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Pan Pacific International Holdings

Pan Pacific International Holdings 7532

パン・パシフィック・インターナショナルHD
Recent Updates
2022-05-11
Q3 FY06/22 flash update
2022-05-09
Sales figures for April 2022
2022-03-25
1H FY06/22 report update
Get in touch
2-19-10 Aobadai Meguro-ku Tokyo, Japan 153-0042
https://ppih.co.jp/
03-5725-7532
Summary
A general discount retailer offering convenience with its revolutionary product display methods, shockingly low prices, and fun shopping experiences. Core line of business is the Don Quijote discount store chain. Aims to establish a post-general merchandise store (GMS) format with the acquisition of Uny.
Multiline RetailSpecialty RetailFood & Staples Retailing
Key dates
2010-01-06
Coverage initiation
Full Report
2022-05-11
Q3 FY06/22 flash update
2022-05-11
1H FY06/22 flash update
2022-02-14
Q1 FY06/22 flash update
2021-11-11
Download

Executive summary

Pan Pacific International Holdings Corporation (PPIH) is one of Japan’s top retailers whose core business is the Don Quijote discount store chain. The company operated 667 stores in Japan and overseas as of end-June 2021. The company recorded sales of JPY1.7tn in FY06/21. As well as Don Quijote, the company runs MEGA Don Quijote, a family-oriented, discount store brand that features spacious layouts and a wide array of food products. Based on the concept of making customers the utmost priority, PPIH has a unique store concept called CV+D+A, with CV standing for convenience, D for discount, and A for amusement to differentiate itself from peers. Most retail companies pursue convenience for customers so that they can buy what they want, when they want, and offer products at competitive prices. In contrast, the company’s concept is for customers to spend time instore, enjoying an exciting shopping experience. Its stores attract consumers, because they provide a form of amusement not offered by conventional retailers.

The company’s operations prioritize the delegation of authority and store autonomy. The sales floor managers source, display, and price items in a way that helps consumers enjoy shopping, having researched demand and competitor trends in their trade area. Mass displays (displaying a large volume of the same product), point-of-purchase (POP) displays such as handwritten price labels and product copy, and spot products that highlight the low price or rarity value of a product are all techniques to enhance consumers’ shopping experience.

PPIH has an aggressive stance on M&A. To date it has acquired GMS Nagasakiya Co., Ltd., and US supermarket chains. In January 2019, the company made Uny Co., Ltd. (GMS and other businesses) a wholly owned, consolidated subsidiary. Since forming an alliance with Uny in August 2017, the company has run dual-name stores such as MEGA Don Quijote UNY and Don Quijote UNY, which benefit from Uny’s expertise in the business while simultaneously promoting the Don Quijote concept of encouraging customers to spend time instore. This has produced positive effects such as improved sales and customer traffic, and earnings improvement. At the same time, to focus its management resources on specific businesses, it decided to sell DOit, which operates the home center business, and 99 Ichiba, which operates mini-supermarkets. As its name suggests, the company is looking to develop into a leading retailer not only in Japan but throughout the Pan Pacific region. Over the past few years, the company has been expanding its own business in Asia while also increasing the number of overseas stores through the acquisition of businesses in North America. In line with the ongoing expansion in the overseas business, the company in February 2021 announced the acquisition of GRCY Holdings, inc., which operates Gelson’s, a high-end supermarket in California.

Having made Uny a subsidiary, the company’s annual sales reached approximately JPY1.7tn. The company sees earnings improvement of Uny’s retail business as the main profit growth driver. In addition to targeting sales growth in existing formats, particularly at Don Quijote, through higher comparable store sales and accelerated store openings, the company is also focused on ensuring profitability at its Uny stores (mainly dual-name stores).

Trends and outlook

The company recorded FY06/21 sales of JPY1.7tn (+1.6% YoY), operating profit of JPY81.3bn (+7.8% YoY), net income attributable to owners of the parent of JPY53.9bn (+7.9 YoY), and ROE of 13.6%. The annual dividend was JPY16.0 per share (payout ratio of 18.8%). The company has now shown YoY sales and operating profit growth in each of the 32 consecutive years since it opened its first Don Quijote store.

For FY06/22, the company forecasts sales of JPY1.9tn (+9.4% YoY), operating profit of JPY85.0bn (+4.5% YoY), and net profit attributable to owners of the parent of JPY57.6bn (+7.0% YoY). Expecting the COVID-19 pandemic to drag on, the company’s forecast does not assume a recovery in inbound demand and factors in a cooling in consumer sentiment.

Under the leadership of Naoki Yoshida who took over as president and CEO in September 2019, PPIH in February 2020 unveiled its new medium- to long-term management plan Passion 2030, which targets operating profit of JPY200bn in 2030 (assuming sales of about JPY3tn). The company aims to generate operating profit of about JPY150bn by evolving and expanding current businesses and another JPY50bn through measures such as merchandising reform, cost optimization, and shift to profitability in its finance business. For the time being, it is looking to maximized synergies with Uny, control of procurement costs through economics of scale, and a private brand product strategy to serve as the drivers behind earnings growth. 

Strengths and weaknesses

Shared Research believes the company’s strengths are 1) ability to execute management policies in the field in ways that are compatible with the conditions of each region, 2) a powerful brand associated with an enjoyable shopping experience and low prices, and 3) swift decision-making. Weaknesses include 1) decline in store competitiveness for having become a giant corporation, 2) existence of some consumers who lack familiarity with, or acceptance of stores, and 3) heavy dependence on the domestic market (see Strengths and weaknesses section for details).

