Enriching homes around the world
New Phase, New Growth.

2020
Integrated ReportFeb. 21, 2019 – Feb. 20, 2020

NITORI Holdings Co., Ltd.
Sapporo Head Ofﬁce
1-2-39, Shinkotoni 7-jo, Kita-ku, Sapporo, Hokkaido 001-0907
Tokyo Headquarters
3-6-20, Kamiya, Kita-ku, Tokyo 115-0043
Osaka Headquarters
1-1, Kamisu-cho, Toyonaka, Osaka 561-0823

www.nitorihd.co.jp/en/

This report uses
environmentally-friendly
FSC-certified paper andvegetable oil ink.

Mission Statement & Vision

Editing Policy

Contents & Editing Policy

We have issued the 2020 Integrated Report to aid
investors, shareholders, and other stakeholders’01

Mission Statement & Vision

02

Contents & Editing Policy

understanding of our processes and potential for achieving
a long-term, sustainable enhancement of our corporate
value. NITORI Group has a business model integrating
manufacturing, distribution, IT, and retail that is uniqueeven on an international basis, with its vertically integrated

About NITORI Groupsupply chain as the source of its competitiveness.
Henceforth, the Group’s policy will be to take the strengths

03 Message from the Chairman
05

Our Value Creation Journey

07

NITORI Group Today

it has built thus far and advance and augment them on the
global market, as it builds the foundations for sustainablegrowth and enhance corporate value. To ensure that theCompany’s story reaches more stakeholders, we haveplanned and structured this Integrated Report with a focus
on strengthening “cohesiveness” and “narrative quality” inorder to communicate the “sustainability and future vision

NITORI Group’s Strengths

Mission Statement

Enriching homesaround the world
Vision 2032

3,000 stores Net Sales ¥3 trillion

08
09
13

Sales

Planning

Logistics

Quality andFunctionality

Affordability

Product
Development

Offering the Unexpected

Control Capabilities

disclosure framework provided by the International
Integrated Reporting Council (IIRC).

Coordination
Raw Material
Procurement

Trade

Quality Control

Ability to Utilize Our Expertise

Target scope

Manufacturing

We set as many domestic and foreign NITORI Group
companies subject to consolidated ﬁnancial statements as
possible as the target of our reporting. However, dependingon the item, the reporting target may differ.

NITORI Group’s Strategy

17 Message from the President

Target period

21

Value Creation ModelIn this report, the ﬁscal year ending February 20, 2020, is

23Strategy to Achieve Our Vision

The Activity Report also includes some recent content.

27

Domestic Sales Business

29

Overseas Sales BusinessFebruary 21, 2019 to February 20, 2020referred to as ﬁscal 2019 or FY2019.

The signiﬁcance of this reportWEB
Company Information

NITORI Group’s ESG

Vision 2022

1,000 stores Net Sales ¥1 trillionof our strategy and business model,” with reference to theStrengths Developed Through Our
Manufacturing-distribution-IT-retail Business(Corporate governance, internal
controls, compliance, etc.)

33

Planning and Development

35

Procurement and Manufacturing

Logistics

37

Logistics and Trade

Trade

39

Sales

41

Initiatives in New Fields of Business

42

Social Action Programs

43

Human Resources Development

45

Environment Creation

47

Corporate Governance

Sales

Planning

Product
Development

BookletIntegrated Report

Governance
Raw Material
Procurement

Quality Control

Mission Statement

Manufacturing

Enriching homes around the world

Environment

Society

Value CreationWEB
CSR InformationWEB
IR Information(Social and environmental
initiatives, and employee
engagement activities)(Strategies, ﬁnancial
results information, etc.)

Disclaimer Regarding Forward-Looking
Statements
This report contains plans, strategies and forecasts, andEconomyforward-looking statements regarding the businessperformance of NITORI Holdings and afﬁliated companies.

Financial & Company Data

These statements are not historical facts. These forwardlooking statements are based on the current assumptions

51

Transition of Key Management Indicatorsand beliefs of NITORI Holdings in light of currently available

53

NITORI Group’s Financial Strategy

uncertainties related to economic trends, personal

57

ESG Information

consumption, market demand and supply, taxation systems,

61

Company Stock Information / Company Information

information. In addition, these statements contain risks andand other systems. Therefore, please note that the actual
business performance of NITORI Holdings and its groupcompanies may differ from the forecasts.

01

02

About NITORI Group

Message from the Chairman

We will continue to focus on rejecting thestatus quo and engaging in innovation as
we work to achieve our Vision 2032.

As we work to achieve our
mission, we will preempt
changes in the times andcontinue to evolve.
Akio Nitori
Representative Director & Chairman (Chief Executive Ofﬁcer)
NITORI Holdings Co., Ltd.

I would like to offer my deepest
condolences to all those who losttheir loved ones to COVID-19.
I would also like to express myheartfelt sympathies to those fighting
the virus, and people in local
communities whose lives have been
affected by the spread of the virus.
Fiscal 2019 marked 33 years ofconsecutive sales and proﬁt growthfor NITORI Group. This would nothave been possible without our
stakeholders including customers
who have purchased our products.
I wish to express my heartfelt
appreciation to all of you.

The outlook for the business environment in fiscal
2020 is unclear owing partly to the stagnation of
economic activity as a result of the spread of
COVID-19, but I believe it is precisely in such timesof need that our “ability to respond to changes” willbe crucial in ensuring the sustainable growth of
NITORI Group over the next 50 or 100 years. For
example, at present, we are rebuilding our systems
for promoting overseas businesses as we look to
expand globally (see p.25 Global Business
Development Office), but customs and ways of living
differ completely in each area, so utilizing expertisefrom our successes in Japan is not a simple matter.
In order to enrich the lives of people around theworld, we must understand people’s ways of living indifferent regions, then preempt changes in the times,change our methods, continue evolving based on trial
and error, and adapt appropriately. The result of thiswill be the establishment of an unsurpassable
dominant competitive position.
Under Vision 2032, we are targeting a businessapproximately five times the size of our current
business, with 3,000 stores and 3 trillion yen in net
sales.
We will become unable to adapt to thechanging society and cannot expect sustainablegrowth if our aim is to maintain the status quo. Inorder to continue moving forward, we must always
reject the status quo and engage in innovation– reject the past and keep taking on new endeavors.
I believe this is a quintessential quality of NITORIGroup. We will continue to evolve significantly in theforthcoming fiscal year.

Offering the experience of enriched living
and promoting human resource development
are what leads to sustainable growth.
After operating for many years, it becomes easy forcompanies to become consumed by the short-termgoal of pursuing profits, and lose sight of justice andbenevolence. Profits are a necessary part ofcorporate management, but they are only the “result”
that follows the achievement of the corporate
philosophy. In the case of our Group, the correct
process is to think in-depth about how we can03address our customers’ frustrations andinconveniences, as we work to achieve our missionof “enriching homes around the world.” For thatreason, we do not cut employee training expenses
under any circumstance, instead we keep
maintaining them at a level approximately five times
that of the average for listed companies. Every year,
we conduct training in the U.S. to enable our
employees to experience enriched lifestyles
themselves and focus on the goals that we should
be aiming to achieve.
Then, to ensure that the qualities of thesehuman resources can be passed down to the next
generation, we must create a system that can
educate our employees. I think it is important that
NITORI continues to be a company where our
employees work not just for the company, but for
their own growth, and enjoy their work as thatgrowth is reflected in quantifiable changes. “Thegrowth of individual employees leads to anenrichment of customers’ lifestyles.” I believe that if
we create a work environment that enables
employees to feel the results of their efforts in thisway, it will in return help nurture our employees andlead to the sustainable growth of NITORI Group.

Message to stakeholders
The roots of NITORI Group lie in the surprise,
excitement, and inspiration I felt toward theluxuriousness of people’s lifestyles that I experienced
when I went to the U.S. for an observation tour in
1972, at the age of 27. Everything was luxurious andI saw that people’s lifestyles were 50 or 60 years
ahead of those in Japan. It inspired me to create
opportunities for Japanese people to experience thiskind of luxuriousness, and thus we formulated thefirst 30-year plan. It had an extremely challenging
target of 100 stores and net sales of 100 billion yen,
but we were able to achieve this goal in 2003, andwe are grateful to have earned great customer
support. The second 30-year plan, i.e. Vision 2032,
will take place on the global stage. The road ahead
will be even more difficult than that of the previousplan, but we will endeavor to achieve our mission of“enriching homes around the world,” with theachievement of our vision as our guide.
I wish to thank all of our stakeholders for theircontinued support in our endeavors.

04

Our Value Creation Journey

About NITORI GroupNITORI Group’s philosophy of doing everything in-house, making it possible for it to offer the unexpected.
We control everything, from product planning to manufacturing, logistics, and sales.

Mission Statement

Enriching homes around the world● Sourcing that expands across the globe to achieve low prices● Achieving high quality by working closely with the supplier and with direction and management on the manufacturing

process at overseas plants.
● Conducting all trading operations in-house. Achieving cost reductions by building our own distribution network from■ The needs of the times and our value offered

the import of products to the delivery to customers.

“To bring America’s enriched
lifestyles to Japan.” —this was
our starting point.

Pioneer of the now widely
accepted “One-room
coordinated interior design.”

Achieving lower prices for expensive
items with product development fromthe customer’s perspective.

The observation tour of America in
1972, had a major influence on
NITORI. Some stores supported aluxurious everyday lifestyle, offering
customer-oriented products atoverwhelming low prices that were in
lineups unified in quality, color, andstyle—this was the starting point of
NITORI Group.

We stopped displaying products bytype, which is the conventional
method, and set up room displays
representing life scenes for eachroom of the house, such as theliving/dining room, bedroom, andkid’s room. Before any othercompany, we were creating sales
floors where customers could
experience coordinated living spaces.

Feather comforters once cost morethan 100,000 yen. By reevaluating
raw materials, NITORI Group wasable to cut the price to under 10,000
yen while still maintaining its quality.
In the same way, we havecontributed to lower prices forfurniture, such as sofas and beds, aswell as randsels (school bags).

Quality andFunctionality

Affordability

Offering the Unexpected
Coordination

Implementing price cuts evenduring recessions with anaffordability that has value.

Balancing economic andenvironmental value with more
efficient manufacturing and logistics.

Pursuing higher functionality indaily essentials extending to theirmaterials.

In 2008, when oil prices skyrocketed,many companies also resorted toraising the prices of their products,
but that is when NITORI made its
Price Cut Declaration. It was ourdesire to give back to customers
precisely because the economy was
experiencing a recession. More than
5,000 items were cut in price by 20%
on average until 2012, garnering
great support from our customers.

NITORI Group is making efforts tobalance economic and environmental
value by pursuing more efficientmanufacturing and logistics withmethods such as mattress compression technology which leads tosmaller package sizes and bettercontainer loading efficiency.

We have rapidly expanded our lineupof N Warm products (launched in2011), which use moisture-absorbing,heat-generating materials, and N Cool
products (launched in 2012), which
use materials that are cool to thetouch, while also enhancing theseproducts functions. The products arevery well regarded by customers.

Present-day onward
Aspirations move tothe global stage

NITORI Group
Today

p.7

NITORI Group’s
Strengths

p.8-16
Net sales (billions of yen)

Ordinary income (billions of yen)

Number of stores

Overseas

Note: Numeric figures are from the financial statement announcement

2008

1967
Founding spirit

in net sales

2004“To bring the comfortable andenriched living of the U.S. to Japan”

Overseas

Established NITORI-net

1986

Overseas
Overseas

Adding cost competitiveness that is one stepahead of the competition

1994

1

3

7

15

18

21

Overseas

217
188

73
24

29

37

73

82

0
0

0.42
0

2.9
0.1

9.0
0.4

13.2
0.9

17.5
1.2

19.3
1.5

25.6
1.8

34.8
2.0

48.9
3.5

1967

1973

1979

1986

1990

1992

1994

1996

1998

2000

130

145

162

3.8
2001

78.7

88.2

7.1

8.9

2002

2003

314.2
286.1

244.0
217.2

417.2

53.5

59.1

348.7
62.1

94.8
87.5

387.6
331.0

103.0

63.4

p.23-26
Domestic andOverseas Sales
Business Strategy

p.27-30

75.0
67.9

47.4

108.7
13.0

2004

129.4
15.2

2005

19.0

2006

NITORI Group’s
ESG

33.9

156.7

63.2

109.5

189.1

50

Establishment of a new business model that integrates manufacturing, distribution, IT, and retail

05

100

116

512.9

NITORI Group’s
Strategy
Strategy to Achieve
Our Vision

572.0

458.1

268
244

Established factories overseas in order toachieve low prices on products withJapanese quality

Break through from being just a furniture store● Opened large stores where products thatmake daily life more enjoyable andconvenient● Achievement of total coordination

373

642.2
608.1

420

300

Began operating an overseas factory

Direct purchase from manufacturers
started471

331

Opened KaohsiungDream Mall Store

2003
Achieved 100 stores and¥100 billion in net sales

1973

2013

Opened the first store in the U.S.

2007

523

2014

Opened Wuhan Star City Store

Implemented the online sales businessStarted direct import of overseas products

576

Opened Printemps Ginza Store
Achieved
as the first store inside a
200 stores anddepartment store¥200 billion

Price cuts on 1,000 items following
the global financial crisis

607

2015

2009

Price Cut Declaration

NITORI Furniture Store established2017

The new factory in Ba Ria-Vung Tau, Vietnam began operation

23.1

2007

26.5

p.31-50
2008

2009

2010

2011

Domestic nationwide development/Overseas expansion

2012

2013

2014

2015

2016

2017

2018

2019

2020 (Fiscal year ending in February)

Globalization and expansion of business areas

06

NITORI Group Today

About NITORI GroupNITORI Group’s Strengths

NITORI Group has continued to provide products tailored to customer needs, based on its concept,
which has remained consistent since its founding – to bring the comfortable and enriched livingof the U.S. to Japan. NITORI Group of “today” is a midway point on its journey into “tomorrow,” asStrengths Developed Through Our
Manufacturing-distribution-IT-retail Businessit looks to achieve its vision.

Strength 1.

Vertically integrated supply chain

Creating stores that are easy to visit and easy to shop at
Proposing more convenient ways to shop

Business content

Product planning that creates
customer satisfaction

Planning, manufacturing, logistics, and sales of all products related to “homes”
Sales● Domestic and overseas network of stores selling products from large

One of the largest
domestic distribution
networks

furniture to household items and more
● Renovation business to support our customers’ homes● Corporate sales business making proposals for offices and facilities● NITORI-net, an online store for furniture and interior decoration.

Logistics

Quality andFunctionality

Affordability

Product
Development

Coordination suggestions
that enrich lifestyles

Offering the Unexpected

Building our own customs
clearance system

Net sales

Number of employees of the Group¥642.2 billion

43,800Areas of operation

2 stores

64 stores

Coordination

U.S.

Quality Control

Sourcing that expands
across the globe

Manufacturing

A solid production system built in ourown and collaborating factories

NITORI Group’s philosophy of doing everything in-house, making it possible for it to offer the unexpected.
We control all aspects, from product planning, manufacturing, logistics, through to sales, allowing us to create acompetitive superiority based on cost performance, unique marketing abilities based on an expansion of our area of
authority, and our ability to gather information from our control of both upstream and downstream markets.
Initiatives forming the sourceof our added value

Initiatives to strengthen
coordination in each process

Strength 2.

Asia

Raw Material
Procurement

Trade

Quality control based on the Sangen
Principle of visiting the actual site,
observing the actual part, product or item,and determining the actual situation* Number of full and part-time employees (calculated by converting standard 8 hour
workday as 1) is 29,936 (including 15,599 average part-time employees)

541 stores

Planning

More sophisticated supply chain utilizing our knowledge andexperience built up in each process

Japan

Control Capabilities

Ability to Utilize Our Expertise

Even in an increasingly complex global market, we willcontrol and manage our supply chain to achieve complete
security, safety, and high quality, and more efficientlogistics in each process.

We will utilize our information assets accumulated
throughout the supply chain to eliminate constraints, etc.
in each process. We will establish a new competitive
superiority by utilizing expertise accumulated in eachprocess in a cross-sectional manner.

Taking NITORI Group’s product safety andquality control to the world

p.9-10

Coordination that realizes our customers’
ideal lifestyles

p.13-14

Achieving both improved delivery quality
and cost reduction

p.11-12

Promotion of O2O strategy
Proposing more convenient shopping

p.15-16*Numeric figures are from Fiscal 2019

Net sales

Gross profit(billions of yen)(billions of yen)

750.0

(billions of yen)

375.0

572.0

608.1

642.2

314.7

331.4

354.3

90.0

500.0

250.0

60.0

250.0

125.0

30.0

0

07

Profit attributable to owners of parent

2018

2019

2020

(Fiscal year ending in February)

0

2018

2019

2020

(Fiscal year ending in February)

0

64.2

2018

68.1

2019

71.3

2020

(Fiscal year ending in February)

08

NITORI Group’s Strengths

Control Capabilities

Case 1

Hiroyuki Tajiri

Strengths developed throughour manufacturing-distribution-IT-retail business

Manager, Product Quality
Control & Improvement Office

Taking NITORI Group’s
product safety and quality
control to the world

Pursuit of quality enhancement
through the United Collaboration
System with our business partners

Toward the creation of a global product safety management system

Social background

Product safety as the basis of our business
There are over 10,000 NITORI Group products, with 90% or more of those sourced from overseas. Overseas
collaborating factories, primarily in Asia, are responsible for related manufacturing processes.
In recent years, there have been issues associated with the increasing complexity of the supply chain. One ofthem is “silent changes,” where parts are altered based on the judgment of the manufacturer, without the buyer’s
consent. A single error has the risk of causing a major product accident, so buyers must always implement strict
quality controls.

NITORI Group’s approach
NITORI Group is involved in all processes, from product planning, procurement
through to sales in an integrated manner, enabling it to effectively negotiate
and coordinate with suppliers, and control quality at NITORI standard.

Globalization of quality assurance system
NITORI has been building a global quality assurance system
across the Group since fiscal 2018. The center of activities forthis effort is the Quality Control Headquarters in Japan, which is
responsible for decisions, audits, and education on related rules
and regulations. Actual work including technical evaluation andinspection is conducted by the quality department of the country
or region in charge of production and sales.

09

Control Capabilities

Quality Control Headquarters in Japan
Determines rules related to quality for the entire
Group. Supervises, takes corrective action,and educates.

In order to deliver products to our customers with more secure andsafe levels of quality, NITORI Group selects supplier factories after
conducting investigations based on its own rigorous standards. I
believe it is important that we build a relationship based on mutual
enhancement and support through study group sessions called
Open House for suppliers at their plants and training and technicaldirection concerning product safety and quality control.

