Medium-Term Management Plan
“CHALLENGE Ⅱ 2020”

February 9,2018
Aoyama Trading Co., Ltd.
President and CEO
Osamu Aoyama

1

AGENDA
１. Review of 『CHALLENGE 2017』

P 2〜 8

２.『CHALLENGE Ⅱ 2020』

P 9〜 15

３. Core Business Strategy(Business Wear Business)

P16〜22

４. Group Business Strategy

P23〜27

５. Store Opening/Closures Plan

P28〜29

６. Finance, Capital Strategies and ESG Initiatives P30〜33
７. 《Reference》
Year Plan by Segment/Store Format

P34〜36

2

Review of 『CHALLENGE 2017』

3

Review of “CHALLENGE 2017” (management index)

Consolidated Net sales was expanded (+37billion yen for 3 years)/Operating income･ROE staid2017 Plan

2017 Forecast

280 billion yen

258.7 billion yen▲21.3 billion yen

27billion yen

21billion yen▲6 billion yen

7.0%

4.6%

▲2.4p

Consolidated Net sales
Consolidated
Operating income
ＲＯＥ

Net sales・Operating income(unit : 100 million yen)

3,000

Net sales

2,500
2,000

1,932

1,000
500

2,000

Operating income
2,124
213

2,221

2,217

226
190

183

1,500

1.2%
'10

2,402

213

(unit : 100 million yen)

2,528

2,587

202

210

300
250

CHALLENGE 2017

136

'10

Change

200
150
100
50

'11

'12

'13

'14

'15

'16

'17⾒込
Forecast

4.0%

5.3%

5.4%

5.4%

5.1%

5.0%

4.6%

'11

'12

'13

'14

'15

'16

'17⾒込
Forecast

ROE

4

Review of “CHALLENGE 2017” (Performances by each Segments)

In performances by each segments, main factors that couldn't achieve the consolidated performance plan are Business wear
business and Casual wear business couldn't achieve the plans.
Factors in Business Wear Business are sales of menʼs items couldn't grow and the number of opening store couldn't achieve theplan, and in Casual Wear Business, Eagle Retailing Corporation couldnʼt achieve the plan greatly.
(unit : 100 million yen)Segment

2017 Plan

2017 Forecast

ChangeChange Since 2014

Comments

Net Sales

Operating
IncomeNet Sales

Operating
IncomeNet Sales

Operating
IncomeNet Sales

Operating
IncomeBusiness Wear

2,070

230

1,905

192

▲165

▲38

114

16

Yofuku-no-Aoyamaʼs menswear sales
couldn't grow and the number of opening
stores couldn't achieve the plan neither.

(Womenswear)

(320)

―

(300)

―

(▲20)

―

(64)

―

While sales unachieved the plan,
expanded steadily.

Casual Wear

240

11

160

▲5

▲80

▲16

33

▲4

Sales couldn't achieve greatly due to Eagle
Retailing couldnʼt achieve the plan.

Credit Card

40

8

49

16

9

8

10

9

Sales achieved the plan due to increasing
shopping fee etc.

Printing and
Media

150

5

112

2

▲38

▲3

▲2

0

Sales couldn't achieve the plan by great
affection of decrease flyer.

Sundry Sales

135

2

161

6

26

4

8

2

Sales achieved the plan by increasing in thesales of expensive products(150yen500yen).

Total Repair
Service

―

―

128

▲3

128

▲3

128

▲3

229

14

102

2

▲127

▲12

68

0

(Restaurant)

(130)

(6)

(80)

(4)

(▲50)

(▲2)

(51)

(2)

Adjustment

▲64

―

▲30

0

34

―

11

―

Consolidated
Total

2,800

270

2,587

210

▲213

▲60

370

20

OthersROE(％)

7％

4.6％

▲2.4P

▲0.8P

Precede prior investment. Expect toexpand during next Mid-term plan.
Due to store opening, sales of Restaurant
business was +5.1billion and WTW was+1.3billion. Others staid

Profit couldn't grow and couldn't achieve
the ROE plan neither.

