Annual Securities Report(Report in accordance with Article 24, paragraph (1) of
the Financial Instruments and Exchange Act)The 16th fiscal year (from March 1, 2022 to February 28, 2023)

J. FRONT RETAILING Co., Ltd.
E03516The information contained in this Annual Securities Report is the same as the information in the Japanese originalof the Annual Securities Report for the 16th fiscal year that was disclosed on May 23, 2023. However, the English
translation of the report has not been audited by the Accounting Auditor.

Table of Contents
Annual securities report for the 16th fiscal year
Cover pageA.

Company Information .........................................................................................................................................4I.

Overview of the Company ............................................................................................................................. 4
1.

Summary of business results...................................................................................................................... 4

2.

Company history........................................................................................................................................ 7

3.

Description of business .............................................................................................................................. 94.

Overview of subsidiaries and associates ...................................................................................................11

5.

Information about employees .................................................................................................................. 13

II.

Overview of Business .................................................................................................................................. 14
1.

Management policy, management environment, issues to be addressed, etc........................................... 14

2.

Business risks........................................................................................................................................... 20

3.

Management analysis of financial position, operating results and cash flows......................................... 56

4.

Critical contracts for operation ................................................................................................................ 66

5.

Research and development activities ....................................................................................................... 66

III. Information About Facilities ........................................................................................................................ 67
1.

Overview of capital expenditures, etc...................................................................................................... 67

2.

Major facilities ......................................................................................................................................... 67

3.

Planned additions, retirements, etc. of facilities ...................................................................................... 70

IV. Information About Reporting Company ...................................................................................................... 71
1.

Company’s shares, etc. ............................................................................................................................ 71

2.

Acquisition and disposal of treasury shares ............................................................................................. 76

3.

Dividend policy ....................................................................................................................................... 77

4.

Status of corporate governance, etc. ........................................................................................................ 78

V.

Financial Information ................................................................................................................................ 129
1.

Consolidated Financial Statements, etc. ................................................................................................ 130

2.

Non-consolidated Financial Statements, etc. ......................................................................................... 205

VI. Outline of Share-Related Administration of Reporting Company ............................................................. 217
VII. Reference Information of Reporting Company ......................................................................................... 219

B.

1.

Information about parent company, etc. of reporting company ............................................................. 219

2.

Other reference information................................................................................................................... 219

Information About Reporting Company’s Guarantor, Etc. .............................................................................220

Cover page
Document title

Annual Securities Report

Clause of stipulation

Article 24, paragraph (1) of the Financial Instruments and Exchange Act

Place of filing

Director-General of the Kanto Local Finance Bureau

Filing date

May 26, 2023

Fiscal year

The 16th fiscal year (from March 1, 2022 to February 28, 2023)

Company name

Ｊ.フロント リテイリング株式会社 (J. FRONT RETAILING
Kabushiki Kaisha)Company name in English

J. FRONT RETAILING Co., Ltd.

Job title and name of representative

YOSHIMOTO Tatsuya, President and Representative Executive Officer

Address of registered headquarters

10-1, Ginza 6-chome, Chuo-ku, Tokyo(Above is the address registered as the location of the head office of theCompany. Actual business operations are conducted at the following“Nearest place of contact.”)

Telephone number+81-3-6865-7620 (from overseas)

Name of contact person

NOGUCHI Hideki, Executive Officer, Senior General Manager of
Accounting and Tax Affairs Division of Financial Strategy Unit

Nearest place of contact

2-70, Konan 1-chome, Minato-ku, Tokyo

Telephone number+81-3-6865-7620 (from overseas)

Name of contact person

NOGUCHI Hideki, Executive Officer, Senior General Manager of
Accounting and Tax Affairs Division of Financial Strategy Unit

Place for public inspection

Tokyo Stock Exchange, Inc.
(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)

A.

Company Information

I. Overview of the Company
1. Summary of business results(1) Business results of the GroupTerm

12th fiscal year

13th fiscal year

14th fiscal year

15th fiscal year

16th fiscal year

Fiscal year-end

February 2019

February 2020

February 2021

February 2022

February 2023

459,840

480,621319,079

331,484

359,679

Profit (loss) before tax(Millions of yen)

42,126

37,161(28,672)

6,190

16,873

Profit (loss) attributable toowners of parent(Millions of yen)

27,35821,251(26,193)

4,321

14,237

Comprehensive income
attributable to owners of parent(Millions of yen)

25,631

19,259(27,296)

6,173

16,384Equity attributable to owners ofparent(Millions of yen)412,700

387,188352,171

350,368

359,385

1,029,573

1,240,308

1,263,722

1,192,907

1,120,953

1,576.68

1,479.07

1,344.91

1,337.29

1,370.43

104.5581.19(100.03)

16.50

54.32

Diluted earnings (loss) per
share
(Yen)

104.5281.17(100.03)

16.50

54.30

Ratio of equity attributable toowners of parent to total
assets
(%)

40.1

31.2

27.9

29.4

32.1

Profit/equity attributable toowners of parent (ROE)

6.8

5.4

(7.1)

1.2

4.0

Price earnings ratio (PER)(Times)

11.79

14.13

–

58.29

23.27

Net cash provided by (used in)operating activities(Millions of yen)

34,87073,35856,47149,86665,480Net cash provided by (used in)investing activities(Millions of yen)

(26,836)(49,559)(20,870)(5,289)(13,371)

Net cash provided by (used in)financing activities(Millions of yen)

(21,274)(14,829)58,727(80,392)(105,694)

Cash and cash equivalents at endof period(Millions of yen)

25,65934,633

128,925

93,27839,874

6,695

6,579

6,528

5,589

5,115

[3,581][3,265][3,107][2,559][2,143]

Sales revenue(Millions of yen)

Total assets(Millions of yen)
Equity attributable to owners ofparent per share(Yen)
Basic earnings (loss) per
share

(Yen)

(%)

Number of employees(Persons)[Separately, average number of
temporary employees]
Notes:

1.
2.
3.

4.

The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards(IFRS).
Amounts have been rounded down to the nearest one million yen.
The Company has introduced the “officer remuneration BIP trust,” and the Company shares held by the officer
remuneration BIP trust are recorded as treasury stock in the consolidated financial statements. The Company shares
held by the trust are included in treasury stock to be deducted in the calculation of the total number of shares
outstanding at the end of the period for the purpose of calculating equity attributable to owners of parent per share andin the calculation of the average number of shares outstanding during the period for the purpose of calculating basic
earnings or loss per share and diluted earnings or loss per share.
The average number of temporary employees includes dedicated employees and fixed-term employees.

-4-

5.
6.

Diluted loss per share for the 14th fiscal year is equal to basic loss per share because there are no potential shares thathave dilutive effects.
The price earnings ratio (PER) for the 14th fiscal year is not presented because a loss attributable to owners of parent
was recorded.

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(2) Business results of the reporting company
Term

12th fiscal year

13th fiscal year

14th fiscal year

15th fiscal year

16th fiscal year

Fiscal year-end

February 2019

February 2020

February 2021

February 2022

February 2023

18,77034,116

13,812

15,482

15,23813,98728,163

8,849

9,505

8,284

13,897

27,948

7,487

14,253

8,448

31,974

31,974

31,974

31,974

31,974

270,565,764

270,565,764

270,565,764

270,565,764

270,565,764

310,329

328,871329,351

335,241

336,121415,927

531,341

675,917641,307574,302

1,186.13

1,256.46

1,258.07

1,280.48

1,282.90

35.00

36.00

27.00

29.00

31.00

[17.00][18.00][9.00][14.00][15.00]53.12

106.80

28.60

54.44

32.25

–

–

28.60

54.44

32.24

74.6

61.9

48.7

52.3

58.5

4.51

8.74

2.28

4.29

2.52

23.21

10.74

35.56

17.67

39.19

65.89

33.71

94.41

53.27

96.12

132

147

133

138

151

[19]

[17]

[17]

[16]

[16]

65.0

62.4

57.2

55.8

72.9

[92.9][89.5][113.2][117.0][127.0]

1,944

1,612

1,175

1,218

1,286

1,184

1,116

600

882

867

Operating revenue(Millions of yen)
Ordinary profit(Millions of yen)
Profit(Millions of yen)
Share capital(Millions of yen)
Total number of issued
shares(Shares)

Net assets(Millions of yen)
Total assets(Millions of yen)
Net assets per share(Yen)
Dividends per share(Yen)[Interim dividends per share]
Basic earnings per share(Yen)
Diluted earnings per share(Yen)
Equity ratio(%)
Return on equity (ROE)(%)
Price earnings ratio (PER)(Times)Dividend payout ratio(%)
Number of employees(Persons)[Separately, average number of
temporary employees]
Total shareholder return(%)[Benchmark index: Dividendincluded TOPIX](%)
Highest share price(Yen)
Lowest share price(Yen)
Notes:

1.
2.

Amounts have been rounded down to the nearest one million yen.
The highest and lowest share prices are those quoted on the First Section of the Tokyo Stock Exchange before April 3,
2022. After April 4, 2022, the figures are those on the Tokyo Stock Exchange Prime Market.

-6-

2. Company history
Apr. 9, 2007

May 24, 2007

Sept. 3, 2007

Nov. 1, 2007
Sept. 1, 2008

Jan. 1, 2009
Mar. 1, 2009
Dec. 1, 2009
Mar. 1, 2010

Sept. 1, 2010

Mar. 1, 2011

Mar. 30, 2011
Jan. 4, 2012
Mar. 23, 2012
Aug. 20, 2012
Aug. 27, 2012

Sept. 3, 2012

Apr. 1, 2013
Aug. 31, 2013
Dec. 20, 2013

The Daimaru, Inc. and Matsuzakaya Holdings Co., Ltd. resolve at their meetings of theBoard of Directors to jointly establish a holding company through a share transfer,
subject to the approval at their respective Annual Shareholders Meetings, and at the sametime to prepare a “Share Transfer Plan” and conclude an “Agreement on Business
Integration.” The details of the proposals regarding the share transfer to be submitted to
the respective Annual Shareholders Meetings are resolved at the meetings of the Boardsof Directors of both companies.
At the Annual Shareholders Meetings of both companies, it is resolved that the twocompanies would become the holding company’s wholly owned subsidiaries by way of
joint share transfer.
The two companies establish the Company by way of a share transfer.
The Company’s common shares are listed on Tokyo Stock Exchange, Inc., Osaka
Securities Exchange Co., Ltd., and Nagoya Stock Exchange, Inc.
The Company merges with and absorbs Matsuzakaya Holdings Co., Ltd.
Daimaru Design & Engineering Co., Ltd. merges with three other companies, Daimaru
Mokko Co., Ltd., Matsuzakaya Seiko Co., Ltd., and Refex Japan, Inc., and changes thecompany name to J. Front Design & Construction Co., Ltd. Dimples’ Co., Ltd. merges
with and absorbs Daimaru Sales Associates Co., Ltd.
Matsuzakaya Co., Ltd. merges with and absorbs Yokohama Matsuzakaya Co., Ltd.,
which ceased its operations on October 26, 2008.
Restaurant Peacock Co., Ltd. merges with and absorbs Shoei Foods Co., Ltd. andchanges the company name to J. Front Foods Co., Ltd.
JFR Service Co. Ltd. (renamed from Matsuzaka Services Co., Ltd. on September 1,2009) merges with and absorbs Daimaru Lease & Service Co., Ltd.
Matsuzakaya Co., Ltd. merges with and absorbs The Daimaru, Inc. and changes thecompany name to Daimaru Matsuzakaya Department Stores Co. Ltd.
J. Front Design & Construction Co., Ltd. merges with and absorbs DHJ Co., Ltd.
The Company establishes JFR Consulting Co. Ltd.
The Daimaru Tomonokai, Inc. merges with and absorbs Matsuzakaya Tomonokai Co.,
Ltd. and changes the company name to Daimaru Matsuzakaya Tomonokai Co., Ltd.
The Daimaru Home Shopping, Inc. takes over part of the direct marketing business split
off from Daimaru Matsuzakaya Department Stores Co. Ltd. and changes the company
name to JFR Online Co. Ltd.
The Company acquires shares of StylingLife Holdings Inc. and makes it an associateaccounted for using the equity method.
Daimaru Kogyo, Ltd. establishes Daimaru Kogyo (Thailand) Co., Ltd.
The Company acquires shares of PARCO Co., Ltd. and makes it an associate accounted
for using the equity method.
The Company establishes JFR PLAZA Inc.
The Company acquires additional shares of PARCO Co., Ltd., making PARCO Co., Ltd.
and its five subsidiaries consolidated subsidiaries of the Company, and also making two
subsidiaries and one associate of PARCO Co., Ltd. associates accounted for using theequity method.
The Company splits off the commissioned sales business operated by Dimples’ Co., Ltd.,and Daimaru Matsuzakaya Sales Associates Co. Ltd., which established the saidbusiness, takes over the business.
On the same day, Dimples’ Co., Ltd. transfers all of its shares in Daimaru Matsuzakaya
Sales Associates Co. Ltd. to Daimaru Matsuzakaya Department Stores Co. Ltd., andDaimaru Matsuzakaya Sales Associates Co. Ltd. becomes a subsidiary of Daimaru
Matsuzakaya Department Stores Co. Ltd.
The Company transfers all shares in Peacock Store Ltd. to Aeon Co., Ltd.
Liquidation of Imabari Daimaru Co., Ltd. is completed.
The Company acquires shares of Forest Co., Ltd. and makes it a consolidated subsidiary.
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Feb. 24, 2014
Aug. 18, 2014
Jan. 7, 2015
Apr. 22, 2015
May 7, 2015
Dec. 17, 2015
Sept. 1, 2016

Mar. 1, 2017
Aug. 31, 2017
Dec. 31, 2017
Feb. 26, 2018

Jul. 2, 2019
Dec. 9, 2019

Mar. 1, 2020Feb. 26, 2021
June 30, 2021
Sept. 1, 2021
Feb. 28, 2022
Apr. 4, 2022

Oct. 27, 2022

Dec. 1, 2022
Jan. 5, 2023

Liquidation of Central Park Building Co., Ltd. is completed.
Liquidation of Parco Consulting (Suzhou) Co., Ltd. is completed.
Daimaru Kogyo, Ltd. establishes Taiwan Daimaru Kogyo, Ltd.
The Company acquires shares of Senshukai Co., Ltd.
The Company acquires additional shares of Senshukai Co., Ltd. and makes it an associateaccounted for using the equity method.
Daimaru Matsuzakaya Department Stores Co. Ltd. transfers all shares of Hakuseisha Co.,
Ltd. to AEON DELIGHT CO., LTD.
Daimaru Matsuzakaya Department Stores Co. Ltd. merges with and absorbs Daimaru
COM Development Inc.
JFR Service Co. Ltd. merges with and absorbs JFR Office Support Co., Ltd. and JFRConsulting Co. Ltd.
JFR Online Co. Ltd. transfers all its business operations to Feel Life Inc., a wholly
owned subsidiary of Senshukai Co., Ltd.
The Company transfers all shares of Forest Co., Ltd. to EDION Corporation.
Liquidation of JFR PLAZA Inc. is completed.
Senshukai Co., Ltd. is excluded from the scope of associates accounted for using theequity method due to the Company’s agreement upon the purchase of treasury shares by
Senshukai Co., Ltd.
Liquidation of JFR Online Co. Ltd. is completed.
Daimaru Matsuzakaya Department Store Co., Ltd. acquires a part of the preferred sharesof Ginza 6-chome Kaihatsu Tokutei Mokuteki Kaisha (G6TMK) through Ginza 6-chome
Shogyo Godo Kaisha and makes it an associate accounted for using the equity method.
Daimaru Matsuzakaya Department Stores Co. Ltd. merges with and absorbs The
Shimonoseki Daimaru, Inc.
The Company transfers all shares in J. Front Foods Co., Ltd. to Dancin’ Diner co., ltd.
PARCO Co., Ltd. transfers all shares of NEUVE A Co., Ltd. to Libra Invesco Co., Ltd.
Daimaru Matsuzakaya Department Stores Co. Ltd. merges with and absorbs Daimaru
Matsuzakaya Sales Associates Co. Ltd.
The Company removes Dimples’ Co., Ltd. from the scope of consolidation upon transfer
of 90% of its shares to WORLD HOLDINGS CO., LTD.
Due to the revision of the market classification of the Tokyo Stock Exchange, theCompany moves from the First Section of the Tokyo Stock Exchange to the Prime
Market.
The Company acquires all shares of JAPAN RETAIL ADVISORS Co., Ltd. fromPARCO Co., Ltd. and changes its trade name to J. FRONT CITY DEVELOPMENT Co.,Ltd.
The Company acquires shares of XENOZ CO., Ltd. and makes it a consolidated
subsidiary.
PARCO Co., Ltd. acquires a part of the preferred shares of Shinsaibashi Kaihatsu Tokutei
Mokuteki Kaisha (Shinsaibashi TMK) and makes it an associate accounted for using theequity method.

-8-

3. Description of business
The corporate group, of which the Company is the holding company, consists of 38 companies (including theCompany). Its principal business is the Department Store Business, and its other businesses include the SC
Business, the Developer Business, the Payment and Finance Business, wholesaling, commissioned back-officeservice, parking, leasing, etc.
The Company is a specified listed company. As a result of falling under the category of specified listed company,
the criteria for insignificant material events under the insider trading regulations will be determined based on
consolidated figures.
Description of business, etc.

Names of major Group companies

Number of companies

Department Store Business

Daimaru Matsuzakaya Department Stores Co. Ltd., The
Hakata Daimaru, Inc., and Kochi Daimaru Co., Ltd.

Consolidated subsidiaries: 3

SC Business

PARCO Co., Ltd. and PARCO (SINGAPORE) PTE LTD

Consolidated subsidiaries: 2
Associates: 1

Developer Business

PARCO Co., Ltd., PARCO SPACE SYSTEMS Co., Ltd., J.
Front Design & Construction Co., Ltd., PARCO Digital
Consolidated subsidiaries: 6
Marketing Co., Ltd., and J. FRONT CITY DEVELOPMENT Associates: 5Co., Ltd.

Payment and FinanceBusiness

JFR Card Co., Ltd.

Wholesale Business

Daimaru Kogyo, Ltd., Daimaru Kogyo International Trading(Shanghai) Co., Ltd., Daimaru Kogyo (Thailand) Co., Ltd., Consolidated subsidiaries: 4
and Taiwan Daimaru Kogyo, Ltd.

Commissioned back-officeservice, real estate leasing,parking and leasing

JFR Service Co. Ltd. and Angel Park Co., Ltd.

Consolidated subsidiaries: 2
Associates: 1

OtherConsumer Product End-Use Research Institute Co., Ltd.,JFR Information Center Co., Ltd., Daimaru Matsuzakaya
Tomonokai Co., Ltd., and XENOZ CO., Ltd.

Consolidated subsidiaries: 5
Associates: 2

Consolidated subsidiaries: 1-9-Our business structure is shown below.
(Company submitting consolidated financial
statements)
J. FRONT RETAILING Co., Ltd.
SC Business(Consolidated subsidiaries)
PARCO CO., LTD.
PARCO (Singapore) Pte Ltd
Other one associate (*)

Department Store BusinessLeasing ofreal estate,etc.

Contracts with credit card member stores

Payment and Finance Business(Consolidated subsidiary)
JFR Card Co., Ltd.

Sale of food products, etc.

Wholesale Business(Consolidated subsidiaries)
Daimaru Kogyo, Ltd.
Daimaru Kogyo International
Trading (Shanghai) Co., Ltd.
Daimaru Kogyo (Thailand)Co., Ltd.
Taiwan Daimaru Kogyo, Ltd.
Other one subsidiary

Notes:

1.
2.
3.
4.

(Consolidated subsidiaries)
Daimaru Matsuzakaya
Department Stores Co. Ltd.
The Hakata Daimaru, Inc.
Kochi Daimaru Co., Ltd.
Leasing, development, supervision, operation,etc. of real estate
Design and construction contracting

Developer Business(Consolidated subsidiaries)
PARCO CO., LTD.
PARCO SPACE SYSTEMS Co.,Ltd.
J. Front Design & Construction
Co., Ltd.
PARCO Digital Marketing Co.,Ltd.
J. Front City Development Co.,Ltd.

Provisionof various
services
Entrustmentof
information
processing,
etc.

Other
(Consolidated subsidiaries)
Consumer Product End-Use
Research Institute Co., Ltd.
JFR Information Center Co.,Ltd.
Daimaru Matsuzakaya
Tomonokai Co., Ltd.
JFR Service Co. Ltd.
Angel Park Co., Ltd.
XENOZ Co., Ltd.
(Associates)
StylingLife Holdings Inc. (*)
HMK LOGI SERVICE Co.,
Ltd. (*)
Wakamiya Park Co., Ltd. (*)
Other five subsidiaries(Associates)
Shinsaibashi Kyodo Center
Building, K.K. (*)
Ginza 6-chome Kaihatsu
Tokutei Mokuteki Kaisha (*)
Yaesu shopping mall Co., Ltd.
(*)
Shinsaibashi Kaihatsu Tokutei
Mokuteki Kaisha (*)
Other two subsidiaries
Other one associate (*)

Companies marked with an asterisk (*) are equity method associates.
In segment information, wholesaling, parking, leasing, etc. are shown together as “Other.” The other businesses are
categorized in accordance with the segments.
On October 27, 2022, the Company acquired all shares of JAPAN RETAIL ADVISORS Co., Ltd. from PARCO Co.,
Ltd. and changed its trade name to J. FRONT CITY DEVELOPMENT Co., Ltd.
The Company acquired shares of XENOZ CO., Ltd. on December 1, 2022, and made it a consolidated subsidiary.

- 10 -

4. Overview of subsidiaries and associates
Ratio of voting
rights holding(held)(%)

Address

Capital(Millions ofyen)

Daimaru Matsuzakaya
Department Stores Co. Ltd.
(Notes 3 and 4)

Koto-ku, Tokyo

10,000Department StoreBusiness

100.0

The Hakata Daimaru, Inc.

Chuo-ku, Fukuoka

3,037

Department StoreBusiness

69.9[69.9]

Kochi Daimaru Co., Ltd.

Kochi, Kochi

300

Department StoreBusiness

100.0[100.0]PARCO Co., Ltd.
(Notes 3 and 4)

Toshima-ku, Tokyo

34,367SC Business,
Developer Business

100.0

Name

Major businesses

Relationship(Consolidated subsidiaries)

PARCO (SINGAPORE) PTE
Singapore
LTD

Millions ofSingapore
SC Businessdollars
4

Interlocking of
officers
Lending of funds

Interlocking of
officers
Lending of funds

100.0[100.0]PARCO SPACE SYSTEMS
Co., Ltd.

Shibuya-ku, Tokyo

100

Developer Business

100.0[100.0]J. Front Design &Construction Co., Ltd.

Chuo-ku, Osaka

100

Developer Business

100.0

PARCO Digital Marketing
Co., Ltd.

Shibuya-ku, Tokyo

10

Developer Business

100.0[100.0]J. FRONT CITY
DEVELOPMENT Co., Ltd.

Shibuya-ku, Tokyo

10

Developer Business

100.0[100.0]Interlocking of
officers
Lending of funds

JFR Card Co., Ltd.

Takatsuki, Osaka

100

Payment and FinanceBusiness

100.0Interlocking of
officers

Daimaru Kogyo, Ltd.

Chuo-ku, Osaka

1,800

Other (Wholesale)

100.0Interlocking of
officers

Daimaru Kogyo International
Shanghai, China
Trading (Shanghai) Co., Ltd.

Millions of US
dollars Other (Wholesale)2

100.0[100.0]

Daimaru Kogyo (Thailand)Co., Ltd.

Millions of Thaibaht Other (Wholesale)
202

99.9
[99.9]

Millions of New
Taiwan dollars Other (Wholesale)
60

100.0
[100.0]

Bangkok, Thailand

Taiwan Daimaru Kogyo, Ltd. Taipei, Taiwan

Interlocking of
officers

Consumer Product End-Use
Research Institute Co., Ltd.

Nishi-ku, Osaka

100

Other (Merchandise
test and quality
control)

100.0Interlocking of
officers

Angel Park Co., Ltd.

Naka-ku, Nagoya

400

Other (Parking)

50.2[49.8]

Interlocking of
officers

JFR Service Co. Ltd.

Koto-ku, Tokyo

100

Other (Commissioned
back-office service,
parking and leasing)

100.0Interlocking of
officers
Lending of funds

JFR Information Center Co.,Ltd.

Tennoji-ku, Osaka

10

Other (Information
service)

100.0Interlocking of
officers

Daimaru Matsuzakaya
Tomonokai Co., Ltd.

Chuo-ku, Osaka

100

Other
(Specified prepaid
transaction service)

100.0[100.0]XENOZ CO., Ltd.

Kawasaki-ku,
Kawasaki

100

Other (Managementof e-sports team, etc.)

50.8- 11 -

Address

Capital(Millions ofyen)

Major businesses

Ratio of voting
rights holding(held)(%)

Shinsaibashi Kyodo Center
Building, K.K.

Chuo-ku, Osaka

50

Developer Business(Real estate leasing)

50.0[50.0]

StylingLife Holdings Inc.

Shinjuku-ku, Tokyo

100

Other (Generalretailing)

49.0

Developer Business(Services related tothe acquisition of
specified assets andtheir management anddisposal, etc.)

33.3[33.3]

Name

Relationship(Equity method associates)

Ginza 6-chome Kaihatsu
Tokutei Mokuteki Kaisha

Chuo-ku, Tokyo

5,595

HMK LOGI SERVICE Co.,Ltd.

Chuo-ku, Osaka

34

Other (Freighttransportation)

32.4[32.4]

Wakamiya Park Co., Ltd.

Naka-ku, Nagoya

1,063

Other (Parking)

20.9[20.9]

Yaesu shopping mall Co., Ltd. Chuo-ku, Tokyo

100

Developer Business(Real estate leasing
and tenant leasing)

28.3[28.3]

Apparel-web, Inc.

Chuo-ku, Tokyo

100

Developer Business

20.3[20.3]

SAN-A PARCO, Inc.

Ginowan, Okinawa

10

SC Business

49.0[49.0]Developer Business(Real estatedevelopment andinvestment)

38.9[38.9]

Shinsaibashi Kaihatsu Tokutei
Chuo-ku, Tokyo
Mokuteki Kaisha
Notes:

1.
2.
3.
4.

2,563

Interlocking of
officers

The names in the “Major businesses” column are the segment names.
The figures in brackets in the “Ratio of voting rights holding (held)” column indicate the percentage of indirectownership.
Falls under the category of specified subsidiary.
For Daimaru Matsuzakaya Department Stores Co. Ltd. and PARCO Co., Ltd., the ratio of sales revenue (excludinginternal sales revenue among consolidated companies) to consolidated sales revenue exceeds 10%. The main profit andloss information of Daimaru Matsuzakaya Department Stores Co. Ltd. and PARCO Co., Ltd. is as follows:(Millions of yen)
Daimaru Matsuzakaya
Department Stores Co. Ltd.

PARCO Co., Ltd.

(i)

Sales revenue

198,370

61,360(ii)

Profit before tax

6,640

3,226

(iii)

Profit

6,114

3,074

(iv)

Total equity

139,299

141,192(v)

Total assets

434,474

410,712- 12 -

5. Information about employees(1) Consolidated companies
As of February 28, 2023
Number of employees(Persons)

Segment name
Department Store Business

2,884[1,390]SC Business

494

[112]

Developer Business

843

[382]

Payment and Finance Business

211

[30]

Other

532

[213]

Corporate (shared)
Total
Notes:

1.
2.

151

[16]

5,115

[2,143]The number of employees indicates the number of working employees.
Figures in brackets in the “Number of employees” column (not included in number of employees) represent
dedicated employees and fixed-term employees.

(2) Reporting company
As of February 28, 2023
Number of employees(Persons)
151[16]
Segment name

Average age(Years old)

4.

17.7

7,588,999

Number of employees(Persons)

Total
1.
2.
3.

Average annual salary
(Yen)

49.0

Corporate (shared)
Notes:

Average length of service(Years)

151

[16]

151

[16]

The number of employees indicates the number of working employees.
Average annual salary includes bonuses and surplus wages.
Figures in brackets in the “Number of employees” column (not included in number of employees) represent
dedicated employees and fixed-term employees.
The Company’s employees are seconded from Daimaru Matsuzakaya Department Stores Co. Ltd. and otherGroup companies. The average years of service of employees is calculated by aggregating the employees’
number of years of service at each company.

(3) Status of labor union
The Group includes the J. Front Retailing Group Federation of Labor Union, which is a member of UA
ZENSEN.
As the relationship between the Company and the union is favorable and based on mutual trust, there areno significant matters to report.

- 13 -

II. Overview of Business
1. Management policy, management environment, issues to be addressed, etc.
Forward-looking statements in this Annual Securities Report are based on the Company’s management decisions
and forecasts made according to information available as of the filing date of this document (May 26, 2023).
(1) Management policy
Under a holding company structure, the Group will strive to enhance the competitiveness and profitabilityof the Department Store Business, the SC Business and all constituent companies by optimizing andmaking effective use of management resources, including the store network and customer bases of
Daimaru, Matsuzakaya and PARCO, as well as responding appropriately to changing times, maximizing
customer satisfaction and operating in the most efficient way.
In addition, with the aim of realizing the Group Vision “Create and Bring to Life ‘New Happiness,’” wewill restructure our business portfolio by allocating resources to areas with greater potential so that it
consists of highly competitive and profitable businesses in a balanced manner.
(2) Management target
On April 13, 2021, the Group formulated the FY2021-FY2023 Medium-term Business Plan.
1. Key performance indicator targets
ROIC (Return on Invested Capital) will be applied as the indicator to manage the capital’s profitability
from this medium-term business plan.
For fiscal 2023, we will aim to achieve consolidated operating profit of ¥38,500 million, profit/equity
attributable to owners of parent (ROE) of 7%, and Return on Invested Capital (ROIC) of 4.6%. In
addition, as sustainability targets, we will aim to achieve a reduction in greenhouse gas (GHG)
emissions of 40% and a ratio of women in management positions of 26%.
2. Financial policy
We will generate operating cash flow of ¥190,000 million or more (including depreciation of right-ofuse assets) over three years, ¥60,000 million of which will be injected into the growth and capital
investments. Until fiscal 2023, investment allocation will be made giving priority to projects that
contribute to profit and the “developer strategy.”
We will reduce interest-bearing debt (excluding lease liabilities) to ¥225,000 million by the end of
fiscal 2023.
We will provide shareholder returns on the basis of maintaining a consolidated dividend payout ratio ofat least 30% and also consider the option of purchasing treasury shares as appropriate.
(3) Priority operational and financial issues that the Company should address
Two years have passed since the start of the Medium-term Business Plan (FY2021-FY2023), which
positions sustainability at the core of management.
In fiscal 2022, as the impact of the repeated spread of COVID-19 and restrictions on movement
diminished, we transitioned to offense-oriented management and promoted concentrated investment andmanagement structure reforms based on our key strategies. As a result of these efforts, mainly from the
middle of the fiscal year onward, revenue steadily began to recover, and we reduced interest-bearing
liabilities, improving our financial standing.
The environment surrounding our business is becoming increasingly uncertain due to the emergence ofgeopolitical risk, rising global inflation, and growing concerns over an economic slowdown due toprolonged supply constraints even though social and economic activities continue to normalize. In
addition to “changes in consumer behavior due to COVID-19” and “decline of existing business models,”
we are aware of the need to respond to these risks from both short-term and medium- to long-term
perspectives.
In fiscal 2023, the final year of the Medium-term Business Plan, we will accelerate the implementation of
key strategies and measures in each business in order to surely capture domestic spending and inbound- 14 -

demand, which are beginning to recover, and achieve a “prompt recovery in earnings power.”
Furthermore, given the highly uncertain business environment, we will further reduce fixed costs in ourmanagement structure reforms, compared to the initial plan, and thoroughly manage variable costs andother expenses.
In terms of our performance targets for fiscal 2023, we set our operating profit targets very carefully at thestart of the period as we expect utilities costs to surge greater than initially expected and we must carefully
identify trends in domestic spending and inbound demand. Considering the future changes in the businessenvironment, we aim to achieve the performance targets. Considering the future changes in the businessenvironment, we aim to achieve the performance targets in the Medium-term Business Plan by steadily
promoting our individual strategies and policies.
Furthermore, amid accelerating changes in spending behavior caused by the COVID-19 pandemic, theimportance of business portfolio transformation has grown. Against this backdrop, with sustainability at
the core of management, we will establish a future vision for the Group with an eye to 2030 and set a clear
trajectory toward regrowth, including transforming the business models of existing businesses, businessgrowth in non-commercial fields, and the creation of new businesses. In addition, based on these mediumto long-term strategies, we will begin formulating our next Medium-term Business Plan that starts infiscal 2024.

(1) Accelerating the promotion of key strategies and management structure reforms aimed at a “prompt
recovery in earnings power”
1) Real x Digital Strategy
We are working to increase the attractiveness of flagship stores through concentrated investments
and to strengthen our online business with digital technologies.
Furthermore, we are working to expand the Group’s customer base by promoting the mutual
exchange of customers in our key areas, such as Nagoya and Shinsaibashi, to integrate and use theGroup’s customer database.
(i) Increase the attractiveness of storesTo establish competitive superiority in each region, we are further strengthening key
categories that customers strongly support in our Department Store Business and enhancing
unique promotions and events. Meanwhile, we are accelerating our response to market
changes by developing new content, with a focus on beauty, health, and the environment,
while streamlining sales floors that handle practical merchandise.

In addition to concentrated investments in our flagship stores, including Shibuya, Ikebukuro,
Nagoya, and Shinsaibashi PARCO, we are developing sales floors with new, fun experiencesand enhancing our information dissemination in Japan and overseas to increase the value ofvisiting our stores. We are also opening new community-based commercial facilities.

(ii) Strengthen online businessIn addition to expanding the products and brands on department store websites and cosmetics
media commerce, we will strengthen our business activities from a CSV perspective bylaunching a men’s line service in our fashion subscription business and expanding sales
channels for regional products using the online platform.

In the SC Business, we are updating our existing online stores, expanding our shops and sales
menus, increasing customer and shop convenience by responding to cross-border EC, andproviding high value-added services.

- 15 -

2) Prime Life Strategy
To strengthen our response to the affluent market segment, we are evolving our customer polices byworking to expand our customer base, develop new content, and use diverse points of customer
contact, including stores, gaisho and websites.
(i) Expand the customer baseIn the Department Store Business, we are expanding our customer base through partnerships
with other companies, online enrollments, and promoting member registration on dedicatedcustomer websites while also transforming visitors to Japan into regular customers throughthe use of our app.

(ii) Develop new products and servicesIn the Department Store Business, we are creating rare content and services that increase
royalties in addition to further strengthening our mainstay categories. Also, in the Payment
and Finance Business, we are developing and providing financial services tailored to the life
stages of customers through business partnerships with other companies.

(iii) Evolve customer policies


We are strengthening our sales activities using digital technologies, including a dedicatedcustomer website and online customer approach, while evolving our CRM by expanding thescope of our data analysis and use.

3) Developer Strategy
In addition to promoting large-scale development projects in key areas, we are effectively using ourreal estate holdings and strengthening our business foundation.
Furthermore, under our new business promotion framework launched in March of this year, we areformulating and promoting long-term development plans centered in the key areas* of seven cities
in which the Company maintains its business foundation from the standpoints of Group-wide
optimization and advanced utilization of asset holdings.
* Sapporo, Tokyo, Nagoya, Kyoto, Osaka, Kobe, and Fukuoka(i) Promote large-scale development projects in key areasIn addition to our large-scale development projects in Nagoya’s Sakae area and Osaka’s
Shinsaibashi, we are advancing the Tenjin 2-chome South Block Station-front East West
Street Area Project (tentative name) through cooperation with the region and othercompanies.

(ii) Effectively use real estate holdings

We will contribute to earnings by developing and completing residential properties that matchthe characteristics of real estate holdings.

(iii) Strengthen business foundations


We will work to strengthen our business foundations by undertaking asset replacement andestablishing a consignment framework for the asset management business.

- 16 -

4) Management structure reforms
Regarding fixed cost reductions, we are working to generate greater benefits than initially planned.
Additionally, we are working to thoroughly manage variable costs as utility costs continue to surge
greater than expected.
(i) Reduction of fixed costs

In addition to the effect of the ongoing organizational and personnel structure reforms,
Group-wide purchasing, and a review of rental properties, we will further review cost
structure reforms, including a review of outsourcing areas and streamline back-office
operations.

(ii) Increase management efficiency and asset efficiency
With an eye to “regrowth” from fiscal 2024 onward, we will work to improve management
efficiency by refining our business foundation, based on future prospects, growth potential,and earnings potential based on invested capital, and improve asset efficiency by assessing
non-business assets.

(2) Clarifying the future vision for the Group toward 2030 and the trajectory toward “regrowth”
As the use of digital technologies in everyday life progresses, driven by the COVID-19 pandemic,
consumer behavior is changing at an accelerated pace with a renewed awareness of the value of reallife experiences, such as connecting with people and local communities, sharing places, spaces andemotions, and a heightened awareness of social and environmental issues.
As ways of living and enjoying life diversify for our customers, we have established a future vision for
the Group toward 2030 to “realize a sustainable society and new happiness in life” and are working toresolve social issues through our businesses and create new value not bound by our existing businesssectors, products, or services.
To achieve these goals, we will make full use of our management resources, including store assets
owned by the Company, customers and regions, supplier connections, and our business expertise. We
will also formulate medium- to long-term strategies and our next Medium-term Business Plan aimed at“regrowth” by transforming the business models of existing businesses, growing businesses innoncommercial sectors, and creating new businesses.

<Management issues and direction toward “regrowth”>
1) Business model transformation of existing businesses
To transform the business models of our Department Store Business and SC Business, we will
expand our customer base through customer exchanges in key areas and improve services foroverseas customers and next-generation customers. We will also work on developing new businesses
aimed at creating environmental and social value.

2) Business growth in non-commercial fields
In our Developer Business, we will formulate and promote long-term strategies, such as long-term
development plans in key areas, expansion of the construction and interior design business, asset
replacement, and diversification of earnings through asset management, with the aim of proposing
diverse urban lifestyles and contributing to the development of attractive urban areas.
- 17 -

In our Payment and Finance Business, we will rebuild the growth strategy in our finance business byefforts that include creating a plan to establish a Group payment infrastructure and developing highvalue-added services using customer data.

3) Creating new businesses
We are developing and entering businesses with expectations for future growth, such as e-sports andsubscription businesses. Moreover, by combining physical stores and virtual spaces, we areproviding new experiences for our customers as we use digital technologies to create new
businesses.
Furthermore, to increase the efficacy of these strategies, we are utilizing diverse knowledge frominside and outside the Company, including partnering with regions and other companies, businessacquisitions, and business co-creation with the CVC fund.

(3) Strengthen management foundations for achievement of medium- to long-term growth
We are working to strengthen management foundations for our Group vision with an eye to 2030 andincrease the effectiveness of our business portfolio transformation. In particular, to realize thesustainability management that the Company aims for, we are promoting “human capital management”
for the sustainable growth of our people and organizations by proactively promoting diversity andfocusing investment on the human resources that create new value.
1) Group human resource strategy
We are strengthening recruitment and developing the skills of highly specialized, talented
employees, developing the human resources responsible for the next generation, and encouraging
the active participation of women. Additionally, we are strengthening investment in humanresources, both in the placement of individual personnel in positions that develop motivation andlatent capabilities and in reskilling.
Furthermore, with an eye to the future vision of the Group and business portfolio transformation, we
are formulating development, hiring, and placement policies based on the visualization of therequired human resources and capabilities. We are also accelerating the promotion of our personnel
strategy linked to our management strategy, including increasing employee engagement.

2) Group financial strategy
Aiming at business portfolio transformation and realizing growth deriving from profitability in eachbusiness, we are working to enhance the sophistication of the Group’s management andadministration by formulating a plan to improve return on invested capital (ROIC) throughcoordination with each business and disseminating it internally. Furthermore, in light of trends in thecapital markets, we are working to strengthen our financial standing by creating operating cash flow,
securing strategic investment capital, and controlling interest-bearing liabilities.

3) Group systems strategy
We will proceed with the introduction of the common Group accounting system, aimed at thesophistication of management and administration and the streamlining of operations in eachcompany, in preparation for its full-fledged operation, which is scheduled for the next Medium-term
Business Plan. Furthermore, from the standpoint of Group-wide optimization and strengthening the- 18 -

response to information security and business continuity, we are working to strengthen Group IT
governance, including creating new networks and performing integrated management of investment
plans and processes.

4) Strengthening corporate governanceWith the goals of realizing medium- to long-term growth and enhancing corporate value, we areworking to develop more sophisticated corporate governance practices by strengthening theoversight function of the Board of Directors and speeding up management decision-making andexecution to transform our business portfolio.

- 19 -

2. Business risks
The matters recorded in the annual securities report concerning the overview of business, financial information,etc. include the following key risks that are recognized by the management as having the potential to exert amaterial impact on the financial position, operating results, and cash flows of consolidated companies.
Forward-looking statements in this Annual Securities Report represent the judgment of the Group as of thefiling date of this document (May 26, 2023).

(1) Approach and system for risk management
・ Risk Management
The Group defines risk as “uncertainties that have both potentially positive and negative sides that
could have an impact on the achievement of targets by a company’s management.” The Company has
positioned risk management as “activity that increases corporate value by managing risks by reasonable
and optimal methods from a companywide perspective” to achieve sustainable corporate growth byaddressing the positive side and the negative side of risk properly.

・ Risk management system
The Company has established the Risk Management Committee, which is chaired by the President andRepresentative Executive Officer and comprises Executive Officers and others, as an advisory body to
the President and Representative Executive Officer. The committee discusses important matters,
including risk identification and evaluation, and the determination of risks to be reflected in strategies,
and utilizes risk management for management decision-making. The committee also reports details of
its deliberations to the Board of Directors in a timely manner.
The committee has established a secretariat headed by an officer in charge of risk management. The
secretariat shares important decisions of the committee with operating subsidiaries and promotes
enterprise risk management (ERM). Moreover, by positioning risk as the starting point of strategy andlinking it to strategy, we are striving to make risk management contribute to corporate value.
Furthermore, in order to effectively perform risk management, we have established the following threelines.
・ First line (Operating divisions such as operating subsidiaries): These divisions identify risks andtake the necessary measures on their own.
・ Second line (The holding company’s divisions): Each division provides support, guidance, andmonitoring regarding risk management from a perspective that is independent of the operating
divisions.
・ Third line (The Internal Audit Division): This division oversees the validity of the risk management
functions and the internal control system from a perspective that is independent of the operating
divisions and each division of a holding company.

- 20 -

Risk Management System(2) Risk management process
The Group promotes risk management through the following processes. Specifically, we are striving toensure that risks of high importance to the Group are not overlooked under the external and internal
environmental analysis and are based on the recognition of Directors, the management team, and the persons
responsible for practical operations.
Over the medium term, we have positioned “corporate risks” as having extremely high importance for theGroup’s management and have used these as starting points for the Group Medium-term Business Plan.
Furthermore, the risks for the fiscal year identified from “corporate risks” are summarized in the Group risk
list, evaluated using a risk map, then ranked by priority before implementing countermeasures. For“corporate risks” and the “JFR Group Risk List,” change in the environment surrounding risks and theprogress of measures are monitored semiannually, and the Risk Management Committee discusses thematters and then reports their contents to the Board of Directors.

- 21 -

The chart below shows “corporate risks” that the Group has positioned as the most important risks that willaffect growth and survival of the Group over the medium to long term.
Among these, “1. Advanced sustainability management,” “2. Decline of existing business models,” “3.
Response to increasingly accelerated digitalization,” and “4. Changes in consumer behavior after COVID19” could potentially have an extremely large impact on our Group’s management, and have therefore been
positioned as risks to be addressed with the highest priority in the Medium-term Business Plan.

Risks that have an extremely large impact and are being addressed with the highest priority- 22 -

“Corporate risks” other than the above risks(3) Recognition of recent environmental changes and risks
The impact of COVID-19, which has caused unprecedented damage to the Group’s management, has
gradually lessened as the government has steered a course of both anti-virus measures and economic
normalization. In fiscal 2023, as the classification of COVID-19 under the Infectious Disease Control Law
was lowered to category 5, the same as seasonal influenza, and border measures for foreign travelers wereabolished, restrictions on economic and social activities due to the COVID-19 pandemic were graduallyeliminated, and the economy is steadily moving into a post-COVID phase, where the infection status does
not affect the economy.
At the same time, the international community is facing high prices on a global scale, and policy rates havebeen raised, particularly in the U.S. and Europe. Although price hikes have slowed, due in part to the effectsof these measures, the adverse effects of the interest rate hikes are becoming apparent, as several financial
institutions have fallen into financial crises. In addition, geopolitical risks, such as the situation in Ukraine
and the intensifying conflict between the U.S. and China, are increasing, and the Company recognizes thatthe unstable and uncertain situation will continue for the time being.
On the other hand, Japan has kept low interest rates for a full-fledged economic recovery, which contributed
to the rapid depreciation of the yen in the last fiscal year. This yen depreciation is adding fuel to the high costof living and is certainly dampening consumer sentiment. Although the yen’s depreciation is coming to anend, prices remain high, and if this trend continues, personal consumption may not recover as expected.
Furthermore, if other countries fall into recession and asset prices, including stock prices, plummet, Japan
will also be affected, leading to further stagnation in consumption, which may also affect operating results of
the Group profoundly.
Thus, business activities will continue to be placed under pressure amid an uncertain future and an extremely
adverse management environment this fiscal year.
- 23 -

For the last three years, the impact of COVID-19 has been further accelerating changes in consumer values,
consumer behavior, what is required of the retail business, etc. People’s values, lifestyles and consumer
behavior, and even the way that cities function, are changing dramatically, and the Group cannot avoid
evolving a new business model.
As a countermeasure based on the Medium-term Business Plan (FY2021-FY2023), the Company has
promoted key strategies (Real x Digital Strategy, Prime Life Strategy, and Developer Strategy) for a “fullrecovery” from the COVID-19 crisis and “re-growth” beginning in fiscal 2024, as well as management
structure reforms that strengthen the management foundation to support medium- to long-term growth. In
addition, in order to transform our business portfolio, we will work on establishing a future vision for theGroup and set a clear trajectory toward regrowth, including transforming the business models of existing
businesses, business growth in non-commercial fields, and the creation of new businesses, and will
strengthen management foundations for the achievement of medium- to long-term growth as well as
accelerate key strategies and management structure reforms aimed at a “prompt recovery in earnings power.”
As awareness of sustainable community and society is increasing due to the COVID-19 pandemic, many
companies are also trying to redefine their existence. Fortunately, the Group has the corporate credos leading
to sustainable management of “Service before profit” and “Abjure All Evil and Practice All Good,” whichhave been kept for 300 to 400 years, and will continue to move ahead steadily towards sustainable growth
going forward.
The corporate risks revised based on the environmental changes described above are considered risks that
could have an impact on your investment and other decisions as of the filing date of the annual securities
report. In line with the Group’s risk definition (uncertainties that have both potentially positive and negativesides that could have an impact on the achievement of targets by a company’s management), we present ourrisk recognition and countermeasures on the following pages.

- 24 -

1

Advanced sustainability management
ImpactVery severe

Outlook for the future (*)

Amid increasing uncertainty about the environment surrounding companies due to theworsening of global environmental problems, such as global warming and ocean pollution,
loss of biodiversity, and issues over human rights in supply chains, etc., demands for
The Company’s sustainability management are of high importance to us and are positioned as one of therisk recognition highest priorities. We believe that stakeholders’ expectations are for how the Company
contributes to the realization of a sustainable society as a corporation, and the Company
cannot even achieve its own sustainable growth without initiatives that meet these
expectations.
Negative side • Defection of stakeholders and lower rating and brand power
Positive side
• Sustainable growth and improvement of the Group’s presence
The Group’s sustainability management is to practice CSV (Creating Shared Value), which is
to solve social issues through business and to achieve corporate profits at the same time.
The Group has identified seven materiality issues (important issues)* and is working on
corresponding measures in order to realize the “Well-Being Life” of stakeholders.
* “Realization of decarbonized society,” “Promotion of circular economy,” “Management of
the entire supply chain,” “Realization of customers’ healthy/safe/secure lives,” “Coexistencewith local communities,” “Promotion of diversity & inclusion,” and “Realization of work-life
integration”
As for environmental issues and human rights issues, we need to proactively work to solvethese issues as our basic corporate attitude.
MeasuresOn the other hand, it is also possible to create both social and economic value at the same timeby finding business chances in the above materiality issues, including resolution of such issues.
The Group will practice CSV by discovering potential needs to solve social issues and create
added value in cooperation with many customers, local communities, suppliers, etc. who theGroup meets through its businesses.
In anticipation of the growth of the circular economy, the Company expanded the fashion
subscription business (the fixed-fee fashion rental service). As part of its efforts to coexist withlocal communities, the Company worked with local communities and partners to develop thearea and promote local production for local consumption, thereby creating bustling towns andenhancing the attractiveness of the area.
We will continue to create new value with an eye to the future vision of the Group to realize
the Well-Being Life of stakeholders.
(*) Prospect of changes in risks during the Medium-term Business Plan period, which takes into account the
impact on the Group, relevant measures, and others- 25 -

2

Decline of existing business models
ImpactVery severe

Outlook for the future

Each business of the Group is centered on in-person business models. In-person businesses
have faced significant restrictions because of COVID-19, and the changes in customers,
The Company’s suppliers, etc. that occurred during this period had a very significant impact on therisk recognition environment surrounding our existing business model. To avoid this impact, it is essential tochange the business model and shift to a business portfolio that is not overly dependent on corebusinesses.
Negative side • Decreased vitality of the entire Group due to weak performance of large-scale store-based
retail business
Positive side
• Regrowth by radical change of the business model of large-scale store-based retail businessIn response to changes in the environment surrounding its existing business models, the Groupis promoting its efforts in the following directions.
The first one is digitalizing customer contact points. By expanding app membership, theCompany will not be limited to card customers and will provide information optimized foreach customer. We are working to overcome the weaknesses of traditional in-person businesses
by having customers and sales staff connect digitally, which is not constrained by place andtime, and offering similar value-added services to physical stores. In addition, we analyze data
on behaviors, which are obtained through digital contact points, to improve the accuracy ofmarketing. Furthermore, to meet customers’ need to shop any time they choose, we are
improving UX (experience value) and strengthening OMO (merging physical stores with
online) by renewing our online store.

Measures

The second one is reviewing the role of stores. Stores in city areas enable us to provide various
values, including encounters with real experiences and something new and connections withpeople other than sales of goods. During the current fiscal year, we introduced amusement
elements and held original mobilization events that attracted many customers to our stores. We
have continued to enhance the media function for communicating various types of information
by taking advantage of favorable locations, the gallery function for introducing high-value
goods and services, entertainment functions, and solutions functions among others and strive torealize increases in the attractiveness of stores and diversification of revenue.
The third one is strengthening our Developer Business, the Payment and Finance Business, anddeveloping new businesses in order to shift to a business portfolio less dependent on the
Department Store Business and SC Business. We will work on business development throughalliances and collaboration with other companies utilizing the newly established CVC “JFRMIRAI CREATORS FUND” and M&A.
We will ensure a trajectory toward full recovery and regrowth of our businesses by promoting
these changes at a rapid pace.

- 26 -

3

Response to increasingly accelerated digitalization
ImpactVery severe

Outlook for the future

Changes in consumer behavior due to digital shifts, such as progress in the promotion of ecommerce, have increased the need for changing from businesses that rely on traditional
The Company’s physical stores and the establishment of business models in new business fields.
risk recognition We think that the way and speed of responding to digitalization and the development of humanresources to support this process affect growth of the Group as a whole and thus are importantand at the same time are also vital in improving the productivity of operations.
Negative side • Sluggish growth of the entire Group• Declining competitiveness due to delay in digitalization
Positive side
• Changing the business models through the use of digitalization• More efficient operations and going paperless
As a measure to respond to digitalization, we promoted the use of integrated databases formore sophisticated marketing and the establishment of new business models through the use oftechnology. Furthermore, we are actively investing in companies related to the metaverse andWEB 3.0 and are working on NFT at PARCO, and we hope these will work within the Group’s
existing businesses and create new businesses in the future.
From the perspective of improving work productivity, we relocated the office and equipped itwith booths suitable for remote meetings and better internet connections, etc. so that thequality and quantity of communication have been improved for remote work.
Measures

From the perspective of digital human resource development, we have begun training data
analysts and digital designers to strengthen the data utilization and business design necessary
to support the realization of the three strategies set forth in the JFR Group Digital Strategy,
which aims to contribute to the three strategies by implementing customer data-driven
management.
(*1)

Metaverse: A word coined from “meta (transcending)” and “universe.” All service
products that enable virtual spaces and communications there.
WEB 3.0: A new decentralized web world that is about to be realized, mainly by blockchain technologies
NFT: Non-Fungible Token. A technology that proves uniqueness through the use ofblock chain technologies.

