MARUI GROUP Stock

My name is Kato. I'll talk about the overview of the financial results as well as the outlook for the March end of 2027.

So first of all, the consolidated financial results. This is the 3 points in the financial results, digest highlights. EPS has increased by 11% to JPY 158.4, ROE is 11.6%. ROIC is 4%. So 3 industries have been all achieved its targets.

In the consolidated operating profit, 13% increase to become JPY 50.2 billion. This is an increase in 5 consecutive quarters and achieved its targets. In segment, retail, JPY 2.3 billion increase of profit, FinTech, JPY 3 billion increase and achieved the target and also the 7% increase in JPY 28.5 in the profits and achieved JPY [ 7.5 ] million to achieve its plan targets.

So financial 11.6% in ROIC and ROE is 11.6%, exceeding the shareholder equity cost, ROIC exceeding the WACC. And also this is the final group and total sales has a record high, JPY 5.7 increase by the previous quarter, JPY 52.2 billion in operating profits and also JPY 1.9 billion exceeded to become JPY 28.5 billion.

So the operating profits, current profits also achieved its targets and the JPY 3 billion increase due to the nonoperating expenses. However, the current profits increased by 7%. Extraordinary profits in accordance with the impairment of the equity as well some of the loss due to the closure of the store, current profits are 7% increase to achieve JPY 28.5 billion.

So in the FinTech profits, this is the revenue profit and operating profit. Retail operating profit has increased to become JPY 11.2 billion. FinTech operating profit is a record high JPY 47 billion for both segments achieved increased profits.

And also the retail plus, the FinTech retail plus JPY 2.6 billion, Fintech plus JPY 6.8 billion in total expenses plus JPY 100 million, excluding the special factors, that is a JPY 9.5 billion increase of profits.

And also tenant revenue have increased and that increase the expense increase that is achieved, the JPY 11.2 billion for the rents and the expenses, those proportional rent has increased.

This is the transaction volume in the 44 months has increased the previous year, it is a higher level than the total region department store is [ 111% ] compared to the previous year.

In the tenant revenue segment, the minus JPY 500 million and also due to the variable rents, JPY 2.3 billion increase in the tenant revenue. And this is the card and this is due to the sales increase at the area, nonoperating area has decreased -- declined to [ 4,700ub ] due to the withdrawal of our own store base and compared 5% increase and now became 70%.

As planned, the category has been increasing. The next is the FinTech situation. In the FinTech, this is the breakdown of the operating profits. And this is due to the change of the revolving and installment payments, the JPY 6.8 billion increase in FinTech. And then this is including the special factors, it is a JPY 3 billion increase.

This is the card and credit card. And in the 10% increase, 1.2 -- so this is JPY 1.2 trillion. This is a record high. And this is the merchant commission rate. This merchant commission rate compared due to the revision of the foreign exchange rates fees, they have increased by 22%.

And this is the revolving and installment payments in the March ending the JPY 473.2 billion expanded. And this increase -- this is the -- if looking at the industry compared to the March, the 1.1x in 2020 March, but now it is 1.7x that we have the case compared to the other peers in the industry.

This is the commission fee revenue due to the revision of the fees since October has expanded to JPY 69 billion, which is JPY 9.4 billion increase. Next is the new memberships in the 2020 March in the entire new card issuance is still going, but then card supporting the [ Suki ] has increased and increased by 50,000 to achieve the 870,000 people members.

So these card numbers of membership is the record high JPY 8.3 million. The [ Suki ] supporting card members are 1.38 million people. The Platinum and Gold Card percentage is including that ratio is 64%. This is the decline in the repayment of the profit, repayment of the yield and interest. So the JPY 1.5 billion has been placed as provisions for the loss of the repayment of that.

This is the total asset with the account receivable increase compared to last year-end, JPY 87.9 billion increase of JPY 1.1413 trillion.

Equity ratio compared to last year-end, less by 2%, so 21.4%. In terms of the capital allocation, the basic cash flow, JPY 2.6 billion borrowing JPY 1.5, JPY 1.8 billion for growth and then dividend 21.4% and then the share buyback 7.7%.

Also in terms of the human resource investment, JPY 9.7 billion. Total investment is JPY 27.7 billion. ESG situation. The main external valuation, [indiscernible] brand, we were the first 9 years in a row, selection.

Other health-related management, we are the first for retail, we are selected for the last 9 years consecutively. In terms of the renewable energy, 100%. We have our own solar generation from '27, we will be improving by 97% for this year.

And then we didn't have our own generator during the Ukraine crisis, our electricity bill went up by 30%, 27 March, even with the Middle East crisis with the tenants included, we will be plus 17% right.

So it's half of the Ukraine crisis. In terms of the outlook for March '27. EPS, 4% growth, JPY 16.4 billion, ROE, 11.8% will be higher than previous year. Group total will be 9% increase, JPY 5.900 billion and then operating profit, 10% increase, JPY 55 billion, then net income will be 4% increase, JPY 29.5 billion.

In terms of the ordinary profit, with the interest rate going, we have minus JPY 34, but we have the operating profit, so some 3% increase of the ordinary profit, JPY 44 billion. By segment, this is the operating profit. Retail, 3% increase, 11.5% FinTech 8% increase JPY 51 billion.

The Retail segment operating profit, plus and minuses, tenant income and event will be expanding. In terms of the other utility costs, we have increase of JPY 800 million. Lessening of the real estate increase, there will be down of JPY 500 billion.

So we will have a JPY 300 million or so operating profit. For FinTech, with the expansion, the merchant fees and the installment and repayment fee changes, actual operating profit will be JPY 3.5 billion because of the interest repayment loss that we accounted for last year, there will be JPY 4 billion for the operating profit. Per head dividend, DOE 10%, we will maintain for March 27.

It will increase by [ JPY 3 ] to JPY 134. We are increasing for the last 15 terms. So that's all from me. Thank you.

So now we would like to have direction for Suki business. Our CEO, Mr. Aoi will present. So this is Aoi. I would like to talk about the business supporting Suki and going forward.

We have the vision of the economy that is driven by Suki. So we have the business that is supporting Suki. The business that supports Suki through Suki, consuming something for somebody and society through Suki is what we want to do the impact to society. We are using our benefit to launch into new businesses and evolve into the new businesses.

First, we will do the businesses to support Suki. We, up to now, retail FinTech, we have the co-creation investment with the Trilogy. So we will putting Suki in the center, we would evolve all of the 3 aspects. First, retail. In retail, we have event goods, cards, Suki support unit will be the main ones.

Store management operation, we have events to support EV and then our own private brand expertise goods will be utilized. And our unique feature, we will continue to draw more card membership through our services. The unit that supports Suki, we are able to change our way of managing stores as well as opening our policies.

Yokohama, we closed in February. We have a unit specializing in Suki to reopen. Yokohama membership, 70% are coming to the Suki events. So through this change, 145 of the area and then 1/10 of the staff, we are able to make sure that we are drawing more membership.

So it's much more efficient sales. Especially efficient operation, we have other different types of outlets. In Osaka, after [indiscernible], we have our second store that is supporting Suki. If the operation unit succeeds, then we can make the asset of the store efficient so that we will be more of an asset-light business.

Next, we will talk about FinTech. Up to now, Gold Card was drawing the growth and driving growth. By adding the Suki support card, we can grow in new areas. Up to now, becoming a general card to Gold card, we are seeing more usage and then people are using their Gold Card as their main card, and there will be more usage. So it's a 2-stage approach for our loyal customer.

Royal customer is simple for the Gold Card, but it's very effective. Last 20 years, we have had 19% increase every year, which is a very high growth. March 26, also in terms of how we traded, 75% increase was from the Gold Card.

As you can see, absolute gold card. On the other hand, Apple Card, we think there is potential that we can draw from. This diagram I would like to use. This is the loyal customer outlined by Gold Card in numbers.

The new member, 100. Of that, 45% of our customers, invitations are sent out for Gold Card. Of that, 20% of the customers switched to Gold Card. And of that, 15% of them make it our main card.

So therefore, they become a true loyal customer. On the other hand, those customers who do not apply to the invitation or even if they become a Gold Card, they don't use it as a main card, there are 5% of those. So total 30% of those. So meaning that the loyal customers, 15%, double that, 30% is still left behind.

So that's our great potential. Therefore, utilizing the Suki support card mission, we would like to take all of these 30% customers into our loyal customer path. To do so, the core competence, we would like to co-create trust.

For that purpose, we will practice co-creation of the trust, which is a core competence. The founders expressed the trust is something not given to the customer, but rather trust is to be co-created with the customer.

Gold Card is relatively closer to the trust that we give to the customer, but the Suki supporting card is the co-creating the trust and loyal customer creation will be proceeded.

So here, the important point is the customers, the self-confidence and self-positive attitude toward oneself in regards to the management of money. And Japanese people, in general, has the less knowledge about the finances and the self-confidence is quite low in terms of financial management. So therefore, some customers feel I'm not really good enough to have the Gold Card.

So therefore, they would hesitate to switch to a Gold Card and they will not use Gold card. That is about 30% of the customers that I just explained. By the Suki supporting card for them to become loyal customers, most specifically until 1970s, since inception, in Marui Store, we have the communication with the customers face-to-face, which we have done in our stores.

In application AI technology utilized to be produced again, that's a customer interaction. And based on that, to support the customers' self-confidence by providing the appropriate feedback at the appropriate timing. This communication with the customers, that is the trust is something that is not just given, but also the customer themselves would grow that confidence and to gain the trust so that they -- as a result of the one's trust to be grown encourage to be grown each customer, they would eventually become a loyal customer, and that is a business to be supported.

So the Suki supporting card, the co-creation of the trust in the volume of the JPY 1.5 trillion to JPY 2 trillion will be the increase of the revenue. And also in the invitation standard is not reached in those are 55%. Those are the other companies' credit card that use as the main card. But then by recommending Suki supporting card, we will promote the switching and charging to our -- the main card to become use ours.

So in the Pet card, 10% of the members Epos Gold Card switch from Epos Gold Card. So among new members, the other company's main card there are certain numbers of customers who have switched from other companies' main card to our card.

And those supporting card other than just the status that you can buy paying money, but also represented in the love for their pets. This is the priceless Suki or like or love is valued as very important for the customer.

So through this card, supporting Suki or their individual interest, that has been those 55% of the customers now recommending them to switch to our cards for them to become loyal customers.

In 2031, the 15% of the customers will become loyal customers by 2031. So therefore, the transaction volume should reach an increase of the JPY 300 billion to JPY 500 billion by March ending in 2031, in main card ratio become -- increases from 23% to 35%.

So the group transaction volume to reach JPY 10 trillion is our target.

This is the fusion of retail and FinTech and now the card membership to be collected and the loyal customers, we combine retail and FinTech so that we can support the long-lasting customer journey. Not just the event to get our members, but also the Suki supporting card, we provide the experiences.

So this is linked with the lifestyle application. The event can be reserved and this is a service for the members, and this is implemented, then the customers like based -- Suki-based event announcement as well as the preferred reservation and invitation can be used at the benefits.

This is a good. These goods are sold in charge of the retails. The goods provided for the members are differently sourced from the person in charge. But now we're going to merge the 2 by having the more unique own goods as well as through the sales is also monetize our sales and also to the original benefits provided to our card members as well as a cost.

So the retail and card will be combined to be used, initial cost will be hedged by the revenues in retail and also the initial [indiscernible] can be recovered to achieve the -- over the lifetime achieving the business model and the profits. And so the need and sales and FinTech to be fused together so that we can achieve this effect by the joint cost sharing so that we can increase our profit ratio. Setup collaboration to be increased and co-creation has been reduced in the recent years due to our review on collaboration policy.

But in the future from now on, we will be supporting the business supporting the Suki and also conversion IP and content, those nontangible asset investment will be done to promote further collaboration. Next is the DX strategy, digital transformation strategy supporting Suki.

This is a communication, a more tailored personalized communication to promote the creation of the trust and also data to be utilized and AI to be utilized and to achieve marketing.

Events and goods are linked. The online and offline experiences can be combined together through the Suki or likes to support each individual happiness. So this strategy is a professional resources in the DX area. We didn't have much of the tech image before in Marui Group but now we have the -- thanks to the efforts by Mr. Tsuchiya, our CDXO, former Goodpatch, the former Marui Group -- Goodpatch President.

And from April, Tokyo University, [ Takamatsu ] Research X, coming from that research lab, AI [indiscernible] Executive Chief Technology Officer; and Goodpatch also a joint venture mature, UX design special software development internal can be internally done in Marui in it, product development specialists as well as key supporting unit, data utilization experts as well.

And the DX strategy will be further promoted by -- so this is the -- for the co-creation as well as the -- also how it should work in the future, business development is made. And most specifically since 2024, employees' own likes Suki can be developed into business development and Suki supporting business [indiscernible] has been done. 240 employees in the past 2 years have applied in 152 plants and the likes in the museums and art museums and the museum card and support card has been commercialized.

We have been expanding the participants to outside to the public from 2026. Broader idea has been collected [ fast right ]. But out of 170 applications, about 130 of them are from outside.

The breakdown, other companies and overseas people, university, graduate students and long-term intern people. The topic was space [ Wajima Lacquer ] and philosophy.

This is the day of the contest. Various types of Suki is presented and support from the audience, it was very much a big hype. Through this place of co-create, [indiscernible] Group strength and the Suki of individuals can be merged together to have very diversified Suki.

For this business, we will have various employment as well as midterm hire as well as contracts as well as long-term internship, we will have a work style based on project.

In that case, company will not be a box where they will split the external, internal. It will be a more free place where people can come and go as well as utilizing their expertise.

Using this co-create place, we would like to create a way of working so that we can get excellent talent from around the globe so that we can evolve into a company that supports Suki.

So the new structure for our Board for the last 12 years, External Director, Okajima [indiscernible] is going to be retiring this year. And then the new External Director, [indiscernible] is from the McKinsey & Company as well as has been a fellow for the Kingdom of [indiscernible] and right now is the President for the [indiscernible].

So a management that has both impact and profit at its core. So also our director is changing. Kato and Kojima are retiring and the new candidate for the Director is the Senior Managing Executive Officer, Epos President, Aida, and also the Senior Manager, Corporate Planning, Endoh.

Also, we have a director that we will increase from Goodpatch President. The CDXO Senior Officer, Tsuchiya, will be recommended.

In the June General Meeting of Shareholders needs to approve these new members, we would like to expand as well as make sure we can have a switch of generations for March 2031. We will make sure we all achieve our target. So that's all I had to say thank you.

Thank you for your time. Let's move on to Q&A.

