2013 Ending February: Results Briefing
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I. 2013 Ending February: Results Overview
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1. Consolidated Financial Highlights
-
Profit and Loss
Net Sales:185,512 million yen
(Y/Y 107.5% ), Ordinary Income: 989 million yen
(Compared with plan +989 million yen)
(Unit: Million yen)
*Plan for 2013 ending February is the performance plan that was announced on November 14, 2012.
2012 ending February
Previous FY 2013 ending February
Results % of Total Plan(A) % of Total Results(B) % of Total Y/Y Change Y/Y Diff.(B)-(A) Ratio(B)/(A)
Net Sales 172,511 100.0% 188,000 100.0% 185,512 100.0% +13,001 107.5% -2,487 98.7%
Gross Profit 84,594 49.0% 93,023 50.1% +8,429 110.0%
SG&A Expenses 90,496 52.5% 94,300 50.8% +3,804 104.2%
Operating Income -5,902 -3.4% -500 -0.3% -1,277 -0.7% +4,624 ─ -777 ─
Ordinary Income -11,393 -6.6% 0 0.0% 989 0.5% +12,383 ─ +989 ─
Current Income Before Income Taxes
-23,858 -13.8% 2,772 1.5% +26,631 ─
Current Net Income -26,983 -15.6% -1,960 -1.0% -1,779 -1.0% +25,203 ─ +180 ─
*Although the financial statements of TSI HOLDINGS for the previous fiscal year did not include the 1st quarter results of the premerger SANEI
-INTERNATIONAL GROUP, these results were simply added to the TSI HOLDINGS’ results for the previous fiscal year herein purely for the sake of comparison.
Net Sales: Existing store sales for the second half of 2013 ending February declined 2.9% year on year due to challenging autumn winter sales performance.
Operating Income: Operating loss for 2013 ending February decreased year on year thanks to our exit from low profitability business.
Ordinary Income: Financial asset valuation gain of 1,039 million yen and foreign exchange gain of 214 million yen were recorded as non-operating income, respectively.
Extraordinary Income: Accrued 1,884 million yen in profit on sales of investment securities, 2,750 million yen in profit from sales of affiliated company stocks, and Negative goodwill of 968 million yen.
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Net Sales:
【Alone】 Decreased due to reduction in total number of stores from closing down of brand and
withdrawal of unprofitable stores.
【Subsidiaries】 Increased year on year due to a full-year sales contribution by companies acquired by TSI
through M&A during 2012 ending February.
SG&A Expenses: 【Alone】 SGA rate declined significantly year on year thanks to Tokyo Style’s exit from
low profitability business.
Operating Income: Decrease in SG&A expense rate and Deficits were reduced due to contribution of subsidiaries’ profit.
2. Consolidated Financial Highlights - Group (1)
TOKYO STYLE Group
(Y/Y comparison alone/by subsidiary)
2012 ending February: Results 2013 ending February: Results
Alone Subsidiaries
Elimination/ others
Total Alone Y/Y Subsidiaries Y/Y
Elimination /others
Total Y/Y
Net Sales 27,025 49,289 -6,186 70,128 23,461 86.8% 68,780 139.5% -9,617 82,624 117.8%
Gross Profit 9,456 23,073 -341 32,188 8,459 89.5% 31,551 136.7% -294 39,716 123.4%
Gross Profit Rate 35.0% 46.8% 45.9% 36.1% +1.1pt 45.9% -0.9pt 48.1% +2.2pt
SG&A Expenses 17,811 19,106 2,205 39,123 14,710 82.6% 26,553 139.0% 585 41,849 107.0%
SGA Rate 65.9% 38.8% 55.8% 62.7% -3.2pt 38.6% -0.2pt 50.6% -5.1pt
Operating Income -8,354 3,966 -2,546 -6,935 -6,250 ─ 4,997 126.0% -879 -2,132 ─
Ordinary Income -13,403 3,900 -2,620 -12,123 -4,805 ─ 5,726 146.8% -1,094 -173 ─
Current Income Before Income Taxes
-30,551 3,413 -661 -27,800 -5,793 ─ 5,749 168.4% 83 38 ─
Current Net Income -31,314 1,957 -922 -30,280 -5,799 ─ 3,127 159.8% -319 -2,991 ─
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SANEI-INTERNATIONAL GROUP
Net Sales: Sales for the first half of 2013 ending February grew 5.3% year on year. However, SANEI-INTERNATIONAL’s subsidiary non-consolidation program and challenging existing store sales
performance during the second half of the year resulted in sales for the second half of 2013 ending February showing a year-on-year decline of 4.1%. Thus, year-on-year sales growth for 2013 ending February stood at 0.4%.
Operating Income: Although profits increased in the first half, profits decreased due to the second half decrease in gross profit margin and increased SG&A expenses.
