Kintetsu Department Store CO.,Ltd. Q4 FY2025 earnings call

2025 February Full Year Performance Overview

• Driven by strong core department store performance, Kintetsu Department Store achieved increased revenue and profit for the full year. All profit metrics exceeded pre-COVID-19 (FY2019) levels.
• Strong results were supported by solid performance in luxury brands, franchise operations, duty-free sales, and foreign trade sales of high-priced goods, as well as strong new car sales at subsidiary Stern Kintetsu.
• Cost structure reform has delivered sustained savings: selling, general and administrative expenses are 13.7% lower than FY2019 levels, despite a year-over-year increase in the current period driven by wage improvements and accounting changes from deconsolidation. The company will continue to push for further cost efficiency.
• The company met all Tokyo Standard Market listing maintenance requirements 2 years ahead of schedule, with a tradable share ratio of 26.6% exceeding the 25% threshold.

Mid-Term Management Plan (FY2025 - FY2028, for 100th anniversary in 2036)

• Vision: Transform from a traditional department store to a

1. Wholesale & Retail: Segment revenue of 14.878 billion yen, a 9.9% increase year-over-year, contributing ~12.9% of total consolidated revenue. Segment profit of 375 million yen, a 14.5% increase year-over-year, driven by strong imported vehicle sales at Stern Kintetsu. 2. Interior Construction: Revenue of 4.037 billion yen, a 5.1% increase year-over-year, contributing ~3.5% of total consolidated revenue. Operating profit of 873 million yen, a 2.2% decrease year-over-year, due to the lack of high-margin large orders that were present in the prior year. 3. Real Estate: Revenue of 291 million yen, a 1.2% decrease year-over-year, contributing ~0.25% of total consolidated revenue. Operating profit of 216 million yen, a 3.4% decrease year-over-year, primarily from changes in rental income. 4. Other Businesses: Revenue of 2.853 billion yen, a 14.9% decrease year-over-year, contributing ~2.5% of total consolidated revenue. Operating profit of 66 million yen, a 39% decrease year-over-year, caused by the deconsolidation of K Support starting from the third quarter. Core department store operations (not broken out as a separate segment above) led overall consolidated growth, with total consolidated revenue reaching 115.107 billion yen (1.4% YoY increase), and total consolidated operating profit reaching 5.353 billion yen (37.2% YoY increase).

FY2026 (February 2026 Year End) Guidance

• Consolidated full-year guidance: Revenue of 121.0 billion yen, a 5.1% increase year-over-year; operating profit of 5.4 billion yen; ordinary profit of 4.8 billion yen; net income attributable to parent shareholders of 3.5 billion yen. Revenue growth guidance already includes the expected positive impact from operating the official store at Osaka-Kansai Expo.
• Individual full-year guidance: Revenue of 101.0 billion yen, a 6.7% increase year-over-year; operating profit of 4.4 billion yen; ordinary profit of 3.8 billion yen (includes planned renovation costs for the main Abeno Harukas store); net income of 3.1 billion yen.
• Dividend guidance: Maintain a full year dividend of 20 yen per share, unchanged from the 2025 February year end.

Mid-Term (FY2028 End) Targets

• Target 6.5 billion yen consolidated operating profit and 9.0%+ consolidated ROE by the end of the mid-term plan in FY2028.
• Total planned investment of 35.0 billion yen over the 4-year plan, with 20.0 billion yen allocated to growth investment, including 10.0 billion yen dedicated to the Abeno-Tennoji area.

No explicit material operational risks or failures were discussed in the available transcript.

Q: The mid-term plan targets a 20% increase in foreign trade sales. What specific initiatives will deliver this growth, and what is the outlook for independent operations under the plan? / A: For foreign trade, the company will pursue growth via three pillars: product strength, personnel capability, and customer environment. It will gradually expand luxury brand offerings at Abeno Harukas main store (with a new brand opening in late April) and strengthen gold and jewelry sections. It will train foreign sales staff to provide multi-faceted advice beyond product offerings, including financial guidance. The new premium exclusive salon for VIP customers at Abeno Harukas will upgrade the service environment to meet high-end customer needs. For the franchise business, the prior 15 billion yen revenue target was achieved one year early, with 2024 full year revenue exceeding 18 billion yen, which contributed significantly to the current period's strong results. Instead of continuing to chase revenue volume growth, the company will now shift focus to maximizing profit from the existing 18 billion yen revenue base, which is achievable because many current franchise locations are less than 3 years old and have untapped profit improvement potential.

Q: What impact do you expect from the upcoming Osaka-Kansai Expo? / A: [No full answer provided in the available transcript]

Q: Why are you focusing on young high-net-worth customers in foreign trade, and what initiatives will you use to acquire these customers? / A: [No full answer provided in the available transcript]

Q: What is your plan for structural reform of regional stores under the mid-term plan? / A: [No full answer provided in the available transcript]