Isetan Mitsukoshi : Summary of Settlement of Consolidated Accounts for the Second Quarter of the Fiscal Year Ending March 31, 2022 (PDF507KB）

Summary of Settlement of Consolidated Accounts

for the Second Quarter of the Fiscal Year Ending March 31, 2022

[Japanese Standards] (Consolidated)

November 10, 2021

Isetan Mitsukoshi Holdings Ltd.

Securities code: 3099 (Listed on the First Section of Tokyo Stock Exchange and Fukuoka Stock Exchange)

(URL: https://www.imhds.co.jp)

Representative: Toshiyuki Hosoya, President and CEO

Contact: Keiko Mihara, General Manager, Corporate Communication and IR Division, Corporate Finance and IR Department

TEL: [phone]

Scheduled date of filing of the quarterly securities report (Shihanki Houkokusho): November 11, 2021

Scheduled date of dividend payments: December 6, 2021

Preparation of quarterly results supplementary materials: Yes

Convening of quarterly results explanation meeting: Yes (for securities analysts)

(Figures are rounded down to the nearest million yen.)

1. Consolidated Business Results for the Second Quarter of Fiscal 2021 (From April 1, 2021 to September 30, 2021)

(1) Results of consolidated operations		(Percentage figures indicate changes from the second quarter of the previous year.)
	Net Sales		Operating Income		Recurring Income		Net Income attributable to
				Parent Company Shareholders
	Millions of yen	%	Millions of yen		%	Millions of yen		%	Millions of yen	%
2Q of FY2021	187,932	-	(7,758)		-	(7,114)		-	(8,136)	-
2Q of FY2020	335,701	(41.8)	(17,812)		-	(17,092)		-	(36,786)	-

(Note) Comprehensive income: 2Q of FY2021: ¥(500) million (-%), 2Q of FY2020: ¥(38,581) million (-%)

Since the "Accounting Standard for Revenue Recognition," etc. was adopted from the beginning of the first quarter of the fiscal year ending March 31, 2022, the percentage changes from the results of the second quarter of the previous fiscal year before the adoption of the accounting standard, etc. are not provided. If the accounting standard, etc. had not been adopted, net sales would be ¥398,997 million, an increase of 18.9% from the second quarter of the previous fiscal year.

	Net Income per Share	Net Income per Share
	(Basic)	(Diluted)
	Yen	Yen
2Q of FY2021	(21.35)	-
2Q of FY2020	(96.74)	-

(Note) Net income per share (diluted) is not presented due to the posting of net loss per share (basic), although there are dilutive shares.

(2) Consolidated financial position

	Total Assets	Net Assets	Shareholders' Equity Ratio
	Millions of yen	Millions of yen	%
2Q of FY2021	1,155,661	492,948	42.1
FY2020	1,198,303	508,275	41.9

(Reference) Shareholders' equity: 2Q of FY2021: ¥487,040 million, FY2020: ¥501,936 million

Since the "Accounting Standard for Revenue Recognition," etc. was adopted from the beginning of the first quarter of the fiscal year ending March 31, 2022, the figures for the second quarter of the fiscal year under review ending March 31, 2022 reflect the adoption of the accounting standard.

2. Dividends

						Annual Dividends
(Record date)		First		Second		Third		Year-end		Total
	Quarter		Quarter		Quarter
		Yen		Yen		Yen		Yen		Yen
FY2020	-	3.00	-	6.00	9.00
FY2021	-	5.00
FY 2021 (Forecast)					-	5.00	10.00

(Note) Revision to recently announced dividend forecast: No

Isetan Mitsukoshi Holdings Ltd. (3099) Summary of Settlement of Consolidated Accounts for the Second Quarter of the Fiscal Year ending March 31, 2022

3. Forecast of Consolidated Results for Fiscal 2021 (From April 1, 2021 to March 31, 2022)

(Percentage figures indicate changes from the previous year.)

	Net sales		Operating Income		Recurring Income		NetIncomeattributableto		Net Income per Share
				ParentCompanyShareholders
	Millions of yen		%	Millions of yen		%	Millions of yen		%	Millions of yen		%	Yen
Full Year	435,000		-	3,000		-	3,000		-	3,000		-	7.87

(Note) Revision to recently announced consolidated results forecast: Yes

The forecast is based on the "Accounting Standard for Revenue Recognition," etc., which was adopted from the beginning of the first quarter of the fiscal year ending March 31, 2022. Therefore, the percentage changes from the results of the previous fiscal year before the adoption of the accounting standard, etc. are not provided. If the accounting standard, etc. had not been adopted, the net sales forecast would be ¥945,000 million, an increase of 15.8% from the previous fiscal year.