- 27 -

4

Changes in consumer behavior after COVID-19
ImpactVery severe

Outlook for the future

On May 8, 2023, the classification of COVID-19 under the Infectious Disease Control Law
was changed to category 5, the same as seasonal influenza, and we believe that the restrictions
on economic and social activities will begin to dissolve, gradually reducing the impact on theeconomy. The COVID-19 pandemic has triggered a shift in values that emphasize “what one
wants to be,” consumer behavior that places importance on contributing to social value, andconsumers are becoming more and more sustainability-oriented, and the sharing economy
market is expanding.
The Company’s
The Group operates businesses that handle a diverse range of products and services, whichrisk recognitionmeans it is important to pay careful attention to the direction of consumption after COVID-19
and find out how to adapt to such consumption to operate businesses.

Negative side
Positive side

MeasuresIf the sudden materialization of risks, such as the inability to adapt to changing consumer
behavior and needs, accompanied by a rapid deterioration in business results necessitated the
impairment of non-current liabilities or a write-down of deferred tax assets, there is anaccounting and tax risk that could have a further negative impact on the Company’s operating
results and financial position.
• Defection of customers due to failure to meet consumer needs• New market creation
The Group is considering businesses that respond to the rise of the value of putting emphasis
on “what one wants to be.” For example, the cosmetics OMO shopping site DEPACO hasreopened as “media commerce” that combines EC and media functions. The structure allows
customers to shop conveniently by navigating around the same site while obtaining useful
information through the media. We will continue to promote OMOs that contribute to making
the customer shopping experience more attractive and convenient. In addition, things such as
luxury products, watches, and art, whose own value and backgrounds are linked to a richlifestyle, have been well received by customers, and sales are steadily expanding.
To respond to the consumer behavior that gives importance to contributing to social value, we
focus on the development of products and services based on the theme of “sustainable.” Aspart of the circular economy initiative, AnotherADdress, a fashion subscription business,launched a men’s line in March 2023, and it will be further promoted. We also promote cocreation with local stakeholders and the spread of local attractions through collaborations withsmall- and medium-sized enterprises as a way to contribute to the local community.
Impairment of non-current assets, which is an accounting and taxation risk, is based on ourbusiness plan for the estimation of future cash flows, and valuation of the recoverability ofdeferred tax assets is based on our business plan for estimating future taxable income. Thus,
we revise our plan as necessary to maintain its accuracy.

- 28 -

■Strategy risk

Urban decentralization (Rebalancing between urban and rural areas)
5

Outlook for the
futureImpact: Severe

・ The Group’s real estate holdings are dispersed throughout Japan, and therefore the Group
recognizes the characteristics and trends of each location are important risks to be monitored
constantly in its business operations.
Risk
recognition ・ As many cities are facing a period of infrastructure renewal, and as they seek to create
attractive cities in anticipation of future population declines, we believe that if we can capture
the characteristics of these cities and contribute to urban development, we can achieve bothregional development and expansion of the JFR Group’s earnings.
・ In October 2022, as part of the reorganization of the Developer Business, we announced theestablishment of a new developer company, J. FRONT CITY DEVELOPMENT Co., Ltd.,
directly under the Company, which started operations in March 2023.

Measures・ In addition, in order to promote prompt and smooth strategic utilization of real estate owned
by Group companies, CRE Strategy Unit was newly established in the Company in March
2023, and the functions of CRE Planning Division under the Management Strategy Unit weretransferred to this unit.
・ Through the above organizational restructuring, we will be able to make more agile andprompt decisions than ever before, from the perspective of overall Group optimization for the
medium to long term, and will promote coexistence with the local community and attractive
urban developments.

Accelerated income polarization
6

Outlook for the
futureImpact: Severe

・ The impacts of high prices caused by Russia’s invasion of Ukraine have been a shock to the
middle class. Consumer behavior has become severe, making it even more difficult to capture
demand.

Risk
recognition ・ Meanwhile, the number in the affluent class is increasing worldwide and in Japan as well.
These include young adults and power couples, who have high purchasing power.
・ The key issue is how to capture and respond to the needs of each customer.

・ We are revising and segmenting categorization of mass market products and services to an
appropriate scale.
Measures・ At the same time in the growing affluent market, we are strengthening categories in highdemand, such as luxury products, art, and watches, to meet the needs of the affluent class.
・ We are strategically investing in renovations to enhance our target merchandise and increase
our presence in contemporary art, as well as collaborating with galleries to offer rare andunique merchandise.

- 29 -

Changes in customers, particularly low birthrate / longevity
7

Outlook for the
futureImpact: Severe

・ The number of weddings in Japan is decreasing due to the COVID-19 pandemic, and thenumber of births reached a new record low in fiscal 2022.
Risk
recognition

・ The Kishida administration is considering drastic measures to increase the birthrate, but it willtake a reasonable period of time before the results of these measures show up and become thebearers of consumption.
・ For the time being, we recognize that the Group’s strategy must be based on the premise of asociety in which the population continues to decline and the aging of the population continues.
・ As the market for children also polarizes in response to the falling birthrate and income
polarization, the Group is concentrating its response on the high-quality children’s apparel andaccessory market and on the education business. As part of this, the Group entered theeducation business with a special focus on English-language education.

Measures・ On the other hand, as the “life shift (transition to an era of 100-year lifespans)” continues, themarket of seniors who enjoy economic power is increasing. For senior gaisho customers, weare enhancing convenience by having online staff work closely with them to introduce and sell
products.

Uncertainty about non-Japanese market
8

Outlook for the
futureImpact: Severe・ Beginning in fiscal 2023, border measures for foreign travelers were eliminated. With the
expected increase in Chinese travelers and regular flights to and from other countries, inboundconsumption is expected to recover to pre-COVID levels in the near future.

Risk
recognition ・ Furthermore, the Japanese government has set a target of 60 million foreign visitors and 15
trillion yen in consumption for 2030, and inbound consumption is expected to grow over the
medium to long term.
・ At the Daimaru Shinsaibashi store, a VIP lounge dedicated to inbound customers has been
established to strengthen the response.
Measures・ In cross-border EC, we are also working to cultivate and discover new inbound hot-selling
products through the introduction and sale of excellent Japanese beauty care products.
・ In addition, we are considering the possibility of developing and offering new content that is
not limited to current product sales, such as luxury tours by a travel salon.

- 30 -

Accelerated reorganization and M&A beyond industry boundaries
9

Outlook for the
futureImpact: Severe

Risk
recognition

・ M&A needs are increasing due to an increasing need for listed companies to select andconcentrate their businesses, an increase in business succession needs due to the aging ofbusiness owners in non-listed companies, and an environment conducive to financing due tocontinuing fiscal easing, and we believe that M&As will increase even more in the future.
・ As stakeholder values change dramatically, M&As are certainly becoming more necessary andimportant, and we recognize this is a domain that we should focus on from the perspectives ofboth offense and defense.
・ From an offensive perspective, the JFR Group has established a CVC and is practicing R&D
reinforcement through capital and business alliances with startup companies.

Measures・ In addition, we are making a full-scale entry into the e-sports business, which is expected to
grow in the future, by acquiring XENOZ CO., Ltd., which operates the e-sports team SCARZ,
and are making it a subsidiary. We are also working to create synergies with existing
businesses, such as PARCO and department stores, and create new value.
・ From a defensive perspective, we will improve corporate value by selecting Group businesses
and optimizing the allocation of management resources, thereby enhancing growth potential
and capital efficiency.

Work styles in new normal era and progress of HR/organization reforms
14

Outlook for the
futureImpact: Severe・ As a shrinking workforce and the increasing mobility of employment are intensifying
competition for professional and other human resources, acquiring human resources andimproving the quality of human resources to support corporate growth are key issues forcompanies.
Risk
recognition ・ Companies are required to view human capital as “capital” and to continue to invest in
maximizing its value in order to increase corporate value. It is also important to build anorganization that enables human resources to fully realize their potential, and the advance ofhuman resources and organizational reforms is a risk that is deeply connected with corporate
management going forward.

Measures

・ The Company will push to realize the Group Vision and strive to achieve Well-Being Life forour stakeholders, including employees, through visualizing its human capital based on “theprinciple of human resource strengths,” which is the standard that we use for the Company’s
human resource evaluation, and investing effectively in human resources to realize the humanresources vision necessary to execute the strategy
・ To secure and develop human resources, we are strengthening the recruitment of highly
specialized personnel and promoting Group personnel exchanges through open recruitment,
and we will invest resources with an emphasis on strengthening human resource development
and education, including reskilling.

- 31 -

■Hazard risk

Frequent natural disasters / epidemics
10

Outlook for the
futureImpact: Very severe

・ The risk of huge earthquakes, such as the Nankai Trough earthquake or an earthquake directly
under the Tokyo metropolitan area, is increasing. Natural disasters caused by extreme weather
events, such as giant typhoons and torrential rains, are increasing in both frequency and scaleof damage.
Riskrecognition

・ With regard to COVID-19, although the infection situation is expected to be under control andsocial activities are expected to normalize, there is a possibility of a similar pandemic, such as
the spread of a new mutant strain or a new disease.
・ If such risks materialize and cause serious disruptions to business operations, such as humancasualties, suspension of business activities, disruption of supply chains, or costs associatedwith facility renovations, the Group’s business performance and financial position could be
affected.
・ In response to natural disasters and other risks that threaten business continuity, we willdevelop a business continuity system from the perspective of securing key operations (funding
and payment operations, etc.) and important infrastructure (systems, etc.) based on a business
continuity plan and will strengthen the system by conducting periodic drills.

Measures・ Based on an analysis of our response to COVID-19, in the event that a new infectious disease
occurs in the future, the Company will respond based on its “New Infectious Disease Response
Manual,” which stipulates items related to ensuring the safety of human life, minimizing theimpact on business, and preparing systems during normal times. Furthermore, we will monitor
infection trends, and if signs of spreading appear, we will analyze the impact according tomultiple scenarios and respond dynamically.

- 32 -

Increasing importance of information security
11

Outlook for the
futureImpact: Severe

Risk
recognition

・ While remote work has been established and operations using cloud computing and mobile
devices are expanding, cyberattacks, unauthorized access, and other methods are rapidly
diversifying and becoming more sophisticated, making the cyber risks surrounding the Groupeven more serious. In addition, the Group holds a large amount of customer and personal
information, making it essential to introduce more robust systems and system security
measures for storing and handling information.
・ The Group recognizes that information security is becoming more important and considers it ahigh priority risk. However, if risks, such as external leakage of critical information or largescale service outages, were to materialize due to external attacks, human error, or inadequate
management by contractors, the Group’s performance and financial position could be affected,
depending on the scale of the damage.
・ We will continue to upgrade and improve the Group’s common system infrastructure, conduct
the safe operation of our information systems, and establish highly robust security. Cyberincidents are becoming more diverse and complex year by year, and we believe that further
initiatives are needed in both hard and soft measures.

Measures・ We will promote the development of the Group’s common system infrastructure, including theconstruction of a secure network and the expansion of a new authentication infrastructure(multi-factor authentication), and also promote the advancement of security operations, such as
the enhancement of the monitoring system using new solutions and external monitoring
services, the expansion of the scope of vulnerability management, and the improvement of the
response quality, to prevent information leaks, etc. In addition, we will promote efforts tominimize risk by revising the Group security guidelines and strengthening the security incident
response system. At the same time, we will improve security awareness and literacy byconducting incident response training for IT personnel and ongoing information security elearning and targeted attack e-mail training for all employees.

- 33 -

■Finance risk

Increasing importance of financing management
12

Outlook for the
futureImpact: Severe

・ With the change of the Bank of Japan’s governor, we will need to closely monitor futurechanges in monetary policy and the funding environment.
Risk
・ Although we believe that the impact of COVID-19 on our business is subsiding and the needrecognition
to urgently raise funds is diminishing, fund procurement management continues to be a risk,
with significant impacts for building a management foundation for the overall growth of theGroup.
・ Considering the characteristics of its business, the Company has traditionally raised a highpercentage of its long-term funding at fixed interest rates and has introduced a system thatprevents a sudden increase in interest payments due to rising interest rates or other significant
short-term effects.
Measures・ On the other hand, we expect large investments to be made in the future to promote growthstrategies, and we see the possibility of an increase in interest expenses in terms of fundingneeds. In the new funding phase, we will work on measures to minimize financing costs byappropriately selecting funding measures.

Need for cost structure that can respond to environmental changes
13

Outlook for the
futureImpact: Very severe

・ The Group’s performance has been hit by changes in the environment, such as high prices for
raw materials and commodities triggered by the invasion of Ukraine and a global economic
slow-down, and the future impact of changes in social conditions on the Company is uncertain.
Risk
recognition ・ Under these circumstances, lowering the break-even point and transforming into a structurethat can cope with environmental changes is an extremely important risk that will dictate thesuccess or failure of our response because it will consolidate our business base and set us on apath to regrowth.
・ Cost reduction measures have included office reorganization and reviews of work styles, cost
structure reforms such as outsourcing, reviews of the composition of required staff in eachbusiness, and strengthening the structure for managing expenses across the Group.
Measures・ Going forward, in addition to promoting structural reforms focusing on fixed costs, we will
also focus on reducing controllable expenses, particularly variable costs, in light of soaring
energy prices and other factors and will implement cost-cutting measures that help secure
profits.

- 34 -

List of Group “corporate risks”
CateNo.
gory
1Advancedsustainability
management

Outlook
Impact for the
future (*)

Negative side

Positive sideVerysevere・ Defection of・ Sustainable growth andstakeholders and lower
improvement of therating and brand power
Group’s presence

Measures
・ CSV practices that combine social andeconomic value
・ Addressing materiality issues

2

Decline of existing
business models

Verysevere・ Digitalizing customer touch points
・ Decreased vitality of the・ Regrowth by radical
entire Group due to・ Revising the role of storeschange of the businessweak performance ofmodel of large-scale store- ・ Strengthen existing businesses andlarge-scale store-based
develop businesses to transform thebased retail businessretail businessbusiness portfolio

3

Response toincreasingly
accelerated
digitalization

Verysevere・ Sluggish growth of the ・ Transformation of・ Utilization of integrated databaseentire Groupbusiness model through・ Building business models in newuse of digital technology
・ Declining
markets, such as the metaverse
competitiveness due to ・ More efficient operations
・ Developing digital human resourcesdelay in digitalizationand going paperless

45Strategy risk

Item

6

7

8

9

・ Defection of customers
due to failure to meet ・ New market creation
consumer needs

・ OMO promotion that contributes tomaking the shopping experience more
attractive and convenient・ Developing sustainable products andservices・ Carrying out appropriate and timely
revision of business plans

Urban decentralization(Rebalancing between Severe
urban and rural areas)・ Decline in conventional ・ Business development
urban commercial
through contribution tofacilities’ ability tourban needs and urban
attract customers
development

・ Reorganization to promote the strategic
use of group real estate promptly andsmoothly・ Working with communities to propose
diverse urban living and appealing local
area developments through complex
redevelopments

Accelerating income
polarization

・ Stimulation of new・ Decrease in sales due to
middle-class demand
contraction of mass
・ Development of newmarketaffluent market

・ Revising and segmenting categorizationof mass market products and services toan appropriate scale
・ Strengthening categories that are in highdemand, such as luxury products, art,
and watches and offering rare andunique merchandise・ Shrinkage of domestic
market scale

・ Expansion of seniormarkets

・ Intensively responding to high-quality
children’s apparel and education
business
・ Increasing shopping convenience forsenior customers and strengthening
categories of interest to them, such aswellness

Uncertainty about nonSevere
Japanese market

・ Delay in recovery of
inbound sales

・ Dedicated lounge for inbound customers
・ Recovery and expansion
・ Cultivate and discover hot-sellingof inbound sales
products for inbound customers through・ Capture of outside
cross-border EC
demand by development
・ Develop and prepare to offer newof EC and live commerce
content, such as luxury tours

Accelerated
reorganization and
SevereM&A beyond industry
boundaries

・ Selecting existing businesses and・ Business portfolio
optimizing allocation of management
realignment
resources・ Hostile takeover of the ・ Entry into new businesses
・ Strengthen R&D through capital andGroupthrough M&A andbusiness alliances with startup
synergies with existing
companiesbusinesses
・ Full-scale entry into e-sports businessChanges in consumer
Verybehavior after COVIDsevere
19

SevereChanges in customers,
particularly low
Severebirthrate / longevity

Work styles in newnormal era, progress of

14 HR/organization
reforms

Severe・ Realization of Well-Being Life of・ Outflow of talented
employees through investment in human・ Increase in employee
human resources, loss ofengagement andresources based on “the principle ofcompetitiveness inorganizational capability
human resource capability”
attracting human・ Promotion of business・ Improvement of environment forresources
strategy; creation ofrecruiting professional human resources,
・ Decrease in employee
innovationgroup personnel exchanges, and human
motivation
resource education- 35 -

CateNo.
gory

Item

Positive side

MeasuresVerysevere11 of information security Severe・ Develop and upgrade the Group’scommon system infrastructure
・ Occurrence of personal
information leaks,
・ Stable running of・ Promoting sophistication of security
lawsuits, and liability
operations and systems
operations and strengthening thefor damages, loss of
response system
・ Operation streamlining
social trust
and promotion of remote ・ Reviewing Group security guidelines
・ Delay/stagnation ofwork
and improving employee security
operations
awareness and understanding throughtraining

Frequent natural

Hazard risk

Negative side・ Continuously implementing practical・ Damage to the lives of
BCP training
customers and・ Conduct periodic reviews of businessemployees
・ Stable business operations
continuity plans
・ Business continuity
・ Strengthening preparedness for newcrisisinfectious diseases

10 disasters / epidemics

Finance risk

Outlook
Impact for the
future (*)

Increasing importance

Increasing importance

12 of financing

Severe・ Lowered cost of capital・ Remaining high cost of・ Support for promoting
capitalgrowth strategies

・ Long-term funding at fixed interest rates
・ Selection of appropriate financing
measures during the new funding phaseVerysevere・ Transformation of・ Decline in profitability
business portfolio
・ Curbs on investment
・ Strengthen businessfoundations

・ Reducing costs by office reorganization,
staff composition reviews, and so forth・ Strengthen cost management system
across the Groupmanagement
Need for cost structure

13 that can respond toenvironmental changes(*) Changes to risks during the period of the Medium-term Business Plan are projected taking into account the severity of theirimpact on the Group and countermeasures.
: Risks that have an extremely heavy impact and are given priority- 36 -

(4) Information disclosure in line with TCFD recommendations(i) JFR Group’s sustainability management goals
The Group has encountered a number of crises over its 300 to 400-year history. Each time we have faced
these situations, we have returned to our Corporate Credo “Service before Profit” and “Abjure All Evil andPractice All Good.” We have been able to carry out our business activities honestly while responding quickly
to changes in our customers and society. This has led us to our current management. Companies cannot
develop without coexisting with society. Today, it is essential for management to take a long-term perspective
and create a vision of what the company should be for the future, one that will have a prominent presence insociety. It is evident that we cannot conduct business activities while turning a blind eye to issues involving
the environment, society and human rights. We believe we can obtain a framework for sustainable
management for future growth by incorporating the concept of sustainability into our corporate and businessstrategies to solve such issues.
Based on this belief, the Medium-term Business Plan, which began in FY2021, clearly states the Company’scommitment to resolving social issues through business activities, with sustainability at the core of its
management based on the Corporate Credo. For each of the seven materiality issues we have identified, we
will seize both risks and opportunities, and by creating business opportunities, we will practice CSV(Creating Shared Value) that balances social value and economic value and realize a “Well-Being Life” forall stakeholders, including customers, employees, and suppliers. (Figure 1, Table 1)

Figure 1:

Overview of sustainability management- 37 -

Table 1: Seven materiality issues addressed by the JFR Group
Materiality issues

FY2030 targets

JFR Group’s commitment to realizing a sustainable society
In order to pass on the irreplaceable environment of the
Leading a carbon-freeearth to the next generation, we will contribute to theRealization ofsociety and creating arealization of a decarbonized society by working together
decarbonized society
global climate for the next
as one to expand procurement of renewable energy andgeneration
rigorously implement energy-saving measures, etc.
Realizing a sustainableglobal environment for the We will cooperate with our suppliers and customers toPromotion of circular
future and growth as acreate innovative business models for generating new
economycompany through theenvironmental value and capture competitive advantages inpromotion of a circular
the circular economy.
economyWe will share our thinking on sustainability with our
Realizing sustainablesuppliers and work together with them to fulfill our social
supply chain created along responsibilities, thereby contributing to the creation of awith suppliers
sustainable society for the future through our entire supply
chain.
We will engage in procurement, etc. of environmentally
Realizing decarbonizationconsiderate products and services with our suppliers while
throughout the entire
also working to shift to renewable energy and energy
Management of the
supply chain created alongsaving so that we can contribute to the realization of aentire supply chain
with suppliers
decarbonized society throughout the entire supply chain.
Realizing Well-Being inwhich we, along with
We will work with our suppliers to create workplace
suppliers, protect theenvironments where the human rights of workers in ourhuman rights and health of supply chain are protected and where they can continue tothe people working in the work in good health.
supply chain
We will contribute to the creation of sustainable
Working together with
communities that utilize local assets by working with local
local communities tocommunities, governments, NGOs and NPOs, centered on
Coexistence with local
create prosperous, futureour stores. Moreover, we will provide exciting newcommunities
oriented communities
experiences for the people who gather in communities by
where people gather,discovering and communicating the appeal of the local
centered on our storesregion.
We will offer high-quality, comfortable products andRealizing a future-oriented
services that help our customers live healthy and secureWell-Being Life thatlives in mind, body, and spirit, thereby providing them withsatisfies the mind andWell-Being suited just for them and an exciting andbody of customers
fulfilling future.
Realization of customers’
We will increase the resilience of our stores by addressing
healthy/safe/secure lives
disaster-prevention and epidemic risks and business
Creating safe, secure, and continuity plans (BCPs). At the same time, we will build
resilient stores with an eye operations that make use of digital technology to createon the future
new customer contact points that are safe and secure as we
promote store development that meet society’s
expectations.

- 38 -

Materiality issues

FY2030 targets

JFR Group’s commitment to realizing a sustainable society
Based on the themes of diversity and flexibility, we willvalue the individuality and perspectives of all our
Realizing a highly
stakeholders, which form the essence of diversity, anddiversified society where
create a company where diverse abilities can be
Promotion of diversity & everyone recognizes eachdemonstrated. We will also aim to grow our business ininclusionother’s diversity andline with diverse expectations of customers by driving
flexibly demonstrates
innovation through the mutual interaction andhis/her individuality
complementary functions of diverse individualities andabilities (inclusion).
Realizing Well-Being for We will promote new ways of working in the new normal
the employees and theirera, which reflect the concepts of diversity and flexibility,
Realization of work-life families through new work while at the same time maintaining mental and physicalintegrationstyles for the future to
health. This will realize the Well-Being of our employees
realize diversity andand their families, leading to improved productivity in our
flexibility
organization.

- 39 -

(ii) Initiatives Towards Realizing “JFR Group 2050 Net Zero”
Recently, climate change has progressed to an extremely serious level, endangering not only future
generations but all people, including the present generation.
The Intergovernmental Panel on Climate Change (IPCC) provided a scientific indicator in its 1.5°C special
report in 2018, which stated that it is necessary to reach net zero*1 emissions by 2050 in order to achieve the
1.5°C target. Meanwhile, in 2021 the Science Based Targets initiative (SBTi)*2 announced a new corporate
net zero standard based on scientific findings. Now, companies cannot afford to overlook the need to reachnet zero by 2050 at the latest in order to achieve the 1.5°C target.
In light of the above social situation, the JFR Group has positioned climate change as a key issue insustainability management, and is taking measures to address the risks and opportunities associated withclimate change, which will have a significant impact on its business strategy. The Group obtained
certification from SBTi in 2019 for its Scope 1, 2, and 3 greenhouse gas (GHG) emissions reduction targets.
In 2021, we raised our 2030 Scope 1 and 2 GHG emission targets from the previous 40% reduction to a 60%
reduction compared with FY2017 (the base year) and reacquired certification for the 1.5°C target that is the
new standard set by the SBTi. In February 2023, we also obtained certification for “Net Zero Target” by 2050
for Scope 1, 2, and 3 GHG emissions.
The Group is committed to both “Realization of decarbonized society” and “Promotion of circular economy,”
as stated in the Materiality (Table 1), and aims to achieve net zero emissions across its entire value chain by
2050.
Specifically, we will work to reduce Scope 1 and 2 GHG emissions through intense energy conservation andincreased use of renewable energy in our stores, and to reduce Scope 3 GHG emissions through cooperation
with suppliers and customers, while promoting initiatives such as strengthening 3Rs and expanding circularbusinesses.

*1

To thoroughly reduce GHG emissions and reduce the remaining emissions to virtually zero after
subtracting the amount of emissions removed through forest absorption and CCS (CO2 capture andstorage), etc.

*2

Established in 2014 by the collaboration of CDP, the UN Global Compact, World Resources Institute(WRI), and the World Wide Fund for Nature (WWF) to enable companies to set ambitious emission
reduction targets in line with the latest climate science(iii) Information disclosure in line with the four disclosure items recommended by the TCFD
In 2019, the Group endorsed the final report of the Task Force on Climate-Related Disclosures (TCFD
recommendations). The TCFD recommendations are a common global framework for comparable climaterelated disclosures, recommending companies to disclose information in line with four items: governance,risk management, strategy, and metrics and targets. (Table 2)
The Group uses the TCFD recommendations as a guideline for verifying the appropriateness of its climatechange response and conducts proactive dialogues with institutional investors to ensure effective disclosureof information.

- 40 -

Table 2: Four Disclosure Items Required of Companies by the TCFD Recommendations
Disclosure
items

Specific disclosures(a)Governance

(b)
(a)

Risk
(b)
management

Strategy

Detailed processes for identifying and assessing climate-related risks
Detailed processes for the management of important climate-related risks(c)

How the processes are integrated into the organization’s overall risk management(a)

Detailed risks and opportunities the organization has identified over the short, medium
and long term
Description of risks and opportunities and their degree of impact on the organization’s
business, strategy and financial planning
Risks, opportunities and financial impacts based on relevant scenarios and strategies andresilience against them

(b)
(c)

Metrics andtargets

Process by which the Board of Directors receives reports on climate-related issues, thefrequency with which these issues are tabled for discussion, and monitored items
Responsibility of management for climate-related issues, the process for receiving reports,
and the method of monitoring(a)

The metrics used to manage climate-related risks and opportunities(b)

GHG emissions (Scope 1, 2 and 3)(c)

The targets used by the organization to manage climate-related risks and opportunities andperformance against targets
Source: Recommendations of the “Task Force on Climate-related Financial Disclosures (final report)” (2017)- 41 -

<Governance (Governance for environmental issues)>(a) Process by which the Board of Directors receives reports on climate-related issues, frequency with whichthese issues are tabled for discussion, and monitored items
The Group Management Meeting, which is the highest decision-making body for business execution,
discusses and makes decisions on specific initiatives related to environmental issues in order to promotesustainability management across the Group in a cross-organizational manner. Furthermore, policies onenvironmental issues discussed and decided by the Group Management Meeting are shared with the
Sustainability Committee, which meets at least twice a year. The Committee formulates action plans for theGroup’s environmental issues and monitors the progress.
The Board of Directors receives reports on the discussions and decisions made by the Group Management
Meeting and the Sustainability Committee, then discusses and oversees the Group’s policies and action plans
for addressing environmental issues. (Figure 2)
In selecting candidates for Directors, the Company uses a skill matrix to clarify the expertise and experience
it expects from its Directors, and one of the matrix items is “the environment.” We enhance the effectivenessof our efforts to address environmental issues by selecting Directors who can appropriately oversee the statusof specific action plans, periodic reviews, and continuous improvement efforts in response to ourenvironmental plan, which includes medium- and long-term goals for resolving environmental issues throughour business activities.

(b) Responsibility of management for climate-related issues, process for receiving reports and method ofmonitoring
The President and Representative Executive Officer chairs the Group Management Meeting and also chairs
the Risk Management Committee and the Sustainability Committee, both of which are advisory committees
under his direct supervision, and is ultimate responsible for business decisions related to environmental
issues. The content of discussions and resolutions made by the Group Management Meeting and theSustainability Committee are finally reported to the Board of Directors. (Table 3, 4)

Figure 2:

Environmental management structure of the JFR Group
Board of Directors
Supervision
ReportPresident and Representative Executive Officer
ReportReportConsultation

Group Management
Meeting
ReportConsultation

Sustainability Committee
Cooperation

Cooperation
ReportInstruction

Risk Management
Committee

Instruction

Operating companies

ReportReportInstruction

Instruction
Cooperation

Sustainability Promotion Division- 42 -

Table 3: JFR Group environmental management meeting bodies and executing entities and their roles
Meeting bodies and executing
entities
Board of Directors

Meetingbody

ExecutingentityRole
Supervises the progress of environment-related initiatives discussed andapproved in business executions. Meets monthly.

As the highest decision-making body for business execution, it discusses anddecides on policies and measures related to Group-wide management. AlsoGroup
discusses and decides the Group-wide management policies, etc. related toManagement
comprehensive risks and opportunities, including environmental issues, asMeeting
discussed by the Risk Management Committee and the Sustainability
Committee, and the decisions are reported to the Board of Directors. Held
weekly.
Discusses the identification, evaluation, and response to comprehensive risks
Risk Management and opportunities, including environmental issues, and monitors the risk
Committee
responses of operating companies. The discussions at the committee meetings
are reported to the Board of Directors. Held three times a year.
Discusses specific measures to address more detailed issues related tosustainability, including environmental issues discussed and decided by theGroup Management Meeting. With regard to climate-related issues, theSustainability
committee monitors the progress of each operating company based on theCommittee
Group’s long-term plan and KGI/KPI, taking into account risks andopportunities. Also engages in dialogue with experts in climate-related topics.
The discussions are reported to the Board of Directors. Held at least twice a
year.
Chairs the Group Management Meeting and also chairs the Risk Management
Committee and the Sustainability Committee. Assumes the ultimate
President andresponsibility for business decisions related to environmental issues, including
Representative
identifying, assessing, and responding to climate-related risks andExecutive Officer
opportunities, and promoting Group-wide efforts to resolve environmental
issues.
Based on decisions made by the Management Meeting and discussions held by
the Risk Management Committee and Sustainability Committee, plan andOperating
implement specific measures to address environmental issues at each operatingcompanies
company, and report progress to the JFR Group’s Risk Management
Committee and Sustainability Committee of the Group.
Formulates and proposes Group policies, etc. to promote sustainability
management. Collects information on risks and opportunities regarding
Sustainability
climate-related issues and formulates the direction of medium- and long-term
Promotion Division
initiatives, and reports to the Group Management Meeting and theSustainability Committee.

- 43 -

Table 4: Main climate change agenda items in the Sustainability Committee
・ Initiatives with suppliers to reduce Scope 3 GHG emissions
・ Sustainability action plan for FY2021
April
FY2021・ Overview of supplier assessment (including environment) in FY2021
・ Revisions to the Sustainability Policy
・ Group-wide KPI progress for FY2020

September・ Lecture by an external instructor on the “Importance of ESG information disclosure”
・ Implementation of supplier assessment (including environment)
・ Group-wide KPI progress for H1 FY2021

FY2022April

September・ Lecture by an external instructor on “ESG/sustainability management”
・ Sustainability action plan for FY2022
・ Results of supplier assessment (including environment) in FY2021
・ Group-wide KPI progress for FY2021
・ Group-wide KPI progress for H1 FY2022<Risk management>(a) Detailed processes for identifying and assessing climate-related risks
The Group considers risk as the starting point of its strategy. It defines risk as “uncertainty, both positive andnegative, that affects the achievement of corporate management goals,” and believes that when companies
respond appropriately to risk, it leads companies to sustainable growth.
With the recognition that climate-related risks and opportunities have a great impact on its businessstrategies, the Group identifies climate-related risks and opportunities through the process below and assesses
their importance. (Figure 3)
Firstly, the Group extracts climate-related risks and opportunities exhaustively for each activity item in the
supply chain process: “product procurement,” “transportation and delivery,” “sales in stores,” “use of
products and services” and “disposal.” Next, we identify important climate-related risks and opportunities for
the Group from among the exhaustively extracted climate-related risks and opportunities. Finally, we assess
the importance of the identified climate-related risks and opportunities based on two assessment criteria,“Importance to the Company (impact x urgency)” and the “Importance to stakeholders.”(b) Detailed processes for management of important climate-related risks
The Sustainability Committee conducts more detailed examinations of the environmental risks and shares theresults with operating companies. Operating companies incorporate climate actions into their action plans.
They discuss and confirm the progress of the action plans at the meetings chaired by their presidents. The
Group Management Meeting, the Risk Management Committee and the Sustainability Committee monitor
the progress and, finally, report to the Board of Directors. (Table 5)(c) How the processes are integrated into the organization’s overall risk management
The Group has established the Risk Management Committee based on the importance of establishing a
structure for managing risk companywide. The Risk Management Committee identifies comprehensive risks
and opportunities, including climate-related risks, from the perspective of the degree and timing of possible
risk manifestations and impacts on business, based on environmental analysis conducted annually, anddeliberates on countermeasures. Those risks that are extremely important to the Group’s management overthe medium term are reflected in the Medium-term Business Plan as “corporate risks” and are addressed
accordingly. Discussions at the Risk Management Committee are reported to the Group Management
Meeting and shared with the Sustainability Committee.
- 44 -

The discussions at the Risk Management Committee and the Sustainability Committee in the above series ofprocesses, as well as decisions by the Group Management Meeting, are reported to the Board of Directors ina timely manner and are reflected and addressed in the Group’s strategies under the supervision of the Boardof Directors.
(* See pages 20-23 for the organization’s overall risk management.)

Figure 3: JFR Group Risk Management Process

Table 5: JFR Group Risk Management System
Risk management
process

Responsible meeting bodies andexecuting entities
・ Board of Directors

Identification/assessment/
narrowing down ofrisks

・ Group Management Meeting

Response to risks

・ Operating companies

・ Risk Management Committee(Overall management risk)
・ Sustainability Committee(Environmental risks)・ Board of Directors
・ Group Management Meeting
Monitoring/report

・ Risk Management Committee(Overall management risk)
・ Sustainability Committee(Environmental risks)- 45 -

<Strategy>(a) Detailed risks and opportunities the organization has identified over the short, medium and long term
The Group considers it important to examine climate-related risks and opportunities at appropriate
milestones because of the potential impact of climate-related risks and opportunities on its business activities
over the long term. Accordingly, the Group has positioned the execution window of the Medium-term
Business Plan up to FY2023 as the short term, the period up to FY2030, which is the year set by the SBTi, as
the medium term, and the period to FY2050, which is the SBTi net zero target year, as the long term. (Table
6)
The Group has formulated a group strategy for climate-related risks and opportunities by backcasting from2050, when net-zero emissions will be achieved.

Table 6: Definition of the periods for consideration of climate-related risks and opportunities in the JFR Group
Periods for consideration ofclimate-related risks andopportunities

JFR Group definitions

Short term

Until FY2023

Execution period of the Medium-term Business Plan

Mediumterm

Until FY2030

Period to the target achievement year in SBTLong term

Until FY2050

Period to SBT Net Zero Target Year(b) Description of risks and opportunities and their degree of impact on the organization’s business, strategy
and financial planning
The Group conducts scenario analysis in order to understand the risks, opportunities, and impacts of climatechange for the Group and to examine the resilience of the Group’s strategies envisaging the world in fiscal
2030 and the necessity of further measures.
In the scenario analysis, we referenced multiple existing scenarios announced by the International Energy
Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC), then considered two world
scenarios: one that envisages the goal of the Paris Agreement to keep the global average temperature increase
well below 2°C above pre-industrial levels and to limit it to 1.5°C (the below 1.5˚C/2˚C scenario) and onethat envisages the world without the introduction of new environment-related policies and regulations (the4˚C scenario). (Table 7)
Based on these two scenarios, the Group extracted climate-related risks and opportunities for each activity inits supply chain process, in line with TCFD recommendations. In addition, we defined the transition risks(policy regulation, technology, market, and reputation) and physical risks (acute and chronic) arising fromclimate change, as well as the opportunities (resource efficiency, energy sources, products and services,markets, and resilience) arising from responding appropriately to it. (Table 8)

Table 7: Existing scenarios taken into consideration
Envisioned world
Below 1.5˚C/2˚C scenario

4˚C scenario

Existing scenarios“Net-Zero Emissions by 2050 Scenario (NZE)” (IEA, 2022)“Representative Concentration Pathways (RCP2.6)” (IPCC, 2014)“Stated Policy Scenario (STEPS)” (IEA, 2022)“Representative Concentration Pathways (RCP8.5)” (IPCC, 2014)- 46 -

Table 8: Overview of climate-related risks and opportunities in the JFR Group
Time of emergence
Short
term

Mediumterm

Policyregulation●●

Technology●●

Market●●Reputation

●

●

Acute

●

●

Long
term

●

Physical risk

Risk

Transition risk

Type of climaterelated risk andopportunity

Chronic●●

Overview of JFR Group’s climate-related risks andopportunities
・ Increased costs associated with introduction of carbon
tax, etc.
・ Increased energy procurement costs due togeopolitical risks
・ Increased costs due to decentralized renewable energy
procurement and energy creation (e.g., PPA)・ Increased costs associated with the development ofproperties with high environmental performance andthe installation of equipment
・ Increased investment for introduction of highefficiency energy-saving equipment
・ Increased procurement costs for renewable energy
due to increased demand for electricity derived fromrenewable energy
・ Loss of growth opportunities due to a delay inresponse to market changes, such as increased
demand for environmentally friendly products
・ Risk loss of reputation due to slow response toenvironmental issues and slow response todiversification of consumption patterns
・ Negative impact on funding due to lack of response to
demand from investors for environmental information
disclosure
・ Negative impact on recruitment of human resourcesand employee engagement due to loss of reputation
・ Disruption of logistics routes due to natural disasters
・ Decrease in revenue due to store closures caused bynatural disasters
・ Increase in procurement costs due to destabilization ofyields and quality of agricultural, livestock, andfishery products associated with changes in rainfall
and other weather patterns
・ Increase in employee health damage due to infectious
diseases risk caused by climate change- 47 -

Opportunity

Type of climaterelated risk andopportunity

Time of emergence
Short
term

Medium
term

Long
term

Resource
efficiency●●

Energy source●●

Products andservices●●

Market

●

●

●

●

●

Resilience●

Overview of JFR Group’s climate-related risks andopportunities
・ Decrease in energy procurement cost due tostrengthening of energy-saving measures
・ Decrease in energy procurement cost due toconversion to stores of high environmental value
・ Decrease in energy procurement cost due tointroduction of high-efficiency energy-saving
equipment
・ Decrease in energy procurement cost due tointroduction of energy creation
・ Reduction in energy procurement costs associatedwith the development of new policies and systems
related to renewable energy
・ Expansion of earnings by acquiring new customers byproposing sustainable lifestyles
・ Decarbonization of the entire supply chain andexpansion of earnings by responding to rising demandfor environmentally friendly products and services
・ Expansion of financing sources through green bonds,
etc.
・ Expansion of new growth opportunities through newentry into the circular businesses
・ Improvement in profitability by rebuilding of businessportfolio across the framework of the retail businessand entry into and expansion in the market forenvironmentally friendly products
・ Expansion of earnings due to increased opportunities
to acquire new tenants through conversion to storeswith high environmental value
・ Improvement in energy resilience through promotionof renewable energy, energy conservation, energy
creation, and diversification of procurement sources(c) Risks, opportunities and financial impacts based on relevant scenarios and strategies and resilience againstthem
The Group exhaustively extracted climate risks and opportunities and assessed their importance based on two
assessment criteria, including the “importance to the Company (impact x urgency)” and the “importance tostakeholders.” For items that were rated as particularly important, the Group has conducted both quantitativeand qualitative analyses of the financial impacts in FY2030 assuming the below 1.5˚C/2˚C scenario and the
4˚C scenario and developed measures for each scenario. (Table 9)
The qualitative financial impacts are presented in three levels by the direction of the arrow symbols.

- 48 -

Table 9: Climate change risks and opportunities of particular importance to the JFR Group and their financial
impacts in FY2030: The impact on the JFR Group’s business and finance is expected to be very large.
: The impact on the JFR Group’s business and finance is expected to be slightly large.
: The impact on the JFR Group’s business and finance is expected to be negligible.

Climate-related risks and opportunitiesof particular importance to the JFR
Group

・

・

Risk

・

・

・

Financial impact
Below
1.5˚C/2˚Cscenario

4˚C scenario

Measures

・ Reduction of GHG emissions
through aggressive energy
conservation measures in stores
Increased costs associated with Approximately Approximately
and expansion of renewable
introduction of carbon tax, etc. ¥1,400 million*1 ¥900 million*1
energy switching to achieve the2050 net-zero target
Increased costs associated with・ Financing through Greenthe development of properties
Bonds, etc.
with high environmental
・ Cost-effective equipment
performance and theinstallation
installation of equipment
・ Consideration of introducing
Increased investment forinternal carbon pricing
introduction of high-efficiency
・ Cost-effective and well-plannedenergy-saving equipment
investment considerations
・ Reduction of renewable energy
procurement risk and mid- tolong-term costs through
Increase in renewable energy
diversification of renewable
Approximately Approximately
procurement costs due toenergy procurement methods
increased demand for electricity ¥700 million*2 ¥300 million*2
・ Improvement of energy selfderived from renewable energy
sufficiency through installationof renewable energy equipmentin the company’s facilities, etc.
・ Increased resilience of storesand business sites through BCP
Approximately
Decrease in revenue due toApproximately
preparation¥10,300
store closures caused by natural¥5,200 million*3
・
Improvement of disastermillion*3
disasters
prevention performance ofstores- 49 -

Climate-related risks and opportunitiesof particular importance to the JFR
Group

Opportunity

・ Decrease in energy
procurement cost due tointroduction of high-efficiency
energy-saving equipment
・ Expansion of earnings byacquiring new customers byproposing sustainable lifestyles

Financial impact
Below
1.5˚C/2˚Cscenario

4˚C scenario

Approximately ¥500 million*4・ Expansion of new growth
opportunities through newentry into the circularbusinesses*

・ Replace with high-efficiency
energy-saving equipment at theappropriate time・ Expansion of circular businesses
such as sharing and upcycling

・ Decarbonization of the entire
supply chain and expansion of
earnings by responding toincreased demand forenvironmentally friendly
products and services

・ Expansion of earnings due toincreased opportunities toacquire new tenants throughconversion to stores with highenvironmental value

MeasuresApproximately¥1,000 million*5―・ Expansion in handling ofenvironmentally friendly products
and services, including switchingto environmentally friendly
packaging materials
・ Collaborating with suppliers todecarbonize, including the
introduction of AI demand
forecasting services to reducewaste・ Launching circular businesses
through effective use of M&A
and CVC* investments
・ Diversification of sales
channels through promotion ofReal × Digital Strategy
formulated in the Medium-term
Business Plan
・ Acquisition of environmental
certifications for newly
developed properties (ZEB,CASBEE, etc.)
・ Promoting the use ofrenewable energy in stores toachieve RE100

CVC (Corporate Venture Capital): A mechanism to efficiently and effectively promote business co-creation through investment inpromising start-ups. In FY2022, the Company established the “JFR MIRAI CREATORS Fund” to promote open innovation.

- 50 -

Basis for calculation of quantitative financial impacts expected in FY2030*1

Calculated by multiplying the JFR Group’s Scope 1 and 2 GHG emissions in FY2030 by the
carbon tax price per tonne of CO2*2

Calculated by multiplying the JFR Group’s electricity usage in FY2030 by the additional price of
renewable energy-sourced electricity per kWh compared to ordinary electricity charges*3

Calculated by multiplying the amount of sales losses due to suspension of store operations during
past natural disasters by the frequency of floods*4

Estimated by multiplying energy procurement costs by the amount of energy saved by the JFRGroup as of FY2030*5

Estimated by multiplying the JFR Group’s real estate revenue and profits in FY2030 by the rate ofchange of new contract conclusion fees for buildings with environmental certification

To achieve the materiality issue “Realization of decarbonized society,” the Group analyzed the impact ofclimate change on the Group’s business activities, based on the above scenarios, then examined ourcountermeasures to verify the Group’s strategy resilience.

・ JFR Group’s 2050 Net Zero Transition Plan
The Group believes it necessary to strengthen its strategic resilience from a medium- to long-term
perspective under both the below 1.5˚C/2˚C scenario and the 4˚C scenario towards realizing net zero in 2050.
Therefore, the Group has formulated a transition plan to achieve net zero emissions by 2050. (Figure 4)
Under this plan, in our business strategy, we have formulated appropriate strategies to avoid negative risks,
while for positive opportunities we have clarified specific initiatives from short-, medium- and long-term
perspectives aimed at capturing new growth opportunities, such as responding proactively to market changes.

- 51 -

Figure 4: 2050 Net Zero Transition Plan*
400

Scope１& 2

FY2030
Aim for
Scope 1&2 60％ reduction

Scope３

GHG emissions(10,000 t-Co2)

Scope 3300

2050

40％ reduction

Scope 1, 2
and３

Net zero

200
100
0

Phase

FY2017(base fiscal year)

FY2022

FY2030

Short term
(to FY2023)

Results(FY2017 to FY2022)

Results andreduction
targets for
GHG
emissions(vs. FY2017)

FY2023Medium term
(to FY2030)

FY2040FY2050Long term(to FY2050)

Scope 1 & 2
FY2017
194,154 t-CO₂

Scope 1 & 2
FY2022
43.5％ reduction

Scope 1 & 2
FY203060％ reduction

Scope 1 & 2
FY2050Net zero

Scope3
FY20172,927,320 t-CO₂

Scope3
FY2022
5.5％ reduction

Scope3
FY2030
Aim for 40％ reduction

Scope3
FY2050Net zero

Scope 1, 2 and 3 reduction by continuing and strengthening energy-saving measures
・Scope 1, 2 and 3 (Category 3) reduction by expanding the switching to LED lighting in stores and introducing energy-saving,highly efficient equipment
・Scope 1 & 2 reduction by shifting to electric vehicles for company use
Scope 2 reduction by expanding renewable energy
・Scope 2 reduction by expanding the switching of stores and offices to renewable energy

Priority
measuresScope 3 reduction in collaboration with suppliers and by promoting a circular economy
・Scope 3 (Categories 1, 3, 5 and 9) reduction through the advancement of existing 3 Rs incollaboration with suppliers and customers
・Scope 3 (Category 1) reduction in collaboration with suppliers
・Scope 3 (Category 5) reduction by reducing amount of waste disposal and improving recycling rate
Scope 2 reduction by introducing an energy creation system
・Scope 2 reduction through renewable energy capital investments,
etc. in our own facilities
・Scope 2 reduction by establishing corporate power purchaseagreements (PPAs)
Utilization of latest technologies, etc. andoffsets
・Use of electricity from new non-carbon
energy sources, such as hydrogen andammonia
・Offsets through tree planting activities toabsorb CO2*

The plan is current as of the end of May 2023 and may be revised depending on business strategies
going forward.

- 52 -

<Metrics and targets>(a) The metrics used to manage climate-related risks and opportunities
The Group has established two metrics for managing climate-related risks and opportunities: Scope 1, 2 and3 GHG emissions and the ratio of renewable energy within electricity used in business activities.
Furthermore, as for the officer remuneration, Scope 1 and 2 GHG emissions reduction targets were set as oneof the non-financial indicators for determining performance-linked remuneration to clarify executive officers’
responsibilities with regard to the issue of climate change.
(* See pages 111-112 for officer remuneration and non-financial indicators)(b) GHG emissions (Scope 1, 2 and 3)
The Group started calculating the total GHG emissions for the Group from fiscal 2017. In fiscal 2022, theGroup’s Scope 1 and 2 GHG emissions are forecast at approximately 110,000 t-CO2 (down 43.5% fromfiscal 2017), and Scope 3 GHG emissions are forecast at approximately 2,770,000 t-CO2 (down 5.5% fromfiscal 2017). The ratio of renewable energy is forecast at 33.6%. (Table 10, Figure 5, 6, 7)
The Company expects to obtain third-party assurances for its Scope 1, 2, and 3 GHG emissions andrenewable energy electricity consumption for FY2022.

Table 10: JFR Group’s Scope 1, 2 and 3 GHG emission results and forecast(Unit: t-CO2)
FY2017

FY2021Results*1

Results*1

Total Scope 1 and 2
194,154
emissions
Scope 1
16,052emissions
Breakdown
Scope 2
178,102emissions
Total Scope 3 emissions*2
2,927,320
Ratio of renewable energy–(%)*1
Obtained third-party assurance from LRQA
*2Forecast in FY2022
Compared with
FY2017
Forecast(compared withbase fiscal year)

122,812

109,792(43.5)%

14,004

13,715(14.6)%

108,808

96,077(46.1)%

2,420,492

2,766,700(5.5)%

20.3

33.6

–

Calculated in accordance with “Basic Guidelines on Accounting for Greenhouse Gas Emissions
Throughout the Supply Chain ver. 3.3 (March 2023, Ministry of the Environment and Ministry of
Economy, Trade and Industry)” IDEAv2.3 (for supply chain GHG emissions calculation).

(c) The targets used by the organization to manage climate-related risks and opportunities and performanceagainst targets
The Group has set long-term GHG emission reduction targets in 2018 to achieve the global under 1.5˚Ctarget and obtained certification from the SBTi in 2019 for its Scope 1, 2, and 3 GHG emissions reduction
targets. In 2021, in line with the evolution of our materiality issues, we lifted our target for reducing Scope 1
and 2 GHG emissions in 2030 from the previous 40% reduction to a 60% reduction compared with FY2017(the base year) and reacquired certification for the 1.5°C target that is the new standard set by the SBTi. In
February 2023, we also obtained certification for “Net Zero Target” by 2050 for Scope 1, 2, and 3 GHG
emissions. (Table 11)- 53 -

To achieve these long-term targets, in FY2019 the Group started procuring renewable energy-derived
electricity at its own facilities, and in October 2020 joined RE100*, which aims to achieve a 100% renewableenergy rate for electricity used in business activities by 2050. Moreover, as an interim target, we aim toachieve a 60% renewable energy rate for electricity used in business activities by 2030.
Looking ahead, we will work to expand procurement of electricity from renewable energy towards achieving
net zero by 2050.
*

A global initiative that aims to source 100% renewable energy to power business operations by 2050

Table 11: The targets used by the JFR Group to manage climate-related risks and opportunities
Metrics

Target year
2050

GHG emissions
Ratio of renewable energy
in electric power used inbusiness activities

2030
2050
2030

*1

Obtained SBT certification*2

Joined RE100 in 2020

Details of targets
Net zero emissions of Scope 1, 2, and 3 GHG emissions
60% reduction of Scope 1 and 2 GHG emissions (compared to
FY2017)*1
40% reduction of Scope 3 GHG emissions (compared to FY2017)*1
100% ratio of renewable energy in electric power used in businessactivities*2
60% ratio of renewable energy in electric power used in businessactivities- 54 -

Figure 5: Scope 1 and 2 emissions

Figure 6: Scope 3 emissions

Figure 7: Renewable energy share

Going forward, the Group will continue to promote the strengthening of governance in environmental
management under the supervisory system of the Board of Directors, and to promote companywide
initiatives such as the formulation and execution of action plans for achieving medium- to long-term targets.

