Earnings Results Briefing for theFirst Six Months of the Fiscal YearEnding March 31, 2018
November15 2017
KOMEHYO Co., Ltd.
Securities code: 2780 (Second Section, Tokyo and Nagoya Stock Exchanges)
Corporate Planning Department IR strategy group TEL:+81-52-249-5366
Note:This document is an English translation of a document prepared in Japanese.
Statements in this document that are not historical facts; statements concerning current plans, forecasts,strategies, and opinions of KOMEHYO Co., Ltd. are forward-looking statements subject to various risks anduncertainties.
These statements are prepared based on assumptions of the management of KOMEHYO Co., Ltd. using
currently available information.
Actual results may differ significantly from forecasts due to a variety of factors; therefore, investors should
not place undue reliance upon them.
In addition, this document is not intended to solicit investments. Investors should make investment
decisions at their own discretion.

Overview of Income Statement（ Consolidated ）Consolidated(Millions of yen)

FY20181Q

YoY

FY20182Q

YoY

FY20181H

YoY

Net sales

9,849

107.6％

10,913111.2％

20,763109.5％

Gross profit

2,940

115.8％

2,988

116.5％

5,928

116.1％

Gross profit
margin29.9%+2.2Pt27.4％+1.3Pt28.6％+1.7ptSG&A expenses

2,767

106.6％

2,700

104.8％

5,467

105.7％

Operating income

173－

288－

461

－

Ordinary income

185－

287－

472

－

Net income
attributableto owners ofparent

100－

195

649.2％

295－
1

Overview of Income Statement（ Non-consolidated ）Non-consolidated(Millions of yen)

FY20181Q

YoY

FY20182Q

YoY

FY20181H

YoY

Net sales

8,673

107.7％

9,858

111.6％

18,532109.7％

Gross profit

2,499

116.0％

2,579

115.6％

5,078

115.8％

Gross profit
margin28.8%+2.0Pt26.2％+1.0pt27.4%+1.4ptSG&A expenses

2,401

107.9％

2,360

104.8％

4,762

106.4％

Operating income

97－

218－

315－

Ordinary income

226－

217－

444－

Net income

168－

148

604.0％

317－
2

Operating income decrease factor（ Consolidated ）Operatingincome

Personal
expensesdecrease

Gross profit
Margin increase(Millions of yen)

＋341
1.7Pt

＋1General andadministrative
expenses
increase△264

Marketing cost
increase△31Sales amountincrease+461＋482
An increase in rents of landand buildings primarily due
to stores opening

0△67FY2017 1H

Operating income(+528)

FY2018 1H
3

Gross Profit Margin Trend
A year-on-year improvement resulting from adjustment of inventoryNon-consolidated

Consolidated'17.3 Gross profit margin（％）'18.3 Gross profit margin

32303027.4

28.5'18.3 Gross profit margin

32

29.9

28

'17.3 Gross profit margin

（％）

28.5

28.8

28

26.2

27.7
2626

27.5

27.5

3Q

4Q

26.8

26.1
24

24

22

22

20

20

1Q

2Q

3Q

4Q

25.2

1Q2Q4Profit Margin Trend
Gross profit margin increase, SG&A expenses to sales ratio decrease
Gross profitmargin
SG&A expenses
Ratio (%)

35Consolidated

Operatingmargin(%)

Gross profit margin
SG&A expenses to sales ratio

16

Gross profitmargin
SG&A expenses
Ratio (%)

3530

Gross profit margin

Operatingmargin(%)

SG&A expenses to sales ratio

Operating income margin30.4

Non-consolidated
Operating income margin

1429.427.3

28.6

121430

29.5
28.3

26.5

27.4

1025

26.9

25.6

26.3

86

4.8

5.5

25
24.3

2.2222.526.05.25.8△ 0.4
FY2015 1H FY2016 1H FY2017 1H FY2018 1H-22151084

1.701025.7620415121023.92016△ 0.5
FY2015 1H FY2016 1H FY2017 1H FY2018 1H0-25

Overview of Balance Sheet
An increase in fixed assets (year on year)
due to the opening of new large storesConsolidated
Assets
26,209Cash anddeposits
3,266

27,435
3,445

11,699Products
11,618Other current
Assets 3,227
Non-current
Assets 8,096

3,639(Millions of yen)

Liabilities and Net Assets
27,435
26,209Current
liabilities
5,559
Non-current
liabilities
2,698

Net assets
17,952

6,388

Assets23,314
Cash anddeposits
2,472

24,4002,186

2,724
Products
10,21918,322Other current
Assets 2,817
Non-current
Assets 7,805

8,650

FY2017 1H FY2018 1H

Non-consolidated

FY2017 1H FY2018 1H

10,388

3,192(Millions of yen)

Liabilities and Net Assets
23,314Current
liabilities
3,633
Non-current
liabilities
2,570

