CO-CREATION
Co-Creation Management Report 2016

PROFILEMARUI GROUP is a conglomerate that provides fulfilling
lifestyles to customers of all ages through its unique businessmodel comprising its Retailing and FinTech segments. Since
its founding in 1931, MARUI has employed a businessmodel merging retailing and credit card operations, and it
has thereby established unique strengths and an undisputed
position in the Japanese retail industry.
Today, the Group has grown to include 29 retail venues
in Japan staffed by approximately 6,000 employees. In
recent years, our FinTech business, which is supported bymore than 6 million cardholders, has been growing as aconsistent driver behind the Group’s performance.
MARUI GROUP is practicing co-creation management
based on customer perspectives as it forges ahead withvarious business model reforms to advance to the next
growth stage.

COVER STORY

Co-Creationof Customer Happiness
MARUI GROUP’s co-creation management entails incorporating
the customer’s perspective into all business processes andthereby working to co-create customer happiness with ourpartners. This approach permeates our store development andproduct creation efforts in the Retailing business and ouradvancement of credit card services in the FinTech business,
and will remain a central and ongoing part of our operations
into the future.

About Front Cover Design
The three overlapping circles on the front cover of this report represent respectively our customers, society, and MARUI GROUP itself. The Group’s co-creation
management is aimed at the co-creation of customer happiness realized byforming intrinsic links between customers, society, and the Group. The front cover
design is a representation of this goal.
The photograph is of a mother and daughter leaving Hakata Marui on Saturday,
May 14, 2016, laughing and with smiles on their faces. We spoke with them on
their way to Hakata Station, preserving their beaming smiles in this photograph.
In addition to these two, this report will feature many other customers that havevisited Hakata Marui.

01

COVER STORY

Co-Creation of Customer Happiness

MARUI GROUP and its

Customers

We strive to work with our customers in co-creating their happiness. By holding planning meetings on various themes and fornumerous projects together with our customers, we are able toengage in ongoing discussion with them. These meetings thus
enable us to develop a thorough understanding of customer
needs and desires as we collaborate to seek out the ideal form
for our stores, products, and services. The value of our cocreation efforts is found in the intersections of interests bornout of these ongoing discussions.
  

P42 MARUI GROUP and its Customers, in the Hakata Marui Co-Creation Story

Customers enjoying shopping at the Marui Shoes store on thethird floor of Hakata Marui on Thursday, April 28, 2016

02

03

COVER STORY

Co-Creation of Customer Happiness

MARUI GROUP and its

Business partners

Our business partners are important allies in co-creating
customer happiness. For this reason, we sought to further
evolve our co-creation business by inviting business partners toparticipate together with customers in planning meetings
related to the establishment of Hakata Marui. This was the firsttime such partners had been invited to these meetings. The
process of developing this store by collaborating with bothcustomers and business partners was an opportunity that led
to new discoveries.
  

P46 MARUI GROUP and its Business Partners, in the Hakata Marui Co-Creation Story

Staff of Dashidokoro Hyoshiro on the first floor and REC COFFEE on the sixth
floor of Hakata Marui, both partners that participated in planning meetings

04

05

COVER STORY

Co-Creation of Customer Happiness

MARUI GROUP and its

Employees

The foundations for our co-creation business are supported byour highly diverse employees. We benefit greatly from thestrength these employees exhibit in responding quickly tochanges in society and in the times, all while sharing our retailing mindset that emphasizes the customer’s perspective.
MARUI GROUP’s corporate philosophy calls for us to “equate
the development of our people with the development of ourcompany.” With this philosophy at heart, our employees willcontinue to treasure their connections with customers.
  

P38 Documentary of Hakata Marui’s Grand Opening  

P66 Employees Helping to Co-Create Customer Happiness

Sales staff displaying calm, joyous, and impassioned expressions despite the frenetic
atmosphere on Thursday, April 28, 2016, one week after the opening of Hakata Marui

06

07

COVER STORY

Co-Creation of Customer Happiness

MARUI GROUP and its

Investors

The point of origin for our co-creation management is ourdesire to contribute to the happiness of our customers, andwe are confident that accomplishing this goal will fuel the
long-term improvement of MARUI GROUP’s corporate value.
Contrary to common belief, the interests of customers andshareholders and other investors are not in opposition, butrather share a common intersection. By increasing this intersection, we aim to make greater contributions to the interests of allof our stakeholders.
  

P28 Discussion of Co-Creation between Long-Term Investor and the President  

P32 Conversation between ESG Specialist and MARUI GROUP

Interactions with shareholders and other investors,
opportunities to build stronger management

0809

COVER STORY

Co-Creation of Customer Happiness

MARUI GROUP andCommunities and Society

MARUI GROUP is connected to communities and the greater
society through its customers. We recognize that the contributions our business activities make to the development of communities, regions, and society as a whole are also contributions
to the happiness of our customers. One reason we develop
stores that are considerate of the needs of small children andsenior citizens as well as those of people with disabilities,
non-Japanese people, and members of the LGBT community
is that we believe such stores will help us resolve social issues
through our business.
  

P48 MARUI GROUP and Communities and Society, in the Hakata Marui Co-Creation Story  

P50 MARUI GROUP Co-Creation Story  

P58 Corporate Culture of Co-Creation Management

Customer sitting with her child next to the second floor escalatorof Hakata Marui, a store that is unique in the large number ofcustomers that visit with small children, on Thursday, April 28, 2016

10

11

Co-Creationof Customer Happiness

12

MARUI GROUP’s co-creation management—its quest to co-createcustomer happiness through its business activities—has only justbegun. We will continue to forge ahead on this path as we tackle anincreasingly wider range of challenges going forward, committed tosteadily producing results.

13

Contents

CO-CREATION
Co-Creation Management Report 2016

Section 01
16 MARUI GROUP’s View on Corporate Value

Section 02
36 MARUI GROUP’s Co-Creation Management

Section 03
88	Management Systems / Corporate Information







18

Message from the President

38

Documentary of Hakata Marui’s Grand Opening

90	Team Supporting Co-Creation Management

26

Co-Creation Management and Corporate Value

42

Hakata Marui Co-Creation Story92	
Dialogue 04
Co-Creation Management and DNA of Innovation
as Seen by External Directors

28	
Dialogue 01
Discussion of Co-Creation between Long-Term
Investor and the President
32	
Dialogue 02
Conversation between ESG Specialist and
MARUI GROUP

50

42

MARUI GROUP and its Customers

46

MARUI GROUP and its Business Partners

48

MARUI GROUP and Communities and Society

MARUI GROUP Co-Creation Story
50 Creation of Marui Fans in Kyushu prior to
Store Opening
52

Evolving Customer Referral Model

54

Marui-Style Omni-Channel Retailing

56	Development of Co-Creation Private Brands
Together with Customers

Co-Creation
Management Report 2015

Co-Creation
CSR Report 2015

For the fiscal year ended March 31, 2015, MARUI GROUP published
Co-Creation Management Report 2015, its first integrated report forshareholders, investors, and other stakeholders, which was followed up withthe release of Co-Creation CSR Report 2015, a digest report. “Co-creation
management” refers to the type of management for co-creating customer
happiness to which MARUI GROUP aspires. Co-Creation Management
Report 2015 placed more emphasis on management strategies while
Co-Creation CSR Report 2015 focused primarily on the Company’s
connection with communities and the greater society.
www.0101maruigroup.co.jp/ir/i-report-2015.html
www.0101maruigroup.co.jp/csr/report.html

14

Editorial Policy
Co-Creation Management Report 2016 was created with the aim of helping ourshareholders, investors, and various other stakeholders develop a better understandingof MARUI GROUP. This report contains performance, business, and financial information
centered on the Group’s corporate philosophy and business strategies. As an integrated
report, it also includes non-financial information related to the activities that support theGroup’s sustainable growth. The International Integrated Reporting Framework releasedby the International Integrated Reporting Council in December 2013 was referenced in
the development of this report.
Cautionary Notice regarding Forward-Looking Statements
Performance forecasts and other forward-looking statements contained in this report
represent the Group’s best judgments based on information available at the time of thisreport’s publication and therefore contain a degree of uncertainty. It is possible that
actual performance could differ materially from these forecasts due to a variety offactors. Economic conditions, foreign exchange rates, and stock price movements areamong the factors that could have a major impact on performance.

96	Directors, Audit & Supervisory Board Members,
and Executive Officers
101	Corporate Governance
104 MARUI GROUP’s Business108	MARUI GROUP Store Network
110 Financial and Non-Financial Summary112	Consolidated Balance Sheets

58	Corporate Culture of Co-Creation Management

113	Consolidated Statements of Income /Consolidated Statements of Comprehensive Income

64Dialogue 03114	Consolidated Statements of Changes in Net Assets

New Meaning of “Healthcare” for the Eye of theCompany Physician

115	Consolidated Statements of Cash Flows116	Notes to Consolidated Financial Statements

66	Employees Helping to Co-Create
Customer Happiness139	Independent Auditor’s Report68	Overview of Performance and Business(Fiscal Year Ended March 31, 2016)143	From the Chief Editor

140	Overview of MARUI GROUP

70	New Medium-Term Management Plan
74	Business Strategies (Retailing and FinTech)
82	Message from the CFO
83	Target Balance Sheet

15Section 01 / Pages 16–35

MARUI GROUP’s View on
Corporate Value    MARUI GROUP aims to improve its corporate value by practicing co-creation management.
What is our view of corporate value and what supports this view?
We will examine the answer to this question from various angles through a message
from President Aoi and discussions with investors.

16

17

Message from the President

MARUI GROUP’s Co-Creation of
Corporate Value Has Only Just Begun.
I eagerly look forward to co-creating our corporate value together with shareholders, other investors,
customers, business partners, and communities from a future-oriented perspective.

Hiroshi Aoi
President and Representative Director
Representative Executive Officer

Let me begin by expressing my sincere appreciation to allof our stakeholders for their ongoing patronage andsupport of MARUI GROUP. I also thank those of you thathave not previously had a chance to connect with theCompany for taking the time to open this report.
This report, Co-Creation Management Report 2016,is MARUI GROUP’s second integrated report. While weanticipate that shareholders and other investors will be
its primary readers, we have taken steps to make thisreport of interest to a wider variety of stakeholders,
including customers, business partners, community
members, and students. The title “Co-Creation
Management Report” might seem a little unfamiliar toyou, and you may wonder why we chose this title insteadof simply calling this report an “integrated report.” Theanswer to this question is that there is a message wewanted to convey through this title.
The overarching theme of this report pertains to
MARUI GROUP’s quest to create corporate value, and we
aim to create this value together with customers, shareholders, business partners, employees, communities,
society, and all of our other stakeholders. The reason forthis approach is that we view corporate value as beingborn out of the harmony between the interests and thehappiness of all of our stakeholders.
We therefore hope to create our corporate value
together with all of you who, after being introduced to
MARUI GROUP’s concept of co-creation management,
are able to get behind this endeavor to even the smallest
degree. This is the message we have encapsulated in thesomewhat unusual title of this report.

DNA of Innovation—History of MARUI GROUP    MARUI GROUP was created in 1931 by my grandfather,
Chuji Aoi. At that time, our business involved sellingfurniture through monthly installment payments. Monthly
installment payments entail providing both products andcredit, or, in other words, represent a business model thatmerges retailing and finance. This business model has
continued to be passed down through our operations,
guiding our business and evolving amid changes in thetimes and MARUI’s products and stores.
Monthly installment payments were a sales technique used by the merchants of Ehime Prefecture.
Although my grandfather was from Toyama Prefecture,
he was able to see the immense potential of this business model. However, he did not blindly embrace thismodel. Rather, he took a critical stance toward monthly
installment payments, driving the evolution of this model,
an undertaking that would lead my grandfather to issue
Japan’s first credit card in 1960. This was MARUI GROUP’s
first great innovation.
The credit sales model grew together with Japan’s
economy during the period of the so-called Japanese
economic miracle that followed the end of World War II,
driving the growth of the Company as a result. However,this situation changed in the 1980s. Up until that point,
consumption had widely been aimed at furniture, consumer electronics, and other durable goods. When these
items became commonplace, the demand for credit sales
began to decline, plunging the entire industry into a stateof crisis.

President Aoi in Yurakucho Marui in July 201618

19

Message from the President

Message from the President“I took up the mantle of president in 2005, in the middle ofthis period of stagnancy. As such, I was immediately charged withthe mission of breaking away from our past successes to pursue
the creation of a new business model through fresh innovation.”

During this period, MARUI GROUP’s rivals were
mostly bought out by major department stores andsupermarkets, resulting in their retail operations being
abandoned to focus solely on finance as credit cardcompanies. The only company to take a different path
was MARUI GROUP.
As the center of consumption moved away fromdurable goods, we turned our attention toward the growing demand for consumer goods, choosing to specialize
in sales of fashion. At the same time, we selected youths,
who were generally not viewed as consumers in that era,
as our target customer group. This decision enabled us
to stimulate credit demand and subsequently advancethe evolution of credit sales without abandoning our
retail operations. In 1981, we called upon our credit
expertise to begin offering cash advances. This was thesecond great innovation of MARUI GROUP, which wasthen equated with the young, fashion, and our Akai Card
(Red Card) in-house credit card. This innovation proved
to be a massive success, leading MARUI GROUP to a
new peak in performance in 1991.
However, this success did not last long. Together
with the collapse of Japan’s asset price bubble, the range
of jobs available to young people changed dramatically,

and an increasingly large number of individuals wereunable to find full-time positions. Furthermore, the youth
population actually began to dwindle in 1996, signaling
the start of the decline in Japan’s birthrate and the aging
of its population. These trends were accompanied by alarge shift in the needs of consumers. While consumers
had previously sought to accumulate physical goods,
they began pursuing more fulfilling lifestyles after the
bubble’s collapse. This trend resulted in a sharp decreasein the demand for fashion, which was the focus of
MARUI’s operations, and ushered in a long period ofpoor performance and stagnancy for the Company.
I took up the mantle of president in 2005, in the
middle of this period of stagnancy. As such, I was immediately charged with the mission of breaking away fromour past successes to pursue the creation of a new business model through fresh innovation. We began by seeking innovation in our credit cards. In 2006, we launched
the EPOS card, MARUI GROUP’s new credit card. The
prior Akai Card was only issued at Marui stores andcould not be used outside these stores. Accordingly, theprimary source of revenue from these cards was cash
advances. EPOS cards, meanwhile, are issued through aspecial license with Visa Inc., meaning that these cards

4897

1975: Launched the Akai Card (Red Card)and began using an in-store, on-the-spot approval system

20

GOOD
THRU
有効期限

MONTH / YEAR

can also be issued outside Marui stores and are usable
anywhere in the world.
However, just as we caught this glimmer of hope, a2007 revision to the Money Lending Business Act dealt
a crushing blow to our cash advance operations, which
had been a significant source of revenue up until thatpoint. The impact of this revision was more devastating
than we could have possibly imagined, lingering on forseven years during which MARUI GROUP was forced topost two losses, despite having never recorded a loss inthe past. Regardless of this dire situation, we managed toovercome the crisis by increasing card shopping transactions through the new EPOS card. This transition fromcash advances to card shopping brought about by the
EPOS card was an innovation that took us back to theoriginal starting point of our business: the merger ofretailing and finance.
Meanwhile, our retailing operations continued to
struggle, and we were barely making a profit in 2008.
This outcome was due in part to the global financial crisis
that struck in September of that year. However, the biggest reason for our difficulties was our inability torespond to the needs of consumers that had shifted fromthe accumulation of physical goods to the pursuit ofmore fulfilling lifestyles. With our backs to the wall, we
took drastic action. We realized that our inability torespond to this shift in needs stemmed from our beingcaught up in past successes, which was why we could
not find a way to innovate our department store retailing
operations. Department stores specialize in selling physical goods. However, contemporary consumers seeking
more fulfilling lifestyles desire dining, experiences, services, and other intangible commodities. The department

store business model was just not suited to catering tothese kinds of needs.
Forced to make a decision, we chose to shift towarda business model of operating shopping centers that wascloser to a real estate model. We thus embarked on a
five-year endeavor from 2014 through 2018 to convert
nearly all of our stores, save a few exceptions that havebeen excluded based on requests from the owners, tothis model. We are making steady progress on this front,with roughly 30% of this conversion completed and theresults beginning to appear. This is the retail innovationthat we are currently undertaking.
As you can see, the history of MARUI GROUP is truly
a history of innovation. Moreover, I am convinced thatMARUI corporate DNA is a DNA of innovation. When thedecision to transition to the real estate business model
was made, one officer described the impending transformation as “a change as massive as transferring to a company in a completely different industry.” However, evenwhile speaking of the difficulty, there was an air of excitement. I believe that our ability to foster innovation is theessence of MARUI GROUP. Our mission is to create suchinnovation and continue to evolve in our aim to contributeto the happiness of all stakeholders.

Co-Creation Management—
MARUI GROUP of Today    
MARUI GROUP is striving to foster innovation together
with its customers. In the past, we have grown purely by
our own strengths or by developing our operations
together with business partners or industry specialists.
However, utilizing only expertise from within the“As you can see, the history of MARUI GROUP istruly a history of innovation. Moreover, I am convinced thatMARUI corporate DNA is a DNA of innovation.”

2006: Began issuing EPOS cards on-the-spot in stores(the world’s first IC-chip-equipped Visa card to be issued in this manner)

21

Message from the President

Company or the industry, we remained bound by past
successes. We were thus forced to admit that we had lost
our ability to respond to changing social trends.
Performance was deteriorating, no matter how hard wetoiled to advance under our previous business model.
In fact, maybe it would be more accurate to say that themore we toiled, the more our performance deteriorated.
It was clear that creating further innovation would require
us to incorporate fresh insight from outside the Company
and even outside the industry. But, where were we tofind this insight? The answer was right in front of oureyes—our customers.
We were professionals when it came to retailing andcredit cards, and we approached our customers as such.
It goes without saying that we knew more about thesesubjects than our customers. However, this caused dialogues with our customers to be one-sided, with us
imposing our knowledge upon customers. We seemed tohave forgotten the importance of listening to customers,
asking them about their needs and trying to understandtheir perspective. Perhaps we were under the impression
that, because we interacted with our customers on adaily basis, we must have understood them and theirneeds. Our desire to work together with our customers
was born out of our reflections on this shortcoming.
On the sales floor, we are separated by our roles ofseller and buyer, and it is difficult to break out of theseroles. For this reason, we chose to meet on a different
stage so that we could better turn our ears toward customers’ true voices during discussions. These discussions were an eye-opening experience through which welearned of numerous customer needs that we were completely unaware of. It was then that we began to pursue
innovation through a partnership with our customers.
Two items born out of these efforts are our private
brand Rakuchin Kirei Pumps and EPOS Gold cards.
Rakuchin Kirei Pumps were carefully crafted to address
unmet customer needs related not only to design andprice but also to comfort and size range, areas that theindustry had been neglecting. These shoes have wonstrong support from customers, with total aggregate
sales of more than 3.0 million pairs as of August 31,
2016, making them an unprecedented best seller.
With EPOS Gold cards, we wanted to make sure thatmembers of the younger generation, our primary

22

Message from the President

customer group, would be able to carry these cards.
For this reason, we chose to offer Gold cards with noannual fees to enable any regular customer to obtainsuch a card regardless of their age or yearly income. Thisdecision has won strong support from youths, our main
target, among other customers, and Gold cards havethus grown to represent more than 60% of total EPOS
card transactions and are now driving growth in ourcredit card services business.
We are pursuing innovation together with our customers in all areas of our business, including products,
lineups, tenant development, credit cards, advertisements,
promotions, IT, and operations. We call these efforts“co-creation.” The latest success of these co-creation
efforts is Hakata Marui.
MARUI GROUP’s first store to be opened in Kyushu,
Hakata Marui was developed together with an aggregate
total of 15,000 customers that participated in the store
development process through more than 600 planningmeetings as well as through our community website.
Based on the concept of “a store in which customers canfind what suits them best,” we built this store through an
ongoing dialectic process with customers. Hakata Marui

Hakata Marui opened in April 2016

Hakata Marui planning meetings held with customers“We view corporate value as being born out of the harmony
between the interests and the happiness of all of our stakeholders.”

has proved immensely popular as a result, with visitor
and purchase numbers high from the start and new
cardholder numbers at the time of the store’s opening
setting a new record for Marui store openings. In addition
to being an amalgamation of initiatives conducted together
with customers, Hakata Marui also marked the start ofco-creation efforts with our business partners. The rangeof stakeholders we partner with in co-creation continues
to expand steadily in this manner. Looking ahead, we hope
to be able to engage in the co-creation of our corporate
value together with all of our stakeholders.
We view corporate value as being born out of theharmony between the interests and the happiness of allof our stakeholders. It is often said that the interests ofdifferent types of stakeholders are at odds with one
another. For example, prioritizing customer interests canlead to neglect of shareholder interests while an overemphasis on shareholder interests may force us to sacrifice
the interests of employees. It is true that the pursuit ofcustomer happiness will not naturally contribute to theinterests of shareholders. It is therefore vital that wedevelop our business model in such a way that the happiness of customers aligns with the interests of shareholders. We believe that such a model can be created byour transition from a department store model to a realestate model. This transition has enabled us to respondto the shift in customer needs from physical goods tofulfilling lifestyles while simultaneously allowing us to act
in the interests of our shareholders. One reason we areable to achieve both of these goals was the change inour key performance indicator, or KPI.
Under the department store model, our KPI was our
profit margins in relation to sales amounts. The realestate model, meanwhile, has us now focusing on profit
margins versus real estate market values, meaning thatnet operating income yield, or NOI yield, is our KPI. Thischange in our KPI cast light on something we had previously not considered. As NOI yield indicates yield versus
the market value of real estate, the core element of ourbusiness amounts to how effectively we are able to utilize
the real estate on which our stores stand to generate
income. This principle holds true whether we own thereal estate or rent it.
One fact that must be considered about real estate,or, in other words, land, is that even the land we own
today was received from someone else in the past. As
such, it is possible that this land will be passed on toother hands in the future. Taking an extremely long-term
perspective, you might be able to say that “our” land isactually just something we are borrowing from society.
If this is the case, we users of land have the responsibility
to pay a form of “interest” on this land by raising its value
in line with society’s expectations before returning it. This
responsibility is represented by anticipated yield on NOI.
We also realized that the concept of effectively
utilizing “borrowed” assets to increase their value before
returning them mirrors our relationship with our stakeholders. The transition to a real estate model was madewith the aim of responding to the shift in customer needs
to more fulfilling lifestyles. However, this move also
linked the improvement of NOI yield on real estate toincreases in return on equity, which represents the yieldon the capital we “borrow” from our shareholders.
To extend the scope of this idea of “borrowing,” wecould also say that our employees are borrowed fromsociety. If this is true, then the Company must become aplace in which employees are able to work in a mannerthat is beneficial to society. Taking this perspective, we
see that the various stakeholders, whose standpoints
and interests appeared to be in opposition, are actuallyinterconnected. This realization then raises the question:
If the connections between these stakeholders weremade stronger, would that not make greater contributions
to the interests of all parties?
At MARUI GROUP, we believe that the fundamentalrole of companies is to strengthen the connections
between their various stakeholders, thereby expanding
the intersection between their interests. The ability to23

Message from the President

accomplish this task, then, is the measure of corporate
value. The goal of our co-creation management is thus toadvance the dialectic progress with all of our stakeholders to eliminate conflicts between their interests andbring these interests into harmony.

Co-Creation of Corporate Value—
Future of MARUI GROUP    MARUI GROUP has kicked off a new medium-term
management plan targeting the five-year period spanningthe fiscal years ending March 31, 2017 to 2021. The
first step of this new plan was to rearrange and redefine
our businesses. Through this process, the previous threebusiness segments of Retailing and Store Operation,
Credit Card Services, and Retailing-Related Services
were organized into two: the Retailing segment, whichmerges the Retailing and Store Operation and RetailingRelated Services segments, and the FinTech segment,
which is the redefined successor to the Credit Card
Services segment.
The Retailing segment comprises store, omni-channel retailing, and facility management and distribution
operations. As we advance the transition to the realestate model for stores, we will integrate the directly
managed specialty stores, private brand, and Internet
sales operations that were traditionally part of our omnichannel retailing efforts. We thereby aim to evolve these
efforts into a future-oriented retailing style that emphasizes Internet sales. The operations of the former
Retailing-Related Services segment will be positioned as
the foundations supporting stores and omni-channel
retailing, and incorporated into retailing operations

Message from the President

based on a broad definition of this concept to further
accelerate evolution in this field.
By redefining our Credit Card Services segment as
the FinTech segment, we aim to achieve rapid growth inthe operations of this segment. Since its founding,
MARUI GROUP has continued to grow by innovating
credit cards together with retailing. Going forward, we
will develop a unique platform that combines the customer contact points created through our cardholder
base of more than 6 million people, primarily youths, andour 29 brick-and-mortar stores. By utilizing this platform
together with startups and various other companies, wewill advance open innovation to create new value by
fostering financial service innovations in an even wider
range of fields.
  

P72 R
 edefinition and Reorganization of Businesses in the New
Medium-Term Management PlanAt the same time, we aim to co-create corporate
value together with shareholders and other investors.
Under the new medium-term management plan, we willseek to realize an optimal capital structure. Setting thisgoal constitutes our response to the requests from ourinvestors to define the type of balance sheet we target.
Over the past several years, MARUI GROUP has undergone a transformation from a company with growth
driven by retailing to a company that grows throughcredit card operations. As a result, the asset portion of
our balance sheet has changed greatly from the time of
our founding, with operating receivables from credit card
operations now exceeding fixed assets from retailing
operations. The liabilities portion, meanwhile, looks very
similar to when retailing drove our growth, creating a sortof imbalance to our balance sheet. The optimal capital“I am convinced that discussing such management issues with shareholders andother investors will help us tackle these issues with a greater degree of success.
This is because such exchanges with shareholders andother investors are the same as our interactions with customers.”

structure we will pursue is aimed at optimizing our balance sheet in reflection of our change in business strategies. By advancing capital measures that ideally are inconsideration of our business strategies, we are confident that we will be able to improve corporate value.
However, capital measures are not the only area in which
we must respond to requests from shareholders andother investors.    P83 Target Balance Sheet
We have received requests to explain our retailing
growth strategies for when the transition to the realestate model has been completed and inquiries about
our ability to further grow Internet sales operations. We
therefore have a lot of issues to incorporate into ourbusiness strategies. It is, of course, our job to resolvethese issues. However, I am convinced that discussing
such management issues with shareholders and otherinvestors will help us tackle these issues with a greater
degree of success. This is because such exchanges withshareholders and other investors are the same as ourinteractions with customers. It goes without saying that
we know more about the Company and our industry thanmost stakeholders. Nevertheless, it is also easy for us toget caught up in past successes and industry norms,
and it is difficult to broaden our perspective and view
MARUI GROUP from the outside. Conversely, given thefact that there are parallels between investment andmanagement, our shareholders and other investors havebeen engaged with various companies in various industries around the world. They therefore possess a type oftranscendental management insight that is valuable
regardless of the industry or company. Through our interactions, we are able to bounce our carefully consideredideas off of this transcendental management insight ofshareholders and investors to formulate even better
ideas. We anticipate that this process will contribute toimproved corporate value.

    
MARUI GROUP’s co-creation of corporate value has only
just begun. I eagerly look forward to co-creating ourcorporate value together with shareholders, other investors, customers, business partners, and communities
from a future-oriented perspective.

August 2016

“The goal of our co-creation management is thus to advancethe dialectic progress with all of our stakeholders to eliminate conflicts
between their interests and bring these interests into harmony.”

24

25

Co-Creation Management
and Corporate Value

Co-Creation Management and Corporate Value

Harmonization of Stakeholder Interests

Long Timeline for Discussing Co-Creation

MARUI GROUP has numerous stakeholders of different
types. While customers are emphasized the most in ourpractice of co-creation management, this does notchange the fact that our business is supported by otherstakeholders, including shareholders and investors aswell as business partners, communities, and the greater
society, not to mention our employees.

Discussions with and between stakeholders are exceptionally important to our co-creation management assuch communication helps harmonize stakeholder interests and form intersections of these interests. It is important that a long timeline with a forward-looking
perspective is adopted in these discussions.
At the same time, it is crucial for MARUI GROUP to
go beyond simply promoting such harmonization to

Although the interests of these various stakeholders
are often seen to be in opposition, the reality is that there
is a significant intersection at which the interests andvalues of different stakeholders overlap. At MARUIGROUP, we view this intersection as representing true
value. We are confident that, by achieving harmony
between these differing interests and expanding thisintersection through co-creation management, we will beable to improve corporate value.

Corporate value

Intersection of all stakeholder interests

Expansion of this intersection

Improvement of corporate value

create business frameworks and procedures that actively
increase the intersection of these interests. This pursuit
will be driven by our DNA of innovation, which has continued to be passed onto all Group employees since ourfounding. The pioneering spirit born out of this DNA, aspirit that embraces change and relishes new challenges,
will remain as a powerful driving force behind our cocreation management.

MARUI GROUP’s View of Corporate Value

Customers

Borrowings from Society
In practicing co-creation management, we see all of ourbusiness assets as being borrowed from society, a viewthat we believe will lend to our efforts to achieve harmony between stakeholder interests and improve corporate value. It is our duty to effectively utilize these“borrowings” and then return them to society with “interest.” Management based on this concept will no doubt
increase the value of all business assets through interconnected relationships.
For example, the transition from a department store
model to a real estate model resulted in our key performance indicator (KPI) changing from the profit margins
on sales to the margin on the market value of the realestate we borrow from society. In other words, our profit
margin is now net operating income (NOI) yield. As NOI
yield increases, return on equity (ROE), which represents
the return on the capital borrowed from stakeholders,will also improve. Co-creation management aims toincrease such interconnectivity between the interests ofdifferent stakeholders.

26

Business
partners

Investors
Harmonization of
stakeholder interestsand expansion ofintersection

Communities andSociety

Employees

27Dialogue 01
As a long-term investor,
I consider customer satisfaction
to be the most important elementof the companies I invest in.
Hideto Fujino

Discussion of Co-Creation between
Long-Term Investor and the President
The Importance of Management’s Timeline
Hideto Fujino, a master at aggressively managing Japanese stocks,
and President Aoi discussed the perception of timelines,
which are important to both management and investors,
and the role of customers as a source of corporate value.

Hideto Fujino
President and Representative Director
Rheos Capital Works Inc.

The intersection between the joy ofcustomers and the joy ofshareholders and otherinvestors is actually quite large.
Hiroshi Aoi

Hiroshi Aoi
President and Representative Director
Representative Executive Officer
MARUI GROUP CO., LTD.

Dialogue 01

Dialogue 01

28

29

Dialogue 01

Discussion of Co-Creation between Long-Term Investor and the President

Return to the Basics of Listening to Customers     
Fujino: Japan has recently been witnessing the peak ofconsumption by the baby boom generation. At the sametime, the spread of smartphones is bringing about substantial change in the consumption patterns of theyounger generations. Moreover, the focus of consumption is shifting from physical goods to more fulfilling
lifestyles. I understand that MARUI GROUP has been
responding to these trends for quite some time now.
Aoi: We became aware of these changes around 2006.
This is when we began having difficulty selling physicalproducts, signifying the ineffectiveness of our previous
business model. Progress in IT has driven forward thematurity of the market and the subsequent diversificationof customer needs, creating a gap between us and ourcustomers that grew quite large before we realized it.
It was this realization that inspired us to return to thebasics: listening to our customers.
Co-Creation of Innovation Together with Customers     
Fujino: MARUI GROUP is devoting its efforts to developing stores through a process of co-creation. Specifically,
what initiatives are you undertaking in this regard?
Aoi: We are engaging in exhaustive conversations withour customers. For example, we hold planning meetings
with customers at which we directly introduce our ideas
for store concept, floor layouts, and even service andproduct development, asking for their opinions during
this process. Should we discover that any of our ideas
are flawed, we discuss the matter thoroughly to get usback on the right track. We have been practicing thisapproach for nearly a decade. With the innovations cocreated with customers, we are striving to generate
corporate value.
Fujino: That is a very original approach. What benefits
has this approach created thus far?
Aoi: When we first adopted this approach, there weretimes when our pride as professionals and the successes

Hideto Fujino
President and Representative Director
Rheos Capital Works Inc.

we had achieved up until that point got in the way of ourefforts. Over the past couple of years, however, we havebeen feeling the benefits of this approach. These benefits
are particularly apparent in Hakata Marui, which was
opened in April 2016 as the culmination of more than
600 planning meetings with customers. Truly the product of our co-creation efforts with customers, Hakata
Marui features a completely new design and represents
a departure from the traditional concept of Marui stores.
This refreshing design has proved immensely popular.
By taking the lifestyle needs of people living in the surrounding community into consideration, we succeededin creating a shopping center that can be enjoyed bypeople of all ages.

investors is actually quite large. We therefore believe that
we can improve corporate value by increasing the size of
this intersection.
Fujino: Our fund is estimated to have approximately
150,000 customers. While these customers are shareholders, they are also standard consumers. For thisreason, if MARUI GROUP’s co-creation management
succeeds and the Company is able to bring joy to its
consumers in the regions it serves with its stores andEPOS cards, this success may also contribute to thehappiness of our customers, as they too are such consumers. For this reason, our investment in MARUIGROUP could be seen as a type of co-creation investment.
My support for MARUI GROUP is based on this belief.