* Notes:

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): No
   Newly consolidated companies: － Companies removed from consolidation: －
2. Adoption of special accounting treatment used in preparation of the quarterly consolidated financial statements:Yes

Note: For details, please refer to "2. Consolidated Financial Statements and Primary Notes (4) Notes regarding Consolidated Financial Statements (Adoption of special accounting treatment used in preparation of the quarterly consolidated financial statements)" on page 12.

1. Changes in accounting policy, changes in accounting estimates or restatement due to correction

1. Changes in accounting policy in line with revision to accounting standards: Yes
2. Other changes: No
3. Changes in accounting estimates: No
4. Restatement due to correction: No

1. Number of shares issued and outstanding (common stock)

1. Number of shares issued and outstanding at the end of the period

(including treasury stock)	Second quarter	396,648,554	shares	FY2020	396,459,054	shares
2) Number of shares of treasury stock at the end of the period	of FY2021
3)Average number of shares during the period	Second quarter	15,196,180	shares	FY2020	15,403,484	shares
	of FY2021
	Second quarter	381,177,847	shares	Second quarter	380,258,149	shares
	of FY2021			of FY2020

* These quarterly consolidated financial results are outside the scope of quarterly review by certified public accountants or auditing firms.

* Disclaimer regarding Forward-looking Statements

This report contains forward-looking statements, which are based on the information currently available and certain assumptions the Company considers to be reasonable, and are not intended to be seen as targets that the Company assures it will achieve. Actual results, performance, achievements or financial position may be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. For assumptions on which forward-looking statements are based as well as for precautionary statements in the use of forward-looking statements, please refer to "1. Qualitative Information on the Quarterly Results (3) Explanation regarding Future Outlook Including the Forecast of Consolidated Results" on page 4.

Note:

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

	Isetan Mitsukoshi Holdings Ltd. (3099)
	Summary of Settlement of Consolidated Accounts
	for the Second Quarter of the Fiscal Year ending March 31, 2022
○Table of Contents of Accompanying Materials
1. Qualitative Information on the Quarterly Results.............................................................................................................	2
(1) Explanation regarding Business Results....................................................................................................................... ..	2
(2)	Explanation regarding Financial Position......................................................................................................................	4
(3)	Explanation regarding Future Outlook Including the Forecast of Consolidated Results...................................	4
2. Consolidated Financial Statements and Primary Notes.................................................................................................. .	5
(1)	Consolidated Balance Sheets.............................................................................................................................................	5
(2)	Consolidated Statements of Income and Consolidated Statements of Comprehensive Income......................	7
(3)	Consolidated Statements of Cash Flows........................................................................................................................	9
(4)	Notes regarding Consolidated Financial Statements...................................................................................................	11
	(Notes on going concern assumption)............................................................................................................................ .	11
	(Notes on significant changes in shareholders' equity)..............................................................................................	11
	(Changes in accounting policies)............................................................................................................................. .........	11
	(Adoption of special accounting treatment used in preparation of the quarterly consolidated financial statements).....	12
	(Additional information)..................................................................................................... ................................................	12
	(Segment information)............................................................................................................................. ............................	13

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Isetan Mitsukoshi Holdings Ltd. (3099) Summary of Settlement of Consolidated Accounts for the Second Quarter of the Fiscal Year ending March 31, 2022

1. Qualitative Information on the Quarterly Results

1. Explanation regarding Business Results

The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020; hereinafter, "Accounting Standard for Revenue Recognition"), etc. was adopted from the beginning of the first quarter of the fiscal year ending March 31, 2022. Accordingly, year-on-year yen and percentage changes are not provided in the explanation of business results below, as the accounting treatment for revenue is different from the one used for the second quarter of the previous fiscal year. All forward-looking statements contained in this text are based on the judgement of the Group (the Company and its consolidated subsidiaries) as of the final day of the quarter under review.

During the second quarter of fiscal 2021 (April 1, 2021 to September 30, 2021), the Japanese economy temporarily showed indications of a recovery trend, with real GDP growth for the April-June quarter of 1.9% year-on-year, despite uncertainty over when the global COVID-19 pandemic would be contained. However, a state of emergency was declared in several prefectures in response to a renewed spread of infections from July onward, and the downturn in consumer sentiment continued.

