Oguchi: Similar to Ms. Iba, I also feel that DCM has
an open and flexible corporate culture. Continuously
incorporating new perspectives while aiming for DCM
sustainable growth, there is a sense of unity in the desire
to contribute to society. I also find that when external
directors ask questions or make comments, we receive
immediate feedback and changes are implemented
rapidly.
Masukawa: I like the fact that there are no discouraging
responses to the opinions expressed by external

47

Corporate Governance 4

lead to human happiness. The expansion of the home
center industry has revolutionized the structure of the
distribution industry and affected the way people shop.
I believe that, as a leading Company in the home center
industry, DCM must fulfill its corporate responsibility bycreating a mechanism enabling people throughout Japan
to conveniently obtain quality products and services
in order to achieve sustainable growth.

Overcoming Challenges to Achieve
Further Growth

Oguchi: With approximately 680 physical storesthroughout Japan, DCM can be seen as a provider ofsocial infrastructure. Each store will connect people,
goods, and services while remaining aware of thechanging needs of local customers and utilizing theconvenience of e-commerce. Through these efforts, wehope to become a corporate group that can substantiallycontribute to the revitalization of Japanese society by
confronting current and future social issues head-on andplaying the role demanded by local communities.
Uno: I think the platform concept is important for DCM.
Placing new business and IT on a platform combining
physical stores that successfully utilize IT with
e-commerce will create new value. If this structure canbe solidified and maintained, DCM will be able to further
incorporate new companies into the Group and growsteadily going forward.
The DCM Company Philosophy “giving shape toyour dreams for life” is one of my favorite phrases.
We learned during the pandemic that society does not
function properly without the power of essential
workers. DCM’s business of “reliably providing daily life
necessities” is truly essential. I believe the mostimportant aspect of DCM sustainable growth is todevelop business that never deviates from “giving shape
to your dreams for life.”
Masukawa: We are no longer in an age when national
economic growth driven by an increasing population
leads to prosperity. DCM's ongoing transformation ofexisting stores and pursuit of the “giving shape to yourdreams for life” concept are deeply meaningful corporate
activities that will improve quality of life and ultimately

48

DCM Holdings Co., Ltd. Integrated Report 2023

Uno: One of DCM’s strengths is that it takes businessseriously. However, I am concerned that this degree ofseriousness may lead to an inability to break with thepast and make a fresh start. In addition to being serious
and honest, it is also important that DCM communicate
its presence to the world. For example, we should makeit more widely known that DCM contributes to local
communities through the in-store recycling of waste,
DIY educational activities for parents and children, andother initiatives.
I would also like to see the further promotion ofdiversity, including the active participation of women.
I hope to see excellence in the functions and cost of
products developed by DCM, as well as productplanning that incorporates women’s perspectives.
Oguchi: As the world enters a period of great changeamid discontinuous environmental changes, I hope DCM
is able to move forward, examining past experiences anddata while anticipating customer needs with an
overwhelming sense of speed and increasingly free andflexible ideas. To this end, I would also like to sharedifferent perspectives based on experiences from mydaily interactions outside DCM and outside Japan.

Values
Message from the President

Iba: In my case, I am not yet familiar with the home
center business itself, so I try to be as specific as possible
in my remarks from the dual perspectives of “deeply
understanding customers” and “facilitating customer
understanding.”
At the same time, as I continue to follow the latest
trends and technologies overseas, I feel strongly that weshould have a sense of urgency about discontinuous
environmental changes—in other words, we need tothink about “a future beyond simply maintaining thestatus quo," and I am willing to speak up when I think itappropriate. I also want to continue sharing facts and thelatest case studies that I feel illustrate this idea throughstudy groups and other methods.

Medium-Term Management Plan
Sustainability

Corporate Governance

Masukawa: DCM has risen to the top class in its industry
in a short period of time through management
integrations and proactive M&A efforts. Because of this
rapid growth, there are many occasions when I feel that
“I am in a position to protect what has been built up.”
For DCM to continue growing, I will continuously
emphasize the “importance of breaking free from theconventional way of doing things.”
I have seen many management integrations and
M&A projects, but I never saw a case where the acquiredcompany, its employees, and its culture were valued ashighly as DCM values its acquisitions. I look forward toworking with other external directors to contribute to
DCM management so that this valuable success story
can be further developed.

