marui groupco., ltd...accounts receivable and others －¥0.5 billion provision for loss on interes...

F i n a n c i a l R e s u l t s B r i e f i n g f o r t h eF i s c a l Ye a r E n d e d M a r c h 3 1 , 2 0 2 0a n d F u t u r e O u t l o o k

M a y 2 8 , 2 0 2 0

M A R U I G R O U P CO . , LT D

Today’s Agenda

1

2

3

Overview of Performance for the Fiscal YearEnded March 31, 2020

H i rotsugu K atoD i recto r, Managi ng Execu t ive Of f i cer, Ch i ef Fi nanci al Of f i cer,General Manager, Investo r Rel at ions D epart m ent , MA R UI GR OUP CO. , LTD

Dealing with the COVID-19 Crisis

Hi ro shi A oiPresi dent and Representative D i rector,MA R UI GR OUP CO., LTD .

Future Developments

H i ro shi A oiPresi dent and Representative D i rector,MA R UI GR OUP CO., LTD .

1Over view of Performance for the Fiscal Year Ended March 31, 2020

H i r o t s u g u K a t oD i r e c t o r, M a n a g i n g E x e c u t i v e O f f i c e r, C h i e f F i n a n c i a l O f f i c e r,G e n e ra l M a n a g e r, I n v e s t o r R e l a t i o n s D e p a r t m e n t , M A R U I G R O U P C O . , LT D

4

H i g h l i g h ts i n t h e F i s ca l Yea r E n d e d M a rc h 3 1 , 2 0 2 0

1. Important KPIs of medium-term-management-plan, which is

EPS, ROE and ROIC, unachieved the targets due to the COVID-19

2. Consolidated operating income increased 2% year on year

to ¥41.9 billion for 11th consecutive year

The negative impact of the COVID-19 was ¥1.3billion

3. Retailing segment operating income decreased 12% year on year

FinTech segment operating income increased 10% year on year

4. Annual dividends increase ¥1 to ¥50 for 8th consecutive year

5

C o n s o l i d ate d Pe r fo r m a n ce

・The 3 KPIs unachieved the targets. ROE exceeded Capital costs and ROIC exceeded WACC

6

Operating income ROIC

FY2019 FY2020 FY2020Y O Yc h a n g e

Y O Yd i f f e r e n c e

V S .target

YOYchange

B i l l i o n so f y e n

B i l l i o n s o f y e n ％ B i l l i o n s

o f y e nB i l l i o n s

o f y e n ％

Retailing 11.4 10.0 88 －1.4 －1.5 3.4 －0.4

FinTech 35.0 38.4 110 ＋3.4 －0.6 4.6 ＋0.4

Eliminations/Corporate －5.3 －6.5 －－1.2 0 －－

Consolidated 41.2 41.9 102 ＋0.8 －2.1 3.7 ＋0.0

S eg m e n t I n co m e

・Retailing segment operating income decreased 12% for the first decrease in the three fiscal yearsdue to the COVID-19 negative impact of ¥1.5 billionFinTech segment operating income increased for 8th consecutive year

7

FinTech＋¥0.2 billion

Fa cto rs Af fe ct i n g O p e rat i n g I n co m e

FY2019 FY2020

¥41.2billion

¥44.3billion

¥41.9billion

Retailing＋¥ 0.1 billion

FinTech＋ ¥4.2 billion

Eliminations/Corporate

－¥1.2 billion

Gain ontransfer and

amortization of liquidated

accountsreceivableand others

－¥0.5 billion

Provision forloss onInterest

repayment－¥1.1 billion

Retailing－¥ 1.5 billion

Effect ofCOVID-19

－¥1.3 billion

Deferralcredit card

issuance cost＋¥0.5 billion

Increase in operating income excluding extraordinary factors

＋¥3.1 billion (＋ 8% YoY)

Extraordinary factors－¥2.4 billion

・Consolidated operating income excluding extraordinary factors and the COVID-19 impactincreased 8% to ¥3.1 billion

8FY2019 FY2020

Fa cto rs Af fe ct i n g Reta i l i n g S eg m e n t I n co m e

¥11.4billion

¥10.0billion

Consignmentsales floorsand others

－ ¥0.1 billion

Incomeimprovements

from transition to fixed-term rental

contractsand others

＋¥ 1.4 billion

E-Commerce－¥0.9 billion Platform

－¥0.3 billion

Effect ofCOVID-19

－¥1.5 billion

・Income improvements from transition to fixed-term rental contracts contributed, butRetailing segment income decreased ¥1.4 billion due to poor performance of consignment sales floors and EC, and the COVID-19 impact