Co-Creation Investment Oriented Around Customers     
Fujino: Our long-term investment activities are basedaround the management and sale of stocks through the
Hifumi Investment Trust, an active investment fund forJapanese stocks. When we conduct investments, theaspect of investment candidates we focus on the most is
the candidate’s customers. We use this approach
because it is through transactions with customers thatcompanies generate earnings, and it is these earnings
that fund dividend payments. The Hifumi Investment
Trust is currently managing shares of MARUI GROUP’s
stocks, and thus our biggest wish is for the Company’s
customers to become happier. If this happiness canadvance improvements in MARUI GROUP’s corporate
value, the value of our fund will increase, allowing us toreturn profits to our customers.
Aoi: It makes me very glad that MARUI GROUP is being
evaluated from that perspective. As a matter of fact, wehave not only been focusing on exchanges with customers over the past couple of years, we have also been
putting effort into interacting with shareholders andother investors—and we have learned much throughthese interactions. The intersection between the joyof customers and the joy of shareholders and other

Importance of a Long Timeline for Management     
Fujino: In increasing the intersection between the values
sought by different types of stakeholders, your timeline
becomes incredibly important. If both management andinvestors adopt long timetables, the intersection of theinterests that they share will grow large. However, if thesetimelines are short, conflicts of interest will appear. The

pursuit of short-term gains will likely result in the interests of one party being sacrificed for the interests of theother. On the other hand, these conflicts can be reconciled through a long-term perspective looking five to 10
years into the future.
Aoi: I have experienced this principle in the past. If we
become overly concerned with the short term, we end up
being unable to gain customer support, which results infailure to improve our business performance and live up
to the expectations of our shareholders. It is for thisreason that we are committed to practicing managementfrom a long-term perspective. At the same time, we will
work to make the differing timelines of investors match
up better through active interactions. Furthermore, wewill submit our various opinions to the scrutiny of investors in order to build stronger management.
Fujino: This approach of pursuing co-creation management
through an active dialogue with all stakeholders is truly
an undertaking that is characteristic of MARUI GROUP.
We at Rheos Capital Works look forward to supporting
the Company over the long term, and we have highanticipations for your ongoing growth.

Mr. Fujino established Rheos Capital Works in 2003, after gaining experience in stock positions
at Nomura Investment Advisory Co., Ltd. (currently Nomura Asset Management Co., Ltd.), Jardine
Fleming (currently JP Morgan Fleming Asset Management), and Goldman Sachs Asset Management
Co., Ltd. Beginning as chief investment officer (CIO), he became a director at Rheos Capital Works
in 2009 before assuming his current position in October 2015. Mr. Fujino has an extensive career
as a fund manager with abundant experience in the management of small-to-mid cap andemerging growth equity investments. He also serves as a teaching fellow at the JPX Academy.

Dialogue 01

Dialogue 01

30

31

Dialogue 02

Conversation between ESG Specialist
and MARUI GROUPMARUI GROUP’s Approach toward ESGMARUI GROUP’s co-creation corporate culture of actively incorporating customer
input has been extended to include gathering feedback from long-term investors.
Such investors consider environmental, social, and governance (ESG) concerns inmeasuring corporate value. We thus invited ESG specialist Hiroko Tokuda to discuss
the present state of and future direction for ESG at MARUI GROUP.

Hiroko Tokuda
ESG Specialist,
Investment Research Group & Responsible Investment Group
Tokio Marine Asset Management Co., Ltd.

Atsuko Toida
General Manager, CSR Promotion Department
MARUI GROUP CO., LTD.

Asumi Kantake
Chief Manager, Investor Relations Department
MARUI GROUP CO., LTD.

From left: Asumi Kantake, Hiroko Tokuda, and Atsuko Toida

Dialogue 02

Dialogue 02

32

33

Dialogue 02

Conversation between ESG Specialist and MARUI GROUP

Investor Perception of ESG     Tokuda: In September 2015, the Government Pension
Investment Fund of Japan, which manages the world’s
largest asset portfolio, became a signatory to the United
Nations Principles for Responsible Investment, a setof principles that places emphasis on ESG concerns.
Accordingly, the importance of ESG is being
re-acknowledged in Japan.
Tokio Marine Asset Management also believes that it
is crucial to consider ESG factors in judging the corporate
value of companies over the medium-to-long term. We
are currently working together with the dedicated CSR
divisions of the Tokio Marine Group in order to develop
systems for clearer incorporation of ESG factors into
investment processes. In addition, in response to the2014 adoption of Japan’s Stewardship Code, we began
ramping up efforts to bolster cross-division coordination
within Tokio Marine, including establishing databases ofinteractions with companies so that this information may
be shared.
Approach toward ESG as a Company     
Kantake: From my perspective as a representative incharge of investor relations, or IR, at MARUI GROUP, it
seems as though the way that institutional investors view
IR has been changing substantially over the past one or
two years following the introduction of the Ito Review,
Japan’s Stewardship Code, and Japan’s Corporate
Governance Code. At MARUI GROUP, we established theInvestor Relations Department as a dedicated IR organization in 2015, and we have been acting in earnest to
step up interactions with investors through means suchas formulating the MARUI GROUP Corporate
Governance Guidelines (    P101–102). Nevertheless, I
still cannot help but feel that our efforts are a bit lacking
in terms of disclosure of non-financial information.
Toida: In terms of CSR, the role companies play in society is a topic that has been gaining more attention sincethe 2011 Great East Japan Earthquake. Therefore, we

Hiroko Tokuda
ESG Specialist, Investment Research Group &Responsible Investment Group
Tokio Marine Asset Management Co., Ltd.

www.tokiomarineam.com/about_us/
pri.html

have been transmitting information about the advancesin MARUI GROUP’s CSR activities through our main
business. However, I often find myself wondering how we
can get investors to better recognize this information as
CSR-oriented. For this perspective, I have begun organizing the initiatives we have conducted to date based on
the concept of ESG, and rethinking what type of information we should seek to communicate accordingly. At the
moment, I am adopting an approach aimed at raising
MARUI GROUP’s reputation from a global standpoint,
which has included examining evaluations of theCompany by overseas ESG evaluation institutions.
Tokuda: The level of disclosure expected by ESG evaluation institutions is increasing. For institutional investors,
meanwhile, I think it is important to prioritize information,
first determining what information is truly important for
judging particular companies, and then asking thesecompanies to supply this information.
Toida: Recently, society has been placing additional
emphasis on the importance of manufacturing operations
that consider the entire supply chain. The Group, as well,has been working to enhance its CSR procurement initiatives, which help us to fulfill our social responsibilities
across the supply chain. To this end, we established anddisclosed the MARUI GROUP Procurement Policy in spring2016. At the moment, we are visiting the factories we use
to confirm on-site conditions, and we plan to formulate
future measures together with our business partners.
Tokuda: As an investor, I think initiatives such as thoseyou speak of are of great importance. In the future, I
would like MARUI GROUP to actively disclose information on risks, such as how it views the social and environmental risks seen across the supply chain and the otherbusiness risks it faces, and how it intends to addressthese risks.
ESG Conversations between Investors
and Companies     
Kantake: MARUI GROUP published an integrated report
titled Co-Creation Management Report 2015 last year.

Ms. Tokuda completed a degree at the Graduate School of Finance, Accounting and Law, Waseda
University, and has served as an inspection committee member of the Securities Analysts
Association of Japan. In her current position, her work pertains to responsible investment andsocially responsible investment funds. She has also been a member of the Ministry of theEnvironment’s Investigation Commission for Creating and Invigorating Markets for Promoting
Green Investment and Investigation Commission for Investment in Consideration of Sustainability
Issues, as well as a judge for the Nikkei Annual Report Awards.

We then held explanatory forums about this report on an
experimental basis with the aim of better communicating
the voices of employees at the frontline of operations toinvestors (    P102). The integrated report includes
contents such as a comment from a junior member ofour shoes sales staff and an introduction of the profession change system that allows for movement of personnel between our various Group companies and divisions,which all feature unique job descriptions. Prior to holding
the explanatory forums, however, we were doubtful as towhether investors would have an interest in such topics.
However, these forums proved immensely popular, withmore investors attending than seen at past financial
results briefings. Attendees expressed great interest evenwith activities that we advance simply as a standard partof operations. This experience reaffirmed my belief that,
if we do not actively communicate such information, ourefforts will remain invisible to investors.
Tokuda: MARUI GROUP’s profession change system issomething that you do not often see at other companies,
and I have great interest in this system as an institutional
investor. I am particularly interested because, from theperspective of medium-to-long-term growth, the development of a workplace environment in which employees
are empowered to work energetically is a matter ofimportance to companies.
Kantake: The “E,” “S,” and “G” of ESG are all elements ofoperations that should contribute to income. This experience taught me the importance of sharing informationon our daily work activities, the Company’s growth,and our roadmap for this growth with people outside
MARUI GROUP.

Shared Vector of Companies and Investors     Tokuda: Corporate cultures are important to consider inanalyzing and evaluating companies. MARUI GROUP
has a corporate culture of incorporating input from
customers as well as from institutional investors.
Kantake: Actually, the reason the Company establishedthe Investor Relations Department was the idea that weshould listen to investor input as we do to customer
input. We report on the details of IR activities at meetingsof the internal Medium-Term Management Visionary
Committee, which employees are able to attend on a
voluntary basis (    P63 Activities of the Medium-Term Management
Visionary Committee in the Corporate Culture of Co-Creation Management).
At the moment, a wide range of Group members areengaging in discussions with investors to help contributeto improved corporate value.
Tokuda: That is a spectacular approach. It is important
than ever for both companies and investors to work toclose the gap between one another in order to improve
corporate value. At Tokio Marine Asset Management, we
aim to contribute to the promotion of a prosperous society and spur economic development through responsible
investment and asset management. MARUI GROUP’s
co-creation management principle of co-creating customer
happiness through its business activities seems very
similar to this philosophy. If society does not prosper, wecannot hope to realize long-term returns. In terms of thevalue of their existence to society, I feel that companies
and institutional investors share the same vector.

Dialogue 02

Dialogue 02

34

35

CO-CRE ATION
Section 02 / Pages 36–87

MARUI GROUP’s
Co-Creation Management    
What exactly is this “co-creation management” that MARUI GROUP is practicing?
In this section, we will introduce examples of MARUI GROUP co-creating value with customers,
business and other partners, communities, and the greater society, with particular focus placed on
store development initiatives related to Hakata Marui, which was opened in spring 2016.

36

37

Documentary of Hakata Marui’s Grand Opening

Co-Created Next-Generation Marui
Departing from Traditional Concept
Hakata Marui is an amalgamation of MARUI GROUP’s co-creation efforts.
This store proved that true innovation means departing from the traditional concept of Marui.

On April 20, 2016, the day before the opening of Hakata Marui,
our first store in Kyushu, preparations for the opening progressed amid
an atmosphere of uncertainty as to whether the customers of
Hakata would be receptive toward this new Marui.

Based on input received from customers during planning meetings,
we had devoted around 70% of the sales floor to food,sundries, and other lifestyle category items,
hoping to offer enjoyable experiences to all customers.

38

39

The day of Hakata Marui’s opening, April 21, 2016,
was unfortunately met with rain. Nonetheless, we found a crowd
waiting outside, some of whom had waited through the night.
We therefore chose to hold the grand opening of the store
30 minutes earlier than planned.

More than 80,000 customers visited on the opening day.
Numerous lines formed within the store, and the draw of thisco-created store was palpable. Moving ahead from thissuccessful opening, we must now tackle the true challenge:
continuing to grow together with our customers in Hakata.

40

41

Hakata Marui
Co-Creation StoryMARUI GROUP and its Customers

Long-Awaited Opening of Hakata Marui:
A Store Co-Created with Customers
Hakata Marui was built from the ideas and wishes of more than 15,000 customers over a period of roughly two years.
Holding over 600 planning meetings with customers, we engaged in enthusiastic discussions with our customers
on all aspects of the store. Topics discussed included the store’s name, main considerations and concept,
floor layouts, product lineups, product creation initiatives, EPOS card designs, and customer service.

The co-creation store development venture was started
in October 2013 based on our desire to make Hakata
Marui a store that members of the community would
truly embrace. In July 2014, we began inviting customers
to participate in planning meetings, hoping to gain theiraid in making their ideal store. We launched our firstcommunity website in November of the same year toserve as a forum for a wide range of customers to takepart in the co-creation process without being restrictedby place or time.
Customers offered various opinions, with somestating that they wanted a store that could be visiteddaily while others expressed desires for a comforting
atmosphere or options to enjoy activities aside fromshopping. Advancing discussions driven by these

opinions, we eventually decided that the concept for
Hakata Marui should be “a store in which customers canfind what suits them best.” Co-creation efforts were notlimited to the store itself. We also utilized customer input
to make original designs for Rakuchin Kirei Pumps(    P56–57), the unique EPOS card based on traditional
Hakata Ori fabric (    P50), and various other Kyushubased products and services. In determining the distribution of sales floors, it became apparent that customer
interest in apparel was low. While Marui stores have pre­viously devoted around 60% of their sales floor to apparel,
only 30% of the sales floor at Hakata Marui was used forthis category. The remaining 70% was allocated to lifestyle items, making Hakata Marui the first co-creatednext-generation lifestyle-oriented Marui store ever.

Customer participants of planning meetings in front of newly opened Hakata Marui (May 2016)

Connections with Customers in the Kyushu Region

Aggregate total of customers participatingin store development

More than

15,000

Number of customers visiting
during first month after opening

2.3 million
42

Planning meetings heldwith customers

More than

600

Number of EPOS cardholders in Kyushu
region at time of Hakata Marui opening

More than

130,000

Hakata Marui community website (Japanese only)
hakata-fan.0101.co.jp/

43Hakata Marui
Co-Creation StoryMARUI GROUP and its Customers

Reunion with Customers Partnering in
Co-Creation a Month after Opening
Planning meetings with customers took place over a span of two years. A month after the opening of
Hakata Marui, the customers that had taken part in these meetings gathered once again to look backat past meetings and offer their opinions and impressions of the now-opened Hakata Marui.

Apparel and shoes sales floors are not distinguished by size, making it easy to go shoppingwith friends. Stores commonly divide their floors by size or taste, which can be a cause ofconcern when shopping with a friend. Hakata Marui, meanwhile, eliminates this concern.
This completely new store has given me the opportunity to find exquisite products andallowed me to become friends with fellow planning meeting participants.

Miku Nagano Sales Representative, Hakata Marui
A month has passed since the opening of Hakata Marui. I recall that many of you were
unfamiliar with Marui stores when you first participated in the planning meetings. Basedon your input, we devoted around 70% of the floor space to dining and lifestyle categories.
This structure is radically different from traditional Marui stores.

Move from Customer to Sales Staff
after Participating in
Planning Meetings

Interpersonal connections are important. In fact, one customer thatparticipated in the planning meetings is now part of the sales staff at
Hakata Marui.

Miyuki Ishida
Sundry Sales Floor Staff, Hakata MaruiI am originally from Tokyo, so I, of course, had an understanding ofwhat constituted a Marui store. However, none of my friends from
Hakata knew about Marui. I was incredibly excited to be chosen toparticipate in the planning meetings. I now feel like somewhat of a
“Marui Ambassador.”

I was born and raised in Hakata, and I did not know about Marui previously. However, I havebeen intimately connected with Marui for nearly two years through the planning meetings,
and I am quite attached to this store that we have made together. I have invited friends tojoin me on numerous excursions to Hakata Marui, and I even applied for an EPOS card. In
particular, I feel a special attachment to REC COFFEE and the FAR EAST BAZAAR dried
fruits store after becoming acquainted with the store managers during the planning meetings. This type of personal connection certainly adds something to my visits.

Thank you for your input. I feel that we were truly able to incorporate the opinions of everyone that participated in the planningmeetings, including tenants. As a result of this support, tenants
have been able to get off to a strong start, exceeding their goals.

Dashidokoro Hyoshiro is a great place to buy gifts, especially due to the small and visuallyappealing packages. I was quite vocal on this topic during the planning meetings as the priorproduct packages tended to be too large or have logos that just felt outdated. When thestore opened, I was very pleased to see the products in the packages and with the logos that
had been designed for Hakata Marui based on our feedback. This satisfaction was all thegreater when I learned that these Hakata Marui-style packages and logos would be introduced at other stores.

By participating inplanning meetings, I cameto be aware of MARUIGROUP’s strong commitment to invigorating the
Hakata area, a sentiment that gave me
great joy as someone born here. After
Hakata Marui opened, I found myself
wanting to make this store a bigger part of
my life. I hope to help build an even more
exciting Hakata together with customers
as a staff member.

There is a real aura of enthusiasm around the planning meeting members. Talking with people of all ages and genders at the meetings was
an experience not found in my daily life. The meetings were consistently energizing as a result.

The atmosphere at planning meetings was always laid back, and thismade it easy to speak frankly. The meeting proceedings themselves
were shaped by our input, which really closed the gap between all
members. I also often found myself posting ideas I had after getting
home on the community website.

I felt a growing sense of anticipation every time I participated in aplanning meeting. Many members stated that they wanted to see a
store that is completely new to Kyushu, and that wish became a reality.
It feels good to have your wishes fulfilled.

Hakata Marui’s overall atmosphere is quite pleasant. It is open, and thelighting is superb. Even the music played in the store is excellent. I
became so fond of this music that I actually play my original Hakata
Marui CD at home on a regular basis.

Thank you all for joining us today. We made many new discoveries
thanks to your input. We will continue to use your feedback to improve
Hakata Marui going forward. Furthermore, we plan to develop other
Marui stores through co-creation with customers and business partners in the future.

Videos of interviews with customers can be viewed on the following website (Japanese only).
www.0101.co.jp/090/hakata-special/introduce.html

44

45

Hakata Marui
Co-Creation StoryMARUI GROUP and its Business Partners

Ajino Hyoshiro’s Co-Creation Realizing
Innovation, Uprooting Past Conventions
Ajino Hyoshiro and MARUI GROUP share a common trait in that they both have a corporate culture oflistening to customer input that dates back to their founding. Co-creation is an innovation that goes beyond­previous conceptions, uprooting past conventions to work together in creating customer happiness.

Ajino Hyoshiro’s Philosophy Dating Back to 1900     
Ajino Hyoshiro was the first in the world to supply
Japanese soup stock containing flying fish in a special
paper package designed for easy cooking. This company
practices a corporate philosophy of selflessness thatinspires its employees to let go of their own interests toseek the heights of compassion, effectively forgetting
themselves to serve others. For this reason, the greatest
joy at Ajino Hyoshiro is found in the happiness of customers, particularly when a delicious taste coaxes out an
unconscious smile. With an ear turned always to thevoices of customers and a critical eye toward the taste ofits products, Ajino Hyoshiro forges ahead with researchand development aimed at responding to the everchanging needs of its customers. These efforts are
guided by a slogan of “simple, convenient, and tasty.”
Ajino Hyoshiro’s history can be traced back to Kappo
Hyoshiro, a restaurant that the current president’s grandfather opened in Fukuoka Prefecture in Kyushu in 1900.
It was the joy of the owner to look out from the kitchen tocatch a glimpse of customers’ happy faces as they
enjoyed culinary satisfaction. Hoping to deliver this taste
to customer homes in a no-hassle manner, Ajino
Hyoshiro developed special packages filled withJapanese soup stock containing flying fish in 1988,
sealing an easy secret to heightening the flavor of meals
in every package. When this product was launched,flying fish soup stock was not yet widely known inJapanese kitchens. Ajino Hyoshiro thus had to begin bytraveling to department stores across the nation to promote sales through the provision of samples. The feedback received from customers, sometimes praise with asmile for the flavor of this product, other times criticism,served as the point of origin for Ajino Hyoshiro. Due tothese efforts, this company’s multipurpose soup stock is
now a well-loved fixture in countless kitchens, where it
helps users prepare authentic cuisine with ease.

46

New History Born Out of Customer Input     
In setting up shop in Hakata Marui,
Ajino Hyoshiro chose to take a new
step and create Dashidokoro
Hyoshiro, a store integrated with adining establishment, which represents this company’s debut in therestaurant industry. Ajino Hyoshiro
Yuri Yokote
first unveiled its menu for thisManager,
Dashidokoro Hyoshiro
establishment, a lineup of dishes
that use the flying fish soup stock it prides itself on
together with local Kyushu ingredients, at a planningmeeting with customers held by MARUI GROUP, in
November 2015. Unfortunately, the response from local
customers was harsh, with comments stating that thedishes lacked a unique pull. This criticism extended to its
standard products, which were deemed to have outdated
package designs. Ajino Hyoshiro pursued improvements,
but soon only three months remained before the openingof Hakata Marui.
Always remaining true to its flying fish soup stock
traditions, Ajino Hyoshiro continued to refine its culinary
creations through trial and error and was eventually able
to complete its menu before opening. This menu won theapproval of customers. The company also redesigned its
product packages to more clearly signify its brand,
making alterations to its historic logo in the process.
Customers were surprised that Ajino Hyoshiro was able
to complete both the menu and new packaging before
the opening while also
expressing their joy at having
their feedback reflected. Ajino
Hyoshiro remains committed
to incorporating customer
input to create smiles throughdelicious tastes.
Ajino Hyoshiro website (Japanese only)
ajino-hyoshiro.com/

Yuri Yokote, Manager of Dashidokoro Hyoshiro (right)
Jun Nishino, Store Manager of Hakata Marui (left)

47

Hakata Marui
Co-Creation StoryMARUI GROUP and Communities and Society

Accommodation of All Customers throughEmpathy and Store Environments
MARUI GROUP strives to help all customers enjoy its stores, regardless of their age or gender,
and this sentiment of course extends to senior citizens, people with disabilities, non-Japanese people,
and members of the LGBT community. At Hakata Marui, we took steps to develop the store from theperspectives of empathy (customer service) and store environment to accommodate all customers
so that everyone could enjoy shopping with peace of mind.

Store Developed Emphasizing the Comfortof All Customers     
Hakata Marui was developed based on the input of specialists and customers to create a store environment that
accommodates a diverse range of customers. We worked
with Kyushu University and Lifestyle Design Lab*1 toinvestigate and analyze the issues and concerns faced bypeople with disabilities. These investigations helped us
find various ideas for improving customer convenience.
We also invited individuals that use wheelchairs to takepart in customer planning meetings in order to gather
more input.
Furthermore, Mirairo Inc.*2 performed a detailed
inspection of the store from the perspective of people
with disabilities, confirming the appropriateness of various facilities. Through accessibility verification, we wereable to implement numerous improvements. For areas inwhich we could not adapt our store environment, wechose to respond by enhancing our empathy. Based on

this approach, we had employees take tests underMirairo’s Universal Manner Placement Examination program, which is aimed at teaching examinees how tounderstand other viewpoints. In addition, employees
took part in this company’s LGBT manner training toacquire basic knowledge about the LGBT community andhow to address the needs of its members. Employees
received special service caregiver training as well as
training on catering to the needs of inbound travelers
performed by non-Japanese lecturers. With the skills
gained, we aim to foster an environment in which all
customers can enjoy shopping.
  

48

Aya ShinoharaI chose to participate in the Hakata Marui planningmeetings as I felt it would be a good opportunity tohelp contribute to the growth of Hakata. I was alsointerested in seeing just how much our input would beincorporated into the store. I was pleasantly surprised.
The finished store not only had wide passageways andmultifunction restrooms on each floor, but also featured signs displaying the distance to restrooms andrest areas with outlets in a space designated forwheelchair charging. I think it is quite rare for shopping
centers in Kyushu to offer these kinds of accommodations. This consideration is apparent in customer
service as staff offer courteous service while coming
down to my level of sight, offering a sense of ease.
Hakata Marui is no doubt a store in which wheelchairusers like myself can enjoy their time in comfort.

P62 A
 ccommodation of All Customers*1 Association that offers training programs taught by people with disabilities
with the aim of providing people with disabilities unique opportunities toparticipate in society while conducting activities for improving the level ofcustomer service and satisfaction at companies*2 Company that advocates the concept of Barrier Value (taking a disability andturning it into some kind of value or benefit), based on which it proposes
universal design goods and services for providing comfort and ease to all

Detailed inspection of Hakata Maruiconducted prior to opening to confirm
various facilities under the guidanceof Mirairo
www.mirairo.co.jp/company/enprofile
Signs displaying distance to restrooms and outlets for charging electric wheelchairs
installed based on ideas from Kyushu University and Lifestyle Design Lab

Hakata Marui as Viewed from a Customer
Using a Wheelchair

A Look Back at the Development of Hakata Marui
Hirai: I research inclusive design. In thisfield, we view the plights of people withdisabilities not as physical limitations forthem, but rather as social issues. We
therefore look to include individuals thathave traditionally been excluded from theuse of products and services in various
fields in the planning and development of
new offerings from the early stages. Bycollecting input from these individuals
and sharing recognition of issues in workshop format, we strive to include them increating feasible designs that meet theirneeds. These initiatives mirror the concept of MARUI GROUP’s co-creation andits focus on all of its customers.
Toyama: It is said that people with disabilities are not often given the opportunity to feel as though they are contributing
to society. However, the opinions of these
individuals come from different perspectives and are built on different thinking,and can therefore turn our eyes to things
we did not previously see.
Hirai: In developing Hakata Marui, MARUIGROUP’s employees worked with differently

abled individuals, discussing the issues
faced around town and searching forsolutions together. These solutions
included improvements in store environment as well as in the ease of use of store
facilities and in customer service, withimprovements based on empathy. The
resolution of these issues does not only
benefit people with disabilities, it also
makes the store more hospitable tosenior citizens.
Toyama: When a store like Hakata Maruihas charging spaces for electric wheelchairs, it removes some of the concerns
faced by people in wheelchairs in leaving
the house. In this manner, an increase in
the number of such accommodating
establishments would help promoteparticipation in society by everyone.
I therefore believe that MARUI GROUP’s
co-creation store development efforts are
empowering to numerous people, andI hope that the Company will continue
striving to live up to society’s expectations
going forward.

Yasuyuki Hirai (left)
Professor, Department of Design Strategy
Faculty of Design, Kyushu University
Professor Hirai is a leading authority on inclusive design inJapan. By considering the needs of all, he seeks to apply
designs that are accommodating to everyone in public spaces.

Shoko Toyama (right)
Representative Director, Coordinator, Lifestyle Design Lab
Ms. Toyama’s work as a coordinator is aimed at helping
people with disabilities view their disability as a strengthand design a lifestyle in which they can be themselves.
www.facebook.com/ikikatanodesign (Japanese only)49

MARUI GROUP
Co-Creation Story

Creation of Marui Fans in Kyushu prior to Store Opening

Development of EPOS Card:
Collaboration Partners across Kyushu
Efforts to develop EPOS card operations have previously been based around Marui stores.
Accordingly, cardholder numbers were primarily increased by recruiting customers that visited stores.
However, MARUI GROUP adopted a completely new approach in Kyushu, deploying EPOS card initiativesprior to opening its first store in this region.

Hakata Marui
EPOS card application center

EPOS Card Collaboration
Partners Promoting Use

AIM CREATE CO., LTD.
Kyushu Office6

We are promoting collaboration withlocal companies, theme parks, andother facilities and were able to partner
first with HUIS TEN BOSCH and laterwith other organizations. We have 20
collaboration partners across Japan.

EPOS Card Co., Ltd.
Kyushu Office

Fukuoka Prefecture

Oita Prefecture

Saga Prefecture
Sasebo 5bangai
EPOS card application center

24

7

Driving schools

8

Driving schools

AMU PLAZA OITA
Marui Shoes

Driving schools

The decision to open Hakata Marui was made in 2013,
and the Kyushu Office of Epos Card Co., Ltd., was established in the same year. A survey on the recognition of
EPOS cards in Kyushu conducted in the following year
found that a mere 9% of the population was aware ofthese cards. With two years left before the opening of
Hakata Marui, we rolled out promotion campaigns toraise EPOS card recognition and began seeking out
facilities to offer cardholder benefits.
One area of focus was developing collaboration
partners among local companies and commercial facilities. In July 2014, HUIS TEN BOSCH became our firstpartner, and five more companies subsequently followed.
As a result, the number of EPOS cardholders in Kyushu
climbed above 130,000 at the time of the o­ pening of
Hakata Marui, and EPOS card recognition exceeded
50%. These efforts enabled MARUI GROUP to set a newrecord for one-day credit card issuances of 1,182 cards
at Hakata Marui.


Card Application Centers at
Partner Facilities

HUIS TEN BOSCHEPOS card application center

4

Driving schools

KYUDENKO EPOS CARD
(Available from December 2014)

Club Hawks EPOS CARD
(Available from February 2015)

Driving schools

Many customers expressed their desire for an EPOS cardwith a design that felt unique to Hakata. We thus invited
local designers to submit design proposals, which werethen voted on by customers. This led to the birth of a newcard inspired by Hakata Ori fabric.*1

Miyazaki Prefecture

13

1,182 cards*1 A
 type of silk fabric traditionally produced in Hakata. Reliefs on
escalator sides at Hakata Marui are also inspired by Hakata Ori fabric.

JQ CARD EPOS CARD
(Available from March 2015)16

EPOS Card staff are positioned full timeat card application centers that havebeen established at HUIS TEN BOSCH,
Sasebo 5bangai, AMU PLAZA OITA, andBonBelta Tachibana.

New record for one-day credit card issuances

KITTE Hakata EPOS CARD
Co-Created with Customers

Sasebo 5bangai EPOS CARD
(Available from November 2014)

Kumamoto Prefecture

15

Driving schools

Establishments Offering
Benefits in Kyushu

HUIS TEN BOSCH Collaboration
EPOS CARD(Available from July 2014)

AMU PLAZA OITAJQ CARD EPOS card
application desk

Nagasaki Prefecture

Kagoshima Prefecture

300

14

The number of establishments offering
benefits to EPOS cardholders in Kyushu
has risen to 300 and includes all restaurants operated by MONTEROZA Co.,
Ltd., as well as Big Man, a long-standing
provider of local delicacy Sasebo Burgers.
Benefits are available at approximately
7,000 establishments nationwide.

Driving Schools Partnered inProviding License
Acquisition Financing

97

MARUI GROUP has partnered with 97
of Kyushu’s 169 driving schools.

Driving schools

EPOS Card Recognition in Kyushu

9%
2013

50%

BonBelta Tachibana
Tachibana EPOS card
application center

Tokyo

More thanOpening of Hakata Marui

KyushuTachibana EPOS CARD
(Available from February 2016)

As of August 31, 2016

50

51

MARUI GROUP
Co-Creation Story

Evolving Customer Referral Model

Growing Range of Partners and New Businesses
Achieved through Integrated Group Operations
Our staff of individuals with retailing experience is endeavoring to expand the range of commercial
facilities, local companies, and theme parks that are collaboration partners with EPOS card. Moreover,
we are pursuing the creation of new businesses by holding try-on events that unite Internet sales andphysical stores (    P54 Marui-Style Omni-Channel Retailing) and regional development events through animerelated ventures.

• Refer customers to partners• Expand number of collaboration cards

Goingforward

Previously• Broaden scope of collaboration card
operations• Support communities and society through
MARUI GROUP’s integrated operations

Shopping
districts

Sharedcardholders

Integrate Business Scope Expansion     
EPOS cards allow all cardholders to receive the benefits
provided by every partner company and facility, regardlessof where they are issued. For this reason, an increase in
the number of card application centers found acrossJapan will contribute to the interests of both customers
and collaboration partners.
MARUI GROUP will continue to expand the scope of
its collaboration card operations going forward. At thesame time, we will hold events related to anime, video
games, and other content and generate synergies withthese events to realize integrated Group operations. We
thereby aim to support the community and otherwise
evolve our customer referral model.
Regional Development Business Merging
Cards and Anime     The Tachibana EPOS CARD is a card that we beganoffering in February 2016 through collaboration with
BonBelta Tachibana, a commercial facility in Miyazaki
Prefecture. The goal of this card is to aid in a drive to
invigorate and increase the appeal of the surroundingarea through a joint effort between this facility and theneighboring shopping district. Joining this effort, MARUIGROUP added in an anime-based initiative and thereby

created a new business that energizes shopping districts
in order to contribute to regional value.
In March 2016, we took part in holding the“OSOMATSU ICHI in Miyazaki” event, a collaboration
between Miyazaki City and popular anime series
Osomatsu-san. In addition to sales of merchandise, theevent also featured a riddle-solving activity in which hints
for solving riddles were scattered throughout the shopping
district. This event drew crowds on all days with 10,000
people visiting the Miyazaki area during the event’s 21-day
span, many of whom applied for a Tachibana EPOS CARD.
More than half of the people that attended the eventcame from outside the prefecture, displaying the surprising power of regional development activities that use
anime to attract people.

