Optimizing the Business Portfolio in Response to Changes in the Social Environment and Consumer Behavior

「In overseas commercial development, we will continue to improve capital efficiency while controlling asset scale by combining investment in core businesses that hold assets over the long term and achieve sustainable growth with investment in businesses designed for short-term recovery of capital.」

「In overseas commercial development, we will continue to improve capital efficiency while controlling asset scale by combining investment in core businesses that hold assets over the long term and achieve sustainable growth with investment in businesses designed for short-term recovery of capital.」

「By increasing earnings in these growth areas, we expect group earnings, defined as consolidated operating profit plus profit from equity-method investments plus dividend income from TOSHIN DEVELOPMENT's Vietnamese affiliates, to reach ¥75 billion to ¥80 billion in 2031, the year of our 200th anniversary. At the same time, we will raise the overseas business share of earnings from 28% in fiscal 2023 to 33% and the share of earnings from businesses other than department stores from 38% in fiscal 2023 to 47%, approximately half, thereby achieving a well-balanced business portfolio capable of responding flexibly to changes in the operating environment.」

「As we further advance ROIC-based management to clarify business portfolio optimisation, investment efficiency and profitability by business, we have changed our reportable segments from the current interim consolidated accounting period as follows. Domestic and overseas department stores previously included in Department Stores have been divided into Domestic Department Stores and Overseas Department Stores. Domestic and overseas commercial development previously included in Commercial Development have likewise been divided into Domestic Commercial Development and Overseas Commercial Development.」

「To continue growing, we need to quickly reallocate resources to business areas with greater growth potential after assessing the future value of our tangible and intangible management resources. Accordingly, we have adopted ROIC, which represents the return on invested capital, as a common Group-wide standard for assessing the effectiveness of management resources. By setting and managing ROIC targets above the cost of capital for each business, we will improve management efficiency.」

「In addition, we are working to further stabilise our business portfolio by increasing the share of non-commercial fields, such as rental housing and offices, in Japan and overseas.」

「In November, we opened OK Store Konandai on the former site of Konandai Glass Court in Konan-ku, Yokohama. ... In Nihombashi, Naniwa-ku, Osaka, we began construction in October on a rental housing development scheduled for completion in 2024, on land near Namba and Nihombashi stations that had previously been used as a car park, in response to housing demand in the area. We will continue working to make effective use of Group assets.」

「In domestic new businesses, we will shift toward a stable business portfolio from a medium- to long-term perspective in response to increasingly diverse lifestyles, including by incorporating non-commercial facilities such as residential, office and healthcare properties.」

「In addition, in November we opened a mixed-use office building in front of Nagareyama-Otakanomori Station and acquired a residential facility in Meguro-ku, Tokyo, as part of our efforts to diversify our asset portfolio.」

「東神開発株式会社, the commercial development business that drives our town development strategy, is advancing site and business development. ... In the financial counter business, positioned as a new department store offering, we opened a counter at the Osaka store in July, following Nihombashi Takashimaya S.C. last year.」

「While department stores are the core business of our town development strategy, 東神開発株式会社 is positioned as the driving force in commercial development, and we are advancing site and business development. ... In financial services, we are developing the financial counter business, which leverages the strengths of our stores, including the Group's customer base and locations, as a new department store offering.」

「To stabilise management, we will work to revitalise department stores, the source of our brand value, while actively expanding growth businesses such as commercial development and financial services, thereby optimising our business portfolio in anticipation of changes in the social environment and consumer behaviour.」