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TRANSCRIPT
AN
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017
Otsuka Kagu, Ltd.
Head Office : PO BOX2004, Tokyo Fashion Town Building, East Wing, 3-6-11, Ariake, Koto-ku,Tokyo 135-8071 TEL.03-5530-4321 FAX.03-5530-5550
"IDC Otsuka" is the corporate brand name of Otsuka Kagu, Ltd.
2017.5
ANNUAL REPORT 2017
We, Otsuka Kagu, put customers’ happiness first.We hold firm on customers’ diverse happiness
and respond to their needs.By combining customers’ passion and our solutions, we will bring about customers’ happiness together
and respond to their desire for joy.
Housing is the foundation of living.One’s living environment builds the person,
just as food builds the human body.Housing has the ability to make people happy.
Otsuka Kagu believes that interiors possess such abilities.
Since its foundation in 1969, Otsuka Kagu has focused on providing excellent products from around the world and excellent services for reasonable prices to achieve its mission of delivering high-quality lifestyles for every single person.
Otsuka will continue working to build life-long relationships with customers through generations by providing furniture and interiors as consumer goods that meet standards of durability, safety, and ethics, along with every possible solution required for comfortable living.
Minami Funabashi Store ANNUAL REPORT 2017 ● 0201 ● IDC OTSUKA
“Let’ s layout happiness”
We, Otsuka Kagu, put customers’ happiness first.We hold firm on customers’ diverse happiness
and respond to their needs.By combining customers’ passion and our solutions, we will bring about customers’ happiness together
and respond to their desire for joy.
Housing is the foundation of living.One’s living environment builds the person,
just as food builds the human body.Housing has the ability to make people happy.
Otsuka Kagu believes that interiors possess such abilities.
Since its foundation in 1969, Otsuka Kagu has focused on providing excellent products from around the world and excellent services for reasonable prices to achieve its mission of delivering high-quality lifestyles for every single person.
Otsuka will continue working to build life-long relationships with customers through generations by providing furniture and interiors as consumer goods that meet standards of durability, safety, and ethics, along with every possible solution required for comfortable living.
Minami Funabashi Store ANNUAL REPORT 2017 ● 0201 ● IDC OTSUKA
“Let’ s layout happiness”
Long-term business performance and corporate historyHistory
“What can we do to increase customer satisfaction?” This is the question we have continued to ask ourselves since our foundation.
Tailor-made services by interior advisors and extensive product lines.
What lies beneath our future ideas and actions is customer satisfaction.
With changes in the times come changes in customer expectations and needs.
We will keep moving forward by revisiting the philosophy of customer satisfaction.
We will continue working to be a company that provides everything necessary for living in the home.
Pursuing the goal of creating storesthat are loved and chosen by customers
Ariake Head Office Showroom (1996～)
Osaka Nanko Showroom (1997～)
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2014 2015 201620132012201120102009200820072006200520042003200220012000199919981997199619951994(Existing stores are shown in bold.)
1969 March
April
1979 July
1980 June
1984 June
1989 September
1993 April
1994 July
1995 June
1996 March
April
1997 April
September
1998 January
April
1999 March
June
September
October
2002 September
2004 April
October
2005 December
2006 May
September
2007 February
April
October
2009 May
October
2010 October
2011 February
2014 September
2015 October
2016 January
September
October
2017 February
March
April
Otsuka Furniture Center Co., Ltd. established with Head Office in Kasukabe City, Saitama Prefecture.
First store opened at West Exit of Kasukabe Station.
Head Office relocated to Kudan-Kita, Chiyoda, Tokyo.
Stock registered on over-the-counter market.
Head Office relocated to Yurakucho, Chiyoda, Tokyo.
Yokohama Service Center and IDC Japan Yokohama Showroom opened.
Hibiya Showroom, an integrated interior showroom for members only, opened.
Kobe Showroom opened as the first store in Kansai region of Western Japan.
Osaka Showroom (renewed Namba Showroom in September 1997) opened.
Head Office moved to current location in Ariake, Tokyo.
Ariake Head Office Showroom, the largest of its kind in Japan,opened.
Kasukabe Showroom, the largest in Saitama, opened.
Osaka Nanko Showroom, one of the largest showrooms in western Japan.
Aomi Service Center opened.
Nagoya Showroom opened.
Makuhari Showroom opened.
Kokura Showroom opened as the first store in Kyushu region.
Shinjuku Showroom, one of the largest in the Tokyo Metropolitan area, opened.
Osaka Service Center opened.
Fukuoka Showroom, one of the largest in Kyushu region, opened.
Yokohama Minatomirai Showroom, the largest in Kanagawa, opened.
Koriyama Showroom opened as the first store in Tohoku region.
Tokorozawa Outlet opened. (renewed Tokorozawa Showroom in September 2008)
Yokohama Outlet opened.(name and format changed into “Outlet&Reuse Yokohama”)
AKITA MOKKO CO., LTD established as a subsidiary.
Nagoya Sakae Showroom, one of the largest in Tokai region,opened.
Modern Style Shop Yodoyabashi opened.
Nagoya Hoshizaki Showroom opened.
Kyushu Service Center opened.
Sendai Showroom opened.
Ginza Showroom (renewed Ginza Main Store in June 2011) opened.
Tachikawa Showroom opened in the Tachikawa store of Takashimaya Co., Ltd.
LIFE STYLE SHOP Nagoya-Ekimae opened.
RE-INTERIA, LTD. established as a subsidiary.
IDC OTSUKA Sapporo Factory opened as the first store in Hokkaido.
Minami Funabashi Store opened.
Outlet&Reuse Osaka Nanko opened.
Outlet&Reuse PREMIUM Ariake opened.
LIFE STYLE SHOP Kashiwanoha T-SITE opened.
Outlet&Reuse Shinjuku opened.
(¥ Million)
Shinjuku Showroom (1999～)
Nagoya Sakae Showroom (2007～)
Sendai Showroom (2010～)
Fukuoka Showroom (2002～)
1993
ANNUAL REPORT 2017 ● 0403 ● IDC OTSUKA
Long-term business performance and corporate historyHistory
“What can we do to increase customer satisfaction?” This is the question we have continued to ask ourselves since our foundation.
Tailor-made services by interior advisors and extensive product lines.
What lies beneath our future ideas and actions is customer satisfaction.
With changes in the times come changes in customer expectations and needs.
We will keep moving forward by revisiting the philosophy of customer satisfaction.
We will continue working to be a company that provides everything necessary for living in the home.
Pursuing the goal of creating storesthat are loved and chosen by customers
Ariake Head Office Showroom (1996～)
Osaka Nanko Showroom (1997～)
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2014 2015 201620132012201120102009200820072006200520042003200220012000199919981997199619951994(Existing stores are shown in bold.)
1969 March
April
1979 July
1980 June
1984 June
1989 September
1993 April
1994 July
1995 June
1996 March
April
1997 April
September
1998 January
April
1999 March
June
September
October
2002 September
2004 April
October
2005 December
2006 May
September
2007 February
April
October
2009 May
October
2010 October
2011 February
2014 September
2015 October
2016 January
September
October
2017 February
March
April
Otsuka Furniture Center Co., Ltd. established with Head Office in Kasukabe City, Saitama Prefecture.
First store opened at West Exit of Kasukabe Station.
Head Office relocated to Kudan-Kita, Chiyoda, Tokyo.
Stock registered on over-the-counter market.
Head Office relocated to Yurakucho, Chiyoda, Tokyo.
Yokohama Service Center and IDC Japan Yokohama Showroom opened.
Hibiya Showroom, an integrated interior showroom for members only, opened.
Kobe Showroom opened as the first store in Kansai region of Western Japan.
Osaka Showroom (renewed Namba Showroom in September 1997) opened.
Head Office moved to current location in Ariake, Tokyo.
Ariake Head Office Showroom, the largest of its kind in Japan,opened.
Kasukabe Showroom, the largest in Saitama, opened.
Osaka Nanko Showroom, one of the largest showrooms in western Japan.
Aomi Service Center opened.
Nagoya Showroom opened.
Makuhari Showroom opened.
Kokura Showroom opened as the first store in Kyushu region.
Shinjuku Showroom, one of the largest in the Tokyo Metropolitan area, opened.
Osaka Service Center opened.
Fukuoka Showroom, one of the largest in Kyushu region, opened.
Yokohama Minatomirai Showroom, the largest in Kanagawa, opened.
Koriyama Showroom opened as the first store in Tohoku region.
Tokorozawa Outlet opened. (renewed Tokorozawa Showroom in September 2008)
Yokohama Outlet opened.(name and format changed into “Outlet&Reuse Yokohama”)
AKITA MOKKO CO., LTD established as a subsidiary.
Nagoya Sakae Showroom, one of the largest in Tokai region,opened.
Modern Style Shop Yodoyabashi opened.
Nagoya Hoshizaki Showroom opened.
Kyushu Service Center opened.
Sendai Showroom opened.
Ginza Showroom (renewed Ginza Main Store in June 2011) opened.
Tachikawa Showroom opened in the Tachikawa store of Takashimaya Co., Ltd.
LIFE STYLE SHOP Nagoya-Ekimae opened.
RE-INTERIA, LTD. established as a subsidiary.
IDC OTSUKA Sapporo Factory opened as the first store in Hokkaido.
Minami Funabashi Store opened.
Outlet&Reuse Osaka Nanko opened.
Outlet&Reuse PREMIUM Ariake opened.
LIFE STYLE SHOP Kashiwanoha T-SITE opened.
Outlet&Reuse Shinjuku opened.
(¥ Million)
Shinjuku Showroom (1999～)
Nagoya Sakae Showroom (2007～)
Sendai Showroom (2010～)
Fukuoka Showroom (2002～)
1993
ANNUAL REPORT 2017 ● 0403 ● IDC OTSUKA
New vision, what remains unchanged and what will be changed
We have embarked on a journey towards our new vision.
Determination to make living better
Efforts to keep providingquality products at low prices
Management focusing on people
Emphasis on quality
What remains unchanged
Rebuilding of business model
Building next-generation store networks
Actively putting professional servicesat the forefront
Strengthening our Internet and EC services
New options to choose furniture
Strengthening of corporate governance structure
What will be changed
Japan’s home living market
will be a growth market.
Be a company that provides
everything necessary for
living in the home in the
growth market.
Otsuka Kagu vision
ANNUAL REPORT 2017 ● 0605 ● IDC OTSUKA
01. Introduction07. Message from the President09. Overview of Otsuka Kagu13. Overview of furniture market15. Rebuilding of business model • Building Next-generation Store Networks
• Professional Solution Proposals
• Enhancement of Relations between Product
and Service Channels
• New Options
• Strengthening BtoB business
25. Capital policy / Shareholder returns25. Corporate governance29. Trends in business performance31. Balance sheets32. Statements of operations Statements of cash flows33. Stock information34. Corporate profile
INDEX
New vision, what remains unchanged and what will be changed
We have embarked on a journey towards our new vision.
Determination to make living better
Efforts to keep providingquality products at low prices
Management focusing on people
Emphasis on quality
What remains unchanged
Rebuilding of business model
Building next-generation store networks
Actively putting professional servicesat the forefront
Strengthening our Internet and EC services
New options to choose furniture
Strengthening of corporate governance structure
What will be changed
Japan’s home living market
will be a growth market.
Be a company that provides
everything necessary for
living in the home in the
growth market.