Aggregate number of customers attending“OSOMATSU ICHI in Miyazaki” event

Cumulative©FA/O

10,000
Customers lined up for the event

SharedpointsParticipation in Anime and Other Content-related Businesses
Facilities

Step 1: Investigate

A survey of 2,100 EPOS cardholders and 3,200 Group employees revealed thatamounts of spending on anime-related products were large and that the demand forregional events was high.

Step 2: Advertise

To inform fans of MARUI GROUP’s entry into the anime business, we set up a boothat the Comic Market 89, a major event that drew around 520,000 people over its
three-day span. This was the first time for us to participate in such an event.

Step 3: Act

Out of a desire to contribute to regional development, we collaborated with the BonBelta
Tachibana EPOS card application center located inside the Miyazaki Prefecture
department store of the same name to hold the “OSOMATSU ICHI in Miyazaki” event.

Step 4: Collaborate

Investment in content creation was commenced to develop a unique, new businessmodel for MARUI GROUP. In addition, the Company joined the production committee for Yell for the Blue Sky, a movie that debuted in theaters in August 2016.

(Marui, collaboration partners)

Theme parks,
sports teams, etc.

Local
companies
Shared benefits

Support communities and society through
MARUI GROUP’s integrated operations
E.g., Try-on stores and anime, video games, and other content-related events

52

Step 5: Profit

Going forward, we will leverage synergies between anime, the Internet, and FinTech
to encourage anime fans, which are known to be major consumers, to partake in the
EPOS card and other services of our FinTech business.

Yell for the Blue Sky (Debuted in August 2016)
Starring Tao Tsuchiya
Directed by Takahiro Miki© 2016 TOHO / Hakuhodo DY music &pictures Inc. / The Asahi Shimbun / Hakuhodo
DY Media Partners / JR Kikaku / SHUEISHA /NIPPAN / KDDI / Tokyu Agency / HoriPro /MARUI GROUP / HAKUHODO / GYAO
© Kazune Kawahara / SHUEISHA

53

MARUI GROUP
Co-Creation Story

Marui-Style Omni-Channel Retailing

Inventory-less Try-on Stores for Shoes
Uniting Internet Sales and Physical Stores
MARUI GROUP develops certain private brands together with its customers. A representative example
of such a brand would be Rakuchin Kirei Pumps, a massive hit product launched in 2010. We refer tosuch brands as “co-creation private brands.” We have recently commenced a new try-on store initiative
geared toward offering customers new value with regard to these co-creation private brands. This initiative forms a union between Internet sales and physical stores and employs a scheme that integrates
Group operations with regard to its proprietary systems and distribution functions.

• Sold private brands through union between
Internet sales and physical stores• Introduced free shipping and returnservices for Internet sales

Previously

Goingforward• Sell co-creation private brands through union
between Internet sales and physical stores• Establish integrated Marui-styleomni-channel retailing scheme• Create stores without inventories
Ongoing earnings from continuing use ofInternet sales and EPOS cards

Fixed-period earnings

Co-creation
private brands

Internet sales

Try-on Store Uniting Internet Sales andPhysical Stores     
Try-on stores represent a new business model unique to
MARUI GROUP that takes advantage of the frameworksof growing Internet sales. The ability to purchase items
through the Internet is exceptionally convenient for customers. However, the inability to try on clothes to see
how they feel and the difficulty in understanding thematerials and sizes of products have been cause fordissatisfaction among customers. This is particularly
true with regard to shoes, for which size and comfort arecore concerns, a fact that has led to many customers
refraining from purchasing such items online.
Our try-on stores address this issue by providing alineup of samples that customers can try on as theyplease at short-term events designed to alleviate suchconcerns. When making purchases, customers can use
one of the stores’ dedicated tablets to order a productand have it sent to their home free of charge. As try-on
stores are temporary stores operated over a limited
period, they require less investment in store fixtures thanwould be necessary for opening a standard store andhave lower fixed rent fees. In addition, as only samples
are displayed, there is no need for inventories. Accordingly,
these stores boast low costs and low risk. The first try-on
store was a Rakuchin Kirei Pumps sampling event held at
Nishitetsu-Fukuoka (Tenjin) Station in September 2015,
after which we began to exhibit such stores across Japan.

Unique MARUI GROUP Business Scheme     Of the customers that purchase co-creation private
brand shoes at try-on stores, approximately 70% also
register for Internet sales site accounts and roughly 40%
apply for EPOS cards. Deploying products through try-on
stores allows us to link them with Internet sales andcredit cards, thereby expanding our repeating customer
base and generating ongoing earnings growth by encouraging these customers to continue using our Internet
sales and EPOS card services. Try-on stores are being
set up in commercial facilities outside the business areasof Marui stores in locations across Japan.
These efforts are made possible by the platform
supporting the try-on store scheme, which is formedby the tablet ordering system developed by M & C
SYSTEMS CO., LTD., and the Internet sales distribution
services of MOVING CO., LTD. Our ability to handle all of
the elements within the Group is a significant advantagethat has enabled us to create such try-on stores centeredon the Internet, a business scheme that is completely
unique to MARUI GROUP.

Percentage of try-on store customers who:
Register for Internet sales
site accounts

Apply for EPOS cards

Approx.

Approx.

70%

40%

Credit cards
Try-on Store Scheme

Try-on stores

Attend short-term
event stores

Freely select size
from among samples

Try on in self-service
fashion

Order withdedicated tablet

Receive product via
home delivery

Customers

Systems

Distribution

Opportunity for customers outside Marui store business area totry on samples during short-term event

MARUI
GROUP

54

Low store investment
and fixed rent fees

No store inventories

Ability to use Internet sales and EPOS card services
with peace of mind after confirming
size and comfort of actual items

Internet sales platform using Company
systems and distribution functions

55

Development of
Co-Creation Private Brands
Together with Customers
MARUI GROUP is involving customers in the process ofdeveloping private brand products with the goal of
responding to the lifestyle needs of all customers. Only
those products that meet the demanding standards ofcustomers taking part in the co-creation process arecommercialized.
Shoes: Marui Rakuchin series shoes (Japanese only)
voi.0101.co.jp/voi/webshop/collabo_product/index.jsp
Pants: ru apparel brand (Japanese only)
search-voi.0101.co.jp/voi/shop/ru/

The origin of MARUI GROUP’s co-creation product development can be found in its Rakuchin Kirei Pumps, whichwere launched in 2010. The development process started
with a survey of customers indicating that around 90% ofthem had felt discomfort with their shoes. Moreover, it was
discovered that customers were unable to find pumps
that satisfied all of their needs with regard to fashion,
comfort, and affordability. We thus vowed to create justsuch pumps. We began by measuring customers’ feet
and analyzing the results to make original shoe trees. We
then held product development meetings together withcustomers who had expressed dissatisfaction with the
comfort of their shoes. Approximately 1,000 customers
participated in the 60 meetings held each year, at which
they tried on shoes and helped us in an ongoing cycle ofchecks and revisions. In addition, we expanded thenumber of sizes of these shoes; although prior shoe lines
had only been available in seven sizes, Rakuchin Kirei
Pumps are offered in 12 sizes, ranging 20.5 cm to 26.0 cm,
providing an option for customers who had previously
been unable to purchase such shoes due to a lack of sizes.
As a result, Rakuchin Kirei Pumps proved to be a massive
hit, selling an aggregate total of more than 3.0 million
pairs*1 as of August 2016. Furthermore, we recently
learned that many women feel similarly dissatisfied withpants sizes. We took action to address this issue by
expanding the number of pants sizes offered in the Group’s
ru apparel brand from 10 to 12. This move won substantial
customer support, thanks to which Hakata has been posting sales figures for women’s pants that are six times higher
than those at existing stores (as of June 30, 2016).
*1 Total aggregate sales of Rakuchin Kirei Pumps as well as sandals, boots, andother shoes in the Rakuchin Kirei series

Sales of Women’s Shoes: Co-Creation Private Brands¥4.7 billion¥4.5 billion¥3.6 billion¥2.7 billion¥1.6 billion¥0.7 billion¥70 million
FY201056

FY2011FY2012FY2013

FY2014FY2015FY201657

Corporate Culture of Co-Creation Management

Corporate Culture of Co-Creation Management

Power to Create Innovations for the Future
To cultivate a corporate culture of co-creation management throughout the Group, MARUI GROUP is pushing
forward with human resource development programs that are blind to age and gender and spread acrossorganizational boundaries. With a corporate philosophy that calls for us to “equate the development of our people
with the development of our company,” we recognize the importance of stimulating the ongoing growth of every
employee and ensuring that they possess the power to create innovations for the future. We believe that developing our employees in this manner will no doubt contribute to the co-creation of customer happiness.

Corporate
CulturePromotingDiversity

MARUI GROUP has defined thepromotion of increased diversity
as an important management
policy, based on which it pursues the establishment of ahighly productive corporate
culture that is conducive tofostering innovation.

Innovation is crucial to further improvements in corporate
value. As such, an organization that creates innovation withdiversity is of extreme importance. This belief is based on
the idea that innovation is born when various senses ofvalue are present and are able to be seamlessly integrated.
When society as a whole is experiencing robust
growth on a single continuum, it is possible to succeed
simply by imitating other companies. However, in thecurrent era of great social change, characterized bytrends like globalization and the proliferation of IT, thesenses of value of individuals vary, leading to the diversification of customer needs. Responding to contemporaryneeds and growing in this era will require employees toturn their eyes toward society and act autonomously togive rise to innovation. In this environment, MARUIGROUP had defined the promotion of increased diversity
as an important management policy, based on which it
pursued the establishment of a highly productive corporate culture that is conducive to fostering innovation. It is,of course, crucial to promote gender diversity, but wemust also focus on developing human resources that are
adept at responding to change by pursuing diversity interms of age and individual talents. It was for this reason
that we are installing frameworks for cross-organizational
career development, cultivating a corporate culture that
supports personal growth, and fostering a workplaceenvironment that provides opportunities to all.

58

Profession
ChangeFramework

Profession changes provide an
opportunity for employees tobreak away from their senseof normalcy and escape pre­conceptions to better practicea customer-first mentality anddiscover new ways of responding
to customer needs.

MARUI GROUP has been implementing its profession
change system since April 2013 with the aim of fostering
the diversity of individual talents. Through this sharedGroupwide system, we conduct personnel relocations
that place employees in different divisions or Group
companies. It is common for people, after having worked
in a single profession for a number of years, to go about
their jobs without putting much thought into their practices.
Profession changes provide an opportunity for employees
to break away from their sense of normalcy and escapepreconceptions to better practice a customer-firstmentality and discover new ways of responding tocustomer needs.
For example, when a member of our sales staff positioned in a sales office undergoes a profession change
placing them in the FinTech business at EPOS Card, they
are able to provide service in their new capacity whilecalling upon the retailing perspective they cultivatedpreviously. Such cross-organizational utilization of talent
contributes to improved productivity for the Group. The
number of people changing professions is rising at sales
offices, where staff members are increasingly relocating
to sales floors for different products. A new sales floor
results in interaction with new customers, which in turnleads to new discoveries.

Job Forum event at which employees fromdifferent Group companies explain theirmotivation toward their job and otherwork experiences

As of April 2016, a total of 1,418 employees(or approximately 25% of all Group employees) had
undergone relocations to different Group companies. To
promote profession changes and provide an opportunity
for employees to think about their careers, the Company
holds Job Forum events once every six months. In theseforums, employees from different Group companies thathave experienced various positions explain their motivation toward their job and other work experiences. As one
facet of these Job Forum events, individual consultation
events are held for each Group company. Furthermore,
we distribute Job Books to all employees and otherwise
support them in undertaking changes to new positions inorder to stimulate their personal growth.

Job Forum
Individual consultation event at which employees from each Group
company can be asked questions about their job and otherwise consulted

Total Number of Employees Changing Positions
between Group Companies
2013

2014

2015

2016

Employees changing
positions

287

383

552

196

Aggregate total

287

670

1,222

1,418

Totals for number of employees changing positions in April and October of eachyear; April only for 2016

Ratio of employees changing positions between Group companies
Aggregate total from April 2013–April 2016 (Excludes officers and managers)

Approx.

25%

Job Book
Booklet containing business and job descriptions from various divisions at Group
companies as well as messages from employees working therein59

Corporate Culture of Co-Creation Management

Activities of
the Diversity
Project Team

Corporate Culture of Co-Creation Management

This cross-Group project teamwill provide a venue for teammembers from different divisions to help them learn more
about their peers.

Promotion of
Women’sContributions

We are promoting the contributions of women by developing
support systems and improving
awareness.

Diversity Book
Booklet published and distributed to employees to increase awareness regarding
work-life balance support systems and to cultivate a workplace environment that
fosters diversity

Open to all employees, the Diversity Project Team advances
initiatives for the purpose of fostering a corporate culture
in which all employees are accepting of one another andare properly motivated with opportunities to exercise
their talents. In July 2015, a meeting was held among 46
members from across the Group that had been assembled
through open application. Back at their workplaces,
members have been sharing information on the matters
discussed at this meeting to further advance the dialogue.
These members are also central in promoting otherefforts through coordination among different workplaces.
The Diversity Project Team will continue to be a placefor discussions on how to make the Group a livelierorganization that is highly productive and conducive tofostering innovation. At the same time, this cross-Groupproject team will provide a venue for team members
from different divisions to help them learn more about
their peers.
As one facet of this project team’s activities, February
2016 was designated as Diversity Promotion Month.
During this month, Diversity Books were distributed to
inform employees about the work-life balance support
systems available to them. As a new initiative, meetingsof the Supervisors Association (a diversity forum) were
held at which the supervisors who are directly responsible for managing other employees met to exchange
opinions on how to better utilize diversity in management.

As of March 31, 2016, MARUI GROUP had 2,685
female employees, representing 46% of its total 5,899
employees. We are promoting the contributions of
women by developing support systems and improving
awareness. In the fiscal year ended March 31, 2014, we
defined women’s empowerment indexes for measuring
our progress in this regard and set targets to be achievedby the fiscal year ending March 31, 2021. A substantialchange in the attitudes and behaviors of employees waswitnessed over the two years since these indexes wereintroduced, as indicated by increases of more than 50
percentage points in the ratio of applicable male employees taking childcare leave and 30 percentage points in
the ratio of female employees returning to work full timeafter taking childcare leave.
Initiative Results: Grand Prix Awardin Ikuboss Award 2015 Program
ボ ス の 理 解 が 、社 会 を 変 え る 。
Kazumi Abe, a director at
MARUI CO., LTD., and the store
manager of Omiya Marui,received the Grand Prix Awardin the Ikuboss Award 2015 program, spearheaded by

the Ministry of Health, Labour and Welfare (MHLW).
Reasons for Ms. Abe’s selection included her management style that inspires her staff, as well as her consideration for the unique situations of her employees, which
she achieves through meeting with them. Ms. Abe also
received recognition for her efforts to cultivate a corporate culture encouraging employees to leave work ontime and avoid overtime, in part by doing so herself, andto promote the use of childcare leave by male employees.
In addition, MARUI GROUP was awarded with a
special encouragement award in the Ikumen EnterpriseAward 2014 from the MHLW.

Platinum “Kurumin” Certification
In July 2016, MARUI GROUP
received Platinum “Kurumin” certification in recognition of it being acompany that actively supports
children. Through the Platinum“Kurumin” program, the MHLW
strives to recognize companies
that have made exceptional progress in introducing
and encouraging the use of systems for balancing
work and child-rearing. It also aims to promote ongoing
related efforts.
MARUI GROUP continues to build an environmentthat is even more conducive to balancing work and childrearing and has established corporate targets and actionplans to this effect.

Women’s Empowerment Indexes
FY2014FY2015FY2016FY2017(Target)FY2021(Target)

37%

60%

74%

100%

100%

41%*1

64%*1

62%*1

60%

80%

14%

54%

66%

60%

100%

Ratio of female employees returning to work
full time after taking childcare leave*2

36%

55%

66%

70%

90%

Number of female leaders

545

576

603

650

900

Fiscal years ended / ending March 31

Recognition of contributions offemale employees
Awareness improvement
Ratio of female employees pursuingand corporate culture
upper-level positions
cultivation
Ratio of applicable male employees taking
childcare leave

Promotion of women’scontributions
Diversity Project Team members from the fiscal year ended March 31, 2016

Number of female managers

24

28

29

35

55

Ratio of female managers

7%

8%

8.9%

11%

17%

*1 Ratio of female employees pursuing upper-level positions is based on the results of surveys conducted in June 2014, June 2015, and April 2016.
*2 Ratio of female employees returning to work full time after taking childcare leave is the ratio of female employees returning to work full time to the total
number of female employees that returned to work shortened hours after childcare leave within a given year.

60

61Corporate Culture of Co-Creation Management

Activities of the
Marui Future
Project Team

Corporate Culture of Co-Creation Management

The members of this crossorganizational project teamthink about the future of Japanand MARUI GROUP’s role inthis future.

The Marui Future Project Team is a committee open to
employee participation that was established in July 2015,
with the aim of further evolving the social contribution
activities that we have been conducting through ourbusiness in a project format since 2011. The committeefeatures a diverse variety of members from various age
groups and workplaces and differing stores and Group
companies. Banding together, the members of this crossorganizational project team think about the future ofJapan and MARUI GROUP’s role in this future. Discussions
began with seven themes for social issues that are closely
related to our daily lives. Based on these themes, weconsidered how the Group could help resolve the issues

A total of 59 representatives
from stores and Group
companies participate in
the project team along withthe store managers,
deputy store managers,
and section managers that
support them

faced by society and what our customers expected of us,
formulating and then implementing initiatives to accommodate senior citizens, people with disabilities, and all of
our other customers.
Seven Themes of Discussion 
1. Aging of society (population) and people with disabilities
2. Women’s contributions, child-rearing, and the declining birthrate
3. Non-Japanese customers and inbound travelers
4. LGBT community
5. Tokyo 2020 Olympic and Paralympic Games
6. Global warming and other environmental issues
7. Regional development

Accommodation of All Customers

Activities of theMedium-Term
Management
VisionaryCommittee

Active discussion is conductedamong members that are
selected from the approximately
1,000 applications received foreach meeting.

The Medium-Term Management Visionary Committee isa forum for discussing various topics that will be important to the future of Group management. In the past,meetings were primarily focused on explanations ofmanagement policies and other such matters. However,topics are now selected that require a medium-term
perspective and for which initiatives will be advancedwith a timeline of three-to-five years. While this committee was previously only open to members of Group management, from January 2016 any interested employee isable to apply for participation, and meetings have been
held almost every month since. Active discussion isconducted among members that are selected from theapproximately 1,000 applications received for eachmeeting. Furthermore, we regularly invite outside lecturers to conduct special lectures.
2016 Committee Meeting Discussion Topics 

Almost all employees have undergone
Service Care-Fitter training*1 to learn how
to accommodate elderly customers andcustomers with disabilities. These training
programs are performed by nine employeesthat have acquired instructor qualifications.

January

Corporate value as viewed by the market, special lecture
Report on activities of Credit Card Evolution Project Team

February

Accommodation of all customers—LGBT community,
special lecture

March

Corporate value as viewed by the market 2, special lecture

April

Analysis of MARUI GROUP’s operating environment andfuture projections

June

Medium-term management plan for Retailing segment
Medium-term management plan for FinTech segment
Report on anime business activities

July

Hakata Marui co-creation initiatives
Report on interactions with investors (investor relations
activity report)
Retailing business and MARUI GROUP as seen byanalysts, special lecture*1 Training program operated by The Nippon Care-Fit
Education Institute
Training for assisting customers using wheelchairs inwhich employees learn how to operate wheelchairs
through actual use

Senior citizen simulation training in which employees wear special goggles to show how objects
appear to someone with cataracts

COLUMN   
Workplace Environment Supporting
Energetic Sales Staff

Breaks are incredibly important to ensuring thatmembers of our sales staff are able to work with vigor.
It was for this reason that we spared no expense withregard to the employee breakrooms at Hakata Marui,
which was opened in April 2016, and also took othersteps to ensure a comfortable workplace environment.
This store features two break rooms with atmospheres much like a café that allow staff to have amore enriching break experience. Facilities include
counter seats at which one may sit alone as well astables where several people may sit together. Also, thebreakrooms are equipped with automatic water heaters to remove any concern for hot water running out
as well as powder rooms and smartphone chargers—
additions made based on staff requests. These highly
comfortable breakrooms are available to all sales staff
members, including those of tenants.

MARUI GROUP took part in TOKYO RAINBOW PRIDE 2016, an event sponsored by
TOKYO RAINBOW PRIDE*2 in April 2016. During this event, the five buildings ofthe Marui and Modi stores located in Shinjuku and Shibuya participated, and rainbow
flags were displayed on the front of these stores, garnering much attention. Prior tothis event, 243 employees underwent LGBT manner training,*3 and employees
greeted customers while wearing “LGBT Friendly” badges during the event period.

“LGBT Friendly” badge and Shibuya Modi during
event period62*2 Organization that seeks to help create a society in which LGBT individuals and other sexual minorities areable to live optimistically and to be themselves, while remaining free from discrimination and prejudice;the name “TOKYO RAINBOW PRIDE” is also used for the organization’s events*3 Training offered by Mirairo Inc. that supplies knowledge about the LGBT community, provides specificexamples of its members, and explains factors needing to be considered in addressing their needs

Partitioned counter seats based on requests for a place where
sales staff can comfortably enjoy time to themselves
Lively question andanswer sessions held after
each lecture

63

Dialogue 03

New Meaning of “Healthcare” for the Eye of the Company Physician

New Meaning of “Healthcare”
for the Eye of the Company Physician
Proactive and Preventive Healthcare
In MARUI GROUP’s healthcare management, we strive to encourage employees, important partners inour co-creation management initiatives, to think through the lens of health in order to invigorate the organizationand improve labor productivity and thereby increase corporate value and make social contributions.

Ishii: Part of MARUI GROUP’s corporate philosophy is to“equate the development of our people with the development of our company.” Of course, health is absolutely
essential to the growth of employees. However, in addition to pursuing improvements in the numeric scores of
employee health examinations, I think that empowering
our employees to work energetically is also an importantdriver behind our co-creation management activities.
Kojima: One’s state of health will always have an impact
on their daily work performance. Health cannot be
separated from one’s daily growth at work.
Ishii: Four years ago, MARUI GROUP introduced a profession change system that actively promotes personnel
relocations between Group companies and divisions.
Immediately after such relocations, employees may
temporarily face difficulties performing in their new“Of course, health is absolutely
essential to the growth of employees.”
Tomoo Ishii
Director and Managing Executive Officer,
and Chief Operating Officer
Healthcare Promotion
In charge of General Affairs,
Personnel and Healthcare Promotion
MARUI GROUP CO., LTD.

position, a situation that can prove stressful. Regardlessof this potential stress, however, profession changes
have become common at MARUI GROUP. This development is likely the result of the spread of a mentality thatvalues changing oneself to adapt to a new environment
and thereby furthering one’s own capacity to grow. The
dissemination of this system was spurred forward by
your belief, Dr. Kojima, that growth requires both stressand rest.
Kojima: If one only rests, and is not subjected to stress,
they may be able to maintain good mental health, butthey will never grow more skillful. The healthcare measures of most companies are generally focused on a typeof preventive healthcare approach. However, in order for
people to keep growing, it is also important to implement
proactive healthcare measures that are designed toencourage employees to adapt to changes and think andact autonomously. At MARUI GROUP, I hope that theproactive measures of the Health Management Division
will be accelerated, while coordinating with the preventive
measures advanced by the Group’s health insurance union.
Ishii: On the healthcare front, we introduced the
Resilience Program in February 2016. We began thisprogram by encouraging managers to develop lifestylepatterns that increase their energy with regard to theirbody (diet, exercise, and sleep), mood, thinking, andmental state. In addition, we have included positive
questions on the surveys taken by all employees when
undergoing health examinations, including “I understandthe goal of my work” and “I am utilizing my strengths totake on new challenges.” These initiatives have made it
possible to perform cross-analyses of the degree ofenergy that employees are able to sustain in their workand of their diet, sleep habits, and other lifestyle patterns. We are utilizing this information in advancing
proactive healthcare measures.
Kojima: As MARUI GROUP’s operating sites are spreadthroughout the Tokyo metropolitan area and the rest ofJapan, we hold self-care training sessions*1 260 times ayear. We are thereby endeavoring to cultivate a corporate
culture that places increased emphasis on the importance of health management as an aspect of one’s workand of working happily. By assembling a force of healthy
and energetic employees, we can more easily contributeto the creation of a livelier MARUI GROUP and a happiersociety. As health is what powers all of our activities,
healthcare measures should not be seen as entailingcosts. Rather, we ought to view these measures as a formof investment in the assets that are our people.
Ishii: The health of each individual employee represents
a building block for the corporate value of the Company.
Seeking to entrench this belief among members of
MARUI GROUP and create a corporate culture that is
ingrained with this sentiment, we set up the Healthcare
Promotion Project together with relevant divisions.
Through this program, we designate a Healthcare Month*2
as a period for improving employee health awareness,position female healthcare promotion leaders throughout
Japan, and participate in the KENKO Corporation
Association.*3 Acting in accordance with our corporate
philosophy, I hope we can work together to enhance theeffectiveness of our healthcare promotion efforts, which
are fundamental to co-creation.
*1 Type of training unique to MARUI GROUP that is aimed at helping employees
to recognize their own health condition and think of ways to improve thiscondition*2 Initiative started in June 2016 to foster employee awareness of health andhealth improvement through stress checks, surveys about health and smoking, and other activities*3 Association consisting of 36 companies created with the goal of sharing
information on healthcare promotion programs and expertise to enhance theeffectiveness of healthcare promotion efforts“By assembling a force of healthy andenergetic employees, we can more easily
contribute to the creation of a livelier
MARUI GROUP and a happier society.”
Reiko Kojima
MD
General Manager, Health Management Division
Company Physician
MARUI GROUP CO., LTD.

Dialogue 03

Dialogue 03

64

65

Employees Helping to Co-Create
Customer Happiness
MARUI GROUP creates unique value by forming intrinsic links between
the businesses and human resources of all Group companies to give rise
to a united MARUI GROUP. The growth of all individual employees isabsolutely essential to creating this value. We feel that this growth is best
stimulated by our profession change system, which entails personnel
relocations at different Group companies and divisions. This system was
implemented to help employees continue to build upon their techniquesand specialties and to develop human resources that are highly adept at
responding to change. In this section, we will introduce some of theGroup’s employees, delivering messages in their own words to paint a
picture of how they go about their daily duties.

Yuko Mizushina

Takayuki Matsuzaka

In my current position, I am making good use of
the customer service techniques I learned on themenswear sales floor. I always do my best to
provide customers visiting our card application
centers with value that exceeds their expectations.

I strive to contribute to an environment in which all
employees can feel energized in their daily workand to create opportunities for personal growth. I
too hope to grow together with the individuals that
I see continually tackling new challenges.

2012 (Joined)	Menswear Sales Floor, Kashiwa MaruiMARUI CO., LTD.

1999 (Joined)	Casual Menswear Sales Floor, Ueno Marui(currently Marui City Ueno)
MARUI CO., LTD.

2016 (Current)	EPOS Card Application Center,
Yurakucho Marui
Epos Card Co., Ltd.

66

2016 (Current)	Personnel Section, Personnel Division
MARUI GROUP CO., LTD.

Miki Hiasa

Ryota Takahashi

Rie Ogasawara

Kiyotaka Kosuge

There are many obstacles that must be overcomein space production. However, when I see thefinished stores and the smiles on the faces of ourcustomers, I feel inspired to continue giving myvery best during future projects.

It brings me great joy when I am able to make myideas a reality. The successes and failures I experienced in my previous position in sales promotion
and planning are now providing the foundation formy success in my current position.

I feel the greatest joy when we first start up a new
system. My job requires a capacity to consider theuser’s perspective, and I feel that I am making
good use of my prior experience on the sales floor.

I am currently responsible for dispatch and time
management of trucks. I was previously a truck
driver, and this experience helps smoothcoordination with drivers.

2001 (Joined)	Space Production Division
AIM CREATE CO., LTD.

2009 (Joined)	Menswear Sales Floor, Kokubunji MaruiMARUI CO., LTD.

2008 (Joined)	Interior Item Sales Floor, Omiya MaruiMARUI CO., LTD.

1994 (Joined)	Yokohama Distribution Center
MOVING CO., LTD.

2016 (Current)	Direction Section 5, Design Department
Space Production Division
AIM CREATE CO., LTD.

2016 (Current)	Omni-Channel Retailing Section,
Omni-Channel Retailing Division
MARUI CO., LTD.

2016 (Current)	Operation Data, Operation System
Development Department
Operation System Development Division
M & C SYSTEMS CO., LTD.

2016 (Current)	Vehicle Management,
Operation and Facility Management
MOVING CO., LTD.

Yumi Saito
I am responsible for returns and settlement ofaccounts. I remain always appreciative of the
support of those around me as I do my part inhandling the tasks that underpin operations.
2012 (Joined)	Contract Section, Planning Division
MARUI HOME SERVICE Co., Ltd.
(Temporary employee since 2003)2016 (Current)	Contract Section, Planning Division
MARUI HOME SERVICE Co., Ltd.

Yukio Kaneda

Yoshimi Ishikawa

Takehide Nanbu

Helping new employees grow and develop is highly
rewarding. I hope that younger employees will
actively take on new challenges without fear of failure.

I strive to understand the individual personalitiesof each differently abled employee I work with inorder to be more considerate of their needs andbetter support them. Watching these employees
grow fills me with joy.

I propose payment plans to help customers getout of debt. I always listen carefully to the circumstances of customers falling behind on their
payments and take a cooperative stance.

1989 (Joined)	Facility Management,
Oimachi Marui (closed in 2007)MARUI FACILITIES Co., Ltd.
2016 (Current)	Facility Management Site,
Marui Family Shiki
MARUI FACILITIES Co., Ltd.

2007 (Joined)	Women’s Accessory Sales Floor,
Ueno Marui (currently Marui City Ueno)
MARUI CO., LTD.
2016 (Current)	Supply Management
MARUI KIT CENTER CO., LTD.

1995 (Joined)	Womenswear Sales Floor,
Oimachi Marui (closed in 2007)MARUI CO., LTD.
2016 (Current)	Collection Section 1,
Receivable Collection Division
MRI Co., Ltd.

67

Overview of Performance and Business (Fiscal Year Ended March 31, 2016)

Overview of Performance and Business (Fiscal Year Ended March 31, 2016)

In the fiscal year ended March 31, 2016, total Group transactions for MARUI GROUP amounted to ¥1,703,353
million, of which 80.7% came from the Credit Card Services segment; 17.2% was generated in the Retailing andStore Operation segment; and 2.1% can be attributed to the Retailing-Related Services segment. Net income
attributable to owners of parent rose for the fifth consecutive year, and the target of 6% for return on equity (ROE)
was achieved one year in advance.
Please refer to MARUI GROUP’s corporate home page for more detailed information.
www.0101maruigroup.co.jp/english.html

Marui Stores
Stores by Region

Sales Floor Area by Product Category■ Tokyo ■ Kanto region(excluding Tokyo) Groupwide Performance■ Tokai region ■ Kansai region 

Total Group Transactions

Operating Income¥1,703,353 million¥29,615 million(Up 15.9% YoY)

(Up 5.6% YoY, 7th consecutive year of increases)
Retailing and StoreOperation

Retailing-Related Services¥37.2 billion(Up 10.2% YoY)

¥3.6 billion(Up 10.2% YoY)

17.2%

23.3%

40%
42%

■ Restaurants, services,and other 

18%

Purchases by Age Group*1■ Age 29 and below ¥7.9 billion(Down 2.7% YoY)

10.9%

■ Male ■ Female 

By segment

39%
4%
11%

Purchases by Gender*1■ Sundries ■ Apparel Retailing and StoreOperation

Retailing-Related
Services¥312.5 billion(Down 3.2% YoY)

2.1%

46%

■ Age 30–39 

12%
88%

■ Age 40–49 ■ Age 50–59 ■ Age 60 and above 

By segment

18%
24%
20%
15%
23%

*1 Purchases using EPOS cards

Credit Card
Services

Credit Card
Services¥1,465.2 billion(Up 18.7% YoY)

¥22.1 billion(Up 10.2% YoY)

80.7%

65.8%

EPOS Cards

Total Group transactions is the total value of transactions from all three businesses less credit card transactions from Retailing and Store Operation.