So the first question, [ SBI, Otsuka-san ], please. This is [ Otsuka from SBI ]. Do you hear me?

Yes. Two questions to Mr. Aoi. So one by one. Is that okay? Yes, that's fine. First question, today, you talked about in terms of the trust, Page 56, after 56, you have mentioned some of these engagements, which is very interesting for me. So you want to elaborate on this for 56? Of course, as you mentioned, especially financial service in terms of credit is providing for.

So the financial institutions normally think in that approach. In terms of co-create, Idea is a differentiator for you, I'm sure. The question is for the differentiation, how would you like to bring it into more solid? For instance, as you said, Suki support, Suki support card, then that will be something that you can benefit.

Like you commented, the 30% of the people who are still not necessarily have no Suki support card or no plan that they can relate to. The digital communication that you will be using as a tool. Not necessarily, you are not able to hook these audience, and they may not feel the attraction to what you are providing.

So strategy going forward, if you could be -- that's first question. So one by one.

Thank you for the question. In terms of trust co-creation to be more specific and how to make it more possible. If I make it very short, last before, from starting of our business late 1970s, we said, especially 1960s or '70s, it's hard to imagine from today at the very top of the floor of our store, we had a payment counter.

Every month, customers would come to make their payment to us. And our employees face-to-face would receive that payment for the repayment. And actually, there is a lot of dialogue going on. For instance, every time when they make payment, we say thank you, and there's a conversation.

For instance, after they finish their 10x payment, this is -- you're done with 10 -- not just saying thank you and expressing appreciation, we say this is just a token of our appreciation.

We will give them a gift. We used to. Then, those customers still treasure those gifts today. It's putting our appreciation into the gift from the customer, limited income, whether they were able to pay the whole 10x, they are so relieved that they were able to pay up all the installments and to be thank for that.

Having it in the form of a gift, it means that they means that they were able to build up their credit, their trust.

So it's a psychological benefit that they can be positive about what they've done later, we analyzed. So those customers, there's quite a lot who are happy with themselves. Our trust co-creation credit cards business, customers, we want to be very sympathetic to how they feel.

These are the expertise we have in our company. Unfortunately, in terms of the storefront communication going away, but our idea, our communication with customer is getting less.

So we want to revive that kind of relationship is what I explained to you. For instance, today, lifestyle app, we have to engage with customer or communicate with the customer. Every month, the closing date. What kind of communication today? We will close soon. Are you okay? Yes. If you want to do a change to the revolving type of payment, you can tell us when and we can change it to a lesser amount and then make it in a new revolving. But the new payment date, we don't have any comment. But just if they are late to pay, there's a telephone or there's a short mail sent. And we ask them, you need to pay us soon. For instance, we want to put our minds in the shoes of the customer. We should say thank you on the day they made the payment for the installments. We start there. If it's a 10x payment installment, then we say this is done, you completed. So this is just our appreciation. So if you don't mind, we can give them a [indiscernible] target gift like a little animal, stuffed animal or digital something is the way so that we can recreate what was there in our history.

Sorry, I'm getting long-winded, but how we can make this possible? Based on our history, the expertise. This is our core competence actually. Others cannot copy our own unique capability is how we appreciate this. Customers psychological, we are able to sympathize with this kind of method. This inevitably is going to be the source of how we can deploy and what we said. The top-tier DX talent, DX UX to recreate. We have -- we need dedicated professionals. Fortunately, we have some very capable people here who are working together with us. So together with these people, our staff are working with these talented people, professionals to create the experience that other companies are not able to match. So this is a new business that we work together with our customers is the differentiation that we're looking for.

With the financial money rending agreement contract was made. And then, however, the customer receive being told that [indiscernible] -- and by being able to do that, that is a very good factor to evolve further communication. And if you have some data, I will let you know as well. More specifically, in the current [indiscernible] supporting business, what is the progress or any impact -- effect that you are able to achieve from that business? From Mr. [indiscernible] viewpoint, are there any favorable results? For example, employees also, there are many situations where the employees themselves will be encouraged from that. Any positive achievement and positive aspects that you are able to achieve. In addition, what are the negative or somewhat not achieving expected results from the Suki supporting business?

In terms of positive things, as you just mentioned, with this Suki likes to be the good trigger. The employees who about 65%, very high percentage. And now that percentage is increasing. And in addition to that, I'm very pleased with the fact that Suki supporting business concur was held this March. And for the first time, we have also opened it to outside the company as well. About 140 -- close to 140 ideas or close to 130 ideas come from outside the company. So these ideas were proposed -- very good proposals were given or very passionate proposals were given to us from outside the company. So those who have received, we want to commercialize and to put that into business as well. So these ideas can be collected from outside and can be used in event and goods and cars by Marui and combining with our existing business and Suki supporting business can be started one after another. That is the -- what we are actually happening. That was the thing we have thought about, even though we were just started, but it is now seemed to provide better results.

And on the other hand, what is somewhat negative or not achieving yet was as your second question, the Suki supporting card to create the trust. Those who can -- the experts who can support this are participating the Suki supporting card and business. But now we are -- the members are now there, players are now there. But then we further need to implement this and to realize such business. I think there's still some room for growth and there are still some conceptual stage. We will need to make more efforts in this area to further make it grow.

We'd like to go on to the next question from Mizuho Securities, [Takai-san,] please.

So this is [Takai] from Mizuho. Two questions. Number one, same with the first question, the Suki support card, how to expand that. You previously told us your card, your operating cost is very low, even that is very difficult for other peers to copy. One possibility, this sort of Suki support card, having this, it's not communicated properly, but people don't know the content very well. They're very vague. It's very, very difficult for them to use the card or people who are nonusers, you want to expand it to nonusers, you need to have more recognition awareness.

One of them is the Umeda, the new store that you are opening in Umeda and Osaka, so that you're more positive about your own self kind of. Those message you need to expand it to people who don't know you? Or how would you like to go about expanding this? That's number one.

Thank you for the question. Yes, Suki Support card is very -- compared to before, has great opportunity. The opportunity lies in large way to improve awareness for many people to understand what we did before. Until we communicated, people didn't understand this. But for instance, Suki support card, the original source before we had the engagement, the anime business that we used to be working. Anime events, we would work together with in the card. Those sorts of credit cards working with anime. From 10 years back, we have been doing through that operation, we understood those anime content fans normally -- in social media X, every day, they have frequent communications within the community. So within the community, we would send a message to this community.

Then that becomes a big hype within the community. It gets transmitted by them also by the community. So communicating to the fan community, the speed, the scope compared to before, it's easier for us to get in touch with the group using social media already, the fan community is already established. We can notify them. So the fans actually can communicate to their peers is how we are able to communicate. So using Suki as the core, we are getting a big benefit advantage through this. Of course, we will continue to communicate and introduce people to these sorts of cards aggressively. But on the other hand, cost and without us putting too much effort, the fan themselves are able to communicate. So that structure already exists for us. So that is our businesses that we are very appreciative of in the nature of it.

And that is why the business concur that is also open to the public, that is very good, including those aspects, those ideas can be collected more broadly from the audience and so that you can increase and you can grow the community. And then this will be naturally expanding from those effort. Is that correct?

Yes, that is correct. That is what we are thinking. Yes.

My second question, in the new organization, you mentioned, could you please let me know your -- the new members are also wonderful. You're also including the young employees and as well as the external directors compared to before, I think you have the younger generation working more and those who are knowledgeable in the business has been the new members of the Board of Director meeting. And how do you want to evolve your Board of Director meeting? That is my second question.

Thank you for your question. [indiscernible] has been working for a long time to increase our corporate value, company value. Okajima-san has joined 12 years ago. At that time, the share price was JPY 1,000. Now our equity price is 3x more, JPY 3,000 level today. After 12 years of his assignment, now he is retiring from that position and the successor is Mitarai-san. Mitarai-san, and Mitarai-san also have been introduced from Okajima-san and they have worked in McKinsey and Company before. Both of them have worked in the company before and Mitarai-san and also in the East, Great East Japan earthquake, Mitarai-san was the Bhutan loyal government Prime Minister fellow, and then now -- and then she is doing the social business quite successful called [Kesennuma] meeting. So this is a social enterprise. She's been working.

So now she's joining us as an external representative director, so that is the director so that we can increase our corporate value. So in case of our internal director, we have increasing internal directors. This is from good batch Representative Director, Mr. Tsuchiya. He is already our Executive Officer, CDXO and Digital Transformation Officer. And Mr. Tsuchiya has been the nonpermanent officer, but now thinking about the future directors within the Board, we do need a person knowledgeable about digital and technology. So that is what we felt we need such an individual talent. So that is why as we have discussed internally in our Board meeting, and we decided to invite this timing that we want to ask Mr. Tsuchiya to become our internal director at this time.

The other person is currently the President of EPOS Card, Mr. Aida. He is the Managing Executive Officer and CDO. And he had worked in the corporate planning as well as he had worked in the putting the new stores in Hakata. He was also the founding member of that store. So both in the credit card as well as the retail. So Mr. Aida is very knowledgeable of our business. So he has done the operation of the company as well as for the business. So as Mr. Aida, we'd like to ask Aida-san to become the Internal Director. And Ms. Endo, she would be the youngest, but she is the IR -- in charge of the IR and also she is the Corporate Planning Director.

So FP&A and she is very knowledgeable about figures and numbers. And also, she is very experienced and knowledgeable in the business management area as well. Mr. Kato is the CFO, but Ms. Endo is a future potential human resource to succeed Mr. Kato in the future. So Mitarai-san and Endo-san are females. So with the -- so the average age with these 2 individuals, the average age of the Board of Director members would become younger, Rich. And toward the 2030, we will be trying to get more younger members included in our business management as well as the Board of Director meeting members. And that is what we are trying to do.

Okasan [indiscernible], Kanamori-san, please.

Yes, we hear you fine. Kato-san Fintech business, I need to confirm. So that's the reason for my question. Up to now, in the material, you used to put in terms of the loss and then changes in the fee commission impact.

Usually, you would put it into the material. I was not able to find it myself. In terms of 26th March, the original Q3. At the end of the day, the actual -- what is the situation I would like to know.

And 27 March, for the first part, the positive of the fee change, commission change. The original plan, raising the fee, the operating profit benefit, 26 March, JPY 4.8 billion. 27 March, JPY 12 billion would be the number. [indiscernible] is going to be a plus JPY 7 billion. However, in terms of you have a lot of the depreciation by quarter, you are trying to fasten out.

In terms of the plan, 27 March, the number -- outlook, how do you have the plan laid out?

Yes. So I would like to respond to your first, the 26 March results. Up to now, in terms of installment change fee, JPY 4.8 billion, we assumed that transaction is not going to change. It Went by 0.2. So it's JPY 5 billion instead of JPY 4.8 billion. 27 March. What we said, no change in the numbers. It will be all benefit of the fee we won't do this in this fiscal year. But going forward, all the expense costs structurally will be readdressed. So annually, in terms of the credit liquidation, we want to make it negative. So asset securitization, we want to make it negative for the quarter. We want to make sure it doesn't go up and down too much. That's a specific area that we want to be more specific about.

Kato-san, by quarter, this chart I used to receive, you're not going to make that available.

Previously, when we closed for the Q1, this year also, after Q1, we should be able to give you a better plan outline that we can share.

Okay. I understand. Another confirmation is the year that closed, Q3 cumulative performance, it was an upside with FinTech?

Yes.

However, Q4, the upside is getting more extra. Strategic cost is going to be put into Q4, I believe. In reality, value, how much did you account for here? Also '27 March, the strategic cost expense, what's your direction? Please comment to the extent that you can comment today.

Strategic expense, we wanted to use. But as we said, interest repayment that we had to account for was more than expected. So as a result, we couldn't build on it. Therefore, rather, we didn't want to -- we accounted for some of the loss. So we put JPY 1.5 billion for the interest repayment. So we were able to -- for this year, the revolving changes in the fees. For digitalization, for the app development cost, we want to account for more so that we didn't have any bad debt. So therefore, we want to have a database buildup. We want to spend more is what we wanted to do. So we wanted to lessen ourselves with the bad debt.

Now I'd like to invite the next question from Daiwa Securities, Shigeoka-san, please.

My name is Shigeoka from Daiwa Securities. I have three questions. First question is on the FinTech also relates to the FinTech issue. You mentioned about the expense increase in FinTech. In the slide of the factors of increase, JPY 16.1 billion expense has increased compared to the previous year. That is the -- some of the factor for the reduced profits. Compared to the last year's situation, the sales linked, the point expense portion seems to be quite large. What do you think?

Sales promotion expense, are you planning to increase -- you may be increasing the sales promotion expenses? I'd like to know the background.

Thank you for your question. For the March ending 2026, we have the points. That is the -- we have provided. The service has been reduced from the previous year. So therefore, not that much difference in the last year. And however, this year, this go back to the usual situation. This is the expense increase. The March 2026 is actually smaller.

In the sales promotion expense, as I mentioned before, the future application enhancement and data to build more databases, we would need more expenses for the future investment. That is why we are -- we have increased our expenses.

And what about the system expense is also JPY 700 million increase. Is that also that is related to that?

That is the -- for the renewal of the servers we plan to do.

I see. I understand. My second question is the loyal customer, about loyal customers. For the Gold Card to be promoted that you -- I understand that you are promoting the Gold card, and Suki supporting cards is being added as well. Which one do you focus on the two? Because -- is that the customer is going to choose the main card as a Gold Card. It is not both of the Gold Card and Suki supporting card. Is there -- when does a customer change from Suki supporting cards to switching to Gold Card, the card face will become changed as well. What do you think?

Let me answer that question. So for the Gold Card and Suki supporting card, those two -- in the past, we only had gold, but now we have the new card, Suki supporting card is newer. And we have done discussion how do we support -- how do we service these two cards. But different from the Gold Card, they can become loyal customer that is different from the Gold Card that for example -- of course, there are some contrasting idea,, concept will be Suki Gold Card, but we don't have that now, that idea. And so that I do remember the numbers in those table. Those who have not been able to get them as our loyal customers because they feel more anxious and they have less self-confidence. But now these cards can also address those type of individuals to become loyal customers.

So as today, Gold Card plus [ alpha ] is Suki supporting cards. So in both -- this is like two wheels of a vehicle to promote more and more numbers of the loyal customers. So in case of loyal card, it is -- the number has to be changed due to the Visa guidelines and rules. But the Suki Gold Card, they can use the same number in the card. And so that improvement is also can be done in the Suki supporting card. So that you can co-create the trust together.

