Message from the President

Representative Director and President
Representative Director and President Koji Takayanagi

The FamilyMart UNY Group has adopted "Everyday Fun and Fresh" as its Group principle. Under this principle, we are making concerted efforts to fully leverage the Group's management resources in order to advance reforms to our retail business model. Meanwhile, we aim to become an essential part of the infrastructure of society and everyday life for consumers.

In the convenience store business, we are working to become an even more competitive chain. To this end, we have been promoting three initiatives that aim to improve the quality of our existing stores: enhancement of product competitiveness, improvement of store operating procedures, and reinforcement of store foundations. Turning to brand conversion, on November 30, 2018, we ceased operation of all Circle K and Sunkus brand stores across Japan, completing the conversion of these brands to the FamilyMart brand. The Groupwide brand conversion initiative has resulted in a total of 5,003 stores being converted since September 2016, and these converted stores have been realizing year-on-year increases in both daily sales and customer numbers. Having completed the brand conversion, we will continue to draw on our domestic network of roughly 17,000 stores as we aim to further leverage the positive effects of the integration between our products, centered on ready-to-eat items, and our logistics networks.

On the service front, in November 2018 we began a drive to sequentially achieve compatibility with smartphone barcode payment services, namely d Pay, LINE Pay, PayPay, and the Rakuten Pay application payment service, in order to accommodate a more diverse range of payment methods. By becoming compatible with such services with the potential to see expanded use going forward, we aim to promote cashless payments in the domestic payment market while improving customer convenience.

In the general merchandise store business, the six MEGA Don Quijote UNY stores that unite the strengths and expertise of Don Quijote Holdings Co., Ltd., and UNY CO., LTD., have sustained favorable sales trends.

As you know, we resolved to transfer all shares of UNY held by the Company to Don Quijote Holdings in October 2018. This transfer was completed on January 4, 2019. In the nine-month period ended November 30, 2018, the Company recorded deferred tax assets in conjunction with the aforementioned transfer of shares of UNY, leading it to record ¥22.5 billion as income taxes-deferred. In addition, the businesses of UNY and its subsidiaries have been classified as businesses to be discontinued.

In the nine-month period ended November 30, 2018, gross operating revenues declined 1.7% year on year, to ¥470.8 billion; core operating income increased 31.4%, to ¥48.2 billion; and profit attributable to owners of parent rose 16.5%, to ¥56.4 billion. The figures for operating revenues and core operating income exclude the performance of businesses to be discontinued.

The Company intends to introduce strategic fixtures at existing stores in the convenience store business ahead of schedule in the fourth quarter of fiscal 2018 while also recording losses on store assets to address future performance-related concerns. Accordingly, the full-year forecast for consolidated profit attributable to owners of parent in fiscal 2018 has been raised from ¥40.0 billion to ¥44.0 billion. The impact of the transfer of shares of UNY on gross operating profit, core operating profit, and profit before taxes is currently being measured. We will promptly disclose our projection for this impact once determined.

Furthermore, we have resolved to institute a four-for-one stock split to shares of the Company's common stock with a record date of February 28, 2019, with the goal of increasing the liquidity of the Company's stock and expanding our investor base.

We ask for the continued support of all our investors and shareholders going forward.