2Q FY2/2013 Results Presentation

October 10, 2012
J. Front Retailing Co., Ltd.
OKUDA Tsutomu
Chairman and CEOFiveFive YearsYears asas J.
J. Front
Front RetailingRetailing

1

Initiatives during These ５ Years
Group Vision

Establishing status as a leading retail company in Japan
both in quality and quantity
2007
・Nov 2009 Opened Shinsaibashi north wing/created specialty zone “Ufufu Girls”
・Oct 2010 Introduced “Ufufu Girls” at Ginza store
・Feb 2011 Introduced “Ufufu Girls” at Kobe store and in Mar at Sapporo store・Apr 2011 Expanded and reopened Umeda store・Sep 2011 Created Original Merchandising Div
・Apr 2012 Renovated (phase I) and reopened Nagoya store
・Apr 2012 Renovated and reopened food floor of Kobe store
・Oct 2012 Expanded and reopened Tokyo store
Mar 2010- HR structure reform
Expanded retail business

Established J. Front Retailing

Built new business model

Sep
2007

2012

・Mar 2011 Made StylingLife Holdings equity method affiliate

・Mar 2012 Made Parco equity method affiliate
Aug 2012 Acquired 65％ stake in Parco and made it
consolidated subsidiary2Made Parco Consolidated Subsidiary
Process to make Parco consolidated subsidiary

Mar 2012

Acquired 33.2% stake in Parco and made it equity method affiliate

Apr 2012

Created Operation Study Committee toward business allianceJul 2012

Decided and started TOB to acquire 65% stake in Parco

Aug 2012 Completed TOB and acquired 65% stake in Parco and made it
consolidated subsidiary【Balance sheets】 Started consolidation at end of 2Q FY2/2013【P/L statements】 Starting consolidation in 3Q FY2/2013
3

Revising Financial Forecast
Achieving consolidated operating profit of ¥30 bn in FY2/2013 one year earlier
Enabling achievement in FY2/2014 of highest profit since establishment of JFR
Consolidation of Parco will increase EPS approx ¥6 and ROE approx 1 point on afull-year basis.
Change in consolidated operating profit
since establishment of J. Front Retailing(¥m)

50,000More than¥40 bn¥39.7 bn※

40,00030,00020,00010,000-0
FY2007

FY2008※The figure is on a disclosure basis.

FY2009FY2010FY2011FY2012
Forecast

FY2013
Forecast

4Creating Synergy with Parco ①Joint
Joint store
store development
development throughthroughprovision
provision andand use
use ofof mutual
mutual know-how
know-how・Provision and use of mutual properties such as stores・More united development projects by using mutual know-how

South wing of Matsuzakaya Ueno store is under discussion with Parco
Jointly studying development of Shinsaibashi area
where Daimaru Shinsaibashi store is located5Creating Synergy with Parco ②
Accelerating
Accelerating department
department store
store businessbusiness reformreformbyby adopting
adopting SC
SC operation
operation know-how
know-how＜Parco’s know-how＞

MarketingMarketingprowess
prowessto
tofindfindand
anddevelop
developpromisingpromisingtenants
tenantsearly
early
Effective
Effectivetenanttenantoperation/management
operation/managementwith
withaasmall
smallstaff
staff

Adopting Parco’s know-how in our department store businessand particularly Shop Operation sales areas
Accelerating innovation of business format through new department store
model and drastically increasing competitive edge of department stores
6

Creating Synergy with Parco ③Strengthening
Strengthening sales
sales capabilities
capabilities
byby using
using mutual
mutual customer
customer bases
bases
・Grades and tastes of two companies’ customer segments are similar
・We are strong in middle aged and elderly people and Parco in younger people

Attracting more customers and boosting sales
through joint sales promotions and joint promotions for cardholders

7

Creating Synergy with Parco ④
Expansion
Expansion ofof collaboration
collaboration opportunities
opportunities
inin affiliatedaffiliated businesses
businesses＜Examples＞