We provide the benefits as well as experiences for the Suki supporting card members and the bonus points for the Gold Card and the lounge use at the airport for the Gold Card. So that's the difference from such a general one like a Gold Card benefits. That is the Suki supporting card has unique benefits and reward and benefits. We made our own Marui's own unique rewards and benefits for Suki supporting card. So this can further also link to the retail sales and combined with the credit cards. So in that sense, our profit ratio margin can be further increased to achieve more loyal customers. That is our future stance.

So not everybody Gold Card, Suki support card. Hopefully, they become main card is what -- how you want to drive them?

Yes. The 10% people who receive Gold Card are very happy, and they would use it as their main card. People are very happy. I met with many, many people who said so, but some of them -- some feel that Gold card is too much for them. So both customers, the 20% are happy, but we want both of them also to be happy.

Last, number three, in terms of the share buyback in your material, after '26 for the capital appropriate, JPY 30 billion, the timing you didn't say after '26 was what was written. No change in your idea? If there's any update, please.

So I should answer that idea has not changed. In terms of the capital allocation, 31 March, if we can build on the profit and then the retail capital will be too large. So JPY 30 billion or so, we want to do share buyback was the plan. But however, retail, FinTech, only when the profit rises, we will have too much capital. As of today, not yet. So in the midterm plan, second -- latter half of the midterm plan, we would do it. So that itself, no change in the direction.

It's already passed our time. So we will have two more questions. SMBC Nikko Securities, Kanamori-san, please.

My name is Kanamori from Nikko Securities. I just want to focus on two questions. First question in this performance results. In this quarter, FinTech KPI, fourth quarter or rather full year results is also included, but per capita, the loan balance JPY 1,000 decline on loan balance and also revolving. And from the second quarter year-over-year, it is -- there is a declining trend on year-on-year.

In the fourth quarter, revolving payments and compared to the first and second quarter, that was the -- in the first and second quarter, there was a double-digit number. In the fourth quarter, that was reduced to 6.7%. That is some of the concern I have for the FinTech business surrounding environment, if there's anything that is -- that is my first question on the FinTech business.

Let me answer your question. In the fourth quarter, the installment and revolving payments in the macro factor that is due to the macro factors in December, the -- has been expanding from December and also the deduction of the government as we started from the fourth quarter. Similar situation is happening in other companies as well. So that from the first quarter, there's some declining trend, but that is just slightly so that we will not worry about it so much.

My second question in this -- in the flow chart, FinTech part, Shigeoka-san has asked and maybe did not mention the guarantee, JPY 1.3 billion for the rent guarantee. What is the background of that reduced profits of JPY 1.3 billion? And also, debt is the JPY 1 billion profit declining, and this will be reduced in future. I think you are also looking at the amortization of that. So the sales proceeds, can you divide them into the sales profit -- sales proceeds? And also, between the difference or gaps between the current profits versus the operating profits, the 11 point has expanded, the profit expanding in the JPY 3.4 billion. This red ink has been expanding in the profits. Is it due to the payment of the interest rate? Or I'd like to know your plan ideas.

So let me answer your first part of the question you just mentioned. For the guarantee of the rent, this is the nonproportional to the volume of transaction. This is for the revenues. This is the -- this is a part of the -- most of the service revenue of the JPY 1 billion profit should be generated because of that. For the liquidation of the debt or the credits and that we have seen amortization -- amortization of the credit will continue. And also, sales proceeds is -- also should happening, the minus JPY 1 billion level that we can control. So the operating profit is JPY 3.5 billion. So they can -- we can reduce this liquidation portion of that, which I will explain more in detail in the first quarter explanation.

And the -- you also mentioned about the current profit is minus JPY 3.4 billion. That is impacted from the interest rate impact, mostly coming from the interest rate.

There will be one more question. Nomura Securities, Kwak-san, please.

This is Kwak from Nomura Securities. Since you don't have time, I have two questions. The credit securitization, the level change, interest hike, how is that going to impact? How would that impact your profit? Minus JPY 1 billion year-on-year you said -- is what you said in terms of the liquidation of receivables. JPY 2.7 billion. So JPY 10 billion for this year, mid-JPY 10 billion after fiscal year, if you're going to reduce the leverage idea, if you have any?

In terms of liquidation with the interest environment, the housing loan liquidation, you would stop -- you are doing a lot of the repo where you are talking about the revolving. So if you can talk about that, please.

So I would like to answer that. So first of all, the initial liquidation interest going up. We -- the interest that -- for lending, we are raising. So it's not an issue. Going forward, what do we do? In terms of the interest hike, annually, JPY 12 billion, we have benefit from. Last year and this year, interest hike, JPY 7.7 billion impact. So we have another JPY 3 billion to JPY 4 billion to go. So we will hedge to do the liquidation. As a result of that, the total loss, we do not want to impact is what we think. Did that answer the question?

Thank you very much. Next question about Suki and Premium Card. This is my question. Increase of this card and the breakdown, unit price going up could impact your financial numbers? Do you have anything that you foresee? Fourth year after membership, fee jumps up high. '23 March, Suki-centric card is increasing for you. Going forward, the financial numbers, how will it be impacted? So if you have any idea?

Yes, I'll answer that. First, from membership, second, third year, the unit price goes up. So as I said before, this year, 870,000 people, so 50,000 increase. This year, we will challenge the same level. So industry overall new membership is -- does mean we are able to grow the membership so we can do a good job. And Suki support card and Gold Platinum with the new membership, naturally, the Gold and higher will go up in the Suki card, the unit price is higher. There are young people. So they are using the installation revolving. And after next year, the installation revolving will continue to build up, we think, from next year onwards.

Thank you very much. We'd like to close the Q&A. '26 March, we would like to close the presentation for this fiscal year.

Now that it's time, we would like to begin Marui Group, Marui IR Day 2025. Thank you very much for coming and participating in your very busy schedule. Today's content, these are the 3 topics that we have for you. Each content, we will have the presentation and Q&A.

Today, Marui Group Head office, we are here at the co-creation communication space. co-creation lounge is where we are speaking from that opened in September. Also from Misaki Investment, Mr. Nakagami is joining us remotely. Later, we will be showing you the video in our homepage. So we would like to begin. First, so Marui Unite, President, Mr. Yamane, President, Representative Director of Marui Unite and Sarasa Yonenaga, Executive Officer and Brand Manager, new Chair Corporation. So Mr. Yamane, please.

As shown on the screen here is today's agenda. So I would like to cover the first part. I'm in charge of the Marui Unite and the DX initiative. Yonenaga from Muture will explain. We will focus on two topics. First, how our Lifestyle app contributes to main card adoption and second, how our development process. First half myself and second half Ms. Yonenaga.

First, let me explain how the app contributes to the main card adoption. I was engaged from the 7 years ago for the app. So I would like to explain some of the efforts. I will begin with our efforts to drive main card adoption, followed by our upcoming initiatives to support customers Suki. As shared in our earnings disclosure, we have set main card adoption rate as a new KPI toward fiscal year 2031. We have defined this as achieving a 33% or higher household share. The average annual cash spending by EPOS cardholder is estimated to be JPY 1.15 million. If this spending were entirely conducted with EPOS Card, it would represent approximately 33% of household expenditures.

Moreover, JPY 1.15 billion level is consistent with the total annual credit card usage estimated from third-party surveys. This level represents what customers can achieve simply by shifting their spending from multiple credit cards to EPOS Card. For this KPI, we have set the household share 33% based on spending, excluding rent. Based on the average household spending patterns of EPOS members, if customers use EPOS Card for recurring payments, e-commerce and smartphone payments, these alone account for 27% of household spending.

By adding just another 6% from other spending, customers can reach 33%. Since the previous midterm plan, we have been advancing a strategy to maximize household share. And shifting from bank account transfers, we have promoted the use of EPOS Card for rent, telecommunications and utility payments. As a result, during the previous midterm plan, rent payments increased 1.9x, recurring payments increased 1.5x and assets under custody at tsumiki Securities increased 7.2x.

In shifting away from cash spending, e-commerce usage increased 1.7x and smartphone payment usage increased 2.8x, showing steady expansion. As a result, the main card adoption rate, meaning the proportion of customers who exceed a 33% household share now stands at 22%. In addition, LTV for main card customers is more than 8x higher than for non-main card customers. When breaking down the main card adoption rate between app members and non-app members, app members show a rate of 27%, which is 2.3x higher than non-app members, demonstrating that the app is a strong driver of EPOS Card's main card adoption.

I would now like to explain our initiatives for driving main card adoption through the app. At the time of planning, many apps in the industry focused primarily on functional elements such as payment notifications, function providing apps. In contrast, our goal was to create an experience providing app, a Lifestyle app that supports customers' lives by enhancing their experience of managing money.

The code name at the time was Lifestyle app, and that term continues to be used within the company. In managing money, the top concern customers have when using credit cards or cashless payments is fear of overspending. At that time, the industry's conventional thinking was that preventing overspending with discourage card usage and negatively affect revolving payments.

We took a completely different approach. We believe that by immediately notifying customers when they spend more than expected, they would feel be assured and actually increase their usage of EPOS Card. This was a totally different approach. This led to the creation of a UX that eliminates the anxiety of overspending. Customers receive real-time notifications as soon as they make transaction with charges reflected immediately in the statement. We also introduced a feature called Meyasu Alert which allows customers to set a monthly spending guideline and receive notifications when they exceed it.

This provides transparency into how much they have spent and enables them to quickly notice and address overspending. Furthermore, if a customer does overspend, we offer options such as installment or revolving payments with simulation function. Next, we focus on household budgeting. Many people find keeping a detailed household leisure burdensome and often give up. Yet customers consistently told us that they still want to keep their spending under control. What they truly want to know is simply how much their spending falls outside the easily manageable fixed costs.

For many customers, traditional household budgeting apps feel excessive and too much. Prevailing view in the industry was that if customers successfully control their spending, card usage would decline. We took the opposite stance if EPOS Card enables customers to manage their spending comfortably, even if spending decreases overall, they will consolidate more of their payments on to EPOS. This led to the creation of our household budgeting UX by simply paying the EPOS Card spending it automatically categorized into fixed and nonfixed. We created a EPOS Card care based on concept the world's easiest household budgeting tool.

By freeing customers from the household budgeting, we aim to encourage them to consolidate their payments with EPOS for the purpose of household management. For fixed cost, we intentionally designed the UI so that bank items remain visible when they're paid with EPOS, prompting customers to want to complete these gaps by switching to EPOS Card. Even with all of these UX enhancements, so we face concern with customers actually use.

During interviews when we explained the service provided by EPOS, some customers would ask why we hadn't told them earlier. It became clear that there was a significant information gap. Traditionally, the industry, we ourselves in the past relied on e-mails, push notifications and adding icons to promote our service awareness.

However, these methods often fail to effectively reach. We then considered the approach leveraging gamification, which fits naturally with the mobile app experience to spark curiosity and lead customers to engage. This is how our service recognition UX called Quest was created. Immediately after downloading the app, the home screen is empty and minimist as customers complete Quests, which are small tasks that help them discover or experience EPOS services, items appear in the room and the space of Epokke, the EPOS Card mascot forms over time. Through an enjoyment experience, customers naturally deepen their understanding of EPOS and credit usage and begin using services that fit their needs.

We now have explained 3 UX concepts behind the app. Throughout this development, we stayed true to our philosophy of co-creating credit, focusing on eliminating customer anxiety and reducing informational asymmetry by transparently presenting options. This approach was the exact opposite of the prevailing industry mindset. By removing fear about credit card usage and eliminating the information asymmetry between customers and us, the app contributes to increasing household share and achieving main card adoption.

As a result of these efforts, when comparing transaction volume growth over the past 10 years with fiscal year 2014 set to 100, EPOS Card has significantly outperformed the industry as a whole. Moreover, the gap has widened further since the launch of the Lifestyle app. Next is the comparison of the proportion of the installment and revolving payments related to the total transaction volume. Over the past 10 years, the gap between EPOS Card and industry average has widened.

The introduction of installment conversion and the rollout of the app have contributed to this improvement. From here, I will explain our upcoming initiatives to support customers Suki. First, let me share the latest updates on our cards that support Suki. As discussed in our earnings presentation, the number of collaboration card projects has increased from 88 a year ago to 130 and the number of cardholders has expanded from 1.01 million to 1.26 million.

Going forward, we will further enhance the app experience to support customers Suki. Starting this fiscal year for members of the Studio UG card, we introduced a feature that allows users to customize their app home screen with the character Gokigen Panda which appears on the card design. In conjunction with the Quest feature I explained earlier, customers can explore convenient EPOS functions and services and new character items are added to their home screens as they progress.

After launch, we compared Quest usage rates among new cardholders. For Studio UG card members, the usage rate was 9% higher than the other new members. The initiative has been well received by our customers. Within this year, we will roll out home screen customization for 3 additional collaboration card projects with large membership bases, and we plan to further expand to more projects going forward.

For our collaboration cards that support Suki, we will introduce a Suki Premium offering. Credit limits will be raised to the same level as old card members, and we will offer original goods based on usage as exclusive benefits. We will also enhance the UX within the app to promote premium engagement. Let me now explain our upcoming UX initiatives for supporting Suki. In addition to the UX developments introduced earlier, we will build distinctive services that integrate digital and physical experiences, services and that competitors cannot easily provide to drive main card adoption.

Our aim is for the app to establish a unique position used both because it makes managing money easier and because customers love using it for their Suki. Furthermore, when customers feel in control of their household budget through better money management, it creates a positive cycle where they can spend on the things they love, the Suki with confidence and peace of mind. Through the app, we will continue contributing to the realization of the economy driven by the customer Suki.

Next, let me share our outlook for the app membership. By fiscal year ending March 2031, we plan for app members to account for 75% of all EPOS members and 85% among members who use their card for shopping. Finally, here is our main card adoption plan towards fiscal year ending March 2031. The current main card adoption rate is 22%. If we rely only on existing initiatives, it would rise to 26%. However, by introducing new measures such as Suki Premium and Gold from the start, we expect to raise the rate to 34%.

Further expansion of the app membership and enhancement of the app UX will enable us to achieve that required 35% main card adoption rate to reach JPY 10 trillion in transaction volume.

Next, I'd like to ask from Muture to discuss the evolution of our development process.

To begin, we would like to explain the role of the group digital and IT-related companies.

Historically, M&C SYSTEMS has been responsible for building our core systems. To further accelerate DX across the entire group, we established Muture in 2022. In addition, Marui Unite established last year served as a specialized in-house development organization responsible for agile development for app and web services. Today, these 3 companies work in close collaboration to drive DX across the group.

