Values and Vision
02 Corporate Credo / Group Mission Statement
04 Group Vision “Create and Bring to Life ‘New Happiness.’”
06 Top Message
08 History – Surviving the Waves of Changing Times
Business Model
10 J. Front Retailing “Value Creation Process”
12 Multi Service Retailer

Contents

14 Changing Department Store Business ModelManagement Strategy
16 Top Interview
22【Special Report】Business Risk (Opportunity and Threat)

Editorial policy:
J. Front Retailing Group (the “Group”) issued
this integrated report in order to provide adeeper understanding of what actions it takes
to change its business portfolio for sustainablegrowth of corporate value. The report explains at
the beginning the values, vision, value creation
process and business model of J. Front Retailing(the “Company”) and it contains non-financial
information including the Group’s involvement
in society and the environment throughbusiness activities and governance systemthat helps enhance corporate value in addition
to financial information based on specificmanagement strategy. We have referred to the“International Integrated Reporting Framework”
established by the International Integrated
Reporting Council (IIRC) and the “Guidance forCollaborative Value Creation” established by
the Ministry of Economy, Trade and Industry tocreate this report.
Timeframe:
This report mainly reviews the fiscal year 2017
(March 1, 2017 through February 28, 2018)
but it also contains the latest information
available at the time of issue to the extent
possible.
Scope:
J. Front Retailing Co., Ltd. and consolidated
subsidiaries
Cautionary statement regarding forwardlooking statements:
Forward-looking statements in this integrated
report represent our assumptions based on
information currently available to us andinherently involve potential risks, uncertainties
and other factors. Therefore, actual results may
differ materially from the results anticipatedherein due to changes in various factors.

Environment
S ociety
Governance

24 Whole Picture of Medium-term Business Plan
26 Urban Dominant Strategy
28 ICT Strategy
30 Innovation of Department Store Business (Rebuilding of Main Buildingof Daimaru Shinsaibashi Store)

32 Innovation of Parco Business (New Shibuya Parco)
34 Finance Strategy
36 Human Resources Strategy
Sustainability
38 Formulation of Sustainability Policy and Identification of Materiality
42 Activity Report – The Environment
44 Activity Report – Coexistence with Local Communities and Contribution to Society
46 Activity Report – Diversity and Work-Life Balance
Governance48 Corporate Governance
56 Interview with Outside Director
58 Management
Financial/Non-financial Highlights
60 Financial/Non-financial Highlights
Financial Section
64 Business Overview (At a Glance)
J. Front Retailing Group
66 Group Companies

Guidance forCollaborative
Value Creation

68 Stores (Map)70 Stores (Photos)
72 Share Information

Corporate Credo

Service before Profit
Service before Profit – This phrase is from a passage from“Of Honor and Disgrace”written by Xunzi, a Chinese thinker
in the Zhanguo period,“Those who give priority to service
over profit will prosper.”The most important thing is toapproach things with sincerity and good faith.“Do not sell
any products that are of no benefit to customers.”“Do notrank customers.”“Honesty and loving-kindness come first.”“An unfaithful person is useless regardless of how gifted
he/she may be.”Thus Daimaru has told its employees tokeep a humble attitude to serve customers. At Matsuzakaya,
the spirit of“Abjure all evil and practice all good”has beenvalued. They can be modernized as“Customer-first principle”
and “Contribution to society.” Thinking of stakeholders
thoroughly and acting accordingly will lead to businessgrowth. We believe“Creating Shared Value (CSV)”to solve
social issues through business activities is nothing less thanpracticing the Group’s corporate credo simply and honestly.

02

Group Mission Statement

We aim at providing
high quality products and services
that meet the changing times andsatisfying customers
beyond their expectations.

We aim atdeveloping the Groupby contributing tosociety at large
as a fair and reliable corporation.

Integrated Report 201803

G r o u p

V i s i o nCreate and Bring to Life
“New Happiness.”
Now is the time when lifestyles are changing speedily. To meet these changes quickly, and what ismore, to find budding needs are J. Front Retailing’s important missions. More women’s social
advancement. Changing lifestyles due to falling birthrate and aging population. Increasing
globalization and digital consumption. Various factors bring you more new ways to enjoy your life
as well as triggering concerns and stresses. Seeing both these“positive and negative”factors, wewill evolve into a group that can serve you in all aspects of life. With regard to“enjoyment,”we will
not only“sell goods”but create new events and experiences to excite you. With regard to“concerns,”
we will cover“shortfall”such as“busyness,”“uneasiness”and“hassle”and create services to clear
the fog in your mind. Our domain will expand beyond the framework of“retail.”And there should becreative ideas, or the creation of“new happiness.”Now is the time for J. Front Retailing to drasticallychange. And we promise you to closely support your life in a“present progressive form”after 10
years and even 100 years by“changing all the time.”

04

Story behind the development of the Vision

products and services mainly for“festive occasions”by the

J. Front Retailing Group was formed through thecore businesses including department store chains Daimaru

management integration of The Daimaru, Inc. and Matsuzakaya

and Matsuzakaya and Parco to meet customer needs. With

Holdings Co., Ltd. in September 2007, and with the vision ofincreasingly diversified lifestyles, however, customer needs“establishing ourselves as a leading Japanese retail company

are seen not just on festive occasions but also widely in dailyboth in terms of quality and quantity with the Department

life. By relieving customers of“concerns”and“frustrations”inStore Business as its core,”we implemented various initiatives

daily life so that they can live more conveniently and more

to become a multifaceted retailer. In the core Department

comfortably, we hope many customers will be able to spareStore Business, we deepened the establishment of new

more time for festive occasions. I think that is the social role

department store model as well as expanding our customer

we will have to fill, i.e., the cause.

base. Furthermore, we have steadily expanded our businessIn fact, as the means of seeking enjoyment are diversified,areas other than the Department Store Business throughmany customers cannot gain sufficient satisfaction from aaggressive M&A including the conversion of StylingLife

stereotypical form of consumption as in the past. Consumers

Holdings Inc. (SLH) into an associate accounted for using“want new and different experiences”or“want to enjoy withequity method in 2011 and the conversion of Parco Co., Ltd.

like-minded people.”Thus the focus of consumption is shifting

into a consolidated subsidiary in 2012.

to experiences. Another recent big trend is heightened

In the meantime, the business environment is greatly

awareness of social contribution. People“want to care morechanging. We expect “lifestyles” to be increasingly

about the environment and ethics”and“want to feel that their“diversified”due to falling birthrate and aging population andown existence is meaningful in society.”The Group has to bechanging family dynamics and the “means of seeking

able to offer something more enjoyable and more exciting inenjoyment”are also expected to grow increasingly“diverse”

response to such diversification of the means of seeking

due to shift from product-based consumption to experience-

enjoyment.

based consumption and the evolution of ICT. That is to say,as it is difficult to grow just by continuing the current businessmodel as it is, we see the present time as a turning point todrastically alter the course of the Group’s management.

Dissemination of the Vision to drive specific actions
The Vision shows where we and the Company want to bein the future and helps clarify the organization’s strategy,

In these circumstances, considering what makes people

direction and decision-making process. It is each and every

happy and strategically expanding business fields andemployee who will realize the Vision in a concrete mannertransforming existing businesses to provide new forms ofand the sum of their performance will constitute our corporate

value with respect to“lifestyles”and“means of seeking

value. That is, we think the key will be how we will drive theenjoyment,”we developed the new Group Vision“Create andspecific actions of individual employees while disseminating

Bring to Life‘New Happiness.’”with the aim of becoming a

the Vision in each site and offering directions.

business group which contributes to realizing spirituallyaffluent lifestyles.

To this end, firstly, the top management explained theirthoughts put into the Vision in person to employees and had

By showing the future directions to aim for with this Group

interactive dialogues. In the next step, all employees including

Vision, we aim to greatly change the Group and realize

people in the Executive Officer and higher management

discontinuous growth.

positions made pledges for actions toward the realization of

New cause assumed by the GroupThe main business of the Group was the offering of

the Vision via the Company magazines and intranet website.
As initiatives to drive specific actions based on these pledges,
we have created the“Challenge Card”program in which all
employees can participate via the personnel system. Thus we

Basic Mission Statement, Group Vision and JFR Way

Basic
MissionStatementGroup Vision

JFR WAY
Ideas we value

We aim at providing high quality products andservices that meet the changing times andsatisfying customers beyond their expectations.
We aim at developing the Group by contributing tosociety at large as a fair and reliable corporation.
Create and Bring to Life
“New Happiness.”“Create the future!”“Try without fear of failure!”“Introduce new ideas!”“Act for yourself!”“Be sensible and honest!”

have introduced a company-wide system that assesses theideas and inspirations of individual employees and teams andhelps realize them. And with regard to“creation”ideas withpotential to expand, the Company provides an opportunity
called“Creation Award”in which creators present their ideas
in person to share company-wide the ideas themselves andinformation on the process to address them. We allow all
employees to try to increase their motivation.
We will have the“creative nature”take root as our true
corporate culture. – The Group’s grand challenge has started.

Integrated Report 2018

05

06

＞

Values and Vision

Values and Vision

Top Message

We Will Respond to Changes and Commit Ourselves
to“Creating Shared Value”in a Timeless Way.
YAMAMOTO Ryoichi
Director, President and Representative Executive Officer
J. Front Retailing Co., Ltd.

Kimono dealers, which originated in the Edo
period, dramatically transformed themselves into
department stores more than 100 years ago in
response to changing times. Thus founded Daimaru
and Matsuzakaya in the Group have achieved
sustainable development over 300 and 400 years,
respectively, because they have always grasped
changes of the times accurately, have thought
through what are values for society and forcustomers, and have been engaged in businessactivities simply and honestly following theircorporate credos.
I recognize the environment surrounding ourbusiness is currently facing a“greater turning point”
than these times and changing at a breakneck
speed. The evolution of AI and robots has automatedtasks and operations. And I feel the digital society
where IoT connects everything to the Internet has
been rapidly becoming familiar to us over the past
year. I realize it is radically changing lifestyles andindustrial systems.
As it is said to be the“era of 100-year life
expectancy,”longevity is expected to be further
extended. In the meantime, according to a study,
the population in Japan is projected to be below 90
million 50 years later and decrease by half 100
years later. Actually, a dramatic change in thesocial structure that we have never experienced
before is drawing near.
In addition, consumption is shifting from goods toservices and experiences and the focus is shiftingfrom retail to services. Therefore, the Group whose
main business is retail such as department stores

needs to change its business structure beyond theframework of retail in order to continue to create
new value beyond customers’expectations andfurther develop.
Under the new Group Vision“Create and Bring toLife‘New Happiness’”and the current Mediumterm Business Plan, the Company drasticallyaltered the course of the management toward“discontinuous growth,”which is not an extensionof the present. In the process, while respecting thevalues that do not change over time, we will
accurately capture changes in the times and thebusiness environment and firmly capture both
positive and negative risks to change into a newsocially indispensable business group thatcombines tradition and innovation.
To this end, it is essential to change our mindset
and working styles. Instead of being bound by our
past
successful
experiencesandfamiliar
approaches, we will facilitate deeper communication
inside and outside the Company and actively
incorporate different cultures and thinking to“combine different elements,”which will lead to
new achievements using diversity.
With the aim of developing as a“Multi Service
Retailer”beyond the retail framework, we will create
both “social value” and “economic value” anddrastically change our business portfolio to ensuresustainable growth and increase corporate value
over the medium to long term.

June 2018

Integrated Report 201807

Values and Vision＞

History – Surviving the Waves of Changing Times

Blend of Tradition and Innovation –And Creation
gratioss intef busine

Phase ofPhase ogfoundin

The Daimaru, Inc. and Matsuzakaya
Holdings Co., Ltd. integrated
management and established
J. Front Retailing Co., Ltd.

●Restaurant PeacockCo., Ltd. absorbed Shoei
Foods Co., Ltd. to form
J. Front Foods Co., Ltd.
●Matsuzaka Service Co.,
Ltd. was renamed JFR
Service Co., Ltd.
●The north wing of
Daimaru Shinsaibashi
store opened●JFR Service absorbed
Daimaru Lease &Service Co., Ltd.

●Phase I relocation and expansionof Daimaru Tokyo store

2007

2008

2009

izationorgan
n and re2010

●The Daimaru Home
Shopping, Inc. took overpart of the direct marketingbusiness split off from
Daimaru Matsuzakaya andwas renamed JFR Online
Co. Ltd.
Acquired a 49% of stakein StylingLife Holdings
Inc. and converted it into
an equity method
associate

Sold all shares of
Peacock Stores Ltd.,
which operated asupermarket
business, to Aeon
Co., Ltd.
Acquired a 70.52%
stake in Forest Co.,
Ltd. and converted it
into a consolidated
subsidiary●Daimaru Umeda store
increased floor space

2011

2012

2013

Acquired a 33.2% stake in ParcoCo., Ltd. (“Parco”) and converted it
into an equity method associate

March 2011
Larger Daimaru Umeda
store opened
November 2009
North wing of Daimaru
Shinsaibashi store opened
September 2007
Established J. Front
Retailing

1611
Ito Genzaemon Sukemichi, a son of
Ito Ranmaru Sukehiro who served
Oda Nobunaga, opened a kimono
fabric and fancy goods wholesale
store in Honmachi, Nagoya(Foundation of Matsuzakaya)
1717
Shimomura Hikoemon Shokei opened akimono fabric store “Daimonjiya” inFushimi, Kyoto (Foundation of Daimaru)

08●Daimaru Credit Service, Inc. wasrenamed JFR Card Co., Ltd.
●Daimaru Design & Engineering
Co., Ltd., Daimaru Mokko Co.,
Ltd., Matsuzakaya Seiko Co.,
Ltd. and Refix Japan, Inc.
merged into J. Front Design &Construction Co., Ltd.
●Dimples’ Co., Ltd.
absorbed Daimaru Sales
Associates Co., Ltd.
●Integrated the information
systems of The Daimaru, Inc.
and Matsuzakaya Co., Ltd.

●Reached a basic agreement with Shanghai
Xin Nan Dong Project Management Co.,
Ltd. and Shanghai New World Co., Ltd. toprovide technical support and cooperationin opening and operating a new department
store in Huangpu District, Shanghai, China●Jointly established JFR Plaza Inc.
with StylingLife Holdings Inc.
Increased a stake in Parco to 65%
through TOB and converted it into a
consolidated subsidiary●The Daimaru, Inc. and MatsuzakayaCo., Ltd. merged into Daimaru
Matsuzakaya Department Stores
Co. Ltd. (“Daimaru Matsuzakaya”)●J. Front Design & Construction
Co., Ltd. absorbed DHJ Co., Ltd.
●The Daimaru Tomonokai, Inc.
absorbed Matsuzakaya Tomonokai
Co., Ltd. to form Daimaru
Matsuzakaya Tomonokai Co., Ltd.

●Dimples’ Co., Ltd. spun off Daimaru
Matsuzakaya Sales Associates Co. Ltd.
●Phase II expansion of Daimaru Tokyo store

August 2012
Converted Parco into a
consolidated subsidiaryowth / camatic gr
hase of drPundations
o
f
g
in
d
il
f bu

Phase o●Became affiliated with
Rakuten R-Point Card
service●Nagoya Zero Gate
opened●The new building of
Fukuoka Parco opened●Sapporo Zero Gate opened●Phase III renovation and grand opening of
Matsuzakaya Nagoya store●Sendai Parco 2 opened●Hiroshima Zero Gate opened

Invested in Cool Japan Fund2014

FY 2014
to 2016
Medium-term
Business Plan
started

2015

2017

2016

2018

structure●The new main buildingof Daimaru Shinsaibashi
store will open (fall)●The complex under the
Udagawa-cho 15
Development Project
including Shibuya
Parco will open (fall)

FY 2017
to 2021
new Mediumterm Business
Plan started
2019

2020

Values and Visione Grouphanging th●The new mainbuilding of
Daimaru
Shinsaibashi
store will beconnected with
the north wing
(spring)

2021●Accepted purchase of own
shares by Senshukai Co., Ltd.

●Fukuoka Parco increased floor space●Acquired a 22.6% stake inSenshukai Co., Ltd. and converted
it into an equity method associate●Shanghai New World Daimaru
Department Store opened●Decided to rebuild the main buildingof Daimaru Shinsaibashi store●Decided to rebuild Shibuya Parco
Invested in Scrum Ventures●Voluntarily applied theInternational Financial
Reporting Standards (IFRS)●Transferred the business of
JFR Online Co. Ltd.
●“Ginza Six” opened●Transitioned to a “Company with Three
Committees (Nomination, Audit andRemuneration Committees)”●Transferred shares of Forest Co., Ltd.
●Kyoto Zero Gate opened●Ueno Frontier Tower opened●JFR Plaza Inc. was dissolved
and liquidated

Create andBring to Life
“New Happiness.”

April 2017
Ginza Six opened

Rendering of new mainbuilding of Daimaru
Shinsaibashi store

October 2012
Phase II expansion andopening of Daimaru Tokyo
store

Rendering of
Shibuya Parco

November 2017
Ueno Frontier Tower opened

Integrated Report 201809

Business Model＞

J. Front Retailing“Value Creation Process”

J. Front Retailing
Value Creation Process
Under the Basic Mission Statement and the Group Vision, J. Front Retailing is committed to creating high quality,
fresh, hospitable and affluent lifestyles with its stakeholders by promptly responding to the changing times.
The business activity of J. Front Retailing is to constantly seek to create rich markets that grow with local
communities, which is led by department stores and Parco.
It is nothing less than to create, as a public entity of society, new values with which its various stakeholders
empathize.
Circulating the Group’s business model and creating new values using the six capitals of J. Front Retailing
effectively and efficiently are the process to create the brand value of J. Front Retailing, which will result in thecreation of new values with which society empathizes.
Through this initiative, we will contribute to society at large as well as aiming at developing the Group.
Financial
capitalTotal
FY 2017 ‒ 2021
Capital investment
Growth investment¥200 billion

Humancapital

Number of
the Group employees
Manufactured
capitalP.22• Low birthrate / longevity

Service Retailer
Multi
Strength(Core Competence)(Core Businesses)(As of February 28, 2018)35

Intellectual
capitalP.12

Structure

Approx.10,500

Store assets

RetailNumber of major storesoperated by Daimaru/
Matsuzakaya/ParcoSocial issues
recognizedby the Company

Business model

Ginza Six
Ueno Frontier Tower
Zero Gate•••

Real estatein urban areas
CreditFinance
Service

Good customer

Accumulated

than 6 mn

mind

assets of more

• Advanced technologies• Progress of sharing economy• Return to urban areas andSocialrelationshipcapitalEnergy consumption by
Daimaru/Matsuzakaya

74,410kl

shrinkage of rural/suburban areas• Expansion of foreigners• Increasing polarization• Global warming
•
•
•
•
•

10

(FY2017)NaturalcapitalHuman resources
Governance P.48

P.36

hospitality

Business Model

Outcome【Customers】
We will provide
genuine satisfaction
captivating customersNew
consumerexperience

OutputStrategy

by oﬀering newvalues.

FY2021ROE
8% or more

Urban
Dominant
Strategy【Shareholders】

We will increase corporate value
over the long term through highly

FY2021
Consolidated
operating proﬁt¥56 bnP.26

ICT
strategy

Safe and secure
products/services

proﬁtable and highly eﬃcientmanagement.

Group Vision

P.04

P.28

Innovation ofexisting
businesses

Total
FY 2017 ‒ 2021
FCF
¥60 bnor moreP.30

Financestrategy
P.34

HR strategy

Customer traﬃc to
Daimaru/Matsuzakaya/
Parco
Approx. 340 mn

P.36

FY2021CO2 emissions

Bustle in thelocalcommunity

Diversity
Work-life
balance(vs. FY2016)of trust by working hard
together and aim to growtogether.

Create andBring to Life
“New Happiness.”【Employees】
We will realize workplaces inwhich employees’ performance andcontribution are fairly evaluated andthey can realize their exhibition of(Intensity)

Down 5.0%【Business partners】
We will build the relations

ability and growth and havejob satisfaction.

Low-carbon
society【Communities】
We will contribute tocommunity development andpromote environment-friendly
business activities as a good
corporate citizen.

Integrated Report 201811

Business Model＞

Multi Service Retailer“Multi Service Retailer”
beyond the Framework of Retail
We are a business group with the retail business and the real estate business as its core, including department stores Daimaru andMatsuzakaya, commercial complexes Parco and a luxury commercial complex Ginza Six.
The histories of Daimaru and Matsuzakaya began respectively when Shimomura Hikoemon Shokei opened a kimono fabric store “Daimonjiya”
in Fushimi, Kyoto in 1717 and Ito Genzaemon Sukemichi, a son of Ito Ranmaru Sukehiro who served Oda Nobunaga, opened a kimono fabricand fancy goods wholesale store in Honmachi, Nagoya in 1611. Both companies started as kimono dealers but have changed their businessmodels for as long as 300 and 400 years, respectively, by responding appropriately to the changing times and grew as department stores.
After management integration in September 2007, the Company aggressively pursues M&A opportunities to expand its business wings for
growth. We converted Parco Co., Ltd. into a consolidated subsidiary and StylingLife Holdings Inc. and other companies into equity method
associates to broaden our business as a multi retailer with department stores as our core.
And under the new “FY 2017 to 2021 Medium-term Business Plan,” we strive to change the Group structure toward development as a “Multi
Service Retailer” beyond the framework of retail to expand our business domain for discontinuous growth based on the new Group Vision“Create and Bring to Life ‘New Happiness.’” With respect to the business portfolio, while growing the core Department Store Business and ParcoBusiness, we will expand into new areas such as the Real Estate Business and Credit and Finance Business to increase their shares.

Multi Service Retailer

Expanded needs to relieve
concerns/frustrations in daily life

Rise of sharing economy

Advent of IoT era

Consumption shift from products
to services/experiences

Increasing urbanization

Expanded demand for
staﬃng services
Diversiﬁed payment methods
Advanced ﬁnancial services

Multiple retail business brands(Multi retailer)

12

Business Model

Source of Value Creation

Structure (Core Businesses)

Strength (Core Competence)Store assets

RetailReal estatein urban areas
CreditFinance
Service

Good customer

Accumulated

than 6 mn

mind

assets of more

hospitality

The Group’s strengths

1

2

3

Store assets in urban areas
nationwide

Good customer assets ofmore than six million people

Accumulated hospitality

The Group has store assets
including department stores, Parcoand Ginza Six in major cities acrossJapan, from Sapporo to Tokyo,
Nagoya, Osaka and Hakata. In key
areas, we will promote the“Urban
Dominant Strategy” for growing
with local communities by putting
together small- and medium-sized
stores around these flagship storesas their core and attract new crowd
to live in harmony with local
communities.

Daimaru, Matsuzakaya and Parco
have good customer assets of morethan six million cardholders. Department
stores have an organization of
affluent gaisho (out-of-store sales)customers whose sales share ismore than 20%. As a new initiative,
we will introduce an app with apayment function, which will further
increase our customer assets under
the concept of “Lifetime Service
Hub.”

Our hospitality mind has been
accumulated in our history. Under
the corporate credo of Service
before Profit, the spirit born out ofcustomer services provided bythoroughly putting the customer
first and serving the community isalive in the Group value chain. It
leads to the operation of a staffing
service company Dimples’ andDaimaru Matsuzakaya Sales
Associates, which leverage thisstrength.

As a “Multi Service Retailer” beyond the framework of retail, we will capitalize on our business portfolio
and core competence mentioned above and respond nimbly to changes in the times with the support ofwell-trained diverse human resources and effective governance that improves the transparency ofmanagement in an effort to create values demanded by society.

Integrated Report 201813

Business Model＞

Changing Department Store Business Model

Turning Point in
Department Store Business Model
Japanese department store sales decreased from ¥9,713 billion in 1991 to ¥5,953 billion in 2017, almost 60% level. Amid environmental changes
such as intensifying competition beyond industry boundaries and rapidly growing e-commerce, we think the biggest problem of department stores isthat the department store business model including sales floor composition overly dependent on women’s clothing in spite of the downward trendof spending on clothing and the product range and tenant composition based on shoka shiire (purchase recorded at the time of sale), whichdeveloped from the high-growth period to the stable-growth period, no longer adapt to changes in the times and in customers’ sense of values.
Therefore, from the standpoint of values department stores should create, we intend to change our business model in four main directions. Throughthese initiatives, we will strive to attract more customers and increase profitability by enhancing store appeal.

History of Retail Industry
1940s
Increasing
wealth andmilitary
power

(War)

1950s

Economic recovery
Jimmu
Boom

1868
Meiji Restration

1960s

1970s

High economic growth period
Iwato
Boom

Olympic
Boom

Izanagi
Boom

1980s

Oil
Shock

Times

DC brandboom

1956 Economic White Paper 1962 Hayashi Shuji“It is no longer postwar”“Distribution Revolution”

2000s

Collapse of
the Bubble

LehmanShock

IzanamiBoom

Foreign luxury brands
were popular

1985 Hakuhodo
1999 NTT DoCoMo“Emergence of segmented masses” “I-mode” was born

Flourishing of small/family-run stores and department stores Flourishing of general merchandise stores (mass consumption society)2010s

Low-growth period

BubbleeconomyThree essential Income-doubling 3C
status symbols
plan

Foreign fast fashion brands
accelerated entry into Japan
Rapid growth of inbound tourism
Expansion of sharing economy

Diversiﬁcation of business categories (post-mass consumption society)Department store

61～68
Daimaru achieved
top sales in Japan

91
00 Sogo ﬁled for civil rehabilitation procedure
Department store sales peaked
03 Renamed Millennium Retailing1982 - 83 Seibu Department Store ad copy
“Oishii Seikatsu (delicious life)”
07 J. Front Retailing07 H2O Retailing
69 Tamagawa Takashimaya SC opened 85 Tsukashin opened
08 Isetan Mitsukoshi Holdings

1904 Kabushiki Kaisha Mitsukoshi Gofukuten(Department Store Declaration)
1907 Kabushiki Goshi Kaisha Daimaru Gofukuten
1910 Kabushiki Kaisha Ito Gofukuten
New initiatives including:Supermarket●Western-style architecture,display of goods;●Uniforms;●Entry with shoes on; and●Female elevator attendants

1990s

Stable-growth period

57 Daiei opened 1st store
72 Daiei achieved top sales in Japan
58 Yokado was established
56 Seibu Store was established 69 Jusco was established
80 “Mujirushi Ryohin” was born
69 Ikebukuro Parco opened

01 Mycal went under

87 “Loft” was born

Other

74 7-Eleven opened 1st store
97 “Rakuten Ichiba” was launched
75 Lawson opened 1st store
04 “Zozotown” was launched
73 FamilyMart opened 1st test store
16 FamilyMart and
76 Tokyu Hands opened 1st store 90 United Arrows opened 1st store
Uny merged
93 Outlet Mall Rhythm
76 Beams opened 1st store
16 Mitsubishi Corporation(Japan’s 1st outlet mall in Saitama)
made Lawson its subsidiary
84 Uniqlo opened 1st store
76 Shinjuku Lumine opened
18 Mercali became listed

Regulation Demographics

1937
Department Store Law
1868
34 million

1973
Large-Scale Retail Store Law (covering large supermarkets)
1967
Exceeded 100 million

1985
121 million

2000
Large-Scale Retail Stores Location Law
1998 Productive-age 2004
(15-64 year old)
Population peaked
population decreased 127.87 million

Depopulating
society

Department Store Value Chain and Competitive Advantage
In order to entice customers to visit our stores, we need to offer the products they want and the experiences that can begiven only in the store space or environment or through sales staff there, namely, new values. By changing our businessmodel, we will strive to enhance store value by adding a perspective of values for customers and values for stakeholders.
Kaitori shiire(Purchase on a no return basis)

Store design

Store layer

Procurement/
logistics

Store operation

Real estate rental
Know-how of store planning

14

Shoka shiire

Marketing
Attracting
customers

Know-how of store operation

After-sales
service
Sales

Building
customer loyalty
Know-how of building
customer loyalty

Business Model

Direction of Changing Business Model

Point 1

Point 2

Active introduction of real estate rental format

Drastic reduction of allocation to women’s clothingMore than 80% of current typical department stores offer

While reducing women’s clothing area, which remains

products and have tenants based on shoka shiire. In other words,

bloated since the middle of 1980s, by 30% under thesuch business practice limits the diversification of store planning.

current Medium-term Business Plan, we will create new

Therefore, we will realize an optimal mix, for example, bysales areas and newly zone the sales floors in response toexpanding real estate leasing area to increase store appeal andchanges in customers to increase store appeal. We willtransform the business model into a stable and highly profitable one.

renovate our stores in a way that meets the market in eacharea, for example, by expanding beauty products, food＜Hybrid form＞

products and daily sundries, which are growth categories.

