Results Presentation
for First Six Months of Fiscal Year Ending February 28, 2021

©TAKENAKA CORPORATION

October 13, 2020

J. Front Retailing Co., Ltd.
YOSHIMOTO Tatsuya
President and Representative Executive Officer
Create and Bring to Life “New Happiness.”We would like to express our heartfelt sympathy foreveryone affected by COVID-19 and everyone concernedand express our deepest appreciation to everyone, including healthcare
workers, who are committed to preventing the spread of infection.

1

Today’s Agenda

I. Overview of H1 FY2020 Results
II. H2/Full FY2020 Forecast

III. Toward “Full Recovery” and “Regrowth”

2H1 FY2020 Results (IFRS)

3

Consolidated P/L (IFRS)
Mainly Department Store and Parco significantly decreased revenue, greatly affectedby COVID-19
Posted slight business profit of ¥0.2 bn but significant operating loss of more than ¥20 bn
Decreased interim dividend ¥9 YoY to ¥9 per share to ensure management stability(Millions of yen, %)First six months offiscal year ending
February 28, 2021

YoY
Results

ChangeVs Jun forecast% change

Change% change

Gross sales

319,589(226,252)(41.5)

7,589

2.4

Revenue

147,471(78,193)(34.7)

7,471

5.3

Gross profit

59,450(45,209)(43.2)

4,150

7.5

SGA

59,200(21,715)(26.8)(4,100)(6.5)

Business profit

250(23,493)(98.9)

8,250－

Other operating income

3,692

(405)

(9.9)

392

11.9

Other operating
expenses

24,57921,913

821.9

(721)

(2.8)

Operating profit(20,637)(45,812)

－

9,363

－

Profit attributable toowners of parent(16,311)(30,678)

－

7,389

－

(Interim) 9

(9)

－

－

－

Dividend per share (Yen)4

Segment Information (IFRS)
Department Store: Closed for 1.5 months due to COVID-19, and after that, gradually
recovered but remained sluggish
Parco:
Affected by closure, some of rent concessions continued after reopening,
entertainment was also sluggish
Real Estate:
Ginza Six and others were affected by rent concessions according to
the length of closure
Credit and Finance: Increased ad expenses, etc. for card renewal in January next year
(Millions of yen, %)Business profit

First six months offiscal year ending
February 28, 2021 Results

Operating profit
Vs Junforecast

YoY

Results

Change % change Change

Department Store(4,416) (16,382)

Parco

1,517

(3,864)

Real Estate

1,924

Vs Junforecast

YoY

Change % change Change

4,284 (21,357) (31,937)

－

4,443

(71.8)

2,117(2,604)(8,469)－2,696(1,447)(42.9)

524

1,634(4,095)(71.5)

634

446

(614)

(58.0)

354

453

(636)

(58.3)

373

Other

1,701

(392)

(18.7)

801

1,150

(858)

(42.7)

730

Total

250

(23,493)(98.9)

8,250 (20,637) (45,812)－

Credit and Finance－

9,363 5

Segment Information <Business Profit> (IFRS)Business profit analysis(Millions of yen)

(16,382)

23,743Parco(3,864)
Department
Store

Real
Estate(1,447)

CreditandFinance
Other Adjustments
(614)
(392)
(792)

Adjustments
250

169

Other

801

CreditandReal
Finance Estate

354

524

Department
2,117 Store(8,000)
Parco

4,284
LY
Results

Down ¥23,493 mn (98.9%) YoY

H1 FY2020
Results¥8,250 mn (-%) above Jun forecastJunforecast

6

Segment Information <Operating Profit> (IFRS)
Operating profit analysis(Millions of yen)

25,175(31,937)

Parco
Department
Store(8,469)Real
Estate(4,095)CreditandFinance(636)(20,637)

Other
(858)