5

Review of “CHALLENGE 2017” (Management visions)
Expansion of “strengths”
in the core businessNo.1 approval rate among
business persons

Proactive expansion ofbusiness domains

・Increase womenswear sales
23.6billion yen⇒30billion yen
・Increase sales of corporate partnership
5.5billion yen⇒10billion yen
・Open 3 “Digital Lab” shops thatmake realize the fusion of net and real・Acquiring Minit Asia Pacific Co., Ltd.
(Total Repair Service Business : Sales 12.8billion yen)・Acquiring WTW Co., Ltd.
(Sundry and interior sales : Sales 1.3Billion yen)

Building a “stable business portfolio”
WTW

Management that engages
stakeholders

Implementation of “improvements
for sustainable growth”

・Appropriate response to “Corporate Governance code”
・Increasing number of independent outside directors（one director ⇒ two directors）
・Carry out IR overseas
・Disclose “Notice of the Convocation Ordinary General
Meeting of Shareholders” earlier(Before 3 weeks ⇒ 4 weeks）

6“CHALLENGE 2017” Review (Results of Business Wear
Business Initiatives)

Results and evaluation of measures taken in the Business Wear BusinessBusiness Wear
Business Categories

Estimate Difference Evaluation

TargetPrimary factors

72 stores 50 stores -22 stores△

Availability of excellent properties decreased due to competition, rising

Womenswear 32 billion yen 30 billion yen -2 billion yen△

Sales grew steadily, although the figure fell slightly short of the target (upDress shirts

102%/year

100.8%/year -1.2% points/year△

Low growth despite strengthened product lines such as Non-iron Max

Shoes

105%/year

103.4%/year -1.6% points/year△

Implemented a joint project with Bridgestone, an industry-academia

New storesconstruction costs, etc.
6.4 billion yen within three years).

project with Waseda University, etc.

EC

4 billion yen 1.9 billion yen -2.1 billion yen

×

Sales grew steadily, but fell short of the target by a wide margin because

Inbound3 billion yen 1.7 billion yen -1.3 billion yen

×Increased the number of duty free stores by 198 to total 277, but average

8.5 billion yen 10 billion yen 1.5 billion yen○

Number of corporate partners increased (227 → 566)

New products 1.2 billion yen 1.3 billion yen 0.1 billion yen○

Sales of maintenance products such as hangers remained strong.

18 stores -48 stores△

WHITE TSC (womenswear store) and UL Measureʼs (custom-made suits

3 billion yen 1.1 billion yen -1.9 billion yen

×

Steadily launched new stores in and around Shanghai, but sales fell short△

Launched Digital Lab, a next-generation store that combines online andStrengthening
corporate department

New businesses 66 stores

Overseas
Other

-

-

-

we made no progress with M&As, etc.
spending per customer decreased

store)of the target by a wide margin
bricks-and-mortar store features

7“CHALLENGE 2017” Review - Summary Goals attained through
CHALLENGE 2017
Core
business･Increase womenswear sales･Increase corporate partner sales･Develop business models for womenswear
stores and made-to-order stores･Open Digital Lab locations･Expand maintenance products, etc.

Goals to be carried over to
CHALLENGE II 2020
･Seek growth of menʼs product lines･Promote digitization (stores/sales promotions)･Respond to changes in consumer behavior(customizing, showrooming, sharing, etc.)･Expand business wear product lines, such as
uniforms

Non-core ･Acquire two companies through M&As
(1) Total repair service businessbusinesses
Minit Asia Pacific Co., Ltd.

･Restructure the casual wear business(Rebuild Eagle Retailing Corporation)･Expand the total repair service business･Create new businesses that will be next-generationcore businesses･Effectively use store assets across Japan(Using in-store and parking spaces, etc.)

