M A R U I G R O U P CO . , LT D
Financial Results Briefing for theF i s c a l Ye a r E n d e d M a r c h 3 1 , 2 0 2 0and Future Outlook

May 28, 2020

Today’s Agendaof Performance for the Fiscal Year
1 Overview
Ended March 31, 2020
H i r ot s u g u K at o
D i r e c to r, M a n a g i n g Exe c u t i v e O f f i ce r, C h i e f F i n a n c i a l O f f i ce r,G e n e ra l M a n a ge r, I n v e st o r R e l at i o n s D e pa r t m e n t , M A R U I G R O U P CO . , LT D

2 Dealing with the COVID-19 Crisis
Hiroshi Aoi
P r e s i d e n t a n d R e p r e s e n tat i v e D i r e c to r,
M A R U I G R O U P CO . , LT D .

3 Future Developments
Hiroshi Aoi
P r e s i d e n t a n d R e p r e s e n tat i v e D i r e c to r,
M A R U I G R O U P CO . , LT D .

1O ve r v i ew of Pe r fo r m a n ce fo r t h e
F i s ca l Yea r E n d e d M a rc h 31, 2020
Hirotsugu Kato
D i r e c t o r, M a n a g i n g E x e c u t i v e O f f i c e r, C h i e f F i n a n c i a l O f f i c e r,
G e n e r a l M a n a g e r, I n v e s t o r R e l a t i o n s D e p a r t m e n t ,M A R U I G R O U P C O . , LT D

H i g h l i g h t s i n t h e F i s c a l Ye a r E n d e d M a r c h 3 1 , 2 0 2 0
1. Important KPIs of medium-term-management-plan, which isEPS, ROE and ROIC, unachieved the targets due to the COVID-19
2. Consolidated operating income increased 2% year on yearto ¥41.9 billion for 11th consecutive year
The negative impact of the COVID-19 was ¥1.3billion
3. Retailing segment operating income decreased 12% year on year
FinTech segment operating income increased 10% year on year4. Annual dividends increase ¥1 to ¥50 for 8th consecutive year4C o n s o l i d a te d Pe r f o r m a n ce
・The 3 KPIs unachieved the targets. ROE exceeded Capital costs and ROIC exceeded WACC

5

S e g m e n t I n co m e・Retailing segment operating income decreased 12% for the first decrease in the three fiscal years
due to the COVID-19 negative impact of ¥1.5 billion
FinTech segment operating income increased for 8th consecutive year
Operating income
FY2019FY2020ROIC
YOYchangeYOY
differenceVS.
targetFY2020YO YchangeBillionsof yenBillionsof yen％Billionsof yenBillionsof yenRetailing

11.4

10.0

88

－1.4

－1.5

3.4

－0.4

FinTech

35.0

38.4

110＋3.4

－0.6

4.6

＋0.4

Eliminations/Corporate－5.3

－6.5

－－1.2

0－－

Consolidated

41.2

41.9

102＋0.8

－2.1

3.7

＋0.0％

6

Fa c to r s A f f e c t i n g O p e ra t i n g I n co m e・Consolidated operating income excluding extraordinary factors and the COVID-19 impact
increased 8% to ¥3.1 billion
Increase in operating income
excluding extraordinary factors＋¥3.1 billion (＋ 8% YoY)

Extraordinary factors－¥2.4 billion¥44.3billion

Eliminations/Corporate－¥1.2 billion¥41.2billion

Retailing＋¥ 0.1 billion

FinTech＋ ¥4.2 billion

DeferralGain oncredit cardtransfer andissuance cost amortization＋¥0.5 billion of liquidated
accounts
receivableand others－¥0.5 billion

Provision forloss onInterest
Effect ofrepayment
COVID-19－¥1.1 billion －¥1.3 billion¥41.9billion