Risk Management and Compliance
Financial Highlights

Iba: How DCM confronts the discontinuous
environmental changes Ms. Oguchi mentioned is critical
for the achievement of sustainable growth. To remain
connected with customers who are also undergoing
discontinuous changes, DCM must maintain a deep andconstant understanding of its customers. At the sametime, in addition to understanding customers, DCM must
maintain initiatives and efforts facilitating customer
understanding of DCM. When DCM DIY Place opened at
Ebisu Garden Place in central Tokyo, it was as a new
beginning for DCM, which up to then had only opened
stores in suburban areas. This move led to increased
media exposure, and I was subsequently contacted byan acquaintance who said it was their first-time hearingof DCM. This experience made me realize that marketing
activities aimed at connecting with customers is anotherarea to focus on in pursuing DCM growth.
In regards to DCM’s seriousness, there is one
additional point I would like to make. I think theseriousness everyone mentioned is a major positive for
DCM. I think there is substantial room for growth if
speed and boldness, which are considered lacking,are incorporated into the Company’s overall cultureof seriousness.

Business Model

Oguchi: I am aware of two main issues. The first is to
speak freely without intimidation. I hope that conveying
the experiences and perspectives I have accumulated indifferent countries and industries from my position
outside the Company will lead to the further invigorationof discussions inside DCM.
The second issue is to become a point of contact
between DCM and the outside world. In this age of
discontinuous change, I think some interesting chemical
reactions may result from the expansion of networks inJapan and abroad extending from different channels.

Masukawa: Corporate culture is cultivated by humanresources. I look forward to human resource changes,
especially at the middle management level, for the goodof DCM’s future. From my participation at Board of
Directors’ and other meetings, I am well aware that DCM
upper management is quite aggressive in their thinking.
DCM’s transformation will be further accelerated if
middle managers, who transform upper management
intentions into action, are more willing to take onchallenges rather than simply defending their existing
privileges and work procedures.

49

Risk Management and Compliance

Risk Management and Compliance
Risk management structure
The Internal Control Committee comprehensively manages
Group-wide risks based on risk management regulations,and engages in awareness, guidance, education, and otherefforts aimed at preventing and minimizing risks and damage.
Every year, risk managers in each division identify andevaluate risks in terms of degree of impact and frequency ofoccurrence, summarizes them in a risk assessment chart that
includes countermeasures, and submits it to the Internal
Control Committee. The Internal Control Committee
comprehensively assesses the status of Group-wide risks
based on risk assessments and countermeasures submitted
by each division risk manager.

50

Risk management conditions and decisions regarding
major risks are reported annually to the Board of Directors fordiscussion and supervision. After Board of Director
deliberations, the Internal Control Committee continuously
monitors the risk management structure and implementationof countermeasures.
Principal risks identified as having the potential tomaterially affect DCM Holdings’ financial position, results ofoperations, and cash flows are as follows. The Internal
Control Committee assessment of risks in fiscal 2022
confirms there are no problems with risk responses and thevariability of the risks themselves.

Risk Items

Risk Details

Responses

Risks Associatedwith Store
Openings• There is a possibility that plans for new store openings may beaffected by changes in economic conditions may require moretime to secure sites for new store openings, and that various
circumstances, such as the opening of new stores bycompetitors, may affect plans for new store openings.
• There is a possibility that plans for new store openings may beaffected by legal restrictions that delay store openings.

• DCM opens new stores in coordination with local residents and local authorities, withconsideration for the local environment, and in compliance with laws and regulations.
• Information pertaining to the progress of store openings is shared at Management Council andother meetings as needed, and when it is determined that the Company will be affected, we
promptly coordinate with relevant departments to take countermeasures.

Risks Associatedwith Climate
Change• There is a possibility that our product supply system and overallbusiness may be adversely impacted by an increase in extreme
weather events associated with climate change.
• There is a possibility that our business performance may beaffected in the event sales of seasonal products fall short ofsales promotion plans due to flagging demand caused byunseasonable weather such as cool summers or warm winters.

