progress of medium-term management plan …2017/05/23 · today’s schedule marui ir day briefing...

MARUI IR DAY

Progress of Medium-Term Management Plan Business Initiatives

May 23, 2017

■Today’s ScheduleMARUI IR DAY

Briefing on Progress of Medium-Term Management Plan

16:00–16:10 IntroductionHiroshi Aoi, President and Representative Director, MARUI GROUP CO., LTD.

16:10–16:35 Retailing BusinessHajime Sasaki, President and Representative Director, MARUI CO., LTD.Masahiro Aono, Managing Director and General Manager, Store Business Promotion Department, MARUI CO., LTD.

16:35–16:50 Q&A Session

16:50–17:15 FinTech BusinessYoshinori Saito, President and Representative Director, Epos Card Co., Ltd.Miyuki Kawara, Director and General Manager, Sales Promotion Department, Epos Card Co., Ltd.

17:15–17:30 Q&A Session

(10 min)

(25 min)

(15 min)

(25 min)

(15 min)

Mayuki Igayama, Director and General Manager, Omni-Channel Retailing Department, MARUI CO., LTD.

Makoto Hoshino, Director and General Manager, FinTech Business Department, Epos Card Co., Ltd.

Introduction

3

Environment Changes over Next Decade: 8 Growth Trends

1. Transition to e-commerce

2. Shift from goods to experiences

3. Emergence of sharing economy

4. Declining birthrate and aging population

5. Increase in demand from inbound travelers

6. Rise of cashless payment methods

7. Change of focus from saving to investment

8. End of era of low interest rates

Revision

4

Opportunities, Threats, and MARUI’s Response: FinTech

Op

port

un

itie

sTh

reats

(Over next decade)

MA

RU

I′s

Resp

on

se

・Coordination with omni-channel retailing operations

・Collaboration with new businesses

＜Individual responses＞

6. Rise of cashless payment methods

1. Transition to e-commerce

2. Shift from goods to experiences

Continuation of 7% average annual growth rates in line with past decade

3. Emergence of sharing economy

6. Rise of cashless payment methods(cash advances)Potential contraction of cash advance market

7. Change of focus from saving to investmentPortion of family financial assets represented by stocks and investment trust receivables: of 15% in Japan, and 30%–50% in Europe and U.S.

Shift from in-house credit card to multipurpose credit card

＜Business structure transformation＞

Transition from credit card services to FinTech

＜Business redefinition＞

6. Rise of cashless payment methods (diversification of payment methods)Emergence of payment options other than credit cards

8. End of era of low interest rates

Revision

0

20

40

60

80

100

0

2000

4000

6000

8000

10000

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26

¥264.6 billion

¥2.5 billion

¥434.3 billion

¥1.7 billion

Approx. ¥900.0 billion

Financial Expense Forecasts

■Interest-Bearing Debt and Interest Expense Forecasts

(Billions of yen)

Interest-bearing debt

Interest expensesDifference if interest rates came to

pre-monetary easing levels

FY17 vs. FY11

Year-end borrowing rate 0.36％ -0.52％

Average repayment period 6.6 years +1.5years

Ratio of fixed income-rate debt 65％＋14％

Major Procurement Indicators

5

・Procurement of funds from interest-bearing debt prioritizing safety and targeting ratioof roughly 90% of operating receivables

・¥0.8 billion decrease in interest expenses over past 6 years, despite ¥170.0 billionincrease in interest-bearing debt, due to favorable procurement environment

・Preparation for future procurement risks by procuring funds through debt with longer repayment periods, fixing interest rates, and ensuring even repayment schedules

200

400

600

800

1000(Billions of yen)

4

6

8

10

2

May 23, 2017

MARUI IR DAY


＜Retailing Business＞

Today’s Presenters

Career History

1986 Joined the Company

2007 Director and General Manager, Card Planning Division, Epos Card Co., Ltd.

2012 Director and General Manager, Private Brand Department, MARUI CO., LTD.

2013 Executive Officer, MARUI GROUP CO., LTD.

2014 Managing Director, MARUI CO., LTD.

2015 Senior Executive Officer, MARUI GROUP CO., LTD.

Senior Managing Director, MARUI CO., LTD.

2016 Current position

Hajime SasakiSenior Executive Officer, MARUI GROUP CO., LTD.President and Representative Director, MARUI CO., LTD.

Masahiro AonoExecutive Officer, MARUI GROUP CO., LTD.Managing Director and General Manager, Store Business Promotion Department, MARUI CO., LTD.

Career History


2008 General Manager, Women’s Clothing and Accessories Department, MARUI CO., LTD.

2010 General Manager, Women’s Fashion Department,

MARUI CO., LTD.

