Business Results for the Six Months Ended September 30, 2017
I would like to take this opportunity to extend our heartfelt thanks for your invaluable support.
Please find below a summary of the PC DEPOT Group's business results for the six months ended September 30, 2017. During the period under review, the Japanese economy continued to recover, although slowly, supported by the government’s economic stimulus measures to a certain extent. Meanwhile, the consumer-spending environment remained challenging amid the uncertainties about the future.
In these circumstances, the PC DEPOT Group continued the Smart Life Partner (SLP) initiative to provide one-stop support services for sales, repairs and the internet.
In the PC Sales Business, in addition to selling PCs and peripheral devices, we provide a service to help customers transfer their previous PC’s data and environment to a new PC and use them in the same way as before. Moreover, we provide a home PC setup service in which our engineers visit the customer at home or other specified place to resolve a problem. As part of our smartphone-related sales and services, we enable the customer to transfer a telephone directory from their previous mobile phone or smartphone to a new smartphone. To meet customer needs for an inexpensive SIM card, we sell our private brand smartphones while delivering an inexpensive SIM card service bundled with support. We continued to work on these initiatives in order to actively meet customer needs for support services.
One of the highlights of the six months ended September 30, 2017 was the rollout of iPhone 8 and iPhone 8 Plus on September 22. Coinciding with this, the PC DEPOT Group launched the following new service product: 1) Mac Premium Member Value Pack (a member service-bundled product), a combination of our premium services (maintenance services provided on a monthly membership fee basis) and Apple’s Mac product; and 2) Windows PC Premium Member Value Pack, a combination of our premium services and Windows PC. Taking the form of an all-in-one format, these products can be used by many customers; namely, not only first-time premium service users, but also existing member customers opting to use these products. We will strive to support customers’ smart IT life experiences through providing them with member service-bundled products, such as the Value Pack series.
We continue to provide members with preferential treatment using our existing premium services. During the six months under review, we continued to support customers’ smart IT life experiences while giving top priority to resolving customer problems. Specifically, we provided products based on a combination of our premium services and hardware, physical damage guarantee and communication line services. Moreover, we worked to increase the number of regular customers by delivering a free-of-charge consultation service for customer problems, such as a failure of hardware, including PC and smartphone bought from other company, and the internet currently in use.
As a result, for the six months ended September 30, 2017, net sales were 21.018 billion yen (down 12.0% YoY), operating income was 1.180 billion yen (down 44.7% YoY), ordinary income was 1.228 billion yen (down 43.9% YoY), and net income related to parent company shareholders was 0.819 billion yen (down 43.6% YoY).
Forecasts for the Second Half of FY2017 and our Policies
Following on from the first half of FY2017, the Japanese economy in the second half is forecast to continue its moderate recovery trend. However, there are uncertainties about the world economy and foreign exchange rates. Amid this situation, the IoT environment involving PCs, smartphones and tablets, as well as the setting for internet devices, will likely evolve further. Against this background, we think demand will grow for services and devices designed to enhance convenience for consumers’ use of smart hardware, enriching their lives.
The PC DEPOT Group will continue to step-up its efforts to offer internet devices. We will keep enhancing our services for customers and program members, while giving top priority to solving user problems.
For store development, we will continue to remodel existing PC DEPOT stores into PC DEPOT Smart Life Stores, which are a new type of outlet that focuses more on providing services, in an effort to meet the growing need for services that is arising from the increasingly diverse internet devices. We will flexibly open new PC DEPOT Smart Life Stores and PC DEPOT PC Clinics, based on the situation.
In the Internet-related business, we will continue to solidify our operations by further upgrading the collaborations between group companies for the backup and service platforms for Premium Services provided by the PC DEPOT Group, in addition to revitalizing the internet service provider business. No change has been made to the initial earnings forecasts released at the start of the current fiscal year, of consolidated net sales of 46.600 billion yen, consolidated operating income of 2.420 billion yen, consolidated ordinary income of 2.500 billion yen, and net income related to parent company shareholders of 1.650 billion yen. In its Medium-Term Business Plan, the Group has set the targets of a ratio of ordinary income to sales of 10% or more and a return on equity (ROE) of 15% or more, and it will strive to deliver improved enterprise value.
Towards becoming a reliable, convenient and kind company indispensable to local communities
Our basic corporate social responsibility (CSR) policy is to use our stores to eliminate citizens’ information society disparities (which is referred to as “the digital divide”) that arise due to differences in age, gender, income, education, place of residence and other factors. Based on this approach, we conduct operations in an effort to become a reliable, convenient and kind company as a solution store operator for local citizens’ PC, internet and smart devices.
We have set the goal of contributing to local communities by making the utmost efforts to support the enriched smart IT life experiences of member customers. This will be through utilizing the skills, experience and knowledge we have accumulated to date while ensuring that each staff member adheres to the customer-first principle.
To realize this goal, we will make and continue efforts to interact with member customers on a face-to-face basis in a manner that, as befitting their daily living store, allows them to casually visit us anytime and without hesitation. This will be by way of using our unique business model based on an integration of products, services and member support activities.
In the coming years, we will strive on a Group-wide basis to improve the financial results in order for the PC DEPOT Group to become a reliable, convenient and kind store operator indispensable to local communities in the eyes of customers and shareholders, as well as other related parties.
We look forward to the continued support of our shareholders as we make further progress in our efforts.