Marui Group Co Ltd Ord

So we would like to start presentation of the second quarter results of a fiscal year ending March 25 for Marui Group Company Limited. Thank you very much for participating in your busy schedule. The documents we will be using can be downloaded at our corporate website. So please look at our presentation material. We will be spending the first half an hour with our presentation followed by Q&A session. Today, presentation will be given by CFO Director Managing Executive Officer Kato, talking about our business and outlook. And it will be followed by a presentation of a President and Representative Executive Officer Aoi. On top of the two, for Q&A session, Eposu Card President Saito, Aono President of Marui, and General Manager of IR Department, Udaka, will be answering to your questions. These will be the content we will be presenting today. First, CFO Kato will be presenting our financial results and outlook. I will now present an overview of the financial results for the fiscal year ending March 25. This is our consolidated results. We have the three major accents. Total transaction increased 10% to 2.3829 trillion yen, continuing to set new records. Consolidated operating income increased 15% to 21.5 billion yen, the fourth consecutive quarterly increase. Fintech's real operating income increased for the fourth consecutive year, rising ¥1.4 billion to ¥22.5 billion, and real operating income increased steadily, rising ¥1.3 billion to ¥3.3 billion. These are the financial indicators. As explained in the digest, groups at the total transaction volume reached record high for the quarter. Both operating income and net income increased from the previous year, and actual results excluding the impact of liquidation of receivables exceeded the pre-COVID level. This is revenue and operating income by segment. Retail sales revenue was 39.1 billion yen up 3.1 billion yen YOY and operating income was 3.3 billion yen up by 1.3 billion yen YOY. Fintech sales increased 8.5 billion yen YOY to 89.2 billion yen and operating income increased 1.3 billion yen YOY to 22.4 billion yen. Breakdown of changes in operating income. Opening income for the period was ¥21.5 billion, an increase of ¥2.8 billion, excluding the impact of the liquidation of receivables. Real profit increased by ¥2.9 billion, a significant improvement from the previous year's real profit, the decline of ¥1.2 billion. These are the retail businesses. breakdown of changes of boarding income. An increase of 1.3 billion yen was due to the continued increase in tenant rental revenue from the previous year. Strong performance of related business aid had struggled last year. This is a reason for the increase in the tenant revenue. Tenant revenue increased by 900 million yen due to decreasing unoccupied floor space. Status of unoccupied area. The unoccupied area decreased from 8,700 to 6,800. We plan to reduce the size down to 6,500 to 2,000. Progress of the stores that don't sell. In the second quarter, the ratio of floor space occupied by stores that don't sell tenants increased to 4% from the previous year to 62%. With the shift of the category, we plan to increase the composition to 65% by the end of March 25. This is the status of EC transaction volume. Q2 transaction volume increased 4% YOY, starting with the utilization of web specialists. This was the 11th consecutive quarterly increase and continued growth. Now on to the fintech situation. Breakdown of changes of operating income. This year, in addition to increase in revenue due to the growth of transaction volume, we have also seen an increase in the number of customers. The increase of 1.3 billion yen was due mainly to the curbing of labor costs and improving productivity and decreasing the point expenses. Excluding the impact of liquidation of receivables, a real profit increased by 1.4 billion yen, with a significant increase. This is a trend of credit card transaction volume. Second quarter transaction volume was 1.112 trillion yen, a record high for the quarter. Changes for installment revolving fees. Year-on-year growth in installment and revolving transaction volume exceeded growth in card credit transaction volume, and fee income grew steadily by 8% to 29.3%. A billion yen, sorry. Then there is a status of new cardholders. New cardholders in the fiscal year totaled to 390,000, the same level as the previous year.