• DCM makes efforts to procure products from multiple suppliers in order to maintain stableprocurement.
• We regard climate change as an important management issue, endorse the recommendationsof the Task Force on Climate-related Financial Disclosures (TCFD), and have establishedtargets for the reduction of greenhouse gas emissions by 2050.
• Going forward, the Sustainability Committee, chaired by the President and COO, will continue
to discuss specific countermeasures

Risks Associatedwith Sales
Fluctuations• There is a possibility that our business results may be affectedby competitors opening new stores or changes in customer
purchasing behavior in line with revisions to related laws andregulations.

• Based on our Company Philosophy “Do Create Mystyle” under the long-term business concept“transforming into an integrated business that comprehensively makes people’s lives more
comfortable,” we aim to become a company that offers comprehensive solutions that enrichpeople’s lives and is indispensable to society.

Risks Associatedwith Natural
Disasters andOther
Emergencies• There is a possibility that our business results may be affectedby the collapse of buildings and other structures in the event ofa major earthquake.

• We have established guidelines and an emergency response manual, maintain an emergency
contact network, introduced a safety confirmation system, and implement other measures suchas periodic drills and the stockpiling of necessary supplies.
• In the event of a disaster or other emergency, we create a task force to ensure business
continuity through Group-wide coordination.

Risks Associatedwith Infectious
Disease• There is a possibility that product supplies will be delayed,
employees will become ill, and stores will be forced to shorten
business hours or temporarily close due to infectious disease.
• There is a possibility that our business performance may beaffected in the event an infectious disease epidemic becomesprolonged, economic activity stagnates, and consumer
sentiment cools.

• To prevent infection, we take measures that include checking employee temperatures before
they come to work, handwashing, and wearing masks, and at stores, we ensure that customers
keep a safe distance, thoroughly disinfect and clean surfaces, and take other measures toprevent the spread of infection among customers and employees.

Risks Associatedwith Private
Brand Products• There is a possibility that our business performance may beaffected in the event that private brand (DCM brand) products,
some of which are supplied by overseas vendors, experiencedelivery disruptions, supply instabilities, or if we fail to develop
products that meet consumer needs.

• To ensure stable procurement, we will review the country of origin for each product, diversify
production areas, and establish a system that enables procurement from multiple suppliers.
• When developing new products, we established a system that enables us to proactively
incorporate the opinions and ideas of employees and focus on product development from thecustomers’ perspective. We strive to reduce risks through trial sales of small lots ofmanufactured products before commercialization.

Risks Associatedwith Fixed Asset
Impairment• There is a possibility that our business performance andfinancial position may be affected in the event we were to record
an impairment loss on an asset for which a new impairment loss
must be recognized.

• We check for signs of impairment, and if there are any concerns regarding impairment, we takesteps to improve profitability and reduce risk.

Risks Associatedwith Exchange
Rate Fluctuations• There is a possibility that our business performance may beaffected in the event exchange rate fluctuations are greater than
expected.

• DCM strives to reduce risks by entering into forward exchange contracts.

Risks Associatedwith Interest Rate
Fluctuations• There is a possibility that our business performance andfinancial position may be affected in the event of a rapid andsignificant rise in interest rates leading to increased interest rate
payments and other factors.

• When procuring funds, we make every effort to limit the impact of market interest rate
fluctuations using a combination of fixed and floating interest rates, depending on the
procurement environment.

Risks Associatedwith the Leak of
Personal
Information• There is a possibility that our trustworthiness in the eyes ofsociety and business performance may be affected in the event
personal information is leaked due to unforeseen criminal acts,
accidents, and other factors.

• In addition to formulating rules associated with information security and the handling of
personal information, creating an IT environment conforming to those rules, and regularly
providing employees with educational opportunities, we make efforts to strengthen information
security countermeasures using targeted email attack drills and other training.

Risks Associatedwith Company
Acquisitions andBusiness
Transfers• There is a possibility that unanticipated contingent or
unrecognized liabilities may arise when conducting M&A
activities.
• There is a possibility that our business performance andfinancial position may be affected in the event the synergies
initially envisioned are not realized.

