Pan Pacific International Holdings Corporation
1H Results for FY 2020
Earnings Results
July 1, 2019 – December 31, 2019
February 5, 2020

Earnings summary
Consolidated(Millions of yen)

6 months to December 2019

6 months to December 2018

ActualShare

YoY

ActualShare

Net sales

858,789

100.0%

167.3%

513,416100.0%

Gross profit

247,79328.9%

182.7%

135,611

26.4%

SGA

202,68023.6%

191.9%

105,594

20.6%

Operating profit

45,1335.3%

150.3%

30,017

5.8%

Recurring profit

45,5555.3%

128.9%

35,330

6.9%

Profit attributable toowners of parent

28,8903.4%

122.3%

23,616

4.6%

EPS(Yen) *45.61－122.2%37.32–* Stock split (1:4) was taken place on September 1, 2019. EPS in FY 2018 is recalculated.

 1H profits largely beat the guidance by executing aggressive strategy to select and concentrate group’s management resources.
 Consumption environment was difficult as there was a series of devastating natural disasters. Consumption tax hike in Octobergave a negative impact on general consumption.
 PPIH focused on conversion of UNY stores and improve profitability. Further optimization was taken place in existing business.
 SSS for Don Quijote went down by 0.7%, 0.2% negative for UNY. Tax-free sales went down 2.7% due largely to the drop in sales
from South Korea. We welcomed overseas tourists from 189 countries. Traffic from Taiwan, ASEAN and the west is sharply rising.
 GPM was up 2.4 pts as we dealt with price conscious consumer sentiment by offering daily necessities at competitive price.
 SGA went up 3.0 pts due to UNY consolidation. Post-merger integration is working out.
 Operating profit and net profit went up 50.3% and 22.3% respectively. Guidance for FY 2020 made an upward revision with thisstrong results.

1Same-store sales (Don Quijote Co., Ltd.)
110.0%

Same Store Sales

105.0%

Spending

100.0%

Traffic

95.0%
2017.Jul.

2017.Dec.

2018.Jun.

2018.Dec.

2019.Jun.

2019.Dec.

Existing stores

2018
Oct.

Nov.

Dec.

2019
Jan.

Feb.

Mar.

Apr.

May.

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Sales (%)

100.4

100.5

98.8

99.7

101.6

104.1

102.1

102.2

100.9

95.7

101.1%

113.0

93.1

97.8

96.6

Customer traffic (%)

101.7

99.697.7

99.7

100.5

102.2

101.3

103.1

101.0

96.5

102.8%

107.6

94.5

97.7

97.3

Customer spending (%)

98.7

101.0

101.1

99.9

101.0

101.8

100.9

99.2

99.9

99.1

98.3%

105.0

98.4

100.2

99.3

Existing store count

291

294

299

301

301

301

295

296

297

297

302

296

307

309

310

 DQ SSS went down 0.7% (decrease from domestic (0.3pt) and from tax-free (0.4pt)) with traffic went down 0.7% and spending was flat.
.

 The domestic sales were soft because of natural disasters and consumption tax hike. Sharp drop in Korean traffic impacted tax freesales, Chinese and ASEAN were contributors.

2Same-store sales (UNY Co., Ltd.)UNY adjusted *110.0%UNY Non-adjusted *UNY SSS

GMS A
SSS

105.0%

100.0%

95.0%

GMS B
SSS
90.0%
2017.Dec.

2018.Jun.

2018.Dec.

Existing stores

2018
Oct.

Sales (%)

101.1

98.7

100.2

100.2

99.1

Customer traffic (%)

100.6

98.9

99.6

99.6

Customer spending (%)

102.4

99.3

100.6

Existing store count

188

186

187

Nov.

Dec.

2019Jan.

Feb.

Mar.

2019.Jun.

Apr.

2019.Dec.

May.

Jun.

Jul.

Aug.

Sep.

102.1

98.4 101.3

101.1

94.1

102.7

104.0

99.5

100.9

98.0 100.3

99.8

94.5

101.1

99.8

99.5

101.1

100.5 101.0

101.3

99.5

181

178

177

169

168

173

173

Oct.

Nov.

Dec.

96.5

102.6

99.3

102.0

96.7

101.2

99.4

101.6

102.0

99.8

101.4

100.0

166

161

161

159

158

* 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 down 0.2%, with traffic went down 0.9% and spending went up 0.7％.

