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Presentation material the first quarter of the fiscal year ending FY05 / 2023 (HTML)（2022.5.16 - 2023.5.15）

September 20, 2022

The Company's plans, business outlooks and strategies contained in this material are based on the judgment of the Company's management obtained from the information available as of the date of the announcement. It is just a future forecast, due to various risks and uncertainties such as intensifying price competition in the market, fluctuations in economic trends surrounding the business environment, large fluctuations in the market price in the capital market, and various uncertainties other than the above. Please be aware that the actual business results may differ significantly.

Overview of the 1st quarter FY05 / 2023

Financial results highlights

3% increase in profit due to recovery trend in sales

Results for the 1st quarter FY05 / 2023

Sales 243.1 billion yen
(+3.2 % YoY)

Operating profit 13.3 billion yen
(+3.3 % YoY)

Business overview
  • Year-on YoY recovery trend in existing store sales
  • Gross margin improved by 0.5 points due to expansion of PB products, etc.
  • SG&A ratio increased by 0.4 points due to soaring utility costs, although labor costs were kept down

FY05 / 2023 the 1st quarter results (YoY)

(million yen / %)

1Q results of previous year Current 1Q results
Composition ratio Composition ratio YoY
amount of sales 235,684 100.0 243,181 100.0 103.2
Gross profit 69,126 29.3 72,374 29.8 104.7
Selling costs·
General and administrative expenses		 56,237 23.9 59,057 24.3 105.0
Operating income 12,889 5.5 13,317 5.5 103.3
Ordinary profit 12,944 5.5 13,357 5.5 103.2
Parent company shareholders
Attributable net income		 7,536 3.2 7,501 3.1 99.5
amount of sales
  • Existing store (13 months old store)
    YoY result: -0.3%
  • 32 new stores opened
Gross profit
  • Due to the expansion of private brand products, etc.
    Profit margin +0.5% YoY
Selling, general and administrative expenses
  • Reduced labor costs,
    Due to an increase in utility bills, etc.
    SG&A YoY

SG&A expenses (compared to the previous year)

(million yen / %)

1Q results of the previous fiscal year Current 1Q results
YoY YoY
Labor costs Amount of money 29,075 113.7 29,478 101.4
Sales ratio 12.3 +0.9 12.1 △0.2
Sales promotion expense Amount of money 913 43.4 989 108.2
Sales ratio 0.4 △0.5 0.4 0.0
Land rent, etc. Amount of money 12,394 109.4 13,092 105.6
Sales ratio 5.3 +0.3 5.4 +0.1
other expenses Amount of money 13,852 127.0 15,497 111.9
Sales ratio 5.9 +1.0 6.4 +0.5
SG&A expenses Amount of money 56,237 112.7 59,057 105.0
Sales ratio 23.9 +1.7 24.3 +0.4
Labor costs
  • Controlling YoY growth
other expenses
  • Utility cost (electricity charges)
    YoY +900 million yen
  • Increase in depreciation expenses

