H2O is a retailer that mainly operates department stores (Hankyu Department Stores and Hanshin Department Stores) and supermarkets (such as Izumiya and Hankyu Oasis)
H2O Retailing Corporation is a retailer that operates department stores (Hankyu Department Stores and Hanshin Department Stores), supermarkets (such as Izumiya and Hankyu Oasis), and shopping centers mainly in the Kansai area. The company operates 15 department stores in Japan, mainly along the Hankyu Railway and Hanshin Electric Railway lines. It also has 177 supermarkets in the Kansai region (as of November 2021). The company follows an area dominance strategy targeting the Kansai region. Kansai has around 20mn consumers and includes the prefectures of Osaka (population of 8.8mn), Hyogo (5.5mn), and Kyoto (2.6mn). H2O’s strategy is to have consumers make as many of their everyday purchases as possible at its supermarkets and enjoyable, non-routine shopping at its department stores.
Sales in the department store industry as a whole have been declining due to intensifying competition from specialty stores and shopping centers. However, H2O is using its ability to design unique retail spaces to attract customers from the Kansai region (primarily at its Hankyu Main Store and Hanshin Umeda Main Store) and customers from outside the region. To secure a new earnings base during a difficult period for expansion in the domestic department store market, the company opened Ningbo Hankyu (located in Zhejiang, China; company stake of 33.3%) as its first overseas department store in April 2021.
H2O was created through the 2007 merger of Hankyu Department Stores and Hanshin Department Stores. Their respective predecessor companies were the Hankyu Market (now Hankyu Main Store), which opened in Osaka’s Umeda district in 1925, and Hanshin Mart (now Hanshin Umeda Main Store), which opened in 1933. Hanshin Electric Railway is H2O’s largest shareholder, with an 11.9% stake, followed by Hankyu Hanshin Holdings (TSE1: 9042), which holds an 8.4% stake. Effectively, Hankyu Hanshin Holdings, the parent company of Hanshin Electric Railway, therefore holds a 20.3% stake in H2O (making it an equity-method affiliate). H2O, Hankyu Hanshin Holdings, and Toho (TSE1: 9602) together form the Hankyu Hanshin Toho Group. The group’s business interests span urban transport, real estate, hotels, department stores, supermarkets, and entertainment.
H2O has four business segments: the Department Store, Supermarket, Shopping Center, and Other businesses. In FY03/21, the Department Store business accounted for 47.1% of the company’s gross sales, while the Supermarket business accounted for 39.6%, the Shopping Center business 8.8%, and the Other business 4.6%. The operating loss in FY03/21 amounted to JPY4.4bn. The Department Store business generated JPY1.9bn in operating loss, while the Supermarket business produced operating profit of JPY4.2bn. Previously, the company had maintained solid performance in the Department Store segment with sales growth driven by its Hankyu Main Store. However, this trend was broken as the company reported an operating loss in the same segment due to impact from the COVID-19 pandemic. On the other hand, the company reported operating profit in the Supermarket segment, in part because it transferred the Izumiya non-food operations, which had generally been generating operating losses, to the Shopping Center business. The company is currently implementing structural reforms, including cost restructuring for its department stores, operational streamlining at supermarkets, and conversion of Izumiya general merchandise stores into shopping centers.
Trends and outlook
In FY03/22, H2O reported gross sales of JPY788.1bn (+6.6% YoY), operating profit of JPY740mn (operating loss of JPY4.4bn in FY03/21), recurring profit of JPY2.3bn (recurring loss of JPY2.9bn in FY03/21), and net income attributable to owners of the parent of JPY9.9bn (net loss of JPY24.8bn in FY03/21). Despite the impact of the COVID-19 pandemic, sales rose thanks to a YoY recovery in the mainstay Department Store business and the effect of the business integration with Kansai Super Market Ltd. in December 2021. On the profit front, the mainstay Department Store
business and Shopping Center business returned to profitability, while
the Supermarket business posted higher profit. The company recorded extraordinary gains of JPY27.0bn—which consisted mainly of a JPY13.6bn gain on sale of fixed assets
and a JPY6.5bn gain on sale of investment securities—and extraordinary losses of JPY13.8bn, which stemmed primarily from JPY4.3bn in pandemic-related losses. The annual dividend for FY03/22 is JPY25 per share.
For FY03/23, the company forecasts gross sales of JPY1.0tn (+26.9% YoY), sales of JPY660.0bn (+27.3% YoY), operating profit of JPY8.0bn (operating profit of JPY740mn in FY03/22), recurring profit of JPY7.0bn (+198.4% YoY), and net income attributable to owners of the parent of JPY8.0bn (-19.0% YoY). The company expects gross sales to increase 26.9% YoY, driven by the grand opening of the Hanshin Main Store in the Department Store business and the contribution from the consolidation of Kansai Super Market in the Supermarket business. On the profit front, the company expects operating profit to grow more than 10x its level in FY03/22 due to the expected increase in gross sales as well as improved profitability at Izumiya.
Medium-term management plan: The company’s new medium-term management plan, covering the years between FY03/22 and FY03/24, is aimed at recovering operating profit to the level seen prior to the spread of COVID-19 and includes the following strategies: rebuild the Department Store business by reforming the cost structure and establishing the OMO business style; establish the Supermarket business as a second earnings pillar by restructuring the business, integrating food manufacturing and processing with sales, and bolstering capacity through alliances; (as part of its effort to establish businesses that will ensure future growth) work to make Ningbo Hankyu the leading department store in the region, develop related businesses, and launch and expand the customer service business centered on online support; and promote the advancement of IT and digitalization.
Strengths and weaknesses
Shared Research believes H2O has three key strengths: 1) an ability to create retail spaces that attract consumers (in Kansai, from outside the region, and from overseas) without relying excessively on retailer tenant revenues; 2) highly convenient, attractive locations; and 3) an ability to make the best use of its Hankyu and Hanshin brand, well known in Kansai region.
We believe its weaknesses are: 1) significant lags between decision-making and results due to the time it takes to build and rebuild department stores; 2) the lack of competitive advantage in the shopping center business format operated under the Shopping Center business; and 3) little experience of business development overseas. (See the Strengths and weaknesses section for details.)
Source: Shared Research based on company data. Per-share data have been adjusted for stock splits.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company conducted a reverse stock split (1-for-2) on September 1, 2014.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. The full-year FY03/22 forecast in this table is based on the application of this standard. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Gross profit margin, SG&A expense ratio, operating profit margin, recurring profit margin, and net margin have been calculated using gross sales as a denominator.
Recent updates
Monthly sales report for April 2022
2022-05-16
H2O Retailing Corporation announced monthly sales report for April 2022.