2011 Director and General Manager, Business Promotion Department, MARUI CO., LTD.

2013 Executive Officer, MARUI GROUP CO., LTD.

2014 Director and General Manager, Store Business Promotion Department, MARUI CO., LTD.


Highlights

2

・Forecast-exceeding progress in transition to shopping centers and fixed-term rental contracts and income improvements

・Temporary increase in inactive space due to transition to

fixed-term rental contracts, but future upturn in income

expected following the introduction of non-apparel tenants

・Promotion of omni-channel retailing to achieve Group integrated operations

Performance in the Fiscal Year Ended March 31, 2017

FY2016 FY2017 YoY change vs. target

Billions of yen Billions of yen ％ Billions of yen

Total transactions 341.5 326.3 -4 -6.7

Revenue 169.4 148.1 -13 -6.4

Operating income 10.7 7.8 -23 -0.1

-1for active floor space

ROIC 3.5% 2.5% -1.0% ー

3

Progress of Transition to Shopping Centers and Fixed-Term Rental Contracts

Progress of Transition to Shopping Centers and Fixed-Term Rental Contracts in FY2017

● Steady progress with forecast-exceeding ratio of fixed-term rental contracts and income improvements

FY15 FY16 FY17

Ratio of fixed-term rental contracts

62%

20%

7%

¥2.0 billion

(vs. target)

+¥0.4 billion

＋2%Hakata Marui

Shizuoka Marui

+42 ppt YoY

5

Impacts of Inactive Floor Space in FY2017

● Temporary increase in inactive floor space due to renovations and other factors following substantial progress in transition to fixed-term rental contracts

Under renovation9％

16％(vs. target: +2 ppt)

FY16 FY17Note: Above figures are percentages of the 200,000 m2 of

floor space that is capable of being converted to fixed-term rental.

Reason for Inactive Floor Space 1■Portion of Floor Space

that is Inactive

Impact on income: -¥2.6 billion

Reason for Inactive Floor Space 2

■Floor Space from Which Tenants Have Withdrawn

Idle

Promotion of early tenant replacement at low-efficiency, large-scale areas

Floor space from which tenants have withdrawn: 1.2 times higher than forecast

Temporary increase following withdrawal at tenant’s discretion (projected to decrease in FY2018 and beyond)

240210

120

FY16 FY17 FY18FY10

6

1.1 times higher

1.1times higher

Replacement of Tenants in Large-Scale Areas

Shop AApprox. 830 m2

Numerous large-scale tenants recruited as immediate response to rapid tenant withdrawals following 2008 financial crisis

・Higher per-area rent fees from sectioning off areas

・Reduced costs from having tenants pay expenses

Consignment SalesShopping Centers and Fixed-Term

Rental Contracts

Notes 1. Per-area rent fees are calculated by indexing rent fees under sale or return arrangement to 100.2. Expenses include water, electricity, and heating bills; credit card processing fees; and sales promotion expenses.

Per-area rent fees

1.1 times higher

1.6 times higher

1.2times higher

1.2times higher

1.5times higher

1.3times higher

【 Rent revenues 】100 120【Expense revenues】 0 50

【 Income 】 100 170

(gross profit)

Paid by tenant

● Achieve massive improvement in profits by renting large-scale areas in sections

7

■Area of Floor Space from Which Large-Scale Tenants Have Withdrawn (FY2017)

Target Actual

Approx. 20,000 m2

Approx. 24,000 m2

70%

30%

New tenants already introduced

Inactive floor space(Used for events)

● Income improvements totaling ¥0.7 billion anticipated in 1st year of initiative

● Temporary increase in inactive floor space to disappear within 1 year, following promotion of quick withdrawal

Progress in Replacement of Tenants in Large-Scale Areas

50% 50%

To be introduced within 6 months

To be introduced within 1 year

1st-year income improvements

¥0.7 billion

8

Policy for Reducing Idle Floor Space

● Utilize unique approach leveraging sale or return arrangement, rather than immediately converting to fixed-term rental, to realize massive improvements in profitability

Immediate conversion to fixed-term rental

5th year

Revenue

1st year

Former sites of large-scale tenants

Conversion to fixed-term rental on highly profitable terms

5th year

Revenue

1st year 2nd year

If Conversion to Fixed-Term Rental is Prioritized

If Improvement of Profitabilityis Prioritized

100

200

Event space(Idle floor

space)

Former sites of large-scale tenants

9

Expansion of Non-Apparel Tenants through Transition toShopping Centers and Fixed-Term Rental

■Distribution of Floor Space

Apparel Non-apparel Apparel Non-apparel

53% 47% 33% 67%

FY14 FY17Prior to transition

to fixed-term rental(sale or return arrangement)

Fixed-term rental contracts

● Improve income by concluding fixed-term rental contracts with restaurants, service providers, and other non-apparel tenants (experience categories)

Income improvements

¥0.6 billion

10

Income improvements

¥1.4 billion

Introduction of Food Vendors on Entry Floors through Co-Creation

● Identification and resolution of disparities in industry perception via co-creation to satisfy all parties

【Past】【Co-Creation】

Customers

MARUI GROUP

Customers

Industry focus

Locations on entry floors by train

stations desired

Luxury brands, cosmetics, accessories,

boutiques

Food options for all genders and ages desired

Tenants

More customers(High usage frequency)

→ Higher sales → Increased portion of sales

(High revenue)

