Results Presentation for
Fiscal Year Ended February 29, 2020

April 13, 2020

J. Front Retailing Co., Ltd.
YAMAMOTO Ryoichi
President and Representative Executive Officer
Create and Bring to Life “New Happiness.”We would like to express our heartfelt sympathy
for all affected by COVID-19 and all concerned.

1

New Management (as of May 28, 2020)【Oversight function】
Director and Chairperson of Board of Directors

YAMAMOTO Ryoichi【Execution control function】
Director, President and Representative Executive Officer

YOSHIMOTO Tatsuya

Director and Senior Managing Executive Officer
President and Representative Director
Daimaru Matsuzakaya Department Stores Co. Ltd.

SAWADA Taro

Director and Senior Managing Executive Officer
Director, President and Representative Executive Officer
PARCO CO., LTD.

MAKIYAMA Kozo

2

Today’s Agenda

Ⅰ． FY2019 Results
Ⅱ． 1H/Full FY2020 Forecast

Ⅲ． Review of Promotion System for
Medium-term GrowthBusiness forecasts in this document have been calculated based on information on the impact of the spreadof COVID-19 we have at the end of March. Customer traffic is expected to decrease mainly in the
Department Store Business and the PARCO Business and these impacts are expected to continue mainly in
1Q and through 1H and full fiscal year. However, these forecasts may change considerably depending on
when the pandemic will actually end. In case we need to revise our business forecasts in light of future
trends in business performance, we will disclose promptly.

3

FY2019 Results (IFRS)

4Consolidated P/L (IFRS)Business profit was below forecast mainly in Department Store and PARCO partly affected byrecord warm winter and COVID-19
Operating profit was affected by unplanned increase in other expenses including loss onretirement of fixed assets and impairment
Year-end dividend is ¥18 per share, resulting in annual dividend of ¥36 combined with interim
dividend, up ¥1 compared to previous year
(Millions of yen, %)Fiscal year ended
February 29, 2020

Results

YoY
Change% change

Vs October forecast
Change% change

Gross sales

1,133,654

8,501

0.8

(33,346)(2.9)

Revenue

480,621

20,781

4.5(11,379)(2.3)

Gross profit

206,953(5,443)(2.6)(7,447)

(3.5)

SGA

161,590(5,292)(3.2)(3,310)(2.0)

Business profit

45,363

(151)

(0.3)

(4,137)(8.4)

Other operating
incomeOther operating
expenses

8,663

5,426

167.6

1,463

20.3

13,740

5,880

74.8

4,040

41.7

Operating profit

40,286

(605)

(1.5)

(6,714)(14.3)

Profit attributable toowners of parent
Dividend per share(Yen)

21,251(6,107)(22.3)(4,549)(17.6)(Annual) 36

1

－

－

－

5

Segment Information (IFRS)
Department Store: Both inbound and domestic consumption stalled partly affected byrecord warm winter and COVID-19
PARCO:
Weak performance of rural stores and NEUVE A in spite of openingof Shibuya PARCO and Kinshicho PARCO
Real Estate:
Affected by cost increase resulting from transfer of north wing of
Shinsaibashi store in spite of strong performance of Ginza Six
Credit and Finance: Above plan in spite of cost increase partly due to employment ofspecialized HRs(Millions of yen, %)Business profit
Fiscal year ended
February 29, 2020

Operating profit
Vs
Oct forecast

YoY
Results

Vs
Oct forecast

YoY
Results

Change % change Change

Change % change Change

Department Store

26,461

1,307

5.2(2,039)17,625(6,569)(27.2)(4,075)

PARCO

8,582

(141)

(1.6)

(1,918)

10,823

5,378

98.7

(1,677)

Real Estate

4,364

(698)

(13.8)

(236)

6,725

2,061

44.2

(275)

Credit and Finance

1,901

(437)

(18.7)

201

1,908

(452)

(19.1)

158

Other

4,926

1,321

36.7

(74)

4,700

1,193

34.0

(200)

Total

45,363

(151)

(0.3)

(4,137)40,286

(605)

(1.5)

(6,714) 6

Segment Information <Business Profit> (IFRS)(Millions of yen)

