Values and Vision02

Corporate Credo / Group Mission Statement

04

Group Vision “Create and Bring to Life ‘New Happiness.’”

06

Top Message

Business Model

Integrated Report 2019

Contents

14

J. Front Retailing Value Creation Process

16

History – Surviving the Waves of Changing Times

18

Transformation of Department Store Business Model

20

Multi Service Retailer

Financial/Non-financial Highlights
22

At a Glance

24

Graphical Data

26

Numerical DataManagement Strategy

Editorial policy:
J. Front Retailing Group (the “Group”) issued thisintegrated report in order to provide a deeper understandingof what actions it takes to change its business portfolio
for sustainable growth of corporate value. The report
explains at the beginning the values, vision, value
creation process and business model of J. Front Retailing(the“Company”) and it contains non-financial information
including the Group’s involvement in society and theenvironment through business activities and governancesystem that helps enhance corporate value in addition tofinancial information based on specific management
strategy. We have referred to the“International Integrated
Reporting Framework”established by the International
Integrated Reporting Council (IIRC) and the“Guidance forCollaborative Value Creation”established by the Ministryof Economy, Trade and Industry to create this report.
Timeframe:
This report mainly reviews the fiscal year 2018 (March 1,
2018 through February 28, 2019) but it also contains thelatest information available at the time of issue to theextent possible.

28

Business Risk – Uncertainty and Direction for Addressing Risk

30

Overview of Medium-term Business Plan

32

Innovation of Department Store Business

34

Innovation of Parco Business

36

Urban Dominant Strategy

38

Credit and Finance Business Strategy

40

ICT Strategy

42

Human Resources Strategy

44

Finance Strategy

Sustainability
46

Materiality

48

Sustainability Road Map and Course of Action

50

Contribution to a Low-Carbon Society

52

Management of the Entire Supply Chain

53

Coexistence with Local Communities

54

Promotion of Diversity

55

Realization of Work-Life Balance

Scope:
J. Front Retailing Co., Ltd. and consolidated subsidiaries

GovernanceCautionary statement regarding forward-looking statements:

56

Corporate Governance

Forward-looking statements in this integrated report
represent our assumptions based on information currently
available to us and inherently involve potential risks,
uncertainties and other factors. Therefore, actual results
may differ materially from the results anticipated herein
due to changes in various factors.

64

Interview with Outside Director

66

Management

Environment
S ociety
Governance

J. Front Retailing Group
68

Group Companies

70

Stores (Map)72Stores (Photos)

74

Share Information

Guidance forCollaborative
Value Creation

Integrated Report 201901

Shinsaibashisuji Osaka store

Corporate Credo

Service before Profit
Service before Profit – This phrase is from a passage from“Of Honor and Disgrace”
written by Xunzi, a Chinese thinker in the Zhanguo period,“Those who give priority toservice over profit will prosper.”The most important thing is to approach things withsincerity and good faith.“Do not sell any products that are of no benefit to customers.”“Do not rank customers.”“Honesty and loving-kindness come first.”“An unfaithful
person is useless regardless of how gifted he/she may be.”Thus Daimaru has told its
employees to keep a humble attitude to serve customers. At Matsuzakaya, the spirit of“Abjure all evil and practice all good”has been valued. They can be modernized as“Customer-first principle”and“Contribution to society.”Thinking of stakeholders
thoroughly and acting accordingly will lead to business growth. We believe“Creating
Shared Value (CSV)”to solve social issues through business activities is nothing less thanpracticing the Group’s corporate credo simply and honestly.

External layout of Ueno store in 177202

Group Mission Statement
We aim at providing high quality products and services
that meet the changing times and satisfying customers
beyond their expectations.

We aim at developing the Groupby contributing to society at large
as a fair and reliable corporation.

Integrated Report 201903

G r o u p

V i s i o nCreate and Bring to Life
“New Happiness.”
Now is the time when lifestyles are changing speedily. To meet these changes quickly, and what is more, to findbudding needs are J. Front Retailing’s important missions. More women’s social advancement. Changing lifestyles due
to falling birthrate and aging population. Increasing globalization and digital consumption. Various factors bring you more
new ways to enjoy your life as well as triggering concerns and stresses. Seeing both these“positive and negative”
factors, we will evolve into a group that can serve you in all aspects of life. With regard to“enjoyment,”we will not only
“sell goods”but create new events and experiences to excite you. With regard to“concerns,”we will cover“shortfall”
such as“busyness,”“uneasiness”and“hassle”and create services to clear the fog in your mind. Our domain will expand
beyond the framework of“retail.”And there should be creative ideas, or the creation of“new happiness.”Now is the time
for J. Front Retailing to drastically change. And we promise you to closely support your life in a“present progressiveform”after 10 years and even 100 years by“changing all the time.”

New employees in FY201804

Values and Vision

New cause assumed by J. Front Retailingmore about the environment and ethics”and“want to

The main business of the Group was the offering of

The Group has to be able to offer something moreproducts and services mainly for“festive occasions”
by the core businesses including department store
chains Daimaru and Matsuzakaya and Parco to meetcustomer needs. With increasingly diversified lifestyles,
however, customer needs are seen not just on festive
occasions but also widely in daily life. By relieving
customers of“concerns”and“frustrations”in daily life
so that they can live more conveniently and more
comfortably, we hope many customers will be able tospare more time for festive occasions. We think that isfeel that their own existence is meaningful in society.”enjoyable and more exciting in response to suchdiversification of the means of seeking enjoyment.
The Vision shows where we and the Company want
to be in the future and helps clarify the organization’sstrategy, direction and decision-making process. It iseach and every employee who will realize the Vision ina concrete manner and the sum of their performance
will constitute our corporate value.

Mission Statement system

the social role we will have to fill, i.e., the cause.
Corporate
Credo
Mission Statement

In fact, as the means of seeking enjoyment are
diversified, many customers cannot gain sufficientsatisfaction from a stereotypical form of consumption
as in the past. Consumers“want new and different

Group Vision

Consistent values
Meaning ofexistence
What the Groupought to beexperiences” or “want to enjoy with like-mindedpeople.”Thus the focus of consumption is shifting toexperiences. Another recent big trend is heightened

JFR Wayawareness of social contribution. People“want to care

Ideas we value
to realize the Vision

J F R WAY
Ideas we value to realize the Vision

Try without fear of
failure!

Create the future!
We will create things that society
and consumers have never before
perceived as well as create new

We will take action without fear ofamazing and delightful things.

result, and we will all learn
from the challenges
we have faced.

Act for yourself!
We will think for ourselves
when taking action
without waiting to be told,

Introduce new ideas! and will enthusiastically
We will not succumb to an inwardlooking approach, but instead willtake a broader view developed bycoming into contact with people,
objects and eventsin the outside world.

accomplish our goals.

Be sensible andhonest!
We will take action as members ofsociety in a manner commensuratewith a sense of social decency,
while unwaveringly conducting
ourselves with sincerity andhonesty at all times.

Integrated Report 201905

YAMAMOTO Ryoichi
Director, President andRepresentative Executive Officer06

Values and Vision

Values and Vision

Top Message

We Will Continue to Challenge Changes andAim for Sustainable Value Creation.
The“Reiwa”era has begun and expectations forclarify the priority order of our initiatives against

the new era are raised. The current fiscal year is thehalfway point of the five-year Medium-term Businessuncertainty and reflect them in our management strategy.

Plan of J. Front Retailing (the“Company”), whichprojects, which symbolize the turning point of the

In the current fiscal year 2019, two ongoing big

started in fiscal year 2017 with the new Group Vision

Group, will be completed. Specifically, the“new main

“Create and Bring to Life‘New Happiness.’”At thebuilding of the Daimaru Shinsaibashi store”and“newsame time, I think it marks a turning point for J. Front

Shibuya Parco”are planned to open on September 20

Retailing Group (the“Group”) to grow dramatically.

and in late November, respectively. In the current era

The growth of the Real Estate Business, which waswhen e-commerce and sharing economy are rapidly

newly created as an independent segment, as the

spreading, we are asked“what is the meaning of theresult of our efforts during two years after the Medium-

existence of real stores.”With these two projects, weterm Business Plan was launched, is a steady firstwould like to show the direction of our unique newstep to change our business portfolio. In addition,

retail business model leading to the future. They aregovernance reform and B/S-based management havemade progress. Thus I think our foundations ofbold challenges to changing times. However, I believe
such ability to respond to changes is the DNA andbusiness have been strengthened steadily. On thestrength of the Group with histories of 300 and 400

other hand, in terms of production of tangible results

years of Daimaru and Matsuzakaya, which are theof growth strategy, I cannot say its progress during

predecessors of the Company, respectively, and leads

these two years has reached the management’sto sustainable management through the implementation

satisfactory level.

of our corporate credo.

Currently in the business environment surrounding

I think a sustainable society can be built if individualarecompanies as public entities of society clarify theincreasing. The global economy seems to be“at apriority order of issues to be addressed throughturning point”and uncertainty about the future has

dialogue with stakeholders and play their roles. To thisbeen heightened since the end of last year. Many

end, last year the Company identified five materiality

Japanese companies started to be impacted in various

issues after seeking opinions from stakeholders andways. Recently “uncommon” weather attributed to

discussing at the Board of Directors meetings. And wetheCompany,

uncertainty

andcomplexity

global warming trend occurs every year and is

set long-term goals and announced them and brought“becoming common.”And consumption tax hike is

our initiatives into full swing. In the current fiscal year,

planned in October. In light of trends after consumption

we will strive to manage the progress thoroughly andtax hikes in the past, I think increasingly polarized
consumption and budget-minded consumer spending

resolve issues promptly by forming a Sustainability
Committee to further strengthen promotion systems.

are unavoidable. Besides, transformation of social

Toward real growth beyond stakeholders’expectations,structure by digitalization and values shift fromwe, at the turning point of the Group, will step up a“possessing”to“sharing”will continue to progress ingear to promote the Group’s business structuralan accelerated manner.

changes and strive to increase corporate value overSuch uncertainty can be restated as risk. And wethe medium to long term while creating both economic

have to note that risk has both positive (opportunity)

value and social value. And at the same time, we will

and negative (threat) aspects. If we can actively takepositive risks while hedging negative risks appropriately,

contribute to creating a sustainable society.

it may lead to sustainable growth. Therefore, we will

June 2019

Integrated Report 201907

Top Interview“ Create changes.
Carry out this one thing
simply and honestly.”

Response to constant changes
We are a holding company established in September
2007 through the management integration of Daimaru
and Matsuzakaya, both of which are department store
chains. Daimaru and Matsuzakaya, which have long
histories of 300 and 400 years, respectively, continue
to practice sustainable management while properly
responding to changes in customers and society.
Why could the Company maintain management forsuch a long time? I think it is because their philosophy
has been persistently kept at the core of management
despite significant changes of the times and all
management activities have been integrated under
this philosophy.
Our corporate credo“Service before Profit”is quoted
from a passage written by Xunzi, one of the foundersof Confuciasm in China. Service before Profit means
those who give priority to service over profit willprosper. All management activities have been08

integrated under this credo.
The word “Service” in the credo means social
justice, which describes attitudes to pursue the rightway in business and contribution to the public. It canbe rephrased as a “customer first principle” and“contribution to society,”and that is a pursuit of bothsocial and economic values in consideration of current
ESG issues. In other words, they are consistent with
the idea of Creating Shared Value (CSV).
When looking at the history of the Group, we cansee that it is a repetitive cycle of crises andinnovations. The biggest crises that we have faced so
far are the“Rebellion of Oshio Heihachiro”in 1837
when our predecessors escaped burning and thefinancial crisis around 1907 when our business
gradually worsened by increased bad debts after thecollapse of the Edo Shogunate. On the other hand, thebiggest innovation seems to occur about 100 years
ago when our business model was transformed from“zauri or bringing products at customer’s request to
showcasing,”in other words, from a kimono fabricValues and Vision

dealer to a department store operator. In the long
history of 300 or 400 years, our predecessors were hit
by many crises. We can say that it is a miracle in asense that the Group exists today thanks to theirrelentless efforts to weather these crises and reform
and innovate themselves. We can tell from this history
that a crisis occurs whenever we become arrogant,fail to respond to changes of the times and society,and stop innovating ourselves.
Stated differently, unchanged values or philosophy
at the core of our management activities made it
possible to respond to changes so far and this spirit
continues to exist in our current Group Vision.

Business model needs to be changed
Increasing obsolescence of business models withchanges of the times is unavoidable. The businessmodel of a department store (hyakkaten in Japanese,
which literally means a store selling hundreds ofitems) was created instead of a kimono fabric dealer
about 100 years ago. As you may know, department
stores do not deal in“hundreds of items”partly due tothe rise of category killers. Department stores changed
their product mix to the one overly dependent on
clothes, in particular, women’s clothes against the
backdrop of the DC brand boom in the 1980s from afull line ranging from clothes to furniture, home
appliances and food, which is the origin of the word
hyakkaten. At the same time, their main businessstructure changed from selling after purchase calledkaitori to purchase without inventory called shoka
shiire, which accounted for around 80%. And the main
business shifted from merchandising to marketing or
brand assortment. It was then that department store
sales peaked.
In the meantime, consumption in Japan has beenchanging rapidly since then. According to the Family
Income and Expenditure Survey by the Ministry ofInternal Affairs and Communication, the percentage ofexpenditure on clothing and footwear decreased to
3.8% in 2018, almost a half of 7.3% in 1991. However,department stores could not get out of former
successful experience and too much floor area has
been allocated to women’s clothes. It increased gap intastes between customers and department stores.
When sales are increasing year after year, thebusiness model centered on shoka shiire and women’sclothes is low risk and can be expected to increase
profit by ensuring that costs are thoroughly managed.
In the current mature market, however, economic
sensitivity becomes stronger and the risk increases
accordingly. One of our strengths is large assets inprime urban locations. Under such risk, however, wefail to extract enough profits from them in terms ofasset efficiency, which is recognized as a problem. In
order to aim to achieve sustainable growth while
generating revenue that matches the asset value, it
has become inevitable to closely investigate themarket of each area and redefine what our businessmodel should be.
To this end, we have decided to study the two major
directions of our new business model. One is theoption“not to operate a department store,”whichmeans we 100% transform ourselves to a real estate
rental business. Specifically, it includes Ginza Six,
which was created by developing the two blocks
including the former site of the Matsuzakaya Ginza
store as one, and Ueno Frontier Tower, which was
created by rebuilding the south wing of the
Matsuzakaya Ueno store. Both opened in 2017 andcontribute to the growth of the Real Estate Businesssegment by generating stable revenue as expected.
The other is the establishment of a hybrid model with
an optimally balanced mix of the advantages of realestate rental business and the advantages of kaitori
and shoka shiire business under the department store
brand. Its concrete example is the new main buildingof the Daimaru Shinsaibashi store, which is plannedto open on September 20 this year. With the conceptof“Delight the World. Shinsaibashi, Adored by theWorld,”particularly on the 1st to 3rd floors, luxury
items and cosmetics that have growth potential will besignificantly expanded as the kaitori and shoka shiirebusiness by“global standards”. The 4th to 10th floors
and basement floors, which account for approximately
65% of total sales floor area, will be operated under
fixed-term lease. Without adhering to the floor layout
according to traditional stereotypical merchandiseclassification, we will consciously incorporate theelements of experience-based consumption. Since itwill have a completely different personnel structurefrom traditional department stores, an unprecedented
low-cost operation model will be created. In spite ofsuch great changes in the business model, customers
will be able to enjoy shopping completely seamlessly
between kaitori and shoka shiire floors and fixed-termlease floors. I hope you will look forward to the scalable
and highly profitable new model, which will show one
future direction of department stores.

Challenge of changing business portfolio
We could say department stores have much room
for profit growth by these changes in the businessmodel. However, I recognize we need to change theGroup’
s business structure that is overly dependent on
the Department Store Business in order to aim for
more sustainable growth. The Company has strived to
become a multifaceted retailer since its inception so

Integrated Report 201909

Top Interview

that we can expand into retail business other than the
Department Store Business. In 2011, we converted
StylingLife Holdings Inc., which operates generalmerchandise shops named Plaza, into an equity
method associate. In 2012, Parco Co., Ltd. wasconverted into a consolidated subsidiary. By
implementing these initiatives, we have steadily
spread our retail wings. The range of our retailbusiness has been thus expanded steadily. However,consumption is shifting from goods to experiences
and services. It is hard to avoid thinking it will bedifficult to achieve dramatic growth that meet the
expectations of stakeholders if we depend on businesscentered on physical stores. Therefore, we will takeone step away from our past approach as a multifaceted
retailer to act as a“Multi Service Retailer,”thereby
expanding our business domain to encompass
endeavors in new fields extending beyond the retailindustry framework. Meanwhile, we will actively
reshuffle our portfolio of businesses by accelerating
the identification of unprofitable business fields andother efforts. The major theme of the current Mediumterm Business Plan is the expansion of the newly
created Real Estate Business segment and building of
the foundation of the Credit and Finance Business for
medium- to long-term growth. As for the Real EstateBusiness, Ginza Six and Ueno Frontier Tower, both ofwhich opened in 2017 by transforming the businessmodel of department store assets, perform well as
expected and we expect share of its operating profit toincrease to around 12% from 0.8% before the current
Medium-term Business Plan was launched. The Credit
and Finance Business invited a person who
accumulated experience in card companies and amobile payment company from outside the Group as

10

its top management and tackles structural reforms toachieve significant growth in the period of the next
Medium-term Business Plan and beyond. With regard
to respective portfolios of the Department StoreBusiness and the Parco Business, we are considering
streamlining their stores, mainly rural and suburban
stores, which have bleak prospects, by converting
their formats or reducing rental area, or closing theirdoors if it is difficult to improve even with these efforts.
Under the current Medium-term Business Plan, we
have already decided to close the Daimaru Yamashina
store, Otsu Parco, Chiba Parco, Utsunomiya Parcoand Kumamoto Parco. We will identify the commercial
environment where each store is located and clarify
our direction to pursue optimal portfolio.

Improve and use the value of information
In the current“era of 100-year life,”lifetime value ofeach individual is expanding. Approximately 300
million customers visit our department stores andParco’
s physical stores every year. In such a situation,
we have many direct customer touch points throughthe provision of various products and services, which
is of great advantage to the Group. It is needless to
say that the“value of information”gained throughthese customer touch points will increasingly enhance.
Individual companies such as the department store
chain and Parco in the Group have their own good
customer assets. For example, however, the data
currently accumulated by department stores are mainly
customer profiles and purchasing information gained
through ID cards such as our private label credit cards.
The Group does not centralize such information and do
not have in place an infrastructure to extract enoughtrue value from our customer assets
as“information.”Therefore, we arebuilding a new customer base called
the“Lifetime Service Hub”to createa system for strengthening“lifetime
engagement with customers.”We will
integrate and centralize the database of good customers held by theGroup and strengthen our “dataeconomy”initiative using ICT such as
AI and apps.
As the process of this initiative, in
May this year, all Daimaru andMatsuzakaya stores released a“mobile app”that gives incentives
according to the purchase amount.
By using this app, we will identify
customers and greatly expand ourdata base through department storeswithout depending on our private

Values and Visionlabel cards as we did before. In the next phase, wewill use chat group-wide to improve the quality andquantity of customer information through accumulationof conversation and purchase history data. By adding
the demonstration tests of AI analysis to upgradeddata base, we will expand opportunities to provide
optimal products and services, and furthermore,launch new businesses to create synergy among
companies in the Group. I think medium- to long-term
corporate value will vary according to the“quality ofavailable information.”

Exceeding cost of capital is a must
We are committed to achieving an ROE of at least
8%, which is the goal for the final year of the current
Medium-term Business Plan (FY2021). At the sametime, we disclose the range of cost of shareholders’equity recognized by the Company. If we set an ROE
target, it should exceed cost of capital and the
management should recognize it to implement
initiatives. Since historically we have made a living by
operating department stores while holding large assets
in prime urban locations, we have kept ourselves
within the structure where“it cannot be helped that itis difficult to increase ROE.”However, it is natural forinvestors to expect return above cost of shareholders’equity. To be honest, it is undeniable that the Company
lacked awareness of such cost of capital. Regrettably,
even the management did not share the concept of
cost of capital, let alone its amount.
This is why we have decided to disclose the current
cost of capital recognized by the Company on theassumption that we aim to achieve an ROE of 8% ormore. Since economic sensitivity is extremely strong
in the department store sector of the stock market,
cost of capital tends to become a little higher. In orderfor the Group with the Department Store Business at
its core to achieve an ROE of 8% or more, it needs toreduce cost of capital as well as further increasing
profit levels. As its process, we began considering
reducing cost of capital by not only increasing profit
levels by implementing growth strategy but alsochanging our business portfolio.
Concerning what I said now, the important point for
the Group to realize ROE of at least 8% is how the
Department Store Business at the core of the Group,
which has large assets, will improve asset efficiency.
To this end, we introduced a store level B/S to the
Department Store Business to improve asset efficiency
in each store. ROA of each store is broken down into
indicators as a tree, which led to on-site improvement
actions. ROA is one of the components of ROE. In
order to achieve an ROE of 8% or more group-wide,
each business sets an ROA target. Furthermore, forexample, in the Department Store Business, it isbroken down into store level ROA as a target, which isalso used to evaluate a store manager. We are highly
recognized by investors that it is revolutionary for a
department store to draw up a store level B/S. I expect
we will have deeper dialogue concerning asset
efficiency as well as profitability at store level.

Contribution to creating a sustainable society
The Company identified materiality issues that
contribute to realizing“sustainable growth of company
and society”and a“sustainable society”while clarifying
the relationship between business activities and social
issues.
Specifically, firstly, we selected 25 candidate
materiality issues from the perspective of theenvironmental and social issues that are meaningful
for us to address and can produce results and theissues we can tackle using our core businesses.
Secondly, we conducted a written survey of 4,250
stakeholders on these 25 issues to secure objectivity
and diversity. And based on the results of the survey
in which the GRI Standards, the assessment items ofISO 26000 and SRI, and SDGs are reflected and after
internal discussions at the Management Meetings andothers, we developed a materiality map. In the processof discussions, we incorporated the perspectives ofgrowth potential, profitability and the Company’suniqueness and discussed in view of the importanceof social issues rather than ease in addressing them toidentify materiality issues. And finally, we narrowed
down the list of materiality issues to and formallydetermined five issues including“contribution to a
low-carbon society,”“management of the entire supply
chain,”“coexistence with local communities,”“promotion of diversity”and“realization of work-lifebalance”at the Board of Directors meetings. At thesame time, we set long-term goals to be achieved andformulated an action plan.

Integrated Report 201911

Top Interview

The greatest importance is placed on“contribution
to a low-carbon society” among them. Not only
external factors such as adoption of the Paris
Agreement and SDGs but also unusual weather andnatural disasters that have occurred frequently
recently in Japan and abroad actually affect ourbusiness activities. In view of the significance ofnegative risks from a long-term perspective, I cannot
think it is good for us to stand back and do nothing or
rely on others. To give an example, the head officebuilding of Daimaru Matsuzakaya Department Stores
already converted to 100% renewable energy inMarch this year. And the new main building of the
Daimaru Shinsaibashi store and new Shibuya Parco,
both of which are planned to open this fall, will
become model stores for use of 100% renewableenergy. As for reduction of CO2 emissions, it isextremely important for the Company to reach out tothe entire supply chain. It is a so-called“scope 3”
initiative. Firstly, based on various policies concerning
supply chain management including the Principles for
Action for Suppliers formulated recently, we will share
purposes and goals by disseminating them to andeducating employees and providing briefings to
suppliers. In the next phase, we will evaluate andselect suppliers, and if needed, we will audit, monitor
and feed back. By continuing them simply andhonestly, we would like to produce tangible results.
“Coexistence with local communities”can be said
to be the very core business of the Company. We
promote the“Urban Dominant strategy”as the growthstrategy of the current Medium-term Business Plan. It
is aimed at growing with local communities with storesincluding department stores at its core. I think a
community is a kind of ecosystem. That is to say, itslarge components and small components are all
mutually connected to create the unique appeal of thearea. Conversely, if our store works hard alone butpart of the community is left weakened, the entire
community will gradually run out of energy. Our
12

initiative to attract shops to the areas around ourdepartment stores and develop shops in these areas,
which started from the Daimaru Kobe store in the late1980s, is the root of the Urban Dominant strategy andcontributes to increasing the appeal of the communities,
which spreads from“points”to“areas.”As a matter ofcourse, we cannot promote such initiative in all areas.
We focus on the areas where the Group’s flagshipstores are presently located. By further developing andexpanding know-how accumulated through thedevelopment of shops around the Kobe store, in the
Shinsaibashi area, we would like to play our own role,
which is indispensable in the area, to create the“Shinsaibashi area adored by the world”based on themain building of the Daimaru Shinsaibashi store, which
will open this fall.

Once mindset changes, work styles willchangeI said earlier that a community is a kind of ecosystem
and I think entities that constitute a community areliving things. This is because they will rapidly
degenerate, be selected and cease to exist unless they
always evolve in response to changes in the external
environment. One of the key roles of the management
is to instill healthy risk awareness in the entire company
and to always respond quickly to changes in themarket and customers. To this end, I, as a managerial
person, would like to clarify our vision and continue toshow employees the course the Company should takeand new goals. In order to realize that permanently,
firstly, we will change employees’mindset. Secondly,
we will change the structures and systems of jobs. And
we will clarify goals. By doing this, their work styles
will change. We will evaluate their performance fairly
and reflect it in their treatment. Furthermore, we will
educate employees toward higher goals. I believe theconstant repetition of this process is the only way tolead our reform to success.
At the same time as the Vision“Create and Bring toLife ‘New Happiness’” was developed, we also
showed the JFR Way, which sets forth the employee
action guidelines:“Create the future,”“Try without
fear of failure,”“Introduce new ideas,”“Act for
yourself,”and“Be sensible and honest.”Among them,it may have been unexpectedly difficult to“try without
fear of failure.”It is important for the Company toencourage employees with the Company’s supportive
programs and systems to change their mindset. One
example is a new personnel program named the“Challenge Card.”We help individual employees andteams realize their ideas and inspirations. It is basedon the assumption that an employee who takes on achallenge will receive extra points in evaluation. A

Values and Vision

thought that“the way not to fail is to do nothing”
should not happen. By clearly stating that we will
positively evaluate the challenge to take concrete
action even though it results in failure, their attitudes
toward their jobs have changed remarkably. The
number of the Challenge Cards has reached as manyas 6,700 in a year and the number of employees who
actively try to engage in interactions beyond individual
divisions and companies is appreciably increasing. I
think the spread of these changes in the mindset ofindividual employees will result in changes in a
corporate culture and work styles, which will lead tomajor corporate changes. As a matter of course,
however, managerial persons are not evaluated only
for the process such as challenges and efforts.
Needless to say, management is practice and only
results matter.

Develop managerial talents
Three years have passed since we launchedgovernance reform, mainly the reform of the Board of
Directors. What I see through our initiatives is thatstrengthening of the Board of Directors andstrengthening of managerial talents are inseparable.
That is to say, we cannot activate the Board of
Directors without strengthening managerial talents. In
other words, the key is“people”after all. Investors may
check the presence of vision and strategy with outlook
for where the Group will go five and ten years from now
and the presence of human resources who can
accomplish them to make an investment decision. In
that sense, I think strengthening of managerial talents
is important. In my opinion, President should not havethe exclusive power to shuffle personnel. Therefore, wecreated a Human Resources and Remuneration
Committee to deliberate. After transition to a Company
with Three Committees (Nomination, Audit andRemuneration Committees), the Committee was takenover by the Nomination Committee to clarify theprocess of appointment and secure transparency. For
appointment and removal, we combine internal
evaluation with the results of personnel evaluation bya third-party organization to ensure highly objective
discussion. We rely on the Nomination Committee todetermine not only the validity of the process of
appointment but also appointment and removal ofindividual Directors and Executive Officers of J. Front
Retailing and major operating companies.
In terms of leadership, it is not too much to say thatbusiness management depends on top management.
And I think a succession plan for President as a chief
executive officer is the most important strategic
decision making. A succession plan for top management
requires assumptions for five and ten years ahead aswell as an emergency plan for contingencies. We
prioritize candidates and discuss since we voluntarily
created a Human Resources and Remuneration
Committee. Before that, I cast about only in my head.
Currently we openly discuss and sometimes internal
evaluation is different from evaluation by outside
officers. I believe we take a larger view and make thebest decision though we sometimes get into anargument of whether individual candidates are
qualified for President or officers.
The removal of President is determined by the
Board of Directors after the Nomination Committee
discusses and resolves based on the status of results
achieved by successor candidates who are selectedunder the succession plan resolved by the Nomination
Committee as well as the goals set and expected andactual results. Outside Directors comprise a majorityof the Nomination Committee and Outside Director
also chairs the Committee. Therefore, I recognize it ishighly objective and transparent. In the meantime, I
think I can manage the Company with a sense oftension under such strict governance.
The management itself needs to take the initiative intransformation without being tied to successful
experiences and change the mindset and actions of
employees in order to transform ourselves to the Group
that enables discontinuous growth. In the process ofchanging the Company significantly, we will makeevery possible effort with tenacity to produce tangible
results to increase corporate value over the medium tolong term beyond stakeholders’expectations.

Integrated Report 201913

Business Model

J. Front Retailing Value Creation Process

J. Front Retailing
Value Creation Process
Under the Corporate Credo and the Basic Mission Statement, J. Front Retailing is committed to creating affluent
lifestyles with its stakeholders to realize the Group Vision“Create and Bring to Life‘New Happiness.’”
The business activity of J. Front Retailing is to constantly seek to create rich markets that grow with local communities,
which is led by department stores and Parco.
It is nothing less than to create, as a public entity of society, new values with which its various stakeholders empathize.
Circulating the Group’s business model and creating new values using the six capitals of J. Front Retailing effectively
and efficiently are the process to create the brand value of J. Front Retailing, which will result in the creation of newvalues with which society empathizes.
Through this initiative, we strive to create both social value and economic value.
Strategy

Total FY 2017 ‒ 2021
Capital investment / growth investment

Financial
capital¥200 bn

Urban
Dominant
strategy

P.36

P.20

Business model

Approx.10,300

HumancapitalManufactured
capital(as of February 28, 2019)

No. of major storesoperated by
Daimaru Matsuzakaya
and Parco

35

Multi Service Retailer(Core Businesses)

Strength(Core Competence)

RetailStore assets
in urban areas

Structure

Ginza Six
Ueno Frontier Tower

Zero Gate
•
•
•

P.28

Information

External
environment
recognition

Real estate

Creditand ﬁnanceservice(positive risks,
negative risks)Intellectual
capitalGovernanceKnow-how forsales ﬂoor development● Increasing importance of ESG

Know-how for store operation

SocialrelationshipcapitalNo. of identiﬁable customers

Approx. 6 mn

● Polarized income
•
•
•
•
•
•

14

ICT
strategy

Accumulated

hospitality
mind

P.40

Financestrategy

P.56

HR
strategy● Frequent disasters● Changes in customers,
low birthrate and longevity

P.38

Human resources

Know-how for
store planning● Advanced technologies● Consumption tax hikeand post-Olympic recession

600万人の
Customer
assets
of
顧客資産
6 mn

Credit andﬁnanceP.42

Brand value● Progress of sharing
economyInnovation ofexisting
businesses P.32

No. of the Group employees

Energy consumption

Naturalcapital99,761kℓ(FY2018)*Figures of the Medium-term Business Plan are before application of IFRS 16.