3

Sales breakdown by product category
6 months to December 2019

Consolidated(Millions of yen)

ActualShare

6 months to December 2018

YoY

ActualShare

Home electrical appliances

43,612

5.1%

105.6%

41,290

8.0%

Miscellaneous household goods

123,80714.4%

107.7%

114,961

22.4%

Foods

202,21923.5%

120.4%

167,943

32.7%

Watches & fashion merchandise

85,2679.9%

101.6%

83,906

16.3%

Sporting goods & leisure goods

31,2903.6%

101.4%

30,870

6.0%

DIY goods

7,696

0.9%

97.5%

7,896

1.5%

Overseas

51,7886.0%

114.4%

45,255

8.8%

Other products

15,2731.8%

136.1%

11,222

2.2%

Total discount store business(Former Don Quijote HD stores)

560,95365.3%

111.4%

503,343

98.0%

Clothings

34,981

4.1%

Household goods

40,965

4.8%

――

―
―

―
―

Foods

175,082

20.4%

―――

Other products

9,535

1.1%―

―

―

Total GMS business(Former UNY group stores)

260,563

30.3%

―

―

―

Tenant leasing business

29,7053.5%

316.2%

9,393

1.8%

Other business

7,568

0.9%

1112.9%680

0.1%

Total sales

858,789

100.0%

167.3%

513,416100.0%

4

Sales breakdown by product category
Home electrical appliances
Miscellaneous household goods

Accessory for smartphones and POSA cards delivered a good sales momentum.
Batteries and flash lights grew.
Daily necessities such as detergents and oral-care products grew. Kitchen products
such as portable stove contributed to sales.

Foods

Strong popularity of processed food (e.g. snacks and preserved food) led to sales
growth. The fresh meat and vegetables were strong.

Watches & fashion merchandise

Rain goods and bags were contributors. The luxury goods including branded watch
and jewelries showed fluctuation before and after the tax hike.

Sporting goods & leisure goods

Despite the slump in car products and toys, sports related products such as proteins
covered.

DIY goods

Gardening goods suffered from a series of natural disasters and poor weather. On theother hand, the goods for preventing such disasters (e.g. sandbags) were strong.

Overseas Fruits, meat and ready-made meals kept strong. Everyday goods also contributed.
Total discount store business The unseasonable weather put negative impact on seasonal goods. On the other hand,(Former Don Quijote HD stores) daily necessities including food went even higher.
Outer and home wear for ladies recorded high growth rate. Socks and rain goods
contributed.
Emergency supplies such as batteries and DIY goods were solid. Seasonal electricalHousehold goods
appliances (e.g. humidifier) and daily consumable (e.g. bath products) also helped.
The processed food and dairies took the lead while fresh food and vegetables affectedFoods
by the low market price. Ready-to-eat fruits were popular.
The strong clothing which captured trends was worth a notice. The housing goods
Total GMS businessgrew with the increased number of items including electric appliances and general(Former UNY group stores)
goods.

Clothing5

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

FY2020-2Q

Don Quijote

209212

213

215

MEGA43444444

New MEGA

8088

8989

MEGA DQ UNY(Conversion Store)―

162229Apita / Piago

―

176

169

162

Picasso

23

21

2222

Kyo-yasu-do

4444

mini Piago

―

7373

73

Doit

18

15

1515

Nagasakiya

2222

Total stores in Japan

379651

653

655

Overseas3942

Global Total

418

693

43696

45700

Domestic opening

55

292

3

3

Domestic closure

520

11

Net increase

50272

22

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

6

The number of stores(stores)

Breakdown by company
FY2018

Don Quijote Co., Ltd.

FY2019FY2020-1Q

FY2020-2Q

313322325327

Nagasakiya Co., Ltd. (MEGA)

43444444

UD Retail Co., Ltd.

―

162229UNY Co., Ltd. (Apita, Piago)

―

176

169

162

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

444499 Ichiba Co., Ltd. (mini-piago)―

737373

Doit Co., Ltd. (Doit)

18151515

Daishin Co., Ltd. (MEGA Omori sanno)

1111379651653655

DQ USA (Stores in Hawaii)

4444

MARUKAI (California)

9101010QSI (Hawaii)

24242424

PPRM (Singapore)

2345

PPRM (Hong Kong)―――

1

DONKI Thonglor (Thailand)―

111

Overseas Total

39424345

Global Total

418693696700(DQ,New MEGA and small format)(MEGA UNY;conversion store from UNY)

Domestic Total

7

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

6 months to December 2019

6 months to December 2018

ActualShare

YoY

ActualShare

Net sales

858,789

100.0%

167.3%

513,416100.0%

Salary allowance

71,7598.4%

181.2%

39,605

7.7%

Rent

26,9563.1%

178.0%

15,142

2.9%

Commission paid

30,8583.6%

241.5%

12,7792.5%

Depreciation andamortization

11,964

1.4%

157.2%

7,609

1.5%

Others61,1437.1%

200.7%

30,458

5.9%

SG&A

202,68023.6%

191.9%

105,594

20.6%

 The consolidated SG&A increased due to UNY consolidation. Cost is in the process of streamlining after consolidating
UNY and it is working well.
 SG&A for former Don Quijote group stood at 26.4% as a percentage of sales, while that of UNY was at 33.1%.

