Annual Review 2009

J. FRONT RETAILING NOWYear ended February 28, 2009

02

Financial Highlights

04

Top Message

06

Top Interview

14

Bigger and Newer Stores■ Shinsaibashi store ／ Umeda store ／ Tokyo store ／ Ginza store

16

Shop Development around Department Stores■ Kobe store ／ Shinsaibashi store ／ Kyoto store ／ Ueno store

18

Original Merchandise and Services■ Private brands■ Independently operated sales sections■ Collaboration■ Customer s View Project

22

Living with Art■ Matsuzakaya Museum and Daimaru Museum■ The world of Art Deco created by architect W.M.Vories■ Kyoto Dyeing and Weaving Design Instituteand Matsuzakaya Kimono Museum

26
28

Human Resource Development
Segment Overview■ Department store business ／ Supermarket business ／Wholesale business ／ Other businesses

32

Corporate Governance34

Corporate Social Responsibility

36

History of Daimaru

37

History of Matsuzakaya

38

Corporate Data ／ Management ／ Organization Chart

41

Financial Information

68

Group Companies

70

Locations of Daimaru and Matsuzakaya Department Stores

72

Share Informaiton

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

Financial Highlights
J. Front Retailing Co., Ltd. and Consolidated Subsidiaries
Years ended February 28, 2009 and February 29, 2008 or at February 28, 2009 and February 29, 2008

Thousands of
U.S. dollars

Millions of yen

Fiscal 2008

(Except where otherwise indicated)(Except whereotherwise indicated)

Fiscal 2007

Fiscal 2007

Fiscal 2008

(Annual real terms)

Business results
Sales
Gross proﬁt
Operating income
Ordinary income
Net income
Selling, general and administrative (SG & A) expenses¥1,096,690¥1,177,901¥1,016,402$11,212,453

269,282

291,115251,301

2,753,113

28,092

42,632

39,717287,21028,28943,151

39,812289,224

7,170

23,404

20,53873,305

241,189

248,482

211,583

2,465,893

776,616-805,375

7,940,047

307,861-

307,823

3,147,541

316,268-

315,854

3,233,494

94,677-103,042

967,969

22,68630,912

27,796

231,939

Financial condition
Total assets
Shareholders equity
Net assets
Interest-bearing debt
Condition of cash ﬂows
Net cash provided by operating activities
Net cash provided by investing activities
Net cash used in ﬁnancing activities(11,676)

4,210

5,792

(119,374)(13,510)(41,015)(39,309)(138,125)¥13.56-¥45.74$0.14¥582.27-¥581.97

$5.95

¥8.0

-

24.55%

24.71%

24.72%

-

22.0%

21.1%

20.8%

-

2.6%

3.6%

3.9%

-

3.6%

5.3%

4.9%

-

2.3%

7.6%

6.7%

-

7.0%

10.5%

9.7%

-

39.6%

38.2%

38.2%

-

Per share information (unit: ¥/$)Net income
Net assets
Cash dividends (Non-consolidated)¥4.5（Note）$0.08

Financial indicators (unit: %)Gross margin
Ratio of SG & A expenses to sales
Operating margin
Return on assets (ROA)
Return on equity (ROE)
Return on Investment (ROI)
Shareholders equity ratio*1 U.S. dollar ﬁgures are for reference only. They are translated from yen, at the rate of ¥97.81=U.S.$1 as of February 28, 2009 and rounded to the nearest U.S.$1,000.
*2 The amounts for ﬁscal 2007 (annual real terms) are the consolidated ﬁgures of the business results of Daimaru Group and Matsuzakaya Group for the year from March 1,
2007 to February 28, 2008.
*3 Net income per share for ﬁscal 2007 is based on the average number of shares outstanding calculated by deeming that the Company was established on March 1, 2007.
The ﬁgures in annual real terms were calculated in the same way.
*4 Net income, operating income and ordinary income are used to calculate ROE, ROA and ROI respectively.
*5 Year-end shareholders equity, total assets and capital invested are used to calculate ROE, ROA and ROI for ﬁscal 2007.
(Note) Daimaru and Matsuzakaya Holdings paid interim dividends of ¥6 and ¥3.50 per share respectively.

02

SalesOperating Income
Unit: ￥Million

1,500,000

1,200,000

1,177,901

1,156,455 1,166,520 1,173,705
810,693 822,584 837,032

50,00042,632
39,717

41,95840,00037,765

1,096,690

1,016,402

Ordinary Income
Unit: ￥Million

30,971

34,67130,17030,67830,000600,000

20,00020,00010,00010,0000345,762 343,936 336,673

Fiscal
2004

Fiscal
2005

Fiscal
2006

Fiscal
2007

Fiscal2008

028,092

26,136

Fiscal
2004

Fiscal
2005

Fiscal2006(Full year ※3)(Full year ※4)

21,544
16,02523,40422,560

100

92.32
60.11

20,53817,304

60

97.18
65.65

7,532

Fiscal
2004

Fiscal
2005

Fiscal
2006

9.00
32.21

10.00
7.50

31.53

5
13.56

11.00

Fiscal
2005

Fiscal
2006

Fiscal
2007

Fiscal
2008

0

Fiscal
2004

Fiscal
2005

Fiscal
2006

Fiscal
2007

Fiscal
2008

8.00

7.50
6.00

5.00

4.50

3.50

14.82

2,506

Fiscal2008

Unit: ￥

10

20

5,255

Fiscal
2007

20

40

Fiscal
2004

7,660
4,678

53.99

7,170

0

28,28915

45.74
10,0005,519

30,06525,387

Cash Dividends per Share（Non-Consolidated）
Unit: ￥

68.81

14,4995,000

33,35343,151
39,812(Full year ※3)(Full year ※4)80

17,00515,000Fiscal2008

Net Income per Share
Unit: ￥Million

20,000Fiscal2007

040,885(Full year ※3)(Full year ※4)

Net Income
25,00030,000

7,228

7,087

4,835

37,83040,000900,000

300,000

Unit: ￥Million

50,0000

Fiscal
2004

Fiscal
2005

Fiscal
2006

Interim Fiscal Fiscal
2007 2007 2008

(Full year ※3)(Full year ※4)

Total Assets

Net Assets
Unit: ￥Million

1,000,000

805,375

800,000

776,616600,000

Unit: ￥Million

500,000

400,000
315,854 316,268

300,000

400,000

200,000

Daimaru

375,513361,749 370,364
200,000

100,000

209,813 217,642
217,4930

Fiscal
2004

Fiscal
2005

Fiscal
2006

Fiscal
2007

Fiscal2008

077,32891,803

109,308

60,18270,44664,508

Fiscal
2004

Fiscal
2005

Fiscal2006

Matsuzakaya Holdings
JFR
Fiscal
2007

Fiscal
2008※1 The ﬁgures of Matsuzakaya Holdings for and before ﬁscal 2005 are the consolidated ﬁgures of Matsuzakaya Group before its transition to holding company.
※2 Sales of Daimaru for and before ﬁscal 2006 include other operating revenue.
※3 According to the accounting standard for business combinations, Daimaru Group and Matsuzakaya Group consolidated the ﬁnancial results for the full year and thesecond half respectively.
※4 Concerning the performance of Matsuzakaya Group, the consolidated ﬁgures for the full year are stated for information purposes.

03Implementing Drastic Management Reforms
to Develop a New Department StoreBusiness Model.
Now department stores are at a historic turning point.
The current department store slump is fundamentally
attributable to their own structural issues such as the weak
response capabilities to the market and the high-cost andlow-proﬁt structure

rather than the impact of rapidly

deteriorating macroeconomic environment. It seems to be
diﬃcult for department stores even to survive, let alone grow in
the future, as long as they continue to rely on the existing
department store business model.
In this context, J. Front Retailing (JFR) seriously addresses
the development of a new department store business modelwith a focus on the improvement of marketing capabilities andthe innovation in business operation structure to revitalize thecore department store business of the Group.
We aim to create an urban lifestyle store with a new operation
model based on popular appeal and lifestyle suggestions as
the fundamentals of department stores. To this end, we shift ouroperational focus from the past merchandising-driven retailer
type ideas to the creation of the appeal of stores as commercial
facilities centered on marketing and tackle the following threeimportant tasks.
The ﬁrst task is to improve marketing capabilities and establish
store strategies.
In the second half of ﬁscal 2008, JFR expanded its Marketing
Planning Promotion Division to strengthen the function ofplanning basic measures to respond to market and customer
changes mainly in department store business.
Particularly, in order to enhance store competitiveness ineach area, which is our greatest challenge, we speed up joint
eﬀorts with our department stores to develop store strategies
based on a detailed area marketing analysis. Beginning with
Daimaru Kobe and Shinsaibashi stores and Matsuzakaya Nagoya
and Ueno stores, we are developing store strategies based onmarket strategies and competition strategies through an area
marketing analysis and will expand into other stores.
With the diversiﬁcation of customers purchasing channel
choices, we will strengthen click-and-mortar business that aims
to create a synergy eﬀect between Internet sales and store sales
to attract customers who do not shop in our physical stores andboost sales of the products that are not oﬀered in our physicalstores.
In the meantime, amid increasingly ﬁerce competition, it isvery important in terms of marketing strategy to expand the04

ba s e o f t h e id e n t i ﬁ a bl e c u s t o m e r s w h o h o ld o u r o w ncompany-wide business operations, organizations and personnel

company-branded cards and build eﬀective CRM. Mainly in ourplanning including administrative support such as out-of-store

stores, we will increase customers holding our cards throughsales, general aﬀairs, human aﬀairs and accounting incompany-wide campaigns and other measures to make our storesconjunction with the above-mentioned overhaul of sales ﬂoor

more attractive and consequently expand our customer base.

operations through the building of a new department store
model. Aiming to achieve the highly productive department

The second task is to establish a store operation structure that

store operation by a few select people, which involves changes inenables both the development of stronger market response

our way of thinking and working, we will pursue further

capabilities and low-cost management.

low-cost operation.

Daimaru is leading JFR s eﬀort to establish a new business
operation structure

mainly for stores. Under this new

In addition to these three business challenges, the integration of

structure, sales ﬂoor operation is divided into two types

Daimaru and Matsuzakaya into one company will constitute one

including shop operation and independent operation to beof the main pillars of our business structure reforms.

based on their respective diﬀerent features.

In March 2010, our department store businesses will be

Utilizing the strengths of each type and based on the ﬂoor

integrated into one company a year ahead of the originalclassiﬁcation meeting new customer needs, mainly in shop

schedule. This will unify the management implementation

operation type sections, we will accelerate the renewal andstructure and speed up decision-making, as well as signiﬁcantly

replacement of brands and shops through the introduction of the

reducing duplication of organizational functions, with the aim ofbest ones that will attract attention and popularity fromachieving high-eﬃciency and low-cost management.

customers, mix and scrapping and building. Thus we will

We are also in the process of integrating the merchandise

improve the response to new market to maintain and enhance

departments of the two companies headquarters. In March

our appeal as commercial facilities.

2009, women s accessories and children s wear departments

As part of our speciﬁc eﬀorts, we already began to introduce

were integrated, while women s wear departments, men s wear

new shops to shop operation type sections without being

and accessories departments and foodstuﬀ departments will be

constrained by the existing suppliers and will expand such shops

integrated in September 2009 and the integration of theinto all our department stores based on store strategies toremaining home furnishings departments and art work, kimono

bolster low- to mid-priced oﬀerings, which are in particularly

and jewelry departments will be completed in March 2010.

strong demand from customers.
At the same time, in order to help implement these measures,

In ﬁscal 2009, we will manage our company based on thewe will develop highly skilled professionals, compile operating

assumption that we will be placed under an extremely severe

procedures in a manual for eﬃcient operation, and improvebusiness environment that we have never experienced before.

information systems to support the streamlining of operations.

We will devote all our energies to building a new department

The third task is to promote low-cost and high-eﬃciency

and focus on minimizing sales shrinkage and dramaticallymanagement to increase human productivity.

reducing costs, which is our greatest challenge for the year.

store business model toward corporate survival and recovery

The shift to a new department store model will signiﬁcantly
change our sales ﬂoor operation management.
First, we will shift our focus from sales to proﬁt. It was
reasonable to aim to maximize sales during the days when sales

And it is in these hard times that we aim to provide high quality
management that can meet the expectations of all our
stakeholders including customers and shareholders and fulﬁll our
corporate social responsibility.

were steadily increasing. However, in the present day whensales are shrinking, the shift from sales orientation to proﬁtorientation is needed to improve the motivation of our sales staﬀ.
Second, operations organization and personnel structure will
be radically overhauled to seek an increase of humanpr od uct iv it y . We a r e pla n ni ng a d r a st ic o ver ha ul o fJune 2009

Tsutomu Okuda

President and CEO

05

〈Top Interview〉

We Need to Structurally Change
the Framework of Department Store Businessat This Historic Turning Point.
Overview of operating results for ﬁscal 2008
Would you outline consolidated operating results forﬁscal 2008?
Consolidated sales of J. Front Retailing Group slightly
increased compared with the forecast announced at thethird quarter results presentation in January 2009 (an increase of¥690 million and 0.1%). Thanks to the eﬀorts to further reduce
costs, operating income, ordinary income and net income
increased by ¥3,090 million (12.4%), ¥2,990 million (11.8%) and¥1,170 million (19.5%) respectively. However, that resulted in afall of 6.9% in income and only reduced the range of decrease inoperating income, ordinary income and net income.
The main cause of poor results is sluggish sales ofdepartment stores that account more than 70% of the total salesof the Group. Sales and operating income of department store
business decreased by 7.0% and 36.6% respectively for the fullyear and dropped by 11.0% and 49.7% respectively for the
Tsutomu Okuda, President and CEO

second half of the year because a decline in consumer
conﬁdence was further accelerated and sales of clothing,branded accessories and big-ticket items, which have been thestrong items of department stores, were poorer than expected.
Particularly, a great slump in sales of the main stores in
Shinsaibashi, Kobe and Nagoya aﬀected the performance.
These are partly due to rapid changes in the macro
environment, but the greater cause is the structural factors of
department stores. We acknowledge that department stores areat the very historic turning point.

Department stores at a historic turning point
What is behind the fact that a department store
business model is facing a historic turning point ?
The structural issues of department stores − weakmarket response capabilities and high-cost structure −have two main causes. One is weak marketing mind as
business quality and fundamental marketing strategy error.
The goods on their shelves moved well without making an
eﬀort in the period of rapid economic growth, which created the
supplier-dependent quality of companies with weak change
response capabilities,
power.

outer-directedness and thinking

Department stores in Japan are diﬀerent from in Europe

and the U.S., and particularly, they diﬀer radically in a businessmodel from the U.S. department stores. Due to their basic
business structure, the sales activities of Japanese department
stores have been based on popular appeal and targeted a wide06

range of customers in terms of age, income and lifestyle.
With a view to catering to customers various demands, theirprices ranged from low to the highest and their product lineup
included fashion, living and food products for occasions ranging
from casual to dress-up to formal and with tastes varying from

U.S.
Japan

Buying all goods : 100％
Buying only goods sold : 80％

authentic to advance. At the same time, they have survived byresponding to the changing times and customers and thecharacteristics of the local market and taking advantage of small

Buying all goods : 20％

Difference in sales operation forms between Japan and U.S.

inventory risk while balancing well and changing ﬂexibly thecustomers. Seen from the viewpoint of corporate management,

weight of each of these factors.

however, they are close but not the same.

However, after the bubble economy heyday in the late 1980s,

diﬀerent in

They are greatly

business operation process, the division of

they lost balance and they were excessively shifted to highresponsibilities and authorities between suppliers and department

prices and clothing, the middle-aged, high-income persons,stores, merchandise information system, personnel planning andauthentic and dress-up.

That made them rigid and weakened

their response capabilities to changes in consumers values anddistribution, knowledge and skills required for staﬀ and proﬁt
structure centered on margins and costs.
They also signiﬁcantly diﬀer in the concrete ways to respondlifestyles.

to changes in the market.
Grade
Prestige

Shop operation type sections

respond at the brand level while independent operation ones at

Occasion
Dress-up

the item or SKU level. Partly due to the historic background ofJapanese department stores, however, the distinction between

Post-bubble
periodmixed up as if they were the same. This is one of the major

Taste

Mind
Young

these two operation types remain unclear and they have been

Post-bubble
periodPeriod of
rapid economic
growthMarriedAuthentic

Period of
rapid economic
growthAdvancefactors that caused weak market response capabilities andhigh cost structure with low human productivity.
In addition, since fresh and attractive products that customers

VolumeCasualChanges in merchandise mix from the period of rapid economic growth to the post-bubble periodwant and the items and brands that sell well in department
stores generally have low margins, it is diﬃcult to introduce themin the high cost structure. It caused a vicious cycle between thepoor assortment of items and brands that customers want in

Do you mean that department stores themselves
moved away from the public ?
As a result, department stores lacked variation andindividuality for consumers and went beyond their reachwith high-priced oﬀerings and little dailiness.
The second cause is Japan s unique forms and ways ofoperating sales ﬂoors.

department stores and the high cost structure, which led toloss of customers.
The performance of department stores will never recover until
these structural issues are resolved, even if the economic
environment improves in the future. We believe that we will see
a completely diﬀerent landscape when we go through a tunnel ofthe current global recession.

Unlike in other countries, department store sales structure in
Japan is very unique. It consists of shop operation typesections with a sales share of 80% where the purchase of mostgoods is recorded only when they are sold and independent
operation type sections with a sales share of 20% that areoperated in American retail way of purchasing and independent
selling.
These two operation forms seem almost the same for07

Development of new department store
business model

Improvement of marketing capabilities andestablishment of store strategies

What new department store business model will
you develop to resolve these issues?

Would you specify the improvement of marketing
capabilities?

In the second half of last year, J. Front Retailing initiatedDevelopment of new store strategies

a full eﬀort to develop a new department store model withIn order to meticulously respond to changes of customers

a focus on the improvement of marketing capabilities and theon a daily basis, we need to clarify store strategies to deﬁne toinnovation of business operation structure to revive department

whom, what and how we should oﬀer, that is, what products

stores.

and services we should oﬀer in what store environment and with

Our target image of a department store is an urban lifestyle
store that adopts a new operation model.

what sales promotion to respond to what customer demands
through regional analysis and increase competitiveness.
In developing store strategies, we will specify the target

Urban Lifestyle StoreCreation of unique and attractive stores adapting to the changing times
Based on popular appeal, widely shift various factors including
customers, merchandise mix and taste & occasionin line with changes in the times

Quick Response to the Changing Times
Fresh Information

Contemporary

Good Taste

Good ValueHigh Quality Service

Exciting Sales Promotion

customers, store concept and image, priority sales policy andproﬁt plan of each store. By integrating sales activities including
products, sales, services, sales promotion and store environment
in line with store concept, we will create step-by-step unique andcompetitive stores that ﬁt the regional characteristics.

Area marketing analysis in cooperation with sores
optionoptionoptionoptionoptionoptionMarket strategy

Security, Safety, High Quality and Trust
Highly Eﬀcient and Low Cost Management

Competition strategy

Store strategy
Target customers
Store concept
Priority sales policy
Profit plan

For this purpose, we will basically shift our focus from thepast merchandising-driven retailer type to the creation of theappeal of stores as commercial facilities centered on marketing.
We will widely deﬁne customers, merchandise mix, pricestructure, tastes and occasions based on popular appeal andShinsaibashi Kobe

Merchandise
Sales
Service
Sales promotion
Store environment

Nagoya

Ueno

Other stores

Other stores
Four priority stores

lifestyle proposing industry as the fundamentals of department
stores to determine their weights according to changes incustomer needs and regional characteristics.

Particularly, we attach importance to quantitative analysis
with a combination of the three axes such as age, income andWe will develop clear strategies for individual stores thatlifestyle as well as traditional qualitative analysis to analyze andplace top priority on competition strategies in the local markets

deﬁne target customers. We will widely determine the target

and eﬀectively combine the factors including merchandise,customers of each store by weighting according to regional

brands, software and hardware services, sales promotion andcharacteristics. And each sales department will oﬀer ﬁnely-tuned

sales ﬂoor environment based on these strategies to create

products and services to meet the demands of each target

attractive stores that customers choose to visit.

customer cluster.

In the meantime, we will focus on quick response to thechanges of the times by always providing fresh information andsuggestions, appropriate fashionability,
prices,good taste,

acceptablehigh quality services and exciting sales promotion as

well as further leveraging the strengths of department storesincluding security, safety, high quality and trust.

At the sametime, we will establish a business operation structure that canrealize them with high eﬃciency and at low cost.
08

New customer
classification =

Age
Young

High consumer
Upper consumer
Medium consumer
Standard consumer
Lower consumer

Around 30

IncomeAround 40 Around 50 Around 60

LifestyleSeniorAdvanced
class
Activeclass
ConservativeclassWe are developing new store strategies for priority storesincluding Daimaru K ob e and Shins aib a shi s t or e s andMatsuzakaya Nagoya and Ueno stores, and then other stores.

women s accessories and other merchandise categories.
The number of customers registering their email addresses
with Daimaru, with whom we can communicate through the

The market research of our stores revealed many problems inInternet or cell phone text messages, is rapidly increasing andresponding to the market. For example, though more than 60%

already exceeded 300 thousand persons. Thus the sales baseof people who visit Shinsaibashi area in Osaka are 35 years oldinterconnecting the website and stores is expanding.

or younger, Daimaru Shinsaibashi store fails to attract many ofthem with the shares of sales on Daimaru-branded cards to its
customers in their 30s and 20s of 16.5% and 7.8% respectively.
Though Daimaru Kobe store has many identiﬁable customers
aged around 30, the number of which accounts for 23% of thetotal, their sales share is 16%, seven percentage points lower.
The purchase rates of cosmetics and confectionary are high, butthat of women s clothing is as low as about 30%. While
analyzing these actual conditions and reﬂecting them in store
strategies, we will set a timeline to remodel and improvemerchandise mix, assortment and pricing policy.

The ﬁercer compet it ion becomes, t he more
important customer retention seems to become.
How will you address that?
Strengthening of regular customer strategies
Currently, Daimaru and Matsuzakaya have more than four
millionidentiﬁable

customers in total who hold theircompany-branded cards. The expansion of customer base andthe strengthening of eﬀective CRM (Customer RelationshipManagement) are one of our important tasks.
Sales from customers who hold Daimaru-branded cards

Customers purchasing channels are not only real
stores but their choices are diversiﬁed. Amongthem,Internet sales seem important.

account for about 70% of total sales from individual customers
and Daimaru will improve CRM based on the cardholder
information infrastructure, which is excellent in terms of both
quality and quantity as the company s main strength, and the

Click-and-mortar businessknow-how to get regular customers. At the same time, Daimaru

The strengthening of Internet business is essential towill improve and thoroughly implement its eﬀorts to create,

attract customers who do not shop in our stores and to increase
sales of the products that are not oﬀered in our stores.
One of our unique approaches is an Internet cosmetics
shopping site Marucollet.

