～ From Full Recovery to Regrowth ～Presentation of Results for Fiscal Year Ended February 28, 2021
and FY2021 – 2023 Medium-term Business Plan

April 13, 2021
J. Front Retailing Co., Ltd.
YOSHIMOTO Tatsuya
President and Representative Executive Officer

Create and Bring to Life “New Happiness.”Today’s Agenda

Ⅰ. FY2020 Results
Ⅱ. FY2021 Forecast

Ⅲ. FY2021 – 2023 Medium-term Business Plan

1

FY2020 Results (IFRS)

2Consolidated PL (IFRS)
Mainly Department Store and Parco significantly decreased revenue in spite of gradual
recovery from impact of COVID-19
In spite of business profit for full year, posted operating loss partly due to costs of closing
two PARCO stores and impairment
Year-end dividend is ¥18 per share, same as LY, resulting in annual dividend of ¥27 per share(Millions of yen, %)Full fiscal year ended
February 28, 2021

Results

YoY
Change% change

Vs. October forecast
Change% change

Gross sales

766,297)(367,357)(32.4)(44,103)(5.4)

Revenue

319,079)(161,542)(33.6)(18,421)(5.5)

Gross profit

134,368)(72,585)(35.1)(4,232)

(3.1)

SGA

132,001)(29,589)(18.3)(5,399)(3.9)

Business profit

2,366)(42,997)(94.8)

1,166)

97.2)

Other operating
income*1
Other operating
expenses*2

5,711)(2,952)(34.1)

1,211)

26.9)

32,343)18,603)135.4)

6,043)

23.0)

Operating profit(24,265)(64,551)－(3,665)－

Profit attributable toowners of parent
Dividend per share(Yen)(26,193)(47,444)－(7,593)－(Annual) 27)

(9)

－

－

－

3

*1 Subsidies for employment adjustment of ¥2,574 million, etc.
*2 Reclassified fixed costs incurred during closure of ¥11,473 million, impairment losses of ¥13,196 million, loss on store closings of ¥4,663 million, etc.

Segment Information (IFRS)
Department Store: Gradually recovered but stood still later in the year due to 3rd wave of
COVID-19
Parco:
Rent relief continued in some stores but its impact was smaller than
expected, entertainment remained sluggish
Real Estate:
Percentage rent decreased but performed relatively steadily after
reopening of GINZA SIX, etc.
Credit and Finance: Affected by card renewal costs and change in annual fee accounting(Millions of yen, %)methodBusiness profit
Full fiscal year ended
February 28, 2021

Operating profit
Vs. Oct
forecast

YoY
Results

Results

Change % change Change
Department Store

(4,899) (31,360)

Parco

2,062)(6,520)Real Estate

2,637)

Vs. Oct
forecast

YoY

Change % change Change(2,899) (22,199) (39,824)－(2,999)(76.0)

2,362)(6,895) (17,718)－(2,445)(1,727)(39.6)(213)

1,986)(4,739)(70.5)

(414)

396)

(1,505)(79.1)

396)

421)(1,487)(77.9)

421)

Other

3,204)(1,722)(34.9)

854)

2,852)(1,848)(39.3)

1,052)

Total

2,366) (42,997)(94.8)

1,166) (24,265) (64,551)－(3,665)Credit and Finance－4Segment Information <Business Profit> (IFRS)

0,000

Department
Store(Millions of yen)

Business profit analysis

0,000

0,000

(31,360)

45,363

0,000

Parco
(6,520)Real
Estate0,000(1,727)

CreditandFinance(1,505)

Other Adjustments(1,722)
(162)

2,366

0

0,000

Adjustments

LY
Results

Down ¥42,997 mn (94.8%) YoY

FY2020Results

665

Other

854

CreditandReal
Finance Estate

396

(213)

Department
Store
Parco
1,200
(2,899)2,362¥1,166 mn (97.2%) above Oct forecast

Oct
Forecast

5

Segment Information <Operating Profit> (IFRS)

,000

,000

Department
Store(Millions of yen)

Operating profit analysis

,000

,000

40,286 (39,824)

,000

Parco
0

(17,728)

,000

,000

Real
Estate(4,739)Credit( 24,265)
andAdjustments
Adjustments
FinanceOther(1,487)
Other(1,848)
1,066
720
1,052

Department
Store

CreditandFinanceReal
Estate

421

(414)

Parco

(20,600)(2,999)(2,445),000

LY
Results

Down ¥64,551 mn YoY

FY2020Results¥3,665 mn below Oct forecast

Oct
Forecast

6

Segment Performance (1) Department Store Business (IFRS)
Gradually recovered from impact of COVID-19 in H2 but struggled due to 3rd wave of
COVID-19 and restriction of attracting customers during year end and new year holidays
Inbound sales remained almost disappeared, steady sales, mainly of big ticket items, toaffluent people in Japan
Could not cover October forecast deficit in gross profit due to sales decrease despite SGA
reduction(Millions of yen, %)Fiscal year ended
February 28, 2021

H1

Results

H2% change
YoY

Full year

Results% change
YoY

Results% change
YoY

Changevs. Oct
forecast

Gross sales

189,790)(46.5)

277,417)(23.1)

467,208)(34.7)(26,292)

Revenue

70,102)(46.9)

93,922)(28.7)

164,024)(37.8)(15,476)

SGA

44,663)(32.0)

58,212)(8.3)

102,876)(20.3)(3,924)

Business profit(4,416)

－

(482)

－

(4,899)－(2,899)Operating profit(21,357)

－

(841)

－

(22,199)－(2,999)7

Daimaru Matsuzakaya Department Stores PL (IFRS)
Terminal stores such as Tokyo store remained sluggish but Shinsaibashi store, Nagoya
store, etc. recovered steadily
Pure EC sales exceeded ¥10 billion, up 40% YoY, also received a good response to live
sales, etc.
Starting in H2, transferred many of properties held by Department Store such as north wingof Shinsaibashi store and Ueno FT(Millions of yen, %)Full fiscal year
ended
February 28, 2021