Muture was established as a joint venture between Marui Group and Goodpatch. I'm Yonenaga, I'm also seconded from Goodpatch to Muture. As a team of digital specialists, Muture plays a key role in identifying new opportunities from a professional perspective and accelerating DX across the group. Goodpatch CEO, Tsuchiya has also joined Marui Group as CDXO working together with Muture to lead this transformation.

Our transformation efforts are focused primarily on the 3 areas, as you can see, which I will explain in order. First is the introduction of agile development. When the Lifestyle app was launched in 2021, Marui Group's development framework was primarily based on the waterfall model shown on the left. This is a methodology in which work proceeds step-by-step according to the predefined requirements.

In contrast, the agile model involves interactive cycles of building, releasing and improving in small and rapid increments. The waterfall model is best suited for core systems where requirements and end goals are clearly defined and steady execution is essential. Meanwhile, the agile model is better suited for areas such as apps and web services where needs are not fully known in advance and flexibility is required to respond to real-time user feedback. For this reason, we shifted to an agile approach for the Lifestyle app.

Next is the establishment of an app and web development organization capable of practicing agile development. Although agile emphasizes speed, rapid development and rapid improvement, this cannot be achieved if decision-making remains slow. Even with an agile team structure, if approvals are dispersed across many decision makers, progress can easily stall. Therefore, the decision-making framework itself needed to become agile. To address this, we established Marui Unite last year as an organization with centralized authority and responsibility for app and web development.

We simplified the approval process and consolidated the necessary roles and talent to accelerate product evolution. Members involved in development from EPOS Card and M&C SYSTEMS also participate in Marui Unite in a dual role capacity. Through this consolidation of authority and the co-creative collaboration across departments and organizations, agile development is now functioning effectively and our release frequency has increased.

This cross-organizational co-creative way of working is exactly what Marui Group has long pursued. A corporate culture that encourages collaboration beyond organizational boundaries has strongly supported the smooth adoption of agile development.

Lastly, let me touch on accelerating in-house development. As the pace of technological innovation, particularly AI continues to accelerate, rapid and accurate technical decision-making is more important than ever before. To ensure that we can determine our own technology road map by aligning business needs with engineering expertise, we are actively hiring digital specialists with engineers at the core. Creating an environment in which these specialists can fully demonstrate their capabilities is also essential. We first redesigned our compensation structure to align with the market standards for digital and engineering talent.

We then enhanced our development environment, including supporting AI-driven development to ensure smooth workflows of specialists. In addition, we are proactively expanding hiring channels through event participation for brand awareness and through referral programs. As a result, highly skilled professionals from outside the company are joining Marui Unite one after another. Our Chief Technology Officer, Mr. Sugomori is one such example. He graduated from the University of Tokyo and its graduate school, where he belonged to the Matsuo Laboratory and developed deep expertise in AI.

He brings extensive experience, including roles at major global companies and launching start-ups. We also have welcomed Mr. Sato as Head of DX Engineering, who has served as a development leader at major e-commerce companies and start-ups and has strong knowledge in building in-house development organizations. Across the entire group, digital specialists continue to join. At Muture, we are steadily hiring members with expertise in organizational transformation and design.

At M&C SYSTEMS, we have strengthened our talent in data analytics and information security as we enhance group's digital foundation. In our co-creation efforts with future generations, we are even seeing cases where students who worked as technical instructors at Life is Tech, one of our co-creation investment partners specialized in digital education, have taken interest in Marui Group and decided to join us. With the evolution of our development process and the expansion of the digital talent across the group, Marui Group companies are now united in driving DX to enhance corporate value.

Finally, let me explain our digital and IT investment plan. During the current midterm plan period, we expect to invest JPY 92 billion or 1.4x the annual average compared with the previous midterm plan. Thank you. We would like to go to the Q&A.

[Operator Instructions] So the first question Mr. Kanamori from Okasan Securities.

This is Kanamori from Okasan. Can you hear me?

Yes, we can hear you fine.

One request. This time, the main card holding, you have the great number here for the main card. For the IR activity, fact book is what you provide, the card usage like Suki supporting card, you have the rate shows. Going forward, the household share, main card adoption, the 33% or more main card adoption definition is what you have. As of today, it's 22%, and you want to target 35% in the target. Going forward, every year, main card holding share, will you be disclosing that going forward every year in your results?

Thank you for the question. I would like to answer that question. With IR, we will consult and discuss proactively. Also, it's a question, I guess. LTV this much it's like 8.4x difference with the non-main holder, the level is totally different. The usage, you will be -- the growth rate will be totally different for you as well. the household, 33% or 35% this target, if it achieves a 35%, your fee income, how would it be presented? And what form that we can have visibility, we are concerned about the visibility, rent and the other payment on Page 11, you have in the circle on Page 11, you can drop it to the P&L. We can tie it to each other somewhat like the rent guarantee, et cetera, for the items for rent.

But if you add on top of each other in the variable part, you have to have all the variable with you for your P&L, what will be the benefit for you P&L-wise for yourselves was not very clear. What's the image that I should be looking for? Main card holding rate goes up, your company's handling and then fees and income will be a totally different playing field? Or where should we be focusing our attention, if you can give us your guidance, please?

Thank you for the question. I would like to respond to that, if I may. In terms of the household share expansion, shopping, it's going to be sent in how much expansion we see in shopping. Household share going up, the shopping affiliate fee also increases for us. If the household share goes up, as we explained, in terms of installment, revolving payment also can happen. So that usage also -- so we have a double decker with our income increasing is what we expect to see. Directly, the main card holding rate to break it down to profitability will be difficult, but shopping handling and revolving payment, we would be disclosing those numbers. So maybe you can confirm it through that.

We will take next question Morgan Stanley Securities, Takemura.

This is Takemura from Morgan Stanley MUFG Securities. I have a couple of questions. The first question is regarding the overspending alert function and the household budget management functions, these functions are very interesting. The question I had is that at the very beginning, your approach was completely different from the norm in the industry. That's what you mentioned. But afterwards, your competitors, are they adding the similar functions to the apps? Are they following suit afterwards? That's my question. In addition to that, the other companies, your peers and competitors, are they promoting the main card adoption at the core of their strategy? Are they pursuing a similar direction? If we can hear your views on that, that would be helpful.

Next is regarding the development structure or the team. So those apps are playing important roles in your strategy. That's what I understood. In terms of the development structure you have comparing against the other competitors, do you think that your development capabilities are better than the others? Or do the others also have the similar development structure as yours? And if you can hear your views on those, that would be appreciated.

Thank you for your question. To the first question, the overspending alarm and budget -- household budget management functions, whether others are following suit. Well, for sure, the overspending alert or the household budget management, we were the first one, but the other companies, they are gradually releasing those functions on apps. But when we look into the details when it comes to the household budget control and management, well, the users will have to add the tags and make the settings or they have to link with the other household budget management tools. At the time of our development, we considered that as well, but it wasn't really appreciated by the users. The users mentioned that if that's the case, I'm not going to use it because it's too troublesome.

And we ended up with having the one that we just released with better functions. So we believe that others -- our competitors' functions are similar, but different totally. And for the other companies focused on the main card adoption rate, of course, the main credit card, it is important to follow the main card adoptions. So other companies are working to increase the main card adoption rate. But as we mentioned in the latter half of the presentation, we are working on the business to support Suki.

As part of that, we are promoting the main card adoption rate. So we are taking a completely different approach, and that's where the difference lies. And in the latter half, in terms of our development structure, on our side, we are bolstering the internal development capabilities. We have been changing the ways in which we develop.

The other companies who are ahead of us, there are some of them. They were ahead of them. But as a latecomer, we are enjoying some sort of benefits and strength because we are a latecomer. We are separating the companies and change the compensation schemes to hire engineers. And this is what we are able to do because we are a latecomer. The other financial companies out there who were ahead of these initiatives, they ended up so much. They were jealous because the organization of engineers, they have to adopt the same compensation scheme as the head office. That's why they were struggling. Well, we'd like to tap into these kind of benefits as a late comer.

[Operator Instructions] There are no further questions. So we will close the Q&A and go to the next content.

We would like to talk about the Suki from Marui Group, Unite support, Mr. Ishioka and from Marui Suki support event, Ms. Inui. Similarly, Marui supporting Suki Ms. Ishikawa. EPOS Card, Shinjuku Marui EPOS Card Center, Sachiko Matsumoto Initially, Ishioka would like to give you a presentation. As we mentioned, we would like to talk about the personnel.

Once again, the Unite support for the Suki support, a company to help the economy driven by customers, Suki. I would like to add some comments. Event goods card combination. We said that it was a self-autonomous unit. We have changed the naming to focus on the card itself. So we now talk business that supports Suki. I would like to talk about what the group is doing for you.

So I'll be looking forward to it. We want to have a vision that Suki drives itself as a strategy to support the business that supports Suki is what we are advancing. As we mentioned in earnings presentation, this business is supported by competitive advantages that are difficult for others to imitate. If you focus only on card itself with the character content printed on it, other companies can easily copy that. And many such products already exist in the market. However, what truly defines our business is total experience, we provide combining the world of Suki that we can be felt through events and merchandise along with the employees who can connect with customers Suki.

These elements are grounded in the capabilities that we have developed. This becomes our first priority limitation. In addition, our unique corporate culture forms the very platform that creates businesses supporting Suki. This becomes the second layer of competitive barrier. The organization that advances this business is Suki Support unit promotion office to which I belong. And in fact, it has a distinctive structure. Only 5 dedicated members are fully assigned to the promotion office to formulate strategy.

Most members belong to the promotion office while concurrently serving in their existing departments, actively collaborating with EPOS Card and other group companies as part of their respective business. In this way, we promote the Suki support business through a cross-organizational structure that directly connects strategy with execution. It is our corporate culture mentioned earlier that enables us to build such a structure effectively and naturally. Our culture encourages people to work across organizational boundaries, which is what makes it possible for us to advance the business that supports Suki as one group.

Since the establishment of this promotion office, we have conducted extensive data-driven analysis and formulated business strategies from a long-term perspective. Based on these strategies, we are planning the nationwide expansion of events and shaping the direction of our original merchandise offer.

Regarding nationwide expansion, our Suki support events, which has been held primarily within Marui stores will now be expanded. EPOS Card share is currently 16% in the Tokyo Metropolitan area where Marui stores are concentrated, but only 5% in other regions. If we raise the share outside this region to the same level, the potential number of new members is 9 million, exceeding our current total membership. By expanding event-driven member acquisition nationwide, we aim to significantly accelerate new customer growth.

Our plan is to double the number of Suki support events to 2,600 per year by fiscal year 2031, which will contribute to achieving 800,000 new collaboration card members. As for original merchandise, we will broaden our target beyond traditional types of [Foreign Language] incorporating pet, sports and the uniquely personal Suki each individual cherishes. This will allow us to create merchandise with a high level of originality products only Marui can deliver. We aim to achieve JPY 12 billion in sales from original merchandise by fiscal year 2031, more than 20x current level.

This is an ambitious target, yet we believe it is achievable by fully leveraging our strengths. One such strength is that our merchandise is planned by employees who are themselves fans because they love the content, they deeply understand fan psychology and reflect that in the product. Another strength is our culture of co-creation with customers built through decades of private brand product development and co-creation and retail. I combine this co-creation expertise with the passion of our fan employees, we can design merchandise that delivers a far superior value.

These strengths have all been nurtured through the unique corporate culture I mentioned at the beginning. And it is our people who sustain this culture to expand Suki support unit, we rely on our talent who have developed retail expertise over many years, expertise in event planning, product development and sourcing, customer-centric service and member acquisitions, et cetera. In the next chapter, members who possesses these expertise and directly support the Suki support unit will explain their actual initiatives. From here, we will introduce the people driving the Suki support unit structured into 3 parts based on their respective role.

I am Inui from the Event Development section Event Business division. Thank you for the opportunity. In our Suki supporting event, our own employees handle the entire process planning, store operation, membership guidance and card insurance. I am responsible for event planning, and I would like to share specific initiatives through the example of an event that we created together with the fans. I have always enjoyed watching game streaming videos, particularly those featuring indie game. I these games are typically developed by small teams or individuals with limited budget, yet they offer unique stories and gameplay that highlight the creators' individuality.

With their accessibility through digital downloads and growing popularity via live streaming, they have continued to attract fans. Among these works, I was captivated by Angels of death, it's unfolding mysteries and compelling characters through them. At the same time, I noticed the tremendous enthusiasm among viewers leaving comments, which made me realize that many others were equally moved. I want to support the title through my job, so I conducted further research. I learned that no recent events have been held and the 10th anniversary was approaching.

I reached out directly through the creator's website to ask whether we could collaborate on a 10th anniversary event. The publisher responded positively saying that they also wanted to realize something special for the anniversary and even presented multiple creative ideas. However, due to budget constraints, it was difficult to implement everything as proposed. When I brought this challenge back to the team, a member suggested why don't we raise funds through funding. We decided to gather production funding for the exhibition through a crowdfunding campaign.

The result far exceeded our expectations against target of JPY 4 million, we raised JPY 45 million. Even before the event was held, we received numerous messages such as thank you for making this project happen and we are excited to experience the event, which created both pressure and motivation to make the event a big success. Because the crowd funding outcome was much stronger than anticipated, we had to quickly expand the elevated project.

Ultimately, we were able to deliver an extraordinary event that brought the world of the title to life far beyond our plans. One of the most memorable exhibits we created the final scene of the story. As a fan myself, I was deeply move, especially when I witnessed visitors become emotional and even cry at the display. Also, we created a unique interactive experience called Kamadon that we created an iconic moment from the story with actors, guests could take commemorative photos using instant film Cheki and become a custom case for special piece or merchandise. We pared 400 sets. The publisher provided tremendous support for the project, and they told us that thanks to Marui's proposal, they were able to realize an event on a scale far greater than originally planned.

Many customers visited the venue multiple times. Some were emotionally moved by the recreated scenes that they cried saying how happy they were to have discovered the work they love, sharing heartfelt messages of gratitude for the exhibition itself seen these reactions made us worthwhile of our hard work. For me, personally, this experience reinforced the belief that events planned from the perspective of fans allow us to truly stand beside our customers. When we do so, the event resonates.

And so going forward, I intend to apply everything I learned from this in the next proposal. Now I would like to hand over to Ms. Ishikawa from the event operations team, who will talk about the Suki supporting events.

Our role is to take ideas and passion developed by planners like Ms. Inui and bring the event to life. I will explain the initiatives we take both in venue operations, including EPOS Card membership. Let me share a case study from the Tokugawa Art Museum 90th anniversary event, which I participated. Over approximately 2 months, the event attracted 90,000 visitors. More than half of the museums total annual visitors last year, which was 170,000. It was also generated JPY 3 billion in sales.