Infrastructuredevelopment･Develop a group management system to expand
the scope of business･Work on risk management･Maintain new personnel systems･Enhance productivity (stores, logistics, etc.)･Work on ESG(2) Sundry and interior sales
WTW Corporation･Generate stable profits from the restaurant
business･Ensure compliance with the governancecode･Appoint multiple independent outside
directors (increase from one to two)･Ensure appropriate disclosure of informationsuch as business plans･Give back to shareholders (total payout ratioof 130%)･Revise personnel systems

8“CHALLENGE 2017” Review (Cash Flows)
As shown in the cash flow chart, we invested 21.8 billion yen in M&As to expand the scope of our business. Net
assets decreased as a result of our strategy to enhance shareholder returns with a total payout ratio target of
130%. We have expended an estimated total of 104.6 billion yen in cash over the last three years. As a result, net
cash decreased 43.2 billion yen and the equity ratio dropped nine percentage points (varies depending on when

dividends are paid).
(100 million yen)

Cash Flows (3-year Total)(Outflow)
1,046
1,033

1,200
1,000

(Inflow)
1,046

218

800

485

63

533

600

420

400

200

200
0

300

254

Outflow(plan)

Outflow(estimate)

2,500
2,381

561

Revenue+ Financing(estimate)Core business
investments

Non-core business
investments

Dividends + Buyback

Other

2014

Loans, etc.

Operating CF

2,337

2015

2016

2,277

2017
estimate

Changes in Consolidated Net Cashand Equity Ratio(100
million yen)
Cash & deposits
Marketable securities

Liquidity in hand
Loans
+ Bonds

M&A

2,367

2,300

2,100

92

Historical Net Assets(100 million yen)

Net cashEquity ratio

FY 2014
FY 2017
Results Estimate Changes

460
188
648

565
135
700

105
▲53
52

411

896

485

237

▲195

▲432

67.2%

58.2%

▲9.0P

9

『 CHALLENGE Ⅱ 2020』

10“CHALLENGE Ⅱ 2020 ”〜Grasp business environment〜
Personal Problem（Market reduction etc.）
movement of
women
into society

Decrease of
population
between 15 to 64
years old

Change of Consumption action（Innovation etc.）
Leaving
newspaper and TV
Smartphone Gen

Decrease ofbirthrate and agingof the population

Employforeigners

Threat ofmajor EC sites

Office fashion
becamemore casual

Problem ofrecruitment

Penetration of
Sharing economy

Customization
Showrooming『Innovation and Creation』〜For sustainable growth〜

Core Business

New Business

Innovationand challenge
ﾋﾞｼﾞﾈｽﾓﾃﾞﾙの変⾰と挑戦of business model

Creationand growing
次世代事業の創造と育成
Next-Gen businesses

Improve productivity

Taking root new personal system
investment for IT system anddistribution services

11

Vision of AOYAMA GROUP For After 10 years
Transit from dependent on a single businessWith growing our core business Business Wear Business further, create and train
second and third main businesses and aim for sales 400billion yen all the group.
(unit：100 million yen)

4,000
3,000
2,000
1,000

4,000

Non-Core
3,000

Core

523

22%

644

1,879 78%

1,884

'15

'16

40%

2,587

2,528

2,402

1,600

25%

75%

682

975

26%

2,400

2,025 67%

74%

1,905

33%

60%

0
'17

'20

Forecast

Core Business Ratio： 74%(FY2017)⇒

67%(FY2020)

'27

⇒

60%

(FY2027)

12

AOYAMA Groupʼs Mission〜The Vision of AOYAMA Group〜

Corporate Philosophy：Aiming to further contribute to society through retail andservices to consumers based on sustainable growth《

AOYAMA Mind》

Engage with working people
For formulating the Mid-term Plan, the company declare Group mission and Principle as《AOYAMA Mind》 and aim to make business minds of each groups consistent. Also we hopethat society become affluent through the company growing up due to putting 《AOYAMAMind》 as the companyʼs base, then employees feel confident and are proud of that.

１．Group Mission

・We support “Worker” and we want to makesociety cheerful. We think that our mission is toshoulder a part of the responsibility about that.
・Under this mission, we aim to offer goods andservices loved by “Worker”, and professional
services that satisfy customers. We aim to increase
our fans as many as possible.

