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FY05 / 2023 the 2nd quarter Presentation material (HTML) (2022.5.16 - 2023.5.15)

December 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.

Index

◼ FY05 / 2023 the 2nd quarter results overview ◼ Medium-term management plan and initiatives for FY2020

* The following abbreviations may be used in this document.
Fukutaro = Kusurino Fukutaro TGN = Tsuruha Group Drug & Pharmacy West Japan Lady = Lady Pharmacy
B & D = B & D Eleven = Drug Eleven TGMD = Tsuruha Group Merchandising

the 2nd quarter FY05 / 2023 Performance Summary

Financial results highlights

Maintain sales and profit growth

Results for the 2nd quarter FY05 / 2023

Sales 484.1 billion yen
(+4.7% YoY YoY

Operating profit ¥ 24.7 billion
(+8.8 % YoY on-year)

Business overview
  • Year-on YoY recovery trend in existing store sales
  • Gross margin improved by 0.4 points due to increased sales of pharmaceuticals, etc.
  • SG&A ratio increased by 0.2 percentage points due to soaring utility costs, although personnel expenses were curtailed

the 2nd quarter Results FY05 / 2023 (vs. plan)

(million yen / %)

amount of sales
  • progressing as planned
Gross profit
  • Gross margin progressed as planned
Selling, general and administrative expenses
  • Personnel cost was 97.7% of plan
  • Land rent, etc. progressed as planned
  • Utilities expenses progressed as planned
    However, the second half is expected to exceed the plan by around 1.0 billion yen.

FY05 / 2023 the 2nd quarter (YoY)

(million yen / %)

amount of sales
  • Existing store (13 months old store) 0.7% YoY
  • Contributions from 76 new store openings
Gross profit
  • Gross profit margin increased by 0.4% YoY on-year due to increased sales of pharmaceuticals and improved gross profit margin of miscellaneous goods.
Selling, general and administrative expenses
  • Although we were able to control personnel expenses, the SG&A ratio increased by 0.2% YoY due to an increase in utility costs, etc.

Consolidated business results (quarterly trend)

Current term(million yen /%)

FY5 /23 (million yen / %)

Previous term(million yen /%)

FY 5/22(million yen / %)

SG&A expenses (compared to the previous year)

(million yen / %)

Labor costs
  • Sales ratio decreased by 0.3% from the same period of the previous year due to productivity improvement and labor cost control
other expenses
  • Utilities (electricity charges)
    +2.3 billion yen YoY
  • Depreciation due to store opening
    YoY +0.9 billion yen

Achievements by company

First half results

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

Store openings/closings/sales/operating income by company

Number of stores

  • ​60 new dispensing pharmacies opened
  • ​115 refurbished existing stores

Existing Store Sales/Operating Margin

Store openings/closures/sales/operating income by region

Number of stores

Existing Store Sales/Operating Margin

[Reference] Results by product group for the 1st quarter

From the 2nd quarter ending March 31, 2020, we have reviewed the criteria for allocating the impact of the point system on revenue recognition to each product group.
(To more precisely reflect the actual conditions of point granting and usage)
This table has been created with figures retroactively applying the revised allocation criteria to the 1st quarter results of the previous fiscal year and the current fiscal year.

the 1st quarter (figures disclosed on Sep. 20, 2020) (million yen / %)

the 1st quarter (after standard review) (million yen / %)

Results by product group (cumulative for the current period)

1H results (after standard review) (million yen / %)

From the 2nd quarter ending March 31, 2020, we have reviewed the criteria for allocating the impact of the point system on revenue recognition to each product group.
(To more precisely reflect the actual conditions of point granting and usage)
As a result, we have retroactively applied the revised allocation criteria to the results of the previous fiscal year, and we have indicated YoY-year changes and changes.
Pharmaceuticals
  • Rapid increase in demand for antigen test kits
    Steady expansion of dispensing pharmacy due to an increase in store openings
Cosmetics
  • The flow of people is recovering, but the increase is only slight
Daily goods
  • Gross profit improved due to expansion of private brand products and special demand for corona-related products
Food
  • Increased sales of alcoholic beverages, daily deliveries, fresh food, etc.
others
  • Gross profit improvement for masks, etc.

Dispensing department results

Current term (million yen /%)

  • The number of prescriptions increased due to an increase in the number of pharmacies
  • Gross profit margin declined due to NHI drug price revisions and medical fee revisions​

Number of dispensing stores by company

Performance of PB products

First half results (POS results) (million yen / %)

Strong sales of daily necessities
Double-digit sales growth
  • ​9.5% of all private brand sales
  • Gross profit margin 43.4%
    (down 0.2 points year-on-year)
Kurashi Rhythm series
Continued sales expansion
  • Increased by 13 SKUs mainly in daily necessities and healthcare
  • Continuing to revise and abolish monopoly products and limited-edition products
  • Gross profit margin 48.8%
    (+1.8 points YoY)
There was an error in the description of the PB gross profit margin in the materials the 1st quarter Presentation material.
The corrected materials are posted on our website.
　For Shareholders and Investors > Financial Information > Presentation material

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

Full-year plan FY05 / 2023

Full year (million yen /%)

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

*Transfer of business on July 1

Store opening plans by company

*Transfer of business on July 1
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.
Strengthen store openings with dispensing pharmacies
  • New dispensing pharmacy plan Full-year 119 stores
    (including 109 stores with dispensing pharmacies)
Introduction of online medication guidance
  • Already installed in about 720 stores
    • Same day delivery available in some areas
PB strategy
  • 12% of private brand product sales in the fiscal year ending May 2025
  • Enhanced series lineup