Traditionally, department stores havedealt in top brand cosmetics. But the survey of customers

develop and retain regular customers.
Matsuzakaya will introduce Daimaru s systems and know-how
and use the information system dramatically improved throughintegration to strengthen regular customer strategies that thecompany had hardly addressed in the past.

buying behavior revealed that they skillfully use cosmetics fromWe will strengthen the interaction with store marketing

department stores and others.

strategies to increase the number of the high priority target

Therefore, we launched a newcustomers and other regular customers of each store, whilebusiness Marucollet in which

upgrading and bolstering our eﬀorts to implement regular

we ﬁnd excellent cosmetics,

customer strategies including the improvement of the card usage

which complement the ones soldrate and the sales rise to the top level.

in department stores, and oﬀer
them to the customers of
department stores.
Its sales are still small in total
amount but have been growing
on a doubling pace since it
started in ﬁscal 2007. Using theinfrastructure of this business
http://www.marucollet.jp

model, we are expanding into09

Establishment of store operation structure thatenables both stronger market response capabilities
and low-cost management
Speciﬁcally, how will a business operation structurechange in the future?

How will sales ﬂoor arrangement change?

New store operation

We will arrange sales ﬂoors by highlighting the strengths

Daimaru is leading JFR s eﬀort to establish a newof and eﬀectively combining these two operation types

business operation structure mainly for stores. Under this newcentered on shop operation type and based on the ﬂoor

structure, sales ﬂoor operation is divided into two types includingclassiﬁcation tailored to new customer needs. Utilizing theshop operation and independent operation to be based onstrengths of department stores such as good location, large

their respective diﬀerent features.

Sales share
Operation typeSCM plan and management

JFR s major roles
in operation

Profit margin
Cost

ﬂoor space, huge customer base and advanced information

Shop operation

Independent operation

About 80%

About 20%

Buying only goods sold（No merchandise risk）

Buying all goods and sell independently（Some merchandise risk）

Supplier

JFR●Extracting and solving issues by●Merchandising = Headquarters

brand in each SCM process with

Sales services = Storesshop managers to increase sales●Central operation●Local operation by stores●Detailed and quick response to●Scrapping and building brands and shops

changes by item or SKU

Medium to low

High

Low

MediumIn shop operation type sections, suppliers plan and manage

system connecting the customer base, strong customer drawing
power and high reliability, we will introduce new shops andbrands that actively respond to customer needs without being
constrained by the existing suppliers.
Mainly in the sale of goods and other areas including
restaurant business and services, we will improve the responseto new market by accelerating the renewal and replacement ofbrands and shops through the introduction of the best ones thatwill attract attention and popularity from customers, and the mix
and scrapping and building of brands and shops. Thus we will
always maintain and enhance the appeal of our stores ascommercial facilities.

the whole process of SCM (Supply Chain Management), andAs part of these eﬀorts to establish a new store operation

basically, the purchase of goods are recorded only when theystructure, our stores already began to introduce new shops toare sold and the company assumes no responsibility for

their shop operation type sections without being limited to theinventory. Though their proﬁt margin is low compared withexisting suppliers to bolster low- to mid-priced oﬀerings, which

independent operation type sections, they are low cost andare in particularly strong demand from customers. Independent

highly proﬁtable. Their sales account for about 80% of the total.

operation type sections

Stores operate them locally. Managers in charge of these

also try to increase thesections work with shop managers from suppliers to eﬀectively

reasonable priced products

extract and solve issues on a brand-by-brand basis in each SCM

of men s wear brands

process with the main goal of increasing sales.

T r o ja n a n d Velocé and

In independent operation type sections, the company plans
and manages SCM. All the goods arepurchased andcareer women s wear
brand Sofuol by using theindependently sold to achieve high proﬁt at high margin andadvantages of being able tohigh cost. Their sales mainly from private brands andrespond quickly to

independently selected items oﬀered in non-partitioned open

customer needs.

space account for about 20% of the total. While stores provide
sales and services, the operation of merchandising is centralized
in the headquarters. Since they can reﬂect the company s
intention in the whole SCM, they aim at agile operation todiﬀerentiate themselves from competing stores, develop people,
complement the products that are not oﬀered in shops, andﬂexibly and quickly respond to changes.

10

SOFUOLHuman resources development, business operation
manual and improvement of support systems
If operation changes, will the required humanresources also change?
Under the new store operation, we have to mix shops andbrands most eﬀectively always in the interests ofcustomer needs and proﬁtability to keep our stores attractive andlively. That requires

highly skilled professionals,

thecompilation of operating procedures in a manual for eﬃcient
operation and the improvement of information systems
supporting the streamlining of operations.

More expertise and eﬃciency of business operation
will be required to implement these and how will
you support stores?
The counseling program as an operating procedures
manual serves as important data that can be used todecide to replace shops and brands as well as helping develop
and revitalize shops.
To this end, we introduced to Daimaru s six directly managed
stores a sales productivity analysis system to be used for theRequired expertise diﬀers greatly between shop operation

operational management and counseling of shops in April 2009.

type and independent operation type. While independent

The same system will be introduced to Matsuzakaya storesoperation type sections focus on sophisticated merchandising

successively in and after September 2009.

capabilities and the capabilities to sell out products, shop

With one click, this system visualizes the data necessary for

operation type sections emphasize producing capabilities andevaluating shops and counseling, including each shop s daily

counseling capabilities.

sales, number of customers, per-customer sales as well as

Producing capabilities are to optimally combine andmonthly sales per square meter, deemed proﬁt calculated byintegrate various goods of popular brands and shops, services,

deducting costs from earnings, and customer service satisfaction

sales promotion and store environment under the leadership ofin service surveys. It enables us to see the situation at a glance.

store managers to make the stores more attractive.

CounselingManagers will use this system to improve counselingcapabilities are that our managers work with shop managers

capabilities and management eﬃciency and shops will befrom suppliers based on the counseling program to help

supported and replaced to revitalize sales ﬂoors, which we

increase sales by analyzing the actual situation of the

expect will lead to sales growth.

performance, assortment and sales structure of each shop.

Development and introduction of sales productivity analysis system●Enhance the capabilities of counseling shops● Improve management effciency● Introduced
ntroduced the system to Daimaru s six directly managed stores in

April 2009 and will introduce it to Matsuzakaya in September 2009

Producingcapabilities
Counselingcapabilities

Shop
operation
type

Independent
operation
type

Sophisticatedmerchandisingcapabilities
Selling out
capabilities

11Promotion of low-cost and high-eﬃciency
management to increase human productivity
The management of sales ﬂoors will also change.
The shift to a new department store business model will
signiﬁcantly change our sales ﬂoor operation
management.
As a proﬁt and loss model by sales ﬂoor operation type, wewill operate shop operation type sections ﬂexibly to respond to
customer needs and achieve a good balance between earnings
and costs instead of focusing on proﬁt margins as excessively

departments will be completed in March 2010.
The complete integration of merchandise under one company
is expected to produce great results in terms of sales activities,
including supplier policy and product development through scale
expansion, and in terms of costs and productivity, including thestreamlining and downsizing of purchasing organization.
〈Group organization for March 2010 and beyond〉
J. Front Retailingas in the past, while in independent operation type sections,

Daimaru Matsuzakaya
Department Stores (tentative)

Department
store
business (※）

Peacock Stores

Supermarket
business

Daimaru Kogyo

Wholesalebusinesswhich was high margin and high cost, we will structurally reduce
costs keeping proﬁt margins high so that both sections will beable to achieve high proﬁts.

J.Front Design & Construction

Coupled with the above-mentioned overhaul of sales ﬂoor
operations through a new approach, we are planning a drastic

JFR Card

overhaul of business operations, organizations and personnel

Daimaru Home Shopping

planning at a company-wide level including out-of-store sales,

J. Front Foodsg e n e r a l a ﬀ a ir s , h u m a n a ﬀ a ir s , a c c o u n t in g a n d o t h e radministrative support sections when Daimaru and Matsuzakaya

Other businesses

Dimplesare integrated into one company in the next ﬁscal year. And
thereby we will aim for highly productive department store
operation by a few select people, which involves changes in our※In addition, Hakata Daimaru, Shimonoseki Daimaru,
Kochi Daimaru and other companies will operate businessas subsidianes of the new department store company.

way of thinking and working.

Integration of Daimaru and Matsuzakaya into one
company and integration of their merchandise
What eﬀect is expected by integrating Daimaru andMatsuzakaya into one company?
The integration of Daimaru and Matsuzakaya into one
company as one of the main pillars of our businessstructure reforms will be carried out in March 2010, a year

Women s accessories &children s wear

Sep 2009

Women s wear, men s wear &accessories and foodstuff

Mar 2010

Home fumishings and art work,
kimono & jewely

Outlook for ﬁscal 2009

implementation structure and speed up decision-making, as well

Fiscal 2009 remains unpredictable and what is theﬁnancial outlook for the year?

as signiﬁcantly reducing duplication of organizational functions,

Consolidated performance for ﬁscal 2009 depends on

with the aim of achieving high-eﬃciency and low-cost

department store sales. Honestly, it is very diﬃcult toahead of the original schedule. This will unify the management

management.

12〈Merchandising integration
schedule〉

Mar 2009

forecast our business for the year under these economic

We are also in the process of integrating the merchandise of

circumstances. Department store sales for ﬁscal 2009 are

the two companies. Following the integration of women s

expected to be ¥745.7 billion (a decline of 10.8% from theaccessories and children s wear departments in March 2009,previous year) because a sharp sales drop for the second half ofwomen s wear departments, men s wear and accessories

ﬁscal 2008 will recover in the second half of ﬁscal 2009 but the

departments and foodstuﬀ departments will be integrated inconsumption environment will remain severe.

September 2009 and the integration of the remaining home

Since we will reduce selling, general and administrative

furnishings departments and art work, kimono and jewelry

expenses by ¥10.3 billion from the previous year by strictlycontrolling expenses without sanctuary, operating income is
projected to be ¥6.5 billion.
Sales of supermarket business, wholesale business and otherbusinesses are forecasted to be ¥127.5 billion, ¥75.5 billion and¥87 billion respectively, whereas we expect operating income tobe ¥0.9 billion for supermarket business, ¥2.9 billion forwholesale business and ¥2.1 billion for other businesses.
As a result, consolidated sales and operating income are
expected to be ¥990 billion and ¥12 billion respectively. On a
consolidated basis, we will invest ¥64 billion mainly in big
projects for the future including the new annex to Daimaru
Shinsaibashi store, which will open in November 2009, andDaimaru Umeda store whose ﬂoor space will increase by 1.6
times in spring 2011.

Shareholder return
What do you think about proﬁt distribution toshareholders?
Our basic policy is to divide up proﬁts appropriately with adividend payout ratio of 30% in consideration of its proﬁt
level, future capital investment and cash ﬂow trends while
maintaining and improving sound ﬁnancial position. We also
consider stock buyback from time to time to improve capitaleﬃciency and implement capital policies in a ﬂexible manner.
For ﬁscal 2008, comprehensively evaluating the performancefor the year and the business environment, we have decided todecrease a term-end dividend by ¥1 from ¥4.50 for the previous
year to ¥3.50 and pay an annual dividend of ¥8 combined withan interim dividend of ¥4.50. That results in a dividend payout
ratio of 59.0% for the year. However, excluding the eﬀect ofloss on valuation of investment securities caused by theunexpected rapidly deteriorating stock markets, it is 32.5%.
For ﬁscal 2009, comprehensively evaluating the interim andterm-end earning forecasts in the largely unpredictable businessenvironment, we will omit an interim dividend and pay a term-end
dividend of ¥6.

13

Bigger and Newer Stores

14

Rendering of Daimaru Tokyo store after increasing its floor space (Summer 2012)

Big Projects in Progress ―Strengthening Competitiveness by Expanding the Basis for Growth
J. Front Retailing is increasing the size of and innovatively renewing

comprehensive department store oﬀering lifestyle products in a

department stores in large cities to enhance the appeal of its storescomprehensive manner. And then we will add high sensitivity ofand further strengthen its business infrastructure.

urban stores and dailiness to provide convenience to working
women and businessmen. The investment amount will be ¥27 billion.

Daimaru Shinsaibashi store fails to attract customers in their 20s and
30s who constitute a large percentage of the persons visiting the

Daimaru Tokyo store completed the ﬁrst phase of relocation anddistrict because it has focused to a certain extent on the upper classexpansion and opened as a new store under the store concept ofincluding its main gaisho (out-of-store sales) customers with a ﬂoor

TOKYO/ADULT/LIFESTYLE Department Store in November 2007. In

space of 37,490 square meters, a medium size for the current urban

the ﬁrst phase, while further improving and enhancing already strong fooddepartment store. Using the facilities of Sogo Shinsaibashi store thatdepartments, the store expanded the cosmetics ﬂoor into Tokyo s largest

we have decided to acquire recently, we will open ascale and the restaurant ﬂoor into two ﬂoors with a restaurant open until

40,000-square-meter new annex next to the main building in

24:00 and gain popularity with women and men working around Tokyo

November 2009 to develop a new market and further reduce costs bystation. In summer 2012, it will complete the second phase of

combining the operation of the main building and the annex. This isconstruction and fully open with the ﬂoor space increased by 1.4 times toalso positioned as a trial toward the establishment of a new

46,000 square meters. Positioned as part of the Tokyo Station City

department store business model for the future that J. Front Retailingplan, which sees Tokyo station including Yaesu, Nihonbashi andis aiming at. We are planning to invest ¥41 billion in this project.

Marunouchi exits and JR station yard as a big city, it is meant to be an

Existing customers and new strategic target of Shinsaibashi store

innovative store that is worthy of the gateway to the metropolis. The total

Young

Around 30 Around 40 Around 50 Around 60

SeniorHigh consumer

investment amount of the ﬁrst and second phases is planned to be ¥18
billion.

Upper consumer
Medium consumer

In the meantime, Matsuzakaya is working on a large-scale project toStandard consumer
Lower consumer

develop the combined two blocks of Ginza 6-chome district where
New strategic target

Major customers of the exisiting store

Matsuzakaya Ginza store is located. The total redevelopment area is

Daimaru Umeda store will increase its ﬂoor space by 1.6 times toabout 9,000 square meters, of which about 66% is owned by

64,000 square meters in spring 2011. Under the redevelopment plan

Matsuzakaya. While promoting a business plan by bringing togetherof JR Osaka station area, West Japan Railway Company and Osaka

the department store operation know-how of JFR Group, we will

Terminal Building Co., Ltd. have considered the redevelopment andcreate a high-grade and innovative symbol store of the department

revitalization of the south side of JR Osaka station to develop thestore business of JFR Group, which has a highly fashionable image

south side of the station and create its face.

and is worthy of the world-class commercial location Ginza.

Successive

developments of commercial facilities including this project will
increase the potential of Umeda area and we believe that the store
will be able to substantially improve store competitiveness byincreasing its ﬂoor space. Now it is a specialty department store
focusing on fashion. However, by increasing its range of food andhousehold products while keeping the present sensitivity and

ori
i-d

Development of
2 blocks combined

Ha

rum

N

atmosphere, we will create a fashionable and contemporary

Ginza 4-chome

Ginza 5-chomeM
Gi atsu
nz z
a ak

ay

Ch

uo

a

-do

ri

Ginza 6-chome

Rendering of Daimaru Umeda store after increasing its floor space15

Shop Development
around Department Stores

16

From Dots to Areas ―Revitalization to Make the Areas Attractive

From dots to areas―

J. Front Retailing operates highly

sensitive shops around its department stores to revitalize thewhole areas, as well as making the stores themselves attractive.
Daimaru Kobe store initiated these eﬀorts in 1987. At thattime, Motomachi, where Daimaru Kobe store is located, wasrelatively losing vitality because the center of transportation andbusiness of Kobe area was shifted to Sannomiya. It was urgent
to create the appeal of the store to attract people.
The development began with Daimaru s own buildings, butthey were not enough to revitalize the area. Therefore, Daimaru
actively invited brand shops to open their branches in otherbuildings in the Former Foreign Settlement of Kobe to draw
more customers throughout the area. Now we operate 68【Stores operated by Daimaru Kobe store】
JR Motomachi
Station

A.P.C.

DAIMARU (Kobe)
BLOCK47 Castelbajac
kate spade
Sport
VIVIENNE TAM
trippenFormer Foreign
Jill Stuart
Settlement Bldg. 38 BLOCK44
agnés b.
HuntingWorld
DAIMARU
Old England MIU MIU
Annex
BLOCK31 BLOCK30GENIUS GALLERYJURGEN LEHLBLOCK32CABANE de zucca /NTT Shin-Kobe Bldg.
tsumori chisato
EPOCA THE SHOP
forty ﬁve・R

Dress Gallery White DoorDAIMARU Interior Annex Bldg.
Le Style

LAURA ASHLEY

various unique brands and shops using the familiar but new

Buildings occupied by several brand shops

including Former Foreign Settlement Bldg. 38 and Block 30,
Such know-how is applied to other stores.

【Stores operated by Daimaru Shinsaibashi store】
DAIMARU (Oﬃce)
YEVS

Subway(Shinsaibashi Station)
Crysta Nagahori (Underground mall)

Daimaru Shinsaibashi store has been working witharea. However, amid changes in the environment surrounding
the stores nearby and generational changes of their landlords
beginning around 2003, some old stores have chosen towithdraw from the business. With a sense of crisis that the
shopping are a will dama g e the f a shionable ima g e o f

Hieldshops around itself by adopting the method of Kobe store. Bold

department store. And it attracted high-proﬁle shops one after

Kyoto Daimaru store has also developed shops around itself
starting with Louis Vuitton Store, which opened as the ﬁrst shop
in 2004, and now operates 12 brands and shops to enhanceacca
Nike OSAKA

alfredo BANNISTER

Sanrio Gallary
ROPÉ Le Marche Blanc

Bonpoint

Hannari
ROPÉ Le Marche Blanc【Stores operated by Daimaru Kyoto store】

A.P.C.
Hankyu(Karasuma Station)

EMPORIO ARMANIDSQUARED²
Daimaru Relaxing Garden Kyoto

DAIMARU (Kyoto)

四条通り
BOTTEGA VENETAJOSEPH THE STORE
Subway(Shijo Station)

Hankyu Kyoto LineEMPORIO ARMANILOUIS VUITTON StoreHouse of
JILL STUART

Takakura-dori※All the numbers of stores are as of May 2009.

Studio V

Grand Afternoon Tea Shinsaibashi

Higashinotoin-doriongoing development of the area.

M-premier
THE BODY SHOP
Paul Smith Womenagnés b.

Karasuma-doriMatsuzakaya Ueno store in line with the progress of the

Swatch Store Osaka

Big Step

the appeal of the whole area.
In the future, we will attract shops to the area aroundJ. M. WESTON

alfredo BANNISTER / FLAGS Cafe

Flower shop
"Bouquet"

Subway Karasuma Line

Shijo Kawaramachi, a high commercial accumulation district,

4℃

4℃
bliss

kinoshohampu

another and now operates 25 brands and shops.
For the purpose of revitalizing Shijo Karasuma area as much as

LONGCHAMP
Samantha Thavasa

FREE S SHOP

shop design and environment are possible in a stand-alone
shop, whereas they are subject to certain restraints within a

DAIMARU (Shinsaibashi)

White Avenue（in Hotel Nikko Osaka）

Shinsaibashi rather than losing vigor if the situation is left as itis, Daimaru Shinsaibashi store launched the development ofMidosuji

Shinsaibashisuji Shopping Arcade to create the prosperity of theBlue Blue

Lloyd's Antiquesappearance of historical modern western-style architecture
which bring new life to the history of the city.

GENIUS GALLERYLOUIS VUITTON Store

17

Original Merchandise
and Services

SOFUOLS OF UO L h a s m a r k e d t h e 10 t hanniversary. Targeting working
women mainly in their 20s and 30s,
the brand oﬀers sophisticated stylingbased on four tastes including mode,natural, feminine and French trad tocater to their business, commuting
and weekend fashion needs.

18

Seeking Originality Readily Adaptable to Changes
in Customer Needs
The role of independently operated sales sections of which sales

comprehensive manner and accelerate our eﬀorts to restructure theaccount for about 20% of total department store sales is

supply chain.

diﬀerentiation and characterization through the quick change of
product selections and displays in response to daily changes in the

Independently operated sales sections

market and the oﬀering of merchandise that is not included in the

Select shops are one of the factors constituting the originality of theassortment of shops.

store through the attractive items that buyers and sales staﬀ selectSuch non-partitioned open space is scalable to customer needs,

using their fashion sense. Daimaru operates Season Message

and there we can change merchandise mix and sell goods acrossoﬀering women s wear and accessories to baby boomers and post

shop boundaries. Making the best use of these strong points, we will

baby boomers and Meiprior carrying trendy women s shoes andrespond to changes ﬂexibly, as well as oﬀering unique merchandisebags purchased directly from Italy, France and other European

and using our sales and service capabilities, to overwhelmingly

countries. Matsuzakaya s select shops include Flair For Ef

diﬀerentiate ourselves from competing department stores.

targeting women with a sharp eye for fashion and Denim Diner

Private brands（PB）

with a wide selection of imported jeans popular abroad. Sales staﬀ
are working with buyers to stimulate potential needs using their

Concerning private brands, we are involved in the whole SCM

information and sensibility, which can be obtained because they

process from the stage of product planning. Basically, clothing items

serve customers on the front line all the time.

are priced at 20% oﬀ the prices of national brands. Lately, however,

One example during ﬁscal 2008 is the baggy pants that some

we expand our focus to a low price range of 50% oﬀ national brandsales staﬀ of Flair For Ef jointly developed with suppliers. They wereprices to satisfy customers who are becoming more price-conscious.

also involved in order placement and product planning. Reﬂecting

A representative example is a men s wear brand Trojan, whichcustomer needs for comfortable and ﬁgure-forgiving denim pants andhas celebrated the 50th anniversary of its establishment. Its highquality material, excellent tailoring and reﬁned urbane image continue

adding a trendy touch, they proposed the new item.

to attract sensible businessmen. A contemporary line was newly

Collaboration

added to the existing basic line to strengthen our approach to new

Daimaru and World Co., Ltd., an apparel company achieving good

customers. A women s wear brand Sofuol marking its 10th

results in SPA brand strategy, established a new business model andanniversary is mainly targeted at working women in their 20s and 30s

collaborate to oﬀer a women s wear brand Esche.

and caters to their business, commuting and weekend fashion needs

joint business unit as business partners, instead of the traditionalwith sophisticated styling.

supplier-buyer relationships, Daimaru and World share information

Forming a virtual

As part of the eﬀorts to seek synergy through the management

and clarify the distribution of proﬁts to collaborate using the core

integration between Daimaru and Matsuzakaya, we introduced thesecompetence of each company, that is, Daimaru s ability to operate

two brands, which were both created by Daimaru and have enjoyed astores and World s ability to develop and supply merchandise, instead

deep-rooted popularity among customers, to Matsuzakaya Nagoyaof the conventional way of developing PB apparel products throughand Ueno stores in ﬁscal 2008 to expand the oﬀering of the private

OEM. In the business process from product planning to selling out,

brands of the Group. We will leverage our private brands in terms of:

the two companies are working together to ensure PDCA

(1) characterization and diﬀerentiation, (2) the increase of(Plan-Do-Check-Action) cycle and respond quickly and accurately to

proﬁtability, and (3) human resources development. We will review

customer needs and wants.

product development, logistics, information system, sales promotion,

trend-conscious youthful baby boomers and post baby boomers, wesales ﬂoor environment, sales activities and inventory control in aoﬀer good quality, elegant and reasonable outing and work clothes

Targeting plugged-in andwith young minds and trends.

TrojanTrojan has celebrated the 50th
anniversary. Its high quality
material, excellent tailoring andreﬁned urbane image continue toattract sensible businessmen. In
2009, a new contemporary line
was added to the existing basic
line to strengthen our approach to
new customers.

escheThis is a total coordinate brand foryouthful baby boomers and post
baby boomers featuring highquality, reﬁnement and reasonable
prices. It oﬀers simple and basic
elegance-oriented street clothes
following moderately trends.

