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Masaaki Kanai
President and Representative Director
36th Term in FY2014 First Half Year
Business Results Briefing
October 1 , 2014
Contents 1. FY 2014 1st Half Sales Results 2. 1st Half Overseas Performance 3. 1st Half Domestic Performance 4. Global Supply Chain Structuring 5. FY 2014 2nd Half Business Plan 6. Activities to Strengthen the Meaning of MUJI
1. FY 2014 1st Half Year Sales Results
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FY 2014 1st Half Sales Results [Consolidated]
■ Revenue growth for five consecutive years; profit growth three consecutive years leads to record bottom-line results.
• Improved gross profit ratio overseas offset lower gross profit ratio in Japan due to tax-inclusive labeling required as part of national consumption tax increase. Gross profit ratio reached 47.6%, a 1-point year-on-year improvement. • Asian businesses contributed to growth, including newly consolidated MUJI Taiwan.
[Unit:million yen] Result Share YOY Plan ratio
Net Sales 123,260 100.0% 118.7% 102.0%G.P.and Operating rev 58,649 47.6% 121.1% 104.1%S.G.A 47,013 38.1% 121.5% 103.5%Operating Profit 11,636 9.4% 119.7% 106.3%Ordinary Profit 11,804 9.6% 110.9% 104.5%Net Income 6,931 5.6% 106.4% 105.0%
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FY 2014 1st Half Sales Results [Non-Consolidated]
■ Four consecutive years of revenue, ordinary profit growth drive record profits
• ¥12,476 million (+7,618 million YOY) in wholesales* to overseas retail locations • Net sales +17.6% YOY (+9.1% YOY excluding overseas wholesales) • Support of tax-inclusive labeling, aggressive S&B, and interior renovations led to year-on-year net sales gains, even after consumption tax increases
*Beginning January 2013, product wholesales to overseas retail locations are included in net sales (prior to that, product wholesales were treated as Non-trade transactions, with transaction-related fees recorded as operating revenues)
[Unit:million yen] Result Share YOY Plan ratio
Net Sales 99,284 100.0% 117.6% 106.3%G.P.and Operating rev 40,299 40.6% 107.9% 103.8%S.G.A 31,585 31.8% 107.9% 103.2%Operating Profit 8,712 8.8% 107.6% 106.2%Ordinary Profit 10,983 11.1% 113.4% 112.9%Net Income 6,914 7.0% 114.7% 116.9%
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Result YOY Syare ChangeNet Sales 123,260 118.7% 100.0% -
Advertising Expenses 1,830 105.6% 1.5% -0.2% Logistics Expenses 5,320 123.1% 4.3% 0.2% Personal Expenses 15,468 124.4% 12.5% 0.6% Rent Expenses 12,913 119.6% 10.5% 0.1% Depreciation Expenses 2,088 110.3% 1.7% -0.1% Other Expenses 9,391 125.1% 7.6% 0.4%
S.G.A 47,013 121.5% 38.1% 0.9%
[Unit:Million Yen]Result Share
• Personnel expense to net sales ratio vs. prior year increased +0.4 points for both overseas and domestic* businesses
• Effective use of MUJIpassport app in Japan held advertising and promotion expenses to • +5.6% YOY, while ratio to net sales was held to -0.2 points vs. the same period in the prior year • Higher delivery costs tied to increased sales of large items in Japan prior to the consumption tax increase led to logistics costs of +23.1% YOY, while delivery ratio to net sales increased by 0.2 points vs. the same period in the prior year
SGA[Consolidated] ■ SGA ratio up 0.9 points YOY
*Figure represents real net sales, which is non-consolidated net sales less Overseas wholesales.