Sales outlets(worldwide)

Related Information p.59 ESG Information Responsible Procurement

Case 2

Toward a more efficient and more
rigorous quality assurance system
As 90% of our products are PB (Private Brand) products plannedand developed in Japan and manufactured overseas, NITORIGroup has established its own quality standards, and it is focusing
on improving and reforming quality on a day-to-day basis.
When developing products, NITORI evaluates products
based on the Failure, Mode, Effect, Analysis (FMEA) method at
Development Technology Evaluation Meetings, with the aim ofpreventing accidents, defects, risk due to misuse, and otherproblems before they occur. In fiscal 2019, over 1,000
Development Technology Evaluation Meetings were held, with attimes as many as over 40 meetings being held in one week. In
addition, approximately 540 Quality Improvement Meetings were
held, in which defective products for which issues occurred wereanalyzed, and their cause and countermeasures were determined
before improvement requests were provided to manufacturing

For further enhancement
Production sites(outside Japan)

Among these, we are particularly focusing on managing
our suppliers. For example, in continuous plant audits QAV2
(Quality Assurance Visits 2), we check whether the supplier’s
quality assurance system meets NITORI Group’s requirements
based on the Sangen Principle of visiting the actual site, observing
the actual parts, products or item, determining the actual situation,with the aim of reducing defective and non-conforming products.
Last year, we conducted investigations of over 200 companies. In
addition, we are also working to develop model factories for the
future, such as by providing compensated technical support(guidance across all methods of management in factory operations
as a means of improving corporate structures) to nine companies.
As we look to expand our store openings overseas from2022, we will continue to focus on building a global quality
assurance system and endeavor to deliver products that offer theunexpected to customers around the world.

1. Build a global quality control system
2. Train suppliers and reduce defective
products through quality reforms

Development Technology Evaluation Meeting

factories. In addition to demands and directions for improvement,
after the meetings, the effectiveness of the improvement
measures is also subsequently checked and the PDCA cycle is
implemented.
This series of initiatives has won acclaim, and we received
the Minister of Economy, Trade and Industry Award for the second
consecutive year under the Product Safety Award in 2018 category,after previously receiving this award in 2016.

1. As we expand our store openings overseas and offer an
expanded range of common global products, we intend toensure that quality standards, testing, numerical and record
collection, etc. in each country where products are sold areshared and implemented in stages from fiscal 2020.
2. Determine an order of priority based on the number of defects,
amount of sales, and factory evaluation, conduct QAV2 andcompensated support, and reduce the defect rate by 5% year
on year.
10

Control Capabilities

NITORI Group’s Strengths

Case 1

Actively implementing leading-edge
technology to achieve lower costs andmore efﬁcient operations

Strengths developed throughour manufacturing-distribution-IT-retail businessIn order for NITORI Group to continue growing on the global stage
while also overcoming chronic labor shortages, we must enhance
our efforts to standardize our warehouse management operationand improve the efficiency of the distribution network as a whole.
Kansai DC, which introduced warehouse management
systems from Manhattan Associates, Inc. in January 2019, is anadvanced logistics base that utilizes three-dimensional automatic
warehouse (AS / RS) systems that are among the leading systems
in Japan. With the introduction of warehouse management
systems and quality improvement activities by the quality control
team, we are ensuring the optimal performance and an increase inAchieving both improveddelivery quality and cost
reduction
Social backgroundprocessing capabilities, while at the same time promoting theautomation and standardization of warehouse operations as awhole. At present, we have rolled out these initiatives to theexisting Kawasaki DC, Sendai DC, and Misato DC, resulting in an
improvement of the shipping-cubic meter rate by 20%.
In addition, we have also currently made it possible totrace products from their manufacture through the last mile bycoordinating with our in-house production site in Hanoi, Vietnam tolink product manufacturing information using Warehouse
Management Solutions (WMS) on a trial basis.
In the future, NITORI will improve and reform operational
systems by promoting the expansion of these initiatives to other
distribution centers, and utilizing Warehouse Management
Solutions (WMS) together with the latest business processes.

Worsening labor shortage
Home Logistics Co., Ltd. is responsible for the final process of delivering NITORI Group’s products to customers’
homes. NITORI’s unique business model that integrates manufacturing, distribution, IT, and retail, enables it tooffer high-quality logistics to the last mile, based on economies of scale and its expertise. In order to improve
the labor shortage and working conditions that have become an issue for the logistics industry in recent years,
NITORI Group has identified breaking away from labor-intensive operations, i.e. using labor-saving measuresand standardization to reduce reliance on human resources, as a major theme.

NITORI Group’s approach reate distributions centers in Japan and overseas to reduce delivery costs throughC
the sorting and storage of products, and ensure prompt product delivery to ourstore network around Japan● Control efficient logistics by separating logistics routes for different product formats● Save labor and improve productivity by introducing Warehouse Management
Solutions (WMS)●

Overseas distribution

Control Capabilities

Domestic distribution

Case 2Aiming to further enhance our delivery
quality with the introduction of thedelivery training vehicle
Special skills are essential for delivering large furniture, including
assembly and installation skills and customer service skills. In
recent years, we have been placing particular focus on the “lastmile”—improving the quality of the final process of delivering
products to our customers. In June 2019, Home Logistics Co., Ltd,
introduced the industry’s first Mobile Training Unit, a vehicle fordelivery training. This training vehicle, which won a Good DesignAward 2019, replicates the inside of a customer’s home and isdesigned in a way that facilitates training related to hoisting up
furniture, stairways, and delivery inside the home. In order toachieve a high standard of delivery across Japan, we haveconducted training at approximately 150 partner delivery
companies nationwide to ensure that workers possess delivery
skills, the ability to work quickly, customer service skills, etc. of alevel that meets customers’ expectations. In fiscal 2019, we
conducted over 100 training sessions for over 400 people bothwithin and outside NITORI, including training sessions utilizing the
Mobile Training Unit. By taking advantage of the fact that the
Mobile Training Unit allows us to conduct training anywhere in
Japan, we aim to further enhance our delivery quality.

Exterior of the Mobile Training Unit

Achieve cost reductions and unhindered supply of products by managing all processes in-house, from application to contract

Overseas
distribution centers
Three sites:
Taicang, Taoyuan and
Ho Chi Minh11

Trading Operations
Improvement Office

Overseas factories

Container yards
Domestic
distribution centers
Receives and storesproducts and supplies
them based on orderinformation. 11 sites
nationwide.

Customers

Stores

1. We are studying and researching the latest robotics and ICT.

NITORI-net

Shipping centers

For further enhancement

11 sites nationwide

Delivery centers
78 sites nationwide

We aim to utilize the latest technologies to rebuild all logistics

Digitalization of logistics operations
Our delivery experts will deliver large furniturethat requires assembly and installation.

operations, from contracts, transportation and delivery,
inventory management through to payment.
2. We aim to enhance productivity in the last mile by expanding
the use of systems to optimize delivery routes and the use of asystem that utilizes AI to enable anyone to easily schedule theoptimal delivery plans.
12

NITORI Group’s Strengths

Ability to Utilize Our Expertise

Case 1

Strengths developed throughour manufacturing-distribution-IT-retail business

Coordination that realizes
our customers’ ideal lifestyles

Hiromi Abikocoordination, which offers our customers a “harmonized” home byManaging Executive Ofﬁcer,
Global Merchandising Division
Coordinated Merchandising
Planning Section
Planning Group Merchandising
Division Manager

just shopping at our stores.
Our approach to coordination is not based solely on color,
pattern, or other aspects of the product’s appearance, but also on
creating “living coordination” that create more comfortable homes
through price, functionality, idea, design, style, and other factors.

Coordination for everyone

Coordination turns the ordinary everyday life into something
exciting – we intend to spread this richness of living around the

Coordination is a key factor in achieving our aim of enriching

world. Having people realize free ways of living that express theirhomes around the world, which lies at the root of NITORI Group’s

own tastes through products and coordination – I believe this will

corporate activities. At NITORI, we focus not just on productcontribute to the enriched ways of living that we propose.

development that enables us to offer the unexpected withappropriate levels of quality at low prices, but also on total

Social background

Needs associated with diversified ways of living
People’s lifestyles have become increasingly diversified with the advancement of urbanization, the shift toward
nuclear families, and changes in ways people work, and as a result, people require “homes” that suit the ways
they live. “A space where the kids can play safely, but also decorated with fashionable interior items” (Working
couple in their 30s) “A space that’s comfortable, even if the space is limited” (Woman in Tokyo in her 20s) “A
space where my parents, wife, and kids can all relax together, while still respecting each other’s lifestyles” (Manin his 50s living with his family and his parents)…
From that matter, it is necessary to respond to the needs of the diversified homes by offering ways to “create
spaces” and “suggesting lifestyles.”NITORI Group’s approach
To fulfill the need for various styles of “living”, NITORI utilizes expertise and data
developed at every stage of the process- from planning, procurement,
manufacturing, through to sales.

Suggesting
coordinated styles

NaturalFeminine

Ability to Utilize Our Expertise

Vintage

Overseas tours

Domestic survey

Ways of communication

In overseas tours, we visit exhibitions in

Within Japan, we mainly study trends

After the surveys, buyers formulate a

Asian countries, Europe, and the U.S.,

among competitors and purchasing

product lineup and the merchandisers

and research trends in designs and styles.

trends at our own stores, in addition to

makes it a reality in the form of products.

At exhibitions, we can learn about whatstudies based on surveys to people in

We handle everything in-house, from thekinds of textiles and colors are trendy. We

and outside NITORI and studies based on

creation of secondary materials to display

also study actual trends among private

actual visits to people’s homes. Our focus

methods in stores, then work with thebrands and sales floors at a variety ofon customers’ frustrations andAdvertising Department and otherstores on tours, then we utilize thisinconveniences in domestic studies led us

relevant sections to advertise theseinformation in product planning andto develop products from the perspective

factors. It is precisely because of NITORI

development and sales floor development.

of the users and other customers, whichGroup’s fully integrated business model

Japanese Modern

have contributed significantly to thethat we are able to control every aspect

growth of NITORI Group.

and promote the greatest attractions ofour products to customers.

Creating products based oncolors, shapes, and materials
For further enhancement

Suggestions by use
Creating products to suitdifferent lifestyle scenes.

13

1. Expansion of sales floors
displaying coordinated products
2. Attempting new product types

1. Conduct thorough market research and produce products thatmeet customer needs. Present our products in small
coordination and in total coordination.
2. Began selling TVs in fiscal 2019. Attempting further expansion
in home appliances.

14

NITORI Group’s Strengths

Ability to Utilize Our Expertise

Case 2

Strengths developed throughour manufacturing-distribution-IT-retail business

Noriaki Miyairi
Manager, O2O Promotion Ofﬁce

Promotion of O2O* strategy
Proposing more convenient ways to shop
*Seamlessly linking offline (stores and DCs) and online (e-commerce sites,
mobile apps, digital ads, etc.) to provide quality customer experience.

Social background

Changing consumer behavior
Recent years have seen a rise in consumer behavior that uses both storesand e-commerce sites in a flexible manner, as smartphones and other mobile
devices have become more popular.
Companies must offer more convenient services to meet customer needs,
such as those of customers who wish to check products on e-commercesites before purchasing based on images on social media, interior design
sites, etc., and customers who wish to check products at actual stores
before purchasing on e-commerce sites.

NITORI Group’s approach
We aim to utilize data and expertise developed in warehouse, distribution, andstore operations to go beyond the barriers between actual stores ande-commerce sites, and offer customers a seamless and convenient shopping
experiences.

Ability to Utilize Our Expertise

Case 1
Evolution of e-commerce sites andpursuit of convenience
NITORI-net, our e-commerce site established in 2004, renewed inAugust 2019. Sales have grown favorably, partly as a result of
online-limited products, colors, and sizes, an online featureenabling customers to search for products based on coordinatedstyles, and enhanced recommendations.
We will work with the O2O Promotion Office to respond tochanging consumer behavior through digital marketing andenhanced coordination between brick-and-mortar stores ande-commerce sites.

15

Enhancing contact points with thecustomers mainly on the NITORI app andutilizing customer data analysis
We know from data analysis that at present, many customers use
both stores and e-commerce sites in a flexible manner. The fact that
we have brick-and-mortar stores and maintain a delivery networkthat covers this store network is a significant advantage for us.
In recent years, customers have become able to connect
with companies and enjoy shopping any time, in any place. For
such customers, companies must offer more convenient andcomfortable customer experience (including the value of theexperience of shopping and receiving useful information fromcompanies).
Our mobile app (the NITORI app) is positioned as a valuable
hub for ensuring that customers enjoy a convenient and seamless
shopping experiences without thinking about whether they are
offline or online. Customers can use the app prior to purchase,when they’re not considering a purchase, etc., and in this way
create a connection with NITORI.
I believe that if we increase the time spent connecting withcustomers through the NITORI app, they will be more likely to thinkof and select NITORI when considering a purchase of furniture,interior accessories, and household items.
In order to achieve that goal, we renewed the NITORI app
in August 2019.
Specifically, we added functions and services that areconvenient from the customer’s perspective, including deliveringpromotional notifications and messages tailored to each individual
customer through the app, adding an image search function thatallows customers to search for products sold by NITORI using
product images, functions for checking store inventories anddisplaying the location of products within stores, andimprovements to information and media functions. Looking ahead,
we will further augment the app by adding tools for measuring
room sizes, an in-store mode, and more.
We are focusing on developing and introducing coupon
functions connected to the POS, etc. to achieve our future target of
having the majority of customers shopping at NITORI through the
NITORI app, with a target of over 9 million NITORI app members by
the end of fiscal 2020 (5.4 million as of the end of fiscal 2019).
On the other hand, the formulation and implementation ofpromotional strategies that address digitalization in society andpeople’s lifestyles is also an important issue. Promotions that alignwith individual customers’ purchasing trends and lifestyles are
effective for creating loyalty among new customers and increasing
the repeat rate among existing customers. NITORI has data from acumulative total of over 40 million NITORI members. We consider
our customers’ data as a significant asset and intend to return theinsights gained from data analysis as useful information for ourcustomers.
We will position the NITORI app at the center of our strategy
as we focus on effective marketing that enables directcommunication with customers, and further augment ourcustomer-focused business as a key characteristic of NITORI Group.

Formulation of measures emphasizing
online sales in fiscal 2020
1. By integrating online and offline data, we will redefine what

Themes1

Promotion of direct marketing and improvementof customer convenience

2

Expansion of product listings

3

For further enhancement
1. Rebuild customer data foundations
and promote customer-centered
KPI management

Enhanced services with coordination between
e-commerce, stores, and distribution

2. Company-wide data utilization andhuman resources development

information is necessary, where we acquire it, how weaccumulate it, and how we utilize it. We will formulate KPIs thatplace a primary focus on the customer, and promotemanagement based on KPIs and their utilization in business.
2. Promote enhancement based on both development of data
and analysis environment and human resources development,
as we look to promote the utilization of data on a companywide basis.

16

Message from the President

NITORI Group’s Strategy

Strategy to Achieve Vision 2032
Direction of growth strategies and approachto corporate growth

We will create new trajectories
for growth toward achieving our
vision through global development
and expansion of business areas.
Toshiyuki Shirai
Representative Director & President (COO)

Summary of Results for Fiscal 2019
Achieved 33 consecutive years of increased
sales and profits. A year of definite progress
toward the achievement of our vision.
In fiscal 2019, we built our store network out to 607 stores,
including overseas stores, and achieved sales of 642.2 billion
yen. Difficult business conditions continued in the furniture andinterior decorating industry, owing partly to intensifying sales
competition across industries, soaring labor costs, and the risingcost of distribution, but we achieved our 33rd year ofconsecutive growth in sales and profits on the back of robust
sales of bedding products, kitchen products, appliances, sofas,and bedroom furniture.

Net sales/Ordinary income(billions of yen) ■ Net sales
600.0■ Ordinary income (billions of yen)642.2 109.5
608.1 103.0
100.0

572.0 94.8
512.9 87.5

80.0

458.1 75.0

400.0

60.0
40.0

200.0

20.0
0

17

2016

2017

2018

2019

0
2020 (Fiscal year endingin February)Compared with the start of our first 30-year plan in 1972,
our store network has increased approximately 300 times, andthe number of purchasing customers exceeded 93 million in
fiscal 2019. In my view, these figures show the results of ourperformance, i.e. that the number of times each customer visits
our stores per year has increased, and that customers feel aclose connection to NITORI thanks to accelerated store openings
in small market areas.
In order to ensure continued customer loyalty, I believe it
will be important that we have stores in locations that are closeand convenient for customers, and that we continue offering
attractive products.

We have set forth our vision of achieving 3,000 stores and 3
trillion yen in net sales by 2032 (“Vision 2032”), based on our
aspiration to enrich homes around the world. The domestic
sales business will continue to play an important role inachieving this vision, but our overseas sales business will also
be a crucial factor (see p.23 Project to Strengthen Global
Business).
In addition to pursuing expansion in existing businessfields, we are also actively advancing into new fields of businesswhere we can leverage our strengths. For example, in the
Corporate Sales and Interior Renovation Businesses, which
opened our largest BtoB showroom, the NITORI BusinessShowroom Shibuya, in 2018, began development and sales offree desks, which can be fully customized without any
installation work, in line with the increase in people working
from home and in small offices. Even as customers’ needs
become increasingly diversified in the future, we intend todevelop and offer products capable of addressing their needs,
and expand our range of products that offer the unexpected in
the BtoB market as well.
In addition, as a separate format to our NITORI stores,
we are also accelerating our openings of Deco Home stores,
which are based around the concept of “a store you can drop inon daily” and stock a large number of popular basic items
concentrating on basic necessities for the home. We aim tofurther clarify the differences between Deco Home and the
NITORI brand, as we look to establish a business model that cancoexist with NITORI, even in the same shopping malls. In
addition, we will also develop brands targeting women, andenter the apparel business.
Taking on the challenge of entering new fields ofbusiness requires a significant amount of energy, not to mention
that it carries risks. At NITORI, however, we have created ourcurrent unique business model that integrates manufacturing,
distribution, IT, and retail and achieved growth precisely becauseof our characteristic attitude of “taking on new endeavors inareas where we lack past experience” and “identifying tiresome
and difficult issues, and doing them ourselves.” I believe that
this attitude, which forms the DNA of NITORI Group, willcertainly manifest itself as a significant strength in our future
global development and business expansion.

Looking back on priority issues for fiscal 2019
NITORI Group has put three priority policies in place to achieve
Vision 2032.
(1) Establish a Group growth trajectory and new endeavors(2) Provide a comfortable lifestyle via our merchandise,stores, and services(3) Rebuild the company organization to sustain a global
chain store system(1)
Establish a Group
growth trajectory andnew endeavors

Three Priority
Policies(2)(3)
to Achieve Our Vision
Provide a comfortable
Rebuild the company
lifestyle via ourorganization to sustain
merchandise, stores,
a global chain store
and services
systemBased on these policies, we determine priority issues
every year, as we make steady progress toward theachievement of our vision.
Priority issues for fiscal 2019 [Table 1]

1. Sustainable customer expansion through the pursuit of thecustomer’s perspective
2. Business area expansion strategy
3. Establishment of an overseas sales business proﬁt model
4. Task and system reform
5. Organizational and human resources development reform

With regard to priority issue 1. sustainable customer
expansion through the pursuit of the customer’s perspective,
there were signs of progress in creating next-generation
prototypes, such as the renovation of the Niiza Store to use new
layouts centered on separate coordinated rooms for different
styles, but the issue of increasing the number of items
purchased remained. As a measure for enhancing the numberof items purchased, we intend to thoroughly implement thestrategy of enhancing sales floors that show the attractions ofcoordinated products. With regard to priority issue 5.
organizational and human resources development reform, we
introduced Workday, which allows our employees to manage
their learning history, and Globis’ study-all-you-want program,an online learning system, in order to augment our creation ofan organization that boasts a wealth of elite employees who can

18

NITORI Group’s Strategy

Message from the President

carry the responsibilities of our Group and its diverse businesses.
The full-scale operation of the Human Resources Management
Platform was also a significant step forward in terms of this issue.
We will utilize the unique education system offered by this platform
and NITORI University to develop personnel capable of creating
new value, thereby becoming a stronger organization boasting a
wealth of elite employees as we target sustainable growth.
Our business results are growing in terms of numbers,
but I believe there are still points where we must improve interms of progress toward achieving our vision. We will not easeup on the speed with which we resolve issues as we continue to
steadily implement improvements and reforms.

