41th Second Quarter Business Activity and Financial Results (From March 1, 2017 to August 31, 2017)
First of all, we would like to thank you very much for your continued support of KOHNAN SHOJI CO., LTD.
During the above mentioned term, the Japanese economy has been gradually recovering due to various government policies. There have also been an improvement in corporate performance and employment, despite weak personal consumption.
Under these conditions, in the final year of the first medium-term management plan called “We love KOHNAN 2017”, we continue to actively promote our initiatives of “revitalization of existing stores” and “reduction of merchandise” as well as focus on these initiatives with unflinching determination to achieve our objectives of 300 billion yen in net sales and 16 billion yen in ordinary income.
With regard to store development, we have opened two Home Center stores and four PRO stores. Additionally, we have acquired all shares of BEAVERTOZAN CO., LTD., which runs eleven Home Center stores in Kanagawa and Tokyo, and made them a wholly owned subsidiary of our company. Overall, as of August 31, 2017, there are now a total 335 stores (272 Home Center stores and 63 PRO stores).
As for business results, thanks to the new stores and the positive effects of a consolidated subsidiary of BEAVERTOZAN CO.,LTD., net sales were 154 billion 298 million yen (up 2.3% from the previous year), which marks the largest first-half sales figure in our history. Due to the improvement in gross profit margins by thorough price negotiations, gross profit was 57 billion 86 million yen (up 3.8% from the previous year). Operating income was 10 billion 305 million yen (up 2.8% from the previous year) and ordinary income was 9 billion 770 million yen (up 5.2% from the previous year). Due to a sharp decrease in the impairment loss, net income rose to 6 billion 24 million yen (up 78.6% from the previous year).
Achieving Further Progress as the Final Year of the First Medium-Term Management Plan
This is our final year of the first medium-term management plan. In addition to establishing the foundation for sustainable growth by revitalizing our existing stores, we are striving to improve our financial constitution. We are reducing our inventory to reduce the loans payable to achieve the further improvement of the enterprise value. We also recognize this year as the year for further rapid progress. Based on customer feedback, we offer products with the best price and quality to satisfy our customers. Moreover, we strive to create attractive stores to be recognized as “Number 1 store in the area” in all respects, including a wide selection of goods and services. Our aim is to to be number one in sales in the Home Center industry.
Higher Returning Profits to Our Shareholders
We recognize it as a priority of business management to return our profits appropriately and actively to our shareholders. We consider it our fundamental policy to keep our dividends stable for the long-term while considering the performance forecasts and the total level of internal reserves.
With this policy in mind, considering business results, we have decided to pay 25 yen per share to our valued shareholders as an interim dividend, which is a 3 yen increase from the original forecast (22 yen per share) to maximize shareholders’ value. Also, we will plan to pay 25 yen per share as year-end dividends, which is a 3 yen increase from the original forecast (22 yen per share).
In closing, we would like to thank all of our shareholders for your continued support of KOHNAN SHOJI CO., LTD.
November 9th, 2017
KOHNAN SHOJI CO., LTD.
PRESIDENT, Naotaro Hikida