Don Quijote Holdings. Co., Ltd.

1H Results for FY 2017
Earnings Results
July 1, 2016 - December 31, 2016

February 6, 20170

Earnings summary
Consolidated(Millions of yen)

6 months to Dec. 2016
ActualShare

YoY

6 months to Dec. 2015
ActualShare

Net sales

417,694

100.0%

108.6%

384,445100.0%

Gross profit

110,640

26.5%

107.5%

102,941

26.8%

SGA

84,29720.2%

109.0%

77,37020.1%

Operating profit

26,343

6.3%

103.0%

25,571

6.7%

Recurring profit

26,9286.4%

104.1%

25,873

6.7%

Profit attributable toowners of parent16,459

3.9%

115.6%

14,232

3.7%

EPS(Yen)104.09-115.6%

90.05-• Consolidated and same store sales went up 8.6% and 2.1% YoY respectively. Consumer sentiment remained stagnant.
Budged-minded customers chose what to buy more carefully because of the rise in food price triggered by bad weather andhigher social security cost burden.
Under such circumstances, we focused on to get more foot traffic by offering various daily necessity items at competitive prices.
• GPM went down 0.3pts. Offering daily necessity was our focus to deal with the tough consumption environment.
Our strategy to have greater sales and traffic worked well even by sacrificing short-term profit.
• Aggressive new store openings triggered the rise in personnel cost, rent and depreciation.
The personnel cost at existing stores were well-controlled as we improved productivity with the organizational change.
• OP went up by 3.0%, Profit attributable to owners of parent was up 15.6%, both beat our guidance.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

1Same-store sales
125.0%

120.0%= Customer traffic= All stores= Customer spending= Existing stores

115.0%

110.0%

105.0%

100.0%

95.0%

90.0%

85.0%
2014
Jun.

Existing stores

2014
Dec.

2015
Jun.

2016 Jan.

2015
Dec.

2016
Jun.

Aug.

2016
Dec.

2015 Oct.

Nov.

Dec.

Feb.

Mar.

Apr.

May.

June.

July.

Sep.

Oct.

Nov.

Sales

106.8%

102.4%

102.5%

105.9%

105.8%

101.9%

105.4%

101.3%

102.4%

103.7%

99.6%

102.6%

102.2%

102.2%

Dec.
102.6%

Customer traffic

102.8%

98.2%

100.0%

102.0%

102.6%

99.2%

101.1%

98.2%

99.9%

101.9%

98.9%

101.2%

100.7%

101.6%

102.5%

Customer spending

103.9%

104.3%

102.6%

103.9%

103.1%

102.8%

104.2%

103.1%

102.5%

101.8%

100.7%

101.3%

101.5%

100.6%

100.2%

Existing store count

214

216

218

221

220

222

223

226

232

236

239

236

238

239

240

• DQ SSS went up 2.1%, traffic +1.2% and spending +0.9% in 1H. (July-December).
• Macro consumption expenditure is stagnant. Our competitive price in daily necessities successfully expanded the domestic customers’
wallet share. Inbound customer number surged and it contributed to the SSS.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

2

Sales breakdown by product category
6 months to Dec. 2016

Consolidated(Millions of yen)

ActualShare

6 months to Dec. 2015

YoY

ActualShare

Home electrical appliances

35,4908.5%

113.7%

31,213

8.1%

Miscellaneous household goods

87,78221.0%

112.1%

78,335

20.4%

Foods

133,98532.1%

113.1%

118,451

30.8%

Watches & fashion merchandise

85,79620.5%

106.9%

80,29020.9%

Sporting goods & leisure goods

30,4447.3%

101.8%

29,899

7.8%

Other products

30,219

7.3%

91.0%

33,221

8.6%

Total retail store business

403,71696.7%

108.7%

371,409

96.6%

Rent income

10,3492.5%

106.3%

9,737

2.5%

Other business

3,629

0.8%

110.0%

3,299

0.9%

417,694

100.0%

108.6%

384,445100.0%

Total

Home appliances : Smart phone accessories and headsets were strong. Seasonal appliances grew as temperature dropped.
Household goods : Consumables sales have become even more strong. Tourists’ sales in cosmetics and drugs were contributor.
Foods: Processed foods such as snacks and instant noodle were robust by being price competitive.
MEGA store enjoyed the sales growth in meats and delis.

