Marui Group Co Ltd Ord

Since it is time, we will now begin the Murray Group Company Limited financial results briefing for the second quarter of the fiscal year ending March 2026. Thank you for joining us today despite your busy schedule. Today's materials are available for download from our corporate website. Please refer to the summary of second quarter financial results for the fiscal year ending March 2026. Regarding today's agenda, we will provide an approximately 30 minutes of presentation, followed by a Q&A session. To provide a detailed explanation of the progress and future direction of our business supporting SUKI, materials related to business performance are included in Appendix Please note this briefing is being streamed from the CoCreation Lounge, a collaborative communication space opened at Marui Group Headquarters this September. Recording of this session will be available on our company website at a later date. Today's presenters are Director, Senior Managing Executive Officer, and CFO, Hirotsugu Kato. He will be explaining about the financial results and the business progress. Next, regarding the progress of the business that supports SUKI and the outlook, it will be presented by our President, Representative Director, Representative Executive Officer, Hiroshi Aoi. In addition to these two people, we will have Udaka, our IR director that will be answering during the Q&A session. These would be the topics that we will be covering today. Our CFO will first explain. Hi, this is Kato speaking. I will be explaining about the overview of the financial results briefing for second quarter of FY ending March 2026, as well as the progress that we've been able to make. Let me first talk about the financial highlights. The total group transaction volume increased by 10% to 2.6137 trillion yen. The second quarter saw a recovery to double-digit growth, continuing to set new records. Consolidated operating profit rose 23% to 26.4 billion yen. Excluding the year-on-year impact of securitization, underlying operating profit increased 14% to 24.4 billion yen. By segment, retail increased profit by ¥1.9 billion to ¥5.1 billion, exceeding pre-COVID levels. Fintech increased profit by ¥3.1 billion to ¥25.4 billion, a record high for the first half. Ordinary profit rose 17% to ¥23.1 billion, steadily expanding the profit margin despite increased financial expenses. Net income rose 22% to 14.8 billion yen, marking the fourth consecutive quarter of profit growth. Financial indicators. Total group transaction volume reached a record high of 2.6137 trillion yen, with both operating profit and net income showing significant increases, surpassing pre-COVID levels. non-operating income and expenses, as well as extraordinary gains and losses. Non-operating expenses increased by ¥1.4 billion compared to previous year, primarily due to rising interest rates. Ordinary incomes expanded steadily, increasing by 17%. Extraordinary gains and losses contributed to profit growth driven by factors such as gains from the sales of cross-shareholdings and the absence of impairment losses on stores recorded in the previous year. As a result, net income increased by 22% to 14.8 billion yen. Trends in segment-specific revenue and operating profit. Retail operating profit exceeded pre-pandemic level, reaching 5.1 billion yen. Fintech OP also steadily expanded its profit margin, achieving a record high of 25.4 billion yen. Both segments resulted in increased revenue and profit. Next, the breakdown of changes in operating profit. Retail is plus 1.9 billion yen, fintech plus 1.1 billion yen, corporate eliminations minus 0.1 billion yen. Excluding the impact of debt securitization, underlying operating profit increased by 2.9 billion yen. The impact of accelerated debt securitization amounted to 2.0 billion yen, resulting in a 4.9 billion yen increase in consolidated operating profit. Details will be explained later. Next, update on retail. Tenant revenue increased by 800 million yen due to reduced vacant space and higher unit prices. Event revenue rose by 600 million yen, driven by strong large-scale events. Related businesses also performed well, contributing to an additional 200 million yen. Overall operating profit increased by 1.9 trillion yen. Factors contributing to increased tenant revenue. Tenant revenue increased by 800 million yen due to a decrease in unutilized floor space and an increase in monthly rent per square meter. Status of unoccupied section decreased from 6,800 Tsubo last year to 5,200 Tsubo. The stores that don't sell, as of the end of September 2025, the area ratio of non-retail tenants reached 65%, a 3% increase year-on-year driven by the introduction of experiential tenants and other factors advancing to category conversion. We plan to increase the composition of non-retail tenants to 70% by the end of March 2026. We are increasing the number of experiential tenants, such as opening Pokemon Center Fukuoka at Hakata Marui in June 2025, and will continue to introduce experiential food and service tenants that delight our customers. Next is update on FinTech. Excluding securitization of receivables, core operating profit increased by 1.1 billion yen due to higher revenues and reduced point expenses. Segment profit rose by 3.1 billion yen driven by factors including the acceleration of securitization activities in response to the increase in installment and revolving loan fee rates implemented in the second half of the fiscal year. Card transaction volume reached a record high of 1.2252 trillion yen. The merchant fee rate for the second quarter increased to 1.22% following the foreign currency settlement fee hike implemented in July 2025.