Department Store% change
YoY

Results

Gross sales

424,374)(Of which: real estatelease revenue)

7,589

Revenue

Total
Daimaru Matsuzakaya
Department Stores

Real Estate

Changevs. Oct
forecast% change
YoY

Results

Changevs. Oct
forecast

Results

Changevs. Oct
forecast(33.5) (22,526)

12,284(31.1)

12.1－

12,231(30.9)

149,720)(36.7) (13,280)

12,273(31.0)(727) 161,818)(36.3) (13,822)

Gross profit

88,890)(36.0)(5,910)4,398(40.3)(202)

93,113)(36.2)(6,087)

SGA

92,574)(18.6)(3,626)2,089(30.5)(211)

94,471)(18.9)(3,829)Business profit(3,683)－(2,283)2,309(47.1)

9)(1,358)－(2,258)Operating profit(19,980)－(2,280)1,885(72.0)(215)(18,096)－(2,496)

-

-

-

-

-

-

(13,067)

－

(767)
8

Profit(716) 436,462)% change
YoY－

19,624(33.5) (23,138)(19.0)－

Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)

Decrease inpersonnel
expenses

Decrease inpacking andtransportation
costs

(173)

(448)
Decreasein adexpenses(3,140)

FY2020
SGA analysis(Millions of yen)

Decrease indepreciation(4,210)Decrease in
rent
expenses
Decrease inother SGA

(315)

Decrease inoperationalcosts(1,646)
116,543

Decrease indepreciation(12,140)
Decrease inother SGA

158

(2,073)
Decrease inoperational
costs

(534)

Decrease inpersonnel
expenses

Increase inpacking andtransportation
costs

(947)

89
Decrease in
rent
expenses(127)

Decreasein adexpenses(398)
98,30094,471¥3,829 mn (3.9%) below Oct forecast

Down ¥22,072 mn (18.9%) YoY
LY
Results

FY2020Results

Oct
Forecast

9Segment Performance (2) Parco Business (IFRS)Greatly affected by about 2-month store closure and reduced business hours due to COVID-19
Business profit was above October forecast due to reduction of tenant rent relief and SGA

Operating profit was below October forecast mainly due to recognition of loss on store
closings (Tsudanuma, Shintokorozawa)(Millions of yen, %)Fiscal year ended
February 28, 2021

H1

Results

H2

Full year% change
YoY

Results% change
YoY

Results% change
YoY

Changevs. Oct
forecast

Gross sales

83,472)(40.9)

123,046)(27.5)

206,519)(33.6)(17,281)

Revenue

30,115)(31.1)

38,746)(43.5)

68,861)(38.6)(3,139)SGA

7,683)(19.8)

8,703)(15.1)

16,387)(17.4)(1,313)Business profit

1,517)(71.8)

544)(83.0)

2,062)(76.0)

2,362)

Operating profit(2,604)－(4,291)－(6,895)－(2,445)

Also greatly affected by reaction to sale ofreserve floor area of Shibuya redevelopment(¥21.7 billion) in H2 LY

10

Segment Performance (2) Parco Business (IFRS)

Shinsaibashi PARCO opened (November 20, 2020 -)Luxury on levels 1 and 2, culture on level 6, etc. performed particularly well as originally
expected
Widened Parco’s customer base, generated synergy with Daimaru Shinsaibashi store
adjacent to and integrated with it11

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

Achieved profitability despite rent relief according to the length of closureand decrease in percentage rent

Credit and Finance: Affected by card renewal costs and change in annual fee accounting
method as well as decrease in transaction volume
Other:

Business profit and operating profit of Daimaru Kogyo, Dimples’, etc.
were above October forecast(Millions of yen, %)Real Estate
Full fiscal year
ended
February 28, 2021

Results

Credit and Finance% change
YoY

Changevs. Oct
forecast

Results% change
YoY

Changevs. Oct
forecast

Other
Results% change
YoY

Changevs. Oct
forecast

Gross sales

15,383(13.7)(417)

11,496

(5.7)

(204)

105,601(20.4)(999)

Revenue

15,372(13.6)

(428)

9,035

(15.7)(565)

95,722(22.4)(1,878)

SGA

2,621

(12.7)

21)

8,639

(2.0)

(961)

23,658

(9.6)

(142)

Business profit

2,637(39.6)(213)

396(79.1)

396)

3,204

(34.9)

854)

Operating profit

1,986(70.5)(414)

421(77.9)

421)

2,852

(39.3)

1,052)

12

Consolidated BS (IFRS)
Total assets increased ¥23.4 bn YoY partly because cash and deposits were secured tocope with COVID-19
Interest-bearing liabilities increased ¥84 bn YoY due to procurement of new funds to copewith COVID-19
Ratio of equity attributable to owners of parent was 27.9%, down 3.3 points YoY
Total assets

Interest-bearing liabilities

1,263,722

Equity attributable toowners of parent
Ratio of equity
attributable toowners of parent

31.2%

1,240,308
27.9%＋23,414(3.3pts)

562,815
478,773＋84,042～ ～Feb 29, 2020

Feb 28, 2021

Lease
liabilities
220,497

Bonds/
borrowings
258,276

Feb 29, 2020

Leaseliabilities
202,885

387,188352,171(35,017)

Bonds/
borrowings

359,930

Feb 28, 2021

Feb 29, 2020

Feb 28, 2021

13
(Millions of yen)Consolidated CF (IFRS)
Operating CF decreased ¥16.8 bn YoY due to profit decrease
Free cash flow was ¥35.6 bn, up ¥11.8 bn YoY due to significant reduction of
investment

