H2O Retailing Corporation · TSE:8242
H2O Retailing — Q2 FY2025 Earnings Presentation
35 slides from H2O Retailing's earnings presentation, Nov 6, 2024
Slide 1: Financial Results for the 2Q of the Fiscal Year Ending Mar. 2025
Financial Results for the 2Q of the Fiscal Year Ending Mar. 2025 2Q of FY2025 Presentation Materials H2O RETAILING CORPORATION Nov. 6, 2024
Slide 2: Digest
Digest Results for 1H of FY2025 (Apr.-Sep.) ◼ As in 1Q, Department Store Business drove consolidated results in 2Q, with gross sales, operating profit, ordinary profit, and profit all reaching new highs for 1H. ◼ Department Store Business increased both sales and operating profit due to strong domes
Slide 3: Topics
Topics 1 Results for 1H of FY2025 Note • Figures in 100 million JPY in this documents are rounded to the nearest 100 million JPY. 2 Forecast for FY2025 • Gross Sales in this document are reclassified on the standard before the application of "Accounting Standard for Revenue Recognition". 3 Progress
Slide 4: Topics
Topics 1 Results for 1H of FY2025 P. 5 2 Forecast for FY2025 P. 14 3 Progress of Mid-term Management Plan (FY2025-FY2027) P. 17 4 Progress of Cost of Capital and Stock Price P. 22 5 Appendix P. 27 Copyright © H2O Retailing Corp. All Rights Reserved. 4
Slide 5: Consolidated Results
Consolidated Results ◼ As in 1Q, Department Store Business drove consolidated results in 2Q, with gross sales, operating profit, ordinary profit, and profit all reaching new highs for 1H. Profit increased significantly, partly due to the recording of a gain on sale of investment securities in 1Q. ◼
Slide 6: Results by Segment-Gross Sales and Operating Profit
Results by Segment-Gross Sales and Operating Profit (100 million JPY) (100 million JPY) 1H of FY2024 1H of FY2025 1H of FY2025 Consolidated Actual Actual YoY change YoY amount Forecast on Aug. 6 Vs. Forecast (a) (b) (b/a) (b-a) (c) (b/c) Gross sales Department Stores 2,591 3,050 +17.7% +459 3,032 +0
Slide 7: Results by Segment-Factors of Increase / Decrease in operating profit
Results by Segment-Factors of Increase / Decrease in operating profit (YoY, Vs. Forecast) (100 million JPY) 1H of FY2024 1H of FY2025 Forecast 99 +51 150 +14 136 Supermarket Shopping Center ▲0 +5 Other • Sales increase +1 and Other Department • Margin downward ▲ 1 adjustments and Shopping Supermarke
Slide 8: Results by Segment-Department Store Business (1/3)
Results by Segment-Department Store Business (1/3) ◼ Steady domestic sales (+3.2% YoY) and rapid growth in inbound sales (+40 bn. JPY YoY) resulted in significant increases in sales and operating profit. ◼ Results of 2Q generally in line with forecasts (announced on Aug. 6) (100 million JPY) 1H of F
Slide 9: Results by Segment-Department Store Business (2/3)
Results by Segment-Department Store Business (2/3) ◼ Domestic sales remained stable in the 2Q period, exceeding the previous year's level (*2Q real basis +4.0% YoY), on par with initial forecast. ◼ Sales driven by urban stores, centered on Hankyu Main Store and Hakata Hankyu (+21% YoY). All store sa
Slide 10: Results by Segment-Department Store Business (3/3)
Results by Segment-Department Store Business (3/3) ◼ Due in part to the depreciation of JPY in 1Q, inbound sales reached a record high of 69.3 bn. JPY in 1H. ◼ Considering recent trends and exchange rate fluctuations, expecting 57.0 bn. JPY (+13% YoY) in 2H and 126.0 bn. JPY for the full-year FY2025
Slide 11: Results by Segment-Supermarket Business
Results by Segment-Supermarket Business ◼ In supermarkets, existing-store sales exceeded the previous year's level due to steady number of customers, despite a decline in the unit price per customer due to a decrease in the number of items purchased. Operating profit was almost flat YoY despite high
Slide 12: Results by Segment-Shopping Center Business
Results by Segment-Shopping Center Business ◼ In Oi Development, sales increased due to the strong performance of the business hotels (Ours Inn Hankyu). Sales decreased in H2O SC Development due to a decrease in stores. ◼ Ours Inn Hankyu achieved occupancy rate of over 95% and an increase in the uni
Slide 13: Topics
Topics 1 Results for 1H of FY2025 P. 5 2 Forecast for FY2025 P. 14 3 Progress of Mid-term Management Plan (FY2025-FY2027) P. 17 4 Progress of Cost of Capital and Stock Price P. 22 5 Appendix P. 27 Copyright © H2O Retailing Corp. All Rights Reserved. 13
Slide 14: Consolidated Forecasts for FY2025
Consolidated Forecasts for FY2025 ◼ Forecast for operating profit and ordinary profit are revised upward in light of the 1H increase. (100 million JPY) 2H of FY2024 2H of FY2025 FY2024 FY2025 FY2025 Change Forecast Forecasts Vs. Forecast Actual Forecast Forecast on Aug. 6 on Nov. 6 on Aug. 6 on Nov.