This slide shows the trend in installment and revolving payment fees. In the first half, the total installment and revolving payments increased 11% year-on-year, while fee income grew steadily by 7% to 31.5 billion yen. This chart shows the year-on-year trend in installment and revolving transaction volume. Even after we announced the fee rate revision at the end of June, transaction volume has remained stable, and we expect fee income to continue expanding in line with our assumptions. Next is the status of new card memberships. In the first half, new memberships totaled 430,000, an increase of 30,000 from the previous year, driven by the continued expansion of the EPOS card that supports SUKI. Turning to gold cards, the number of new gold card memberships reached a record high, 180,000 in the first half, that was supported by our Start from the Gold initiative, under which customers using services such as rent guarantees are invited to join as gold card members from the As a result, the total number of cardholders reached a record high of 8.11 million. Memberships in the cards that support SUKI category reached 1.26 million, and when combined with platinum and gold card members, these now account for 62% of all cardholders, making a continued expansion of their high-grade membership base. Next on balance sheet and capital allocation. Total assets increased by 85.4 billion yen from the end of the previous fiscal year to 1.1388 trillion yen, mainly due to higher operating receivables. The equity ratio declined 1.4 points to 22%. Now, the capital allocation. Out of 24.1 billion yen in basic operating cash flow, 23.7 billion yen was allocated for growth investment and shareholder returns, 10.9 billion yen for growth investment, 3.2 billion yen for share buybacks, and 9.6 billion yen for dividends. Human capital investment totaled 5 billion yen, accounting for 28%. Next is our initiative to expand the number of individual shareholders and the movement of our PER. In the earnings call in May, we explained that we aim to lower our beta value and raise our PER by expanding our base of individual shareholders In July, we sold 10.28 million shares previously held by five cross-shareholding companies to about 10,000 individual investors. Since then, additional purchases have continued, and as of the end of September, the proportion of individual shareholders reached a record high of 13%. Our PERL has performed strongly since the offering and reached 21.6 times in September. As for ESG, in October 2025, Marui Group received the Visionary Award from the Women Corporate Directors , the world's largest organization supporting female board members becoming only the third company in Japan to receive this recognition. We were commended for promoting diversity in decision-making and establishing an effective governance framework through organizational and cultural reform. Finally, the full-year forecast. We expect to achieve our three key KPI targets, EPS, ROE, and ROIC, exactly as planned at the beginning of the year. Operating profit is projected to rise 12% to 50 billion yen, and net income to increase 5% to 28 billion yen, both unchanged from initial guidance. We will continue to monitor interest rate trends, but ordinary profit is expected to increase 5% to 42 billion yen, also in line with the plan. By segment, operating profit is forecast to increase 28% to 11 billion yen for retail and 7% to 47 billion yen for fintech, both unchanged. For the second half, retail expects strategic spending on promotion and marketing, but the full-year forecast remains 11 billion yen as planned. In fintech, taking into account the positive impact from higher installment and revolving fee rates and the negative impact from reduced receivables securitization, we expect operating profit for the full year to remain on plan at 47 billion yen. Although we will not conduct securitization in the second half due to the timing of the fee revision, there will be no profit impact because the fee rate revision was implemented earlier than originally scheduled. Lastly, if our share price does not fully reflect our future profitability, we will carry out flexible share buybacks. Following the first half, we have set a maximum buyback limit of up to 20 billion yen for the second half as well. That concludes my presentation. Thank you.

