CO-CREATION OF CREDITABILITY

CO-CREATION
Co-Creation Management Report 2018

Co-Creation Management Report 2018

SECTION 01

SECTION 03

MARUI GROUP’s Vision
for Co-Creation Sustainability Management
01 MARUI GROUP’s Co-Creation Philosophy
02 Co-Creation of Creditability
06 Message from the President
16	Dialogue 01: “Good Companies” Achieving Both
Economic and Social Benefits to be Deemed
Necessary to Society
SECTION 02

Co-Creation Sustainability Management
Value Creation Model
22	Co-Creation Sustainability Management
Business Model
22 Pioneer Spirit of Creating Opportunities
24	Business Model Integrating Stores, Credit Cards,
and the Internet
26	Unique Pure Holding Company System
Contributing to Integrated Thinking
28	Framework of Business Model Integrating
Stores, Credit Cards, and the Internet
30	Identification of Four Core Themes for Inclusion
32	Creation of an Inclusive and Flourishing Society
34	Dialogue 02: Financial Inclusion as Viewed from the
Perspective of Microfinance
38 MARUI GROUP’s Vision for Financial Inclusion
38	Promotion of Financial Inclusion for the Benefitof Everyone
40	Japan’s First Securities Business
Driven by Credit Cards
44	Dialogue 03: Contributions to the Happiness of
All Customers through Cumulative Investments
48	MARUI GROUP Employees Supporting the
Securities Business50	MARUI GROUP’s Unique Integrated Management
Approach50	Profession Change System for Fostering
Empathy and Innovation
52	Cultivation of an Organization That Creates
Innovation through Diversity
54	Work Style Reforms Creating a Venue forContributions of All Employees
56	Revision of Evaluation Systems and Desired
Characteristics in Employees
58	Dialogue 04: Unique Integrated GroupManagement Enabling Co-Creation
Sustainability Management
62 Strong Support for Inclusion

Co-Creation Sustainability Management
66

Medium-Term Management Plan
66	Basic Policy of the Medium-Term
Management Plan
67	MARUI GROUP’s Three Focus KPIs
68	Opportunities and Threats to be Facedover the Next Decade70	Progress in Growth Investments
72	Dialogue 05: Future of MARUI GROUP Forgedthrough Co-Creation with Start-up Companies
76	Retailing Segment
80	FinTech Segment
84	Message from the CFO
85	Target Balance Sheet
88	Shareholder Returns and Policies
90	Co-Creation Corporate Governance90	Corporate Governance for Co-Creating
Corporate Value
93	Messages from External Directors
102	Directors, Audit & Supervisory Board Members,
and Executive Officers
108	Overview of MARUI GROUP
110 MARUI GROUP Store Network112	Financial and Non-Financial Summary
114	Consolidated Balance Sheets
115	Consolidated Statements of Income /Consolidated Statements of Comprehensive Income
116	Consolidated Statements of Changes in Net Assets
117	Consolidated Statements of Cash Flows118	Notes to Consolidated Financial Statements
141	Independent Auditor’s Report142	Ratings, Awards, and Recognition144	Participation in the Forum for Integrated Corporate
Disclosure and ESG Dialogue
145	From the Chief Editor
Editorial Policy: Co-Creation Management Report 2018 was created with the aim of helping ourshareholders, other investors, and various other stakeholders develop a better understanding of
MARUI GROUP. This report contains performance, business, and financial information centered on
the Group’s corporate philosophy and business strategies. As an integrated report, it also comprehensively includes non-financial information on the activities that support the Group’s sustainablegrowth. In the preparation of this report, we referenced the International Integrated Reporting
Framework released by the International Integrated Reporting Council in December 2013 and the
Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative
Value Creation: ESG Integration, Non-Financial Information Disclosure, and Intangible Assets into
Investment released by the Ministry of Economy, Trade and Industry in May 2017.
Cautionary Notice regarding Forward-Looking Statements: Performance forecasts and otherforward-looking statements contained in this report represent the Group’s best judgments basedon information available at the time of this report’s publication and therefore contain a degree of
uncertainty. It is possible that actual performance could differ materially from these forecasts due
to a variety of factors. Economic conditions, foreign exchange rates, and stock price movements
are among the factors that could have a major impact on performance.

Co-Creation Management Report

Co-Creation Sustainability Reportwww.0101maruigroup.co.jp/en/ir/lib/i-report.html
Annual integrated report focused on
management strategies

Scheduled tobe published in
January 2019

 ww.0101maruigroup.co.jp/en/sustainability/w
lib/s-report.html
Annual sustainability report focused onconnections with communities and society

MARUI GROUP’s

CO-CREATIONPHILOSOPHY
Since its founding in 1931, MARUI GROUP has continued to evolve its
unique business model, which merges retailing and finance, in response tochanges in the times and in consumer needs. Today, we are engaged inco-creation sustainability management, a practice that entails creating value
together with all of our stakeholders. Our goal is to co-create happiness,
which is born out of the harmony between the interests of all stakeholders.
We are focused on the concept of “inclusion” as the key to responding tocustomer needs and social issues, which change with the times, and forging
a better future. Through co-creation activities advanced with all­stakeholders, MARUI GROUP will endeavor to help build a flourishing andinclusive society that offers happiness to all.

MissionContribute to co-creating a flourishing and inclusive societythat offers happiness to all
Corporate Philosophy
Continue evolving to better aid our customers
Equate the development of our people withthe development of our company
Founding Spirit
Creditability should be built together with customers
Pioneer spirit of creating opportunities

01

COVER STORY

CO-CREATION OF CREDITABILITYMARUI’s Core Value
The co-creation of creditability is a concept based on the belief of
MARUI GROUP’s founder that creditability should be built together with customers,
rather than assigned to them.

02

COVER STORYMARUI GROUP’s “Onion Core”
The core value of MARUI GROUP is like the core of an onion. Onions consist of several layersthat must be peeled back before reaching their core. Companies are the same, and there areaspects of a company that may be easily visible from the outside while the inner layers may be
more difficult to see.
For MARUI GROUP, the outer layers of the onion are the Marui and Modi stores located in
major cities across Japan and the 6.6 million EPOS cardholders. These are aspects of theCompany that anyone can see, but they do not represent the distinctive value of MARUI GROUP.
In fact, these aspects both represent value that can be found in numerous other companies.
After all layers of the onion have been peeled away, all that is left will be the core. This onion
core, the value that differs from all other companies, the value that defines a company and that,
if removed, would cause that company to cease to be itself, is its core value. MARUI GROUP’s
onion core, its core value, is the co-creation of creditability.

CORE VALUE

03

COVER STORY

TRUST

Co-Creation of Creditability
The concept of the co-creation of creditability is one of the principles rooted in the belief of theCompany’s founder that creditability should be built together with customers. At the time of its
founding, MARUI GROUP’s business involved selling furniture through monthly installment
payments. Installment payments were a system designed to allow a wider range of customers
to purchase furniture. The Company would loan money for the purchase to customers, which
they would repay in monthly installments. Compared to business models based on cash payments, which often resulted in relationships ending after a single interaction, installment payments were effective in fostering long-term relationships with customers as they proceeded to
repay their debts in 10, 12, or 24 installments after purchases.
So long as customers made payments on time, they would continue to build creditability
the more they borrowed and the longer the period over which they borrowed. It was this typeof relationship with customers that gave rise to the principle of building creditability together
with customers. This principle has guided us in working together with customers to build creditability, rather than assigning a credit rating based on their income, profession, or assets,
resulting in birth of the concept of the co-creation of creditability.

04

COVER STORY

Co-Creation of HappinessWith the co-creation of creditability as its core value, MARUI GROUP proceeded to engage inco-creation with its customers through its products, stores, credit cards, and other offerings. In
recent years, we have been expanding the scope of our co-creation activities to encompass all
stakeholders.
This expanded scope led us to focus on the concept of inclusion. This concept entails
incorporating and including individuals that had previously been excluded. By reconceptualizing its management based on the concept of inclusion, MARUI GROUP took its first step forward in the practice of co-creation sustainability management through which the Company
aims to help build a flourishing and inclusive society that offers happiness to all.

HAPPINESS

05

Message from the President

Realization of New Value to
Shape the Future through Co-Creation
Sustainability Management    

Hiroshi Aoi
President and Representative Director
Representative Executive Officer

Review of the Fiscal Year Ended March 31, 2018
Record-Breaking Income and Dividends
In the fiscal year ended March 31, 2018, we posted earnings per share of ¥93.2, an increase of 16% year on year,
and return on equity of 7.6%, up 0.9 percentage point,
thereby accomplishing our targets for both of these items.
In addition, we set new records for operating income,which rose for the ninth consecutive year, to ¥35.2 billion,
up 13%, and for dividends, which were increased forthe sixth consecutive year, to ¥38, up ¥5. Furthermore,
MARUI GROUP’s stock price stood at ¥2,168 on March
31, 2018, an increase of 43% from March 31, 2017,
exceeding the 13% growth seen in the Nikkei 225.
This impressive performance brought with it a highevaluation of our corporate value. What I mean by this isthat at the end of the previous year, our stock price was
6% lower than at the beginning of the year, despite thefact that our performance in this year was every bit asimpressive as in the fiscal year under review. Moreover,there was a significant gap between the change in ourstock price and the 13% increase seen in the Nikkei 225.
The large improvement in our perceived corporate value inthe fiscal year ended March 31, 2018, illustrates the highevaluation that I am referring to. I would next like to review
this year and analyze the factors behind this improvement.

Effectiveness of Unprecedented Transition to
Shopping Centers and Fixed-Term Rental Contracts
I would first like to talk about the increased income in the
Retailing segment that stemmed from the transition to
shopping centers and fixed-term rental contracts. Thistransition entails transforming all of our department
stores into stores that employ a real estate business06

model. The aim of this transition is to allow us to betteraccommodate the long-term trend in consumer needs
that is the shift from consumption of goods to consumption of experiences. Through this transition, our goal has
been to cater to such customer needs by developing
stores that deal in food, services, and experiences in
addition to goods and to improve the previously stagnant
income of the Retailing segment.
In the fiscal year ended March 31, 2017, the Retailingsegment suffered a decline in income. This decline was aside effect of the rapid transition to shopping centers andfixed-term rental contracts, which resulted in a temporary
increase in the area of inactive, or non-revenue generating,floor space following sales floor replacements and renovations. The transition of all stores to shopping centers andfixed-term rental contracts was an unprecedented undertaking. This downturn in performance no doubt confirmed
the concerns held by shareholders and investors worried
about the success of this strategy. We diligently explainedthat this was only temporary and that income was sure to
improve as the benefits of the transition emerged.
However, as this t­ ransition was, once again, unprecedented, shareholders and investors stated that they would
have to wait and see the results.
In the fiscal year ended March 31, 2018, the progress of the transition and the decline in inactive floor
space resulted in an upturn in income in the Retailingsegment, as had been expected. Shareholders and investors were therefore finally able to understand the effectiveness of our strategy. In addition, other companies
undertook similar transitions, which helped investors
better understand MARUI GROUP’s strategy.

President Aoi in Q-COURT British-style garden on the roof of Shinjuku Marui Main Building (certified as an “Urban Oasis”)

07Message from the President

Second Consecutive Year of ROIC Exceeding WACC
The second factor behind the higher evaluation of theCompany was our ability to improve corporate value by
increasing surplus income. Due in part to the higher
income of the Retailing segment, return on invested capital(ROIC) in the fiscal year ended March 31, 2018,
increased 0.1 percentage point year on year, to 3.2%,
exceeding weighted average cost of capital (WACC) for
the second consecutive year. Based on discussions withshareholders and other investors, we defined the balance
sheet that we will work toward over the next five years
and set targets for the optimal capital structure.
By implementing financial and capital measures
based on this plan, we generated surplus income in thefiscal year ended March 31, 2017, by reducing WACC.
We then created additional surplus income in the fiscal
year ended March 31, 2018, by improving ROIC. In thismanner, we have at last become able to start developing
a corporate constitution that will enable ongoing increases
in corporate value. This ability is a product of continuous
discussion with shareholders and other investors.

Goal of Becoming a Forerunner in ESG Initiatives
The third factor is the high evaluation of our environmental, social, and governance (ESG) initiatives. In 2008, a
step ahead of the rest of the corporate sector, we began
implementing what have now come to be referred to as“work style reforms” in Japan. Initiatives to empower our
female employees were kicked off in 2013. Then, in thefiscal year ended March 31, 2017, we defined the ESG
theme most important for us to address as “inclusion.”
By linking the concept of inclusion to the United Nations
Sustainable Development Goals, we identified four core
themes and commenced full-fledged initiatives based onthese themes.
Our efforts to become a forerunner in ESG initiatives
have won high praise from outside of the Company. In
the fiscal year ended March 31, 2018, we were selected
for inclusion in the three ESG indexes that are utilized by
the Government Pension Investment Fund of Japan andin Dow Jones Sustainability Index, which is administeredby a global rating institution. MARUI GROUP was also
included in the FY2018 Nadeshiko Brand and the
FY2018 Health & Productivity Stock Selection (Figure 1).
Probably as a reaction to our inclusion in these selections,an investor stated that “MARUI GROUP is neither a retailer
nor a financial company; it is an ESG company,” at afinancial results briefing. This praise not only brings us joy
but also indicates the path we should follow in the future.
As I have explained, the fiscal year ended March 31,
2018, was a year in which our initiatives related to strategies, finances, and pre-financial information—information that has not yet impacted financial information but isstill as important as financial information—were linked toeach other and advanced in an integrated manner, earning high evaluations for our corporate value. I am mostappreciative for the support we received from stakeholders throughout this process.

Figure 1: MARUI GROUP’s Stock Price (March 2017 indexed to 100)MARUI GROUPNIKKEI 225

100
2017.308

2017.92018.3

Message from the President

Vision for Stores of the Future a Decade from Now
Ultimate Goal of Transition to Shopping Centers
and Fixed-Term Rental Contracts
I would next like to explain our plans for future value creation. I will begin this explanation by talking about our
initiatives for after the transition to shopping centers andfixed-term rental contracts, which we have been advancing based on a five-year plan and are scheduled for completion in the fiscal year ending March 31, 2019. As wehave proceeded to improve income in the Retailing segment through this transition, we have simultaneously
shrunk the amount of floor space dedicated to apparelwhile increasing the space allocated to food vendors andservice providers. This move is meant as a response to
the long-term shift in consumption from goods to experiences. For example, we have been applying the idea of
positioning food vendors on all entry floors at various
stores. This was a successful initiative at Hakata Marui, astore that overturned previous department store conventions, and its application to other stores has resulted inincreases in overall customer numbers and transaction
volumes at all stores.
However, the income improvements and the revitalization of stores through product category rebalancing
achieved via the transition to shopping centers and fixedterm rental contracts are merely by-products of the process of the transition and not the ultimate goal of thetransition itself. The ultimate goal of the transition is toreinvent the very concept of stores to realize a new vision
for the stores of the future a decade from now. By shifting from our prior department store model to the current
real estate model, we will position ourselves to begin thecreation of the stores of the future.

Threats Faced by Conventional Stores
The stores of the future that MARUI GROUP aims tocreate could be explained as “stores that do not sell.” Theconventional concept of a store is an establishment thatsells some type of product or service. However, such
conventional stores will face major threats over the
medium-to-long term because of two reasons.

The first threat comes in the form of the spread ofe-commerce while the second threat could be seen to
be the commoditization of products and services. As
e-commerce becomes more mainstream going forward,
it can only be expected that the sale of products andservices will come to be primarily conducted throughe-commerce venues. In the United States, the spread of
shopping through Amazon has led to shopping mall closures and bankruptcies of specialty shop chains of an
unprecedented scale. At the same time, the global commoditization of products and services is driving down
prices, resulting in fierce price competition for bothbrick-and-mortar and e-commerce venues. The trend
has placed enormous pressure on all retailers with the
exception of those limited few of a scale that enables
them to exercise leverage in setting prices.
Faced with these threats, conventional stores will likely
have to either choose to close or to resign themselves tochronically low profit margins due to never-ending pricecompetition.

Option of Stores That Do Not Sell
MARUI GROUP, however, believes that there is a third
option: the stores of the future—stores that do not sell.
The stores of the future we envision offer the value ofexperiences and community as opposed to the sale ofproducts and services. Up until now, we have devoted
ourselves to customer service and sales at our stores. This
led us to wonder if our customer service efforts to date
had purely been for the purpose of sales and what would
happen if sales were conducted through an e-commercevenue and we devoted ourselves to customer service.
We found our answer in 2017 when we investigatednumerous stores in the United States. This answer was tocreate a store that brought joy to both customers and staff.
The stores in which we saw this answer were those operated by companies that had initially grown as e-commercebusinesses and that used their physical stores as pointsof contact with customers. Customers did not need tobuy products in those stores. They were thus able to feel09

Message from the President

more freedom and enjoyment in their shopping experience. Similarly, members of the store staff did not needto sell products but instead were able to help customers
try out various products and answer their questions in afriendlier manner. This approach also brought joy to customers; it was an enjoyable place for everyone there.
Seeing this store made me realize the joy that could
be provided by stores that do not sell. This realization gavea clear form to our vision, which had previously been no
more than an abstract concept. The stores of the futurethat would accurately respond to the megatrend that is theshift from consumption of goods to consumption of experiences are not stores that simply increase the amount of
space devoted to food vendors and service providers. No,
the stores of the future are those that coordinate with
e-commerce to offer experiences and a sense of community. Creating these stores will require a complete change
in direction, a transformation from stores that sell goods
and services to stores that do not sell.

Sales as a Result of Not Selling
We thus embarked on our journey toward the future. The
U.S. stores I speak of employed an omni-channel retailing approach, and we therefore began introducing tenants that adopted similar approaches. We also developed
and launched the try-on store scheme for our private
brand women’s shoes. Another step in this journeyentailed welcoming Apple Store Shinjuku into Shinjuku
Marui Main Building in spring 2018. Apple StoreApple Store Shinjuku serving as a representative
example of experience-based stores(Shinjuku Marui Main Building)

10

Shinjuku is an experience-based store, the exact type ofstore we had longed for. Next to this store, you will findlululemon, which deals in athletic wear among otherofferings. A representative of lululemon stated that theirpolicy is that employees can do anything but sell, making
lululemon truly a store that does not sell. Instead of selling, lululemon holds in-store yoga workshops and otherevents for fostering a sense of community among customers. Of course, Apple Store Shinjuku and lululemon
both offer products and boast world-leading per-areasales efficiency. However, their main focus is providing
experiences and community. Sales are simply a result of
those efforts, not the goal of their activities. This is theprimary difference between these stores and conventional stores.
Furthermore, SHIBUYA BASE was opened in Shibuya
Marui in June 2018 through collaboration with start-up
company BASE, Inc. This store offers a physical venue
that can be used by e-commerce business operatorsdeveloping their own brands to engage with fans of theirbrands and meet new customers. Many business operators have high expectations for this new type of store.
By furthering the development of and introducing
such tenants, as well as shops of the same vein operated
by MARUI GROUP, we will create the stores of the future.
The transition to shopping centers and fixed-term rental
contracts laid the groundwork needed to develop such
stores. After the transition is complete, our journey ofcreating value for the future will begin.

Athletic wear brand store lululemon(Shinjuku Marui Main Building)

SHIBUYA BASE physical venue for e-commerce sites
developed through collaboration with BASE, Inc.
(Shibuya Marui)Message from the President

Power to Change Threats into Opportunities
QR Code Payments Igniting Spreadof Cashless Payments
The trend toward cashless payments is one example ofa medium-to-long-term change in the operating environment impacting the FinTech business. Over the years, wehave continued to contribute to the spread of cashless
payments with our credit cards. Looking ahead, we
expect that QR code payments, which have exploded in
the Chinese market, will also ignite the spread of cashless payments in the Japanese market. The spread of QR
code payments does indeed represent a threat that may
replace credit cards. However, I believe that the impactsof this threat will be limited. In fact, I suspect that the
spread of QR code payments may actually have a positive impact on credit cards.
To get a better understanding of the threats andopportunities presented by QR code payments, let me
provide an overview of our outlook for the future spread of
cashless payments (Figure 2). Excluding bank transactions
and housing loans, the payment market in Japan has ascale of around ¥200 trillion. Of this amount, credit card
payments account for approximately ¥60 trillion and areprimarily used for large-sum payments of more than
¥5,000 at chain stores and large-scale stores. Meanwhile,
prepaid cards and e-money payments represent ¥10 trillion of this amount, mainly through small-sum paymentsof less than ¥5,000 conducted at transportation venues,
convenience stores, and other such stores. In this manner,each payment method has carved out its own corner ofthe market comprising the uses for which it is most convenient. We therefore expect that the new payment of QR
code payments will find a market of around ¥90 trillion
centered on small to medium-sized businesses and smallsum payments of less than ¥5,000.
We therefore project that, as the overall spread of
cashless payments advances, a clear division between
the use of these three payment methods will be maintained. It is said that a similar division between payment
methods is already being seen in China. One reason
behind this division is that, while QR code payments
have the potential to function as a new payment method,they can also become a new means of making payments
through existing methods. For example, it is possible to
make credit card payments through one’s smartphone byusing QR codes if one links the credit card information
registered with their smartphone to a QR code payment
system. Payments through this method do not involve aphysical credit card and may appear to be QR code payments, but they are indeed credit card payments.
Apparently, many Chinese people select payment via
credit card, even when using QR codes, if they aremaking large-sum payments.

Figure 2: Trend toward Use of Credit Cards for Large-Sum Payments and QR Code Payments and E-Moneyfor Small-Sum Payments
Large sum (More than ¥5,000)

Cash
Approx.
¥40 trillion

Credit cards
Approx. 10 million
payment terminals

Approx. ¥60 trillion

Small stores(Mom-and-pop)

EPOS Pay
Launched in summer 2018

Large-scale stores(Chain stores)

Cash(Can be replaced by QR code payments)
Approx. ¥90 trillion

Prepaid cards / e-money
Approx. 1 million payment terminals
Approx. ¥10 trillion

Small sum (Less than ¥5,000)
Sources: MARUI GROUP CO., LTD. (Based on National Accounts of Japan, Cabinet Office; materials from Japan Consumer Credit Association; General Survey of Payment
Methods, Bank of Japan; General Survey of Electronic Payment Methods 2017–2018, CardWave Co., Ltd.; and other materials; excludes bank transactions andhousing loans)

11Message from the President

A similar trend can be seen with Apple Pay and otherservices already in use in Japan. Apple Pay allows users toregister their IC e-money card and credit card with theiriPhone. I suspect that the majority of users make payments via Apple Pay with their IC e-money card at transportation venues and with their credit card when making
larger-sum payments. Initially, it may seem as though the
spread of QR code payments and other payments via
smartphone has the potential to limit opportunities for
credit card payments. However, as illustrated by the examples I just explained, it is likely that usage of credit cards tomake payments will actually increase.

Introduction of EPOS Pay
QR Code Payment Service
MARUI GROUP fully intends to capture the opportunitythat QR code payments present. To this end, we launched
EPOS Pay, a QR code payment service that is tied to our
EPOS cards, in summer 2018. We are forming affiliate
agreements with business owners around Marui stores topromote usage of EPOS cards for small-sum payments instores where our cards previously could not be used. At
the same time, we will utilize the data collected as
through this service to conduct marketing activities thatoffer benefits for both customers and affiliates. We
thereby aim to create regional economic spheres centered on customers. Our goal is to differentiate ourselvesfrom competitors by developing a platform that enables
QR code payments to be made anywhere in Japan.

Collaboration for Growing E-Commerceand Sharing Economies
Two medium-to-long-term trends we anticipate will buoy
the growth of credit cards going forward are theSmartphone application that allows for­payments to be made by reading QR codes
at stores

12

proliferation of e-commerce and the development ofsharing economies. E-commerce has been a consistent
proponent behind the growth of credit cards. In fact, thegreatest contributor behind the growth of EPOS cards
in recent years has been the use of these cards throughe-commerce venues. With an eye to further promoting
the use of EPOS cards for e-commerce payments, weallied with GMO Payment Gateway, Inc., in May 2018.
Another driving force behind the growth of our credit
cards is recurring transactions, which include payments
for electricity, gas, water, and other utilities as well as for
smartphone bills. Going forward, we will be collaboratingwith ABLE. INC. with the aim of gaining access to recurringtransactions in a domain where credit cards previously
could not be used: rent payments. Together with ABLE,we will encourage customers to pay their rent with their
credit card.
Another form of recurring transaction is subscription
payments. Such payments are expected to become morecommon in conjunction with the development of sharing
economies and are therefore anticipated to contribute tofurther increases in recurring transactions. MARUIGROUP is collaborating with sharing facilitators offering
brand-name bags, luxury watches, clothing, and otheritems to encourage the use of credit cards for the recurring transactions their services entail. We therefore anticipate that the development of sharing economies will
drive growth in card shopping transactions.

Businesses That Are Not Dependent on
the Balance Sheet
It can be expected that credit card businesses will witness steady growth going forward if they are able to takeadvantage of the megatrends represented by the spreadof cashless payments, the proliferation of e-commerce,
and the development of sharing economies. However,this growth will not be without challenges. Specifically,
I refer to the risks of bloated balance sheets that stemfrom the expansion of credit card businesses and theinterest rate hike risks that accompany higher liabilities.
To address the risks of bloated balance sheets,
MARUI GROUP will enact a phased increase in theamount of liquidation of receivables from the prior 12%
to around 25%. Through this progress, we will seek toimprove funding reliability and achieve an optimal capital
structure by diversifying procurement methods. By realizing this level of liquidation, we should be able to keep

Message from the President

Figure 3: Revenue Sources and Balance Sheet Characteristics

Bolster stock-type businesses
that are not dependent
on balance sheet

Off-balance sheet assets
Rent
guarantee

tsumikiSecurities
Co., Ltd.

Affiliate
Platinum card
commissions annual fees
Rental dresses
Share houses

Flow-typeOmni-channel retailing(Specialty shops,
private-brandproducts)

Stock-type

Shopping­centers using
fixed-term
rental contracts

Onlinesales

Credit cards(Revolving payments,­installment payments)

On-balance sheet assets

total assets below ¥1 trillion in the fiscal year ending
March 31, 2021. This amount of assets should enable us
to maintain an equity ratio of 30% or more in this year,
even if receivables in our credit card services business
are higher than expected. At the same time, we will work
to improve capital efficiency by developing rent guarantee and securities operations and other businesses thatare not dependent on our balance sheet (Figure 3).
Our response to interest rate hike risks has included

upping the ratio of funding sources with fixed interest
rates; achieving a balanced mix of short-, medium-, andlong-term borrowings; and seeking to keep payments
level across fiscal years. As a result, the portion of borrowings that will be impacted by future interest rate hikes
will be limited, and we will be able to spread the impact
across a longer period of time. We therefore expect to beable to minimize the impacts of such interest rate hikes
on income.

Resolution of Social Issues through Co-Creation Sustainability Management
Strength of Business Model Integrating Stores,
Credit Cards, and the Internet
Lastly, I would like to explain how we are creating value
through new businesses. The end of the transition to
shopping centers and fixed-term rental contracts is now
in sight and our credit card services business has been
put on the growth track. Accordingly, we are now poised
to devote our efforts to developing new businesses
beginning from the fiscal year ending March 31, 2019.
We aim to develop new businesses that will drive thefuture growth of MARUI GROUP and contribute toimproved corporate value. In developing these businesses, we will not limit ourselves to the boundaries ofretailing and FinTech, and we will seek to devise businesses that leverage the strength of our business model
integrating stores, credit cards, and the Internet.
To date, MARUI GROUP has proceeded to develop
and cultivate new businesses that go beyond the boundaries of retailing and FinTech. The anime business is one
example. Over the two years since its launch, the anime
business has grown to boast annual transactions of ¥5.0
billion, or ¥3.0 billion on a lifetime value (LTV) basis.
Looking ahead, we will maintain our focus on the development of businesses that leverage the strength of ourbusiness model integrating stores, credit cards, and theInternet to resolve social issues. We hope that these13Message from the President

businesses will allow us to make progress in the practiceof co-creation sustainability management, which represents the next stage of MARUI GROUP’s evolution.

Invigoration of the Securities Business
The first step in this evolution will be the promotion offinancial inclusion. MARUI GROUP’s business began withinstallment payment sales. After issuing Japan’s firstcredit card in 1960, we have continued to provide credit
to people of all ages, regardless of their income. This
commitment to equal-opportunity credit is ingrained in
the very DNA of MARUI GROUP. We are therefore compelled to provide financial services other than credit foreveryone. We call this “financial inclusion” and havedefined it as part of our mission.
Our first forays into financial inclusion began with
our entry into the securities business in the fiscal year
ending March 31, 2019. Asset building has previously
been an area of services only available to a very limitedgroup of wealthy individuals. We aim to make these services available to younger generations and to everyoneelse. In the background of our decision to pursue thisgoal is the concern younger generations harbor for the
future. A survey released in June 2017 indicated thatnearly 60% of people belonging to younger generations
have concerns for the future in relation to money, inspiring them to save and conserve money. Meanwhile, manyof these people find themselves unable to move forwardwith asset building due to a lack of knowledge or apprehension regarding investment. At the same time, the ratio
of private financial assets accounted for by cash anddeposits in Japan is higher than in any other developed
country. In fact, the amount of cash and deposits inJapan is ¥900 trillion. This situation has resulted in slow
growth in financial assets in comparison to other countries, prompting the Financial Services Agency to encourage people to shift their assets from savings to asset
building. The goal of our securities business is to transform this concern for the future into hope and thereby
help resolve this social issue. As we are new to thismarket, we will utilize flexible thinking and other advantages of being a newcomer to invigorate our securities
business with a unique business model.
Specifically, our securities business will specialize insales of investment trusts applicable under Tsumitate
NISA in order to help younger generations build assets
steadily over extended periods of time. We have carefully

14

selected the trust managers we will partner with, choosing only those that share our ambitions, so that we canrecommend investment trusts with complete confidence.
This business represents Japan’s first scheme for making
cumulative investments via credit cards, EPOS cards
specifically. Our securities business will receive backup
through support and financial education provided at ourstores as we implement new branding and marketing initiatives utilizing the receptiveness that is characteristic ofretail. We thereby aim to grow this business to serve one
million users and handle a balance of ¥1 trillion in assets
within 10 years.

New Businesses That Resolve Social Issues
Shaping MARUI GROUP’s Future
Beginning with the securities business, MARUI GROUP
will undertake the simultaneous development of various
new businesses related to sharing economies, new foodbusiness models, and technology-powered personalization,
among other areas. The majority of these businesses will
represent efforts to commercialize initiatives for addressing social issues utilizing MARUI GROUP’s unique business model. We plan on accelerating co-creation withstart-up companies in developing such businesses. These
new businesses will shape the future of MARUI GROUP and
help us create new value alongside existing businesses.
I look forward to your ongoing support andunderstanding.
August 2018

Hiroshi Aoi
President and Representative Director
Representative Executive Officer

Messages from President Aoi can be accessed through the following links.
Fiscal Year Ended March 31, 2015:
Co-Creation Management Declarationwww.0101maruigroup.co.jp/en/ir/message/ceo_2015.html
Fiscal Year Ended March 31, 2016:
Co-Creation Management from a Corporate Value Perspective
www.0101maruigroup.co.jp/en/ir/message/ceo_2016.html
Fiscal Year Ended March 31, 2017:
Co-Creation Management Business Model
www.0101maruigroup.co.jp/en/ir/message/ceo_2017.html

Message from the President

MARUI GROUP’s Vision for the Co-Creation of Corporate Value

Customers

Business
partners

Investors

Expansion of
stakeholder interests(Happiness)

Communities andSociety

Employees

Corporate value

Intersection of all stakeholder interests

Expansion of this intersection

Improvement of corporate value

15

Dialogue 01“Good Companies” Achieving Both Economic andSocial Benefits to be Deemed Necessary to Society    

The concept of sustainability management, which entails working to achieve both economic and social benefits,
is gaining attention, and there are those long-term investors that have begun offering their full support to “goodcompanies” that are deemed necessary to society going forward. We arranged a discussion between Kazuhiro
Arai, founder of KAMAKURA INVESTMENT MANAGEMENT CO., LTD., and President Aoi of MARUI GROUP CO.,LTD., on the new potential that can be created through a focus on happiness, helpfulness, and inclusion.

Kazuhiro Arai

Hiroshi Aoi

Director
General Manager, Asset Management Division
KAMAKURA INVESTMENT MANAGEMENT CO., LTD.
(at time of discussion)

President and Representative Director
Representative Executive Officer
MARUI GROUP CO., LTD.

Asset Building and Society Building througha New Type of Finance    Aoi: Prior to starting up KAMAKURA INVESTMENTMANAGEMENT, Mr. Arai, I understand that you were at
the forefront of the financial field. Today, you are still in
finance, but on the opposite side of the field. What
prompted you to undertake this drastic change?
Arai: I realized that there was a limit to the extent towhich I could manage assets based on numbers. I previously worked at Barclays Global Investors Ltd. (currently
BlackRock Japan Co., Ltd.), which was then the world
leader in quantitative investment, which is based on
numbers. There, I treated investment as a science. I
would statistically analyze the performance forecasts ofanalysts from across the globe and use the results ofthese analyses to conduct stock trades in which trillionsof yen would change hands. However, I developed a serious, stress-related illness in 2007, which led to my decision to leave this company. It was then that I encountered
Nihon de Ichiban Taisetsu ni Shitai Kaisha (“TheCompany That Should Be Most Valued in Japan”), a book
written by Koji Sakamoto. This book transformed how I
viewed the world. Up until then, I only saw companies asthings to be traded based on numbers, but this bookmade me realize that companies are driven by people.
Looking to take an approach toward investment that was
the polar opposite of my previous approach, I started up
KAMAKURA INVESTMENT MANAGEMENT.

16

Aoi: So, you could say that you saw both poles of theinvestment world. However, one cannot help but thinkthat investment trusts would not function at the opposite
pole. How do you balance this new approach with theneed for functioning trusts?
Arai: KAMAKURA INVESTMENT MANAGEMENT provides an environment in which we can guarantee thereturns of 4% to 5% that represent the minimal necessary amount for customers’ asset building. The only otherconditions we care about are the social benefits of companies; we seek to invest in good companies that contribute to society. We cannot resolve social issues
without funding companies that are not concerned withprofits. Even if we do not realize profits in the short term,
if we invest in a mixture of companies that have grown tothe point of generating income and companies that are
not yet at this stage, we should be able to guarantee
returns for our customers. This type of investment basedon social benefits is what I wanted to do. I had hoped tobe the type of financier that companies need, and I
therefore committed myself to standing by companies inboth the good times and the bad times.

Entrenchment of Sustainability in Corporate
Culture as the Most Basic Growth Strategy    
Aoi: How many companies do you invest in?
Arai: We invest in 63 companies. We invest in companies that remain true to their vision or to their desire toDialogue 01“Good Companies” Achieving Both Economic and Social Benefits to be Deemed Necessary to Society

Kazuhiro Arai
Director
General Manager, Asset Management Division
KAMAKURA INVESTMENT MANAGEMENT CO., LTD. (at time of discussion)

After working at domestic trust banks and foreign asset management companies,
a serious illness prompted Mr. Kazuhiro Arai to establish KAMAKURA INVESTMENTMANAGEMENT together with four of his colleagues in 2008. Yui 2101, an
investment trust overseen by Mr. Arai, has continued to adhere to its uniquestyle of evaluating companies based on their benefits to society and disclosing
all investees. On July 31, 2018, this trust boasted more than 19,000 private
investors and net assets of over ¥37.2 billion. Mr. Arai has written books on
topics such as how to achieve success through principled investment, the knowledge of work and money held by happy people, and sustainable capitalism.

17Dialogue 01“Good Companies” Achieving Both Economic and Social Benefits to be Deemed Necessary to Society

I wanted to make a community that is notpreoccupied with money. I see the most fundamental
purpose of financing as bringing joy
to all parties involved.
Kazuhiro Araibe a good company. We have withdrawn investment
from a total of seven companies in the past. The reasonsfor these withdrawals have included acquisitions, delisting, and other formal issues. Other reasons have involved
changes in policies following the appointment of new
managers that made it impossible for us to continue pursuing the social good together with these companies.
Aoi: It is common for Japanese companies to change
their leader once every four years. Changes in leadershipbring changes in management policies, and the new policies can sometimes be 100% different from the priorpolicies. I believe it would be better for companies tokeep the same leader for at least a decade. If not, it will
be impossible to truly root the idea of being a good company or of sustainability within a company.
Arai: I agree completely. This is one of the reasons thatmany of the companies we choose for investment are
still led by their founder or are family businesses.
Aoi: The majority of companies that keep the sameleader over the long term are of this nature. I see this asa serious issue. When thinking about the future, it seems
apparent that other companies will also need to installlong-term leadership if we are to realize a sustainable
society. I recently had the opportunity to speak with anindividual from Marks & Spencer Group plc of the United
Kingdom. This individual stated that sustainability is themost basic growth strategy and that view did not need tochange no matter who managed the company. This commitment to sustainability has entrenched this concept in
the corporate culture of Marks & Spencer throughout its
124-year history.
Arai: It takes a decade or two for a manager to shape thecorporate culture of their company. I think that the restraint18

function of corporate governance should actually bedesigned to ensure that managers and employees areremaining true to the purpose of their company and thatthe appropriate corporate culture is being fostered. The
belief that it is better to replace managers after short terms
in office may be common, but this belief is mistaken.

Managers’ Resolution to Shape Society through
Their Business as Important Aspect of ESG    
Aoi: I think that the evaluation of companies based on
ESG factors is a positive trend.
Arai: The concept of ESG itself is a positive development. However, if we only focus on raising scores using
ESG evaluations, then there is a risk that all companies
will end up becoming the same. Individuality and resolution are of utmost importance to companies. People
cannot be inspired by a lack of resolve. Sometimes, mycustomers lodge complaints citing the unclear nature of
a company’s business. When I receive such a complaint,
I go speak with the management of the investee, looking
to see the resolve of managers. I want to see the commitment of management to shape society in a certain way
through their business. If I do not see such resolution,
I will not feel compelled to invest in a company.
Aoi: MARUI GROUP preaches the overarching values ofco-creation and inclusion. Nonetheless, when I asked
several new recruits why they wanted to join the
Company, I was still surprised when all of their answers
involved our commitment to inclusion. A strong message
will attract a strong response. This realization has reaffirmed my commitment going forward.
Arai: The future of a company is decided by its

Dialogue 01“Good Companies” Achieving Both Economic and Social Benefits to be Deemed Necessary to Society

employees, and the opinions of employees are a company’s most important intangible asset. The happiness of
employees and the atmosphere of a company are factorsthat we are not yet able to quantify. Nonetheless,
KAMAKURA INVESTMENT MANAGEMENT is currently
researching means of tracking these metrics. We hopethat such research will help us ensure that these assets
are evaluated.

Fundamental Purpose of Financing as Bringing Joy    
Aoi: What type of customers does KAMAKURAINVESTMENT MANAGEMENT serve?
Arai: All of our approximately 19,000 customers have ahigh degree of social awareness and most are in their 30s
or 40s. Around 60% of these customers conduct cumulative investments. We have committed ourselves to standing by the companies we invest in, even during when
performance is bad. This resolve was tested by the Great
East Japan Earthquake. After the earthquake, many funds
saw an outflow of capital as investors predicted catastrophic damage to the Japanese stock market. However,
not one of our customers canceled their accounts.
Aoi: If one predicts a downturn in the Japanese stock
market, they will likely immediately sell their holdings.
I find issue with this common practice.
Arai: The reason we focus on investment trusts is
because I wanted to make a community that is not preoccupied with money. I see the most fundamental purposeof financing as bringing joy to all parties involved. To fulfill this purpose, it is crucial to create a financing schemethat goes beyond a simple business model.

Corporate Growth by Continuously Helping
Customers and Society    
Arai: I have made use of Marui in the past. The Marui of
today is much different than before.
Aoi: I became president of MARUI GROUP in 2005. At
this time, I looked back at our past to try and ascertain
how the Company had managed to continue growing
over the 70 years since its founding. What came to mind
was customers saying that they had “made use of Marui,”a sentiment I had been hearing since I was a child. They
did not say “I went to Marui” or “I shopped at Marui,” butrather they said “I made use of Marui.” I then came torealize that the core value driving our growth over the
past 70 years was the aspect of Marui that made customers hold this sentiment. Customers’ “I made use of”
translates to “we helped” from the perspective of theCompany. This realization made me recognize that our
struggling performance back then was a consequenceof Marui’s diminished ability to be of help to customers.
Faced with this wall, I was reminded of our corporate
philosophy, which inspired me to commence management reforms. It is for this reason that what you, Mr. Arai,do and say resonates so much with me.
Arai: My expectations for MARUI GROUP in the future
are very simple. Rather than clinging to the MARUIGROUP of the past, I want you to develop a MARUIGROUP of today. The concept of inclusion that you mentioned will likely be key to accomplishing this objective.
The younger generations are empowered. Accordingly,
if you can attract individuals from these generations, youwill be able to attract anyone. I hope to see you grow
MARUI GROUP into a place where people gather, a basefor social activity.

Customers’ “I made use of” translates to“we helped” from the perspective of
the Company.
Hiroshi Aoi

19

SECTION 02

Co-Creation Sustainability
Management Value Creation Model
CONTENTS
22

Co-Creation Sustainability Management Business Model
22

Pioneer Spirit of Creating Opportunities

24

Business Model Integrating Stores, Credit Cards, and the Internet

26	Unique Pure Holding Company System Contributing
to Integrated Thinking
28	Framework of Business Model Integrating Stores, Credit Cards,
and the Internet
30

Identification of Four Core Themes for Inclusion

32

Creation of an Inclusive and Flourishing Society

34

Dialogue 02: Financial Inclusion as Viewed from the Perspective of Microfinance38

MARUI GROUP’s Vision for Financial Inclusion
38

50

20

Promotion of Financial Inclusion for the Benefit of Everyone

40

Japan’s First Securities Business Driven by Credit Cards

44

Dialogue 03: Contributions to the Happiness of All Customers through Cumulative Investments

48

MARUI GROUP Employees Supporting the Securities Business

MARUI GROUP’s Unique Integrated Management Approach
50

Profession Change System for Fostering Empathy and Innovation

52

Cultivation of an Organization That Creates Innovation through Diversity

54

Work Style Reforms Creating a Venue for Contributions of All Employees

56

Revision of Evaluation Systems and Desired Characteristics in Employees

58

Dialogue 04: Unique Integrated Group Management Enabling Co-Creation
Sustainability Management

62

Strong Support for Inclusion

21

Co-Creation Sustainability Management Business Model

Pioneer Spirit of Creating Opportunities
Over the 87 years since MARUI GROUP’s founding, we have continued to adhere to our commitment to a pioneer
spirit of creating opportunities, a principle advocated by our founder. This spirit has driven us to continuously
innovate and evolve our business model, which began with installment sales and integrates stores, credit cards,
and the Internet, in conjunction with changes in the times and in customer needs. A look back at the past suggeststhat MARUI GROUP’s business has always focused on the concept of inclusion that we are advocating today.