Key financial data

Income statementFY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21FY06/22
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Est.
Sales568,377612,424683,981759,592828,798941,5081,328,8741,681,9471,708,6351,870,000
YoY5.2%7.7%11.7%11.1%9.1%13.6%41.1%26.6%1.6%9.4%
Gross profit149,807161,018181,741201,893218,580243,991370,527481,689497,325553,900
YoY7.4%7.5%12.9%11.1%8.3%11.6%51.9%30.0%3.2%11.4%
Gross profit margin26.4%26.3%26.6%26.6%26.4%25.9%27.9%28.6%29.1%29.6%
SG&A expenses117,438126,726142,638158,708172,395192,423307,417405,692416,018468,900
YoY6.5%7.9%12.6%11.3%8.6%11.6%59.8%32.0%2.5%12.7%
Operating profit32,36934,29239,10343,18546,18551,56863,11075,99781,30685,000
YoY10.4%5.9%14.0%10.4%6.9%11.7%22.4%20.4%7.0%4.5%
Operating profit margin5.7%5.6%5.7%5.7%5.6%5.5%4.7%4.5%4.8%4.5%
Recurring profit33,20135,48740,16043,79745,52357,21868,24075,17381,52683,000
YoY13.4%6.9%13.2%9.1%3.9%25.7%19.3%10.2%8.5%1.8%
Recurring profit margin5.8%5.8%5.9%5.8%5.5%6.1%5.1%4.5%4.8%4.4%
Net income21,14121,47123,14824,93833,08236,40548,25350,30353,85157,600
YoY6.5%1.6%7.8%7.7%32.7%10.0%32.5%4.2%7.1%7.0%
Net margin3.7%3.5%3.4%3.3%4.0%3.9%3.6%3.0%3.2%3.1%
Per-share data (split-adjusted; JPY)
Shares issued (year-end; '000)622,911627,152631,676632,473632,715632,773633,287633,929634,239
EPS (JPY)34.234.436.839.452.357.572.278.884.990.8
Book value per share (JPY)267.0298.8336.2366.1409.4458.9520.4589.3660.1
Dividend per share (JPY)4.14.55.05.56.58.010.015.016.016.5
Balance sheet (JPYmn)
Cash and cash equivalents31,69842,69049,71742,89476,43071,973172,673179,785157,522
Accounts receivable5,3715,7306,8207,7208,96612,84818,74418,37821,074
Inventories85,99789,10594,580117,400123,969135,781188,510190,397203,416
Total current assets143,391158,834175,981195,977227,585244,125496,405496,760495,496
Total assets386,622432,135505,666560,568642,868807,0571,282,1001,298,9481,370,252
Accounts payable48,03655,11860,55670,19485,66193,030159,064148,226149,984
Total interest-bearing debt126,506134,531167,507186,499211,068332,712549,902532,553533,353
Total liabilities216,444238,971284,299316,021362,938494,562929,800908,232931,487
Shareholders' equity167,233187,637209,682231,788258,282291,337328,109373,950416,527
Cash flow statement (JPYmn)
Cash flows from operating activities38,27039,68442,52029,11056,44146,081101,97865,13579,054
Cash flows from investing activities-23,293-36,593-52,641-52,197-40,593-164,443-37,113-33,452-78,042
Cash flows from financing activities-9,5104,44016,17617,14817,644116,08343,456-34,030-28,954
Financial ratios
ROA (RP-based)8.6%8.2%7.9%7.8%7.1%7.1%5.3%5.8%6.1%
ROE13.7%12.1%11.6%11.2%13.5%13.3%15.6%14.3%13.6%
Equity ratio43.0%43.4%42.0%41.3%40.3%36.0%25.6%28.8%30.6%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company executed a 2-for-1 stock split on July 1, 2015 and a 4-for-1 stock split on September 1, 2019.
Note: The company revised its inventory valuation method from the retail method to the moving average method in FY06/21. 

Recent updates

Sales figures for April 2022

2022-05-09

Pan Pacific International Holdings Corporation announced sales figures for April 2022.

