1Q of FY2025
Presentation Materials

Aug. 6, 2024

H2O RETAILING CORPORATION

Digest of Financial Results (Apr.-Jun.)◼ Department Store Business drove consolidated results.
Consolidated gross sales and operating profit exceeded forecasts.
Gross sales, operating profit and other phase profit reached record highs in 1Q.
◼ Department Store Business exceeded both the previous year’s results and forecast in
gross sales and operating profit due to stable domestic sales and rapid growth ininbound sales.
◼ Supermarket Business increased gross sales but decreased operating profit.
Supermarket decreased operating profit due to higher labor costs, although average spend
per customer was on a par with the previous year and existing store sales exceeded theprevious year's level due to steady number of customers.
◼ Upward revision of 1H and full-year forecasts
Operating profit was revised upward by ¥3.0 bn, reflecting 1Q results in Department
Store Business.

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2

Topics

I .

1Q Results of FY2025

II .

Forecast of FY2025 (Upward Revision)

III .

Progress of Mid-term Management Plan

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I. 1Q Results of FY2025

1 . Consolidated Results
2 . Results by segment
3 . Department Store Business4 . Supermarket Business5 . Shopping Center Business6 . Extraordinary Income and Losses
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I-1. Consolidated Results
Gross sales, operating profit and other phaseprofit reached record highs in 1Q thanks to increased gross sales inDepartment Store Business.

Profit attributable to owners of parent increased significantly due to extraordinary income from the sale of policy
stock holdings, gain on step acquisitions of subsidiaries, and others.

1Q (Apr.-Jun.)(Unit: 100 million yen)

ResultsYoY

YoY AmountGross sales

2,764+13.0%+317

Net sales

1,619+4.6%+71

Operating profit

93+94.7%+45

Ordinary profit

102+96.4%+50

Extraordinary income

248

Extraordinary losses

2+685.0%+231

Profit attributable to owners of parent

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2655

I-2. Results by segment
Department Store Business reached record highs in 1Q in gross sales and operating profit.
Department Store Business significantly exceeded the forecast, while Supermarket Business, Shopping Center
Business, and Other Business were generally in line with forecasts.
Gross sales

Results

Operating profit

YoYResults

YoY

YoY Amount(Unit: 100 million yen)

Department Stores

1,554+25.8%

80+170.3%+50

Supermarket

1,034

+0.3%

15▲5.8%▲1Shopping Center

82

+1.8%

13+46.8%

+4

Other

94

▲6.3%

66+204.1%+44
H2O +46

Consolidation
adjustment
Total

2,764

▲82―

▲5393

+94.7%+45+13.0%* Due to the review of head office expense starting in FY2025, head office expense rearranged from non-operating expenses to SG&A,

reflected in operating profit in each segment. No change in consolidated operating profit.
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6I-3. Department Store Business-Performance Overview
Steady domestic sales and rapid growth in inbound sales led to strong sales at Hankyu Main Store and other urbanstores.

1Q(Apr.-Jun.)(Unit: 100 million yen)

ResultsYoY

YoY Amount
Sales by store

Gross sales

Net sales

1,554
457

+25.8%+19.6%

YoY+319+75

Gross profit338+23.5%+64

SG & A259+5.8%+14

Operating profit

80+170.3%+50

Urban store+31%

Hankyu Main Store
Hakata Hankyu+38%+31%Suburban stores+1%(Unit: 100 million yen)

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Breakdown of changes
in SG&A expenses

YoYAmount

Sales-linked variable
expenses+13Bonuses, etc.

+5Utilities expenses▲27

I-3. Department Store Business-Sales Trends (YoY Change)
Domestic sales remained steady and largely in line with expectations, although sales differed from month to month.
Rapid growth in inbound sales is pushing-up sales at all stores, and while a similar trend is expected to continue
after Jul, the previous year's results are expanding month by month, and the increase from the previous year is
expected to gradually shrink.