Otsuka Kagu vision
ANNUAL REPORT 2017 ● 0605 ● IDC OTSUKA
01. Introduction07. Message from the President09. Overview of Otsuka Kagu13. Overview of furniture market15. Rebuilding of business model • Building Next-generation Store Networks
• Professional Solution Proposals
• Enhancement of Relations between Product
and Service Channels
• New Options
• Strengthening BtoB business
25. Capital policy / Shareholder returns25. Corporate governance29. Trends in business performance31. Balance sheets32. Statements of operations Statements of cash flows33. Stock information34. Corporate profile
INDEX
In the fiscal year ended December 31, 2016, we focused on establishing and disseminating our new business model, which was launched in 2015. Specific activities include reforms to our existing stores, including renovations aimed at capturing increasingly important replacement/single-purchase demand in addition to demand for new housing. A focus was also placed on building long-lasting relationships with customers by making the most of IDC Partners, establishing new stores, rebuilding tie-up sales with housing companies and others, and implementing various initiatives to strengthen our ability to capture reuse and corporate demand.
Part of our efforts to reform existing stores was to launch a new operation framework by renovating all stores in February with the aim of balancing an inviting atmosphere with excellent services. In addition, we facilitated activities to strengthen customer relations, such as using IDC Partners to focus on building lasting relationships with customers, and promoting outside-customer sales led by the Out-of-Store Sales Department established in December.
In the area of store networks, we opened our first Hokkaido store in January, introduced a small group operation system with multi-functional staff to IDC OTSUKA Minami-Funabashi, which was opened in September, and in October opened IDC OTSUKA Outlet&Reuse Osaka Nanko, which is a new format store specializing in outlet and reuse goods. In rural areas, we accelerated store openings through tie-ups that enable us to open stores quickly and with less cost burden, and from October we opened new sales bases in Hiroshima and Himeji, where previously we had no presence.
In addition, we fully rolled out furniture trade-in and purchase, and facilitated replacement by minimizing customers’ reluctance to dispose of their existing furniture. The purchase and trade-in campaign, which was launched as a way to enhance customer recognition of our reused furniture business and promote replacement, received an overwhelmingly positive reaction from the public, indicating high interest and potential demand for furniture trade-in and purchase.
In an effort to capture corporate demand from clients such as hotels and companies, we strengthened activities in the Corporate Division, including the expansion of sales activities from the Kanto region to other areas by establishing the Osaka Contract Sales Division.
Progress was made in increasing the number of customer visits to standalone stores in commercial locations while developing the customer service skills of our staff. In the second half, improvements were made through the effects of the purchase and trade-in campaign and new store openings. However, amid low new housing supply, a delay in rebuilding tie-up sales with housing companies resulted in the deterioration of sales in large stores that are highly dependent on new housing related demand. In addition, misunderstandings regarding our 2015 and onwards strategies, namely the shift toward a low price approach, has caused confusion about our positioning image, which resulted in the deterioration of business performance. Going forward, we will strive to turn around our business as swiftly as possible by clearing up consumer misunderstandings and restoring our image, while building a business model suited to changing consumer needs and intensifying competition.
Reviewing the fiscal year ended December 31, 2016
tie-ups with department stores and housing companies in rural areas with smaller populations. In addition, we will reorganize our flagship stores as an assortment of small specialized stores, reduce floor area in standard stores to selectively display popular items, and promote small group operations by increasing multi-functional staff.
Next, we will put the provision of professional proposals at the forefront and promote fee-based consulting services aside from product sales. We will provide tailor-made services to accommodate customers’ housing related needs by creating a framework for staff in charge of outside-customer sales to go beyond store boundaries to maintain timely and close communications with customers. Only a company such as ours with extensive knowledge in interiors and a large number of experienced staff can provide such services.
In addition, we will attract customers to physical stores by increasing our online presence with the enhancement of our website and by promoting an online to offline (O2O) strategy. Backed by ou r ex tens ive p roduc t l i nes and p r ice competitiveness, we will establish a competitive advantage in e-commerce to turn EC into our second mainstay operation along with physical stores. We will also facilitate the above mentioned professional services online.
Other areas of focus include the provision of new options in addition to purchases. We also began a full-scale trade-in and purchase of furniture and reused furniture business in 2016. Going forward, we will increase new options to deliver high-quality lifestyles to a larger number of people by adding rental and subscription services to accommodate customers’ needs for short-term use and seasonal rearrangement.
We aim to realize our management vision by increasing customer touch points through these initiatives to clear up consumer misunderstanding, restoring our positioning image, and rebuilding our business model.
We will increase our corporate value by discussing strategies to maintain appropriate capital, enhance shareholder returns, and improve profitability in a well-balanced manner. In a bid to strengthen governance, we shifted from a company with a board of auditors to a company with an audit and supervisory committee on March 24, 2017. Outside directors who are more independent continue to make up the majority of the board, with diversity as a priority.
Management vision — Be a company that proposes home lifestyle solutions —
Providing high-quality lifestyles suited to each individual has always been our mission. We continue handling a wide range of products to meet the diverse needs of consumers seeking high-quality lifestyles. In addition to abolishing our existing membership system and creating a more inviting atmosphere, we are working to enhance our professional services, including in-store services.
To complete this mission, we are working to provide options to enable customers to say “I want this” rather than “This will do” by maintaining quality standards for non-disposable, durable consumer goods. We take pride in providing all kinds of solutions to achieve high-quality lifestyles, not as merely product seller but as a service provider.
Consumer needs have changed in recent years. The importance of multi-store development focusing on specialty and small stores is increasing quickly due mainly to a shift from life stage-driven bulk purchases to lifestyle-driven single-purchase demand, a decline in the value of offering diverse product lines at brick and mortar stores with the widespread use of the Internet, and an increase in the number of competitors in accessible locations. In addition, as the generation that buys products based on online information reaches the age to make furniture purchases, our online presence has begun to directly affect the number of customers at brick and mortar stores. Consumer focus has shifted from products to services, and from the quantity to the quality of information. In line with these changes, we must adjust our store operations. There is an increasing demand for professional services, the value of which is expected to increase in the future.
In response to these changes in consumer needs, we will focus on the four pillars of (1) multi-store development focusing on specialty and small stores, (2) provision of professional solution proposals, (3) enhancement of relations between product and service channels, and (4) provision of new options in addition to purchases.
Our first step will be to promote multi-store development in more accessible areas to enable customers to visit stores on a dai ly basis. We wi l l operate standard stores, mainly directly-managed stores, and small specialized stores in urban areas with high populations, while operating stores in
President andRepresentative Director
Message from the President
Unwavering mission
Management vision
Capital policy/governance
Kumiko Otsuka
ANNUAL REPORT 2017 ● 0807 ● IDC OTSUKA
In the fiscal year ended December 31, 2016, we focused on establishing and disseminating our new business model, which was launched in 2015. Specific activities include reforms to our existing stores, including renovations aimed at capturing increasingly important replacement/single-purchase demand in addition to demand for new housing. A focus was also placed on building long-lasting relationships with customers by making the most of IDC Partners, establishing new stores, rebuilding tie-up sales with housing companies and others, and implementing various initiatives to strengthen our ability to capture reuse and corporate demand.
Part of our efforts to reform existing stores was to launch a new operation framework by renovating all stores in February with the aim of balancing an inviting atmosphere with excellent services. In addition, we facilitated activities to strengthen customer relations, such as using IDC Partners to focus on building lasting relationships with customers, and promoting outside-customer sales led by the Out-of-Store Sales Department established in December.
In the area of store networks, we opened our first Hokkaido store in January, introduced a small group operation system with multi-functional staff to IDC OTSUKA Minami-Funabashi, which was opened in September, and in October opened IDC OTSUKA Outlet&Reuse Osaka Nanko, which is a new format store specializing in outlet and reuse goods. In rural areas, we accelerated store openings through tie-ups that enable us to open stores quickly and with less cost burden, and from October we opened new sales bases in Hiroshima and Himeji, where previously we had no presence.
In addition, we fully rolled out furniture trade-in and purchase, and facilitated replacement by minimizing customers’ reluctance to dispose of their existing furniture. The purchase and trade-in campaign, which was launched as a way to enhance customer recognition of our reused furniture business and promote replacement, received an overwhelmingly positive reaction from the public, indicating high interest and potential demand for furniture trade-in and purchase.
In an effort to capture corporate demand from clients such as hotels and companies, we strengthened activities in the Corporate Division, including the expansion of sales activities from the Kanto region to other areas by establishing the Osaka Contract Sales Division.
Progress was made in increasing the number of customer visits to standalone stores in commercial locations while developing the customer service skills of our staff. In the second half, improvements were made through the effects of the purchase and trade-in campaign and new store openings. However, amid low new housing supply, a delay in rebuilding tie-up sales with housing companies resulted in the deterioration of sales in large stores that are highly dependent on new housing related demand. In addition, misunderstandings regarding our 2015 and onwards strategies, namely the shift toward a low price approach, has caused confusion about our positioning image, which resulted in the deterioration of business performance. Going forward, we will strive to turn around our business as swiftly as possible by clearing up consumer misunderstandings and restoring our image, while building a business model suited to changing consumer needs and intensifying competition.
Reviewing the fiscal year ended December 31, 2016
tie-ups with department stores and housing companies in rural areas with smaller populations. In addition, we will reorganize our flagship stores as an assortment of small specialized stores, reduce floor area in standard stores to selectively display popular items, and promote small group operations by increasing multi-functional staff.
Next, we will put the provision of professional proposals at the forefront and promote fee-based consulting services aside from product sales. We will provide tailor-made services to accommodate customers’ housing related needs by creating a framework for staff in charge of outside-customer sales to go beyond store boundaries to maintain timely and close communications with customers. Only a company such as ours with extensive knowledge in interiors and a large number of experienced staff can provide such services.
In addition, we will attract customers to physical stores by increasing our online presence with the enhancement of our website and by promoting an online to offline (O2O) strategy. Backed by ou r ex tens ive p roduc t l i nes and p r ice competitiveness, we will establish a competitive advantage in e-commerce to turn EC into our second mainstay operation along with physical stores. We will also facilitate the above mentioned professional services online.
Other areas of focus include the provision of new options in addition to purchases. We also began a full-scale trade-in and purchase of furniture and reused furniture business in 2016. Going forward, we will increase new options to deliver high-quality lifestyles to a larger number of people by adding rental and subscription services to accommodate customers’ needs for short-term use and seasonal rearrangement.
We aim to realize our management vision by increasing customer touch points through these initiatives to clear up consumer misunderstanding, restoring our positioning image, and rebuilding our business model.
We will increase our corporate value by discussing strategies to maintain appropriate capital, enhance shareholder returns, and improve profitability in a well-balanced manner. In a bid to strengthen governance, we shifted from a company with a board of auditors to a company with an audit and supervisory committee on March 24, 2017. Outside directors who are more independent continue to make up the majority of the board, with diversity as a priority.
Management vision — Be a company that proposes home lifestyle solutions —
Providing high-quality lifestyles suited to each individual has always been our mission. We continue handling a wide range of products to meet the diverse needs of consumers seeking high-quality lifestyles. In addition to abolishing our existing membership system and creating a more inviting atmosphere, we are working to enhance our professional services, including in-store services.