Secured cash reserves enough to cope with COVID-19 by issuing CP andborrowing money from banks
Operating CF

Investing CF

Free CF

Financing CF

Balance of cash
and deposits
128,925

73,35858,72756,47135,601

34,633

23,799＜＋28,689＞＜(16,887)＞＜＋11,802＞(20,870)＜ ＞ Change YoY(14,829)＜＋73,556＞(49,559)

Results FY ended February 29, 2020
(Millions of yen)＜＋94,292＞

Results FY ended February 28, 2021

14

FY2021 Forecast (IFRS)

15

Consolidated Forecast PL (IFRS)Gross sales are expected to recover to less than 90% of results FY2019,business profit to be ¥18.5 bn
Factored in costs of ¥6 bn to accelerate structural reform
Plan to pay interim dividend of ¥14 per share, annual dividend of ¥29, up ¥2 YoY(Millions of yen, %)H1
Fiscal year ending
February 28, 2022

H2
% change
YoY

Forecast

Forecast

Full year% change
YoY% change
YoY

Forecast

Gross sales

470,000

46.6)

535,000

19.2)

1,005,000

30.6)

Revenue

180,000

22.1)

214,000

24.7)

394,000

23.5)

Gross profit

81,50037.1)

92,50023.5)

174,000

29.5)

SGA

75,00026.7)

80,50010.6)

155,500

17.8)

Business profit

6,500

－)

12,000467.0)

18,500681.7)

Other operating income

1,000(72.9)

500(75.2)

1,500(73.7)

Other operating expenses

3,500(85.8)

5,500(29.2)

9,000(72.2)

Operating profit

4,000

－

7,000

－

11,000－

Profit attributable toowners of parent

1,000

－

3,000

－

4,000

－

29

(Change) 2

Dividend per share (Yen) (Interim)

14(Change) 5 (Year-end)

15(Change) (3)(Annual)16Changes in Reportable Segments- August 2020

- February 2021

March 2021 -Department StoreBusiness

Department Store Business

Department Store Business

Real Estate Business

Real Estate Business(Held by Daimaru Matsuzakaya)(Held by Daimaru Matsuzakaya)

GINZA SIX
Tenants around department stores

GINZA SIX
Tenants around department stores

GINZA SIX
Tenants around department stores

Ueno Frontier Tower (lease)*
Other (BINO, etc.)
North wing of Shinsaibashi store(Held by Parco)
Ueno Frontier Tower (lease)*
Other (BINO, etc.)

ＳＣ Business

Parco Business

Parco BusinessUeno Frontier Tower

PARCO stores

PARCO stores
Shinsaibashi PARCO(opened on November 20)

ZERO GATE
Other subsidiaries of Parco

ZERO GATE
Other subsidiaries of Parco

Credit and Finance Business

Credit and Finance Business

Other

Other

J. Front Design & Construction
Daimaru Kogyo
Dimples’, etc.

J. Front Design & Construction
Daimaru Kogyo
Dimples’, etc.

PARCO stores
Neuve A
Parco (Singapore)

Developer BusinessZERO GATE
Parco Space Systems
Parco Digital Marketing
Japan Retail Advisors
Other (BINO, etc.)
J. Front Design & Construction
Payment and Finance Business (renamed)

Other
Daimaru Kogyo
Dimples’, etc.

*“Ueno Frontier Tower (lease)” up to February 2021 includes real estate lease revenue from Parco Co., Ltd. on PARCO_ya Ueno.
*shows the scope of the former Parco Business.

17

Segment Performance (IFRS)(Millions of yen, %)Business profit
Fiscal year ending
February 28, 2022

YoY
YoY
YoY
H1
H2
Full year
Forecast Change % change Forecast Change % change Forecast Change % change

Department Store

700

SC

4,900

Developer

－

6,800

6,928)－

7,500 10,610)

3,950) 415.6)

2,500

2,371)－

7,400

6,321) 585.2)

800

(931)

(53.8)

1,400

291)

26.2)

2,200

(640)

0

(446)

－

800

849)

－

800

Other

500

(464)

(48.2)

600(684)(53.3)

1,100

Total

6,500

6,250)－

12,0009,884)

467.0)

18,500 16,134) 681.7)

Payment and Finance

3,682

－
(22.6)

404) 101.6)(1,149)(51.1)

Operating profit
Fiscal year ending
February 28, 2022

YoY
YoY
YoY
H1
H2
Full year
Forecast Change % change Forecast Change % change Forecast Change % change(700) 19,618)

－

6,200

6,820)－

5,500 26,439)－

SC

4,800)

7,871)－

2,100

5,925)－

6,900 13,796)－

Developer

1,200)(498)(29.3)

1,400

1,117)

393.1)

2,600

619)

31.2)

0)

(453)

－

800

832)

－

800

379)

90.0)

480)

68)

16.3

520

(945)

(64.5)

1,000

(878)

(46.8)

4,000) 24,637)－

7,000 10,628)－

11,000 35,265)－

Department Store

Payment and Finance

Other
Total

18

Segment Performance (1) Department Store Business
The entire business is driven by affluent people in Japan and expected to steadily recovermonth by month
Inbound sales are expected to gradually move later in the year

SGA is expected to decrease more than ¥5 bn compared to FY2019 despite reaction toprevious fiscal year
(Millions of yen, %)H1
Fiscal year ending
February 28, 2022

Forecast

H2% change
YoY

Forecast

Full year% change
YoY

Forecast% change
YoY

Gross sales

287,700)

48.4

339,100

19.9

626,800

31.5

Revenue

106,400)

43.3

119,800

20.7

226,200

30.4

SGA

61,000)35.2

65,20010.1

126,200

21.0

Business profit

700)

－

6,800

－

7,500

－

Operating profit

(700)