Net Income Attributable to Owners of Parent

Number of Stores

EPOS Cardholders¥17,771 million

28 stores

6.1 million(Up 10.8% YoY, 5th consecutive year of increases)

29 stores as of August 31, 2016,
after inclusion of Hakata Marui

24 Marui stores
4 Modi stores(Up 220,000 from March 31, 2015)

68■ Platinum/Gold cards ■ Other 

New Cardholders by Application Location

Return on Equity (ROE)

Return on Invested Capital (ROIC)

Earnings per Share (EPS)

6.0%

3.3%

¥70.68■ Marui stores ■ Outside Marui stores ■ Inside MARUI GROUP stores(Marui/Modi) 
76%

22%
78%

Transactions by Location

MARUI GROUP’s 3 Focus KPIs

Up 0.8 percentage point YoY
Medium-term management plan target
achieved one year in advance

Cardholders by Card Type■ Outside MARUI GROUP
stores 

24%Transactions by Type9%91%

■ Card shopping transactions  89%■ Cash advance transactions  11%(Up 20.1% YoY)69

New Medium-Term Management Plan

New Medium-Term Management Plan

Establishment of New Medium-Term
Management Plan Emphasizing Corporate Value
Through Groupwide reforms brought about by business structure transformations, MARUI GROUP was able toachieve the target of 6% for ROE defined in the previous medium-term management plan in the fiscal year ended
March 31, 2016, one year in advance. For this reason, we decided to establish a new five-year medium-term
management plan. This plan was made to emphasize improved corporate value.

Early achievement of 6% ROE target: In addition tobusiness initiatives, we also actively conducted sharebuybacks, acquiring some ¥50.0 billion worth ofCompany shares in the two years leading up to March 31,
2016. As a result, ROE increased by 4.0 percentage
points over a period of four years and reached 6% in thefiscal year ended March 31, 2016, reaching our target
one year in advance (see Figure 3).

Figure 3: Shareholder Returns and ROE

Consequently, total shareholder return, an indicatorof shareholder value, was 230% over the five-year period
ended March 31, 2016 (27% annual average). This level
greatly exceeded the average of 72% (11% annual average) for companies listed on the First Section of theTokyo Stock Exchange (see Figure 4).

Figure 4: Total Shareholder Return
6.0%

Review of the Previous Medium-Term Management Plan
Business overview: Following the 2006 launch of the
EPOS card, MARUI GROUP’s business structure shifted infocus from retailing to credit cards, successfully creatinga credit card-driven business structure. This structure
proved capable of realizing stable growth. We thendeployed the previous medium-term management plan.
This plan targeted ROE of more than 6% and placed theCredit Card Services business as central to growth strategies, based on which we developed the Credit Card
Services business nationwide.
In the Retailing and Store Operation business, meanwhile, we worked toward the development of lifestyleoriented stores by transitioning to a shopping centermodel and the use of fixed-term rental contracts. Ourcurrent goal is to complete the transition to fixed-term

Figure 1: T otal Fixed-Term Rental Contract
Floor Space and Targets

200,000 m2
180,000 m2

Operatingincome125,000 m2
improvement

15,000 m2
FY2017

Figure 2: N ationwide Development ofCredit Card Services
Cardholders: 6.1 million● MARUI GROUP stores● EPOS Card offices

40,000 m2

FY2016

rental contracts by March 31, 2019. A ¥0.9 billion
improvement in operating income was realized in thefiscal year ended March 31, 2016, as the transition
reached 20% completion (see Figure 1). In our directly
managed specialty stores, we selected product categories
in which we excel to concentrate our efforts on. We also
adjusted our Internet sales operations to focus more on
strong-performing shoes and other accessories.
In the Credit Card Services business, we sought torecruit cardholders from across Japan, expanding thenumber of cardholders outside of the business areas of
Marui stores. After deciding to open Hakata Marui, we
positioned Kyushu as a strategic region, thereby increasing
the number of cardholders in this region to more than
130,000 at the time of the store’s opening (see Figure 2).

¥159+¥1,2351.8%
15.0 billion

Dividends

3.8 billion¥

FY2012¥1,61335.0 billion¥¥

4.1 billion¥

FY2013

4.9 billion¥

FY2014¥

5.2 billion
FY2015¥(including
reinvestment amounts)
Year-end
stock priceSharebuybacks
Year-end
stock price

5.4 billion¥537

FY2016FY2011FY2016

6% target for ROE achieved one year in advance

MARUI GROUP’s 5-year total shareholder return: 230%
First Section of TSE: 72%

Massive improvement in Group productivity: In conjunction with the transformation of the Group’s businessstructure, we also began actively promoting inter-Group
company personnel relocations to stimulate employee
growth and give form to the concept of a united MARUIGROUP (see Figure 5).
By utilizing the retailing expertise of employees in thehigh-margin Credit Card Services and Retailing-Related

Services, we realized a massive improvement in theGroup’s productivity. This increase in productivity
resulted in operating income per employee being 1.8
times higher than in the fiscal year ended March 31,
2012, prior to our full-fledged promotion of inter-Group
company personnel relocations, which led to consolidated operating income increasing 1.6 times comparedwith the fiscal year ended March 31, 2012 (see Figure 6).

FY2018FY2019Figure 5: Employee Numbers by Business

Figure 6: Operating Income per Employee(Excluding temporary employees)(Including temporary employees)

Strategic region
Kyushu 130,000(Up 80,000 in 2 years)

FY2012

Ratio offixed-term rental
contracts(Year-end)

7%

20%

60%

90%

100%

Retailing-Related Services

Ratio offixed-term rental
contracts(Average)

3%

13%

38%

74%

94%

Credit Card Services

Ratio of fixed-term rental contracts = Fixed-term rental contracted floor space ÷Total floor space capable of being contracted as fixed-term rental
Sections not applicable for fixed-term rental contracts: Sections not applicablefor fixed-term rental contracts based on requests of building owners, directly
managed sales floors, event spaces, food sales floors, etc.

Fiscal year ended March 31, 2016:
Ratio of fixed-term rental contracts (year-end): 20%
Operating income improvement amount: ¥0.9 billion

70

4.5%

(as of March 31, 2016)¥0.9 billion

FY2015

ROE

Dividends

5.2%

5.0%

Total cardholders: Up 710,000 in 2 years
Number of cardholders outside of store business area:
Up 1.5 times

FY2016¥4,660,000

Difference

4,539

3,566

–973

516

1,016

+500

Other

1,163

1,317

+154

Total

6,218

5,899

–319

Total number of employees changing positions:
1,418 (approx. 25%)
Aggregate total for fiscal years ended March 31, 2013–2016(excluding officers and managers)

1.8 times
higher¥2,540,000

FY2012FY2016

Consolidated operating income: 1.6 times higher

71New Medium-Term Management Plan

New Medium-Term Management Plan

Redefinition and Reorganization of Businesses
In conjunction with the start of the new medium-term
management plan, we redefined our previous threebusiness segments from a forward-looking perspective,
reorganizing these segments into the Retailing and
FinTech segments. With these redefined and reorganizedbusiness segments, we will advance initiatives in eachbusiness through integrated Group operations.
The reorganized Retailing segment comprises stores(shopping centers), omni-channel retailing (specialty
stores, private brands, and Internet sales), and facility
management and distribution operations (store renovation, distribution, building management, and other services). Meanwhile, the FinTech segment is responsible
for credit cards (card shopping and cash advances),
financial services (rent guarantees, insurance, and otherservices), and IT (system development). We believe thatthese segments better match the strengths and characteristics of the Group’s businesses (see Figure 7).

Redefined FinTech Business (Target Business Scope)
When looking at the customer groups in the financial
services field, we will see that banks and other membersof the conventional financial sector tend to serve customers that are large in terms of both income and scale(see left half of Figure 8). Meanwhile, the FinTech sector
takes advantage of its ability to combine both financeand technology to provide services to customer groups
that the conventional financial sector did not address.
We view this type of democratization of finance as themission of FinTech as well as the mission of the MARUIGROUP, which has traditionally provided financial services for enriching the lifestyles of younger generations.
Looking ahead, we will seek to expand the scope of our
FinTech business from physical to digital services andfrom urban areas to rural and other areas across Japan(see right half of Figure 8). We will thus continue toincorporate evolving technologies to drive this businessscope expansion.

Overview of the New Medium-Term Management Plan
Under the new medium-term management plan, we will
form intrinsic links between the Group’s redefined andreorganized businesses and integrate their operations toimprove corporate value. At the same time, we will create
new business through the transformation of Group businesses and work toward the development of an optimal
capital structure (    P83 Target Balance Sheet) and further

improvement of productivity. By advancing these measures, we will target ROE of more than 10%, ROIC of
more than 4%, and earnings per share (EPS) of morethan ¥130 in the fiscal year ending March 31, 2021,
the final year of the new medium-term management plan.

New Medium-Term Management Plan with the Fiscal Year Ending March 31, 2021, as its Final Year
Plan Framework

Improvement of corporate
value through integrated
Group operations

Development of optimal
capital structure and further
improvement of productivity

Creation of new businesses
through transformation ofGroup businesses

Specific Initiatives

Figure 7: Redefinition and Reorganization of Businesses
Previous

StoresGoing forward
Redefined using
broad definition

Retailing

Stores (shopping centers)
Omni-channel retailing (specialty stores, private brands, Internet)
Facility management and distribution (store renovation,
distribution, building management, etc.)

FinTechCredit cards (card shopping, cash advances)
Financial services (rent guarantees, insurance, etc.)
IT (system development)

Retailing-Related Services

Credit Card Services

Redefined basedon mission

Integrated operations

Retailing and StoreOperation

Retailing

Omni-channel retailing

Develop business focused on Internet sales while expanding scope of try-on stores that combine
Group expertise and other unique business models

Facility managementand distribution

Utilize store renovation, distribution, building management, and other retailing expertise in an
integrated manner and advance business-to-business operations

Credit cards

FinTechCompanies

Redefinition Based on Forward-Looking Perspective

Individuals

Large
scale

Expand revenues from rent guarantee, insurance, and other services utilizing credit know-how to
improve ROIC through business requiring minimal invested capital

IT

Support expansion of Group business scope by utilizing new technologies to improve customer
convenience

Conventional financeMediumscale

Going forward

MiddleincomeFinTech
Small
scale

Optimal capital structure

Create structure in which ROIC consistently exceeds capital costs by improving ROIC through income
growth and establishing optimal capital structure suited to Group business structure

Growth investments

Develop commercial facilities utilizing shopping center and fixed-term rental know-how, conduct M&A
activities for expanding business scope, invest in venture companies to acquire new technologies, andexecute other growth investments for improving corporate value

Productivity improvement

Utilize human resources as necessitated by business portfolio as a united MARUI GROUP to further
improve Group productivity

Digital (e-commerce, digital content)HighincomeUrban

Increase number of EPOS card fans across Japan and reinforce collaboration with commercial facilities
and companies while maintaining high profit margins and simultaneously expanding business scale

Financial services

Figure 8: Redefined FinTech Business (Target Business Scope)
Redefinition Based on Mission

Improve capital productivity by completing transition to a business structure focused on shopping centersand fixed-term rental contracts and deploying next-generation lifestyle-oriented shopping centers

Rural

Previous

Achieve ROE of more than 10%, ROIC of more than 4%,
and EPS of more than ¥130 in the fiscal year ending March 31, 2021

Low
incomePhysical (stores, products)

7273

Business Strategies

Business Strategies

Retailing

Retailing

Figure 1: Consumption Expenditures (1995 indexed to 100)Social Trends: Shift from Consumption of Goods to Consumption of Experiences
Communications
services
263%

100

50
1995

Masao Nakamura

109%
106%

Eating outLeisureTotal
consumption
Food

Experiences

90%
89%

Newspapers andmagazines

71%

Clothing

61%

Goods

2015

Source: F amily Income and Expenditure Survey, Statistics Bureau, Ministry of Internal Affairs and Communications (two-or-more-person households in which head ofhousehold works, “food” excludes “eating out,” “leisure” based on Company data

Director and Managing Executive Officer
Responsible for Retailing Business

RETAILING BUSINESS

Figure 2: Sales Amounts by Store Type (1995 indexed to 100)Social Trends: Strong Performance of Shopping Centers Able to Cater to Consumption of Experiences

Going forward, I aim to further develop the Retailing businesswhile generating synergies with other Group businesses.



Shopping
centers

136%

Chain stores

82%

Department
stores72%

100

As Japanese society matures, the focus of individuals’
values is changing from the accumulation of physicalgoods to the pursuit of more fulfilling lifestyles. The
ensuing shift in consumption from goods to experiences is
becoming all the more clear as IT advances, and this trend
can be expected to continue into the future (see Figure 1).
Looking at trends in the amounts of sales by store
type dating back to 1995, we will see that, as sales
decline among store types using the traditional sale orreturn arrangement, performance has been strong for
shopping centers. This is most likely due to the ability ofthese facilities to cater to needs for the consumption ofexperiences (see Figure 2).
In light of this social change, MARUI GROUP’s
Retailing business is transitioning toward shopping centersand fixed-term rental contracts (see Figure 3).
This transformation represents a 180-degree turnaway from our prior retailing frameworks in areas ranging
from the form of contracts with business partners to74

store operation methods. Accordingly, the decision toundertake this transformation was monumental.
However, given MARUI GROUP’s goal of developing
stores through co-creation with customers, I am confident
that this transformation will help restore the Retailingbusiness to its former glory.
Promoting the shift toward shopping centers andfixed-term rental contracts for our stores will enable us toexercise increased flexibility in adjusting the balance of
product and service categories available at our stores.
This increased flexibility will no doubt be a powerfulasset in developing stores that win customer support
and provide joy. Retailing was the starting point for theGroup’s business, and even the credit card services thatare now supporting our earnings are still steeped in theappeal of retailing. Going forward, I aim to further
develop the Retailing business while generating synergies
with other Group businesses.

50
1995

2015

Source: Japan Council of Shopping Centers, Japan Chain Stores Association, and Japan Department Stores Association

Figure 3: MARUI GROUP’s Business Model Based on Social Changes~2006

Young (people in their 20s)
×
Fashion (primarily goods)

2007~

2014~

Everyone (all ages)
×Lifestyle (goods and experiences)

Sale or return arrangement(percent commission)

Sale or return arrangement(percent commission)

Fixed-term rental contracts(fixed rent)

Income decrease

Customer needs ≠ Income

Customer needs = Income

75

Business Strategies

Retailing

Business Strategies

RETAILING BUSINESSKEY POINTS

Earnings Growth through Business Structure
Transformation
The transformation of business structures in the
Retailing business will be centered on the following
three initiatives. By increasing earnings through thetransition to fixed-term rental contracts and thepromotion of omni-channel retailing, we will target
operating income of more than ¥18.0 billion in thefiscal year ending March 31, 2021.

Hajime Sasaki
Senior Executive Officer
President and Representative Director, MARUI CO., LTD.

Our true worth will be put to the test
in determining how we will provide
customers with value and joy.

Hakata Marui opened in April 201676

Retailing

Our greatest mission in the Retailing business is toonce again return our operations to a growth trajectory. The shift to shopping centers and fixed-term
rental contracts and the promotion of omni-channel
retailing are important strategies for accomplishing
this goal. However, we must remember that thesestrategies are merely a means to an end and not
an end unto themselves. Our ultimate goal should
be to provide customers with products, services,and contact points that earn their support andthereby realize ongoing growth in income.
Accomplishing this goal will require us to act froma forward-looking perspective with a view to fiveand 10 years in the future. It is crucial to think
about how customer lifestyles will change in the
future. Our true worth will be put to the test in
determining how we will provide customers withvalue and joy amid these changes.
Hakata Marui, a store opened in April 2016,
turned out to be a model example of the direction
we should take with our stores in the future. Goingforward, we will need to steadily create more
successful examples of stores developed throughco-creation processes conducted together withcustomers and business partners as well as with
community members, society, and employees.

2. Promotion of Omni-Channel Retailing
For specialty stores and private brands, we will
optimize sales floor area and implement other­selection and concentration measures. We will also
expand the scope of our operations by creating
unique business models, such as the try-on storesthat leverage our bolstered accessory lineups forInternet sales and Group expertise, to grow earnings.
3. Development of Facility Management andDistribution Operations
We aim to expand our business-to-business facility
management and distribution operations by combining the operations of the prior Retailing-Related
Services segment, which include store renovation,
distribution, building management, and IT (systemdevelopment) operations, with our unique expertise
related to real-time management of store andInternet inventories.

1. Transition to Shopping Centers and
Fixed-Term Rental Contracts
We are renovating existing stores as part of the tran­
sition. We plan to convert almost all of our stores,
excluding certain stores that will not be converted
based on requests from the owners, to fixed-term
contracts by March 31, 2019. At Hakata Marui, thefirst new store to be established under this model, we
deployed fixed-term rental tenants and competitive
directly operated specialty shops in a balancedmanner. This store is thus expected to achieve returnon investment*1 of 12% and net operating income
yield*2 of more than 4%. Hakata Marui will be positioned as a model for future co-creation initiatives.

*1 Indicator of how much income is generated in comparison to theinvestment necessary for conducting business activities*2 Indicator of earnings potential of real estate calculated by dividing net
operating income by real estate market value

Factors Affecting Operating Income in Retailing Segment
Operating income to begenerated throughomni-channel retailing
Income improvementsfrom transition to
shopping center /fixed-term rental contracts
Operating income of former
Retailing-Related Services(newly included due tobusiness reorganization)
Operating income offormer Retailing andStore Operation+¥2.7
billion–¥2.5
billionIncome decline at
non-shopping center /fixed rental stores¥6.0
billion¥3.0
billion¥1.0
billionOperating income of facility
management anddistribution(newly included due tobusiness reorganization)

More than¥18.0
billion¥7.9
billion

FY2016FY2021 (Projection)

77

Business Strategies

Business Strategies

FinTechFinTechFigure 1: Card Shopping Transaction Trends and Future Credit Card Market
EPOS Card transaction volume growth exceeding industry growth; further growth to be pursued going forward

Average annual growth rate for EPOS Card
up to the fiscal year ended March 31, 2016:20%

Projected annual industry growth rate:

EPOS Card

8%

Average annual industry growth rate:

7%

Industry

Toshikazu Takimoto

Credit transaction volume(Industry)Managing Executive Officer
Responsible for FinTech Business

FY2012FY2016FY2021¥38 trillion¥50 trillion¥70–¥80 trillion

Source: C onsumer Credit Statistics from Japan (FY2015), Japan Consumer Credit Association for data from the fiscal years ended March 31, 2012–2016, preliminary
calculation by MARUI GROUP for the fiscal year ending March 31, 2021

FINTECH BUSINESSIn the transition from Credit Card Services to FinTech,
we are pursuing new possibilities through co-creation with customers.

Figure 2: Comparison with Competitors (Figures from FY2016, segment based; Source: MARUI GROUP)
Only one-fourth as many cardholders as other companies but incredibly high revenues per active cardCardholders

The Japanese credit card market is still developing. It is
expected that the installation of infrastructure leading up
to the Tokyo 2020 Olympic and Paralympic Games will
stimulate average annual growth of 8% in this market
and that annual transaction amounts will increase fromthe current ¥50 trillion to more than ¥70 trillion. The
growth of EPOS card transactions is particularly strong,
exceeding the industry average, and we will target further
growth in the future (see Figure 1).
The number of cardholders of EPOS Card wasroughly one-fourth that of other retail-type credit cardcompanies, standing at only 6.1 million on March 31,
2016. Similarly, while EPOS card transactions have risen
above ¥1 trillion, those of other companies’ cards
amount to more than ¥4 trillion. Nonetheless, theamount of operating income per active EPOS card is
exceptionally high in comparison to rival cards, making
for impressive profit margins (see Figure 2).
In consideration of the growth potential of the credit
card market and the strengths of EPOS cards, MARUIGROUP embarked on a new endeavor in its credit card
operations by undertaking the transition to the FinTech

78

business in April 2016. We have thus redefined, andeffectively expanded, the target scope of our businesswith the aim of realizing ongoing growth. We will continue to evolve our services to make them easy to use bya wider range of customers, regardless of the differencesin their income level or the region in which they live. To
customers, the appeal of EPOS cards can be found in theever-expanding range of unique services and benefits
that make customers feel they made the right decision inusing their card, provide peace of mind, and offer small
joys. Recently, we have been collaborating with animeand video game companies to step up initiatives for
expanding the range of cardholders among the younger
generation, our primary target demographic. From abusiness perspective, we will strive to increase operating
income and boost capital efficiency. These goals will beaccomplished in part by developing a highly uniquebusiness through further coordination with other Group
companies, such as M & C SYSTEMS, which is lending
its strengths in system development. In addition, we willleverage our customer assets and expertise to expand
our financial service operations (see Figure 3).

Card Transactions*1

Operating Income¥4,530.0 billion ¥4,470.0 billion
25.6 million

25.9 million¥22.0 billion¥1,310.0 billion

6.1 million
EPOS Card¥37.0 billion

Company A

Company B

EPOS Card¥7.0 billion
Company A

Company B

EPOS Card

Company A

Company B*1 Total for card shopping and cash advance transactions

Operating Income per Active Card

Revenue¥19,600

Expenses¥13,900
Revenue¥13,700
Income ¥5,700

Expenses¥13,300
Income ¥400

Company A

EPOS Card

Revenue¥10,100

Expenses¥7,800
Income ¥2,300

Company B

Figure 3: FinTech Growth Strategies
Expand cardholder
numbers×
Improve usage ratio
and amounts

1. Expand business scope to continually grow credit card operations
2. Promote highly unique businesses through collaboration
with other Group companies

Increase operating income andimprove capital efficiency

3. Increase service revenues by leveraging customer assets
and expertise79

Business Strategies

FinTechBusiness Strategies

FINTECH BUSINESSKEY POINTS

FinTech Business Growth Strategies

our system for high-speed issuance of cards via
tablets and our patented credit card application app.
These frameworks help us limit costs while realizing
high card usage ratios.

In the FinTech business, we will expand the scope ofcollaboration with anime and video game companies
and increase card usage rates and amounts, thereby
targeting total transaction volumes of ¥2,500.0
billion in the fiscal year ending March 31, 2021, 1.7
times higher than the level in the fiscal year ended
March 31, 2016. The strengths of the FinTech business, which centers on EPOS cards, are as follows.

Yoshinori Saito
Senior Executive Officer
President and Representative Director, Epos Card Co., Ltd.

I hope to develop EPOS cards into
cards that offer users joy anda sense of wonder.

80

FinTechThe expansion of the scope of the FinTech businessdriven by the EPOS card is supporting growth incardholder numbers and increases in usage ratios
and amounts. Over the past several years, we havebeen successful in achieving a massive increasein the number of cardholders in Kyushu throughefforts positioning this area as a strategic region
in preparation for the opening of Hakata Marui. In
addition, we have been collaborating with various
commercial facilities and companies to grow thenumber of cards issued outside of the Group,
realizing a rise in cardholder numbers outside ofbusiness areas of Marui stores. Today, the numberof EPOS card fans is on the increase across Japan,
and the benefits are appearing steadily.
I hope to develop EPOS cards into cards thatoffer users joy and a sense of wonder with theirability to be used in a variety of everyday life situations. This quest will be supported by MARUIGROUP’s sophisticated systems, which arefounded on its unique credit management expertiseand IT. By leveraging such strengths well into the
future, we will continue to offer joy to customers
while growing our business.

3. Unique Credit Expertise and Customer Assets
Since its founding, MARUI GROUP has operated
under the basic belief that creditability should bebuilt together with customers. As opposed to being
assigned based on a customer’s age, profession, orincome, we feel that credit should be shaped
through a customer’s usage and payment records.
This belief is one of the reasons that our cardholder
base is characterized by a large number of young
people, who tend to have large demand for credit,
and women.

1. Ability to Improve Value for Collaboration
Partners through Personnel with Retailing
Experience
EPOS card application centers are staffed by full-time
personnel that possess both retailing and card expertise. Such personnel are able to provide fine-tuned
support to partners through means including offering
advice on how sales staff can encourage customers
to use or apply for credit cards. This support can help
create fans of partner facilities, thereby improving
the value of collaboration for our partners.

4. In-House Development of Systems
Our ability to exercise the strengths of the FinTechbusiness is supported by MARUI GROUP’s uniquebusiness model that integrates the operation of thisbusiness with that of the Retailing business. In addition, by working together with the Group’s systemdevelopment company, we have created an in-housestructure capable of developing more than 100
systems a year. This type of inter-Group coordination
drives the swift evolution of our business model.

2. IT Frameworks
EPOS cards are IC-chip-embedded VISA cards thatcan be issued on-the-spot at stores and are immediately usable. We have also introduced other frameworks taking advantage of cutting-edge IT, such as

FinTech: Medium-Term Transaction Volume and Operating Income Targets
Total transactions of FinTech Business¥2,500.0 billion–

Cardholders

8.0 million–¥2,000.0 billion–

7.0 million–¥1,724.0 billion

6.4 million
FY2017
Operating¥25.5 billion
incomeFY2018FY2019¥30.0 billion–

FY2020

FY2021¥40.0 billion–81

Message from the CFO

Target Balance SheetHistory-Making Balance Sheet Change
Transition from retailing to credit cards as main driver of growth after 2006 launch of EPOS card
Creation of a credit card-driven business structure capable of achieving stable growth
MARUI GROUP has continued to evolve its unique businessmodel merging retailing and finance since its founding.
In the past, it has been retailing that has driven growth
while finance supported these operations. During thisperiod, the credit cards offered by the Company werein-house cards only valid at Marui stores, and they primarily
generated revenues through cash advances. However,the 2007 revision to the Money Lending Business Act
greatly impacted these credit cards, catastrophicallydamaging cash advances as a revenue source.
We were able to overcome this trial thanks to the
EPOS card, which was launched in 2006, one year prior
to the regulatory revision. This new card enabled us toincrease card shopping transactions, freeing us from pastdependence on cash advances and shifting the focus of

It is my goal to create a uniqueand optimal capital structure
for MARUI GROUP.
    

Motohiko Sato
Senior Managing Executive Officer and CFO

Beginning in the fiscal year ending March 31, 2017,MARUI GROUP will adopt three key performance indicators (KPIs) for gauging Groupwide performance. These
KPIs will include return on equity (ROE) and earnings per
share (EPS), which are both indicators that have been
selected based on our emphasis on improvements tomedium-to-long-term corporate value. The last KPI isreturn on invested capital (ROIC), which is an indicator of
the profitability of our main business.
It is, of course, important to steadily generate earnings over the medium-to-long term. However, it is at thesame time crucial to set KPIs from a balanced perspective given the fact that improvements in ROIC, an indicator of business profitability, are linked to returns toshareholders as indicated by ROE. Each Group company
and operating division has set its own KPIs based on thecharacteristics of its business, and the aggregates ofthese KPIs are the management indicators of the Group
as a whole. With this recent establishment of Groupwide
KPIs, I feel that we have made it clear the role that Group
companies and operating divisions should play inaccomplishing our overall goals.
In addition, we are working to transform our balance
sheet to more ideally match the business and earnings

82

structures that the Group will utilize going forward inconsideration of the changes to our business model thathave been implemented thus far. Following the 2006
switch from an in-house credit card to a multipurpose
credit card, the portion of our balance sheet accounted
for by credit card operating receivables increased.
However, our capital structure remained relatively
unchanged from when our focus was retailing. To help
rectify this situation, we established a vision for our idealbalance sheet in the fiscal year ending March 31, 2021.
This vision was formulated using average balance sheets
for both the retailing and credit card industry as a benchmark and then simulating the growth of the Group’s
Retailing and FinTech businesses over the next five years.
However, as long as we continue to operate underbusiness models for which there is no precedent at othercompanies, we will always have to be thinking of what
equally unique capital structure will be optimal for
MARUI GROUP. The next round of growth strategies will
be formulated based on the growth we are able toaccomplish over the next five years and the initiatives weintend to implement thereafter. When we find the next
pillar of growth, it goes without saying that our ideal
capital structure will also change.

growth from retailing to credit cards. By positioning
credit card services operations, which were able to generate steady income, as the main proponent of its business, the Group was successful in creating a businessstructure that was capable of achieving stable growth.
This change was most apparent in the Company’sbalance sheet. While previously the asset portion of thebalance sheet had primarily consisted of land, buildings,
and other fixed assets for stores, in the fiscal year ended
March 31, 2014, the balance of credit card operatingreceivables accounted for more than half of assets.
These receivables thus took center stage on the balance
sheet, representing a history-making change from thetime of our founding.

Balance Sheet Assets
Billions of yen

600

Fixed assets andother store assets
500

History-Making Change
Shift of growth focus fromretailing to credit cards

400

Increase in card shoppingtransactions following
EPOS card launch
300

Credit card
operating receivables
200

Catastrophic damage dealt tocash advances by Money
Lending Business Act revision100

FY1992

FY2006FY2014FY201683

Target Balance Sheet

Target Balance Sheet

Previously

Going Forward

Increase of Operating Receivables on Asset Portion

Balance Sheet Targeted by MARUI GROUP

Growth of operating receivables to represent more than half of assets despite total assets remaining relatively the same
Increase of 15 percentage points in ratio of interest-bearing debt to total assets while maintaining high shareholders’ equity

Total assets forecast to reach ¥1 trillion in the fiscal year ending March 31, 2021, due to increased operating receivables
Optimal capital structure defined as having equity ratio of approximately 30%

Total assets ¥689.4 billion

Operating receivables
29%
Fixed assets
45%

Total assets ¥675.6 billion

Interest-bearing debt
26%

Operating receivables
53%% of operating receivables: 90%

Shareholders’ equity
53%

The amount of total assets on the balance sheet fromthe fiscal year ended March 31, 2015, was around thesame level as that of the balance sheet from the year
ended January 31, 1995, roughly 20 years ago.
However, the structure of the balance sheet has changed
as operating receivables, which represented less thanShareholders’ equity
45%

Fixed assets
37%

Shareholders’equity45%

Liabilities¥730.0 billionof which interest-bearing debt is¥590.0 billionof which interest-bearing debt is¥359.3 billion

Shareholders’ equity¥281.6 billion

Fixed assets, others

Shareholders’ equity¥300.0 billion
Equity ratio approx. 30%

FY201630% of assets in 1995, accounted for more than half ofassets in 2015. Meanwhile, the increase in the ratio ofinterest-bearing debt to total assets was around 15
percentage points, and a high level of shareholders’equity has been maintained.

In order to achieve the balance sheet we target, we will
work to bring the liabilities portion of the sheet in linewith the Group’s earnings structure. As operating receivables increase in the FinTech business, total assets arealso expected to grow, reaching around ¥1 trillion in the

FY2021 (forecast)fiscal year ending March 31, 2021. Meanwhile, we will
maintain a level of interest-bearing debt that is equivalent to 90% of operating receivables, while targeting anequity ratio of approximately 30%, the level we view asrepresenting an optimal capital structure.

Creation of Corporate Value through ROIC Exceeding WACC

Average of 4 major credit cardcompanies

Development of structure in which ROIC consistently exceeds WACC by increasing consolidated ROIC fromcurrent 3.3% to 4.0% and lowering capital costs

Average of 3 major department store
operators

82%

72%

4%

ROIC

% of operatingreceivables: approx. 90%

3.3%

15%

8%

Averaging the balance sheets of four major credit cards,
we will see that their ratio of interest-bearing debt tooperating receivables is around 90%. For MARUI GROUP,
this ratio is 78%. Meanwhile, our shareholders’ equity isequivalent to 45% of total assets, greatly above the averagefor the four credit card companies, which is 10%.

Operatingreceivables

FinTechROIC 3.9%

Fixed assets,othersRetailing
ROIC 3.5%

76%
40%

10%

At the same time, the ratio of stores and other fixed
assets to total assets on MARUI GROUP’s balance sheet
is 37%, about half the average ratio for the three major
department store operators. Our level of shareholders’equity exceeds the average for these department stores.

