Don Quijote Holdings. Co., Ltd.

1H Results for FY 2018
Earnings Results
July 1, 2017 - December 31, 2017

February 6, 2018

0Earnings summary
Consolidated(Millions of yen)

6 months to Dec. 2017
Actual6 months to Dec. 2016

Share

YoY

ActualShare

Net sales

462,830

100.0%

110.8%

417,694

100.0%

Gross profit

120,17626.0%

108.6%

110,640

26.5%

SGA

90,92919.6%

107.9%

84,297

20.2%

Operating profit

29,2476.3%

111.0%

26,343

6.3%

Recurring profit

31,0586.7%

115.3%

26,928

6.4%

Profit attributable toowners of parent18,678

4.0%

113.5%

16,4593.9%

EPS(Yen)118.08-113.4%

104.09-• Consolidated and same store sales went up 10.8% and 4.8% YoY respectively. We expanded our presence in each commercial area by
beating our peers with our competitive prices on daily necessity items. We delivered strong sales momentum by quickly responding toever-changing customer needs. Our pricing provided customers with fast and easy ways to save money.
• Gross Profit Margin declined 50 basis points. Price investments on food and consumables items were the primary contributors to thedecline. We focused on securing gross profit in value terms by executing EDLP pricing strategies.
• Operating expenses as a percentage of net sales decreased 60 basis points. Personnel cost at comparable stores were streamlined
as we have done organizational reforms and changed how we work. Our productivity loop is starting to turn.
• Operating profit and net profit went up 11.0% and 13.5% respectively. Our 1H results hit an all-time high.
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

1Same-store sales= Customer traffic= Customer spending

Existing stores2016 Oct.

Nov.

Dec.

2017 Jan.

= Existing stores

Feb.

Mar.

Apr.

May.

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Sales

102.2%

102.2%

102.6%

102.6%

102.1%

103.2%

102.1%

102.8%

105.1%

105.2%

105.1%

106.4%

102.6%

105.9%

104.0%

Customer traffic

100.7%

101.6%

102.5%

102.7%

101.6%

103.6%

103.1%

102.0%

104.5%

104.0%

104.2%

105.5%

100.2%

105.4%

103.0%

Customer spending

101.5%

100.6%

100.2%

99.9%

100.5%

99.6%

99.0%

100.7%

100.6%

101.1%

100.9%

100.9%

102.4%

100.5%

100.9%

Existing store count238239

240

244

244

245

247

258

258

265

269

271

274275277• DQ SSS went up 4.8%, traffic +3.7% and spending +1.1% for 1H. (July-December).
• Bad weather and major consumption pattern to save money made the price wars more intense. Customers responded to our wide
product assortment and competitive price. Rapidly-growing sales from overseas travelers were the significant contributor.
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

2Sales breakdown by product category
6 months to Dec. 2017

Consolidated(Millions of yen)

ActualShare

6 months to Dec. 2016
YoY

ActualShare

Home electrical appliances

40,0108.6%

112.7%

35,4908.5%

Miscellaneous household goods

108,408

23.4%

123.5%

87,782

21.0%

Foods

153,557

33.2%

114.6%

133,985

32.1%

Watches & fashion merchandise

83,838

18.1%

97.7%

85,796

20.5%

Sporting goods & leisure goods

31,0796.7%

102.1%

30,444

7.3%

Other products

31,8996.9%105.6%

30,219

7.3%

Total retail store business

448,79197.0%

111.2%

403,716

96.7%

Rent income

10,6862.3%

103.3%

10,349

2.5%

Other business

3,353

0.7%

92.4%

3,629

0.8%

462,830

100.0%

110.8%

417,694

100.0%

Total
Home appliances: Seasonal appliances accelerated the sales momentum in association with temperature fluctuation.
Smart phone accessories were strong. 4K TV, full HD cameras and laptops made a big hit.

Household goods: Strong daily consumables sales took the lead. Cosmetics and drugs were boosted by tourists’ good shopping appetite.

Foods: Snacks and daily delivered food earned a lot. Fresh produce at MEGA stores were impacted by bad weather.

Watches & Fashion : Sales for e-cigarettes and their parts grew fast. Underwear and gloves were encouraged by the temperature drop.
Sports & Leisure: Sporting goods made a solid growth. Seasonal event items like Halloween were affected by some external factors.

Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

3

The number of stores(Number of stores)

FY2016FY2017FY2018-1Q

FY2018-2Q

Don Quijote

194198199

204

MEGA39404041

New MEGA557273

77

Others39444443Total stores in Japan

327354356365

Overseas14143738

Grand Total

341368393

403

Domestic opening

40

322712

Domestic closure552235272510Net increase• 15 new stores were opened in 1H : 8 Don Quijote, 5 New MEGA, 1 MEGA in Japan. We opened our very first store in
Singapore named “Don Don Donki Orchard Central Store”. 24 stores were newly added to our overseas store count as QSI(Supermarket operator in Hawaii) joined our group.
• 4 stores closed due to nations’ land readjustment project and other reasons.

Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

4

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

6 months to Dec. 2017
Actual6 months to Dec. 2016

Share

YoY

ActualShare

Net sales

462,830

100.0%

110.8%

417,694

100.0%

Salary allowance

34,0317.4%

105.9%

32,124

7.7%

Rent

13,4022.9%

117.7%

11,387

2.7%

Commission paid

11,166

2.4%

118.5%

9,424

2.3%

Depreciation and amortization

6,841

1.5%

100.7%

6,793

1.6%

Others

25,4895.5%

103.7%

24,5695.9%

SG&A

90,92919.6%107.9%

84,297

20.2%•SG&A expenses as a percentage of net sales decreased 60 basis points. Personnel cost at comparable stores were streamlined.
It is due mainly to our organizational reforms which were taken place since 2 years ago. Also, we changed how we work andit is bearing fruit. We invested in people and rent in association with our aggressive new store openings.
• Our productivity loop in people and wage are starting to turn.

Copyright (c) 2018 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, 2017, to Dec. 31, 2017
Consolidated
Sales to external customers

Retail store

Rent income

Others

Total

Adjusted amount

Consolidated

448,791

10,686

3,353

462,830-

462,830427

10,637

4,522

15,586(15,586)-

Total

449,218

21,323

7,875

478,416(15,586)

462,830

Segment profit

17,495

8,834

2,858

29,18760

29,247

Internal sales or transfers
between segments（Millions of yen）

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

Retail store

Rent income

Others

Total

Adjusted amount

Consolidated

403,716

10,3493,629

417,694-

417,694

271

9,780

4,951

15,002(15,002)-

Total

403,987

20,1298,580

432,696(15,002)417,694

Segment profit

14,321

8,442

3,485

26,24895

26,343

Internal sales or transfers
between segments

・ Profit in the retail business was 17.5 billion yen which is our mainstay.
・ Profit in the tenant leasing business was 8.8 billion yen.
・ Profit in other business was 2.9 billion yen.
Copyright (c) 2018 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, 2017, to Dec. 31, 2017
Consolidated

Don QuijoteDoit

Nagasakiya 1)

Overseas 2)

JAM 3)

Consolidated

Net sales

339,466

8,524

89,89018,161

9,483

462,830

Operating profit

16,619

199

3,211

391

3,764

29,247

Total asset

273,296

23,10688,81432,202

171,324

782,137

Net asset

125,931

19,51849,822

20,861

101,501

296,897

PL/1USD=111.3
BS/1USD=112.7（Millions of yen）Sales, profit and asset by subsidiaries from Jul. 1, 2016, to Dec. 31, 2016
Consolidated

Don QuijoteDoitNagasakiya 1)

Overseas 2)

JAM 3)

Consolidated

Net sales

302,0288,240

84,01017,122

8,889

417,694

Operating profit

13,069

390

3,166

583

3,806

26,343

Total asset

237,357

23,20082,797

20,766126,258

628,931

Net asset

113,166

19,42447,503

14,652

23,272

265,432

PL/1USD=￥105.7
1) Nagasakiya shows retail business only.
2) Overseas includes DQ USA and MARUKAI and QSI (Only BS).
3) PL on JAM shows its results from July1,2017 to December 31,2017. BS is as of December 31,2017.

BS/1USD= ￥101.0• Good performance at subsidiaries contributed to overall group strong results.
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

7

Balance Sheet（Millions of yen）

（Millions of yen）
As of Dec. 31,
2017

Change fromJun. 30, 2017

Total current liabilities

189,532

24,707(24,663)

Accounts payable

116,783

31,122

145,140

21,171

Short-term liabilities*

17,122(7,900)541,574

126,291

Total noncurrent liabilities

295,708

97,595

323,065

12,299Long-term bonds

72,982(1,908)

Buildings

125,130

6,507

Long-term borrowings

187,069

102,431Land

174,090

3,072

Long-term payables
under fluidity lease receivables

15,749(3,617)29,604

13,716

Total liabilities

485,240

122,302

18,982

13,619Net assets

296,897

16,967

188,905

100,276

Total shareholders' equity

274,401

16,11945,022

4,548

Non-controlling interests

20,690(89)

782,137

139,269

Liabilities and net assets

782,137

139,269

As of Dec. 31,2017

Change fromJun. 30, 2017

Total current assets

240,563

12,978Cash and deposits

51,677

Merchandise

Consolidated

Total noncurrent assets
Total property, plant and equipment

Total intangible assets
Goodwill
Total investments and other assets

Lease and guarantee deposits

Total assets

Consolidated* Short-term liabilities = Short-term loans payable + Current portion of long-term loans payable + Current portion of bonds• Cash & deposits : We financed long-term borrowing for capital investment to expand our business in next year and afterwards.
• Merchandise: We had more inventory to open 15 new stores as well as to reduce opportunity losses.