Monthly gross sales
FY03/21
2020
2021
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Consolidated
-47.3%
-39.1%
-12.5%
-15.0%
-15.1%
-25.2%
-4.1%
-13.5%
-13.6%
-19.4%
-10.9%
8.8%
Department Store
-79.4%
-68.7%
-22.1%
-23.6%
-26.5%
-36.1%
3.7%
-14.1%
-17.1%
-30.1%
-12.0%
33.5%
Hankyu Hanshin Dept. Stores
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Hankyu Main Store
-85.9%
-74.4%
-21.9%
-24.6%
-29.5%
-38.2%
-1.1%
-13.8%
-17.9%
-29.9%
-7.2%
44.8%
Hanshin Umeda Main Store
-81.0%
-72.7%
-36.1%
-31.9%
-36.9%
-55.8%
-10.4%
-31.4%
-33.7%
-44.6%
-33.1%
9.5%
Total branch stores
-58.5%
-43.9%
15.4%
12.6%
16.7%
8.2%
-3.0%
-9.8%
-10.8%
-26.0%
-11.1%
24.5%
All stores
-76.5%
-64.1%
-10.9%
-13.2%
-15.0%
-27.0%
-2.8%
-13.7%
-16.5%
-29.6%
-11.6%
32.6%
Comparable stores
-80.5%
-69.5%
-22.5%
-23.9%
-26.9%
-36.3%
-
-
-
-
-
-
Izumiya
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
7.2%
5.4%
-0.9%
2.9%
5.2%
1.0%
3.2%
1.8%
0.6%
5.4%
-2.0%
-7.4%
Comparable stores
6.8%
6.1%
-0.2%
3.5%
5.2%
0.5%
2.0%
-0.4%
1.6%
5.4%
-2.0%
-7.7%
Hankyu Oasis
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
7.7%
4.3%
0.3%
4.4%
5.7%
-0.3%
-0.1%
-4.7%
1.6%
7.4%
-2.4%
-8.1%
Comparable stores
6.0%
3.3%
-1.4%
1.8%
4.9%
-1.5%
-0.8%
-3.8%
2.9%
8.1%
-2.2%
-8.6%
FY03/22
2021
2022
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Consolidated
38.8%
-1.6%
-0.3%
3.8%
-10.7%
-5.4%
4.5%
7.5%
2.3%
23.0%
16.1%
15.2%
Department Store
216.6%
2.0%
3.2%
11.4%
-15.4%
-6.4%
4.5%
12.4%
16.9%
17.1%
2.0%
4.5%
Supermarket
-
-
-
-
-
-
-
-
-
46.5%
46.7%
44.4%
Hankyu Hanshin Dept. Stores
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Hankyu Main Store
322.9%
-34.3%
8.6%
18.8%
-13.7%
-3.2%
7.8%
19.3%
23.5%
22.1%
6.9%
6.9%
Hanshin Umeda Main Store
151.9%
-21.1%
-17.6%
-14.3%
-68.2%
-42.2%
-9.5%
14.6%
35.3%
22.1%
-2.5%
34.5%
Total branch stores
158.6%
32.3%
-0.9%
6.8%
-8.6%
-5.1%
1.9%
2.2%
3.9%
7.7%
-5.1%
-3.3%
All stores
213.6%
1.3%
2.5%
11.0%
-15.6%
-6.9%
3.7%
11.5%
15.8%
15.7%
1.0%
4.5%
Comparable stores
-
-
-
-
-
-
-
-
-
-
-
-
Izumiya
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
-7.1%
-1.3%
-0.4%
-1.2%
-6.1%
-1.6%
-2.2%
-6.8%
-6.7%
-6.7%
-3.1%
-2.5%
Comparable stores
-7.1%
-0.6%
0.7%
-0.8%
-5.7%
-0.4%
-0.5%
-5.0%
-5.0%
-5.0%
-1.2%
-0.7%
Hankyu Oasis
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
-5.3%
0.9%
5.5%
0.7%
-0.2%
0.5%
0.3%
-1.1%
-5.5%
-5.3%
-2.6%
-0.2%
Comparable stores
-5.8%
0.7%
6.3%
2.3%
1.9%
2.4%
1.5%
-0.9%
-5.6%
-5.2%
-2.2%
-0.6%
Kansai Super
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
-
-
-
-
-
-
-
-
-
-0.7%
0.2%
-0.4%
Comparable stores
-
-
-
-
-
-
-
-
-
0.1%
1.0%
0.5%
FY03/23
2022
2023
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Consolidated
97.7%
Department Store
43.1%
Supermarket
42.6%
Hankyu Hanshin Dept. Stores
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Hankyu Main Store
56.0%
Hanshin Umeda Main Store
142.4%
Total branch stores
13.5%
All stores
42.0%
Comparable stores
-
Izumiya
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
-5.4%
Comparable stores
-3.4%
Hankyu Oasis
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
-7.7%
Comparable stores
-8.1%
Kansai Super
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Gross sales
All stores
-1.7%
Comparable stores
-1.7%
Note: The company has adopted the Accounting Standard for Revenue Recognition from FY03/22, but general merchandise values (gross sales) for the fiscal year provided above are based on the previous accounting standard. Note: Kansai Super, which merged with the company in December 2021, is included in the Supermarket segment. Consolidated sales and Supermarket segment results for FY03/21 do not include Kansai Super results.
Monthly
2021
2022
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Consolidated
-1.6%
-0.3%
3.8%
-10.7%
-5.4%
4.5%
7.5%
2.3%
23.0%
16.1%
15.2%
97.7%
Department Store
2.0%
3.2%
11.4%
-15.4%
-6.4%
4.5%
12.4%
16.9%
17.1%
2.0%
4.5%
43.1%
Supermarket
-
-
-
-
-
-
-
-
46.5%
46.7%
44.4%
42.6%
Hankyu Hanshin Dept. Stores
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Hankyu Main Store
-34.3%
8.6%
18.8%
-13.7%
-3.2%
7.8%
19.3%
23.5%
22.1%
6.9%
6.9%
56.0%
Hanshin Umeda Main Store
-21.1%
-17.6%
-14.3%
-68.2%
-42.2%
-9.5%
14.6%
35.3%
22.1%
-2.5%
34.5%
142.4%
Total branch stores
32.3%
-0.9%
6.8%
-8.6%
-5.1%
1.9%
2.2%
3.9%
7.7%
-5.1%
-3.3%
13.5%
All stores
1.3%
2.5%
11.0%
-15.6%
-6.9%
3.7%
11.5%
15.8%
15.7%
1.0%
4.5%
42.0%
Comparable stores
-
-
-
-
-
-
-
-
-
-
-
-
All stores ex. Hanshin Umeda Main Store
Customer count
All stores
22.8%
-2.5%
0.3%
-21.4%
-16.7%
-3.1%
7.7%
22.0%
14.1%
-2.3%
-0.4%
40.1%
Comparable stores
-
-
-
-
-
-
-
-
-
-
-
-
Branch stores
Senri Hankyu
-16.3%
-2.5%
5.8%
-12.0%
-1.1%
1.2%
7.6%
1.4%
0.8%
-5.7%
-1.3%
13.2%
Takatsuki Hankyu
-23.2%
-5.9%
4.1%
-14.2%
-3.4%
-5.8%
4.1%
1.2%
7.7%
-6.4%
-4.6%
27.4%
Kawanishi Hankyu
8.0%
-9.2%
-1.8%
-13.2%
-9.4%
-1.5%
0.3%
0.7%
2.1%
-7.3%
-3.0%
10.5%
Takarazuka Hankyu
15.6%
6.9%
5.3%
8.5%
-8.2%
3.7%
6.2%
-0.4%
0.6%
-8.8%
3.6%
3.3%
Nishinomiya Hankyu
30.5%
-7.8%
3.3%
-10.2%
-0.5%
3.1%
4.6%
2.0%
5.5%
-4.9%
1.5%
23.6%
Sanda Hankyu
53.1%
60.0%
55.7%
-85.9%
-
-
-
-
-
-
-
-
Kobe Hankyu
40.7%
-1.3%
7.4%
-10.7%
-13.5%
-7.5%
-1.5%
-4.1%
-0.6%
-16.1%
-16.6%
9.2%
Hakata Hankyu
165.9%
7.3%
15.8%
-3.8%
-3.8%
15.9%
5.2%
18.2%
25.0%
5.3%
2.2%
9.3%
Hankyu Men's Tokyo
170.5%
-5.6%
-0.2%
-14.0%
0.5%
1.7%
-0.3%
11.7%
17.8%
4.4%
8.3%
44.5%
Oi Hankyu Food Hall
-4.1%
3.0%
0.4%
-4.6%
1.4%
0.1%
-1.3%
-1.3%
0.1%
-0.7%
-3.0%
-2.8%
Tsuzuki Hankyu
27.5%
8.1%
6.1%
2.1%
7.4%
8.9%
2.7%
2.6%
-0.7%
