Shared esearch eport Meganesuper 3318 This PDF document is an updated note on the company. A comprehensive version of the report on the company, including this latest update, is available on our website at http:// and various professional platforms. Our sponsored research reports provide an in-depth and informative view of the companies we cover, and contain the latest available information updated in a timely manner. On December 15, 216, Meganesuper announced earnings results for 1H FY4/17. Income statement FY4/14 FY4/17 FY4/17 FY4/17 Q2 Q4 Q2 Q4 Q2 Q4 Q2 1H Act. 1H Act. 1H Est. % of 1H Est. % of FY Sales 3,785 3,555 3,67 3,964 3,558 3,643 3,634 3,456 3,868 3,91 3,935 3,995 4,349 4,296 7,778 8,645 8,92 96.9% - 18, 48.% YoY -11.1% -13.% -5.% 3.5% -6.% 2.5%.7% -12.8% 8.7% 7.3% 8.3% 15.6% 12.4% 9.9% 8.% 11.2% 14.7% 14.6% CoGS 1,346 1,317 1,276 1,367 1,186 1,165 1,181 1,17 1,247 1,193 1,258 1,32 1,418 1,431 2,44 2,849 5,618 5.7% CoGS ratio 35.6% 37.% 35.4% 34.5% 33.3% 32.% 32.5% 33.8% 32.2% 3.5% 32.% 32.6% 32.6% 33.3% 31.4% 33.% 31.2% Gross profit 2,439 2,279 2,291 2,597 2,371 2,478 2,453 2,287 2,621 2,717 2,677 2,693 2,93 2,866 5,338 5,796 12,381 46.8% GPM 64.4% 64.1% 63.5% 65.5% 66.7% 68.% 67.5% 66.2% 67.8% 69.5% 68.% 67.4% 67.4% 66.7% 68.6% 67.% 68.8% SG&A expenses 2,975 2,872 2,926 2,957 2,845 2,592 2,529 2,435 2,478 2,53 2,587 2,616 2,778 2,86 4,981 5,584 11,581 48.2% Salaries and retirement benefit expenses 876 854 858 843 825 793 777 791 793 88 822 846 897 848 1,544 1,681 ents 776 728 732 74 728 696 68 59 598 65 619 625 632 638 57 64 Advertising, other 1,323 1,29 1,335 1,374 1,291 1,12 1,72 1,53 1,87 1,9 1,146 1,145 1,248 1,321 3,381 3,84 YoY -4.% -1.3% -8.8% -1.7% -4.4% -9.8% -13.6% -17.7% -12.9% -3.4% 2.3% 7.5% 12.1% 12.1% -8.4% 12.1% 13.7% SG&A-to-sales ratio 78.6% 8.8% 81.1% 74.6% 8.% 71.1% 69.6% 7.4% 64.1% 64.% 65.8% 65.5% 63.9% 65.3% 64.% 64.6% 64.3% Operating profit -537-594 -634-36 -473-114 -76-148 143 213 9 77 152 59 356 212 39 54.3% 8 26.5% YoY - - - - - - - - - - - - 6.6% -72.2% - -4.6% 9.4% 52.9% OPM -14.2% -16.7% -17.6% -9.1% -13.3% -3.1% -2.1% -4.3% 3.7% 5.5% 2.3% 1.9% 3.5% 1.4% 4.6% 2.4% 4.4% 4.4% Non-operating income (expenses) -81-62 -5-133 -44-47 -4-47 -24-27 -25-25 -26-15 -51-41 -5-1 Financial income -54-58 -63-67 -24-16 -16-28 -29-29 -29-32 -29-27 -58-56 Other non-operating income -27-4 13-66 -2-31 -24-19 5 3 4 7 4 12 7 15 ecurring profit -618-656 -684-493 -517-16 -115-195 119 187 65 51 127 44 35 171 34 5.3% 7 24.4% YoY - - - - - - 6.8% -76.3% - -44.% 11.3% 66.1% PM -16.3% -18.4% -19.% -12.4% -14.5% -4.4% -3.2% -5.6% 3.1% 4.8% 1.6% 1.3% 2.9% 1.% 3.9% 2.% 3.8% 3.9% Extraordinary gains (losses) -18-25 -2-18 -142-261 -14 3-5 -8 3 32-74 -1 19 75 Income taxes 28 28 3 28 28 28 28 29 49 71 49 15 53 54 119 17 Implied tax rate -4.4% -4.1% -4.4% -5.6% -4.3% -6.5% -21.9% -17.7% 42.9% 39.5% 71.6% 17.4% 99.% 126.3% 36.7% 43.5% Net income -663-79 -716-539 -687-449 -157-194 65 18 19 69 1-11 173-11 18-6.