- 55 -

3. Management analysis of financial position, operating results and cash flows(1) Financial position and operating results(i) Operating results for the current fiscal year
(Millions of yen, %)Fiscal year ended
February 28, 2023

Against Octoberforecasts

Year-on-year changes

Gross sales

998,755

132,836

Change inpercentage
15.3

Sales revenue

359,679

28,195

8.5

13,679Gross profit
Selling, general andadministrative expense
Business profit

169,536

21,694

14.7

1,536

144,682

8,559

6.3

682

24,854

13,136

112.1

854

Other operating income

4,540(6,528)(59.0)

740

Other operating expense

10,336(3,070)(22.9)

6,036

Operating profit
Profit attributable to ownersof parent

19,059

9,679

103.2

(4,441)

14,237

9,916

229.4

(1,763)

Change in amount

Change in amount23,755

During the current fiscal year, while the Japanese economy has shown a gradual recovery centering on domestic
demand as the effects of COVID-19 gradually abate, geopolitical risks, such as the situation in Ukraine, haveemerged, and economic instability, such as sharp fluctuations in exchange rates and rising prices, havepersisted.
Corporate earnings have ebbed and flowed as social and economic activities began to normalize. Although there
were signs of improvement in earnings in the service sector and others as demand recovered following the
COVID-19 pandemic, production activity stagnated due to economic slowdowns overseas, soaring resource
prices and shortages in materials.
Turning to personal spending, while the impact of COVID-19 began to diminish, primarily due to face-to-faceservice consumption and tourist demand from the middle of the fiscal year onward as restrictions on activities
were eased, the outlook has grown increasingly uncertain as people grow more frugally minded due to factors
such as rising prices.
As for the progress of the FY2021-FY2023 Medium-term Business Plan, faced with the unprecedented businessenvironment caused by the COVID-19 pandemic, the Company launched its Medium-term Business Plan
(FY2021-FY2023), which focuses on sustainable management, for FY2021 onwards. This business plan
positions this period as a time in which to achieve “complete recovery” from the COVID-19 crisis in order tobegin “regrowth” from FY2024.
In this, the second year of the Medium-term Business Plan, the impact of the COVID-19 pandemic and ensuing
restrictions on activities, which had been in place up to the previous fiscal year, began to diminish. In order toensure that we are on the right track toward complete recovery, we have positioned this year as the year inwhich we will shift to “aggressive management” for regrowth in FY2024 andbeyond and have advanced the key strategies and measures set out in the plan.
Our commitment to sustainability primarily involved engaging in activities integrating our seven materiality
issues (priority issues) with our key strategies, reducing greenhouse gas emissions based on our medium- tolong-term targets, and seeking solutions to environmental and social challenges in cooperation with our
suppliers.
Concerning the promotion of the key strategies and management structure reforms for “complete
recovery” and “regrowth,” we have steadily advanced measures and strategic investments based on the key
strategies alongside management structure reforms, which are the most important measures to achieve complete
recovery.
- 56 -

Concerning the “real x digital strategy” to make our stores more attractive in the Department Store Business, inaddition to expanding core categories, we promoted the creation of sales areas and stores utilizing thecharacteristics of each region and store. In the SC Business, we promoted major renovations at our flagshipstores and expanded large-scale promotions at each store. In our initiatives using digital technology, we mainly
promoted the digitalization of customer contact points by expanding app membership and increasing thesophistication of data usage, including discovery of potential customers.
Under our “prime life strategy,” in order to strengthen our response to the affluent market together with ourefforts, mainly based on “gaisho,” (out-of-store sales), to expand our core categories and enhance our scarcemerchandise and services offerings both in-store and online, we worked to expand our customer base.
Our “developer strategy” primarily involved development of large-scale multi-use facilities in Nagoya’s Sakaearea and Osaka’s Shinsaibashi area, which are priority areas, and we promoted a new investigation ofredevelopment in partnership with the local community and other companies in Fukuoka’s Tenjin area. In
addition, we entered the residential real estate business to utilize our real estate holdings effectively.
Under “management structure reforms,” in addition to the effects of organizational and personnel structurereforms, fixed costs were reduced beyond the initial plan through the digitalization of advertising methods, joint
Group purchasing of material and supplies, and a review of leased properties. In addition, to improve
management and asset efficiency, we proceeded with the sale of non-business assets and decided to terminate
operations at Matsumoto PARCO (scheduled for the end of February 2025).
At the same time, in order to accelerate efforts toward “regrowth” with a view to 2030, from the current fiscal
year the holding company has strengthened its functions for formulating and promoting management strategies,
such as “Group digital,” “Group CRE,” and “business portfolio transformation.”
Through these efforts under the Group digital strategy, we have worked to expand the Group’s customer baseby analyzing and utilizing customer databases, developed new business plans utilizing digital technology, andformulated and implemented a Group-wide digital human resource development plan.
For the Group CRE strategy, in addition to establishing basic policy and strategies to maximize the value of realestate holdings, we have decided to restructure our Developer Business in order to achieve further businessgrowth by making prompt decisions from the perspective of overall Group optimization.
In our efforts to transform our business portfolio, we established a CVC fund with the aim of creating new
businesses through co-creation with startups, developing managerial human resources, and evolving a corporate
culture that encourages creation and challenges. Moreover, in order to enter the e-sports business, which is
expected to grow in the future, and to create synergies with various businesses, such as the SC business, wehave acquired shares in XENOZ CO., Ltd.
To strengthen our management foundation in order to support the realization of medium- and long-term growth,under the Group human resource strategy we strengthened investment in human resources by reinforcing
recruitment of highly specialized human resources and developing their skills based on the key strategies andpromoted cross-sectional projects across the Group to promote mid-career and young employees and women’s
participation in the workplace. In addition, we promoted open staffingthat reflects employees’ wishes and motivations and Group personnel exchanges that enhance the diversity ofthe organization and its human resources.
The Group’s financial strategy was to improve its financial position by securing free cash flow, optimizing cash
and deposits on hand, and reducing interest-bearing debt based on an assessment of changes in the businessenvironment due to COVID-19 and the progress and outlook of its business performance. In addition to efforts
to improve return on invested capital (ROIC) in each business, a consolidated taxation system was introduced
to strengthen tax governance and optimize tax costs.
Under the Group’s systems strategy, in addition to supporting the promotion of the key strategies in eachbusiness, we developed a Group-wide accounting system to enhance business management and strengthened
our response to information security and business continuity.

- 57 -

As a result of various measures, including those mentioned above, sales revenue was ¥359,679 million (up8.5% year on year) with respect to consolidated earnings for the current fiscal year.

In addition to the improvement in sales revenue over the fiscal year, the effects of fixed cost reductions and costsavings resulted in business profit of ¥24,854 million (up 112.1% year on year). Despite the recording of an
impairment loss on department stores and a PARCO store and a business liquidation loss on Matsumoto
PARCO following the decision to terminate its operations, operating profit rose sharply to ¥19,059 million (up103.2% year on year), profit before tax was ¥16,873 million (up 172.6% year on year), and profit attributable toowners of parent was ¥14,237 million (up 229.4% year on year).
Regarding dividends, the Company has decided to pay an annual dividend of ¥31 per share (¥29 in the previous
fiscal year) for an increase of ¥2 relative to the previous fiscal year.

Business results by segment<Department Store Business>(Millions of yen, %)Fiscal year ended
February 28, 2023

Against Octoberforecasts

Year-on-year changes

25,015

Change inpercentage
13.1

12,834

11,036

613.7

934

7,529

12,123-(1,571)

Sales revenue

215,754

Business profit
Operating profit

Change in amount

Change in amount
6,154

As the impact of the pandemic and restrictions on activities began to diminish, mainly from the middle of the
fiscal year onward, customer numbers and sales improved steadily as a result of strategic investment effects
advanced during this period as previously restrained consumption began to recover and the number of foreign
visitors to Japan increased.
In terms of initiatives for the key strategies, in addition to expanding core categories, such as luxury products,
watches, and art, we promoted the creation of attractive sales floors and stores by taking advantage of thecharacteristics of each store, such as building a large concentrated character zone at the Daimaru Umeda store.
In addition to promoting the digitalization of customer contact points through apps, our digital utilization efforts
included the evolution of our customer policies, such as the identification of potential customers through data
analysis and utilization. We have also launched “DEPACO,” a media commerce site for cosmetics thatleverages the department stores’ strengths, including brick-and-mortar stores and sales service capabilities.
To strengthen our response to the affluent market, we worked to expand our customer base by expanding ourcore categories, creating high-quality store environments, such as lounges for our loyal customers, andenhancing our scarce merchandise and services offerings both in-store and on our customer-exclusive website.
In our management structure reform initiatives, we reviewed our cost structure, including creating effects fromorganizational and personnel structure reforms in anticipation of a new store operation model, and reviewed
areas for business process outsourcing.
As a result of various measures, including those mentioned above, sales revenue was ¥215,754 million (up13.1% year on year). Operating profit was ¥7,529 million, despite the recording of an impairment loss on stores(operating loss of ¥4,594 million in the previous fiscal year), and we returned to profitability.

- 58 -

<SC Business>(Millions of yen, %)Fiscal year ended
February 28, 2023

Against Octoberforecasts

Year-on-year changes
Change in amount

Change inpercentage

Change in amount

Sales revenue

54,361

1,805

3.4

(902)

Business profit

5,382

1,538

40.0

(234)

Operating profit

3,733

1,678

81.6

(2,460)With a rebound from an end to suspended store operations and restrictions imposed on entering entertainment
venues in the previous fiscal year and with personal spending turning toward recovery from the middle of the
fiscal year onward, initiatives, such as strategic remodeling of flagship stores and strengthened promotions,have seen steady improvement in the number of customers visiting stores and tenant transaction volume.
In terms of initiatives to achieve the key strategies, in light of the changing times and changing lifestyles during
the COVID-19 pandemic, Ikebukuro PARCO renovated its ground floor and expanded content with a highaffinity to the area while Nagoya PARCO implemented large-scale renovations with the keywords “genderless”
and “ageless.” In addition, unique pop-up stores, character collaboration projects, and joint projects throughlocal partnerships were rolled out at each store. We also worked with tenants to expand app membership andpromoted core improvements, such as improving the shopping experience in our physical and online stores. We
ceased operations of Tsudanuma PARCO at the end of February 2023.
As a result of various measures, including those mentioned above, sales revenue was ¥54,361 million (up 3.4%
year on year). Despite a loss on a business liquidation and an impairment loss on stores following the decision
to terminate operations at Matsumoto PARCO (scheduled for the end of February 2025), operating profit was¥3,733 million (up 81.6% year on year).

<Developer Business>(Millions of yen, %)Fiscal year ended
February 28, 2023

Against Octoberforecasts

Year-on-year changes
Change in amount

Change inpercentage

Change in amount

Sales revenue

54,6704,037

8.0(1,854)

Business profit

2,947

(187)

(6.0)

361

Operating profit

3,695(1,016)(21.6)

86

We pursued key strategies to maximize the use of the Group’s real estate holdings and transform our real estate
portfolio. We entered the residential real estate business mainly for the development of noncommercial facilities
that utilize our real estate holdings and planned and implemented the development of large-scale multi-use
facilities in priority areas where the Company has a solid foundation. Specifically, together with the “Nishiki 325 District Project (tentative name)” in Nagoya’s Sakae area and the “Shinsaibashi Project (tentative name)” in
Osaka’s Shinsaibashi area, both of which are scheduled for completion and opening in 2026, we promoted a
new investigation of redevelopments in partnership with local communities and other companies with the aimof contributing to the creation of an attractive, high-quality urban development in Fukuoka’s Tenjin area.
In addition, to achieve further business growth, we placed J. Front City Development Co., Ltd. directly under
the holding company and have decided to have J. Front City Development Co., Ltd. take over management of
the developer business currently being managed by PARCO CO., LTD. Through this business restructuring, we
will build a system for swift decision-making from the perspective of overall Group optimization while also
further promoting the development and securing of specialist personnel and the strengthening of governance bypracticing corporate-level management and risk management that are optimal for the business.

- 59 -

As a result of various measures, including those mentioned above, and despite the impact of the termination ofoperations at existing properties, sales revenue was ¥54,670 million (up 8.0% year on year) as a result of anincrease in interior decorating/facility work, facility management services, etc. both within the Group andoutside it. Operating profit was ¥3,695 million (down 21.6% year on year) due to a rebound from gains on salesof non-current assets and other factors in the previous fiscal year.

<Payment and Finance Business>(Millions of yen, %)Fiscal year ended
February 28, 2023

Against Octoberforecasts

Year-on-year changes

Sales revenue

12,8891,852

Change inpercentage
16.8

Business profit

3,486

1,580

82.9

215

Operating profit

3,485

1,515

76.9

184

Change in amount

Change in amount90

In the payment business, in addition to the recovery of transaction volume in the Department Store Businessand at external affiliate stores, we worked to provide special experiences, such as holding special events forcard members, in order to increase awareness of our unique point program (QIRA points). We also strengthened
our Affiliate Store Business by improving the payment environment at the Group’s commercial facilities.
In the finance business, in addition to strengthening the insurance agency business, we worked to expand ourfinancial services, such as an investment trust savings service, in collaboration with other companies.
As a result of various measures, including those mentioned above, sales revenue was ¥12,889 million (up16.8% year on year) and operating profit was ¥3,485 million (up 76.9% year on year).

<Other>(Millions of yen, %)Fiscal year ended
February 28, 2023

Against Octoberforecasts

Year-on-year changes

Sales revenue

55,922(5,833)

Change inpercentage(9.4)

Business profit

924

(328)

(26.2)

155

Operating profit

899

(300)

(25.0)

33

Change in amount

Change in amount
4,175

Wholesaler Daimaru Kogyo, Ltd. posted increases in both revenue and profit, mainly due to factors such as arecovery in orders received in the automotive components division. However, sales revenue fell to ¥55,922
million (down 9.4% year on year) and operating profit fell to ¥899 million (down 25.0% year on year) due tothe exclusion of the personnel recruitment business from the scope of consolidation at the end of the previous
fiscal year.

- 60 -

(ii) Financial position(Millions of yen, %)Current assets
Non-current assets

As of February 28, 2022

As of February 28, 2023

Change in amount

234,884

201,860(33,024)

958,022919,092(38,930)

1,192,907

1,120,953(71,954)

Current liabilities

347,413

317,953(29,460)

Non-current liabilities

483,373431,589(51,784)

Total liabilities

830,787749,542(81,245)

Equity attributable to owners of parent
Ratio of equity attributable to owners ofparent to total assets
Total equity

350,368

359,385

9,017

29.4

32.1

2.7

362,120

371,410

9,290

Total assets

Total assets as of February 28, 2023, was ¥1,120,953 million, down ¥71,954 million compared with February
28, 2022. Total liabilities was ¥749,542 million, a decrease of ¥81,245 million compared with February 28,
2022. Interest-bearing debt (including lease liabilities) was ¥413,949 million, down ¥88,160 million, as a resultof the Company having taken steps to optimize cash and deposits on hand secured to provide for the effects of
the COVID-19 pandemic and having proceeded with repayment.
Total equity was ¥371,410 million, an increase of ¥9,290 million compared with February 28, 2022.

(iii) Cash flows(Millions of yen)
Net cash flows from (used in) operating
activities
Net cash flows from (used in) investing
activities
Free cash flows
Net cash flows from (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at end of period

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Change in amount

49,86665,48015,614(5,289)(13,371)(8,082)

44,577

52,1097,532(80,392)(105,694)(25,302)(35,815)(53,585)(17,770)

93,27839,874(53,404)

The balance of cash and cash equivalents (hereinafter “cash”) as of February 28, 2023, was ¥39,874 million,
down ¥53,404 million compared with February 28, 2022.
Cash flow positions in the current fiscal year and the factors for these are as follows.
Net cash provided by operating activities was ¥65,480 million. In comparison with the previous fiscal year,
cash provided increased by ¥15,614 million, largely due to an increase in profit before tax.
Net cash used in investing activities was ¥13,371 million. In comparison with the previous fiscal year, cashused increased by ¥8,082 million, largely due to the absence of proceeds from sales of investment property andsubsidiary shares in addition to an increase in the purchase of property, plant and equipment.
Net cash used in financing activities was ¥105,694 million. In comparison with the previous fiscal year, cashused increased by ¥25,302 million, largely due to the repayment of interest-bearing debt, including theredemption of bonds.

- 61 -

(iv) Production, orders received and sales
1) Production
Production by segments for the current fiscal year are as follows.
Production(Millions of yen)Segment name
Developer BusinessNotes:

1.
2.

Year-on-year comparison
(%)

750

123.2

Production is not shown for contracted work because it is difficult to define production.
No items to report for segments other than above

2) Orders received
Orders received by segments for the current fiscal year are as follows.
Orders received(Millions of yen)Segment name
Developer Business
Note:

Year-on-year comparison(%)

39,495117.5

No items to report for segments other than above.

3) SalesSales by segments for the current fiscal year are as follows.
Breakdown

Sales(Millions of yen)

Daimaru Matsuzakaya
Department Stores

198,347

The Hakata Daimaru

14,076

112.3

Other

3,330

100.3

215,754113.1

54,297

110.3

64

1.9

Segment name

Department StoreBusiness

Total
PARCO
SC Business

Other
Total

Developer BusinessYear-on-year comparison
(%)
113.4

54,361

103.4

PARCO

7,025

86.6

J. Front Design & Construction

28,142

119.0

PARCO SPACE SYSTEMS

18,204

102.1

Other

1,298

124.2

54,670

108.0

Payment and Finance
JFR Card
Business

Total

12,889116.8

Wholesale

38,732111.8

17,19063.4

55,922

90.6

Adjustments(33,919)

96.3

Total

359,679

108.5

Other

Other
Total

Notes:

1.
2.

Adjustments for inter-segment transactions are made in the adjustments column.
Sales amount shows sales revenue.

(2) Management’s analysis and discussion of operating results
Analysis and discussion of the Group’s financial position and operating results are, in principle, content
that has been analyzed based on the consolidated financial statements.
Items in the text below that concern the future were determined as of the end of the current fiscal year.
(i) Significant accounting policies and estimates
The Group’s consolidated financial statements are prepared in accordance with the International
Financial Reporting Standards. The preparation of the consolidated financial statements requires
selection and application of accounting policies by the management and accounting estimates that- 62 -

affect the reported amounts and disclosures of assets, liabilities, revenues and expenses. Although the
management makes reasonable judgments for these estimates based on past results and current
circumstances, actual results may differ from these estimates due to uncertainties unique to theestimation.
The significant accounting policies for preparation of the Group’s consolidated financial statements
are described in “V. Financial Information, 1. Consolidated Financial Statements, etc., Notes toConsolidated Financial Statements, 3. Significant Accounting Policies.”
In addition, accounting estimates used in the preparation of the consolidated financial statements andassumptions used in those estimates are described in “V. Financial Information, 1. Consolidated
Financial Statements, etc., Notes to Consolidated Financial Statements, 4. Significant Accounting
Estimates and Judgments.”(ii) Perception, analysis and discussion of operating results, etc. for the current fiscal year
1) Operating results, etc.
Information by segment is described in (1) Financial position and operating results (i) Operating
results for the current fiscal year.
a) Sales revenue
Sales revenue increased by ¥28,195 million from the previous fiscal year to ¥359,679 million.
b) Operating profit
Operating profit increased by ¥9,679 million from the previous fiscal year to ¥19,059 million.
c) Profit before tax
Profit before tax increased by ¥10,683 million from the previous fiscal year to ¥16,873
million.
d) Profit attributable to owners of parent
Profit attributable to owners of parent increased by ¥9,916 million from the previous fiscal
year to ¥14,237 million.
e) Financial position
Total assets as of February 28, 2023, was ¥1,120,953 million, down ¥71,954 million
compared with February 28, 2022. Total liabilities was ¥749,542 million, a decrease of¥81,245 million compared with February 28, 2022. Interest-bearing debt (including leaseliabilities) was ¥413,949 million, down ¥88,160 million, as a result of the Company having
taken steps to optimize cash and deposits on hand secured to provide for the effects of the
COVID-19 pandemic and having proceeded with repayment.
Total equity was ¥371,410 million, an increase of ¥9,290 million compared with February 28,
2022.
As a result, operating profit/total assets (ROA) was 1.6%, profit/shareholders’ equity (ROE)
was 4.0%, and the ratio of equity attributable to owners of parent to total assets was 32.1%.
f) Cash flows
Net cash provided by operating activities was ¥65,480 million. Net cash used in investing
activities was ¥13,371 million, and net cash used in financing activities was ¥105,694 million.
As a result, the balance of cash and cash equivalents as of February 28, 2023, was ¥39,874
million, down ¥53,404 million compared with February 28, 2022.
Looking forward, the Group plans to provide appropriate distribution of profit and capital
investment, giving consideration to the level of profit and cash flow trends among otherfactors.
- 63 -

g) Liquidity and capital resources(Basic capital policy)
The Company believes that any increase in free cash flow and improvement in ROE should
help to ensure its sustainable growth and increase corporate value over the medium to longterm. To such ends, the Company promotes a capital policy that takes a balanced approach to“undertaking strategic investment,” “enhancing shareholder returns,” and “expanding net
worth” after taking into consideration the business environment and risk readiness.
Moreover, in procuring funds through interest-bearing debt, we aim to achieve an optimal
structure of debt to equity in a manner cognizant of our funding efficiency and cost of capital,
carried out on the basis of having taken into consideration our capacity for generating free
cash flows and our balance of interest-bearing debt.
A business strategy where higher sales are accompanied by profits and a financial strategy(encompassing the capital policy) that heightens profitability of invested capital are essential
elements with respect to improving free cash flows and ROE. In addition, we believe it is
crucial that we achieve maximization of the operating profit and sustainable improvement of
the operating profit margin by strengthening our core businesses and concentrating
management resources on initiatives such as business field expansion and active developmentof new businesses.
The key financial indicators for the achievement of the Medium-term Business Plan are ROE
for capital efficiency, consolidated operating profit and ROIC for business profitability, free
cash flow for profitability and safety, and equity ratio attributable to owners of the parent(equity ratio) for financial soundness.
(Status of procurement)
The Group’s basic policy is to source funds needed for business activities using funds
generated by the Group. Moreover, when the need arises for business investment or otherexpenditures, the holding company spearheads efforts to procure such funds mainly by issuingbonds and borrowing from financial institutions, with consideration placed on maintaining
financial soundness.
The Group subsidiaries do not procure funds from financial institutions, but instead we
promote streamlined means of procuring Group funds by seeking necessary funds throughintra-Group financing using a cash management system.
Based on the above policy, the Company raised 5.5 billion yen in long-term borrowings fromfinancial institutions during the current fiscal year. Meanwhile, we embarked on efforts tooptimize cash and deposits on hand secured to provide for the effects of the COVID-19
pandemic and made progress on the redemption of unsecured corporate bonds of ¥20,000
million and commercial paper of ¥15,000 million in addition to repayment of short-termborrowings of ¥24,000 million and long-term borrowings of ¥15,100 million. As a result, thebalance of interest-bearing debt (excluding lease liabilities) decreased by ¥68,600 million
compared to the end of the previous fiscal year to ¥249,100 million. We also scaled back thecommitment line from ¥200,000 million to ¥100,000 million.
Details on risks associated with financing are mentioned in “II. Overview of Business, 2.
Business risks.”(Financial policy)
Financial policies under the “FY2021-FY2023 Medium-term Business Plan” are described in“II. Overview of Business, 1. Management policy, management environment, issues to beaddressed, etc.”- 64 -(Dividend policy)
The Company’s basic policy on dividends of surplus and dividend results for the current fiscal
year are described in “IV. Information About Reporting Company, 3. Dividend policy.”2) Achievement status of management goals
The achievement status of management goals given as targets for FY2022, the second year of the
FY2021-FY2023 Group Medium-term Business Plan, are as follows.
We will continue working on the growth strategy outlined in “1. Management policy, management
environment, issues to be addressed, etc.” and strive to realize our management goals.
FY2022 results
Consolidated operating profit (IFRS)FY2023 targets¥19,059 million¥38,500 million

Consolidated ROE

4.0%

7.0%

Consolidated ROIC

2.7%

4.6%

GHG emissions*
Ratio of women in management positions(under calculation)

(40)%

22.2%

26.0%

* Compared with fiscal 2017 Scope 1 (direct GHG emissions from the business operators) and Scope
2 (indirect emissions from the use of electricity, heat, and steam supplied by other companies); fiscal
2022 results are currently being calculated.

- 65 -

4. Critical contracts for operation<Consolidated subsidiaries>
Agreements relating to leases
Company name

Office name

Daimaru Osaka
Umeda store

Leasedproperty

LessorOsaka Terminal
Building Co., Ltd.

Area
(m2)

Rent

Building(1) Fixed portion of rent
expenses¥6,186 million per annum
95,101 (2) Variable portion of rent
expenses
1.5% of net sales amount inexcess of ¥85,000 million

Daimaru
Matsuzakaya
Department Stores
Co. Ltd.
Daimaru Tokyo
store

JR East Cross Station
Co., Ltd.

Building(1) Fixed portion of rent
expenses¥5,330 million per annum(2) Variable portion of rent
64,657
expenses
1% of the amount in excessof the highest annual net
sales in the most recent threefiscal years.

Main Building

The Nishinippon
Shimbun Building
Inc.
KAMIYOFUDOSAN CO. LTD

Building

31,258 ¥1,266 million per annum

East hall (ELLEGALA)

The Nishinippon
Shimbun Building
Inc.

Building

15,155 ¥1,041 million per annum

The Hakata Daimaru,
Inc.

5. Research and development activities
There are no significant matters to report.

- 66 -

III. Information About Facilities
1. Overview of capital expenditures, etc.
In the current fiscal year, total capital expenditures of ¥23,415 million were made, mainly in the Department StoreBusiness and SC Business.
The breakdown by segment is as follows:
Capital expenditures(Millions of yen)Segment name
Department Store Business

12,633SC Business

2,597

Developer Business

5,963

Payment and Finance Business

130

Other

1,300

Adjustments

789
Total

Notes:

1.
2.

23,415

Guarantee deposits for store openings, etc. are included in the amounts above.
Newly acquired right-of-use assets are included in the amounts above.

In the Department Store Business this included investment in refurbishment of sales floors at the Matsuzakaya
Nagoya store, and in the Developer Business this included investment in connection with the opening of
HAB@Kumamoto, etc.
The funds required for these expenditures were appropriated from funds on hand and borrowings.
2. Major facilities
Major facilities of the Group are as follows:(1) Reporting company
As of February 28, 2023
Carrying amounts(Millions of yen)

Office name
(Location)

Segment name

J. FRONTRETAILING Co.,Ltd.
(Minato-ku, Tokyo)

Corporate(Shared)

Note:

Facilities

Buildings
andstructures

Right-of-use
Land
assets[Area in m2]–
Office, etc.

219

[–]

420

Other

–

Total

Number of
employees(Persons)

151
640

[16]

The number in the brackets in the “Number of employees” column (not included in number of employees) refers to theyearly average number of dedicated employees, fixed-term employees, etc.

- 67 -

(2) Domestic subsidiaries
As of February 28, 2023

Company
nameCarrying amounts(Millions of yen)

Office name
(Location)

Segment
nameFacilities

Daimaru Osaka
Shinsaibashi store(Chuo-ku, Osaka)

Department
Store
Business

Daimaru Osaka Umeda
store(Kita-ku, Osaka)

Number of
employees(Persons)

Buildings
andstructures

Land[Thousandsof m2]

Right-ofuse assets

Other

Store, etc.

27,693

7,919
[11]

9,405

776

45,795204[65]

Department
Store
Business

Store, etc.

–

14,357–

14,357

127[100]

Daimaru Tokyo store(Chiyoda-ku, Tokyo)

Department
Store
Business

Store, etc.

2,661

21,54654

24,263

108[74]

Daimaru Kyoto store(Shimogyo-ku, Kyoto)

Department
Store
Business

Store, etc.

9,853

8,759
[10]

3,094

71

21,779214[150]

Daimaru Kobe store(Chuo-ku, Kobe)

Department
Store
Business

Store, etc.

7,502

1,693
[11]

9,896

151

19,243

235[187]

Daimaru Suma store(Suma-ku, Kobe)

Department
Store
Business

Store, etc.

868

573

4

1,446

13
[3]

Daimaru Ashiya store(Ashiya, Hyogo)

Department
Store
Business

Store, etc.

9

475

–

485

8
[10]

Department
Store
Business

Store, etc.

6,753

12,696[8]87

85

19,623

145[142]

Store, etc.

829

1,361
[11]

47

60

2,298

47
[29]

Daimaru Sapporo store
Daimaru(Chuo-ku, Sapporo)
Matsuzakaya
Department
Daimaru Shimonoseki
Stores Co.
Ltd.
store
(Shimonoseki,
Yamaguchi)

–
[–]

–
[–]

–
[–]

–
[–]

Total

Department
Store
Business

Matsuzakaya Nagoya
store(Naka-ku, Nagoya)

Department
Store
Business

Store, etc.

15,31065,919
[19]

4,497

191

85,919452[146]

Matsuzakaya Ueno store(Taito-ku, Tokyo)

Department
Store
Business

Store, etc.

3,925

27,718
[7]

606

21

32,271

161[43]

Matsuzakaya Shizuoka
store(Aoi-ku, Shizuoka)

Department
Store
Business

Store, etc.

3,890

6,628
[7]

63

136

10,71861[46]

Matsuzakaya Takatsuki
store(Takatsuki, Osaka)

Department
Store
Business

Store, etc.

1,273

3,738
[5]

1

9

5,022

9
[1]

GINZA SIX
(Chuo-ku, Tokyo)

Department
Store
Business

Store, etc.

14,34582,660
[4]

238

397

97,642

1[1]

Head office/Others(Koto-ku, Tokyo, andother locations)

Department
Store
Business

Office, etc.

2,535

4,317
[37]

3,227

28

10,109

835
[265]

Total

–

–

97,450223,413[135]

68,1201,990

390,975

2,620[1,262]- 68 -

Company
nameOffice name
(Location)

Carrying amounts(Millions of yen)Segment
nameFacilities

Daimaru Fukuoka
Department
The Hakata Tenjin store, etc.
Store
Daimaru, Inc. (Chuo-ku, Fukuoka, andBusinessother locations)
Kochi
Kochi Daimaru store
Daimaru Co.,
(Kochi, Kochi)
Ltd.

Land
[Thousandsof m2]

Right-ofuse assets

Other

Store, etc.

4,991

7,101
[8]

7,798

293

20,184210[115]

Department
Store
Business

Store, etc.

1,312

414
[3]

572

134

2,432

54
[13]

Sapporo PARCO(Sapporo, Hokkaido)

SC BusinessStore, etc.

1,756

5,011
[2]

558

78

7,405

11
[2]

Sendai PARCO(Sendai, Miyagi)

SC BusinessStore, etc.

8,616

4,261
[2]

6,512

79

19,47016[–]

Urawa PARCO(Saitama, Saitama)

SC BusinessStore, etc.

7,274

10,300
[7]

109

72

17,75614[2]

Ikebukuro PARCO(Toshima-ku, Tokyo)

SC BusinessStore, etc.

4,700

7,120
[1]

12,76345

24,62915[1]

PARCO_ya Ueno
(Taito-ku, Tokyo)

SC BusinessStore, etc.

12,353

15,817
[2]

390

62

28,624

7[1]

Kichijoji PARCO(Musashino, Tokyo)

SC BusinessStore, etc.

1,850

3,465

43

5,359

8
[1]

Shibuya PARCO(Shibuya-ku, Tokyo)

SC BusinessStore, etc.

17,626

1,551

909

55,037

19[1]

Kinshicho PARCO(Sumida-ku, Tokyo)

SC BusinessStore, etc.

1,921

9,653

27

11,601

Chofu PARCO(Chofu, Tokyo)

SC BusinessStore, etc.

3,671

1,477

78

13,25615[1]

Shizuoka PARCO(Shizuoka, Shizuoka)

SC BusinessStore, etc.

762

832

14

1,609

10
[–]

SC BusinessStore, etc.

5,778

6,261
[2]

8,465

101

20,60722[2]

SC BusinessStore, etc.

13,913

21,309
[4]

470

385

36,07914[2]

Hiroshima PARCOSC Business(Hiroshima, Hiroshima)

Store, etc.

3,063

5,580
[2]

2,756

79

11,47916[–]

Fukuoka PARCO(Fukuoka, Fukuoka)

SC BusinessStore, etc.

4,536

24,877
[4]

2,105

55

31,574

16[–]

Shintokorozawa
PARCO(Tokorozawa, Saitama)

SC BusinessStore, etc.

812

1,706
[5]

355

5

2,879

Tsudanuma PARCO(Funabashi, Chiba)

SC BusinessStore, etc.

–

4

–

4

Hibarigaoka PARCO(Nishi-Tokyo, Tokyo)

SC BusinessStore, etc.

395

1,652

3

2,052

Matsumoto PARCO(Matsumoto, Nagano)

SC BusinessStore, etc.

10

447
[3]

16

0

475

5
[1]

Head office/Others(Shibuya-ku, Tokyo,
etc.)

SC Business
Developer
Business

Office, etc.

12,66643,417[57]

17,728271

74,083

347
[96]

–

–

101,710

189,089[106]

70,8702,314

363,984541[115]

PARCO Co., Nagoya PARCO
Ltd.
(Nagoya, Aichi)
Shinsaibashi PARCO(Osaka, Osaka)

Total

Notes:

1.
2.

Number of
employees(Persons)

Buildings
andstructures–[–]
34,948
[3]

–
[–]
8,029
[4]

–
[–]

–
[–]

–
[–]

Total

–
[3]

–
[–]
6
[2]

–
[–]

The number in brackets in the “Number of employees” column (not included in number of employees) refers to theyearly average number of dedicated employees, fixed-term employees, etc.
Of the major facilities, the ones rented from external sources are listed in “Agreements relating to leases” under “4.
Critical contracts for operation” in “II. Overview of Business.”- 69 -

3. Planned additions, retirements, etc. of facilities
Planned additions, retirements, etc. of significant facilities are as follows:(1) Additions, etc. of significant facilities
Planned investment amountAmountalready paid
(Millions of
yen)

Funds
procurement
methodCompany name

Office name
(Location)

Segment nameFacilities

J. FRONTRETAILING
Co., Ltd.

Head Office(Minato-ku,
Tokyo)

Companywide(Common)Construction of
a newaccounting
system

1,612

1,144 and borrowings

Department
Sales floor
Store Business renovation, etc.

7,672

364 and borrowings

14,921

2,598 and borrowings

Matsuzakaya
Daimaru
Nagoya store,
Matsuzakaya
etc.
Department(Naka-ku,
Stores Co. Ltd.
Nagoya, etc.)
PARCO Co.,Ltd.

Nagoya Sakae(Naka-ku,
Nagoya)Developer
Business

Multi-tenantbuilding

Total(Millions ofyen)(2) Retirements, etc. of significant facilities
There are no significant matters to report.

- 70 -

Funds on handFunds on handFunds on hand

Start

Scheduledcompletion

March 2021

March 2026

March 2023

February 2024

July 2022

March 2026

IV. Information About Reporting Company
1. Company’s shares, etc.
(1) Total number of shares(i) Authorized shares
Number of shares authorized(Shares)Class
Ordinary shares

1,000,000,000
Total

1,000,000,000(ii) Number of issued shares

Class

Number of issued
shares as of fiscal
year end(Shares)(As of February 28,
2023)

Number of issued
shares as of filingdate(Shares)(As of May 26,
2023)

Name of financial instruments
exchange on which securities
are listed or authorized
financial instruments businessassociation to which securities
are registered

Details

Ordinary shares

270,565,764

270,565,764

Prime Market of the Tokyo
Stock Exchange
Premier Market of the Nagoya
Stock Exchange

The number ofshares per shareunit
100 shares

Total

270,565,764

270,565,764––(2) Share acquisition rights(i) Employee share option plans
No items to report(ii) Rights plans
No items to report(iii) Share acquisition rights for other uses
No items to report(3) Exercises of moving strike convertible bonds, etc.
No items to report(4) Changes in number of issued shares, share capital and legal capital surplus

Date

July 24, 2017
(Note)

Note:

Change in the total Balance of the total
number of issued
number of issued
sharesshares(Thousands of(Thousands ofshares)shares)
2,446

270,565

Change in sharecapitalBalance of sharecapitalChange in legal
capital surplus

Balance of legal
capital surplus(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

1,974

31,974

1,974

9,474

Third-party allotment
Price of issue: ¥1,614
Amount to be included in capital: ¥807
Allottee: The Master Trust Bank of Japan, Ltd. (Trust account for officer remuneration BIP trust)- 71 -

(5) Shareholding by shareholder category
As of February 28, 2023
Shareholding status (Number of shares per share unit: 100 shares)
Foreign investors, etc.

Public sector

Financial
institutions

Financial
instruments
business
operators

Other
corporations

Number ofshareholders(Persons)

–

62

36

Number ofshares held
(Units)–992,938

Shareholding
ratio (%)

–

36.77

Category

Notes:

1.

2.

Shares lessthan one unit
(Shares)Companies,
etc.

Individuals

Individuals
and others

968

324

181

153,686

155,257–

177,536

164,636

516,075457

848,2032,699,845

581,264

6.58

6.10

19.11

0.02

31.41

100.00–Total

The 6,272,120 treasury shares include 62,721 share units under “Individuals and others” and 20 shares under “Sharesless than one unit.” In addition, the 6,272,120 treasury shares are the shares listed on the shareholder register, and thisis the same as the actual number of treasury shares owned as of the end of the fiscal year.
The number of units under “Other corporations” includes 94 share units registered in the name of Japan Securities
Depository Center, Incorporated.

(6) Status of Major Shareholders
As of February 28, 2023
Name / Company Name

Address

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

2-11-3 Hamamatsucho, Minato-ku,
Tokyo

Number of shares
held(Thousands ofshares)Shareholding ratio(excluding treasury
shares)(%)

46,039

17.42

Custody Bank of Japan, Ltd. (Trust Account) 1-8-12 Harumi, Chuo-ku, Tokyo

20,798

7.87

Nippon Life Insurance Company

1-6-6 Marunouchi, Chiyoda-ku,
Tokyo

9,828

3.72

J. Front Retailing Kyoei Supplier
Shareholding Association

Shinagawa Season Terrace,
1-2-70 Konan, Minato-ku, Tokyo

6,462

2.45

The Dai-ichi Life Insurance Company,
Limited

1-13-1 Yurakucho, Chiyoda-ku,
Tokyo

4,012

1.52

Mitsubishi UFJ Morgan Stanley Securities
Co., Ltd.

1-9-2 Otemachi, Chiyoda-ku, Tokyo

3,825

1.45

JPMorgan Securities Japan Co., Ltd.

Tokyo Building,
2-7-3 Marunouchi, Chiyoda-ku,
Tokyo

3,565

1.35

SMBC Nikko Securities Inc.

3-3-1 Marunouchi, Chiyoda-ku,
Tokyo

3,387

1.28

SMBC Trust Bank Ltd. (Sumitomo Mitsui
Banking Corporation Retirement Benefit
Trust Account)

1-3-2 Marunouchi, Chiyoda-ku,
Tokyo

3,204

1.21

JAPAN SECURITIES FINANCE CO., LTD.

1-2-10 Nihonbashi Kayabacho,
Chuo-ku, Tokyo

3,124

1.18

104,249

39.44

Total
Notes:

1.
2.

—

J. Front Retailing Kyoei Supplier Shareholding Association is a shareholder association comprised of business partnersof the Group.
In addition to the above, there are 6,272,000 treasury shares (the percentage of the number of treasury shares owned tothe total number of issued shares is 2.31%), and the shareholding ratio is calculated after excluding those treasury
shares.
Treasury shares do not include shares held by the officer remuneration BIP trust.

- 72 -

(7) Voting rights(i) Issued shares
As of February 28, 2023
Number of voting
rights(Rights)

Number of shares(Shares)Category

Details

Shares without voting rights

–

–

–

Shares with restricted voting rights(Treasury shares, etc.)

–

–

–

Shares with restricted voting rights(Other)

–

–

–

–

–

Shares with full voting rights (Treasury
shares, etc.)(Treasury shares)
Ordinary shares

6,272,100

Shares with full voting rights (Other)

Ordinary shares

263,712,400

2,637,124–

Shares less than one unit

Ordinary shares

581,264––

Total number of issued shares

270,565,764––

Total number of voting rights–

2,637,124–Notes:

1.

2.

Figures under “Shares with full voting rights (Other)” include 2,292,700 shares of the Company held by the officer
remuneration BIP trust (22,927 voting rights) and 9,400 shares registered in the name of Japan Securities Depository
Center, Incorporated (94 voting rights).
The number of “Shares less than one unit” includes 20 treasury shares held by the Company and 16 treasury shares
held by the officer remuneration BIP trust.

(ii) Treasury shares, etc.
As of February 28, 2023
Name of shareholder(Treasury shares)
J. FRONT RETAILING
Co., Ltd.
Total
Note:

Address of shareholder

10-1, Ginza 6-chome,
Chuo-ku, Tokyo–

Number of shares Number of shares
held under own
held under thenamename of others(Shares)(Shares)

Total number ofshares held
(Shares)

Shareholding
ratio
(%)

6,272,100–

6,272,100

2.31

6,272,100–

6,272,100

2.31

Treasury shares do not include shares of the Company held by the officer remuneration BIP trust.

(8) Share ownership plan for directors (and other officers) and employees
1) Overview of New Stock-Based Remuneration System for Officers
The Company resolved to replace the “stock-based remuneration system for officers utilizing trust” thatwas introduced in fiscal 2017 as an incentive plan targeting the officers of the Company and theCompany’s main subsidiary, Daimaru Matsuzakaya Department Stores Co. Ltd. (the “Former System”),
by introducing a new stock-based remuneration system for officers (the “System”). In addition to
officers of the Company and Daimaru Matsuzakaya Department Stores Co. Ltd., the System covers
Executive Officers of PARCO Co., Ltd. and Representative Directors of JFR Card Co., Ltd., J. FRONTCITY DEVELOPMENT Co., Ltd. and J. Front Design & Construction Co., Ltd.
For the introduction of the System, the three trusts described below, including those already establishedunder the Former System, will continue to be used as trusts of the System by making changes to partsof the trust so that they match the details of the System, extending the trust periods and adding
additional monetary trusts as required.
(i) The trust that issues the Company’s shares for Executive Officers of the Company and Directors
and Corporate Officers of Daimaru Matsuzakaya Department Stores Co. Ltd. as well as
Representative Directors of JFR Card Co., J. FRONT CITY DEVELOPMENT Co., Ltd. and J.
Front Design & Construction Co., Ltd. to help the Group achieve sustainable growth and increase
corporate value over the medium to long term (“Trust I”).

- 73 -

(ii) The trust that issues the Company’s shares in a way that is not linked to performance with theobjective of involving Non-executive Directors of the Company (Independent Outside Directors aswell as the chairperson of the Board of Directors, Audit Committee members and other internal
Non-executive Directors; collectively the “Non-executive Directors”) in management with amedium- to long-term view in order that they should strengthen proactive and defensive
governance of the Company from a different standpoint to the executives as representatives of
stakeholders (“Trust II”).
(iii) The trust that issues the Company’s shares for Executive Officers of PARCO Co., Ltd. to help theGroup achieve sustainable growth and increase corporate value over the medium to long term(“Trust III”).
2) Overview of the trust agreement(Reference) “Trust I”“Trust II”“Trust III”

(i) Trust category:Monetary trust other than a specific individually operated monetary trust (third-party benefit trust)(ii) Trust objective:

To provide incentive to
Executive Officers of theCompany and Directors andCorporate Officers of Daimaru
Matsuzakaya Department Stores
Co. Ltd. as well as
Representative Directors of JFR
Card Co., Ltd., J. FRONT CITY
DEVELOPMENT Co., Ltd. and
J. Front Design & Construction
Co., Ltd.

(iii) Settlor:

The Company(iv) Trustee:

Mitsubishi UFJ Trust and Banking Corporation(Joint Trustee: The Master Trust Bank of Japan, Ltd.)

Sumitomo Mitsui Trust Bank,
Limited(Re-trust Trustee: Custody Bankof Japan, Ltd.)(v) Beneficiaries:

Executive Officers of theCompany and Directors andCorporate Officers of Daimaru
Matsuzakaya Department Stores
Co. Ltd. as well as
Non-executive Directors of theRepresentative Directors of JFR Company who meet theCard Co., Ltd., J. FRONT CITY beneficiary requirements
DEVELOPMENT Co., Ltd. and
J. Front Design & Construction
Co., Ltd. who meet thebeneficiary requirements

Executive Officers of PARCO
Co., Ltd. who meet thebeneficiary requirements(vi) Trustadministrator:

Third party with no relationship of interest with the Company (certified public accountant)(vii) Date of trust
agreement:

July 14, 2017 (changed on July 20, 2021)

July 9, 2018 (changed on July 27,
2021)(viii) Trust period:

July 14, 2017, to August 31, 2022 (Planned extension until August
31, 2024, due to amendment of trust agreement on July 20, 2021)

July 9, 2018, to July 31, 2023
(Planned extension until August
31, 2024, due to amendment oftrust agreement on July 27, 2021)(ix) Execution of
voting rights:

None

To have Non-executive Directorsof the Company engage inmanagement as representatives of
stakeholders from a medium- tolong-term perspective and from astandpoint that is different fromthat of Executive Officers- 74 -

To provide incentive to Executive
Officers of PARCO Co., Ltd.

3) The structure of Share Distribution Trust(1) Resolutions by Remuneration Committee(1) Resolutions by
Shareholders(3) Contribution of
Meetingfunds

Eligible subsidiaries[Settlor]
The Company(8) Gratis transfer
andcancellation ofresidualshares(4) Shares(3) Trustof theestablishment
Company(5) Dividends (4) Payment(9) Delivery ofresidualassets[Trustee]
Mitsubishi UFJ Trust and Banking Corporation
or Sumitomo Mitsui Trust Bank, Limited
The Company’s shares and cash benefits(7) Delivery of theCompany’s
shares andcash benefits(6) Instruction on non-exercise of voting rights, etc.

Trust administrator- 75 -(2) Establishmentof ShareDelivery Policy[Beneficiaries]
Eligible corporate
officers

2. Acquisition and disposal of treasury sharesClass of shares, etc.

Acquisition of ordinary shares under Article 155, item (vii) of the Companies Act(1) Acquisitions by resolution of Shareholders Meeting
No items to report(2) Acquisition by resolution of Board of Directors meeting
No items to report(3) Acquisition not based on resolution of Shareholders Meeting or Board of Directors meeting
Number of shares(Shares)Category
Treasury shares acquired during the current fiscal year

8,145

8,879,168

824

1,078,026

Treasury shares acquired during the period from March 1,
2023, to the filing date of this Annual Securities Report
Note:

Total value(Yen)

The figure for treasury shares acquired during the period from March 1, 2023, to the filing date of this Annual
Securities Report does not include the number of shares arising from purchases of shares less than one unit fromshareholders upon request during the period from May 1, 2023, until the filing date of this Annual Securities
Report.

(4) Disposal of acquired treasury shares and number of treasury shares held
Fiscal year ended February 28, 2023
Category

From March 1, 2022, until the filing date ofthis Annual Securities Report

Number of shares(Shares)

Total disposal value(Yen)

Number of shares(Shares)

Total disposal value(Yen)

Acquired treasury shares offered forsubscription

–

–

–

–

Acquired treasury shares that were
disposed of

–

–

–

–

Acquired treasury shares transferred
for merger, share exchange, sharedelivery and company split

–

–

–

–

272,884–––

6,272,944–

Other (Decrease due to sales ofshares less than one unit toshareholders upon request)
Treasury shares held
Note:

171
6,272,120

The “Treasury shares held” includes the number of shares from purchases of shares less than one unit. The figure does notinclude the number of shares from purchases of shares less than one unit from May 1, 2023, until the filing date of thisAnnual Securities Report.

- 76 -

3. Dividend policy
The Company’s basic policy is to appropriately return profits. Hence, while maintaining and enhancing its soundfinancial standing, the Company strives to provide stable dividends and target a consolidated dividend payout
ratio of no less than 30%, taking profit levels, future capital investment, free cash flow trends and other suchfactors into consideration. The Company also gives consideration to the option of purchasing its own shares asappropriate in accordance with aims that include improving capital efficiency and implementing a flexible capital
policy.
With respect to internal reserves, the Company intends to enhance corporate value by using them for such
purposes as investing in store refurbishments and business expansions to strengthen sales as well as strengthening
the Company’s financial standing.
The Company has paid an annual dividend of ¥31 per share for the current fiscal year, comprising an interim
dividend of ¥15 per share and a year-end dividend of ¥16 per share.
The Company’s basic policy on dividends of surplus is to pay a dividend twice a year in the form of an interim
dividend and a year-end dividend, and the Articles of Incorporation stipulate that the Company may pay dividends
based on a resolution of a Board of Directors meeting.
Note:

Dividends of surplus with record dates falling in the current fiscal year are as follows:
Resolution date

Total amount of dividends(Millions of yen)

October 11, 2022
Resolution of the Board of Directors
April 11, 2023
Resolution of the Board of Directors- 77 -

Dividends per share
(Yen)
3,964

15.00

4,228

16.00

4. Status of corporate governance, etc.
(1) Overview of corporate governance(i) Overview of corporate governance system and reasons for adopting the system
The Company has established Corporate Governance Guidelines that set out the role of corporate
governance in the Company and its subsidiaries (the “Group”). The aims of the Guidelines are to
realize our best possible corporate governance practices in order to ensure the sustainable growth of
the Group and increase corporate value over the medium to long term.
The Company is a holding company and, with the exception of the authority for matters affecting thebusiness of the Group, it accordingly delegates authority to its respective operating subsidiaries withrespect to matters involving business execution by the business subsidiaries in order to speed up
business decisions and to make managerial responsibilities clear.
The roles and responsibilities of the Company, as a holding company, are as described below.
Accordingly, the Company: Plans, formulates and penetrates the Group Vision, Group Medium-term Business Plan and Group
Annual Management Policy and tracks the progress and results thereof; Sets business domains of the Group; Business portfolio management (Optimally allocates the Group’s management resources); Generates synergies between businesses;
 Establishes Group-wide risk management system; Organization design and operation of the entire Group; Human resource management of the entire Group; Management of shareholders; Establishes corporate governance practices for the entire Group; Makes decisions on important matters of business execution relating to management of the Group;and Provides advice and approval for management policy and management strategy of respective
operating subsidiaries and oversees and evaluates progress thereof
The Company has seven supervisory units (Management Strategy Unit, CRE Strategy Unit, Group
Digital Unit, Group System Unit, Financial Strategy Unit, Human Resources Strategy Unit andAdministration Unit) as management bodies of the Company to clarify each unit’s roles,
responsibilities and authorities, thereby reinforcing the supervisory function and improving theinternal control systems of the entire JFR Group.
The Company has adopted the organizational structure of a company with three committees(nomination, audit and remuneration committees). This is for the purpose of carrying out initiatives tofurther strengthen corporate governance from the following perspectives:
 The Company will strengthen the oversight function for business execution of the Board of
Directors by separating oversight from execution.
In addition, the Company aims to promote sophistication of strategy by having the Board of
Directors actively include the insights of external persons in order to hold rigorous discourse on
important strategic issues relating to the Group’s management.
 The Company will enable decisions of business execution to be delegated to Executive Officers,
clarify authority and responsibilities, and carry out speedy management decision-making.
 The Company will improve the transparency and objectivity of management by adopting thestructure of a company with three committees (nomination, audit and remuneration committees).
The majority of the members of each of these committees are independent Outside Directors.
 The Company will build a governance structure that is easy to understand from global perspectives,
such as those of overseas investors.
- 78 -

1) Organization of the Company
A. Board of Directors
Directors who are appointed by the shareholders and are entrusted with management of theCompany are to carry out the roles and responsibilities of the Board of Directors as listed below.
They are to do so in accordance with their fiduciary responsibility and accountability toshareholders and with the aim of realizing the Group Vision. Accordingly, these roles andresponsibilities include: Indicating the overall direction that the Group’s management is to take by engaging inconstructive discussions with respect to the Group Vision, the Sustainability Policy, the Group
Medium-term Business Plan, the Group Management Policy for the fiscal year, and otherfundamental management policies, and carrying out multifaceted and objective deliberations
that include evaluation of risks with respect to the aforementioned;
 Appropriately making decisions in terms of overall policy and plans pertaining to the Group’s
management on the basis of the direction noted above and overseeing progress and results ofthe plans; Developing an environment conducive to encouraging offense-oriented management geared toachieving 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 related parties; and On the basis of summary reports furnished by the Nomination Committee, overseeing the
progress of the President and Representative Executive Officer succession planning andpersonnel assignment plans pertaining to managerial talent and Executive Officer training in
consultation with the Nomination Committee
The Board of Directors of the Company is to be composed of an appropriate number of Directors,
but not more than 11, as stipulated in the Articles of Incorporation. The number of Directors iscurrently eleven (11) (including seven (7) independent Outside Directors), and the term of office
is one year. From the standpoint of separating supervision and execution and ensuring theeffectiveness of discussions in the Board of Directors meetings, a majority of its membershipcomprises independent Outside Directors. The chairperson of the Board of Directors is chosenfrom among internally promoted Directors who do not execute business from the standpoint of
separating supervision and execution and ensuring the smooth operation of the Board of
Directors.
We take steps to ensure diversity when nominating candidates for positions of Director, upongiving consideration to bringing about a balance of knowledge, experience and abilities within the
Board of Directors as a whole.
Members of the Board of Directors are as follows.
Internal Directors:

YAMAMOTO Ryoichi (Chairperson), HAMADA Kazuko,
YOSHIMOTO Tatsuya, and WAKABAYASHI Hayato

Outside Directors:

YAGO Natsunosuke, HAKODA Junya, UCHIDA Akira, SATO Rieko,
SEKI Tadayuki, KOIDE Hiroko, and KATAYAMA Eiichi- 79 -

B. Three Committees(Nomination Committee)
The Nomination Committee is composed of three (3) independent Outside Directors and thechairperson of the Board of Directors who does not execute business. The chairperson is chosenfrom among independent Outside Directors from the standpoint of ensuring transparency andobjectivity.
The Nomination Committee determines the contents of proposals on the nomination and dismissalof Directors submitted to shareholders’ meetings and reports to the Board of Directors upon
consultations from the Board of Directors regarding the nomination and dismissal of Executive
Officers as well as the chairpersons and members of individual statutory committees and othermatters.
Members:

YAGO Natsunosuke (Chairperson), UCHIDA Akira, KOIDE Hiroko, andYAMAMOTO Ryoichi(Audit Committee)
The Audit Committee is composed of four (4) independent Outside Directors and one (1) full-time
internal Director who does not execute business, and the Chairperson is chosen from among
independent Outside Directors from the standpoint of ensuring transparency and objectivity.
The Audit Committee effectively audits whether the execution of duties by Executive Officers andDirectors is in compliance with laws, regulations, and the Articles of Incorporation of theCompany and whether they are performing their duties efficiently in accordance with theCompany’s basic philosophy and the Group Vision, and it provides necessary advice andrecommendations, etc.
Members:

HAKODA Junya (Chairperson), SATO Rieko, SEKI Tadayuki, KATAYAMA Eiichi,
and HAMADA Kazuko(Remuneration Committee)
The Remuneration Committee is composed of three (3) independent Outside Directors and thechairperson of the Board of Directors who does not execute business. The chairperson is chosenfrom among independent Outside Directors from the standpoint of transparency and objectivity.
The Remuneration Committee determines the policy on deciding the contents of individual
remuneration for Directors and Executive Officers of the Company and officers of its subsidiaries(Directors, Audit & Supervisory Board Members and Executive Officers) and determines thecontents themselves of individual remuneration for Directors and Executive Officers of theCompany.
Members:

UCHIDA Akira (Chairperson), YAGO Natsunosuke, KOIDE Hiroko, andYAMAMOTO Ryoichi- 80 -

2) Corporate governance structure

Shareholders Meeting
Appoint and Dismiss

ReportExecutive
SessionBoard of Directors

Oversight

Directors
Audit

ReportRemuneration
Committee

Nomination
Committee

Audit Committee

ReportEvaluate

Accounting
AuditorCooperate

Oversight
ReportCooperate

Audit

Execution

Risk Management
Committee

Consult

Sustainability
Committee

Consult

ReportReportRepresentative
Executive Officer

Consult
ReportCompliance
Committee
DirectExecutive Officers
ReportInternal Audit
DivisionGroup Management
Meeting
Audit

Operating Units
Audit(ii) Status of internal control system
The Board of Directors of the Company adopted the following resolution (Basic Policy to Build
Internal Control System) concerning “the matters prescribed by Ministry of Justice Order as thosenecessary for the execution of the duties of the audit committee” (Article 416, paragraph (1), item (i)(b) of the Companies Act) and “the development of systems necessary to ensure that the execution ofduties by executive officers complies with laws and regulations and the articles of incorporation andother systems prescribed by Ministry of Justice Order as systems necessary to ensure the propernessof operations of a Stock Company and of operations of a group of enterprises consisting of the Stock
Company and its Subsidiary Companies” (Article 416, paragraph (1), item (i) (e) of the Companies
Act).
Basic Policy to Build Internal Control System
A. Group management system
Regarding the group management system, the Board of Directors shall perform an oversight function
by monitoring the Executive Officers’ and Directors’ execution of business. The Board of Directors
shall discuss and resolve matters defined in the Companies Act and/or the Articles of Incorporation as
well as the Group Vision, Sustainability Policy, Group Medium-term Business Plan, overall policy
and plan for Group management, M&As, Group financing plans, and other individual matters relating
to Group management. In order to speed up business decisions and execution, the matters involving
business execution other than the above shall be delegated to execution, with the exception of matterswhich have a material impact on the Group management.
Regarding a management execution framework, the Company shall clearly separate management
oversight and execution and strengthen the Board of Directors’ oversight function while delegating
authority for execution to enable swift management decision-making.

