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%.

For our original merchandise, we establish a policy of inventory turnover of 120% based on lessons learned from our previous withdrawal from private brand business. We procure initial inventory, assuming a 100% in-store sell-through, then meet any unfilled demand through online sales, achieving a total sell-through of over 120% versus initial stock. By executing this policy, we are able to maintain a high GP margin. Examples of our original merchandise include life-size standing panels and scene-based acrylic dioramas developed in collaboration with artists and creators. Looking ahead, we aim for sales of 12 billion yen from our original merchandise by FY2031, including event-linked, e-commerce, wholesale, and overseas sales. That concludes our overview of cars, events, and merchandise. Next, I will address our competitive advantages and barriers to imitation. Investors often ask whether our business that supports Suki could easily be copied by others. I would like to address this question. To begin with, this business starts with credit cards featuring characters and anime designs that reflect our customers' suki. This aspect can indeed be replicated, and many similar content-based cards already exist in the market. However, our business that supports Suki is not simply about content-themed cars. It represents the entire value of the customer experience created by combining the various elements Marui Group has developed through its retail business, events that let people immerse themselves in the worlds they love. Merchandise that physically express those worlds and staff who can share customers' suki in person. Providing this unique experiential value through the seamless integration of retail and finance constitutes our first barrier to imitation. The second barrier is our corporate culture. Our distinct corporate culture itself serves as the foundation that enables the creation of the business that supports Suki. As the proverb says, Rome wasn't built in a day. It takes many years to cultivate such a culture, and that long-term accumulation heightens our barrier to imitation. Let me explain more. The cards that support SUKI are not developed solely by our core fintech team. In fact, roughly half of them are created by divisions outside the fintech, our retail stores, the e-commerce division, the co-creation investment division, and the co-creation team, with cross-organizational efforts as well as the SUKI support contests. The entire group is collaboratively developing these cards. What supports these efforts is the corporate culture that encourages collaboration beyond organizational boundaries. This culture has been fostered through cross-group job rotation transfers, project-based organizational structures, and co-creation teams that collaborate directly with investee companies. Another core feature of our culture is that employees proactively propose ideas and take on new challenges. Grounded in our hand-raising culture, this mindset is nurtured through initiatives like Digital Cup, where employees compete to propose digital transformation ideas, the Suki Support Contest, and the Fail Forward Award, which recognizes those who learned from challenges and failed attempts. Now, let me discuss our future direction, focusing on two areas. First, opening up business development, and second, promoting main card adoption through SUKI. First, business development that will be opened up. Until now, we recruited ideas related to SUKI and then the project leaders to commercialize them only from within the company. Going forward, we will open this process to both internal and external participants, inviting ideas and project leaders from outside the company as well. By gathering outstanding ideas and people from inside and outside the organization and supporting them through Murray's unique collaboration framework, we will commercialize business that supports SUKI one after another. The driving force will be the open version of the SUKI support contest. We will invite not only employees but also external creators, startup founders and corporate professionals, students and participants from overseas, anyone who wants to turn their Suki into a business with excellent ideas from around the world. The first contest is scheduled for March 2026. Next, I will discuss promoting main card adoption through Suki. As mentioned, cards that support Suki have a high proportion of first-time cardholders and a high main card adoption rate, resulting in strong LTV. That is the key strength of the product, but 85% of our members join as their second or later card. and the main card usage rate remains low at 25%. By comparison, the main card adoption rate for first card members is 58%, leaving a 33-point gap, a potential area for growth in the future. How can we encourage second-card users to make our card their main card? The answer can be found in our highly popular pet card. Although 87% of pet card holders joined as second-card users, their main card adoption rate after enrollment reaches 40%, well above the 25% average for cards that support Suki. When we asked customers why, many said, My beloved pet appears on this card. I will never use any other card. This perfectly captures what suki truly means. It reminded us that the emotional connection customers feel is powerful enough to change behavior. The power of Suki has the potential to transform the credit card business itself. Traditionally, people use credit cards either because of status or rewards. Our cards that support Suki, however, inspire the third motivation to use the card simply because they love it. By tapping into this emotional motivation, we believe we can create a new market altogether. Accordingly, we will promote main card usage, not only through gold cards, but also via cards that support SUKI, their upgraded passion for SUKI premium cards, and exclusive benefits for premium members. Currently, the overall main card adoption rate for EPOS cards stands at 22%. Through these initiatives, we aim to raise it to 35% by FY2031. To achieve this, we will strengthen initiatives that go beyond member acquisition, enhancing events and merchandise programs to encourage main card usage. At the same time, we will advance main card adoption through DX. Since establishing the joint venture UX design company Mutor with Goodpatch in 2022 and launching the UX UI development firm MarieUnite in 2024, we have been hiring highly skilled specialists like ai engineers and cyber security experts with them we have begun improving our lifestyle app which serves as the key digital touch point with our customers here is an example of a ux initiative linked to suki for members of the studio yuji card we changed the app's home screen to feature the character gokigen panda This personalization increased engagement with the AppsQuest function, which guides users to explore Apple's card features and services, leading to a higher main card adoption rate. We will continue developing UI UX designs that connect directly with customers' Suki. Finally, our KPI. By FY2031, we aim to raise the main code adoption rate to 35%, achieve a total group transaction of 10 trillion yen, and reach PBR of 3 to 4 times. That concludes my presentation. Thank you for your kind attention. Thank you very much. We now move on to Q&A session. If you have any questions, please raise the red hand button on the screen. And afterwards, we designate a person. And please unmute yourself and ask questions. Now we'd like to start entertaining questions. We will confirm names of those who are raising hands. So please wait a moment. If you do not have any question, please observe the Q&A session continuously. Thank you.