19

Customer s View Project ―Shape Born from the Voices of Customers

Semi-custom boots born from the voices of customers

As part of the eﬀorts to implement the customer-ﬁrst principle, J.
Front Retailing carries on a company-wide Customer s View
project to develop merchandise and improve services and store
environment by attending to the voices of customers reaching into

(Placed in stores)

the tens of thousands every year. We have in place the systems
such as Hospitality Memo,

Questionnaire on Merchandise andProduct Development Based on Customers Comments toactively collect various views and needs from customers, while
widely cooperating with Consumer Product End-Use ResearchInstitute, which belongs to the Group, and material manufacturers.
Many products and services have been thus developed, including
machine-washable cashmere knitwear of which annual sales
exceed ¥100 million.

20

Product
development

Customer s View Box

Hospitality Memo

(Information note by salespersons)Product Development Basedon Customers Comments(Collecting real comments online
and at monitor meetings)

Collecting the voices ofcustomers in various ways

Getting
customers
voices into
shape

Services
Facilities
Environment
Customer s
View projectLately, from the voices of customers that it is diﬃcult to ﬁnd bootsﬁtting well around the calves and that they want to choose thedesign and color they like, we developed semi-custom boots called
pattern order boots,

which are available in seven shaft

circumferences, six colors for elegant type and 12 colors for jockey
type, and two heel heights. A bag-in-bag (a drawstring bag to
put in another bag) made its debut six years ago to resolve
customers concerns that the contents show through and that thecontents often drop out when they use bags without closures. It
has become established as a popular item with greater variation incolors and patterns.

Multipurpose restroom on the 3rd floor of Daimaru Umeda store

The multipurpose restroom on the east side of Daimaru Umeda
store was born from the demands of the elderly and customers
with babies for a user-friendly restroom. It secures enough space
for a person using a large wheelchair and an attendant to moveeasily. In addition, it is equipped with ostomate-friendly functions,a ﬂush lever in easy-to-operate size and shape, a fold-down bed
and a ﬁtting room. It is accessible to many customers including
the elderly and persons with babies.
New products and services are born from the voices of customers
Bag-in-bag

and then they are improved and evolved. Customer s View projectAn example of the improvement of store environment is a multiple

developed with customers enjoys great popularity. We willﬁtting room with light simulation in the women s wear department

continue to identify the demands and complaints of customers

on the 4th ﬂoor of Daimaru Kobe store. This ﬁtting room was born

through daily dialogues with them, create ideas with them andout of customers desires to see how they would look outdoors indevelop services, store environment and merchandise to satisfy

the garments they try on. It simulates various lighting conditions

them.

including in a building and a park so that a customer can see how
diﬀerent the clothing colors look throughout the body. And it hasenough space for wheelchair users and mothers with daughters.
Multiple fitting room on the 4th floor of Daimaru Kobe store

Since various lighting conditions are simulated,a customer can see how different the clothingcolors look throughout the body.

Handrails and other equipments are
installed.
21

Living with Art

22

Living with Art ―Spiritually Rich Life

Museums providing easy access to art■ Major cultural events held during ﬁscal 2008

J. Front Retailing has museums in its major department stores

Aida Mitsuo (Matsuzakaya Museum and Daimaru Shinsaibashi)

and holds topical exhibitions to provide easier access to
excellent art works in Japan and abroad. We oﬀer spirituallyaﬄuent lifestyles to visitors through paintings and a wide variety

Kobori Enshu: Encounter with Beauty (Matsuzakaya Museum and Daimaru Kobe)
Twentieth Century Masters: Eyes Looking at Beauty and Eyes Looking at Society(Daimaru Umeda and Tokyo)
Nakau Collection: Four Great Ukiyoe Masters (Daimaru Tokyo)
Koiso Ryohei and Higashiyama Kaii (Daimaru Kobe)of other fascinating works of art including photos, deigns andOriginal Illustrations by John Burningham (Daimaru Sapporo)

picture book illustrations to make a cultural contribution to local

Ancient Egypt (Matsuzakaya Museum and Daimaru Kobe)

communities.
Matsuzakaya has a full-scale museum named

MatsuzakayaMuseum in Nagoya store, which is unusual for department
stores. It is a modern museum complete with digniﬁed and calm
display space and the equipments to keep exhibits in goodcondition and protect them from crimes and disasters.

Daimaru

Museums are placed in Shinsaibashi, Umeda, Tokyo, Kyoto andKobe stores.
The exhibitions that Daimaru and Matsuzakaya held during

Nakamura Ikuo Photo Exhibition: The Sea and its Creatures（Daimaru Umeda and Sapporo）
Rouault and Matisse (Matsuzakaya Museum)
Camille Pissarro (Daimaru Tokyo)
Hokusai Painting Mt.Fuji (Matsuzakaya Museum)The 93rd Inten: Exhibition of the Japan Art Institute (Daimaru Shinsaibashi)
Shirasu Jiro and Masako (Daimaru Kobe and Sapporo)
Great Romance of the Three Kingdoms (Matsuzakaya Museum)■ Exhibition schedule for ﬁscal 2009

ﬁscal 2008 are listed on the right. (Daimaru Sapporo store gives
exhibitions in the hall on the 7th ﬂoor.)

12

1. Léonard Fujita Portrait in 1927
2. Four Great Dinner Sets of Ekaterina II
From the Collection of the State Hermitage Museum

4(From left) Creamer, sugar bowl and saucer, coffee pot
and coffee cup and saucer

from the Cameo Service
Sèvres Royal Porcelain Factory, France (1778-79)
C

Texts, photos, The State Hermitage Museum, St.Petersburg, 2009

3 3. Italian Art and Napoleon

Madonna and Child with an Angel by Sandro Botticelli (1467-70)

Photo:Jean-François Paccosi

4. The History and Various Treasures of Higashi Honganji
One part of the Annyo Rokushu Zu (Six Types of Birds in the Pure Land)
from the sliding-door panel paintings in the Goeido(Founder s Hall) by Mochizuki Gyokusen

Léonard Fujita（Matsuzakaya Museum and Daimaru Kobe）
Four Great Dinner Sets of Ekaterina II from the Collection of the State
Hermitage Museum（Daimaru Shinsaibashi）
Botticelli: Italian Art and Napoleon-Collection of Fesch Museum in Corsica（Daimaru Tokyo）
Hashimoto Kansetsu（Daimaru Kyoto）
Nakahara Junichi（Daimaru Kobe）
In Commemoration of the 750th Memorial for Shinran Shonin: The History andVarious Treasures of Higashi Honganji（Matsuzakaya Museum）
The 94th Inten: Exhibition of the Japan Art Institute（Daimaru Shinsaibashi）
The Legacy of Carthage（Daimaru Tokyo）※Details of the exhibitions to be held in ﬁscal 2009, including titles, are subject to changes.

23

The world of Art Deco createdby architect W. M. Vories

It was in 1914 that Daimaru kimono fabric store, which was founded in 1717,

department store with seven stories above ground came into existence.

opened a Western style store with display windows in the present

The middle layer of the building is covered with grave scratched tiles. It is

Shinsaibashi. A few years later, in October 1918, a unique Gothic style

between the granite exterior wall of the ﬁrst ﬂoor and the outer wall of the top

four-story timber-frame and brick department store was born, which was rare

ﬂoor elaborately designed with terra cotta. Once you step into the store

even in Osaka. It was the ﬁrst building that W. M. Vories (1880-1964)

through the entrance with a relief of a peacock, which is a symbol of Daimaru,

designed for Daimaru. Regrettably, however, it was burned down only one

you will ﬁnd gorgeous details one after another, including fresco paintings onyear and four months later. The current building of Shinsaibashi store wasthe ceiling and a stained glass clock on the upper wall of the central elevator

constructed in four phases according to a plan. In the ﬁrst phase ofhall. All of them, including geometric patterns, abstract ﬂowers and trees, andconstruction, the southern half facing the arcade street of Shinsaibashisuji wassnow and mineral crystals, form the world of Art Deco uniﬁed in one tone.

completed in 1922, and in the second phase, the northern part facing the

Department stores should have diﬀerent characteristics from region tosame street was completed in 1925. And then the third and fourth phases ofregion. Here is one of the approaches of Shinsaibashi store to oﬀer customers

additional construction of the part facing Midosuji street were completed in

special time and space as well as products and services.

1932 and the following 1933 respectively. This is how a Neo-Gothic style

Peacock relief

Mezzanine of the main building

Decoration of elevator hall

24

Elevators on the 2nd floor of the main building

East side of the central staircase of the main building

Fresco ceiling

Stained glass designed after Aesop s Fables

Ceiling of light and colors

Relief ceiling

Elevator hall on the 1st floor of the main building

Stained glass clockKyoto Dyeing and Weaving Design Instituteand Matsuzakaya Kimono Museum

designs, Noh masks, byobu (folding screens) and armor and helmets werecollected. They were initially housed in a storehouse of Kyoto Merchandising
Branch, and in 1957, Matsuzakaya Kimono Museum was built with modern
equipment on the premises to keep them permanently as cultural assets. Now
it houses as many as 10,000 pieces of dyed textiles and related materials.

■ Roles of Kyoto Dyeing and Weaving Design InstituteKyoto Dyeing and Weaving Design Institute asks a group of the industry s
Kyoto Dyeing and Weaving Design Institute,machiya architecture of the Edo era

Matsuzakaya Kimono Museum
housing 10,000 pieces of dyed textiles

leading manufacturers to plan and produce original kimono fabric based on thedesigns developed through the study of the collection of Matsuzakaya Kimono
Museum and Matsuzakaya organizes the Exhibition of Kimono Masterpieces

Kyoto Dyeing and Weaving Design Institute was inaugurated in 1745 as Kyoto

every year to show and sell these works to customers. The ﬁrst exhibition was

Merchandising Branch of Matsuzakaya, a major kimono fabric dealer at theheld in Tokyo, Nagoya and Osaka in fall 1935. During the war, Matsuzakaya

time, and had bought Kyoto kimono fabric for many years. Since Matsuzakaya

were forced to suspend it. However, after the war was over and the exhibition

Kimono Museum was opened in Kyoto Merchandising Branch in 1931 tomade a comeback in 1950, the company continues to organize it and held thecollect dyed textile works of art from all ages and countries, it has pursed the63rd exhibition in spring 2009. The institute is also committed to corporate

beauty of Japanese kimono and has researched and developed the design ofphilanthropy to inherit traditional culture of dyed textiles. In 1934, the institutetrendy kimono. In 1957, Matsuzakaya Kimono Museum was established as a

asked Chiso Shoten (present Chiso), a kimono manufacturer in Kyoto, to restore

modern storage and treasures precious pieces of dyed textile art of national

the Keicho Kosode allegedly owned by Yodo-dono (concubine of Toyotomi

important cultural property class. （Kyoto Merchandising Branch was renamed

Hideyoshi) from the collection of Matsuzakaya Kimono Museum and it appeared

Kyoto Dyeing and Weaving Design Institute in 1990.）

in literature. When requested by domestic and overseas museums to allow
them to show some works from its collection in their special exhibitions of dyed

■ History of Kyoto Merchandising Branch

textiles and others, the museum lends them after due consideration. Recently,

Matsuzakaya, which was founded as a kimono fabric dealer Ito Gofukuten in

an exhibition titled Kosode:

Nagoya in 1611, expanded the business to become a kimono fabric purveyor to

Haute Couture Kimonos of thethe Owari Tokugawa clan around 1740 and advanced into Kyoto in 1745.

In

Edo Period was held in Tokyo

order to further develop the business, Kyoto Merchandising Branch was(Suntory Museum of Art) andestablished as a store with buying functions in Kyoto, which was a production

Nagoya (Nagoya City Museum)

center of quality kimono fabric at the time. Originally, the branch was openedin 2008 and in Osaka (Osakain Muromachi Nishikikoji, and four years later, it was moved to the present

Municipal Museum of Art) inlocation in Shinmachidori Rokkaku-sagaru. Though it repeatedly suﬀered ﬁres2009 to show about 300 items,

and incidents including Donguri Fire in 1788, Hamaguri Rebellion in 1864 andmainly including kosode of thethe Great Fire of Meiji in 1900, it was rebuilt each time and retains theEdo era, from the treasured

architecture of machiya (town house) of the Edo era.

collection of Matsuzakaya■ Establishment of Matsuzakaya Kimono Museum

Kimono Museum and received
extremely good reaction from

From the Taisho era to the Showa era, department stores were expected toabout 130,000 visitors in the

produce top quality kimono fabric using traditional dyeing skills, while they weretotal of these three locations.

transformed like department stores through popularization and the expansion of

We will continue to assume aoﬀerings other than kimono fabric. With that historical backdrop, Matsuzakayarole in inheriting the precious

Kimono Museum was set up in Kyoto Merchandising Branch in 1931 andtraditional beauty of Japan bybegan to collect dyed textile works of art from the Nara era to the Edo era fromcreating opportunities to expose

Japan and other countries across the world to help create original kimono

many people to the essence offabric. The collection includes clothes such as kosode (small-sleeved kimono)Japanese dyed textile works ofof the Edo era, Noh costume, furisode (long-sleeved kimono), katabira (unlined

art unlike any other in the world.

Keicho Kosode allegedly worn by Yodo-donosummer kimono), jinbaori (battle surcoat) and obi (kimono belt) and kireji (cloth)of all countires such as Coptic cloth from Egypt, Incan cloth and Indian chintz.
In addition, a wide variety of arts and crafts including sample books of kosode

Furisode with design of fans on dark green crepe (Mid-Edo era)25

Human Resource
Development

26

Developing Independent Professionals
Who Can Adapt to Changes

continuing these eﬀorts to build their career, J. Front Retailing

4 ．Human resource development through organization
management(JFR) develops human resources based on the following four pillars.

JFR systematically provides the management knowledge required

With the belief that people grow by getting their jobs done and【Independent Career Building System】

Position & Function

OJT

Career Route

バイヤー
Buyer

マネジ
ャー
Manager

アウトセールスエOutsales
キスパートExpert

スタッフStaﬀ

セールス
エキSales
スパーExpert
ト

Sales Chief

Career Support
College

Supervisor

General
ゼネラルマネジManagerャーMerchandise
マーチャンダイザー
Manager

Assistant
ト
Team
チームリ
ーダー アシスタン
Buyer
バイヤー
LeaderTraining

Four Programs
Task setting
and follow-up

Role
Training

Personnel
System
Self-proposing
and challenging

Subordinate

Service
接客販売担当and Sales

お客様対応担当
Customer
Service
Order
Taking
承り担当
SupportService
事務・作業

Program to EnhanceSelf-Awarenessorganization to give subordinates roles and tasks and follow up
their progress and evaluate and feedback their results.

Three-Year Training Program for New Employees
JFR recognizes the ﬁrst three years as an important training period
for new employees to acquire basic knowledge of department

Program to Enhance
Daily Job
Performancenew employees with basic business knowledge step by step in

Program to EnhanceBusiness
Expertisethat they can assume the role of sales chief in their fourth year.

Step-upCourseGrowing themselves
through daily work.
Obtaining the knowledge andskills necessary for their roles.

Designing employees'
own future career.

Training) and steadily carries out RPDC activities in oﬃce

Program to Enhance
Humanity as a
Member of Society

Basic
CourseGiving their thoughts
on career.

by the Group to enhance the functions of OJT (On-the-Job

Self-studying to become
what they want to be.

1．Feedback to enhance self-awarenessstore operations. The basic policy of this program is to provide
conjunction with OJT at stores, group training and feedback soTheir progress of learning and aptitude are shared between thecompany and individual employees through regular interviews.

■ Major activities during ﬁscal 2008
●JFR provided trainings to make employees acquire knowledge
and skills required for their roles in conjunction with the ongoing
business structure reform. JFR gave general managers trainings
on a marketing strategy and a complete form of store-based sales

JFR has in place systems to provide feedback to each employee

reform. Dividing mangers into independent operation type andincluding multifaceted observation of behavior traits from theshop operation type in a new business operation structure, JFR

viewpoints of colleagues and milestone interviews to exchange

oﬀered trainings to give knowledge and skills corresponding toviews between the company and individual employees at their

their specialized jobs.

milestone ages. In addition, JFR gives 30- and 40-year-old●In order to develop leaders bearing the future of JFR Group,

employees career development training to help them become

Daimaru, Matsuzakaya and other subsidiaries of the Group jointly

aware of their own career and make a career building plan.

provided three-tier leadership training programs including JES＊1 totrain management personnel, JMS＊2 to train department head level

2．Establishment of learning systems

personnel and JBS＊3 to train manager and buyer level personnel.

JFR improves the menu of Career Support College (in-house(All of them marked the second term in the period under review.)

self-development school) based on the concept of career●Daimaru and Matsuzakaya jointly gave trainings to foster expert

independence that we should develop our career on our own, whilestaﬀ teaching sales and services. (The second term in the period

clarifying knowledge and skills required for each position and providing

under review)trainings to help employees fulﬁll their roles. The attendance histories●JFR improved the curriculum of Career Support College basedof employees are registered in the personnel information system andon the concept of career independence that we should develop

respected as an indication of their intentions and motivations.

our career on our own and about 2,500 persons in annual total

3．Development through job and rolefrom JFR Group attended in-house and outside seminars or tookcorrespondence courses.

JFR enhances various assessment tools to know the abilities andaptitudes of individual employees. Respecting their will andJFR will develop strong professional personnel in a well-planned

motivation, JFR assigns them to the best positions to demonstratemanner in conjunction with the business structure reform by further

their abilities. To this end, JFR improves various assessment tools

clarifying the abilities and requirements needed for each ofafter deﬁning career concept and job requirements and develops

independent operation type and shop operation type andpeople by putting the right person in the right place. JFR alsoenhancing training programs to improve expertise.

improves the systems to fulﬁll the intentions of employees,＊1…JFR Executive School＊2…JFR Management School＊3…JFR Basic Management School

including the online self-application system.

27

Segment Overview

At a Glance● The percentage of total sales represents the ratio of sales to external

Sales and operating income

customers after eliminating intersegment sales.
● Sales and operating income include inter-segment transactions.
● The figures for fiscal 2007 are in real terms. (※)

Percentage of total sales

Sales (¥Million)
898,756

836,189

Operating income (¥Million)
34,089Department store business

21,61676.1%
Percentage of total sales

Fiscal
2007

Fiscal2008

Sales (¥Million)
133,323

130,660

Fiscal
2007

Fiscal2008

Operating income (¥Million)
1,811Supermarket business

1,105

11.5%
Percentage of total sales

Fiscal
2007

Fiscal2008

Sales (¥Million)

Fiscal
2007

Fiscal2008

Operating income (¥Million)

90,622

87,1393,327

Fiscal
2007

Fiscal
2008

Fiscal2007

3,572

Wholesale business
7.2%
Percentage of total sales

Sales (¥Million)
108,107

Other businesses

91,688

Fiscal2008

Operating income (¥Million)
3,972
2,558

5.2%

Fiscal
2007

Fiscal
2008

Fiscal
2007

Fiscal2008※The amounts in annual real terms for fiscal 2007 are the consolidated figures of Daimaru and Matsuzakaya groups for the year from March 1, 2007 to February 28, 2008.
28

Department store business
Overview for ﬁscal 2008

Daimaru posted sales of ¥453.4 billion (a year-on-year decline ofDuring ﬁscal 2008, this segment worked mainly on theof 45.8%) on a non-consolidated basis, whereas Matsuzakaya saw

enhancement of marketing functions and store strategy, therestructuring of sales ﬂoor operation structure and the reinforcementof regular customer base.
Since competition within regions, which were among department
stores, are becoming complex and multilayered beyond industrial
boarders, it is important to base our strategies on the enhancementof store competitiveness to increase our share in the competition ofeach region for survival. For this purpose, J. Front Retailing began
to develop new store strategies mainly for priority stores including5.9%) and operating income of ¥10.4 billion (a year-on-year decline
sales of ¥259.9 billion (a year-on-year decline of 8.9%) andoperating income of ¥5.7 billion (a year-on-year decline of 27.6%).
Aﬃliated department stores including Hakata Daimaru also saw
both revenue and proﬁt fall and sales and operating income of thewhole department store business were ¥836.1 billion (down 7.0%
from the previous year) and ¥21.6 billion (down 36.6% from theprevious year) respectively.

Outlook for ﬁscal 2009

Daimaru Shinsaibashi and Kobe stores and Matsuzakaya Nagoya
and Ueno stores, while strengthening marketing sections and

For the ﬁrst half of ﬁscal 2009, this segment expects sales of

performing qualitative and quantitative analyses. In addition,

department store business to be ¥367.7 billion (a year-on-year

Daimaru Shinsaibashi store has decided to acquire the adjoining

decline of 12.7%) based on the assumption that the sales trend forstore real estate to improve and expand the business infrastructure

the second half of ﬁscal 2008 will continue. It is more diﬃcult totoward the strengthening of store competitiveness.

forecast the economic trends for the second half than those for the

To rebuild sales ﬂoor operation structure, Daimaru drasticallyﬁrst half. In light of some reaction against a sharp drop in sales inchanged the sales operation structure mainly of women s wear andthe second half of the previous year and the results of management

men s wear departments toward the complete form of store-based

measures to be taken during ﬁscal 2009, the companies projectsales reform. Speciﬁcally, the company divided sales ﬂoor

sales for the second half of the year to be ¥378 billion (down 9.0%

operation into independent operation type and shop operationfrom the previous year) and annual sales to be ¥745.7 billion (atype and redesigned operations to ﬁt the features of each type.

decrease of 10.8% from the previous year).

Based on the structure, we reviewed the roles of the headquarters

In the meantime, in ﬁscal 2008, selling, general andand stores. Matsuzakaya introduced the know-how of theadministrative expenses decreased by ¥6.9 billion compared withstore-based sales reform that Daimaru has tackled in the past to

the previous year, and in ﬁscal 2009, the companies will further

Nagoya, Ueno and Shizuoka stores in March and all other stores in

reduce them by ¥10.3 billion. In spite of the factors increasing

September to promote the standardization and centralization ofthem by ¥4.6 billion including retirement beneﬁt expenses (aoperations.

year-on-year increase of ¥1.7 billion), the companies will strictly

To reinforce regular customer base, the card systems of Daimaru

control expenses through the eﬀects of the closure of Yokohama

and Matsuzakaya were standardized in March and Matsuzakaya

Matsuzakaya and Imabari Daimaru in ﬁscal 2008 and the reduction

issued Matsuzakaya Card that has the same functions asof personnel expenses by not ﬁlling the positions of retirees and in

Daimaru Card.

That allowed central control of vast amount ofother areas including advertising, rent and logistics. As a result ofdata on more than four million customers and the customer

these eﬀorts, operating income in this segment for ﬁscal 2009 is

information infrastructure, which can be utilized eﬃciently for sales

expected to be ¥6.5 billion (down 69.9% from the previous year).

activities and sales promotion, was established.
In addition, in order to increase our presence in Tokyo area,

These projections do not include the eﬀects of the new annex to
Shinsaibashi store that will open in November.