・Expansion of opportunities to open our stores in Parco’s
shopping complex business・Mutual use of space engineering business, building managementbusiness and staffing business etc.
Peacock Stores

J. Front Foods

JFR Plaza

Parco （Singapore）

Daimaru Kogyo

Dimples’JFR Information Center

Parco Consulting (Suzhou)

JFR Card

Daimaru Matsuzakaya
Sales Associates

JFR Office Support

Neuve AJ. Front Design & Construction

Daimaru COM development

JFR Service

Parco Space Systems

JFR Online

Consumer Product
End-Use Research Institute

JFR Consulting

Parco-Cityetc.
8Progress of Initiatives to Create Synergy
Concrete
Concretediscussions
discussionsare
areunderunderway
wayinindepartment
departmentstore
storebusiness,business,development
developmentprojects,projects,affiliatedaffiliatedbusinesses
businessesand
andback-officeback-officesections
sections
Top-down
Top-downapproach
approachto
todepartment
departmentstore
storebusinessbusinessthroughthroughregular
regularmeetingsmeetingsof
oftop
topmanagements
managementsof
ofDaimaru
DaimaruMatsuzakaya
MatsuzakayaDepartment
DepartmentStores
StoresandandParco
Parco

Considering
Consideringearly
earlyexchange
exchangeof
ofmanagers
managersand
andstaff
staff
tototransfer
transfermutual
mutualknow-how
know-how

Generating synergy early to achieve target operating profit of ¥50 bn ASAP
9

1H
1H FY2012
FY2012 Results
Results10

1H FY2012 Consolidated Results
Sales increased and operating/ordinary/net profits soared
Operating/ordinary/net profits exceeded initial forecast
YoYvs initial forecast

2Q
FY2/2013

Actual(¥m)

¥m%

¥m%

Sales
Operating profit
Ordinary profit
Net profit

457,1229,156
11,007
3,905

1,682
1,913
3,297
1,623

0.4
26.4
42.8
71.1

△5,878
156
1,907
205

△1.3
1.7
21.0
5.5

111H FY2012 Consolidated Results
Sales increased and profits soared because renovations of Kobe andNagoya stores offset adverse effects of closed Nagasaki store
Department store, wholesale, credit and other businesses increased
operating profit【By segment】(Unit: ¥m)

Sales
2Q
FY2/2013

Department store
Supermarket
WholesaleCredit
Other

Operating profitActual

YoY (%)

ActualYoY (%)

358,186
51,72925,864
4,190
46,079

1.0
△10.2
14.5
4.6
12.6

6,488
△446474
1,158
1,449

49.7
―
23.4
16.3
31.4

12

1H FY2012 Daimaru Matsuzakaya Department Stores
Big renovation projects to make flagship stores more competitive① Nagoya ⇒ Phase I renovation (luxury, young,fashion, cosmetics, women’saccessories etc.)② Kobe⇒ First full renovation of food floor in 15 years
to greatly enhance sweets and delis
Replacement of brands and review of productlineup to meet changing values and lifestyles ofcustomers
2Q
FY2/2013

Sales
Operating profit
Ordinary profit

Net profit

1H FY12 flagship stores
YoY sales change (%)

YoYActual(¥m)¥m%

315,306
5,516
4,969
421

6,823
2,285
2,166
325

2.2
70.7
77.3
335.1

Shinsaibashi
Umeda
Tokyo
Kyoto
Kobe
SapporoNagoya
Ueno
Ginza

0.4
4.4
7.5
0.4
4.8
2.4
1.1
1.9
5.7

13

2H
2H andand Full
Full Year
Year FY2012
FY2012 Forecast
Forecast

142H FY2012 Consolidated Forecast
Increasing department store sales due to renovations of Kobe and Nagoyastores and expansion of Tokyo store
Adding Parco business as new segment(Unit: ¥m)
2H
FY2/2013

Sales
Operating profit

Ordinary profit

Net profit

Excluding Parco

Including Parco

Forecast

YoY

YoY (%)

Forecast

YoY

YoY (%)