Real estate rental＜Conventional form＞

Women’s clothing area

Shoka shiire
Kaitorie.g. Main building of
Daimaru Shinsaibashi store

Shoka shiire＜Real estate rental form＞

KaitoriReal estate rental

Down(Total FY 2017 to 2021 vs. FY2016)e.g. Ginza six,
Ueno Frontier Tower

Point 3

Point 4

Area dominant formation that attracts customers with“areas”

Strengthening of customer engagement using ICT

Not as“points”of department stores but as“areas,”the Group

The“era of 100-year life expectancy”–“Lifetime Service Hub”is awill dominantly operate Parco and brand shops around department

challenge to establish a new customer information system in order tostores and also conduct activities in concert with local communities

build stronger lifetime customer engagement. Using not only customer

so that we can attract more customers. This is our own strategy

touch points through the Group’s cards but also the app that will bethat aims to grow with local communities by attracting new crowd.

released this fall, we will accumulate fixed-form information and unfixedform information in a multi-layered way through cross-group initiatives.

Example of Urban Dominant Strategy
in the Ueno Okachimachi area

We will provide new products and services to relieve customers’“concerns” and “frustrations” by having more touch points withcustomers and building a long and deep relationship with them on various
occasions and milestones for their entire life beginning with birth.

Shiseido Beauty Salon
Beauty Garden
Matsuzakaya Pet Salon Libon

Parco
●Oﬃce
Art
●Cinema Sports
complexMontbell

Panda
HirobaBirthSchoolInfancy attendance Employed MarriageChildraising

Secondlife

Integrating customer data of Department Store, Parco and other businesses and divisions

Accumulation ofﬁxed-form information

Use of ICT

Accumulation of
unﬁxed information

Integrated customer database

Integrated Report 201815

Top Interview

YAMAMOTO Ryoichi
Director, President and Representative Executive Officer

Management Strategy＞

Top Interview

Steadily Capturing the Two Sides of Risks andAccelerating the Transformation of Business Portfolio

Q.

“Gross sales”were ¥1,138.9 billion, up 0.4% year

Would you explain about your businessresults for fiscal year 2017?

on year, and“business profit”was ¥46.8 billion, up
4.3% year on year.“Gross sales”were ¥3 billion

The Company has applied the International

below forecast in October but“business profit”wasFinancial Reporting Standards (IFRS) since fiscal¥0.3 billion above the same forecast. Consolidated

year 2017. Therefore, results for fiscal year 2016

ROE on which we place the most importance washave been converted into IFRS-based figures and7.5%.
We paid a year-end ordinary dividend of ¥18 per

year-on-year comparison for fiscal year 2017 has

share, ¥3 more than originally planned, and an

been made with thus converted figures.
The Company’s consolidated sales revenue wasadditional dividend of ¥1 per share commemorating¥469.9 billion, up 3.8% year on year, in fiscal year

the 10th anniversary of the establishment of J. Front

2017. Consolidated operating profit and profit

Retailing, totaling ¥19. The annual dividend including

attributable to owners of parent were ¥49.5 billion, up

the interim dividend of ¥16 was ¥35 per share, up ¥5

18.7% year on year, and ¥28.4 billion, up 5.3% year

year on year, marking the seventh consecutive year ofon year, respectively. Consolidated operating profit

increase.

exceeded forecast in October by ¥0.5 billion.
Considering comparability with our past performanceQ.

How did you perform by business segment?

and other companies, we also release“gross sales”
close to net sales under Japanese generally accepted

By segment, the Department Store Business saw

accounting principle“JGAAP”(), which we had applied

further accelerated spending by inbound tourists tountil fiscal year 2016, and“business profit,”which has

Japan in the second half. Spending by affluent people

been calculated by excluding the impact of otherin Japan was also strong throughout the fiscal year. In

operating income and other operating expense fromthe meantime, the severe sales slump in the suburban

operating profit under IFRS, as our own reference

and rural stores continued.

indicators.

16

We sold the real estate owned by Daimaru

In addition, the effect of withdrawal from unprofitableof improving asset efficiency. As a result, sales

businesses including JFR Online and JFR Plaza

revenue increased by 2.3% from the previous year

contributed to improving consolidated performance.
The Company transferred all shares of Forest, aand operating profit significantly increased by 20.0%.

consolidated subsidiary operating a direct marketing“Business profit”also grew by 9.1%

Management Strategy

Matsuzakaya Department Stores from the perspective

business, which was included in Other, as of AugustWith respect to the Parco Business,“Parco_ya,”a31, 2017 to replace the business.

store in new Parco format, which opened as theanchor tenant of“Ueno Frontier Tower”on November

In conjunction with that, the Company has decided

4, 2017, performed well attracting many “a little

to accede to Senshukai Co., Ltd., an associateolder”people than Parco’s existing target customers

accounted for using equity method, purchasing its

as expected. Meanwhile, partly due to the impact ofown shares in February 2018.

Shibuya Parco, which closed temporarily in AugustQ.

2016 for rebuilding, continuing until the first half, theimpact of the closing of Chiba Parco and the sluggish
performance of Neuve A, sales revenue and operating

The top line (sales) of the Department
Store Business is growing.
In Daimaru Matsuzakaya Department Stores,

profit in total decreased by 2.3% and 9.7% year on

spending by inbound tourists dramatically increased

year, respectively.

due to the success of the measures taken by its

The“Real Estate Business”significantly increased

flagship stores with strong sales to inbound tourists tosales revenue by 168.3% and operating profit by ¥3.7

cater to increasing foreign tourists to Japan including

billion compared to the previous year due to the great

the expansion of timepiece area, the expansion ofeffect of“Ginza Six,”which opened in April 2017, andsales areas that accept mobile payments at the point“Ueno Frontier Tower,”which opened in Novemberof sale and the strengthening of promotion using SNS

2017.

at stores.
Tax-free sales of Daimaru Matsuzakaya Department
Stores grew by 62.8% year on year to ¥47.9 billion or
1.4 times from those amid shopping spree called“bakugai”in fiscal year 2015 and have reached alevel where they can be expected to exceed ¥50
billion a year. In particular, the number of customers
jumped by 50.6% year on year. By merchandise
category, sales of“consumables”mainly including
cosmetics doubled from the previous fiscal year toalmost the same level as“general products.”
Credit sales of their flagship stores, which represent
the company’s gaisho sales, increased by 1.5% from

Ginza Six

the previous year because the strengthening of events
including a rare“selection of

Daimaru Matsuzakaya Department Stores tax-free sales and the number of paying customers from September 2014 onward(¥1,000)(People)6,000,000

100,000
Number of customers

Sales

value

in

response to brisker spending
by affluent people in Japan

5,000,000

80,000against the backdrop of stableshare price level and the

4,000,000
60,0003,000,000
40,0002,000,000

expansion of customer basebyacquiringnewgaishocustomers

workedwell.

Thanksthedevelop20,0001,000,000

0

products”and highly attractive“experience”

toeffortsnewtogaishocardholders, we could acquire
13,250 new accounts.

Sep
2014

Feb
2015

Feb
2016

Feb
2017

Feb
2018

0

By store, sales of theShinsaibashi store, which has

Integrated Report 201817

an overwhelming ability to attract inbound tourists,
significantly increased for 14 consecutive months, up
14.0% year on year. The Tokyo store, which
accurately brought in affluent people and increasingneighborhood

officeworkers

throughstrategic

customer acquisition initiatives, increased sales for
18 consecutive months and the Sapporo store also
increased sales for 15 consecutive months. Sales ofsix flagship stores were above the previous year’slevel and total sales of existing stores increased for
12 consecutive months.
In the meantime, in terms of costs, thoughadvertising expenses (up ¥0.6 billion) and operationalcosts (up ¥0.4 billion) associated with the opening of“Ginza Six” and “Ueno Frontier Tower,” repair
expenses for replacement of facilities (up ¥0.1 billion)
and supplies expense (up ¥0.05 billion) including
utility costs increased, the whole company strived tofurther reduce costs by decreasing actual personnel
expenses (down ¥0.1 billion) including outsourcing
expenses and rent (down ¥0.1 billion). The company
also sold its real estate from the perspective ofimproving asset efficiency.
As a result, operating profit of Daimaru Matsuzakaya
Department Stores soared by 41.0% year on year to¥28.2 billion and business profit as a referenceindicator significantly increased by 22.7% from theprevious year to ¥27.1 billion. Operating profit andbusiness profit exceeded forecast in October by ¥2.6
billion and ¥0.9 billion, respectively.
Free cash flow was positive at ¥3.8 billion, better
than forecast in October.

Q.

Parco_ya

be an additional decline in reaction to gain on sales ofreal estate recorded at approximately ¥1.4 billion in
the previous year, operating profit is expected todecrease by 6.6%.
Factoring in the full operation of“Parco_ya,”a store
in a new format, which opened in“Ueno Frontier
Tower”in November 2017, the opening of Harajuku
Zero Gate and Sannomiya Zero Gate and theperformance of Neuve A business, which was sluggish
last year but is expected to improve in the second half

In the meantime, why do you expect bothbusiness profit and operating profit of the
Department Store Business to decreasein the current fiscal year 2018?

and beyond due to the rebuilding of strategy, theParco Business expects to increase sales revenue
and“business profit”by 4.8% and 4.5% year on year,
respectively. However, operating profit is expected toremain at the same level as the previous year partly

The Department Store Business is expected toincrease sales revenue by 3.3% year on year because

18

due to the absence of reversal of impairment loss
recorded in the previous year.

mainly the flagship stores of Daimaru Matsuzakaya

The Real Estate Business expects sales revenue

Department Stores are projected to increase salesand “business profit” to significantly increase by

while the severe sales slump in rural and suburban

27.4% and 26.1% year on year, respectively, to which

stores is forecast to continue. However, factoring in

the full operation of Ginza Six, which opened in April

system-relatedthe2017, and“Ueno Frontier Tower,”which opened inreplacement of POS systems with the ones that

November 2017, will contribute. As is the case in theenable payment processing in the presence ofDepartment Store Business, however, operating profit

customers in the second half and cost increaseis expected to decrease by 20.1% in reaction to gain

resulting from the improvement of facilities to makeon sales of real estate recorded in the previous year

our stores safe and secure, we expect“business(¥1.6 billion).

one-time

costs

including

profit” to decrease by 2.2%. Since extraordinary

The Credit and Finance Business expects sales

income and extraordinary losses under JGAAP are

revenue to increase by 7.1% year on year. While

included in operating profit under IFRS and there will“business profit”is expected to decrease by 1.5%

Management Strategy

because system costs associated with security
enhancements will increase, operating profit isexpected to increase by 0.3%. Other expects thegrowth rate of sales revenue to be almost at the samelevel as the previous year at 0.1% partly due to thenegative impact of the transfer of shares of Forest.
However,“business profit”and operating profit are
expected to increase by 29.8% and 22.2%,
respectively, factoring in the improvement of theperformance of J. Front Design & Construction, which
struggled in the previous fiscal year.

Q.

Collaboration with Parco seems to be
progressing further in the wake of the
opening of Ueno Frontier Tower.

the Medium-term Business Plan, when big projects
including “Ginza Six” and “Ueno Frontier Tower”
contributed to growing the new Real Estate Business

Customer traffic to the main building of thesegment more than originally expected, got off to a

Matsuzakaya Ueno store significantly increased after

good start as the first step of the“transformation of

opening Ueno Frontier Tower on November 4, 2017.

business portfolio” toward discontinuous growthI think positive factors will certainly emerge by adding

which we are aiming at.

various events while implementing the Urban

In the meantime, with respect to ICT initiatives as

Dominant Strategy with new elements such as Parco,

the measures to reinforce sales capabilities and aa cinema complex and offices under the new concept

response to the Credit and Finance Business, whichof“Shitamachi. Front.”The Matsuzakaya Ueno store

is highly positioned as a growth business, we areintends to change the main building after researchingrepeating trial and error. Unfortunately, however, it is

new visitors after the opening of Ueno Frontier Tower

undeniable that its progress lacks in speed and we

instead of making a large investment before its

have not achieved visible or tangible results yet. I

opening. With respect to Shitamachi. Front, I think

think we need to shift gears to solve these urgent

Daimaru Matsuzakaya Department Stores and Parcobusiness issues.

are successfully working with local shopping malls

The business environment is changing at an

and the government.

unprecedented speed. Various changes in the

We have decided to open Parco in the north wingbusinessof the Daimaru Shinsaibashi store as its anchor tenant
after completing the main building. We are working on

negative side. We need to capture these two sides ofwith each other. The main building will open first in

risk.

fall 2019. We will share information on it to build theTo this end, the Company redefined changes in the

Parco and Real Estate Businesses in the north wing.

business environment as the risk associated with the

It is important to develop an idea of what constitutes

Company, and at first, identified 138 risk items. The

an ideal form as a large hybrid commercial complex

Risk Management Committee met and the Board

with a floor area of more than 80,000 square meters.

members lodged together to discuss in-depth theWhat we would like to borrow from Parco is information

business risks we consider particularly important

on what to do after departure from department store’samong them, and finally, 15 items were identified.

traditional merchandise mix by category or where theare created. You can expect the advanced form ofcollaboration with Parco beyond the results achievedin Ueno Frontier Tower.

Q.

What are the achievements and challenges
after fiscal year 2017 as the first year of
the Medium-term Business Plan?
I think the last fiscal year 2017 as the first year ofmean “uncertainty” for“opportunity”as a positive side and“threat”as athis project with Parco closely exchanging information

new markets which department stores fail to tap into

environment

businesses. Such uncertainty or risk includes an

Q.

Could you talk about these risks a little
more?
138 risks are classified into strategic risks, financerisks, operation risks and hazard risks. We set priorities
according to importance in the end. As a matter ofcourse, however, the risks identified are different
betweentheholdingcompany

andoperatingcompanies including department store operators andIntegrated Report 201819

P/S at the internal performance report of department
stores though they conduct business activities using
significant assets. Therefore, we introduced store B/Sandstartedthebusinessmanagementthat

incorporates ROA as a store manager’s performanceindicator.
Also in the ICT field that currently requires a
response with speed, we appointed a talent who
possesses insight with respect to overall digital
including AI from outside the Group as Executive
Officer. Furthermore, in the credit and finance fieldthat is expected to grow in the future, we appointed ahighly professional person from outside the Group as
the President of JFR Card, a consolidated subsidiary
Parco. Among 15 risks identified, I asked the operatingin the Group.

companies to specify high-priority ones as their risks

Recently, I often talk about the“combination ofafter discussions. Some operating companies may

different elements”inside and outside the Company. I

have to focus on defensive risks and others need tothink it is possible that the new values demanded byheighten their perspectives a little more like thethe present times will be born in a place where

holding company. The risks thus identified are threats.

different values and cultures bump into each other. It

On the contrary, they can be considered as

can be said that exactly the combination of different

opportunities.

elements through discussions and collaboration

For example, consumption tax will be raised in fallamong four companies that share high goals beyond

2019. While worrying about a decline in consumption,company level enabled us to create and open an

we can convert it into a chance thinking of where

unprecedented luxury mall“Ginza Six”in April 2017.

spending by the child-raising generation who will be

I think“discontinuous growth”which the Company

less burdened will go. With respect to“low birthrate

is aiming at is the aggregate results of new out-of-the-and longevity,” given the “era of 100-year life

box initiatives born by breaking internal conventional

expectancy,”even consumers in their 60s and 70s

rules and combining different elements.

may become more eager to buy. Accordingly, it canalso be considered as a chance. With respect to the“evolution of technologies,”its speed is too high andit would be terrible if we fail to follow it. However, if
we can successfully incorporate the evolution, it will
become a chance.“Income”may become increasingly“polarized”in the future but we can make it a chanceby serving affluent people well, which is department
store’
s strength. It is important to closely look at theboth positive and negative sides of risk and incorporate
them into a concrete strategy.

Q.

The recruitment of experts from outside
the Group is becoming activated.

Q.

You have actively proceeded withgovernance reforms. How will you address
the reforms from an ESG perspective?
As you know, GPIF, the world’s largest pension
fund, signed the United Nations Principles for
Responsible Investment (PRI) in 2015 and announced
the selection of three ESG indices. This showed that
financial information only is not enough to understandthereality

conscious of asset efficiency since last year, for

Officer in charge of finance strategy who had been
invited from manufacturing industry, not from retailindustry, that triggered this. He said he felt something
was wrong with the situation where we discussed only

20

and

assessReform of the Boardof Directors
Succession planning

example, by making a balance sheet for eachdepartment store. It was the perspective of Executive

corporations

their

Corporate governance reform in which the Company
has actively taken the initiative since 2015

The Company has strengthened the orientation
toward so-called B/S-based management that is

of

E

G

Changes in theorganizational structure

Reform of oﬃcer
remuneration system

S

Improving and strengthening initiatives and information
disclosure concerning“E”and“S”in FY2018
Created“ESG Promotion Division”as a dedicated unit in MarchInvestment in the five-year period of the Medium-a more important role. I recognize it as a great change

term Business is expected to peak in fiscal year 2019in capital market trends and as a strong message

when the“main building of the Daimaru Shinsaibashi

addressed to corporations which are regarded as thestore”and“new Shibuya Parco,”which are being“public entities of society.”rebuilt, and subsequently, in fiscal year 2020 and

The Company has actively taken the initiative inthe reform of the“G”of ESG or governance. In light of2021, free cash flows of more than ¥20 billion eachare projected to be generated.

these trends in the capital markets, we created“ESG

Five-year cumulative free cash flows of ¥60 billion

Promotion Division”as a dedicated unit in March. Andor more will be allocated to shareholder return and thegoing forward, we will also strengthen initiatives andexpansion of equity. Our shareholder return policy is

information disclosure concerning the“E”and“S”

to consider purchasing our own shares as appropriate

both in terms of quality and quantity.

on the basis of dividend payout ratio of at least 30%

To this end, we identified materiality or“importantand in view of our financial condition.

tasks”we should address. Firstly, we conducted a

The Company increased dividends for sevenquestionnaire of stakeholders concerning 25 candidate

consecutive years until the previous fiscal year ended

materiality items and collected responses from 4,250

on February 28, 2018. Also in the fiscal year ending

stakeholders. In the next step, we had internal

on February 28, 2019, we are planning to increase an

discussions based on major guidelines including theannual ordinary dividend by ¥2, marking the 8th

GRI Standards and ISO 26000 and the assessment

consecutive dividend increase.

items of research institutes. And we have formally

As mentioned above, by promoting capital policy indecided the degrees of materiality through discussions

consideration of the balance of strategic investment,at the Board of Directors meetings. Thus by identifying

the improvement of shareholder return and theand disclosing our materiality, we will make clearer

expansion of equity, we will strive to realize thethe relevance between social issues and business

management structure that can achieve ROE of 8%

activities and proceed with initiatives based on thecontinuously.

concept of“CSV”or“Creating Shared Value.”

The Company’s current cost of shareholders’equity

Going forward, we will set the medium- to long-term

has been calculated to be about 6%, and over thequantitative materiality goals which we should

medium term, it is expected to remain within the range

achieve, and in fall, we will hold“ESG briefings”forof 6 to 7%. Therefore, I recognize that the target ROE

institutional investors.

of 8% set under the current Medium-term Business
Plan is the minimum level to be achieved in order to

Would you explain your view ofshareholder return?

Q.

transformation of business portfolio.

financial information including ESG information plays

meet shareholders’expectations. The transformationof business portfolio is expected to lead to reduction

During the five-year period of the Medium-term
Business Plan, we will generate operating cash flowsof ¥260 billion or more and allocate ¥200 billion tocapital investment and growth investment for the
innovationofexisting

businesses

Management Strategy

sustainability and growth potential and that non-

and

the

2
33

35

of equity cost as well as helping building up abusiness structure foundation. We would like to
steadily accumulate tangible results to develop as a“Multi Service Retailer” beyond the framework ofretail.

Dividends(Yen)
40

Commemorative dividend
Ordinary dividend

35
30
25

22

20
15
10

16

14

14

16

25

27

28

18

5
0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(forecast) FY

Integrated Report 201821

Management Strategy＞ 【Special Report】Business Risk (Opportunity and Threat)

Risk is“Uncertainty”
Seeing both the positive side“opportunity”and the negative side“threat”

In order to develop strategies, the Company has analyzed opportunities for consideration in the past. Meanwhile, “risk”
management was focused on hedging risks. However, as we can recognize both “positive risk (opportunity)” and “negative risk(threat)” if we define risk as “uncertainty,” we have thought we will be able to increase profit opportunities by taking risks inaddition to hedging risks as in the past.
The Company redefined changes in the business environment as the risk associated with the Company, and at first,
identified 138 risk items. The Risk Management Committee met and the Board members lodged together to discuss in-depth
the business risks we consider particularly important among them, and finally, we identified 15 items as our business risks.
In fiscal year 2018, the holding company and operating companies respectively selected six items they place particularimportance on from these 15 items and incorporate them into their management policies to promote their specific actionplans. With these initiatives, we will further change our business portfolio through “discontinuous growth” as a “Multi Service
Retailer” beyond the framework of retail to realize the Group Vision “Create and Bring to Life ‘New Happiness.’”tifieds iden13 8 risk item

Occurrence of wars/conflicts
Aggravated terrorism issues
Occurrence of economic crisis / financial crisis
Occurrence of trade issues
Surge of emerging countries
Consumption tax hike
Promotion of tourism-oriented country policy
Reduction of corporate tax and measures for encouraging investment
Promotion of business using National Strategic Special Zones
Promotion of outsourcing of operation of public facilities to private sector
Promotion of sharing economy
Economic trends
Development of financial markets
Changes in interest rate / share price / exchange rate
Polarized income
Expansion of the affluent
Decrease in disposable income
Increasingly diversified consumption pattern
Consumption shift from goods to services/experiences

22

Rise in persistence and health consciousness
Spread of cheap goods/services
Low birthrate / longevity (declining population)
Return to urban areas (population concentration) and depopulation in rural areas
Growing population in America / Southeast Asia
Increase in single-person households (aged/young people)
Increase in double-income / single-parent households
Escalation of and increasing interest in environmental issues / poverty issues
Growing shortage of energy resources
Evolution of AI (artificial intelligence) / robots
Expansion of EC business
Evolution of payment/order-related technologies
Expansion of use of big data
Fiercer competition in attracting inbound tourists
Fiercer competition from outside the industry
Fiercer competition in customer retention
Fiercer competition in maximizing user experience
Success/failure of analysis/rebuilding of business portfolio
Success/failure of development and progress management of mid- to long-term plan
Success/failure of management of companies acquired through M&A
Success/failure of penetration of mission statement / vision
Success/failure of brand strategy
Success/failure of hostile takeover defense measures
Success/failure of innovation
Opportunity loss due to prolonged examination period

Pressure of unreasonable expectations from inside/outside the company
Delay in decision-making due to lack of adherence to withdrawal criteria
Loss of funds due to excess investment
Impairment due to gap between plan and result
Revision of real estate-related laws / tax systems
Changes in assessed land values or building construction costs
Entry of competing companies / changes in surrounding environment
Inadequate safety management of buildings and equipment*
Soil pollution / asbestos
Changes in rent
Bankruptcy of landlord
Decline in rent / increase in vacancies
Non-payment of rent and bankruptcy of tenants
Success/failure of exit strategy (purchaser)
Changes in employee age structure
Growing labor shortage and fiercer recruitment competition
Success/failure of acquiring specialists for IT, etc.
Success/failure of work style reform
Success/failure of response to diversity
Success/failure of operation of retirement benefit / pension system
Success/failure of succession plan
Increase/decrease of audit accuracy
Success/failure of reform of the Board of Directors
Success/failure of provision of remuneration and incentives
Success/failure of risk management

Management Strategy

15 important items selected =Business risks

Identified 15 items as the Company’s business risks and selected 6
items (bold letters) we place importance on in the current fiscal year
Risk associated with
consumption tax hikeand post-Olympic
recession

Risk associated with
consumption shift fromproducts to services /experiences

Risk associated withincreasing importanceof CSR

Risk associated withchanges in customers,
particularly, low birthrate
and longevity

Risk associated withadvanced technologies

Risk associated withthe progress of sharing
economyRisk associated withmaturing of existing
businesses

Risk associated withreturn to urban areasand shrinkage of rural/suburban areas

Risk associated with theconversion of business
partners

Risk associated withhuman resources /human resources
structure

Risk associated withpolarized income

Risk associated withmisconduct

Risk associated withcompetition from newentrants

Risk associated with the
expansion of foreigners

Risk associated withdisasters, etc.

Success/failure of operation of internal control system over financial reporting
Success/failure of strengthening of the Group governance
Success/failure of fair disclosure / ESG information disclosure
Success/failure of sustainability policy
Success/failure of social contribution activities
Success/failure of waste reduction and promotion of recycling
Leakage of hazardous materials (CFC, PCB, etc.)
Success/failure of global warming prevention activities
Misstatements in financial statements
Impairment of assets (including goodwill)
Success/failure of business revitalization / withdrawal
based on revitalization/withdrawal criteria
Application of new accounting standards (lease standards)
Success/failure of response to tax system revision
Success/failure of timely disclosure
Success/failure of management of cash and deposits / interest-bearing debt
Success/failure of funding
Rating changes
Success/failure of strategic investment based on investment criteria
Success/failure of examination of business portfolio and optimal capital structure
Exchange rate fluctuations
Inadequate business continuity plan for disaster recovery
Disaster-stricken store facilities / business partners
Transportation infrastructure suspended by disaster

Inadequate first response to disaster
Inadequate safety management of buildings and equipment*
Outbreak of plague and infection
Occurrence of traffic accidents
Virus infection / information leakage due to external cyber attacks
Internal information leakage
Late report of / inadequate response to incidents
Improper posting / information leakage by employees (SNS)Loss of credibility from customer’s tweet (SNS)Improper posting from the company’s official account (SNS)Product defect and food poisoning
Incorrect/false labeling of quality / expiration date
Leakage of personal/customer information
Improper/unclear sales recording / charging
Customer’s bankruptcy/insolvency
Accidents and customer troubles due to inadequate/incomplete operation rules
Dependence on particular customers (customer segments)
Improper treatment of business partners
Infringement of intellectual property rights
Unfair/illegal transactions
Late/short delivery of goods
Bankruptcy of business partners
Inadequate management of contractors
Cargo increase / growing labor shortage at logistics companies

Delivery time restrictions / redelivery reduction
Late delivery / misdelivery / loss or damage of goods
Product liability
Inadequate quality control (PB goods, buildings, etc.)
Less precisely planned order
Delay/failure of development
Rise in production costs
Late response to technical innovation
Late response to equal pay / equal work
Lack/failure of human resource development plan
Fraud / illegal act of the Board members / employees
Inadequate response to human rights issues
Inadequate health management / mental health management
Improper contracting / outsourcing / worker dispatching
Inadequate staffing
Legal violation
Transactions with antisocial forces
Inadequate regulations/rules
Lack of notification/license
Leakage of confidential information / insider information
Occurrence of litigation/lawsuit
Lack of consciousness of prevention of incidents/accidents and compliance*Respectively recognized as an important hazard risk and an important risk in the strategy of the Real Estate Business.
Integrated Report 201823

Management Strategy＞

Whole Picture of Medium-term Business Plan

Phase of changing the Group structure

Got off to a Good Start toward
Changing Business Portfolio
FY 2017 to 2021 Medium-term Business Plan
We have defined the five years from fiscal year 2017 to 2021, when the big development projects launched under the FY 2014 to2016 Medium-term Business Plan will be completed and generate revenue, as the period of the current Medium-term Business Plan.
We will achieve dramatic growth by completing these development projects. And at the same time, positioning the period as a turning
point to drastically alter the course of the management of the Group toward realizing discontinuous growth based on the new Group
Vision, that is, a“phase of changing the Group structure,”we aim to achieve ROE of 8% or more in fiscal year 2021.
To this end, by taking a step forward from the past idea of a multifaceted retailer to expand into new business fields as a“Multi
Service Retailer”beyond the framework of retail while further accelerating our efforts to identify unprofitable business fields, we will
aggressively promote business reshuffle.
With these initiatives, we will achieve the Group’s sustainable growth and medium- to long-term enhancement of corporate value.

Idea on business portfolio

Transition to the International Financial Reporting Standards (IFRS)The“Real Estate Business”was newly added as a reportable

For the purpose of implementing efficient management based on

segment in fiscal year 2017 and the Group has a total of four

appropriate asset evaluation and managing our business with a focus

segments including the“Department Store Business,”the“Parcoon profit for the current period as well as strengthening accountability

Business”and the“Credit and Finance Business.”We will decrease

to domestic and overseas investors by improving the international

the share of the Department Store Business and the Parcocomparability of financial information, we decided to voluntarily apply

Business, which represented almost 90% of operating profit of thethe International Financial Reporting Standards (IFRS) beginning inGroup, to around 70%, and instead, strengthen the Real Estate

March 2017 when the current Medium-term Business Plan started. We

Business and expand new business fields to increase their share.

will disclose the Group’s business forecasts and results including the

In fiscal year 2017, which is the first year of the current Medium-

quantitative management objectives of the Medium-term Business
Plans under IFRS.

term Business Plan, the Real Estate Business segment grew
substantially due to opening of“Ginza Six”and“Ueno Frontier

When disclosing our financial results, considering comparability withTower”for which preparations we had proceeded with as big

our past performance and our peers, we release“gross sales”close toprojects. Thus we got off to a good start toward changing businessnet sales under Japanese generally accepted accounting principle

portfolio at which we are aiming.