So the first is from Takahashi-san from Mizuho Securities. This is Takashi from Mizuho Securities. Thank you very much for the very easy to understand explanation. I have three questions. One is for Kato-san and the remaining two is for Mr. Aoi. My first question is for Kato-san. As always, I would like to understand something. I think that the retail business in the second quarter was doing very steady, but for retail and fintech, what is the progress against your annual target are you slightly behind or are you a little bit ahead of the plan is my first question my second question is for mr aoi i think that the card that supports suki is great and i think your explanation was also very easy to understand the two questions that i have is You mentioned that this is not oshikatsu. I think it was explained in various areas. You mentioned about pet card as an example. You mentioned that this has a very high main card adoption rate. Towards the future, when you think of LTV, in what area would you feel a potential today? And maybe this is something that will become more open and maybe the various ideas will be generated going forward, but I'm sure that you have various antennas that you have allocated in various areas. So I would like to understand what your opinion is around this. My other question is, which is my last question. your fintech and retail initiative is planned to expand in the regional local areas as you work on this initiative what is going to become necessary obviously you need to secure space but are there any bars in achieving that or is this something that is rather easy to execute You will be expanding to the local areas, so I'm sure that liquidity of human resource is also something that you need to elevate. So when you move people, what are the bars that you may be facing or do you not have any challenges in that area is my third question. Thank you. So let me answer to your first question. Thank you very much for the question. Our progress against the results or the annual target. We don't disclose the first half target. but to explain about our internal target both for retail and fintech we have slightly exceeded our target for the first half of the year starting with retail the areas that we exceeded our target would be the event that supports suki it was more than what we had anticipated and so that's a positive upside for us the related businesses also are a slight surplus for fintech the revenue is steady on track against our plan. It's just that the cost, I think there were some points that were held back. So for both segments, we have been able to surpass the budget, but we don't know how the remaining year is going to unfold. And so we have not made any changes to our annual target. I hope that answers your question. Yes, thank you. So let me answer to your second and third question. Starting with the second question. From the LTV perspective, what are the future attractive areas that I see? I think was your question. The business that supports Suki is centered around card. We have events and merchandises, but The animation department was a triggering opportunity for us to expand this initiative, and so I think it's animation-centric, character-centric games as well. But as you have pointed out, pet cards. would be an example, which is slightly different from oshikatsu, but for each individual, they are indispensable because it's like a suki of your family member. And so I think there's an expansion around that. Animation, games, characters, and pets. and also the castle cards and museum cards. The difference is that are there any rights affiliated to this? So if there are any rights affiliated to some of the assets or properties, we do need a consent or permit. And when we do events and when we sell merchandise as well, there are various restrictions that we need to overcup or consider as we try to generate business. Like museum cards. There are various goods that can be invented, I guess, for those that don't have any rights issues. the animals in the zoo. Castles as well. And so if we summarize all of those opportunities anything that does not have any rights that are suki they can be cards or translated into goods like we are originally from retail and so we want to put a lot of focus on merchandise so that from a wholesale perspective and also from overseas sells perspective, I think we have an opportunity. I think the Japanese culture is also very popular from overseas guests. And so these non-rights opportunities like the clay figure is also an example when it comes to museum related ideas. And so that's something that we would like to look into. The bars that I believe we may be facing when we try to expand to the local areas, we need to secure space. We would like to secure space. we have been working on store openings and so the real estate development division is already trying to collect various information so that we can negotiate for space and so i think in the near future i think there will be a promising opportunity on the other hand when it comes to resource apple's card We have been able to cover north all the way to south from Hokkaido all the way to Okinawa. We have branches to acquire new users through the EPOS card proposition. We also work with real estate partners to negotiate to do various business activities so when it comes to transferring of people moving people and hiring people we do have a foundation that we've been able to establish and so i don't see personnel as a big bar or higher bar but as we start working on these initiatives we will be needing people that can be a touch point of new potential customers. And we also need to train people. So I think those are areas that we would like to start putting our efforts around. And so that's something that we've started preparing from the first half of this year. I hope that answers your question.

