MARUI GROUP Co., Ltd.
MARUI IR DAY(Briefing on new medium-term management plan)<Questions and Answers>
Retailing segment questions and answers
Q.

Although MARUI's stores have evolved over the past few years, the operating profit target for thisfiscal year is ¥7 billion and has not reached pre-COVID-19 levels of ¥10 billion. What is behind thisgap? Furthermore, regarding the target of ¥12 billion for the fiscal year ending March 31, 2026, what
measures will be accumulated to achieve this goal? Can you tell me what has the biggest impact on
profits?

A.

The biggest reason for the decline in operating income compared to before COVID-19 was revenue
from fixed-term rental contracts. The biggest reason for the decline in profits is that the unit rent per
tsubo (3.31 m2), which was originally ¥50,000, has fallen to the ¥30,000 level, combined with adecline in the volume of tenants' transactions and rent reduction or relief, resulting in a decline inrevenue from fixed-term rental contracts.
As for the drivers for the future increase in profits, one is the improvement in rent levels and rental
prices due to tenant replacement. We also closed our private-brand specialty stores in the three years
during the pandemic. This will lead to significant cost reductions and structural reforms.
Increasing revenue and structural reforms are two major drivers in our goal for ¥12 billion.

Q.

What are your thoughts on the future beyond the operating income of ¥12 billion for the fiscal year
ending March 31, 2026?

A.

Regarding this, we believe that there is room for several billion yen in profit growth as an extensionof our current efforts. Although we will no longer be able to expand the fixed-term rental contract
area, we believe that we will be able to increase rental prices even further. Our target rental price forthe fiscal year ending March 31, 2026 is ¥51,000 per unit, but we believe we can raise it to ¥55,000
to ¥60,000 per unit, leaving a few billion yen of room for growth. In addition, we will take steps
further by pursuing other measures.

Q.

There was an explanation that leasing in OMEMIE has a higher unit price because there is no need tonegotiate, but on the contrary, is it not true that there is a rent discount in normal leasing negotiations?

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Also, will rent ever go down for OMEMIE?
A.

Normal leasing negotiations also result in discounts, but not to the extent that normal tenant spaces
are rented at significantly lower rates than through OMEMIE. Also, although negotiations for rent
discounts occur through OMEMIE, the unit price is positively impacted by the fact that the space andrent are clearly indicated when applying to open a store, allowing good tenant candidates with a certain
degree of understanding to consider opening a store.
In addition to returning rents to pre-COVID-19 levels, we hope to increase unit prices by pursuingleasing in OMEMIE.

Q.

I believe that the further expansion of OMEMIE will increase the productivity of tenant leasing, which
until now has relied on manual efforts. How much room is there for cost savings? In addition, it would
be possible to improve profits in a different way by allocating the personnel freed up by increased
productivity to tenant consulting and other activities. How do you see this?

A.

By bringing development work online, what used to be negotiated face-to-face or over the phone can
now be completed online, improving productivity.
In terms of the impact of the introduction of OMEMIE on revenue from fixed-term rental contracts,
we will start in earnest this year, so the positive impact of productivity improvements will not besignificant this fiscal year. However, in the profit plan for the fiscal year ending March 31, 2026, thelast fiscal year of the medium-term management plan, we expect to see the effects of reducing
expenses and increasing personnel efficiency through the introduction of OMEMIE.

Q.

Is this expected to continue to be effective after the fiscal year ending March 31, 2026?

A.

I think it will continue to grow.

FinTech segment questions and answers
Q.

Regarding maximizing share of household finances, how much of the increase is expected to comefrom the unique strategy as you raise the annual usage amount per capita to ¥800,000 in the fiscal year
ending March 31, 2026? I believe you once mentioned one of the challenges to maximizing share ofhousehold finances is that there are still very few people who settle their water, gas, and recurring
payments with EPOS Cards. Am I correct in understanding that usage is now steadily expanding?

A.

The credit card market as a whole is growing about 7 to 8% a year. We believe this momentum willcontinue in light of the progress of cashless payments in the future. At the same time, we have been
growing at an annual rate of 15 to 16%, which is double the rate of the market, so we believe that ourdifference from the overall market by about 7 to 8% is the result of our unique strategy.