% 4-2.7% YoY - - - - - - - - - - - - -99.2% - - - 4.2% 53.3% Net margin -17.5% -19.9% -19.9% -13.6% -19.3% -12.3% -4.3% -5.6% 1.7% 2.8%.5% 1.7%.% -.3% 2.2% -.1% 2.% 2.2% Number of stores 316 313 317 324 36 299 291 296 31 321 322 325 329 325 321 325 Store openings - - 4 7 3 7 7 7 14 13 1 8 9 4 27 13 Store closings -25-3 - - -21-14 -15-2 - -2 - -5-5 -8-2 -13 Inventories 2,438 2,428 2,554 2,522 2,495 2,61 2,749 2,727 2,719 2,697 2,657 2,641 2,558 2,51 2,77 2,51 Merchandise 2,411 2,399 2,531 2,488 2,459 2,571 2,718 2,697 2,682 2,657 2,618 2,67 2,524 2,455 2,667 2,455 aw materials and supplies 27 29 23 35 37 39 31 31 37 4 38 34 34 45 4 45 Days in inventory 165 169 178 169 193 2 27 214 199 27 194 186 167 161 Interest-bearing debt 9,871 9,912 1,17 7,955 7,896 7,896 7,896 7,896 7,846 7,846 7,82 7,66 7,616 7,611 7,846 7,611 Cash and deposits 1,556 789 684 1,72 791 933 1,29 1,336 1,447 2,141 2,378 2,791 2,77 2,98 2,141 2,98 Net debt 8,315 9,124 9,423 6,253 7,15 6,963 6,868 6,56 6,4 5,76 5,423 4,869 4,99 4,73 5,76 4,73 Net assets -1,874-2,583-3,47 94-622 -924-873 -969-743 -173 74 197 212 215-173 215 Income statement FY4/5 FY4/6 FY4/7 FY4/8 FY4/9 FY4/1 FY4/11 FY4/12 FY4/13 FY4/14 FY4/17 FY4/18 FY4/19 FY4/2 Cons. Cons. Cons. Cons. Non-cons. Non-cons. Non-cons. Non-cons. Non-cons. Non-cons. Non-cons. Non-cons. Est. MTP MTP MTP Sales 37,777 38,99 38,293 35,313 29,423 25,61 22,472 19,174 15,969 14,911 14,291 15,77 18, 19,8 21,8 23,98 etail services (eyewears) 37,321 37,68 37,879 34,945 28,535 24,27 21,665 18,692 15,859 14,759 14,76 15,414 17,635 19,36 21,3 23,43 Frames 12,797 13,37 13,18 11,748 9,363 7,579 6,214 4,861 4,364 4,323 4,239 4,47 Lenses 13,55 13,494 13,471 12,131 9,423 7,899 7,542 6,879 5,522 4,835 4,39 4,485 Contact lenses 7,65 7,3 7,363 7,496 7,73 6,378 5,783 5,177 4,529 4,125 3,991 4,95 Contact lens accessories 35 338 34 292 25 189 156 121 92 84 15 129 Sunglasses, etc 3,559 3,439 3,722 3,278 2,425 1,983 1,97 1,655 1,351 1,391 1,433 1,848 Mail order 528 673 596 482 11 152 215 293 364 44 5 55 Golf business 373 46 357 369 359 361 211 Other business 83 86 57 YoY 7.2%.9%.5% -7.8% -16.7% -14.8% -1.3% -14.7% -16.7% -6.6% -4.2% 9.9% 14.6% 1.% 1.1% 1.% etail services (eyewears) 7.4%.8%.7% -7.7% -18.3% -15.8% -9.8% -13.7% -15.2% -6.9% -4.6% 9.5% 14.4% 9.8% 1.% 1.% Frames 8.1% 1.9% -.1% -9.8% -2.3% -19.1% -18.% -21.8% -1.2% -.9% -2.% -4.5% Lenses 1.1% -.4% -.2% -1.% -22.3% -16.2% -4.5% -8.8% -19.7% -12.4% -1.9% 4.1% Contact lenses 3.7% 3.3%.9% 1.8% -5.6% -9.8% -9.3% -1.5% -12.5% -8.9% -3.3% 22.9% Contact lens accessories -12.9% -3.3% -1.1% -4.% -14.3% -24.6% -17.2% -22.9% -23.4% -8.8% 24.3% 23.5% Sunglasses, etc 5.3% -3.4% 8.2% -11.9% -26.% -18.2% -.7% -16.% -18.3% 2.9% 3.% 29.% Mail order - - - - - 27.5% -11.4% -19.2% -77.1% 37.9% 41.2% 36.2% 24.2% 2.9% 13.6% 1.% Gross profit 27,65 27,716 27,532 24,44 19,814 16,454 14,747 12,768 1,62 9,65 9,589 1,78 12,381 13,56 14,824 16,195 GPM 73.2% 72.7% 71.9% 69.2% 67.3% 65.7% 65.6% 66.6% 66.5% 64.4% 67.1% 68.2% 68.8% 68.5% 68.