>

ROIC

10%

(Data from the fiscal year ended March 31, 2015; Source: MARUI GROUP)

84

Liabilities¥448.0 billion

FY2015Interest-bearingdebt
41%% of operatingreceivables: 78%

Fixed assets, others

Operating receivables¥680.0 billion

Equity ratio 39%

Imbalance between assets and liabilities on MARUI GROUP’s current balance sheet
Assets now oriented toward credit cards but liabilities still geared toward retailing

Operatingreceivables
53%

Operating receivables¥413.9 billion% of operating receivables: 78%

Comparison of Balance Sheet to Industry PeersMARUI GROUP

Total assets ¥730.1 billion

Interest-bearing debt
41%

Fixed assets
37%

FY1995

Total assets ¥1 trillion

WACC

2%–3%

≦ 3.3%–3.7%
WACC

Liability costs

0.3%

Capital costs

7%–8%

Liabilities

Shareholders’equityFY2016

We will increase ROIC by growing financial service
revenues in the FinTech business and transitioning to
shopping centers and fixed-term rental contracts in the
Retailing business. Meanwhile, we will deploy financial
strategies of increasingly procuring funds in the growing

FinTechROIC 4.1%

Liability costs

Retailing
ROIC 5.3%

Capital costs

0.3%–1%

7%–8%

FY2021 (forecast)

FinTech business through low-cost interest-bearing debt
to reduce the overall capital costs of the Group andthereby develop a structure in which ROIC consistently
exceeds WACC.

85

Target Balance Sheet

Target Balance Sheet

Cash Flow Forecasts

Previously

Going Forward

Five-year aggregate core operating cash flow of ¥230.0 billion forecast for period of new medium-term
management plan (fiscal years ending March 31, 2017–2021)
Allocation of cash flows to growth investments and shareholder returns to achieve ongoing growthand improve capital efficiency
Fund procurement throughincurring interest-bearing
debt and liquidation ofreceivables¥230.0 billion

Core operating cash flow

¥230.0 billion

Procurement

Increase in operatingreceivables in FinTech

Growth investments

Growth investments &Shareholder returns

Shareholder returns¥260.0 billion¥200.0 billion
Allocation¥90.0 billion¥110.0 billion

EPS in fiscal year ending March 31, 2021

Existing businesses¥60.0 billion+
Investments in new businessfields ¥30.0 billion

More than ¥130 (forecast)

Stable, long-term dividend
increases
Share buybacks

EPS

gh

Hi

¥80 (forecast)

ow
Gr

th

Breakdown
Stable, long-term
dividend increases

MARUI GROUP will use cash flows generated during thefive-year period of the new medium-term management
plan to conduct growth investments and enhance shareholder returns. Approximately 90% of the working capitalrequirements associated with the anticipated increasein operating receivables in the FinTech business will befunded through borrowings. Excluding this increase, core
operating cash flow is expected to amount to ¥230.0
billion over the period of the plan. We plan to allocate¥200.0 billion of this amount to growth investments andshareholder returns. Growth investments of ¥60.0 billion
will be directed toward existing businesses to fund thetransition to shopping centers and fixed-term rental
contracts and invest in IT systems. Meanwhile, ¥30.0
billion has been earmarked for investments in new business fields, and we are examining potential uses for thisamount. We intend to use the remaining ¥110.0 billion
for enhancing shareholder returns through stable, longterm dividend increases and share buybacks. We willcomprehensively evaluate factors such as cash flows
when considering share buybacks, targeting the ideal
timing for improving capital efficiency and increasing
shareholder returns. Acquired treasury stock will, in
principle, be canceled.

High Growth Coupled with High Returns

¥71

gh

Record high¥48
Cash dividends per share22¥(up ¥3)4th consecutive yearof higher dividends
¥32

¥19

¥22
¥18

86

¥32 (forecast)

¥59
¥56

Earnings
per share (EPS)

Based on this feedback, we have decided to raise thetarget payout ratio to 40% or more beginning with thefiscal year ending March 31, 2017. Accordingly, we intend
to increase dividends in this year to ¥32 per share, whichis ¥10 per share higher than was issued in the fiscal year
ended March 31, 2016. This level will represent a record
high for dividend payment and make for our fifth consecutive year of increased dividend payments. With thefiscal year ending March 31, 2021, as its final year the
new medium-term management plan targets high growthcoupled with high returns to be realized through ongoing
dividend increases based on long-term growth in EPS.

Hi

Cash dividends per share

Stable, long-term dividend increases in conjunction with income growth aimed
at raising payout ratio from 30% or more to 40% or more
MARUI GROUP positions returning profits to shareholders
as an important management priority. Our basic policy is
to issue stable and appropriate returns, based on which
we have continued to increase dividend levels whileconsidering performance trends and financial conditions.
We had previously targeted a consolidated payout ratioof 30% or more. However, we have since received
numerous requests from long-term investors and private
shareholders stating that they want the Company toreconsider dividend levels, rather than focusing only onshare buybacks.

s

rn

tu
Re

¥14

¥19

¥15

Cash dividends
per share

FY2012FY2013

Consolidated
payout ratio
Share buybacks

FY2014FY2015FY2016FY2017(forecast)——

FY2019(forecast)

FY2020(forecast)

FY2021(forecast)

40% or more

30% or more—

FY2018(forecast)¥15.0 billion¥15.0 billion ¥35.0 billion(1st half)87Section 03 / Pages 88–143

Management Systems /Corporate Information    In this section, we will look at the corporate governance systems and frameworks
that support MARUI GROUP’s co-creation management as well as provide basic
information on the Group.

88

89

Team Supporting Co-Creation Management

Team Supporting Co-Creation Management

As of June 29, 2016

From back left

Takehiko Takagi

Tetsuji Sunami

Hirotsugu Kato

Tomoo Ishii

Hideaki Fujizuka

Tadashi Ooe

External Audit & Supervisory
Board Member

Audit & Supervisory
Board Member (Full time)

Director

Director

Audit & Supervisory
Board Member (Full time)

External Audit & Supervisory
Board Member

Masao Nakamura

Koichiro Horiuchi

Hiroshi Aoi

Etsuko Okajima

Director

External Director

President andRepresentative Director

External Director

From front left

9091

Dialogue 04

Co-Creation Management andDNA of Innovation as Seen
by External Directors
MARUI GROUP’s Corporate Governanceand Board of Directors
MARUI GROUP pursues medium-to-long-term improvements incorporate value through the practice of co-creation management.
The Company’s two external directors discussed the type ofdeliberations that take place at the Board of Directors, which is
charged with guiding management, and whether corporate­gover­nance systems were functioning effectively.

Koichiro Horiuchi
External Director
President and Representative Director, FUJI KYUKO CO., LTD.

Etsuko Okajima
External Director
President & CEO, ProNova Inc.

Dialogue 04

Dialogue 04

92

93

Dialogue 04

A Board of Directors Engaged in Lively Debate    
Okajima: I have been an external director at MARUIGROUP for two years now, and I have a very positive
opinion of the atmosphere of the Board of Directors.
With a total of six members, including us two external
directors, the Company’s Board is lean but highly conducive to lively debate.
Moreover, the Board of Directors does not just makedecisions about important matters; it also engages in
open, active, and constructive discussions of management issues from a medium-to-long-term perspective.
While I specialize in management strategies and organizational development, retail and finance lie outside of myarea of expertise. For this reason, I often ask somewhat
naive questions, but the internal directors are always
thoughtful enough to offer me a comprehensive answer
to my inquiry.
Horiuchi: Discussions at MARUI GROUP’s Board of
Directors are practical, and the discussion processes are
such that they ensure necessary decisions are made.
You can plainly see that the Company has taken steps tomake Board meetings a forum that is conducive to discussion, most likely out of a strong desire to invigorate
the Board and make it a more meaningful body. The ratioof two internal directors to one external director isalso ideal.
Since Ms. Okajima joined two years ago, the atmosphere of the Board of Directors has improved significantly. In the past, when the Board was all male,
discussions tended to be a bit intense and were often
locked in a single direction. However, with the advent of
Ms. Okajima, the atmosphere has been more relaxed,
and you have provided us with various ideas on how tomake discussion livelier. Yes, there truly have been a lotof changes.
Okajima: Looking back over the past year, I can remember various discussions that were held at meetings of theBoard of Directors. I have a particularly strong impression of the Company’s passion with regard to Hakata
Marui, which was opened in the spring of 2016. This
opening was not seen simply as the establishment of a
new store; it was treated as an opportunity to ask society
its opinion on the future direction of Marui stores ingeneral. The commitment to exercise the Group’s
strength in its entirety in this undertaking was palpable.

Co-Creation Management and DNA of Innovation as Seen by External Directors

It was also through Hakata Marui that I was able todeepen my understanding of the Company’s concept of
co-creation management, which entails developing
stores through an exhaustive process of incorporating
customer feedback. This experience convinced me thatthe direction chosen by MARUI GROUP’s management
was right on target.
Horiuchi: What left a strong impression on me was thediscussions related to the massive transformation thatMARUI GROUP has been undergoing over the past several years, including the shift toward shopping centerstyle stores. President Aoi was particularly passionate
about the Company’s corporate value-raising businessmodel innovations. When providing an explanation as towhy this transformation was being pursued now, thedepth of his passion and commitment could not havebeen clearer.
At the same time, President Aoi exhibits exceptional
leadership while exercising a sense of balance, firstcarefully listening to our opinions at meetings and thenputting forth his thinking and final decisions. I suspectthat the growth of MARUI GROUP’s business and performance is due in part to these characteristics of its Boardof Directors and the corporate governance systems
enacted to achieve these characteristics.
Okajima: We also discussed human resources development at the Board of Directors. MARUI GROUP is actively
utilizing its profession change system, which allows for
personnel to be relocated among Group companies anddivisions. I originally had misgivings regarding thissystem, primarily out of concern that it might impede theaccumulation of expertise within the organization.
However, over the course of our discussions on this
topic, I grew to understand the merits of this system,
such as how changes in professions offer new opportunities to junior employees while helping enhance the abilityof veteran employees to adapt to different work situations. I also learned that this process thereby contributes
to cross-divisional co-creation. In other words, it was an
example of an initiative to “equate the development ofour people with the development of our company,” asdescribed in the Company’s corporate philosophy. The
ability for us to discuss MARUI GROUP’s policies for
improving corporate value at meetings of the Board of
Directors is truly meaningful.
MARUI GROUP’s Ongoing Process of Innovation    
Horiuchi: Recently, the common consensus among
investors and other people outside the Company is that
“MARUI GROUP has changed.” However, I feel a little
differently. I have been an external director at theCompany since 2008, and I do not get the impression
MARUI GROUP underwent any drastic change.
MARUI GROUP has always had its eyes to the future,aware of the dangers that lie ahead and committed totransforming these dangers into opportunities. This ispart of its corporate DNA. If, from the outside, it looks as
though the Company has suddenly changed, this is most
likely because the reforms that it has been advancing forseveral years have finally begun producing results.
MARUI GROUP undoubtedly has a corporate culture of
tackling the challenge of innovation while also considering what constitutes the essence of the Company.
Okajima: I feel the same way. One of the roles external
directors of Japanese companies are currently expected
to fulfill is to support management with regard to taking
appropriate risks while realizing long-term growth.
However, this approach toward growth is alreadyentrenched in MARUI GROUP.
For this reason, discussions at meetings of theBoard of Directors are not based on precedent or preconceived notions. Rather, the atmosphere is one inwhich no topic of discussion is taboo, and you can feelthe devotion to carrying out any decision made, leaving
no measure incomplete. An ideal example of this devotion can be seen in the Company’s committed stancetoward co-creation management.
Horiuchi: Because of this devotion on the part of management, I feel that we, as external directors, areexpected to verify the appropriateness of the strategies
and measures MARUI GROUP is looking to advance andexamine any risks it may face. I manage a land transportcompany, which operates in an industry where careful
preparation for risks is exceptionally important. From thisperspective, I tend to voice opinions from a conservative
standpoint in my capacity as an external director at
MARUI GROUP.
In the end, President Aoi is a manager that will also
make decisions that target an ideal position from theperspective of all stakeholders. As he can be relied upon
for this type of prudency, I am able to voice my opinions
without unnecessary restraint.
Okajima: I believe that my expected role is a little bit
different than yours, Mr. Horiuchi, especially given myrelationship to the diversity of the Board of Directors. It is
for this reason that I try to make suggestions to spurforward the growth of MARUI GROUP from my differing
perspective as a woman as well as in terms of corporate
management and human resources development.
As a management advisor, I have observed both
successes and failures at numerous companies. I believethat this experience can be of use to MARUI GROUP in
making aggressive management decisions. In addition,
I hope to help promote innovation at MARUI GROUP
and contribute to increased competitiveness from theperspective of human resources and organizational
development, my areas of expertise.

Dialogue 04

Dialogue 04

94

95

Directors, Audit & Supervisory Board Members, and Executive Officers

Directors, Audit & Supervisory Board Members, and Executive Officers

As of June 29, 2016

Directors

Audit & Supervisory Board Members

Hiroshi Aoi

Koichiro Horiuchi

Etsuko Okajima

Hideaki Fujizuka

Tetsuji Sunami

President and Representative Director
Shares held: 1,611,700
Born: January 17, 1961

External Director
Shares held: 0
Born: September 17, 1960

External Director
Shares held: 0
Born: May 16, 1966

Audit & Supervisory Board Member (Full time)
Shares held: 200
Born: September 1, 1955

Audit & Supervisory Board Member (Full time)
Shares held: 1,900
Born: August 13, 1958

Jul. 1986 Joined the Company
Apr. 1991	Director and General Manager,
Sales Planning Headquarters
Apr. 1995	Managing Director and
Deputy General Manager,
Sales Promotion Headquarters andGeneral Manager, Sales Planning Division
Jan. 2001	Managing Director and General Manager,
Sales Promotion Headquarters
Jun. 2004	Executive Vice President andRepresentative Director
Apr. 2005 President and Representative Director
Oct. 2006	President and Representative Director
Representative Executive Officer(Incumbent)

Apr. 1983 Joined Long-Term Credit Bank of Japan
Mar. 1988	Joined FUJI KYUKO CO., LTD.
General Manager, Corporate Planning
Division, FUJI KYUKO CO., LTD.
Jun. 1988 Director, FUJI KYUKO CO., LTD.
Feb. 1989	Senior Managing Director,
FUJI KYUKO CO., LTD.
Jun. 1989	Representative Director and Senior
Managing Director, FUJI KYUKO CO., LTD.
Sep. 1989	President and Representative Director,
FUJI KYUKO CO., LTD. (Incumbent)
Jun. 2008 External Director (Incumbent)
Jun. 2012	External Audit & Supervisory Board
Member, Yamanashi Chuo Bank, Ltd.
(Incumbent)

Apr. 1989 Joined Mitsubishi Corporation
Jan. 2001 Joined McKinsey & Company
Jul. 2005	Representative and CEO,GLOBIS Management Bank
Jun. 2007	President & CEO,
ProNova Inc. (Incumbent)
Jun. 2014	External Director,
Astellas Pharma Inc. (Incumbent)
External Director (Incumbent)
Mar. 2016	Outside Director,
Link and Motivation Inc. (Incumbent)

Apr. 1980	Joined Mitsubishi Bank Ltd. (currently
The Bank of Tokyo Mitsubishi UFJ, Ltd.)
Jun. 2007	Executive Officer and General Manager,
General Affairs Dept.,
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Jun. 2010	President and Director,
Chitose Kosan, Co., Ltd.
Apr. 2012	Director, Senior Executive Managing
Officer and Group President ofCorporate Center, Olympus Corporation
Apr. 2015	Director, Olympus Corporation
Jun. 2015	Audit & Supervisory Board Member(Full time) (Incumbent)

Mar. 1981 Joined the Company
Jan. 2002	General Manager, Store Planning Division,
Sales Promotion Headquarters
Oct. 2004	General Manager, DM Business Division,
Sales Promotion Headquarters
Apr. 2006	Representative and CEO,Marui Voi, Co., Ltd.
Oct. 2007	Managing Director,
M & C SYSTEMS CO., LTD.
Apr. 2011	Representative and CEO,MRI Co., Ltd.
Jun. 2014	Audit & Supervisory Board Member(Full time) (Incumbent)

Participation in committees:
Management Committee (Chairman)
Compliance Promotion Board (Chairman)
Public Relations IR Committee (Chairman)
Nominating and Compensation Committee

Participation in committees:
Nominating and Compensation Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee

Participation in committees:
Compliance Promotion Board
Internal Control Committee

Masao Nakamura

Tomoo Ishii

Hirotsugu Kato

Tadashi Ooe

Takehiko Takagi

Director
Shares held: 20,000
Born: June 11, 1960

Director
Shares held: 16,800
Born: July 16, 1960

Director
Shares held: 2,000
Born: July 30, 1963

External Audit & Supervisory Board Member
Shares held: 68,400
Born: May 20, 1944

External Audit & Supervisory Board Member
Shares held: 2,400
Born: January 23, 1945

Apr. 1983 Joined the Company
May 2003	General Manager, Store Planning Division,
Sales Promotion Headquarters
Apr. 2007	Executive Officer and General Manager,
Group Business Promotion DivisionJun. 2008	Director and Executive Officer,
General Manager, Corporate Planning
Division and General Manager,
Business Development Division
Apr. 2011	Managing Director andManaging Executive Officer
President and Representative Director,
MARUI CO., LTD.
Apr. 2015	Director and Managing Executive Officer
Responsible for Retailing and StoreOperation BusinessPresident and Representative Director,
MARUI CO., LTD.
Apr. 2016	Director and Managing Executive Officer
Responsible for Retailing Business(Incumbent)
President and Representative Director,
AIM CREATE CO., LTD. (Incumbent)

Apr. 1983 Joined the Company
Oct. 2005	General Manager,
Group Compliance Division
Apr. 2007	Executive Officer and General Manager,
Group Compliance DivisionJun. 2009	Director and Executive Officer,
General Manager,
General Affairs Division
Apr. 2013	Director and Executive Officer,
General Manager, Personnel Division
Apr. 2015	Director and Managing Executive Officer,
and Chief Operating Officer
Healthcare Promotion andGeneral Manager, Personnel Division
In charge of General Affairs and
Healthcare Promotion
Apr. 2016	Director and Managing Executive Officer,
and Chief Operating Officer,
Healthcare Promotion
In charge of General Affairs, Personnel
and Healthcare Promotion (Incumbent)

Mar. 1987 Joined the Company
Apr. 2013	General Manager,
Corporate Planning Division
Apr. 2015	Executive Officer and General Manager,
Corporate Planning Division
Oct. 2015	Executive Officer and General Manager,
Corporate Planning Division and
IR Department
Jun. 2016	Director and Senior Executive Officer
General Manager, Corporate Planning
Division and IR Department (Incumbent)

Apr. 1969 Registered as Attorney
Apr. 1989	Practicing-Attorney,
Professor for Civil Advocacy,
Legal Training and Research Instituteof the Supreme Court of Japan
Mar. 1994	Outside Audit & Supervisory Board
Member, Canon Inc. (Incumbent)
Jun. 2004	External Audit & Supervisory Board
Member (Incumbent)
Jun. 2011 Director, Jeco Co., Ltd. (Incumbent)
Jun. 2015	Outside Director,
Nissan Chemical Industries, Ltd.
(Incumbent)

Jul. 2001	Chief, Kanazawa Regional
Taxation Bureau
Jul. 2002 President, National Tax College
Jul. 2003	Retired from National Tax
Administration Agency
Aug. 2003	Registered as Certified Public
Tax Accountant
May 2006	External Audit & Supervisory Board
Member, TOH-TEN-KOH Corporation(Incumbent)
Jun. 2008	External Audit & Supervisory Board
Member (Incumbent)
Jun. 2010	External Audit & Supervisory Board
Member, KAWADA TECHNOLOGIES, Inc.
(Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee

96

Participation in committees:
Nominating and Compensation Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Internal Control Committee
Insider Trading Prevention Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Environment CSR Promotion Committee
Safety Control Committee

97

Directors, Audit & Supervisory Board Members, and Executive Officers

Directors, Audit & Supervisory Board Members, and Executive Officers

Executive Officers

Hiroshi Aoi

Motohiko Sato

Masao Nakamura

Nariaki Fuse

Hajime Sasaki

Yoshinori Saito

Representative Executive Officer
Born: January 17, 1961

Senior Managing Executive Officer
Born: December 17, 1953

Managing Executive Officer
Born: June 11, 1960

Senior Executive Officer
Born: June 3, 1959

Senior Executive Officer
Born: November 24, 1963

Senior Executive Officer
Born: July 25, 1962

Jul. 1986	Joined the Company
Apr. 1991	Director and General Manager,
Sales Planning Headquarters
Apr. 1995	Managing Director and
Deputy General Manager,
Sales Promotion Headquarters andGeneral Manager, Sales Planning Division
Jan. 2001	Managing Director and General Manager,
Sales Promotion Headquarters
Jun. 2004	Executive Vice President andRepresentative Director
Apr. 2005	President and Representative Director
Oct. 2006	President and Representative Director
Representative Executive Officer(Incumbent)

Mar. 1977 Joined the Company
Jan. 2000	General Manager, Supply Chain andLogistics Management Division,
Sales Promotion Headquarters
Jun. 2005	Director and General Manager,
Group Corporate Planning DivisionJun. 2008	Managing Director andManaging Executive Officer
Apr. 2012	Senior Managing Director andSenior Managing Executive Officer
Apr. 2015	Director and Senior Managing
Executive Officer, and CFO
In charge of Corporate Planning and Finance
Responsible for Credit Card Services
Business and Information Systems
Jun. 2016	Senior Managing Executive Officer and CFO
In charge of Corporate Planning, IR and
Finance (Incumbent)

Apr. 1983 Joined the Company
May 2003	General Manager, Store Planning Division,
Sales Promotion Headquarters
Apr. 2007	Executive Officer and General Manager,
Group Business Promotion DivisionJun. 2008	Director and Executive Officer,
General Manager, Corporate Planning
Division and General Manager,
Business Development Division
Apr. 2011	Managing Director andManaging Executive Officer
President and Representative Director,
MARUI CO., LTD.
Apr. 2015	Director and Managing Executive Officer
Responsible for Retailing and StoreOperation BusinessPresident and Representative Director,
MARUI CO., LTD.
Apr. 2016	Director and Managing Executive Officer
Responsible for Retailing Business(Incumbent)
President and Representative Director,
AIM CREATE CO., LTD. (Incumbent)

Mar. 1982 Joined the Company
Feb. 2005	General Manager, Customer System
Development Department,
M & C SYSTEMS CO., LTD.
Apr. 2007 Director, M & C SYSTEMS CO., LTD.
Apr. 2011	Executive Officer
Managing Executive Officer,
M & C SYSTEMS CO., LTD.
Apr. 2013	President and Representative Director,
M & C SYSTEMS CO., LTD. (Incumbent)
Jun. 2013 Director and Executive Officer
Apr. 2015	Senior Executive Officer
In charge of Audit andInformation Systems
Apr. 2016	Senior Executive Officer and CIO
In charge of Audit (Incumbent)

Mar. 1986 Joined the Company
Oct. 2007	Director and General Manager,
Card Planning Division, Epos Card Co., Ltd.
Apr. 2012	Director and General Manager, Private
Brand Department, MARUI CO., LTD.
Apr. 2013 Executive Officer
Apr. 2014	Managing Director and General Manager,
Specialty Store Department,
MARUI CO., LTD.
Jun. 2014 Director
Apr. 2015	Director and Senior Executive Officer
Responsible for Retailing and StoreOperation Business
Senior Managing Director, MARUI CO., LTD.
Director, Epos Card Co., Ltd.
Apr. 2016	Senior Executive Officer (Incumbent)
President and Representative Director,
MARUI CO., LTD. (Incumbent)

Mar. 1986 Joined the Company
Jul. 2008	Executive Officer
General Manager, Financial Department
Apr. 2011	Director and General Manager, Direct
Marketing Department, MARUI CO., LTD.
Apr. 2013	Director and General Manager,
Collaboration Card Business Department,
Epos Card Co., Ltd.
Oct. 2013	Director and General Manager, Sales
Promotion Department, Epos Card Co., Ltd.
Apr. 2015	Managing Director, Epos Card Co., Ltd.
Director, M & C SYSTEMS CO., LTD.
(Incumbent)
Apr. 2016	Senior Executive Officer (Incumbent)
President and Representative Director,
Epos Card Co., Ltd. (Incumbent)
Director, MRI Co., Ltd. (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Internal Control Committee
Safety Control Committee (Chairman)

Participation in committees:
Management Committee
Compliance Promotion Board
Internal Control Committee
Personal Information Protection
Promotion Committee

Participation in committees:
Management Committee (Chairman)
Compliance Promotion Board (Chairman)
Public Relations IR Committee (Chairman)
Nominating and Compensation Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Internal Control Committee (Chairman)
Insider Trading Prevention Committee (Chairman)

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Internal Control Committee
Personal Information Protection
Promotion Committee (Chairman)

Toshikazu Takimoto

Takashi Wakashima

Tomoo Ishii

Hirotsugu KatoManaging Executive Officer
Born: November 5, 1959

Managing Executive Officer
Born: November 19, 1956

Managing Executive Officer
Born: July 16, 1960

Senior Executive Officer
Born: July 30, 1963

Mar. 1982 Joined the Company
Oct. 2003	General Manager, Credit Card Planning
Division, Zero First Co., Ltd.
Mar. 2006	Director, Epos Card Co., Ltd.
General Manager, Credit Card Services
DivisionMar. 2009	Executive Officer and General Manager,
Group Profit Improvement Division
Oct. 2009 Director, Epos Card Co., Ltd.
Apr. 2011 Managing Director, Epos Card Co., Ltd.
Apr. 2012	President and Representative Director,
Epos Card Co., Ltd.
President and Representative Director,
Zero First Co., Ltd.
Jun. 2012 Director and Executive Officer
Apr. 2015	Managing Executive Officer
In charge of Credit Card Services BusinessPresident and Representative Director,
Epos Card Co., Ltd.
Apr. 2016	Managing Executive Officer
Responsible for FinTech Business(Incumbent)
President and Representative Director,
MARUI HOME SERVICE Co., Ltd.
(Incumbent)

Mar. 1981 Joined the Company
Jan. 2001	General Manager, Product Planning
Division, Sales Promotion Headquarters
Jun. 2006	Director, Deputy General Manager,
Sales Promotion Headquarters andGeneral Manager, Sales Planning Division
Apr. 2011	Director and Executive Officer
President and Representative Director,
MOVING CO., LTD. (Incumbent)
Apr. 2013	Director and Executive Officer
In charge of CSR Promotion andReal Estate Business & Architecture
President and Representative Director,
Totsuka Commercial Buildings
Management Co., Ltd. (Incumbent)
Jun. 2013	President and Representative Director,
Nakano Suncuore Co., Ltd. (Incumbent)
Jun. 2015	Director and Managing Executive Officer
In charge of CSR Promotion and Real
Estate Business & Architecture (Incumbent)
Director, AIM CREATE CO., LTD. (Incumbent)

Apr. 1983 Joined the Company
Oct. 2005	General Manager,
Group Compliance Division
Apr. 2007	Executive Officer and General Manager,
Group Compliance DivisionJun. 2009	Director and Executive Officer,
General Manager,
General Affairs Division
Apr. 2013	Director and Executive Officer,
General Manager, Personnel Division
Apr. 2015	Director and Managing Executive Officer,
and Chief Operating Officer
Healthcare Promotion andGeneral Manager, Personnel Division
In charge of General Affairs and
Healthcare Promotion
Apr. 2016	Director and Managing Executive Officer,
and Chief Operating Officer,
Healthcare Promotion
In charge of General Affairs, Personnel
and Healthcare Promotion (Incumbent)

Mar. 1987 Joined the Company
Apr. 2013	General Manager,
Corporate Planning Division
Apr. 2015	Executive Officer and General Manager,
Corporate Planning Division
Oct. 2015	Executive Officer and General Manager,
Corporate Planning Division and
IR Department
Jun. 2016	Director and Senior Executive Officer
General Manager, Corporate Planning
Division and IR Department (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Environment CSR Promotion Committee (Chairman)

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Environment CSR Promotion Committee
Safety Control Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee

98

Participation in committees:
Management Committee
Compliance Promotion Board
Public Relations IR Committee
Internal Control Committee
Insider Trading Prevention Committee99

Corporate GovernanceDirectors, Audit & Supervisory Board Members, and Executive Officers

Corporate Governance:
Emphasizing Corporate Value
Yoshiaki Kogure

Masahiro Aono

Yuko Ito

Executive Officer
Born: September 5, 1960

Executive Officer
Born: March 4, 1962

Executive Officer
Born: June 2, 1962

Apr. 1983 Joined the Company
Mar. 2006	General Manager,
Group Financial Department
Apr. 2007 Executive Officer (Incumbent)
Jul. 2008 General Manager, Personnel Division
Oct. 2009	General Manager, Voi Business
Department, MARUI CO., LTD.
Apr. 2011	General Manager,
Corporate Planning Division
Apr. 2013	President and Representative Director,
MARUI FACILITIES Co., Ltd. (Incumbent)
May 2013	President and Representative Director,
Shiki City Development Co., Ltd.
(Incumbent)
Apr. 2015	Director, MARUI HOME SERVICE Co., Ltd.
(Incumbent)

Mar. 1984 Joined the Company
Mar. 2008	General Manager, Women’s Clothing andAccessories Department, MARUI CO., LTD.
Apr. 2010	General Manager, Women’s Fashion
Department, MARUI CO., LTD.
Apr. 2011	Director and General Manager, Business
Promotion Department, MARUI CO., LTD.
Apr. 2013 Executive Officer (Incumbent)
Apr. 2014	Director and General Manager,
Store Business Promotion Department,
MARUI CO., LTD. (Incumbent)
Apr. 2015	Managing Director, MARUI CO., LTD.
(Incumbent)
Director, AIM CREATE CO., LTD.
(Incumbent)

Mar. 1986 Joined the Company
Oct. 2007	General Manager,
Construction Department (Incumbent)
Apr. 2012	Director and General Manager,
Creative Management Department
Deputy General Manager,
Space Production Business Department,
AIM CREATE CO., LTD.
Apr. 2014 Executive Officer (Incumbent)
Apr. 2016	Director and General Manager,
Design Management Department
Deputy General Manager,
Space Production Business Department,
AIM CREATE CO., LTD. (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Internal Control Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Environment CSR Promotion Committee
Safety Control Committee

Participation in committees:
Management Committee
Compliance Promotion Board
Environment CSR Promotion Committee

MARUI GROUP’s corporate philosophy calls for us to“continue evolving to better aid our customers” and“equate the development of our people with the devel­
opment of our company.” Accordingly, we support thepassion of all employees to aid our customers to createa virtuous cycle in which the growth of our people furthers the development of the Company, which in turnfacilitates the further growth of our people. This cycle ispart of our pursuit of improvements to corporate value.
Given this approach, reinforcing corporate governance isa top priority, and we endeavor to practice sound management that is highly transparent and efficient toheighten earnings capacity.
In addition to its Board of Directors and Audit &Supervisory Board, MARUI GROUP has established the

Directors

Audit & Supervisory
Board Members

External(Independent)

External(Independent)

6

2

Mayuki Igayama

Junko Tsuda

Miyuki Kawara

Executive Officer
Born: June 19, 1964

Executive Officer
Born: May 25, 1972

Executive Officer
Born: August 6, 1963

Mar. 1987 Joined the Company
Apr. 2009	General Manager,
New Business Department
Oct. 2009	Deputy General Manager, Voi Business
Department, MARUI CO., LTD.
Apr. 2012	General Manager, Direct Marketing
Department, MARUI CO., LTD.
Apr. 2014	Director and General Manager, Direct
Marketing Department, MARUI CO., LTD.
Apr. 2015	Executive Officer (Incumbent)
Director, MOVING CO., LTD. (Incumbent)
Apr. 2016	Director and General Manager,
Omni-Channel Retailing Department
MARUI CO., LTD. (Incumbent)

Mar. 1995 Joined the Company
Apr. 2014	Store Manager, Nakano Marui,
MARUI CO., LTD.
Apr. 2015	Executive Officer (Incumbent)
Director and Store Manager,
Marui Family Shiki,
MARUI CO., LTD. (Incumbent)

Mar. 1986	Joined the Company
Apr. 2007	Store Manager, Kobe Marui,
MARUI CO., LTD.
Oct. 2008	General Manager, Brand Development
Department, MARUI CO., LTD.
Apr. 2012	General Manager,
CSR Promotion Department
Apr. 2015	Director and General Manager,
Collaboration Card Business Department,
Sales Promotion Department,
Epos Card Co., Ltd.
Apr. 2016	Executive Officer (Incumbent)
Director and General Manager,
Sales Promotion Department,
Epos Card Co., Ltd. (Incumbent)

Participation in committees:
Management Committee
Compliance Promotion Board
Personal Information Protection
Promotion Committee

100

Participation in committees:
Management Committee
Compliance Promotion Board

4

2

Management Committee, which functions as the highest
decision-making body and is composed of 16 executive
officers. In the fiscal year ended March 31, 2016, theCompany redefined the roles of the Board of Directors
and the Management Committee, choosing to reduce
the number of directors, and instituted other measures
for reinforcing corporate governance. In addition, we
formulated the MARUI GROUP Corporate Governance
Guidelines to codify our stance toward corporate
governance and our initiative policies.
MARUI GROUP Corporate Governance Guidelines
www.0101maruigroup.co.jp/pdf/cgg_en.pdf
Corporate Governance Reportwww.0101maruigroup.co.jp/pdf/cgr_en.pdf

Executive Officers

16

Female3Nominating and Compensation
Committee Members

3

External(Independent)

2Participation in committees:
Management Committee
Compliance Promotion Board
Personal Information Protection
Promotion Committee

101Corporate GovernanceCorporate GovernanceInitiatives for Reinforcing Corporate Governance2007

Oct. Adopted a holding company system

2008

Jun. Appointed first external director

2016 Mar.– Conducted evaluation of the Board of Directors’ effectiveness
May All directors and Audit & Supervisory Board members completed a self-evaluation survey of the effectiveness of theBoard of Directors. Based on these surveys, it was decided that the Board of Directors was functioning sufficiently.
Areas applauded and issues identified included the following.
Areas Applauded· Active discussion centered on external directors appointed by reducing the total number of directors· Respect for opinions of external directors· Incorporation of perspectives of shareholders, investors, and other stakeholders
Issues Identified· Lack of successor development programs· Failure to link director compensation to medium-to-long-term performance

Mr. Koichiro Horiuchi has accumulated a wealth of management experience and insight from hislong career at FUJI KYUKO CO., LTD., and actively offers opinions and advice from an independentand objective standpoint.