Matsuzakaya Ginza store remodeled its sales ﬂoors with a focus on
the basement food ﬂoor, accessories department on the ﬁrst ﬂoor
and women s shoes department on the second ﬂoor targeting
working women in their 30s, and successfully attracted newcustomers.
However, consumption environment became worse in the latter
half of the year. The main stores of the Group such as Daimaru
Shinsaibashi and Kobe stores and Matsuzakaya Nagoya store
suﬀered sluggish sales of clothing and big-ticket items. As a result,

Matsuzakaya Ginza store reopened after remodeling29Supermarket business
Overview for ﬁscal 2008

Outlook for ﬁscal 2009

In September 2008, Daimaru Peacock Co., Ltd., Matsuzakaya

Since the consumption environment is uncertain, the businessStore Co., Ltd., Yokohama Matsuzakaya Store Co., Ltd. andenvironment is expected to become severer. This is why, during

Nozawa Shoji Co., Ltd. were integrated into a new company

ﬁscal 2009, Peacock Stores will open only Nikke Colton Plaza

named Peacock Stores Ltd. to increase competitiveness andstore in May and reopen Rokkakubashi store in fall, which has

proﬁtability. Through this integration, the company centralized

been closed for rebuilding, while focusing on the revitalization of

its product buying functions to strengthen purchasing capabilities

the existing stores and enhancing cost eﬃciency toward low-cost

while developing information systems including POS andmanagement through the improvement of the operations of theunifying the headquarters functions.

head oﬃce and the headquarters. Through these eﬀorts, theIn order to strengthen the operational base, Peacock Storescompany projects sales of ¥127.5 billion (down 2.4% from theactively worked on scrapping and building by opening six new

previous year) and operating income of ¥0.9 billion (down 18.6%

stores in dominant areas, including Shinsenri Nishimachi, Dojima

from the previous year).

Crosswalk, Kanda Tsumakoisaka and Kami Ikebukuro stores andnew type small urban stores Exe Peacock, and closing two
unproﬁtable stores. The company did extensive remodeling ofhighly proﬁtable downtown stores including Kyodo, Yokodai andSales by district (Year ended February 2009)

Korigaoka stores to attract more customers.
However, sales and operating income were ¥130.6 billion(down 2% from the previous year) and ¥1.1 billion (down 39.0%
from the previous year) due to consumers growing awareness ofthe defense of their livelihood and the eﬀects of the rebuilding

Chubu district 8%Tokyo district 58%

Kansai district 34%

and closure of large scale stores.

■ Store locations (As of May 2009)
Tokyo district(54stores)■ Daimaru Peacock

Peacock Store Korigaoka

Private brand Peacock Choice30

AoyamaSodegaura
Takanawa Gyoranzaka
MejiroJiyugaoka
Asagaya
Shimokitazawa
Fujisawa
MisatoEbis
Tama
Kunitachi Sakuradori
TsurumiYokohamabashi
Kugayama
Takadanobaba
Azabu Juban
Iogi
Kyodo
Shinurayasu
Toritsukasei
Sakurashinmachi
Takanodai
Granpark Tamachi
Higashikoganei
Kamiikedai

Bunkyo Green Court
Mita Isarago
Tamagawa Josui
Ishikawadai
Hanakoganei
Kunitachi Bentendori
Fujisawa Treage Shirahata
Sangenchaya no Mori
Tornare Nihonbashi Hamacho
Daikanyama Peacock
Higashi Ikebukuro
Shibaura Island
Daimaru Tokyo Store
Kanda Tsumakoisaka■ Matsuzakaya Store
Takenotsuka
Ebisu Minami
TakashimadairaTokiwadairaToyoshiki
Ojima
Katakuracho
HongodaiIsogo■ Exe Peacock
Passage Aoyama
Granduo Kamata■ Peacock Store
Kami Ikebukuro
Yokodai
Nikke Colton Plaza※Closed due to rebuilding
Daimaru Peacock Rokkakubashi(Reopen in fall 2009)

Daimaru Peacock Nakano(Reopen in winter 2010)

Kansai district(31 stores)■ Daimaru Peacock
Senri Daimaru Plaza
Tsukumodai
Kitasenri
MeimaiNakamiya
Chayamadai
Harumidai
Takakuradai
Matsugaoka
Myodani
Karibadai
Tsukahara
HoshidaSenri Minamimachi Plaza
Ashiya Nangu
Koshien

KotoenYamadaMukonoso
Senriyama
Mino Sakuragaoka
Konan
Ashiya Kawanishi
Kitayamato Mayumi
Takarazuka Nakayama
Mino Gein
Nishi Umeda
Shin Kobe
Shinsenri Nishimachi
Dojima Crosswalk■ Peacock Store
Korigaoka

Chubu district(8 stores)■ Matsuzakaya Store
Motoyama
Tsukimigaoka
Fujigaoka
HishinoHongo
Hirabari
MiyoshiChiyodaWholesale business

Other businesses

Overview for ﬁscal 2008

Overview for ﬁscal 2008

A wholesale company Daimaru Kogyo, Ltd. deals in electronic parts, foodproducts, software, chemical products, metal and resin products, housing

Other businesses mainly include a design and construction business and amaterials, apparel and ﬁshing rods. The company has 16 business places incredit business.

Japan and abroad and provides solutions to customers mainly in the

In September 2008, four design and construction companies were

triangular market including Japan, China and ASEAN through various

integrated into a new company named J. Front Design & Construction Co.,

services ranging from the procurement of industrial materials and retailLtd. Its business lines include the interior ﬁnish works of stores and ships

merchandise to after-sales care.

and the production and sales of interior furniture and special mirrors. The

During ﬁscal 2008, the company strived to enhance the capabilities tocompany provides high quality plans, designs, constructions and products.

make suggestions to the existing customers, develop new merchandise

During ﬁscal 2008, the company accepted orders for the remodeling of

mainly in soft business areas and cultivate new customers, while strongly

commercial facilities including Hakata Daimaru, Daimaru Kobe store andpromoting the transformation of the business structure primarily in metal andMatsuzakaya Ginza store of the Group and the repair works of hotels. A

resin products and housing materials. By merchandise category, electronic

credit company JFR Card Co., Ltd. issued Matsuzakaya Card in Marchdevice-related products and ﬁnished food materials continued to sell strongly,

2008 by standardizing the card system with Daimaru and devoted all its

but sales of other products were sluggish due to ﬁercer competition andenergies to cultivating new customers and encouraging the existing

decreased demand. Daimaru Kogyo made an eﬃcient use of costs to reduce

customers to replace their old cards with the new ones. As a result, theselling, general and administrative expenses. As a result, sales decreased torevenue base including merchant fee is steadily expanding.

¥87.1 billion (down 3.8% from the previous year), but operating income
increased to ¥3.5 billion (up 7.4% from the previous year).

However, sales of design and construction business decreased, aﬀectedby the backlash against the extensive renewal work of Tokyo store, whichrelocated and opened with increased ﬂoor space in November 2007, and a

Outlook for ﬁscal 2009

decline in orders caused by the reduction of business investment and sales

For ﬁscal 2009, based on the assumption that the competition environmentyear). In addition, JFR Card incurred large temporary expenses resulted fromin this segment decreased to ¥91.6 billion (down 15.2% from the previous

including prices will become severer, the company will ① maintain andexpand the core electronic device business; ② expand the business with J.
Front Retailing Group by exercising its purchasing capabilities andinformation capabilities to contribute to the Group synergy; ③ develop andthe issue of Matsuzakaya Card and operating income in this segment
decreased to ¥2.5 billion (down 35.6% from the previous year).

Outlook for ﬁscal 2009

create new businesses multilaterally; ④ promote the triangular market
structure including Japan, China and ASEAN; ⑤ change the business andFor ﬁscal 2009, JFR Card expects to increase sales and proﬁt because the

proﬁt structures based on selection and concentration to thoroughly increase

recruitment of new cardholders and temporary expenses will come full circle.

competitiveness; and ⑥ establish and operate the internal control system toIn the entire segment, however, assuming that the business environment willrealize the sophistication of the management as its basic strategy and basic

become increasingly severe, we forecast sales and operating income to bepolicy. Sales and operating income are expected to be ¥75.5 billion (down¥87 billion (down 5.1% from the previous year) and ¥2.1 billion (down

13.4% from the previous year) and ¥2.9 billion (down 18.8% from the

17.9% from the previous year) respectively.

previous year).

DalianPeople s Republic of China Shanghai

NanshaTaiwanTaipeiHong Kong

Myanmar
YangonThailandKita-Kanto (Gunma)O s residence

NagoyaBangkok

Ho Chi Minh

Indonesia
Jakarta

Store U: PONTEVECCHIO

31

Corporate GovernanceGroup Philosophy

Group Vision

We at J. Front Retailing Group aim at:（1）Providing high quality products and services thatmeet the changes of the times and satisfying customers
beyond their expectations; and（2）Developing the Group by making a broad contribution
to society as an honest and reliable company.

We will establish a status as a leading Japanese retail company both interms of quality and quantity with the department store business as our
core.
（1）We will gain the highest popularity from customers in Japan byoﬀering sales services and products that exceed their expectations.
（2）We will achieve the Group s operating margin of more than 5% early.

Corporate Go ve rn a n c e
Basic Concepts

Corporate Bodies and Internal Control Systems

As the core of the uniﬁed governance of the Group, J. Front Retailing

J. Front Retailing has the Board of Corporate Auditors. Its

positions the strengthening of corporate governance as one of thecorporate bodies include Shareholders Meeting, the Board of

most important business challenges to ensure the transparency,

Directors, the Board of Corporate Auditors and independent

soundness and compliance of the management of the whole Groupauditors as stipulated in the Corporate Law. In addition, theand thoroughly fulﬁll its accountability to its stakeholders (including

Company adopts a corporate oﬃcer system as a body tocustomers, shareholders, employees, suppliers and communities).

perform operations. It also has a Compliance Committee as
an advisory body to the Board of Directors and adopts a

To this end, we created two headquarters and two policy

whistle-blowing system to solve compliance issues.

departments in the company organization to clarify roles,
responsibilities and authorities, thereby improving supervisory

Meetings of the Board of Directors and Outside Directors

function and the internal control systems of the whole J. Front
Retailing Group. In addition, a corporate oﬃcer system is in place to

The Board of Directors as a management decision-making body consists ofseparate between decision-making and execution of thenine Directors (including two outside directors) and generally meets once amanagement, which enables more speedy decision-making andmonth under the chairmanship of President and CEO and with theimplementation.

attendance of Corporate Auditor to discuss and resolve the matters

The term for Directors and Corporate Oﬃcers is one year and theyrequired by laws or prescribed by the articles of incorporation as well as

are remunerated based on their individual annual performance tothe matters stipulated in the rules and regulations of the Board of Directors.

clarify their responsibilities for the enhancement of management andDuring ﬁscal 2008, the Board of Directors had 17 meetings to discussand resolve the mid- to long-term management plan, the integration ofbusiness results.

department store business into one company, thereorganization of businesses of the Group, theCorporate governance organizationand internal control system

acquisition of ﬁxed asset by a subsidiary Daimaru,

Shareholders Meeting
Compliance Committee

Board of Directors

Board of Corporate
Auditors

ＣＥＯ

Corporate Auditors
Corporate Oﬃcer
CSR Promotion
DivisionInternal Audit DivisionCorporate Oﬃcer
Planning Office forOpening Ginza Storethe winding-up of Imabari Daimaru and the closureof Yokohama Matsuzakaya department store, as
well as approve budgets and settlements.
J. Front Retailing has invited Tsuyoshi
Takayama and Isao Takeuchi as highly
independent outside directors who can judge
independently from the top management andappropriately determine the decisions andsupervisory actions made by the Board of Directors.

Corporate Oﬃcer
Management Planning
Headquarters

Corporate Oﬃcer
Department Stores
Coordination DivisionCorporate Oﬃcer
Aﬃliates Coordination
Division

Corporate Oﬃcer
Administration
Headquarters

They are both in an objective position independent
from the management team performing operations.
We expect Takayama as an executive of abusiness entity and Takeuchi as an executive of aﬁnancial institution and a business entity to reﬂect

Department store
business

32

Supermarket business

Wholesale business

Other affiliatedbusinesses

their rich experience, achievements and insights inthe management of J. Front Retailing.

Audit Function

Monitoring of Implementation

In order to support the soundness of its management structure, J. Front

Persons in charge in each business place provide on-site guidance

Retailing has ﬁve Corporate Auditors (including three outside auditors) toand inspection to check the steady implementation of compliancedetermine its audit policy and approach, while having a system thatpolicies and rules. In case an accident should happen, it will beenables their views concerning important audit matters to be reﬂected inreported immediately to the Compliance Committee and remedial

the Board of Directors. The Company also has Internal Audit Division (30actions will be taken under the leadership of the Committee.

members) reporting directly to CEO to audit according to the annual audit
plan whether each department carries out its operations appropriately andPractice of Compliance under Company Regulations and Operation Manuals

eﬃciently in accordance with laws, the articles of incorporation and

J. Front Retailing develops company regulations and various

internal regulations and duly report to the Board of Directors and theoperation manuals to ensure the implementation of theBoard of Corporate Auditors. Internal Audit Division, the Board ofcorporate code of conduct and the corporate behavior charter

Corporate Auditors and independent auditors cooperate with each other byon the job, while setting its own strict standards on quality

exchanging information and views and discussing as needed.

control and the protection and management of personal
information to thoroughly carry out daily compliance activities.

Internal Control Systems
J. Front Retailing develops systems in line with the Basic Policy to●

Build Internal Control Systems.

In 2009, marking the ﬁrst year in

Sanitary supervisors are placed in the food departments of all

Food Quality Control

which an internal control reporting system is adopted, the Company

Daimaru stores to ensure the high level of quality expected of

established the Rules and Regulations for Internal Control overdepartment stores. For customers security and safety, they

Financial Reporting to clarify roles and authorities concerning theirperiodically inspect the conditions of quality control in cooperation

improvement and operation. Accordingly, internal control administration

with Consumer Product End-Use Research Institute based on thefunction and independent assessment function were transferred to CSR

Food Sanitation Law and Daimaru s Quality Control Regulations

Promotion Division and Internal Audit Division respectively.

and rules for running. All Matsuzakaya stores also address thestrengthening of food quality control and sanitary supervisors were

Risk Management

newly placed in Nagoya and Ueno stores in March 2008.

With its general manager and policy manager as responsible supervisors,each division deﬁnes check items for its speciﬁc business risks and● Protection of Personal Information

analyzes and manages these risks and reports the management status on

In order to ensure the protection of personal information, J. Fronta regular basis.

Retailing Group established the basic principles and the code of

In respect to particularly signiﬁcant business risk factors thus identiﬁed,

conduct and continuously provides employee training and checks

we discuss and determine a policy to deal with them in a strategy meetingthe management status in all companies of the Group. JFR

and other meetings of the Group and concerned divisions implement it toInformation Center Co., Ltd. and JFR Card Co., Ltd., which handle

prevent such risks from arising. In case of emergencies including great

all the customer information data of Daimaru, and Matsuzakaya Co.,

earthquakes, ﬁres and accidents, the Emergency Headquarters headed

Ltd. and Sakae Printing Co., Ltd. acquired the Privacy Markby CEO are responsible for managing a crisis.

certiﬁcation to protect the personal information of customers.

Preparation of the Compliance Manual of JFR Group● Customer Consultation Service

In January 2009, JFR Group prepared a compliance manual to deﬁne

Daimaru has Consultation Corners for Consumers in its storesits structure and principles and code of conduct to implement

and consultants certiﬁed as advisory specialists for consumers

compliance management.

aﬀairs oﬀer consultation for customers. Customer complaints about

The manual provides that the basic framework of the complianceproducts are sent online to Consumer Product End-Use Researchsystem of the Group is a binary structure consisting of all companies

Institute for scientiﬁc quality inspection. Consultants informand divisions voluntary compliance with laws and corporate ethics incustomers of the results. These test results are also provided to

conducting business and training, supervision and strict audit bystores and manufacturers to prevent recurrence and improve quality.

compliance divisions, operational audit divisions and others.

It alsoMatsuzakaya has a Consultation Corner for Consumers insets compliance principles and code of conduct with four perspectives

Nagoya store and customer consultation service staﬀ is always

to be followed by all oﬃcers and employees of JFR Group.

stationed in all stores to oﬀer consultation for customers. When

The Group ensures thorough compliance activities on a daily basis

receiving inquiries about quality, like Daimaru, they work withby posting compliance self-check lists in each company, which

Consumer Product End-Use Research Institute to conduct tests andenable employees to check their own everyday behavior.

ensure that the results are reported to customers.
33

Corporate Social Responsibility

Commitment to Be an Environment- and People-Friendly Department Store
J. Front Retailing is working with customers and suppliers to■ Reduction and Recycling of Waste

conserve the global environment toward the building of a

JFR implements thorough waste separation to decrease ﬁnal

sustainable society for the 21st century. Daimaru andwaste and promote recycling. Food waste is recycled as

Matsuzakaya, which manage the core department store

fertilizer by the garbage disposers installed in stores. We

business, operate an ISO 14001-based environmental

also outsource the recycling of ﬁsh trimmings and food oil

management system to continuously reduce the eﬀects on

waste as fertilizer, feed, biofuel and soap according to thethe environment.

output situation of each store.
Vegetables grown using organic fertilizer recycled from■ Energy Use Reduction

food waste from Daimaru stores are sold in Daimaru andBy carefully controlling lighting and air conditioning as wellas participating various activities including

weaker air

conditioning in stores and the Light Down Campaign

Matsuzakaya stores.

■ Oﬀering Environment-Friendly Lifestyles

promoted by the Japan Department Stores Association, all

JFR provides ideas for smart eco -friendly living as a priority

employees are making energy saving eﬀorts to reduce CO2

item of the environmental activities in department stores. We

emissions and prevent global warming. On the occasion ofoﬀer environment-friendly products and services based on

replacing equipment or opening new stores, energy-eﬃcient

our own selection criteria, while actively suggestingeco-friendly products to outside corporate customers andappliances are introduced.

accepting orders from them and organizing environmental■ Reduction of Packaging Materials

events.

JFR develops company-wide packaging standards andRecently, we began to oﬀer repair, remaking and reform

provides training based on a smart wrapping manual so that

services as

all employees can pack in an unwasted and appropriate

environmental activities to cater to customers wishes to use

manner. Our stores promoteandlong the items they are attached to and not to throw themto put all stuﬀ in one bag with theaway when they become old. JFR also holds a Recycle

one-bag campaign

simple packaging

cooperation of customers. JFR also develops and sells eco
bags with a focus on design and added value to oﬀer adepartment store-like shopping style.

environment-friendly services.

They are

Fair to collect used clothing.

■ Creating Comfortable and Customer-Friendly Stores

Speciﬁcally, original eco bags with carbon oﬀsets are

Daimaru and Matsuzakaya stores regularly carry out

sold in all 25 stores of Daimaru and Matsuzakaya. A carbon

emergency drills for all workers and introduced theoﬀset fee of ¥50 per bag is added. JFR has acquired

Earthquake Early Warning system that issues real-time alerts

emission credits generated from a wind power project in India

over the in-store PA system just as an earthquake starts.

and expects to reduce CO2 emissions of about 14 kg per bag.

(This system is installed in Daimaru Shinsaibashi, Umeda,
Tokyo, Kyoto, Kobe, Sapporo, Shinnagata, Suma and Ashiya
and Hakata Daimaru Fukuoka Tenjin stores and all
Matsuzakaya stores. It will be introduced to all other stores.)
AED (automatic external deﬁbrillator) units are installed inall stores and 1,443 employees from all stores (881 from
Daimaru and 562 from Matsuzakaya) have completed training
in normal lifesaving so that we can provide an initial response
in case of emergencies.
(Some stores that occupy as tenants share AED units with building ownercompanies.)〈Eco bags〉¥500 including tax/Black and beige/Pocketable
100%PET bottle recycled polyester

34

Regional and Social Contribution Activities[Support for Local Industries and Learning]■ Regional Revitalization
Daimaru and Matsuzakaya as community-based department〈Kobe Creator Selection DRAFT! 〉

stores actively participate in creating pleasant and beautiful

Kobe Fashion Organization, Kobe

towns that attract people in cooperation with local people and theCity and other organizations organize

governments. The stores also support local industries and new

this audition event to provide new

designers through business operations and make environmental

fashion creators with opportunities of

eﬀorts that customers and local people can take part in.

publishing and selling their works.
Daimaru has participated in it since[Major participation in local events]

the beginning and sells these jointly● Daimaru

designed products in the handbag

Sapporo : Sapporo Snow Festival/YOSAKOI Soran Festival
Kobe : Luminarie/Motomachi East Jazz Picnic
Hakata Daimaru Fukuoka Tenjin :Hakata Gion Yamakasa Festival
Shimonoseki Daimaru: Shimonoseki Kaikyo Festival● Matsuzakaya
Nagoya : Sakae Minami Music Festival
Ikeda Park Summer Festival
Domannaka Festival
Ueno : Grand Festival of Gojo Tenjin Shrine
Shizuoka : Lovely Town Shizuoka (Seasonal events)
Takatsuki : Takatsuki Jazz Street[Rooftop Greening]department Meiprior of its directly
managed stores.
〈Environmental Study and Sales Experience〉
Daimaru and Matsuzakaya stores help the integrated learning of local
elementary and junior high school students by showing their environmental
activities and providing opportunities to try out jobs in department stores.

■ Social Action Programs
We continue the eﬀorts to widely contribute to the communities using thedepartment store s capabilities to draw customers and transmit information.
Our stores organize charity bazaars, run fund-raising campaigns andDaimaru Kyoto and Kobe stores have open spaces covered withparticipate in events in order to preserve the global environment, support

natural grass on the rooftops. They serve as urban oases where

the regions suﬀering from severe hunger and poverty and enlighten people

visitors can relax, as well as reducing the heat-island eﬀect.

for safe and healthy living.

Kobe store also has a vegetable garden and the children
attending Yume Nursery plant potatoes there in March. After[Christmas Charity Shop]

harvesting them at the end of June, the children madeDaimaru and Matsuzakaya stores organized an auction of thethemselves and ate curry.

original works of a famous paper cutout artist Robert Ryan andcharity sales of original goods, as well as collecting donations to[Cleaning Activities and Clean Campaign]

support the activities of

We are working with community groups to rid the streets of

UN-authorized private international aid organization for children.

Save the Children Japan,

theillegally parked bicycles and remove graﬃti, while cleaning
the streets around the stores on a regular basis.

[Disaster Fund-Raising Campaigns]
When major disasters occur, we run fund-raising campaigns[Promotion of Public Transportation Use]in stores and oﬃces and send relief supplies to disaster areas

Shimonoseki Daimaru ran athrough the Japanese Red Cross Society.

Going-Shopping-by-Bus

Campaign jointly with Seamall Shimonoseki and Sanden
Kotsu, in which customers received 50% oﬀ bus fares with

[PET Bottle Cap Collection Campaigns]

purchases, in order to reduce CO2 emissions by encouraging

Special boxes are placed in the Elgala Passage Plaza of Hakata Daimaru

them to use public transportation instead of their private cars.

