Toward the Realization of Our Vision

We have established the achievement of a 300-store network and operating revenue of 1 trillion yen* as our 2030 Long-Term Vision. As the COVID-19 pandemic is now over, we have reached the stage where we can expect to see the results of our investments. Therefore, we are working to maximize investment returns. Particularly amid the current soaring construction costs, our policy will be to reduce new store openings as they are associated with risk and to shift investment to the revitalization of existing stores with a high probability of profitability and success. We will also promote growth through M&A and alliances and increase revenue from sources outside of our consolidated subsidiaries.

*We applied the "Accounting Standard for Revenue Recognition" and others from the beginning of fiscal 2022, but the figure presented is from before the application of these accounting standards.The figure after the application of the accounting standard is 740 billion yen.

Progress of KPIs Toward the Realization of Our Vision

Conceptual Image of Operating Revenue by Business Segment

In 2024, we took over the Kyushu business of Seiyu Co., Ltd., which operates stores in the Kyushu region under the "SUNNY" brand. We aim to absorb the excellent low-cost operation know-how possessed by SUNNY and create a highly profitable new SM business. Also, by adding the 69 SUNNY stores, we will expand in scale and achieve strong dominance, creating many synergies. In the future, we will develop this new SM Business into a pillar that ranks alongside the GMS Business as a growth driver.

Conceptual Image of Operating Revenue by Business Segment

Main Strategies

Area strategy

In order to further clarify our area strategy for the western Japan region, we divided store locations into "key areas," which are Hiroshima Prefecture, Kumamoto Prefecture, Fukuoka Prefecture, and Yamaguchi Prefecture with large market size and existing market share, and "other store opening areas." In key areas, we will accelerate our dominance strategy through new store openings and revitalization of existing stores. In other store opening areas, we will also carry out new store openings centered on M&A to increase market share and expand area.

Area strategy (image)

M&A strategy

We are promoting our M&A strategy as one of the main pillars of our growth strategy. In 2024, we acquired SUNLIFE Co., Ltd. in addition to taking over the Kyushu business of Seiyu Co., Ltd. In PMI*, we prioritize maintaining and increasing a high level of profitability with the aim of building an industry-leading business model in terms of profitability. The continued pursuit of our M&A strategy will promote benefits from expansion in scale and our dominance strategy as synergies.

*PMI...Post Merger Integration Process Implemented after Completion of M&A

Number of Izumi Group Malls and Stores

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SUNNY, which operates 70 stores in the Kyushu region (as of February 28, 2025), enjoys a high level of name recognition from customers. It also features highly- efficient, low-cost operations and an attractive product mix based on the development of private brand products with the aim of being "good but affordable!" We will absorb this know-how to create synergies with our existing stores, thereby creating a highly profitable new SM Business.

Product Strategy

We have adopted a product strategy that responds to consumer bipolarization into those seeking high value-added and those looking for low-priced products against the backdrop of sharply increasing prices. To meet high-value-added needs, we will enhance zehi, our own brand of prepared foods and processed fresh foods carefully selected through an internal evaluation process and manufactured in-house, as well as our Kore Uma series, which our buyers recommend with confidence. We will focus our efforts on strengthening quality and expanding the product lineup. To respond to the demand for low prices, we are promoting measures such as the introduction of Seven & i Holdings' SEVEN The PRICE, that company's price-focused private brand, as well as partnering with the Nichiryu Group, which engages in joint purchasing and product development in the area of daily necessities. In addition to collaborating with other companies, we will promote the development of our own private brands going forward.

zehi(Japanese)

Response to price polarization (conceptual image)

Action to Implement Management that is Conscious of Cost of Capital and Stock Price

We are working to implement management that is conscious of the cost of capital and stock price in terms of both ROE and PER, which are essential indicators for improving PBR. More specifically, to improve ROE, we are taking measures to increase ROA through an improvement in ROIC and to optimize financial leverage. To improve PER, our basic policy is to increase expected growth rates by realizing business growth and to adopt awareness and actions for reducing the cost of capital.

Target Indicator Levels

*The industry average PER is taken from the average figures from the end of the most recent accounting period in the sub-sector, covering department stores, GMS, SM, convenience stores, and drug stores (outliers were omitted).

A Logic Tree for Increasing PBR

• ・To increase our PBR, we will make improvements to our ROE and price-to-earnings ratio (PER).
• ・To increase our ROE, we will raise our ROA by improving our ROIC and other measures, and optimize our financial leverage.
• ・To increase our PER, we will realize business growth to increase our expected growth rate, and both remain aware of and take action toward lowering cost of capital.

Stock price = PBR × BVPS (net assets per share)

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Future Vision for 2030

Under the Group's 2030 Long-Term Vision, our future vision is expressed by the phrase "at the heart of our communities." The word "heart" has two meanings in this context. One meaning is that the shopping centers the Group develops as part of its business will serve as places for the many people who live in those communities to get together and relax. Another meaning is that the Group will play a central role in revitalizing those very communities. We believe that our vision will become more of a reality as we gradually get closer to achieving a 300-store network and operating revenue of 1 trillion yen.

*We applied the "Accounting Standard for Revenue Recognition" and others from the beginning of fiscal 2022, but the figure presented is from before the application of these accounting standards.The figure after the application of the accounting standard is 740 billion yen.

Izumi's Future Vision