% 67.5% SG&A expenses 23,75 24,672 25,178 24,989 2,71 16,867 15,285 14,58 12,227 11,73 1,4 1,185 11,581 12,46 13,124 13,895 Personnel 6,489 6,825 6,71 6,644 7,45 6,238 5,626 5,16 4,131 4,3 3,774 3,871 ent, lease, depreciation 5,28 5,85 6,52 6,813 6,377 5,358 4,786 4,37 3,936 3,222 2,954 2,72 Advertising 2,745 2,578 2,541 2,576 1,653 1,274 1,164 1,31 84 1,14 488 283 Other 9,19 9,465 9,47 8,956 4,996 3,997 3,79 3,496 3,356 3,373 3,184 3,329 YoY 4.3% 4.1% 2.% -.8% -19.7% -16.% -9.4% -8.% -13.% -4.1% -11.3% -2.1% 13.7% 7.6% 5.3% 5.9% Personnel 3.1% 5.2% -1.7% -1.% 6.% -11.5% -9.8% -8.3% -19.9% -2.4% -6.4% 2.6% ent, lease, depreciation 7.8% 9.9% 12.3% 4.5% -6.4% -16.% -1.7% -8.7% -9.9% -18.1% -8.3% -8.5% Advertising 4.2% -6.1% -1.4% 1.4% -35.8% -22.9% -8.6% -11.4% -22.% 37.3% -55.8% -41.9% Other 3.3% 3.% -.6% -4.8% -44.2% -2.% -7.2% -5.8% -4.%.5% -5.6% 4.5% SG&A-to-sales ratio 62.7% 64.8% 65.8% 7.8% 68.2% 67.3% 68.% 73.3% 76.6% 78.7% 72.8% 64.8% 64.3% 62.9% 6.2% 57.9% Personnel 17.2% 17.9% 17.5% 18.8% 23.9% 24.9% 25.% 26.9% 25.9% 27.% 26.4% 24.6% ent, lease, depreciation 14.% 15.2% 17.% 19.3% 21.7% 21.4% 21.3% 22.8% 24.6% 21.6% 2.7% 17.2% Advertising 7.3% 6.8% 6.6% 7.3% 5.6% 5.1% 5.2% 5.4% 5.% 7.4% 3.4% 1.8% Other 24.3% 24.8% 24.6% 25.4% 17.% 15.9% 16.5% 18.2% 21.% 22.6% 22.3% 21.2% Operating profit 3,946 3,44 2,354-549 -257-413 -538-1,289-1,67-2,125-811 523 8 1,1 1,7 2,3 YoY 41.7% -22.9% -22.7% 52.9% 37.5% 54.5% 35.3% OPM 1.4% 8.% 6.1% -1.6% -.9% -1.6% -2.4% -6.7% -1.1% -14.3% -5.7% 3.3% 4.4% 5.6% 7.8% 9.6% Non-operating income -121-14 -15-168 -176-144 -123-191 -48-326 -177-12 -1-1 -1-1 Financial income -233-231 -223-216 -128-144 -163-156 -19-242 -84-119 Others 112 127 73 48-48 4-35 61-84 -94 18 ecurring profit 3,824 2,94 2,24-718 -433-556 -661-1,481-1,655-2,451-988 422 7 1, 1,6 2,2 YoY 48.7% -23.1% -25.% 66.1% 42.9% 6.% 37.5% PM 1.1% 7.7% 5.8% -2.% -1.5% -2.2% -2.9% -7.7% -1.4% -16.4% -6.9% 2.7% 3.9% 5.1% 7.3% 9.2% Extraordinary gains -873-761 -228-446 -3,212-3,51-8 -378-515 -62-386 22 Income taxes 1,466 1,118 989 1,786 125 195 117 12 123 114 113 182 Implied tax rate 49.7% 51.3% 5.% -153.5% -3.4% -4.8% -8.% -6.5% -5.7% -4.6% -8.2% 41.1% Net income 1,485 1,61 987-2,95-3,77-4,253-1,579-1,979-2,293-2,628-1,487 261 4 73 1,24 1,84 YoY 29.4% -28.6% -6.9% 53.3% 82.5% 69.9% 48.4% Net margin 3.9% 2.8% 2.6% -8.4% -12.8% -17.% -7.% -1.3% -14.4% -17.6% -1.4% 1.7% 2.2% 3.7% 5.7% 7.7% YoY Comparable store sales 1.1% -5.1% -4.4% -1.1% -1.5% -1.6% -7.1% -11.3% -13.9% 2.1%.8% 11.1% All store sales 7.5%.8%.7% -7.7% -14.9% -16.9% -9.9% -13.9% -16.7% -7.% -3.4% 11.5% Source: Shared esearch based on company data Note: Figures may differ from company data due to differences in rounding methods 1/7