All stores sales by month+30%+27%+29%

All store sales

All store sales

Domestic sales+20%

Inboundpush-up+20%+10%

Domestic sales+8%+4%+0%+0%Apr.
(2023)May

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Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.
(2024)MayJun.
8I-3. Department Store Business-Inbound Sales
Due in part to "Labor day (China)" in May, sales of Chinese tourists increased by more than 4.5 times from the previous
year, and inbound sales as a whole also expanded significantly(YoY)
Billions of yen¥40.3 bn.

40.0
OtherSales

331%

Average spend
per customer

140%

Number ofCustomers

237%South Korea, Taiwan, and Hong Kong
¥11.8 bn.

30.0

20.0

(YoY)

¥12.2 bn.

China¥24.5 bn.

10.0

Sales

465%

Average spend
per customer

113%

Number ofCustomers

411%0.0

23.1Q
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24.1Q
9I-4. Supermarket Business
Sales at supermarkets were flat, and operating profit decreased by ¥100 million due to higher personnel expenses
resulting from changes in the wage system.
Existing store sales in supermarkets increased YoY due to recovery in the number of customers, while averagespend per customer was on par with the previous year. Izumiya・Hankyu Oasis increased operating profits, butsales fell short of plan. Kansai Super Market decreased operating profit, partly in reaction to the strong performancein the previous year, but progress was almost in line with forecasts.
Gross sales decreased but operating profit increased in food manufacturing and home delivery, and segment grosssales increased but operating profit decreased.
Segment

1Q(Apr.-Jun.)
Results(Unit: 100 million yen)

YoY

Gross sales

1,034+0.3%+315▲5.8%▲1

Operating profit
By company

YoY AmountGross sales(Unit: 100 million yen)Izumiya・Hankyu Oasis

Results645

YoY＋0.3%

Operating profit
YoY AmountResultsYoY

YoY Amount+211+1.5%+0▲16▲19.3%▲1▲5▲2―+0

Existing stores +1.1%

Kansai Super Market

325

▲0.4%
Existing stores +0.4%

Food Manufacturing /Home Delivery
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93

▲4.7%

10I-5. Shopping Center BusinessOi Development operated business hotel maintained high occupancy rates (over 95%) and increased gross sales andoperating profit.
Tenant sales at shopping Center stores were strong.

1Q(Apr.-Jun.)

Segment
Results(Unit: 100 million yen)YoY

YoY AmountGross sales

82+1.8%+1Operating profit

13+46.8%+4By company(Unit: 100 million yen)

Gross sales
Results

YoY

Operating profit
YoY AmountResultsYoY

YoY AmountOi Development

17+19.5%+38+35.1%+2H2OSC Development

61

▲4.5%

▲33+17.5%+0Hankyu SC Development

13+11.5%+12+63.4%+1Copyright © H2O Retailing Corp. All Rights Reserved.

11I-6. Extraordinary Income and Losses

Major items

Results

Major contents(Unit: 100 million yen)

Extraordinary
incomeExtraordinary
losses248

Gain on sale of policy stockholdings

142

Sales of stocks of Toho Co., Ltd.

Gain on step acquisitions ofsubsidiaries

80

Ningbo Development

Gain on sale of non-current assets

26Kansai Super Market: Fukushima store (closed)
H2OSC Development: Merchandise center

Loss on retirement of non-currentassets

2Hankyu Hanshin Department StoreCopyright © H2O Retailing Corp. All Rights Reserved.