P.42

P.44

Business Model

Outcome

Customers
We will provide
genuine satisfaction
captivating customers
by oﬀering newContribution toa low-carbon
societyvalues.

P.04

Shareholders
AFFORDABLE AND
CLEAN ENERGY

CLIMATEACTIONWe will increase
corporate value over the longterm through highly proﬁtable
and highly eﬃcientmanagement.

OutputManagementof the entire
supply chain

FY2021 ROE

8% or moreGroup Vision

AFFORDABLE AND
CLEAN ENERGYBusiness partners

CLIMATEACTIONWe will build therelationsof trust by working hard
together and aim to grow

Create andBring to Life
“New Happiness.”

together.

FY2021
Consolidated
operating proﬁt¥56 bnEmployees

Coexistencewith local
communities
SUSTAINABLE CITIESAND COMMUNITIESPARTNERSHIPFOR THE GOALS

We will realize workplaces inwhich employeesʼ performanceand contribution are fairly evaluatedand they can realize their exhibitionof ability and growth and havejob satisfaction.

FY 2017 ‒ 2021
Total FCF

¥60 bn or more

2021

2030
Promotionof diversity
GENDEREQUALITY

Realization ofwork-life
balanceCommunities
We will contribute tocommunity development andpromote environment-friendly
business activities as a good
corporate citizen.

17 GOALS TO TRANSFORM OUR WORLDDECENT WORK AND
ECONOMIC GROWTHNOPOVERTYZERO
HUNGERGOOD HEALTH
AND WELL-BEINGQUALITYEDUCATIONGENDEREQUALITY

CLEAN WATER
AND SANITATIONAFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

REDUCEDINEQUALITIESSUSTAINABLE CITIESAND COMMUNITIESRESPONSIBLE
CONSUMPTION
AND PRODUCTION

CLIMATEACTIONLIFE
BELOW WATERPEACE, JUSTICEAND STRONG
INSTITUTIONSPARTNERSHIPFOR THE GOALSLIFEON LAND“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

SDGs (Sustainable Development Goals)
GOOD HEALTH
AND WELL-BEING

DECENT WORK AND
ECONOMIC GROWTH

Global goals for the period from2016 to 2030, which are included inthe“2030 Agenda for Sustainable
Development”adopted at the United
Nations summit in September 2015.

Integrated Report 201915

Business Model

History – Surviving the Waves of Changing Times

Blend of Tradition and Innovation –And Creation
Shimomura Hikoemon Shokei
opened a kimono fabric store“Daimonjiya”in Fushimi, Kyoto(Foundation of Daimaru)
●

●



●

●

Announced store creed“Service
before Profit”to all stores

●



●

●

●

Kiba Villa was built near Han-ei Bridge, Kiba 4-chome,
Fukagawa, Edo and a shrine of Han-ei Inari was set up in
one corner of the property (still present on the premises of
Daimaru Core Building)Edo store achieved the highest sales in Japan as a kimono
fabric dealer
The Oshio Rebellion broke out
and Daimaru escaped burning due
to its reputation as a philanthropic
merchant


●



●



●

The Daimaru, Inc.
and Matsuzakaya
Holdings Co., Ltd.
integrated
management andestablished J. Front
Retailing Co., Ltd.
Phase I relocationand expansion of
Daimaru Tokyo store

Restaurant Peacock Co., Ltd. absorbed
Shoei Foods Co., Ltd. to form J. Front
Foods Co., Ltd.
Matsuzaka Service Co., Ltd. wasrenamed JFR Service Co., Ltd.
The north wing of Daimaru
Shinsaibashi store opened
JFR Service absorbed Daimaru Lease& Service Co., Ltd.










Established“Kabushiki
Kaisha Daimaru
Gofukuten”with acapital of ¥12 mn

March 2011
Larger Daimaru Umeda store opened●1611 1717 1717
1736 1757 1768

2007

1837 1910 1920 1999

Phase of founding

Phase of business integration andreorganization
2008

2009

2010

2011

Phase of development/maturity
Fully launched management
reform [store-based sales reform/ gaisho (out-of-store sales)
reform] (In 2000, HR reform andback-office reform were launched)●

Established“Kabushiki Kaisha Ito
Gofukuten”with a capital of ¥0.5
mn and opened a department
store in Sakaemachi, Nagoya●Daimaru Credit Service, Inc.
was renamed JFR Card Co., Ltd.
Daimaru Design & Engineering
Co., Ltd., Daimaru Mokko Co.,
Ltd., Matsuzakaya Seiko Co.,
Ltd. and Refix Japan, Inc.
merged into J. Front Design &Construction Co., Ltd.
Dimples’ Co., Ltd. absorbed
Daimaru Sales Associates
Co., Ltd.
Integrated the information
systems of The Daimaru, Inc.
and Matsuzakaya Co., Ltd.

●

●

●

●

Acquired Matsuzakaya in Ueno
and renamed it“ItoMatsuzakaya”to enter into Edo●●

Ito Genzaemon
Sukemichi, a son of
Ito Ranmaru Sukehiro
who served Oda
Nobunaga, opened akimono fabric andfancy goods
wholesale store in
Honmachi, Nagoya(Foundation of
Matsuzakaya)


September 2007
Established J. Front Retailing

November 2009
North wing of Daimaru
Shinsaibashi store opened

16

The Daimaru, Inc. and MatsuzakayaCo., Ltd. merged into Daimaru
Matsuzakaya Department Stores
Co. Ltd. (“Daimaru Matsuzakaya”)
J. Front Design & Construction
Co., Ltd. absorbed DHJ Co., Ltd.
The Daimaru Tomonokai, Inc.
absorbed Matsuzakaya Tomonokai
Co., Ltd. to form Daimaru
Matsuzakaya Tomonokai Co., Ltd.

●

● 

●

Business Model●●

Sold all shares of
Peacock Stores Ltd.,
which operated asupermarket business, toAeon Co., Ltd.
Acquired a 70.52%
stake in Forest Co., Ltd.
and converted it into a
consolidated subsidiary


●

●



●

●

●

●

Fukuoka Parco increased
floor space of mainbuilding
Acquired a 22.6% stakein Senshukai Co., Ltd.
and converted it into an
equity method associate
Shanghai New World
Daimaru Department
Store opened
Decided to rebuild themain building of Daimaru
Shinsaibashi store
Decided to rebuild
Shibuya Parco
Invested in Scrum
Ventures

















2012

2013

2014

●

●

●

2015

2016

Became affiliatedwith Rakuten R-Point
Card service
Nagoya Zero Gate
openedThe new building of
Fukuoka Parco
openedInvested in CoolJapan Fund





●


●

●

●

●

●

●

Kinshicho Parco opened (Mar)San-A Urasoe West Coast Parco City opened(Jun)
New main building of Daimaru Shinsaibashi
store will open (Sep)
New Shibuya Parco will open (Nov)











●

Commercial complex“Nihon Seimei
Sakaemachi Building”(tentative) will
open (Nov)





●







●



2017

2018

FY 2017
to 2021
new Mediumterm Business
Plan started● cquired a 33.2% stake inA
Parco Co., Ltd.“Parco”()
and converted it into an
equity method associateReached a basic
agreement with Shanghai
Xin Nan Dong ProjectManagement Co., Ltd. andShanghai New World Co., Ltd. to provide
technical support and cooperation in
opening and operating a new department
store in Huangpu District, Shanghai, China
Jointly established JFR Plaza Inc. with
StylingLife Holdings Inc.
Increased a stake in Parco to 65% through
TOB and converted it into a consolidated
subsidiaryDimples’Co., Ltd. spun off Daimaru
Matsuzakaya Sales Associates Co. Ltd.
Phase II expansion of Daimaru Tokyo store●●

Phase of building
foundations●

Voluntarily applied theInternational Financial
Reporting Standards (IFRS)Transferred the business of
JFR Online Co. Ltd.
“Ginza Six”opened
Transitioned to a“Company
with Three Committees(Nomination, Audit andRemuneration Committees)”
Transferred shares of Forest
Co., Ltd.
Kyoto Zero Gate opened
Parco_ya opened
Ueno Frontier Tower opened
JFR Plaza Inc. wasdissolved and liquidated●●

FY 2014
to 2016
Medium-term
Business Plan
startedNovember 2017
Ueno Frontier Tower opened

April 2017
Ginza Six opened

2019

2020

The new main building of
Daimaru Shinsaibashi
store will be connectedwith the north wing (spring)Parco will open in thenorth wing of Daimaru
Shinsaibashi store





2021

Phase of dramatic growth /changing the Group structure
Harajuku Zero Gate and Sannomiya
Zero Gate opened
Accepted purchase of own sharesby Senshukai Co., Ltd.

●


●


●

●

●

Sapporo Zero Gate opened
Phase III renovation andgrand opening of
Matsuzakaya Nagoya store
Sendai Parco 2 opened
Hiroshima Zero Gate 2 opened

●


●


●

●

●

Create andBring to Life
“New Happiness.”

●

●

●

October 2012
Phase II expansion and openingof Daimaru Tokyo store

Rendering of new main buildingof Daimaru Shinsaibashi store

November 2019 Rendering of Shibuya Parco©2019, Takenaka Corporation
Integrated Report 201917

Business Model

Transformation of Department Store Business ModelGreat Transformation of Department Store Business Model
Environment surrounding department stores

7.3% in 1991 when department store sales peaked.
Behind this trend, there are increasing changes in
consumption quality such as casualization andglobalization of fashion and a shift to balanced
consumption and service/experience-based consumption.
Given these circumstances, we recognize that whatis expected of department stores is not at the level of
improvement but initiatives for discontinuous growththat depart from past successful experiences, that is,
the great transformation of obsolete business model.

About 100 years have passed since kimono fabricdealers created a new business format known as adepartment store in response to changing times. Its
business model is at a major turning point. According
to data compiled by the Japan Department Stores
Association, after peaking at ¥9.7 trillion in 1991,
national department store sales decreased to ¥5,887
billion in 2018, below ¥6 trillion for two consecutive
years, which represent 60% of
peak sales. We faced economic
National department store sales
crises such as the collapse of thePeak of sales
bubble economy and the collapse¥9.7 trillionof Lehman Brothers and competition
Collapse of Lehman Brothers
beyondindustryboundaries
became fiercer at an accelerated
pace during that period. We thinkan even bigger problem than theseexternal factors is the failure towell keep up with the speed ofchanges of current times, which issort of the “obsolescence of
1980
1985
1990
1995
2000
2005
2010
2015
department store business model.”Source:“National
department
store
sales”
releasedbyJapan
Department
Stores
Association
Department
storesarecharacterized by operation with
Sales of Daimaru Matsuzakaya Department Stores existing
FY2018 latest monthly sales of Daimaru Matsuzakayalarge assets held in prime urban
stores and national department stores for last 10 years
Department Stores and national department stores（%）（%）
locations. However, we cannot say
6.0
8.0
all department stores can generate
4.0
6.0
enough revenue commensurate
2.0
4.0
with the value of these assets
0.0
2.0
currently. During the high-growth
-2.0
0.0
-4.0
period, we could earn decent
-2.0
-6.0
revenue only by focusing on sales.
-4.0
-8.0
Existing Daimaru and Matsuzakaya stores
Existing Daimaru and Matsuzakaya stores
In current mature period or low-6.0
National department stores (adjusted)
National department stores (adjusted)-10.0
growth period, however, we need to
-12.0
-8.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Year)
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
carry out structural reforms with astronger focus on B/S from theperspective of improving asset
Consumption expenditure on clothing and footwear and share of total consumption expenditure
efficiency.
(Yen)
（%）
8.0
30,000With regard to sales floor
allocation, women’s clothing floors
7.0
25,000that have rapidly become bloated
6.0
20,000since the 1980s do not meet
5.0changes in customer consumption
15,000
4.0
behavior. According to the Family
3.0
10,000
Income and Expenditure Survey by
2.0
the Ministry of Internal Affairs and
5.000
1.0
Communication, the share of
expenditure on clothing and footwear
1997
2002
2007
2012
2017
1992
plummeted to 3.8% in 2018 from*Source: Monthly Disbursements per Household (two-or-more-person households) from“Family Income
and Expenditure Survey”by the Ministry of Internal Affairs and Communication

18

Business Model

Establishment of new business model

Review of sales floor allocation

In these circumstances, we determined two major
directions for the ongoing transformation of ourbusiness model. One is transformation to a“hybrid”
model with a well balanced mix of retail and real estate
rental as an evolved department store and the other istransformation to a“real estate rental model”that“doesnot operate a department store,” including thetransformation of business format. Since the market
characteristics of department stores vary greatly by
area, it is important to optimize each store based on its
store strategy in order to improve customer satisfaction
and profitability of store assets.

We will reduce bloated women’s clothing floor areaby 30% compared to FY2016 during the period of thecurrent Medium-term Business Plan, and in thus
created spaces, we will offer categories that can be
expected to grow revenue and attract many customers.
In the Sapporo and Nagoya stores, we created original
sales space “Kiki Yococho,” which is curated byourselves with an assortment of cosmetics, accessories
and food and beverage, in April 2018 and March 2019,respectively. It led to tangible results such as attracting
more customers and improving sales floor efficiency.
We will continue to review allocation based on thestore strategy of each store.

(1) Hybrid model
A typical example is the“new main building of the
Daimaru Shinsaibashi store,” which will open on
September 20, 2019. In the case of the new mainbuilding of the Shinsaibashi store, real estate rental
occupies approximately 65% of total sales floor area
and kaitori and shoka shiire occupy remaining
approximately 35%, which is an optimal balance.
Traditional modelHybrid model
Real estate rental“Kiki Yococho,”Matsuzakaya Nagoya store

Progress of reduction of women s clothing ﬂoor area

Reduction rate of
womenʼs clothing
ﬂoor area (total)

New main building of
Daimaru Shinsaibashi store(2) Real estate rental model
Typical examples include“Ginza Six,”which was
created by developing the two blocks including theformer site of the Matsuzakaya Ginza store as one,and“Ueno Frontier Tower,”which was created byrebuilding the south wing of the Matsuzakaya Ueno
store and converting it to a commercial complex.
Traditional model

Real estate rental model

Real estate rental

FY2017FY2018FY2019(planned)

FY2021(planned)

△2%

△6%

△16%

△30%

Promotion of DX (digital transformation)
With the common mobile app of Daimaru andMatsuzakaya released in May 2019, we will makecustomers’shopping experiences at department stores
more attractive and revitalize CRM activities by shifting
our axis of customer retention to smartphones.
Furthermore, we will promote the conversion of
department store business to be operated digitally byintroducing new customer management tools toadvance gaisho activities, using digital platform to
exploit the affluent market, and using RPA for operations
to enhance productivity.
Mobile app
New CRM

New

customer tool

DX
Web

RPA
Process reform

Ginza Six
Integrated Report 201919

Business Model

Multi Service Retailer“Multi Service Retailer”
beyond the Framework of Retail
While our core Department Store Business attempts to improve asset efficiency by changing its business model andwe think there is enough room for growth, given the business environment surrounding the Company including
depopulation and changes in consumption quality, from a medium- to long-term perspective, it is obviously difficult togrow substantially if we stick to the domain of department stores, and furthermore, the domain of retail.

History of retail industry
1940s
Increasing
wealth andmilitary
power

(War)

1950s

Economic recovery
Jimmu
Boom

Times

1868
Meiji Restration

1960s

1970s

High economic growth period
Iwato
Boom

Olympic
Boom

Izanagi
Boom

Three essential Income-doubling 3C
status symbols
plan

1980s

Oil
Shock
DC brandboom

Bubblecollapse

2010s
Collapse of
LehmanBrothers

IzanamiBoom

Foreign luxury brands
were popular

1985 Hakuhodo
1999 NTT DoCoMo“Emergence of segmented masses” “I-mode” was created

Flourishing of small/family-run stores and department stores Flourishing of general merchandise stores (mass consumption society)Department store
Supermarket●Western-style architecture,display of goods;●Uniforms;●Entry with shoes on; and●Female elevator attendants

2000s
Low-growth period

Bubbleeconomy1956 Economic White Paper 1962 Hayashi Shuji“It is no longer postwar”“Distribution Revolution”

1904 Kabushiki Kaisha Mitsukoshi Gofukuten(Department Store Declaration)
1907 Kabushiki Goshi Kaisha Daimaru Gofukuten
1910 Kabushiki Kaisha Ito Gofukuten
New initiatives including:

1990s

Stable-growth period

Foreign fast fashion brands
accelerated entry into Japan
Rapid growth of inbound tourism
Expansion of sharing economy

Diversiﬁcation of business categories (post-mass consumption society)

61〜68
Daimaru achieved
top sales in Japan

91
00 Sogo ﬁled for civil rehabilitation procedure
Department store sales peaked
03 Renamed Millennium Retailing
82 - 83 Seibu Department Store ad copy
“Oishii Seikatsu (delicious life)”
07 J. Front Retailing07 H2O Retailing
69 Tamagawa Takashimaya SC opened 85 Tsukashin opened
08 Isetan Mitsukoshi Holdings

57 Daiei opened 1st store
72 Daiei achieved top sales in Japan
58 Yokado was established
56 Seibu Store was established 69 Jusco was established
80 “Mujirushi Ryohin” was created
69 Ikebukuro Parco opened
87 “Loft” was created

01 Mycal went underOther

74 7-Eleven opened 1st store
97 “Rakuten Ichiba” was launched
75 Lawson opened 1st store
04 “Zozotown” was launched
73 FamilyMart opened 1st test store
16 FamilyMart and
76 Tokyu Hands opened 1st store 90 United Arrows opened 1st store
Uny merged
93 Outlet Mall Rhythm
76 Beams opened 1st store
16 Mitsubishi Corporation(Japanʼs 1st outlet mall in Saitama)
made Lawson its subsidiary
84 Uniqlo opened 1st store
76 Shinjuku Lumine opened

Regulation Demographics

1937
Department Store Law

18 Mercali became listed

1973
Large-Scale Retail Store Law (covering large supermarkets as well)1868
34 million

1967
Exceeded 100 million

2000
Large-Scale Retail Stores Location Law
1998 Productive-age
population (15-64
year olds) decreased

1985
121 million

2004
Population peaked at
127.87 million

Depopulating
society

Therefore, under the current Medium-term Plan, we are working to change our business portfolio toward“discontinuous
growth,”which is not an extension of past growth, with the aim of developing as a“Multi Service Retailer”beyond theframework of retail. In our business portfolio, while striving to growing the core Department Store and Parco Businesses,
we will expand into new areas such as the Real Estate Business and the Credit and Finance Business using thestrengths of the Group to increase their shares.

Multi Service Retailer
Expanded needs to relieve concerns/
frustrations in daily life
Rise of sharing economy

Advent of IoT era

Consumption shift from products
to services/experiences

Expanded demand for HR services

Increased urbanization

Diversiﬁed payment methods
Advanced ﬁnancial services

Multiple retail business brands(Multi Retailer)

Strong customer assets of 6 million people
Store assets in urban areas

20

Business Model

Two years have passed since the Medium-term Business Plan started in fiscal year 2017. So far the Real EstateBusiness has grown steadily partly thanks to the opening of Ginza Six and Ueno Frontier Tower and its share ofoperating profit exceeds 10%. In the meantime, the Credit and Finance Business focuses on building foundations toachieve dramatic growth during the period of the next Medium-term Business Plan. Going forward, we will consider
entering into new service areas to relieve customers of concerns and frustrations based on the Group Vision, including
realization of the Lifetime Service Hub plan by building the Group’s integrated database, M&A and alliance.

Structure (Core Businesses)

Strength (Core Competence)

Transforming business model

Store assets
in urban areas

RetailInformation
Real estate

Creditand ﬁnanceservice

Increasing leasing area
(Urban Dominant strategy)

600万人の
Customer
assets
of産
顧客資
6 mn

Accumulated

hospitalitymind

New growth businesses

Building the Groupʼs integrated database(Lifetime Service Hub)

The Group’s strengths

1Store assets in urban areas across JapanThe Group has store assets including department stores, Parco and Ginza Six in major cities across Japan,
from Sapporo to Tokyo, Nagoya, Osaka and Hakata. In key areas, we will promote the Urban Dominant strategy
for growing with local communities by putting together small- and medium-sized stores around these flagshipstores as their core and attract new crowds to live in harmony with local communities.

2

Good customer assets of more than six million people
Daimaru, Matsuzakaya and Parco have good customer assets of more than six million cardholders. Department
stores have an organization of affluent gaisho customers whose sales share exceeds 20%. In fiscal year 2019,
we newly introduced an app to retain good customers who use other companies’cards and were not reached
by us so far.

3

Accumulated hospitality
Hospitality arose from customer services based on the corporate credo of Service before Profit and thecustomer-first principle and has been developed in the history. This spirit leads to services provided by a staffing
service subsidiary and the system to maintain high quality services through training at stores where many
people from suppliers work.
Integrated Report 201921

Percentage of
total revenue

Revenue (Millions of yen)

Percentage of
total revenue

Revenue (Millions of yen)

Financial/Non-financial Highlights

Percentage of
total revenue

268,233

274,308

275,441

Business Overview
At a Glance
274,308
275,441
268,233

Revenue (Millions of yen)

Operating proﬁt (Millions of yen)
26,65924,194
Operating
22,224 proﬁt (Millions of yen)
26,65924,194
Operating
proﬁt (Millionsof yen)22,224

Business Overview (FY2018) At a Glance
Percentage of%
total revenue

59.8

Store
Business

Business

Business

59.8

Percentage of%
total revenue

59.8

Business

FY2018（IFRS）
275,441

FY2016（IFRS）FY2016 (Millions
FY2017 FY2018
Revenueof yen)（IFRS）
93,780（IFRS）
91,621（IFRS）
89,969FY2016 FY2017 FY2018
Revenue(Millions of yen)
（IFRS）
93,780（IFRS）
91,621（IFRS）
89,969（IFRS）（IFRS）

26,65924,19422,224 proﬁt
FY2016FY2017FY2018Operating(Millionsof yen)（IFRS）
13,021（IFRS）（IFRS）

11,752FY2016 FY2017 FY2018
Operating
proﬁt (Millions of yen)
（IFRS）
13,021（IFRS）（IFRS）

11,752FY20175,445
FY2018Percentage of total%
operating proﬁt

11,752

5,445（IFRS）（IFRS）

Percentage of total%
operating proﬁt

FY2017FY201893,780Percentage of%
total revenue

91,621

89,969Operating(Millionsof yen)（IFRS） proﬁt（IFRS）（IFRS）FY2016 FY2017 FY2018
Revenue(Millions of yen)

FY2016 FY2017 FY2018
Operating
proﬁt (Millions of yen)

Percentage of
total revenue%

FY2016 (Millions
FY2017 FY2018
Revenueof yen)Percentage of
total revenue%

19.4

13,427FY2016 (Millions
FY2017FY2018
Revenueof yen)Percentage of
total revenue%

13,427FY2016 (Millions
FY2017FY2018
Revenueof yen)

19.4（IFRS）（IFRS）（IFRS）（IFRS）

5,004（IFRS）
16,995Percentage of%
total revenue

3.4（IFRS）
16,995FY2016FY2017 FY2018
5,004
13,427
Revenue(Millions
ofyen)（IFRS） （IFRS） （IFRS）

Percentage of%
total revenue

FY2016FY2017FY20185,004
13,427
Revenue(Millionsof yen)

3.4（IFRS）（IFRS）
16,995（IFRS）

16,995（IFRS）（IFRS）（IFRS）
16,995Percentage of
total revenue%

FY2016FY2017FY20185,004
Revenue(Millionsof yen)13,427

Percentage of%
total revenue

10,1769,847
FY2016FY2017 FY2018
5,004
Revenue(Millionsof yen)（IFRS） （IFRS） （IFRS）

Percentage of
total revenue%

3.4

Percentage of%
total revenue

1.4（IFRS）

9,847（IFRS）

10,176（IFRS）
10,573

10,573

FY2016 (Millions
FY2017 FY2018
Revenueof yen)（IFRS）（IFRS） （IFRS）
10,573
10,1769,847
FY2016 FY2017 FY2018
Revenue(Millionsof yen)（IFRS） （IFRS） （IFRS）
9,847

10,176

10,573（IFRS）（IFRS）（IFRS）（IFRS）
13,021

11,7525,445
FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)（IFRS） （IFRS） （IFRS）
4,664
4,131
5,445
FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)（IFRS） （IFRS） （IFRS）
4,664
4,131
FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)（IFRS）（IFRS） （IFRS）
348
4,664
4,131
FY2016 FY2017 FY2018
Operating
proﬁt(Millionsof yen)（IFRS） （IFRS）（IFRS）
348
4,664
4,131
FY2016 FY2017 FY2018
Operating
proﬁt (Millions of yen)
（IFRS） （IFRS） （IFRS）
348
4,664
4,131
FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)（IFRS） （IFRS） （IFRS）
2,856
348
2,742
2,360
FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)（IFRS） （IFRS） （IFRS）
348
2,856
2,742
2,360
FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)（IFRS） （IFRS） （IFRS）
2,856
2,742
2,360
FY2016 FY2017 FY2018

Operating(Millionsof yen)（IFRS） proﬁt（IFRS）（IFRS）
2,856

2,742

2,360

1.4

FY2016 FY2017 FY2018
Revenue(Millions of yen)

FY2016 FY2017 FY2018
Operating
proﬁt (Millions of yen)

Percentage of
total revenue%

10,573
10,1769,847
FY2016 (Millions
FY2017 FY2018
Revenueof yen)（IFRS） 117,845（IFRS） （IFRS）
114,584
104,250

FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)FY2016 FY2017 FY2018
Revenue(Millions of yen)

Percentage of%
total revenue

1.4

Percentage of%
total revenue

1.4

Percentage of%
total revenue

15.9

Percentage of（IFRS）
2,742（IFRS）

Percentage of total
operating proﬁt
%

59.2
13.3
13.3

Percentage of total
operating proﬁt%

13.3

Percentage of total
operating proﬁt%

13.3

Percentage of total
operating proﬁt%

13.3

Percentage of total%
operating proﬁt

11.4

Percentage of total%
operating proﬁt

11.4

Percentage of total
operating proﬁt%

11.4

Percentage of total%
operating proﬁt

11.4

Percentage of total
operating proﬁt%

11.4

Percentage of total
operating %
proﬁt

5.8

Percentage of total
operating %
proﬁt

5.8

（IFRS）

Percentage of total
operating %proﬁt

FY2016 FY2017 FY2018
Operating
2,981 proﬁt (Millions of yen)

3,507
（IFRS）

Percentage of total
operating %proﬁt

FY2016 (Millions
FY2017 FY2018
Revenueof yen)FY2016 proﬁt
FY2017FY20183,507
Operating(Millionsof yen)Percentage of total
operating %proﬁt104,250
FY2016 FY2017 FY2018
Revenue(Millionsof yen)（IFRS） （IFRS） （IFRS）
114,584 117,845
104,2503,507
Operating(Millionsof yen)（IFRS） proﬁt（IFRS）（IFRS）

Percentage of total%
operating proﬁt

FY2016 FY2017 FY2018
Revenue(Millions of yen)

FY2016 FY2017 FY2018
Operating
proﬁt (Millions3,507
of yen)2,981

Percentage of total%
operating proﬁt（IFRS） （IFRS）
114,584 117,845（IFRS） （IFRS）
114,584 117,845（IFRS）（IFRS）（IFRS）

104,250（IFRS）

15.9
revenue（IFRS） （IFRS） （IFRS）
New leasetotal
accounting
standards(IFRS 16)
114,584 117,845%（IFRS）
2,856

59.2

11,752FY2016

13,021

Percentage of total%
operating proﬁt

5,445

Revenueof yen)（IFRS） (Millions（IFRS） （IFRS）

FY2016

59.2（IFRS）

19.4（IFRS）
13,021

59.2（IFRS）

Percentage of%
total revenue（IFRS）
89,96959.2

Percentage of total
operating proﬁt%

FY2018（IFRS）（IFRS）
89,969（IFRS）
91,621

Percentage of total%
operating proﬁt

26,659FY2017（IFRS）（IFRS）
91,621（IFRS）
93,780Percentage of total
operating proﬁt

Percentage of total%
operating proﬁt

FY2016（IFRS）（IFRS）
93,78019.4

Percentage of total
operating proﬁt

24,194
Operating
22,224 proﬁt (Millions of yen)

FY2016 proﬁt
FY2017FY2018Operating(Millionsof yen)1.4

Reference

FY2017（IFRS）
274,308

268,233（IFRS）FY2016 (Millions
FY2017 FY2018
Revenueof yen)Percentage of%
total revenue

Other（IFRS）
275,441

26,65924,194
Operating
proﬁt (Millionsof yen)FY201622,224 FY2017 FY2018

Percentage of
total revenue%

3.4

Finance（IFRS）
274,308

Percentage of
total revenue%

3.4

Credit and（IFRS）

268,233

19.4

Real Estate

275,441

Revenue (Millions of yen)

59.8

Parco

274,308

Percentage of%
total revenue

59.8

Department

268,233

Revenue(Millions of yen)
FY2016 FY2017 FY2018

Percentage of total
operating proﬁt（IFRS）
4,744（IFRS）
4,744

2,360

2,981
（IFRS）（IFRS）
4,744（IFRS）FY2016FY2017FY2018

2,981（IFRS）

4,744（IFRS）
4,744（IFRS）

5.8
5.8
5.8

10.3
10.3

104,250●The Group recognized right-of-use assets and lease liabilities
at the date
●As aFY2018
result, in the consolidatedof financial
position on the initial application
FY2016FY2017FY2016statement
FY2017FY20183,507%
of initial application of IFRS 16 for leases%that it previously（IFRS）
classified asassets and liabilities
increasedby ¥210.6（IFRS）
billion and ¥225.2 billion, respectively,（IFRS）date,（IFRS）（IFRS）（IFRS）
2,981

15.9

10.3

15.9

10.3

operating leases under IAS 17. The lease liabilities are measured at theand equity decreased by ¥14.5 billion. In the consolidated statement of profit or loss
present value of outstanding lease payments discounted using thefor fiscal year 2019, operating profit increased by approximately ¥4.6 billion compared
FY2016 FY2017 FY2018
FY2016 FY2017 FY2018
lessee’s incremental borrowing rate at the%date of initial application. The
to former standards (before application of IFRS 16), but its impact on profit is expected%（IFRS） （IFRS） （IFRS）（IFRS） （IFRS） （IFRS）
right-of-use assets are measured retrospectively as if IFRS 16 had been
to be immaterial. Compared to former standards, cash flows from operating activities
applied since the commencement date of the lease contract.
are expected to increase by approximately ¥28 billion and cash flows from financing
are expected FY2016
to decreaseFY2017
by the sameamount in fiscal year 2019.
FY2016 FY2017activities
FY2018FY2018

15.9%

22（IFRS）（IFRS）（IFRS）（IFRS）（IFRS）（IFRS）

10.3%

Financial/Non-financial Highlights●The percentage of total revenue represents the ratio of revenue to external customers after eliminating intersegment transactions.
●Revenue and operating profit include intersegment transactions.
●Calculation of percentage of total operating profit of“Other”segment includes adjustments.

