2017.4.14
＝
Acceleration of
Growth Strategy
Further bolster of strengths
Investment to growth markets
Medium-Term Management Policy
Enhancement of
Profitability Basis
Reinforce weaknesses
Continuous improvement
1
2
Organization Activation/ HR Development
Investment to “employees” the largest asset of the holdings
Past Review
ڭ
Medium-Term
Management Strategy
ڮ
Numerical Goal
Department store sales declined 27.8 billion yen (CAGR -14.2%) over the past
five years, whereas E-Commerce sales grew 190% (CAGR +17.4%)
Expand growth business and E-Commerce sales channel while implementing withdrawal of
unprofitable business and stores
＊
Percentage values in parentheses represent composition ratio of sales in the period
Reviewing the past 1: Net sales per channel
■
Withdrawing further unprofitable business
■
Optimizing
procurement and logistics cost
■
Introducing discipline of
management
■
Shifting from paper media to digital
■
Strengthening
E-Commerce sales
■
Investing in growth areas
■
Reducing inventory
evaluation loss by improving digestibility rate and rise in gross profit
margin from reducing discount
Operating income increased by 3.8 billion yen in 5 years,
operating margin from -0.7% to + 1.6%
■
Withdrawing unprofitable
businesses mainly from Tokyo Style
■
Liquidation of unprofitable
subsidiaries of Sanei-International
Reviewing the past 2: Operating Income
Past Review
ڭ
Medium-Term
Management Strategy
ڮ
Numerical Goal
Inconvenient Truth
Declining of younger
generation
Population in the 20s and 40s is -7.3% in 2021, -12.9% in 2026
Urbanization
The number of out-migrants exceeds the number of in-migrants,
except for the Tokyo areas (Tokyo, Kanagawa, Saitama, Chiba) and
Aichi, Fukuoka and Osaka
Difficult to secure
shop personnel
Effective job offering ratio 1.36 times in 2016
Sluggishness in
women's clothing
The average annual growth rate of the medium price trend market
from 2013 to 2017 is -2.4%. Expecting gradual decrease from -2 to 3%
every year in the future(excluding E-Commerce)
Declining fashion
spending in households
Decrease by 10% from 12,776 yen to 11,363 yen
in the past 10 years
If store sales will continue to decline by 2% each year over the next 5 years, and if store personnel expenses
will rise by 10%, about 30% of the stores may subject to be organized = smooth transition to E-Commerce
and high-earning stores in urban cities are necessary
Basic Principle
Athleisure market: 3.6 trillion yen in 2016
→
4.6 trillion yen in 2020
World changing with smart-wear: 0.1 billion yen in 2013
→
500 billion
yen in 2020
Ethical x Factory Online SPA
Sharing and reuse market
Convenient Truth
Growth Prospect of
Overseas Market
The nominal GDP growth rate (2015 to 2025) is +7.6%/year globally,
+8.4%/year in Asia
Explosive growth of upper middle income group (annual income of
USD15,000 to 35,000) in India, Indonesia and China:
150 million people in 2015
→
710 million people in 2030
Growth Prospect of
E-commerce Market
Domestic E-Commerce sales : 1.4 trillion yen in 2013
→
2.6 trillion yen
in 2020, E-Commerce ratio of 5
％
in 2013
→
14% in 2020
Sales through cross-border E-Commerce from Japan to China will
grow, roughly tripling from 2015 to 2019
Growth prospect of
cosmetics and eating-out
market
Organic cosmetic market growth: 93 billion yen in 2011
→
128.1 billion
yen in 2017
Foresee the room for growth for each category, and concentrate management resources to extend more
than market growth
Basic Principle
New growth
opportunities
in the domestic
fashion market
Shift from expenses cut to gross profit maximization as a measure to generate profits
Promote BPR, introduce AI, optimize SCM to minimize discount loss and improve digestibility(= minimize
inventory evaluation loss and reduce procurement costs by optimizing purchase volume)
→
Aim to achieve a virtuous cycle by highly value-added manufacturing(=cost rate up) from the source of
improvement in gross profit
Cost rate up
=Feeling Valuable
Decrease discount
loss and improve
digestibility
“REAL WORLD”
Profitability structure image of current TSI
“IDEAL WORLD”
Profitability structure image TSI should aim
＊
Direct costs ratio = Direct costs/sales before discount
Recognition of Current Situation 3
Enhancement of Profitability Basis
(4)Enhancement of Creation
(2)Marketing Evolution
(3)Strengthen Sales Skill
Creative Direction seminars intended to educate the
group’s
designers(four times a year)
Share trend analysis and forecast within the group
Bolster manufacturing through research and
development
Ensure that the direction for each brand reflects the
recognition of the brand by consumers, information on
rivals and potential customers as found through big data
analysis, a set of information that were not able to
analyze in the past
Optimizing media-mix (paper and digital)
Push forward with BPR by fully utilizing IT investments
and optimize the operations through introducing the
core system (TERRA) at all group companies
Lower SCM cost further by consolidating logistics
operations
Continue the structural reform of low profitability
companies
Introduction of RFID
Deploy the NPS initiative to reflect customer feedback in
merchandising and sales in the entire group
Improve employee satisfaction through eNPS
Push forward with the group-wide total efforts to secure
sales personnel
Theme 1
Acceleration of Growth Strategy
(1)E-Commerce
(3)M&A
Expand in-group success experiences based on overseas
expansion of domestics
Expand the business area of M.Tsubomi and SHANGHAI
DONGZHISHANG STYLE COMMERCIAL AND TRADING
CO., LTD. and acquire new sales channels including
E-commerce
Push forward with the winning patterns clarified through
BPR and make sure to run the PDCA cycle
Examine local partners in China and enhance the
cross-border E-Commerce
Accelerate digital investments to support E-commerce
business expansion
Seek to discover next-generation seeds
Ascertain our brands’ maximum growth potential and
work on M&A to
fill the unaddressed “white space”
Accelerate overseas business expansion through M&A
involving foreign companies and partnership to
penetrate further in South East Asia
Enhance the growth of Israel-originated cosmetics
company, Laline JAPAN Co., Ltd. acquired in 2016
Established Urth Caffé JAPAN
→
Aim to grow sales and
profits through expanding new store openings
Aim to grow sales and profits through expanding the
new store openings of Dominique Ansel Bakery
Investment in next-generation garment factory
corresponding to new consumption style
(4)Investments in New Businesses
(2)Overseas
Organization Activation/ HR Development
Promote revision of compensation system and evaluation system of
group companies
Enhancement of motivation-up measures
Review of paid vacation / childcare leave system etc.