(JGAAP) and“business profit”as our own reference indicators.

Actual share and target share of consolidated operating proﬁt(Millions of yen)
60,00050,00040,00030,000

14.1%
14.7%
0.8%
31.2%

8.3%

23.7%

18%
17.7%
6.8%
24.2%

12%

Credit and Finance Business
Other
Real Estate Business
Parco Business

Department Store Business

26%

20,00010,000
0

24

53.3%

2016

53.8%

51.3%

44%

2017

2018

2021

(FY)

Management Strategy

Qualitative management objectives (IFRS)
Target FY2021

Finance strategy
structure diagram

Consolidated operating profit (IFRS) ¥56 billion

FCF>

Consolidated operating margin (IFRS) 10.0%
Consolidated ROE (IFRS)(Ratio of profit to equity attributable to owners of parent)08.0% or more

ROE

10 8 40

Total FY 2017 – 2021
Consolidated operating cash flows¥260 billion or more%%

Operating margin

Capital investment and growth investment ¥200 billion%

Equity ratio

Capital investment under the Medium-term Business Plan
Capital investment is expected to peak in fiscal year 2019 when the new main building of the Daimaru Shinsaibashi store and new Shibuya Parco, which arebeing rebuilt, will open, and in the following fiscal year 2020 and beyond, free cash flows of ¥20 to 30 billion level are projected to be generated each year.
(Millions of yen)
60,000Other
M&A

50,00040,00030,000Capital investment
Growth investment¥200

58,00049,30020,00037,50010,0000billionParco Business

28,18027,021

Daimaru
Matsuzakaya

Real Estate Business

2017

2018

2019

2020

2021

(FY)

Overview of Medium-term Business PlanFY 2014-2016 Medium-term Business Plan
<Phase of building foundations>1
Growthstrategy

FY 2017-2021 Medium-term Business Plan
<Phase of changing the Group structure>

Realizing the Vision

1

Multi Service
Retailer Strategy

Promoting the expansion of business ﬁelds including service ﬁelds beyond theframework of retail and strengthening highly eﬃcient businesses to realize the
new Group Vision in consideration of increasingly diverse lifestyles

2

Urban Dominant
Strategy

Expanding real estate lease area by strengthening the function of the Real EstateBusiness and expanding Urban Dominant initiatives for growing with local
communities

3

ICT Strategy
toward IoT era

Developing ICT infrastructure and strengthening EC to increase proﬁtability andstrengthening relations with customers and creating new businesses using ICT

4

Initiatives to innovate
existing businesses

Heightening the appeal of real stores including department stores and Parco andenhancing soft contents to respond to increasingly diverse means of seeking
enjoyment

2

Strengthening business foundations
that support growth strategy

Promoting strengthening of corporate governance [transition to a Company withThree Committees (Nomination, Audit and Remuneration Committees)], theGroup ﬁnance strategy (transition to IFRS), renovation of the Group operations
systems, the Group organization/HR reform and CSR activities

Integrated Report 201825

Exterior of Ginza Six

Management Strategy＞

Urban Dominant Strategy

Growing and Coexisting with Local Communities
that“fame attracts fame.”

Ginza Six

We think there are two key factors for success (KFS)The Ginza area’s largest luxury mall“Ginza Six”
made its grand opening on April 20, 2017 drawing

One is the“combination of different elements”throughmuch attention from all over Japan and even frominitiatives beyond company level. Ginza Six is a big

abroad. More than half of 241 world-class quality

project for which four companies including J. Front

brands that were carefully selected and collected are

Retailing, Mori Building, Sumitomo Corporation and L

flagship stores. In addition, the creation of unconventional

Catterton

store environment using art, customer management andcompanies which have totally different backgrounds andanalysis using ICT, and promotion creating a buzz andcorporate cultures jointly aimed at creating new world-

conscious of being spread on SNS are also a symbol ofclass value and put together their wisdom and energy in“discontinuous growth”we aim at.

the world’s leading commercial area Ginza. As a result,Real

Estatecollaborated.

These

four

By category, luxury brands are very popular among

we think the unprecedented“innovative luxury mall”

affluent people in Japan and inbound tourists to Japan.

causing a buzz worldwide was born by the chemical

Fashion items are steadily creating customer loyalty byreaction that occurred among these four companies oroffering Ginza Six limited items. Cosmetics draw

“four different elements.”

customers from Japan and abroad by actively providing

The other is many brand new ideas we tried toward

unique services and events. Food products are also

“discontinuous”growth, not an extension of the status

popular due to successful lineup of items available only

quo by choosing to abandon our past successful

at Ginza Six, many of which are sold out.

experiences and“not to make it a department store.”We

Another feature of this project is a great deal of

could create special experiences and values available

attention from the media. In April when it opened,

only there including luxury duplex boutiques adding

the total number of media exposures includingcolor to the façade, store space design such as the boldbefore and after its

atrium welcoming visitors with art, the unique layout of

opening such as TV,

passages reminiscent of the“back alleys in Ginza”andnewspaper, magazine

the floor composition beyond the so-called framework ofand the Internet, wasdepartment store’s merchandise classification. In otheras many as 8,200. The

words, in the era when online shopping is rapidly

overwhelming number

growing and it has already been said that “onlineofexposuresshopping is driving out real stores”in Western countries,

created a chain reaction

we think we could present an“answer”to the questions

People in line at opening

26

in Ginza Six.

media

Management Strategy

Map around Matsuzakaya Ueno store

Ueno
Frontier
Art Sports
Tower

Kasuga-dori-dorOkachimachi
Panda Hiroba

iMontbell

Art in the atrium of Ginza Six

Nakaokachimachi Station
Tokyo Metro Hibiya Line Showa-dori

Shiseido
Beauty Salon
Matsuzakaya Beauty Gaden
Ueno
Pet Salon Libon
Main

JR Okachimachi Station

Ueno Hirokoji Station
Tokyo Metro Ginza Line C
huo

Toei Oedo Line

Ueno Okachimachi Station“What values are expected of real stores to provide

Okachimachi area, which was named “Shitamachi.

and what is the meaning of the existence of realMaparoundMatsuza
dissemination of local information and appeal
using
the

stores?”Front,”started in full swing. Specifically, we enhanced

community site“Ueno ga Suki.”At the same time, by
creating multiple sales spaces in conjunction with thisUeno Frontier Tower“Ueno ga Suki,”we built a new mechanism to increase

The south wing of the Matsuzakaya Ueno store wasrebuilt and“Ueno Frontier Tower”opened on November
4, 2017. With an anchor tenant Parco on the 1st to 6th
floors, the Matsuzakaya Ueno store on the 1st basement
floor, Toho Cinemas on the 7th to 10th floors and highly

customer loyalty, which helps strengthen customer
relations. In addition, by holding various events startingfrom the adjacent “Okachimachi Panda Hiroba” todramatically increase our ability to attract customers,
we will contribute to revitalizing the whole area.

functional offices on the 12th to 22nd floors, acommercial complex as a new landmark in the area wasborn.
This is the first big development project jointly
implemented by Daimaru Matsuzakaya Department
StoresandParco.

The

initiativesofDaimaru

Matsuzakaya Department Stores and Parco achieved acertain result in joint sales promotion and others in theareas where the stores of the two companies are
adjacent to each other. And we think this project led us
to enter into a stage where the Group synergy with
Parco shifts into full swing in more situations. The new
Parco store opened in this“Ueno Frontier Tower”was
named “Parco_ya,” which is an example of new
initiatives with unprecedented concept. Specialty shops
there were selected to attract the customers who visit
the adjacent Matsuzakaya Ueno store or Toho Cinemas
Ueno and workers in offices on upper floors.“Parco”
opened a store in a new area in the 23 wards of Tokyo
for the first time in 44 years. Under the new name“Parco_ya,”the store contributes to tapping a new

Promoting urban development in key areas
In addition to these big development projects, theGroup will make active efforts to further expand realestate leasing area in urban areas which can be
expected to grow.
New commercial facilities which opened, or will
open, in fiscal year 2018 include four projects by theReal

EstateDivision

Harajuku

Zero

Gate,

At the same time, in five key areas including
Shinsaibashi, Kyoto Karasuma, Kobe Motomachi,
Nagoya Sakae and Ueno Okachimachi, we will also
clarify respective “area strategies” by implementing
promotion

Urban

for

department stores and motivating
people to visit the areas
in collaboration with local
communities to promote the
Urban Dominant Strategy for

thisgrowing with local communities.

“Ueno Frontier Tower,”theprograms

developing the areas aroundIn conjunction with

Matsuzakaya Ueno store andUeno Frontier Tower

projects.

2018.

than

of

seven

or so around flagship department stores in fiscal year

customers.
opening

totaling

Furthermore, we are considering promoting five projects

Parco’
s existing target

the

Matsuzakaya

Gate business of Parco such as Kyoto Zero Gate andthe surrounding environment and catering to a little
peopleDaimaru

Nanzenji area, Kyoto and three projects by the Zeromarket in the area with a brand lineup suitable for
older

of

Department Stores such as“Blue Bottle Coffee”in the

Dominant

Strategy in the Ueno

Blue Bottle Coffee Kyoto Cafe

Integrated Report 201827

Management Strategy＞

ICT Strategy“Aggressive”and“Defensive”toward Full-scale IoT Era“Lifetime Service Hub”concept
The Group has a great advantage of holding good
customer assets mainly through Daimaru, Mtsuzakaya
and Parco. Currently, however, most of our contact
points with these customers are real stores and otherretail, which is only a small part of their lives.
Therefore, we intend to build a new customer basenamed“Lifetime Service Hub”and create a system
for “strengthening lifetime customer engagement.”
And thereby we will collect and use not only“fixed
information”obtained when providing products andservices but also “unfixed information” obtained

through the establishment of a new company“JFR
Kodomo Mirai Co., Ltd.”is a part of our initiatives
based on the concept mentioned above. By contactingwith people in their infancy, which is the beginning oflife under the“Lifetime Service Hub”concept, andhaving many day-to-day communications with theirparents while putting the provision of high quality andadvanced early childhood education first, we would
like to create opportunities for providing new value.
Image of Lifetime Service Hub concept
BirthInfancy

Schoolattendance

Employed

MarriedChildraising

Secondlife

through daily conversations with customers andcommunities to understand customers more deeply
than ever and dramatically enhance engagement.
The“Lifetime Service Hub”is illustrated by thechart on the right. With so-called“era of 100-year life
expectancy”in mind, we will provide new products
and services that help relieve customers’“frustrations”
and“concerns”by having more contact points thanever and building long and deep relations with themon various occasions and milestones throughout their

Department
store

Parco

JFR Card

Dimples’Tomonokai
J. Front Foods
JFR Kodomo Mirai, etc.

CRM

CRM

CRM

CRM

Customer proﬁle fordepartment stores

Customer proﬁle for
Parco

Customer proﬁle for
JFR Card

Customer proﬁle for
Dimples’Tomonokai
J. Front Foods

Analysis/proposal by AI

lives beginning from birth to expand our businessfields.
The“entry into early childhood education business”

28

Integrated database (DB)What is expected in the use of ICT particularly indepartment stores is the perspectives of the“provisionof new customer experience”and the“advancementof sales measures.”Beginning in the current fiscal
year, Daimaru Matsuzakaya Department Stores will

systems in the Group, mainly department stores,
including how the aging of existing systems isaddressed, and take inventory of these systems andwe will start a full-scale shift to cloud-based systems
according to the system policy developed based on
their results.

Management Strategy

Advancing sales activities using digitaltechnology

Image of cloud-based systems

promote full-scale digital strategy by incorporatingknowledge from outside the company.
Specifically, by introducing a communication-based
mobile application equipped with point card function(The payment function is scheduled to become
available next fiscal year.) starting from the Daimaru
Tokyo store in fall 2018, improving gaisho sales
activities using digital tools (SFA), and increasing
sales areas where inbound tourists can make mobile
payments, we will overhaul all sales process
operations to reform department store operations sothat they catch up with the era of ICT.
With respect to department store e-commerce (EC),we will revise the conventional“full category”lineup
conscious of real department stores by narrowing it
down to gift, beauty and food products in which thestrength of department stores can be shown, we
would like to achieve tangible results.

Work style reform starting from RPA
We are introducing RPA (Robotic Process
Automation) to realize the“work style reform”using
ICT. Specifically, at three companies including J.
Front Retailing, Daimaru Matsuzakaya Department
Stores and JFR Service, routine operations such as
expense calculation, download and tabulation of
accounting data, checkup of data and creation ofand input to performance management table are
picked up to be covered by RPA. In fiscal year
2017, RPA was introduced to 48 operations among
them, reducing about 4,400 man-hours. In fiscal

Rebuilding “department store digital strategy”

by actively incorporating knowledge from outside the company“Provision of new customer experience” and“advancement of sales measures”
Store

year 2018, RPA will cover additional 60 operations,
expecting about 5,400 man-hour reduction. During
the five-year period of the current Medium-term
Business Plan, we will automate about 28,000
man-hours by expanding RPA to 300 operations

Mobile app, payment processing
before customers, etc.

across the Group to increase productivity.
While going paperless using this initiative, we

Gaisho

New SFA,sales activities using ICT, etc.

InboundMobile payment,
use of SNS, etc.

will realize BYOD (Bring Your Own Device) ensuringsystem security and create a telework environment
for full-scale“work style reform.”

Revising department store EC
Narrowing down existing “full category”
EC lineup to gift, beauty and foodWork style reform using ICT
Radical overhaul of operation frames centered on paperless operations using ICT

Shift to cloud-based systems in the Group
It is necessary to introduce“high speed,”“low cost”

Sales
Order
ArrivalStorage

Back oﬃce

Sales

Settlement

Payment Performance
Closingcollection management

Tax

HR
Admin

and“secure”systems in order to diversify businesses

Promoting operation process reform using ICT

and develop new businesses using IT. Therefore, theAutomation/streamlining ofadministrative processing

Group decided to build IT infrastructure, which serves
as a basis for creating and operating systems, in thecloud, and beginning in fiscal year 2018, the systemsof J. Front Retailing, Daimaru Matsuzakaya Department
Store and other subsidiaries and associates in theGroup will be basically developed and operated in thecloud. At the same time, we will study hundreds ofIntroductionof RPA

Introduction of
new GW/WF

Paperless
Introduction ofadvanced core system

Expansion of scope of
the Group shared services

Radical reform of the Group operations

Realizing BYOD (Bring Your Own Device)
Creating telework environment
Full-scale “work style reform” through operation reform using ICT

Integrated Report 2018

29

Rendering of new main building of Daimaru Shinsaibashi store

Management Strategy ＞ Innovation of Department Store Business (Rebuilding of Main Building of Daimaru Shinsaibashi Store)

Creating“Future Department Store”
Structural issues facing department storesincreasing globalization and casualization of fashion,and furthermore, a shift to online shopping.

According to the statistics of the Japan Department

In spite of these changes in customers’buying

Stores Association, department store sales in Japan

behavior, in flagship department stores, the sales floor

remain on a downward trend after peaking at ¥9.7 trillion

area of women’s clothing remains bloated since the latein 1991. There are multiple causes including store

1980s. We are planning to reduce the area by about

saturation, a shift in demographics, shrinking rural

30% or 16,000 square meters compared to fiscal year

economy, globalization, changes in consumption quality

2016 during the period of the current Medium-termand changes in customers. We think one of the important

Business Plan in an effort to correct this gap.

issues we should resolve is the store structure overly

In the spaces newly created by such reduction, we

dependent on fashion clothing, which rapidly expanded

will expand categories and contents that have growthin the early 1980s.

potential and the ability to attract many customers. In

According to the Family Income and Expenditure

the current fiscal year, we are planning to reduce sales

Survey by the Ministry of Internal Affairs andarea by around 10% compared to fiscal year 2016

Communication, the percentage of expenditure on

mainly in the Daimaru Umeda and Sapporo stores andclothing of the“annual average of monthly consumption

the Matsuzakaya Nagoya store. In thus created spaces,

expenditure per household”decreased from 7.3% in

we will change merchandising by creating sales areas

1991 to 3.8% in 2017. Behind this trend, we assume

combining beauty products, food and daily sundries andthat there are great changes in ways of self-expression

introducing the brands that meet the demand for service

and values particularly among young people as well as

and experience-focused consumption to respond tochanges in the market for each store.

Expenditure on“clothing and footwear”and its percentage of consumption expenditures

Source: Family Income and Expenditure Survey by the Ministry of Internal Aﬀairs and Communication“Average of Monthly Disbursements per Household ‒ Two-or-more-person Households”
8.0

30,0007.0

25,000

6.0
20,0005.0

15,00010,000
5,000

30

4.0

The rebuilding project of the main

3.0

building of the Daimaru Shinsaibashi store

2.0

is positioned as a symbol of innovation of

2.0

1992

1997

2002

2007

2012

2017

Rebuilding of the main buildingof the Daimaru Shinsaibashi
store
looking ahead to the future

the Department Store Business. The mainbuilding of the Shinsaibashi store is being

The big full-scale joint development of stores by thebuilding, we would like to embody an innovative“new“department store”and“Parco”in this north wing is thedepartment store model”showing the future directions

second case following“Ueno Frontier Tower.”Throughofthis initiative, we will further expand the creation of thedepartment

storesinallaspects

includingmerchandise mix, service and environment, which havenever been seen in existing department stores.

Group synergy.
And then, by connecting these two buildings, the new

The strengths of the Shinsaibashi store are many

main building and the north wing, we will create anaffluent customers and the ability to pull in the greatest

innovative and profitable hybrid commercial complex

number of inbound tourists in Japan. While further

with a total floor space of more than 80,000 squarestrengthening these strengths, we will“create added

meters to attract a wide range of customers from a widevalue”including new services and experiences only

area and draw new crowds to the area.

Management Strategy

rebuilt aimed at opening in fall 2019. In the new main

available in real sores.
At the same time, by drastically revising ourtransaction format mix including“kaitori,”“shoka shire”

Future Standard Laboratory

and“real estate rental”to achieve an optimal balance

Five years from now, how will we live? What tools willamong them, we would like to embody an innovative

become mainstream? What clothing will we wear? Whatand profitable“new department store model.”food will we eat? And what will we experience? – We
created“Future Standard Laboratory”in 2017 to propose

Changing the business model of the northwing using synergy with Parco
After completing the reconstruction of the mainbuilding, the business model of the north wing will makea major shift from a department store to real estate
rental. The north wing has two basement floors and 14

and deliver information on what will become a standard
in the future. Contacting with various creators, cultural
figures, universities, local communities and NPOs andmany companies, we will promote the“combination ofdifferent elements” to “create” things and services/
experiences which will become standards in the future.

floors above ground. We decided to open“Parco”as its
big anchor tenant occupying the 2nd basement floor to
the 7th floor above ground.
There is no store in Parco format in the Osaka areaand many local customers have eagerly awaited for the
opening of Parco. We think this project will meet their
expectations and be positioned as an important measure
to help Parco enhance the strength of store brand. It isalso very meaningful as store opening in one of the key
areas of the Urban Dominant Strategy implemented by
the Company.

Structure of new main building and north wing of Daimaru Shinsaibashi store●Changing the business model of the north wing of the Shinsaibashi store to “realestate rental” after completing the new main building●Anchor tenant “Parco” will occupy the 2nd basement ﬂoor to the 7th ﬂoor. Upper
ﬂoors will be operated by Real Estate Division.
●Creating more synergy of the Group through the joint development of Daimaru
Matsuzakaya Department Stores and Parco

North wing

Theater / event hall

Parco
*There are some
exceptions.

ZERO GATE
Shinsaibashi

Parking

New main building
10F
9F
8F
7F
Department store 6F
5F(Daimaru
4F
Shinsaibashi store) 3F
2F
1F
B1
B2

Connecting to the north wing after rebuilding the new main building (planned for spring 2021)

White
AvenueParking

BAG'n'NOUN
CHANEL

Daimaru Interior building
Museé Air Shinsaibashi(North)Daimaru
Shinsaibashi store（Main）

ShinsaibashisujiReal estate
rental model

Nagahori-dorilucien pellat‐ﬁnet

Midosuji

14F
13F
12F
11F
10F
9F
8F
7F
6F
5F
4F
3F
2F
1F
B1
B2

< MAP around Shinsaibashi store >（South）

LUMIÈRE PARIS
Commercial
complex

Shinsaibashi161
agnès b. air-OSAKAROSE BUD

acca
Nike Osaka

Hybrid commercial complex with more than 80,000 m2 ﬂoor area

Integrated Report 201831

Rendering of New Shibuya Parco

Management Strategy＞

Innovation of Parco Business (New Shibuya Parco)“Next-generation Parco”in Shibuya
With respect to the direction of store planning, we aim to

New Shibuya Parcocreate next-generation commercial space that provides

The rebuilding project of Shibuya Parco is a pillar of theappeal unique to Parco’s own real store including new

innovation of the Parco Business. Shibuya Parco, which is

shopping experiences using the latest technologies forbeing rebuilt, has made various new proposals as thecustomer services, payment methods and others, new ideas

starting point of Parco’s uniqueness. In “new Shibuya

to meet changing lifestyles of mature urban consumers, andParco,”which is scheduled to open in fall 2019, we would“learning”and“experiences”using“Parco Theater”thatlike to bring together new initiatives which have never been

will be newly reborn. Using the advantages of commercial

done in conventional commercial facilities.

complex including offices, we will expand the business by

The scheme of this project was approved in December

expanding contact with various companies, provide

2015 as an urban planning project of special urban

advanced tenant services using ICT, and cooperate in therenaissance district, not simple rebuilding. Based on“creation of Entertainment City”in Shibuya-ku.

evaluation of its contribution to urban renaissance, its floor-

By spreading the new achievements and know-how

area ratio was allowed to increase. With respect to thegained through this project to other urban stores gradually,

income and expenditure of the redevelopment project,

we will realize the evolution of the store brand of entire

proceeds from the disposal of reserve floor area will cover

Parco.

project cost, land maintenance cost, construction cost,compensation cost for the suspension of business andothers. The office area of reserve floor area was sold andthe store area will be acquired by Parco.

Expanding commercial real estate
As the initiatives of the Parco Business to expand
commercial real estate including Zero Gate and newformats, eight development projects are in progress in fiscal

Scheme of“Udagawa-cho District 14/15 Category 1 Urban Redevelopment Project”
Income and expenditure of Udagawa-cho District 14/15 Category 1 Urban Redevelopment Project

Proceeds from disposal of reserve ﬂoor area:
Approx ¥46.4 bn

Project cost,land maintenance cost,
construction cost, etc.
Compensation cost
Suspension of business,relocation cost, etc.
Oﬃce cost, etc.

Expenditure

32

year 2018. Specifically, Kyoto Zero gate, which partiallyopened in 2017, will fully open and three other storesincluding Harajuku Zero Gate and Sannomiya Zero GateOﬃce area*Concluded transfer
agreement concerningoﬃce ﬂoor with Hulic

will open in fiscal year 2018. From late 2018 to fiscal year

Store area
*To be acquired by Parco

Zero Gate in fall 2019 to cultivate the central part ofIncome2019, stores in new formats will open in Kinshicho andUrasoe, Okinawa. In addition, we decided to open Kawasaki
Kawasaki-shi that is expected to grow and improve urban
function.

Existing Parco store
Existing Zero Gate
Store opening after the start of the current Medium-term
Business Plan and development project already announced

Improvement ofcustomer services
and tenant services
In the stores business, we
provide customer services andtenant services using ICT as a

Kyoto

Ueno

Kyoto Zero Gate
Opened in Nov 2017

Parco_ya
Opened in Nov 2017

Kobe

Sannomiya Zero Gate
(provisional)
Opening date is to be determined

Okinawa

Urasoe West Coast Project
Scheduled to open
in summer 2019

Management Strategy

Cultivating urban areas with growth potential by developing new formats in addition to Parco and Zero Gate

Harajuku

Harajuku Zero Gate
Opened in Mar 2018

Kinshicho

customer service and tenant
support policy.
Aiming at digital transformation

In front of Kinshicho Sta
Scheduled to open
in the 2nd half of 2018that is expected to be adopted on

Shibuyaa full scale in new Shibuya Parco,

New Shibuya Parco
Scheduled to open
in fall 2019

which is planned to open in fall
2019, we conduct the pilot testsof the measures to provide newconsumption

experiencesby

expanding in-store services of

Revitalizing existing storescommercial facility Parco.
For customers, we introduced a 3D scanner, which enables

In each Parco store, we promote renovation based on

customers to post the 3D images of their coordinated styles

changes in consumption and store characteristics. In fiscal

on social media, at SR6 in Shibuya in December and use it toyear 2017, we conducted renovation of approximately 35,000

sell fashion items. We also developed voice search service

square meters. In urban stores, mainly Nagoya Parco andAlexa Skill that provides voice guidance service in Parco

Fukuoka Parco,“spaces”that offer new ways of communicating

stores and installed it in Ikebukuro Parco in April. Furthermore,

were provided and restaurants that offer information wereaiming at improving our ability to offer information as media,

introduced. In community stores, mainly Urawa Parco andwe will implement various initiatives, beginning in the 2nd half

Tsudanuma Parco, food floors, which play a central part inof 2018, including increasing buying menu in conjunction

encouraging customers to make multiple purchases and staywith information on Pocket Parco.

longer in the store, were renovated and large-scale key

For tenants and brands in Parco stores, we help themtenants with strong ability to bring in customers were invited.

strengthen sales and the transmission of information. We

In fiscal year 2018, we are planning to renovate floor areachanged the orientation training programs for newly employedof approximately 35,000 square meters under the theme ofpeople to be provided online so that they can take them atthe creation of new added value that meets diversified

their convenient time and focus on customer services at

consumption needs. By introducing key items, mainly

stores.

“cosmetics”and“food”-related products, we will carry out
renovations to expand the variety of fashion zones.

When opened “Parco_ya” in Ueno Frontier Tower, we
introduced at each shop Japan’s first service to analyze“store

In urban stores, we will introduce“health & beauty”as atraffic”and“customer attributes”such as age and gender,

provider of added value for lifestyles and provide new food

which can be used to ensure appropriate personnel structure

style ideas including formats and shop interior and common

according to store traffic by time of day and changes in store

space decoration. In community stores, we will continue totraffic by date and time and revise product lineup according tostrengthen their offering by introducing high quality

customer attributes.

supermarkets that meet market needs and improving foodspecialty shops.

Commercial facility’s first shared office / co-working space (Fukuoka Parco)

Tested a 3D scanner for coordinated styles (Shibuya SR6)Integrated Report 201833

Management Strategy＞

Finance Strategy

Building a Financial Base to Achieve an ROE of 8%
Promoting management in recognition of capital cost
The Group aims to achieve a consolidated ROE of 8%
or more in fiscal year 2021, which is the final year of theMedium-term Business Plan. We began with recognizing
shareholders’/ investors’expected return, that is, ourcost of shareholders’equity to set an ROE target of 8%.
The cost of shareholders’equity has been calculated
at a little less than 6% at the end of February 2018 but
we see it moving in the range of 6% to 7% over the
medium to long term. Therefore, we think we are expected
to stably achieve an ROE of 8% or more exceeding thecost of shareholders’equity mentioned above.
FY2021
consolidated ROE target

8.0% or more

Cost of shareholders’ equity recognizedby the Company

6–7%

The WACC (weighted average cost of capital) has
been calculated at a little less than 5% at the end of
February 2018. But we recognize the WACC of thewhole Group has been at the level of around 5% over the
medium to long term and each of our main businesses
including the Department Store Business, ParcoBusiness, Real Estate Business and Credit and FinanceBusiness also recognizes its WACC.
In the process of changing our business portfolio, wewill be conscious of decreasing capital cost by reducing
shareholders’/investors’recognition of business risks andpursuing an optimal capital structure.

Generation of cash flows and the balance
between growth and return¥60 billion or more in five years. They will be used to
expand equity targeting an equity ratio of 40% and toreturn profits to shareholders targeting a consolidated
dividend payout ratio of at least 30%. We will also
consider purchasing our own shares as appropriate.