FY2018 results

FY2019 forecast

While spending by inbound tourists and the affluent continued strong, sales of volume zone
items were sluggish as a whole. Stores had to reduce operating hours or temporarily close due
to natural disasters such as record heavy rain mainly in western Japan in July, huge typhoons inAugust and September, and the great earthquake in the Hokkaido area. The“warm winter”trend
from December to January caused heavy damage to sales of winter clothing. As a result,revenue slightly increased by 0.4% year on year but“business profit”decreased by 4.3% due toan increase in cost associated with information systems, etc. and operating profit decreased by
9.2% partly in reaction to gain on sales of real estate recorded in the previous year (¥1.4 billion).

Revenue is forecast to increase by 0.5% year on year because spending by Japanese affluent people andinbound tourists is expected to remain strong and the effect of renovation of urban stores including the measuresagainst weak volume zone items and additional sales from closeout in the north wing of the Shinsaibashi store before
opening of the main building are expected while consumption tax is scheduled to rise in October. In terms of profit,
initial cost and depreciation associated with opening of the new main building of the Shinsaibashi store and anincrease in operational cost due to companywide upgrading of POS systems are expected but they will be offset by
an increase in gross profit as well as reduction of rent expenses and streamlining of personnel expenses. Accordingly,“business profit”is expected to increase by 13.3%. Meanwhile, operating profit is expected to increase by 7.5%
factoring in loss on retirement of fixed assets arising from renovation of the north wing of the Shinsaibashi store.

“Parco_ya,”which opened as the anchor tenant of“Ueno Frontier Tower”inNovember two years ago, performed well. There were additional sales from newly
opened Zero Gate complexes in Harajuku, Sannomiya, etc. However, clothing sales
were sluggish as a whole. There were also sluggish sales of regional stores and areactionary decline in sales of the entertainment business. As a result, total revenueof the Parco Business decreased by 1.8% year on year and“business profit”decreased
by 15.2%. In addition, taking into account changes in competitive environment, we
decided to close Kumamoto Parco and Utsunomiya Parco and recorded loss on
liquidation of business. Accordingly, operating profit significantly decreased by 53.7%.

We expect revenue and“business profit”to increase by 29.2% and 20.4%
year on year, respectively, due to opening of new Shibuya Parco and“Kinshicho Parco”and additional sales from renovation and anniversary
projects of major stores. In addition, compensation income from theredevelopment of Shibuya will increase and there will be an increase inreaction to loss on liquidation of business recorded in the previous fiscal
year after we decided to close Kumamoto Parco and Utsunomiya Parco.
Accordingly, operating profit is expected to increase by 133.2%.

Thanks to continued strong performance of“Ginza Six”(opened in
April 2017) in the 2nd year after opening and full operation of“UenoFrontier Tower”(opened in November in the same year) as well astransfer of many of shops around the Daimaru Kobe store to the Real
Estate Business, revenue and “business profit” significantly
increased by 26.6% and 79.5% year on year, respectively. Operating
profit marked a double-digit growth of 12.9% in spite of a decline inreaction to gain on sales of real estate recorded in the previous year(¥1.6 billion).

Revenue is expected to increase partly due to the effect of transfer ofshops around the Daimaru Kobe store. On the other hand, as the north wingof the Daimaru Shinsaibashi store will be transferred as the“asset of theReal Estate Business”after opening of the new main building of the samestore, fixed asset tax and depreciation on the north wing will be recorded in
the Real Estate Business segment. As a result,“business profit”is expected
to decrease by 13.1% year on year. Operating profit is expected to decreaseby 22.8% because construction cost associated with the renovation of thenorth wing, etc. will be added to other operating expenses.

Revenue increased by 3.9% year on year partly due to an increasein external merchant fees. However,“business profit”and operating
profit decreased by 16.6% and 13.9%, respectively, due to multiple
cost increase factors such as an increase in personnel expenses to
employ specialized human resources and strengthen the organization
for future growth (+¥160 million), card renewal cost incurred every
five years (+¥140 million) and a change in brand fee rate (+100
million).

Revenue is expected to increase by 10.7% year on year due to anincrease in merchant fees and interest income from installment sales.
However,“business profit”and operating profit are expected to decrease by
15.3% each because cost associated with issue of new cards and anincrease in cost to recruit human resources for growth are expected.

J. Front Design & Construction improved profitability and increased
profit in spite of a decline in sales in reaction to the large-scale
project carried out in the previous year. However, revenue,“businessprofit”and operating profit decreased by 11.5%, 19.7% and 26.1%
year on year, respectively, partly due to poor performance of Daimaru
Kogyo and business transfer of a consolidated subsidiary Forest at
the end of August of the previous fiscal year.

Revenue,“business profit”and operating profit are expected to increaseby 14.1%, 35.1% and 37.7% year on year, respectively, factoring in largescale orders, such as for the interior construction of the new main buildingof the Daimaru Shinsaibashi store, which are certainly expected to bereceived by J. Front Design & Construction, and performance improvementof Daimaru Kogyo, which is working on strengthening the order taking anddelivery system.

Integrated Report 201923

Financial/Non-financial Highlights

Graphical Data

Financial/Non-financial Highlights
ROE

Consolidated business proﬁt / IFRS operating proﬁt（%）
10(Millions of yen)
60,000Business proﬁt*
IFRS operating proﬁt

9850,000

7.5
6.9

7

6.8

48,0386.8

44,58042,091

46,84249,54645,51440.89140,0006

5.3

530,0004

20,000

3
2

10,000

1
0

2014

2015

2016

2017

2018

(FY)

0

2014

2015

2016

2017

2018

(FY)

EPS

Capital expenditures/Depreciation (including the amount included in cost)

(Yen)
120

(Millions of yen)
50,000100.42100

103.04108.92104.55

Depreciation(including the amount included in cost)

39,87340,00080

Capital expenditures

44,99937,11075.47

30,00027,021

24,27760

20,00018,345

17,96340

17,18919,907

18,683

10,000

20
0

2014

2015

2016

2017

2018

(FY)

Interest-bearing liabilities
D/E ratio

200,000
168,458

187,7990.47

150,000

100,000

180,922

184,202

0.50
0.49
0.48

174,378

0.47

0.47
0.46

0.46

0.45

0.45

50,000

0.42

2014

2015

2016

2017

2018

(FY)

(People)12,00011,14911,023

10,732

10,42910,27620172018

10,000
8,000
6,000

0.44
0.43

0

2014

Consolidated number of employees

Interest-bearing liabilities and D/E ratio(Millions of yen)
250,000

0

2015

2016

2017

2018

0.42
0.41
0.40
(FY)

4,000
2,000
0

2014

2015

2016

(FY)

*The inventory valuation method has been changed to the specific identification method since fiscal year 2015.
*The Company has applied the International Financial Reporting Standards (IFRS) since fiscal year 2017.
The amounts for fiscal year 2016 and before are under JGAAP.
*Of revenue under IFRS, sales from shoka shiire (purchase recorded at the time of sale) of the“Department Store Business”and "Other (Daimaru Kogyo)"have been converted into gross amount and the net amount of sales of the“Parco Business”into tenant transaction volume (gross amount basis).
*Business profit is calculated by subtracting sales cost and SGA from revenue and roughly corresponds to“operating profit”under JGAAP.

24

Operating profit under JGAAP is presented as business profit for fiscal year 2016 and before.

Financial/Non-financial Highlights

Daimaru Matsuzakaya Department Stores existing store sales (YoY % change)
3

（%）

2
1

1.6
0.5

Daimaru Matsuzakaya Department Stores tax-free sales and share(Millions of yen)
70,000

3.0

6
5.0

4.6

30,000-2-3

20,000-4

10,000
-4.5

2014

2015

2016

2017

2018

4
2.3

2

0

(FY)

15,15633,86029,41547,90258,890

2014

2015

2016

2017

2018

Ratio of female employees in management positions (consolidated)

GHG emissions (consolidated)（%）
15（t-CO2）200,000

14.7
14.3

150,000

13

12.2
12

182,566

100,000
10.4
50,000

9

0
2014

2015

2016

2017

2018

2014

(FY)

Year-end number of issues of cross-shareholdings(No of issues)
80

2015

2016

64

38.4

12
41

Ratio of Outside Directors

13

9
7

30

7

3

10
2015

2016

2017

2018

(FY)

0

35

13

7

6

20

38.4

（%）
40

Of which no of Outside Directors

48

40

(FY)

Company with Three Committees

No of Directors

60

50

2018

Number of Directors/Outside Directors and ratio of Outside Directors
Company with Audit & Supervisory Board

69

2014

2017

(People)
15

60

0

0
(FY)

11.1

10

70

194,154*Data have been compiled anddisclosed on a consolidated basis
since FY2017.
They have received an independent
assurance statement from Lloyd s
Register Quality Assurance Limited（LRQA）.

14

11

8

7.3

40,000

-1

8.9

Share

50,0000-5Daimaru Matsuzakaya
Department Stores tax-free sales

60,000

0.9

（%）
10

28.6

28.6

28.6

2

2

2

2014

2015

2016

5

5

2017

2018

30

(FY)

25

*The Ginza store closed on June 30, 2013.
*The south wing of the Ueno store temporarily closed for rebuilding on March 11, 2014.
*The main building of the Shinsaibashi store temporarily closed for rebuilding on December 30, 2015.
*The Urawa store closed on July 31, 2017.
*The portions transferred to the Real Estate Business of real estate lease revenue, which had been included in store sales,for both current and previous years have been deducted since fiscal year 2017.
*The Yamashina store closed on March 31, 2019.

Integrated Report 201925

Financial/Non-financial Highlights

Numerical Data

Financial/Non-financial Highlights
JGAAP

Millions of yen (except where otherwise indicated)

FY2009FY2010FY2011FY2012

982,533

950,102

941,415

ー

ー

ー

ー

Gross profit

240,211229,588

226,646

245,615

SGA

214,757

Net sales / Gross sales－ / Revenue

1,092,756

221,627

209,265

205,052

Business profit

ー

ー

ー

ー

Operating profit

18,584

20,323

21,59430,857

Ordinary profit / Profit before tax

19,96621,092

22,941

32,202

Profit / Profit attributable to owners of parent

8,167

8,862

18,804

12,183

Total assets

804,534

775,029

767,543

1,009,165

Equity314,494

318,033

332,917341,318

Net assets

323,506

327,242

342,561

390,667Interest-bearing debt

125,937

108,658

106,025

213,085

Cash flows from operating activities

22,996

21,27024,36526,025

Cash flows from investing activities(40,879)(8,432)(26,781)(73,977)

Cash flows from financing activities

29,212(23,128)(6,872)58,275

Capital expenditures

59,56620,02019,246

19,038Depreciation (including cost)

13,295

13,61013,347

16,482Per share information (Yen)
Earnings per share (EPS) / Basic earnings per share*1

30.90

33.53

71.15

46.11

1,189.79

1,203.24

1,259.60

1,292.36

14.00

14.00

16.00

18.00

Ratio of gross profit to net sales / Ratio of gross profit to revenue

24.45

24.16

24.08

22.48

Ratio of SGA to net sales / Ratio of SGA to revenue

22.6

22.0

21.8

19.7

Ratio of operating profit to net sales / Ratio of operating profit to revenue

1.9

2.1

2.3

2.8

Return on equity (ROE) / Return on equity attributable to owners of parent (ROE)

2.6

2.8

5.8

3.6

Return on assets (ROA) / Return on assets (ROA)

2.4

2.6

2.8

3.5

Return on investment (ROI) / Return on investment (ROI)

4.7

4.9

5.3

6.5

Equity ratio / Equity ratio attributable to owners of parent

39.1

41.0

43.4

33.8

Dividend payout ratio

45.3

41.8

22.5

39.0

Number of employees (consolidated) (People)

15,431

14,307

13,413

14,838

Ratio of female employees (consolidated) (%)

ー

ー

ー

ー

Ratio of female employees in management positions (consolidated) (%)*2

ー

ー

ー

ー

Employee turnover rate (consolidated) (%)*3

ー

ー

ー

ー

Post-retirement re-employment rate (consolidated) (%)

ー

ー

ー

ー

Department store sales floor area (directly managed stores) (m2)

570,117549,739

573,323569,137

Parco sales floor area (m2)Book value per share (BPS) / Equity attributable to owners of parent per share*1
Dividends per share*1
Financial indicators (%)

Non-financial indicators*1

444,500

454,000

443,000

442,600

Customer traffic (Daimaru Matsuzakaya) (1,000 people)ー

224,242

236,876

246,764

Average spend per customer (Daimaru Matsuzakaya) (Yen)

ー

3,842

3,797

3,838

Number of cards issued by Daimaru Matsuzakaya (1,000 cards)

3,872

4,056

4,365

4,580

Number of holders of cards issued by Parco (1,000 people)

1,574

1,618

1,612

1,614

GHG (CO2) emissions (consolidated) (t-CO2)*4

ー

ー

ー

ー

Energy consumption (consolidated) crude oil equivalent (kl)*5

ー

ー

ー

ー

Packaging material consumption (Daimaru Matsuzakaya) (t)*6

ー

2,574

2,627

2,669

Waste disposal (Daimaru Matsuzakaya) (t)*7ー

10,803

11,004

10,797

Food waste disposal (Daimaru Matsuzakaya) (t)*8

ー

2,517

2,327

2,109

The Company’s common shares were consolidated at the ratio of one share for every two shares as of September 1, 2014.
Per share information has been calculated as if this consolidation of shares was conducted at the beginning of FY2007.
Manager and above positions
Number of retired employees during the year / Number of employees at the beginning of the year ×100 (%)
The number of retired employees above excludes employees who retired because of retirement age, transfer and becoming officers.
*4 and 5 Certified by Lloyd’s Register Quality Assurance Limited (LRQA)
*2
*3

26

Financial/Non-financial Highlights

IFRS
FY2013

FY2014FY2015FY2016FY2016FY2017FY20181,146,319

1,149,529

1,163,564

1,108,512

1,134,342

1,138,981

1,125,153

ー

ー

ー

ー

452,505

469,915459,840

244,130

243,739

245,532

234,785

212,567

212,935

212,396202,313201,572

197,494

190,205

167,668

166,688

166,882

ー

ー

ー

ー

44,89846,84245,514

41,81642,16748,03844,58041,72749,54640,89140,502

40,48047,91044,42542,60848,271

42,126

31,56819,96726,313

26,95027,052

28,48627,358998,730

1,018,495

1,019,146

1,050,109

1,005,069

1,022,348

1,029,573

370,173375,886

383,699406,336

368,571395,519

412,700

422,215430,260

440,594

465,839

187,950

168,458

180,922

187,799

205,952

184,202174,378

ー

37,53244,65036,79936,23933,76457,07934,870(8,858)(16,272)(39,741)(30,353)(27,952)(19,030)(26,836)(32,027)(27,587)(1,041)(2,189)(2,097)(31,048)

8,033

52,75824,277

37,11044,99944,99927,021

39,873

17,69817,963

18,345

17,18917,284

18,683

19,907119.5575.66

100.42103.04103.43108.92104.55

1,402.53

1,424.28

1,467.05

1,553.60

1,409.20

1,511.91

1,576.68

22.00

25.00

27.00

28.00

28.00

35.00

35.00

21.30

21.20

21.10

21.18

46.98

45.31

46.19

17.6

17.5

17.0

17.2

37.1

35.5

36.3

3.6

3.7

4.1

4.0

9.2

10.5

8.9

8.9

5.4

6.9

6.8

7.6

7.5

6.8

4.2

4.2

4.7

4.3

4.2

4.9

4.0

7.3

7.3

8.6

7.7

7.6

8.4

7.2

37.1

36.9

37.6

38.7

36.7

38.7

40.1

18.4

33.1

26.9

27.2

27.1

32.1

33.5

11,561

11,14911,023

10,732

ー

10,42910,276

ー

ー

ー

ー

ー

57.2

56.8

ー

11,1

10.4

12.2

ー

14.3

14.7

ー

ー

ー

ー

ー

3.6

3.3

ー

ー

ー

ー

ー

55.3

73.1

543,785

529,460

498,460

498,460

ー

495,331495,331442,600

451,000

456,000

409,000ー

389,000

401,000

237,647

220,411

207,512

197,250ー

200,966

202,066

4,107

4,215

4,414

4,420

ー

4,676

4,841

4,659

4,595

4,217

4,062

ー

4,029

3,939

1,643

1,754

1,885

1,990

ー

2,031

2,018

ー

ー

ー

ー

ー

194,154

182,566

ー

ー

ー

ー

ー

101,143

99,761

2,978

2,682

2,553

2,412

ー

2,370

2,236

10,456

9,205

8,198

8,256

ー

7,669

7,298

1,955

1,718

1,527

1,826

ー

2,081

1,867

*5 Energy consumption is the crude oil equivalent of the total consumption of electricity, gas, gasoline, light/heavy oil, etc. (kiloliter).
*6-8 Total of Daimaru Matsuzakaya, Hakata Daimaru, Shimonoseki Daimaru, Kochi Daimaru and Tottori Daimaru*6 Packaging material consumption is the weights of wrapping paper, shopping bags, paper bags, plastic bags for food products, etc. (ton).
*7 Waste disposal is the weights after subtracting the weights of waste recycled from the total weights of waste generated including general waste, raw garbage and industrial
waste (ton).
*8 Food waste disposal is included in waste disposal.
*9 Daimaru Matsuzakaya: Daimaru Matsuzakaya Department Stores
Integrated Report 201927

Management Strategy

Business Risk – Uncertainty and Direction for Addressing Risk

Face Uncertainty (Risk)“Positive Side of Risk”and“Negative Side of Risk”——

The Group defines risk as“uncertainty,”
which affects the organization’s profit orloss amid environmental changes and

7 important risks (uncertainty) and measures to address them
Narrowed down to risks to beparticularly emphasizedrecognizes that it has both a positive
Risk associatedwith the progressof sharing
economyside (opportunity) and a negative side
(threat). As an advisory body to the
President and Executive Officer withregardtotheoperation

of

risk

management, we have formed the Risk
Management

Committee,

which

is

Officer and comprises Executive Officers

discusses, clarifies and evaluates risks(uncertainty) based on analysis ofexternal and internal environments andmonitors the measures to address them.
In fiscal year 2019, we recognized
137 risk items as uncertainty around theGroup from four categories including“strategy,”“finance,”“operation” and“hazard.” Thus recognized risks wereanalyzed and evaluated individually. As
for the risks that we think have a great
impact on the performance and financial
condition of the Group, we reflect themin our strategy and address them on apriority basis. Among these 137 items,
we determined seven risks to beparticularly emphasized as shown to theright.

137 items were recognizedand others. The Committee periodically

7 risks to be particularly emphasizedchaired by the President and Executive

Risk associatedwith advanced
technologies

marketchangeswhile

appropriately hedging the negative sideof risk, we think it will lead to sustainablecorporate growth in the future.

28● Frequency of occurrence
Already became visible,
expanding over the mediumterm● Degree of impact
Very material impact. The entire
Group will decline.
● Frequency of occurrence
Already became visible, rapidly
expanding over the short term
● Degree of impact
Very material impact on retailbusiness with real stores at its
core● Frequency of occurrence
Already became visible,
definitely expanding over thelong term

Risk associatedwith growing
importance of ESG ● Degree of impact

Very material impact. The entire
Group will decline.

● Frequency of occurrence
Already became visible, continuing
and expanding over the medium term

Risk associatedwith disasters, etc. ● Degree of impact

Very material impact on theperformance and financial
condition of the Group● Frequency of occurrence
Becoming visible shortly after
Risk associatedthe events occur and continuingwith consumption
for several years

tax hike and post● Degree of impact
Olympic recession
Material impact on retail businesswith real stores at its core

Risk associatedwith changes incustomers, lowbirthrate andlongevity

If we can aggressively take risks
assessingFrequency of occurrence /Degree of impact

Risk associatedwith polarizedincome● Frequency of occurrence
Already became visible, worsening
several years after baby boomers
reach the age of 75● Degree of impact
Material impact on the performanceand financial condition of the Group● Frequency of occurrence
Already became visible, slowly
expanding over the long term
● Degree of impact
Very material impact on the performanceand financial condition of the GroupManagement Strategy

Negative side of risk (threat)● Expansion of C2C● Decline of real stores due todecreased product sales● Attack by digital disruptors● Progress of D2C● Loss of consumers, deteriorating
relations with local communities anddivestment due to poor reputation
caused by delayed response● Opportunity loss due to closing or
suspension of business● Increase in cost for restoringdamaged facilities and core systems● Combined slump in consumer
spending● Loss of senior market due to delayed
response

Positive side of risk (opportunity)● Development of new business fromthe perspective of sharing● Sophistication of services andstreamlining of operations using
technologies● Reputation enhanced by appropriate
response● Enhancement of competitivenessusing diverse human resources● Reinforcement of business base withhigh transparency

Direction for considering how to address them
● Considering new sharing service
business of products, places, skills,
etc.
● Developing services that lead to newentertainment and regional
development by cloud funding● Maximizing lifetime value by building
integrated customer database● Providing new customer experiencesusing VR and AR● Improving convenience by introducing
new payment methods● Launching specific initiatives byidentifying 5 materiality issues● Promoting highly transparent

management in the Company withThree Committees (Nomination, Audit
and Remuneration Committees)● Actively disclosing information andimproving quality of dialogue● Increase of existence value as
infrastructure at the time of disaster●P romoting redevelopment of BCP plan,establishment of HQ, strengthening ofdrills, investment in aging infrastructureand stocking of disaster supplies● Increase in foreign tourists who are notinfluenced by consumption tax hike● Attracting more foreign customers fromacross Southeast Asia

● Reduction of economic burden on child-rearing
households due to free-of-charge education● Promoting initiatives to retain foreign
customers● Various government-led economic
stimulus after tax hike● Promoting stimulus programs before andafter consumption tax hike● Emergence of new markets in the eraof multiple stages● Expansion of active senior market
due to increased healthy life
expectancy● Creating backup center for importantdata● Developing new products/services
using integrated customer database● Newly launching high quality earlychildhood education business● Considering service business for theelderly● Developing products/services withnew asset value that meetsdiversified interests of the affluent● Further shrinkage of middle classmarket● Expansion of our strong affluent
market● Strengthening touch points with theaffluent combining online magazines,
our websites and real stores● Recreating sales spaces for the
middle class that meet new
consumer needs

Integrated Report 201929

Management Strategy

Overview of Medium-term Business Plan

Steadily Changing Business Portfolio
FY 2017 to 2021 Medium-term Business Plan
We position the FY 2017 to 2021 Medium-term
Business Plan as a turning point to drastically alter thecourse of the management of the Group towardrealizing discontinuous growth based on the newGroup Vision, that is, a“phase of changing the Groupstructure”and aim to realize ROE of 8% or more infiscal year 2021.

FY2021 target
Consolidated operating profit(IFRS)
Consolidated operating margin(IFRS)
Consolidated ROE (IFRS)(Ratio of profit to equity attributable to owners of parent)

To this end, by taking a step forward from the past

¥56 bn10.0 %or more
8.0 %idea of a Multi Retailer to expand into new businessfields as a “Multi Service Retailer” beyond the

FY 2017 – 2021 totalframework of retail while further accelerating ourefforts to identify unprofitable business fields, we will
aggressively promote business reshuffle.
With these initiatives, we will achieve the Group’ssustainable growth and medium- to long-term
enhancement of corporate value.

Consolidated operating
cash flows
Capital investment
and growth investment¥260 bnor more
¥200 bn*Figures above are before application of IFRS 16.

Growth strategy and foundation reinforcement strategy to achieve the Medium-term Plan
1
2
Growth strategy

345Foundation reinforcement
strategy

30

6
7
8
9

“Expansion of business ﬁelds” beyond the framework of retail (Multi Service Retailer strategy)● Promoting the expansion of business ﬁelds including service ﬁelds beyond the framework of retail to realize the new Group Vision“Expansion of the Real Estate Business” through expansion of real estate area under management (Urban Dominant strategy)● Expanding lease area by strengthening the function of the Real Estate Business and expanding Urban Dominant initiatives“Full-scale implementation of ICT strategy” to keep up with the IoT era● Increasing proﬁtability by developing ICT infrastructure, realizing new businesses using ICT, designing digital communication

Initiatives to innovate existing businesses● Department Store Business: Setting a goal to “oﬀer ʻfuture standardʼ lifestyles for ﬁve years ahead” by changing its business structure to
realize creative ideas in order to realize the Group Vision. Changing core department store operations and maximizing store value toachieve the goal
● Parco Business: Changing store portfolio, strengthening new type store area strategy, expanding small-scale commercial business bypromoting development, expanding soft business (strengthening of soft content)● Associated businesses: Expanding external revenue, expanding new business ﬁelds, strengthening highly eﬃcient associated businesses

Promotion of ESG activities
Renovation of the Group operations systems● Building high quality and highly productive resilient infrastructure for the Group operations systems, promoting the Group cost structure reform

The Group ﬁnance strategy (transition to IFRS)● Improving asset eﬃciency (ROE), realizing business proﬁtability (positive FCF)

The Group organization / human resources reform● Maximizing “energy of human resources and organization” to realize the Group Vision

Strengthening of corporate governance [transition to a Company with Three Committees (Nomination, Audit and Remuneration Committees)]● Strengthening the Board of Directors, strengthening the Group governance function, strengthening managerial human resource function

Management Strategy

Progress of changing business portfolio(Billions of yen)
60

Share of “operating proﬁt” (before application of IFRS 16)
56
49.5

50
40

41.7
0.8%

30

14.7%
31.2%

45

14.1%
8.3%
23.7%

40.8

13.8%

16.1%

7.9%

11.4%

25.7%

13.3%

18%

Credit and Finance
Other

12%

Real Estate Business

26%

Parco Business
Department StoreBusiness

20
10
0

53.3%

2016

53.8%

59.2%

52.7%

2017

2018

2019 (forecast)

44%

2021 (forecast) (FY)

Major topics so far during the current Medium-term Plan
Results of initiatives for new growth
Expansion of the Real Estate Business (Urban Dominant strategy)

New format / small-scale commercial business● Opening of“Ginza Six”(April 2017)● Opening of“Ueno Frontier Tower”(November 2017)● Opening of“Kyoto Zero Gate”(November 2017)● Opening of“Harajuku Zero Gate”(March 2018)● Opening of“Sannomiya Zero Gate”(September 2018)●O
 pening of“San-A Urasoe West Coast Parco City”(June 2019)● Opening of“Kawasaki Zero Gate”(planned for August 2019)

Ginza Six

Ueno Frontier Tower

Innovation of the Department Store Business● Opening of the“new main building of the Daimaru
Shinsaibashi store”(planned for September 2019)

San-A Urasoe West Coast Kawasaki Zero Gate
Parco City

Expansion of business fields
New main building of
Daimaru Shinsaibashi store● Opening of“Daimaru Matsuzakaya Kids Duo
International”(April 2019)

Innovation of the Parco Business● Opening of“Parco_ya”(November 2017)● Opening of“Kinshicho Parco”(March 2019)● Opening of“new Shibuya Parco”(planned for November 2019)

Kinshicho Parco

Daimaru Matsuzakaya Kids Duo International

Rendering of Shibuya Parco ©2019, Takenaka Corporation

Withdrawal from unprofitable businesses / business reshuffle● Business transfer of a consolidated subsidiary“JFR Online”(March 2017) ● Share transfer of an equity method associate“Senshukai”(April 2018)● Closing of the“Daimaru Urawa Parco store”(July 2017) ● Closing of the“Daimaru Yamashina store”(March 2019)● Closing of“Otsu Parco”(August 2017)● Closing of“Utsunomiya Parco”(May 2019)● Share transfer of a consolidated subsidiary“Forest”(August 2017) ● Closing of“Kumamoto Parco”(planned for February 2020)

Strengthening of ESG initiatives● Introduction of stock-based remuneration system for officers (April 2017)● Identification of materiality and setting of KPIs (FY2018)●T ransition to a Company with Three Committees (Nomination,● Participation in the Global Compact (FY2018)

Audit and Remuneration Committees) (May 2017)● Reduction of cross-shareholdings by 19 issues (FY 2017 - 2018)● Support for the Japan Climate Initiative (FY2018)●A pplication for SBT certification, support for the TCFD (FY2019)

Integrated Report 201931

17 GOALS TO TRANSFORM OUR WORLDManagement Strategy

NO
POVERTY

Innovation of Department Store BusinessZERO
HUNGERGOOD HEALTH
AND WELL-BEING

Here Is the“Future of Department Store.”
AFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

CLIMATEACTIONLIFE
BELOW WATER

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

LIFE
ON LAND

17 GOALS TO TRANSFORM OUR WORLDNOQUALITY
POVERTYEDUCATIONGENDERZEROEQUALITY
HUNGER

CLEANHEALTH
WATER
GOOD
ANDWELL-BEING
SANITATIONANDQUALITYEDUCATION

GEND
EQUA

AFFORDABLEREDUCED AND
CLEAN
INEQUALITIESENERGYDECENTSUSTAINABLE
WORKCITIESANDECONOMIC
AND COMMUNITIESGROWTH

INDUSTRY,RESPONSIBLEINNOVATIONAND
CONSUMPTIONINFRASTRUCTURE
AND PRODUCTION

REDUCEDINEQUALITIES

SUST
AND

PEACE,JUSTICE
CLIMATEANDSTRONGACTIONINSTITUTIONSPARTNERSHIPLIFE
FORTHE GOALS
BELOW
WATER

PEACE, JUSTICEAND STRONG
INSTITUTIONS

PAR
FOR

LIFE
ON LAND“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

Forward-looking rebuilding of the mainbuilding of the Daimaru Shinsaibashi store

with modern design, we will create commercial space

Big project positioned as a symbol of innovation ofWorld. Shinsaibashi, Adored by the World.”While

the Department Store Business to overcome combined
challenges facing department stores – On September
20, 2019, the main building of the Daimaru
Shinsaibashi store will be newly reborn as anunprecedented“exclusive”store that blends“tradition”
and“innovation”ranging from in store space and store
planning to in operation. Using the“beauty of Vories’
architecture,”which colored the former Shinsaibashi

32

that provides real store’s unique“experience value.”
The concept to create the store is“Delight thefurther strengthening services to the affluent andforeign tourists to whom sales are already strong, theShinsaibashi store has set“all customers that actively
enjoy their lives” as its target. With respect tomerchandise mix, the floor area for and the number ofbrands of luxury items, cosmetics and drinking anddining on the basement floors (depachika in Japanese)
will be increased significantly. Cosmetics will be

store, in part of its exterior and interior and blending it

offered not only on the main floor but also on other

Peacock relief

Elevator hallManagement Strategy

Crystal tower on the 7th floor

Rendering of food hall on the 2nd basement floor

multiple floors. About half of drinking and dining on

strives to produce results. This new main building of

depachika are composed of new brands. In addition,

the Shinsaibashi store was created from such

we will expand “experience-based-consumption”-

perspective. Specifically, renewable energy and LED

conscious merchandising combining drinking/dining withlighting will be used throughout the building including

product sales such as a food hall. In other categories, wethe back stockrooms. We will aggressively implement

have revised conventional merchandise composition

initiatives to create a low-carbon and recycling society

by gender or item and we will actively introduce newwith the cooperation of customers and suppliers bybrands. The store will have 370 shops including 37

centrally controlling deliveries in the building to reduce

Kansai’s first shops and 50 shops in new formats.

delivery operation time and eliminate the congestion

Innovative hybrid business model

occurring when carrying products in and out, promoting
the use of green packaging materials, permanently
installing clothes collection boxes as an Ecoff*2

In the meantime, the business model is completely
different from conventional department stores. It isbased on an innovative layer structure in which fixedterm lease accounts for approximately 60% of total
floor area. The transactions of traditional department
stores are centered on kaitori. But later a new form oftransaction without inventory called shoka shiire
emerged and it occupied 80% in the 1980s. In current
low-growth and highly uncertain period, however,over-dependence on shoka shiire will not only makeus ignore a challenge to new market but also increase
the risk of decreasing profitability. Therefore, we asked
ourselves what the new business model that increases
the appeal of the store and maximizes revenue is andone of the answers will be realized in the new mainbuilding of the Shinsaibashi store. We will create anepochal hybrid department store business model with
an optimally balanced mix of the advantages of kaitori /shoka shiire and the advantages of fixed-term lease
while it is completely seamless from a customer
perspective.
And we will customize the results of this new trial
according to individual stores and area characteristics
and use them as a“new scalable department store
business model.”Also as a flagship store with an ESG perspective
We identified five priority materiality issues*1 torealize a“sustainable society”and the entire Group

activity and other means.
*1 Our five materiality issues include“contribution to a
low-carbon society,”“management of the entire supply
chain,”“coexistence with local communities,”“promotion ofdiversity”and“realization of work-life balance.”*2 Campaign implemented by Daimaru Matsuzakaya
Department Stores to recycle clothes, shoes, bags, etc.