9

C o n s o l i d ate d B a l a n ce S h e et

* 1 R a t i o o f l i q u i d a t e d a c c o u n t s r e c e i v a b l e = L i q u i d a t e d a c c o u n t s r e c e i v a b l e / ( O p e r a t i n g r e c e i v a b l e s + L i q u i d a t e d a c c o u n t s r e c e i v a b l e )* 2 R a t i o o f i n t e r e s t - b e a r i n g d e b t t o o p e r a t i n g r e c e i v a b l e s = I n t e r e s t - b e a r i n g d e b t / O p e r a t i n g r e c e i v a b l e s

・Liquidation suppresses interesting-bearing dept Total assets are about the same as the previous year

10

C a s h F l ow

* 3 C o r e o p e r a t i n g c a s h f l o w = N e t c a s h p r o v i d e d b y ( u s e d i n ) o p e r a t i n g a c t i v i t i e s － C h a n g e i n o p e r a t i n g r e c e i v a b l e s

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

11

Recurring Gross Profit Contracted FutureRecurring Gross Profit

FY2019 FY2020 FromFY2021YOY

ch angeYOY

d iffe re nceVS. Re cu rring

gross p rofi t

Bi l l ions of ye n

Bi l l ions of ye n ％ Bil l ions

of ye nBi l l ions

of ye n ％

Retailing 41.1 42.6 104 ＋1.5 81.4 191

FinTech 81.5 88.5 109 ＋6.9 268.7 304

Total 122.7 131.1 107 ＋8.4 350.0 267

Composition withingross profit（%） 62.9 65.3 －＋2.4

L i fet i m e Va l u e M a n a ge m e n t I n d i cato r

・Recurring gross profit increased 7% to ¥131.1 billionThe ratio of recurring gross profit to consolidated gross profit increased to 65%

12

0

20

40

60

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

31%

41% 41% 42% 43%

Consolidated payout ratio

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

3 33 8

4 9

(yen)

2 21 9

p l a n t o i n c r e a s e

d i v i d e n d s

¥15.0 billion Share buybacks

EPS ¥58.9 ¥70.7 ¥80.2 ¥93.2 ¥116.0 ¥117.6

about 55%

Total return ratio 125.3% 227.5% 147.5% 112.3% 69.9% 70.1%

■Dividends per Share

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

¥51( F o r e c a s t )¥50

S h a re h o l d e r Ret u r n s

2Dealing with the COVID-19 Crisis

H i r o s h i A o iP r e s i d e n t a n d R e p r e s e n t a t i v e D i r e c t o r, M A R U I G R O U P C O . , LT D .

14

Request by the Government ResponseRetailing

transaction volume

YoY change

EPOS Card transactionsYoY change

March 27th Request for leaveby the Government

5th All Marui and Modi stores started short-time operations

28th Some stores closed on weekends65% 102%

April 7th Emergency Declaration18th All stores temporarily closed

(Only food floors in 8 stores opened for shorthours)

27% 82%

May 14th~ Partial cancellation 14th~ Some stores reopened ― ―

June 1st All stores reopened ― ―

・Fi nTe ch s e gme nt pe rformance was l owe r than pl anne d pe rformance i n Apri l

As a re s ul t , more cas h funds re mai ne d at hand

*provisional value

■Status of Store Operations

■Cash Flow Status

O v e r v i ew

15Review stakeholder relationships and strengthen partnerships in times of the crisis

Co-Creation Management in MARUI GROUP

Re s p o n s e fo r Sta ke h o l d e rs

16

10

20

30

19.4 19.5 19.6 19.7 19.8 19.9 19.1 19.11 19.12 20.1 20.2 20.3 20.4

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

・No serious change in payment status

・Guide to customer “Housing security benefits” of the Government for Inquiries about credit cardpayment for rent

・Demand for funds decreased due to refraining from going out

101% 103%98%

77%

53%

40%

50%

60%

70%

80%

90%

100%

110%

1月 20.2 20.3 20.4 20.5

Payment Status Usage status

■Year-on-Year change in Cash Advances

Average 247000

24.7 24.5

19.3 20.1(Until the 20th)

■Number of customers not eligible for direct debit

(ten thousand)

20.3

(%)

100

50

20.4

Re s p o n s e fo r Sta ke h o l d e rs : Cu sto m e rs

17

27%

40%

66%

カテゴリ 1 カテゴリ 3Results for April,2020

Results for March, 2020

Targets for FY21

Store staff Head office staffApprox. 1,900

Logistics department and call center Approx. 1,200

Approx. 2,200

20

40

・Special leaves after temporary suspension of businessin principle.The salary is fully compensated

(Application for “Employment adjustment subsidy”)

・In the essential departments for business continuity, creating a safe work environment thorough center decentralization and prevention of droplet infection, etc.

