H2O Retailing : Presentation Materials（2Q of FY2024）

2Q of FY2024

Presentation Materials

Nov. 2, 2023

H2O RETAILING CORPORATION

Digest of Financial Results

• 1H (Apr.-Sep.) Results

< Consolidated >

• Sales progressed as planned in Aug, Department Store Business results exceeded forecast. Both operating profit and ordinary profit reached record highs in 1H.
• 2Q as well as 1Q, all segments, including Department Store business, increased profits.

< By Segment >
•	Department	Both domestic and inbound sales exceeded 1H of FY2019 results due to the continued positive
	Store	impact of the external environment.
		Inbound sales growth accelerated in 2Q (Jul.-Sep.)
		SG&A expenses were lower than planned, despite an increase in sales related expenses.
•	Supermarket	Existing store sales exceeded the previous year's level due to a rise in unit prices and a recovery in
		the number of customers.
		SG&A expenses were restrained from the previous year and forecasts.
•	Shopping Center	Hotels continue to perform well with high occupancy rates.

• Forecast of FY2024

• Consolidated operating profit is expected to be ¥22.0 bn, well above Mid-term Management Plan target.
• Forecast of 2H is not based on the positive impact of the external environment in 2Q, and is expected to be in line with the initial plan in May.

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Topics

I . Consolidated Financial Results

II . Forecast of FY2024

III . For Mid and Long-Term Growth

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I. Consolidated Financial Results

1. . Consolidated Financial Results
2. . Results by Segment
3. . Department Store Business
4. . Supermarket Business
5. . Shopping Center Business
6. . Extraordinary income and losses
7. . Capital Investment

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I-1. Consolidated Financial Results

• Gross sales exceeded forecast, driven by strong Department Store sales.
• Operating profit in Department Store and Shopping Center Business exceeded the forecast, and consolidated operating profit reached a record high in 1H.

				1H		YoY	Vs. Forecast
	1Q		2Q		in Aug.
(Unit: 100 million yen)
Gross sales		2,447	2,605		5,052	109.5%	101.9%
Net sales		1,548	1,637		3,185	104.6%	98.9%
Operating profit		48	51		99	+88	+29
Ordinary profit		52	55		107	+78	+40
Extraordinary income		7	3		10	―	―
Extraordinary losses		4	8		12	―	―
Profit		34	29		63	+35	+43

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I-2. Results by Segment

▶ Department Store	Both domestic and inbound sales were driven by high-end items, and sales exceeded as planned.
	Operating profit reached a record high in 1H due to strong sales and ongoing efforts to control costs.
▶ Supermarket	Sales recovery strengthened in Jul.-Sep, and sales were in line with forecast.
	Operating profit increased significantly from the previous year due to sales recovery and cost reductions from chain
	operation reform effect at Izumiya・Hankyu Oasis.
▶ Shopping Center	Decrease in sales due to closure of shopping center stores, but operating profit increased due to high occupancy rates
	at Oi Development business-hotel.

		Gross sales
	1H	YoY	Vs. Forecast
	in Aug.
(Unit: 100 million yen)
Department	2,591	117.5%	103.8%
Store
Supermarket	2,109	102.5%	99.9%
Shopping	158	90.3%	88.2%
Center
Other	193	109.0%	111.5%
Consolidation
adjustment
Total	5,052	109.5%	101.9%

Operating profit

1H	YoY	Vs. Forecast
in Aug.
70	+54	+29
41	+25	▲4
18	+9	+7
13	+29	+14
▲44	▲29	▲16
99	+88	+29

(Unit: 100 million yen)
H2O	YoY
non-consolidated
Operating profit	+24
Within the group	+25
dividend income
(Elimination)

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I-2. Results by Segment

• Factors of Increase / Decrease in operating profit (YoY, Vs. Forecast)

1H of	YoY
FY2023
+88

11

		(100 millions of yen)
1H of	Vs. Forecast	Forecast
FY2024
+29

99 70

		Other and	Other and	Shopping
		Adjustments	Adjustments	Supermarket
	Shopping	+0	▲3	Center	▲4	Department
			+7
	Center				stores
Supermarket
+9					+29
+25

Department

store +54

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I-3. Department Store Business

• Strong domestic sales and rapid increase in inbound sales at urban stores drove sales.
• Increase in expenses, such as personnel expenses and sales related expenses, were kept down compared to the plan. Operating profit exceeded forecast in Aug, and both sales and operating profit reached record highs in 1H.

Hankyu Hanshin Department Stores

			1H	YoY	Vs. Forecast
(Unit: 100 million yen)	1Q	2Q	in Aug.
Gross sales	1,227	1,348	2,575	117.5%	103.2%
Gross profit	276	298	574	+82	―
Gross profit	22.49%	22.12%	22.29%	▲0.14pt	―
/ Gross sales
Other operating	10	10	20	+4	+1
revenue
SG&A	253	271	524	+32	―
Operating profit	33	37	70	+54	+28

Sales by store		YoY	Vs.
	Forecast
Urban store		119%	105%
Hankyu Main Store		119%	107%
Hanshin Umeda Main Store		122%	96%
Hakata Hankyu		125%	106%
Suburban stores		116%	101%
		(Unit: 100 million yen)
Breakdown of changes			YoY
in SG&A expenses
Increase in personnel expenses			+11
Increase in rent and depreciation			+10
(ex. Hanshin Umeda main store)
Increase in sales related expenses			+9

* Non-consolidated results shown above are reclassified on the basis before the application of "Accounting Standards for Revenue Recognition".

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I-3. Department Store Business - Factors of Increase / Decrease in operating profit

• Hankyu Hanshin Department Store Factors of Increase / Decrease in operating profit (YoY, Vs. Forecast)

			(100 millions of yen)
1H of	YoY	1H of	Forecast
FY2023	FY2024	Vs. Forecast
+54	+28
16		70	42

Decline in
gross
margin	Increase in
▲4
personnel
Margin
expenses	Increase in rent
22.29%
▲11
YoY▲0.14pt	and depreciation
Sales		▲10	Increase in sales	Increase in
		related expenses
		SG&A
increase
		▲9
		▲2
+90			Cost control	Increase in
				Sales
					+10	gross
					・Utility cost	margin	increase
					+0	+19
					・Renovation

・Sales promotion expenses

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I-3. Department Store Business - Sales by Product

• Sales of all categories increased from the previous year in Jul.- Sep. also.
• Strong domestic sales and rapidly growing inbound sales contributed to increased sales of accessories and general merchandise, including jewelry, watches, and bags.

Sales of each category (All Stores)

(Unit: 100 million yen)	1H	YoY		Share	YoY
Clothing	552	115%	20.6%	▲0.5pt
Accessories, bags and	622	131%	23.3%	2.4pt
others
Household merchandise	70	117%	2.6%	0.0pt
Foods	702	108%	26.3%	▲2.3pt
Restaurants & cafes	67	122%	2.5%	0.1pt
General merchandise	544	118%	20.3%	0.0pt
Service	12	138%	0.5%	0.1pt
Other	105	127%	3.9%	0.3pt
Total	2,673	118%

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