Parco will open in the north wing in spring 2021
After the new main building opens, the renovation
work of the north wing, which currently operates as adepartment store, will start and it will be newly born asa real estate rental model with Parco as its anchor
tenant in spring 2021. The north wing will have twobasement floors and 14 floors above the ground. And“Parco”will occupy from the 2nd basement floor to
the 7th floor above the ground as a large anchor
tenant. There is no store in Parco format in the Osaka
area and many local customers have eagerly awaitedthe opening of Parco. Through this initiative, we willfurther expand the creation of the Group synergy. At
the same time, by connecting the new main building
and the north wing as one, we will create a more than80,000-square-meter

commercial

complexthat

attracts a wide range of customers.
Creation of the community,“Shinsaibashi, Adoredby the World,”will begin in earnest. We will contributeto increasing the appeal of the community bypromoting the Urban Dominant strategy and draw new
crowds to the area.

Integrated Report 201933

17 GOALS TO TRANSFORM OUR WORLDManagement Strategy

Innovation of Parco BusinessNO
POVERTYZERO
HUNGER

Shibuya Parco has addressed“Incubation,”“Urban
Revitalization” and “Trends Communication” and has
played a part in developing Shibuya stimulating and at thesame time being stimulated by the area since its opening
in 1973. These three initiatives are Parco’s DNA andpoint of origin and also the belief of evolving Parco.
We started to study this project as a rebuilding planof Shibuya Parco in 2007. It was approved as an urban
planning project of special urban renaissance district inDecember 2015 and we have proceeded with the planNO
QUALITY
POVERTYEDUCATION

17 GOALS TO TRANSFORM OUR WORLD
CLEANHEALTH
WATER
GOOD
ANDWELL-BEING
SANITATIONAND

GENDERZEROEQUALITY
HUNGER

AFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

CLIMATEACTIONLIFE
BELOW WATER

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

LIFE
ON LAND

AFFORDABLEREDUCED AND
CLEAN
INEQUALITIESENERGYDECENTSUSTAINABLE
WORKCITIESANDECONOMIC
AND COMMUNITIESGROWTHPEACE,JUSTICE
CLIMATEANDSTRONGACTIONINSTITUTIONSPARTNERSHIPLIFE
FORTHE GOALS
BELOW
WATER

INDUSTRY,RESPONSIBLEINNOVATIONAND
CONSUMPTIONINFRASTRUCTURE
AND PRODUCTION

LIFE
ON LAND“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

as an urban redevelopment project. In order to createnext-generation commercial space, we will increase
experiential content by opening Japan’s first official
Nintendo shop“Nintendo Tokyo”and expanding Parco
Theater, renew fashion offering with a mix of luxury,
mode and street culture, and create future-oriented
sales space using ICT.
Shibuya Parco is designed not to meet needs, but tocreate them, and in doing so, provide new consumption
proposals and values. We aim to surpass the traditional
concept of a commercial facility, sharing the sense andcreativity of the designers and creators and conducting
new initiatives to propose fresh stimulation andexcitement as experience value. In this way, we will
create a global center for trends communication. We
selected mainly specialty shops with high quality deign,art and entertainment to develop Shibuya Parco’s own
identity. We will not narrow down a target to certain age
groups or gender but aim to create a commercial
complex that attracts urban consumers“looking forsomethingnew,somethingdifferent,

somethinginteresting and something individual”from across theworld. About 180 unique and attractive shops will
operate there. It consists of five pillars including
Rendering of“Parco Museum Tokyo”on the 4th floor of Shibuya Parco

34

QUALITYEDUCATION

GEND
EQUA

REDUCEDINEQUALITIES

SUST
AND

PEACE, JUSTICEAND STRONG
INSTITUTIONS

PAR
FOR

Rendering of the exterior of Shibuya Parco ©2019, Takenaka Corporation“Next-generation”Parco
That Will Enhance Brand Value
New Shibuya Parco as a symbol ofnext-generation Parco

GOOD HEALTH
AND WELL-BEING“Fashion,”“Art & Culture,”“Entertainment,”“Food”

Management Strategy

and“Technology.”We will create sales floors by mixing
them so that they will elicit each other‘s appeal.
We hope it will evolve“Parco brand”as a flagshipstore for the next generation and that such brand power

Contribution to the local community
both in terms of hardware and software
The building that will be occupied by the new Shibuya

will spread through other stores.

Parco with a total floor area of approximately 64,000

Fusion of shopping and technology

square meters and 19 floors above the ground and three
under the ground consisting of commercial part on theOn the 5th floor of the new Shibuya Parco, we will
create an omnichannel space“Cube (tentative)”fore-commerce as well as over-the-counter sales. Elevensmall shops will open in this about 130-tsubo-area.
Using digital technology, we will try to create a zone
with shops that have smaller space and fewer productson the shelf than traditional sales space so that
customers can find what they want. As a next store withenhanced function of showroom, it will mainly carrystrategic items and limited items and the stock of otherproducts will be controlled digitally and sold in“Parco
Online Store”(e-commerce). Data will be transmitted
directly to a smartphone from large signage in thecommon use area and in-shop signage and customers
can always buy online products not on the shelf. Thus
we have developed a system that allows customers toshop on the spot without stress.

first basement to the 8th floors and part of the 10th
floor, a creative studio (talent incubation facilities) on
the 9th floor, an entrance on the 1st floor and offices onpart of the 10th floor and the 12th to the 18th floors willcontribute to“Urban Revitalization”both in terms ofhardware and software as a symbolic facility on Koendori street.
In terms of hardware, we will create a pedestrianfriendly environment by creating a walkway around thebuilding and a plaza on the premises and thereby
expanding space for pedestrians to enliven the area.
We addressed issues in the area such as disposal ofgoods and bicycle parking on streets, which prevent
people from walking around, by installing an arealogistics center and a bicycle parking lot in the building.
Furthermore, this building has been evaluated highly by
the Ministry of Land, Infrastructure, Transport andTourism for (1) creation of attractive outdoor spaces
with the outdoor plaza and elevated walkway, (2) highly
efficient energy system based on a co-generation
system (CGS: Collective term for the systems thatgenerate and supply electricity and heat from a heatsource), and (3) initiatives to promote efficient energy
use through digital communications and it was selected
as a “Leading Sustainable Building Project (CO2Reduction Leader).” We realized a CO2 reduction
complex whose operating efficiency was improved by“visualization”using energy management system as

Rendering of“Cube (tentative)”on the 5th floor of Shibuya Parco

We will display 3D works created by a computer
using XR*1 technology. Customers will be able to seethem through smartphones or AR glasses as if they
really exist there. We plan to display an installation art
work created by VR space designer Discont who
received the Parco Award at“NEWVIEW AWARDS

well as introducing the latest equipment. We will spreadsustainability to other complexes as a“CO2 reduction
leading project in urban fashion complexes.”
In the meantime, in terms of software, in the outdoor
plaza in the building, we will hold a wide range of eventsin coordination with the local community, fashionshows, music, and food events, to help create
excitement in the area.

2018,”a VR content competition held in 2018 and it isbeing created.
*1 XR is a collective term for technologies such as VR (Virtual Reality), AR(Augmented Reality) and MR (Mixed Reality).

In addition, on the first floor, Japan’s first experimental
AI showroom using cloud funding“Booster Studio byCampfire”will open. Here customers can actually touchand try IoT products and other unique digital products andideas from across the world before they hit the market.

Rendering of outdoor plaza on the 10th floor of Shibuya Parco©2019, Takenaka Corporation
Integrated Report 201935

17 GOALS TO TRANSFORM OUR WORLDNO
POVERTY

Management Strategy

ZERO
HUNGER

17 GOALS TO TRANSFORM OUR WORLDGOOD HEALTH
AND WELL-BEINGNOQUALITY
POVERTYEDUCATIONGENDERZEROEQUALITY
HUNGER

CLEANHEALTH
WATER
GOOD
ANDWELL-BEING
SANITATIONANDQUALITYEDUCATION

GEND
EQUA

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

AFFORDABLEREDUCED AND
CLEAN
INEQUALITIESENERGYDECENTSUSTAINABLE
WORKCITIESANDECONOMIC
AND COMMUNITIESGROWTH

INDUSTRY,RESPONSIBLEINNOVATIONAND
CONSUMPTIONINFRASTRUCTURE
AND PRODUCTION

REDUCEDINEQUALITIES

SUST
AND

PEACE,JUSTICE
CLIMATEANDSTRONGACTIONPARTNERSHIPLIFE
FORTHE GOALS
BELOW
WATER

PEACE, JUSTICEAND STRONG

PAR
FOR

Urban Dominant Strategy

Establish“Ecosystem”alongwith Local Communities
AFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

CLIMATEACTIONLIFE
BELOW WATER

LIFE
ON LAND

INSTITUTIONSArea development with stores at the coreboutiques in other buildings in the Former Foreign

We think we will be able to attract more new crowds to

The number of a wide variety of unique brands and shops

the area using or based on our assets such as department
stores and Parco, which operate in major cities throughout
Japan. And as a result, we might be able to further
enhance asset value and asset efficiency – The Urban
Dominant strategy is an initiative for community
development and coexistence with communities making
the best use of the strength of the Company that has
stores in urban locations.
The Urban Dominant strategy has its roots in an
initiative at the Daimaru Kobe store. The Daimaru Kobe
store developed the shops in the Former Foreign
Settlement of Kobe to revitalize not the single“point”but
the“area”as a whole. This initiative started in 1987. At
that time, the center of transportation and business of theKobe area shifted to Sannomiya and Motomachi where
the Daimaru Kobe store is located was being relatively
devitalized. Therefore, it was urgent to create the appealof the store to attract customers. The shop development
around the store started with our own buildings. But they
are not enough to revitalize the area. So the Daimaru
Kobe store actively invited some brands to open theirSettlement to draw more customers to the whole area.
using the nostalgic but new look of historic modern
western-style architectures such as “Former Foreign
Settlement Building 38”and“Block 30”has reachedmore than 60 and they bring new life to the history of thearea.
Then such know-how has been applied to the Daimaru
Shinsaibashi store and Daimaru Kyoto store and expanded
and developed into the“Urban Dominant strategy.”
In promoting the Urban Dominant strategy in the future,
positioning Shinsaibashi, Kyoto, Kobe, Nagoya and Ueno
as five key areas, we will also clarify respective“areastrategies” by implementing promotion programs fordeveloping the areas around our stores and motivating
people to visit the areas to create attractive areas with
our stores at their core.

Major developments in the Nagoya area
Two development projects have started in the Nagoya
area, one of the key areas.
One is opening of commercial facility in“Nihon Seimei
Sakaemachi Building”(tentative). Daimaru Matsuzakaya
Department Stores will develop a commercial facility bymaster-leasing the property owned by Nippon Life
Insurance Company and finding tenants. The building
located in the center of the Sakae area will have twofloors under the ground and six floors above the ground

Shop leased near Kobe store

36

Bino Higashinotoinwith a total floor area of 6,343 square meters. Given its

LIFE
ON LAND“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

INSTITUTIONS

Management Strategy
denotes shops operated by or leased from Daimaru Matsuzakaya Department Stores.

Map around Matsuzakaya Nagoya store

Map around Daimaru Shinsaibashi store

Map around Daimaru Kyoto store

Nagahori-doriHanamikoji-dori

Yamato-oji-doriKamo River
Kiyamachi-dori

Daimaru
Annex

Kasuga-dori

Block 47
Former Foreign
Settlement Bldg. 38
Block 44
Block 31

Block 32

Matsuzakaya
Ueno

Block 30

NTT Nishinihon
Shin-Kobe Bldg.

doriWakamiya-odori

location in the center of the Sakae area, we will develop

Ueno
Frontier
Tower

Okachimachi
Panda Hiroba

JR Okachimachi Sta.

Daimaru
Kobe

uo-(South)(East)

Map
松坂屋上野店周辺地区マッ
around Matsuzakayaプ
Ueno store

JR Motomachi Sta.

Ch

Yabacho-dori

NagoyaParco

Kawaramachi-dori

NagoyaZero Gate

Map around Daimaru Kobe store

Teramachi-dori(South)(South)Shijo-dori
Kyoto
Zero Gate
Takakura-doriMatsuzakaya
Nagoya(Main)

Daimaru Interior Bldg.
Musée Air Shinsaibashi

Daimaru
Shinsaibashi(Main)

Daimaru
Kyoto

Karasuma-doriHisaya-odori

Otsu-dori

Isemachi-dori

Parking(North)Higashinotoin-dori

Redevelopment of “Nishiki 3-chome District 25, Nagoya”(Planned to be completed in 2024)

MidosujiWhite
Avenue(North)Kawabata-dori

Shinsaibashi
Zero Gate

Parking

Shinsaibashisuji“Nihon Seimei Sakaemachi Bldg.”(tentative)(Planned to be completed
in Nov 2020)“Ginza Six,”the largest luxury mall Takakura-doriin the Ginza
area,
Kamo
River

the new commercial facility by creating the Group synergy

collected world-class quality brands. The complex thatwith the Matsuzakaya Nagoya store, Nagoya Parco, etc.

was created by developing the two blocks including theto help attract more customers to the area. Construction

former site of the Matsuzakaya Ginza store as one

is planned to be completed in November 2020.

attracts customers not only from Tokyo but also fromThe other is redevelopment of“Nishiki 3-chome District

across Japan and even across the world since it opened

25, Nagoya.”Daimaru Matsuzakaya Department Storesin April 2017. Foreign customers account for about 30%

and Nagoya City concluded a basic agreement in January

and customers in their 20s and 30s occupy the majority.

this year to mutually cooperate in developing the land

Thus it pulls in new customers who did not visit our stores

owned by them. The total site area is 4,862.96 square
meters of which 3,040.82 square meters are owned bybefore. The concept for creating floors beyond productcategories, which can be said to be one of its success

Daimaru Matsuzakaya Department Stores. The following

factors, is applied to the new main building of the Daimaru

are the key development conditions: (1) Daimaru

Shinsaibashi store, which will open on September 20 thisMatsuzakaya Department Stores shall operate commercial

year.

specialty store business in the lower part from the 2nd

The south wing of the Matsuzakaya Ueno store wasbasement floor to upper floors; (2) The main functions torebuilt and remodeled as a high-rise commercial complex

be introduced by the participant candidate shall include“Ueno Frontier Tower”in November 2017. It has Parco’sstay, culture, learning and amusement; and (3) The

new format store Parco_ya as an anchor tenant and alsobuilding shall be connected to the subway facilities anda cinema complex and highly functional offices. Thereby

the underground mall facilities and ensure barrier-free

it became a landmark that attracts a wide range ofaccess by installing slopes and elevators and by othercustomers. This is the first large-scale joint development

means. We aim to complete construction in fiscal year

project with Parco and we think the experience and know-2024.

how obtained here will be used in the new north wing ofThey are merely a few examples. We, along with

the Daimaru Shinsaibashi store, which will open in 2021.

department stores and Parco in the key areas, will

We will create new value and create new customers inpromote the Urban Dominant strategy to help enliven

the area. Our Urban Dominant strategy will get into full

local communities and grow with them by creating theswing.

Group synergy through expansion of such real estate area
under management.

Draw in new customers as a landmarkof the area
Two redevelopment projects, which changed thebusiness model from department store operation to realestate rental, attract new crowds to the areas and steadily
contribute to revenue.

Ginza Six

Ueno Frontier Tower

Integrated Report 201937

17 GOALS TO TRANSFORM OUR WORLDManagement Strategy

NO
POVERTY

Credit and Finance Business Strategy

ZERO
HUNGER

Growth Model through“Settlement”and“Finance”
Actively employ specialized humanresources from outside the GroupThe environment surrounding the Credit and
Finance Business is rapidly changing. Opportunities
to be able to expand business depending on responseto them, such as government-led promotion of
cashless transactions, expansion of new settlement
options including QR code and advanced technologies,
are being created. The Group’s strengths include store
assets that are located in major cities throughout
Japan, good customer assets of more than six million
people and hospitality developed over a long period of
history. The Credit and Finance Business has a highaffinity for retail including department stores that havedirect customer touch points and it is expected tofurther create synergy in the Group. In view of such
The Groupʼs strengths are the source of competitive advantage

Large urban
storesthat attract
many customers

More than 6 million

goodcustomers

38

The Grouptransaction
volume of

DECENT WORK AND
ECONOMIC GROWTH

CLIMATEACTIONLIFE
BELOW WATERQUALITYEDUCATIONGENDEREQUALITY

CLEAN WATER
AND SANITATION

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

REDUCEDINEQUALITIESSUSTAINABLE CITIESAND COMMUNITIESRESPONSIBLE
CONSUMPTION
AND PRODUCTIONPEACE, JUSTICEAND STRONG
INSTITUTIONSPARTNERSHIPFOR THE GOALSLIFEON LAND“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

background, we positioned the Credit and FinanceBusiness as a growth business that can become thecore of the Group and we have decided to invest
management resources to strengthen the business.

Rebuild strategy for dramatic growth
To this end, a person who is knowledgeable about
settlement and finance was invited from outside theGroup to become the President of“JFR Card,”which
operates the Credit and Finance Business, in March2018 and the company was analyzed and surveyedfrom an objective perspective using skills andexperience. Based on the results of such analysis andsurvey, we will rebuild strategy for the Credit and
Finance Business to revitalize existing business andexpand business fields.
5 pillars of strategic actions

1

Improvementof revenue ofexisting
business

2

Strengtheningof cardproducts

3

Launch ofmerchant
acquiring
services

4

Review ofsystemplatform

5

Human resource development /building of organization

more than ¥1 trillion

Brand strength /customer
service skills

AFFORDABLE AND
CLEAN ENERGYGOOD HEALTH
AND WELL-BEING

Management Strategy

Firstly, we tried to improve business operations. In

In the“finance”field, using the strength of the Groupthe original scheme of our card business, most of card
operations were outsourced and we scrutinized andthat has many customer touch points through storesand offering not only credit cards but various settlement

overhauled existing operations through the eyes of an

options, we aim to provide optimal finance services forexpert who is knowledgeable about card business. As

customers, including “insurance” and “financing,”

a result, it was revealed that there were someinefficient processes, which we could not find withinbased on settlement data. We will strive to expand thefinance business considering active investment tothe company before. We already started improvement

make up for a lack of resources and alliance.

of business operations, which is possible in the shortterm, and it begins to show a certain effect as cost
reduction due to streamlining of operations.

Use of strengths of ability to attract manycustomers and transaction volume

whose stage is different from the past. For this reason,
we reformed the organization and created positions
for systems and employed human resources who haveexpertise to achieve these organizational missions

Oﬀering ofreceipt options

responsible for marketing and positions responsible

Settlementof strategy, in order to develop into growth business

CreditOﬀering of
payment options

It is essential to develop human resources and build
an organization, which will support the implementation

Debit

Point

Prepaid

Merchant acquiring businessfrom outside the Group. Now we are in a phase ofbearing upfront costs for future growth such as costs
for strengthening the organization. We will speed up
to build business foundations to respond to the rapidly

Timely provisionof ﬁnance services

changing environment surrounding the Credit and
Financing

Finance Business.
Based on them, we rebuilt growth strategy for theservices with“settlement”at the core.
In the“settlement”field, we will prepare for issuing
new cards with new loyalty program. Concerning theInsurance

Finance

Credit and Finance Business to provide “finance”

new program, we are finalizing it with Daimaru

Asset management
Investment management
Exchange
RemittanceMatsuzakaya Department Stores from a perspectiveof ease of use and advantages for customers and aim
to issue new cards in the next fiscal year. We will
expand operations as a settlement company byobtaining licenses from international card brands andhelp go cashless by introducing new settlement
technologies. Through these efforts, we will offer awide range of settlement options to increase thenumber of customers and expand settlement data.

What we aim about the Credit and Finance Businessis the integration of digital business and real businessthat provides value mainly at the Group’s physicalstores. We think the“model combining digital andreal”businesses is exactly growth strategy for theCredit and Finance Business, which is unique to theGroup.

Provide ﬁnance services with settlement at the core
Financing(revolving)

Financing

Insurance(loan)

Settlement

Remittance

Investment
management

Exchange

Assetmanagement

Integrated Report 201939

17 GOALS TO TRANSFORM OUR WORLDManagement Strategy

NO
POVERTY

ICT Strategy

ZERO
HUNGER

Provide New Value Using ICT
AFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

CLIMATEACTIONLIFE
BELOW WATERGOOD HEALTH
AND WELL-BEINGQUALITYEDUCATIONGENDEREQUALITY

CLEAN WATER
AND SANITATION

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

REDUCEDINEQUALITIESSUSTAINABLE CITIESAND COMMUNITIESRESPONSIBLE
CONSUMPTION
AND PRODUCTIONPEACE, JUSTICEAND STRONG
INSTITUTIONSPARTNERSHIPFOR THE GOALSLIFEON LAND“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

“Lifetime Service Hub”planand with the“era of 100-year life”in mind, we will
have more customer touch points than ever on various

We are building a new customer base called“Lifetime
Service Hub,”and by integrating the database of morethan six million good customers owned by companies
in the Group, we are creating systems to“strengthen
lifetime engagement with customers.”
In the current era of the so-called“100-year life,”
the lifetime value of each individual is increasing. In
such a situation, we have many direct customer touchpoints through the provision of various products andservices. It is a big advantage of the Group. With theprogress of ICT, information gained through theseoccasions and milestones all through life beginningwith birth and create long and deep relations. And by
doing this, we will expand opportunities to provide
optimal products and services to alleviate customers’“frustrations” and “concerns,” andfurthermore,

operate new businesses. Through these initiatives, wewill provide new value as a“Multi Service Retailer”
beyond the framework of retail.
Image of Lifetime Service Hub plan
BirthInfancy

Schoolattendance

Employed

MarriedChildraising

Secondlife

touch points is becoming more and more important asa source for creating additional value. For this reason,
we would like to create systems to“strengthen lifetime
engagement with customers” through the Lifetime
Service Hub. By doing this, we will collect and use not
only“fixed information”such as customer attributeinformation and purchase information we haveobtained so far but also“unfixed information”obtained
through chat using strong relations with customers to

Department
store

Parco

JFR Card

Other
associatedbusinesses

CRM

CRM

CRM

CRM

Customer
proﬁle fordepartment stores

Customer
proﬁle for
Parco

Customer
proﬁle for
JFR Card

Other
associatedbusinesses

Analysis/proposal by AI
Integrated database (DB)understand customers more deeply than ever andenhance engagement dramatically.
Firstly, in this fiscal year, we will accumulate
informationcollected

fromcustomersofourdepartment stores in the new integrated database toenhance the value of customer assets as deepened
information. In fiscal year 2020, we will expand thisinitiative into Parco and other companies in the Groupto integrate and centralize the database as the Group.
In addition, we will strive to upgrade information
through accumulation of data such as conversation
history and purchase history using new touch points
including chat.
In the future, by adding experimental AI analysis

40

Release of mobile app
With the progress of ICT technology, it is said thatabout 60% of individuals have smartphones and that
more than 80% have mobile devices (mobile phones,
PHS and smartphones). In this context, Daimaru
Matsuzakaya Department Stores rebuilt customer
strategy from the perspectives of “providing newcustomer experiences”and“upgrading sales activities”
using digital technologies and released mobile app in
13 stores across Japan in May this year as part ofinitiative to further strengthen relations with customers.

Management Strategy

Its

main

functions

includethe “electronic

store.

membership function”that enables a user to earn andWe will strive to develop and improve services thatuse points like a card, the“upgrading function”toenhance customers’shopping experience value bychange services according to the frequency of visit to

expanding this initiative into other stores and using

the store and the amount purchased, the “alert

digital technologies to support customers.

function” to provide bargain or other information
timely, and the “store information function” thatenables a user to check the events, topics, floor guide,
etc. of his/her desired store anytime. We will add the“settlement function”to further improve services.
In addition to information gained through ID cards
such as our private label cards, we will be able toReal-time
vacancy status
display service

obtain a wider range of information on customer
buying behavior and preferences using app. We
expect that relations with customers or CRM activities
will evolve dramatically. Information upgraded throughthese initiatives, which forms the basis of the Lifetime
Service Hub plan, will be accumulated in the
integrated customer database.

Work style reform by introducing RPA
We tackle“work style reform”by introducing RPA(Robotic

Process

Automation)tostreamline

administrative operations system and shift to highvalue

You canearn anduse points!

added

operations.

Specifically,

at

three

companies including J. Front Retailing, Daimaru
Matsuzakaya Department Stores and JFR Service,
You can
get app
membershipprivileges!

You cancheck
the latest
information!

routine operations such as expense calculation, entryof ordering operations into system and collection ofnecessary input information for project proposals are
picked up to be covered by RPA. In fiscal year 2018,
we automated 42 operations, approximately 8,000
hours, by introducing new software and strengthening
systems. During the five-year period of the current
Medium-term Business Plan, we plan to expand RPA
to cover up to 300 operations in the entire Group andDigital technologies to improve in-store services
Here we present an example of using digitaltechnologies from a customer perspective at the
Daimaru Tokyo store. The Daimaru Tokyo store has
many customers, on average 100,000 people on
weekdays and 120,000 people on weekends, due to

we aim to increase productivity by automating
approximately 30,000 man-hour operations.
In addition to these initiatives, we will make
operations paperless, facilitate BYOD (Bring YourOwn Device) and create an enabling environment for
telework to realize full-scale“work style reform.”

its location at a terminal. Restaurants and cafes on

Work style reform using ICT

each floor are very highly occupied due to convenient

Radical overhaul of operation frames centered on paperless operations using ICT

access and many customers wait for a table on
weekends. Similarly wait time for women’s restrooms
on the 1st basement floor and the 2nd floor is long.
In order to improve this situation, we introduced a“real-time vacancy status display service”with thecooperation of Vacan, Inc., a company that provides
vacancy information. Customers can check whether it
is“full”or“not”in advance on the digital signage oneach floor in the store or by accessing the website on
their mobile devices such as smartphones outside the

Sales
Order
ArrivalStorage

Back oﬃce

Sales

Payment Performance
Settlement
Closingcollection management

Tax

HR
Admin

Promoting operation process reform using ICTAutomation/streamlining ofadministrative processing

Introductionof RPA

Introduction of
new GW/WF

Paperless
Introduction ofadvanced core system

Expansion of scope of
the Group shared services

Radical reform of the Group operations

Realizing BYOD (Bring Your Own Device)
Creating telework environment
Full-scale “work style reform” through operation reform using ICT

Integrated Report 201941

17 GOALS TO TRANSFORM OUManagement Strategy

NO
POVERTY

Human Resources Strategy

Develop Human Resources
who Unlock the Future

17 GOALS TO TRANSFORM
17 GOALS TO
OUR
TRANSFORM
WORLD OUR WORLDGOOD
ZEROHEALTHAND
HUNGER
WELL-BEINGGOOD
QUALITYHEALTHAND
EDUCATION
WELL-BEING

AFFORDABLE ANDQUALITY
GENDER
CLEAN ENERGYEDUCATION
EQUALITYDECENTWATERWORK AND
CLEAN
GENDERECONOMICGROWTHAND
SANITATIONEQUALITY

INDUSTRY,INNOVATION
CLEAN
WATER
AND INFRASTRUCTURE
AND
SANITATIONREDUCEDINEQUALI

AFFORDABLE AND
CLEAN ENERGYAFFORDABLEDECENT WORKAND
AND
CLEAN
ECONOMIC
ENERGYGROWTH

INDUSTRY,
DECENT WORKINNOVATIONANDAND
ECONOMICINFRASTRUCTURE
GROWTH

INDUSTRY,
REDUCEDINNOVATION
ANDINEQUALITIESINFRASTRUCTURE

CLIMATE CITIESREDUCEDSUSTAINABLE
ACTIONINEQUALITIESANDCOMMUNITIESLIFERESPONSIBLE
SUSTAINABLE
CITIESBELOWWATERCONSUMPTIONANDCOMMUNITIESAND PRODUCTIONLIFERESPONSIBLE
ON LAND
CONSUMPTION
AND PRODUCTIONPEACE, JU
AND STRO
INSTITUTI

CLIMATEACTION

CLIMATELIFE
ACTIONBELOW WATER

LIFE
LIFE
ON
BELOW
LAND
WATER

PEACE, JUSTICE
LIFE
ANDLANDSTRONGON
INSTITUTIONSPARTNERSHIPPEACE,JUSTICEFOR THEGOALSANDSTRONGINSTITUTIONSPARTNERSHIPFOR THE GOALS“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

Based on the recognition that“employees are treasure (assets),”we will thoroughly confront each individual and aim torealize a“human resource development company”that develops human resource capabilities.

