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    8242   JP3774600005

H2O RETAILING CORPORATION

(8242)
  Report
Delayed Japan Exchange  -  01:00 2022-11-30 am EST
1220.00 JPY   +0.08%
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H2O Retailing : FINANCIAL REPORT 2022

09/15/2022 | 02:10am EST

H2O RETAILING CORPORATION

FINANCIAL REPORT 2022

Profile

Hankyu Department Stores, Inc. was established in 1929 in Umeda Osaka, as the world's first railway terminal department store by Mr. Ichizo Kobayashi, the founder of the Hankyu Corporation. Helped by the ability of a railway terminal to attract customers, the store grew together with the Umeda area, and a succession of stores in other areas were subsequently opened. In 1947, the Company was spun off from Hankyu Corporation and the Hankyu Department Stores Group was formed.

On 1st October 2007, Hankyu Department Stores, Inc. changed its name to H2O RETAILING CORPORATION and became a holding company in accordance with the management integration between Hankyu Department Stores, Inc. and Hanshin Department Store, Ltd.

On 1st June 2014, H2O RETAILING CORPORATION had a management integration with Izumiya, Co., Ltd.

On 1st October 2017, the Group purchased the businesses of Sogo Kobe and Seibu Takatsuki stores from Sogo & Seibu Co., Ltd.

On 15th December 2021, H2O RETAILING CORPORATION had a management integration with Kansai Super Market Ltd.

Currently, the Group consists of 45 subsidiaries and 8 affiliates that operate retail businesses, including its core department store operations, supermarket operations and shopping centre operations.

Contents

General Business Conditions

01

Corporate Governance System

18

Five-Year Summary

52

Consolidated Balance Sheets

53

Consolidated Statements of Operations

55

Consolidated Statements of Comprehensive Income

56

Consolidated Statements of Changes in Net Assets

57

Consolidated Statements of Cash Flows

58

Notes to the Consolidated Financial Statements

60

Corporate Data

129

General Business Conditions

1. Management Analysis of Financial Position, Business Performance and Cash Flows

The future information contained in these materials reflects judgements made at the end of fiscal year ended 31st March 2022.

From the current fiscal year, Hankyu Kitchen Yell Kansai, Inc., EveryD.com, Inc. and Hankyu Sennan Green Farm, which were previously included in the Other Businesses segment, were transferred to the Supermarket Business segment, and Oi Development Co., Ltd., which was also included in Other Businesses segment, was transferred to the Shopping Centre Business segment. HANKYU B&C Planning Co., Ltd. and Hankyu Freds Co., Ltd., which were included in the Other Businesses segment, were absorbed by Hankyu Bakery Co., Ltd. that is in the Supermarket Business segment on 1st April 2021. Year-on-year comparisons are shown based on the results for the previous fiscal year, which have been reclassified into the new reportable segments.

Following the management integration through a share exchange with Kansai Super Market Ltd. (*1) on 15th December 2021, Kansai Food Market Ltd., Kansai Super Market Ltd. and Kansai Super Premium Co., Ltd. were included in the Supermarket Business segment, and consolidated financial results included the operating results for the fourth quarter of above three companies.

(1) Accounting estimates that significantly affect the consolidated financial statements

In preparing the Group's consolidated financial statements, management makes various estimates that affect the reported amounts of assets and liabilities as of the balance sheet date, the disclosure of contingent assets and liabilities, and income and expenses for the reporting period.

Out of these accounting estimates, items deemed to contain a risk of significantly affecting the consolidated financial statements for the next fiscal year are described in "Notes to the Consolidated Financial Statements (Significant Accounting Estimates)" in the Consolidated Financial Statements. In addition, assumptions used to reflect the impact of COVID-19 in these estimates, which are applicable across accounting estimates, are described in "Notes to the Consolidated Financial Statements (Additional Information)" in the Consolidated Financial Statements.

1

(2) Business Performance for Reporting Period Consolidated business performance for the fiscal year

(Millions of yen)

March 2020

March 2021

March 2022 Cumulative

Cumulative

Cumulative

Amount

YOY

Change

Versus

Change

Amount

Amount

forecast

Department Store

473,225

347,768

385,095

110.7%

+37,327

100.3%

+1,095

Business

Supermarket Business

354,115

292,754

327,205

111.8%

+34,451

100.6%

+2,005

Shopping Centre Business

8,725

65,024

42,879

65.9%

(22,145)

98.6%

(620)

Other Businesses

61,222

33,651

32,928

97.9%

(722)

101.9%

+628

Consolidated gross sales

897,289

739,198

788,108

106.6%

+48,910

100.4%

+3,108

Net sales

897,289

739,198

518,447

-

-

100.7%

+3,447

Department Store

11,486

(1,903)

939

-

+2,843

469.5%

+739

Business

Supermarket Business

(2,503)

4,086

5,326

130.3%

+1,239

106.5%

+326

Shopping Centre Business

4,141

(757)

391

-

+1,149

-

+391

Other Businesses

2,903

(1,516)

(3,409)

-

(1,892)

-

+190

Consolidation adjustment

(4,856)

(4,347)

(2,506)

-

+1,840

-

+93

Operating income (loss)

11,171

(4,438)

740

-

+5,179

-

+1,740

Ordinary income (loss)

11,831

(2,907)

2,346

-

+5,253

469.3%

+1,846

Extraordinary income

1,707

3,049

27,032

886.3%

+23,982

Extraordinary losses

22,875

24,172

13,792

57.1%

(10,380)

Profit (loss) attributable to

(13,150)

(24,791)

9,872

-

+34,663

89.7%

(1,127)

owners of parent

*1. Actual results in the year ended 31st March 2022 represent figures based on the previous reportable segments.