2.9%
-1.0%
0.0%
Amagasaki Hanshin
5.5%
3.1%
1.4%
6.7%
7.5%
4.0%
2.6%
1.5%
2.7%
0.0%
3.1%
5.3%
Hanshin Nishinomiya
2.1%
3.7%
0.9%
3.8%
4.6%
6.5%
2.6%
-0.1%
2.1%
-2.3%
-0.5%
1.1%
Hanshin Mikage
16.6%
12.7%
0.8%
2.1%
-0.5%
16.0%
3.3%
7.3%
5.9%
3.6%
-4.1%
13.1%
All store sales by product
Menswear and goods
-35.3%
-11.2%
4.1%
-21.5%
-4.9%
-2.0%
9.5%
14.4%
13.3%
3.7%
10.5%
47.9%
Womenswear and goods
-19.9%
-1.5%
8.1%
-24.1%
-8.5%
6.9%
16.5%
20.4%
12.1%
-8.3%
4.3%
55.3%
Children's wear and goods
-25.6%
-10.9%
8.7%
-18.0%
-20.5%
0.1%
9.8%
14.7%
6.2%
-5.6%
-8.5%
31.9%
Other apparel
-35.7%
-7.8%
17.5%
-30.0%
-19.2%
-4.5%
13.4%
8.4%
2.8%
-11.7%
-2.3%
40.7%
Apparel
-27.1%
-6.1%
7.8%
-23.3%
-9.4%
2.4%
13.3%
16.7%
11.2%
-4.6%
4.4%
49.6%
Personal items
-11.0%
8.6%
13.8%
-11.7%
-0.1%
11.0%
21.3%
25.5%
31.6%
10.0%
17.6%
59.3%
Household goods
-24.8%
-0.3%
23.0%
3.4%
-2.7%
-4.1%
9.4%
16.2%
9.0%
-4.6%
-2.9%
26.9%
Food
17.9%
8.3%
5.6%
-15.4%
-9.4%
-2.0%
6.1%
8.2%
6.2%
-1.8%
-0.4%
28.1%
Restaurants and cafes
5.4%
2.7%
9.3%
-36.9%
-26.6%
22.4%
60.3%
105.6%
62.6%
30.5%
41.5%
204.1%
Accessories
3.7%
3.2%
26.4%
-11.5%
-2.9%
10.9%
11.8%
23.5%
27.6%
7.5%
3.7%
39.6%
Services
-18.8%
15.2%
10.1%
-30.5%
-2.9%
8.4%
0.3%
19.1%
39.9%
-3.6%
13.1%
45.3%
Other
-7.6%
-7.3%
-0.5%
-16.5%
-17.6%
-11.5%
-9.5%
-12.2%
-12.1%
-19.7%
-26.3%
12.3%
Total
1.3%
2.5%
11.0%
-15.6%
-6.9%
3.7%
11.5%
15.8%
15.7%
1.0%
4.5%
42.0%
Izumiya
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Gross sales
All stores
-1.3%
-0.4%
-1.2%
-6.1%
-1.6%
-2.2%
-6.8%
-6.7%
-6.7%
-3.1%
-2.5%
-5.4%
Comparable stores
-0.6%
0.7%
-0.8%
-5.7%
-0.4%
-0.5%
-5.0%
-5.0%
-5.0%
-1.2%
-0.7%
-3.4%
Hankyu Oasis
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Gross sales
All stores
0.9%
5.5%
0.7%
-0.2%
0.5%
0.3%
-1.1%
-5.5%
-5.3%
-2.6%
-0.2%
-7.7%
Comparable stores
0.7%
6.3%
2.3%
1.9%
2.4%
1.5%
-0.9%
-5.6%
-5.2%
-2.2%
-0.6%
-8.1%
Kansai Super
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Gross sales
All stores
-
-
-
-
-
-
-
-
-0.7%
0.2%
-0.4%
-1.7%
Comparable stores
-
-
-
-
-
-
-
-
0.1%
1.0%
0.5%
-1.7%
Note: The company has adopted the Accounting Standard for Revenue Recognition from FY03/22, but general merchandise values (gross sales) for the fiscal year provided above are based on the previous accounting standard.
Note: Kansai Super, which merged with the company in December 2021, is included in the Supermarket segment. Consolidated sales and Supermarket segment results for FY03/21 do not include Kansai Super results.
Extraordinary gains (negative goodwill) and remodeling of Kobe Hankyu and Takatsuki Hankyuecast
2022-05-13
On May 12, 2022, H2O Retailing Corporation announced the recording of extraordinary gains (gain on negative goodwill).
Extraordinary gains (gain on negative goodwill)
The company made Kansai Super Market Ltd. a consolidated
subsidiary in December 2021. In Q4 FY03/22, the purchase price allocation (PPA) was completed, and the difference between acquisition costs and net book value (JPY3.3bn; cumulative total of JPY3.4bn) was recorded as a gain on negative goodwill under extraordinary gains.
On the same day, the company announced the remodeling of the Kobe Hankyu and Takatsuki Hankyu locations.
Remodeling of Kobe Hankyu and Takatsuki Hankyu
Hankyu Hanshin Department Stores, Inc., a consolidated subsidiary
of the company, announced that it will remodel the Kobe Hankyu and Takatsuki
Hankyu locations. This is in accordance with the company's new medium-term management
plan (FY2022–FY2023) announced in July 2021.
Kobe Hankyu: The company will invest approximately JPY8.0bn to renovate about 90% of the total sales floor area of the entire building. The objective of the remodeling is to create a store that blends the feel of the Kobe lifestyle with the urban department store model. The renovation is scheduled to be completed in autumn 2023.
Takatsuki Hankyu: Aiming to create a new suburban department store model with the optimum mix of department stores and specialty stores, Takatsuki Hankyu will renovate about 65% of its total sales floor area with an investment of approximately JPY2.3bn. The renovation is scheduled to be completed in autumn 2023.
Reorganization of consolidated subsidiary Hankyu Hanshin Department Stores, Inc.
2022-03-18
On March 17, 2022, H2O Retailing Corporation announced reorganization of its consolidated subsidiary Hankyu Hanshin Department Stores, Inc.
The company will change the organizational structure of its consolidated subsidiary Hankyu Hanshin Department Stores (effective April 1, 2022) to establish a new business model with the aim of rebuilding the Department Store business; to promote integration of the procurement and sales functions and maximize the effectiveness and efficiency of these functions; to maximize effectiveness and efficiency through reorganizing operations related to the OMO business style; and to strengthen branding for Hankyu Men's department stores.
Grand reopening of Hanshin Umeda Main Store
2022-02-28
On February 25, 2022, H2O Retailing Corporation made an announcement regarding the grand reopening of its Hanshin Umeda Main Store.
The company announced that it would celebrate the grand reopening of the entire Hanshin Umeda Main Store on April 6, 2022. Reconstruction of the Hanshin Umeda Main Store has been underway since the autumn of 2014. The Wing I was completed in April 2018 and since then the reconstructed store has reopened gradually, with a pre-opening in October 2021 and a full reopening of floors one to nine in December 2021.