Fukuoka Tenjin store, the customers rest space and employees cafeteria

The campaign drew a great response.

and tearoom of Matsuzakaya Nagoya store and the employees rest areas

Matsuzakaya Okazaki store became one of about 230
Town Bus Ticket Service Stores in the city and issues theon all the ﬂoors of Matsuzakaya Ueno store to collect PET bottle caps.
We send collected caps to recycling companies through the NPO

customers making purchases with service tickets that allow a

Ecocap Movement to use them as recycling materials. Proceeds fromfree bus ride in order to encourage them to visit the store by

the sale of these caps are used by the NPO Japan Committee Vaccines

public transportation.

for the World s Children (JCV) to buy vaccines for developing countries.
35

History of Daimaru

1717
1726
1728
1736
1743
1837
1907
Founder Hikoemon Shokei Shimomura

1910
1912
1913
1920
1922
1927

Osaka store opened in 1726

Edo store in Odenma-cho
by Utagawa Hiroshige

1928
1947
1948
1950
1953
1954
1959
1960
1983
1987
1995
1997
1999
2000

Daimaru s famous umbrellaborrowing in ukiyoe print

2002
2003

Show windows of Osaka store thatﬁrst appeared in Osaka in 1914

2005
2006
2007

Hikoemon Shokei Shimomura opened a kimono fabric store Daimonjiya in Fushimi, Kyoto.
(Foundation of Daimaru)■ Osaka store Matsuya opened in Shinsaibashisuji, Osaka and began cash sales at ﬁxed
prices (present location of Shinsaibashi store).
■ Nagoya store opened at Honmachi 4-chome, Nagoya and used the name Daimaruya
for the ﬁrst time.
■ Announced the store creed of Service Before Proﬁt to all stores.
■ Daimaru ﬂagship store Daimonjiya opened in Funaya-cho, Higashinotoin, Kyoto.
■ Edo (Tokyo) store opened at Odenma-cho 3-chome, Nihonbashi, Edo.
■ The Oshio Rebellion broke out. Daimaru escaped burning at the hands of mobs due to its
reputation as a philanthropic merchant.
■ Established Kabushiki Goshi Kaisha (joint-stock limited partnership) Daimaru Gofukuten(kimono fabric store) with a capital of ¥500,000.
■ Closed Edo and Nagoya stores.
■ Kyoto store opened at the present location.
■ Kobe branch opened in Motomachi, Kobe.
■ Established Kabushiki Kaisha (stock company) Daimaru Gofukuten with a capital of¥12 million.
■ Established the ﬁrst weekly holiday (Monday) system in the department store industry.
■ Kobe store moved to the present location.
■ Established the ﬁrst Dyeing Laboratory & Hygienic Laboratory (present Consumer End-Use
Research Institute) in the department store industry in Osaka store (present Shinsaibashi
store).
■ Changed the company name to Kabushiki Kaisha Daimaru.
■ Kochi Daimaru opened.
■ Established Daimaru Kogyo, Ltd.
■ Shimonoseki Daimaru opened.
■ Hakata Daimaru opened.
■ Tokyo store opened at the Yaesu exit of Tokyo station.
■ Launched the original men s brand Trojan.
■ Established Peacock Industries Co., Ltd. (present Peacock Stores).
■ Adopted a corporate identity system (CIS) and created a new logo.
■ Umeda store opened in Osaka Terminal Building Acty Osaka.
■ Kobe store opened its ﬁrst nearby directly-operated store(present Former Foreign Settlement Bldg. 38).
■ Kobe store was hit by the Great Hanshin Earthquake.
■ Kobe store was restored and grand opened.
■ The annex to Fukuoka Tenjin store of Hakata Daimaru grand opened with increased
ﬂoor space.
■ Out-of-store sales reform started.
■ Store-based sales reform started.
■ The Customer s View project started.
■ Personnel system reform started.
■ Back-oﬃce functions reform started.
■ Established Daimaru s environmental philosophy.
■ Introduced a new merchandise information system.
■ Hakata Daimaru and Nagasaki Daimaru merged.
■ Sapporo store opened.
■ Launched a new customer information system.
■ The 2nd store-based sales reform started.
■ New personnel system reform started.
■ Newly formed Planning Oﬃce for New Umeda Store.
■ LaLaport Yokohama store opened.
■

September 3, 2007 The Daimaru, Inc. and Matsuzakaya Holdings Co., Ltd. established■

Osaka store whose ﬁrst phase of
construction was completed in 192236■

Urawa Parco store opened.
Tokyo store moved to a new building and opened in first phase.

History of Matsuzakaya

1611
1659
1736
1740
1745
1768
1907
1910
1911
1917
1918
1924
1925
1929
1930
1932
1957
1966
1971
1972
1974
1979
1991
1993
1995
1996
1998
2000
2001
2003
2004
2005
2006

Genzaemon Sukemichi Ito, a son of Ranmaru Sukehiro Ito who served Nobunaga Oda,
opened a kimono fabric and fancy goods wholesale store in Honmachi, Nagoya.
(Foundation of Matsuzakaya)■ Sukemichi s son Sukemoto opened a kimono fabric and fancy goods wholesale store in
Chayamachi, Nagoya and called himself Jirozaemon Ito.
(Since then the heads of the Ito family succeed to the name Jirozaemon.)■ Ito Gofukuten changed its trade from a silk kimono fabric wholesaler to a silk and cotton
kimono fabric retailer.
■ Ito Gofukuten became a kimono fabric purveyor to the Owari Tokugawa clan.
■ Kyoto Merchandising Branch opened in Muromachi Anekoji.
(Newly built at the present location in Shinmachidori Rokkaku in 1749)■ Acquired Matsuzakaya in Ueno Hirokoji and began business as Ito Matsuzakaya.
■ Ueno store was rebuilt into a Western-style building to display goods for sale andreorganized into Goshi Kaisha (limited partnership) Ito Gofukuten (capital ¥250,000)
to become ﬁnancially independent. Employed saleswomen.
■ Established Kabushiki Kaisha Ito Gofukuten with a capital of ¥500,000. Reopened Nagoya
store at Sakaemachi Kado, Nagoya as the ﬁrst department store in the Nagoya region.
■ Formed Ito Gofukuten Boys Music Band. (Present Tokyo Philharmonic Orchestra)■ Completed the new main building of Ueno store.
(Burnt down in the Great Kanto Earthquake in 1923)■ Introduced uniforms for the ﬁrst time in the department store industry.
(Striped cotton kimono with a muslin sash)■ Ginza store opened at the present location. Allowed customers to enter all ﬂoors with their
shoes on for the ﬁrst time in the department store industry.
■ Changed the company name to Kabushiki Kaisha Matsuzakaya.
■ Nagoya store moved to Minamiotsumachi (present location).
■ Rebuilt the new main building of Ueno store at the present location.
■ The ﬁrst elevator girls in the department store industry debuted in Ueno store.
■ The basement of Ueno store was directly connected to Ueno Hirokoji station on subway Ginza line.
■ Shizuoka store opened.
■ Added a south wing to Ueno store.
■ Established Matsuzakaya Kimono Museum in Kyoto.
■ Held a huge sale on live animals on the roof of Ginza store.
■ Okazaki store opened.
■ Built an annex to Ginza store and opened an underground passage leading to Ginza subway station.
■ Added a north wing to Nagoya store.
■ Nagoya Station store opened.
■ Takatsuki store opened.
■ Issued Matsuzakaya My Card.
■ Nagoya store added a south wing to consist of three buildings.
■ Opened Matsuzakaya Museum in the south wing of Nagoya store.
■ Established a corporate philosophy.
■ Put up a website and opened an online shop.
■ Added a north wing to Shizuoka store.
■ Established an employee code of conduct and basic business transaction rules.
■ Developed the Matsuzakaya environment program and launched a new information system.
■ Toyota store opened.
■ Nagoya store added a new south wing to increase its ﬂoor space to the largest level inJapan (86,758 ｍ２).
■ Introduced an executive oﬃcer system and established a management code for personal
information protection.
■ Opened an oﬃcial goods shop at the Exposition of Global Harmony.
■ Established a pure holding company Matsuzakaya Holdings Co., Ltd.
■

Matsuzakaya by Utagawa Hiroshige

Nagoya store reopened in Sakaemachi in 1910

Women wearing the industry s
ﬁrst uniforms (kimono)

Poster of Ito Gofukuten

Ginza store, the first department store allowing
customers to enter with their shoes on

Nagoya store moved to the present locationin Minamiotsumachi (at that time)a joint holding company J. Front Retailing Co., Ltd. and integrated management.

Elevator girls of Ueno store

37

Corporate Data

(As of May 26, 2009)

Company name

： J. FRONT RETAILING Co., Ltd.

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

Oﬃce： 1-1, Yaesu 2-chome, Chuo-ku, Tokyo

Established： September 3, 2007

Capital： ￥30,000 million

Line of business： Department store operation, retail, restaurants, wholesale, import and export,
supervising and contracting of construction works, direct marketing, credit cards,
merchandise inspection and consulting, labor dispatch service, and others

Number of employees ： 9,094 (As of February 28, 2009)(Consolidated)

UR L： http://www.j-front-retailing.com/

Front page of the website

38

Management(As of May 26, 2009)

ChairmanKunihiko Okada

President and CEO

Tsutomu Okuda

Director

Ryoichi Yamamoto

Executive General Manager of Department Stores
Coordination Division and Chairman of Daimaru
In charge of Promotion of Store-Based and Out-of-Store Sales
Reforms and President of Daimaru and Director of Matsuzakaya

Director

Shunichi Samura

In charge of Ginza Redevelopment and Presidentof Matsuzakaya and Director of Daimaru

Director and Corporate Senior Executive Oﬃcer

Toshiaki Tsushima

Executive General Manager of Administration Headquarters

Director and Corporate Executive Oﬃcer

Kiyozo Kojima

Executive General Manager of Aﬃliates Coordination Division

Director and Corporate Executive Oﬃcer

Hiroto Tsukada

Executive General Manager of Management Planning
Headquarters and Assistant in charge of Ginza Redevelopment

Director

Tsuyoshi Takayama

Director

Isao Takeuchi

Corporate Auditor (Full-time)

Toshio Kido

Corporate Auditor (Full-time)

Junji Nakamura

Corporate Auditor

Takeshi Furuta

Corporate Auditor

Sadahiko Shimizu

Corporate Auditor

Rokurou Tsuruta

Corporate Oﬃcer

Koji Yamakawa

Corporate Oﬃcer

Shinji Matsuda

General Manager of CSR Promotion Division
General Manager of Planning Oﬃce for Opening
Ginza Store and Development Project Division andCorporate Oﬃcer and General Manager of PlanningOﬃce for New Nagoya Station Store of Matsuzakaya

Corporate Oﬃcer

Seiichiro Hirayama

General Manager of Human Resources DivisionCorporate Oﬃcer

Kazuo Doi

General Manager of Cost Structural Reform
Promotion DivisionCorporate Oﬃcer

Takaharu Harada

Deputy Executive General Manager of Department
Stores Coordination Division and General Manager ofMerchandising Strategy Promotion Division and Tokyo
Area Department Store Strategy Promotion DivisionCorporate Oﬃcer

Tomohiko Enomoto

General Manager of Sales Planning Promotion DivisionCorporate Oﬃcer

Masaichi Higuchi

General Manager of Women s Accessories &Children s Wear Department

Associate Director

Tadaaki Hirano

General Manager of Internal Audit Division

Associate Director

Yoshihiro Saito

General Manager of Management Planning Division

Associate Director

Ichiro Fukuyama

General Manager of PR & IR Division

Associate Director

Masatoshi Sakashita

General Manager of System Promotion Division
and President of JFR Information Center

Associate Director

Masaru Ozawa

General Manager of Finance Division(Note) 1. Tsuyoshi Takayama and Isao Takeuchi are outside directors.
2. Takeshi Furuta, Sadahiko Shimizu and Rokurou Tsuruta are outside corporate auditors.
39

■ Organization Chart ofJ. Front Retailing Co., Ltd.

■ Organization Chart ofJ. Front Retailing GroupManagement
Planning Div.

Hakata Daimaru

Development
Project Div.

Management
Planning HQ

Shimonoseki Daimaru
Daimaru

PR & IR Div.

Kochi Daimaru

SystemPromotion Div.

Daimaru Tomonokai

Sales Innovation
Promotion Dept.
Sales Planning
Promotion Div.

Matsuzakaya Tomonokai

Sales
Planning Dept.

Matsuzakaya

Customer
Policy Dept.

Internal
Audit Div.

Aﬃliates
Coordination Div.

Central Park Building
Angel ParkTokyo Area Department Store
Strategy Promotion Div.
Peacock Stores

Shareholders
Meeting

Board ofDirectors

ChairmanPresident
and CEO

Daimaru Kogyo
Original Merchandise
Promotion Dept.
Department Stores
Coordination Div.

CSR
PromotionDiv.

Board ofCorporate
Auditors

Merchandising Strategy
Promotion Div.

Secretariat of
the Board of
Corporate Auditors

J. Front Design &ConstructionDHJ

JFR Card
Women s Accessories &Children s Wear Dept.

Planning
Oﬃce
for Opening
Ginza Store

J. Front
Retailing

Daimaru Home Shopping
J. Front Foods

Marketing Planning
Promotion Div.

Marketing Strategy
Planning Dept.

Dimples

Store Planning
Dept.

Sakae Printing

Sales Promotion
Dept.

Daimaru COM
Development

Online Marketing
Promotion Dept.

Consumer Product
End-Use Research Institute
JFR Information Center

Administration HQ

Finance Div.

JFR Oﬃce Support

Human ResourcesDiv.

Daimaru Lease & Service

Cost Structual
Reform Promotion Div.

Matsuzaka Service(As of May 2009)40

Financial Information
42

Analysis of Financial Condition
and Operating Results

46

Consolidated Balance Sheets48

Consolidated Statements of Income

49

Consolidated Statements of Changes
in Net Assets

51

Consolidated Statements of Cash Flows

52 Notes to Consolidated Financial Statements

41

Analysis of Financial Condition and Operating Results

Sales

05

06

1,096,690

1,177,901

1,173,705

1,166,520

1,156,455
04

07
08（Fiscal year）

Sales by Business Segment<

Composition of sales not includingintersegment sales>

Other businesses
Wholesalebusiness
Supermarket
business

In the meantime, drastically reviewing the future

During the consolidated ﬁscal year under review

proﬁt structure and businesses of the whole Group,(ﬁscal 2008), the Japanese economy worsened

we closed Yokohama Matsuzakaya and Imabari

rapidly. The global ﬁnancial and economic crisis

Daimaru. In addition, as a result of reexamining ouroriginating in the U.S. sharply decreased imports

overall investment plan in consideration of abrupt

and also reduced business investment andchanges in business environment, we gave up ourconsumer spending since last fall.

plan to open a new store in Hamamatsu.

Department store sales fell far below the levels of

In order to thoroughly reduce costs, JFR took a big

the previous year because of intensifying

step as a control tower to review and narrow thecompetition across categories or types ofcost plans of the whole Group, while minimizing all

businesses and changes in consumer buying

orders and purchases.

behavior as well as loss of consumer conﬁdence

As our eﬀorts to improve human productivity andand tighter purse strings resulted from the weakcorporate vitality, we are working on personnel

economy.

structure reform through downsizing to a few selectWith the aim of realizing the Group s vision ofpeople and the optimal arrangement of personnel

establishing a status as a leading Japanese retail

within the Group. In September 2008, Matsuzakaya

company both in terms of quality and quantity witha d o p t e d t h e p e r s o n n e l s y s t e m b as e d o n j o b

the department store business as its core, J. Front

evaluation, which is the same as Daimaru s system.

Retailing (JFR) launched a mid- to long-term plan

Department
store
business

Frontier 21 for three terms of nine years, whilefurther reducing costs to respond to radical changes
in business environment.

<Including intersegment sales>（Unit: ¥Million）
Department store business 836,189

Sales
In spite of the measures mentioned above,

During the period under review, which marks theconsolidated sales of the department store businessﬁrst year of

we uniﬁed thefor the period under review remained far below the

Frontier 21,

Supermarket business

130,660

Wholesale business

87,139policy-making functions of the department store

level of the previous year due to an unprecedentedly

Other businesses

91,688business, including the marketing, product planningsevere consumption environment. Sales ofand sales planning, and the headquarters functions,supermarket, wholesale and other businesses also

including ﬁnance, personnel aﬀairs and public

dropped compared with the previous year and thisrelations, as well as integrating information systems

resulted in total consolidated sales of ¥196,690

that form the foundation of business operation, tomillion, a decrease of 6.9% over the previous year.

Operating Income

04

42,632

improve and develop the basis for the growth of theGroup.
28,092

41,95837,76530,971（Unit: ￥Million）

05

06

07
08
（Fiscal year）

Daimaru
Matsuzakaya Holdings
JFR＊1 The figures of Matsuzakaya
Holdings for and before fiscal 2005
are the consolidated figures of
Matsuzakaya Group before its
transition to holding company.
＊2 Sales of Daimaru for and before
fiscal 2006 include other operating
revenue.
＊3 F o r f i s c a l 2 0 0 7 , f u l l - y e a r
consolidated figures are used for
Matsuzakaya Group.

42

competitiveness and revenue base for the future.

Business overview（Unit: ￥Million）

As our eﬀorts to reorganize and integrate the

Selling, general and administrative expenses

Group s businesses into one company per section,

Selling, general and administrative expenses were

we integrated four supermarket companies, four

¥241,189 million, down 2.9% from the previous

design and construction companies and two staﬃng

year. While work-related expenses substantiallycompanies into one company each in September

increased due to the system integration between

2008 and two restaurant companies into one

Daimaru and Matsuzakaya, we reduced personnel

company in March 2009.

To ﬁnalize suchcosts by reforming the ways of working and not

reorganization and integration, we have decided toﬁlling the vacancies caused by retirement andintegrate Daimaru and Matsuzakaya in March 2010

reviewed and lowered advertising costs andto speed up decision-making and further improve

supplies costs as well.

management eﬃciency in the department store
business.
Toward future growth, we worked on the plans to

Operating income

increase the ﬂoor space of the existing storesWith a decrease of ¥21,833 million in grossincluding Daimaru Umeda and Tokyo stores andoperating proﬁt, we drastically cut selling, general

redevelop the Ginza 6-chome district. In light ofand administrative expenses. However, operating

future ﬁercer competition in Osaka area, we haveincome fell by 34.1% from the previous year todecided to acquire the facilities of Sogo

¥28,092 million, seriously aﬀected by sluggish

Shinsaibashi ﬂagship store adjacent to Daimaru

sales of the department store business.

Shinsaibashi store to strengthen storeaddition, we reviewed the price structure of all

because as an extraordinary loss, the Group

private fashion brands because the deterioration ofrecorded a loss on revaluation of investment

consumption environment late the ﬁscal year under

securities of ¥9,833 million caused by plunging

review made customers more sensitive to prices.

stock markets, a loss on business restructuring ofTo enhance sales and service capabilities, we¥5,761 million resulting from the closure ofhave developed

Yokohama Matsuzakaya and Imabari Daimaru

instructors to train sales professionals and assume

department stores and the impairment loss ofa central role in improving sales capabilities. In¥2,824 million posted by the supermarket and otherorder to identify issues to increase the levels of

businesses.

sales services, we conducted service surveys in all

who areBased on the results of these surveys, we will makeAs a result, income before income taxes andimprovements to further enhance customer

minority interests decreased by 78.7% from thesatisfaction with sales services.

previous year to ¥8,459 million and net income

To expand customer base, we standardized theamounted to ¥7,170 million, a decrease of 69.4%

card systems of Daimaru and Matsuzakaya by

from the previous year.

issuing Matsuzakaya Card in March 2008 and(Note) Year-on-year ﬁgures above and below are

November 2008 to oﬀer greater convenience tocomparison with the consolidated ﬁgures of Daimaru

customers and attract new customers. At the sameand Matsuzakaya groups in annual real terms for thetime, the integration of customer information

period from March 1, 2007 to February 29, 2008.

systems enabled us to unify the management of

13.56
04

05

06

across Japan from Sapporo to Hakata andreinforce marketing capabilities and proﬁtability

Matsuzakaya started to standardize and centralize

through the

improvement of market response

operations in Nagoya, Ueno and Shizuoka stores incapabilities,

theMarch 2008 and in all other stores in September

enhancement of sales andand theexpansion of2008 so that salespersons can devote all theircustomer base.

energy to sales activities. Daimaru examined theTo

improve market response capabilities,

eﬀects of the past store-based sales reform to build

following the creation of Marketing Planninga more highly eﬃcient and proﬁtable new

Promotion Division in March 2008, the sales policy

department store model.

sections of Daimaru and Matsuzakaya were uniﬁed

Besides the eﬀorts mentioned above, Daimaru andinto JFR in September 2008 to strengthen strategy

Matsuzakaya conducted joint sales promotions

and planning functions. Meanwhile, responsibilities

including events and catalog sales of selected

and authorities in sales activities were transferred togoods targeted at the gaisho (out-of-store sales)

stores to adapt to market characteristics, whichcustomers of both companies. In July 2008, three

diﬀer from region to region, and quickly respond to

stores in the Tokyo area jointly held Summer Foodchanges. In March 2009, the merchandise sections

Festival

related to women s accessories and children s wear

attracted many customers. In September 2008,of Daimaru and Matsuzakaya were uniﬁed into one

Matsuzakaya Ginza store was remodeled to newly

section of JFR to make the product lineup moretargetattractive and improve productivity through thenumber of customers visiting the store has

increase of transaction size. Other merchandise

increased dramatically.

sections will also be integrated successively.

In spite of these measures, consumers haveto increase our presence there andworking women in their 30s

and the（Unit: ¥）Interim 07

8.00

customer satisfaction at the lowest cost,

Cash Dividends per Share

4.50

This segment strived to improve the infrastructure to

07
08（Fiscal year）（Non-Consolidated）

6.00

As our store-based sales reform to maximize

3.50

accurately understand customer needs.

● Department store businessservice capabilities

Net Income per Share（Unit: ￥）for cash purchases in

information on more than four million customers

Segment overview

07
08（Fiscal year）

45.74

Matsuzakaya M Card

06

97.18

assess objectively their sales service capabilities.

Net income

05

92.32

Daimaru and Matsuzakaya stores to quantify and

04

68.81

service trainers

7,170

the oﬀering of the private brands of JFR Group. In

income from the previous year. This is mainly

23,404

Matsuzakaya Nagoya and Ueno stores to expand¥19,634 million, a decline of ¥16,784 million in

22,560

Other expenses (income) resulted in a net loss of

Net Income（Unit: ￥Million）

21,544

women s wear brand Sofuol were introduced to

17,005

Daimaru s original men s wear brand Trojan andOther income and expenses

07

08（Fiscal year）

Daimaru
Matsuzakaya Holdings
JFR＊1 The figures of Matsuzakaya
Holdings for and before fiscal 2005
are the consolidated figures of
Matsuzakaya Group before its
transition to holding company.
＊2 Sales of Daimaru for and before
fiscal 2006 include other operating
revenue.
＊3 F o r f i s c a l 2 0 0 7 , f u l l - y e a r
consolidated figures are used for
Matsuzakaya Group.

43

Total Assets

361,749

370,364

776,616

375,513805,375（Unit: ￥Million）

increasingly kept from buying big-ticket and fashion● Other businesses

items, which are the main products of department

Though the companies including the integrated

stores, and gaisho sales were sluggish, though fooddesign and construction company and staﬃng

sales remained steady. As a result, sales in thiscompany addressed the improvement of proﬁtability

segment decreased by 7.0% to ¥836,189 million

through diﬀerentiation and characterization in theirand operating income also fell by 36.6% torespective business ﬁelds, sales in this segment¥21,616 million in spite of the eﬀorts to streamline

decreased by 15.2% to ¥91,688 million partly due

selling, general and administrative expenses.

to a signiﬁcant decline in the revenue of J. Front

209,813217,642

217,493

Design & Construction Co., Ltd. Operating income

04

05

06

07
08
（Fiscal year）● Supermarket businessalso fell by 35.6% to ¥2,558 million partly because

In September 2008, four supermarket companiesof the temporary expenses incurred by JFR Card

including Daimaru Peacock and Matsuzakaya Store

Co., Ltd. to issue Matsuzakaya Card.

were integrated into a new company named
Peacock Stores Ltd. to improve competitivenessand proﬁtability.