Watches & Fashion : Import brand wallets enjoyed greater sales. Temperature drop encouraged the sales in underwear and gloves.
Bags and sneakers went up.
Sports & Leisure ： Bicycles and workout equipments were good. Three-day Christmas weekend pushed the toy sales up.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

3

The number of stores(Number of stores)

FY2015FY2016FY2017-1Q

FY2017-2Q

Don Quijote183

194

195

196

MEGA36393940New MEGA

41556164

Others32393940

Total stores in Japan

292327334

340

Overseas14141414Grand Total

306341348354

Domestic opening

3340

106

Domestic closure

105302335

76Net increase• 16 new stores opened in 1H : 7 Don Quijote, 7 New MEGA, 1 MEGA, 1 Doit.
• 3 DQ stores closed for relocation and renovation.
• 31 new stores will be opened in FY2017.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

4

Key components in SG&AConsolidated(Millions of yen)

6 months to Dec. 2016Actual

Share

YoY

6 months to Dec. 2015
ActualShare

Net sales

417,694

100.0%

108.6%

384,445100.0%

Salary allowance

32,1247.7%

111.1%

28,9207.5%

Rent

11,3872.7%

111.2%

10,237

2.7%

Commission paid

9,424

2.3%

106.9%

8,815

2.3%

Depreciation and amortization

6,793

1.6%

110.5%

6,149

1.6%

Others24,5695.9%105.7%

23,2496.0%

SGA

84,29720.2%

109.0%

77,370

20.1%• SGA to sales ratio went up 0.1pts to 20.2%. Cost increased due to initial cost of new store openings such as personnel cost,rent and depreciation expenses. Productivity improvement offset the rise in social security cost for part-timers.
zThe rise in personnel cost in existing stores, however, is slowing down as the organization structure change in 2015is bearing fruit.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

5

Sales and profit by business（Millions of yen）

Sales, profit and loss by segment from Jul. 1, 2016, to Dec. 31, 2016
Consolidated

Retail store

Rent income

403,716

10,349

3,629

271

9,780

Total

403,987

Segment profit14,321

Sales to external customers
Internal sales or transfers
between segments

Others

Total

Adjusted amount

Consolidated

417,694-

417,694

4,951

15,002(15,002)-20,1298,580

432,696(15,002)417,694

8,442

3,485

26,24895

26,343（Millions of yen）

Sales, profit and loss by segment from Jul. 1, 2015, to Dec. 31, 2015
Consolidated

Retail store

Rent income

371,409

9,737

3,299

7

8,762

Total

371,416

Segment profit

15,393

Sales to external customers
Internal sales or transfers
between segments

zOthers

Total

Adjusted amountConsolidated

384,445-

384,445

3,747

12,516(12,516)-

18,4997,046

396,961(12,516)

384,445

7,129

3,266

25,788(217)

25,571

Profit in the retail business was 14.3 billion yen which is our mainstay.