• When engaging in M&A activities, we conduct detailed due diligence on the target company’sbusiness plan, financial position, real estate, employment contract relationships, and otherfactors. The Board of Directors and other relevant bodies review risks identified through due
diligence, the synergistic effects expected from M&A activity, and the appropriateness of theacquisition price, among other efforts aimed at minimizing risk.

DCM Holdings Co., Ltd. Integrated Report 2023

Valuesas the foundation, employees work as members ofa company that is trusted by society. To put our compliancepolicy into practice, we established a compliance program tolay out substantive codes of conduct and standards, andperiodically and continually implement compliance education.

Message from the President

With regard to compliance management, we laid out the
DCM Holdings Compliance Policy. Each and every employee
is aware of the company’s societal responsibility and we
ensure that we observe all laws, ordinances and societal
norms and ethics, and that corruption is prevented. With thisBusiness Model

Compliance Policy

1. Statement of Compliance
We aim to be a company that is aware of its societal responsibilities, that observes all laws, ordinances, rules and societal norms
and ethics, and that is trusted by society.

Medium-Term Management Plan

2. Charter of Corporate Behavior
The DCM Group always acts with the customer in mind
• We offer products with peace of mind
• We keep our promises and operate with integrity• We offer products and services with good value• We provide products and services that come with a greeting and a smile•W e promote management that puts the customer-first, and give it our all to ensure it stays that way

Sustainability

The DCM Group values its employees•W e respect the human rights and individuality of each and every one of our employees•W e offer opportunities and an environment where all of our employees can grow their natural gifts and abilities•W e evaluate the roles, duties and results of all employees fairly

Corporate Governance

The DCM Group aims to build even stronger partnerships with our clients•W e will clarify the conditions of the dealing, and our reciprocal responsibilities•W e respect clients who can share our principles• We maintain fair and equitable partnerships and respect laws, ordinances and rules• We do not accept the donation of undue money or gifts, nor entertainment

Risk Management and Compliance

The DCM Group will not betray the trust of stockholders• We actively work to return profits to stockholders• We actively engage in dialogues and aim to find solutions to business challenges• We aim for healthy growth with innovative management• We disclose information in a timely manner and fulfill our accountability
The DCM Group grows together with local communities and society• We aim to create community-based stores• We work to protect the global environment with things such as developing environmentally-friendly products

Financial Highlights• We do not involve ourselves with antisocial forces or individuals

Our Compliance System
We have established an Internal Control Committee. This
committee fulfills compliance-related functions and is
responsible for compliance activities within the DCM Group.
In the event that a major compliance issue arises in the DCM
Group, this committee is expected to take the lead in
addressing the issue and formulating countermeasures.
As for specific activities related to compliance, the Groupis working to create a compliance program, create
educational tools, and conduct education and training.
In addition, because we are a retail business group,
we consider the issue of compliance is particularly importantfor merchandisers, who select products to be purchased fromsuppliers, and distributors, who determine the quantity anddelivery method of the selected products. Thus, not only
have we created a code of conduct regarding the
Antimonopoly Act, Subcontract Act, and other laws andregulations related to fair trade, but we also conduct training.
We also educate our employees about the Labor
Standards Act, the Act on Securing, Etc. of Equal Opportunity
and Treatment between Men and Women in Employment,
and other issues that are familiar to them through internal
newsletters and posters. In addition, we have establisheda whistleblower system (commonly known as the helpline)
in accordance with the Whistleblower Protection Act, and areworking to ensure that compliance management functions
effectively.

51

Financial Highlights
Years ended the end of February(Millions of yen)

2019

2020

2021

2022

2023

438,683

430,000

464,212437,722469,782

Gardening

68,86558,79767,06866,661

66,112Home improvement

90,09787,764

98,52396,614

94,798Home leisure and pet

64,77563,781

67,07863,77963,346

Housekeeping

106,935

104,790

110,090

101,047

96,082Home furnishing

26,67725,496

27,762

24,83023,058Home electronics

39,59545,32551,241

47,121

46,257

Others32,69833,00831,442

25,76915,473

Product supply, etc.