To complete this mission, we are working to provide options to enable customers to say “I want this” rather than “This will do” by maintaining quality standards for non-disposable, durable consumer goods. We take pride in providing all kinds of solutions to achieve high-quality lifestyles, not as merely product seller but as a service provider.
Consumer needs have changed in recent years. The importance of multi-store development focusing on specialty and small stores is increasing quickly due mainly to a shift from life stage-driven bulk purchases to lifestyle-driven single-purchase demand, a decline in the value of offering diverse product lines at brick and mortar stores with the widespread use of the Internet, and an increase in the number of competitors in accessible locations. In addition, as the generation that buys products based on online information reaches the age to make furniture purchases, our online presence has begun to directly affect the number of customers at brick and mortar stores. Consumer focus has shifted from products to services, and from the quantity to the quality of information. In line with these changes, we must adjust our store operations. There is an increasing demand for professional services, the value of which is expected to increase in the future.
In response to these changes in consumer needs, we will focus on the four pillars of (1) multi-store development focusing on specialty and small stores, (2) provision of professional solution proposals, (3) enhancement of relations between product and service channels, and (4) provision of new options in addition to purchases.
Our first step will be to promote multi-store development in more accessible areas to enable customers to visit stores on a dai ly basis. We wi l l operate standard stores, mainly directly-managed stores, and small specialized stores in urban areas with high populations, while operating stores in
President andRepresentative Director
Message from the President
Unwavering mission
Management vision
Capital policy/governance
Kumiko Otsuka
ANNUAL REPORT 2017 ● 0807 ● IDC OTSUKA
ANNUAL REPORT 2017 ● 1009 ● IDC OTSUKA
Product Development
We deal with furniture as high-quality durable consumer goods that meet ethical standards, while taking into account the impact of the production process on the environment, as well as durability and safety standards. We boast the widest product line in the furniture industry, as we select various kinds of furniture from around the world, ranging in terms of price range from popular products to those of the highest-class. In product development, we are working to optimize our product mix by closely examining and analyzing market trends, information obtained from business partners, sales data, etc. We focus on product development that takes into account customers’ existing furniture in terms of sizes and colors in order to meet replacement/single-purchase demand, which has been increasingly important in recent years.
Distribution of Business Partners
Overview of Otsuka Kagu
25.2
14.5
11.1
0.2
46.4
Trends in Sales by Country of Origin (%)
0
20
40
60
80
0
100
2012
23.9
16.6
10.8
0.12.52.3
45.9
2013
23.2
16.4
10.7
0.02.4
47.1
2014
23.7
17.8
10.0
0.02.2
46.2
2015
23.7
16.4
10.2
0.02.4
47.0
2016
Abundant products line-up
Number of Business Partners
Japan
USA
England
Italy
Iran
Indonesia
Australia
Austria
Netherlands
263
16
7
49
1
2
1
1
1
Canada
Singapore
Switzerland
Sweden
Spain
Thailand
Denmark
Germany
Turkey
1
1
2
1
3
2
18
20
1
Norway
Pakistan
Philippines
France
Vietnam
Belgium
Taiwan
China
2
1
1
4
3
2
2
12
(A total of 417 companies)
We have been honing our ability to get product prices exactly right ever since Otsuka Kagu was established in 1969. Making the most of that ability, we have built a unique global network consisting of around 450 factories, operated by partner companies in 26 countries worldwide. We procure and develop products under the best possible conditions, keeping a close eye on exchange rates and other changes in the operating environment as well as the technical and design capabilities of factories around the world. We collect vast amounts of product-related information via our network of factories, enabling us to stock a range of over 70,000 products. As we carefully select the most competitive products from all over the world, we are confident that our products offer customers the very best in cost performance.
We use our global network of factories, each of which has its own specialty, to develop original products. As well as assigning design categories, we also develop features and materials in line with our customers’ needs, in an effort to put together the perfect range of products to suit each customer’ s tastes and lifestyle needs.The fact that we are involved in every part of the process, from development to marketing and after-sales services, enables us to get feedback from our customers along the way and incorporate that into product development. This approach to product development makes it easier to showcase products in our showrooms and present ideas to our customers, enabling us to offer an attractive range of total interior solutions.
IDC Otsuka
Price comparison of products stocked by furniture retailers
SpecialtyStore A
SpecialtyStore B
SpecialtyStore C
SpecialtyStore D
Department Stores
USA
Europe
Asia
Oceania
Others
Japan
Products Development Department, Merchandising Division Masahiko MoriProduct Development Division
The Products Development Department, Merchandising Division, is driving product development, including VMD and sales promotion based on close examination and analysis of various types of market information. In development, we focus with manufacturers on creating products that meet consumer needs, while we act as a starting point, taking market trends and the competition landscape into account, given the diversification of consumers’ preferences and needs and changes to sales strategies and in-store frameworks resulting from such diversification. I am primarily engaged in purchases, including negotiations with business partners overseas and the establishment of cooperative frameworks, in addition to activities ranging from original product planning to procurement and product training for employees. As a buyer, I also visit furniture trade fairs overseas, such as Milano Salone. Every time I see our business partners exhibit their products there, I realize that our company sells attractive furniture favored by consumers globally, and find great potential for the furniture industry in those exhibitions, which have an active atmosphere and inspires imagination beyond the category of furniture. I would like more people to know the potential of furniture also in Japan. I will work to communicate the attractiveness of furniture through exhibitions or sales promotion activities that bring tangible images of what benefit furniture can deliver, and what lifestyles it can realize. Salone del Mobile. Milano
＊As of April.30, 2017
ANNUAL REPORT 2017 ● 1009 ● IDC OTSUKA
Product Development
We deal with furniture as high-quality durable consumer goods that meet ethical standards, while taking into account the impact of the production process on the environment, as well as durability and safety standards. We boast the widest product line in the furniture industry, as we select various kinds of furniture from around the world, ranging in terms of price range from popular products to those of the highest-class. In product development, we are working to optimize our product mix by closely examining and analyzing market trends, information obtained from business partners, sales data, etc. We focus on product development that takes into account customers’ existing furniture in terms of sizes and colors in order to meet replacement/single-purchase demand, which has been increasingly important in recent years.
Distribution of Business Partners
Overview of Otsuka Kagu
25.2
14.5
11.1
0.2
46.4
Trends in Sales by Country of Origin (%)
0
20
40
60
80
0
100
2012
23.9
16.6
10.8
0.12.52.3
45.9
2013
23.2
16.4
10.7
0.02.4
47.1
2014
23.7
17.8
10.0
0.02.2
46.2
2015
23.7
16.4
10.2
0.02.4
47.0
2016
Abundant products line-up
Number of Business Partners
Japan
USA
England
Italy
Iran
Indonesia
Australia
Austria
Netherlands
Canada
Singapore
Switzerland
Sweden
Spain
Thailand
Denmark
Germany
Turkey
Norway
Pakistan
Philippines
France
Vietnam
Belgium
Taiwan
China
(A total of 417 companies)
We have been honing our ability to get product prices exactly right ever since Otsuka Kagu was established in 1969. Making the most of that ability, we have built a unique global network consisting of around 450 factories, operated by partner companies in 26 countries worldwide. We procure and develop products under the best possible conditions, keeping a close eye on exchange rates and other changes in the operating environment as well as the technical and design capabilities of factories around the world. We collect vast amounts of product-related information via our network of factories, enabling us to stock a range of over 70,000 products. As we carefully select the most competitive products from all over the world, we are confident that our products offer customers the very best in cost performance.
We use our global network of factories, each of which has its own specialty, to develop original products. As well as assigning design categories, we also develop features and materials in line with our customers’ needs, in an effort to put together the perfect range of products to suit each customer’ s tastes and lifestyle needs.The fact that we are involved in every part of the process, from development to marketing and after-sales services, enables us to get feedback from our customers along the way and incorporate that into product development. This approach to product development makes it easier to showcase products in our showrooms and present ideas to our customers, enabling us to offer an attractive range of total interior solutions.
Finest-qualityProducts
IDC Otsuka
Price comparison of products stocked by furniture retailers
High-qualityProducts
Medium-qualityProducts
PopularProducts
SpecialtyStore A
SpecialtyStore B
SpecialtyStore C
SpecialtyStore D
Department Stores
USA
Europe
Asia
Oceania
Others
Japan
Products Development Department, Merchandising Division Masahiko MoriProduct Development Division
The Products Development Department, Merchandising Division, is driving product development, including VMD and sales promotion based on close examination and analysis of various types of market information. In development, we focus with manufacturers on creating products that meet consumer needs, while we act as a starting point, taking market trends and the competition landscape into account, given the diversification of consumers’ preferences and needs and changes to sales strategies and in-store frameworks resulting from such diversification. I am primarily engaged in purchases, including negotiations with business partners overseas and the establishment of cooperative frameworks, in addition to activities ranging from original product planning to procurement and product training for employees. As a buyer, I also visit furniture trade fairs overseas, such as Milano Salone. Every time I see our business partners exhibit their products there, I realize that our company sells attractive furniture favored by consumers globally, and find great potential for the furniture industry in those exhibitions, which have an active atmosphere and inspires imagination beyond the category of furniture. I would like more people to know the potential of furniture also in Japan. I will work to communicate the attractiveness of furniture through exhibitions or sales promotion activities that bring tangible images of what benefit furniture can deliver, and what lifestyles it can realize. Salone del Mobile. Milano
＊As of April.30, 2017
ANNUAL REPORT 2017 ● 1211 ● IDC OTSUKA
Overview of Otsuka Kagu
Reasonable prices
In the past, the distribution of furniture industry consisted of (1) factories manufacturing products, (2) manufacturers planning products and wholesalers being located in production areas, (3) wholesalers carrying product lines and inventory, and (4) retailers selling products. This multi-layered distribution system has the advantage of diversifying costs necessary to carry product l ines and inventory r isks. However, complex distribution routes have the disadvantage of increasing prices. Since our foundation in 1969, we have continued to develop our unique distribution system ahead of competitors. Direct trading with factories without involving a middleman, such as wholesalers and trading firms, has enabled us to cut middle
margins. In addition, bulk trading through planned purchase orders has increased factory productivity and reduced production costs. This has helped to significantly lower purchase costs, enabling us to set low sales prices while ensuring a high gross profit ratio. We are working to maintain inventories at an optimum level by centrally managing company-wide inventories and orders while making planned purchase orders based on the analysis of market trends. Since we have competitive products in our inventory, we can offer reasonable prices without shifting the risk of unsold products on to product prices by fully selling out products as planned by leveraging our unique sales know-how.