Other
183

485

Adjustments

Adjustments

730

CreditandFinance Real
Estate373
634(30,000)
Parco

2,696

Department
Store
4,443

LY
Results

Down ¥45,812 mn (-%) YoY

H1 FY2020
Results¥9,363 mn (31.2%) above Jun forecastJunforecast

7Segment Performance (1) Department Store Business (IFRS)
Significantly decreased partly due to 1.5 month closure from April to May
After reopening, recovered to around 70% in June and July but came to a standstill
temporarily in August due to the spread of infection
Inbound sales continued to decrease more than 90%, sales to affluent people in Japan showeda sign of steady recovery
Sales increase and additional reduction of SGA such as ad expenses favorably affectedcomparison with June forecast
Subsidies for employment adjustment were recorded at ¥1.1 bn under other operating income,reclassified fixed costs and impairment losses of stores arising during closure were recorded
at ¥8 bn and ¥9.7 bn, respectively, under other operating expenses(Millions of yen, %)First six months offiscal year ending
February 28, 2021

Q1
Results

Q2

H1

YoY
% change

Results

YoY% change

Results

YoY% change

Vs Junforecast
ChangeGross sales

62,180(64.9)

127,609(28.0)

189,790(46.5)

3,790

Revenue

24,308(63.2)

45,749(30.6)

70,102(46.9)

102

SGA

17,733(45.2)

26,930(19.1)

44,663(32.0)(3,237)

Business profit(4,870)－454(91.8)(4,416)－

4,284

Operating profit(23,156)－

1,796(59.6)(21,357)

－

4,443

8

Daimaru Matsuzakaya Department Stores P/L (IFRS)
Department Store: Urban stores such as Tokyo store struggled but Kobe store recovered fast
Business loss and operating loss decreased below forecast were attributable to SGA
reduction such as review of investments
Subsidies for employment adjustment were recorded at ¥1.1 bn under other operating
income, reclassified fixed costs and impairment losses of stores arising during closure wererecorded at ¥7.5 bn and ¥9.7 bn, respectively, under other operating expenses(Millions of yen, %)First six months offiscal year ending
February 28, 2021

Department Store

Total
Daimaru Matsuzakaya
Department Stores

Real Estate
YoY% change

Vs Junforecast
ChangeResults

YoY% change

Vs Junforecast
Change6,815(23.2)

315

179,276(44.9)

3,376

－

6,763

(22.8)－

10,049(7.8)－(45.7)

210

6,815(22.7)

315

70,833(44.1)

533

36,559(47.2)

959

3,431(26.6)

331

39,898(46.0)

1,298

SGA

40,232(30.8)(3,068)

1,506

15.5

(194)

41,629(29.8)(3,271)Business profit(3,673)

－

4,027

1,924

(42.9)

524(1,731)－

4,569

Operating profit(19,477)

－

4,423

1,634

(71.5)

634(17,843)

－

5,057

-

-

-

-

-

(13,092)

－

3,608
9

Results

YoY% change

Vs Junforecast
ChangeGross sales

172,573(45.5)

3,073[Of which: real estate
rental income]

3,378

49.5

Revenue

64,110Gross profit

ProfitResults-

Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)
Decrease inpersonnel
expenses(2,088)Decrease inpacking andtransportation
costs

H1 FY2020
SGA analysis
Decrease indepreciation(1,957)(284)(206)
Decrease in
Decrease
Decrease inother SGA
in ad
(3,625)
rental
(1,448)expenses
expenses
Decrease inoperational
costs

Decrease inother SGA

(8,056)59,292(Millions of yen)

*Of the above, ¥6,69 bn of fixed costs associated withclosure period were reclassified to “other operating
expenses.”
・Personnel expenses (¥1.21 bn)
・Depreciation(¥2.52 bn)
・Rental expenses(¥0.03 bn)
・Other(¥2.92 bn)(outsourcing expenses, computing expenses, etc.)

Decrease inpacking andtransportation
costs

Decrease indepreciation
76
(77)

(249)
(2,153) Decrease inoperational
costs

Decrease inrentalexpenses(37)

Decrease inpersonnel
expenses
(355)

(474)

Decreasein adexpenses

44,90041,629*¥0.9 bn of cost of sales was also reclassified to“other operating expenses” (Department Store ¥0.47
bn, Real Estate ¥0.42 bn).