High revenue, low usage frequency

Tenants

11

■Kashiwa Marui 2F

Cosmetics dealersFood vendors

BOMBAY, Shichino,La Patisserie de Riz Chi:no, Wadeli

BOMBAYTakeout curry

ShichinoDorayaki (traditional

Japanese confectionary) shop

La Patisserie de Riz Chi:noRice flour cakes and bread

Per-area purchases: 7.2 times higher Monthly revenue: 1.5 times higher

● Higher revenue resulting from large increase in customers

Food Vendors Introduced on Entry Floors

12

Introduction of Mobile Phone Service Providers

● Simultaneous introduction of 3 mobile phone service providers, in response to high demand, results in earnings growth

vs. target growthin total

transactions of 3 companies

+140%

■Consumer Spending Trends

1995 2016

100

Communications services

+173％

Apparel

-42％

■Hakata Marui

13Source: Family Income and Expenditure Survey, Statistics Bureau, Ministry of Internal

Affairs and Communications (two-or-more-person households in which head of household works)

■Soka Marui 6F

Introduction of Service Providers on Top Floor

Kumon

● Earnings improvements on top floor achieved by matching supply to demand

＜Needs of Service Providers＞

Commercial facility with easy-to-find location that offers peace of mind to customers

KANDA GAIGO Kids Club Daiwa Securities

Monthly revenue: 3.3 times higher

14

Plan for Transition to Shopping Centers andFixed-Term Rental in FY2018

● Ratio of fixed-term rental contracts of 84% and income improvements of ¥2.3 billion

FY15 FY16 FY17

Ratio of fixed-term

rental contracts

20%7%

FY18

62%

84%

¥2.3 billion

■Plan for Transition to Fixed-Term Rental

■Inactive Floor Space Projection (% of total floor space)

FY17 FY181H

FY182H

16% 15%

9%

Income improvements +¥0.5 billion per year

● Decrease in inactive floor space in 2nd half of fiscal year to contribute to ¥0.5 billion increase in income

Income improvements

15

Renovations in FY2018: Kyoto Marui

● Improved revenues from introducing food vendors on entry floors

■Kyoto Marui 1F

Entirely sundries 18 food vendors

Quon ChocolateChocolate specialty store

LOVES BAGELBagel specialty store

Kyoto-SeijyuannJapanese-style confectionaries

Monthly revenue: 1.4 times higher

16

Renovations in FY2018: Kinshicho Marui

● Introduction of food vendors in response to customer needs

Supermarket

[B1F]

Monthly revenue: 1.1 times higher (total for B1F and 1F)

Primarily apparel and sundries[1F]

Accessories

Food and sundries

PEARL LADY CHA BAR

Takeout café

8 food vendors

Una casitaSeasonings and food products

JAPAN MEAT

17

[FY2019]

Storage floor spaceApprox. 29,000 m2

Expansion of Revenue-Generating Floor Space through Conversion of Storage Space to Sales Floors

Dentist office

No revenues → Revenue generating

[FY2016]

Storage floor space converted to sales floors

or rental spaceApprox. 17,000m2

* Total for FY2018 and FY2019

Storage space

Income improvements¥0.8 billion*

■Marui Family Shiki 4F

● New revenue-generating floor space and earnings created by converting storage space that previously did not generate revenues into sales floors

18

Note: Ratio of fixed-term rental contracts = Fixed-term rental contracted floor space ÷ Total floor space capable of being contracted as fixed-term rental

Ratio of fixed-term

rental contracts

(year-end)

¥6.0 billion

¥7.0 billion

62％84%

100%

FY15 FY16 FY17 FY18 FY19

Aggregate

7% 20%

¥2.9 billion

¥0.9 billion

Income improve-

ment amounts

Increase value through

contract renewals

Future Plan for Transition to Shopping Centers and Fixed-Term Rental Contracts

● Steadily advance transition to fixed-term rental contracts, targeting ratio of fixed-term rental contracts of 100% and income improvements of ¥6.0 billion in FY2019 as initially planned

19

Omni-Channel Retailing Strategies

■Try-on Store Model

Imp

roved

Corp

ora

te V

alu

e

・Improved floor space efficiency(Elimination of storage space)

・Higher productivity

Improved NOI Yield

・Credit card LTV

・E-commerce LTV

Higher Medium-to-Long-Term Income

■Integrated Operation Model

・Increased inventory efficiency

Omni-Channel Retailing Initiatives

21

● Create business models that contribute to improved corporate value

through integrated Group operations

Stores

Credit card LTV

Credit card LTV

Stores

E-commerce LTV

Event-Style Try-on Store Model

● Deployment of try-on store events at commercial facilities across Japan

・Figures from FY2017 (47 events)

Note: In comparison to average rates for all Marui stores

Open short-term event stores

Ship products

Conduct sales via tablets

Allow customers to try on

Only exhibit samples

【Scheme】

22

Internet service registration rates

3 times higher

Card application rates 8 times higher

Try-on Store Events in Existing Stores (Women’s Shoes)

● Achieve massive improvements in NOI yield and medium-to-long-term income by introducing try-on stores in existing stores

■Customer Feedback

Per-area sales

NOI yieldMedium-to-long-term income

1.3 times higher

+5％+¥26

million

■Results of Trial Introduction (Shizuoka Marui and Kichijoji Marui)

Notes: 1. Trial period from October 2016–January 2017

2. Averages for one store

Conventional Model

Try-on Stores

・The full lineup of sizes offers freedom to try on samples.

