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

6465Medium-Term Management Plan

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

MARUI 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

18.65
19.19

–31.90–86.36
FY2009FY2018More than 10%

More than 4%

6.7

3.3

6.0

FinTechIncrease 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

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

66

4.5

1.6

5.0

5.2

3.0

1.8

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

3.0

3.3
3.1 3.2%

2.1
1.7

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

Optimal capital structure

FY2021
Target7.6%

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

Credit cards

58.87

–2.7
1.0

1.1

–7.9
FY2009FY2018FY2021
Target

FY2009FY2018FY2021
Target67

Medium-Term Management Plan

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.

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.

Response to the Rise of Cashless Payment Methods
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

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 by

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

redefining 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

2017
Opportunities

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

Rise of cashless payment methods

Transition to e-commerce

Ratio of e-commerce sales: 5% → 20%

Change of focus from saving to asset building

Shift from goods to experiences

Emergence of a sharing economy

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

Threats

Continuation of 3% reductions in apparel product selling prices

Sharing economy usage ratio: 2% → 10%

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

Declining birthrate and aging population

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

Rise of cashless payment methods (diversification of payment methods)

Transition to shopping centers and fixed-term rental

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

Expansion of omni-channel retailing

Emergence of payment options other than credit cards

MARUI GROUP’s Response

Improve business profitability by transitioning from a department store
model to a real estate model

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

Medium-Term Management Plan

Investments in New Businesses

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

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

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.

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 popula-¥1,030 million
Recruitment and otherhuman resource
development expenses¥220 million¥480 million

Training center
expenses¥80 million

FY2018FY2019~

Breakdown of Human Resource Investments¥730 million

FY2017FY2018FY2019(Forecast)tion and declining birthrate. MARUI GROUP seeks to help build a flourishing and inclusive society

FY2018¥730 million

that offers happiness to all in this country. This quest will require that we move beyond existing busi-

Training-related
personnel expenses¥250 million

nesses 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
External training /education fees
¥180 million

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

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

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.

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

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.

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 ofCareer History of Four Seconded Employees

Yusuke Nakashima

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

what 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.

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

Retailing Segment

Message from the President of MARUI CO., LTD.
    

Progress in the Retailing Segment and Future Strategies
Progress Rate of 87% in Transition to Shopping
Centers and Fixed-Term Rental Contracts

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.

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

Retailing Segment

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

Hotelspurchasing 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.

OfficesIssues for Specialty Stores and Response Measures
Upper 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

Service providers

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.

Initiatives for Facilitating the Growthof E-Commerce Operations
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

78Entertainment, beauty, health, learning

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

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

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
System enabling storage and management of large quantities of products

Robots that automatically picknecessary products

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

FinTech Segment

Message from the President of Epos Card Co., Ltd.
    

Progress in the FinTech Segment and Future Strategies
Higher Card Shopping Transactions
and Service Revenues

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

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.

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

80

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.

FinTech Segment

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

E-commerce

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

EPOS Pay QR Code Payment Service

Figure 3: Directives for Future Collaboration
Content /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

4.1%–4.3%
ROIC
3.8%

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

6,570,000

Total transactions¥1,970.0 billion

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

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

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

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 ¥592.2 billion

Operatingreceivables¥548.0 billion

Interest-bearing debt

Shareholders’ equity

Fixed assets, others    Motohiko Sato
Senior Managing Executive Officer and CFOn the fiscal year ended March 31, 2018, theI second 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 second

84Interest-bearing debt

¥590.0 billion¥274.4 billion

Shareholders’ equity

Fixed assets, others¥300.0 billion
Equity ratio 30%

Equity ratio 32%

FY2016 (Actual)

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

Operatingreceivables¥680.0 billion¥485.3 billion

Equity ratio 39%

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.

Liabilities ¥730.0 billion

Total assets ¥867.2 billion

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

Target Balance Sheet

03 Forecasts and Issues Related to Target Balance Sheet

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

POINT

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

Operatingreceivables¥630.0 billion

Reduction of interest-bearing
debt ¥220.0 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.

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

Shareholders’ equity¥2.5 billion¥300.0 billion¥2.1 billion

Interest
expensesLiquidation interest
Other costs¥6.8 billion¥2.8 billion¥1.9 billion

Equity ratio 32%

FY2016FY2021 (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

FY2017FY2018FY2019(Forecast)

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

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

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

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)

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

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 ofHigh 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.

Previously• 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

¥130

Record highor moreShareholder Returns: Amounts and Indicators(Forecast)
227%

125%

112%

Total return ratio
31%
Consolidated
payout ratio

32%

148%

32%

31%

41%

41%

¥110

7.6%

(Forecast)

Consolidated
payout ratio

Approx.