Priority issues for fiscal 2020
We have set forth six priority issues shown in table 2 for fiscal
2020 and will accelerate our initiatives in these areas. Also, as
we work our way to significantly change the way we approachsolving these issues this year, we have begun building
organizational systems to enhance the speed and accuracy ofdecision-making, by eliminating the concurrent holding of theposition of President of operating companies and NITORI
Holdings Co., Ltd. by the same person, and establishingdedicated officers responsible for each issue. As President of
NITORI Holdings Co., Ltd., I believe key parts of my duties
involve measures for the future – namely training personnel andcreating an organization for the future – and the establishmentof an organization that clarifies the persons dedicated toresolving the respective issues.
I think a day will come when we look back at fiscal 2020
as a watershed moment, when our initiatives this year
significantly changed our future direction, precisely because theyear began with the headwind of the spread of COVID-19. I
intend for NITORI to take a proactive stance this year, as we
accelerate the speed of improvements and reforms aimed atturning this difficult situation into an opportunity.

NITORI Group’s ESG and sustainability
In order for NITORI Group to maintain sustainable growth, we
believe it is necessary to flexibly respond to the “external
environment,” which includes factors such as domestic market
shrinkage and changes in consumer preferences. On top of this,we will further strengthen our overseas sales business, whichmeans that we will engage with and be supported by a morediverse selection of people as we expand our business activities.
Recognizing the importance of these changes in the businessenvironment, we have summarized the sustainability policy of
NITORI Group and examples of our contributions to ESG and
SDGs, and have established systems for promoting these
initiatives. (see p.31 NITORI Group’s ESG)NITORI Group’s attitude of placing the highest priority on
resolving customers’ frustrations and inconveniences and taking
action is the same attitude we assume when approaching ESG.

[Table 2]
Priority issues for fiscal 2020
1. Promoting coordination suggestions andO2O
2. Global business development andexpansion of business areas

Specific targets
Increase percentage of sales floors displaying coordination
Improve linkage function between stores and the NITORI app● Enhance function for receiving feedback from customers●●(see p.23 Japan-China Joint Project to Strengthen Global Business)
Establish production system for dining chairs: 1,000 per day
Production of bed mattresses: 1 million per year
● Production of sofas: 200,000 per year
● Globalization of quality regulations and standards● Strengthened quality control procedures overseas● Direction and development of suppliers●

3. Enhancement of product development,
production system, and qualify control
system

●●4. Rebuilding domestic distribution centers

5. Improvement of operational productivity
for the entire company
6. Promoting human resources development
toward the future

19

●

●

●

We believe that leveraging our unique business model that
integrates manufacturing, distribution, IT, and retail in creating
environmental, social and economic value is exactly the kind ofsustainable management that suits NITORI Group. For example,
enhancing transportation efficiency by downsizing productpackaging leads to the reduction of CO2 emissions volume inaddition to cost reduction, and providing direction andinspections for overseas factories for OEMs not only improve
quality but also lead to the resolution of social issues, such as
the prevention of “silent changes,” where parts are alteredbased on the judgment of the manufacturer, without the buyer’s
consent.
There is one sentiment that I’ve often expressed to thededicated employees who support these business activities thatlead to corporate growth-it is the idea that you haven’t crossed
the goal line just because a system has been created; the real
work comes in continuing to break it down and rebuild it into
something better.
Our business model that integrates manufacturing,
distribution, IT, and retail, which is recognized as the one andonly of its type in Japan, is not necessarily compatible with direct
deployment overseas as it is, and it must be strengthened
through constant evolution and development to adapt to thesurrounding environment and circumstances. I don’t believe in
the idea that you’ve crossed the goal line just by creating asystem, and that you can simply copy existing rules as they are;instead, I believe that deep understanding of the “process” ofsystem creation and being able to create a new system toaccommodate evolving situations are what are important as anorganization and what allow both the individuals and thecompany itself to continue growing.
Based on the approach detailed in the NITORI Group
Sustainability Policy, we will continue to provide systematic
control in ESG initiatives through our business activities andcreate additional shared value to achieve the sustainablecorporate growth and sustainable management that ischaracteristic of NITORI Group.

Message to Stakeholders
From Japan to the world. NITORI Group willcontinue to grow.
Although the first 30-year plan for our expansion from Hokkaido
to the mainland, which included opening 100 stores andachieving net sales of 100 billion yen, was considered a grandvision at the time of its conception, we were able to achieve thisvision in 2003. Our current plan is to expand out from Japan
into the world, increasing the number of stores and net sales to
30 times what they were in 2003. Vision 2032 sets ambitious
goals, but the challenges that NITORI Group must tackle toachieve them are clear, and by steadily resolving them, we willlead our efforts into the achievement of our vision and mission.
Decrease in population due to low birthrate and aging
population is an issue in Japan, but on the other hand, shifting
our attention to the world at large, population in the Asian
countries are increasing, and in that sense, we recognize thateven after achieving Vision 2032, we still have challenges thatare waiting to be tackled. We will be accelerating the number ofstore openings in Eastern Asia from 2021, but we are also
already looking into expanding into Southeast Asia.
The indicators that we value as cornerstones of corporate
growth are the number of stores and the number of customers,
which serve as barometers of social contribution in the
distribution industry. To those ends, it is important to think ofcustomers first and to provide product development andservices that resolve the frustrations and inconveniences
experienced in everyday life. We will continue to open stores insmall market areas and strengthen our O2O initiatives in orderto deliver these products and services to more customers.
Profits will follow as a result of these efforts. I sincerely believethat this is true.
I believe that all of the dedicated stakeholders who are
involved with NITORI Group, as customers or as shareholders,will continue to make us stronger by providing us with a diverse
selection of valuable opinions and requests from a wide varietyof perspectives. We ask for your continued support and wishes
for the further growth of NITORI Group as a company that willremain close to your heart.

Rebuild locations and functions at both new and existing sites
Review methods and frequency of delivery to stores, and maintain and achieve appropriate store
inventories and optimal lead-timesP romote enhanced work speeds, labor reduction, and automation by further utilizing digitaltransformation
 evelop a talent management platform and link individual career orientations with internal
D
education (NITORI University) to support self-directed careers

20Value Creation Model

Business Environment
Contraction in domestic market owing
to low birth rates and aging population
Increased diversification of lifestyles

Strengths Developed through Our
Manufacturing-distribution-IT-retail
Business

Mission sharedby each and every
employee as thesource of corporate
activities

p. 8-16● Built our own supply chain from product planning,

manufacturing, distribution, through to sales● Ensuring quality with comprehensive management

systems and establishment of new competitive
superiority through utilization of expertise

Strategy to Achieve Our Vision
p. 23-26

From the Japan-China Joint Project toStrengthen Global Business to
the Global Business Development OfficeHumanresourcesdevelopment

Product
development

StoresSupplysystemAbility to Utilize
Our Expertise

Enriching homes● Create the attraction of “offering the unexpected”

overseas with a proper understanding of the local

around the world

Vision 2032

3,000 stores¥3 trillion
Becoming a company that offers enriched
lifestyles to people around the world

environment and market needs● Utilize clarification and standardization of businessControl Capabilities

Sales

Achieving Our Mission

Global standard sustainability
management

know-how for global business development

Planning

Logistics

Quality andFunctionality

Affordability

Product
Development

Business Activities and Strategies

Offering the Unexpected
Coordination
Raw Material
Procurement

Trade

Quality Control

Domestic Sales Business andOverseas Sales Businessp. 27-30● Actively open stores in small market areas and promote

coordination suggestions● Challenges and growth strategies overseas

Manufacturing

Approach● Improvement and reform based on rejecting the status quo

1,000 stores¥1 trillion
Expanding dominant areas around the world
and revolutionizing lifestyles

ESG p. 31-50● Product development from the customer perspective

Vision 2022

● Aiming for a better future by resolving the issues of theEnvironment

Society

Value Creation● Working backwards from our goalworld while taking steps toward achieving our mission● Create environmental, social, and economic value

through business activities that leverage our businessmodel

Economy21

22

Strategy to Achieve Our Vision

NITORI Group’s Strategy

Interview

Clarification and standardization of businessknow-how cultivated in Japan:
Creating a system where we can bring together
the know-how of each individual person in our“organizational knowledge” and open stores
anywhere in the world

From the Japan-China Joint Project toStrengthen Global
Business to
the Global Business
Development Office

Fumiaki Matsumoto

Director, Executive Vice President

NITORI Group’s Global Business Development−The Importance of Overseas Sales Business to Achieve Our Vision−

Project background
NITORI has continued to take a proactive approach in opening stores throughout Asia since 2014. Home
furnishing businesses like ours are not common, and there is an opportunity for us to become the market leader.
On the other hand, the competitive environment is changing drastically due to the rapid digitalization of local
competitors, and it remains a fierce market where competitive battles are being fought daily.

NITORI Group’s approach
Utilizing know-how
Strengths developed
through our manufacturingdistribution-IT-retailbusiness

Medium- to long-term goals

Create the attraction of “offering theunexpected” overseas with a proper
understanding of the local environment
and market needs

Utilize clarification and standardization ofbusiness know-how tempered for global
business development[Strategies in Overseas Business]
Identify issues under specific themes, such as product development, sales floor creation, supply chain andinventory management, and store manager and buyer training, etc., and work on improvement measures.
Specific activities and primary results

Four priority issues
Humanresourcesdevelopment
Product
development
promotion

Clarify roles and standards for store manager and buyer positions
Create a short-term training program that enable development in a short period of time, and develop lecturers● Establish and begin operation of curriculums that feature training in Japan, etc.
●

Supply systemestablishment

Build a product development system and standardize processes that take advantage of economies of scale linked to the approximately 540 stores in Japan● Global standardization of NITORI’s unique KPI management methods and improvement of management skills● Provide appropriate store inventories that support product development that can continue to enhance product appeal● Redesign e-commerce site, etc.
●

Design displays, layouts, etc. that create special experience that will attract customers back to stores that include new discoveries, good value, and heightened
expectations● Establish a prototype for standard stores and horizontal deployment of remodeling for other stores● Establish system for new product trial sales using flagship stores● Redevelop guidelines on store opening criteria, including location strategies, etc., for accelerating store openings● Scrap-and-build, etc.
●●

Sales plans and appropriate inventory management based on coefficient management of seasonal indicators and sales performance
Clarification and application of efficient in-store storage methods, etc.

■ Increased localization of management■ Standard store (Shanghai Qibao Store) and flagship store (Shanghai Xujiahui Store) both recorded double-digit growth in net sales ona year-on-year basis following renovation■ Existing stores recorded annual net sales of 103.8% (double-digit growth in the third and fourth quarters) on a year-on-year basis

23

this in mind, I am confident that NITORI Group’s business model
can be expected to succeed in the global market as well.
In our global business, we opened our first overseas store,
Kaohsiung Dream Mall Store, in 2007, and have since then
expanded proactively overseas, and at the end of fiscal 2019,
there are 64 stores in Asia, and two stores in the U.S. Although ouroverseas results don’t seem necessarily promising whencompared with domestic sales, this is due to lack of managementin factors such as human resource management being unable tokeep up with the pace of opening stores and a lack of utilization ofbusiness know-how, and it is actually not a field that is posing an
inherently tough battle. We believe that this period gave us time toexperiment through trial and error to create a system that can win
out in the fierce competition of the global market.
Under these circumstances, the Japan-China Joint Projectto Strengthen Global Business was launched in an all-out effort tothoroughly consider the subject of how we can accelerate theexpansion of our overseas sales business in the future.

Establishing the Japan-China Joint Project to Strengthen Global Business−The Project Content and Results−●●

Improving store
appealWorking backward from the goal of achieving 3,000 stores and 3
trillion yen in net sales set forth in Vision 2032, we believe thatstrengthening global business is absolutely essential. Although
NITORI Group will continue to focus on sales growth throughactively opening stores and providing total coordinationsuggestions in Japan, considering that the scale of the domestic
market is approximately 3 trillion yen, the overseas sales businesscould be called the growth driver for achieving our vision.
I think the key to the success or failure of overseas
business lies in whether the business model has a “system” that
can accommodate the different needs found around the world. In
this regard, NITORI Group benefits from maintaining management
skills for fully integrated control from procurement to sales, which
it has achieved through the manufacturing-distribution-IT-retailbusiness model. (see p.8 NITORI Group’s Strength)
Through this, it is possible to reflect the needs of eachregion, such as trends and consumption levels in the area of
operation, in the ways that products are made and supplied. WithIn December 2018, we established the Japan-China Joint Projectto Strengthen Global Business, a joint effort in whichknowledgeable specialists from our headquarters in Japan andlocal staff members worked together to resolve issues, strengthen
overseas sales business and achieve speedy global businessdevelopment. Starting with an analysis of the current state ofdevelopment, we organized and analyzed a scattered selection ofissues and clarified the problem areas that needed to be resolved.
In addition, we organized the know-how that has been handed
down to us as knowledge through experience, and have put inplace a system to improve our ability to replicate this know-how at

actual sites. Thanks to this approach, fiscal 2019 has alreadybegun to produce positive results in both store operation andperformance.
Approximately half of the listed and recognized issues will
be resolved through operational improvements such as humanresources development and sales floor development, andprospects look bright that the other half will be resolved throughclarification, adding to our curriculum, and systematization. NITORI
as a company retains all kinds of internal know-how, but it iscontained within specific personnel and has not been collected
and managed as shared organizational knowledge. Through this24

NITORI Group’s Strategy

Strategy to Achieve Our Vision

NITORI Group’s Strategy

relationship can be in jointly solving problems that are occurringand that we were able to share a firm understanding that it is thejob of the headquarters to take responsibility for supporting theoverseas business. In the future, we believe that this will be a
powerful resource as we continue to dramatically expand theoverseas sales business.

project, it has become clear that identifying this implicit knowledge
and sharing it as explicit knowledge is a shared theme that wemust continue to work on.
In addition, we also gained great insights, including the factthat the members of the headquarters in Japan were able toexperience how efficient and effective the Japan-China

Performance Reports and Growth
Strategy for Achieving Our Vision
Consolidated operating results

Creating a System with the Ability to Open Stores Anywhere in the World– Strategy to Achieve Our Vision –acquired through this project and effectively convey it to eachdepartment. Specifically, it will direct and supervise the entire
global business by acting as a bridge for communication so thateach department can easily support overseas business, regulating
issue awareness, and in some cases, creating systems for issue
resolution.

The Japan-China Joint Project to Strengthen Global Business was
disbanded in fiscal 2019 as originally planned, and we havetransitioned to a holdings company structure to support overseas
business expansion by each organization through the Global
Business Development Office. The Global Business Development
Office will drive future overseas sales business as a management
organization that provides systematic control over the knowledge(billions of yen)

700.0

608.1

350.0

Human resources development ● Product development
Product supply ● Store creation ● Omni-channel● Store work standardization● Product supply and inventory
management

Support for overseas business by the Japan
headquarters→Supporting issues related to developing business in all
countries and regions●

Clarification and transfer of the knowledge→Through OJT and personnel transfers to enable knowledge
sharing, transplant and transfer the knowledge accumulated
within the Company to other countries and regions●

Global omni-channel promotion(platform building, global standardization)→Evolution from e-commerce measures deployed in eachcountry to the development of a shared global platform

There are many different countries around the world, withmany different lifestyles and ways of living. We believe that we canrespond to the frustrations and inconveniences found in eachcountry with NITORI Group’s business model.
The strategy we are employing to achieve our vision is toestablish a system for stable growth in the top competitive market
while still making maximum use of the knowledge and strength wehave cultivated in Japan, and provide global standardization sothat this system can be transferred to any region of the world.

25

Initiatives●●

Display standards
Faster and more efficient human resources development, etc.

100.0

109.5

Fiscal
2018

68.1

Fiscal
2019

71.3

50.0

0

0

Net sales

Ordinary income

Profit attributable to owners of parent

Sales were strong in N Cool series and N
Warm series bedding products, kitchen
products, appliances including
refrigerator/freezer and washing machines,
sofas, and bedroom furniture includinginternally-developed mattresses, etc.

Gross profit improved due to forward
exchange contracts and measures tolower costs. Selling, general andadministrative expenses increased due toincreased logistic expenses, including
shipping and delivery expenses, andexpenses involved in remodeling 25
existing stores.

Despite recording gain on sales of
non-current assets and extraordinary
losses due to factors including
impairment of unprofitable branches ofoverseas stores, etc., profit attributable toowners of parent increased by 4.7%
year-on-year.

* Discovering more solid knowledge through a process of clarification andtransfer of conventional know-how

Understanding the lifestyles of local people and identifying
frustrations and inconveniences based on actual living conditions

150.0

75.0

0

Themes(billions of yen)

103.0

Global Business Development Office (started in January 2020)

Lifestyle studies in new countries→Identifying the features of local lifestyles instead of market
research on what’s currently selling well

642.2

(billions of yen)

Growth strategy●Response to rapid changes in customers’ “purchase behavior”● Unified system, cost measures and improved expansion speed, etc.
●

While maintaining support for issue resolution through operationalchanges and improvements, we will continue to promote thecreation of a system featuring clarification and transfer overseas of
the knowledge to achieve efficient and effective global businessexpansion, which includes the discovery of new knowledge thatarises from providing support.
In this way, NITORI Group seeks to establish a system withthe ability to open stores anywhere in the world.

Priority
policies● Establish a Group growth trajectory and new endeavors● Provide a comfortable lifestyle via our merchandise, stores, and services● Rebuild the company organization to sustain a global chain store system

Looking backon fiscal 2019

Furniture and interior decorating product sales werestrong, driven by favorable performance of bedding
products, kitchen products, appliances, sofas, andbedroom furniture, and gross profit improved due toforward exchange contracts. Net sales in the furnitureand interior decorating products sales business were629.7 billion yen.

Future issues
and response
strategy

In the furniture and interior decorating industry, the business environment is expected to change significantly due tofactors including technological progress, evolution of competition, intensifying sales competition that spans acrossbusiness categories, rising logistic costs, and changes in consumption trends. In order to establish a global chain in
response to this kind of environment, we will evolve our strength as a manufacturing-distribution-IT-retail business,offer coordination suggestions, promote O2O, etc. and continue to provide products, stores, and services withincreased focus on the perspective of our customers.

Net sales in other business were 12.5 billion yen, due
to real estate lease revenue and advertising andpublicity business, etc.