Achievements by company

Current 1Q results

consolidated Tsuruha Kusurino Fukutaro Tsuruha Group Drug &
Pharmacy West Japan		 Lady drug store Kyorindo Pharmacy B & D Drug Eleven
Previous year
synchronous ratio		 Previous year
synchronous ratio		 Previous year
synchronous ratio		 Previous year
synchronous ratio		 Previous year
synchronous ratio		 Previous year
synchronous ratio		 Previous year
synchronous ratio		 Previous year
synchronous ratio
amount of sales Amount of money 243,181 103.2 117,605 102.9 18,157 100.8 35,265 107.9 21,041 101.7 30,854 105.7 7,236 98.8 11,199 94.2
Sales ratio 100.0 － 100.0 － 100.0 － 100.0 － 100.0 － 100.0 － 100.0 － 100.0 －
Gross profit Amount of money 72,374 104.7 35,318 102.8 5,850 99.1 10,714 109.0 6,045 103.9 8,021 113.3 2,180 103.8 3,599 105.0
Sales ratio 29.8 +0.5 30.0 △0.1 32.2 △0.6 30.4 +0.3 28.7 +0.6 26.0 +1.7 30.1 +1.4 32.1 +3.3
SG&A expenses Amount of money 59,057 105.0 28,725 104.8 5,361 102.0 7,402 109.7 4,554 104.5 6,692 110.7 1,859 101.7 3,046 91.4
Sales ratio 24.3 +0.4 24.4 +0.4 29.5 +0.3 21.0 +0.4 21.6 +0.5 21.7 +1.0 25.7 +0.7 27.2 △0.8
Operating income Amount of money 13,317 103.3 6,592 94.9 489 75.5 3,312 107.5 1,490 102.1 1,329 128.0 321 118.5 553 591.9
Sales ratio 5.5 0.0 5.6 △0.5 2.7 △0.9 9.4 0.0 7.1 0.0 4.3 +0.7 4.4 +0.7 4.9 +4.1
Ordinary profit Amount of money 13,357 103.2 6,758 95.2 485 73.7 3,313 108.9 1,448 102.0 1,280 129.1 336 109.4 505 751.6
Sales ratio 5.5 0.0 5.7 △0.5 2.7 △1.0 9.4 +0.1 6.9 0.0 4.1 0.7 4.6 +0.4 4.5 +3.9
Attribution to the shareholders of the parent company
Net income		 Amount of money 7,501 99.5 4,521 94.2 309 71.2 2,282 109.3 988 101.8 839 131.9 215 106.8 302 1050.2
Sales ratio 3.1 △0.1 3.8 △0.4 1.7 △0.7 6.5 +0.1 4.7 0.0 2.7 +0.5 3.0 +0.2 2.7 +2.5

Year-on-YoY change in sales (stores 13 months old)

Month Jun. July Jul. August Aug. September Sep. October Oct. November Nov. December Dec. January Jan. February Feb. March Mar. April Apr. in May May.
 previous fiscal year
  • Reactionary decline in demand for nesting in the previous term
  • Slump in seasonal products such as cold remedies
Current term
  • Strong sales of seasonal products
  • with the spread of infection
    Increased demand for test reagents, etc.

Store openings / closures / sales status by company

Number of stores

　 End of the previous fiscal year Current term
Opening closed Subsidiary etc. Net increase End of the quarter
Tsuruha 1,382 14 24 1 △9 1,373
Kusurino Fukutaro 232 2 1 - +1 233
TGN 317 8 - - +8 325
Lady drug store 235 4 - - +4 239
Kyorindo Pharmacy 92 3 1 - +2 94
B & D 73 - - - 0 73
Drug Eleven 190 1 6 - △5 185
TGMD (EC Headquarters) 1 - - - 0 1
Domestic total 2,522 32 32 1 +1 2,523
  • ​26 newly opened dispensing pharmacies
  • ​52 stores renovated from existing stores

Existing Store Sales/Operating Margin

Existing store sales YoY Operating margin (company-wide basis)
 previous fiscal year Current term  previous fiscal year Current term
Tsuruha 96.8 99.1 6.1 5.6
Kusurino Fukutaro 97.3 101.6 3.6 2.7
TGN 99.6 102.4 9.4 9.4
Lady drug store 100.6 99 7.1 7.1
Kyorindo Pharmacy 100.1 100.6 3.6 4.3
B & D 94 95.9 3.7 4.4
Drug Eleven 95.5 0.8 4.9
Domestic Total/Consolidated 97.9 99.7 5.5 5.5

* Individual company results (including headquarters and stores)

Store openings / closures / sales status by region

Number of stores

End of the previous fiscal year Current term
Opening closed Subsidiary etc. Net increase End of the quarter
Hokkaido 422 1 8 - △7 415
Tohoku 570 6 9 1 △2 568
Kanto Koshinetsu 520 7 5 - +2 522
Chubu / Kansai 247 5 4 - +1 248
Chugoku 326 6 - - +6 332
Shikoku 220 4 - - +4 224
Kyushu / Okinawa 217 3 6 - △3 214
Domestic total 2,522 32 32 1 +1 2,523
(Other FC stores: 6 stores)
overseas Thailand) 17 - - - 0 17