Don QuijoteFY06/10FY06/11FY06/12FY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21
FYFYFYFYFYFYFYFYFYFYFYFY
All storesSales6.1%5.9%6.2%7.1%6.6%12.3%112.3%11.8%12.2%5.0%-0.5%-7.3%
Store count162169185200217242243292313322339346
Comparable storesSales-1.5%3.4%0.5%-0.1%0.8%4.6%4.6%2.6%4.1%1.2%-2.9%-9.7%
Customer count3.8%3.1%-0.8%-0.5%0.1%1.9%1.9%2.2%2.3%0.3%-2.7%-9.1%
Customer spend-5.1%0.3%1.3%0.4%0.7%2.7%2.7%0.4%1.8%0.9%-0.2%-0.7%
Store count149158164179194208209258283297315325
By productElectric appliances-3.6%5.1%-2.2%-0.5%-2.7%4.8%4.8%10.5%12.4%2.2%-1.2%-6.1%
Household goods9.1%7.9%6.7%7.9%8.8%14.8%14.8%18.2%20.2%5.2%-2.3%-12.5%
Foods14.4%4.5%7.3%8.9%13.1%19.0%19.0%17.4%16.2%9.9%6.5%-1.6%
Watches & fashion merchandise1.7%4.3%11.9%11.2%3.4%8.8%8.8%2.7%1.8%0.7%-9.5%-12.4%
Sports & leisure goods5.5%8.2%2.0%8.3%5.6%7.1%7.1%3.7%2.4%0.0%-1.3%-2.1%
Domestic retailFY06/21
Major five companiesJulAugSepOctNovDecJanFebMarAprMayJun
All storesSales0.9%2.5%-12.0%2.5%-0.8%-0.1%3.6%-2.7%0.8%1.8%-2.1%-2.5%
Store count579577578578581582581582582585584582
Comparable storesSales-2.2%-1.5%-14.9%-0.4%-3.3%-3.3%0.1%-6.1%-2.4%-0.9%-4.6%-4.4%
Customer count-6.6%-5.2%-12.4%-3.9%-5.0%-5.0%-4.6%-9.5%-5.7%0.0%-2.1%-1.5%
Customer spend4.7%3.8%-2.9%3.6%1.8%1.9%4.9%3.8%3.5%-0.9%-2.6%-2.9%
Store count521522520518523528528536529536542541
Domestic retailFY06/22
Major four companiesJulAugSepOctNovDecJanFebMarAprMayJun
All storesSales3.8%-3.5%1.7%5.2%0.8%2.1%2.5%0.4%3.4%4.0%
Store count585586587588591593594595598600
Comparable storesSales2.4%-4.3%0.1%3.6%-1.2%1.2%1.5%-1.0%1.5%1.6%
Customer count2.9%-4.1%-0.5%2.3%-1.5%-0.1%0.0%-4.3%-1.4%-1.5%
Customer spend-0.6%-0.2%0.6%1.2%0.3%1.4%1.5%3.4%2.9%3.2%
Store count545551547549549556560559557563
Discount StoreFY06/22
JulAugSepOctNovDecJanFebMarAprMayJun
All storesSales7.8%-0.2%5.2%9.7%3.1%4.2%4.6%1.7%5.6%6.3%
Store count446447449450454456457458462464
Comparable storesSales3.4%-4.5%1.0%5.3%-1.0%1.7%1.6%-1.4%2.2%2.4%
Customer count3.5%-4.5%-0.1%3.0%-1.9%0.0%-0.4%-5.1%-1.3%-1.3%
Customer spend-0.1%0.0%1.1%2.3%0.9%1.7%2.0%3.9%3.5%3.8%
Store count410417417419418422426428425428
By productElectric appliances-6.5%-17.3%-10.1%-3.5%-12.6%-10.2%-6.5%-8.6%-6.5%-4.9%
Household goods2.7%-2.6%4.4%8.1%2.5%5.7%5.1%1.2%5.7%6.6%
Foods6.7%2.3%4.2%7.5%0.3%1.7%0.1%-1.2%2.3%0.2%
Watches & fashion merchandise-3.5%-14.3%-7.7%-2.4%-3.3%1.6%5.3%-1.0%2.2%7.4%
Sports & leisure goods14.8%-13.4%0.1%8.3%-1.9%7.2%5.6%-3.6%-0.4%1.3%
GMSFY06/22
JulAugSepOctNovDecJanFebMarAprMayJun
All storesSales-4.7%-8.5%-5.7%-3.9%-3.8%-2.4%-2.1%-2.5%-1.4%-1.7%
Store count139139138138137137137137136136
Comparable storesSales0.1%-3.8%-1.9%-0.2%-1.7%0.2%1.2%-0.1%-0.2%-0.4%
Customer count1.9%-3.1%-1.6%0.9%-0.8%-0.3%0.8%-2.5%-1.5%-2.0%
Customer spend-1.8%-0.7%-0.4%-1.1%-0.9%0.5%0.5%2.5%1.3%1.6%
Apparel6.2%-18.2%-15.8%-8.1%0.4%2.5%1.8%-13.5%-4.3%2.2%
Household goods-1.2%-8.3%-6.4%-1.4%-5.7%-0.2%3.3%-1.7%-0.4%-1.3%
Foods-0.6%-0.4%1.2%1.7%-0.9%0.0%0.7%2.3%0.5%-0.8%
Store count135134130130131134134131132135
Don QuijoteFY06/21
JulAugSepOctNovDecJanFebMarAprMayJun
All storesSales-7.0%-6.1%-20.9%-6.9%-8.4%-8.7%-5.7%-9.3%-1.8%-2.8%-3.7%-3.3%
Store count342341342342345346345346346349348346
Comparable storesSales-9.6%-9.0%-23.4%-9.2%-10.7%-11.0%-7.7%-11.4%-4.6%-5.4%-6.6%-5.2%
Customer count-11.2%-9.5%-18.0%-8.5%-8.3%-9.2%-8.6%-13.3%-9.7%-5.7%-3.7%-1.7%
Customer spend1.8%0.6%-6.6%-0.7%-2.6%-1.9%0.9%2.2%5.6%0.3%-3.0%-3.7%
Store count318319317316319320320325319323326325
By productElectric appliances3.7%-1.1%-17.4%-6.3%-3.6%-4.3%0.1%-9.3%-1.5%1.5%-12.7%-19.9%
Household goods-12.0%-11.1%-32.7%-10.9%-13.9%-13.6%-12.1%-15.1%-2.3%-10.8%-7.8%-2.5%
Foods-3.0%-0.1%-12.8%-1.7%-2.2%-2.2%0.1%-2.0%-2.6%-1.5%1.4%6.2%
Watches & fashion merchandise-13.9%-17.3%-21.8%-11.6%-17.1%-16.0%-21.2%-18.3%-0.7%17.4%-1.8%-12.2%
Sports & leisure goods-0.4%7.1%-6.2%-5.5%2.3%-6.4%-3.2%-3.0%2.3%-3.7%-5.3%-6.7%
Don QuijoteFY06/22
JulAugSepOctNovDecJanFebMarAprMayJun
All storesSales3.7%-4.5%0.5%6.1%0.1%2.7%2.7%-0.5%4.0%5.2%
Store count349349349349352353354355358359
Comparable storesSales2.2%-5.8%-0.5%5.0%-1.5%1.9%1.6%-2.0%2.3%3.0%
Customer count3.1%-5.3%-0.8%3.0%-2.3%0.2%-0.3%-5.4%-1.2%-0.7%
Customer spend-0.9%-4.5%0.3%1.9%0.8%1.6%2.0%3.6%3.6%3.8%
Store count325332329330331333335336333336
By productElectric appliances-6.9%-16.5%-10.7%-4.2%-10.5%-10.1%-5.6%-8.3%-5.5%-2.9%
Household goods3.9%-1.4%5.3%9.3%4.7%7.7%6.6%3.0%7.8%10.2%
Foods8.3%3.2%3.7%9.3%1.3%2.7%0.4%-1.1%4.2%2.0%
Watches & fashion merchandise-4.5%-13.9%-8.2%-2.4%-3.6%1.1%5.5%0.5%3.5%9.4%
Sports & leisure goods16.0%-11.6%1.4%10.2%0.0%9.2%6.8%-2.6%1.3%4.5%
UNYFY06/21
JulAugSepOctNovDecJanFebMarAprMayJun
All storesSales-7.6%-6.0%-14.0%-2.5%-8.5%-5.5%-2.4%-9.7%-7.3%-0.6%-6.6%-9.1%
Store count149147147147144143143143143142140139
Comparable storesSales6.9%7.5%-1.6%9.9%3.4%4.2%6.6%-2.1%-1.2%5.3%-2.0%-5.2%
Customer count-0.7%0.5%-3.6%2.0%-1.5%-0.6%-0.9%-6.0%-1.6%7.1%0.4%-2.4%
Customer spend7.6%7.0%2.1%7.7%4.9%4.8%7.5%4.1%0.4%-1.7%-2.4%-2.8%
Apparel-5.6%-7.9%-14.6%13.3%-9.0%1.6%-7.7%-9.1%15.8%75.4%6.0%-16.5%
Household goods8.9%8.9%-16.3%24.2%7.5%6.3%9.5%-4.2%-4.1%6.7%-7.5%-11.1%
Foods8.9%10.1%5.0%6.6%5.2%4.1%9.0%-0.5%-3.4%-2.8%-2.2%-0.8%
Store count145142141138137139139138136138137135
UDRStore count434444444748484848495152
UNYFY06/22
JulAugSepOctNovDecJanFebMarAprMayJun
All storesSales-4.7%-8.5%-5.7%-3.9%-3.8%-2.4%-2.1%-2.5%-1.4%-1.7%
Store count139139138138137137137137136136
Comparable storesSales0.1%-3.8%-1.9%-0.2%-1.7%0.2%1.2%-0.1%-0.2%-0.4%
Customer count1.9%-3.1%-1.6%0.9%-0.8%-0.3%0.8%-2.5%-1.5%-2.0%
Customer spend-1.8%-0.7%-0.4%-1.1%-0.9%0.5%0.5%2.5%1.3%1.6%
Apparel6.2%-18.2%-15.8%-8.1%0.4%2.5%1.8%-13.5%-4.3%2.2%
Household goods-1.2%-8.3%-6.4%-1.4%-5.7%-0.2%3.3%-1.7%-0.4%-1.3%
Foods-0.6%-0.4%1.2%1.7%-0.9%0.0%0.7%2.3%0.5%-0.8%
Store count135134130130131134134131132135
UDRStore count52535455565757575859