Net Assets

70,44664,508316,268

109,308

60,182

77,32891,803315,854（Unit: ￥Million）

04

05

06

07
08
（Fiscal year）

Financial condition

Using this opportunity of integration, the company

We worked on making eﬀective use of the assets

strengthened purchasing capabilities through theowned by the Group and reducing interest-bearing

centralization of product buying functions, as welldebt to improve the eﬃciency of assets and funds,

as developing information systems including POS

while unifying the management of the funds of theand unifying the headquarters functions, to further

Group to improve ﬁnancial strength. These eﬀorts

increase marketing capabilities and management

resulted in total assets of ¥776,616 million (aeﬃciency. In order to strengthen revenue base,decrease of ¥28,759 million compared with the end

Yokodai and Korigaoka stores were remodeled asof the previous period), whereas total liabilities were

Peacock Stores and new type small urban stores¥460,347 million (a decrease of ¥29,173 million

Exe Peacock opened. In addition, the company

compared with the end of the previous period) anddeveloped private brand products combining foodtotal net assets amounted to ¥316,268 million (ansecurity and safety

increase of ¥414 million compared with the end ofwith

aﬀordability

andthoroughly controlled products to enhance thethe previous period).

accuracy of business operation.

As a result, return on asset (ROA) was 3.6% andThough we implemented these measures, sales andshareholders equity ratio was 39.6%.

operating income in this segment decreased by
2.0% and 39.0% to ¥130,660 million and ¥1,105
million respectively due to a decline in purchaseCash ﬂows

amount per person, which was attributable to

The Group is making eﬀorts to generate stableconsumers growing awareness of the defense ofoperating cash ﬂows and secure a wide range of

their livelihoods, and the eﬀects of the rebuilding

ﬁnancing methods to ensure appropriate funds forand closure of large scale stores.

business activities, maintain liquidity and achieve asound ﬁscal condition. We raise working capital,

Daimaru
Matsuzakaya Holdings
JFR＊1 The figures of Matsuzakaya
Holdings for and before fiscal 2005
are the consolidated figures of
Matsuzakaya Group before its
transition to holding company.
＊2 Sales of Daimaru for and before
fiscal 2006 include other operating
revenue.
＊3 F o r f i s c a l 2 0 0 7 , f u l l - y e a r
consolidated figures are used for
Matsuzakaya Group.

44● Wholesale businessbusiness investment funds and investment and loan

Though Daimaru Kogyo, Ltd. opened a new market

funds needed in the future to maintain the growth ofand developed new merchandise in the existing

the Group through borrowing and the issue of bonds

businesses, it suﬀered weak sales of industrial

in addition to cash reserves and cash ﬂows frommaterials and apparel partly because of theoperating activities.

deteriorating market environment and sales in thisWe generated a cash inﬂow of ¥22,686 million fromsegment decreased by 3.8% to ¥87,139 million.

operating activities because of income before

However, its continuing eﬀorts to improve operating

income taxes and minority interests of ¥8,459

proﬁt margin and the thorough reduction of selling,million, depreciation of ¥13,257 million and income

general and administrative expenses through thetaxes paid of ¥12,934 million. Investing activities

standardization and centralization of businessresulted in a cash outﬂow of ¥11,676 million due tooperation resulted in operating income of ¥3,572

a cash outﬂow of ¥12,765 million from themillion, up 7.4%.

acquisition of ﬁxed assets including the remodelingof department stores and a cash inﬂow of ¥4,618
million from the sales of marketable securities.

Financing activities including the repayment of❷ Laws and regulations and legal revisions

loans and the payment of dividends led to a cash

The Group is subject to the laws and regulations

outﬂow of ¥13,510 million.

relating to the new opening of large-scale retailAs a result, cash and cash equivalents at the end of

stores, antitrust, consumer protection, tax systems

the consolidated ﬁscal year under review stood atand environment and recycling. In addition, a rise in¥32,307 million, a decrease of ¥2,636 million

consumption tax rate resulting from the futurecompared with the end of the previous period,

amendment to tax systems could reduce consumer

whereas the balance of interest-bearing debt

spending. Thus these laws and regulations andamounted to ¥94,677 million, a decrease oflegal revisions may lead to a restriction of business¥8,365 million compared with the end of theactivities, an increase in costs and a decline inprevious period.

sales, which could adversely aﬀect the performanceand ﬁnancial position of the Group.

Basic policy on proﬁt distribution anddividends❸ Changes in natural environment and accidents

The basic policy of JFR is to divide up proﬁts

typhoons, and unexpected accidents could damage

appropriately with a dividend payout ratio of 30% in

stores and facilities, lead to a loss of salesconsideration of its proﬁt level, future capital

opportunities and aﬀect operations. Abnormal

investment and cash ﬂow trends while maintaining

weather conditions including cold summers andand improving sound ﬁnancial position.

warm winters may also lead to a decrease in sales

We willNatural disasters, including earthquakes, ﬂoods andalso consider stock buyback from time to time toof the Group s main products including clothing andimprove capital eﬃciency and implement capital

foodstuﬀs. Thus changes in natural environment

policies in a ﬂexible manner.

and accidents could adversely aﬀect the

We intend to use retained earnings to strengthen

performance and ﬁnancial position of the Group.

marketing capabilities through store remodeling andbusiness expansion and increase ﬁnancial strength❹ Information management

in order to heighten our corporate value.

The Group has an internal system in place to strictly

For the period under review, JFR has decided to pay

manage and protect personal and conﬁdential

an annual dividend of ¥8: an interim dividend of

information held by the Group. However, leaks of¥4.50 and a term-end dividend of ¥3.50.

such information caused by unexpected accidents

Our annual dividend for the next period is expected

and incidents could damage the reputation of theto be ¥6.

Group and adversely aﬀect the performance andﬁnancial position of the Group.

Business risk factors❺ Overseas operations

The Group s business risk factors that could have a

The Group is engaged in business activities abroadmaterial impact on investment decisions aremainly in the wholesale business segment. In suchdiscussed below.

overseas operations, unpredictable economic and

The forward-looking statements herein are based on

currency ﬂuctuations, political and social confusion

the Group s expectations as of February 28, 2009,

arising from terrorism, wars and civil wars andand could be aﬀected by domestic and overseas

legislative and taxation changes could adversely

economic conditions. Therefore, the Group s

aﬀect the performance and ﬁnancial position of thebusiness risk factors are not limited to them.

Group.

❶ Business environment❻ Signiﬁcant lawsuits

Economic conditions, including business,

During the consolidated ﬁscal year under review,

consumption and ﬁnancial trends, and competition

there were no lawsuits that had a material impact

with other retailers of the same and diﬀerent types

on the Group. However, if a signiﬁcant lawsuit

have a material impact on the Group s mainoccurs and judgment is taken against the Group in

department store and supermarket businessthe future, the performance and ﬁnancial position ofsegments. These business environment factors

the Group could be adversely aﬀected.

could adversely aﬀect the performance and ﬁnancial
position of the Group.

45

CONSOLIDATED BALANCE SHEETS
J. Front Retailing Co., Ltd. and Consolidated Subsidiaries
February 28, 2009 and February 29, 2008

Millions of yen

ASSETS

2009

2008

2009

¥32,858
1,093
62,137(743)
42,93910,99327,554
176,833¥37,562
1,531
74,311(784)
45,154
10,34925,400
193,525$335,937
11,175635,283(7,596)
439,004
112,391
281,7091,807,924

Property and equipment
Land (Note 5)
Buildings and structures (Notes 5, 9 and 10)
Other
Construction in progress
Total
Accumulated depreciation
Net property and equipment

334,271342,240
12,8792,362
691,753(224,579)
467,173

335,025
346,189
14,716
1,047
696,979(224,190)
472,788

3,417,554
3,499,029
131,674
24,1497,072,416(2,296,074)
4,776,332

Investments and other assets:
Investment securities (Notes 4 and 5)
Investments in unconsolidated subsidiaries and affiliates
Long-term loans
Leasehold and other deposits
Deferred tax assets (Note 12)
Other
Total investment and other assets

30,3303,701
1,089
50,04812,26335,176132,608

44,582
3,834
1,205
47,362
10,00832,068139,059

310,091
37,839
11,134
511,686
125,376359,636
1,355,771¥776,616¥805,375$7,940,047

Current assets:
Cash on hand and in banks (Note 3)
Marketable securities (Notes 3 and 4)
Notes and accounts receivable:
Less: allowance for doubtful accounts
Inventories
Deferred tax assets (Note12)
Other current assets
Total current assets

Total assets
See notes to consolidated financial statements.

46

Thousands of
U.S. dollars(Note 1)

Thousands of
U.S. dollars(Note 1)Millions of yen

LIABILITIES AND NET ASSETS

Current liabilities:
Notes and accounts payable
Short-term bank loans (Note 5)
Current portion of long-term debt (Note 5)
Income taxes payable (Note 12)
Advances received
Gift certificates
Allowance for employees' bonuses
Allowance for directors' and corporate auditors' bonuses
Reserve for sales promotion
Reserve for loss on collection of gift certificates
Reserve for loss on business restructuring (Note 10)
Other current liabilities
Total current liabilities
Long-term liabilities:
Bonds (Note 5)Long-term loans payable (Note 5)
Deferred tax liabilities (Note 12)
Deferred tax liabilities on revaluation
Reserve for retirement benefits (Note 6)
Reserve for directors' and corporate auditors'
retirement allowances
Negative goodwill
Other
Total long-term liabilities
Total liabilities

2009

2008

2009

¥79,685
42,556
14,0003,563
29,23235,275
7,735
185
354
7,317
2,679
51,644274,228¥89,956
47,968−
11,31430,31936,844
6,216
263
1,999
5,975
−
47,400278,259$814,692
435,088
143,135
36,428298,865
360,648
79,082
1,891
3,619
74,80827,390528,0032,803,681

5,000
33,121
98,072
1,492
34,422

19,00036,073
101,919
1,518
36,14351,120338,626
1,002,679
15,254351,927

51

206

521

8,086
5,871
186,118
460,347

10,502
5,896
211,260
489,520

82,67060,025
1,902,852
4,706,543

Net assets (Note 7):
Shareholders' equity:
Common stock:
Authorized: 2,000,000 thousand shares
Issued: 536,238,328 shares in 2009 and 2008
Capital surplus
Retained earnings
Less: Treasury stock, at cost, 7,507,521 shares in 2009
7,301,098 shares in 2008
Total shareholders' equity

30,000209,657
75,31030,000209,787
72,938306,717
2,143,513
769,962(5,980)308,987(5,973)306,753(61,139)
3,159,053

Valuation and translation adjustments:
Unrealized gains (losses) on available-for-sale securities
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets(1,161)35(1,125)130
8,276
316,268¥776,616

1,098
(29)
1,069
136
7,895
315,854¥805,375(11,870)358(11,502)
1,329
84,6133,233,494$7,940,047

See notes to consolidated financial statements.

47

CONSOLIDATED STATEMENTS OF INCOME
J. Front Retailing Co., Ltd. and Consolidated Subsidiaries
Years ended February 28, 2009 and February 29, 2008

Thousands of
U.S. dollars(Note 1)Millions of yen

Sales:Net sales
Real estate lease income
Operating expenses:
Cost of sales
Cost of real estate lease
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Net gain (loss) on sales or disposal of fixed assets
Gain on sales of investment securities
Loss on revaluation of investment securities
Loss on impairment (Note 9)
Gain on restructuring liabilities
Amortization of negative goodwill
Provision for loss on collection of gift certificates
Loss on business restructuring (Note 10)
Other, net
Income before income taxes and minority interests
Income taxes: (Note 12)
Current
Deferred
Minority interests in earnings of consolidated subsidiaries
Net income
See notes to consolidated financial statements.

48

2009

2008

2009

¥1,092,448
4,242
1,096,690¥1,013,221
3,181
1,016,402$11,169,083
43,37011,212,453

825,628
1,779
827,407269,282
241,189
28,092

763,698
1,403
765,101
251,301
211,583
39,717

8,441,141
18,1888,459,329
2,753,113
2,465,893
287,210910(1,616)(1,748)1,352(9,833)(2,824)
3,317
2,336(3,731)(5,761)(2,033)(19,634)642(1,543)
(723)
32
(362)
(2,078)2,447
1,199(4,602)−586(4,404)

9,304(16,522)(17,871)
13,823(100,532)(28,872)
33,91323,883(38,145)(58,900)(20,785)(200,736)

8,459

35,31486,484

5,812(5,275)537

15,710(1,756)
13,95359,421(53,931)5,490

751¥7,170822¥20,538

7,678$73,305

CONSOLIDATED STATEMENTS OF CHAGES IN NET ASSETS
J. Front Retailing Co., Ltd. and Consolidated Subsidiaries
Years ended February 28, 2009 and February 29, 2008

Millions of yen

Balance, February 28, 2007
Increase due to stock transfer
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Net changes of items other than shareholders'equity during the year
Balance, February 29, 2008
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Disposal of treasury stock due to stock exchange
Decrease in affiliates accounted forby the equity method
Net changes of items other than shareholders'equity during the year
Balance, February 28, 2009

Number ofshares issued

Commonstock

270,830,356
271,707,972¥20,283
9,716¥23,184
185,921682
0(6,300,000)

536,238,328

Capitalsurplus30,000209,787

Retainedearnings¥60,982(3,745)
20,538(2)(4,834)72,938(4,760)
7,170

(63)
(67)

Treasurystock, atcost¥(5,493)(5,448)135
4,834(5,973)

(364)
180
176

(38)

536,238,328¥30,000¥209,657¥75,310

Total
shareholders'equity¥98,956
195,638(3,745)
20,538(4,766)
132−306,753(4,760)
7,170
(364)
116
109
(38)

¥(5,980)¥308,987

Millions of yen
Unrealized gains Deferred(losses) on
gains
available-for-sale (losses) on
securities
hedgesBalance, February 28, 2007
Increase due to stock transfer
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Net changes of items other than shareholders'equity during the year
Balance, February 29, 2008
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Disposal of treasury stock due to stock exchange
Decrease in affiliates accounted forby the equity method
Net changes of items other than shareholders'equity during the year
Balance, February 28, 2009

Total
valuation andtranslation
adjustments

StockacquisitionrightsMinority
interests

Total net assets¥6,561¥(1)¥6,560−¥3,791¥109,308
195,638(3,745)
20,538(4,766)132−(5,462)
1,098

(28)
(29)

(5,491)
1,069

136
136

4,103
7,895

(1,251)
315,854(4,760)
7,170
(364)
116
109
(38)

(2,260)¥(1,161)65¥35(2,195)¥(1,125)

(5)
¥130

381
¥8,276(1,819)¥316,268

See notes to consolidated financial statements.

49

Thousands of U.S. dollars (Note 1)

Balance, February 29, 2008
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Disposal of treasury stock due to stock exchange
Decrease in affiliates accounted forby the equity method
Net changes of items other than shareholders'equity during the year
Balance, February 28, 2009

Number ofshares issued

Commonstock

Capitalsurplus536,238,328$306,717$2,144,842

Retainedearnings$745,711(48,666)
73,305

(644)
(685)

Treasurystock, atcost$(61,067)(3,722)
1,840
1,799

(389)

536,238,328$306,717$2,143,513$769,962

Total
shareholders'equity$3,136,213(48,666)
73,305(3,722)
1,186
1,114
(389)

$(61,139)$3,159,053

Thousands of U.S. dollars (Note 1)
Unrealized gains Deferred(losses) on
gains
available-for-sale (losses) on
securities
hedgesBalance, February 29, 2008
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Disposal of treasury stock due to stock exchange
Decrease in affiliates accounted forby the equity method
Net changes of items other than shareholders'equity during the year
Balance, February 28, 2009
See notes to consolidated financial statements.

50$11,226$(296)

Total
valuation andtranslation
adjustments

StockacquisitionrightsMinority
interests$10,929$1,390$80,718

Total net assets$3,229,261(48,666)
73,305(3,722)
1,186
1,114
(389)

(23,106)$(11,870)

665
$358

(22,441)$(11,502)(51)$1,3293,895$84,613(18,597)$3,233,494

CONSOLIDATED STATEMENTS OF CASH FLOWS
J. Front Retailing Co., Ltd. and Consolidated Subsidiaries
Years ended February 28, 2009 and February 29, 2008

Millions of yen

Thousands of
U.S. dollars(Note 1)

2009

2008

2009

¥8,45913,2574,554(2,336)476
1,439(1,603)(1,645)
1,342
2,679
(910)
1,616
(122)
−
1,665
(1,352)
9,833
12,1152,214(10,264)(1,112)(1,989)(1,953)36,362899(1,641)(12,934)
22,686¥35,314
11,301
2,078(1,199)30
133(3,606)
118
5,975
−
(643)
1,543
(158)
(3,827)
4,174
(32)
362
3,854
(488)
(2,012)(3,357)(2,961)(3,021)
43,579738(1,594)(14,927)
27,796$86,484
135,538
46,560(23,883)
4,867
14,712(16,389)(16,818)
13,72027,390(9,304)
16,522(1,247)−
17,023(13,823)
100,532
123,863
22,636(104,938)(11,369)(20,335)(19,967)
371,762
9,191(16,777)(132,236)
231,939

Cash flows from investing activities:
Purchase of securities
Proceeds from sales of securities
Purchase of property and equipment
Proceeds from sale of property and equipment
Increase in long-term loans
Proceeds from collection of long-term loans
Net (increase) decrease in short-term loans
Other
Net cash provided by (used in) investing activities(1,903)
4,618(12,765)
526
(29)
148
111
(2,383)(11,676)(407)
416(16,122)
21,322
(23)
156
327
122
5,792

(19,456)
47,214(130,508)
5,378
(296)
1,513
1,135
(24,364)(119,374)

Cash flows from financing activities:
Net increase (decrease) in short-term bank loans
Proceeds from long-term bank loans
Payment of long-term bank loans
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Other
Net cash used in financing activities
Effect of exchange rate changes
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase due to stock transfer
Cash and cash equivalents at end of year (Note 3)

16,6991,500(26,563)−(357)(4,763)(111)
87(13,510)(136)(2,636)34,944−¥32,307(15,889)
8,499(14,007)(13,500)(752)(3,722)(68)132(39,309)(73)(5,794)
33,103
7,634¥34,944

170,729
15,336(271,578)−(3,650)(48,696)(1,135)889(138,125)(1,390)(26,950)
357,264−$330,304

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Loss on impairment
Amortization of negative goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for bonuses
Decrease in reserve for employees' retirement benefits
Increase in reserve for sales promotion
Decrease in reserve for loss on collection of gift certificates
Increase in reserve for business restructuring
Interest and dividend income
Interest expenses
Equity in earnings of affiliated companies
Gain on sales of property and equipment, net
Loss on sales or disposal of property and equipment
Gain on sale of investment securities, net
Write-down of investment securities
Increase in notes and accounts receivable
Increase in inventories
Increase in notes and accounts payable
Increase in other receivables
Increase in prepaid expenses
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

See notes to consolidated financial statements.

51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
J. Front Retailing Co., Ltd. and Consolidated Subsidiaries
Years ended February 28, 2009 and February 29, 2008

1

BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

On September 3, 2007, J. Front Retailing Co., Ltd. was established

Law. Some supplementary information included in the statutory

as a joint holding company through the management integration

Japanese language consolidated ﬁnancial statements, but notwhich was agreed between the Daimaru, Inc. and Matsuzakayarequired for fair presentation, is not presented in the accompanying

Holdings Co., Ltd.

consolidated ﬁnancial statements.

The accompanying consolidated ﬁnancial statements of J. Front

All ﬁgures in the consolidated ﬁnancial statements and notes are

Retailing Co., Ltd. (hereafter the Company ) and its consolidated

stated in millions of Japanese yen by discarding fractional amounts

subsidiaries have been prepared in accordance with the provisionsof less than ¥1 million as permitted by the Financial Instruments

set forth in the Japanese Financial Instruments and Exchange Law

and Exchange Law. As a result, the totals shown in theand its related accounting regulations and in conformity withconsolidated ﬁnancial statements and notes in yen do notaccounting principles generally accepted in Japan, which arenecessarily agree with the sum of the individual amounts.

diﬀerent in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.

The translations of the Japanese yen amounts into U.S. dollars
are included solely for the convenience of readers outside Japan,

The accompanying consolidated ﬁnancial statements have beenusing the prevailing exchange rate at February 28, 2009, which

restructured and translated into English (with some expandedwas ¥97.81 to U.S. $1. Such translations should not be construed

descriptions) from the consolidated ﬁnancial statements of theas representations that the Japanese yen amounts have been,

Company, prepared in accordance with Japanese GAAP and ﬁled

could have been or could in the future be converted into U.S.

with the appropriate Local Finance Bureau of the Ministry of

dollars at this or any other rate of exchange.

Finance as required by the Financial Instruments and Exchange

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of consolidation

the Company acquired control of the respective subsidiaries.

The consolidated ﬁnancial statements include the accounts of the

The diﬀerences between the cost and underlying net equity ofCompany and its 27 (38 in 2008) signiﬁcant subsidiaries (hereafterinvestments in consolidated subsidiaries (goodwill or negative

the Companies ).

goodwill) are amortized on a straight-line basis over 5 years with

Investments in 5 (6 in 2008) signiﬁcant aﬃliated companies areaccounted for by the equity method after the elimination of

the exception of minor diﬀerences, which are charged or credited
to income in the period of acquisition.

unrealized intercompany proﬁts. Investments in the remaining

All the Company s unconsolidated subsidiaries are of a limited

unconsolidated subsidiaries and aﬃliated companies are notscale in terms of total assets, net sales, proﬁt, retained earnings

accounted for by the equity method because of the immaterial

and other indicators, and taken together they do not have aeﬀect on the consolidated ﬁnancial statements. Such investments

signiﬁcant impact on the consolidated ﬁnancial statements.

are, therefore, stated at cost, adjusted for any substantial andnon-recoverable impairment in value, and income from thoseunconsolidated subsidiaries and aﬃliated companies is recognized(b) Foreign currency translation

only when the Companies receive dividends therefrom.

All monetary assets and liabilities denominated in foreign

In accordance with the accounting standards for consolidation,

currencies are translated into Japanese yen at the exchange rate at

the Company s subsidiaries include companies over which

the balance sheet date, and translation gains and losses aresubstantial control is exerted through either majority ownership ofcharged to income.

voting stock and/or by other means. Also, the Company s aﬃliatedcompanies include companies over which the Company has theability to exercise signiﬁcant inﬂuence.
All signiﬁcant intercompany transactions and unrealized proﬁts
among the Group have been eliminated in consolidation.
In the elimination of investments in subsidiaries, the assets andliabilities of the subsidiaries, including the portion attributable tominority shareholders, are evaluated using the fair value at the time

52(c) Cash and cash equivalents
In preparing the consolidated statements of cash ﬂows, cash andcash equivalents include cash on hand, readily available deposits
and short-term highly liquid investments with maturities notexceeding three months at the time of acquisition.