*2. The Company has applied "Accounting Standard for Revenue Recognition" from the beginning of the year ended 31st March 2022 and changed the method of recording net sales, etc. based on agreements in which purchase is recognised at the time of sales of merchandise. Because net sales have been affected significantly, YOY comparisons and YOY changes have not been provided. Figures which are equivalent to net sales up to the previous fiscal year excluding the effects of changes in accounting policies are shown as consolidated gross sales.

  • Net sales

The Company has applied "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, 31st March 2020) and other standards from the beginning of the current fiscal year. Consolidated net sales for the fiscal year ended 31st March 2022 was ¥518,447 million. Consolidated gross sales, which is equivalent to net sales up to the previous fiscal year excluding the effects of changes in accounting policies, amounted to ¥788,108 million. Net sales on a real basis increased by 6.6% from the previous fiscal year, despite the closure of stores due to the declaration of the state of emergency and restrict of operations occurred as in the previous fiscal year.

  • Operating income / ordinary income

Despite the impact of the COVID-19, net sales recovered from the previous fiscal year, operating income was ¥740 million (operating loss of ¥4,438 million in the previous fiscal year). Ordinary income was ¥2,346 million (ordinary loss of ¥2,907 million in the previous fiscal year).

Department Store Business

In late April 2021, a state of emergency was declared. Some stores were completely closed, and stores including both

2

Hankyu and Hanshin main stores shifted to operating only in the daily necessities section (43 days at 4 stores in Osaka Prefecture, including both Hankyu and Hanshin main stores and 29 days at 6 stores in Hyogo Prefecture). In August, a state of emergency declared again as the infection had spread. Some stores were refrained from holding events and restricted entry to the food floor. From October, demand for fashion and gift items became active as opportunities to go out and to meet people increased. However, COVID-19 affected throughout the fiscal year, like in January 2022, with a decrease in store visits, especially among seniors and families, due to the infection spread that occurred again.

Hanshin Umeda Main Store, which had been reconstructed, pre-opened on 8th October 2021 and full-opened from the first floor to the ninth floor on 8th December (fully opened including basement food floor on 6th April 2022). New Hanshin Umeda Main Store has strengthened its proposals for all scenes of eating and food floor expanded from three to four floors. Customer response to the new value of the experience was high, resulting in a wide range of customers visiting the store.

As results of the above, consolidated gross sales was ¥385,095 million, increased by 10.7% year on year and operating income was ¥939 million (operating loss of ¥1,903 million in the previous fiscal year). Hankyu Hanshin Department Store recorded an extraordinary loss of ¥3,819 million, including personnel expenses, rent and depreciation expenses during the period of closure.

Supermarket Business

Consolidated gross sales was ¥327,205 million, increased by 11.8% year on year and operating income was ¥5,326 million, increased by 30.3% year on year.

Although Izumiya Co., Ltd. increased sales due to the transfer of the Super Centre food division, its profit decreased due to the decrease in sales at existing stores (sales at existing stores decreased by 2.7% year on year) in reaction to the previous fiscal year's demand for eating at home and increase of cost.

Izumiya celebrated its 100th anniversary by selling commemorative merchandise and holding events in collaboration with the local community under the theme of "thankfulness" and "relationship." Super Centre stores, including Yao and Yawata stores, had renovation of transforming to Shopping Centre model and sales were affected during the renovation construction period. On the other hand, due to the impact of re-emergence of COVID-19, performance of stores in small commercial areas were good. Selling, general and administrative expenses increased due to an increase in sales commission in line with cashless payment ratio.

Hankyu Oasis Co., Ltd. decreased in sales and increased operating income by improvement of gross margin. Hankyu Oasis Co., Ltd. worked to strengthen its ability to respond to the market with a basic policy of transforming itself into a highly profitable company. Existing stores sales decreased by 0.5% year on year (number of customers decreased by 0.1% and average spend per customer decreased by 0.5% year on year. Although the number of customers was on par with the previous fiscal year, average spend per customer was slightly lower than the previous fiscal year due to a decrease in the number of items purchased per visit. Sannomiya store in April 2021 and Oyodo Minami store in March 2022 newly opened and 4 stores were renovated to change the MD to meet the changing in commercial areas and to introduce sweets sold in department stores. Selling, general and administrative expenses decreased from the previous fiscal year due to the efforts to restrain the purchase price of consumable supplies.

For Kansai Super Market Business (*2), net sales for the fourth quarter (January to March, 2022) was ¥31,042 million and operating income was ¥1,391 million. Kansai Super Market Business worked to realize a "total solution

3

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

H2O Retailing Corporation published this content on 15 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 September 2022 06:09:05 UTC.


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Financials
Sales 2023 640 B 4 625 M 4 625 M
Net income 2023 11 250 M 81,3 M 81,3 M
Net Debt 2023 - - -
P/E ratio 2023 13,2x
Yield 2023 2,05%
Capitalization 142 B 1 025 M 1 025 M
Capi. / Sales 2023 0,22x
Capi. / Sales 2024 0,22x
Nbr of Employees 9 856
Free-Float 66,9%
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Mean consensus HOLD
Number of Analysts 2
Last Close Price 1 219,00 JPY
Average target price 1 250,00 JPY
Spread / Average Target 2,54%
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Managers and Directors
Naoya Araki President & Representative Director
Gaku Watanabe Managing Executive Officer & Head-Finance
Naoshi Ban Independent Outside Director
Kenjiro Nakano Independent Outside Director
Mayumi Ishihara Independent Outside Director
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