Thank you. Thank you. Thank you. We'd like to take next questions. Daiwa Securities, Shigeoka-san, please go ahead with your questions. This is Shigeoka from Daiwa Securities. Am I coming through? Can you hear me? Yes, we can hear you. Thank you. Thank you for the explanation. Well, I just want to confirm one thing. When it comes to progress in the first half, on a consolidated basis as well, Including the corporate eliminations, there was a slight upside overshoot. Is that the right understanding? Yes. Yes, that's the right understanding. Understood. Thank you. That was one thing I wanted to confirm. I have a couple of questions. First question is regarding the retail event-related revenue. Earlier, you explained that there are events that supported Suki that had upside. And in terms of the details of that, more than you expected, larger size event contributed or the compact type merchandise sales performed better than your expectation. And also, you mentioned that you expand those events externally. and have they started to contribute to the profit can you elaborate on more details and against your plan in the second half it seems like you can grow this further you announced in the first quarter When you look at the operating profit forecast in the first quarter, it seems like the growth will be milder in the second half. Is there any room for you to grow this business farther in the second half? So that was my first question. My second question, can I go ahead with my second question or should I wait for your answer for the first question first? Please go ahead with your second question as well. My second question is regarding the shareholder return. This time around, you set the upper limit for the share buyback. In terms of how you think about this, you will continue to strengthen the shareholder return. That is the policy as I understand it. And in this fiscal year, when the share price remain at a low level, you will carry out the share buybacks and at the same time, you will pay out dividends in a steady manner. And the balance sheet, the ideal balance sheet that you just announced, the 30 billion yen was mentioned as part of the capital optimization. And basically those will be executed in FY26 and onwards. So FY26 and beyond. the capital optimization will take place and the shareholder return will be strengthened in or after 2026. Is that the right understanding? That's all from my side. Thank you. To your first question, whether the large-scale events or small-scale events contributed more, both contributed, but the main upside came from the large-scale events. As was questioned, these large-scale events were convened in external world as well. So both external and internal large-scale events performed very well and made a huge contribution. The second question is whether we have room for further growth in the second half. If we keep the pace as we saw it in the first half, we may be able to grow more. But when it comes to events, those events themselves Sometimes those events will be a hit and some other events will not be a hit and will not receive good reaction from the participants. So we are being careful. So if the events perform well as we saw it in the first half, there may be some upside in the second half. Next is about the balance sheet. This time around, we made the announcement as shown in the PowerPoint. If the share price does not reflect the future profitability, we will carry out the share buyback 30 billion capital optimization rather than for the capital optimization of 30 billion. If there are excessive capitals we'd like to address it so and that will be conducted in fi 26 and 27 this time around uh the share buyback we are talking about this time around and these are the ones that we will carry out depending on the share price performance so the 30 billion capital optimization these will be carried out in fi 26 and onwards and the fintech will produce more profit in the future so looking at the profit accumulation and the equity level, you will carry out the initiatives as necessary. Is that the right understanding? Yes, it is. Thank you.