Business profit analysis

Department
Store△2,039PARCO
Department
Real
PARCO EstateStore1,307 △ 141△ 698

CreditandFinance△ 1,918

Other Adjustment
1,321 △ 1,502△ 437

Adjustment

Other

△ 73

△ 74

CreditRealandEstateFinance△ 236
201

49,50045,51445,363

Down ¥151 mn (0.3%) YoY

LY
results¥4,137 mn (8.4%) below Oct forecast

FY2019results

Oct
forecast 7

Segment Information <Operating Profit> (IFRS)(Millions of yen)

Operating profit analysis
Department
Store△ 4,075

Department
Store△ 6,569 PARCO
5,378

CreditRealandAdjustment
Estate Finance Other
1,193 △ 2,213
2,061 △ 452

Adjustment Other
△ 200
△ 646

CreditandReal
Finance Estate
158
△ 275

PARCO
△ 1,677

47,00040,89140,286

Down ¥605 mn (1.5%) YoY

LY
results¥6,714 mn (14.3%) below Oct forecast

FY2019results

Oct
forecast 8

Segment Performance (1) Department Store Business (IFRS)In addition to sluggish consumption after tax hike, COVID-19 caused heavy damage
to both inbound and domestic consumption
Business profit increased due to cost reduction such as significant decrease inretirement benefit expenses resulting from extension of retirement age
Department
Store Business gross sales (YoY % change)
40.0

30.9

30.0
20.0
10.0

1.0

0.9

0.8

0.5

Mar

Apr

May

Jun

0.0

▲ 10.0▲3.5 ▲0.3
Jul▲ 8.8 ▲ 5.9 ▲ 5.2

Aug

Sep

▲ 20.0

Oct

Nov

Dec

Jan

▲18.7

▲ 30.0Feb▲21.5(Millions of yen, %)Fiscal year ended
February 29, 2020

Results

YoY
ChangeVs October forecast% change

Change% change

Gross sales

715,039(28,301)(3.8)(22,661)(3.1)

Revenue

263,748(11,693)(4.2)(7,852)

(2.9)

SGA

129,127(7,910)(5.8)(1,753)(1.3)

Business profit

26,461

1,307

5.2(2,039)(7.2)

Operating profit

17,625(6,569)(27.2)(4,075)(18.8)
9Daimaru Matsuzakaya Department Stores P/L (IFRS)Sales rapidly slowed down in 4Q partly affected by record warm winter and COVID-19
Business profit was below Oct forecast mainly due to decrease in gross profit for thereason above
Operating profit was below Oct forecast due to increase in one-time expenses such as
loss on retirement(Millions of yen, %)Fiscal year ended
February 29, 2020

Department StoreYoY% change

Results

Real Estate

Changevs Octforecast

YoY% change

Results

Changevs Octforecast

Results

YoY% change

Changevs Octforecast(3.8) (19,231)

17,8324.0(168)

656,152(3.6) (19,348)

6,768

59.9

268

17,6994.7(101)

24,217

15.9

117

Revenue

236,341(4.0)(6,059)17,793

4.7(107)

253,886(3.5)(6,114)Gross profit

138,790(3.9)(3,110)

7,368

(0.7)

(532)

145,910(3.8)(3,590)SGA

113,785(6.5)(1,715)

3,004

27.4

(296)

116,543(5.8)(1,957)

Business profit

25,005

9.7(1,395)4,364(13.8)(236)

29,367

5.4(1,633)Operating profit

17,831(18.4)(3,669)

6,725

44.2

(275)

24,555(7.4)(3,945)

-

-

-

-

-

-

15,578(16.2)(2,622)Gross sales[Of which: real estate rental income]

Profit638,569

Total
Daimaru Matsuzakaya
Department Stores

10

Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)
Mainly impact ofapplication of IFRS 16

FY2019
SGA analysis

Increase in
Increase
Decrease inoperational costs
in adrent expenses
Increase in
expenses △206 △ 16,791
depreciation
1,252
1,247 △ 1,680
Decrease in△ 5,367
14,313
packing and
Decrease in
Decrease intransportation
personnel
other SGA
expenses
expenses(Millions of yen)

Increase
Decrease in
Decrease inin adoperational costs
rent expenses
expenses △ 1,044
108
△ 202
422
△ 973 △ 298
27
Increase indepreciation

Decrease inother SGA

Increase inpacking andtransportation
expenses

Decrease inpersonnel
expenses

123,774
Mainly decrease inretirement benefit
expenses resulting
from extension ofretirement age

Commissions,
supplies, etc.
116,543 Commissions,
supplies, etc.
Mainly increase in costs of system forpayment processing in front of customers

Mainly decrease inretirement benefit
expenses resulting
from extension ofretirement age