It also generated JPY 3 billion in sales and 3,200 new card sign-ups, which were outstanding results. The museum expected large crowds and was concerned that their own staff alone would not be able to operate smoothly. Based on the trust built through previous collaborations, they entrusted operations to us. First, in sales floor operations, we leveraged our experience in private brand retail to design zoning that encourages exploration, layouts that ensure safety and flow and display that make customers want to pick up products.

For entrance guidance, our goal is to reduce stress caused by waiting or uncertainty. We plan staff allocation and engagement so customers remain comfortable and entertained. For example, while customers wait in line, we handle product lists and explain exclusive purchase bonuses available only at the event. Our staff do not simply manage the line. We make sure to speak to each customer with a smile and ensure the waiting experience itself is enjoyable. In customer service, we focus on being fully aligned with customers' feeling of Suki. To do that, all staff study and deepen their understanding of the content in advance. At the Tokugawa Art Museum event, visitors ranged from history enthusiasts to those who became interested in source through related games. We made sure everyone could recognize and respond to each customer's unique Suki, including not only sword games, but also the stories and history behind them so that every staff member could genuinely interact from the fund perspective.

Next, I'd like to speak about how we guide customers toward EPOS card enrollment. Each customer values something different. Some appreciate the appealing card designs or exclusive enrollment gifts that are not sold elsewhere while others are drawn to points or discounts. We listen carefully during the conversation to understand what each person values and provide guidance tailored to what will make them happiest. We also meet many people who did not know about EPOS Card before visiting the event but became interested once they learn more.

For example, at the Tokugawa Art Museum event, we offered a collaboration card that automatically donates JPY 1,000 from Marui to the museum upon enrollment. Customers who wanted to continue supporting the museum or who were interested in social contribution also found it very appealing that they could donate their accumulated points.

By combining these unique enrollment benefits with EPOS features that best match these customers' needs, we ensure that every customer receives a personalized introduction. Thanks to this approach, our partners shared feedback such as we were nervous because it was the first time running an event like this at the museum, but we are glad we entrusted operations to Marui. You ensure the safe, smooth and customer-friendly environment. Customers also expressed their delight. The staff explained everything so clearly and knowing that I could support cultural heritage and I love made me decide to sign up. Suki supporting events are defined by extremely passionate fans.

This is why we always learned the world view of the content deeply and serve customers from the perspective of fellow fans. Being able to help customers fully enjoy both shopping and experience is the greatest source of meaning in my role. Now I'd like to hand over to Matsumoto-san from the EPOS Card Center at Shinjuku Marui, who will explain card issuance operations.

Within the event flow, I am responsible for the actual card issuance process. So I'd like to explain what specific initiatives we are taking on. Let me first explain the issuance of the cards. My role is to ensure that customers who have decided to sign up, thanks to the excitement Ishikawa-san and the team have created, maintain that positive feeling all the way through.

Card issuance is completed on the customer's own smartphone by downloading the app and entering their information. At times, I support 8 to 10 customers simultaneously as a matter of fact. Providing clear guidance is essential during this process. Let me elaborate on how we explain card usage. We will explain thoroughly to each and every customer. Now let me elaborate on how we explain card usage. First, we address concerns about security.

For customers worried about rising fraud, we explain how real-time notifications show exactly where and how much they spend. For those new to credit cards and worried about overspending, we show alert functions that notify them when they exceed a set monthly amount. And when younger customers express uncertainty about payments, we walk them through repayment options using simultaneous, enabling them to choose what feels comfortable.

By carefully observing each customer's expressions and reactions, we identify their concerns and provide reassurance through specific features available on the app. Next, we highlight benefits of the card. Since each customer is drawn to different advantages, we tailor our explanation while observing their interest level during the conversation. Many are particularly excited about points.

For customers who want to earn more points, we suggest consolidating fixed monthly expenses like utilities to EPOS Card. For instance, on the news, the extraordinary climate is being observed and the bear attacks are rising in number and CO2 emission is one of the major reasons behind this. And the electricity we are using on a daily basis is accounting for the large portion of the CO2 emissions.

So those customers who used to feel the climate-related issues as distant issues, we are choosing simple plain language to explain. For customers who care about the environment, we introduced that Minna Denryoku Epos Plan, explaining that simply switching to this plan reduces CO2 emissions through their everyday electricity usage, making environmental action feel personal and achievable.

For customers who want to use their points wisely, we introduced point investment, enabling asset building without spending money. While EPOS Card offers many services, we curate the best fit combination for each customer. As a result of this personalized and empathetic guidance, customers tell us, thanks to your clear explanation, my worries are gone, and I can use the card with confidence. And I'm glad I can start making a positive environmental impact easily and affordably.

Before joining the card center, I worked 20 years in children's apparel retail, serving customers of all ages. My core belief has always remained the same. I want each guest to leave happy. Now that product has simply changed from clothing to services, I love EPOS Card myself. And I want customers to love it as well. I will continue striving to deliver that through every interaction so that I can bring a smile on the face of customers.

Face-to-face card guidance has been an essential Marui Group capability since our founding. This accumulated expertise creates a competitive advantage that cannot be easily replicated by others. Marui Group will celebrate its 100th anniversary in 2031. By refining the people capabilities we have explained today, event planning, venue operation and enrollment guidance and card issuance, we will continue expanding new card sign-ups.

Finally, here are our KPIs towards fiscal year ending in March 2031. By leveraging our talent capabilities and unique corporate culture to expand the Suki support unit, we will achieve the group targets of main card adoption rate 35% and 12 million new card enrollments and JPY 10 trillion in group transaction values. That concludes my presentation. Thank you very much for your kind attention.

Now we would like to questionnaire for the promotion of support Suki. First question, Daiwa Securities, Shigeoka-san, please.

This is Shigeoka from Daiwa Securities. Thank you very much for interesting presentation today. So one big question. Event, doubling the number of events and merchandising, the number of headcount could be a bottleneck is the question. Previously, in your presentation, you have given the narrative. For the moment, the event should be selective and the number of events could increase in volume so that your profit could grow. However, the number of events goes above a certain level, there is a limit. So mid- to long term to continue to grow, what is your plan? So first answer that, please.

Thank you for the question. I will be answering that. Event, the number of events that we hold the structure at the moment, on the screen, you can see the number of events, event that support Suki, anime kind of events are included. Besides this, we also have in the store, there are like food events in terms of number of events, focusing on the event that support Suki, other events will be shrinking.

Therefore, other events the resources that work on the other events could be shifting to the event that support Suki. So although it seems total is growing, other events will be declining. So the resources involved in the event could be shifting towards the Suki events. That's one. The other, in terms of talent, how we expand our talent is the point.

Our company employee, of course, not just event development, they do planning and development of merchandise. We have -- besides in our promotion office at support Suki, there are other people who belong to other departments. We can reallocate these people, mid- to long term, these talent so that office and support Suki unit, the event and goods part could be consolidated maybe. So by doing so, we can reallocate our resources so that internally, we can draw these resources from inside the company.

I don't know whether that answered your question.

So we are reallocating the talent internally, more efficient. So your skill talent could be doing a lot of things so that could be efficient. and you can upgrade your power, I guess?

Yes, exactly.

For related topic, I wanted to ask another question in terms of allocating resources, events, doing it outside like external third-party sites or goods development in reallocating your talent, what's the balance? How will you make the decision? Who makes the decision as to how much you want to do outside, inside? It's all within the promotion that support Suki, but in terms of retail and fintech resource allocation, how do you decide in terms of the process that goes in making that decision, how the resources get allocated, including the future direction.

Thank you very much for the question. I will be answering that as well. First, the skill set. The office that support Suki talent at the moment, operation planning, our members explained to you earlier, the planning is what we do mainly. Going forward for merchandising development that we will focus earlier, repeating myself, product development members also can be reallocated. So planning and operation balance. The planning rather than making that bigger, we want to make sure that the operation also nationwide is going to be in demand.

So planning and operation balance, operation will be higher in weight going forward nationwide. The other question, internal. Within Marui Group allocating resources with the group HR, switching jobs and roles within the group. We have done that. So we don't think there will be any major challenges of reallocation. Where we strengthen, which area we will focus. EPOS Card and retail event goods related will be the focus going forward. So resource allocation will be thought from that perspective and talking to the group HR department will be the direction that we will be following.

We will take next questions. We are very sorry, but due to the time constraint, we'd like to take the last question. Morgan Stanley MUFG Securities, Takeumura-san.

This is Takemura from Morgan Stanley MUFG Securities. I have 3 quick questions. First one is regarding the event planning and merchandising planning. Within your company, I'm sure that these roles positions are popular. Am I right to assume so? -- well, there are some employees volunteering in serving in these roles. In that sense, it is easy for you to secure human resources working in these areas, I assume.

Second question is regarding the possibility of exhausting the event ideas. while everyone has their passions and they are planning events on those areas where they have passions. How are you actually generating the new ideas and planting seeds for future events?

My third question is regarding what you mentioned earlier about the indice games, what is the potential size of the market? It is difficult for us to really identify the market opportunities and the size. When you look into that, are you able to identify the number of potential buyers or the number of potential visitors? It is also important to manage the inventory risks. So in that regard, how are you able to identify the market opportunities and the size?

Thank you. To the first part of your question, I will answer that. And to your second and third questions, Inui will answer. Whether those positions are popular or not, in conclusion, they are popular, not only event goods and merchandise, the cars that support Suki, these are the core of our businesses. In that sense, every 6 months, we are introducing a so-called voluntary system where the employees can volunteer in serving those roles.

The Suki supporting cars and event and merchandise, the roles and positions are very popular according to what we hear from the HR. Rather than exhausting the ideas, we are -- we believe that the opportunities for those people to engage in the efforts will not decrease. The second part of your question, are we worried about the ideas to be exhausted or plans to be exhausted? I don't think that will be the case.

At this point in time, as a matter of fact, the event plans, there are not enough ideas and plans for events. So from makers and other parties, we are collecting ideas, but not all of them have been materialized in the events. So we are dropping and giving up on some of the ideas. So in terms of the number of plans, we are not really worried. When it comes to new developments, the individual creators through the penetration of SNS, social networking sites and the gadgets, they are increasing in number.

And the situation is such that the IPs are more easily created and generated. By tapping into those, we believe that we will always be able to plan for new events. And the third part of your question regarding the market challenges, where we see the difficulty in tapping into the market opportunities. As you mentioned, in the past, the anime IPs or Manga IPs compared to those, we have less track records. So it is not easy for us to figure out how we can advance these businesses, but media mix situations and what is on the SMS, we believe that we can refer to them.

So that's what we are trying to do. We'd like to leverage those sources to identify the probabilities and possibilities for the future events. Thank you. We will now wrap up the Q&A session and move on to the next content. Please wait until Speaker is ready.

Next, we have the dialogue with our External Director. Mr. Nakagami, are you ready?

Yes, I'm ready. I'm the External Director. Yasunori Nakagami. At the same time, I will be looking at the Nomination and Remuneration Committee members as well as Strategic Examination Committee Chair. From my side, I have 2 topics that I have prepared. Marui Group Governance comment is one. The other is the economy driven by Suki as the external director, my thoughts. So 2 topics that I would like to talk about. So thank you for your time.

So these 2, before I go there, as an external director or as a business person, what I feel close to heart, I would like to talk about that first. It's a bit old saying. Peter Drucker, the purpose of business is customer creation is what he said, Peter Drucker. Marui Group is customer creation and creating market, creating new market is Marui Group's mandate, big pillar, I believe. So today, customer creation, market creation, I would like to talk about today.

And important is new market, new customer needs to be with strong profitability, is it protected? If not, the big profit will be skewed, especially for financial services. We believe it's an important part. What is happening? I am very concerned about. In terms of the full governance with new market creation and making sure we have sufficient profitability by looking at that does that benefit the coexistence of our shareholder? It's important to look at that from a governance perspective.

So that's what I am doing my activity as an external director that I hope to give advice. Based on that, one first topic, Marui Group's governance, how I view Marui Group's governance. As was mentioned, Marui Group governance is not textbook like is my appreciation. Constantly, Marui Group is unique. From my side, that's the management thrust. Why it's not textbook like? What they insist is multi-stakeholder governance is what they say. 6 stakeholder is what they proclaim.

From their perspective, governance, company value is created, which is not textbook-based. Governance textbook-wise, Monitoring Board should be -- is one point they insist. Still the auditor group, it's something that you have to have. So that's not very textbook light. Whether the system beyond the system, governance, the core governance perspective, I think there are 4 areas.

One, to observe the valuation from the market and high level of performance, financial performance needs to be observed is one. Number two, to be responsible as a Board, we need to be responsible. The mission and then CEO and then how the Board and then independence when something out of the ordinary happens needs to happen. together with the executive part of the body, you should work together. So as a company, that's a big strategy going forward.

And you have to have the right capital allocation to support that effort. And lastly, which is another important, no intervention, you define which areas of no intervention. There are other areas that we need to define. So these are the 4 areas that I think are very important in the pillars of governance. Personally, too, I've been contributing.

One thing is the monitoring. When it comes to this point, -- more than 4 years ago, I started to serve as the independent director. The first proposal I made is to have the monitoring framework. At Marui and Marui Group, the Board of Directors, they focus on diversity. So we have a very diversified Board. So diversity is important, but as it is, well, the discussions will go on and go on and dispersed.

So the common framework, monitoring Board needs to be set up at a high level, what are our share price levels compared to our competitors compared to the industry average, how we are doing and the high-level business performance that supports that, where are we ROE and ROIC, where are we? And we have distinct and unique business model, for instance, retail and fintech business, they are completely different businesses. So if it's the fintech business, the highest level, PL, BS, not that, but the lifetime value, whether we have been able to accumulate lifetime value.

And if it's the retail business, diversified economics are there. So the P&L of each merchant, what is the situation? And after all, retail business is a combination of each partner merchants. So that's why we suggested -- I suggested to create the monitoring framework. And to really bolster the monitoring, I was able to contribute to that front. And to be responsible, the corporate philosophy and purposes, we have accumulated so many discussions and CEO successions, the nomination and remuneration committees, we have been able to discuss on that topic as well.

On the front of collaborating, well, we are collaborating on the strategy to create the economy driven by Suki. And we are discussing how robust this business will be and how we are allocating capital to those businesses. On that front, we were -- I was able to contribute. And when it comes to business management and business execution, we are not really involved. So that's how our governance has functioned. Marui's governance is not a textbook, but it is highly effective.