¥3,271 mn (7.3%) below Jun forecast

Down ¥17,663 mn (29.8%) YoY
LY
Results

H1 FY2020
Results

Jun
forecast

10Segment Performance (2) PARCO Business (IFRS)Greatly affected by about 2-month store closure and reduced business hours due to COVID-19

Some of tenant rent concessions continued not only during closure but also after reopening
In the entertainment business, many of planned performances were cancelled to avoid “3 Cs”
Compared to June forecast, rent concessions reduced and SGA also reduced
Subsidies for employment adjustment were recorded at ¥0.3 bn under other operating income,reclassified fixed costs and impairment losses of stores arising during closure were recorded at¥3.1 bn and ¥1.6 bn, respectively, under other operating expenses(Millions of yen, %)First six months offiscal year ending
February 28, 2021

Q1
Results

Q2
YoY% change

Results

H1
YoY% change

Results

YoY% change

Vs Junforecast
ChangeGross sales

29,229(59.9)

54,243(20.7)

83,472(40.9)

272

Revenue

12,132(45.1)

17,982(16.7)

30,115(31.1)

1,465

SGA

3,436

(29.0)

4,247(10.5)

7,683(19.8)(717)

Business profit443(84.3)

1,074(58.1)

1,517(71.8)

2,117

Operating profit(4,127)－1,523(38.0)(2,604)

－

2,696
11

Segment Performance(3) Real Estate (4) Credit and Finance (5) Other (IFRS)Real Estate:

Posted profit in spite of rent concessions according to the length of closureand decrease in percentage rent
Credit and Finance: Decrease in transaction volume of Daimaru Matsuzakaya Department
Stores and upfront cost for card renewal
Other:

Dimples’ and J. Front Foods were damaged by the closure of commercial
facilities, etc.
(Millions of yen, %)Real Estate
First six months offiscal year ending
February 28, 2021

YoY
Results

Credit and Finance

Vs Junforecast

YoY
Results% change Change

Vs Junforecast

Other
YoY

Vs Junforecast% change

ChangeResults% change Change

Gross sales

6,815(23.2)

315

5,212(11.6)

312

53,236

△10.9

1,236

Revenue

6,815(22.7)

315

4,593(11.7)

233

52,305

△6.9

7,105

SGA

1,506

15.5

(194)

4,147

0.2

(121)

11,231

△14.9

(169)

Business profit

1,924(42.9)

524

446(58.0)

354

1,701

△18.7

801

Operating profit

1,634(71.5)

634

453(58.3)

373

1,150

△42.7

730

12

Consolidated B/S (IFRS)
Total assets increased ¥43.9 bn YoY partly because cash and deposits were secured tocope with COVID-19
Interest-bearing liabilities increased ¥99.6 bn YoY due to procurement of new funds to copewith COVID-19
Ratio of equity attributable to owners of parent was 28.5%, down 2.7 points from the previous
periodTotal assets

Interest-bearing liabilities

Equity attributable toowners of parent
Ratio of equity
attributable toowners of parent

1,284,217
31.2%
1,240,308

28.5%＋43,909△2.7pt578,421478,773＋99,648～ ～Feb 29, 2020

Aug 31, 2020

Leaseliabilities
220,497

Bonds/
borrowings
258,276

Feb 29, 2020

Leaseliabilities
212,867

387,188

365,859△21,329

Bonds/
borrowings
365,554

Aug 31, 2020

Feb 29, 2020

Aug 31, 2020

13
(Millions of yen)Consolidated CF (IFRS)
Operating CF significantly decreased. In investing CF, investments except the north wing of
Shinsaibashi store were considerably reduced from the original plan
Free cash flow was positive at ¥8.4 bn though it significantly decreased ¥2.9 bn YoY
Secured cash reserves enough to cope with COVID-19 by issuing CP and borrowing
money from banks
Secured enough funding facilities such as commitment lines, so there is no concern about
funding
Operating CF

