Pan Pacific International Holdings Corporation
1H Results for FY 2019
Earnings Results
July 1, 2018 – December 31, 2018
February 5, 2019

Earnings summary
Consolidated(Millions of yen)

6 months to December 2018

6 months to December 2017

ActualShare

YoY

ActualShare

Net sales

513,416100.0%

110.9%

462,830

100.0%

Gross profit

135,61126.4%

112.8%

120,176

26.0%

SGA

105,59420.6%

116.1%

90,929

19.6%

Operating profit

30,0175.8%

102.6%

29,247

6.3%

Recurring profit

35,3306.9%

113.8%

31,058

6.7%

Profit attributable toowners of parent

23,6164.6%

126.4%

18,678

4.0%

EPS(Yen)149.27–126.4%

118.08- Consolidated and same store sales went up 10.9% and 0.6% YoY respectively. Natural disasters and unusual temperaturegave a negative impact on seasonal items. Daily necessities took the lead for domestic consumption. Tax-free sales went
up 27%, maintaining very strong momentum, and beat last year’s sales for 51 consecutive months.
 GPM went up 40 basis points. Gross profit and margin increased thanks to our finely-tuned pricing strategy against peers.
● SG&A went up 90 basis points. Upfront investment related to new store openings required more personnel cost, rent, utilityand repair expense. One-off cost to dealt with natural disasters was added 1H SG&A.
 Operating profit and net profit went up 2.6% and 13.8% respectively, which were more-than-expected figures and hit an alltime high for 1H results.

1

Same-store sales
110.0%

Customer
Traffic

Same Store Sales

105.0%

100.0%

Average
Spending

95.0%
2016
Jul.

2016
Dec.

2017
Jun.

Existing stores
Sales (%)
Customer traffic (%)
Customer spending (%)
Existing store count

2017
Oct.

Nov.

Dec.

2017
Dec.

2018
Jan.

Feb.

Mar.

Apr.

2018
Jun.

May.

Nov.

Dec.

102.6 105.9 104.0 103.0 103.6 105.2 103.1 101.6

104.4 100.0 101.4 103.5 100.4 100.5

98.8

100.2 105.4 103.0 101.3 101.3 102.5 101.1

100.9

97.7

Jul.

Oct.

99.6

102.4 100.5 100.9 101.6 102.3 102.6 101.9 102.2

103.5 101.2 101.5 105.0

98.7

101.0 101.1

274

283

291

294

278

278

278

280

283

288

99.9

Sep.

101.7

277

98.9

Aug.

98.6

275

99.4

Jun.

2018
Dec.

291

283

299 DQ SSS went up 0.6% (▲0.8pts from domestic sales and 1.4pts from tax-free sales), traffic ▲0.7% and spending +1.3%
for 1H FY June 2019.
 A series of natural disasters and unusual high temperature gave a negative impact on the seasonal items.
Sales momentum for tax-free sales were very strong, and daily necessities took the lead for stable domestic consumption.

2

Sales breakdown by product category
Consolidated(Millions of yen)

6 months to December 2018
ActualShare

6 months to December 2017

YoYActual

Share

Other products

41,290114,961167,943
83,90630,87059,180

8.0%
22.4%
32.7%
16.3%
6.0%
11.5%

103.2%
106.0%
109.4%
100.1%
99.3%
185.5%

40,010108,408
153,557
83,83831,07931,899

8.6%
23.4%
33.2%
18.1%
6.7%
6.9%

Total retail store business

498,15097.0%

111.0%

448,791

97.0%

Rent income

11,3572.2%

106.3%

10,686

2.3%

Other business

3,909

0.8%

116.6%

3,353

0.7%

Total

513,416100.0%

110.9%

462,830

100.0%

Home electrical appliances
Miscellaneous household goods
Foods
Watches & fashion merchandiseSporting goods & leisure goods

Home appliances: Wireless headsets achieved high growth rate. Smartphone items and gaming consoles were strong.

Household goods: Daily consumables such as kitchen and bath goods were robust. Cosmetics and drugs grew rapidly.

Foods: Processed food and daily delivered food were the two biggest earners. MEGA stores enjoyed deli sales well.

Watches & Fashion: E-cigarettes and related items were good. Outerwear was decelerated due to high temperature.
Sporting and rain wear went well.

Sports & Leisure: Outdoor goods were soft because of bad weather. Car items and toys were contributors.

3

The number of stores(Number of stores)

FY2017FY2018FY2019-1Q

FY2019-2QDon Quijote

198209

212

215

MEGA

40

43

43

43

New MEGA

72

80

81

83

Others

4447

49

48

Total stores in Japan

354

379

385

389

Overseas14393940

Global Total

368

418

424

429

Domestic opening

3255

77

Domestic closure

5512Net increase2750

65 14 new stores were opened in 1H : 7 Don Quijote, 3 MEGA, 3 New MEGA, 3 small format stores in Japan.
1 overseas stores in California opened under the name of Tokyo Central format.
 3 stores were closed due to slow performance.

