FY 2013 Financial Results Presentation Materials May 13, 2014 BOOKOFF Corporation Ltd. (TSE First Section: 3313) 0
Contents ・・・・ ・・・・ ・・・・ ・・・・ 1. Prior Period (FY 2013) Financial Report P2 Overview ・・・・ ・・・・ ・・・・ ・・・・ 2. Business Strategies P8 ・・・・ ・・・・ ・・・・ ・・・・ 3. Current Fiscal Year (FY 2014) Plan P33 Overview ・・・・ ・・・・ ・・・・ ・・・・ 4. Featured Topics P37 ・・・・ ・・・・ ・・・・ ・・・・ 5. Financial Information P41 ・・・・ ・・・・ ・・・・ ・・・・ 6. Additional Information P45 Note Concerning Forward-Looking Statements: The plans, strategies, and financial forecasts presented in these materials contain forward-looking statements not based on historical fact. Forward-looking statements are based on management judgments using information available at the time. Actual results may vary significantly from forecasts due to changes in the business environment and other factors. (Contact) BOOKOFF Corporation Ltd. Corporate Planning Department 1
��� Prior Period (FY 2013) Financial Report Overview
1. Prior Period (FY 2013) Financial Overview Financial Report Overview FY 2012 FY 2013 Change Ratio Ratio YoY Unit: million yen 103.2 ％ 76,670 79,159 Net sales - - +2,488 102.2 ％ 114.6 ％ BOOKOFF 52,484 68.5% 53,648 67.8% +1,164 Packaged Media ・ Other 95.6 ％ Reuse 12,548 16.4% 14,379 18.2% +1,831 11,638 15.2% 11,130 14.1% -507 105.7 ％ 1,914 2,024 Operating income 2.5% 2.6% +109 101.6 ％ 196.9 ％ BOOKOFF 3,395 3,450 +54 Packaged Media ・ Other 465 917 +451 Reuse -127 -469 - -341 Corporate -1,819 -1,874 - -55 110.2 ％ 2,366 2,608 Ordinary income 3.1% 3.3% +242 － 64 Extraordinary gain - 0.1% - +64 109.4 ％ 483 529 Extraordinary loss 0.6% 0.7% +45 89.9 ％ 1,058 951 Net income 1.4% 1.2% -106 3
Assessment of Earnings Forecast 1. Prior Period (FY 2013) Financial Report Overview Assumptions (Oct 25) 10/25 Revised Plan Assumptions Assess Progress (from Q2 Financial Results ment Presentation Materials) BOOKOFF YoY 97 ％ BOOKOFF YoY 97.3 ％ [Existing Store Net Sales] [Existing Store Net Sales] Reuse YoY 105 ％ Net sales Reuse YoY 105.4% [New Stores] [New Stores] BO Stand-Alone X 3, BSB X 3 BO Stand-Alone X 3, BSB X 3 ・ Second Half 57.9% (in line with first-half) Gross profit Second Half 58.0% (full-year 57.9%) [Factors Leading to Decrease] ・ Lower variable costs due to lower BOOKOFF existing store sales ・ Lower initial investment/operating costs due to limited number of new store openings ・ HQ cost control In line with forecast SG&A [Factors Leading to Increase] ・ Higher payroll due to higher minimum wage ・ Higher investment/costs due to BOOKOFF package development Lower SG&A due to store operating cost control (payroll, etc.) Increase in gain on sale of used Non-operating income paper 4
1. Prior Period (FY 2013) Earnings vs. Oct 25 Forecast (Second Half ) Financial Report Overview 〈 Second Half 〉 Forecast vs. Actual Change Change (Oct 25) Forecast Unit: million yen 40,252 40,411 +159 Net sales +571 +731 Gross profit 23,320 23,449 +129 +479 +608 21,983 SG&A 21,437 -546 +340 -205 Operating 1,337 2,011 +674 +138 +813 income Ordinary 1,518 2,326 +808 +54 +863 income 617 Net Income 1,068 +451 +43 +925 Ratio of Total Sales 57.9% 58.0% +0.1% Gross Profit % +0.4% +0.5% 54.6% -1.6% SG&A % 53.0% +0.1% -1.5% 5
1. Prior Period (FY 2013) YoY Ordinary Income Financial Report Overview New Book Sales ・ ・ TSUTAYA ・ ・ +40 Unit: million yen Other Reuse Existing stores -326 PY ・ ・ CY New Stores +87 ・ ・ +40 +40 -377 Packaged BO Online +124 Media Non-Operating Inc/Exp +187 +451 -42 Other +98 Company Company hug all, other +170 -377 BOOKOFF Existing stores +235 PY ・ ・ CY New Stores +142 ・ ・ 2,608 Other +74 2,366 FY 2013 FY 2012 6
1. Prior Period (FY 2013) Net Income Change Factors Financial Report Overview Despite + ¥ 240 million ordinary income (base), net income was - ¥ 100 million. The reasons for this result lie in extraordinary losses and taxes: [Extraordinary Loss] Impairments, loss on business withdrawals related to 22 store closings this period (including 20 BOOKOFF stores) Reserve for loss on business withdrawals recorded for seven planned closings next period (including six BOOKOFF stores) [Income Taxes] Mainly increase in effective tax burden due to initial net losses in new businesses launched by new subsidiary (hug all) . 7
2. Business Strategies
2. Business Strategies Yahoo Business and Capital Alliance 9
2. Business Strategies Yahoo Business and Capital Alliance Yahoo! Japan Auction No. 1 in Offline Reuse No. 1 in Online Reuse 10