26

NITORI Group’s Strategy

Domestic Sales Business

Growth Strategy for Achieving Our Mission and Vision

Domestic Sales Business

Actively open stores in small market
areas and promote coordinationsuggestions

Create attractive
stores with new
products, services,and coordinationsuggestions

We place the highest priority on resolving customers’ frustrations and inconveniencesin developing products and providing services. I believe that identifying and resolving

In regard to store openings within Japan, there is a lot of room forthe sustainable expansion of customers in areas where our Grouphas yet to open a sufficient number of stores: market areas withlow populations. In the Deco Home business, we are actively
opening stores in these areas. Our domestic network of Deco
Home stores, which are based around the concept of “a store you
can drop in on daily,” had expanded to 94 as of February 20,
2020, including the opening of our first store in Hokkaido in
February 2020. In fiscal 2020, we plan to open 20 stores, as we
look to expand our offering of skin care products, cosmetics,
beauty appliances, and other new types of products, and create
store formats that can exist alongside NITORI.
Additionally, the “promotion of coordination suggestions”
will be essential as we look to achieve the mission and vision of
NITORI Group. At present, the proportion of our sales floors
allocated to displaying coordinated merchandise is just 25%, but
we aim to increase this to 40% in fiscal 2020 by increasing ourrange of coordinated offerings. We aim to encourage morecustomers to visit stores by ensuring they experience at first handa greater range of coordinated offerings that will enrich theirlifestyles, and we believe this will lead to an increase in thenumber of items purchased as customers learn the joy of
coordinated merchandise.
In order to make life more convenient, comfortable, andenriched for all people in all regions throughout the country, we are
actively opening stores and promoting coordinated offerings, as we
aim to achieve our mission and vision.

many more of the troubles faced by customers will contribute to the enriched
lifestyles that we offer. We aim to achieve our mission and vision by clarifying anddevoting ourselves to issues in products, sales floors, and services.

Masanori Takeda

Specific strategy

Representative Director & President, Nitori Co., Ltd.

27

Business Environment (Risks and Opportunities)

Countermeasures

Pursuit of the customer’s perspective asa priority issue for sustainable expansionof customers

To create stores where many customers
would want to visit repeatedly

In fiscal 2019, the number of stores increased by 36 from theprevious fiscal year, with total of 541 stores (NITORI, Deco Home,and NITORI EXPRESS) in Japan. After we opened our first store in
Hokkaido in 1967, NITORI Group has focused on expanding
domestic businesses. However, we have witnessed shrinkage ofthe domestic market with a decrease in domestic sales in various
industries resulting from the impact of population decline andother factors in recent years. We have worked on sustainable
customer expansion through the pursuit of the customer’s
perspective as one of our priority issues in order to continue toprovide enriched lifestyles even amid this situation.

In fiscal 2019, we undertook various measures to improve theconvenience of shopping. This included establishing interior design
consultation corners at four separate sites, building a customer
service system using 3-D simulators, installing digital catalogs in
439 stores to compliment the product lineup, and experimental
trials of introducing self- and semi-self-service cash registers. As
we continue to open new stores, we will strive to implement
low-cost operations while providing stable services to customers,
and aim to continue devoting ourselves to creating stores withrepeat visitors.

Offering enriched ways of livingwith a wide range of options
NITORI’s approach to coordinated offerings is based on twobrands with different price ranges – our DAY+Value and &Style lines – and five styles (simple, natural, feminine, vintage,and Japanese modern). In order to offer customers ways ofliving that allow them to experience the joy of coherent interior
coordination, we are revising our product mix (price ranges)
and creating style-based merchandising (clarification of ourphilosophy and design policies, and control of our mix ofbrands for each type of product). The Group’s aim is toensure that customers are able to select the style, price, andfunction that meets their needs, and experience the joy of
shopping and interior coordination. We will offer more people
enriched ways of living by increasing our efforts to provide
coordinated offerings and thereby offering customers amultitude of styles that cannot be found anywhere else.

28

NITORI Group’s Strategy

Overseas
Sales Business
海外販売事業Overseas Sales BusinessAccelerating
globalization is the key
to achieving Vision
2032

NITORI Group is currently focused on opening stores overseas. Up to this point,
resolution of the unique issues faced in each country was left to the local teammembers. However, since we thought that this method will not provide the ability toaccelerate globalization, in February 2020, we established the Global Business
Development Office in order to provide support directly from our headquarters forbuilding foundations for overseas business.

Fumiaki Matsumoto
Director, Executive Vice President

NITORI (China) Holdings Co., Ltd.: Looking Back on Fiscal 2019 and Issues and Growth Strategy for Fiscal 2020

A year of foundation building - yielding steady results from the project
The number of stores in fiscal 2019 decreased by four from theprevious fiscal year to 34. However, this was a deliberate strategy
deployed to restructure the business promotion system led by theJapan-China Joint Project to Strengthen Global Business that wasformed in December 2018. Focusing on remodeling existing
stores, the Shanghai Qibao Store, the standard store, took steps toestablish standard patterns in operation and sales floors, while theShanghai Xujiahui Store, the flagship store, conducted initiatives
such as reproducing the most advanced stores in Japan torecreate the image of NITORI. As a result, these two stores
recorded double-digit growth in net sales year-on-year after
remodeling and were able to grow as models for profit-generating
stores.

29

In fiscal 2020, the issues are to horizontally expand Hfa
prototype stores through scrap-and-build initiatives andremodeling existing stores, in addition to maintaining a PDCA cycle
to accelerate store openings from 2021, including standardizationof shelving allocation and product lineups that meet the needs ofthe area. In addition, we will continue to take on new challenges toexpand the e-commerce business and implement measures toincrease contact points with customers leveraging the results
obtained from the project. As the second year of foundationbuilding, we will move forward to achieve steady growth.

NITORI Taiwan Co., Ltd.: Looking Back on Fiscal 2019

NITORI USA, INC.: Looking Back on Fiscal 2019

Net sales at existing stores recorded
double-digit growth year-on-year.
Gaining confidence in the permeation of
the NITORI brand

A two-store structure with a streamlinedorganization which allows morefunctional responses to market changes.

Although the number of stores in fiscal 2019 decreased by one
from the end of fiscal 2018 to 30 as a result of promotion of
scrap-and-build initiatives, net sales at existing stores recorded
double-digit growth year-on-year due to effective remodeling ofexisting stores. The remodeled stores have been favored bycustomers as a result of reviewing product composition,
strengthening presentation, and replacing floors and furniture. Also,
performance in the BtoB business increased significantly from theprevious year, as we provided interior design planning service toJapanese companies on the occasion of their store openings. Thisbusiness is expected to grow into a pillar of NITORI Taiwan Co., Ltd.
in the future.

We have been promoting the development of our Aki-Home brandin the U.S. since we first entered the market in 2013. In fiscal
2019, the number of stores in the U.S. came down to two as aresult of closing unprofitable stores, but we also worked to cut
down on costs by downsizing the organization. Half-hearted
attempts will not make the cut when it comes to businessdevelopment in the U.S., which is said to be the most competitivemarket in the world. However, establishing a store in the U.S.,
where the roots of our mission lie, has great significance for thegrowth and development of NITORI Group. We are now undergoinga repeated process of learning and taking on of new challenges
amid the fierce competition presented in this market.

NITORI Taiwan Co., Ltd.: Fiscal 2020 Issues and Growth Strategy

NITORI USA, INC.: Fiscal 2020 Issues and Growth Strategy

To become the company that contributes
the most to enriched living

Promotion of omni-channel strategy
centered on private label products

We will continue to promote scrap-and-build initiatives as well as
the remodeling of existing stores to build a profit model and also
experiment the development of small stores of the size of 330 m2
in our efforts to open more stores. In addition, we will utilize TV
commercials and social media to promote our products andservices to an even wider range of customers, and in doing so,
aim to promote recognition of the product capabilities of NITORIGroup and our status as a global corporation. “Becoming acompany that contributes the most to enriched living” - this is thevision that NITORI Taiwan Co., Ltd. aims to achieve. We will work
to steadily gain the support from our customers and continue totake on new challenges.

In regard to purchasing behaviors of furniture in the U.S., morethan 60% of customers first select products on e-commerce sites
and then purchase them at actual stores. In order to accommodate
this behavior at Aki-Home as well, we will focus on expanding
e-commerce sales in fiscal 2020. In addition, we will pursue newendeavors, such as experimenting the use of physical contact
points (pop-up stores) to convey the value of functional products,
including the N Cool product series, to customers, and linking
information obtained through lifestyle surveys to productdevelopment capabilities for developing core products.

30

NITORI Group’s ESG

Enriching homes around the world

Mission statement

NITORI Group’s Sustainability Policy

Taking steps toward achieving our mission while resolving
the issues of the world, aiming for a better future.
NITORI Group has continued to maintain its shared corporate philosophy of enriching homes around the world andcontinues its endeavors as a corporation to provide products and services focused on “offering the unexpected.”Its unique business model that integrates manufacturing, distribution, IT, and retail was developed precisely during
this process.

Environment

Society

Value Creation

Taking advantage of this fully integrated business model, and repeating improvements and reform at every
stage from planning to sales by constantly making considerations from the perspective of the entire supply chain,
we are not only able to achieve drastic cost reduction, but also able to contribute to various fields in solving ESG
issues and implementing the SDGs.
We will continue to place the highest priority on “resolving customers’ frustrations and inconveniences” as wework to achieve our mission, and by focusing our efforts on the external environment and change and challenge
ourselves, achieve sustainable corporate growth and create environmental, social, and economic value to achieve
the sustainable management that suits the characteristic of NITORI Group.

EconomyInitiatives to Solve Issues
Planning and Development

Sales

Balancing convenience of products and environmental

Planning

consciousness………p.33–34
Procurement and Manufacturing

Product
Development

Logistics

recycled materials………p.35–36
Logistics and Trade

Governance

Sales

Raw Material
Procurement

Trade

Contributing to a recycling-oriented society with the use of

CO2 reduction through enhanced transport efficiency………p.37–38

Offering convenience with an expanded store network………p.39–40

New Fields of BusinessContribution to sustainable urban planning through revitalization ofused home market………p.41

Quality Control

Manufacturing

Initiatives to Build Foundations
Social Action Programs

Loss of biodiversity fromdeforestation

Destruction of theecosystem from ocean
plastic pollution

Global warmingfrom CO2
emissions

I want to buy
products that are
secure and safe

I want a comfortableand fulfilling lifestyle

I want to choose acompany that considers
people, society, andenvironment

I want affordable
and valuable
products

Environment

Customers

Business partners
We want to achievesustainable growth

Local community
We want to contribute toenriching society for the future
generations

Shareholders and investors
We want to support companies
that we can foresee
sustainable growth

Creating an organization with a wealth of elites………p.43–46

Governance
ESG Information

Employees
We want a work environment
where empowerment anddiversity are respected

Corporate governance………p.47–50

Disclosure of ESG Information………p.57–60

Sustainability Promotion System
Board of Directors

Stakeholders

NITORI Group’s customer-oriented, unique business model that
integrates manufacturing, distribution, IT, and retail
Resolving issues around the world through our business model
31

Human Resources Development

Hand-in-hand with our customers………p.42

Internal Board of Directors[Information collection and promotion] CSR Group, President’s Office, NITORI Holdings, Co., Ltd.
[Information disclosure]Public Relations Division[Response to environmental and social issues]
Related departments[Governance]
Legal Office32

NITORI Group’s ESG

Planning andDevelopment

Initiatives to Solve Issues

Balancing convenience of products
and environmental consciousness
Overview of initiatives
Impact on the society

Importance of environmental
considerations through the entire
product life cycle in response to
the pressing issue of climatechangeDevelopment and sale of productsthat combine convenience forcustomers and a reduced impact
on the environment

Placing the highest priority on resolving customers’ frustrations
and inconveniences

NITORI Group

Development Concept Behind the scenes of the N Cool series“How can we get a comfortable night’s sleep without using air-conditioning on humid summer nights?” This was
the question that led NITORI to develop the N Cool product series, which uses materials that feel cool to the touch.
Through our unique business model, we were able to develop products that are sufficiently functional while also
being low priced and of appropriate quality by managing the proportion of different thread materials at the raw
material procurement stage, and as a result, the product was a major hit.
The N Cool product series started from bedding items, but are expanding in line with customer needs,
which as a result is leading to the contribution and reduction of environmental impact.
In addition, NITORI has developed many environmentally friendly products that
contribute to enhanced convenience for customers, including the N Warm series, which
was developed to enable a warm night’s sleep on cold winter nights and uses moistureabsorbing, heat-generating materials; N Warm Moist, which uses thread that maintains
a high moisture percentage and feels moist against the skin, for people worried about
dryness; and ECONATURETM lace curtains, which cuts heat and ultraviolet light, andblocking vision into the room, while enabling sunlight to pass through.

Creating comfortable lifestyles forcustomers and economic value
through reduced utility expenses,
while also contributing to a
reduced environmental impact

Create shared value through the above process
Environmental
value

Contribute to a reduced environmental impact
through development of environmentallyfriendly functional products (green products)

Economic
value

Reduce electric power usage in typicalhomes cutting down the use of heating
and air conditioning systems, etc.

Expansion of N Cool and N Warm product series
FY

2011

2012

N Cool series

N Warm series

Social issue

Balancing economic and ecological goals

Sales started(bedding andrugs)

Sales of N Warm
Super launched

Fiscal 2019 Sales

General trends●A s the global community is increasingly engaging in debate

surrounding global warming, there are also signs of increased
interest in new ways of valuing companies that utilize an ESG
perspective.
● In response, companies are required to identify social issues,
while taking into consideration the environment surrounding
them, resolve those issues through their businesses, and outline
scenarios for sustainable growth.

NITORI’s approach
NITORI will accurately analyze customers’ needs and social
background of the times and create products tailored to them. We
believe that our endeavors as a corporation to resolve customers’
frustrations and inconveniences will eventually result in reduced
environmental impact and resolution of social issues.

Product development targeting coexistence with the environment and society
In response to these changes in the environment surrounding companies, NITORI Group will achieve its objective of resolving customers’
frustrations and inconveniences and enrich people’s day-to-day lives, while at the same time recognize the importance of ethical consumption,in which consumers actively select and use products and services that consider the environment and society, and promote the development ofenvironmentally friendly functional products (green products).
These products are developed based on designs that are both low priced and highly functional, while at the same time being
environmentally friendly, and as a result, contribute to reduced environmental impact, such as lower CO2 emissions, in addition to
making a positive contribution to customers’ household finances by saving energy and resource usage.
Related Information p.58 Environmental Data Reducing wastes by reviewing product packaging (from polystyrene to molded pulp)

33

2013

2014

2015

2016

2017

2018

Sales of N Cool and Line expands toSales of N CoolLine expands toLine expands to Line expands to
N Cool Superrugs and living
Double Super
kids products
loungewear
pet products(bedding only) started room accessories
launched

Shared value

Line expands toliving room
accessories

Line expands toSales of N Warm
Line expands to baby products
Double Moist
pet products Sales of N Warmlaunched
Moist launchedLine expands tokids products

Accelerating the shift to a sustainable society through contributions
on both environmental and economic fronts
Creation of shared value
Customers

In addition to comfortable lifestyles, contributing tohousehold finances through reduced costs as aresult of lower electric power usage

NITORI Group

Sustainable growth by offering convenience forcustomers and capturing needs of next-generation
consumers

Globalenvironment

Reduction of environmental impact throughreduced energy usage

Examples of NITORI’s green product functions

N CoolCooler than general pile fabricApproximately -3.5˚C (N Cool Super)
Approximately -5.3˚C (N Cool Double Super)

N WarmCompared with ordinary flannel fabricHeat retention +5˚C (N Warm Super)
Moisture percentage 5 times (N Warm Moist)

ECONATURE™

Line expands tobaby products

N Cool series: 8.76 mn units / N Warm series: 5.33 mn units

Looking ahead, NITORI will continue to contribute to enhanced
convenience for customers and consideration for the environment,
through the development and sale of environmentally friendly
functional products (green products).

Premium lace curtain

2019

Summer insulation over 25% /winter heat retention over 20%
UV reduction over 80% /lighting rate approx. over 20%

Contribution on both environmental and economic
fronts with reduction in electric power consumption

7.3
By 2030, double the global rate of
improvement in energy efficiency
12.2
By 2030, achieve the sustainable
management and efficient use of natural
resources

34

NITORI Group’s ESG

Procurement andManufacturing

Initiatives to Solve Issues

Contributing to a recycling-oriented
society with the use of recycled materials

NITORI Group

Manufacturing carpets and rugs with recycled plastic bottles

Approach● In order to promote a recycling-oriented society in the home furnishing field, we made Thai Negoro (currently SIAM NITORI), which recycles

Overview of initiatives

plastic bottles and uses them to make carpets and rugs, a subsidiary.
Impact on the society●B y promoting initiatives including comprehensive collection and recycling and the development of products that use fewer resources, we will

limit the use of new natural resources as much as possible, and build supply chains that reduce wastes.

About SIAM NITORI●S IAM NITORI is the sole factory supplying products manufactured using recycled fibers to Japan.

Reexamining economic and social
systems based on high-volume
production, consumption, andwaste in the pursuit of material
abundance

Product manufacturing using
recycled polyester. Manufacturingof carpets and rugs at SIAMNITORI

Contribute to recycling-oriented
society with the effective use ofresources and active utilization ofrecycled materials●O ne carpet approximately 10m2 in size, can be made with recycled polyester produced from approximately a hundred 500ml plastic bottles.

SIAM NITORI’s technical capabilities●M anufacture of carpets and rugs using recycled polyester produced from plastic bottles●M anufacture of recycled polyester with special functions such as flame retardant and antibacterial properties→Promotion of recycling●M anufacture of recycled polyester using pigments with an environmentally friendly coloring method that does not produce sewage

Create shared value through the above process
Limit waste and consumption of natural resources andEnvironmental
contribute to creation of sustainable recycling-orientedvalue
society through active use of recycled resources

Economic Create products and suggest lifestyles
that are environmentally friendly
value→Reduce environmental impact●M anufacture of spun yarn with high bulkiness using a special “wrap thread,” in which ultra-fine nylon thread is wrapped around recycled polyester→Efficient use of materials

Necessity of effective
resource use

Response to environmental
issues and risks

Exhaustible natural resources must be
used in a more effective manner than
before, owing to future economic
development in the Asian region andgrowth in global population.

Companies must respond to the COP’s
creation of goals for the reduction ofgreenhouse gas emissions in each country,
and issues related to dioxins,
environmental hormones, and otherpollutants.

Increasing social costs
While waste is increasing, processing anddisposal systems have not kept up,
resulting in increasing social costs.

Shared value

Plastic flakes

has been indicated amid growing energy demand in line with the increasing global population, and companies are thus required to optimize
product lifecycles and enhance the efficiency of their resource use as part of their social corporate responsibility.
● Ocean plastic pollution has spread to become a global environmental issue, and the conditions under which people can maintain old social
systems based on high-volume production, consumption, and waste are beginning to collapse.