3. Consolidated Financial Highlights - Group (2)
2012 ending February: Results
2013 ending February: Results
Results % of Total Results % of Total Y/Y Change Y/Y
Net Sales 102,480 100.0% 102,859 100.0% +378 100.4%
Gross Profit 52,440 51.2% 53,441 52.0% +1,000 101.9%
SG&A Expenses 51,415 50.2% 52,735 51.3% +1,319 102.6%
Operating Income 1,024 1.0% 705 0.7% -319 68.8%
Ordinary Income 891 0.9% 1,083 1.1% +192 121.6%
Current Income Before Income Taxes
38 0.0% 2,591 2.5% +2,552 6730.8%
Current Net Income -610 -0.6% 1,520 1.5% +2,131 ─
(Unit: Million yen)
*Although the financial statements of TSI HOLDINGS for the previous fiscal year did not include the 1st quarter results of the pre-merger SANEI-INTERNATIONAL
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. Consolidated performance
-
Extraordinary income and loss
(
2
)Extraordinary Loss: Recognized business restructuring-related costs
Gain on sale of fixed assets 454 million yen
Gain on sales of investment securities 1,884 million yen
Gain on sales of affiliated company stocks 2,750 million yen
Gain on negative goodwill 968 million yen
Others 352 million yen Total extraordinary income 6,408 million yen
(
1
)Extraordinary income: Continued to utilize assets effectively
Loss on retirement of fixed assets 638 million yen
Impairment loss 411 million yen
Loss on sale of investment securities 477 million yen
Loss on valuation of shares in related company 619 million yen
Loss on disposal of related company 836 million yen
Costs relating to early retirement 545 million yen
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5. Our shareholder return policy
Consider the management environment, performance, and financial health in a comprehensive manner.
TSI will allocate its internal reserves to the development of new brands and high-growth new businesses as well as to capital expenditure for opening new stores, thereby enhancing the Company’s enterprise value.
(
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) Payment of dividends
Maintenance of stable dividend standard
(
2
) Acquisition of treasury stock
Dividends
TSI will acquire its shares as treasury stock as part of its shareholder
return policy.
2013 ending February Plan for 2014 ending February
Annual dividend per share 17.50 yen 17.50 yen
Total dividend amount 2,026 million yen
The type of shares to be acquired by TSI: Common shares in TSI
The total number of shares authorized to be acquired by TSI: 4,000,000 shares (3.45% of the total number of shares outstanding)
Addition to the share acquisition value: 3,000 million yen (upper limit)
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6. A General Schedule of the Mid-term Management plan
FY2011
“Structural reform without sanctuary”
Sales: 147.8
Operating income: -6.9
Operating income rate: -4.6%
Results from the previous year
“Continuous growth”
(2) “Improving profitability”
FY2012
FY2013
FY2014
Target 2.
Operating income rate
2.3%
Sales: 185.5
Operating income: -1.3
Operating income rate: -0.7%
● Results (billions of yen) ● Plan (Reexamined plan)
(billions of yen)
Target 1.
Return to Profitable sales
(1) “Reforming cost structure”
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●
Results (billions of yen)(3) “Strengthening group management capabilities”
●
Forecasts(billions of yen)Sales: 180
Operating income: 1.2
Operating income rate: 0.7%
Sales: 195
Operating income: 4.5
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7. Core Strategies of the Mid-term Management Plan (1)
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(1) Reforming cost structure
1st Qtr.
2nd Qtr.
3rd Qtr.
4th Qtr.
③Close low-yielder/unprofitable stores.…Close approx. 297 unprofitable stores of TOKYO STYLE.
②Withdraw from unprofitable business…Close four brands of TOKYO STYLE. ①Reform the organization of TOKYO STYLE into divisions of each brand business.
→ Clarification of profit responsibility
⑦Sale and closure of some factories ⑥Implementation of early retirement support system ⑤Cost structure(Advertising expenses/Logistics costs/General expenses) ④Discontinuation of branch system at TOKYO STYLE
※ Cost reduction accompanying implementation of structural reforms: -1,343 million yen
+ Additional cost reduction: -762 million yen
Reduced items
Reduction accompanying
cost-structural reform Additional reduction Personnel costs -903
+
-762Logistics costs -40
Advertising expenses -400
Others ─
Total -1,343
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8. Core Strategies of the Mid-term Management Plan (2)
(2) Improving profitability
Consolidate HR, accounting, administration, and system divisions that TOKYO STYLE and
SANEI INTERNATIONAL have separately into the Administrative Headquarters of TSI HOLDINGS.
Establish the Store Development Dept. and Web Business Strategy Preparation Office within
the Business Headquarters of TSI HOLDINGS.
→ Consolidate the functions of TOKYO STYLE and SANEI INTERNATIONAL together.
(3) Strengthening group management capabilities
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Launch in the spring/summer 2013 season “Planet blue world,” a casual style idea store format,
as well as “PEARLY GATES THE GREEN GOLF STORE,” a golf casual wear store format.
1) Development of new business
Aggressive investments on large-market brands such as "nano・universe,” “NATURAL
BEAUTY BASIC,” etc.
Continue to sell investment securities and unused assets aggressively, and secure the funds for
pursuing the Company’s growth strategy for its core business at an accelerated pace while using the funds for repaying debt.
