Don Quijote Holdings. Co., Ltd.

Q1 Results for FY 2018
Earnings Results
July 1, 2017 - September 30, 2017

November 6, 2017

0Earnings summary
Consolidated(Millions of yen)

3 months to Sep. 2017
Actual3 months to Sep. 2016

Share

YoY

ActualShare

Net sales

223,433

100.0%

111.0%

201,327100.0%

Gross profit

59,26826.5%

109.3%

54,224

26.9%

SGA

44,96820.1%

107.9%

41,692

20.7%

Operating profit

14,300

6.4%

114.1%

12,532

6.2%

Recurring profit

14,3016.4%

111.8%

12,788

6.4%

Profit attributable toowners of parent

8,4653.8%

104.2%

8,127

4.0%

EPS(Yen)

53.52-

104.1%

51.40-• Consolidated and same store sales went up 11.0% and 5.6% YoY respectively. Though there were some negative factors including badweather and temperature fluctuation, the sales for Q1 were strong by doing more flexible store operation. We took finely-tuned pricing
strategy to respond to the price-conscious consumers’ needs and won the competition against nearby retailers.
• GPM went down 0.4pts. Some seasonal items sales were affected by bad weather. Food items attracted the greater customer traffic
by being more price-competitive.
• Per man-hour productivity improved due to the drastic organizational reform and more authority was delegated to front line staff.
Personnel cost as a percentage of sales went down because sales went up sharply. Rent increased associated with new store opening,commission paid went up for one-off reason. All in all, SG&A went down 0.6pts.
• Operating profit and net profit went up 14.1% and 4.2% respectively, both beat our guidance. It is “Positive Surprise!”
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

1Same-store sales
110%= Customer traffic= All stores= Customer spending= Existing stores

105%

100%

95%
2015
Jul.
Existing stores

2015
Sep.
2016 Jul.

2016
Mar.
Aug.

2016
Sep.
2017 Jan.

2017
Mar.
May.

2017
Sep.

Sep.

Oct.

Nov.

Dec.

Feb.

Mar.

Apr.

Jun.

Jul.

Sales

103.7%

99.6%

102.6%

102.2%

102.2%

102.6%

102.6%

102.1%

103.2%

102.1%

102.8%

105.1%

105.2%

Aug.
105.1%

Sep.

Customer traffic

101.9%

98.9%

101.2%

100.7%

101.6%

102.5%

102.7%

101.6%

103.6%

103.1%102.0%

104.5%

104.0%

104.2%

105.5%

Customer spending

101.8%

100.7%

101.3%

101.5%

100.6%

100.2%

99.9%

100.5%

99.6%

99.0%

100.7%

100.6%

101.1%

100.9%

100.9%

Existing store count

236

239

236

238

239

240

244

244

245

247

258

258

265

269

271

106.4%• DQ SSS went up 5.6%, traffic +4.6% and spending +0.9% for Q1(July-September).
• Competitive priced daily necessities expanded the domestic customer base. Tax-free sales for overseas travelers hit all time high.
Rapidly grown customer traffic drove strong inbound (tax-free) sales. 1.6pts came from inbound sales out of 5.6% of SSS growth.

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

2

Sales breakdown by product category
3 months to Sep. 2017

Consolidated(Millions of yen)

ActualShare

3 months to Jun. 2016
YoY

ActualShare

Home electrical appliances

18,4188.2%

111.8%

16,4798.2%

Miscellaneous household goods

53,35623.9%

123.7%

43,148

21.4%

Foods

73,231

32.8%

114.6%

63,874

31.7%

Watches & fashion merchandise

40,051

17.9%

98.0%

40,88120.3%

Sporting goods & leisure goods

15,8037.1%

105.2%

15,016

7.5%

Other products

15,6397.0%

103.9%

15,055

7.5%

Total retail store business

216,49896.9%

111.3%

194,453

96.6%

Rent income

5,232

2.3%

102.3%

5,114

2.5%

Other business

1,703

0.8%

96.8%

1,760

0.9%

223,433

100.0%

111.0%

201,327100.0%

Total

Home appliances : There were several hit products in private brand items including 4K TV and full HD camera .
Household goods : Cosmetics and drugs sales made a double digit growth respectively. Summer items grew as temperature rose.
Foods: Snacks including chocolates and daily delivered food took the lead. Local noodles became popular.
Meat and Deli boosted fresh food sales.

Watches & Fashion : E-cigarette skyrocketed. Casual wear and private brand items attracted new customer base.
Sports & Leisure : Bad weather and low temperature decelerated the outdoor goods, however, strong character toys sales offset.
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

3The number of stores(Number of stores)

FY2015FY2016

FY2017FY2018-1QDon Quijote

183

194198199

MEGA36394040

New MEGA41557273

Others32394444

Total stores in Japan

292327354356

Overseas14141437

Grand Total

306

341

368

393

Opening

33403227

Closure10552

23352725

Net increase• 3 new stores were opened in Q1: 2 Don Quijote, 1 New MEGA and 24 stores operated by QSI, Inc.
• 2 store closed due to the land readjustment project.