118,500

Includes extra depreciationof ¥1.47 bn of north wing of
Shinsaibashi store¥1,957 mn (1.7%) below Oct forecast

Down ¥7,231 mn (5.8%) YoY
LY
results

FY2019results

Oct
forecast

11

Daimaru Matsuzakaya Department Stores Other Expenses (IFRS)FY2019Other expenses analysis
Loss ondisposal of
fixed
assetsShinsaibashi store’scontribution for
subway stationpassage construction
Expansion ofvoluntary early
retirement program 883

963

Loss onbusinessliquidation
△ 5

781

Loss onbusinessliquidation△326△ 1,019

Other

Other

Loss on
1,926 retirementof fixed
assets649
Demolition of exteriorwall of north wing of
Shinsaibashi store

781(Millions of yen)

Loss on disposalof fixed assets△ 1,255

Loss onretirementof fixed
assets1,926

Demolition of exteriorwall of north wing of Revision of retirement
Shinsaibashi store benefit plan
649

△ 697

883

Shinsaibashi store’scontribution for subway
1,673
station passage
construction
Expansion ofvoluntary early
retirement program

8,941

Revision of retirement
benefit plan
6,000

2,173

1,897

LY
results

Up 7,044 mn (371.1%) YoY¥2,941 mn (49.0%) above Oct forecast

FY2019results

Oct
forecast

12Segment Performance (1) Department Store Business

Daimaru Matsuzakaya Department Stores: Main Building of Daimaru Shinsaibashi Store

Main building of Daimaru Shinsaibashi store opened as new “hybrid business model”
in September 2019
Opened on Sep 20, 2019
Total transaction volume+15.0 %
Customer traffic+11.1 %
Purchase by young people(aged 25 to 34)+４0 %*The figures above are total for the period from Sep 2019 to Jan 2020.

Speed up to expand this business model to other flagship stores

13

Segment Performance (2) PARCO Business (IFRS)
Boosted by opening of Shibuya PARCO, Kinshicho PARCO, Kawasaki ZERO GATE, etc.
Revenue equal to sales of reserve floor space of Shibuya PARCO (¥21.7 bn) was
recognized as cost
Business profit slightly decreased due to weak performance of some rural stores and NEUVE A
Operating profit significantly increased YoY mainly in reaction to loss on store closure recorded
in previous year
(Millions of yen, %)Fiscal year ended
February 29, 2020

YoY
Results

ChangeVs October forecast% change

Change% change

Gross sales

311,107

32,154

11.5(9,093)(2.8)

Revenue

112,212

22,24324.7(1,888)

(1.7)

SGA

19,837

453

2.3

(44)

(0.2)

Business profit

8,582

(141)

(1.6)

(1,918)(18.3)

Operating profit

10,823

5,378

98.7

(1,677)(13.4)
14

Segment Performance (2) Parco Business

Shibuya PARCO
New Shibuya PARCO as a symbol of PARCO brand made its grand opening inNovember 2019
Contents on higher floors
attract foot traffic

Opened on Nov 22, 2019

Expanded luxury brands
Unconventional floor
composition and zones

Newly curated sales areas

Succeeded in bringing ina wide age range of customers

Apply achievements in other PARCO stores to suit their characteristics 15

Segment Performance(3) Real Estate (4) Credit and Finance (5) Other (IFRS)Real Estate:

Business profit decreased due to cost increase resulting from transfer ofnorth wing of Shinsaibashi store to Real Estate Business segment
Credit and Finance: Revenue increased due to increase in external merchant fees but cost
increased partly due to strengthening of organization
Other:
Driven by J. Front Design & Construction with interior construction of mainbuilding of Shinsaibashi store(Millions of yen, %)Real Estate
Fiscal year
ended
Feb 29, 2020

Credit and FinanceVs Octforecast Results

YoY
Results%Other

Vs Octforecast

YoY%

Change change Change

Change change Change

Vs Octforecast

YoY
Results%

Change change Change

Gross
sales

17,832684

4.0(168) 12,187

290

2.4

(213)

132,645 11,622

9.6 (2,355)

Revenue

17,793798

4.7(107) 10,719

146

1.4

(161)

123,275 19,025

18.2

1,575

SGA

3,004

647

27.4

(296)

8,817

582

7.1

(363)

26,174 1,243

5.0

(468)

Business
profit4,364(698) (13.8)

(236)

1,901

(437) (18.7)