507,377
16,843
15,492
7,094

21,4032,492
261△9,427

4.4
17.4
1.7
△57.1

647,877
22,643
21,192
8,794

161,903
8,292
5,961△7,727

33.3
57.8
39.1
△46.8

2H
FY2/2013

Department store
Parco
Supermarket
WholesaleCredit
OtherSales

Operating profit

Forecast

YoY (%)

Forecast

YoY (%)

397,713140,663
51,87032,435
4,409
48,053

4.0－
△5.8
14.3
4.6
17.6

12,011
5,841
46
1,525
1,391
1,850

17.3
－－
27.0
8.3
17.8

15

Full Year FY2012 Consolidated Forecast
Greatly raised operating profit forecast because Parco became consolidated subsidiary

Increasing dividend per share ¥1 from last year to ¥9
Full year
FY2/2013

Sales
Operating profit

Ordinary profit

Net profit

Excluding Parco(Unit: ¥m)

Including ParcoForecast

YoY

YoY (%)

Forecast

YoY

YoY (%)

964,500
26,00026,50011,00023,085
4,406
3,559△7,804

2.5
20.4
15.5
△41.5

1,105,000
31,80032,20012,700163,585
10,206
9,259△6,104

17.4
47.3
40.4
△32.5

Full year
FY2/2013

Department store
ParcoSupermarket
Wholesale
CreditOtherSales

Operating profit

Forecast

YoY (%)

Forecast

YoY (%)

755,900
140,663
103,600
58,3008,600
94,133

2.6－
△8.0
14.4
4.6
15.1

18,500
5,841
△400
2,000
2,550
3,300

26.9－－
26.2
11.8
23.4

16

Department
Department StoreStore BusinessBusiness17Building New Department Store Business Model－Focus of department store business－
Better marketing

Developing and pursuing store strategy

Innovating store operations＜Building new department store business model＞
Expanding
Expandingtarget
targetcustomer
customerbase
base
Expanding
Expandingproductproductline
lineand
andparticularly
particularlypricepricerange
range
Developing
Developingspecialty
specialtyzones
zones
Achieving
Achievinghighly
highlyefficientefficientmanagement
management
18Significant Increase in Footfall
Footfall to major 10 stores of Daimaru Matsuzakaya Department
Stores is increasing since 1H FY10Greatly increased in FY11 due to expansion of Umeda store
Driven by big renovations of Nagoya and Kobe stores in FY12
Change in footfall to Nagoya and Kobe stores

Change in footfall to 10 directly managed stores since FY2010

1H FY2012(1,000 persons)
102,000(%)

100,000KobeNagoya

MayJun50.0

98,00096,00040.0

94,00030.0

92,00090,00020.0

88,00086,00010.0

84,0000.0

82,0001H FY102H FY101H FY112H FY11

1H FY1219MarAprJulAug

Steady Sales Growth
LFL sales of Daimaru Matsuzakaya Department Stores turned positive YoY in 1H FY11

Subsequently increased YoY for 3 Hs in a row until 1H FY12Sales growth remained above rivals every month excluding Mar and Apr
when there was a big rebound from quake
Trends in YoY sales change of Daimaru Matsuzakaya Department Stores(%)
20.0
15.0
10.0
5.0All Japan
10 big cities
Daimaru Matsuzakaya
(LFL)

0.0
▲5.0
▲10.0
▲15.0
▲20.0
Mar 2011 Apr

MayJunJulAugSepOctNovDec

Jan 2012 FebMarAprMayJunJulAug20

Further Widened Customer Base
No of young/around 30-year-old paying customers rose 16.8% YoY andtheir spend grew 14.9% YoY
Sales of luxury brands remain positive since Feb 2011, up 7.7% in 1H
Change in no of identifiable customers of Daimaru Matsuzakaya(years old)

18-34
(Young/around 30)

35-44
2011
45-54

2012

55-64
650

200,000

400,000※Comparison on an annual basis for Sep thru Aug

600,000

800,000

1,000,000(persons)21

Renovation of Kobe Store
Renovated and grand opened food floor on Apr 27, 2012
Greatly improved with focus on delis and sweets including new specialty zone “Table Plus”