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

4

Key components in SG&AConsolidated(Millions of yen)3 months to Sep. 2017
Actual3 months to Sep. 2016

ShareYoY

ActualShare

Net sales

223,433

100.0%

111.0%

201,327100.0%

Salary allowance

16,7187.5%

104.2%

16,049

8.0%

Rent

6,602

3.0%

117.1%

5,638

2.8%

Commission paid

5,593

2.5%

128.2%

4,362

2.2%

Depreciation and amortization

3,343

1.5%

100.1%

3,338

1.6%

Others12,712

5.7%

103.3%

12,305

6.1%

SGA

44,96820.1%

107.9%

41,692

20.7%•SGA to sales ratio went down by 0.6pts YoY.
Per man-hour productivity improved due to the drastic organizational reform and more authority was delegated to front line staff.
Personnel cost as a percentage of sales went down because sales went up sharply.
Rent increased associated with new store opening and commission paid went up for one-off reason.

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

5Balance Sheet（Millions of yen）
As of Sep. 30,
2017

Change from
Jun. 30, 2017

Total current assets

315,30387,718Cash and deposits

153,805

Merchandise（Millions of yen）
As of Sep. 30,
2017

Change from
Jun. 30, 2017

Total current liabilities

168,323

3,498

77,465

Accounts payable

93,591

7,930

130,025

6,056

Short-term liabilities*

24,408(614)

436,910

21,627

Total noncurrent liabilities

297,980

99,867318,266(7,500)Long-term bonds

73,782(1,108)

Buildings

122,895

4,272

Long-term borrowings

187,173

102,535Land

173,037

2,019

Long-term payables
under fluidity lease receivables

17,561(1,805)29,60813,720Total liabilities

466,303103,365

19,056

13,963

Net assets

285,910

5,980

89,036407

Total shareholders' equity263,650

5,368

43,544

3,070

Non-controlling interests

20,664(115)

752,213

109,345

Liabilities and net assets

752,213

109,345

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 : It increased sharply because long-term borrowings including 100 billion yen of subordinated loan were financed
for further business expansion.
• Merchandise: Inventory increased associated with 3 new stores. It also accumulated for existing stores with strong sales.

• Payables associated with the liquidation of receivables : 24.7 billion yen. It went down by 1.8 billion yen from a year ago.

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

6

Cash flows and Capital expenditure（Millions of yen）

Consolidated Cash Flows
3 months to Sep.
2017
Cash and equivalents at beginning of period

78,094
12,385(28,267)
94,72679,268
157,362

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

3 months to Sep.
2016

44,496
9,378(31,344)
23,383
1,021
45,517

Change33,598
3,007
3,077(71,343)
78,247
111,845（Millions of yen）

Consolidated Capital Expenditures
3 months to Jun.
2017
Capital expenditures
Cash flows*
Net increase (decrease)11,837
8,555(3,283)3 months to Sep.
2016

12,5808,856(3,725)

Change(743)(301)442* Cash flows = Net income + Depreciation and amortization + Extraordinary loss - Dividend• Cash flow from operating activities was 12.4 billion yen positive.
Positive factors : 14.2 billion yen of income before income taxes and minority interests, 3.8 billion yen of depreciation and amortization,
4.9 billion yen increase in trade payables. Negative factors : 3.2 billion yen of increase in inventory and 8.1 billion yen for tax payment.
• Cash flow from financing activities was 94.7 billion yen positive driven by 102.3 billion yen of net increase of long-term borrowings and1.6 billion yen of corporate bond redemption. 3.3 billion yen of dividend payment were negative factors.
• Capex was 11.8 billion yen. Free cash flow was negative 3.3 billion yen .
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

7

Forecast for fiscal June 2018
Consolidated

FY2018 1H Revised Forecast(Millions of yen)Plan

FY2017 1H Previously
announced forecasst

Share

YoY

Plan

FY2018 Forecast

Share

Plan

Share

Net sales

455,000

100.0%

108.9%

445,000

100.0%

890,000

100.0%

Gross profit119,200

26.2%

107.7%

117,000

26.3%

234,200

26.3%

SGA

90,40019.9%

107.2%

90,00020.2%

184,400

20.7%

Operating profit

28,8006.3%

109.3%

27,0006.1%

49,800

5.6%

Recurring profit

28,7006.3%

106.6%

27,0006.1%

49,8005.6%

Net profit

16,9003.7%

102.7%

15,5003.5%

29,500

3.3%

EPS(Yen)106.83-102.6%

97.99-

186.49-Depreciation

7,200

1.6%

106.0%

7,200

1.6%

15,0001.7%• 2H forecast : Sales 455 billion yen, OP : 28.8 billion, RP : 28.7 billion, NP : 16.9 billion.
• Full year forecast : Sales 890 billion yen, OP : 49.8 billion, RP : 49.8 billion, NP : 29.5 billion.
• Don Quijote SSS forecast : DQ SSS forecast : +3.0% in 1H, +0.6% in 2H and +1.8% for full year.
Copyright (c) 2018 Don Quijote Holdings Co.,Ltd. All rights reserved.

8