Investing CF

Free CF

Financing CF

Balance of cash
and deposits
124,377

81,35561,01842,77037,481
19,7588,400＜△6,069＞＜△23,012＞＜△29,081＞(5,289)(11,358)＜ ＞Change YoY(Millions of yen)

Q2 FY ended Feb 29, 2020
Results(2,122)＜＋63,359＞＜＋83,477＞

Q2 FY ending Feb 28, 2021
Results

14

H2/Full FY2020 Forecast

15

Consolidated Forecast P/L (IFRS)
Reflected positive difference between H1 results and June forecast in full year forecast for business profit,
operating profit and profit
For H2, carefully reviewed sales but June forecast for each profit category remains unchanged due to SGA
reduction
Year-end dividend will be ¥18 per share. Combined with interim dividend, annual dividend will be ¥27, down
¥9 YoY(Millions of yen, %)H2Fiscal year ending
February 28, 2021

Full year
Vs Junforecast

YoY
Forecast% change

YoY

Vs Junforecast% change

ChangeForecast

ChangeGross sales

490,810(16.5)(2,190)810,400(28.5)

5,400

Revenue

190,028(25.5)(1,972)

337,500(29.8)

5,500

Gross profit

79,149(22.6)(2,351)

138,600(33.0)

1,800

SGA

78,199(3.1)(2,301)

137,400(15.0)(6,400)Business profit
Other operating
income949(95.6)

(51)

1,200

(97.4)

8,200

807(82.3)

307

4,500(48.1)

700

Other operating expenses

1,720(84.5)

220

26,300

91.4

(500)

Operating profit

37(99.8)

37(20,600)－

9,400

Profit attributable toowners of parent(2,288)－12(18,600)

－

7,400

0

0

(Annual) 27(Change) (9)0Dividend per share (Yen) (Year-end) 18(Change)

16

Segment Performance (IFRS)(Millions of yen, %)Business Profit
Fiscal year ending
February 28, 2021

H2
forecast

Vs Junforecast

YoY

Change % change Change

Vs JunYoY
Full year
forecast
forecast Change % change Change

Department Store

2,416(12,078)(83.3)

716(2,000) (28,461)

－

5,000

Parco

(1,817)(5,017)－(1,117)(300)(8,882)－

1,000

Real Estate

925

(67)

(6.8)

1,025

2,850

(1,514)(34.7)

1,550

Credit and Finance(446)(1,286)

－

(511)

0

(1,901)

－

(157)

Other

648

(2,184)(77.1)

98

2,350(2,576)(52.3)

900

Total

949

(20,670)(95.6)

(51)

1,200

(44,163)(97.4)

8,200

Operating profit
Fiscal year ending
February 28, 2021

H2
forecast

Vs Junforecast

YoY

Change % change Change

Vs JunYoY
Full year
forecast
forecast Change % change Change

Department Store

2,157(4,888)(69.4)

757(19,200) (36,825)

－

5,200

Parco

(1,845)(6,802)－(1,045)(4,450) (15,273)

－

1,650

Real Estate

765

(231)

(23.2)

1,065

2,400

(4,325)(64.3)

1,700

Credit and Finance(453)(1,272)

－

(523)

0

(1,908)

－

(150)

Other

649

(2,042)(75.9)

109

1,800(2,900)(61.7)

840

Total

37

(15,074)(99.8)

37(20,600) (60,886)－

9,400 17

Segment Performance (1) Department Store Business
Carefully reviewed H2 sales in light of the current situation and revised down Jun forecastby ¥5.9 bn
Expect inbound sales in H2 to be the same level as H1 (¥0.7 bn), difficult to recover
Domestic consumption will gradually recover toward later this FY, driven by affluent people
Expect to expand business profit and operating profit by further reducing SGA

H2
Fiscal year ending
February 28, 2021

Full year

YoY
Forecast% change

Vs Junforecast

YoY

Vs Junforecast% change

ChangeForecast

ChangeGross sales

303,809(15.7)(5,991)