Adopting store-by-store balance sheet
The Department Store Business operates using large
assets. In fact, however, a strong focus had been put on
profit and loss statement (P/L) at a store level. In otherwords, stores had been less conscious of balance sheet(B/S). Therefore, we have decided to“change employee
mindset”to increase ROE across the Department StoreBusiness including all its companies and stores by addinga B/S perspective (assets/liabilities/shareholders’equity)
to business management and clarifying the managementtargets of the whole Business and each department store.
Specifically, beginning in March 2017, each department
store develops a B/S budget, which enables us tocompare it with results and understand asset profitability.
We prioritize investments considering each store’s ability
to achieve a return on investment and expect effects fromthis that will lead to a curb on investment plans intended
only to maintain or increase sales and drastic measuresfor poorly performing divisions. Each store will actively
implement measures to enhance asset efficiency
according to business size, regional characteristics andasset composition in an effort to improve ROA, asset
turnover and performance.
In the first year of adoption, we visualized each store’s
B/S like an independent company by transferring land andbuildings, operating receivables and payables and others,
which had been recorded by the head office, to each store
and budgeted ROA of each store and added it to theperformance indicators of Store Managers and others. As
a result, partly thanks to an increase in operating margin

The Group will generate operating cash flows of ¥260
billion or more in total during the five-year period of thecurrent Medium-term Plan (FY 2017 to 2021), and fromthem, ¥200 billion will be allocated mainly to capital
investment in existing businesses and growth strategy
investment to expand into new businesses
toward restructuring its business portfolio.
Cash ﬂow allocation *Total for FY 2017 to 2021
A little more than 60% of such investment
will be allocated to the Department Store
Investing cash ﬂows
Business and Parco Business, which arebillionthe Group’s core businesses, a little less
Operating cash ﬂows
than 20% to the Real Estate Business,billion or morewhich was newly created as an independent
segment, and a little less than 10% toFree cash ﬂows
Other. We are planning to invest ¥27 billion
billion or morein M&A for growth.
We expect to generate free cash flows of

¥200

¥260

¥60

34

Capitalinvestment
Growthinvestment
Shareholder
returnExpansionof equity

ProﬁtOperating proﬁt

Total assets
turnoverNet sales
Total assets

ROE

ROA
(Store Manager
performance indicator)

ProﬁtOperating proﬁt

Shareholders’equity

Total assets

Total assets
Shareholders’equity

Accounts receivable
collection ratio⇒Prevention of delays in collection / individual assessment

・Key focus of lease stores (Rate of inventories is relatively high)⇒Thorough assessment with turnover / cross ratio
Merchandise
turnover
Securing salable items / removing unsalable items
・Key focus of the company’s own stores (Rate of property and equipment is relatively high)Selecting/implementing renovation investment projects
Sales per⇒month/tsubothat highly contribute to the store’s ROA
Return ofinvestment

P/L
perspective
Operating margin
Operating proﬁt
Net sales

due to profit growth, “inventories” and “property andequipment”in B/S, which can be managed by each store,
were generally controlled against the budget set at the
beginning of the period and ROA was improved.
Going forward, we will promote strategic initiatives toenhance asset efficiency including: (i) defining KPIs froma perspective of asset efficiency (B/S) and breaking themdown at a store level; (ii) verifying the investment action
plan of each store and implementing the PDCA cycle;and (iii) developing a growth investment model to improve
ROA by replacing
and adding assets.
店舗B/S導入による経営管理の高度化⇒Judged and monitored by the Investment Project Review Committee

Associatedsales
Number of new
identiﬁable customers
Product sales
proﬁtEﬃciency ofoperating expense

Continuing focus

Existing indicators

Financialleverage・Key focus of stores emphasizing gaisho sales (Rate of accounts receivable is relatively high)Focus indicators

MarginB/Sperspective

Management Strategy

Enhancing business managementby adopting store-by-store B/S

Chairperson, the Senior General Manager of Budget andManagement Support Division of Financial Strategy Unit
as its Vice Chairperson, the Senior Executive General
Manager of Management Strategy Unit and othermembers from Budget and Management Support Division.

取り組み強化指標

Specifically, the Committee classifies the businesses of
the Group into three phases including“I. Normal,”“II.
Caution needed”and“III. Revitalization or withdrawal tobe considered”and reviews them on a regular basis. Oneof the criteria for the“phase III”in which revitalization orwithdrawal is to be considered is“two consecutive periods
B/S視点（売掛金の比率が相対的に高い）●外商重点店舗の主要取組み
of operatingloss.”Concerning the companies, businesses,
マージン⇒回収延滞の防止・個人評価
Investment Project
Review Committee and 売掛金回収率 storesand others that meet the criterion, mainly a relevant
当期純利益
Revitalization Plan
Review Committee
総資産回転率company
prepares the measures for “revitalization or●賃借店舗の主要取組み（棚卸資産の比率が相対的に高い）
営業利益
売上高⇒回転率・交差比率での評価徹底、
売筋商品確保・死筋商品排除商品回転率 withdrawal.”
The Committee
validates
these businesses
The Company hasROA
created the“Investment Project
総資産
and （有形固定資産の比率が相対的に高い）
determines the validity of the measures as well as（店長評価指標）ROE Committee”●自社店舗の主要取組み
Reviewand the“Revitalization Plan Review⇒自店舗ＲＯＡ貢献度の高い改装投資計画を選別実施
月坪売上高
providinginformation to facilitate ・swift
management
当期純利益
営業利益
Committee”to support management decision-making on
株主資本
総資産
投資回収
⇒投資計画検討委員会による審査、モニタリングdecision-making
at
the
Group
Management
Meetings
andinvestment, business revitalization and withdrawal from a
the
Board
of
Directors
meetings.
financial perspective.
財務レバレッジ

従来指標

担当売上高
P/L視点
The“Investment Project
総資産 Review Committee”consists
新規ID顧客数
営業利益率
Flow of the“Investment Project Review Committee”
of the Senior Executive
General Manager of Financial
株主資本
従来に引き続き重点実施
営業利益
商品売買益高Strategy Unit as its Chairperson, the Senior General
売上高
Investment ProjectGroup Management Meeting /営業費効率Manager of Management Planning Division as its Vice
Review Committee
Board of Directors
1 OK
Chairperson and other members from Financial Strategy
Proposing
Quantitative
Quantitative
Proposingcriteria
criteria
division
Unit, Management Planning Division and Legal Division.
Presenting
The Committee has in place a system that enables theexamination results
Qualitative
Risk
participation of external institutions in order to present
criteria
2 NO
more objective and stricter opinions. We make an
investment decision using the payback method for
Risk
3 NO (Re-examining)
investment in store renovations, the NPV method fordevelopment investment (present value discounted using
WACC ≧ 0), and the DCF method for M&A. In addition,
Classiﬁcation into phases by the“Revitalization Plan Review Committee”
the Committee checks many areas including legal risks
NormalContinuing to manage
Phase●Continuing to post
and financial risks (calculation of shareholder value).
performance at each company
Ⅰ
an operating proﬁt
Specifically, in fiscal year 2017, they examined
Caution needed
Parco’s new store opening projects in Kinshi-cho and the●1st period of operating loss
Submitting thePhase(including forecast)measures for●Signof
operatingloss
north wing of the Daimaru Shinsaibashi store and theⅡsustainable●New business with operating loss
beyondtheoriginal
planestablishment of new operating company (JFR Kodomo
operating
proﬁt to the
Revitalization or withdrawal to be considered
Mirai Co., Ltd.).
Revitalization●Two consecutive periods ofPhase
operating loss (including forecast)
The “Revitalization Plan Review Committee” isPlan Review●Concern
about
liabilities
exceedingassetsⅢ
Committee●New business expected to make a loss in thecomposed of the Senior General Manager of Managementﬁscal year when it is planned to turn proﬁtable
Planning Division of Management Strategy Unit as its

Screening unproﬁtable businesses

Integrated Report 201835

Management Strategy＞

Human Resources Strategy

Human Resources“Creating”Happiness
J. Front Retailing (the“Company”) believes individual employees, that is,“human resources”lead the creation ofadded value, which is essential for sustainable corporate growth, and that human resources are the most importantmanagement resources. Based on the belief that“people grow by getting their job done,”we will develop humanresources by linking four elements including recruitment, allocation, evaluation and development and maximizing energythat drives growth valuing the thoughts of each and every employee.
Development of self-transforming people through OJD (On-the-Job Development)*
Organization area

Area connecting organizations
and individuals

Individual area

Development
Development throughthrough allocation organization management

Maximization of personal vitality
facilitated by organization

Self-learning and growth based on
HR attributes and growth patterns

Late career

Development throughorganization operation
based on role
structure chart

EntrepreneurialManagement Professional
leaders

Course recommended
according to
HR attributes

Organization
Spreadingawarenessof goalCareerroute

Practice

Middle career

Review

Clariﬁcation and implementationof career plan by employees
・ Development of career plan
System to absorb intention

Early career

Allocation basedon HR attributes/
assumptions

3-yeardevelopment
plan

Enhancement ofleadership

Sharing of information
between managerialstaﬀ and HR div.

MBA school
External open training(IFI, Globis, etc.)

Course toobtain external
information/networkand motivation of employees
・ Career entry system
・ Online self-application
Feedback to encourage
self-awareness

Basic development
ability of organization

Career Support
College・ Multifaceted observationof behavioral traits
・ Milestone interview
Feedback toorganization activities
・ Organizational diagnosis
・ Service research

JFR Group line
personnel training
JFR Group open training

Basic global
courseJFR Management School
JFR Leader School
Store/div. school

Members

Career development training●Externalcourse/seminar●In-house seminar●Correspondence
course●E-learning●Acquisition ofqualiﬁcation

New employee entry school

Development system that combines organization management, which draws self-innovation in the process of*OJD taking on diﬃcult challenges, and individual self-growth ability in addition to OJT and Oﬀ-JT that complements OJT

36

management strategy. Therefore, we select some people
from“all the human resources of the Group”as candidates

We thoroughly develop and strengthen employees’

for the next senior management team members and“personal basic skills”required for leaders with a focus

provide the employees selected from them with focusedon their first three-year career at the JFR three-yeartraining school for new employees with college degrees(JES). We provide a“career development training”toemployees aged 27 where employees review theirexperiences from the past to the present for future careerdevelopment.

development programs organized by the“JFR School.”
The“JFR School”is composed of the“JFR Business
Management School”(for candidates for the next senior
management team members), the “JFR Management
School”(for candidates for the next general managers)
and the“JFR Leader School”(for candidates for the nextmanagers) to produce managerial talents over the medium
to long term. We aim to develop the next generation
leaders as soon as possible by fostering management
perspectives, sharing awareness of issues with the senior
management team and applying strategies to specificaction plans and implementing these plans with a focus
on five desirable qualities required of the Group managerial
talents in addition to allocating these human resources ina well-planned and strategic way based on the belief that“a person’s growth depends on his/her job.”

Training at JFR three-year training school for new employees with college degrees (JES)**JES stands for JFR Entry School.

With the aim of creating new value by combining
different elements, we actively give employees opportunities
to work for external bodies and attend MBA programs andexternal training sessions (IFI, Globis, etc.). In addition, we
provide them with opportunities to show their intentions
including the self-application system, milestone interviews
and the career entry system. We also strive to improve theexpertise courses of the Career Support College (selfdevelopment school) to give opportunities for obtaining
professional knowledge and skills. In fiscal year 2017, a
total of 539 employees attended the Career Support
College including correspondence courses.
With respect of“allocation,”which is an importantfactor in“developing human resources through jobs,”weput the“right people in the right jobs,”which vitalizes
each person and brings out the best in him/her, at theGroup level by focusing on each employee, finding new
human resources and actively providing opportunities. To
this end, using the human resources information system
named“Talent Management System,”which integrates
human resources big data on approximately 10,000
employees of the Group, human resources divisions andjob sites work together to promote allocation anddevelopment planning based on human resource
attributes and certain human resource assumptions.

Management Strategy(1) Systems to help employees develop their careers*Desirable qualities required of the Group managerial talents:“strategic mindset,”“reform-oriented leadership,”“tenacity to achieve results,”“organization
development strengths”and“human resource development strengths”*The total number of employees who attended the training programs including
the Group general manager training programs and the Group manager training
programs in fiscal year 2017 was 621 and the total time of these programs
was approximately 22,400 hours.

(3) S ystems to support each employee’s creativity
and willingness to take on a challenge
In order to realize the Group Vision“Create and Bring
to Life‘New Happiness,’”we introduced the“Employee
Pledges for Action”and“Challenge Card”programs infiscal year 2017 to support each employee’s willingness
to take on a challenge. In fiscal year 2017, a total of
1,728 challenges were submitted and nine best teams
were selected from the whole Group in the first half of theyear and gave presentations to the management team in
the Takatsuki training institute.
Beginning in fiscal year 2018, the contents of the“Challenge Card” have been divided into three
categories including “sales measures,”“operational
improvement”and“new business”and the ideas for new
businesses are examined at the Company. The event
named the“Creation Award”is held semiannually at eachcompany and each store and the Group-wide“JFR Group
Creation Award”is held annually.

(2) S ystems to develop the next senior management teamThe selection of the chief executive officer is the mostimportant strategic decision-making and the Company
positions the development and implementation of
succession plans (for the next senior management team)as matters of particular importance in terms of

The “1st JFR Creation Award” presentation at Ginza Six

Integrated Report 201837

Sustainability＞

Formulation of Sustainability Policy and Identification of Materiality

Sustainability Initiatives
The Company newly formulated the “Sustainability Policy” and identified “materiality” after discussions at theManagement Meetings and the Board of Directors meetings. Based on the premise that the medium- to long-term quantitative
goals will be set, we have decided to formulate and release a specific action plan around October 2018 to achieve them.
In this Integrated Report, we show the five materiality issues selected by the Company and the process to identify theseissues and the direction of future specific actions as well as reporting our past sustainability activities.

Sustainability Policy

With People, with Local Communities, with Environment
to Realize New Happiness in Sustainable Society and Life

The society where we live, whether in Japan or overseas, faces various social issues including unusual weather, water
resource crisis, resource depletion, widening gap, incomplete employment and human rights issues. Among them, environmental
risks have been getting particularly remarkable in recent years. The environment surrounding us is changing significantly due
to global warming and worsening global environment. Companies are increasingly expected to contribute to sustainable
society including actions to address climate change under the Paris Agreement and social issues covered by the“Sustainable
Development Goals (SDGs)”adopted by the United Nations as part of global initiatives. It is essential for companies to tackle
environmental, social and governance (ESG) issues.
In the meantime, Daimaru and Matsuzakaya, which are the foundations of J. Front Retailing Group, have conductedbusiness activities under the corporate credos“Service before profit”and“Abjure all evil and practice all good,”which show
their commitment to pursuing the right path, over their long histories of 300 and 400 years. Based on this, we newly developed
the Vision“Create and Bring to Life‘New Happiness.’”And we always think of each and every customer’s life and conductbusiness activities to make their futures happy.
We have many places where we communicate with customers, including retail stores. Various people including customers,
employees, business partners and local people get together and meet there. Local communities in which people root assume
an important role in keeping these communication places rich. And we believe it is important to hand down the irreplaceable
global environment that supports all to the next generation smoothly so that local communities will continue forever as contact
points always filled with vitality. That is to say, it is important to keep communication places in order to create and bring tolife new happiness, which we aim to realize. And this cannot be realized without a sustainable society.
We defined the places for communicating with customers as a focus area of J. Front Retailing’s sustainability management
and we will unite and make proactive and serious efforts to realize a sustainable society. To this end, we have received various
opinions from stakeholders through questionnaires and have had many discussions at the Management Meetings and theBoard of Directors meetings since last year. As a result, we identified five materiality issues to be addressed by us including“contribution to a low-carbon society,”“management of the entire supply chain,”“coexistence with local communities,”“promotion of diversity”and“realization of work-life balance.”We believe our efforts to address these materiality issues willcontribute to achieving the global“Sustainable Development Goals (SDGs).”Among these five materiality issues, themanagement team put the greatest focus on“contribution to a low-carbon society (action on climate change),”which is anurgent issue. We are addressing this issue as the mission of a member of society and working on developing the“JFR Eco
Vision”with an eye to 2050 to help realize a sustainable society. Based on this vision, we will aim to achieve both theresolution of environmental issues and corporate growth.
As mentioned above, we will meet our environmental and social responsibilities to all customers to realize a sustainable
society, and as a Multi Service Retailer, we will create new happiness to be brought to each and every stakeholder’s life. At
the same time, we will continue sustainable growth by strengthening corporate governance to tirelessly continue this initiative.

38

Sustainability

Process to identify materiality
Recognizing
environmental/social issues
Listing
candidate materiality issues

Hearing survey onmateriality issues fromthe perspective of
stakeholders

We strive to build a relationship of trust with all
stakeholders(customers,

shareholders,business

Assessing the Company’s
strengths and impact
Picking out materiality issues
for the Company

Discussion/
identiﬁcation

Selected 100 social issues that seem to have a signiﬁcant impact
on the environment and society

partners, employees, local communities, etc.) throughbusiness activities and actively address sustainability
issues including environmental and social issues basedon the spirit of the Corporate Credo, the Basic Mission

Selected 25 items(organizational governance, race, labor practices, the environment,
fair operating practices, community, etc.)by reference to the Company’s initiatives and ESG guidelines and benchmark companies

Statement and the Group Vision in order to achieve theGroup’
s sustainable growth and medium- to long-term
enhancement of corporate value.

Conducted a questionnaire survey of stakeholders (4,250 people)
and interviewed the management teamWith the aim of further deepening these efforts, we
identified materiality that contributes to the realization of“sustainable growth of companies and society” andDiscussed at the Management Meetings and the Board of Directors meetings“sustainable society”in the process of clarifying therelationship between business activities and social

Selected 5 materiality issues

issues.

“Contribution to a low-carbon society”

Specifically, firstly, we selected 25 candidate materiality“Management of the entire supply chain”

issues from the perspectives of: (i) the environmental/“Coexistence with local communities”*including “contribution to vitalizing local economy”

social issues that are meaningful for us to address and“Promotion of diversity”

can produce results and (ii) the issues we can tackle“Realization of work-life balance”

using our core businesses. Secondly, we conducted aquestionnaire survey of 4,250 stakeholders on these 25
issues to secure objectivity and diversity. And based on

J. Front Retailing Group materiality map
Contribution to a low-carbon society

Very highthe results of the survey in which the GRI Standards(GRI: Global Reporting Initiative, a nonprofit organization

Management of theentire supply chain
Promotion of diversitythat develops international sustainability guidelines), theResponsible Investment), SDGs (Sustainable Development
Goals)* and review by the President are reflected andafter discussions at the Management Meetings andothers within the Company, we developed a materiality

Impact on stakeholders

assessment items of ISO 26000 and SRI (Socially

Realization ofwork-life balance

Coexistence withlocal communities

map. And finally, we narrowed down the list of materialityof Directors meetings.
Concerning these materiality issues, we will set long-High

issues to and formally determined five items at the Board

High

Impact on J. Front Retailing Group

Very highterm goals to be achieved and formulate an action plan
to contribute to resolving social issues through businessactivities and develop as a company.

Integrated Report 201839

Five priority materiality issues to be addressed by J. Front Retailing
AFFORDABLE AND
CLEAN ENERGYSUSTAINABLE CITIESAND COMMUNITIESPARTNERSHIPFOR THE GOALSCLIMATEACTION

CLIMATEACTIONGENDEREQUALITYDECENT WORK AND
ECONOMIC GROWTH

Contribution toa low-carbon
society

Coexistence withlocal communities 5 materiality

issuesRealization ofwork-life balance

GOOD HEALTH
AND WELL-BEING

AFFORDABLE AND
CLEAN ENERGYManagement of
the entire
supply chain

Promotion ofdiversity

DECENT WORK AND
ECONOMIC GROWTH

Social value

Economic value＊

SDGs (Sustainable Development Goals)

17 GOALS TO TRANSFORM OUR WORLD

Global goals for the period from 2016 to 2030, whichNO
POVERTYZERO
HUNGERGOOD HEALTH
AND WELL-BEINGQUALITYEDUCATIONGENDEREQUALITY

CLEAN WATER
AND SANITATIONAFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

REDUCEDINEQUALITIESSUSTAINABLE CITIESAND COMMUNITIESRESPONSIBLE
CONSUMPTION
AND PRODUCTION

CLIMATEACTIONLIFE
BELOW WATERPEACE, JUSTICEAND STRONG
INSTITUTIONSPARTNERSHIPFOR THE GOALS

are included in the “2030 Agenda for Sustainable
Development”adopted at the United Nations summit in
September 2015. They contain 17 goals with 169 targets
including“climate action,”“good health and well-being,”

LIFE
ON LAND“gender equality” and “decent work and economic“Sustainable Development Goals”
agreed by the world community
to be achieved by 2030

40

growth”and pledge to leave no one behind.

Sustainability

Materiality principles and specific actions
We will aim to contribute to preventing global warming and air pollution and make the global environment sustainable byPrinciples developing the long-term environmental vision and working by ourselves to reduce energy consumption, increase theefficiency of energy use and use renewable energy and working with business partners to achieve zero emissions.

Contribution toa low-carbon
society

Specificactions● Reduction of energy consumption
・Installing LED lighting in stores, rooftop greening,
paperless operations, promoting telework, etc.
● Shift to low-carbon energy
・Shift to renewable energy in directly managed
stores● Energy shift
・Shifting company cars to electric cars
●Other・Reducing and recycling food waste
・Expanding ethical consumption and promoting
awareness activities

We will enhance the corporate values of both the Company and its suppliers by fulfilling social responsibilities andPrinciples promoting environment-friendly initiatives at the entire supply chain to eliminate risks at the entire supply chain andproviding the products that customers can use pleasantly and securely in terms of society and the environment.

Management of
the entire
supply chain

Specificactions● Supply chain policy
・Developing and sharing supply chain initiatives
to address social issues including human rights,
the environment and safety and security
・Promoting initiatives with the suppliers who
agree to the policy
・Evaluating the CSR of suppliers● CSR for procurement and delivery
・Working with suppliers to promote theimprovement of fuel efficiency and the
reduction of delivery frequency in the entire
business activity including productprocurement

We will aim to contribute to revitalizing the area and grow with local communities over the medium to long term

Principles by combining the realization of sustainable society and the realization of pleasant shopping unifying stores andcommunities in the area through coexistence with local communities to increase the appeal of the area.

Coexistence withlocal communities

Specificactions● Urban Dominant Strategy
・Increasing the appeal of the area bydeveloping shops around a store as its core・Enhancing the strength of area brand byrealizing services through collaboration
between stores and areas● Contribution to vitalizing local economy
・Promoting initiatives to revitalize thearea using know-how to operate a retailbusiness(e.g. expansion of products produced
locally for local consumption )● Other・Supporting post-disaster recovery
・Promoting industry-government-academia
partnership that contributes to thedevelopment of the area and humanresource development

Realizing a company in which people with different cultures and customs, ages, genders andPrinciples disabilities exist together and diversity is respected and accepted as a source of growth, J.

Front Retailing Group will make contact points with various stakeholders diverse and attractive.

Promotion ofdiversity

Specificactions● Diversity initiatives
・Developing diversity policy
・Developing a policy to address women’s
empowerment, LGBTs, people with disabilities,
etc. and providing trainings
・Improving systems to receive employees(improvement of the work environment)
・Increasing the ratio of women in leadership positions

・Providing seniors with opportunities to takeactive roles and revising or abolishing theretirement benefit scheme・Lifting the ban on second jobs and side jobs
● Respect for human rights
・Developing human rights policy, providing inhouse trainings and installing service environment
equipment (e.g. the one to cater to LGBTs)

With the aim of realizing true work-life balance that meets changes in lifestyles and diversified
values, J. Front Retailing Group will innovate work styles using technologies, streamline
Principles operations, shift to creative operations and realize the work environment in which employees
and their families feel happy.

Realization ofwork-life
balanceSpecificactions● Promoting work-life balance・Work style reform including theinstitutionalization of homeworking andremote working using IoT, etc.
・Improving operations and promoting RPA
at each operating company
・Expanding support for the work stylesof employees with small children

regardless of gender (developing a paidchild care leave system and a system
to secure replacement workers)
・Developing a nursing care leave system● Employee healthcare
・Formulating a “plan for realizing healthand productivity management” andestablishing PDCA cycle

Planning to set the medium- to long-term quantitative goals to be achieved around October 2018
Integrated Report 201841

Sustainability

AFFORDABLE AND
CLEAN ENERGY＞

Activity Report – The Environment

CLIMATEACTION

Steadily Reducing Environmental Load
Recently, various environmental issues arise on earth.
In particular, the emission of greenhouse gases (CO2,etc.), which leads to global warming, and biodiversity
loss, which affects food and health, are issues common
to all humankind because they affect the entire earth.
Since the Group mainly operates a retail business, it
can make the greatest contribution through product sales
and other activities at stores and we believe that it is oursocial mission.
Therefore, we formulated the “J. Front Retailing
Environmental Policy”and each company in the Grouphas in place a system to promote environmental
conservation activities through business activities andconducts such activities.
J. Front Retailing Environmental Policy
Recognizing our roles and responsibilities to hand down theirreplaceable global environment to the next generation, we at J. Front
Retailing Group (the “Group”) proactively promote “environment-friendly
corporate management” toward the “realization of a sustainable
society” with customers, business partners and community members.

Daimaru Matsuzakaya Department Stores structure topromote the environmental and social activities management system
Top manager (President)
Administrator
Internal auditor
Store
organization

Promotion staﬀ
Promotion member (all workers including people from suppliers)

Customers / community members*Other companies in the Group are also working on environmental activities with Daimaru Matsuzakaya Department Stores.
(Daimaru Matsuzakaya Sales Associates, Daimaru Matsuzakaya Tomonokai, JFR Card, Dimples’, J. Front Foods and JFR
Service)

Daimaru Matsuzakaya Department Stores set the
FY 2017 to 2021 in conjunction with the Medium-term
Business Plan to conduct environmental activities.
<Quantitative targets>●Reducing CO2 emissions from energy use by cuttingenergy use intensity by 5% in FY2021 compared to
FY2016.
*CO2 emissions in the business activities of department stores are caused by use

3 We will raise awareness of environmental conservation througheducational and awareness activities to strengthen the foundation onwhich each worker in the Group will tackle environmental tasks voluntarily.

of air conditioning and lighting.

●Reducing the intensity of final waste disposal volume(Volume of waste generated - Recycling volume) by
5% in FY2021 compared to FY2016.

4 We will make this environmental policy known to all workers of eachcompany in the Group and make the policy available to the public.

●Increasing the food recycling rate to the 60% level by

Environmental and social activities management system
Daimaru Matsuzakaya Department Stores expands

FY2021.
FY 2017 to 2021 Daimaru Matsuzakaya Department Stores quantitative environmental targets(including Hakata Daimaru, Shimonoseki Daimaru, Kochi Daimaru and Tottori Daimaru)

the ISO 14001 environmental management systemand has in place an environmental and social activities
management system. In order to promote these
activities, we appoint the Senior Executive General
Administration

Headquartersasan“administrator”, Executive Store Managers and StoreManagers as“managers”and division managers as“promotion managers”and“promotion staff”members
in charge of practical operations are placed. They
educate workers including people from suppliers.

42

Promotion manager (division manager)

medium-term quantitative environmental targets for

2 We will comply with the requirements of environmental laws,
regulations and agreements and strive to prevent contamination.

ofManager (Executive Store Manager / Store Manager)

Goals for FY 2017 to 2021 Daimaru
Matsuzakaya Department Stores
environmental and social activities

1 Recognizing environmental impacts and their causes, we will establish
structures and systems to promote environmental conservation
activities through the business activities of each company in the Groupand strive for continuous improvement to reduce environmental load.
(1) Provision of environment-friendly products, services and information;(2) Eﬀective use of resources and energy;(3) Reduction of CO2 emissions;(4) Waste reduction and recycling; and(5) Promotion of environmental conservation activities andsocial contribution activities with customers, business
partners and community members

Manager

Corporate CSR promotion secretariat

FY2017FY2018FY2019FY2020

FY2021CO2 emissions(intensity) *1

0.04240.04140.04100.04050.0401

Energy consumption(intensity) *2

0.02040.01970.01960.01950.0193

Final waste disposal(intensity) *3

11.13

10.97

10.85

10.74

10.63

Food waste
recycling rate *4

59.8%

57.0%

58.0%

59.0%

60.0%

*1 Intensity: CO2 emissions (t-CO2)/Business hours (h)× Total floor area (㎡)		CO2 emissions targets for FY2018 and beyond have been calculated using the CO2
emission factor for FY2016.
*2 Intensity: Crude oil equivalent energy (kl)/Business hours (ｈ) × Total floor area (㎡)*3 Intensity: Final waste disposal volume (kg) / Sales (¥million)*4 Intensity: Volume of food waste recycled / Volume of food waste generated

Forestation project

Daimaru Matsuzakaya Department Stores conducts

In October 2009, “Trojan,” Daimaru Matsuzakaya

the “Ecoff recycling campaign” on a regular basis.