Shared esearch eport 1H: First year of renewed growth period. Initiated growth strategy underpinned by eye care. Sales up 11.2% and OP down 4.6% Sales: Higher comparable store sales and impact of new stores rolled out in. Although eyewear was flat YoY, contact lens sales rose 35%, driving earnings OP: Down 4.6%. OPM lower, since contact lens occupied more of the sales mix. Increased SG&A costs for growth, mainly personnel expenses Versus forecast: Contact lens and online sales overshot estimates, while eyewear and other products missed estimates. Operating profit missed target as sales and GPM dropped Growth strategy: Initiatives focused on both organizational improvement and eye care helped increase revenue for value added services. Initiatives expected to increase customer footfall Organization: Caravans, action meetings, review of initiatives, and quick decision-making for revising strategies, all bringing solid improvements evenue base: Transition to eye care service-focused stores. Diversified revenue base pushed earnings firmly into the black M&A: Local chain store (22 stores in Toyama Prefecture) to be converted into wholly owned subsidiary at end-january 217. Expects strategic M&A activity Full-year earnings forecast: Examining expected earnings impact from Me no Kenkou (made into wholly owned subsidiary in Q4) and acquisition of Megane House. Plans to investigate and disclose any impact on earnings Overview of results 1H: First year of renewed growth period. Initiated growth strategy underpinned by eye care. Sales up 11.2% and OP down 4.6% In 1H FY4/17, sales rose 11.2% to JPY8.6bn. At its etailing Services business, the various sales initiatives tied to the common theme of eye care continued to boost comparable store sales growth through 1H. Contact lens sales rose significantly through the company s sheer effort with promotional methods for store displays. The company decided to deal with unprofitable stores during, and in rolled out new stores, which in turn helped boost sales. GPM fell 1.6pp as contact lens sales with relatively lower margins rose by roughly 35% and high-margin eyewear sales were flat YoY. The SG&A-to-sales ratio rose 1.3pp to 65.3%, and operating profit dropped to JPY212mn (-4.6%, or -JPY145mn from 1H ) due to increased personnel spending that followed new store openings. The company worked on minimizing and optimizing personnel expenses considering the progress sales and profits versus 1H targets, but as sales rose, so did personnel expenses. To further improve the earnings power of each store, the company worked to revitalize existing stores through relocating stores to nearby locations based on tight profitability management, optimizing store floor space, renovating stores, changing store formats, and preemptively shutting down stores that require too much time to generate earnings. As a result, the company booked extraordinary losses (JPY19mn in losses on disposal of fixed assets and JPY51mn in losses from shutting down stores), with pre-tax profit at JPY96mn and net loss at JPY11mn. 2/7
