M A R U I G R O U P CO . , LT D
Financial Results Briefing for the
Six Months Ended September 30,
2020, and Future Outlook

November 12, 2020

Schedule for today’s presentation

1

Over view of Performance in Six Months Ended September 30, 2020and Full-Year Forecasts
H i r ot s u g u K ato, D i r e c to r, M a n a g i n g Exe c u t i v e O f f i ce r, C F O i n c h a r ge o f I R

2

Reflecting on the Six Months Ended September 30, 2020
H i r o s h i A o i , P r e s i d e n t a n d R e p r e s e n tat i ve D i r e c to r, R e p r e s e n tat i ve
Exe c u t i v e O f f i ce r, C E O

3COVID-19-related Environmental Changes and Future Direction
H i r o s h i A o i , P r e s i d e n t a n d R e p r e s e n tat i ve D i r e c to r,
R e p r e s e n tat i v e Exe c u t i v e O f f i ce r, C E O

1Overview of Performance in Six Months Ended
September 30, 2020 and Full-Year Forecasts

Hirotsugu Kato,
Director,
Managing Executive Officer,
CFO in charge of IR

Highlights i n S i x M o n t h s E n d e d S e p t e m b e r 3 0 , 2 0 2 0
1. EPS decreased 35% year on year to ¥41.6
2. Consolidated operating income decreased 8% year on year to¥20.7 billion for the first time in 6th consecutive year of decrease
3. Retailing segment operating income decreased 76% year on year
FinTech segment operating income increased 7% year on year
4. For the negative impact of COVID-19 for this first half,
Retailing segment operating income decreased ¥3.3 billion and
FinTech segment operating income decreased ¥0.7 billion
4C o n s o l i d ate d Pe r fo r m a n ce
Six months
ended
Sep.30, 2020

41.6

EPS（yen）

Q1

YOY
changeQ2

YOYchangeSix months
ended
Sep.30, 2020

YOYchange（％）

65

YOYchangeYOY
difference

－22.8

YOY
difference

Billions ofyen％

Billions ofyen％

Billions ofyen％

Billions of
yen

615.3

90

733.0

101

1348.3

95－65.8

Revenue

46.1

80

63.2

93

109.3

87

－16.2

Gross Profit

37.3

81

52.1

95

89.4

89

－11.2

〈 27.3 〉〈 85 〉〈 32.2 〉〈 97 〉〈 59.5 〉〈 91 〉〈 －5.8 〉

28.4

77

40.2

98

68.7

88

－9.4

Operating income

8.9

101

11.9

86

20.7

92

－1.8

Net income

1.6

28

7.4

88

8.9

64

－5.1

Total Group transactions〈Recurring gross profit〉
SG&A expenses

5

S eg m e n t I n co m eOperating income
Q1

YOYchangeQ2

YOYchangeSix months
ended
Sep.30, 2020

YOYchangeYOY
difference

Billions ofyen％

Billions ofyen％

Billions ofyen％

Billions ofyen

Retail ing

0.8

36

0.3

12

1.1

24

－3.7

FinTech

9.5

117

13.2

101

22.7

107

＋1.5

El iminations/ Corporate

－1.5

－

－1.6

－

－3.1

－

＋0.3

Consol idate d

8.9

101

11.9

86

20.7

92

－1.8

6

Fa cto rs Af fe ct i n g O p e rat i n g I n co m e・Consolidated operating income excluding extraordinary factors and the impact of COVID-19
increased 10% to ¥2.3 billion
Increase in operating income
excluding extraordinary factors＋¥2.3 billion (YOY ＋10％)

Extraordinary factors－¥4.2 billion¥24.9 billion¥22.6 billion
FinTechRetailing－¥0.4 billion ＋¥2.4 billion

Eliminations/
Corporate＋¥0.3 billion

Deferral
Provision for
credit card
loss onissuance cost interest＋¥0.7 billion repayment－¥0.8 billion¥20.7 billion
The impact of
COVID-19－¥4.0 billion
Retailing－¥3.3 billion
FinTech－¥0.7 billion