２．Principle
(1)
(2)
(3)
(4)
(5)
(6)

Customerʼs point of View
Bottom-up Approach
Pursuing Quality
Sense of Ownership
Spirit of Challenge
Fare & Square

13“CHALLENGE Ⅱ 2020 ”〜Management Index〜
The 3years that be based of vision after 10 years
2017 Forecast

2020 Plan

Consolidated Net sales

258.7billion yen

300billion yen+41.3billion yen

Consolidated Operating income

21billion yen

25billion yen+4billion yen

ＲＯＥ

4.6%

6.3%

+1.7p

(Exclude goodwill)(5.3%)(7.0%)(+1.7p)(unit：100million yen)(unit：100million yen)

Net Sales・Operating income

4,500

4,000

Net Sales
Operating Income

3,000
1,932

1,500

Change

2,000

2,124

2,221

183

213

225

136

2,217
190

2,402

2,527

2,587

2,650

2,800

3,000

600
350

213

202

210

200

230

250

300

CHALLENGE Ⅱ 2020

0
'10

'11

'12

'13

'14

900

'15

ROE

'16

ＲＯＥ

5.7%

Exclude goodwill

'17

5.3%

'18

'19

'20

0
'27
10.0%

5.7%

6.4%

7.0%

1.2%

4.0%

5.3%

5.4%

5.4%

5.1%

5.0%

4.6%

5.0%

5.7%

6.3%

8.9%

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

'27

14

“CHALLENGE Ⅱ 2020 ” 〜Key Strategies〜
１. Reform the core business and take on
new challenges〜Customerʼs point of View〜

２. Create and grownext-generation businesses

⼈⼝減少(2)少⼦⾼齢化
Accelerate efforts to digitize EC, sales promotions,(1)Expand the total repair service business (new store
launches and M&As)(2)Effectively use store assets across Japan(1)Expand corporate sales and develop an
organizational structure: shift from internal to external
store operations, etc.

(3) Make a full-scale entry into the uniform market(4) Implement measures targeting people in their 20s and
30s, as well as stores in rural areas, and enhancemerchandising〜create second and third main businesses〜(3)Create new businesses①leverage customer bases to create synergies②work on out-of-the-box initiatives

３. Develop infrastructure to improve productivity(1)Maintain the new personnel system: improve motivation(2)Aggressively invest in IT innovations

４. Work on ESG initiatives(1)Environmental initiatives(2)Personnel and social initiatives(3)Governance enhancement

15“CHALLENGE Ⅱ 2020 ” 〜Segments〜2016 Result2017 Forecast(unit：100million yen)2020 Plan

Change (3years)

Net Sales

Operating
IncomeNet Sales

Operating
IncomeNet Sales

Operating
IncomeNet Sales

Operating
IncomeBusiness Wear
Business

1,884

195

1,905

192

2,025

202

120

11

Casual Wear
Business

167

▲16

160

▲5

171

0

11

5

Credit Card
Business

46

13

49

16

54

18

5

1

Printing and MediaBusiness

114

3

112

2

115

3

3

1

Sundry Sales
Business

158

6

161

6

155

5

▲6

▲2

Total Repair Service
Business

118

2

128

▲3

174

10

46

13

77

▲1

102

2

147

7

45

5

(58)

(1)

(80)

(4)

(114)

(7)

(34)

(3)

New Business

―

―

―

―

190

5

190

5

Adjustments

▲37

0

▲30

0

▲30

0

0

0

2,527

202

2,587

210

3,000

250

413

40

Others(Restaurant Business)

Consolidated Total
ROE

5.0％

4.6%

6.3%

＋1.7P

(Exclude goodwill)（5.7%）（5.3%）（７％）（＋1.7P）

16

Core Business Strategies(Business Wear Business)

17
Menʼs Suits Market Number of Sold Menʼs Suits Share (Assumption)

Number of domestic sold menʼs suits in 2017 is going to be 8.3million on assumption. In
which the companyʼs share is going to be 26.3%. The number of sold menʼs suit forecast in
FY2020 will be 2.3million and plan to expand its share to 28.5%.