8Sales and profit by business
Sales, profit and loss by segment from Jul.1, 2019, to Dec.31, 2019
Consolidated

Discount store

GMS

Tenant leasing

OthersTotal(Millions of yen)

Adjusted

Consolidated

Sales to externalcustomers

560,953

260,564

29,705

7,567

858,789-858,789

Internal sales or transfers
between segments

2,847

2,179

2,037

3,373

10,436 (10,436)-Total563,800

262,743

31,742

10,940869,225 (10,436)

858,789

Segment profit

28,11010,0056,741

43

44,89945,113214

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

Discount store

GMS

Tenant leasing

OthersTotal(Millions of yen)

Adjusted

ConsolidatedSales to externalcustomers

503,343

-

9,393

680

513,416-

513,416

Internal sales or transfers
between segments

1,461

-

949

-

2,410

(2,410)-

Total

504,804-

10,342680

515,826(2,410)513,416

Segment profit

29,494

-

1,375

(870)

29,99918

30,017

 Segment profit : 28.1 billion yen for discount store business, 10 billion yen for GMS business and 6.7 billion yen fortenant leasing business.

9Balance Sheet
Consolidated(Millions of yen)

As of December
31, 2019

Change fromJune 30, 2019

(Millions of yen)

ConsolidatedAs of December
31, 2019

Change from
June 30, 2019

Total current assets

542,50746,102

Total current liabilities

373,190

31,416

Cash and deposits

188,768

16,095

Accounts payable

187,715

28,651

79,282

11,865

Short-term liabilities*

34,809(7,851)

Merchandise

200,778

12,268

Total noncurrent liabilities

579,704(8,322)

Total noncurrent assets

785,665(30)

Long-term bonds

237,250(1,208)

Total property, plan and equipment

615,032

619

Long-term borrowings

Buildings

260,669(2,286)251,080(5,697)

Land

317,989(591)

1,378(3,325)

Total intangible assets

36,421(1,181)

Total liabilities

952,894

23,094

Goodwill

16,328(888)

Net assets

375,278

22,978134,212532

Total shareholders’ equity

352,574

24,46580,54097

Non-controlling interests

23,475258

1,328,172

46,072

1,328,172

46,072

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 increase in assets were cash and deposits (+16.1 bil yen),notes and account receivables (+6.3 bil yen),and installment account receivable (+11.9 bil yen). Merchandise increased by 12.3 billion yen.

 Liabilities: Accounts payables – other (+28.7 bil yen) and Deposits received (+5.3 bil yen) increased. Decreased items are accrued
expense(-5.0 bil yen), interest bearing debt (-14.8 bil yen: -7.9 bil yen from short-term and -6.9 bil yen from long-termdebt) and payables under fluidity lease receivables (-3.6 bil yen).

10Cash flows and Capital expenditure(Millions of yen)

6 months toDecember 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
58,970(19,182)(23,071)
18,193203,329

6 months to
December 201875,88333,238(24,481)
185,067
194,692
270,575

Change109,253
25,732
5,299(208,138)
176,499(67,246)(Millions of yen)

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

6 months toDecember 201919,151
40,697
21,5466 months toDecember 2018

28,757
27,798(959)

Change(9,606)
12,89922,505* Cash flows = Net income + Depreciation and amortization + Extraordinary loss - Dividend Cash flow from operating activities was 59 billion yen positive. Positive factors : 42.0 billion yen of income before income taxes,
14.1 billion yen of depreciation and amortization and 28.6 billion yen of increase in accounts payables.
Negative factors：6.4 billion yen of increase in notes and accounts receivables, 12.3 billion yen of inventory and 9.2 billion yenof income taxes paid.
 Cash flow from financing activities was 23.1 billion yen negative. 12.9 billion yen of long-term loans payables repayments,
1.7 billion yen of bonds redemption, 3.7 billion yen of payables under fluidity lease receivables repayments and 4.8 billion yen of
cash dividends paid were major factors.
 Capex was 19.2 billion yen (DQ:6.2 bil, Nagasakiya:2.3 bil, UDR:4.8 bil, UNY:1.4 bil, JAM:0.9 bil, HD:1.7 bil.).
 Free cash flow was 21.5 billion yen positive.