Shortened the term of all directors to one year to clarify management responsibilities
2014

Jun. Appointed second external director
Ms. Etsuko Okajima has accumulated a wealth of management experience and insight at
ProNova Inc. as well as a deep understanding of diversity issues and actively offers opinions andadvice from an independent and objective standpoint.

2015

May

Mar. Redefined roles of the Board of Directors and the Management Committee to separate management
decision making and oversight from operational execution
The Board of Directors was defined as a forum for discussing important issues, and steps were taken to stimulate
discussion centered on outside directors in order to enhance the Board’s functionality as a venue for creatingGroupwide strategies for improving corporate value. The Management Committee was delegated a wider range ofdecision-making authority from the Board of Directors in order to expedite management decisions.

Apr. Established Criteria for Independence of External Directors and Audit & Supervisory Board Members
Criteria for Independence of External Directors and Audit & Supervisory Board Members

www.0101maruigroup.co.jp/pdf/cgg_en.pdf

Jun. Reduced the number of directors from 10 to 6
We reduced the number of directors by four to reinforce the supervisory functions of the Board of Directors by making
it easier for the opinions of the external directors to be incorporated into management practices.

❶ Established Nominating and Compensation Committee with external directors as its primary members
Based on a resolution by the Board of Directors, the Nominating and Compensation Committee must consist of at least
three members, two of whom must be outside directors. At a meeting of the Board of Directors held on May 12, 2016,
three members were appointed: external directors Koichiro Horiuchi and Etsuko Okajima, and President Hiroshi Aoi.
We believe that discussing matters related to the nomination and compensation of directors at a committee with­external directors as its primary members will help ensure objectivity and transparency and thereby contribute to
the enhancement of our corporate governance system.

Jun.

❷ Introduced performance-linked, stock-based compensation to serve as a medium-to-long-term
incentive for directors and executives of the Company and directors of subsidiaries
Through the performance-linked, stock-based compensation system, applicable officers receive allocations of Company
stock every three years that are adjusted via a coefficient within the range of 0% to 100% based on the KPI defined forthat period (ROE, EPS, and ROIC for the first three-year period). The Company has adopted the Board Incentive Plan
Trust scheme for this system. Accordingly, director compensation now consists of fixed basic compensation, performance-linked bonuses, and performance-linked, stock-based compensation. In addition, an incentive plan based on the
Employee Stock Ownership Plan Trust scheme has been instituted for managers of Group companies to increase theirmotivation to contribute to medium-to-long-term improvements in performance and corporate value for the Company.

Aug. Published Japanese-language version of first integrated report, Co-Creation Management Report 2015;
English-language version published in October 2015
Oct. Established dedicated investor relations department
MARUI GROUP strives to co-create corporate value together with shareholders and other investors. To this end,
we conduct twice-yearly financial results briefings and also hold meetings with individual domestic and overseas
shareholders and investors individually or in small groups.
  

P141 M
 ARUI GROUP Ranked High in the 2016 All-Japan Executive Team Rankings Released by U.S. Financial Industry Magazine Institutional Investor

Nov. Formulated MARUI GROUP Corporate Governance Guidelines
The MARUI GROUP Corporate Governance Guidelines codify our stance toward corporate governance and our initiative
policies, including those for improving corporate value. For example, it is stated that one-third of directors should beexternal directors (independent directors), that the Company is to conduct appropriate capital measures based on its
business structure, and that the Company will not engage in cross-shareholdings except when necessary.
MARUI GROUP Corporate Governance Guidelines

www.0101maruigroup.co.jp/pdf/cgg_en.pdf

Published Japanese-language Co-Creation CSR Report 2015, focusing on our connections with local
communities and the greater society; English-language digest published in February 2016
Dec. Held explanatory forum on Co-Creation Management Report 2015MARUI GROUP held its first integrated report explanatory forum on
Co-Creation Management Report 2015 for institutional investors,
analysts, and members of the press to faciliate understanding of thereport’s contents. In this forum, President Aoi and representatives
from each business explained co-creation management policies andexamples of specific initiatives.

102

Co-Creation of Corporate Value with Shareholders and Other Investors
In October 2015, we established the IR Department, a dedicated organization consisting ofseven members, who primarily engage in communication with institutional investors. In one
year, we met with between 200 and 300 institutional investors, including those overseas.
Through our discussions with these investors, we gain valuable insight into matters such as
how to view corporate value and balance sheet policies. I feel that this input was effectively
utilized in shaping MARUI GROUP’s new medium-term management plan, which covers theperiod leading up to the fiscal year ending March 31, 2021. Corporate value certainly
cannot be summed up in a single statement. Nevertheless, it is important for the Company
to actively explain its view on corporate value and its efforts for improving this value. This is
one of the main reasons we publish co-creation management reports. We also held explanatory forums on the 2015 report to delve into topics that were not completely covered in thereport for that year. A number of junior employees from the frontlines of business took thestage at these events, providing energized perspectives of how co-creation efforts arecontributing to corporate value or where they find motivation in their own work. Investors inattendance stated that these presentations greatly enhanced their understanding. Our
initiatives over the past year bore results as the Securities Analysts Association of Japan
identified MARUI GROUP as a company demonstrating a massive improvement in disclosure
during the fiscal year ended March 31, 2016, and the Company ranked high in the 2016
All-Japan Executive Team Rankings released by U.S. financial industry magazine Institutional
Investor. Going forward, we will continue to provide inclusive explanations of our activities
to deepen stakeholder understanding.

Hirotsugu Kato
Director and Senior Executive Officer
General Manager,
Corporate Planning Division and IR Department

103

MARUI GROUP’s Business

MARUI GROUP’s Business

As of June 30, 2016

Retailing

Space Production, Commercial Facility Management, and Advertising
In the Retailing business,
MARUI is transitioning towarda unique shopping center style
store model to devote more ofits stores’ floor space tosundries, restaurants, andother high-demand areas that
support all lifestyles.
The long-awaited openingof Hakata Marui, our first
store in Kyushu, took place inApril 2016.

MARUI CO., LTD.
Established

October 1, 2007

Number of Employees

3,370

Capital¥100 million

Head Office3-2, Nakano 4-chome, Nakano-ku,
Tokyo 164-8701, Japan

President andRepresentative Director

Hajime Sasaki

Telephone

03-3384-0101 (Receptionist)

Business Activities

Retailing and Marui store operation,
Internet sales, specialty store business(operation and development of directly
managed sales floors and private brands)

Homepagewww.0101.co.jp.e.ex.hp.transer.com

AIM CREATE CO., LTD.

By leveraging MARUI GROUP’s expertise,
AIM CREATE provides comprehensive proposals
for design, construction, planning, promotion,
advertising, and operation of commercial facilities
and other places customers gather. The company
strives to create facilities that bring joy to visitors.

October 1, 2004

Number of Employees

1,052

Capital¥100 million

Head Office3-2, Nakano 4-chome, Nakano-ku,
Tokyo 164-8701, Japan

President andRepresentative Director

Yoshinori Saito

Telephone

03-4574-0101 (Receptionist)

Business Activities

Credit card business, credit loan business

Homepagewww.eposcard.co.jp (Japanese only)

104¥100 million

President andRepresentative Director

Masao Nakamura

Business Activities

Design and construction of commercial facilities, advertisement
planning and production, property management, Modi retailing,and store operation

Number of Employees

401

Head Office34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan

Telephone

03-5340-0101 (Receptionist)

Homepage

www.aim-create.co.jp (Japanese only)

MOVING CO., LTD.

By combining MARUI GROUP’s Internet sales
know-how with leading-edge distribution operations, MOVING provides powerful support forcustomers’ businesses by responding to theirvarious needs.

Established

October 25, 1960

Capital¥100 million

President andRepresentative Director

Takashi Wakashima

Business Activities

Trucking business, forwarding, and other businesses

Number of Employees

312

Head Office

5-1, Bijogihigashi 2-chome, Toda-shi, Saitama 335-0032, Japan

Telephone048-233-1000 (Receptionist)

Homepagewww.moving.co.jp (Japanese only)

IT Systems

M & C SYSTEMS CO., LTD.

Epos Card Co., Ltd.
Established

August 4, 1959

CapitalApparel Distribution / Internet Sales Support

FinTechMARUI GROUP issued Japan’s
first credit card. In the fiscal
year ended March 31, 2015,card transactions exceeded¥1 trillion for the first time since
EPOS cards were launchedin 2006. By leveraging theexpertise gained through theGroup’s long history, Epos
Card is working to expand thenumber of cardholders, improveusage rates, increase usage
amounts, and strengthen
operating foundations.

Established

M & C SYSTEMS operates high-quality systems
utilizing data centers equipped with exceptionallysafe facilities and provides system support for the
Retailing and FinTech businesses.

Established

September 1, 1984

Capital¥234 million

President andRepresentative Director

Nariaki Fuse

Business Activities

Software development, IT systems operation

Number of Employees

109

Head Office3-2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan

Telephone

03-5343-0100 (Receptionist)

Homepagewww.m-and-c.co.jp (Japanese only)105

MARUI GROUP’s Business

MARUI GROUP’s BusinessTotal Building Management

MARUI FACILITIES offers comprehensive operation and management services for large-scalecommercial facilities that include security, facility
maintenance and management, janitorial, andfood court operation services to improve facility
value while creating comfortable environments.

Small-Amount Short-Term Insurance Policy Business

MARUI FACILITIES Co., Ltd.

Epos Small Amount and Short Term Insurance Co., Ltd.

Established

July 1, 1987

EstablishedFebruary 1, 2013

Capital¥100 million

Capital¥300 million (including paid-in capital)

President andRepresentative Director

Yoshiaki Kogure

President andRepresentative Director

Izumi AsoBusiness Activities

Total building management businessBusiness Activities

Small-amount short-term insurance policy business

Number of Employees

349

Number of Employees

8

Head Office34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan

Head Office34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan

Telephone

03-3229-0101 (Receptionist)

Telephone

03-4546-0101 (Receptionist)

Homepagewww.marui-facilities.co.jp (Japanese only)

Homepagewww.epos-ssi.co.jp (Japanese only)

Real Estate Rental

Epos Small Amount and Short Term Insurance’s
ROOM GUARD comprehensive renters’ insurance
plans support rental housing tenants by providing
coverage for personal belongings, repairs, andindemnity.

Support for Group Companies

MARUI KIT CENTER CO., LTD.

MARUI HOME SERVICE Co., Ltd.

MARUI HOME SERVICE manages rental condominiums in operations founded on the reliability
and trust cultivated by MARUI GROUP. In addition, MARUI HOME SERVICE is coordinating with
Epos Card to solicit its ROOM iD advancedpayment rent guarantee service.

Special subsidiary established to employ people with disabilities

Established

October 1, 2007

Established

October 1, 2003

Capital¥100 million

Capital¥42.5 million

President andRepresentative Director

Toshikazu Takimoto

President andRepresentative Director

Takeo Horiguchi

Business Activities

Real estate rental businessBusiness Activities

Supply pickup, product inspection, various printing services

Number of Employees

61

Number of Employees

52

Head Office34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan

Telephone

03-6361-0101 (Receptionist)

Head Office

Toda Product Center, Second Building, 5-1,
Bijogihigashi 2-chome, Toda-shi, Saitama 335-0032, Japan

Homepagewww.marui-hs.co.jp (Japanese only)

Telephone048-421-7351 (Receptionist)

MARUI KIT CENTER provides pickup services for
supplies, conducts product inspections and office
work, and operates supply dispatch and storage
centers. These tasks are performed by people
with disabilities, creating employment opportunities
for such individuals while helping them achieve
independence.

Loan Collection
4 色指定 :M100+Y60+BL20%
特色 :PANTONE 207

MRI Co., Ltd.

The greatest strengths of MRI’s business are theclaim collection expertise MARUI GROUP has
developed as a pioneer and the ability to communicate with customers refined through its
retailing operations. MRI provides reliable andtrustworthy services by consulting with customers
regarding their individual situations.

106

Established

November 25, 2004

Capital¥500 million

President andRepresentative Director

Kazutoshi Masuda

Business Activities

Collection and management of receivables business,credit check business

Number of Employees

50

Head Office34-28, Nakano 3-chome, Nakano-ku, Tokyo 164-0001, Japan

Telephone

03-4574-4700 (Receptionist)

Homepagewww.mri-s.co.jp (Japanese only)

The AOI SCHOLARSHIP FOUNDATION was established by MARUI GROUP founder Chuji
Aoi with the aim of contributing to the development of people that can shape the future ofJapan and benefit society. Over the more than 40 years since its establishment, thisfoundation has helped fund the education of high school and university students while
facilitating networking between students receiving scholarships and past graduates.
Established: January 1973 (became an incorporated public interest foundation in 2012)
Director: Tadao Aoi (Honorary Chairman of MARUI GROUP)
Total amount of scholarships provided: ¥1,690 million
Total number of students supported: 1,508
(As of April 2016)
Office: 3
 -2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan(located at MARUI GROUP head office)Telephone: 03-5343-0351

Group of new university students supported in the fiscal year ending March 31, 2017107

MARUI GROUP Store Network

MARUI GROUP Store Network

As of August 31, 2016

Marui Stores

Operating revenues are from the fiscal year ended March 31, 2016; other information is as of August 31, 2016.

Modi Stores

Marui Stores

Specialty Stores

Name

EPOS Card Application Centers(outside of Marui and Modi stores)

Hokkaido
Rera EPOS Card Application Center(Opened in Chitose Outlet Mall Reraon April 16, 2016)

Gifu

Hyogo

Shizuoka

Marui Shoes(Opened in SENDAI PARCO 2
on July 1, 2016)

Saitama

Kyoto

Nagasaki

Omiya

Kawagoe

Soka

Osaka

Shiki

Kashiwa

Oita
Ikebukuro

MiyazakiTachikawa

Kichijoji

Shinjuku

Kitasenju

Tokyo

Ueno

NakanoKokubunji

Kashiwa Modi
(Planned opening
in fall 2016)

Kyoto Marui

8,760

4.2

April 27, 2011

Hakata Marui

15,000—April 21, 2016

Sales floor area(m2)

Transactions(billions of yen)

OpenedAddress

Telephone

1-21-3 Jinnan, Shibuya-ku 150-0041
6-2-6 Haramachida, Machida-shi 194-0013
10 Totsuka-cho, Totsuka-ku, Yokohama-shi 244-0003
4-2 Wakita-cho, Kawagoe-shi 350-1122
1-2-26 Kashiwa, Kashiwa-shi 277-0005 (tentative)
6-10 Miyukicho, Aoi-ku, Shizuoka-shi 420-0857 (tentative)

03-4336-0101
042-812-2700
045-862-0135
049-227-5950——

Funabashi
Chiharadai

Ebina
KawasakiKanagawa

Totsuka

Name

Tokyo

Shinurayasu

Mizonokuchi

075-257-0101
092-415-0101

Modi Stores

Chiba

Yurakucho

Machida03-3354-0101
03-3989-0101
03-3464-0101
03-3635-0101
03-3833-0101
03-5244-0101
03-3212-0101
03-3382-0101
0422-48-0101
042-728-0101
042-323-0101
045-451-0101
044-245-0101
044-814-0101
046-232-0101
048-642-0101
048-922-0101
048-487-0101
04-7163-0101
029-225-0101
054-252-0101
06-6634-0101
078-334-0101

Fukuoka

Kinshicho

Shibuya

Telephone

September 10, 1948
January 20, 1952
October 1, 1958
September 2, 1983
August 24, 1985
February 27, 2004
October 12, 2007
February 17, 1931
October 30, 1960
September 20, 1980
March 1, 1989
September 20, 1996
March 11, 1988
September 12, 1997
April 19, 2002
September 28, 1982
February 21, 1992
February 25, 2000
April 24, 1964
July 25, 1970
September 21, 1969
September 22, 2006
October 3, 2003

Kyoto

Saitama

Mito

Address

28.9
6.9
4.3
12.7
14.5
34.4
23.1
5.5
5.7
5.7
13.6
12.2
4.5
21.4
11.3
9.6
4.5
12.2
7.0*1
3.2
4.9*1
11.7
4.8

Chiba
IbarakiShizuoka
Osaka
Hyogo

Kanagawa

IbarakiOpened30,59012,1704,240
22,99016,39035,30018,500
4,950
11,9507,550
14,30016,77012,31032,26019,50013,97016,53018,9008,220
13,3007,920
17,0006,940

3-30-13 Shinjuku, Shinjuku-ku 160-0022
3-28-13 Nishi-Ikebukuro, Toshima-ku 171-0021
1-22-6 Jinnan, Shibuya-ku 150-0041
3-9-10 Kotobashi, Sumida-ku 130-0022
6-15-1 Ueno, Taito-ku 110-8502
3-92 Senju, Adachi-ku 120-8501
2-7-1 Yurakucho, Chiyoda-ku 100-0006
3-34-28 Nakano, Nakano-ku 164-0001
1-7-1 Kichijojiminami-cho, Musashino-shi 180-8552
6-1-6 Haramachida, Machida-shi 194-0013
3-20-3 Minami-cho, Kokubunji-shi 185-8562
2-19-12 Takashima, Nishi-ku, Yokohama-shi 220-0011
1-11 Nisshin-cho, Kawasaki-ku, Kawasaki-shi 210-0024
1-4-1 Mizonokuchi, Takatsu-ku, Kawasaki-shi 213-0001
1-6-1 Chuo, Ebina-shi 243-0483
2-3 Sakuragi-cho, Omiya-ku, Saitama-shi 330-9501
2-9-1 Takasago, Soka-shi 340-0015
5-26-1 Hon-cho, Shiki-shi 353-0004
1-1-11 Kashiwa, Kashiwa-shi 277-0005
1-2-4 Miyamachi, Mito-shi 310-0015
6-10 Miyukicho, Aoi-ku, Shizuoka-shi 420-0857
3-8-9 Namba, Chuo-ku, Osaka-shi 542-0076
1-7-2 Sannomiya-cho, Chuo-ku, Kobe-shi 650-0021
68 Shin-cho, Shijodori-Kawaramachi-Higashiiru,
Shimogyo-ku, Kyoto-shi 600-8567
9-1 Chuogai, Hakataeki, Hakata-ku, Fukuoka-shi 812-0012

MiyagiFukuoka
Hakata Marui(Opened on April 21, 2016)

Transactions(billions of yen)

Shinjuku Marui
Ikebukuro Marui
Shibuya Marui
Kinshicho Marui
Ueno Marui
Kitasenju Marui
Yurakucho Marui
Nakano Marui
Kichijoji Marui
Machida MaruiKokubunji Marui
Marui City Yokohama
Kawasaki Marui
Marui Family Mizonokuchi
Marui Family Ebina
Omiya MaruiSoka Marui
Marui Family Shiki
Kashiwa Marui
Mito Marui
Shizuoka Marui
Namba Marui
Kobe MaruiTokyo

Shizuoka Modi
(Planned opening in fall 2016)

Sales floor area(m2)

Kanagawa
Saitama
Chiba
Shizuoka

Shibuya Modi
Machida Modi
Totsuka Modi
Kawagoe Modi
Kashiwa Modi
Shizuoka Modi

9,840
13,72016,5807,850

2.5
November 19, 2015
8.5
September 28, 2006
9.2
March 15, 2007
1.7
March 24, 2007
Planned opening in fall 2016
Planned opening in fall 2016

*1 Operating revenue figures for Kashiwa Marui and Shizuoka Marui are from when both stores comprised two buildings during the fiscal year ended March 31, 2016.

Yokohama

As of August 31, 2016

Specialty Stores
Name

Tokyo
Chiba
Miyagi
Oita

Marui Shoes
LaLaPort Tachikawa Tachihi StoreMarui Shoes & Bags / Watches
LaLaPort TOKYO-BAY StoreMarui Shoes SENDAI PARCO 2 StoreMARUI MODEL IZUMI PARK TOWN
Tapio StoreMarui Shoes AMU PLAZA OITA Store

Address

Telephone

1st Floor, LaLaPort Tachikawa Tachihi, 935-1 Izumi-cho, Tachikawa-shi 190-0015

042-540-6235

2nd Floor, West Building, LaLaPort TOKYO-BAY, 2-1-1 Hama-cho, Funabashi-shi, 273-8530

047-421-7264

4th Floor, SENDAI PARCO 2, 3-7-5 Chuo, Aoba-ku, Sendai-shi, 980-8450

022-212-8350

1st Floor, IZUMI PARK TOWN Tapio, 6-5-1 Teraoka, Izumi-ku, Sendai-shi, 981-3204

022-342-5950

2nd Floor, AMU PLAZA OITA, 1-14 Kanamemachi, Oita-shi, 870-8550

097-573-3220

EPOS Card Application Centers (outside of Marui and Modi stores)
Name

Hokkaido

Shinjuku Marui

Kitasenju Marui

Yurakucho Marui

Marui Family Mizonokuchi
Chiba

Gifu

NagasakiOita
MiyazakiNamba Marui108

Hakata Marui

Shibuya Modi

Chitose Outlet Mall Rera
Rera EPOS Card Application Center
MONA Shinurayasu
MONA Card Application Center
unimo Chiharadai
unimo Chiharadai EPOS Card
Application Center
MALera GIFU
MALera GIFU EPOS Card Application Center
HUIS TEN BOSCH EPOS Card
Application Center
Sasebo 5bangai EPOS Card
Application Center
AMU PLAZA OITAJQ CARD EPOS Card Application Desk
BonBelta Tachibana
Tachibana EPOS Card Application Center

Address

Telephone

Rera EPOS Card Application Center, 1-2-1 Kashiwadai Minami, Chitose-shi, 066-8765

0123-27-3511

MONA Card Application Center, MONA Shinurayasu, 2nd Floor, 1-5-1 Irifune,
Urayasu-shi, 279-0012

047-390-5411

unimo Chiharadai EPOS Card Application Center, 2nd Floor, unimo Chiharadai,
3-4 Chiharadai Nishi, Ichihara-shi, 290-0194

0436-40-5411

MALera GIFU EPOS Card Application Center, 2nd Floor, MALera GIFU, 1100 Mitsuhashi,
Motosu-shi, 501-0497
HUIS TEN BOSCH EPOS Card Application Center, 2nd Floor, Passage, HUIS TEN BOSCH,
8-2 HUIS TEN BOSCH-cho, Sasebo-shi, 859-3292
Sasebo 5bangai EPOS Card Application Center, A-106, 1st Floor, Promenade East Zone,
Sasebo 5bangai, 2-1 Shinko-cho, Sasebo-shi, 857-0855
JQ CARD EPOS Card Application Desk, 302, 3rd Floor, AMU PLAZA OITA, 1-14
Kanamemachi, Oita-shi, 870-0831
Tachibana EPOS Card Application Center, 1st Floor, West Wing, BonBelta Tachibana,
3-10-32 Tachibanadorinishi, Miyazaki-shi, 880-8586

058-320-5811
0956-27-0971
0956-37-3711
097-513-2411
0985-35-4811

Machida Modi

109

Financial and Non-Financial Summary

Financial and Non-Financial Summary

MARUI GROUP CO., LTD., and its consolidated subsidiaries

Millions of yen
Fiscal years ended March 31

Total Group transactions
Retailing and Store Operation
Credit Card Services
Retailing-Related Services
Eliminations*1
Total operating revenues*2
Revenue*2
Gross profit
Selling, general and administrative expenses
EBITDA*3
Operating income
Net income (loss) attributable to owners of parent
Segment income:Retailing and Store Operation
Credit Card Services
Retailing-Related Services
Total assets
Shareholders’ equity
Installment sales accounts receivable
Consumer loans outstanding
Interest-bearing debt
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents
Capital investments
Depreciation and amortization
Earnings (loss) per share (yen)Net assets per share (yen)Cash dividends per share (yen)Payout ratio (%)
Total return ratio (%)
Operating income margin (%)* 4
Return on equity (%)
Return on invested capital (%)
Return on assets (%)
Equity ratio (%)
Stock price at year-end (yen)Market capitalization (including treasury stock) (billions of yen)Price earnings ratio (times)
Price book-value ratio (times)
Number of common shares issued (including treasury stock)
Number of shares of treasury stock
Total number of employees
Ratio of female employees (%)
Total number of stores
Total sales floor area (thousand m 2)
Environment preservation expenditure (thousands of yen)
Electricity consumption (thousands of kWh)
CO2 emissions (Scope 1 and 2) (t-CO2)*5
CO2 emissions (Scope 3) (t-CO2)*5

2006

2007

2008

2009

2010

2012

2013

2014

2015

2016

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

1,297,250
338,705
1,054,706
34,695(130,857)
253,077

1,469,111
322,866
1,234,339
33,816(121,910)
249,847

1,703,353
312,511
1,465,227
37,279(111,664)
245,867

561,539
209,347
164,641
62,32244,70523,983552,140
210,288
166,599
61,41543,688
4,248

493,533
177,565
159,382
36,87018,183
7,603

447,400
160,125
150,986
28,5229,138(8,750)419,255
149,926
139,488
29,695
10,4385,104

406,472
144,736
129,940
30,457
14,795(23,638)

412,408
147,240
129,224
33,08518,0155,251

407,366
148,172
123,886
35,23724,285
13,255416,460
156,642
129,495
37,134
27,146
15,409404,947
159,448
131,406
38,33828,042
16,036—160,035
130,419
39,286
29,615
17,771

24,245
19,818
4,429
722,578432,695
40,045
258,488
201,175
36,116(33,846)(12,956)
42,61925,812
17,616
70.39
1,286
28.0
39.8
144.4
8.0
5.5
—
6.4
59.9
2,325
857.1
33.0
1.8
368,660,417
32,217,405
8,156
39.4
31
381.4
—
—
150,975—

19,30921,892
6,913
740,373402,61051,310248,464
239,308
23,828(28,025)6,300
44,72230,293
17,727
12.92
1,233
28.0
216.7
646.1
7.9
1.0
—
6.1
54.4
1,445
532.7
111.8
1.2
368,660,417
42,222,840
8,154
39.9
28
381.4
588,300—
142,006—

10,645
5,740
6,772
695,491
336,445
73,781
222,534
277,537
13,9193,134(32,241)
29,53523,64918,686
24.91
1,207
28.0
112.4
911.3
3.7
2.1
—
2.4
48.4
1,061
338.0
42.6
0.9
318,660,417
39,913,811
7,147
44.4
25
381.4
660,600—
125,628
—

1,252
6,725
3,740
685,351
310,818
88,761
207,117
292,061
15,316(18,234)
2,409
29,026
24,073
19,384(31.90)
1,135
28.0
—
—
2.0
(2.7)
—
1.1
45.4
523
166.6
—
0.5
318,660,417
44,918,979
7,085
44.6
25
444.8
731,900—
122,136—

37
10,272
2,509
664,357
312,188
95,871
191,486
283,676
30,811(13,034)(14,519)
32,283
17,39819,257
18.65
1,140
14.0
75.1
75.1
2.5
1.6
—
1.5
47.0
678
216.0
36.4
0.6
318,660,417
44,941,174
6,847
44.7
25
453.3
633,700
259,800
130,600—

2,110
13,704
1,568
628,910284,526
111,760
158,707
264,692
30,280(7,033)(22,926)
32,603
14,332
15,661(86.36)
1,039
14.0
—
—
3.6
(7.9)
—
2.2
45.2
537
171.1
—
0.5
318,660,417
44,946,398
6,492
44.4
26
457.8
893,700
244,800
114,900—

7,547
10,6192,567
615,130
289,975
142,995
132,280
245,175
24,897(3,913)(23,660)
29,928
7,941
15,069
19.19
1,059
14.0
73.0
73.0
4.4
1.8
—
2.8
47.1
690
219.8
36.0
0.7
318,660,417
44,947,345
6,218
44.4
27
458.4
1,165,400
204,484
96,300—9,885
13,177
3,792
624,173
303,637
171,187
123,739
243,762
5,111
435(5,571)
29,940
7,665
10,951
48.43
1,109
15.0
31.0
31.0
6.0
4.5
—
3.9
48.6
975
310.6
20.1
0.9
318,660,417
44,948,289
6,101
44.3
27
453.1
1,141,300
204,825
104,299—

10,562
15,634
4,523
664,019
315,446
213,466
125,215
264,824(9,227)(6,791)
16,14130,053
11,238
9,988
56.29
1,152
18.0
32.0
32.0
10.7
5.0
—
4.3
47.5
885
282.0
15.7
0.8
318,660,417
44,901,353
5,966
44.5
27
446.5
924,500
214,905
113,227
550,612

8,074
20,126
3,333
675,627
306,795
227,121
128,030
277,839
12,310(3,867)(7,267)31,229
9,786
10,296
58.87
1,166
19.0
32.3
125.3
11.2
5.2
3.3
4.2
45.4
1,365
380.3
23.2
1.2
278,660,417
15,588,364
5,918
44.6
27
444.0
1,281,000
199,700
109,528
530,595

7,856
22,186
3,674
730,126
281,610
279,763
134,107359,324(35,310)(4,063)40,71932,575
12,882
9,670
70.68
1,161
22.0
31.1
227.5
12.0
6.0
3.3
4.1
38.6
1,613
449.4
22.8
1.4
278,660,417
36,270,334
5,899
45.5
28
441.8
837,400
196,196
101,278
509,070*1 Eliminations under total Group transactions represent the deduction of credit card transactions recorded in Retailing and Store Operation.
*2 Beginning with the fiscal year ended March 31, 2016, the display method was changed from total value display to net value display, the portion that represents income
to the Company, for sales recorded through sale or return arrangements. In conjunction with this change, the previous “operating revenues” line item was replaced with
the new “revenue” line item.
*3 EBITDA (earnings before interest, taxes, and depreciation and amortization) = Operating income + Depreciation and amortization

110

2011

*4 Operating income margin is calculated using operating revenues for the fiscal year ended March 31, 2013, and prior fiscal years and revenue for the fiscal year ended
March 31, 2014, and subsequent fiscal years.
*5 Scope 1 and 2 represent CO2 emissions from the Group. Scope 3 represents CO2 emissions from areas including raw material procurement, transportation, and use
by customers. Emissions calculations are verified by Mizuho Information & Research Institute, Inc.

