Takashimaya / 8233
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Takashimaya / 8233 COVERAGE INITIATED ON: 2012.06.21 LAST UPDATE: 2020.12.25 Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg. Research Coverage Report by Shared Research Inc. Takashimaya / 8233 RCoverage LAST UPDATE: 2020.12.25 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp INDEX How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent earnings. First-time readers should start at the business section later in the report. Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3 Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5 Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 6 Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------ 6 Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 7 Monthly trends ----------------------------------------------------------------------------------------------------------------------------------------------------- 7 Quarterly trends and results ----------------------------------------------------------------------------------------------------------------------------------- 9 Forecasts for FY02/21 ------------------------------------------------------------------------------------------------------------------------------------------ 17 Growth strategy and long-term business plan --------------------------------------------------------------------------------------------------------- 24 Business ------------------------------------------------------------------------------------------------------------------------------------------------ 28 Business description -------------------------------------------------------------------------------------------------------------------------------------------- 28 Strengths and weaknesses ------------------------------------------------------------------------------------------------------------------------------------ 40 Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 41 Strategy ------------------------------------------------------------------------------------------------------------------------------------------------------------- 44 Financial statements ------------------------------------------------------------------------------------------------------------------------------- 45 Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 45 Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 47 Statement of cash flows --------------------------------------------------------------------------------------------------------------------------------------- 48 Other information ---------------------------------------------------------------------------------------------------------------------------------- 49 History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 49 Major shareholders --------------------------------------------------------------------------------------------------------------------------------------------- 51 Top management ----------------------------------------------------------------------------------------------------------------------------------------------- 51 Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 51 Dividends and shareholder returns ------------------------------------------------------------------------------------------------------------------------ 51 Investor relations ------------------------------------------------------------------------------------------------------------------------------------------------ 52 By the way --------------------------------------------------------------------------------------------------------------------------------------------------------- 52 Historical performance and news -------------------------------------------------------------------------------------------------------------- 54 Historical performance ---------------------------------------------------------------------------------------------------------------------------------------- 54 News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 67 Company profile ------------------------------------------------------------------------------------------------------------------------------------------------- 68 02/69 Takashimaya / 8233 RCoverage LAST UPDATE: 2020.12.25 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Executive summary ◤ Takashimaya is the operator of one of the largest department store chains in Japan. It has 15 domestic stores comprising 12 stores run by the parent—including the Osaka, Tokyo (Nihombashi), Yokohama, and Shinjuku stores—and three stores owned by subsidiaries. Being one of the oldest department stores in Japan, Takashimaya has many long-time customers. The building that houses the Nihombashi store was given the status of a historic building and later designated as one of Japan’s Important Cultural Properties. Overseas, it has stores in Singapore (opened in 1993), Shanghai, China (2012), Ho Chi Minh City, Vietnam (2016), and Bangkok, Thailand (2018). ◤ The company breaks down its business into five reporting segments: Department Stores, Commercial Property Development, Finance, Contract and Design, and Others. Of the FY02/20 operating revenue of JPY25.6bn, Department Stores accounted for JPY6.9bn (27.1% of total), Commercial Property Development JPY9.9bn (38.8%), Finance JPY4.9bn (19.1%), and Contract and Design JPY1.8bn (7.0%). The Commercial Property Development business is involved in the development and operation of shopping centers, and real estate development overseas. The Finance business mainly handles the credit card business, and the Contract and Design business deals with interior decorating for the company properties as well as for hotels and luxury brand boutiques. ◤ In the Department Stores business, sales to inbound tourists have been the growth driver in recent years. Sales to inbound tourists visiting Japan came to account for just less than 20% of sales at its stores in Osaka and Shinjuku, which typically generate large amounts of tax-free sales to foreign tourists. However, the company has lost its growth driver as the COVID-19 pandemic has caused a rapid decline in the number of foreign visitors to Japan. Issues facing the company include declining gross profit margin on product sales and delays to initiatives related to online sales and other new sales methods. Apparel sales, which boast high margins and have become the source of profit at the company’s department stores, have continued to decline, and the profitability of other product categories seems to be falling gradually as well. Takashimaya plans to work on initiatives aimed at cutting costs while enhancing the appeal of its department stores, merchandises, and services. In terms of online sales, the company will need to implement its own unique form of marketing that takes full advantage of its ability to discover products and the strong power of its brands. ◤ The Finance and overseas businesses are gaining attention as the drivers of the medium- and long-term growth. The company has positioned the Finance business as a business highly compatible with the Department Stores business, and intends to strengthen its relationships with customers through offering financial products that cater to customers’ important life events. Overseas, the company aims to expand department store sales in Shanghai (China), Vietnam, and Thailand, and targets medium- to long-term growth through real estate development in surrounding regions. Trends and outlook ◤ In FY02/20, Takashimaya reported full-year consolidated operating revenue of JPY919.1bn (+0.7% YoY), operating profit of JPY25.6bn (-4.0% YoY), and net income of JPY16.0bn (-2.5% YoY). The decline in operating profit reflected weak results at domestic department stores, which were hurt by a combination of a warmer-than-usual winter, the spread of COVID-19,