FY2/2016
Earnings Announcement&New 3-Year Plan
Adastria Co., Ltd.
http://www.adastria.co.jp/

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

Consolidated Income Statement
FY2/2015

FY2/2016

Results
Consolidated（Millions of Yen)

9/30 Announced

Ratio

Result Forecast

Results

Ratio

Y/Y

Net Sales

184,588

100.0%

198,000

200,038

100.0%

108.4%

Gross Profit

102,524

55.5%-113,266

56.6%

110.5%

SG&A Expenses

96,542

52.3%-97,26148.6%

100.7%

Advertising & Promotion

6,424

3.5%

-5,805

2.9%

90.4%

Personnel

32,17617.4%-33,18616.6%

103.1%

Rent & depreciation

39,552

21.4%-

40,03020.0%

101.2%

Amortization of Goodwill

2,394

1.3%

-

2,213

1.1%

92.4%

Others15,995

8.7%-

16,0268.0%

100.2%

5,981

3.2%

16,0048.0%

267.6%

Operating Income

14,000Adastria(Non-consolidated,Amortization of Goodwill
Excluded）

10,036--

17,551--

Overseas business▲ 1,351

-

-

▲ 238

--

103

-

-

▲ 190

---

-

203

-

-

N9&PG
Adastria Logistics
Ordinary Income

6,452

3.5%

14,30016,1858.1%

250.8%

503

0.3%

6,8009,122

4.6%-15,732

8.5%

22,70024,61212.3%

156.4%

Depreciation & Amortization

7,356

4.0%

6,500

6,394

3.2%

86.9%

Amortization of Goodwill

2,394

1.3%

2,200

2,213

1.1%

92.4%

7,000

6,364

Net Income
EBITDA

Capital Expenditure
Copyright © 2016 Adastria Co., Ltd. All rights reserved.

10,9362

Consolidated Balance Sheet（Millions of Yen)
End of 2/2015

End of 2/2016

34,48841.2%

45,465

50.3%

Increase or
Decrease of+10,976

Cash and Deposits

7,677

9.2%

19,46021.5%+11,783

Inventories

14,48817.3%

15,07616.7%+587

Fixed Assets

49,25358.8%

44,98849.7%▲4,264

Plant and Equipment

12,90815.4%

11,215

12.4%▲1,692

Goodwill

7,921

9.5%

5,493

6.1%

▲2,427

Total Assets

83,742100.0%

90,454100.0%+6,712

Liabilities

37,50844.8%

37,171

41.1%

▲336

Debt

3,753

4.5%

1,867

2.1%

▲1,886

Net Asset

46,23355.2%

53,282

58.9%+7,049

▲ 406

-0.5%

▲ 1,824-2.0%▲1,417

Consolidated
Current Assets

Treasury Shares

Ratio

Ratio

3Copyright © 2016 Adastria Co., Ltd. All rights reserved.FY2/2017 Forecast（Consolidated）（Millions of Yen)
FY2/2016

FY2/2017

Results
Consolidated

1H

1H

2H

Forecast

2H

Full-year

Y/Y

Y/Y

Ratio

Y/Y

100.0%

104.4%Net Sales

97,032 103,006 200,038

99,700102.7% 109,200

106.0% 208,900

Operating Income

8,132

7,872

16,004

8,100

99.6%

8,900

113.1%

17,0008.1%

106.2%

Ordinary Income

8,324

7,861

16,185

8,200

98.5%

9,100

115.8%

17,3008.3%

106.9%Net Income

4,156

4,966

9,122

4,500

108.3%

5,500

110.8%

10,0004.8%

109.6%

ROE

--

18.3%

----

17.7%-▲ 0.6p

EBITDA

12,272

12,33924,612

11,90097.0%

13,000105.4%

24,90011.9%

101.2%

3,019

3,375

6,394

2,700

89.4%

3,000

88.9%

5,700

2.7%

89.1%

1,121

1,092

2,213

1,100

98.1%

1,100

100.7%

2,200

1.1%

99.4%

Depreciation &Amortization
Amortization ofGoodwill
Capital Expenditure

6,364

8,600

4Copyright © 2016 Adastria Co., Ltd. All rights reserved.