Existing Store Sales/Operating Margin

Existing store sales YoY Operating margin (company-wide basis)
 previous fiscal year Current term  previous fiscal year Current term
Hokkaido 97.4 99.3 8.4 8.0
Tohoku 97 97.9 6.0 4.9
Kanto Koshinetsu 95.8 101 3.7 3.5
Chubu / Kansai 98.8 100 2.8 3.2
Chugoku 99 102.3 8.1 8.1
Shikoku 100.6 99.1 6.6 7.0
Kyushu / Okinawa 110.5 95.2 2.2 4.3
Total/Consolidated 97.9 99.7 *Total figures for group companies
* Store level figures including new stores
(Does not include Headquarters)
* Figures for the previous fiscal year exclude Drug Eleven

Results by product group (cumulative for the current period)

(million yen / %)

amount of sales Gross profit margin
YoY Composition ratio YoY increase / decrease
Product Pharmaceuticals 52,737 107.1 21.7 40.9 △0.1
Dispensing 26,631 109.6 11.0 35.5 △0.8
OTC 26,106 104.7 10.7 46.3 +0.8
Cosmetics 36,998 105.4 15.2 31.4 △0.8
Daily goods 65,575 99.7 27.0 29.6 +0.7
Food 57,484 102.2 23.7 15.5 △0.2
others 29,268 103.5 12.0 35.1 +2.5
Product total 242,065 103.2 99.6 29.6 +0.4
total 243,181 103.2 100.0 29.8 +0.5
Pharmaceuticals
  • Rapid increase in demand for antigen test kits
Cosmetics
  • Sales recovery driven by general cosmetics and seasonal products
Daily goods
  • Gross profit improved due to expansion of private brand products and special demand for corona-related products (disinfection-related, cooking gloves, etc.)
Food
  • Slight decrease in gross margin due to pricing strategy (drinks, confectionery, etc.)
others
  • Increased sales of cold products such as masks

Dispensing department results

Current term (million yen /%)

Year-on-year
Actual results		 achievement YoY
Dispensing fee (million yen) 24,296 26,631 109.6
Gross profit margin (%) 36.3 35.5 △0.8
Number of prescriptions (thousands) 2,328 2,565 110.2
Unit price (yen) 10,436 10,382 99.5
  • The number of prescriptions increased due to an increase in the number of pharmacies
  • Decline in gross profit margin due to medical fee revision​

Number of dispensing stores by company

　 End of the previous fiscal year End of current term (breakdown)
Annex Specialty
Tsuruha 343 347 310 37
Kusurino Fukutaro 121 127 65 62
TGN 113 117 94 23
Lady drug store 59 61 36 25
Kyorindo Pharmacy 73 76 63 13
B & D 30 31 24 7
Drug Eleven 23 24 14 10
Domestic total 762 783 606 177

Performance of PB products

(million yen / %)

amount of sales Sale composition ratio Number of SKUs
YoY Composition ratio End of the quarter YoY increase/decrease
Pharmaceuticals 5,237 99.0 25.5 20.1 693 △ 27
Cosmetics 1,095 104.6 5.3 3.1 255 △ 12
Daily goods 6,496 133.5 31.7 9.9 729 △ 5
Food 2,919 108.6 14.2 4.9 746 18
others 4,755 103.6 23.2 16.4 592 9
Total 20,504 111.0 100.0 9.5 3,015 △ 17
including
Kurashi Rhythm		 11,029 121.3 5.1 900 +10
Strong sales of daily necessities
Double-digit sales growth
  • ​9.5% of all private brand sales
  • Gross profit margin 43.3%
    (-0.4 point YoY)
Kurashi Rhythm series
Reached 900 SKUs
  • Increased by 10 SKUs mainly in daily necessities and healthcare
  • Continuing to revise and abolish monopoly products and limited-edition products
  • Gross profit margin 48.4%
    (+1.6 points YoY)

