progress of medium-term management plan …2017/05/23 · today’s schedule marui ir day briefing...
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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
Progress of Medium-Term Management Plan Business Initiatives
<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
1984 Joined the Company
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.
2015 Current position
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
Sales floor Approx. 83 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. 100 m2
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
FY16 FY17 FY18 FY19 FY20 FY21
¥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
Progress of Medium-Term Management Plan Business Initiatives
<FinTech Business>
2
Today’s Presenters
Yoshinori SaitoSenior Executive Officer, MARUI GROUP CO., LTD.President and Representative Director, Epos Card Co., Ltd.
Career History
1986 Joined the Company
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.
2016 Current position
Miyuki KawaraExecutive Officer, MARUI GROUP CO., LTD.Director and General Manager, Sales Promotion Department, Epos Card Co., Ltd.
Career History
1986 Joined the Company
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.
2016 Current position
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
FY12 FY13 FY14 FY15 FY16 FY17
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
FY12 FY13 FY14 FY15 FY16 FY17
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
Average annual growth rate: 37%
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
Average annual growth rate: 5%
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
FY13 FY14 FY15 FY16 FY17
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%
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY21
Platinum
Gold
StandardVISA
Average annual growth rate: 17%
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%
FY13 FY14 FY15 FY16 FY17
FY13 FY14 FY15 FY16 FY17
¥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
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY21
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
FY17 FY18 FY19 FY20 FY21
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%
Interest-bearing debt
¥434.3 billion
¥27.1 billion
(+¥4.0 billion)
More than ¥40.0 billion
Interest-bearing debt
¥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).