Values and Vision

Value Creation

Management Strategy

Sustainability

Governance

Data

Management Strategy

Review of the Previous Medium-term Business Plan and the Current Medium-term Business Plan

Toward Medium- to Long-term “Regrowth” through Portfolio Transformation

Medium-term Business Plan（FY2021-FY2023）
Review of the previous Medium-term Business Plan (FY2017-FY2021)
The previous Medium-term Business plan, which started infiscal 2017, ended in fiscal 2020, one year ahead of schedule,
due to the rapid changes in the business environment
caused by the spread of COVID-19 that began in early 2020.

Positioning the period as a phase of changing the structure
aimed at transforming our business portfolio, we have steadily
expanded our business domains, transformed our existing
business models, and strengthened our ESG initiatives.

Major achievements

Major challenges left

Conversion of Parco
into a wholly owned
subsidiary

Converted a consolidated subsidiary Parco into awholly owned subsidiary through TOB (March 2020).
Strengthened systems to further enhance corporate
value of the Group by seeking synergy.

Growth of Real
Estate Business

Expanded the Real Estate Business by opening GINZASIX (April 2017) and Ueno Frontier Tower (November2017). Built a new business base to change businessportfolio.

Innovation ofDepartment Store /Parco

Opened the Daimaru Shinsaibashi store with a hybridbusiness model that combines the transaction bybuying and fixed-term lease (September 2019).
Opened Shibuya PARCO as a symbol of next
generation commercial facilities (November 2019).

Strengthening ofdefensive IT

Formulated the Group IT governance. Strengthened
security by introducing cloud systems and created anenvironment that enables remote working.

Strengthening ofgovernance system

Transitioned from a Company with an Audit & Supervisory
Board to a Company with Three Committees (Nomination,Audit, and Remuneration Committees) (May 2017).
Implemented the reform of the Board of Directors by
separating oversight from execution, increasing thenumber of Outside Directors, etc.

Obsolescence ofbusiness model

The performance of the Department Store and Parcodeclined rapidly due to the COVID-19 pandemic.
Obsolescence of their business models that overly
depended on physical stores was accelerated. Thereis an urgent need to respond to aggressive digitalization.

Lack of resiliencein business portfolio

The vulnerability of earnings structure with more than
80% of earnings coming from the Department Store andSC got revealed all at once due to rapid environmental
changes. Need to revise resource allocation to correct
overdependence on the Department Store and SC.

Weak promotion
framework, lack ofprofessional talent

Cannot deny the weakness of organizational
promotion framework and the lack of professional
talent for portfolio transformation. Urgently need tostrengthen professional talent in digital and realestate (Developer) areas.

Resolution ofsustainability issues

Inevitably need to address climate change and humanrights issues at the supply chain level. COVID-19
further increased the importance of safety andsecurity. Essential to strengthen initiatives from a CSV
perspective.

Linkage between the previous Medium-term Business Plan and the current Medium-term Business Plan
Major strategies in the previous Medium-term Business Plan

(1) Multi Service
Retailer Strategy(2) Urban Dominant
Strategy34

Positioning in the current Medium-term Business Plan
[Holding company]
Develop investment projects and alliance partners of a certain
size or larger[Operating companies]
Develop new businesses in the areas around existingbusinesses[Development of new businesses]
Development of new businesses inthe service areas that relieve thefrustration and concern ofconsumers(1) Developer Strategy(2) Real × Digital Strategy(3) Prime Life Strategy
Develop new businesses
with 3 strategies[Growth of 3 key businesses]
JFR Card
J. Front Design & ConstructionDimples’Review the positioning of 3 key businesses
JFR Card: Strive to contribute to each strategy and achieve independent growth
J. Front Design & Construction: Positioned as Developer segment and strive to grow inconjunction with Parco and PSS
Dimples’: Liquidated the business with the Department Store Business[Large-scale development PJ]
Development of GINZA SIX/Ueno
FT/Shibuya/Shinsaibashi[Real estate development]
Expansion of real estate rentalbusiness[Coexistence with area](3) ICT Strategy inresponse to theIoT era