・As there is no need to carry purchased products home, purchases are easier.

・Planned to be implemented in 5–10 stores, including Marui City Yokohama and Omiya Marui, in FY2018 23

Sales floor Approx. 100 m2

Storage Approx. 26 m2


Storage None

Try-on Store Events in Existing Stores (Womenswear)

■Results of Trial Introduction (Shizuoka Marui and Kashiwa Modi)

Conventional Model

Try-on Stores

Per-area sales

NOI yieldMedium-to-long-term income

1.5 times higher

+5％+¥14

millionNotes: 1. Trial period from October 2016–January 2017

2. Averages for one store

■Customer Feedback・There is no pressure to buy,

making it easier to try on products.

● Massive improvements in performance of womenswear trial conducted following women’s shoes trial

・As I don’t need to perform stocking procedures, I am able to concentrate my efforts on serving customers.

■Feedback from Sales Floor Staff

・Planned to be implemented in 5–10 stores, including Yurakucho Marui and Marui City Yokohama, in FY2018

24


Sales floor Approx. 75m2

Storage None

Storage Approx. 20 m2

Integrated Operation Model● Integrate operation of sundries sales floors and credit card application

centers to promote card applications, boost productivity, and ultimately increase medium-to-long-term income

■Results of Trial Introduction (Kashiwa Modi)*Trial period from October–December 2016

Conventional Model

IntegratedShop

New card applications per

employee

Operating income per employee (annual)

NOI yield

Medium-to-long-term income

Sundries sales floor

Approx. 280 m2 Sundries sales

floor＋Card center 1.5 times higher

+¥2.5 million

+7％+15

millionCard centerApprox.

50 m2

Employees 100％ Employees 60％

■Feedback from Sales Floor Staff・The new model allows us to flexibly assist others,

including having sundry sales staff handle card-related processes or having card staff work registers or wrap products, as necessitated by how crowded the store is, thereby ensuring that customers don’t have to wait.

・Planned to be implemented in approx. 10 stores, including Shinjuku Marui Main Building and Machida Marui, in FY2018

25

Approx. 130 m2

(40％)

FY15 FY17

E-Commerce Operations

+15%

+1%

+8%

[vs. FY15]

Apparel

Sundries

■Total E-Commerce Transaction Amounts and Distribution

● Increased e-commerce transactions following shift from apparel to sundries

Total

Grow

business

earnings

Utilize AI-driven programs to enhance

recommendations

49％ 52％

51％48％

¥21.3 billion¥19.9

billion

■Growth Cycle

Expand sundries lineup

Encourage to become cardholders

Encourage purchases of multiple items

26

Increase new e-commerce customers

Strategic E-Commerce Alliances

・Exclusive fashion brand lineup within shopping site

・Issuance of EPOS cards through MARUI’s store on shopping site

■Accomplishments in FY2017

● Expansion of e-commerce operations through opening of store on Wowma! site, operated by KDDI after commencement of alliance in February 2017

・Broadening of contact points with approx. 38 million au customers

■Targets for FY2021

Revenue

Operating margin

¥4.0–¥5.0 billion

20％

×

Contributed to 5% growth rate in e-commerce transactions and expanded operations during applicable period

Note: 40 days from February 20 to March 31, 2017

27

● Development of cross-border e-commerce operations utilizing try-on store model

[Customer rating of pumps]

89/100

[Customers expressing desire to use try-on stores]

85％

Development of cross-border, try-on-based e-commerce business model

[1st Half]

Event at Taipei commercial facility

[2nd Half]Establishment of

cross-border e-commerce site

Cross-Border E-Commerce Operations

・Favorable attitude toward Japan・Low risks related customs and other

legal matters

■Trial Conducted in Taiwan

・More than 500 customers tried on samples at store opened at Taiwan travel expo

■Future Initiatives (FY2018)

Benefits

Nov. 2016

28

Medium-Term Targets for Omni-Channel Retailing

● Expand business targeting transactions of ¥33.0 billion in FY2021

+8億円

FY16 FY17 FY18 FY19 FY20 FY21

Operating income

Transactions

¥4.6 billion

20.4

0.8

+¥0.8 billion

Existing businesses

New businesses21.3

24.0

20% of total Retailing revenue

29

¥33.0 billion

Medium-Term Targets for Retailing Business


¥10.7 billion

¥7.8 billion

¥8.8 billion

More than ¥18.0 billion

● Operating income of more than ¥18.0 billion to be achieved in FY2021 in accordance with initial expectations as income improvements come into full swing in FY2019

30

May 23, 2017

MARUI IR DAY


＜FinTech Business＞

2

Today’s Presenters

Yoshinori SaitoSenior Executive Officer, MARUI GROUP CO., LTD.President and Representative Director, Epos Card Co., Ltd.