Post-War Japanese Economic Miracle

Japanese Asset Price Bubble

Accumulation of physical goods

First Great
Innovation

Customers

New families

Customers

Younger generations

Products

Furniture, consumer electronics,
and other durable goods

Products

FashionCredit cards

Akai Card (Red Card) in-housecredit card

Credit cards Japan’s first credit card
StoresSecond Great
Innovation

Monthly installment payment
storesStoresDepartment stores
FY1991
Achieved peak
performance
EPS: ¥103.2

1966
Introduced industry’s first computer
1960
Issued first credit card in Japan

Earnings per share (EPS)
1931 Founding

Fiscal year ended
January 31, 1973

Fiscal year ended
January 31, 1980

Fiscal year ended
January 31, 1990MARUI GROUP of Installment Payments

MARUI GROUP of Fashion

Founder: Chuji Aoi

Second leader: Tadao Aoi

Period as president: 1931–1972 (41 years)

Period as president: 1972–2005 (33 years)

MARUI GROUP’s business initially involved selling furniturethrough monthly installment payments. Furniture in thosedays was exceptionally expensive, meaning that somepeople lacked the on-hand funds necessary to purchase furniture. We sought to include these individuals and address
this issue through sales on installment payments, a schemethat merged retail and finance. The Company continued tocontribute to affluence in each coming era by developing
department stores that offered installment payment plans,
issuing Japan’s first credit card, and eventually introducing
the industry’s first computer.

In the 1980s, the need for credit sales of durable goods
declined, leading other stores using the monthly installment
payment system to abandon retailing to focus on finance.
MARUI GROUP, meanwhile, turned its attention to the growing field of fashion. This transition enabled us to include theyounger generations that had previously been a neglected
demographic. We thereby were able to stimulate new credit
demand, revolutionizing credit sales without abandoning
retail. As a result of this strategy, we achieved our peak
­performance in 1991.

Co-Creation Sustainability Management Business Model

MARUI GROUP’s Founding Spirit
Words of Founder Chuji Aoi“Creditability should be built together with customers”
Unique business model merging retailing and finance“Pioneer spirit of creating opportunities”
Adeptness at evolving and creating innovation in response to the needs of the times

Age of Declining Birthrates and Aging Populations
Pursuit of more-fulfilling lifestyles and market maturity

Third Great
Innovation

Customers

All ages (everyone)

Products

Lifestyle proposals

Stores

FY2006
Began issuing
EPOS cards
EPS: ¥70.4

FY2007
Revision of
Money Lending
Business Act
EPS: ¥12.9

FY2021
Promotion of financial inclusion
EPS: Target of ¥130 or more

Credit cards Multipurpose EPOS card

Real estate model

FY2009Recorded first loss due inpart to financial crisis of 2008
EPS: –¥31.9

FY2018
EPS: ¥93.2

FY2011
Recorded second loss
Commenced massive
business restructuring
EPS: –¥86.4

FY2019
Entry into
securities business
EPS: Target of ¥110
(record high)
FY2015
Stabilized earnings
structures of stores
EPS: ¥58.9

Fiscal year ended
January 31, 2000

Fiscal year ended
March 31, 2006

Fiscal year ended
March 31, 2010

Fiscal year ended Fiscal year ending
March 31, 2018 March 31, 2021

MARUI GROUP of Inclusion
Third leader: Hiroshi Aoi
Period as president: from 2005

Due to the impacts of the revision of the Money Lending
Business Act and the 2008 financial crisis, MARUI GROUP
was forced to record losses on two occasions. This development spurred MARUI GROUP to pursue innovations in threeareas. In customer base innovation, we drastically realigned
our focus from catering primarily to younger generations todeveloping a business that wins the favor of customers of allages, genders, and physical characteristics. Credit cardinnovation led to the launch of the multipurpose EPOS cardin 2006, an evolution of our prior in-house cards thatbrought further change as our earnings began to come less

4897

GOOD
THRU
有効期限

MONTH / YEAR

from cash advances and more from card shopping transactions. As for retailing innovation, we started transitioning ourstores from the consignment buying system, which entails
procuring and selling products, toward real estate-model
shopping centers to enable them to provide both goods andexperiences. This business structure transformation stabilized the earnings of stores. In addition, the transformation
made it possible to undertake co-creation store development initiatives with customers and increase the number ofvisiting customers and purchases.

Co-Creation Sustainability Management Business Model

Business Model Integrating Stores,
Credit Cards, and the Internet
Through the business reforms that began in 2006, we have been undertaking a massive transformation in
MARUI GROUP’s stores and credit cards while leveraging the platform provided by the Internet to createa business model integrating stores, credit cards, and the Internet. Rather than developing operations in eachof these areas on an individual basis, MARUI GROUP aims to expand the intersection between these businesses
to create joy for customers through a concerted effort.

Expansion of Business Model Integrating Stores, Credit Cards,
and the Internet through Integrated Group Management

StoresPhysical stores welcoming
200 million customers a year

Expansion ofintersection between
stores, credit cards,
and the Internet

Credit Cards

Internet

6.6 million
cardholders

Platform provided
by the Internet

Total Group Transactions

Group Employees¥2,189.4 billion

5,548

In the fiscal year ended March 31, 2018, total Group transactions
rose 13% year on year, exceeding ¥2 trillion for the first time. Of thisamount, approximately 70% was attributable to card shopping transactions in the FinTech segment.

The average number of consecutive years of service for employees is20; 44% of the Group’s employees are women; and 43% of employees have experienced intra-Group profession changes.

24

Co-Creation Sustainability Management Business ModelStores of the Future Not Focused on Selling

StoresMARUI GROUP is currently in the process of transitioning away from stores using the consignment
buying system, which entails procuring and selling products, toward real estate-model shopping centersand fixed-term rental contracts. This transition is scheduled for completion in the fiscal year ending
March 31, 2019. As a result, our earnings structure will shift from generating income from net consignment revenues to receiving rent revenues. This transition has laid the groundwork for our efforts to create
the stores of the future. Capitalizing on the customer bases and customer service expertise cultivatedthrough the operation of conventional stores, these new stores will not focus on selling products or services. Rather, they will offer value in the forms of experiences and a sense of community.

Physical stores

Total of 26 Marui and Modi stores in major cities and other locations across Japan
Epos Card Co., Ltd., employees stationed at stores to provide customer service(stationed at 22 facilities not operated by MARUI GROUP)
Specialty stores (located at 7 facilities not operated by MARUI GROUP)

Omni-channel

Try-on stores in which customers can try on products in stores and purchase
via the Internet

Credit Cards Encouraging Long-Term Use by Everyone

Credit Cards

Group company Epos Card Co., Ltd., has accumulated big data through its years of engaging in the­co-creation of creditability with its 6.6 million cardholders, who are largely composed of people fromyounger generations. Committed to our mission of promoting financial inclusion, we will endeavor toutilize such assets to develop credit cards that encourage long-term use by everyone, regardless of age
or income. Moreover, we aim to go beyond the limits of our previous cards, which primarily provided
payment, lending, and other settlement-related services, to supply cards that offer asset building anda wide range of other services.

Characteristics
and scaleAround 6.6 million cardholders largely comprising people from younger generations
Card shopping transactions totaling ¥1,600.9 billion, up 15% year on year, in the fiscal
year ended March 31, 2018
Transactions at external facilities and Internet shopping sites accounting for 93% of
total card shopping transactions

Expanded scopeFirst cards to be issued for foreign exchange students in Japan
Cardholder growth achieved through anime business
Evolution from cards focused on settlement services to cards offeringvarious financial services

Platform Tailored to Individual Customers Realized
through Enhanced IT

InternetThrough its operations merging stores and credit cards, MARUI GROUP has developed IT and information systems as well as a distribution platform. We have also been taking steps to enhance our IT andother foundations through means such as the establishment of the Digital Transformation Promotion
Department in 2018. Through these enhancements, we will merge our stores and credit cards in amanner that accommodates the current age of the Internet and smartphones to create a platform tailored
to individual customers that can be applied to our e-commerce, securities, and other new businesses.
E-commerce

Proprietary “marui web channel” Internet shopping site and partnership with externalInternet shopping sites

Intra-Group
coordination

IT systems supporting integration of retailing and finance
System staff with retailing and finance experience
Big data accumulated through co-creation of creditability

Enhancement ofplatform

EPOS card user interface built specifically for smartphones
Intra-Group distribution systems supporting Internet sales

25

Co-Creation Sustainability Management Business Model

Unique Pure Holding Company System
Contributing to Integrated Thinking
We adopted a pure holding company system in 2007. This move clarified the roles of Group operating companies
and of MARUI GROUP CO., LTD., and made it possible to develop a business model integrating stores, credit
cards, and the Internet. Later incorporating the perspective of inclusion into management gave rise to a cycle inwhich the expansion of the intersection between stores, credit cards, and the Internet contributed to the growth of
the intersection between the interests of stakeholders, driving further increases in the intersection between stores,
credit cards, and the Internet, forming a structure like a Moebius strip.

Outward Propulsion and Unifying Force of Management
MARUI GROUP differs from a standard pure holding
company in that all Group employees are hired throughthe Company and that, even if an employee is appointed
to an operating company, they will still have access to thesame shared human resource systems available at theCompany. This framework makes it possible for employees to undergo profession changes between Group companies and for us to arrange Groupwide project teams inwhich employees transcend the boundaries of theiroperating companies to discuss management issues.
These features of our framework are what make our business model of integrating stores, credit cards, and theInternet possible.
Our goal in adopting the pure holding company
system was to simultaneously heighten the outward propulsion and unifying force of our integrated Group management. As operating companies grow, exercising theirindividual specialties and expertise in the process, they
exhibit an outward propulsion that drives them awayfrom the rest of the Group. For this reason, if we do notalso increase the unifying force of our management, ourbusiness model based on Group integration, a corestrength of MARUI GROUP, will lose its potency. The taskof heightening this unifying force lies with the pure holding company. Having all Group employees be, in essence,
employees of the pure holding company effectively creates a unified MARUI GROUP, which in turn allows for thebalanced exertion of outward propulsion and unifying
force. The unifying force is perhaps most aptly symbolized by the new business of tsumiki Securities Co., Ltd.
As seen in this business, this force allows us to combine
the expertise, knowledge, and other human and intellectual capital of Group companies to transform these formsof capital into the organizational capital of the Group.

Organization of the Group after Adoptionof the Pure Holding Company System
Batch hiring of all employees, shared human resource systems
MARUI GROUP CO., LTD. (pure holding company)
MARUI CO., LTD.
Epos Card Co., Ltd.
AIM CREATE CO., LTD.

tsumiki Securities Co., Ltd.

26

Expansion of intersection between stores,
credit cards, and the Internet

Co-Creation Sustainability Management Business Model

Integrated Thinking Spawning Both Corporate Value and Social Value

Inclusion
perspective

increases in both. This relationship makes it possible for
MARUI GROUP to create corporate value over the longterm while simultaneously generating value for stakeholders and for all of society.
Scope of Thinking and Timeframe
Scope

Earth

Sustainability
management

Pure holding
company

Society

Industry

Company

Operatingcompanies
New businesses
Existing businesses
Short termLong term

Timeframe

Another major goal of the adoption of the pure holding
company system was to incorporate a long-term perspective into management. The longer the timeframe
used when thinking about corporate management, themore the scope of thought will broaden, spreading fromthe Company to include the industry and eventually thewhole of society. The presidents of operating companies
are required to pursue earnings based on a relatively
short-term perspective while the president of the holding
company is expected to adopt a long-term perspective
for addressing sustainability and social issues. It is
incredibly difficult for the same person to fulfill both ofthese roles. Based on this realization, we adopted thepure holding company system in part to clarify the distinction between these two roles. This system has thus
made it possible for management to engage in integrated
thinking aimed at realizing Groupwide optimization thattranscends the differences and contradictions between
individual businesses, thereby enabling the developmentof a business model integrating stores, credit cards, andthe Internet.
Having incorporated the perspective of inclusion into
management, MARUI GROUP views the expansion of theintersection between stores, credit cards, and theInternet as being interconnected with the growth of theintersection between the interests (happiness) of stakeholders, forming a relationship that can be illustrated asa Moebius strip in which an increase in one intersection
drives the growth of the other, prompting us to pursue

Growth of intersection between
interests of stakeholders

27

Co-Creation Sustainability Management Business Model

Framework of Business Model Integrating
Stores, Credit Cards, and the Internet
MARUI GROUP’s business model, which integrates stores, credit cards, and the Internet, is supported by a framework for transforming the isolated strengths dispersed throughout the Group into the strength of the entire Group.
By advancing its business activities as a unified whole, MARUI GROUP aims to create a business that makes ongoing and wide-reaching contributions to society in order to forge longer lasting relationships with customers.

Integrated Group Management Underpinning Business Model Integrating
Stores, Credit Cards, and the Internet
Transformation of Isolated Human Capital into Organizational Capital of the GroupMARUI GROUP possesses four strengths that enable it to transform isolated strengths into the organizational capital of
the Group. MARUI GROUP’s practice of integrated Group management provides the foundation that gives rise to thesestrengths. When isolated, our precious human capital cannot be effectively translated into the strength of the organization. However, when we are able to transform this human capital into the strength of the Group, into organizational
capital, through co-creation with customers and other stakeholders or through MARUI GROUP’s corporate culture, we
can utilize this capital to create value through our business model that integrates stores, credit cards, and the Internet.
P50 MARUI GROUP’s Unique Integrated Management Approach

Customers and other stakeholders

Input

Exchanges
Diverse perspectives

In-store customer service experienced by
all employees after joining

Personnel exchanges between Group companies
through profession changes

Business processes premisedon co-creation with customers

Groupwide project teams for discussing
management issues

Four Strengths
Supporting Business Model
Integrating Stores, Credit Cards,
and the Internet

Co-creationof value

28

Empathy
Perspective as other

Innovation

Unification

Problem-solving perspective

Integrated perspective

Creation of new industries from
inclusion perspective

Integrated Group management made possible
through pure holding company system

Co-creation with start-ups and other companies

Shared Groupwide human resource andcompensation systems

Co-Creation Sustainability Management Business Model

Earnings Structure Targeted in MARUI GROUP’s Main BusinessBusiness Forging Long-Term Relationships with Customers
MARUI GROUP believes that, by drastically altering its prior business approach, it can forge relationships with customers
that continue over even longer periods. Rent guarantee and asset building services entail relationships in which recurringtransactions are conducted with customers over periods of 3, 5, 10, or even 20 or more years. Accordingly, these services encourage customers to use their EPOS cards as their main credit card and thereby contribute to increases in thenumber of Gold cardholders. In the future, we anticipate that the co-creation of creditability through the forging of suchlong-term, trusting relationships with customers will be more important than ever.
P38 Promotion of Financial Inclusion for the Benefit of Everyone

LTV Generated through Recurring Income
Previously, our earnings structure has focused on product sales. This earnings structure faced a serious issue in terms ofthe volatility of earnings as performance in retailing can be heavily impacted by external factors, such as weather, foreignexchange rates, and trends in inbound travel in Japan. However, by advancing the transition to shopping centers andfixed-term rental contracts, we are shifting the source of our earnings from product sales to rent revenues. In addition,
we anticipate a relative increase in payments for recurring transactions and subscription services through credit cards.
These two changes will expand the portion of our earnings that is accounted for by recurring income. This trend is
expected to contribute to stable growth in the overall lifetime value (LTV) of the Group as we accumulate earnings.
P66 Medium-Term Management Plan
Projected Path of Improvement of LTV through Accumulation of Recurring Income
Previously

Going Forward

Earnings structure heavily influenced by external factors

Stabilization of LTV through recurring income
Product
sales

Product
sales

A
RecurringincomeB

Recurringincome
1st year

2nd year

3rd year ……………………………

1st year

2nd year

3rd year ……………………………………………………………
A. Recurring transactions, subscription services, etc.
B. S
 table revenues from transition to shopping centers andfixed-term rental contracts

Transformation of Intellectual Capital into Financial Capital
Rental guarantees, cumulative investments, and sharing services are all businesses in which MARUI GROUP will be able
to exhibit greater strength the more it amasses intellectual capital and other management resources. By utilizing suchintellectual capital in the integration of stores, credit cards, and the Internet, MARUI GROUP aims to transform this capital by operating its business without depending on significant amounts of assets and liabilities and thereby limiting total
assets. Through this approach, we will target stable increases in return on invested capital.
P85 Target Balance Sheet

29

Co-Creation Sustainability Management Business Model

Identification of Four Core Themes for Inclusion
In November 2016, MARUI GROUP defined four core themes for inclusion as it redefined the focus of its businessof serving all customers from the perspective of inclusion. By commercializing these themes through our businessmodel integrating stores, credit cards, and the Internet, we aim to expand the intersection between the interests ofstakeholders.

Core Theme 1

Core Theme 2

Customer Diversity and Inclusion

Workplace Inclusion

We will seek to develop products, services, and stores thatbring joy to all customers, regardless of their age, gender, or
physical characteristics.

Based on MARUI GROUP’s corporate philosophy of striving
to “continue evolving to better aid our customers” and“equate the development of our people with the development of our company,” we will provide all employees withvenues through which they can excel.
Inclusive Store Development 

P77

Development of an Organization That Utilizes Diversity  P52

Inclusive Product Development 

P79

Healthcare Management 

P55

Financial Inclusion 

P38

Human Resource Investments 

P70

Core Theme 3

Core Theme 4Ecological Inclusion

Co-Creation Corporate Governance

We will develop businesses with low environmental impact,
and contribute to the realization of a low-carbon society anda circular economy, and propose ecologically sound lifestyles
that are in harmony with nature and the environment.

We will develop management frameworks that include stakeholders in order to achieve harmony between the interests
and the happiness of all stakeholders.


Environmental Footprint Reduction P101

Co-Creation with Stakeholders

Product Initiatives

Sustainability Management 

Responsible Procurement

Cultivation of Future Leaders 

P97

Innovative Services

Risk Management 

P100

30

P65

Co-Creation Sustainability Management Business Model

More detailed information can be found on our corporate website.
www.0101maruigroup.co.jp/en/sustainability/themes/

Process for Establishing Core Themes

Stakeholder Engagement
STEP 1

In identifying the expectations for MARUI GROUP as well as the themes it should prioritize, we held meetings with longterm investors, ESG-minded investors, sustainability experts, nonprofit organizations, and other stakeholders in thegreater society as well as with customers, business partners, and Group officers and employees.

Identification and Organization of Social Issues
STEP 2

With a focus on co-creation management; the impact of this co-creation management on the economy, society, and theenvironment; and its relationship with our medium-term management plans and human resource strategies, we identified
and organized the issues facing society while referencing internal and external guidelines, such as those of ESG-rating
institutions, the Global Reporting Initiative, ISO 26000, the Sustainability Accounting Standards Board, and theInternational Integrated Reporting Council, along with the SDGs.

Management-Level Discussions and Decisions
STEP 3

At meetings of a committee headed by the president, a series of discussions were held among the relevant officers anddivisions to decide four core themes pertaining to inclusion. Responsibility for these themes was assigned to the
Sustainability Department and the ESG Promotion Department, and the themes themselves were disclosed in
Co-Creation Sustainability Report 2016 and in the sustainability section of MARUI GROUP’s website.

Verification of Activities and Quantification of Results
STEP 4

Activities are verified at least once a year as we continuously practice engagement with stakeholders. Taking into consideration issues pointed out by stakeholders, we have been preparing a long-term vision based on the four core themes
and are examining possible key performance indicators that can be disclosed with regard to those themes for which targets can be set. Corporate governance frameworks that include stakeholders will be an important theme for MARUIGROUP as it seeks to incorporate sustainability into its management.

Major Initiative Matrix● Inclusive productdevelopment
Highly material■R eduction initiatives
related to private
brand products

Material

Materiality for Stakeholders

 ealthcare manageH
ment underpinningpersonal growth evelopment of anDorganization thatutilizes diversity■ Groupwide environmental impact reduction initiatives■R evolutionary services
contributing to reduced
environmental
impacts● Financial inclusion● Inclusive store
development

 ultivation of futureC
leaders■R esponsible procurement activities withbusiness partners

 o-creation withC
Stakeholders

 uman resourceH
investments for new
growthRisk management

Sustainability
Management

Material

Highly material

Materiality for MARUI GROUP
Customer Diversity and Inclusion

Workplace Inclusion

Ecological Inclusion

Co-Creation Corporate Governance31

Co-Creation Sustainability Management Business ModelCreation of an Inclusive and Flourishing Society
MARUI GROUP practices forward-looking co-creation sustainability management that leverages its core value—
the co-creation of creditability. As part of this practice, we have identified social issues for the Company toaddress from the perspective of inclusion, and we are commercializing initiatives for addressing these issues
through our business model of integrating stores, credit cards, and the Internet. We thereby aim to simultaneously
improve corporate value and resolve social issues. The new businesses born out of this process will drive thegrowth of the MARUI GROUP and eventually become the main focus of its operations.

Inclusion as Both a Philosophy
and a Business Strategy
Co-creation is, at its core, the quest to realize an inclusive society. A society cannot be said to be happy if happiness is only provided to certain groups. Rather thanfocusing on bettering the Company, MARUI GROUP iscommitted to addressing social and environmental issues
through co-creation with its stakeholders. In this manner,
we view inclusion as both a philosophy and a businessstrategy.

Business Model Integrating Stores,
Credit Cards, and the Internet

StoresConcern for the future among younger generations
Increasingly more serious global environmental issues
Digital divide stemming from the spread of the Internet

Commercialization of
New Initiatives throughBusiness Model Integrating Stores,
Credit Cards, and the Internet
Existing Business

Expansion ofintersection
between stores,
credit cards,
and the Internet
Credit Cards

Social and Environmental Issues
Declining birthrates and aging societies

Existing Business

Existing Business

Existing Business

Internet

Co-Creation of Creditability

Perspective of Inclusion

Core value of MARUI GROUP based ona belief of the founderTransformation of existing businesses based ona new way of thinking about businessFirst step of financial inclusion (securities business)32

Co-Creation Sustainability Management Business Model

A Flourishing and Inclusive Society
Offering Happiness to All

Main Focus of MARUI GROUP’s
Operations Going Forward

Simultaneously improving
corporate value andresolving social issues

Co-Creation of Happiness
Expansion of the intersection between
the interests of stakeholders

33

Dialogue 02

Financial Inclusion as Viewed from the Perspectiveof Microfinance    

The idea of microfinance advocated by Grameen Nippon and the concept of financial inclusion promoted by
MARUI GROUP are connected on a level that exceeds the boundaries of each organization. The following is a conversation between two individuals that met Grameen Bank founder Professor Muhammad Yunus around the sametime and that both have visions for finance that opens itself toward the future. Sharing the same ideals, these two
individuals will discuss the potential of financial inclusion.

Masahiro Kan

Hiroshi Aoi

President
Grameen Nippon

President and Representative Director
Representative Executive Officer
MARUI GROUP CO., LTD.

Meeting with Grameen Bank Founder
Professor Muhammad Yunus    
Aoi: My first encounter with Grameen Bank founderMuhammad Yunus came at a lecture he delivered inJapan in 2007. This experience prompted me to establish Social Business Platform, a general incorporated
foundation, with my friends. We invited Professor Yunus
to serve as a special advisor to this foundation. Mr. Kan,
I would like to ask how you met Professor Yunus and

Masahiro Kan
President, Grameen Nippon

Born in Fukushima Prefecture, Mr. Masahiro Kan was involved in financial policy
at the Ministry of Finance and served as an executive director for Japan at theWorld Bank Group before he became a professor at Meiji Gakuin University in2017. A meeting with Professor Yunus in 2008 proved to be a turning point in
his life. Committed to promoting microfinance in Japan, Mr. Kan created the preparatory institution that would become Grameen Nippon with his colleagues inAugust 2017. Grameen Nippon was formally established and commenced operations on September 13, 2018.

34

what inspired you to create Grameen Nippon.
Kan: I first met Professor Yunus in 2008 on a visit toGrameen Bank in Bangladesh. Even today, I still vividly
remember the professor’s explanation of how micro­
finance was without a doubt applicable to Japan. It tooka decade, but I was finally able to establish Grameen
Nippon in 2018. I had previously been involved in government finance and financial policy at the Ministry of
Finance. A major turning point came when my family’s
liquor store, which my uncle had taken over, was forcedDialogue 02
Financial Inclusion as Viewed from the Perspective of Microfinanceto close around 2004. Seeing how those around him
reacted to the closure, I was shocked at how cold others
were to him. I did not want to live in a cold society when I
grew older. My first encounter with microfinance andProfessor Yunus came when I was mulling over thesefeelings. After this encounter, I came to view my priorgovernment experience as having been the preparation
for microfinance. Each subsequent time I met Professor
Yunus, I left feeling even more empowered. The professor is truly the person I respect the most in this world.
Aoi: It was around the time of my first encounter withProfessor Yunus that I was searching for ways to contribute to society through our main business. Not finding ananswer, I remember being moved by the creative idea ofProfessor Yunus to “put poverty in the museum.” Up untilthat point, the common approach was to use the earnings of one’s business to fund charities or CSR activities.
However, the professor advocated an idea for social
businesses in which dividends are not paid because
investments are used to fund the actual business.
Kan: One of Professor Yunus’ Seven Principles of Social
Business is “Investors get back their investment amountonly. No dividend is given beyond investment money.”
Under this principle, if an investor puts ¥10,000 into asocial business, they will only get that ¥10,000 back,even if the business grows this ¥10,000 to ¥12,000 or¥13,000. A normal public company would return the
additional ¥2,000 or ¥3,000 to investors in the form of
dividends, but the dividends issued by a social businessare zero. Any returns that exceed investments are used to
improve and expand the social business.
Aoi: Listed companies like MARUI GROUP seek to realizesocial contribution through their business by paying dividends. Accordingly, Professor Yunus’ ideas were moststimulating. We define corporate value as being represented by the intersection between the happiness of all
stakeholders. I arrived at this idea when my way of viewing the world was transformed by Professor Yunus, leading me to see intersections between concepts I previously
thought to be completely separate.

Mutual Trust Bridging Gap Created byInformation Asymmetry    
Aoi: Grameen Bank has arms in both developing countries and developed countries like the United States.
What type of customers do you serve in Japan?
Kan: The individuals that come to borrow money from
Grameen Nippon are people with a desire to work but
who are unable to do so because of their own poverty.
For example, we cater to single mothers looking to35

Dialogue 02
Financial Inclusion as Viewed from the Perspective of Microfinanceimprove their lives through work, members of the working poor who are proactive toward work, and other individuals that have previously been excluded from financial
services. The only condition for receiving financing is forborrowers to form mutual aid groups of five people.
Loans are then provided with no need for collateral or
guarantors. In this manner, we simultaneously supply theseed money for funding their aspirations and provide an
opportunity to work or give support to their job search.
Borrowers can start their own business or look for
employment. Those that want to become a care worker,
financial planner, or some other specialist can receive
funds to cover the tuition payments for obtaining thenecessary qualifications or education.
Aoi: Is the need to form groups of five a standard worldwide rule for Grameen branches?
Kan: Yes, the group of five rule is a core aspect ofGrameen Bank’s approach, and Grameen Nippon also
requires prospective borrowers to form mutual aid
groups of five people. We provide funds to people thatwant to work but lack the money without asking for collateral or guarantors. A normal bank would not loan
money under such conditions. The true goal of financing
should be to supply money to the people who really needit, but the reality of finance is much different. This isbecause we are unable to resolve information asymmetryissues. The Grameen model aims to address this issue by
having borrowers form groups of five and holding weekly

meetings among these groups. In other words, you could
say that we will not provide financing if borrowers cannot
build trust among themselves. Mutual trust is therefore
crucial to our approach to financing.

Overlapping Ideas from Different Backgrounds    
Aoi: MARUI GROUP’s credit card services business is not
only unique in that it arose from a retailing business but
also in the credit philosophy that has guided it since its
inception. We do not assign customers credit limits
based on their income, assets, age, or job. Rather, allcustomers start off with low credit limits that are gradually increased in conjunction with their usage amounts
and payment histories. Although most credit card businesses only achieve return on invested capital of
between 1% and 2%, we boast a return of 3.8%. One
reason for this difference is that around half of our cardholders are in their thirties or younger. While they may
not have a lot of income or assets, they spend a lot due
to life events, such as renting housing, getting married, or
having children. As a result, their card usage rates arehigh. Regardless of this younger cardholder base, ourratio of delinquent debt is the lowest in the industry, afact that is hard to comprehend for European and U.S.
investors. Our founder believed that creditability should
be built together with customers. This belief gave rise toGrameen Bank loans money to people
with no money without asking for collateral.
Mutual trust is therefore crucial.
Masahiro Kan

36

Dialogue 02
Financial Inclusion as Viewed from the Perspective of Microfinanceour concept of the co-creation of creditability, which is
the wellspring of value, the core value that has supported
us throughout our 87-year history.
Kan: That concept is the same as the business model ofGrameen Bank. At Grameen Nippon, we refer to borrowers as “members.” This is because, rather than the onesided provision of credit, we seek to foster mutual trustwith borrowers, a desire that overlaps with MARUIGROUP’s concept of co-creation.
Aoi: When I first heard of Grameen Bank, its philosophy
resonated with me. I was struck to know that we were notalone in our thinking. Up until then, I had thought that
our approach toward finance was unique, an approachthat no one else could understand. What Grameen Bank
preached was the same as the financial inclusion we pursued. Our backgrounds may be completely different, but
our ideas overlapped. It was fate. Professor Yunus mademe realize that, while financial inclusion was an approach
to finance that differs from the traditional approach seenaround the world, it could be seen as an approach oriented toward the future. If we view the entirety of financial services, not just credit cards, from the perspectiveof financial inclusion, we will see that the vast majority offinancial services are primarily offered only to the wealthy.
As such, younger generations and other individuals havebeen excluded from these services. Recognizing the
problems with this situation, we chose to establish asecurities company specializing in cumulative

investments. It is clear that the model of Grameen Bankand our business are connected on some deeper levelthat transcends their form and origin. This connection isvisible in our approaches toward co-creating creditability
and in our stances toward including everyone.
Kan: There are many aspects to the society that Grameen
Nippon aims to create, but first and foremost is our vision
for a society free from poverty in which everyone isempowered. This goal entails including the socially disadvantaged. Microfinance is truly an endeavor in financial
inclusion. I am confident that financial inclusion will prove
to be a pioneering initiative representative of future socialand global trends. One such trend is the United Nations
Sustainable Development Goals, the first of which is to“end poverty in all its forms everywhere.” This goal means
to eradicate poverty, not just in developing countries, butalso in developed countries like Japan. One defined target
for this goal is to “by 2030, reduce at least by half the
proportion of men, women and children of all ages living
in poverty in all its dimensions according to national definitions.” The quest of Grameen Nippon coincides completely with this goal. There is an African saying that goes
“fast alone, far together.” Grameen Nippon adopted thissaying as its motto. If we are united together, even if oneof us may falter, our aspirations will travel far. We arecommitted to moving forward with our comrades.

Our backgrounds may be completely different,
but our ideas overlapped. It was fate.
Hiroshi Aoi

37

MARUI GROUP’s Vision for Financial Inclusion

Promotion of Financial Inclusion
for the Benefit of Everyone
MARUI GROUP’s vision for financial inclusion is to resolve the social issues represented by the exclusivity of financial services to the wealthy with its business model of integrating stores, credit cards, and the Internet. We aim toprovide financial services that put affluence within reach of younger generations and everyone else.

Financial Services for People of All Ages and Incomes
Since issuing Japan’s first credit card in 1960, MARUIGROUP has proceeded to develop a business of providing credit cards to all applicants, regardless of their age,profession, or income. We expanded the scope of these
efforts to include non-Japanese residents and foreignexchange students in Japan in October 2017, when wepartnered with Global Trust Networks Co., Ltd., a company that offers comprehensive lifestyle support for nonJapanese individuals. Through this partnership, Epos
Card has issued Japan’s first credit card exclusively for
non-Japanese individuals to support them in their various life situations, whether going to school, working,or maintaining permanent residence, with funding andpayment services.

In 2018, we entered into the securities business,
which could be seen as central to financial inclusion.
Services for building assets through investment are currently limited almost completely to wealthy individuals,
being placed out of reach for younger generations andeveryone else. The mission of our securities business isthus to resolve this social issue and realize financial
inclusion by providing financial services for everyone,
regardless of their age, profession, or income.

Younger Generations and Everyone Else

WealthyYounger
Generations

1960
Issuance of Japan’s first credit card

Akai Card enriching the lifestyles ofyounger generations

Provision of financial services to younger generations
and all other customers
Issuance of Japan’s first credit card exclusively
for non-Japanese individuals
Launch of Japan’s first securities business driven by credit cards

38

MARUI GROUP’s Vision for Financial Inclusion

MARUI GROUP’s Basic Credit Philosophy

Cardholder Base Compositions of
MARUI GROUP and the Industry

MARUI GROUP’s basic credit philosophy—that creditability should be built together with customers—dates
back to the Company’s founding. Our credit framework
does not entail assigning credit to customers, but rather
involves setting a credit limit that is within their means
and gradually increasing this limit based on their usage
history. Through this framework, our cardholder base hascome to largely comprise university students and minors
without credit card experience and adults aged 18 to 39.
Furthermore, 30% of these individuals received their firstever credit card from MARUI GROUP. From our founding
up until today, we have continued to amass extensive
amounts of data on customers’ credit histories. This data
has allowed us to develop wide-ranging expertise withregard to credit, which helps us identify the cases inwhich customers will be able to make payments and thecases in which a customer will likely become a credit
delinquent. By combining our initial credit data, which
has grown to the level of big data, with the credit monitoring data we have accumulated through co-creation
with customers, we have been able to maintain theindustry’s lowest ratio of delinquent debt of 1.60%.
Moreover, our rate of refusing to issue credit cards atstores is only 8%, compared to the industry average
refusal rate of 24%.

EPOS Cardholders by Age*1

56%
44%

■ Age 39 and below ■ Age 40 and above Industry Cardholders by Age*2

26%
74%

■ Age 39 and below ■ Age 40 and above 

EPOS Cardholders by Gender*1

31%
69%

■ Male ■ Female Industry Cardholders by Gender*2

52%
48%

■ Male ■ Female *1 Active cardholder base
*2 Source: Consumer Credit Statistics from Japan (FY2017), Japan Consumer
Credit Association

High Growth and Low Ratio of Delinquent Debt
¥548.0 billion
Growth in revolving and installment payments
and other card shopping transactions

Ratio ofdelinquent debt

EPOS card
operatingreceivables

Decline in ratio of delinquent debt in conjunction
with increase in credit
examination accuracy

1.60%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

39

MARUI GROUP’s Vision for Financial Inclusion

Japan’s First Securities Business Driven by Credit Cards
In its securities business, which is central to financial inclusion, MARUI GROUP aims to transform the concern
younger generations harbor for the future into hope and to contribute to the drive to shift assets from savings toasset building. Our business model of integrating stores, credit cards, and the Internet will play an important rolein developing this business. MARUI GROUP entered into this business from the completely different industry ofretailing. We therefore aim to create a new wave in the securities business by incorporating ideas based on thecustomer’s perspective.

Backdrop for Entry into Securities Business
The goal of MARUI GROUP’s securities business is tocontribute to customer happiness and to a better society
through cumulative investments. Our decision to enter
into this business was prompted by the concerns formoney seen largely among the younger generations. A
public opinion survey conducted on people’s lifestyles inJune 2017 indicated that nearly 60% of people aged 18
to 39 are saving money, not for their life in the present,
but for the future. This result indicates an increase inemphasis on preparation for the future among younger
generations.

Meanwhile, the ratio of financial assets accounted forby cash and deposits in Japan is high and the rate of
growth in private financial assets is low in comparison toother countries. In response to this trend, the Financial
Services Agency is encouraging people to shift theirassets from savings to asset building. Against this backdrop, MARUI GROUP sought a means of alleviating customers’ apprehensions regarding money. After thoroughly
examining the types of services that could be used tohelp customers build assets with peace of mind, we
arrived at the decision to establish a securities company
specializing in cumulative investment.

Concerns of Younger Generations and Social Trends
Concerns of Workforce Members in Their 20s
No. 1 Money59%

No. 2 Work41%

No. 3 Marriage

Breakdowns of Private Financial Assets by Type
Financial Services Agency promoting asset formation using¥900 trillion worth of cash and deposits

32%

14%

Source: Dentsu Communication Institute Inc., 2015

New Year’s Resolutions of People Aged 20 in January 2017
No. 1 Saving for the future41%

No. 2 Conserving money

34%

No. 3 Healthy habits

30%

52%
(¥900 trillion)

31%

59%

Source: Visa Worldwide Japan Co., Ltd.

Reason for Lack of Interest or Unwillingness to Engage in
Asset Management and Lending
No. 1 Perceived difficulty or lack of knowledge

60%

No. 2 Concern for losses

45%

No. 3 Lack of monetary leeway39%

Source: Asset management survey of EPOS cardholders, 201640

Cash /
deposits

24%

Insurance /pensions

23%

Stocks /trusts

15%

Other

10%
Japan

29%

26%

12%

U.S.

U.K.

5%

Sources: Flow of funds data, Bank of Japan, 2016
Progress and Assessment of the Strategic Directions and Priorities
2016–2017, Financial Services Agency, 2016

MARUI GROUP’s Vision for Financial Inclusion

Purchases of Tsumitate NISA Applicable
Trusts with Credit Cards
Our securities company specializing in cumulative
investment, tsumiki Securities Co., Ltd., provides services that allow for cumulative investments to be conducted through regular, fixed-amount credit card
payments for purchasing investment trusts applicable
under Tsumitate NISA that have cleared government
standards. This business represents Japan’s first scheme
for purchasing investment trusts with credit cards.
Monthly investment amounts may be set within the rangeof ¥3,000 to ¥50,000 per month. Investment payments
are deducted from customers’ bank accounts together
with their monthly payments for shopping, and otherpurchases. Our goal is to grow this business to serve one
million users and handle a balance of ¥1 trillion in assets
within 10 years.
The growth of the credit card market is projected to be
driven by e-commerce and recurring transactions going forward. Recurring transactions refer to ongoing payments,
such as those for gas, electricity, water, and rent. EPOS
cardholders that use their cards to make payments for suchtransactions are five times more likely to upgrade to Goldcards, which are emblematic of their loyalty as customers.
Moreover, when cardholders upgrade to a Gold card, theirusage amounts increase greatly. Accordingly, even if therecurring transactions through the Tsumitate NISA scheme
do not generate significant profits, this business model will
still create substantial returns in terms of credit card revenues and other Groupwide revenues, with low upfront
investment nonetheless.
Who

Younger generations and everyone else

What

Purchases of investment trusts applicable
under Tsumitate NISA

How

Credit payment via EPOS cards(first scheme of its type)

About Tsumitate NISA
Tsumitate NISA is a program commenced by the Financial Services Agency inJanuary 2018 with the goal of promoting the shift from saving to investment.
Characteristics of this program include the ability to start investments in small
sums as annual investments are limited to ¥400,000, as well as the fact thattaxes will not be applied to this program for 20 years and that all applicable
investment trusts must clear certain standards, making them suited to long-term
asset building. This program is thus designed to support younger and first-time
investors in conducting long-term, cumulative, and dispersed investments.

Collaboration between tsumiki Securities and nendo
The design for tsumiki Securities was created by
nendo inc., an international design firm led by Chief
Designer Oki Sato.
Judging that a major reason behind the concern regarding money and investment was a lack oftransparency, nendo developed physical representations for the services of tsumiki Securities that
resemble Japan’s traditional luck charm. The goal ofthese representations is to draw a connection
between asset building and a better fortune foroneself. By carrying these charms around or placing
them in customers’ living space, we hope to makecustomers feel at ease knowing that their future
is secure.
The company name of tsumiki Securities, withtsumiki being Japanese for building blocks, itself ismeant to symbolize its simple and easy-to-understand services, the process of building assets gradually and at one’s own pace, and the idea of
accumulating not just money, but also a more positive outlook.

Oki Sato
Mr. Oki Sato is the chief designer and CEO of nendo inc.
He was born in Canada in 1977 and received a Master ofArts in architecture from Waseda University in 2002. Heestablished the nendo design firm in the same year. Mr.
Sato has been included among the 100 most respected
Japanese by Newsweek magazine and named designer ofthe year in numerous global design awards programs.
Moreover, he has made appearances on Japanese television programs highlighting the work of professionals andthe lifestyles of exemplary individuals with connections tocountries outside of Japan. Mr. Sato has also publishedbooks on topics including design philosophy, problem
solving, techniques for working faster, rejected projects,
and how to adopt different perspectives.

41

MARUI GROUP’s Vision for Financial Inclusion

New Services Provided by tsumiki Securities
Through cumulative investments, tsumiki Securities is
a company that contributes to the happiness of all
customers.
From among the approximately 6,000 investment
trusts available in Japan, tsumiki Securities has
handpicked four trusts to offer to customers: theCommons 30 Fund of Commons Asset Management,
Inc., the SAISON Vanguard Global Balanced Fund andthe Saison Shisan Keisei no Tatsujin Fund of Saison
Asset Management Co., Ltd., and the Hifumi Plus Fundof Rheos Capital Works Inc. The fund managementcompanies of each of these trusts share our vision andare committed to supporting customers in long-term
asset building. These fund managers strive to act as
close partners to their customers, communicating tothem the importance of asset building and the benefitsof long-term cumulative investments. Together withthese three fund managers, we aim to encouragecustomers to shift their assets from savings to asset
building during our interactions with them.

tsumiki Securities Co., Ltd.
www.tsumiki-sec.com/ (Japanese only)

Service Details • Monthly payments of ¥3,000–¥50,000• One-time payments only (no interest payments oradditional fees)• Payments deducted together with shopping andother payments• Points accumulated through payments

Investment Trusts Offered by tsumiki Securities
Four Handpicked Trusts Offered by tsumiki Securities
Fund manager

Trust name

Investment trusts
applicable underTsumitate NISA

Commons AssetManagement, Inc.

Approx. 150

Saison Asset Management
Co., Ltd.