• Payables associated with the liquidation of receivables : 23 billion yen.

Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

8

Cash flows and Capital expenditure（Millions of yen）

Consolidated Cash Flows
6 months to Dec.
2017
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.
2016

78,09431,758(133,932)
84,580(17,059)
61,03544,496
39,737(41,305)
21,572
19,66564,161

6 months to Dec.
2017
Cash flows*
Net increase (decrease)33,598(7,979)(92,627)
63,008(36,724)(3,126)（Millions of yen）

Consolidated Capital Expenditures

Capital expenditures

Change6 months to Dec.
2016

19,84422,4202,577

Change19,857
20,872
1,015

(13)
1,548
1,562

* Cash flows = Net income + Depreciation and amortization + Extraordinary loss - Dividend• Cash flow from operating activities was 31.8 billion yen positive.
Positive factors :30.9 billion yen of income before income taxes, 7.8 billion yen of depreciation and amortization.
Negative factors :18.2 billion yen increase in inventory and 11.3 billion yen for corporate tax payment.
• Cash flow from financing activities was 84.6 billion yen positive driven by 110 billion yen of net increase of loans, and 17.4 billion
yen of net decrease in corporate bond. 3.3 billion yen of dividend payment were negative factors.
• Capex was 19.8 billion yen. (DQ: 10.8 bil, Nagasakiya: 1.4 bil, JAM: 14.9 bil). Free cash flow was 2.6 billion yen positive.
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

9

Earnings summary for Q2
Consolidated(Millions of yen)

3 months to Dec. 2017
Actual3 months to Dec. 2016

Share

YoY

ActualShare

Net sales

239,397

100.0%

110.6%

216,367

100.0%

Gross profit

60,90825.4%

108.0%

56,41526.1%

SGA

45,961

19.2%

107.9%

42,605

19.7%

Operating profit

14,9476.2%

108.2%

13,811

6.4%

Recurring profit

16,7577.0%

118.5%

14,140

6.5%

Profit attributableto owners of parent

10,212

4.3%

122.6%

8,3323.9%

64.56-122.5%EPS(Yen)

Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

52.69

10

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

3 months to Dec. 2017
ActualShare

3 months to Dec. 2016
YoY

ActualShare

Home electrical appliances

21,5929.0%

113.6%

19,011

8.8%

Miscellaneous household goods

55,05223.0%

123.3%

44,635

20.6%

Foods

80,326

33.6%

114.6%

70,11032.4%

Watches & fashion merchandise

43,787

18.3%

97.5%

44,915

20.8%

Sporting goods & leisure goods

15,2766.4%

99.0%

15,428

7.1%

Others

16,2606.8%

107.2%

15,163

7.0%

Total retail store business

232,29397.0%

111.0%

209,262

96.7%

Rent income

5,454

2.3%

104.2%

5,236

2.4%

Other business

1,650

0.7%

88.3%

1,869

0.9%

239,397

100.0%

110.6%

216,367

100.0%

Total

Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

11

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

3 months to Dec. 2017
Actual3 months to Dec. 2016

Share

YoY

ActualShareNet sales

239,397

100.0%

110.6%216,367

100.0%

Salary allowance

17,3137.2%

107.7%

16,076

7.4%

Rent

6,800

2.8%

118.3%

5,749

2.7%

Commission paid

5,573

2.3%

110.1%

5,062

2.3%

Depreciation and amortization

3,498

1.5%

101.3%

3,454

1.6%

Others12,7775.3%

104.2%

12,264

5.7%

SG&A

45,961

19.2%

107.9%

42,605

19.7%

Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

12Forecast for fiscal June 2018
Consolidated

FY2018 Revised forecast(Millions of yen)Plan

FY2018 Initial forecast

Share

YoYPlanShare

Net sales

920,000100.0%

111.0%

890,000

100.0%

Gross profit

240,000

26.1%

109.8%

234,200

26.3%

SGA

189,000

20.5%

109.6%

184,400

20.7%

Operating profit

51,0005.5%

110.4%

49,800

5.6%

Recurring profit

53,8005.8%

118.2%

49,8005.6%

Net profit

32,200

3.5%

97.3%

29,500

3.3%

EPS(Yen)203.55-97.3%

186.49-

Capital expenditure

45,000-99.2%

45,000-Depreciation

15,0001.6%

106.3%

15,000

1.6%• Full year forecast was revised upward. Net sales up 30 billion yen, OP up 1.2 billion yen, RP up 4 billion yen and NPup 2.7 billion against our initial forecast.
• Don Quijote SSS forecast : DQ SSS forecast :+0.6% in 2H and +2.7% for full year.
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

13