Human resources supporting excellent services
In line with the rebuilt business model, we are focusing on the development of human resources that can flexibly deal with each customer appropriately, and in a timely manner, in addition to the development of professionals who deliver high-quality consulting services we have worked on for a long time. Because the operation shift from dedicated advisors guiding customers from reception to in-store services according to the situation, the staff now needs flexible in-store service skills tailor-made for each customer, in addition to extensive specialist skills in interiors. We also promote out-of-store sales for faster and closer communication and provision of services more suitable to customer needs, and in December 2016 we newly established a department dedicated to out-of-store sales. Following this change, we revised education and training. While the staff improves highly specialized expertise and techniques through our proprietary education and training programs or internal qualification schemes, we have also increased opportunities for staff to attend external training in sales and in-store services to master new skills.The Head Office departments supporting sales forces engage in business while cooperating with each other and collaborating with stores. The Merchandising Division develops customer-oriented products by reflecting customer needs identified through daily customer service into the development of unique products by making the most of the respective factories’ strengths. The Sales Headquarters develops and manages sales strategies in a timely and
effective manner. The Distribution Headquarters oversees the service center, the base of logistics, along with the overall logistics business including shipping, inventory management, and delivery. The Contract Division, to which first-class architects and other various specialists belong, seeks to strengthen the BtoB business by sharing know-how with store staff in charge of corporate and out-of-store sales, and others, and vitalizing corporate and out-of-store sales activities in each region.In October 2015, we revised the Rules for Executive Officers with the aim of creating a structure to encourage employees to fully enhance their professional expertise and reach higher levels. We expanded the scope of Executive Officers to employees in expert positions engaging in specialized tasks at sales and other sites in addition to those in management positions who oversee divisions.In order to secure talented human resources, we have created a wide range of employment systems and benefit programs. These include re-hiring of employees under the same conditions if they satisfy certain requirements and offering shorter work hours in case employees retire due to changes in their career plans, life stage, and others. In addition, we introduced an employee stock ownership plan (ESOP) in November 2015. We will focus on increasing mid- to long-term corporate value by fostering employees’ sense of belonging and raising their awareness of the need to participate in management as well as increasing corporate performance and share prices.
Focusing on living style, I work on consulting sales together with about 70 staff members every day so that each staff member can appropriately and quickly select furniture best suited to the lifestyle our customers imagine. Because we would not be able to face the high aesthetic sense of customers without adequate knowledge and sense of beauty, I am also seeking mutual development with my staff by learning various lifestyles and sharing information with them to stimulate their appetite for knowledge. Since the quality and class of a store depends on the degree of its staff’s growth, I regard the growth of every single staff member and the teamwork as important issues. Another everyday issue is to develop tighter relationships between Otsuka Kagu and customers by creating human resources and stores that customers feel are familiar, trustworthy, reliable, and well-informed. We will not only deliver furniture but also promote communication ranging from interiors to lifestyle by planning various store events, and also focusing on extra elements in addition to furniture to color our customers’ lives.
The Purchasing Department, Merchandising Division, administers centrally the preparation of products ordered by customers at stores which are to be delivered from the delivery center. Our job is to prepare products in proper quantities by developing order plans based on past sales results data, orders placed, inventory, scheduled arrival of products, and others. While we carry out planned transactions of large order quantities, it is also important to improve the accuracy of actual demand prediction and immediately adjust gaps to maintain proper inventory. In this regard, we have cultivated experience, knowledge and networks over a long period of time, which provide an environment to facilitate responses to irregular events or negotiations with suppliers more smoothly. Because of our business model reform, we have increased more ordinary products that will be purchased more frequently, in addition to middle and high class ones, which have traditionally been our strength. I believe that it is important to establish a system resistant to change by fully taking advantage of our experience, know-how, and networks to flexibly respond to circumstances, while aggregating new experience and knowledge at the corporate level.
Merchandising Division, Deputy General Manager Toru KasaiPurchasing Division Kobe Showroom, General Manager Yuka MatsumotoStore Sales Division
＊As of April.30, 2017 ＊As of April.30, 2017
RetailerWholesalerManufacturer /Trading company
Factory
Domestic products /Imports
(1) (2) (3) (4)
Factory IDC Otsuka(Simultaneously acts as manufacturer, trading company, wholesaler and retailer)
IDC Otsuka’sfurniture
distribution systemConsumer
ANNUAL REPORT 2017 ● 1211 ● IDC OTSUKA
Overview of Otsuka Kagu
Reasonable prices
In the past, the distribution of furniture industry consisted of (1) factories manufacturing products, (2) manufacturers planning products and wholesalers being located in production areas, (3) wholesalers carrying product lines and inventory, and (4) retailers selling products. This multi-layered distribution system has the advantage of diversifying costs necessary to carry product l ines and inventory r isks. However, complex distribution routes have the disadvantage of increasing prices. Since our foundation in 1969, we have continued to develop our unique distribution system ahead of competitors. Direct trading with factories without involving a middleman, such as wholesalers and trading firms, has enabled us to cut middle
margins. In addition, bulk trading through planned purchase orders has increased factory productivity and reduced production costs. This has helped to significantly lower purchase costs, enabling us to set low sales prices while ensuring a high gross profit ratio. We are working to maintain inventories at an optimum level by centrally managing company-wide inventories and orders while making planned purchase orders based on the analysis of market trends. Since we have competitive products in our inventory, we can offer reasonable prices without shifting the risk of unsold products on to product prices by fully selling out products as planned by leveraging our unique sales know-how.
Human resources supporting excellent services
In line with the rebuilt business model, we are focusing on the development of human resources that can flexibly deal with each customer appropriately, and in a timely manner, in addition to the development of professionals who deliver high-quality consulting services we have worked on for a long time. Because the operation shift from dedicated advisors guiding customers from reception to in-store services according to the situation, the staff now needs flexible in-store service skills tailor-made for each customer, in addition to extensive specialist skills in interiors. We also promote out-of-store sales for faster and closer communication and provision of services more suitable to customer needs, and in December 2016 we newly established a department dedicated to out-of-store sales. Following this change, we revised education and training. While the staff improves highly specialized expertise and techniques through our proprietary education and training programs or internal qualification schemes, we have also increased opportunities for staff to attend external training in sales and in-store services to master new skills.The Head Office departments supporting sales forces engage in business while cooperating with each other and collaborating with stores. The Merchandising Division develops customer-oriented products by reflecting customer needs identified through daily customer service into the development of unique products by making the most of the respective factories’ strengths. The Sales Headquarters develops and manages sales strategies in a timely and
effective manner. The Distribution Headquarters oversees the service center, the base of logistics, along with the overall logistics business including shipping, inventory management, and delivery. The Contract Division, to which first-class architects and other various specialists belong, seeks to strengthen the BtoB business by sharing know-how with store staff in charge of corporate and out-of-store sales, and others, and vitalizing corporate and out-of-store sales activities in each region.In October 2015, we revised the Rules for Executive Officers with the aim of creating a structure to encourage employees to fully enhance their professional expertise and reach higher levels. We expanded the scope of Executive Officers to employees in expert positions engaging in specialized tasks at sales and other sites in addition to those in management positions who oversee divisions.In order to secure talented human resources, we have created a wide range of employment systems and benefit programs. These include re-hiring of employees under the same conditions if they satisfy certain requirements and offering shorter work hours in case employees retire due to changes in their career plans, life stage, and others. In addition, we introduced an employee stock ownership plan (ESOP) in November 2015. We will focus on increasing mid- to long-term corporate value by fostering employees’ sense of belonging and raising their awareness of the need to participate in management as well as increasing corporate performance and share prices.
Focusing on living style, I work on consulting sales together with about 70 staff members every day so that each staff member can appropriately and quickly select furniture best suited to the lifestyle our customers imagine. Because we would not be able to face the high aesthetic sense of customers without adequate knowledge and sense of beauty, I am also seeking mutual development with my staff by learning various lifestyles and sharing information with them to stimulate their appetite for knowledge. Since the quality and class of a store depends on the degree of its staff’s growth, I regard the growth of every single staff member and the teamwork as important issues. Another everyday issue is to develop tighter relationships between Otsuka Kagu and customers by creating human resources and stores that customers feel are familiar, trustworthy, reliable, and well-informed. We will not only deliver furniture but also promote communication ranging from interiors to lifestyle by planning various store events, and also focusing on extra elements in addition to furniture to color our customers’ lives.
The Purchasing Department, Merchandising Division, administers centrally the preparation of products ordered by customers at stores which are to be delivered from the delivery center. Our job is to prepare products in proper quantities by developing order plans based on past sales results data, orders placed, inventory, scheduled arrival of products, and others. While we carry out planned transactions of large order quantities, it is also important to improve the accuracy of actual demand prediction and immediately adjust gaps to maintain proper inventory. In this regard, we have cultivated experience, knowledge and networks over a long period of time, which provide an environment to facilitate responses to irregular events or negotiations with suppliers more smoothly. Because of our business model reform, we have increased more ordinary products that will be purchased more frequently, in addition to middle and high class ones, which have traditionally been our strength. I believe that it is important to establish a system resistant to change by fully taking advantage of our experience, know-how, and networks to flexibly respond to circumstances, while aggregating new experience and knowledge at the corporate level.
Merchandising Division, Deputy General Manager Toru KasaiPurchasing Division Kobe Showroom, General Manager Yuka MatsumotoStore Sales Division
＊As of April.30, 2017 ＊As of April.30, 2017
RetailerWholesalerManufacturer /Trading company
Factory
Domestic products /Imports
(1) (2) (3) (4)
Factory IDC Otsuka(Simultaneously acts as manufacturer, trading company, wholesaler and retailer)
IDC Otsuka’sfurniture
distribution systemConsumer
ANNUAL REPORT 2017 ● 1413 ● IDC OTSUKA
Overview of furniture market
Overview of domestic furniture market
The size of the furniture market in Japan has been on the decline after exceeding JPY 6 trillion in 1991, hovering around JPY 3 trillion in recent years. One of the main reasons is a decline in the number of new housing starts in Japan which is closely related to the furniture market.The concentration of players in the furniture market has been lower due to weak competition caused by the Large Scale Retail Store Law. However, in line with an increase in competition following deregulation and an economic slowdown, the number of furniture retailers has declined, gradually moving towards an oligopolistic market. In addition, the competitive environment has been changing due to the rise of furniture stores handling
low-priced products and wide spread use of online shopping.People tended to regard furniture and interior as equipment that filled an empty box — a house. However, since the 2000s, interiors have started to be regarded as an element that makes up a person’s lifestyle, as something to be bought little by little in order to create the desired lifestyle. Among food, clothing, and living environment, food and clothing are highly mature markets. However, living environment still has room for further growth. With increasing interest and concern about living in the home, the furniture market can be a major growth one if we can identify consumers’ potential needs and provide appropriate solutions to meet them.
Consumer needs have changed in recent years. We consider the following five changes to be particularly important.The first change is a shift from life stage-driven bulk purchases to lifestyle-driven single-purchase demand. Bulk purchase demand for new housing has decreased due to a decline in new housing, while the demand for small-volume, single purchases according changes in lifestyle is increasing. The second change is a decline in the relative advantage of offering diverse product lines at brick and mortar stores because the widespread use of the Internet has enabled product search on the web. The third change is an increase in the number of competitors in locations accessible to consumers. To respond to these changes, we will open many characteristic stores with optimized floor areas in more accessible locations, as well as
rebuild flagship stores as assortments.The fourth change is that the generation that buys products based on online information is reaching the age to make furniture purchases. We will flexibly meet every needs by increasing our presence at information portals on the Internet, and seamlessly linking places, the means to explore, and purchase interiors.The fifth change is a shift in customer focus from products to services, and from the quantity to the quality of information. In order to meet a variety of changing individual needs, we will enhance our value to consumers and differentiate ourselves by providing coordination and other professional consulting services.
Size of Furniture Market / Number of New Housing Starts / Trends in IDC Otsuka Kagu Sales
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
1,000,000
0
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Company name
580
100
161
320
3,075
80
1,499
2,299
780
4,581
61,742
Otsuka Kagu,Ltd.
CASSINA IXC. Ltd.