9,037

11,036

11,005

11,635

12,903438,683

429,719

463,995

437,460

418,034

—

—

—

—

51,423

0

0

0

262

324

144,257

141,350

154,697

147,386

156,279

7,075

7,371

6,980

7,028

7,039

Selling, general and administrative expenses

130,319

127,889

131,423

123,765

133,250

Operating profit

21,013

20,83230,25430,64930,068

Ordinary profit

19,905

20,10729,55030,31729,555

Profit attributable to owners of parent

12,246

13,783

18,59418,80918,135

Capital investment

12,248

13,11718,302

9,368

14,290Depreciation

12,25911,881

11,70912,52812,658

2019

2020

2021

2022

2023

Results of Operations
Net sales
Home improvement retail businessTotal of home improvement retail business
XPRICE business
Other business
Gross profit
Operating revenue
Real estate lease revenue(Yen)

Per Share Information
Earnings per share

90.1

103.3

127.3

126.2

125.0

78.2

89.6

121.3

—

—

Net assets per share

1,410.2

1,467.3

1,531.7

1,624.2

1,738.4

Dividends per share

27.0

28.0

32.0

33.0

40.0

Diluted earnings per share

2019

2020

2021

2022

2023

Major Indicators
Operating profit margin (%)

4.8

4.8

6.5

7.0

6.4

Return on equity (ROE) (%)

6.6

7.1

8.6

7.9

7.5

Equity ratio (%)

45.3

46.1

47.7

53.6

47.2

Payout ratio (%)

49.6

46.5

27

28.7

12.8

Price earnings ratio

19.9

16.3

8.9

9.7

3.7

Total shareholder return (%)

105.3

98.4

108.1

117.1

123.9

671

673

663

669

675

746,946745,278

737,878

739,059742,597

4,331

4,248

4,059

4,025

4,102

Number of stores
Total sales floor area (m2)
Number of employees

52

DCM Holdings Co., Ltd. Integrated Report 2023

Values(Millions of yen)

2020

2021

2022

2023

Business Model2019
Cash Flow Information

25,07436,74945,243(3,720)15,614(9,770)(5,369)(16,002)(7,489)(38,459)

Cash flows from financing activities(11,423)(8,849)12,421(24,620)

34,383

Cash and cash equivalents at end of period

15,741

38,272

79,934

44,10455,643

2019

2020

2021

2022

2023

138,511

161,618

207,183

175,057

214,390

Cash and deposits

15,76338,306

79,95644,12655,665

Notes and accounts receivable–trade

13,50014,883

14,946

14,211

18,109Merchandise

97,19999,60699,431106,001

121,941

Message from the President

Cash flows from operating activities
Cash flows from investing activities(Millions of yen)

Financial Position
Current assets

12,847

10,71818,673

283,666

274,093

301,564

Property, plant and equipment

196,699

195,932

202,169

196,243

195,687

Buildings and structures

93,662

89,913

95,45391,072

90,628Land

80,851

81,97983,08982,39482,410Other

22,18524,03923,626

22,776

22,64813,233

12,725

12,326

13,30633,650Intangible assets

1,320

1,025

730

488

20,382

Other

11,913

11,69911,595

12,81813,267

67,23964,456

69,17064,542

72,226

Investment securities

20,346

19,60425,292

23,67730,927

Leasehold and guarantee deposits

41,37939,33337,937

36,63436,282

Investments and other assets

5,513

5,518

5,939

4,231

5,016

415,684434,733

490,849

449,151

515,955

Current liabilities

105,476

119,743

117,255

100,109102,828

Notes and accounts payable–trade29,13032,65735,277

22,81624,155

Short-term borrowings

27,55012,400——10,00016,474

8,823

6,379

13,08930,111

Other

39,97168,306

68,88847,181

52,198Non-current liabilities

121,803

114,776

139,385

108,306

169,773

Bonds payable

10,00010,00010,00010,00010,000Long-term borrowings

63,68978,324

102,749

73,767137,104

Other

48,11426,451

26,636

24,53922,668

Net assets

188,404

200,213234,208240,735

243,353

10,058

11,93919,973

19,973

19,973

Share capital
Capital surplus

45,13547,01755,05155,05154,075Retained earnings

140,015150,029

164,285

178,254

185,378

Treasury shares(8,985)(10,114)(10,372)(15,692)(18,619)