493,600(31.0)(2,200)

Revenue

109,397(17.0)(3,103)

179,500(31.9)(3,000)SGA

62,136(2.1)(1,764)

106,800(17.3)(5,000)Business profit

2,416(83.3)

716(2,000)－5,000

Operating profit

2,157(69.4)

757(19,200)

－

5,200

18

Daimaru Matsuzakaya Department Stores Forecast P/L (IFRS)
Department Store: Increase profits by carefully reviewing sales and further reducing SGA
Real Estate:Transferred to Parco in Sep but Ginza Six is managed by Daimaru
Matsuzakaya Department Store(Millions of yen, %)Second six
Department Store
months of fiscal
year ending
Vs JunYoY
February 28, 2021 Forecast
forecast% change Change

Total
Daimaru Matsuzakaya
Department Stores

Real Estate
Forecast

YoY% change

Vs Junforecast
ChangeForecast

YoY% change

Vs Junforecast
ChangeGross sales

274,326(14.8)(5,574)6,184(31.0)(3,916)280,323(15.3)(8,877)[Of which: real estate
rental income]

4,022(10.8)－

6,137(31.3)－

9,951(25.3)－

Revenue

98,889(16.4)(3,111)

6,184(31.1)(3,916)

104,866(17.5)(6,434)

SGA

55,9670.5(1,533)793(53.3)(307)

56,670(1.0)(1,430)Business profit

2,273(83.6)

773

375(62.2)

475

2,631(82.3)

1,231

Operating profit

1,777(74.5)

577

465(53.3)

765

2,243(71.8)

1,343

-

-

-

-

792

(82.8)

992

Profit--19

Daimaru Matsuzakaya Department Stores Major Store Sales
Monthly sales changed greatly this year due to last-minute buying in September last year
before consumption tax hike and sales decrease in October in reaction to it
More severe forecast for Shinsaibashi store that has a high tax-free sales ratio and Tokyo
store where recovery of day population is delayed
Expect mainly Kyoto, Kobe and Nagoya stores, which are strong in individual gaisho sales,
to drive sales recovery(% change YoY)

Fiscal year ending
February 28, 2021

Q1
Results

Q2
Results

Q3
Forecast

Q4
Forecast

H2
Forecast

Shinsaibashi(79.9)(52.2)(43.3)(23.5)(33.8)

Umeda(72.6)(28.3)(25.5)(14.7)(19.7)

Tokyo(76.0)(48.1)(36.6)(32.7)(34.6)

Kyoto(58.9)(24.4)(11.8)

(3.5)

(7.5)

Kobe

(63.4)(10.5)

(5.5)

(2.8)

(4.1)

Sapporo(66.4)(25.8)(13.0)(15.1)(14.1)

Nagoya(58.7)(17.9)(13.6)

(3.7)

(8.5)

Total directly
managed stores(64.1)(26.9)(18.6)(11.3)(14.8)
20

Daimaru Matsuzakaya Department Stores SGA Analysis (IFRS)H2 FY2020
SGA analysis

PersonnelAdexpenses expenses
(623)
(91)

Rentalexpenses
87

Packing andtransportation
costs

Operational
costs
(593)
Other
39

Depreciation

3,321

57,250

Increase in reaction to a decrease of ¥4.1 bn in retirement
benefit expenses resulting from extension of retirement age LY

Q3
LY
Results(Millions of yen)

(618)

Personnel
expenses

Packing andtransportation
Operational
(459)
costs
(162)
Depreciation costs
(163)
Other
297
(69)
(151)
Ad
Rentalexpenses
expenses(1,393)

Enhancement of credit card security,
an increase in computing expenses
for mutual reward points of Daimaru
Matsuzakaya / Parco cards, etc.