Slide 15: Forecast for FY2025-By Segment
Forecast for FY2025-By Segment (100 million JPY) (100 million JPY) FY2024 FY2025 Forecast FY2025 Forecast Change Consolidated Actual on Aug. 6 on Nov. 6 (a) (b) (c) (c/a) (c-b) Gross sales Department Stores 5,771 6,267 6,285 +8.9% +18 Forecast of FY2025 11,550 Supermarket 4,256 4,449 4,300 +1.0% ▲14
Slide 16: Topics
Topics 1 Results for 1H of FY2025 P. 5 2 Forecasts for FY2025 P. 14 3 Progress of Mid-term Management Plan (FY2025-FY2027) P. 17 4 Progress of Cost of Capital and Stock Price P. 22 5 Appendix P. 27 Copyright © H2O Retailing Corp. All Rights Reserved. 16
Slide 17: Digest of Mid-term Management Plan Progress
Digest of Mid-term Management Plan Progress Policy Progress in 1H of FY2025 [Department Store Business] Deepening of existing business Promoting reforms and service development to maximize LTV of key customers “Domestic Customer and Store Business” [Supermarket Business and others] Executing initiat
Slide 18: Focus on and strengthen Overseas Customer Business / Deepen Domestic Customer and Store Business
Focus on and strengthen Overseas Customer Business / Deepen Domestic Customer and Store Business ◼ Developed the organization and began full-scale efforts to maximize LTVs on key customers. Overseas wealthy customers (Department Store) Personal Communication • Attendance staff for overseas VIP custo
Slide 19: Development and utilization of group infrastructure
Development and utilization of group infrastructure ◼ Promote training programs across the Group to activate value creation based on the Human Resources strategy ◼ Further strengthen the Group's unique community co-creation activities and promote specific environmental measures Human resource develo
Slide 20: Numerical targets
Numerical targets ◼ Forecast for FY2025 is better than initial expectations, with a target return on equity of 10.8%, but the actual return on equity 6.2%. Aim to achieve the targets for FY2027 by consistently implementing Mid-term Management Plan. (100 million JPY) FY2025 FY2025 FY2027 Forecast For
Slide 21: Topics
Topics 1 Results for 1H of FY2025 P. 5 2 Forecast for FY2025 P. 14 3 Progress of Mid-term Management Plan (FY2025-FY2027) P. 17 4 Progress of Cost of Capital and Stock Price P. 22 5 Appendix P. 27 Copyright © H2O Retailing Corp. All Rights Reserved. 21
Slide 22: Analysis of Current Status and Direction of Initiatives
Analysis of Current Status and Direction of Initiatives ◼ Although PBR temporarily exceeded 1.0x, but has recently remained at around 0.8x, and PER has remained at a low level of 7.5x to 8.0x. ◼ To improve PER, realising the business strategy, execution of enhancement of shareholder returns and prom
Slide 23: Cash Flow Allocation (FY2025-2027)
Cash Flow Allocation (FY2025-2027) ◼ Cash-in: Expected to exceed forecast due to strong business performance of FY2025 ◼ Cash-out: M&A (making it a subsidiary) has been completed, planning to allocate additional funds to shareholder returns and growth investments as appropriate based on performance
Slide 24: Shareholder Returns
Shareholder Returns ◼ Forecast of dividend for FY2025 is ¥40 per share as initially planned. ◼ Considering acquisition of treasury stock for the current fiscal year after the completion of market purchase transactions in ASR transaction, which is part of the share repurchase program implemented in M
Slide 25: Expand the shareholder base