Accumulated other comprehensive income

2,181

1,341

5,271

3,148

2,545

415,684434,733

490,849

449,151

515,955

Total liabilities and net assets

Financial Highlights

Current portion of long-term borrowings

Risk Management and Compliance

Other
Total assets

Corporate Governance

Goodwill

Sustainability

8,821
273,114

Medium-Term Management Plan

12,047277,172

Other
Non-current assets*1, The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), has been applied from the beginning of the fiscal year ended February 28,
2023, with sales figures for this period reflecting the application of this accounting standard, which resulted in an ¥11,322 million decrease in recognized revenue.
*2. Figures include XPRICE Inc., which was consolidated in the second quarter of the fiscal year ended February 28, 2023.

53

Company Data (As of February 28, 2023)
Company name

DCM Holdings Co., Ltd.

Established

September 1, 2006

Share capital¥19,973.5 million

Head office

Omori Bellport E Building, 6-22-7 Minami-Oi, Shinagawa-ku, Tokyo 140-0013, Japan

Consolidated numberof employees

4,102

Independent auditor

Deloitte Touche Tohmatsu LLC

URLhttps://www.dcm-hldgs.co.jp/grp/english/

Consolidated subsidiaries DCM Co., Ltd., XPRICE Inc., MYVOT Fellows, Inc.

Stock Information (As of February 28, 2023)
Total number of sharesauthorized to be issued

600,000,000 shares

Total number of outstanding shares 157,000,000 shares
Number of shareholders

85,051

Stock exchange listing

Prime Market of Tokyo Stock Exchange

Security code

3050

Fiscal year-end

End of February

Shareholders register administrator Mitsubishi UFJ Trust and Banking Corporation

Share Distribution (As of February 28, 2023)
Kyushu

2.5%
6.9%

11.0%

21.4%

Number of
Sharesby Holder

29.7%

DCM Holdings Co., Ltd. Integrated Report 2023

Individuals and others

37.9%

Kinki

16.3%

Hokkaido

7.3%

Tohoku5.1%

Chugoku

4.8%

Financial institutions andﬁnancial instruments business operators

54

0.3%

Shikoku

Foreign corporations

Other
corporations

Foreign

Number of
Sharesby Region

Chubu

28.5%

Kanto

28.3%

Major Shareholders (As of February 28, 2023)
Major shareholders

Number of shares held

Shareholding ratio

The Master Trust Bank of Japan, Ltd. (Trust account)

18,95013.22

Nisshinkikou company limited

11,870

8.28

Custody Bank of Japan, Ltd. (Trust account)

6,432

4.49

AEON Co., Ltd.

5,876

4.10

Yasunori Ishiguro

4,193

2.92

DCM Holdings Employee Stock Ownership Plan

3,988

2.78

Kaori Maki

3,723

2.60

SMBC Nikko Securities Inc.

2,915

2.03

The Master Trust Bank of Japan, Ltd.
(Stock Grant ESOP Trust Account)

2,625

1.83

TAMON Co., Inc.

2,581

1.80

Notes: 1. Treasury stock held by the Company is excluded from the above major shareholders.
2. The shareholding ratio is calculated after deducting 13,636,736 shares of treasury stock owned by the Company.

Rating Information
Rating agency

Rating and Investment Information, Inc. (R&I)

RatingA-

Rating outlook

StableDate of public announcement

November 16, 2022

Stock Price and Trading Volume
Stock Price (Yen)
2,000
1,800
1,600
1,400
1,200
1,000
800

Trading Volume (Shares)
2,500
2,000
1,500
1,000
500
0

2020/32021/32022/32023/355

Omori Bellport E Building, 6-22-7 Minami-Oi,
Shinagawa-ku, Tokyo 140-0013, Japan
Published September 2023