1. Strengthening of EC
2. Development of LTS-Hub
3. Creation of organization to use ICT(4) Innovation ofexistingbusinesses[Department Store Businessinnovation]
Making stores attractive, reform ofrural and suburban stores[Parco Business innovation]
Store portfolio transformation(1) Strengthening ofdevelopment asDeveloper Strategy[Large-scale development PJ/real estate development]
Promote large-scale complex redevelopment. Develop“unparalleled J. Front zones” in Shinsaibashi/Nagoya/Fukuoka ineach of which a department store and PARCO adjoin each other[linked to three strategies (1) to (3)][Coexistence with area]
Inherit the concept. Deliver value to consumers, improve
environmental performance(2) Real × Digital Strategy
Digital shift[Operating companies]
Strengthen OMO of customer touch points[Holding company]
Realize full use of LTS-Hub (present JCDP)
Continue to strengthen IT governance(2) Real × Digital Strategy
Making contentattractive[Operating companies]
Continue efforts to make stores attractive. Invest in flagshipstores, promote renovation, find and co-create content

Overview of FY2021-FY2023 Medium-term Business Plan
We positioned the current Medium-term Business Plan as
the period for achieving “full recovery” from the COVID-19
pandemic by returning our financial figures to fiscal 2019
levels in its final fiscal year 2023 and for getting back on
track for “regrowth” from fiscal 2024 onward.
This fiscal year is the final year, but the forecast figurescompared to the initial target have been revised downward
due to the delay in top-line recovery caused by the longerthan-expected impact of the COVID-19 pandemic, as well as
the expected sharp rise in raw material costs, especially fuelcosts, triggered by geopolitical risks, which are expected toLong-term mega trends

lead to a significant increase in costs.
In order to achieve an early profit recovery, we will concentrate
on remodeling and digital investment in flagship stores under oneof our key strategies Real × Digital Strategy and on strengthening
our customer base based on the Department Store’s gaisho sales
under the Prime Life Strategy. Under the Developer Strategy, as a
medium- to long-term growth driver, we will increase investment
allocations ahead of schedule during the period of this plan.
At the same time, we will carry out “management
restructuring” to reduce fixed costs, replace businesses andassets, and reduce interest-bearing liabilities.
Short-term outlook for changes (mainly impact of COVID-19)

Entireworld

Environmental/food problems
Natural disasters/epidemics becoming commonRealization of sustainable society
Technology progress (AI, 6G, IoT, etc.)
Increasing urbanization
Increasing globalization
Widening income gap (income polarization)

Politics/economy

Concern about prolongation of economic stagnation
Increasing demand for focus on sustainability
Accelerated technology evolution
Changes in urbanization (possibility of decentralization)
Paradigm shift in work styleJapan
specific

Accelerated depopulation/aging
Lack of labor force population
Rebuilding of social security system
Renewal of urban infrastructure/transition to a smart city
Maturing consumption

Society/individual

Increasing awareness of sustainabilityShift to open areas with sparse population,return to rural areas and nature
Expansion of virtual communication
Increasing importance of human connection

Important changes in the external environment
Steady urban commercial areas

Key performance indicator targets（FY2023）
Capital profitability
Business growth
Financial health
Sustainability

Polarization of income/consumption

Merger of digital and real

7.0%
Operating profit ¥38.5 bn
Interest-bearing
liabilities* ¥ 225.0 bn
GHGemissions* -40%
ROE

12Portfolio reformIn fiscal 2023, the final year of the current Mediumterm Business Plan, the share of the retail business,
including the Department Store and Parco, is still
expected to exceed 70%, but in fiscal 2030, we will
reduce this share to about 60%. On the other hand, we
hope to increase the share of non-retail businesses, suchas the Developer, the Payment and Finance, and new
businesses, to around 40%. Through these initiatives, wewill change our portfolio to a highly resilient one.