Food sales jumped and food floor’s ability to attract customers spreads to upper floors

22

Renovation of Nagoya StoreMar – Apr 2012 (Phase I)

Renovation of fashion floors

Renovated 1st floor (main/north/south) and 2nd floor (main/south)
as “face of department store”
Attracted much more young/around 30-year-old customers (up 35.3% YoY in total for Mar thru Aug)
Phase II food floor renovation for next spring is expected to further improve customer circulation to upper floors

アラ5023

Phase II Expansion of Tokyo Store
Expanded and grand opened on Oct 5, 2012 (46,000㎡/1.4 times larger)
Approaching wide range of customers
with concept of “department store with compact assortment of ‘current’ Tokyo”
Footfall is surging since advance opening of food floor on Aug 22
110,000 to 130,000 visitors on Saturdays and Sundays
Renovation of Tokyo station Yaesu side due for completion in 2013
will dramatically improve access and boost sales
Main points● Enhancing food products including boxed lunch and sweets
both in quality and quantity● 9 new luxury brands on 1st and 2nd floors● Popular brands including select shops on 3rd to 5th floors● Big specialty shops including Tokyu Hands and ICI Ishii Sports
on upper floors

24Survival in Competition from Umeda Area
Steadily preparing and possible enough to minimize
effects of expansion of Hankyu Umeda Flagship StoreDaimaru Umeda

Sales forecast for 2H
4 flagship stores in Kansai
Daimaru Kobe

2H FY2012

YoYUmeda
Kyoto
Kobe
Shinsaibashi

+1.5％
+1.3％
+6.1％
△2.0％

Daimaru Kyoto

Daimaru Shinsaibashi

25

AffiliatedAffiliated Businesses
Businesses

26

Peacock Stores
Financial results for 1H FY2012 (YoY %)SalesCompany-wide△10.2

LFL (excluding closed stores/effects of conversion to rent tenants)△7.4Tokyo

ChubuKansai

△8.7

△9.5

△4.9

Grossmargin

Operatingprofit△12.3―※Loss of ¥450 m＜Causes of sluggish sales＞
More price-conscious consumers/severer price competition
New openings and renovations of rival stores esp in Tokyo area
Delay in meeting environmental changes
in terms of pricing/product lineup/store environment
Solution ①

Solution ②

Solution ③

More competitive pricing

Review of product lineup

Cost reduction

Increasing Valor PB products

Enhancing accuracy with new system(80 items ⇒250 items)

Drastically strengthening
fruits/vegetables/delisConverting to rent tenants
excluding food floors
Company-wide HR structure reform27

Overseas
Overseas BusinessBusiness28

Overseas Joint Business
Jointly established new company JFR Plaza with StylingLife Holdings

Outline of new company
Location:

Taipei, Taiwan

Capital:

NT$185 m (approx ¥480 m)

Investment
ratio:

J. Front Retailing
StylingLife Holdings

Date of establishment:

Aug 20, 2012

Line of business:

General merchandise retailingunder new brand of Plaza

90%
10%

Opening 1st shop in Taipei, Taiwan in mid Feb 2013 and another 3 or so in FY2013
29

New Department Store in China
Basic agreement with Chinese company in May 2012 to open
and operate full-line upscale department store in China＜Outline of project＞(Land 163 Huangpu District project)Store name: Shanghai New World Daimaru Department Store(tentative)
Size:【Land area】 13,709.3㎡【Total floor area of building】 116,000㎡【No of floors】 7 above ground and 5 below
Department store: 7 above ground and 2 below

Operator:

Shanghai Xin Nan Dong Project Management Co., Ltd.

Schedule:

Due for completion in late 2014 or early 2015 (started construction)

Support/cooperation to create China’s most upscale department store
On-site market research and negotiation for introducing luxury brands are under way
30http://www.j-front-retailing.com

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

31