Commons 30 Fund

Rheos Capital Works Inc.

SAISON Vanguard Global
Balanced Fund
Saison Shisan Keisei no
Tatsujin Fund
Hifumi Plus Fund

Investment trusts available in Japan

Approx. 6,00042

As of June 30, 2018

MARUI GROUP’s Vision for Financial Inclusion

Customer Joy Brought About through Cumulative Investments
Through tsumiki Securities, we offer services that enable customers to build assets for the future gradually,at their own pace, and with peace of mind through cumulative investments by purchasing
Tsumitate NISA applicable trusts with fixed, monthly payments via their EPOS cards.
Services were launched in August 2018 to help customers accumulate money for the future.

01

02

Application is easy and can be
conducted through a smartphone.
The simple user interface is easy tounderstand and use, even for individuals
that are new to asset building.

Cumulative monthly payments are madevia EPOS cards. Points are accumulated
as an added bonus based on the amountof investments and number of yearsof ongoing use.

0304

Services are available online andapplication support can be received atstores. Follow-up seminars and otherservices merging stores and the Internet
are provided after application.

Physical representations of these
services for asset building, which can bea source of concern, are offered that
resemble good luck charms. Pick yours
up at a Marui store and keep it with you.

POINT

POINT

POINT

POINT

Brand movie for tsumiki Securities
www.youtube.com/watch?v=VuQLSEqKYOc (Japanese only)

43Dialogue 03

Contributions to the Happiness of All Customers
through Cumulative Investments
MARUI GROUP established tsumiki Securities as a securities company specializing in cumulative
investment with the aim of addressing the needs of customers harboring concerns for the future
pertaining to money or seeking to increase their assets with peace of mind.
The following is a discussion between the CEO and COO of tsumiki Securities, which commenced
services in August 2018, in which they express their resolutions for this company going forward.

Asumi Kantake

Takeo Nakaki

Representative Director and CEO
tsumiki Securities Co., Ltd.

Representative Director and COO
tsumiki Securities Co., Ltd.

44

Dialogue 03
Contributions to the Happiness of All Customers
through Cumulative Investments

Asumi Kantake
Representative Director and CEO
tsumiki Securities Co., Ltd.

Ms. Asumi Kantake joined MARUI GROUP in 1997. After transferringfrom a store position to the Accounting Department, she was later
involved in the establishment of management and business plans incorporate planning and finance divisions. In 2014, Ms. Kantake wasappointed as the deputy store manager of Kokubunji Marui and was
also put in charge of engagement with investors as the chief managerof the Investor Relations Department. She became the representative
director and CEO of what is now tsumiki Securities in February 2018.

Takeo Nakaki
Representative Director and COO
tsumiki Securities Co., Ltd.

Mr. Takeo Nakaki joined The Mitsubishi Trust and Banking Corporation­(currently Mitsubishi UFJ Trust and Banking Corporation) in 2001
and transferred to a foreign life insurance company before entering
Sawakami Asset Management Inc. in 2004. At Sawakami, Mr. Nakakirose to the ranks of vice president, a position in which he was responsible for promoting long-term investment across Japan. He became president of Union Asset Management Inc. in 2014 before taking up the
position of representative director and COO of what is now tsumiki
Securities in June 2018.

Reason for MARUI GROUP’s Entry
into the Securities Business    
Kantake: MARUI GROUP is motivated by its mission ofpromoting financial inclusion by providing financial services that can be used by everyone, regardless of theirage or income. This was the reason behind our entry into
the securities business.
Nakaki: When I first met President Aoi, he explained how
MARUI GROUP had long been developing a credit card
services business in which the Company built creditability together with young adults and others who had not
yet established their own credit ratings. He also
expressed his desire to provide asset building services
that transform the concerns that younger generations
have for the future into hope. This dedication to thesecurities business filled me with excitement. I spent
15 years at independent fund management companies,
during which I attended seminars across Japan to network with long-term investors and speak with fellow fundmanagers. Colleagues that had begun gradual, long-term
investment exhibited a clear sense of leeway as they had
less concern for the future and felt they had access to agreater range of options in their life.

Kantake: Roughly half of MARUI GROUP’s customers arein their twenties or thirties, and around 70% of them are
women. When examining possible service offerings forthe future, we solicited feedback from customers. Thiswas when we learned about customers’ significant anxiety for the future with regard to money. This anxiety
resulted in most of them turning to savings. However,everyone knows that savings do not grow. Looking tohelp such customers, MARUI GROUP sought to create
services that would assist them in growing their wealthwith peace of mind. We eventually arrived at the idea of
cumulative investment.
Nakaki: The conventions of cumulative investment differ
from those of the standard form of investment. For
example, there is no need to intensely watch the stock
market, trying to buy low and sell high. Rather, the convention of cumulative investment is just to continue
steady investment, whether prices are high or low.
Steadily investing in a trustworthy fund of a reputable
management company will no doubt be an effectivemeans of building assets over the long term. Cumulative
investment could therefore be seen to be a “buy andforget” approach toward investment.

45

Dialogue 03
Contributions to the Happiness of All Customers through Cumulative Investments

I want to make cumulative investment based on
confidence in the future a part of our culture.
The idea of an economy driven by the money andtrust of individuals is exhilarating.
Takeo Nakaki
Kantake: The desire to save money usually has something more meaningful behind it, whether that be a­special someone, a dream, or some other matter ofimportance. Cumulative investments are the best way
to grow one’s precious money with peace of mind.

Japan’s First Scheme for Purchasing Investment
Trusts with Credit Cards    
Kantake: There are a lot of people who assume you needa fair amount of on-hand funds to invest. At tsumiki
Securities, we overturn this preconception by allowing
cumulative investments to be made starting from as little
as ¥3,000 a month via one’s EPOS card. This system is a
first for Japan. Once a month, funds are deducted from
customers’ accounts together with their usual payments,
such as those for shopping or mobile phone bills, andusers accumulate EPOS points based on the amounts
and duration of their investments. By letting customers
make payments with the EPOS cards they have become
accustomed to, we hope to lower the hurdle people perceive when they think of investment.
Nakaki: If investments can be made in sums of ¥100 or¥1,000, while it may be easier to start, it is common forpeople to stop after only a short time as the purpose of46

those investments feels unclear. The most common
amount for cumulative investments in trusts is ¥10,000,
but this amount can feel a bit too high for those who are
new to investment. The amount of ¥3,000 can be produced if one only adjusts their expenditures or gives up
something small. This amount also gives investments aclear purpose, making it easier to commit to continue.
I therefore see that this amount is just right. Monthly cumulative investments are a purchase, a purchase of a sense of
security for the future so that one can live in the moment.
Kantake: The financial lexicon can be difficult to understand, and we have had a lot of trouble explaining financial concepts to customers in terms they can understand.
Nakaki: Communicating information in an easy-tounderstand manner is important. I take care to provide
simple explanations, using the Internet and other tools
when appropriate. I do not expect customers that will bebuilding assets through tsumiki Securities to study or
understand difficult financial terms. Rather, I want tocommunicate to these people the effectiveness of cumulative investments, how to incorporate these investments
into one’s life, and the attitude to be taken toward investments. I also want to teach them how to be more prudent
in their use of money.
Kantake: We also try to provide a venue for asking questions that cannot be easily answered via the Internet bymeans of our stores. Here, customers can ask about
product selection, contract terms, or even how to view
our websites. We thereby support customers through a
two-pronged approach using both the Internet and physical venues.
Nakaki: The representatives of the fund managers wehave partnered with all share similar sentiments regarding
the importance of face-to-face explanations. No matter
how functional and convenient the Internet may become,it cannot replace the passion and dedication that fuel theeffectiveness of face-to-face explanations. Of course, weare taking steps to provide support via the Internet thatcomes closer to what you would get at a physical store.

Dialogue 03
Contributions to the Happiness of All Customers through Cumulative Investments

Meaningful Social Contributions
through Investment    
Kantake: Our securities business provides services
designed to accumulate money for customers’ futures. As
such, our own reputation is called into question. We haveselected four funds to offer, all of which are operated byfund managers that explain the benefits of long-term
cumulative investments to customers in the same terms as
we do. This narrow selection was chosen in response tocustomers who stated that, while they wanted to beginasset building, there were too many options for them tochoose from with the hope of making this choice easier forthem. Furthermore, as these funds have met the government’s criteria for being applicable under the Tsumitate
NISA program, they can be utilized with peace of mind
even by customers that are new to asset building, areoverly busy, or are apprehensive toward investment.
Nakaki: That is why it is ideal for the fund managementcompanies we partner with to be those that customers
can familiarize themselves with. We therefore selected
funds that were worthy of our trust through careful evaluations from both quantitative and qualitative perspectives.
The criteria for these evaluations included (1) how
compelling their philosophy is, (2) whether they are working
to continually improve their performance, and (3) if they
actively engage with their customers. I believe that ourinvestment trust business is the ultimate sharing business.
In the investment trust business, the money received from
customers is channeled through sales companies, tsumiki
Securities in our case, to trust funds of management companies and then to companies boasting value. The last
step of this cycle sees returns being made to customers
through the business activities of those companies. The
resulting cycle creates a business that is beneficial for customers, the sales company, fund managers, the companies in which investments are made, and society.
Moreover, returns are shared in this business, which issustainable over the long term. There are still very few
sales companies and fund managers that have fully
embraced this model. As a forerunner in this area, I hopeto promote the spread of cumulative investment.

Our securities business provides services designed
to accumulate money for customers’ futures.
As such, our own reputation is called into question.
Asumi Kantake
Improvement of Overall Corporate Valueby Utilizing Management Resources    
Kantake: Tsumitate NISA is an offering designed with thecustomer in mind. This is illustrated by the fact that it has
no trust sales commissions and low trust fees. Manycompanies are choosing not to take advantage of thisprogram because of its low profitability. MARUI GROUP,
meanwhile, is proactively utilizing this program because
it represents an opportunity to fully utilize its management resources, such as its stores, IT systems, humanresources, and affiliates, and because it boasts a customer base consisting of 6.6 million EPOS cardholders.
Nakaki: One will be compelled to purchase an offering
when the lifestyle that offering proposes resonates withthem. Investment trusts can be seen as one such offering. Furthermore, exercising the full potential of MARUIGROUP requires the strength of individual employees.
It is when a charismatic employee devotes themselves toserving a single customer and contributing to their happiness that we will be able to provide services that are
truly tailored to individual customers. The ability to makeproposals that resonate with customers I sensed in
MARUI GROUP’s employees after joining the Company
is something I feel that we can leverage to its fullest.
Kantake: Encouraging customers to engage in cumulative investment over the long term will also contribute tolong-term use of EPOS cards. MARUI GROUP’s securities
business is therefore incredibly meaningful to improving
the Company’s corporate value.

47

MARUI GROUP’s Vision for Financial Inclusion

MARUI GROUP Employees Supporting the Securities Businessreating something completely new isa difficult but enjoyable task. The new
securities business is an unprecedented
undertaking. I therefore strive to makeproposals I can feel confident in based ondata-backed hypotheses. Customers’ needs
regarding money vary from person to person.
By proposing events, experiences, andopportunities for communication to help
customers gain knowledge and peace ofmind regarding money, I hope to alleviate
their concerns for the future and help themfeel at ease in their daily spending.

C

Masahiro Uchida
FinTech Business Development Department,
Epos Card Co., Ltd.
Qualifications: Securities sales representativefter being involved in space production and corporate planning, I found myself at tsumiki Securities
helping to start up MARUI GROUP’s securities business.
This company was born out of the collective strength ofindividuals with various backgrounds and skills from insideand outside of MARUI GROUP. In addition to these individuals, we also receive a lot of support from those aroundus. As such, our efforts cannot be defined in terms of ourcompany. They rather take form through the cooperationof everyone involved. Valuing long-term relationships withcustomers, I hope to contribute to developing a businessthat builds a community of similar ideals.

earning about the importance of asset
building in a society of increasingly long
lifespans, I sought to address this issue. Using thecustomer service skills I acquired through myretail experience, I aspire to become an employeethat customers feel comfortable consulting with.
I thereby want to make tsumiki Securities into a
company that values an un-finance-like atmosphere,
in a good way, and that wins the support of younger
generations and everyone else.

L

Kiyomi Minamiyama
Women’s Shoes,
Yurakucho Marui,
MARUI CO., LTD.
Qualifications: Financial plannerA

Soichiro Tanaka
Customer Engagement Department,
tsumiki Securities Co., Ltd.
Qualifications: S ecurities sales representative
Financial planner

he never-before-seen scheme ofpurchasing investment trusts throughcredit card payments is something that only
MARUI GROUP could create. I aim to play apart in satisfying the customers of tsumiki
Securities to help this company attract morecustomers and turn their concerns for the
future into hope. My contributions will be madein the systems division supporting its platform by ensuring the stable operation of its
systems as I also make new proposals.

T

Hisao Imura
Customer System Development Department,
M & C SYSTEMS CO., LTD.
Qualifications: Information Technology Passport Examination
Personal information manager

48

eople are increasingly being motivated tosupport companies that contribute to society. I chose to participate in the securities businesswith the goal of providing an outlet for this desire tocontribute. I also wanted to help with the first stepof people becoming aware of the appeal of suchsupportive investments, which can address concerns regarding money. Rather than financial
advice, in this business it is more important toprovide personal advice. I therefore aim to create
services that cater to the needs of each individual
customer and that are accessible anywhere.

P

Miku Yamanaka
FinTech Business Development Department,
Epos Card Co., Ltd.

MARUI GROUP’s Vision for Financial Inclusion

hen participating in a financial plannereducation program, I learned thatmany feel concerns regarding money but do
not know how to address these concerns.
This realization filled me with a desire toshare the knowledge I had gained through theprogram with these individuals. I therefore
aim to transmit various information that is ofinterest to customers to encourage them tomake their first investment through tsumiki
Securities.

W

Reika Sakuma
FinTech Business Development Department,
Epos Card Co., Ltd.
Qualifications: S ecurities sales representative
Financial plannert is common for people to feel aversion
toward finance and securities. It is my job tohelp such people take their first step into thesefields. I am currently enjoying the process of asking
customers about their needs at discussion forums
and finding means of addressing these needs. By
creating the services that win the support of lots ofcustomers, I hope to help build a society in whichpeople can feel at peace and optimistic when
thinking about money and the future.

I

Mai Demura
Customer Engagement Department,
tsumiki Securities Co., Ltd.
Qualifications: Securities sales representative

think the large number of younger customers for whom their EPOS card is their firstcard is a powerful asset for MARUI GROUP’s
securities business. I was working at a store until
just recently. With the faces and voices of thecustomers I served at my store in mind, I will strive
to foster a community that blurs the lines between
customers and employees as we learn about
finance together.

I

Yuuto Sakuma
FinTech Business Development Department,
Epos Card Co., Ltd.
Qualifications: Securities sales representatives part of an overseas dispatch seminar, I had
the opportunity to observe Nordic societies.
This experience made me realize the need for asset
building frameworks to support life security inJapan. At tsumiki Securities, my job, of course,
involves providing financial insight. More important, however, is to develop an understanding ofcustomers’ concerns by speaking with them andthen find ways to alleviate these concerns. I want tohelp create a society in which everyone is able touse their money to achieve self-actualization.

A

Hiroyuki Kasugai
aim to link customers to tsumiki
I Securities and thereby foster understanding of the ease and importance of asset
building to the point that customers begin
spreading the word of how tsumiki Securities
is the choice for asset building. In the future,
I plan to branch out from investment trusts toresearch other investment products that might
be useful to our customers in order to createeven more services that can be accessed
through credit cards as a Japan first.

Women’s Purses,
Shinjuku Marui Main Building,
MARUI CO., LTD.
Qualifications: Financial planner

Tatsuya Oguma
Operation Department,
tsumiki Securities Co., Ltd.
Qualifications: Securities sales representative

49

MARUI GROUP’s Unique Integrated Management Approach

Profession Change System for Fostering
Empathy and Innovation
MARUI GROUP’s profession change system is a unique human resource system that is shared throughout
the Group and that allows for relocations between the Company and 11 Group companies. This systemenables employees to experience a wide range of businesses, including retail at stores, IT, logistics,
and credit card services through a program that is almost like changing one’s profession.
As of April 1, 2018, approximately 2,200 employees, or 43% of our entire employee base,had undergone profession changes.

Profession Changes    through Shared Human   After joining MARUI GROUP, all employees are first
appointed to positions such as sales floors to allow themto experience face-to-face interactions with customers.
This is done to foster a capacity for empathy—the ability
to comprehend the position of others and build sharedunderstanding to be more sympathetic to them—by
having them engage with customer needs first-hand. Once
this capacity has been cultivated, they are allowed toexperience various professions in order to develop apropensity for innovation, which will inspire them to enjoy
differences and changes and drive them to autonomous
action. Moreover, being placed in a new profession canenable employees to escape preconceptions. Suchtransitions thus contribute to the growth of the employees
undergoing profession changes as well as to transformationsin the new workplaces in which they are placed. Throughthis profession change system, we aim to cultivate
employees that embody a customer-first mentality
and are adept at responding to change in orderto make the Group a more fertile groundfor innovation.

Retailing

Space Production,
Commercial Facility Management,
and Advertising

IT Systems

By experiencing various professions,employees develop a propensity forinnovation that inspires them to enjoychanges and drives them toautonomous action.

Real Estate Rental

Small-Amount Short-Term
Insurance Policy BusinessSupport for Group Companies

Employees experience face-to-facecustomer service at MARUI CO., LTD.,
sales floors, and other positions tofoster a capacity for empathy byengaging with customer needs.

Platform Supporting
All employees first join
MARUI GROUP CO., LTD.

50

Share
Groupwide

Human resourceand salarysystems

Work hours

MARUI GROUP’s Unique Integrated Management Approach

Employees that embody a customer-firstmentality and are adept at responding
to change enact proposals from aGroupwide perspective.

Human resources with a capacity for
empathy and a propensity for innovation make proposals that are notbound by industry conventions or
preconceptions.

    Made Possible    Resource System

FinTechApparel Distribution
Internet Sales Support

Total Building Management
4 色指定 :M100+Y60+BL20%
特色 :PANTONE 207

Loan Collection

Ratio of Employees Changing Positions
between Group Companies

43%

Securities Business

Aggregate total from April 2013–April 2018
(Excludes officers and managers)

Percentage of Employees Who Experienced
Personal Growth after Profession Change

86%

According to the results of a survey carried out
in November 2016

Profession Changes

Welfare systems

Post-Professional Change Monitoring

Labor union

Health insurance
union

•S
 elf-declaration system allowing employees to declare the professions
and divisions in which they are interested in working (twice a year)•O pportunities for discovery for employees who have changed their­profession as well as their new colleagues

51

MARUI GROUP’s Unique Integrated Management Approach

Cultivation of an Organization That Creates
Innovation through Diversity
MARUI GROUP believes that, when its approximately 6,000 unique employees are accepting toward one anotherand able to merge their values, it will be able to cultivate a corporate culture that is conducive to innovation.
Promoting diversity has been defined as one of the strategies of the medium-term management plan launched in
the fiscal year ended March 31, 2015, and we are therefore pursuing diversity with regard to individual talents,
gender, and age. A distinctive characteristic of our diversity initiatives is our Groupwide project teams, which
recruit members through open application and in which any employee may volunteer to participate. Rather thandivision, age, or position, members are selected based on essays. These members discuss various themes that areimportant to Group management.

Groupwide Project Teams Engaged in Deep,
Forward-Looking Discussion
MARUI GROUP has established four official project
teams that engage in deep, forward-looking discussion
on themes that are related to the Company or society as
a whole from a medium-to-long-term perspective. After
participating, members utilize the knowledge and ideas
they gained to formulate and implement action plans forincorporating this insight into the business, procedures,or other aspects of their workplace. Project members arechanged on an annual basis, producing a new set of
autonomous employees with increased knowledge andawareness each year and thereby cultivating a corporate
culture emphasizing autonomous thought and action.

Marui Future Project Team

Diversity Project Team

Launched in 2011, the Marui Future
Project Team is currently discussing
concrete ideas for bringing joy to all
customers through products andservices.

Created in 2015, the Diversity Project
Team now promotes the developmentof a comfortable workplace that is
conducive to innovation with a focus
on the diversity of individual talents
and ages.

Healthcare Promotion Project

Sustainability Project Team

Established in 2016, the Healthcare
Promotion Project is working toward
its vision of ensuring that 100% of
employees can proudly proclaim they
are healthy in 2050.

The Sustainability Project Team wascreated in 2018 to form a vision for
MARUI GROUP in 2050 based on abroad perspective examining various
scenarios for the future.

Message from an Employee

Natsuki Yano
Sustainability Project Team Member
Women’s Shoes,
Yurakucho Marui,
MARUI CO., LTD.

52

Through my participation in the
Sustainability Project Team,I gained a clear idea of the inclusive
society we envision for the future.
I feel strongly that addressing
poverty, environmental, and othersocial issues will become a coreelement of the business and thegrowth of MARUI GROUP going
forward. In the future, I want toengage in co-creation with everyone on the planet. I hope to create
innovation within MARUI GROUP
that will be more impactful andthat will spread across the globe.

MARUI GROUP’s Unique Integrated Management Approach
Development of an organization that utilizes diversity
www.0101maruigroup.co.jp/en/sustainability/theme02/org_01.html

Medium-Term Management Visionary Committee
Receiving 1,000 Applications for Participation
with Each Iteration
The Medium-Term Management Visionary Committee isa forum for discussing various topics that will be important to the future of Group management, which are
selected from a long-term perspective. While this committee was previously only open to members of Groupmanagement, in January 2016 we made the committee
open to any interested employee, and meetings havebeen held almost every month since. Active discussion isconducted among the roughly 300 members that are
selected from the approximately 1,000 applications
received for each iteration.

Committee Meeting Discussion Topics in 2017
Social environment as it pertains to MARUI GROUP and future outlook
Long-term operating environment changes and new growth initiatives
MARUI GROUP’s ESG: Forward-Looking Initiatives for Transforming
Our Main Business into a Socially Contributing Undertaking—Lecture by Abe Chiyo, Fumino Sugiyama, and Toshiya Kakiuchi
The Digital Industrial Revolution: Era of Redefining Industries—
Lecture by Tak Miyata of Scrum Ventures
Innovation Creation Approach Apparent in Global Management
Practices—Lecture by Professor Akie Iriyama of Waseda Business School

Committee Meeting Discussion Topics in 2018
Corporate Strategies for Realizing a Sustainable Society—Lecture byPeter David Pedersen of PricewaterhouseCoopers Sustainability LLC
Hello! Miraijin—A Look at the Sensibilities of the Future
Singularity and Exponential Thinking: Characteristics of Companies
and People That Can Survive in Volatile Times—Lecture by Kazunori
Saito of Exponential Japan
Long-Term Operating Environment and Impact on MARUI GROUP—
Lecture by Peter David Pedersen of PricewaterhouseCoopers
Sustainability LLC
Joy Brought to Customers through Cumulative Investment—
Lecture by Ken Shibusawa of Commons Asset Management, Inc.,
Haruhiro Nakano of Saison Asset Management Co., Ltd., andHideto Fujino of Rheos Capital Works Inc.

Employee Participants

2,768(Approx. 50% of all
employees)

53

MARUI GROUP’s Unique Integrated Management Approach

Work Style Reforms Creating a Venue for Contributionsof All Employees
MARUI GROUP’s corporate philosophy calls for us to “continue evolving to better aid our customers” and “equate
the development of our people with the development of our company.” Accordingly, we see a company as a venue
for the contributions of all its employees. We are therefore cultivating a comfortable workplace environment inwhich all employees are accepting toward one another, regardless of their age, gender, lifestyle, or sexual preference, and that is conducive to innovation in order to create a venue in which all employees are able to grow andaccess opportunities.

Average Monthly Overtime Lowered to 3.5 Hours
MARUI GROUP began implementing work style reforms
in 2008, and the Company now boasts one of the lowest
levels of overtime in Japan as a result.
As part of these reforms, overtime reduction policies
and targets have been set for each position and shifts areformulated systematically for stores using up to 50­working patterns defined in 10-minute increments. In
addition, processes related to delivering and returning
products to storage and other back-office procedures atstores are handled by Group companies to enable store
employees to be primarily positioned in customer service
roles. As a result, average monthly overtime hours perperson were down to 3.5 in the fiscal year ended March
31, 2018, while average annual overtime hours
decreased to 42. Average monthly overtime among head
office employees was 6.7 hours in the fiscal year ended
March 31, 2018, representing a roughly two-thirds
reduction compared with the fiscal year ended March 31,
2008, while average monthly overtime at our 26 storesnationwide was 0.8 hours, making for an approximately
90% reduction from the same year. These reductions
have improved productivity along with personnel expense
efficiency.

54

Average Monthly Overtime Hours per Person
20 hours

10.9 hours

Head office

6.7 hours

7 hours
Consolidated
Stores
FY20083.5 hours
0.8 hours
FY2018Overtime Reduction and Benefits
FY2008FY2018BenefitAverage annual overtime
hours per person

130 hours

42 hours–88 hours

Total overtime payments¥3.4 billion¥0.8 billion–¥2.6 billion

6.8%

2.3%

–4.5 ppt

Employee turnover rate
(excluding mandatory retirement)

MARUI GROUP’s Unique Integrated Management Approach
MARUI GROUP occupational health and safety policy
www.0101maruigroup.co.jp/en/sustainability/theme02/health.html

Healthcare Management Energizing Employees
In MARUI GROUP’s healthcare management, we strive toencourage employees to think through the lens of healthand act accordingly in order to thereby increase corporate value. For this reason, it is important to take the perspectives of preventing health issues and also energizing
employees and enabling them to work happier. We arepromoting healthcare management on a Groupwide basis.
These activities have earned us much praise, leading theCompany to earn the highest rank in Development Bankof Japan Inc.’s DBJ Employees’ Health Management
Rated Loan Program in 2016 and to be included in
the Excellent Enterprise of Health and Productivity
Management—White 500 for two consecutive years
beginning with 2017. Furthermore, MARUI GROUP wasthe only retail industry company included in the 2018
Health & Productivity Stock Selection.
In March 2018, we began encouraging employees totake Japan’s healthcare master certification test to
improve health literacy. To date, approximately 1,000
employees have applied to take this test. A resounding
97% of all test takers have stated that studying for thetest spurred changes in their awareness or behavior.
MARUI GROUP is committed to advancing healthcare
initiatives in terms of both systems and its corporate­culture going forward.

Evolution of Healthcare Promotion Activities
1962 Establishment of MARUI GROUP’s health insurance union
1970 Opened Marui Health Insurance Union Building
2008 Commencement of overtime reduction project
2011	Start of Health Improvement Program by MARUI GROUP’s
health insurance union	Established Health Management Division and appointed­dedicated Company physicians2013	Introduced physical and mental health consultation hotline
2014	Began analyzing health examination data of all employees
and relationship between lifestyle patterns and attitudes
toward work	Started holding self-care training sessions for all employees	Appointed wellness leaders nationwide to help alleviate­women’s health concerns
2016	Introduced Resilience Program to energize senior managers interms of their body, mood, mental state, and thinking
	Incorporated new healthcare management items into labor
agreements
	Established outside advisory board and began analyzing
healthcare management practices and data	Formulated Groupwide Healthcare Management Project Team2017	Established MARUI GROUP Occupational Health and Safety
Policy and declared Companywide commitment to improving
occupational health and safety and advancing voluntary­initiatives to this end
2018 Appointed chief health officer

Message from an Employee

Tomohiro Niikura
Health Management Division
MARUI GROUP CO., LTD.

Encouraging employees to exercise
autonomy in improving their own
health has proven beneficial for
improving life and exercise habits.
These efforts have also led to a big
increase in employees’ self-efficacy,which refers to their confidence intheir own abilities. I anticipate thatthese benefits will have a positive
impact on invigorating our people
and organization. I also expect that
this energy will become a driving
force accelerating our growth.

55

MARUI GROUP’s Unique Integrated Management Approach

Revision of Evaluation Systems and Desired
Characteristics in Employees
MARUI GROUP seeks to help create a flourishing and inclusive society offering happiness to all. We recently
revised our human resource evaluation systems and the desired characteristics we look for in employees based on
our corporate philosophy and our vision for the future of MARUI GROUP. This revision was based on discussions
with employees and students scheduled to join the Company.

Evaluation Systems Revised Based on Discussion
among Employees
In October 2017, MARUI GROUP revised its personnel
evaluation systems to assess employees based on value
evaluations and performance evaluations. The revision
process was initiated in December 2015 with theestablishment of a Groupwide committee tasked withexamining the possibilities for new human resource andevaluation systems. This committee has held discussions
on the implementation of these systems and theirquantitative and qualitative targets with an aggregate
total of approximately 2,900 employees.
Value evaluations assess the self-guided actions of
employees based on the Company’s corporate philosophy
and values. Through these evaluations, we aim to develop
strong organizations. These organizations should not
simply focus on how to achieve the targets handed tothem at the beginning of each year. Rather, they should
create new ideas and pursue lofty goals to respond tosocial change and customer needs. These evaluations will
be conducted from various perspectives, through selfevaluations and evaluations by supervisors, coworkers,
and subordinates, based on the desired characteristics
defined for each position. A goal of involving all employees
in evaluations is to encourage employees to take interestin the work habits of others, to think together, and toengage in more active communication.
Performance evaluations look at the results createdby teams as opposed to by individuals. We hope thatthese evaluations will help us develop an organizationthat makes use of diversity and in which employees
coordinate their differing strengths and compensate for
their shortcomings, teach each other, and continue
growing as teams dedicated to serving customers.

New Personnel Evaluation Systems
Performance evaluations• Results in serving customers→ Team results
based on Company values

Results

Actions
SkillsTeam growth
Knowledge

Receptiveness toward corporate philosophy
and co-creation
Leadership skills and qualities
Ambition toward growth

Value evaluations• Initiatives for realizing corporate philosophy
and co-creation• Personal growth and contributions to team growth

Link actions and growth based on corporate philosophy and values to team results

56

MARUI GROUP’s Unique Integrated Management Approach
Desired characteristics we look for in employees
www.0101maruigroup.co.jp/recruit/2019newgraduate/recruit/personality.html(Japanese only)

Human Resource Systems for Utilizing Diversity
In September 2017, labor agreements were updated toinclude a clear declaration that individuals are not tosuffer discrimination on the basis of sexual identity orsexual orientation. Moreover, an internal helpline wasestablished to allow employees to receive consultation
with regard to LGBT issues related to work, themselves,or their families. This helpline added to the previously
existing external helpline. In addition, the scope of
application of human resource systems pertaining tospouses was expanded in April 2018 to include spouses
from legal marriages as well as spouses from commonlaw marriages and same-sex partners. In conjunction
with this change, the word “spouse” was replaced with“partner” in these systems. This change was applied toleave, compensation, welfare, and other systems.

Message from an Employee

Moe Yamashita
MARUI GROUP CO., LTD.
(Joined in April 2018)

Desired Characteristics of Understanding
and Innovation
We have redefined the desired characteristics we look forin employees to include capacity for empathy and a propensity for innovation. A capacity for empathy refers to theability of employees to adopt the viewpoints of our various
stakeholders to understand their thinking and their pain.
This understanding gives rise to the propensity for innovation that drives our employees to seek resolutions to theissues faced by customers, society, and the environment.
All MARUI GROUP employees should strive to developthese characteristics to support the Company in practicing
co-creation sustainability management.

I feel that working as a member ofsociety is a way to repay one’s debt
to society and the people aroundthem. MARUI GROUP’s corporate
philosophy aligned with my view.
MARUI GROUP is a company
aimed at creating innovation that
goes beyond the boundaries ofindustries or positions. My decision to join was based on the belief
that this aspect of the Company
will ensure it is always necessary
to society, no matter how times
may change. I hope to experiencelots of professions to gain the skills
needed to leave an impression on
all the customers I help.

Message from an Employee

Takuma Ishikawa
MARUI GROUP CO., LTD.
(Joined in April 2018)

The goal of my job hunt was to finda position where I could be of help
to people. I decided on MARUIGROUP because of how its corporate philosophy matched this goal.
During my job hunt, I was remindedof the truly large number of friendly
and understanding people working
at MARUI GROUP. I believe that I
possess the capacity for empathy
the Company seeks, but I still lackthe propensity for innovation. I
therefore aim to acquire this trait as
I work going forward.

57

Dialogue 04

Unique Integrated Group Management Enabling
Co-Creation Sustainability Management
MARUI GROUP’s integrated Group management has given rise to the profession change system, project teams
encompassing employees of all ranks, and various other new initiatives and businesses. The following is a discussion between Masao Nakamura and Toshikazu Takimoto, the segment representatives who underwent MARUIGROUP’s most prominent profession changes, and Junko Tsuda and Miyuki Kawara, who are knowledgeable on
the start of Groupwide project teams. These individuals discuss the potential for MARUI GROUP to create further
innovation through its practice of integrated Group management.

Realization of Integrated Group Management
through Adoption of Pure Holding Company System    
Nakamura: President Aoi took the helm in 2005 and weadopted the pure holding company system in 2007. Prior
to that, we used an operating holding company system inwhich MARUI CO., LTD., led the retailing business while
housing corporate functions. Hiring was performed byindividual operating companies.
Takimoto: In 2003, each business established its own
sales company, which engaged in relentless sales activities to create higher numbers to tally. The result was a
corporate culture that was counteractive to employee
happiness and growth. In the past, we had a system inwhich all employees were hired by MARUI CO., LTD.
Today, it feels like we have finally returned to those days.
Kawara: The atmosphere was more hostile at that time.
The person who sold the most would be the most highly
evaluated and receive the highest salary. Rather than helping or teaching others, everyone was preoccupied with
their own interests. I remembered when President Aoi
wrote a letter to all employees in 2007. This letter
explained the reason behind the transition to the pureholding company system and the sentiments that had
been incorporated into the corporate philosophy. The
letter described a corporate culture in which employees
and businesses worked and grew together. This culture
has finally been achieved.
Tsuda: The attitude within the Company has undergone
a 180-degree turn. Today, employees have a strong commitment to developing their businesses as a member of
the Group, a stark contrast to the past obsession withheightening individual skills and results.

58

Nakamura: In the past, we had also hired everyone
through the same company. However, it was a bit different
in that when you were placed in a specific field, products
or systems, for example, you would stay there until retirement. These specializations were kind of like separate
operating companies. Today’s system feels like we returnedto that point and then took a step in the right direction.

Profession Changes as a Wellspring for New Ideas    
Nakamura: Currently, 43% of our employee base has
undergone profession changes by being relocated to adifferent Group company. The profession change system
was launched around 2007, when we began co-creation
activities with customers. Those of us on the sales floor
at that time had each developed our own image of customers, and nothing short of a profession change would
have enabled us to change our thinking.
Kawara: The greatest benefit of my profession change
was that, by expanding my network and subsequently
broadening my perspective, I was able to come up withnew ideas. I was recently transferred from Epos Card Co.,
Ltd., to a retail position. After this change, I began to naturally link ideas related to retailing, FinTech, and technologies in my mind. Profession changes truly are awellspring of new initiatives to be enacted by overlapping
the strengths of the Group.
Tsuda: I agree completely. I spent a number of years inretail. However, after experiencing positions in purchasing and sales promotion and later store management andnew business development, my range of knowledge
became substantially more varied. In these different
positions, I have formed an ever wider network with

Dialogue 04
Unique Integrated Group Management Enabling Co-Creation Sustainability Management

Junko Tsuda
Executive Officer
Director and Store Manager,
Marui Family Mizonokuchi,
MARUI CO., LTD.

Masao Nakamura
Director and Managing Executive Officer
Responsible for FinTech Segment
President and Representative Director,
AIM CREATE CO., LTD.

Toshikazu Takimoto
Managing Executive Officer andChief Information Officer
Responsible for Retailing Segment
President and Representative Director,
M & C SYSTEMS CO., LTD.

Miyuki Kawara
Executive Officer
Director and Store Manager,
Ueno Marui, MARUI CO., LTD.

59

Dialogue 04
Unique Integrated Group Management Enabling Co-Creation Sustainability Managementbusiness partners, community members, and other outside individuals. This has given me confidence in newundertakings. The value to be found in these reciprocal
relationships is multifaceted and something that othercompanies cannot imitate.
Nakamura: In 2017, Mr. Takimoto and I switched places;
I assumed his role in leading the FinTech segment and hetook over my position of heading the Retailing segment.
This change left a strong impression on people both
inside and outside of the Company. As we were in the
midst of encouraging people throughout the Group of allages to undergo profession changes, I felt that this symbolic swap of the representatives of the Retailing and
FinTech segments would send an important message tothe rest of the Company.
Takimoto: In my case, I did not feel that this relocation
would put me in a completely unfamiliar position, as I
had held positions in sales, sales promotion, and planning in the past. However, after the change, I immediately
recognized possibilities for EPOS cards that had eluded
me previously as well as new initiatives we could implement from a retailing perspective. I have no doubt that
this change was a positive development for the Group.
Nakamura: After switching positions with Mr. Takimoto,
I found myself working together with him more often as
we sought means to further integrate retailing and
FinTech. Come to think of it, we have had a past of suchswitches. Yoshinori Saito, current president and representative director of Epos Card Co., Ltd., used to be adirector of MARUI CO., LTD., and Hajime Sasaki, current
president and representative director of MARUI CO.,LTD., was previously a director of Epos Card Co., Ltd. In
the future, I look forward to periodically changing positions so that I can make new discoveries to incorporate
into new initiatives for the Group.

Groupwide Project Teams Allowing Exchanges
between Employees of All Ages and Ranks    
Takimoto: Even if we have allowed for intra-Group profession changes, it did not change the fact that almost all
MARUI GROUP employees join right out of university andare cultivated in the same environment. There was thus aneed for further change in our corporate culture.
Tsuda: I think it was in 2013 when we decided to establish Groupwide project teams that examine importantmanagement themes through a bottom-up approach60

with management acting in a supportive role. These project teams drove steady change in our corporate culture
and atmosphere.
Kawara: Project teams assemble members from all businesses of all ages and ranks, and members are able to voice
opinions without concern for hierarchy. I therefore believethat these meetings provide good stimulation for all in
attendance. Those of us representing management arealso made aware of previously elusive insights regarding
the future through the opinions of new employees.
Tsuda: Whether participating in Groupwide project
teams or changing professions, the decision is based on
employee volition, and these undertakings allow for discussions that transcend rank to give rise to new ideas.
When I think about it, our efforts to reduce overtime andthe healthcare management initiatives of today can betraced back to the Work Style Project Team formed in2008 to involve younger employees in discussions withmanagement. These efforts have gradually led to moreproactive thinking, evolving into the quest to makeemployees healthier and more energetic in their work.
Kawara: The first task of the Diversity Project Team was
supporting female employees working shortened hours
for childcare purposes, which entailed entrenching anevaluation process that looked at the quality of output as
opposed to the length of work hours. Another facet ofthese efforts was to encourage male employees to get
involved in childrearing. As men taking childcare leave
became commonplace, the project team’s activities
evolved to the current focus on building lifestyles thatempower employees in their private and professional
lives and contribute to higher productivity.
Nakamura: In the past, there were many who simply did
overtime to match the work hours of their supervisors.
Today, we evaluate people based on their accomplishment of goals and their exercise of the corporate philosophy. It has therefore become important to think about
how to create results without overtime.
Takimoto: I want to eliminate unnecessary work to give
people more time to think about customers and humanresource development. Profession changes can be goodexperiences. However, employees can find themselves
needing specialized knowledge at companies like M & C
SYSTEMS CO., LTD., and in businesses such as credit
card services. This need and the fast pace of progressmean that significant study is necessary to compete inthese areas.

Dialogue 04
Unique Integrated Group Management Enabling Co-Creation Sustainability Management

Kawara: It is also important to get enough sleep andexercise and to eat right in order to deliver the best performance. These healthy habits help you clear your mind
and can give rise to new ideas. Healthcare management
has formed the foundations for such habits.
Nakamura: Health is crucial to creativity in work, andinnovation is impossible without such creativity. In thismanner, the positioning of health has not always
matched its fundamental purpose.

DNA of MARUI GROUP Attracting
Younger Generations    
Kawara: A major strength of MARUI GROUP is employees
who find happiness in helping others. This fact is readily
apparent if you take a step outside of the Company.
I therefore think that the idea of inclusion, or not excluding
anyone, is a perfect match for us. Identifying issues as
we seek out those who are troubled and resolving theseissues through our business is a process sure to create
innovation.
Takimoto: Our growth up until now has been driven byproviding joy to those who were at risk of being excluded
and making them appreciate our existence. This quest ispart of our very DNA. The securities business welaunched in 2018 was a product of our desire to prevent

younger generations from being excluded from financial
services. This undertaking is in line with our DNA. I hopethat customers who start cumulative investments
through Tsumitate NISA when young will be grateful thatthey used their EPOS card to partake in this program
when they turn 60.
Nakamura: It used to be the case that new graduateswere interested in specific businesses. Now, they seemto be drawn to our corporate philosophy. In addition,
many state a desire to test the limits of their potential
through profession changes in light of MARUI GROUP’s
wide range of businesses.
Tsuda: Younger employees were not at all resistant
toward the profession change system, and this system
has come to be recognized as an opportunity for growth.
This system is now a normal part of our business, but tostudents it is a source of appeal. The cultivation of a culture of tackling new challenges contributes to growth forindividuals and businesses while also nurturing theseeds of innovation.
Nakamura: At the moment, we are searching for meansof growing the seeds of innovation into new businesses
for the Group. By fostering a culture of tackling new­challenges, I want to create an ecosystem in which thedevelopment of our people equates to development of
the Company.

61

Strong Support for Inclusion
Inclusion Fes 2018—Co-Creation of Happiness for Everyone
The Inclusion Fes event has been held since 2017 to provide a venue for fosteringawareness among employees and allowing them to experience their differences
firsthand. The second iteration of this event took place in 2018. Over a three-day
period, this event spread support for inclusion among the approximately 1,700
employees and family members that attended.

Customer
Diversity andInclusion

Booths were set up that allowed
attendees to use wheelchairs
and otherwise experience thedifficulties of differently abledindividuals that are inconvenienced by our society together
with such individuals, andbooths for experiencing parasports. We also planned forums
for discussing life and lifestyles
with members of the LGBT
community and differently abledindividuals that enabled participants to learn about theirdifferences.

Tai chi workshops for relaxing themind and body were conductedalong with programs using the
JINS MEME motion tracking
glasses to teach participants
about the deep world of meditation. In addition, special presentations were held on the RIZAP
Method of exercise, and organic
vegetables were sold to getpeople thinking about healthyeating. These events were meant
to allow employees to experience
health in terms of the body, mind,
food, and everything else.