Department Stores private brand of men’s clothing,

Customers bring disused clothing, shoes and bags to thelaunched a project “Trojan Forest Carbon Free” instores, and in exchange, we give them shopping support

collaboration with Carbon Free Consulting Corporation.

tickets so that they can buy new items at a small discount.

One larch tree is planted in a forestation site in Inner

Sustainability

Daimaru Matsuzakaya Ecoff recycling activities

Mongolia, China, for every 10 Trojan suits or jackets sold

＝ ECO ＋ OFF“Sustainable participatory project” to eliminate burdens on customers and theearth through ecological activities that are friendly to the environment and society

A total of 299,170 renewable articles were collectedin the campaign in Aprilof

that, we continue to plant trees, and at the end of February
2018, a total of 4,350 larch trees are changing the
drought-stricken region in Inner Mongolia to a green zone.
The growing of“Trojan Forest”contributes to preventing
global warming caused by absorbing CO2, preventing the2018 and the total
numberand 250 trees were planted on the first occasion. After

desert from expanding, preventing yellow dust fromarticlesblowing, and creating jobs of planting trees for local

collected since the firstpeople.

campaign in August
2016 exceeded one
million. The collected
articles are recycled into bioethanol and coke as well as
the raw materials of textile products.

Promoting the installation of high energy
efficient equipments and LED lighting
The Group adopts various energy saving measures toreduce CO2 emissions
andprevent

global“Ginza Six Garden”was certified as an“Urban Oasis”

efficient equipments areunder the“SEGES (Social and Environmental Green

installed on the occasions

Evaluation System)”(administered by the Organizationof facility replacement,
store opening.

Ginza Six was certified as an“Urban
Oasis”under SEGES*In October 2017, the rooftop garden of Ginza Six

warming. High energy

store renovation and new

Trojan Forest

Installed LED lighting on the ceilingwhen the store was renovated(Daimaru Tokyo store)

Daimaru Matsuzakaya Department Stores strives toreduce electricity consumption and CO2 emissions byreplacing existing lighting with LED units. In fiscal year
2017, we replaced approximately 7,000 units, mainly
basic lights in the Tokyo, Kyoto and Kobe stores, with
LED units, and by February 2018, 204,000 units,
which account for about 48% of the total number of
relevant lighting fixtures, were replaced with LED
units.

Installing solar panels

for Landscape and Urban Green Infrastructure), which
recognizes comfortable and attractive urban green
areas.
The Ginza’s largest about 4,000-square-meter
rooftop garden“Ginza Six Garden”is located on theroof of the about 56-meter-high building with 13 floors
above ground. A green area of approximately 2,200
square meters, which accounts for about 56% of therooftop garden, was newly created. Our large-scale
greening efforts in the prime downtown location werehighly recognized
and we obtainedsuch certification.

At the Daimaru Kyoto store, a solar panel (rated output:10kW), which is 11 meters long and 6.6 meters wide,
was installed behind the peacock bronze sculpture. It is
expected to generate approximately 6,000 kWh ofelectricity per year, which powers digital signage andexternal signs.

*SEGES(Social and Environmental Green Evaluation System)
A system to recognize and certify outstanding green areas of the companies
that contribute to society and the environment through greening activities

Integrated Report 201843

Sustainability

SUSTAINABLE CITIESAND COMMUNITIES＞

Activity Report – Coexistence with Local Communities and Contribution to Society

PARTNERSHIPFOR THE GOALSWith Local Communities, with Customers
As a corporate citizen, J. Front Retailing uses the resources of the companies in the Group and implements
initiatives through business activities to contribute to revitalizing local communities and resolving various social
issues.

①C
 ontribution to revitalizing local communities
Our Urban Dominant Strategy is a“business model for
growing with local communities” by enhancing theappeal of the whole area with the stores at its core.
Implementing the strategy helps attract more customers
to the area and contribute to the area.
*For Ginza Six and Ueno Frontier Tower, please see pages 26 and 27.

● Shop development around the Daimaru Kobe store
The Daimaru Kobe store
it since 1987, about 30 years
Cutting-edgeboutiquesinexoticarea. Currently
approximately
60 shops operatearound the store
and the area
combining
shopping andinherithistoricalvalue and contributeto revitalizing the

Daimaru Kyoto Store Gion Machiya(Hublot Boutique Kyoto)area. And we are well received by people in Japan andproduction

economy. It also helps
reduce environmental

JR Motomachi Station
A.P.C.

Daimaru Kobe

kate spade
BLOCK47
trippenFormer Foreign
Settlement Bldg. 38
Daimaru
STRASBURGO
Annex
BLOCK44
DIESEL
GENIUS GALLERY
PradaBLOCK31BLOCK30
BURBERRY
Rolex
BLOCK32
NTT Nishinihon
Miu Miu
Shin-Kobe
Valentino
Bldg.
Hervé Chapelier
Dior
Lloyd's
Antiques
Fred Segal

attracts customers from a wider area. The store organizes
events using the appeal of the Former Foreign Settlement
on a regular basis. In March 2017, Vogue’s shopping
event“Vogue Fashion’s Night Out”was held. It was thefirst time in the world that the event was held in spring.
● Kyoto Machiya projectIn 2016, Daimaru opened the“Daimaru Kyoto Store
Gion Machiya”as a special project celebrating the 300th
anniversary of its foundation. In Gion, which has a tasteof the old capital, we revived a dilapidated machiya (aJapanese traditional townhouse) and operate a luxury

44

the machiya, wehelps revitalize the local

Map around Daimaru Kobe store

sightseeing

preserving and using

for local consumption”

as a foreign settlement, tocustomers to theAugust 2017). By

consumption

which historically developed
moreand Hublot from

“Localbuildings in Motomachi, Kobe,

attract2016 to July 2017●P
 roposal for local production for local

fashionbrands are invited to open
their“tradition”and“innovativeness”(Hermes from November

abroad as well as residents in Kyoto.

has developed shops aroundago.

brand boutique that matches Kyoto, which combines

loadbecauseCO2

Event to recommend the products producedin Yamaguchi (Shimonoseki Daimaru)

emissions from transportation and refrigeration decrease
due to short transportation distance. Each of the Daimaru
and Matsuzakaya stores organizes events to provide awide range of products including food, clothing andcrafts and expand their sales.

② Contribution to resolving the issues of
the child-raising generation
With the aim of taking away some of the worries
and inconveniences that accompany early childhood
parenting, we launched the operation of unlicensed
infant child care facilities that provide both enhanced
early-childhood education and extended-hour childcare. We will operate the facilities under franchise incollaboration with Tact
Kodomomirai Co., Ltd.,a group company of
Yaruki Switch Group
Holdings Co., Ltd., toprovide a curriculum

are installed mainly in department stores and we

exercise”and“English.”The first facility named“Daimaru

continuously train employees in their use.

Matsuzakaya Kids Duo International Aobadai”will open

*BCP: A plan that allows an organization to continue to operate or restore

in Aoba-ku, Yokohama in April 2019.

business early in the event of disaster③ Contribution to the safety and securityof customers④ Social contribution activities with customers● Operation of Customer Service Officeactivities with customers through business activities.

At the“Consultation
Corners for Consumers”
of the Daimaru andMatsuzakaya stores,
consultants certified
as advisory specialists
for consumers’affairs
accept comments from customers regarding productquality. Comments from customers are sent to Consumer
Product End-Use Research Institute online for scientificquality inspection. Consultants inform customers of theresults. These test results are also provided to relevant
stores and manufacturers to prevent recurrence andimprove quality.
●‌“ Consumer Product End-Use Research Institute”
as a quality professional in the retail industry
Consumer Product End-Use Research Institute (the“Institute”) operates in Osaka, Tokyo and Nagoya. Its
operations include tests to identify product performanceand the causes of complaints, the verification of productlabels and expressions in sales promotion media underrelevant laws and regulations, and consulting, trainings
and seminars concerning product control in general.
For the companies in the Group, the Institute conducts
various tests to ensure the safety of products in use
including quality tests of various products for sale, load
bearing tests of wrapping paper and shopping bags andcolor fastness tests, as well as pre-sale tests, productlabel checks at stores and hygiene inspections of foodfloors and restaurants.
● Creation of safe and secure store environment
At department stores and other stores and offices, weorganize self-defense fighting teams and conduct
emergency drills and BCP trainings* in preparation forearthquakes and fires. We also promote the improvementof systems by introducing an earthquake early warning
alert system, a safety confirmation system for all
employees and satellite-based mobile phones. Selfdefense firefighting teams at stores carry out drills on aregular basis with the participation of all workers
including people from suppliers to ensure that we cantake prompt and appropriate actions including firefighting,evacuation guidance for customers and informationcollection. AED (automatic external defibrillator) units

Sustainability

including not only“intellectual training”but also“physical

J. Front Retailing continuously conducts social contribution
The unnecessary PET bottle caps collected mainly in
the Daimaru and Matsuzakaya stores are recycled
through the nonprofit organization“Re Lifestyle”and we
donate the full amount paid for them to the authorized
nonprofit organization“Japan Committee Vaccines for
the World’s Children” to fund vaccines for children
around the world. Since we started this initiative in
December 2009, the total amount donated through thecollection of caps and other activities reached theequivalent of polio vaccines for 260,000 children in May
2018. Our other charity support activities include the“Pink Ribbon Campaign”and“Blue Clover Campaign”
that promote early diagnosis, detection and treatment ofbreast cancer and prostate cancer, respectively, the“Table for Two” program that helps provide school
meals for children in developing countries and support forpeople in the areas
affectedbytheGreat East Japan
Earthquake,the

Kumamoto Earthquakeand other disasters.
Blue Clover Campaign

Major charity support in FY2017 (Daimaru Matsuzakaya Department Stores)(Unit: ¥1,000)

Recipient

Description

AmountdonatedSupported the rehabilitation assistanceJapanese Red Cross
project by announcing online, wearing
Societyawareness badges, putting stickers on“We will never forget.
cars and donating the full amount raised- Project for the future”
in stores and employee facilities

114

Donated a portion of the proceeds fromthe sale of the“charity pins celebrating
the 10th anniversary of Sakura Panda’sbirth”under the intent of support for
Tohoku“Smile for Japan”

1,699

Donated the money raised through theLove 49 campaign and a portion of the
Authorized NPO Orange
proceeds from the sale of original eco
Cloverbags, etc. to support cervical cancer
prevention awareness activities

288

Local Pink Ribbon
support groups

Donated a portion of the proceeds fromthe sale of original pins, heart bread,beverages from Pink Ribbon vending
machines, etc. to support bread cancer
prevention awareness activities

1,081

Kumamoto Earthquake
Relief Fund

Donated a portion of the proceeds fromthe sale of the“charity pins celebrating the10th anniversary of Sakura Panda’s birth”

992

Authorized NPO
Table for Two
International

Donated a portion of the proceeds fromthe sale of healthy meals to help provide
school meals in developing countries

311

Authorized NPO
Japan Committee
Vaccines for theWorld’s Children

Donated the full amount received at theauction of Rob Ryan’s original drawingsof Christmas promotion charity program“Baton Relay for the Future”and raisedin conjunction with posting with hashtags
and the view counts of special videos

1,126

Scholarship funds
to support children
affected by the Great
East Japan Earthquake

Integrated Report 201845

Sustainability

GOOD HEALTH
AND WELL-BEINGGENDEREQUALITY＞

Activity Report – Diversity and Work-Life Balance

DECENT WORK AND
ECONOMIC GROWTH

Using Diversity. Changing Work Styles.
Based on the recognition that the diversity of humanwere hired by June 2018 and they are working for legal,

resources is the source of corporate competitiveness, J.

finance, real estate and other divisions using their

Front Retailing believes it is important to ensure as aexpertise and skills.

company “non-discriminatory treatment” in terms of

JFR Women’s School

nationality, gender, thought, belief and even working

We opened the“JFR Women’s School”in fiscal year2018 for short-time workers of the Group who keep

conditions and maintain and improve it.
Work-life balance is important to keep employees
healthy both mentally and physically and we aim to realizea workplace in which employees can work lively andworking while raising children. They aim to continuously
enhance their career by acquiring time management andleadership skills, financial knowledge and others toachieve high productivity by creating a pleasant working

perform at their best within a limited time.

environment and taking care of employees’health.

*The average lengths of service of the male and female employees of Daimaru
Matsuzakaya Department Stores are 23.4 years and 23.2 years, respectively.

① Promoting women’s empowerment② Employment of disabled people

Appointment of female leaders
Regardless of gender, we promote the assignment anduse of human resources based on individual ability,
performance, aptitude and motivation. At Daimaru
Matsuzakaya Department Stores, women accounted for
32.5% of total leadership positions in March 2018. And
three female Executive Officers serve as the Executive
Store Managers of its flagship stores (21.4% of a total of
14 Executive Officers). We will actively appoint womento leadership positions and other important positions tofurther empower motivated women.

We recognize that the employment of people withdisabilities is a corporate social responsibility andactively strive to promote that. “JFR Create” wasestablished in April 2017 for the purpose of securing astable working environment for disabled people andcreating a workplace in which they can exercise theirabilities and it was certified as a special subsidiary by the
Health, Labor and Welfare Ministry in September 2017.
The company was registered as an“Excellent Support
Company for the Disabled in Osaka”for actively hiringand providing job assistance for disabled people.

Mother Recruitment
Recently, while more and more women are entering*Employment rate of disabled people (totalof Daimaru Matsuzakaya Department
Stores, JFR Create, JFR Service,Dimples’ and Daimaru Matsuzakaya
Sales Associates): 2.21%(as of June 1, 2018)

into the workforce, they leave their jobs for childbirth at ahigh rate, which has become a social issue. We launchedthe“Mother Recruitment”program in fiscal year 2017 tohire experts who left their jobs for child care. Six people
Daimaru Matsuzakaya Department Stores female employees in leadership positions(as of March 1, 2018)
Number of females

Total

General Manager

12

102

11.8%

Other leadership positions

221

616

35.9%

Total

233

718

32.5%

*The figures above include workers temporarily transferred to Daimaru Matsuzakaya Sales
Associates.
*The number of“other leadership positions”is the total of Managers, Submanagers, Buyers(including Supervisors and Section Leaders from Daimaru Matsuzakaya Sales Associates).

Percentage of female leaders of Daimaru Matsuzakaya Department Stores
（%）
35
30
25
20
15
10
5
0

46

28.4

2013

32.0

32.5

2016

2017

28.2

23.5

2014

2015

Work at JFR Create (enclosing)

Percentage of females(FY)③ Post-retirement reemployment program
In order to respond to changes in the social environment
such as the rapid aging of the population amid extremely
low birthrates and the raising of the age at which public
pension payments begin and effectively use highly
professional people, we adopt a reemployment programfor employees who have reached the mandatory retirementage. The“My Life Plan Seminar”is held for employees
aged 53 and over to help make their life after retirementrich and 316 employees attended the seminar in fiscal
year 2017. Lecturers from inside and outside the Company
provide information and advice on the future economic

J. Front Retailing strives

We provide human rights education and strive to raise
employees’ awareness of human rights from theperspective that individual employees should correctly
recognize and understand human rights issues and that weshould further promote the creation of corporate culture
and corporate social responsibility based on respect forhuman rights. Daimaru Matsuzakaya Department Storeshas a Human Rights Awareness Promotion Committee,
which is chaired by the Executive General Manager of
Human Resources Development Division. (The Committees
in stores are chaired by their Executive Store Managers orStore Managers.) Its activities include human rights
education through trainings when employees join thecompany and in-house seminars as well as various
seminars organized by the governments and various
educational materials distributed to employees.

to change work styles sothat employees can create
something new. On theoccasion of the relocationof the head office in

Meeting space in the head office of
J. Front Retailing

January 2018, we reduced
documents by approximately 80% and adopted a“free address
system”that allows workers to freely choose their seats. We
also promote paperless operations by digitalizing meetings, thatis,“seeing meeting materials on a computer screen instead ofprinting them.”⑦ Health care measures
Based on the basic idea that employees are thecompany’s greatest asset and that it is the most important⑤ Systems to realize work-life balanceof all things to keep employees healthy both mentally

Daimaru Matsuzakaya Department Stores has in place thefollowing systems.
Systems related to child care and family care
Systems with coverage exceeding statutory limits are in place.
Systems related to child care and family care exceeding statutory limits
at Daimaru Matsuzakaya Department Stores and the number of takers in FY2017
Description⑥ Changing work styles
As a holding company,④ Promoting human rights education

SystemSustainability

design, healthcare, job satisfaction and purposes in life
for employees before reaching the retirement age.

No. of takers

and physically in order to provide better services tocustomers, our specific health care measures focus on
primary disease prevention.
To this end, we conduct health examinations toprevent lifestyle diseases and gynecological examinations
for all employees aged 35 and over, as well as legal
regular health examinations.* Dealing with mental healthwithin the large framework of total mental and physicalChild care
Family careChild care leave

Up to the last day of the month in which the childenters an elementary school (at the longest until thechild reaches two years of age under law)

175

Shortened working
hours for child care

Up to the last day of the month in which the childenters an elementary school (for children under three
years old under law). The“optional working hours
system”allows shortened working hours until thechild enters a junior high school.

137

Sick/injured childcare leave

Paid (Unpaid leave is permitted by law.)

144

Child care support
leave

Four days of paid leave for raising children under
three years old (No such leave is granted by law.)20

Maternity leave forspouseOne day of paid leave (No such leave is granted by
law.)

8

Family care leave

Up to a total of one year of leave per subject family
member can be taken consecutively or separately
any number of times. (Up to 93 days of leave can betaken separately up to three times under law.)2

Nursing care leave

Paid (Unpaid leave is permitted by law.)31

labor rights including employment opportunities, working

Optional working hours system
We adopt a system that allows employees to choose
shortened working hours for child care, family care,hobbies to enrich senior life and other reasons.
(Purpose and period: Up to the last day of the month inwhich the child enters a junior high school for child care,a period in which the employee needs to take care of his/her family member for family care, etc.)
Area Limited Employee System
In response to diversifying sense of working, values andlifestyles, we adopt the“Area Limited Employee System”toincrease work options and build a foundation on which
employees autonomously think of the balance between theircareer formation and life and act accordingly. Employees
can choose their place of work from among five areas
including Sapporo, Tokyo, Kansai, Chubu and Shizuoka.

hours and health and safety and require both labor andhealth care, we offer stress checks as a self-care tool.
We put importance on health guidance provided byhealth care teams based on their results.
*In fiscal year 2017, 99.7% of the employees of Daimaru Matsuzakaya
Department Stores had regular health examinations.

⑧ Labor-management relations
In Japan, the Labor Standards Act and other labor
relations-related laws set forth basic rules regarding

management to comply with them.
At each operating company in the Group, issues
concerning working conditions and the improvement of
economic status are resolved autonomously by labor andmanagement in line with the actual situation of the unit
labor union. J. Front Retailing and the Federation of J.
Front Retailing Group Labor Unions hold the “JFR LaborManagement Meetings” to deepen the mutual understandingof labor and management and help operating companies
in the Group develop smooth labor-management relations.
*In fiscal year 2017, 88.3% of the employees of Daimaru Matsuzakaya
Department Stores belong to the labor union.

Integrated Report 201847

Governance>Corporate GovernanceCorporate governance
As a holding company, J. Front Retailing puts thestrengthening of corporate governance at the top of its
business agenda to ensure the legal compliance,transparency, objectivity and soundness of the business ofthe entire Group and focus on and thoroughly fulfill its
accountability to its stakeholders (customers, shareholders,
employees, business partners, local communities andothers) as the core of the unified governance of the Group.

Transition to a Company with Three Committees(Nomination, Audit and Remuneration Committees)
The Company made the transition to a Company withThree Committees (Nomination, Audit and Remuneration
Committees) through the resolution adopted at theAnnual Shareholders Meeting in May 2017. The purposeof this change is to further strengthen corporate
governance from the following standpoints.
(1) S trengthening of the management oversight function
by separating oversight from execution
The Company will strengthen the oversight function forbusiness execution of the Board of Directors by separating
oversight from execution. In addition, the Company aims
to promote sophistication of strategy by having the Boardof Directors actively include the insights of external
persons in order to hold rigorous discourse on important
issues relating to the management of the Group.
(2) Greater‌clarity of authority and responsibility in businessexecution and promotion of agile management
The Company will enable decisions of businessexecution to be delegated to Executive Officers, clarify
the authority and responsibility between the Board of
Directors and Executive Officers and between the holding
company and its operating subsidiaries, and carry out

48

speedy management decision making.
(3) Improvement of transparency and objectivity ofmanagement
The Company will improve the transparency andobjectivity of management by transitioning to a Company
with Three Committees including Nomination, Audit andRemuneration Committees. The majority of the membersof each committee are Outside Directors.
(4) B uilding of a globally applicable governance system
The Company will build a governance system that iseasy to understand from global perspectives, such as
those of overseas investors.

Overview of corporate governance system
The Company is a pure holding company and, with the
exception of authority for important matters relating to the
management of the Group, it delegates authority to its
respective operating subsidiaries with respect to matters
involving business execution by the operating subsidiaries
in an effort to speed up business decisions and to makemanagerial responsibilities clear.
The roles and responsibilities of the Company, as apure holding company, are as described below:●Establishment of corporate governance practices forthe entire Group;●Planning and formulating of the Group Vision, the Group
Medium-term Business Plan and the Group Management
Policy and tracking of the progress and results thereof;●Optimal allocation of the Group’s management resources;●Establishment of the Group-wide risk management
system and involvement in internal audits;●Decision making on important matters involving businessexecution relating to the management of the Group; andGovernance (oversight)
Function

Shareholders Meeting
Election/
removalNomination Committee

Audit

Board of Directors
Remuneration Committee

ReportExecution Control Function

Consultation

Consultation

President and Representative
Executive Officer

Business
Development Unit

Risk Management
Committee

Consultation

Group Management
Meeting

Compliance
Committee

Instruction

Operating UnitsAﬃliated
Business Unit

Accounting
Auditor

Audit Committee

Oversight

Governance Committee

Management
Strategy Unit

Cooperation/
reportChairperson

GovernanceCorporate governance organization chart [Company with Three Committees (Nomination, Audit and Remuneration Committees)]

Financial
Strategy Unit

ReportCooperation/
reportCooperation

Audit
Audit

ReportInternal Audit
Division
Audit

Human Resources
Strategy Unit

Administration
Unit

Companies in the Group●Provision of advice and approval for the management
policies and management strategies of respective
operating companies and oversight and evaluation of
the progress thereof.
The Company has six supervisory units (Management
Strategy Unit, Business Development Unit, AffiliatedBusiness Unit, Financial Strategy Unit, Human Resources
Strategy Unit and Administration Unit) as management
bodies to clarify each unit’s roles, responsibilities andauthorities, thereby strengthening the oversight function andimproving the internal control system of the entire Group.

Board of Directors(1) B asic roles and responsibilities of the Board of
Directors
Directors who are elected by shareholders and are
entrusted with the management of the Company are tocarry out the following roles and responsibilities in the
Board of Directors in accordance with their fiduciary
responsibility and accountability to shareholders with theaim of realizing the Group Vision.
●Indicating the overall direction that the Group management
is to take by engaging in constructive discussions withrespect to the Group Vision, the Group Medium-term
Business Plan, the Group Management Policy and otherfundamental management policies and carrying out
multifaceted and objective deliberations that include
evaluation of risks with respect to the aforementioned;●Appropriately making decisions in terms of overall
policy and plans pertaining to the Group managementon the basis of the direction noted above and overseeing
the progress and results of the plans;●Improving the environment to drive aggressive
management toward discontinuous growth;●Taking steps to build and develop internal control
systems of the Group overall and otherwise overseeing
the operational status of such systems;●Overseeing conflicts of interest between related parties; and●On the basis of summary reports furnished by the Nomination
Committee, overseeing the progress of senior management

team succession planning, personnel assignment plans
pertaining to managerial talent and management teamtraining, as delegated to the Nomination Committee.
(2) Composition of the Board of Directors
The Board of Directors of the Company is comprisedof the appropriate number of 15 or less Directors as set
forth in the Articles of Incorporation. The number of
Directors is thirteen (five of whom are independent
Outside Directors including two female Directors) as of
May 24, 2018 and the term of office is one year.
From the standpoint of separating oversight fromexecution and enhancing the effectiveness of discussions
at the Board of Directors meetings, one-third or more of
Directors are independent Outside Directors and the
majority of Directors are independent Outside Directors
and internally promoted Directors who do not executebusiness.
When nominating Director candidates, the Company
ensures diversity in consideration of the balance ofknowledge, experience and ability on the Board of
Directors as a whole.
With regard the agenda for discussion at the Board of
Directors meetings concerning important policies related
to the Group’s overall management, we deliberate inadvance at the“Group Management Meetings,”which
consists of Executive Officers and the Senior Executive
General Managers of the supervisory units.
(3) Matters‌
discussed at the Board of Directors meetingsin fiscal year 2017
In fiscal year 2017, the Board of Directors had 14
meetings to deliberate and resolve the“dissemination of
the Group Vision”and the“progress of the Medium-term
Business Plan”as strategic discussion for the medium- tolong-term growth of the Group, the“validation of therationale for cross-shareholdings and sales of suchshares”and a“basic policy to build internal control
systems”as discussion concerning corporate governance,
the“opening of Parco in the Daimaru Shinsaibashi store”
and the“launch of the early childhood education”asdiscussion concerning individual growth businesses, the“transfer of shares of Forest,”the“sale of unused real

Integrated Report 201849

estates” and the “acceptance of the share buybackplanned by Senshukai, an associate accounted for using
equity method”as the replacement of businesses andassets to improve capital efficiency, as well as approving
budgets and financial statements.

Nomination Committee / Audit Committee /Remuneration Committee(1) Nomination Committee
The Nomination Committee is composed of three
Outside Directors, the Chairperson of the Board of
Directors who does not execute business and President
and Representative Executive Officer.
In fiscal year 2017, concerning the appointment of
Directors including Outside Directors and the Executive
Officers of J. Front Retailing and its major operating
subsidiaries, the Committee ensured objectivity,transparency and rationality using assessment data fromthird-party institutions as well as the Company’s internal
information on human resources and through theopportunities to have direct contact with candidates’
personalities and mindsets such as interviews conducted
as needed. While having discussions on succession
planning for the top management, they verified the system
to develop candidates for the next officers in a planned
manner and confirmed the status of results achieved bysuccessor candidates on a regular basis.
(2) Audit Committee
The Audit Committee is composed of three Outside
Directors and two full-time Inside Directors who do not
execute business and are well informed about theCompany’s internal information to maintain and improve
the accuracy of audit.
In fiscal year 2017, the Committee drafted andimplemented an audit plan for the current fiscal year inaccordance with the Audit Committee Rules, Audit
Standards, Audit Practice Standards for Internal Control
Systems and others set by the Committee and reported
details to the Board of Directors. In particular, as its key
audit items, the Committee audited the status ofdeveloping and operating internal control systems
determined by the Board of Directors and the progressstatus of the key strategies in the first year of the Mediumterm Business Plan of the Group in close cooperation
with Internal Audit Division, Accounting Auditor and the
Audit & Supervisory Board Members of the Group
companies. And the Committee assessed Ernst & Young
ShinNihon LLC by comparing its quality management,
expertise, etc. with other audit firms in accordance with
the Accounting Auditor Selection Criteria newly
developed by the Committee.
An internally promoted Director who does not executebusiness chairs the Committee from the standpoint ofachieving a smooth transition from the Audit & Supervisory
Board system. However, the Company will reconsider
reviewing this system and establishing the mostappropriate system.
(3) Remuneration Committee
The Remuneration Committee is composed of three
Outside Directors, the Chairperson of the Board of
Directors who does not execute business and President
and Representative Executive Officer. The chairperson ischosen from among independent Outside Directors from50

the standpoint of ensuring transparency and objectivity.
The Remuneration Committee determines the policies on
deciding the contents of individual remuneration ofmanagement personnel of the Company and Daimaru
Matsuzakaya Department Stores and these contents
themselves.
In fiscal year 2017, the Committee achieved an
appropriate allocation between basic remuneration andperformance-based remuneration (bonuses and stockbased remuneration) and also disclosed the performanceindicators that will determine the level of stock-based
remuneration in the Officer Remuneration Policy resolved
on May 25, 2017. With respect to bonuses, which reflect
the status of the achievements of individual officers, theCommittee formulated a new performance evaluation
sheet and has adopted it from fiscal year 2018 afterrevising evaluation items, performance indicators and theevaluation rank determination process so that results will
be shown with greater fairness and objectivity. At thesame time, entering into the first year when the Company’sshares are issued as remuneration, the Committee isworking on the verification of the stock-based
remuneration system for officers for appropriate operation
as planned.
Committees to which Directors belong (as of May 31, 2018)(◎ Chairperson)

Name
KOBAYASHI Yasuyuki
DOI Zenichi
TSUTSUMI Hiroyuki
TACHIBANA FUKUSHIMA SakieOTA Yoshikatsu
ISHII Yasuo
NISHIKAWA Koichiro
SATO Eriko
YAMAMOTO Ryoichi
YOSHIMOTO Tatsuya
MAKIYAMA Kozo
SAWADA Taro
WAKABAYASHI Hayato

Nomination
Committee

Audit
Remuneration
Committee Committee

○

○
◎
○

◎
○

○
○

○
◎
○
○
○

○
○

Remarks
Chairperson of the Board of
Directors
Non-executive
Non-executive
Independent Outside Director
Independent Outside Director
Independent Outside Director
Independent Outside Director
Independent Outside Director
President and Representative
Executive Officer
Representative Managing
Executive Officer
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer

Governance Committee (optional advisorycommittee)
The Company, in principle, holds monthly meetings ofthe Governance Committee, an optional advisorycommittee comprised of the Chairperson of the Board of
Directors, President and Representative Executive
Officer, and all Outside Directors. The GovernanceCommittee engages in constructive discussions andexchanges of views with respect to matters such asaddressing issues to make the meetings of the Board of
Directors more effective in view of the results ofevaluation of the Board of Directors, and considering
options with respect to organizational structure.
In fiscal year 2017, new personnel have been
appointed as the presidents of three important associates(JFR Card, J. Front Design & Construction and Dimples’)in business areas with high management efficiency, andthese presidents have also been concurrently appointed
as the Executive Officers of the Company. This isbecause the Company has confirmed that theAppointment of Outside Directors
The Company has appointed five independent Outside
Directors out of 13 Directors to separate oversight fromexecution, ensure the effectiveness of the Board of
Directors’ discussions, and maintain and improvetransparency and objectivity. In appointing Outside
Directors, we confirm, in accordance with the Criteria for
Determining Independence of Outside Directors set by
the Company, that nominees are not susceptible toconflicts of interest with the Company’s shareholders andare in an objective position, independent of the
management team that executes business.

