Isetan Mitsukoshi Group |
Business Results Explanation Meeting |
Second Quarter of the |
Fiscal Year Ending March 31, 2024 |
November 10, 2023 |
- Results for the Second Quarter of the Fiscal Year Ending March 2024
- Full Year Plan for the Fiscal Year Ending March 2024
- Progress of Medium-term Management Plan
- Results for the Second Quarter of the Fiscal Year Ending March 2024
- Full Year Plan for the Fiscal Year Ending March 2024
- Progress of Medium-term Management Plan
[Yoshinori Makino, Director, Managing Operating Officer and CFO]
I would like to explain the results of the second quarter and the full-year plan.
Consolidated Financial Results (Second Quarter)
・Strong Gross sales: Significant increase in sales due to "High sensitivity, fine quality" strategy and CRM strategy that connects with individual customers
・Continued control of SG & A expenses: Continued steady cost control
・Operating income and recurring income doubled from a year ago: Highest profit in the first half after the business integration of Isetan and Mitsukoshi.
(0.1 billions of yen) | 2Q Cumulative | YoY | YoY difference |
(April-September) | |||
Gross sales | 5,614 | 113.3% | +657 |
Net sales | 2,485 | 111.5% | +256 |
Gross profit | 1,478 | 112.1% | +159 |
Selling, general and | 1,276 | 103.8% | +46 |
administrative expenses | |||
Operating income | 201 | 225.7% | +112 |
Recurring income | 229 | 240.1% | +133 |
Net income | 148 | 191.3% | +70 |
First of all, let's talk about the results for the first six months of the fiscal year.
Gross sales were 113% year on year. As Hosoya will explain later, I feel that the reason for the rise in sales is that the strategy our company has been promoting for the past two and a half years has been effective, leading to slightly better results than the industry average.
While gross profit increased by 15.9 billion yen, selling, general and administrative expenses increased by only 4.6 billion yen.
As a result, both operating income and recurring income increased by more than 10 billion yen from the previous year to record highs.
Operating income is much higher than the past record high of 14.5 billion yen in the second quarter of fiscal 2015.
In addition, net income also increased by 7 billion yen from the previous year, which reflected the effect of control on net income we have been promoting for the past several years.
1
Sales Trends of Isetan Mitsukoshi Existing Stores Compared to FY 2018 | ||
・Monthly sales excluding inbound and inbound rose further into the second quarter | ||
・In both cases, steady progress over the full-year plan (109% excluding inbound, 80% inbound) as of | ||
disclosure forecast at August continued | ||
Monthly Net Sales Growth Rate of Isetan | ||
Mitsukoshi Compared to FY 2018 | ||
September 2022 to September 2023 | ||
109% compared | ||
to FY 2018 | ||
80% compared to | ||
FY 2018 | ||
* Excludes Isetan Sagamihara, Isetan Fuchu and Ebisu Mitsukoshi | 2 | |
* | Before adoption of revenue recognition standards, based on gross sales |
Next, I would like to discuss the sales trends of existing stores of Isetan
Mitsukoshi Ltd., which are the basis of the strong business performance.
The blue line shows Japanese customer and EC sales excluding inbound sales, and the red line shows inbound customer sales. In both cases, the performance in the second quarter has improved compared to the first quarter.
Inbound customer sales, in particular, has been setting a new record since July. Although not shown in this chart, sales in October increased further significantly.
Domestic Major department stores
(gross sales for the first half of the fiscal year by stores/each company)
・Isetan Shinjuku Main Store sales for the first half were the highest ever following the first quarter ・Regional companies increased sales thanks to the successful implementation of strategies.
Implementation of base network initiatives
(0.1 billions of yen) Gross sales | YoY | YoY | (0.1 billions of yen) | Gross sales | YoY | YoY | ||
difference | difference | |||||||
Isetan Shinjuku | 1,703 | 115.5% | +228 | Sapporo Marui | 275 | 113.3% | +32 | |
Main Store | Mitsukoshi | |||||||
Mitsukoshi | 699 | Sendai | 128 | |||||
Nihombashi Main | 110.5% | +66 | 102.2% | +2 | ||||
Mitsukoshi | ||||||||
Store | ||||||||
Ginza Mitsukoshi | 471 | 142.9% | +141 | Nagoya | 288 | 108.7% | +22 | |
Mitsukoshi | ||||||||
Isetan Tachikawa | 148 | 108.6% | +11 | Niigata | 168 | 102.2% | +3 | |
Store | Mitsukoshi Isetan | |||||||
Isetan Urawa | 178 | 106.2% | +10 | Iwataya | 561 | 112.9% | +64 | |
Store | Mitsukoshi | |||||||
Total Isetan | 3,201 | Total of five | 1,422 | |||||
116.7% | +458 | major regional | 109.7% | +125 | ||||
Mitsukoshi | ||||||||
companies | ||||||||
3
This chart shows the results of the successful department store business by store or regional company.