Trends and outlook

Quarterly trends and results

CumulativeFY06/21FY06/22FY06/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Sales418,474852,8611,268,1961,708,635445,474917,6801,370,479-73.3%1,870,000
YoY-2.4%-0.7%0.2%1.6%6.5%7.6%8.1%-9.4%
Gross profit123,455251,194369,944497,325127,477267,866400,318-72.3%553,900
YoY0.7%1.4%1.5%3.2%3.3%6.6%8.2%-11.4%
Gross profit margin29.5%29.5%29.2%29.1%28.6%29.2%29.2%-29.6%
SG&A expenses100,251201,865303,056416,018111,402224,222337,238-71.9%468,900
YoY-1.2%-0.4%-0.4%2.5%11.1%11.1%11.3%-12.7%
SG&A ratio24.0%23.7%23.9%24.3%25.0%24.4%24.6%-25.1%
Operating profit23,20449,32966,88881,30616,07543,64463,080-74.2%85,000
YoY9.8%9.3%10.7%7.0%-30.7%-11.5%-5.7%-4.5%
Operating profit margin5.5%5.8%5.3%4.8%3.6%4.8%4.6%-4.5%
Recurring profit22,80548,19267,54781,52616,44744,52367,707-81.6%83,000
YoY11.5%5.8%12.7%8.5%-27.9%-7.6%0.2%-1.8%
Recurring profit margin5.4%5.7%5.3%4.8%3.7%4.9%4.9%-4.4%
Net income16,47032,63845,23453,85112,42030,14845,984-79.8%57,600
YoY30.7%13.0%17.9%7.1%-24.6%-7.6%1.7%-7.0%
Net margin3.9%3.8%3.6%3.2%2.8%3.3%3.4%-3.1%
QuarterlyFY06/21FY06/22
(JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4
Sales418,474434,387415,335440,439445,474472,206452,799-
YoY-2.4%1.0%2.1%5.8%6.5%8.7%9.0%-
Gross profit123,455127,739118,750127,381127,477140,389132,452-
YoY0.7%2.0%1.6%8.8%3.3%9.9%11.5%-
Gross profit margin29.5%29.4%28.6%28.9%28.6%29.7%29.3%-
SG&A expenses100,251101,614101,191112,962111,402112,820113,016-
YoY-1.2%0.4%-0.3%11.3%11.1%11.0%11.7%-
SG&A ratio24.0%23.4%24.4%25.6%25.0%23.9%25.0%-
Operating profit23,20426,12517,55914,41816,07527,56919,436-
YoY9.8%8.9%14.7%-7.4%-30.7%5.5%10.7%-
Operating profit margin5.5%6.0%4.2%3.3%3.6%5.8%4.3%-
Recurring profit22,80525,38719,35513,97916,44728,07623,184-
YoY11.5%1.1%34.8%-8.4%-27.9%10.6%19.8%-
Recurring profit margin5.4%5.8%4.7%3.2%3.7%5.9%5.1%-
Net income16,47016,16812,5968,61712,42017,72815,836-
YoY30.7%-0.7%32.9%-27.8%-24.6%9.6%25.7%-
Net margin3.9%3.7%3.0%2.0%2.8%3.8%3.5%-
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company revised its inventory valuation method from the retail method to the moving average method in FY06/21.
Note: The company is applying the Accounting Standard for Revenue Recognition and other standards from FY06/22.           