Store Opening Plan(Full-year)
FY2/2016

Results

FY2/2017 Full-Year Plan

The beginningof the periodOpen

ChangeClose

Term EndTotal

178
168116162
1258971752631,247(45)8681181321764(1)0000000000(0)▲2▲ 17▲1▲2▲3▲7▲ 15▲ 10▲ 34▲ 91(▲5)

184
157
123
171
130835967
246
1,220(41)Subsidiaries(Web Store)

3(1)

0(0)

▲3(▲1)0(0)0(0)

Hong Kong
China
TaiwanSingapore
Korea
Overseas(Web Stores)

2434
26
1012106(7)51720
529(5)

100▲100(0)▲3▲ 11▲1▲9▲7▲ 31(▲5)

2740
270
10104(7)Total (Consolidated)

1,356

93

▲3▲ 122

1,324GLOBAL WORKLOWRYS FARM
niko and ...
studio CLIP
LEPSIMJEANASISRAGEBLUE
HeatherOthers
Adastria Total(Web Stores)

The
beginningof theperiod184154123
171
130835976
240
1,220(41)-2740
2710104(7)1,324Open

Close

Term EndTotal

1236650131248(0)▲2▲3▲10▲2▲4▲2▲3▲ 12▲ 29(0)

194
154
128
177
133
79
5876
240
1,239(41)

3123-

2849
30

018(0)▲2▲30▲1▲6(0)66▲ 35

1,355-

5Copyright © 2016 Adastria Co., Ltd. All rights reserved.

9116(7)

Returns to stockholders(Millions of Yen)
FY2/2017
FY2/2012 FY2/2013 FY2/2014 FY2/2015 FY2/2016(Forecast)

Dividend per share (Yen)

60

60

37.5

37.5

65

75

（Interim Dividend）

(25)

(25)

(25)

(15)

(20)

(35)

Total amount of dividends

2,851

2,679

1,697

1,821

3,138

3,611

Consolidated Net profit

6,789

5,508

▲4,731503

9,122

10,000

Amortization of Goodwill

064

8,326

2,937

2,213

2,200-

361.5%

34.5%

36.1%

(47.8%)(52.9%)(27.8%)(29.6%)

4,000

01,395-

Dividend payout ratio(Amortization of Goodwill
Excluded)
Stock Buyback

42.0%

49.7%

05,9476Copyright © 2016 Adastria Co., Ltd. All rights reserved.

Progress Review of ACE18*
FY2/18 Targets

FY2/16 Results

Net sales¥210.0 billion¥200.0 billion

Operating income¥14.8 billion¥16.0 billion

Operating income margin (%)

7.0%

EBITDA¥24.0 billion

ROE

13.8%

8.0%
¥24.6 billion
18.3%

Target profit achieved in the 1st year
– Enhanced power of core brands– Improved products’ competitiveness & customer service capabilities– Strong performance of online business– Lowered cost of SG&A
*ACE18 (Adastria Change/Challenge/Collaboration for Evolution 2018) is the medium-term management
plan announced in April 2015.
Copyright © 2016 Adastria Co., Ltd. All rights reserved.

7

Advancing to the Next Stage after ACE18
Basic Strategies of ACE18

FY2/17-FY2/19

Basic Strategies of 3-year Plan
1
2
3

Enhance core brands

1

Reinforce and evolve the multi-brand strategy

2

Strengthen our core brands

3

Create categories, brands and businesssectors linked to ideas for new lifestyles

4

Expand the Internet business

5Use advanced technologies to build a stronger
and more efficient business infrastructure

Aggressively target the
middle-age and senior markets
Reinforce the multi-brand strategy

4Customer base expansion
utilizing the internet

5

Add more lifestyle categories

Build retail SPA framework
Promote OEM/ODM framework
Trendy products with good quality and reasonable prices

Corporate Culture

Corporate Culture

Sharing, working together and empathy

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

8

Strategy 1: Multi-brand Strategy
Strengths and weaknesses
Strengths

Weaknesses

Actions

Higher volume of sales
makes production, storedevelopment and backoffice operations more
efficient

Unable to capture
benefits of larger scale ofoperations due to thewide variety of products
and services

・Consolidate factories
・Develop and consolidate
materials
・Create a framework forsupporting sales activities forall brands

Able to meet needs ofcustomers in both massand core markets by
responding quickly tochanges in markets

Complicated value chain
creates differences inmarketing accuracy
among brands andmarketing personnel

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

⇒Started in 2015

・Analyze, standardize andsystemize value chainprocesses⇒Strategy 59Strategy 1: Multi-brand Strategy
Brand portfolio management
Analyze the brand portfolio by using conventional brand characteristics aswell as creative approaches from the standpoint of new markets⇒Invest in growing categories and blank markets⇒Continue implementing product, sales promotion and investment strategies thatmatch each brandMarketingchannel?
Profitable?
Chances to enternew industries

Domestic oroverseas?

Growth potential?

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

10Strategies 2: Strengthen Core Brands
FY2/16 Sales: ¥36.1 billion (+19.7% YoY)

Establish position as a global brandContinue in-house manufacturingof core products and improve
marketing accuracy- Enhance “MD development that createsvalue”
Consistency:
Material ⇔ Shop VI ⇔ Practical Use- Core concept:
FASHION + FUNCTION = FEELING

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

11

Strategies 2: Strengthen Core Brands

New Shops and Larger Shops•

Flagship Shop and Large-scale Shop Model- Expression of brand concept- Open shops of over 800m2•

Urban Shop Model- Increase brand recognition and convenience

UEHOMMACHI YUFURA STORE- Open shops of about 330m2 around main stations

Increase Brand Recognition- Carry out promotions that share core values
and increase the desire to make a purchase
Event in AEON LAKETOWN STORE
Copyright © 2016 Adastria Co., Ltd. All rights reserved.