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We expect that our unique strategy will continue to add the same level of value in the future, so thestructure of ¥150,000 for cashless operations and ¥150,000 for our unique strategy in the fiscal year
ended March 31, 2023 will generally remain unchanged, and we expect the annual usage amount percapita to reach ¥800,000 in the fiscal year ending March 31, 2026.
As for challenges related to the number of customers using recurring payments, usage is now steadily
increasing. We introduced a new app called Lifestyle app a few years ago. It does not send push
notifications from us to customers, but rather an app that allows customers to settle their utility bills
themselves with their EPOS Card through the app. The fact that this initiative has started and is
progressing smoothly is a big difference from the time when we were facing challenges.
Q.

Regarding future operating income, if all the various initiatives explained are successful, I feel thatthe potential is higher than the current plan. What is your perspective on this? Or are there risk aspects,
such as expenses incurred by implementing the measures? Can you tell me how the measures relate
to the operating income plan?

A.

Card credit and installment payment and revolving transactions are moving at a pace that exceeds theoriginal medium-term management plan. Therefore, we now recognize that we will be able to achieve
operating income of ¥53 billion under the current situation. Regarding expenses, basically, thestructure of expenses in the FinTech business is 70% variable expenses. So when the top line goes up,
variable expenses naturally go up too. That is why the top line is important. As for fixed expenses, weare currently lowering the fixed cost ratio, so we do not expect that heavy expenses will place a slightburden on operating income at this time. In terms of exceeding our plan, we will strive to do so.

Medium- and long-term direction questions and answers
Q.

Regarding the results of the employee engagement survey, there seems to be a discrepancy between
the percentage of employees who "know what is expected of them on the job" (80%) and thepercentage of employees who "use their strengths to take on challenges" (52%). Will these percentages
increase further as you move forward with the new organizational structure that has been explained?
Alternatively, could you tell me if there is another factor that would cause them to rise?

A.

We are somewhat disappointed that the percentage of respondents who use their strengths to take onchallenges is 52%, which is very low, but we would like to increase this percentage to 70% to 80% in
the future. We put a lot of time and effort into dialogue, especially group team dialogue. However, wehave not been able to have 1-on-1 meetings where supervisors listen to each person's future work styleand career vision and encourage them, so CHRO Ishii and I are looking into efforts to make thispossible.

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Q.

How long do you envision it will take to disseminate a project-based organization or an organization
without section chiefs? Will you gradually increase these organizational styles through experimenting
with some teams, or will you change over all at once at a certain point in time? What is your vision
for organizational reform?

A.

We would like to repeat experiments by trial and error, and expand on those that we feel are responding
well. For example, for the authorized initiatives that I covered in the explanation, the company set atheme and asked people to volunteer if they wanted to take up the challenge of this theme. For thisreason, it has essentially been voluntary, but there have been cases of the company nominating people
by asking them to be leaders. Since this format has produced the most results, we would like to proceed
step by step, for example by increasing the number of such teams. However, rather than making
everything project-based, we believe that the existing vertical structure is more suitable fordepartments that perform routine operations such as crisis management, credit and collection
operations accurately and efficiently. For this reason, we would like to proceed with project-basedplanning work to develop new services.

Q.

As for your future hiring efforts, it would seem your company is a great place to work because many
employees joined straight out of university and there is a low resignation rate. Will you continue to
steadfastly recruit and train new graduates in the future? And in that case, what kind of candidates areyou going to strengthen your approach to?
Conversely, I would like to know your thoughts on the option of mid-career hiring as well.

A.

Up until now, most of our employees have joined as new graduates, but most recently, we have been
hiring mid-career tech talent due to the sense of urgency of not being able to move forward with DX.
As an example, we have been hiring mid-career professionals in the e-commerce field since before
Muture was established, and our e-commerce sales have been increasing. In addition, the migration
to the cloud, which had been delayed for mission-critical systems, was facilitated by mid-career
specialists, thereby streamlining operations and addressing security risks. We are currently recruiting
mid-career employees with the support of Muture and Goodpatch. We have very wonderful people
joining our company, and our collaboration is going very smoothly. As we have collaborated withstartups and emerging companies in the form of co-creation, we have become more adaptable toworking with people outside of our own company, and this has coincided with the hiring of mid-career
professionals. I believe we are meshing well within the company.