- 81 -

Regarding a system for promoting internal controls, under the direction of the President andRepresentative Executive Officer, to strengthen internal control over execution, the departments andresponsible persons in charge of internal controls shall be established and shall manage thedevelopment and operation of the internal controls in relation to the Companies Act and the internal
control system in relation to the Financial Instruments and Exchange Act at the Company and theoperating subsidiaries.
B. Risk management system
Regarding the risk management, the Company shall establish the Risk Management Committee. The
committee is chaired by the President and Representative Executive Officer and comprises Executive
Officers and others. The Risk Management Committee shall discuss important matters, including risk
identification and evaluation, and determination of risks to be reflected in strategies and utilize it for
management decision-making. The committee also reports details of its deliberations to the Board of
Directors in a timely manner.
Regarding crisis risk response, crisis management shall be controlled by the “Emergency Response
Headquarters,” which is headed by the President and Representative Executive Officer, for crisis
events such as large-scale earthquakes, fires and accidents.
C. Legal compliance system
Regarding the legal compliance system, the Company shall establish the Compliance Committee. The
President and Representative Executive Officer shall be the chairperson, and the members of thecommittee shall be corporate lawyers, Executive Officers and others. The Compliance Committee
continuously oversees development of the foundations of the compliance system and the status of
implementation through enhanced collaboration with departments in charge of the compliance of each
operating subsidiary and promotes compliance with laws and regulations, corporate ethics, and othersuch standards. It also draws up a policy for addressing matters involving serious compliance-related
violations. The committee also reports details of its deliberations to the Audit Committee in a timely
manner.
In addition, regarding a whistle-blowing system, the Company shall establish the “JFR Group
Compliance Hotline” as the whistle-blowing system of the Group that also extends beyond companies(to a corporate lawyer) and which may be used by all persons working at the Company and operating
subsidiaries. For hotline reports concerning management personnel, the Company shall build astructure whereby the reports are submitted directly to the Audit Committee and subjected todirections from the Audit Committee so as to secure an independent reporting route.
D. Internal audit structure
Regarding the internal audit structure, the Company shall establish an independent internal audit
department under the President and Representative Executive Officer. In accordance with internal
audit rules and under the direction of the President and Representative Executive Officer, the internal
audit department shall audit the operations of the Company and operating subsidiaries or properly
report the results of audits of operations, examine the properness and effectiveness of the processes
for their operations, and provide guidance, advice and proposals to all departments at the Company
and to operating subsidiaries.
E. Structure of the Audit Committee
Regarding the structure of the Audit Committee, it is chaired by an Outside Director and composed offive members, including an internal Director who does not execute business. The Audit Committee
shall audit the legality and suitability of the execution of duties by the Executive Officers andDirectors. The Audit Committee shall have periodic meetings with the President and Representative
Executive Officer to share information. Moreover, the Company’s Executive Officers and Directors
may be asked to attend Audit Committee meetings to provide reports and opinions as necessary.
Under the direction of the Audit Committee, the Audit Committee Secretariat has been established as
an organization in charge of assisting the Committee’s duties. Regarding personnel appointments andchanges for the Audit Committee Secretariat staff members and personnel evaluation of the
responsible person for the Audit Committee Secretariat, the Audit Committee’s advance approval isrequired.

- 82 -

F. System for storage and management of information
Regarding documents relating to the execution of duties by Executive Officers and Directors, as well
as minutes and related materials of meetings hosted by Executive Officers and Directors (including
electromagnetic documents), in accordance with the laws and regulations and the rules on confidential
information management, each responsible department shall carry out document storage andmanagement during the stipulated period and shall develop a system to enable inspections of such
documents at any time.
Regarding information security, Senior Executive General Manager of the system departments shallcontrol information security management of the Company based on the Information Security Policy
and the IT Governance Policy and shall report periodically and whenever necessary on the status of
information system management and related matters to the Board of Directors, the Audit Committee,
the Management Meeting and the President and Representative Executive Officer.
(iii) Overview of limited liability agreement
The Company concludes a limited liability agreement with each Director who does not executebusiness pursuant to the provisions of Article 427, paragraph (1) of the Companies Act so that
Directors who do not execute business can adequately fulfill their expected roles. The limited liability
agreement stipulates that the maximum amount of liability for damages due to negligence of duties by
a Director who does not execute business shall be the higher of twelve million (12,000,000) yen or theamount fixed by laws and regulations; however, the limitation of liability is applicable only when theduties that caused the liability were executed by the Director who does not execute business in goodfaith and without gross negligence.
(iv) Number of Directors
The Articles of Incorporation stipulate that the number of Directors of the Company shall be eleven(11) or fewer.
(v) Requirements for a resolution to elect Directors
The Articles of Incorporation stipulate that a resolution to elect a Director of the Company shall be
adopted by a majority of the voting rights of shareholders present at the meeting where theshareholders holding at least one-third of the voting rights of the shareholders entitled to exercise theirvoting rights are present, and such a resolution shall not be held by cumulative voting.
(vi) Requirements of a special resolution of a shareholders meeting
The Articles of Incorporation stipulate that a special resolution of a shareholders meeting provided forin Article 309, paragraph (2) of the Companies Act shall be adopted by at least two-thirds of thevoting rights of the shareholders present at the meeting where the shareholders holding at least onethird of the voting rights of the shareholders entitled to exercise their voting rights are present. The
purpose of this is to facilitate the operation of the shareholders meeting by providing an easier quorum
requirement for special resolutions at shareholders meetings.
(vii) Organizational body to determine dividends of surplus, etc.
To implement even more flexible dividend measures, the Company provides in the Articles ofIncorporation that matters regarding dividends of surplus, including matters prescribed in the items of
Article 459, paragraph (1) of the Companies Act, shall be determined by a resolution of a Board of
Directors without obtaining a resolution at a shareholders meeting unless otherwise provided for bylaws and regulations.
(viii) Basic policy regarding control of the Company
1) Contents of basic policy
The Company believes it is necessary for the party controlling the Company’s financial and business
policy decisions to be a party who sufficiently understands the financial and business details of theGroup and the sources of the Group’s corporate value, who continuously and sustainably ensuresthat the corporate value of the Group and, by extension, the common interests of shareholders areserved, and who enables further improvement in this area.
As the Company is a listed enterprise, the Company’s policy regarding its shareholders is that, ingeneral, they are determined through free market transactions on the financial instruments market.
Furthermore, even in the case of a purchase of shares of the Company above a certain scale by- 83 -

specific shareholders or specific groups (hereinafter “Large-Scale Purchase”), if this Large-Scale
Purchase will contribute to the corporate value of the Group and, by extension, the common interestsof its shareholders, the Company believes that this should not be rejected outright and that,
ultimately, the decision on whether to accept or reject it should be left to the discretion of theCompany’s shareholders.
Nevertheless, a Large-Scale Purchase that involves a serious risk of causing damage to the corporate
value of the Group may be envisaged. This may include a Large-Scale Purchase that, in view of its
purpose and other factors, would demonstrably harm the Group’s corporate value; one with thepotential to involve substantial coercion of shareholders to sell shares of the Company; or one thatwould not provide sufficient time and information for the Company’s Board of Directors andshareholders to consider factors such as the details of the large-scale purchaser’s proposal or for theCompany’s Board of Directors to make an alternative proposal.
A party attempting this kind of Large-Scale Purchase, which would not contribute to the corporate
value of the Group and, by extension, the common interests of its shareholders (hereinafter, the“Large-Scale Purchaser”), would not be appropriate as a party controlling the Company’s financial
and business policy decisions. Accordingly, the Company believes that it is the duty of theCompany’s Board of Directors, which is entrusted by the shareholders to manage the Company, torespond to this kind of Large-Scale Purchase by ensuring that processes such as provision of
information by the Large-Scale Purchaser and considerations and evaluations by the Company’s
Board of Directors are carried out and securing sufficient time for the Company’s Board of Directors
and shareholders to consider the details of the Large-Scale Purchaser’s proposal in order to prevent
damage to the corporate value of the Group and, by extension, the common interests of its
shareholders.
2) Frameworks contributing to realization of basic policy
Since the foundation of Daimaru and Matsuzakaya, the Group has been engaged in the businesses ofkimono fabric stores and department stores for many years based on the corporate philosophies andtraditional spirits of these businesses, which are: “Service before profit (those who place service
before profit will prosper),” “Abjure All Evil and Practice All Good” and “In doing good to others,
we do good to ourselves.”
The Company believes that the sources of the Group’s corporate value are the relationships of trust it
has established with customers and with society, which have been refined on the basis of thesephilosophies and spirits.
Accordingly, in order to exemplify the principles of “customer-first principle” and “contribution tosociety,” which are in common with these philosophies and spirits, the Company has established thefollowing basic philosophies of the Group: “to aim at providing high quality products and services
that meet the changing times and satisfying customers beyond their expectations” and “to aim atdeveloping the Group by making a broad contribution to society as a fair and trusted business entity.”
Based on these basic philosophies, the Company implements a wide range of measures, aiming torealize the Group’s vision of “Create and Bring to Life ‘New Happiness,’” in order to make acontribution to securing and enhancing the corporate value of the Group and, by extension, thecommon interests of shareholders.
3) Framework to prevent parties deemed inappropriate in light of basic policy from controlling thefinancial and business policy decisions of the Company
At present, the Company has not specifically stipulated a concrete framework for a case in which a
Large-Scale Purchaser appears, commonly known as takeover defense measures.
Nevertheless, the Company believes that, in order to prevent damage to the Group’s corporate value
if a Large-Scale Purchaser appears, it is necessary to carefully examine the impact a Large-Scale
Purchase would have on the Group’s corporate value after ascertaining certain information about theLarge-Scale Purchaser. Such information would include the nature of the Large-Scale Purchaser, thepurpose of the Large-Scale Purchase, the Large-Scale Purchaser’s proposed financial and business
policies and their policy for handling shareholders, the Group’s customers, business partners,
employees, the communities that surround the Group and other stakeholders.
Accordingly, if this occurs, the Company will establish an independent committee composed of
Outside Directors and experts with viewpoints that are independent from the Company’s
management personnel and Internal Directors. If the Company judges that the said Large-Scale- 84 -

Purchaser is inappropriate in light of the aforementioned basic policy after considering advice andopinions from the committee, the Company will act to secure the Group’s corporate value and, byextension, the common interests of shareholders by taking necessary and appropriate measures.
4) Judgment of the Company’s Board of Directors regarding concrete framework and reasons forsuch judgment
Various measures formulated by the Group are formulated based on the Group’s basic philosophy
and are intended to further build up the relationship of trust with customers and with society, which
are the sources of the Group’s corporate value. Therefore, the Company believes that these measures
are in line with the contents of the basic policy and contribute to securing and enhancing thecorporate value of the Group and, by extension, the common interests of shareholders.
Furthermore, if the Company takes necessary and appropriate countermeasures against a Large-Scale
Purchaser judged to be inappropriate in light of the basic policy, the fairness, neutrality and rationalityof this judgment will be ensured by making it in consideration of advice and opinions from an
independent committee whose independence from the management personnel and Internal Directorsof the Company is assured. Accordingly, the Company believes that these measures would not
damage the corporate value of the Group or the common interests of shareholders and that they are
not intended to maintain the positions of the officers of the Company.

- 85 -

(2) Information about officers(i) List of officers
Officers include 16 males and 3 females. (Percentage of female officers: 15.79%)
1) Directors
Title and
position

Name

Date of birth

Career summary
April 1973

Joined The Daimaru, Inc.

May 2003

President and COO and General
Manager of Department StoreOperations, Group Headquarters

September
2007

Director of J. FRONTRETAILING Co., Ltd.

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)102

In charge of Sales Reform andOut-of-Store Sales (gaisho)
Reform Promotion
Executive General Manager ofDepartment Store Operations
Headquarters and Planning
Office for New Umeda Store,
Head Office of The Daimaru,
Inc.
Director of Matsuzakaya Co.,Ltd.
Director
Chairpersonof Board of
Directors

YAMAMOTO
RyoichiMarch 27,
1951

March 2008

Executive General Manager ofSales Headquarters, Head Officeof The Daimaru, Inc.

March 2010

President of Daimaru
Matsuzakaya Department Stores
Co. Ltd.

September
2012

President of Daimaru
Matsuzakaya Department Stores
Co. Ltd. and President of
Daimaru Matsuzakaya Sales
Associates Co. Ltd.

April 2013

President and Representative
Director of J. FRONTRETAILING Co., Ltd.

May 2017

Director, President andRepresentative Executive
Officer

May 2020

Director, Chairperson of Boardof Directors (present)

June 2021

Outside Director of Daido SteelCo., Ltd (present)
Outside Director of NORITAKE
CO., LIMITED (present)- 86 -

Title andposition

Director

Name

HAMADA Kazuko

Date of birth

Career summary
April 1985

Joined PARCO Co., Ltd.

September
2000

General Manager of Marketing
Department of SalesManagement Division

March 2002

Deputy General Manager ofKichijoji PARCO

March 2005

General Manager of Kichijoji
PARCO

September 6, March 2007
1962
March 2010

General Manager of
Shintokorozawa PARCO
Executive Officer (Personnel)

March 2013

Executive Officer(Administration and Personnel)

March 2015

Executive Officer (Group Audit
Office)May 2020

AuditorMay 2021

Director of J. FRONTRETAILING Co., Ltd. (present)- 87 -

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)0

Title andposition

Director

Name

YAGO
Natsunosuke

Date of birth

May 16, 1951

Career summary
April 1977

Joined EBARACORPORATION

June 2002

Executive Officer

April 2004

Senior Executive Officer, Group
Executive of Precision
Machinery Group of EBARACORPORATION,
Representative Director andChairman of Ebara Precision
Machinery Europe GmbH,
Representative Director andChairman of Ebara Technologies
Inc. and Chairman of Ebara
Precision Machinery Shanghai
Inc.

June 2004

Director of EBARACORPORATION

April 2005

Director of EBARACORPORATION and Chairmanof Ebara Precision Machinery
Taiwan Inc.

June 2005

Director, President of Precision
Machinery Company andGeneral Manager of Fujisawa
Operation of EBARACORPORATION

April 2006

Director and Managing
Executive Officer
President of Precision
Machinery Company

April 2007

President and Representative
Director

May 2007

President and Representative
Director and General Manager
of Internal Control Promotion
Department

July 2009

President and Representative
Director and General Manager
of Internal Control Department

April 2013

Chairman & Director

October 2017

Representative Director of The
Ebara Hatakeyama Memorial
Foundation (present)

March 2019

Retired from the office ofChairman & Director of EBARACORPORATION

June 2019

Outside Director of SUBARUCORPORATION (present)

May 2020

Outside Director of J. FRONTRETAILING Co., Ltd. (present)

May 2021

Director of PARCO Co., Ltd.

- 88 -

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)6

Title andposition

Director

Name

HAKODA Junya

Date of birth

Career summary
April 1974

Joined Mitsubishi Rayon Co.,
Ltd. (present Mitsubishi
Chemical Corporation)

November
1980

Joined Pricewaterhouse CPA
Office(Reorganized as Aoyama Audit
Corporation in June 1983)

April 1984

Registered as Certified Public
Accountant

April 2000

Partner at the merged firm,
ChuoAoyama Audit
Corporation/
PricewaterhouseCoopers

August 2006

Representative of Arata Audit
Corporation/Partner ofPricewaterhouseCoopers

April 2008

Eminent Professor of Graduate
School of Keio University(internal audit theory)

September
2009

Member of the Agreement
Monitoring Committee of theJapan External Trade
Organization (JETRO)

September
2010

Director of Japan Internal
Control Research Association

December
2014

Outside Corporate Auditor of
Schroder Investment
Management (Japan) Limited(present)

July 10, 1951
March 2015

Director of Institute ofCorporate Governance, Japan(present)

June 2015

Outside Corporate Auditor of
Yamaha Corporation

June 2015

Outside Director of AEON
Financial Service Co., Ltd.

June 2017

Outside Director andChairperson of the Audit
Committee of Yamaha
Corporation

September
2019

Member of the Ethics
Committee of the JapaneseInstitute of Certified Public
Accountants

August 2020

Vice Chairperson of theCommittee on Training andResearch for Outside Officers,
Japanese Institute of Certified
Public Accountants

May 2021

Outside Director of J. FRONTRETAILING Co., Ltd. (present)

August 2021

Chairperson of the Committee
on Training and Research for
Outside Officers, JapaneseInstitute of Certified Public
Accountants (present)- 89 -

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)1

Title andposition

Name

Date of birth

Career summary
April 1975

Joined Toray Industries, Inc.

June 1996

Executive Vice President of
Toray Industries (America), Inc.

June 2000

General Manager on Special
Assignment of Corporate
Strategic Planning Division 1,
General Manager on Special
Assignment of Corporate
Communications Dept. of Toray
Industries, Inc.

June 2004

Counsellor of Corporate
Strategic Planning Division, andCounsellor of Investor Relations
Dept.

June 2005

Member of the Board, General
Manager of Finance andController’s Division

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)

5

President, Toray Holding (USA),Inc.
June 2009

Director

UCHIDA Akira

October 4,
1950

Senior Vice President (Memberof the Board), General Manager
of Finance and Controller’s
Division
President, Toray Holding (USA),Inc.

June 2012

Senior Vice President (Memberof the Board), in charge of CSR;
General Manager of General
Administration and Legal
Division, Investor Relations
Dept., Corporate
Communications Dept., andAdvertising Dept., Tokyo Head
OfficeJune 2016

AdviserMarch 2019

Retired from Adviser

May 2019

Outside Director of J. FRONTRETAILING Co., Ltd. (present)

June 2019

Outside Director of Yokogawa
Electric Corporation (present)

May 2020

Director of Daimaru
Matsuzakaya Department Stores
Co. Ltd.

May 2022

Director of PARCO Co., Ltd.
(present)- 90 -

Title andposition

Name

Date of birth

Career summary
April 1984

Director

SATO Rieko

November28, 1956

Number ofshares held(Thousandsof shares)(Note 2)

3

Registered as attorney at law

August 1989

Shearman & Sterling LLP

July 1998

Partner of Ishii Law Office(present)

June 2004

External Audit & Supervisory
Board Member of AjinomotoCo., Inc.

June 2012

Outside Corporate Auditor of
NTT DATA CORPORATION

June 2015

Outside Director of The Dai-ichi
Life Insurance Company,
Limited

October 2016

Outside Director (Audit andSupervisory Committee
Member) of Dai-ichi Life
Holdings, Inc. (present)

May 2018

Outside Director of J. FRONTRETAILING Co., Ltd. (present)

May 2019

Director of Daimaru
Matsuzakaya Department Stores
Co. Ltd.

June 2020

Outside Director (Member of the
Audit and Supervisory
Committee) of NTT DATACORPORATION
Outside Audit & Supervisory
Board Member of Mitsubishi
Corporation (present)- 91 -

Term ofofficeTitle andposition

Director

Name

SEKI Tadayuki

Date of birth

Career summary
April 1973

Joined ITOCHU Corporation

June 1998

General Manager, Finance
Division, ITOCHU International
Inc. (Stationed in New York)

June 2004

Executive Officer of ITOCHU
Corporation, CFO of Food
Company

April 2007

Managing Executive Officer,
General Manager of Finance
Division

June 2009

Representative Director,
Managing Director, Chief
Officer for Finance, Accounting,
Risk Management and CFO

April 2010

Representative Director, Senior
Managing Executive Officer

May 2011

Representative Director, Senior
Managing Executive Officer and
CFO

April 2013

Representative Director,
Executive Vice President and
CFO

December 7, April 2014
1949

Representative Director,
Executive Vice President,
Executive Advisory Officer,
CFO & CAO

April 2015

Adviser

May 2016

External Director of PARCO
Co., Ltd.

June 2016

Outside Director of NIPPONVALQUA INDUSTRIES, LTD.
(present VALQUA, LTD.)(present)

April 2017

Advisory Member of ITOCHU
Corporation

June 2017

Outside Director of JSR
Corporation (present)

July 2017

Outside Statutory Auditor of
Asahi Mutual Life Insurance
Company (present)

May 2020

Outside Director of J. FRONTRETAILING Co., Ltd. (present)
Director of PARCO Co., Ltd.

May 2022- 92 -

Director of Daimaru
Matsuzakaya Department Stores
Co. Ltd. (present)

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)3

Title andposition

Director

Name

KOIDE Hiroko

Date of birthAugust 10,
1957

Career summary
September
1986

Joined J. Walter Thompson
Japan K.K. (present Wunderman
Thompson Tokyo G.K.)

May 1993

Joined Nippon Lever K.K.
(present Unilever Japan K.K.)

April 2001

Director

April 2006

General Manager of Marketing
Management Division ofMasterfoods Ltd. (present Mars
Japan Limited)

April 2008

Chief Operating Officer

November2010

President and Representative
Director of Parfums ChristianDior Japon K.K.

January 2013

Outside Director of Kirin Co.,Ltd.

April 2013

Senior Vice President of Global
Marketing of Newell
Rubbermaid Inc. (U.S.) (present
Newell Brands Inc.)

June 2016

Outside Director of Mitsubishi
Electric Corporation (present)

April 2018

Director of Vicela Japan Co.,Ltd.

June 2019

Outside Director of Honda
Motor Co., Ltd
Outside Director of J-OILMILLS, Inc. (present)

May 2021- 93 -

Outside Director of J. FRONTRETAILING Co., Ltd. (present)

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)1

Title andposition

Name

Date of birth

Career summary
April 1989

Joined Nomura ResearchInstitute, Ltd.

June 2000

Seconded to Nomura Corporate
Advisors Co., Ltd.

October 2010

Joined Merrill Lynch Japan
Securities Co., Ltd. (present
BofA Securities Japan Co.,
Ltd.).

June 2012Managing Director and General
Manager of Research Division

January 2016

Joined Panasonic Corporation
Officer (in charge of Business
Development)

January 2017

Officer (in charge of Strategy
Business)

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)

1

Vice President of Eco Solutions
Company, in charge of AGEFREE BusinessDirector

KATAYAMA
Eiichi

April 2017

President and Representative
Director of Panasonic Cycle
Technology Co., Ltd.

February 2019

Executive Officer and CSO ofPanasonic Corporation
In charge of Business Planning,
Business Development, andBusiness Creation Project

April 2020

Managing Executive Officer and
CSO

October 2020

In charge of Sports Management
Business

October 2021

Managing Executive Officer
Assistant General Manager ofLifestyle Updates Business
Division

May 17, 1966

President of Cold Chain
Solutions Company
In charge of Sports Management
Business
April 2022

Executive Vice President
President of Cold Chain
Solutions Company
In charge of DEI promotion,
General Manager of Cold Chain
Business Division

April 2023

Executive Vice President
President of the Cold Chain
Solutions Company
CDO and in charge of DEI
promotion (present)

May 2023- 94 -

Outside Director of J. FRONTRETAILING Co., Ltd. (present)Title andposition

Director

Name

YOSHIMOTO
Tatsuya

Date of birth

Career summary
April 1979

Joined The Daimaru, Inc.

March 2000

Senior Manager of Preparatory
Office for Opening Sapporo
Store of Planning Office for
Sapporo Store, Head Office

January 2008

General Manager of Tokyo StoreMay 2008

Corporate Officer, General
Manager of Tokyo Store

January 2010

Corporate Officer, General
Manager of Sales Planning
Promotion Division andMarketing Planning Promotion
Division of Department Stores
Coordination Division of J.
FRONT RETAILING Co., Ltd.

March 2010

Corporate Officer of Daimaru
Matsuzakaya Department Stores
Co. Ltd.
Senior General Manager ofManagement Planning Division

April 13,1956
May 2012

Director and Corporate Officer

April 2013

President of Daimaru
Matsuzakaya Department Stores
Co. Ltd. and President of
Daimaru Matsuzakaya Sales
Associates Co. Ltd.

May 2013

Director of J. FRONTRETAILING Co., Ltd. (present)

May 2017

Representative Managing
Executive Officer

May 2020

Director, President andRepresentative Executive
OfficerMarch 2023

Director, President andRepresentative Executive
Officer, Senior Executive
General Manager of CRE
Strategy Unit (present)- 95 -

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)95

Title andposition

Director

Name

WAKABAYASHI
HayatoDate of birthAugust 31,
1961

Career summary
April 1985

Joined Matsushita ElectricIndustrial Co., Ltd. (present
Panasonic Corporation)

April 1998

President of Panasonic Financial
Center Malaysia Co., Ltd.

April 2007

Director and Chief Executive
Officer of Matsushita Electric(China) Finance Limited

February 2009

Finance Planning Team Leader(Manager), Headquarters
Finance & IR Group of
Panasonic Corporation

July 2013

General Manager, Finance & IR
Group, Corporate Strategy
Division and Finance Strategy
Team Leader of Panasonic
Corporation (Director)

May 2015

Joined J. FRONT RETAILING
Co., Ltd.
In charge of Finance Policy,
Administration Unit

September
2015

Executive Officer

Term ofofficeNumber ofshares held(Thousandsof shares)(Note 2)17

In charge of Financial Strategy
and Policy, Administration Unit
March 2016

Senior Executive General
Manager of Financial Strategy
Unit (present) and in charge ofFinance Policy

May 2016

Director (present)

March 2017

In charge of Financing and
Finance Policy

May 2017

Managing Executive Officer(present)

May 2018

Senior General Manager ofFinancing and Finance Policy
Division

May 2020

Director of PARCO Co., Ltd.

May 2023

Director of Daimaru
Matsuzakaya Department Stores
Co. Ltd. (present)

Total
Notes:

1.
2.

239

Directors YAGO Natsunosuke, HAKODA Junya, UCHIDA Akira, SATO Rieko, SEKI Tadayuki, KOIDE Hiroko, and
KATAYAMA Eiichi are Outside Directors.
The term of office will be from the conclusion of the Annual Shareholders Meeting for the fiscal year ended February
28, 2023, to the conclusion of the Annual Shareholders Meeting for the fiscal year ending February 29, 2024.

- 96 -

2) Executive officers
Career summary

Term ofofficeNumber ofshares held(Thousands ofshares)Title and position

Name

Date ofbirth

President andRepresentative
Executive Officer

YOSHIMOTO
Tatsuya

April 13,
1956

(Note 1)

(Note 2)

95

Managing
Executive Officer
Senior Executive WAKABAYASHI August 31,
Hayato1961
General Manager
of Financial
Strategy Unit

(Note 1)

(Note 2)

17

(Note 2)

6(Note 2)

4

Managing
Executive Officer
Senior Executive
General Manager
of Management
Strategy UnitManaging
Executive Officer
Senior Executive
General Manager
of Group Digital
Unit

April 1998

Joined The Daimaru, Inc.

September
2016

General Manager of Sales
Promotion Department, Daimaru
Kyoto store of Daimaru
Matsuzakaya Department Stores
Co. Ltd.

March 2018

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

October 2020
ONO Keiichi

HAYASHI
Naotaka

August 2,
1975

Executive Officer and Senior
General Manager of Structural
Reform Promotion Division,
Financial Strategy Unit of J.
FRONT RETAILING Co., Ltd.

March 2022

Managing Executive Officer
Senior Executive General
Manager of Management
Strategy Unit and in charge of
Risk Management (present)

May 2022

Director of PARCO Co., Ltd.
(present)

October 2022

Director of J. FRONT CITY
DEVELOPMENT Co., Ltd.
(present)

April 1991

Joined PARCO Co., Ltd.

March 2009

General Manager of Ecommerce Business Department
of PARCO-CITY Co., Ltd.
(present PARCO DigitalMarketing Co., Ltd.)March 2013

General Manager of Web
Communication Department of
PARCO Co., Ltd.

March 2016

Executive Officer (WebMarketing Department andMedia Communication
Department)

September7, 1968
March 2017

Executive Officer (Group ICTStrategy Office)May 2020

Executive Officer (CRM
Promotion Department andDigital Promotion Department)

March 2022

Managing Executive Officer andSenior Executive General
Manager of Group Digital Unitof J. FRONT RETAILING Co.,
Ltd. (present)- 97 -

Title and position

Managing
Executive Officer
Senior Executive
General Manager
of Group System
Unit

Name

Date ofbirth

Career summary
April 1992

Joined Mitsubishi Corporation

April 1998

General Manager of New
Business Development
Department of eCubeNet. com
Co., Ltd.

April 2003

Executive Officer Partner of
Eupholink Co., Ltd.

April 2004

Vice President and COO

April 2008

Distribution Trading Company
Sector Partner of SIGMAXYZ
Inc.

April 2015

Leader of Process Engineering
Unit, IT Planning Dept. of
Mitsubishi Corporation

March 2017Retired from Mitsubishi
Corporation

April 2017

Joined J. FRONT RETAILING
Co., Ltd.

Term ofofficeNumber ofshares held(Thousands ofshares)(Note 2)8

Senior General Manager ofGroup Digital Strategy Division
and Senior General Manager of
New Business Division,
Management Strategy Unit
NAKAYAMA
Takashi

September
October 14, 20171966

Executive Officer, Senior
General Manager of Group
Digital Strategy Division,
Management Strategy Unit andSenior General Manager of New
Business Division

March 2019

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

May 2020

Executive Officer, Senior
Executive General Manager ofGroup Digital Strategy Unit andSenior General Manager of
Digital Promotion Division

May 2021

Managing Executive Officer andSenior Executive General
Manager of Group Digital
Strategy Unit

March 2022

Managing Executive Officer andSenior Executive General
Manager of Group System Unit
(present)

May 2022

Director of Daimaru
Matsuzakaya Department Stores
Co. Ltd.

May 2023

Director of PARCO Co., Ltd.
(present)- 98 -

Title and position

Managing
Executive Officer
Senior Executive
General Manager
of HumanResources
Strategy Unit andAdministration
Unit

Name

MATSUDA
Hirokazu

Date ofbirth

Career summary
April 1983

Joined The Daimaru, Inc.

April 2005

General Manager in charge ofLabor, Personnel Department,
Administration Division, Group
Headquarters

January 2008

General Manager of Personnel
Department, Operation Division,
Group Headquarters

March 2010

General Manager of
Administration Headquarters
and in charge of Personnel
Structure Reform, Head Officeof Daimaru Matsuzakaya
Department Stores Co. Ltd.

March 2014

General Manager of Personnel
Department of Administration
Headquarters, in charge of
Personnel Structure Reform, andin charge of Personnel Planningand Labor, Head Office

May 2014

Corporate Officer and in chargeof Group Organizational andPersonnel Policy, Management
Strategy Unit of J. Front
Retailing Co., Ltd.

March 29,1960

Corporate Officer and General
Manager of Personnel
Department, Administration
Headquarters of Daimaru
Matsuzakaya Department Stores
Co. Ltd.
January 2015

Senior Executive General
Manager of Administration
Headquarters and in charge ofCompliance and Risk
Management

May 2015

Director and Corporate Officer

May 2017

Director and Corporate
Executive Officer

May 2018

Corporate Executive Officer

March 2021

Managing Executive Officer,
Senior Executive General
Manager of Human Resources
Strategy Unit andAdministration Unit and in
charge of Compliance (present)

May 2022

Director of Daimaru
Matsuzakaya Department Stores
Co. Ltd. (present)- 99 -

Term ofofficeNumber ofshares held(Thousands ofshares)(Note 2)17

Title and position

Executive Officer

Name

YAMAZAKI
Shiro

Date ofbirth

Career summary
April 1993

Joined The Daimaru, Inc.

March 2004

Staff of Sales Planning
Department, Sales Planning &CS Promotion Division ofTokyo StoreMarch 2007

Staff of Tokyo Metropolitan
Area Strategy Office of J.
FRONT RETAILING Co., Ltd.

March 2010

Staff of Management Planning
Office, Head Office of Daimaru
Matsuzakaya Department Stores
Co. Ltd.

September
2013

Staff of Sales Promotion
Department, Daimaru
Shinsaibashi store

September
2015

Staff of Shinsaibashi New Store
Planning Office, Head Office

September
2019

Staff of Sales Promotion
Department, Daimaru
Shinsaibashi store

January 26,
January 2020
1970

Staff of Group Digital Strategy
Division, Management Strategy
Unit of J. FRONT RETAILING
Co., Ltd.

March 2020

Staff of Group Digital Strategy
Unit

May 2020

Representative Director andPresident of JFR Information
Center Co., Ltd.

March 2022

Executive Officer and Senior
General Manager of System
Planning Division of Group
System Unit of J. FRONTRETAILING Co., Ltd. (present)
Director of JFR Information
Center Co., Ltd. (present)

May 2023- 100 -

Senior General Manager ofSystem Promotion Division ofGroup System Unit of J.
FRONT RETAILING Co., Ltd.
(present)

Term ofofficeNumber ofshares held(Thousands ofshares)(Note 2)0

Title and position

Executive Officer

Name

NOGUCHI
Hideki

Date ofbirth

Career summary
April 1990

Joined PARCO Co., Ltd.

March 2007

General Manager in charge of
Accounting & Finance
Department, Financial
Administration Unit

March 2010

Executive Officer (Accounting
Department and Finance/IR
Department)

May 2020

Executive Officer (Accounting
Department, Business
Management Department, andAdministration and Legal
Department)

May 15,1965
May 2021

Executive Officer (Accounting& Finance Department, Business
Administration Department,
Business Management
Department, and Administrationand Legal Department)

March 2022

Executive Officer and Senior
General Manager of Accounting
and Tax Affairs Division,
Financial Strategy Unit (present)- 101 -

Term ofofficeNumber ofshares held(Thousands ofshares)(Note 2)4

Title and position

Executive Officer

Name

UMEBAYASHI
Akira

Date ofbirth

May 4,
1972

Career summary
April 1995

Joined The Daimaru, Inc.

May 2009

Assistant to Business Promotion
Department, Administration
Headquarters (Assigned
Exclusively to Union)(Responsible for the TokyoStore)

September
2016

Staff of Group Personnel
Department, Administration
Unit of J. FRONT RETAILING
Co., Ltd.

March 2017

Staff of Group Personnel
Department, Administration
Unit and Staff of the Board of
Directors Secretariat

September
2017

Senior General Manager ofGroup Personnel Department,
Administration Unit (in chargeof Group Personnel Policy) andStaff of the Board of Directors
Secretariat

May 2018

Senior General Manager ofGroup Human Resources Policy
Division, Human Resources
Strategy Unit and Staff of theBoard of Directors Secretariat

March 2020

Senior General Manager ofGroup Human Resources Policy
Division, Human Resources
Strategy Unit and Staff ofNomination Committee
Secretariat and Remuneration
Committee Secretariat

October 2020

Senior General Manager ofGroup Human Resources Policy
Division, Human Resources
Strategy Unit, Staff ofNomination Committee
Secretariat and Remuneration
Committee Secretariat, and Staffof Structural Reform Promotion
Division, Financial Strategy
Unit

September
2021

Senior General Manager ofGroup Human Resources Policy
Division and Group Human
Resources Development
Division, Human Resources
Strategy Unit, Staff ofNomination Committee
Secretariat and Remuneration
Committee Secretariat, and Staffof Structural Reform Promotion
Division, Financial Strategy
Unit- 102 -

Term ofofficeNumber ofshares held(Thousands ofshares)(Note 2)1

Title and position

Name

Date ofbirth

Career summary
March 2022

Executive Officer

OCHIAI Isao

Joined Matsuzakaya Co., Ltd.

March 2020

General Manager ofManagement Planning Division,
Management Planning Office,Head Office of Daimaru
Matsuzakaya Department Stores
Co. Ltd., General Manager of
MIRAITEIBAN KENKYUJYOMarch 2023

Total
Notes:

1.
2.

Number ofshares held(Thousands ofshares)(Note 2)0

Executive Officer and Senior
General Manager of Group
Human Resources Policy
Division, Group Human
Resources Development
Division, and Group Welfare
Division of Human Resources
Strategy Unit, and Staff ofNomination Committee
Secretariat and Remuneration
Committee Secretariat (present)

April 1993

December21, 1968 January 2021

Term ofofficeExecutive Store Manager of
Matsuzakaya Shizuoka store
Executive Officer, Senior
General Manager ofManagement Planning Division
and Business Portfolio
Transformation Promotion
Division of Management
Strategy Unit of J. FRONTRETAILING Co., Ltd. (present)

156

Described in “(1) Directors” in “(i) List of officers” in “(2) Information about officers.”
The term of office of an Executive Officer shall expire at the end of the first meeting of the Board of Directors held
after the end of the Annual Shareholders Meeting that relates to the latest business year that ends within one (1) year
after his/her election to office.

(ii) Outside officers
The Company has seven Outside Directors.
The basic view of the Company under the corporate governance structure with three committees isthat more than half of the Board of Directors must be independent Outside Directors. By doing so, theCompany aims to separate supervision and execution, ensure the effectiveness of the Board of
Directors’ discussions, and maintain and improve transparency and objectivity. Two internal Directors
who do not execute business and are well informed about internal information because of theirextensive business experience in the businesses of the Group companies, fulfill their roles as thechairperson of the Board of Directors and as an Audit Committee member, and seven independent
Outside Directors, who have extensive external management experience or in-depth knowledge in
specialized areas, fulfill their roles as chairpersons of any of the Nomination, Audit and Remuneration
Committees or as members of the three committees, so that the effectiveness of independent andobjective management supervision can be ensured.

- 103 -

1) Relationship with the Company and appointment of Outside Directors
Name

YAGO Natsunosuke

HAKODA Junya

Important concurrent positions(As of May 26, 2023)

Relationship with the Company and appointment

Outside Director of SUBARUCORPORATIONYAGO Natsunosuke has been involved in top-level company
management for many years and has a wealth of experience instrengthening financial bases and compliance management. He also
has a highly specialized knowledge of internal controls andcorporate governance gained through his experience in transitioning
to a company with three committees (nomination, audit andremuneration committees). He has contributed to improving theeffectiveness of the Board of Directors by actively and assertively
providing advice and oversight, particularly on the direction to be
specified in the medium- to long-term strategies and key points atthe time of their formulation, the desired form of a new developerbusiness company, the approach to asset holdings in our financial
strategy, and the approach to monetizing customer data. In addition,
as the chairperson of the Nomination Committee, he has proceededwith the establishment of the officer selection process that checks thestatus of future candidates for positions in senior management andensures objectivity, transparency, and continuity based on the
succession plan. As a member of the Remuneration Committee, he
has contributed to reviews of appropriate remuneration levels forbonuses and stock-based remuneration and operating rules in theofficer remuneration system. In light of his track record, abundant
experience and high level of insight, the Company expects him tocontribute greatly to management of the Group and has accordingly
appointed him as an Outside Director. The Company has no interestin or relationship with him.

Chairperson of the Committee on
Training and Research for Outside
Officers, Japanese Institute ofCertified Public Accountants

HAKODA Junya was involved in accounting audits, management
consulting, and internal audits of auditing firms, etc. for many years
at PricewaterhouseCoopers and also served as an eminent professor
teaching internal audit theory at Graduate School of Keio University
and therefore has abundant experience and high-level expertise incorporate auditing. He also has a high level of expertise in corporate
governance and management auditing, having served as thechairperson of the Audit Committee of Yamaha Corporation when
the company changed its organizational design to a company withthree committees (nomination, audit, and remuneration committees).
He has contributed to improving the effectiveness of the Board of
Directors by actively and assertively providing advice and oversight,
particularly in terms of the consistency of the medium- to long-term
financial plans and medium- to long-term strategies, pursuing new
business initiatives, the approach to human resources development,
and points of focus in formulating an international business strategy.
Moreover, as a member of the Audit Committee, he has endeavoredto strengthen the audit function by fulfilling his roles of auditing theexecution of duties by Directors and Executive Officers of acompany with three committees (nomination, audit, andremuneration committees) while exchanging opinions and engaging
in discussions from the perspective of legality and appropriateness,
etc. related to items submitted to the Board of Directors and items
judged to require monitoring by the Audit Committee, which he isexpected to promote. He is also simultaneously working to enhance
the governance of the Group as a whole. In light of his track record,abundant experience and high level of insight, the Company expects
him to contribute greatly to management of the Group and has
accordingly appointed him as an Outside Director. The Company has
no interest in or relationship with him.

- 104 -Name

UCHIDA Akira

SATO Rieko

Important concurrent positions(As of May 26, 2023)

Relationship with the Company and appointment

Outside Director of Yokogawa
Electric Corporation

UCHIDA Akira possesses extensive experience and knowledge of
not only business planning and IR but also corporate departments as
the person responsible for the finance and accounting division. He
has contributed to improving the effectiveness of the Board of
Directors by actively and assertively providing advice and oversight,
particularly in terms of the necessary KPI perspectives the Company
should have when formulating medium-term business plans, theconcepts for funding plans when promoting business portfoliotransformation, Group coordination and the approach to governanceas a holding company, the acquisition and development ofspecialists, and points of focus in supporting initiatives aimed at new
business initiatives. In addition, as chairperson of the Compensation
Committee, he promotes the review of appropriate compensationlevels and operating rules for bonuses and stock compensation in theexecutive compensation system and, as a member of the Nominating
Committee, he confirms the status of candidates for future senior
management in accordance with the Succession Plan and contributes
to an executive decision-making process that ensures objectivity,transparency, and continuity. In light of his track record andabundant insight, the Company expects him to contribute greatly to
management of the Group and has accordingly appointed him as an
Outside Director. The Company has no interest in or relationshipwith him.

Partner of Ishii Law Office;Outside Director (Audit &Supervisory Committee Member)of Dai-ichi Life Holdings, Inc.;
Outside Director (Audit &Supervisory Committee Member);Outside Audit & Supervisory
Board Member of Mitsubishi
Corporation

SATO Rieko has extensive experience as an outside director andcorporate auditor of other companies in addition to a career as alawyer specializing mainly in corporate legal affairs, where she has
handled numerous cases with a high level of sophistication andexpertise. She has also contributed to improving the effectiveness of
the Board of Directors by actively and assertively furnishing advice
and oversight particularly in terms of the clarification of the path tocreating corporate value and achieving profit targets, specificpolicies on decarbonization, diversity and inclusion that connect tosustainability management, the strategic use of customer data, andthe legal position on reducing cross-shareholdings. Moreover, as amember of the Audit Committee, she has contributed tostrengthening the audit function by auditing the execution of duties
by Directors and Executive Officers of the company with threecommittees (nomination, audit, and remuneration committees) while
exchanging opinions and engaging in discussions from theperspective of legality and appropriateness related to items submitted
to the Board of Directors and items judged to require monitoring by
the Audit Committee. She is also simultaneously working to enhance
the governance of the Group as a whole. In light of her track recordand abundant insight, the Company expects her to contribute greatly
to management of the Group and has accordingly appointed her as
an Outside Director. The Company has no interest in or relationshipwith her.

- 105 -Name

SEKI Tadayuki

KOIDE Hiroko

KATAYAMA Eiichi

Important concurrent positions(As of May 26, 2023)

Relationship with the Company and appointment

Outside Director of VALQUA,
LTD.;
Outside Director of JSR
Corporation;
Outside Statutory Auditor of Asahi
Mutual Life Insurance Company

SEKI Tadayuki was involved in international business management
and risk management at a general trading company for many years
and has broad experience in finance and accounting as CFO andextensive experience as Outside Director and Audit & Supervisory
Board Member at multiple companies. He has contributed to
improving the effectiveness of the Board of Directors by actively
and assertively providing advice and oversight particularly on such
issues as the approach to business and asset holdings to promotebusiness portfolio transformation, alignment of strategy with corecompetencies and resources, and risk awareness in new businessinitiatives. Moreover, as a member of the Audit Committee, he has
contributed to strengthening the audit function by auditing theexecution of duties by Directors and Executive Officers of thecompany with three committees (nomination, audit, andremuneration committees) while exchanging opinions and engaging
in discussions from the perspective of legality and appropriateness
related to items submitted to the Board of Directors and items judged
to require monitoring by the Audit Committee. In light of his trackrecord and high level of insight, the Company expects him tocontribute greatly to management of the Group and has accordingly
appointed him as an Outside Director. The Company has no interestin or relationship with him.

Outside Director of Mitsubishi
Electric Corporation;
Outside Director of J-OIL MILLS,Inc.

KOIDE Hiroko served as an officer at foreign companies for many
years and engaged in corporate management as the head ofmarketing at the head office of a U.S. company and therefore has
extensive knowledge based on her rich experience in the fields ofglobal management and marketing. She also has a wealth of insights
gained as an Outside Director at multiple listed companies. She has
contributed to improving the effectiveness of the Board of Directors
by actively and assertively providing advice and oversight,
particularly in terms of the approach to formulating medium- tolong-term strategies based on robust strategic discussions, theimportance of a marketing-oriented way of thinking such as
identifying target and needs, and aspirations for the new developerbusiness. In addition, as a member of the Nomination Committee,
she has confirmed the status of future candidates for positions insenior management based on the Succession Plan and contributed tothe executive decision-making process that ensures objectivity,transparency, and continuity. As a member of the Remuneration
Committee, she has contributed to reviews of appropriate
remuneration levels for bonuses and stock-based remuneration andoperating rules in the officer remuneration system. In light of her
track record, abundant experience and high level of insight, theCompany expects her to contribute greatly to management of theGroup and has accordingly appointed her as an Outside Director.
The Company has no interest in or relationship with her.

KATAYAMA Eiichi has a wide range of financial and accounting
knowledge based on his many years of experience as a security
company analyst and working in the investment banking business.
As the manager of several companies at a general appliancemanufacturer, he has delivered strong leadership and achieved
business regeneration, structural reforms, and other improvements.
As CSO, he possesses extensive experience and advanced
knowledge about a wide range of matters, including constructing andExecutive Vice President, Panasoniccarrying out various M&A actions, formulating and implementing
Corporation;companywide strategies, taking the lead in the transition to a purePresident of the Cold Chain
holding company, and contributing to strengthening Group
Solutions Company;
governance. In addition, as the officer in charge of new business, he
CDO and in charge of DEI
has knowledge related to the creation of new digital businesses, andpromotion
through his initiatives in digitalizing existing businesses, he hasdeveloped knowledge that permits a comprehensive view of thelatest digital trends from an objective perspective. In light of his
track record, extensive experience and considerable insights, theCompany expects that he will apply them to the appropriate
supervision of management in the Group and has accordingly
appointed him as an Outside Director. The Company has no interestin or relationship with him.

- 106 -

(iii) Coordination between supervision by the Outside Directors, the internal audits and accounting audit, andrelationship with the internal control department
The Company’s Outside Directors, as members of the Board of Directors, make decisions on the basic
policy for management policy and management strategy of the Group and execution of othermanagement-related operations and fulfill the highly effective oversight function over the
management from a standpoint that is independent from the execution of operations. As stated in “(3)Status of audit” below, the Audit Committee conducts audits for the legal compliance andappropriateness of the execution of operations by Directors and Executive Officers by cooperatingwith the Accounting Auditor and utilizing internal organizations in accordance with the audit policy
and plan developed by the Audit Committee.
(3) Status of audit(i) Status of audit by Audit Committee
1) Organization, members and procedures of Audit Committee
The Audit Committee consists of five Audit Committee Members (as of the filing date of theannual securities report; one full-time member and four outside members).
Chairperson of the Audit Committee, HAKODA Junya, has a wealth of experience as a Certified
Public Accountant and extensive expertise in corporate accounting. Audit Committee Member
SEKI Tadayuki has served as CFO at Itochu Corporation and possesses considerable insight infinance and accounting. Audit Committee Member SATO Rieko has a wealth of experience andextensive expertise in corporate legal affairs as a lawyer. New Audit Committee Member
KATAYAMA Eiichi has a broad knowledge of finance and accounting based on his many years ofexperience as a security company analyst and working in investment banking. The Audit
Committee Secretariat (three members) has been established to support the Audit Committee in its
auditing duties.
From fiscal 2021, the Audit Committee Members clearly documented in the Rules of Audit
Committee the right of approval of the Audit Committee concerning appointments and transfers of
Audit & Supervisory Board Members in the Group companies to strengthen the auditing functionin accordance with points made regarding the effectiveness evaluation of the Board of Directors,
and working to enhance the auditing systems of organizations, the Audit & Supervisory Board
Members in the Group companies concurrently serve on the Audit Committee Secretariat.
In accordance with the audit policy and plan developed by the Audit Committee, the Audit
Committee conducts audits for the legal compliance and appropriateness of the execution ofoperations by Directors and Executive Officers by cooperating with the Accounting Auditor andutilizing internal organizations, and it prepares an audit report.
2) Activities of Audit Committee
In the current fiscal year, the Company held a total of 22 meetings of the Audit Committee. The
attendance of each Audit Committee member at the meetings is as follows.
Category

Name

Attendance at the meetings of the
Audit Committee

Chairperson of Audit Committee(outside)

HAKODA Junya

22/22

Audit Committee Member (full-time)

HAMADA Kazuko

22/22

Audit Committee Member (outside)

SATO Rieko

22/22

Audit Committee Member (outside)

SEKI Tadayuki

22/22

Audit Committee Member (outside)

KATAYAMA Eiichi (Note)

Note:

–

Assumed office on May 25, 2023

The main activities of the Audit Committee and the Audit Committee Meetings (held 18 times),
which are held separately from the Audit Committee, during the current fiscal year are as follows.