Overview of Hanshin Umeda Main Store
Name: Hanshin Umeda Main Store
Location: 1-13-13 Umeda, Kita-ku, Osaka
Sales floors: Second basement floor to ninth floor above ground
Sales floor area: 53,000sqm
Sales target: JPY73.0bn in FY03/22
Trends and outlook
Quarterly trends and results
Cumulative
FY03/21
FY03/22
FY03/22
(JPYmn)
Q1
Q1–Q2
Q1–Q3
Q1–Q4
Q1
Q1–Q2
Q1–Q3
Q1–Q4
% of Est.
FY Est.
Gross sales
145,904
335,614
551,568
739,198
161,179
344,072
567,149
788,108
100.4%
785,000
YoY
-32.8%
-25.5%
-20.5%
-17.6%
10.5%
2.5%
2.8%
6.6%
6.2%
Sales
-
-
-
-
114,285
237,020
371,303
518,447
100.7%
515,000
YoY
-
-
-
-
-
-
-
-
-
Gross profit
43,726
97,702
158,782
211,903
46,400
97,824
158,723
218,680
YoY
-30.6%
-24.3%
-20.0%
-17.2%
-
-
-
3.2%
Gross profit/Gross sales
30.0%
29.1%
28.8%
28.7%
28.8%
28.4%
28.0%
27.7%
SG&A expenses
47,020
102,108
159,790
216,342
48,445
102,973
158,003
217,939
YoY
-21.8%
-16.8%
-14.3%
-11.6%
-
-
-
0.7%
SG&A expenses/Gross sales
32.2%
30.4%
29.0%
29.3%
30.1%
29.9%
27.9%
27.7%
Operating profit
-3,293
-4,405
-1,008
-4,438
-2,044
-5,148
720
740
-
-1,000
YoY
-
-
-
-
-
-
-
-
-
Operating profit/Gross sales
-2.3%
-1.3%
-0.2%
-0.6%
-1.3%
-
0.1%
0.1%
-
Recurring profit
-2,996
-4,400
-101
-2,907
-949
-4,189
2,012
2,346
469.2%
500
YoY
-
-
-
-
-
-
-
-
-
Recurring profit/Gross sales
-2.1%
-1.3%
0.0%
-0.4%
-0.6%
-
0.4%
0.3%
0.1%
Net income
-6,111
-10,102
-8,109
-24,791
6,277
8,085
12,937
9,872
89.7%
11,000
YoY
-
-
-
-
-
-
-
-
-
Net income/Gross sales
-4.2%
-3.0%
-1.5%
-3.4%
3.9%
2.3%
2.3%
1.3%
1.4%
Quarterly
FY03/21
FY03/22
(JPYmn)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Gross sales
145,904
189,710
215,954
187,630
161,179
182,893
223,077
220,959
YoY
-32.8%
-18.8%
-11.2%
-7.7%
10.5%
-3.6%
3.3%
17.8%
Sales
161,179
122,735
134,283
147,144
YoY
-
-
-
Gross profit
43,726
53,976
61,080
53,121
46,400
51,424
60,899
59,957
YoY
-30.6%
-18.2%
-12.0%
-7.8%
-
-
-
12.9%
Gross profit/Gross sales
30.0%
28.5%
28.3%
28.3%
28.8%
28.1%
27.3%
27.1%
SG&A expenses
47,020
55,088
57,682
56,552
48,445
54,528
55,030
59,936
YoY
-21.8%
-11.9%
-9.6%
-3.1%
-
-
-
6.0%
SG&A expenses/Gross sales
32.2%
29.0%
26.7%
30.1%
30.1%
29.8%
24.7%
27.1%
Operating profit
-3,293
-1,112
3,397
-3,430
-2,044
-3,104
5,868
20
YoY
-
-
-39.0%
-
-
-
-
-
Operating profit/Gross sales
-
-
1.6%
-
-
-
2.6%
-
Recurring profit
-2,996
-1,404
4,299
-2,806
-949
-3,240
6,201
334
YoY
-
-
-24.9%
-
-
-
-
-
Recurring profit/Gross sales
-
-
-
-
-0.6%
-
4.6%
0.2%
Net income
-6,111
-3,991
1,993
-16,682
6,277
1,808
4,852
-3,065
YoY
-
-
86.3%
-
-
-
143.5%
-
Net income/Gross sales
-
-
-
-
3.9%
1.0%
2.2%
-2.1%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. FY03/22 figures and forecast in this table are based on the application of this standard. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Gross profit margin, SG&A expense ratio, operating profit margin, recurring profit margin, and net margin have been calculated using gross sales as a denominator.
By segment
FY03/21
FY03/22
FY03/22
Cumulative (JPYmn)
Q1
Q1–Q2
Q1–Q3
Q1–Q4
Q1
Q1–Q2
Q1–Q3
Q1–Q4
% of Est.
FY Est.
Gross sales
145,904
335,614
551,568
739,198
161,179
344,072
567,149
788,108
100.4%
785,000
YoY
-32.8%
-25.5%
-20.5%
-17.6%
10.5%
2.5%
2.8%
6.6%
6.2%
Department Store
48,408
138,187
252,727
347,768
66,697
154,306
282,457
385,095
100.3%
384,000
YoY
-57.4%
-43.1%
-31.8%
-26.5%
37.8%
11.7%
11.8%
10.7%
10.4%
Supermarket
73,148
147,600
223,367
292,754
73,346
149,228
225,860
327,205
100.6%
325,200
YoY
-
-
-
-
0.3%
1.1%
1.1%
11.8%
11.1%
Shopping Center Management
17,073
34,075
51,366
65,024
13,025
24,560
34,748
42,879
98.6%
43,500
YoY
-
-
-
-
-23.7%
-27.9%
-32.4%
-34.1%
-33.1%
Other
7,274
15,750
24,108
33,651
8,110
15,976
24,083
32,928
101.9%
32,300
YoY
-
-
-
-
11.5%
1.4%
-0.1%
-2.1%
-4.0%
Sales
145,904
335,614
551,568
739,198
114,285
237,020
371,303
518,447
100.7%
515,000
YoY
-32.8%
-25.5%
-20.5%
-17.6%
-
-
-
-
-
Department Store
48,408
138,187
252,727
347,768
23,416
54,886
98,284
131,446
YoY
-57.4%
-43.1%
-31.8%
-26.5%
-
-
-
-
Supermarket
73,148
147,600
223,367
292,754
70,095
142,384
215,077
313,068
YoY
-
-
-
-
-
-
-
-
Shopping Center Management
17,073
34,075
51,366
65,024
12,436
23,511
32,988
40,670
YoY
-
-
-
-
-
-
-
-
Other
7,274
15,750
24,108
33,651
7,326
14,056
21,249
28,351
YoY
-
-
-
-
-
-
-
-
Operating profit
-3,293
-4,405
-1,008
-4,438
-2,044
-5,148
720
740
-
-1,000
YoY
-
-
-
-
-
-
-
-
-
Operating profit/Gross sales
-
-
-
-
-
-
-
-
Department Store
-2,945
-3,456
-963
-1,903
-1,846
-4,075
1,060
939
469.5%
200
YoY
-
-
-
-
-
-
-
-
Operating profit/Gross sales
-
-
-
-
-
-
0.4%
0.2%
0.1%
Supermarket
1,482
2,852
4,466
4,086
1,335
2,396
3,926
5,326
106.5%
5,000
YoY
-
-
-
-
-
-
-
30.3%
22.3%
Operating profit/Gross sales
2.0%
1.9%
0.6%
1.9%
0.7%
1.7%
1.6%
1.5%
Shopping Center Management
-107
-669
-102
-757
23
-6
380