19.9

20.9

7

C o n s o l i d ate d B a l a n ce s h e ets
Mar.31, 2020

S ep.30, 2020

YO Y difference

B il l ions of yen

B il l ions of yen

B il l ions of yen

555.6

543.8

－11.8

(181.9)(177.3)(－4.6)[24.7][24.6][－0.1]

416.3

421.8

＋5.5

139.3

122.0

－17.3

259.2

273.4

＋14.2

27.4

47.5

＋20.1

479.8

485.6

＋5.8

[86.4][89.3][＋2.9]

S harehol de r's equity

289.8

305.7

＋15.9

[Equity ratio (%)]

[32.7][34.2][＋1.5]

886.0

894.6

＋8.6

O perating receivabl es(Liquida te d accounts receivabl e: O ff-bal ance sheet)[Ratio of l iquida te daccounts receivabl e( % ) *1]
instal l ment sal es accounts
receivabl e
operating l oans outstandin g
Fixed assets
Investment securities
Interest-bearing debt
[Ratio of operating receivabl es( % ) *2]

Total assets*1 Ratio of liquidated accounts receivable = Liquidated accounts receivable / (Operating receivables + Liquidated accounts receivable)*2 Ratio of interest-bearing debt to operating receivables = Interest-bearing debt / Operating receivables

8Cash FlowsSix months end ed
Sep .30, 2019

Six months ended
Sep.30, 2020

YOY difference

Billions of yen

Billions of yen

Billions of yen

14.4

10.7

－3.7

Increase(decrease) in operating receivables

－8.6

－0.8

＋7.8

Core operating cash flow*3

23.1

11.6

－11.5

Net cash provided by (used in)investing activities

－10.2

－10.1

0.0

Purchase of fixed assets

－6.0

－6.4

－0.4

Gains on sales of investment securities

－4.4

－3.2

＋1.2

0.3

－0.5

－0.7

－14.2

1.0

＋15.2

Increase(decrease) in interest-bearing dept

－1.8

5.8

＋7.6

Cash dividends paid

－5.7

－4.7

＋0.9

Purchase of treasury stock, etc.

－6.7

－0.1

＋6.7

36.8

42.4

＋5.7

Net cash provided by (used in)operating activities

Gains on sales of fixed assets, etc.
Net cash provided by (used in)financial activities

Cash and cash equivalents at end of period*3 Core operating cash flow = Net cash provided by (used in) operating activities － Change in operating receivables9L i fet i m e Va l u e M a n a ge m e n t I n d i cato r

Recurring Gross Profit
Six months ended
Sep .30, 2019

Six months ended
Sep .30, 2020

Billions of yen

Billions of yen％

Billions of yen

Retailing

22.2

15.8

71

－6.5

FinTech

43.1

43.8

101

＋0.6

Total

65.4

59.5

91

－5.8

Composition withingross profit（%）

63.2

65.0

－

＋1.8

YOY
changeYOY
difference10

Fu l l -Yea r Fo re ca sts fo r FY 2 0 2 1FY2020

FY2021

YOY
changeYOY
difference

117.6

72.3

61

－45.3

ROE（％）

8.8

5.3

－

－3.5

ROIC（％）

3.7

3.1

－

－0.6

Billions of yen

Billions of yen％

Billions of yen

2903.72970.0102＋66.3

Revenue

247.6

223.0

90

－24.6

Gross Profit

195.7

179.5

92

－16.2

SG&A exp enses

153.7

144.0

94

－9.7

Operating income

41.9

35.5

85

－6.4

Net income

25.4

15.5

61

－9.9

EPS（yen）〈Reference〉

Total Group transactions

11

〈 Refe re n ce 〉 S eg m e n t i n co m e fo re ca sts fo r FY 2 0 2 1FY2020

FY2021

YOY
changeYOY
difference

Billions of yen

Billions of yen％

Billions of yen

Retailing

10.0

3.0

30

－7.0

FinTech

38.4

39.0

102

＋0.6

Eliminations /Corporate

－6.5

－6.5

－

0

Consolidated

41.9

35.5

85

－6.4

* Planning p remise

From July to Sep tember

Second half (from October to March)