Career History


2007 Store Manager, Machida Marui, MARUI CO., LTD.

2008 Executive Officer and General Manager, Financial Department, MARUI GROUP CO., LTD.

2011 Director and General Manager, Direct Marketing Department, MARUI CO., LTD.

2013 Director and General Manager, Sales Promotion Department, Epos Card Co., Ltd.

2015 Managing Director, Epos Card Co., Ltd.


Miyuki KawaraExecutive Officer, MARUI GROUP CO., LTD.Director and General Manager, Sales Promotion Department, Epos Card Co., Ltd.

Career History


2007 Store Manager, Kobe Marui, MARUI CO., LTD.

2008 General Manager, Brand Development Department, MARUI CO., LTD

2012 General Manager, CSR Promotion Department, MARUI GROUP CO., LTD.

2015 Director and General Manager, Collaboration Card Business Department, Epos Card Co., Ltd.


3

Highlights in the Fiscal Year Ended March 31, 2017

■Operating income of ¥27.1 billion (up ¥4.0 billion YoY), ROIC of 3.9% (unchanged YoY)

■Expansion of card shopping and revolving and installment payment transactions driving performance

■New cardholders lower than forecast at 740,000 (up 2% YoY), new applications for collaboration cards particularly low

44

Performance in the Fiscal Year Ended March 31, 2017

FY2015 FY2016 FY2017

YoY change

YoY change

YoY difference

vs. target

ROIC （％） 3.9 3.9 - 3.9 - ±0 ±0

Invested capital (Billions of yen)

358.3 396.7 +11 464.0 +17 +67.3 +3.0

Billions of yen Billions of yen ％ Billions of yen ％Billions of

yenBillions of

yen

Total transactions 1,242.4 1,473.5 +19 1,723.2 +17 +249.7 -9.8

Revenue 78.0 85.2 +9 97.1 +14 +11.9 -0.5

SG&A expenses, etc. 57.1 62.1 +8 70.0 +13 +7.9 -0.3

Operating income 20.9 23.1 +11 27.1 +17 +4.0 -0.2

New cardholders(Ten thousands)

73 73 ±0 74 +2 +1 -6

・ Operating income of ¥27.1 billion (up ¥4.0 billion YoY), ROIC of 3.9% (unchanged YoY)

55

Breakdown of Increase in Revenues

・Higher financial charges earned on installment sales and from affiliated merchants due to increase in card shopping transactions

FY16 FY17

Revenue

¥85.2 billion

+6.0

+3.8

+1.0

+0.8

Financial charges earned on

installment sales

Financial chargesfrom affiliated

merchants

Interest income on consumer loans

Service revenues

+11.9billion

+0.3Other

97.1billion

6

Today’s Agenda

■Card Shopping Transaction Trends

■Initiatives for Increasing

New Cardholders

■Characteristics of FinTech Business

■Quantitative Targets

Miyuki Kawara

General Manager,

Sales Promotion Department,

Epos Card Co., Ltd.

Yoshinori Saito

President and Representative

Director, Epos Card Co., Ltd.

7

Card Shopping Transaction Trends

7.3 8.3 9.3 10.3 11.3 12.3 13.3 14.3 15.3 16.3 17.3

■Total Transactions

¥354.9billion

¥1,723.2 billion

Average annual growth rate: 17%

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Transaction Amounts

・ Continuing strong growth with total transactions of ¥1,723.2 billion (up 17% YoY)

Note: Average annual credit card shopping market growth rate over above period: Approx. 7% (Source: Market scale statistics provided by Japan Consumer Credit Association)

Annual growth rateover past 5 years:

20%

8

9

Card Shopping Transaction Trends: Shift from Physical Stores to E-Commerce


E-commerce

Fashion-oriented shopping centers station buildings

Departmentstores

TransactionsYoY

change% of total

Billions of yen ％％

E-commerce 211.9 +26 15

Fashion-oriented shopping centers station buildings

70.9 +9 5

Department stores 39.4 +11 3

Shopping centers 27.0 +18 2

Total 1,390.6 +19 100

■Figures from FY2017

4.0 times higher

2.0 times higher1.9 times higher

■Card Shopping Transaction Growth Rates (FY12 Indexed to 100)

100

200

300

400

2.4 times higher

2.4 times higherShopping

centers

Overall

Note: The e-commerce market accounted for approximately 5% of consumer spending in FY2017.

・E-commerce card shopping transactions 4 times higher than 5 years ago,driving overall card transaction growth and coming to represent 15% of total card shopping transactions

10

Card Shopping Transaction Trends: Shift from Goods Consumption to Experience Consumption


Department stores 1.9 times higher

・Ongoing growth of experience consumption, exceeding goods consumption in terms of credit usage

TotalTransaction

YoY change

Billions of yen ％

Communications services

103.9 +18

Dining 63.4 +18

Travel 49.2 +26

Hotels 36.3 +19

■Ratios of Goods Consumption and Experience Consumption

GoodsExperi-ence

55％ 45％47％ 53％

■Card Shopping Transaction Growth Rates(FY12 Indexed to 100)

FY12 FY17

Experiences

Goods

100

200

300

■Experience Consumption Transactions (FY17)

400Hotels3.7 times higher

Travel3.3 times higherDining3.0 times higherCommunication services2.8 times higher