62

Health of Body,
Mind, andEverything Else

Promotion ofDiversity ofIndividuals’ Talents
and Ages

To give employees a glimpse of
the diverse range of sensibilities
found outside of the Company,
lectures and panel discussions
on the topics of conditions
outside of the Group were held
by former MARUI GROUP
employees and employees
seconded to other companies
that are active outside of theGroup. We also arranged business mixers with representatives
from other companies to promote discussion with people
from outside of the Group.

Inclusion Fes 2018 wasplanned and administered bymembers of Groupwide project
teams based on themes of
MARUI GROUP’s future,
diversity, and health.

64

SECTION 03

Co-Creation Sustainability
Management
CONTENTS
66

Medium-Term Management Plan
66	Basic Policy of the Medium-Term
Management Plan
67

MARUI GROUP’s Three Focus KPIs

68	Opportunities and Threats to be Facedover the Next Decade

84

90

70

Progress in Growth Investments

72

Dialogue 05: Future of MARUI GROUP Forgedthrough Co-Creation with
Start-up Companies

76

Retailing Segment

80

FinTech Segment

Message from the CFO
85Target Balance Sheet

88

Shareholder Returns and Policies

Co-Creation Corporate Governance90	Corporate Governance for
Co-Creating Corporate Value
93

Messages from External Directors

102	Directors, Audit & Supervisory Board Members,
and Executive Officers

65Medium-Term Management PlanBasic Policy of the Medium-Term Management Plan
It is stated in MARUI GROUP’s corporate philosophy that
we should “continue evolving to better aid our customers” and “equate the development of our people with thedevelopment of our company.” Based on this philosophy,
our mission is to co-create the happiness of all of our
stakeholders, including our customers, employees,

business partners, local communities, shareholders, andother investors, together with these stakeholders.
Seeking to heighten the corporate value that will arise
from this process, we are moving ahead with a five-year
medium-term management plan with the fiscal year
ending March 31, 2021, as its final year.

MARUI GROUP’s Three Focus KPIs for the Fiscal Year Ending March 31, 2021

Achieve EPS of more than ¥130, ROE of more than 10%, and ROIC of more than 4%
Plan Framework
Improvement of corporate
value through integrated
Group operations

Creation of new businesses
through transformation ofGroup businesses

Development of optimal
capital structure and further
improvement of productivity

Specific Initiatives

Retailing

Stores

Improve capital productivity by completing transition to a business structure focused on shopping­centers and fixed-term rental contracts and deploying next-generation lifestyle-oriented shopping centers

Omni-channel
retailing

Develop business focused on Internet sales while expanding scope of try-on stores that combine
Group expertise and other unique business models

Facility managementand distribution

FinTechCredit cards

Increase number of EPOS card fans across Japan and reinforce collaboration with commercial
facilities and companies while maintaining high profit margins and simultaneously expanding
business scale

Financial services

Expand revenues from rent guarantee, insurance, and other services utilizing credit know-how to
improve ROIC through business requiring minimal invested capital

IT

66

Utilize store renovation, distribution, building management, and other retailing expertise in
an integrated manner and advance business-to-business operations

Support expansion of Group business scope by utilizing new technologies to improvecustomer convenience

Optimal capital structure

Create structure in which ROIC consistently exceeds capital costs by improving ROIC through income
growth and establishing optimal capital structure suited to Group business structure

Growth investments

Develop commercial facilities utilizing shopping center and fixed-term rental know-how, invest in­venture companies to acquire new technologies, and execute other growth investments for improving
corporate value

Productivity improvement

Utilize human resources as necessitated by business portfolio as a united MARUI GROUP to further
improve Group productivity

Medium-Term Management PlanMARUI GROUP’s Three Focus KPIs
In line with the belief that all of its business assets areborrowed from society, MARUI GROUP identified three
key performance indicators (KPIs) for gauging Groupwide
performance beginning with the fiscal year ended March
31, 2017. These KPIs include earnings per share (EPS)
and return on equity (ROE), which are both indicatorsthat have been selected based on the Company’semphasis on improvements to medium-to-long-term
corporate value, as well as return on invested capital(ROIC), which is an indicator of profitability in the
Company’s main business.
In the fiscal year ended March 31, 2018, EPS rose
by a substantial 16.1% year on year, to ¥93.18, due toincome growth and the benefits of capital measures. In
addition, ROE increased 0.9 percentage point, to 7.6%,
and ROIC was up 0.1 percentage point, to 3.2%. In thismanner, we achieved our targets for all three indicators.
For the fiscal year ending March 31, 2019, we are forecasting record-breaking EPS of ¥109.9, which will represent an increase of 17.9% year on year.

Earnings per Share (EPS)

Return on Equity (ROE)

Return on Invested Capital (ROIC)

More than ¥130¥93.18
80.24
70.68
48.43

56.29

58.87

18.65
19.19

–31.90–86.36
FY2009FY2018More than 10%

FY2021
TargetMore than 4%

7.6%
6.7

3.3

6.0
4.5

1.6

5.0

5.2

3.0

1.8

3.0

3.3
3.1 3.2%

2.1
1.7

–2.7
1.0

1.1

–7.9
FY2009FY2018FY2021
Target

FY2009FY2018FY2021
Target67

Medium-Term Management Plan

Opportunities and Threats to be Faced over the Next Decade
In May 2017, MARUI GROUP defined the following eight long-term trends that will warrant attention: (1) the transition
to e-commerce, (2) the shift from goods to experiences, (3) the emergence of a sharing economy, (4) the declining
birthrate and aging population, (5) the increase in demand from inbound travelers, (6) the rise of cashless payment
methods, (7) the change of focus from saving to investment, and (8) the end of an era of low interest rates.

Opportunities Found in the Transition to E-Commerce
Threats to retailing businesses include the transition to
e-commerce, the emergence of a sharing economy, andthe declining birthrate and aging population.
MARUI GROUP’s answer to these threats is the transition to shopping centers and fixed-term rental contracts
and omni-channel retailing. Through the transition to

shopping centers and fixed-term rental contracts, we will
expand the portion of our stores devoted to restaurants
and other tenants that are resilient to the impacts of
e-commerce while also increasing the number of tenants
that offer services or experiences that cannot be replacedby e-commerce. At the same time, we will introduce tenants that utilize omni-channel retailing approaches as

Opportunities and Threats to be Faced by the Retailing Segment over the Next Decade
2017
Opportunities

Increase in demand from inbound travelers
Inbound travelers: 20 million → Approx. 40 million

Transition to e-commerce

Ratio of e-commerce sales: 5% → 20%

Shift from goods to experiences

Emergence of a sharing economy

Threats

Continuation of 3% reductions in apparel product selling prices

Sharing economy usage ratio: 2% → 10%

Declining birthrate and aging population

Working-age population: 71 million (7% reduction)

Transition to shopping centers and fixed-term rental

Expansion of omni-channel retailing

Create business model integrating stores, credit cards, and the Internet

Diversity and inclusion initiatives targeting customers
Compatibility with sharing economy through new businesses(goods, space)
10 yearsfrom now68

MARUI GROUP’s Response

Improve business profitability by transitioning from a department store
model to a real estate modelMedium-Term Management Plana part of a strategy of growing in conjunction with
e-commerce. We are also developing new businesses
matched to the impending era of sharing economies.
Initiatives to address population decline include the provision of products and services that can be enjoyed by customers of all ages, physical characteristics, and genders.
We thereby aim to expand our customer base andincrease customer numbers.

Response to the Rise of Cashless Payment Methods
The greatest opportunity for the FinTech segment is therise of cashless payment methods. Going forward, thecredit card market is expected to continue posting
annual growth of around 7% on average as a result of
e-commerce and consumption trends. In regard to thechange of focus from saving to asset building, we poised
ourselves to take advantage of this opportunity byredefining our credit card services business as a FinTechbusiness. Nevertheless, we cannot deny that the rise of
cashless payment methods threatens to lead to the contraction of the cash advance market and to erode theshare of payments conducted using credit cards throughthe diversification of payment methods and consequent
emergence of payment options other than credit cards.
However, the transition to a multipurpose credit
card—the EPOS card—which took place in 2006, hasgiven us a business model that can take advantage of therise of cashless payment methods. We also have ananswer for the diversification of payment methods: linking other payment methods to credit cards, as seen in
our new QR code payment service. Furthermore, MARUIGROUP has entered into the securities business with theaim of harnessing the change of focus from saving toasset building in order to promote financial inclusion.

Opportunities and Threats to be Faced by the FinTech Segment over the Next Decade
2017

Rise of cashless payment methods

Change of focus from saving to asset building

Portion of family financial assets represented by stocks and investment trust
receivables: 15% in Japan, and 30%–50% in Europe and U.S.

Opportunities

1. Transition to e-commerce; 2. Shift from goods to experiences;
3. Emergence of a sharing economy
Continuation of 7% average annual growth rates in line with the past decade

Rise of cashless payment methods (cash advances)
Potential contraction of cash advance market

Threats
Rise of cashless payment methods (diversification of payment methods)
Emergence of payment options other than credit cards

MARUI GROUP’s Response

New businesses (variety of financial services)

Increase in cardholders; Usage of EPOS card as main card

10 yearsfrom now

Note: Information on measures related to “(8) the end of an era of low interest rates” can be foundon page 87.

69Medium-Term Management PlanProgress in Growth Investments
Growth investments have been positioned as a priority measure in the five-year medium-term management plan set toconclude with the fiscal year ending March 31, 2021. MARUI GROUP has therefore earmarked ¥30.0 billion for growthinvestments over the period of the plan in order to fund future improvements in corporate value. These investments will
be directed at developing new businesses that utilize our shopping center and fixed-term rental know-how and investingin start-up companies to acquire new technologies. Over the period from April 2016 to August 2018, we conducted¥7.0 billion worth of these investments when scheduled future investments are included.
New business projects
Securities business
Investment in and collaboration with start-up companies
Anime business
Human resource development
FY2015FY2016FY2017

Investments in Human Resource Development
MARUI GROUP recognizes the growth of employees thatare committed to helping others as the source of all thevalue it creates. Accordingly, we strive to foster a corporate culture that is respectful of diverse values and inwhich all employees can feel energized and continue
growing. In the fiscal year ending March 31, 2019, weplan to invest ¥1,030 million in developing humanresources that will support MARUI GROUP in the future.
This amount represents a 41% year-on-year increase.
Human Resource Investments
Approx. 2.2 times higher

70

Since April 2017, we have been actively developing
frameworks to support employee growth that are open to
voluntary participation in order to cultivate employeesthat can think and act autonomously. Examples of suchframeworks include the future leader development program, the seconding of employees to start-up companies, dispatches to business schools, project team
activities, workshops, and training sessions.

Breakdown of Human Resource Investments
Recruitment and otherhuman resource
development expenses¥220 million¥480 million

Training center
expenses¥80 million

FY2018FY2019~¥1,030 million¥730 million

FY2017FY2018FY2019(Forecast)

FY2018¥730 million

Training-related
personnel expenses¥250 million

External training /education fees
¥180 million

Medium-Term Management Plan

Investments in New Businesses
When looking for the businesses that will drive the future
growth of MARUI GROUP and contribute to increases in
its corporate value, we will not limit ourselves to ourexisting operations in the Retailing and FinTech segments. We thus plan to develop businesses that integrate
stores, credit cards, and the Internet—a scheme that
represents a strength of MARUI GROUP—to addresssocial issues.
Accordingly, future investments in new businesses
will be focused on commercializing initiatives foraddressing social issues through MARUI GROUP’s

unique business model. At the same time, we will proactively direct investments toward start-up companies thatwill join us in creating such businesses. Our past investments in the anime business, among others, have begun
generating a certain degree of results. In addition, we
started up our securities business in August 2018and have also commenced six new business projects,
which are based on the themes of sharing, share houses,
financial inclusion, the development of new food-related
business models, personalization (sizes), and lifestyle
applications and wallets. Through these projects, we aim
to develop new businesses with a sense of speed.

New Business Project Initiatives

Sharing

Share Houses

Lifestyle Applications and Wallets

We aim to foster a culture of sharing goods
and skills that will take us into the future in
response to the social change represented bya shift from ownership to usage. One form of
these initiatives is stores that do not sell but
rather utilize the strengths of physical venues
to provide various customers with experiences such as sharing clothing and watches.

Housing is essential to our lives, but it is also
subject to social issues arising from the concentration of populations in urban centers andsoaring land prices. We are therefore examining possible means of building communities
and aiding community members throughshare houses, which offer convenient andaffordable housing options.

MARUI GROUP is researching and introducing
the lifestyle applications that have become an
indispensable part of customers’ daily lives,
such as those allowing for QR code payments
to be made via smartphone. In addition, weare collaborating with members of the communities surrounding Marui stores to invigorate these areas through such applications
and our unique services.

Message from a New Business Representative

Evolution in Step with the Times
Japan is notable among developed countries for the challenges it faces, including its aging population and declining birthrate. MARUI GROUP seeks to help build a flourishing and inclusive societythat offers happiness to all in this country. This quest will require that we move beyond existing businesses to leverage the management resources and expertise of MARUI GROUP in areas such as
stores, credit cards, and the Internet to contribute to the resolution of social issues. The goal of ourMasahisa Aoki
Executive Officer
General Manager,
New Business Development Department,
In charge of Anime Business,
MARUI GROUP CO., LTD.

new business projects is to commercialize initiatives for addressing social issues through our uniquebusiness model and improve corporate value. In these projects, we plan to abandon preconceptions
to develop unique business models in areas characterized by significant customer needs and concerns. The scale of these business models will be adjusted as necessary to live up to expectations
from across society for MARUI to resolve the issues that only it can.
Looking ahead, MARUI GROUP will continue to evolve its business structure in step with thetimes and changes in customer needs to accelerate its growth.

71

Dialogue 05

Future of MARUI GROUP Forged through Co-Creation
with Start-up Companies    

MARUI GROUP began co-creation with start-up companies with the aim of stimulating new innovation within the
Company. The following pages chronicle a discussion between four MARUI GROUP employees that are learning
new senses of value on secondment to start-up companies operating in areas such as e-commerce payment proxyservices, investment-style medicine, online store establishment support services, and comprehensive lifestylesupport services for non-Japanese individuals. In this discussion, these employees talk about the issues faced by
MARUI GROUP and its future potential.

Kyohei Taguchi

Yusuke Nakashima
Seconded to investment-style
medicine company, MinaCare Co., Ltd.

Mai Mitsumori
Seconded to e-commerce payment proxy service
provider, GMO Payment Gateway, Inc.

72

Seconded to provider of comprehensive
lifestyle support services for non-Japaneseindividuals, Global Trust Networks Co., Ltd.

Takayuki Shibao
Seconded to online store
establishment support service
provider, BASE, Inc.

Dialogue 05
Future of MARUI GROUP Forged through Co-Creation with Start-up Companies

Secondment to Start-up Companies as Extensionof Profession Change System    
Nakashima: The proposal of being seconded to MinaCarecame suddenly for me. It occurred when I was in my
fourth year at distribution company MOVING after beingtransferred from retailing company MARUI CO., LTD.
I had felt that the relocation to MOVING had been a significant contributor to my growth. For this reason, this
proposal filled me with excitement for the chance to once
again test my skills in a new industry and the growth tobe achieved therein. At MinaCare, I am responsible forplanning new businesses. This position has me wear
­several hats, performing tasks related to sales to corporate clients, human resources, public relations, and evenaccounting.
Shibao: My department at BASE is responsible for­planning new services, designing business models, andconstructing and performing daily operation of systems.
I personally enjoy trying out new things and tackling newchallenges, and I get great joy out of the constant senseof growth I feel in this position. Uncovering new social
needs through the development of new services is particularly exciting. This job also lets me meet people that
I would have never encountered at MARUI GROUP, forexample, women in their 20s that cannot use computers
but make tens of millions of yen a year through theirsmartphones or the fans that gather at pop-up stores.
Taguchi: I am being seconded to Global Trust Networks(GTN), a company that provides rent guarantee and otherservices based on its desire to improve the lives of nonJapanese individuals that live in Japan. Around 70% of
GTN’s employees are non-Japanese, and we can perform
debt recovery procedures in 15 languages. GTN’s credit
examinations standards are completely different fromthose of Epos Card Co., Ltd., which is another pointof interest.
Mitsumori: At GMO Payment Gateway, I conduct sales
activities that include preparing proposals for customers
that are considering introducing payment systems on
their online sales sites. I had spent the entirety of mytime at MARUI GROUP on the sales floor or in productdevelopment, and I had therefore felt aversion to FinTech
and sales. As such, I was filled with uncertainty whennews of my secondment suddenly arose. Contrary to my
expectations, the job is actually a lot of fun, and I feel likeI grow every day.
Nakashima: I definitely feel that I have grown throughmy secondment. At MARUI GROUP, I didn’t really havethe opportunity to develop projects by myself, and it justfelt natural to split a task with my coworkers. Developing
projects requires a wide range of business skills. I have asevere lack of these skills, and I am constantly finding
new gaps in my abilities. However, I feel that the greatest
benefit of my secondment has been this, the ability to
discover such issues by working at a start-up company
and to learn and grow as a result.
Taguchi: The ability to grow by engaging in various types
of work that I experienced through MARUI GROUP’s­profession change system is even more pronounced in
the experience of secondment. Start-up companies
require each of their employees to perform various tasks.
Working in such a company made me realize that theconcept of diversity was less about specializing in a specific type of work and more about developing one’s own
style and calling and excelling in this area. I also learned
that MARUI GROUP employees can be more successfulin start-up companies than I had expected.
Shibao: It is important for people to possess both specialized skills and experience. After coming to BASE,
I lost confidence in my ability to compete with people intheir 20s in technological fields in terms of either skills orideas. However, these younger employees lacked experience in engaging face-to-face communication or indeveloping business, creating room for me to contributewith the insight I have accumulated. My time at BASE hasreminded me of the ability to identify skills you lack andgrow by interacting with people who are different thanyou. MARUI GROUP already has a framework for humanresource fluidity with its profession change system. If we
can incorporate personnel from other organizations andindustries that differ from ours, we should be able tocreate an even better cycle.

73Dialogue 05
Future of MARUI GROUP Forged through Co-Creation with Start-up Companies

MARUI GROUP as Viewed from the Outside    
Taguchi: Start-up companies have no leeway when it
comes to resources. Accordingly, they have no choice but
to employ people that have gained experience elsewhere.
Recognizing this made me aware of the extreme care
MARUI GROUP pays in developing its human resources.
Mitsumori: The employees at start-up companies tend
to be incredibly skilled and capable of generating profits.
However, they lack opportunities to thinking about the
future of their company. Conversely, MARUI GROUP provides numerous opportunities to think about the future of
the Company and its organization from a medium-to-longterm perspective. My experience at a start-up company
made me realize how powerful these opportunities are.
At the same time, I can’t help but wonder if this power isbeing effectively exercised by individuals.
Shibao: A major strength of start-up companies is theirincredible speed. Their corporate cultures often encourage employees to act first and make improvements later,using outside services and other tools as necessary.
This way of thinking is very different from that of
MARUI GROUP.
Nakashima: I am involved in planning a new business forpromoting the importance of preventive medicine. When
we had our kickoff meeting in April, I was shocked tohear that we were looking to commence service in thesummer.
Taguchi: The difference at start-up companies is clear
right from the scheduling phase, with tasks sometimes
allocated for only three days with the next step due
within a week. I want to transmit this type of speed to
MARUI GROUP.
Shibao: The speed and frequency of output at start-up
companies is amazing. However, their services cansometimes be a bit unrefined and they are unable toimmediately launch large-scale projects.
Nakashima: I don’t necessarily think that large-scalecompanies need to move at the same speed as start-up
companies. Both types of companies have their own
benefits and roles. Ideally, the relationship between
these types of companies should entail mutually sharing
strengths and compensating for each other’s
insufficiencies.
Shibao: One thing that changed my views after my secondment was realizing that, rather than growing sales in74

the here and now, start-up companies have a responsibility toward the future. Specifically, they need to consider how they want to shape the future through theirservices. Of course, profits are something considered in
the end, but this pursuit of profits is not about the present, but is instead framed in the future they wish to realize.
Taguchi: The timeframe used at start-up companies may
be longer than we might expect. Rather than pursuing
short-term goals, these companies look at the businesses
they will need to develop to accomplish larger goals in the
future. If one only focuses on short-term profits, they will
not be able to make bigger achievements.
Shibao: For start-up companies, their underlying goal,
their main businesses, is to accomplish some sort of mission. They therefore place more focus on resolving someissue than on growing profits. Short-term profits are, ofcourse, important. However, if a company focuses toomuch on the short term, it will fail to serve its customers
in the future and will thus be unable to accomplish
its mission.
Taguchi: If a company prioritizes its mission, concepts
like industry and business model will fade away. For
example, GTN says that its business is not that of a mobile
phone service provider or a rent guarantor but rather thatof a port for connecting two countries. As there are a lotof people that come to Japan, GTN provides support inJapan. However, its real targets are the 1.2 billion people
that live in other countries around the world. As immigrants tend to be neglected in any country, GTN’s expertise can be used to develop businesses anywhere in theworld with ease. From this standpoint, I recently often
find myself thinking about what exactly is MARUI GROUP’s
main business. I don’t think it is retailing or finance. No,
I think MARUI GROUP has evolved further than that.

Responsibility-Driven Action by All Employees    
Nakashima: At MinaCare, there is a very frank atmosphere in which people refer to everyone, even their­supervisors, by their first name, with no mention of rank.
This atmosphere makes it easy to voice opinions. This lackof distance with supervisors is something that is very
important.
Shibao: BASE deemphasizes hierarchy in a similarmanner, and supervisors tend not to micromanage
work processes. Moreover, input from supervisors on

Dialogue 05
Future of MARUI GROUP Forged through Co-Creation with Start-up Companies

business plans is taken as an opinion, not as an order.
Fundamentally, everyone is expected to make their own
decisions and take responsibility for their outcomes.
Mitsumori: Doing everything related to sales, from proposals to estimates and follow-up, at one’s own discretion is a hefty task. I recognize that even a small explanation
deficiency or other mistake can cause massive losses forcustomers, and I try to act swiftly.
Taguchi: Start-up companies expect employees to exercise responsibility. After coming to such a company, I havestarted to think I may have lacked a sense of responsibility when I was at MARUI GROUP. Perhaps I was complacent with being in a big company.
Mitsumori: My more experienced colleagues at GMO
Payment Gateway make presentations based on thestandard of whether or not they can wager their year’ssalary on the proposal. I found myself wondering if I had
ever bet so much on a single proposal and if there werea way to inspire this level of commitment to one’s work
among all employees at MARUI GROUP.
Nakashima: In the past, I had never really had an idea ofwhat I wanted to accomplish, leading me to simply follow
the instructions of those more experienced than me. If I
were able to create a service that I truly wanted to show
the world, wanted to have people buy, I think it would bereally exciting. This type of work would be more enjoyable, and I want to make teams with this type of mentality.
Shibao: I want to transmit the culture of taking action by
one’s own volition to MARUI GROUP and help it swiftly
spread and become entrenched in our corporate culture.
The ability to experience such a culture has perhaps
been the greatest prize of my secondment.
Taguchi: There is nothing that a start-up company cando that MARUI GROUP cannot. This is something I feelvery strong about. If everyone at MARUI GROUP thinks
more about what they can accomplish, exercising boththeir talents and a sense of responsibility, we will become
stronger as people and as a company.
Nakashima: Fostering that sentiment is the responsibility of those of us who were seconded. I look forward tousing what I learned from this experience to guide
MARUI GROUP in a better direction.

Career History of Four Seconded Employees

Yusuke Nakashima

Mai Mitsumori

Kyohei Taguchi

Takayuki Shibao

Joined MARUI GROUP in 2011

Joined MARUI GROUP in 2014

Joined MARUI GROUP in 2006

Joined MARUI GROUP in 2005

Marui Family Mizonokuchi,
MARUI CO., LTD.

Ikebukuro Marui, MARUI CO., LTD.

Kawasaki Marui, MARUI CO., LTD.

Omni-Channel Retailing Department,
MARUI CO., LTD.

Planning Department,
AIM CREATE CO., LTD.

Advertisement Planning Department,
AIM CREATE CO., LTD.

Store Support Department,
MARUI CO., LTD.
Group Logistics Department,
MOVING CO., LTD.

System Planning Department,
M & C SYSTEMS CO., LTD.
Credit Management Department,
Epos Card Co., Ltd.

Demand Survey Department,
MARUI CO., LTD.
Omni-Channel Retailing Department,
MARUI CO., LTD.

75

Retailing Segment

Message from the President of MARUI CO., LTD.
    We are committed to discovering uniqueofferings to be provided because of
not selling to create services that are ofvalue to customers.
    Hajime Sasaki
Senior Executive Officer
President and Representative Director,
MARUI CO., LTD.

he transition to shopping centers and fixed-term
rental contracts has supported improvements
to income thus far, and this transition is scheduled forcompletion in the fiscal year ending March 31, 2019.
As for the e-commerce businesses that will be key tofuture growth, our three consecutive years of higher
revenues seem unsatisfactory given the growth potentialof the market.
It can be expected that the trend toward e-commerce,
the shift from consumption of goods to consumption ofexperiences, the emergence of sharing economies, andother changes will accelerate going forward. With this inmind, we are testing various ideas for creating the storesof the future, which will comprise food vendors and service
providers that cannot be replaced by e-commerce aswell as experience providers, omni-channel retailers, andsharing facilitators that are synergistic with e-commerce.
In addition, we are moving forward with omni-channel
retailing and personalization initiatives, which will becore elements of our future e-commerce strategies. We
also recognize the need to revise our concept of stores.
What can be done through the Internet can be left to thisvenue. In our stores, we will focus on what cannot bedone through the Internet and what provides value tocustomers. For example, we have started education programs that allow employees to gain the necessary knowledge and skills for taking a counseling approach toward
customer service with regard to women’s shoes in lightof a significant amount of concern customers haveT76

regarding their feet. We are also developing try-on stores,
which do not have inventories and conduct sales via
e-commerce frameworks. These stores reduce the needfor back-office procedures, thereby enabling staff to
focus more on customer service and facilitating thiscounseling approach. Looking ahead, we plan to leave
sales to the Internet so that we can use stores to provide
such counseling services as well as experiences and otherwise to customer-oriented customer service that is notpreoccupied with sales. Another area where customers
have ­concern is product sizes. We therefore want tomake it possible for customers to order shoes of the­perfect size over the Internet based on the shoes theyown or measurements of their feet.
Our new approach toward retailing will be closer toservice provision. Accordingly, we will be using lifetime
value (LTV) to gauge our operations going forward, andour initiatives will be mindful of this. This evaluation
method, we anticipate, will enable us to focus on whatis actually beneficial to the customer, as opposed toshort-term sales figures, which in turn will also allow
us to provide more helpful services.
Furthermore, I think that catering to customers’
needs with personalized products offered through storesand the Internet is part of our role in realizing an inclusive
society. By divorcing the concept of retailing from theidea of selling, we are committed to discovering uniqueofferings to be provided because of not selling to create
services that are of value to customers.

Retailing Segment

Progress in the Retailing Segment and Future Strategies
Progress Rate of 87% in Transition to Shopping
Centers and Fixed-Term Rental Contracts
In the fiscal year ended March 31, 2018, the Retailingsegment achieved its target for operating income witha figure of ¥8.8 billion, up ¥1.1 billion year on year. This
increase was attributable to the transition to shopping
centers and fixed-term rental contracts, higher earnings
from e-commerce, and a decline in inactive floor space.
ROIC, a KPI, rose 0.3 percentage point, to 2.8%.
In the fiscal year ended March 31, 2018, the progress
rate of the transition to shopping centers and fixed-term
rental contracts was 87% and income improvements fromthe transition amounted to ¥3.2 billion (Figure 1). By
dividing up large, loss-generating consignment sales floors
while replacing tenants on these floors, we were able toachieve income improvements that exceeded our target.
In conjunction with this transition, the ratio of oursales floors accounted for by high-demand food and services has doubled to 29% over the past four years while
the ratio of apparel has shrunk from 53% to 31%. In
addition, MARUI GROUP has been positioning foodvendors on entry floors resulting in higher purchasenumbers and transaction volumes.
The transition to shopping centers and fixed-term
rental contracts is expected to be completed in the fiscal
year ending March 31, 2019. However, we intend to

Figure 1: Progress and Targets for Transition to
Shopping Centers and Fixed-Term Rental Contracts
100%

Tenants That Are Synergistic with E-Commerce
Going forward, MARUI GROUP intends to introduce tenants that cannot be replaced by e-commerce, such as
food vendors and service providers, as well as tenants
that are synergistic with e-commerce, such as experience
providers, sharing facilitators, and omni-channel retailers(Figure 3).
An example of experience providers would be AppleStore Shinjuku. Experience providers seek to deliver
value suited to the consumption of experiences, thedesire to see, hear, and do. Another experience provider
is lululemon, which holds yoga events in Shinjuku Marui

Figure 2: E-Commerce Sales

105%

¥20.5
billion87%
62%

convert an additional 9,917m2 worth of floor space tofixed-term rental contracts beginning in the fiscal year
ending March 31, 2020, in response to the conversion ofstorage space to sales floors and the optimization of specialty store floor space.
Total e-commerce sales amounted to ¥23.0 billion in
the fiscal year ended March 31, 2018, an increase of 8%
year on year (Figure 2). Factors behind this increase
included our ability to expand our lineup of products not
in Company warehouses by sharing inventory information with our business partners and the collaboration
with KDDI CORPORATION in relation to its Wowma!
Internet sales site that commenced in February 2017.

+9,917 m2¥19.9
billion¥20.4
billion¥23.0
billion¥21.3
billionTo be converted
after 100%20%
7%FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021(Target) (Target) (Target)
YoY income
improvements—¥0.9
billion¥2.0
billion

FY2014FY2015FY2016FY2017FY2018¥3.2
billionRatio of fixed-term rental contracts = Fixed-term rental contracted floor space ÷Total floor space capable of being contracted as fixed-term rental
Sections not applicable for fixed-term rental contracts: Sections not applicablefor fixed-term rental contracts based on requests of building owners, directly
managed sales floors, event spaces, food sales floors, etc.

77Retailing Segment

Figure 3: Stores of the Future (Stores Offering Distinctive Services That Cannot Be Replaced by E-Commerce)
Rooftop parks

HotelsUpper floors

Commercial zone

Mid-level
floorsEntry floors

Tenants that cannot be
replaced by e-commerce

Tenants that are synergisticwith e-commerce

Tenants that cannot be
replaced by e-commerce

Offices

Service providers

Entertainment, beauty, health, learning

Experience providers

Customization, workshops

Sharing facilitators

Sharing, rental, reuse

Omni-channel retailers

Counseling, showrooms

Food vendors, etc.

Main Building. Sharing facilitators, meanwhile, are­tenants that provide schemes facilitating sharing,exchanges, and redistribution of goods and places
among various people. Sharing facilitators include
KARITOKE, which operates luxury brand-name watch
rental stores jointly with MARUI GROUP in Yurakucho
Marui and Namba Marui, and enicia, which offers coworking spaces in Shizuoka Marui. Omni-channel retailers are tenants that use e-commerce as their primarysales channel while also utilizing physical stores to provide functions not available through e-commerce. For
example, FABRIC TOKYO, located in Shinjuku Marui Main
Building, measures customers buying order-made suitsin stores and allows them to use these measurements topurchase additional suits online.

Cafés, restaurants, food-related items, take-out

Initiatives for Facilitating the Growthof E-Commerce Operations

automated picking and packing equipment that can function 24 hours a day. We also made our in-store pickup
services for items bought online available at all stores in
February 2018, helping us limit the impacts of theincreases in delivery costs instituted by couriers.
Furthermore, a dedicated user interface and user
experience division was established during 2017.
MARUI GROUP is planning the full-fledged launch of an
application optimized for smartphones in the fiscal year
ending March 31, 2019, and intends to implement
improvements to this application through co-creation
with customers going forward.
MARUI GROUP has also been collaborating with
Virtusize to address difficulties in choosing the appropriate size when purchasing items online. Through this collaboration, we aim to develop a scheme that compares
the sizes of clothing the customers have purchased in
the past and of the clothes they are considering

The total number of items shipped from our warehouses
has increased by 40% over the past three years, making
reforms to our logistics systems a pressing task. In thefiscal year ended March 31, 2018, we introduced the
AutoStore robotic warehouse system, which has tripled
the number of items we can store in our warehouses while
cutting the workload related to shipping by 40%. In the
future, we will examine the possibility of expanding thefloor space of our distribution centers and introducing

System enabling storage and management of large quantities of products

78

Robots that automatically picknecessary products

Retailing Segment

purchasing online to choose a size that matches theirsubjective sense of comfort. This approach differs fromstandard approaches of choosing customer sizes basedon objective body measurements. This scheme will be
deployed at MARUI GROUP stores going forward.

Issues for Specialty Stores and Response Measures
In conjunction with the transition to shopping centersand fixed-term rental contracts, MARUI GROUP has been
reducing the floor space of its shopping centers to bringthis floor space to an optimal level. Future decisions onwhether to continue, discontinue, or reform specialty
stores will be made based on earnings by product category and contributions to new cardholder recruitment inorder to reconstruct our sales floors. Discontinued stores
will be converted to fixed-term rental sales floors to
improve earnings. Reformed stores will undergo a change
in business model, such as to a rental or a try-on store.
One type of business model change to be undertaken will be the development of rental operations, which
are garnering a great deal of attention amid the trend
toward usage over ownership. In the fiscal year ending
March 31, 2019, MARUI GROUP will take its first rental
operation foray in the area of women’s dresses, whichcustomer surveys indicated as an area where customer
interest is high. Our goal is to grow these operations togenerate sales of around ¥5.0 billion with an operating
income margin of between 30% and 40% in five years.
Also, we will target ROIC of approximately 70% on average over the five-year period.
In the past, MARUI GROUP has expanded the rangeof sizes of its private brand women’s shoes to 16, covering nearly 100% of the foot sizes of adult Japanesewomen. These efforts are being extended to another areaof apparel: personalized suits. By quintupling our lineupof sizes and allowing for custom-made orders, we have
evolved our personalization options to provide all customers, including members of the LGBT community, withthe perfect match. Moreover, we register data on themeasurements of customers at stores to facilitate subsequent purchases through the Internet. We anticipate thatthese efforts will help us forge long-term relationships
with all customers and thereby increase LTV.

ROIC Forecast
MARUI GROUP will target ROIC of 5.3% or more in thefiscal year ending March 31, 2021, as initially expected,

Figure 4: ROIC Forecast
Prior to start oftransition

Products andfixed assets¥268.8 billion

After start of transition

5.3% or more
ROIC
2.8%
¥244.6 billion

Products:-¥11.8 billion
Fixed assets:-¥12.3 billion

FY2014FY2018FY2021(Forecast)through improvements in both income and invested capital efficiency (Figure 4). In the past, income improvements have been driven by the transition to shopping
centers and fixed-term rental contracts. Going forward,
income improvements will be pursued by growing
e-commerce operations, reducing costs through more
efficient personnel utilization, and raising the value of thetransition to shopping centers and fixed-term rental contracts. E-commerce sales in the fiscal year ending March
31, 2021, are forecast to reach ¥33.0 billion, an
increase of more than 40% over the fiscal year ended
March 31, 2018. Over the period leading up to this year,
we plan to achieve reductions in expenses throughimproved efficiency realized by effectively allocating
human resources to the FinTech business and othergrowth fields.
A benefit of the model produced through this transition is the ability to generate income with fewer on-balance
sheet assets. For example, these operations do not
require procurement of products through consignment
agreements and entail fewer fixed assets due to reduced
store renovation expenses. These benefits have equatedto a decrease in invested capital of around ¥24.1 billion
over the past four years. The Company will target
improvements in ROIC going forward by advancing thistransition.

79

FinTech Segment

Message from the President of Epos Card Co., Ltd.
    We are committed to growing further
through expansions to our base ofpremium cardholders andnew collaboration businesses.
    

Yoshinori Saito
Senior Executive Officer
President and Representative Director,
Epos Card Co., Ltd.

n the fiscal year ended March 31, 2018, theFinTech segment achieved impressive performance on the back of growth in card shopping transactions through EPOS cards, leading the segment to post
higher operating income for the sixth consecutive year
and to achieve its target for ROIC. A particularly notableaccomplishment was the continued strong growth oftransactions by holders of premium cards, namely our
Platinum and Gold cards. These transactions exceeded¥1 trillion for the first time in the year under review, once
again driving overall growth.
Previously, the number of new cards issued at Maruiand Modi stores had been chronically low as a result of
the transition to shopping centers and fixed-term rental
contracts. By stepping up coordination between storesand cards in our recruitment measures, we have realized
steady recovery in the number of card applications. At
the same time, the number of external facilities withwhich we collaborate reached 22 on August 31, 2018.
Our aggressive development of collaboration cards with
anime and other content creators has translated tosmooth progress toward achieving our goal of issuing
800,000 new cards a year. Going forward, we will accelerate recruitment measures associated with the Internet
and services to increase application numbers. In thefiscal year ending March 31, 2019, we commenced collaboration with GMO Payment Gateway, Japan’s largest
e-commerce payment proxy company, and ABLE. INC.,

I

80

a major rental housing brokerage and managementcompany. Meanwhile, we are working to address card
cancellations, a major factor behind the sluggish growthof cardholders, by encouraging cardholders to upgrade
to Gold cards to increase renewal rates. We thus aim toquickly achieve new application numbers of more than
1 million.
MARUI GROUP is making steady progress towardrealizing its vision for financial inclusion. In August 2018,
we launched our securities business to expand our
lineup of financial services to address the previously
neglected needs of EPOS cardholders pertaining to asset
building. We are also preparing for the rapid changes
projected in the payment service market, which will
include the advent of QR code payments, a payment
method expected to spread as cashless payments
become more prominent.
Furthermore, we are investing in our system infrastructure to automate credit card application and debt
collection procedures, which are expected to increase
together with transaction volumes, in order to improve
productivity. Profit growth in our credit card services
operations has led to higher operating receivables. We
are working to combat this trend by boosting service revenues that do not require additional assets, such as revenues from rent guarantees, to heighten profitability andcapital efficiency.

FinTech Segment

Progress in the FinTech Segment and Future Strategies
Higher Card Shopping Transactions
and Service Revenues
In the fiscal year ended March 31, 2018, operating
income in the FinTech segment increased for the sixth
consecutive year, rising ¥3.2 billion year on year, to¥30.3 billion. As for ROIC, we achieved our target with afigure of 3.8%. Revenue also grew for the sixth consecutive year, exceeding ¥100.0 billion.
Card shopping transactions were up 15% year on
year, to ¥1,600.9 billion. This growth rate was higher
than the industry average growth rate (Figure 1). Overall
growth in card shopping transactions was driven bytransactions made using premium cards, such as our
Platinum and Gold cards, which exceeded ¥1,000.0
billion for the first time in the fiscal year ended March
31, 2018. Transactions by premium cardholders havegrown by an average rate of 27% over the past five years,
and the number of these cardholders has climbed to1,840,000.
Revolving and installment payment transactions only
grew by 9% year on year in the fiscal year ended March
31, 2018, a low rate in comparison to the growth of card
shopping transactions. This lackluster growth was a
result of the dissipation of the benefits of measures instituted in the fiscal year ended March 31, 2017. We will
not feel this rebound in the fiscal year ending March 31,

2019, and we therefore project a 17% increase in revolving and installment payment transactions. MARUIGROUP aims to achieve rapid growth in installment payments, which are the target of strong demand from customers, by accelerating our initiatives for promoting thistype of payment, increasing the number of affiliates atwhich this method can be used, and introducing asystem that enables cardholders to switch to multiple
installment payments even if their initial contract only
allowed for one-time installment payments.
As a result of collaboration with the Anime Business
Department established in April 2016, anime-inspired
cards represent 10% of all new card issuances.
Moreover, as of August 31, 2018, we were collaborating with 22 commercial facilities. Our scheme of positioning employees versed in retailing at partner facilities
has received much praise, helping spread EPOS cards
throughout Japan, as indicated by the 1 million cardholders currently living in areas without a Marui or Modi store.
Service revenues rose by a significant 20% year on
year primarily due to rent guarantee services. Rent guarantees represent an area in which we can capitalize on
MARUI GROUP’s expertise and strengths. We haveachieved massive growth of 32% in these revenues on
average over the past five years due to trends stimulatedby the impending revision of the Civil Code. In the fiscal

Figure 1: Card Shopping Transactions¥1,600.9 billion
YoY growth of
EPOS card

Standard
cardholders¥425.7 billion

GODZILLA EPOS CARD
TM&©TOHO CO., LTD.

YoY growth ofindustry average

15.1%

8.0%
Platinum and Gold cardholders¥1,175.2 billion

Gintama EPOS CARD

New Prince of Tennis EPOS CARD©HIDEAKI SORACHI/SHUEISHA,TV TOKYO, DENTSU, BNP, ANIPLEX©Takeshi Konomi / SHUEISHA, NAS,
New Prince of Tennis Project

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

81

FinTech Segment

year ending March 31, 2021, we will target service revenue of ¥10.0 billion, twice that of the year under review.
Provision for bad debt increased 28% in the fiscal
year ended March 31, 2018, following a rise in operatingreceivables. Nonetheless, we maintained the low ratio ofbad debt write-offs of 1.6%.

Lower Cancellations and Higher LTV throughGrowth in Gold Cardholders
We have failed to meet our new card application targets
for two consecutive years. This failure came in spite of
the annual influx of more than 800,000 new applicants
we had anticipated. Growth in cardholder numbers has
been stagnating due to higher cancellations.
To address this situation, we are encouraging cardholders to upgrade to Gold cards. Holders of Platinum
and Gold cards have exceptionally high renewal rates of
upwards of 90%. For this reason, we believe that we canlimit card cancellations by encouraging cardholders to
upgrade to Gold cards. In addition, Gold cards tend to
boast high profitability, meaning that a rise in the number
of Gold cardholders will contribute to increased LTV forthe entire FinTech segment.
As one measure of encouraging these upgrades, welaunched the EPOS Family Gold card in June 2018. In
addition, we are reinventing our marketing approach bymerging data, IT, and artificial intelligence. Through thisinitiative, we will verify the process that customers follow
from new card application to Gold card upgrade to tailor
communications to individual cardholders in order tostrategically encourage them to upgrade to Gold cards.

We are targeting the swift achievement of 3 million premium cardholders through these initiatives (Figure 2).