391
-
0
YoY
-
-
-
-
-
-
-
-
Operating profit/Gross sales
-
-
0.2%
-
1.1%
0.9%
-
Other
526
-721
-571
-1,516
-1,090
-2,348
-2,618
-3,409
-
-3,600
YoY
-81.8%
-
-
-
-
-
-
-
Operating profit/Gross sales
7.2%
-
-
-
-
-
Adjustments
-2,250
-2,409
-3,837
-4,347
-466
-1,114
-2,029
-2,506
-
-2,600
By segment
FY03/21
FY03/22
Quarterly (JPYmn)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Gross sales
145,904
189,710
215,954
187,630
161,179
182,893
223,077
220,959
YoY
-32.8%
-18.8%
-11.2%
-7.7%
10.5%
-3.6%
3.3%
17.8%
Department Store
48,408
89,779
114,540
95,041
66,697
87,609
128,151
102,638
YoY
-57.4%
-28.8%
-12.5%
-7.4%
37.8%
-2.4%
11.9%
8.0%
Supermarket
73,148
74,452
75,767
69,387
73,346
75,882
76,632
101,345
YoY
-
-
-
-
0.3%
1.9%
1.1%
46.1%
Shopping Center Management
17,073
17,002
17,291
13,658
13,025
11,535
10,188
8,131
YoY
-
-
-
-
-23.7%
-32.2%
-41.1%
-40.5%
Other
7,274
8,476
8,358
9,543
8,110
7,866
8,107
8,845
YoY
-
-
-
-
11.5%
-7.2%
-3.0%
-7.3%
Sales
145,904
189,710
215,954
187,630
114,285
122,735
134,283
147,144
YoY
-32.8%
-18.8%
-11.2%
-7.7%
-
-
-
-
Department Store
48,408
89,779
114,540
95,041
23,416
31,470
43,398
33,162
YoY
-57.4%
-28.8%
-12.5%
-7.4%
-
-
-
-
Supermarket
73,148
74,452
75,767
69,387
70,095
72,289
72,693
97,991
YoY
-
-
-
-
-
-
-
-
Shopping Center Management
17,073
17,002
17,291
13,658
12,436
11,075
9,477
7,682
YoY
-
-
-
-
-
-
-
-
Other
7,274
8,476
8,358
9,543
7,326
6,730
7,193
7,102
YoY
-
-
-
-
-
-
-
-
Operating profit
-3,293
-1,112
3,397
-3,430
-2,044
-3,104
5,868
20
YoY
-
-
-
-
-
-
-
-
Operating profit/Gross sales
-
-
-
-
-
-
-
-
Department Store
-2,945
-511
2,493
-940
-1,846
-2,229
5,135
-121
YoY
-
-
-
-
-
-
-
-
Operating profit/Gross sales
-
-
2.2%
-
-
-
-
-
Supermarket
1,482
1,370
1,614
-380
1,335
1,061
1,530
1,400
YoY
-
-
-
-
-
-
-
-
Operating profit/Gross sales
2.0%
1.8%
2.1%
-
1.9%
0.6%
0.7%
0.6%
Shopping Center Management
-107
-562
567
-655
23
-29
386
11
YoY
-
-
-
-
-
-
-
-
Operating profit/Gross sales
-
-
-
-
0.2%
-
3.8%
0.1%
Other
526
-1,247
150
-945
-1,090
-1,258
-270
-791
YoY
-
-
-
-
-
-
-
-
Operating profit/Gross sales
7.2%
-
-
-
-
-
-
-
Adjustments
-2,250
-159
-1,428
-510
-466
-648
-915
-477
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. FY03/22 figures and forecast in this table are based on the application of this standard. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Operating profit margin has been calculated using gross sales as the denominator.
Note: In Q1 FY03/22, the company changed the name of the Shopping Center Management segment to the Shopping Center segment. Additionally, Hankyu Kitchen Yell Kansai, Inc., EveryD.com, Inc. and Hankyu Sennan Green Farm, which were previously included in the Other business segment, were transferred to the Supermarket segment, and Oi Development Co., Ltd., which was also included in Other business segment, was transferred to the Shopping Center segment. FY03/21 figures have been adjusted to reflect the new reporting segment classifications.
SG&A expenses
FY03/21
FY03/22
Quarterly (JPYmn)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Gross sales
145,904
189,710
215,954
187,630
161,179
182,893
223,077
220,959
SG&A expenses
47,020
55,088
57,682
56,552
48,445
54,528
55,030
59,936
YoY
-21.8%
-11.9%
-9.6%
-3.1%
3.0%
-1.0%
-4.6%
6.0%
% of sales
32.2%
29.0%
26.7%
30.1%
30.1%
29.8%
24.7%
27.1%
Personnel
18,396
21,094
21,323
20,821
19,275
20,852
20,836
23,157
YoY
-22.3%
-10.7%
-12.1%
-7.1%
4.8%
-1.1%
-2.3%
11.2%
% of gross sales
12.6%
11.1%
9.9%
11.1%
12.0%
11.4%
9.3%
10.5%
Rents
7,064
9,514
10,039
9,748
8,468
9,792
10,544
11,664
YoY
-28.5%
-5.7%
-4.4%
-0.7%
19.9%
2.9%
5.0%
19.7%
% of gross sales
4.8%
5.0%
4.6%
5.2%
5.3%
5.4%
4.7%
5.3%
Advertising and display
706
1,301
1,791
2,012
1,254
1,683
1,955
2,234
YoY
-76.3%
-60.1%
-19.8%
-14.7%
77.6%
29.4%
9.2%
11.0%
% of gross sales
0.5%
0.7%
0.8%
1.1%
0.8%
0.9%
0.9%
1.0%
Depreciation and amortization
3,658
4,217
4,518
4,566
3,536
4,054
4,200
4,825
YoY
-9.5%
0.5%
-1.0%
-5.2%
-3.3%
-3.9%
-7.0%
5.7%
% of gross sales
2.5%
2.2%
2.1%
2.4%
2.2%
2.2%
1.9%
2.2%
Outsourcing
4,605
3,965
4,526
4,940
4,389
5,020
4,690
5,167
YoY
-6.3%
-21.4%
-10.7%
0.2%
-4.7%
26.6%
3.6%
4.6%
% of gross sales
3.2%
2.1%
2.1%
2.6%
2.7%
2.7%
2.1%
2.3%
Sales commissions
2,309
3,069
3,725
2,300
1,111
1,363
1,591
1,954
YoY
-25.8%
-5.2%
-19.8%
-26.4%
-51.9%
-55.6%
-57.3%
-15.0%
% of gross sales
1.6%
1.6%
1.7%
1.2%
0.7%
0.7%
0.7%
0.9%
Transportation
3,474
3,869
3,993
3,069
3,372
3,759
4,028
2,955
YoY
-2.7%
-5.7%
-4.4%
-1.6%
-2.9%
-2.8%
0.9%
-3.7%
% of gross sales
2.4%
2.0%
1.8%
1.6%
2.1%
2.1%
1.8%
1.3%
Other
6,804
8,059
7,769
9,094
7,037
8,005
7,185
7,981
YoY
-14.7%
-10.2%
-7.3%
17.1%
3.4%
-0.7%
-7.5%
-12.2%
% of gross sales
4.7%
4.2%
3.6%
4.8%
4.4%
4.4%
3.2%
3.6%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22.