56,670Q4
H2 FY2020
Forecast

21

Segment Performance (2) Parco Business (IFRS)
Full operation of Shibuya PARCO, which opened in November last year, opening of
Shinsaibashi PARCO in November this year, but decrease in reaction to sales of reserve
floor space of Shibuya PARCO (¥21.7 bn) last year
Revenue will be above Jun forecast but expect tenant rent concessions and delay inrecovery of entertainment
Affected by real estate registration license tax incurred from transfer of the north wing
asset of Shinsaibashi store to Parco and cost increase, which were not factored in at the
beginning of the current period(Millions of yen, %)H2Fiscal year ending
February 28, 2021

Full year
Vs Junforecast
ChangeForecast

Gross sales

140,327(17.3)

1,327

223,800(28.1)

1,600

Revenue

41,884(38.9)

1,934

72,000(35.8)

3,400

SGA

10,016

(2.3)

(321)

17,700(10.8)(1,037)

Business profit(1,817)－(1,117)

(300)

－

1,000

Operating profit(1,845)－(1,045)(4,450)－1,650

Forecast

YoY% chnage

Vs Junforecast
ChangeYoY% change22Segment Performance (2) Parco Business

Shinsaibashi

PARCO
will open
in November 2020

New
Urban PARCO
Essence of new Shibuya PARCO

Mode / animation / newrestaurants & cafes /art
Theme of department store

Luxury / high class restaurants& cafes / golf & sport

Large specialty stores

Cinema complex

Multipurpose hall / event space23Segment Performance(3) Real Estate (4) Credit and Finance (5) Other (IFRS)Real Estate:

Cost reduction resulting from transfer of the north wing asset of Shinsaibashi store to
Parco, which was not factored in at the beginning of the current period

Credit and Finance: Affected by an increase in card renewal costs and a change in accounting method forannual fee income, which was not factored in at the beginning of the current period
Other:

Greatly affected by a decrease in reaction to special demand for J. Front Design &Construction to construct the main building of Shinsaibashi store last year
(Millions of yen, %)H2Fiscal year ending
February 28, 2021

Full year
Vs Junforecast

YoY
Forecast

Vs Junforecast

YoY
Forecast% change Change% change Change

Real Estate Credit and Finance
Other

Revenue

8,984

0.3

(1,116)15,800(11.2)(800)

Business profit

925

(6.8)

1,025

2,850

(34.7)

1,550

Operating profit765(23.2)

1,065

2,400

(64.3)

1,700

Revenue

5,006

(9.3)

(384)

9,600

(10.4)(150)

Business profit

(446)

－

(511)

0

－

(157)

Operating profit

(453)

－

(523)

0

－

(150)

Revenue

45,294(32.5)(1,306)

97,600(20.8)

5,800

Business profit

648(77.1)

98

2,350(52.3)

900

Operating profit649(75.9)

109

1,800(61.7)

840

24

Consolidated B/S Forecast (IFRS)
Total assets will increase ¥39.6 bn YoY partly due to continuously securing of cash anddeposits
Interest-bearing liabilities will increase ¥101.2 bn YoY due to procurement of new funds tocope with COVID-19
Ratio of equity attributable to owners of parent will be 28.2%, down 3.0 points YoY
Total assets

Interest-bearing liabilities

Equity attributable toowners of parent
Ratio of equity
attributable toowners of parent

1,280,000
31.2%
1,240,308

28.2%＋39,692△3.0pt580,000
478,773＋101,227～ ～Feb 29, 2020
Results(Millions of yen)

Feb 28, 2021
Forecast

Leaseliabilities
220,497

Bonds/
borrowings
258,276

Feb 29, 2020
Results

Leaseliabilities
200,000

387,188

361,000△26,188

Bonds/
borrowings
380,000

Feb 28, 2021
Forecast

Feb 29, 2020
Results

Feb 28, 2021
Forecast

25

Consolidated CF Forecast (IFRS)
Operating CF will significantly decrease, negative investing CF will be significantly reduced
by reviewing the original plan
Free cash flow will be positive at ¥7 bn though it will significantly decrease ¥16.7 bn YoYContinue to secure enough cash reserves until COVID-19 comes to an end