201

4,926 1,321

36.7

(74)

Operatingprofit

6,725 2,061

(275)

1,908

(452) (19.1)

158

4,700 1,193

34.0

(200)

44.2

16

Consolidated B/S and CF (IFRS)
Total assets increased partly due to recognition of “right-of-use assets” on balance sheet
Interest-bearing liabilities increased ¥304.3 bn YoY partly due to recognition of “leaseliabilities” and TOB fundFree cash flows were positive at ¥23.7 bn, slightly negative if impact of IFRS 16 is excluded<Consolidated statements of financial position><Cash flows>(Millions of yen)

(Millions of yen, %)Fiscal year ended
February 29, 2020

Results

YoYchangeFiscal year ended
February 29, 2020

Results

YoYchangeTotal assets

1,240,308

210,735

Operating cash flows

73,35838,488[Of which: right-of-use assets]

202,516

202,516

Investing cash flows(49,559)(22,723)

Interest-bearing liabilities

478,773304,395

Free cash flows

23,79915,766[Of which: lease liabilities]

220,497

220,497

Financing cash flows(14,829)

6,445

Equity attributable toowners of parent

387,188(25,512)

Ratio of equity attributableto owners of parent

31.2(Ratio of equity to total assets)

(率差）
(RD)

(8.9)
17

1H/Full FY2020 Forecast

18

Major Business Risks
Negative risk (threat)

Positive risk (opportunity)

Direction for considering how to address risk・Spread of COVID-19
・Opportunity loss from business suspension
・Increase in cost to repair damage to facilities
and core systems

・Growing need for minimizing/avoiding risk
・Increase of existence value as
infrastructure in disasters
・Progress of work style reform

・Promote redevelopment of BCP plan, establishmentof HQ, strengthening of drills, investment in aging
infrastructure and stocking of disaster supplies
・Create backup center for important data
・Promote telework and online meetings by constructing
IT infrastructure

Risk associatedwith advanced
technologies

・Attack by digital disruptors
・Progress of D2C・Sophistication of services andstreamlining of operations using
technologies

・Maximize lifetime value by building integrated
customer database
・Provide new customer experiences using VR/AR・Improve convenience by introducing new
payment methods

Risk associatedwith the progressof sharing
economy・Expansion of C2C
・Decline of real stores due to decreased
product sales

・Development of new business from theperspective of sharing

・Consider new sharing service business of
products, places, skills, etc.
・Develop services that lead to newentertainment and regional development by
cloud funding

Risk associatedwith growing
importance of
ESG

・Loss of consumers, deteriorating relations
with local communities and divestment due
to poor reputation caused by delayed
response

・Enhancement of reputation by appropriate
response
・Enhancement of competitiveness using
diverse HRs
・Reinforcement of business base with hightransparency

・Promote highly transparent management in the
Company with Three Committees (Nomination,
Audit and Remuneration Committees)
・Obtain certification
・Actively disclose information and improve
quality of dialogue

・Loss of senior market due to delayed
response

・Emergence of new markets in the era ofmultiple stages
・Expansion of active senior market due toincreased healthy life expectancy

・Develop new products/services using
integrated customer database・Operate high quality early childhood education
business
・Consider service business for the elderly

・Expansion of our strong affluent market

・Develop products/services with new asset
value that meets diversified interests of theaffluent
・Strengthen touch points with the affluent
combining online magazines, our websites andreal stores・Recreate sales spaces for the middle class thatmeet new customer needs

Risk associatedwith disasters, etc.

Risk associatedwith changes incustomers, lowbirthrate andlongevity

Risk associatedwith polarizedincome・Further shrinkage of middle class market

19Response to Impact of COVID-19
Spread of COVID-19
Growing tendency to voluntarily
refrain from leaving home
Increasing risk against theability to attract customers
Temporary closing and shorter business hours
Cancellation of big events that
attract many customers

Increasing risk
associated with commuting

Promotion of telework
Active adoption of online meetings

Change/postponement/cancellation of events

Promote initiatives that consider safety of customers and employees andreview of existing operations through “work style reform” to the extent possible
20

Idea on Guidance for FY2020
When COVID-19 will end and how consumption will
recover remain uncertain

Maximize consideration for “risks” that are expected tohave negative impact on the Company’s sales