Note: With its application of the Accounting Standard for Revenue Recognition, the company began subtracting the monetary value associated with customer point redemptions, which it had previously recorded under “sales commissions,” from sales. This change led to a decline in sales commissions in FY03/22.
Note: SG&A expense ratios have been calculated using gross sales as the denominator.
Department Store business
Hankyu Hanshin Dept. Stores
FY03/20
FY03/21
FY03/22
FY03/22
Cumulative (JPYmn)
Q1
Q1–Q2
Q1–Q3
Q1–Q4
Q1
Q1–Q2
Q1–Q3
Q1–Q4
Q1
Q1–Q2
Q1–Q3
Q1–Q4
% of Est.
FY Est.
Gross sales
103,616
218,344
348,529
450,458
47,992
137,063
250,885
347,768
66,176
153,161
280,578
385,095
100.3%
384,000
YoY
1.0%
4.4%
3.1%
-0.3%
-53.7%
-37.2%
-28.0%
-22.8%
37.9%
11.7%
11.8%
10.7%
10.4%
Gross profit
25,245
52,315
83,424
106,670
10,989
31,247
57,656
78,399
14,960
34,546
63,855
86,389
YoY
-0.4%
3.0%
1.2%
-2.5%
-56.5%
-40.3%
-30.9%
-26.5%
36.1%
10.6%
10.8%
10.2%
Gross profit/Gross sales
24.4%
24.0%
23.9%
23.7%
22.9%
22.8%
23.0%
22.5%
22.6%
22.6%
22.8%
22.4%
Other operating revenue
142
316
1,169
1,950
524
1,330
2,149
2,924
685
1,473
2,341
3,117
YoY
1.4%
12.9%
173.1%
245.1%
269.0%
320.9%
83.8%
49.9%
30.7%
10.8%
8.9%
6.6%
SG&A expenses
22,355
45,996
73,685
96,942
14,349
35,955
60,700
83,189
17,465
40,132
65,230
88,424
YoY
1.3%
1.6%
5.8%
4.9%
-35.8%
-21.8%
-17.6%
-14.2%
21.7%
11.6%
7.5%
6.3%
SG&A expenses/Gross sales
21.6%
21.1%
21.1%
21.5%
29.9%
26.2%
24.2%
23.9%
26.4%
26.2%
23.2%
23.0%
Operating profit
3,033
6,634
10,908
11,679
-2,835
-3,377
-894
-1,688
-1,820
-4,112
966
1,083
200
YoY
-11.1%
14.4%
-17.8%
-33.5%
-
-
-
-
-35.8%
21.8%
-
-
-
Operating profit/Gross sales
2.9%
3.0%
3.1%
2.6%
-5.9%
-2.5%
-0.4%
-0.5%
-2.8%
-2.7%
0.3%
0.3%
0.1%
Hankyu Hanshin Dept. Stores
FY03/20
FY03/21
FY03/22
Quarterly (JPYmn)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Gross sales
103,616
114,728
130,185
101,929
47,992
89,071
113,822
96,883
66,176
86,985
127,417
104,517
YoY
1.0%
7.7%
1.0%
-10.4%
-53.7%
-22.4%
-12.6%
-5.0%
37.9%
-2.3%
11.9%
7.9%
Gross profit
25,245
27,070
31,109
23,246
10,989
20,258
26,409
20,743
14,960
19,586
29,309
22,534
YoY
-0.4%
6.4%
-1.8%
-13.7%
-56.5%
-25.2%
-15.1%
-10.8%
36.1%
-3.3%
11.0%
8.6%
Gross profit/Gross sales
24.4%
23.6%
23.9%
22.8%
22.9%
22.7%
23.2%
21.4%
22.6%
22.5%
23.0%
21.6%
Other operating revenue
142
174
853
781
524
806
819
775
685
788
868
776
YoY
1.4%
24.3%
476.4%
470.1%
269.0%
363.2%
-4.0%
-0.8%
30.7%
-2.2%
6.0%
0.1%
SG&A expenses
22,355
23,641
27,689
23,257
14,349
21,606
24,745
22,489
17,465
22,667
25,098
23,194
YoY
1.3%
2.0%
13.6%
2.0%
-35.8%
-8.6%
-10.6%
-3.3%
21.7%
4.9%
1.4%
3.1%
SG&A expenses/Gross sales
21.6%
20.6%
21.3%
22.8%
29.9%
24.3%
21.7%
23.2%
26.4%
26.1%
19.7%
22.2%
Operating profit
3,033
3,601
4,274
771
-2,835
-542
2,483
-794
-1,820
-2,292
5,078
117
YoY
-11.1%
50.7%
-42.8%
-82.0%
-
-
-41.9%
-
-35.8%
-
104.5%
-
Operating profit/Gross sales
2.9%
3.1%
3.3%
0.8%
-5.9%
-0.6%
2.2%
-0.8%
-2.8%
-
4.0%
0.1%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. However, non-consolidated financial results do not reflect this standard’s application. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Gross profit margin, SG&A expense ratio, and operating profit margin have been calculated using gross sales as a denominator.
Sales by store
FY03/20
FY03/21
FY03/22
Quarterly (JPYmn)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
All stores
103,616
114,728
135,127
106,067
50,672
93,433
118,878
98,492
69,368
90,843
131,884
105,544
YoY
1.0%
7.7%
4.8%
-6.7%
-51.1%
-18.6%
-12.0%
-7.1%
36.9%
-2.8%
10.9%
7.2%
Hankyu Main Store
58,233
66,060
66,447
50,550
22,407
45,643
58,254
48,799
31,047
46,614
68,508
54,477
YoY
4.1%
12.7%
-8.5%
-20.5%
-61.5%
-30.9%
-12.3%
-3.5%
38.6%
2.1%
17.6%
11.6%
Hanshin Umeda Main Store
11,157
12,632
12,709
9,837
4,043
7,267
9,327
7,168
4,533
4,443
10,652
8,664
YoY
-12.6%
4.6%
-8.8%
-21.9%
-63.8%
-42.5%
-26.6%
-27.1%
12.1%
-38.9%
14.2%
20.9%
Total branches
34,225
36,036
55,970
45,681
24,220
40,525
51,296
42,525
33,788
39,785
52,724
42,403
YoY
1.0%
0.7%
32.1%
21.8%
-29.2%
12.5%
-8.4%
-6.9%
39.5%
-1.8%
2.8%
-0.3%
Senri Hankyu
3,564
3,879
4,363
3,401
2,261
3,226
4,054
3,310
2,538
3,174
4,187
3,245
YoY
-1.4%
0.5%
-6.6%
-11.8%
-36.6%
-16.8%
-7.1%
-2.7%
12.3%
-1.6%
3.3%
-2.0%
Takatsuki Hankyu
-
-
5,601
4,623
3,258
4,705
5,740
4,715
3,599
4,499
5,740
4,660
YoY
-
-
-
-
-
-
2.5%
2.0%
10.5%
-4.4%
0.0%
-1.2%
Kawanishi Hankyu
3,478
3,823
4,132
3,355
2,140
3,220
3,799
3,091
2,475
2,975
3,797
3,010
YoY
-1.0%
-1.1%
-8.4%
-11.6%
-38.5%
-15.8%
-8.1%
-7.9%
15.7%
-7.6%
-0.1%
-2.6%
Takarazuka Hankyu
1,737
1,885
2,041
1,705
1,302
1,714
1,988
1,730
1,526
1,745
2,043
1,707
YoY
0.4%
0.7%
-2.9%
-8.3%
-25.0%
-9.1%
-2.6%
1.5%
17.2%
1.8%
2.8%
-1.3%
Nishinomiya Hankyu
5,922
6,407
6,778
5,875
3,192
5,439
6,588
5,755
4,207
5,321
6,795
5,814
YoY
3.4%
4.7%
-5.9%
-12.2%
-46.1%
-15.1%
-2.8%
-2.0%
31.8%
-2.2%
3.1%
1.0%
Kobe Hankyu
-
-
10,465
8,403
3,961
7,418
9,400
7,688
5,742
7,041
8,998
6,792
YoY
-
-
-
-
-
-
-10.2%
-8.5%
45.0%
-5.1%
-4.3%
-11.7%
Sanda Hankyu
279
365
402
318
104
304
365
288
201
232
-
-
YoY
0.7%
2.0%
-2.9%
-7.0%
-62.7%
-16.7%
-9.2%
-9.4%
93.3%
-23.7%
-
-
Hakata Hankyu
12,279
12,383
13,507
11,025
3,798
8,526
11,850
9,815
8,404
8,822
13,407
10,789
YoY
4.1%
0.9%
-4.9%
-17.4%
-69.1%
-31.1%
-12.3%
-11.0%
121.3%
3.5%
13.1%
9.9%
Hankyu Men's Tokyo
3,068
3,111
3,770
2,935
995
2,231
3,153
2,313
1,658
2,141
3,309
2,564
YoY
-8.7%
-4.2%
-13.2%
-10.1%
-67.6%
-28.3%
-16.4%
-21.2%
66.6%
-4.0%
4.9%
10.9%
Oi Hankyu Food Hall
1,042
1,101
1,306
1,090
1,056
1,123
1,310
1,100
1,039
1,111
1,298
1,086
YoY
1.9%
0.2%
0.2%
-0.2%
1.3%
2.0%
0.3%
0.9%
-1.6%
-1.1%
-0.9%
-1.3%
Tsuzuki Hankyu
1,056
1,093
1,381
1,030
619
745
899
806
735
783
937
809
YoY
-0.9%
-2.7%
3.2%
-17.5%
-41.4%
-31.8%
-34.9%