Standardize personnel-related regulations within the group
Review of employment rules
Or
ga
niz
at
ion
HR
Vitalization of personnel exchange system
Stable securing and training of sales personnel
Enhancement of group training system
Establishment of self-enlightenment incentive system
Past Review
ڭ
Medium-Term
Management Strategy
ڮ
Numerical Goal
Numerical Goal 1: KPI for FY2022.2
1
2
Make domestic apparel more efficient and actively invest in growth channel towards
sales of 200 billion yen
Net Sales Target After 5 years
Numerical Goal 2: Net Sales Target for FY2022.2
Net Sales
200.0
Continue+New Businesses
CAGR
+5.3%
Domestic Apparel
Related(exc. E-Commerce)
CAGR
+0.8%
E-Commerce Ratio
25.0%
Overseas Ratio
(Apparel+Cosmetics+Food)
10.0%
Cosmetics+Food
(Domestic+Overseas)
10.0
(Unit: Billion Yen)
FY2017.2
FY2022.2
Results
Composition
Goal
Composition
CAGR
-Promote permanent profit improvement of existing business and increase earnings of
new business to achieve operating income of 10 billion yen
Operating Income Target After 5 years
Regrowth of domestic existing
select shop companies
Structural reform of overseas
existing apparel company
Profit impact by E-Commerce
sales increase(exc. structural
reform companies)
Gross profit margin 2 pt improvement
target (exc. restructuring companies)
Prospect of contribution from
new business (incl. M&A)
Profit contribution by
concentrating investment on high-
profitability stores
Decline in profits of stores that may
become unprofitable in the future
Numerical Goal 3: Operating Income Target for FY2022.2
Glossary
Page# Word/Phrase Meaning
3 CAGR Stands for "Compound Annual Growth Rate", annual growth rate over a specified period of time longer than one year. 4 Digestibility The ratio of the number of sales to the number of purchases.
7 Cross-border E-commerce E-commerce that not only sells domestically, but also internationally via foreign languages sites for oversea consumers. Athleisure A word combining athletics and leisure, which is a fashion style mainly composed with sportswear.
Smart-wear It is a worn item that fuses with IT and can detect biological information such as heart rate and momentum etc. Ethical The fashion that is being produced and circulated conscientiously is called "Ethical fashion".
SPA Stands for "Specialty store retailer of Private label Apparel", a business model of apparel that an integrated way from product planning, design,production to retail sales by the corporation.
Sharing A service that mediates lending of assets owned by companies and individuals. Reuse To reuse the used product as it is, or with some changes.
Organic Cosmetics Cosmetic that incorporates natural origin as the main ingredient.
8 BPR Stands for "Business Process Reengineering", which improves profitability by drastically revising and redesigning the existing operation flows and contents.
AI Stands for "Artificial Intelligence", which attempts to make the same intelligence as human beings by computer or/and technology.
SCM Stands for "Supply Chain Management", which is a system for creating profit by reviewing the entire flow from procurement, manufacturing, logistics to sales beyond the company boundaries.
9 TERRA The name of the core system of TSI Holdings group.
RFID Stands for Radio-frequency identification, uses electromagnetic field to identify track tags attached to items, and communicate within peripheral field.
Big Data Data that is much bigger and more diverse than existing data that companiews used. It is based on data such as customer information, purchase histories accumulated in E-commerce and SNS, etc., and is utilized for businesses in various fields.
NPS
Stands for "Net Promoter Score", and is an index for measuring loyalty. Customers are asked: "What is the likelihood of you recommending our company to your friends?" and then asked to score the possibility from 0 to 10 points. Those who scored 9 to 10 are called promoters, those who score 7 to 8 are neutral and those who score 6 and under are detractors; the rate of detractors is deducted from the rate of promoters. The customers are also asked to comment on how it can be improved, and these improvement measures are shared in the company and lead to improvement actions.
eNPS This is for disseminating NPS to employees, and improving their loyalty to the company.
Creative Direction In-house seminars to analyze social trends, translate them into fashion trends, and reflect them on actual manufacturing. 10 PDCA Stands for "Plan, Do, Check and Action", meaning a method of improving operations continuously by repeating these four phases.