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Balance Sheet Highlights[Consolidated]
■ Total Assets +12% vs. PY End
• Inventory +18% vs. PY end, due to increased holdings of important products • Fixed assets +14% vs. PY end, due to investments in new stores, renovations, and new logistics centers
[Unit : Million Yen] Feb.28,2014 Aug.31,2014
Result Ratio Result Ratio Change Cash on hand and in bank 25,206 18% 23,419 15% ▲7%
Inventories 36,849 26% 43,458 28% +18% Other Current Assets 15,234 11% 18,917 12% +24%
Fixed Asset 62,938 45% 71,682 46% +14% Total Asset 140,229 100% 157,478 100% +12% Liabilities 29,214 21% 43,000 27% +47% Net Asset 111,015 79% 114,477 73% +3%
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2. 1st Half Year Overseas Performance
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Overseas Performance
Net Sales Operating Profit
32,354million Yen
2,443million Yen
YOY 62.9%UP
YOY 58.3%UP
Region 1st Half 1st Quarter 2nd Quarter
Europe Total 99.4% 98.9% 99.2% Asia Total 99.2% 109.9% 104.4% USA Total 96.9% 106.4% 101.8%
Overseas Total 99.1% 107.6% 103.3%
•Delay in spring apparel delivery resulted in slow Q1, but recovery in Q2
■YOY ratio of directly managed Existing Overseas Stores *Converted from local currencies for comparison
■Overseas consolidated subsidiary total
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Overseas Store Opens, Renovations ■ First Half: +14 Stores Net, 7 Remodeled
• Eight new stores in China during first half; +8 stores net. Planning for +25 net store opens during second half • Also: Opening new stores in USA, UK, Hong Kong, Singapore, Malaysia, the Philippines, Australia, UAE • Four comparable store remodeled in china; one each in Taiwan, Hong Kong, and Korea to New store fitting out. • Store renovations: New fixtures (stationery, H&B, Tower fixture, etc.)
Region FY2013 1st Half ,2014
Store renovation Open Close
Net Increase
End of 1st Half
End of year
Europe Total 60 3 ▲3 0 60 0 Asia Total 187 14 ▲1 13 200 7 USA Total 8 1 0 1 9 0
Overseas Total 255 18 ▲4 14 269 7
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Santa Monica (USA)
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Santa Monica (USA)
3. 1st Half Year Domestic Performance
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Good Products
Good Environment
Good Information
・ Develop product policies for MUJI Selection, Always a Good Price ・ Develop Strategic Products
1) Good Products
・Selling environment linked with product policies; improved fixtures, VMD presentation skills
・ Improve selling skills (Storage Advisors, Fashion Advisors)
2) Good Environment
・ Shift advertising from TV/paper to Web, SNS ・ Social purchasing initiatives
3) Good Information
・ Global SCM Foundation (implement MD systems overseas, GDC) ・ Improve purchasing/procurement structure ・ Organizing Japan HQ as “Global HQ” and unifying awareness
4) Building a Foundation
Philosophy y/Culture
Production
Inventory
Sales
Supply/ Delivery
Production Plan
Systems/Skills
Building a Stronger Identity and Foundation for Growth
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Division 1st Half 1st Quarter 2nd Quarter
Apparel 107.5% 104.6% 106.2% Household 109.2% 101.8% 105.9% Food 103.7% 93.9% 98.9%
Sales Growth for Like for Like Stores 107.8% 102.1% 105.2%
Customer numbers YOY 102.2% 101.3% 101.8% Customer unit purchased price 105.6% 100.8% 103.4%
• Sales floor redesign (new store fittings) and improved staff skills contributed to plan outperformance
• Consumers accepted tax-inclusive labeling after consumption tax increase leading to +1.8% in number of customers YOY
• Ratio of MUJI Selection sales increased, as did unit prices, leading to +3.4% for sales per customer YOY
Comparable Domestic Store Performance
■ LFL Net Sales, YOY
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Channel
FY2013 1st Half ,2014 Store
renovation Open Close Net
increase
End of 1st Half End of
year Directly managed store 269 14 ▲2 12 281 11 Licensed Store 61 3 ▲2 1 62 1 Shops in the Seiyu 55 0 ▲1 ▲1 54 0
Domestic Total 385 17 ▲5 12 397 12
•Opened 17 stores during first half; stronger S&B promotion resulted in 5 store closes for a +12 net gain (17 new opens and 6 closes in prior year). •Remodeled at 11 directly operated and 1 License store to create new store fitting sales floor. Progress achieved in creating cross-department groupings, living space exhibits. •Adoption of High Fixtures: More than 30% of all directly operated stores.