-21.7%
18.7%
5.1%
4.2%
0.4%
Amagasaki Hanshin
652
743
823
704
561
731
834
718
617
767
855
732
YoY
2.7%
-0.5%
-2.0%
-4.9%
-14.0%
-1.6%
1.3%
2.0%
10.0%
4.9%
2.5%
1.9%
Hanshin Nishinomiya
1,028
1,111
1,249
1,092
882
1,018
1,172
1,071
940
1,049
1,201
1,069
YoY
0.3%
1.2%
-2.3%
-5.6%
-14.2%
-8.4%
-6.2%
-1.9%
6.6%
3.0%
2.5%
-0.2%
Hanshin Mikage
116
134
151
123
83
126
144
124
99
128
156
126
YoY
-3.3%
1.5%
-0.7%
-3.1%
-28.4%
-6.0%
-4.6%
0.8%
19.3%
1.6%
8.3%
1.6%
Note: The company began applying the Accounting Standard for Revenue Recognition at the start of FY03/22. However, “sales by store” figures represent transaction volumes (gross sales), the metric applied by the company prior to the application of this standard.
Note: Sales figures for Kobe Hankyu and Takatsuki Hankyu include both sales from department stores and trading volumes at specialty shops.
Note: Figures may differ from company materials due to differences in rounding methods. Note: Hankyu Main Store includes Hankyu Men's Osaka. Hankyu Umeda Main Store pre-opened in October 2021 following reconstruction. Figures for Takatsuki Hankyu are the sum of department store sales and trading volumes at specialty shops. Sanda Hankyu closed in August 2021.
Executive summary
Business overview
H2O Retailing Corporation is a retailer that operates department stores (Hankyu Department Stores and Hanshin Department Stores), supermarkets (such as Izumiya and Hankyu Oasis), and shopping centers mainly in the Kansai area. The company operates 15 department stores in Japan, mainly along the Hankyu Railway and Hanshin Electric Railway lines. It also has 177 supermarkets in the Kansai region (as of November 2021). The company follows an area dominance strategy targeting the Kansai region. Kansai has around 20mn consumers and includes the prefectures of Osaka (population of 8.8mn), Hyogo (5.5mn), and Kyoto (2.6mn). H2O’s strategy is to have consumers make as many of their everyday purchases as possible at its supermarkets and enjoyable, non-routine shopping at its department stores.
Sales in the department store industry as a whole have been declining due to intensifying competition from specialty stores and shopping centers. However, H2O is using its ability to design unique retail spaces to attract customers from the Kansai region (primarily at its Hankyu Main Store and Hanshin Umeda Main Store) and customers from outside the region. To secure a new earnings base during a difficult period for expansion in the domestic department store market, the company opened Ningbo Hankyu (located in Zhejiang, China; company stake of 33.3%) as its first overseas department store in April 2021.
H2O was created through the 2007 merger of Hankyu Department Stores and Hanshin Department Stores. Their respective predecessor companies were the Hankyu Market (now Hankyu Main Store), which opened in Osaka’s Umeda district in 1925, and Hanshin Mart (now Hanshin Umeda Main Store), which opened in 1933. Hanshin Electric Railway is H2O’s largest shareholder, with an 11.9% stake, followed by Hankyu Hanshin Holdings (TSE1: 9042), which holds an 8.4% stake. Effectively, Hankyu Hanshin Holdings, the parent company of Hanshin Electric Railway, therefore holds a 20.3% stake in H2O (making it an equity-method affiliate). H2O, Hankyu Hanshin Holdings, and Toho (TSE1: 9602) together form the Hankyu Hanshin Toho Group. The group’s business interests span urban transport, real estate, hotels, department stores, supermarkets, and entertainment.
H2O has four business segments: the Department Store, Supermarket, Shopping Center, and Other businesses. In FY03/21, the Department Store business accounted for 47.1% of the company’s gross sales, while the Supermarket business accounted for 39.6%, the Shopping Center business 8.8%, and the Other business 4.6%. The operating loss in FY03/21 amounted to JPY4.4bn. The Department Store business generated JPY1.9bn in operating loss, while the Supermarket business produced operating profit of JPY4.2bn. Previously, the company had maintained solid performance in the Department Store segment with sales growth driven by its Hankyu Main Store. However, this trend was broken as the company reported an operating loss in the same segment due to impact from the COVID-19 pandemic. On the other hand, the company reported operating profit in the Supermarket segment, in part because it transferred the Izumiya non-food operations, which had generally been generating operating losses, to the Shopping Center business. The company is currently implementing structural reforms, including cost restructuring for its department stores, operational streamlining at supermarkets, and conversion of Izumiya general merchandise stores into shopping centers.
Trends and outlook
In FY03/22, H2O reported gross sales of JPY788.1bn (+6.6% YoY), operating profit of JPY740mn (operating loss of JPY4.4bn in FY03/21), recurring profit of JPY2.3bn (recurring loss of JPY2.9bn in FY03/21), and net income attributable to owners of the parent of JPY9.9bn (net loss of JPY24.8bn in FY03/21). Despite the impact of the COVID-19 pandemic, sales rose thanks to a YoY recovery in the mainstay Department Store business and the effect of the business integration with Kansai Super Market Ltd. in December 2021. On the profit front, the mainstay Department Store business and Shopping Center business returned to profitability, while the Supermarket business posted higher profit. The company recorded extraordinary gains of JPY27.0bn—which consisted mainly of a JPY13.6bn gain on sale of fixed assets and a JPY6.5bn gain on sale of investment securities—and extraordinary losses of JPY13.8bn, which stemmed primarily from JPY4.3bn in pandemic-related losses. The annual dividend for FY03/22 is JPY25 per share.