4We would like to continue hiring new graduates at a constant rate of about 50 to 60 people, but thecandidates we want are those who want to challenge the high hurdle of not only pursuing profits orsolving social issues, but also "commercializing solutions to social issues," which is a combination of
the two, as we have stated today as our goal. However, we want to be a company that attracts not only
those who want to challenge themselves, but also those who want to contribute with their special skills
or areas of study or those who have advanced digital skills such as programming, artificial intelligence,
and writing web3 programs.
Q.

In the future, the MARUI GROUP will become more knowledge-intensive, and while the fundamental
nature of its business may not change, the structure, personnel, and capital efficiency of its operations
will change considerably. I believe this message is the result of the response you have received over
the years in your efforts to make this change. On the other hand, it can be hard to put yourself in theshoes of an employee. What is your view on this point?

A.

To be honest, I think it's hard for employees. On the other hand, they also seem to be thriving happily,
so we think they will be fine. My philosophy is to enable each person to take advantage of his or her
area of expertise, so while we will focus on developing tech apps in the future, but I do not think
everyone needs to be able to program and be tech savvy. In connecting the online and offline worlds
through the use of technology, we would like people who are skilled in the management of physicaloffline sales areas and face-to-face communication with customers to be active in these areas. We
want to make sure that all of our talent can perform well.

Q.

Does that mean that this explanation was given because there are employees who see this kind of
discussion as a matter of personal concern, rather than from the cold perspective of doing something
because the president says so?

A.

This term itself, "a company that solves social issues," is something that the employee in charge ofhiring was enthusiastically talking about at one point in time. This employee said that students tend
to think of MARUI GROUP as a retail or credit card company, but that it is really a company thatsolves social issues, and that he was working hard to somehow make students understand this. I was
motivated to do my best after hearing this, so I spoke about it today.

Q.

As for the future of your Group's business, from the perspective of consumers, will the format of thestore have changed significantly when they visit the store in seven or eight years from now? Or will
it not change much, and will “stores that don’t sell” and “eventful” stores continue to grow?

5In FinTech, while the parts visible to customers will remain largely unchanged, such as efforts tostrengthen LTV and cards tailored to each individual's interests, will the unseen parts, such as themechanisms that drive retail and FinTech, change in the future?
A.

While I think that what the customer sees, such as stores and credit cards, probably will not havechanged that much, I believe the structure and way of proceeding in the unseen areas will change
considerably, and I would like to change it.
For example, while stores continue to sell things, they are gradually shifting to providing services andexperiences. By combining this initiative with being a company that solves social issues, we believethat our stores will become places for meeting and engaging with many customers. In a real-world
location, the ability of people to communicate face-to-face through physical objects and to manage
the venue is necessary. In this way, the management of a place for meeting and engaging with eachconsumer will become the capabilities and assets of retailing.
On the other hand, cards will also be based on conventional credit cards, but we believe that embedded
finance since the founding of our company that I have explained will become important expertise forbringing cash when balancing profits with solving social issues. This expertise will be used to provide
start-up entrepreneurs and others with the opportunity to work together to create credit with those who
were previously considered young and generally credit-poor, as in the case of the owner's card. By
doing this, we believe that our expertise will be utilized in such a way that it will lead to the creationof new credit and business expansion. While it may look the same, by honing the core capabilities thatare unique to our company, we will change to a business that can be applied from various angles tosolve social issues, and we hope to make such a change.

Q.

There does not seem to have been any major fluctuations in your stock prices since their peak in 2019,
although I think they were affected by COVID-19. In spite of your various initiatives during thisperiod, including non-financial matters such as Human Capital-Focused Management and ESG, andyour approach to the market through IR, I believe that the stage in which the stock price rose waswhen the company announced return. Do you feel there is a gap between your actual efforts and how
the market views them?

A.

Indeed, it is very disappointing that our stock price stagnated for about three years due to the pandemic.
I think that one factor for the stock price trends over the last five years or so has been the unavoidable
force of COVID-19. On the other hand, EPS will definitely improve after the pandemic, so the stock
price will also go up.