Overhaul nonessential costs and investments
on a zero basis
21

Consolidated Forecast P/L (IFRS)The entire Group, mainly Department Store and PARCO, is expected to struggle due toimpact of COVID-19
Gross sales and operating profit are expected to decrease ¥165 bn and ¥3.3 bn, respectively,
affected by COVID-19
Annual dividend has not yet been decided and will be decided comprehensively in view of
future progress of performance(Millions of yen, %)Fiscal year ending
February 28, 2021

1H forecast

YoY
Change % change

Full year
forecast

YoY
Change % change

1,010,000 (123,654)

Gross sales

437,500(108,341)(19.8)(10.9)

Revenue

182,000(43,664)(19.3)

411,000(69,621)(14.5)

Gross profit

82,800(21,859)(20.9)

183,600(23,353)(11.3)

SGA

80,300

(615)

(0.8)

166,600

5,010

3.1

Business profit

2,500(21,243)(89.5)

17,000(28,363)(62.5)

Other operating income

500(3,597)(87.8)

800(7,863)(90.8)

Other operating expenses

3,000

334

12.5

5,800

(7,940)(57.8)

Operating profit

0(25,175)‐

12,000(28,286)(70.2)

Profit attributable toowners of parent(1,000)(15,367)‐

5,000(16,251)(76.5)

22

Full Year Forecast P/L (IFRS) Difference from Original Plan
500
+5.1

+2

450
▲1.7
400

250
200
150
100
50

▲1
▲0.7: Shinsaibashi northwing cost▲0.６: Upfront cost fordevelopment

350
300

+0.1
▲1.3

FY2019results
operatingprofit40.2

FY2019resultsbusiness
profit45.3(Billions of yen)

▲0.９: JF Design & Construction(reaction to construction of
Shinsaibashi store in LY, etc.)＋2: Shinsaibashi(full operation of main building and extra
depreciation of north wing in LY)＋3.8: Revenue increase by floor
renovation, gaisho, etc.
(incl. reaction to impact of COVID-19 in Feb LY)▲4.1: Retirement benefits and revision ofpension plan in LY+1.7: Increase in▲0.４: Increase in investment in safety
operating income
and security, etc.
(merchant fees ＋13
annual membership ＋8+1.5: Full operation of Shibuya PARCO
point revision, etc. ▲4)+0.６: Full operation of Shibuya▲1.6: Card renewal adentertainment hub
expenses, increase+0.３: Make NEUVE A profitablein operation cost,▲0.４: Preparation of Shinsaibashi
employment of HRs
north wing, etc.
with high potential,
etc.

Main reasons for
SGA increase
Change in SGA: Original plan – LY results ・PARCO ＋1.1
・Department Store ＋6.8
New development, transfer＋4.1: Revision of retirement benefitof Real Estateplan in LY
・Credit and Finance ＋1.6
＋0.８: Investment in safety and security Card renewal＋0.５: Investment in renovation＋0.３: ESG
＋1: Other (logistics cost hike, etc.)▲26.8: Department Store▲4: PARCO▲0.2: Real Estate▲0.3: Credit and Finance▲1.7: OtherFY2020originalplanbusiness
profit
43.5
▲1.8

YoY

＋1.2: Revenue measures＋5.3: Cost measures
・HR measures
・Investment reduction
・Ad expenses reduction
・Other controllable cost reduction
・Decrease in cost proportional to sales

▲33

+6.5
FY2020forecast
business
profit

17
▲28.3
YoY

FY2020forecast▲5

Operatingprofit

12
▲28.2
YoY

0

23

Segment Information Forecast (IFRS)
Department Store: Strictly project sales mainly for 1H, expect operating loss in 1H,
ensure profit in full year
PARCO:
Expect sluggish entertainment but contribution of full operation of Shibuya
PARCO
Real Estate:
Expect cost related to “north wing” of Shinsaibashi store and percentage
rent decrease due to sales decrease(Millions of yen, %)Business profit
Fiscal year ending
February 28, 2021

Operating profit

1H
YoY
Full year
YoY
1H
Full year
YoY
YoY
forecast % change forecast % change forecast % change forecast % change

Department Store(3,500)‐4,500(83.0)(4,700)‐2,300(87.0)

PARCO

2,700

(49.8)

6,600(23.1)

2,400(59.1)

6,000(44.6)

Real Estate

2,400(28.8)

2,900(33.6)

2,200(61.6)

2,500(62.8)

Credit and Finance

230(78.3)

1,700(10.6)

230(78.9)

1,700(10.9)

Other

900(57.0)

2,650(46.2)