Net assets
17,11024,400
4,592

2,516

17,2918,633

FY2017 1H FY2018 1H

FY2017 1H FY2018 1H6Statement of Cash Flows
Cash flows from operating activities were negative due
mainly to an increase in inventories

Consolidated(Millions of yen)

4,000

FY2016FY2017 1H

4,257

4,271

FY2017FY2018 1H
4,327

3,886
3,000

2,855
2,048

2,000

1,533

1,000

536

505

0

△ 1,000△ 2,000△ 777△ 1,091

△ 248

△ 572
△ 1,412△ 845△ 1,393

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Cash and cash equivalents

7By Segment
The Brand Fashion Business: An improvement in earnings（百万円）FY2018
1Q

FY20182Q

YoY

FY2018
1H

YoY

YoY

Brand
FashionTire andWheel
Others

Net sales

8,827

107.9％

10,027112.1％

18,854110.1％

Operatingincome157－

315

1,631.7%

472－

Operatingmargin1.8％+2.3pt3.1%+2.9pt2.5％+2.6ptNet sales

997

105.2％

862

102.2％

1,859

103.8％

Operatingincome

1－

△41－

△40－

Operatingmargin0.1%+2.4pt△4.8％△0.3pt△2.2％+1.1ptNet sales38

110.2％

37

107.5％

76

108.8％

Operatingincome15285.3％

14183.0％29224.6％

Operatingmargin39.4％+24.2pt

37.5％+15.5pt

38.4％+19.8pt
8

FY2018 plan
Nonconsolidated(Millionsof yen)

FY2018plan

YoY

107.9%Net sales

37,900108.6%

1,330

159.8%

Operatingincome900

179.0%

1,330

163.1%

Operatingincome1,000

204.1%

800

224.8%Net income

620

420.8%

Consolidated(Millionsof yen)

FY2018plan

YoY

Net sales

43,300OperatingincomeOrdinary
incomeNet income
attributableto owners ofparent9Economic Trend
The economic environment remains on a moderate recovery path
Net sales
YoY (%)

Stock Price(yen)Department store(fine arts/jewelry/precious metals)

130

22,000

KOMEHYO net sales(non-consolidated)
Nikkei Stock Average(monthly closing price)

21,000120

20,000110

19,000100
100

18,00017,00090

16,00080

15,000FY2018 1H
70

14,000'16.456789101112'17.1

23456789(Source:JAPAN DEPARTMENT STORES ASSOCIATION website) 10

Issues in Core Businesses① Successful opening of large stores・Enhancement of customer management－Acquisition of new customers－Expansion of existing customers
・Introduction of new products
・Enhancement of online backorders② Increasing profitability
・Improvement of gross margin
・Enhancement of inventory controls－Long-term inventories, low-yield inventories
・Enhancement of cost controls
・Enhancement of purchases from individual customers③ Optimization of individual stores
・Increasing profitability of each store
・Enhancement of major products
・Enhancement of trade-in
and purchase guarantees
11Response to issues①
Umeda store (‘17.2)
Projected an upscale image and won favor of womenin their 40s and 50s who are looking for high-priced items【KOMEHYO card members(‘17.9)】
MaleFemale

10's
50's

20's60's

30's
70's～

40's

3.5% 0.3%
9.8%

33.7%

66.3%

14.7%
19.9%
26.3%
25.5%

12

Response to issues ①
Shinjyuku store ANNEX (‘17.5)
Men’s Store handles men’s clothing items ranging from casual clothes tobusiness suits and accessories【KOMEHYO card members(‘17.9)】
MaleFemale

10's
50's

20's
30's
60's
70's～
2.8% 0.6%

11.5%

12.4%

40's

11.6%

25.3%

22.5%

87.6%
25.7%

13

Response to issues ①
Meieki store(‘17.5)
Visited by many customers who are doing shoppingaround Nagoya Station【KOMEHYO card members(‘17.9)】
MaleFemale

10's
50's

20's
60's

30's
70's～

40's

5.3% 0.4%
8.2%
27.4%
72.6%

18.0%

27.8%

15.7%

24.6%

14

Response to issues ①
E-commerce-induced sales“Buy Online and Pick up in Store,” connecting brick-and-mortar storeswith e-commerce sites, is on an upward trend(Millions of yen)

FY20181Q

YoY

FY20182Q

YoY

FY2018
1H

YoY

E-commerceinduced sales

1,453

109.6％

1,914

128.4%

3,367

119.6％

E-commerceinduced sales rate

18.0％

－21.7％－19.9％－【Percentage of online sales by channel】 【KOMEHYO ONLINE STORE】
KOMEHYO

13.3%

website24.2%
Backorders

62.5%

Others15

Response to issues ②
Purchase from Individual Customers
Has won the No.1 position in customer satisfaction surveys.
Purchases from individual customers posted a double-digit increase.
Amount ofpurchase fromindividualcustomers

FY20181Q

YoY

FY20182Q

YoY

Purchasing
Center

4,359

107.2％

4,617

118.3％

8,977

112.6％

Home delivery
Purchasing

210

94.4％

218

115.4％

429

104.1％

Total(Millions of yen)

4,570106.5％

4,836

118.2％

9,406

112.2％【 2017 Oricon Customer Satisfaction
Survey in Japan 】
Has won first place in the category of“Brand-name Products Purchase Stores.”
Ranked first in all rankings byquestionnaire item.
Highly appreciated with the intention torecommend at 81.9% and intention to use
again at 79.5%.