Shared esearch eport Quarterly sales, gross profit, and GPM (JPYmn, %) 6, Sales Operating profit OPM (right axis) YoY sales (right axis) 4, 2, 2.3%1.3% -6.%-5.4% -1.5%1.6% -4.2% -6.3%.4% -3.2% -11.5% -15.% -3.7%-4.2% 159 9-354 -38-91 97-226 -319 23-3.1% -9.1% -18.8% -14.6%-14.2% -16.7% -17.6% -13.3% -2.1% -4.3%3.7% 5.5% -161-525 -627-159 -173-714 -561-537 -594-634 -36-114 -76-148 -473 2.3%1.9% 3.5% 1.4% 143 213 9 77 152 59-2, Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 FY4/1 FY4/11 FY4/12 FY4/13 FY4/14 FY4/17 Source: Shared esearch based on company data Operating profit, GPM, and OPM (JPYmn, %) 4 65.9% 65.6% 66.3% 66.% 65.9% 67.2% 67.% 65.% 64.4% 66.7% 67.8%69.5% 66.7% 64.1% 64.9% 65.5% 67.1% 65.%67.% 69.% 68.% 2 65.7% 67.5% 63.9% 63.5%65.5% 66.2% 68.% 67.4% 67.4% 159 9 97 23 143 213 9 77 152 59-354 -38-91 -226-319 -161-525 -627-159 -173-714 -561-537 -594-634 -36-473 -114-76 -148-2 -4-6 -2% 2% -5% -3% -8 2% 1% % -6% -4% -4% -6% -4% -1, -12% -15% -19% FY4/1 FY4/11 FY4/12 FY4/13 Source: Shared esearch based on company data Operating profit OPM (right axis) GPM (right axis) -14% -18% -13% -3% -17% -9% -15% FY4/14-2% -4% 4% 5% 2% 2% 4% 1% FY4/17 % - -4% -6% 8% 6% 4% % - Comparable store growth rate The comparable store growth rate continued to outstrip the competition. Since July 214, sales have continued to grow over 1% monthly, excluding March 215 (due to a tough YoY comparison as there was increased demand right before a consumption tax hike in 214) and January 216 (internal sales promotion targeting family members of employees). Comparable store growth rate vs. competitors 3% 3318 MeganeSuper 346 JIN 7455 Miki HD 9854 Aigan 1% % -1% - -3% May Aug Nov Feb May FY6/214 FY6/215 Source: Shared esearch based on company data Aug Nov Feb May FY6/216 Aug Nov Gross profit down YoY mostly due to much larger share of contact lens sales, despite successful eye care initiatives Although GPM fell 1.3pp, this is primarily because contact lenses which have a relatively low GPM occupied more of the sales mix, going from 3.7% in 1H (3.% in and an estimated 31.4% in Q2) to 37.2% in 1H FY4/17 (36.1% in and an estimated 38.3% in Q2). Shared esearch estimates that there is more than a 1pp GPM difference between contact lenses and overall glasses (frames, lenses, and sunglasses). We think this reflects emerging results from the company s earnings growth initiatives, which include increased sales of premium lenses and private brand frames. The share of premium lens in the sales mix was up 2.5pp YoY to 41.5%, and the share of private brand frames was down 1.5% to 57.8%. Although the share of private brand frames fell, the company has been able to maintain the ratio at around 6% since. 3/7