We would like to move on to the next question. Kanamori-san from Okasan Securities, please. My name is Kanamori from Okasan Securities. I have two questions. First, it's more of a follow-up question to the previous questions regarding the investment of each of the businesses. Starting with the retail business, as of the first quarter, The water flow chart for the operating profit for the retail segment and when I compare that with the materials today, the tenant and event both have exceeded the OP value. As of first quarter, the tenant annual revenue was $1.1 billion, but now it's $1.4 billion. And for the event, Initially it was 600 million yen and now it's 800 million yen. But you have mentioned that the expense as of the first quarter You have felt that there is a increase in profit of 400 million yen from the second quarter to fourth quarter, but there is a negative profit factor of 300 million yen that is now coming up. And so I want to understand how this is structured in your mind. And my second question is regarding FinTech. This is more of a clarification, but when you explained in the first quarter, you mentioned that you have pushed forward the timing of increasing the commission rate, but the securitization elimination is going to happen, and therefore, this is how the operating profit is going to be is what you have mentioned. You haven't made much changes to that, but I think that we will be facing a raise in interest rates. And when that does happen, I don't think that you have embedded that into the commission rates, but Next fiscal year, if there is a profit increase factor that is about 10 billion yen from interest rates, is that something that has not changed? Does that remain to be the plan is my question. And another question for Mr. Aoi. The business that supports Suki, you mentioned that there's a lot of progress in the acquisition of main cards. And this may not be directly tied to this, but usually the main card increases. When this increases, You've mentioned about maximizing households in your past IR events. As the main card increases, I think that you can increase your share, but What is it that they are paying with this card? I think that you had some breakdown around that. And compared to the initial plan, I think this part is growing, but this part is not being used. I think if you have that information in front of you, we would like to get a sense of how that looks like. Let me answer to the first two questions, starting with Your first question. For the waterfall chart, as you have mentioned, the tenant and event revenue both are quite bullish and so In the second half, we have some strategic expenses that we had been expecting, but this is actually going to probably be an expense that will drive revenue increase towards the next fiscal year. And so that's why the balance in this waterfall chart has slightly changed. Your second question about the changes in the commission rate. and how the profit changes. We are looking at 10 billion yen on an annualized basis, and so we're going to achieve 4 billion. So next year, if we don't do anything, we have a 6 billion yen impact. What we do with that is not decided yet, but in principle, we don't want to generate any factors that tie to a significant change in profit, and so there's a possibility that we may take some hedging measures. For the value on an analyzed basis. We're looking at $10 billion analyzed, and this year we're looking at $4 billion, and next year $6 billion. That breakdown has not changed. When you say hedge, it would be the elimination timing of the securitization. Next fiscal year, there's a possibility that there may be some adjustments. Is that a correct way to interpret what you just mentioned? Elimination, we can't adjust, but I think it's the timing that we will work out Maybe. Okay, understood. Thank you. And let me answer to the third question. Regarding the main card translation within the business that supports Suki, as you have mentioned, Kanamori-san, we're trying to maximize share. And so, yes, they are tied with each other. So the definition of main card. In the IR day, the FinTech representative will be explaining this in detail, but roughly speaking, share is about 33%. The people who are using Apple's card, they are the main card. We're seeing them as main card users. The 33%, so more than one-third, in order to get people to use more than one third, then we do need to have them heavily use Apple's card. But thanks to all of your support, we have been able to make progress because there is a rent payment that we have a warranty around. And in other cards, this is not something that we can add as a service, but this is really contributing to the share maximization. And so this is really driving usage and that has progressed in gaining share. On the other hand, the areas where the growth is sluggish would be smartphone contracts. This would be the contracts with the main carriers. And this would be a key expense of the young generation, as you know, but a lot of the key carriers are trying to capture this within their own ecosystem. And so there is a difficulty in growing in this area. So that's a weakness that we're experiencing. But for other areas, I think that there's an opportunity for people to use EBL's card, for example, insurance premiums or The non-life insurance payment, I think this is an area that we can serve. You can get points when you pay with our card. And the insurance companies, they don't need to burden the deposit commission. The credit card company is going to burden that, and so that's a win-win for both parties. And so the insurance premium payment is also what we're promoting with our card, and this is growing significantly. So there are new services like tax payment that we're trying to add within our services. so that we can increase the share of usage so that we can combine this card usage with the main cards. That's it. Understood. Thank you very much.