900(55.2)

2,580(45.0)

Total

2,500

(89.5)

17,000(62.5)

0‐

12,000(70.2)
24

Changes of Each Segment（IFRS）(Millions of yen)

Business profit

Department
Store△ 21,961

Operating profit
Department
Store△15,325

PARCO△1,98245,363

PARCO
Real
Estate△1,464CreditandFinance Other△201 △ 2,276 Adjustment△ 477△4,82340,286Real
Estate△4,225CreditandFinance Other△ 208△ 2,120 Adjustment△ 1,584

17,00012,000

LY
results

FY2020forecast

LY
results

FY2020forecast

25

Daimaru Matsuzakaya Department Stores Forecast P/L (IFRS)(Millions of yen, %)Fiscal year ending
February 28, 2021

Department Store
Forecast

Total
Daimaru Matsuzakaya
Department Stores

Real estate

YoY% change

Forecast

YoY% change

Forecast

YoY% change244,700(22.7)

8,600

(3.1)

253,200(22.2)[Of which: real estate rental income]

4,500

99.2

8,600

(1.8)

13,000

19.3

Revenue

90,600(23.3)

8,600

(2.5)

99,100(21.8)

Gross profit

53,000(23.5)

4,200(10.2)

57,100(22.7)

SGA

56,000

(3.6)

1,800

38.0

57,700(2.7)

Business profit(3,000)‐2,400(28.8)(600)‐

Operating profit(4,100)‐2,200(61.6)(1,900)‐Gross sales

564,000(11.7)

20,00012.2

583,800(11.0)

9,200

35.9

20,00013.0

29,00019.8

Revenue

207,200(12.3)

20,00012.4

227,000(10.6)

Gross profit

121,900(12.2)

5,900(19.9)

127,600(12.5)

SGA

117,700

3.4

3,000

(0.1)

120,500

3.4

Business profit

4,200(83.2)

2,900(33.6)

7,100(75.8)

Operating profit

2,200(87.7)

2,500(62.8)

4,700(80.9)
26

Gross sales

1H[Of which: real estate rental income]

Full year

Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)<FY2020 Daimaru Matsuzakaya Department Stores SGA analysis>(Millions of yen)

Other
Personnel
expenses

4,437

Personnel
expenses
△ 592

△ 251

Rent
expenses△ 33

Packing andtransportation
expensesAd
expenses
△ 611
△ 194

Rent
expenses△113

Packing andtransportation
expenses△

Operational
Other
costs
344

Depreciation

116,543

1H
LY
resultsAd
expenses

71

266

Operational
costs

86

762

287

Depreciation

Increase in computer systemcosts associated with credit card
security measures and cardexchanges between Daimaru
Matsuzakaya and PARCO

192

120,500
Payment of rent expenses of north wing of
Supplies +¥0.2 bn
Shinsaibashi store to Real Estate Business (mainly renewable energy)(Part of north wing is department store)
Repair +¥0.1 bn
Commissions +¥0.1 bn,
etc.
・Reaction to decrease of ¥4.1 bn in retirement benefit expenses
resulting from extension of retirement age in LY +¥4.1 bn
・Placing Shimonoseki Daimaru under direct management,
strengthening of digital HRs, etc. ＋¥0.4 bn, etc.

2H
FY2020forecast

27

Consolidated B/S and CF Forecast (IFRS)
Despite severe outlook for operating CF due to impact of COVID-19, we intend to maximize
decrease in free CF by scrutinizing investment plan, etc. again
Ensure sufficient funds on hand and availability of funding through CP, commitment lines, etc.

We recognize financing and funding will not be significantly affected for the time
being
<Consolidated statements of financial position><Cash flows>(Millions of yen)

(Millions of yen, %)Fiscal year ending
February 28, 2021

Forecast

YoYchangeFiscal year ending
February 28, 2021

Forecast

YoYchangeTotal assets

1,240,000(308)

Operating cash flows

58,000(15,358)[Of which: right-of-use assets]

183,800(18,716)

Investing cash flows(38,000)

11,559Interest-bearing
liabilities

477,500(1,273)

Free cash flows

20,000(3,799)[Of which: lease liabilities]

204,000(16,497)

Financing cash flows(26,000)(11,171)

Equity attributable toowners of parent

386,500(688)

Ratio of equity attributableto owners of parent(率差）

31.2 (RD)0.0(Ratio of equity to total assets)