By segmentFY06/21FY06/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Sales418,474852,8611,268,1961,708,635445,474917,6801,370,479-
YoY-2.4%-0.7%0.2%1.6%6.5%7.6%8.1%-
Discount Store286,195579,345868,6701,183,526322,065658,233988,481-
YoY1.6%3.3%4.4%5.9%12.5%13.6%13.8%-
GMS112,372234,539342,393449,989105,297222,317326,663-
YoY-12.3%-10.0%-9.5%-8.5%-6.3%-5.2%-4.6%-
Rent16,41331,83446,48360,92714,57029,82044,520-
YoY8.2%7.2%4.4%4.6%-11.2%-6.3%-4.2%-
Other3,4947,14210,64914,1933,5417,31010,816-
YoY-8.3%-5.6%-5.6%-2.7%1.3%2.4%1.6%-
Operating profit23,20449,32966,88880,84316,07543,64463,080-
YoY9.8%9.3%10.7%6.4%-30.7%-11.5%-5.7%-
Profit margin5.5%5.8%5.3%4.7%3.6%4.8%4.6%-
Discount Store16,06532,25445,23855,33515,34535,16251,922-
YoY7.4%14.7%22.6%17.0%-4.5%9.0%14.8%-
Profit margin5.6%5.6%5.2%4.7%4.8%5.3%5.3%-
GMS3,65711,31714,01516,5993686,4178,753-
YoY27.7%13.1%6.8%-2.3%-89.9%-43.3%-37.5%-
Profit margin3.3%4.8%4.1%3.7%0.3%2.9%2.7%-
Rent3,9577,48910,49813,3622,0615,3577,794-
YoY25.3%11.1%-0.1%-1.6%-47.9%-28.5%-25.8%-
Profit margin24.1%23.5%22.6%21.9%14.1%18.0%17.5%-
Other-955-1,875-3,138-4,453-1,730-3,371-5,505-
YoY--------
Profit margin--------
Adjustments4801442753079115-
By segmentFY06/21FY06/22
(JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4
Sales418,474434,387415,335440,439445,474472,206452,799-
YoY-2.4%1.0%2.1%5.8%6.5%8.7%9.0%-
Discount Store286,195293,150289,325314,856322,065336,168330,248-
YoY1.6%4.9%6.9%10.2%12.5%14.7%14.1%-
GMS112,372122,167107,854107,596105,297117,020104,346-
YoY-12.3%-7.7%-8.4%-5.1%-6.3%-4.2%-3.3%-
Rent16,41315,42114,64914,44414,57015,25014,700-
YoY8.2%6.1%-1.2%5.4%-11.2%-1.1%0.3%-
Other3,4943,6483,5073,5443,5413,7693,506-
YoY-8.3%-2.8%-5.5%7.0%1.3%3.3%0.0%-
Operating profit23,20426,12517,55913,95516,07527,56919,436-
YoY9.8%8.9%14.7%-10.4%-30.7%5.5%10.7%-
Profit margin5.5%6.0%4.2%3.2%3.6%5.8%4.3%-
Discount Store16,06516,18912,98410,09715,34519,81716,760-
YoY7.4%23.1%47.9%-3.1%-4.5%22.4%29.1%-
Profit margin5.6%5.5%4.5%3.2%4.8%5.9%5.1%-
GMS3,6577,6602,6982,5843686,0492,336-
YoY27.7%7.3%-13.5%-33.2%-89.9%-21.0%-13.4%-
Profit margin3.3%6.3%2.5%2.4%0.3%5.2%2.2%-
Rent3,9573,5323,0092,8642,0613,2962,437-
YoY25.3%-1.4%-20.1%-6.8%-47.9%-6.7%-19.0%-
Profit margin24.1%22.9%20.5%19.8%14.1%21.6%16.6%-
Other-955-920-1,263-1,315-1,730-1,641-2,134-
YoY--------
Profit margin--------
Adjustments480-336131-275304936-
Source: Shared Research based on company data
Note: The company revised its inventory valuation method from the retail method to the moving average method in FY06/21.
Note: The company is applying the Accounting Standard for Revenue Recognition and other standards from FY06/22.
By product categoryFY06/21FY06/22
Quarterly (JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4
Sales418,474434,387415,335440,439445,474472,206452,799
YoY-2.4%1.0%2.1%5.8%6.5%8.7%9.0%
Discount Store286,195293,150289,325314,856322,065336,168330,248
YoY1.6%4.9%6.9%10.2%12.5%14.7%14.1%
Electric appliances22,13623,16922,60119,97521,00022,40022,000
YoY2.0%5.7%9.7%-8.8%-5.1%-3.3%-2.7%
% of DS business7.7%7.9%7.8%6.3%6.5%6.7%6.7%
Household goods56,62555,40656,07657,34164,10065,60065,100
YoY-13.1%-5.6%-3.6%-4.2%13.2%18.4%16.1%
% of DS business19.8%18.9%19.4%18.2%19.9%19.5%19.7%
Foods110,045116,198117,807120,860119,800104,200141,300
YoY11.4%12.3%11.3%6.8%8.9%-10.3%19.9%
% of DS business38.5%39.6%40.7%38.4%37.2%31.0%42.8%
Watches & fashion merchandise38,17338,71033,09934,74734,30037,70032,800
YoY-11.1%-8.5%-6.2%2.6%-10.1%-2.6%-0.9%
% of DS business13.3%13.2%11.4%11.0%10.7%11.2%9.9%
Sports & leisure goods17,68715,82613,22715,02518,20017,10013,700
YoY9.2%4.9%6.1%-4.0%2.9%8.1%3.6%
% of DS business6.2%5.4%4.6%4.8%5.7%5.1%4.1%
Overseas34,67236,67538,98159,84260,30065,60069,500
YoY34.8%40.7%31.4%81.0%73.9%78.9%78.3%
% of DS business12.1%12.5%13.5%19.0%18.7%19.5%21.0%
Other6,8577,1657,5367,0644,5003,5005,700
YoY-3.5%-12.3%-3.3%-15.7%-34.4%-51.2%-24.4%
% of DS business2.4%2.4%2.6%2.2%1.4%1.0%1.7%
GMS112,372122,167107,854107,596105,297117,020104,346
YoY-12.3%-7.7%-8.4%-5.1%-6.3%-4.2%-3.3%
Apparel13,05715,95511,57414,12410,90014,90010,900
YoY-22.5%-12.0%-15.4%7.8%-16.5%-6.6%-5.8%
% of GMS business11.6%13.1%10.7%13.1%10.4%12.7%10.4%
Household goods16,89620,65817,01313,81715,40019,90015,300
YoY-14.5%-2.6%0.1%-22.1%-8.9%-3.7%-10.1%
% of GMS business15.0%16.9%15.8%12.8%14.6%17.0%14.7%
Foods82,05983,68577,92777,84378,50081,60077,500
YoY-5.4%-5.2%-6.1%-5.7%-4.3%-2.5%-0.5%
% of GMS business73.0%68.5%72.3%72.3%74.6%69.7%74.3%
Other3601,8681,3411,811500700600
YoY-92.4%-60.9%-67.1%-38.9%-62.5%-55.3%
% of GMS business0.3%1.5%1.2%1.7%0.5%0.6%0.6%
SG&A expenses, store count, and comparable store sales
SG&A expensesFY06/21FY06/22
Quarterly (JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4
SG&A expenses100,251101,614101,191112,962111,402112,820113,016-
YoY-1.2%0.4%-0.3%11.3%11.1%11.0%11.7%-
Salaries and allowances37,54637,79038,39443,64243,10043,60043,900-
YoY5.8%4.2%5.5%19.1%14.8%15.4%14.3%-
Rents12,98813,30113,31413,53813,50013,50013,700-
YoY-3.2%-1.8%-1.7%1.1%3.9%1.5%2.9%-
Commission fees14,46714,73713,62816,01214,40015,10014,100-
YoY-3.7%-7.0%-8.8%3.7%-0.5%2.5%3.5%-
Depreciation6,2196,4706,3157,4687,2007,6007,800-
YoY6.7%5.5%6.6%11.4%15.8%17.5%23.5%-
Other29,03129,31629,54032,30233,10033,00033,500-
YoY-8.5%-0.3%-3.9%10.2%14.0%12.6%13.4%-
Store count by formatFY06/21FY06/22
Q1Q2Q3Q4Q1Q2Q3Q4
Discount Store432440440444450457463
Don Quijote225228227226226229234-
MEGADon Quijote135137138139140140140
(MEGA) Don Quijote UNY44484852545758-
Picasso and others28272727303131
GMS147143143139138137136-
Overseas49505484868892-
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Sales and operating profit by company
By companyFY06/21FY06/22
(JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4
Don Quijote
Sales167,474170,531162,162165,986170,800177,400167,600
YoY-10.2%-5.4%-3.5%-1.9%2.0%4.0%3.4%
Operating profit6,4623,8142,6831,2484,6007,5004,500
YoY-24.6%-39.6%-52.8%-24.2%-28.8%96.6%67.7%
Profit margin3.9%2.2%1.7%0.8%2.7%4.2%2.7%
Nagasakiya
Sales48,17949,55947,15147,74548,60051,20048,200
YoY-2.6%2.9%1.5%-3.6%0.9%3.3%2.2%
Operating profit1,5242,3461,3051,1051,1002,2001,000
YoY-10.6%75.2%14.4%-45.8%-27.8%-6.2%-23.4%
Profit margin3.2%4.7%2.8%2.3%2.3%4.3%2.1%
UD Retail
Sales42,40646,27747,03148,70751,50053,70052,100
YoY122.8%92.4%67.5%28.1%21.4%16.0%10.8%
Operating profit1728630105001,200700
YoY-----64.8%11.1%
Profit margin0.0%1.6%1.3%0.0%1.0%2.2%1.3%
UNY
Sales123,840132,665117,952118,204116,000128,100115,000
YoY-7.8%-4.3%-5.4%-4.9%-6.3%-3.4%-2.5%
Operating profit6,86610,8605,7335,5142,7009,3005,000
YoY39.3%6.6%-9.2%-18.0%-60.7%-14.4%-12.8%
Profit margin5.5%8.2%4.9%4.7%2.3%7.3%4.3%
North America
Sales25,43824,75625,31544,29145,90049,70051,000
YoY----80.4%100.8%101.5%
Operating profit1,9071,5701,7592,8643,0004,0004,000
YoY----57.3%154.8%-
Profit margin7.5%6.3%6.9%6.5%6.5%8.0%7.8%
Asia
Sales9,17211,80513,66315,49914,40015,90018,600
YoY----57.0%34.7%-
Operating profit7741,3181,357-404005001,000
YoY-----48.3%-62.1%-
Profit margin8.4%11.2%9.9%-0.3%2.8%3.1%5.4%
Japan Asset Marketing
Sales5,6255,4455,2915,3775,3005,2005,300
YoY-0.6%-3.3%-7.3%-2.8%-5.8%-4.5%0.2%
Operating profit2,0781,9731,7371,7631,7001,6001,700
YoY-2.9%-8.2%-19.1%-11.5%-18.2%-18.9%-2.1%
Profit margin36.9%36.2%32.8%32.8%32.1%30.8%32.1%
UCS
Sales4,5504,8614,6004,6474,6004,9004,600
YoY-11.1%-8.9%-6.3%1.4%1.1%0.8%0.0%
Operating profit269507203692300700300
YoY-58.2%-28.9%-26.7%-11.5%38.1%47.8%
Profit margin5.9%10.4%4.4%14.9%6.5%14.3%6.5%

Q3 FY06/22 results 

Consolidated results for nine-month period thru Q3 FY06/22

  • Sales:               JPY1,370.5bn (+8.1% YoY)
  • Operating profit: JPY63.1bn (-5.7% YoY)
  • Recurring profit: JPY67.7bn (+0.2% YoY)
  • Net income*:    JPY46.0bn (+1.7% YoY)
    *Net income attributable to owners of the parent 

The company is applying the Accounting Standard for Revenue Recognition and other standards from FY06/22. In accordance with the transitional treatment, the cumulative effect of retroactive application of the new accounting standard prior to the beginning of Q1 is added to or deducted from retained earnings at the beginning of Q1.

The top-line growth during the nine-month period through Q3 FY06/22 was due in large part to the April 2021 acquisition of Gelson's, a high-end supermarket chain operator in California. Gelson's added JPY64.7bn to consolidated sales during the period. Also adding to sales were new stores openings in Japan and overseas, conversions of stores to new formats, and comparable-store sales recovered under the company's retail business in Japan.