Overview of new human resources strategy● Changes in the employment environment● Work style reform● Diversiﬁed values● Social demand● Safe and secure work environment

Internal risks

Medium-term Business Plan

● Changes in employment structure● Shortage of next-generation andspecialized human resources● Transformation of organizational
climate and corporate culture

New human resources strategy
Recruitment of diverse human resources and5 Response to diversiﬁed values

Strategic allocation and use of

to changes in
6 Response
employment structure

3 strengthen human resource capabilities

Rebuilding of human resource systems toof safe and secure work
7 Creation
environment

4 Promotion of work style reformof organizational climate and
8 Development
culture that value challenge and creation

1 development of specialized human resources
2 diverse human resources

Purpose42

QUALITYEDUCATIONNOZERO
POVERTY
HUNGER

unlock the future and that companies cannot grow without growth of“human resources.”

Group Vision

GOOD HEALTH
AND WELL-BEINGNOPOVERTY

For lasting growth in a highly uncertain environment, J. Front Retailing recognizes it is only“human resources”who canExternal risks

ZERO
HUNGER

Creating a highly competitive group of companies that makes eachindividual employee commit to autonomy and challenges and realize
his/her growth through work and continues to create new value
by combining diverse human resources

Thought about human resources strategy

Intended profile of human resource and organization

With a focus on clarifying a policy on dealing withinternal and external risks and maximizing humanresource capabilities, which are essential for growth, andwith the aim of realizing the Group Vision“Create andBring to Life‘New Happiness,’”we will strive to contributeto creating a highly competitive group of companies thatmakes each individual employee commit to autonomy andchallenges and realize his/her growth through work andcontinues to create new value by combining diverse
human resources.

● Intended profile of human resource:“Human resource who continues to grow bylearning throughout life”●Human resource who creates and takes on achallenge without fear of failure to create new value
and always has the intension and motivation tocontinue to learn for self-growth●Human resource who not only realizes the Vision
through work but also continues to live a sparklinglife with vigor and enthusiasm throughout life as ahuman being and a community member“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

Management Strategy● Intended profile of organization:“Value creation group that continues to develop
through friendly competition respecting diversity”
We aim to create an organization that produces
innovation through open-minded communication in whichpeople respect and accept diversity each other anddevelop through friendly competition to create new value.

Review of the axis of human resources operation
The human resources systems will change to“humanresource capability systems”based on both merit and job
to increase the focus on human resources instead ofexisting job-based systems and enhance human resource
capabilities.
To this end, we will renew a series of human resource
management systems themselves ranging from“recruitment” to “allocation and use,”“development,”“evaluation and assessment,”“treatment”and“retirement,”
which include appropriate understanding of comprehensive
human resource capabilities of each individual(performance, behavior, knowledge and skills, intention
and motivation, learning ability, development ability,
innovation and creation ability, influence, negotiation
ability, personality, values, temperament, preferences andhobbies, etc.), allocation of the right people to the rightjobs and allocation of the right jobs to the right people,
development to enhance human resource capabilities
and their appropriate evaluation and treatment.

Keys to rebuilding human resource
management system(1) Correct understanding of human resource
capabilities of each individual

We will conduct a multifaceted assessment including“interviews with all employees”by human resources
divisions.
(2) Autonomous career development and enhancementof human resources value
We will create a wide variety of education and training
opportunities including outside experiences to strengthen
engagement between employees and companies.
(3) Facilitation of promotion by selection regardless ofage and experience
We will concentrate attention on the overall humanresource capabilities, particularly intention andmotivation, and facilitate allocation and promotion
with a focus on the potential for future performance.
(4) Treatment based on human resource capabilities
We will reflect growth of the overall human resource
capabilities in not only change of post but also treatment.
(5) Visualization of human resource database
We will implement strategic and scientific humanresources operation by centralizing the managementof and analyzing human resources information throughmultifaceted assessment.

Resolution of human resources issues tobe tackled by companies
We will rebuild a human resource management systemcentered on human resource development, and at thesame time, tackle various challenges that are essentialconditions for lasting business growth, including“diversity & inclusion,”“diversified work styles,”“worklife management,”“equal pay for equal work”and“healthmanagement.” For this reason, we will also revise
various human resource systems and rebuild humanresource development systems and human resource
organization and structure.

Promotion of human resources operation centered on human resource development
The Group strategic challenge: Change of business portfolio and transformation to a new department store business model
Rebuilding of human resource management

Workforce planning

Retirement
SeniorRecruitment

Rebuilding with a focus
on HR development

Treatment
Working conditions

Evaluation
Assessment

Allocation
Development

Essential conditions for lasting growth (social demand)
Diversity & inclusion

Diversiﬁed
work styles

Work-life
management

Equal pay for
equal work

Health management● Women and senior empowerment● LGBT and the disabled● Response to law revision● Eﬀective work styles● Assistance to juggle work and life
● Response to family care

● Gap in employment classiﬁcation● Pension and retirement beneﬁts● Measures against mental illness● Measures against harassment

Rebuilding of human resources operation base
HR systems

HR development systems(including Talent Management System)

HR organization and structure

Renewal of organizational climate and corporate culture
Integrated Report 201943

Management Strategy

Finance Strategy

Finance Policy that Supports the Realization of ROE of 8% or More
Promotion of management inrecognition of the cost of capital
The Group aims to achieve a consolidated ROE of 8% ormore in fiscal year 2021, which is the final year of theMedium-term Business Plan. We have calculated our cost ofshareholders’equity (shareholders’and investors’expected
return), which is a hurdle rate for ROE, at 6% at the end of
February 2019 but we expect it to move in the range of 6 to
7% over the medium to long term. Therefore, we recognizethat the 8% ROE is the minimum level we should achieve tomeet the expectations of shareholders.
The WACC (weighted average cost of capital) is a little
higher than 4% at the end of February 2019 and we expect
it to be at the level of around 5% over the medium to longterm. We also calculate WACC by business segment suchas the Department Store Business, Parco Business, Real
Estate Business and Credit and Finance Business and set
hurdle rates to be used when considering investments.
By recognizing the cost of capital, we will promotemanagement activities to expand spread, which funds thesustainable and medium- to long-term enhancement ofcorporate value.
Correlation between management indicators and hurdle rates
Management indicators>

Hurdle rates

Operatingliabilities

ROA
4,5％
ROIC
5.5％
Assets

ROE
8％

Revised before-tax
WACC
4.0％

Interestbearing
debt

WACC
5.0％

Cost ofParent shareholdersʼ
equityinterest
6-7%
Non-controllinginterest

Generation of cash flows and thebalance between growth and return
The Group will generate operating cash flows of ¥260
billion or more in total during the five-year period of thecurrent Medium-term Plan (fiscal years 2017 to 2021), of
which ¥200 billion will be allocated mainly to capital
investment in existing businesses and growth strategy
investment to restructure its business portfolio. It is notincluded in our quantitative management objectives but
return on this investment (ROIC) is expected to exceed ourhurdle rate (WACC) of 5%.
A little more than 60% of such investment will beallocated to the Group’s core Department Store Business

44

and Parco Business and slightly less than 20% to the Real
Estate Business, and a little less than 10% to Other. And¥27 billion will be allocated to M&A for growth. Capital
investment during the period of the current Medium-term
Plan will peak in fiscal year 2019 when the new mainbuilding of the Daimaru Shinsaibashi store and Shibuya
Parco will open.
We expect to generate free cash flows of ¥60 billion ormore during the five-year period. We will strive to increase
shareholder return and equity and promote balanced capital
policy.
Cash ﬂow allocation*Total for FY 2017 to 2021
Investing cash ﬂows

Operating cash ﬂows

¥260

¥200

billionbillionor moreFree cash ﬂows

¥60

billionor moreCapitalinvestment
Growthinvestment
Shareholder
returnExpansionof equity

Promotion of department store
management based on separate B/Sfor each store
The greatest focus of each operating company is on
increasing ROA to realize a consolidated ROE of 8%.
Though the core Department Store Business operates usinglarge assets, we had little perspective of asset efficiency.
Therefore, we adopted management based on separate B/Sfor each store. We have“raised awareness”to incorporate
not only a P/L perspective, which places disproportionate
weight on sales and profit, but also a B/S perspective,
which seeks appropriate return from assets, to management
at a store level.
Specifically, beginning in March 2017, each store
develops a B/S budget, which enables us to compare it withresults and understand asset profitability. Investments areprioritized considering each store’s ability to recoverinvestment. It contributes to a curb on investment plans
intended only to maintain or increase sales and drastic
measures for poorly performing divisions. We will improveand increase ROA through each store’s active implementationof measures.
Going forward, we will apply asset efficiency (B/S) KPIs
to stores, create medium-term targets, and promote thebuilding of investment PDCA cycle by introducing the“Investment Project Review Committee”to the Department
Store Business to improve asset efficiency. In addition, inorder to advance B/S-based management, we started toconsider determining the“amount of capital by store”thatvisualizes cumulative profits, which have been centralized in
the head office of the Department Store Business.

Management Strategy

Enhancing business managementby adopting store level B/S

B/S perspective●Key focus of stores emphasizing

Proﬁt

Total assets turnover

Operating proﬁt

Net sales

ROA

ROE

(Store Manager performance indicator)

ProﬁtOperating proﬁt

Shareholdersʼ equity

Total assets

Total assets●Key focus of leased stores (Rate of inventories is relatively high)Merchandise⇒Thorough assessment with turnover / cross ratio
turnover
Securing salable items / removing unsalable items●Key focus of the companyʼs own stores (Rate of property and equipment is relatively high)Sales per⇒Selecting/implementing renovation investment projects
month/tsubothat highly contribute to the storeʼs ROA
Recovery of⇒Judged and monitored by the Investment Project Review Committee
investment
Associatedsales

P/L perspective

Total assets
Shareholdersʼ equity

Operating margin

Number of new
identiﬁable customers

Operating proﬁt

Product sales
proﬁt

Net sales

The Company has the“Investment Project Committee”
and “Revitalization Plan Review Committee” to support
management decision-making on investment, business
revitalization and withdrawal from a financial perspective.
Both Committees do multifaceted checks including
quantitative review and financial and legal confirmation ofrisks.
The“Investment Project Committee”makes an investment
decision using the payback method for investment in store
renovations, the NPV method (present value discount using
a hurdle rate ≧ 0) for development investment, and the DCF
method for M&A. They check many areas (calculateshareholder value) and have in place a system that enables
the participation of external institutions in order to present
Flow of Investment Project Review Committee

Proposingdivision

ProposeQuantitative
criteria
Risk

Group Management
Meeting / Board of
Directors meeting
1 OK

Quantitative
criteria

Present
examination
results

Risk

2 NO

3 NO（Re-examine）

Qualitative
criteria

Classiﬁcation into phases by the Revitalization Plan Review Committee
operating proﬁt

Continue to manage
performanceat each company

Caution needed●1st period of operating deﬁcit(including forecast)

Phase Ⅱ ●Sign of operating deﬁcit●New business with
operating deﬁcit
beyond initial plan

Revitalization/
withdrawal to be considered
Phase Ⅲ

●2 consecutive periods of operating deﬁcit(including forecast)●Concern about liabilities exceeding assets●New business expected to make a loss
in FY when it is planned to turn proﬁtable

Revitalization plan

【prepared byoperating company】

Revitalization plan

【prepared byholding company】

Revitalization Plan Review Committee

Screening of underperforming businesses

NormalPhaseⅠ ●Continue to achieve

Continuing focus

Eﬃciency ofoperating expense

Investment Project Review Committee
and Revitalization Plan Review Committee

Investment Project
Review Committee

Traditional indicators

Financialleveragesales (Rate of accounts receivable is relatively high)⇒Prevention of delays in collection / individual assessment

Focus indicators

Accounts receivable
collection ratio

Marginmore objective and stricter opinions.
The“Revitalization Plan Review Committee”classifies
the businesses of the Group into three phases including“I.
Normal,”“II. Caution needed” and “III. Revitalization orwithdrawal to be considered”and reviews them on a regularbasis. The criterion for the“Phase III”in which revitalization
or withdrawal is considered is“two consecutive periods ofoperating deficit.”Concerning the companies, businesses,
stores and others that meet the criterion, the measures for“revitalization or withdrawal”are developed. The Committee
validates these businesses and determines the validity ofthe measures as well as provides information to facilitate
swift management decision-making at the GroupManagement Meetings and the Board of Directors meetings.

Optimization of the amount of equity ofeach company in the GroupWe worked to optimize the amount of equity of eachcompany in the Group and reduce its total assets so thateach company can promote B/S-conscious management andimprove asset efficiency in consideration of financial safety.
Specifically, we determined the appropriate equity ratio of
each company by examining necessary funds including
operating funds and the amount that can avoid impairment
risks and business risks. The difference between the amountof equity and the amount of appropriate equity on the record
date (the last day of February 2018) was absorbed as a
special dividend to the holding company J. Front Retailing toincrease the amount of its equity. As a result, the double
leverage* ratio, which is one of important indicators for
rating a holding company, improved from 100% to 94%.
*Double leverage: This occurs when a holding company uses debt toacquire shares in subsidiaries and associates and the subsidiaries andassociates procure debt financing.

Optimization of the amount of equity of each company in the GroupCalculation formula
Shares of subsidiaries and associates
Double leverage ratio=(100% or less is desirable)
Equity of JFR

Integrated Report 201945

Sustainability

Materiality

Sustainability
The Company formulated the Sustainability Policy in 2018 and identified five materiality issues to be addressed by theCompany after a lot of discussions at the Management Meetings and the Board of Directors meetings based on the results of
the questionnaire survey for 4,250 stakeholders. We also developed the“Eco Vision”and“Social Vision,”which indicate ourthoughts and guidelines for action to resolve environmental issues and social issues. At the same time, we set medium- tolong-term goals for each materiality issue and work on them in conjunction with our business strategy. We created the“Sustainability Committee”to promote sustainability management in all companies in the Group in a cross-organizationalmanner. The Committee develops action plans for each company in the Group and manages the progress.
We will continue to implement our distinctive initiatives along with people, local communities and environment to realize asustainable society and new happiness in life.

Five materiality issues

AFFORDABLE AND
CLEAN ENERGY

CLIMATEACTION

Contribution toa low-carbon
societySUSTAINABLE CITIESAND COMMUNITIESPARTNERSHIPFOR THE GOALS

Coexistence withlocal communities

GOOD HEALTH
AND WELL-BEING

DECENT WORK AND
ECONOMIC GROWTH

5 materiality
issuesRealization ofwork-life balanceSocial value

Process to identify materiality*including “contribution to vitalizing local economy”“Promotion of diversity”“Realization of work-life balance”

46

Contribution to a low-carbon societyManagement of theentire supply chain
Promotion of diversity

Realization ofwork-life balance

Coexistence withlocal communities

High

Selected 5 materiality issues“Contribution to a low-carbon society”“Management of the entire supply chain”“Coexistence with local communities”

DECENT WORK AND
ECONOMIC GROWTH

J. Front Retailing Group materiality map

Impact on stakeholders

Discussed at the Management Meetings and the Board of Directors meetings

CLIMATEACTION

Economic value

Very highConducted a questionnaire survey of stakeholders (4,250 people)
and interviewed the management team

GENDEREQUALITY

Promotion ofdiversity

Selected 100 social issues that seem to have a signiﬁcant
impact on the environment and society
Selected 25 items(organizational governance, race, labor practices, the environment,
fair operating practices, community, etc.)by reference to the Companyʼs initiatives and ESG guidelines and benchmark companies

AFFORDABLE AND
CLEAN ENERGYManagement of
the entire
supply chain

High

Impact on J. Front Retailing Group

Very highSustainability

Materiality KPIs and actions
We set medium- to long-term goals for each of five materiality issues and take specific actions. We believe we cancontribute to the SDGs (Sustainable Development Goals) proposed by the United Nations by implementing each action.
Long-term goals

Actions

Contribution to a
low-carbon society● 2050 Zero CO2 emissions(Scopes 1 and 2 vs. 2017)● 2030
40% reduction of CO2 emissions(Scopes 1 and 2 vs. 2017)● Replacement with renewable energy● Introduction of energy-saving andhighly efficient equipment● Replacement with LED lighting● Replacement of company cars with EVs● Replacement with office supplies madefrom green materials● Promotion of paperless operations● Response to SBT/TCFD/CDPManagement of theentire supply chain● 2030100% dissemination of the
Principles of Action for Suppliers● 2030
Aim to reduce CO2 emissions by 40%(Scope 3 vs. 2017)● Formulation and dissemination of the Principles of
Action for Suppliers
AFFORDABLE AND
CLEAN ENERGY● Scope 3 CO2 emissions reduction● Replacement with office supplies
made from green materials● Ecoff initiative● Mutually cooperate with local
communities in using our strong
know-how of urban
development and revitalizing
local communities to create
sustainable communities● Promotion of urban development
Store planning for the new main building of the Daimaru
SUSTAINABLE CITIESPARTNERSHIP
Shinsaibashi store and new Shibuya Parco
AND COMMUNITIESFOR THE GOALS
Development of local historicfacilities through renovation● Expansion of local production for local consumption
Expansion of local production for local consumption
using nationwide store network
Expansion of offering of Japanese unique products● Response to disasters BCP plan

Coexistence withlocal communities

Promotion ofdiversity● Ratio of women in management
positions2025 30%2030 Aim for 50%● 2030
Aim to extend the retirement
age to 70● 2030
Ratio of disabled employees:
3.0%

Realization of worklife balance● 2030
Men taking child care leave:100%● 2050
Turnover due to child/familycare: 0%

AFFORDABLE AND
CLEAN ENERGY

CLIMATEACTION

CLIMATEACTION● Actions for women’s empowerment
Shortened working hours system for women coming back from child care
Improvement of education and provision of information during a leave of absence
Women’s School, Mother Recruitment for child-raising generation● Promotion of senior empowerment
GOOD HEALTHGENDER
DECENT WORK AND
Development of job categories and duties,
AND WELL-BEING
EQUALITYECONOMIC GROWTH
optional working hours, lifting of the ban on
second jobs and side jobs for employees
aged 60 and older● Employment of disabled people
Improvement of the work environment of operatingcompanies in the Group
Development of new business by a special subsidiary● Expansion of work systems
Homeworking, remote working
GOOD HEALTHGOOD HEALTHGENDER
DECENT
GENDER
WORK AND(creation of satellite offices)
AND WELL-BEING
AND WELL-BEING
EQUALITYECONOMIC
EQUALITYGROWTH
Minimization of transfer with or without family● Use of technologies
Use of technologies such as AI and RPA● Expansion of work systems and rules
Introduction of paid child care leave, improvement of nursing
care leave, creation of child care facilities within offices

DECENT WORK AND
ECONOMIC GROWTH

Participation in initiatives
We declare participation in global initiatives
including the United Nations Global Compact
to clarify our intention to address sustainability.
We will fulfill our responsibilities as a corporate
citizen and realize the SDGs by following theprinciples set forth in each initiative.

Integrated Report 201947

Sustainability

Sustainability Road Map and Course of Action

Sustainability road map

17 GOALS TO TRANSFORM OUR WORLD

Aiming at the sustainable enhancement of corporate value, we have set
our goals for 2030 and 2050 and try to implement“discontinuous initiatives”

NO
POVERTYZERO
HUNGERGOOD HEALTH
AND WELL-BEINGQUALITYEDUCATIONGENDEREQUALITY

CLEAN WATER
AND SANITATIONAFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

REDUCEDINEQUALITIESSUSTAINABLE CITIESAND COMMUNITIESRESPONSIBLE
CONSUMPTION
AND PRODUCTION

CLIMATEACTIONLIFE
BELOW WATERPEACE, JUSTICEAND STRONG
INSTITUTIONSPARTNERSHIPFOR THE GOALS

by backcasting.

LIFE
ON LAND“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

Scopes 1 and 2

CO2

Scopes 1 and 2
CO2 emissions● Formulation of Sustainability Policy

emissions%40
reduction(vs. 2017)● Support for Global Compact

Mutually cooperate with local communities in using ourstrong know-how of urban development and revitalizing
local communities to create sustainable communities● Ratio of women in management positions: 50％● Aim to extend the retirement age to 70● Men taking child care leave: 100％

● Creation of ESG Promotion Division● Development of Social Vision0● Disabled employees: 3.0%

● Identiﬁcation of materiality issues● Development of Eco Vision

2050

Zero

● Creation of Sustainability Committee● Turnover due to child/family care: 0％● Dissemination of Principles of
Action for Suppliers: 100％

● Formulation of JFR Principles of Action● Formulation of Principles of Action for Suppliers● Participation in Japan Climate Initiative● Support for Womenʼs

Empowerment Principles

2018

2019

● Scope 3 CO2 emissions

Aim for 40％ reduction

2030(vs. 2017)

Creation of the Sustainability Committee
We created the Sustainability Committee to promote sustainability management in all companies in the Group in across-organizational manner by addressing ESG materiality issues. The Committee, as well as the Risk Management
Committee and Compliance Committee, is positioned as an advisory committee directly under the President andRepresentative Executive Officer. It meets biannually to develop action plans concerning the five materiality issues ofeach company in the Group so that they can be addressed by the entire Group and monitor the progress. The Board of
Directors receives reports about what was discussed at the Sustainability Committee and discusses and supervises thelong-term goals on ESG issues and the progress of actions.

ESG course of action
The“Sustainability Policy,”which stipulates thegeneral policy of ESG initiatives, serves as guidelines
for all ESG activities. We developed separate
environmental and social visions (the Eco Vision andSocial Vision) in accordance with the“Sustainability
Policy.” These visions as well as the Corporate

Permanent

Corporate Credo
Basic Mission Statement

Future toaim forGroup Vision

ESG policy

Sustainability Policy

Governance Guidelines guide our ESG activities. We
formulated the “JFR Principles of Action” and“Principles of Action for Suppliers”by translatingthese visions into a specific action level to implement
specific actions in accordance with them. We will
share these Principles with employees and suppliers
and promote ESG activities.
48

Policies onenvironment,
society andgovernance

JFR Way

Environment

Society

Governance

Eco Vision

Social VisionCorporate
Governance
Guidelines

Principles of Action for Suppliers/ JFR Principles of Action

Sustainability

JFR Principles of Action and Principles of Action for Suppliers

Management of the entire supply chain

The JFR Principles of Action set forth basic actions
that each individual of all officers and employees in
the Group should understand and follow on a daily
basis from a perspective of recognizing their roles andresponsibilities and acting with a high sense of ethics
to fulfill their social responsibilities toward therealization of the Corporate Credo and Visions.
The Principles of Action for Suppliers provide forthe matters to be complied with by the Group andPrinciples of Action for Suppliers
Suppliers
shall comply
with them

The Group shall comply with themand asks suppliers to understandand comply with them.
Procurement policy
Human rights policy

Principles of
Actionfor Suppliers

Anti-corruption policy

JFR conduct
policyOccupational healthand safety policy

suppliers to meet their social responsibilities. By
complying with these Principles, the Group will fulfill

The Group
shall comply
with themits social responsibilities along with suppliers and aim
to enhance corporate value.

JFR Principles of Action

Formulated the JFR Principles of Action and Principles of Action for Suppliers and four policies
JFR conduct policy and guidelines for action for suppliers
They are the most basic policies in the“Principlesof Action.”We will comply with and ask suppliers tocorruption or bribery and perform fair and highly transparent
corporate activities.
(4) Occupational health and safety policy

understand and cooperate in complying with five items

Based on the idea that occupational health and safety is

including“fair business activities,”“consideration forthe most important foundation of business activities, we will

human rights and the work environment,”“consideration

work to improve employees’occupational health and safety

for the environment,”“consideration for the safety andlevels with top priority on ensuring health and safety.

security of products and services”and“contribution to
local communities.”

Items of“JFR Principles of Action”and“Principles of Action for Suppliers”

Fair business activities(i) Legal compliance(ii) Prohibition of transactions with antisocial forces(iii) Prohibition of corruption, bribery and the like(iv) Prohibition of giving and accepting of improper benefits(v) Prohibition of anticompetitive acts(vi) Disclosure of information(vii) Prevention of leakage of personal information(viii) Protection of intellectual properties(ix) Promotion of responsible procurement

2

Consideration for humanrights and the work
environment(i) Prohibition of discrimination(ii) Prohibition of harassment(iii) Provision of safe work environment(iv) Respect for freedom of association and collective bargaining(v) Prohibition of forced labor(vi) Prohibition of child labor(vii) Responsibility for local communities(viii) Disaster prevention measures

3

Consideration for theenvironment(i) Actions against global warming(ii) Sustainable use of resources(iii) Prevention of pollution(iv) Biodiversity(v) Elimination of chemicals

4

Consideration for thesafety and security of
products and services(i) Compliance with safety standards(ii) Prevention of accidents from happening or expanding(iii) Response to customers

5

Contribution to local
communities(i) Activities to realize development of local communities(ii) Cooperation with local communities

Procurement policy, human rights policy, anti-corruption
policy and occupational health and safety policy(1) Procurement policy

1This policy is intended to ensure that the Group willprocure products and services, increase businesscompetitiveness and enhance corporate value torealize the optimal procurement for business.
(2) Human rights policy
This policy was developed so that we can have abetter understanding of various human rights issues
underlying all our business activities and takeappropriate actions.
(3) Anti-corruption policy
Recognizing corruption and bribery as a serious risk
factor that severely damages the trust of companies,
we will prevent the actions that may constituteInternal dissemination measures
We think it is essential for individual employees toSpecial issue ofinternal newsletterfeaturing ESG

understand the purpose and meaning of ESG initiatives
and address them as“persons involved”in order to promotethese initiatives. Therefore, the management teammembers of each operating company explain in person the
background and importance of ESG initiatives and internal
newsletters are issued to raise awareness.
Integrated Report 201949

Sustainability

Contribution to a Low-carbon Society

Achieving Zero CO2 Emissions
As global awareness for climate change increases,
our long-term vision for the environment“Eco Vision”
was formulated. We will work on reducing energy
consumption,

increasingenergyuse

efficiency,

enhancing renewable energy usage and cooperatingwith customers and suppliers to reduce CO2 emissions.

TargetContribution to a low-carbon society

By 2050:

40%
reduction

20
0

2017

2020

2025

2030

CLIMATEACTIONZeroemissions2050(against
FY 2017)

Zeroemissions60

preventing global warming and air pollution and makeApproach

By 2030: 40% reduction(Compared with fiscal year 2017)

80

40

0

● CO2 emissions (Scopes 1 and 2)

（%）
100

Through these activities, we aim to contribute to
the global environment sustainable.

AFFORDABLE AND
CLEAN ENERGY

2035

2040

2045

2050

Eco Vision

Increasing global warming and extreme weather events are examples of how environmental risks can affectour lives. We, as a member of society, believe it is our important mission to consider environmental issues as
top priority and implement companywide efforts to maintain the global environment which is irreplaceable andprecious. To achieve this mission, we will take action to resolve environmental issues through our businessactivities. In turn, these efforts will ensure that the various stakeholder contact points stated in our Sustainable
Policy continue to thrive.
Each of us will deepen our knowledge and awareness of environmental issues, comply with legal requirements
and internal standards, and take responsibility for addressing these issues.

Guidelines for action
1

Efforts to reduce energy consumption and emissions

2

Response to a recycling society

3

Provision of products and services that contribute to a low-carbon society

4

Development of promotion system

5

Environmental education and communication with stakeholders

We will strive to continuously reduce energy consumption and emissions through business activities in our stores and offices aswell as the entire supply chain.
We will work with customers and suppliers to recycle waste from homes and our stores and offices and strive to improve theresource efficiency of business activities by recycling resources and using recycled resources.
We will develop and provide environment-friendly and high-value-added products and services that contribute to a low-carbon
society through our stores and offices.
We will develop J. Front Retailing Group’s environmental plan at the“Sustainability Committee.”Each company in the Groupwill set medium- to long-term targets based on the environmental plan, develop and promote a specific action plan, and review
them on a regular basis for continuous improvement.
We will actively promote environmental awareness raising activities to increase environmental awareness of individual
employees. We will also strive to mutually raise environmental awareness through active dialogue with stakeholders.

Participating in environmental initiatives
The Group has announced its participation in various
initiatives to make its policy and activities on climate

by the Financial Stability Board (FSB), and joined the
TCFD Consortium of Japan which launched on May 27,change visible to the public.

2019.

●Application for Science Based Targets Initiative●Participation in Japan Climate Initiative (JCI)(SBT) certification
We will apply for SBT certification, an global initiative,

We participate in the Japan Climate Initiative (JCI) which
is a network of companies, local governments and NGOs

with the aim to acquire certification in fiscal year 2019.

that are actively implementing climate actions and agree to●Support for the Recommendations of the Task Forceaim for decarbonization.

on Climate-related Financial Disclosures (TCFD)

50

We support the final report of the Task Force on
Climate-related Financial Disclosures (TCFD) establishedSustainability

CO2 emissions reduction: progress and management

New Shibuya Parco―environmentallyfriendly next generation building●Independent, third-party verification on CO2 emissions
To achieve our long-term goal for CO2 emissions

The Ministry of Land, Infrastructure, Transport andreduction, we established

Tourism chose Shibuya Parco, scheduled to open in late

the JFR Group annual

November 2019, as a“Leading project for sustainableemission target to monitor

building initiative (CO2 reduction initiative)”for the following

progress.

tofeatures: (1) Attractive outdoor space including roof top

andsquare and multi-level pathways; (2) Proactive installation

ensureIn

orderobjectivity

reliability of environmentalof high-efficiency energy

data in our disclosure, wesystemobtained an independent,

cogeneration

third-party verification of(CGS) (*1); and (3) Use

CO2 emissions and energyof digital communication

consumptionforfiscalyear 2017 (the base year

includingasystemtechnology to promote
Certificate of independent verification (excerpt)

for CO2 emissions reduction) and fiscal year 2018.

efficient energy use. In
addition to installing thelatest equipment andJFR Group Environmental Data
FY 2017 (Base year)

FY 2018

CO2 emissions (t- CO2)

194,154

182,566

Energy consumption (kℓ)

101,143

99,761

fixtures, we will also
“visualize”

energyefficiency for energy

Rendering of New Shibuya Parco, an
environmentally friendly next generation building©2019, Takenaka Corporation

management systems so as to make it a multi-purpose
commercial space showcasing efficient energy use with

Flagship store for promoting ESG initiatives:
New main building, Daimaru Shinsaibashi store
The new main building of the Daimaru Shinsaibashi store
which is scheduled to open on September 20, 2019, isdesignated as the flagship store to promote ESG initiatives.
It will engage in various activities to“contribute to a lowcarbon society”.
The CO2 emissions from the new main building of the
Daimaru Shinsaibashi store in fiscal year 2020 will beapproximately 7,000 t-CO2 less compared* to the former
main building (in fiscal year 2015). It will use 100%
renewable energy for all power needs, and LED units will be
deployed in all lighting fixtures.
The new rooftop area and 7th floor terrace will be utilized

lower CO2 emissions.
*1 Cogeneration system (CGS): System that simultaneously produces
and supplies electricity and heat from a single energy source.