Domestic Store Opens, Renovations ■ First Half: +12 Stores Net, 12 Remodeled
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Marui Kichijyoji (TOKYO)
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Marui Kichijyoji (TOKYO)
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Namba (OSAKA)
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High Fixture Sales Floor
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•MUJI site top-page redesign •Use MUJIpassport to communicate, promote more efficiently
4.28 Million Social Network Followers
MUJI NET Members 4.60 million
MUJI Site Top-Page Redesign (August) •Tie in to unified global portal site •Plan to redesign each regional site beginning 14AW
2.23 Million MUJIpassport Downloads ・ New customer communication tool
Facebook GL Facebook JP
Twitter mixi LINE
580,000 1.03 million
330,000 50,000
2.29 million
Improve Communications with Customers In-Store and via Web
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0
50万
100万
150万
200万
250万
300万
2013/5/1 8/1 11/1 2014/2/1 5/1 8/1 11/1 2/1
Downloads (projected) Downloads (actual)
■ MUJIpassport App Downloads
•First half goal of 2.0 million downloads achieved (as of June); year-end goal is 2.5 million. •Prepare Chinese version by year-end; Roll out to Taiwan, Hong Kong, USA, etc. next year.
Download the app for a new MUJI buying experience.
4. Global Supply Chain Structuring
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Factors Total Foreign exchange rate
Overseas Supply Sales
Price Reductions
Cost Reductions
Other
1st Quarter ▲1.0% ▲0.5% ▲1.9% ▲3.4% 2nd quarter ▲0.7% ▲3.4% ▲1.4% ▲5.5% 1st Half ▲0.9% ▲1.7% ▲1.8% ▲4.4%
(Vs. Original Plan) -0.9% -0.6% +0.4% -1.1%
•Higher consumption tax and continuation of tax-inclusive labeling pressured gross profit ratios (-1.5 points theoretically). Cost improvements and push of MUJI Selection products helped compensate. •Wider wholesaling to overseas retail locations drove down gross profits (original plan called for ¥10.0 billion/half year)
Gross Profit Ratio Change -4.4% [Non-Consolidated (March 2014 – August 2014)
*Price discount factors include continuation of tax-inclusive labeling.
Gross Profit Ratio Structure
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・ Implementation plan for automated orders of staple products
2014 AW Test 2015 SS Start
2015 AW Test 2016 SS Start
Phase 3 Automated production ordering
2014 SS Test 2014 AW Start
Phase 1 Automated re-ordering system
Phase 2 Automated supply system between centers
Store Country DC GDC Factory
Global figures visible to HQ
Begin System Development and Operations
①Sales
②Production Plan ⑤Inventory
③Production ④Supply /Delivery
Global Supply Chain Management
•Stronger HQ Management of Tag Name, Quality, Specifications
•Establish system so each local retailer can concentrate on sales
Ryohin Keikaku Group
Global Supply Chain Structuring ■ All automated ordering: Store → Country DC → GDC → Factory
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■ Global Supply Chain Structuring Progress
Right-Timing, Right-Volume system for automated store orders ⇒Launched a test in Korea in April. Achieved 30% inventory reduction
for targeted products.
In operation in five regions: China, Korea, Singapore, Thailand, MEH (Europe); working toward future expansion
Store Country DC
Phase 1 Automated Supply Operations
Korea Singapore China Europe Australia Malaysia
Automated Supply System
Operations
%=Percentage of products in the
Auto-order system
78% 15% 80% 77% January 2015
November2014
Taiwan Hong Kong U.S.A. Thailand Canada
December2014
March 2015
March 2015 60% November
2014
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Automated Center Ordering System
Started testing in Korea and Singapore
Phase 2 System for automated supply between centers
Country DC GDC
• Better automated ordering should result in reduced ordering time, better inventory efficiency, and greater work efficiency.
■ Global Supply Chain Structuring Progress
Korea Singapore China Europe Australia Malaysia
Center Automated
Supply Ordering System
Operations
○ ○ October 2014
October 2014
March 2015
March 2015
Taiwan Hong Kong U.S.A. Thailand Canada
March 2015
March 2015
March 2015
March 2015
March 2015
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■ Global Tag Adoption Progress 2014AW 2015SS 2015AW
Apparel 100% 100% 100%
Household 40% 100% 100%
JP CN TW KR
EU US
*Separate measures for food and care products, where labels will be printed directly on packaging.
