Pan Pacific International Holdings Corporation Q3 Results for FY 2020 Earnings Results July 1, 2019 – March 31, 2020 May 8, 2020
Q3 results at a glance PPIH delivered the highest Q3 sales and profits ! ＲＯＥ Sales Growth Operating Profit 37.7 ％ increase 15.0 ％ 60.4 billion yen ROE over 15.0 ％ Pursuing PPIH mission Record high OP as a social infrastructure for the first nine months (Annualized) Rapid Change in Stable Domestic Sales Full-year Forecast Business Environment 0.5 ％ Increase Bipolarization Revised Solid domestic sales Strong daily necessity sales/ Aiming for sales and OP growth excluding inbound Tax-free sales nosedived for 31 consecutive years (SSS at 5 main companies) 1
Annual performance trends (JPY bn) (JPY bn) OP / # of stores Sales 800 16000 Sales 4Q 700 14000 3Q 2Q 600 12000 1Q OP 500 10000 # of stores 400 8000 300 6000 200 4000 100 2000 0 0 1989 1995 2000 2005 2010 2015 2020 *PPIH has been renewing sales and operating profit growth record over the past 30 consecutive years since FY1989, when the very first DQ store started its business in March 1989. (Consecutive growth record continued 23 years on a consolidated basis, since the start of consolidated accounting in FY1996.) 2
Earnings summary 9 months to March 2020 9 months to March 2019 Consolidated (Millions of yen) Actual Share YoY Actual Share 1,265,759 100.0% 137.7% 918,990 100.0% Net sales 364,643 28.8% 144.6% 252,117 27.4% Gross profit 304,224 24.0% 147.9% 205,705 22.4% SG&A 108,160 8.5% 143.2% 75,506 8.2% Salary allowance 40,500 3.2% 141.6% 28,596 3.1% Rent 45,805 3.6% 161.6% 28,344 3.1% Commission paid Depreciation and 17,889 1.4% 129.6% 13,802 1.5% amortization 91,870 7.3% 154.5% 59,457 6.5% Others 60,419 4.8% 130.2% 46,412 5.1% Operating profit 59,918 4.7% 115.6% 51,838 5.6% Recurring profit Profit attributable to 38,368 3.0% 100.9% 38,029 4.1% owners of parent － 60.56 100.8% 60.09 – EPS (Yen) * * Stock split (1:4) was taken place on September 1, 2019. EPS in FY 2018 is recalculated. 3
Earnings summary (comment) PPIH committed to “Customer matters the most” principle to execute business strategies by localizing store operations to differentiate from peers. � Consumption environment drastically changed. Daily necessities delivered stable growth, however, various situations bipolarized. PPIH gained the market share in each commercial area by further discounting and enhancing added- value with quick action. � 18 UNY stores were converted to MEGA Don Quijote UNY format. Conversion stores totaled 34. Conversion stores enjoy high uplifts in performance compare to pre-conversion. Those stores are gaining more market share. � Tax-free sales from overseas tourist nosedived in February associated with COVID-19 outbreak. Stores located in popular sightseeing destination changed in-store layout and merchandizing mix flexibly. � PPIH successfully executed portfolio management by controlling various store formats, locations and sizes. Sourcing network and product mix were flexibly changed to minimize the negative external factors. � Results for the first nine months for FY 2020 were as follows: Sales amounted to 1.27 trillion yen (up 37.7% YoY, 75.8% progress against full year guidance), OP 60.4 billion yen (up 30.2%, progress 83.9%), recurring profit 59.9 billion yen (up 15.6%, prog. 83.2%) and profit attributable to owners of parent was 38.4 billion yen (up 0.9%, prog. 83.4%). Q3 results hit an all time high. � Full-year guidance for FY 2020; expecting 31 consecutive years of growth in sales and OP. Sales were revised by 20 billion yen from the previous announcement (revised from 1.67 billion to 1.65 billion yen) due to drastic change in business environment triggered by Covid-19. Profit guidance was revised as follows; OP: 71 billion yen (up 12.5% YoY) and RP: 71 billion yen (up 4.0%). No change for NP (46 billion yen, down 2.3% YoY). 4