The number of EPOS cards that support individual interests was 11 in the first half of the year, and for the second half, we currently plan to have 26. As for the new JQ card EPOS design, in addition to the popular Kyushu Shinkansen 800 series Tsubame, we have plans to release cards featuring popular artists and popular games in the future, which we are optimistic will contribute to expanding our new membership. As of September 2024, the total card membership reached a record high of 7.73 million. The number of cars that support individual interests has surpassed 1 million, and the composition of platinum, gold, and cars that support individual interests has expanded to 58%. This is the status of co-creative investments. In the first half of the year, we invested 1.1 billion yen in startup companies and 500 million yen in funds, totaling 1.6 billion yen in investments, bringing the cumulative investment amount to 29.6 billion yen, The profit contribution through co-creative investments has reached ¥1.4 billion. The IRR of the startup companies we have invested in so far is 10%, which is on par with the hurdle rate of 10%. Regarding the balance sheet and capital allocation, this is the status of the balance sheet. Total assets increased by ¥85.9 billion from the end of the previous fiscal year, reaching ¥1.0894 trillion. Additionally, the equity ratio has decreased by 1.8% from the previous fiscal year end to 23.4%. On capital allocation, out of a fundamental operating cash flow of 25.9 billion yen, we allocated 8.3 billion yen for growth investment, 9.6 billion yen for dividends, and conducted a share buyback of 3.2 billion yen, Investment in human capital amounted to 4.6 billion yen, which represents 25% of personal expense. Regarding ESG status, in terms of external evaluation, in the first half of this fiscal year, we were selected for the first time for the highest rating under the Act of Promotion of Women's Participation and Advancement in the Workplace, receiving a Platinum Eruboshi designation. As of the end of September 24, there are 68 companies certified as platinum eruboshi, which is about 2% of the total 3,100 companies certified as eruboshi. We have also received other evaluations as shown. Finally, regarding full-year forecast, for the fiscal year ending March 2025, we expect to achieve the initial targets for the three KPIs, EPS, ROE, and ROIC. As for segment profits, retail is projected to increase by 22% to 8.5 billion yen, and fintech is expected to rise by 5% to 44.5 billion yen, with no changes from the plan set at the beginning of the period. Segment forecast for the second half of the fiscal year. Retail segment forecast. Revenue is expected to continue to grow steadily. However, due to increases in utility costs and strategic expenditures such as system terminal costs, operating income is projected to be limited to an increase of 200 million yen. The full year forecast remains at 8.5 million yen in line with the initial plan. FinTech forecast for the second half. While the increase in operating income will be smaller compared to the first half due to rising data center-related costs and changes in the reward point program, operating income is still expected to reach 44.5 billion yen, consistent with the initial plan. Finally, regarding share buybacks, if the stock price does not adequately reflect Future of profitability. We will continue to maintain a flexible share buyback policy. Following the first half, we will set a maximum share buyback limit of 20 billion yen for the second half. Next, the growth strategies and capital allocation based on the growth strategy will be explained by the representative director and president Aoi. This is Aoi. Thank you for your attention. Many investors have requested an advanced explanation of the outline for the next medium-term management plan. Therefore, today, I will explain the key elements of the upcoming medium-term management plan specifically focusing on the future growth strategy. The content is summarized in three points. First, on the theme of the economy driven by interests. Our company issued Japan's first credit card in 1960, developed fashion retail stores targeting young people in the 1980s, and since 2000, we have expanded our unique business model to include a triad of retail, fintech, and future investments. We have continuously pursued forward-thinking initiatives to achieve growth.

This is due to the basic stance of not competing existing markets, but rather developing new markets of our own. Such is our focus for the future. It's an economy driven by individual interests. In a deflationary economy, with wages not rising, the emphasis has been on function and price balance. This trend is also known as cost performance or COSPA, and consumers have become more cost-conscious over the years. At the same time, however, another trend is emerging. This is a trend known as mixed consumption behaviors. According to the NRA survey, 68% of consumers said that they usually divide themselves between what they save and what they spend money on, more than the 28% who said buy cheap and economical things anyway. In this case of a balanced economy or mixed consumption, there is a tendency to spend as much as possible on things that are important to them, such as hobbies and collections, which is the exact opposite of the cost economy. Now that the deflation is expected to be over, the Bank of Japan and major, I think, banks are also paying attention to moves such as the consumption, mediocre consumption, and trusting activities. Using this as a reference, there is a breakdown of the current economy today. If an economy emphasizes a