Retailing transactions trend（store・Web）

75％(scenario F)

80％(Equivalent to scenario E)

FinTech transactions trend（outside of Marui Group）

105％

107％

12

Shareholder Returns
・Annual dividend of ¥51 per share planned: An increase for the ninth consecutive fiscal year,
continuing our policy of stable long-term dividend increases
228%

250%
200%

148%

125%

Total return ratio

150%

112%

73%
(Yen)

31%

32%

¥35.0
billion

60
40
20
0

EPS

Cash
dividends
per share
¥14
14円

¥15
15円

¥18
18円

Share
buyback¥22¥ 1 5 . 0 22円¥1919円 b i l l i o n

3/13
13.3

3/14
14.3

3/1515.3

3/16 16.3

¥19.2

¥48.4

¥56.3

¥58.9

¥70.7

(billion
yen)
100%

35
50%
0%
20

billion¥15.0
billion¥7.0
billion

3/12
12.3

¥51
( p l a51
nned)

¥50
50円

¥49
49円

¥38
¥33 ¥ 2 0 . 0 38円
33円

71%( p l a71%
nned)

70%

70%

3/17 17.3 3/18
¥80.2

18.3 3/19¥93.2

19.33/20¥116.0¥7.0
billion

3/21
20.3

21.3

¥117.6

¥72.3

13

2
Reflecting on the Six Months Ended
September 30, 2020
Hiroshi Aoi,
President and Representative Director,
Representative Executive Officer, CEORetailing Segment
・Continued to struggle in second quarter due to second wave of COVID-19 following on from store
closures in first quarter
State of emergency
declared■Transactions (YoY)
（％）
100

100%

Second wave

Temporary closures
April 8 through May 31

97%(Cases)

83%

88%
88%

1,800

(preliminary)

77%

76%

65%

74%

1,500
1,200

50

900

26%

600

23%
Confirmed
COVID-19
cases

20.1 2020/1/162/20
20.22020/2/16
20.3
20.6 7/20
1/20
3/20
5/20 20.5
2020/3/164/2020.4
2020/4/16
2020/5/16
20.1
20.2
20.3
20.4
20.5 6/20 2020/6/16
20.6

20.78/20
2020/7/16
20.7

20.8
9/20
2020/8/16
20.8

300

20.9
10/20
2020/9/16
20.9

20.10
2020/10/16
20.10

Some impact from tax
hike in previous year

015Retailing Segment
・Forecasting transaction volume to trend at 80% YoY in 2H■Transactions (YoY)
100%
（％）

2H: 88%
83%

80
80%

8
8%
88%

76%

77%

7/20
20.7

8/2020.8(preliminary)74%

Trending at 80% of
Previous years’ level

60
60%
40
40%

26%

23%

4/20
20.4

5/20
20.5

20
20%

0%

6/20
20.6

9/2020.9 10/2020.1011/20 20.1112/20 20.12
1/21
Some impact from tax
hike in previous year

2/21
21.1

3/21
21.2

21.3

16

F i n Te c h S e g m e n t
・Forecasting transaction volume to trend at 107% YoY in 2H■Affiliates’ shopping transactions YoY

2H: 111% YoY
116%

120%
（％）

105%

104%

107%

Trending at 107% ofprevious year’s level

97%

100
100%

90%
82%

80
80%

60%

20.4

20.5

20.6

20.7

20.8

20.9

20.10

Some impact from tax
hike in previous year

20.11

20.12

21.1

21.2

21.3

17

F i n Te c h S e g m e n t

1H FY2020
transactions

1st

E-commerce

2nd

Rent

3rd

Regular payments

4th
5th
6th

Supermarkets & convenience stores

YoYchange¥226.4 billion ＋36%
¥218.8 billion ＋33%
¥133.8 billion＋4%¥90.7 billion ＋38%