The decline in operating profit during the period was due to the sharp drop in earnings in Q1, which was large enough to offset even the record-high operating profit reported in both Q2 and Q3. In Q1, the COVID-19 pandemic and unseasonable weather impeded sales growth and expenses for new store openings and renovations increased. In Q2 and Q3, the gross profit margin rose in response to an expansion of its lineup of private brand goods, better pricing, faster inventory turns, and the addition of Gelson's to consolidated sales.

The total number of stores as of the end of Q3 (March 2021) was 691 (versus 667 at the end of FY06/21), consisting of 599 domestic stores and 92 overseas stores. The company opened 17 new stores in Japan, including 13 Don Quijote stores, one Nagasakiya store, and three UD Retail stores, and eight stores overseas (three in Singapore, one in Hong Kong, two in Thailand, one in Malaysia, and one in Macao). Also during the period, the company closed one Don Quijote store.

Discount Store business
  • Sales:                JPY988.5bn (+13.8% YoY)
  • Operating profit:  JPY51.9bn (+14.8% YoY) 

Comparable-store sales during the nine-month period were up 0.9% YoY, aided by the lifting of restrictions on the flow of people following the end of the state of emergency, an expansion of lineup of private brand goods, better pricing, and other measures. The expanded lineup of private brand goods also boosted the gross profit margin and the acquisition of Gelson's added to both sales and earnings. 

GMS business
  • Sales:                JPY326.7bn (-4.6% YoY)
  • Operating profit:  JPY8.8bn (-37.5% YoY) 

The decline in sales was due in part to a decrease in the total number of stores following the shift of UNY stores to a discount store format. Comparable-store sales during the nine-month were also down 0.7% YoY due to weak sales of apparel and housing-related products amid extraordinary summer weather, despite robust Food sales. However, comparable-store sales have moved back into positive, with Q3 FY06/22 results exceeding that of Q3 FY06/21. 

Rent business
  • Sales:               JPY44.5bn (-4.2% YoY)
  • Operating profit: JPY7.8bn (-25.8% YoY) 

Due to the prolonged and widespread impact of COVID-19, vacant lots were created due to tenant closures, resulting in decreased sales and profits.

Overseas business (includes discount store and general supermarket businesses)

In Asia, sales of JPY48.9bn were up 41.2% YoY, but operating profit of JPY1.9bn was down 44.9% YoY. Although the company's own stores were competing with each other, it continued to open new stores, resulting in an increase in sales. Operating profit was down on increased store opening costs.

In North America, sales of JPY146.6bn were up 94.1% YoY and operating profit of JPY11.0bn was up 110.1% YoY. Both sales and profit increased reflecting improved gross profit margin due to a combination of better pricing strategies and contributions from the addition of Gelson's to the group.

Current initiatives
Enhancement of financial business 

As more Japanese consumers have moved to cashless payments, the company has been paying more in transaction fees to outside companies and running into more obstacles when it comes to analyzing the purchasing data of its customers. Seeing this challenge as a business opportunity, the company has drawn up plans to make payment processing part of its value chain. Specifically, these plans call for the startup of a participating merchant management business in June 2022, followed in the latter half of FY06/23 by initiatives such as enhancing convenience of payment app functions with the addition of features such as instant credit approval.  

Introduction of shareholder special benefit plan

In order to strengthen its engagement with individual shareholders, the company has introduced a shareholder special benefit plan. Eligible shareholders will receive JPY2,000 worth of majica points.

Full-year FY06/22 company forecast

FY06/20FY06/21FY06/22 Initial Est.
(JPYmn) 1H Act.2H Act.FY Act.1H Act.2H Act.FY Act.1H Act.2H Est.FY Est.
Sales858,789823,1581,681,947852,861855,7741,708,635917,680952,3201,870,000
YoY67.3%0.9%26.6%-0.7%4.0%1.6%7.6%11.3%9.4%
Gross profit247,793233,896481,689251,194246,131497,325267,866286,034553,900
YoY82.7%-0.4%30.0%1.4%5.2%3.2%6.6%16.2%11.4%
Gross profit margin28.9%28.4%28.6%29.5%28.8%29.1%29.2%30.0%29.6%
SG&A expenses202,680203,012405,692201,865214,153416,018224,222244,678468,900
SG&A ratio23.6%24.7%24.1%23.7%25.0%24.3%24.4%25.7%25.1%
Operating profit45,11330,88475,99749,32931,97781,30643,64441,35685,000
YoY50.3%-6.7%20.4%9.3%3.5%7.0%-11.5%29.3%4.5%
Operating profit margin5.3%3.8%4.5%5.8%3.7%4.8%4.8%4.3%4.5%
Recurring profit45,55529,61875,17348,19233,33481,52644,52338,47783,000
YoY28.9%-10.0%10.2%5.8%12.5%8.5%-7.6%15.4%1.8%
Recurring profit margin5.3%3.6%4.5%5.7%3.9%4.8%4.9%4.0%4.4%
Net income28,89021,41350,30332,63821,21353,85130,14827,45257,600
YoY22.3%-13.1%4.2%13.0%-0.9%7.1%-7.6%29.4%7.0%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

PPIH forecasts FY06/22 sales of JPY1.9tn (+9.4% YoY), operating profit of JPY85.0bn (+4.5% YoY), net income of JPY57.6bn (+7.0% YoY). Of this total, sales in the domestic business (domestic discount store and GMS businesses) is targeted at JPY1.6tn (+4.6% YoY), and operating profit at JPY54.4bn (+6.5% YoY). Sales from overseas businesses (Asia and North America) is projected at JPY267.0bn (+57.1% YoY), and operating profit at JPY12.5bn (+8.3% YoY).

Performance forecast and assumptions

The company has considered the following factors: the COVID-19 pandemic is expected to drag on and recovery of inbound demand is not expected; intermittent state-of-emergency declarations will lower consumer sentiment; and a drop in food sales is expected in FY06/22 due to absence of demand for alternatives to eating out which was seen in FY06/21. 

Domestic discount store business

Comparable store sales (excluding duty-free sales) are expected to increase by 3.1% YoY. The company expects to open at least 25 new stores (including five Don Quijote stores, eight UD Retail stores, two Nagasakiya stores, and 10 MEGA stores) and renovate at least 30 stores. It is also planning on capital investments of JPY18.0bn. Comparable store sales (excluding duty-free sales) are expected to recover to pre-COVID-19 levels. UD Retail plans to transfer seven stores from Uny due to the change in business format, and will focus on renovating the stores with Don Quijote as a tenant. 

GMS business

Comparable store sales are expected to increase by 2.1% YoY. The company expects to renovate at least 11 stores into new GMS and plans to spend JPY14.0bn in capex (JPY8.4bn in FY06/21). While sales of food products are expected to be sluggish due to a reactive decline against FY06/21, the company anticipates a recovery in clothing and home-oriented goods.

Asia business

Comparable store sales are forecast to decrease by 1.8% YoY. The company expects to open more than 12 new stores—including in Macau—renovate at least three stores, and make capital investments of JPY11.0bn. Comparable store sales were set to be negative, factoring in a decline due to the absence of special demand related to COVID-19, as well as that associated with the opening of new stores seen in FY06/21. 