function, the price is called a cost-buy economy. The non-cost-buy economy that emphasizes emotional value is positioned as the opposite of the spectrum. In contrast to the cost-buy economy, which has become a red ocean due to the prolonged deflationary economy, the non-cost-buy economy is a new market and is considered to be a blue ocean with a good look. We would like to call it the Blue Ocean, an economy driven by individual interest. We will also leave the Red Ocean, one of fierce competition and steer major courses toward a new economy driven by interest as a source of power. To this end, we will place individual interest at the center of the Trinity of retail or fintech future investment. We will then develop a new growth strategy with our investment. So what is a business that supports individual interests? The platform for this is a card to support individual interests. We aim to achieve both customer happiness and profitability by using cards that support individual interests as a platform to connect each customer's individual interests with our business. The number of cards supporting interests currently stands at 88 projects and 1.01 million members. The content of these cards range from social contribution programs such as support for refugees in Ukraine, music, sports, characters such as Chikawa, animation, the games. In addition, only one card was introduced this year. Here is the first of these, the EPOS pet card. The photo shows the actual card face, which was posted with the customers at the pets. It is literally the only card of its kind in the world. Another reason for your support is that the portion of the amount you spend is donated to animal shelters. Households with pets exceed those with children at 10.5 million nationwide. Since pet related expenditures total ¥360,000 per year, the market size multiplied by the number of households is expected to be ¥3.8 trillion a large term. This is the expected market. The so-called Oshikatsu supporting fabs market alone is worth 3 trillion yen, but we envision a larger market that is not limited to supporting fabs, but includes individual interests in a broader sense, such as pets, sports, music, and so on. The size of the market exceeds 10 trillion yen. It is also assumed that the object of liking will expand as the number of people increases. 10 people have 10 likes, the other 100 people have hundreds. The cards of support individual interest have the potential to increase the number of individual interest infinitely by utilizing print-on-demand to develop a long tail of interest. In addition, cards that support interest are more likely to be used as the main cards because of their strong connection to customers' values and emotions, and can be expected to generate two or seven times higher lifetime earnings than general credit cards. In addition, in a business that supports interest, employees' interests are utilized in their work. We will create a new business by connecting employees and customers who are previously divided in the form of service providers and consumers through a common interest. In the recent supporting interest competition, 131 employees participated and competed with their suggestions despite the fact that it was the first time the concept was held. The proposal that won the Excellence Award is currently under development for implementation. In the future, we will continue to develop unique services. Next is the Trinity, the business strategy that places interest at the center. We will maximize group synergy by reorganizing and evolving the business.

Let me explain the synergy between retail and fintech. Our company has consistently grown through the support of credit cards for retail over the 75 years from our founding in 1931 with furniture installment sales to the issuance of the EPOS card in 2006. Since the issuance of the EPOS card, this dynamic has flipped, allowing retail to support fintech, resulting in high growth of 16% per year over the subsequent 17 years. When we reassess our fintech strengths from the perspective of synergy through retail, we see that we can consistently recruit 700,000 to 800,000 new members annually by focusing on in-store membership recruitment. Additionally, our retail employees can require members through customer services and sales, which keeps customer acquisition costs lower than those of competitors. Furthermore, recruiting members in Maori stores, which attract many young visitors for shopping and events, leads to a higher proportion of younger members contributing to elevated rates of revolving and installment payments. Moreover, recruitment driven by shopping and service usage, what we call embedded finance, results in lower rejection rates, higher utilization rates, and lower default rates. The combination of all these factors has allowed us to achieve high growth and profitability that exceed industry standards. This unique management structure, which retail supports fintech, has also received high praise from the CEO of our partner Visa, who described it as one of the most successful examples worldwide. However, there are challenges associated with the synergy between retail and fintech. One such challenge is the decrease in customer touchpoints due to the withdrawal from in-house and private brand products. Therefore, moving forward, we will develop events and merchandise that closely align with the EPOS cards that support individual interests as new initiatives to replace in-house and private brand offerings, thereby enhancing the synergy with fintech once again. The approximately 1,000 employees responsible for these operations have transitioned from retail to fintech due