15(unit : million)

Men's suits Total

6

28.0%

Share
25.0%

9.8

25.0%

9.9

26.2%
24.8%

10.0

2.4

2.5

'11

'12

2.5
'13

26.2%

26.3%
26.0%

24.7%
24.0%

9.1

3
0

28.5%

Aoyama

12
9

30.0%

8.5

8.4

8.3

8.1

2.2

2.2

2.2

2.2

2.3

'14

'15

'16

'17Forecast

'20

22.0%

20.0%

This is Aoyama Tradingʼs original data on the overall domestic market. Our market share isestimated on the basis of statistical data for the quantity of menʼs suits supplied to the market,
looking comprehensively at the number of sold Mensʼ suits each fiscal year, effects ofconsumption tax hike, as well as other factors.

18Core Business(Business Wear Business)Strategies《Innovation and Challenge of Business Model》〜〜Suits to Business Wear Inside to Outside Analogue to Digital Manual to AI selling to sharing 〜
Expand share of new core models including EC(Online), Corporate partnerships and Sharing etc.,
instead of the present core models that are selling inside stores with flyer attacking etc.(Real store).
(unit：100million)

3,000
2,000

New models

Core model

2,400

2,025

1,905

1,884

1,879

1,000

Expand share of new core models

5%

6%

7%

13%

95%

94%

93%

87%

25%
75%

0

'15

'16

'17 Forecast

1. Improve and expand core business models(1) Restructure item
portfolio

1. Develop attractive products that create a buzz
2. Strengthen items with a low market share andbusiness casual line

(2) Strategies forstores in rural areas(3) Strengthen
womenswear, shirts,
and shoes(4) Inbound tourists

'20

'27

2. Innovation and Challenge of new business models(1) Expand corporate sales

1.･Increase corporate partners
2. Make full-scale entry into the uniform market

1. Respond to the needs of an aging populationand enhance efficiency
2. Localize merchandise and sales promotions(2) Diversify sales channels

1. Increase Digital Lab locations
2. Expand made-to-order business

1. Enhance product lines/sales promotions andtrain personnel
2. Expand products that will create a buzz throughcollaborations with other companies, etc.

(3) Digitization strategy

1. Increase digital sales promotion
2. Study/use AI and other technologies

1. Develop payment infrastructure
2. Place ads on Wechat/Weibo, etc.

(4) Strategies targetingpeople in their 20s and 30s

1. Enhance TSC strategies targeting the young
2. Work on sharing business19

Womenswear＜Net Sales Plan＞

Aoyama30billion yen ⇒ 35billion yen ⇒ 50billion yen(2017 Forecast)(2020 Plan)

7.4%(Vision)

Womenʼs Formal wear
Market＜Main Strategies＞(1) Increase mainly of share formal wearthat has further room for expansion

Others92.6%①Upgrade itemsʼ lineup for young and middle aged women②Rise brand recognition using various tool sales promotion
like SNS etc.
③Educate staff thoroughly(2)Propel with CRM promotion by issuing new memberʼs cardfor women

300
200
100

TSC
Yofuku-no-Aoyama

212
38
174

236
43
193

Source: Prepared based on “White Paper on
Apparel Industry2017,” Yano Research InstituteLtd.

Net Sales Plan

(unit : 100million yen)400

90.3billion yen(FY2016)

331

274

286

300

313

55

60

64

51

59

223

231

241

253

267

350
70

280

CHALLENGE Ⅱ 2020

0
'13

'14

'15

'16

'17

Forecast

'18

'19

'20

Character of Freshersʼ for women ：Nicole
Fujita20

Corporate Business 〜Suits to Business Wear Inside to Outside〜
1. Increase Sales of Corporate Partnerships＜Net Sales Plan＞15billion yen (FY2020)(1)Reinforce with additional personnel working in area
for corporate sales(2)Strengthen sales promotion for existing corporate
partners(3)Expand corporate sales by shop managers andblock managers

200

Sales plan for Corporate partnerships(unit : 100million yen)

150
100
50

83

115

100

〜Challenge to compete in the uniform market bigger than menʼs suits

'16

'17

'18

market (about 2,00billion yen)〜＜Net Sales Plan＞
1.1billion yen ⇒ 3billion yen ⇒ 20billion yen(2017Forecast)＜Specific action plan＞(2020Plan)(Vision)(1)Strengthen uniform sales by mainly staffs working in area
for corporate sales(2)Expand business for Student uniform and working clothes(3)Reinforce personnel recruitment including mid-career
recruitments(4)Enhance the capability to collect information about M&A

150

CHALLENGE Ⅱ 20200

2. Compete in the uniform business on a full-scale

130

'19

'20

Office8.9%Service
16.8%

Uniform market
507.9billion yen Working(FY2016)53.0%

School21.3%

Source: Prepared based on “Uniform market
yearbook” Yano Research Institute Ltd.