Travel & entertainment
Commercial facilities

Other¥75.8 billion ー59%
¥66.4 billion ー19%18

F i n Te c h S e g m e n t : R e n t - r e l a t e d・Use of rent payment and rent guarantee services, which are both directly linked to people’s
livelihoods, increased despite COVID-19
・Increased use of our credit cards as cardholders’ main cards helped to increase LTV■ 1H FY2020 YoY■Percentage of Gold cardholders/Card LTV
200円

Rent guarantee

Total

180円

LTV 1.8x

80

70

160円

60

140円

Revenue

＋30%

ー1%

Gold
cardholders:

120円

57%

100円

80円

50

40

30

60円

New cards ＋30%

ー44%

20

40円

20円

0円

13%
Overall average

100

Rent guarantee

19

Co-Creative Investment
・Maintained fast pace of investment (two transactions per month) despite COVID-19; two listed companies’ share prices rose sharply.
■Organizational structure

External specialist
personnel＋

Increased number ofdedicated personnel
2016

Four (with other duties)

2020⇒ 21 (dedicated)■Share price performance of the 25 companies＊Share price difference between
time of investment and mostrecent procurement

Over 1.1x

14.1x

5

Over
1.0x

18

18.0x
(As of September 30, 2020)

Less than
1.0x

Invested ¥19.0 billion in 25 companies

Hurdle rate
IRR: 10％＜ IRR: 85%*IRR: Calculated using most recent procurement price of securities held, assuming that listed shares were sold at the end of each company’s
fiscal year20

Co-Creative Investment
・Co-Creation teams headed by executive officers formed to ensure success of open innovation(No. of members)(No. of members)Maruipresident

Maruipresident

BASE

7

FABRIC TOKYO

6

A-too (Surugaya)

Global Trust Networks

6

6

Crowdcredit
Gojo & Company

5

b8ta

7

Financial inclusion sector: 11 members

mercari7

Sparty (Medulla)

5

COUNTERWORKS

8

Co-creation
teams(20 teams)
Total: 122 members

Minna-denryoku

6Nature Innovation Group(i-kasa)5Life is Tech

6

GOOD VIBES ONLY

6

EPARK

7

Sumitomo Forestry

5

Pocket Marché

6

Tsukuruba

7

D2C/digital sector: 82 members

Epos Card
president

Sustainability sector: 17 members

Housing sector: 12 members*Includes companies that we do not invest in21

3
COVID- 19- related E nvi ro nmenta l C h a nges
and Future Direction
Hiroshi Aoi,
President and Representative Director,
Representative Executive Officer,
CEOCOV ID-19-related envi ronm enta l cha nges

1) Changes in real estate values
2) Progress with digital transformation (DX)
3) Emergence of sustainability as a key issue23

Changes in real estate values: REIT price trends
・Prices of commercial facilities have fallen since the COVID-19 outbreak, whereas prices oflogistics facilities have risen sharply.
Logistics
facilities

120
110

100
100

Rental housing
Commercial
facilities
Offices
Hotels

80
70

30

12/19
19.12

2019/12/31

1/20
20.1

2020/1/31

2/20
20.2

2020/2/29

2020/3/31
3/20
20.3

2020/4/30
4/20
20.4

2020/6/30
5/202020/5/31
20.5 6/20 20.67/20

8/20
20.7

2020/7/31*Source: J-REIT price trend data by sector, from Deutsche Asset Management (index end-2019 = 100)

9/20
20.8

2020/8/31

2020/9/30

20.9

24

Changes in real estate values:
Performance of real estate holdings
Rental － Shift of people fromhousing: central Tokyo to suburbs

5%Stores: － Risk of rising vacancy rate75%

＋ Establishment of fixed-term
rental contracts reduces
investment burden

Approx.
460,000m2(total floor
area)＋Coordination with rent
guarantee and payment

Logistics －Lower capacity utilization
facilities: rate

19%

＋Prices of properties inprime locations rise25

Changes in real estate values: Investment policy
・Establishment of fixed-term rental contracts expected to reduce investment in stores;
will increase investment in logistics facilities and rental housing.
■Store investment trends
Investment
capacity:
Approx. ¥15.0
billionApprox.
¥70 billion

Investment policy
Logistics facilities
Rental housing

Approx.
¥40 billion

Before fixed-term
Fixed-term
rental contracts Rental contracts
2015–20192008–2012

Approx.
¥25 billion
Next five years(outlook)

Move ahead with portfolio review

26Changes in real estate values■MARUI GROUP’s housing-related businesses
Marui Home Service Co., Ltd.