Next, the presenter will be our President and Representative Director, Mr. Aoi. He will be explaining about the progress as well as the outlook of the business that supports Suki. I would like to explain about our progress and outlook regarding the business that supports Suki. Our company champions an economy driven by passion as its vision, Suki, and as a strategy to realize this, we are advancing business that supports Suki. The purpose of business that supports suki is to achieve both impact and profit by expanding conception for oneself through suki into conception for someone else and for the society. Our definition of suki is not limited to oshikatsu. The suki we support encompasses not only oshikatsu but diverse passions such as pets, mountain climbing, sports, food culture, art, and Japanese culture that are irreplaceable and unique to each individual. Business that supports Suki will primarily develop cards, events, and goods that support Suki. Today, I will explain the progress of these three businesses. I also would like to explain the corporate culture that underpins them. First, here is the status of the card that supports Suki. The number of projects has expanded from 88 projects a year ago to 130 projects, and the number of members have also increased from 1.01 million to 1.26 million. In 2025, two new projects have debuted. I would like to introduce a couple of them. The first is the Rika-chan card. There are two types, retro Rika-chan reprint edition and Rika-chan who only buys pink. The castle cards come in two types, the castle itself and the stone walls. Many castle fans actually prefer the stone walls over to keep, and about 30% of applicants choose this option. If successful, we plan to expand to castles nationwide in the future. Additionally, 0.1% of the purchase amount will be donated to Japan Castle Association, which works on castle preservation and maintenance. Next is the men's volleyball team, the Tokyo Great Bears. You can choose from two types, characters and players, to select the design of the player you support from among the 14 athletes. Here too, 0.1% of purchase amount will be donated to the Tokyo Great Bears as funding for developing next-generation players. Here is the breakdown of cards supporting Sukip, both in terms of projects and membership numbers, characters, and animation dominate. This stems from the fact that the initiative originally launched with a focus on animation projects. In recent years, projects in new drawn roles such as social contribution, creator, sports, and arts as well as culture have been increasing. And thanks to all of your support, our donation-linked cards have expanded to 21 programs reaching 110,000 people, including Pet Cards, Museum Cards, and Harold Bonney Cards. The key feature of Tsuki Cards is that the LTV, which is 2 to 7 times higher than standard cards. This is because the proportion of the cards is higher due to the notably high proportion of young members among SUKI cards compared to general cards, resulting in a main card usage rate of 58%, 11 percentage points higher than the 47% for general cards. Therefore, we will expand recruitment of first SUKI card members nationwide through events that support SUKI. The share of EposCard is 16% in the Tokyo metropolitan area and two neighboring prefectures where Bari stores are concentrated, but only 5% in other regions. Raising this share to the level of Tokyo metropolitan area and two neighboring prefectures would unlock a potential of 9 million new users, a scale exceeding the current membership of 8.11 million. The membership of Suki Support Card aims to reach 3 million members by March 2031 and surpass the number of Gold Card members by the fiscal year ending March 2041. Next, events that support Suki. As a result of our efforts to create an event-filled store, the number of events held annually has rapidly expanded to approximately 6,000 over the past three years. Of these events supporting passions, account for 1,300, representing over 20% of the total. Sales for the first half of the year at events supporting Tsukithin reached 5.2 billion yen, a 46% increase year-on-year. Animation, games, and music artists accounted for the majority of this. New members totaled 60,000, a 39% increase. Both sales and new members for music and artists grew significantly, more than doubling year-on-year. The event status for the music artists, focusing on artists like these examples, we held over 70 events in the first half of the year, attracting over 200,000 attendees and gaining over 20,000 new members. Events celebrating Suki achieve an average customer spend approximately 2.3 times higher than the store average. They also generate 17 times more new members per day compared to regular events, making them the most efficient sales store within Marui's store. The operational format are categorized into compact events of approximately 40 Tsubo. focused on merchandise sales and large-scale events of approximately 150 tsubo, incorporating exhibition and experiential space. Large-scale events generate over twice the number of visitors, new members, and sales revenue compared to compact events resulting in higher per-person productivity. They offer potential admission fee income and will expand our planning of large-scale events going forward. Here's an example of a large-scale event. It featured many creators, manga, animation. In the first half of the year, it held approximately 40 times, attracting 150,000 visitors and gaining approximately 10,000 new members. explore new areas of suki the rising indie game scene we held a large-scale event with fans using funds raised through crowdfunding additionally we employed led sauna product fair achieved sales of 50 million yen and attracted 10 000 paying customers we will continue developing events that support these diverse suki Under our policy of creating an event field store, we have focused solely on expanding the number of events held, but going forward, we will review our approach and expand events that support people's passion. The fiscal year ending March 2031, we will reduce the total number of events held to about 80% of the current level while expanding events that support people's suki to more than double of the current situation. Sales for the first half reached 5.2 billion yen with full-year sales projected at 10 billion yen. Our in-house merchandise line launched this fiscal year. It is under active development. First half sales are projected at 200 million yen with full-year sales at 500 million yen and a gross margin of approximately 75%.