Medium-Term Management Plan and Initiatives for the Current Fiscal Year

Full-year plan FY05 / 2023

Full year (million yen /%)

FY05/2022 Plan for FY05/2023
achievement Composition ratio Business forecast Composition ratio YoY
amount of sales 915,700 100.0 968,800 100.0 105.8
Gross profit 271,483 29.6 290,600 30.0 107.0
Selling costs·
General and administrative expenses		 230,915 25.2 247,900 25.6 107.4
Operating income 40,567 4.4 42,700 4.4 105.3
Ordinary profit 40,052 4.4 42,571 4.4 106.3
To the shareholders of the parent company
Attribution
Net income		 21,388 2.3 22,640 2.3 105.9

First half (million yen /%)

　 First half of FY05/2022 First half plan for FY05/2023
achievement Composition ratio Business forecast Composition ratio YoY
amount of sales 462,512 100.0 481,700 100.0 104.1
Gross profit 136,817 29.6 144,200 29.9 105.4
Selling costs·
General and administrative expenses		 114,107 24.7 122,300 25.4 107.2
Operating income 22,709 4.9 21,900 4.5 96.4
Ordinary profit 22,622 4.9 21,949 4.6 97.0
Attribution to the shareholders of the parent company
Net income		 12,739 2.8 12,600 2.6 98.9

Second half

　 Second half of FY05/2022 Second half plan for FY05/2023
achievement Composition ratio Business forecast Composition ratio YoY
amount of sales 453,187 100.0 487,100 100.0 107.5
Gross profit 134,665 29.7 146,400 30.1 108.7
Selling costs·
General and administrative expenses		 116,807 25.8 125,600 25.8 107.5
Operating income 17,857 3.9 20,800 4.3 116.5
Ordinary profit 17,429 3.8 20,622 4.2 118.3
Attribution to the shareholders of the parent company
Net income		 8,648 1.9 10,040 2.1 116.1

Key strategies in the new medium-term management plan

store strategy
  • Fiscal year ending May 2025 2,750 stores for the entire group
  • Further strengthen dominance in areas where stores have already been opened (40 prefectures) and open stores with dispensing pharmacy
  • Suppress store opening speed, increase accuracy and open stores
    Improve profitability of existing stores
Dispensing strategy
  • Dispensing sales of approximately 100 billion yen to 140 billion yen in the fiscal year ending May 2025
  • Strengthen store openings centered on store openings, and plan to increase the number of stores from the current 760 to 1,170
  • Respond to the anticipated revisions by increasing the number of items to meet demand and adding various premiums by improving pharmacy functions.
PB strategy
  • 12% of private brand product sales in the fiscal year ending May 2025
  • Enhanced series lineup
  • Promotion of joint product development with major manufacturers (Double Chop*1)
DX strategy
  • Build a next-generation infrastructure by renovating the internal systems of each department
    Strengthen customer engagement by deepening digital marketing
    Rapidly catch up with lifestyle and social changes such as e-commerce and online pharmacy
financial strategy
  • Improve profitability and capital efficiency while continuing to invest in growth
    5% ROE 10% for the fiscal year ending May 2025,
    Aiming for 6% operating margin and 12% ROE for the fiscal year ending May 2029
  • Shareholder returns will be from the fiscal year FY05 / 2023 year ending May 2025
    Targeting a dividend payout ratio of 50% to 70%​

*1: Store brand products jointly developed with major manufacturers

Key Strategies and Initiatives for the Fiscal Year

store strategy
  • Fiscal year ending May 2025 2,750 stores for the entire group
  • Further strengthen dominance in areas where stores have already been opened (40 prefectures) and open stores with dispensing pharmacy
  • Control the speed of store openings, improve the accuracy of store openings, and improve the profitability of existing stores

Store opening plan by region