Retailing－¥ 1.5 billion
FinTech＋¥0.2 billion

FY2019FY20207

Fa c to r s A f f e c t i n g R e ta i l i n g S e g m e n t I n co m e・Income improvements from transition to fixed-term rental contracts contributed, but
Retailing segment income decreased ¥1.4 billion due to poor performance of consignment sales
floors and EC, and the COVID-19 impact¥11.4billion

E-Commerce
Consignment
sales floors
and others－ ¥0.1 billion

FY2019

Incomeimprovementsfrom transition tofixed-term rental
contracts
and others＋¥ 1.4 billion－¥0.9 billion

Platform¥10.0－¥0.3 billion

billion

Effect ofCOVID-19－¥1.5 billion

FY20208

C o n s o l i d a te d B a l a n ce S h e e t・Liquidation suppresses interesting-bearing deptTotal assets are about the same as the previous year

*1 Ratio of liquidated accounts receivable = Liquidated accounts receivable / (Operating receivables + Liquidated accounts receivable)*2 Ratio of interest-bearing debt to operating receivables = Interest-bearing debt / Operating receivables

9Cash Flow
・Net cash provided by (used in) investing activities was a cash out of ¥11.1 billion due to increase ofinvestments to venture companies.

*3 Core operating cash flow = Net cash provided by (used in) operating activities － Change in operating receivables

10L i f e t i m e Va l u e M a n a ge m e n t I n d i c a to r・Recurring gross profit increased 7% to ¥131.1 billion
The ratio of recurring gross profit to consolidated gross profit increased to 65%
Contracted Future
Recurring Gross Profit

Recurring Gross Profit
FY2019FY2020YOYchangeYOY
differenceFrom
FY2021

VS. Recurringgross profit

Billionsof yenBillionsof yen％Billionsof yenBillionsof yen％

Retailing

41.1

42.6

104＋1.5

81.4

191

FinTech

81.5

88.5

109＋6.9

268.7

304

122.7

131.1

107＋8.4

350.0

267

62.9

65.3

－＋2.4

TotalComposition withingross profit（%）

11

Shareholder Returns
・Dividends increase￥1 to ¥50 for 8th consecutive year (Forecast was ¥57),
marking record high for 4th consecutive year
about 55%

■Dividends per Share41%

(yen)

60

Consolidated
payout ratio

31%

40

33
19

20

41%

42%

43%

49

¥50

¥51

plan toincrease
dividends(Forecast)

FY21

FY2238220
FY13FY14FY15

FY16

FY17

FY18

FY19

FY20

Total return ratio

125.3%

227.5%

147.5%

112.3%

69.9%

70.1%

Share buybacks
EPS

FY23

FY24

¥15.0 billion ¥35.0 billion ¥20.7 billion ¥15.0 billion ¥0.7 billion ¥0.7 billion
¥58.9

¥70.7

¥80.2

¥93.2

¥116.0¥117.612

2
D ea l i n g w i t h t h e COV I D -19 C r i s i sHiroshi Aoi
P r e s i d e n t a n d R e p r e s e n t a t i v e D i r e c t o r,
M A R U I G R O U P C O . , LT D .

Overview■Status of Store Operations
Request by the Government

ResponseRetailingtransaction
volumeYoY change

EPOS Cardtransactions
YoY changeMarch

27th Request for leaveby the Government

5th All Marui and Modi stores started short-time
operations
th28 Some stores closed on weekends

65%

102%

April

7th

18th All stores temporarily closed(Only food floors in 8 stores opened for shorthours)

27%

82%

MayEmergency Declaration

14th~ Partial cancellation

June*provisional value

14th~ Some stores reopened――

1st All stores reopened――■Cash Flow Status
・FinTech segment performance was lower than planned performance in April
As a result, more cash funds remained at hand14

R e s p o n s e f o r Sta ke h o l d e r s
Co-Creation Management in MARUI GROUP

Review stakeholder relationships and strengthen partnerships in times of the crisis

15

R e s p o n s e f o r Sta ke h o l d e r s : C u sto m e r s

Payment Status

Usage status

・Inquiries about credit card payment temporarily
increased in April but decreased in May