Environmental improvement that supports
appropriate risk taking by the management

Governancestrengthening of the Group governance requires thestrengthening of oversight, auditing and businessexecution functions of operating companies. Governanceis also strengthened by assigning Audit & Supervisory
Board Members to each main associated operatingcompany, setting up auditing functions horizontally
covering these companies, and taking other measures.
From now on, the Company will engage in discussions
and exchanges of views with respect to various issues on
corporate governance, such as governance of the Group
companies and the role of the holding company.

Changes in the business environment are a source of
uncertainty that a company cannot avoid. But that
uncertainty or “risk” provides an “opportunity” as a positiveside and a “threat” as a negative side. In addressing such
uncertainty, we tackle strategic issues raised in theMedium-term Business Plan in terms not only of“riskhedging,”but also of“risk-taking”for growth.
The Company has also established the “RiskManagement Committee”as an advisory body for its
President and Representative Executive Officer to extract
risks related to the Group and formulate, implement andmonitor measures against individual risks.
During the current fiscal year, the Company extracted
138 risk items as those related to the Group, identified
15 items out of them as“business risk items,”including
six items that were reflected in strategies for the current
fiscal year, and continues to monitor the progress.

Evaluation of the effectiveness of the Board of Directors

Evaluation
methodology

Items evaluatedEvaluation results
andimprovements

Continued from 2016, the Company performed the third evaluation by third-party organization of
the Board of Directors from July to September 2017, in line with the transition to a Company withThree Committees (Nomination, Audit and Remuneration Committees).
The evaluation was performed using a methodology whereby the third-party organization prepareda report containing summaries and analyses of the results of “individual interviews” conducted for
all Directors and “direct observation of the Board of Directors through attendance at its meetings”
based on self-assessment by Directors concerning the progress of the evaluation items below and
the Board of Directors carried out deliberations on the evaluation based on the report.
In light of the roles and responsibilities of the Board of Directors, an analysis/evaluation was
performed for each of the items for evaluation, including the Board of Directors’ composition andits operational status, agenda items, materials for deliberations, level of explanation for proposals,
supporting system for Outside Directors, and the eﬀectiveness of three Committees’ (Nomination,
Audit and Remuneration Committees’) activities. We set new questions each time to get answers
according to their positions such as Inside Director, Outside Director, Committee Member andNon-Committee Member, as well as giving consideration to ensure comparability.
Evaluation results are shared between Directors and they discuss the solutions to the issues foundfrom the evaluation to improve the eﬀectiveness of the Board of Directors continuously.
The evaluation of the Board of Directors conducted from July to September 2017 identiﬁed
signiﬁcant improvements compared to the previous evaluation regarding the level of the “Board of
Directors’ contribution to the entire Group,” the “selection of appropriate agenda items andsubstantive discussions,” “each Director’s contribution to discussions” and other matters. The“enhancement of the corporate governance system through organizational structure changes” andthe “level of each Committee’s contribution to the Board of Directors” were also highly evaluated.
On the other hand, since there are opinions that there are still some problems remaining in thestrengthening of execution (execution speed) to formulate the Group strategies expeditiously due
to expectations toward further improving the eﬀectiveness of the Board of Directors, the timing of
implementing the solutions to the issues pointed out in the Board of Directors meetings and theircontents are conﬁrmed at the beginning of each meeting of the Board of Directors.
We are working on improvements including the strengthening of the organizational structure ofManagement Strategy Unit to promote “Multi Service Retailer strategy” and “ICT strategy toward
the era of IoT,” which are the pillars of the Medium-term Business Plan started in ﬁscal year 2017.
Since there are opinions demanding the improvement of execution planning and proposal ability,
the Company has started to review discussion materials to improve the planning and proposal
accuracy from shareholder viewpoints. The Company has also newly established the “Business
Development Unit” that is responsible for completing the business portfolio reforms and achieving
corporate value enhancement to strengthen execution and the “Human Resources Strategy Unit”
that is responsible for preparing HR policies and further strengthening the promotion activities
related to recruitment, assignment, cultivation and evaluation so that the growth of humanresources, which are the most important management resources, can lead to the entire Group
organization’s growth. The Company will continue to share issues based on the evaluation of theeﬀectiveness of the Board of Directors to ensure the eﬀectiveness of the entire Board of Directors.

Integrated Report 201851

Officer remuneration system
1 Policy on determining remuneration for Directors and Executive Oﬃcers
To carry out the Medium-term Business Plan steadily for realizing the new Group Vision, the Company has formulated the new“Oﬃcer Remuneration Policy” including the introduction of a stock-based remuneration system for oﬃcers. The basic policies on theoﬃcer remuneration are as follows:●Contributing to the sustainable growth of the Group and increasing corporate value over the medium to long term;●A highly performance-based remuneration system that provides incentives to Executive Oﬃcers both for accomplishing objectives
set under management strategies and business plans and for achieving targets with respect to corporate performance;●Remuneration levels that can secure and retain personnel who have the “desirable managerial talent qualities” required by theCompany;●Increasing shared awareness of proﬁts with shareholders and awareness of shareholder-focused management; and●Enhanced transparency and objectivity in the remuneration determining process.

2 Procedures for determining remuneration for Directors and Executive Oﬃcers
To ensure that remuneration levels and remuneration amounts are appropriate and that their determination process is transparent,
the determination of the speciﬁc remuneration amounts to be paid is made by discussion and resolution of the “Remuneration
Committee,” which comprises a majority of independent Outside Directors and is chaired by an independent Outside Director. The
Remuneration Committee meetings are to be held at least four times per year and the Company plans to conduct a review of theoﬃcer remuneration system upon the completion of the period of each Medium-term Business Plan.

(Basic remuneration)
Basic remuneration is positioned as a ﬁxed remuneration and is decided for each rank (position) based on the size (weight) of the
responsibility borne by each oﬃcer.

Remuneration composition for Executive Oﬃcers

Remuneration composition for Non-executive Directors

Basic Remuneration
Remuneration, etc. for
Executive Oﬃcers

Bonuses

Basic Remuneration
Remuneration, etc. forNon-executive Directors

Performance shares (PS)

Restricted stock(Restricted stock)
Restricted stock is a system for issuing the Company’s shares in a way that is not linked to performance with the objective of involving
Non-executive Directors in management with a medium- to long-term view in order that they should strengthen the aggressive anddefensive governance of the Company from a diﬀerent standpoint from that of Executive Oﬃcers as the representatives of
stakeholders. The shares are issued upon their retirement from oﬃce.

Proportion of remuneration by type for Executive Oﬃcers of each rank

Details of performance shares<President>
Basic remuneration
38.5%

Bonuses
23.0%

Monetary remuneration
61.5%
Fixed remuneration
38.5%

Stock-based remuneration
38.5%

Performance-linked remuneration
61.5%

Bonuses
27.3%

Monetary remuneration
72.7%
Fixed remuneration
45.4%

PS
27.3%
Stock-based remuneration
27.3%

Performance-linked remuneration
54.6%

Note: The above ﬁgure represents the case of a bonus for a standard ranking where the performanceachievement rate for stock-based remuneration was 100%.
Note: The remuneration composition for Directors and Executive Oﬃcers at Daimaru Matsuzakaya
Department Stores is the same as that shown for“Executive Oﬃcers excluding President”inthe ﬁgure above.

52

Short
term

Medium tolong term(1)

Consolidated
operating profit◯◯

Profitability(2)

Basic earnings per
share

◯

◯

ー

◯

ー

◯

(3) Free cash flows

Efficiency (4) ROE<Executive Oﬃcers excluding President>
Basic remuneration
45.4%

KPI

PS
38.5%

Methods of use
Evaluation based on theachievement rate of targets(absolute value)
Evaluation is weighed as
50% for each indicator.
If targets are not achieved,
the amount of stock-based
remuneration is reduced by
50% (reduced by 25% if
one target is not achieved).

Note: KPI stands for Key Performance Indicator.
Note: Short-term targets are the initial forecasts for the relevant fiscal year as
announced in the Consolidated Financial Results each April (IFRS basis).

Calculation method for performance-linked coefficient
Performance achievement rate

Performance-linked coefficient

150% or more

2.0

50% to less than 150%

(Actual value / Targets－0.5)×2

Less than 50%

0The selection and dismissal of the chief executive
officer are the most important strategic decision-making
and the Company positions the development andimplementation of succession plans (for the next senior
management team) as matters of particular importance interms of management strategy.
The Company ensures clarity and transparency in theprocess of selecting successor candidates throughrepeated reviews of successor candidates’individual
evaluations based on assessments made by a third-party
organization using internal data. The deliberations are
conducted by the Nomination Committee andRemuneration Committee, in which Outside Directors
comprise a majority. In the process of deciding a
successor, the Board of Directors plays a supervisory role
focused on realizing the Basic Mission Statement and
the Group Vision, based on proposals received from theNomination Committee. With regard to the qualities
required of successors, the Company clearly defines thenecessary values, capabilities, and behavioral traits inthe form of the five qualities required of an officer in the
Corporate Governance Guidelines under “Desirable
qualities required of JFR Group managerial talent.”These
are a“strategic mindset,”“reform-oriented leadership,”“tenacity to achieve results,”“organization development
strengths”and“human resource development strengths.”
The Company endeavors to ensure impartial cultivationand selection of successors by sharing these qualities
among all members of the Nomination Committee tomake them all aware of the indicators used in cultivating
and assessing successors.
In addition, the dismissal of the chief executive officer
is determined by the Board of Directors after being
discussed and resolved by the Nomination Committee
based on the goals set, expected and actual results (e.g.
annual performance and strategy execution status), andthe status of results, etc., achieved by successor
candidates who are selected under the succession plan
resolved by the Nomination Committee.
The Nomination Committee will continue to havediscussions on succession planning in a planned mannerso that changes in the environments and situations
surrounding the Company, the progress of strategies
formulated, etc., can be reflected in such planning.
Both the Committees mentioned above also discussand resolve the dismissal of senior management teammembers as in the case of the chief executive officer.

Basic capital policy
The Company believes that any increase in free cash
flows and improvement in ROE should help to ensure its
sustainable growth and increase corporate value over the
medium to long term. To such ends, the Company
promotes a capital policy that takes a balanced approach
to “undertaking strategic investment,”“enhancing
shareholder returns”and“expanding net worth”being
equipped to address risks.
Moreover, in procuring funds through interest-bearing

debt, we aim to achieve an optimal structure of debt toequity in a manner cognizant of our funding efficiency
and cost of capital, carried out on the basis of having
taken into consideration our capacity for generating free
cash flows and our balance of interest-bearing debt.
A “business strategy” where higher sales areaccompanied by profits and a “finance strategy(encompassing the capital policy)”that heightens therate of return on invested capital are essential elementswith respect to improving free cash flows and ROE. In
addition, we believe it is crucial that we maximize ouroperating profit and continually improve our operating
margin by strengthening our core businesses andconcentrating management resources on initiatives suchas business field expansion and active development of
new businesses.

Governance

Succession planning

Shareholder return policy
The Company’s basic policy is to appropriately return
profits. Hence, while maintaining and enhancing its
sound financial standing, the Company strives to provide
stable dividends and target a consolidated dividend
payout ratio of no less than 30%, taking profit levels,
future capital investment, free cash flow trends and othersuch factors into consideration. The Company also gives
consideration to the option of purchasing its own sharesas appropriate, in accordance with aims that include
improving capital efficiency and implementing a flexible
capital policy.

Policy on cross-shareholdings
The Group reduces its cross-shareholdings asappropriate considering the market environment, shareprice trends and other such factors (cross-shareholdings
are the holdings of listed shares other than those of
subsidiaries and associates which are not held for pureinvestment purposes). However, this does not apply toshares with respect to which rationale for such holdings
has been verified by means of validation as described
below.
The Board of Directors validates the rationale for theGroup to maintain its cross-shareholdings on a yearlybasis from both qualitative and quantitative perspectives.
From a qualitative perspective, the Board of Directors
considers such business strategies as maintaining
harmonious and favorable business relationships withcorporate customers and business partners and securing
supply chains, and from a quantitative perspective, it
considers dividend income and other economic rationale.
Decisions with respect to voting on matters regarding
cross-shareholdings are made from both of theperspectives of whether cross-shareholdings contributeto the sustainable growth of and the medium- to longterm enhancement of the corporate value of the company
whose shares are held and whether the crossshareholdings contribute to the Group’s sustainablegrowth and medium- to long-term enhancement ofcorporate value. Specifically, in regard to proposals that
we consider to be of high priority with respect tostrengthening corporate governance, such as proposals

Integrated Report 201853

relating to the corporate governance system (appointment
of officers), proposals relating to shareholder return(appropriation of surplus) and proposals that have aneffect on shareholder value (introduction of takeover
defense measures), we establish policies upon which tobase judgment of our exercise of voting rights, and acting
as the Group as a whole, we take a response that is inline with such policies. We engage in dialogue withcompanies whose shares we hold if necessary when we
exercise voting rights.
In accordance with the aforementioned policy, in fiscal
year 2017, the Company sold all shares of 12 companies
and partially sold shares of two companies (proceeds fromthe sales amounted to approximately ¥1.32 billion). As aresult, the Group maintained cross-shareholdings in 48
companies (approximately ¥6.3 billion recorded on thestatements of financial position) as of February 28, 2018.
Also, from the current fiscal year, the Company has
established the guidelines for exercising voting rights
relating to cross-shareholdings and implemented them inline with the entire Group’s policy.
In case a holder of cross-held shares which holds theCompany’s shares for the purpose of cross-shareholding
indicates intention to sell the Company’s shares, theCompany will never conduct activities to hinder the saleof cross-held shares by implying a reduction of business
transaction, etc., and appropriately handle the sale, etc.

Improvement of Shareholders Meetings
With the aim of engaging in constructive dialogue withshareholders, we ensure that there is adequate time forour shareholders to consider matters with respect towhich they will exercise their voting rights. To that end,
we send convocation notices as early as possible (atleast three weeks prior to the date on which a
Shareholders Meeting is to be held) and at the same time
we submit such content to financial instruments
exchanges and post it on the Company’s website as early
as practicably possible before sending out convocation
notices. The convocation notice of the 11th Annual
Shareholders Meeting was provided to financial
instruments exchanges and made available on the
Company’s website before delivery of the printed version
and four weeks prior to the date of the Shareholders
Meeting.
We give consideration to ensuring that our shareholders
including domestic and overseas institutional investors
are able to conveniently exercise their voting rights. To
that end, we have adopted online and other means of
exercising voting rights and otherwise use an electronic
platform for exercising voting rights. We also prepare
English translations of our convocation notices and makethem available on our website and the Electronic Voting
Platform so that our overseas shareholders are able toproperly exercise their voting rights.
For many shareholders, the venue of the Shareholders
Meetings was moved further away from their residencescompared to the times when they had been theshareholders of Daimaru and Matsuzakaya before J.
Front Retailing was established as a holding company.
Therefore, in order to provide them with opportunities to54view the Meetings, we have set up live relay venues in
the Osaka area (the Daimaru Shinsaibashi store) and the
Nagoya area (the Matsuzakaya Nagoya store).

Participation of beneficial shareholders in
Shareholders Meetings
Respecting the requirements of the Corporate
Governance Code, at the 10th Annual Shareholders
Meeting held in May 2017, the Company amended the
Articles of Incorporation to enable an institutional
investor that owns shares in the name of a trust bank,etc. and does not own shares in their own name to attend
a Shareholders Meeting and exercise voting rights as aproxy.
There were no special requests filed by beneficial
shareholders at the 11th Annual Shareholders Meeting.

Disclosure and IR activities
Under the Basic Mission Statement that“we aim atdeveloping the Group by contributing to society at large
as a fair and reliable corporation,”the Company promotes
IR activities for the purpose of maintaining and developing
relations of trust with stakeholders including shareholders
and investors. By accurately and plainly disclosing
important information about the Company in a fair, timely
and appropriate manner, we promote IR activities withthe aim of improving management transparency andhelping stakeholders better understand the Company.
The Company discloses important company
information to which the timely disclosure rules apply
through the TDnet (Timely Disclosure Network) systemprovided by the Tokyo Stock Exchange, while posting thesame information on the Company’s website, etc. as
quickly as possible. With respect to any information thatis deemed to help stakeholders better understand theCompany, even where the timely disclosure rules do not
apply to it, the Company works to publicize suchinformation on its website as well as by using SNS andpublishing integrated reports. The Company releases
information in a timely and appropriate manner by making
use of the TDnet and EDINET platforms, the Company’swebsite and other means in line with the attributes of theinformation being disclosed. Moreover, to ensure that we
disclose information in an impartial manner, we prepare
and release English translations of our convocation
notices of the Shareholders Meetings, integrated reports,
timely disclosure information, financial information and
the Company’s website.
The Company’s efforts to improve communication
include timely disclosure and information transmission on
its website in combination
with various briefings andmeetings and responses toinquiries from shareholders
and investors on a daily
basis. The comments andrequests received fromshareholders and investors
are widely shared among
the Company and themanagement, etc. using extensive specialized knowledgeof the Committee members chosen from among thesupervisory units.
The Company has established the “Compliance
Committee”(whose membership includes a corporate
lawyer) for the purpose of appropriately addressing theissues of the Group compliance management practices.
The Committee draws up a policy for addressing matters
involving
seriouscompliance-related
violations,continuously oversees development of the foundations ofcompliance system (e.g. preparation of promotion
systems and plans) and the status of implementation
through close collaboration with departments in charge ofpromoting compliance and promotes compliance withlaws and regulations, corporate ethics and other suchstandards.
Both the Committees report details of their deliberations
to the Audit Committee regularly (about two times a year)
and in a timely manner.

Governancerelevant companies in the Group, and we refer to them inmanaging the Company to increase corporate value.
Furthermore, the Company was chosen as No. 1 in theretail category of the“2017 Award for Excellence inCorporate Disclosure” (sponsored by The Securities
Analysts Association of Japan). Its evaluation items
include: (1) top management attitude, the function of IR
department and the basic stance on IR; (2) information
disclosure in briefings, interviews and description
materials; (3) fair disclosure; (4) disclosure of informationon corporate governance; and (5) voluntary information
disclosure in line with the situation of each industry. The
Company was highly evaluated, selected as No. 1 in two
items out of five, and as the overall No.1 in the retailcategory among 20 retail companies.

Whistleblowing system

Major dialogue activities with investors in fiscal year 2017
For individual investors

Participation in briefings hosted
by securities companies, etc.

Seven times in
total

For analysts / institutional investors

Results presentations

Every six months

Overseas IR roadshowsThree times in
total

Participation in overseas
conferences

Once

For overseas institutional investors

The Company has established a whistleblowing
system that enables all the Group’s officers andemployees as well as all individuals working at the Group(including part-timers and employees seconded frombusiness partners) to notify the Compliance Committee
directly with respect to compliance-related issues, and toseek corrective action. The Company has set up points ofcontact for whistleblowers both internally and outside theCompany (a corporate lawyer).
The Group’s internal company rules rigorously provide
for the whistleblowing system in terms of protecting theconfidentiality of whistleblowers and prohibiting any
disadvantageous treatment of any whistleblower.
*There were 28 whistleblowing cases in fiscal year 2017.

Participation in conferences for Three times inoverseas investors held in Japan total

Combining the above and individual meetings, we helda total of 287 dialogues with analysts and institutional
investors.
From the standpoint of fair disclosure, we release theJapanese and English texts of the summary of questions
and answers in the results presentations and conference
calls held after the release of financial results beginningin the fiscal year ended February 28, 2018.

Risk management and compliance
The Risk Management Committee manages andaddresses strategic and other risks as a wholesystematically from a company-wide perspective, andmakes management decisions specifically focusing on
risk management. The Committee is chaired by President
and Representative Executive Officer and the Committee
members include the Senior Executive General Managersof the supervisory units and the presidents of main
subsidiaries. The Committee assesses a variety of risks,
prepares necessary measures, and conducts progress

Integrated Report 201855

Biography

Governance＞Apr 1970	Joined Yamanouchi Pharmaceutical Co., Ltd.
Jun 2000	Director of the Board and Director of Ethical
Products Marketing Department of Sales &Marketing Division of the same company
Jan 2001	Director of the Board of the same company and
Chairman of Yamanouchi Europe B. V.
Mar 2003	Director of the Board of Yamanouchi PharmaceuticalCo., Ltd. and Chairman of Yamanouchi U.K. Limited
and Yamanouchi Europe B. V.
Jun 2003	Managing Director of the Board of Yamanouchi
Pharmaceutical Co., Ltd.
Jun 2004	Senior Corporate Executive of the same company
Jun 2005	Senior Corporate Executive of Astellas Pharma Inc.
and Chairman & CEO of Astellas Pharma Europe Ltd.
Jun 2008	Executive Vice President and Representative
Director of Astellas Pharma Inc.
Jun 2011	Vice Deputy Chairman and Representative Directorof the same company
Jun 2013	Retired from the office of Vice Deputy Chairman
and Representative Director of the same company
May 2015	Outside Audit & Supervisory Board Member of J.
Front Retailing Co., Ltd.
	Audit & Supervisory Board Member of Daimaru
Matsuzakaya Department Stores Co. Ltd.
May 2017	Outside Director of J. Front Retailing Co., Ltd. (present)
May 2018	Director of Daimaru Matsuzakaya Department
Stores Co. Ltd. (present)Interview with Outside Director

Interview ISHII Yasuo

represents the development of the governance of the

The Company’s governance initiatives

Company as a Company with Three Committees(Nomination,

andRemuneration

Committees).

Secondly, I also saw changes in questions from

Board Member three years ago, people were talking aboutshareholders this year. I have the impression that there

the

corporate

were many questions concerning requests from agovernance. In such a situation, the Company, which wascustomer’s perspective in the past. This year, however,a Company with an Audit & Supervisory Board, establishedmany questions were raised concerning the policies,

a voluntary“Governance Committee.”And the Company

strategies and governance of the Company. I think this

discussed the way the organizational structure should be.

changeAs a result, the direction that it should transition to achanges in the Company’s governance. Thirdly, theCompany with Three Committees (Nomination, Audit andPresident of the Company who chaired the Shareholders

Remuneration Committees) was shown.

Meeting explained very precisely in person in his own

importanceofoutsideofficersandI think there are three points of changes in the Company’sgovernance. Firstly, they have promoted initiatives toensure the effectiveness of the Board of Directors as awhole.

56

Audit

When I became the Company’s Audit & Supervisory

Secondly,

they

introduced

theoccurredbecauseshareholders

understoodwords. These three matters have renewed my feeling that
the Company’s governance has changed.
In addition, I feel the Group structure is changing. For

International

example, they discuss the roles of the auditors ofFinancial Reporting Standards (IFRS) and B/S-based

consolidated subsidiaries. I think studying such a thing

management from the standpoint of governance in a broad

itself is a specific example of proceeding with the Groupsense. It is particularly symbolic that they have set an ROE

management. Their view is that it is not easy to survive intarget of 8% or more in the recent and current Medium-the future without considering new businesses andterm Business Plans. And thirdly, they created a specialized

associated businesses other than the Department Store

unit named“ESG Promotion Division”in March 2018 toBusiness beyond the framework of retail and aiming toclarify their stance on important sustainability issues. Ichange their business portfolio. Business portfolio wasthink these three points are great changes that represent

actively discussed at my previous company, and as a

the development of the Company’s governance.

result, they pulled out of associated businesses one after

Also at the 11th Annual Shareholders Meeting, I saw

another to focus on their main business. Meanwhile, given

obvious changes. I think they are typified by the following

the industry structure, I think it will be difficult for thethree matters. Firstly, the Chairperson of the Board ofCompany to focus excessively on retail in the future.

Directors reported the operational status of the Board ofThough I think the Company’s direction and idea of

Directors and the chairpersons of the three statutory“exceeding the framework of retail” is correct, thecommittees reported the operational status of thesequestions are what business to choose and where tocommittees at the Shareholders Meeting. This exactly

expand it.

Roles to be filled as Outside Director

Compared to my first year as an outside Board member,
I think the Company’s policies and strategies are much
more intensively discussed at the Board of Directors
meetings. The Board members including myself discussed
in depth the Group Vision, the Medium-term Business
Plans, annual strategies and others. It was striking that theCompany ran into issues concerning“people”such as thedevelopment and securing of human resources in any
discussions. Each strategy is not a“pie in the sky”and it
is important to realize it. Another keyword for realizing
strategies is“speed.”In discussions on strategies, issues
of“people”and“speed”were always raised.
The Company evaluated the Board of Directors threetimes. Seeing the results, I feel the evaluations weregenerally correct. Inside Directors also told what they
really thought more than I had thought. The results of theevaluation of the Board of Directors are not its purpose butwhat to do thereafter based on issues seen from theevaluation is important. Evaluation results are only interim
evaluation at that point in major governance reform and it
is important to continuously conduct evaluations. Currently
the Board of Directors of the holding company is evaluatedand I think the evaluation should be expanded in the future
to cover major consolidated subsidiaries partly in order todeepen discussions on the Group management.
The main item on the agenda of the meetings of thevoluntarily established Governance Committee is the waytheorganizational

structureshouldbetoimproveeffectiveness based on the evaluation of the Board of
Directors. In the past, the Committee discussed themembers of the Board of Directors, agenda items to be
discussed, time allocation, the number of the Board
meetings, etc. Presently, the Committee discusses even theway related operating subsidiaries and their roles andfunctions and audit systems should be as well as thefunctions and roles of the holding company. I feel theGovernance Committee has also entered the second phase.
In general, diversity is considered as the issue of
women, nationality and race, and age. However, I think
diversity is the issue of how to use people with different
thoughts as well as genders, nationalities and ages. I think
the final form of diversity is to use the individuality of eachand every worker, regardless of whether he/she is an
officer or an employee, instead of excluding people who
think differently, so that people with different thoughts canperform well in a company. As discussed with Mr.
Yamamoto, President, previously, it is important to create
an environment where consolidated subsidiaries caneasily provide advice to the holding company. I think
openness to accept different opinions is critical to enhance
corporate value.

