Medium-term Business Plan
Preparation of the Medium-term Business Plan
The Group’s management environment is changing on a greater scale and at a greater speed than expected. Above all, the spread of the novel coronavirus disease (COVID-19) has had a significant impact on social and economic activity in Japan and overseas.
In this unprecedented management environment, to promote the rapid recovery of earnings and improvement of our financial position in parallel with growth strategies, in preparing the Medium-term Business Plan, we determined specific strategies and measures that the Group should focus on for a three-year period after picturing the desired form of business group in 2030, our corporate vision and the direction of our strategies for achieving it.
This Medium-term Business Plan aims to achieve “full recovery” from the COVID-19 pandemic by returning our financial figures to fiscal 2019 levels, while at the same time positioning this period as one for getting back on track for “regrowth” from fiscal 2024 onward and implementing speedy management.
Promotion of sustainability management
（１）Achieving both social and economic value
The Group has encountered countless crises over its 300-400 year history. Every time we have encountered these situations, we have returned to our Corporate Credo, “Service before Profit,” faced the changes in our customers and society directly, and carried out our business activities honestly. We believe this is what has led us to the management that we have today.
Furthermore, in addition to generating economic value, companies are also urged to fulfill their roles in and responsibilities for confronting a large number of issues related to sustainability, such as environment, society, and human rights, and providing solutions through their businesses.
In accordance with the Group’s Corporate Credo, we conduct management that achieves both social and economic value by positioning sustainability at the core of management to conduct our business activities.
（２）Realizing stakeholders’ Well-being Life
In this Medium-term Business Plan, we have set seven materiality issues with the new addition of “realization of customers’ healthy/safe/secure life” and “promotion of circular economy.” By promoting business activities based on these materiality issues, we will contribute to realizing all stakeholders’ Well-being Life.
In realizing our corporate vision for 2030, we consider the following external environmental changes will have a significant impact on the Group: 1) The “underlying strength of urban commercial areas” amid a shrinking national population, 2) the “merging of real and digital,” in which information provided through “people” and reliability are reevaluated, and 3) “increasing polarization of income and consumption.”
Moreover, we recognize that the Group’s four strengths are 1) store real estate assets in major cities in Japan such as Tokyo, Nagoya, Osaka, Fukuoka, and Sapporo, 2) commercial production capabilities developed through store planning and the development of the areas around our stores, 3) partners such as suppliers and specialty shops that have excellent content and unique creators, and 4) a high quality customer base that enjoys active lifestyles.
2021-2023 Medium-term Business Plan
(1) Positioning of the Medium-term Business Plan
Full recovery and start on regrowth
This Medium-term Business Plan aims to achieve “full recovery” from the COVID-19 pandemic by returning our financial figures to fiscal 2019 levels in the final fiscal year of the plan, fiscal 2023, while at the same time positioning this period as one for getting back on track for “regrowth” from fiscal 2024 onward.
Currently, the spread of COVID-19 continues to exert a significant impact on social and economic activity. During the period of this Medium-term Business Plan, the pandemic is expected to continue impacting each business directly.
In this environment, to quickly recover earnings, we will focus on our key strategies, making investments in reforms of flagship stores and digital investments under the “Real x Digital Strategy” and strengthening our customer base underpinned by department store gaisho in the “Prime Life Strategy.”
In the “Developer Strategy,” we will increase our investment allocation in advance, starting during the period of this plan as a medium- to long-term growth driver. At the same time, we will carry out “management structure reforms” as a key measure toward full recovery, reducing fixed expenses and interest-bearing liabilities.
(2) Key performance indicator targets
- As a new indicator to manage capital profitability, return on investment capital (ROIC) will be applied from this Medium-term Business Plan.
- For fiscal 2023, we will aim to achieve consolidated operating profit of ¥40.3 billion, ROE of 7%, and ROIC of 5%.
- Our sustainability targets are a 40% reduction in greenhouse gas emissions and a ratio of women in management positions of 26%.
(3) Financial policy
- Over the three-year period we plan to generate over ¥190.0 billion in operating cash flows, ¥90.0 billion of which is to be allocated for growth investments and capital investments. Until fiscal 2023, investment allocation will be made giving priority to projects that contribute to profit and the “Developer Strategy.”
- We will reduce interest-bearing liabilities to ¥260.0 billion by the end of fiscal 2023.
- We will provide shareholder returns on the basis of maintaining a consolidated dividend payout ratio of at least 30% and also consider the option of purchasing treasury shares as appropriate.
※Includes depreciation expenses for right-of-use assets.
※Excludes lease liabilities.
Approach to long-term profit growth and business portfolio
Target of consolidated operating profit of ¥80.0 billion, ROE of 10% in fiscal 2030
- We will aim to achieve consolidated operating profit of ¥80.0 billion and ROE (profit/equity attributable to owners of parent) of 10% in fiscal 2030 through annualized profit growth of over 10% from fiscal 2024 onward.
- We will increase the share of consolidated operating profit of the Developer Business and the Payment and Finance Business in the business portfolio to 40% in 2030 from 20% in fiscal 2019.
- From fiscal 2021, the Group will have four business segments: the Department Store Business, the SC (Shopping Center) Business, the Developer Business, and the Payment and Finance Business.