Operating CF

Investing CF

Free CF

Financing CF

Balance of cash
and deposits
120,000

79,00073,35834,63330,00023,7997,000＜＋26,559＞＜△43,358＞＜ ＞Change YoY＜△16,799＞(23,000)＜＋85,367＞(14,829)＜＋93,829＞(49,559)(Millions of yen)

FY ended Feb 29, 2020
Results

FY ending Feb 28, 2021
Forecast

26

パルコ
事業

百貨店
事業

百貨店
事業

Toward “Full Recovery” and “Regrowth”

27Business Environment Recognition
How will we coexist with COVID-19?
Changes in consumption behavior andvalues about consumption due to COVID-19
Response to digitalization that was dramatically widespread in society

Concern about maintaining and increasing
stores’ additional value of “prime locations”

It is obvious that failure to take appropriate measures
can endanger the Company’s existence“Greatest opportunity” to change mindset andpush forward sweeping management reforms

28

Priority Policies～ In order for the Group to achieve“full recovery” and “regrowth” ～Management structure reform
Digital transformation (DX)
Full creation of synergy with Parco

We must clarify timeline, plan and“do to completion” to survive COVID-19

29

Management Structure Reform (1)Structural reduction of “fixed costs”
How will we lower the break-even point?
Implement organization/HR structure reformby accelerating business model transformation

Expansion of
hybrid department
store model

Drastic cost reductionin Parco andassociatedbusinesses

Full-scale work styleand organization
reform by improving
and expanding digital
infrastructure

Drastic improvement of productivity by changing systems(Improvement in revenue: ¥10 bn or more)

30

Management Structure Reform (2)Strict identification of unprofitable stores/businesses
Restructuring of the Group businesses /replacement of businesses
More quickly decide to shrink or withdraw from businesses
Improve management efficiency by integrating/consolidating
the Group businesses

Implement structural reform and portfolio reform decisively
through these initiatives31DX (Digital Transformation)
Transform to a new business model through DX
Consumption is more radically polarized anddigital shift has progressed at once

Difficult to meet customers’ expectations only by promoting the
expansion of online transactions and digitalization symptomatically

Improve a “customer base” and the “ability to develop content,” which are theGroup’s strengths developed at real stores, using digital technology

Important to create new “venues for experiences”
that merges real with digital32

DX – Creation of Customer Experiences
Creation of new “venues for experiences” that merges real with digital

Chat

DigitalEntertainment

Decide

Zoom

SNS

Pay

Consult
Blog

WEB

SelectDecidePay
Consult
SelectReceive

Real Receive

Invest in “people” including sales people from suppliers
as touchpoints with customers

Departure from restrictions of “time” and “place”

Digitally reproduce real experience values

Build a digital platform that connects customers
to sales floors with “warmth”

33

DX – OMO (Online Merges with Offline)

OMO by Daimaru Matsuzakaya Department Stores
Create systems where sales people serve customers both online and offline
Build systems that allow customers to shop using shop blogs
Realize unique OMO customer shopping experiences for cosmetics
by the end of fiscal year 2021

OMO by Parco
Mutually send customers to/from multiple EC platforms with real stores’
communication capabilities as the starting point
Connect real channels to online channels including tenants’ own EC with Parcopoints
Already strong entertainment will become available online34

DX – Use of the Group Data
Deepen the understanding of customers by visualizing a customer base
<J. Front Retailing Group>

Purchase data /behavior log

New value creation
using data

Marketing/CRM

Integrated customer database(LTS Hub)

Accumulation/analysis/feedback of data35

DX – Improvement of Operational Efficiency
Rebuild business operation using digital technology
Streamlined back office processes using RPA
Next, phase of paperless operations, also in stores

Reduction of costs for slips and their delivery and storage warehouse

Drastic HR structure reform by overhauling the operation flow

Launch a project to greatly upgrade systems andaccelerate initiatives to digitalize business operation

36

Creation of Synergy with Parco (1)Expand new initiatives starting from Shinsaibashi PARCO

Mutualreward points

Send
customers toeach other

Integrate
customer DB

Use of each other’s suppliers’ channels
Provide Parco’s unique content in department stores