to the withdrawal of private label products. Most of these employees are currently active at customer touchpoints such as in-store and card centers. but there are also many who are engaged in unfamiliar administrative tasks. These employees can once again thrive by applying the event management skills and customer service techniques they developed in retail to events that support individual interests. Additionally, they can leverage that know-how gained from planning, manufacturing and selling private-level products to create new revenue stream through merchandise that support individual interests. Through these efforts, we will significantly increase the recruitment of cars that support individual interests in stores. Next, regarding the direction of fintech. In addition to the gold cars that have driven growth so far, we will introduce cars that support individual interests as a new growth driver, evolving from a single engine to a dual engine model, thereby accelerating growth once again. To this end, We will launch a premium version of the cards that support individual interests. First, we will raise the credit limit to that of the gold cards to make them the primary cards. Next, we will differentiate ourselves from competitors by offering exclusive original merchandise instead of bonus points. Finally, we will provide benefits that allow customers to make donations according to their interests, responding to their social contribution needs, and aiming to balance impact with profit. In the future, we will improve the UX of the EPOS Lifestyle app, which will become an important customer touchpoint alongside physical stores through the new company MariUnite, which focuses on in-house front development, aiming to enhance customer lifetime value. Next, regarding the direction of future investments, we will leverage the know-how gained from co-creative investments in startups to support startups that promote individual interests, invest in intellectual property, and collaborate with individual creators by enhancing group synergy. Now, let's discuss capital allocation based on our future growth strategy. We will compress non-core businesses and focus on investments on businesses that support individual interests, thereby accelerating growth once again. I will explain four key initiatives. First, the asset allocation of stores to maximize synergy between retail and fintech. As mentioned earlier, I discussed the importance of stores in supporting the high growth and profitability of fintech. However, not all stores contribute to fintech. Some have low profitability, low customer attraction, and do not help in recruiting members. Therefore, we will proceed to close or sell stores that do not show potential for synergy, compressing assets and investments. Conversely, we will strengthen investments in stores with high customer attraction, where strategies for supporting individual interests through events and merchandise can be effectively utilized, maximizing synergy with fintech. Next is the allocation of human resources to leverage individual and organizational capabilities. With the structural transformation of the group's business, the retail workforce has decreased by about 60% over the past decade, while the fintech workforce has doubled. While productivity in fintech seems to have doubled in terms of transaction volume, the number of cardholders per employee has dropped to 70%. This decline is influenced by the acceptance of personnel from retail following downsizing of retail. Going forward, in addition to reallocating personnel to retail due to the commercialization of events and goods, we will improve the number of cardholders per employee to levels exceeding those of 10 years ago through efficiencies gained from digital transformation. Next, we will discuss the revenue contribution from new services that have emerged from human resource investments. High-margin new services developed so far, such as owner cars, dental credits, freelancer cars, and residual value-setting credits, are expected to make significant contributions to profits. In six years, we anticipate a contribution of 3 to 5 billion yen in contribution margin and 20 to 30 billion yen in LTV. In the future, while fintech may face negative factors due to rising interest rates, we will hedge against these negatives through increased revenues from new services, cost reductions in variable expenses from cards supporting individual interests, and fixed cost reductions from DX, creating a solid structure where high growth in transaction volume leads to a high growth in profits. Compression of corporate assets. Since the formulation of the Corporate Governance Code, In 2015, we have been gradually selling off cross-share holdings and we will continue to proceed with the sale of the remaining holdings. Finally, regarding the next mid-term management plan, to implement our growth strategy early and advance transformations aimed at enhancing corporate value, we are developing the next mid-term management plan through the fiscal year ending March 2031. Our goal is to achieve accelerated growth. We aim to double our group transaction volume to 10 trillion yen. Our target for ROE is between 17% to 20%, with a PBR of 3 to 4 times. Additionally, we aim for future KPIs of ROE above 25% and PBR over 5 times. Specific business strategies based on today's direction will be explained by the responsible executives at the IR Day in December. Moreover, we plan to announce the next mid-term management plan at the financial results briefing in May 2025. That concludes my presentation. Thank you for your attention.

So we would like to move on to Q&A session.