28

パルコ
事業

百貨店of Promotion System for
Review
事業
Medium-term Growth

百貨店
事業

29

Look Back on Past Three Years (Growth Strategy)
Results/progress

Challenge

Evaluation◆Launched child care business・Established JFR Kodomo Mirai, opened 1st facility◆Invested in only 2 companies to develop new business◆Developed direction for growth of JFR Card. Could not show
the path to growth of JF Design & Construction and Dimples’◆Realization of new businesses other than childcare area◆Review of structure and method of developmentof new business as a group◆Strengthening of HR base and investment of
resources of JF Design & Construction andDimples’×

Urban Dominant(development project)◆Promoted redevelopment projects
・Opened Ginza Six, Ueno Frontier Tower, Shinsaibashi
Daimaru and Shibuya PARCO◆Spread of success factors of Shinsaibashi
Daimaru and Shibuya PARCO to flagship stores

Urban Dominant(Real Estate Business)◆Expanded real estate rental business・Renovated machiya as “Gion Machiya”“Blue Bottle Coffee Kyoto Café” and beauty & health “Bino”(Higashinotoin and Okachimachi)◆Growth strategy of Real Estate Business after
transfer to PARCO

ICT (defense)◆Formulated Group IT governance・Created IT governance definition, policy, regulations, rules◆Developed system to strengthen security◆Employment of HRs specialized in IT fromoutside the Group and development of HRs in
the Group○

ICT (offense)◆Created the Group integrated customer DB (LTS-Hub)◆Developed digital communication base using ICT・Introduced department store smartphone app and gaisho SFA◆Achievement using the Group integrated
customer DB (LTS-Hub)◆Review of core systems△

Innovation of
Department StoreBusiness◆Promoted initiatives to enhance appeal of stores・Appropriate women’s wear area (down 30% vs FY2016)
Total FY2017 to 2019: 7,492 ㎡ (down 15% vs FY2016)
・Newly curated sales areas (Kikiyococho, michi kake)◆Placed Shimonoseki Daimaru under direct management,
renewed Daimaru Ashiya and Suma, closed Daimaru
Yamashina◆Creation of new value of existing stores(development of next generation
merchandise/contents pursuing customer
perspectives/insights)

Innovation of PARCO
Business◆Promoted change of store portfolio
・Opened Shibuya PARCO, Ueno PARCO_ya◆Expanded small commercial business by promoting
development
・Opened ZERO GATE (Sannomiya, Kyoto, Kinshicho,
Harajuku) and SAN-A Urasoe West Coast PARCO CITY

◆Creation of new value of existing stores(reform of store business by spreading successof Shibuya PARCO to other stores)◆Assessment of future growth of Retail Business(NEUVE A)

Major initiatives
Multi Service Retailer(expansion of businessdomain)○Growth strategy

○

△

△

30

Look Back on Past Three Years (Reinforcement of Base)
Major initiatives

Results/progress

Challenge◆Strengthened the Group governance function
・Transition to Company with Three Committees (Nomination,
Audit and Remuneration Committees) (FY2017)◆Strengthened oversight function (Board of Directors) and
execution function, improved accuracy of oversight・Reviewed criteria for submitting agenda items to Board of
Directors
・Evaluated effectiveness of Board of Directors
・Set management rules of Group companies
・Changed from “single-person audit” of Company with Audit& Supervisory Board to “organization audit”◆Strengthened management HR function
・Evaluation of management HRs by third-party organization
・Started to operate new officer remuneration system◆Review of functions of holding company andoperating companies after converting PARCO
into wholly owned subsidiary◆Formulation of capital policy and shareholder
return measures to achieve ROE of 8%Group financial strategy◆Changed mindset about investment recovery to achieve
ROE・Manage companies by phase management
・Revitalized/withdrew from unprofitable businesses◆Sophisticated business management
・Introduced IFRS, applied new lease accounting◆Enhanced communication with investors
・IR by each business (department store, financial service,finance)◆Employment/development of HRs specialized inIT, etc.

Group organization/HR reform◆Employed specialized HRs (11 of 41 were mothers.)◆Developed various systems based on new HR strategy(extension of retirement age, termination of transfer at 55,
revision of retirement benefits / pension plan, time-limited
support for career selection)

ESG initiatives◆Identified materiality issues, formulated various policies
such as Sustainability Policy, Eco Vision and Social Vision◆Set goals for 2030/2050 and promoted initiatives to achieve
them◆Provided/disclosed information through ESG presentations,etc.

