Business and Earnings Structure Reform and Cash Flow Management

「To reduce operational workloads, we introduced an automated ordering system in the daily-goods departments of a cumulative total of 97 GMS and SM stores. This reduced the labor hours required for ordering, allowing them to be allocated to initiatives to enhance store appeal.」

「At our logistics and product manufacturing bases, we will further expand the facilities, centered on the AEON Ishikari Product Center, which was newly established in FY2021 under the previous medium-term management plan. We will achieve work-style reform at our stores by improving logistics efficiency and expanding product manufacturing and supply. In DX, we will also raise productivity by accelerating operational reform, including the full-scale introduction of AI ordering.」

「At our logistics and product manufacturing bases, we will further expand the facilities, centered on the AEON Ishikari Product Center, which was newly established in FY2021 under the previous medium-term management plan. We will achieve work-style reform at our stores by improving logistics efficiency and expanding product manufacturing and supply. In DX, we will also raise productivity by accelerating operational reform, including the full-scale introduction of AI ordering.」

「As part of its productivity improvement initiatives, the company continued to promote the introduction of electronic shelf labels, self-checkout and touch-screen monitors called “CI Boards,” which it had been implementing. These measures improved operating efficiency, bringing total labor hours at existing stores to 97.9% of the year-earlier level.」

「During the fiscal year, the company made maximum use of the Group’s economies of scale, seeking to expand sales of the highly competitive Topvalu brand and improve gross margins by expanding joint procurement across the Group. It also focused on reforming store operating procedures. In the following fiscal year, the company will continue working across the entire organization to improve gross margins and establish highly efficient store operating procedures capable of addressing rising labor costs and labor shortages.」

「Regarding the transition to and establishment of new operations, the company advanced the introduction of self-checkout and introduced a system enabling the automatic creation of work schedules using AI to improve productivity. These initiatives brought total labor hours per store to 98.8% of the year-earlier level. The company also introduced touch-screen monitors called “CI Boards” in back-store aisles, making it easier to communicate information and check numerical data.」

「Regarding the transition to and establishment of new operations, the company introduced electronic shelf labels at 6 stores during the cumulative first quarter period, bringing the cumulative number of stores with the system to 42. It also newly introduced or added self-checkout at 13 stores during the period, bringing the cumulative number of stores with self-checkout to 120. As an initiative to improve work practices, the company introduced touch-screen monitors called “CI Boards” in back-store aisles, making it easier to communicate information and check numerical data; the system had been introduced at 55 stores as of the end of the first quarter. In addition, a system enabling the automatic creation of work schedules using AI was introduced in the food checkout departments of 127 stores.」

「In the following fiscal year, particularly with regard to store operations reform, the company will make an organizational change to strengthen its implementation structure as part of company-wide operational reforms carried out alongside reforms at headquarters and in the back office. It will pursue these efforts thoroughly, from expanding labor-saving investment to reviewing work practices.」

「Under its earnings structure reforms, the company introduced electronic shelf labels at 20 stores during the cumulative third quarter period and newly introduced or added self-checkout at 32 stores, bringing the cumulative number of stores with self-checkout to 118. The company had targeted a 2% year-on-year improvement in total labor hours through operating efficiency measures, but total labor hours remained at around the year-earlier level because sales grew more than expected.」

「Under its earnings structure reforms, the company introduced electronic shelf labels at 13 stores during the cumulative second quarter period to improve productivity. It also newly introduced or added self-checkout at 28 stores during the period, bringing the cumulative number of stores with self-checkout to 117. The company targeted a 2% year-on-year improvement in total labor hours for the period through measures including improved operating efficiency, and achieved a 1% improvement from the year-earlier period.」

「Under its earnings structure reforms, the company introduced electronic shelf labels at 5 stores during the cumulative first quarter period to improve productivity. It also newly introduced or added self-checkout at 12 stores during the period, bringing the cumulative number of stores with self-checkout to 116. Through improved operating efficiency, total labor hours were reduced to 98.6% of the year-earlier level.」

「We promoted the introduction of self-checkouts, installing new or additional units at 27 stores during the fiscal year, bringing the cumulative number of stores with self-checkouts to 107. In addition, amid rising energy costs, we actively installed highly efficient labour-saving equipment, including upgraded and replaced LED lighting, replaced refrigerated and frozen display cases and energy-efficient air-conditioning equipment, reducing electricity consumption by more than 5% from the previous year.」

「Although selling, general and administrative expenses were affected by higher utility costs, the impact was minimised through energy-saving initiatives and reductions in labour and general expenses, resulting in expenses of ¥70.038 billion, or 100.0% of the previous year.」

