Pan Pacific International Holdings Corporation
Q1 Results for FY 2020
Earnings Results
July 1, 2019 – September 30, 2019
November 6, 2019

Earnings summary for Q1
Consolidated(Millions of yen)

3 months to September 2019

3 months to September 2018

ActualShare

YoY

ActualShare

Net sales

428,736

100.0%

171.4%

250,080

100.0%

Gross profit

122,62028.6%

183.8%

66,732

26.7%

SGA

101,48823.7%

194.3%

52,22920.9%

Operating profit

21,1324.9%

145.7%

14,503

5.8%

Recurring profit

20,4494.8%

114.1%

17,917

7.2%

Profit attributable toowners of parent

12,6042.9%

108.2%

11,646

4.7%

EPS(Yen)

19.90－108.2%

18.40– Q1 profits hit an all time high by localizing the store operation further to meet the customer needs. Consumer sentiment is getting
even more tougher than ever before. A serious of natural disasters and unusual low temperature gave a negative impact on thedomestic consumption. SSS for Don Quijote went up by 2.9%, 2.7% for Nagasakiya and 0.1% for UNY. Tax-free sales went down
4.1% due largely to the drop in sales from South Korea.
 GPM was up 1.9pts backed by the consolidation of UNY. Fine-tuned pricing strategy contributed to the GP growth.
● SGA rose sharply mainly because of the consolidation of UNY. Personnel cost and commission paid increased due to the rapid
expansion of business scale. Cost is controlling with disciplines.
● Operating profit and net profit went up 45.7% and 8.2% respectively. Guidance for FY 2020 made an upward revision with thisstrong results.

1

Same-store sales (Don Quijote Co., Ltd.)
115.0%

110.0%

TrafficSame Store SalesSpending

105.0%

100.0%

95.0%
2017.Jul.

2017.Dec.

2018.Jun.

2018.Nov.

2019.Apr.

2019.Sep.

Existing stores

2018Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

2019Jan.

Feb.

Mar.

Apr.

May.

Jun.

Jul.

Aug.

Sales (%)

100.0

101.4

103.5

100.4

100.5

98.8

99.7

101.6

104.1

102.1

102.2

100.9

95.7

101.1% 113.0%

Customer traffic (%)

98.9

99.9

98.6

101.7

99.6

97.7

99.7

100.5

102.2

101.3

103.1

101.0

96.5

102.8% 107.6%

Customer spending (%)

101.2

101.5

105.0

98.7

101.0

101.1

99.9

101.0

101.8

100.9

99.2

99.9

99.1

98.3%

105.0%

Existing store count288291283

291

294

299

301

301

301

295

296

297

297

302

296

Sep.

 DQ SSS went up 2.9% (3.7pts from domestic sales, negative 0.8pts from tax-free sales), traffic went up 2.2% and spending went up
0.7％.
 There were some negative factors such as devastating natural disasters and sudden change for tax-free consumption.
Strong domestic sales prior to tax hike was more than offset those negative factors.

2Same-store sales (UNY Co., Ltd.)UNY adjusted *UNY Non-adjusted *110.0%GMS ASSSUNY SSS105.0%

100.0%

95.0%

GMS B
SSS
90.0%
2017.Sep.

2018.Mar.

2018.Sep.

Existing stores

2018Jul.

Aug.

Sep.

Oct.

Sales (%)

103.9

102.0

101.8

101.1

Customer traffic (%)

102.6

101.0

100.1

Customer spending (%)

102.4

100.5

Existing store count

190

190

2019.Mar.

Dec.

2019
Jan.

Feb.

Mar.

98.7

100.2

100.2

99.1

102.1

100.6

98.9

99.6

99.6

99.5

101.7

102.4

99.3

100.6

99.8

189

188

186

187

181

Nov.

Apr.

Jun.

Jul.

Aug.

Sep.

98.4 101.3

101.1

94.1

102.7

104.0

100.9

98.0 100.3

99.8

94.5

101.1

102.0

99.5101.1

100.5 101.0

101.3

99.5

101.6

101.9

178

177

169

168

166

161

173

May.