North America business

Comparable store sales are expected to increase by 3.6% YoY. The company plans to renovate at least 10 stores, and make capital investments of JPY10.0bn. Gelson’s is expected to contribute for the entire year.

Other

The company will make capital investments of JPY22.0bn for promotion of digital transformation (DX) and other measures.

Capital expenditures are expected to total JPY75.0bn (actual result for FY06/21 was JPY46.0bn vs. JPY50.0bn planned). In addition to implementing plans accumulated in FY06/21, such as store renovations and strengthening private brand products, the company will step up its promotion of DX.

As a result of the above, operating profit is expected to be JPY85.0bn (+4.5% YoY), recovering to a level comparable to FY06/20, before the outbreak of COVID-19. SG&A expenses are expected to increase in reaction to the decrease in FY06/21 due to shorter operating hours and cost reductions.

Details of main initiatives

However, the company even in this environment aims to increase support from customers by operating its stores based on the idea of store autonomy, responding quickly to shifts in customer preferences, and strengthening sales promotion activities using the group’s proprietary majica e-money service. Management also looks to improve customer satisfaction by increasing store count through the conversion of UNY stores and the New GMS strategy in the UNY business, while also advancing digital strategies and bolstering sales and product development in the private brand lineup of Jonetsu Kakaku products. The company plans to accelerate investment in future growth and establish a structure so that when the COVID-19 pandemic subsides, it will be able to capitalize on domestic and international demand and get back on a growth track. 

Domestic discount store business

The company indicated its belief that it had fallen short in responding to changes in consumer behavior following the spread of COVID-19. In particular, management noted that despite the expansion of the e-commerce market due to consumers spending more time at home, online sales were slow to adapt, resulting in lost opportunities.  

In FY06/22, the company will strengthen its price competition in brick-and-mortar stores. To achieve this, it will lower the prices of some national brand products and increase the ratio of sales of private brand products to appeal to customers with lower prices. In addition, to maintain and improve the attractiveness of the shelves even as the handling of national brand products declines, the company will strengthen development to increase the attractiveness of private brand products, while also deepening the assortment of product categories where the company can demonstrate its strengths.

Strengthen price competitiveness against rival companies

Price competition is intensifying not only with brick-and-mortar stores in other business formats, but also with the e-commerce market. The company plans to introduce a system that provides recommended prices based on the prices offered by rivals in the vicinity of the store, and as a discount business, strengthen its price competitiveness. 

Promote differentiation by introducing and strengthening development of private brand products

The company aims for private brand products to account for 17.5% of sales (approximately 12.5% at end-June 2021). Since the complete renewal of the company's private brand product, Jonetsu Kakaku, in February 2021, the ratio of sales of private brand products has been on an upward trend. The company has been successful in renewing its brand image and strengthening its product development process to incorporate customer feedback and enhance the appeal of its products. A higher percentage of sales from private brand products will allow the company to appeal to customers with lower prices, and is also expected to increase the company's GPM. In FY06/22, the company will implement in-store sales promotions to strengthen sales of existing private brand products, and also fortify new product development. 

Deepen and strengthen categories in which the company can become the leader

The company plans to narrow down the number of items of national brand products in order to make room for private brand products. It offers a wide variety of products at low prices, and considers the discovery of favorite products to be one of the most enjoyable aspects of shopping, as it motivates customers to visit stores and make purchases. To continue to provide this kind of enjoyment even as private brand products take up a larger percentage of the shelves, the company will maintain the appeal of its product lineup by digging deep into categories where it can demonstrate its strengths. For example, the company is testing a "Meat Donki" that specializes in meat products. In addition to Meat Donki, the company has repeatedly conducted hypothesis testing on multiple products and categories to determine the balance between necessary products and those that entertain customers. 

GMS business

The change in business format to a discount store business format has shown some results. Going forward, the company will accelerate the renovation of stores into new GMSs and aims to achieve a combined operating profit increase of JPY20.0bn (compared to FY6/2020) for Uny and UD Retail. 

Accelerate renovation into new GMSs

The number of stores to be converted into UD Retail stores will be limited to seven—five of which will be tenanted by Don Quijote at APITA—compared to 11 stores in FY06/21. Eleven stores are scheduled to be renovated into new GMSs, the same as in FY06/21. The company expects the number of stores to be converted by end-FY6/2024 to decrease from about 80 to about 60. The company plans to close two stores in connection with the conversion to UD Retail, bringing the total number of stores in the GMS business to 137. 

Individual store management

The company's corporate philosophy, Genryu (The Source), has spread to Uny employees, boosting their morale and making it possible for the company to introduce its strength in individual store management to Uny. The company will move away from conventional GMS and supermarkets, where store management is led by headquarters. Instead, it will incorporate elements of individual store management, such as product purchasing, pricing, display, and sales, based on decisions made on the spot and taking advantage of local characteristics and locations. In FY06/21, the cash register and core systems of Uny stores were replaced, enabling sales price changes at the discretion of the frontline employees. 

Overseas business

In the overseas business, the company aims to expand the number of companies participating in and the number of products handled by the Pan Pacific International Club, which was established to advance exports of Japanese agricultural, livestock, and marine products. It will also pursue the development of stores, mainly in North America and Southeast Asia and follow a policy based on providing Japanese agricultural, livestock, and marine products at affordable prices. It will support future business expansion and profitability improvement, and boost the growth of the company’s Asian and North American businesses. 

Asia business

The company expects to expand its business by opening new stores, and forecasts sales increase by JPY35.0bn and profit increase by JPY500-600mn YoY. Using PPIC as a business foundation, the company will launch initiatives to promote Japanese food locally, with the aim of increasing sales and improving profitability. In the medium term, the company aims to achieve an OPM of 8% (6.8% in FY06/21). 

North America business

Sales are expected to increase by JPY62.0bn YoY. 

In its existing businesses, the company will renovate existing stores and shore up the business especially in the side dish category. In addition to procuring Japanese agricultural and livestock products through PPIC, the company will also strengthen its handling of private brand products.

Gelsonʼs is forecasting sales of JPY80.0bn (JPY90.2bn in FY06/21) and operating profit before amortization of goodwill of JPY3.4bn (JPY7.1bn in FY06/21 with amortization of goodwill of JPY2.7bn). The company expects sales to decline due to a decrease in alternative demand for dining out as economic activity resumes, but it aims to increase sales above pre-COVID-19 levels by securing customers acquired during the pandemic. The company has refurbished two stores in FY06/22 and plans to open two more stores in FY6/23.

Digital data strategy

The company will accelerate its digital data strategy by establishing and restructuring specialized organizations and organizing focus areas. It will also work to improve touchpoints by expanding channels with customers to obtain customer information. The company will further build an infrastructure to centrally manage the information obtained, and analyze the data to improve its understanding of customers and provide best experience for each and every one of them.  

Release of new majica app

By end-2021, the company will release a new version of its majica app with enhanced functionality. In addition to searching for and purchasing products, it will add functions for sales promotion, providing product information, communication, and payment to make shopping more convenient. The company will then build an infrastructure for centralized management of application information and databases by May 2022. The company plans to link physical stores and online channels to expand channels with customers and improve the value provided in the form of convenience. 