・2200 mobile PCs already deployed by March

・Telework become familiar rapidly afterthe emergency situationNew ways of working promoted withprevention of infection

■Telework rate

Re s p o n s e fo r Sta ke h o l d e rs : E m p l oye e s

18

Strengthening partnerships to overcome the COVID-19

(1) Full exemption of all rent and common service fees for our business partnersduring suspension of business.

(2) Elimination of minimum guaranteed sales of consignment sales contract business partners for 6months

(3) Return of 1 month or 2 months security deposit to rent upon request*Applicable to business partners who deposit for more than 6 months

(4) 6months grace for payment of May-July upon request

< Contents>

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

Re s p o n s e fo r Sta ke h o l d e rs : B u s i n e s s Pa r t n e rs

19

・Continue our shareholder returns policies, aiming for long-term stable dividends increaseeven in an uncertain business environment

0

20

40

60

12.3 13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3

3 3

3 8

4 9

(yen)

2 21 9

dividends increase for 8th consecutive year

1 81 5¥ 1 4

stable dividendsincrease

~

* N o s h a r e b u y b a c k s p l a n n e d f o r f i r s t h a l f o f 2 0

■Dividends per Share

p l a n t o i n c r e a s e

d i v i d e n d s¥51( F o r e c a s t )¥50

Re s p o n s e fo r Sta ke h o l d e rs : S h a re h o l d e rs a n d I n v e sto rs

20

Segment Operatingincome Main factorsOperating

revenue SG & A expenses

Retailing －￥1.5 billion －￥2.2 billion －￥0.7 billion・Store closure・Cancellation of sale for cardholders

FinTech ＋￥0.2 billion －￥0.7 billion －￥0.9 billion・Decreased usage in Marui and

members stores・Decrease in new card issuance

Impact of the COVID-19 in FY2020

・Retailing segment operating income decreased ¥1.5 billion.FinTech segment operating income increased ¥0.2 billion due to SG & A expenses decrease.

■Impact on Operating Income

21

Card shopping transaction Affiliate commissions Point cost (70%)

Revolving and installment payments receivable Financial charges

Recruiting new members

Card issuance costs(advance investment)

*Time lag in the effect

①

②

③

・Due to our unique profit structure, the profit impact of a decrease in transaction is limited.

P rof i t st r u ct u re of F i nTe c h S eg m e n t

22

Estimated Impact of the COVID-19 in FY2020

The forecast of consolidated results for fiscal year ending March 31, 2021 is undetermined as it is difficult to reasonably estimate the COVID-19 impact at this time. The forecast of results will be disclosed as soon as impact for consolidated results are identified and revealed in detail.

~

Segment FY2020

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

Excluding the effect of the

COVID-19

After reflect trial calculation effect of the COVID-19

Retailing ¥10.0 billion ± ¥0 billion －¥3.0 billion ~ －¥9.0 billion

FinTech ¥38.4 billion ＋¥4.0 billion ＋¥0.5 billion ~ －¥0.5 billion

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

◇Optimistic scenario・Recovery in October 2020

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

Progress of Medium-Term Management Plan

24

EPS Target130.0 yen

3.1 3.3 3.7 3.7％

6.77.6

9.1 8.8％

80.293.2

116.0 ¥117.6

0

50

100

150

FY17 FY18 FY19 FY20 FY21

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

ROE target10%

ROIC target4%

(yen)

Progress of KPIs

25

Apr. 2016 Apr. 2021

Current medium-term management plan

Next medium-term management plan

・The current medium-term management plan will end as scheduled in the fiscal year ending March,2021.

・The next medium-term management plan will be launched in the fiscal year ending March,2022.

・ Key KPIs Targets are aimed to achieve early in the next medium-term management plan.

P o s t p o n e m e n t o f k e y K P I s a c h i e v e m e n t

Outlook for the Future

3Future Developments

H i r o s h i A o iP r e s i d e n t a n d R e p r e s e n t a t i v e D i r e c t o r, M A R U I G R O U P C O . , LT D .

ー I n co r p o ra t i n g s h a r e h o l d e r s a n d i n v e sto r s f e e d ba c k ー

27

・What kind of company do you want to be in the future?

・What is the direction of the next Medium-Term Management Plan?

・What are your views on capital allocation?