Actions to realize a recycling society inpartnership with our customers
Daimaru Matsuzakaya Department Stores conducts the“Ecoff recycling campaign”on a regular basis. Customers
bring disused clothing, shoes and bags to the stores forreuse and recycling and receive shopping support tickets in
exchange that allow them to buy new items. Cumulatively,
more than 1.92 million articles have been collected from
August 2016 to April 2019. This campaign is successfully
expanding.

for active greenification initiatives. The rooftop will be used
for keeping honeybees in a green area. 70 cars and vansowned as company fleet will be gradually replaced by

Customers’visit

electric vehicles.
*The building structure is different because it was rebuilt.
Flagship store for promoting ESG
initiatives: New main building,
Daimaru Shinsaibashi store

Clothing

Shoes

Bags

Bedding

Sorting

7th floor terrace

Polyester

CottonOther materials

Unreusable items

Reusable items

Pelletization

Recyclingas energy

Recycling as carinterior materials/
industrial basic
materials

Recyclingas energy

Reuse overseas

Integrated Report 201951

Sustainability

Management of the Entire Supply Chain

Sustainability, from Procurement to Consumption
Management of the entire supply chain

Supply chain of the Group

Solving environmental and social issues
in the entire supply chain is necessary
Disposal and recycleof products

Use of products

Customer visit andgoods delivery

Sales/services
in stores

Transportation

Manufacture of
products

Raw material
procurement

The Group

Customers

Formulation of“JFR Principles of Action”
and“Principles of Action for Suppliers”
We have formulated“JFR Principles of Action”and“Principles of Action for Suppliers” to eliminate
environmental and social risks in the entire supply
chain.
These Principles define basic actions to beunderstood and followed so both the Group and our
suppliers can fulfill social responsibilities. “JFR
Principles of Action”are composed of“JFR conduct
policy”and four policies common with“Principles of
Action for Suppliers”:“Procurement policy,”“Humanrightspolicy,” “Anti-corruption
policy,” and“Occupational health and safety policy.”“JFR
Principles of Action for Suppliers”are composed of“Guidelines for action for suppliers”and the fourcommon policies mentioned above. By complying
with these Principles, we will fulfill social
responsibilities together with our suppliers and strive
to enhance corporate value of both parties.

52

Awareness of supply chain policy (Principles of Action for Suppliers)
Target: 100％
Scope 3 CO2 emissions reduction target
Aiming for 40％ reduction(compared with FY 2017)

Future initiatives related to“Principles of
Action for Suppliers”

In the retail business, the core business of theGroup, we sell goods and offer services in a supply
chain that extends from procurement of raw
materials to production/sale/consumption. Thus,
initiatives to solve environmental and social issues
in the entire supply chain, including our suppliers,
are essential, not just in the areas where we are
directly involved.

Suppliers

CLIMATEACTION

Target to be achieved by 2030

TargetBy fulfilling social responsibilities and promoting
environment-friendly initiatives throughout the entire
supply chain, we will eliminate risk in the entire
supply chain. Also, by providing products that
customers can enjoy without concern for social andenvironmental issues, we will enhance the corporate
values of both the Group and its suppliers.

AFFORDABLE AND
CLEAN ENERGY

Starting in the summer of 2019, we will holdexplanatory sessions, etc., of the“Principles of Action
for Suppliers”in order to obtain the understanding
and support of suppliers and request them to follow
the Principles in their operations. In addition, we will
carry out a survey to confirm compliance with the
Principles and gradually develop a system to assess
compliance. We will find new suppliers who willcommit to fulfilling social responsibilities and businessfocusing on products and services with lessenvironmental burden.

Initiatives to realize a recycling society inthe entire supply chain
The Group aims to propose a shopping style withcustomer-participation through eco-friendly recycling
and reuse activities, as well as develop a new
business model regarding a sharing economy.
Daimaru Matsuzakaya Department Stores havebeen carrying out the“Ecoff”recycling campaign
since fiscal year 2016. Starting August 2019, 16
stores will use shopping bags made of environment
friendly FSC® certified paper. The stores are graduallyswitching plastic bags for food items to 30% plantbased packaging material. Through these initiatives,
we are working on realizing a recycling society.

Initiatives to realize a recycling society in the entire supply chain
RecyclePaper shopping bags andplastic grocery bags

RecycleEcoﬀ

ReduceProduction

Developing
Consumption
a newbusiness model

Reduction offood waste

Disposal

Sharing

Sharing
ReuseSustainability

Sustainability

Coexistence with Local Communities

With Communities and with Our Customers
Coexistence with local communities

Promoting“Urban Dominant strategy”
The Group promotes the“Urban Dominant strategy,”which is a business model pursuing growth in partnershipwith local communities, utilizing our stores as the coreasset to enhance the appeal of the entire area. Promoting
this strategy automatically leads to attracting more visitorsand customers to the area, thus contributing to thecommunity.
In 2017, we opened Ginza Six and Ueno Frontier Towerand succeeded in attracting new customers to both areas.
Ginza Six offers more than retail shopping experience,with Kanze Noh Theater providing opportunities for cultural
exchange, the largest rooftop garden in Ginza area, bus
stops and a service center for tourists, etc. It also serves as
an emergency shelter for the stranded in times of
emergency. Thus, it contributes to improving convenienceand amenities of the area, as well as improving disaster
preparedness. In Ueno Frontier Tower, the tourist
information center, “Ueno-ga-Suki”, meaning “we loveUeno”in Japanese and offering local information, events,
and the sale of goods, is on the 1st basement floor of themain building of the Matsuzakaya Ueno Store. In“Okachimachi Panda Hiroba”various events are held on
regular basis in collaboration with the government and theneighboring shopping districts.
In fall 2019, the newly rebuilt main building of the
Daimaru Shinsaibashi store and Shibuya Parco are set toopen. In both projects, we will work together with the local
communities and the governments to promote advanced

Ginza Six

Ueno Frontier Tower

PARTNERSHIPFOR THE GOALS

2050

TargetThrough coexistence with local communities, we try tounite two goals: realizing a sustainable society andensuring a delightful shopping experience in areas whereretail design is integrated into urban planning. Throughsuch an initiative, we aim to revitalize communities byenhancing the appeal of the area and achieve medium tolong term growth together with communities.

SUSTAINABLE CITIESAND COMMUNITIES

Through partnership among local
communities, governments and retailers, we will
make compatible the solving of environmental issues
and urban/community planning which showcases
local assets, our area of expertise, thereby realizing
sustainable and advanced urban development.

urban development to make the areas more appealing.

Expansion of local production for local
consumption“Local production for local consumption”initiatives help
revitalize local economies. Daimaru and Matsuzakaya
stores aim to contribute to the revitalization of local areas
by expanding the lineup of products that are unique to thearea, capitalizing on its countrywide store network. As partof this initiative, the Matsuzakaya Shizuoka store
collaborated with a local farm and a culinary institute todevelop and sell sweets using local production.

Planting tomatoes tobe used for sweets
together with the local
farmers and culinary
institute students.

Partnerships with universities in the area
The Daimaru Kobe store has entered into a“Comprehensive
partnership agreement on revitalizing local society andpromoting lifelong education”with Kobe Gakuin University.
We are cooperating in nine areas including joint projects forfostering creativity in children, providing support for the
next generation, promoting education and human resource
development, disaster prevention and mitigation, local
development and resolving local issues, among others.
The Matsuzakaya Nagoya store has entered into acomprehensive partnership with Nagoya University.
Through the partnership, both parties will cooperate in thefields of culture, industry, education, academia, etc. for the
purpose of contributing to regional growth and humanresource development.

“Midori-no-hiroba,”
on the 8th floor of
Daimaru Kobe store
was used to provide
a farm experienceand dietaryeducation classes.

Integrated Report 201953

Sustainability

Promotion of Diversity

Diversity as a Source of Growth

GOOD HEALTH
AND WELL-BEING

Promotion of diversity
different cultures and customs and of all ages,
genders and abilities coexist, and where diversity isrespected and accepted, we will build a companywide and continuing system to promote andTargetAiming to become a company where people fromGENDEREQUALITYDECENT WORK AND
ECONOMIC GROWTH● Percentage of women in management positions
2025: 30％
2030: 50％● Retirement age

2030: 70 years old● Percentage of disabled employment
2030: 3.0％

implement diversity.

Promoting women’s empowerment
1. Appointment of female leaders
Regardless of gender, we will promote humanresources recruitment and assignment based on
individual ability, performance, aptitude and motivation.
At Daimaru Matsuzakaya Department Stores, our corebusiness company, women accounted for 23.0% of
total management positions in March 2019. And as of
May 29, 2019, three female Executive Officers wereappointed making up 20.0% of a total of 15 Executive
Officers of the company. In addition, a female
Managing Executive Officer was appointed in J. Front
Retailing as well. We will actively appoint women toleadership, management and other important positions
to further empower motivated women.
Daimaru Matsuzakaya Department Stores female employees in management positions
Number of female
employees

Total

General Managers

14

108

Managers

81

305

Total

95

413

(As of March 1, 2019)*The figures include workers
seconded to Daimaru
Matsuzakaya Sales Associates.
13.0% *The number of“Manager”is
26.6% the total of Managers, SalesManagers, and Supervisors
23.0% (Daimaru Matsuzakaya Sales
Associates).

Percentage offemales* The percentage of women in management positions in J. Front RetailingGroup (consolidated) is 14.7%, as of the end of February 2019.

2. Initiatives to promote women’s empowerment
We launched a“Mother Recruitment”program tohire experts who left their jobs for child care.“JFR
Women’s School”was launched for women such as
those who chose shortened working hours whileraising children to help them acquire time management
and business skills. In fiscal year 2018, 32 employees
took the classes. To build a workplace where womencan continue to balance childcare and family careChild care and family care related benefits of Daimaru Matsuzakaya
Department Stores superior to legal requirement

54

Type

Description

Child care leave

Up to the final day of the month when the child enters anelementary school (Legal childcare leave lasts until the childreaches the age of 2, at the longest.)

Shortened work hours forchild care

Up to the final day of the month when the child enters an elementary
school (Legal requirement is until the child reaches the age of 3.)*By opting for“flexible work system,”an employee may work shortened hours
until the final day of the month when the child enters a junior high school.

Leave to care for sick/injured child

Paid leave (Under the current law, employers can offer unpaid
leave in such situation.)

Short-term leave to support
child care

Up to 4 days of paid leave to care for a child under age 3 (Nolegal requirement)

Spousal leave for childbirth

1 day of paid leave (No legal requirement)

Short-term child care leave*Introduced in March 2019

In addition to the above child care leave (unpaid), employees may takepaid short-term leave for child care under the new system. (Under thecurrent law, employers can offer unpaid leave in such situation.)with work, the Group has set various system in placethat provide better benefits than the legal requirement.

Promoting the empowerment of employeesof advanced age
In preparation for the aging society, we consider
that empowering human resources of advanced age isessential. To achieve the Group’s 2030 target,
retirement at 70 years old, we will work on developing
job opportunities and responsibilities for those aged
60 or above, introduce a system where workers canchoose working hours, and abolish the ban on dual
jobs and side employment.
Before their retirement, we hold annual“My Life
Plan Seminar”to employees turning 53 years old withthemes including life design in the future, healthmanagement, work and life motivation (300 employees
attended in fiscal year 2018). On the other hand, we
consider it important for human resources of advanced
age to acquire new knowledge and skills, in addition
to transmitting their knowledge and skills to younger
employees. For this purpose, we are developing a
training program for recurrent education.

Employment of people with disabilities
We are committed to corporate social responsibilityof employing disabled people. Along with improving
the working environment of operating companies in theGroup, we are also developing business in our special
subsidiary, JFR Create Co., Ltd. which was establishedin April 2017 and certified as a special subsidiary by
the Ministry of Health, Labor and Welfare in September
2017. It was officially registered as“Osaka Prefecture
Superior Support Company for People with Disabilities”
as a company that actively hires and offers employment
support to disabled people.
*Employment rate of disabled people in the special scope of subsidiaries
including Daimaru Matsuzakaya Department Stores was 2.21% as ofJune 2018.
In“Abilympic Osaka 2018,”where
disabled people compete andshowcase their job-related skills, ouremployees
demonstrated
theircapabilities in theoffice-assistantclass, winning one
Gold medal andtwo Silver medals.

Sustainability

Sustainability

Realization of Work-Life Balance

Innovation in Our Work Styles
Realization of work-life balancechanges in lifestyles and diversified values, we will innovate
work styles using technologies, streamline operations, andshift to creative operations in order to realize a work
environment that contributes to the happiness and well-

GOOD HEALTHGENDERAND WELL-BEING
EQUALITYDECENT
GENDER
WORK ANDECONOMIC
EQUALITYGROWTHDECENT WORK AND
ECONOMIC GROWTH● Percentage of men taking childcare leave

TargetWith the aim of realizing true work-life balance that meets

GOOD HEALTH
AND WELL-BEING

in 2030: 100％
● Percentage of employees who leave theirjob due to child or family carein 2025: 0％

being of our employees and their families.

Target for 2050
Our target in realizing work-life balance for 2050 is“To ensure that corporate culture and work options
exist so that individual employees can achieve worklife balance that is best for their life stage so we as acompany can contribute to the happiness and wellbeing of our employees and their families.” To
accomplish this, we will take actions to expand andchange how we work.

Expansion of systems and rules for work
style reform
1. Establishment of short-term childcare leave
In addition to the existing childcare leave (withoutpay), we introduced a new short-term paid childcare
leave (up to two weeks). It is expected to enhancemore male employees to take childcare leave.
2. Flexible working system for employees whochose shortened working hours (for those withchildcare or family care)
We gave options to employees who chose
shortened work hours to proactively expand theirworking opportunities. Under the new system, they
can work full hours once a week, if they choose. In
addition, employees working shortened hours are
now eligible for flexible working hour system.
3. Introduction of half-day paid leave
We introduced a new system where employees
can use their annual paid leave in half-day
segments.
4. Introduction of telework
We are working on introducing telework from home.
* 1, 2 and 3 above have started in JFR, Daimaru Matsuzakaya
Department Stores, DMSA and JFR Service since March 2019. 4
has been implemented in Parco and JFR Information Center, andfrom May 2019 it is applied in JFR.

Area Limited Employee System
By increasing work style options, we aim to build afoundation on which each employee can plan andachieve his or her balance between professional
development and personal life. To this end, Daimaru
Matsuzakaya Department Stores has introduced the“Area Limited Employee System” that allows

employees to limit their workplace in one of five areas
including Sapporo, Tokyo, Kansai, Chubu and Shizuoka.

Use of technologies
We will streamline operations using technologies
including AI and RPA and shift man-hours created byincreased efficiency to high value-added operations.
Jobs that technologies can accomplish should be
automated, and human resources will be reassigned
to creative jobs.
To adapt to more flexible working style, we will
introduce mobile PC, new teleconferencing systemand promote paperless digital meetings.

Initiatives for health maintenance andimprovement
Based on the basic thinking that“employees are
the company’s greatest asset and that the employees’
physical and mental well-being are crucial for us toprovide better services to customers,”we promotethorough implementation of industrial health andsafety measures and initiatives to maintain andimprove employees’health. Specific initiatives forhealth maintenance and improvement include
prevention of lifestyle diseases and management of
mental health, among others, in cooperation with theGroup’
s health insurance association.
We offer lifestyle diseases prevention screening
including specified checkup items to employees aged
35 and over, in addition to the legally required regular
health examination. Also, there are women’s healthcheckups including breast cancer and uterus cancer
exams, and prostate-specific antigen (PSA) test for
male employees aged 50 and over. Using data fromthese exams, we provide individual health guidance,
identify health management issues and establish
goals for each office and implement various
improvement measures.
We conduct stress checks for mental healthrequired by law. In addition to promoting mental
health self-management, we will use the survey
results on the organizational environment toimplement initiatives to realize a working environment
where all employees can fulfill his or her true potential.

Integrated Report 201955

GovernanceCorporate GovernanceCorporate Governance
As a holding company, J. Front Retailing puts thestrengthening of corporate governance at the top of its
business agenda to ensure the legal compliance,transparency, objectivity and soundness of thebusiness of the entire Group and focus on andthoroughly fulfill its accountability to its stakeholders(customers, shareholders, employees, business
partners, local communities and others) as the core of
the unified governance of the Group.
As part of these efforts, the Company made thetransition to a Company with Three Committees(Nomination, Audit and Remuneration Committees)

Governance(oversight)
Function

Shareholders Meeting
Nomination Committee

Election/removal

Chairperson
Board of Directors

Remuneration Committee

Consultation
Consultation

Sustainability
Committee
Management
Strategy Unit

Audit Committee

Consultation Risk Management

Consultation

Group Management Meeting

Aﬃliated
Business Unit

Committee

Compliance
Committee

Instruction

Operating Units
Financial
Strategy Unit

Accounting
AuditorReportOversight

President and Representative
Executive Officer

Cooperation/report

ReportCooperation/reportManagement Advisory Board

Audit

Cooperation/report

Execution Control Function

56

through the resolution adopted at the Annual
Shareholders Meeting in May 2017. The purpose ofthis change is to further strengthen corporate
governance by:(1) Strengthening of the management oversightfunction by separating oversight from execution;(2) Greater clarity of authority and responsibility inbusiness execution and promotion of agile
management;(3) Improvement of transparency and objectivity ofmanagement; and(4) Building of a globally applicable governance system.

Report Internal Audit Division
Audit

Human Resources
Strategy Unit

Companies in the Group

Administration
Unit

Audit
Audit

Governance

Overview of corporate governance system
The Company is a pure holding company and, withthe exception of authority for important matters relating
to the management of the Group, it delegates authority
to its respective operating subsidiaries with respect tomatters involving business execution by the operating
subsidiaries in an effort to speed up business decisions
and to make managerial responsibilities clear.
The roles and responsibilities of the Company, as apure holding company, are as described below:●Establishment of corporate governance practices
for the entire Group;●Planning and formulating of the Group Vision, Group
Medium-term Business Plan and Group Management
Policy and tracking of the progress and results thereof;●Optimal allocation of the Group’s management
resources;●Establishment of the Group-wide risk management
system and involvement in internal audits;●Decision making on important matters involving
business execution relating to the management of
the Group; and●Provision of advice and approval for the management
policies and management strategies of respective
operating companies and oversight and evaluationof the progress thereof.
The Company has five supervisory units (Management
Strategy Unit, Affiliated Business Unit, Financial
Strategy Unit, Human Resources Strategy Unit andAdministration Unit) as management bodies to clarify
each unit’s roles, responsibilities and authorities, thereby
strengthening the oversight function and improving theinternal control system of the entire Group.

Board of Directors(1) Basic roles and responsibilities of the Board of Directors
Directors who are elected by shareholders and are
entrusted with the management of the Company are tocarry out the following roles and responsibilities in the
Board of Directors in accordance with their fiduciary
responsibility and accountability to shareholders withthe aim of realizing the Group Vision:●Indicating the overall direction that the Groupmanagement is to take by engaging in constructive
discussions with respect to the Group Vision, Group
Medium-term Business Plan, Group Management
Policy and other fundamental management policies
and carrying out multifaceted and objective
deliberations that include evaluation of risks withrespect to the aforementioned;●Making appropriate decisions in terms of overall
policy and plans pertaining to the Group managementon the basis of the direction noted above andoverseeing the progress and results of the plans;●Improving the environment to drive aggressive
management toward discontinuous growth;●Taking steps to build and develop internal control
systems of the Group overall and otherwise
overseeing the operational status of such systems;●Overseeing conflicts of interest between relatedparties; and●On the basis of summary reports furnished by the
Nomination Committee, overseeing the progress ofsenior management team succession planning,
personnel assignment plans pertaining to managerial
talent and management team training, as delegatedto the Nomination Committee.
(2) Composition of the Board of Directors
The Board of Directors of the Company is comprisedof the appropriate number of 15 or less Directors as
set forth in the Articles of Incorporation. The number
of Directors is thirteen (six of whom are independent
Outside Directors) as of May 23, 2019 and the termof office is one year.
When nominating Director candidates, the Company
ensures diversity in consideration of the balance ofknowledge, experience and ability on the Board of
Directors as a whole. In appointing Outside Directors,
we confirm, in accordance with the Criteria for
Determining Independence of Outside Directors set by
the Company, that nominees are highly independent
not being susceptible to conflicts of interest with theCompany’s shareholders.

InsideDirectors

53.8%

OutsideDirectors

46.2%

ExecutiveOﬃcers30.8%
Non-executive
Directors
69.2%

One-thirdor moreof Directors

Majority of
Directors

As of May 23,2019(3) Matters discussed at the Board of Directors meetings in fiscal year 2018
In fiscal year 2018, the Board of Directors had 14
meetings to deliberate and resolve: the“progress of theMedium-term Business Plan”as strategic discussion
for the medium- to long-term growth of the Group; the“growth strategy of the Credit and Finance Business”
and the “development plan of Sakae Kadochi in
Nagoya”as discussion concerning individual growthbusinesses; the “validation of rationale for crossshareholdings and sales of such shares”and the“basic
policy to build internal control systems”as discussion
concerning corporate governance; the“Group humanresources strategy”and the“initiative for strategic ESG
corporate management”as discussion to strengthen
operating foundations; the“closure of the Daimaru
Yamashina Store”, the“closures of Utsunomiya Parcoand Kumamoto Parco”and the“subscription of theIntegrated Report 201957

share buyback planned by Senshukai and thedissolution of the capital tie-up therewith”as discussion
on the replacement of businesses and assets toimprove capital efficiency; as well as approving
budgets and financial statements.

Committee audits the building and operation status ofinternal control, and prepares audit reports.
In addition, the Audit Committee oversees accounting
auditors to ensure the reliability of accounting
information and determines the content of proposals
relating to the election and dismissal of accounting
auditors to be presented to the Shareholders Meeting.

Nomination Committee / Audit Committee /Remuneration Committee(3) Remuneration Committee
The Remuneration Committee is composed of three
Outside Directors, the Chairperson of the Board of
Directors who does not execute business andPresident and Representative Executive Officer. The
chairperson is chosen from among independent
Outside Directors from the standpoint of ensuringtransparency and objectivity. The Remuneration
Committee determines the policies on deciding
individual remuneration of management personnel of
the Company and Daimaru Matsuzakaya Department
Stores and the content of remuneration.

(1) Nomination Committee
The Nomination Committee is composed of three
Outside Directors, the Chairperson of the Board of
Directors who does not execute business and President
and Representative Executive Officer. The chairperson
is chosen from among independent Outside Directors
from the standpoint of ensuring transparency andobjectivity. The Nomination Committee determines thecontent of the proposals relating to the election anddismissal of Directors to be submitted to the
Shareholders Meeting as well as the content of thereports relating to the election and dismissal of themembers of the management teams of the Company
and Daimaru Matsuzakaya Department Stores and theappointment and removal of the chairpersons andmembers of each of the statutory committees to besubmitted to the Board of Directors.

Management Advisory Board
In January 2019, the Company reorganized theGovernance Committee that had been held as an
optional advisory committee to discuss corporate
governance-related issues and then newly establishedthe Management Advisory Board that is composed ofPresident and Representative Executive Officer, all
Outside Directors, and Chairperson of Board of
Directors. The Management Advisory Board freely,
vigorously, and constructively discusses andexchanges opinions about various issues concerning
corporate governance and overall corporate
management; and works to share information andfacilitate cooperation with Outside Directors.

(2) Audit Committee
The Audit Committee is composed of three Outside
Directors and two full-time Inside Directors who do
not execute business and are well informed about theCompany’s internal information to maintain andimprove the accuracy of audit. The chairperson ischosen from among independent Outside Directors
from the standpoint of ensuring transparency andobjectivity. The Audit Committee effectively audits theefficient performance of duties by Executive Officers
and Directors in compliance with applicable laws andregulations as well as the Articles of Incorporation andin line with the Company’s Basic Mission Statement
and the Group Vision, and thus provides necessary
advice and recommendations. In addition, the Audit

Succession planning
The selection of the chief executive officer is the mostimportant strategic decision-making and the Company
positions the development and implementation ofCommittees and their respective members
Length of office as
Director

Non-executive (9)Outside Directors (6)Remuneration
Committee

Management
Advisory
Board

Approx. 7 years

◎

○

○

OTA Yoshikatsu

Approx. 4 years

○

◎

○

ISHII Yasuo

Approx. 2 years

○

○

○

NISHIKAWA Koichiro

Approx. 2 years◎○

SATO Rieko *Approx. 1 year○○

UCHIDA Akira

Newly appointed○

KOBAYASHI Yasuyuki

Chairperson of Board of Directors Approx. 6 years○

Approx. 2 years

MURATA Soichi
Executive (4)Inside Directors (7)

58

Audit
Committee

TACHIBANA FUKUSHIMA Sakie*

TSUTSUMI Hiroyuki*Female3 Statutory Committees
Nomination
Committee

President and Representative Executive Officer

Approx. 11 years and 9 months

YOSHIMOTO Tatsuya

Representative Managing Executive Officer Approx. 6 years

MAKIYAMA Kozo

Managing Executive Officer

Approx. 6 years

WAKABAYASHI Hayato

Managing Executive Officer

Approx. 3 years

○

○

◎

○

Newly appointed

YAMAMOTO Ryoichi

○
○

○
○

As of May 23, 2019

Governancesuccession plans (for the next senior management team)as matters of particular importance in terms ofmanagement strategy.
The Company ensures clarity and transparency in theprocess of selecting successor candidates throughrepeated reviews of successor candidates’individual
evaluations based on assessments made by a third-party
organization using internal data. The deliberations are
conducted by the Nomination Committee, in which
Outside Directors comprise a majority. In the process ofdeciding a successor, the Board of Directors plays asupervisory role focused on realizing the Basic Mission
Statement and the Group Vision, based on proposals
received from the Nomination Committee. With regard to
the qualities required of successors, the Company clearly
defines the necessary values, capabilities, and behavioral
traits in the form of the five qualities required of an officer

in the Corporate Governance Guidelines under“Desirable
qualities required of JFR Group managerial talent.”These
are a“strategic mindset,”“reform-oriented leadership,”“tenacity to achieve results,”“organization development
strengths”and“human resource development strengths.”
The Company endeavors to ensure impartial cultivationand selection of successors by sharing these qualities
among all members of the Nomination Committee tomake them all aware of the indicators used in cultivating
and assessing successors.
In addition, the dismissal of the chief executive officer
is implemented based on the evaluation determinedthrough highly objective deliberations by the Nomination
and Remuneration Committees on the submitted data ofdifferences among the goals set, expected results andactual results (e.g. annual performance and strategy
execution status).

Evaluation of the Board of Directors
Evaluation
methodology

Items
evaluated

The evaluation was performed through deliberations by the Board of Directors based on the report
prepared by a third-party organization containing summaries and analyses of the results of “individualinterviews” conducted for all (both Inside and Outside) Directors based on preliminary questionnaires
and “direct observation of the Board of Directors through attendance of its meetings.”
In light of the roles and responsibilities of the Board of Directors, an analysis/evaluation was performed
for each of the items for evaluation, including the Board of Directorsʼ composition and its operational
status, agenda items, materials for deliberations, level of explanation for proposals, supporting system
for Outside Directors, and the eﬀectiveness of three Committeesʼ (Nomination, Audit and Remuneration
Committeesʼ) activities. We set new questions each time to get answers according to their positions
such as Inside Director, Outside Director, Committee Member and Non-Committee Member, as well as
giving consideration to ensure comparability.
Evaluation results are shared between Directors and they discuss the solutions to the issues found fromthe evaluation to continually improve the eﬀectiveness of the Board of Directors.
The fourth evaluation of the Board of Directors conducted from October to November 2018 identiﬁed continuous
improvements of the Companyʼs initiatives both formally and practically. On the other hand, some items lowered
evaluation points. We recognize that this is not because of a decrease in the eﬀectiveness of the Board of Directors,
but because of a heightened expectation for a fundamental solution to issues in order to enhance the corporate
value since the framework of the corporate governance system has been already established at the high level.
The Company will continue to share issues based on the evaluation of the Board of Directors to enhance theeﬀectiveness of the entire Board of Directors.

First (2015) to third (2017)

Fourth (2018)●Strengthening of discussion of important proposals●Creation of a mechanism to improve proposals●Review of decision making process●Strengthening of the function of the committees

IssuesIssues

Evaluation
results andcountermeasures●Focus on corporate strategy proposals●Strengthening of execution

Groundwork to enhancethe eﬀectiveness●Strengthening of the function of the Audit
Committee●Strengthening of execution●Increase in proposals of important issues (Groupstrategies, business portfolio, capital policy,
resource allocation)

Actions

Actions●Clariﬁcation of the roles of the Board of Directors●Revision of the Board of Directors rules (Clariﬁcationof criteria for proposals)●Shorter explanation for proposals and longer time for discussion●Prior explanation given to all Outside Directors●Classiﬁcation of proposals (Establishment of“discussion” in addition to resolution and report)●Setup of the Governance Committee andsophistication of discussions●Improvement of materials (by using format)●Appointment of external management humanresources to ensure speedy facilitation of strategies●Continuous initiatives to enhance the eﬀectivenessof the Board of Directors●Strengthening of the monitoring function of theMedium-term Business Plan

●Review of development method of yearly agenda plan

●Setup of the Management Advisory Board that discusses
not just governance issues but various othermanagement issues●Improvement of materials (Enhanced clariﬁcation of
discussion points, sharing of deliberation status ofManagement Meetings)

Essential solution to issues toenhance corporate value
Integrated Report 201959

Officer remuneration system
1 Policy on determining remuneration for Directors and Executive Oﬃcers

To carry out the Medium-term Business Plan steadily for realizing the new Group Vision, the Company has formulated the new“Oﬃcer Remuneration Policy” including the introduction of a stock-based remuneration system for oﬃcers. The basic policies on
the oﬃcer remuneration are as follows:●Contributing to the sustainable growth of the Group and increasing corporate value over the medium to long term;●A highly performance-based remuneration system that provides incentives to Executive Oﬃcers both for accomplishing objectives
set under management strategies and business plans and for achieving targets with respect to corporate performance;●Remuneration levels that can secure and retain personnel who have the “desirable managerial talent qualities” required by the Company;●Increasing shared awareness of proﬁts with shareholders and awareness of shareholder-focused management; and●Enhanced transparency and objectivity in the remuneration determining process.

2 Procedures for determining remuneration for Directors and Executive Oﬃcers

To ensure that remuneration levels and remuneration amounts are appropriate and that their determination process istransparent, the determination of the speciﬁc remuneration amounts to be paid is made by discussion and resolution of the“Remuneration Committee,” which comprises a majority of independent Outside Directors and is chaired by an independent
Outside Director. The Remuneration Committee meetings are to be held at least four times per year and the Company plans to
conduct a review of the oﬃcer remuneration system upon the completion of the period of each Medium-term Business Plan.

3 Remuneration composition for Executive Oﬃcers and Non-executive Directors【Basic remuneration】(monetary remuneration)

Basic remuneration is positioned as a ﬁxed remuneration and is decided for each rank (position) based on the size (weight) of the
responsibility borne by each oﬃcer.

【Restricted stock】(non-performance-linked stock-based remuneration)
Restricted stock is a system for issuing the Companyʼs shares in a way that is not linked to performance with the objective of
involving Non-executive Directors in management with a medium- to long-term view in order that they should strengthen theaggressive and defensive governance of the Company from a diﬀerent standpoint from that of Executive Oﬃcers as therepresentatives of stakeholders. The shares are issued upon their retirement from oﬃce.

