36th Term in FY2014 First Half Year Business …...¥12,476 million (+7,618 million YOY) in...

Masaaki Kanai

President and Representative Director

36th Term in FY2014 First Half Year

Business Results Briefing

October 1 , 2014

Contents 1. FY 2014 1st Half Sales Results 2. 1st Half Overseas Performance 3. 1st Half Domestic Performance 4. Global Supply Chain Structuring 5. FY 2014 2nd Half Business Plan 6. Activities to Strengthen the Meaning of MUJI

1. FY 2014 1st Half Year Sales Results

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FY 2014 1st Half Sales Results ［Consolidated］

■ Revenue growth for five consecutive years; profit growth three consecutive years leads to record bottom-line results.

• Improved gross profit ratio overseas offset lower gross profit ratio in Japan due to tax-inclusive labeling required as part of national consumption tax increase. Gross profit ratio reached 47.6%, a 1-point year-on-year improvement. • Asian businesses contributed to growth, including newly consolidated MUJI Taiwan.

［Unit:million yen］ Result Share YOY Plan ratio

Net Sales 123,260 100.0% 118.7% 102.0%G.P.and Operating rev 58,649 47.6% 121.1% 104.1%S.G.A 47,013 38.1% 121.5% 103.5%Operating Profit 11,636 9.4% 119.7% 106.3%Ordinary Profit 11,804 9.6% 110.9% 104.5%Net Income 6,931 5.6% 106.4% 105.0%


FY 2014 1st Half Sales Results ［Non-Consolidated］

■ Four consecutive years of revenue, ordinary profit growth drive record profits

• ¥12,476 million (+7,618 million YOY) in wholesales* to overseas retail locations • Net sales +17.6% YOY (+9.1% YOY excluding overseas wholesales) • Support of tax-inclusive labeling, aggressive S&B, and interior renovations led to year-on-year net sales gains, even after consumption tax increases

*Beginning January 2013, product wholesales to overseas retail locations are included in net sales (prior to that, product wholesales were treated as Non-trade transactions, with transaction-related fees recorded as operating revenues)

［Unit:million yen］ Result Share YOY Plan ratio

Net Sales 99,284 100.0% 117.6% 106.3%G.P.and Operating rev 40,299 40.6% 107.9% 103.8%S.G.A 31,585 31.8% 107.9% 103.2%Operating Profit 8,712 8.8% 107.6% 106.2%Ordinary Profit 10,983 11.1% 113.4% 112.9%Net Income 6,914 7.0% 114.7% 116.9%


Result YOY Syare ChangeNet Sales 123,260 118.7% 100.0% -

Advertising Expenses 1,830 105.6% 1.5% -0.2% Logistics Expenses 5,320 123.1% 4.3% 0.2% Personal Expenses 15,468 124.4% 12.5% 0.6% Rent Expenses 12,913 119.6% 10.5% 0.1% Depreciation Expenses 2,088 110.3% 1.7% -0.1% Other Expenses 9,391 125.1% 7.6% 0.4%

S.G.A 47,013 121.5% 38.1% 0.9%

［Unit:Million Yen］Result Share

• Personnel expense to net sales ratio vs. prior year increased +0.4 points for both overseas and domestic* businesses

• Effective use of MUJIpassport app in Japan held advertising and promotion expenses to • +5.6% YOY, while ratio to net sales was held to -0.2 points vs. the same period in the prior year • Higher delivery costs tied to increased sales of large items in Japan prior to the consumption tax increase led to logistics costs of +23.1% YOY, while delivery ratio to net sales increased by 0.2 points vs. the same period in the prior year

SGA［Consolidated］ ■ SGA ratio up 0.9 points YOY

*Figure represents real net sales, which is non-consolidated net sales less Overseas wholesales.