2019.Sep.

173* In terms of SSS sales of UNY, day of the week has been adjusted until Feb. 2019. From Mar. 2019, the figures are of non-adjusted. For the customer traffic and spending, all the figures are of non-adjusted.
* The fiscal month are from 21th to 20th of next month until the figure of Nov. 2018. From Dec. 2018, the fiscal month has been revised from 1st to the end of the month.

 UNY SSS went up 0.1%, traffic went down 0.9% and spending went up 1.0％ for 1Q in FY2020.

3

Sales breakdown by product category
3 months to September 2019

Consolidated(Millions of yen)

ActualShare

3 months to September 2018

YoY

ActualShare

Home electrical appliances

21,6965.1%

111.8%

19,405

7.8%

Miscellaneous household goods

65,12515.2%

113.8%

57,232

22.9%

Foods

98,75323.0%

121.7%

81,143

32.4%

Watches & fashion merchandise

42,96310.0%

103.5%

41,491

16.6%

Sporting goods & leisure goods

16,1993.8%

102.4%

15,821

6.3%

DIY goods

4,033

0.9%

108.4%

3,7201.5%

Overseas

25,7236.0%

122.7%

20,957

8.4%

Other products

7,107

1.7%

134.7%

5,277

2.1%

Total discount store business(Former Don Quijote HD stores)

281,59965.7%

114.9%

245,046

98.0%

Clothings

16,851

3.9%

Household goods

19,764

4.6%

―
―

―
―

―
―

Foods

86,779

20.3%

―

―

―

Other products

4,759

1.1%

―

―

―

Total GMS business(Former UNY group stores)

128,153

29.9%

―

―

―

Tenant leasing business

15,172

3.5%

320.7%

4,731

1.9%

Other business

3,812

0.9%

1258.1%303

0.1%

Total sales

428,736

100.0%

171.4%

250,080

100.0%

4

Sales breakdown by product category
Home electrical appliances

Miscellaneous household goods
Foods

Small-sized seasonal items such as portable fans were gainers. POSA cards and TVs
delivered a good sales momentum.
There was bulk-buying for daily necessities such as detergents and paper products.
Kitchen goods and medicine also contributed.
Processed food (e.g. snacks, beverages) and dairies recorded high growth rate.
Fresh meat was strong in MEGA stores.

Watches & fashion merchandise

Although cigarettes were stagnant, sporting wears were strong. Branded watches andluxury goods such as jewelry were encouraged by the before tax hike demand.

Sporting goods & leisure goods

Electric assist bicycles were popular. Although outdoor goods were affected by bad
weather condition, car appliances and toys were contributors.

DIY goods

Exterior and gardening goods were weak because of unstable temperature and badweather. Small parts and working clothes were good.

Overseas Fresh foods were popular. Ready-made meals and everyday goods were also strong.
Total discount store business Seasonal items were weak due to low temperature during summer.
(Former Don Quijote HD stores) There were last-minute demand before tax hike, especially daily necessities.
Ladies’ inner wear and kids’ wear grew. Sales promotion worked well for shoes anddesigner’s bags.
Smartphone items and portable home electronics contributed to sales. Beddings,
Household goods
bicycles and daily necessities were boosted by strong demand before tax hike.
Rice and packaged food were strong. Market price for vegetables was lower than lastFoods
year.
Total GMS business Clothing and household goods took the lead. Processed food sales and packaged(Former UNY group stores) meals were solid.

Clothing

5

The number of stores
Breakdown by format(stores)
FY2018FY2019FY2020-1Q

Don Quijote

209212

213

MEGA

43

44

44

New MEGA

80

8889

MEGA DQ UNY(Conversion Store)

―

1622

Apita / Piago

―

176

169

Picasso

23

21

22

Kyo-yasu-do

4

44mini Piago

―

7373

Doit

18

15

15

Nagasakiya

222Total stores in Japan

379

651

653

Overseas3942

Global Total

418

693

43696

Domestic opening

55292

3Domestic closure

5201Net increase

50272

2

* Opening store count includes both organic new store openings and M&A.