FY20181H

Detailed questionnaire items

Rank

Ease of use

No.1

Store atmosphere andcleanliness

No.1

Floor staff’s ability to attend
to customers

No.1

Evaluation

No.1

Purchase price

No.1

Campaign

No.1

YoY16Response to issues ②
UM Inazawa store・LS Uedayama store
Establishment of Purchasing Center—Enhancement of purchases from individual customers【USED MARKET Inazawa store】(‘17.4.1～)【LINK SMILE Uedayama store】(‘17.7.1～)

17

Response to issues ③
Guarantee for trade-ins and buy-backs
Offering the full scale of guarantee for trade-ins and buy-backs inphysical stores and e-commerce sites

Up to 30,000yen improves

Three years guarantee ofrelief

Can be used with othercampaigns

Up to 10,000yen improves
With article which we did not use
to the nearest store
Please select your favorite items
totaling more than 30,000 yen
at the sales floor
Purchase at online store andsell at home delivery purchasing
18

Subsidiary(1)KOMEHYO Auction
Expand sales channels of used products, reinforce procurement
and collect industry information
FY2018 1H

Trade volumeJewelry
Watches
Bags

8,800

Clothing

160(Millions of yen)YoY

No. of member
companies

104.6％
786
116.1%

19

Subsidiary(2)KOMEHYO HONG KONG
Strengthen purchases of used products in Japanfor exploring overseas sales channels
Net sales(Millions of yen)

FY2018 1H527

YoY135.9％【Hong Kong Jewelry show】

20

Subsidiary(3) Craft、Auto Parts Japan
Sale of tires, wheels, and vehicle parts
FY2018 1H[EURO STYLE Craft]

Net sales

YoY(Millions of yen)Tires/wheels

1,532

109.2％

Parts

280

82.6％

Others

46

96.6％

1,859

103.8％

Segment
total

Opened in Craft Nagoya Dome West store 2F
in September 2017
Support customization focusing on euro
compact car[URBAN OFF CRAFT]
Opened in Craft Nakagawa store 2F
in October 2017
Proposing customization such as “Liftup suspension” for Cross Country Style
４×４ and Urban SUV21

Challenge to The C-to-C Business
The C-to-C Business: Free market app “KANTE”
Free market app “KANTE”
Service started in November 2017

Free market app specializing in brandname products
Providing purchasers with a sense ofassurance through judgment of authenticity

Nurturing a healthy culture of reuse[Characteristics of functions]
POINT１

POINT２

POINT３

Follow theguidelines:
Take a photo ofyour item andselect theinformation insequence. By
simply enteringsome basic
information,
you can put
your item upfor sale

You can start
the purchasing
procedure by
simply pushinga button.
Proceed withyour tradefollowing theguidelines.
Then all you
have to do is to
wait for yourpurchase toarrive!

With“KOMEHYOAppraisal” byexperienced
experts, you
can trade highpriced brands
with peace ofmind22

70 th anniversary event
Held a special event to mark the 70th anniversary
to show our appreciation to the local community in Osu, Nagoya[Exercise courses given by leading athletes]（‘17.7.27）[Acrobat Musical “AMAZING Hakkenden”]（‘17.8.30）

23

Reference Information(1) Store Type
5 stores (‘17.9)

26 stores (‘17.9)
Large-scale

Sales/Purchase ※Ladies casualclothing,bags,accessories

Nagoya Store，Meieki Store,
Shinjuku Store/ANNEX，Ginza Store，Umeda Store

Sales/Purchase

Jewelry, precious metals,watches, bags, clothing , etc.

6stores

3 stores (‘17.9)

Mid-scaleOpening stores in large major cities

Sales/Purchase3stores

Sales/Purchase ※clothing in the low
price range,bags,accessories

Small-scale
Opening stores in major cities

Sales/Purchase10stores（※

Some stores only as for the sale）

Purchasing Center
Opening stores in major cities

Purchase only

7店舗

Total 34 stores（‘17.9）
24Reference Information(2)Shareholder return
Dividend changesDividend(yen)40
Fiscal year-end dividendInterim dividend

Payout ratio

92.4

Payout ratio(％)
100

Forecast90

35303080
70

2560

2050
1536.2

40
29.3

1030

23.0
5

16.0

13.2

24.8

16.6

15.5

19.4
15.0

0

20
10FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY201825