－

6,200

－

5,500

－

19

Daimaru Matsuzakaya Department Store Major Store Sales
Sales are expected to recover, down 19.2% in H1, 5.8% in H2 compared to FY2019
Remain relatively cautious about Tokyo and Umeda stores, which highly depend on railway
passengers
Shinsaibashi and Sapporo stores, whose share of inbound sales is large, factor in expectedslow recovery of inbound sales(% change)
Vs. FY2020

Vs. FY2019

Fiscal year ending
February 28, 2022

H1
Forecast

H2
Forecast

Full year
Forecast

H1
Forecast

H2
Forecast

Full year
Forecast

Shinsaibashi

82.9

26.1

46.5

(39.7)(17.3)(29.1)

Umeda

48.2

25.7

35.1

(26.1)(14.8)(20.4)

Tokyo

67.3

31.2

45.3

(36.6)(21.0)(28.9)

Kyoto

42.6

20.1

29.3

(16.2)

(2.1)

(9.0)

Kobe

46.9

14.6

27.3

(7.2)

4.4)

(1.2)

Sapporo

46.4

26.4

34.5

(21.2)(7.8)(14.2)

Nagoya

46.5

17.5

29.2

(9.0)

1.1)

(3.8)

Total
directly managed stores

47.4

20.1

31.2

(19.2)(5.8)(12.5)
20

Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)FY2021
SGA analysis* Of fixed costs incurred during closure, SGA of (¥6.69 bn) was
reclassified to “other operating expenses in H1 last year.
・Personnel expenses (¥1.21 bn)
・Depreciation(¥2.52 bn)
・Rent expenses(¥0.03 bn)
・Other(¥2.92 bn)(outsourcing expenses, computer expenses, etc.)

Other
6,706

Operational
costs
1,866
Depreciation
3,169

Ad
Rent
expenses
expenses
Personnel
1,512
18
expenses
Packingand1,094transportation
Mainly increase in commission
costs
expenses, outsourcing expenses,
131(Millions of yen)
Packing andtransportation
costs
(32)

Ad
expenses
Personnel 588
expenses
1,235

Depreciation
203

Rent
expenses
71

Operational
costs
600

Other
3,494

Mainly increase in commission
expenses, repair expenses,
utilities expenses, etc. due tosales recovery

114,200

utilities expenses, repair expenses,
etc. due to sales recovery

93,545

H1
LY
Results

H2
FY2021
Forecast

21

Segment Performance (2) SC Business (Parco) (IFRS)
Shinsaibashi PARCO including restaurants and cinema complex, which made its
grand opening in March, is expected to fully contributeEntertainment is also expected to head for recovery with significant reductionof tenant rent relief(Millions of yen, %)H1
Fiscal year ending
February 28, 2022

Forecast

H2% change
YoY

Forecast

Full year% change
YoY

Forecast% change
YoY

Gross sales

136,600

75.2

132,900

12.7)

269,500

37.6

Revenue

34,27047.9

36,43013.6)

70,700

28.0

SGA

7,400

10.3

7,200

(1.2)

14,600

4.3

Business profit

4,900

415.6

2,500

－

7,400

585.2

Operating profit

4,800

－

2,100

－

6,900

－

22

Segment Performance(3) Developer Business (4) Payment and Finance Business (5) Other (IFRS)
Developer:

Expected to be driven by revenue of design and construction businessdue to upfront investment in properties
Payment and Finance: Expected to continue to be affected by increase in promotion costs forcard renewal and change in annual fee accounting method
Other:
Carefully forecast Daimaru Kogyo, excluded J. Front Foods fromconsolidation due to business transfer(Millions of yen, %)Fiscal year ending
February 28, 2022

H1
% change
YoY

Forecast

H2% change
Forecast
YoY

Full year% change
Forecast
YoY

Developer
Payment and Finance

RevenueSGA

26,4003,800(19.7)
28.8)

32,300
3,800

54.3)
30.0)

58,700
7,600

9.1)
29.4)

Business profit

800(53.8)

1,400

26.2)

2,200

(22.6)

Operating profit
Revenue

1,200
5,100

(29.3)
11.0)

1,400
5,900

393.1)
32.8)

2,600
11,000

31.2)
21.7)

SGA

5,100

23.0)

5,100

13.6)

10,200

18.1)

0
0

800
800

800
800

101.6)
90.0)

36,900－－(0.1)

73,600

7.4)

Other

Revenue

36,700

－
－
16.2)

SGA
Business profit

11,740500

13.9)(48.2)

11,560600(0.1)(53.3)

23,3001,100

6.5)(51.1)

Operating profit

480

16.3)

520

(64.5)

1,000(46.8)

Business profit
Operating profit

23

Consolidated BS Forecast (IFRS)
Total assets are expected to decrease ¥23.7 bn partly due to decrease in fixed assets caused
by depreciation
Interest-bearing liabilities are expected to decrease ¥28.8 bn YoY partly due to repayment oflease liabilities
Ratio of equity attributable to owners of parent is expected to be 28.0%, same as last year’s
level
Total assets

Interest-bearing liabilities

Equity attributable toowners of parent
Ratio of equity
attributable toowners of parent

1,263,722

1,240,000

28.0

27.9
(23,722)＋0.1 pts

562,815
Leaseliabilities
202,885～ ～Feb 28, 2021
(Millions of yen)

Feb 28, 2022

534,000(28,815)

Leaseliabilities
174,000

352,171

347,500(4,671)

Bonds/
borrowings
359,930

Bonds/
borrowings

Feb 28, 2021

Feb 28, 2022

360,000

Feb 28, 2021

Feb 28, 202224

Consolidated CF Forecast (IFRS)
Operating CF is expected to decrease ¥4.4 bn partly due to increase in working capital
Secure free cash flow of ¥30 bn by keeping investment within the scope of depreciation
Continue to secure enough cash reserves until COVID-19 comes to an end