4Key components in SG&A
6 months to Dec. 2018

Consolidated(Millions of yen)

6 months to Dec. 2017

ActualShare

YoY

ActualShare

Net sales

513,416100.0%

110.9%

462,830

100.0%

Salary allowance

39,6057.7%

116.4%

34,031

7.4%

Rent

15,1422.9%

113.0%

13,402

2.9%

Commission paid

12,7792.5%

114.4%

11,166

2.4%

Depreciation andamortization

7,609

1.5%

111.2%

6,841

1.5%

Others30,4585.9%

119.5%

25,4895.5%

SG&A

105,59420.6%

116.1%

90,92919.6%

 SG&A expenses as a percent of sales increased 90 basis points. Upfront cost related to new store openings is the major
reason for the increase of SG&A. Personnel cost, rent, utility, repair expense, and amortization of goodwill are main items
for increase in cost.
 SG&A increased by 16.1% year-over-year. Extraordinary cost was incurred to dealt with natural disasters.

5

Sales and profit by business
Sales, profit and loss by segment from Jul.1, 2018, to Dec.31, 2018Consolidated

Retail store

Rent income

Others

Total(Millions of yen)

Adjusted
amountConsolidated

Sales to external customers

498,150

11,357

3,909

513,416-

513,416

Internal sales or transfers
between segments

340

11,6604,584

16,584 (16,584)

-

Total

498,490

23,0178,493

530,000 (16,584)

513,416

Segment profit

16,959

9,166

3,715

29,84030,017

177

Sales, profit and loss by segment from Jul.1, 2017, to Dec.31, 2017
Consolidated

Retail store

Rent income

Others

Total(Millions of yen)

Adjusted
amountConsolidated

Sales to external customers

448,791

10,686

3,353

462,830-

462,830

Internal sales or transfers
between segments

427

10,637

4,522

15,586 (15,586)-Total449,218

21,323

7,875

478,416 (15,586)

462,830

Segment profit

17,495

8,834

2,858

29,187

29,24760

 Profit in the retail business was 17.0 billion yen which is our mainstay.
 Profit in the tenant leasing business was 9.2 billion yen.
 Profit in other business was 3.7 billion yen.

6

Sales, profit and asset by subsidiaries
Sales, profit and asset by subsidiaries from Jul.1, 2018, to Dec.31, 2018
Consolidated

Don Quijote 1)

Doit

Nagasakiya 2)

Overseas 3)

JAM 4)(Millions of yen)

Consolidated

Net sales

356,470

8,181

95,16846,171

10,915

513,416

Operating profit

15,447

(108)

3,354

1,342

4,368

30,017

Total asset

303,910

22,911

88,07379,367

180,948 1,039,902

Net asset

137,946

19,31952,25553,254

107,453

PL/1USD=¥110.7

1SGD=¥81.9

BS/1USD=¥113.7

1SGD=¥83.0

Sales, profit and asset by subsidiaries from Jul.1, 2017, to Dec.31, 2017
Consolidated

Don Quijote 1)

Doit

Nagasakiya 2)Overseas 3)

JAM 4)

326,798(Millions of yen)

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

1) Don Quijote runs retail business.

PL/1USD=¥111.3

2) Nagasakiya shows retail business only.

BS/1USD=¥112.7

2) Overseas includes DQ USA , MARUKAI, QSI and PPRM.
3) PL on JAM shows its results from July1,2018 to December 31, 2018. BS is as of December 31,2018.

.

 Strong performance at subsidiaries contributed to overall group results.

7

Balance Sheet(Millions of yen)

Consolidated

As of Dec 31,2018(Millions of yen)

Consolidated

Change from
June 30, 2018

As of Dec 31,2018

Change from
June 30, 2018

Total current assets

452,956

216,343

Total current liabilities

202,568

30,682

Cash and deposits

258,494

186,521

Accounts payable

119,600

26,570

Merchandise

153,150

17,369

Short-term liabilities*

31,518

10,114

Total noncurrent assets

586,946

16,781

Total noncurrent liabilities510,536

188,139

Total property, plan and equipment

365,675

17,762Long-term bonds

229,566

138,292

Buildings

148,432

15,017Long-term borrowings

252,506

51,838Land

194,200

5,334

8,369

(3,735)

Total intangible assets

29,180933

Total liabilities

713,104

218,821

Goodwill

18,065465

Net assets

326,798

14,303

192,091(1,914)

Total shareholders’ equity

305,381

14,044

48,2201,726

Non-controlling interests

19,506(2,281)

1,039,902

233,124

Liabilities and net assets

1,039,902

233,124

Total investments and other assets
Lease and guarantee deposits

Total assets

Long-term payables under fluidity
lease receivables* Short-term liabilities = Short-term loans payable + Current portion of long-term loans payable + Current portion of bonds

 Cash & deposits: Cash position was heightened due to subordinated loan and debt financing to acquire the remaining UNY staketo fully consolidate.