21

ＥＣ Digital〜Promote for Strategies of Omni Channel Digital〜＜Main Strategies＞＜Net Sales Plan＞

2.2billion yen ⇒ 6.7billion yen ⇒ 15billion yen(2017Forecast)(2020Plan)(Vision)Increase sales that using EC including sales in the EC
and digital strategic store.
(unit : 100million yen)

80
60

Digital Lab
EC

40

40
20
0

Net Sales Plan

17
17

'16

22
3
19

'17

Forecast

28
6
22

15
25

67

'19

①Work for fusion of real others and EC and showrooming②Adopt “Digital Lab” in TSC stores(2) developing infrastructure①Organize logistic systems②Develop systems like to the cloud etc.,③Introduce AI system that has recommendation feature etc.,
and develop new terminals for customer service.

34

33

CHALLENGE Ⅱ 2020

'18(1)Open digital strategic stores and promote to change
existing stores to be digitized.

'20

Sharing〜selling to sharing〜＜Purpose＞Measure to 20s〜30s customers⇒Among this generation, utilization ratio of
sharing is high.

＜Result＞Morning dress and tuxedo⇒Started on 2016.10. Sales amount about
200million yen＜Main strategies＞(2017Forecast)(1)Expand sharing item lineup(2)Start to link with Aoyama club members
and expand services(3)Open the EC site for only rental items.

22

ＴＳＣ Strategies＜ Net Sales Plan＞

24.9billion yen ⇒ 29billion yen ⇒ 40billion yen(2017Forecast)(2020Plan)(Vision)＜Main Strategies＞(1)Get young customers(20s〜30s) andstrengthen womenswear
SNS promotion･Lineup･Corporate Partnerships
Strengthen collaboration items with other companies etc.,(2)Strategies of store opening
Opening stores in the areas where are no TSC stores(Open 16stores for 3years)(3)Order business 〜 Strengthen strategies to customization 〜
Increase stores with order corner and high-quality services

Net Sales Plan

(unit：100million yen)

300
200
100

238

249

258

275

290

CHALLENGE Ⅱ 2020

0'16

'17Forecast

'18

'19

'20

23

Group Business Strategies

24

Total Repair Service Business: Minit Asia Pacific Co., Ltd.
1. Vision”Harnessing the worldʼs finest hand craftsmanship, we will serve as a service convenience store
that brings the right solutions to your everyday problems within reach so you can use the things
you love for a long time and as much as you like.“

2. Key strategies
2017 estimate
Increase locations inJapan2020 target

314 locations

400 locations

Shore repair ratio

72%

40%

Transition from just shoe repair to service convenience store

Franchise ratio

23%

50%

Promote franchising in Japan

With a view to M&As, etc.

Southeast Asia

Leverage Australian management resources and know-how to expand operations in this growth market

China

Rebuild operations through a service convenience store business model and franchising

3. Performance plan (Minit Asia Pacific: including amortization of goodwill due to M&A)
(100 million yen)(100 million yen)

Net Sales

200

Operating Income

150
100
50
0
▲ 50

118
2
2016

128

▲3

2017
estimate

20

143

158

2

6

2018

174
10

10
5
0

CHALLENGE II 2020

2019

15

2020

▲5

25

Restaurant Business: glob Co., Ltd.
1. Vision“Leverage the Groupʼs combined strengths to expand the franchise business and give back tocommunities through food services”