Rentalhousing

Investment

Rental apartment business
Owned properties: 610 (approx.)
Managed properties: 7,500 (approx.)

Rent guarantee
Rent payment(Renovations x property rental business)(Support service for multi-home living)Small

Co-creative
investment

amount,short-term
insurance

Epos S. S. Insurance Co., Ltd.
Began home contents insurance
business in 2013, turned profitable infiscal year ended March 31, 2019.
Number of policies: 97,000 (as of
September 30, 2020)

Generate synergies with FinTech and Co-creation Investment through housing-related investment

27

Progress with digital transformation (DX)28

Progress with digital transformation (DX)
■Competitive IT Strategy Company 2019
Recognized for building groupwideorganizational framework for promoting DX■DX Company 2020
Selected as “DX Company”
Commended for work on “stores that don’t sell” concept
Vision andbusiness model

ーMARUI GROUP
ーAll-company averageーRetail sector average
Strategy

Governance

Performanceand,performanceindicators

Organizations
and systems
Digitaltechnologies*Cosponsored by Ministry of Economy, Trade, and Industry and Tokyo Stock Exchange

29

Progress with digital transformation (DX)1) Stores that don’t sell
2) Development of OMO(online-merged-with-offline) E-commerce3) Fostering DX personnel

30

Progress with digital transformation (DX):Stores that don’t sellStores that don’t sell

SHIBUYA BASE＝
FABRIC TOKYO

Offline store platform for digital age

b8ta

mercari station

A growing number of partner companies that identify with the “stores that don’t sell”
concept are beginning to gather
31

Progress with digital transformation (DX): Development of
OMO (online-merged-with-offline) E-commerce■E-commerce sales
Company A(Billion yen)
300
3000

2000
200

Approx.
15x

1000
100

MARUI GROUP¥20.8 billion¥21.4 billion

0

2010

2020
32

Progress with digital transformation (DX): Development of
OMO (online-merged-with-offline) E-commerce■Three points of difference
1) Target business areas
・Specialize in business areas with growth potential
where we can leverage our competitive strengths

3) OMO business model
Partnerships with co-creative
investment targets (D2C)
Co-Creative
Investment

・Run multiple, specialized E-commerce operations

2) Development and operation methods
・Utilize external cutting-edge E-commerce
development and operation services
・Agile, low-cost operation

RetailUtilize stores

FinTechCoordinate with payments
and subscriptions

Harness competitive advantages over conventional E-commerce
33

Progress with digital transformation (DX):
Fostering DX personnel
・Increase investment in DX personnel internally and externallyInternal

External

IT Department experience

Hire mid-career specialists in:

Assign approx. 50 young employees to
IT Department every year

・Cloud computing
・IT security measures
・App development, etc.

Subsequently take on DXrelated roles at groupcompaniesDX
personnel

Diverse human resources(Approx. 200 employees)

34

Progress with digital transformation (DX):
Fostering DX personnel
・Employees gain practical DX training and experience through secondment to startups

MARUI GROUP

Startups
Total: 40
employees

DX-related roles atgroup companies after
secondment

13

Currently
seconded27
35

Progress with digital transformation (DX):
Co-Creation with future generations
・Collaboration with WED, Inc., headed by 19-year-old CEO, Soto Yamauchi