111

Consolidated Balance Sheets

Consolidated Statements of Income / Consolidated Statements of Comprehensive Income

MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of March 31, 2015 and 2016MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2015 and 2016

Millions of yen
2015

AssetsCurrent assets:
Cash and deposits (Notes 6 and 21)
Notes and accounts receivable–trade (Note 6)
Accounts receivable–installment (Notes 4 and 6)
Operating loans (Notes 5 and 6)
Allowance for doubtful accounts (Note 6)
Inventories
Deferred tax assets (Note 11)
Other
Total current assets
Property and equipment (Note 13):Land
Buildings and structures
Construction in progress
Other
Accumulated depreciation
Property and equipment, net
Investments and other assets:
Investment securities (Notes 6 and 7)
Investments in unconsolidated subsidiaries and affiliates
Intangible assets
Leasehold and other deposits (Note 6)
Deferred tax assets (Note 11)
Other
Total investments and other assets
Total assets
Liabilities
Current liabilities:
Accounts payable–trade (Note 6)
Short-term loans payable and current portion of long-term loans payable (Notes 6 and 10)
Current portion of bonds payable (Notes 6 and 10)
Commercial paper (Notes 6 and 10)
Income taxes payable (Notes 6 and 11)
Provision for bonuses
Provision for point card certificates
Provision for loss on redemption of gift certificates
Other
Total current liabilities
Non-current liabilities:
Bonds payable (Notes 6 and 10)
Long-term loans payable (Notes 6, 8, and 10)
Deferred tax liabilities (Note 11)
Provision for loss on interest repayment
Provision for loss on guarantees
Asset retirement obligations (Note 12)
Other
Total non-current liabilities
Total liabilities
Contingent liabilities (Note 14)
Net assets (Note 15)
Shareholders’ equity:
Capital stock		 Authorized: 1,400,000,000 shares of common stock		 Issued:
278,660,417 shares as of March 31, 2015 and 2016
Capital surplus
Retained earnings
Treasury stock (Note 26)
		 15,588,364 shares as of March 31, 2015 and 36,270,334 shares as of March 31, 2016
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income
Subscription rights to shares (Note 22)
Non-controlling interests
Total net assets
Total liabilities and net assets

2016

Thousands of
U.S. dollars (Note 1)2016¥  31,240
6,453
227,121
128,030(8,110)353,495
16,834
6,444
18,738426,753¥  32,586
7,459
279,763
134,107(7,800)413,530
12,7595,569
21,594
486,040$   290,946
66,5982,497,883
1,197,383(69,642)3,692,232
113,919
49,723
192,8034,339,642

99,665
256,707488
35,146(219,313)
172,694

99,683
261,491
420
34,523(221,121)
174,996890,026
2,334,741
3,750
308,241(1,974,294)
1,562,464

24,389772
6,237
35,824
6,348
2,606
76,178¥ 675,627

19,610772
6,502
34,895
4,619
2,688
69,088¥ 730,126

175,089
6,892
58,053
311,562
41,241
24,000616,857$ 6,518,982¥  27,002
56,83917,00010,000
3,340
3,763
4,590
153
28,593
151,281¥  24,318
48,32430,00010,000
4,731
3,756
6,586
159
30,601
158,477$   217,125
431,464
267,857
89,28542,24133,53558,803
1,419
273,223
1,414,973

85,000109,000
1,516
12,652
140
548
8,232
217,090368,371

80,000191,000
1,855
6,078
164
881
9,567
289,547
448,025714,285
1,705,357
16,56254,2671,464
7,866
85,4192,585,241
4,000,223

35,92035,920320,71491,307
197,875

91,307210,237

815,241
1,877,116(19,290)
305,813(54,238)
283,226(484,267)
2,528,803

982
982
39
420
307,255¥ 675,627(1,616)(1,616)53437
282,101¥ 730,126(14,428)(14,428)473
3,901
2,518,758$ 6,518,982

Consolidated Statements of Income
Revenue (Notes 3 and 13)
Cost of sales (Notes 3, 13 and 16)
Gross profit
Selling, general and administrative expenses (Notes 3, 13 and 17)
Operating income
Non-operating income (expenses):
Interest income
Dividend income
Gain on bad debt recovered
Gain on sale of investment securities
Interest expenses
Financing expenses
Loss on retirement of property and equipment (Note 18)
Loss on interest repayment
Provision for loss on interest repayment
Other, net (Note 19)
Income before income taxes
Income taxes (Note 11)
Income taxes–current
Income taxes–deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent
Per share data (Note 25)
Net income per share:
Basic
DilutedCash dividends
Net assets per share

Millions of yen

Thousands of
U.S. dollars (Note 1)

2015

2016

2016

¥249,847
90,398
159,448
131,406
28,042¥245,867
85,832160,035
130,419
29,615$2,195,241
766,357
1,428,883
1,164,455
264,419

110
446
1,275
12,094(1,870)(179)(1,097)(390)(12,652)(1,776)(4,041)
24,001

86
370
1,190
972
(1,797)(296)(1,920)—(1,201)(113)(2,709)26,905767
3,303
10,625
8,678(16,044)(2,642)(17,142)—(10,723)(1,008)(24,187)
240,223

6,193
1,745
7,938
16,06225¥ 16,036

5,676
3,434
9,110
17,79423¥ 17,771

50,67830,66081,339158,875205$  158,669

2015

2016

¥   58.87
58.86
19.00

¥   70.68
70.67
22.00

$ 0.630.63
0.19

1,166.20

1,161.81

10.37

Yen

U.S. dollars (Note 1)
2016

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Comprehensive Income
Net income
Other comprehensive income (Note 20):
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income

Millions of yen
2015

2016

Thousands of
U.S. dollars (Note 1)
2016¥16,062¥17,794$158,875(4,794)(4,794)¥11,268(2,598)(2,598)¥15,196(23,196)(23,196)$135,678¥11,242¥15,172$135,464

25

23

205

Comprehensive income attributable to:
Owners of parent
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

112

113

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash FlowsMARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2015 and 2016MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
For the fiscal years ended March 31, 2015 and 2016

Millions of yen
Shareholders’ equity

Capitalstock

Capitalsurplus¥35,920¥ 91,307 ¥236,274¥(53,832) ¥309,669

Dividends from surplus(4,927)(4,927)

Net income attributable to owners
	  of parent

16,036

Balance as of April 1, 2014

Retainedearnings

Millions of yen

Accumulated othercomprehensive income

Treasury
stock

Total

2015

Valuationdifference
on availablefor-salesecurities

Total

Subscription
rights toshares

Noncontrollinginterests

Total net
assets¥ 5,776¥ 5,776¥39¥402¥315,889

Changes of items during period:

Purchase of treasury stock
Disposal of treasury stock(4,927)

16,036

16,036(15,002)(15,002)(15,002)

(6)

43

36

36

Retirement of treasury stock(49,500)

49,500——Transfer from retained earnings
	  to capital surplus

49,507(49,507)———(38,398)

Net changes of items other thanshareholders’ equity(4,794)(4,794)0

17(4,776)(3,856)(4,794)(4,794)0

17(8,633)¥ 91,307 ¥197,875¥(19,290) ¥305,813¥  982¥  982¥39¥420¥307,255

Dividends from surplus(5,391)(5,391)

Net income attributable to owners
	  of parent

17,771

Total changes of items during period
Balance as of April 1, 2015—
¥35,920

34,541

Changes of items during period:

Purchase of treasury stock
Disposal of treasury stock(17)

17,771

17,771(35,002)(35,002)(35,002)

54

36

36

—

—

—

—

Retirement of treasury stock
Transfer from retained earnings
	  to capital surplus

17

(17)

—

12,361

Net changes of items other than
	  shareholders’ equity
Total changes of items during period
Balance as of March 31, 2016—
¥35,920¥ 91,307 ¥210,237(5,391)(2,598)(2,598)13

16(2,568)(22,586)(2,598)(2,598)13

16(25,154)¥(54,238) ¥283,226¥(1,616)¥(1,616)

¥53

¥437

¥282,101(34,947)

The accompanying notes are an integral part of these consolidated financial statements.
Thousands of U.S. dollars (Note 1)
Accumulated othercomprehensive income

Shareholders’ equity

Balance as of April 1, 2015

Capitalstock

CapitalsurplusRetainedearnings

Treasurystock$320,714$815,241 $1,766,741 $(172,232) $2,730,473

Total

Valuationdifference
on availablefor-salesecurities

Total

Subscription
rights toshares

Noncontrollinginterests

Total net
assets$  8,767$  8,767$348$3,750$2,743,348

Changes of items during period:
Dividends from surplus(48,133)

Net income attributable to owners
	  of parent

158,669

Purchase of treasury stock
Disposal of treasury stock(151)(48,133)
158,669

158,669(312,517)(312,517)(312,517)

482

321

321

—

—

—

—

Retirement of treasury stock
Transfer from retained earnings
	  to capital surplus

151

(151)

—

110,366

Net changes of items other than
	  shareholders’ equity
Total changes of items during period
Balance as of March 31, 2016

114—
$320,714(48,133)(23,196)(23,196)

116

142(22,928)(201,660)(23,196)(23,196)

116

142(224,589)$815,241 $1,877,116 $(484,267) $2,528,803$(14,428)$(14,428)$473$3,901$2,518,758(312,026)

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Increase (decrease) in provision for point card certificates
Increase (decrease) in provision for allowance for doubtful accounts
Increase (decrease) in provision for loss on interest repayment
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Loss (gain) on retirement of property and equipment
Loss (gain) on sale of investment securities
Decrease (increase) in notes and accounts receivable–trade
Decrease (increase) in accounts receivable–installment
Decrease (increase) in operating loans
Decrease (increase) in inventories
Increase (decrease) in accounts payable–trade
Other, net (Note 19)
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of property and equipment
Purchase of investment securities
Proceeds from sale of investment securities
Payments for leasehold and other deposits
Proceeds from collection of leasehold and other deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Net increase (decrease) in commercial paper
Purchase of treasury stock
Cash dividends paid (Note 15)
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 21)

2016

Thousands of
U.S. dollars (Note 1)
2016¥ 24,001
10,296
1,777
670
5,781
(253)
(556)
1,870
604
(12,094)(129)(13,655)(2,815)
1,964(2,973)
2,839
17,328475(1,906)(3,721)135
12,310¥ 26,905
9,670
1,996
(310)
(6,574)
(7)
(457)
1,797
655
(972)
(1,006)(52,641)(6,076)
4,145(2,683)(2,657)(28,215)388(1,811)(5,741)
68(35,310)$ 240,223
86,33917,821(2,767)(58,696)(62)(4,080)16,044
5,848(8,678)(8,982)(470,008)(54,250)
37,008(23,955)(23,723)(251,919)
3,464(16,169)(51,258)
607(315,267)(10,874)(17,931)
22,684
(70)
2,165
159
(3,867)(9,058)
(678)
3,340
(619)
1,485
1,467
(4,063)(80,875)(6,053)29,821(5,526)
13,25813,098(36,276)(29,985)
45,000—19,897(20,000)(2,000)(15,016)(4,927)(234)(7,267)
1,176
30,053¥ 31,229(6,042)97,000(17,500)
24,875(17,000)—(35,035)(5,391)(185)
40,7191,345
31,229¥ 32,575(53,946)
866,071(156,250)
222,098(151,785)—(312,812)(48,133)(1,651)
363,562
12,008278,830$ 290,848

The accompanying notes are an integral part of these consolidated financial statements.

115

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

MARUI GROUP CO., LTD. and Its Consolidated Subsidiaries
As of and for the fiscal years ended March 31, 2015 and 2016

1. BASIS OF PRESENTATION(4) Investment securities

The accompanying consolidated financial statements of MARUI GROUP CO., LTD. (“the Company”) and its consolidated subsidiaries (collectively, “the Group”) have been prepared in accordance with the provisions set forth in the Financial Instruments andExchange Act of Japan and its related accounting regulations as well as in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial
Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form that is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the 2015 consolidated financial statements to conform to theclassifications used in 2016.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company isincorporated and operates.
As permitted by the regulations under the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been omitted. As a result, the totals shown in the accompanying consolidated financial statements in Japanese yen
do not necessarily agree with the sums of the individual amounts.
The U.S. dollar amounts shown in the accompanying consolidated financial statements and notes thereto were translated
from the presented Japanese yen amounts into U.S. dollar amounts at the rate of ¥112 = $1, the approximate rate of exchange
at March 31, 2016, and were then rounded down to the nearest thousand. As a result, the totals shown in the accompanying
consolidated financial statements in U.S. dollars do not necessarily agree with the sums of the individual amounts. This translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan. Suchtranslation should not be construed as a representation that Japanese yen could be converted into U.S. dollars at that or any
other rate.

Investment securities held by the Group are all classified as available-for-sale securities.
Available-for-sale securities with a determinable market value are stated at fair value based on the market value at thebalance sheet date, and unrealized gains or losses, net of applicable income taxes, are reported as a separate componentof net assets. Cost of securities sold is computed based on the moving-average method. Available-for-sale securities without
a determinable market value are stated at cost determined by the moving-average method.
Investments in unconsolidated subsidiaries and affiliates are stated at cost determined by the moving-average method.

(5) Inventories
Inventories are measured at the lower of cost determined by the monthly weighted-average method or net selling value.

(6) Depreciation and amortization
Property and equipment (excluding leased assets) are depreciated by the straight-line method.
Intangible assets are amortized by the straight-line method. Capitalized computer software costs for internal use areamortized by the straight-line method over the estimated useful lives (within five years).
For finance leases which do not transfer ownership of the leased assets to the lessee, leased assets are depreciated by thestraight-line method over the lease terms with no residual value.

(7) Allowance for doubtful accounts
The allowance for doubtful accounts is stated at the amount determined based on the historical experience of bad debt withrespect to ordinary receivables (“general reserve”), plus an estimate of uncollectible amounts determined by reference to specificdoubtful receivables of customers experiencing financial difficulties (“specific reserve”).

(8) Provision for bonuses

2. SIGNIFICANT ACCOUNTING POLICIESThe provision for bonuses is accrued at the fiscal year-end to which such bonuses are attributable.

(1) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The consolidated financial statements as of and for the fiscal year ended March 31, 2016 and 2015, include the accounts of theCompany and its nine significant subsidiaries.
Under the control or influence concept, those companies in which the Company, either directly or indirectly, is able to exercise control over operations are consolidated, and those companies over which the Company has the ability to exercise significant influence are accounted for using the equity method. For the fiscal years ended March 31, 2015 and 2016, there was no
subsidiary or affiliate accounted for using the equity method. Investments in the remaining unconsolidated subsidiaries andaffiliates are stated at cost. If the equity method of accounting was applied to the investments in these companies, the effect on
the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation.
The fiscal year-end of all consolidated subsidiaries is March 31, the same as that of the Company.

(9) Provision for point card certificates
Credit points are awarded to customers when they make purchases using the Group’s member card and, upon request, theCompany will issue gift certificates or allow customers to use their accumulated credit points for their payment.
The provision for point card certificates is accrued to the estimated amount required based on the balance of credit points
awarded to card members outstanding at the fiscal year-end.

(10) Provision for loss on redemption of gift certificates
The monetary value of gift certificates and other certificates that have not been redeemed for a set period of time after issuanceis recognized as income. However, some gift certificates and other certificates can be redeemed after the recognition of income.
The provision for loss on redemption of gift certificates is provided at the estimated amount to be redeemed in the future
based on historical experience.

(2) Foreign currency translation
All monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates
prevailing at the consolidated balance sheet dates. All revenues and expenses associated with foreign currencies are translated
into Japanese yen at the exchange rates prevailing when such transactions were made. The resulting exchange gains or losses
are credited or charged to income.

(11) Provision for loss on interest repayment
The provision for loss on interest repayment is provided to the estimated amount of repayment claims on consumer loaninterests at the fiscal year-end.

(12) Provision for loss on guarantees(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, the Group considers cash on hand, readily available deposits, and highly
liquid short-term investments with maturities of three months or less when purchased that are exposed to an insignificant risk ofchanges in value to be cash and cash equivalents.

116

The provision for loss on guarantees is provided at the estimated amount of loss arising from the Group’s guarantee obligationsof customers’ liabilities in relation to loans to individuals from financial institutions with which the Group has guarantee service
arrangements.

117

Notes to Consolidated Financial Statements(13) Basis for revenue recognition

Notes to Consolidated Financial Statements

The Group utilizes interest rate swaps to mitigate the fluctuation risk of interests on loans payable.
The Group applies the special accounting treatment for interest rate swaps as all requirements for this treatment are
fulfilled. The Group omits the evaluation of hedge effectiveness for interest rate swaps under the special accounting treatment.

The Group applied this accounting policy retroactively and restated the consolidated financial statements for the fiscal year ended
March 31, 2015. As a result, revenue and cost of sales for the fiscal year ended March 31, 2015 decreased by ¥155,100 million($1,384,821 thousand). There was no impact on gross profit, operating income, and income before income taxes. In addition, there
was no accumulated impact on the beginning balance of net assets for the fiscal year ended March 31, 2015.
In addition, due to the change in presentation, an amount of ¥1,303 million ($11,633 thousand) included in cost of sales
on the consolidated statements of income for the fiscal year ended March 31, 2015 was reclassified to selling, general andadministrative expenses.
Impacts on segment information are stated in Note 23, “SEGMENT INFORMATION.”(15) Consumption taxes(c) Accounting standard issued but not yet applied

National and local consumption taxes are accounted for by the tax-excluded method. Non-deductible consumption tax andother taxes imposed on fixed assets are recorded as expenses as incurred.

The “Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016)(i) Overview
		Following the framework in Auditing Committee Report No. 66, the “Audit Treatment regarding the Judgment ofRecoverability of Deferred Tax Assets,” which prescribes estimation of deferred tax assets according to the classificationof the entity by one of five types, the following treatments were changed as necessary:		 1. Treatment for an entity that does not meet any of the criteria in types 1 to 5;
		 2. Criteria for types 2 and 3;
		 3. Treatment for deductible temporary differences which an entity classified as type 2 is unable to schedule;
		 4. Treatment for the period which an entity classified as type 3 is able to reasonably estimate with respect to futuretaxable income before consideration of taxable or deductible temporary differences that exist at the end of thecurrent fiscal year; and		 5. Treatment when an entity classified as type 4 also meets the criteria for types 2 or 3.
(ii) Effective date		 Effective from the beginning of the fiscal year ending March 31, 2017(iii) Effects of application of the Guidance		 The Company is currently evaluating the effects of application.

The charges for installment sales and interest income on consumer loans are recognized on an accrual basis based on theremaining loan balances.

(14) Hedge accounting

3. CHANGES IN ACCOUNTING POLICIES(a) Business combinations and others
Effective from the fiscal year ended March 31, 2016, the Group adopted the “Revised Accounting Standard for Business
Combinations” (ASBJ Statement No. 21, September 13, 2013), “Revised Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, September 13, 2013) and “Revised Accounting Standard for Business Divestitures” (ASBJ
Statement No. 7, September 13, 2013), and changed the presentation of net income and used the term “non-controlling interests”
instead of “minority interests.” Certain amounts in the prior year comparative information were reclassified to conform to suchchanges in the current year presentation.

(b) Revenue recognition
In the Retailing and Store Operation segment, certain sales are made under a sale or return arrangement with tenants. Under thearrangement, a good is purchased from a tenant when the good is sold to a customer and the Group does not bear substantial
risk on inventory since the title of the good remains with the tenant until the good is sold to a customer.
The Group previously recognized revenue from such arrangement by recording both operating revenues and cost of sales.
However, effective from the fiscal year ended March 31, 2016, the Group comprehensively applied JICPA Accounting PracticeCommittee Research Report No. 13, the “Research Report on Revenue Recognition in Japan (Interim Report)—considerations inlight of IAS 18 ‘Revenue’” and changed its accounting treatment to recognize a profit, net of cost of sales, as revenue.
In response to changes in the consumer market environment, the Group has been moving away from its traditional retailingbusiness and developing shopping centers of its own unique style, in accordance with the medium-term management plan.
The change of revenue recognition described above will enable the Group to not only disclose the results of operations more
appropriately and thus monitor the progress of implementation of the management plan, but to also use the amount of revenue
as a more practical KPI.
Thus, the Group changed the account name from “Total operating revenues” to “Revenue” on the consolidated statements
of income.

4. ACCOUNTS RECEIVABLE–INSTALLMENT
The following balances for lump sums receivable and revolving receivable were securitized and are therefore excluded from theconsolidated balance sheets as of March 31, 2015 and 2016:
Millions of yen
2015

Card shopping:
Lump sums receivable
Revolving receivable¥53,000
13,526

2016¥55,000
13,928

Thousands of
U.S. dollars (Note 1)
2016$491,071
124,357

Regarding expenses arising from a tenant with a fixed term lease contract, the Group previously accounted for fixed expenses
such as depreciation of retail space as cost of sales in correspondence with rent revenue. However, effective from the fiscal year
ended March 31, 2016, the Group changed the treatment to account for the expenses arising from a tenant with a sales-based
rent agreement as selling, general and administrative expenses. This is consistent with the treatment for expenses arising fromthe sales or return arrangement described above, which are accounted for as selling, general and administrative expenses. Thus,
the results of operations will be more clearly stated.

118

119

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

5. LOAN COMMITMENTS(2) Estimated fair value of financial instruments

Certain consolidated subsidiaries that operate in the Credit Card Services segment provide consumer loan services to customers.
The unused balance of loans contingent with the loan commitments was as follows:

Carrying value, fair value, and the difference between them as of March 31, 2015 and 2016, are summarized below. Financial
instruments for which the fair value is difficult to estimate are excluded from the following table (See Note 2 below).

Millions of yen

Total loan limits
Amount executed as loans
Unused balance

Thousands of
U.S. dollars (Note 1)

2015

2016

2016

¥1,081,117
128,030¥  953,086¥1,090,691
134,107¥  956,583$9,738,312
1,197,383$8,540,919

Under the provisions of the loan service contract, the Group is able to decline a loan request or decrease a loan limit whena customer’s financial condition or other circumstances change. Thus, the total unused balance will not necessarily be executed
as loans.

6. FINANCIAL INSTRUMENTS(1) Status of financial instruments(a) Policy on financial instruments
The Group raises necessary funds for business operations through bank loans and corporate bond issuance. Temporary surplus
funds are invested in highly safe short-term deposits. Derivative transactions are utilized to avoid the interest rate fluctuation risk
on loans. The Group does not use derivative transactions for speculative purposes.

(b) Financial instruments, their risks, and the risk management system
Accounts receivable–installment and operating loans are exposed to the credit risk of customers. In accordance with the internalrisk management rules, the Group mitigates such risk by monitoring and evaluating the credit status of each customer by meansof third-party personal credit information agencies and the Group’s own credit monitoring system.
Investment securities primarily consist of shares issued by business partners and are exposed to both credit risk and market
risk. The Group mitigates such risks by regularly monitoring the share price and the financial condition of the issuers.
Leasehold and other deposits consist of security deposits to rent properties for stores.
Accounts payable–trade is settled in the short term.
Long-term loans payable with a floating interest rate is exposed to interest rate fluctuation risk. The Group utilizes interest
rate swaps to avoid such risk by fixing the future interest rate.

120

Millions of yen
2015(1) Cash and deposits(2) Notes and accounts receivable–trade(3) Accounts receivable–installment
		 Allowance for doubtful accounts *1(4) Operating loans
		 Allowance for doubtful accounts *2(5) Investment securities:
		Available-for-sale securities(6) Leasehold and other deposits
Assets, total(1) Accounts payable–trade(2) S hort-term loans payable and current
portion of long-term loans payable(3) Current portion of bonds payable(4) Commercial paper(5) Income taxes payable(6) Bonds payable(7) Long-term loans payable
Liabilities, total
Derivative transactions

2016

Carrying value

Fair value

Difference

Carrying value

Fair value

Difference¥ 31,240
6,453
227,121(5,198)221,923
128,030(2,231)
125,798¥ 31,240
6,453¥    ——¥ 32,586
7,459¥    ——

249,151

27,227

312,365

37,847

142,766

16,968¥ 32,586
7,459
279,763(5,246)
274,517
134,107(2,114)
131,993

152,737

20,74424,1529,493¥419,062¥ 27,002

24,152
9,312¥463,077¥ 27,002—(180)¥44,015¥    —

19,3298,404¥474,290¥ 24,318

19,3298,324¥532,801¥ 24,318—(80)¥58,510¥    —

56,83917,00010,0003,340
85,000109,000¥308,181¥     —

56,83917,00010,0003,340
85,860109,046¥309,089¥     —

—
—
—
—
860
46
¥   907¥    —

48,32430,00010,0004,731
80,000191,000¥388,374¥        
—48,32430,00010,0004,731
80,650191,382¥389,407¥     —

—
—
—
—
650
382
¥ 1,032¥    —*1 The amount presents the total of general reserve and specific reserve for accounts receivable–installment.
*2 The amount presents the total of general reserve and specific reserve for operating loans.

121Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Thousands of U.S. dollars (Note 1)
2016
Carrying value(1) Cash and deposits(2) Notes and accounts receivable–trade(3) Accounts receivable–installment
		 Allowance for doubtful accounts(4) Operating loans
		 Allowance for doubtful accounts(5) Investment securities
		Available-for-sale securities(6) Leasehold and other deposits
Assets, total(1) Accounts payable–trade(2) Short-term loans payable and current portion of long-term loans payable(3) Current portion of bonds payable(4) Commercial paper(5) Income taxes payable(6) Bonds payable(7) Long-term loans payable
Liabilities, total
Derivative transactions

Fair value

Difference$  290,946 $  290,946
66,59866,5982,497,883(46,839)2,451,044 2,788,973
1,197,383(18,875)
1,178,508 1,363,723$     ——

172,580
75,035$4,234,732$  217,125
431,464
267,857
89,28542,241
714,285
1,705,357$3,467,625$       —

—(714)$522,410$     —
—
—
—
—
5,803
3,410
$  9,214$     —

172,580
74,321$4,757,151$  217,125
431,464
267,857
89,28542,241
720,089
1,708,767$3,476,848$       —337,919

185,214

Liabilities:		(1) Accounts payable–trade, (2) Short-term loans payable and current portion of long-term loans payable, (3) Current
portion of bonds payable, (4) Commercial paper, and (5) Income taxes payable		  The fair value approximates their carrying value because of their short maturities.
		 (6) Bonds payable		The fair value is based on the present value calculated by discounting the sum of principal and interests using aninterest rate, for which credit risk and redemption periods are taken into account.
		 (7) Long-term loans payable		The carrying value of long-term loans payable with a floating interest rate approximates its fair value since the interest
rate reflects the market rate in the short term. Thus, carrying value is used as its fair value. The fair value of long-termloans payable hedged by interest rate swaps under special accounting treatment is calculated by discounting the sumof principal and interests accounted for together with interest rate swaps using a reasonably estimated interest rateapplied to similar borrowings. The fair value of long-term loans payable with fixed interest rates is calculated bydiscounting the sum of principal and interests using an interest rate that would be applied to similar new borrowings.
		 Derivative transactions
		 See Note 8, “DERIVATIVE TRANSACTIONS,” for details.
Note 2. Financial instruments whose fair value is extremely difficult to determine
Millions of yen

Note 1. Calculation method for fair value of financial instruments and information on securities and derivative transactions
Assets:		 (1) Cash and deposits and (2) Notes and accounts receivable–trade		 The fair value approximates their carrying value because of their short maturities.
		 (3) Accounts receivable–installment and (4) Operating loans		The fair value is determined as their present value by discounting, using the risk-free rate, their future cash flows
adjusted for their credit risk identified in the credit control process. With regard to bad receivables and loans, allowance for doubtful accounts is estimated based on the present value of their estimated future cash flows. The fair value
approximates the amount of carrying value less allowance for doubtful accounts. Thus, the amount of carrying valueless allowance for doubtful accounts is used as fair value.

2015

Unlisted stocks
Part of security deposits¥   877
27,9152016¥   921
28,103Thousands of
U.S. dollars (Note 1)
2016$  8,223
250,919

Unlisted stocks are not included in (5) Investment securities in the table above, as there were no market prices available
and it is extremely difficult to determine the fair value. Similarly, part of security deposits is not included in (6) Leasehold andother deposits.

		 (5) Investment securities
		 The fair value is based on quotes on an exchange.
		 (6) Leasehold and other deposits		The fair value is determined as their present value by discounting future cash flows at the risk-free rate adjusted for
credit risk premium. The amount includes the current portion of leasehold and other deposits.

122

123

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

7. INVESTMENT SECURITIESNote 3. Redemption schedule for monetary claims and securities with maturities
Millions of yen(1) Information on available-for-sale securities as of March 31, 2015 and 2016, is as follows:

2015

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Millions of yen

Due in one year
or less

Due after one year
through five years

Due after five years
through ten years

Due after ten years¥ 31,240
6,453
129,841
62,466
1,515¥231,516¥     ——
66,16065,005
3,654¥134,820¥    ——
19,638486
2,843¥22,968¥    ——
11,48172
1,480¥13,034
Millions of yen

2016

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Due in one year
or less

Due after one year
through five years

Due after five years
through ten years

Due after ten years¥ 32,586
7,459
154,581
62,913
1,352¥258,892¥     ——
83,29470,885
2,986¥157,166¥    ——
23,502245
2,218¥25,966¥    ——
18,386
63
1,846¥20,296

Thousands of U.S. dollars (Note 1)
2016

Cash and deposits
Notes and accounts receivable–trade
Accounts receivable–installment
Operating loans
Leasehold and other deposits
Total

Due in one year
or less

Due after one year
through five years

Due after five years
through ten years

Due after ten years$  290,946
66,5981,380,187
561,723
12,071$2,311,535$       —
—743,696
632,901
26,660$1,403,267$     ——
209,839
2,187
19,803$231,839$     ——
164,160
562
16,482$181,214

2015

Carrying value exceedingacquisition cost:
StocksSubtotalCarrying value not exceedingacquisition cost:
StocksSubtotal
Total

Carrying value

Acquisition cost

¥18,783
18,783¥16,468
16,4685,369
5,369¥24,152

6,319
6,319
¥22,7872016
Difference

Carrying value

Acquisition cost

Difference¥2,3142,314¥ 9,072
9,072¥ 8,5108,510¥   562
562

(950)
(950)
¥1,364

10,256
10,256¥19,329

12,544
12,544¥21,054(2,287)(2,287)¥(1,725)

Thousands of U.S. dollars (Note 1)
2016

Carrying value exceedingacquisition cost:
StocksSubtotalCarrying value not exceedingacquisition cost:
StocksSubtotal
Total

Carrying value

Acquisition cost

Difference$ 81,000
81,000$ 75,982
75,982$  5,017
5,017

91,571
91,571$172,580

112,000
112,000$187,982(20,419)(20,419)$(15,401)

Unlisted stocks in the amount of ¥237 million and ¥281 million ($2,508 thousand) as of March 31, 2015, and 2016,
respectively, are not included in the table above since their market price is not readily available and it is extremely difficult todetermine their fair value.

See Note 10, “SHORT–TERM LOANS PAYABLE AND LONG–TERM DEBT,” for the schedule of aggregate annual maturities oflong-term loans payable and long-term debt.

124

125

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements(2) I nformation on sale of available-for-sale securities for the fiscal years ended March 31, 2015 and 2016 is asfollows:
Millions of yen
2015

Stocks
Total

Proceeds
from sales

Gains¥22,684¥22,684¥12,094¥12,094

2016
Proceeds
from sales

Losses

¥—
¥—

Gains

¥3,340¥3,340¥972¥972

LossesStocksTotal$29,821$29,821$8,678$8,678The Group capitalizes leased assets under finance leases that do not transfer ownership. These assets mainly consist of buildings and properties in connection with the Retailing and Store Operation segment and software.
The future minimum lease payments under non-cancellable operating leases were as follows:
Millions of yen
2015

Within one year
Over one year
Total

2016
Gains

(As a Lessee)¥0¥0Thousands of U.S. dollars (Note 1)
Proceeds
from sales

9. LEASES

Losses$0$0¥ 3,960
18,469¥22,4292016¥ 4,782
25,136¥29,919

Thousands of
U.S. dollars (Note 1)
2016$ 42,696
224,428$267,133(As a Lessor)
The future minimum lease receipts under non-cancellable operating leases were as follows:(3) W hen the fair value of investment securities declines by 30% to 50%, the Group recognizes an impairment
loss after comprehensively evaluating the recoverability of the market price. For the fiscal year ended March
31, 2015, the Group recognized an impairment loss on available-for-sale securities but omitted its disclosure since the amount was immaterial. No significant impairment loss on investment securities was recognized for the fiscal year ended March 31, 2016.

8. DERIVATIVE TRANSACTIONS
For the fiscal years ended March 31, 2015 and 2016, the Group’s derivative transactions were limited to interest rate swaps
that qualified for hedge accounting and met the requirements for the special accounting treatment for interest rate swaps as
described below. There were no derivative transactions for which hedge accounting was not applied.
Hedge accounting method:
Special treatment for interest rate swaps
Type of derivative transactions:Interest rate swaps, receive floating / pay fixed
Hedged item:
Long-term loans payable
Millions of yen
2015
Contract amountTotal

Due after one year

¥17,000¥17,000

Thousands of U.S. dollars (Note 1)

2016

2016

Contract amount
Fair value

*

Total

Due after one year

¥27,000¥22,000

Contract amount
Fair value

*

Total

Due after one year

$241,071$196,428

Fair value** Interest rate swaps under the special accounting treatment are accounted for as an integral component of the long-term loans payable designated as hedged items. Thus,
their fair value is included in that of long-term loans payable.

126

Millions of yen
2015

Within one year
Over one year
Total

¥ 3,452
8,859¥12,3112016¥ 7,049
9,485¥16,534

Thousands of
U.S. dollars (Note 1)
2016$ 62,937
84,687$147,625

10. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT
Short-term loans payable and current portion of long-term loans payable as of March 31, 2015 and 2016, consisted of thefollowing:
Millions of yen
2015

Short-term loans payable
Current portion of long-term loans payable
Total¥39,339
17,500¥56,8392016¥33,324
15,000¥48,324

Thousands of
U.S. dollars (Note 1)
2016$297,535
133,928$431,464

Annual weighted-average interest rates of short-term loans payable were 0.42% and 0.36% and those of current portion of
long-term loans payable were 0.88% and 0.42% for the fiscal years ended March 31, 2015 and 2016, respectively.
Annual weighted-average interest rates of commercial paper, due within a year, were 0.10% and 0.001% for the fiscal years
ended March 31, 2015 and 2016, respectively.