• Profit in the tenant leasing business was 8.4 billion yen.
• Profit in other business was 3.5 billion.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

6

Sales, profit and asset by subsidiaries（Millions of yen）

Sales, profit and asset by subsidiaries from Jul. 1, 2016, to Dec. 31, 2016
Consolidated

Don Quijote 1)

Doit

Nagasakiya 2)

Overseas 3)

Accretive 4)

JAM 4)

Consolidated

Net sales

302,0288,240

84,01017,122

2,918

8,889

417,694

Operating profit

13,069

390

3,166

583

937

3,806

26,343

Total asset

237,357

23,20082,797

20,76625,670126,258

628,931

Net asset

113,166

19,42447,503

14,652

9,382

23,272

265,432

PL/1USD=\105.7
BS/1USD=\101.0（Millions of yen）

Sales, profit and asset by subsidiaries from Jul. 1, 2015, to Dec. 31, 2015
Consolidated

Don Quijote 1)

Doit

Nagasakiya 2)

Overseas 3)

Accretive 4)

JAM 4)

Consolidated

Net sales

270,793

8,291

79,453

19,939

2,246

8,044

384,445

Operating profit

14,545

452

2,405

819

1,007

3,362

25,571

Total asset

205,606

22,04979,92422,07023,503102,875

560,400

Net asset

104,167

18,75245,06015,9807,057

11,711

234,971

1) Don Quijote is retail business. DQHoldings is not included.
2) Nagasakiya shows retail business only

PL/1USD=\121.7
BS/1USD=\120.3

3) Overseas includes DQ USA and MARUKAI• The rise in cost was more than offset by the sales growth in Don Quijote, Nagasakiya with finely-tuned cost management.
• Forex affected overseas business ; 1USD=JPY105.7 (1H in FY2017), 1USD=JPY121.7 (1H in FY2016).

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

7

Balance Sheet（Millions of yen）
As of Dec. 31, Change from2016
Jun. 30, 2016
227,660
31,683

Consolidated
Total current assets

Consolidated
Total current liabilities（Millions of yen）
As of Dec. 31, Change from2016
Jun. 30, 2016
166,952
18,957

Cash and deposits

58,021

15,127

Accounts payable

87,99217,798

Merchandise

122,677

5,277

Short-term liabilities*

30,637(2,287)401,271

36,680Total noncurrent liabilities

196,547

28,521

299,721

7,669

Long-term bonds

66,948(9,523)

Buildings

110,6772,563

Long-term borrowings

87,82742,745

Land

169,155

3,970

Long-term payables
under fluidity lease receivables

22,956(3,920)16,870(135)

Total liabilities

363,499

47,478

6,439

(413)

Net assets

265,432

20,88584,68029,146

Total shareholders' equity

248,264

16,47639,407

3,762

Non-controlling interests

17,906

4,910

628,931

68,363Liabilities and net assets

628,931

68,363

Total noncurrent assets
Total property, plant and equipment

Total intangible assets
Goodwill
Total investments and other assets

Lease and guarantee deposits

Total assets* Short-term liabilities = Short-term loans payable + Current portion of long-term loans payable + Current portion of bonds• Cash & deposits : We financed long-term bank borrowing for capital investment. December, the best-selling month of a year,brought another cash.
• Merchandise: Inventory increased for 16 new stores and strong existing stores.

• Payables associated with the liquidation of receivables : 30.1 billion yen was financed by asset-backed loans.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

8

Cash flows and Capital expenditure（Millions of yen）

Consolidated Cash Flows

Cash and equivalents at beginning of period
Cash flows from operating activitiies
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash and equivalents
Cash and equivalents at end of period

6 months to Dec.
20166 months to Dec.
2015

44,496
39,737(41,305)
21,572
19,66564,161

51,29233,605(26,443)
15,902
22,826
74,118Cash flows*
Net increase (decrease)(6,796)
6,132(14,862)
5,670(3,161)(9,957)（Millions of yen）

Consolidated Capital Expenditures

Capital expenditures

Change6 months to Dec.
2016

6 months to Dec.
2015

19,857
20,872
1,015

23,836
19,314(4,522)