- 107 -

In addition, the activities of the full-time Corporate Auditors included confirming circularapproval memos, attending important internal meetings, confirming auditing issues throughperiodic meetings with the Internal Audit Division, the Accounting Auditor, and the corporate
auditors of other Group companies, and they promoted the construction of an organization audit
structure while working to share information with other members.
Major activities of the Audit Committee
Matters to be resolved
・ Audit policy, KAM, audit plan, allocation of work
・ Independent Auditor’s Report, Audit findings
・ Reappointment of Accounting Auditor, Consent to audit fees
Matters to be discussed
・ Preparation of audit environment (organizational audit structure, etc.) and key issues to beaddressed
・ Dealing with non-assurance engagements outsourced to accounting auditors group
・ Appropriateness of audits by the Accounting Auditor and evaluation of the Accounting
Auditor・ Selection criteria for Accounting Auditor candidates
・ Regarding Key Audit Matters (KAM)
Matters to be reported
・ Reports from the Internal Audit Division
・ Reports from the Accounting Auditor (financial reports, etc.)
・ Receive audit reports from corporate auditors of other Group companies
・ Reports from the finance division (financial reports, financial conditions, etc.)
・ Status of compliance with laws and regulations (collaboration with Legal Division andCompliance Committee)
・ Construction and operation status of internal control system
Major activities of the Audit Committee meetings
・ Conduct audits of the execution of duties by the Representative Executive Officer andexchange opinions
・ Audit the execution of duties of Directors and Executive Officers and interview them・ Prior consultation on matters to be resolved at the Audit Committee
・ Reports from the full-time Corporate Auditors
Based on the information received through these discussions, the Audit Committee makes reportsmonthly to the Board of Directors and offers guidance and proposals in the form of “audit
findings” regarding matters deemed to be of particular importance.
3) Enhancement of organizational audits
The Company has established an organizational audit system, as shown in the chart below, inwhich the Audit Committee, Internal Audit Division, and the corporate auditors of other Group
companies always share information on issues discovered through regular meetings and reports
and work together to resolve such issues. In addition to the Audit Committee, the Internal Audit
Office and the corporate auditors of other Group companies hold regular meetings with the- 108 -

Accounting Auditor, and the content of these meetings is shared with the Audit Committee in aneffort to enhance organizational auditing throughout the Group.
Organizational audit structure chart(ii) Status of internal audit
1) Organization, members and procedures of internal audit
The Company has established an independent Internal Audit Division (nine members) under the
President and Representative Executive Officer. The Internal Audit Division verifies and evaluates
the legality and effectiveness of systems of corporate governance, risk management andcompliance management in addition to performing audits on business operations of the Company
and the Group companies.
The Company shall adopt a dual-reporting system where both the President and Representative
Executive Officer and the Audit Committee shall receive reports, and audit results andimprovement measures related to audit findings are regularly reported on. As for orders related to
improvement measures from management, issues are promptly handled in collaboration with theaudited departments.
2) Coordination between the internal audits, auditing by the Audit Committee members andaccounting audit, and their relationship with the internal control department
In addition to the contents described in “(i) Status of audit by Audit Committee,” when theInternal Audit Division prepares its audit policy and plan, it submits the relevant report in advanceto the Audit Committee. In addition, its audit results are regularly reported to the President andRepresentative Executive Officer and the Audit Committee. The Audit Committee is authorized tomake requests to the Internal Audit Division on the execution of additional audits or directly
conduct audits if necessary. Regarding personnel appointments and changes related to the
Executive General Manager of the Internal Audit Division, the Audit Committee’s advanceapproval is required.
(iii) Status of accounting audit
1) Name of audit firm
Ernst & Young ShinNihon LLC
2) Consecutive audit period
71 years
Note: The Company is a holding company jointly established by The Daimaru, Inc. andMatsuzakaya Holdings Co., Ltd. through the transfer of shares in 2007, and the above
consecutive audit period includes the consecutive audit period of The Daimaru, Inc.
- 109 -

3) Certified public accountants who executed the audit duties
TAKENOUCHI Kazunori (Consecutive audit period: 5 years)
SHIBAYAMA Yoshihisa (Consecutive audit period: 6 years)
MATSUURA Hiroshi (Consecutive audit period: 6 years)
4) Breakdown of support staff for audit operations
Support staff for financial audit operations consists of 23 certified public accountants and 43
others.
5) Policies and reasons for selecting audit firm
The Audit Committee draws up criteria in advance for selecting and evaluating the Accounting
Auditor, which are composed of matters relating to the auditor’s independence, expertise andother aspects of executing the audit, with the aim of ensuring that the Accounting Auditor
properly carries out the audit. On the basis of that criteria, the Audit Committee takes into accountthe opinions of the management team, etc. and then makes decisions on proposals for the election,
dismissal and non-reappointment of the Accounting Auditor that are submitted to the Shareholders
Meeting.
The Audit Committee is to take necessary measures that include dismissing the Accounting
Auditor upon resolution of the committee, or otherwise making a decision on proposals to dismissor not reappoint the Accounting Auditor submitted to the Shareholders Meeting, in the event that
the Audit Committee deems it appropriate to dismiss or otherwise not reappoint the Accounting
Auditor either if there are grounds for dismissal as provided for in Article 340, paragraph (1) of
the Companies Act of Japan or if a situation arises whereby the audit of the Company has beensignificantly impeded, such as would be the case if the supervisory authorities were to issue anorder requiring suspension of auditing activities.
6) Assessment of audit firm by Audit Committee
The Audit Committee assesses the appropriateness and validity of audit activities by the
Accounting Auditor based on the Accounting Auditor Evaluation Standards established by the
Audit Committee.
(iv) Details of audit fee, etc.
1) Remuneration to certified public accountants, etc. for audits
Previous fiscal year
Category

Fees for audit
certification services(Millions of yen)

Current fiscal year

Fees for non-audit
services(Millions of yen)

Fees for audit
certification services(Millions of yen)

Fees for non-audit
services(Millions of yen)

Reporting company

119

13

136

3

Consolidated
subsidiaries

175

9

195

3

295

23

331

6

Total
Note:

Non-audit services provided to the Company and its consolidated subsidiaries include assistance in applying accounting
standards for revenue recognition.

2) Remuneration to companies which comprise the same network of certified public accountants, etc.
for audits (Ernst & Young).
Previous fiscal year
Category

Fees for audit
certification services(Millions of yen)

Current fiscal year

Fees for non-audit
services(Millions of yen)

Fees for audit
certification services(Millions of yen)

Fees for non-audit
services(Millions of yen)

Reporting company

–

217

–

332

Consolidated
subsidiaries

6

0

9

8

6

217

9

341

Total
Note:

The content of non-audit services for the Company is accounting system-related support services, etc.
The content of non-audit services at consolidated subsidiaries is taxation support, etc.

- 110 -

When outsourcing non-audit services, the Company confirms that the services to be provided will
not cause any impediments to the independence of the Accounting Auditor, etc. and obtains theprior approval of the Audit Committee.
3) Policy on determining audit fee
The fee is determined in view of the audit system, the number of days for audit, and other factors.
4) Rationale for Audit Committee’s agreement on remuneration of the Accounting Auditor, etc.
The Audit Committee furnished its agreement with respect to the amount of remuneration, etc.
provided to the Accounting Auditor, which has been deemed appropriate upon conducting areview regarding audit appropriateness with respect to the Accounting Auditor’s audit plan, its
execution of duties, the basis used for calculating remuneration estimates and other factors.
(4) Remuneration, etc. for officers(i) Matters regarding the policy on determination of the amounts of compensation paid to officers and thecalculation method thereof
The Company established and published an Officer Remuneration Policy (hereinafter the “Policy”) in
April 2017. On May 27, 2021, the Remuneration Committee with a majority of independent Outside
Directors embarked on review of the Officer Remuneration System in alignment with the Mediumterm Business Plan to ensure that officer remuneration functions as an incentive for achieving andpromoting sustainability management, and the Policy has been revised accordingly and is now in
effect.
<Basic policy for officer remuneration>
The Company’s officer remuneration system is operated under the following basic policy with aview to realizing and promoting sustainability management (pay for purpose). The same basic
philosophy is also established for Directors and Executive Officers of Daimaru Matsuzakaya
Department Stores Co. Ltd. and PARCO Co., Ltd. and Representative Directors of JFR Card Co.,
Ltd., J. FRONT CITY DEVELOPMENT Co., Ltd. and J. Front Design & Construction Co., Ltd.
(“eligible officers of major subsidiaries of the Group”), which are major subsidiaries of the Group.
1) Contribute to the sustainable growth and increase of the corporate value of the Group over the
medium to long term and also be compatible with its corporate culture2) Establish a remuneration system that facilitates the achievement of duties (mission) based on
management strategies of professional corporate managers.
3) Remuneration levels that can secure and retain human resources who have the desirable
managerial talent qualities required by the Company.
4) Increase shared awareness of profits with shareholders and awareness of shareholder-focusedmanagement.
5) Enhanced transparency and objectivity in the remuneration determining process.
<How to determine remuneration levels>
To make quick responses to changes in the external environment and the market environment, theCompany refers to objectively verifiable survey data from specialist external organizations andadopts the officer remuneration levels of companies in the same industry (department stores /retailers) and companies of a comparable size (selected based on market capitalization andconsolidated operating profit) in other industries as a benchmark and compares the remunerationlevels of its Executive Officers and Directors with the benchmark every year. The same treatment
is applied to the eligible officers of major subsidiaries of the Group.
<Composition of remuneration>
Executive Officer
Remuneration for Executive Officers shall comprise basic remuneration (monetary remuneration)in accordance with mission grade, bonuses (monetary remuneration) based on individual
evaluations conducted each business year, and performance shares linked to the consolidated
performance achievement rate, etc. provided in the Medium-term Business Plan as a stock-based- 111 -

remuneration system (trust-type stock-based remuneration). The performance indicators forbonuses and performance shares were selected, as shown in the table below, with an awarenessthat they function as sound incentives for the achievement of KPIs and sustainable growth in the
final year of the Medium-term Business Plan.
Type ofremuneration

Payment basis

Basicremuneration(fixed)Determined separately for each mission grade

Payment
methodComposition of remuneration(%)
President

Officers otherthan President

Monthly
payment in cash

38.5

45.4

Annual payment
in cash

23.0

27.3

38.5

27.3

Base amount by mission grade × Rate of change*1*1. The rate of change is based on a calculation of scores using thequantitative and qualitative evaluations below.
Evaluation
weights (%)

Details
Quantitativeevaluation*2<50%>

Fiscal year’s
financial
evaluation

Bonuses(variable)

Qualitativeevaluation*2<50%>

Consolidated
operating profit*3

50

Level ofachievement ofaction plan forachieving individual
mission.

30

Fiscal year’s Level of
non-financial achievement ofevaluation
action plan forachieving nonfinancial targets inline with materiality
issues20[Short term: 40%] Base amount by mission grade × Performance achievement
factor*4*4. Calculated based on the following measures of achievement*4
Annual payment
Evaluation
weights (%)

Details
Consolidated operating profit

in stocks*6100[Medium to long term: 60%] Base amount by mission grade × Performance
Performanceachievement factor*5
linked stock- *5. Calculated based on the following measures of achievement
based
Evaluation
Details
remuneration
At theweights (%)(variable)
expiration of theConsolidated operating profit
40
term of each
Financial indicators
Medium-term
ROE
40
<80%>
Business Plan in
GHG reductions (Scope 1 &stocks*6
10
2 emissions)Non-financial indicators
Goal achievement for ratio of<20%>
10
women in management
positions*2. For the eligible officers of major subsidiaries of the Group, the quantitative evaluation is 70% and the qualitative evaluation
30%, with the evaluation weights for the qualitative evaluation being 20% for the achievement of action plans to achieve
individual missions and 10% for the achievement of action plans to achieve non-financial goals in line with materiality.
*3. In principle, the target figures are based on consolidated financial indicators, but if an officer is in charge of a certain business,target figures for that business are used.
*4, 5. The performance-linked factor for performance-linked stock-based remuneration is calculated by the following calculation
method: The rate of change for the ratio of women in management positions is evaluated using the fiscal 2020 results as thereference. Actual results = Results - fiscal 2020 results, Target = 26% - fiscal 2020 results
Performance target achievement
200% or more
0% or more but less than 200%
Less than 0%

Performance-linked factor
2
Actual results ÷ Target
0*6. In principle, the equivalent of 50% of the Company’s shares to be issued is converted and paid as cash to provide funds forpayment of tax.

- 112 -

(Basic remuneration)
Basic remuneration is positioned as a fixed remuneration and is decided for each mission grade
based on the size (weight) of the responsibility borne by each officer. Payments are made every
month in the form of money.
(Bonuses)
Bonuses are paid as performance-linked remuneration to facilitate the achievement of goals set foreach fiscal year as milestones for the Medium-term Business Plan, and evaluation for the bonuses
is carried out using the fiscal year’s financial indicators serving as quantitative evaluations and thefiscal year’s non-financial indicators, which include qualitative evaluations. For the fiscal year’s
financial indicators, the Company evaluates the level of achievement against target figures set for
consolidated financial indicators announced after a resolution by the Board of Directors at thestart of each fiscal year. (Where the officer is in charge of a certain business, the target figures forthat business are used.) For the fiscal year’s non-financial indicators, the Company evaluates thelevel of achievement of the action plan for achieving each officer’s individual mission for eachfiscal year and the action plan for achieving the Company’s materiality. Taking the weighting of
the fiscal year’s financial and non-financial indicators as 50:50, two-fifths of the fiscal year’s nonfinancial indicators (20% of the total weight) is taken as the evaluation of the action plan forachieving the Company’s materiality issues. For the fiscal year’s financial indicators, theevaluation is made based on the achievement level of the fiscal year’s target using the forecast
figure of the consolidated operating profit announced at the start of the fiscal year (IFRS based).
Where the officer is in charge of a certain business, the target figures for operating profit for thatbusiness decided by the Company’s Board of Directors at the start of the fiscal year are used. The
Company selected the indicators referred to above because they are linked to the respective
indicators mentioned in the Medium-term Business Plan. However, since the target figures of theconsolidated financial indicators for FY2023, the final year of the Medium-term Business Plan,are lower than the initially planned target figures, the Compensation Committee has decided toapply a revised standard amount of bonus set for each mission grade, which is calculated by
dividing the target figures of the consolidated financial indicators (where the officer is in chargeof a certain business, the target figures for that business are used) to be announced at the
beginning of the current fiscal year after a resolution by the Board of Directors by the target
figures of the consolidated financial indicators for the relevant fiscal year in the Medium-term
Business Plan. For the fiscal year’s non-financial indicators, the President and Representative
Executive Officer, who is the evaluator, conducts an interview with each Executive Officer at thestart of the fiscal year to formulate an action plan based on each Executive Officer’s mission.
(Performance share (Performance-linked stock-based remuneration))
Performance-linked stock-based remuneration is issues of the Company’s shares linked to theconsolidated performance achievement rate, etc. provided in the Medium-term Business Plan.
This remuneration is designed to help the Group achieve sustainable growth and increase
corporate value over the medium to long term. When the shares are issued, in principle theequivalent of 50% of the Company’s shares to be issued is converted and paid as cash to provide
funds for payment of tax. Under this system, 60% of the entire amount of performance-linked
stock-based remuneration will be issued in a single issuance at the end of the Medium-term
Business Plan, with the remaining 40% to be issued each year in order to promote managementfrom the shareholders’ perspective. Of the portion issued at the end of the Medium-term Business
Plan, 80% is evaluated by financial indicators and is weighted so that 40% is evaluated based on
consolidated operating profit and 40% on ROE, this being the numerical targets of the Mediumterm Business Plan (IFRS based) announced following a resolution of the Board of Directors. The
remaining 20% is evaluated based on non-financial indicators. For non-financial targets, thesystem bases the evaluation on a weighting of 10% for GHG reductions (scope 1 & 2 emissions)and 10% for raising the ratio of women in management positions. Regarding the portion issued
each year, the level of achievement with respect to figures announced in the initial forecast (IFRS
based) following a resolution of the Board of Directors will be evaluated based only on
consolidated operating profit. The fluctuation range for remuneration in accordance with theperformance achievement rate is between 0% and 200%. However, since the target figures of theconsolidated financial indicators for FY2023, the final year of the Medium-term Business Plan,are lower than the initially planned target figures, the Compensation Committee has decided to- 113 -

apply a revised reference point set for each mission grade, which is calculated by dividing thetarget figures of the consolidated financial indicators (where the officer is in charge of a certain
business, the target figures for that business are used) to be announced at the beginning of thecurrent fiscal year after resolution by the Board of Directors by the target figures of theconsolidated financial indicators for the relevant fiscal year in the Medium-term Business Plan.
[Performance-linked stock-based remuneration targets]
KPI

Target figures for medium
to long term

Evaluation
weights

Profitability(i)Consolidated operating profit¥40,300 million (FY2023)

40%

Efficiency

(ii)

ROE

7% (at the end of FY2023)

40%

(iii)

GHG reductions (Scope 1 & 2 emissions)Non-financial(iv)

Raise the ratio of women in management
positions

40% reduction (comparedwith FY2017)26% (at the end of
FY2023)

10%
10%

Note:

KPI stands for Key Performance Indicator.

Note:

For the short term, only consolidated operating profit is used. The target figure used is theforecast figure (IFRS based) for the fiscal year announced in the Company’s financial
results reports each year in April. However, since the target figures of the consolidated
financial indicators for FY2023, the final year of the Medium-term Business Plan, arelower than the initially planned target figures, the Compensation Committee has decided
to apply a revised reference point set for each mission grade, which is calculated by
dividing the target figures of the consolidated financial indicators (where the officer is incharge of a certain business, the target figures for that business are used) to be announced
at the beginning of the relevant fiscal year after resolution by the Board of Directors by thetarget figures of the consolidated financial indicators for the relevant fiscal year in theMedium-term Business Plan.

Note:

In the medium to long term, we will use the 40.3 billion yen target established for FY2023
in the Medium-term Business Plan.

(Targets and results of indicators for performance-linked remuneration in the current fiscal year
(from March 2022 to February 2023))(Millions of yen)Type of remuneration
Bonuses

Financial
perspective
Short term

Performancelinked stockbased
remuneration

TargetResults

Consolidated operating profit

21,00019,059Consolidated operating profit

21,00019,059––Consolidated operating profit
ROE
Medium term

GHG reductions
Ratio of women in management
positions<Director>
Non-executive Directors’ remuneration shall consist only of fixed remuneration, which shall be (i)basic remuneration (monetary remuneration) in accordance with responsibilities and (ii) restricted
stock (non-performance-linked stock-based remuneration, which is trust-type stock-based
remuneration), which is not linked to performance as part of the stock-based remuneration system.
- 114 -

4) Remuneration determination process
To ensure the appropriateness of the level and amount of remuneration and the transparency ofdecision-making processes, decisions are made by deliberation and resolution of theRemuneration Committee comprising three independent Outside Directors and the chairperson of
the Board of Directors, who is an internal Director and does not execute business, and it is headedby an independent Outside Director. By having the same members on the Compensation
Committee and Nominating Committee and using the same evaluation sheet for both committees
regarding the activities in the areas of nomination and compensation for management, including
the eligible officers of major subsidiaries of the Group, the Compensation Committee determines
the policy regarding the determination of individual compensation for the Company and theeligible officers of major subsidiaries of the Group as well as the details of individualcompensation for the Company’s Directors and Executive Officers. The Committee alsodeliberates on and resolves internal regulations and other rules for remuneration of the Company’s
Directors and Executive Officers. The individual remuneration details for the eligible officers ofmajor subsidiaries of the Group are deliberated on by the nomination and remunerationcommittees (among the Group’s major subsidiaries, those committees are established at Daimaru
Matsuzakaya Department Stores Co. Ltd. and PARCO Co., Ltd. and whose members include
independent Outside Directors of the Company), which are established at the discretion of eachcompany, and are decided by each company’s Board of Directors after being resolved by eachcompany’s Annual Shareholders Meeting if such approval is required. It is planned that the
Remuneration Committee shall meet at least four times a year. Revisions of the officer
remuneration system will be undertaken based on Medium-term Business Plan periods. The
Company will revise the level of basic remuneration during the Medium-term Business Plan if it
is necessary to significantly revise basic remuneration due to extreme changes, etc. in the external
environment. In the current fiscal year, the Remuneration Committee held 12 meetings.
5) Forfeiture of remuneration, etc. (clawback/malus clauses)
With regard to bonuses and stock-based remuneration, in cases where the Board of Directors has
resolved that serious accounting errors or fraudulent adjustments after the settlement of accounts
have occurred, or in cases where serious infringements of the delegation agreement, etc. between
the Company and an officer have taken place, or in cases where a person has resigned for theirown reasons during their tenure against the wishes of the Company, the right to be paid/issued
remuneration may be forfeited, and the Company may demand the repayment of remuneration
already paid or issued.
Furthermore, if a significant change occurs in the management environment, and so forth, theRemuneration Committee may deliberate on reducing the amount of officer remuneration in cases
where it receives a submission from Executive Officers and Directors volunteering to reduce theirremuneration.
6) Stock acquisition and holding
Any shares of the Company acquired by Executive Officers as stock-based remuneration shallcontinue to be held by respective Executive Officers at least for three years from the grant date of
the shares (or at least for one year after they retire from the office of Executive Officer). The
purpose of this requirement is to deepen the common interest of shareholders and officers. In
particular, the purpose of granting shares of the Company to Executive Officers who areresponsible for business execution as remuneration through performance-linked stock-based
remuneration is to provide additional incentives to them to work for the improvement of thefinancial performance and corporate value of the Company from the medium- to long-term
perspective.
The eligible officers of major subsidiaries of the Group shall adopt the same policy for theiracquisition and holding of the Company’s shares.

- 115 -

(ii) Total amount of remuneration, etc. by each category of Directors and Executive Officers, total amount of
remuneration, etc. by type, and number of Directors and Executive Officers to be paid
Total amount of remuneration, etc. by type(Millions of yen)

Number ofrecipient
Directors (andother officers)(Persons)

Total amount of
remuneration,
etc.
(Millions of yen)Basicremuneration

Performancelinked bonuses

Performancelinked stockbased
remuneration

Nonperformancelinked stockbased
remuneration

192

151

–

0

40

8

[104]

[86]

[–]

[–]

[18]

[6]

Executive
Officer

483

213

122

147

–

15

Total

675

365

122

147

40

23

Category of
officer

Director[of which,OutsideDirector]

Notes:

1.
2.
3.

4.

5.

Other than the above, the total amount of remuneration, etc. received by Outside Directors from subsidiaries of theCompany in the current fiscal year is ¥9 million.
The remunerations, etc. paid to Directors who concurrently serve as Executive Officers as compensation for the
performance of duties during the term of the Executive Officers is shown in the Executive Officer row.
In the above table, the remuneration, etc. for Directors of ¥483 million includes ¥25 million (including nonperformance-linked stock-based remuneration) paid to four Directors who held the post between March 1 and May 26,
2022.
Beginning in the fiscal year ended February 28, 2018, to ensure steady execution of the Medium-term Business Planfor realizing the Group Vision, the Company has adopted the stock-based remuneration system using a trust for officers(a system of granting the Company’s shares to officers (in certain cases, the Company’s shares are converted into cash
within the trust, and cash in the amount equivalent to their conversion value is paid) in accordance with the officers’
rank and level of achievement of the Medium-term Business Plan, etc.) The stock-based remuneration in the above
chart is the total recorded as expenses for the period under review. It is divided into performance-linked stock-based
remuneration corresponding to the degree of achievement of single fiscal year results and the degree of achievement of
the Medium-Term Business Plan targets, as well as non-performance-linked stock-based remuneration for Directors
who do not execute business.
Figures in the “performance-linked bonuses” and “performance-linked stock-based remuneration” columns represent
amounts recognized as provisions (expenses) (standard amounts) before adjustment for the results of performance
evaluations for the fiscal year ended February 2023. The actual amounts to be paid and amounts to be paid on an
individual basis will be determined by a meeting of the Remuneration Committee scheduled in or after April 2023.

- 116 -

(iii) Total amount of consolidated remuneration, etc. per Director and Executive Officer
Total amount ofconsolidated
Category of officer
remuneration, etc.
(Millions of yen)

Name

Total amount of remuneration, etc. by type(Millions of yen)
Category ofcompany

PerformanceBasic
Performance- linked stockremuneration linked bonuses
based
remuneration

Nonperformancelinked stockbased
remuneration

YAMAMOTO
Ryoichi59

Director

Reporting company

43

–

0

16

HAMADA Kazuko

29

Director

Reporting company

21

–

–

8

YAGO Natsunosuke

17

Director (Note 1) Reporting company

14

–

–

3

HAKODA Junya

21

Director (Note 1) Reporting company

18

–

–

3

UCHIDA Akira

20

Director (Note 1) Reporting company

17

–

–

3

SATO Rieko

17

Director (Note 1) Reporting company

14

–

–

3

SEKI Tadayuki

19

Director (Note 1) Reporting company

16

–

–

3

KOIDE Hiroko

15

Director (Note 1) Reporting company

12

–

–

3

111

Executive Officer Reporting company

46

22

43

–

45

Executive Officer Reporting company

23

11

11

–

ONO Keiichi

42

Executive Officer Reporting company

20

11

11

–

HAYASHI Naotaka

37

Executive Officer Reporting company

18

9

10

–

38

Executive Officer Reporting company

18

10

10

–

40

Executive Officer Reporting company

20

9

11

–

OCHIAI Isao–

Executive Officer Reporting company

–

–

–

–

YAMAZAKI Shiro

27

Executive Officer Reporting company

13

7

7

–

NOGUCHI Hideki

26

Executive Officer Reporting company

13

6

7

–

UMEBAYASHI
Akira

26

Executive Officer Reporting company

13

6

7

–

YOSHIMOTO
Tatsuya
WAKABAYASHI
HayatoNAKAYAMA
Takashi
MATSUDA
Hirokazu

Notes:

1.
2.
3.
4.

Independent Outside Director
Lists only those who were officers as of the Shareholders Meeting of May 25, 2023
Directors who concurrently serve as officers are listed in the “Executive Officer” column.
In the case of Executive Officers who serve concurrently at operating companies, remuneration paid by each company
is included.

- 117 -

(5) Ownership of shares(i) Classification criteria and approaches for investment shares
The Company and the Group have defined the classification of investment shares held for the purposeof pure investment and investment shares held for purposes other than pure investment (crossshareholdings) as follows.
(Investment shares held for the purpose of pure investment)
Shares held exclusively for the purpose of profiting through fluctuations in share prices or from thereceipt of dividends(Investment shares held for any purpose other than pure investment)
Shares held because the Group judged that they are necessary for the promotion of the Group’sbusiness strategy and that the holding of such shares will contribute to increasing corporate value inthe medium to long term(ii) Ownership of shares in the Group
1) Investment shares held for any purpose other than pure investment
A. Holding policy and the method to verify the reasonableness of the holding, as well as detailsof such verification by the Board of Directors concerning the appropriateness of the holdingof the respective stocks
The Group has prescribed the holding policy and method for the validation of the rationale forcross-shareholdings, etc. in the Corporate Governance Policy as follows, and the Board of
Directors decides whether or not the holding is appropriate.
(Holding policy)
 Shares will not be newly acquired in principle. However, this does not apply to shares where it
has been recognized that they are necessary for the promotion of the Group’s business strategy
and that the holding of such shares will contribute to increasing corporate value in the medium
to long term through the validation of the rationale for holding them.
 If listed shares (including deemed shareholdings) that are already held are judged to “not be
rational” based on the results of the validation of the rationale for holding them, which occurs
every year, the Group will negotiate with corporate customers and business partners and reducethem as appropriate upon receiving consent regarding the sale method, period, etc.
 For unlisted shares, since FY2021, we have confirmed the suitability of holding all shares inthe same way as listed shares, from both qualitative and quantitative aspects, and strengthened
our initiatives towards reducing holdings.
(Method for validation of rationale)
The Group periodically validates the rationale for holding individual issues from the following
perspective.
 Qualitative perspective
The perspective relating to business strategies, such as maintaining harmonious and favorable
business relationships with corporate customers and business partners, and securing supply
chains Quantitative perspective
The perspective relating to whether profitability by holding shares, including related trading
profits and dividends, exceeds capital costs, etc.
(Details of verification by the Board of Directors concerning the appropriateness of the holding of
the respective stocks)
 The results of the above validation that takes place based on the holding policy, the judgment
regarding the continuation or disposal of held shares, and the reduction plan are discussed at
the meeting of the Board of Directors held every August, and the Group confirms the reduction
result at the meeting of the Board of Directors held in the following March.
- 118 -

As a result, the number of the Group’s cross shareholdings as of February 28, 2023, haddecreased by 15 stocks compared with the previous fiscal year-end to 148 stocks (of which thenumber of stocks of listed companies excluding deemed holdings was 16).
□

Process for validation of rationale Validation is conducted with a focus on continued qualitative rationality in accordance with the
purpose at the time of acquisition.

□

Schedule for validation of rationale, negotiation and reduction*

Implementation
periodContent of
implementation

X

First half

AugustX + 1 year
Secondhalf

MarchFirst half

Operating unit

Validation of rationale
Development of reduction
plan

Board ofDirectors

Negotiation/reduction

Decision on
Discussion continuation/
reduction
Confirmation: Efforts in : Year X (first year),

Negotiation/
reduction result- 119 -

August: X + 1 year,: X + 2 years

X + 2 years
Secondhalf

MarchFirst half

AugustSecondhalf

B. Number of issues and consolidated statement of financial position amount (IFRS)(Shares not listed)
Previous fiscal
year
Number of issues(security titles)

Increase

Decrease

1

(7)

135

Consolidated
statement of financial
position amount(Millions of yen)

20,834

150(21)

Increase or
decrease inmarket value

Current fiscal
year–

Reason for increasein number of shares

129

22,605Acquisition aiming toacquire know-how for
new businesses

Current fiscal
year

Reason for increasein number of shares

1,642* The acquisition was made by JFR MIRAI CREATORS Fund, a corporate venture capital fund.

(Shares other than those not listed)
Previous fiscal
year
Number of issues(security titles)*Consolidated
statement of financial
position amount(Millions of yen)

Increase or
decrease inmarket value

Increase

Decrease

21

–

(5)

–

16

3,334

–

(393)

(25)

2,916

Increase

Decrease

Increase or
decrease inmarket value

7

–

(4)

–

3

9,006

–

(7,785)

8

1,229

–

(Deemed shareholdings)
Previous fiscal
year
Number of issues(security titles)*Consolidated
statement of financial
position amount(Millions of yen)

Current fiscal
year

Reason for increasein number of shares–* Of the issues, one issue is included in both shares other than those not listed and deemed shareholdings.

The ratio of the amount recorded in the consolidated statement of financial position of crossshareholdings to the equity attributable to owners of parent is 7.42%.

- 120 -

□

Changes in the number of cross-shareholdings (listed shares excluding deemed shareholdings)(Billions of yen)

(Issues)Amount recorded on consolidated
statement of financial position (Billions ofyen)
Number of issues held (Issues)

10.0
41

50

8.0

40

6.0

26

30

23
21

8.6
4.0

20

16
4.4
4.0

2.0

3.3

10

2.9

0.0

0
FY2018FY2019FY2020

FY2021

FY2022(iii) Ownership of shares in the reporting company (Japanese GAAP)
As for the reporting company, the ownership is as follows.
1) Investment shares held for any purpose other than pure investment
A. Number of issues and carrying amount(Shares not listed)
Previous fiscal
year

Increase

Decrease

Year-end
valuation

Current fiscal
year

Number of issues(security titles)

7

–

(1)

–

6

Carrying amount(Millions of yen)

1,636

–

(0)

104

1,740

Increase

Decrease

Increase or
decrease inmarket value

Reason for increasein number of shares–(Shares other than those not listed)
Previous fiscal
year

Current fiscal
year

Number of issues(security titles)

1

–

–

–

1

Carrying amount(Millions of yen)

24

–

–

(3)

21

Reason for increasein number of shares–

B. Information on the number of shares and carrying amount by issue of specified investment
shares and shares subject to deemed shareholding(Specified investment shares)
The Company validates the rationale for all cross-shareholdings based on the qualitative
perspective, which relates to business strategies, such as maintaining harmonious and favorable
business relationships with corporate customers and business partners and securing supply chains,
as well as the quantitative perspective, which relates to whether profitability by holding shares,
including related trading profits and dividends, exceeds capital costs, etc.
The quantitative effects of shareholdings have not been provided from the viewpoint of trade
secrets, etc.
- 121 -

Issue nameCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)

Carrying amount(Millions of yen)

Carrying amount(Millions of yen)

Purpose of holding

Quantitative effects ofshareholding

Reason forincrease in
number ofsharesHolding of theCompany’s
shares–None(Quantitative standard)・ Not met

12,000(Comprehensive
judgment)

12,000(Purpose of holding)・ Made judgment tocontinue to holdtaking into
consideration the factthat this company is
・ Promotion of arts andindispensable forculturedeveloping art andculture in the area inwhich stores of
Daimaru Matsuzakaya
Department Storesexist.
・ Contribution tocommunity
development

Misonoza Theatrical
Corporation

21

24(iv) Ownership of shares in Daimaru Matsuzakaya Department Stores Co. Ltd. (Japanese GAAP)
As for Daimaru Matsuzakaya Department Stores Co. Ltd. of which the carrying amount of investment
shares on the balance sheet is the largest among the Company and consolidated subsidiaries (company
with the largest holdings), the ownership of shares is as follows.
1) Investment shares held for any purpose other than pure investment
A. Number of issues and carrying amount(Shares not listed)
Previous fiscal
year

Increase

Decrease

Year-end
valuation

Current fiscal
year

Number of issues(security titles)

94

–

(3)

–

91

Carrying amount(Millions of yen)

2,672

–

(17)

(27)

2,628

Increase

Decrease

Increase or
decrease inmarket value

Reason for increasein number of shares–(Shares other than those not listed)
Previous fiscal
year

Current fiscal
year

Number of issues(security titles)*

16

–

(5)

–

11

Carrying amount(Millions of yen)

3,033

–

(393)

(66)

2,574

Increase

Decrease

Increase or
decrease inmarket value

Reason for increasein number of shares–(Deemed shareholdings)
Previous fiscal
year

Current fiscal
year

Number of issues(security titles)*

7

–

(4)

–

3

Carrying amount(Millions of yen)

9,006

–

(7,785)8

1,229

Reason for increasein number of shares–* Of the issues, one issue is included in both shares other than those not listed and deemed shareholdings.

- 122 -

B. Information on the number of shares and carrying amount by issue of specified investment
shares and shares subject to deemed shareholding(Specified investment shares)
The Group validates the rationale for all cross-shareholdings based on the qualitative perspective,
which relates to business strategies, such as maintaining harmonious and favorable business
relationships with corporate customers and business partners and securing supply chains, as wellas the quantitative perspective, which relates to whether profitability by holding shares, including
related trading profits and dividends, exceeds capital costs, etc.
The quantitative effects of shareholdings have not been provided from the viewpoint of trade
secrets, etc.
Of the issues held at the end of the current fiscal year, it is agreed that four will be sold in their
entirety.
Current fiscal Previous fiscal
year
year

Issue name

Number ofshares(Shares)Number ofshares(Shares)

Carrying
amountCarrying
amount(Millions ofyen)(Millions ofyen)

310,400

310,400(Segment)(Quantitative standard)222,893

222,893

Stable merchandise sales

Maintaining goodbusiness relationships

Made judgment tocontinue to hold taking
into consideration the factthat this is a corecompany in the area inwhich stores of Daimaru
Matsuzakaya Department
Stores exist and therecognition that it hascontinuously contributed
to a stable level of profit.

(Segment)(Quantitative standard)

Department store(Comprehensive judgment)Stable merchandise sales

Maintaining goodbusiness relationships- 123 -

–

Yes

–

Yes

Not met(Purpose of holding)685

Reason for Holding ofincrease inthenumber of Company’s
sharesshares

Not met(Comprehensive judgment)654

Toho Gas Co., Ltd.

569

Department store(Purpose of holding)

OSAKA GAS CO., LTD.

686

Quantitative effects ofshareholding

Purpose of holding

Made judgment tocontinue to hold taking
into consideration the factthat this is a corecompany in the area inwhich stores of Daimaru
Matsuzakaya Department
Stores exist and therecognition that it hascontinuously contributed
to a stable level of profit.

Current fiscal Previous fiscal
year
year

Issue name

Number ofshares(Shares)Number ofshares(Shares)

Carrying
amountCarrying
amount(Millions ofyen)(Millions ofyen)

Purpose of holding(Segment)
200,000

200,000 

Department store(Purpose of holding)Misonoza Theatrical
Corporation
360

568,205

Contribution tocommunity development

Promotion of arts andculture403

568,205(Comprehensive judgment)

Advertisement including
public relations activities

Maintaining goodbusiness relationships

82,200 (Segment)

173

Department store

Made judgment tocontinue to hold taking
into consideration the factthat this is a corecompany in the area inwhich stores of Daimaru
Matsuzakaya Department
Stores exist and therecognition that it hascontinuously contributed
to a stable level of profit.



Stable merchandise sales

Maintaining goodbusiness relationships

Made judgment tocontinue to hold taking
into consideration therecognition that it hascontinuously contributed
to a stable level of profit(Segment)(Quantitative standard)

144,803 (Purpose of holding)Stable merchandise sales

Maintaining goodbusiness relationships

166- 124 -

–

Yes

–

None

–

None

Not met(Comprehensive judgment)

Department store

None(Quantitative standard)(Purpose of holding)207–

Not met

82,200

Meiko Trans Co., Ltd.

Made judgment tocontinue to hold taking
into consideration the factthat this company is
indispensable fordeveloping art and culturein the area in which storesof Daimaru Matsuzakaya
Department Stores exist.

(Purpose of holding)318

144,803





305

227

Not met(Comprehensive judgment)



LTD.

ANA HOLDINGS INC.



(Quantitative standard)

Department store

Reason for Holding ofincrease inthenumber of Company’s
sharesshares(Quantitative standard)(Segment)

CHUBU-NIPPONBROADCASTING CO.,

Quantitative effects ofshareholding

Not met(Comprehensive judgment)Made judgment tocontinue to hold taking
into consideration the factthat this is a corecompany in the area inwhich stores of Daimaru
Matsuzakaya Department
Stores exist.

Current fiscal Previous fiscal
year
year

Issue name

Number ofshares(Shares)Number ofshares(Shares)

Carrying
amountCarrying
amount(Millions ofyen)(Millions ofyen)

Purpose of holding(Segment)
86,337

171,337 

Hakuyosha Co., Ltd.*1
138

6,600
OKAYA & CO., LTD.

67

Department store

Not met

Maintaining goodbusiness relationships

Made judgment tocontinue to hold taking
into consideration the factthat it is indispensable formaintaining customer
service(Segment)(Quantitative standard)

Department store(Comprehensive judgment)Stable merchandise sales

Maintaining goodbusiness relationships

62

21,750 

Department store

–

Yes

–

None

–

None

–

Yes

–

None

Not met(Purpose of holding)(Segment)
21,750(Comprehensive judgment)

Provision of services tocustomers

Reason for Holding ofincrease inthenumber of Company’s
sharesshares(Quantitative standard)(Purpose of holding)

203

6,600

Quantitative effects ofshareholding

Made judgment tocontinue to hold taking
into consideration therecognition that it hascontinuously contributed
to a stable level of profit(Quantitative standard)Met(Purpose of holding)

THE ROYAL HOTEL,LIMITED

Stable merchandise sales

Maintaining goodbusiness relationships

30

24

1,155

1,155 (Segment)
Department store(Quantitative standard)Met(Purpose of holding)Rinnai Corporation


11

10 

5,000

5,000 Stable merchandise sales
Maintaining goodbusiness relationships(Segment)

Yamaguchi Financial Group,
Inc.
4

3

Department store(Quantitative standard)

Not met(Purpose of holding)(Comprehensive judgment)Stable merchandise sales

Maintaining goodbusiness relationships- 125 -

Made judgment tocontinue to hold taking
into consideration the factthat this is a corecompany in the area inwhich stores of Daimaru
Matsuzakaya Department
Stores exist.

Current fiscal Previous fiscal
year
year

Issue name

Number ofshares(Shares)Number ofshares(Shares)

Carrying
amountCarrying
amount(Millions ofyen)(Millions ofyen)–

42,500Toppan Printing Co., Ltd.*2

YOMEISHU SEIZO CO.,
LTD.

–

95

–

52,000

*2

–

92

–

79,200WASHINGTON HOTELCORPORATION*2
–

52

–

24,000Sangetsu Corporation*2––

Purpose of holding

–

–

–

None

–

–

–

Yes

–

–

–

None

–

–

–

None

–

–

–

None

38

26,620Hayashikane Sangyo Co.,
Ltd.*2–

Reason for Holding ofincrease inthenumber of Company’s
sharessharesQuantitative effects ofshareholding

13*1. Partially sold in the current fiscal year upon reaching an agreement*2. Fully sold in the current fiscal year upon reaching an agreement(Deemed shareholdings)
Shares of which the holding is considered by the Company to contribute to increasing corporate
value in the medium to long term have been added to the retirement benefit trust for the purposeof achieving sound pension financing in Daimaru Matsuzakaya Department Stores Co. Ltd., asubsidiary of the Company.
The right of instructions for the exercise of voting rights is possessed by Daimaru Matsuzakaya
Department Stores Co. Ltd.
- 126 -

Furthermore, the quantitative effects of shareholdings have not been provided from the viewpointof trade secrets, etc.
Of the issues held at the end of the current fiscal year, three have been agreed to be sold in their
entirety.

Issue nameCurrent fiscal Previous fiscal
year
year
Number of
Number ofsharesshares(Shares)(Shares)
Carrying
Carrying
amountamount(Millions of (Millions of
yen)
yen)

Reason for Holding ofincrease inthenumber of Company’s
sharesshares(Quantitative standard)(Segment)
300,000

Quantitative effects ofshareholding

Purpose of holding Department store
300,000 (Purpose of holding)

Not met(Comprehensive judgment)Stable merchandise sales

Maintaining goodcontinue to hold taking

business relationships

into consideration theMade judgment tofact that this is a core

OSAKA GAS CO., LTD.

company in the area in

–

Yes

–

Yes

–

None

–

None

which stores of Daimaru
663

632

Matsuzakaya Department
Stores exist and therecognition that it hascontinuously contributed
to a stable level of profit.
(Segment)

135,000

270,000(Quantitative standard)

Department store(Purpose of holding)
YAMATO HOLDINGS CO.,LTD.

Not met

Securing supply chain

Maintaining goodcontinue to hold taking

business relationships

into consideration the

*1

310



(Comprehensive judgment)Made judgment tofact that it is606

indispensable formaintaining customer
service(Segment)
102,700

102,700(Quantitative standard)

Department store(Purpose of holding)OUG Holdings Inc.

255

284

Stable merchandiseNot met(Comprehensive judgment)Made judgment topurchasing

continue to hold taking

Maintaining good

into consideration thebusiness relationships

recognition that it hascontinuously contributed
to a stable level of profit–

4,913,000

Mitsubishi UFJ Financial–

Group, Inc.*2
–

3,498

- 127 -–

Issue nameCurrent fiscal Previous fiscal
year
year
Number of
Number ofsharesshares(Shares)(Shares)
Carrying
Carrying
amountamount(Millions of (Millions of
yen)
yen)

–

Holdings, Inc.*2

Group, Inc.*2

–

2,755

–

280,000

–

1,153

–

33,000

The Nanto Bank, Ltd.
–

Quantitative effects ofshareholding

–

–

–

–

–

–

–

–

–

670,500

Sumitomo Mitsui Trust

Sumitomo Mitsui Financial

Reason for Holding ofincrease inthenumber of Company’s
sharessharesPurpose of holding

None

Yes
*3

None

70

*1. Partially sold in the current fiscal year upon reaching an agreement*2. Fully sold in the current fiscal year upon reaching an agreement*3. Held by Sumitomo Mitsui Financial Group, Inc.’s subsidiaries Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui
Card Company, Limited- 128 -

V. Financial Information
1. Basis of preparation of the consolidated and non-consolidated financial statements(1) Pursuant to the provisions of Article 93 of the “Ordinance on Terminology, Forms, and Preparation
Methods of Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of 1976;
hereinafter referred to as the “Ordinance on Consolidated Financial Statements”), the consolidated
financial statements of the Company have been prepared in compliance with International Financial
Reporting Standards (“IFRS”).
(2) The non-consolidated financial statements of the Company have been prepared in accordance with the“Ordinance on Terminology, Forms, and Preparation Methods of Financial Statements” (Ordinance of the
Ministry of Finance No. 59 of 1963; hereinafter referred to as the “Ordinance on Financial Statements”).
The Company meets the criteria of a company allowed to file specified financial statements under the
Financial Instruments and Exchange Act and prepares non-consolidated financial statements pursuant to
the provisions of Article 127 of the Ordinance on Financial Statements.
(3) The amounts presented in this report are rounded down to the nearest million yen.
2. Note on independent audit
The consolidated financial statements for the fiscal year (from March 1, 2022 to February 28, 2023) and thenon-consolidated financial statements for the fiscal year (from March 1, 2022 to February 28, 2023) wereaudited by Ernst & Young ShinNihon LLC in accordance with Article 193-2, paragraph (1) of the Financial
Instruments and Exchange Act.
3. Special efforts to ensure the appropriateness of the consolidated financial statements, etc. and development ofa system for appropriate preparation of the consolidated financial statements, etc. in accordance with IFRSThe Company makes special efforts to ensure the appropriateness of the consolidated financial statements, etc.
and develops a system for appropriate preparation of the consolidated financial statements, etc. in accordancewith IFRS. The details of such are as follows:(1) To develop a system for ensuring correct understanding of accounting standards, etc. and appropriate
responses to any changes in accounting standards, etc., the Company has joined the Financial AccountingStandards Foundation and attends seminars, etc. held by the foundation and others.
(2) For the adoption of IFRS, the Company keeps up with the latest accounting standards by obtaining press
releases and standards published by the International Accounting Standards Board as needed. To prepare
appropriate consolidated financial statements under IFRS, the Company has developed accounting
policies of the Group in compliance with IFRS and performs accounting procedures based on thesepolicies.

- 129 -

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements
1) Consolidated Statement of Financial Position
Notes

As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

AssetsCurrent assets
Cash and cash equivalents

693,27839,874

Trade and other receivables
Other financial assets

7,27
9,36

112,262
11,929129,121
10,836Inventories
Other current assets

8
10

12,4594,954

16,932
5,094

234,884

201,860

Total current assets
Non-current assets
Property, plant and equipment

11

480,380

469,401

Right-of-use assets
Goodwill

13
12

140,470523

119,501
995

Investment property
Intangible assets

14
12

189,688
7,289

187,247
7,797

Investments accounted for using equity method

16
9,20,

38,761

41,402

79,97779,711

8,209

3,137

Other financial assets
Deferred tax assets

36
18

Other non-current assets

10

Total non-current assets
Total assets- 130 -

12,721

9,897

958,022919,092

1,192,907

1,120,953

Notes

As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

Liabilities and equity
Liabilities
Current liabilities
Bonds and borrowings

19,20

108,152

63,530Trade and other payables
Lease liabilities

21
13,19

116,107
28,554

133,835
28,411Other financial liabilities

13,19,
20,36

29,91529,975

4,485
954

1,527
2,397

Income tax payables
Provisions

23

Other current liabilities

24,27

Total current liabilities

59,24358,276

347,413

317,953

Non-current liabilities
Bonds and borrowings
Lease liabilities

19,20
13,19

209,562
155,839

185,593
136,414

Other financial liabilities

13,19,
20,36

36,74135,290Retirement benefit liabilities
Provisions

22
23

19,416
9,553

16,754
8,699

Deferred tax liabilities
Other non-current liabilities

18
24

51,697563

48,366469

483,373431,589

830,787749,542

Total non-current liabilities
Total liabilities
EquityCapitalShare premium

25
25

31,974
188,894

31,974
189,068

Treasury shares
Other components of equity

25
25(14,780)
9,574(14,466)
10,654Retained earnings

25

134,705

142,153

350,368

359,385

Total equity attributable to owners of parent
Non-controlling interests

11,751

12,025

Total equity

362,120

371,410

1,192,907

1,120,953

Total liabilities and equity- 131 -

2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
Notes

Sales revenue
Cost of sales

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Millions of yen

Millions of yen

27
29

Gross profit

331,484(183,642)

359,679(190,142)

147,842

169,536

Selling, general and administrative expense

30(136,123)(144,682)

Other operating income
Other operating expenses

28
31

11,068(13,406)

4,540(10,336)

9,380

19,0591,335(5,890)871(5,218)

Share of profit (loss) of investments accounted forusing equity method

1,364

2,161

Profit before tax

6,190

16,873Operating profit
Finance income
Finance costs

Income tax expense

32
32

18

(2,225)(2,611)

Profit3,964

14,262

Profit attributable to:
Owners of parent

4,321

14,237

Non-controlling interests

(356)

25

Profit3,964

14,262

16.50
16.50

54.32
54.30

Earnings per share
Basic earnings per share (Yen)
Diluted earnings per share (Yen)34
34- 132 -

Consolidated Statement of Comprehensive Income
Notes

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Millions of yen

Millions of yen

Profit3,964

14,262

33,36

(52)

823

33

1,632

1,176

33

136

(7)

1,716

1,992

33

(13)

(1)

33

151

144

33

(0)

4

136

147

Other comprehensive income
Items that will not be reclassified to profit or loss
Financial assets measured at fair value throughother comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income ofentities accounted for using equity method
Total items that will not be reclassified to profit
or loss
Items that may be reclassified to profit or loss
Cash flow hedges
Exchange differences on translation of foreign
operations
Share of other comprehensive income ofentities accounted for using equity method
Total items that may be reclassified to profit orloss
Other comprehensive income, net of tax

1,853

2,140

5,818

16,402

Owners of parent
Non-controlling interests

6,173
(355)

16,38418

Comprehensive income

5,818

16,402Comprehensive income
Comprehensive income attributable to:- 133 -

3) Consolidated Statement of Changes in Equity
Equity attributable to owners of parent
Other components of equity
Notes

Balance at March 1, 2021

CapitalShare premium

Treasury shares

Millions of yen

Millions of yen

Millions of yen

Exchangedifferences ontranslation offoreign
operations

Cash flow
hedgesFinancial assets
measured at fairvalue throughothercomprehensive
incomeMillions of yen

Millions of yen

Millions of yen

31,974

188,542(14,830)

Profit

–

–

–

–

–

–

Other comprehensive income

–

–

–

150

(13)

(53)

–

–

–

150

(13)

(53)

Total comprehensive
income

(89)

11

9,656

Purchase of treasury shares

25

–

–

(32)

–

–

–

Disposal of treasury shares

25

–

(0)

0

–

–

–

Dividends

26

–

–

–

–

–

–

–

351

81

–

–

–

–

–

–

–

–

(86)

–

351

49

–

–

(86)

31,974

188,894(14,780)

60

(1)

9,516

Profit

–

–

–

–

–

–

Other comprehensive income

–

–

–

148

(1)

822

–

–

–

148

(1)

822

Share-based paymenttransactions
Transfer from othercomponents of equity toretained earnings
Total transactions withownersBalance at February 28, 2022

Total comprehensive
incomePurchase of treasury shares

25

–

–

(8)

–

–

–

Disposal of treasury shares

25

–

(0)

1

–

–

–

Dividends

26

–

–

–

–

–

–

–

–

–

–

–

–

–

175

322

–

–

–

–

–

–

–

–

109

–

174

314

–

–

109

31,974

189,068(14,466)209(2)10,448

Obtaining of control ofsubsidiaries
Share-based paymenttransactions
Transfer from othercomponents of equity toretained earnings
Total transactions withownersBalance at February 28, 2023

- 134 -

Equity attributable to owners of parent
Notes

Balance at March 1, 2021

Other components of equity

Other comprehensive income
Total comprehensive
incomeTotal

Millions of yen

Millions of yen

Millions of yen

352,171

12,171

364,343

Total

Millions of yen

9,578

136,906

Remeasurements of defined
benefit plans

Total

Millions of yen

Millions of yen–

ProfitNon-controllinginterests

Retainedearnings

–

–

4,321

4,321

(356)

3,964

1,769

1,852

–

1,852

1

1,853

1,769

1,852

4,321

6,173

(355)

5,818

–

(32)

–

(32)

Purchase of treasury shares

25

–

–

Disposal of treasury shares

25

–

–

–

0

–

0

Dividends

26

–

–

(8,377)(8,377)(64)(8,442)

–

–

–

433

–

433

(1,769)(1,855)

1,855

–

–

–

(1,769)(1,855)(6,522)(7,976)(64)(8,041)–

9,574

134,705

350,368

11,751

362,120––

14,237

14,23725

14,262

1,177

2,147

–

2,147

(6)

2,140

1,177

2,147

14,237

16,38418

16,402

Share-based paymenttransactions
Transfer from othercomponents of equity toretained earnings
Total transactions withownersBalance at February 28, 2022
ProfitOther comprehensive income
Total comprehensive
incomePurchase of treasury shares

25

–

–

–

(8)

–

(8)

Disposal of treasury shares

25

–

–

–

0

–

0

Dividends

26

–

–

(7,857)(7,857)(64)(7,921)

–

–

–

–

319

319

–

–

–

497

–

497

(1,177)(1,067)

1,067

–

–

–

(1,177)(1,067)(6,789)(7,368)255(7,113)–

10,654142,153359,385

12,025

371,410

Obtaining of control ofsubsidiaries
Share-based paymenttransactions
Transfer from othercomponents of equity toretained earnings
Total transactions withownersBalance at February 28, 2023

- 135 -

4) Consolidated Statement of Cash Flows
Notes

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Millions of yen

Millions of yen

Cash flows from (used in) operating activities
Profit before tax

6,190

16,87349,62949,1071,136(1,335)

5,900
(871)

5,890

5,218

(1,364)(2,161)

Loss (gain) on sales of non-current assets(2,666)(771)

Loss on disposals of non-current assets

1,726

2,102

Gain on sales of shares of subsidiaries(3,951)–

Loss on sales of shares of subsidiaries

1,818

–

Decrease (increase) in inventories

5,904(2,185)Decrease (increase) in trade and other receivables(536)(16,898)

Increase (decrease) in trade and other payables(4,159)17,599

Increase (decrease) in retirement benefit liabilities(365)(2,661)

Decrease (increase) in retirement benefit assets

(407)

3,360

Other, net

228

1,944

Depreciation and amortization expense
Impairment loss
Finance income

15

Finance costs
Share of loss (profit) of investments accounted forusing equity method

Subtotal

57,73776,558Interest received

130

123

Dividends received

208

170

Interest paid
Income taxes paid

(5,808)(4,548)(5,172)(8,282)

Income taxes refund

2,147

2,083

Net cash flows from (used in) operating activities

49,86665,480Purchase of property, plant and equipment(5,820)(8,641)

Proceeds from sales of property, plant andequipment

492

190

(2,601)(3,043)

Cash flows from (used in) investing activities

Purchase of investment property
Proceeds from sales of investment property

2,887

1,599

Purchase of investment securities(2,760)(1,946)

Proceeds from sales of investment securities

2,503

2,072

Purchase of shares of subsidiaries resulting inchange in scope of consolidation

–

(207)

Proceeds from sales of shares of subsidiaries that
result in change in scope of consolidation

3,479

–

Other, net(3,469)(3,396)

Net cash flows from (used in) investing activities(5,289)(13,371)- 136 -

NotesFiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Cash flows from (used in) financing activities
Net increase (decrease) in current borrowings

19–(24,000)

Net increase (decrease) in commercial papers

19(54,998)(15,002)

Proceeds from non-current borrowings

19

–

5,500

Repayments of non-current borrowings

19(17,150)(15,150)

Proceeds from issuance of bonds

19,20

29,867–

Redemption of bonds

19,20

–

(20,000)

Repayments of lease liabilities

13,19(29,674)(29,138)

(32)

(9)

(8,348)(7,832)

(64)

(64)

Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate changes on cash and cash

6

equivalents
Cash and cash equivalents at end of period6- 137 -

82

(80,392)(105,694)(35,815)(53,585)

128,925

93,278168

181

93,27839,874

Notes to Consolidated Financial Statements
1. Reporting Entity
J. FRONT RETAILING Co., Ltd. (the “Company”) is the ultimate parent of the Company group (the “Group”)
and a company located in Japan. The registered address of its head office is Chuo-ku, Tokyo.
The Company’s consolidated financial statements for the fiscal year ended February 28, 2023 comprise theCompany and its subsidiaries’ interests in the Group’s associates.
For the Group’s major business activities, please refer to “5. Segment Information.”
2. Basis of Preparation(1) Compliance with IFRSThe consolidated financial statements of the Group have been prepared in compliance with International
Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board.
Pursuant to the provisions of Article 93 of the “Ordinance on Terminology, Forms, and Preparation
Methods of Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of 1976),
the consolidated financial statements of the Group have been prepared in compliance with IFRS since theCompany qualifies as a “Specified Company Complying with Designated International AccountingStandards” prescribed in Article 1-2 of the Ordinance.
(2) Basis of measurement
The Group’s consolidated financial statements have been prepared on a historical cost basis except for
certain financial instruments, etc. measured at fair value as stated in “3. Significant Accounting Policies.”(3) Functional currency and presentation currency
The Group’s consolidated financial statements are presented in Japanese yen, which is the Company’sfunctional currency, and figures are rounded down to the nearest million yen.
3. Significant Accounting Policies
Significant accounting policies are applied consistently for all periods presented in these consolidated financial
statements, except as otherwise provided.
(1) Basis of consolidation
1) Subsidiaries
Subsidiaries are entities controlled by the Group. Control means the power to govern the financial andoperating policies of the entity so as to obtain benefits from its business activities.
The financial statements of subsidiaries are included in the consolidated financial statements of theGroup from the date when the Group gains control until the date when it ceases to control thesubsidiary.
In cases where the accounting policies applied by a subsidiary are different from those applied by theGroup, adjustments are made to the subsidiary’s financial statements, if necessary. All intergroupbalances, transactions and unrealized gains or losses arising from transactions within the Group are
eliminated in preparing the consolidated financial statements.
When the Company retains control when there has been partial disposal of ownership interest in a
subsidiary, the partial disposal is accounted for as an equity transaction. Any difference between theamount by which the non-controlling interests are adjusted and the fair value of the consideration paidor received is recognized directly in equity attributable to owners of the parent.
The additional acquisition of non-controlling interests is accounted for as a capital transaction, andtherefore no goodwill is recognized with respect to such transactions.
Non-controlling interests in consolidated subsidiaries are identified separately from the Group’s
equity therein. Comprehensive income of subsidiaries is attributed to owners of the parent company
and to the non-controlling interests even if this results in the non-controlling interests having anegative balance.
When subsidiaries’ fiscal year end is not the end of February, which is the fiscal year end of theCompany, because the legal system of the region where the subsidiaries are located does not allow- 138 -

them to have the same fiscal year end as that of the Company, or for other reasons, adjustments are
made by additionally preparing their financial statements as of the fiscal year end of the Company orother means.
2) Associates
An associate is defined as an entity over which the Group has significant influence on financial andoperating policies but does not have control.
Associates are recognized at cost at the time of the acquisition, and are accounted for by the equity
method thereafter. Goodwill recognized on acquisition (less accumulated impairment) is included ininvestments in associates.
In cases where the accounting policies applied by an associate are different from those applied by theGroup, adjustments are made to the associate’s financial statements, if necessary.
For associates whose fiscal year end is not the end of February, which is the fiscal year end of theCompany, due to relationships with other shareholders or other reasons, adjustments are made byadditionally preparing their financial statements as of the fiscal year end of the Company or othermeans.
3) Joint control
A joint arrangement is a contractual arrangement of which two or more parties have joint control.
The Group classifies its involvement in joint arrangements as joint operations (when the Group hasrights to assets and assumes obligations for liabilities in association with the arrangement) and joint
ventures (when the Group only has rights to net assets of the arrangement), depending on rights andobligations of the parties to the arrangement.
In the case of joint operations, the Group recognizes its own assets, liabilities, income and expenses aswell as the amount equivalent to its share when the Group jointly holds or assumes them. Joint
ventures are recognized at cost at the time of the acquisition and are subsequently accounted for using
the equity method.
(2) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition ismeasured as the aggregate of the acquisition date fair value of the assets transferred, liabilities assumed
and equity instruments issued by the Company in exchange for control of the acquiree. Any excess of theconsideration transferred over the fair value of identifiable assets and liabilities is recognized as goodwill
in the consolidated statement of financial position. Conversely, any deficit is immediately recognized asincome in the consolidated statement of income.
The Group elects to measure non-controlling interests at fair value, or at the proportionate share of therecognized amounts of identifiable net assets, on a transaction-by-transaction basis.
Acquisition-related costs are expensed as incurred.
(3) Foreign currency translation
1) Foreign currency transactions
Each entity of the Group has set its own functional currency as the currency of the primary economic
environment in which the entity operates. Transactions of each entity are measured at the functional
currency.
When each entity prepares non-consolidated financial statements, transactions in currencies other thanits functional currencies are translated using the exchange rate prevailing at the dates of transactions.
Foreign currency monetary assets and liabilities at the end of the reporting period are translated using
exchange rates at the end of the reporting period.
Exchange differences arising from translation or settlement are recognized as profit or loss. However,when gains or losses on non-monetary items are recorded in other comprehensive income, exchange
differences are also recorded in other comprehensive income.