127

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

11. DEFERRED TAX ACCOUNTING

Long-term debt as of March 31, 2015 and 2016, consisted of the following:
Millions of yen

0.38% long-term loans from banks and others due through 2028,
excluding current portion
13th series unsecured 1.51% corporate bond, due 2017
16th series unsecured 1.01% corporate bond, due 2015
18th series unsecured 0.97% corporate bond, due 201719th series unsecured 0.58% corporate bond, due 2015
20th series unsecured 0.79% corporate bond, due 2017
21st series unsecured 0.57% corporate bond, due 2017
22nd series unsecured 0.85% corporate bond, due 2019
23rd series unsecured 0.342% corporate bond, due 2016
24th series unsecured 0.582% corporate bond, due 2018
25th series unsecured 0.344% corporate bond, due 2019
26th series unsecured 0.562% corporate bond, due 2021
27th series unsecured 0.337% corporate bond, due 2020
28th series unsecured 0.543% corporate bond, due 2022
Lease obligation
Less: Current portion
Total

Thousands of
U.S. dollars (Note 1)

2015

2016

2016

¥109,000
10,00012,00010,0005,000
10,00010,0005,000
10,00010,00010,00010,000——2,047
213,047
17,178¥195,869¥191,000
10,000—10,000—10,00010,0005,000
10,00010,00010,00010,00015,00010,0001,868
302,868
30,149¥272,719$1,705,357
89,285—89,285—89,28589,28544,64289,28589,28589,28589,285
133,928
89,285
16,6782,704,178
269,187$2,434,991

Millions of yen
Year ending March 31

Bonds payable

2017
2018
2019
2020
2021 and thereafter
Total¥ 15,000
10,00031,00032,000118,000¥206,000¥ 30,000
20,00010,00015,00035,000¥110,000Millions of yen
2015

The aggregate annual maturities of long-term debt subsequent to March 31, 2016, are as follows:
Long-term loans
payableMajor components of deferred tax assets and deferred tax liabilities as of March 31, 2015 and 2016, were as follows:

Thousands of U.S. dollars (Note 1)
Long-term loans
payableBonds payable

Lease obligation¥  149 $  133,928
149
89,285
149
276,785149
285,714
1,272 1,053,571¥1,868 $1,839,285$267,857
178,571
89,285
133,928
312,500$982,142$ 1,330
1,330
1,330
1,330
11,357$16,678

Lease obligation

Deferred tax assets:
Depreciation
Impairment loss
Provision for loss on interest repayment
Provision for point card certificates
Net operating loss carried forward
Net unrealized loss on non-current assets
Provision for bonuses
Other
Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for special account for advanced depreciation of non-current assets
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities
Deferred tax assets, net

2016

Thousands of
U.S. dollars (Note 1)2016¥ 6,339
5,586
4,478
1,624
1,494
1,372
1,324
6,055
28,275(7,684)¥20,590¥ 6,016
5,232
2,114
2,291
1,105
1,357
1,293
4,990
24,403(7,192)¥17,210$ 53,714
46,714
18,875
20,455
9,866
12,116
11,54444,553217,883(64,214)$153,660¥ 8,737380
197¥ 9,315¥11,275¥ 8,5234350¥ 8,877¥ 8,332$ 76,098
35
3,125$ 79,258$ 74,392(Change in presentation)
As of March 31, 2016, the amount of allowance for doubtful account, which was previously shown as one of major components
of deferred tax assets, became immaterial and was included in other. Accordingly, the allowance for doubtful accounts of ¥1,423
million as of March 31, 2015 was reclassified to other to conform to the classification used in 2016.
Income taxes consist of corporation, inhabitants’ and enterprise taxes. Reconciliations between the statutory tax rate and theeffective tax rate reflected in the consolidated statements of income were as follows:
Statutory tax rate
Adjustments:
Permanent differences such as entertainment expenses, etc.
Permanent differences such as dividends
Change in valuation allowance
Inhabitants’ tax
Adjustments due to changes in tax rate
Other
Effective tax rate

2015

2016

35.6%

33.1%

0.4
(0.3)
(4.7)
0.6
1.9
(0.4)
33.1%

0.3
(0.1)
(0.8)
0.6
0.4
0.4
33.9%

On March 29, 2016, amendments to the Japanese tax regulations were enacted in the Diet session. Based on the amendments, the statutory income tax rates utilized for the measurement of deferred tax assets and liabilities expected to be settled orrealized from April 1, 2016 to March 31, 2018 and on or after April 1, 2018 were changed from 33.1% to 30.9% and 30.6%,
respectively, as of March 31, 2016.
As a result of this change, deferred tax assets (after deducting deferred tax liabilities) decreased by ¥110 million($982 thousand), valuation difference on available-for-sale securities decreased by ¥6 million ($53 thousand) and income
taxes–deferred increased by ¥104 million ($928 thousand) as of March 31, 2016.

128

129

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

12. ASSET RETIREMENT OBLIGATIONS

14. CONTINGENT LIABILITIES(1) Asset retirement obligations recognized in the consolidated balance sheets

The Group has commitments to guarantee customers’ liabilities in relation to personal loans to individuals from financial institutions with which the Group has guarantee service arrangements.
As of March 31, 2015 and 2016, the amounts of the Group’s guarantee obligations were ¥19,327 million and ¥23,018
million ($205,517 thousand), respectively.

The Group’s asset retirement obligations mainly include the cost of restoring the store sites to their original condition under thereal estate lease contracts of stores. The Group calculated its asset retirement obligations by assuming the lease period as the
expected period of use and applying discount rates of 0.00% to 1.38%.
Asset retirement obligations as of March 31, 2015 and 2016, consisted of the following:
Millions of yen
2015

Beginning balance
Increase due to acquisition of property and equipment
Increase due to change in estimate *1
Adjustments due to passage of time
Decrease due to fulfillment of obligation
Other increase (decrease)Ending balance

¥549
—
87
2
(13)
9
¥635

Thousands of
U.S. dollars (Note 1)

2016

2016

¥635
348
80
2
(93)
—
¥974

$5,669
3,107
714
17
(830)
—
$8,696*1 The reasonable estimate of obligation became available for stores to be closed.

(2) Asset retirement obligations other than those recognized in the consolidated balance sheets
While the Group estimates asset retirement obligations based on the real estate lease contracts of stores, it is not possible toreasonably estimate the cost of restoring the store sites to their original condition under the general lease contracts since theperiod of use is not clearly determined. Therefore, the Group does not recognize the asset retirement obligations for stores otherthan those that are planning to be closed.

Under the Companies Act of Japan (“the Act”), the entire amount paid for new shares is required to be designated as capitalstock. However, a company may, by resolution of the Board of Directors, designate an amount not exceeding one-half of theprice of the new shares as additional paid-in capital, which is included in capital surplus. The legal earnings reserve is included
in retained earnings in the accompanying consolidated balance sheets.
The Act provides that an amount equal to at least 10% of the amount to be disbursed as distributions of capital surplus(other than additional paid-in capital) and retained earnings (other than legal earnings reserve) be transferred to additional
paid-in capital and the legal earnings reserve, respectively, until the total of additional paid-in capital and the legal earnings
reserve equals 25% of the capital stock account.
Such distributions can be made at any time by resolution of the shareholders’ meeting, or by resolution of the Board of
Directors if certain conditions are met.
Under the Act, additional paid-in capital and the legal earnings reserve may not be distributed as dividends; the Act allows
all additional paid-in capital and all legal earnings reserve to be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the unconsolidated financial
statements of the Company in accordance with Japanese laws and regulations.
The following tables summarize the dividends paid for the fiscal years ended March 31, 2015 and 2016:

13. INVESTMENT AND RENTAL PROPERTY
Certain consolidated subsidiaries hold commercial properties, including land, for rental in the Tokyo metropolitan area and otherareas. The net rental income in connection with these properties for the fiscal years ended March 31, 2015 and 2016, was¥3,824 million and ¥5,320 million ($47,500 thousand), respectively. The rental income was included in revenue and the associated rental expenses were included in cost of sales and selling, general and administrative expenses. The carrying value andthe fair value of such assets were as follows:
Millions of yen
2015

Carrying value * :Beginning balance
Changes during the year
Ending balance
Fair value *2

15. NET ASSETS

Thousands of
U.S. dollars (Note 1)

2016

2015
Resolution

Class ofshare

Total amount of dividend(Millions of yen)

Dividend per share(Yen)Annual general meeting ofshareholders held on June 26, 2014
Board of Directors’ meeting held on
November 6, 2014

Commonstock
Commonstock¥2,463

¥9

2,464

9

¥32,367
12,873¥45,240¥95,079*1 Carrying value represents the amount on the consolidated balance sheets which is carried at the acquisition costs less the accumulated depreciation.
*2 Fair value is based on the appraised value provided by third-party real estate appraisers.

$288,991
114,937$403,928$848,919

Effective date

March 31,2014
September 30,
2014

June 27,2014
December 4,
2014

Record date

Effective date

March 31,2015
September 30,
2015

June 26,
2015
December 4,
2015

2016

2016

1

¥32,28581¥32,367¥66,959

Record date

Resolution

Annual general meeting ofshareholders held on June 25, 2015
Board of Directors’ meeting held on
November 6, 2015

Class ofshare

Commonstock
Commonstock

Total amount of dividend

Dividend per share(Thousands of(Millions of
U.S. dollars)yen)(Note 1)(Yen)

(U.S. dollars)(Note 1)

¥2,630 $23,482

¥10

$0.08

2,761

11

0.09

24,651Dividends with a record date during the fiscal year ended March 31, 2016, but with an effective date subsequent to thefiscal year ended March 31, 2016, were as follows:
Total amount of dividend
Resolution

Class ofshareAnnual general meeting ofCommonshareholders held on June 29, 2016 stock130

Dividend per share(U.S.
dollars)(Note 1)

Record date

Effective date

¥2,666 $23,803 Retained ¥11 $0.09
earnings

March 31,2016

June 30,
2016(Thousands of(Millions of
U.S. dollars)yen)(Note 1)

Source(Yen)

131

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

16. COST OF SALES

20. COMPREHENSIVE INCOME

For the fiscal years ended March 31, 2015 and 2016, cost of sales included the revaluation loss on inventories in the amountsof ¥43 million and ¥94 million ($839 thousand), respectively.

Millions of yen
2015

17. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the fiscal years ended March 31, 2015 and 2016 were as follows:
Millions of yen

Advertisement
Provision for point card certificates
Provision for allowance for doubtful accounts
Salaries and allowances
Provision for bonuses
Rent
Depreciation and amortization
Other

Thousands of
U.S. dollars (Note 1)

2015

2016

2016

¥ 14,781
4,590
7,748
33,165
3,533
15,7759,165
42,647¥131,406¥ 13,941
6,586
7,289
32,7703,513
15,782
8,614
41,920¥130,419$  124,473
58,80365,080292,589
31,366140,91076,910374,285$1,164,455

Valuation difference on available-for-sale securities:
Amounts incurred for the year
Reclassification adjustments
Before tax effect adjustment
Tax effect
Valuation difference on available-for-sale securities
Total other comprehensive income¥  5,473(12,094)(6,621)
1,827(4,794)¥ (4,794)

2016¥(2,117)(972)(3,089)491(2,598)¥(2,598)$(18,901)(8,678)(27,580)
4,383(23,196)$(23,196)

21. CASH FLOW STATEMENTS
Reconciliations of cash and cash equivalents in the consolidated statements of cash flows to accounts and amounts in theaccompanying consolidated balance sheets as of March 31, 2015 and 2016 were as follows:
Millions of yen
2015

Cash and deposits
Time deposits with maturity in excess of three months
Cash and cash equivalents

18. LOSS ON RETIREMENT OF PROPERTY AND EQUIPMENT

2016

Thousands of
U.S. dollars (Note 1)

2016¥31,240(11)¥31,229

Thousands of
U.S. dollars (Note 1)
2016¥32,586(11)¥32,575$290,946(98)$290,848

Loss on retirement of property and equipment for the fiscal years ended March 31, 2015 and 2016 consisted of the following:
Millions of yen

Buildings and structures
Furniture and fixtures

Thousands of
U.S. dollars (Note 1)

2015

2016

2016

¥  515582¥1,097¥  546
1,374¥1,920$ 4,875
12,267$17,142

For the fiscal years ended March 31, 2015 and 2016, the amounts of costs incurred for subscription rights to shares (“stock
options”) were ¥36 million and ¥50 million ($446 thousand), respectively, and were included in selling, general and administrative expenses.
The outline of stock options of the Company is as follows:
Date of resolution

19. IMPAIRMENT LOSS
For the fiscal year ended March 31, 2016, the amount of impairment loss was immaterial and the disclosure was omitted.
An impairment loss recognized for the fiscal year ended March 31, 2015 was included in other, net under non-operating
income (expenses) on the consolidated statements of income and other, net under cash flows from operating activities on the
consolidated statement of cash flows. The details are as follows:
Use

Location

Type of assets

Millions of yen

Stores, etc.

Kyoto MaruiKyoto City, Kyoto

Buildings and structures
Other
Total

¥1,78771¥1,859The Group has grouped its fixed assets by either store or rental property, which are the minimum cash-generating units.
The carrying value of each asset group is written down to its respective recoverable amount and in doing so is recognized as an
impairment loss.
The Group estimated the recoverable amount of each asset group based on value in use or fair value less costs to sell. If a
store reports continuous operating losses, the Group evaluates that the value in use of the store is zero since positive cash flows
cannot be expected in the future. If a store is planned to be closed, the Group evaluates that the fair value less costs to sell is zero.

132

22. SUBSCRIPTION RIGHTS TO SHARES

Title and number of granteeType and number of shares tobe issued upon exercise of stock
options
Granted date
Vesting conditions
Eligible service period
Exercise period

2013

2014

2015

2016

June 27, 2012
7 Directors and5 Executive Officersof the Company

June 26, 2013
7 Directors and5 Executive Officersof the Company

June 26, 2014
8 Directors and5 Executive Officersof the Company

June 25, 2015
4 Directors and
12 Executive Officersof the Company

Common stock
52,000 shares

Common stock
38,400 shares

Common stock
43,500 shares

Common stock
32,000 shares

August 3, 2012
No provision
No provision
From April 1, 2013
to March 31, 2023

July 11, 2013
No provision
No provision
From April 1, 2014
to March 31, 2024

July 11, 2014
No provision
No provision
From April 1, 2015
to March 31, 2025

July 10, 2015
No provision
No provision
From April 1, 2016
to March 31, 2026

133

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

The following table describes the scale and changes in stock options that existed during the fiscal year ended March 31,
2016. The number of stock options is translated into the number of shares.
Number of shares
2013

Before vested:
As of March 31, 2015
GrantedForfeited
VestedAs of March 31, 2016
After vested:
As of March 31, 2015
VestedExercised
Forfeited
As of March 31, 2016

Exercise price
Average exercise price
Fair value at granted date

2014

2015

2016

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
32,000—32,000
—

2,600
—
—
—
2,600

2,000
—
2,000
—
—

43,500—41,400—2,100—
32,000——32,000Yen

U.S. dollars(Note 1)Yen

U.S. dollars(Note 1)Yen

U.S. dollars(Note 1)Yen

U.S. dollars(Note 1)

¥  1
—
485

$0.008—
4.33¥    11,546
1,007$0.00813.80
8.99¥    11,434
844$0.00812.80
7.53¥    1—
1,589$0.008—
14.18

The Black-Scholes option-pricing model is applied to estimate the fair value of stock options granted for the fiscal year
ended March 31, 2016, based on the following assumptions.
Expected volatility *1
32.943%
Expected holding period *2
Expected dividend *3
Risk-free rate *4

5.7 years¥19 ($0.16) per share
0.125%*1 It is estimated based on the share price over the period corresponding to the expected holding period.
*2 It is estimated based on the assumption that stock options are exercised at the middle of the exercise period.
*3 It is based on the dividends for the fiscal year ended March 31, 2015.
*4 It is the average yield on government bonds for the period that corresponds to the remaining life of the stock option.

Since it is difficult to reasonably estimate the number of stock options that will expire in the future, the number of stock
options that were forfeited is shown as the number of vested options.

23. SEGMENT INFORMATION(2) Basis of measurement for the amounts of segment revenue, segment income or loss, segment assets, andother items
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “SIGNIFICANT ACCOUNTINGPOLICIES.”
Segment income is measured on the basis of operating income. Intersegment sales and transfers are accounted for basedon the prevailing market price.
Millions of yen
2015
Retailing and StoreOperation

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Increase in property and	  equipment and intangible assets

Reportable segment
Credit Card
Retailing-Related
Services
Services

Total

Adjustment *1

Consolidated *2¥147,593
4,918¥152,511¥  8,074¥239,592¥ 68,436
2,186¥ 70,623¥ 20,126¥385,466¥33,816
22,332¥56,149¥ 3,333¥64,944¥249,847
29,437¥279,284¥ 31,535¥690,003¥     —
(29,437)¥(29,437)¥ (3,492)¥(14,376)¥249,847—¥249,847¥ 28,042¥675,627¥  6,976¥  1,223¥ 1,869¥ 10,070¥    226¥ 10,296

6,280

1,710

2,208

10,198

(412)

9,786

*1	Adjustment to segment income consists of intersegment elimination of ¥1,602 million and corporate expenses of ¥(5,095) million that are not allocated to eachreportable segment. Adjustment to segment assets mainly consists of intersegment elimination of ¥(224,929) million and corporate assets of ¥213,560 million, whichmainly present the Company’s loans in connection with the Group’s cash management system.
*2 Segment income is reconciled to operating income on the consolidated statements of income.
Millions of yen
2016
Retailing and StoreOperation

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Increase in property and	  equipment and intangible assets

Reportable segment
Credit Card
Retailing-Related
Services
Services

Total

Adjustment *1

Consolidated *2¥134,263
4,543¥138,807¥  7,856¥246,622¥ 74,323
2,123¥ 76,446¥ 22,186¥441,748¥37,279
21,362¥58,642¥ 3,674¥66,261¥245,867
28,029¥273,896¥ 33,717¥754,633¥      —
(28,029)¥(28,029)¥ (4,101)¥(24,507)¥245,867—¥245,867¥ 29,615¥730,126¥  6,500¥  1,301¥ 1,881¥  9,683¥    (12)¥  9,670

9,700

1,374

2,048

13,124(684)

12,439(1) Overview of reportable segments
The Group defines its reportable segments as a component of the Group for which separate financial information is available
and whose operating results are regularly evaluated by the Board of Directors to make decisions about how resources are to beallocated among the Group and assess their performance.
The Group consists of the following three reportable segments identified by products and services: “Retailing and StoreOperation,” “Credit Card Services,” and “Retailing-Related Services.”
The Retailing and Store Operation segment engages in retailing operations of clothes and accessories and management ofcommercial property rental. The Credit Card Services segment engages in the credit card services, the consumer loans, and therent payment guarantee businesses. The Retailing-Related Services segment engages in businesses such as store design, advertising, apparel distribution, IT systems, maintenance and management of buildings and other facilities, and real estate rental.

134

135

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Thousands of U.S. dollars (Note 1)
2016
Reportable segment
Credit Card
Retailing-Related
Services
Services

Retailing and StoreOperation

Revenue:
Outside customers
Intersegment
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Increase in property and	  equipment and intangible assets

2016
Name of thecompany

Total

Adjustment *1

Consolidated *2$2,195,241—$2,195,241$  264,419$6,518,982$1,198,776
40,562$1,239,348$   70,142$2,201,982$  663,598
18,955$  682,553$  198,089$3,944,178$332,848
190,732$523,589$ 32,803$591,616$2,195,241
250,258$2,445,500$  301,044$6,737,794$      —
(250,258)$(250,258)$ (36,616)$(218,812)$   58,035$   11,616$ 16,794$   86,455$    (107) $   86,339

86,607

12,26718,285

117,178(6,107)

111,062*1	Adjustment to segment income consists of intersegment elimination of ¥1,571 million ($14,026 thousand) and corporate expenses of ¥(5,673) million ($(50,651)
thousand) that are not allocated to each reportable segment. Adjustment to segment assets mainly consists of intersegment elimination of ¥(290,641) million($(2,595,008) thousand) and corporate assets of ¥269,384 million ($2,405,214 thousand), which mainly present the Company’s loans in connection with the Group’s
cash management system.
*2 Segment income is reconciled to operating income on the consolidated statements of income.

Location

Capital(Millions of yen)

Business

VotingrightsRelationshipTransaction

Nakano Co., Ltd.

Shinjuku,¥10 RealTokyo($89 thousand) estate(Note 1) rental

Direct Property
0.9% rental
Concurrent
position as
director

Property
rentalSeiwa Kogyo
Co., Ltd.

Shinjuku,
10 RealTokyo($89 thousand) estate(Note 1) rental

Direct Property
0.7% rental
Concurrent
position as
director

Property
rentalstores

Amount(Millions of yen)Account name

¥42 Leasehold and($375 thousand) other deposits(Note 1)Other current
liabilities¥41($366 thousand)(Note 1)
1($8 thousand)(Note 1)42 Leasehold and191($375 thousand) other deposits ($1,705 thousand)(Note 1)
(Note 1)

The monetary amounts above do not include consumption taxes. Terms and conditions for rental agreements are
determined similarly to those of third-party transactions.

25. PER SHARE INFORMATION
Net income per share, both basic and diluted, for the fiscal years ended March 31, 2015 and 2016 is as follows:
Yen

Change in reportable segments
As stated in Note 3, “CHANGES IN ACCOUNTING POLICIES,” effective from the fiscal year ended March 31, 2016, the Group
retroactively adopted to change the revenue recognition of sales under a sale or return arrangement. The account name waschanged from “Total operating revenues” to “Revenue” on the consolidated statements of income. From this change, revenue
from outside customers in Retailing and Store Operation decreased by ¥155,100 million ($1,384,821 thousand), comparedwith those recognized under the previous application. There was no impact on segment income.

Balance(Millions of yen)

Net income per share
Diluted net income per share

2015

2016

¥58.8758.86¥70.68
70.67

U.S. dollars (Note 1)
2016

$0.63
0.63

Thousands of shares

Weighted-average number of outstanding shares
Diluted shares:
Assumed exercise of stock options

Disclosures on related information with regard to the concentration of products and services, location, and major customers
have been omitted since there was no relevant information to be disclosed.
For the fiscal years ended March 31, 2015 and 2016, an impairment loss of ¥1,859 million and ¥107 million($955 thousand), respectively, was reported by the Retailing and Store Operation segment.

2015

2016

272,430

251,434

48

27

Net income per share is computed based on the net income attributable to shareholders of common stock and theweighted-average number of outstanding shares.

24. RELATED PARTY INFORMATION
Related party information where directors and their close relatives substantially own a majority of the voting rights is as follows:
2015
Name of thecompany

Nakano Co., Ltd.

Seiwa Kogyo
Co., Ltd.

Location

Capital(Millions of yen)

Shinjuku,
Tokyo

¥10

Shinjuku,
Tokyo

10

BusinessRealestaterentalRealestaterentalVotingrightsRelationshipTransaction

Amount(Millions of yen)

Direct Property
0.9% rental
Concurrent
position as
director
Direct Property
0.5% rental
Concurrent
position as
director

Property
rental¥42

Property
rentalstores

44

Account name

Balance(Millions of yen)

Leasehold andother deposits
Other current
liabilities¥ 41

Leasehold andother deposits

191

1

The monetary amounts above do not include consumption taxes. Terms and conditions for rental agreements are determined similarly to those of third-party transactions.

136

137

Independent Auditor’s Report

Notes to Consolidated Financial Statements

26. SUBSEQUENT EVENTAt the Board of Directors’ meeting held on May 12, 2016, the Company resolved to acquire treasury stock in accordance with
Article 156 of the Companies Act as applied with relevant changes in interpretation pursuant to the provisions of Article 165,
paragraph (3).
Reason for acquisition
Based on the medium-term business plan to be achieved by the fiscal year ending March 2021, the Group aims to achieve
profitable growth by innovating group business and integrating operations in light of potential changes in the business environment. As its financial strategy, the Group will effectively utilize basic operating cash flows that will be generated in the next five
years in order to optimize capital structure for the business; thus, the Group will enhance investment growth and shareholder
return. The Group will improve its corporate value by achieving the following targets: an ROE of 10%, an ROIC of 4%, and an
EPS of ¥130 as early as possible.
Based on these Group strategies, following the acquisition of treasury stock in the total amount of ¥15,000 million($133,928 thousand) in the fiscal year ended March 31, 2015 and ¥35,000 million ($312,500 thousand) in the fiscal year
ended March 31, 2016, the Company resolved to acquire treasury stock as follows:(i) Class of shares(ii) Maximum number of shares to acquire(iii) Maximum amount for acquisition(iv) Acquisition period

138

Common stock
10 million shares (4.13% of total outstanding shares)¥15,000 million ($133,928 thousand)From May 13, 2016 to September 30, 2016139

Overview of MARUI GROUPINFORMATIONAs of March 31, 2016

Company Overview
Name
Head officeDistribution of Shares Held by Shareholder TypeMARUI GROUP CO., LTD.
3-2, Nakano 4-chome, Nakano-ku,
Tokyo 164-8701, Japan
February 17, 1931
March 30, 1937

Date of foundation
Date ofestablishment
CapitalBusiness activities

278,660,417
shares¥35,920 million
Corporate planning and management forGroup companies conducting Retailingand Store Operation, Credit Card
Services, and Retailing-Related Services
businesses and other businesses
Marui: 24 located in Kanto, Tokai,
and Kansai regions
Modi: 4 located in Kanto region

StoresTotal sales floor area 441,800 m2
Number of
5,899(Group total, excludes temporary employees)
employees
Main banks
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Mitsubishi UFJ Trust andBanking Corporation
Mizuho Bank, Ltd.
Development Bank of Japan Inc.
Accounting auditor KPMG AZSA LLC

Stock Information
Stock listing

Financial institutions
97,784,000 shares(35.1%)

Individuals andothers*2
59,603,000 shares(21.4%)

Tokyo Stock Exchange, First Section(loan margin trading issues)
8252
1,400,000,000

Securities code
Number of
authorized shares
Number of common 278,660,417
shares issued*1
Number of
21,770shareholders

Securities
companies
8,628,000 shares(3.1%)

Foreign institutions
and individuals
72,912,000 shares(26.2%)MARUI GROUP Ranked Highin the 2016 All-Japan Executive Team Rankings
Released by U.S. Financial Industry Magazine Institutional Investor
MARUI GROUP was placed in the upper ranks among retail sector
companies in the Best IR Companies category and President Aoi
placed high among retail sector peers in the Best CEOs category of
the 2016 All-Japan Executive Team Rankings. These rankings arecompiled by globally renowned U.S. financial industry magazine
Institutional Investor.

Other companies
within Japan
39,732,000 shares(14.3%)

Sell Side No.

Major Shareholders
Name

Percentage of
total sharesissued*3 (%)

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

27,505

11.3

Japan Trustee Services Bank, Ltd.
(Trust Account)

22,496

9.3

Aoi Real Estate Co., Ltd.

6,019

2.5

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

5,808

2.4

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

5,133

2.1

Toho Co., Ltd.

3,779

1.6

MSCO CUSTOMER SECURITIES

3,654

1.5

AOI SCHOLARSHIP FOUNDATION

3,234

1.3

Toriyama Co., Ltd.

3,104

1.3

STATE STREET BANK WEST
CLIENT-TREATY 505234

3,048

1.3

Sell Side No.

1

2Best CEOs, Buy Side No.

3, Combined No.

Corporate and IR informationwww.0101maruigroup.co.jp/english.html

2

Retailing Business

About the All-Japan Executive Team Rankings
The All-Japan Executive Team Rankings is a ranking of major listed Japanese companies
compiled by U.S. financial industry magazine Institutional Investor, based on votes frominstitutional investors and securities analysts from around the world. The ranking
consists of six categories (Best CEOs, Best CFOs, Best IR Professionals, Best IR
Companies, Best Analyst Days, and Best Websites). In 2016, votes were received from
515 institutional investors and securities analysts from 205 institutions.
Ranking Details
www.institutionalinvestor.com/Research/6280/
Honored-Companies.html#.V1UuU01f2M8

Marui store and product informationwww.0101.co.jp.e.ex.hp.transer.com

Keiki wo Shikaketa Otoko, a Novel about MARUI Founder Chuji Aoi*3 Percentage of total shares issued is calculated excluding treasury stock.

*1 Number of common shares issued includes 36,270,334 shares of treasury stock,equivalent to 13% of the total number of shares of common stock issued.

Stock Price
Closing price for Company stock (Yen)

MARUI GROUP CO., LTD.

Best IR Companies*2 Individuals and others includes 36,270,334 shares of treasury stock.

Number ofshares(Thousands ofshares)MARUI GROUP Websites

Nikkei 225 (Yen)

Yuzuru Demachi, who, like Chuji Aoi, hails from Toyama Prefecture, wrote anovel entitled Keiki wo Shikaketa Otoko (“The Man Who Built the Economy”)
about MARUI’s founder. The novel was published by Gentosha in August
2015, 70 years after the end of World War II and 40 years since the passing of founder Aoi. It chronicles the countless ordeals Aoi overcame on his
odyssey, beginning with his ambitious move from Toyama to Tokyo and thestrict training he underwent at Maruni Shokai. Later, the book details thefounding of MARUI, the struggles to rebuild the Company after the war,and the turmoil experienced within the Company. This novel also provides
a memorable account of Aoi’s wife Tazuko and how she supported herhusband throughout his life, which was devoted to his business.

MARUI Internet shopping web channel (Japanese only)
voi.0101.co.jp

FinTech Business

30,000 2,500

24,000

2,000
1,500

18,000

Nikkei 225

12,000

1,000
500

6,000

Closing price for Company stock00

Trading volume (Thousands of shares)
100,000
80,00060,000MARUI founder Chuji Aoi

40,00020,0000140

2007/1

2008/1

2009/1

2010/1

2011/1

2012/1

2013/1

2014/1

2015/1

Written by Yuzuru Demachi,
published by Gentosha Inc.

Epos Card Co., Ltd. (Japanese only)
www.eposcard.co.jp

2016/1

141

From the Chief Editor
MARUI GROUP began publishing co-creation management reports in 2015 tofunction as tools for facilitating communication with stakeholders and fordeepening understanding of the Group’s management and business.
In compiling this second report, Co-Creation Management Report 2016,
we once again engaged in an ongoing process of discussion among membersof a project team consisting of President Hiroshi Aoi and key members from the
Corporate Planning Division, the IR Department, the Financial Department, theGeneral Affairs Department, and the CSR Promotion Department. In addition, we
incorporated the various opinions and requests received based on the previous
report over the past year in order to make this year’s report even more valuable
to readers.
One major theme of this year’s report was co-creation with stakeholders.
Based on this theme, we took a different approach from the previous year,
choosing to include discussions with stakeholders in various sections throughout
the report. In addition, we focused on our initiatives in Kyushu, which proved to be
representative examples of MARUI GROUP’s co-creation management.
Accordingly, we had many of the customers who participated in the developmentof Hakata Marui and who went shopping at the store after its opening appear in thereport. I thank each and every one of these individuals for their willingness to be
photographed for this report.
Our co-creation management reports are meant to provide a platform for
expanding the scope of co-creation activities through communication with all of theGroup’s stakeholders. We recognize that there is still much room for improvementwith regard to these reports. We therefore hope to gather input on how to makethese reports better through our future interactions with stakeholders so thatMARUI GROUP’s co-creation management reports can continue to evolve.
I look forward to your ongoing support of MARUI GROUP.
Shin Sakamoto
Chief Editor of Co-Creation Management Reports
General Manager, Public Relations Office, General Affairs Department,
MARUI GROUP CO., LTD.

Contact
MARUI GROUP CO., LTD.
3-2, Nakano 4-chome, Nakano-ku, Tokyo 164-8701, Japan
Tel: 03-3384-0101 (Receptionist)
Fax: 03-5343-6615
Email: koho-ml@0101.co.jp
For inquiries:
Please contact the Public Relations Office in the General Affairs Department for inquiries about corporate
information, the IR Section in the IR Department for inquiries about IR and financial information, and theGeneral Affairs Section in the General Affairs Department for inquiries about stock-related information

142

143

Co-Creation Management Report 2016

Publication date:
October 2016
Publisher:
MARUI GROUP CO., LTD. /Co-Creation Management Promotion Project Team
Planning and production:
EDGE INTERNATIONAL, INC.
Printed in Japan