Promotion of New Card Applications throughInternet- and Experience-Oriented Fields
New cardholder recruitment has previously been focusedon stores. In the future, however, we aim to step up collaboration with companies in Internet- and experienceoriented fields (Figure 3). Examples of these fields include
e-commerce, recurring payments, and rent guarantee­services, which represent highly profitable fields thatencourage ongoing use and promise high rates of Goldcard upgrades. While maintaining the net annual influx of
500,000 from goods- and physical store-oriented venues,
we are looking to double the number of new cards issued
through Internet- and experience-oriented fields.
One initiative for accomplishing this goal is MARUIGROUP’s collaboration with GMO Payment Gateway,
Japan’s largest e-commerce payment proxy company.
Through this collaboration, we will develop the industry’s
first scheme allowing for purchase, credit payment, anduse of application benefits to be conducted immediately
after card application by offering real-time inspections
24 hours a day. This scheme is expected to greatly
increase convenience for customers. We also expect
value for online affiliates, such as higher customer numbers, increases in repeat users, and acquisitions of new
customers through referrals of EPOS cardholders. The
full-fledged operation of this scheme is scheduled tocommence during the third quarter of the fiscal year
ending March 31, 2019. In the fifth year after the launch

Figure 2: EPOS Cardholder Forecast
10,000,000

8,000,000
Standard
cardholders
6,000,000

6,570,000

1,840,000

3,000,000

Platinum and Gold
cardholders
4,000,000

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024(Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast)82

FinTech Segment

EPOS Pay QR Code Payment Service

Figure 3: Directives for Future Collaboration
E-commerceContent /Sharing

Internet

300,000 applicants(+150,000)

Going
forwardGoods

ExperienceGoing
forward500,000 applicantsSale of goods

200,000 applicants

Physical stores(+100,000)

Servicesof this scheme, we hope to have extended it to more than
200 application venues and over 100,000 customers.
In experience-oriented fields, together with ABLE,a major rental housing brokerage and management company with 422 directly operated stores and 375 franchisebranches located throughout Japan, MARUI GROUP
launched a collaborative rent guarantee services planat certain locations in April 2018. We aim to achieve
approximately 80,000 rent guarantee users and around
40,000 new card applicants through this project in thefiscal year ending March 31, 2021. Through these collaborative initiatives, we will look to swiftly increase thenumber of total cardholders to 8 million.

Figure 4: Medium-Term Targets
for the FinTech Segment

MARUI GROUP has commenced a verification test of
EPOS Pay, its QR code payment service in targeting restaurants, venues at which credit cards often cannot be
used, in certain areas. Based on the results of this test,
we plan to introduce this service at our stores and thefacilities of partners, after which we will approach potential affiliates located around Marui stores and in otherareas of cardholders’ lives. We thereby aim to increase
the share of payments using EPOS cards in the payment
market by encouraging customers to make small-sum
purchases usually made with cash through QR code
payments.

Future Outlook
In the fiscal year ending March 31, 2019, we are forecasting ROIC of 3.9% and operating income of ¥33.5 billion,
which will represent an increase of ¥3.2 billion, or 11%,year on year (Figure 4). Total transactions are expected torise 16%, to more than ¥2,280.0 billion, while revenue
grows 14%, to ¥124.3 billion.
In the fiscal year ending March 31, 2021, we areforecasting operating income of ¥40.0 billion or more
and total transactions of ¥3,000.0 billion or more. In
addition, we are working toward our initial target of over
4.1% for ROIC by liquidating the higher operating receivables that resulted from growth in EPOS card transactions (Figure 5).

Figure 5: Operating Receivables and ROIC Forecasts
for the FinTech Segment
More than¥3,000.0 billion

Total transactions¥1,970.0 billion

4.1%–4.3%
ROIC
3.8%

More than¥2,280.0 billion¥548.0 billion
Operating receivables¥413.9 billion

Operatingincome¥30.3 billion

FY2018Liquidation ofreceivables¥33.5 billion

FY2019(Forecast)¥630.0 billion–¥650.0 billion

More than ¥40.0 billion

FY2021(Forecast)

FY2016FY2018FY2021(Forecast)83

Message from the CFO

By constructing the optimal capital
structure for the Group’s business,
we will consistently generate ROIC
that exceeds capital costs.
    

Motohiko Sato
Senior Managing Executive Officer and CFOn the fiscal year ended March 31, 2018, thesecond year of the medium-term management
plan, total Group transactions rose 13.2% year on year,to ¥2,189.4 billion, exceeding ¥2 trillion for the first time
thanks to the strong growth of card shoppingtransactions. At the same time, operating income
increased for the ninth consecutive year, to ¥35.2 billion,
and net income attributable to owners of parent grew for
the seventh consecutive year, to ¥20.9 billion. Coupledwith the benefits of share buybacks and dividend
increases, this income growth contributed to a 0.9
percentage point increase in ROE, to 7.6%; a 16.1%
rise in EPS, to ¥93.2; and a total shareholder return of
45.6%, well above the Tokyo Stock Price Index averageof 22.0%. In addition, income improvements in the
Retailing segment led ROIC to rise by 0.1 percentage
point, to 3.2%. ROIC exceeded weighted average cost ofcapital (WACC), which was 3.0%, for the secondI

84

consecutive year as a result of efforts to reconstruct ourbusiness and capital structures to achieve the corporate
value improvements targeted by the medium-term
management plan.
The reconstruction of our capital structure is being
advanced based on our target balance sheet, a vision forthe balance sheet judged to be ideal from theperspective of long-term corporate value improvement,
our participation in the securities business, and new
business entries and reforms to be undertaken in the
future. Total assets are expected to rise to ¥1 trillion in
the fiscal year ending March 31, 2021, as a result ofhigher operating receivables (installment sales accounts
receivable and consumer loans outstanding) in the
FinTech segment. Meanwhile, the liability portion of ourbalance sheet has been more oriented toward retailingwith high levels of shareholders’ equity. Under the
medium-term management plan, we aim to address thisstructure by transforming our business model to target
an equity ratio of approximately 30%. Higher funding
demands will be met through the procurement of lowcost capital as we seek to lower overall capital costs byincreasing the portion of funds accounted for by interestbearing debt. At the same time, we will seek to maintain alevel of interest-bearing debt that is equivalent to around
90% of operating receivables to ensure financial safety.
We plan to enact a fund procurement policy of liquidating operating receivables and procuring funds
through borrowings from financial institutions and bondissuances. Our end goal is to improve asset efficiency bylimiting the increase in total assets and liabilities.

Target Balance Sheet

01 Target Balance Sheet
POINT

Procurement through interest-bearing debt in response to increases in operating receivables
Optimal capital structure defined as targeting an equity ratio of approximately 30%
Total assets ¥1 trillion

Total assets ¥730.1 billion
Operatingreceivables¥413.9 billion

Liabilities ¥448.0 billion
Interest-bearing debt

¥359.3 billion

Shareholders’ equity

Fixed assets, others¥281.6 billion

Liabilities ¥730.0 billion

Total assets ¥867.2 billion
Liabilities ¥592.2 billion

Operatingreceivables¥548.0 billion

Interest-bearing debt

Operatingreceivables¥680.0 billion

Interest-bearing debt

¥590.0 billion¥485.3 billion

Shareholders’ equity

Fixed assets, others¥274.4 billion

Equity ratio 39%

Shareholders’ equity

Fixed assets, others¥300.0 billion
Equity ratio 30%

Equity ratio 32%

FY2016 (Actual)

FY2018 (Actual)

The medium-term management plan with the fiscal year
ending March 31, 2021 as its final year, defined ourtarget balance sheet with the aim of bringing the liability
portion of the balance sheet in line with our earnings
structure. Based on this target, we will procure funds inthe form of interest-bearing debt to address the

FY2021 (Target)

projected rise in operating receivables with the aim ofmaintaining a level of interest-bearing debt that is equivalent to around 90% of operating receivables. As for theequity ratio, we will target a ratio of approximately 30%,
the level we have deemed to be optimal.

02 Creation of Corporate Value through ROIC Exceeding WACC
POINT

Structure in which ROIC consistently exceeds WACC to be achieved by increasing ROIC and lowering capital costs
Surplus income once again achieved in the fiscal year ended March 31, 2018,
through steady advance of financial strategies
ROIC
ROIC

WACC

>

3.1%

3.0%

ROIC

>

3.2%

Retailing
ROIC 2.5%

Liability costs

0.2%

Capital costs

FY2017 (Actual)

7.2%

3.0%

4%

>

WACC

2%–3%

Total assets ¥930.0 billion

Total assets ¥867.2 billion

Total assets ¥806.6 billion
FinTechROIC 3.9%

WACC

FinTechROIC 3.8%
Retailing
ROIC 2.8%

0.3%

FinTechROIC 4.1%

Capital costs

Retailing
ROIC 5.3%

Liability costs

8.0%

FY2018 (Actual)

In the fiscal year ended March 31, 2018, ROIC exceeded
WACC for the second consecutive year following an
improvement in the ROIC of the Retailing segment. In the
FinTech segment, we are targeting ROIC of 4.1% or morein the fiscal year ending March 31, 2021, by growing
service revenues that require less invested capitalthrough initiatives in the securities business and othernew fields. Our ROIC target for this year in the Retailing

Liability costs

0.3%–1%

Capital costs

7%–8%

FY2021 (Post-liquidation forecast)segment is 5.3% or more. We will work toward this target
through growth in e-commerce earnings and by pursuingincome improvements by raising the value of the transition to shopping centers and fixed-term rental contracts
after its completion. We will also develop businesses that
do not require increased assets to improve the efficiency
of invested capital.

85

Target Balance Sheet

03 Forecasts and Issues Related to Target Balance Sheet
POINT

Equity ratio of 32% in the fiscal year ended March 31, 2018, approaching optimal level of 30%
Operating receivables to exceed initial forecast, making for total assets of ¥1 trillion
in the fiscal year ending March 31, 2021
Total assets ¥1,060.0 billion

Total assets ¥1 trillion
Operatingreceivables¥680.0 billion

Interest-bearing debt

¥590.0 billion

Fixed assets, others

Shareholders’ equity¥300.0 billion

Interest-bearing debt
¥660.0 billion% of operatingreceivables 87%

Operatingreceivables¥760.0 billion

Fixed assets, others

Shareholders’ equity¥300.0 billion

Total assets ¥930.0 billion
Liquidation of receivables¥220.0 billion

Reduction of interest-bearing
debt ¥220.0 billion

Operatingreceivables¥630.0 billion

Interest-bearing debt
¥530.0 billion% of operatingreceivables 84%

Fixed assets, others

Equity ratio 28%

Equity ratio 30%

FY2021 (forecast announced in FY2016)

FY2021 (current forecast)

In the fiscal year ended March 31, 2018, the equity ratio
reached 32%, a large step toward the optimal level of
30% from the level of 39% in the fiscal year ended
March 31, 2016. However, operating receivables are
expected to exceed our initial forecast for the fiscal year
ending March 31, 2021, due to the growth of the
FinTech segment. As we address this rise in receivables
through additional interest-bearing debt, this situation is
projected to cause the equity ratio to fall below 30%
while total assets exceed ¥1 trillion in this year.

Shareholders’ equity¥300.0 billion
Equity ratio 32%

FY2021 (forecast after liquidation of receivables)

We will respond to this issue through a systematicincrease in fund procurement through the liquidation ofoperating receivables beginning in the fiscal year ending
March 31, 2019. By raising the ratio of liquidated operating receivables to around 25% from the level of 12%
seen on March 31, 2018, we aim to keep total assets
below ¥1 trillion in the fiscal year ending March 31,
2021, which enables us to maintain an equity ratio of
more than 30%, moving us closer to our optimal capital
structure.

Operating Receivable Liquidation Schedule
Ratio of liquidated operating receivables to be systematically raised from 12% to 25%
Equity ratio of more than 30% to be maintained by keeping total assets below ¥1 trillion
in the fiscal year ending March 31, 2021

25%

Ratio ofliquidation

12%–¥220.0 billion
Amount of liquidation–¥73.0 billion¥630.0 billion

Operating receivables¥548.0 billion
FY201786

FY2018FY2019(Plan)FY2020(Plan)FY2021(Plan)FY2026(Plan)

FY2031(Plan)

Target Balance Sheet

04 Interest Rate Hike Risk (Preliminary Calculation of Amount of Impact)
POINT

Limited impact on financial expenses anticipated from projected interest rate hike risks
Liability costs to be controlled through optimal fund procurement balance
0.58%

Average
0.56%
interest rate

0.41%

Financial expenses 0.51%
as a percentage
of operatingreceivables

0.57%

0.31%

0.39%

¥1,170.0 billion

0.31%

Operatingreceivables(including¥620.8 billion
liquidation) ¥553.1 billion¥482.8 billion¥2.5 billion

FY2016¥2.1 billion

FY2017

Interest
expenses

FY2019(Forecast)¥6.8 billion¥2.8 billion¥1.9 billion

FY2018Liquidation interest
Other costs

FY2020(Forecast)

As the FinTech segment continues to grow, it will be
impossible to avoid increases in liabilities. A higher levelof liabilities means that interest rate hikes will havegreater impact on the Company. If long-term interest
rates are increased by 0.1% every year, the averageinterest rate on the Company’s debt is estimated to risefrom 0.31% in the fiscal year ended March 31, 2018, to
0.57% in the fiscal year ending March 31, 2026. Thesehigher interest rates will cause financial expenses to

FY2021(Forecast)

FY2022(Forecast)

FY2023(Forecast)

FY2024(Forecast)

FY2025(Forecast)

FY2026(Forecast)climb above ¥6.0 billion in this year. However, thisamount will only represent 0.58% of operating receivables (including liquidation), a level that is not significantly larger than now. MARUI GROUP has beensuccessful in absorbing a portion of the potential impact
of interest rate hikes by procuring funds with lower interest rates, longer borrowing periods, and even fixedinterest rates. Going forward, we will continue to monitor
interest rate trends to limit liability costs.

05 Cash Flow Forecasts
POINT

Five-year aggregate core operating cash flow of ¥230.0 billion forecast for period of medium-term management plan
Allocation of cash flows to growth investments and shareholder returns to achieve ongoing growthand improve capital efficiency

Increase in operatingreceivables in FinTech¥260.0 billion

Growth investments¥90.0 billion

Existing businesses¥60.0 billion+
Investments in new business fields¥30.0 billion

Core operating cash flow
¥230.0 billion

Growth investments &Shareholder returns¥200.0 billion

Shareholder returns¥110.0 billion

Stable, long-term dividend increases
Share buybacks

Procurement

Allocation

Breakdown

Fund procurement throughincurring interest-bearing
debt and liquidationof receivables¥230.0 billion

Over the period of the medium-term management plan,
core operating cash flow, which excludes outflows associated with increases in operating receivables, is
expected to amount to ¥230.0 billion. We will allocate¥200.0 billion of this amount to growth investments andshareholder returns. Growth investments of ¥90.0 billion
will be conducted, of which ¥30.0 billion will be used forinvestments in new business fields and collaborative
ventures. The remaining ¥110.0 billion will go toshareholder returns.

87Shareholder Returns and Policies

Continuous, Long-Term Dividend Increases

shareholder returns from share buybacks to dividends,
and we will aim for a consolidated payout ratio of 55%
and move toward this ratio in a phased manner as we
implement ongoing, long-term dividend increases. Our
target for the total return ratio will be around 70%, a levelthat will enable us to maintain an equity ratio of 30%
going forward. Acquired treasury stock will, in principle,
be canceled.

MARUI GROUP has been conducting proactive sharebuybacks over the past four years. Also, in the fiscal year
ended March 31, 2017, we raised our target for consolidated payout ratio from 30% or more to 40% or more.
The total return ratio exceeded 100% for four consecutive years leading up to March 31, 2018, representing
a high level of shareholder returns. Looking ahead,
MARUI GROUP will be gradually shifting the focus ofPreviously• Acquired ¥85.0 billion worth oftreasury stock in four years
beginning with the fiscal year
ended March 31, 2015
• Raised target for consolidated
payout ratio to 40% or more in
the fiscal year ended March 31,
2017• Achieved total return ratio
exceeding 100% for four consecutive years leading up to
March 31, 2018

Shareholder Returns: Amounts and Indicators
227%
125%

112%

Total return ratio
31%
Consolidated
payout ratio

32%

148%

32%

31%

41%

41%
7.6%

6.7%
6.0%
4.5%

5.0%

5.2%
¥35.0
billionROE
Share buybacks¥15.0 billion¥20.0
billionDividends¥15.0
billion¥4.1 billion¥4.9 billion¥5.1 billion¥5.4 billion¥7.6 billion¥8.5 billion

FY2013

FY2014FY2015FY2016FY2017FY2018Going Forward• Gradually shift the focus ofshareholder returns from sharebuybacks to dividends beginningin the fiscal year ending March
31, 2019• Target a total return ratio of
approximately 70% to maintainan equity ratio of 30% going
forward• Aim for a consolidated payout
ratio of 55% and move toward
this ratio in a phased manner

Forecasts for Shareholder Returns: Amounts and Indicators
70%

Total return ratio
72%

55%

43%
Consolidated
payout ratio
8.6%
ROE

10%

Share buybacks¥7.0 billion
Dividends¥10.3
billion
FY201988

FY2020

FY2021

FY2022

FY2030

FY2031

Shareholder Returns and Policies

High Growth Coupled with High Returns

In addition, we plan to issue higher dividends for the seventh consecutive year with dividends of ¥47 based on
our new shareholder return policies. The Company will
also acquire ¥7.0 billion worth of treasury stock in thisyear. In May 2018, MARUI GROUP canceled 10 million
shares of acquired treasury stock.

For the fiscal year ended March 31, 2018, we raised dividend payments by ¥5 per share, to the record high of¥38 per share. In the fiscal year ending March 31, 2019,MARUI GROUP will target record-breaking EPS of¥109.9 through income growth and capital measures.

¥130

Record highor more(Forecast)¥110

Consolidated
payout ratio(Forecast)

Approx.

55%

¥93
¥47

Earnings per share
(EPS)
¥80

¥38

(Forecast)

¥71
¥33
¥59

40%
or more

¥56

¥48

¥22

¥19

Cash dividends
per share
¥18

¥15

30%

or moreFY2013

FY2014FY2015FY2016FY2017FY2018FY2019(Forecast)

Consolidated
payout ratio

31.0%

32.0%

32.3%

31.1%

41.1%

40.8%

42.8%

Total return ratio

31.0%

32.0%

125.3%

227.5%

147.5%

112.3%

71.9%

Share buybacks——¥15.0 billion ¥35.0 billion ¥20.0 billion ¥15.0 billion ¥7.0 billion

FY2020(Forecast)

FY2021(Forecast)—

Phased increase toward 55%
Total return ratio target of 70%

89

Co-Creation
Corporate
Governance

MARUI GROUP Corporate Governance Guidelines
www.0101maruigroup.co.jp/pdf/cgg_20180625_en.pdf
Corporate Governance Reportwww.0101maruigroup.co.jp/pdf/cgr_en.pdf

Corporate Governance for Co-Creating Corporate ValueMARUI GROUP conducts co-creation sustainability
management to co-create the happiness of all
stakeholders with the aim of improving its corporate value
over the medium-to-long term. Strengthening corporate
governance through co-creation sustainability
management is crucial to MARUI GROUP in its quest toachieve harmony between the interests of all stakeholders.
As a Company with Company Auditor(s), as
described in the Companies Act of Japan, MARUIGROUP has in place its Board of Directors and Audit &Supervisory Board. In addition, the Company has

Directors

Audit &
Supervisory Board Members

7

External(Independent)

established the Management Committee, the highest
decision-making body; the Nominating andCompensation Committee; seven committees thatmanage risks pertaining to environmental, social, andgovernance (ESG) issues, among others; and theCompliance Promotion Board, which oversees thesecommittees. Following the expiration of the term of
former external director Koichiro Horiuchi (appointed inJune 2008), the Company appointed one new external
director in June 2018.

4

Executive Officers

External(Independent)

3

Nominating andCompensation
Committee Members

16

External(Independent)

Female3232Ordinary General Meeting of Shareholders
Appoint / Dismiss

Appoint / Dismiss
Coordinate

Audit &
Supervisory Board

Appoint / Dismiss
Select / Discharge

Audit

Board of Directors
ReportNominating andCompensation
Committee

Management
Committee

DirectPresident

ReportReportCompliance Promotion Board
Chairman: Representative Director,
Representative Executive Officer
Members: 14 (including 3 directors and 2 Audit & Supervisory Board members)
ReportPublic Relations IR Committee
Chairman: PresidentInternal Control Committee
Chairman: Senior Managing Executive Officer
Environment CSR Promotion Committee
Chairman: Managing Executive Officer
Personal Information Protection Promotion Committee Chairman: Managing Executive Officer
Information Security Committee
Chairman: Managing Executive Officer
Safety Control Committee
Chairman: Senior Executive Officer
Insider Trading Prevention Committee
Chairman: Senior Managing Executive Officer

Members: 9
Members: 14
Members: 10
Members: 9
Members: 9
Members: 13
Members: 6

Report / Participate

Legal Advisor

Audit Department• Executive in charge of audits• Executive in charge of internal control

Consult

General Affairs Department• Executive in charge of legal affairs• Executive in charge of personal
information protection

Committee Membershipwww.0101maruigroup.co.jp/pdf/committee_members_en.pdf

90

Audit
Internal
Notification
SystemHead Office
Divisions
ReportConsult

Group Companies
Stores / Specialty Stores / Offices

Communicate

Coordinate

Audit

Accounting Auditor

Committees

MARUI GROUP Code of Conduct

ReportCo-Creation Corporate Governance

Agenda Items Discussed by the Board of Directors 
The major agenda items discussed by the Board of Directors in the fiscal year ended March 31, 2018, are detailed in thetable below. In addition to resolutions and reports, time was allocated for free and open discussion and exchanges of
opinion regarding issues pointed out by external directors and ESG and other themes related to long-term improvements
in corporate value.
Resolutions and Reports

First Quarter• Progress of growth investments• Abolition of takeover defense measures• Distribution of shareholders• Audit plans for Audit & Supervisory Board
Second Quarter • Cross-shareholdings and sales policies• Fund procurement policies

Third Quarter•R evision of MARUI GROUP Code of Conduct•E stablishment of Groupwide policies•P rogress of official Groupwide project teams• Establishment of securities business• Progress of Co-Creation Management
Academy (CMA)
Fourth Quarter • Participation in Japan Deep Learning
Association• Revision of human resource systems
related to spouses
EXAMPLE• Results of evaluations of the effectiveness of
the Board of Directors• Performance-linked bonuses for directors• Initiatives with external experts

Discussion Themes• Preparation for Ordinary
General Meeting of
Shareholders• Evaluation of the Board of
Directors•R evision of human resource systems• Review of Ordinary•R evision of labor agreements (change in sysGeneral Meeting oftems related to LGBT community and childcare) Shareholders• Reports from Compliance Promotion Board• Overview of co-creation sustainability
explanatory forum• New businesses•P olicies for Management Committee andother committees•F und procurement policies•A nime business services•A cquisition of certification from Science
Based Targets for greenhouse gas targets• Corporate governanceinitiatives

Transcript of Board of Directors’ Discussion

The following is an abridged transcript of a discussion by the
Board of Directors regarding MARUI GROUP’s potential entry
into the securities business prior to it being put to resolution.
   
Kato: The main point of this business is the purchase of investment trusts with credit cards. Generally, it is not possible to purchase investment trusts with credit cards. However, I learned
that trusts can be purchased using credit cards if it is for cumulative investments through a securities company. I thus sought tocommercialize this scheme.
Muroi: Financial inclusion has significant strategic and social
meaning. I therefore think we should go through with this business. It is my understanding, though, that Tsumitate NISA offers
only very limited investment trust fees. We will need to rigorously
control fixed and variable costs after formulating business plans.

Okajima: Promoting EPOS cards is not the purpose of this business. Marketing and public relations activities will therefore need
to be geared toward making finance a more familiar concept.
Organization structures will also be important, and you will probably have to recruit specialized talent from outside of theCompany; these people must share MARUI GROUP’s principles.
Aoi: That is definitely important. The candidates we are considering now do not just boast specialized knowledge; they also
share our vision of creating an asset building culture that facilitates financial inclusion of younger generations and everyone
else.
Okajima: Long-term investment is a business that requires
long-term commitment and bears the risk of damaging a company’s
reputation. Exit conditions should probably be defined aheadof time.
Kato: We will consider such conditions as we formulate businessplans.
Muroi: Investors consider the social meaning of businesses aswell as whether investments will harm corporate value. Most of
the industry thinks that Tsumitate NISA is not profitable. We will
therefore need to be able to explain our business based on an
overarching scenario that includes its synergies with otherbusinesses.
Aoi: That is the reason we are so committed to investment using
credit cards. This scheme allows us to explain how we expect
earnings from the securities business itself as well as from
improved LTV for the Group.

91

Co-Creation
Corporate
GovernanceInitiatives for Reinforcing Corporate Governancewww.0101maruigroup.co.jp/en/sustainability/theme04/governance.html

Evaluations of the Board of Directors’ Effectiveness 
The Company has been performing annual evaluations of
the Board of Directors’ effectiveness since the fiscal year
ended March 31, 2016, with the aim of improving theeffectiveness of the Board of Directors. In these evaluations, all directors and Audit & Supervisory Board members complete a self-evaluation survey of theeffectiveness of the Board of Directors with regard tosuch aspects as the scale and composition of the Boardof Directors, operating procedures, decision-making processes, and roles and responsibilities. Based on the
results of this survey, information on the current evaluation of the Board of Directors and the issues it faces areshared and constructive discussions are held in order toformulate measures for the future.

Initiatives in the Fiscal Year Ended March 31, 2018
Compensation systems: In light of the upcoming conclusion of the first period to which medium-to-long-term incentives are linked in thefiscal year ending March 31, 2019, opportunities were arranged for the Board of Directors to discuss officer compensation, which is an
important element of corporate governance. Once again finding that the portion of total officer compensation accounted for by variablemedium-to-long-term incentives was low in comparison to other Japanese companies, the Board of Directors examined instances of companies utilizing pre-financial information, such as that related to ESG factors, for evaluations for performance-linked compensation. The factors to be examined when developing future officer compensation systems were identified through this process.
Succession plans: The future leader development program (CMA) was launched in April 2017, to bestow upon participants the knowledge
and understanding required of managers. Individuals that completed the initial development phase in the first iteration of the program
have been undergoing relocations between Group companies in their second year of the program. By assigning these individuals to highly
demanding divisions and positions with wide-ranging responsibilities, the Company aims to enable them to continue growing through practical application of their skills.

Results of Effectiveness Evaluation from the Fiscal Year Ended March 31, 2018
Areas Applauded
The overall evaluation of factors including the increase in the number of external directors and the start of the future leader development
program (CMA) was high and the Board of Directors was judged to be sufficiently functional.

Issues
1. L ow portion of total officer compensation accounted for by variable medium-to-long-term incentives (continuing from the fiscal year
ended March 31, 2017)
2. Incomplete state of future leader development program (CMA) aimed at discovering and cultivating manager successors over the
medium-to-long term

Response to Issue 1

Response to Issue 2

92

Compensation systems: Based on investigations of industry trends and the compensation systems of otherdomestic companies, the Company will develop officer compensation systems that are better linked to
improvements in medium-to-long-term corporate value for the next period for performance linkage.
Measures to be adopted include the expansion of the portion of total compensation accounted for variable
compensation as well as the utilization of ESG-related pre-financial information associated with sustainable
management alongside conventional evaluation indicators.

Succession plans: The Board of Directors will discuss matters including the overall plan for the future leader
development program (CMA), the positioning and promotion of applicants after completion of the program,and other aspects of systems for promoting ongoing development. The possibility of holding regular forums
to allow program applicants to speak with the Board of Directors and creating opportunities and frameworks
for ongoing monitoring will be examined.

Messages from
External Directors

I focus on whether MARUI GROUP
is devoting management resources
to the risks that should be taken.
    

Etsuko Okajima
External Director (appointed in June 2014)
Nominating and Compensation Committee Member

he effectiveness of MARUI GROUP’s corporate
governance has improved greatly over the four
years since I was appointed as an external director. The
first step in this improvement was the reduction ofinternal directors and the increase in external directors,
which made these directors a larger part of the Board of
Directors. This was followed by improvements in themethods of formulating agendas, which allowed for
active discussion on matters of strategic importance. In
addition, MARUI GROUP conducts evaluations of theBoard. The feedback gathered through surveys in theseevaluations is utilized and swift action is taken to makeany necessary improvements.
I see my role at MARUI GROUP as being to help
cultivate human resources that can create future
innovation and develop future managers. This is my areaof expertise, and I therefore hope to implement changes
to both frameworks and procedures to this end. MARUIGROUP is currently in the process of expanding thescope of its business model integrating stores, credit
cards, and the Internet to new fields to contribute to theresolution of social issues while generating profits. In
these new fields, the Company will need humanresources that are completely different from those thathave driven past success. MARUI GROUP has earmarked

T¥30.0 billion for growth investments in new businesses
under the medium-term management plan. In addition,
the Company takes steps to identify younger employeeswith the potential to drive rapid growth and to second
them to partnering start-up companies. These efforts areimportant for two reasons. The first reason is the ability
to gain tools for use in future business scope expansion,
as opposed to capital gains from businesses. The second
reason is the provision of opportunities for younger
employees to gain experience making decisions indifferent industries. To use an example from soccer, thenext FIFA World Cup will be in 2022, with the next afterthat scheduled for 2026. If you ask someone the type ofplayers that will be needed to win in the 2026 World Cup
today, no one will be able answer for sure. However, that
does not change the fact that preparations for 2026
need to start today. Companies are the same. It is crucial
to cultivate employees that can respond to futurechanges and to give them lots of opportunities to makedecisions. Such employees may come to create newindustries in the future. I like to think of myself as acatalyst at the Company, and I focus on whether
MARUI GROUP is devoting management resources tothe risks that should be taken at meetings of the Boardof Directors.

93

Co-Creation
Corporate
Governancehere are two reasons why I chose to become an
external director at MARUI GROUP. The first wasthat the Company’s principle of co-creation with customers resonated with me. The second is that I respected theforesight MARUI GROUP is exercising through new initiatives advanced together with outside partners in the
midst of the large social changes spurred by AI and sharing economies. I am currently the president of a transportation company. The transportation industry too is
expected to realign its viewpoint to better consider thecustomer by redefining its objective from “transporting
customers’ belongings” to “being entrusted with thetransportation of customers’ assets.” I therefore feel that
I can help MARUI GROUP from the same perspectivethat it has adopted. Meanwhile, being from a different
industry with a different business model, my perspective
still differs a bit from that of the Company, enabling me
to make new proposals to management.
A manager must be able to assess social trends,
determine the direction for their company, and move

T

From my perspective as amanager, I plan to support
MARUI GROUP’s efforts tocreate value that is a half-stepahead of its customers.
    

Yoshitaka Taguchi
External Director (appointed in June 2018)
Nominating and Compensation Committee Member

94

forward on that path. When the managers of MARUIGROUP lose their way, I think that my management
experience will make it easier for them to consult with me
as I will be able to talk to them from the perspective ofa manager.
The gauge I use as an external director is based onwhether or not MARUI GROUP’s strategies will benefit
customers. Of course, forward-looking projects entailinglarge investment risks will require that the Board of
Directors discuss matters such as investment recovery
period. However, if such a project will create new value
for customers, I will encourage the Company to take thispath. In these forward-looking projects, it is possible tolook too far ahead of the customer’s perspective.
Whether for the customer or for the business, it is best to
be a half-step ahead of customers. I therefore plan tosupport MARUI GROUP’s efforts to create value that isa half-step ahead of its customers.

MARUI GROUP will need tocreate forward-looking growth­strategies for the tumultuous
operating environment.
    Masahiro Muroi
External Director (appointed in June 2017)

ver the year since I became an external director at
MARUI GROUP, I have dedicated myself to thesupervision of the Company’s management. I have held
meetings with managers, visited numerous stores anddata centers, and even participated in the Medium-Term
Management Visionary Committee, which sees voluntary
participation by employees. I have also had the opportunity to speak directly with overseas institutional investors. These experiences have made me aware of threeunique characteristics of MARUI GROUP.
The first is that its management is rooted in ESG, andconcepts such as inclusion and sustainability havebecome entrenched throughout the organization. I haveseen frontline employees speaking passionately about
store and product development activities involving customers, environmental measures spanning the value
chain, and work style reforms. In addition, MARUIGROUP continues to receive awards and certifications
for its environment management, healthcare management, and investor relations activities, and the Company
has been included in various ESG investment indexes.

O

The second characteristic is that MARUI GROUP is at
the forefront of innovation. At meetings of the MediumTerm Management Visionary Committee, where hundreds of employees gather, information on the potential
impacts of e-commerce and sharing economies on theretailing business and the threats to the credit card services business posed by cashless payments is provided
together with concrete examples from countries where
digitization is in advanced stages. As such, MARUIGROUP employees hold the necessary sense of danger
while pursuing innovation in their business and creating
new businesses.
The third characteristic of MARUI GROUP is its distinctive use of open innovation. There are companies infields related to retailing and FinTech that are developing
new businesses guided by a keen eye for future consumer needs. MARUI GROUP utilizes its high-quality
internal ecosystem to form relations with promising startup companies to take part in various verification tests
through collaboration or investment. I look forward toseeing MARUI GROUP cultivate next-generation sharing
and FinTech businesses through these efforts.
The role of an external director is first and foremost
to protect management through supervision from an
independent standpoint. However, MARUI GROUP’s
focus on an ESG perspective in its corporate activities
means that there is little need for this protection. MARUIGROUP will therefore need to create forward-looking
growth strategies for the tumultuous operating environment. I will support these strategies by taking an independent standpoint in discussions.

95

Co-Creation
Corporate
Governance

Revision of Japan’s Corporate Governance Code 
The MARUI GROUP Corporate Governance Guidelines
have been revised as described below with the aim offacilitating sound, highly transparent, profitable, and efficient management in order to improve corporate value
over the medium-to-long term.
Tokyo Stock Exchange, Inc., revised Japan’s
Corporate Governance Code, which defines principles
for effective corporate governance, as well as its listing

requirements in June 2018. MARUI GROUP respects theintent and the essence of these documents.
For more information on our implementation of theprinciples of Japan’s Corporate Governance Code, pleaserefer to the Japan’s Corporate Governance CodeCompliance Table at the end of MARUI GROUP’s
Corporate Governance Report.

June 2018 Revision to MARUI GROUP Corporate Governance Guidelines
Details of Revision

Applicable
Page of
Report

Duties of Directors (Article 4)• Described status of oversight for succession plans by Board of Directors anddetails on the future leader development program (CMA)• Provided information on minimum attendance rates to meetings of the Board of
Directors and Audit & Supervisory Board

P97

Composition of the Board of Directors (Article 5)Composition of the Audit & Supervisory Board(Article 9)• Clarified commitment to developing a Board of Directors composed of directors
from a diverse range of backgrounds with differing specialties and experienceand of various genders and nationalities• Stated that Audit & Supervisory Board members are expected to have insightwith regard to areas such as finance, accounting, and legal affairs and that one
member should possess specialties related to finance and accounting

P102
P103

Revised Item

Selection of Candidates for Positions as Directors,
Audit & Supervisory Board Members, andManagers Ranked Lower Than President andRepresentative Director, and Dismissal ofIndividuals in These Positions (Article 15)• Provided clear information on both selection and dismissal procedures• Described how the Nominating and Compensation Committee will be used toensure objectivity and transparency in newly defined dismissal proceduresCompensation of Directors, Audit & Supervisory
Board Members, and Executive Officers (Article 16)• Detailed compensation policies and performance-linked compensation

P90

P97

Risk Management System (Article 19)• Included information on the Information Security Committee established inJune 2018 and described systems and policies for ensuring security of
information assets

P100

Basic Policies for Capital Measures (Article 23)• Explained capital measures being implemented based on capital costs• Described policies for capital investments, human resource investments, andother growth investments

P84
P70

Shareholder Returns (Article 24)• Explained new targets for consolidated payout ratio and total return ratio• Stated intent to, in principle, cancel all acquired shares of treasury stock

P88

Cross-Shareholdings (Article 25)• Declared that, in principle, the Company will not engage in cross-shareholdings• Stated that the Company only provides overviews of holdings due to confidentiality• Explained that voting rights attached to shares held through cross-shareholdings
will be exercised based on each proposal

P98

MARUI GROUP Corporate Governance Guidelines
www.0101maruigroup.co.jp/pdf/cgg_20180625_en.pdf
Corporate Governance Reportwww.0101maruigroup.co.jp/pdf/cgr_en.pdf

96

Co-Creation Corporate Governance

Officer Compensation Systems 
The amount of compensation paid to individual directors
is to be decided by the Nominating and Compensation
Committee and set within the limit approved at theOrdinary General Meeting of Shareholders. Theseamounts are to be determined based on a comprehensive evaluation of factors including the responsibility ofeach director for the management of the Group and theprogress of the Group’s medium-term management plan.
The amount of compensation paid to individual executive
officers is to be decided by the Nominating andCompensation Committee.
Compensation for directors includes fixed basic
compensation as well as performance-linked bonuses,
which are based on the performance of the Company ina given fiscal year to function as a short-term incentive,
and performance-linked stock-based compensation,
which is based on the medium-to-long-term performance of the Company to function as a medium-to-longterm incentive. The portion of compensation linked toperformance is meant to provide incentive for pursuingsustainable growth for the Company. However, external
directors will only receive fixed basic compensation
based on their position to ensure that they maintain an
independent standpoint.
Performance-linked bonuses will be set as an
amount equivalent to 10/90 of the compensation of
directors for each fiscal year and will be adjusted upward
or downward by as much as 10% based on the degree ofaccomplishment of the Company’s consolidated operating income target for the respective fiscal year.
As for performance-linked stock-based compensation, directors will be awarded points based on their rank
at a set time in each of the fiscal years ended/ending
March 31, 2017–2019. These points will then be
adjusted via a coefficient within the range of 0% to 100%
determined based on progress toward targets for threefocus KPIs (ROE, ROIC, and EPS) in the fiscal year
ending March 31, 2019. Shares of the Company’s stock
will then be allocated to each director in reflection of
their aggregate total of points post-adjustment.

Officer Compensation in the Fiscal Year Ended March 31, 2018 (Millions of yen)
Basic Compensation

Performance-Linked Bonuses(Short-Term Incentive)

Performance-Linked
Stock-Based Compensation(Medium-to-Long-Term
Incentive)

Total Compensation

President and representative director

84

9

9

102

Directors (excluding external directors)

148

16

16

181

External directors

38

0

0

38

Audit & Supervisory Board members(excluding external Audit & Supervisory
Board members)

34

0

0

34

External Audit & Supervisory
Board members

15

0

0

15

By resolution at the Ordinary General Meeting of Shareholders, the upper limit for full-year compensation paid to directors has been set at ¥300 million, the upper limit for
performance-linked bonuses paid to directors has been set at ¥100 million, the upper limit for performance-linked stock-based compensation issued to directors has been
set at ¥300 million, and the upper limit for monthly compensation of Audit & Supervisory Board members has been set at ¥6 million.

Future Leader Development Program 
MARUI GROUP unveiled its Co-Creation Management
Academy (CMA) future leader development program in
April 2017 with the aim of cultivating human resources
capable of promoting management reforms. This program is based on open application, and each year 20
candidates are selected from among volunteers. Those
selected are submitted to a one-year training curriculum
developed under the guidance of third-party institutions

and external directors to
instill in them a management perspective. After
training, participants continue to be nurtured into
future leaders in a wide
range of actual work situations through strategic intra-Group relocations.

Cultivation of Future Leaders
www.0101maruigroup.co.jp/en/sustainability/theme04/leader.html

97

Co-Creation
Corporate
Governance

Cross-Shareholdings In principle, the Company will not engage in cross-shareholdings except for cases in which such holdings are
deemed necessary for maintaining or building upon collaborative or transactional relationships that are strategically critical for improving corporate value. At a meeting of
the Board of Directors held in February 2016, it wasdetermined that the Company had already establishedsufficiently strong business relationships with crossshareholding counterparties, and it was therefore decided
to undertake a phased reduction in cross-shareholdingsout of consideration for asset efficiency and stock pricefluctuation risks.
Since then, the returns from each cross-shareholding
have been verified at meetings of the Board of Directors
held in either July or August of each year. The extent towhich holdings have been reduced was confirmed atthese meetings. On March 31, 2018, the Company

held shares of the stock in nine companies as crossshareholdings (nine companies fewer than on December
31, 2015), and the total value of these shares on the
consolidated balance sheets was ¥12.4 billion (down¥12.1 billion from December 31, 2015).
Total Value of Cross-Shareholdingson the Consolidated Balance Sheets¥24.5 billion(18 companies)

Dec. 31, 2015¥18.9 billion(16 companies)

Mar. 31, 2016

Down
¥12.1 billion¥17.0 billion(14 companies)

Mar. 31, 2017¥12.4 billion(9 companies)

Mar. 31, 2018

Advisory Board 
The Advisory Board was established in July 2016, andcontracts with the current members cover the one-year
period from July 1, 2018, to June 30, 2019.
The purpose of the Advisory Board is to enable
MARUI GROUP to receive multifaceted advice and proposals from external experts with insight into businessstrategies and various business areas. We anticipate thatsuch advice will be a powerful asset in the establishmentof strategies for Groupwide efforts to accomplish thetargets of the medium-term management plan and to
improve corporate value over the medium-to-long term
as we seek to address the rapidly changing operating
environment and the diversifying society. Regularbimonthly meetings of the Advisory Board are held, atwhich the president, pertinent directors, and representatives from relevant areas attend; advice is also sought on
specific themes and operations are inspected.

Advisory Board Members

98

Tadasu Ohe

Yuji Yamamoto

President, PLANTEC ASSOCIATES INC.

Physician, Representative Director, MinaCare Co., Ltd.

Area of Specialty and Past Activities Area of Specialty and Past Activities Proposals for better utilizing real estate from the user’s
perspective

Analysis and advice for promoting healthcare
management• Discussion and proposals regarding store directives• Inspection of stores and discussion regarding vision for
future stores• Inspection of distribution centers and proposals for environmental measures• Lectures at Group companies•D iscussion and proposals regarding tracking the relationship between health and productivity•G uidance on how to be included in healthcare management-related indexes•S haring of external healthcare management case studies
and related proposals

Masakazu Masujima

Meyumi Yamada

Partner, Mori Hamada & Matsumoto

Executive Director, istyle Inc.