6.7%
6.0%
4.5%

5.0%

55%

5.2%
¥35.0
billionROE
Share buybacks¥15.0 billion¥20.0
billionDividends

¥93

¥15.0
billion¥4.1 billion¥4.9 billion¥5.1 billion¥5.4 billion¥7.6 billion¥8.5 billion

FY2013

FY2014FY2015FY2016FY2017FY2018¥47

Earnings per share
(EPS)
¥80

¥38

(Forecast)

¥71
¥33
¥59

40%
or more¥56

Going 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¥48

Forecasts for Shareholder Returns: Amounts and Indicators
70%

Total return ratio
72%

55%

¥19

Cash dividends
per share¥18

43%
Consolidated
payout ratio
8.6%
ROE

¥15

Share buybacks¥7.0 billion

FY201930%

or more10%

Dividends¥10.3
billion88¥22

FY2020

FY2021

FY2022

FY2030FY2013

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%

FY203189

Co-Creation
Corporate
Governance

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

3

2

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 Quarter32• 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

External(Independent)

FemaleAgenda Items Discussed by the Board of Directors • Revision of MARUI GROUP Code of Conduct• Establishment of Groupwide policies• Progress 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•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• Policies for Management Committee andother committees• Fund procurement policies• Anime business services• Acquisition of certification from Science
Based Targets for greenhouse gas targets• Corporate governanceinitiatives

Transcript of Board of Directors’ Discussion

Ordinary 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

ReportDiscussion Themes• Preparation for Ordinary
General Meeting of
Shareholders• Evaluation of the Board of
Directors

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.

Messages from
External Directors

Initiatives in the Fiscal Year Ended March 31, 2018

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

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.

    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

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

Officer Compensation Systems 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)
Compensation of Directors, Audit & Supervisory
Board Members, and Executive Officers (Article 16)• 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 procedures• Detailed compensation policies and performance-linked compensation

Basic Compensation

Performance-Linked Bonuses(Short-Term Incentive)

P90

P97

Risk Management System (Article 19)

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

Corporate Governance Reportwww.0101maruigroup.co.jp/pdf/cgr_en.pdf

sustainable 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)

• Included information on the Information Security Committee established inJune 2018 and described systems and policies for ensuring security of
information assets

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

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 pursuing

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

9697

Co-Creation
Corporate
Governance

Co-Creation Corporate Governance

Co-Creation of Corporate Value with Shareholders and Other Investors 

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)¥18.9 billion(16 companies)

Down¥12.1 billion¥17.0 billion(14 companies)¥12.4 billion(9 companies)

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.

Dec. 31, 2015

Mar. 31, 2016

Mar. 31, 2017

Mar. 31, 2018

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

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“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

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

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

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

Co-Creation Corporate Governance Risk Countermeasures 

Environmental Impact Reduction Targets for 2050 

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 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 Information Security Policy (Abridged)

MARUI GROUP’s Medium- and Long-Term Environmental Targets

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

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.

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

100

101

Directors, Audit & Supervisory Board Members, and Executive Officers

Directors, Audit & Supervisory Board Members, and Executive Officers

As of June 25, 2018

Directors

Audit & Supervisory Board Members

Hiroshi Aoi

Etsuko Okajima

Yoshitaka Taguchi

Hirotsugu Kato

Hideaki Fujizuka

Nariaki Fuse

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

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

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)

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)

Participation in committees:
Nominating and Compensation Committee

Participation in committees:
Nominating and Compensation CommitteeMar. 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)

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)

Masahiro Muroi

Tomoo Ishii

Masao Nakamura

Tadashi Ooe

Takehiko Takagi

External Director
Shares held: 0
Born: July 1955

Director
Shares held: 18,400
Born: July 1960

Director
Shares held: 21,500
Born: June 1960

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. 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)

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)

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 Committee

102

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

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

Hajime Sasaki

Yoshinori Saito

Representative Executive Officer
Born: January 1961

Senior Managing Executive Officer
Born: December 1953

Senior Managing Executive Officer
Born: July 1960

Senior Executive Officer
Born: November 1963

Senior Executive Officer
Born: July 1962

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)

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 (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

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

Masao Nakamura

Toshikazu Takimoto

Takashi Wakashima

Hirotsugu Kato

Yoshiaki Kogure

Managing Executive Officer
Born: June 1960

Managing Executive Officer
Born: November 1959

Managing Executive Officer
Born: November 1956

Senior Executive Officer
Born: July 1963

Executive Officer
Born: September 1960

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)

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

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)

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

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Participation in committees:
Management Committee