ACTUS
BALS CORPORATION
Ryohin Keikaku Co., Ltd.
Misawa & Co., Ltd.
Shimachu Co., Ltd.
NAFCO Corporation
IKEA Japan
Nitori Holdings Co., Ltd.
Japan department storefurniture sales
Sales in 2015 (100 million yen)
579
95
113
109
480
60
415
520
429
2,098
725
Furniture sales (100 million yen)
1.7%
0.3%
0.3%
0.3%
1.4%
0.2%
1.2%
1.5%
1.2%
6.0%
2.1%
Market share
99.9%
95.0%
70.0%
34.0%
15.6%
75.0%
27.7%
22.6%
55.0%
45.8%
1.2%
Furniture salesshare
Source: Size of domestic/import furniture markets: AIK CO., Ltd. Number of new housing starts: Survey on Construction Statistics by the Ministry of Land, Infrastructure, Transport and Tourism Trends in the number of leading furniture retailers/wholesalers/manufacturers (*sales exceeding JPY 300 million, pre-tax profit exceeding JPY 40 million): Furniture company directory by TOYO FURNITURE RESEARCH CO.,LTD Other companies’ sales, furniture sales share, and furniture sales: Estimated by Otsuka Kagu based on each company’s financial statements,Furniture company directory by TOYO FURNITURE RESEARCH CO.,LTD and Home Fashion Brand Market 2016 by Yano Research Institute Ltd.
Trends in Number of Leading Furniture Retailers / Wholesalers / Manufacturers
Sales and Market Share of Leading Furniture Stores
643
340
506
504
259
377
308
179
276
245
143
207
242
128
187
1,600
1,400
1,200
1,000
800
600
400
200
01996 2001 2006 2011 2016
Change in Consumer Needs
Import furniture (million yen: left axis)Domestic furniture (million yen: left axis)IDC Otsuka Kagu sales (10,000 yen: left axis)New housing starts (houses: right axis)
Retailing
Wholesale trade
Manufacturing industry
Shift from life stage-driven bulk purchases to lifestyle-driven single-purchase demand
Life stage-driven
Bulk purchasedemand
Lifestyle-driven
Wide trading areas
Marriage New housing Rebuilding
Medium and small trading areas
Large quantity, low frequency
Small quantity, high frequency
Past
“I want good, inexpensive products”
“I want to know the product specs”
Present
“I want easily acquired, good quality living”
“I want to know how my living can become more comfortable”
1
Declining value of product lines at stores due to the widespread use of the Internet
Increasing competitor stores
The generation buying products based on online information reaches the age to make furniture purchases
Consumer focus has shifted from products to services and from the quantity to the quality of information
→ Provision of professional solution proposals
→ Multi-store development focusing on specialty and small stores
→ Increasing our presence on the Internet
2
3
4
5
Past
Present
Single purchasedemand
ANNUAL REPORT 2017 ● 1413 ● IDC OTSUKA
Overview of furniture market
Overview of domestic furniture market
The size of the furniture market in Japan has been on the decline after exceeding JPY 6 trillion in 1991, hovering around JPY 3 trillion in recent years. One of the main reasons is a decline in the number of new housing starts in Japan which is closely related to the furniture market.The concentration of players in the furniture market has been lower due to weak competition caused by the Large Scale Retail Store Law. However, in line with an increase in competition following deregulation and an economic slowdown, the number of furniture retailers has declined, gradually moving towards an oligopolistic market. In addition, the competitive environment has been changing due to the rise of furniture stores handling
low-priced products and wide spread use of online shopping.People tended to regard furniture and interior as equipment that filled an empty box — a house. However, since the 2000s, interiors have started to be regarded as an element that makes up a person’s lifestyle, as something to be bought little by little in order to create the desired lifestyle. Among food, clothing, and living environment, food and clothing are highly mature markets. However, living environment still has room for further growth. With increasing interest and concern about living in the home, the furniture market can be a major growth one if we can identify consumers’ potential needs and provide appropriate solutions to meet them.
Consumer needs have changed in recent years. We consider the following five changes to be particularly important.The first change is a shift from life stage-driven bulk purchases to lifestyle-driven single-purchase demand. Bulk purchase demand for new housing has decreased due to a decline in new housing, while the demand for small-volume, single purchases according changes in lifestyle is increasing. The second change is a decline in the relative advantage of offering diverse product lines at brick and mortar stores because the widespread use of the Internet has enabled product search on the web. The third change is an increase in the number of competitors in locations accessible to consumers. To respond to these changes, we will open many characteristic stores with optimized floor areas in more accessible locations, as well as
rebuild flagship stores as assortments.The fourth change is that the generation that buys products based on online information is reaching the age to make furniture purchases. We will flexibly meet every needs by increasing our presence at information portals on the Internet, and seamlessly linking places, the means to explore, and purchase interiors.The fifth change is a shift in customer focus from products to services, and from the quantity to the quality of information. In order to meet a variety of changing individual needs, we will enhance our value to consumers and differentiate ourselves by providing coordination and other professional consulting services.
Size of Furniture Market / Number of New Housing Starts / Trends in IDC Otsuka Kagu Sales
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
1,000,000
0
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Company name
Otsuka Kagu,Ltd.
CASSINA IXC. Ltd.
ACTUS
BALS CORPORATION
Ryohin Keikaku Co., Ltd.
Misawa & Co., Ltd.
Shimachu Co., Ltd.
NAFCO Corporation
IKEA Japan
Nitori Holdings Co., Ltd.
Japan department storefurniture sales
Sales in 2015 (100 million yen)
Furniture sales (100 million yen) Market shareFurniture sales
share
Source: Size of domestic/import furniture markets: AIK CO., Ltd. Number of new housing starts: Survey on Construction Statistics by the Ministry of Land, Infrastructure, Transport and Tourism Trends in the number of leading furniture retailers/wholesalers/manufacturers (*sales exceeding JPY 300 million, pre-tax profit exceeding JPY 40 million): Furniture company directory by TOYO FURNITURE RESEARCH CO.,LTD Other companies’ sales, furniture sales share, and furniture sales: Estimated by Otsuka Kagu based on each company’s financial statements,Furniture company directory by TOYO FURNITURE RESEARCH CO.,LTD and Home Fashion Brand Market 2016 by Yano Research Institute Ltd.
Trends in Number of Leading Furniture Retailers / Wholesalers / Manufacturers
Sales and Market Share of Leading Furniture Stores
643
340
506
504
259
377
308
179
276
245
143
207
242
128
187
1,600
1,400
1,200
1,000
800
600
400
200
01996 2001 2006 2011 2016
Change in Consumer Needs
Import furniture (million yen: left axis)Domestic furniture (million yen: left axis)IDC Otsuka Kagu sales (10,000 yen: left axis)New housing starts (houses: right axis)
Retailing
Wholesale trade
Manufacturing industry
Shift from life stage-driven bulk purchases to lifestyle-driven single-purchase demand
Life stage-driven
Bulk purchasedemand
Lifestyle-driven
Wide trading areas
Marriage New housing Rebuilding
Medium and small trading areas
Large quantity, low frequency
Small quantity, high frequency
Past
“I want good, inexpensive products”
“I want to know the product specs”
Present
“I want easily acquired, good quality living”
“I want to know how my living can become more comfortable”
1
Declining value of product lines at stores due to the widespread use of the Internet
Increasing competitor stores
The generation buying products based on online information reaches the age to make furniture purchases
Consumer focus has shifted from products to services and from the quantity to the quality of information
→ Provision of professional solution proposals
→ Multi-store development focusing on specialty and small stores
→ Increasing our presence on the Internet
2
3
4
5
Past
Present
Single purchasedemand
Fourpillars
Multi-store developmentfocusing on specialty
and small stores
1
(see pages 17-18 for details)
Provision of professionalsolution proposals
2
(see page 19 for details)
Enhancement of relationsbetween product
and service channels
3
(see page 20 for details)
Provision of new optionsin addition to purchases
4
(see page 21 for details)
ANNUAL REPORT 2017 ● 1615 ● IDC OTSUKA
Rebuilding of business model
Results until 2016 and Future Effort
Radical revision of resource allocation
Buildingnext-generationstore networks
Professionalsolution proposals
Enhancement ofrelations between
product andservice channels
Realizing themanagement vision
Increasingcorporate value
Providingnew options
Capital Policy
Investment in wide floorareas for assortments
Internet & ECInvestment in information
and communication systemsMoney
StrengtheningBtoB business
Rebuilding ofbusiness model
Rebuilding ourpositioning image
Governance
Out-of-store salesProducts
Sales staff selling productsOut-of-store sales
Professionals delivering professional services
Products to sell + assets to provideuse value including subscriptions
People
Before March 2015, we had adopted a membership system in which the basic style was that customers sign their names at reception and the staff provides in-store services. This model, which was once suitable to the time of bulk purchases for new housing, resulted in consumer reluctance due to changes in their needs. In addition, a prejudiced image that “Otsuka products seem too expensive” prevailed due to advertising that featured the high-class products out of all the ones in a wide price range we deal with.To solve this issue, under the new management established in March 2015, we abolished the membership system and revised store operations from a closed model to an open one. We also revised our approach to advertising to create an accurate consumer perception that our stores deal with a wide variety of
products in an extensive price range. As a result, we have successfully introduced an open model for store operations to a certain degree, and expanded the perception of stores with a more inviting atmosphere where consumers can choose products freely thanks to advertising that also features different classes of products. On the other hand, some consumers misunderstood and thought we shifted to a low price approach or that we gave up on in-store services.Backed by these circumstances, we announced our management vision in March 2017. Putting priority on the restoration of our positioning image by clearing the consumer misunderstanding, and the reform of our business model, we will work on initiatives centered on the following four pillars.
In rebuilding our business model, we will also revise resource allocation.First, we redefine human resources as professionals who deliver professional services instead of sales staff who simply sell products. This will expand opportunities for our professionals possessing deep interior-related knowledge and experience, and enable us to make the most of our human resources.Second, we will recognize products not only as goods to sell but also as assets for rental or subscription. By developing new
options in addition to sales, we can utilize our inventory as valuable assets.Finally, the focus of our fund usage will shift from wide floor areas to the Internet and EC. As the digitization of information has enabled the viewing different colors or sizes on a tablet terminal and reduced the quantity of products required for store-front display, the required area may be reduced. We will appropriate expenses that had been used to maintain wide sales floors to the Internet and EC, which have become more important.