4.6%
Business profit ¥40.0 bn
Net D/E
0.6 times
Ratio of women inmanagement positions 26％
ROIC*1 Lease liabilities are excluded.
*2	Scope 1 and 2 emissions
compared to FY2017“Operating profit” share of each segment
Department StoreSCDeveloper
Payment and Finance¥80.0 bn40%

Developer
Payment and Finance
Other60%

Department StoreSC

Other (including consolidation adjustments)
7.0%
4.7%

¥40.2 bn
9.8%
23.6%

¥38.5 bn

0.8%

17.1%

9.1%

17.1%

54.9%

55.8%

FY2019FY2023
Forecast

FY2030
Image35

Values and Vision

Value Creation

Management Strategy

Sustainability

Governance

Data

Management Strategy

Review of the Previous Medium-term Business Plan and the Current Medium-term Business Plan

Overall composition of the current Medium-term Business Plan

3 strategies forearnings recovery
and regrowth

1. Real × Digital Strategy

2. Prime Life Strategy

3. Developer StrategyD epartment Store: Making stores attractive
and transition to media commerce with afocus on genuineness/essenceP arco: Rebuilding store brand value andseeking digital SC platformC reation/development of new content froma CSV perspectiveD evelopment of new solution services thatrealize high quality customer experience
Evolution of online gaisho communication
Evolution of CRM strategy at the GrouplevelM
 ixed use not limited to commercialuseL aunching a circular investment
schemeEntry into semi-urban areas

Promotion of strategies across the Group by committees for regrowth
Digital Strategy
Committee

Developer Strategy
Committee

 ost reduction throughCbusiness model reform arrowing down of aN
business base

Capital policy

Tax policy

 enewal ofR
business management

Human resource
strategy ompletion of the GroupC
workforce restructuring

 ealization of diversity
Rand work-life balance uman resource
Hmanagement for regrowth

IT strategy(defensive IT)

Rebuilding of core systems

 trengthening ofS
the Group IT talent system

Important measures
for full recoveryManagementrestructuring
FinancestrategyManagement basefunction strategy

Prime Life Strategy
Committee

Three strategies
Our strengths are “commercial production capability,” “goodcustomer base,” “partners including suppliers and creators,”and “real estate assets in major cities.” Considering thesestrengths and medium- to long-term environmental changes,
we have decided to focus our initiatives for growth on “threekey strategies” in the current Medium-term Business Plan.

(1) Real × Digital Strategy
 e will convert physical stores into spaces not only for makingWpurchases, but also for encountering attractive products andservices, and enjoying high quality customer experiences.

 ith the use of digital technologies based on stores, we willW
transform the business model into one that provides newexperience value beyond time and space.

 e will sophisticate customer data analysis and the use ofW
digital tools for individual sales staff, gaisho staff, and buyers
to deepen the relationships with customers.

In addition to sales revenue, we will diversify revenue streams,
such as real estate-related revenue and commission revenue
through the use of digital technologies.

【Major progress to date】

・Number of department store app users: 1.77 million(results on February 28, 2023)
Sales via app: ¥237.1 billion (results in FY2022)
・Department store online sales: ¥13.7 billion (results in FY2022)(2) Prime Life Strategy
 e will further strengthen our proposals for consumers whoW
value culture and art and enjoy fulfilling, sustainable lifestyles.

 e will enhance our content by utilizing the Group’sW
entertainment and art, as well as developing new products andservices that provide premium experiences through allianceswith other companies.

We will promote the acquisition of customers beyond

36Group, while working to establish frameworks and systems thatenable their maximum utilization in the Group.

Management restructuring【Major progress to date】

Reduction of fixed costs
 e will reduce fixed costs by ¥10.0 billion or more comparedWwith fiscal 2019 and lower our breakeven point throughorganization/workforce restructuring and cost restructuring.

【Major progress to date】

・Reduction in consolidated fixed costs: ¥10.4 billion (cost/SGA,cumulative total for FY2021-FY2022)

Improvement of management efficiency and asset efficiency
 e will increase efficiency by narrowing down the GroupW
businesses based on the future and growth potential of eachbusiness and identifying idle and low-yield assets.