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2) Financial statements of foreign subsidiaries and associates
Assets and liabilities of foreign subsidiaries and associates are translated into Japanese yen at theexchange rate prevailing at the end of the reporting period. Income and expenses of foreignsubsidiaries and associates are translated into Japanese yen at the average exchange rate for theperiod, unless there is significant change in the exchange rate during the period. When there issignificant change in the exchange rate, the income and expenses are translated using the exchange
rate at the transaction date.
Exchange differences arising from translation of the financial statements of foreign subsidiaries andassociates are recognized in other comprehensive income. Exchange differences for foreignsubsidiaries and associates are recognized as profit or loss in the period during which the foreignsubsidiaries and associates are disposed of.
(4) Financial instruments
1) Non-derivative financial assets
Trade and other receivables are initially recognized on the date when they are incurred. All otherfinancial assets are initially recognized on the trade date when the Group becomes a party to thecontractual provisions of the financial instruments.
An overview of classification and measurement model of non-derivative financial assets is as follows.
(i) Financial assets measured at amortized cost
With regard to investments in debt instruments, when the contractual cash flows consist ofprincipal and interest paid on specified dates, and the Group holds such investments based on abusiness model whose objective is to hold the instrument to collect contractual cash flows, thedebt instruments are measured at amortized cost. Transaction cost directly attributable toacquisition of financial assets measured at amortized cost is included in the amount of initial
measurement.
After the initial recognition, amortization cost is measured using the effective interest method, andimpairment losses are deducted when recognized. Interest revenue, foreign exchange gains andlosses and impairment losses on financial assets measured at amortized cost are recognized in
profit or loss.
(ii) Financial assets measured at fair value through other comprehensive income (financial assets at
FVTOCI)
With regard to investments in debt instruments, when the contractual cash flows consist ofprincipal and interest paid on specified dates, and the Group holds such investments based on abusiness model whose objective is both to collect contractual cash flows and to sell the financial
assets, the debt instruments are measured at fair value. In this case, interest revenue, foreignexchange gains and losses and impairment losses measured using the effective interest method arerecognized in profit or loss, and changes in the fair value excluding them are recognized in othercomprehensive income. The cumulative amount recognized in other comprehensive income as at
the time of derecognition of the financial asset is reclassified to profit or loss.
For investments in equity instruments that are not held for sale, the Group may make anirrevocable election at initial recognition to measure them at fair value and recognize any changes
in the fair value in other comprehensive income. In this case, changes in the fair value arerecognized in other comprehensive income (not reclassified to profit or loss). The cumulative
amount recognized as other comprehensive income is transferred to retained earnings when thefinancial asset is derecognized. Dividends are recognized in profit or loss unless they obviously
represent a partial recovery of the cost of the investment.
Transaction cost directly attributable to acquisition of financial assets at FVTOCI is included in
the amount of initial measurement.
(iii) Financial assets measured at fair value through profit or loss (financial assets at FVTPL)
Financial assets other than the above are measured at fair value with changes in fair value
recognized in profit or loss. Transaction cost directly attributable to acquisition of financial assets
at FVTPL is recognized in profit or loss as incurred.
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The Group does not designate any debt instrument as measured at fair value through profit or loss
to eliminate or significantly reduce an accounting mismatch.
(iv) Impairment of financial assets
The Group recognizes impairment of debt instruments measured at amortized cost or at fair value
through other comprehensive income based on its evaluation at the end of each reporting period of
whether there has been a significant increase in credit risk of financial assets or groups offinancial assets since initial recognition. Specifically, when there has been no significant increasein the credit risk since initial recognition, 12-month expected credit losses are recognized asallowance for credit losses. On the other hand, when there has been a significant increase in credit
risk since initial recognition, lifetime expected credit losses of the financial assets are recognized
as allowance for credit losses. Whether credit risk has significantly increased or not is determinedbased on changes in default risk.
For trade receivables arising from the ordinary course of business of the Group, since the period
up to the collection is short, expected credit losses of such trade receivables are recognized overtheir remaining lives from the inception simply based on historical credit loss experience.
(v) Derecognition of financial assets
The Group derecognizes a financial asset when the contractual rights to the cash flows from thefinancial asset expire, or the contractual rights to receive cash flows from the financial asset aretransferred in a transaction where substantially all the risks and rewards incidental to ownership ofthe financial asset are transferred. Any interests in transferred financial assets that are created orcontinuously retained by the Group are recognized as a separate asset or liability.
2) Non-derivative financial liabilities
The Group recognizes financial liabilities at the date of transaction when the Group becomes a party
to the contract for the financial instrument.
The Group derecognizes a financial liability when the financial liability is extinguished, i.e. when thecontractual obligation is discharged or cancelled or expires.
The Group principally has borrowings, bonds, trade payables, other short-term payables, common gift
certificates for department stores nationwide, deposits received, etc. as non-derivative financial
liabilities. These financial liabilities are initially recognized at fair value and subsequently measured atamortized cost based on the effective interest method.
3) Presentation of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is presented in the consolidated statementof financial position only when the Group has a legally enforceable right to offset the recognizedamounts and intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously.
4) Derivatives and hedge accounting
The Group uses derivatives to hedge interest rate fluctuation risk and foreign exchange fluctuation
risk. Derivatives used by the Group primarily include forward exchange contracts and interest rate
swaps.
At the time of initial designation of the hedge, the Group documents the relationship between thehedging instrument and the hedged item, the risk management objective, the strategy for
implementation of the hedge transaction, the hedging instrument and the hedged item, the nature ofhedged risk, the method for assessing effectiveness of the hedge relationship and the method of
measuring the effective portion and ineffective portion.
The Group assesses whether the hedging instrument is expected to be highly effective in achieving
offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk
throughout the period for which the hedge is designated, at the inception of the hedge and on an
ongoing basis.
To apply cash flow hedges to forecast transactions, the forecast transaction must be highly probable.

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Derivatives are initially recognized at fair value and the transaction costs are recognized in profit orloss as incurred. After initial recognition, derivatives are measured at fair value, and any changes in
the fair value are accounted for as follows.
(ⅰ) Cash flow hedges
When a derivative is designated as a hedging instrument to hedge changes in cash flows
attributable to certain risks related to highly likely forecast transactions that could affectrecognized assets and liabilities or profit or loss, the effective portion of the hedge in changes infair value of the derivative is included in other components of equity as “cash flow hedges.” Thebalance of cash flow hedges is deducted from other comprehensive income in the consolidated
statement of comprehensive income and transferred to profit or loss under the same item as thehedged item in the same period as the period in which cash flows of the hedged item affect profit
or loss. The ineffective portion of the hedge in changes in fair value of the derivative isimmediately recognized in profit or loss.
When the hedge no longer meets the criteria for hedge accounting, the hedging instrument expires
or is sold, terminated or exercised, or the designation of the hedge is revoked, the application ofhedge accounting, is discontinued prospectively.
If hedge accounting is discontinued, the Group continues to record the balance of cash flow
hedges that have already been recognized in other comprehensive income until the forecast
transaction affects profit or loss. When forecast transactions are no longer expected to occur, thebalance of cash flow hedges is immediately recognized in profit or loss.
(ⅱ) Fair value hedges
Changes in fair value of derivatives that are hedging instruments are recognized in profit or loss.
Carrying amounts of hedged items are measured at fair value. For gains or losses on hedged items
attributable to hedged risk, any changes in the fair value are recognized in profit or loss.
(5) Cash and cash equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments with maturities ofthree months or less from the date of acquisition that are readily convertible to cash and subject toinsignificant risk of change in value.
(6) Inventories
Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimatedselling price in the ordinary course of business less the estimated costs necessary to make the sale. The
acquisition cost is calculated mainly using the specific identification method, and includes all costs ofpurchase and other costs incurred in bringing the inventories to their present location and condition.
(7) Assets held for saleIf the carrying amounts of non-current assets are recovered principally through a sale transaction rather
than through continuing use, these assets (or disposal groups) are classified under “assets held for sale.”
The condition for classifying an asset under “assets held for sale” is only met by an asset whose sale ishighly probable and which is available for immediate sale in its present condition. Management must havecommitted to the execution of a sale plan for that asset, and the sale of the asset must be scheduled to becompleted within one year from the day it is classified as an asset held for sale.
An asset held for sale is measured at the lower of its carrying amount and fair value less cost to sell. Afterproperty, plant and equipment, intangible assets and investment property have been classified under“assets held for sale,” depreciation or amortization will not be applied to these assets.
(8) Property, plant and equipment
Property, plant and equipment is measured using the cost model and is carried at cost less accumulated
depreciation and accumulated impairment.
The acquisition cost includes costs directly attributable to the acquisition of the asset, costs related todisassembly, retirement and site restoration, and borrowing costs that should be capitalized.
Depreciation of assets other than land and construction in progress is recognized using the straight-line
method over the estimated useful lives of the assets. The estimated useful lives of major components ofproperty, plant and equipment are as follows:- 142 -

• Buildings and structures• Machinery and vehicles• Furniture and fixtures

2 to 60 years
2 to 20 years
2 to 20 years

The estimated useful lives, depreciation methods, etc. are reviewed at the end of the fiscal year, and if
there are any changes made, those changes are applied prospectively as a change in an accounting
estimate.
(9) Goodwill
The Group measures goodwill at the amount calculated by deducting the net recognized amount (usually,
fair value) of identifiable assets acquired and liabilities assumed at the date of acquisition from the fairvalue of the consideration for the transfer including the recognized amount of non-controlling interests inthe acquiree, which is measured at the date of acquisition.
Goodwill is not amortized. Instead, it is tested for impairment annually, or whenever there are indicationsof impairment.
Impairment losses of goodwill are recognized in the consolidated statement of income, and not reversed
subsequently.
In addition, goodwill is carried at cost less accumulated impairment on the consolidated statement offinancial position.
(10) Intangible assets
Intangible assets are measured using the cost model and stated at cost less accumulated amortization andaccumulated impairment.
Intangible assets acquired separately are measured at cost at initial recognition.
After initial recognition, intangible assets other than goodwill are amortized using the straight-line method
over respective estimated useful lives, except for intangible assets with indefinite useful lives. Estimateduseful lives of major intangible assets are as follows. In addition, the Group has no intangible assets withindefinite useful lives.
• Software

5 years

The estimated useful lives, residual values and amortization methods are reviewed at the end of the fiscal
year, and if there are any changes made, those changes are applied prospectively as a change in an
accounting estimate.
(11) Right-of-use assets
The Group confirms a right-of-use asset on the lease commencement date and initially measures it at its
acquisition cost. The aforementioned acquisition cost consists of the amount of the lease liability, theamount of lease payments made before the lease commencement date adjusted to exclude any received
lease incentives, and the initial direct cost that was incurred.
After the initial measurement, right-of-use assets are depreciated using the straight-line method over thelease term. The lease term is determined based on the non-cancellable term of the lease, taking into
consideration any term for which there is reasonable certainty of extension and any term for which there isreasonable certainty of non-cancellation. In cases where a right-of-use asset is impaired, the impairment
loss is deducted from the carrying amount of the right-of-use asset.
Right-of-use assets are depreciated using the straight-line method mainly over 2 to 73 years from thecommencement date.
(12) Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments to be paid in the future
over the lease term on and after the lease commencement date. When calculating the present value, if theinterest rate implicit in the lease can be readily determined, that is used, and if it cannot, the lessee’s
incremental borrowing rate is used.
The lease payments used in the measurement of lease liabilities mainly include the fixed lease payments,
the lease payments of the extended term if the lease term reflects the exercise of a lease extension option,and the cancellation fees if the lease term reflects the exercise of a lease cancellation option.
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After the initial measurement, lease liabilities are measured at the amortized cost using the effective
interest method. Moreover, if changes in future lease payments arise due to changes in indexes or rates, or
if changes in the assessment regarding the potential for execution of an extension option or a cancellation
option arises, the Group remeasures the lease liabilities.
If remeasuring the lease liabilities, the carrying amount of the right-of-use asset is also adjusted using theremeasured amount of the lease liabilities. However, if the decrease in liabilities due to remeasurement of
the lease liabilities is larger than the carrying amount of the right-of-use asset, the amount remaining after
impairing the right-of-use asset to zero is recognized in profit or loss.
Furthermore, for rent concessions arising as a direct consequence of the novel coronavirus disease(COVID-19), which meet specified requirements, the Group has selected to apply the practical expedientand therefore does not assess whether rent concessions are lease modifications.
(13) Investment property
Investment property is property held to earn rental income or for capital appreciation or both.
Investment property is measured using the cost model and stated at cost less accumulated depreciation andaccumulated impairment (For the depreciation method and useful lives, please refer to “(8) Property, plantand equipment”).
When the investment property portion of a property cannot be accounted for separately from otherportions of a property, the entire property is accounted for as investment property only if the owneroccupied portion is insignificant.
(14) Impairment of non-financial assets
The Group determines at the end of every reporting period whether there is any indication that carrying
amounts of the Group’s non-financial assets excluding inventories and deferred tax assets may be
impaired. If any indication exists, the recoverable amount of the asset is estimated. For goodwill andintangible assets that have indefinite useful lives or not yet available for use, the recoverable amount isestimated at the same time each year.
The recoverable amount of an asset or a cash-generating unit is the larger of its value in use and fair valueless cost of disposal. In calculating value in use, the estimated future cash flows are discounted to theirpresent value using a pretax discount rate that reflects the time value of money and the risks specific to theasset. The cash-generating unit is the smallest group of assets that generates cash inflows, fromcontinuous use, that are largely independent of the cash inflows from other assets or groups of assets.
To test goodwill for impairment, cash-generating units to which the goodwill is allocated are integrated sothat impairment is tested reflecting the smallest unit related to the goodwill. Goodwill acquired in abusiness combination is allocated to cash-generating units that are expected to benefit from the synergiesof the combination.
Since the Group’s corporate assets do not generate independent cash inflows, the recoverable amount ofcash-generating units to which the corporate assets are attributed is determined if there is any indicationthat corporate assets are impaired.
An impairment loss is recognized as profit or loss, if the carrying amount of an asset or cash-generating
unit exceeds the recoverable amount. The impairment loss recognized in association with a cashgenerating unit is first allocated to reduce the carrying amount of goodwill allocated to this unit, and thenthe carrying amounts of other assets in the cash-generating unit are reduced on a pro rata basis.
Impairment losses related to goodwill are not reversed. With regard to other assets, for previously
recognized impairment losses, the Group assesses whether there is any indication that the loss has
decreased or been extinguished at the end of the reporting period. An impairment loss is reversed when
there has been a change in the estimates used to determine the recoverable amount. An impairment loss isreversed up to the carrying amount that would have been determined had no impairment loss beenrecognized, net of necessary depreciation and amortization.
(15) Employee benefits
The Group has established defined benefit plans (such as a corporate pension fund plan and lump-sum
retirement benefit plan) as employee retirement benefit plans, and certain consolidated subsidiaries haveadopted defined contribution plans.

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The projected unit credit method is used to determine the present value of defined benefit obligation,
related current service cost and past service cost.
The discount rate is determined by reference to market yields at the end of the fiscal year on high quality
corporate bonds corresponding to the discount period established based on the period to the date when the
future benefits for each fiscal year are to be paid.
Net defined benefit liability or asset is determined as the present value of defined benefit obligation lessthe fair value of plan assets.
Remeasurements of net defined benefit liability or asset are recognized as other comprehensive income
and immediately transferred from other components of equity to retained earnings. Remeasurements
consist of actuarial gains and losses on defined benefit obligation, return on plan assets (excluding theamount of interest revenue on plan assets) and others.
Past service costs are immediately accounted for as profit or loss.
Costs for defined contribution benefits are recognized as expenses in the period in which the employees
render the related service.
(16) Share-based payment
The Company has adopted an officer remuneration BIP (Board Incentive Plan) trust (hereinafter referred
to as the “BIP Trust”) as a performance-linked, share-based payment to ensure steady execution of theMedium-term Business Plan aimed at realizing the Group Vision.
The BIP Trust is a system of granting the Company’s shares to officers (in certain cases, the Company’s
shares are converted into cash within the trust and cash in the amount equivalent to their conversion value
is paid) in accordance with the level of achievement of the Medium-term Business Plan, etc. The
consideration for the services received is calculated using the fair value of the Company’s shares on the
grant date. This value is expensed over the vesting period from the grant date, and a corresponding
amount is recognized as an increase in equity.
(17) Provisions
A provision is recognized when the Group has a present legal or constructive obligation as a result of apast event, when it is probable that an outflow of financial resources will be required to settle theobligation and when a reliable estimate can be made of the amount of the obligation. To determine theamount of a provision, when the effect of the time value of money is material, the estimated future cash
flows are discounted to their present value using a pretax discount rate that reflects the time value ofmoney and the risks specific to the liability. Unwinding of the discount over time is recognized in financecosts.
Asset retirement obligations
Asset retirement obligations are recorded at the estimated amount of restoration costs for leased stores,
offices, etc. for which the Group has obligations to restore them to the original state at the time when thelease is terminated.
Provision for loss on business liquidation
Legal or constructive obligations are recorded for the cost of store dismantlement, etc. that is expected to
be borne in the future as a result of business liquidation, store closure and store rebuilding.
(18) Sales revenue
Based on the following five-step approach, the Group recognizes revenue as the amount of consideration
to which the Group expects to be entitled in exchange for the transfer of goods or services promised tocustomers.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation- 145 -

The Group, under a holding company structure, develops businesses such as the SC Business, theDeveloper Business, and the Payment and Finance Business, with the Department Store Business at its
core. The Department Store Business carries out the sale of clothing, general goods, household goods,
food products and others. With regard to these sales of goods, since performance obligations are deemed
to be satisfied at the time of delivery of goods when customers gain control of such goods, the Group
mainly recognizes revenue at the time of delivery of such goods. Furthermore, revenue is measured at theamount of consideration promised in contracts between customers, less any discounts, rebates and sales
returns, etc.
1) Revenue recognition by business segmenti) Department Store Business
The Department Store Business carries out the sale of clothing, general goods, household goods,
food products and others. With regard to these sales of goods, since performance obligations are
deemed to be satisfied at the time when goods are delivered to customers, the Group recognizes
revenue at the time of delivery of such goods. Payments for goods are principally received at thetime of delivery of the goods, which is the time when the performance obligation is satisfied.
ii) SC Business
The SC Business undertakes development, management, supervision and operation, etc. of
shopping centers as well as sale of personal belongings, general goods and others.
With regard to services, because these services are provided on a continuous basis and thus it isdetermined that performance obligation is satisfied over a certain period of time, revenue isrecognized as the services are rendered.
With regard to the sale of accessories, general goods and others, since it is usually determined that
performance obligation is satisfied at the time when goods are delivered to customers, revenue isrecognized at the time of delivery of such goods. Payments for goods are received at the time ofdelivery of the goods, which is the time when performance obligation is satisfied.
Revenue from lease of shopping centers and others is recognized over the lease term, in
accordance with IFRS 16.
iii) Developer Business
The Developer Business carries out development, management, operation, interior decorating
work, etc. of real estate.
Revenue from lease of real estate and others is recognized over the lease term, in accordance withIFRS 16.
With regard to the design and operation of interior decorating work, if the outcome of a work
contract can be estimated reliably, revenue is recognized according to the stage of completion of
the performance obligation. If the outcome of a work contract cannot be estimated reliably,revenue is recognized only to the extent that it is probable that the contract costs incurred will berecoverable.
iv) Payment and Finance Business
The Payment and Finance Business undertakes issuance and administration, etc. of credit cards.
In the Payment and Finance Business, annual membership fees from cardholders, and fees fromdepartment stores and external affiliated stores are recognized as revenue. With regard to interest
on installment sales, the Group multiplies the revolving balance and number of installment
payments by their respective set interest rates to calculate interest revenue, and recognizes theinterest in the period to which it is attributable, in accordance with IFRS 9.
v) OtherWithin other, for sales of products and merchandise such as electronic components, automobile
components, industrial supplies, and liquor within the wholesale business, the Group deems thatin most cases the customer acquires control of the products when they are delivered and its
performance obligations are satisfied. Therefore, usually revenue is recognized for the goods upon
their delivery.
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2) Interest revenue
Interest revenue is recognized using the effective interest method.
3) Dividends
Dividend income is recognized when the right to receive dividends is established.
4) Gross and net presentation of revenue
When the Group conducts transactions as a principal, revenue is presented at the gross amount ofconsideration received from customers. When the Group conducts transactions as an agent for the
benefit of a third party, revenue is presented at the net amount calculated by deducting the amountcollected for the benefit of the third party from the gross amount of consideration received from
customers.
The following indicators are taken into account in the determination of whether the Group conducts atransaction as a principal or an agent:• Whether the entity is primarily responsible for fulfilling a contract• Whether the entity has inventory risk before or after the customer order, during shipping or on
return• Whether the entity has discretion in establishing prices(19) Government grants
Government grants are measured and recognized at fair value, if the conditions attaching to them arecomplied with, and there is reasonable assurance that the grants will be received. Grants for expenses
incurred are recorded as income in the same fiscal year as the fiscal year in which the expenses are
incurred. Grants related to acquisition of an asset are recorded as other operating income on a systematic
basis over the useful life of the asset, and unearned government grants are recorded in liabilities asdeferred income.
(20) Income tax
Income tax consists of current taxes and deferred taxes. Income tax is recognized as profit or loss, except
for taxes related to business combinations and taxes related to items that are recognized directly in equity
or in other comprehensive income.
1) Current taxes
Current taxes are measured in the amount of the expected tax payables to or receivables from thetaxation authorities. Calculation of the amount of tax is based on the tax rates and tax laws enacted or
substantively enacted by the end of the reporting period in countries where the Group conducts
business and earns taxable profit.
2) Deferred taxes
Deferred taxes are recognized for temporary differences between the carrying amounts of assets or
liabilities in the statement of financial position and its tax base, and for unused tax losses and unused
tax credits.
No deferred tax assets and liabilities are recognized on the following temporary differences:• Temporary differences arising from the initial recognition of goodwill• Temporary differences arising from initial recognition of assets and liabilities from transactions thatare not business combinations and affect neither accounting income or taxable profit• Taxable temporary differences associated with investments in subsidiaries and associates, etc. forwhich the Group is able to control the timing of the reversal of the temporary difference and it isprobable that the temporary difference will not reverse in the foreseeable future
A deferred tax liability is recognized for all taxable temporary differences in principle, and a deferred
tax asset is recognized for all deductible temporary differences to the extent that it is probable thattaxable profit will be available against which deductible temporary differences can be utilized.
Carrying amount of deferred tax assets is reassessed at the end of each reporting period and reduced tothe extent that it is no longer probable that sufficient taxable profit will be available to use all or part
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of the benefit of the deferred tax assets. Unrecognized deferred tax assets are reassessed each period
and are recognized to the extent that it has become probable that future taxable profit will allow thedeferred tax assets to be recovered.
Deferred tax assets and liabilities are measured at the tax rates and by the tax laws that are expected toapply to the period when the assets are realized or the liabilities are settled, based on the statutory tax
rates and tax laws enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to offset
current tax assets against tax liabilities and income taxes are levied by the same taxation authority on
the same taxable entity.
(21) Earnings per share
Basic earnings per share are calculated by dividing profit (loss) attributable to ordinary equity holders of
the parent entity by the weighted average number of shares outstanding during the period, adjustingtreasury shares. Diluted earnings per share are calculated by adjusting for the effects of all dilutive
potential shares.
(22) Operating segments
Operating segments are components of entities that engage in business activities that earn revenue andincur costs including transactions with other operating segments. Operating results of all the operating
segments, for which the financial information is separately available, are reviewed periodically by the
Board of Directors for the purpose of allocating management resources to each segment and assessing
performance.
(23) Treasury shares
Treasury shares are assessed at acquisition cost and deducted from equity. No gain or loss is recognizedon the purchase, sale or cancellation of the Company’s treasury shares. Any difference between the
carrying amount and consideration received on the sale of treasury shares is recognized as share premium.
(24) Borrowing costs
The Group includes borrowing costs directly attributable to the acquisition, construction or production ofan asset that necessarily takes a substantial period of time to get ready for its intended use or sale, that is, aqualifying asset as part of the acquisition cost until the asset is substantially ready for its intended use orsale.
All borrowing costs other than those above are recognized as profit or loss in the fiscal period in which
they are incurred.
(25) Application of consolidated taxation system
The Company and some of its consolidated subsidiaries apply the consolidated taxation system.
4. Significant Accounting Estimates and Judgments
In the preparation of consolidated financial statements, management is required to make judgments, estimates andassumptions that affect application of accounting policies as well as amounts of assets, liabilities, revenue andexpenses. Actual results may differ from these estimates.
The estimates and their underlying assumptions are reviewed on an ongoing basis. The effects of changes inaccounting estimates are recognized in the fiscal period in which the estimates are changed and in future periods
that are affected.
In terms of the business environment, while the impact of the spread of COVID-19 and restrictions on activities
has diminished and social and economic activities have normalized, there are still uncertainties such as the
emergence of geopolitical risks and growing concerns of economic recession due to global inflation and otherfactors. Given these circumstances, the Group factors in the effects of strategies and measures in each businessand has made reasonable estimates that reflect the situation as of the end of the reporting period, based on theassumption that the recovery trend in domestic spending will continue in FY2023 and inbound tourism demand
will head for a full-scale recovery. If uncertainty further increases, the Group may revise the carrying amounts ofassets and liabilities in future accounting periods.
Estimates and judgments made by management that significantly affect the amounts in the consolidated financial
statements are as follows.
- 148 -

(1) Property, plant and equipment, right-of-use assets, intangible assets and investment property
The Group conducts impairment tests if there is an indication that property, plant and equipment, right-ofuse assets, intangible assets and investment property may be impaired.
Impairment tests are performed by comparing the carrying amount and the recoverable amount of theasset. If the recoverable amount is less than the carrying amount, an impairment loss is recognized.
The recoverable amount is usually determined by the value in use. In calculating the value in use, future
cash flows generated from the use of the asset, future cash flows generated by its final disposal, and thediscount rate are used as estimation factors.
The forecasting period for future cash flows is estimated by considering the remaining useful life of therelevant asset.
Future cash flows before discounting are estimated based on the business plan. The main assumptions
include forecast for personal spending trend in Japan and projected recovery in inbound tourism demand,and the rate of sales growth after the period of business plan.
For the forecast for personal spending trends in Japan, which is the basis of sales revenue, the Group
refers to forecast trends provided by several external specialist organizations, factors in the effect ofmeasures in its business plan, and sets the sales revenue for each of the relevant primary businesssegments for the following fiscal year onward. In addition, in the outlook for inbound tourism demand
recovery, the Group creates a scenario based on international shipping forecasts and tourism demand
forecasts by external organizations, and forecasts the demand recovery within the scope of that scenario.
Although it is difficult to forecast changes in the impact of consumption and other factors due to changes
in social and economic conditions, the Group has made certain assumptions and incorporated them into
the forecast of domestic consumer spending trends.
The growth rate after the business plan is determined by making reference to long-term growth rates forthe relevant markets. These estimates are based on management’s best estimates, but may differ from
actual results due to effects of changes in uncertain future economic conditions.
Moreover, the amounts of impairment losses and non-financial assets in the Department Store Businessand the SC Business are as follows.
Department Store BusinessImpairment losses(Millions of yen)
SC Business

3,887

2,006

Property, plant and equipment

233,491

231,961

Right-of-use assets

69,21154,000Intangible assets
Investment property

4,308

1,355

111,0873,120(2) Recoverability of deferred tax assets
The Group recognizes deferred tax assets to the extent that it is probable that, after the scheduling, taxable
profit will be available against which deductible temporary differences can be utilized.
The judgment of the recoverability is made on the basis of an estimate of taxable profit, etc. for eachfuture fiscal year determined based on the Group’s business plan.
The significant assumptions in the Group’s business plan are forecast for personal spending trends inJapan and the projected recovery in inbound tourism demand as well as the forecast for sales revenue thatincorporates the effect of each business plan for the Department Store Business, the SC Business and the
Payment and Finance Business segments; the forecast for sales revenue that incorporates new
development projects from the business plan in the Developer Business segment; and the forecast for
operating profit taking into account the effects of cost reductions achieved through business structurereforms in each segment.
These significant assumptions are based on management’s best estimates, but may differ from actual
results due to effects of changes in uncertain future economic conditions. If significant revisions become
necessary, it may have a material impact on the amounts to be recognized in the consolidated financial
statements for the next fiscal year and beyond.

- 149 -

The breakdown of deferred tax assets by major cause and their carrying amounts are stated in “18. IncomeTax.”(3) Post-employment benefits
The Group has defined benefit and defined contribution post-employment benefit plans for employees andretirees. Present value of defined benefit obligations, service costs and others are determined based on
various actuarial assumptions. For actuarial assumptions, a variety of factors, such as discount rates,
future payment of salaries, those who withdraw from the plan in the future and life expectancy ofmembers, are estimated. These estimates are made based on management’s best estimates, but may differ
from actual results due to effects of changes in uncertain future economic conditions and amendment or
promulgation of relevant laws and regulations.
Of the assumptions provided above, the discount rate and anticipated rate of salary increase, which areparticularly important, are provided in “22. Employee Benefits.”(4) Determination and revision of lease periods
The Group determines the lease periods based on the non-cancellable term of the lease, taking into
consideration any term for which there is reasonable certainty of extension and any term for which there isreasonable certainty of non-cancellation. Specifically, the Group estimates the period for which there isreasonable certainty considering changes in rent expenses resulting from extension or shortening of thelease period, the existence of cancellation penalties, and the payback period for investments in significant
fixtures, facilities, etc. for rental properties.
For real estate leases in which the Group is the lessee in the Department Store Business, there may berevisions to the lease period for the flagship store or properties tied to the flagship store coinciding with
the next individual-store large-scale renovation plan or when the next Medium-term Business Plan isdecided. If revisions to the lease periods become necessary, such revisions could have a material effect on
the amounts recognized in the consolidated financial statements in the next fiscal year and beyond.
Details of lease periods are stated in “3. Significant Accounting Policies.”
5. Segment Information(1) Overview of reportable segments
The reportable segments of the Group are constituent units of the Group for which separate financial
information is obtainable. These segments are periodically examined by the Board of Directors for the
purpose of deciding the allocation of management resources and evaluating business results.
The Group is comprised, under a holding company structure, of the reportable segments “Department
Store Business,” “SC Business,” “Developer Business” and “Payment and Finance Business,” with the
Department Store Business at its core.
The Department Store Business carries out the sale of clothing, general goods, household goods, foodproducts and others. The SC Business undertakes development, management, supervision and operation,etc. of shopping centers. The Developer Business carries out development, management, operation,interior decorating work, etc. of real estate. The Payment and Finance Business undertakes issuance andadministration, etc. of credit cards.
Daimaru Matsuzakaya Sales Associates Co. Ltd., which was a consolidated subsidiary of the Company,
merged with and was absorbed by Daimaru Matsuzakaya Department Stores Co. Ltd., which is a
consolidated subsidiary of the Company, on September 1, 2021. As a result of this change, Daimaru
Matsuzakaya Sales Associates Co. Ltd., which was previously included in “Other,” has been included in“Department Store Business” from the fiscal year ended February 28, 2022.
(2) Segment revenue and business results
Revenue and business results by reportable segments of the Group are as follows. Inter-segment
transactions are generally based on prevailing market prices.

- 150 -

Fiscal year ended February 28, 2022
Reportable segment
Other

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions of
yen

7,273

289,864

41,619331,484–

331,484

9,935

3,764

15,103

20,13535,239(35,239)–

52,55650,633

11,037

304,967

61,755366,723(35,239)

331,484

2,055

4,711

1,970

4,142

1,199

5,341

4,039

9,380

Department
Store
SC BusinessBusiness

Developer
Business

Payment and
FinanceBusiness

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyen

190,307

51,58540,698

431

971

Total

190,739

Segment profit (loss)(4,594)External revenue
Inter-segment revenue

Adjustments Consolidated

Finance income

1,335

Finance costs(5,890)Share of profit (loss)of investments
accounted for using
equity method

1,364

Profit before tax

6,190

Segment assets

566,354334,273

106,420

72,505

1,079,554

108,065

1,187,620

5,287

1,192,907

30,416

14,671

4,102

154

49,345

1,704

51,049(1,419)49,629Other items
Depreciation andamortization expense
Impairment loss

113

234

776

–

1,123

13

1,136

–

1,136

Investments accounted
for using equity
method21,861–

47–

21,908156

22,065

16,696

38,761

Capital expenditures

10,582

5,074

3,745

38

19,441

1,132

20,57358

20,632

Notes:

1.

The “Other” category is a business segment not included in reportable segments. It includes wholesaling, parking, leasing, etc.

2.

Capital expenditures are the amount of the increase in property, plant and equipment, right-of-use assets, investment property andintangible assets.

3.

Adjustments are made as follows.
(1) The adjustments for segment profit (loss) include inter-segment eliminations and corporate income and expenses not attributable
to any business segment. Corporate income and expenses are mainly income and expenses of the company submitting
consolidated financial statements that are not attributable to any business segment.
(2) The adjustment for segment assets includes elimination of segment receivables, unrealized profit adjustments on non-current
assets, and assets of the company submitting consolidated financial statements that are not attributable to any business segment.
(3) The adjustment for depreciation and amortization expense consists of inter-segment transfers.
(4) The adjustment for amounts invested in entities accounted for using equity method consists of investments in entities accounted
for using equity method of the company submitting consolidated financial statements that are not attributable to any businesssegment.
(5) The adjustment for capital expenditures consists mainly of inter-segment eliminations, inter-segment unrealized profit, andcapital expenditures of the company submitting consolidated financial statements that are not attributable to any businesssegment.

4.

Segment profit (loss) is adjusted to operating profit in the consolidated financial statements.

- 151 -

Fiscal year ended February 28, 2023
Reportable segment
Other

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions of
yen

7,585

318,486

41,193359,679–

359,679

12,372

5,304

19,19014,72833,919(33,919)–

54,361

54,67012,889337,676

55,922

393,599(33,919)359,679

3,733

3,695

3,485

18,443899

19,343(283)

19,059Department
Store
SC BusinessBusiness

Developer
Business

Payment and
FinanceBusiness

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyen

215,295

53,30842,297

459

1,053

Total

215,754

Segment profit

7,529

External revenue
Inter-segment revenue

Adjustments Consolidated

Finance income

871

Finance costs(5,218)

Share of profit (loss)of investments
accounted for using
equity method

2,161

Profit before tax

16,873

Segment assets

544,939

321,529

115,536

80,272

1,062,277

132,614

1,194,892(73,938)

1,120,953

Depreciation andamortization expense

30,624

14,4173,811

158

49,012

1,460

50,472(1,365)

49,107

Impairment loss

3,887

2,006

–

–

5,894

6

5,900

–

5,900

Investments accounted
for using equity
method22,260

1,038

–

–

23,299156

23,455

17,94741,402

Capital expenditures

12,057

2,596

5,735

128

20,517

1,272

21,790780

22,570

Other items

Notes:

1.

The “Other” category is a business segment not included in reportable segments. It includes wholesaling, parking, leasing, etc.

2.

Capital expenditures are the amount of the increase in property, plant and equipment, right-of-use assets, investment property andintangible assets.

3.

Adjustments are made as follows.
(1) The adjustments for segment profit include inter-segment eliminations and corporate income and expenses not attributable to any
business segment. Corporate income and expenses are mainly income and expenses of the company submitting consolidated
financial statements that are not attributable to any business segment.
(2) The adjustment for segment assets includes elimination of segment receivables, unrealized profit adjustments on non-current
assets, and assets of the company submitting consolidated financial statements that are not attributable to any business segment.
(3) The adjustment for depreciation and amortization expense consists of inter-segment transfers.
(4) The adjustment for amounts invested in entities accounted for using equity method consists of investments in entities accounted
for using equity method of the company submitting consolidated financial statements that are not attributable to any businesssegment.
(5) The adjustment for capital expenditures consists mainly of inter-segment eliminations, inter-segment unrealized profit, andcapital expenditures of the company submitting consolidated financial statements that are not attributable to any businesssegment.

4.

Segment profit is adjusted to operating profit in the consolidated financial statements.

(3) Information by geographical area
Sales revenue from external customers
This information has been omitted, as sales revenue from external customers in Japan accounts for a large
percentage of sales revenue recorded on the consolidated statement of income.
Non-current assets
This information has been omitted, as the amount of non-current assets located in Japan accounts for alarge percentage of the amount recorded on the consolidated statement of financial position.
- 152 -

6. Cash and Cash Equivalents
The breakdown of cash and cash equivalents is as follows:
As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

Cash
Deposits (including time deposits with deposit
terms of three months or less)
Total

2,654

2,744

90,624

37,12993,27839,874

7. Trade and Other Receivables
The breakdown of trade and other receivables is as follows.
All these receivables have been classified as financial assets measured at amortized cost.
As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

Notes receivable - trade
Accounts receivable - trade
Accounts receivable - other
Contract assets
Other

2,081
53,164
49,675
3,193
4,147

2,667
60,67454,553
6,832
4,392

Total

112,262

129,121

8. Inventories
The breakdown of inventories is as follows:
As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

Merchandise and finished goods
Work in process
Real estate for sale in process
Supplies
Total

11,982117–
360

12,051
30
4,304
546

12,45916,932

3–

Inventories sold beyond 12 months

In connection with the change of holding purpose of some investment property in the Developer Businessfrom leasing to sales, land amounting to ¥1,827 million and construction in progress amounting to ¥2,476
million were reclassified to inventories.
The amount of inventories that were recognized as expenses was ¥171,024 million in the fiscal year ended
February 28, 2022 and ¥175,548 million in the fiscal year ended February 28, 2023.
The amounts of write-down of inventories recognized as expenses are as follows:
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Millions of yen
Amounts of write-down

Millions of yen
138- 153 -

69

9. Other Financial Assets
The breakdown of other financial assets is as follows:
As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

Financial assets measured at amortized cost
Time deposits with deposit terms of morethan three months
Lease and guarantee deposits
Loans receivable
Other
Financial instruments measured at fair value
through profit or loss
Derivative financial assets
Financial assets measured at fair value throughother comprehensive income
Shares and investments in capital
Total
Total current assets
Total non-current assets

4,853

4,915

55,053
1,604
5,739

53,436
1,621
4,924

7

6

24,64825,64591,90790,548

11,92979,977

10,836
79,711

10. Other Assets
The breakdown of other assets is as follows:
As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

Prepaid expense
Advance payments - trade
Suspense payments
Retirement benefit assets
Other

2,131
1,009
337
9,506
4,690

2,768
794
389
6,145
4,894

Total

17,675

14,991

4,954
12,721

5,094
9,897

Other current assets
Other non-current assets- 154 -

11. Property, Plant and Equipment(1) Schedule of changes
Changes in acquisition costs and accumulated depreciation and impairment of property, plant andequipment are as follow:
Acquisition costs
MachineryandvehiclesMillions ofyen

Furnitureand fixtures

Constructionin progress

Total

Millions ofyen

Buildings
andstructures
Millions ofyenMillions ofyenMillions ofyenMillions ofyen

287,715

508,914

4,229

17,617271

818,748

43

4,655

75

721

145

5,642

(490)

(5,396)

(131)

(448)

–

(6,466)

Transfer among line items

–

(148)

–

9

(80)

(220)

Exclusion from consolidation–(1,409)–(1,395)–(2,804)287,268

506,616

4,174

16,504335

814,899

Acquisitions

12

8,677

63

842

203

9,799

Sales or disposals(34)(9,296)

(44)

(443)

–

(9,818)Transfer among line items

–

103

–

0

(114)

(10)

Other

–

7

–

4

(232)

(220)

287,246

506,108

4,193

16,908

192

814,649

Land

Balance as of March 1, 2021
Acquisitions
Sales or disposals

Balance as of February 28, 2022

Balance as of February 28, 2023

- 155 -

Accumulated depreciation and impairment
Land

Buildings
andstructures

MachineryandvehiclesFurnitureand fixtures

Constructionin progress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions of
yen

(499)

(309,452)(2,863)(12,289)–(325,104)

Depreciation–(15,920)(225)(1,347)–(17,493)

Impairment loss

–

(41)

(2)

(14)

–

(58)

Sales or disposals

–

4,865

130

436

–

5,432

Transfer among line items

–

149

(0)

(6)

–

143

Exclusion from consolidation

–

1,282

–

1,278

–

2,561

Balance as of February 28, 2022

(499)

(319,115)(2,961)(11,942)–(334,518)

Depreciation–(15,557)(224)(1,236)–(17,019)

Impairment loss(50)

(2,508)

(4)

(94)

–

(2,657)

Sales or disposals

–

8,529

35

384

–

8,949

Transfer among line items

–

(1)

–

–

–

(1)

(549)

(328,653)(3,154)(12,888)–(345,247)

Land

Buildings
andstructures

MachineryandvehiclesFurnitureand fixtures

Constructionin progress

Total

Millions ofMillions ofMillions ofMillions ofMillions ofMillions of

yen

yen

yen

yen

yen

yen

Balance as of March 1, 2021

287,215

199,462

1,366

5,328

271

493,644

Balance as of February 28, 2022

286,768

187,500

1,213

4,561

335

480,380

Balance as of February 28, 2023

286,696

177,454

1,038

4,019

192

469,401

Balance as of March 1, 2021

Balance as of February 28, 2023

Carrying amountNotes:

1.

The amount of depreciation expense for property, plant and equipment is included in “cost of sales” and “selling, general andadministrative expense” in the consolidated statement of income.

2.

Please refer to “28. Other Operating Income” for the gain on sales of non-current assets for the fiscal year ended February 28, 2022
and February 28, 2023, and “31. Other Operating Expenses” for the loss on disposals of non-current assets for the fiscal year ended
February 28, 2022 and February 28, 2023.

(2) Assets pledged as collateral
There is no property, plant and equipment pledged as collateral for liabilities.
(3) Commitments
Please refer to “39. Commitments” for commitments related to purchase of property, plant and equipment.

- 156 -

12. Goodwill and Intangible Assets(1) Schedule of changes
Changes in acquisition costs, accumulated amortization and impairment and carrying amounts of goodwill
and intangible assets are as follows:
Acquisition costs
Intangible assets
Goodwill

Millions of yen
Balance as of March 1, 2021

Software

Other

Total

Millions of yen

Millions of yen

Millions of yen

568

13,036

485

13,521

Acquisitions

–

3,675

3

3,678

Sales or disposals

–

(916)

(7)

(924)

Transfer among line items

–

(61)

1

(60)

Exclusion from consolidation–(1,018)(0)(1,018)

Balance as of February 28, 2022

568

14,715481

15,197

Acquisitions

472

2,970

20

2,990

Sales or disposals–(1,317)(1)(1,319)Transfer among line items

–

(220)

(11)

(231)

Other

(44)

–

–

–

Balance as of February 28, 2023

995

16,148488

16,636Note:

The acquisition of goodwill in the fiscal year ended February 28, 2023 was due to a business combination (acquisition of shares of XENOZCO., Ltd.).

- 157 -

Accumulated amortization and impairment
Intangible assets
Goodwill

Millions of yen
Balance as of March 1, 2021

Software

Other

Total

Millions of yen

Millions of yen

Millions of yen(44)(7,336)(432)(7,769)Amortization expense–(1,993)(1)(1,994)

Impairment loss

–

(1)

–

(1)

Sales or disposals

–

912

7

919

Transfer among line items

–

(0)

(0)

(0)

Exclusion from consolidation

–

939

–

939

Balance as of February 28, 2022

(44)

(7,480)(426)(7,907)

Amortization expense–(2,212)(2)(2,214)

Impairment loss

–

(6)

–

(6)

Sales or disposals

–

1,287

1

1,288

Transfer among line items

–

0

0

0

Other

44

–

–

–

Balance as of February 28, 2023–

(8,412)(427)(8,839)Carrying amount
Intangible assets
Goodwill

Millions of yen

Software

Other

Total

Millions of yen

Millions of yen

Millions of yen

Balance as of March 1, 2021

523

5,699

52

5,752

Balance as of February 28, 2022

523

7,235

54

7,289

Balance as of February 28, 2023

995

7,736

60

7,797

Note:

The amount of amortization expense for intangible assets is included in “cost of sales” and “selling, general and administrative expense” inthe consolidated statement of income.

(2) Impairment of goodwill
Goodwill arising in business combinations is allocated to cash-generating units that benefit from thebusiness combination on the acquisition date. The breakdown of the carrying amount of goodwill bysegment is as follows:
As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

SC Business
Other

523
–

523
472

Total

523

995

The Group tests goodwill for impairment each fiscal year, or whenever there is an indication of
impairment.
To test goodwill for impairment, cash-generating units to which the goodwill is allocated are integrated sothat impairment is tested reflecting the smallest units related to the goodwill. Goodwill acquired in a
- 158 -

business combination is allocated to cash-generating units that are expected to benefit from the synergiesof the combination.
The recoverable amount is usually determined by the value in use. The Group estimates the discounted
present value of future cash flows generated from use of the asset and the discounted present value of
future cash flows generated from ultimate disposal of the asset. These estimates are based on
management’s best estimates, but may differ from actual results due to effects of changes in uncertain
future economic conditions.
There is a risk that impairment may arise if major assumptions used for impairment test are changed.
However, the value in use sufficiently exceeds the carrying amount of the cash-generating unit or thegroup of cash-generating units, and the Group considers value in use unlikely to fall below the carrying
amount even if major assumptions used for impairment tests change within a reasonably foreseeable
range.
13. Leases(1) As lessee
The Group enters into lease contracts for real estate, various facilities, etc. in the Department StoreBusiness mainly for the purpose of ensuring flexibility relating to asset replacement, reducing theadministrative burden relating to asset management, and efficiently operating funds. In cases where such acontract transfers the right to control the use of an identified asset for a period of time in exchange forconsideration, the contract is deemed to be a lease or to contain a lease, and the right-of-use assets andlease liabilities are recognized on the date of the commencement of the lease. However, for short-termleases and leases for which the underlying asset is of low value, the Group may recognize the lease
payments related to the lease as an expense using the straight-line method over the lease term.
In some lease contracts among those aforementioned agreements, an option for the lessee to extend thelease period is attached.
The Group exercises the option to extend a lease if it judges it necessary to exercise that option after
comprehensively considering the profitability of the underlying asset of the agreement, changes to theenvironment of the neighborhood market and the exercise conditions of the option. However, in cases
where there is no reasonable certainty that the option will be exercised on the start date of the lease, thecorresponding extension period is not included in the lease period and the lease payment for that period is
not included in the measurement of lease liabilities.
For both the option to extend the lease period and the option to cancel the lease, the Group reviews thepossibility of exercising the option each period.
The total amount of agreements that contain contingent rents or residual value guarantee, or the total
amount of leases that have not yet started regardless of whether the agreement has been concluded are
immaterial.
The breakdown of right-of-use assets is as follows:(Millions of yen)Type of underlying assets
Intangible assets,
other

Total

Buildings andstructures

Machinery, tools
and fixtures

As of February 28, 2022

115,049

1,603

22,433

1,382

140,470

As of February 28, 2023

95,554

1,308

21,414

1,223

119,501- 159 -

Land

Profit or loss and cash outflow related to right-of-use assets
1) Costs related to leases(Millions of yen)
Fiscal year ended

Fiscal year ended

February 28, 2022

February 28, 2023

Depreciation expense of right-of-use assets
Items with buildings and structures as the underlying

22,441

22,333

919

867

1,201

1,237

Items with intangible assets, other as the underlying asset

156

152

Total depreciation expense of right-of-use assets

24,71824,590186

2,898

Items with machinery, tools and fixtures as theunderlying asset

1–

Items with land as the underlying asset–

305

Items with intangible assets, other as the underlying asset

032

Total impairment loss of right-of-use assets

188

3,236

Interest expenses related to lease liabilities

4,009

3,607

Costs related to current lease obligations

487

285

Costs related to leases of low-value assets

1,084

990

163

82

assets
Items with machinery, tools and fixtures as theunderlying asset
Items with land as the underlying asset

Impairment loss of right-of-use assets
Items with buildings and structures as the underlying
assetsContingent rents not included in the measurement oflease liabilities
Notes:

1.