12Strategies 2: Strengthen core brands
FY2/16 Sales: ¥22.8 billion (+11.3% YoY)

Become a global lifestyle brand originating in Japan
Establish a Business Model for Large
Shops
Upgrade content to the level needed for a global
network of large stores- More trendy merchandise and a more refinedsales area for women- Larger and better selection of men’s products andaccessories- Full-scale development of the furniture category

Flagship Shop Promotional Activities- Disseminate information from niko and… TOKYOCopyright © 2016 Adastria Co., Ltd. All rights reserved.

niko and ... FURNITURE & SUPPLY

13

Strategies 3:
New Categories, Brands and Industries

Invest to increase sales and profits⇒ 1. Become profitable within 3 years
2. Eliminate accumulated loss within 5 years
3. Consider terminating businesses unable to achieve these goals

Invest in new functional departments, areas, andindustries⇒Consider both profits and synergies

Invest in infrastructure (IT systems and logistics)⇒Confirm that investments will improve overall profitability and cash flows

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

14

Strategies 4: Expand Online Business• Online Business

FY2/16 Sales +38.6% YoY 11.5% of total sales- Number of users: More than 4.4 million- Strong performances of Adastria & partner websites (ZOZOTOWN and others)
Online Sales

Actions during the past 3 years(Billions of Yen)
25

14.0%
Sales

Sales Composition Ratio

11.5%

20
9.1%
15

12.0%
10.0%8.0%
6.8%

8.0%
6.0%

104.0%
52.0%
0.0%

0
FY2013*
FY2/13*

FY2014*
FY2/14*FY2015
FY2/15FY2016
FY2/16- Reinforced shopping functions- Relation-building with outside websites- Accumulated know-how and increased
efficiency by moving filming, logistics
and data analysis operations in-house- Cooperation with brick-and-mortar
shops to attract more users* Includes sales of TRINITY ARTES before merger
Copyright © 2016 Adastria Co., Ltd. All rights reserved.

15

Strategies 4: Expand Online Business
Vision for online business expansion- Transitioning to a user platform■Domestic EC ■Oversea EC■Membership Business, BtoB Business etc.

Stage3Stage2

Stage1・Renewed EC
website twice
・Selected andconsolidated
outside EC websites

・Marketing channels
to the world・Connect stores andlogistics seamlessly

・Transition to auser platform
・B-to-B business,etc.

¥30 billion(More than 6 million users)¥21 billion(4.4 million users)¥9 billion(1 million users)

FY2/13

FY2/14-FY2/16

FY2/17-FY2/19

FY2/20EC Website

Omni-channel

IT Platform(Focus on Shopping Function)
Copyright © 2016 Adastria Co., Ltd. All rights reserved.

(Focus on Customer Experience) (Enter New Business Fields)

16

Strategy 5: Introduce Technology
Consolidate business infrastructure
Planning

Production

Logistics

Sales

Brand Direction

Securing Capacity

Inspection

Pricing

Merchandising

Order Receiving

Transportation

Inventory Adjustments

Product Planning

Manufacturing

Storage & Disposal

Merchandise Movements
among Shops

Shipping

Picking

Shop Layout
Tag Attaching

Supports for Decision-Making
Higher accuracy for decision-making

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

Visualization
Prepare information for decision-making

Enhance Execution CapabilityImprove efficiency of shop operations

17

Strategy 5: Introduce Technology
Next Generation of Technology Innovation

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

18

Targets of the 3-year Plan
FY2/16

FY2/17-FY2/19 3-Year Plan

Targets

Net sales¥200.0 billion

Average annual growth > 5%
(existing businesses)

Operating income¥16.0 billion-Operating income margin (%)

8.0%>10% (existing businesses)

ROE

18.3%

Around 15%

Cash flows¥13.8 billion¥48.0 billion

Capital expenditures¥6.4 billion¥28.0 billion

Free cash flows¥7.4 billion¥20.0 billion＋ α
New business andother investments

Copyright © 2016 Adastria Co., Ltd. All rights reserved.

19

Cautionary statement with respect to forward-lookingstatements
Forward-looking statements in this report are based on currently
available information and certain assumption judged to be reasonable.
Actual results may differ significantly from forecasts for a number offactors.

Other points to consider
The amounts in this report are rounded down less than million yen.
The percentage calculates from the original data.

20
Copyright © 2016 Adastria Co., Ltd. All rights reserved.

21
Copyright © 2016 Adastria Co., Ltd. All rights reserved.