6The number of stores
Breakdown by company(stores)
FY2018

Don Quijote Co., Ltd.

FY2019FY2020-1Q

313322325

Nagasakiya Co., Ltd. (MEGA)

434444

UD Retail Co., Ltd.

―

1622

UNY Co., Ltd. (Apita, Piago)

―

176

169

Lirack Co., Ltd. (Kyo-yasu-do)

44499 Ichiba Co., Ltd. (mini-piago)

―

7373

Doit Co., Ltd. (Doit)

181515Daishin Co., Ltd. (MEGA Omori sanno)

111379651653

DQ USA (Stores in Hawaii)444

MARUKAI (California)

91010

QSI (Hawaii)

242424

PPRM (Singapore)

234

DONKI Thonglor (Thailand)―11Overseas Total

394243Global Total

418693696(DQ,New MEGA and small format)(MEGA UNY;conversion store from UNY)

Domestic Total

7

Key components in SG&A for Q1
Consolidated(Millions of yen)

3 months to September 2019

3 months to September 2018

ActualShare

YoY

ActualShare

Net sales

428,736

100.0%

171.4%

250,080

100.0%

Salary allowance

35,4998.3%

182.7%

19,425

7.8%

Rent

13,411

3.1%

179.9%

7,453

3.0%

Commission paid

15,0183.5%

248.9%

6,033

2.4%

Depreciation andamortization

5,830

1.4%

158.9%

3,669

1.5%

Others

31,7307.4%

202.8%

15,648

6.3%

SG&A

101,48823.7%

194.3%

52,22920.9%

 The consolidated SG&A increased due to UNY consolidation. Personnel cost and commission paid increased byexpanding the business scale rapidly. One-off cost related to UNY consolidation and initial cost for new stores were added.
 SG&A for former Don Quijote group stood at 20.2% as a percentage of sales, while that of UNY was at 30.0%.

8

Sales and profit by business
Sales, profit and loss by segment from Jul.1, 2019, to Sep.30, 2019
Consolidated

Discount store

GMS

Tenant leasing

Others

Total(Millions of yen)

Adjusted

Consolidated

Sales to externalcustomers

281,599

128,153

15,172

3,812

428,736-

428,736

Internal sales or transfers
between segments

1,404

992

1,024

1,566

4,986

(4,986)-

Total

283,003

129,145

16,196

5,378

433,722(4,986)

428,736

Segment profit

14,963

2,864

3,159

12

20,99813421,132

Sales, profit and loss by segment from Jul.1, 2018, to Sep.30, 2018
Consolidated

Discount store

GMS

Tenant leasing

Others

Total(Millions of yen)

Adjusted

Consolidated

Sales to externalcustomers

245,047

-

4,731

302

250,080-

250,080

Internal sales or transfers
between segments

723

-

476

-

1,199

(1,199)-

Total

245,770-

5,207

302

251,279(1,199)250,080

Segment profit

14,188-779(459)

14,508(5)

14,503

 Segment profit : 14.9 billion yen for discount store business, 2.9 billion yen for GMS business and 3.2 billion yen
for tenant leasing business.

9Balance Sheet
Consolidated(Millions of yen)

As of September
30,2019

Change from
June 30, 2019

(Millions of yen)

Consolidated

As of September Change from30,2019
June 30, 2019

Total current assets

483,266(13,139)

Total current liabilities

326,519(11,466)

Cash and deposits

160,742(11,931)

Accounts payable

148,773(10,291)

73,345

5,928

Short-term liabilities*

37,878(4,782)Merchandise

181,939(6,571)

Total noncurrent liabilities

579,701(7,394)

Total noncurrent assets

783,755

1,593Long-term bonds

237,250(1,208)

Total property, plan and equipment611,219339

Long-term borrowings

Buildings

262,744(211)

251,578(5,199)Land

314,750

(297)

2,859

(1,844)

Total intangible assets

37,434(168)

Total liabilities

906,220(18,860)

Goodwill

16,551(665)