Wash● As shown by the call of Goal 12 of the SDGs to secure sustainable models of production and consumption, the finite nature of resources

Sort

Raise the alarm against large-volume production, high-volume consumption, and high-volume waste

Used plastic bottles are turned into plastic
flakes after they are sorted, crushed, andwashed, which is processed into plasticpellets, 100% made from plastic bottles with
SIAM NITORI’s unique technology

Crush

Necessity of building a recycling-oriented society

Sort

Social issueCollect plastic
bottles

Extrusion granulation

Plastic bottle recycling process

Plastic pellet(made 100% from plastic bottles)

Contribution to creating a sustainable society through active use ofrecycled materials

At NITORI, carpets and rugs produced
using the recycled fiber of SIAM NITORI
are labeled with the “Neco” logo and arepromoted as environmentally friendly
products. In the future, we will expand theuse of this fiber in products other thancarpets, and promote initiatives for further
reduction of environmental impact towarda recycling-oriented society.

Creation of shared value
NITORI Group

Sustainable growth through efficient use ofresources and development and sales of productsthat contribute to ethical consumption

Globalenvironment

Short-term: Environmental conservation
Long-term: Recycling-oriented society

Customers

New lifestyles through ethical consumption that
does not contribute to environmental impact

Utilization of recycled materials

As we look to achieve our common goal of building a society with no concept ofwaste, it is important that all parties fulfill their respective roles under the basisof “co-creation and coordination.”

Building a recycling-oriented
society

Related Information p.58 Environmental Data Reducing wastes through the effective use of scrap materials at NITORI FURNITURE VIETNAM

35

Number of recycled plastic bottles at SIAM NITORI(From joining Group in May 2018 to fiscal 2019)

Approx.
200 million

Usage volume of recycled polyester in soft goods
other than those from SIAM NITORI (Fiscal 2019)

Over 18,000t
in totalComposition ratio in above virgin materials (%)

43％

12.2
By 2030, achieve the sustainable
management and efficient use of natural
resources

36

NITORI Group’s ESG

Logistics andTrade

Initiatives to Solve Issues

CO2 reduction through enhanced
transport efficiency* Difference calculated from the previous fiscal year

Reduction of CO2 throughGreen Logistics

NITORI Group

Annual volume of CO2 emission reduction
1,930t-CO2*

Aiming to balance reduction of distribution costs and environmental measuresthrough improvement of transportation efficiency

ApproachThrough eliminating waste and improving efficiency in all steps of the distribution process, including trade, transportation, and shipping, we areable to significantly reduce logistics costs and achieve environmentally friendly “Green Logistics,” which furthermore leads to reduction of CO2
emission volume in the distribution process.

Overview of initiatives
Impact on the society

Improvement and reform for reduction of environmental impact in logistics andtrade as ALL NITORI

Initiatives

Conventional
methodmethodImproving container transportation efﬁciency by expanding container round use Conventional

Mitigation of impact on climate change
Environmental through achieving Green Logistics
Contribution to global environmental
value
conservation

Reduce logistics and trade risks by
Economic strengthening logistics capabilities throughenhancing transportation efficiency andvalue
mitigating impact on climate change

Building resilience to climate change

Increasing “sense of crisis” and business risk associated with global climate change● Issues such as rising sea levels, abnormal weather, depletion of land resources, deforestation, water pollution and depletion, and changes inthe ecosystem due to climate change are becoming increasingly serious on a global scale.
●A lso in the international community, the Paris Agreement sets a goal for all countries to work on reducing greenhouse gas, and there is aneed to balance both economic activities and resolving environmental issues.
●T he increase of extreme weather events, such as heavy rainfall and super typhoons, may cause enormous damage in manufacturing andlogistics operations.

By undertaking all import-related tasks within our Group, we areachieving significant cost reduction and smooth product supply.

Improve efficiency of transportation routes byintroducing the latest systems
Distribution centers throughout the country use the latest traffic
control systems employing GPS for more efficient delivery.
Eliminate relay points and ship directly from the manufacturer tocustomer homes. Used to enhance efficiency of transportation routes.

●C limate change has a serious impact on the management resources that are essential for a company to carry out business activities, andits influence extends throughout the entire supply chain.
●N ITORI Group believes that contributing to global environmental conservation by mitigating the factors that cause climate change andadapting to climate change to enhance sustainability and resilience will lead to earning the trust of all stakeholders, including business
partners, investors, etc.

Related Information p.59 Our role as a social infrastructure at the time of disasters

37

Empty Empty

Packages Packages

Exporter
ExporterProceed with initiatives including the establishment of new
distribution hubs and review of the positioning and functions ofexisting distribution centers to balance cost reductions withimprovement of productivity and reduction of environmental impact.

Enhanced loading efficiency with downsizing ofproduct packaging
Proceed with downsizing of product packaging and expansion of the
product composition ratio of assembled furniture to increase thenumber of products that can be loaded per container and per truck.
Related Information p.57 Environmental Data

Aiming for sustainable growth by contributing to efforts on
climate change

Shared value
Energy usage in logistics by unit

Creation of shared value

FY

2015

2016

2017

2018

2019

Unit (㎘)

3.13

2.94

2.91

2.90

2.78

NITORI Group

Reduce distribution costs by improving transportation
efficiency

Year-on-year
88.9%
(%)

93.9%

99.1%

99.5%

95.9%

Globalenvironment

Mitigate global warming with CO2 emission reduction

Employees

Reduce labor burden and reform workstyles withimproved logistics efficiency* Unit = Crude oil equivalent (㎘) of energy usage (GJ) / annual net sales

Strengthen NITORI Group’s logistics capabilities by contributing to the environment andadapting to climate change

Exporter
ExporterEmpty Empty

Optimize placement of domestic distribution centers

Expand direct delivery of products to customer homes

Social issue

Packages Packages

HarborCreate shared value through the above process

Building a one-stop shipping system throughreviewing international logistics

Packages Packages

HarborReduction of greenhouse gas
emission volume throughachieving Green Logistics.
Mitigation of the impact businessactivities have on climate change.

Packages Packages

Importer
ImporterHarbor

Implement initiatives to improvetransportation efficiency as ALL
NITORI, leading to reduction of
distribution costs.

Importer
ImporterHarbor

Expected increase in business
continuity risks due to climatechange such as heavy rainfall,
typhoons, and heat waves

In an initiative to use imported containers after packages are unloaded inexports thereafter, an annual total of more than 2,000 containers was used
more effectively throughout fiscal 2019. Through this, the annual volume of
CO2 emissions was reduced by 130t (number of containers was 118%
compared to fiscal 2018).

Container
Container
round
round
useuseEmpty Empty

CO2 emission volume per store in Japan involved in logistics
FY

2015

2016

2017

2018

2019

CO2 emission
volume perstore in Japan(t-CO2)

95.5

89.7

90.3

88.1

83.4

CO2-related indicators at delivery centers
FY

2017

2018

2019

Mileage per delivery truck
(Km)

91.62

90.92

89.51

Mileage per delivery truck
year-on-year (%)

98.6%

99.2%

98.4%

7.3
By 2030, double the global rate of
improvement in energy efficiency
9.4 (Summary)
Improve sustainability with increased resourceuse efficiency and greater adoption of clean
and environmentally sound technologies
13.3
Improve education, awareness-raising andhuman and institutional capacity on climatechange mitigation, adaptation, impact
reduction, and early warning

38

NITORI Group’s ESG

Initiatives to Solve Issues

Offering convenience with an
expanded store network

Sales

Overview of initiatives
Impact on society at large

NITORI GroupBy expanding store network, increase store density

Idea

Even though customers can get product information and read
reviews on e-commerce sites, they cannot actually pick up the
products and check them out in person unless there is a physicalstore located near their homes. Shopping has become convenientwith the expansion of e-commerce, but that alone is not enough.
NITORI Group believes that being able to directly view the quality ofApproach
From urban areas to market areas
with low populations, companies
must be able to respond to theneeds of every community

Promoting new format
development mainly in urban
areas and opening stores inmarket areas with low populations

Bringing enriched lifestyles tomore people nationwide
Enabling anyone to buy thenecessary products for their living
whenever needed

Create shared value through the above process
Socialvalue

Guaranteeing affordable, safe andcomfortable living environments for all

Economic
value

Contributing to the revitalization of local
economies and urban planning that achieves
sustainable growth and development

Accessibility for people living in small market areas

Expectations for an aging population and smaller market areas
Although the total Japanese population in 2019 decreased by 260
thousand year-on-year, the elderly population over the age of 65
increased by 320 thousand to 35,880 thousand, the highest
number it has ever been. The percentage of the total population
represented by the elderly is 28.4%, as it rose by 0.3 points from2018 to the current record high, and Japan is facing the realities
presented by an aging population.

It is commonly said that elderly people can only walk andshop within a 400-500m radius from home due to physicalweakness in their legs and hips that come with aging, and the ideaof developing retail stores in market areas with low populations isgathering attention.

Seamlessly linking stores and e-commerce sites to propose more convenient ways to shop
As the e-commerce market shows remarkable growth in general,sales performance on NITORI’s e-commerce site, NITORI-net, isalso expanding year by year. At the same time, we know thatapproximately 70% of customers who make purchases on
NITORI-net actually visit NITORI stores beforehand to see theproducts, touch them, check the quality, and then make theirpurchase online. We will continue to pursue initiatives to improvecustomer convenience by continuing to meet the changing needsof the times in our sales methods.

39

Purchasing behavior on NITORI-net

30
70

Purchased on
NITORI-net after
visiting stores
Directly purchased
on NITORI-net

products in person at stores before purchasing them, and being
able to directly ask questions to and consult with store employees,
will lead to safe and enjoyable shopping experiences for ourcustomers. To achieve this, stores must be available in every
region of the country. As such, we are focused on expanding ourstore network to improve customer convenience.

Actively opening small-format stores in urban areas

While continuing to open stores for regions that have market areas
with populations of 100 thousand or less, we will also focus on
opening stores in shopping centers and department stores inurban areas, and development of small-format Deco Home and
NITORI EXPRESS stores, to provide shopping experiences forcustomers living in urban areas where cars are not required.

Urban area store: Shibuya Koen-dori store (left) Deco Home Rasora Sapporo store (top right)
NITORI EXPRESS Apita Terrace Yokohama Tsunashima store (bottom right)

Shared value
Social issue

Offering enriched living to many more people

The ability to purchase products essential for daily living
whenever they are needed

We aim to become a store that is supported in all regions of thecountry by improving accessibility to stores through expanding ourstore network, focusing on creating stores catering to eachindividual region, and strengthening sales floors, product lines, andservices that make it easy for customers to go through with theirpurchase.

● Expanding lines of appliances• NITORI offers everything needed in daily life, so customers don’t have toshop around at multiple stores. We are committed to providing expedited
shopping experiences.

Product line expansion history of NITORI’s simple electric appliances*
FY2009Full-scale sales of compact electric appliances(new home appliances)●A ccelerating development of small-format stores

FY2017Full-scale sales of compact refrigerators (106L)

Number of Deco Home stores

FY2018Fully automated washing machines (6kg)

FY201932V-type high-definition TVs

FY

2012

2013

2017

2018

2019

Number ofstores

10

22

62

78

94

2020
(plan)

114* Achieving low prices by carefully selecting only the functions that customers really need* Achieve the same quality as domestic electric appliance manufacturers with our own
unique quality control system

Creation of shared value● Initiatives for creating stores that will be supported by morecustomers• Actively opening stores located in shopping centers• Building system to maintain low-cost operations even at stores ofdifferent sizes and market areas• Complimenting product lineups with a digital catalog• Installation of display corners coordinated in different styles throughcomplete refurbishment• New interior design consultation corner with professional advisors

Customers

Achieving enriched living by improving store access

NITORI Group

Increase frequency of customer store visits
Increase number of customers

11
Make cities inclusive, safe, resilient andsustainable40

Initiatives to Solve Issues

NITORI Group’s ESG
Initiatives
in New Fields
of BusinessInitiatives to Build Foundations

NITORI Group’s ESG

Contribution to sustainable urban
planning through revitalization ofused home market
Overview of initiatives
Impact on the society

SocialActionPrograms

Hand-in-hand with our customers

NITORI Group’s approach to social action programs
Aiming to become a company that people will feel in need of, we conduct a wide variety of activities to give back to our founding place,
Hokkaido, and all of the countries, local communities, and society members that nurture and support NITORI Group. We would like to introduce
some of the various activities that we have implemented by building a long-term relationship with the community involved in our businesses,
and focusing on the areas of “personal development,” “environmental support” and “local contribution.”
Categories

By furnishing houses with furniture andinterior decorating products and enhancing
added value, customers are able to find it
easier to imagine their future lifestyle in thehome after purchase. At the same time, we
support their smooth transition to starting
their new life by selling everything as one
coordinated set.

Increasing number of used homes
hidden in local areas that are notbeing fully utilized and “vacant
homes” resulting from thedeclining birthrate and aging
population

Discovering potential value anddemand for used homes andstimulating new demand throughrenovation in addition to furnitureand interior decoration

Activities

Proposing solutions to external diseconomies andinefficient use of existing houses due to an increasein used homes and vacant houses that have beenleft open for a long time

Social issue

Economic
value

Endowed courses at universities●

Develop the next
generation of leaders

Revitalize used home market and furniture andinterior decorating market through lifestylesuggestions that feature total coordination

As the population continues to fall due to the declining birthrate and aging population, homes that were built during the high growth period haveturned into vacant houses. It has been predicted that one in every four houses will be vacant by 2033, and there is a need to address social issues
such as property taxes and other uneconomical situations, building collapse and fires, bug infestations, and criminal risks.

Perspective

Support through benefit-type
scholarships by the NITORI International
Scholarship Foundation

Business alliances with other companies centered on the usedhome rehabilitation market

OutlineNITORI Group concluded a partnership agreement with Sapporo Cityand Hokkaido University in July 2019 for the development of “Future IT
Human Resources” who can leverage the power of digital technology
and data to resolve local issues and create a society of the future.

Activities

These three dedicated parties are working together to develop initiatives
for each level of education, including elementary and junior high school (From left) Mr. Kasahara, Vice President of Hokkaido
University, Mayor Akimoto of Sapporo City, andstudents, high school students, and university and graduate school
Mr. Shirai, President of NITORI Holdings Co., Ltd.
students. Among these initiatives, in “NITORI Future Society Design
Course,” established in the Education and Research Center for
Mathematical and Data Science, they are focused on implementing an ambitious project to conduct humanresources development by applying the latest data science research on the big data retained by companies.

Future subjects

We are promoting initiatives so that Sapporo, Hokkaido, the place where NITORI was founded, will generate many
talented people who will forge the future, and so that those people will generate vitality throughout the entire
community by playing an active role in the region, and moreover become a bridge to the world.

Capital and business alliance with KATITAS Co., Ltd., the No. 1 company in the used home rehabilitation industry

Offering homes that more people want to purchase and live inSince 2018, we have been working on “home staging,” in which we furnish real estate properties with NITORI’s furniture.
Furniture and interior decoration
furnishing and contract results● Approx. 100 structures furnished with

furniture and interior decoration annually● Providing customers the opportunity toactually imagine what it would be like tolive there, leading to an increased numberof contracts landed

Creation of shared value
NITORIEnter the used home rehabilitation market

KATITASAcquire new demand

Customers

Acquire living environment that meets needs
at low prices

11
Make cities inclusive,
safe, resilient andsustainable

Opened an art gallery, OTARU ART
BASE

●

Expanding friendship and supporting human resources
development around the world→Supported a total of 5,850 students from 42
countries and regions in 15 years from 2005 to 2019
Conservation of nature and revitalization of the local
community→Supported the planting of a cumulative total ofover 5 million trees in 15 years from 2005 to 2019
Reduce environmental impact by contributing topopularizing electric vehicles→Installation and operation of 558 charging stations
in parking lots in 208 of our stores nationwide
Contribute to promoting the Japanese economy withcompact city development and regional revitalization→Donated 500 million yen in four years from 2015
to 2019
Contribute to tourism development and protection anduse of cultural resources such as historic structures andwonderful works of art→Over 250 thousand annual visitors

Partnership agreement for development of “Future IT Human Resources”
with Sapporo City and Hokkaido University

Offering spaces that meet customer needs

Shared value

Donated to Yubari City using thecorporate version of the hometown tax
system●

See below

Focus

We aim to develop a system for increasing added value in sales through a business alliance.

41

Installed electric vehicle charging
facilities●Contributing to the
local community andcommunity
investment from along-term perspective

Reduce vacant houses through revitalization of used home market

We will provide NITORI’s furniture and interior decoration in coordinated sets to help customers with a smooth transition to starting their new life
after making their purchase.
Approach

Furusato Hokkaido 10-million Tree
Planting Project●Conservation of theenvironment andrevitalization of thelocal community

The idea of sharing possessions and services has taken root in recent years, and even in housing, the number of cases where people choose to buy
a home regardless of whether it is new or used is increasing.
Concept

Partnership agreement for developmentof “Future IT Human Resources“ with
Sapporo City and Hokkaido University●●

One in every four houses will be vacant by 2033!?

NITORI Group

Improve the status of distribution/retail industries anddevelop the next generation of leaders
Endowed courses at the University of Tokyo (2015-2019)→More than 5,000 students in total in five years

External lectures●Create shared value through the above process
Socialvalue

Results and expected impact

42

Initiatives to Build Foundations

NITORI Group’s ESG
Human
Resources
Development

Creating an organization witha wealth of elites

Employee education system: NITORI University

Human resources development to achieve a “reinvention of lifestyles” toaccompany the digital revolution

Independent and autonomous human resources that support the future of NITORI Groupthrough “deepening of knowledge” and “search for knowledge”
NITORI University has placed the idea of “training ‘innovation creators’ through ‘deepening of knowledge’ and ‘searchfor knowledge’” as the core of its education concept. In “deepening of knowledge,” we will deepen studies of thephilosophy, knowledge, and experience that NITORI Group has valued thus far. On the other side, in “search forknowledge,” we have prepared curriculums that reflect the latest technology, values, and knowledge of the modern
era in order to accommodate the insatiable intellectual curiosity of employees and let them experience the unknown.

In order to achieve the goals of 3,000 stores and 3 trillion yen in net sales set forth in Vision 2032, we will focus onbuilding a human resources management platform oriented on the following priority issues and promote further
organizational strengthening throughout the entire group.

Priority issues
 chieve growth by repeatedly rejecting the status quo regardless of conventional industryA
practices and past successful experiences● 
Responding to the new era of globalization and digital transformation● 
Creating an environment where human resources with various knowledge andexperiences can achieve self-directed growth●Technology

Core competence

GlobalThree pillars
Foundation

Deepening of knowledge

Search for knowledge

Core competence“NITORI Style” that cannot be
imitated by other companies

NITORI Group’s human resources development
Transfer-based education

Aiming to train true specialists who can contribute to
the company and society
NITORI Group’s unique business model that integrates manufacturing, distribution, IT, andretail is supported by specialists who can think comprehensively and create new value. In
order to train those specialists, a transfer-based education in which they can experience avariety of occupations every two to three years is essential. NITORI Group’s transfer-based
education is an education system designed to constantly revitalize the organization andprovide each person with a wealth of knowledge and extensive experience.

