Earnings Results Briefing for theFirst Six Months of the Fiscal YearEnding March 31, 2017
November14 2016
KOMEHYO Co., Ltd.
Securities code: 2780 (Second Section, Tokyo and Nagoya Stock Exchanges)

The IR strategy department

TEL +81-52-249-5366

Note:This document is an English translation of a document prepared in Japanese.
Statements in this document that are not historical facts; statements concerning current plans, forecasts,strategies, and opinions of KOMEHYO Co., Ltd. are forward-looking statements subject to various risks anduncertainties.
These statements are prepared based on assumptions of the management of KOMEHYO Co., Ltd. using
currently available information.
Actual results may differ significantly from forecasts due to a variety of factors; therefore, investors should
not place undue reliance upon them.
In addition, this document is not intended to solicit investments. Investors should make investment
decisions at their own discretion.

Overview of Income Statement（ Consolidated ）Consolidated(Millions of yen)

FY20171Q

YoY

FY20172Q

YoY

FY2017
1H

YoY

Net sales

9,153

88.2％

9,815

92.9％

18,96990.6％

Gross profit2,539

79.8％

2,565

86.4％

5,10483.0％

Gross profit
margin27.7%△3.0pt26.1％△2.0pt26.9％△2.5ptSG&A expenses

2,595

104.3％

2,576

102.6％

5,172103.4％

Operating income

△55－

△11－

△67－

Ordinary income

△68－

△19－

△88－

Net income
attributableto owners ofparent△58－

309.6％△28－
1

Overview of Income Statement（ Non-consolidated ）Non-consolidated(Millions of yen)

FY20171Q

YoY

FY20172Q

YoY

FY2017
1H

YoYNet sales

8,052

86.9％

8,835

92.5％

16,88889.7％

Gross profit

2,15478.2％

2,23086.8％

4,38582.3％

Gross profit
margin26.8%△2.9pt25.2％△1.7pt26.0%△2.3ptSG&A expenses

2,225105.9％

2,251105.5％

4,477

105.7％

Operating income

△70－

△21－

△92－

Ordinary income

△77－

△31－

△109－

Net income△57－

248.4％△33－
2

Operating income decrease factor（ Consolidated ）Operatingincome

1,148

Sales amountdecrease△577(Millions of yen)

Gross profit
Margin drop

△466

Marketing cost
increase△1190

Personalexpenses
increase△17FY2016
1H

Operating income(△1,215)

General andadministrativeexpenses
increase△33△67FY2017
1H3Profit Margin Trend
Gross profit margin decrease, SG&A expenses to sales ratio increase
Gross profit
margin
SG&A expenses
Ratio (%)

35Consolidated

Operatingmargin(%)

Gross profit margin
SG&A expenses to sales ratio

31.5

30.4

29.4

25.6
26.9

6.4
5.5

8630.530

2-0.4

1028.3

25

23.3

1210

24.3
26.0

22.5

7.2

86

20

5.2

5.8

42

15

00-0.5-2FY2014 1H FY2015 1H FY2016 1H FY2017 1H

29.5

161426.5

415Gross profit margin

Operatingmargin(%)

SG&A expenses to sales ratio

1023.94.8

12Non-consolidated
Operating income margin

1427.3252035

Operating income margin

30

25.1

16

Gross profitmargin
SG&A expenses
Ratio (%)

10-2
FY2014 1H FY2015 1H FY2016 1H FY2017 1H4

Overview of Balance Sheet
Products 756millions of yen decrease(YoY)
Consolidated
AssetsLiabilities and Net Assets

25,926
26,209Cash anddeposits 3,266
2,801

Products
12,374

Other current
assets3,056
Non-current
assets7,694(Millions of yen)

11,6183,227

25,926

26,209Current
liabilities
7,471

5,559

Non-current
liabilities
1,118

Net assets
17,337

Assets23,138Cash anddeposits
1,740

23,13823,314

2,472

Current
liabilities
5,534

3,633

10,219Non-current
liabilities
930

Other current
assets
2,993

2,817

Net assets
16,673

Non-current
assets
7,429

7,805

Products
10,975

17,952FY2016 1H FY2017 1H

Liabilities and Net Assets

23,314

2,698

8,096

FY2016 1H FY2017 1H

Non-consolidated (Millions of yen)

FY2016 1H FY2017 1H

2,570

17,110FY2016 1H FY2017 1H5Statement of Cash Flows
Cash flows from operating activities were negative due
mainly to an increase in inventories

Consolidated(Millions of yen)

FY2015FY2016 1H

4,000

3,707
3,000

2,000

3,322

FY2016FY2017 1H

4,257

4,271

2,855
2,048

1,499

1,200

1,000

0

-1,000-575 -466-516-293-2,000-777-1,091-572-1,412

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Cash and cash equivalents

6

By Segment
Brand Fashion business’s operating income increased in 2Q(Millionsof yen)

FY20171Q

FY2017
2Q

YoY

YoY

FY2017
１H

YoY

Brand
FashionTire andWheel
Others

Net sales

8,181

86.8％

8,947

92.1％

17,128

89.5％

Operatingincome△39－

194.0%△20－

Operatingmargin△0.5％△7.8pt0.2%△4.7pt△0.1％△6.2ptNet sales

948

102.0％

843

102.4％

1,792

102.2％

Operatingincome

△21－

△38－

△59－

Operatingmargin△2.3%△2.4pt△4.5％△0.8pt△3.3％△1.5ptNet sales

34103.8％35106.5％70

105.2％

Operatingincome573.7％

7128.1％1398.5％

Operatingmargin

15.2％△6.2pt22.0％+3.7pt18.6％△1.3pt7

FY2017 plan
YoY

Nonconsolidated(Millionsof yen)