We have highly effective Board as well. So that's my comment on the governance of Marui Group. The other theme that we are discussing today is the economy driven by Suki. There are 3 things that I'd like to discuss. First is the new concept of economy driven by Suki -- after all, it is important whether we are creating new customers or not. And the second important point is whether we are protecting that with the barrier to imitation.

And what are the business size or opportunities we can tap into? I believe that was what was questioned earlier and is an important point. So drive -- excuse me, economy driven by Suki, are we able to create new customers? When we look at the entire industry, the credit card business has been in the power games where there are fierce competition. Rather than the value provided to customers, they are competing over points, reward points they are providing to customers.

So the convenience of the payment settlements or functions, cost performance economies, they are competing focusing on these aspects. However, on the other hand, as the economy matures, as you can see from our presentations for each and every customer, we have to look into the emotional values. Well, the angel of the debt was mentioned. I totally don't know what it is about, but there are so much passion going into this and those passions are really driving the economy.

Marui Group operates fintech and retail. We would like to address the blue ocean areas that is the economy driven by Suki. Well, there are JPY 20 trillion market of Suki, if we define it narrowly, and if we define it widely, then it gets to more than JPY 20 trillion.

So adding other function, somebody we can contribute to society. This is another value-add area that we can create a new market, which is being done as we speak. So new market, new customers are being created, let's say, it is protected by these barriers. The card, if you look at -- it's easy to copy maybe, maybe at a glance. The economy driven by Suki the uniqueness of our business and the organization power is necessary. In terms of fintech business, card business, not just that.

In terms of real brick-and-mortar, we can see the synergy, rebates and giving goods. There is some synergistic benefit. So there is a uniqueness. In terms of the credit logic kicking in, you can issue in 1 day. So the operation is quite keen and savvy. And events supporting the Suki with the team is operational. and then you can do a God-like service because you are putting yourself in the shoes of the fan.

So you have the resources to maintain and you can do retraining and reskilling and more. Flow raising hand. In Marui Group, we talk about it. corporate culture, in other words, supporting the Suki, that kind of corporate culture, people are not told what to do. They raise their hand, volunteer and voluntarily do things on their own proactively. Operation and resources and corporate culture, combination without this.

Economy driven by Suki cannot be easily achievable. So I think the imitation barrier is very big. So lastly, what that economy is going to be like in scale. As of now, the target, as we said, like JPY 10 trillion, the group total transaction, 12% increase. TSR annual growth to be 12% as a result, PBR, 3 to 4x is what we're saying. As of today, that's our target goal. My message is this is creating customer, creating new market. Therefore, fundamentally, how far we can get to, no one can assume.

That's why our business is to create customer. The people who are in this business, they don't know how far they can go, I believe. Therefore, it's enjoyable. If you think about it, fintech business, you need to build up lifetime value is what you build on is the economy and the business. in a sense, people can challenge new things without being hesitant or feeling anxious. So I look forward to it. How far this scale can grow personally. As an external director, I'm hopeful. So briefly, so Q&A, I guess.

Mr. Nakagami, thank you very much. So let's have a dialogue with Mr. Nakagami, External Director. Thank you very much. So first question, Okasan Securities, Mr. Kanamori.

I'm Kanamori from Okasan Securities. Two questions that I'd like to ask you. now that you are in the position of External Director, investment, you are professional in investment. From Nakagami-san's perspective, this Marui's -- Marui Group's initially, your talk was about governance and factors that you mentioned. The first, how the market views monitors. From the perspective, this Marui Group from the market, how is it viewed? How do you think is viewed is my first question to you.

Okay. I will go one by one then. Marui Group JPY 570 billion, PBR 2.3x PR at one time, it dropped. It's 20x now or above 20x. PBR, 1x or under in Japan or less is 50% in the Japanese market. So in that sense, PBR 2.3x, they deliver. So I think we're viewed quite properly. Number two, PBR, generally speaking, stable growth, profitability is one way to look at the PBR contribution.

Corporate growth, the other PER, the growth indicator, the expectation, how much we can expect out of this company is another. area we need to look at. In the past, Marui Group share price at the timing when market valued, with the interest rate hiking, the fees going up to be expected, that's why the share price rose and then it settled. And the reason for that, in terms of liquidation, the technical volatility of the bonds to adjust that from this year, from this year to next year, you are trying to move towards a stable management.

That's how market views you. So the share prices are stable. it's not a big movement that we see in our share prices. On the other hand, the other factor for stability every year, the buyback sit is supporting your share price.

So you have the positive by the buyback that you mentioned. The market itself, how does the market view your share price? It's different. For the investor want stable growth is a good value. But expectation growth is not high, then the share price increase valuation may not grow as much.

What would be your take on that? Nakagami-san?

Kanamori-san has the best idea, I'm sure, but market has different shareholders. Which segment you target? -- the company direction, you need to match it up, I guess. Marui Group today, in that sense, once again, is in high growth and high return. We want to target. We want to do both. We are in a phase where we're going for both. It is based on the economy driven by Suki creating new customer and high profit with a content that is supported by solid content for growth.

DOE or share buyback. Basically, balance sheet optimization and then return. There are 2 factors, components. The balance sheet optimization, share buyback is done. The rest is return, dividend, DOE return and combination of share buyback to return or payback. Of course, macro condition with the interest could change going forward. It's pulled by the data. The technical one that you are talking about in terms of the liquidity -- more than that, to repeat myself, new customer creation, new market creation, Alpha companies story, creating that and the profit from there.

In a high level, return could be more the direction. Data would be Marui Group Alpha, we want to create our own, although it's driven by beta a lot. Recently, multiple was went down to about 15 -- 14. But this new management direction, DOE level to be raised, PER is going to return back to where we were is my expectation.

We will take next questions. Any other questions? Thank you for waiting. Daiwa Securities, [ Kuda-san ].

Am I coming through? Can you hear me?

Yes we can hear you.

Nakagami-san, this is a sort of nebulous question. So the presenters mentioned this and Nakagami-san also mentioned this corporate culture or hand-raising culture. From the external directors' perspective, when it comes to mid- to long-term corporate growth strategy, is there any gap between that and the corporate culture? Would you be able to help filling the gap?

Well, in the past presentation, there is no mention of the economy driven by the Suki. But now that you have the hand-raising culture, corporate culture and now that you are ready to promote the Suki supporting businesses, in terms of the maturity level of the corporate culture and its alignment with the corporate growth strategy.

How can you support as an independent director? Or will you not be able to support that part?

That is a great question. Without that alignment, well, there are many companies out there without this alignment. Well, there are many companies who don't have the good corporate cultures from the beginning. And even if they have the good corporate culture, they are not really aligned with the business strategy. So what is good about serving as an independent director in the Board is that I'm serving as the Chair of the Strategy Committee and -- the other Independent Director, Okajima-san, Etsuko Okajima-san, she sits or she chairs the Human Resource Strategy Committee.

And that committee and the Strategy Committee, they are jointly convened sometimes. And Okajima-san participates from time to time. And so whenever we discuss strategy, we discuss whether this strategy is aligned with the human resource strategy and whether it is aligned with the corporate culture. So we are trying to always synchronize these 2 as we discuss on those topics. And that's how we are promoting these strategies and Okajima-san is on the executive team and well-being and engagement of employment -- employees and flow experiences.

The team is always looking to enhance them. And we believe that we are working very closely. And earlier, I mentioned collaboration and being responsible for what we do. And I myself have been supporting this strategy through the collaboration, and that's what we are doing on the strategy committee and how we can support the penetration of corporate philosophy and visions and corporate culture enhancement.

So we believe that -- I believe that as an independent director, I believe that I can collaborate. I can work with the team and drive these efforts. So companies who have completely opposite strategy. Well, I'm sure that you give advice to the companies with a completely different strategy as Marui.

Well, for the Japanese companies, that could be a bottleneck. The companies I have been involved in, in the past, those companies who are able to improve the value, well, they worked on the corporate culture and human resource assistance first. And then after the enhancements, improvements are made, then they work on the business strategies and business strategies generated tangible results. And those are the cases I have actually experienced with other companies.

I think our time is up. So that concludes Marui IR Day 2025. So thank you for coming in your very busy schedule.

Since it is time, we will now begin the Marui Group Company Limited financial results briefing for the second quarter of the fiscal year ending March 2026. Thank you for joining us today despite your busy schedule. Today's materials are available for download from our corporate website. Please refer to the summary of second quarter financial results for the fiscal year ending March 2026.

Regarding today's agenda, we will provide an approximately 30 minutes of presentation followed by a Q&A session. To provide a detailed explanation of the progress and future direction of our business supporting Suki, materials related to business performance are included in appendix.

Please note this briefing is being streamed from the Co-Creation Lounge, a collaborative communication space opened at Marui Group headquarters this September. Recording of this session will be available on our company website at a later date. Today's presenters are Director, Senior Managing Executive Officer and CFO, Hirotsugu Kato, he will be explaining about the financial results and the business progress.

Next, regarding the progress of the business that supports Suki and the outlook, it will be presented by our President, Representative Director, Representative Executive Officer, Hiroshi Aoi. In addition to these 2 people, we will have Udaka, our IR Director, that will be answering during the Q&A session. These would be the topics that we will be covering today. Our CFO will first explain.

Hi, this is Kato speaking. I will be explaining about the overview of the financial results briefing for second quarter of FY ending March 2026 as well as the progress that we've been able to make. Let me first talk about the financial highlights.

The total group transaction volume increased by 10% to JPY 2.6137 trillion. The second quarter saw a recovery to double-digit growth, continuing to set new records. Consolidated operating profit rose 23% to JPY 26.4 billion. Excluding the year-on-year impact of securitization, underlying operating profit increased 14% to JPY 24.4 billion.

By segment, Retail increased profit by JPY 1.9 billion to JPY 5.1 billion, exceeding pre-COVID levels. FinTech increased profit by JPY 3.1 billion to JPY 25.4 billion, a record high for the first half. Ordinary profit rose 17% to JPY 23.1 billion, steadily expanding the profit margin despite increased financial expenses. Net income rose 22% to JPY 14.8 billion, marking the fourth consecutive quarter of profit growth.

Financial indicators. Total group transaction volume reached a record high of JPY 2.6137 trillion, with both operating profit and net income showing significant increases surpassing pre-COVID levels. Nonoperating income and expenses as well as extraordinary gains and losses. Nonoperating expenses increased by JPY 1.4 billion compared to previous year, primarily due to rising interest rates.

Ordinary income expanded steadily, increasing by 17%. Extraordinary gains and losses contributed to profit growth driven by factors such as gains from the sales of cross-shareholdings and the absence of impairment losses on stores recorded in the previous year. As a result, net income increased by 22% to JPY 14.8 billion. Trends in segment-specific revenue and operating profit. Retail operating profit exceeded pre-pandemic level, reaching JPY 5.1 billion.

FinTech OP also steadily expanded its profit margin, achieving a record high of JPY 25.4 billion. Both segments resulted in increased revenue and profit. Next, the breakdown of changes in operating profit. Retail is plus JPY 1.9 billion, FinTech plus JPY 1.1 billion. Corporate eliminations, minus JPY 0.1 billion. Excluding the impact of debt securitization, underlying operating profit increased by JPY 2.9 billion. The impact of accelerated debt securitization amounted to JPY 2.0 billion, resulting in a JPY 4.9 billion increase in consolidated operating profit. Details will be explained later.

Next, update on Retail. Tenant revenue increased by JPY 800 million due to reduced vacant space and higher unit prices. Event revenue rose by JPY 600 million, driven by strong large-scale events. Related businesses also performed well, contributing to an additional JPY 200 million. Overall operating profit increased by JPY 1.9 trillion. Factors contributing to increased tenant revenue. Tenant revenue increased by JPY 800 million due to a decrease in unutilized floor space and an increase in monthly rent per square meter.

Status of unoccupied section decreased from 6,800 Tsubo last year to 5,200 Tsubo. The stores that don't sell as of the end of September 2025, the area ratio of non-retail tenants reached 65%, a 3% increase year-on-year driven by the introduction of experiential tenants and other factors advancing to category conversion. We plan to increase the composition of non-retail tenants to 70% by the end of March 2026. We are increasing the number of experiential tenants such as opening Pokémon Center Fukuoka at Hakata Marui in June 2025, and we'll continue to introduce experiential food and service tenants that delight our customers.

Next is update on Fintech. Excluding securitization of receivables, core operating profit increased by JPY 1.1 billion due to higher revenues and reduced point expenses. Segment profit rose by JPY 3.1 billion, driven by factors, including the acceleration of securitization activities in response to the increase in installment and revolving loan fee rates implemented in the second half of the fiscal year.

Credit card transaction volume reached a record high of JPY 1.2252 trillion. The merchant fee rate for the second quarter increased to 1.22% following the foreign currency settlement fee hike implemented in July 2025. This slide shows the trend in installment and revolving payment fees. In the first half, the total installment and revolving payments increased 11% year-on-year, while fee income grew steadily by 7% to JPY 31.5 billion.

This chart shows the year-on-year trend in installment and revolving transaction volume. Even after we announced the fee rate revision at the end of June, transaction volume has remained stable, and we expect fee income to continue expanding in line with our assumptions.

Next is the status of new card memberships. In the first half, new memberships totaled 430,000, an increase of 30,000 from the previous year, driven by the continued expansion of the EPOS card that supports Suki.

Turning to Gold cards. The number of new Gold Card memberships reached a record high 180,000 in the first half that was supported by our Start from the Gold initiative under which customers using services such as rent guarantees are invited to join as Gold Card members from the outset. As a result, the total number of cardholders reached a record high of 8.11 million. Memberships in the cards that support Suki category reached 1.26 million. And when combined with Platinum and Gold Card members, these now account for 62% of all cardholders, making a continued expansion of the high-grade membership base.

Next, on balance sheet and capital allocation. Total assets increased by JPY 85.4 billion from the end of the previous fiscal year to JPY 1.1388 trillion, mainly due to higher operating receivables. The equity ratio declined 1.4 points to 22%. Now the capital allocation. Out of JPY 24.1 billion in basic operating cash flow, JPY 23.7 billion was allocated for growth investment and shareholder returns, JPY 10.9 billion for growth investment, JPY 3.2 billion for share buybacks and JPY 9.6 billion for dividends. Human capital investment totaled JPY 5 billion, accounting for 28%.

Next is our initiative to expand the number of individual shareholders and the movement of our PER. In the earnings call in May, we explained that we aim to lower our data value and raise our PER by expanding our base of individual shareholders. In July, we sold 10.28 million shares previously held by 5 cross-shareholding companies to about 10,000 individual investors.