Activities to realize our management visionand increase corporate value
Fourpillars
Multi-store developmentfocusing on specialty
and small stores
1
(see pages 17-18 for details)
Provision of professionalsolution proposals
2
(see page 19 for details)
Enhancement of relationsbetween product
and service channels
3
(see page 20 for details)
Provision of new optionsin addition to purchases
4
(see page 21 for details)
ANNUAL REPORT 2017 ● 1615 ● IDC OTSUKA
Rebuilding of business model
Results until 2016 and Future Effort
Radical revision of resource allocation
Buildingnext-generationstore networks
Professionalsolution proposals
Enhancement ofrelations between
product andservice channels
Realizing themanagement vision
Increasingcorporate value
Providingnew options
Capital Policy
Investment in wide floorareas for assortments
Internet & ECInvestment in information
and communication systemsMoney
StrengtheningBtoB business
Rebuilding ofbusiness model
Rebuilding ourpositioning image
Governance
Out-of-store salesProducts
Sales staff selling productsOut-of-store sales
Professionals delivering professional services
Products to sell + assets to provideuse value including subscriptions
People
Before March 2015, we had adopted a membership system in which the basic style was that customers sign their names at reception and the staff provides in-store services. This model, which was once suitable to the time of bulk purchases for new housing, resulted in consumer reluctance due to changes in their needs. In addition, a prejudiced image that “Otsuka products seem too expensive” prevailed due to advertising that featured the high-class products out of all the ones in a wide price range we deal with.To solve this issue, under the new management established in March 2015, we abolished the membership system and revised store operations from a closed model to an open one. We also revised our approach to advertising to create an accurate consumer perception that our stores deal with a wide variety of
products in an extensive price range. As a result, we have successfully introduced an open model for store operations to a certain degree, and expanded the perception of stores with a more inviting atmosphere where consumers can choose products freely thanks to advertising that also features different classes of products. On the other hand, some consumers misunderstood and thought we shifted to a low price approach or that we gave up on in-store services.Backed by these circumstances, we announced our management vision in March 2017. Putting priority on the restoration of our positioning image by clearing the consumer misunderstanding, and the reform of our business model, we will work on initiatives centered on the following four pillars.
In rebuilding our business model, we will also revise resource allocation.First, we redefine human resources as professionals who deliver professional services instead of sales staff who simply sell products. This will expand opportunities for our professionals possessing deep interior-related knowledge and experience, and enable us to make the most of our human resources.Second, we will recognize products not only as goods to sell but also as assets for rental or subscription. By developing new
options in addition to sales, we can utilize our inventory as valuable assets.Finally, the focus of our fund usage will shift from wide floor areas to the Internet and EC. As the digitization of information has enabled the viewing different colors or sizes on a tablet terminal and reduced the quantity of products required for store-front display, the required area may be reduced. We will appropriate expenses that had been used to maintain wide sales floors to the Internet and EC, which have become more important.
Activities to realize our management visionand increase corporate value
ANNUAL REPORT 2017 ● 1817 ● IDC OTSUKA
Rebuilding of business model
Flagship stores
Showroom Network As of April 30, 2017SR =Showroom
TokaiNagoya Sakae SR [11,178㎡]
Nagoya Hoshizaki SR [4,670㎡]
LIFE STYLE SHOP Nagoya-Ekimae [304㎡]
KansaiOsaka Nanko SR [16,750㎡]
Outlet&Reuse Osaka Nanko[5,492㎡]
Kobe SR [8,566㎡]
Modern Style Shop Yodoyabashi [475㎡]
KyushuFukuoka SR [9,628㎡]
KantoAriake Head Office SR [23,285㎡]
Outlet&Reuse PREMIUM Ariake [1,388㎡]
Yokohama Minatomirai SR [19,500㎡]
Shinjuku SR [12,297㎡]
Outlet&Reuse Shinjuku [1,305㎡]
Kasukabe SR [10,772㎡]
Ginza Main Store [7,007㎡]
Minami Funabashi Store [4,599㎡]
Tachikawa SR [4,421㎡]
Outlet&Reuse Yokohama [4,189㎡]
Tokorozawa SR [1,537㎡]
LIFE STYLE SHOP Kashiwanoha T-SITE [184㎡]
DEJIMASTOCK(Hiroshima)
Poltrona FrauLIFE STYLE SHOPKashiwanoha T-SITE
LightariumGood Sleep Factory
Ariake/Osaka Nanko
Minami FunabashiStore
TohokuSendai SR [11,291㎡]
HokkaidoIDC OTSUKA Sapporo Factory [520㎡]
Large stores, which sell a large number of varied furniture, may still attract demand from interior professionals. While opening small specialized stores to make the character of each store more visible, we will restructure two flagship stores, Ariake Head Office Showroom and Osaka Nanko Showroom, into flagship stores whose character is visible to consumers as assortments of those highly specialized small stores.
Small stores (urban specialized stores)
In the metropolitan area and other large urban areas, we will develop highly specialized small stores specializing in specific items or themes, including sofas, sleeping and lighting, or specific brands. We will create stores with visible character by clearly featuring our various aspects, and work on expanding consumer recognition of Otsuka Kagu’s character, or what Otsuka Kagu stores look like, by increasing touch points with consumers.
Small stores (rural tie-up stores)
Specialized stores
General stores
Giantstores
Smallstores
In areas where we open a store for the first time, it is important to cooperate with locally rooted businesses. We will develop sales bases through tie-ups, particularly in areas with smaller populations. In 2016, we opened new sales bases to fully supply our products and services in Hiroshima and Himeji. We aim to open several more stores in 2017, and 30 stores by the end of 2019.
Standard stores
Standard stores are engaged in all-around product sales. Whereas they had required an area of about 10,000 ㎡ in the past, this was reduced to 3,000 to 7,000 ㎡, leading to more opportunities to open additional stores because the digitization of information has enabled the viewing different colors or sizes on a tablet terminal, resulting in fewer products required at store-fronts.
Yamatoyashiki Himeji Store
Complete the image of the next-generation store network
● Floor area temporarily reduced during the scrap & build process
Flagship stores
Medium & large stores
Small stores
2
11
4
Number of storesBeginning of 2016
Flagship stores (directly managed)
Standard stores (directly managed)
Specialized stores in urban areas (directly managed)
Rural tie-up stores (tied-up)
2
15～20
5～20
30
Number of stores
Smallstores
End of 2019
Development of specialized small stores and restructuring of flagship storesBuilding Next-generation Store Networks
Partly due to a decline in the number of new housing, consumer needs and purchase behavior have changed such that life stage-driven bulk purchases have shifted to lifestyle-driven, single-purchase demand, and the generation buying products based on online information has reached the age to make furniture purchases. To catch up with such changes, we are promoting the establishment of next-generation store networks.We will operate standard stores, mainly directly-managed stores,
and small specialized stores in urban areas with high populations, while operating stores in tie-ups with department stores and housing companies in rural areas with smaller populations. We will shift store development from a small number of existing stores, 20 or fewer large stores, to stores with a character that is visible to consumers at more accessible locations, while optimizing floor areas. We will restructure flagship stores as an assortment of those visible highly specialized stores.
By making each store more familiar to consumers through the development of small specialized stores mainly in urban areas, and restructuring flagship stores as assortments, we aim at stores withe character that is more visible to consumers, even if they are
large ones. We will also promote the enhancement of standard stores for all-around product sales and the development of rural tie-up stores.
Scrap & Build
Rural tie-up storesStandard stores (all-around product sales)
Flagship stores (assortment of specialized stores)
Sleeping stores
Sofa stores Brand-specific
Lighting stores
ANNUAL REPORT 2017 ● 1817 ● IDC OTSUKA
Rebuilding of business model
Flagship stores
Showroom Network As of April 30, 2017SR =Showroom
TokaiNagoya Sakae SR [11,178㎡]
Nagoya Hoshizaki SR [4,670㎡]
LIFE STYLE SHOP Nagoya-Ekimae [304㎡]
KansaiOsaka Nanko SR [16,750㎡]
Outlet&Reuse Osaka Nanko[5,492㎡]
Kobe SR [8,566㎡]
Modern Style Shop Yodoyabashi [475㎡]
KyushuFukuoka SR [9,628㎡]
KantoAriake Head Office SR [23,285㎡]
Outlet&Reuse PREMIUM Ariake [1,388㎡]
Yokohama Minatomirai SR [19,500㎡]
Shinjuku SR [12,297㎡]
Outlet&Reuse Shinjuku [1,305㎡]
Kasukabe SR [10,772㎡]
Ginza Main Store [7,007㎡]
Minami Funabashi Store [4,599㎡]
Tachikawa SR [4,421㎡]
Outlet&Reuse Yokohama [4,189㎡]
Tokorozawa SR [1,537㎡]
LIFE STYLE SHOP Kashiwanoha T-SITE [184㎡]
DEJIMASTOCK(Hiroshima)
Poltrona FrauLIFE STYLE SHOPKashiwanoha T-SITE
LightariumGood Sleep Factory
Ariake/Osaka Nanko
Minami FunabashiStore
TohokuSendai SR [11,291㎡]
HokkaidoIDC OTSUKA Sapporo Factory [520㎡]
Large stores, which sell a large number of varied furniture, may still attract demand from interior professionals. While opening small specialized stores to make the character of each store more visible, we will restructure two flagship stores, Ariake Head Office Showroom and Osaka Nanko Showroom, into flagship stores whose character is visible to consumers as assortments of those highly specialized small stores.
Small stores (urban specialized stores)
In the metropolitan area and other large urban areas, we will develop highly specialized small stores specializing in specific items or themes, including sofas, sleeping and lighting, or specific brands. We will create stores with visible character by clearly featuring our various aspects, and work on expanding consumer recognition of Otsuka Kagu’s character, or what Otsuka Kagu stores look like, by increasing touch points with consumers.
Small stores (rural tie-up stores)
Specialized stores
General stores
Giantstores
Smallstores
In areas where we open a store for the first time, it is important to cooperate with locally rooted businesses. We will develop sales bases through tie-ups, particularly in areas with smaller populations. In 2016, we opened new sales bases to fully supply our products and services in Hiroshima and Himeji. We aim to open several more stores in 2017, and 30 stores by the end of 2019.
Standard stores
Standard stores are engaged in all-around product sales. Whereas they had required an area of about 10,000 ㎡ in the past, this was reduced to 3,000 to 7,000 ㎡, leading to more opportunities to open additional stores because the digitization of information has enabled the viewing different colors or sizes on a tablet terminal, resulting in fewer products required at store-fronts.
Yamatoyashiki Himeji Store
Complete the image of the next-generation store network
● Floor area temporarily reduced during the scrap & build process
Flagship stores
Medium & large stores
Small stores
2
11
4
Number of storesBeginning of 2016
Flagship stores (directly managed)
Standard stores (directly managed)
Specialized stores in urban areas (directly managed)
Rural tie-up stores (tied-up)
2
15～20
5～20
30
Number of stores
Smallstores
End of 2019
Development of specialized small stores and restructuring of flagship storesBuilding Next-generation Store Networks
Partly due to a decline in the number of new housing, consumer needs and purchase behavior have changed such that life stage-driven bulk purchases have shifted to lifestyle-driven, single-purchase demand, and the generation buying products based on online information has reached the age to make furniture purchases. To catch up with such changes, we are promoting the establishment of next-generation store networks.We will operate standard stores, mainly directly-managed stores,
and small specialized stores in urban areas with high populations, while operating stores in tie-ups with department stores and housing companies in rural areas with smaller populations. We will shift store development from a small number of existing stores, 20 or fewer large stores, to stores with a character that is visible to consumers at more accessible locations, while optimizing floor areas. We will restructure flagship stores as an assortment of those visible highly specialized stores.
By making each store more familiar to consumers through the development of small specialized stores mainly in urban areas, and restructuring flagship stores as assortments, we aim at stores withe character that is more visible to consumers, even if they are
large ones. We will also promote the enhancement of standard stores for all-around product sales and the development of rural tie-up stores.