Operating CF

Investing CF

Free CF

Financing CF

Balance of cash
and deposits
128,925
121,425

58,72756,471 52,000
35,601

30,000＜(1,130)＞＜(4,471)＞＜(5,601)＞(20,870)(22,000)＜ ＞ Change YoY

Results FY ended February 28, 2021
(Millions of yen)＜(7,500)＞(37,500)＜(96,227)＞

Forecast FY ending February 28, 2022

25

百貨店
事業

百貨店
事業

FY2021– 2023 Medium-term Business Plan
パルコ
事業

26

Review of Previous Medium-term Plan
Major initiatives
Multi Service Retailer(expansion of businessdomain)Urban Dominant(development PJ)

Results

Evaluation◆ Entered into childcare business◆ Invested in only 2 companies to develop new businesses◆ Could not show path to growth of 3 key businesses (JFR Card, JF Design & Construction, Dimples’)×◆ Promoted redevelopment projects
・Opened GINZA SIX, Ueno Frontier Tower○

Growth strategy

Urban Dominant(Real Estate Business)◆ Expanded real estate rental business・Gion Machiya, renovated machiya
Blue Bottle Kyoto Café, beauty & health BINO (Higashinotoin, Okachimachi, Sakae)○

ICT (defense)◆ Formulated the Group IT governance・Created IT governance definition, policy, regulations, rules◆ Developed system to strengthen security○

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

Innovation of
Department StoreBusiness◆ Right-sized women’s wear space - Decreased 10,240 ㎡ in total for FY2017 - 2020 (down 21% vs. FY2016)◆ Main building of Daimaru Shinsaibashi opened as hybrid model◆ Placed Shimonoseki Daimaru under direct management, renewed Daimaru Ashiya/Suma, closed Daimaru
Yamashina△

Innovation of ParcoBusiness◆ Opened Shibuya PARCO, Ueno PARCO_ya, Kinshicho PARCO, Shinsaibashi PARCO◆ Expanded small commercial business by promoting development
・Opened ZERO GATE (Sannomiya, Kyoto, Harajuku), SAN-A Urasoe West Coast PARCO CITY△

Portfolio reform and business model reform are only half done
In addition, COVID-19 made apparent vulnerability of earnings structure27

Business Risk Identification
Response to external environment

Creation of new value, gainingof competitive advantage

Ⅰ. Risk associated with development of new market
3. Urban decentralization(Rebalancing between
urban and rural areas)

12. Changes in customers,
particularly low
birthrate / longevity

4. Post-COVID-19 changes
in consumer behavior

13. Uncertainty about
non-Japanese market

Response to internal environment
Ⅱ. Risk associated with provision of new
customer experience
5. Accelerating
reorganization and M&A
beyond industry
boundaries

6. Declining existing
business model

11. Accelerating income
polarization

2. Accelerating technologicalevolution

Rebuilding of basis for
growth and revenue

9. Frequent natural
disasters / epidemics

14. Increasing importanceof information security

Ⅲ. Risk associated with improvement ofresilience amid major crisis becoming common

1. Advanced sustainability
management

7. Increasing importanceof financing management

10. Progress of reforms ofwork styles, HR,organization in newnormal era

8. Need for cost structurethat can respond toenvironmental changes

Ⅳ. Risk associated with improvement of resiliencevia drastic organizational/structural reforms

28

Awareness Gained from COVID-19

Vulnerability of business model
Concern about advantage of urban location
Delay in digitalization
Lack of resilience of business portfolio
Importance of person-to-person communication
Renewed awareness of attention to safety and security

Attention to all stakeholders

29

Revision of Materiality Issues
Newly added 2 items to materiality issues to promote sustainability
management

Realization ofcustomers’
healthy/safe/
secure life

Realization of
decarbonizedsociety
Promotion ofdiversity &inclusion(Newly added)

Realization ofwork-life
integration

7 materiality
issuesManagementof the entire
supply chain

Coexistencewith local
communities

Realizationof circular
economy(Newly added)30

System of High Level Concept and Strategy
Integrate corporate strategy / business strategy
with sustainability management

Corporate Credo

Service before Profit
Group Vision

Practice of CSV(Creating Shared
Value) using theGroup’s strengths

Create andBring to Life
“New Happiness”
Sustainability Policy

With People,
with Local Communities,
with Environment

Proposal for
Well-being Lifeby creating
new value

Ideal company we aim to be and value we aim to provide

Produce spiritually affluent lifestyles
and develop local areas in a unique way
to coexist with local communities

Management strategy / business strategy
31

３ Key Strategies
Group Structure
Commercial
production
capability

Goodcustomer
assetsCore
CompetencePartners
including
suppliers andcreators

Real estate
assets inurban areas

×

Department
Store
Business

SC
BusinessCore
Business

Developer
Business

Payment
andFinanceBusiness

Focus on 3 strategies based on
medium- to long-term environmental changes and the Group’s strengths
Importantexternal
environmental
changes

Group’sstrengths

Online Merges with
Offline (OMO)
Commercial
production capability

Steadyurban trade areas

Polarization ofincome/consumption
Partners including
suppliers andcreators

Customer base including
department store gaisho

Real estate assets inmajor urban areasin Japan

Reclassify 4 strengths to make maximum use of them across the Group3
strategies

Real × Digital Strategy

Prime Life Strategy

Developer Strategy

32

Overall Structure of Medium-term Business Plan

3 strategies
for revenue
recovery andregrowth(1) Real × Digital Strategy(2) Prime Life Strategy(3) Developer Strategy－ Department store: Enhanceappeal of stores and use
stores for media commercewith focus on genuineness/essence－ Parco: Rebuild store brandvalue / seek digital SC
platform－ Create/develop new content
from CSV perspective－ Develop new solution services
to realize high quality customer
experience－ Advance online gaisho
communication－ Advance CRM strategy at theGroup level－ Mixed use not limited tocommercial use－ Start circular investment
scheme－ Enter into semi-urban areas

Promote strategies by committees across the Group for regrowth
Digital Strategy
Committee
Importantmeasures forfull recovery

Prime Life Strategy
Committee

Developer Strategy
Committee

Management structure reform－Reduce costs via business model reform－Narrow business baseFinance strategy －Capital policy －Tax policy －Business management renewal
Management
basefunctionstrategy

HR strategy－Complete the Group HR structure reform －HR management for regrowth－Realization of diversity and work-life balance

IT strategy (defensive IT) －Rebuild core systems －Strengthen the Group IT HR structure33

3 Years for Increasing Resilience for Regrowth

No Change, No Full Recovery
Waiting will not recover anything.
Never miss this opportunity to change.