Takahashi-san of Mizuho Securities, please. This is Takahashi of Mizuho Securities. Thank you for the detailed explanation. And I have questions, one for Kato-san and one for Aoi-san. Question for Kaoi-san. I think the second quarter results was favorable, but against your four-year guidance, what was your progress, achievement for your profit? you showed your outlook for the second half too. So I understand your progress is in line with the four-year guidance. But if there is any gap for like a fintech business, can you please share us some details? Okay, so I will be giving an answer for your question. So the profit increase in the first half was substantial compared to our four-year guidance, but there will be data center related expenses expected in the second half. So you can understand our first half results was in line with our expectation. So if the business continues to progress as we planned, we will be achieving our four-year guidance. So there is no specific gap against four-year guidance. So for retail and fintech separately, is that the right understanding? Yes. So it seems like our profit increase in the second half will slow down, but in the second half for fintech, there will be data center-related expenses, and for retail, as there will be replacement of terminals, So for both of those segments, situations are the same. So for FP&A, the impact of the developing FP&A organization, Do I understand you are already seeing the positive contribution from that? On the monthly basis, on the monitoring framework, we are checking the progress at the Board of Meeting as well, and we are already tracking, always tracking the progress. Thank you. So my second question is for Aoi-san. For non-focused businesses, you are going to reduce the size of those businesses. But I understand you have done substantial restructuring already. But if you are going to do further restructuring, I think that is a good surprise to me. And my question is about So you are going to achieve growth mainly in the credit cards and you are going to support the retail business because it's going to be attractive to get the new cardholders. So as you're going to downsize the retail network, the connecting points with the new customers, with the existing stores, do you think you will have enough connecting points with the customers? Maybe you will be sharing some more details the next year, but in terms of competition, and also some business alliances with other companies. Are you going to further utilize those other networks and your strategy to expand the total transaction? But at the same time, you are going to downsize your retail at the network. So can you share how you're going to keep those two strategies in well balance? Thank you for your question. So first of all, We have been improving efficiency of our stores. We have taken a proactive approach in the measures to do that. However, we still think there is a further room for improvement. And if I can share what we have done already, in the last 10 years, So we have shifted the retail business to a fixed term contract, and we have been reducing the retail stores. So as we have shifted our business model for retail, we have seen the total size of the retail business to decline. But by closing low efficient stores, we wanted to really focus our other resources. But if we accelerate the process of closing the stores, we may see a temporary losses, but we will still have some human resources and there will be some labor related cost weighing on our profit. So, we could not really proceed the improvement of efficiency as we had planned. But from the beginning of this year, we were able to keep the good balance between the number of retail human resources and the cost. And now it seems like we are facing some situation, we don't have enough labor. So that makes it easier for us to improve the efficiency of the retail business. So we are going to accelerate this initiative going forward. And to your second question, so at the stores, while we try to improve the efficiency further, the connection points with our customers, it could have a negative impact to our credit card business. You have some concern over that. And for the existing or the remaining stores, those will be flagship Marui stores for us. And at those stores, we have a very wide market area. which attracts the customers from nationwide. And on top of the shopping, we will be holding events, and also we will have events to support individual interests. So we are expecting to attract the customers across the nation, especially young customers. And that will be reflected in the opportunity to acquire new credit card holders. We already have relatively high market share within the metropolitan area, but in terms of LTV, we want to attract young customers. That is going to be our intention. So from these two perspectives, at our flagship stores, which can attract many customers, we will be accelerating investment in those flagship stores so they will be like a shiny stores as a representative of marui stores we will be able to attract customers from all over the country and these marui stores will be the destination for all these customers we think we can increase the contact points with customers from these efforts. So at the Marui stores and for credit cards, that will help us to raise the brand equity of Marui by consolidating all these businesses and we will be enhancing our investment to achieve that. Thank you very much. Thank you for a detailed answer. If I can confirm what I heard. So the economy driven by individual interest. I think it was a very interesting expression. so the economy driven by interest for events or merchandises because these are the things people like and have strong interest in even if the stores are in the far away from where you live they will still be coming to visit your stores so that will be slightly different from cost spa market you can reach out to wider at the market area and by making more investment in those flagship stores Those stores can attract customers from wider area. Is that the right understanding? Yes, exactly. That is a good summary of what I wanted to say. Yes, that's what we intended to do. So, so far. from e-commerce, as we shifted to e-commerce, the area, sorry, era, and we were trying to change our stores to the stores that do not sell. And with our stores, we were expanding the events and also experiences. And for these, the experiences events, we needed to further enhance these events. That will be the future image of the stores for us. And that will be also linked to a great group synergy in the future. So we will be specializing in those and focusing on those initiatives when we develop our stores. Thank you very much.