【Major progress to date】

・Transferred all shares of a subsidiary Neuve A (June 2021)
・Daimaru Matsuzakaya Sales Associates merged into Daimaru
Matsuzakaya Department Stores (September 2021)
・Transferred part of the shares of a subsidiary Dimples’ (February 2022)
・Tsudanuma PARCO closed (February 28, 2023)
・Shintokorozawa PARCO will close (scheduled for February 29, 2024)
・Matsumoto PARCO will close (scheduled for February 28, 2025)

The Group human resource strategy
department store gaisho, such as the new rich in Japan andaffluent people in Asia, for example, through alliances withother companies.

 sing digital technologies to sophisticate our customer
U
management, we will maximize the lifetime value of good
customers by capturing diversifying customer insights tostrengthen our proposal capabilities.
 e will expand our pool of loyal customers by offering newW
payment methods and developing high added value financial
services through customer life planning.

【Major progress to date】

・Department store gaisho sales: ¥188.3 billion (results in FY2022)
・Share of young gaisho customers (20s to 40s): 29.5% (results inFY2022)(3) Developer Strategy
 e will maximize the value of the Group’s real estate assets.
W
In complex redevelopment and so forth, we will rightsize
our department stores and PARCO and make use of relaxedbuilding volume restrictions. We will increase the share of
non-commercial applications to increase profitability.
In the development of large-scale complexes in key areas, wewill contribute to attracting crowds to the areas by making
them attractive in a way that respects local individuality interms of history and the environment to increase consumer
mindshare.
 e will diversify revenue streams by acquiring and developingW
new real estate, organizing private placement funds, andengaging in asset management. In addition, we will expand
our development area to include semi-urban areas.

【Major progress to date】

・Established a new company J. Front City Development (March 2023)
・Created CRE Strategy Unit in the holding company (March 2023)
・Development projects underway in the Sakae area, Nagoya andthe Shinsaibashi area, Osaka (scheduled for completion in 2026)

Human resource management for regrowth o secure human resources that will carry out the key strategies,T
we will strengthen employee skills development and therecruitment of professional human resources from outside the・Number of professional human resources hired from outside theGroup: 264 (cumulative total for FY2021-FY2022)

Promotion of diversity & inclusion, realization of work-life integration
 e will conduct various measures based on materialities, such asW
assignment and development aimed at women’s empowerment,
work style reforms, employment of disabled people, and LGBTrelated initiatives, to enable individual employees to demonstrate
their individuality and abilities to the fullest.

【Major progress to date】

・Ratio of women in management positions: 22.2% (results onFebruary 28, 2023)
・Employment rate of disabled people: 2.9% (results on June 30, 2022)

Policy on alliances, M&As, and wing expansion
 e will aggressively engage in alliances with other companies
Wand business acquisitions to create new businesses and expand
our capabilities, which will contribute to scale expansion andacceleration of the three key strategies.

【Major progress to date】

・Established a CVC fund (October 2022)
・Acquired a 50.8% stake in XENOZ Co., Ltd. and converted it into a
subsidiary (November 2022)
・Invested in Financie, Inc. (April 2023)

Cash flow allocation
In the current Medium-term
Business Plan, we have decided
to prioritize balance sheet
improvement by reducing
investment compared to theinitial plan and proceeding withasset sales, in preparation for
the investment phase of thenext Medium-term Business
Plan and beyond.

Capital investment
Store renovation, DX, etc.

Investing CF

Operating CF¥190.2 bn（¥38.6 bn*
¥57.2 bnexcluding proceeds fromsale of assets）

Growth investment
M&A, alliance

Improvement of balance sheetFCF¥151.6 bn*CF numbers are total for the three-year period fromFY2021 to FY2023.
*Depreciation related to right-of-use assets is included.
*Proceeds from sale of assets (¥18.6 bn) are included.

Increasing shareholders’ equity
Reducing interest-bearing liabilities

Return to shareholders
Targeting dividend payout ratio of at least 30％
 onsidering share buyback as appropriate
CToward the next medium-term plan
The next Medium-term Business Plan will start in fiscal 2024. This is a phase in which initiatives currently underway toprepare for medium- to long-term regrowth will take shape. How will the grains of results that have been seen be chained andexpanded in the future? We would like to more clearly show the path to the portfolio transformation that the Group is aimingfor 2030, including the pipeline of the Developer Business, which is one of the growth drivers.

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