Balance Sheet Highlights［Consolidated］

■ Total Assets +12% vs. PY End

• Inventory +18% vs. PY end, due to increased holdings of important products • Fixed assets +14% vs. PY end, due to investments in new stores, renovations, and new logistics centers

［Unit : Million Yen］ Feb.28,2014 Aug.31,2014

Result Ratio Result Ratio Change Cash on hand and in bank 25,206 18% 23,419 15% ▲7%

Inventories 36,849 26% 43,458 28% +18% Other Current Assets 15,234 11% 18,917 12% +24%

Fixed Asset 62,938 45% 71,682 46% +14% Total Asset 140,229 100% 157,478 100% +12% Liabilities 29,214 21% 43,000 27% +47% Net Asset 111,015 79% 114,477 73% +3%

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2. 1st Half Year Overseas Performance


Overseas Performance

Net Sales Operating Profit

32,354million Yen

2,443million Yen

YOY 62.9％UP

YOY 58.3％UP

Region 1st Half 1st Quarter 2nd Quarter

Europe Total 99.4% 98.9% 99.2% Asia Total 99.2% 109.9% 104.4% USA Total 96.9% 106.4% 101.8%

Overseas Total 99.1% 107.6% 103.3%

•Delay in spring apparel delivery resulted in slow Q1, but recovery in Q2

■YOY ratio of directly managed Existing Overseas Stores *Converted from local currencies for comparison

■Overseas consolidated subsidiary total


Overseas Store Opens, Renovations ■ First Half: +14 Stores Net, 7 Remodeled

• Eight new stores in China during first half; +8 stores net. Planning for +25 net store opens during second half • Also: Opening new stores in USA, UK, Hong Kong, Singapore, Malaysia, the Philippines, Australia, UAE • Four comparable store remodeled in china; one each in Taiwan, Hong Kong, and Korea to New store fitting out. • Store renovations: New fixtures (stationery, H&B, Tower fixture, etc.)

Region FY2013 1st Half ,2014

Store renovation Open Close

Net Increase

End of 1st Half

End of year

Europe Total 60 3 ▲3 0 60 0 Asia Total 187 14 ▲1 13 200 7 USA Total 8 1 0 1 9 0

Overseas Total 255 18 ▲4 14 269 7


Santa Monica (USA)


Santa Monica (USA)

3. 1st Half Year Domestic Performance


Good Products

Good Environment

Good Information

・ Develop product policies for MUJI Selection, Always a Good Price ・ Develop Strategic Products

1) Good Products

・Selling environment linked with product policies; improved fixtures, VMD presentation skills

・ Improve selling skills (Storage Advisors, Fashion Advisors)

2) Good Environment

・ Shift advertising from TV/paper to Web, SNS ・ Social purchasing initiatives

3) Good Information

・ Global SCM Foundation (implement MD systems overseas, GDC) ・ Improve purchasing/procurement structure ・ Organizing Japan HQ as “Global HQ” and unifying awareness

4) Building a Foundation

Philosophy y/Culture

Production

Inventory

Sales

Supply/ Delivery

Production Plan

Systems/Skills

Building a Stronger Identity and Foundation for Growth


Division 1st Half 1st Quarter 2nd Quarter

Apparel 107.5% 104.6% 106.2% Household 109.2% 101.8% 105.9% Food 103.7% 93.9% 98.9%

Sales Growth for Like for Like Stores 107.8% 102.1% 105.2%

Customer numbers YOY 102.2% 101.3% 101.8% Customer unit purchased price 105.6% 100.8% 103.4%

• Sales floor redesign (new store fittings) and improved staff skills contributed to plan outperformance

• Consumers accepted tax-inclusive labeling after consumption tax increase leading to +1.8% in number of customers YOY

• Ratio of MUJI Selection sales increased, as did unit prices, leading to +3.4% for sales per customer YOY

Comparable Domestic Store Performance

■ LFL Net Sales, YOY


Channel

FY2013 1st Half ,2014 Store

renovation Open Close Net

increase

End of 1st Half End of

year Directly managed store 269 14 ▲2 12 281 11 Licensed Store 61 3 ▲2 1 62 1 Shops in the Seiyu 55 0 ▲1 ▲1 54 0

Domestic Total 385 17 ▲5 12 397 12

•Opened 17 stores during first half; stronger S&B promotion resulted in 5 store closes for a +12 net gain (17 new opens and 6 closes in prior year). •Remodeled at 11 directly operated and 1 License store to create new store fitting sales floor. Progress achieved in creating cross-department groupings, living space exhibits. •Adoption of High Fixtures: More than 30% of all directly operated stores.