Thank you very much. We will take the next questions. Daiwa Securities, Mr. Shigeoka, please go ahead with your questions. This is actually Ms. Shigeoka. Thank you for taking my questions. I have two questions. First question is regarding the revolving and installment payments, commissions increase, and what are the thinking behind that? And could you give us updates? On page 78 of the document, the FinTechs, revenue structure changes are explained and the funding cost is increasing and under the circumstances, you have been taking measures to increase the commissions and are they included in your reform measures? And what is your current thinking around this? Thank you for the question. This is Saito. In terms of the installment and revolving payments commission's revision, Other companies have started on working on that, and that's what we recognize. And in our case, we have been considering about this. And at any times, we have made preparations for us to implement that. But at this point in time, at what point in time, what kind of changes will be implemented? Nothing has been officialized as of yet, and the interest rates have been revised. And today, a future strategy growth strategy was explained while membership expansion and transaction volume expansion, how are we going to realize these will be the priority in terms of our strategy and from the profit perspectives, the installment and revolving payment commission revisions, Well, that's one thing, but we believe there is still room for expense control. For instance, the productivity will go up significantly. And once the efficiency goes up, the productivity and profitability will go up as well. So various strategies and measures have been implemented. At this point in time, we're trying to prioritize those. measures and strategies to be implemented. Thank you very much. As for the installment and revolving payment commissions increases, you have been considering that and once determined as necessary, you'll be making the disclosure. Is that the right way to understand this? At this point in time, you don't have numbers that can be shared and you are positively considering about this. At this point in time, at what point in time we are going to implement such revisions, we haven't factored that into our plans. Apple's card in the industry, profit per credit card is extremely high. That means that many customers have been using the installment payments and revolving payments and revising the interest rate associated with that will require understanding of our customers. So we'd like to carefully consider that. Thank you very much. Second question is regarding the next midterm plan. The growth story were explained in a very easy to understand manner. But this mid-term plan updates or EPS 200 and OP 60 billion yen, when it comes to the thinking behind those numbers, When you make the financial results briefing for the fiscal year 2024, you'll be also talking about the fiscal year 2025 forecast or at the time of the IR day in December, you'll be sharing the thinking behind the numbers for this midterm plan, the current midterm plan. When will we be talking about your thinking around this midterm plan? Thank you for the question. Let me answer that question. As for the current midterm plan, the recovery from COVID pandemic, it was not predicted correctly, so the progress is being delayed. As for EPS and ROE, the third year targets, will be achieved in the fourth year, this year, that means there is a delay of one year. And for the fiscal year ending in March, 2026, which is the last year of the midterm plan, the original plan included the contribution of the profits from the new businesses and other co-creative investments and other share buyback. These will have impact. So right now we are scrutinizing all of this. So next year in May, we will be able to disclose the numbers in the official manner. So I would ask for your understanding about this. Understood. Well, due to the COVID pandemic, the business environment has changed. And that is what I understand totally, including that point. the forecast and variance from the variance and countermeasures implemented, the EPA department was established and recently the budget creation and forecast accuracy have been improved. And I believe that this will lead to the next midterm plan and that will be explained in the future, I hope. Understood. Thank you.

Thank you very much. So we would like to move on to the next question. Kanamori-san from Okasan Securities, please. This is Kanamori of Okasan Securities. I have two questions. In the first quarter, this will be a question for Kato-san. So for revenue and the expenses, you always present the water flow chart. As of the first quarter, you have done some adjustment for the transaction volume, and FP&A expenses, By making flexible adjustment, you were able to control the cost. So you did not change your operating profit, the budget. And now you have presented your outlook for the second half. Maybe my question is very granular, but if we combine the first half results and the second half outlook, so the total revenue for the full year, so the adjustment, the revenue is still slightly less than what you have announced. Maybe this will be a minor issue. But in the fintech business environment, are you taking more cautious stance? Or? You expect this to be the minimum, the level you can achieve under the current circumstance. So the adjustment or revision we made in the first half was mainly in the travel and entertainment. 30 billion yen, the transaction volume was adjusted. So because the fee, the ratio itself was not so high to begin with for merchants, and there was some upside to the merchants' fee. So we did not change our four-year outlook or the guidance. And we continue to see the same trend. Against what we had expected back then, travel and entertainment is still showing some weakness, but because we did not think it was necessary to make a revision, the current situation is almost the same as the first quarter. So we believe we can still achieve a four-year guidance. And my second question is about the medium term capital allocation. You have provided various information. Finally, you have a good balance between your human resources and your retail stores. And in the slide you have provided, you have 22 stores now. And for those stores, you may still consider further closure in the sales indicated on page 73. If I may ask, how many of those stores are on the table for closure, possible closures or sales? Or, given the current circumstance