Change(3,979)
1,558
5,537

* Cash flows = Net income + Depreciation and amortization + Extraordinary loss - Dividend• Cash flow from operating activities was 39.7 billion yen positive.
Positive factors : 26.9 billion yen of income before income taxes, 7.7 billion yen of depreciation and amortization.
Negative factors : 5.5 billion yen more in inventories and 7.2 billion yen for tax payment.
• Cash flow from financing activities was 21.6 billion yen positive driven by 31.2 billion yen of net increase of short and long-termborrowings and 2.2 billion yen of net decrease in corporate bond. 2.7 billion yen of dividend payment were negative factors.
• Capex was 19.9 billion yen (DQ: 11 bil, Nagasakiya: 1 bil, Doit: 0.3 bil, JAM: 6bil). Free cash flow was 1 billion yen positive.
Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

9

Earnings summary for Q2
Consolidated(Millions of yen)

3 months to Dec. 2016
Actual3 months to Dec. 2015

Share

YoY

ActualShare

Net sales

216,367

100.0%

109.4%

197,803100.0%

Gross profit

56,41526.1%

105.9%

53,263

26.9%

SGA

42,60519.7%

109.3%

38,988

19.7%

Operating profit

13,811

6.4%

96.7%

14,275

7.2%

Recurring profit

14,140

6.5%

98.9%

14,296

7.2%

Profit attributableto owners of parent

8,332

3.9%

107.5%

7,751

3.9%

EPS(Yen)

52.69-107.5%

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

49.03

10Sales breakdown by product category for Q2
Consolidated(Millions of yen)

3 months to Dec. 2016
ActualShare

3 months to Dec. 2015

YoY

ActualShare

Home electrical appliances

19,011

8.8%

114.2%

16,6548.4%

Miscellaneous household goods

44,635

20.6%

112.5%

39,658

20.0%

Foods

70,11032.4%

113.7%

61,652

31.2%

Watches & fashion merchandise

44,91520.8%

108.5%

41,415

20.9%

Sporting goods & leisure goods

15,4287.1%

101.4%

15,209

7.7%

Others15,163

7.0%

92.0%

16,488

8.4%

Total retail store business

209,26296.7%

109.5%

191,076

96.6%

Rent income

5,236

2.4%

104.3%

5,018

2.5%

Other business

1,869

0.9%

109.4%

1,709

0.9%

216,367

100.0%

109.4%

197,803100.0%

Total

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

11

Key components in SG&A for Q2
Consolidated(Millions of yen)

3 months to Dec. 2016
ActualShareYoY

3 months to Dec. 2015
ActualShareNet sales

216,367

100.0%

109.4%

197,803100.0%

Salary allowance

16,0767.4%

108.9%

14,764

7.4%

Rent

5,749

2.7%

113.1%

5,084

2.6%

Commission paid

5,062

2.3%

111.0%

4,562

2.3%

Depreciation and amortization

3,454

1.6%

108.9%

3,171

1.6%

Others12,2645.7%

107.5%

11,407

5.8%

SGA

42,60519.7%

109.3%

38,988

19.7%

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

12Forecast for fiscal June 2017
Consolidated

FY2017 Revised forecast(Millions of yen)

PlanShareYoY

FY2017 Initial forecast
PlanShare

Net sales

820,000

100.0%

108.0%

820,000

100.0%

Gross profit

218,000

26.6%

108.0%

220,000

26.8%

SGA

173,000

21.1%

109.0%

175,000

21.3%

Operating profit

45,0005.5%

104.2%

45,000

5.5%

Recurring profit

45,5005.5%

103.9%

45,5005.5%

Net profit

27,5003.4%

110.3%

26,800

3.3%

EPS(Yen)173.88-110.2%

169.50-Capital expenditure

45,000-87.3%

45,000-Depreciation

14,7001.8%

110.5%

14,7001.8%• Full year forecast revised. Net profit up 700 million, against our initial forecast.
• Don Quijote SSS forecast : DQ SSS forecast : flat in 2H and +1.0% for full year.

Copyright (c) 2017 Don Quijote Holdings Co.,Ltd. All rights reserved.

13