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So in the medium to long term, I am not worried at all. But as things stand now, I think the short-term
momentum for the stock is the return. The share buybacks we have been conducting in the past havebeen based on long-term discussions with shareholders about the balance sheet that we should aim
for, not on a short-term basis. As the balance sheet we should aim for has been developed to someextent beyond what we initially targeted, we decided to adopt DOE in order to increase dividends overthe long term and place more emphasis on dividends if the same returns are to be made in the future.
Some people said that if we adopt DOE, it will seem like we are giving up on growth, so we adopted
a high level of 8% in our financial results the other day. This comes from the fact that we can achieve
ROE of 10% or more. We believe that we would have that ability at this point if there was zero
influence from COVID-19. I believe that our DOE of 8% represents high growth and high returns, as
this is a sign of confidence that the 13% target is sufficiently achievable for the medium-term
management plan in three years.
Of all the investments I have talked about today, I think human capital investments are the ones withthe best returns. We believe that by going beyond the three-year target of the medium-term
management plan and investing with increasing sophistication for the next five to ten years, we canachieve a P/B ratio of 5 times and an ROE of around 25%. We will never achieve high goals if we donot set them. By setting a goal of about 25%, I believe this is achievable if all of us think hard about
how we can get there. I believe the stock price will soon break out of the box.

Q.

You have provided an IRR of 12.7% for human capital investment. What are the criteria forinvestment? With this logic, I would expect to see an expansion of profitability and ROE, but on theother hand, is the idea that you would not invest in services or new businesses with a return of lessthan 12.7%?

A.

What I am saying here is that we can expect this kind of return on the human capital investments wehave made over the past five years, and that is one estimate. In other words, we do not think at all that
we just need to be at 12.7% or that we want to continue to return 12.7%. This level should be raisedfurther, and I believe it can be raised. Precisely because we have achieved a high figure of 12.7% in
our performance to date, we will continue to invest ¥65 billion to further enhance the viability ofhuman capital investment. Although human capital investment is almost an expense in the financial
statements, our idea is to achieve a high ROE of 25%, as set out in our target, by continuing
investments that exceed the period profit or loss, not the period profit or loss for the current fiscal year,
and are expected to contribute to earnings two or three years from now, and by placing the intangible
asset of human capital at the center of corporate value, and by increasing the return on investment.

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Q.

While the Human Capital-Focused Management initiatives you discussed were very convincing, it
made me wonder if the understanding of such ideas in the capital market has not yet advanced. From
your company's perspective, could you tell me if you have any thoughts on the effectiveness of humancapital investment and how well it is understood by the capital markets in valuation?

A.

In the United States, the ratio of intangible investments, or the ratio of intangible investments tomarket capitalization, has already reached 90%. In Japan, by contrast, the ratio is 32%, and I suspect
this gap is the root cause of Japan's lost 30 years. This means that Japan has over-adapted to the 19th
century-type industrial society that has existed since the Industrial Revolution, or what Drucker calls
the industrialized society, and has not been able to cope with the 21st century-type industrial structure
called the knowledge society. For individual companies on a microeconomic level, I also do believethat such factors have led to stagnation in corporate value. The most important intangible investment
is human capital, or people, and I think it is clear from the contrast between the United States andJapan that shifting to management that maximizes the power of people will certainly increase
corporate value. I feel that the term Human Capital-Focused Management has become a topic ofattention not only in management but also in the capital market, as our understanding on the subject
has advanced. We believe that we can steadily increase our corporate value by fully utilizing ourunique expertise in embedded finance and the co-creation of creditability.

Q.

I completely agree that the low ratio of intangible investments has led to the low competitiveness ofJapanese companies, and I urge your company to continue promoting human capital investment. In
this context, I believe that the ¥65 billion investment in human capital will be converted into services
and new businesses and generate marginal profits. Are the seeds and twin leaves that you mentioned
in your explanation accumulated in your company? If the seed is not growing, no matter how muchinvestment you make, it will not lead to services or new businesses, and you will not be able tomonetize.

A.

In FinTech, we have introduced residual value loans with Apple, dental credit as a new embedded
finance, and more are in development. However, they are all small in scale, so we only introduced themain ones. In Retailing, we are continuing to develop not only OMEMIE but also new products andnew line-ups for event-type e-commerce. We will report on these in due course when they have grown
to a certain scale and profitability.

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