of our country, we will continue to see our population to decline? And I understand you are a niche top and you are trying to differentiate yourself with the support for individual interests. But the total, the population who could hold credit cards is going to decline. And for the future growth of the credit card transaction or the membership growth, there will be slowdown sometime in the future. What do you think that could be a potential risk for you? Thank you for your question. As for the closures and the improvement of efficiency of our stores and the future outlook of our credit card business. I understand you raised the two questions. And for closing of our stores, there are the owners and also the tenants and employees working at those retail stores. There are many stakeholders involved. And we cannot really say anything about the plans for our closures. The more information we provide, it may cause some concerns to stakeholders. So this is a naive situation. We cannot disclose information. And we will be facing some other risks. as a company for some possible losses and for shareholders of us too. So we cannot share any information about how many and when we are going to close our stores. But as we explained earlier, we are finally able to keep the good balance between our human resources and number of stores, and that enables us to further improve efficiency. So for sure, we are going to accelerate these initiatives to improve asset efficiency or investment efficiency. And we are going to further Polish Marui stores or Marui brand. And for our FinTech business, our future outlook as we face a declining population, what kind of outlook we have was your question? And one thing we should look at is number of membership. Card business can be simply explained by number of membership and the transaction volume. So those will be the growth indicators for us. As for the membership, young people, young population is going to decline, who could possibly become a card holders, but we are able to only acquire a part of the Dozo population, 1 or 2% of the entire population as our cardholders. And as for the transaction volume, we are seeing the positive trend of cashless transactions. Because of the COVID, now we see 40% of the transaction done without the cash. And in the case of UK, it's like a 60%. And in Korea, we understand the 95% is done with the cashless payment. So compared to those other countries, there is a further room for expansion. So the new membership to be acquired and the growth of the transaction volume, if we think about these two numbers in the future, we believe there could be more growth to come in the future decades. Thank you very much.

Thank you. We will take the next questions.

SMBC Nikko Securities, Kanamori-san, please go ahead with your questions. This is Kanamori from Nikko Securities. I would like to confirm the detailed numbers and fintech-related matters. and this is a rather detailed question a couple of things first is the gain on the liquidated account receivables what is the size of this in the previous term you wanted to level out the differences between the quarters and first and second quarters this gap of 1 billion yen exists and I don't think you can completely eliminate this gap, but is this a level of gap that we will continue to see in the future? Thank you for the question. Sure, we wanted to level out the gaps between the quarters, but if there is a huge gap from the previous year, that could result in a decrease in the profit. So the balance with the previous year and balance between the quarters, we wanted to make good adjustments. So this time around, we considered the gap from the previous year. So that means that it is going to take some time to make the adjustments. The next is regarding the cost, the data center costs and terminal replacement costs. You have been saying that these costs would incur. In the beginning of the year, the data center 500 million to 1 billion yen cost and terminal cost of 500 million yen were anticipated but on page 35 the data center 500 million yen is described and terminals cost is not as heavy as we thought so what is the difference between the beginning of the year assumptions and the forecast as of today Let me answer that question. As for the data center-related cost, while there is a slight decrease, however, some of that is included in the system-related cost instead of the direct cost. So in that sense, it is not true to say that the cost would decrease from 1 billion yen to 500 million yen, but there could be a slight decrease of several hundred millions of yen. As for the terminal costs, In the same manner, we were considering 500 million yen, but here we show the terminal-related cost in terms of numbers, but some of the costs are included in the system side, so terminal costs remain unchanged from the beginning of the year. And regarding the FinTech business, on page 78, regarding the countermeasures for increasing interest rates, most recently the Fair Trade Commission has been reinvestigating into the Affiliate Merchants Commissions. In the past, well, the small to medium-sized Affiliate Merchants Commissions could have been asked to decrease or revise downwards, and you showed and disclosed the risk. And at this point in time, what is the risk in terms of the negative impact on the profit and what are the countermeasures that you have in mind to offset that negative impact? Kanemori-san, let me confirm your questions. As for the small to medium-sized affiliate merchants IRF revisions, what could be the possible impact of that on our performance? Is that the question? Yes. For sure, there was such an article that was published, and we are fully aware of the situation. But this time around, IRF revision, the background of that is They wanted to develop the number of small to medium-sized merchants who will start taking the credit cards. And for that purpose, the IRF revisions could be applied to some of the merchants. Well, we could not disclose the details, but based on the conditions, the possible impact that we may see is 1% of the total transaction volume. So that means that the impact on our profitability is very, very limited. And on the other hand, if the number of small to medium-sized merchants in the tourist destinations and other areas who will start taking the credit cards increases, that could give us a positive impact in terms of the transaction volumes and on our profits. And we have a high expectation for that. Did I answer your question? Yes. Thank you. Thank you very much.