・Demand for funds decreased due to refraining fromgoing out

・No serious change in payment status
・Guide to customer “Housing security benefits” of
the Government for Inquiries about credit card
payment for rent
■Number of customers not eligible for direct debit

(%)

110%

101%

103%

100%
100

98%

90%

77%

80%

30 thousand)(ten

24.7 24.5

70%

53%

60%

2010

■Year-on-Year change in Cash Advances

Average 247000
19.4

19.3

19.5

19.6

19.7

19.8

19.9

19.1

19.11

50
50%
19.12

20.1

20.2

20.3

20.3

20.4

20.4

40%

20.11月

20.2

20.3

20.4

20.5
(Until the 20th)16

R e s p o n s e f o r Sta ke h o l d e r s : E m p l o y e e sStore staff

Approx. 1,900

・Special leaves after temporary suspension of businessin principle.
The salary is fully compensated(Application for “Employment adjustment subsidy”)

Logistics department and call center

Approx. 2,200

Head office staff

・2200 mobile PCs already deployed by March
・Telework become familiar rapidly after
the emergency situation
New ways of working promoted withprevention of infection

Approx. 1,200■Telework rate

・In the essential departments for business continuity, creatinga safe work environment thorough center decentralization
40and prevention of droplet infection, etc.
2066%

40%
27%
Results for
カテゴリ
1March,2020

Targets for FY21

Results for April,
カテゴリ
2020 317

R e s p o n s e f o r Sta ke h o l d e r s : B u s i n e s s Pa r t n e r sStrengthening partnerships to overcome the COVID-19< Contents>(1) Full exemption of all rent and common service fees for our business partners
during suspension of business.
(2) Elimination of minimum guaranteed sales of consignment sales contract
business partners for 6months(3) Return of 1 month or 2 months security deposit to rent upon request*Applicable to business partners who deposit for more than 6 months(4) 6months grace for payment of May-July upon request

Announced April 24, expected to cost approximately ¥5.0 billion by end of May18

R e s p o n s e f o r Sta ke h o l d e r s : S h a r e h o l d e r s a n d I n v e sto r s・Continue our shareholder returns policies, aiming for long-term stable dividends increase
even in an uncertain business environment■Dividends per Sharestable dividends
increase

dividends increase for 8th consecutive year

plan toincrease
dividends

(yen)

60
49
38

40

20

¥50

¥51

(Forecast)

33

¥1415

12.3

13.3

18

19~

220
14.3

15.3

16.3

17.3

18.3

19.3

20.3

21.3

*No share buybacks planned for first half of 20

19Impact of the COVID-19 in FY2020
・Retailing segment operating income decreased ¥1.5 billion.
FinTech segment operating income increased ¥0.2 billion due to SG & A expenses decrease.
■Impact on Operating Income

Segment

Operatingincome

Retailing－￥1.5 billion

FinTech＋￥0.2 billion

Operatingrevenue

SG & A expenses－￥2.2 billion－￥0.7 billion－￥0.7 billion－￥0.9 billion

Main factors

・Store closure
・Cancellation of sale for cardholders
・Decreased usage in Marui andmembers stores
・Decrease in new card issuance20

P r o f i t st r u c t u r e o f F i nTe c h S e g m e n t・Due to our unique profit structure, the profit impact of a decrease in transaction is limited.