Depreciation and impairment losses exclude right-of-use assets that fall under the definition of investment property.

2.

The amount of depreciation expense is included in “cost of sales” and “selling, general and administrative expense” in the
consolidated statement of income.

3

Impairment losses are recorded in “other operating expenses” in the consolidated statement of income.

2) Income from subleasing(Millions of yen)
Income from subleasing

11,962

12,7693) Cash outflow related to leases(Millions of yen)
Cash outflow related to leases

35,418- 160 -

34,081

Lease liabilities
A maturity analysis for lease liabilities is as follows.
(Millions of yen)
Fiscal year ended

Fiscal year ended

February 28, 2022

February 28, 2023

Contractual undiscounted cash flows
Due within one year

31,93230,946

Due after one year through two years

29,08928,785Due after two years through three years

27,52423,729Due after three years through four years

21,935

16,589Due after four years through five years

14,913

11,814Due after five years

85,426

78,207

Balance of lease liabilities before discount

210,821

190,072

Current

28,55428,411

Non-current

155,839

136,414(2) As lessor
The Group mainly leases investment property and tenant space inside commercial facilities using financelease or operating lease transactions.
These lease assets are exposed to the risk of being damaged due to the use by the lessee that is above andbeyond regular use, or as a result of intentional acts or gross negligence. To avoid and mitigate such risks,
the Group requires in accordance with lease contracts that lessees provide a lease or guarantee deposit of acertain amount, and if the asset is actually damaged, the lease or guarantee deposit is used to fund thecosts required for repair.
1) Finance leases (As lessor)
The information has been omitted due to its immateriality.
2) Operating leases (As lessor)
Revenue related to operating leases is as follows:
Fiscal year ended
February 28, 2022

(Millions of yen)
Fiscal year ended
February 28, 2023

Lease revenue (other than contingent rents)

28,532

29,850

Lease revenue (contingent rents)

24,956

26,604The maturity analysis for lease payments relating to operating leases is as follows:
As of February 28, 2022

(Millions of yen)
As of February 28, 2023

Due within one year
Due after one year through two years
Due after two years through three years
Due after three years through four years
Due after four years through five years
Due after five years

21,12919,63018,09916,50915,182
111,513

20,794
18,684
17,214
15,813
14,93999,691

Total

202,064

187,138- 161 -

Changes in the carrying amount, acquisition cost, and accumulated depreciation and impairment ofunderlying assets of operating leases recorded under property, plant and equipment in the consolidated
statement of financial position are as follows:
Carrying amount(Millions of yen)
Buildings and structures

Land
Balance as of March 1, 2021
Acquisitions
Sales or disposals
Depreciation expense
Impairment loss
Other
Balance as of February 28, 2022
Acquisitions
Sales or disposals
Depreciation expense
Impairment loss
Other
Balance as of February 28, 2023

149,250

103,431

43
–
–
–
(63)

1,620
(170)
(7,537)(41)57

149,231

97,359

20
–
–
–
(31)

3,376
(237)
(7,406)(1,134)(42)

149,220

91,915Acquisition costs(Millions of yen)
Buildings and structures

Land
Balance as of March 1, 2021

149,729

206,992

Balance as of February 28, 2022

149,709

208,406

Balance as of February 28, 2023

149,698

207,537

Accumulated depreciation and impairment(Millions of yen)
Buildings and structures

Land
Balance as of March 1, 2021

478

Balance as of February 28, 2022

478

111,046

Balance as of February 28, 2023

478

115,622- 162 -

103,56114. Investment Property(1) Schedule of changes
Changes in acquisition costs, accumulated depreciation and impairment and carrying amounts ofinvestment property and fair values as of the end of each fiscal year are as follows:
Acquisition costs
Self-owned assets

Right-of-use assets

Total

Millions of yen

Millions of yen

Millions of yen

Balance as of March 1, 2021

181,86235,088

216,950

Acquisitions
Sales or disposals
Transfer among line items
Decrease due to cancellation of lease contracts
Other

3,472
(1,133)
175
–
71

4,007
–
–
(182)
53

7,480
(1,133)
175
(182)
125

Balance as of February 28, 2022

184,446

38,967

223,413

Acquisitions
Sales or disposals
Transfer among line items
Decrease due to cancellation of lease contracts
Other

4,714
(3,042)(4,411)
–
(35)

2,432
–
(455)
(1,689)722

7,146(3,042)(4,866)(1,689)687

Balance as of February 28, 2023

181,672

39,977

221,649(Changes in presentation)
Previously, “Decrease due to cancellation of lease contracts” was included in “Other” (¥(129) million in the fiscal year ended
February 28, 2022), but due to its increased materiality, it is presented as “Decrease due to cancellation of lease contracts” (¥(1,689)
million in the fiscal year ended February 28, 2023) from the fiscal year ended February 28, 2023.

Accumulated depreciation and impairment
Self-owned assets

Right-of-use assets

Total

Millions of yen

Millions of yen

Millions of yen

Balance as of March 1, 2021

(16,634)(11,436)(28,071)

Depreciation
Impairment loss
Sales or disposals
Transfer among line items
Decrease due to cancellation of lease contracts(1,964)
(805)
426
(154)
–

(3,221)
(83)
–
–
147

(5,185)
(888)
426
(154)
147

Balance as of February 28, 2022

(19,131)(14,594)(33,725)

Depreciation
Impairment loss
Sales or disposals
Transfer among line items
Decrease due to cancellation of lease contracts
Other(1,893)
–
2,146
495
–
–

(3,132)
–
–
5
1,612
88

(5,025)
–
2,146
501
1,612
88

Balance as of February 28, 2023

(18,381)(16,019)(34,401)(Changes in presentation)
Previously, “Decrease due to cancellation of lease contracts” was included in “Other” (¥147 million in the fiscal year ended
February 28, 2022), but due to its increased materiality, it is presented as “Decrease due to cancellation of lease contracts”(¥1,612 million in the fiscal year ended February 28, 2023) from the fiscal year ended February 28, 2023.

- 163 -

Carrying amounts and fair values(Millions of yen)
As of February 28, 2023

As of February 28, 2022
Carrying amount
Investment property

Fair value

189,688

Carrying amount

257,720

Fair value

187,247

259,459

Fair value of investment property is based on real-estate appraisal by an external real-estate appraiser withrecent experience in appraisal for the region where the property is located and the type of the property to
be valued who holds certified professional qualifications and others. The appraisal is based on market
evidence reflecting the transaction price of similar assets in accordance with valuation standards of thecountry where the property is located.
(2) Income and expenses from investment property(Millions of yen)
Fiscal year ended
February 28, 2023

Fiscal year ended
February 28, 2022
Rental income
Direct operating expense

17,054
10,39817,667
10,781

The amounts of rental income from investment property and accompanying direct operating expense areincluded in “sales revenue” and “cost of sales,” respectively, in the consolidated statement of income.
(3) Commitments
Please refer to “39. Commitments” for commitments related to purchase of investment property.
15. Impairment of Non-financial Assets
Non-financial assets are grouped based on the smallest cash-generating unit (principally stores) that generates
cash inflows largely independent of those of other assets.
Impairment losses are recorded in “other operating expenses” in the consolidated statement of income.
The breakdown of the assets for which impairment losses were recognized by segment is as follows:
Fiscal year ended February 28, 2022
Segment

Company name (Location)

Daimaru Matsuzakaya Department Stores
Department Store
Co. Ltd.
Business(Chuo-ku, Tokyo, etc.)

SC Business

PARCO Co., Ltd.
(Funabashi, Chiba, etc.)

Use
Investment
property, etc.

Store, etc.

Type
Right-of-use assets

6

Investment property

106

Buildings and structures

41

Machinery and vehicles

2

Furniture and fixtures

0

Right-of-use assets

188

SoftwareDeveloper
Business
Other

PARCO Co., Ltd.
(Osaka, Osaka, etc.)
Daimaru Kogyo, Ltd.
(Chuo-ku, Osaka, etc.)

Store, etc.

Office, etc.

(Millions of yen)
Impairment loss

0

Furniture and fixtures

0

Right-of-use assets

76

Investment property

698

Furniture and fixtures

12

Software

0
Total

1,136

1) With regard to the Department Store Business, the main item is an impairment loss of ¥103 million
recognized for an expected decrease in revenue due to tenant withdrawals and write-down of thecarrying amount of buildings and structures to the recoverable amount in relation to the formulation ofa rebuilding and redevelopment plan for the Ginza Core building, in which Daimaru Matsuzakaya
Department Stores Co. Ltd. participates as a joint building business. The recoverable amount of the
cash-generating unit is measured as the fair value less cost of disposal.
2) With regard to the SC Business, the main item is an impairment loss of ¥231 million recognized for awrite-down of the carrying amount of right-of-use assets to the recoverable amount due to a decrease- 164 -

in the profitability of PARCO Co., Ltd.’s Tsudanuma PARCO. The recoverable amount of the cashgenerating unit was measured at value in use, and was calculated by discounting future cash flows by
a pre-tax discount rate of 3.9%, which was based on the WACC at the time of measurement, taking
into account the future profitability and other factors.
3) With regard to the Developer Business, the main item is an impairment loss of ¥593 million
recognized for a write-off of the entire amount of the carrying amount of investment real estate due toa decision to terminate the PARCO Co., Ltd.’s Dotonbori ZERO GATE project. The recoverable
amount was based on the value-in-use, which was zero.
In addition, an impairment loss of ¥159 million was recognized for the entire amount of the carrying
amount of the structure portion only of investment real estate due to a decision to dismantle andrebuild PARCO Co., Ltd.’s Nishiki 3-chome building. The recoverable amount was based on thevalue-in-use, which was zero.
There was no reversal of impairment losses recorded in the fiscal year ended February 28, 2022.
Fiscal year ended February 28, 2023
Segment

Company name (Location)
The Hakata Daimaru, Inc.
(Chuo-ku, Fukuoka)

Use
Merchandise
Center

Department Store
Daimaru Matsuzakaya Department Stores Co.
Business
Ltd.
Store, etc.
(Kita-ku, Osaka, etc.)

SC Business

Other

PARCO Co., Ltd.
(Shizuoka, Shizuoka, etc.)
Daimaru Kogyo, Ltd.
(Chuo-ku, Osaka)

Store, etc.

Software

Type(Millions of yen)
Impairment loss

Buildings and structures

47

Furniture and fixtures
Buildings and structures

0
1,341

Furniture and fixtures

82

Land

50

Right-of-use assets

2,366

Buildings and structures

1,119

Machinery and vehicles

4

Furniture and fixtures

12

Right-of-use assets

870

Software

6
Total

5,900

1) With regard to the Department Store Business, principally because of decreased profitability of
Daimaru Matsuzakaya Department Stores Co. Ltd.’s Daimaru Umeda store and Daimaru Shimonoseki
store, the carrying amount of right-of-use assets, etc. was reduced to the recoverable amount and the
reduction of ¥3,840 million was recognized as an impairment loss. The recoverable amount of the
cash-generating unit was measured at value in use, and was calculated by discounting future cash
flows by a pre-tax discount rates of 4.3 - 4.5%, which were based on the WACC at the time of
measurement, taking into account the future profitability and other factors.
2) With regard to the SC Business, principally because of decreased profitability of PARCO Co., Ltd.’s
Shizuoka PARCO, the carrying amount of right-of-use assets, etc. was reduced to the recoverable
amount and the reduction of ¥1,011 million was recognized as an impairment loss. The recoverable
amount of the cash-generating unit was measured at value in use, and was calculated by discounting
future cash flows by a pre-tax discount rate of 3.7%, which was based on the WACC at the time of
measurement, taking into account the future profitability and other factors.
In addition, with regard to PARCO Co., Ltd.’s Matsumoto PARCO which plans to terminate
operations at the end of February 2025, an impairment loss of ¥995 million was recorded as loss on
business liquidation. The recoverable amount of the cash-generating unit was measured at value in
use, and was calculated by discounting future cash flows by a pre-tax discount rate of 3.7%, which
was based on the WACC at the time of measurement, taking into account the future profitability andother factors.
There was no reversal of impairment losses recorded in the fiscal year ended February 28, 2023.

- 165 -

16. Investments Accounted for Using Equity Method
Investments in associates and joint ventures
The carrying amount of investments in associates and joint ventures that are not individually material is asfollows:
As of February 28, 2022
Associates:
Joint ventures:
Total(Millions of yen)
As of February 28, 2023

20,44318,31822,056
19,346

38,761

41,402The Group’s share of comprehensive income of associates and joint ventures that are not individually material
is as follows:(Millions of yen)
Fiscal year ended
February 28, 2023

Fiscal year ended
February 28, 2022
Associates:
Share of profit
Share of other comprehensive income
Share of comprehensive income
Joint ventures:
Share of profit
Share of other comprehensive income
Share of comprehensive income
Associates and joint ventures
Share of profit
Share of other comprehensive income
Share of comprehensive income

1,181
136

1,759
(3)

1,317

1,756

183
0

402
0

183

402

1,364
136

2,161
(3)

1,500

2,158

17. Joint Operations(1) GINZA SIX
In the Group, Daimaru Matsuzakaya Department Stores Co. Ltd., a subsidiary, works on the joint operation of
GINZA SIX, a commercial facility located at Ginza 6-chome 10, running the joint operation with partners,
namely L Real Estate S.C.A SICAR and SUMITOMO CORPORATION. With regard to revenue and expenses
related to the operation of this commercial facility, including profit and loss based on tenant agreements, theamount corresponding to the ownership ratio of Daimaru Matsuzakaya Department Stores Co. Ltd. (68%),
determined according to the ownership category of the commercial facility and other factors, was recognized.
(2) “Nishiki 3-chome District 25 project (tentative name)”
PARCO Co., Ltd., a subsidiary of the Group is engaged in the construction of a new building in Nishiki 3chome, Naka-ku, Nagoya City, under the “Nishiki 3-chome District 25 project (tentative name)”, a joint
operation with MITSUBISHI ESTATE CO., LTD., Japan Post Real Estate Co., Ltd., Meiji Yasuda Life
Insurance Company, and Chunichi Shimbun Co., Ltd.
Of the project expenses related to the project, PARCO Co., Ltd. will recognize the full amount of theconstruction expenses for the exclusive use areas and some common use areas for the commercial use, and theamount equivalent to the percentage determined based on the exclusive use area ratio, etc. for the entire
common use areas.
Construction of this project is scheduled to be completed in March 2026, and the entire facility is scheduled toopen around the summer of 2026.

- 166 -

18. Income Tax(1) Deferred tax assets and liabilities
The breakdown of and changes in deferred tax assets and liabilities by major cause are as follows:
Fiscal year ended February 28, 2022
(Millions of yen)
Balance as ofMarch 1, 2021

Recognized in
profit or loss

Recognized inothercomprehensive
income

7,180
614
5,372
60
1,944
5,487

(451)
46
(717)
28
(261)
1,142

(734)
–
–
(79)
–
–

–
(3)
(1)
–
–
–

5,994
657
4,653
8
1,683
6,630

5,235

422

–

–

5,658

106

(7)

–

–

98

Other (Note)

Balance as ofFebruary 28,
2022

Deferred tax assets
Retirement benefit liabilities
Allowance for credit losses
Non-current assets
Other financial assets
Asset retirement obligations
Tax loss carryforwards
Gain on adjustment of accounts
payableLong-term unearned revenue
Prepaid expense (Landleasehold right)
Lease liabilities
Other

2,972

11

–

–

2,984

59,584
9,784(6,424)
5,654

–
–

43
(284)

53,20315,154

Total

98,343

(555)

(814)

(245)

96,72778,903
4,873
56,2332,882(3,287)199(5,714)
5,821

–
435
–
(23)

0
–
(107)
(2)

75,616
5,508
50,411
8,679

Total

142,893(2,980)

412

(109)

140,215

Net amount of deferred tax
assets(44,550)

2,424(1,226)(136)(43,488)

Deferred tax liabilities
Non-current assets
Securities
Right-of-use assets
Other

Note:

Changes, etc. due to the sale of a consolidated subsidiary are included in “Other.”- 167 -

Fiscal year ended February 28, 2023
(Millions of yen)
Balance as ofMarch 1, 2022
Deferred tax assets
Retirement benefit liabilities
Allowance for credit losses
Non-current assets
Other financial assets
Asset retirement obligations
Tax loss carryforwards
Gain on adjustment of accounts
payableLong-term unearned revenue
Prepaid expense (Land leasehold
right)
Lease liabilities
Other
Total

Recognized in profit
or loss

Recognized in othercomprehensive
incomeBalance as ofFebruary 28, 2023

5,994
657
4,653
8
1,683
6,630

(702)
223
(1,455)(6)
74(1,419)

(166)
–
–
(0)
–
–

5,125
880
3,198
1
1,758
5,210

5,658

697

–

6,355

98

(5)

–

93

2,984

9

–

2,993

53,20315,154(5,442)(346)––

47,76114,80896,727(8,374)(166)

88,18675,616
5,508
50,411
8,679(3,496)178(5,974)
1,695

–
491
–
304

72,1206,179
44,436
10,679Total

140,215(7,596)796

133,415

Net amount of deferred tax assets(43,488)

(777)

(963)

(45,228)

Deferred tax liabilities
Non-current assets
Securities
Right-of-use assets
Other

Deferred tax assets and liabilities in the consolidated statement of financial position are as follows:(Millions of yen)
As of February 28, 2023

As of February 28, 2022
Deferred tax assets
Deferred tax liabilities
Net amount

8,209
51,697

3,137
48,366(43,488)(45,228)

In recognizing deferred tax assets, the Group takes into account the possibility that tax loss carryforwards
or deductible temporary differences can be utilized against future taxable profit. In the recoverability ofdeferred tax assets, the Group considers the scheduled reversal of deferred tax liabilities, projected futuretaxable profit and tax planning.
Based on the result of the above assessment of recoverability of deferred tax assets, some of the Group’s
subsidiaries have not recognized deferred tax assets for certain tax loss carryforwards and deductible
temporary differences. Tax loss carryforwards and deductible temporary differences for which deferred
tax assets have not been recognized are as follows:
Major balances of deferred tax assets of the Group are related to the consolidated taxation group in which
the Company is the consolidated parent corporation, and many of these deferred tax assets were recordedat Daimaru Matsuzakaya Department Stores Co. Ltd. and PARCO Co., Ltd., which are domestic
subsidiaries.
(Millions of yen)
As of February 28, 2023

As of February 28, 2022
Tax loss carryforwards
Deductible temporary differences
Total- 168 -

5,297
45,082

6,633
40,79450,38047,428

The deferral period of tax loss carryforwards for which deferred tax assets have not been recognized is asfollows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

1st year––

2nd year––

3rd year––

4th year

–

–

5,297

6,633

5,297

6,633

5th year and after
Total

The Company and some of its domestic subsidiaries apply the consolidated taxation system. The above
figures do not include the amounts of deductible temporary differences and unused tax losses for which
deferred tax assets have not been recognized, related to local taxes (inhabitant tax and business tax),
which are not subject to the said system. As of February 28, 2023, the amount of deductible temporary
differences related to local taxes (inhabitant tax and business tax) was ¥52,118 million (¥56,515 million as
of February 28, 2022), and the amount of unused tax losses was ¥9,041 million (¥7,477 million as ofFebruary 28, 2022).
As of February 28, 2022 and February 28, 2023, the total amount of temporary differences forinvestments in subsidiaries that were not recognized as deferred tax liabilities were ¥130,448 million and¥136,397 million, respectively.
(2) Income tax
The breakdown of income tax is as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Current taxes:
Current period

4,624

2,619

Prior periods

25

(785)

Total current taxes

4,650

1,834

757

34

(3,182)743(2,424)

777

2,225

2,611

Deferred taxes:
Origination and reversal of temporary
differences, etc.
Changes in unrecognized deferred tax assets
Total deferred taxes
Total- 169 -

(3) Reconciliation between effective tax rates
Differences between the effective statutory tax rate and average effective tax rate are as follows:
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023%%

Effective statutory tax rate

30.6

30.6

Entertainment expense

1.4

0.7

Bonuses for directors (and other officers)

0.3

0.4

Dividend income

(0.3)

(0.1)

Share of profit (loss) of investments accounted
for using equity method

(6.8)

(3.9)

Unrecognized deferred tax assets

(5.1)

(7.1)

10.3

–

4.8

0.1

Income taxes for prior periods

–

(4.4)

Other

0.7

(0.8)

36.0

15.5

Consolidation adjustments for gain (loss) on
sales of shares of subsidiaries
Difference from the applicable tax rate of
subsidiaries

Average effective tax rate

19. Cash Flow Information(1) Changes in liabilities arising from financing activities
Changes in liabilities arising from financing activities are as follows:
Fiscal year ended February 28, 2022
Changes that do not affect cash flows
Balance as ofFebruary 28,
2022
Millions ofyen

Balance as ofMarch 1, 2021

Changes that affectcash flows

New leases andchanges inagreements

Changes in fairvaluesOther

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

58,000––––58,00070,001(54,998)–––

15,002

162,110(17,150)–––

144,960

Bonds

69,81929,867––65

99,752

Lease liabilities

202,885(29,674)

11,891–(708)

184,394

Total

562,815(71,955)

11,891–(642)

502,109

Current
borrowings
Commercial
papersNon-current
borrowings- 170 -

Fiscal year ended February 28, 2023
Changes that do not affect cash flows
Balance as ofFebruary 28,
2023
Millions ofyen

Balance as ofMarch 1, 2022

Changes that affectcash flows

New leases andchanges inagreements

Changes in fairvaluesOther

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

58,000(24,000)–––

34,00015,002(15,002)

–

–

–

–

144,960(9,650)–––135,310

Bonds

99,752(20,000)––

61

79,813

Lease liabilities

184,394(29,138)

9,570

–

–

164,825

Total

502,109(97,791)

9,570

–

61

413,949

Current
borrowings
Commercial
papersNon-current
borrowings(2) Non-cash transactions
Right-of-use assets acquired through leases are as follows:
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Millions of yen

Millions of yen
8,333

Right-of-use assets acquired through leases

8,400(3) Loss of control
Fiscal year ended February 28, 2022
1) Transfer of NEUVE A Co., Ltd.
(i) Overview of transaction
In accordance with the share transfer agreement concluded with Libra Invesco Co., Ltd. on May
10, 2021, PARCO Co., Ltd., a consolidated subsidiary of the Company, transferred all the sharesof NEUVE A Co., Ltd. held by PARCO Co., Ltd. on June 30, 2021. Due to this transfer, theCompany lost control of NEUVE A Co., Ltd.
(ii) The amounts of assets and liabilities disposed of(Millions of yen)AmountCash and cash equivalents

650

Other current assets

3,085

Non-current assets

1,189

Total assets

4,924

Current liabilities

2,226

Non-current liabilities

402

Total liabilities

2,628- 171 -

(iii) Cash flows arising from loss of control(Millions of yen)AmountCash and cash equivalents received as compensation for loss of control

600

Expenses related to transfer of a subsidiary(79)

Cash and cash equivalents in a subsidiary of which the Company lost control(650)

Payments for sales of shares of subsidiaries that result in change in scope of consolidation (Note)

(129)

Note:

Payments for sales of shares of subsidiaries that result in change in scope of consolidation are included in cash flows from (used in)investing activities in the consolidated statement of cash flows.

2) Transfer of Dimples’ Co., Ltd.
(i) Overview of transaction
In accordance with the share transfer agreement concluded with WORLD HOLDINGS CO., LTD.
on January 6, 2022, the Company transferred 90% of the total number of shares of Dimples’ Co.,
Ltd. held by the Company on February 28, 2022. Due to this transfer, the Company lost control ofDimples’ Co., Ltd.
(ii) The amounts of assets and liabilities disposed of(Millions of yen)AmountCash and cash equivalents

309

Other current assets

760

Non-current assets

495

Total assets

1,565

Current liabilities

1,221

Non-current liabilities

149

Total liabilities

1,370(iii) Cash flows arising from loss of control(Millions of yen)AmountCash and cash equivalents received as compensation for loss of control

3,788

Cash and cash equivalents in a subsidiary of which the Company lost control(309)

Proceeds from sales of shares of subsidiaries that result in change in scope of consolidation (Note)

3,479

Note:

Proceeds from sales of shares of subsidiaries that result in change in scope of consolidation are included in cash flows from (usedin) investing activities in the consolidated statement of cash flows.

- 172 -

20. Bonds and Borrowings(1) Breakdown of financial liabilities
The breakdown of “bonds and borrowings” and “other financial liabilities” is as follows:
As of February 28, 2022

As of February 28, 2023

Averageinterest rate
(Note 1)Millions of yen

Millions of yen%

Repayment
deadline

Current borrowings

73,15063,5300.31–

Commercial papers

15,002–––Long-term borrowings

129,810

105,780

0.42

From March 2024
to March 2035

Bonds (Note 2)

99,752

79,81337,79037,605––28,866

27,660

–

–

Total

384,372

314,389––

Current liabilities

138,068

93,505––

Non-current liabilities

246,304

220,884––

Guarantee deposits
received
Other

Notes:

1.
2.

(Note 2)

The average interest rates are weighted-average interest rates based on the contract interest rates and the closingbalances for each borrowing.
Summary of issuing conditions of bonds is as follows:(Millions of yen)Company name

J. FRONTRETAILING Co.,Ltd.
J. FRONTRETAILING Co.,Ltd.
J. FRONTRETAILING Co.,Ltd.
J. FRONTRETAILING Co.,Ltd.
J. FRONTRETAILING Co.,Ltd.
J. FRONTRETAILING Co.,Ltd.
J. FRONTRETAILING Co.,
Ltd.

(Note 2)

Date of issue

As of February
28, 2022

As of February
28, 2023

Interest
rate(%)

Maturity dateAugust 5, 2015

5,000

–

0.46

August 5, 2022

August 4, 2017

15,000–0.16

August 4, 2022

6th series of
unsecured bonds

August 4, 2017

20,00020,0000.43

August 4, 2027

7th series of
unsecured bonds

May 22, 2019

20,00020,0000.20

May 22, 2024

May 22, 201910,00010,0000.37

May 22, 2029

May 26, 2021

15,00015,0000.17

May 26, 2026

May 26, 2021

15,00015,0000.47

May 26, 2028

100,000

80,0000.32

Bond name

4th series of
unsecured bonds
5th series of
unsecured bonds

8th series of
unsecured bonds
9th series of
unsecured bonds
10th series of
unsecured bonds

Total- 173 -

Agreements on some of borrowings of the Group require the maintenance of specific financial ratios and net assets at a
certain level.
The Group has complied with all the agreements on borrowings.

(2) Assets pledged as collateral
The Group has pledged corporate properties as collateral for borrowings, etc. Secured creditors have theright to receive the payment of their claims prior to other unsecured creditors with regard to the Group’s
properties.
Assets pledged as collateral for borrowings, etc. are as follows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Other financial assets

160

197

Inventories

81

146

242

343

Total

The corresponding obligations are as follows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Trade and other payables

177

215

Total

177

215

21. Trade and Other Payables
The breakdown of trade and other payables is as follows.
These are all classified as financial liabilities measured at amortized cost.
(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Notes payable - trade

2,353

2,772

Accounts payable - trade62,93779,701

Accounts payable - other

27,32728,761

Deposits received

21,602

21,581

Other

1,886

1,019

116,107

133,835Total

22. Employee Benefits
The Group has established defined benefit plans (such as a corporate pension fund plan and lump-sum
retirement benefit plan) as employee retirement benefit plans, and certain consolidated subsidiaries haveadopted defined contribution plans. In addition, the Group may pay extra retirement payments whenemployees retire before their normal retirement date. Certain consolidated subsidiaries have instituted aretirement benefit trust.
In regard to the corporate pension fund plan, the Group has obligations including paying contributions to thecorporate pension fund under the Defined-Benefit Corporate Pension Act, etc. Directors of the fund have
responsibilities including a duty of loyalty to faithfully execute operations related to managing and operating
funds in the interests of the fund. In addition, it is stipulated that directors are forbidden from entering into any
asset management contract aimed at serving the interests of a third party, and rules of conduct that include
forbidding acts that create a conflict of interest are clarified.
- 174 -

The plan is mainly operated by a corporate pension fund that is independent from the Group. The board ofrepresentatives comprises the same number of representatives elected from among the employers (elected
representatives) and representatives elected from among employees (mutually elected representatives), and thechairperson (president) of the board of representatives is elected from among the employers.
Decisions of the board of representatives are made by a majority of members in attendance, but in the case ofa tie, the President, who is the Chairperson, has the authority to make a decision. However, it is stipulated thatdecisions related to particularly important matters shall be determined by a majority in excess of the above.
The board of representatives holds the authority to make decisions about all important matters, such as
investment policies. Actual asset management is conducted by a managing trustee under an investment service
agreement, and directions from the board of representatives regarding investment in individual securities, etc.
are forbidden by laws and regulations.
The Company is required to pay contributions to the corporate pension fund and contributions are regularly
reviewed within the range permitted by laws and regulations. While the Company is obligated to makecontributions stipulated by the fund into the future, in addition to these contributions, it also funds a retirement
benefit trust on a voluntary basis.
With regard to the lump-sum retirement benefit plan, the Company is obligated to pay benefits directly to thebeneficiaries. There are no statutory requirements regarding funding.
(1) Defined benefit plans
The relationship between the present value of the defined benefit obligations and the fair value of the plan
assets and the amounts recognized in the consolidated statement of financial position is as follows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Present value of funded defined benefit
obligations

23,72921,325

Fair value of plan assets(35,179)(29,631)(11,450)(8,306)

Present value of unfunded defined benefit
obligations

21,36018,915

Liabilities of defined benefit plans

9,910

10,609Retirement benefit liabilities

19,416

16,754Retirement benefit assets

9,506

6,145

9,910

10,609Subtotal

Amounts in the consolidated statement offinancial position

Net defined benefit liability or asset in the
consolidated statement of financial position- 175 -

Changes in the present value of the defined benefit obligations are as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Present value of defined benefit obligations at
beginning of period
Service cost
Interest expense

Fiscal year ended
February 28, 2023
46,72645,089

1,480

1,511

190

161

(25)

(408)

(148)

(673)

(3,135)(5,285)1(154)

45,08940,240Remeasurements
Actuarial gains and losses arising fromchanges in demographic assumptions
Actuarial gains and losses arising fromchanges in financial assumptions
Benefits paid
Other
Present value of defined benefit obligations at
end of period

Changes in the fair value of the plan assets are as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Fair value of plan assets at beginning of period

Fiscal year ended
February 28, 2023
36,04335,179143

122

Return on plan assets

2,193

626

Contributions by employer

764

766

Benefits paid

(2,265)(2,563)Return of trust assets(1,700)(4,500)––35,17929,631

Interest revenue
Remeasurements

Other
Fair value of plan assets at end of period- 176 -

The fair value of each item of plan assets is as follows:
As of February 28, 2022
(Millions of yen)
Items of plan assets

Assets with quoted market
prices in active markets

Assets without quoted
market prices in active
markets

Cash and cash equivalents

1,269

–

1,269

Domestic shares

12,092283

12,376

Overseas shares

3,588

280

3,869

–

761

761

Domestic bonds

298

6,112

6,411

Overseas bonds

98

3,872

3,970

–

977

977

General accounts of life insurancecompanies

–

4,735

4,735

Other

–

808

808

17,347

17,83235,179Assets with quoted market
prices in active markets

Assets without quoted
market prices in active
markets

Cash and cash equivalents

4,158

–

4,158

Domestic shares

4,499

288

4,788

Overseas shares

3,463

271

3,734

–

754

754

Domestic bonds

5,389

600

5,989

Overseas bonds

2,996

105

3,102

555

948

1,504

–

4,799

4,799

–

799

799

21,063

8,568

29,631

Jointly operated trusts(shares)

Jointly operated trusts(public and corporate bonds)

Total

Total

As of February 28, 2023
(Millions of yen)
Items of plan assets

Jointly operated trusts(shares)

Jointly operated trusts(public and corporate bonds)
General accounts of life insurancecompanies
Other
Total

Total

The Group’s management of plan assets is aimed at ensuring the necessary income over the long-term toreliably make pension and lump-sum payments into the future. Its investment policy to achieve this isfundamentally to make diversified investments after analyzing characteristics of risks and returns for each
asset and taking into account correlations between respective assets.
Specifically, the Group develops the policy asset mix that is the optimal combination now and in the
future after taking into account the expected rate of return and risks on eligible investments, and the
managing trustee manages assets accordingly.
- 177 -

In regard to plan assets, the status of asset management is managed primarily by regularly reviewing thefinancial position of the plans, formulating long-term management policies, and monitoring the status ofasset allocation.
The Group’s pension funding is determined after taking into consideration various factors such as theallowable limit of deductible expenses under tax laws, the funding status of plan assets and actuarial
calculations. Contributions to plan assets are intended to cover benefits for services already rendered, in
addition to benefits for services to be rendered in future.
In accordance with the provisions of the Defined-Benefit Corporate Pension Act, the rules of the corporate
pension fund stipulate that the amount of contributions shall be recalculated every three to five years witha record date of the fiscal year end, in order to preserve a balanced budget into the future. During therecalculation, the basic rates related to contributions (expected interest rates, expected mortality rates,
expected withdrawal rates, expected salary increase indexes, expected number of new participants, etc.)
are reviewed, and the appropriateness of the contributions is reverified.
The Group plans to pay contributions of ¥807 million in the fiscal year ending February 29, 2024.
The weighted average duration of the defined benefit obligations as of February 28, 2022 was 9.28 years.
The weighted average duration of the defined benefit obligations as of February 28, 2023 was 8.58 years.
The main actuarial assumptions used to calculate the present value of the defined benefit obligations are
as follows:
As of February 28, 2022

As of February 28, 2023%%

Discount rate

Mainly 0.4

Mainly 1.0

Anticipated rate of salary increase

Mainly 4.6

Mainly 4.6

The sensitivity analysis is conducted based on changes in assumptions that are reasonably possible, as ofthe end of the fiscal year.
The sensitivity analysis is based on the premise that all actuarial assumptions remain constant other than
the actuarial assumption that is the focus of the analysis, but in reality there is a possibility that changes inother actuarial assumptions may affect the sensitivity analysis.
If there are no other changes to assumptions, the sensitivity of defined benefit obligations at the end ofeach fiscal year to changes in the discount rate is as follows. Furthermore, the Group does not expect any
changes in the anticipated rate of salary increase.
(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Changes in discount rate
0.5% increase(1,981)(1,624)

0.5% decrease

2,139

1,750

Amounts recognized as retirement benefit expense are as follows:- 178 -

(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Service cost

1,480

1,511

Net interest

47

39

Other

122

4

1,650

1,555

Total

(2) Defined contribution plans
The amount recorded as expenses in relation to defined contribution plans is ¥4,479 million for the fiscal
year ended February 28, 2022 and ¥3,875 million for the fiscal year ended February 28, 2023, andincluded in “cost of sales” and “selling, general and administrative expense” in the consolidated statementof income. The above amounts include the amount of the employer’s contribution to welfare pension
insurance premiums.
(3) Extra retirement payments
Extra retirement payments may be provided when an employee retires prior to the normal retirement date.
The amount recorded as expenses in relation to extra retirement payments was ¥3,477 million in the fiscal
year ended February 28, 2022 and ¥25 million in the fiscal year ended February 28, 2023, and included in“other operating expenses” in the consolidated statement of income.
(4) Employee benefit expenses
The amount of employee benefit expenses was ¥62,009 million in the fiscal year ended February 28, 2022
and ¥51,506 million in the fiscal year ended February 28, 2023, and included in “cost of sales” and“selling, general and administrative expense” in the consolidated statement of income.
23. Provisions
The breakdown and changes of provisions are as follows:(Millions of yen)
Asset retirement
obligations

Provision for loss on
business liquidation

Total

Balance as of March 1, 2021

6,708

4,740

11,449

Increase during the period

122

–

122

48

–

48

Decrease during the period (use)

(362)

(443)

(805)

Decrease during the period (reversal)

(51)

(82)

(134)

Other

(123)

(48)

(172)

Balance as of February 28, 2022

6,342

4,165

10,507

Increase during the period

632

1,027

1,660

Discounted interest expenses for theperiod36–

36

Decrease during the period (use)

(310)

(217)

(528)

Decrease during the period (reversal)

(175)

(402)

(577)

(0)

–

(0)

6,524

4,573

11,097

Discounted interest expenses for theperiodOther
Balance as of February 28, 2023

- 179 -

The breakdown of provisions in the consolidated statement of financial position is as follows:(Millions of yen)
As of February 28, 2022
Current liabilities
Non-current liabilities
Total

As of February 28, 2023
954

2,397

9,553

8,699

10,507

11,097(1) Asset retirement obligations
Asset retirement obligations are recorded at the estimated amount of restoration costs for rented stores,
offices, etc. for which the Group has obligations to restore to original state at the time when the leaseagreement is terminated. These expenses are expected to be mainly paid after one year or longer has
passed from the end of the fiscal year, and will be affected by future business plans, etc.
(2) Provision for loss on business liquidation
An amount of loss is recorded for the cost of store dismantlement, etc. that is expected to be borne in the
future as a result of business liquidation, store closure and store rebuilding. These expenses are expected
to be mainly paid after store closure or rebuilding (within four years from the end of the fiscal year), butwill be affected by changes in the surrounding environment and other factors.
24. Other Liabilities
The breakdown of other liabilities is as follows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Accrued bonuses

4,504

5,089

Accrued paid absences

2,479

2,671

Deferred income (Note)

408

383

Contract liabilities

39,73939,988Other accrued expense

9,939

7,929

Other

2,734

2,682

59,80658,74559,24358,276

563

469

Total
Other current liabilities
Other non-current liabilities
Note:

The breakdown of deferred income in the fiscal year ended February 28, 2022 was ¥408 million in government grants.
The breakdown of deferred income in the fiscal year ended February 28, 2023 is ¥383 million in government grants.

- 180 -

25. Equity and Other Equity Items(1) Capital and share premium
Changes in the number of authorized shares, number of issued shares, and the balances of capital, etc. are
as follows:

As of March 1, 2021
Changes during the period
As of February 28, 2022
Changes during the period
As of February 28, 2023
Note:

Number of
authorized shares(Shares)Number of issued
shares (Shares)

Capital(Millions of yen)

Share premium(Millions of yen)

1,000,000,000

270,565,764

31,974

188,542

–

–

–

351

1,000,000,000

270,565,764

31,974

188,894

–

–

–

174

1,000,000,000

270,565,764

31,974

189,068

All shares issued by the Company are ordinary shares with no restrictions and no par value. Issued shares are fully paid.

(2) Treasury shares
Changes in the number and balance of treasury shares are as follows:
Number of shares (Shares)
As of March 1, 2021

Amount (Millions of yen)

8,775,280(14,830)

Changes during the period(18,325)50

As of February 28, 2022

8,756,955(14,780)

Changes during the period(192,119)314

As of February 28, 2023

8,564,836(14,466)

Note:

Treasury shares include shares of the Company owned by the officer remuneration BIP trust.

(3) Nature and purposes of share premium and retained earnings
1) Share premium
It is stipulated in the Companies Act of Japan (“Companies Act”), that at least 50% of the payment ofcertain issues of common shares shall be credited to capital. The remainder of the payment shall becredited to legal capital surplus included in share premium. In addition, the Companies Act permits,upon approval of the shareholders meeting, the transfer of amounts from legal capital surplus tocapital.
2) Retained earnings
Under the Companies Act, 10% of the amount paid as dividends from surplus shall be reserved aslegal capital surplus (an item of share premium) or legal retained earnings (an item of retained
earnings), until the total amount of legal capital surplus and legal retained earnings reaches 25% ofcapital. The legal retained earnings may be used to eliminate or reduce a deficit, or may be reversedby resolution of the shareholders meeting.
(4) Nature and purposes of other components of equity
Exchange differences on translation of foreign operations
Exchange differences on translation of foreign operations represent the translation differences that
occurred when consolidating financial statements denominated in a foreign currency for companies
including foreign subsidiaries.
Cash flow hedges
The Group uses derivatives to hedge the risk of fluctuations in future cash flows. Cash flow hedges
represent the effective portion of changes in fair value of derivative transactions designated as cash flow
hedges.
- 181 -

Financial assets measured through other comprehensive income
Financial assets measured at fair value through other comprehensive income represent the changes in fairvalue of financial assets measured at fair value through other comprehensive income.
Remeasurements of defined benefit plans
Remeasurements of defined benefit plans are the effect of difference between actuarial assumptions as at
the beginning of the period and actual results in defined benefit plans and the effect of changes in actuarial
assumptions. They are recognized in other comprehensive income when incurred and immediatelytransferred from other components of equity to retained earnings.
26. Dividends(1) Dividends paid
Fiscal year ended February 28, 2022
Resolution
Board ofDirectors meeting
held on April 13,
2021
Board ofDirectors meeting
held on October
12, 2021
Note:

Class of shares

Total amount ofdividends(Millions of yen)

Dividends per
share
(Yen)

Ordinary shares

4,751

Ordinary shares

3,700

Record date

Effective date18.00

February 28, 2021

May 7, 2021

14.00

August 31, 2021

November 11,
2021

Total amount of dividends resolved at the Board of Directors meeting held on April 13, 2021 includes ¥39 million of dividends paid to theCompany’s shares held by an officer remuneration BIP trust.
Total amount of dividends resolved at the Board of Directors meeting held on October 12, 2021 includes ¥34 million of dividends paid on
the Company’s shares held by the officer remuneration BIP trust.

Fiscal year ended February 28, 2023
Resolution
Board ofDirectors meeting
held on April 12,
2022
Board ofDirectors meeting
held on October
11, 2022
Note:

Class of shares

Total amount ofdividends(Millions of yen)

Dividends per
share
(Yen)

Ordinary shares

3,964

Ordinary shares

3,964

Record date

Effective date

15.00

February 28, 2022

May 6, 2022

15.00

August 31, 2022

November 11,
2022

Total amount of dividends resolved at the Board of Directors meeting held on April 12, 2022 includes ¥37 million of dividends paid on the
Company’s shares held by the officer remuneration BIP trust.
Total amount of dividends resolved at the Board of Directors meeting held on October 11, 2022 includes ¥34 million of dividends paid on
the Company’s shares held by the officer remuneration BIP trust.

(2) Dividends whose effective date belongs to the following fiscal year
Fiscal year ended February 28, 2022
Resolution

Class of shares

Total amount ofdividends(Millions of yen)

Dividends per
share
(Yen)

Board ofDirectors meeting
held on April 12,
2022

Ordinary shares

3,964

15.00

Note:

Record date

Effective dateFebruary 28, 2022

May 6, 2022

Total amount of dividends resolved at the Board of Directors meeting held on April 12, 2022 includes ¥37 million of dividends paid on the
Company’s shares held by the officer remuneration BIP trust.

- 182 -

Fiscal year ended February 28, 2023
Resolution

Class of shares

Total amount ofdividends(Millions of yen)

Dividends per
share
(Yen)

Board ofDirectors meeting
held on April 11,2023

Ordinary shares

4,228

16.00

Note:

Record date

Effective dateFebruary 28, 2023

May 2, 2023

Total amount of dividends resolved at the Board of Directors meeting held on April 11, 2023 includes ¥36 million of dividends paid on the
Company’s shares held by the officer remuneration BIP trust.

27. Sales Revenue(1) Disaggregation of revenue
In accordance with IFRS 8 Operating Segments, the Group reports information about its four segments,
namely “Department Store Business,” “SC Business,” “Developer Business” and “Payment and FinanceBusiness.” These reportable segments are periodically examined by the Board of Directors for the purposeof deciding the allocation of management resources and assessing business results. Furthermore, the“Other” category is an operating segment not included as a reportable segment. It includes wholesaling,
parking, leasing, etc.
The Group considers that the categories of these reportable segments can be used to meet the objective forthe disaggregation disclosure requirement in paragraph 114 of IFRS 15. The following table shows thedisaggregation of revenue in accordance with the above categories and includes the reconciliation
representing how disaggregated revenue relates to each segment.
Revenue arising from these businesses is mainly recorded in accordance with contracts with customers,
and the amount of sales revenue related to variable consideration, etc. is immaterial. In addition, theamount of promised consideration does not include any significant financing.

- 183 -

Segment

Millions of yen

Millions of yen

19,15823,979Osaka Umeda store

14,840

16,101

Tokyo store

14,721

18,223

Kyoto store

15,44017,147

Kobe store

21,23325,330

Sapporo store

14,70817,652

Matsuzakaya
Nagoya store

34,15035,382

7,529

8,551

48,95653,385

(431)

(459)

Other stores, etc.
Elimination of inter-segment revenue
Department Store Business

190,307215,295

PARCO

49,35854,299

Other

3,198

62

Elimination of inter-segment revenue
SC Business(971)(1,053)51,58553,308

PARCO

8,130

7,061

PARCO SPACE SYSTEMS

18,15018,751

J. Front Design & Construction

23,64528,142706

714(9,935)(12,372)

Other
Elimination of inter-segment revenue
Developer Business

40,69842,297

Payment and Finance Business

11,037

12,889Elimination of inter-segment revenue(3,764)(5,304)

7,273

7,585

Other

61,75555,922Elimination of inter-segment revenue(20,135)(14,728)

41,61941,193

331,484

359,679

Revenue from contracts with customers

274,803

300,164

Revenue arising from other sources

56,68059,514331,484

359,679

Payment and FinanceBusiness

Other
Total

Sales revenue

1)

Fiscal year ended
February 28, 2023

Daimaru
Osaka Shinsaibashi store

Ueno store

Note:

Fiscal year ended
February 28, 2022

The “Department Store Business,” “SC Business” and “Developer Business” categories include lease revenue based on IFRS
16, and the “Payment and Finance Business” category includes interest revenue based on IFRS 9. Lease revenue and interest
revenue are included in “Revenue arising from other sources.” The “Other” category is a business segment not included inreportable segments. It includes wholesaling, parking, leasing, etc.

Department Store Business
The Department Store Business carries out the sale of clothing, general goods, household goods, foodproducts and others. With regard to these sales of goods, since performance obligations are deemed to besatisfied at the time when goods are delivered to customers, the Group recognizes revenue at the time ofdelivery of such goods. Payments for goods are principally received at the time of delivery of the goods,
which is the time when the performance obligation is satisfied.

2)

SC Business
The SC Business undertakes development, management, supervision and operation, etc. of shopping
centers as well as sale of personal belongings, general goods and others.
- 184 -

With regard to services, because these services are provided on a continuous basis and thus it isdetermined that performance obligation is satisfied over a certain period of time, revenue is recognized as
the services are rendered.
With regard to the sale of accessories, general goods and others, since it is usually determined that
performance obligation is satisfied at the time when goods are delivered to customers, revenue isrecognized at the time of delivery of such goods. Payments for goods are received at the time of deliveryof the goods, which is the time when performance obligation is satisfied.
Revenue from lease of shopping centers and others is recognized over the lease term, in accordance withIFRS 16.
3)

Developer Business
The Developer Business carries out development, management, operation, interior decorating work, etc.
of real estate.
Revenue from lease of real estate and others is recognized over the lease term, in accordance with IFRS
16.
With regard to the design and operation of interior decorating work, if the outcome of a work contract canbe estimated reliably, revenue is recognized according to the stage of completion of the performanceobligation. If the outcome of a work contract cannot be estimated reliably, revenue is recognized only tothe extent that it is probable that the contract costs incurred will be recoverable.

4)

Payment and Finance Business
The Payment and Finance Business undertakes issuance and administration, etc. of credit cards.
In the Payment and Finance Business, annual membership fees from cardholders, and fees fromdepartment stores and external affiliated stores are recognized as revenue. With regard to interest on
installment sales, the Group multiplies the revolving balance and number of installment payments by theirrespective set interest rates to calculate interest revenue, and recognizes the interest in the period to which
it is attributable, in accordance with IFRS 9.

5)

Other
Within other, for sales of products and merchandise such as electronic components, automobile
components, industrial supplies, and liquor within the wholesale business, the Group deems that in mostcases the customer acquires control of the products when they are delivered and its performanceobligations are satisfied. Therefore, usually revenue is recognized for the goods upon their delivery.

(2) Balance of contracts
Balance of contracts of the Group is as follows:
Fiscal year ended February 28, 2022
As of March 1, 2021
Receivables from contracts with customers

87,602(Millions of yen)
As of February 28, 2022
85,715Contract assets

3,280

3,193

Contract liabilities

42,93539,739Fiscal year ended February 28, 2023
As of March 1, 2022

(Millions of yen)February 28, 2023

Receivables from contracts with customers

85,715

94,129Contract assets

3,193

6,832

Contract liabilities

39,73939,988Notes:

1.

Receivables from contracts with customers
Receivables from contracts with customers primarily consist of receivables in association with the use ofcredit cards issued by the Group, and the amount includes the amount collected on behalf of third parties asagent transactions. The collection period of these receivables is mainly within one to two months.
2. Contract assets
Contract assets are related to rights to considerations arising when the Group is to receive payments from- 185 -

customers in line with a series of performances, and are recognized mainly in association with contracted
work agreements. For the completed part of work, the Group recognizes contract assets in advance, and they
are transferred to trade receivables at the time when the customer conducts acceptance inspection and theinvoice is sent.
Contract assets are included in trade and other receivables in the consolidated statement of financial position.
3. Contract liabilities
Contract liabilities are related to consideration received prior to performance under contracts and transferred
to revenue at the time when the Group performs obligations under contracts.
Contract liabilities are included in other current liabilities in the consolidated statement of financial position.

Of contract liabilities at the end of the previous period, the amount recognized in revenue in the fiscal year
ended February 28, 2023 was ¥17,851 million.
The increase in contract assets in the fiscal year ended February 28, 2023 was due to an increase inaccounts receivable - trade.
Regarding performance obligations satisfied or partially satisfied in prior periods, no amount wasrecognized in sales revenue in the fiscal years ended February 28, 2022 and February 28, 2023.
(3) Transaction price allocated to the remaining performance obligations
With regard to transaction price allocated to the remaining performance obligations, the Group willrecognize revenue in accordance with progress toward completion of construction work, the actual use ofgift certificates and points, and performance of services from membership fees. The total amount oftransaction price allocated to the remaining performance obligations and the timing when revenue is
expected to be recognized are as follows:
As of February 28, 2022
Due within one year
Due after one year through two years
Due after two years
Total(Millions of yen)
As of February 28, 2023

30,103
11,4199,207

39,886
11,376
7,666

50,72958,92928. Other Operating Income
The breakdown of other operating income is as follows:
Fiscal year ended
February 28, 2022
Gain on sales of shares of subsidiaries (Note 3)
Gain on sales of non-current assets (Note 1)
Subsidies for employment adjustment (Note 2)
Other subsidies
Other
Total
Notes:

1.
2.
3.

(Millions of yen)
Fiscal year ended
February 28, 2023

3,951
2,666
399
1,012
3,038

–
790
3
904
2,842

11,068

4,540

Gain on sales of non-current assets is mainly a gain on sales due to the sale of real estate holdings in theDeveloper Business.
The Company was eligible for subsidies for employment adjustment and other special measures due to the impact
of COVID-19.
Gain on sales of shares of subsidiaries for the fiscal year ended February 28, 2022, is a gain on the transfer of 90%of the shares of Dimples’ Co., Ltd. to WORLD HOLDINGS CO., LTD. Gain on valuation at the time of
measuring the remaining portion of 10% at fair value was ¥411 million and recognized as gain on sales of sharesof subsidiaries.