11

Earnings summary for Q2
Consolidated(Millions of yen)

3 months to December 2019
ActualShare

3 months to December 2018
YoY

ActualShare

Net sales

430,053

100.0%

163.3%

263,336

100.0%

Gross profit

125,17329.1%

181.7%

68,87926.2%

SGA

101,19223.5%

189.6%

53,365

20.3%

Operating profit

23,981

5.6%

154.6%

15,514

5.9%

Recurring profit

25,1065.8%

144.2%

17,413

6.6%

Profit attributable toowners of parent

16,2863.8%

136.1%

11,970

4.5%

EPS(Yen) *

25.70

-

135.8%

18.92-* EPS (2018) =Supposed that stock sprit(1:4) effect on September 1,2019 was performed on July 1,201812

Sales breakdown by product category for Q2
3 months to December 2019

Consolidated(Millions of yen)

ActualShare

3 months to December 2018

YoY

ActualShare

Other products

21,916
58,682
103,466
42,30415,091
3,664
26,065
8,166

5.1%
13.6%
24.1%
9.8%
3.5%
0.9%
6.1%
1.9%

100.1%101.7%
119.2%
99.7%
100.3%
87.8%
107.3%
137.4%

21,88557,72986,80042,415
15,0504,175
24,298
5,945

8.5%
21.9%
33.0%
16.1%
5.7%
1.6%
9.2%
2.3%

Total discount store business(Former Don Quijote HD stores)

279,35465.0%

108.2%

258,297

98.1%

Clothings

Other products

18,13021,20188,303
4,775

4.2%
4.9%
20.5%
1.1%

―
―
―
―

―
―
―
―

―
―
―
―

Total GMS business(Former UNY group stores)

132,409

30.8%

―

―

―

Tenant leasing business

14,5343.4%

311.8%

4,6621.8%

Other business

3,755

0.9%

996.0%

377

0.1%

Total sales

430,053

100.0%

163.3%

263,336

100.0%

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

Household goods
Foods

13

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

3 months to December 2019
ActualShare

3 months to December 2018
YoY

ActualShare

Net sales

430,053

100.0%

163.3%

263,336

100.0%

Salary allowance

36,2608.4%

179.7%

20,180

7.7%

Rent

13,5453.1%

176.2%

7,689

2.9%

Commission paid

15,8403.7%

234.8%

6,746

2.6%

Depreciation andamortization

6,134

1.4%

155.7%

3,940

1.5%

Others29,4136.8%

198.6%

14,810

5.6%

SG&A

101,19223.5%

189.6%

53,365

20.3%

14Forecast for FY June 2020
Consolidated(Millions of yen)

FY2020 Full year Revised Forecast

FY2020 Previously Annouced
Forecast*¹

Plan

Share

YoY

Plan

Share

Net sales

1,670,000

100.0%

125.7%

1,660,000

100.0%

Gross profit

478,000

28.6%

129.0%

470,000

28.3%

SGA

406,000

24.3%

132.1%

402,000

24.2%

Operating profit

72,0004.3%

114.1%

68,000

4.1%

Recurring profit

72,0004.3%

105.5%

68,000

4.1%

Net profit

46,000

2.8%

97.7%

45,0002.7%

EPS (Yen) *²

72.59

-

97.6%

71.03

-

Depreciation

24,0001.4%

119.9%

25,0001.5%*1. FY2019 1H Original Forecast was announced Aug.13,2019 (The net sales of 1,650 billion yen, operating profit of 66 billion yen and the recurring profit of 66 billion yen)
*2. Stock split (1:4) was taken place on September 1, 2019. EPS in FY 2018 is recalculated.

 Considering the strong results in 1H, full year forecast in FY2020 has been revised upward.
Net sales of 1.67 trillion yen (25.7% YoY increase, original forecast figure was 1.66 trillion yen), operating profit of 72 billion yen(14.1% YoY increase, originally 68 billion yen), recurring profit 72 billion yen (5.5% YoY increase, originally 68 billion yen) andnet profit of 46 billion yen (2.3% YoY decrease, originally 45 billion yen).
 SSS forecasts for Don Quijote is 1.8% negative and flat for UNY.
 Capex is expected to be 40 billion yen with opening 20 new domestic and 7 international stores and 25 UNY conversion stores.

15