Total2.4 times higher

FB, station buildings2.1 times higherElectronics stores1.9 times higher

Card Shopping Transaction Trends: Premium Cardholders

・Ongoing increases in Gold and Platinum cardholder numbers, with strong transaction growth driving overall performance

■Transactions (FY2017) ■Gold and Platinum Cardholder Numbers


Gold cardholders

Platinum cardholdersYoY

changeYoY

change

％％

1,540,000 +17 30,000 +80

■Cardholder Numbers (FY2017)

25% of total cardholders 11

4,370,000

Cardholders

6,360,000


FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

120,000

1,570,000Transactions YoY change

YoY difference

Billions of yen ％ Billions of yen

Total 1,390.6 +19 +224.9

Gold 884.7 +23 +164.7

Platinum 78.4 +83 +35.6

Standard VISA

427.5 +6 +24.6

Cardholders YoY change

％

6,360,000 +4

1212

Directives for Premium Cards

Standard VISA

1,540,0004,790,000 30,000

Card-holders

Usage Amounts(Thousands of yen)

600

Platinum

・Increase usage of standard VISA cards to expand number of individuals applicable for invitation to acquire premium cards

・Introduce new loyalty programs to increase cardholder numbers along with usage amounts

・Encourage high-usage Gold cardholders to become Platinum cardholders

■Directives


500

600

■Usage Amounts for Gold Cardholders

1,000

(Thousands of yen)

+¥110 thousands

Gold

1,000Industry average

・Introduce services for increasing holders of standard and premium cards along with usage amounts

■Transactions

Outlook for Premium Cards

・Target transactions of ¥1,800.0 billion and cardholders of more than 2.5 million in FY2021

Premium cardsAverage annual transaction

growth rate: 39%


Platinum

Gold

StandardVISA


120,000 1,570,000

Average annualgrowth rate: 37%

2,500,000

Average annualgrowth rate: 13%

¥1,800.0 billion

¥960.0billion

13

¥67.0 billion

Premium cardholders

14

Card Shopping Revolving and Installment Payment Transactions: Breakdown of FY2017 Increase

¥137.5 billion

¥171.4 billion

Change in

revolving

Goldcards

Expansion of

installment

Others

FY16 FY17

■Breakdown of Increase in Transactions

New cards

Total YoY

increase+¥33.9 billion

・Record-high transaction growth due to increased convenience and higher installment payment and Gold card usage

110%

115%

120%

125%

130%

13.3 14.3 15.3 16.3 17.3

■YoY Growth in Revolving and Installment Payment Transactions (Outside Marui Group)

Revolving and installment

Card shopping

+27％

+21％

YoY growth in revolving and installment

YoY growth in installment

YoY growth in revolving

Outside Marui Group +27% +113% +20%

+10%

+15%

+20%

+25%

+30%



¥6.3 billion

¥7.8 billion

¥9.9 billion

¥21.1 billion

15

○Feedback from Customers・The ability to set payments for high-ticket items at

manageable levels is convenient.・It is nice to know when payments will be complete.

○Feedback from Business Partners・Many customers choose to make payments in

multiple installments.・It is easy to promote installment payments to

customers.

Installment Revolving

YoY change

YoY change

Billions of yen

％Billions of

yen％

Fashion e-commerce Site A

¥0.72 +34 ¥0.97 +28

Travel agency B ¥0.66 +21 ¥0.49 +26

Electronics store C ¥0.51 +34 ¥0.73 +9

Furniture store D ¥0.22 +54 ¥0.62 +21

■Revolving and Installment Payment Transactions at Affiliates

■Installment Payment Transactions (Outside Marui Group)

・Large growth in installment payment transactions stimulated by increased options for customers

Approx. 10,000 stores

More than 1 million stores

From March 2016Previously

Expansion of stores outside Group at which installment payments are available

Card Shopping Revolving and Installment Payment Transactions: Installment Payment Transactions

¥1.8 billion

Card Shopping Revolving and Installment Payment Transactions: Future Outlook

・Development of low-risk, high-return business through initiatives merging retailing and finance

Risks

High

HighCash advances

Revolving

Installment sales accounts receivable

Consumer loans outstanding

■Directives

FY13 FY17vs. FY13

Billions of yen

Billions of yen

Times higher

Revolving 15.9 31.0 2.0

Installment 0.7 1.6 2.3

Affiliated merchants

10.5 22.4 2.1

Cash advances 19.2 23.2 1.2

Total 46.3 78.2 1.7

Returns

■Previously

InstallmentFY13 FY17

16

[Breakdown of Revenue]

Business structure transformation, shifting from cash advances to card shopping

125

250

Balanced growth of revolving and installment payment transactions, particular focus on increasing low-risk

installment payment transactions

(Billions of yen)

Affiliated merchants

17

Initiatives for Increasing New Cardholders

52 52 5052

4648

51

57

4439

43

5855 55

58 58

71 72 7173 73

30

40

50

60

70

80

90

96.109.0 4.3 5.3 08.109.1 6.3 7.3 08.209.2 8.3 9.3 08.309.310.311.312.313.314.315.316.317.318.3

500,000

■New Cardholders740,000

(60,000 less than forecast)