34

Image of Portfolio Changes
Expand share of Developer, Payment and Finance, Other
while steadily growing Department Store, SC

80(Billions of yen)

“Operating profit” share of each segment

40%

Other*

40.2

Payment and
Finance

7.0%
4.7%
9.8%

Developer

23.6%

40.3
1%
6%
11%
25%

60%

SC

Department
Store

54.9%

FY2019*“Other” includes consolidated adjustments.

Developer
Payment and
Finance
Other

Department
Store
SC

57%

FY2023

FY2030

Forecast

Image

35

Management Numerical Targets
Aim for “full recovery” of both PL and BS to FY2019 level in FY2023
Add sustainability items to targets of medium-term business plan
as officer remuneration evaluation indicators
FY2023

Capital profitability
Business growth
Financialsoundness
Sustainability*1 Excludes lease liabilities*2 Vs. FY2017, Scope 1 and 2

ROE

ROIC

7%

5%

Operating profit

Business profit¥40.3 billion¥44 billion

Interesting-bearing
liabilities*1

Net D/E¥260 billion

0.6ｘ

GHG emissions*2

Ratio of women in
management positions

△40%

26%
36

Path to “Full Recovery” (Contribution of Each Measure)(Billions of yen)

(2.5)

Operating profit

+4.1

+3.7

Digitalshift+2.7 Enhancement ofappeal ofDeveloper stores/content
Strategy
Real ✕ Digital
Strategy

+5.7

40.2

+10

Consolidation
Prime Life adjustments
etc.
Strategy

40.3

Structuralreform(64.4)

Total + more than 16+25.6
FY2019Results

FY2023
Forecast(24.2)+15.2

Impact of
COVID-19

Recoveryfrom
COVID-19【Projections for FY2023 (vs. 2019 level)】
Department store sales: Excluding tax-free sales (7.9%)
Tax-free sales(30%)
Parco comparable store operating revenue(5.6%)

Special factors

FY2020 (impairment, loss on store
closings, subsidies for
employment adjustment)

37

Path to “Full Recovery” (PL, BS)【PL】(Millions of yen)

50,000Business profit【BS】

Operating profit(Times)(Millions of yen)Interest-bearing liabilities

45,36344,000Net D/E

500,000

0.8

40,30040,28640,0000.7

450,000
30,00030,000

0.7

0.7

0.7

400,000

26,0000.6

359,930

360,0000.6

0.6

350,000
18,50020,0000.5

300,000
11,000265,000

258,276

10,000260,000

250,000

0.4

2,366
200,0000

0.3

150,000(10,000)

0.2
100,000(20,000)

0.1

50,000(24,134)(30,000)

0
FY2019FY2020

FY2021

FY2022

FY2023

Forecast

Forecast

Forecast

0.0
FY2019FY2020

FY2021

FY2022

FY2023

Forecast

Forecast

Forecast

38

Redefinition of Commercial Model
Vulnerability of core business base revealed by COVID-19

Current retail business model, which is overly dependent on
attracting customers to real stores, has reached a limit

Redefinition of commercial model isan unavoidable necessity

Important to create new experience valuethat merges real and digital
39

Merger of Real and Digital (Department Store)

Overcome time and location constraints
Provide unique OMO shopping experiences: cosmetics in FY2021, art in FY2022
Enhance customer convenience by equipping shop blog and connaissligne sites
with payment function

OnlineGetinterested

Select/consider/consult

Buy

Receive

Share

Information
via media

Customer service

Payment

Delivery

Share bycustomers

Remotecustomer service

EC payment

Receipt at home

External SNS

OMO-EC payment(blog/connaissligne)

Smart locker,
etc.

In-house
community

Store signage

Customer
service at store

Payment at
store
(POS)

Pickup at store

Customers’
voice

DB

DB

DB

DB

DB

External SNS
App/email

Shop blog

Live stream

Connaissligne
VR store

Personal stylist

Offline40

Merger of Real and Digital (Parco)

Maximize experience value via Real × Digital
Realize OMO via cycle of mutually sending customers between real channels
and online channels by building multi-platform
Strengthen hybrid entertainment (live + digital) instead of relying on only attracting
customers to physical locations

Attract customers

Attract customers

Send customers to EC

Parco’soffline channel
・Theater, live stream
・Museum VR experience
・PARCO CUBE
・Service to visiting customers

Send customers to EC

Multiplatform
・PARCO online store
・Tenant’s own EC site

Send customers toreal channel

Parco’s
online channel
・POCKET PARCO
・Store website
・PARCO news

Send customers toonline channel

PARCO points

41

“Media Commerce” Focused on People
Online media
Product

Curation

WebsiteOffline
media

App

Space
value

Focused on“people”

Location

Service
Experience

Value

Focused on“people”
Trust
Credibility

Socialcontribution

Store
Beyond time and space constraints

Content created with “humanwarmth”

Creation of new experience value

Media that connect with“human warmth”