Area of Specialty and Past Activities Area of Specialty and Past Activities Provision of information for developing new FinTechbusinesses

Provision of information regarding sharing economies
and omni-channel retailing• Proposal of specific growth investment targets• Advice and proposals regarding entry into securities
business• Advice on FinTech-related laws and regulations•D iscussion on sharing economies, omni-channel retailing,
and other social trends

Co-Creation Corporate Governance

Co-Creation of Corporate Value with Shareholders and Other Investors 
MARUI GROUP conducts proactive investor relations
activities to engage with shareholders and other investors and to reflect their input in its co-creation sustainability management.
The Company has been issuing co-creation management reports and co-creation sustainability reports as
communication tools since 2015. Under the guidanceof President Aoi, these business strategy reports areforged over the course of more than 40 planning meetings each year.

In addition, Director and Senior Executive Officer
Hirotsugu Kato regularly takes part in exchanges of opinion as a member of the Forum for Integrated Corporate
Disclosure and ESG Dialogue established by the Ministryof Economy, Trade and Industry as a forum for dialogue
between companies and investors based on the ministry’s Guidance for Integrated Corporate Disclosure andCompany-Investor Dialogue for Collaborative Value
Creation: ESG Integration, Non-Financial Information
Disclosure, and Intangible Assets into Investment.

Dialogue with Shareholders
The Ordinary General Meeting of Shareholders is the highest decision-making authority for corporate management at MARUI GROUP. The
Company revises its methods of proceeding and administration of meetings to provide an open atmosphere that is ideal for reflecting theopinions and suggestions of shareholders in management and is expanding the range of opportunities for dialogue with shareholders.
Ordinary General Meeting of Shareholders Held in June 2018

Shareholders in attendance: 182

Questions: 14

Ratio of voting rights exercised: 87.6%

Comments from Attendees“I want MARUI GROUP to explore
and commercialize initiatives foraddressing social needs.”“The meeting was great.
I appreciate the thorough andeasy-to-understand answers
to questions.”“I was able to understand how
Tsumitate NISA will help alleviate
concern regarding investment
among younger generations.”

Dialogue with Institutional Investors
Through coordination between the IR Department, the Corporate Planning Division, the General Affairs Division, and the ESG Promotion
Department, MARUI GROUP holds financial results briefings and twice-annual IR DAY events, accommodates visits from domestic andoverseas investors and requests for individual meetings, and provides other opportunities for direct discussion with institutional investors.
In addition, the Company participates in the Ministry of the Environment’s Environmental Reporting Platform Development Pilot Project,through which it engages in dialogue with ESG-minded investors and conducts surveys of approximately 150 institutional investors andcompanies, using the input gained in improving management and information disclosure activities.
Fiscal year ended March 31, 2018 Aggregate institutional investors met with: Approx. 250 Financial results briefings: 4 Financial results briefings attendees: 364

Comments from Institutional Investors“I want to hear about growth strategies
for after the transition to shopping­centers and fixed-term rental contracts.”“Rather than share buybacks, shareholders would prefer a focus on dividends.”“How will you address the threat ofmobile phone payments?”“I was quite impressed with the idea ofstores that do not sell.”“MARUI GROUP should more actively
advertise its status as a forerunner in
ESG initiatives.”99

Co-Creation
Corporate
Governance

MARUI GROUP Information Security Policy
www.0101maruigroup.co.jp/en/security/index.html

Co-Creation Corporate Governance Risk Countermeasures 
As part of its efforts to promote co-creation sustainability management through an integrated Group effort, MARUIGROUP revised the MARUI GROUP Code of Conduct and established the MARUI GROUP Human Rights Policy and the
MARUI GROUP Occupational Health and Safety Policy in 2017. The Company later unveiled three policies for reinforcing
Groupwide information security in June 2018: the MARUI GROUP Information Security Policy, the MARUI GROUP
Privacy Policy, and the MARUI GROUP Social Media Policy. It was also at this time that we formulated the MARUI GROUP
Tax Policy for ensuring transparent tax payments and minimizing tax risks.

MARUI GROUP Information Security Policy (Abridged)
1. Purpose
The purpose of this policy is to provide guidelines for establishing and implementing information security management systems to protect
the information assets of customers and of MARUI GROUP from all threats, whether internal or external, accidental or intentional, andthereby help ensure the continuity of MARUI GROUP’s business activities.
2. Basic Principles(1) M
 ARUI GROUP shall practice appropriate management of the information entrusted to it by individuals or organizations during thecourse of its business activities while respecting the rights and interests of these individuals or organizations.
(2) M ARUI GROUP shall practice appropriate management of trade secrets, technological information, and other valuable informationacquired during the course of its business activities and protect the rights and interests of MARUI GROUP.
(3) M
 ARUI GROUP will engage in research and human resource development in order to work to improve information security as it pertains
to customer information and thereby gain greater levels of trust from customers and subsequently society as a whole.

Reinforcement of Groupwide Information Security
Risk management pertaining to IT systems for the entire
Group is overseen by the Compliance Promotion Board,which is chaired by the president and representative
director of MARUI GROUP CO., LTD. In addition, theCompany established the Information Security
Committee in June 2018 and appointed the chief security officer (CSO) to serve as the highest-level authority
on security responsible for managing and protecting
Groupwide information assets. The CSO coordinates

MARUI GROUP’s Information Security Framework
Board of Directors
Compliance Promotion
Board

Chief Security Officer
Coordination

Information Security
Committee

Chief Information Officer

Operating sites and divisions

100

with the chief information officer (CIO), who is the highest authority responsible for managing Groupwide IT
systems. In the event of a major information security incident, the head of the division that detects the incident
will report to the chairperson of the Information Security
Committee. The chairperson will then report to the CIO,
and the CSO will issue a report to the president and representative director of MARUI GROUP CO., LTD., whennecessary. The CSO will also be responsible for assembling a specialized team to address the incident.

Third-Party Assessments
MARUI GROUP recruits and develops the humanresources necessary for implementing Groupwide information security measures and provides education on
information security to officers and employees to promote awareness. In addition, third-party information
security assessments are performed by specialized institutions to help us maintain an understanding of information security systems and levels throughout the Group.
We will continue to pursue improvements through regular assessments going forward.

Co-Creation Corporate Governance

MARUI GROUP Environmental Policy
www.0101maruigroup.co.jp/en/sustainability/theme03/environment_01.html

Environmental Impact Reduction Targets for 2050 
MARUI GROUP has defined ecological inclusion as one of its core themes. In 2016, we revised the MARUI GROUP
Environmental Policy, based on which we propose ecologically sound lifestyles that are in harmony with nature and theenvironment to develop businesses with low environmental impact and contribute to the realization of a low-carbon andrecycling-oriented society. In addition, we recognize our responsibility as a producer to reduce our environmental footprint across the entire value chain, from the procurement of raw materials and product creation to the sale and disposalof products.

MARUI GROUP’s Medium- and Long-Term Environmental Targets
Long-Term Greenhouse Gas Emissions Reduction Target
Achieve 80% reduction in Groupwide total greenhouse gas emissions attributable to Scope 1 and Scope 2
from the fiscal year ended March 31, 2017, by the fiscal year ending March 31, 2051
Medium-term target: Achieve 40% reduction in Groupwide total greenhouse gas emissions attributable to Scope 1 and Scope 2 anda 35% reduction in emissions attributable to Scope 3 from the fiscal year ended March 31, 2017, by the fiscal year ending March 31, 2031

Targets for Sourcing 100% of Electricity from Renewable Power Sources
Source 100% of electricity used in business activities from renewable power sources by 2030
Medium-term target: Source 70% of electricity used in business activities from renewable power sources by 2025

Pursuit of 80% Reduction in Greenhouse
Gas Emissions
Through ongoing discussion regarding the establishment of environmental impact reduction targets for2050 based on projected changes
to business activities and future impacts on natural capital, MARUI GROUP formulated targets for reducing its
greenhouse gas emissions. These targets, which placeparticular emphasis on lowering electricity consumption,
were the first targets from a Japanese retailer to receive
certification from the international initiative known as
Science Based Targets.
FY2014FY2015

Sourcing of 100% of Electricity from Renewable
Power Sources
MARUI GROUP has become a member of RE100, aninternational initiative comprising a collective of companies committed to the procurement of 100% of the electricity used in their business activities from renewable
power sources.
In its efforts to achieve this goal, MARUI GROUP
will take part in a trial of a new service offered by Minna
Denryoku Co., Ltd., that will be the first in Japan touse blockchain technology to allow for the identificationof the renewable power source from which power has
been supplied.

660,000 t-CO2
640,000 t-CO2
DISCLOSURE INSIGHT ACTION

FY2016610,000 t-CO2

FY2017600,000 t-CO2

FY2018520,000 t-CO2

Scope 3 410,000 t-CO2 78.9%
Emissions from raw material procurement, transportation, andproducts purchased by customers
Scope 2 100,000 t-CO2 19.2%
Emissions from operation of MARUI GROUP’s stores and offices

Minna Denryoku Co., Ltd.

Message from the Head of RE100

Mr. Sam Kimmins
Head of RE100, The Climate Group

By committing to 100% renewable power, MARUI GROUP is growing
corporate demand for renewables in Japan and accelerating thecountry’s low-carbon economy. In trialing blockchain technology to
trace renewable sources, MARUI GROUP is further showcasing how
high levels of ambition can drive smart energy innovation.

Scope 1 10,000 t-CO2 1.9%
Emissions from transportation by MARUI GROUP vehicles

101

Directors, Audit & Supervisory Board Members, and Executive Officers
As of June 25, 2018

Directors

Hiroshi Aoi

Etsuko Okajima

Yoshitaka Taguchi

President and Representative Director
Shares held: 1,538,300
Born: January 1961

External Director
Shares held: 0
Born: May 1966

External Director
Shares held: 0
Born: April 1961

Jul. 1986 Joined the Company
Apr. 1991	Director and General Manager,
Sales Planning Headquarters
Apr. 1995	Managing Director and
Deputy General Manager,
Sales Promotion Headquarters andGeneral Manager, Sales Planning Division
Jan. 2001	Managing Director and General Manager,
Sales Promotion Headquarters
Jun. 2004	Executive Vice President andRepresentative Director
Apr. 2005 President and Representative Director
Oct. 2006	President and Representative Director
Representative Executive Officer(Incumbent)

Apr. 1989 Joined Mitsubishi Corporation
Jan. 2001 Joined McKinsey & Company
Jul. 2005	Representative and CEO,GLOBIS Management Bank
Jun. 2007	President & CEO, ProNova Inc.
(Incumbent)
Jun. 2014	External Director (Incumbent)
Nov. 2015	Outside Director,
Lancers, Inc. (Incumbent)
Dec. 2015	Outside Director,
SEPTENI HOLDINGS CO., LTD.
(Incumbent)
Mar. 2016	Outside Director,
Link and Motivation Inc. (Incumbent)

Mar. 1985	Joined Seino Transportation Co., Ltd.
(currently Seino Holdings Co., Ltd.)
Jul. 1989 Director, Seino Transportation Co., Ltd.
Jul. 1991	Managing Director,
Seino Transportation Co., Ltd.
Jun. 1996	Senior Managing Director,
Seino Transportation Co., Ltd.
Oct. 1998	Representative Director andVice President,
Seino Transportation Co., Ltd.
Jun. 2003	President and Chief Operating Officer,
Seino Transportation Co., Ltd.
(Incumbent)
Jun. 2018 External Director (Incumbent)

Participation in committees:
Nominating and Compensation Committee

Participation in committees:
Nominating and Compensation Committee

Masahiro Muroi

Tomoo Ishii

Masao Nakamura

External Director
Shares held: 0
Born: July 1955

Director
Shares held: 18,400
Born: July 1960

Director
Shares held: 21,500
Born: June 1960

Apr. 1978	Joined Nomura Computer System
Co., Ltd. (currently Nomura ResearchInstitute, Ltd.)
Jun. 2000	Member of the Board,
Nomura Research Institute, Ltd.
Apr. 2002	Senior Corporate Managing Director,
Member of the Board,
Nomura Research Institute, Ltd.
Apr. 2009	Representative and Senior Executive
Managing Director, Member of the Board,
Nomura Research Institute, Ltd.
Apr. 2013	Representative and Vice President,
Member of the Board,
Nomura Research Institute, Ltd.
Jun. 2016	External Director, Ryoden Corporation(Incumbent)
Jun. 2017 External Director (Incumbent)
Jun. 2018	Audit & Supervisory Board Member,
The Norinchukin Bank (Incumbent)

Apr. 1983	Joined the Company
Jun. 2009	Director and Executive Officer,
General Manager, General Affairs Division
Apr. 2013	Director and Executive Officer,
General Manager, Personnel Division
Apr. 2015	Director and Managing Executive Officer
Apr. 2017	President and Representative Director,
MOVING CO., LTD. (Incumbent)
Jun. 2018	Senior Managing Executive Officer,
Chief Security Officer,
and Chief Health Officer
In charge of Audit, General Affairs,
Personnel, and Health Promotion(Incumbent)

Apr. 1983	Joined the Company
Apr. 2007	Executive Officer and General Manager,
Group Business Promotion DivisionJun. 2008	Director and Executive Officer,
General Manager, Corporate Planning
Division and General Manager,
Business Development Division
Apr. 2011	Managing Director andManaging Executive Officer
President and Representative Director,
MARUI CO., LTD.
Apr. 2015	Director and Managing Executive Officer
Responsible for Retailing andStore Operation BusinessPresident and Representative Director,
MARUI CO., LTD.
Apr. 2016	President and Representative Director,
AIM CREATE CO., LTD. (Incumbent)
Oct. 2017	Director and Managing Executive Officer
Responsible for FinTech Segment(Incumbent)

Participation in committees:
Management Committee (Chairman)
Compliance Promotion Board (Chairman)
Public Relations IR Committee (Chairman)
Nominating and Compensation Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Environment CSR Promotion Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee102Directors, Audit & Supervisory Board Members, and Executive Officers

Audit & Supervisory Board Members

Hirotsugu Kato

Hideaki Fujizuka

Nariaki Fuse

Director
Shares held: 5,200
Born: July 1963

Audit & Supervisory Board Member (Full time)
Shares held: 600
Born: September 1955

Audit & Supervisory Board Member (Full time)
Shares held: 9,800
Born: June 1959

Mar. 1987	Joined the Company
Apr. 2015	Executive Officer and General Manager,
Corporate Planning DivisionJun. 2016	Director and Senior Executive Officer,
General Manager, Corporate Planning
Division and IR Department
Oct. 2017	Director, Senior Executive Officer,
and Chief Digital Officer
General Manager, IR Department
In charge of Corporate Planning and
ESG Promotion (Incumbent)
Feb. 2018	Director, tsumiki Securities Co., Ltd.
(Incumbent)
Apr. 2018	Senior Managing Director,
M & C SYSTEMS CO., LTD. (Incumbent)

Apr. 1980	Joined Mitsubishi Bank Ltd.
(currently MUFG Bank, Ltd.)
Jun. 2007	Executive Officer and General Manager,
General Affairs Dept.,
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Jun. 2010	President and Director,
Chitose Kosan, Co., Ltd.
Apr. 2012	Director, Senior Executive Managing
Officer and Group President ofCorporate Center, Olympus Corporation
Apr. 2015	Director, Olympus Corporation
Jun. 2015	Audit & Supervisory Board Member(Full time) (Incumbent)

Mar. 1982	Joined the Company
Apr. 2007	Director, M & C SYSTEMS CO., LTD.
Apr. 2011	Executive Officer
Managing Executive Officer,
M & C SYSTEMS CO., LTD.
Apr. 2013	President and Representative Director,
M & C SYSTEMS CO., LTD. (Incumbent)
Jun. 2013	Director and Executive Officer
Apr. 2015	Senior Executive Officer
In charge of Audit andInformation Systems
Apr. 2016	Senior Executive Officer andChief Information Officer
In charge of Audit
Jun. 2018	Audit & Supervisory Board Member(Full time) (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Internal Control Committee
Insider Trading Prevention Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee

Participation in committees:
Compliance Promotion Board
Internal Control Committee

Tadashi Ooe

Takehiko Takagi

External Audit & Supervisory Board Member
Shares held: 74,700
Born: May 1944

External Audit & Supervisory Board Member
Shares held: 5,200
Born: January 1945

Apr. 1969	Registered as Attorney
Apr. 1989	Practicing-Attorney,
Professor for Civil Advocacy,
Legal Training and Research Instituteof the Supreme Court of Japan
Mar. 1994	Outside Audit & Supervisory Board
Member, Canon Inc. (Incumbent)
Jun. 2004	External Audit & Supervisory Board
Member (Incumbent)
Jun. 2011	Director, Jeco Co., Ltd. (Incumbent)
Jun. 2015	Outside Director,
Nissan Chemical Industries, Ltd.
(Incumbent)

Jul. 2001	Chief, Kanazawa Regional Taxation Bureau
Jul. 2002	President, National Tax College
Jul. 2003	Retired from National Tax
Administration Agency
Aug. 2003	Registered as Certified Public
Tax Accountant
May 2006	External Audit & Supervisory Board
Member, TOH-TEN-KOH Corporation(Incumbent)
Jun. 2008	External Audit & Supervisory Board
Member (Incumbent)
Jun. 2010	External Audit & Supervisory Board
Member, KAWADA TECHNOLOGIES, Inc.
(Incumbent)

Number of shares held as of March 31, 2018103

Directors, Audit & Supervisory Board Members, and Executive Officers

Executive Officers

Hiroshi Aoi

Motohiko Sato

Tomoo Ishii

Representative Executive Officer
Born: January 1961

Senior Managing Executive Officer
Born: December 1953

Senior Managing Executive Officer
Born: July 1960

Jul. 1986 Joined the Company
Apr. 1991	Director and General Manager,
Sales Planning Headquarters
Apr. 1995	Managing Director and
Deputy General Manager,
Sales Promotion Headquarters andGeneral Manager, Sales Planning Division
Jan. 2001	Managing Director and General Manager,
Sales Promotion Headquarters
Jun. 2004	Executive Vice President andRepresentative Director
Apr. 2005	President and Representative Director
Oct. 2006	President and Representative Director
Representative Executive Officer(Incumbent)

Mar. 1977	Joined the Company
Jun. 2005	Director and General Manager,
Group Corporate Planning DivisionJun. 2008	Managing Director andManaging Executive Officer
Apr. 2012	Senior Managing Director andSenior Managing Executive Officer
Apr. 2015	Director and Senior Managing
Executive Officer, and CFO
In charge of Corporate Planning and Finance
Responsible for Credit Card Services
Business and Information Systems
Jun. 2016	Senior Managing Executive Officer and CFO
In charge of Corporate Planning,
IR and Finance
Apr. 2017	Senior Managing Executive Officer and CFO
In charge of IR and Finance (Incumbent)

Apr. 1983	Joined the Company
Jun. 2009	Director and Executive Officer,
General Manager, General Affairs Division
Apr. 2013	Director and Executive Officer,
General Manager, Personnel Division
Apr. 2015	Director and Managing Executive Officer
Apr. 2017	President and Representative Director,
MOVING CO., LTD. (Incumbent)
Jun. 2018	Senior Managing Executive Officer,
Chief Security Officer,
and Chief Health Officer
In charge of Audit, General Affairs,
Personnel, and Health Promotion(Incumbent)

Participation in committees:
Management Committee (Chairman)
Compliance Promotion Board (Chairman)
Public Relations IR Committee (Chairman)
Nominating and Compensation Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Internal Control Committee (Chairman)
Insider Trading Prevention Committee (Chairman)

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Environment CSR Promotion Committee

Masao Nakamura

Toshikazu Takimoto

Takashi Wakashima

Managing Executive Officer
Born: June 1960

Managing Executive Officer
Born: November 1959

Managing Executive Officer
Born: November 1956

Apr. 1983	Joined the Company
Apr. 2007	Executive Officer and General Manager,
Group Business Promotion DivisionJun. 2008	Director and Executive Officer,
General Manager, Corporate Planning
Division and General Manager,
Business Development Division
Apr. 2011	Managing Director andManaging Executive Officer
President and Representative Director,
MARUI CO., LTD.
Apr. 2015	Director and Managing Executive Officer
Responsible for Retailing andStore Operation BusinessPresident and Representative Director,
MARUI CO., LTD.
Apr. 2016	President and Representative Director,
AIM CREATE CO., LTD. (Incumbent)
Oct. 2017	Director and Managing Executive Officer
Responsible for FinTech Segment(Incumbent)

Mar. 1982	Joined the Company
Mar. 2009	Executive Officer and General Manager,
Group Profit Improvement DivisionJun. 2012	Director and Executive Officer
Apr. 2015 Managing Executive Officer
Apr. 2016	Managing Executive Officer
Responsible for FinTech BusinessPresident and Representative Director,
MARUI HOME SERVICE Co., Ltd.
Oct. 2017	Managing Executive Officer
Responsible for Retailing Segment(Incumbent)
Apr. 2018	Managing Executive Officer andChief Information Officer (Incumbent)
President and Representative Director,
M & C SYSTEMS CO., LTD. (Incumbent)

Mar. 1981	Joined the Company
Jun. 2006	Director, Deputy General Manager,
Sales Promotion Headquarters andGeneral Manager, Sales Planning Division
Apr. 2011	Director and Executive Officer
President and Representative Director,
MOVING CO., LTD. (Incumbent)
Apr. 2013	Director and Executive Officer
In charge of CSR Promotion andReal Estate Business & Architecture
Jun. 2015	Director and Managing Executive Officer
In charge of CSR Promotion andReal Estate Business & Architecture
Director, AIM CREATE CO., LTD. (Incumbent)
Apr. 2017	Director and Managing Executive Officer
In charge of Sustainability and Real EstateBusiness & Architecture (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee

104

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Internal Control Committee
Personal Information Protection Promotion Committee(Chairman)
Information Security Committee (Chairman)

Participation in committees:
Management Committee
Compliance Promotion Board
Environment CSR Promotion Committee (Chairman)

Hajime Sasaki

Yoshinori Saito

Senior Executive Officer
Born: November 1963

Senior Executive Officer
Born: July 1962

Mar. 1986	Joined the Company
Oct. 2007	Director and General Manager,
Card Planning Division,
Epos Card Co., Ltd.
Apr. 2012	Director and General Manager,
Private Brand Department, MARUI CO., LTD.
Apr. 2013	Executive Officer
Apr. 2014	Managing Director and General Manager,
Specialty Store Department,
MARUI CO., LTD.
Jun. 2014	Director
Apr. 2015	Director and Senior Executive Officer
Responsible for Retailing and StoreOperation Business
Senior Managing Director, MARUI CO., LTD.
Director, Epos Card Co., Ltd.
Apr. 2016	Senior Executive Officer (Incumbent)
President and Representative Director,
MARUI CO., LTD. (Incumbent)

Mar. 1986	Joined the Company
Jul. 2008	Executive Officer
General Manager, Financial Department
Apr. 2011	Director and General Manager, Direct
Marketing Department, MARUI CO., LTD.
Apr. 2013	Director and General Manager,
Collaboration Card Business Department,
Epos Card Co., Ltd.
Oct. 2013	Director and General Manager,
Sales Promotion Department,
Epos Card Co., Ltd.
Apr. 2015	Managing Director, Epos Card Co., Ltd.
Director, M & C SYSTEMS CO., LTD.
(Incumbent)
Apr. 2016	Senior Executive Officer (Incumbent)
President and Representative Director,
Epos Card Co., Ltd. (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Internal Control Committee
Safety Control Committee (Chairman)

Participation in committees:
Management Committee
Compliance Promotion Board
Internal Control Committee
Personal Information Protection
Promotion Committee
Information Security Committee

Hirotsugu Kato

Yoshiaki Kogure

Senior Executive Officer
Born: July 1963

Executive Officer
Born: September 1960

Mar. 1987	Joined the Company
Apr. 2015	Executive Officer and General Manager,
Corporate Planning DivisionJun. 2016	Director and Senior Executive Officer
General Manager, Corporate Planning
Division and IR Department
Oct. 2017	Director, Senior Executive Officer,
and Chief Digital Officer
General Manager, IR Department
In charge of Corporate Planning and
ESG Promotion (Incumbent)
Feb. 2018	Director, tsumiki Securities Co., Ltd.
(Incumbent)
Apr. 2018	Senior Managing Director,
M & C SYSTEMS CO., LTD. (Incumbent)

Apr. 1983	Joined the Company
Mar. 2006	General Manager,
Group Financial Department
Apr. 2007	Executive Officer (Incumbent)
Jul. 2008	General Manager, Personnel Division
Oct. 2009	General Manager,
Voi Business Department,
MARUI CO., LTD.
Apr. 2011	General Manager,
Corporate Planning Division
Apr. 2013	President and Representative Director,
MARUI FACILITIES Co., Ltd. (Incumbent)
May 2013	President and Representative Director,
Shiki City Development Co., Ltd.
(Incumbent)
Apr. 2015	Director, MARUI HOME SERVICE Co., Ltd.
(Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Internal Control Committee
Insider Trading Prevention Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Internal Control Committee
Safety Control CommitteeDirectors, Audit & Supervisory Board Members, and Executive Officers

Masahiro Aono

Yuko Ito

Mayuki Igayama

Executive Officer
Born: March 1962

Executive Officer
Born: June 1962

Executive Officer
Born: June 1964

Mar. 1984	Joined the Company
Mar. 2008	General Manager, Women’s Clothing andAccessories Department, MARUI CO., LTD.
Apr. 2010	General Manager,
Women’s Fashion Department,
MARUI CO., LTD.
Apr. 2011	Director and General Manager,
Business Promotion Department,
MARUI CO., LTD.
Apr. 2013	Executive Officer (Incumbent)
Apr. 2014	Director and General Manager,
Store Business Promotion Department,
MARUI CO., LTD. (Incumbent)
Apr. 2015	Managing Director, MARUI CO., LTD.
(Incumbent)
Director, AIM CREATE CO., LTD.
(Incumbent)

Mar. 1986	Joined the Company
Oct. 2007	General Manager,
Construction Department (Incumbent)
Apr. 2012	Director and General Manager,
Creative Management Department
Deputy General Manager,
Space Production Business Division,
AIM CREATE CO., LTD.
Apr. 2014	Executive Officer (Incumbent)
Apr. 2016	Director and General Manager,
Design Management Department
Deputy General Manager,
Space Production Business Division,
AIM CREATE CO., LTD.
Oct. 2016	Director and General Manager,
Creative Management Department
Deputy General Manager,
Space Production Business Division,
AIM CREATE CO., LTD. (Incumbent)
Apr. 2018	General Manager, Group Design Center(Incumbent)

Mar. 1987	Joined the Company
Apr. 2009	General Manager,
New Business Department
Oct. 2009	Deputy General Manager,
Voi Business Department,
MARUI CO., LTD.
Apr. 2012	General Manager,
Direct Marketing Department,
MARUI CO., LTD.
Apr. 2014	Director and General Manager,
Direct Marketing Department,
MARUI CO., LTD.
Apr. 2015	Executive Officer (Incumbent)
Director, MOVING CO., LTD. (Incumbent)
Apr. 2016	Director and General Manager,
Omni-Channel Retailing Division
MARUI CO., LTD. (Incumbent)

Participation in committees:
Management Committee
Safety Control Committee

Participation in committees:
Management Committee
Environment CSR Promotion Committee

Participation in committees:
Management Committee
Personal Information Protection
Promotion Committee
Information Security Committee

Junko Tsuda

Miyuki Kawara

Masahisa Aoki

Executive Officer
Born: May 1972

Executive Officer
Born: August 1963

Executive Officer
Born: July 1969

Mar. 1995	Joined the Company
Apr. 2014	Store Manager, Nakano Marui,
MARUI CO., LTD.
Apr. 2015	Executive Officer (Incumbent)
Director and Store Manager,
Marui Family Shiki, MARUI CO., LTD.
Apr. 2017	Executive Officer and General Manager
New Business Development Department
Apr. 2018	Director and Store Manager,
Marui Family Mizonokuchi,
MARUI CO., LTD. (Incumbent)

Mar. 1986	Joined the Company
Apr. 2007	Store Manager, Kobe Marui,
MARUI CO., LTD.
Oct. 2008	General Manager, Brand Development
Department, MARUI CO., LTD.
Apr. 2012	General Manager,
CSR Promotion Department
Apr. 2015	Director and General Manager,
Collaboration Card Business Department,
Sales Promotion Department,
Epos Card Co., Ltd.
Apr. 2016	Executive Officer (Incumbent)
Director and General Manager,
Sales Promotion Department,
Epos Card Co., Ltd.
Apr. 2018	Director and Store Manager, Ueno Marui,
MARUI CO., LTD. (Incumbent)

Apr. 1992	Joined MOVING CO., LTD.
Apr. 2015	Store Manager, Shinjuku Marui Annex,
MARUI CO., LTD.
Oct. 2015	General Manager,
Pre-Opening Development Office,Anime Business Department
Apr. 2016	General Manager,
Anime Business Department
Apr. 2017	Executive Officer (Incumbent)
Apr. 2018	General Manager,
New Business Development Department,
In charge of Anime Business (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Safety Control Committee

Participation in committees:
Management Committee
Personal Information Protection
Promotion Committee

106

Participation in committees:
Management CommitteeOverview of MARUI GROUP
As of March 31, 2018

Company Overview
NameDistribution of Shares Held by Shareholder TypeMARUI GROUP CO., LTD.

Head office3-2, Nakano 4-chome, Nakano-ku,
Tokyo 164-8701, Japan
Date of foundation
February 17, 1931
Date of establishment March 30, 1937
Capital¥35,920 million
Business activities Corporate planning and management forGroup companies engaged in Retailingsegment and FinTech segment
Marui and Modi: 26 located in Kanto,
StoresTokai, Kansai, and Kyushu regions
Total sales floor area 439,800m2
5,548
Number of

employees
Main banks

Foreign institutions
and individuals
62,565,000 shares(26.8%)

233,660,417 shares

Securities companies
2,598,000 shares(1.1%)

Other companies within Japan
35,405,000 shares(15.2%)*3 Individuals and others includes 12,767,206 shares of treasury stock.

(Group total, excludes temporary employees)

The Bank of Tokyo-Mitsubishi UFJ, Ltd. *1
Sumitomo Mitsui Banking Corporation
Mitsubishi UFJ Trust andBanking Corporation
Mizuho Bank, Ltd.
Development Bank of Japan Inc.
KPMG AZSA LLC

Accounting auditor*1 Currently MUFG Bank, Ltd.

Stock Information
Stock listing

Financial institutions
99,102,000 shares(42.4%)

Individuals and others*3
33,988,000 shares(14.5%)

Tokyo Stock Exchange, First Section(loan margin trading issues)
8252
1,400,000,000

Securities code
Number of
authorized shares
Number of common 233,660,417
shares issued*2
24,080
Number ofshareholders*2 Number of common shares issued includes 12,767,206 shares of treasury
stock, equivalent to 5.5% of the total number of shares of common stock issued.

Major Shareholders
Number of shares Percentage of
total shares(Thousands ofissued*4 (%)
shares)Name

The Master Trust Bank of Japan, Ltd.
(Trust Account)

31,735

14.4

Japan Trustee Services Bank, Ltd.
(Trust Account)

17,242

7.8

Japan Trustee Services Bank, Ltd.
(Trust Account 9)

6,220

2.8

Aoi Real Estate Co., Ltd.

6,019

2.7

The Bank of Tokyo-Mitsubishi UFJ, Ltd.*1

5,808

2.6

UBS AG LONDON A/C IPBSEGREGATED CLIENT ACCOUNT

4,171

1.9

TOHO CO., LTD.

3,779

1.7

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

3,770

1.7

Japan Trustee Services Bank, Ltd.
(Trust Account 5)

3,603

1.6

STATE STREET BANK WEST CLIENT –TREATY 505234

3,529

1.6

*4 P
 ercentage of total shares issued is calculated excluding treasury stock andincluding 502,300 shares held under the Board Incentive Plan Trust schemeand the Employee Stock Ownership Plan Trust scheme.

Stock Price
Closing price forCompany stock (Yen)

Nikkei 225(Yen)
30,0002,500

24,000

2,000
1,500

18,000

Nikkei 225

1,000

12,0006,000

Closing price for Company stock5000
Trading volume(Thousands of shares)

0

100,000
80,00060,00040,00020,0000108

2009/1

2010/1

2011/1

2012/1

2013/1

2014/1

2015/1

2016/1

2017/1

2018/1

Overview of MARUI GROUPMARUI GROUP’s Business
MARUI CO., LTD.

MARUI FACILITIES Co., Ltd.

Marui store business operation, original sales and private brandoperation and development, online shopping and mail-order, outside
specialty store business

Building management service business, security service business

3-2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan
Tel: 03-3384-0101 (Receptionist)

34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan
Tel: 03-3229-0101 (Receptionist)
www.marui-facilities.co.jp (Japanese only)

www.0101.co.jp.e.ex.hp.transer.com

MARUI HOME SERVICE Co., Ltd.
Real estate rental business

Epos Card Co., Ltd.

34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan
Tel: 03-6361-0101 (Receptionist)

Credit card business, credit loan business
3-2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan
Tel: 03-4574-0101 (Receptionist)

www.marui-hs.co.jp (Japanese only)

www.eposcard.co.jp (Japanese only)

MRI Co., Ltd.
Collection and management of receivables business, credit checkbusiness

AIM CREATE CO., LTD.
Commercial facility proposal, design and interior decoration,
operation and management, operation of Modi stores, advertisement
planning and creation
34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan
Tel: 03-5340-0101 (Receptionist)
www.aim-create.co.jp (Japanese only)

34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan
Tel: 03-4574-4700 (Receptionist)
www.mri-s.co.jp (Japanese only)

Epos Small Amount and Short Term Insurance Co., Ltd.
Small-amount short-term insurance policy business
34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan
Tel: 03-4546-0101 (Receptionist)

MOVING CO., LTD.
Trucking business, forwarding, and other businesses
5-1, Bijogihigashi 2-chome, Toda-shi, Saitama 335-0032, Japan
Tel: 048-233-1000 (Receptionist)
www.moving.co.jp (Japanese only)

www.epos-ssi.co.jp (Japanese only)

tsumiki Securities Co., Ltd.
Sale of investment trusts applicable under Tsumitate NISA throughcredit payment via EPOS cards

M & C SYSTEMS CO., LTD.

3-2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan
Tel: 03-3384-0101 (Receptionist)

Software development, computer operation
3-2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan
Tel: 03-5343-0100 (Receptionist)
www.m-and-c.co.jp (Japanese only)

www.tsumiki-sec.com (Japanese only)

MARUI KIT CENTER CO., LTD.
Supply pickup, product inspection, various printing services
Toda Product Center, Second Building, 5-1, Bijogihigashi 2-chome,Toda-shi, Saitama 335-0032, Japan
Tel: 048-421-7351 (Receptionist)

The AOI SCHOLARSHIP FOUNDATION was established by MARUI GROUP founder
Chuji Aoi with the aim of contributing to the development of people that can shape the futureof Japan and benefit society. Over the more than 40 years since its establishment, thisfoundation has helped fund the education of high school and university students while
facilitating networking between students receiving scholarships and past graduates.
Established: January 1973 (became an incorporated public interest foundation in 2012)
Director: Tadao Aoi (Honorary Chairman of MARUI GROUP)
Total amount of scholarships provided: ¥1,810 million
Total number of students supported: 1,561
(As of April 2018)
Group of new
university students
supported in the fiscal
year ending March 31,
2019

Office: 3-2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan(located at MARUI GROUP head office)Tel: 03-5343-0351

109

MARUI GROUP Store Network
As of March 31, 2018

Marui and Modi Stores: 26
Specialty Stores (outside of Marui and Modi stores): 7
EPOS Card Application Centers (outside of Marui and Modi stores): 17

Hokkaido

AomoriGifu
Kyoto
FukuokaMiyagi

Hyogo
Ibaraki Mito
SaitamaOmiya

Kawagoe

Soka
Shiki

Shizuoka

Ikebukuro

NagasakiTachikawa Kokubunji Kichijoji Nakano Shinjuku

Kagoshima

Oita

Aichi

Miyazaki

Osaka

Tokyo

Shibuya
MachidaKashiwa
Kitasenju
Ueno

Chiba
Kinshicho

Yurakucho

Mizonokuchi

Tokyo
Shinurayasu

Funabashi

Ebina

Chiharadai

Kanagawa

Hiratsuka

Totsuka

Yokohama

Marui and Modi Stores
Name

Sales floorarea (m2)Transactions(billions of yen)

OpenedAddress

Telephone

Kitasenju Marui35,30037.4

February 27, 2004

3-92 Senju, Adachi-ku 120-8501

03-5244-0101

Shinjuku Marui

30,59024.6

September 10, 1948

3-30-13 Shinjuku, Shinjuku-ku 160-0022

03-3354-0101

Yurakucho Marui

18,50021.6

October 12, 2007

2-7-1 Yurakucho, Chiyoda-ku 100-0006

03-3212-0101

Machida Location

21,27015.3

September 20, 1980

6-1-6 Haramachida, Machida-shi 194-0013

042-728-0101

Ueno Marui

16,39012.7

August 24, 1985

6-15-1 Ueno, Taito-ku 110-8502

03-3833-0101

Kinshicho Marui

22,99012.3

September 2, 1983

3-9-10 Kotobashi, Sumida-ku 130-0022

03-3635-0101

Kokubunji Marui

14,30012.2

March 1, 1989

3-20-3 Minami-cho, Kokubunji-shi 185-8562

042-323-0101

Shibuya Location

14,09011.5

October 1, 1958

1-22-6 Jinnan, Shibuya-ku 150-0041

03-3464-0101

Ikebukuro Marui

12,170

5.7

January 20, 1952

3-28-13 Nishi-Ikebukuro, Toshima-ku 171-0021

03-3989-0101

Nakano Marui

4,950

5.5

February 17, 1931

3-34-28 Nakano, Nakano-ku 164-0001

03-3382-0101

Kichijoji Marui

11,9505.3

October 30, 1960

1-7-1 Kichijojiminami-cho, Musashino-shi 180-8552

0422-48-0101

Marui Family Mizonokuchi

32,26021.1

September 12, 1997

1-4-1 Mizonokuchi, Takatsu-ku, Kawasaki-shi 213-0001

044-814-0101

Totsuka Modi

16,5809.3

March 15, 2007

10 Totsuka-cho, Totsuka-ku, Yokohama-shi 244-0003

045-862-0135

Marui Family Ebina

19,5008.9

April 19, 2002

1-6-1 Chuo, Ebina-shi 243-0483

046-232-0101

Marui City Yokohama

16,7708.2

September 20, 1996

2-19-12 Takashima, Nishi-ku, Yokohama-shi 220-0011

045-451-0101

Marui Family Shiki

18,90011.0

February 25, 2000

5-26-1 Hon-cho, Shiki-shi 353-0004

048-487-0101

Omiya Marui

13,9706.7

September 28, 1982

2-3 Sakuragi-cho, Omiya-ku, Saitama-shi 330-9501

048-642-0101

Soka Marui

16,530

4.6

February 21, 1992

2-9-1 Takasago, Soka-shi 340-0015

048-922-0101

Kawagoe Modi

7,850

1.8

March 24, 2007

4-2 Wakita-cho, Kawagoe-shi 350-1122

049-227-5950

Chiba

Kashiwa Location

18,810

6.7

April 24, 1964

1-1-11 Kashiwa, Kashiwa-shi 277-0005

04-7163-0101

Ibaraki

Mito Marui

13,300

1.9

July 25, 1970

1-2-4 Miyamachi, Mito-shi 310-0015

029-225-0101

Shizuoka

Shizuoka Location

13,4603.2

September 21, 1969

6-10 Miyukicho, Aoi-ku, Shizuoka-shi 420-0857

054-252-0101

Osaka

Namba Marui17,00010.6

September 22, 2006

3-8-9 Namba, Chuo-ku, Osaka-shi 542-0076

06-6634-0101

Kyoto

Kyoto Marui

8,760

4.5

April 27, 2011

68 Shin-cho, Shijodori-Kawaramachi-Higashiiru,
Shimogyo-ku, Kyoto-shi 600-8567

075-257-0101

Hyogo

Kobe Marui

6,940

4.3

October 3, 2003

1-7-2 Sannomiya-cho, Chuo-ku, Kobe-shi 650-0021

078-334-0101

Fukuoka

Hakata Marui

15,000

7.6

April 21, 2016

9-1 Chuogai, Hakataeki, Hakata-ku, Fukuoka-shi 812-0012

092-415-0101

Tokyo

Kanagawa

Saitama

Note: “Shinjuku Marui” refers to Shinjuku Marui Main Building, Shinjuku Marui Annex, Shinjuku Marui Men. “Shibuya Location,” “Machida Location,” “Kashiwa Location,”and “Shizuoka Location” refer to both the Marui and Modi stores located at these sites.