Domestic Store Opens, Renovations ■ First Half: +12 Stores Net, 12 Remodeled


Marui Kichijyoji (TOKYO)


Marui Kichijyoji (TOKYO)


Namba (OSAKA)


High Fixture Sales Floor


•MUJI site top-page redesign •Use MUJIpassport to communicate, promote more efficiently

4.28 Million Social Network Followers

MUJI NET Members 4.60 million

MUJI Site Top-Page Redesign (August) •Tie in to unified global portal site •Plan to redesign each regional site beginning 14AW

2.23 Million MUJIpassport Downloads ・ New customer communication tool

Facebook GL Facebook JP

Twitter mixi LINE

580,000 1.03 million

330,000 50,000

2.29 million

Improve Communications with Customers In-Store and via Web

プレゼンター

プレゼンテーションのノート

武内さん確認OK


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50万

100万

150万

200万

250万

300万

2013/5/1 8/1 11/1 2014/2/1 5/1 8/1 11/1 2/1

Downloads (projected) Downloads (actual)

■ MUJIpassport App Downloads

•First half goal of 2.0 million downloads achieved (as of June); year-end goal is 2.5 million. •Prepare Chinese version by year-end; Roll out to Taiwan, Hong Kong, USA, etc. next year.

Download the app for a new MUJI buying experience.

4. Global Supply Chain Structuring


Factors Total Foreign exchange rate

Overseas Supply Sales

Price Reductions

Cost Reductions

Other

1st Quarter ▲1.0% ▲0.5% ▲1.9% ▲3.4% 2nd quarter ▲0.7% ▲3.4% ▲1.4% ▲5.5% 1st Half ▲0.9% ▲1.7% ▲1.8% ▲4.4%

(Vs. Original Plan) -0.9% -0.6% +0.4% -1.1%

•Higher consumption tax and continuation of tax-inclusive labeling pressured gross profit ratios (-1.5 points theoretically). Cost improvements and push of MUJI Selection products helped compensate. •Wider wholesaling to overseas retail locations drove down gross profits (original plan called for ¥10.0 billion/half year)

Gross Profit Ratio Change -4.4％［Non-Consolidated (March 2014 – August 2014)

*Price discount factors include continuation of tax-inclusive labeling.

Gross Profit Ratio Structure


・ Implementation plan for automated orders of staple products

2014 AW Test 2015 SS Start

2015 AW Test 2016 SS Start

Phase 3 Automated production ordering

2014 SS Test 2014 AW Start

Phase 1 Automated re-ordering system

Phase 2 Automated supply system between centers

Store Country DC GDC Factory

Global figures visible to HQ

Begin System Development and Operations

①Sales

②Production Plan ⑤Inventory

③Production ④Supply /Delivery

Global Supply Chain Management

•Stronger HQ Management of Tag Name, Quality, Specifications

•Establish system so each local retailer can concentrate on sales

Ryohin Keikaku Group

Global Supply Chain Structuring ■ All automated ordering: Store → Country DC → GDC → Factory

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DC　ディストリビューションセンター GDC　グローバルディストリビューションセンターオートリ　自動補充システムの呼称 SS　スプリング＆サマー AW　オータム＆ウィンター 20140411　決算説明会資料より


■ Global Supply Chain Structuring Progress

Right-Timing, Right-Volume system for automated store orders ⇒Launched a test in Korea in April. Achieved 30% inventory reduction

for targeted products.

In operation in five regions: China, Korea, Singapore, Thailand, MEH (Europe); working toward future expansion

Store Country DC

Phase 1 Automated Supply Operations

Korea Singapore China Europe Australia Malaysia

Automated Supply System

Operations

%=Percentage of products in the

Auto-order system

78% 15% 80% 77% January 2015

November2014

Taiwan Hong Kong U.S.A. Thailand Canada

December2014

March 2015

March 2015 60% November

2014


Automated Center Ordering System

Started testing in Korea and Singapore

Phase 2 System for automated supply between centers

Country DC GDC

• Better automated ordering should result in reduced ordering time, better inventory efficiency, and greater work efficiency.

■ Global Supply Chain Structuring Progress

Korea Singapore China Europe Australia Malaysia

Center Automated

Supply Ordering System

Operations

○ ○ October 2014

October 2014

March 2015

March 2015

Taiwan Hong Kong U.S.A. Thailand Canada

March 2015

March 2015

March 2015

March 2015

March 2015


■ Global Tag Adoption Progress 2014AW 2015SS 2015AW

Apparel 100% 100% 100%

Household 40% 100% 100%

JP CN TW KR

EU US

*Separate measures for food and care products, where labels will be printed directly on packaging.