Expand the shareholder base ◼ To expand the investor base by taking concrete measures to improve the convenience of shareholder benefits and increase the number of fan shareholders Enhancing shareholder benefits under Enhance reviw convenience and appeal Present Introduction of choice system Content
Slide 26: Topics
Topics 1 Results for 1H of FY2025 P. 5 2 Forecast for FY2025 P. 14 3 Progress of Mid-term Management Plan (FY2025-FY2027) P. 17 4 Progress of Cost of Capital and Stock Price P. 22 5 Appendix P. 27 Copyright © H2O Retailing Corp. All Rights Reserved. 26
Slide 27: Consolidated Results trends
Consolidated Results trends (100 million JPY) 2023.1Q 2023.2Q 2023.3Q 2023.4Q 2024.1Q YoY 2024.2Q YoY Gross sales 2,447 2,605 2,965 2,722 2,764 +13.0% 2,821 +8.3% Net sales 1,548 1,637 1,769 1,619 1,619 +4.6% 1,694 +3.4% Operating profit 48 51 123 40 93 +45 57 +6 Ordinary profit 52 55 133 40 102 +50
Slide 28: Results by Segment trends
Results by Segment trends (100 million JPY) 2023.1Q 2023.2Q 2023.3Q 2023.4Q 2024.1Q YoY 2024.2Q YoY Department Stores 1,235 1,356 1,655 1,525 1,554 +25.8% 1,496 +10.3% Supermarket 1,031 1,078 1,127 1,020 1,034 +0.3% 1,078 ▲0.0% Shopping Center 81 77 86 77 82 +1.8% 78 +0.5% Other 100 93 96 101 94 ▲6.
Slide 29: Consolidated Forecast for 2H of FY2025
Consolidated Forecast for 2H of FY2025 (100 million JPY) 2H of FY2024 2H of FY2025 Forecast 2H of FY2025 Forecast Change Actual on Aug. 6 on Nov. 6 (a) (b) (c) (c vs a) (c-b) Gross sales 5,687 6,070 5,965 +4.9% ▲104 Net sales 3,389 3,610 3,507 +3.5% ▲103 Operating profit 163 159 160 ▲3 +1 Ordinary p
Slide 30: Forecast for 2H of FY2025-by Segment
Forecast for 2H of FY2025-by Segment (100 million JPY) (100 million JPY) 2H of FY2024 2H of FY2025 2H of FY2025 Change Actual Forecast Forecast Consolidated on Aug. 6 on Nov. 6 (a) (b) (c) (c/a) (c-b) Gross sales Department Stores 3,180 3,235 3,235 +1.7% +0 Forecast for 2H of FY2025 5,965 Supermarke
Slide 31: Department Store-Results for 1H of FY2025
Department Store-Results for 1H of FY2025 (100 million JPY) 1H of 1H of 2023.1Q 2024.1Q 2024.2Q 2024.2Q FY2024 FY2025 Actual Actual YoY Actual Actual YoY Actual Actual YoY Gross sales 1,235 1,554 +25.8% 1,356 1,496 +10.3% 2,591 3,050 +17.7% Net sales 383 457 +19.6% 431 463 +7.4% 813 920 +13.1% Gross
Slide 32: Department Store-Results for 1H of FY2025
Department Store-Results for 1H of FY2025 (100 million JPY) 1H of 1H of 2023.1Q 2024.1Q 2024.2Q 2024.2Q FY2024 FY2025 Actual Actual YoY Actual Actual YoY Actual Actual YoY Gross sales 122,734 154,535 +25.9% 134,745 148,700 +4.0% 257,479 303,235 ＋17.8% Gross profit 27,599 34,116 +6,517 29,805 32,854
Slide 33: Non-operating income/expenses and Extraordinary income/losses
Non-operating income/expenses and Extraordinary income/losses (100 million JPY) 1H of 1H of YoY FY2024 FY2025 YoY Major items amount Actual Actual amount Operating profit 99 150 +51 • Increase in dividends received +4 • Increase in foreign exchange gain +2 Non-operating income/expenses 8 9 +2 • Incr
Slide 34: Capital Investment and Depreciation
Capital Investment and Depreciation Capital Investment (100 million JPY) 1H of 1H of FY2025 FY2024 FY2025 Major items Forecast Actual Actual Department 44 19 Hankyu Main Store renovation 53 Stores Supermarket 38 39 Store investment of supermarket 85 Shopping Renovation of SC stores and renovation of
Slide 35: Cautionary Statement
Cautionary Statement The information contained in this material reflects judgments made by H2O Retailing Corporation at the time of preparing this material, and no guarantees are provided concerning the accuracy of the information. The information is also subject to change without prior notice. The