Use of social media 

The company will increase information delivery on social media platforms. Opportunity losses are occurring due to insufficient use of social media. The company will create incentives to visit physical stores by linking products featured on social media with the company's social media channels and by posting product reviews. 

Historical forecast accuracy
Results vs. Initial Est.FY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.
SalesInitial Est.560,000596,300634,000730,000820,000880,0001,000,0001,650,0001,700,000
Act.568,377612,424683,981759,592828,798941,5081,328,8741,681,9471,708,635
Results vs. Initial Est.1.5%2.7%7.9%4.1%1.1%7.0%32.9%1.9%0.5%
Operating profitInitial Est.30,50033,50034,80039,80045,00048,00053,00066,00077,000
Act.32,36934,29239,10343,18546,18551,56863,11075,99781,306
Results vs. Initial Est.6.1%2.4%12.4%8.5%2.6%7.4%19.1%15.1%5.6%
Recurring profitInitial Est.30,30034,00035,60040,80045,50048,00058,00066,00076,000
Act.33,20135,48740,16043,79745,52357,21868,24075,17381,526
Results vs. Initial Est.9.6%4.4%12.8%7.3%0.1%19.2%17.7%13.9%7.3%
Net incomeInitial Est.20,00021,50021,50023,30026,80028,00037,00045,00051,000
Act.21,14121,47123,14824,93833,08236,40548,25350,30353,851
Results vs. Initial Est.5.7%-0.1%7.7%7.0%23.4%30.0%30.4%11.8%5.6%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods. 
Performance by segment
FY06/12FY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.
Sales540,255568,377612,424683,981759,592828,798941,5081,328,8741,681,9471,708,635
YoY6.4%5.2%7.7%11.7%11.1%9.1%13.6%41.1%26.6%1.6%
Retail519,891546,930590,076659,931733,334801,802913,497---
YoY6.6%5.2%7.9%11.8%11.1%9.3%13.9%---
% of total sales96.2%96.2%96.4%96.5%96.5%96.7%97.0%---
Discount Store------923,0421,015,9241,117,5071,183,526
YoY-------10.1%10.0%5.9%
% of total sales------98.0%76.4%66.4%69.3%
GMS-------266,058491,621449,989
YoY--------84.8%-8.5%
% of total sales-------20.0%29.2%26.3%
Rent15,45316,37017,09218,20019,78120,55921,29539,13258,22960,927
YoY-1.4%5.9%4.4%6.5%8.7%3.9%3.6%83.8%48.8%4.6%
% of total sales2.9%2.9%2.8%2.7%2.6%2.5%2.3%2.9%3.5%3.6%
Other4,9115,0785,2565,8506,4786,4376,7167,76014,59014,193
YoY19.3%3.4%3.5%11.3%10.7%-0.6%4.3%15.5%88.0%-2.7%
% of total sales0.9%0.9%0.9%0.9%0.9%0.8%0.7%0.6%0.9%0.8%
Operating profit29,32032,36934,29239,10343,18546,18551,56863,11075,99780,843
YoY15.7%10.4%5.9%14.0%10.4%6.9%11.7%22.4%20.4%6.4%
Operating profit margin5.4%5.7%5.6%5.7%5.7%5.6%5.5%4.7%4.5%4.7%
Retail22,00825,32724,38121,41722,74623,69327,760---
YoY11.0%15.1%-3.7%-12.2%6.2%4.2%17.2%---
Operating profit margin4.2%4.6%4.1%3.2%3.1%3.0%3.0%---
Discount Store------51,50849,58947,31155,335
YoY--------3.7%-4.6%17.0%
Operating profit margin------5.6%4.9%4.2%4.7%
GMS-------7,03916,99216,599
YoY--------141.4%-2.3%
Operating profit margin-------2.6%3.5%3.7%
Rent5,7104,9526,50512,71414,15916,12317,2377,79513,57913,362
YoY27.3%-13.3%31.4%95.4%11.4%13.9%6.9%-54.8%74.2%-1.6%
Operating profit margin37.0%30.3%38.1%69.9%71.6%78.4%80.9%19.9%23.3%21.9%
Other1,8432,0253,5405,3726,7336,3956,329-1,240-2,373-4,453
YoY57.0%9.9%74.8%51.8%25.3%-5.0%-1.0%---
Operating profit margin37.5%39.9%67.4%91.8%103.9%99.3%94.2%---
Adjustments-24165-134-400-453-26242-73488464
Source: Shared Research based on company data
Sales breakdown
FY06/12FY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.
Retail519,891546,930590,076659,931733,334801,802913,497---
YoY6.6%5.2%7.9%11.8%11.1%9.3%13.9%---
Discount Store------923,0421,015,9241,117,5071,183,526
YoY-------10.1%10.0%5.9%
Electric appliances56,04955,77354,46956,84260,97868,91276,69880,12586,11487,881
YoY-0.3%-0.5%-2.3%4.5%7.3%13.0%11.3%4.5%7.5%2.1%
% of total sales10.4%9.8%8.9%8.3%8.0%8.3%8.1%6.0%5.1%5.1%
Household goods117,420125,549136,203137,260157,288183,505217,257231,835241,846225,448
YoY8.0%6.9%8.5%13.0%14.6%16.7%18.4%6.7%4.3%-6.8%
% of total sales21.7%22.1%22.2%20.1%20.7%22.1%23.1%17.4%14.4%13.2%
Foods154,385161,871180,619208,541242,215274,553311,565350,897421,152464,910
YoY7.5%4.8%11.6%15.5%16.1%13.4%13.5%12.6%20.0%10.4%
% of total sales28.6%28.5%29.5%30.5%31.9%33.1%33.1%26.4%25.0%27.2%
Watches & fashion merchandise119,246130,476132,395147,462154,183158,451159,904162,397154,419144,729
YoY10.6%9.4%1.5%7.0%4.6%2.8%0.9%1.6%-4.9%-6.3%
% of total sales22.1%23.0%21.6%21.6%20.3%19.1%17.0%12.2%9.2%8.5%
Sports & leisure goods30,72833,02234,58847,31051,72253,59654,94655,88959,40461,765
YoY3.9%7.5%4.7%6.4%9.3%3.6%2.5%1.7%6.3%4.0%
% of total sales5.7%5.8%5.6%6.9%6.8%6.5%5.8%4.2%3.5%3.6%
DIY goods17,79817,19317,79416,53515,49315,81416,21615,4488,611-
YoY6.8%-3.4%3.5%-7.1%-6.3%2.1%2.5%-4.7%-44.3%-
% of total sales3.3%3.0%2.9%2.4%2.0%1.9%1.7%1.2%0.5%-
Overseas12,94013,73124,64535,59139,84235,92565,48096,996114,514170,170
YoY-15.0%6.1%79.5%44.4%11.9%-9.8%82.3%48.1%18.1%48.6%
% of total sales2.4%2.4%4.0%5.2%5.2%4.3%7.0%7.3%6.8%10.0%
Other11,3279,3149,36410,39011,61211,04611,43122,33731,44728,622
YoY12.0%-17.8%0.5%6.4%11.8%-4.9%3.5%95.4%40.8%-9.0%
% of total sales2.1%1.6%1.5%1.5%1.5%1.3%1.2%1.7%1.9%1.7%
GMS-------266,058491,621449,989
YoY-