Governance

Changes seen in the Board of Directors

I think people with different insights and experiences indifferent industries should be appointed as Outside
Directors. I am conscious of an external perspective as
well as the standpoint of a representative of shareholders.
I think to say consciously in the position of Outside
Director what is difficult to ask or say in the position of
Inside Director helps improve corporate value and actuallyI am doing so. I think it is important to improve theexecutive level first in a company. If only Outside Directors
are strong and Executive Officers are not strong, thecompany will become an armchair theorist. I exercise
oversight and provide advice consciously so that theexecutive level will be improved.
In such a situation, I think it is good that the“RiskManagement Committee”focuses on the both positive andnegative sides of risk. Literally, there is a“risk of notinvesting.”The Company has many things to consider
including ICT and e-commerce, M&A, and new businesses.
Japan as a whole will trend toward depopulation andmarket shrinkage in the future. They are the issues facing
not only the Company but also all industries in Japan.
However, I think the Company should make a little more
effort to address these issues.
I think the Company put in place an internal control
system and formulated the great Medium-term Business
Plan during the past year. Going forward, it is important
how they will be operated and promoted, and to this end, I
would like to thoroughly fulfill my supervisory role. It is also
important how the policy and direction of the entire GroupManagement will be established beyond the framework ofretail. Currently the Company is at a major“turning point”
and in the very phase of changing the Group structure.
How will the Company proceed with these changes? I
would like to look at the future of the Group managementfrom the standpoint of the business plan, development of
new businesses and overseas business management, inwhich I had engaged over my career.
I think the Company is in the course of very interestingchange now. For example, the business concept of thepresent pharmaceutical companies has changed
completely from before. They are a so-called“informationindustry”in which it is important not to sell products but toinput and output information. In these circumstances, theperspective of how to use data is becoming important.
Though there may be ways of doing business continuing
for hundreds of years in the retail industry, I think some ofthem can be changed. A keyword“creation”is shown in
the new Group Vision and I give attention to how the
Company will become a“creative company”in the future.
For example, it may be interesting to aim for a“researchand-development-based retailer.”I expect the Company
will produce tangible results that meet the keyword“creation”in the Vision.

Integrated Report 201857

Governance＞Management

Management(as of May 31, 2018)

Directors

KOBAYASHI Yasuyuki

DOI Zenichi

TSUTSUMI Hiroyuki

TACHIBANA FUKUSHIMA Sakie

Number of the Company’s shares held: 35,300

Number of the Company’s shares held: 35,700

Number of the Company’s shares held: 15,698

Outside Director
Number of the Company’s shares held: 4,700

Chairperson of Board of Directors
Nomination Committee Member
Remuneration Committee Member

Chairperson of Audit Committee

Audit Committee Member

Chairperson of Nomination Committee
Remuneration Committee Member

Apr 1973
Feb 2003

Mar 1976
May 2002

Apr 1980
Mar 1993

Jun 1980
Sep 1987
Aug 1991

May 2003
Jan 2004
Sep 2007
Jan 2008

Mar 2010

May 2010
May 2012
Apr 2013
May 2013
May 2015
May 2016
May 2017

Joined The Daimaru, Inc.
Associate Director and General Manager of
Sapporo Store of the same company
Corporate Officer of the same company
General Manager of Tokyo Store of the same
company
Corporate Officer of J. Front Retailing Co., Ltd.
Director and Corporate Officer, Deputy Executive
General Manager of Department Store Operations
Headquarters and Executive General Manager ofMerchandising Management Unit of Head Office of
The Daimaru, Inc.
Director and Corporate Officer, Senior Executive
General Manager of Sales and Marketing
Headquarters and Senior General Manager ofMerchandise Strategy Unit of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Director and Corporate Executive Officer of thesame company
Director of Parco Co., Ltd. (present)
Managing Executive Officer and Senior Executive
General Manager of Affiliated Business Unit of J.
Front Retailing Co., Ltd.
Director and Managing Executive Officer of thesame company
Senior Managing Executive Officer of the same
company
Representative Director of the same company
Director and Chairperson of Board of Directors of
the same company (present)

May 2006
May 2008

Jan 2009
Mar 2010

Mar 2012
May 2012
Jan 2015
May 2015

Mar 2017
May 2017

Joined Matsuzakaya Co., Ltd.
Executive General Manager of Corporate Planning Unitof Nagoya Business Division of the same company
Executive Officer and Executive General Manager
of Sales Planning Unit of the same company
Managing Executive Officer, Executive General
Manager of General Planning Unit, Executive
General Manager of Sales Reform Promotion Unitand Executive General Manager of Sales Planning
Unit of the same company
Director and Executive Officer and Executive General
Manager of Sales Management Unit of the same company
Director and Corporate Officer and Senior General
Manager of Sales Planning Unit of Sales andMarketing Headquarters of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Senior General Manager of Out-of-Store SalesManagement Division of Sales and Marketing
Headquarters of the same company
Director and Managing Executive Officer of thesame company
Senior Executive General Manager of Administration
Headquarters and in charge of Compliance and Risk
Management of the same company
Director and Managing Executive Officer, Senior
Executive General Manager of Administration Unit
and in charge of Compliance and Risk Managementof J. Front Retailing Co., Ltd.
Outside Director of Hakuyosha Co., Ltd. (present)
Director of J. Front Retailing Co., Ltd. (present)

Mar 2001
Sep 2007
Mar 2010
May 2013
Mar 2016
May 2017

Joined The Daimaru, Inc.
General Manager of Accounting Division of Hong
Kong Daimaru Limited
General Manager of Finance Headquarters of The
Daimaru, Inc.
General Manager of Finance Division of Administration
Unit of J. Front Retailing Co., Ltd.
General Manager of Finance Division of
Administration Unit of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Executive Officer and Senior General Manager ofFinance Division of Administration Unit of J. Front
Retailing Co., Ltd.
Senior General Manager of Finance and Accountingof Financial Strategy Unit of the same company
Director of the same company (present)

Jun 1993
Sep 2000
May 2001
Sep 2007
May 2009
Mar 2010
Jul 2010
Aug 2010
Jun 2011
May 2012
Jun 2013
Jun 2016

Joined Braxton International
Joined Bain & Company, Inc.
Principal Consultant of Japan Branch Office of
Korn/Ferry International
Partner of the same company
Regional Managing Director of Korn/Ferry
International-Japan and Member of the Board of
Korn/Ferry International (Global Headquarters)
President and Representative Director of Korn/
Ferry International-Japan and Member of the Boardof Korn/Ferry International (Global Headquarters)
President and Representative Director of Korn/
Ferry International-Japan
Chairman and Representative Director of the same
company
Outside Director of Bridgestone Corporation
President and Representative Director of G&S
Global Advisors Inc. (present)
Asia Pacific Senior Advisor of Korn/Ferry
International
Outside Director of Ajinomoto Co., Inc. (present)
Outside Director of J. Front Retailing Co., Ltd.
(present)
Outside Director of Mitsubishi Corporation
Outside Director of Ushio Inc. (present)

OTA Yoshikatsu

ISHII Yasuo

NISHIKAWA Koichiro

SATO Rieko

Outside Director
Number of the Company’s shares held: 6,800

Outside Director
Number of the Company’s shares held: 1,900

Outside Director
Number of the Company’s shares held: 900

Outside Director
Number of the Company’s shares held: 0

Chairperson of Remuneration Committee
Nomination Committee Member

Audit Committee Member

Audit Committee Member

Nomination Committee Member
Remuneration Committee Member
Audit Committee Member

Apr 1964
Jun 1991

Apr 1970
Jun 2000

Apr 1970
Aug 1995
Jun 2001

Apr 1984
Aug 1989
Jul 1998
Jun 2004

Jul 1994

Jun 1995
Jun 1999
Apr 2001
Aug 2003
Oct 2003
Apr 2006
Apr 2009
Jun 2012
Apr 2013
Apr 2014
Jun 2014
May 2015
Jun 2017

Joined Minolta Camera Co., Ltd.
Director, General Manager of Copying Machine
Business Division and General Manager of Copying
Machine Sales Division of the same company
Director and Executive General Manager ofInformation Device Business Management Unitand Executive General Manager of Information
Device Sales Unit of Minolta Co., Ltd.
Managing Director of the same company
President and Representative Director of the same
company
President and Executive Officer and Representative
Director of the same company
Director and Vice President and Representative
Executive Officer of Konica Minolta Holdings, Inc.
President and CEO of Konica Minolta Technologies,
Inc.
Director, President and CEO of Konica Minolta
Holdings, Inc.
Director and Chairman of the Board of Directors of
the same company
Outside Director of Yamaha Corporation
Director and Chairman of the Board of Directors ofKonica Minolta, Inc.
Director of the same company
Special Advisor of the same company
Outside Director of J. Front Retailing Co., Ltd. (present)
Honorary Advisor of Konica Minolta, Inc. (present)

Jan 2001
Mar 2003
Jun 2003
Jun 2004
Apr 2005
Jun 2008
Jun 2011
May 2015

May 2017
May 2018

Joined Yamanouchi Pharmaceutical Co., Ltd.
Director of the Board and Director of Ethical
Products Marketing Department of Sales &Marketing Division of the same company
Director of the Board of the same company and
Chairman of Yamanouchi Europe B. V.
Director of the Board of Yamanouchi PharmaceuticalCo., Ltd. and Chairman of Yamanouchi U.K. Limited
and Chairman of Yamanouchi Europe B. V.
Managing Director of the Board of Yamanouchi
Pharmaceutical Co., Ltd.
Senior Corporate Executive of the same company
Senior Corporate Executive of Astellas Pharma
Inc. and Chairman & CEO of Astellas Pharma
Europe Ltd.
Executive Vice President and Representative
Director of Astellas Pharma Inc.
Vice Deputy Chairman and Representative Directorof the same company
Outside Audit & Supervisory Board Member of J.
Front Retailing Co., Ltd.
Audit & Supervisory Board Member of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd.
(present)
Director of Daimaru Matsuzakaya Department
Stores Co. Ltd. (present)

Apr 2003
Jun 2003
Jan 2006
Apr 2007
Apr 2012
Apr 2010
Mar 2014
May 2015

May 2017
May 2018

Joined Hitachi, Ltd.
Vice President of Hitachi America, Ltd.
Managing Officer and General Manager of Global
Business Development Division of Hitachi, Ltd.
Manager of Business Development Division of thesame company
Executive Officer and Manager of Business
Development Division of the same company
Vice President and Executive Officer in charge ofBusiness Development of the same company
Senior Vice President and Executive Officer incharge of Business Development of the same
company
Senior Vice President and Executive Officer ofHitachi Cable, Ltd.
Senior Advisor of Hitachi Research InstituteOutside Director of Kyowa Hakko Kirin Co., Ltd.
Outside Audit & Supervisory Board Member of J.
Front Retailing Co., Ltd.
Audit & Supervisory Board Member of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd.
(present)
Director of Daimaru Matsuzakaya Department
Stores Co. Ltd. (present)

Jun 2012
Jun 2015
Oct 2016
May 2018

Registered as attorney at law
Shearman & Sterling LLP
Partner of Ishii Law Office (present)
External Audit & Supervisory Board Member of
Ajinomoto Co., Inc.
Outside Corporate Auditor of NTT Data
Corporation (present)
Outside Director of The Dai-ichi Life Insurance
Company, Limited
Outside Director of Dai-ichi Life Holdings, Inc.
(Audit & Supervisory Committee Member) (present)
Outside Director of J. Front Retailing Co., Ltd.
(present)*The numbers of the Company’s shares held by Directors are as of February 28, 2018.
*The Company transitioned to a Company with Three Committees (Nomination, Audit and Remuneration Committees) as of May 25, 2017 by resolving to amend the Articles ofIncorporation at the Annual Shareholders Meeting held on the same day.

58

GovernanceDirectors

YAMAMOTO Ryoichi

YOSHIMOTO Tatsuya

MAKIYAMA Kozo

SAWADA Taro

Number of the Company’s shares held: 64,700

Number of the Company’s shares held: 36,500

Number of the Company’s shares held: 14,100

Number of the Company’s shares held: 9,800

President and Representative Executive Officer
Nomination Committee Member
Remuneration Committee Member

Representative Managing Executive Officer

Managing Executive Officer

Managing Executive Officer

Apr 1973
May 2003

Apr 1979
Mar 2000

Apr 1981
Mar 2004

Apr 1983
Jun 2004

Mar 2005
Jan 2007

Sep 2007

Mar 2008
Mar 2010
Sep 2012
Apr 2013
May 2017

Joined The Daimaru, Inc.
President and COO and General Manager ofDepartment Store Operations of Group Headquartersof the same company
General Manager of Metropolitan Area New Business
Development Division of Group Headquarters of thesame company
Executive General Manager of Planning Office for
New Umeda Store of Department Store Operations
Headquarters of Group Headquarters of the same
company
Director and in charge of Sales Reform and Out-ofStore Sales Reform of J. Front Retailing Co., Ltd.
Executive General Manager of Department StoreOperations Headquarters and Executive General
Manager of Planning Office for New Umeda Storeof Head Office of The Daimaru, Inc.
Director of Matsuzakaya Co., Ltd.
Executive General Manager of Sales Headquartersof Head Office of The Daimaru, Inc.
President and Representative Director of Daimaru
Matsuzakaya Department Stores Co. Ltd.
President and Representative Director of the same
company and President and Representative Directorof Daimaru Matsuzakaya Sales Associates Co. Ltd.
President and Representative Director of J. Front
Retailing Co., Ltd.
Director, President and Representative Executive
Officer of the same company (present)

Jan 2008
May 2008
Jan 2010

Mar 2010
May 2012
Apr 2013

May 2013
May 2017

Joined The Daimaru, Inc.
Senior Manager of Preparatory Office for Opening
Sapporo Store of Planning Office for Sapporo
Store of Head Office of the same company
General Manager of Tokyo Store of the same
company
Corporate Officer and General Manager of TokyoStore of the same company
Corporate Officer, General Manager of Sales
Planning Promotion Division and General Manager
of Marketing Planning Promotion Division of
Department Stores Coordination Division of J. Front
Retailing Co., Ltd.
Corporate Officer and Senior General Manager ofManagement Planning Division of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Director and Corporate Officer of the same
company
President and Representative Director of the same
company (present) and President andRepresentative Director of Daimaru Matsuzakaya
Sales Associates Co. Ltd. (present)
Director of J. Front Retailing Co., Ltd.
Director and Representative Managing Executive
Officer of the same company (present)

Managing Executive Officer

Apr 1985
Apr 1998
Apr 2007
Feb 2009
Jul 2013
May 2015
Sep 2015
Mar 2016
May 2016
May 2017

May 2018

Joined Matsushita Electric Industrial Co., Ltd.
(present Panasonic Corporation)
President of Panasonic Financial Center Malaysia
Co., Ltd.
Director and Chief Executive Officer of Matsushita
Electric (China) Finance Limited
Finance Planning Team Leader (Manager) of
Headquarters Finance & IR Group of Panasonic
Corporation
General Manager of Finance & IR Group of
Corporate Strategy Division and Finance Planning
Team Leader (Director) of Panasonic Corporation
Joined J. Front Retailing Co., Ltd.
In charge of Finance Policy of Administration Unitof the same company
Executive Officer and in charge of Financial Strategy
and Policy of Administration Unit of the same company
Senior Executive General Manager of Financial
Strategy Unit and in charge of Finance Policy ofthe same company
Director of the same company
Director and Managing Executive Officer, Senior
Executive General Manager of Financial Strategy
Unit and in charge of Financing and Finance
Policy of the same company
Director and Managing Executive Officer, Senior
Executive General Manager of Financial Strategy Unit
and Senior General Manager of Financing and Finance
Policy Division of the same company (present)

May 2008
Mar 2009
Mar 2010
Mar 2011
May 2011
May 2013
May 2017

Mar 2010
Jan 2011
May 2011
May 2012
Sep 2015
Jul 2016
Mar 2017
May 2017
May 2018

YAMAMOTO Ryoichi

YOSHIMOTO Tatsuya

MAKIYAMA Kozo

SAWADA Taro

WAKABAYASHI Hayato

FUJINO Haruyoshi

ARISAWA Hisashi

MURATA Soichi

TADATSU Takehiko

IWATA Yoshimi

Managing Executive Officer
Senior Executive General Manager of Financial
Strategy Unit and Senior General Manager ofFinancing and Finance Policy Division

Number of the Company’s shares held: 1,800

Mar 2008

Joined The Daimaru, Inc.
Department Manager of Sales Promotion Departmentof Sales Planning & CS Promotion Division of KobeStore
Division Manager of Management Planning Divisionof Daimaru Matsuzakaya Department Stores Co. Ltd.
Executive Store Manager of Daimaru Kobe of thesame company
Corporate Officer of the same company
Executive Store Manager of Daimaru Osaka
Shinsaibashi of the same company
Executive Store Manager of Daimaru Osaka Shinsaibashi
and Executive General Manager of Shinsaibashi New
Store Planning Office of the same company
Executive General Manager of Management
Planning Unit of the same company
Executive General Manager of Management
Planning Unit and Executive General Manager of
Future Standard Laboratory of the same company
Director and Managing Executive Officer of thesame company
Director and Managing Executive Officer, Senior
Executive General Manager of Management
Strategy Unit and in charge of Risk Management of
J. Front Retailing Co., Ltd. (present)
Director of Daimaru Matsuzakaya Department
Stores Co. Ltd. (present)
Director of Parco Co., Ltd. (present)

Executive Officers
President and Representative Executive
Officer

WAKABAYASHI Hayato

Mar 2007

Joined Parco Co., Ltd.
Executive Officer and Executive General Manager
of Store Operation Division of the same company
Managing Executive Officer and Executive
General Manager of Store Management Division of
the same company
Senior Executive Officer, Senior Executive
General Manager of Store Operation Headquarters
and Executive General Manager of StoreManagement Division of the same company
Director and Senior Executive Officer of the same
company
Supervisor of Store Operation Division of the same
company
In charge of Store Management of the same
company
In charge of Business Management of the same
company
Director, President and Representative Executive
Officer of the same company (present)
Director of J. Front Retailing Co., Ltd.
Director and Managing Executive Officer of thesame company (present)

Representative Managing Executive
OfficerManaging Executive Officer
Senior Executive General Manager ofBusiness Development UnitManaging Executive Officer

Managing Executive Officer
Senior Executive General Manager ofAffiliated Business Unit

MAKITA Takayuki

Executive Officer
Senior General Manager of Management
Planning Division of Management
Strategy Unit

NAKAYAMA Takashi

Executive Officer
Senior General Manager of Human Resources Strategy Unit
and Senior General Manager of Group Human Resources
Development Division and Executive Officer and Executive
General Manager of Human Resources Development
Division of Administration Headquarters of Daimaru
Matsuzakaya Department Stores Co. Ltd.

NINOBE Mamoru

KONDO Yasuhiko

ONO Keiichi

Executive Officer
President and Representative Director of
JFR Card Co., Ltd.

Executive Officer
President and Representative Director of
J. Front Design & Construction Co., Ltd.

Executive Officer
Senior General Manager of Group Digital
Strategy Division and Senior General
Manager of New Business Division ofBusiness Development UnitManaging Executive Officer
Senior Executive General Manager of Management
Strategy Unit and in charge of Risk Management

Managing Executive Officer
Senior Executive General Manager of
Administration Unit and in charge ofCompliance

Executive Officer
Senior General Manager of Budget
and Management Support of Financial
Strategy Unit

Executive Officer
President and Representative Director of
Dimples’Co., Ltd.

Corporate profile
Company nameMain store
Office： J. Front Retailing Co., Ltd.
： 10-1, Ginza 6-chome, Chuo-ku, Tokyo： Nihonbashi 1-chome Mitsui Building, 4-1, Nihonbashi 1-chome, Chuo-ku, Tokyo

Established： September 3, 2007
Capital： ¥31,974 million
The Group’s business lines ：	Department store operation; retail; restaurants; wholesale; import andexport; design, supervision and contracting of construction works; direct
marketing; credit cards; labor dispatch service; merchandise inspection
and consulting; and others
Number of employees (consolidated)：6,723 (as of February 28, 2018)
Note: In addition to the above, there are 1,573 dedicated employees who became indefinite-term
employees on June 1, 2017 and 2,133 fixed-term employees on average during fiscal year 2017.

URL： http://www.j-front-retailing.com/

Integrated Report 201859

Financial/Non-financial Highlights
Consolidated ROE

7.5%

10

340 million people
7.5

8.9

8
6

Customer traffic

6.8
5.8

5.8
5.4

4
3.6
2
0

2011

2012

2013

2014

2015

2016

2017

In the fiscal year ended February 28, 2018, return on equity(ROE) as the most important management indicator was 7.5%
due to the efforts to enhance profit level and capital efficiency.
We aim to achieve an 8% or more ROE in FY2021, the final
year of the new Medium-term Business Plan.

7yearth ofconsecutive
increase
Annual dividend

Our basic policy is to maintain stable dividend payments andappropriately return profits targeting a dividend payout ratio of at least
30% in view of profit level, future capital investment, FCF trends, etc.
while maintaining and enhancing the sound financial condition.

Share of sales to inbound tourists

7.3%

In fiscal year 2017, Daimaru Matsuzakaya Department Stores posted
tax-free sales to foreign tourists to Japan of ¥47.9 billion and their sales
share increased to 7.3%. The product selection and hospitality of ourdepartment stores attract foreign tourists and sales continue to grow.

New employees in FY2017

60

About 340 million customers visited
15 stores directly managed by
Daimaru Matsuzakaya Department
Stores and 18 Parco stores during
the year. This shows that our storesare loved by and familiar to local
people and contribute to revitalizing
local communities. (As of February
28, 2018)

Identifiable customers of Daimaru/Matsuzakaya/Parco

6 million people

As of February 28, 2018, Daimaru Matsuzakaya Department Stores andParco have 4.2 million and 1.88 million cardholders, respectively, totaling
more than six million. We also have a gaisho organization of affluent
customers and such good customer assets are the strength of the Group.

Ratio of female leaders

50.5%

32.5%

Ratio of Outside Directors

Outside Directors’attendance rate at the Board meetings

At Daimaru Matsuzakaya Department
Stores, female employees account for
50.5%, half of total employees, as ofFebruary 28, 2018. We have in placevarious systems that consider work-lifebalance including “shortened working hours
for child care” and “child care leave,” whichwere designed beyond statutory limits, tosupport female employees.

513

The organizational structure transitioned from a Company with Audit &Supervisory Board to a Company with Three Committees (Nomination, Audit
and Remuneration Committees) by a resolution of the Annual Shareholders
Meeting held in May 2017. Five out of 13 Directors are Outside Directors.
With a stronger outside perspective, we strengthen governance.

The ratio of female leaders to total
leadership positions of Daimaru
Matsuzakaya Department Stores was
32.5% as of March 1, 2018. Womencan play an active role in a wide
range of work areas. Regardless ofgender and nationality, we promotemanagement with diversity as asource of competitive advantage.

Financial/Non-financial Highlights

Ratio of female employees

100%

A total of 14 meetings of the Board of Directors were held in the fiscal year ended
February 28, 2018. The attendance rate of Outside Directors at these Board meetings
was 100%. Oversight function was further strengthened by transitioning to a Company
with Three Committees (Nomination, Audit and Remuneration Committees) and they
have highly transparent and vigorous discussions using an outside perspective.

CO2 emissions

147,000 tons
In fiscal year 2017, Daimaru Matsuzakaya Department Stores emitted
147,000 tons of CO2, down 6.4% in intensity compared to fiscal year
2016. We promote conversion to LED lighting at stores and makevarious energy saving efforts in back-office sections to contribute topreventing global warming and improve productivity at the same time.

Number of items collected for recycling

1.022 million pieces
Daimaru Matsuzakaya Department Stores launched“Ecoff” recycling campaign in August 2016. The
number of disused clothing, shoes and bags brought bycustomers finally exceeded one million pieces in total
till April 2018. The collected items are recycled asenergy, fabric and others.

Integrated Report 201861

Financial/Non-financial Highlights
Millions of yen (except where otherwise indicated)

JGAAP
FY2008FY2009FY2010FY2011

1,096,690

982,533

950,102

ー

ー

ー

ー

4,242

4,652

5,962

6,961

Gross profit

269,282

240,211229,588

226,646

SGA

241,189

221,627

209,265

205,052

Business profit

ー

ー

ー

ー

Operating profit

28,092

18,584

20,323

21,594

Ordinary profit / Profit before tax

28,28919,96621,092

22,941

Profit / Profit attributable to owners of parent

7,170

8,167

8,862

18,804

Total assets

776,616

804,534

775,029

767,543

Equity307,861

314,494

318,033

332,917

Net assets

316,268

323,506

327,242

342,561Interest-bearing debt

94,677125,937

108,658

106,025

Net sales / Gross sales－ / Sales revenue
Rent income

941,415

Cash flows from operating activities

22,68622,996

21,27024,365

Cash flows from investing activities(11,676)(40,879)(8,432)(26,781)

Cash flows from financing activities(13,510)

29,212(23,128)(6,872)

Capital expenditures

18,09559,56620,02019,246

Depreciation (including cost)

13,257

13,295

13,61013,347Per share information [Yen]Earnings per share (EPS) / Basic earnings per share*1

27.13

30.90

33.53

71.15

1,164.53

1,189.79

1,203.24

1,259.60

16.00

14.00

14.00

16.00

Ratio of gross profit to net sales / Ratio of gross profit to sales revenue

24.55

24.45

24.16

24.08

Ratio of SGA to net sales / Ratio of SGA to sales revenue

22.0

22.6

22.0

21.8

Ratio of operating profit to net sales / Ratio of operating profit to sales revenue

2.6

1.9

2.1

2.3

Return on equity (ROE) / Return on equity attributable to owners of parent (ROE)

2.3

2.6

2.8

5.8

Return on assets (ROA) / Return on assets (ROA)

3.6

2.4

2.6

2.8

Book value per share (BPS) *1
Dividends per share*1
Financial indicators [%]Return on investment (ROI) / Return on investment (ROI)

7.0

4.7

4.9

5.3

Equity ratio / Equity ratio attributable to owners of parent

39.6

39.1

41.0

43.4

Dividend payout ratio

59.0

45.3

41.8

22.5

13,413

Non-financial indicators
Number of employees (consolidated) [People]

16,873

15,431

14,307

Ratio of female employees (Daimaru Matsuzakaya*10) [%]

42.6

43.5

44.7

45.9

Ratio of female leaders [%]*2

30.8

26.2

26.3

19.0

Employee turnover rate (Daimaru Matsuzakaya) [%]*3

2.1

3.5

3.7

2.3

Post-retirement re-employment rate (Daimaru Matsuzakaya) [%]*4

64.3

55.6

57.2

68.1

Department store sales floor area (directly managed stores) [m2]541,546

570,117549,739

573,323

Parco sales floor area [m2]447,500

444,500

454,000

443,000

ーー

224,242

236,876

Customer traffic (Daimaru Matsuzakaya) [1,000 people]
Average spend per customer (Daimaru Matsuzakaya) [Yen]

*1
*2
*3
*4

62

ー

ー

3,842

3,797

Number of cards issued by Daimaru Matsuzakaya [1,000 cards]

4,307

3,872

4,056

4,365

Number of holders of cards issued by Parco [1,000 people]

1,564

1,574

1,618

1,612

GHG (CO2) emissions (CO2-t)*5ーー

166,801

151,341

Energy consumption [kl (crude oil equivalent)]*6

ーー

98,013

98,128

Packaging material consumption [t]*7

ー

ー

2,574

2,627

Waste disposal [t]*8ーー

10,803

11,004

Food waste disposal [t]*9

ー

ー

2,517

2,327

The Company’s common shares were consolidated at the ratio of one share for every two shares as of September 1, 2014.
Per share information has been calculated as if this consolidation of shares was conducted at the beginning of FY2007.
Until FY2012: Total numbers of General Managers, Managers, Buyers, Team Leaders and Assistant Buyers of Daimaru Matsuzakaya
FY2013 and after: Total numbers of General Managers, Managers, Submanagers, Buyers and Team Leaders of Daimaru Matsuzakaya and Daimaru Matsuzakaya Sales
Associates (“DMSA”) and Supervisors and Section Leaders of DMSA
Number of retired employees during the year / Number of employees at the beginning of the year ×100 (%)
The number of retired employees above excludes employees who retired because of retirement age, transfer and becoming officers.
Daimaru Matsuzakaya has introduced a transfer system for employees aged 55 and above in September 2013.