2. Business Strategies Yahoo Business and Capital Alliance Agreement Overview Ratio of Voting Shares to be Issued Type of Share Issuance Planned Funding Shares after Dilutive Shares Exercise Allocation of new shares 15 % 1. ¥2.17 billion 3.10 million to a third party Issuance of convertible 28 % 2. ¥7.7 billion 10.25 million bonds to a third party 1. + 2. 43 % ¥9.87 billion 13.35 million Share warrants may be exercised in stages at certain operating income levels for FYE When operating income exceeds ¥ ¥ ¥ ¥ 2.2 billion March 2015 through FYE March 2018: When operating income exceeds ¥ ¥ 2.7 billion ¥ ¥ ・ Exercise up to 45% (voting ratio of 30% when combined with 1.) ・ Exercise up to 100% (voting ratio of 43% when combined with 1.) 11
2. Business Strategies Yahoo Business and Capital Alliance Yahoo Auction serves as new sales outlet for BOOKOFF stores ・ BOOKOFF inventory listed on Yahoo Auction ・ Customize Yahoo Auction functions for more efficient sales ・ Joint operating structure/system development for listing and delivery ・ Launch at certain stores beginning FYE March 2015 ・ Roll out to all directly operated stores over three years ・ List 10 million used books on Yahoo Auction (5x present level) 12
2. Business Strategies Yahoo Business and Capital Alliance BOOKOFF Stores become a "sell-everything" format ・ Tie in hug all business with BOOKOFF stores: General Purchasing Service Desk ・ List purchased merchandise on Yahoo Auction ・ Jointly develop systems for hug all buying, calculations, sales management ・ Advertise to Yahoo customer base ・ Run on trial basis during FYE March 2015 ・ Will require longer roll-out than preceding plan, but will be executed with urgency 13
2. Business Strategies Yahoo Business and Capital Alliance Largest Reuse Center in Japan (Planned Launch: March 2016) ・ Collect certain BOOKOFF store products, list on Yahoo Auction ・ General Purchasing Service Desk to collect, evaluate, buy, and list on Yahoo Auction ・ Future: BtoB, fulfillment services in planning stages 14
2. Business Strategies Business Policies 2Q Briefing Materials s Republished Mission Infrastructure for people who don’t let things go to waste The Evolution New Businesses Expand of BOOKOFF Comprehensive Reuse Models 15
2. Business Strategies BOOKOFF Strengths Network of 900 Stores BOOKOFF Strengths Honest and Name Trustworthy Brand Trustworthy Brand Recognition 16
2. Business Strategies Immediate Issues BOOKOFF Existing Store YoY Sales 110% Large-Format Stores / Comprehensive Reuse Stores 105% 100% 95% 90% Small-/Medium- Format Stores 4 月 5 月 6 月 7 月 8 月 9 月 10 月 11 月 12 月 1 月 2 月 3 月 85% May Jun Apr Jul Aug Sep Oct Nov Dec Jan Feb Mar 17
2. Business Strategies BOOKOFF Response to Issues Reorganize Store Operations for Both Segments Improve Execution of Management Response Directly Operated Stores BOOKOFF Business 1st Division Segment BOOKOFF Small-/Medium BOOKOFF Stores -Format Stores Manage BOOKOFF store-in-store and Reuse store Reorganize by package; create organizations that separately within Comprehensive Reuse Stores (BSB, can respond to these immediate issues BOP) to manage merchandise effectively by type Directly Operated Stores 2nd Division Reuse Business BOOKOFF Segment Large-Format Stores / Comprehensive Reuse Reuse Stores (BSB, BOP) Reuse Stand-Alone 18
2. Business Strategies The Future Direction of BOOKOFF Improve Sales Efficiency (expand sales channels) Online Sales Improve Sales Efficiency (Yahoo Auction) BOOKOFF Package Pricing Stand-Alone Innovation Shelving stores Respond to Contraction in Existing Merchandise Markets General Merchandise No. 1 in Offline Reuse No. 1 in Online Reuse Comprehensive Reuse Tie in hug all BSB business (BOOKOFF SUPER BAZAAR) General Purchasing BOP Service Desk (BOOKOFF PLUS) 19
2. Business Strategies BOOKOFF Initiatives No. of No. of Pricing/Shelving Package Innovation Stores Stores Pricing Measures 84 Add Household, Stationery 3 Reading Room (Fee-Based) 1 Concept Shop 1 (80s Retro Goods Collection) Sell New & Used Books 3 (1) Customer order service tied in with Online business 1 (2) Expanded used mobile phone purchasing and sales Recycling Station 3 (Accepting Clothes, Shoes) 20
2. Business Strategies BOOKOFF Packaging Innovations Add Household, Stationery (Nakameguro Station Store; two others) 21
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