①

Card shoppingtransaction

Affiliate commissions

Point cost (70%)*Time lag in the effect②

Revolving and installment
payments receivable③

Recruiting newmembers

Financial charges

Card issuance costs(advance investment)
21

Estimated Impact of the COVID-19 in FY2020<Assumptions for the estimate of
the COVID-19 impact>*estimate in 4 ways

Segment

FY2020Retailing

FinTechExcluding theeffect of theCOVID-19

After reflect trial calculation effectof the COVID-19¥10.0 billion± ¥0 billion－¥3.0 billion~－¥9.0 billion¥38.4 billion＋¥4.0 billion＋¥0.5 billion~－¥0.5 billion◇Optimistic scenario
・Recovery in October 2020~

◇Pessimistic scenario
・arrival of the second wave
・Recovery in October 2021

YOY difference from the previous year for the year
ended March 2021

The forecast of consolidated results for fiscal year ending March 31, 2021 is undetermined
as it is difficult to reasonably estimate the COVID-19 impact at this time.
The forecast of results will be disclosed as soon as impact for consolidated results areidentified and revealed in detail.
22Pro g re ss of M e d i um-Te rm M a n a ge me n t Pl a n

Progress of KPIs
・It was smooth until the COVID-19 crisis, but it is expected to be difficult to achieve key KPI targets
in the fiscal year ending March 21, the final year of the medium-term management plan.

6.7(yen)

3.1

9.1

8.8％

3.7

3.7％

7.6

3.3

150

100

80.2

93.2

116.0

ROE target

10%

ROIC target

4%

EPS Target¥117.6130.0 yen

500
FY17

FY18

FY19FY20

FY2124

Outlook for the Future・The current medium-term management plan will end as scheduled in the fiscal year
ending March,2021.
・The next medium-term management plan will be launched in the fiscal year ending March,2022.
・ Key KPIs Targets are aimed to achieve early in the next medium-term management plan.
Apr. 2016
Current medium-term management plan

Apr. 2021

Postponement ofkey KPIs achievement

Next medium-term management plan25

3
Fut ure D eve lopme n ts
ーIncorporati ng shareholders and i nvestors feedbackー
Hiroshi Aoi
P r e s i d e n t a n d R e p r e s e n t a t i v e D i r e c t o r,
M A R U I G R O U P C O . , LT D .

Comments from Shareholders and Investors

・What kind of company do you want to be in the future?
・What is the direction of the next Medium-Term Management Plan?
・What are your views on capital allocation?

27

Long-Term Shift from Tangible to Intangible Investments■Percentage of Output

USAUnited Kingdom
Tangible asset
Tangible asset

Intangible asset

Intangible asset*Cited by “CAPTALISM WITHOUT CAPITAL The Rise of the Intangible Economy” by Jonathan Haskel / Stian Westlake/ translated by Hiroki Yamagata/ Toyo Keizai Inc.

28

Long-Term Shift from Tangible to Intangible Investments■Intangible Investment Ratio (Intangible and Tangible Investments)(double)

1.6

USA

1.2

United Kingdom

1.0

0.5
0.4
Five years from 1995

系列 1JapanItaly

10 years from 2001

系列 2

*Created by our company from “The Role of Intangible Investment on Economic Growth in Japan“,
Tsutomu MIYAGAWA et al. (2015) RIETI Policy Discussion Papers

29Long-Term Shift from Tangible to Intangible Investments

GAFA + M
market capitalization

FY 2019
Japan nominal GDP¥552trillion<¥576

trillion*Market capitalization = as of April 30, 202030

Transformation of Business Structure in MARUI GROUP(Reprinted from Presentation
Materials for the Fiscal Year
ended March 31, 2016)(Billions of7,000yen)

Tangible assets

600
6,000

5,000

4,000
400

3,000

Operatingreceivables

200
2,000

19.3

FY2020

20.3

18.3

17.3

16.3

FY2014

15.3

14.3

13.3

12.3

11.3

10.3

09.3

08.3

07.3

06.3

05.3

04.3

03.1

02.1

01.1

00.1

99.1

98.1

97.1

96.1

95.1

92.1

94.1

93.1

92.1

1,000

31

Intangible Investments in MARUI GROUP(Billions of yen)
250

20200

Tangibleinvestment

15150

10100

550

Intangible
investment

0FY2008

FY2019FY202032

Breakdown of Investment Destinations
Intangible investment ratio(Intangible investments / Tangible investments)