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■ Restructure global logistics to hold logistics costs to 1% (about ¥3.0 billion) of net sales in three years
Reorganization of Domestic Distribution Center for Major Improvements beginning 2015 and beyond ・ Start of Hatoyama Center Operations (November 2014)
・¥270 million in higher costs for 2014 due to facilities move
・ Expect to see ¥1.0 billion in cost reductions in 2015
Hatoyama Logistic Center(2014.11 Open)
5. FY 2014 2nd Half Business Plan
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FY 2014 2nd Half Business Plan[Consolidated]
■ Plan calls for 2nd year of double-digit operating, ordinary profit growth
・ Gross Profit – Yen weakness, global SCM operations, and associated lower costs should lead to expected major improvements in overseas store gross profit ratio ・ Net Income – Expect lower profits due to recording extraordinary income related to a Taiwanese subsidiary in the prior year
・ Net Sales – New flagship stores in Paris, Chengdu, Taipei
[Unit:million yen] Plan Ratio YOY Change RatioChange
Net Sales 128,740 100.0% 110.8% 12,565 -G.P.and Operating 60,951 47.3% 114.5% 7,698 1.5%S.G.A 47,087 36.6% 112.0% 5,028 0.4%Operating Profit 13,864 10.8% 123.9% 2,670 1.1%Ordinary Profit 13,796 10.7% 111.2% 1,395 0.0%Net Income 8,469 6.6% 80.0% -2,115 -2.5%
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FY 2014 2nd Half Business Plan[Non-Consolidated]
■ Continued improvement in costs, SGA ratio
・ Advertising Expenses ・ Logistics Expenses
・ Gross Profit Ratio - Continue cost reductions ahead of autumn ‘15 consumption tax increase - Continue to improve expense efficiencies by maximizing use of MUJIpassport - More efficient domestic logistics through GDC, Hatoyama Center
[Unit:million yen] Plan Ratio YOY Change RatioChange
Net Sales 93,456 100.0% 101.6% 1,489 -G.P.and Operating 39,901 42.7% 104.0% 1,533 1.0%S.G.A 29,995 32.1% 100.0% 1 -0.5%Operating Profit 9,908 10.6% 118.3% 1,535 1.5%Ordinary Profit 9,317 10.0% 101.8% 164 0.0%Net Income 5,426 5.8% 95.1% -278 -0.4%
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More Active Flagship Store Openings in and outside of Japan
Paris (France) Chengdu (China) Taipei (Taiwan) →Plan・・・・・・Singapore →Plan・・・・・・New York (U.S.A)
Izumi (Osaka) Okayama →Plan・・・・・・Fukuoka →Plan・・・・・・Nagoya
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Forum des Halles (France)
Paris Flagship Store 851㎡ (2014.9.24 opened)
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Forum des Halles (France)
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Forum des Halles (France)
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Forum des Halles (France)
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Forum des Halles (France)
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Forum des Halles (France)
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→ How to Live Elegantly in China? I Enjoyment in designing one’s own living space
II Fun leisure-time activities
III Safe, enjoyable dining
・ Café&Meal, IDEE roll out ・ Stronger kitchen, tableware lineup ・ Introduce Interior Advisors
■ Concept Today’s Chinese Households • Furnished property is the norm, however, ratio of consumers selecting their own furniture is
on the rise • Higher incomes have led to more interest in leisure time activities • More home parties, in line with U.S. and European customs • More interest in health; more people exercising during their free time
• Most Chinese are aware of food safety as an issue in the country, etc.
Chengdu Flagship Store 3,065㎡ (2014.12 planned to open)
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Chengdu Flagship Store 3,065㎡ (2014.12 planned to open)
41
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Chengdu Flagship Store 3,065㎡ (2014.12 planned to open)
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Shareholder Returns ■Dividends & Payout Trends FY '08 to '14 (Estimate)
• Look to improve capital efficiency leading to ROE of over 15% • Set basic dividend payout policy to 30% of consolidated earnings;
work toward stable, consistent dividends
(Plan)
(Plan)
Non-
Consolidated Consolidated