Advertising
Businessplanning

IT

Store
operations

Changing curriculums by reading the trends ofthe times

Core competence refers to the

IT technology is an essential ﬁeld in our modern times. However, the remarkableability to overwhelmingly surpass

progress that has been achieved in IT technology is just another tool for us to use.

that cannot be imitated by
Logistics

Tradingcompanies

Education
Manufacturers

NITORI-style specialist

A broadperspective

A broadperspective

Crossborder

ExpertExpertise C

Expertise B

Expertise A

Expertise

Expertise

43

T-shaped
persons

It is up to us to apply this technology to existing ideas to create an environment andPreviously, society tended to value human resources who wereexperts in a single field, known as “I-shaped persons” and“T-shaped persons.” However, in the modern era in which
personnel are forced to solve problems that transcend theboundaries of industries and occupations, we require humanresources who can apply knowledge on a broad range of fields
and combine expertise in several subjects to generate innovation.
NITORI Group has produced a large number of “NITORI-stylespecialists” who have increased the number of pillars of expertisethrough transfer-based education and are able to solve problems
from a broad perspective. We aim for sustainable growth by taking
advantage of the potential presented by being an organization witha wealth of elites.

products that are better for our customers and employees. The key to this is

Mission and visioncompetitors in corporate

employees’ curiosity about the yet-unknown technology. In the future, global

activities. For NITORI Group, its

perspectives that include the introduction of overseas technologies and overseas
business development will become more essential than ever before. NITORI University

core competencies lie in its
mission and vision, chain store
theory, and coordination.

Chain store theory

Coordination

constantly changes curriculums by reading the trends of the times and looking toward
developing personnel who can play an active role in the next generation.

Focus

Enhancing human resources and creating an organization with a wealth of elites throughtransfer-based education that covers an extensive range of fields
I-shaped
persons

GlobalAbility to leap from Japanand play an active role in
the global community

Practicing chain store theory and enriching
lifestyles around the worldcompetitors and core abilities
Onlinesales

Technology
Knowledge in applying
IT technology to
revolutionize the future

Seminars in the U.S.
Outline

The curriculum is prepared for each training stage, from the introductory
course in which all second-year employees participate, to the selective
advanced courses, which approximately 1,200 people attend each year.

Features andpurposeExperiencing an “enriched lifestyle” with all five senses and reaffirming the Company’s mission. We visit the U.S.,
where competition is fierce, to tour the chain stores that support the lifestyles of the general public and observe
the latest initiatives, sales floors, and products.

Achievements

My idea of an “enriched lifestyle” was clarified through on-site tours and shopping experiences, and I wasprovided with the opportunity to think more about how to approach our mission. I’ll immediately get to work to
improve the issues we found in our own company that we were able to discover through comparison with sites in
the U.S. (T.A., second-year employee, Store Operations Division)

44

NITORI Group’s ESG

Initiatives to Build Foundations

Human resources management platform

Work-life balance

A company where employees can continue to work with peace of mind

In 2019, NITORI Group established a new human resourcesmanagement platform. This platform was built with thecooperation of Workday (HR and finance solutions vendor)
Basic employee information
and Globis (operating Japan’s largest business school). It
Future goals
Career plan
provides an optimal learning environment in accordance with
Course participation
Globiseach individual employee’s orientation and career, while atLearning
Operational experience
Platformthe same time, promotes the unified management ofResults and evaluation
Work aptitude
personnel information, such as work history, skills, andCredentials
career orientation.
…other talent information
As NITORI Group’s business domains expand globally,a variety of knowledge and skills such as management theory and digital knowledge is becoming increasingly important for the developmentof future human resources, in addition to our in-house learning. While broadening employees’ breadth of knowledge through Globis’study-all-you-want program and coordinating educational backgrounds that demonstrate the fields that have piqued an individual’s intellectual
curiosity and personal data in the human resources management system, we will apply this information in optimizing assignments to
manufacturing, logistics, retail, IT, and other divisions.

We are working to enhance employee’s work and private lives byenabling them to balance childcare, nursing care, illness, and workand choose their workstyle according to the life events. In 2016,
we introduced a half-day paid leave system, and in 2017, a work
interval system that requires an interval of at least 10 hours fromthe end of the workday until the next workday begins. We believethat enhancing the lives of employees can be expected to improve

An HR management system adopted by 3,200 companies worldwide,
including approximately 60% of Fortune 50 companies such as AMAZON.
COM, INC. and ADOBE INC. (as of February 2020). In addition toconventional personnel management, it offers the function of effectively
promoting talent management such as recruitment, evaluation, training,and placement of employees. NITORI decided to introduce this system as
it looks toward promoting individual growth and accelerating global
business development in the future.

Coordinating course
participation data

Proper assignment of human resources

Working together with technology to find the best assignment for each and every person

Online video course service offered by Globis. Users can study the
essential skills of business in marketing, leadership, accounting, andfinance through 300 courses and 2,700 videos whenever they want andas much as they want. This highly effective education method has won
numerous awards, including the HR TECHNOLOGY AWARDS. At NITORI, it
provides all employees with a long term plan in order to apply them increating an organization with a wealth of elites.

work efficiency and performance. We also introduced further
initiatives such as a holiday childcare cost subsidy system andchildcare leave for partners, in an aim to turn NITORI Group into afamily-friendly company not only for employees but for theirfamilies as well.

Improved productivity

Develop a work environment that enables employees to work more efficiently
To accompany the change in workstyles, we introduced awork-at-home system geared toward employees who work shorter
hours to improve work productivity from 2016, and the teleworksystem using satellite offices from 2018. Furthermore, from 2018,
we began utilizing RPA (Robotics Process Automation) in an
initiative led by the Information System Improvement Office. We
hold regular internal briefings on RPA every month and haveestablished a support site in order to stay active in following up
with each department after its introduction. Currently, RPA is usedin 20 departments, reducing working hours by over 45,000 hours
per year, and we aim to expand it to all internal departments andreduce working hours by 80,000 hours per year by fiscal 2020.
On the logistics front, from March 2019, we began using swap
body containers in relay transportation. By using swap bodycontainers, we can improve transport efficiency, reduce the burden
on drivers, improve workstyles, and promote women to play activeroles.

RPA briefings

Environment Creation
Diversity and inclusion

Health management

Aiming for an environment where employees canwork in good mental and physical health
At NITORI Group, we believe that the health of each and every employee isessential to the growth of our company, and we are actively working to maintainand improve the health of employees and their families. In 2013, we instated theCompany’s exclusive NITORI health insurance society, and in 2016, established the
Health Management Declaration. In order to improve employees’ self-management
and awareness of health, we have implemented initiatives including the operationof a personal health website, My Health Web, walking campaigns for employees,
and NITORI physical condition improvement contest. In addition, NITORI Group was
accredited for the 3rd consecutive year since 2017, in the Certiﬁed Health andProductivity Management Organization Recognition Program* (White 500) by the
Ministry of Economy, Trade and Industry and Nippon Kenko Kaigi. In the 5th White
Company Award, the Company was recognized in both the Employee Welfare
Category and Valuable Business Model Category.

45

A workplace where diverse human resources can demonstrate their abilities

Health Management Declaration(Established April 1, 2016)
We believe that employee health is a crucial
management resource for NITORI Group. We will
work with our labor union and health insurance
society to help all of our employees and theirfamilies stay healthy so that we can achieve ourGroup mission and vision and ensure that all
employees fulﬁll their potential.

In May 2013, in order to create a more comfortable workplace, weestablished the Diversity Promotional Committee. Committee
members lead discussions and make recommendations to theCompany so that employees experiencing marriage, childbirth,child care, nursing care as well as multinational employees, etc.
can choose from a diverse selection of workstyles.
Among those, we are focusing on encouraging women’s
active roles, expanding systems that allow women to demonstrate
their individual ability and holding career support seminars from2014. In these seminars, as a venue for our female employees toconnect and exchange information, female employees of all ages
and positions participate in content designed for our female
executives as well as all women who are trying to raise children

while working and discuss ways of balancing both work and family
as well as career plans.

Seminar promoting active roles of women46

NITORI Group’s ESG

Corporate GovernanceCorporate governance system overview

Corporate Governance
Basic approach
NITORI Holdings Co., Ltd. (“the Company”) places top priority on sustainable growth and the medium- to long- term improvement of corporate value
in its management. The Company believes that enhancing its corporate governance system is necessary for achieving these goals. To enhance
corporate governance, the Company aims to build an organizational structure to respond promptly to any changes in the business environment,
practice fair and transparent management as a listed company, and disclose accurate information to all stakeholders in a timely manner. Meanwhile,
the Company will develop an internal system to establish its corporate social responsibility and corporate ethics.

Board of Directors

Corporate governance system

Primary items

Content

Organization design format

Company with an audit and supervisorycommittee

Number of directors (number ofoutside directors included)11(5)Term of directors

1 year (2 years for directors who are Audit
and Supervisory Committee Members)

Adoption of an executive ofﬁcer
systemEstablishment of discretionary
committees
Executive compensation system
Audit corporation● Board of Directors’ meetings held: 13*

AdoptedEstablished (Nominating and Compensation
Committee)
1. Basic compensation
2. Performance-based bonuses
3. Performance- based stock compensation
Deloitte Touche Tohmatsu Limited● Number of members stipulated in the Articles of Incorporation

Audit and Supervisory Committee

Election/Dismissal

Election/Dismissal

Election/Dismissal
Collaboration

Board of Directors

Auditing, Monitoring

Directors who are Audit and Supervisory
Reports, Proposals
Instructions, Reports

Electing, Monitoring

Audit and Supervisory Committee
Committee Members
Collaboration

Representative Directors

Risk Management Division
Risk Management Committee
Reports,
Proposals

Reports,
Proposals

Instructions, Reports

Instructions,
Reports

Audit and Supervisory
Committee Office
Collaboration

Deliberation DivisionInternal Boardof Directors

Accounting
auditInternal Control Division

Collaboration

Auditing in
the Internal
Control System
Collaboration

Risk Control Conference
Reports,
Proposals
Reports, Proposals

Each division and Group company in Japan

Operation Audit

Nominating and Compensation Committee● Number of members stipulated in the Articles of Incorporation● Nominating and Compensation Committee meetings held: 5*

Not more than five47

Compensation for executive directors consists of fixed basic
compensation and performance-based compensation, in which theamount paid fluctuates based on the Company’s performance.
Compensation for non-executive directors, in principle,
consists of fixed basic compensation. Performance-based
compensation as short-term or medium- to long-term incentive is notprovided for non-executive directors.
● Basic compensation
Compensation for directors is determined by a resolution of theBoard of Directors within the maximum amount of compensation,etc. for these directors approved at the shareholders’ meeting.
Compensation for Audit and Supervisory Committee Members isdetermined through deliberation by the directors who are Audit
and Supervisory Committee Members.
● Performance-based bonuses (short-term incentives)
Performance-based bonuses for executive directors are decided
by calculating an amount for each director based on the
Company’s performance, etc. and the specific amount to be paid
is determined by the Board of Directors within the maximum
amount of compensation, etc. for directors approved at theshareholders’ meeting and in consideration of reports by the
Nominating and Compensation Committee. Performance-based
bonuses are not provided for non-executive directors.
● Performance-based stock compensation (medium- to long-term
incentives)
Performance-based stock compensation for executive directors is
decided through a process in which the Company establishes
numerical targets in advance for the Company’s performance
during the target period every two fiscal years, and, based on theamount of stock to be granted determined in consideration ofreports by the Nominating and Compensation Committee
depending on the achievement of said numerical targets, thespecific amount to be paid to each director is determined by the
Board of Directors after the target period.
The applicable directors will continue to hold the stock thathas been granted for a certain period of time based on this plan
and will have restrictions imposed on their transfer for three years
after delivery. Performance-based stock compensation is notprovided for non-executive directors.

and abroad● Audit and Supervisory Committee meetings held: 10*

The Audit and Supervisory Committee has four directors, of whomthree are independent outside directors.
Directors who are Audit and Supervisory Committee
Members audit and monitor the execution of duties by the directors
by participating in Board of Directors meetings and using the internal
control system. Directors who are full-time Audit and Supervisory
Committee Members are, in addition to the above, responsible for
conducting highly effective audits and monitoring by attending
Internal Board of Directors meetings and other important meetings,
reading documents regarding important decisions, receiving reports
from the Internal Audit Division, and interviewing relevant people.
In addition, the Audit and Supervisory Committee cooperates
with the financial auditor, communicating about the financial auditor’s
audit policy, audit plans, and audit reports as needed.
The Company has established an Audit and Supervisory
Committee Office as a department to assist the Audit andSupervisory Committee.

Financial Auditor (audit corporation)

The Board of Directors is composed of 11 directors, of whom five are
independent outside directors (of whom, four are directors who are
Audit and Supervisory Committee Members, including three
independent outside directors).
The Board of Directors delegates the authority to makedecisions regarding important business execution to executive directors
including the representative director in order to focus on discussions
regarding management direction and business strategies, and in turnstrengthen the monitoring function of the Board of Directors.
The Company established an Internal Board of Directors to
discuss important items related to the execution of duties in advanceof discussion at board meetings for prompt decision-making andbusiness execution.
In addition, the Company has introduced an executive officer
system in order to respond promptly and appropriately to changes inthe business environment.

Shareholders’ Meeting

Nominating and Compensation Committee(optional advisory organ)

Not more than 15 (not more than ten directors excluding
directors who are Audit and Supervisory Committee Members
and not more than five directors who are Audit andSupervisory Committee Members)● Ratio of independent outside directors
More than one-third of members shall be independent outside
directors

Compensation system● Number of members: 5

Risk management● Ratio of independent outside directors

The majority of members shall be independent outside directors

Risk Management Committee

Information security management system

To minimize losses or disadvantages that our Group suffer, theCompany formulated risk management regulations and a BusinessContinuity Plan (BCP) and established a risk management system
initiated by the Risk Management Committee. In accordance with the
BCP, the Company carries out various training along with regular Risk
Control Conferences that review risks and implement
countermeasures against new challenges to strengthen the Group’s
risk management system.

The Company has appointed an Information Security Officer
who assumes overall responsibility for the information security
management system. The Information Security Officer will be
responsible for directing and monitoring the organization in thebuilding and operation of the information security management
system, including identifying the status of information security
throughout the entire Group and reporting security incidents
and accidents to top management.

The Company has established a Nominating and Compensation
Committee as an optional advisory organ for the Board of Directors.
The committee ensures objectivity and transparency when the Boardof Directors determines policies and procedures related to thenomination of director candidates and compensation, andaccordingly further improves the corporate governance system.
The composition of directors’ compensation, evaluations of
the appropriateness of the performance-based compensation plan’s
design, establishment of targets and performance evaluations, etc.
are reported to the Board of Directors after being discussed at theNominating and Compensation Committee and then decided in turn.
* The number of meetings held in fiscal 2019.

48

NITORI Group’s ESG

Corporate GovernanceDirectors (As of May 14, 2020)

Management Status of the Board of Directors

Directors

Overview
Akio Nitori

Toshiyuki Shirai

Fumihiro Sudo

Representative Director &Chairman(Chief Executive Officer)

Representative Director &President(Chief Operating Officer)

Director, Executive Vice
President & Business System
Improvement Officer

Reason for appointment

Reason for appointment

Reason for appointment

Mr. Nitori, always making the most of his excellent foresightand strong leadership, has led NITORI, and the Company
believes that he is qualified to continue as a director that takes
responsibility of decision making related to management
policies and corporate strategy and supervisory functions
regarding business execution.

Mr. Shirai has had a broad range of business experience at theCompany and has abundant experience and knowledge related
to overall management of the Group gained from serving in
positions such as Representative Director & President of Nitori
Co., Ltd. from May 2014 to February 2020, and Representative
Director & President of the Company from February 2016, andthe Company believes that he is appropriate for the role.

Mr. Sudo has abundant business experience, including store
development operations, and has abundant experience andknowledge related to overall management gained from serving
in positions such as Vice President from August 2018, and theCompany believes that he is appropriate for the role.

Masanori Takeda

Takao Kubo

Director, Executive Vice
President & Global Business
Development Officer

Director & General Manager of
Global Merchandising Division

Director
Audit and Supervisory Committee
Member (Full-time)

Reason for appointment

Reason for appointment

Reason for appointment

Mr. Matsumoto has abundant experience and knowledge inoverseas business, and the Company believes that he isappropriate for the role of director in charge of promoting andenhancing the overseas sales business of the Company.

Mr. Takeda has abundant business experience and keenbusiness insight owing to his broad experience in major
operations of the Company and contributes to the promotion of
product development and the expansion of overseas productprocurement and sales channels. In addition, he assumed theposition of Representative Director & President of Nitori Co.,
Ltd. in February 2020, and the Company believes that he isappropriate for the role.

Mr. Kubo has considerable knowledge regarding finance andaccounting and has abundant experience covering the overallmanagement of the Company gained from serving as Director
and Corporate Auditor of the Company, and the Company
believes that he is appropriate for the role.

Takaharu Ando

Director

Director* Independent Outside Director* Independent Outside Director* Independent Outside Director
Audit and Supervisory
Committee Member

Reason for appointment

Reason for appointment

Reason for appointment

Mr. Sakakibara was involved in the management of Toray
Industries for many years and has held prominent positions
including Chairman of the Japan Business Federation. With hisabundant experience and considerable insight, the Company
believes he will provide advice regarding the overallmanagement of the Company and will contribute to further
strengthen our corporate governance.

Mr. Miyauchi has abundant experience and deep insight incorporate management gained from his extensive years ofexperience engaging in the management of ORIX Corporation.
The Company believes that he will provide useful advice froma broader perspective for the Company’s overall management
by utilizing his experience and insight.

Mr. Ando has held prominent positions, including
Commissioner General of the National Police Agency, and hasa wealth of experience and extensive knowledge. Based on his
professional experience and knowledge, the Company believes
that he will continue to contribute to further strengthen ourgovernance and risk management.

Director* Independent Outside Director

Audit and Supervisory
Committee Member

Audit and Supervisory
Committee Member

Reason for appointment

Reason for appointment

Mr. Suzuki is a legal professional who has held prominent
positions, including Superintendent Prosecutor of the Fukuoka
High Public Prosecutors Ofﬁce. The Company believes that hewill utilize his extensive experience and expertise and continue
to provide appropriate opinions for the Company’s
management.

Mr. Tatsuoka has assumed many prominent positions,
including Vice-Minister of Economy, Trade and Industry.
The Company believes that he will utilize his wealth ofexperience and expertise to strengthen the Company’s
corporate governance and compliance systems.

49

In this fiscal year, we confirmed the status of improvements and progress of the issues identified in the effectiveness evaluation
conducted in the previous fiscal year. As in the previous fiscal year, the Board of Directors Secretariat established evaluation
categories in the form of a questionnaire with items for evaluating the effectiveness of the Board of Directors. Questionnaires andindividual interviews were conducted for all directors, and discussions were held at the Board of Directors’ meeting regarding theanalysis results and each issue.