2.0 x

0.2 x

88
3
1792

15.3
FY2015Intangible
investment
7.6 x
Tangibleinvestment
0.8 x

32
32
75
FY202020.3

New businesses

Human resources and researchand development
SoftwareStore investment

33

Status of Software Investment

In-house software development

Yearly230 cases(1 launch every 2 days)

cost

40％

Reduction

ROI

310%

Investment ￥3.2 billion
Return￥10 billion34

Status of Human Resource and R&D Investments

1.3％(Billions of50yen)

40
430
202

1.0％

¥3.2
32billion億円

(%)

1.0

¥2.4 billion

Portion of revenue
represented by human
Resource and R&D investments

100

Operatingincome peremployee

FY201515.3

FY201616.3

FY201717.3

FY201818.3

FY201919.3

FY202020.3￥4.72
million￥5.01
million￥5.37
million￥6.45
million￥7.57
million￥8.02
million

FY2015 ratio

0.0%

1.7times

35

Status of New Business Investments■ Status of FY2020■ Status of 20 investee companies*Comparison of stock prices at the time of investment and the latest funding
IPO October 25, 2019

tsumiki Securities¥1.9 billion

D2C & Co.

¥1.6 billion

Venture companies

4.5 xOver 1.1times¥7.1 billion¥5.1 billion

Total. ¥15.7 billion

IPO September 20, 2019

7.5 x
1x~Fund4 companies

14 companies(As of May 21, 2020)

Less than 1times

IRR 34%*IRR: Calculated using latest procurement price or listed stock priceassumed to be sold at the end of each company’s fiscal year.

36Direction to be Addressed in the Future

BusinessmodelAssets
Investment

From in 1931 (Establishment)

From 2006

From 2019

Labor-intensive type

Capital-intensive type

Knowledge creation type

Retailing - driven

Credit (FinTech) -driven

Retailing× FinTech ×
Co-Creation investment

Fixed Assets

Financial Assets

Intangible assets

Tangible investment(Stock buyback)Intangible investment

37

Creation of New Business Model

Create a new business model based on the Trinity combining Retailing and FinTech with "Co-Creation Investment Business"38

Co-Creation Investment Side A : Growth Support Type

39

Co-Creation Investment Side A : Growth Support Type40

Co-Creation Investment Side A : Growth Support Type

41

Co-Creation Investment Side A : Growth Support Type42

Co-Creation Investment Side A : Growth Support Type

43

Co-Creation Investment Side A : Growth Support Type44

Co-Creation Investment Side A : Growth Support Type・Aim to improve IRR by increasing the success probability of investment
IRR more than 10%

co-creation

30%
Individual
IRR×1/3
Success
Probability=10%
IRR

45

Co-Creation Investment Side B : Synergistic Type46

Co-Creation Investment Side B : Synergistic Type47

Co-Creation Investment Side B : Synergistic Type

48

Co-Creation Investment Side B : Synergistic Type49

Co-Creation Investment Side B : Synergistic Type50

Co-Creation Investment Side B : Synergistic Type

■Animation BusinessTotal
Contribution Amount■Other cases￥4.3 billion

Cumulative
Investment Amount￥0.12 billion
FY201616.3

FY201717.3

FY201818.3

FY201919.3

FY202020.3

Ventures and listed companies
not to be targets of IPO(from now on)
51

Future Direction of Investment (Image)Current medium-term management plan from April 2016
ROE
ROIC

>
>

cost of capital
WACC

The next medium-term plan period starts in April 2021
ROE
IRR>
>

10% or moreROE

New businesses￥30 billion

Co-creation investment

Existing business￥60 billion

Existing business

Dividends￥50 billion

Dividends

Purchase of treasury stock￥60 billion

Purchase of treasury stock52

Directives to aim for the Future

Co-create All Stakeholder’s interests and happiness
53

The forward-looking statements contained in this document are based on information currently available to our company and arereasonable.
Actual results may differ materially depending on various factors.
If you have any questions, please contact the IR Department at 03-5343-0075.

Questions and Answers