Sales breakdown by product category 9 months to March 2020 9 months to March 2019 Consolidated (Millions of yen) Actual Share YoY Actual Share Home electrical appliances 64,208 5.1% 103.8% 61,886 6.7% Miscellaneous household goods 181,996 14.4% 105.7% 172,163 18.7% Foods 308,024 24.3% 119.6% 257,625 28.0% Watches & fashion merchandise 120,555 9.5% 98.9% 121,893 13.3% Sporting goods & leisure goods 43,757 3.5% 102.8% 42,570 4.6% DIY goods 8,632 0.7% 74.8% 11,542 1.3% Overseas 81,449 6.4% 112.7% 72,268 7.9% Other products 23,063 1.8% 139.8% 16,502 1.8% Total discount store business 831,684 65.7% 109.9% 756,449 82.3% (Former Don Quijote HD stores) Clothings 48,658 3.8% 278.9% 17,445 1.9% Household goods 57,961 4.6% 299.2% 19,370 2.1% Foods 258,033 20.4% 279.0% 92,500 10.1% Other products 13,614 1.1% 293.5% 4,638 0.5% Total GMS business 378,266 29.9% 282.4% 133,953 14.6% (Former UNY group stores) Tenant leasing business 44,530 3.5% 184.3% 24,156 2.6% Other business 11,279 0.9% 254.4% 4,432 0.5% 1,265,759 100.0% 137.7% 918,990 100.0% Total sales 5
Sales breakdown by product category Home electrical appliances POSA cards took the lead. Household appliance such as air purifiers as well as batteries and light bulbs were good. Miscellaneous household goods Daily necessities such as detergents and bath products contributed to sales. Consumer needs toward papers and sanitary goods grew considerably. Foods There was strong popularity for processed food (e.g. instant noodle and instant rice), rice and beverages. Dairy products such as yogurt also contributed to sales growth. Watches & fashion merchandise Unseasonable weather affected the sales in clothing. Rain goods were solid whereas leather products and luxury goods including watches struggled. Sporting goods & leisure goods Despite the slump in car products, sports related products such as yoga mat and toys like board game posted high growth. DIY goods Outdoor related products suffered due to unstable weather. Overseas Processed food (e.g. instant food and seasoning) was solid. Frozen, ready-made food and paper products grew. Total discount store business Strong customer needs for daily necessity while unstable weather affected seasonal (Former Don Quijote HD stores) products. Tax-free sales from overseas tourists nosedived. Clothing Seasonal wear suffered from out-of-season temperature, whereas casual wear such as clothes for wearing at home were strong. Household goods Consumer needs went up for seasonal home appliance (e.g. humidifier and air purifier) and daily necessity goods (e.g. bath products and sanitary goods). Foods Preservable food (e.g. canned or frozen food), rice and noodles took the lead. Dairies and bread were also popular. Total GMS business Household goods were strong by adding new lineups such as home appliance and (Former UNY group stores) cosmetics. Customer loyalty went up due to the high needs for food. 6
Balance sheet (Millions of yen) (Millions of yen) As of March 31, Change from As of March 31, Change from Consolidated Consolidated 2020 June 30, 2019 2020 June 30, 2019 464,871 (31,534) 311,406 (30,368) Total current assets Total current liabilities 149,895 (22,778) Cash and deposits 147,228 (11,836) Accounts payable 67,350 (67) Installment account receivable 24,453 (18,207) Short-term liabilities* 190,305 1,795 Merchandise 564,739 (23,287) Total noncurrent liabilities 788,006 2,311 Total non-current assets 247,691 (9,086) Long-term bonds 619,960 5,547 Total property, plan and equipment 247,691 (9,086) Long-term borrowings 263,277 322 Buildings Long-term payables under fluidity 632 (4,071) lease receivables 323,912 5,332 Land 876,145 (53,655) Total liabilities 36,334 (1,268) Total intangible assets 376,732 24,432 Net assets 16,274 (942) Goodwill 376,732 24,432 Total shareholders’ equity 131,712 (1,968) Total investments and other assets 14,936 (8,281) 78,498 (1,945) Non-controlling interests Lease and guarantee deposits 1,252,877 (29,223) 1,252,877 (29,223) Liabilities and net assets Total assets * Short-term liabilities = Short-term loans payable + Current portion of long-term loans payable + Current portion of bonds � Assets : Major reasons for increase in assets were notes and account receivables (+1.8 bil yen), merchandise (+1.8 billion yen), non-current asset (+2.3 bil yen). Cash and deposits decreased by 22.8 billion yen. � Liabilities : Decreased items; Accounts payables – trade (-11.8 bil yen), Accrued expenses (-3.2 bil yen), deposits received (-3.2 bil yen), interest bearing debt (-39.1 bil yen) and payables under fluidity lease receivables (-5.5 bil yen). Interest bearing debt stood at 498.8 billion yen with 39.8% dependency rate. Net D/E ratio: 0.97 times. Net asset was 376.7 bil yen. 7
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