An analysis conducted by the Company’s Board of Directors confirmed that the Board of Directors is well balanced with people ofdiverse knowledge and experience, free and lively discussions are taking place among all attending directors including outside
directors, the frequency of meetings is reasonable, and the Board’s proceedings are properly managed. The effectiveness of theBoard’s decision-making and its oversight of directors’ execution of their duties was judged as properly maintained in line with thebasic policies on corporate governance.
On the other hand, as a result of verifying the status of improvements and progress of issues that were clarified by theeffectiveness evaluation of the previous fiscal year, it was judged that although steady improvements have been made in further
strengthening the Board of Director’s monitoring function and strengthening collaboration to further enhance the functions of theBoard of Directors and each meeting body, there are still issues to be resolved regarding deepening discussions on medium- tolong-term issues of NITORI Group and prior distribution and thorough explanation of board materials.

 eepening discussions on medium- to longDterm issues of NITORI Group● Promoting delegation of the authority to makedecisions regarding the execution of duties[continuous]●

Executive Vice Presidents

Senior executive ofﬁcer

Executive ofﬁcers

Fumihiro Sudo / Fumiaki Matsumoto

Akio Igarashi

Hidetoshi Kobayashi / Tadashi Kudo / Soichi Oda /Kazuyoshi Tayano / Naoshi Takei / Shunichi Osawa /Eri Ablet / Hiroki Murabayashi / Manabu Nakamura / Ken Ueda /Hiroshi Nagai / Kazuyuki Hashimoto / Isao Arai / Tsuyoshi Okamura /Kunihiko Takahashi / Yoshihisa Sato / Junichi Yoshima /Fumiki Takeda / Nobuyuki Tomii / Toshinao Matsushima

Managing executive ofﬁcers

The Company’s Board of Directors evaluates the performance of the Board of Directors based on the basic policies of corporate governance andutilizes these evaluations as a PDCA tool to implement improvements and reforms that enhance the Board of Directors’ effectiveness.
https://www.nitorihd.co.jp/en/ir/governance/pdf/Basic_Policies_on_Corporate_Governance.pdf

Primary countermeasures for fiscal 2020

Executive Officers

Yuichi Kazeharu / Mitsuru Ohki /Hiromi Abiko

Matters related to Ordinary General Meeting of
Shareholders● Evaluation of strategic shares● Feedback on dialogue with shareholders● Matters related to the basic policies on
corporate governance● Report on the operational status of thewhistleblowing system●Evaluation

Yoshihiko Miyauchi

Director* Independent Outside Director

Performance report on delegation to directorsof matters subject to the resolution of theBoard of Directors● Matters related to nomination andcompensation of directors● Matters related to establishment and operationof the internal control system● Report on the internal control over financial
reporting● Report on the status of execution of duties●

Implementation

Sadayuki Sakakibara

Tsuneyoshi Tatsuoka

Decisions on policies and strategies
Matters related to medium- to long-term
management plans● Matters related to annual budget of theGroup● Matters related to financing andinvestment● Matters related to Group governance● Matters related to delegating authority todirectors for matters subject to theresolution of the Board of Directors●Board of Directors’ effectiveness evaluation

Independent Outside Directors

DirectorPrimary matters subject to resolution and report (fiscal 2019)●

Fumiaki Matsumoto

Kazuhiro Suzuki

The Board of Directors’ meeting is held once a month, in principle, and the Board of Directors makes decisions on matters set forth in theRegulation of the Board of Directors, such as matters stipulated by laws and regulations and important management matters concerning theCompany and the Group and monitors the execution of duties of directors by receiving regular reports from directors on the status of execution of
their duties.
● Outside directors are provided with prior distribution and explanation of materials for important agenda items in order to ensure lively discussions
at the Board of Directors’ meeting.
● Before each Board of Directors’ meeting, an information exchange meeting is held as a venue for communication and information sharing among
directors.
● rior distribution and thorough explanation ofP
board material● Standardization and improvement of the levelof materials submitted to the Board of
Directors [continuous]●

The Company will continue to discuss how to enhance the effectiveness of the Board of Directors, including how
to improve the method of evaluation of the Board of Directors, in order to raise corporate value and achieve NITORIGroup’s vision.
50

Financial & Company Data

Transition of Key Management Indicators(Million yen)

FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019(Thousand USD)FY2019

Income/Loss¥

Net sales

314,291¥

331,016¥

348,789¥

387,605¥

417,285¥

458,140¥

512,958¥

572,060¥

608,131¥642,273$ 5,771,692

Gross profit

172,483

183,938

192,616

201,656

218,337

243,543

278,274

314,778

331,421354,364

3,184,443

Selling, general and administrative expenses

119,818

125,987

131,066

138,583

152,029

170,503

192,497

221,400

230,642

246,886

2,218,607

Operating income

52,66557,951

61,55063,073

66,30773,03985,776

93,378100,779

107,478965,835

Ordinary income

53,594

59,151

62,19563,47467,92975,00787,563

94,860103,053

109,522984,205

Net income attributable to owners of parent

30,82233,54835,811

38,42541,45046,96959,99964,21968,18071,395641,583

Cash flows from operating activities

34,65343,90841,98946,15452,92357,34377,93076,84081,66496,316

865,529

Cash flows from investing activities(26,684)(22,925)(21,937)(32,376)(43,023)(35,899)(42,047)(82,751)(30,424)(41,464)(372,613)

Cash flows from financing activities(3,577)(16,099)(22,047)(10,540)(6,654)(9,943)(6,414)655(11,340)(13,862)(124,575)

Cash and cash equivalents at the end of the year

14,035

18,41016,816

21,17925,71336,794

66,03560,923100,053

140,791

1,265,201

Depreciation and amortization

7,762

8,456

8,227

8,850

8,921

9,398

10,406

11,357

12,311

14,547130,731

Capital expenditure

26,81822,34825,70830,08345,033

26,60542,82864,172

32,237

23,170208,210

Total assets

246,187

267,153284,290

321,703404,793414,541

487,814550,507619,286

683,247

6,139,894

Net assets

146,038

174,949

209,764

247,898

310,531

330,968

394,778441,668

500,192

560,861

5,040,092

Equity145,766

174,527

209,125

247,099

309,413329,695

393,693

440,991

499,721560,571

5,037,488

Gross profit to net sales ratio (%)

54.9

55.6

55.2

52.0

52.3

53.2

54.2

55.0

54.5

55.2

55.2

SG&A expenses to net sales ratio (%)

38.1

38.1

37.6

35.8

36.4

37.2

37.5

38.7

37.9

38.4

38.4

Operating income to net sales ratio (%)

16.8

17.5

17.6

16.3

15.9

15.9

16.7

16.3

16.6

16.7

16.7

Rate of return on equity (ROE) (%)

22.0

20.9

18.7

16.8

14.9

14.7

16.6

15.4

14.5

13.5

13.5

Equity ratio (%)

59.2

65.3

73.6

76.8

76.4

79.5

80.7

80.1

80.7

82.0

82.0

Ordinary income to total assets ratio (ROA) (%)

23.1

23.0

22.6

20.9

18.7

18.3

19.4

18.3

17.6

16.8

16.8

Payout ratio (consolidated) (%)

11.8

13.1

13.8

14.3

14.6

15.3

15.2

16.0

16.0

17.0

17.0

Price earnings ratio (PER) (Times)

13.6

11.2

10.6

13.3

20.2

19.4

22.7

30.7

23.1

26.1

26.1

Net income per share (EPS) (Yen, USD)

274.44305.95325.83350.27376.14425.10540.93574.49608.05635.42

5.71

Net assets per share (BPS) (Yen, USD)

1,329.34

1,591.64

1,906.91

2,248.80

2,806.99

2,981.27

3,530.51

3,938.89

4,452.99

4,984.29

44.79

32.5

40

45

50

55

65

82

92

97

108

0.97

57,221,748

57,221,748

57,221,748

57,221,748

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

7,460

6,850

6,890

9,340

7,600

8,260

12,25017,625

14,05016,560148.81

426,874

391,968

394,257

534,451

869,770

945,3031,401,933

2,017,067

1,607,931

1,895,184

17,030,771

Number of stores in Japan

237

258

286

312

346

383

428

467

505

541

541

Number of stores overseas

7

10

14

19

27

37

43

56

71

66

66

Net increase in number of stores

27

24

32

31

42

47

51

52

53

31

31

1,185,134

1,275,121

1,390,711

1,478,205

1,568,596

1,678,835

1,806,666

1,928,461

2,037,213

2,099,373

2,099,373

12,504

14,35815,272

16,88419,092

20,75922,111

24,81627,50629,93629,936

Financial Position

Key Management Indicators

Per Share Information

Dividend per share (Yen, USD)
Other Data
Number of shares issued at the end of the year
Stock price at the end of the year (Yen, USD)
Total market value

2

Total sales floor area (m )Total number of employees(Notes)1. The Company conducted a two-for-one stock split of its common shares effective February 21, 2014. The above per share information is calculated under the assumption that the stock split was conducted at the
beginning of FY2007.
2. Translation into US dollars has been made at the exchange rate of 1 USD to 111.28 yen.
3. The total number of employees includes the average number of temporary employees (calculated on the basis that one day is eight hours).

51

52

Financial & Company Data

NITORI Group’s Financial Strategy

Solid financial foundations willallow us to invest for growth
in a proactive and flexible manner,and thus enhance corporate value

Year-on-year change in existing store sales

Store openings in fiscal 2019 and number of stores as of the end of
fiscal 2019 in Japan and overseas
2106.0 (%)

(Stores)

Asia

Overseas

66

105.0

64
104.0

607
541
2016

Masaomi Zenji

You have achieved your 33rd year of consecutive growth in sales and profits in fiscal 2019.
Please tell us your view on the results and the financial policies of NITORI Group.

I believe the fact that we achieved our 33rd year ofconsecutive growth in sales and profits is proof that
we are maintaining the pace of our growth as we lookto achieve the long-term vision of NITORI Group. Growth atexisting stores was the biggest contributing factor to our
top-line (sales) growth. Year on year, sales at existing storesincreased 2.8%, exceeding our initial forecast of 2.3%. Fiscal
2019 was a year of significant fluctuation, including a positive
start to the spring period of high demand, when people start
new chapters in life, and a rush of demand prior to theconsumption tax hike in October that exceeded expectations,followed by a slump owing to a setback in demand following
the consumption tax hike. Ultimately, however, we achieved ayear-on-year increase in sales at existing stores. In fiscal 2019,
products not significantly affected by the weather, such as
kitchen products and cleaning products, as well as washingmachines, refrigerators, and other appliances performed welland contributed to sales, in addition to seasonal products as inprevious years. In terms of profits, in addition to the increase inprofits from higher sales, profits also increased owing to thesuccess of ongoing measures to reduce costs and measures toaddress the risk of fluctuations in foreign exchange rates.
Fluctuations in the USD-JPY rate significantly affect the grossprofit of NITORI Group as imports make up approximately 90%

53

2017

2018

2019

NITORI

Japan
433

2020 (FY)DECOHOMEEXPRESS

2. The role of finance in achieving our medium- to long-term vision

1. Results and financial policies in fiscal 2019

Q
A

14
94

103.0

102.0

General Manager, Accounting & Finance Division

U.S.

of our procurement, almost all of which are denominated in US
dollars. We appropriately hedged this foreign exchange risk inthe current period, which contributed to higher profits.
We opened 44 new stores in the current period,
bringing our store network to 607 stores as of the end of theperiod. At present, we are fully covering store opening
expenses with internal funds, and are not raising any funds
externally, including bank loans.
The retail business is based on day-to-day cashtransactions, and it is important that each store steadily
increases sales. Fortunately, NITORI Group has maintained
year-on-year growth in sales at existing stores, and has also
increased profits, allowing us to allocate the increased
operating cash from growth in sales at existing stores to newstore openings, etc. In this environment, we are able to cover
the funds required for growth in existing businesses (organic
growth) with internal funds. In terms of our financial position, I
believe it is important that we build and maintain soundfinancial foundations based on sufficient internal funds so that
we can raise funds through borrowings, issuance of bonds, etc.
in a nimble manner and at low cost when needed for future
M&A and other initiatives.

Q
A

Please tell us about the role of finance in achieving a store network of 1,000 stores andnet sales of 1 trillion yen by 2022 and 3,000 stores and net sales of 3 trillion yen by 2032.

Q
A

Please tell us about how you view the risks caused by the rapidly changing businessenvironment and measures to address the impact of these risks on business results.

We intend to achieve a store network of 1,000 storesby 2022, but first, we plan to open 45 stores in Japan
in fiscal 2020. In terms of future store openings, we
intend to increase the number of DECOHOME store openings,
in addition to NITORI store openings. At present, we open
stores as tenants, so we are able to keep store opening costs
low. In addition, we have slowed the pace of new store
openings of NITORI (China) Holdings Co., Ltd. in fiscal 2019and intend to do so in fiscal 2020 also, as we strengthen our
foundations ahead of restarting double-digit store openings infiscal 2021. We also intend to continue using internal funds forthe funds required to open these stores, both in Japan andoverseas. Depending on the speed of new store openings, we

Foreign exchange risk exists in financial markets. As I
mentioned before, fluctuations in the USD-JPY rate
significantly affect our business results. As a company,
NITORI hedges foreign exchange risk as much as possible, butthere may be some cases that we cannot address such risk
with hedges, particularly with the recent rapid fluctuations in
global trends, when it is difficult to make forecasts about the
future. With regard to the risk of an increase in interest rates,
we do not have any outstanding borrowing at present, so thisrisk does not directly affect us. Increased interest rates willlead to increased costs if we were to borrow funds in future, so

will also consider the option of expanding our store network
through M&A as an additional strategy to achieve our target of
3,000 stores by 2032, in which case we will need to procure
external funds. We are primarily considering raising funds
through borrowing, namely issuing corporate bonds, but we arealso considering share exchanges using treasury stock, andissuing bonds and listing shares in overseas markets in amanner suited to the expansion of our overseas development.
As we expand our store network overseas, an increasing
number of our transactions will also be denominated in foreign
currencies, so I think the creation of global fund management
systems, including the management of foreign exchange risk,
will be an important issue for us.

we must build and maintain sound financial foundations toenable us to procure funds with favorable terms.
We closely follow trends in custom duties for trading
purposes. Imports make up approximately 90% of our
procurement, so trends in customs duties in each country
directly impact our cost of sales. NITORI Group must consider
whether to pass on the increase in costs by raising the prices
at which our products are sold, or absorb the increase in costs
internally, or use a combination of both to address the impact
of increased costs. NITORI Group is probably most significantly
impacted by country risk related to business with oversea

54Financial & Company Data

NITORI Group’s Financial Strategy

countries, which accounts for the majority of our productprocurement and market. The recent novel coronavirus
pandemic has placed renewed emphasis on the risk of relying
on one country on processing a product.
In Japan, we face risks from labor shortages amongtruck drivers and increasing distribution costs in line withJapan’s aging society. NITORI Group will implement various
initiatives to tackle these issues, including rebuilding ourdistribution system by creating new distribution bases,
redeploying distribution bases, etc., and enhancing logistics
efficiency through one-man delivery, more compact packaging,and other initiatives.

has already started, and we intend to begin shipments in fall
2021. The amount of investment will be approximately 6.0
billion yen. Although it does not fall under capital expenditure,
the Company’s plants are notable for the fact that labor
expenses comprise a relatively high proportion of costs. Local
personnel expenses are rising and the management of labor
expenses will be an issue for us, including measures toincrease the retention rate.
Rebuilding our distribution network (Japan)

3. Key Performance Indicators (KPIs)

Q
A

What KPIs are prioritized when looking at factors such as growth and capital efficiency?

First, the key premise here is that NITORI Group is still
growing, as I mentioned before, so we must focus all
our efforts on business development for further growthand securing the necessary funds for investing in businessdevelopment. In the future, strategies focusing on development
not just in the domestic market but also on the expansion of ouroverseas businesses will be the key for NITORI Group. I believethat focusing on fully utilizing our potential to increase corporate
value, in terms of an absolute amount rather than efficiency offunds as a ratio, will contribute to returns for shareholders andall other providers of funds.
There are various KPIs, but at NITORI, we place thegreatest emphasis on the number of purchasing customers
and the number of items purchased. These indicators show thegrowth of our company, and at the same time they show ourcontribution to society and are consistent with the Group’s
mission of enriching homes around the world.
We are also constantly aware of capital efficiency. For
example, the average ROE of NITORI Group over the past five
years has been 14.9%. The cost of equity is 5.1%, resulting ina spread of 9.8%. Whether this percentage is high or low islikely to change depending on whether a comparison is madewith global peers or just those in Japan. The ROE of NITORIGroup is driven by our net income margin, which is high among
companies in the retail industry. On the other hand, ourfinancial leverage is low and it would be possible to lower ourcost of equity by borrowing to increase our debt, but at NITORIGroup, we prioritize building and maintaining a sound financial
foundation, and since we are able to cover funds for existing
growth investment with organic growth, I think there is no needfor us to blindly increase debt with unnecessary borrowing.

Year-on-year comparison of number of purchasing customers
at existing stores and average spend per customer
Number of purchasing customers
Average spend per customer

106.0 (%)
105.0

55

Q

104.0

A

103.0
102.0
101.0
100.0
99.0
98.0
97.0

2016

2017

2018

2019

2020 (FY)You mentioned that internal funds will be allocated to growth investment, but could youtell us about the specific content of this investment?
In addition to investment plans related to store
openings, we are also currently implementing planssuch as the following:

Investment in information systems infrastructure (global)
At NITORI Group, we are also focusing on an overhaul of our
information systems infrastructure, in order to strengthen our IT
competitiveness as necessary to achieve our vision of 3,000
stores by 2032 and evolve into a global corporate group withmultiple store formats. In order to survive in an increasingly
complex and diverse global economic environment, we must
create globally optimal core systems tailored to the increasingly
global nature of our businesses. Accordingly, we plan to build
and introduce these systems in procurement, trading, stores,
and sales areas.
For all investments, including investment in store
openings, we make investment decisions after calculating thetime required to recover our investment, and stringently
analyzing profitability.

5. Shareholder returns

4. Investment for growth

Q
A

NITORI Group uses 28 distribution centers in Japan (DC: 11, TC
and XD: 17). Most of these distribution centers are leased, with
only a few owned by NITORI Group. For this reason, distribution
centers are not always optimally located, requiring unnecessary
distribution between centers and leading to increased costs.
We are implementing a plan aimed at achieving optimal
locations of distribution centers by shifting to centers owned byourselves. This will also lead to a reduction in rental fees andallow us to reduce distribution expenses by introducing thenecessary materials handling equipment, contributing to ahigher ratio of operating income to net sales.
We have already begun looking for suitable plots of land
and we plan to complete our shift to Group-owned distribution

centers over the next five or six years. We expect the total
amount of investment to be approximately 200 billion yen, andour basic assumption is that we will cover this amount withinternal funds.

Strengthening production systems (Vietnam)

In addition to the furniture business, we are also expanding ourplants ahead of the launch of the fabric business. Construction

You mentioned that financial soundness will be prioritized and internal funds will beallocated to growth investment, but can you tell us about your approach to shareholder
returns?