Shared esearch eport The company continues to invest in its company-designed private-brand frames Varietas for sports (July 216), Morgrande for middle-aged and senior men (September), and Keith Valler turned by meganesupe for the same target audience (November) to contribute to the product line. Premium lens and private brand frame ratio 6% Premium lense ratio PB ratio July 214: declare as "the eye care company" 54% 58% 6% 59% 59% 58% 5% 4% 3% 28% 29% 25% 15% 15% 14% 34% 17% 41% 4% 27% 21% 46% 25% 3% 38% 4% 41% 4% 42% 1% FY4/14 Q2 Q4 Q2 Q4 Q2 Q4 FY4/17 1H Source: Shared esearch based on company materials eductions in SG&A expenditures lower breakeven point In 1H, the SG&A expense ratio rose 1.3pp YoY to 65.3%. SG&A expenses rose due to the following factors. In, the company worked to close unprofitable stores and open new stores, resulting in an increase in related costs. As contact lenses experienced robust growth, call center costs went up. Also, once assets started exceeding liabilities in, the company ramped up advertising and sales promotions. Sales growth also missed its target. That said, the company s breakeven point significantly lowered thanks to a reduction in fixed expenses such as rents, as the company closed 55 unprofitable stores in, and because expenses were effectively focused on cost effectiveness. Notably, new store opening costs were greatly reduced. Until it used to take about JPY4mn per store, while the medium-term plan was expecting the costs to be at JPY3mn. The company brought the average cost of new store openings down to JPY13.8mn in and plans to bring it further down to JPY1mn or so in FY4/17. This improvement of the breakeven point was achieved by reviewing the locations and needed floor space with the aim to increase profits in mind. SG&A expenses and YoY change (JPYmn, %) 5, 4, 3, Salaries and allowances, provision for retirement benefits ents Advertising, other 4,329 4,237 4,229 4,72 4,55 3,844 3,75 77% 82% 85% 79% 79% 81% 81% 3,637 3,597 7% 3,558 73% 75% 8% 3,482 71% 71% 3,421 7% 7% 1,752 1,72 1,712 3,99 3,28 64% 64% 66% 65% 64% 65% 1,666 1,716 2,911 3,9 2,975 2,872 2,926 2,957 1,538 2,845 1,55 2,778 2,86 1,463 1,457 1,439 2,592 1,392 2,529 1,353 2,435 2,478 2,53 2,587 2,616 1% 8% 6% 2, 1, 1,236 1,4 1,87 1,241 1,323 1,29 1,335 1,374 1,291 1,2431,261,185 1,12 1,72 1,123 1,53 1,87 1,9 1,146 1,145 1,248 1,321 1,1241,191,731,461,341,321,211,1 961 943 926 881 776 728 732 74 728 696 68 59 598 65 619 625 632 638 1,3341,3111,3321,2831,2151,1971,1721,1281,161,871,71,66 91 881 883 887 876 854 858 843 825 793 777 791 793 88 822 846 897 848 4% FY4/1 FY4/11 FY4/12 FY4/13 FY4/14 FY4/17 % Source: Shared esearch based on company data 4/7
Shared esearch eport SG&A expenses ratio 4% 35% 3% 25% 15% 26% 26% 1% FY4/1 32% 31% 28% 29% 27% 28% 29% 29% 29% 29% 26% 24% 23% 23% 22% 22% 21% 22% 18% 18% 19% 19% 19% FY4/11 Salaries and retirement benefits expenses ents Advertising fee, etc 37% FY4/12 Source: Shared esearch based on company data 26% Quarterly sales, inventory, inventory turnover (JPYmn, days) 27% 35% 36% 37% 35% 36% 32% 3% 3% 29% 28% 28% 29% 31% 29% 29% 21% 22% 23% 23% 23% 24% 24% 23% 