FY2017FY1996 FY2007 FY2012

Launch of EPOS cards

700,000More than 800,000

Opening of Hakata Marui

New Cardholders

・New cardholders come to 740,000 due to poor performance of collaboration cards, contrary to full-year forecast of around 800,000 new cardholders in FY2017 and beyond following opening of Hakata Marui

18

(Ten thousands of people)

Change of application benefits

Hakata Marui Kyoto MaruiYurakucho

Marui

New card applications 55,000 42,000 46,000

Number of customers

visiting13,400,000 6,150,000 13,500,000

Hakata Marui

■New Card Applications (1st Year)

<Cardholders in Kyushu>

・New shopping center model store acquiring 55,000 new cardholder applications in 1st year of operation through measures related to card design, flexible operation, and enhanced Internet services

<Reference> 1st Year Performance Figures by Store

Total In-store Via Internet

55,000 50,000 5,000

・Favorable trend in card applications realized through

flexible operation of high-customer-traffic food and

sundry floors (1F and 2F) Card application smartphone app

2F card application desk

4 times higher

・Rapid increase in card applications via Internet

immediately before and after store opening

19

FY14 FY15 FY16 FY17

New card applications 13,000 34,000 43,000 90,000

Hakata Marui - - - 48,000

Total cardholders

54,000 87,000 130,000 217,000

20

Collaboration Cards

・Acquisition of 6 new collaboration partner facilities as planned・New card issuances poor for partner companies focused on physical stores

and goods


2,000Total

collaboration cardholders

390,000 More than 1,000,000

140,000

110,000130,000

90,000

50,00040,00030,000

10,0005,000

■New Collaboration Cardholders

Partnercompanies

Partner facilitiesNew cardholders

50,000

90,000

50,000

60,000

80,000

50,000

300,000～

Collaboration Card Directives: Partner Companies

・Increase cardholders by shifting focus of collaboration from physical stores to Internet and experience areas anticipated to see high growth

Present

Internet

Experi-encesGoods

Future

Internet

Experi-ences

Goodsー

3 companies

5companies

5 companies

○

× △

Anime contentSharing

34% YoY increase in new

cardholders

21

Games, digital content

Clothing, living, goods

Dining, services

Physical stores45% YoY

decrease in new cardholders

25% YoY decrease in new

cardholders

E-commerce

Physical stores

Collaboration Card Directives: Nationwide Expansion

22

2017Hokkaido Office

2015Tohoku Office2016

Nagoya Office2012

Osaka Office2014

Kyushu Office

■Collaboration Partner Facilities and Offices

○Mar. 2015 3 facilities 2 offices ○Mar. 2016 8 facilities 3 offices○Mar. 2017 13 facilities 4 offices○May 2017 14 facilities 5 offices

・Steady progress in nationwide expansion as indicated by 14 collaboration partner facilities and 5 offices

New partner from April 2017: Northern Tohoku’s largest commercial facility ELM

2. Shops Integrating Sundries and Card Application Centers

Stores

Credit Cards

Stores / Events

Credit Cards Internet

3. Anime-Related Ventures1. Rakuchin Kirei Shoes Try-on Store Events

Stores / Events

Credit Cards Internet

Integrated Group Operation

・Expansion of cardholders via unique business model created through overlap of Group businesses

Number of events 47New card applicationsApprox. 6,000(Same level as at Nakano Marui)

Number of events Approx. 200New card applicationsApprox. 14,000(Same level as at Ikebukuro Marui)

New card issuances per employee at Kashiwa Modi integrated shop1.5 times higher

23

24

Characteristics of FinTech Business

Comparisons with Rivals 1

・Lower transactions compared to rivals, but same level of operating income and higher ROIC

0

10000

20000

30000

40000

50000

MARUI

GROUP

Company

A

Company

B

¥4.7trillion

■Transactions

(Billions of yen)

27.123.0

0

100

200

300

400

MARUI

GROUP

Company

A

Company

B

3.9

1.1

2.1

0.0

1.0

2.0

3.0

4.0

5.0

MARUI

GROUP

Company

A

Company

B

■Operating Income

億円％

■ROIC

25

¥1.7trillion

5,000

4,000

3,000

2,000

1,000

¥5.2trillion

(Billions of yen)

40

30

20

1030.0

* MARUI GROUP: FinTech business; Company A: Retail credit card and credit services operations; Company B: E-commerce credit card operations (Calculated by the Company based on latest financial results announcements)

2.7 times higher

3.0 times higher

26

Comparisons with Rivals 2

58%

63%

27%

42%

37%

73%

B社

A社

当社

■Distribution of Card Shopping Transactions and Operating Receivables Balance by Company

1 / 2 time installment payment transactions

Revolving / Installment transactions

MARUI GROUP

52％

Company A

25％

<Portion of Cardholders in 20s and 30s>

(¥350.0 billion)

Operating receivables balance

(¥1,040.0 billion)

(¥890.0 billion)