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140903　由美子さんより（レイアウトイメージまで確認済み）


■ Restructure global logistics to hold logistics costs to 1% (about ¥3.0 billion) of net sales in three years

Reorganization of Domestic Distribution Center for Major Improvements beginning 2015 and beyond ・ Start of Hatoyama Center Operations (November 2014)

・¥270 million in higher costs for 2014 due to facilities move

・ Expect to see ¥1.0 billion in cost reductions in 2015

Hatoyama Logistic Center（2014.11 Open）

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20140411　決算説明会資料より 20140902　外観写真　差し替え済み（竣工式）

5. FY 2014 2nd Half Business Plan


FY 2014 2nd Half Business Plan［Consolidated］

■ Plan calls for 2nd year of double-digit operating, ordinary profit growth

・ Gross Profit – Yen weakness, global SCM operations, and associated lower costs should lead to expected major improvements in overseas store gross profit ratio ・ Net Income – Expect lower profits due to recording extraordinary income related to a Taiwanese subsidiary in the prior year

・ Net Sales – New flagship stores in Paris, Chengdu, Taipei

［Unit:million yen］ Plan Ratio YOY Change RatioChange

Net Sales 128,740 100.0% 110.8% 12,565 -G.P.and Operating 60,951 47.3% 114.5% 7,698 1.5%S.G.A 47,087 36.6% 112.0% 5,028 0.4%Operating Profit 13,864 10.8% 123.9% 2,670 1.1%Ordinary Profit 13,796 10.7% 111.2% 1,395 0.0%Net Income 8,469 6.6% 80.0% -2,115 -2.5%

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当期純利益　前期差マイナス　


FY 2014 2nd Half Business Plan［Non-Consolidated］

■ Continued improvement in costs, SGA ratio

・ Advertising Expenses ・ Logistics Expenses

・ Gross Profit Ratio - Continue cost reductions ahead of autumn ‘15 consumption tax increase - Continue to improve expense efficiencies by maximizing use of MUJIpassport - More efficient domestic logistics through GDC, Hatoyama Center

［Unit:million yen］ Plan Ratio YOY Change RatioChange

Net Sales 93,456 100.0% 101.6% 1,489 -G.P.and Operating 39,901 42.7% 104.0% 1,533 1.0%S.G.A 29,995 32.1% 100.0% 1 -0.5%Operating Profit 9,908 10.6% 118.3% 1,535 1.5%Ordinary Profit 9,317 10.0% 101.8% 164 0.0%Net Income 5,426 5.8% 95.1% -278 -0.4%


More Active Flagship Store Openings in and outside of Japan

Paris (France) Chengdu (China) Taipei (Taiwan) →Plan・・・・・・Singapore →Plan・・・・・・New York (U.S.A)

Izumi (Osaka) Okayama →Plan・・・・・・Fukuoka →Plan・・・・・・Nagoya


Forum des Halles (France)

Paris Flagship Store 851㎡（2014.9.24 opened）












→ How to Live Elegantly in China? I Enjoyment in designing one’s own living space

II Fun leisure-time activities

III Safe, enjoyable dining

・ Café&Meal, IDEE roll out ・ Stronger kitchen, tableware lineup ・ Introduce Interior Advisors

■ Concept Today’s Chinese Households • Furnished property is the norm, however, ratio of consumers selecting their own furniture is

on the rise • Higher incomes have led to more interest in leisure time activities • More home parties, in line with U.S. and European customs • More interest in health; more people exercising during their free time

• Most Chinese are aware of food safety as an issue in the country, etc.

Chengdu Flagship Store 3,065㎡（2014.12 planned to open）


Chengdu Flagship Store 3,065㎡（2014.12 planned to open)

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950坪（契約面積）約700坪（売場面積）


Chengdu Flagship Store 3,065㎡（2014.12 planned to open）


Shareholder Returns ■Dividends & Payout Trends FY '08 to '14 (Estimate)

• Look to improve capital efficiency leading to ROE of over 15% • Set basic dividend payout policy to 30% of consolidated earnings;

work toward stable, consistent dividends

（Plan）

（Plan）

Non-

Consolidated Consolidated

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36th Term in FY2014 First Half Year Business …...¥12,476 million (+7,618 million YOY) in...

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