21% 22% 21% 23% 21% 21% 21% 21% 21% 24% 23% 23% 24% 23% 21% 19% 19% 19% 17% 15% 15% 16% 16% FY4/13 FY4/14 15% 15% FY4/17 7, 6, 5, 4, 3, 2, 1, 6,81 3,62 6,665 5,97 5,68 6,6 5,984 5,378 5,14 5,398 5,57 142 133 14 139 125 123 131 132 128 132 124 FY4/1 4,549 4,259 4,17 131 146 173 158 163 165 169 178 169 3,795 3,785 4,85 3,83 3,555 3,17 2,8 2,433 2,632 3,215 2,83 2,525 2,46 2,697 2,359 1,955 2,234 2,52 2,443 2,438 2,554 2,495 2,749 2,719 2,657 2,641 2,558 2,51 2,428 2,522 2,61 2,727 2,697 1,993 FY4/11 FY4/12 Source: Shared esearch based on company data Inventories Sales Inventory turnover (right axis) FY4/13 FY4/14 3,67 3,964 193 2 27 214 199 27 194 186 167 161 3,558 3,643 3,634 3,456 3,868 3,91 3,935 3,995 4,349 4,296 FY4/17 25 2 15 1 5 Factors for changes in the operating profit 1, 8 6 595 Gross profit items -136-9 -231 SG&A items 4 2 356 Operating profit 1H Increase in sales Source: Shared esearch based on company data Other Selling expenses Personnel expenses ents Other expenses Operating profit 1H FY4/17-66 -213 212 Announced acquisition of prominent local chain store business The company announced that it will convert Megane House into a wholly owned subsidiary. Megane House operates prominent local chain stores with 22 locations in Toyama Prefecture. Under the company s eye care strategy, the company has been recruiting companies to be a part of Me no Kenkou s platform with plans for Megane House to be in charge of the Hokuriku region. Meganesuper expects synergies from joint procurement, distribution, store management, and added value propositions, and it also plans to contribute to the local community. The company will acquire 24 common shares (16 shares for the parent and 8 shares for Me no Kenkou) for JPY3mn. The advisory fee will be JPY48mn, and the share purchase date is set to end-january 217. Meganesuper plans to consolidate Me no Kenkou (wholly owned subsidiary) and Megane House in Q4 FY4/17. 5/7
Shared esearch eport Megane House performance FY1/13 FY1/14 FY1/15 (JPYmn, JPY') FY1/13 FY1/14 FY1/15 Sales 875 884 861 Net assets 453 468 487 Operating profit 21 22 26 Total assets 518 536 562 ecurring profit 27 26 31 Book value per share 1,89.5 1,953.3 2,29.5 Net income 15 16 19 Earnings per share 63.1 67.8 81.2 Dividend per share - - Source: Shared esearch based on company data Store openings, store closings, and store count as of quarter-end 2 15 1 5-5 -1-15 -2-25 Store openings Store closings Number of stores (right axis) 48 49 49 49 48 394 388 381 381 381 379 379 378 37 369 14 13 6 7 7 7 7 4 1 1 3-3 -1-1 -2-1 -1-5 -3-2 -2-6 -7-8 341 313 317 324 31-14 -14-15 296 321-28 -25 316 36-21 299 291 8 9 1 322-5 -5 4-8 325 329 325-3 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 FY4/1 FY4/11 FY4/12 FY4/13 FY4/14 FY4/17 Source: Shared esearch based on company data 4 3 2 This note is the most recent addition to the full report. 6/7
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