◆CSV initiatives
・Promotion of initiatives to enhance corporate
value and increase market cap◆Achievement of goals through steady promotion◆Strengthening of information disclosure

Strengthening of corporate
governanceEvaluation◆Strengthening of governance function ofeach operating company○

Reinforcement of base◆Ensuring of diversity of management HRs◆Clear indication of linkage between ESG
initiatives and operating revenue◆Review of management of revenue forecast◆Continuation/sophistication of business IR◆Effective posting at a group level

○

△
○

31

Changes in “Business Profit” (IFRS)
Our intention in current midterm plan was that business profit would turn up after bottoming
out in FY2019 but business environment drastically changed
In FY2020, impossible to avoid substantial decline in profit levels due to tremendous impact
of COVID-19 and delayed response to changes
Extremely difficult to achieve operating profit target in FY2021, final year of current midterm plan
Consolidated business profit*
Rebuilding of
Shinsaibashi and PARCO,
reaction to explosive
buying by foreign tourists(¥100 mn)

600

Mainly impact
of COVID-19

480

500

445

426

418

Lehman
shock

400

468

455

453

421

309
281

300

186

200

203

216
170

100

0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
forecast*For FY2007 to 2016, “operating profit” under JGAAP is shown.

Current midterm plan

32

(FY)

Progress of Business Portfolio Transformation
Real Estate is steadily growing but Department Store still has a majority share
Balance of business composition of the Group has not been improved,
ability to respond to environmental changes weakens
Composition of “operating profit” (before application of IFRS 16)
FY2016
results
Real
Estate0.8

FY2018results

Credit and
Finance, Other

14.7
PARCO

31.2

FY2021
original plan(final year of current midterm plan)

Credit and
Finance, Other

Department
Store

53.3

Real
EstateCredit and
Finance, Other

16.1

11.4

PARCO

(%)

Department
Store

Real
Estate

59.2

13.3

18.0

Department
Store

44.0

12.0
PARCO

26.0

Need to rebuild structure
to transform business portfolio

33

Changes in Assumptions (1) External EnvironmentMore than expected weakening of middle class,particularly abruptly accelerated shrinkage of apparel market after consumption tax hike

Declining competitiveness of urban flagship storesas well as declining rural stores

Vulnerability of group structure became more visible due to pandemic risk

Upward pressure on costs in IT and ESG, where prompt response is required

Assumptions changed at more than expected “scale” and “speed”
compared to when developing current midterm plan
34

Changes in Assumptions (2) Internal Environment
Important “turning point” of the Group

Converted PARCO into wholly owned subsidiary

Initiatives for dynamic business structural changes
and drastic HR exchanges became possible

Readiness to build framework in which we can aim to maximize
synergy at increased speed is a big plus factor
35

For True “Business Portfolio Transformation”
Overhaul of management/organizational structure
Ambitious goal setting for a long term
Upgrade strategy to bring out the strength of the Group
more than everTerminate current midterm plan in FY2020“Cement a foothold” in FY2020
36

Direction of New Medium-term Business Plan
<Construction of new mid- to long-term plan>
Quantitative goal setting for 10 years later (2030) using KPIs
“Medium-term three-year plan” that will start in 2021 at the core

Management cycle with long-term and quantitative
vision that achieves results during “three-year” term

More “speed”-oriented decision making and “execution”
that leads to results promptly are absolutely necessary37

New Promotion System
Created “New System Review Committee” to generate the Group synergy and promotehighly efficient management

New System Review Committee

Corporate
Subcommittee

Finance
Subcommittee

Administration
Subcommittee

Real Estate
Subcommittee

Created “Medium-term Business Plan Working Group” to give a new clear picture of
the future of the Group

Midterm Business Plan WG

Utilization ofdata

Department
Store Business

SC Real EstateBusiness

FinanceBusiness

Life Business

Future Creation
Business38

Maximize Synergy with PARCO
North wing

New main building

Planned to open in fall 2020

Opened in September 2019

Specialty
shop mall

Daimaru

Embody direction for creating synergy
toward new Medium-term Business Plan

39

Strengthen “Defense” and Prepare for “Offense”
Practice of corporate credo “Service before Profit” = CSVSocialvalue

×Economic
value

Strengthen “defense” in the short termand prepare for “offense” for the future at the same time

Get over crisis and enhance corporate value
in the medium to long term40

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

Create andBring to Life
“New Happiness.”

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