For FY03/23, the company forecasts gross sales of JPY1.0tn (+26.9% YoY), sales of JPY660.0bn (+27.3% YoY), operating profit of JPY8.0bn (operating profit of JPY740mn in FY03/22), recurring profit of JPY7.0bn (+198.4% YoY), and net income attributable to owners of the parent of JPY8.0bn (-19.0% YoY). The company expects gross sales to increase 26.9% YoY, driven by the grand opening of the Hanshin Main Store in the Department Store business and the contribution from the consolidation of Kansai Super Market in the Supermarket business. On the profit front, the company expects operating profit to grow more than 10x its level in FY03/22 due to the expected increase in gross sales as well as improved profitability at Izumiya.
Medium-term management plan: The company’s new medium-term management plan, covering the years between FY03/22 and FY03/24, is aimed at recovering operating profit to the level seen prior to the spread of COVID-19 and includes the following strategies: rebuild the Department Store business by reforming the cost structure and establishing the OMO business style; establish the Supermarket business as a second earnings pillar by restructuring the business, integrating food manufacturing and processing with sales, and bolstering capacity through alliances; (as part of its effort to establish businesses that will ensure future growth) work to make Ningbo Hankyu the leading department store in the region, develop related businesses, and launch and expand the customer service business centered on online support; and promote the advancement of IT and digitalization.
Strengths and weaknesses
Shared Research believes H2O has three key strengths: 1) an ability to create retail spaces that attract consumers (in Kansai, from outside the region, and from overseas) without relying excessively on retailer tenant revenues; 2) highly convenient, attractive locations; and 3) an ability to make the best use of its Hankyu and Hanshin brand, well known in Kansai region.
We believe its weaknesses are: 1) significant lags between decision-making and results due to the time it takes to build and rebuild department stores; 2) the lack of competitive advantage in the shopping center business format operated under the Shopping Center business; and 3) little experience of business development overseas. (See the Strengths and weaknesses section for details.)
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company conducted a reverse stock split (1-for-2) on September 1, 2014.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. The full-year FY03/22 forecast in this table is based on the application of this standard. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Gross profit margin, SG&A expense ratio, operating profit margin, recurring profit margin, and net margin have been calculated using gross sales as a denominator.
Recent updates
Monthly sales report for April 2022
H2O Retailing Corporation announced monthly sales report for April 2022.
Monthly gross sales
Note: Kansai Super, which merged with the company in December 2021, is included in the Supermarket segment. Consolidated sales and Supermarket segment results for FY03/21 do not include Kansai Super results.
Note: Kansai Super, which merged with the company in December 2021, is included in the Supermarket segment. Consolidated sales and Supermarket segment results for FY03/21 do not include Kansai Super results.
Extraordinary gains (negative goodwill) and remodeling of Kobe Hankyu and Takatsuki Hankyuecast
On May 12, 2022, H2O Retailing Corporation announced the recording of extraordinary gains (gain on negative goodwill).
Extraordinary gains (gain on negative goodwill)
The company made Kansai Super Market Ltd. a consolidated subsidiary in December 2021. In Q4 FY03/22, the purchase price allocation (PPA) was completed, and the difference between acquisition costs and net book value (JPY3.3bn; cumulative total of JPY3.4bn) was recorded as a gain on negative goodwill under extraordinary gains.
On the same day, the company announced the remodeling of the Kobe Hankyu and Takatsuki Hankyu locations.
Remodeling of Kobe Hankyu and Takatsuki Hankyu
Hankyu Hanshin Department Stores, Inc., a consolidated subsidiary of the company, announced that it will remodel the Kobe Hankyu and Takatsuki Hankyu locations. This is in accordance with the company's new medium-term management plan (FY2022–FY2023) announced in July 2021.
Kobe Hankyu: The company will invest approximately JPY8.0bn to renovate about 90% of the total sales floor area of the entire building. The objective of the remodeling is to create a store that blends the feel of the Kobe lifestyle with the urban department store model. The renovation is scheduled to be completed in autumn 2023.
Takatsuki Hankyu: Aiming to create a new suburban department store model with the optimum mix of department stores and specialty stores, Takatsuki Hankyu will renovate about 65% of its total sales floor area with an investment of approximately JPY2.3bn. The renovation is scheduled to be completed in autumn 2023.
Reorganization of consolidated subsidiary Hankyu Hanshin Department Stores, Inc.
On March 17, 2022, H2O Retailing Corporation announced reorganization of its consolidated subsidiary Hankyu Hanshin Department Stores, Inc.
The company will change the organizational structure of its consolidated subsidiary Hankyu Hanshin Department Stores (effective April 1, 2022) to establish a new business model with the aim of rebuilding the Department Store business; to promote integration of the procurement and sales functions and maximize the effectiveness and efficiency of these functions; to maximize effectiveness and efficiency through reorganizing operations related to the OMO business style; and to strengthen branding for Hankyu Men's department stores.
Grand reopening of Hanshin Umeda Main Store
On February 25, 2022, H2O Retailing Corporation made an announcement regarding the grand reopening of its Hanshin Umeda Main Store.
The company announced that it would celebrate the grand reopening of the entire Hanshin Umeda Main Store on April 6, 2022. Reconstruction of the Hanshin Umeda Main Store has been underway since the autumn of 2014. The Wing I was completed in April 2018 and since then the reconstructed store has reopened gradually, with a pre-opening in October 2021 and a full reopening of floors one to nine in December 2021.
Overview of Hanshin Umeda Main Store
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. FY03/22 figures and forecast in this table are based on the application of this standard. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Gross profit margin, SG&A expense ratio, operating profit margin, recurring profit margin, and net margin have been calculated using gross sales as a denominator.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. FY03/22 figures and forecast in this table are based on the application of this standard. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Operating profit margin has been calculated using gross sales as the denominator.
Note: In Q1 FY03/22, the company changed the name of the Shopping Center Management segment to the Shopping Center segment. Additionally, Hankyu Kitchen Yell Kansai, Inc., EveryD.com, Inc. and Hankyu Sennan Green Farm, which were previously included in the Other business segment, were transferred to the Supermarket segment, and Oi Development Co., Ltd., which was also included in Other business segment, was transferred to the Shopping Center segment. FY03/21 figures have been adjusted to reflect the new reporting segment classifications.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22.
Note: With its application of the Accounting Standard for Revenue Recognition, the company began subtracting the monetary value associated with customer point redemptions, which it had previously recorded under “sales commissions,” from sales. This change led to a decline in sales commissions in FY03/22.
Note: SG&A expense ratios have been calculated using gross sales as the denominator.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) in FY03/22. However, non-consolidated financial results do not reflect this standard’s application. “Sales” through FY03/21 are stated as “gross sales” in the table.
Note: Gross profit margin, SG&A expense ratio, and operating profit margin have been calculated using gross sales as a denominator.
Note: Sales figures for Kobe Hankyu and Takatsuki Hankyu include both sales from department stores and trading volumes at specialty shops.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Hankyu Main Store includes Hankyu Men's Osaka. Hankyu Umeda Main Store pre-opened in October 2021 following reconstruction. Figures for Takatsuki Hankyu are the sum of department store sales and trading volumes at specialty shops. Sanda Hankyu closed in August 2021.