2. Key strategies(1) Aggressively open new locations under the prime location strategy (open 18 new locations by FY 2020)(2) Open small restaurants with a minimum initial investment according to location conditions and look atdeveloping new business models(3) Implement a membership program and bring in customers from the Aoyama membership program andAoyamaʼs corporate partners(4) Enhance recruiting and continue to work on retention

3. Performance plan (glob Co., Ltd.)(100 million yen)(100 million yen)150

Net Sales

100
50
0

Operating Income
100

87

80
58
1

4

5

2016

2017
estimate

2018

6
CHALLENGE Ⅱ 2020

2019

114

7
2020

15
10
5
0

26

Casual Wear Business〜Eagle Retailing Corporation〜

１．Vision“Improve profitability and expand brand recognition”

２．Main Strategies(1)Propel with SNS promotion like LINE etc.,
and increase EC sales by the SNS promotion(2) Level-up of MD and expand well-selling goods bystrengthening cooperation with US AEO(3)Make profits early thorough cost reduction

３．Achievement Plan（Eagle Retailing Corporation）(unit：100million yen)

200
100

148

Net Sales

144

Operating income

144(unit：100million yen)

20

149

0
▲ 100

▲ 15

▲5

▲4

155

10

0

▲3

0
▲ 10

CHALLENGE Ⅱ 2020

▲ 20

▲ 200

'16

'17

Forecast

'18

'19

'20

27

Group Business Strategies
Other Businesses strategies are listed below〜Other Businesses〜

28Store Opening/Closures Plan29

Store Opening/Closures Plan
１．Store Opening/Closures Policy

Mainly Business Wear Business, Total Repair Business and Restaurant Business, open stores ingood locations. In Total Repair Business there are much room to be able to open new stores inJapan and intend to work on store opening aggressively. However, in regular meeting judge
about store removal or closure speedily.

．Store Opening/Closures
Plan
Opening/Closure
Yofuku-no-Aoyama
Business
Wear
Business
Total Repair
ServiceBusiness

Restaurant
Business

Others

Total

Opening

Road side
Station sideＳＣ
Tota
ClosureOpening
ClosureOpening
Opening
ClosureOpening
ClosureChange

8
9
11
28
9

Japan
120
30
Yakiniku King

14
-

ＴＳＣ
9
7

ANZ

16
2

33
12
Yuzu An
4-

Others0130
130Others
16
0
-

Total
17
40
57
11
169
42
18
13
10
257
63
194

30

Finance, Capital Strategies
and ESG Initiatives

31

Cash Flow Plan

Allocate a total of 97 billion yen from operating cash flow generated by business operations conductedaccording to the strategies already described for growth investment and shareholder return (varies dependingon when dividends are paid).
Under “CHALLENGE II 2020” we will aim for sustainable growth and invest in personnel and innovations.
Core business investments

Investments+
Expenditures

173

50 160387

200

970 (Outflow)

Non-core business
investments
Personnel/Innovation
Dividends + Buyback

Revenues+
Financing

M&A

633

137

200

970

(Inflow)

Operating CF
Cash & deposits

0

200

400

600

800

1,000

1,200

Loans, etc.

(100 million yen)

Breakdown of personnel/innovation investments (16 billion yen): For enhancing productivity and sustaining growth

Investments

AmountPurposePersonnel

5 billionyen

Improve working conditions to improve motivation and retention, revise evaluation
system, and ensure training

IT systems

5 billionyen

Digitize operations, develop systems infrastructure, enhance operational efficiency, etc.

Other

6 billionyen

Restructure logistics infrastructure in line with expanding EC, corporate, Digital Lab,
sharing, as well as other businesses, and work on ESG

Total

16 billion
yen

We should be able to fully maintain a stable financial foundation even after financing and partial spending of cash
and deposits for the above-mentioned investment purposes.