2) Expansion of core brands
3) Effective utilization of assets
1) Concentration of management functions at TSI HOLDINGS
2) Unification of production management functions
Consolidate and promote rationalization of the production and logistics divisions of TOKYO
STYLE and SANEI INTERNATIONAL into TSI HOLDINGS subsidiary, TSI Production Network.
3) Introduce tax consolidation system
Consolidate the corporate taxes for 16 domestic wholly-owned subsidiaries from 2014 payment.
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9. Consolidated business plan for 2014 ending February
Plan to achieve 180,000 million yen in sales and 1,200 million yen in operating income
(Unit: Million yen)
2013 ending February: Plan
Throughout the year
Results from
previous year Plan for this year Y/Y
1
sthalf
2
ndhalf
Throughout the year
2013 ending February: Result 2014 ending February: Plan Y/Y 2013 ending February: Result 2014 ending February: Plan Y/Y 2013 ending February: Result 2014 ending February: Plan Y/Y
Net Sales
90,534 86,500
95.5%
94,978 93,500
98.4%
185,512
180,000
97.0%
Operating
Income
-1,076 -1,500
─
-201
2,700
─
-1,277
1,200
─
Ordinary
Income
-1,123 -1,200
─
2,112
3,300
─
989
2,100
212.2%
Current Net
Income
-2,424 -2,300
─
644
1,500
─
-1,779
-800
─
Net Sales: Sales for 2014 ending February will likely decrease year on year due to store closing by Tokyo Style and sale of subsidiary shares by SANEI-INTERNATIONAL.
Operating Income: Operating profitability is expected to be achieved on the back of Tokyo Style’s improving gross margin and declining SGA expenses.
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10. Performance plan by group for 2014 ending February
(
1
) Tokyo Style Group
1st half 2nd half Throughout the year
2013 ending February: Result 2014 ending February: Plan Y/Y 2013 ending February: Result 2014 ending February: Plan Y/Y 2013 ending February: Result 2014 ending February: Plan Y/Y
Net Sales 39,254 37,200 94.8% 43,370 40,800 94.1% 82,624 78,000 94.4%
Operating Income -1,505 -810 ─ -626 1,789 ─ -2,132 978 ─
Ordinary Income -1,655 -510 ─ 1,482 2,389 161.2% -173 1,878 ─
(
2
) SANEI-INTERNATIONAL Group
1st half 2nd half Throughout the year
2013 ending February: Result 2014 ending February: Plan Y/Y 2013 ending February: Result 2014 ending February: Plan Y/Y 2013 ending February: Result 2014 ending February: Plan Y/Y
Sales 51,312 49,134 95.8% 51,546 52,594 102.0% 102,859 101,729 98.9%
Operating Income 628 -696 ─ 77 834 1080.6% 705 138 19.6%
Ordinary Income 786 -686 ─ 297 869 292.8% 1,083 183 16.9%
(Unit: Million yen)
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11. Net Sales per Brand
Brand Name
2013 ending February, Cumulative
% of Total Y/Y
1 nano・universe 19,592 10.6% 133.2%
2 NATURAL BEAUTY BASIC 14,060 7.6% 106.2%
3 MARGARET HOWELL 8,995 4.8% 113.6%
4 ROSE BUD 8,937 4.8% ─
5 Apuweiser-riche 6,703 3.6% ─
6 & by P&D 5,846 3.2% 102.8%
7 FREE'S SHOP 5,676 3.1% 92.4%
8 HUMAN WOMAN 5,581 3.0% 94.6%
9 PEARLY GATES 5,314 2.9% 112.3%
10 TORNADO MART 4,695 2.5% 106.0%
Others 100,109 54.0% ─
Total
185,512 100.0% ─
*The net sales of ROSE BUD is the consolidated net sales of ROSE BUD CO., Ltd. and Elephant Co., Ltd.
*As the subsidiaries ROSE BUD and Apuweiser-riche were consolidated during the previous period, a comparison with the previous quarter has been omitted.
Tokyo Style Group
SANEI-INTERNATIONAL Group
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12. Net Sales per Sales Channel
2013 ending February, Cumulative
Consolidates
TOKYO STYLE GROUP
SANEI INTERNATIONAL GROUP
TSI (Non-consolidated)
Eliminations Sales Channel Results
% of Total
Results
% of Total
Results % of Total
Department store 29,948 36.2% 30,987 30.1% ─ 60,936 32.8% Commercial
facilities*1
30,785 33.8% 54,443 52.9% ─ 85,229 45.9%
EC 9,372 11.3% 4,059 3.9% ─ 13,432 7.2% Overseas 5,528 7.2% 3,742 3.6% ─ 9,270 5.0% Others*2 6,989 11.4% 9,625 9.4% 28 16,644 9.0%
Total 82,624 100.0% 102,859 100.0% 28 185,512 100.0%
(Unit: Million yen)
*1 Commercial facilities: Fashion buildings, railroad station buildings, individual stores, outlet shops, etc., except for department stores
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