Executive Oﬃcers

Details of performance shares

Remuneration, etc. for
Executive Oﬃcers

Bonuses
Performance shares (PS)

Proportion of remuneration by type for Executive Oﬃcers of each rank
【President】
Basic remuneration
38.5%

PS
38.5%

Bonuses
23.0%

KPI
Profitability

Basic Remuneration

Consolidated(1)
operating profit
Basic earnings(2)
per share(3) Free cash flows

Efficiency (4) ROE

Short Medium toterm long term
○

○

○

○

−

○

−

○

Fixed remuneration
38.5%

Performance-linked remuneration
61.5%

Calculation method of performance-linked factor
Performance target achievement Performance-linked factor

Bonuses
27.3%

Monetary remuneration
72.7%
Fixed remuneration
45.4%

2.0

50% or more but less than 150%

(Actual results ÷ Target – 0.5) × 2

Less than 50%

0Image of changes in performance-linked factor
Factor
2.0【Executive Oﬃcers excluding President】
Basic remuneration
45.4%

If targets are not achieved, theamount of stock-based remunerationis reduced by 50% (reduced by 25% if
one target is not achieved).

Note: KPI stands for Key Performance Indicator.
Note: Short-term targets are the initial forecasts for the relevant ﬁscal year as
announced in the Consolidated Financial Results each April (IFRS basis).

150% or more

Stock-based remuneration
38.5%

Monetary remuneration
61.5%

Methods of use
Evaluation based on the achievement
rate of targets (absolute value)
Evaluation is weighed as 50% foreach indicator.

PS
27.3%
Stock-based remuneration
27.3%

Performance-linked remuneration
54.6%

Note: The above ﬁgure represents the case of a bonus for a standard ranking
where the performance achievement rate for stock-based remuneration
was 100%.
Note: The remuneration composition for Directors and Executive Oﬃcers at
Daimaru Matsuzakaya Department Stores is the same as that shown for
Executive Oﬃcers excluding President in the ﬁgure above.

1.0

0

0%

50%

100%

150%

Performancetargetachievement

Note: When performance target achievement is less than 50%,
performance-linked factor is 0 (0%), and when performance target
achievement is 150% or more, performance-linked factor is 2.0 (200%).

Non-executive Directors
Remuneration, etc. forNon-executive Directors

Basic remuneration
Restricted stock60

Governance

The Nomination Committee will continue to havediscussions on succession planning in a planned
manner so that changes in the environments andsituations surrounding the Company, the progress ofstrategies formulated, etc., can be reflected in suchplanning.
The dismissal of senior management team members
is also determined based on deliberations by the
Nomination and Remuneration Committees as in thecase of the chief executive officer.

Basic Capital Policy
The Company believes that any increase in free
cash flows and improvement in ROE should help toensure its sustainable growth and increase corporate
value over the medium to long term. To such ends, theCompany promotes a capital policy that takes abalanced approach to “undertaking strategic
investment,”“enhancing shareholder returns” and“expanding net worth”for the purpose of hedging
against possible risks.
Moreover, in procuring funds through interestbearing debt, we aim to achieve an optimal structureof debt to equity in a manner cognizant of our funding
efficiency and cost of capital, carried out on the basisof having taken into consideration our capacity for
generating free cash flows and our balance of interestbearing debt.
A“business strategy”to achieve an increase ofprofitable sales and a“finance strategy (encompassing
the capital policy)”that heightens the rate of return on
invested capital are essential elements with respect toimproving free cash flows and ROE. In addition, we
believe it is crucial that we maximize our operating
profit and continually improve our operating margin bystrengthening our core businesses and concentrating
management resources on initiatives such as businessfield expansion and active development of new
businesses.

Shareholder Return Policy
The Company’s basic policy is to duly return profits
to shareholders. Hence, while maintaining andenhancing its sound financial standing, the Company
strives to provide stable dividends and target a
consolidated dividend payout ratio of no less than
30%, taking such factors as profit levels, future capital
investment and free cash flow trends into consideration.
The Company also gives consideration to the optionof purchasing its own shares as appropriate, in
accordance with aims that include improving capitalefficiency and implementing a flexible capital policy.

Changes in annual dividend per share (Yen)(Yen)
40
Ordinary dividend

35

2Commemorative dividend

30
25
20

33

15
10

16

5

14

14

16

18

22

25

27

35

36

28

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (FY)
*These annual dividends per share are adjusted retroactively, reﬂecting the consolidation of shares. (planned)

Policy on Cross-shareholdings
The Group reduces its cross-shareholdings asappropriate considering such factors as the market
environment and share price trends (cross-shareholdings
are the holdings of listed shares, other than those of
subsidiaries and associates, which are not held for pureinvestment purposes). However, if the Company
receives any request for a cross-shareholding from a
local government or any company based in the area
where the Company will promote its key strategy, theUrban Dominant strategy, executives will thoroughly
examine the appropriateness of such cross-shareholding
from a perspective of “Coexistence with Local
Communities,”one of our key ESG materiality issues.
The Board of Directors validates the rationale for
the Group to maintain its principal cross-shareholdings
on a yearly basis from both qualitative and quantitative
perspectives. From qualitative perspectives, the Boardof Directors considers such business strategies as
maintaining harmonious and favorable business
relationships with corporate customers and business
partners and securing supply chains. From quantitative
perspectives, the Board of Directors examines whether
the profitability, including dividends and income from
related sales, exceeds cost of capital for each of theissues of cross-shareholding.

Changes in number of issues of cross-shareholdings and their book value(Book value)120(No of issues)
80

69
100

64

Book value (¥100 mn)
Number of issues
at year end

60

80

70
60

48

50

41

60

40
24

40

30
20

20
0

10
2014

2015

2016

2017

2018

0
2019 (FY)
forecast

Integrated Report 201961

Decisions with respect to voting on mattersregarding cross-shareholdings are made from both ofthe perspectives of whether cross-shareholdings
contribute to the sustainable growth of and the
medium- to long-term enhancement of the corporate
value of the company whose shares are held andwhether the cross-shareholdings contribute to theGroup’
s sustainable growth and medium- to long-term
enhancement of corporate value. Specifically, inregard to proposals that we consider to be of highpriority with respect to strengthening corporate
governance, such as proposals relating to thecorporate governance system (appointment ofofficers), proposals relating to shareholder return(appropriation of surplus) and proposals that have aneffect on shareholder value (introduction of takeover
defense measures), we establish policies upon which
to base judgment of our exercise of voting rights, andacting as the Group as a whole, we take a responsethat is in line with such policies. If necessary, we
engage in dialogue with companies whose shares wehold when we exercise voting rights.

Improvement of Shareholders Meetings
With the aim of engaging in constructive dialogue
with shareholders, we ensure that there is adequate
time for our shareholders to consider matters uponwhich they will exercise their voting rights. To that
end, we send convocation notices of the Shareholders
Meeting as early as possible (at least three weeks
prior to the date of the meeting) and at the same time
we post notice details on financial instruments
exchanges’and the Company’s websites as early aspracticably possible before sending out the
convocation notices. The convocation notice of the
12th Annual Shareholders Meeting was madeavailable on financial instruments exchanges’and theCompany’s websites before delivery of the printed
version and four weeks prior to the date of the
Shareholders Meeting.
We give consideration to ensuring that ourshareholders, including domestic and overseas
institutional investors, are able to conveniently
exercise their voting rights. To that end, we haveadopted online and other means of exercising voting
rights and otherwise use an electronic platform forexercising voting rights. We also prepare English
translations of our convocation notices and makethem available on our website and the Electronic
Voting Platform so that our overseas shareholders areable to properly exercise their voting rights.

Disclosure and IR activities
Under the Basic Mission Statement that“we aim atdeveloping the Group by contributing to society atlarge as a fair and reliable corporation,”the Company
promotes IR activities for the purpose of maintaining
and developing relations of trust with stakeholders
including shareholders and investors. By accurately

62

and plainly disclosing important information about theCompany in a fair, timely and appropriate manner, we
promote IR activities with the aim of improving
management transparency and helping stakeholders
better understand the Company.
The Company discloses important company
information to which the timely disclosure rules apply
through the TDnet (Timely Disclosure Network)
system provided by the Tokyo Stock Exchange, while
posting the same information on the Company’swebsite, etc. as quickly as possible. With respect toany information that is deemed to help stakeholders
better understand the Company, even where thetimely disclosure rules do not apply to it, the Company
works to publicize such information on its website andpublishing integrated reports. The Company releases
information in a timely and appropriate manner bymaking use of the TDnet and EDINET platforms, theCompany’s website and other means in line with theattributes of the information being disclosed. Moreover,to ensure that we disclose information in an impartial
manner, we prepare and release English translationsof our convocation notices of the Shareholders
Meetings, integrated reports, timely disclosure
information, financial information and the Company’swebsite. The Company publishes on its website apresentation video and materials and a Q&A summaryof financial results presentations and an ESG
presentation, and a Q&A summary of financial results
teleconferences both in Japanese and English as
promptly as possible.
The Company’s efforts to improve communication
include timely disclosure and information dissemination
on its website in combination with various briefings
and meetings and responses to inquiries fromshareholders and investors on a daily basis. The
comments and requests received from shareholders
and investors are widely shared among the Company
and the relevant companies in the Group, and we referto them in managing the Company to increase
corporate value.

Risk management and compliance
The Company has established the “RiskManagement Committee”within its execution system
in order to manage and address strategic and otherrisks as a whole systematically from a company-wide
perspective. The Risk Management Committee
manages and addresses risks as a whole systematicallyfrom a group-wide perspective, including risks
associated with positive strategies in order to ensure
growth opportunities, and makes management
decisions specifically focusing on risk management.
The Committee is chaired by President andRepresentative Executive Officer and consists ofmembers such as the Senior Executive General
Managers of the supervisory units and the presidents
of main operating companies. The Committee
assesses a variety of risks, instructs a business unit incharge to develop and implement necessary measures,Governance

Major dialogue activities with investors in fiscal year 2018
Item

Remarks

Financial results presentations for institutional
investors/analysts (explanation of results andbusiness management)

Twice

Posted a streaming video and a Q&A summary of eachpresentation in Japanese and English on the Company’s website.

Financial results teleconferences for institutional
investors/analysts (1Q and 3Q)

Twice

Posted a Q&A summary of each presentation in Japanese andEnglish on the Company’s website.

ESG presentation for institutional investors/
analysts

Once

Posted a streaming video and a Q&A summary of eachpresentation in Japanese and English on the Company’s website.

Store tours for institutional investors/analysts

Once Held a store tour of Ginza Six for overseas investors.

Overseas IR

3 times/45
1 time each in Europe, North America and Asia.
companies

Conferences hosted by securities companies(in Japan and overseas)

4 times/41
3 times in Japan and 1 time overseas.
companies

Individual meetings for institutional investors

163 times

Briefings for individual investors

16 times

and monitors the progress thereof by using extensive
specialized knowledge of the Committee members
chosen from among the supervisory units.
Changes in business environment are consideredunavoidable uncertainties for companies. However,
the Company recognizes such uncertainties, that is,risks, which entail both“opportunities”on the positiveside and“threats”on the negative side, and is working
to manage risks associated with strategies listed in
the Medium-term Business Plan both from theperspectives of“risk hedging”and“risk taking”towardachieving growth.
In the fiscal year 2019, the Company extracted 137
risks in total relating to the Group and, out of them,
identified 15 as“business risks”that require special
attention. In addition to these, in recent years we haveseen more abnormal weather patterns and typhoons,floods and other natural disasters resulting from theglobal warming, while there have been growing
concerns about the world political instabilities andeconomic slowdown which are deemed to greatly
impact financial risks. Under such circumstances, asa matter of high priority, the Company is also
identifying and addressing such risks in relation tonatural hazards and financial risks as they could havea potentially considerable impact on the Group’sbusiness activities.
The Company has established the “Compliance
Committee”(whose membership includes a corporate
lawyer) for the purpose of appropriately addressing theissues of the Group compliance management
practices. The Committee, chaired by the President
and Representative Executive Officer, draws up a
policy for addressing matters involving serious
compliance-related violations, continuously oversees
development of the foundations of the compliancesystem (e.g. preparation of promotion systems andplans) and the status of implementation through close
collaboration with departments in charge of promoting

Held mostly by visiting or inviting them and sometimes via
teleconference.
7 times in Tokyo, 3 times in Osaka, 2 times in Nagoya, and 1 timeeach in Saitama, Sapporo, Kobe and Kyoto.

compliance, and promotes the observance of laws
and regulations, corporate ethics and other suchstandards.
Both Committees report details of their deliberations
to the Audit Committee regularly and in a timely
manner.

JFR Group Compliance Hotline
The Company has established a whistleblowing
system that enables all the Group’s officers andemployees as well as all individuals working at theGroup (including part-timers and employees seconded
from business partners) to notify the Compliance
Committee directly with respect to compliance-related
issues, and to seek corrective action. The Company
has set up points of contact for whistleblowers bothinternally and outside the Company (a corporate
lawyer). The Group’s internal company rules rigorously
provide for the whistleblowing system in terms ofprotecting the confidentiality of whistleblowers andprohibiting any disadvantageous treatment of any
whistleblower.

Integrated Report 201963GovernanceInterview with Outside Director

Interview with Outside Director
NISHIKAWA Koichiro
Biography
Apr 1970 Joined Hitachi, Ltd.
Aug 1995 Vice President of Hitachi America, Ltd.
Jun 2001 Managing Officer and General Manager of Global Business Development Division of
Hitachi, Ltd.
Apr 2003 Manager of Business Development Division of the same company
Jun 2003 Executive Officer and Manager of Business Development Division of the same company
Jan 2006 Vice President and Executive Officer in charge of Business Development of thesame company
Apr 2007 Senior Vice President and Executive Officer in charge of Business Development of
the same company
Apr 2010 Senior Vice President and Executive Officer of Hitachi Cable, Ltd.
Apr 2012 Senior Advisor of Hitachi Research InstituteMar 2014 Outside Director of Kyowa Hakko Kirin Co., Ltd.
May 2015 Audit & Supervisory Board Member of J. Front Retailing Co., Ltd. and Audit &Supervisory Board Member of Daimaru Matsuzakaya Department Stores Co. Ltd.
May 2017 Outside Director of J. Front Retailing Co., Ltd. (present)
May 2018 Director of Daimaru Matsuzakaya Department Stores Co. Ltd. (present)

Governance reform is shifting from“container”to“content”

Directors meetings in 2015, which I attended as an
Audit & Supervisory Board Member, for example, theagenda concerning investment was explained andI have been involved in the governance of the64

discussed only from a perspective of“whether or not it

Company as an Outside Audit & Supervisory Board

would

Member of the then Company with an Audit &statements, only P/L (statement of profit or loss) was

generate

profit.” Speakingoffinancial

Supervisory Board since May 2015 and as an Outside

discussed. At the recent Board of Directors meetings,

Director of the Company with Three Committees

we have mainly discussed what impact the invest(Nomination, Audit and Remuneration Committees)

would have on B/S (balance sheet), what effect itsince May 2017.

would have over the short, medium, and long terms toI think a full-fledged governance reform started after

increase ROE, what relationship would be between

the Governance Committee was created in Julyrisk and return, and furthermore, how it would be able

2015. Executive Directors and Outside Directors had

to contribute to capital received from shareholders formany discussions to establish a desirable governanceactual management from shareholder perspectives tosystem. The Governance Committee drew a proposal

achieve an ROE of 8%. Thus our managementthat the Company should transition to a Company

changed to ROE management in which we canwith Three Committees (Nomination, Audit anddiscuss based on B/S instead of focusing on P/L as

Remuneration Committees) to realize the establishment

in the past. I think this is a striking example showingofinmanagement valuing shareholder perspectives is

consideration of what we aim at including strengthening

steadily taking root. Recent discussions on ICTof oversight function by separating oversight fromstrategy particularly impressed me. We took time to

execution, greater clarity of authority and responsibility

consider from various angles not only measures toin business execution and promotion of agile

implement the Medium-term Business Plan such as

management,

andthe measures for remarkably leaping e-commerce

objectivity of management, and global investor
perspectives. As a result, the Company transitioned tobusiness but also a wide range of issues including“2025
DigitalCliff” involvingDX(digitala Company with Three Committees (Nomination,transformation) and appropriate allocation of roles

Audit and Remuneration Committees) in May 2017. In

and responsibilities between the head offices andJanuary 2019, the Governance Committee developed

operating divisions in the Group not only at the Board

into the Management Advisory Board where Presidentof Directors meetings but also preliminary hearing at

seeks active advice from Outside Directors. Now that

the Audit Committee and executive sessions attended

the“container”of governance has been created, it

by only Outside Directors. I recognize they are

evolved into the one for discussions to improve

included in the most important issues that will be“content”to be put in the container.

continuously followed up by the Board of Directors.

easy-to-understandgovernanceimprovementofsystemtransparency

The Board of Directors clearly changed after the

Since 2015, monitoring, questionnaires, interviews,

governance reform was launched. At the Board ofand quantitative and chronological analyses areGovernanceprovided by a third-party organization on a regularcalled“the most trusted man in America”for his liberalbasis to evaluate the effectiveness of the Board of
Directors. I reread the reports on the past fourand patriotic stance, to join the board as an outside

evaluations and found that concerning“agenda for thereality. By that I mean the majority of outside directors

Board of Directors meetings,”“time allocation inof the company I worked for before are foreigners

discussions,”“how to evolve discussions including

though the Company has no foreign directors. What
seemed unrealistic at that time has become a reality.

prior explanation about agenda”and“securing enoughdirector. Looking back, it is just about to become atime for discussions, having exhaustive discussions

From such experience, I am always aware of sharing

and narrowing down problems concerning important“common sense”as an Outside Director.

matters to reach a decision,”we are highly evaluatedbecause the framework is being completed.

We also need to pay attention to risk. By restating“risk” as “uncertainty,” the Company studies risk

On the other hand, particularly according to thefrom both positive side and negative side in relation tolatest evaluation,“there were few opinions from Outside

management strategy. Generally speaking, risk is

Directors among those who attended discussions,”“theconsidered negative. Therefore, I thought I had betterfocus of agenda should be on the matters related to theorganize the wording and particularly should be careful

progress of the Medium-term Business Plan, forto use the word “risk.” By restating “risk” asexample,”“the Audit Committee is not working enough”“uncertainty,” we can treat so-called “risk” asand“some Outside Directors are not satisfied with theuncertainty in a negative sense and“opportunity”asspeed of execution.”We have to keep them in mind. I

uncertainty in a positive sense and I think we canwould like to say the Board of Directors is evaluatedbetter organize it than ever before. I often tell thethat the framework is well in place and that the Board

Board of Directors that leaving the uncertain future oris at the phase of improving content to be put in theunforeseeable situation untouched is not management.

framework and the management capabilities andIf we leave it to fate, we need no managerial people.
In this sense, it is important to cover risks in a negative

execution capabilities to produces results.

Important role is to provide“common
sense”to management
I think the common sense of Outside Director isimportant. For example, a person who became amember of the management team after accumulating
experience in retail and department stores has
extensive knowledge about and expertise in the industry
but I am afraid his or her measure of management
decision making was developed in a limited environmentor to a limited extent. Common sense in Japan may not
be common sense in the rest of the world. I myself haveoften encountered such cases in my past experience.
In this sense, I think it is more important to share“common sense,”which means“common sense in
the world,”than to share my management ability andmanagement experience. In the 1980s, an industrial
spy scandal happened. The FBI conducted anundercover investigation and some employees ofJapanese electronics manufacturers were arrested. Atthat time, I was involved in resolving the scandal. A
famous American corporate lawyer made a defense
and finally it was resolved. The lawyer said,“Theoperation of your company lacks vitamin C.”I asked,“What do you mean by vitamin C?”and he answered,“It means common sense”and he added,“It lacks
common sense to do business globally. So you causedsuch an incident.”He also said that we should invite
Mr. Walter Cronkite, a renowned American journalist

sense and actively take chances in a positive sense.
As all the management should do is how they makedecisions for the uncertain future, it is important how
many options we will have when implementing them.
We need to analyze the probability and sensitivity ofeach option, implement the option that will maximize
corporate value over the medium to long term, andprepare a backup plan. We also have to think in detailabout how we will take it if it is a chance or how wewill cover it if it is a negative risk. Needless to say,quantitative analysis is essential for this purpose.
Speaking from my past experience of serving as an
outside director of a pharmaceutical company,
investments at pharmaceutical companies are highly
uncertain and large in scale, and if a wrong decision is
made, they will face a financial crisis. For this reason,
AI is used in a significant part of investment decision
making. With the current backdrop of increased big
data and simulation ability, I am beginning to think theera of“AI management”using them is just beginning.
The Company, which mainly operates retail business,
may need such ideas and thoughts. I was appointed as
the Chairperson of the Audit Committee in the current
fiscal year. Valuing provision of common sense to
management including these ideas and thoughts, I
will strive to audit not only illegal operations but also
whether or not the Company conducts risk-return
managementwithcomprehensively

balancedmanagement decision making for the uncertain future
to achieve the Medium-term Business Plan.

Integrated Report 201965

GovernanceManagement

Management(as of May 31, 2019)

Directors

KOBAYASHI Yasuyuki

TSUTSUMI Hiroyuki

MURATA Soichi

TACHIBANA FUKUSHIMA Sakie

Number of the Company’s shares held: 35,800
Number of other shares as stock-based remuneration not yet granted：10,037

Number of the Company’s shares held: 16,398
Number of other shares as stock-based remuneration not yet granted：5,855

Number of the Company’s shares held: 12,689

Outside Director
Number of the Company’s shares held: 5,500
Number of other shares as stock-based remuneration not yet granted：1,933

Chairperson of Board of Directors
Nomination Committee Member
Remuneration Committee Member

Audit Committee Member

Audit Committee Member

Chairperson of Nomination Committee
Remuneration Committee Member

Apr 1973
Feb 2003

Apr 1980
Mar 1993

Apr 1980
Mar 2000【Reasons for appointment】She has broad insight in internal and external
governance as a director at a US company’s global headquarters and as an
outside director at numerous Japanese companies. In addition, she has gained
corporate management experience as the president of a foreign-owned humanresource consulting company’s local Japanese branch, and accordingly
possesses in-depth knowledge regarding global human resources and theCompany expects her to reflect them in the management of the Group.

Jan 2004
Sep 2007
Jan 2008

Mar 2010

May 2010
May 2012
Apr 2013
May 2013
May 2015
May 2016
May 2017

Mar 2001
Sep 2007
Mar 2010
May 2013
Mar 2016
May 2017

Joined The Daimaru, Inc.
General Manager of Accounting Division of Hong
Kong Daimaru Limited
General Manager of Finance Headquarters of The
Daimaru, Inc.
General Manager of Finance Division of Administration
Unit of J. Front Retailing Co., Ltd.
General Manager of Finance Division of
Administration Unit of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Executive Officer and Senior General Manager ofFinance Division of Administration Unit of J. Front
Retailing Co., Ltd.
Senior General Manager of Finance and Accountingof Financial Strategy Unit of the same company
Director of the same company (present)

Sep 2002
Jan 2005
Jan 2006
Jan 2010
May 2010
Apr 2013

May 2013
May 2017

May 2019

Joined The Daimaru, Inc.
Senior Manager of Men’s Wear & Accessory
Division of Osaka Umeda Store of the same
company
Senior Manager of Business Planning Department
of Business Planning & CS Promotion Division of
Osaka Umeda Store of the same company
Deputy General Manager of Osaka Umeda Storeof the same company
Deputy General Manager of Osaka Umeda Storeand General Manager of Planning Office for New
Umeda Store of Head Office of the same company
Executive Store Manager of Osaka Umeda of thesame company
Corporate Officer and Executive Store Manager of
Daimaru Osaka Umeda of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Corporate Executive Officer, Executive General
Manager of Sales & Marketing Headquarters andSenior General Manager of Merchandising
Strategy Promotion Unit of the same company
Director and Corporate Executive Officer of thesame company
Managing Executive Officer, Senior Executive
General Manager of Administration Unit and in
charge of Compliance of J. Front Retailing Co.,Ltd.
Director of the same company (present)

Jun 1980
Sep 1987
Aug 1991
Jun 1993
Sep 2000
May 2001
Sep 2007
May 2009
Mar 2010
Jul 2010
Aug 2010
Jun 2011
May 2012
Jun 2013
Jun 2016

Joined Braxton International
Joined Bain & Company, Inc.
Principal Consultant of Japan Branch Office of Korn/
Ferry International
Partner of the same company
Regional Managing Director of Korn/Ferry
International-Japan and Member of the Board of Korn/
Ferry International (Global Headquarters)
President and Representative Director of Korn/Ferry
International-Japan and Member of the Board of Korn/
Ferry International (Global Headquarters)
President and Representative Director of Korn/Ferry
International-Japan
Chairman and Representative Director of the same
company
Outside Director of Bridgestone Corporation
President and Representative Director of G&S Global
Advisors Inc. (present)
Asia Pacific Senior Advisor of Korn/Ferry International
Outside Director of Ajinomoto Co., Inc. (retired in Jun 2019)
Outside Director of J. Front Retailing Co., Ltd. (present)
Outside Director of Mitsubishi Corporation
Outside Director of Ushio Inc. (present)

OTA Yoshikatsu

ISHII Yasuo

NISHIKAWA Koichiro

SATO Rieko

Outside Director
Number of the Company’s shares held: 8,300
Number of other shares as stock-based remuneration not yet granted：1,933

Outside Director
Number of the Company’s shares held: 2,700
Number of other shares as stock-based remuneration not yet granted：1,933

Outside Director
Number of the Company’s shares held: 1,300
Number of other shares as stock-based remuneration not yet granted：1,933

Outside Director
Number of the Company’s shares held: 300

Chairperson of Remuneration Committee
Nomination Committee Member

Nomination Committee Member
Remuneration Committee Member

Chairperson of Audit Committee

Audit Committee Member【Reasons for appointment】He has abundant insight gained through his
extensive experience acting as a manager of a holding company. In thatcapacity, he promoted the corporate merger between Minolta Co., Ltd.
and Konica Corporation, and has served as a chairman of the board of
directors of a company with committees [currently a company with threecommittees (nomination, audit and remuneration committees)] and theCompany expects him to reflect them in the management of the Group.

【Reasons for appointment】He has long-standing overseas
work experience and possesses insight based on his abundant
experience in the field of global corporate management
outside the retail industry, such as special familiarity withbusiness development in overseas countries and the Company
expects him to reflect them in the management of the Group.

【Reasons for appointment】He has useful insight evenwith respect to financial matters from his practicalexperience in business alliances, M&A, businessreforms, and his involvement in numerous importantinternational negotiations and the Company expects
him to reflect them in the management of the Group.

【Reasons for appointment】She has abundant experience as an
outside director and outside audit & supervisory board member atother companies, in addition to having made a career in handlingmany cases with in-depth and specialized knowledge as an attorneyat law specializing in corporate legal affairs and the Company
expects expect her to reflect them in the management of the Group.

Apr 1970
Jun 2000

Apr 1970
Aug 1995
Jun 2001

Apr 1984
Aug 1989
Jul 1998
Jun 2004

Apr 1964
Jun 1991
Jul 1994

Jun 1995
Jun 1999
Apr 2001
Aug 2003
Oct 2003
Apr 2006
Apr 2009
Jun 2012
Apr 2013

66

Joined The Daimaru, Inc.
Associate Director and General Manager of
Sapporo Store of the same company
General Manager of Tokyo Store of the same
company
Corporate Officer of J. Front Retailing Co., Ltd.
Director and Corporate Officer, Deputy Executive
General Manager of Department Store Operations
Headquarters and Executive General Manager ofMerchandising Management Unit of Head Office of
The Daimaru, Inc.
Director and Corporate Officer, Senior Executive
General Manager of Sales and Marketing
Headquarters and Senior General Manager ofMerchandise Strategy Unit of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Director and Corporate Executive Officer of thesame company
Director of Parco Co., Ltd.
Managing Executive Officer and Senior Executive
General Manager of Affiliated Business Unit of J.
Front Retailing Co., Ltd.
Director and Managing Executive Officer of thesame company
Director and Senior Managing Executive Officer ofthe same company
Representative Director of the same company
Director and Chairperson of Board of Directors of
the same company (present)

Apr 2014
Jun 2014
May 2015
Jun 2017

Joined Minolta Camera Co., Ltd.
Director, General Manager of Copying Machine
Business Division and General Manager of Copying
Machine Sales Division of the same company
Director and Executive General Manager ofInformation Device Business Management Unit andExecutive General Manager of Information Device
Sales Unit of Minolta Co., Ltd.
Managing Director of the same company
President and Representative Director of the same
company
President and Executive Officer and Representative
Director of the same company
Director and Vice President and Representative
Executive Officer of Konica Minolta Holdings, Inc.
President and CEO of Konica Minolta Technologies,
Inc.
Director, President and CEO of Konica Minolta
Holdings, Inc.
Director and Chairman of the Board of Directors of
the same company
Outside Director of Yamaha Corporation
Director and Chairman of the Board of Directors ofKonica Minolta, Inc.
Director of the same company
Special Advisor of the same company
Outside Director of J. Front Retailing Co., Ltd. (present)
Honorary Advisor of Konica Minolta, Inc. (present)

Jan 2001
Mar 2003
Jun 2003
Jun 2004
Apr 2005
Jun 2008
Jun 2011
May 2015

May 2017
May 2018

Joined Yamanouchi Pharmaceutical Co., Ltd.
Director of the Board and Director of Ethical
Products Marketing Department of Sales &Marketing Division of the same company
Director of the Board of the same company and
Chairman of Yamanouchi Europe B. V.
Director of the Board of Yamanouchi PharmaceuticalCo., Ltd. and Chairman of Yamanouchi U.K. Limited
and Chairman of Yamanouchi Europe B. V.
Managing Director of the Board of Yamanouchi
Pharmaceutical Co., Ltd.
Senior Corporate Executive of the same company
Senior Corporate Executive of Astellas Pharma Inc.
and Chairman & CEO of Astellas Pharma Europe
Ltd.
Executive Vice President and Representative
Director of Astellas Pharma Inc.
Vice Deputy Chairman and Representative Directorof the same company
Outside Audit & Supervisory Board Member of J.
Front Retailing Co., Ltd.
Audit & Supervisory Board Member of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd.
(present)
Director of Daimaru Matsuzakaya Department
Stores Co. Ltd. (present)

Apr 2003
Jun 2003
Jan 2006
Apr 2007
Apr 2010
Apr 2012
Mar 2014
May 2015

May 2017
May 2018

Joined Hitachi, Ltd.
Vice President of Hitachi America, Ltd.
Managing Officer and General Manager of Global
Business Development Division of Hitachi, Ltd.
Manager of Business Development Division of thesame company
Executive Officer and Manager of Business
Development Division of the same company
Vice President and Executive Officer in charge ofBusiness Development of the same company
Senior Vice President and Executive Officer incharge of Business Development of the same
company
Senior Vice President and Executive Officer ofHitachi Cable, Ltd.
Senior Advisor of Hitachi Research InstituteOutside Director of Kyowa Hakko Kirin Co., Ltd.
Outside Audit & Supervisory Board Member of J.
Front Retailing Co., Ltd.
Audit & Supervisory Board Member of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd.
(present)
Director of Daimaru Matsuzakaya Department
Stores Co. Ltd. (present)

Jun 2012
Jun 2015
Oct 2016
May 2018
May 2019

Registered as attorney at law
Shearman & Sterling LLP
Partner of Ishii Law Office (present)
External Audit & Supervisory Board Member of
Ajinomoto Co., Inc.
Outside Corporate Auditor of NTT Data Corporation(present)
Outside Director of The Dai-ichi Life Insurance
Company, Limited
Outside Director of Dai-ichi Life Holdings, Inc.
(Audit & Supervisory Committee Member) (present)
Outside Director of J. Front Retailing Co., Ltd.
(present)
Director of Daimaru Matsuzakaya Department
Stores Co. Ltd. (present)*The numbers of the Company’s shares held by Directors are as of February 28, 2019.