MARUI GROUP

Company A

Company B

■SG&A Expenses by Company

・Low-cost operations realized through

integrated Group operation

・Sound usage of unique credit expertise

* Ratio of personnel expenses to salesMARUI GROUP: 10％ CompanyＡ: 11％ CompanyB: 7％Ratio of provision for bad salesMARUI GROUP:10% Company A: 15% Company B:19%

MARUI GROUP Company A Company B

Billions of yen Billions of yen Billions of yen

Total SG&A expenses 70.0 190.0 110.0

％％％

Ratio of SG&A expenses to

sales72 89 79

・Only small portion of operating receivables accounted for by one and two installment payment transactions, leading to lower ratio of SG&A expenses to sales and subsequently higher profitability

* MARUI GROUP: FinTech business; Company A: Retail credit card and credit services operations; Company B: E-commerce credit card operations (Calculated by the Company based on latest financial results announcements)

27

Operating Foundations Underpinning High Levels of Profitability and Efficiency

・Competitive edge resulting from integrated operation with Retailing business and in-Group system development company

Integrated operation with

Retailing business

In-Group system development

company

■Efficient operations utilizing stores and Internet

■Proprietary card issuance system (in-store, on-the-spot issuance; tablet utilization)

■Synergies with Retailing business human resources

■In-house development of core systems: ¥6.0 billion in investments in 2006 (100% transition to IC)

Stores

Internet

・Efficient operations utilizing stores and InternetInternet application, in-store pickup: 23,000 cards per year (same scale as Marui City Yokohama)In-store switches to Gold cards: 90,000 cards per year (30% of new Gold card applications)

・Improved competitiveness achieved through swift response to cardholder needs and high usability

・Simultaneous realization of high usage rates and lower card issuance costs

・Efficiency realized through face-to-face application promotion and integrated operation of sales floors and card application centers

■Ongoing system investment: Aggregate investments of more than ¥12.0 billion

CreditCard

2828

Promotion of Financial Inclusion

・Provision of new financial services for cardholders by utilizing Group management resources

Cardholders

Credit cards Stores

Applications Online content

Credit payment

Money seminarsMobile payment

Household finances management

Insurance

Investment

・Examination of various possible financial services centered on newly established FinTech Business Department

2929

Mobile Payment Trends and MARUI GROUP’s Response

・Improve customer convenience through accurate response to future mobile payment trends

Social Trends MARUI GROUP’s Response

■Spread of Japan’s unique Felica standard

・Smartphone payment market with scale of ¥430.0 billion (2015)

■Emergence of new payment service providers

■Introduction of Origami Pay in August 2016

■Commencement of Apple Pay compatibility in March 2017

・30,000 registered cardholders on April 30, 2017

Provision of better payment services by carefully monitoring social and

customer trends going forward

■Full-fledged expansion of foreign payment services in Japanese market

・Test introduction in Shibuya Modi

Focus on reducing introduction costs and spreading use of payment terminals

30

Quantitative Targets

3131

FY2016 FY2017 FY2018

YoY change

YoY change

YoY difference

ROIC （％） 3.9 3.9 － 3.8 －－0.1

Invested capital (Billions of yen)

396.7 464.0 +17 533.7 +15 +69.7

Billions of yen Billions of yen ％ Billions of yen ％ Billions of yen

Total transactions 1,473.5 1,723.2 +17 1,981.0 +15 +257.8

Revenue 85.2 97.1 +14 109.4 +13 +12.3

SG&A expenses, etc.

62.1 70.0 +13 79.4 +13 +9.4

Operating income

23.1 27.1 +17 30.1 +11 +3.0

New cardholders(Ten thousands)

73 74 +2 78 +5 +4

Forecasts for the Fiscal Year Ending March 31, 2018

・ROIC of 3.8% (down 0.1 percentage point YoY) and operating income of ¥30.1 billion (up ¥3.0 billion YoY)

32

0億

10000億

20000億

30000億


Medium-Term Targets

32

¥1,723.2 billion

More than

¥2,500.0 billion

・Total transactions of more than ¥2,500.0 billion in FY2021

More than 8,000,000

6,360,000

●●

●●

●

Total transactions

Cardholders

More than 7,000,000

More than

¥2,100.0 billion

More than ¥40.0 billion¥27.1 billion

Operating income More than

¥30.1 billion

左右FY21 (Forecast)FY17

■Operating Income and ROIC Forecast

■Balance Sheet Forecasts

More than 4.1%

3.9%

FY21 (Forecast)FY17

Operating receivables

¥488.8 billion

Equity ratioApprox.10%


¥434.3 billion

¥27.1 billion

(+¥4.0 billion)

More than ¥40.0 billion


¥590.0 billion

Equity ratio8%

Operating receivables

¥680.0 billion

Total assets¥540.0 billion

・Increase of ¥190.0 billion in operating receivables and ROIC of more than 4.1% leading up to FY2021

33

Total assets¥720.0 billion

Balance Sheet and ROIC Forecasts

Forward-looking statements contained in this presentation are based on information available at the time of preparation and on assumptions that have been deemed to be rational. Actual performance may differ greatly due to a variety of factors.Any inquiries may be directed to the IR Department (Tel: 03-5343-0075).

progress of medium-term management plan …2017/05/23 · today’s schedule marui ir day briefing...

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