FY2017
plan

YoY

41,50090.4％

Net sales

36,00088.8％

Operatingincome

1,230

44.1％

Operatingincome850

35.0%

Ordinary
income

1,230

44.9％

Operatingincome850

35.4%

Net income
attributableto owners ofparent

840

49.5％

Net income

550

37.2%

Consolidated(Millionsof yen)

FY2017plan

Net sales8External Environment Economic Trend
Consumption trend was weak due to significant changes
in the economic environment
Net sales
YoY (%)

130Department store net sales(nationwide)
Nikkei Stock Average(monthly closing price)

KOMEHYO net sales(non-consolidated)

Stock Price(yen)21,000China shock

20,000120

Brexit shock110

19,00018,000100
100

17,00016,00090

15,00080

Declines in stock prices
Yen’s appreciation

14,000FY2017 1H
70

13,000(Source:JAPAN DEPARTMENT STORES ASSOCIATION website)

9

Purchase from Individual Customers
Strengthened purchases through LINE De Satei* and other services
Amount of purchasefrom individualcustomers
PurchasingCenter

FY20171Q

YoY

FY20172Q

YoY

FY2017
１H

YoY

4,067

86.7％

3,903

92.8％

7,971

89.6％

Home delivery
Purchasing

222

97.9％

18989.1％

412

93.7％

Total
(Millions of yen)

4,290

87.2％

4,093

92.6％

8,383

89.8％

【 LINE De Satei 】
started evaluating brand-nameproducts in June 2016
Responding to customer need thatthey want to know valuation first andare hesitant to ask for valuation only
at stores* LINE De Satei: valuation of items
using the “LINE” app.

10

Online Sales
The backorder systemthat connects stores with the website regained strengthNet sales

FY2017
1Q(Millions of yen)YoY

FY20172Q

YoY

FY2017
１H

YoY

KOMEHYO website ※１360

85.3％

375

83.9%

735

84.6％

Back orders

※２781

96.2％

925

101.2%

1,707

98.8％

Other

※３182

115.8％

190

98.8%

373

106.5％

1,325

95.1％

1,490

95.9%

2,816

95.5％

Total
KOMEHYO apps

※1 KOMEHYO website
Order/settlement via komehyo.jp
App that can be used as a member

card of KOMEHYO Co., Ltd.
Outstanding points, purchasing
history, selling history , and otherinformation can be checked※２ Back orders
・Customers specify a store to do back orders online
・Store staff suggest/back order products to suit customer needs※３ OtherOrder/payment via other companies’ websites, such as Rakuten
Ichiba, Yahoo!, Amazon, and eBay stores

11

Member’s Card
Leveraging omni channel retailing, leading customers from online storesto physical stores and vice versa
FY2017

1H

Total members

No.

YoY

645,000

116.0%

KOMEHYO apps
App that can be used as a member card of KOMEHYO Co., Ltd.
Outstanding points, purchasing history, selling history,

KOMEHYOand other information can be checked

Member’s card

12

Subsidiary① Brand Fashion Segment
Sales to secondhand dealers in Japan and abroad

KOMEHYO Auction
Frequency

Trade volume(FY2017 1H)

YoY

Jewelry,watches,bags

Monthly
3 days

JPY8,400
million95.6％

Clothing

Monthly
1 day

JPY140
million

89.3%

No. of member
companies

698

KOMEHYO HONG KONG LIMITEDKOMEHYO auctions

・ Onsite staff for overseas contacts
・Participation in NJKP auctions
・ Jewelry show

・ Expansion of B2B business
NJKP auctions

13Subsidiary② Tire and Wheel Segment
Both tires/wheels and parts remained flat year-on-year
Net sales(Millionsof yen)Tires/wheels

FY2017
１H

YoY

1,403

100.8％【Produce a wheel“AXEL Series” movie】

Parts

339

104.7％

Others48

133.2％

Segment
total【Dress-up workexample】↑Before1,792

102.2％
After→
14

Future tasks -Opening of New Stores①A large store will be opened in Umeda in February 2017
KOMEHYO Umeda StoreFebruary 2017 (planned)(approx. 1,318m2)

Building for planned
store opening(１-３F)
15

Future tasks -Opening of New Stores②A large store will be opened in Nagoya-ekimae in May 2017
KOMEHYO Nagoya-ekimae StoreMay 2017 (planned) (approx. 1,320m2)

Building for planned
store opening(１-2F)
16

Future tasks -Business Policy①Strengthen sales of products in a price range for which
it is easier to secure gross profit

17

Future tasks -Business Policy②Set product categories whose sales are to be strengthened, andenhance customer service

18

Future tasks -Business Policy③Promote sales of remodeled jewelry products

19Future tasks -Business Policy④Acquire customers we can telephone to provide information

20

Future tasks -Business Policy⑤Revitalize product supplies to, and movement between, stores(facilitate optimization of inventories)
product supplies
to stores

product supplies
to stores【Products Center】

movement betweenstores【Store】【Store】

21

Future tasks -Business Policy⑥Strengthen purchases throughPurchasing Service Trial Coupon and LINE De Satei【 LINE De Satei 】
Responding to customer need that they wantto know valuation first and are hesitant toask for valuation only at stores【Purchasing Service Trial Coupon 】
Coupons limited to customers who use thepurchasing services of KOMEHYO for the first time(can be used at Purchase Centers and for homedelivery purchasing)22

Shareholder return
Dividend changesDividend(yen)Payout ratio(％)

Fiscal year-end dividend

40Interim dividend

Payout ratio

36.2

40

Forecast

35303029.3

2630

352830251520

23.0

1925

24.8

19.4

151020

16.6

16.0

15.5

15.0

15515

13.2
010FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY201723