Since then, additional purchases have continued. And as of the end of September, the proportion of individual shareholders reached a record high of 13%. Our PER has performed strongly since the offering and reached 21.6x in September. As for ESG, in October 2025, Marui Group received a visionary award from the Women Corporate Directors, WCD, the world's largest organization supporting female Board members becoming only the third country -- company in Japan to receive this recognition. We were commended for promoting diversity in decision-making and establishing an effective governance framework through organizational and cultural reform.

Finally, the full year forecast. We expect to achieve our 3 key KPI targets, EPS, ROE and ROIC exactly as planned at the beginning of the year. Operating profit is projected to rise 12% to JPY 50 billion and net income to increase 5% to JPY 28 billion, both unchanged from initial guidance. We will continue to monitor interest rate trends, but ordinary profit is expected to increase 5% to JPY 42 billion, also in line with the plan. By segment, operating profit is forecast to increase 28% to JPY 11 billion for Retail and 7% to JPY 47 billion for FinTech, both unchanged.

For the second half, retail expects strategic spending on promotion and marketing, but the full year forecast remains JPY 11 billion as planned. In FinTech, taking into account the positive impact from higher installment and revolving fee rates and the negative impact from reduced receivables securitization, we expect operating profit for the full year to remain on plan at JPY 47 billion.

Although we will not conduct securitization in the second half due to the timing of the fee revision, there will be no profit impact because the fee rate revision was implemented earlier than originally scheduled. Lastly, if our share price does not fully reflect our future profitability, we will carry out flexible share buybacks. Following the first half, we have set a maximum buyback limit of up to JPY 20 billion for the second half as well. That concludes my presentation. Thank you.

Next, the presenter will be our President and Representative Director, Mr. Aoi. He will be explaining about the progress as well as the outlook of the business that supports Suki.

I would like to explain about our progress and outlook regarding the business that supports Suki. Our company champions in economy driven by passion as its vision, Suki. And as a strategy to realize this, we are advancing business that supports Suki. The purpose of business that supports Suki is to achieve both impact and profit by expanding consumption for [indiscernible] through Suki into consumption for someone else and for the society.

Our definition of Suki is not limited to Oshikatsu. The Suki we support encompasses not only Oshikatsu, but diverse fashions such as pets, mountain, climbing, sports, food culture, art and Japanese culture that are irreplaceable and unique to each individual. Business that supports Suki will primarily develop cards, events and goods that support Suki.

Today, I will explain the progress of these 3 businesses. I also would like to explain the corporate culture that underpins them. First, here is the status of the card that supports Suki. The number of projects has expanded from 88 projects a year ago to 130 projects, and the number of members have also increased from 1.01 million to 1.26 million. In 2025, 2 new projects have debuted.

I would like to introduce a couple of them. The first is the Licca-chan card. There are 2 types, Retro Licca-chan Reprint edition and Licca-chan who only buys Pink. The castle cards come in 2 types, the castle itself and the stone walls. Many castle fans actually prefer the stone walls over to keep and about 30% of applicants choose this option. If successful, we plan to expand to castles nationwide in the future. Additionally, 0.1% of the purchase amount will be donated to Japan Castle Association, which works on castle preservation and maintenance.

Next is the men's volleyball team, the Tokyo Great Bears. You can choose from 2 types, characters and players to select the design of the player you support from among the 14 athletes. Here, too, 0.1% of purchase amount will be donated to the Tokyo Great Bears as funding for developing next-generation players. Here is the breakdown of cards supporting Suki, both in terms of projects and membership numbers, characters and animation dominate.

This stems from the fact that the initiative originally launched with a focus on animation projects. In recent years, projects in new genres such as social contribution, creators, sports and arts as well as culture have been increasing. And thanks to all of your support, our donation-linked cards have expanded to 21 programs, reaching 110,000 people, including Pet Cards, museum cards and [indiscernible] cards.

The key feature of Suki cards is that the LTV, which is 2x to 7x higher than standard cards. This is because the proportion of the cards is higher due to the notably high proportion of young members among Suki cards compared to general cards, resulting in a main card usage rate of 58%, 11 percentage points higher than the 47% for general cards.

Therefore, we will expand recruitment of first Suki card members nationwide through events that support Suki. The share of EPOS Card is 16% in the Tokyo Metropolitan area and 2 neighboring prefectures where Bari stores are concentrated, but only 5% in other regions. Raising this share to the level of Tokyo Metropolitan area in 2 neighboring prefectors would unlock a potential of 9 million new users, a scale exceeding the current membership of 8.11 million. The membership of Suki Support Card aims to reach 3 million members by March 2031 and surpass the number of Gold Card members by the fiscal year ending March 2041.

Next, events that support Suki. As a result of our efforts to create an event-filled store, the number of events held annually has rapidly expanded to approximately 6,000 over the past 3 years. Of these events supporting passions account for 1,300, representing over 20% of the total. Sales for the first half of the year at events supporting Suki theme reached JPY 5.2 billion, a 46% increase year-on-year.

Animation, games and music artists accounted for the majority of this. New members totaled 60,000, a 39% increase. Both sales and new members for music and artists grew significantly, more than doubling year-on-year. The event status for the music artists focusing on artists like these examples, we held over 70 events in the first half of the year, attracting over 200,000 attendees and gaining over 20,000 new members.

Events celebrating Suki achieved an average customer spend approximately 2.3x higher than the store average. They also generate 17x more new members per day compared to regular events, making them the most efficient sales store within Marui store. The operational format are categorized into compact events of approximately 40 Tsubo, focused on merchandise sales and large-scale events of approximately 150 Tsubo, incorporating exhibition ex and experiential space.

Large-scale events generate over twice the number of visitors, new members and sales revenue compared to compact events resulting in higher per person productivity. They offer potential admission fee income and will expand our planning of large-scale events going forward.

Here's an example of a large-scale event. It featured many creators among animation. In the first half of the year, it held approximately 40x attracting 150,000 visitors and gaining approximately 10,000 new members. We also explore new areas of Suki, the rising in the game scene, we held a large-scale event with fans using funds raised through crowd funding.

Additionally, we employed Luna product fair achieved sales of JPY 50 million and attracted 10,000 paying customers. We will continue developing events that support these diverse Suki. Under our policy of creating an event field store, we have focused solely on expanding the number of events held. But going forward, we will review our approach and expand events that support people's passion.

The first -- the fiscal year ending March 2031, we will reduce the total number of events held to about 80% of the current level while expanding events that support people's Suki to more than double of the current situation. Sales for the first half reached JPY 5.2 billion with full year sales projected at JPY 10 billion. And our in-house merchandise line launched this fiscal year, it is under active development.

First half sales are projected at JPY 200 million with full year sales at JPY 500 million and a gross margin of approximately 75%. For our original merchandise, we established a policy of inventory turnover of 120% based on lessons learned from our previous withdrawal from private brand business. We procure initial inventory, assuming a 100% in-store sell-through, then meet any unfilled demand through online sales, achieving a total sell-through of over 120% versus initial stock.

By executing this policy, we are able to maintain a high GP margin. Examples of our original merchandise include light-size standing panels and scene-based acrylic dioramas developed in collaboration with artists and creators. Looking ahead, we aim for sales of JPY 12 billion from our original merchandise by FY 2031, including event linked, e-commerce, wholesale and overseas sales. That concludes our overview of cars, events and merchandise.

Next, I will address our competitive advantages and barriers to imitation. Investors often ask whether our business that supports Suki could easily be copied by others. I would like to address this question. To begin with, this business starts with credit cards featuring characters and anime designs that reflect our customers' Suki.

This aspect can indeed be replicated and many similar content-based cars already exist in the market. However, our business that supports Suki is not simply about content-themed cars. It represents the entire value of the customer experience created by combining the various elements Marui Group has developed through its retail business, events that let people immerse themselves in the worlds they love, merchandise that physically express those worlds and staff food and share customers Suki in person, providing this unique experiential value through the seamless integration of retail and finance constitutes our first barrier to imitation.

The second barrier is our corporate culture. Our distinct corporate culture itself serves as the foundation that enables the creation of the business that supports Suki. As the proverb says, Rome wasn't built in a day. It takes many years to cultivate such a culture and that long-term accumulation heightens our barrier to imitation. Let me explain more.

The cars that support Suki are not developed solely by our core fintech team. In fact, roughly half of them are created by divisions outside the fintech, our retail stores, the e-commerce division, the co-creation investment division and the co-creation team with cross-organizational efforts as well as the Suki support contests. The entire group is collaboratively developing these cars.

What supports these efforts is the corporate culture that encourages collaboration beyond organizational boundaries. This culture has been fostered through cross-group job rotation transfers, project-based organizational structures and co-creation teams that collaborate directly with investee companies.

Another core feature of our culture is that employees proactively propose ideas and take on new challenges grounded in our hand-raising culture. This mindset is nurtured through initiatives like Digital Cup, where employees compete to propose digital transformation ideas, the Suki support contest and the Fail Forward Award, which recognizes those who learn from challenges and failed attempts.

Now let me discuss our future direction, focusing on 2 areas: first, opening up business development; and second, promoting main card adoption through Suki. First, business development that will be opened up. Until now, we recruited ideas related to Suki and then the project leaders to commercialize them only from within the company.

Going forward, we will open this process to both internal and external participants, inviting ideas and project leaders from outside the company as well. By gathering outstanding ideas and people from inside and outside the organization and supporting them through Marui's unique collaboration framework, we will commercialize business that supports Suki one after another.

The driving force will be the open version of the Suki support contest. We will invite not only employees, but also external creators, start-up founders and corporate professionals, students and participants from overseas, anyone who wants to turn their Suki into a business with excellent ideas from around the world. The first contest is scheduled for March 2026.

Next, I will discuss promoting main card adoption through Suki. As mentioned, card that supports Suki have a first high proportion of first-time cardholders and a high main card adoption rate, resulting in strong LTV. That is the key strength of the product, but 85% of our members join us their second or later card and the main card usage rate remains low at 25%.

By comparison, the main card adoption rate for first card members is 58%, leaving a 33-point gap, our potential area for growth in the future. How can we encourage second card users to make our card their main card? The answer can be found in our highly popular Pet Card. Although 87% of Pet Card holders joined as second card users, their main card adoption rate after enrollment reaches 40%, well above the 25% average for cards that support Suki.

When we asked customers why, many said, my beloved pet appears on this card. I will never use any other card. This perfectly captures what Suki truly means. It reminded us that the emotional connection customers feel is powerful enough to change behavior. The power of Suki has the potential to transform the credit card business itself.

Traditionally, people use credit cards either because of status or rewards. Our cards that support Suki, however, inspired the third motivation to use the card simply because they love it. By tapping into this emotional motivation, we believe we can create a new market altogether. Accordingly, we will promote main card usage, not only through gold cards, but also via cards that support Suki, the upgraded passion or Suki premium cards and exclusive benefits for premium members.

Currently, the overall main card adoption rate for EPOS cards stands at 22%. And through these initiatives, we aim to raise it to 35% by FY 2031. To achieve this, we will strengthen initiatives that go beyond member acquisition, enhancing events and merchandise programs to encourage main card usage. At the same time, we will advance main card adoption through DX. Since establishing the joint venture, UX design company, Muture with Goodpatch in 2022 and launching the UX/UI development firm, Marui Unite in 2024, we have been hiring highly skilled specialists like AI engineers and cybersecurity experts.

With them, we have begun improving our lifestyle app, which serves as a key digital touch point with our customers. Here is an example of our UX initiative linked to Suki. For members of the Studio UG card, we changed the app's home screen to feature the character Gokigen Panda. This personalization increased engagement with the apps quest function, which guides users to explore EPOS cards features and services, leading to a higher main card adoption rate. We will continue developing UI/UX designs that connect directly with customers of Suki.

Finally, our KPI. By FY 2031, we aim to raise the main card adoption rate to 35%, achieve a total group transaction of JPY 10 trillion and reach PPR of 3x to 4x. That concludes my presentation. Thank you for your kind attention.

We now move on to Q&A. [Operator Instructions] So the first is from Takahashi-San from Mizuho Securities.

This is Takahashi from Mizuho Securities. Thank you very much for the very easy to understand explanations. I have 3 questions. One is for Kato-San and the remaining 2 is for Mr. Aoi. My first question is for Kato-San. As always, , I would like to understand something. I think that the retail business in the second quarter was doing very steady.

But for Retail and Fintech, what is the progress against your annual target? Are you slightly behind? Or are you a little bit ahead of the plan is my first question. My second question is for Mr. Aoi. I think that the card that support Suki is great. And I think your explanation was also very easy to understand.

The 2 questions that I have is, you mentioned that this is not Oshikatsu. I think it was explained in various areas. You mentioned about Pet Card as an example, you mentioned that this has a very high main card adoption rate. Towards the future, when you think of LTV, in what area would you feel a potential today?

And maybe this is something that will become more open and maybe the various ideas will be generated going forward. But I'm sure that you have various antennas that you have allocated in various areas. So I would like to understand what your opinion is around this. My other question is, which is my last question. Your fintech and retail initiative is planned to expand in the regional local areas. As you work on this initiative, what is going to become necessary?

Obviously, you need to secure space. But are there any bars in achieving that? Or is this something that is rather easy to execute? You will be expanding to the local areas. So I'm sure that liquidity of human resource is also something that you need to elevate. So when you move people, what are the bars that you may be facing? Or do you not have any challenges in that area is my third question.

So let me answer to your first question. Thank you very much for the question. Our progress against the results or the annual target. We don't disclose the first half target. But to explain about our internal target, both for Retail and Fintech, we have slightly exceeded our target for the first half of the year. Starting with Retail, the areas that we exceeded our target would be the event that support Suki. It was more than what we had anticipated, and so that's a positive upside for us. The related businesses also are a slight surplus.

For FinTech, the revenue is steady on track against our plan. It's just that the cost, I think there were some points that were held back. So for both segments, we have been able to surpass the budget, but we don't know how the remaining year is going to unfold. And so we have not changes to our annual -- we have not made any changes to our annual target. I hope that answers your question.

So let me answer to your second and third question. Starting with the second question, from the LTV perspective, what are the future attractive areas that I see, I think, was your question. The business that supports Suki is centered around card. We have events and merchandises, but the animation department was a triggering opportunity for us to expand this initiative.

And so I think it's animation-centric, character-centric games as well. But as you have pointed out, Pet Cards would be an example, which is slightly different from Oshikatsu, but for each individual, they are indispensable because it's like a Suki of your family member. And so I think there's an expansion around that.

Animation, games, characters and pets and also the castle cards and museum cards, the difference is that are there any rights affiliated to this? So if there are any rights affiliated to some of the assets or properties, we do need a consent or permit. And when we do events and when we sell merchandise as well, there are various restrictions that we need to overcome or consider as we try to generate business, like museum cards.