12II. Forecast of FY2025 (Upward Revision)
Upward revision of 1H and full-year forecasts based on strong 1Q results
No change from the forecast in May from 2Q onwardPlan to increase dividend to ¥40 per share from ¥28 per share in the previous fiscal year (no change from the forecast inMay)
1H

Forecast

YoY(Unit: 100 million yen)

2H
Vs.
forecast(May)

Forecast

YoY

FY2025
Vs.
forecast(May)

Forecast

YoY

Vs.
forecast(May)

Gross sales

5,680+12.4%

+125

6,070

+6.7%

―

11,750+9.4%+125

Net sales

3,410

+7.0%

+20

3,610

+6.5%

―

7,020

+6.8%+20

Operating profit

136+37+30

159

▲4―

295

+33+30Ordinary profit

138+31+35162

▲10―

300

+21+35Extraordinary
income248

0248

Extraordinary
losses

175875

Profit attributable toowners of parent254+81+40Copyright © H2O Retailing Corp. All Rights Reserved.

+191+4046▲110―300

13II. Forecast of FY2025(Upward Revision)
Upward revision of gross sales and operating profit in Department Store Business based on strong 1Q results
Business results were generally in line with forecasts in May, except for Department Store Business, which remained
unchanged from May.
Gross sales

Forecast

Operating profit

YoY

YoY amount

Forecast

Vs. forecast(May)(Unit: 100 million yen)

Department Stores

6,267+8.6%

255+59+32

Supermarket

4,449+4.5%

98+27―Shopping Center380+18.4%33+1―Other655+67.6%▲3▲3―▲88▲51▲2295+33＋30

Consolidation
adjustment
Total

11,750+9.4%* Due to the review of head office expense starting in FY2025, head office expense rearranged from non-operating expenses to SG&A,

reflected in operating profit in each segment. No change in consolidated operating profit.
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14III. Progress of Mid-term Management PlanStarted HR strategy based on three policies to support personnel and organizational aspects to realise the Long-TermBusiness Plan 2030.
① Optimizing Organizational Performance ② Activating Employee Engagement ③ Strengthen HR infrastructure◼ Organizational and Personnel System• Revision of the Personnel System in FY2026 to realise the Vision
Presenting career courses according to the skills and values required by the Company, arranging employees around their willingness,building professional skills and clarifying the roles and skills of individuals
Introducing a performance-based evaluation system and establishing a new HR course for new graduates and employees with ashort working career in order to improve employees' autonomous working style and motivation••

Establish new organizations to expand overseas and domestic wealthy customer by dividing them intooverseas and domestic customers
Consolidation of offices to pursue synergies among supermarkets
Consolidation of Izumiya・Hankyu Oasis and Kansai Super Market's headquarters department offices to Itami City,
where Kansai Super Market's head office is located◼ Specific efforts to acquire high-net-worth overseas customers• Signed a partnership agreement with the State of Hawaii of Department of Business, Economic Development andTourismStrengthening popular events for both domestic and inbound customers, consumer research on local products, etc.

•Signed a partnership agreement with La Ditta Singapore
Jointly develop high-value-added Japanese foods and beverages, and secure sales channels••

Increased overseas VIP attendance staff to expand overseas affluent customer
Collaborated with Hyundai Card, South Korea‘s leading payment amount, to capture overseas customer

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15III. Progress of Mid-term Management Plan (To Achieve Management Conscious of Cost of Capital and Stock Price)
Sell low-profit assets and invest in businesses to achieve ROE targets set forth in the financial and capital strategies ofthe Mid-term Management Plan (announced in May 2024).

◼ Cash-in from sales of non-business assets• Sales of stocks of Toho Co., Ltd. ¥17.4 bn.
• Sales of real estate ¥5.6 bn.

◼ Acquisition of treasury stock (May 2024)• Acquired treasury stock of ¥24.2 bn.
Treasury stock is used for share exchange to make Kansai Food Market Ltd. wholly owned subsidiary.

◼ Made Kansai Food Market Ltd. a wholly owned subsidiary• Completed conversion to a wholly owned subsidiary at the end of Jul. 2024, and began accelerating integrated
management and maximizing synergies in the future

Continue to enhance corporate value and equity value by implementing business strategies and actively
pursuing capital and financial strategies to achieve a stable PBR over 1.2x.

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