FY2012FY2013

FY2014FY2015FY2016FY2016FY2017

1,092,756

1,146,319

1,149,529

1,163,564

1,108,512

1,134,342

1,138,981

ー

ー

ー

ー

ー

452,505

469,915

9,076

10,195

10,727

12,094

13,547

13,545

17,156245,615

244,130

243,739

245,532

234,785

212,567

212,935

214,757

202,313201,572

197,494

190,205

167,668

166,688

ー

ー

ー

ー

ー

44,89846,84230,857

41,81642,16748,03844,58041,72749,54632,20240,502

40,48047,91044,42542,60848,271

12,18331,56819,96726,313

26,95027,052

28,486

1,009,165

998,730

1,018,495

1,019,146

1,050,109

1,005,069

1,022,348

341,318

370,173375,886

383,699406,336

368,571395,519

390,667

422,215430,260

440,594

465,839

213,085

187,950

168,458

180,922

187,799

205,952

184,202

26,02537,53244,65036,79936,23933,76457,079(73,977)(8,858)(16,272)(39,741)(30,353)(27,952)(19,030)

58,275(32,027)(27,587)(1,041)(2,189)(2,097)(31,048)

19,03852,75824,277

37,11044,99944,99927,021

16,482

17,69817,963

18,345

17,18917,284

18,68346.11

119.5575.66

100.42103.04103.43108.92

1,292.36

1,402.53

1,424.28

1,467.05

1,553.60

1,409.20

1,511.91

18.00

22.00

25.00

27.00

28.00

28.00

35.00

22.48

21.30

21.20

21.10

21.18

46.98

45.31

19.7

17.6

17.5

17.0

17.2

37.1

35.5

2.8

3.6

3.7

4.1

4.0

9.2

10.5

3.6

8.9

5.4

6.9

6.8

7.6

7.5

3.5

4.2

4.2

4.7

4.3

4.2

4.9

6.5

7.3

7.3

8.6

7.7

7.6

8.4

33.8

37.1

36.9

37.6

38.7

36.7

38.7

39.0

18.4

33.1

26.9

27.2

27.1

32.1

14,838

11,561

11,14911,023

10,732-

10,429

44.8

48.5

48.9

49.9

50.2

-

50.5

15.7

24.6

27.7

28.1

32.0

-

32.5

1.2

5.9

0.7

1.5

1.4

-

1.7

67.8

69.8

78.0

88.5

95.6

-

85.0

569,137

543,785

529,460

498,460

498,460-

495,331442,600

442,600

451,000

456,000

409,000-

389,000

246,764

237,647

220,411

207,512

197,250-

200,966

3,838

4,107

4,215

4,414

4,420

-

4,676

4,580

4,659

4,595

4,217

4,062

-

4,029

1,614

1,643

1,754

1,885

1,990

-

2,031

156,843

168,825

167,613167,189

157,575-

147,191

93,33888,027

81,66680,00975,934-74,410

2,669

2,978

2,682

2,553

2,412

-

2,369

10,797

10,456

9,205

8,198

8,256

-

8,136

2,109

1,955

1,718

1,527

1,826

-

2,104

Financial/Non-financial Highlights

IFRS*5-9 Total of Daimaru Matsuzakaya, Hakata Daimaru, Shimonoseki Daimaru, Kochi Daimaru and Tottori Daimaru*6 Energy consumption is the crude oil equivalent of the total consumption of electricity, gas, gasoline, light/heavy oil, etc. (kiloliter).
*7 Packaging material consumption is the weights of wrapping paper, shopping bags, plastic bags for food products, etc. (ton).
*8 Waste disposal is the weights after subtracting the weights of waste recycled from the total weights of waste generated including general waste, raw garbage and industrial
waste (ton).
*9 Food waste disposal is included in waste disposal.
*10 Daimaru Matsuzakaya: Daimaru Matsuzakaya Department Stores

Integrated Report 201863

Financial Section＞

Business Overview (At a Glance)

Business Overview

At a Glance
Sales revenue(FY2017)*‌The Company has applied the International Financial ReportingStandards (IFRS) beginning in fiscal year 2017.

Operating profit

CreditCreditandandFinanceFinanceBusiness
Business
1.3%
1.3%

CreditCreditandandFinanceFinanceBusiness
Business
5.5%
5.5%

Other
Other
18.3%
18.3%

Real
Real
EstateEstateBusiness
Business
2.7%
2.7%

Department
Department¥469.9¥469.9billionbillion
Store
Store

Parco
Parco
Business
Business
19.4%
19.4%

（IFRS）（IFRS）

Other
Other
8.6%
8.6%

Real
Real
EstateEstateBusiness
Business
8.3%
8.3%

Department
Department
¥49.5
¥49.5
billionbillion
Store
Store
（IFRS）（IFRS）

Business
Business
58.3%
58.3%

Parco
Parco
Business
Business
23.7%
23.7%

Consolidated ROE

Consolidated ROA

Consolidated operating margin

EPS

Consolidated dividend payout ratio

Equity ratio

7.5%

108.92

4.9%

10.5%

¥

32.1%

Illustration

Comparison between JGAAP and IFRS (International Financial Reporting Standards)

JGAAP (consolidated)

Sales (gross)

IFRS (consolidated)
Sales revenue
Sales [net + sales from purchase on a no return basis (kaitori)]△Point expenses

Cost of sales
Gross proﬁt

Cost of sales
Gross proﬁt

SGA
Point expenses

SGA△Amortization of goodwill

Operating proﬁt
Non-operating income/expenses
Financial income/loss
Share of proﬁt/loss of equity method entities
Ordinary proﬁt

Extraordinary gain/loss
Proﬁt attributable to parent company

64

Business
Business
53.8%
53.8%

△Amortization of retirement beneﬁt plans
Other operating income/expense
Operating proﬁt
Financial income/loss
Share of proﬁt/loss of equity method entities
Proﬁt attributable to parent company

38.7%
Greatly decrease because sales of
the Department Store Businessfrom purchase recorded at the timeof sales (shoka shiire), tenant salesof the Parco Business and sales of
Daimaru Kogyo from shoka shiire
are presented net.
Point expenses included in SGA of
the Department Store Business are
deducted from sales.
Actuarial diﬀerences in goodwill
and retirement beneﬁts are notamortized.
Gain on sales of non-current assets,
miscellaneous income, loss on
disposal of non-current assets,
miscellaneous expenses, etc.
Interest income, dividend income,interest expenses, etc.
There is no "ordinary proﬁt"
under IFRS.
Corresponds to proﬁt under JGAAP
and is used in the numerator of ROE● ‌The percentage of total sales revenue represents the ratio of sales revenue to external customers
after eliminating intersegment transactions.
● Sales revenue and operating profit include intersegment transactions.
Percentage of total sales revenue

Sales revenue (Millions of yen)
268,233

Department

Operating proﬁt (Millions of yen)

274,308
22,224

Financial Section

Sales revenue and operating profit

Percentage of total
operating proﬁt

26,659Store
Business

58.3%
Percentage of total sales revenue

FY2016（IFRS）FY2017（IFRS）

Sales revenue (Millions of yen)

FY2016（IFRS）FY2017（IFRS）

Operating proﬁt (Millions of yen)

93,78091,621

13,021FY2016（IFRS）FY2017（IFRS）FY2016（IFRS）

Parco

53.8%
Percentage of total
operating proﬁt

11,752Business

19.4%
Percentage of total sales revenue

Sales revenue (Millions of yen)

FY2017（IFRS）

Operating proﬁt (Millions of yen)

13,427

23.7%
Percentage of total
operating proﬁt

4,131Real EstateBusiness

5,004
348

2.7%
Percentage of total sales revenue

Credit and

FY2016（IFRS）FY2017（IFRS）

Sales revenue (Millions of yen)
9,847

10,176FY2016（IFRS）FY2017（IFRS）FY2016（IFRS）FY2017（IFRS）

Operating proﬁt (Millions of yen)
2,856

2,742

FY2016（IFRS）FY2017（IFRS）

8.3%
Percentage of total
operating proﬁt

FinanceBusiness

1.3%
Percentage of total sales revenue

Sales revenue (Millions of yen)
114,584

Operating proﬁt (Millions of yen)

117,845

4,744

5.5%
Percentage of total
operating proﬁt

2,981

Other

18.3%

FY2016（IFRS）FY2017（IFRS）FY2016（IFRS）FY2017（IFRS）

8.6%*Beginning in fiscal year 2017, the Group has designated the “Department Store Business,” “Parco Business,” “Real Estate Business” and “Credit and
Finance Business” as reportable segments to highlight its focus on the Real Estate Business. The Wholesale Business has been included in “Other.”*The percentage of total operating profit of “Other” includes adjustments.

Integrated Report 2018

65

J. Front Retailing Group＞

Group Companies

Group Companies
Department Store Business / Real Estate Business
Daimaru Matsuzakaya Department Stores Co. Ltd.
Location: 18-11, Kiba 2-chome, Koto-ku, Tokyo 135-0042
Capital: ¥10,000 million Investment ratio: 100%
http://www.daimaru-matsuzakaya.com

Daimaru Osaka Shinsaibashi Store

Daimaru Yamashina Store

Daimaru Osaka Umeda Store

Daimaru Suma Store

Daimaru Tokyo Store

Daimaru Ashiya Store

Daimaru Kyoto Store

Matsuzakaya Shizuoka Store

Location: 7-1, Shinsaibashisuji 1-chome, Chuo-ku, Osaka 542-8501
Phone: +81-6-6271-1231 Opened (Present location): November 1726

Location: 1-1, Umeda 3-chome, Kita-ku, Osaka 530-8202
Phone: +81-6-6343-1231 Opened: April 1983

Location: 9-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-6701
Phone: +81-3-3212-8011 Opened: October 1954

Location: 7 9, Tachiuri Nishimachi, Shijo-dori Takakura Nishi-iru,
Shimogyo-ku, Kyoto 600-8511
Phone: +81-75-211-8111 Opened (Present location): October 1912

Daimaru Kobe Store

Location: 40, Akashimachi, Chuo-ku, Kobe, Hyogo 650-0037
Phone: +81-78-331-8121 Opened (Present location): April 1927

Daimaru Sapporo Store

Location: 7, Nishi 4-chome, Kita 5-jo, Chuo-ku, Sapporo, Hokkaido 060-0005
Phone: +81-11-828-1111 Opened: March 2003

Matsuzakaya Nagoya Store

Location: 16-1, Sakae 3-chome, Naka-ku, Nagoya, Aichi 460-8430
Phone: +81-52-251-1111 Opened: March 1910

Matsuzakaya Ueno Store

Location: 29-5, Ueno 3-chome, Taito-ku, Tokyo 110-8503
Phone: +81-3-3832-1111 Opened: April 1768

Location: 91, Takehana Takenokaido-cho, Yamashina-ku, Kyoto 607-8080
Phone: +81-75-255-7365 Opened: October 1998

Location: 2-4, Nakaochiai 2-chome, Suma-ku, Kobe, Hyogo 654-0154
Phone: +81-78-791-3111 Opened: March 1980

Location: 1-31, Funato-cho, Ashiya, Hyogo 659-0093
Phone: +81-797-34-2111 Opened: October 1980

Location: 10-2, Miyuki-cho, Aoi-ku, Shizuoka 420-8560
Phone: +81-54-254-1111 Opened: November 1932

Matsuzakaya Takatsuki Store

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-682-1111 Opened: November 1979

Matsuzakaya Toyota Store

Location: 85-1, Nishimachi 6-chome, Toyota, Aichi 471-8560
Phone: +81-565-37-1111 Opened: October 2001

Real Estate Division

Location: 18-11, Kiba 2-chome, Koto-ku, Tokyo 135-0042
Phone: +81-3-6860-1141

Corporate Sales Division

Location: 6th Fl., Kuromon Annex, Matsuzakaya Ueno Store, 18-6,
Ueno 3-chome, Taito-ku, Tokyo 110-0005
Phone: +81-3-5846-1431

The Hakata Daimaru, Inc.

Kochi Daimaru Co., Ltd.

Location: 4-1, Tenjin 1-chome, Chuo-ku, Fukuoka 810-8717
Phone: +81-92-712-8181 Capital: ¥3,037 million Investment ratio: 69.9%
http://www.daimaru.co.jp/fukuoka/index.html

Location: 6-1, Obiyamachi 1-chome, Kochi 780-8566
Phone: +81-88-822-5111 Capital: ¥300 million Investment ratio: 100%
http://www.kochi-daimaru.co.jp/

The Shimonoseki Daimaru, Inc.
Location: 4-10, Takezaki-cho 4-chome, Shimonoseki, Yamaguchi 750-8503
Phone: +81-83-232-1111 Capital: ¥480 million Investment ratio: 100%
http://shimonoseki.daimaru.co.jp/

Parco Business
Parco Co., Ltd. (Shopping complex business)
Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-3477-5710 Capital: ¥34,367 million Investment ratio: 64.9％

PARCO（Singapore）Pte Ltd (Shopping complex business)
Location: 10 Anson Road #09-05/06 International Plaza Singapore 079903
Phone: +65-6595-9100 Capital: S$4.5 million Investment ratio: 64.9％

Neuve A Co., Ltd. (Retail business)
Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-5428-2600 Capital: ¥490 million Investment ratio: 64.9％

66

Parco Space Systems Co., Ltd.

(Space engineering and management business)

Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-5459-6811 Capital: ¥490 million Investment ratio: 64.9％

Parco Digital Marketing Co., Ltd.
(Internet-related business)

Location: Shibuya First Place Bldg., 8-16, Shinsen-cho, Shibuya-ku, Tokyo 150-0045
Phone: +81-3-3477-8910 Capital: ¥10 million Investment ratio: 64.9％

J. Front Retailing Group

Credit and Finance Business
JFR Card Co., Ltd.
Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-686-0108 Capital: ¥100 million Investment ratio: 100％
http://www.jfr-card.co.jp/

Other
Daimaru Kogyo, Ltd. (Wholesale business)
Location: Y ushutsu Seni Kaikan, 4-9, Bingomachi 3-chome, Chuo-ku,
Osaka 541-0051
Phone: +81-6-6205-1000 Capital: ¥1,800 million Investment ratio: 100％
http://www.daimarukogyo.co.jp/

Daimaru Kogyo International Trading (Shanghai) Co., Ltd. (Wholesale business)
Location: 6th Fl., Heng Seng Bank Tower, 1000 Lujiazui Ring Rd.,
Pudong New Area, Shanghai, China
Phone: +86-21-6841-3588 Capital: U.S.$2 million Investment ratio: 100％

Daimaru Kogyo (Thailand) Co., Ltd. (Wholesale business)
Location: Unit 1902, 19th Fl., Sathorn Square Office Building, 
98 North Sathorn, Kwaeng Silom, Khet Bangrak, Bangkok 10500, Thailand
Phone: +66-2163-2903
Capital: THB202 million Investment ratio: 100％

Taiwan Daimaru Kogyo, Ltd. (Wholesale business)
Location: R oom 709, No. 142, Sec. 3, Ming Chuan East Road, Taipei 10542, Taiwan, R.O.C.
Phone: +886-2-2718-7215
Capital: NT$60 million Investment ratio: 100％

J. Front Design & Construction Co., Ltd.

(Design and construction contracting and manufacture and sale of furniture)

Location: 36-20, Higashinippori 4-chome, Arakawa-ku, Tokyo 116-0014
Phone: +81-3-5850-4700
Location: 2nd Fl., Nomura Fudosan Osaka Bldg., 8-15,
Azuchimachi 1-chome, Chuo-ku, Osaka 541-0052
Phone: +81-6-4705-6200
Capital: ¥100 million Investment ratio: 100％
http://www.jfdc.co.jp/

Dimples’Co., Ltd. (Staffing service)
Location: 2 2nd Fl., Osaka Ekimae 4th Bldg., 11-4, Umeda 1-chome,
Kita-ku, Osaka 530-0001
Phone: +81-6-6344-0312 Capital: ¥90 million Investment ratio: 100%
http://www.dimples.co.jp/

J. Front Foods Co., Ltd. (Restaurant)

Consumer Product End-Use Research Institute Co., Ltd.
(Merchandise test and quality control)

Location: 2 0th & 21st Fls., Edobori Center Bldg., 1-1,
Edobori 2-chome, Nishi-ku, Osaka 550-0002
Phone: +81-6-6445-4670
Location: 5th Fl., Matsuzakaya Ryutsu Center, 36-20,
Higashinippori 4-chome, Arakawa-ku, Tokyo 116-0014
Phone: +81-3-5615-5390
Location: 1
 0th Fl., Matsuzakaya Park Place, 2-36, Sakae 5-chome,
Naka-ku, Nagoya, Aichi 460-0008
Phone: +81-52-261-2030
Capital: ¥450 million Investment ratio: 100％
http://www.shoukaken.jp/

Angel Park Co., Ltd. (Parking)Location: 16-10, Sakae 3-chome, Naka-ku, Nagoya, Aichi 460-0008
Phone:+81-52-261-5746 Capital: ¥400 million Investment ratio: 50.2％
http://www.angelpark.co.jp/

JFR Service Co. Ltd.

(Commissioned back-office service / leasing / parking management)

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-681-7245 Capital: ¥100 million Investment ratio: 100％

JFR Information Center Co., Ltd. (Information service)
Location: 3-24, Osaka 1-chome, Tennoji-ku, Osaka 543-0062
Phone: +81-6-6775-3700 Capital: ¥10 million Investment ratio: 100％
http://www.jfr-ic.jp/

Daimaru Matsuzakaya Sales Associates Co. Ltd.
(Commissioned sales and store operations)

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone:+81-72-684-8145 Capital: ¥90 million Investment ratio: 100％

Daimaru Matsuzakaya Tomonokai Co., Ltd.
(Specified prepaid transaction service）

Location: 2-1, Konyamachi, Takatsuki, Osaka 569-8522
Phone: +81-72-684-8101 Capital: ¥100 million Investment ratio: 100％
http://www.dmtomonokai.co.jp/

Location: 1 01, Louis Chatelet Nakanoshima, 3-92, Nakanoshima 5-chome, Kita-ku, Osaka 530-0005
Phone: +81-6-7220-0290 Capital: ¥100 million Investment ratio: 100%
http://www.j-frontfoods.co.jp/

Integrated Report 201867

J. Front Retailing Group＞Stores (Map)

Daimaru, Matsuzakaya and ParcoCover Major Big Cities across Japan

Sapporo Parco

Daimaru
SapporoSapporo Zero Gate

J. Front Retailing Group operates stores in major cities across Japan, from Hokkaido
in the north to Kumamoto, Kyushu in the south.
The Department Store Business operates 17 “Daimaru” and “Matsuzakaya” stores.
The Parco Business operates 18 “Parco” shopping complexes*.
We also operate “Ginza Six” and nine “Zero Gate” stores in a new business format
which develops urban-style low- to medium-rise shopping complexes.
The Group will make the best use of the well-balanced network of store assets
in major cities throughout Japan and accelerate new store opening anddevelopment strategies for further growth.
*Including Shibuya Parco, which is temporarily closed for rebuilding● Daimaru● Matsuzakaya● ParcoSendai Parco● Zero Gate
(As of May 31, 2018)

Matsumoto Parco

Shizuoka Parco

Hiroshima
Zero Gate

Matsuzakaya Nagoya

Kanto area

Hiroshima
Zero Gate 2

Kansai area

NagoyaZero Gate

Fukuoka Parco
Nagoya Parco
Matsuzakaya
ToyotaHiroshima Parco

Hakata Daimaru
Fukuoka Tenjin

Kochi Daimaru
Shimonoseki Daimaru

Kumamoto Parco

68

Matsuzakaya
ShizuokaJ. Front Retailing Group

Ginza Six (Opened in April 2017)

Kanto area

Shintokorozawa Urawa Parco
Parco
Ikebukuro Parco

Utsunomiya
Parco
Tsudanuma

Matsuzakaya Ueno Parco
Ueno Frontier Tower
Parco_ya

Hibarigaoka Parco
Kichijoji Parco

Daimaru Tokyo
Ginza Six
Pedi Shiodome

Chofu Parco

Shibuya Parco

Scheduled to open infall 2019 after rebuilding

Harajuku
Zero Gate

Shibuya
Zero Gate

Ueno Frontier Tower / Parco_ya (Opened in November 2017)

Kansai area
Daimaru Yamashina
Daimaru Kyoto
Kyoto Zero Gate

Rendering of Udagawa-cho 15 Devolopment including Shibuya Parco(Scheduled to open in fall 2019 after rebuilding)

Matsuzakaya Takatsuki
Daimaru Osaka Umeda
Daimaru Ashiya

Shinsaibashi Zero Gate

Daimaru Kobe

Daimaru Suma

Dotonbori Zero Gate
Daimaru Osaka Shinsaibashi

Main building will open in fall 2019 after rebuilding.

Rendering of main building of Daimaru Shinsaibashi store(Main building will open in fall 2019 after rebuilding.)

Integrated Report 2018

69

J. Front Retailing Group＞Stores (Photos)

Daimaru and Matsuzakaya Stores

Daimaru Osaka Shinsaibashi (Floor space: 46,490㎡)*The new main building is scheduled to open in fall 2019.

Daimaru Osaka Umeda (Floor space: 64,000㎡)

Daimaru Tokyo (Floor space: 46,000㎡)

Daimaru Yamashina (Floor space: 5,403㎡）

Shimonoseki Daimaru (Floor space: 23,912㎡)

Daimaru Suma (Floor space: 13,076㎡)

Kochi Daimaru (Floor space: 16,068㎡)

Daimaru Ashiya (Floor space: 4,300㎡)

Hakata Daimaru Fukuoka Tenjin

Daimaru Kyoto (Floor space: 50,830㎡)

Daimaru Kobe (Floor space: 50,656㎡)(Floor space: 44,192㎡)

Daimaru Sapporo (Floor space: 45,000㎡)

Matsuzakaya Nagoya (Floor space: 86,758㎡)

Matsuzakaya Takatsuki (Floor space: 17,387㎡)

Matsuzakaya Toyota (Floor space: 18,220㎡)

Matsuzakaya Ueno (Floor space: 21,759㎡)

Matsuzakaya Shizuoka (Floor space: 25,452㎡)

Ginza Six (Floor space: 47,000㎡)

Overseas Offices and Company
Paris Representative Office

Milan Representative Office

21 rue Auber, 75009 Paris, France
Phone : +33-1-4574-2151

Conservatorio 22 Business Center, Via Conservatorio 22, 20122 Milan, Italy
Phone : +39-02-77291

Daimaru Matsuzakaya Department Stores (Shanghai) Consulting Co., Ltd.
Huaxin Haixin Building 13F Rm-B1, 666 Fuzhou Rd, Shanghai 200001, China
Phone : +86-21-6248-1538

As of September 1, 201870

Parco Stores

Sapporo Parco

New Shibuya Parco

Sendai Parco

Parco_ya

Shizuoka Parco

Nagoya Parco

Hiroshima Parco

Fukuoka Parco

3-3, Minami 1-jo Nishi, Chuo-ku,
Sapporo, Hokkaido
B2F-8F
Opened: August 24, 1975
sapporo.parco.jp

6-7, Koyamachi, Aoi-ku, Shizuoka
B1F-8F
Opened: March 15, 2007
shizuoka.parco.jp

Udagawa-cho 15 and part of
Udagawa-cho 14, Shibuya-ku, Tokyo
B3F-19F
Scheduled to open in fall 2019Club Quattro
32-13, Udagawa-cho, Shibuya-ku, Tokyo
4F-5F
Opened: June 28, 1988
club-quattro.com

3-29-1, Sakae, Naka-ku, Nagoya, Aichi
West Building: B1F-11F
East Building: B1F-8F
Opened: June 29, 1989
South Building: B1F-10F
Opened: November 6, 1998
Parco midi: 1F-3F
Opened: March 27, 2015
nagoya.parco.jp

1-2-3, Chuo, Aoba-ku, Sendai, Miyagi
Main Building: B1F-9F
Opened: August 23, 2008
Parco 2: 1F-9F
3-7-5, Chuo, Aoba-ku, Sendai, Miyagi
Opened: July 1, 2016sendai.parco.jp

10-1, Hondori, Naka-ku, Hiroshima
Main Building: B1F-10F
Opened: April 9, 1994
New Building: B1F-9F
Opened: September 21, 2001
hiroshima.parco.jp

Ikebukuro Parco

3-24-6, Ueno, Taito-ku, Tokyo
1F-6F
Opened: November 4, 2017
parcoya-ueno.parco.jp

J. Front Retailing Group

Parco urban complexes

1-28-2, Minami-Ikebukuro,
Toshima-ku, Tokyo
Main Building: B2F-8F
Opened: November 23, 1969
P’Parco: B2F-8F
Opened: March 10, 1994
ikebukuro.parco.jp

2-11-1, Tenjin, Chuo-ku, Fukuoka
Main Building: B1F-8F
Opened: March 19, 2010
New Building: B2F-6F
Opened: November 13, 2014
fukuoka.parco.jp

Parco community complexes

Utsunomiya Parco

Kichijoji ParcoUrawa Parco

Chofu Parco

Matsumoto Parco

Tsudanuma Parco

Kumamoto Parco

Hibarigaoka Parco

Sapporo Zero Gate

Shinsaibashi Zero Gate

Shibuya Zero Gate

Dotonbori Zero Gate

Harajuku Zero Gate

3-15-1, Minami 2-jo Nishi, Chuo-ku, Sapporo, Hokkaido
B2F, 1F-4F
Opened: February 26, 2016

1-9-1, Shinsaibashisuji, Chuo-ku, Osaka
B2F-4F
Opened: April 13, 2013

16-9, Udagawa-cho, Shibuya-ku, Tokyo
B1F-4F
Opened: April 16, 2011

1-8-22, Dotonbori, Chuo-ku, Osaka
1F-3F
Opened: April 20, 2013

4-31-12, Jingumae, Shibuya-ku, Tokyo
1F-4F
Opened: March 17, 2018

Hiroshima Zero Gate

Hiroshima Zero Gate 2

Nagoya Zero Gate

Kyoto Zero Gate

2-7, Shintenchi, Naka-ku, Hiroshima
1F-3F
Opened: October 10, 2013

9-4, Hondori, Naka-ku, Hiroshima
1F-3F
Opened: September 10, 2016

3-28-11, Sakae, Nagoya, Aichi
1F-3F
Opened: October 10, 2014

8 3-1, Tachiuri Nakanocho, Shijo-dori
Takakura Higashi-iru, Shimogyo-ku, Kyoto
B2F-7F
Partially opened: November 2017

3-1-1, Baba-dori, Utsunomiya, Tochigi
B1F-10F
Opened: March 20, 1997
utsunomiya.parco.jp

1-10-30, Chuo, Matsumoto, Nagano
B1F-6F
Opened: August 23, 1984
matsumoto.parco.jp

1-5-1, Kichijojihoncho, Musashino, Tokyo
B2F-8F
Opened: September 21, 1980kichijoji.parco.jp

2-18-1, Maebaranishi, Funabashi, Chiba
Building A: B1F-6F
Building B: B1F-6F
Opened: July 1, 1977
tsudanuma.parco.jp

11-1, Higashitakasago-cho, Urawa-ku, Saitama
B1F-7F
Opened: October 10, 2007
urawa.parco.jp

5-1, Tetorihoncho, Chuo-ku, Kumamoto
B1F-9F
Opened: May 2, 1986
kumamoto.parco.jp

1-38-1, Kojima-cho, Chofu, Tokyo
B1F-10F
Opened: May 25, 1989
chofu.parco.jp

Shintokorozawa Parco

1-2-1, Midori-cho, Tokorozawa, Saitama
Parco: B1F-5F
Let’s: B1F-4F
Opened: June 23,1983
shintokorozawa.parco.jp

1-1-1, Hibarigaoka, Nishitokyo, Tokyo
B1F-5F
Opened: October 8, 1993
hibarigaoka.parco.jp

Zero Gate

Other store
Pedi Shiodome
1-9-1, Higashishinbashi, Minato-ku, Tokyo B2F-B1F, 2F
Opened: February 16, 2005 www.pedi-s.com

Integrated Report 201871

J. Front Retailing Group＞

Share Information

Share Information
Status of Shares (As of February 28, 2018)

Number of shares authorized：1,000,000,000 shares

Stock exchange listings：Tokyo and Nagoya

Number of shares issued：270,565,764 shares

Transfer agent：Mitsubishi UFJ Trust and Banking Corporation

Stock code：3086

Number of shareholders：100,931

Major shareholders

Number of shares held
(1,000 shares)

Shareholding ratio
(%)
7.47

1

The Master Trust Bank of Japan, Ltd. (Trust Account)

19,743

2

Japan Trustee Services Bank, Ltd. (Trust Account)

14,727

5.57

3

Nippon Life Insurance Company

7,862

2.97

4

J. Front Retailing Kyoei Supplier Shareholding Association

6,273

2.37

5

The Dai-ichi Mutual Life Insurance Company

5,732

2.17

6

MUFG Bank, Ltd.

5,624

2.13

7

Trust & Custody Services, Ltd. (Investment Trust Collateral Account)

5,286

2.00

8

Japan Trustee Services Bank, Ltd. (Trust Account 9)

4,870

1.84

9

Japan Trustee Services Bank, Ltd. (Trust Account 5)

4,494

1.70

4,228

1.60

10 State Street Bank West Client - Treaty 505234

Note: Shareholding ratio is calculated by deducting treasury stock (6,581,000 shares).
The said treasury stock does not include the Company's shares held by the BIP Trust.

Number of shareholders(People)Number of shares(1,000 shares)

ー

ー

ー

■ Financial institutions

78

108,895

40.24

■

41

10,961

4.05

838

18,9707.01

Distribution by shareholder type
Government and local public entities
Financial instruments firms■ Other companies■

Foreign companies■ Individuals and others■

Treasury stock

Ratio
(%)

560

56,522

20.89

99,413

68,633

25.37

1

6,581

2.43

Treasury stock
6,581,000 shares
2.43%

Individuals and others
68,633,000 shares
25.37%

Foreign companies
56,522,000 shares
20.89%

72

Financial
institutions
108,895,000 shares
40.24%

Financial instruments firms
10,961,000 shares
4.05%
Other companies
18,970,000 shares
7.01%