Scrap & Build
Rural tie-up storesStandard stores (all-around product sales)
Flagship stores (assortment of specialized stores)
Sleeping stores
Sofa stores Brand-specific
Lighting stores
Professional Solution Proposals Enhancement of Relations between Product and Service Channels
Out-of-Store Sales Division
Image of the connection between the internet, store fronts, and out-of-store sales
Example of an online shop’s product page
Interior-related qualification holdersExample of coordination by professionals
Coordinator Aya Umemura Joined in 2002
○ Interior Stylist○ Interior Coordinator○ Sleep Advisor
A wide range of experience from personal residences
to model room design.
A personal residence in Osaka City
As of January, 2017
Qualification
Interior Coordinator
Interior Planner
First-Class Architect
Second-Class Architect
Lighting Consultant
Senior Lighting Consultant
Lighting Coordinator
Color Coordinator, 1 Grade
Color Coordinator, 2 Grade
The Certificate Test in Color Coordination, The First Grade
Seiri-Shuno Advisor, Level 1
Seiri-Shuno Advisor, Level 2
Kitchen Specialist
IDC Interior Stylist
Sleep Advisor
Hida Kagu Meister
Ergonomic Advisor
Swarovski® Crystal Advisor
Housing Environment Coordinator for Elderly and Disabled People, 2 Grade
Window Treatment Planner
The Second Class Building Works Execution Manager
License for Type 2 Electric Works Specialist
Furniture Manufacturing Technician, Grade 2
Certified Skilled Professional on Furnituremaking - Grade 2
114
1
2
16
64
5
3
2
45
4
11
334
2
120
816
136
56
24
27
19
2
13
5
3
Holders
Interior proposal/consultation services
WEB
Homes Stores
Face-to-face
We have many experienced interior professionals holding interior-related qualifications. While customer interest has shifted from furniture as products to living as services, we will offer coordination and other services not only at store-fronts
but also at home or on websites by putting such professional services at the forefront as a differentiation factor. In the future, we plan to provide fee-based consulting services aside from product sales.
It has been increasingly popular to purchase furniture based on online information, and an online presence is now necessary to attract customers to brick and mortal stores. By seamlessly linking stores and homes, or websites and people,
we will respond to any request customers may have when they view product information on a website, such as “I want to see actual products,” “I want to try fitting,” “I want it now,” “I want to consult someone” and “Please come to take sizes.”
Backed by our product lines consisting of 73,000 types of products and our price competitiveness, we will establish a competitive advantage in e-commerce to turn EC into our
second mainstay operation along with physical stores. We integrated our product information pages and EC sites in 2016, and will continue improving usability.
In proposing high-quality lifestyles, it is important to listen to customers carefully while observing their living space. In December 2016, we organized the Out-of-Store Sales Department mainly consisting of experts who have excellent expertise, product knowledge, and proposal ability related to interiors to
further enhance our customer services and expand our customer base. We will work on creating long-lasting relationships with customers by addressing detailed needs and problems of customers related to their residence through quick and close communication with them beyond the framework of a store.
Rebuilding of business model
Obtaining detailed product information on the web
Simulation with a 3D/AR app
Purchase via EC
Visits to take sizes In-store purchases
In-store fittings
Various interior experiences via visiting, watching, and touching
ANNUAL REPORT 2017 ● 2019 ● IDC OTSUKA
As of April 30, 2017
Visits to fit curtains, carpets, etc.
Professional Solution Proposals Enhancement of Relations between Product and Service Channels
Out-of-Store Sales Division
Image of the connection between the internet, store fronts, and out-of-store sales
Example of an online shop’s product page
Interior-related qualification holdersExample of coordination by professionals
Coordinator Aya Umemura Joined in 2002
○ Interior Stylist○ Interior Coordinator○ Sleep Advisor
A wide range of experience from personal residences
to model room design.
A personal residence in Osaka City
As of January, 2017
Qualification
Interior Coordinator
Interior Planner
First-Class Architect
Second-Class Architect
Lighting Consultant
Senior Lighting Consultant
Lighting Coordinator
Color Coordinator, 1 Grade
Color Coordinator, 2 Grade
The Certificate Test in Color Coordination, The First Grade
Seiri-Shuno Advisor, Level 1
Seiri-Shuno Advisor, Level 2
Kitchen Specialist
IDC Interior Stylist
Sleep Advisor
Hida Kagu Meister
Ergonomic Advisor
Swarovski® Crystal Advisor
Housing Environment Coordinator for Elderly and Disabled People, 2 Grade
Window Treatment Planner
The Second Class Building Works Execution Manager
License for Type 2 Electric Works Specialist
Furniture Manufacturing Technician, Grade 2
Certified Skilled Professional on Furnituremaking - Grade 2
114
1
2
16
64
5
3
2
45
4
11
334
2
120
816
136
56
24
27
19
2
13
5
3
Holders
Interior proposal/consultation services
WEB
Homes Stores
Face-to-face
We have many experienced interior professionals holding interior-related qualifications. While customer interest has shifted from furniture as products to living as services, we will offer coordination and other services not only at store-fronts
but also at home or on websites by putting such professional services at the forefront as a differentiation factor. In the future, we plan to provide fee-based consulting services aside from product sales.
It has been increasingly popular to purchase furniture based on online information, and an online presence is now necessary to attract customers to brick and mortal stores. By seamlessly linking stores and homes, or websites and people,
we will respond to any request customers may have when they view product information on a website, such as “I want to see actual products,” “I want to try fitting,” “I want it now,” “I want to consult someone” and “Please come to take sizes.”
Backed by our product lines consisting of 73,000 types of products and our price competitiveness, we will establish a competitive advantage in e-commerce to turn EC into our
second mainstay operation along with physical stores. We integrated our product information pages and EC sites in 2016, and will continue improving usability.
In proposing high-quality lifestyles, it is important to listen to customers carefully while observing their living space. In December 2016, we organized the Out-of-Store Sales Department mainly consisting of experts who have excellent expertise, product knowledge, and proposal ability related to interiors to
further enhance our customer services and expand our customer base. We will work on creating long-lasting relationships with customers by addressing detailed needs and problems of customers related to their residence through quick and close communication with them beyond the framework of a store.
Rebuilding of business model
Obtaining detailed product information on the web
Simulation with a 3D/AR app
Purchase via EC
Visits to take sizes In-store purchases
In-store fittings
Various interior experiences via visiting, watching, and touching
ANNUAL REPORT 2017 ● 2019 ● IDC OTSUKA
As of April 30, 2017
Visits to fit curtains, carpets, etc.
ANNUAL REPORT 2017 ● 2221 ● IDC OTSUKA
Otsuka Kagu reuse services
By combining reuse, rental, and other various options in addition to purchasing of new products, customers can achieve high-quality lifestyles at low costs, and at any life stage.
Imagine, for example, that you are living in a rental house alone. You now live alone, but may plan marriage in the near future, and have a desire to live with your favorites surrounding you. However, you may not be able to use the same furniture in the life with your family after marriage. What should you do?
You can achieve your ideal lifestyle by combining purchases of reused products, rentals, and purchases of new products.
New Options
Rebuilding of business model
AKITA MOKKO Co., Ltd.Founded in 1910 in Yuzawa, Akita Prefecture, Akita Mageki Seisakusho has honed bent wood technologies invented in Germany and continued to manufacture light and durable bent wood furniture for over a century. In September 2006, we established a wholly owned subsidiary, AKITA MOKKO Co., Ltd., for the purpose of facilitating the development and manufacturing of light, movable, safe, and durable furniture in view of the aging society. By protecting skilled furniture craftspeople and passing their skills down to future generations, AKITA MOKKO has enabled the development and manufacturing of products with delicate shapes that are only possible with human hands while balancing functionality and practicality that reflect customer needs. Products that have been manufactured by combining traditional techniques of AKITA MOKKO with Japan’s leading designers have been well-received and selected for The Good Design Award.
RE-INTERIA, LTD.In October 2015, we established a wholly owned subsidiary, RE-INTERIA, LTD., for the main purpose of assessing, repairing, restoring, managing, and wholesaling furniture that has been traded-in or purchased from customers. RE-INTERIA pays close attention to environmental issues by focusing on the trade-in and purchase of furniture from customers and facilitating effective use of resources through waste reduction. RE-INTERIA has introduced a framework that enables customers to casually select an interior that suits changes in their lifestyle by reducing their reluctance to dispose of existing furniture due to replacement. In addition, we believe that products that are restored with solid maintenance skills will be able to satisfy customer needs for low costs while maintaining the quality of interiors.
Featured Article～ Using Good Products Longer～
I belong to the woodwork department at IDC Work Shop. After learning furniture production at a vocational training school, I joined Otsuka Kagu in 2016. I am still a novice among veteran craftsmen at IDC Work Shop. Under time and cost restraints, I putting highest priority on finishing precision to meet customers’ expectations. Every time I see flaws in the furniture we accept, a worn arm or stickers put on by children, I feel refreshed as if I witnessed the history that the customer has carved with the furniture, while at the same time I feel tense as a craftsman in repairing important furniture. Given that there are cheap and easy options to buy furniture, I am very grateful to customers who choose to repair and continue using furniture they love by spending extra money. I strongly desire that the reuse mechanism prevail in society as soon as possible. I will work hard so that customers recall Otsuka Kagu as a familiar company to which they can trust their repairs with confidence as they continue to use their furniture rather than dispose of it.
IDC Work Shop
Etsuko Kimura
2
1
3
Effect of providing multiple new options
② Purchase of reused productsA designer’s chair. Brand-new one is not affordable. Reused one is available for a reasonable price.
① RentalA vintage dining table, which suits the designer’s chair. In order to use high-quality furniture for a limited time in your single life, you can use rental services and save on costs.
③ Purchase of new productsA sofa, which can be exhausted easily.You purchase a small sofa suitable to a house for a single life at a reasonable price. Costs saved by a reused or rental dining set can be set aside to purchase new products.
We have offered trade-in services to minimize customer reluctance to dispose of their existing furniture and facilitate replacement. In addition, recovered furniture leads to the provision of new product categories including antiques, vintages and reuse, resulting in the creation of a new market
that realizes a high-quality lifestyle that is low cost. The creation of the secondary furniture market also enables rental and subscription services, and we believe that we can capture demand for short-term use by business bachelors, trials of various styles, seasonal rearrangement of rooms, etc.
IDC Work Shop, which consists of woodwork, painting and re-covering departments, performs repair, processing and maintenance of furniture on request by customers. Highly skilled craftsmen at each department work on their jobs by utilizing their skills and cooperating with each other. In the reuse business, which was fully rolled out in 2016, we accept high-value furniture, repair and process them at
IDC Work Shop, and sell them as our products, even if they require difficult repair work. We sell reused products that meet durability and safety standards. Repair and processing skills are indispensable in disseminating the value of using good products for a long time. We will work to further enhance our skills so that customers can use valuable furniture with confidence.
We are promoting the reuse business so that customers can enjoy interiors easily according to changes in their living environment or lifestyles. We support the creation of interiors suited to customers’ current lifestyles by encouraging them to trade in their furniture to minimize their reluctance to dispose of existing furniture after replacement. In addition, we will contribute to preservation of the global environment by recycling furniture, instead of disposing of it, to avoid wasting valuable natural resources.
Different from traditional recycled furniture, we only deal with and sell reasonably priced reused products that have cleared the same quality standards as new products, including durability and safety, after skilled craftsmen restore and add value to high-quality furniture. Toward the realization of a true recycling society where good items continue being used, we will endeavor to establish a trustworthy reused furniture market, which has not yet been established in Japan.