 Merchandise: We added 17.4 billion yen.

 Payables associated with the liquidation of receivables : 15.6 billion yen.

8

Cash flows and Capital expenditure(Millions of yen)

Consolidated Cash Flows

6 months to Dec.
2018

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

75,88333,238(24,481)
185,067
194,692
270,575

6 months to Dec.
2017

78,09431,758(133,932)
84,580(17,059)
61,035

Change(2,211)
1,480
109,451
100,487
211,751
209,540(Millions of yen)

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

6 months to Dec.
2018

28,757
27,798(959)

6 months to Dec.
2017

19,84422,4202,577

Change8,913
5,378(3,536)* Cash flows = Net income + Depreciation and amortization + Extraordinary loss - Dividend Cash flow from operating activities was 33.2 billion yen positive. Positive factors :350 billion yen of income before income
taxes, 9.2 billion yen of depreciation and amortization. Negative factors : 17 billion yen increase in inventory and 11.3
billion yen for corporate tax payment.
 Cash flow from financing activities was 185.1 billion yen positive mainly due to 61.3 billion yen of net increase of long-termloans,136.9 billion yen of net increase in bond, 4.3 billion yen of dividend payment.
 Capex was 28.8 billion yen. (DQ: 11.6 bil, Nagasakiya: 1.5 bil, JAM: 8.6bil). Free cash flow was 1 billion yen negative.

9Earnings summary for Q2
3 months to Dec. 2018

Consolidated(Millions of yen)

3 months to Dec. 2017

ActualShare

YoY

ActualShare

Net sales

263,336

100.0%

110.0%

239,397

100.0%

Gross profit

68,87926.2%

113.1%

60,90825.4%

SGA

53,36520.3%

116.1%

45,961

19.2%

Operating profit

15,5145.9%

103.8%

14,947

6.2%

Recurring profit

17,4136.6%

103.9%

16,757

7.0%

Profit attributable toowners of parent

11,9704.5%

117.2%

10,212

4.3%

EPS(Yen)

75.66-

117.2%

64.56

-

10

Sales breakdown by product category for Q2
3 months to Dec. 2018

Consolidated(Millions of yen)

ActualShare

3 months to Dec. 2017
YoY

ActualShare

Other products

21,88557,72986,80042,415
15,05031,567

8.3%
21.9%
33.0%
16.1%
5.7%
12.0%

101.4%
104.9%
108.1%
96.9%
98.5%
194.1%

21,59255,05280,32643,787
15,276
16,260

9.0%
23.0%
33.6%
18.3%
6.4%
6.8%

Total retail store business

255,44797.0%

110.0%

232,293

97.0%

Rent income

5,878

2.2%

107.8%

5,454

2.3%

Other business

2,012

0.8%

121.9%

1,650

0.7%

Total

263,336

100.0%

110.0%

239,397

100.0%

Home electrical appliances
Miscellaneous household goods

Foods
Watches & fashion merchandiseSporting goods & leisure goods

11Key components in SG&A for Q2
3 months to Dec. 2018Consolidated(Millions of yen)

3 months to Dec. 2017

ActualShare

YoY

ActualShare

Net sales

263,336

100.0%

110.0%

239,397

100.0%

Salary allowance

Commission paid

20,180
7,689
6,746

7.7%
2.9%
2.6%

116.6%
113.1%
121.0%

17,313
6,800
5,573

7.2%
2.8%
2.3%

Depreciation andamortization

3,940

1.5%

116.5%

3,382

1.4%

Others14,81053,365

5.6%
20.3%

115.9%
116.1%

12,77745,961

5.3%
19.2%

Rent

SG&A

12Forecast for fiscal June 2019
FY2019 Revised Forecast

Consolidated(Millions of yen)

FY2019 Initial Forecast

Plan

Share

YoY

Plan

Share

Net sales

1,370,000

100.0%

145.5%

1,000,000

100.0%

Gross profit

360,000

26.3%

147.5%

260,000

26.0%

SGA

297,000

21.7%

154.3%

207,000

20.7%

Operating profit

63,0004.6%

122.2%

53,000

5.3%

Recurring profit

65,0004.7%

113.6%

58,0005.8%

Net profit

48,0003.5%

131.9%

37,0003.7%

EPS (Yen)

303.31―131.8%

233.90―Capitalexpenditure

48,000

3.5%

85.6%

40,000

4.0%

Depreciation

21,0001.5%

141.7%

15,5001.6%

 Full year forecast：Sales 1 trillion 370 billion yen, OP :63 billion yen, RP：65 billion yen, NP：48 billion.
Medium term target ”Vision 2020” is likely to be achieved one year ahead of schedule. Full year guidance is up revised andincluded the consolidation of UNY.
 Don Quijote SSS forecast : DQ SSS forecast :+0.6% in 1H flat in 2H and +0.3% for full year.

13