(d) Securities(g) Inventories

No trading securities and held-to-maturity securities are held by theInventories are stated at cost determined principally by the retailCompanies. Equity securities issued by subsidiaries and aﬃliatedinventory method.

companies which are not consolidated or accounted for by theequity method are stated at moving-average cost. Available-for-salesecurities with fair market value are stated at fair market value. Net(h) Property and equipment

unrealized gains or losses on these securities are reported, net of

Property and equipment are stated at cost. Depreciation of

applicable income taxes, as a separate component of net assets inbuildings and structures is computed mainly by the straight-line

the balance sheets. Realized gains and losses on sale of suchmethod and other properties are depreciated using thesecurities are computed using the moving-average cost method.

declining-balance method over the estimated useful lives of the

Available-for-sale securities with no available fair market value areassets as prescribed by the Corporate Tax Law. Maintenance andstated at moving average cost.

repairs, including minor renewals and improvements, are charged toincome as incurred. The range of useful lives is principally 3 to 50(e) Derivatives and hedging transactions

years for buildings and structures and 2 to 20 years for otherproperties.

Derivative ﬁnancial instruments are stated at fair value andCertain subsidiaries had used the declining-balance method inchanges in the fair value are charged to income unless thedepreciating building attachments and structures, but eﬀective thederivative ﬁnancial instruments are used for hedging purposes.

year ended February 28, 2009, they changed their depreciation

If derivative ﬁnancial instruments are used as hedges and meetmethod to the straight-line method. The eﬀect of this change wascertain hedging criteria, the Companies defer recognition of gains

to increase operating income and income before income taxes andor losses resulting from changes in the fair value of derivativeminority interests by ¥1,295 million ($13,240 thousand), comparedﬁnancial instruments until the related losses or gains on the hedged

with the previous method.

items are recognized.

In addition, pursuant to an amendment to the Corporate Tax Law,

In cases where forward foreign exchange contracts are used as

the salvage value (5% of the acquisition costs) of the assets fully

hedges and meet certain hedging criteria, hedged items are statedd e p r e c i a t e d b a s e d o n t h e C o r p o r a t e Ta x L a w b e f o re t h eusing the forward foreign exchange contract rates.

amendment is depreciated equally over ﬁve years starting from theyear ended February 28, 2009. The eﬀect of this change was toAlso, if interest rate swap contracts are used as hedges and meetdecrease operating income and income before income taxes andcertain hedging criteria, the net amount to be paid or received

minority interests by ¥736 million ($7,525 thousand), compared

under the interest rate swap contract is added to or deducted fromwith the previous method.

the interest on the assets or liabilities for which the swap contract
was executed.
The Companies use forward foreign currency contracts and(i) Impairment of ﬁxed assetsinterest rate swaps as derivative ﬁnancial instruments only for the

The Companies review their ﬁxed assets for impairment wheneverpurpose of mitigating future risks of ﬂuctuation of foreign currency

events or changes in circumstances indicate the carrying amountexchange and increases in the interest rate.

of an asset or asset group may not be recoverable. An impairment

The related hedged items are trade receivables, trade payables,
loans payables, and interest on foreign currency bonds.

loss would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash ﬂows
expected to result from the continued use and eventual disposition(f) Allowance for doubtful accountsof the asset or asset group. The impairment loss would bemeasured as the amount by which the carrying amount of the asset

Allowance for doubtful accounts is provided principally for amounts

exceeds its recoverable amount, which is the higher of thesuﬃcient to cover possible losses on collection. It consists of the

discounted cash ﬂows from the continued use and eventual

estimated uncollectible amount with respect to speciﬁc items anddisposition of the asset or the net selling price at disposition.

possible losses on collection calculated by applying a percentage
based on collection experience to the remaining items.

53

(j) Software
Software purchased or internally developed for internal use is(q) Allowance for directors and corporate auditors
retirement beneﬁts

amortized using the straight-line method over its estimated useful life

An allowance for directors and corporate auditors retirement(ﬁve years).

beneﬁts is provided by certain consolidated subsidiaries based on
the internal rules for the estimated amount which would be payable
if all oﬃcers were to retire at the balance sheet date.

(k) Reserve for Sales Promotion
Reserve for sales promotion is provided for the estimated future

The payments are subject to an approval of the shareholders
meeting.

costs on the issuance of point card certiﬁcates and other gift
certiﬁcates based on the historical experience rate of usage.

(r) Leases
Under the current Japanese accounting standards for leases,(l) Allowance for employees bonuses

ﬁnance leases that deem to transfer ownership of the leased

An allowance for employees bonuses is provided for the estimatedproperty to the lessee are to be capitalized, while other ﬁnanceamounts which is attributable to the ﬁscal year.

leases are permitted to be accounted for as operating leasetransactions if certain as if capitalized information is disclosed in
the notes to the lessee s ﬁnancial statements. All other leases are(m) Allowance for directors and corporate auditors
bonuses
An allowance for directors and corporate auditors bonuses isaccounted for as operating leases.

provided for the estimated amounts which is attributable to the(s) Income taxes

ﬁscal year.

Income taxes consist of national and local income taxes.
The Companies recognize the tax eﬀects of temporary
diﬀerences between the ﬁnancial statement s carrying amounts and(n) Reserve for loss on collection of gift certiﬁcates

the tax basis of assets and liabilities. The provision for income

Reserve for loss on collection of gift certiﬁcates is provided fortaxes is computed based on the income before income taxes andestimated future loss to be incurred when gift certiﬁcates wereminority interests included in the statements of income of each ofcollected after derecognition of the related liability based on the

the Companies. The assets and liabilities approach is used tohistorical experience.

recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary diﬀerences.

(o) Reserve for loss on business restructuring
Reserve for loss on business restructuring is provided for estimated(t) Per share information

loss on restructuring aﬃliated companies.

Net income per share is based on the weighted average number ofshares of common stock outstanding during each year and diluted
net income per share reﬂects the potential dilution that could occur(p) Reserve for retirement beneﬁts
Reserve for retirement beneﬁts is provided based on the projected
beneﬁt obligations and plan assets at the balance sheet date.
The unrecognized prior service cost obligations are recognized
as expenses and recorded in equal amounts mainly 10 ‒ 12 years

if it were converted into common stock.
Cash dividends per share represent interim dividends resolved by
the Board of Directors in each year and year-end dividends
resolved by the Board of Directors subsequent to the end of theﬁscal year.

from their recognition, which are less than the average remaining
service years of the employees. Actuarial gains or losses incurred54

during the year are amortized by using the straight-line method over(u) Reclassiﬁcationa certain period of time (mainly 10 ‒ 12 years), which are less than

Certain prior year amounts have been reclassiﬁed to conform to thethe average remaining service years of the employees,

current year presentation. These changes had no impact oncommencing from the following ﬁscal year after they are incurred.

previously reported results of operations.

3

CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the statements of cash ﬂows at February 28, 2009 and February 29, 2008 consisted of the following:

Millions of yen
2009

Cash on hand and in banks
Time deposits with maturities exceeding three months
Short-term investments
Cash and cash equivalents

4¥32,858(568)
16¥32,307

Thousands of
U.S. dollars
2009

2008

$335,937(5,807)164$330,304¥37,562(2,635)
16¥34,944

SECURITIESMarketable securities classiﬁed as available-for-sale securities at February 28, 2009 and February 29, 2008 are as follows:
Thousands of U.S. dollars

Millions of yen
February 28, 2009
Acquisition
cost

Securities whose carrying
value exceeds their acquisition cost:
Equity securities
Debt securities
Subtotal
Securities whose acquisition costexceeds their carrying value:
Equity securities
Debt securities
Subtotal
Total

Carrying
value

Acquisition
Unrealized
cost
gains (losses)

Carrying
value

Unrealized
gains (losses)¥2,417872
3,290¥4,420878
5,299¥2,0026
2,009$24,711
8,915
33,637$45,1908,977
54,176$20,468
61
20,54021,093
1,812
22,905¥26,195

17,127
1,715
18,842¥24,142(3,966)(96)(4,063)¥(2,053)

215,653
18,526234,179$267,815

175,105
17,534
192,639$246,825(40,548)(980)(41,540)$(20,990)

Millions of yen
February 29, 2008
Acquisition
cost

Securities whose carrying
value exceeds their acquisition cost:
Equity securities
Debt securities
Subtotal
Securities whose acquisition costexceeds their carrying value:
Equity securities
Debt securities
Subtotal
Total

Carrying
value

Unrealized
gains (losses)¥7,152
2,631
9,784¥13,774
2,648
16,423¥6,621
17
6,638

27,066361
27,428¥37,212

22,177360
22,538¥38,961(4,888)(0)(4,889)¥1,74955

The Companies review available-for-sale securities with fair value

losses recognized for available-for-sale securities whose fair value

for impairment when the fair value declined more than 30% fromis available for the years ended February 28, 2009 and February

the acquisition cost. When the cost is not considered to be29, 2008 amounted to ￥9,833 million ($100,532 thousand) andrecoverable, impairment loss would be recognized. Impairment￥362 million, respectively.

Available-for-sale securities whose fair value is not available at February 28, 2009 and February 29, 2008 are as follows:
Thousands of
U.S. dollars

Millions of yen
2009

Unlisted equity securities
Other
Total

2008

¥3,172
4,108¥7,281¥3,184
3,967¥7,151

2009$32,430
42,000$74,440

Proceeds from sales of available-for-sale securities and gross realized gains on these sales for the year ended February 28, 2009 was￥4,618 million ($47,214 thousand) and ￥1,352 million ($13,823 thousand), respectively.
The carrying values of debt securities and other securities by contractual maturities for securities classiﬁed as available-for-sale at February
28, 2009 are as follows:
Millions of yen
2009
Due in 1 year Due after 1 year Due after 5 years
or less
through 5 years through 10 years

Debt securities:
Government and municipal bonds
Other
Other securities:
Investment trust
Total

Due after
10 years

¥280
796

¥100
1,416

−
−

−
−

16
¥1,093−¥1,517−−−−

Thousands of U.S. dollars
2009
Due in 1 year Due after 1 year Due after 5 years
or less
through 5 years through 10 years

Debt securities:
Government and municipal bonds
Other
Other securities:
Investment trust
Total

56

Due after
10 years$2,8638,138$1,022
14,477

−
−

−
−

164
$11,175−$15,510

−
−

−
−

5

SHORT-TERM BANK LOANS AND LONG-TERM DEBT

Short-term bank loans at February 28, 2009 and February 29, 2008 consisted of notes to banks and bank overdrafts. The annual weighted
average interest rate applicable to the short-term bank loans was 0.93%. Long-term debt at February 28, 2009 and February 29, 2008
consisted of the following:

Millions of yen

Unsecured 0.76% straight bonds due 2009
Unsecured 0.74% straight bonds due 2009
Unsecured 1.01% straight bonds due 2009
Unsecured 1.10% straight bonds due 2009
Unsecured 1.07% straight bonds due 2011
Unsecured 1.06% straight bonds due 2011
Loans from banks and others due serially to 2021
Total
Less: Current portion of long-term debt

2009

¥6,000
3,000
3,000
2,000
3,000
2,000
37,49456,494
18,373¥38,1212008

Thousands of
U.S. dollars
2009¥6,000
3,000
3,000
2,000
3,000
2,000
62,55781,557
26,484¥55,073$61,343
30,67230,672
20,44830,672
20,448383,335
577,589
187,844$389,745

Millions of yen

Thousands of
U.S. dollars

Annual maturities of long-term debt including bonds at February 28, 2009 are as follows:

Years ending February 28 or 29

2010
2011
2012
2013
2014 and thereafter
Total¥18,373
10,956
11,6348,390
7,141¥56,494$187,844
112,013
118,945
85,77973,009$577,589

The carrying amounts of assets pledged as collateral for short-term loans of ￥2,886 million ($29,506 thousand) and the long-term loans of￥11,685 million ($119,466 thousand) at February 28, 2009 were as follows:

Millions of yen

Land
Buildings and structures
Investment securities
Total¥12,608
15,429521¥28,560

Thousands of
U.S. dollars$128,903
157,7455,327$291,995

As is customary in Japan, the Companies maintain substantial deposit balances with banks with which they have borrowings. Such deposit
balances are not legally or contractually restricted as to withdrawal.

57

6

RESERVE FOR RETIREMENT BENEFITSThe Companies have deﬁned beneﬁt pension plans, i.e., corporate

employees. Such payments are not included in retirement beneﬁt

pension plans, tax qualiﬁed pension plans, lump-sum retirement

obligations actuarially computed in accordance with the accounting

plans and deﬁned contribution pension plans. In certain cases,

standard for retirement beneﬁts. Certain consolidated subsidiaries

additional severance payments may be granted to the eligible

have established retirement beneﬁt trusts.

The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated balance sheets at
February 28, 2009 and February 29, 2008 for the Companies retirement beneﬁt plans:
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation
Plan assets at fair value
Retirement benefit trusts
Unfunded retirement benefit obligation
Unrecognized prior service cost
Unrecognized actuarial differences
Prepaid pension costReserve for retirement benefits

2009¥84,230(35,720)(8,095)40,414
3,428(19,589)
24,253
10,168¥34,4222008¥92,686(50,471)(14,530)
27,683
3,007(2,791)
27,8998,244¥36,1432009$861,159(365,198)(82,762)
413,189
35,048(200,276)
247,960
103,957$351,927

The component of net retirement beneﬁt costs for the years ended February 28, 2009 and February 29, 2008 are as follows:
Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial differences
Net retirement benefit cost
Contribution to defined contribution plan
Total

2009

¥2,961
1,798(1,206)
(552)
294
3,295
283
¥3,5792008¥2,602
1,506
(928)
(501)
(824)
1,855
147
¥2,003

2009$30,273
18,383(12,330)(5,644)
3,006
33,688
2,893$36,591

Assumptions used in the calculation of the above information were as follows:

Interperiod allocation method of estimated retirement benefits
Discount rate
Expected return on plan assets
Amortization of unrecognized prior service costs
Amortization of unrecognized actuarial differences

58

2009

Straight-line
2.0%
1.0%-2.0%
Mainly 10-12 years
10-12 year

2008

Straight-line
2.0%
1.0%-2.0%
Mainly 10-13 year
10-13 years

7

NET ASSETS

Japanese companies are subject to the Corporate Law of Japan (the Corporate Law ). The signiﬁcant provisions in the Corporate Law thataﬀect ﬁnancial and accounting matters are summarized below:(a) Dividends(c) Treasury stock and treasury stock acquisition rights

Under the Corporate Law, companies can pay dividends at any

The Corporate Law also provides for companies to purchasetime during the ﬁscal year in addition to the year-end dividend upontreasury stock and dispose of such treasury stock by resolution ofresolution at the shareholders meeting. For companies that meetthe Board of Directors. The amount of treasury stock purchased

certain criteria such as; (1) having the Board of Directors, (2)cannot exceed the amount available for distribution to thehaving independent auditors, (3) having the Board of Corporateshareholders which is determined by speciﬁc formula.

Auditors, and (4) the term of services of the directors is prescribedas one year rather than two years of normal term by its articles ofUnder the Corporate Law, stock acquisition rights, which wereincorporation, the Board of Directors may declare dividends (except

previously presented as a liability, are now presented as a separate

for dividends in kind) at any time during the ﬁscal year if thecomponent of net assets.

company has prescribed so in its articles of incorporation.
Semiannual interim dividends may also be paid once a year upon

The Corporate Law also provides that companies can purchaseresolution by the Board of Directors if the articles of incorporation

both treasury stock acquisition rights and treasury stock. Suchof the company so stipulate. The Corporate Law provides certain

treasury stock acquisition rights are presented as a separate

limitations on the amounts available for dividends or the purchasecomponent of net assets or deducted directly from stockof treasury stock. The limitation is deﬁned as the amount available

acquisition rights.

for distribution to the shareholders, but the amount of net assets
after dividends must be maintained at no less than ¥3 million.

At the Board of Directors

meeting held on April 14, 2009,

distribution of cash dividends amounting to ¥1,851 million(b) Increases/decreases and transfer of common stock,reserve and surplus
The Corporate Law requires that an amount of equal to 10% of($18,924 thousand) was resolved. This distribution has not been
accrued in the consolidated ﬁnancial statements as of February
28, 2009 and is recognized in the period in which they wereresolved.

dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of
capital surplus) depending on the equity account charged upon thepayment of such dividends until the total of aggregate amount oflegal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Corporate Law, the total amount ofadditional paid-in capital and legal reserve may be reversed without
limitation. The Corporate Law also provides that common stock,legal reserve, additional paid-in capital, other capital surplus andretained earnings can be transferred among the accounts undercertain conditions upon resolution of the shareholders.

59

8

STOCK OPTIONSThe stock options outstanding as of February 28, 2009 are as follows:

Stock option

1st
2nd

3 rd

4 th

5 th
6 th

Number ofoptions granted

Date of grant

Exercise Period

140,000 common shares

May 23, 2002

Sep. 3, 2007 to
May 23, 2012

161,000 common shares

May 22, 2003

Sep. 3, 2007 to
May 22, 2013

308,000 common shares

May 27, 2004

Sep. 3, 2007 to
May 27, 2014

336,000 common shares

May 26, 2005

Sep. 3, 2007 to
May 26, 2015

63,000 common shares

May 25, 2006

300,000 common shares

May 25, 2006

Sep. 3, 2007 toJul. 14, 2026
Jul. 15, 2008 toJul. 14, 2012

1st

2nd

3rd

4th

140,000

161,000

308,000

336,000

63,000300,000

140,000

161,000
42,000308,000

336,000

63,0007,000

300,000

140,000

119,000

308,000

336,000

56,000300,000

Persons granted
12 directors
4 corporate auditors
6 employees
7 directors
4 corporate auditors
16 executive officers
1 employee
7 directors
4 corporate auditors
14 executive officers
1 employee
7 directors
4 corporate auditors
12 executive officers
1 employee
8 directors
5 corporate auditors
135 employees

The stock option activity is as follows:

Vested:February 28, 2007-outstanding
Exercised
Forfeited
February 29, 2008-outstanding
Exercised
Forfeited
February 28, 2009-outstanding

5th

6th

Price information is as follows:
Yen
Year ended February 28, 2009

Exercise price
Average stock price at time of exercise
Fair value at date of grant

1st

2nd
¥404
−
＊

¥317
634
＊

3rd

4th

¥699
−
＊

5th
¥691
−
＊

6th
¥794
−
279

¥1
661
833

U.S. dollar
Year ended February 28, 2009

Exercise price
Average stock price at time of exercise
Fair value at date of grant

1st
$4.13
−
＊

2nd
$3.24
6.48
＊

3rd
$7.15
−
＊

4th
$7.06
−
＊

5th
$0.01
6.76
8.52

＊Fair value at date of grant is not disclosed since these options were granted before the enforcement of the Corporate Law.
No stock options were exercised during the year ended February 29, 2008.

60

6th
$8.12
−
2.85

9

LOSS ON IMPAIRMENTThe Companies recognized impairment losses on ﬁxed assets including buildings and other assets in stores for the years ended February 28,
2009 and February 29, 2008 as follows:
The Companies identify groups of assets principally on a store or warehouse basis which is the smallest identiﬁable group of assets
generating cash inﬂows.
Thousands of
U.S. dollars

Millions of yen
2009

Buildings and other¥2,8242008¥2,078

2009$28,872

The carrying values of these assets were reduced to the recoverable amounts. The recoverable amounts of stores are measured based on thevalue of use and written-down to nil since no future cash inﬂows are expected.

10 LOSS ON BUSINESS RESTRUCTURING
After the management integration, the Companies have been proceeding business restructuring in order to improve management eﬃciency
throughout the organization. Pursuant to the management s strategic plan, the Companies have recognized loss on business restructuring forthe year ended February 28, 2009 as follows:
Millions of yen

Provision for loss on business restructuring
Impairment loss on buildings and other properties
Other
Total

Yokohama
Matsuzakaya

Imabari
Daimaru

J. Front
Retailing¥2,680397
9¥3,087¥1,2391,331−¥2,570

¥104
−
−
¥104

Total

¥4,0231,728
9¥5,761Thousands of U.S. dollars

Provision for loss on business restructuring
Impairment loss on buildings and other properties
Other
Total

Yokohama
Matsuzakaya

Imabari
Daimaru

J. Front
Retailing$27,400
4,059
92$31,561$12,667
13,608−$26,275$1,063−−$1,063

Total$41,130
17,66792$58,90061

11 LEASES
a. Finance leases
The companies lease machinery and equipment and other assets.
Information regarding ﬁnance leases other than those which deem to transfer ownership of the leased assets to the lessee is as follows:(As a lessee)
Pro forma information of leased assets such as acquisition cost, accumulated depreciation, accumulated impairment loss, obligations underﬁnance leases, depreciation expense and other information of ﬁnance leases as if capitalized basis for the years ended February 28, 2009
and February 29, 2008 was as follows:
Thousands of
U.S. dollars

Millions of yen

Property and equipment (Machinery, equipment, vehicles and other)
Acquisition cost
Accumulated depreciation
Accumulated impairment loss
Net leased assets

2009

2008

2009

¥14,6316,588
364¥7,677¥15,927
8,218
178¥7,529$149,586
67,355
3,722$78,489

Obligations under ﬁnance leases:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total
Impairment loss on leased assets

2009¥2,568
5,393¥7,9612008¥2,5005,189¥7,690

¥283

¥160

2009

$26,255
55,138$81,392$2,893

Total lease payments and other information:
Thousands of
U.S. dollars

Millions of yen

Total lease payments
Reversal of allowance for impairment loss on leased assets
Depreciation expense
Impairment loss
Adjustment to allowance for impairment loss on leased assets

2009¥2,711
117
2,594
240
−

2008

¥2,322
4
2,318
109
42

2009

$27,717
1,196
26,521
2,454−

Depreciation expense, which is not reﬂected in the accompanying consolidated statements of income, is computed by the straight-line
method over the lease periods.