In the future, we will maintain our basic policy of
paying a stable dividend, while also balancing this withinvestment for growth. The annual dividend per sharein fiscal 2019 was 108 yen, an increase of 11 yen from theprevious year. This means we have increased our dividend for
16 consecutive years. The payout ratio is 17%. We are also
considering enhancing our total payout ratio through sharebuybacks and other methods over the medium- to long-term,
although we will need to balance this with investment for growth.
As a company that is still growing, with 33 consecutive
years of growth in sales and profits, I believe NITORI Group will
be able to ensure total returns to shareholders, not just throughdividends and share buybacks, but also indirectly through anincrease in the share price based on the market’s valuation of
our company, by investing for growth and thereby securing andincreasing profits on an ongoing basis. We ask for shareholders’continued support to enable us to maintain our shared growthtrajectory.

Dividend per share and payout ratio
Dividend per share

Payout ratio

(Yen)

(%)

120

17.5

100

17.0

80

16.5

60

16.0

40

15.5

20

15.0

2016

2017

2018

2019

2020 (FY)56

Financial & Company Data

ESG Information

Society

GovernanceApproach to ESG
As global efforts centered on ESG and SDGs accelerate, NITORI Group believes that it is essential for its sustainable growth to also focus
on these changes and respond in a flexible manner. We are aware of the importance of this external environment, and have gathered,sorted out and enhanced disclosure of information on NITORI Group’s initiatives related to ESG
and SDGs, in addition to creating systems to further strengthen our activities in this area. We
will control initiatives centered on ESG and SDGs in our business activities in a systematicmanner, based on discussions that include senior management, and create greater sharedvalue, thereby achieving a sustainability management in a manner characteristic of NITORIGroup.

Reduction of environmental burden with
3Rs

Environment

Countermeasure

Creation of recycling-oriented society

ESG Information

Environmental
issue

Initiatives

Evaluation indicator

Results of initiatives

Activities at SIAM NITORI

Number of recycledplastic bottles

Approx. 200 million (converted to 500ml plastic bottles)(Total number during the period from joining NITORI Group in May 2018 to
February 2020)

Activities other than at SIAMNITORI

Usage volume ofrecycled polyester

・Usage volume of recycled polyester in soft products: Over 18,000t
annually・Composition ratio in virgin polyester materials: 43%

Usage rate of raw
materials (yield) (%)

Timber usage rate (yield): 95% (usually around 50%)

Amount of scrap
materials reused

Over 430,000 MDF sheets annually(Converted based on MDF size: t3×1220×2440 mm)

Initiatives aimed at effective
use of timber resources at
NITORI FURNITURE VIETNAM

Recycling of cushioning
Amount of reduction inmaterials for packaging
polystyrene wastage
Shift to the use of molded pulp

・Amount of reduction: 3,994 kg YoY amount of waste: 72.3% (fiscal
2019)
・Reduced polystyrene waste by a total of 38t through this initiative since
fiscal 2017

Occupational health and safety

Contribution to SDGs
We believe it is important that we utilize our unique business model based on the customer’s perspective to contribute to achieving SDGs
through our business activities. Of the targets in the 17 goals, we understand that there are high relevance and compatibility with 12 goals(3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 15, and 17), and we are thus promoting our initiatives aimed at achieving these goals.

Environmental issues

NITORI Group’s approach
NITORI aims to comply with applicable laws, regulations and rules related to occupational health and safety, and to maintain and enhance safe
and comfortable workplaces, taking into consideration the physical and mental wellbeing of our employees.
Taking this approach as our guiding principle, we have set forth concrete rules and stipulations for our business activities.

Planned initiatives

NITORI Group’s approach and priority areas
Initiative theme

We are working to optimize all stages of our supply chain by utilizing NITORI Group’s unique business model that integrates manufacturing,
distribution, IT and retail. We have also planned initiatives in two areas – “addressing climate change” and “creating a recycling-oriented
society” – and are focusing on resolving these issues through our businesses. A company that enriches homes around the world must also be
a company that contributes to conserving the global environment. In our efforts to address the environmental issues we are facing, we arecommitted to reducing our business risk and identifying opportunities to develop green products, which will contribute to sustainable growth
aimed at achieving Vision 2032.

Initiatives

Results of initiatives

Future plans(1) Expand large fan installation(1) Installed large fans
• Installed fans (four sets of 7m blades) in four locations* Reduced effective temperature by approximately 4 degrees Celsius(2) Introduced air-conditioning in warehouses• Introduced air-conditioning in four sales offices and CSC locations(3) Installed 50 yen vending machines
Measuresto prevent
heatstroke

Environmental data

• Installed vending machines selling sports drinks and tea for 50 yen in 21

locations(4) Clothing with cooling features• Introduced clothing with cooling features on a trial basis at 11 locations, inorder to prevent people becoming unwell because of heatstroke* Distributed two sets to each person

Environmental Counterissue
measureReduction of greenhouse gas emission volume

Addressing climate change

57

Initiatives

Evaluation indicator

Development and sales ofenvironmentally friendly
Annual units soldfunctional products(green products)
Smaller packaging sizes
for soft products
Number of SKUs andEnhanced loading
efficiency with downsizing reduced cubic metersof product packaging
Proportion of mattresses forbeds with compressedpackaging in product mix (%)

Initiatives to enhancetransportation efficiency
in distribution processes(5) Installed container showers in Kyushu DC on a trial basis

Results of initiatives• In order to limit increases in temperature in containers while performing

devanning operations• N Cool series: 8.76 mn units• N Warm series: 5.33 mn units (fiscal 2019)

Number of SKUs
Reduced cubic meters (m )3

Proportion of units sold in
product mix

FY2017FY2018FY2019

77

67

199

30,71325,18921,017

56%

71%

81%

Prevent
seriousdisasters• Definitions will be clearly indicated and guidance provided to sites(2) Create a culture of safety* Unit = Crude oil equivalent (㎘) of energy usage(GJ) / annual net sales

CO2 emission volume perstore in Japan involved in
distribution

CO2 emission volume per store in
Japan (t-CO2)

90.3

88.1

83.4

Mileage per delivery truck (km)

91.62

90.92

89.51

2.91

2.90

(3) Revise helmets

where air-conditioning is introduced(3) Expand 50 yen vending machine
installation• Currently considering increasing locations

where 50 yen vending machines are
introduced(4) Expand introduction of clothing withcooling features• Creating an environment where theseclothes can be used in 13 locations• Provide portable copies of safety(2) Further promote creation of a culture ofsafety• Continue training related to safety and risk•H elmets do not use polystyrene as a shock absorption material, thereby reducing

the extent to which helmets becoming dirty and reducing discomfort* Lighter, more breathable, and better from a hygiene perspective

thereby enhancing safety

2.78• Currently considering increasing locations

standards for employees• Conduct training on safety, including other companies (subcontractors)• Conduct and continue onsite risk assessments

Safetymeasureswhere large fans are introduced(2) Expand air-conditioning installation in
warehouses(1) Create booklet of safety standards(1) Revise safety standards and rules• E nhance shock-resistant area and protect from shocks around the entire circumference,

Energy usage indistribution by unit (㎘)Delivery efficiency ofdelivery truck* Number of people suffering from heatstroke reduced to 61.4% of number inprevious year

• Currently considering increasing locations

assessment• Conduct safety training for forklifts• Continue Safety Creation Committee withparticipation from onsite employees* Measure to prevent accidents occurring on adaily basis(4) Improve walking paths and construct signs• Improved walking paths at three locations and displayed signs in four locations

Year-on-year mileage per delivery
truck (%)

98.6

99.2

98.4

in order to visualize guidance in buildings and risks

Introductionof URC rollbox pallets*• Replaced approximately 16,600 units at Home Logistics centers andstores• Measures to address decline in productivity caused by lack of jigs andensure stable operation• Plan to replace remaining 7,300 units or

so in fiscal 2020

* A new type of safe roll box pallet that does not fall over easily.

58

Financial & Company Data

ESG Information

Social Data

Responsible Procurement

Personnel Data

NITORI Group’s approach
NITORI Group is focusing on responsible procurement in its supply chain as a company which
operates globally. In particular, we prioritize quality inspections, management of raw materials
and packaging materials, conservation and protection of the natural environment, prohibition offorced labor, child labor, and discrimination, etc., and have entered into supplier contracts basedon our “Basic Entrustment Contract for Product Manufacturing” and “Quality Assurance Manual.”
10.3 (Summary)In addition, we are aiming for sustainable growth with suppliers by explaining and sharing our
Ensure equal opportunities, etc. and takeideas to create a culture of product safety, such as the importance of fulfilling their work
corrective action on inequalities inaccomplishment through the elimination ofenvironment and social responsibilities, through the implementation of quality improvement
discriminatory laws and practices as well as theeducation including guidance in plant management, etc., to overseas supplier managers.

Employee data

2017

2018

2019

Diversity & Inclusion

Number of full-time employees
Percentage of women (%)

4,437
26.6％

4,688
27.2％

4,965
31.8％

Number of employees
Percentage of women (%)

29,68162.1％

31,031
63.1％

33,055
63.4％

Childcare leave, childcare leave forpartners
Shorter working hours(pregnancy, childcare, nursing care)
Nursing care leave

Regular employment

4,437

4,688

4,965

Percentage of paid leave taken (%)

Non-regular employment

25,244

26,34328,090Global human resources strategy

2017

2018

2019

Number of participants in U.S.
seminars

1,301

1,169

1,134

Male

910

740

728

Female

391

429

406

Average overtime hours(hours per month)
Women in management positions
Percentage (%)
NumberNew graduate women hired
Percentage (%)
Number
Percentage of employment of
persons with disabilities (%)

Typepromotion of appropriate related regulations.

List of activities
Activities
Risk assessment
Product safety
Quality control
Field check
Improvement
supportInitiatives

Details

Evaluation Indicator

QAV1(Quality Assurance Visit 1)
Development Technology
Evaluation Meetings
QIM(Quality Improvement
Meeting)
Compensated technicalsupport for suppliers and
NITORI Juku

Audit and evaluate new suppliers and judge whether
to start business (incorporate the FMEA method)
Evaluation meetings to prevent problems on newly
developed products
Analysis work and meetings to determine the cause
and countermeasures of damaged and defective
products and implement PDCA

Number of QAV1
implemented
Total number of evaluation
meetings held

Compensated technical support on management,
production, processes, and quality control

FY2017FY2018FY2019

148

143

163

1,254

1,291

952

Number of QIM held

581

583

510

Number of companies
implementing compensatedtechnical support

8

11

12

We promote quality reform based on four steps of process management: “❶Development ❷Manufacturing ❸ Inspection ❹Repair,” andendeavor to create a culture of product safety.
1 Product safety information inclusion

We aim to include production safety from the planning stage andestablish production safety in the manufacturing process.
We will improve the skill of overseas staff, promote localization through the introductionof various types of testers, and promote the shift to overseas operations throughimplementation at plants.

Development Technology Evaluation Meetings
Composition ratio of actual performance by country
2018

2019

2020

YoY

Tokyo Headquarters

77.1%

75.7%

63.0%

83.2%

Shanghai + Shenzhen

13.6%

17.9%

25.0%

139.4%

Ho Chi Minh

9.3%

6.4%

12.0%

188.8%

Overseas total

22.9%

24.3%

37.0%

152.3%●Improvement in the level of supplier management andinvestigation of causes by defective analysis
Provide further guidanceon plant management tocultivate NITORI model
plantsJointly work withseveral suppliers togrow specific technicalfields in a short periodof timeA

Compensatedtechnical
support

Implement QAV2
for suppliers
releasing many
non-conforming
productsB
NITORI Juku

C
Quality meeting

2019

125

139

152

123

145

144

2

8

10

83.9％

85.1％

87.5％

22.9

20.4

16.7

12.3％
250

12.8％
286

13.4％
305

47.2％
238

42.2％
227

47.8％
277

2.55％

2.52％

2.85％

Social Action Program Data
■ Donation and support for social action programs infiscal 2019
Total amount

Total number of cases

Approx. 700 million yen

47 cases■ Focus –disaster assistance–

Breakdown of social action expenses (yen)Approx. 160 million yen
Investment in sustainable growthfor future generations and cultural
inheritance・Support for cultural activities
・Support for educational activities
・Support for regional development
activities
and others

Approx. 540 million yen
Donations (support for public
interest business, etc.)
・Local volunteers
・Emergency disasterassistance and others• Implementation of compensated technical support, NITORI Juku, and QAV2
• Implementation of QIM (in-house analysis measures)Collect actual products, check actual products, and ascertain actual situations(problematic content) ➡ Request improvement and prevent reoccurrence

NITORI Group procures and delivers
emergency relief supplies to shelters andtemporary housing at the request of thegovernment and local municipalities whennatural disasters, such as earthquakes andheavy rainfall, strike in various locations. In
addition, based on the belief that resuming
regional store operations as soon as possible
is the most important way to support stricken
areas, NITORI Group is united in working tocreate a system to work on restoration so as
to be capable of resuming operations at an
early stage even if it is temporarily difficult tomaintain the operations.

13.1
Enhance resilienceand adaptability torisk and natural
disasters due toclimate change inall countries.

3 Product safety check function

4 Market quality●After-sales follow-up with CSC* function covering Japan
Closer, deeper, and longer toward our customers• The only function in the industry of repairing furniture and gathering information• A pillar of one-year, three-year, five-year, and 30-year warranties●Prevention of defective product release by inspecting
incoming products from overseas• Inspection of incoming products at each DC in Japan
Number of imported
containers (annual)

175,000

25 bases across Japan:
400-person system
Number of repairs
in fiscal 2018

* Customer Service Center

Composition of Directors

2018

2019

Total number of Directors

10

11

11

Measure the emission amount of formaldehyde at the product stage.
Started from 2008

Outside Directors

4

5

5

* Constant temperature and humidity chamber (three chambers available)

Female Directors

0

0

0

(Adopted guideline values of the Ministry of Health,Labour and Welfare)

15,000 orders* Total of all categories• Prevention of release of products exceeding guideline values of hazardous
substances (formaldehyde, etc.)[Evaluation threshold] 0.08ppm or lessCustomer orders

Governance Data

[Total number of products inspected]
About 630,000 products

2017

containers

59

QAV2

2018

* Total numerical values of Nitori Holdings, NITORI, Home Logistics, Nitori
Facility, and N+

2 Design information protection●Development Technology Evaluation Meetings

About

Gender2017

Status of Board of Directors
Meetings held

2017

2018

2019

13

13

13

Average attendance rate of Directors (%) 95.6％

94.6％

96.4％

Average attendance rate of Outside
Directors (%)

94.2％

95.2％

Number of meetings held

92.3％

60

Financial & Company Data

Company Stock Information / Company Information

Company Stock Information (As of February 20, 2020)■ Outline of Shares
Total number of authorized shares: 288,000,000
Total number of issued shares: 114,443,496
Number of shareholders: 20,598
Listed markets: First Section of the Tokyo Stock Exchange
and the Sapporo Securities Exchange
Securities code: 9843
Fiscal year: February 21st of every year to February 20th of
the following year
Ordinary General Meeting of Shareholders: May
Administrator of shareholder registry: Sumitomo Mitsui Trust
Bank, Limited■ Distribution of Share by Type of Shareholder
Treasury stock
1.45%

Financial institutions
27.68%

Individual
shareholders
12.28%
Securities
companies
1.20%
Other corporationsin Japan
23.43%

Foreign corporations, etc.
33.96%

Company Information (As of February 20, 2020)■ Major Shareholders(As of February 20, 2020)
Ratio toNumber of
the total number
sharesof issued shares
owned
(%)
(thousands)

Name

Company Name

Nitori Holdings Co., Ltd.

Representative

Akio Nitori, Representative Director & Chairman (Chief Executive Officer)
Toshiyuki Shirai, Representative Director & President (Chief Operating Ofﬁcer)

Address

Sapporo Head Ofﬁce: 1-2-39 Shinkotoni 7-jo, Kita-ku, Sapporo, Hokkaido 001-0907;
Tel: +81-11-330-6200
Tokyo Headquarters: 3-6-20, Kamiya, Kita-ku, Tokyo 115-0043; Tel: +81-3-6741-1235

Establishment

Established December 1967

NITORI Trading, Ltd.

20,79918.44

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

5,674

5.03

Japan Trustee Services Bank, Ltd.
(Trust account)

4,931

4.37

Incorporated

March 1972

JP Morgan Chase Bank 385632

4,198

3.72

¥642,273 million

NITORI International ScholarshipFoundation

Revenues(Consolidated)

4,000

3.55

North Pacific Bank, Ltd.

3,860

3.42

Ordinary Income(Consolidated)¥109,522 million

Akio Nitori

3,410

3.02

Capital Stock¥13,370 million

Momoyo Nitori

3,078

2.73

29,936 (including 15,599 part-time employees)

Nippon Life Insurance Company

2,056

1.82

Number of Employees(Consolidated)

National Mutual Insurance Federationof Agricultural Cooperatives

2,007

1.78

NITORI Group List

Notes: 1. T he numbers presented in “Number of shares held” above arecalculated based on the list of shareholders.
2. The Company’s 1,656,132 shares of treasury stock are excluded
from the above list of major shareholders.
3. Calculations of equity positions exclude holdings of treasury stock.
4. The number of shares owned by The Master Trust Bank of Japan,
Ltd. and Japan Trustee Services Bank, Ltd. are shares held insecurities investment trusts and retirement benefit trusts.

Overseas Manufacturing
Companies
NITORI FURNITURE
VIETNAM EPE
NITORI Furniture
Ba Ria-Vung Tau Co., Ltd.

(As of February 20, 2020)
Curtain Manufacturing Factory
HOME DECO CO., LTD.

Import Agent Companies
NITORI (China) Co., Ltd.
NITORI (Taicang) Trading & Logistics Co., Ltd.
NITORI TRADING VIETNAM COMPANY LIMITEDNITORI (MALAYSIA) SDN. BHD.
Nitori Trading (Thailand) Co., Ltd.
NITORI INDIA PRIVATE LIMITED

Trading, Planning & Development,
and Logistics Functions

Logistics Company
Home Logistics Co., Ltd.

■ Stock Price and Turnover
Stock price (yen)Advertising Agency
Nitori Public Co., Ltd.

20,00018,000

Manufacturing
Functions

16,00014,000

Nitori Holdings
Co., Ltd.
[Holding Company]

12,000SIAM NITORI

Facility Management
Functions

10,0008,000
Turnover(Thousandshares)

6,000

Sales Activities

12,000
9,000
6,000
3,000
2017/361

Advertising andPublicity Functions

2017/62017/92017/122018/3

2018/62018/92018/122019/3

2019/6

2019/92019/122020/20

Carpet and Rug Manufacturing Company
SIAM NITORI CO., LTD.

Facility Management Insurance
Agent Business
Nitori Facility Co., Ltd.
Store Management Companies
Nitori Co., Ltd.
• HOME FURNISHING STORE• HOME FASHION STORE• NITORI MALL
• DECOHOME• Online Shopping Business• Renovation Business• Corporate Sales Business, etc.
Apparel Sales Company
N Plus Co., Ltd.
Overseas Sales Companies
NITORI Taiwan Co., Ltd.
NITORI (China) Holdings Co., Ltd.
DECO HOME China Co., Ltd.
NITORI (Shanghai) Home Furnishing Co., Ltd.
NITORI (Shanghai) Home Furnishing Sales Co., Ltd.
NITORI USA, INC.

62