Regarding Isetan Mitsukoshi Ltd., on the left, the sales of Mitsukoshi Ginza Store, the third from the top, exceeded 140% year on year, and the sales of Isetan Shinjuku Main Store increased significantly to 115% year on year.
As for the regional stores on the right, the companies with the largest sales in our group are listed in order from the north.
In particular, the stores in the major metropolitan areas, such as Sapporo Marui Mitsukoshi, Nagoya Mitsukoshi, and Iwataya Mitsukoshi, showed remarkable sales growth, and business performance has recovered steadily.
Increase (decrease) in consolidated SG & A expenses (first half of the fiscal year)
・Cost structure reform: -3.2 billion yen as of the end of Q2, running exceeding -4 billion yen (disclosure forecast at August)
・Price increase: + 1.7 billion yen, falling below expectations, mainly in utilities
Breakdown of year-on-year changes | |||||||||
Change in the current year | |||||||||
2Q | |||||||||
(0.1 billions of yen) | Cumulative Year-on-Year | Cost Structure | Sales Linked | Price Increase | New | Other | |||
(April- | Changes | Reform | Consolidation | ||||||
September) | |||||||||
Personnel | 445 | +4 | (18) | +9 | +12 | +1 | |||
expenses | |||||||||
Advertising | 48 | +7 | +7 | ||||||
expenses | |||||||||
Lease payments | 162 | +3 | (4) | +1 | +5 | +2 | |||
Business | |||||||||
consignment | 146 | +3 | (5) | +4 | +2 | +2 | |||
expenses | |||||||||
Depreciation and | 114 | (2) | +1 | (4) | |||||
amortization | |||||||||
Utilities | 50 | +2 | (3) | +4 | +1 | ||||
Other | 309 | +28 | (2) | +19 | +9 | +1 | |||
Total | 1,276 | +46 | (32) | +27 | +17 | +31 | +3 | ||
4
Next, I would like to discuss the results of selling, general and administrative expenses for the first six months of the fiscal year.
I mentioned earlier that we were able to keep it down to 4.6 billion yen increase year on year.
Since the cost of Isetan Mitsukoshi Food Style, which was consolidated from July of the previous fiscal year, increased 3.1 billion yen for the first quarter,
we were able to limit the increase to approximately 1.5 billion yen in real terms.
Although there was an increase in expenses associated with the linkage to sales and price increases, I feel that we have been able to take the cost structure reform further.
Results by Segment (The first half of the fiscal year)
-
Department store business : Substantial increase in sales due to the recovery of consumption and the successful promotion of strategies.
Operating income increased sharply due to cost control. - Credit and finance business : External transaction volume was steady. Operating income fell temporarily due to
investments.
・ Real estate business : Construction and interiors business sales were strong. Operating income declined due to a decrease in rental income.
(0.1 billions of yen) | Gross sales | YoY | Net sales | Operating | YoY difference |
income | |||||
Department store | 5,215 | 112.6% | 2,085 | 167 | +116 |
business | |||||
Credit & finance | |||||
business/ Customer | 171 | 105.7% | 156 | 14 | (3) |
organization | |||||
management business | |||||
Real estate business | 110 | 121.5% | 110 | 12 | (8) |
Other businesses *
116
165.3%
133
7
+7
Total
5,614
113.3%
2,485
201
+112
* Other businesses include adjustments. | 5 |
Next, here are the results by segment for the first six months of the fiscal year.
Most of the year-on-year increase in operating income of 11.2 billion yen in the lower right corner was attributable to the department store business.
Other segments, such as finance and real estate, slightly decreased.
I: | Results for the Second Quarter of |
the Fiscal Year Ending March 2024 | |
II: Full Year Plan for the Fiscal Year | |
Ending March 2024 | |
III: Progress of Medium-term | |
Management Plan |
Next, I would like to discuss our approach to the full-year plan.
Assumptions for Full Year Plan
- Gross sales werefurther revised up from the initial plan by implementing the "High sensitivity, fine quality" strategy and "CRM Strategy to Connect with Individual Customers" and promoting individual marketing to foreign customers in addition to Japanese customers.
- The initial plan for SG & A expenses was kept unchanged, as expenses were controlled by "Scientific analysis of department stores", despite the increase in expenses due to sales linkage and price increases.
Operating income of 48 billion yen and recurring income of
50 billion yen are planned.
Both plans are revised upward to substantially exceed maximum profit after the business integration of Isetan and Mitsukoshi.
6
As for gross sales, again, it can be said that the integration with the strategy has been effective.
In addition, we have been able to raise the top line for foreign customers by promoting mass to individual marketing, including out-store-sales for foreign customers launched in the second half of the previous fiscal year.
On the other hand, we believe that the fact that we were able to properly control our selling, general and administrative expenses and sustain our initial plan is one of the factors that enabled us to revise up our plan in both operating income and recurring income to greatly exceed the highest profit since the consolidation.
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Isetan Mitsukoshi Holdings Ltd. published this content on 17 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2023 10:37:02 UTC.