Soto Yamauchi, CEO, WED, Inc. (born 2001)
2016: Founded WALT, Inc. (now WED, Inc.) when he was 15 years old
2018: Launched shopping receipt purchase app ONE
2020: Collaborated with MARUI GROUP on co-development of settlement andsales reporting system for commercial facility tenants

36

Progress with digital transformation (DX):
Co-Creation with future generations

・Accelerator program supervised by
Life is Tech, Inc.
・Co-creation of new businesses with
university and graduate school
students

・Collaborated with SAMURAI INCUBATE INC. to host startup pitch events37

E m e r g e n ce o f s u s ta i n a b i l i t y a s a ke y i s s u e38

Emergence of sustainability as a key issue■Main third-party accreditations
・DJSI World Index
Selected for two years running・Accredited as Silver Class 2020

■Bloomberg company ranking by ESG disclosure(Based on previous fiscal year’s disclosure)for first time at RobecoSAM

Global (retail)Japan (all sectors)

1

MARUI GROUPMARUI GROUP

2

Company A(Mexico)Company E(Infrastructure)2020 CONSTITUENT MSCI JapanESG Select Leaders Index (four years running)

3

Company B(UK)

Company F(Security)2020 CONSTITUENT MSCI Japan
Empowering Women Index (WIN) (four years
running)

4Company C(Portugal)

Company G(Devices)

5Company D(USA)

Company H(Telecommunications)Sustainability Award

・Included in four ESG indices selected by GPIF (July 2020)＊1

Included for
four years running＊1

S&P/JPX Carbon Efficient Index (constituent)

FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that MARUI GROUP CO., LTD. has been independently assessed according to the index
criteria, and has satisfied the requirements to become a constituent of the FTSE Blossom Japan Index. Created by the global index provider FTSE Russell, the FTSE Blossom Japan Index isdesigned to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE Blossom Japan Index are used by a wide variety
of market participants to create and assess responsible investment funds and other products.

39

Emergence of sustainability as a key issue
The Great Reset
Green Recovery

Zero greenhouse gas
emissions

ESG-related
investment

Promotion ofrenewable energy

40

Emergence of sustainability as a key issue
・Steady progress with stores transitioning to renewable energy■ MARUI GROUP’s target for RE100 initiative
To ensure that 100% of the energy used in businessactivities is from renewable sources by 2030

Shinjuku Marui Main Building
Minna-Denryoku

Total power
consumption:
200 million
kWh

170 million
kWh

100%

The Shinjuku Marui
Main Building uses
environmentfriendly energy.

50%
0%
17.3

23%
20.3

21.3

31.3

(Forecast)(Plan)

41

Emergence of sustainability as a key issue
・Launched initiative to encourage customers to use renewable energy to reduce society’s
environmental impact■EPOS cardholder questionnaire
Minna-Denryoku EPOS Plan

59%

Would like to use
renewable energy(Launched Sept. 2020)・Developed system that allows EPOS cardholders toswitch to renewable energy plan in less than fiveminutes using their smartphones

However, some cardholders have concerns:“Don’t know what kind of paperwork is required”.
“Looks likes it’d be a hassle”.
42

Emergence of sustainability as a key issue
・Fulfill expectations of all stakeholders by balancing profit with environmental conservation

CO2 reduction

Expand LTVOver 1 million tons

Over ¥40 billion

Customers

Local
Futurecommunities generations

Used by
500,000 people

Shareholders
Investors
43

Emergence of sustainability as a key issue
・Reduce total societal emissions with the help of customers on the way to carbon negativity■Image of greenhouse gas emission reductions
Greenhouse gas reductions

CarbonneutralCarbon negative

Reduce emissions ofown business(scope 1, 2, and 3)＋
０

Reduce social emissions(scope 4)－

Total emissions(reflecting societal emissions reductions)
現在
Today

将来
Future

44

The forward-looking statements contained in this presentation are based on information available at the time of
preparation of this presentation and certain assumptions that MARUI GROUP deems to be reasonable. The
forward-looking statements may differ materially from actual results due to a variety of different factors. Please
direct any inquiries to the IR Department (Tel: 03-5343-0075)