- 186 -

29. Cost of Sales
The breakdown of cost of sales is as follows:
Fiscal year ended
February 28, 2022
Cost of goods sold
Personnel expense
Depreciation expense
Other
Total

(Millions of yen)
Fiscal year ended
February 28, 2023

137,226
14,552
21,9659,899

149,934
6,787
22,191
11,229183,642

190,142

30. Selling, General and Administrative Expense
The breakdown of selling, general and administrative expense is as follows:
Fiscal year ended
February 28, 2022
Personnel expense
Depreciation and amortization expense
Advertising expense
Operational costs
Other
Total

(Millions of yen)
Fiscal year ended
February 28, 2023

49,94425,971
9,189
6,677
44,34047,284
26,915
10,4899,581
50,411

136,123

144,682

31. Other Operating Expenses
The breakdown of other operating expenses is as follows:
Fiscal year ended
February 28, 2022
Loss on sales of shares of subsidiaries (Note 2)
Loss on disposals of non-current assets
Impairment loss
Costs associated with temporary closures (Note 3)
Structural reform costs (Note 4)
Loss on business liquidation (Note 1)
Other
Total
Notes:

1.

2.
3.

4.

(Millions of yen)
Fiscal year ended
February 28, 2023

1,818
1,726
1,136
3,146
3,802
–
1,775

–
2,102
4,905
–
–
1,893
1,434

13,406

10,336The loss on business liquidation for the fiscal year ended February 28, 2023 is due to ¥898 million in costs related
to store closures (removal costs, sales reparations, etc.) and ¥995 million in impairment losses that were recorded
following the decision to cease operations at PARCO Co., Ltd.’s Matsumoto PARCO.
Loss on sales of shares of subsidiaries for the fiscal year ended February 28, 2022, was a loss on sale related to thetransfer of all shares of NEUVE A Co., Ltd. to Libra Invesco Co., Ltd.
Costs associated with suspension of store operations in the fiscal year ended February 28, 2022 were mainly fixed
costs (depreciation and amortization, personnel expenses, etc.) incurred by Daimaru Matsuzakaya Department
Stores Co. Ltd. and PARCO Co., Ltd. during the suspension of operations of stores, etc. that closed due to theimpact of the spread of COVID-19.
Structural reform costs in the fiscal year ended February 28, 2022, are mainly extra retirement payments due to the
expanded voluntary early retirement program for Daimaru Matsuzakaya Department Stores Co. Ltd. and The
Hakata Daimaru, Inc.

- 187 -

32. Finance Income and Finance Costs
The breakdown of finance income is as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Interest income
Financial assets measured at amortized cost

1,127

700

208

170

1,335

871

Dividend income
Equity financial assets measured at fair value
through other comprehensive income
Total

The breakdown of finance costs is as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Interest expense
Financial liabilities measured at amortized
cost

1,205

1,135

Interest expenses related to lease liabilities

4,009

3,607

676

475

5,890

5,218

Other
Total

- 188 -

33. Other Comprehensive Income
The amount arising during the period and reclassification adjustments to profit or loss for each item of othercomprehensive income and tax effect are as follows:(Millions of yen)
Fiscal year ended

Fiscal year ended

February 28, 2022

February 28, 2023

Financial assets measured at fair value through othercomprehensive income
Amount arising during the period

461

1,315

(515)

(491)

(52)

823

Amount arising during the period
Tax effect

2,349
(716)

1,708
(531)

Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted

1,632

1,176

208

(11)

(72)

4

136

(7)

1,716

1,992

Cash flow hedges
Amount arising during the period

(20)

(1)

Reclassification adjustments
Before tax effect

–
(20)

–
(1)

Tax effectCash flow hedges

6
(13)

0
(1)

Amount arising during the period
Reclassification adjustments

151
–

144
–

Before tax effectTax effect

151
–

144
–

Exchange differences on translation of foreign operations

151

144

for using equity method
Amount arising during the period(0)4Reclassification adjustments
Before tax effect

–
(0)

–
4

Tax effect
Share of other comprehensive income of entities

(0)

–

(0)

4

Total items that may be reclassified to profit or loss

136

147

Total other comprehensive income

1,853

2,140

Tax effectFinancial assets measured at fair value through othercomprehensive income
Remeasurements of defined benefit plansfor using equity method
Amount arising during the period
Tax effect
Share of other comprehensive income of entities
accounted for using equity method
Total items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss

Exchange differences on translation of foreign operations

Share of other comprehensive income of entities accounted

accounted for using equity method- 189 -

34. Earnings Per Share
Fiscal year ended
February 28, 2022
Profit attributable to owners of parent(Millions of yen)

Fiscal year ended
February 28, 2023
4,321

14,237

–

–

4,321

14,237

261,863,266

262,075,939

66,841

138,870

261,930,107

262,214,809

Basic earnings per share (Yen)

16.50

54.32

Diluted earnings per share (Yen)

16.50

54.30

Adjustment to profit
Profit used to calculate diluted earnings per share(Millions of yen)
Average number of ordinary shares during the period(Shares)
Increase in the number of ordinary shares:
Officer remuneration BIP trust (Shares)
Average number of diluted ordinary shares during theperiod (Shares)

Note:

The calculation of basic earnings per share and diluted earnings per share excludes the number of the Company’s shares
owned by the officer remuneration BIP trust from the average number of ordinary shares during the period because suchshares are treated as the Company’s treasury shares.

35. Share-Based Payment(1) Share-based payment plan1) Details of share-based payment plan
The Group has also adopted an officer remuneration BIP (Board Incentive Plan) trust (hereinafter the“BIP Trust”) as a performance-linked share-based payment for officers of PARCO Co., Ltd., which
had previously used a Share Distribution Trust, in addition to the Company and Daimaru Matsuzakaya
Department Stores Co. Ltd., from June 2021. The BIP Trust, which is similar to performance shareplans and restricted stock plans in the U.S. and Europe, is a system of granting the Company’s shares
to officers (in certain cases, the Company’s shares are converted into cash within the trust and cash in
the amount equivalent to their conversion value is paid) in accordance with the officers’ rank and levelof achievement of the Medium-term Business Plan, etc.
2) Number of points granted during the period and weighted average fair value of the points
In the assessment of fair value, a calculation is made based on the market price of shares adjusted
after taking into account expected dividends. The number of points granted during the period andweighted average fair value of the points are as follows:
Fiscal year ended February 28, 2022
(Former plan)
BIP Trust
Medium- to long-term
PS

Short-term PS
Number of points granted during
the period
Weighted average fair value (Yen)

Share Distribution
Trust

RS

–

41,00533,491

11,772

–

1,475

1,475

1,850

- 190 -

(New plan)
BIP Trust
Short-term PS

Medium- to long-term PS

RS

Number of points granted during
the period

84,857

138,857

23,079Weighted average fair value (Yen)

989

922

922

Fiscal year ended February 28, 2023
BIP Trust
Short-term PS

Medium- to long-term PS

RS

Number of points granted during
the period

136,871

251,398

40,971

Weighted average fair value (Yen)

988

922

922

Notes:1.

2.
3.

PS (Performance Share) is a share-based payment plan under which shares are granted when a predetermined
performance target for a certain period is achieved. The Company’s shares are granted to officers according to the levelof annual achievement in performance each year for short-term PS and according to the level of achievement of theMedium-term Business Plan after the completion of the Medium-term Business Plan for medium- to long-term PS.
RS (Restricted Stock) is a share-based payment plan under which shares that have restrictions on transfer for a certain
period are granted at the time of retirement in accordance with rank.
The Share Distribution Trust is a system of distributing shares at the time of retirement and paying the amount of cash
equivalent to their conversion value.

(2) Share-based payment expense
The amounts recognized as share-based payment expense, which were included in the consolidated
statement of income, were ¥455 million in the fiscal year ended February 28, 2022 and ¥480 million in thefiscal year ended February 28, 2023.
36. Financial Instruments(1) Capital management
The Group works to increase productivity and managerial efficiency as a group and conducts capitalmanagement with the aim of achieving sustained improvement in corporate value.
One of the major indicators monitored in the Group’s capital management is the D/E ratio, andmanagement uses this for monitoring and confirmation. Furthermore, the Group is not subject to any
material capital regulations.
D/E ratio is as follows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Interest-bearing debt

502,109

413,949

Equity attributable to owners of parent

350,368

359,385

1.43

1.15

D/E ratio (Times)(2) Financial risk management policy
In the course of its business activities, the Group is exposed to financial risks (credit risk, liquidity risk,
foreign currency risk, and interest rate risk), and engages in risk management to reduce these financial
risks.
The Group uses derivative transactions to avoid foreign currency fluctuation risk or interest rate
fluctuation risk and, in accordance with its policy, does not carry out any speculative transactions.
1) Credit risk management
Credit risk is the risk that a business partner will default on contractual obligations and cause theGroup to incur a financial loss.
- 191 -

To address this risk, each Group company carries out due date management and balance management
for each business partner and seeks early identification and mitigation of collectability concerns.
The Group’s receivables are from a number of business partners in a wide range of industries andregions.
The Group does not have credit risks overly concentrated in a single counterparty or a group to which
the counterparty belongs.
The maximum exposure to credit risk on financial assets is the carrying amount after impairment
presented in consolidated financial statements. The Group does not hold any properties as collateral orother credit enhancements in regard to exposure to these credit risks.
The Group considers whether or not there has been a significant increase in credit risk from the dateof initial recognition, and establishes an allowance for credit losses. Specifically, when there is no
significant increase in credit risk since initial recognition, expected credit losses for 12 months aremeasured as allowance for credit losses.
On the other hand, when there is a significant increase in credit risk since initial recognition, lifetime
expected credit losses are measured as allowance for credit losses. Whether credit risk hassignificantly increased or not is determined based on changes in default risk. Regardless of the above,
for trade receivables, lease receivables, etc. without a significant financing component, allowance for
credit losses is measured at an amount equal to lifetime expected credit losses.
In the measurement of these expected credit losses, reasonable and supportable information that isavailable at the fiscal year end is used for past events, current situations and projection of future
economic conditions such as credit loss experience in past years, status of delinquent receivables andfinancial conditions of creditors. Expected credit losses on financial assets for which credit risk has
not increased significantly and trade receivables, etc. without a significant financing component are
set altogether as a group and collectively assessed based on historical credit losses because they havelargely homogeneous credit risk characteristics.
Expected credit losses on financial assets for which credit risk has increased significantly and creditimpaired financial assets are individually assessed, taking into account historical credit loss
experience, future estimated collectible amount and others.
If a debtor does not make a payment within 90 days after the due date, the situation is considered as
default.
When financial assets are assessed as fully or partially uncollectible and the Group determines, as aresult of credit research, that it is appropriate to write off the assets, the Group directly writes off thecarrying amount of the credit-impaired financial assets.

- 192 -(i)Changes in allowance for credit losses
The Group considers whether or not there has been a significant increase in credit risk from thedate of initial recognition, and establishes an allowance for credit losses.
Changes in allowance for credit losses are as follows:

12-month
expected credit
lossesLifetime expectedcredit losses(Assessed
collectively)

Lifetime expectedcredit losses(Assessed
individually)(Millions of yen)
Credit-impaired
financial assets(Lifetime expectedcredit losses)

Balance as of March 1, 2021

131

61

3,085

994

Transfer to lifetime expected credit losses

(32)

–

84

(52)

Transfer to credit-impaired financial assets
Transfer to 12-month expected credit losses

(59)
0

–
–

(88)
(0)

147
(0)

Changes due to new arising and collectionof financial assets

76

(21)

240

213

Financial assets that were derecognized
during the period

(3)

–

(39)

(3)

Direct write-off
Changes in model/risk variables

(0)
–

–
–

(92)
–

(463)
–

Other

–

(0)

(1)

(1)

Balance as of February 28, 2022

111

38

3,187

835

Transfer to lifetime expected credit losses

(34)

–

77

(42)

Transfer to credit-impaired financial assets
Transfer to 12-month expected credit losses

(56)
0

–
–

(96)
(0)

153
(0)

Changes due to new arising and collectionof financial assets

88

(7)

(443)

310

Financial assets that were derecognized
during the period

–

–

–

–

Direct write-off
Changes in model/risk variables

(0)
–

–
–

(75)
–

(336)
–

Balance as of February 28, 2023

109

30

2,648

918

(ii) The carrying amounts of financial assets by risk type (before deducting allowance for credit
losses) are as follows:
As of February 28, 2022

As of February 28, 2023

Millions of yen

Millions of yen

Financial assets measured at amortized cost, etc.
(12-month expected credit losses)
Trade and other receivables(Lifetime expected credit losses)
Financial assets whose credit risk has increased
significantly since initial recognition (Lifetime expectedcredit losses)
Credit-impaired financial assets(Lifetime expected credit losses)

119,123

121,203

59,16670,898

4,526

4,667

869

957

2) Liquidity risk management
Liquidity risk is the risk of failure to make payments on the due date when the Group is required tofulfill its payment obligations for financial liabilities due.
The Group manages liquidity risk with methods such as preparing monthly cash flow management
plans at all companies, and securing sufficient liquidity on hand through commitment line contracts
and overdraft contracts with its main financing banks.
- 193 -

The balance of financial liabilities (other than lease liabilities, etc.) by payment due date is as follows:(Millions of yen)
Due after
Due after
Due within
one year
two years
one year through two
through
years
three years

Due after
three years
throughfour years

Due after
four years
throughfive years

Due after
five years

Carrying
amountContractual
amountTrade and other payables

116,107

116,107

116,107

–

–

–

–

–

Current borrowings

73,15073,30073,300

–

–

–

–

–

Commercial papers

15,002

15,00015,000

–

–

–

–

–

Non-current borrowings

129,810132,397482

30,012

12,844

26,764

17,662

44,629Bonds

99,752

101,452

20,283260

20,240220

15,20745,241Other financial liabilities

66,657

66,67929,915

1,034

535

–

–

35,193Forward exchange

–

–

–

–

–

–

–

–

Interest rate swaps

–

–

–

–

–

–

–

–

Total

500,480

504,937

255,090

31,30733,62026,98432,870125,064

As of February 28, 2022

Non-derivative financial liabilities

Derivative financial liabilities

Notes:

1.
2.

Current borrowings include the current portion of non-current borrowings.
Receivables and liabilities resulting from derivative transactions are presented on a net basis.
(Millions of yen)
Due after
Due after
Due within
one year
two years
one year through two
through
years
three years

Due after
three years
throughfour years

Due after
four years
throughfive years

Due after
five years

Carrying
amountContractual
amountTrade and other payables

133,835

133,835

133,835

–

–

–

–

–

Current borrowings

63,53063,67863,678

–

–

–

–

–

Commercial papers

–

–

–

–

–

–

–

–

Non-current borrowings

105,780

107,990444

12,874

28,794

17,68622,18226,009

Bonds

79,813

81,169260

20,240220

15,207

20,15125,090

Other financial liabilities

65,26565,32929,975

522

428

14

–

34,389Forward exchange

–

–

–

–

–

–

–

–

Interest rate swaps

–

–

–

–

–

–

–

–

Total

448,225

452,003

228,193

33,63629,44232,90742,33385,490

As of February 28, 2023

Non-derivative financial liabilities

Derivative financial liabilities

Notes:

1.
2.

Current borrowings include the current portion of non-current borrowings.
Receivables and liabilities resulting from derivative transactions are presented on a net basis.

- 194 -

If funds are temporarily insufficient for the payment of trade payables, etc., the Group procures fundswith the following financing methods. Fund procurement methods and the status of procurement ineach fiscal year were as follows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Commitment line
Used

–

–

200,000

100,000

200,000

100,000

Used

40,00016,000

Unused141,030

132,430

181,030

148,430

Used

15,000–

Unused85,000100,000

100,000

100,000

UnusedTotal
Overdraft limit

Total
Commercial paper issuance limit

Total3) Foreign currency risk management
The Group conducts transactions denominated in foreign currencies and is exposed to the risk offluctuations in exchange rates of foreign currencies against the Japanese yen, but this has immaterial
effect on profit before tax.
4) Interest rate risk management
The Group is exposed to various interest rate fluctuation risks in the course of its business activities.
Particularly, fluctuations in interest rates greatly affect borrowing costs.
To mitigate such interest rate fluctuation risks, the Group hedges the risks by conducting interest rate
swap transactions and other means.
(3) Fair value of financial instruments
1) Calculation method of fair value(Cash and cash equivalents, trade and other receivables, other financial assets (current), trade andother payables, and other financial liabilities (current))
The carrying amount is used as the fair value of these instruments, given that the fair value is almost
the same as the carrying amount, as they are mostly settled in a short period of time.
Derivatives are measured as financial assets or liabilities measured at fair value through profit or loss
based on prices presented by the counterparty financial institutions.
(Other financial assets (non-current), and other financial liabilities (non-current))
The fair value of listed shares is measured based on market prices at the last date of a fiscal year. The
fair value of unlisted shares is measured by discounted future cash flows, valuation model based on
profit and net assets, comparable company analysis method or the like.
Other financial assets or other financial liabilities measured at amortized cost mainly consist of leaseand guarantee deposits paid or lease and guarantee deposits received, and their fair value is measured
at present value calculated by discounting future cash flows at rates such as the current market interestrate.
- 195 -

(Bonds and borrowings)
The fair values of corporate bonds are estimated using the trading reference statistics of the Japan
Securities Dealers Association and others. Borrowings are measured by present value obtained bydiscounting future cash flows at interest rates that would be charged for a new similar borrowing.
2) Financial instruments measured at amortized cost
The carrying amounts and fair values of financial instruments measured at amortized cost are as
follows.
Financial instruments measured at fair value and financial instruments whose carrying amount closely
approximates fair value are not included in the following table.
As of February 28, 2022

As of February 28, 2023

Carrying amount

Fair value

Carrying amount

Fair value

Millions of yen

Millions of yen

Millions of yen

Millions of yen

55,74357,86754,48055,33255,74357,86754,48055,332

Borrowings

202,960

202,691

169,310

168,026

Bonds

99,752

99,47579,81378,812Other financial liabilities (non-current)

36,741

36,68635,29035,290

Total

339,454338,853

284,414282,129

Financial assets:
Other financial assets (non-current)
Total
Financial liabilities:

3) Fair value measurement
In regard to financial instruments measured at fair value, the fair value amounts measured are
categorized into three levels, from Level 1 to Level 3, in accordance with the observability andmateriality of inputs used in measurement.
Level 1:Market prices for identical assets or liabilities in active markets

Level 2:

Fair value, other than Level 1, that is determined by directly or indirectly using anobservable price

Level 3:

Fair value that is determined using a valuation technique including unobservable inputs

The fair value of financial instruments measured at fair value is as follows.
Any transfer between levels in the fair value hierarchy is recognized on each reporting date. In thefiscal years ended February 28, 2022 and February 28, 2023, there was no transfer between Level 1,
Level 2 and Level 3.

- 196 -

As of February 28, 2022
Financial assets measured at fair value on a recurring basis
Level 1

Level 2

Level 3

Total

Millions ofyenMillions ofyenMillions ofyenMillions of
yen

–

7

–

7

3,334

–

20,89924,2333,334

7

20,89924,241

Derivative financial liabilities

–

–

–

–

Total

–

–

–

–

Assets:Financial assets measured at fair value through profit orloss
Derivative financial assets
Financial assets measured at fair value through othercomprehensive income
Other financial assets (non-current)
Total
Liabilities:
Financial liabilities measured at fair value through profit
or loss

As of February 28, 2023
Financial assets measured at fair value on a recurring basis
Level 1

Level 2

Level 3

Total

Millions ofyenMillions ofyenMillions ofyenMillions of
yen

–

6

–

6

2,916

–

22,31425,2312,916

6

22,31425,237

Derivative financial liabilities

–

–

–

–

Total

–

–

–

–

Assets:Financial assets measured at fair value through profit orloss
Derivative financial assets
Financial assets measured at fair value through othercomprehensive income
Other financial assets (non-current)
Total
Liabilities:
Financial liabilities measured at fair value through profit
or loss- 197 -

4) Changes, from the beginning to the end of the period, in financial instruments whose fair value
measurement is categorized within Level 3
Changes, from the beginning to the end of the period, in financial instruments whose fair value
measurement is categorized within Level 3 are as follows:
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Millions of yen

Millions of yen

Balance at beginning of period

18,54920,899Other comprehensive income (Note)

1,410

1,286

Purchase

549

150

Sale

(30)

(19)

Other

420

(2)

20,89922,314

Balance at end of period
Note:

Gains or losses included in other comprehensive income relate to financial assets measured at fair value through othercomprehensive income as of the reporting date. These gains or losses are included in “financial assets measured at fair value
through other comprehensive income” in the consolidated statement of comprehensive income.

Financial instruments classified as Level 3 principally consist of unlisted shares. Fair value of unlisted
shares is measured by the Group’s department in charge using the latest figures available for eachquarter in accordance with the Group’s accounting policies and others, and reported together with thebasis for changes in fair value to superiors and to management where necessary.
Illiquidity discount that is a significant unobservable input used for the measurement of fair value
classified as Level 3 in the fair value hierarchy is 30% in the calculation.
A significant increase (decrease) in this input will cause a significant decrease (increase) in the fairvalue.
(4) Fair value hierarchy for assets and liabilities that are not measured at fair value but of which fair value has
been disclosed
Fair values of financial instruments measured at amortized cost are as follows.
Financial instruments measured at fair value and financial instruments whose carrying amount closely
approximates fair value are not included in the following tables.
(Millions of yen)
As of February 28, 2022

Level 1

Level 2

Level 3

Total

Assets:Financial assets measured at amortized cost
Other financial assets (non-current)

–

4,301

53,56657,867–4,301

53,56657,867

Borrowings–

202,691–

202,691

Bonds–

99,475–99,475

Other financial liabilities (non-current)––

36,686

36,686–302,166

36,686

338,853

Total
Liabilities:
Financial liabilities measured at amortized cost

Total

- 198 -

(Millions of yen)
As of February 28, 2023

Level 1

Level 2

Level 3

Total

Assets:Financial assets measured at amortized cost
Other financial assets (non-current)

–

4,359

50,97255,332–

4,359

50,97255,332

Borrowings–

168,026–

168,026

Bonds–

78,812–78,812Other financial liabilities (non-current)––

35,29035,290–246,838

35,290282,129

Total
Liabilities:
Financial liabilities measured at amortized cost

Total(5) Financial assets measured at fair value through other comprehensive income
The Group designates investments in equity instruments held in order to maintain and strengthen business
relationships as financial assets measured at fair value through other comprehensive income in the light of
the holding purpose.
1) Fair value of securities
In regard to investments in equity instruments designated as financial assets measured at fair value
through other comprehensive income, the fair value of the main securities is as follows:
As of February 28, 2022
(Millions of yen)AmountSecurities
Asahi Properties Inc.

5,578

Takenaka Corporation

4,687

Chunichi Shimbun Co., Ltd.

975

Toho Gas Co., Ltd.

685

OSAKA GAS CO., LTD.

654

MBS MEDIA HOLDINGS, INC.

614

Nagoya Dome Company, Limited

601

TOKAI TELEVISION BROADCASTING Co., Ltd.

458

Misonoza Theatrical Corporation

427

Japan Installment Deposit Guarantee Co., Ltd.

420

- 199 -

As of February 28, 2023
(Millions of yen)AmountSecurities
Asahi Properties Inc.

6,476

Takenaka Corporation

5,416

Chunichi Shimbun Co., Ltd.

1,108

OSAKA GAS CO., LTD.

686

MBS MEDIA HOLDINGS, INC.

627

Toho Gas Co., Ltd.

569

Nagoya Dome Company, Limited

513

TOKAI TELEVISION BROADCASTING Co., Ltd.

493

Kyushu Kangyo Co., Ltd.

484

Misonoza Theatrical Corporation

3812) Dividend income(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Investments derecognized during theperiod04Investments held at end of period

207

166

208

170

Total

3) Financial assets measured at fair value through other comprehensive income derecognized during theperiodThe Group sells financial assets measured at fair value through other comprehensive income for the
purpose of periodic portfolio revisions, management of risk assets and others. The fair value on thedate of sale thereof and cumulative gain or loss on the sale (before tax) are as follows:(Millions of yen)
Fiscal year ended
February 28, 2023

Fiscal year ended
February 28, 2022
Fair value on the date of sale

183

471

Cumulative gain (loss) on sale95294) Transfer to retained earnings
The Group transfers cumulative gain or loss caused by fluctuations in the fair value of financial assets
measured at fair value through other comprehensive income to retained earnings when the asset isderecognized. In the fiscal years ended February 28, 2022 and February 28, 2023, cumulative gain orloss (after tax) in other comprehensive income transferred to retained earnings were ¥86 million and¥(109) million, respectively.
(6) Derivatives and hedges
1) Cash flow hedges
Cash flow hedges are hedges to avoid the risk of fluctuations in future cash flows. The Company
utilizes forward exchange contracts to hedge fluctuations in cash flows for forecast transactions, andinterest rate swaps and currency swaps to hedge fluctuations in cash flows related to floating-rateborrowings. Changes in fair value of derivative transactions designated as cash flow hedges arerecognized as other comprehensive income, included in other components of equity, and transferred to
profit (loss) when the hedged item is recognized as profit (loss).
The details of hedging instruments designated as cash flow hedges are as follows:- 200 -

As of February 28, 2022

Foreign currency
risk
Forward exchange
contracts

With term
exceeding
one year

AssetsLiabilities

Millionsof yenMillions ofyenMillions ofyenMillions of
yen

1,871

–

7

–

Other financial assets

–

–

–

–

–

Other financial
liabilities–

Carrying amountLine item in the
consolidated statement offinancial position

Changes in fair value used
to calculate the ineffective
portion of the hedge

Contract
value

Millions of yen

Interest rate risk
Interest rate swaps

As of February 28, 2023

Foreign currency
risk
Forward exchange
contracts

Line item in the
consolidated statement offinancial position

Changes in fair value used
to calculate the ineffective
portion of the hedge

ContractvalueWith term
exceeding
one year

AssetsLiabilities

Millionsof yenMillions ofyenMillions ofyenMillions of
yen

2,101

–

6

–

Other financial assets

–

–

–

–

–

Other financial
liabilities–

Carrying amountMillions of yen

Interest rate risk
Interest rate swaps(7) Transfer of financial assets
The Group securitizes certain trade receivables through the transfer of shares. However, some of suchsecuritized receivables impose an obligation to pay on the Group retrospectively if the debtor does notmake a payment. Since these securitized receivables do not meet requirements for derecognition offinancial assets, they are not derecognized.
As of February 28, 2022 and February 28, 2023, such transferred assets were recorded in “trade and otherreceivables” and the amount of money received arising at the time when the assets were transferred as
related liabilities was recorded in “bonds and borrowings,” at ¥18,000 million in the fiscal year ended
February 28, 2022 and ¥18,000 million in the fiscal year ended February 28, 2023.

- 201 -

37. Subsidiaries
Status of subsidiaries is as follows:
Equity ratio (%)
Name

Location

Daimaru Matsuzakaya Department Stores Co. Ltd.

Japan

The Hakata Daimaru, Inc.

Japan

Kochi Daimaru Co., Ltd.

Japan

PARCO Co., Ltd.

Japan

PARCO (SINGAPORE) PTE LTD

Singapore

Reportable segment

Department Store

As of
February 28,

As ofFebruary 28,

2022

2023

100.0

100.0

Department StoreBusiness

69.9

69.9

Department StoreBusiness

100.0

100.0

100.0

100.0

100.0

100.0

Business

SC Business
Developer Business
SC Business

PARCO SPACE SYSTEMS CO., LTD.

Japan

Developer Business

100.0

100.0

J. Front Design & Construction Co., Ltd.

Japan

Developer Business

100.0

100.0

PARCO Digital Marketing CO., LTD.

Japan

Developer Business

100.0

100.0

J. FRONT CITY DEVELOPMENT Co., Ltd.

Japan

Developer Business

100.0

100.0

100.0

100.0

Payment andJFR Card Co., Ltd.

Japan

Daimaru Kogyo, Ltd.

Japan

Other (Wholesale)

100.0

100.0

China

Other (Wholesale)

100.0

100.0

Daimaru Kogyo International Trading (Shanghai)Co., Ltd.

Finance Business

Daimaru Kogyo (Thailand) Co., Ltd.

Thailand

Other (Wholesale)

99.9

99.9

Taiwan Daimaru Kogyo, Ltd.

TaiwanOther (Wholesale)

100.0

100.0

Japan

Other (Merchandise
test and quality

100.0

100.0

50.2

50.2

100.0

100.0

100.0

100.0

100.0

100.0

–

50.8

Consumer Product End-Use Research Institute Co.,Ltd.

control)Angel Park Co., Ltd.

Japan

Other (Parking)Other

JFR Service Co. Ltd.

Japan

(Commissioned
back-officeservice/parking andleasing)

JFR Information Center Co., Ltd.

Japan

Daimaru Matsuzakaya Tomonokai Co., Ltd.

JapanXENOZ CO., Ltd.

Japan

Other (Information
service)
Other (Specified
prepaid transaction
service)
Other (Management

Notes:

1.
2.
3.

of e-sports team,etc.)

On October 27, 2022, the Company acquired all shares of JAPAN RETAIL ADVISORS Co., Ltd. from PARCO Co.,
Ltd. and changed its trade name to J. FRONT CITY DEVELOPMENT Co., Ltd.
Taiwan Daimaru Kogyo, Ltd. resolved to dissolve as of August 22, 2022 and is in the process of liquidation.
The Company acquired shares of XENOZ CO., Ltd. on December 1, 2022 and made it a consolidated subsidiary.

38. Related Parties(1) Transactions with related parties
Notes related to transactions with related parties (excluding those eliminated in the consolidated financial
statements) have been omitted because there were no significant transactions, etc.
- 202 -

(2) Remuneration for key management personnel
Description of the remuneration for Directors and other key management personnel of the Group is asfollows:(Millions of yen)
Fiscal year ended
February 28, 2022
Officer remuneration

Fiscal year ended
February 28, 2023
1,675

1,750

Retirement benefit

1

1

Share-based payment

455

480

2,132

2,232

Total

39. Commitments
Commitments related to expenditures after the reporting date are as follows:(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Purchase of property, plant and equipment

193

246

Purchase of intangible assets

219

894

3,082

8,062

3,495

9,203

Purchase of investment property
Total

40. Contingent Liabilities
Amount of guarantee obligations
The Group has provided guarantee for transactions, etc. between its employees and financial institutions asfollows:(Millions of yen)
As of February 28, 2022
Debt guarantees for employees
Total

As of February 28, 2023
1

0

1

0

41. Subsequent Events
No items to report
42. Approval of Consolidated Financial Statements
These consolidated financial statements were approved by the President and Representative Executive Officer
Tatsuya Yoshimoto on May 26, 2023.

- 203 -

(2) Other
Quarterly financial information, etc. for the current fiscal year
(Cumulative)
Sales revenue (Millions of yen)First three months

First six months

First nine months

Current fiscal year

81,905

169,129

256,941

359,6796,856

12,223

18,426

16,873

Profit attributable to owners ofparent (Millions of yen)

5,974

10,155

14,762

14,237

Basic earnings per share (Yen)

22.80

38.75

56.33

54.32

Profit before tax (Millions ofyen)(Quarterly)
Basic earnings (loss) per share(Yen)First quarter

Second quarter

22.80

15.95

- 204 -

Third quarter
17.58

Fourth quarter(2.01)

2. Non-consolidated Financial Statements, etc.
(1) Non-consolidated Financial Statements
1) Non-consolidated Balance Sheet(Millions of yen)
As of February 28, 2022

As of February 28, 2023

85,03031,08749,074

75,100

1,776
376
(370)
135,887

4,939
124
(400)
110,851

77
16
94

185
34
219

553
553

1,348
1,348

1,660
377,268

1,762
378,341

124,000

81,000

1,615
479
(500)
504,524
505,172

472
619
(500)
461,695
463,264247
247
641,307

186
186
574,302

AssetsCurrent assets
Cash and deposits
Short-term loans receivable from subsidiaries andassociates
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Other
Total property, plant and equipment
Intangible assets
SoftwareTotal intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable from subsidiaries
and associates
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Bond issuance costs
Total deferred assets
Total assets- 205 -

(Millions of yen)
As of February 28, 2022

As of February 28, 2023

55,15015,00220,000616
356
13945,530
–
–
719
121
194

95

122

111
2,393
93,864178
3,105
49,97180,000129,810413
1,978
212,201
306,066

80,000105,780
777
1,652
188,209238,180

31,974

31,974

9,474
239,400
248,874

9,474
239,400
248,874

68,20068,200(13,816)
335,233

68,71968,719(13,526)
336,043778

7335,241
641,30778
336,121574,302

Liabilities
Current liabilities
Short-term borrowings
Commercial papers
Current portion of bonds
Accrued expenses
Income taxes payable
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Provision for officer remuneration BIP trust
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Provision for officer remuneration BIP trust
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Other retained earnings
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 206 -

2)

Non-consolidated Statement of Income(Millions of yen)
Fiscal year ended
February 28, 2022

Operating revenue
Dividend income
Consulting fee income
Total operating revenue
General and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Interest on bonds
Amortization of bond issuance costs
Provision of allowance for doubtful accounts
Commitment fees
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of shares of subsidiaries and associates
Total extraordinary income
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit*1*1*1, *2

*1
*1

*1

*3

*4

- 207 -

Fiscal year ended
February 28, 2023

10,482
5,000
15,482
4,995
10,487

*1

712
44
22
779

*1

672
284
65
30
574
135
1,762
9,505

*1

3,644
3,644
13,149518(1,622)(1,103)
14,253

*1

*2

*1

*3

9,379
5,859
15,238
6,278
8,959
672
69
45
787
608
280
61
30
383
98
1,462
8,284
–
–
8,284
(1,276)
1,112
(163)
8,448

3)

Non-consolidated Statement of Changes in Equity

Fiscal year ended February 28, 2022
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurplusOtherretainedearnings
Retainedearnings
brought
forward9,474

239,601

249,075

62,39862,398Dividends ofsurplus(8,452)(8,452)(8,452)

Profit14,253

14,253

14,253

SharecapitalBalance at beginning of
period31,974

Total
retainedearnings

TreasurysharesTotalshareholders’equity(14,066)

329,382

Changes during period

Purchase oftreasury shares
Disposal of treasury
shares
Disposal of treasury
shares for share
distribution trust
Purchase oftreasury shares byshare distribution
trust
Net changes in
items other thanshareholders’ equity
Total changes during
periodBalance at end of
periodBalance at beginning of
period

(32)

(0)

(0)

82

82

(200)

(200)

583

383

(383)

(383)

–

–

(200)

(200)

5,801

5,801

250

5,851

31,974

9,474

239,400

248,874

68,20068,200(13,816)

335,233

Valuation and translation
adjustments
Valuation
Total
difference
valuationonandavailabletranslation
for-saleadjustments
securities

Total net
assets(30)(30)

329,351

Changes during period
Dividends ofsurplus(8,452)

Profit14,253Purchase oftreasury shares
Disposal of treasury
shares
Disposal of treasury
shares for share
distribution trust
Purchase oftreasury shares byshare distribution
trust
Net changes in
items other thanshareholders’ equity
Total changes during
periodBalance at end of
period

(32)

(32)
82
383

(383)

38

38

38

38

38

5,889

7

7

335,241- 208 -

Fiscal year ended February 28, 2023
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurplusOtherretainedearnings
Retainedearnings
brought
forward9,474

239,400

248,874

68,20068,200

Dividends ofsurplus(7,928)(7,928)(7,928)

Profit

8,448

8,448

8,448

Share
capitalBalance at beginning of
period31,974

Total
retainedearnings

TreasurysharesTotalshareholders’equity(13,816)

335,233

Changes during period

Purchase oftreasury shares
Disposal of treasury
sharesNet changes in
items other thanshareholders’ equity
Total changes during
periodBalance at end of
periodBalance at beginning of
period

(0)

(0)

(8)

299

299

–

–

(0)

(0)

519

519

290

809

31,974

9,474

239,400

248,874

68,71968,719(13,526)

336,043

Valuation and translation
adjustments
Valuation
Total
difference
valuationonandavailabletranslation
for-saleadjustments
securities

Total net
assets77335,241

Changes during period
Dividends ofsurplus(7,928)

Profit8,448

Purchase oftreasury shares
Disposal of treasury
sharesNet changes in
items other thanshareholders’ equity
Total changes during
periodBalance at end of
period

(8)

(8)
299
70

70

70

70

70

879

78

78

336,121- 209 -

Notes to Non-consolidated Financial Statements(Notes on premise of going concern)
No items to report(Significant accounting policies)
1. Basis and method of valuation of assets(1) Shares of subsidiaries and associates
Stated at cost using the moving-average method(2) Available-for-sale securities
Other than stocks and other securities with no market priceStated at fair value based on the market prices at the fiscal year-end (Valuation differences are included in
net assets; cost of securities sold is determined by the moving-average method)
Stocks and other securities with no market priceStated at cost using the moving-average method
2. Basis and method of valuation of derivatives
Derivatives
Stated at fair value
3. Basis and method of valuation of inventories
Supplies
Stated at cost using the FIFO method (the book value is written down based on the decreased profitability)
4. Depreciation method of non-current assets(1) Property, plant and equipment (excluding leased assets)
Straight-line method(2) Intangible assets (excluding leased assets)
Straight-line method
Internal use software is amortized using the straight-line method over the internally expected useful life (5years).
(3) Leased assets
Leased assets in finance leases that do not transfer ownership are depreciated using the straight-line
method with zero residual value assuming the lease periods as useful lives.
5. Accounting method for deferred assets
Bond issuance costs
Amortized using the straight-line method over the period until redemption
6. Accounting policy for provisions(1) Allowance for doubtful accounts
To prepare for losses from bad debt, an estimated uncollectible amount is provided.
(2) Provision for bonuses
To prepare for the payment of bonuses to employees, the amount expected to be paid is provided.
- 210 -

(3) Provision for bonuses for directors (and other officers)
To prepare for the payment of bonuses to corporate officers, the amount expected to be paid is provided.
(4) Provision for officer remuneration BIP trust
To prepare for the granting of the Company’s shares through an officer remuneration BIP trust, theamount equivalent to the value of shares in proportion to the number of points awarded to officers inaccordance with the Stock Benefit Rules is provided.
7. Accounting policy for revenues and expenses
Revenue generated from contracts with customers for the Company, which is a holding company, mainly
consists of consulting fee income and dividend income from subsidiaries. Income from consulting fees isrecognized as revenue in equal amounts over the contract period because the performance obligation is toprovide management, planning and other guidance to subsidiaries, and such performance obligations are
satisfied on a recurring basis. Income from dividends is recognized as of the effective date.
8. Hedge accounting method(1) Hedge accounting method
Exceptional treatment is applied to interest rate swaps that satisfy the requirements for exceptional
treatment.
(2) Hedging instruments and hedged items(i) Hedging instruments
Interest rate swaps(ii) Hedged items
Borrowings and interest expenses on borrowings(3) Hedging policy
Based on the risk management policy, hedging is undertaken to hedge interest rate fluctuation risk.
(4) Method for assessing the hedge effectivenessAt the end of each fiscal year, hedge effectiveness with respect to the hedged items and hedging
instruments is assessed for each hedging transaction. This annual assessment excludes any transaction
where important terms and conditions, such as principal, interest rate, and duration, are identical between
the assets or liabilities of hedged items and hedging instruments.
9. Application of consolidated taxation system
The consolidated taxation system has been applied from the current fiscal year.
Moreover, regarding the transition to the group tax sharing system established in the “Act Partially Amending
the Income Tax Act” (Act No. 8 of 2020) and the items revised in the non-consolidated taxation system in linewith the transition to the group tax sharing system, in accordance with the treatment of Paragraph 3 of“Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31, 2020), the Company has
not applied the provision of Paragraph 44 of “Guidance on Accounting Standard for Tax Effect Accounting”(ASBJ Guidance No. 28, February 16, 2018), and the amounts of its deferred tax assets and deferred tax
liabilities are in accordance with the tax laws prior to revision.
(Significant accounting estimates)
1. Recoverability of deferred tax assets(1) Amounts recorded in financial statements for the current fiscal year
Deferred tax assets ¥472 million(2) Other information contributing to understanding the details of accounting estimates- 211 -

This information is omitted here as it is presented under “4. Significant Accounting Estimates andJudgments” in the notes to consolidated financial statements.
(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition, etc.)
The Company adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020), etc. from the beginning of the current fiscal year, and recognizes revenue at the amount
expected to be received in exchange for the promised goods or services when control of the promised
goods or services has been transferred to the customer.
Regarding application of the Accounting Standard for Revenue Recognition, the Company follows thetransitional treatment prescribed in the proviso of Paragraph 84 of the Accounting Standard for Revenue
Recognition, and the cumulative effect of retrospective applications of the new accounting policy prior to
the beginning of the current fiscal year is added to or deducted from retained earnings at the beginning of
the current fiscal year, and the new accounting policy is applied from such a starting balance.
There is no impact on the financial statements.
(Application of Accounting Standard for Fair Value Measurement, etc.)
The “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019), etc. isapplied from the beginning of the current fiscal year, and the new accounting policies prescribed by the
Accounting Standard for Fair Value Measurement, etc. are applied prospectively in accordance with thetransitional treatment prescribed in paragraph 19 of the Accounting Standard for Fair Value Measurement
and paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4,2019).
There is no impact on the financial statements.
(Changes in presentation)(Notes to non-consolidated balance sheet)
Accounts receivable - other, previously included in other (¥2,152 million yen for the previous fiscal year)
on the balance sheet, is now presented as accounts receivable - other (¥4,939 million yen for the current
fiscal year) due to its increased importance.

- 212 -

(Notes to non-consolidated statement of income)*1. Transactions with subsidiaries and associates(Millions of yen)
Fiscal year ended
February 28, 2022
Operating transactions
Operating revenue
General and administrative expenses
Non-operating transactions

Fiscal year ended
February 28, 2023

15,482595
700

15,238889
672*2. Major components of general and administrative expenses(Millions of yen)
Fiscal year ended
February 28, 2022
Officer remuneration
Employees’ salaries
Provision for bonuses
Provision for bonuses for directors (and other officers)
Retirement benefit expenses
Welfare expenses
Taxes and dues
Depreciation
Rent expenses
Operational costs
Miscellaneous expenses

Fiscal year ended
February 28, 2023

693
905
139
95
61
226
407
34
287
606
565

799
1,016
194
122
64
273
331
281
265
1,068
868

*3. Provision of allowance for doubtful accounts
Fiscal year ended February 28, 2022
Loans to the subsidiary and associate JFR Kodomo Mirai Co., Ltd. were recognized as provision of allowance for
doubtful accounts.
Fiscal year ended February 28, 2023
Loans to the subsidiary and associate JFR Kodomo Mirai Co., Ltd. were recognized as provision of allowance for
doubtful accounts.
*4. Gain on sale of shares of subsidiaries and associates
Fiscal year ended February 28, 2022
Gain on sale was recognized in association with the sale of shares in the subsidiary and associate Dimples’ Co.,
Ltd.
(Notes on securities)
Shares of subsidiaries and associates
As of February 28, 2022
(Millions of yen)
Category

Carrying amount

Fair value

Difference

Shares of subsidiaries

–

–

–

Total

–

–

–

- 213 -

Note:

Shares of subsidiaries and associates whose fair values are deemed to be extremely difficult to determine(Millions of yen)
Category

Carrying amount

Shares of subsidiaries
Shares of associates

367,121
10,147

As of February 28, 2023
(Millions of yen)
Category

Carrying amount

Fair value

Difference

Shares of subsidiaries

–

–

–

Total

–

–

–

Note:

Carrying amount of non-marketable stocks and other securities not included in the above table(Millions of yen)
Category

Carrying amount

Shares of subsidiaries
Shares of associates
Investments in investment
partnerships, etc.

368,045
10,147148(Notes on tax effect accounting)
1. The breakdown of deferred tax assets and liabilities by major cause(Millions of yen)
Deferred tax assets
Provision for bonuses
Accrued insurance expenses
Accrued enterprise tax
Tax loss carryforwards
Allowance for doubtful accounts for subsidiaries and associates
Loss on valuation of shares of subsidiaries and associates
Provision for officer remuneration BIP trust
Loss on impairment of non-current assets
Other
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Asset retirement obligations
Valuation difference on available-for-sale securities
Business tax refund receivable
Other
Total deferred tax liabilities
Net amount of deferred tax assets- 214 -

As of February 28, 2022

As of February 28, 2023

42
6
83
1,667
266
61
77
112
69

59
8
35
707
275
61
119
112
95

2,387
(767)
1,620

1,475
(922)
552

(1)
(3)
–
–

(20)
(34)
(14)
(10)

(4)

(80)

1,615

472

2. Reconciliation of significant difference between effective statutory tax rate and effective income tax rate after
application of tax effect accounting(Millions of yen)
As of February 28, 2022
Effective statutory tax rate(%)
(Adjustments)
Permanent non-taxable income for tax purposes (e.g., dividend
income)Permanent non-deductible expenses for tax purposes (e.g.,entertainment expenses)
Per capita inhabitant tax
Valuation allowance
Other
Effective income tax rate after application of tax effect accounting

As of February 28, 2023

30.6

30.6

(24.3)(34.9)

0.0

0.8

0.0
(15.0)
0.3

0.1
1.8
(0.3)

(8.3)

(2.0)

(Notes on business combinations)
No items to report(Notes on revenue recognition)
The basis for understanding revenues is described in “Notes (Significant accounting policies) 7. Accounting
policy for revenues and expenses.”(Significant subsequent events)
No items to report- 215 -

4) Annexed detailed schedules[Annexed detailed schedule of property, plant and equipment, etc.](Millions of yen)
Category

Balance at
beginning of
periodIncrease during
the period

Buildings andstructures

77

283

–

175

185

16

Other

16

32

–

14

34

12

Type of assets

Property, plantand equipment

Intangible assets

Total

Accumulated
depreciation

94

315

–

189

219

29

553

1,152

266

91

1,348

–

553

1,152

266

91

1,348

–

Total
SoftwareDecrease during
Amortization Balance at end of
the period
during the period
period[Annexed detailed schedule of provisions](Millions of yen)

Category

Balance at
beginning of
periodAllowance for doubtful accounts

870

430

400

900

Provision for bonuses

139

194

139

194

Provision for bonuses for directors (and otherofficers)

95

122

95

122

Provision for officer remuneration BIP trust

524

777

346

956

Increase during
the period

Decrease during
the period(2) Components of major assets and liabilities
The information has been omitted as the consolidated financial statements are prepared.
(3) Other
No items to report- 216 -

Balance at end of
periodVI. Outline of Share-Related Administration of Reporting Company
Fiscal year

From March 1 to the last day of February

Annual Shareholders Meeting

May

Record date

Last day of February

Record dates for dividends of surplus

Last day of February
August 31

Number of shares per share unit

100 shares

Purchase of shares less than one unit
Office for handling business

Shareholder register administrator

Forwarding officeHandling charge for purchase
Method of public noticeSpecial benefits for shareholders(Special account)
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Mitsubishi UFJ Trust and Banking Corporation
Stock Transfer Agency(Special account)
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Mitsubishi UFJ Trust and Banking Corporation–
No charge
The public notices of the Company shall be given by electronic means. However, inthe case of unavoidable circumstances, such as an accident which prevents the use of
the public notice by electronic means, they shall be placed in The Nikkei newspaper.
(i)

For shareholders owning at least 100 shares as of the last day of February
and new shareholders owning at least 100 shares as of August 31, the“Daimaru Matsuzakaya shopping courtesy card,” which entitles cardholders
to a 10% discount when shopping at marked prices at department storesoperated by Daimaru Matsuzakaya Department Stores Co. Ltd. (Daimaru
Shinsaibashi store, Daimaru Umeda store, Daimaru Tokyo store, Daimaru
Kyoto store, Daimaru Kobe store, Daimaru Suma store, Daimaru Ashiya
store, Daimaru Sapporo store, Daimaru Shimonoseki store, Matsuzakaya
Nagoya store, Matsuzakaya Takatsuki store, Matsuzakaya Ueno store,
Matsuzakaya Shizuoka store), The Hakata Daimaru, Inc. (Fukuoka Tenjin
store), Kochi Daimaru Co., Ltd., and also spending at Daimaru
Matsuzakaya ONLINE STORE, will be issued on the following basis.
For shareholders as of the last day of February, the courtesy cards will be
issued in May, with an annual spending limit set according to the number ofshares owned as described below. (Valid from mid-May (the date ofdelivery) until May 31 the following year)
Number of shares owned
as of the end of February

Spending limit
Duration of ownership:
Less than 3 years

Duration of ownership: 3
years or more

100 to 499 shares¥0.5 million per year

¥1.5 million per year

500 to 999 shares¥1.0 million per year

¥2.0 million per year

1,000 to 3,999 shares

Additional ¥1.0 million for Additional ¥1.0 million forevery 1,000 shares
every 1,000 shares

4,000 shares or more

¥5.0 million per year
(upper limit)¥6.0 million per year
(upper limit)

For new shareholders as of August 31, the courtesy cards will be issued in
November, with an annual spending limit according to the number of shares
owned set at half of the above amounts. (Valid from mid-November (the dateof delivery) until May 31 the following year)(ii)

By presenting the “Daimaru Matsuzakaya shopping courtesy card,”
shareholders may gain entry free of charge for themselves and a guest to
cultural events subject to admission fees held at facilities operated by
Daimaru Matsuzakaya Department Stores Co. Ltd. and PARCO Co., Ltd.
(gallery spaces in Sapporo, Shibuya, Nagoya, Shinsaibashi, Fukuoka, etc.).
Note: Complimentary admission may not apply to all cultural events.

- 217 -

(iii)Note:

The Company will issue the “PARCO shopping courtesy card” (credit card)
upon request from shareholders owning at least 100 shares of the Company
as of the end of February and August 31. The credit card will entitle theholder to a 5% discount (excluding some shops, products, services, etc.) atpoint of purchase for shopping at stores in Japan operated by PARCO Co.,
Ltd. (Sapporo PARCO, Sendai PARCO, Urawa PARCO, Shintokorozawa
PARCO, Shibuya PARCO, Ikebukuro PARCO, Kinshicho PARCO,
Hibarigaoka PARCO, Kichijoji PARCO, Chofu PARCO, Shizuoka PARCO,
Nagoya PARCO, Matsumoto PARCO, Shinsaibashi PARCO, Hiroshima
PARCO, Fukuoka PARCO and PARCO_ya UENO) and via the ONLINE
PARCO e-commerce platform. (Valid from the date of delivery until May 31
the following year)

The Company stipulates the rights regarding shares less than one unit in its Articles of Incorporation. According to the
stipulation, the holders of shares less than one unit shall not be entitled to exercise the rights of shareholders in connection
with such shares less than one unit other than those rights listed below:(1) Rights set forth in items of Article 189, paragraph (2) of the Companies Act;
(2) Right to make a demand pursuant to the provisions of Article 166, paragraph (1) of the Companies Act;
(3) Right to receive an allotment of offered shares and offered share acquisition rights in proportion to the number ofshares held by the shareholder; and(4) Right to demand the purchase of additional shares less than one unit

- 218 -

VII. Reference Information of Reporting Company
1. Information about parent company, etc. of reporting company
The Company does not have a parent company, etc. as prescribed in Article 24-7, paragraph (1) of the Financial
Instruments and Exchange Act.
2. Other reference information
From the beginning of this fiscal year until the filing date of this Annual Securities Report, the Company has filed
the following documents.
(1) Annual Securities Report, Attached Documents and Written Confirmation
Fiscal year

15th fiscal year (from March 1, 2021, to February 28, 2022)

Filed to Director-General of Kanto Local Finance Bureau on May 27, 2022
(2) Internal Control Report
Filed to Director-General of Kanto Local Finance Bureau on May 27, 2022
(3) Quarterly Securities Reports and Written ConfirmationsFirst quarter of the 16th fiscal year (from March 1, 2022, to May 31, 2022)
Filed to Director-General of Kanto Local Finance Bureau on July 13, 2022
Second quarter of the 16th fiscal year (from June 1, 2022, to August 31, 2022)
Filed to Director-General of Kanto Local Finance Bureau on October 13, 2022
Third quarter of the 16th fiscal year (from September 1, 2022, to November 30, 2022)
Filed to Director-General of Kanto Local Finance Bureau on January 12, 2023
(4) Extraordinary Securities Reports
Filed to Director-General of Kanto Local Finance Bureau on May 27, 2022
Extraordinary Securities Report based on Article 19, paragraph (2), item (ix)-2 (Results of Exercise of
Voting Rights at the Shareholders Meeting) of the Cabinet Office Ordinance on Disclosure of Corporate
Affairs, etc.
(5) Shelf Registration Statements (corporate bonds) and Attached Documents
Filed to Director-General of Kanto Local Finance Bureau on March 2, 2022
(6) Amended Shelf Registration Statements
Filed to Director-General of Kanto Local Finance Bureau on May 27, 2022
Amended Shelf Registration Statements pertaining to Shelf Registration Statement filed on March 2, 2022

- 219 -

B.

Information About Reporting Company’s Guarantor, Etc.

No items to report- 220 -