Increase the appeal of stores and brand strength37

Creation of Synergy with Parco (2)Consolidate know-how and resources by transfer of Real Estate Business

Innovate real estate portfoliowith various uses and initiatives
Develop semi-urban locations
Consider the combined development projectin Tokyo/Nagoya/Osaka ＋ Fukuoka areas
Consider using a circular investment scheme

Develop and grow as a developer business38

Increase Resilience through Two “Mergers”
MergerMergerof real and digitalof Parco and the Group×
Create a strong portfolio with an enhanced“ability to respond to changes” for unforeseeable times
39Formulate a New Medium- to Long-term Plan
Decide what we should be 10 years from now and formulate a medium-term
three-year business plan toward “full recovery” and “regrowth”

FY20212023 2024

2030

Full recovery

Regrowth(Structural reform / digital innovation)(Acceleration of the Group innovation)

Corporate transformation

Specific details will be announced
at the “results presentation” in April 2021
40

Turn Crisis into Opportunity
Practice of corporate credo “Service before Profit” = CSVSocialvalue

×Economic
value

Important to face changes in customers and society,find the best “solution” and continue to provide it
Actually “Create and Bring to Life ‘New Happiness.’”41

<Reference> Links to Initiatives That Use Digital Technology(1) SK-II webinar only for Daimaru
Matsuzakaya gaisho customers Video
https://youtu.be/Rf0lRYhdU5s
Sep 26 (Sat) 17:00 - 18:00
Invited customers to a special site andintroduced SK-II “Skin Power”
launched on Aug 21(2) Remote sale for Daimaru
Matsuzakaya gaisho customers“Musée Air brand furniture fair”
Video
https://www.connaissligne.com/topics/pr
eview?id=eyJpZCI6NTQ0LCJtb2RlIjoiZH
JhZnQifQ==
Jul 23 (Thu) – Aug 2 (Sun)
Delivered video for introduction ofmachines by Musée Air interior
coordinator and Techno Gym trainer(3) Daimaru Matsuzakaya
Hokkai DO the LIVE! Video
https://youtu.be/tMj4EqvUuYw
Jul 30 (Thu) 19:00 - 20:00
Live shopping of reasonable food in
Hokkaido (4 items) with a buyer Mr.
Honda as an influencer(4) Daimaru Matsuzakaya Think
LOCAL “Local Production
Market” Website
https://dmdepart.jp/think_local/
Opened online shopping website “Local
Production Market” to sell excellent
local products as part of Think LOCAL
activities launched on Sep 2 (Wed)(5) PARCO Live Commerce at an online mall
Websitehttps://parco.jp/onlinemarket/
Live commerce by shop staff and famous
specialists in various fields.
Customers can shop while experiencing
explanation of products by customer service
professionals and interactive communication using
chat function.
(6) PARCO MUSEUM ONLINE GALLERY
Websitehttps://art.parco.jp/museumtokyo/detail/?id=425
Provide a 3D view of exhibition online at the sametime as the actual exhibition. Viewers can enjoy
viewing art works as if they were actually in thevenue of exhibition.

(7) Display XR art in open ceiling spaceof Shibuya PARCO Video
https://youtu.be/iGGYJtG8hTM
Permanently display works related to NEWVIEWAWARDS, a global award that collects XR(VR/AR/MR) contents. Customers can always
enjoy mysterious art experience on theirsmartphones(8) Shibuya PARCO XR music art
exhibition event Video
https://www.youtube.com/watch?v=7ai
Zhjw3gC0
Oct 3 (Sat) and 4 (Sun)
Virtual event where visitors could experiencevarious live art and music in ５G virtual space.
They enjoyed experience-based content using
their smartphones or 5G-ready devices lent in thevenue.

42https://www.j-front-retailing.com

Create andBring to Life
“New Happiness.”

Forward-looking statements in this document represent our assumptions based on information currently available to us and inherently involve potential
risks, uncertainties and other factors. Therefore, actual results may differ materially from the results anticipated herein due to changes in various factors.