Under these circumstances, in response to requests to reduce people's traffic under the state of emergency, the Group took actions as appropriate based on "safety and security," such as the partial suspension of business and entry restrictions for food floors and other areas, while considering prevention of the spread of infection to customers and employees.

Amid expectations of a full-scale revival in economic activity due to higher vaccination rates and the easing of restrictions, as well as new lifestyles and further changes in consumer behavior, the Group has established the long-term vision "to be a 'special' department store-centered retail group that enriches the lives of our customers," and aims to achieve its basic strategy of "expanding and dominating in high sensitivity, fine quality consumption, providing the ultimate customer experience." Based on the three pillars of its "high sensitivity, fine quality" strategy, "connections with customers" CRM strategy, and "stronger intra-Group coordination" strategy, the Group will aim to achieve these goals by implementing "digital reforms," "CRE and business model reforms," and "reforms to the income and expenditure structure," which will form the foundation of the Group, as well as establishing "system and data infrastructure," "human resources infrastructure" and "sustainability, governance and business systems" that will form the foundation for management.

As a result, in the second quarter of the fiscal year under review on a consolidated basis, the Company recorded net sales of ¥187,932 million compared to net sales of ¥335,701 million in the second quarter of the previous fiscal year, operating loss of ¥7,758 million compared to operating loss of ¥17,812 million in the second quarter of the previous fiscal year, recurring loss of ¥7,114 million compared to recurring loss of ¥17,092 million in the second quarter of the previous fiscal year, and net loss attributable to parent company shareholders of ¥8,136 million compared to net loss attributable to parent company shareholders of ¥36,786 million in the second quarter of the previous fiscal year.

Due to the adoption of the Accounting Standard for Revenue Recognition, etc., in the second quarter of the fiscal year under review, net sales decreased by ¥211,064 million, operating loss, recurring loss, and loss before incomes taxes increased by ¥295 million, ¥240 million, and ¥240 million, respectively.

Results by segment were as follows.

1. Department Store Business

In the department store business, despite temporary indications of a recovery trend, several stores were subject to a long- term state of emergency from July onward. Store visitor numbers and net sales were sluggish, partly due to the impact of measures such as the partial suspension of business and entry restrictions for food floors and other areas from mid-August.

Even in such a restricted environment, the Company stepped up its sales activities to connect with highly loyal customers, primarily through direct sales, utilizing digital infrastructure such as the "Isetan Mitsukoshi app" and "Mitsukoshi Isetan remote shopping." In particular, the exclusive events for app subscribers and direct sales customers held at both of our main stores enjoyed a large response, with customer traffic and net sales both exceeding targets. At branches, Group stores and satellite stores, we engaged in sales through limited sale events of luxury brands, order-in items and remote customer services, and sales among highly loyal customers were firm across the entire Group.

The Company has been implementing digital reforms aimed at providing seamless customer experience value combining physical stores and online sales. We implanted initiatives to enhance customer convenience, including the launch of a service enabling customers to "reserve online and pick up in store" and sales through "Mitsukoshi Isetan remote shopping."

From May, we began awarding points to customers even if they did not pay with an MICARD, aiming to expand the number of digital ID subscribers through enhanced convenience.

E-commerce sales grew substantially year-on-year, as we continued to strive to strengthen online initiatives, expanding limited-time events and product lineups, and enhancing the attractiveness of purchasing through e-commerce. The "ISETAN DOOR" regular food delivery service also performed strongly, capturing eat-at-home demand resulting from more time spent at home under a state of emergency.

We engaged in sustainability initiatives in the department store business under the slogan "think good," which represents our commitment to start with using imagination and thinking sincerely, and held campaigns at the two main stores and the Mitsukoshi Ginza Store. For example, we held an event themed on "upcycling" to promote climate change countermeasures

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Isetan Mitsukoshi Holdings Ltd. (3099) Summary of Settlement of Consolidated Accounts for the Second Quarter of the Fiscal Year ending March 31, 2022

together with our business partners and those involved in social activities. We also provided an environmentally-friendly product lineup and services.

The "i'm green" service, which purchases and collects unwanted items from customers, was launched in October 2020 under the direct control of the Mitsukoshi Nihombashi Main Store. The number of inquiries regarding collections increased during the year, and we opened another permanent counter at the Isetan Shinjuku Main Store this October.