Communication and provision of value /meeting place

Realize improvement of experience value and multiple revenue streams 42Enhance Appeal of Real Stores and Content (Department Store)

Increase share of categories/areas to be strengthened
Renovation via greater allocation of investment in key stores, mainly expansion of luxury
Development/introduction of new services and tenants by maximizing synergy with Parco

Bold overhaul of sales floor configuration(1) Halve space of our own curation
13,200 ㎡ ⇒ 7,000 ㎡(2) Redesign/expand content by shifting focus to lifestylee.g. cosmetics ⇒ beauty/wellness(3) Introduce new content by shifting focus to experiencee.g. education, entertainment, incubation

Clarify direction and implement based on market characteristics of stores
43
including advanced hybrid model and real estate modelEnhance Appeal of Real Stores and Content (Parco)

Development of new content
Newly launched wellness service that supports women’s inner beauty and healthOpened community WS “SkiiMa” in Kichijoji PARCO following Shinsaibashi PARCO
Created exciting food space Shinsaibashi Neon Shokudo-gai that provides entertainment &cultureCommunity working space SkiiMa(Shinsaibashi PARCO)NISHIKIYA KITCHEN (Sendai PARCO)

Shinsaibashi Neon Shokudo-gai (Shinsaibashi PARCO)

Increase real store value / brand value

44

Creation of New Content
Entry into subscription business
Introduced subscription model that enhances intrinsic value of fashion and leads
to sustainable future￥SUBSCRIPTION (STOCK)
BUY
Deliverycompany

100%
WEB

ORDER

RENT

3PL company

Recycling
company

Cleaning
company

Customer

Apparelcompany

Challenge to socially and environmentally sustainable business model 45

Prime Life Strategy
Advanced gaisho customer strategy
Promote deep cultivation of core content such as luxury and development of new solution
Expand OMO shopping using connaissligne and increase virtual events
Expand Tokyo area / nouveau riche customers and promote retention of affluent foreign
customers
Expand content offering

Build communication system(Interest 〜 Service 〜 Buying 〜 Receipt)

Conventional
products for gaisho
customers＋
Online sales ofbest selection

New category

connaissligne&
online payment system(Platform forcoordination)

Advance gaisho
customer CRM via
analysis/use of data

Buy Delivery
via staff
via salon

Expand customer base /increase number of customers

Receive

Awareness 〜 Interest 〜 Service
・Access to articles
・Live shopping・Chat・Virtual event

Gaishocustomer＋
Prospective customers(including alliance)

App
Competitor’scard / cash

In-housecard

46Prime Life Strategy
Expansion of customer base by advancing CRM
Entice new ID customers who joined app membership to hold in-house credit cards
Expand LTV by full use of the Group integrated data base LTS-Hub

Buying data /behavior log

Create new value
using data

Marketing/CRM

Integrated customer data base
(LTS–Hub)47

Prime Life Strategy
Growth process of Payment and Finance Business
Strengthen alliance with department store and expand basis for growth bypromoting acquisition of new cardholders
Increase cardholders
・Renewed Daimaru Matsuzakaya Card (January 2021)
・Increase the number of cardholders online, via app, as well as
in stores

Promote merchant business・Improve payment environment in the Group・Help send customers in the Group

Expand insurance/finance business・Took over insurance agency business from Daimaru Kogyo toexpand financial service
・Strengthen revolving / installment / cash advance by increasing
the number of cardholders

Steadily strengthen business baseas one of pillars of the Group’s medium- to long-term growth
Achieve operating profit of ¥5 billion early48

Developer Strategy“Developer Business” developed from Real Estate Business
Accumulate know-how using transferred properties for multiple purposes not
limited to commercial purpose
Maximize real estate value by implementing CRE strategy via sale andreplacement of assets
Changes in portfolio for revenue diversification

Developmentof semiurban
locations

Developmentof key urban
areas

CRE
strategy
Mixed use oftransferredproperties

Circularinvestment
scheme49

Developer Strategy
Medium-term pipeline
Current medium-term plan period is upfront investment phase,
realize dramatic growth in or after next medium-term plan period
Development of Sakae Kadochi, Nagoya / development of Nagoya area
Open multiple largescale complex
development projects
with total floor space ofmore than 45,000 ㎡

Development of Osaka
Shinsaibashi area

2020

2021−2023

Small/medium development

Life Higashinippori store (opened)
Open 8 small andmedium-sizedproperties includingcommercial facilities,
residences, offices,
totaling more than
25,000 ㎡

2024−2030
Store reopening project on the site ofKumamoto PARCO

Development of semi-urban areas

Develop long-term plan for key areas, led by committees

Large-scale complex development

Shinsaibashi PARCO

50

Strengthening of Project Promotion System
Set up 3 committees in HD
Make maximum use of the Group’s strengths and management resources beyond
boundaries of operating companies in the Group
Committees are led by Executive Officers to promote across the Group(I)
Developer
Strategy
Committee

Mutualcooperation(II)
Digital Strategy
Committee

Mutualcooperation(III)
Prime Life
Strategy
Committee

Plan/promote long-term and highly important strategies

Clarification of responsibilities and timeline and focus on commitment to results

51

Management Structure Reform
Reduction of fixed costs (lowering of break-even point)・Reform HR structure via business model reform
・Shift operation base to new normal
・Digital advertisingetc.