So let's move on to the next question.

Murata-san from JP Morgan Securities. Can you hear me?

Yes. This is Murata of JP Morgan Securities. I have two questions. My first question is about a question as last year. Credit card to support interest, the maximum limit you're going to lift it, and it's not included in your guidance this year. You're going to implement this on the full scale from November. And there will be a 30 billion yen contribution this year. And next year, it will double or triple. And you're going to expect a profit contribution too. But if you can give us an update on the contribution to your business performance, please share numbers. Thank you for your question. This is Saito answering to your question. So... lifting the maximum limit for the credit cards to support the individual interests. There are many card holders and the use of the credit cards. And a certain number of the customers, we are going to invite them to become Gold members. And on the trial basis, we have the changed, the revised, the maximum limit of usage for those members. And from the trial, we have come to know 20% of those customers increased their usage, which would be the 30,000 people, they increased their usage to 400,000 yen. So going forward. Suki Premium is something we have mentioned. For the retail clients, we are going to increase the maximum limit on a regular basis to drive more transactions. And for the bonus points given for the annual usage, we are still negotiating with our partners, and the cutover is likely to be January next year, so it is still difficult to see what kind of profit contribution we can expect. But based on the track record, when we provided the new incentives, it's going to create the positive contribution. So it's going to be two or three billion yen profit contribution. That's the number we have shared before. We do not know if we can achieve that, but I think there will be a one billion yen profit contribution. coming from lifting the maximum limit. So that will be the contribution you can expect next fiscal year, right? And for this year, GMV is going to increase by 10 billion yen, and you will have some other profit contribution. Is that the right understanding? Yes. Thank you. And another question is about your strategy. So you will be implementing business strategies based on the individual interests. And you understand this is a blue ocean with a lot of growth opportunity, which I thought was an interesting story. The stories you shared with us were mainly positive outlook. And as you promote these strategies going forward, what could possibly be risks or challenges for you? If there are any, please share. If there is no risks or challenges at all, that's okay. But if there are any, please share. Thank you for your question. So credit cards, or sorry, the businesses to support individual interests by holding events and investment, we are going to implement that as a group. But it's not really a risk, but as for challenges, we share that there will be about 10 trillion yen as a whole. market. And within that, Oshikatsu, supporting your FAFSA area, we already see a very fierce competition for anime and IP because there are production companies holding rights They have such a strong power, and even if you want to hold events and issue credit cards, there are higher entry barriers for us. But this is the area people are very enthusiastic about, with limited players still. the transaction volume is very big in this segment of the market. This is the area we wanted to capture, but We are still facing some competition against the existing large players, or we need to negotiate with existing players. Of course, we will have a oshikatsu or supporting fabs, the other business, but the pet and music, sports, or climbing mountains and theaters, there are other areas of the individual's interests. where many people are really enthusiastic about. So in this area, as for the IP situation, we consider it to be a more blue ocean situation. There is an opportunity for us to get those IPs or we can create IPs on our own. and there is more flexibility for us to create the merchandises with a higher margin, and we can also sell them with more flexibility. Of course, there are some challenges, but there are a lot of opportunities too. And as for the events, As I said, Marui stores can attract many customers, and we will focus on those other stores where we can exert our brand equity. But as for events, by making them as businesses, in the commercial facilities outside of Marui, we can hold those events, or the arenas where concerts are held, or the other the stadium where the sports events are held. So we plan to hold many events across the nation and sell merchandises and promote our businesses to support individual interests. We already have a track record at our Marui stores. We were successful in holding events to acquire many new cardholders, but for those events held outside of Marui facilities, by raising the attractiveness of the contents we will be developing going forward. we can hold those events outside of our facilities. So we really need to further polish our capability to develop and create and develop these IPs. So the IP-related cost is one issue. And for these businesses, they're not going to be sustainable. There is going to be many replacements required because people may lose enthusiasm for specific IPs. Could that be an issue for you too? As we promote this strategy, we may come up with those kind of issues in the future. But excluding some Oshikatsu or supporting FAFSA, This is an untouched area now, so our intention is to gain our market share rapidly and become a dominant player in this area. So we want to make our credit cards supporting interest to be a number one brand. And after that, we may face some challenges. And then we may need to make some necessary adjustment and replace the contents. Thank you.

Thank you. It is time, so we'd like to close this Q&A session. With that, we'd like to close this financial results briefing.