Comments from Shareholders and Investors

28

USA United Kingdom

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

■Percentage of Output

Tangible asset

Tangible asset

Intangible asset Intangible asset

Long-Term Shift from Tangible to Intangible Investments

29

0.5

1.2

1.6

0.4

系列 1 系列 2

(double)

Five years from 1995 10 years from 2001

USA

United Kingdom

1.0

Japan

Italy

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

■Intangible Investment Ratio (Intangible and Tangible Investments)


30

*Market capitalization = as of April 30, 2020

<

GAFA + Mmarket capitalization

¥576 trillion

FY 2019Japan nominal GDP

¥552 trillion


31

1,000

2,000

3,000

4,000

5,000

6,000

7,00092

.1

93.1

94.1

95.1

96.1

97.1

98.1

99.1

00.1

01.1

02.1

03.1

04.3

05.3

06.3

07.3

08.3

09.3

10.3

11.3

12.3

13.3

14.3

15.3

16.3

17.3

18.3

19.3

20.3FY1981 FY2020FY2014

Tangible assets

Operating receivables

(Billions of yen)

(Reprinted from Presentation Materials for the Fiscal Year

ended March 31, 2016)

400

600

200

Transformation of Business Structure in MARUI GROUP

32

0

50

100

150

200

250

FY2019FY2008 FY2020

Tangible investment

Intangible investment

(Billions of yen)

20

15

10

5

Intangible Investments in MARUI GROUP

33

New businesses

Human resources and research and development

Store investment

Software

92 75

17 32

3 32

88

15.3 20.3

Tangible investment

0.8 x


7.6 x

0.2 x

Intangible investment ratio( I n t a n g i b l e i n v e s t m e n t s / T a n g i b l e i n v e s t m e n t s )

2.0 x

FY2015 FY2020

Breakdown of Investment Destinations

34

Yearly

230 cases(1 launch every 2 days)

cost40％

Reduction

ROI310%

Investment ￥3.2 billionReturn￥10 billion

In-house software development

Status of Software Investment

35

0.0%0

10

20

30

40

50

15.3 16.3 17.3 18.3 19.3 20.3

¥2.4 billion

32億円

Operating income peremployee

￥8.02 million

Portion of revenuerepresented by human

Resource and R&D investments

1.3％

1.0％ 1.0

(Billions of yen) (%)

FY2015 ratio 1.7times

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

¥3.2 billion4

2

￥7.57million

￥6.45million

￥5.37million

￥5.01million

￥4.72million

Status of Human Resource and R&D Investments

36

*Comparison of stock prices at the time of investment and the latest funding

Over 1.1 times

1 x ~

Less than 1 times

■ Status of 20 investee companies■ Status of FY2020

IRR 34%

Venture companies ¥7.1 billion

Fund ¥5.1 billion

Total. ¥15.7 billion*IRR: Calculated using latest procurement price or listed stock priceassumed to be sold at the end of each company’s fiscal year.

7.5 x

September 20, 2019

October 25, 2019

4.5 x

IPO

IPO

tsumiki Securities ¥1.9 billion

D2C & Co. ¥1.6 billion

14 companies

4 companies

(As of May 21, 2020)

Status of New Business Investments

37

Retailing - driven Credit (FinTech) -driven Retailing× FinTech ×Co-Creation investment

From 2019From 2006From in 1931 (Establishment)

Labor-intensive type Capital-intensive type Knowledge creation type

Fixed Assets

Tangible investment

Financial Assets

(Stock buyback)

Intangible assets


Business model

Assets

Investment

Direction to be Addressed in the Future

38

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

Creation of New Business Model

39

Co-Creation Investment Side A : Growth Support Type

40


41


42


43


44


45

Individual IRR

SuccessProbability

30% × =1/3 10%

IRR

・Aim to improve IRR by increasing the success probability of investment

co-creation

IRR more than 10%


46

Co-Creation Investment Side B : Synergistic Type

47


48


49


50


5116.3 17.3 18.3 19.3 20.3FY2017 FY2019 FY2020

CumulativeInvestment Amount

TotalContribution Amount

￥0.12 billion

￥4.3 billion

FY2016 FY2018

■Animation Business■Other cases

Ventures and listed companies not to be targets of IPO

(from now on)


52

New businesses￥30 billion

Existing business￥60 billion

Dividends￥50 billion

Purchase of treasury stock￥60 billion

Co-creation investment

Existing business

Dividends

Purchase of treasury stock

ROE > cost of capitalROIC > WACC IRR > ROE

ROE > 10% or more

Current medium-term management plan from April 2016 The next medium-term plan period starts in April 2021

Future Direction of Investment (Image)

53

Co-create All Stakeholder’s interests and happiness

Directives to aim for the Future

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

marui groupco., ltd...accounts receivable and others －¥0.5 billion provision for loss on interes...

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