32

Shareholder Return
We will use the following strategy as we continue to work on improving ROE.
CHALLENGE 2017

CHALLENGE II 2020

Consolidated total
return ratio

130% target

100% target

Dividend payout
ratio

70% target (stable dividend of 100 yen)

70% target (stable dividend of 100 yen)

Purchase oftreasury shares

Buy back shares valued at an amountequal to 130% of consolidated net income
minus dividends

Buy back shares valued at an amount equal
to consolidated net income minus dividends(100 million yen)

200

Share buyback

150

Dividends

100
50
0

CHALLENGE Ⅱ 2020

2010

2011

2012

2013

2014

2015

2016

2017
Forecast

2018

2019

2020

33

ESG Initiatives

Guided by our mission to work for working people, we will respond to the expectations of our
stakeholders as we move ahead with the following ESG initiatives (to be published on our
corporate website) with a view to creating a sustainable society.
Category

Environmental
Issues(E)

Social Issues(S)

Governance(G)

Sub-category

Measures taken so far

Climate change
mitigation

1. Implemented the “eco 5 minutes” energy
conservation initiative at all store locations
2. Switched to LED lights at locations in Japan(cutting about 15,000 t CO2)

Waste management

1. Reduced waste through the suit trade-in
program
2. Reduced usage of packing materials bytransporting garments on hangers

Human resources(work-stylereforms)(empowerment of
women)

1. Implemented half-day holidays andencouraged employees to take paid half-day
holidays, etc.
2. Introduced women manager system
3. Established employee training programs
including e-learning
4. Improved employee motivation by revising
personnel systems

Community
outreach

1. Hosted free dressing seminars (80,000
people/year)
2. Published community information
magazines

Internal controls

1. Established the Compliance Promotion
Office2. Organized a risk management training
session

Dialogue withstakeholders

1. Conducted regular IR events in Japan andconducted IR events overseas
2. Published the medium-term management
plan

Measures to be implemented
Environmental initiatives
1. Switch to LED lights at more store
locations
2. Develop recycled products using trade-in
items
3. Develop environmentally friendly products

Personnel and social initiatives
1. Focus on creating a work environment
designed to empower women
2. Host free dressing seminars (100,000
people/year)
3. Maintain new personnel systems

Governance enhancement
1. Step up efforts to ensure compliance withthe governance code
2. Develop a group management system
3. Implement risk management programs

34《Reference》
Year Plan by Segment/
Store Format

35“CHALLENGE Ⅱ 2020”《Reference》〜Year Plan by segments〜
Segment

2017Forecast

2018Plan

2019Plan(unit：100million yen)

2020Plan

Net Sales

Operating
IncomeNet Sales

Operating
IncomeNet Sales

Operating
IncomeNet Sales

Operating
IncomeBusiness
Wear

1,905

192

1,941

174

1,990

196

2,025

202

Casual
Wear

160

▲5

158

▲4

165

▲3

171

0

Credit Card

49

16

50

17

52

17

54

18

Printing and
Media

112

2

113

2

113

3

115

3

Sundry
sales

161

6

160

6

154

5

155

5

Total Repair
Service

128

▲3

143

2

158

6

174

10

Others

102

2

115

4

198

6

337

13

(Restaurant)

(80)

(4)

(87)

(5)

(100)

(6)

(114)

(7)

Adjustment

▲30

0

▲30

0

▲30

0

▲30

0

Consolidated
total

2,587

210

2,650

200

2,800

230

3,000

250

ROE(％)

4.6％

5.0%

5.7%

6.3%

(Exclude good-will)(5.3%)(5.7%)(6.4%)(7.0%)

36

Store Format（Business Wear Business） 《Reference》
Yofuku-no-Aoyama
Road side store

Yofuku-no-Aoyama and
TSC connected store

Yofuku-no-Aoyama
Station side store

Yofuku-no-Aoyama
Digital Lab store

Yofuku-no-Aoyama
Collaborated with
Other Company

TSC in station side
Building

UL in Department store

UL Measures store

Yofuku-no-Aoyama
SC storeTSC

SC store

Yofuku-no Aoyama
郊外路⾯店舗UL in station side
Building

WHITE TSC store

This presentation material contains forward-looking
statements which are based on the Companyʼs
assumptions, predictions and plans regarding the future
as of February 9, 2018. Actual results may differ
significantly from those anticipated in these forwardlooking statements due to various risks and uncertainties
related to the world economy, competitor situation andchanges in exchange rates.