「Although selling, general and administrative expenses were affected by higher utility costs, the impact was minimised through the planned replacement of energy-saving equipment and efforts to promote electricity conservation. Together with reductions in labour and general expenses, this resulted in expenses of ¥46.608 billion, or 99.0% of the previous year.」

「Although selling, general and administrative expenses were affected by higher utility costs, reductions in labour, promotional and general expenses resulted in expenses of ¥23.125 billion, or 98.1% of the previous year.」

「To build a robust management foundation supporting growth, we will reform our earnings structure. In apparel and home and leisure products in particular, we will optimise product assortments and sales-floor space, improve sales-floor efficiency and enhance profitability. At the same time, we will improve productivity per labour hour through workforce and labour-saving measures using digital technology and by reviewing business operations. We will establish and control a cost structure capable of withstanding increases in labour, utility and other costs.」

「Selling, general and administrative expenses increased to ¥70.058 billion, or 103.8% of the previous year, due to proactive investment in a new logistics centre, store revitalisation and self-checkout installations, as well as higher electricity costs.」

「Selling, general and administrative expenses were ¥47.084 billion, or 104.7% of the previous year. This reflected higher facility expenses from proactive investment in a new logistics centre, store revitalisation and self-checkout installations, as well as a rebound increase in promotional expenses after the previous year’s restraint.」

「As part of our sales initiatives, we carried out major revitalizations at 6 stores during the first quarter, comprising 2 GMS stores, 3 SM stores and 1 DS store.」

「The main factors were improvements in margins using the economies of scale in food, as initially envisaged as an integration benefit, alignment of transaction terms and a review of delivery agency fees at logistics centres, together with solid sales of food, which accounts for a high proportion of sales. These factors increased gross profit by ¥2.9727 billion, while selling, general and administrative expenses increased by ¥2.8435 billion due to the business integration.」

「Although selling, general and administrative expenses increased following the business integration, we restrained non-essential business travel, reviewed promotional and store revitalisation plans, and reduced electricity costs and streamlined shared functions through integration synergies, resulting in expenses of 144.6% of the previous year.」

「Although selling, general and administrative expenses increased following the business integration, we restrained non-essential business travel, reviewed promotional and store revitalisation plans, and reduced electricity costs and streamlined shared functions through integration synergies, resulting in expenses of 143.7% of the previous year.」

「We improved the functions of the digital picking system to accommodate increased orders, among other measures, and sales grew to 141.7% of the previous year.」

「As part of our labour-saving and workforce-reduction initiatives, we newly installed 60 self-checkout and semi-self-checkout registers. This brought the total installed at 34 GMS stores to 307, helping to eliminate customer waiting times. We also introduced a “new ordering system” using ordering forecasts tailored to product characteristics, enabling us to optimise inventory and reduce losses from stockouts, while working to reduce staffing requirements and improve ordering accuracy.」

「As part of our labour-saving and workforce-reduction initiatives, we made IT investments including the introduction of a new ordering system to reduce operating costs associated with ordering, stockouts and price changes.」

「As a result of reducing selling expenses to 98.3% of the previous year and controlling selling, general and administrative expenses at 100.8% of the previous year」

「As part of our efforts to improve productivity through store digitalisation, we introduced easy-to-use, easy-to-learn new checkout registers at all 40 GMS stores and newly installed self-checkouts at 9 GMS stores, also helping to shorten customer waiting times. Training and operating costs were reduced, and total working hours fell by approximately 1%.」

「Although selling, general and administrative expenses increased due to higher minimum wages and electricity rates, rent and other costs were reduced through property acquisitions and promotional and other expenses were controlled. Operating profit for the third quarter accounted for ¥1.824 billion, an increase of ¥151 million.」

「As part of our labour-saving and workforce-reduction initiatives, we reduced in-store workload in the GMS business by promoting the introduction of self-checkouts and installing energy-efficient kitchen equipment. As a result, despite rising labour costs, we controlled labour costs at 100.5% of the previous fiscal year, while total selling, general and administrative expenses were 100.6% of the previous fiscal year, keeping the increase within the rise in gross operating profit.」

「We worked to improve low-profitability businesses in order to enhance profitability.」

「To improve earnings power, we worked to reduce labor and automate operations while seeking further improvements in operational efficiency. In the online supermarket business, we pursued system upgrades and improvements to in-center warehouse operations. In the GMS business, we promoted the introduction of in-store communication equipment capable of sending messages simultaneously to multiple employees, food preparation and cleaning equipment that reduces labor requirements, and self-checkout registers, thereby improving sales per labor hour.」

「As part of business structure reform, we will work to improve the profitability of the My Basket and online supermarket businesses. As part of earnings structure reform, we will improve the efficiency of promotional expenses. We will also use our ample operating cash flow for proactive capital investment within operating cash flow, including store revitalisation, property acquisitions and energy-saving investment for the future.」