110

MARUI GROUP Store Network

Specialty Stores (outside of Marui and Modi stores)
Name

Address

Telephone

Marui Shoes SENDAI PARCO 2 Store

4th Floor, SENDAI PARCO 2, 3-7-5 Chuo, Aoba-ku, Sendai-shi 980-8450

022-212-8350

MARUI MODEL IZUMI PARK TOWN

Tapio Store 1st Floor, IZUMI PARK TOWN Tapio, 6-5-1 Teraoka, Izumi-ku, Sendai-shi 981-3204

022-342-5950

Tokyo

Marui Shoes
LaLaPort Tachikawa Tachihi Store

1st Floor, LaLaPort Tachikawa Tachihi, 935-1 Izumi-cho, Tachikawa-shi 190-0015

042-540-6235

Kanagawa

Marui Shoes
LaLaport Shonan Hiratsuka

1st Floor, LaLaport Shonan Hiratsuka, 10-1 Amanuma, Hiratsuka-shi 254-8510

0463-25-5101

Chiba

Marui Shoes & Bags / Watches
LaLaPort TOKYO-BAY Store

2nd Floor, South Building, LaLaPort TOKYO-BAY, 2-1-1 Hama-cho, Funabashi-shi 273-8530

047-421-7264

Aichi

Rakuchin Kirei Shoes Fit Studio
AEONMALL KISOGAWA(Permanent try-on store)

1st Floor, AEONMALL KISOGAWA, 25-1 Aza-minamiyatsugaike, Kuroda, Kisogawa-cho,
Ichinomiya-shi 493-0001

0586-84-2131

Oita

Marui Shoes AMU PLAZA OITA Store

2nd Floor, AMU PLAZA OITA, 1-14 Kanamemachi, Oita-shi 870-0831

097-573-3220

Miyagi

EPOS Card Application Centers (outside of Marui and Modi stores)
Name

Address

Telephone

Chitose Outlet Mall Rera Rera
EPOS Card Application Center

Rera EPOS Card Application Center, 1-2-1 Kashiwadai Minami, Chitose-shi 066-8765

0123-27-3511

Feeeal EPOS Card Application CenterFeeeal Asahikawa EPOS Card Application Center, 1st Underground Floor, Feeeal Asahikawa,
8-108 1 Jodori, Asahikawa-shi 070-0031

0166-29-6711

Aomori

ELM EPOS Card Application Center

ELM EPOS Card Application Center, 2nd Floor ELM, 517-1 Fujimaki, Karakasayanagi,
Goshogawara-shi 037-0004

0173-38-4311

Tokyo

KITTE Marunouchi
EPOS Card Application Center

KITTE Marunouchi EPOS Card Application Center, 4th Floor, KITTE Marunouchi, 2-7-2 Marunouchi,
Chiyoda-ku, Tokyo 100-7004

03-5224-6611

MONA Card Application Center

MONA Card Application Center, MONA Shinurayasu, 2nd Floor, 1-5-1 Irifune, Urayasu-shi 279-0012

047-390-5411

MALLAGE KASHIWA
EPOS Card Application Center

MALLAGE KASHIWA EPOS Card Application Center, 2nd Floor, MALLAGE KASHIWA, 2-3 Oyamadai,
Kashiwa-shi 277-0837

04-7137-1411

unimo Chiharadai
EPOS Card Application Center

unimo Chiharadai EPOS Card Application Center, 2nd Floor, unimo Chiharadai, 3-4 Chiharadai Nishi,
Ichihara-shi 290-0194

0436-40-5411

Gifu

MALera GIFUEPOS Card Application Center

MALera GIFU EPOS Card Application Center, 2nd Floor, MALera GIFU, 1100 Mitsuhashi,
Motosu-shi 501-0497

058-320-5811

Aichi

Hoshigaoka Terrace
EPOS Card Application Center

Hoshigaoka Terrace EPOS Card Application Center, East 1st Floor, Hoshigaoka Terrace, 16-50
Motomachi, Hoshigaoka, Chikusa-ku, Nagoya-shi 464-0802

052-788-7311

Osaka

Kishiwada CanCan
EPOS Card Application Center

Kishiwada CanCan EPOS Card Application Center, 2nd Floor, Kishiwada CanCan Bayside Mall,
2-1 Minatomidorimachi, Kishiwada-shi 596-0014

072-433-5311

Hyogo

ASPIA AKASHIEPOS Card Application Center

ASPIA AKASHI EPOS Card Application Center, 1st Underground Floor, ASPIA AKASHI,
6-1 Higashi-Nakanomachi, Akashi-shi 673-0886

078-915-0611

FukuokaAMU PLAZA HAKATAJQ Card EPOS Counter

JQ Card EPOS Counter, 1st Underground Floor, AMU PLAZA HAKATA, 1-1 Hakataekichuogai,
Hakata-ku, Fukuoka-shi 812-0012

092-432-5911

HUIS TEN BOSCHEPOS Card Application Center

HUIS TEN BOSCH EPOS Card Application Center, 2nd Floor, Passage, HUIS TEN BOSCH,
8-2 HUIS TEN BOSCH-cho, Sasebo-shi 859-3292

0956-27-0971

Sasebo 5bangai
EPOS Card Application Center

Sasebo 5bangai EPOS Card Application Center, 1st Floor, Promenade East Zone, Sasebo 5bangai,
2-1 Shinko-cho, Sasebo-shi 857-0855

0956-37-3711

AMU PLAZA OITAJQ CARD EPOS Card Application DeskJQ CARD EPOS Card Application Desk, 302, 3rd Floor, AMU PLAZA OITA, 1-14 Kanamemachi,
Oita-shi 870-0831

097-513-2411

MiyazakiTachibana EPOS Card Application Center

Tachibana EPOS Card Application Center, 1st Floor, West Wing, BonBelta Tachibana, 3-10-32
Tachibanadorinishi, Miyazaki-shi 880-8586

0985-35-4811

Kagoshima

AMU PLAZA KAGOSHIMA JQ CARDEPOS Card Application DeskJQ CARD EPOS Card Application Desk, 2nd Floor, AMU PLAZA KAGOSHIMA, 1-1 Chuo-cho,Kagoshima-shi 890-0053

099-812-6411

Hokkaido

Chiba

Nagasaki

Oita

Marui store and product informationwww.0101.co.jp.e.ex.hp.transer.com

MARUI Internet shopping“marui web channel” (Japanese only)
voi.0101.co.jp

Epos Card Co., Ltd. (Japanese only)
www.eposcard.co.jp

111

Financial and Non-Financial Summary

FACT BOOK
www.0101maruigroup.co.jp/en/ir/lib/fact.html

MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries

Fiscal years ended March 31

2008

2009

2010

2011

Total Group transactions
Retailing*1
FinTech*1
Eliminations*2
Total operating revenues*3
Revenue*3
Gross profit
Selling, general and administrative expenses
EBITDA*4
Operating income
Net income (loss) attributable to owners of parent
Segment income*1
Retailing*1
FinTech*1
Retailing and Store Operation*1
Credit Card Services*1
Retailing-Related Services*1
Total assets
Shareholders’ equity
Installment sales accounts receivable
Consumer loans outstanding
Interest-bearing debt
Net cash provided by (used in) operating activities
Core operating cash flow*5
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents
Capital investments
Depreciation and amortization
Earnings (loss) per share (yen)Net assets per share (yen)Cash dividends per share (yen)Payout ratio (%)
Total return ratio (%)
Operating income margin (%)*6
Return on equity (%)
Return on invested capital (%)
Return on assets (%)
Equity ratio (%)
Stock price at year-end (yen)Market capitalization(including treasury stock) (billions of yen)Price earnings ratio (times)
Price book-value ratio (times)
Number of common shares issued (including treasury stock)
Number of shares of treasury stock
Total number of employees
Ratio of female employees (%)
Ratio of female managers (%)
Employee turnover rate
(excluding mandatory retirement) (%)
Total number of stores*7
Total sales floor area (thousand m2)
EPOS cardholders (including Akai Card)(ten thousands of members)
Ratio of delinquent debt (%)
Energy consumption (GJ)
GHG emissions (Scope 1 & 2) (t-CO2)*8 *9
GHG emissions (Scope 3) (t-CO2)*8 *9

—
—
—
—
—
493,533
177,565
159,382
36,87018,183
7,603

—
—
—
—
—
447,400
160,125
150,986
28,5229,138(8,750)—————419,255
149,926
139,488
29,695
10,438
5,104

—
—
—
—
—
406,472
144,736
129,940
30,457
14,795(23,638)——
10,645
5,740
6,772
695,491
336,445
73,781
222,534
277,537
13,919—3,134(32,241)
29,53523,64918,686
24.91
1,207
28.0
112.4
911.3
3.7
2.1
1.9
2.4
48.4
1,061

—
—
1,252
6,725
3,740
685,351
310,818
88,761
207,117
292,061
15,316—(18,234)
2,409
29,026
24,073
19,384(31.90)
1,135
28.0
—
—
2.0
(2.7)
1.0
1.1
45.4
523

—
—
37
10,272
2,509
664,357
312,188
95,871
191,486
283,676
30,811—(13,034)(14,519)
32,283
17,39819,257
18.65
1,140
14.0
75.1
75.1
2.5
1.6
1.1
1.5
47.0
678

—
—
2,110
13,704
1,568
628,910284,526
111,760
158,707
264,692
30,280—(7,033)(22,926)
32,603
14,332
15,661(86.36)
1,039
14.0
—
—
3.6
(7.9)
1.7
2.2
45.2
537

338.0
42.6
0.9
318,660,417
39,913,811
7,147
44.4
—

166.6
—
0.5
318,660,417
44,918,979
7,085
44.6
—

216.0
36.4
0.6
318,660,417
44,941,174
6,847
44.7
—

171.1
—
0.5
318,660,417
44,946,398
6,492
44.4
—

—
25
381.4

—
25
444.8

—
25
453.3

—
26
457.8

429
4.22
—
125,628
—

437
3.91
—
122,136
—

476
3.19
—
130,600
—

476
3.35
—
114,900—*1 Beginning with the fiscal year ended March 31, 2017, the prior segments of Retailing and Store Operation, Credit Card Services, and Retailing-Related Services werereorganized into the Retailing and FinTech segments.
*2 Eliminations under total Group transactions represent the deduction of credit card transactions recorded in Retailing.
*3 Beginning with the fiscal year ended March 31, 2016, the display method was changed from total value display to net value display, the portion that represents income
to the Company, for sales recorded through sale or return arrangements. In conjunction with this change, the previous “operating revenues” line item was replaced with
the new “revenue” line item.
*4 EBITDA (earnings before interest, taxes, and depreciation and amortization) = Operating income + Depreciation and amortization

112

Financial and Non-Financial Summary

ESG DATA BOOK
www.0101maruigroup.co.jp/en/sustainability/lib/databook.html

Millions of yen
2012

2013

2014

2015

2016

2017

2018

—
—
—
—
—
412,408
147,240
129,224
33,08518,015
5,251

—
—
—
—
—
407,366
148,172
123,886
35,23724,285
13,255

1,297,250———
253,077
416,460
156,642
129,495
37,134
27,146
15,4091,469,111———
249,847
404,947
159,448
131,406
38,33828,042
16,036

1,703,353
341,478
1,473,539(111,664)
245,867—
160,035
130,419
39,286
29,615
17,771

1,933,685
326,327
1,723,254(115,896)
237,022—
165,964
134,711
41,374
31,25318,7242,189,374
328,486
1,972,482(111,594)
238,999—
174,405
139,162
45,51735,243
20,907——
7,547
10,6192,567
615,130
289,975
142,995
132,280
245,175
24,897—(3,913)(23,660)
29,928
7,941
15,069
19.19
1,059
14.0
73.0
73.0
4.4
1.8
2.1
2.8
47.1
690

—
—
9,885
13,177
3,792
624,173
303,637
171,187
123,739
243,762
5,111—
435(5,571)
29,940
7,665
10,951
48.43
1,109
15.0
31.0
31.0
6.0
4.5
3.0
3.9
48.6
975

—
—
10,562
15,634
4,523
664,019
315,446
213,466
125,215
264,824(9,227)—(6,791)
16,14130,053
11,238
9,988
56.29
1,152
18.0
32.0
32.0
10.7
5.0
3.0
4.3
47.5
885

—
—
8,074
20,126
3,333
675,627
306,795
227,121
128,030
277,839
12,31025,484(3,867)(7,267)31,229
9,786
10,296
58.87
1,166
19.0
32.3
125.3
11.2
5.2
3.3
4.2
45.4
1,365

10,65823,094
7,856
22,186
3,674
730,126
281,610
279,763
134,107359,324(35,310)
26,788(4,063)40,71932,575
12,882
9,670
70.68
1,161
22.0
31.1
227.5
12.0
6.0
3.3
4.1
38.6
1,613

7,759
27,111———
806,575
273,883
348,191
140,569
434,327(45,955)
28,188
1,995
47,63036,245
15,696
10,121
80.24
1,196
33.0
41.1
147.5
13.2
6.7
3.1
4.1
34.0
1,513

8,826
30,310———867,150
274,434
402,030
146,011
485,331(19,329)35,853
747
27,77345,437
10,25010,274
93.18
1,245
38.0
40.8
112.3
14.7
7.6
3.2
4.2
31.6
2,168

219.8
36.0
0.7
318,660,417
44,947,345
6,218
44.4
—

310.6
20.1
0.9
318,660,417
44,948,289
6,101
44.3
6.4

282.0
15.7
0.8
318,660,417
44,901,353
5,966
44.5
7.3

380.3
23.2
1.2
278,660,417
15,588,364
5,918
44.6
8.5

449.4
22.8
1.4
278,660,417
36,270,334
5,899
45.5
8.9

353.5
18.9
1.3
233,660,417
4,704,750
5,732
45.1
10.0

506.6
23.3
1.7
233,660,417
13,269,506
5,548
44.4
11.0

—
27
458.4

2.8
27
453.1

2.3
27
446.5

2.0
27
444.0

1.6
28
441.8

2.6
27
452.1

2.3
26
439.8

487
3.10
—
96,300—498
2.32
1,998,182
86,765—542
1.84
2,525,815
119,129
550,612591
1.68
2,350,595
111,216
530,595613
1.57
2,305,099
103,613509,070636
1.45
2,341,454
118,183
489,439657
1.60
2,327,713
113,104
412,256*5 Core operating cash flow represents net cash provided by (used in) operating activities less the increase in operating receivables.
*6 Operating income margin is calculated using operating revenues for the fiscal year ended March 31, 2013, and prior fiscal years and revenue for the fiscal year ended
March 31, 2014, and subsequent fiscal years.
*7 From the fiscal year ended March 31, 2017, sites at which both a Marui store and a Modi store exist are counted as one store.
*8 Scope 1 & 2 represent GHG emissions from the Group. Scope 3 represents GHG emissions from areas including raw material procurement, transportation, and use bycustomers. Scope 3 emissions calculations are verified by Mizuho Information & Research Institute, Inc.
*9 In the fiscal year ended March 31, 2014, the scope of data collection was expanded to include the entire Group.

113

Consolidated Balance Sheets
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of March 31, 2017 and 2018

Millions of yen

Thousands of
U.S. dollars (Note 1)

2017

2018

¥ 36,257¥  45,448$  428,754

Inventories
Deferred tax assets (Note 15)
Other
Total current assets

4,840
348,191
140,569(9,352)484,249
10,437
6,934
20,920558,799

7,006
402,030
146,011(11,843)543,205
7,489
7,328
26,522629,994

66,094
3,792,735
1,377,462(111,726)
5,124,575
70,65069,132
250,207
5,943,339

Property and equipment (Note 17):Land
Buildings and structures
Construction in progress
Other
Accumulated depreciation
Property and equipment, net

103,540
257,647
195
33,547(216,277)
178,654

103,680
257,968764
33,363(218,974)
176,803

978,1132,433,660
7,207
314,745(2,065,792)
1,667,952

Investments and other assets:
Investment securities (Notes 8, 10 and 11)
Intangible assets
Leasehold and other deposits (Note 10)
Deferred tax assets (Note 15)
Other (Note 9)
Total investments and other assets
Total assets

18,8506,295
34,031
6,870
3,073
69,121¥806,575

14,9996,388
32,5273,492
2,944
60,352¥867,150

141,500
60,264
306,858
32,943
27,773569,358$8,180,660¥ 15,850
50,82720,000
5,000
7,214
3,671
9,181
158
33,150145,051¥ 12,361
75,331
10,000
—
5,961
3,940
11,445
156
49,236
168,431$  116,613
710,669
94,339—56,23537,169107,971
1,471
464,490
1,588,971

85,000273,500
4,003
11,487197
179
887
11,928387,184
532,236

95,000305,000
3,315
6,081
203
363
874
12,980423,818592,249

896,226
2,877,358
31,27357,367
1,915
3,424
8,245
122,452
3,998,283
5,587,254

35,92035,920338,867

91,307
155,079

91,307
168,034

861,386
1,585,226(7,389)274,918(22,389)
272,872(211,216)
2,574,264(1,034)—(1,034)2453
274,339¥806,575

1,563
(1)
1,561
—
466
274,900¥867,150

14,745(9)14,726—
4,396
2,593,396$8,180,660

AssetsCurrent assets:
Cash and deposits (Notes 10 and 27)
Notes and accounts receivable–trade (Note 10)
Accounts receivable–installment (Notes 6 and 10)
Operating loans (Notes 7 and 10)
Allowance for doubtful accounts (Note 10)

Liabilities and net assets
Current liabilities:
Accounts payable–trade (Note 10)
Short-term loans payable and current portion of long-term loans payable (Notes 10 and 14)
Current portion of bonds payable (Notes 10 and 14)
Commercial paper (Note 10)
Income taxes payable (Note 10)
Provision for bonuses
Provision for point card certificates
Provision for loss on redemption of gift certificates
Other
Total current liabilities
Non-current liabilities:
Bonds payable (Notes 10 and 14)
Long-term loans payable (Notes 10, 12, and 14)
Deferred tax liabilities (Note 15)
Provision for loss on interest repayment
Provision for loss on guarantees
Provision for stock benefits (Note 5)
Asset retirement obligations (Note 16)
Other
Total non-current liabilities
Total liabilities
Contingent liabilities (Note 20)
Net assets (Note 19)
Shareholders’ equity:
Capital stock			  Authorized: 1,400,000,000 shares of common stock			 Issued:
233,660,417 shares as of March 31, 2017 and		
March 31, 2018
Capital surplus
Retained earnings
Treasury stock (Note 31)			  4,704,750 shares as of March 31, 2017 and 13,269,506 shares as of March 31, 2018
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Total accumulated other comprehensive income
Subscription rights to shares (Note 18)
Non-controlling interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these consolidated financial statements.

114

2018

Consolidated Statements of Income /Consolidated Statements of Comprehensive Income
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2017 and 2018

Consolidated Statements of Income
Revenue (Note 17)

Millions of yen

Thousands of
U.S. dollars (Note 1)

2017

2018

2018

¥237,022¥238,999$2,254,707

Cost of sales (Notes 17 and 21)

71,05764,593609,367

Gross profit

165,964

174,405

1,645,330

Selling, general and administrative expenses (Notes 17 and 22)

134,711

139,162

1,312,849

Operating income

31,25335,243

332,481Non-operating income (expenses):
Interest income

103

46

433

Dividend income

338

353

3,330

Gain on bad debt recovered

1,231

1,122

10,584Gain on sale of property and equipment (Note 17)

13,659

1,121

10,575

208

429

4,047

(1,682)(1,492)(14,075)

Gain on sale of investment securities
Interest expenses
Financing expenses

(187)

(224)

(2,113)

Loss on retirement of property and equipment (Note 23)(2,918)(1,643)(15,500)

Loss on closing of stores (Note 23)(1,310)(604)(5,698)

Impairment loss (Note 24)(291)(1,184)(11,169)

Loss on sale of investment securities(330)(1,334)(12,584)

—

(23)

(216)

(377)

—

—

(11,487)

—

—

(164)

81

764

Loss on valuation of investment securities
Loss on interest repayment
Provision for loss on interest repayment (Note 25)
Other, net(3,210)(3,354)(31,641)

28,04331,888300,830

Income taxes–current

10,42010,765

101,556

Income taxes–deferred(1,126)

194

1,830

9,293

10,959103,386

18,74920,929197,443

24

21

198

¥ 18,724¥ 20,907$  197,235

2017

2018

¥   80.24
80.24
33.00
1,196.23¥   93.18
93.18
38.00
1,245.22

Income before income taxes
Income taxes (Note 15)

Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

Per share data (Note 30)
Net income per share:
Basic
DilutedCash dividends
Net assets per share

Yen

U.S. dollars (Note 1)2018$ 0.87
0.87
0.35
11.74

The accompanying notes are an integral part of these consolidated financial statements.
Millions of yen

Thousands of
U.S. dollars (Note 1)

Consolidated Statements of Comprehensive Income

2017

2018

2018

Net income¥18,749¥20,929$197,443
24,500

Other comprehensive income (Note 26):
Valuation difference on available-for-sale securities

581

2,597

Deferred gains or losses on hedges

—

(1)

(9)

Total other comprehensive income

581

2,596

24,490¥19,331¥23,525$221,933¥19,306¥23,504$221,735

24

21

198

Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.

115

Consolidated Statements of Changes in Net Assets
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2017 and 2018

Millions of yen
Accumulated othercomprehensive income

Shareholders’ equity

CapitalsurplusRetainedearnings

Treasury stockTotal¥35,920 ¥ 91,307¥210,237¥(54,238)¥283,226

Capitalstock

Balance as of April 1, 2016

Valuation
Deferreddifference on gains oravailable-for- losses onsale securities hedges¥(1,616)

¥—

Total

¥(1,616)

Subscription
Nonrights to controllingsharesinterests

¥ 53

¥437

Total net
assets¥282,101

Changes of items during period:
Dividends from surplus(6,386)

	Net income attributable to ownersof parent

18,724(20,698)
53
67,494Purchase of treasury stock
Retirement of treasury stock(1)(67,494)	Transfer from retained earnings
to capital surplus

67,495(67,495)——¥35,920 ¥ 91,307(55,157)¥155,079

Disposal of treasury stock(6,386)(6,386)

18,724(20,698)51—

18,724(20,698)
51
—

—

—

	Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance as of April 1, 201746,849¥ (7,389)(8,308)¥274,918

581
581¥(1,034)

—
—
¥—

581
581
¥(1,034)

(51)
(51)
¥  2

16
16
¥453

546
(7,761)¥274,339

Changes of items during period:
Dividends from surplus(7,953)

	Net income attributable to ownersof parent

20,907(15,002)2

Purchase of treasury stock(0)

Disposal of treasury stock
Retirement of treasury stock	Transfer from retained earnings
to capital surplus

0

(0)

—
—
¥35,920 ¥ 91,307

12,954¥168,034(7,953)(7,953)

20,907(15,002)2—

20,907(15,002)2———

	Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance as of March 31, 2018(15,000)¥(22,389)(2,045)¥272,872

2,597
2,597
¥ 1,563

(1)
(1)
¥(1)

2,596
2,596
¥ 1,561

(2)
(2)
¥ —

12
12
¥466

2,607
561
¥274,900

Thousands of U.S. dollars (Note 1)
Accumulated othercomprehensive income

Shareholders’ equity

Capitalstock

CapitalsurplusRetainedearnings

Treasury stock

Valuation
Deferreddifference on gains oravailable-for- losses onsale securities hedges

Total

$—

$ (9,754)$ 18

Total net
assets$338,867 $861,386 $1,463,009$ (69,707) $2,593,566

Dividends from surplus(75,028)(75,028)(75,028)	Net income attributable to ownersof parent

197,235

197,235(141,528)
18—

197,235(141,528)
18
—

(0)

—

—

—
—
122,207$338,867 $861,386 $1,585,226(141,509)(19,292)$(211,216) $2,574,264

Balance as of April 1, 2017

$ (9,754)

Total

Subscription
Nonrights to controllingsharesinterests$4,273 $2,588,103

Changes of items during period:(141,528)
18

Purchase of treasury stock
Disposal of treasury stock(0)

Retirement of treasury stock	Transfer from retained earnings
to capital surplus

0	Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance as of March 31, 2018

The accompanying notes are an integral part of these consolidated financial statements.

116

24,50024,500$14,745(9) 24,490(9) 24,490$(9) $14,726

(18)
(18)
$ —

113
24,594113
5,292$4,396 $2,593,396

Consolidated Statements of Cash FlowsMARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2017 and 2018

Millions of yen
2017

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss (Note 24)
Increase (decrease) in provision for point card certificates
Increase (decrease) in provision for allowance for doubtful accounts
Increase (decrease) in provision for loss on interest repayment
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Loss (gain) on retirement of property and equipment
Loss (gain) on sale of property and equipment
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable–trade
Decrease (increase) in accounts receivable–installment
Decrease (increase) in operating loans
Decrease (increase) in inventories
Increase (decrease) in accounts payable–trade
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from sale of property and equipment
Purchase of investment securities
Proceeds from sale of investment securities
Payments for leasehold and other deposits
Proceeds from collection of leasehold and other deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Net increase (decrease) in commercial paper
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Cash dividends paid (Note 19)
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 27)

2018

Thousands of
U.S. dollars (Note 1)
2018¥ 28,043
10,121
291
2,595
1,552
5,409
(85)
(441)
1,682
1,149
(13,659)
122
—
2,618
(68,428)(6,461)
2,800(8,468)4,213(36,943)350(1,692)(7,882)
212(45,955)¥ 31,888
10,274
1,184
2,264
2,491
(5,406)
269
(399)
1,492
780
(1,121)904
30(2,166)(53,838)(5,442)
2,193(3,489)10,792(7,297)365(1,518)(10,880)0(19,329)$ 300,830
96,924
11,16921,35823,500(51,000)
2,537(3,764)
14,075
7,358(10,575)
8,528
283(20,433)(507,905)(51,339)
20,688(32,915)
101,811(68,839)3,443(14,320)(102,641)
0(182,349)(18,059)
14,607
(399)
2,016
(275)
2,097
2,009
1,995

(9,607)
1,328(1,793)
8,562
(161)
1,134
1,285
747

(90,632)
12,528(16,915)
80,773(1,518)
10,69812,122
7,047

7,502(5,000)92,500(15,000)
24,883(30,000)(20,711)(6,386)(157)
47,6303,670
32,575¥ 36,245

3,503(5,000)62,500(10,000)
19,897(20,000)(15,016)(7,953)(158)
27,773
9,191
36,245¥ 45,437

33,047(47,169)
589,622(94,339)
187,707(188,679)(141,660)(75,028)(1,490)262,00986,707
341,933$ 428,650

The accompanying notes are an integral part of these consolidated financial statements.

117

Notes to Consolidated Financial Statements
MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of and for the fiscal years ended March 31, 2017 and 2018

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of MARUI GROUP CO., LTD. (“the Company”) and its consolidated subsidiaries (collectively, “the Group”) have been prepared in accordance with the provisions set forth in the Financial Instruments andExchange Act of Japan and its related accounting regulations as well as in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial
Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form that is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the 2017 consolidated financial statements to conform to theclassifications used in 2018.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company isincorporated and operates.
As permitted by the regulations under the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been omitted. As a result, the totals shown in the accompanying consolidated financial statements in Japanese yen
do not necessarily agree with the sums of the individual amounts.
The U.S. dollar amounts shown in the accompanying consolidated financial statements and notes thereto were translated
from the presented Japanese yen amounts into U.S. dollar amounts at the rate of ¥106 = $1, the approximate rate of exchange
at March 31, 2018, and were then rounded down to the nearest thousand. As a result, the totals shown in the accompanying
consolidated financial statements in U.S. dollars do not necessarily agree with the sums of the individual amounts. This translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan. Suchtranslation should not be construed as a representation that Japanese yen could be converted into U.S. dollars at that or any
other rate.

2. SIGNIFICANT ACCOUNTING POLICIES(1) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The consolidated financial statements as of and for the fiscal years ended March 31, 2017 and 2018, include the accounts of
the Company and its nine significant subsidiaries.
Under the control or influence concept, those companies in which the Company, either directly or indirectly, is able to exercise control over operations are consolidated, and those companies over which the Company has the ability to exercise
significant influence are accounted for using the equity method. For the fiscal years ended March 31, 2017 and 2018, there
was no subsidiary or affiliate accounted for using the equity method. Investments in the remaining unconsolidated subsidiaries
and affiliates are stated at cost. If the equity method of accounting was applied to the investments in these companies, the effecton the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation.
The fiscal year-end of all consolidated subsidiaries is March 31, the same as that of the Company.

(2) Foreign currency translation
All monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates
prevailing at the consolidated balance sheet dates. All revenues and expenses associated with foreign currencies are translated
into Japanese yen at the exchange rates prevailing when such transactions were made. The resulting exchange gains or losses
are credited or charged to income.

(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, the Group considers cash on hand, readily available deposits, and highly
liquid short-term investments with maturities of three months or less when purchased that are exposed to an insignificant risk ofchanges in value to be cash and cash equivalents.

118

Notes to Consolidated Financial Statements(4) Investment securities
Investment securities held by the Group are all classified as available-for-sale securities.
Available-for-sale securities with a determinable market value are stated at fair value based on the market value at the balance sheet date, and unrealized gains or losses, net of applicable income taxes, are reported as a separate component of net
assets. Cost of securities sold is computed based on the moving-average method. Available-for-sale securities without a determinable market value are stated at cost, principally determined by the moving-average method.
Investments in unconsolidated subsidiaries and affiliates are stated at cost determined by the moving-average method.

(5) Inventories
Inventories are measured at the lower of cost determined by the monthly weighted-average method or net selling value.

(6) Depreciation and amortization
Property and equipment (excluding leased assets) are depreciated by the straight-line method.
Intangible assets are amortized by the straight-line method. Capitalized computer software costs for internal use are amortized by the straight-line method over the estimated useful lives (within five years).
For finance leases that do not transfer ownership of the leased assets to the lessee, leased assets are depreciated by thestraight-line method over the lease terms with no residual value.

(7) Allowance for doubtful accounts
The allowance for doubtful accounts is stated at the amount determined based on the historical experience of bad debt withrespect to ordinary receivables (“general reserve”), plus an estimate of uncollectible amounts determined by reference to specificdoubtful receivables of customers experiencing financial difficulties (“specific reserve”).

(8) Provision for bonuses
The provision for bonuses is accrued at the fiscal year-end to which such bonuses are attributable.

(9) Provision for point card certificates
Credit points are awarded to customers when they make purchases using EPOS cards and, upon request, the Company will
issue gift certificates or allow customers to use their accumulated credit points for their payment.
The provision for point card certificates is accrued to the estimated amount required based on the balance of credit points
awarded to cardholders outstanding at the fiscal year-end.

(10) Provision for loss on redemption of gift certificates
The monetary value of gift certificates and other certificates that have not been redeemed for a set period of time after issuanceis recognized as income. However, some gift certificates and other certificates can be redeemed after the recognition of income.
The provision for loss on redemption of gift certificates is provided at the estimated amount to be redeemed in the future
based on historical experience.

(11) Provision for loss on interest repayment
The provision for loss on interest repayment is provided to the estimated amount of repayment claims on consumer loaninterests at the fiscal year-end.

(12) Provision for loss on guarantees
The provision for loss on guarantees is provided at the estimated amount of loss arising from the Group’s guarantee obligationsof customers’ liabilities in relation to loans to individuals from financial institutions with which the Group has guarantee service
arrangements.

119Notes to Consolidated Financial Statements(13) Provision for stock benefits
The provision for stock benefits is provided at the estimated amount for stock benefits to directors and employees at the fiscal
year-end in accordance with the internal rule for stock delivery.

(14) Basis for revenue recognition
The charges for installment sales and interest income on consumer loans are recognized on an accrual basis based on theremaining loan balances.

(15) Hedge accounting
The Group utilizes interest rate swaps to mitigate the fluctuation risk of interests on loans payable.
The Group applies the special accounting treatment for interest rate swaps as all requirements for this treatment are fulfilled. The Group omits the evaluation of hedge effectiveness for interest rate swaps under the special accounting treatment.

(16) Consumption taxes
National and local consumption taxes are accounted for by the tax-excluded method. Non-deductible consumption tax andother taxes imposed on fixed assets are recorded as expenses as incurred.

3. ACCOUNTING STANDARD ISSUED BUT NOT YET APPLIED
The following guidance was issued but not yet applied.
• “Implementation Guidance on Tax Effect Accounting” (the Accounting Standards Board of Japan (“ASBJ”) Guidance No. 28,
February 16, 2018)• “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, February 16, 2018)(1) Overview
The above guidance was revised in regard to the treatments for taxable temporary differences for investments in subsidiaries
within the context of non-consolidated financial statements, and to clarify the treatments in determining recoverability ofdeferred tax assets in a company which was categorized as “Type 1” according to the guidance.
(2) Scheduled date of application
The Company plans to apply the aforementioned guidance from the beginning of the fiscal year ending March 31, 2019.
(3) Effect of application
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of the aforementioned guidance on the consolidated financial statements.

120

Notes to Consolidated Financial Statements

The following standard and guidance were issued but not yet applied.
• “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 30, 2018)• “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 30, 2018)(1) Overview
The above standard and guidance provide comprehensive principles for revenue recognition. Under the standard and guidance,
revenue is recognized by applying the following five steps:
Step 1: Identify contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligation in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Scheduled date of application
The Company plans to apply the aforementioned standard and guidance from the beginning of the fiscal year ending March
31, 2022.
(3) Effect of application
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these newstandard and guidance on the consolidated financial statements.

4. CHANGE IN PRESENTATION
Consolidated Balance Sheets
From the fiscal year ended March 31, 2018, the account “Investments in unconsolidated subsidiaries and affiliates,” which
was previously shown as a separate line item under “Investments and other assets,” was reclassified into “Investment securities”
or “Other” for the clearer presentation of the consolidated balance sheets. The balance in the previous fiscal year has been
reclassified to conform to the current year’s presentation. As a result, the amount of ¥872 million presented as “Investments inunconsolidated subsidiaries and affiliates” was reclassified and included in “Investment securities” and “Other” in the amounts of¥740 million and ¥132 million, respectively.

Consolidated Statements of Cash FlowsThe account “Impairment loss,” which was previously included in “Other, net” under “Cash flows from operating activities,” is shown
separately for the fiscal year ended March 31, 2018. The balance in the previous fiscal year has been reclassified to conform to thecurrent year’s presentation. As a result, the amount of ¥4,505 million presented as “Other, net” in the previous fiscal year’s consolidated statement of cash flows is reclassified as “Impairment loss” of ¥291 million and “Other, net” of ¥4,213 million.

121

Notes to Consolidated Financial Statements

5. ADDITIONAL INFORMATION
Stock Benefit Employee Stock Ownership Plan Trust
The Company has an incentive plan using the “Stock Benefit Employee Stock Ownership Plan Trust (“ESOP Trust”)” to provide
an incentive to the Group’s employees holding senior management positions (hereinafter the “Senior Managers”), aiming toenhance their commitment to further improve the business performance and corporate value over the medium-to-long term.
(1) Overview of the plan
The Company sets up a trust with the Senior Managers who fulfill certain requirements as beneficiaries, by contributing funds toacquire the Company’s stock. The trust acquires the Company’s own stock from the stock market for the number of shares requiredfor delivering to the Senior Managers based on the prescribed internal rule for stock delivery. Then, in accordance with the internal
rule, the Company makes a delivery or payment of its shares and cash equivalents to the amount obtained by converting a part ofthe shares into cash based on the rank of each Senior Manager and degree of achievement of the performance target.
The Company applies the “Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc.
through Trusts” (PITF No. 30, March 26, 2015) for the accounting treatment of the plan.
(2) The Company’s shares held at the trust
The Company’s shares held at the trust are carried at their book value at the trust (excluding incidental expenses) and accounted
for as treasury stock under net assets. The book value of applicable treasury stock is ¥479 million ($4,518 thousand), and thenumber of shares is 340,800 shares as of March 31, 2017 and 2018.

Officer Remuneration Board Incentive Plan Trust
The Company also has an incentive plan using the “Officer Remuneration Board Incentive Plan Trust (“BIP Trust”)” to provide an
incentive to (i) Directors and Executive Officers (excluding External Directors and non-residents in Japan) of the Company and(ii) Directors of 11 subsidiaries of the Group (excluding External Directors and non-residents in Japan; collectively, with the
Directors and Executive Officers of the Company, the “Executives”).
(1) Overview of the plan
The Company sets up a trust with the Executives who fulfill certain requirements as beneficiaries, by contributing funds to acquire
the Company’s stock. The trust acquires the Company’s own stock from the stock market for the number of shares required fordelivering to the Executives based on the prescribed internal rule for stock delivery. Then, in accordance with the internal rule,
the Company makes a delivery or payment of its shares and cash equivalents to the amount obtained by converting a part of theshares into cash based on the rank of each Executive and degree of achievement of the performance target. The Company
applies the “Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc. through Trusts” (PITF
No. 30, March 26, 2015) for the accounting treatment of the plan.
(2) The Company’s shares held at the trust
The Company’s shares held at the trust are carried at their book value at the trust (excluding incidental expenses) and accounted
for as treasury stock under net assets. The book value of applicable treasury stock is ¥217 million ($2,047 thousand) and thenumber of shares is 161,500 shares as of March 31, 2017 and 2018.

122

Notes to Consolidated Financial Statements

6. ACCOUNTS RECEIVABLE–INSTALLMENT
The following balances for lump sums receivable and revolving receivable are securitized and are therefore excluded from theconsolidated balance sheets as of March 31, 2017 and 2018:
Millions of yen
2017

Card shopping:
Lump sums receivable
Revolving receivable¥55,000
9,290

Thousands of
U.S. dollars (Note 1)

2018

2018

¥69,973
2,776$660,122
26,188

7. LOAN COMMITMENTS
Certain consolidated subsidiaries that operate in the credit card business provide consumer loan services to customers.
The unused balance of loans contingent with the loan commitments is as follows:
Millions of yen

Total loan limits
Amount executed as loans
Unused balance

Thousands of
U.S. dollars (Note 1)

2017

2018

2018

¥1,139,270
140,569¥  998,701¥1,188,248
146,011¥1,042,237$11,209,886
1,377,462$ 9,832,424

Under the provisions of the loan service contract, the Group is able to decline a loan request or decrease a loan limit when acustomer’s financial condition or other circumstances change. Thus, the total unused balance will not necessarily be executed as loans.

8. INVESTMENTS IN STOCKS OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
The balance of “Investment securities” includes the investments in stocks of unconsolidated subsidiaries and affiliates as follows:
Millions of yen
2017

Stocks of unconsolidated subsidiaries and affiliates

¥740

2018

¥840

Thousands of
U.S. dollars (Note 1)
2018$7,924

9. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
The balance of “Other” includes the investments in stocks of unconsolidated subsidiaries and affiliates as follows:
Millions of yen
2017

Investments in unconsolidated subsidiaries and affiliates

¥132

2018

¥132

Thousands of
U.S. dollars (Note 1)
2018$1,245123

Notes to Consolidated Financial Statements

10. FINANCIAL INSTRUMENTS(1) Status of financial instruments(a) Policy on financial instruments
The Group raises necessary funds for business operations through bank loans and corporate bond issuance. Temporary surplus
funds are invested in highly safe short-term deposits. Derivative transactions are utilized to avoid the interest rate fluctuation risk
on loans. The Group does not use derivative transactions for speculative purposes.

(b) Financial instruments, their risks, and the risk management system
Accounts receivable–installment and operating loans are exposed to the credit risk of customers. In accordance with the internalrisk management rules, the Group mitigates such risk by monitoring and evaluating the credit status of each customer by meansof third-party personal credit information agencies and the Group’s own credit monitoring system.
Investment securities primarily consist of shares issued by business partners and are exposed to both credit risk and market
risk. The Group mitigates such risks by regularly monitoring the share price and the financial condition of the issuers.
Leasehold and other deposits consist of security deposits to rent properties for stores.
Accounts payable–trade is settled in the short term.
Long-term loans payable with a floating interest rate is exposed to interest rate fluctuation risk. The Group utilizes interest
rate swaps to avoid such risk by fixing the future interest rate.

(2) Estimated fair value of financial instruments
Carrying value, fair value, and the difference between them as of March 31, 2017 and 2018, are summarized below.
Financial instruments for which the fair value is extremely difficult to determine are excluded from the following table(see Note 2 on page 118).
Millions of yen
2017(1) Cash and deposits(2) Notes and accounts receivable–trade(3) Accounts receivable–installment
		 Allowance for doubtful accounts*1(4) Operating loans
		 Allowance for doubtful accounts*2(5) Investment securities:
		Available-for-sale securities(6) Leasehold and other deposits
Assets, total(1) Accounts payable–trade(2) Short-term loans payable and current
portion of long-term loans payable(3) Current portion of bonds payable(4) Commercial paper(5) Income taxes payable(6) Bonds payable(7) Long-term loans payable
Liabilities, total

2018

Carrying value

Fair value

Difference

Carrying value

Fair value

Difference¥ 36,257
4,840
348,191(6,236)
341,955
140,569(2,349)138,219¥ 36,257
4,840¥     ——

¥ 45,448
7,006¥    ——

385,860

43,904434,942

40,937

157,324

19,105¥ 45,448
7,006
402,030(8,024)
394,005
146,011(2,771)
143,239

162,550

19,31017,4296,993¥545,695¥ 15,850

17,4296,902¥608,615¥ 15,850—(90)¥62,919¥     —

12,954
6,173¥608,829¥ 12,361

12,954
6,236¥669,139¥ 12,361—
62¥60,310¥    —

50,82720,0005,000
7,214
85,000273,500¥457,391

50,82720,0005,000
7,214
85,049272,556¥456,498

—
—
—
—
49
(943)
¥     (893)

75,331
10,000—5,961
95,000305,000¥503,654

75,331
10,000—5,961
95,140304,597¥503,392

—
—
—
—
140
(402)
¥  (261)*1 The amount presents the total of general reserve and specific reserve for accounts receivable–installment.
*2 The amount presents the total of general reserve and specific reserve for operating loans.

124Notes to Consolidated Financial Statements

Thousands of U.S. dollars (Note 1)
2018
Carrying value(1) Cash and deposits(2) Notes and accounts receivable–trade(3) Accounts receivable–installment
		 Allowance for doubtful accounts(4) Operating loans
		 Allowance for doubtful accounts(5) Investment securities
		Available-for-sale securities(6) Leasehold and other deposits
Assets, total(1) Accounts payable–trade(2) Short-term loans payable and current portion of long-term loans payable(3) Current portion of bonds payable(4) Commercial paper(5) Income taxes payable(6) Bonds payable(7) Long-term loans payable
Liabilities, total

Fair value

Difference$  428,754 $  428,754
66,09466,094
3,792,735(75,698)
3,717,028 4,103,226
1,377,462(26,141)
1,351,311 1,533,490$     ——

122,207122,207
58,23558,830$5,743,669 $6,312,632$  116,613 $  116,613
710,669
710,669
94,33994,339——56,23556,235896,226
897,547
2,877,358 2,873,556$4,751,452 $4,748,981—
584$568,962$     —
—
—
—
—
1,320
(3,792)$  (2,462)

386,198

182,169

Note 1. Calculation method for fair value of financial instruments and information on securities and derivative transactions
Assets:		 (1) Cash and deposits and (2) Notes and accounts receivable–trade		 The fair value approximates their carrying value because of their short maturities.
		 (3) Accounts receivable–installment and (4) Operating loans		The fair value is determined as their present value by discounting, using the risk-free rate, future cash flows adjusted
for their credit risk identified in the credit control process. With regard to bad receivables and loans, allowance for
doubtful accounts is estimated based on the present value of their estimated future cash flows. The fair value approximates the amount of carrying value less allowance for doubtful accounts. Thus, the amount of carrying value lessallowance for doubtful accounts is used as fair value.
		 (5) Investment securities
		 The fair value is based on quotes on an exchange.
		 (6) Leasehold and other deposits		The fair value is determined as their present value by discounting future cash flows at the risk-free rate adjusted for
credit risk premium. The amount includes the current portion of leasehold and other deposits.