Thank you. We will take next questions. Morgan Stanley, MUFG Securities. Takemura-san, please go ahead. This is Takemura from Morgan Stanley MUFG Securities. Thank you. I have a couple of questions as well. First question is regarding 63, page 63, the goods that support Suki. I would like to ask questions about the status of this business. On the right-hand side, the in-house merchandise sales. This fiscal year, 500 million yen, GDP margin is 75%. It's quite high. So I'm curious about the forecast from mid to long term perspectives. every year there is a growth of 300 million to 500 million, rather moderate growth, or at some point in the mid-term plan period, would there be any inflection point where this business would significantly grow? That was my first question. Second question is regarding page 66. So the goods that support Suki, The expansion in overseas markets is mentioned. It seems relatively small in terms of the scale of this business. So in overseas markets, when you sell merchandise, what are the specific initiatives you are thinking of? Are you leveraging the e-commerce on internet platform to sell merchandise? And how are you leveraging your strengths? So these are the points that I was concerned. So if you can elaborate more on this and add colors to this, that would be appreciated. Thank you very much for the questions. I will answer these questions. The first question regarding the goods that support Suki, the GP margin forecast for these in-house merchandise, our target is 80% GP margin. We are slightly below this level, but we are working very hard to be closer to that level. And that was the first half situation. And the second half, the starting point will be the similar level. In the future, we are raising the added, we are adding values to come closer to 80%. As I explained earlier, so in the past we had private brand products developed one after another 50 billion to 60 billion yen sales were achieved at one point in time with the private label private brand that we weren't able to have good inventory turnovers and we had some losses and we continued to be in the red and we had no option but to withdraw from that business. That was a very painful experience. Based on this painful experience, we are determined to not repeat this kind of an experience going forward. And It is important to set the right selling prices, but it's also important to not have the excessive inventory without being too much reliant on the discount offering. We are committed to keeping the inventory level at an appropriate level. So by doing these things, we are aiming to achieve GP margin of 80%. The other thing is that FY31 revenue 12 billion well from 500 million currently to 12 billion yen that is a big jump as we try to achieve this not only the e-commerce and events but we'd like to also work on the overseas expansion of the businesses so that is the very ambitious target including all of these on aspects So when we have the unique merchandise, for instance, anime or character related goods, Well, there are many retailers or chain retailers who handle these character-related merchandise, and those retailers would want to carry these unique merchandises. So we'd like to leverage those retail network. One thing about the overseas expansion is that well the japanese contents are drawing so much interest and passion from all over the world so leveraging the e-commerce platform we'd like to deploy these businesses going forward to the overseas businesses of overseas markets and the japanese culture as at large is attracting a lot of attention from overseas for instance we talked about the castle and stone walls And to what degree these would attract interest or attention, we're not sure, but when it comes to Japanese unique culture, we'd like to develop the goods that feature the unique culture of Japan. So they don't necessarily be linked with events and cause, but we'd like to keep working on developing the goods that support individuals' suki and interests. So more than ever, the Japanese culture is attracting a lot of attention from all across the globe. So we'd like to tap into this opportunity to be more proactive in the products developments and leveraging the so-called cross-border EC platforms to sell those products as appropriate. Understood. Thank you.

Are there any other questions? If you have a question, please use the red hands button. Thank you. We do have some time restraints, and so I would like to ask the next person to ask the question. This will be the last question. Oiwason from Jefferies Securities, please. Hi, this is Oi from Jefferies. The unit price per tubal on page 13. You mentioned how it is increasing. At what timing do you do this is my question. Thank you for the question. This would be at the timing of when the tenant changes or when the contract is renewed. Usually, we have a reshuffling of the tenants every five years, and so about 20% changes. And the unit price per tubal is increasing by 10%, so that's 10% of 20%, and so about 2% the unit price per tubal is increasing per year. Does that help you understand? The increase in event revenue Is this impacted by the Tsubo unit price? That event would be separate because this unit price per Tsubo is related to tenants. There are some rent that we charge for events, but basically the gross profit as well as the sales of the merchandise would be the key part of the income. Okay, understood. My second question was raised in Nikkei newspaper. You have some carrier breaks and that is demonstrated in your attrition rate. Thank you very much for your question. We believe that it is contributing to a reduction of attrition rate. About two years ago, I had utilized this system to learn in graduate school and this system has expanded. It doesn't limit to education. There is a carrier so that you can utilize to learn or do what you like. So it's a system to support the employee's suki, and we're trying to create an environment that encourages the employees to really be able to absorb themselves in their passion or suki, and I think that is tying to reduction in attrition rate. Udaka-san says, went to business school for a year and she has really upgraded herself and she's really helping us in our business you can have an education absence for one year but you can also really absorb in your suki and we have like a three-month absence available for employees so if you have a hobby that you really want to polish or if there's something that you want to concentrate in learning about around your hobby, then you can take this three month leave. A person that I know is a YouTuber and This person is really taking on this challenge of becoming a YouTuber and looking into the opportunity of really becoming being independent. And there also is an example of a welfare. Opportunity, so a massage. Training for welfare and nursing is an example of a leaf that our employees have experienced. So there's various ways of suki that you can really absorb through this system. For us, I think this is an investment in human capital. Each individual suki really is diverse and being able to leverage on that when you do your work, I think is definitely going to really play a role at some point in time in your career. And so that's why we are encouraging the employees to make use of this system. Okay, thank you. Well understood.

Thank you very much. Now it is time. So this concludes the financial results briefing for the second quarter of the fiscal year ending March 2026. At our IRL day on December 9th, we will provide a more detailed explanation of the retail and fintech initiatives within our business that supports SUKI, as well as insights from our outside directors on the business. We sincerely hope you will join us then as well. Lastly, we kindly ask all participants to complete a short questionnaire regarding today's briefing. After leaving the Zoom webinar, you will be automatically directed to the survey page. Your feedback will be greatly appreciated. Thank you once again for your time and participation today.