Net assets

360,801

7,314

135,102

1,422

Total shareholders’ equity

337,419

8,123

80,414(29)

Non-controlling interests

23,473256

1,267,021(11,546)

1,267,021(11,546)

Installment account receivable

Total investments and other assets

Lease and guarantee deposits
Total assets

Long-term payables under fluidity
lease receivables

Liabilities and net assets* Short-term liabilities = Short-term loans payable + Current portion of long-term loans payable + Current portion of bonds

 Assets: Major reasons for decrease in assets were cash and deposits (-11.9 bil yen) and merchandise (-6.6 bil yen).
There was an increase in notes and accounts receivable (+4.1 bil yen) and installment account receivable (+5.9 bil yen).

 Liabilities: Accounts payables – other (+2 bil yen) and deposits received (+0.8 bil yen) increased. Account payables – trade (-10.3 bil yen),accrued expenses (-2.8 bil yen), interest bearing debt (-11.2 bil yen: -4.8 bil yen from short-term and -6.4 bil yen from long-termdebt) and payables under fluidity lease receivables (-1.8 bil yen).

10Cash flows and Capital expenditure(Millions of yen)

3 months to
September 2019

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

185,136
10,879(9,909)(17,682)(17,234)
167,902

3 months to
September 201875,833
14,603(14,623)
49,591
49,999125,882

Change109,253(3,724)
4,714(67,273)(67,233)
42,020(Millions of yen)

Consolidated Capital Expenditures
Capital expenditures
Cash flows*
Net increase (decrease)

3 months to
September 201910,306
14,797
4,491

3 months to
September 201815,53011,323(4,207)

Change(5,224)
3,474
8,698

* Cash flows = Net income + Depreciation and amortization + Extraordinary loss - Dividend Cash flow from operating activities was 10.9 billion yen positive. Positive factors : 19.6 billion yen of income before income taxes,
7.1 billion yen of depreciation and amortization and 6.4 billion yen of increase in inventories contributed.
Negative factors：4.2 billion yen of increase in notes and accounts receivables, 10.2 billion yen of notes and accounts payables
decrease and 5.8 billion yen of income taxes paid.
 Cash flow from financing activities was 17.7 billion yen negative. 10 billion yen of long-term loans payables repayments, 1.1 billion
yen of bonds redemption, 1.9 billion yen of payables under fluidity lease receivables repayments and 4.8 billion yen of cash
dividends paid were major factors.
 Capex was 10.3 billion yen (DQ:2.2 bil, Nagasakiya:1.7 bil, UDR:3.1 bil, UNY:0.8 bil, JAM:0.4 bil).
 Free cash flow was 4.5 billion yen positive.
11

Forecast for 1H in June 2020
Consolidated(Millions of yen)

FY2019 1H Forecast(Announced Aug.13,2019)

FY2020 1H Revised Forecast
PlanShareYoYPlanShare

Net sales

840,000

100.0%

163.6%

830,000

100.0%

Gross profit

238,000

28.3%

175.5%

234,000

28.2%

SGA

202,000

24.0%

191.3%

200,000

24.1%

Operating profit

36,0004.3%

119.9%

34,000

4.1%

Recurring profit

36,0004.3%

101.9%

34,000

4.1%

Net profit

21,800

2.6%

92.3%

21,0002.5%

EPS (Yen)

34.41

-

92.2%

33.16

-

Depreciation

12,5001.5%

164.3%

12,5001.5%

 Considering the strong results in 1Q, 1H forecast in FY2020 has been revised upward.
Net sales of 840 billion yen (63.6% YoY increase, original forecast figure 830 billion yen), operating profit of 36 billion yen(19.9% YoY increase, originally 34 billion yen), recurring profit 36 billion yen (1.9% YoY increase, originally 34 billion yen) andnet profit of 21.8 billion yen (7.7% YoY decrease, originally 21 billion yen).
 SSS forecasts for Don Quijote and UNY are both flat.
 Capex is expected to be 40 billion yen with opening more than 20 organic stores and more than 25 UNY conversion stores.

12