Severe conditions continued in specialty stores, due to lower rent income from tenants, resulting from the impact of business suspension and reduced operating hours triggered by the state of emergency. Even under these conditions, in July we opened "FOOD & TIME ISETAN OFUNA" in the "GRAND SHIP" commercial facility beside Ofuna Station, the second location after Yokohama.

As a result, segment sales amounted to ¥166,473 million compared to ¥305,153 million in the second quarter of the previous fiscal year, and an operating loss of ¥12,636 million was recorded compared to an operating loss of ¥21,297 million in the second quarter of the previous fiscal year. Due to the adoption of the Accounting Standard for Revenue Recognition, etc., segment sales decreased by ¥208,070 million, and operating loss increased by ¥43 million.

1. Credit & Finance Business/Customer Organization Management Business

In the credit & finance business/customer organization management business, we are aiming for business expansion, building on the Group's system infrastructure and excellent customer base.

MICARD Co., Ltd. continued to face severe conditions, with a decrease in handling volume due to the partial suspension of business and reduced opening hours at the Group's department stores, as well as a decrease in the use of member stores outside the Group due to people refraining from going out. This was despite signs of a recovery trend from the second half of September, when the spread of COVID-19 began to slow. Under these conditions, in terms of selling, general and administrative expenses, we took measures to reduce outsourcing costs and achieve greater efficiency in sales program costs, which resulted in firm operating income.

It remains difficult to project the expansion of card handling volumes and cardholder numbers at the Group's department stores due to the COVID-19 pandemic. In this context, the Company introduced contact-free mobile payment services to enhance member convenience, and promoted the issuance of cards in collaboration with companies outside the Group to cultivate new customer segments.

As a result, segment sales amounted to ¥14,486 million compared to ¥15,055 million in the second quarter of the previous fiscal year, and operating income was ¥2,606 million compared to operating income of ¥1,285 million in the second quarter of the previous fiscal year. Due to the adoption of the Accounting Standard for Revenue Recognition, etc., segment sales decreased by ¥1,328 million, and operating income decreased by ¥251 million.

1. Real Estate Business

In the real estate business, we are continuing to proceed with initiatives to create highly profitable business opportunities that utilize the excellent real estate held by the Group.

Isetan Mitsukoshi Property Design Ltd. recorded a year-on-year decline in net sales due to the impact of construction work delays and other issues arising from the COVID-19 pandemic, despite substantial orders for large commercial facilities, hotels, resorts and other facilities in the construction and design business and construction management business. However, net sales in the home renovation business and interior design and furniture business rose significantly year on year due to changes in personal consumption behavior.

As a result, segment sales amounted to ¥7,396 million compared to ¥14,897 million in the second quarter of the previous fiscal year, and operating income was ¥2,494 million compared to operating income of ¥2,997 million in the second quarter of the previous fiscal year. In the real estate business, the impact of the adoption of the Accounting Standard for Revenue Recognition, etc. on segment sales and operating income is minimal.

1. Other Businesses

In the other businesses, we are aiming to generate a new value proposition and maximize earnings by capitalizing on cooperation among companies based on "stronger intra-Group coordination."

In the travel business, Mitsukoshi Isetan Nikko Travel, Ltd. continues to face a harsh business environment, with the declaration of a state of emergency from July to September severely impacting the domestic travel business, and net sales at half of the level they were before the declaration. Even under these circumstances, we achieved solid results in the newly launched tailored travels for high-income individuals, through sales efforts utilizing the direct sales base of department stores. There is also a feeling of expectancy concerning new approaches to travel in the era of coexistence with COVID-19, with orders up 40% year on year after the state of emergency was lifted in autumn.

Although the volume of digital-related cargo received through intra-Group transactions by our logistics subsidiary Isetan Mitsukoshi Business Support Ltd. increased year on year, the volume of store-related cargo handling, inner building delivery and related operations declined. In businesses for customers outside the Group, operating income remained strong owing to an overall improvement in gross profit through the acquisition of new customers and review of manufacturing costs.

As a result, segment sales amounted to ¥24,520 million compared to ¥29,145 million in the second quarter of the previous fiscal year, and an operating loss of ¥313 million was recorded compared to an operating loss of ¥723 million in the second quarter of the previous fiscal year. Due to the adoption of the Accounting Standard for Revenue Recognition, etc., segment sales decreased by ¥1,665 million, while there is minimal impact on operating loss.

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