There are various goods that can be invented, I guess, for those that don't have any rights issues like the animals in the zoo, castles as well. And so if we summarize all of those opportunities, anything that does not have any rights that are Suki, they can be cards or translated into goods like we are originally from retail. And so we want to put a lot of focus on merchandise so that from a wholesale perspective and also from overseas sales perspective, I think we have an opportunity.

I think the Japanese culture is also very popular from overseas guests. And so these non-rights opportunities like the clay figure is also an example when it comes to museum-related ideas. And so that's something that we would like to look into. The bars that I believe we may be facing when we try to expand to the local areas, we need to secure space. We would like to secure space.

We have been working on store openings. And so the real estate development division is already trying to collect various information, so that we can negotiate for space. And so I think in the near future, I think there will be a promising opportunity. On the other hand, when it comes to resource, EPOS Card, we have been able to cover north all the way to south from Hokkaido all the way to Okinawa.

We have branches to acquire new users through the EPOS Card proposition. We also work with real estate partners to negotiate to do various business activities. So when it comes to transferring of people, moving people and hiring people, we do have a foundation that we've been able to establish. And so I don't see personnel as a big bar or higher bar.

But as we start working on these initiatives, we will be needing people that can be a touch point of new potential customers, and we also need to train people. So I think those are areas that we would like to start putting our efforts around. And so that's something that we've started preparing from the first half of this year. I hope that answers your question.

We'd like to take next question. Daiwa Securities, Shigeoka-San.

This is Shigeoka from Daiwa Securities. Am I coming through? Can I -- can you hear me?

Yes, we can hear you.

Well, I just want to confirm one thing. When it comes to progress in the first half, on a consolidated basis as well, including the corporate eliminations, there was a slight upside overshoot. Is that the right understanding?

Yes. Yes, that's the right understanding.

Understood. That was one thing I wanted to confirm. I have a couple of questions. First question is regarding the retail event-related revenue. Earlier, you explained that there are events that supported Suki that had upside. And in terms of the details of that, more than you expected, larger size event contributed or the compact type merchandise sales performed better than your expectation?

And also, you mentioned that you expand those events externally and have they started to contribute to the profit? Can you elaborate on more details? And against your plan in the second half, it seems like you can grow this further. You announced in the first quarter, when you look at the operating profit forecast in the first quarter, it seems like the growth will be milder in the second half. Is there any room for you to grow this business further in the second half? So that was my first question.

My second question, can I go ahead with my second question? Or should I wait for your answer for the first question first?

Please go ahead with your second question as well.

My second question is regarding the shareholder return. This time around, you set the upper limit for the share buyback. In terms of how you think about this, you will continue to strengthen the shareholder return. That is the policy, as I understand it. And in this fiscal year, when the share price remain at a low level, you will carry out the share buybacks. And at the same time, you will pay out dividends in a steady manner.

And the balance sheet, the ideal balance sheet that you just announced, the JPY 30 billion was mentioned as part of the capital optimization. And basically, those will be executed in FY '26 and onwards. So FY '26 and beyond, the capital optimization will take place and the shareholder return will be strengthened in or after 2026. Is that the right understanding? That's all from my side.

Thank you. To your first question, whether the large-scale events or small-scale events contributed more, both contributed. But the upside, main upside came from the large-scale events. As was questioned, these large-scale events were convened in external world as well. So both external and internal large-scale events performed very well and that made a huge contribution.

The second question is whether we have room for further growth in the second half. If we keep the pace as we saw it in the first half, we may be able to grow more. But when it comes to events, those events themselves, sometimes those events will be a hit and some other events will not be a hit and will not receive good reaction from the participants. So we are being careful. So if the events perform well as we saw it in the first half, there may be some upside in the second half.

Next is about the balance sheet. This time around, we made the announcement as shown in the PowerPoint, if the share price does not reflect the future profitability, we will carry out the share buyback, JPY 30 billion capital optimization rather than for the capital optimization of JPY 30 billion, if there are excessive capital, we'd like to address it. So that will be conducted in FY '26 and '27.

This time around, the share buyback we are talking about this time around, these are the ones that we will carry out depending on the share price performance. So the JPY 30 billion capital optimization, these will be carried out in FY '26 and onwards, and the fintech will produce more profit in the future. So looking at the profit accumulation and the equity level, you will carry out the initiatives as necessary. Is that the right understanding?

Yes, it is.

We would like to move on to the next question. Kanamori-San from Okasan Securities, please.

My name is Kanamori from Okasan Securities. I have 2 questions. First, it's more of a follow-up question to the previous questions regarding the investment of each of the businesses. Starting with the retail business. As of the first quarter, the waterfall chart for the operating profit for the Retail segment and when I compare that with the materials today, the tenant and event both have exceeded the OP value.

As of first quarter, the tenant annual revenue was JPY 1.1 billion, but now it's JPY 1.4 billion. And for the event, initially, it was JPY 600 million, and now it's JPY 800 million. But you have mentioned that the expense as of the first quarter, you have felt that there is an increase in profit of JPY 400 million from the second quarter to fourth quarter, but there is a negative profit factor of JPY 300 million that is now coming up. And so I want to understand how this is structured in your mind.

And my second question is regarding Fintech. This is more of a clarification. But when you explained in the first quarter, you mentioned that you have pushed forward the timing of increasing the commission rate. But the securitization elimination is going to happen, and therefore, this is how the operating profit is going to be is what you have mentioned.

You haven't made much changes to that. But I think that we will be facing a raise in interest rates. And when that does happen, I don't think that you have embedded that into the commission rates. But next fiscal year, if there is a profit increase factor that is about JPY 10 billion from interest rates, is that something that has not changed? Does that remain to be the plan is my question.

And another question for Mr. Aoi. The business that supports Suki, you mentioned that it's -- there's a lot of progress and the acquisition of main cards. And this may not be directly tied to this, but usually the main card increases. When this increases, you've mentioned about maximizing households in your past IR events.

As the main card increases, you think that you can increase your share, but what is it that they are paying with this card? I think that you had some breakdown around that. And compared to the initial plan, I think this part is growing, but this part is not being used. I think if you have that information in front of you, we would like to get a sense of how that looks like.

Let me answer to the first 2 questions, starting with your first question. For the waterfall chart, as you have mentioned, the tenant and event revenue, both are quite bullish. And so in the second half, we have some strategic expenses that we had been expecting, but this is actually going to probably be an expense that will drive revenue increase towards the next fiscal year. And so that's why the balance in this waterfall chart has slightly changed.

Your second question about the changes in the commission rate and how the profit changes. We are looking at JPY 10 billion on an annualized basis. And so we're going to achieve JPY 4 billion. So next year, if we don't do anything, we have a JPY 6 billion impact. What we do with that is not decided yet. But in principle, we don't want to generate any factors that tie to a significant change in profit.

And so there's a possibility that we may take some hedging measures. For the value, on an annualized basis, we're looking at JPY 10 billion annualized. And this year, we're looking at JPY 4 billion, looking at JPY 4 billion and next year, JPY 6 billion. That breakdown has not changed. When you say hedge, it would be the elimination timing of the securitization.

Next fiscal year, there's a possibility that there may be some adjustments. Is that a correct way to interpret what you just mentioned? Elimination, we can't adjust, but I think it's the timing that we will work out. Maybe.

And let me answer to the third question. Regarding the main card translation within the business that supports Suki, as you have mentioned, Kanamori-San, we're trying to maximize share. And so yes, they are tied with each other. So the definition of main card, in the IR Day, the fintech representative will be explaining this in detail.

But roughly speaking, share is about 33%. The people who are using Apple Card, we want -- they are the main card. That's -- we're seeing them as main card users. The 33%, so more than 1/3 in order to get people to use more than 1/3, then we do need to have them heavily use Apple Card. But thanks to all of your support, we have been able to make progress because there is a rent payment that we have a warranty around.

And in other cards, this is not something that we can add as a service. But this is really contributing to the share maximization. And so this is really driving usage and that has progressed in gaining share. On the other hand, the areas where the growth is sluggish would be smartphone contracts? This would be the contracts with the main carriers. And this would be a key expense of the young generation, as you know. But a lot of the key carriers are trying to capture this within their own ecosystem.

And so there's a difficulty in growing in this area. So that's a weakness that we're experiencing. But for other areas, I think that there's an opportunity for people to use Apple Card, for example, insurance premiums or the non-life insurance payment, I think this is an area that we can serve. You can get points when you pay with our card. And the insurance companies, they don't need to burden the deposit commission.

The credit card company is going to burden that. And so that's a win-win for both parties. And so the insurance premium payment is also what we're promoting with our card, and this is growing significantly. So there are new services like tax payment that we're trying to add within our service so that we can increase the share of usage so that we can combine this card usage with the main cards. That's it.

We will take next question. Morgan Stanley MUFG Securities. Takemura-San.

This is Takemura from Morgan Stanley MUFG Securities. I have a couple of questions as well. First question is regarding 63, Page 63, the goods that supports Suki. I would like to ask questions about the status of this business. On the right-hand side, the in-house merchandise sales, this fiscal year, JPY 500 million. GP margin is 75%. It's quite high. So I'm curious about the forecast from mid- to long-term perspective.

Every year, there is a growth of 300 million to 500 million, rather moderate growth or at some point in the midterm plan period, would there be any inflection point where this business would significantly grow? That was my first question. Second question is regarding Page 66. So the goods that support Suki, the expansion in overseas markets is mentioned. It seems relatively small in terms of the scale of this business.

So in overseas markets, when you sell merchandise, what are the specific initiatives you are thinking of? Are you leveraging the e-commerce on Internet platform to sell merchandise? And how are you leveraging your strength? So these are the points that I was concerned. So if you can elaborate more on this and add colors to this, that would be appreciated.

Thank you very much for the questions. I will answer these questions. The first question regarding the goods that support Suki, the GP margin forecast for the in-house merchandise, our target is 80% GP margin. We are slightly below this level, but we are working very hard to be closer to that level. And that was the first half situation.

And the second half, the starting point will be the similar level. In the future, we are raising the added -- we are adding values to come closer to 80%. As I explained earlier, so in the past, we had private brand products developed one after another, JPY 50 billion to JPY 60 billion sales were achieved at one point in time with the private label private brand that we weren't able to have good inventory turnovers, and we have some losses, and we continue to be in the red, and we had no option but to withdraw from that business. So that was a very painful experience.

Based on this painful experience, we are determined to not repeat this kind of an experience going forward. And it is important to set the right selling prices, but it's also important to not have the excessive inventory without being too much reliant on the discount offering, we are committed to keeping the inventory level at an appropriate level.

So by doing these things, we are aiming to achieve GP margin of 80%. The other thing is that FY '31 revenue, JPY 12 billion, well from JPY 500 million currently to JPY 12 billion, that is a big jump. As we try to achieve this, not only the e-commerce and events, but we'd like to also work on the overseas expansion of the businesses.

So that is a very ambitious target, including all of these aspects. So when we have the unique merchandise, for instance, anime or character-related goods, well, there are many retailers or chain retailers who handle these character-related merchandise.

And those retailers would want to carry these unique merchandises. So we'd like to leverage those retail network. One thing about the overseas expansion is that, well, the Japanese contents are drawing so much interest and passion from all over the world. So leveraging the e-commerce platform, we'd like to deploy these businesses going forward to the overseas business -- overseas markets. And the Japanese culture at large is attracting a lot of attention from overseas.

For instance, we talked about the castle and stone walls and to what degree these would attract interest or attention, we are not sure. But when it comes to Japanese unique culture, we'd like to develop the goods that feature the unique culture of Japan. So they don't necessarily be linked with events and cards, but we'd like to keep working on developing the goods that support individuals Suki and interest.

So more than ever, the Japanese culture is attracting a lot of attention from all across the globe. So we'd like to tap into this opportunity to be more proactive in the product development and leveraging the so-called cross-border EC platforms to sell those products as appropriate.

Are there any other questions? [Operator Instructions] We do have some time restraints. And so I would like to ask the next person to ask the question. This will be the last question, Oiwa-San from Jefferies Securities, please.

This is from Oiwa from Jefferies. The unit price per Tsubo on Page 13, you mentioned how it is increasing. At what timing do you do? This is my question.

Thank you for the question. This would be at the timing of when the tenant changes or when the contract is renewed. Usually, we have a reshuffling of the tenants every 5 years, and so about 20% changes. And the unit price per Tsubo is increasing by 10%. So that's 10% of 20% and so about 2%, the unit price per Tsubo is increasing per year. Does that help you understand?

The increase in event revenue is this impacted by the Tsubo unit price? That event would be separate because this unit price per Tsubo is related to tenants. There are some rent that we charge for events, but basically, the gross profit as well as the sales of the merchandise would be the key part of the income.

Okay. Understood. My second question was raised in Nikkei newspaper. You have some carrier breaks and that is demonstrated in your attrition rate.

Thank you very much for your question. We believe that it is contributing to a reduction of attrition rate. About 2 years ago, I had utilized the system to learn in graduate school. And this system has expanded. It doesn't limit to education. There is a career absence that you can utilize to learn or do what you like.

That's -- it's a system to support the employees Suki, and we're trying to create an environment that encourages the employees to really be able to absorb themselves in their passion or Suki, and I think that is tying to reduction in attrition rate. Udaka-San went to business school for a year, and she has really upgraded herself, and she's really helping us in our business. You can have an education absence for 1 year, but you can also really absorb in your Suki.

And we have like a 3-month absence available for employees. So if you have a hobby that you really want to polish or if there is something that you want to concentrate in learning around your hobby, then you can take this 3-month leave. A person that I know is a YouTuber and this person is really taking on this challenge of becoming a YouTuber and looking into the opportunity of really becoming being independent. And there also is an example of a welfare opportunity.

So a massage training for welfare and nursing is an example of a leaf that our employees have experienced. So there's various ways of Suki that you can really absorb through this system. For us, I think this is an investment in human capital. Each individual Suki really is diverse and being able to leverage on that when you do your work, I think, is definitely going to really play a role at some point in time in your career. And so that's why we are encouraging the employees to make use of this system.

Thank you very much. Now it is time. So this concludes the financial results briefing for the second quarter of the fiscal year ending March 2026. At our IR Day on December 9, we will provide a more detailed explanation of the retail and fintech initiatives within our business that supports Suki as well as insights from our outside directors on the business. We sincerely hope you will join us then as well.

Lastly, we kindly ask all participants to complete a short questionnaire regarding today's briefing. After leaving the Zoom webinar, you will be automatically directed to the survey page. Your feedback will be greatly appreciated. Thank you once again for your time and participation today.