GovernanceDirectors

Executive Officers
YAMAMOTO Ryoichi

President and Representative Executive Officer

YOSHIMOTO Tatsuya

UCHIDA Akira

YAMAMOTO Ryoichi

YOSHIMOTO Tatsuya

Outside Director
Number of the Company’s shares held: 0

Number of the Company’s shares held: 79,366

Number of the Company’s shares held: 49,459

Audit Committee Member

President and Representative Executive Officer
Nomination Committee Member
Remuneration Committee Member

Representative Managing Executive Officer【Reasons for appointment】He has broad experience andknowledge as the person responsible for management planning,
IR and finance and accounting divisions. In addition, as a memberof the“Council of Experts Concerning the Corporate GovernanceCode” and follow-up committees, he has been involved informulation and promotion of said code, and accordingly
possesses a high level of expertise and the Company expects
him to reflect them in the management of the Group.

Apr 1973
May 2003

Apr 1979
Mar 2000

Apr 1975
Jun 1996
Jun 2000
Jun 2004
Jun 2005
Jun 2009
Jun 2012

Jun 2016
Mar 2019
May 2019

Joined Toray Industries, Inc.
Executive Vice President of Toray Industries (America), Inc.
General Manager on Special Assignment of Corporate Strategic
Planning Division 1, General Manager on Special Assignment ofCorporate Communications Department of Toray Industries, Inc.
Counsellor of Corporate Strategic Planning Division andCounsellor of Investor Relations Department of the same
company
Member of the Board, General Manager of Finance andController’s Division of the same company
President of Toray Holding (USA), Inc.
Senior Vice President (Member of the Board), General Manager
of Finance and Controller’s Division of Toray Industries, Inc.
President of Toray Holding (USA), Inc.
Senior Vice President (Member of the Board) in charge of CSR;
General Manager of General Administration and Legal Division,
Investor Relations Department, Corporate Communications
Department and Advertising Department; and General Manager
of Tokyo Head Office of Toray Industries, Inc.
Adviser of the same company
Retired from Adviser of the same company
Outside Director of J. Front Retailing (present)

Sep 2007

Mar 2008
Mar 2010
Sep 2012
Apr 2013
May 2017

Joined The Daimaru, Inc.
President and COO and General Manager ofDepartment Store Operations of Group Headquartersof the same company
Director and in charge of Sales Reform and Out-ofStore Sales Reform of J. Front Retailing Co., Ltd.
Executive General Manager of Department StoreOperations Headquarters and Executive General
Manager of Planning Office for New Umeda Storeof Head Office of The Daimaru, Inc.
Director of Matsuzakaya Co., Ltd.
Executive General Manager of Sales Headquartersof Head Office of The Daimaru, Inc.
President and Representative Director of Daimaru
Matsuzakaya Department Stores Co. Ltd.
President and Representative Director of the same
company and President and Representative Directorof Daimaru Matsuzakaya Sales Associates Co. Ltd.
President and Representative Director of J. Front
Retailing Co., Ltd.
Director, President and Representative Executive
Officer of the same company (present)

Jan 2008
May 2008
Jan 2010

Mar 2010
May 2012
Apr 2013

May 2013
May 2017

Joined The Daimaru, Inc.
Senior Manager of Preparatory Office for Opening
Sapporo Store of Planning Office for Sapporo Storeof Head Office of the same company
General Manager of Tokyo Store of the same
company
Corporate Officer and General Manager of TokyoStore of the same company
Corporate Officer, General Manager of Sales
Planning Promotion Division and General Manager
of Marketing Planning Promotion Division of
Department Stores Coordination Division of J. Front
Retailing Co., Ltd.
Corporate Officer and Senior General Manager ofManagement Planning Division of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Director and Corporate Officer of the same
company
President and Representative Director of the same
company(present)andPresident
andRepresentative Director of Daimaru Matsuzakaya
Sales Associates Co. Ltd. (present)
Director of J. Front Retailing Co., Ltd. (present)
Representative Managing Executive Officer of thesame company (present)

Representative Managing Executive Officer
President and Representative Director of Daimaru
Matsuzakaya Department Stores Co. Ltd.
President and Representative Director of Daimaru
Matsuzakaya Sales Associates Co. Ltd.

MAKIYAMA Kozo

Managing Executive Officer
Director, President and Representative
Executive Officer of Parco Co., Ltd.

SAWADA TaroManaging Executive Officer
Senior Executive General Manager of Management
Strategy Unit and Senior General Manager of New
Business Division and in charge of Risk Management

WAKABAYASHI Hayato

Managing Executive Officer
Senior Executive General Manager of Financial Strategy Unit andSenior General Manager of Financing and Finance Policy Division

YUNOKI Kazuyo

Managing Executive Officer
Senior Executive General Manager of Affiliated Business Unit

ARISAWA Hisashi

Managing Executive Officer
Senior Executive General Manager of
Administration Unit and in charge of Compliance

TADATSU Takehiko

Executive Officer
Senior Executive General Manager of Human Resources
Strategy Unit and Senior General Manager of Group Human
Resources Development Division and Executive Officer andExecutive General Manager of Human Resources
Development Division of Administration Headquarters of
Daimaru Matsuzakaya Department Stores Co. Ltd.

MAKITA Takayuki

MAKIYAMA Kozo

WAKABAYASHI Hayato

Number of the Company’s shares held: 17,100

Number of the Company’s shares held: 6,359

Managing Executive Officer

Managing Executive Officer

Apr 1981
Mar 2004

Apr 1985

Mar 2007
Mar 2008

May 2008
Mar 2009
Mar 2010
Mar 2011
May 2011
May 2013
May 2017

Joined Parco Co., Ltd.
Executive Officer and Executive General Manager
of Store Operation Division of the same company
Managing Executive Officer and Executive General
Manager of Store Management Division of the same
company
Senior Executive Officer, Senior Executive General
Manager of Store Operation Headquarters andExecutive General Manager of Store Management
Division of the same company
Director and Senior Executive Officer of the same
company
Supervisor of Store Operation Division of the same
company
In charge of Store Management of the same
company
In charge of Business Management of the same
company
Director, President and Representative Executive
Officer of the same company (present)
Director of J. Front Retailing Co., Ltd. (present)
Director and Managing Executive Officer of thesame company (present)

Apr 1998
Apr 2007
Feb 2009
Jul 2013
May 2015
Sep 2015
Mar 2016
May 2016
May 2017
May 2018

Joined Matsushita Electric Industrial Co., Ltd.
(present Panasonic Corporation)
President of Panasonic Financial Center Malaysia
Co., Ltd.
Director and Chief Executive Officer of Matsushita
Electric (China) Finance Limited
Finance Planning Team Leader (Manager) of
Headquarters Finance & IR Group of Panasonic
Corporation
General Manager of Finance & IR Group of
Corporate Strategy Division and Finance Planning
Team Leader (Director) of Panasonic Corporation
Joined J. Front Retailing Co., Ltd.
In charge of Finance Policy of Administration Unitof the same company
Executive Officer and in charge of Financial Strategy
and Policy of Administration Unit of the same company
Senior Executive General Manager of Financial
Strategy Unit (present) and in charge of Finance
Policy of the same company
Director of the same company (present)
Managing Executive Officer (present) and in charge ofFinancing and Finance Policy of the same company
Director and Managing Executive Officer and Senior
General Manager of Financing and Finance Policy
Division of the same company (present)

Executive Officer
Senior General Manager of Management Planning Division and Group
Communications Promotion Division of Management Strategy Unit

NAKAYAMA Takashi

Executive Officer
Senior General Manager of Group Digital
Strategy Division of Management Strategy Unit

IWATA Yoshimi

Executive Officer
Senior General Manager of Budget and Management
Support Division of Financial Strategy Unit

NINOBE Mamoru

Executive Officer
President and Representative Director of JFR Card Co., Ltd.

KONDO Yasuhiko

Executive Officer
President and Representative Director of J. Front Design & Construction Co., Ltd.

ONO Keiichi

Executive Officer
President and Representative Director of Dimples’Co., Ltd.

Integrated Report 201967

J. Front Retailing Group

Group Companies

Group Companies
Department Store Business / Real Estate Business
Daimaru Matsuzakaya Department Stores Co. Ltd.
Location: 18-11, Kiba 2-chome, Koto-ku, Tokyo 135-0042
Capital: ¥10,000 million Investment ratio: 100%
http://www.daimaru-matsuzakaya.com

Daimaru Osaka Shinsaibashi Store

Daimaru Suma Store

Daimaru Osaka Umeda Store

Daimaru Ashiya Store

Daimaru Tokyo Store

Matsuzakaya Shizuoka Store

Daimaru Kyoto Store

Matsuzakaya Takatsuki Store

Location: 7-1, Shinsaibashisuji 1-chome, Chuo-ku, Osaka 542-8501
Phone: +81-6-6271-1231 Opened (Present location): November 1726

Location: 1-1, Umeda 3-chome, Kita-ku, Osaka 530-8202
Phone: +81-6-6343-1231 Opened: April 1983

Location: 9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-6701
Phone: +81-3-3212-8011 Opened: October 1954

Location: 7 9, Tachiuri Nishimachi, Shijo-dori Takakura Nishi-iru,
Shimogyo-ku, Kyoto 600-8511
Phone: +81-75-211-8111 Opened (Present location): October 1912

Daimaru Kobe Store

Location: 40, Akashimachi, Chuo-ku, Kobe, Hyogo 650-0037
Phone: +81-78-331-8121 Opened (Present location): April 1927

Daimaru Sapporo Store

Location: 7, Nishi 4-chome, Kita 5-jo, Chuo-ku, Sapporo, Hokkaido 060-0005
Phone: +81-11-828-1111 Opened: March 2003

Matsuzakaya Nagoya Store

Location: 16-1, Sakae 3-chome, Naka-ku, Nagoya, Aichi 460-8430
Phone: +81-52-251-1111 Opened: March 1910

Location: 2-4, Nakaochiai 2-chome, Suma-ku, Kobe, Hyogo 654-0154
Phone: +81-78-791-3111 Opened: March 1980

Location: 1-31, Funato-cho, Ashiya, Hyogo 659-0093
Phone: +81-797-34-2111 Opened: October 1980

Location: 10-2, Miyuki-cho, Aoi-ku, Shizuoka 420-8560
Phone: +81-54-254-1111 Opened: November 1932

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-682-1111 Opened: November 1979

Matsuzakaya Toyota Store

Location: 85-1, Nishimachi 6-chome, Toyota, Aichi 471-8560
Phone: +81-565-37-1111 Opened: October 2001

Real Estate Division

Location: 18-11, Kiba 2-chome, Koto-ku, Tokyo 135-0042
Phone: +81-3-6860-1141

Corporate Sales Division

Location: 6th Fl., Kuromon Annex, Matsuzakaya Ueno Store, 18-6,
Ueno 3-chome, Taito-ku, Tokyo 110-0005
Phone: +81-3-5846-1431

Matsuzakaya Ueno Store

Location: 29-5, Ueno 3-chome, Taito-ku, Tokyo 110-8503
Phone: +81-3-3832-1111 Opened: April 1768

The Hakata Daimaru, Inc.

Kochi Daimaru Co., Ltd.

Location: 4-1, Tenjin 1-chome, Chuo-ku, Fukuoka 810-8717
Phone: +81-92-712-8181 Capital: ¥3,037 million Investment ratio: 69.9%
http://www.daimaru.co.jp/fukuoka/index.html

Location: 6-1, Obiyamachi 1-chome, Kochi 780-8566
Phone: +81-88-822-5111 Capital: ¥300 million Investment ratio: 100%
http://www.kochi-daimaru.co.jp/

The Shimonoseki Daimaru, Inc.
Location: 4-10, Takezaki-cho 4-chome, Shimonoseki, Yamaguchi 750-8503
Phone: +81-83-232-1111 Capital: ¥480 million Investment ratio: 100%
http://shimonoseki.daimaru.co.jp/

Parco Business
Parco Co., Ltd. (Shopping complex business)
Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-3477-5710 Capital: ¥34,367 million Investment ratio: 65.2％

PARCO（Singapore）Pte Ltd (Shopping complex business)
Location: 10 Anson Road #09-05/06 International Plaza Singapore 079903
Phone: +65-6595-9100 Capital: S$4.5 million Investment ratio: 65.2％

Neuve A Co., Ltd. (Retail business)
Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-5428-2600 Capital: ¥490 million Investment ratio: 65.2％

68

Parco Space Systems Co., Ltd.

(Space engineering and management business)

Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-5459-6811 Capital: ¥490 million Investment ratio: 65.2％

Parco Digital Marketing Co., Ltd.
(Internet-related business)

Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-3477-8910 Capital: ¥10 million Investment ratio: 65.2％

J. Front Retailing Group

Credit and Finance Business
JFR Card Co., Ltd.
Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-686-0108 Capital: ¥100 million Investment ratio: 100％
http://www.jfr-card.co.jp/

Other
Daimaru Kogyo, Ltd. (Wholesale business)
Location: Yushutsu Seni Kaikan, 4-9, Bingomachi 3-chome, Chuo-ku,
Osaka 541-0051
Phone: +81-6-6205-1000 Capital: ¥1,800 million Investment ratio: 100％
http://www.daimarukogyo.co.jp/

Daimaru Kogyo International Trading (Shanghai) Co., Ltd. (Wholesale business)
Location: 6 th Fl., Heng Seng Bank Tower, 1000 Lujiazui Ring Rd.,
Pudong New Area, Shanghai, China
Phone: +86-21-6841-3588 Capital: U.S.$2 million Investment ratio: 100％

Daimaru Kogyo (Thailand) Co., Ltd. (Wholesale business)
Location: Unit 1902, 19th Fl., Sathorn Square Office Building, 
98 North Sathorn, Kwaeng Silom, Khet Bangrak, Bangkok 10500, Thailand
Phone: +66-2163-2903
Capital: THB202 million Investment ratio: 100％

Taiwan Daimaru Kogyo, Ltd. (Wholesale business)
Location: R oom 709, No. 142, Sec. 3, Ming Chuan East Road, Taipei 10542, Taiwan, R.O.C.
Phone: +886-2-2718-7215
Capital: NT$60 million Investment ratio: 100％

J. Front Design & Construction Co., Ltd.

(Design and construction contracting and manufacture and sale of furniture)

Location: 1 6F•17F, Harumi Island Triton Square Office Tower W Bldg.
1-8-8, Harumi, Chuo-ku, Tokyo, 104-0053
Phone: +81-3-6890-6710
Location: 2nd Fl., Nomura Fudosan Osaka Bldg., 8-15,
Azuchimachi 1-chome, Chuo-ku, Osaka 541-0052
Phone: +81-6-4705-6200
Capital: ¥100 million Investment ratio: 100％
http://www.jfdc.co.jp/

Dimples’Co., Ltd. (Staffing service)
Location: 2 2nd Fl., Osaka Ekimae 4th Bldg., 11-4, Umeda 1-chome,
Kita-ku, Osaka 530-0001
Phone: +81-6-6344-0312 Capital: ¥90 million Investment ratio: 100%
http://www.dimples.co.jp/

Consumer Product End-Use Research Institute Co., Ltd.
(Merchandise test and quality control)

Location: 2 0th & 21st Fls., Edobori Center Bldg., 1-1,
Edobori 2-chome, Nishi-ku, Osaka 550-0002
Phone: +81-6-6445-4670
Location: 2nd Fl., Kuromon Annex, Matsuzakaya Ueno Store,
18-6, Ueno 3-chome, Taito-ku, Tokyo 110-0005
Phone: +81-3-6695-6780
Location: 1
 0th Fl., Matsuzakaya Park Place, 2-36, Sakae 5-chome,
Naka-ku, Nagoya, Aichi 460-0008
Phone: +81-52-261-2030
Capital: ¥450 million Investment ratio: 100％
http://www.shoukaken.jp/

Angel Park Co., Ltd. (Parking)Location: 16-10, Sakae 3-chome, Naka-ku, Nagoya, Aichi 460-0008
Phone:+81-52-261-5746 Capital: ¥400 million Investment ratio: 50.2％
http://www.angelpark.co.jp/

JFR Service Co. Ltd.

(Commissioned back-office service / leasing / parking management)

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-681-7245 Capital: ¥100 million Investment ratio: 100％

JFR Information Center Co., Ltd. (Information service)
Location: 3-24, Osaka 1-chome, Tennoji-ku, Osaka 543-0062
Phone: +81-6-6775-3700 Capital: ¥10 million Investment ratio: 100％
http://www.jfr-ic.jp/

Daimaru Matsuzakaya Sales Associates Co. Ltd.
(Commissioned sales and store operations)

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone:+81-72-684-8145 Capital: ¥90 million Investment ratio: 100％

Daimaru Matsuzakaya Tomonokai Co., Ltd.
(Specified prepaid transaction service）

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-684-8101 Capital: ¥100 million Investment ratio: 100％
http://www.dmtomonokai.co.jp/

J. Front Foods Co., Ltd. (Restaurant)
Location: 1 01, Louis Chatelet Nakanoshima, 3-92, Nakanoshima 5-chome, Kita-ku, Osaka 530-0005
Phone: +81-6-7220-0290 Capital: ¥100 million Investment ratio: 100%
http://www.j-frontfoods.co.jp/

Integrated Report 201969

J. Front Retailing GroupStores (Map)

Daimaru, Matsuzakaya and ParcoCover Major Big Cities across Japan

Sapporo Parco

Daimaru
SapporoSapporo Zero Gate

J. Front Retailing Group operates stores in major cities across Japan, from Hokkaido
in the north to Kumamoto, Kyushu in the south.
The Department Store Business operates 16“Daimaru”and“Matsuzakaya”stores.
The Parco Business operates 18“Parco”shopping complexes*.
We also operate“Ginza Six”and 10“Zero Gate”stores in a new business format
which develops urban-style low- to medium-rise shopping complexes.
The Group will make the best use of the well-balanced network of store assets
in major cities throughout Japan and accelerate new store opening anddevelopment strategies for further growth.
*Including Shibuya Parco, which is temporarily closed for rebuilding● Daimaru● Matsuzakaya● ParcoSendai Parco● Zero Gate
(As of June 30, 2019)

Matsumoto Parco

Shizuoka Parco

Hiroshima
Zero Gate

Matsuzakaya Nagoya

Kanto area

Hiroshima
Zero Gate 2

Kansai area

NagoyaZero Gate

Fukuoka Parco
Nagoya Parco
Matsuzakaya
ToyotaMatsuzakaya
Shizuoka

Hiroshima Parco

Hakata Daimaru
Fukuoka Tenjin

Kochi Daimaru
Shimonoseki Daimaru

Kumamoto Parco
SAN-A Urasoe West Coast PARCO CITY

70

J. Front Retailing Group

Ginza Six (Opened in April 2017)

Kanto area
Urawa Parco
Shintokorozawa
Parco

Ikebukuro Parco
Matsuzakaya Ueno
Ueno Frontier Tower

Hibarigaoka Parco

Parco̲ya
Kinshicho Parco

Tsudanuma
Parco

Daimaru Tokyo

Kichijoji Parco

Ginza Six
Pedi Shiodome

Chofu Parco

Shibuya Parco

Scheduled to open inlate November 2019 after rebuilding

Harajuku
Zero Gate
KawasakiZero Gate

Shibuya
Zero Gate

Ueno Frontier Tower / Parco_ya (Opened in November 2017)

Scheduled to open in
August 2019

Kansai area

Daimaru Kyoto
Kyoto Zero Gate

Rendering of Shibuya Parco(Scheduled to open in late November 2019 after rebuilding)

Matsuzakaya Takatsuki
Daimaru Osaka Umeda
Sannomiya Zero Gate
Shinsaibashi Zero Gate
Daimaru Ashiya

Daimaru Kobe

Daimaru Suma

Dotonbori Zero Gate
Daimaru Osaka Shinsaibashi

Main building will open on September 20, 2019
after rebuilding.
PARCO will open in the north wing in spring 2021

Rendering of main building of Daimaru Shinsaibashi store(Main building will open on September 20, 2019 after rebuilding.)

Integrated Report 201971

J. Front Retailing GroupStores (Photos)

Daimaru and Matsuzakaya Stores

Daimaru Osaka Shinsaibashi (Floor space: 46,490㎡)*The new main building is scheduled to open on September 20, 2019.

Daimaru Osaka Umeda (Floor space: 64,000㎡)

Daimaru Suma (Floor space: 13,076㎡)

Shimonoseki Daimaru (Floor space: 23,912㎡)

Daimaru Ashiya (Floor space: 3,395㎡)

Kochi Daimaru (Floor space: 16,068㎡)

Daimaru Kyoto (Floor space: 50,830㎡)

Daimaru Kobe (Floor space: 50,656㎡)
Hakata Daimaru Fukuoka Tenjin(Floor space: 44,192㎡)

Daimaru Tokyo (Floor space: 46,000㎡)

Daimaru Sapporo (Floor space: 45,000㎡)

Matsuzakaya Nagoya (Floor space: 86,758㎡)

Matsuzakaya Takatsuki (Floor space: 17,387㎡)

Matsuzakaya Toyota (Floor space: 18,220㎡)

Matsuzakaya Ueno (Floor space: 21,759㎡)

Matsuzakaya Shizuoka (Floor space: 25,452㎡)

Ginza Six (Floor space: 47,000㎡)

Overseas Offices and Company
Paris Representative Office

Milan Representative Office

21 rue Auber, 75009 Paris, France
Phone : +33-1-4574-2151

Conservatorio 22 Business Center, Via Conservatorio 22, 20122 Milan, Italy
Phone : +39-02-77291

Daimaru Matsuzakaya Department Stores (Shanghai) Consulting Co., Ltd.
Huaxin Haixin Building 13F Rm-15A1, 666 Fuzhou Rd, Shanghai 200001, China
Phone : +86-21-6248-1538

As of June 30, 201972

Parco Stores

J. Front Retailing Group

Parco urban complexes

Sapporo Parco

3-3, Minami 1-jo Nishi, Chuo-ku,
Sapporo, Hokkaido
B2F-8F
Opened: August 24, 1975

Kichijoji Parco

1-5-1, Kichijojihoncho, Musashino, Tokyo
B2F-8F
Opened: September 21, 1980

Shizuoka Parco

6-7, Koyamachi, Aoi-ku, Shizuoka
B1F-8F
Opened: March 15, 2007

Sendai Parco

1-2-3, Chuo, Aoba-ku, Sendai, Miyagi
Main Building: B1F-9F
Opened: August 23, 2008
Parco 2: 1F-9F
3-7-5, Chuo, Aoba-ku, Sendai, Miyagi
Opened: July 1, 2016

Urawa Parco

11-1, Higashitakasago-cho, Urawa-ku, Saitama
B1F-7F
Opened: October 10, 2007

Ikebukuro Parco

Kinshicho Parco

Nagoya Parco

Hiroshima Parco

Fukuoka Parco

Shintokorozawa Parco

Hibarigaoka Parco

Matsumoto Parco

Shibuya Zero Gate

Harajuku Zero Gate

Nagoya Zero Gate

3-29-1, Sakae, Naka-ku, Nagoya, Aichi
West Building: B1F-11F
East Building: B1F-8F
Opened: June 29, 1989
South Building: B1F-10F
Opened: November 6, 1998
Parco midi: 1F-3F
Opened: March 27, 2015

4-27-14, Kotobashi, Sumida-ku, Tokyo
1F-7F
Opened: March 16, 2019

10-1, Hondori, Naka-ku, Hiroshima
Main Building: B1F-10F
Opened: April 9, 1994
New Building: B1F-9F
Opened: September 21, 2001

3-24-6, Ueno, Taito-ku, Tokyo
1F-6F
Opened: November 4, 2017

Chofu Parco

Shibuya Parco

Udagawa-cho 15-1, Shibuya-ku, Tokyo
B3F-19F
Scheduled to open in late November 2019Club Quattro
32-13, Udagawa-cho, Shibuya-ku, Tokyo
4F-5F
Opened: June 28, 1988

Parco_ya

1-28-2, Minami-Ikebukuro,
Toshima-ku, Tokyo
Main Building: B2F-8F
Opened: November 23, 1969
P’Parco: B2F-8F
Opened: March 10, 1994

1-38-1, Kojima-cho, Chofu, Tokyo
B1F-10F
Opened: May 25, 1989

2-11-1, Tenjin, Chuo-ku, Fukuoka
Main Building: B1F-8F
Opened: March 19, 2010
New Building: B2F-6F
Opened: November 13, 2014

Parco community complexes

Tsudanuma Parco

2-18-1, Maebaranishi, Funabashi, Chiba
Building A: B1F-6F
Building B: B1F-6F
Opened: July 1, 1977

1-2-1, Midori-cho, Tokorozawa, Saitama
Parco: B1F-5F
Let’s: B1F-4F
Opened: June 23,1983

1-1-1, Hibarigaoka, Nishitokyo, Tokyo
B1F-5F
Opened: October 8, 1993

1-10-30, Chuo, Matsumoto, Nagano
B1F-6F
Opened: August 23, 1984

Kumamoto Parco

5-1, Tetorihoncho, Chuo-ku, Kumamoto
B1F-9F
Opened: May 2, 1986

Zero Gate
Sapporo Zero Gate

3-15-1, Minami 2-jo Nishi, Chuo-ku, Sapporo, Hokkaido 16-9, Udagawa-cho, Shibuya-ku, Tokyo
B2F, 1F-4F
B1F-4F
Opened: February 26, 2016
Opened: April 16, 2011

4-31-12, Jingumae, Shibuya-ku, Tokyo 3-28-11, Sakae, Nagoya, Aichi
1F-4F
1F-3F
Opened: March 17, 2018
Opened: October 10, 2014

Shinsaibashi Zero Gate

Dotonbori Zero Gate

Hiroshima Zero Gate

Hiroshima Zero Gate 2

1-9-1, Shinsaibashisuji, Chuo-ku, Osaka
B2F-4F
Opened: April 13, 2013

1-8-22, Dotonbori, Chuo-ku, Osaka
1F-3F
Opened: April 20, 2013

2-7, Shintenchi, Naka-ku, Hiroshima
1F-3F
Opened: October 10, 2013

9-4, Hondori, Naka-ku, Hiroshima
1F-3F
Opened: September 10, 2016

Kyoto Zero Gate
83-1, Tachiuri Nakanocho, Shijo-dori
Takakura Higashi-iru, Shimogyo-ku, Kyoto
B2F-7F
Opened: November 4, 2017

Sannomiya Zero Gate

2-11-3, Sannomiya-cho Chuo-ku, kobe
1F-4F
Opened: September 14, 2018

Kawasaki Zero Gate

1-1 Ogawa-cho, Kawasaki-ku, Kawasaki, Kanagawa
1F-2F
Scheduled to open: August 8, 2019

Other stores
Pedi Shiodome

1-9-1, Higashishinbashi, Minato-ku, Tokyo
B2F-B1F, 2F
Opened: February 16, 2005 www.pedi-s.com

Overseas Japanese Restaurant zone
San-A Urasoe West Coast Parco City
3-1-1 Irijima, Urasoeshi, Okinawa
1F-3F for commercial facilities
Opened: June 27, 2019

Itadakimasu by PARCO

Level 3, 100AM Mall 100 Tras Street, Singapore 079027
Opened: December 1, 2016

Integrated Report 201973

J. Front Retailing Group

Share Information

Share Information
Status of Shares (As of February 28, 2019)
Number of shares authorized：1,000,000,000 shares
Number of shares issued：270,565,764 shares
Stock code：3086

Stock exchange listings：Tokyo and Nagoya
Transfer agent：Mitsubishi UFJ Trust and Banking Corporation
Number of shareholders：117,086
Number of shares held (1,000 shares)

Shareholding ratio (%)

1

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

23,913

9.05

2

Japan Trustee Services Bank, Ltd. (Trust Account)

13,822

5.23

3

Nippon Life Insurance Company

9,828

3,72

4

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

6,822

2.58

5

J. Front Retailing Kyoei Supplier Shareholding Association

6,129

2.32

6

The Dai-ichi Mutual Life Insurance Company

5,732

2.17

7

MUFG Bank, Ltd.

4,998

1.89

8

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

4,941

1.87

9

JP Morgan Securities Japan Co., Ltd.

4,693

1.77

3,861

1.46

Major shareholders

10 JP Morgan Chase Bank 385151

Note: Shareholding ratio is calculated by deducting treasury stock (6,587,000 shares).
The said treasury stock does not include the Company's shares held by the BIP Trust.

Distribution by shareholder type

Number of shareholders (People) Number of shares (1,000 shares)

Ratio (%)

Government and local public entities

ー

ー

ー

■

Financial institutions

86

112,879

41.72■

Financial instruments firms

43

15,990

5.91■

Other companies

866

17,931

6.63■

Foreign companies■

Individuals and others■

Treasury stock580

45,46016.80

115,51071,716

26.51

1

6,587

2.43

Distribution by shareholder type
Treasury stock
6,587,000 shares
2.43%
Individuals and others
71,716,000 shares
26.51%

Foreign companies
45,460,000 shares
16.80%

Corporate profile

Financial institutions
112,879,000 shares
41.72%
Financial instruments firms
15,990,000 shares
5.91%
Other companies
17,931,000 shares
6.63%

Company name

: J. Front Retailing Co., Ltd.

Main store: 10-1, Ginza 6-chome, Chuo-ku, Tokyo

Office: Nihonbashi 1-chome Mitsui Building, 4-1, Nihonbashi 1-chome, Chuo-ku, Tokyo

Established: September 3, 2007

Capital: ¥31,974 million

The Group's business lines :	Department store operation; retail; restaurants; wholesale; import and export; design, supervision andcontracting of construction works; direct marketing; credit cards; labor dispatch service; merchandise
inspection and consulting; and others
Number of employees (consolidated) : 6,695 (as of February 28, 2019)		Note: In addition to the above, there are 1,697 dedicated employees and 1,884 fixed-term employees on average during fiscal year 2018.

ＵＲＬ

74

: https://www.j-front-retailing.com/english/