62

(As a lessor)
Pro forma information of leased assets such as acquisition cost, accumulated depreciation, receivables under ﬁnance leases, depreciation
expense and other information of ﬁnance leases for the years ended February 28, 2009 and February 29, 2008 was as follows:
Thousands of
U.S. dollars

Millions of yen

Property and equipment (Machinery, equipment, vehicles and other)
Acquisition cost
Accumulated depreciation
Net leased assets

2009

2008

¥1,284761¥522¥1,352
649
¥703

2009
$13,127
7,780$5,337

Commitment received under ﬁnance leases:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total

2009

¥161
361
¥522

2008

¥187
515
¥703

2009

$1,646
3,691$5,337

Lease income and depreciation expense:
Thousands of
U.S. dollars

Millions of yen

Lease income
Depreciation expense

2009

¥186
186

2008

¥188
188

2009

$1,901
1,901

b. Operating leases
Future minimum lease payments under non-cancellable leases subsequent to February 28, 2009 are summarized as follows:

Millions of yen

As a lessee:
Within one year
After one year
Total
As a lessor:
Within one year
After one year
Total

Thousands of
U.S. dollars¥3,48225,602¥29,084$35,600
261,752$297,352¥827
947¥1,775$8,455
9,682$18,14763

12 INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which in the aggregate, resulted innormal eﬀective statutory tax rates of approximately 40.6% for the years ended February 28, 2009 and February 29, 2008. The tax eﬀects
of signiﬁcant temporary diﬀerences and tax loss carryforwards which resulted in deferred tax assets and liabilities as of February 28, 2009
and February 29, 2008 are as follows:

Millions of yen

Deferred tax assets:
Reserve for retirement benefits
Securities under retirement benefit trusts
Loss on evaluation recognized upon merger of consolidated subsidiaries
Allowance for bonuses
Tax loss carryforwards
Reserve for loss on collection of gift certificates
Loss on impairment
Reserve for loss on business restructuring
Allowance for doubtful accounts
Unrealized profits on fixed assets
Payables related to an amendment to the retirement benefit plan
Inventories
Accrued enterprise tax
Reserve for sales promotion
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Adjustments of book values by fair value method
Deferred gains
Returned shares of retirement benefit trusts
Unrealized gains on available-for-sale securities
OthersTotal deferred tax liabilities
Net of deferred tax assets

Thousands of
U.S. dollars

2009

2008

2009

¥9,769
4,780
4,516
3,165
2,980
2,979
2,849
1,087
1,026
804
783
480
380
143
5,564
41,312(10,297)¥31,015¥11,233
4,606
4,516
3,441
1,269
2,148
2,849
−
890
867
1,217
470
1,051
811
5,719
41,092(11,347)¥29,745$99,877
48,87046,17132,35930,46730,457
29,128
11,113
10,490
8,220
8,005
4,907
3,885
1,462
56,886422,370(105,276)$317,094¥(96,014)(6,585)(3,179)−(52)(105,831)¥(74,816)¥(97,610)(6,813)(6,156)(700)(25)(111,306)¥(81,561)$(981,638)(67,324)(32,502)−(532)(1,082,006)$(764,912)

These deferred tax assets and liabilities are recorded under the following captions of the accompanying consolidated balance sheets:

Millions of yen

Current assets
Investments and other assets
Long-term liabilities

2009¥10,993
12,263(98,072)2008¥10,349
10,008(101,919)

Thousands of
U.S. dollars

13 DERIVATIVE TRANSACTIONSThere was no derivative transaction that is required to disclose its
fair value as of February 28, 2009 and February 29, 2008, since

64

2009

$112,391
125,376(1,002,679)

all derivatives are accounted for under hedge accounting.

14 CONTINGENT LIABILITIESThe Companies had the following contingent liabilities at February 28, 2009:

Millions of yen

Guarantees on employees’ home mortgage loans
Guarantees on bank loans and lease arrangements for a subsidiary
Total

Thousands of
U.S. dollars

¥82
24
¥106

$838
245
$1,08415 PER SHARE INFORMATION
The ﬁnancial data for the computation of basic net income per share for the years ended February 28, 2009 and February 29, 2008 is asfollows:

Millions of yen

Thousandsof shares

Net income

Weighted
average shares

Yen

DollarEPS

For the year ended February 28, 2009:
Basic EPS
Net income available to common shareholders¥7,170528,667¥13.56

For the year ended February 29, 2008:
Basic EPS
Net income available to common shareholders¥20,538

449,037¥45.74$0.14

Net assets per share at February 28, 2009 and February 29, 2008 were calculated as follows:

Millions of yen

Thousandsof shares

Net assets

Common sharesat end of fiscal year

For the year ended February 28, 2009:
Total net assets
Amounts not attributable to common shares:−Stock subscription rights−Minority interests
Net assets attributable to common shares
Outstanding number of common shares issued¥316,268
8,407
(130)
(8,276)¥307,861

For the year ended February 29, 2008:
Total net assets
Amounts not attributable to common shares:−Stock subscription rights−Minority interests
Net assets attributable to common shares
Outstanding number of common shares issued¥315,854
8,031
(136)
(7,895)¥307,823

528,730

528,937

Yen

Dollar

Net assets per shares¥582.27$5.95¥581.9765

16 SEGMENT INFORMATION(a) Business segment information
The Companies operate in the four business segments consisting

real estate leasing, interior construction contract, manufacturingof Department store,

and sales of furniture, credit business, etc.

Super market,

Wholesale and Other.

Other segment includes various business including mail order,
Business segment information for the years ended February 28, 2009 and February 29, 2008 was as follows:
Millions of yen

Year ended February 28, 2009
I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total
Operating expenses
Operating income
II. Assets, depreciation, impairment loss
and capital expenditure
AssetsDepreciation
Loss on impairment
Capital expenditure

Department
store

Super
marketWholesale

Other

Eliminationor corporate

Consolidated¥834,097
2,091
836,189
814,572¥21,616¥125,833
4,826
130,660
129,555¥1,105¥79,554
7,584
87,13983,567¥3,572¥57,204
34,48391,68889,129¥2,558¥−(48,987)(48,987)(48,226)¥(760)¥1,096,690−
1,096,690
1,068,597¥28,092¥679,624
12,225
3,413
10,140¥44,033
916
964
1,314

¥28,707102−
37¥140,828
273
190
1,532

¥(116,578)
(260)
(14)
(208)

¥776,616
13,257
4,554
12,817

Eliminationor corporate

Consolidated

Millions of yen

Year ended February 29, 2008
I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total
Operating expenses
Operating income
II. Assets, depreciation, impairment loss
and capital expenditure
AssetsDepreciation
Loss on impairment
Capital expenditure66

Department
store

Super
marketWholesale

Other¥754,195
1,625
755,820
724,479¥31,341¥114,908
4,825
119,733
117,848¥1,884¥82,733
7,888
90,62287,295¥3,327¥64,565
32,86697,431
93,797¥3,634¥−(47,205)(47,205)(46,736)¥(469)¥1,016,402−
1,016,402
976,684¥39,717¥728,833
10,047−
15,438¥43,791
832
1,939
1,275

¥29,732
159−
115¥98,549
473
179
376

¥(95,531)
(211)
(41)
(688)

¥805,375
11,301
2,078
16,517

Thousands of U.S. dollars

Year ended February 28, 2009
I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total
Operating expenses
Operating income
II. Assets, depreciation, impairment loss
and capital expenditure
AssetsDepreciation
Loss on impairment
Capital expenditure

Department
store

Super
marketWholesale

Other$8,527,727
21,2768,549,116
8,328,106$221,000$1,286,504
49,341
1,335,855
1,324,558$11,297$813,352
77,538890,901
854,381$36,520$6,948,410
124,987
34,894
103,670$450,189
9,365
9,856
13,434$293,498
1,043
−
378

Eliminationor corporate

Consolidated$584,848
352,551
937,409911,246$26,153$−(500,838)(500,838)(493,058)$(7,770)$11,212,453−
11,212,453
10,925,233$287,210$1,439,812
2,791
1,943
15,663$(1,191,882)(2,658)(143)(2,127)$7,940,047
135,538
46,560131,040

Notes:(1) As discussed in the note 2(h), certain subsidiaries changed the depreciation method from the declining-balance method to thestraight-line method eﬀective the year ended February 28, 2009. The eﬀect of this change was to decrease operating expenses ofDepartment store,
Super market,
Wholesale and Other by ¥1,200 million ($12,269 thousand), ¥30 million ($307
thousand), ¥15 million ($153 thousand) and ¥50 million ($511 thousand), respectively, and accordingly, operating income
increased by the same amount.
(2) As discussed in the note 2(h), pursuant to the amendment to the Corporate Tax Law, the salvage value of the assets which were
fully depreciated based on the Corporate Tax Law before the amendment is depreciated equally over ﬁve years starting from theyear ended February 28, 2009. The eﬀect of this change was to increase operating expenses of Department store,Supermarket, Wholesale and Other by ¥667 million ($6,819 thousand), ¥54 million ($552 thousand), ¥4 million ($41 thousand)and ¥10 million ($102 thousand), respectively, and accordingly, operating income decreased by the same amount.

(b) Geographic segment information
Geographic segment information is not disclosed, due to sales and total assets of overseas subsidiaries not being material compared toconsolidated sales and consolidated total assets, respectively.

(c) Information for overseas sales
Information for overseas sales is not disclosed, due to overseas sales not being material compared to consolidated sales.

17 RELATED PARTIES
There were no signiﬁcant transactions and balances with related parties as of and for the years ended February 28, 2009 and February 29,
2008.

67

Group Companies
Department Store Business
The Daimaru, Inc.
Location: 7-1, Shinsaibashisuji 1-chome, Chuo-ku, Osaka 542-8501, Japan
Capital: ¥20,283 million
Investment ratio: 100%
http://www.daimaru.co.jp/

Daimaru Osaka Shinsaibashi Store

Daimaru LaLaport Yokohama Store

Daimaru Osaka Umeda Store

Daimaru Urawa Parco Store

Daimaru Tokyo Store

Daimaru Yamashina Store

Daimaru Kyoto Store

Daimaru Shinnagata Store

Location: 79, Shijo Takakura, Shimogyo-ku, Kyoto 600-8511, Japan
Phone: +81-75-211-8111
Opened (Present location): October 1912

Location: 5-1, Wakamatsu-cho 5-chome, Nagata-ku, Kobe 653-0038, Japan
Phone: +81-78-643-2951
Opened: April 1977

Daimaru Kobe Store

Daimaru Suma Store

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

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

Daimaru Sapporo Store

Daimaru Ashiya Store

Location: 7-1, Shinsaibashisuji 1-chome, Chuo-ku, Osaka 542-8501, Japan
Phone: +81-6-6271-1231
Opened (Present location): November 1726
Location: 1-1, Umeda 3-chome, Kita-ku, Osaka 530-8202, Japan
Phone: +81-6-6343-1231
Opened: April 1983
Location: 9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-6701, Japan
Phone: +81-3-3212-8011
Opened: October 1954

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

Location: 1st Fl., LaLaport Yokohama, 4035-1, Ikebe-cho, Tsuzuki-ku, Yokohama 224-0053, Japan
Phone: +81-45-287-5000
Opened: March 2007
Location: 1st Basement Fl., Urawa Parco, 11-1, Higashitakasago-cho, Urawa-ku, Saitama 330-0055, Japan
Phone: +81-48-615-6000
Opened: October 2007
Location: 91, Takehana Takenokaido-cho, Yamashina-ku, Kyoto 607-8080, Japan
Phone: +81-75-255-7365
Opened: October 1998

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

Matsuzakaya Co., Ltd.
Location: 16-1, Sakae 3-chome, Naka-ku, Nagoya 460-8430, Japan
Capital: ¥9,765 million
Investment ratio: 100%
http://www.matsuzakaya.co.jp/

Matsuzakaya Nagoya Store

Matsuzakaya Takatsuki Store

Matsuzakaya Ueno Store

Matsuzakaya Nagoya Station Store

Matsuzakaya Shizuoka Store

Matsuzakaya Toyota Store

Matsuzakaya Ginza Store

Matsuzakaya Okazaki Store

Location: 16-1, Sakae 3-chome, Naka-ku, Nagoya 460-8430, Japan
Phone: +81-52-251-1111
Opened: March 1910
Location: 29-5, Ueno 3-chome, Taito-ku, Tokyo 110-8503, Japan
Phone: +81-3-3832-1111
Opened: April 1768
Location: 10-2, Miyuki-cho, Aoi-ku, Shizuoka 420-8560, Japan
Phone: +81-54-254-1111
Opened: November 1932
Location: 10-1, Ginza 6-chome, Chuo-ku, Tokyo 104-8166, Japan
Phone: +81-3-3572-1111
Opened: December 1924

68

Location: 2-1, Konya-cho, Takatsuki 569-8522, Japan
Phone: +81-72-682-1111
Opened: November 1979
Location: 1-2, Meieki 1-chome, Nakamura-ku, Nagoya 450-8502, Japan
Phone: +81-52-561-1111
Opened: November 1974
Location: 85-1, Nishimachii 6-chome, Toyota 471-8560, Japan
Phone: +81-565-37-1111
Opened: October 2001
Location: 15-4, Koseidori Nishi 3-chome, Okazaki 444-8515, Japan
Phone: +81-564-23-1111
Opened: April 1971

The Hakata Daimaru, Inc.

Kochi Daimaru Co., Ltd.

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

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

The Shimonoseki Daimaru, Inc.

Tottori Daimaru Co., Ltd.

Location: 4-10, Takezaki-cho 4-chome, Shimonoseki 750-8503, Japan
Phone: +81-83-232-1111
Capital: ¥480 million Investment ratio: 100%
http://daimaru.shimonoseki.ne.jp/index.html

Location: 151, Imamachi 2-chome, Tottori 680-8601, Japan
Phone: +81-857-25-2111
Capital: ¥180 million Investment ratio: 14%
http://www.daimaru-tottori.co.jp/

Supermarket Business

Wholesale Business

Peacock Stores Ltd.

Daimaru Kogyo, Ltd. (Wholesale and import-export business)

Location: Daimaru Core Bldg., 18-11, Kiba 2-chome, Koto-ku, Tokyo 135-8510, Japan
Phone: +81-3-3630-1511
Capital: ¥2,550 million Investment ratio: 100%
http://www.peacock.co.jp/

Location: Yushutsu Seni Kaikan, 4-9, Bingo-machi 3-chome, Chuo-ku, Osaka 541-0051, Japan
Phone: +81-6-6205-1000
Capital: ¥1,800 million Investment ratio: 100%
http://www.daimarukogyo.co.jp/

Other Businesses
J. Front Design & Construction Co., Ltd.

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

Location: 2nd & 4th Fls., Shingu Bldg., 4-2, Toyo 2-chome, Koto-ku, Tokyo 135-0016, Japan
Phone: +81-3-5665-1800
Location: 5th & 6th Fls., Ueyama Bldg., 1-3, Minamisemba 2-chome, Chuo-ku, Osaka 542-0081, Japan
Phone: +81-6-4705-6200
Capital: ¥100 million Investment ratio: 100%
http://www.jfdc.co.jp/

Location: O s 605, ATC Bldg., 1-10, Nankokita 2-chome, Suminoe-ku, Osaka 559-0034, Japan
Phone: +81-6-6615-5285
Location: Daimaru Core Bldg., 18-11, Kiba 2-chome, Koto-ku, Tokyo 135-8510, Japan
Phone: +81-3-3820-7330
Capital: ¥450 million Investment ratio: 100%
http://www.shoukaken.jp/

DHJ Co, Ltd. (Wholesale and retail of furniture)

Sakae Printing Co., Ltd. (Printing)Location: 34-10, Toyosato-cho, Neyagawa 572-0071, Japan
Phone: +81-72-828-2256
Capital: ¥180 million Investment ratio: 100%
http://www.drexel.co.jp/

Location: 158, Sunami-cho, Minato-ku, Nagoya 455-0056, Japan
Phone: +81-52-652-1251
Capital: ¥100 million Investment ratio: 100%
http://www.sakaeprint.co.jp/(Design and construction contracting and manufacture and sale of furniture)

The Daimaru Home Shopping, Inc. (Direct marketing)(Merchandise test and quality control)

Matsuzaka Service Co., Ltd.

(Building maintenance, store decoration, parking management and staﬃng service)

Location: 4th Fl., Higashikobe Center Bldg., 6-26, Motoyama Minamimachi
8-chome, Higashinada-ku, Kobe 658-0015, Japan
Phone: +81-78-441-8800
Capital: ¥100 million Investment ratio: 100%
http://www.daimaru-lim.co.jp/

Location: 2nd Annex to Matsuzakaya Ginza Store, 9-9, Ginza 5-chome, Chuo-ku, Tokyo 104-0061, Japan
Phone: +81-3-3572-8611
Capital: ¥100 million Investment ratio: 100%
http://www.matsuzaka-service.co.jp/

J. Front Foods Co., Ltd. (Restaurant)

Daimaru COM Development Inc. (Real estate leasing and tenant service)

Location: 2nd Fl., Daimaru Kitasumiyamachi Bldg.
7-3, Nishishinsaibashi 1-chome, Chuo-ku, Osaka 542-0086, Japan
Phone: +81-6-6281-1125
Capital: ¥100 million Investment ratio: 100%
http://www.j-frontfoods.co.jp/

Location: 2nd Fl., Daimaru Kitasumiyamachi Bldg.
7-3, Nishishinsaibashi 1-chome, Chuo-ku, Osaka 542-0086, Japan
Phone: +81-6-6245-8481
Capital: ¥50 million Investment ratio: 100%

Dimples Co., Ltd. (Staﬃng service)
Location: 22nd Fl., Osaka Ekimae 4th Bldg.
11-4, Umeda 1-chome, Kita-ku, Osaka 530-0001, Japan
Phone: +81-6-6344-0312
Capital: ¥90 million Investment ratio: 100%
http://www.dimples.co.jp/

JFR Card Co., Ltd. (Credit service)
Location: 4-10, Minamisemba 4-chome, Chuo-ku, Osaka 542-8551, Japan
Phone: +81-6-6243-3140
Capital: ¥100 million Investment ratio: 100%
http://www.jfr-card.co.jp/

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

JFR Oﬃce Support Co., Ltd. (Business processing)
Location: Daimaru Kitasumiyamachi Bldg.
7-3, Nishishinsaibashi 1-chome, Chuo-ku, Osaka 542-0086, Japan
Phone: +81-6-6281-5040
Capital: ¥10 million Investment ratio: 100%

Daimaru Lease & Service Co., Ltd. (Leasing and parking management)
Location: 4-10, Minamisemba 4-chome, Chuo-ku, Osaka 542-8551, Japan
Phone: +81-6-6282-1233
Capital: ¥30 million Investment ratio: 100%

Angel Park Co., Ltd. (Parking)Location: 16-10, Sakae 3-chome, Naka-ku, Nagoya 460-0008, Japan
Phone: +81-52-261-5745
Capital: ¥400 million Investment ratio: 49.8%
http://www.angelpark.co.jp/

Central Park Building Co., Ltd. (Parking and real estate leasing)
Location: 15-6, Koseidori Nishi 3-chome, Okazaki 444-0059, Japan
Phone: +81-564-23-1321
Capital: ¥100 million Investment ratio: 85.7%
http://www.celbi.jp/

The Daimaru Tomonokai, Inc. (Special prepayment-based transactions)
Location: 4-10, Minamisemba 4-chome, Chuo-ku, Osaka 542-0083, Japan
Phone: +81-6-6281-9013
Capital: ¥100 million Investment ratio: 100%
http://www.daimaru.co.jp/tomonokai/

Matsuzakaya Tomonokai Co., Ltd. (Special prepayment-based transactions)
Location: 16-1, Sakae 3-chome, Naka-ku, Nagoya 460-0008, Japan
Phone: +81-52-264-7711
Capital: ¥50 million Investment ratio: 100%
http://www.matsuzakaya.co.jp/honten/tomonokai/index.html
69Locations of Daimaru and Matsuzakaya Department Stores

Daimaru Sapporo

Daimaru Kyoto

Daimaru Yamashina

Matsuzakaya Takatsuki

Daimaru Ashiya
Daimaru Suma
Daimaru
Shinnagata

Daimaru Osaka Umeda
Daimaru Osaka Shinsaibashi
Daimaru Kobe

Matsuzakaya Nagoya
Matsuzakaya Nagoya Station
Tottori Daimaru(Non-consolidated)

Shimonoseki Daimaru
Hakata Daimaru
Fukuoka Tenjin
Matsuzakaya Shizuoka
Matsuzakaya Toyota
Matsuzakaya Okazaki
Daimaru
Urawa Parco
Kochi Daimaru

Hakata Daimaru
Nagasaki

Daimaru
70

Matsuzakaya

Matsuzakaya
Ueno
Matsuzakaya
Ginza

Daimaru Tokyo

Daimaru
LaLaport Yokohama

■ Daimaru Department Stores

Daimaru LaLaport Yokohama（Floor space: 3,840㎡）

Daimaru Osaka Shinsaibashi（Floor space: 37,490㎡）

Daimaru Kyoto

Daimaru Urawa Parco

Daimaru Osaka Umeda

Kochi Daimaru（Floor space: 16,068㎡）

Daimaru Kobe

Daimaru Yamashina

Daimaru Tokyo

Daimaru Ashiya（Floor space: 4,300㎡）（Floor space: 50,656㎡）（Floor space: 9,260㎡）（Floor space: 34,000㎡）

Shimonoseki Daimaru（Floor space: 23,912㎡）（Floor space: 50,830㎡）（Floor space:4,000㎡）（Floor space: 40,416㎡）

Daimaru Suma

（Floor space: 13,076㎡）

Daimaru Sapporo（Floor space: 45,000㎡ )Daimaru Shinnagata（Floor space: 9,091㎡）

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

Tottori Daimaru（Floor space: 13,637㎡）

Hakata Daimaru Nagasaki（Floor space: 9,176㎡）■ Matsuzakaya Department Stores

Matsuzakaya Nagoya Station（Floor space: 16,521㎡）

Matsuzakaya Nagoya（Floor space: 86,758㎡）

Matsuzakaya Okazaki（Floor space: 11,429㎡）

Matsuzakaya Shizuoka（Floor space: 25,452㎡）

Matsuzakaya Toyota（Floor space: 18,220㎡）

Matsuzakaya Ueno

（Floor space: 35,213㎡）

Matsuzakaya Ginza（Floor space: 25,352㎡）

Matsuzakaya Takatsuki（Floor space: 20,642㎡）■ Overseas Offices
New York Oﬃce

Milan Oﬃce

52 Vanderbilt Avenue, #904 New York, N.Y. 10017, U.S.A.
Phone : +1-212-681-8725

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

Paris Oﬃce

Shanghai Oﬃce

267, Boulevard Pereire, 75017 Paris, France
Phone : +33-1-4574-2151

14-D Xin Hua Lian West Tower 775 Huai Hai Zhong Lu, Shanghai 200020, China
Phone : +86-21-6445-0742
Aviation Center Rm-323, 1600 Nanjing Rd(W), Shanghai 200040, China
Phone : +86-21-6248-1538

London Oﬃce
20 Hanover Square, London W1S 1HZ, UK
Phone : +44-20-3178-4606

71

Share Information■ Status of Shares（As of February 28, 2009）
Number of share authorized : 2,000,000,000 shares
Number of share issued: 536,238,328 shares

Stock code

: 3086

Stock exchange listings: Tokyo, Osaka and Nagoya

Transfer agent: Mitsubishi UFJ Trust and Banking Corporation

Number of shareholders: 74,195

Number ofshares held

Shareholding
ratio

1 Nippon Life Insurance Company

28,906

5.39

2 Japan Trustee Services Bank, Ltd. (Trust Account 4G)

26,3144.90

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

25,580

4.77

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

25,074

4.67

5 The Bank of Tokyo-Mitsubishi UFJ, Ltd.

17,903

3.33

6 The Dai-ichi Mutual Life Insurance Company

11,5642.15

7 Daimaru Kyoei Supplier Shareholding Association

8,745

1.63

8 Tokio Marine & Nichido Fire Insurance Co., Ltd.

8,369

1.56

9 Employee Shareholding Association of J. Front Retailing

7,992

1.49

10 The Sumitomo Trust and Banking Co., Ltd.

7,722

1.44

Major shareholders(1,000 shares)(%)

Treasury stock

Distribution by shareholder type

(Persons)

1.37%

Number ofsharesPercentage(1,000 shares)(%)

Financial institutions

85

220,024

41.03

Financial instruments firms

48

4,411

0.82

Other companies

867

50,596

9.44

Foreign companies

371

75,446

14.07

72,823

178,430

33.27

1

7,329

1.37

Individuals and others
Treasury stock72

Number ofshareholders

Individuals
and others

Financial
institutions

33.27%

41.03%

Foreigncompanies

14.07% 9.44%
Other
companies

Financial
instruments
firms

0.82%