125Notes to Consolidated Financial Statements

Liabilities:		(1) Accounts payable–trade, (2) Short-term loans payable and current portion of long-term loans payable, (3) Current
portion of bonds payable, (4) Commercial paper, and (5) Income taxes payable		 The fair value approximates their carrying value because of their short maturities.
		 (6) Bonds payable		The fair value is based on the present value calculated by discounting the sum of principal and interests using aninterest rate, for which credit risk and redemption periods are taken into account.
		 (7) Long-term loans payable		The carrying value of long-term loans payable with a floating interest rate approximates its fair value since the interest
rate reflects the market rate in the short term. Thus, carrying value is used as its fair value. The fair value of long-termloans payable hedged by interest rate swaps under special accounting treatment is calculated by discounting the sumof principal and interests accounted for together with interest rate swaps using a reasonably estimated interest rateapplied to similar borrowings. The fair value of long-term loans payable with fixed interest rates is calculated bydiscounting the sum of principal and interests using an interest rate that would be applied to similar new borrowings.
		 Derivative transactions
		 See Note 12, “DERIVATIVE TRANSACTIONS,” for details.
Note 2. Financial instruments whose fair value is extremely difficult to determine
Millions of yen
2017

Unlisted stocks
Contributions to investment limited partnerships
Part of security deposits

2018¥ 1,421—
27,796¥ 1,788256
28,225

Thousands of
U.S. dollars (Note 1)
2018$ 16,867
2,415
266,273

The items above are not included in (5) Investment securities or (6) Leasehold and other deposits in the table on page 125,
as it is extremely difficult to determine the fair value since there were no market prices available and their future cash flows
cannot be estimated.
Note 3. Redemption schedule for monetary claims and securities with maturities
Millions of yen
2017

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

126

Due in one year
or less

Due after one year
through five years

Due after five years
through ten years

Due after ten years¥ 36,257
4,840
186,538
66,131
745¥294,512¥     ——
107,079
74,2433,770¥185,094¥    ——
29,073138
721¥29,932¥    ——
25,50056
1,755¥27,312

Notes to Consolidated Financial Statements

Millions of yen
2018

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Due in one year
or less

Due after one year
through five years

Due after five years
through ten years

Due after ten years¥ 45,448
7,006
217,645
69,434799¥340,334¥     ——
124,80976,414
3,244¥204,468¥    ——
33,372111
436¥33,920¥    ——
26,20350
1,693¥27,947

Thousands of U.S. dollars (Note 1)
2018

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Due in one year
or less

Due after one year
through five years

Due after five years
through ten years

Due after ten years$  428,754
66,094
2,053,254
655,037
7,537$3,210,698$       —
—1,177,443
720,886
30,603$1,928,943$     ——
314,830
1,047
4,113$320,000$     ——
247,198
471
15,971$263,650

See Note 14, “SHORT–TERM LOANS PAYABLE AND LONG–TERM DEBT,” for the schedule of aggregate annual maturities oflong-term loans payable and long-term debt.

11. INVESTMENT SECURITIES(1) Information on available-for-sale securities as of March 31, 2017 and 2018, is as follows:
Millions of yen
2017Carrying value exceedingacquisition cost:
StocksSubtotalCarrying value not exceedingacquisition cost:
StocksSubtotal
Total

2018

Carrying value

Acquisition cost

Difference

Carrying value

Acquisition cost

Difference¥10,633
10,633¥ 9,956
9,956¥  677677¥12,555
12,555¥10,149
10,149¥2,406
2,406

6,795
6,795
¥17,429

8,959
8,959
¥18,915(2,164)(2,164)¥(1,486)

398
398¥12,954564
564¥10,713

(165)
(165)
¥2,241127

Notes to Consolidated Financial Statements

Thousands of U.S. dollars (Note 1)
2018

Carrying value exceedingacquisition cost:
StocksSubtotalCarrying value not exceedingacquisition cost:
StocksSubtotal
Total

Carrying value

Acquisition cost

Difference$118,443
118,443$ 95,745
95,745$22,698
22,6983,754
3,754$122,207

5,320
5,320
$101,066(1,556)(1,556)$21,141

Unlisted stocks in the amount of ¥681 million and ¥948 million ($8,943 thousand) as of March 31, 2017 and 2018,
respectively, and contributions to investment limited partnerships in the amount of ¥256 million ($2,415 thousand) as of March
31, 2018, are not included in the table above as it is extremely difficult to determine the fair value since their market price is notreadily available and their future cash flows cannot be estimated.
(2) Information on sale of available-for-sale securities for the fiscal years ended March 31, 2017 and 2018, is as follows:
Millions of yen
2017
Proceeds
from sales

StocksTotal¥2,016¥2,016

Gains

¥208
¥208

2018
Losses¥330¥330

Proceeds
from sales¥8,562¥8,562

Gains

¥429
¥429

Losses¥1,334¥1,334

Thousands of U.S. dollars (Note 1)
2018

Stocks
Total

Proceeds
from sales

Gains

Losses$80,773$80,773$4,047$4,047$12,584$12,584(3) When the fair value of investment securities declines by 30% to 50%, the Group recognizes an impairment loss after comprehensively evaluating the recoverability of the market price. For the fiscal year ended March 31, 2018, the disclosure of
impairment loss on investment securities was omitted due to insignificance of the amount. For the fiscal year ended March
31, 2017, no impairment loss on investment securities was recognized.

128

Notes to Consolidated Financial Statements

12. DERIVATIVE TRANSACTIONS
For the fiscal years ended March 31, 2017 and 2018, the Group’s derivative transactions were limited to interest rate swaps
that qualified for hedge accounting and met the requirements for the special accounting treatment for interest rate swaps as
described below. There were no derivative transactions for which hedge accounting was not applied.
Hedge accounting method:
Special treatment for interest rate swaps
Type of derivative transactions:Interest rate swaps, receive floating / pay fixed
Hedged item:
Long-term loans payable
Millions of yen
2017
Contract amountTotal

Due after one year

¥22,000¥17,000

Thousands of U.S. dollars (Note 1)

2018

2018

Contract amount
Fair value

*

Total

Due after one year

¥17,000¥10,000

Contract amount
Fair value

*

Total

Due after one year

$160,377$94,339

Fair value** Interest rate swaps under the special accounting treatment are accounted for as an integral component of the long-term loans payable designated as hedged items. Thus,
their fair value is included in that of long-term loans payable.

13. LEASES(As a Lessee)
The Group capitalizes leased assets under finance leases that do not transfer ownership. These assets mainly comprise buildings and properties in connection with the Retailing segment.
The future minimum lease payments under non-cancellable operating leases are as follows:
Millions of yen
2017

Within one year
Over one year
Total

¥ 3,861
21,275¥25,1362018¥ 3,728
17,818¥21,546

Thousands of
U.S. dollars (Note 1)
2018$ 35,169
168,094$203,264(As a Lessor)
The future minimum lease receipts under non-cancellable operating leases are as follows:
Millions of yen
2017

Within one year
Over one year
Total

¥12,058
8,881¥20,9392018¥10,038
6,554¥16,592

Thousands of
U.S. dollars (Note 1)
2018$ 94,698
61,830$156,528

14. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT
Short-term loans payable and current portion of long-term loans payable as of March 31, 2017 and 2018, consist of thefollowing:
Millions of yen
2017

Short-term loans payable
Current portion of long-term loans payable
Total¥40,827
10,000¥50,8272018¥44,331
31,000¥75,331

Thousands of
U.S. dollars (Note 1)
2018$418,216
292,452$710,669

Annual weighted-average interest rates of short-term loans payable were 0.27% and 0.28% and those of current portion of
long-term loans payable were 0.65% and 0.43% for the fiscal years ended March 31, 2017 and 2018, respectively.
129

Notes to Consolidated Financial Statements

Long-term debt as of March 31, 2017 and 2018, consist of the following:
Millions of yen

0.27% long-term loans from banks and others due through 2028,
excluding current portion
20th series unsecured 0.79% corporate bond, due 2017
21st series unsecured 0.57% corporate bond, due 2017
22nd series unsecured 0.85% corporate bond, due 201924th series unsecured 0.582% corporate bond, due 2018
25th series unsecured 0.344% corporate bond, due 2019
26th series unsecured 0.562% corporate bond, due 2021
27th series unsecured 0.337% corporate bond, due 2020
28th series unsecured 0.543% corporate bond, due 2022
29th series unsecured 0.050% corporate bond, due 201930th series unsecured 0.130% corporate bond, due 2021
31st series unsecured 0.190% corporate bond, due 2022
32nd series unsecured 0.300% corporate bond, due 2024
Lease obligation
Less: Current portion of corporate bond and lease obligation
Total

Thousands of
U.S. dollars (Note 1)

2017

2018

2018

¥273,500
10,00010,0005,000
10,00010,00010,00015,00010,00015,00010,000——¥305,000——
5,000
10,00010,00010,00015,00010,00015,00010,00010,00010,000$2,877,358——
47,16994,33994,33994,339141,509
94,339141,509
94,33994,33994,3391,719
380,219
20,149¥360,070

1,570
411,570
10,149¥401,420

14,8113,882,735
95,745$3,786,981

The aggregate annual maturities of long-term debt subsequent to March 31, 2018, are as follows:
Millions of yen
Year ending March 31

Long-termloans payable

Bonds payable

2019
2020
2021
2022
2023 and thereafter
Total¥ 31,000
42,00051,00035,000177,000¥336,000¥ 10,000
30,00015,00020,00030,000¥105,000130

Thousands of U.S. dollars (Note 1)
Long-termloans payable

Bonds payable

Lease obligation¥  149 $  292,452
149
396,226
149
481,132
149
330,188971 1,669,811¥1,570 $3,169,811$ 94,339
283,018
141,509
188,679
283,018$990,566$ 1,405
1,405
1,405
1,405
9,160
$14,811

Lease obligation

Notes to Consolidated Financial Statements

15. DEFERRED TAX ACCOUNTING
Major components of deferred tax assets and deferred tax liabilities as of March 31, 2017 and 2018, are as follows:
Millions of yen
2017

Deferred tax assets:
Depreciation
Impairment loss
Provision for loss on interest repayment
Provision for point card certificates
Net unrealized loss on non-current assets
Provision for bonuses
Net operating loss carried forward
Other
Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for special account for advanced depreciation of non-current assets
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities
Deferred tax assets, net

2018

Thousands of
U.S. dollars (Note 1)2018¥ 5,741
5,073
3,982
3,194
1,353
1,263
315
6,034
26,958(6,969)¥19,988¥ 5,597
5,384
1,860
3,286
1,191
1,240
523
5,593
24,678(5,630)¥19,047$ 52,801
50,792
17,54731,000
11,235
11,698
4,933
52,764
232,811(53,113)$179,688¥9,90023
263¥10,187¥ 9,801¥11,25961
221¥11,542¥ 7,505$106,216
575
2,084$108,886$ 70,801

Income taxes consist of corporation, inhabitants’, and enterprise taxes. Reconciliations between the statutory tax rate andthe effective tax rate reflected in the consolidated statements of income are as follows:
Statutory tax rate
Adjustments:
Permanent differences such as entertainment expenses, etc.
Permanent differences such as dividends, etc.
Change in valuation allowance
Inhabitants’ tax
Difference in tax rates of consolidated subsidiaries
Tax creditAdjustments to deferred tax assets in connection with application of
pro forma standard taxation*
Other
Effective tax rate

2017

2018

30.9%

30.9%

0.3
(0.1)
(0.9)
0.5
3.6
(1.5)

0.2
(0.1)
(4.2)
0.5
3.3
0.0

—
0.3
33.1%

3.5
0.3
34.4%

* A certain consolidated subsidiary became subject to pro forma standard taxation due to an increase in its capital amount. This is the effect of application of such taxation.

131

Notes to Consolidated Financial Statements

16. ASSET RETIREMENT OBLIGATIONS(1) Asset retirement obligations recognized on the consolidated balance sheets
The Group’s asset retirement obligations mainly include the cost of restoring the store sites to their original condition under thereal estate lease contracts of stores. The Group calculated its asset retirement obligations by assuming the lease period as the
expected period of use and applying discount rates of 0.00% to 1.38%.
Asset retirement obligations as of March 31, 2017 and 2018, consist of the following:
Millions of yen
2017

Beginning balance
Increase due to acquisition of property and equipment
Adjustments due to passage of time
Decrease due to fulfillment of obligation
Ending balance

¥974
7
4
(93)
¥892

2018

¥892
—
4
—
¥897

Thousands of
U.S. dollars (Note 1)
2018$8,415—37—$8,462(2) Asset retirement obligations other than those recognized on the consolidated balance sheets
While the Group estimates asset retirement obligations based on the real estate lease contracts of stores, it is not possible toreasonably estimate the cost of restoring the store sites to their original condition under the general lease contracts since theperiod of use is not clearly determined. Therefore, the Group does not recognize the asset retirement obligations for stores otherthan those that are planning to be closed.

17. INVESTMENT AND RENTAL PROPERTY
Certain consolidated subsidiaries hold commercial properties, including land, for rental in the Tokyo metropolitan area and otherareas. The net rental income in connection with these properties for the fiscal years ended March 31, 2017 and 2018, was¥10,929 million and ¥17,509 million ($165,179 thousand), respectively. For the fiscal years ended March 31, 2017 and 2018,
the Group recognized ¥13,659 million and ¥1,121 million ($10,575 thousand) of gain on sale of property and equipment,
primarily land. The rental income was included in revenue and the associated rental expenses were included in cost of sales andselling, general and administrative expenses. The carrying value and the fair value of such assets are as follows:
Millions of yen

Carrying value*1:
Beginning balance
Changes during the year*2
Ending balance
Fair value*3

Thousands of
U.S. dollars (Note 1)

2017

2018

2018

¥ 45,240
41,008¥ 86,249¥159,321¥ 86,249
17,679¥103,928¥215,080$  813,669
166,783$  980,452$2,029,056*1 Carrying value represents the amount on the consolidated balance sheets that is carried at the acquisition cost less accumulated depreciation.
*2 Major items are the increases due to reclassification of holding purposes of properties in the amounts of ¥37,267 million and ¥18,530 million ($174,811 thousand) for
the fiscal years ended March 31, 2017 and 2018, respectively.
*3 Fair value is based on the appraised value provided by third-party real estate appraisers.

132

Notes to Consolidated Financial Statements

18. SUBSCRIPTION RIGHTS TO SHARESThe outline of stock options of the Company is as follows:
2016

Date of resolution
Title and number of granteesType and number of shares to be issued upon exercise of stock options
Granted date
Vesting conditions
Eligible service period
Exercise period

June 25, 2015
4 Directors and 12 Executive Officersof the Company
Common stock 32,000 shares
July 10, 2015
No provision
No provision
From April 1, 2016 to March 31, 2026

The following table describes the scale and changes in stock options that existed during the fiscal year ended March 31,
2018. The number of stock options is translated into the number of shares.
Number of shares
2016

Before vested:
As of March 31, 2017
GrantedForfeited
VestedAs of March 31, 2018
After vested:
As of March 31, 2017
VestedExercised
Forfeited
As of March 31, 2018

—
—
—
—
—
1,400
—
1,400
—
—
Yen

Exercise price
Average exercise price
Fair value at granted date

¥   1
1,482
1,589

U.S. dollars (Note 1)$0.00913.98
14.99

Since it is difficult to reasonably estimate the number of stock options that will expire in the future, the number of stock
options that were forfeited is shown as the number of vested options.

133

Notes to Consolidated Financial Statements

19. NET ASSETS
Under the Companies Act of Japan (“the Act”), the entire amount paid for new shares is required to be designated as capitalstock. However, a company may, by resolution of the Board of Directors, designate an amount not exceeding one-half of theprice of the new shares as additional paid-in capital, which is included in capital surplus. The legal earnings reserve is included
in retained earnings in the accompanying consolidated balance sheets.
The Act provides that an amount equal to at least 10% of the amount to be disbursed as distributions of capital surplus(other than additional paid-in capital) and retained earnings (other than legal earnings reserve) be transferred to additional
paid-in capital and the legal earnings reserve, respectively, until the total of additional paid-in capital and the legal earnings
reserve equals 25% of the capital stock account.
Such distributions can be made at any time by resolution of the shareholders’ meeting, or by resolution of the Board of
Directors if certain conditions are met.
Under the Act, additional paid-in capital and the legal earnings reserve may not be distributed as dividends; the Act allows
all additional paid-in capital and all legal earnings reserve to be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the unconsolidated financial
statements of the Company in accordance with Japanese laws and regulations.
The following tables summarize the dividends paid for the fiscal years ended March 31, 2017 and 2018:2017
Resolution

Class ofshare

Ordinary General Meeting ofCommonShareholders held on June 29, 2016 stockBoard of Directors’ meeting held on
CommonNovember 4, 2016
stock

Total amount of dividends(Millions of yen)

Dividends per share (Yen)¥2,666

¥11

3,719

16

Record date

Effective date

March 31,
June 30,2016
2016
September 30, December 5,
2016
2016

Note: The amount of dividends resolved at the Board of Directors’ meeting held on November 4, 2016, includes ¥8 million of dividends for the BIP Trust and ESOP Trust.

2018

Resolution

Class ofshare

Ordinary General Meeting ofCommonShareholders held on June 26, 2017 stockBoard of Directors’ meeting held on
CommonNovember 9, 2017stock

Total amount of dividends

Dividends per share(Thousands of(Millions of
U.S. dollars)yen)(Note 1)(Yen)

(U.S. dollars)(Note 1)

¥3,900 $36,792

¥17

$0.16

4,052

18

0.16

38,226

Record date

Effective date

March 31,2017
September 30,
2017

June 27,2017
December 4,
2017

Note 1: T he amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June 26, 2017, includes ¥8 million ($75 thousand) of dividends for the
BIP Trust and ESOP Trust.
Note 2: T he amount of dividends resolved at the Board of Directors’ meeting held on November 9, 2017, includes ¥9 million ($84 thousand) of dividends for the BIP Trustand ESOP Trust.

Dividends with a record date during the fiscal year ended March 31, 2018, but with an effective date subsequent to thefiscal year ended March 31, 2018, are as follows:
Total amount of dividends
Resolution

Class ofshare

Ordinary General Meeting ofCommonShareholders held on June 25, 2018 stock

Dividends per share(U.S.
dollars)(Note 1)

Record date

Effective date

¥4,417 $41,669 Retained ¥20 $0.18
earnings

March 31,2018

June 26,
2018(Thousands of(Millions of
U.S. dollars)yen)(Note 1)

Source(Yen)

Note: The amount of dividends resolved at the Ordinary General Meeting of Shareholders held on June 25, 2018, includes ¥10 million ($94 thousand) of dividends for the
BIP Trust and ESOP Trust.

134

Notes to Consolidated Financial Statements

The following table summarizes the number of shares of common stock, issued and outstanding, and treasury stock:
Number of shares
2017

2018

Common stock, issued and outstanding:At the beginning of the year
		 Decrease due to retirement of treasury stock
At the end of the year

278,660,417(45,000,000)
233,660,417

233,660,417—
233,660,417

Treasury stock:
At the beginning of the year
		 Increase due to purchase of treasury stock in the stock market
		 Increase due to acquisition of stock through BIP Trust and ESOP Trust		 Increase due to purchase of odd lot shares
		 Decrease due to retirement of treasury stock
		 Decrease due to exercise of stock options
		 Decrease due to sale of stock to odd lot shareholders
At the end of the year

36,270,334
12,966,300
502,300
1,178(45,000,000)(35,300)(62)
4,704,750

4,704,750
8,564,700—
1,473—(1,400)(17)
13,269,506

20. CONTINGENT LIABILITIESThe Group has commitments to guarantee customers’ liabilities in relation to personal loans to individuals from financial institutions with which the Group has guarantee service arrangements.
As of March 31, 2017 and 2018, the amounts of the Group’s guarantee obligations were ¥25,428 million and ¥24,616
million ($232,226 thousand), respectively.

21. COST OF SALESFor the fiscal years ended March 31, 2017 and 2018, cost of sales included the revaluation loss on inventories in the amountsof ¥48 million and ¥24 million ($226 thousand), respectively.

22. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the fiscal years ended March 31, 2017 and 2018, are as follows:
Millions of yen

Advertisement
Provision for point card certificates
Provision for allowance for doubtful accounts
Salaries and allowances
Provision for bonuses
Rent
Depreciation and amortization
Other

Thousands of
U.S. dollars (Note 1)

2017

2018

2018

¥ 12,425
9,181
9,610
32,0233,441
16,3088,960
42,760¥134,711¥ 12,168
11,445
12,344
31,386
3,604
15,8888,899
43,425¥139,162$  114,792
107,971
116,452
296,094
34,000149,886
83,952409,669$1,312,849

135

Notes to Consolidated Financial Statements

23. LOSS ON RETIREMENT OF PROPERTY AND EQUIPMENT AND LOSS ON CLOSING OF STORES
Loss on retirement of property and equipment for the fiscal years ended March 31, 2017 and 2018, consisted of the following:
Millions of yen

Buildings and structures
Furniture and fixtures

Thousands of
U.S. dollars (Note 1)

2017

2018

2018

¥  9881,930¥2,918¥  535
1,108¥1,643$ 5,047
10,452$15,500

For the fiscal years ended March 31, 2017 and 2018, the Group recognized ¥1,310 million and ¥604 million ($5,698
thousand) of loss on closing of stores, which primarily consisted of restoration costs involved in the closing of stores.

24. IMPAIRMENT LOSS
The impairment loss recognized for the fiscal year ended March 31, 2017, is as follows:
Use

StoresLocation

Kawasaki store
Kawasaki, Kanagawa, etc.

Type of assets

Buildings and structures
Other
Total

Millions of yen

¥278
12
¥291

The impairment loss recognized for the fiscal year ended March 31, 2018, is as follows:
Use

StoresLocation

Mito store
Mito, Ibaraki, etc.

Type of assets

Land
Other
Total

Thousands ofMillions of yen U.S. dollars (Note 1)¥  738446¥1,184$ 6,962
4,207$11,169

The Group has grouped its fixed assets by either store or rental property, which is the minimum cash-generating unit.
The carrying value of each asset group is written down to its respective recoverable amount and in doing so is recognized as
an impairment loss.
The Group estimated the recoverable amount of each asset group based on value in use or fair value less costs to sell. If a
store reports continuous operating losses, the Group evaluates that the value in use of the store is zero since positive cash flows
cannot be expected in the future. If a store is planned to be closed or disposed of, the Group evaluates that the fair value lesscosts to sell is zero.

25. PROVISION FOR LOSS ON INTEREST REPAYMENTFor the fiscal year ended March 31, 2017, the Company re-examined the amount of provision based on the situation in which
repayment claims continue although the actual repayments decreased compared with the previous fiscal year, and recorded thenecessary amount at the fiscal year-end.

136

Notes to Consolidated Financial Statements

26. COMPREHENSIVE INCOME
Millions of yen
2017

Valuation difference on available-for-sale securities:
Amounts incurred for the year
Reclassification adjustments
Before tax effect adjustment
Tax effect
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges:
Amounts incurred for the year
Tax effect
Deferred gains or losses on hedges
Total other comprehensive income

2018

Thousands of
U.S. dollars (Note 1)
2018

¥116
122
238
343
581

¥ 2,847904
3,751(1,154)
2,597$ 26,858
8,528
35,386(10,886)
24,500

—
—
—
¥581

(2)
0
(1)
¥ 2,596(18)
0(9)$ 24,490

27. CASH FLOW STATEMENTS
Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to accounts and amounts in theaccompanying consolidated balance sheets as of March 31, 2017 and 2018, are as follows:
Millions of yen
2017

Cash and deposits
Time deposits with maturity in excess of three months
Cash and cash equivalents¥36,257(11)¥36,2452018¥45,448(11)¥45,437

Thousands of
U.S. dollars (Note 1)
2018$428,754(103)$428,650

28. SEGMENT INFORMATION(1) Overview of reportable segments
The Group defines its reportable segments as a component of the Group for which separate financial information is available
and whose operating results are regularly evaluated by the Board of Directors to make decisions about how resources are to beallocated among the Group and assess their performance.
The Group consists of the following two reportable segments identified by products and services: “Retailing” and “FinTech.”
The Retailing segment engages in management of commercial property rental, retailing operations of clothes and accessories, store design, advertising, apparel distribution maintenance, and management of buildings and other facilities. The
FinTech segment engages in the credit card services, the consumer loans, and the rent payment guarantee businesses; IT systems; and real estate rental.

137

Notes to Consolidated Financial Statements(2) B asis of measurement for the amounts of segment revenue, segment income or loss, segment assets, andother items
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “SIGNIFICANT ACCOUNTINGPOLICIES.”
Segment income is measured on the basis of operating income. Intersegment sales and transfers are accounted for basedon the prevailing market price.
Millions of yen
2017

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Increase in property and	  equipment and intangible assets

Retailing

Reportable segment
FinTechTotal¥142,113
5,975¥148,089¥  7,759¥297,606¥ 94,909
2,192¥ 97,101¥ 27,111¥536,050¥  8,422
14,376

Adjustment *1

Consolidated *2¥237,022
8,168¥245,190¥ 34,870¥833,656¥     —
(8,168)¥ (8,168)¥ (3,616)¥(27,081)¥237,022—¥237,022¥ 31,253¥806,575¥  1,759¥ 10,182¥    (61)¥ 10,121

2,040

16,416(719)

15,696*1 Adjustment to segment income consists of intersegment elimination of ¥2,037 million and corporate expenses of ¥(5,654) million that are not allocated to eachreportable segment. Adjustment to segment assets mainly consists of intersegment elimination of ¥(362,554) million and corporate assets of ¥335,571 million, whichmainly present the Company’s loans in connection with the Group’s cash management system.
*2 Segment income is reconciled to operating income in the consolidated statements of income.
Millions of yen
2018

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Increase in property and	  equipment and intangible assets

138

Retailing

Reportable segment
FinTechTotal¥132,241
5,839¥138,081¥  8,826¥297,199¥106,758
2,187¥108,945¥ 30,310¥595,844¥  8,484
9,030

Adjustment *1

Consolidated *2¥238,999
8,026¥247,026¥ 39,137¥893,044¥     —
(8,026)¥ (8,026)¥ (3,894)¥(25,893)¥238,999—¥238,999¥ 35,243¥867,150¥  1,819¥ 10,303¥    (29)¥ 10,274

1,874

10,905(654)

10,250Notes to Consolidated Financial Statements

Thousands of U.S. dollars (Note 1)
2018

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Increase in property and	  equipment and intangible assets

Retailing

Reportable segment
FinTechTotal$1,247,556
55,084$1,302,650$   83,264$2,803,764$1,007,150
20,632$1,027,783$  285,943$5,621,169$   80,037
85,188Adjustment *1

Consolidated *2$2,254,707
75,716$2,330,433$  369,216$8,424,943$      —
(75,716)$ (75,716)$ (36,735)$(244,273)$2,254,707—$2,254,707$  332,481$8,180,660$   17,160$   97,198$    (273)$   96,924

17,679102,877(6,169)96,698*1 Adjustment to segment income consists of intersegment elimination of ¥2,534 million ($23,905 thousand) and corporate expenses of ¥(6,428) million ($(60,641)
thousand) that are not allocated to each reportable segment. Adjustment to segment assets mainly consists of intersegment elimination of ¥(416,031) million($(3,924,820) thousand) and corporate assets of ¥390,674 million ($3,685,603 thousand), which mainly present the Company’s loans in connection with the Group’s
cash management system.
*2 Segment income is reconciled to operating income in the consolidated statements of income.

Disclosures on related information with regard to the concentration of products and services, location, and major customers
have been omitted since there was no relevant information to be disclosed.
For the fiscal years ended March 31, 2017 and 2018, an impairment loss of ¥291 million and ¥1,184 million ($11,169
thousand), respectively, was reported by the Retailing segment.

29. RELATED PARTY INFORMATION
Related party information where directors and their close relatives substantially own a majority of the voting rights is as follows:
2017
Name ofcompany

Nakano Co., Ltd.

Seiwa Kogyo
Co., Ltd.

Location

Capital(Millions of yen)

Shinjuku,
Tokyo

¥10

Shinjuku,
Tokyo

10

Business

VotingrightsRelationshipTransaction

RealestaterentalDirect Property
1.0% rental
Concurrent
position as
director

Property
rentalRealestaterentalDirect Property
0.7% rental
Concurrent
position as
director

Property
rentalstoresAmount(Millions of yen)Account name

Balance(Millions of yen)

¥42

Leasehold andother deposits¥41

Other current
liabilities

1

Leasehold andother deposits

191

32

The monetary amounts above do not include consumption taxes. Terms and conditions for rental agreements are determined similarly to those of third-party transactions.
2018
Name ofcompany

Location

Capital(Millions of yen)

Business

VotingrightsRelationshipTransaction

Amount(Millions of yen)Account nameNakano Co., Ltd.

Shinjuku,¥10 RealTokyo($94 thousand) estate(Note 1) rental

Direct Property
1.0% rental
Concurrent
position as
director

Property
rental¥45 Leasehold and($424 thousand) other deposits(Note 1)Other current
liabilities

Seiwa Kogyo
Co., Ltd.

Shinjuku,
10 RealTokyo($94 thousand) estate(Note 1) rental

Direct Property
0.8% rental
Concurrent
position as
director

Property
rental32 Leasehold and($301 thousand) other deposits(Note 1)

Balance(Millions of yen)

¥41($386 thousand)(Note 1)
1($9 thousand)(Note 1)191($1,801 thousand)(Note 1)

The monetary amounts above do not include consumption taxes. Terms and conditions for rental agreements are determined similarly to those of third-party transactions.
139

Notes to Consolidated Financial Statements

30. PER SHARE INFORMATION
Net income per share, both basic and diluted, for the fiscal years ended March 31, 2017 and 2018, is as follows:Yen

Net income per share
Diluted net income per share

2017

2018

¥80.2480.24¥93.18
93.18

U.S. dollars (Note 1)
2018

$0.87
0.87

Thousands of shares

Weighted-average number of outstanding shares
Diluted shares:
Assumed exercise of stock options

2017

2018

233,346

224,38180

Net income per share is computed based on the net income attributable to shareholders of common stock and theweighted-average number of outstanding shares.
For the computation of net income per share and diluted net income per share, the number of shares held by BIP Trust and
ESOP Trust is deducted from the weighted-average number of outstanding shares (293 thousand shares and 502 thousand
shares for the fiscal years ended March 31, 2017 and 2018, respectively).

31. SUBSEQUENT EVENTAt the Board of Directors’ meeting held on May 10, 2018, the Company resolved to acquire treasury stock in accordance with
Article 156 of the Companies Act as applied with relevant changes in interpretation pursuant to the provisions of Article 165,
paragraph (3), and also resolved to retire treasury stock in accordance with Article 178 of the Act.
Reason for acquisition and retirement
Based on the medium-term management plan to be achieved by the fiscal year ending March 31, 2021, the Group aims toachieve profitable growth by innovating Group business and integrating operations in light of potential changes in the businessenvironment. As its financial strategy, the Group will effectively utilize basic operating cash flows that will be generated in thenext five years in order to optimize capital structure for the business; thus, the Group will enhance investment growth and shareholder return. As part of the plan, the Company will execute acquisition and retirement of treasury stock to improve its corporate
value by achieving the following targets: an ROE of 10%, an ROIC of 4%, and an EPS of ¥130.
Based on these Group strategies, the Company resolved to acquire and retire treasury stock as follows:(Acquisition of treasury stock)(i) Class of shares(ii) Maximum number of shares to acquire(iii) Maximum amount for acquisition(iv) Acquisition period

Common stock
4 million shares (1.81% of total outstanding shares)¥7,000 million ($66,037 thousand)From May 11, 2018 to March 31, 2019

(Retirement of treasury stock)(i) Class of shares(ii) Number of shares to be retired(iii) Number of total outstanding shares after retirement(iv) Date of retirement

Common stock
10 million shares (4.28% of total outstanding shares)
223,660,417 shares
May 31, 2018140Independent Auditor’s Report141Ratings, Awards, and Recognition

MARUI GROUP established the IR Department in October 2015 and then the ESG Promotion Department in October 2016 to enhance communication with institutional investors and ESG rating institutions, earning much praise from external organizations. We have also identified the promotion ofdiversity and healthcare management as key measures under the medium-term management plan with the aim of improving corporate value.

Global Socially Responsible Investment Indexes

Three ESG Indexes Utilized by the Government
Pension Investment FundMARUI GROUP has been included in the FTSE4Good Index Series, a series
of well-known socially responsible investment indexes arranged by FTSE
Russell that comprise companies meeting evaluation standards pertaining to
ESG factors, for two consecutive years. As of June 30, 2018, a total of 925
companies from around the world were included in these indexes, of which
152 were Japanese companies.

MARUI GROUP was included in the FTSE Blossom Japan Index. This index ismeant to reflect the performance of Japanese companies that meet various
ESG-related requirements, and industry is therefore not considered whenselecting companies for inclusion.

MARUI GROUP has been selected for inclusion in the Dow Jones
Sustainability World Index, a major global socially responsible investment
index, for the first time and has been included in the Dow Jones
Sustainability Asia Pacific Index for the second consecutive year.

MARUI GROUP was included in the MSCI Japan ESG Select Leaders Index*
for the second consecutive year. This ESG index comprises Japanese companies with relatively high MSCI ESG Ratings in each industry selected fromamong the top 500 companies in terms of market capitalization after excluding those companies with the lowest MSCI ESG Rating of CCC.

In RobecoSAM Sustainability Yearbook 2018, a compilation of companies
displaying excellence in terms of ESG initiatives and information disclosure,
MARUI GROUP was the only Japanese company from the retail sector identified as a yearbook member. Moreover, this was our first year of inclusion.

For two consecutive years, MARUI GROUP has been included in the MSCIJapan Empowering Women Index,* an ESG index for Japanese stocks consisting of companies that exhibit gender diversity excellence in each industry,based on the Global Industry Classification Standard, selected from among
the top 500 companies in terms of market capitalization.

JPX-Nikkei Index 400
MARUI GROUP was included, for the first time, in the JPX-Nikkei Index 400,a stock price index composed of companies with high appeal for investors
that meet requirements of global investment standards, such as efficient use
of capital and investor-focused management perspectives.
MARUI GROUP was selected for inclusion in the SNAM Sustainability Index
for the first time. This index is compiled by Sompo Japan Nipponkoa AssetManagement Co., Ltd., and used in its SNAM Sustainable Investment Fund,which prioritizes ESG ratings by investigation firms.

MARUI GROUP was selected for inclusion in the Morningstar Socially
Responsible Investment Index for the second consecutive year. This socially
responsible investment index compiles and indexes the stock price ofapproximately 150 companies from among the roughly 4,000 listed companies in Japan that display excellence in terms of social contributions basedon corporate governance-, environment-, social-, and human resourcerelated matters.

142

Ranked No. 1 in Retail Sector in Three Categories of
U.S. Institutional Investor’s All-Japan Executive Team Rankings

Best Analyst Days

Combined No. 1

Best ESG/SRI Metrics

Combined No. 1

Best Corporate Governance

Combined No. 1

Best CEOs

Buy Side No. 3

Best IR Programs

Combined No. 3, Buy Side No. 2

Most Honored Companies

Combined No. 5

The All-Japan Executive Team Rankings is a ranking of major listed Japanesecompanies compiled by U.S. financial industry magazine Institutional
Investor, based on votes from institutional investors and securities analysts
from around the world. In 2018, votes were received from 1,002 institutional investors and securities analysts from 410 institutions.

* THE INCLUSION OF MARUI GROUP CO., LTD. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT ORPROMOTION OF MARUI GROUP CO., LTD. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE
EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICEMARKS OF MSCI OR ITS AFFILIATES.

Ratings, Awards, and Recognition

DISCLOSURE INSIGHT ACTIONMARUI GROUP was awarded a score of A- for thesecond consecutive year in CDP Climate Change
Report 2017, Japan edition, out of recognition for
its efforts to control emissions of CO2 and other­greenhouse gases and manage risks related toclimate change.

MARUI GROUP was awarded with the highest ratingof gold in the PRIDE INDEX out of recognition of its
inclusion of a clear declaration that individuals are notto suffer discrimination on the basis of sexual identity
or sexual orientation among the items prohibiting discriminatory treatment in its labor agreements and its
establishment of an internal consultation venue forLGBT issues, among other initiatives.

MARUI GROUP’s greenhouse gas emission reduction
targets for 2050 were the first targets by a Japaneseretailer to receive certification from the international
initiative known as Science Based Targets.

In the International ARC Awards, one of the two
major U.S. annual report competitions, Co-Creation
Sustainability Report 2016 (English-language
edition) received a Silver award in 2017 and
Co-Creation Management Report 2017 (Englishlanguage edition) received a Bronze award in 2018.

21st Nikkei Corporate Environmental Management Survey
The Nikkei Corporate Environmental Management Survey is a survey
designed to evaluate companies that are effectively addressing environmental issues in their management, which has been instituted once a year since1997. MARUI GROUP ranked first in the retail and restaurants category of
the most recent survey with perfect scores in areas related to environment
management systems, pollution prevention and biodiversity initiatives, andglobal warming countermeasures.

MARUI GROUP was included in the Health &Productivity Stock Selection for the first time in2018, recognizing it as a company that is strategically addressing employee health and productivity
management issues based on a management perspective. The Company was rated the highest among
retail sector companies for its organizational framework and measures.

MARUI GROUP was selected for inclusion in theNadeshiko Brand for the first time based on the highevaluation of its efforts to promote diversity throughsystems for encouraging active participation by all
employees and frameworks for swiftly incorporating
employee input.

MARUI GROUP was included in the New Diversity
Management Selection 100 for the first time out ofrecognition of its cultivation of a corporate culture inwhich employees voluntarily participate in initiatives
and its creation of new services that merge physicalstores, e-commerce, and FinTech.

In the 2017 Vision Awards Annual Report
Competition, one of the two major U.S. annual reportcompetitions, Co-Creation Sustainability Report2017 (English-language edition) won a Goldaward and Co-Creation Management Report 2017(English-language edition) won a Silver award.

NIKKEI Annual Report Awards 2017
In NIKKEI Annual Report Awards 2017, MARUI GROUP’s Co-Creation
Management Report 2017 integrated report received an award for outstanding performance based on the high scores for its senior management messages,
descriptions of measures and plans for improving medium-to-long-term
corporate value, and overall quality.

Rating and Investment Information, Inc.
MARUI GROUP has been granted a rating of A- for its overall debt repayment
capacity with regard to financial liabilities.

MARUI GROUP Websites

More detailed information on these and other awards andrecognition can be found on the Company’s corporatewebsite.

MARUI GROUP was presented with its first award
for outstanding performance in the Awards forEnterprises and Workplaces with Pleasant Working
Environments and High Productivity program out ofrecognition of its efforts to reduce overtime throughvarious work systems and to build a pleasant working
environment.

www.0101maruigroup.co.jp/en/ci/award.html
Email Newsletter (Japanese only)
MARUI GROUP distributes an email newsletter containing
information on the latest topics and financial results as well
as details on events and surveys.

www.0101maruigroup.co.jp/ir/infomail/reg.html

143Participation in the Forum for Integrated Corporate Disclosure and ESG Dialogue
MARUI GROUP emphasizes the importance of dialogue in its co-creation efforts with shareholders and other investors. For this reason,
I became a member of the Forum for Integrated Corporate Disclosureand ESG Dialogue, which was established by the Ministry of Economy,
Trade and Industry (METI) as a platform for discussion with investors on
the topic of integrated corporate disclosure. This forum is a venue for
dialogue between companies and investors with regard to topics suchas the Guidance for Integrated Corporate Disclosure and CompanyInvestor Dialogue for Collaborative Value Creation: ESG Integration,
Non-Financial Information Disclosure, and Intangible Assets into
Investment (Guidance for Collaborative Value Creation) created by
METI in 2017 and how to use, disseminate, and entrench this guidance.
The Guidance for Collaborative Value Creation provides a guideline for companies on how to systematically organize information on
corporate philosophies, business models, strategies, corporate governance, and other matters in an integrated manner to facilitate improvements to information disclosure and investor engagement. At a forum
meeting, I made a presentation on MARUI GROUP’s co-creation sustainability management and on Co-Creation Management Report2017 based on the Guidance for Collaborative Value Creation. I also

144

took part in frank discussions on business models, KPIs, and theUnited Nations Sustainable Development Goals as they pertain to
integrated reporting in past meetings and formulated action plans
based on these discussions. In preparing Co-Creation Management
Report 2018, we referenced the Guidance for Collaborative Value
Creation as well as the International Integrated Reporting Framework
released by the International Integrated Reporting Council.
METI has prepared a logo for the Guidance for Collaborative Value
Creation to support management and information disclosure activities
that reference this guidance. Endorsing the objectives of this guidance,
we proudly display this logo on Co-Creation Management Report 2018.

Hirotsugu Kato
Member of Forum for Integrated Corporate Disclosureand ESG Dialogue
Director and Senior Executive Officer
Chief Digital Officer, General Manager, IR Department
in charge of Corporate Planning and ESG Promotion,
MARUI GROUP CO., LTD.

Twelve Group employees in front of the Nakano head office

From the Chief Editor
Thank you for reading Co-Creation Management Report 2018 to its end.
MARUI GROUP creates its reports based on a three-year cycle,
and Co-Creation Management Report 2018 represents the start ofa new cycle. In preparing this report, we assembled a project teamcomprising members from the Corporate Planning Division, the IR
Department, the Financial Department, the Sustainability Department,
the ESG Promotion Department, and the General Affairs Division. Led
by President Aoi, we engaged in multiple discussions in which we considered what best to communicate to stakeholders. The answer wearrived at was our core value, the value without which the Company
would cease to be MARUI GROUP. Explaining this core value was sure
to be the closest path to help stakeholders understand MARUI GROUP’s
essence. The core value that has guided us since our founding is theco-creation of creditability. We hope this report has helped you understand how this value has sculpted the business we have today andhow it will shape our business in the future.
Our co-creation management reports are meant to provide a­platform for expanding the scope of our co-creation activities throughcommunication with all of the Group’s stakeholders. With the goal of
better incorporating your feedback and requests, we have created an

online questionnaire. We hope you will feel free to offer your frankopinions. I look forward to your ongoing support of MARUI GROUP.

Takahiro Matsumoto
Chief Editor of Co-Creation Management Report 2018
General Manager, Public Relations Office,General Affairs Department,
MARUI GROUP CO., LTD.

Online Co-Creation Management Report 2018
Questionnaire (Japanese only)www.0101.co.jp/form2/pub/maruigrp/2018report
QR codes used in this report are registered trademarks of DENSO WAVE INCORPORATED.

CO-CREATION

Publication date: October 2018
Publisher: Co-Creation Management Promotion Project Team,MARUI GROUP CO., LTD.
Planning and production: EDGE INTERNATIONAL, INC.
Printed in Japan