Reduce fixed costs more than ¥10 billion(vs. FY2019)

Narrowing of business base
Strictly assess businesses and stores with an eye to the future

Accelerate implementation as much as possible

52

Strengthening of Management Base
IT strategy
Renovate core systems to advance business management, reduce IT risk, improve
management efficiency
Shift to high value added operations and respond to diversified work styles using advanced
IT technologies
Steadily operate systems and achieve robust security using cloud computing
Control IT investment allocation in HD to continuously strengthen the Group IT governanceHR strategy
HR management
for regrowth・Retain HRs who support 3 strategies
・Promote HR development andrecruitment from outside
・Build system to use the Group HRs

Retaining/developing ofdigital talents
・Retain HRs in HD and send
them to the Group companies
・Centrally manage career and skills
in HD
・Development program that fits
individual IT talents

Promotion ofdiversity & inclusion,
realization of work-life
integration
・Promote women’s empowerment
・Develop young talents
・Reform work styles
・Understand LGBT53

Finance Strategy
Introduction of ROIC
Set hurdle rates for each business segment and aim for ROIC above themStrengthen management of Developer Business and Payment and FinanceBusiness for which medium- to long-term growth is expected

ROIC

Increase NOPAT margin
Increase invested capital turnover

Increase capital profitability

WACC

Strengthen competitive advantage
Control leverage
Strengthen ESG initiatives

Reduce capital cost

Enhance corporate value by increasing spread

ROIC

＞

WACC
(Recognized at 3.5 - 4% currently)

ROE＞

Cost of shareholder’s equity(Recognized at 6 - 7% currently)

54

Cash Flow Allocation
From generated operating CF of ¥190 bn, allocate ¥90 bn to investing CF, ¥100 bn to FCF
Reduce cash and deposits to ¥30 bn from ¥128.9 bn to repay lease liabilities and interestbearing liabilities
Give priority to improvement of BS damaged by COVID-19 and provide appropriate returnto shareholders

Capital investment

Investing CF¥90 bn・Store renovation, DX, etc.

Growth investment
・M&A, alliance

Operating CF¥190 bn

Improvement ofbalance sheet

FCF¥100 bn*CF numbers are total for the three-year period from FY2021 to 2023.
*Includes right-of-use assets depreciation.

・Increase equity
・Reduce interest-bearing liabilities

Return to shareholders
・Targeting dividend payout ratioof at least 30%
・Consider share buyback asappropriate

55Capital Investment / Growth Investment
Basically, plan and implement capital investment within the scope of depreciation
Allocate ¥10 bn as funds for growth investment for the future including M&A andalliance【Historical and medium-term 3-year
forecast capital investment】【Investment plan for each segment】(Billions of yen)

Growthinvestment
Other
Payment and
Finance

4.5(Billions of yen)

38

37.9

35

10

31
Department Store30

1.5
FY2021 - 2023
total 3-year
investment
Developer

40¥90 bn

30

30
25

22

20
15

30
SC

10

14
5
0
FY2019FY2020

FY2021

FY2022

FY2023

Forecast

Forecast

Forecast

56

Return to Shareholders
Basic policy is to return profits with consolidated dividend payout ratio of at least 30% and to
consider share buyback as appropriate
Aim to recover dividend per share to FY2019 level as early as possible(Yen)

Annual dividend per shareafter establishment of J. Front Retailing (Yen)

40

35

2

30

25

Commemorative dividend

20

33
15

25

27

28

2015

2016

35

36

36

Ordinary dividend

32
27

29

22

10

16

14

14

2009

2010

16

18

5

0
2008

2011

2012

2013

2014

2017

*Annual dividend per share is shown on a post-share consolidation basis.

2018

2019

2020

2021
Forecast

2020

2023
(FY)

57

Sustainable Growth and Enhancement of Corporate Value
2021

2030

2023

－ Full recovery －－ Regrowth －Aim toincrease
operatingprofit atannualaverage rateof 10%FY2023
ROE 7％ROIC 5％
Operating profit ¥40.3 bn
Business profit ¥44 bn
GHG emissions △40%

FY2030
ROE 10％
ROIC 5％
Operating profit ¥80 bn
Business profit ¥83 bn
GHG emissions △60%

(Millions of yen)

100,000
Business profit

Operating profit

83,00080,00080,00060,00040,00045,36340,28644,000 40,300
30,00026,00018,50020,00011,0002,366

0FY2019FY2020

FY2021

Forecast

FY2022

FY2023

FY2030

Forecast

Forecast

Forecast(20,000)(24,134)(40,000)

Implement sustainable management that creates both social value and economic value

Realize the Group Vision: Create and Bring to Life “New Happiness.”58

<Reference>

Links toDaimaru Matsuzakaya & Parco

Examples of “Real × Digital Strategy”

PARCO online TV
Nagoya PARCO “LEE”
https://www.instagram.com/tv/CM3wa_hj8Bj/

Renewed “PARCO online mall,” which waslaunched to serve customers online last year,
as “PARCO online TV” that streams special
videos and live performance using
Instagram Live and IGTV to connect
customers to stores. Planned to stream incollaboration and from stores on a regularbasis.

Entry into fashion subscription business“AnotherADdress”【Press conference】
https://youtu.be/8Tlpyc9wbkU

Shinsaibashi PARCO virtual tour
https://my.matterport.com/show/?m=SF1u4Dj3
cZP
https://my.matterport.com/show/?m=QUq2jr5t
Pet【Website】
https://anotheraddress.jp/

Shinsaibashi PARCO, which, like art
exhibitions, restricted admission to reduce
congestion and prevent infection when it
opened, provides online content named
virtual tour that provides 3D view experienceso that customers can feel like really visiting
Shinsaibashi PARCO at home.

Launched on Friday, March 12. Mr. Sawada,
President of Daimaru Matsuzakaya, and Mr.
Tabata, who is responsible for the business,gave their thoughts about this business at
the conference.

SHIBUYA PARCO ReOPEN Eve
Virtual Shibuya PARCO
https://youtu.be/8UmsWxxo0GAhttps
Online event held after 1st state of emergency
was lifted. Hit a record-high number of PVs of
0.2 million in 4 hours. Helped bring excitement
to reopening after closure due to COVID-19
with live performance by artist BiSH and DJ
performance by Okamoto Reiji (OKAMOTO’S).

59

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.