Subsidiary
Introduction ofIDC Work Shop
ANNUAL REPORT 2017 ● 2221 ● IDC OTSUKA
Otsuka Kagu reuse services
By combining reuse, rental, and other various options in addition to purchasing of new products, customers can achieve high-quality lifestyles at low costs, and at any life stage.
Imagine, for example, that you are living in a rental house alone. You now live alone, but may plan marriage in the near future, and have a desire to live with your favorites surrounding you. However, you may not be able to use the same furniture in the life with your family after marriage. What should you do?
You can achieve your ideal lifestyle by combining purchases of reused products, rentals, and purchases of new products.
New Options
Rebuilding of business model
AKITA MOKKO Co., Ltd.Founded in 1910 in Yuzawa, Akita Prefecture, Akita Mageki Seisakusho has honed bent wood technologies invented in Germany and continued to manufacture light and durable bent wood furniture for over a century. In September 2006, we established a wholly owned subsidiary, AKITA MOKKO Co., Ltd., for the purpose of facilitating the development and manufacturing of light, movable, safe, and durable furniture in view of the aging society. By protecting skilled furniture craftspeople and passing their skills down to future generations, AKITA MOKKO has enabled the development and manufacturing of products with delicate shapes that are only possible with human hands while balancing functionality and practicality that reflect customer needs. Products that have been manufactured by combining traditional techniques of AKITA MOKKO with Japan’s leading designers have been well-received and selected for The Good Design Award.
RE-INTERIA, LTD.In October 2015, we established a wholly owned subsidiary, RE-INTERIA, LTD., for the main purpose of assessing, repairing, restoring, managing, and wholesaling furniture that has been traded-in or purchased from customers. RE-INTERIA pays close attention to environmental issues by focusing on the trade-in and purchase of furniture from customers and facilitating effective use of resources through waste reduction. RE-INTERIA has introduced a framework that enables customers to casually select an interior that suits changes in their lifestyle by reducing their reluctance to dispose of existing furniture due to replacement. In addition, we believe that products that are restored with solid maintenance skills will be able to satisfy customer needs for low costs while maintaining the quality of interiors.
Featured Article～ Using Good Products Longer～
I belong to the woodwork department at IDC Work Shop. After learning furniture production at a vocational training school, I joined Otsuka Kagu in 2016. I am still a novice among veteran craftsmen at IDC Work Shop. Under time and cost restraints, I putting highest priority on finishing precision to meet customers’ expectations. Every time I see flaws in the furniture we accept, a worn arm or stickers put on by children, I feel refreshed as if I witnessed the history that the customer has carved with the furniture, while at the same time I feel tense as a craftsman in repairing important furniture. Given that there are cheap and easy options to buy furniture, I am very grateful to customers who choose to repair and continue using furniture they love by spending extra money. I strongly desire that the reuse mechanism prevail in society as soon as possible. I will work hard so that customers recall Otsuka Kagu as a familiar company to which they can trust their repairs with confidence as they continue to use their furniture rather than dispose of it.
IDC Work Shop
Etsuko Kimura
2
1
3
Effect of providing multiple new options
② Purchase of reused productsA designer’s chair. Brand-new one is not affordable. Reused one is available for a reasonable price.
① RentalA vintage dining table, which suits the designer’s chair. In order to use high-quality furniture for a limited time in your single life, you can use rental services and save on costs.
③ Purchase of new productsA sofa, which can be exhausted easily.You purchase a small sofa suitable to a house for a single life at a reasonable price. Costs saved by a reused or rental dining set can be set aside to purchase new products.
We have offered trade-in services to minimize customer reluctance to dispose of their existing furniture and facilitate replacement. In addition, recovered furniture leads to the provision of new product categories including antiques, vintages and reuse, resulting in the creation of a new market
that realizes a high-quality lifestyle that is low cost. The creation of the secondary furniture market also enables rental and subscription services, and we believe that we can capture demand for short-term use by business bachelors, trials of various styles, seasonal rearrangement of rooms, etc.
IDC Work Shop, which consists of woodwork, painting and re-covering departments, performs repair, processing and maintenance of furniture on request by customers. Highly skilled craftsmen at each department work on their jobs by utilizing their skills and cooperating with each other. In the reuse business, which was fully rolled out in 2016, we accept high-value furniture, repair and process them at
IDC Work Shop, and sell them as our products, even if they require difficult repair work. We sell reused products that meet durability and safety standards. Repair and processing skills are indispensable in disseminating the value of using good products for a long time. We will work to further enhance our skills so that customers can use valuable furniture with confidence.
We are promoting the reuse business so that customers can enjoy interiors easily according to changes in their living environment or lifestyles. We support the creation of interiors suited to customers’ current lifestyles by encouraging them to trade in their furniture to minimize their reluctance to dispose of existing furniture after replacement. In addition, we will contribute to preservation of the global environment by recycling furniture, instead of disposing of it, to avoid wasting valuable natural resources.
Different from traditional recycled furniture, we only deal with and sell reasonably priced reused products that have cleared the same quality standards as new products, including durability and safety, after skilled craftsmen restore and add value to high-quality furniture. Toward the realization of a true recycling society where good items continue being used, we will endeavor to establish a trustworthy reused furniture market, which has not yet been established in Japan.
Subsidiary
Introduction ofIDC Work Shop
ANNUAL REPORT 2017 ● 2423 ● IDC OTSUKA
Rebuilding of business model
The Prince Gallery Tokyo Kioicho (hotel)
Sun City Mitatomirai EAST (senior housing)
ADENIUM Itabashi Ukima-koen(prototype room)
Nagoya Kanko Hotel (hotel)
THE HIRAMATSU HOTELS & RESORTS Atami (hotel)
ROYAL PARK HOTEL THE SHIODOME, TOKYO (hotel)
−Examples−
In the Contract Division, we deal with the interiors of various types of spaces, including hotels, health and welfare facilities, reception or executive rooms at companies, commercial facilities, and model rooms for detached houses or apartments. We are consistently engaged in every phase from planning to design, construction, production of custom furniture and coordination of ornaments, while also achieving high cost efficiency with ready-made or semi-custom-made products by taking advantage of the extensive product lines in the retail section. In addition to projects ordered by our existing business partners, we are also recently focusing on taking orders through our own solicitation, including the Out-of-Store Division at stores. The sales and design groups cooperate closely with each other to do their jobs.We opened a new contract base at Osaka in 2016, and will continue establishing a base to meet corporate demand in cooperation with the Out-of-Store Division at stores. As it is expected that demand for housing for the elderly will further increase in the aging society of Japan, as well as repair and new construction demand for hotels backed by increasing foreign tourism to Japan, we seek to ensure capturing market share in those areas.
Senior Manager, Contract Division Takanori Ogawa Contract Division
Strengthening BtoB business
We have engaged in BtoB businesses such as furniture and interior for hotels, welfare and healthcare facilities, and companies’ executive/drawing rooms. As Japan accelerates its efforts as a tourism-oriented country to attract tourists from
around the world, demand for these areas is expected to increase in the future. We will respond to market needs by strengthening the corporate unit having various professionals including first-class registered architects.
Hotels
Contractsales department
Storesales personnel
Nursinghomes
Offices
● Growth expected moving toward the 2020 Tokyo Olympics
● Needs for specially ordered furniture
Target IDC Otsuka's sales personnelOverview
● Growth expected to be backed by the aging of society
● Needs for furniture in accordance with the growing number of new construction
● A market noc developed by rival companies
● Needs for furniture for board member offices and conference rooms
ANNUAL REPORT 2017 ● 2423 ● IDC OTSUKA
Rebuilding of business model
The Prince Gallery Tokyo Kioicho (hotel)
Sun City Mitatomirai EAST (senior housing)
ADENIUM Itabashi Ukima-koen(prototype room)
Nagoya Kanko Hotel (hotel)
THE HIRAMATSU HOTELS & RESORTS Atami (hotel)
ROYAL PARK HOTEL THE SHIODOME, TOKYO (hotel)
−Examples−
In the Contract Division, we deal with the interiors of various types of spaces, including hotels, health and welfare facilities, reception or executive rooms at companies, commercial facilities, and model rooms for detached houses or apartments. We are consistently engaged in every phase from planning to design, construction, production of custom furniture and coordination of ornaments, while also achieving high cost efficiency with ready-made or semi-custom-made products by taking advantage of the extensive product lines in the retail section. In addition to projects ordered by our existing business partners, we are also recently focusing on taking orders through our own solicitation, including the Out-of-Store Division at stores. The sales and design groups cooperate closely with each other to do their jobs.We opened a new contract base at Osaka in 2016, and will continue establishing a base to meet corporate demand in cooperation with the Out-of-Store Division at stores. As it is expected that demand for housing for the elderly will further increase in the aging society of Japan, as well as repair and new construction demand for hotels backed by increasing foreign tourism to Japan, we seek to ensure capturing market share in those areas.
Senior Manager, Contract Division Takanori Ogawa Contract Division
Strengthening BtoB business
We have engaged in BtoB businesses such as furniture and interior for hotels, welfare and healthcare facilities, and companies’ executive/drawing rooms. As Japan accelerates its efforts as a tourism-oriented country to attract tourists from
around the world, demand for these areas is expected to increase in the future. We will respond to market needs by strengthening the corporate unit having various professionals including first-class registered architects.
Hotels
Contractsales department
Storesales personnel
Nursinghomes
Offices
● Growth expected moving toward the 2020 Tokyo Olympics
● Needs for specially ordered furniture
Target IDC Otsuka's sales personnelOverview
● Growth expected to be backed by the aging of society
● Needs for furniture in accordance with the growing number of new construction
● A market noc developed by rival companies
● Needs for furniture for board member offices and conference rooms
General Meeting of Shareholders
Appointment / Removal
Selection / Dismissal / OversightReport
Auditing / Oversight
Inquiry
Auditing
Internal Audit
Oversight
Auditing
Advice
Cooperation
Cooperation
Cooperation
Appointment / Removal
Appointment /Removal
Excecutive Officer
Business Execution Section
Advisory Committee
RepresentativeDirectors
Compliance&Risk ManagementCommittee(CR Committee)
Within the CompanyWhistleblowing Administrator
AccountingAuditor
CorporateLawyer
ANNUAL REPORT 2017 ● 2625 ● IDC OTSUKA
Capital policyShareholder returns
Corporate governance
Commitment to strengthening corporate governanceWe have announced full support for the principles of the Corporate Governance Code.As we are in transition, we seek to establish an organization with transparent, fair, fast, and decisive decision-making based on the Corporate Governance Code, keeping in mind the issues of rebuilding our business model and developing next-generation managers, while focusing on the functional enhancement of the Board of Directors, such as filling half of the board with independent outside directors.
Efforts to strengthen corporate governanceOur Board of Directors, half the members of which are independent outside directors, consists of experienced members with various backgrounds. We are supervising corporate management and working to improve corporate value through active discussion in meetings of the Board of Directors and other meeting bodies. To further strengthen the supervisory function of the Board of Directors and increase management’ s decision-making speed, we shifted from a company with a board of auditors to a company with an audit and supervisory committee in March 2017. For transparent and fair auditing, we appointed three audit and supervisory committee members with expertise from outside to strengthen the audit function. We will continue striving to build an effective corporate governance system.
Corporate governance policy
We will increase our corporate value by discussing strategies to maintain appropriate capital, enhance shareholder returns, and improve profitability in a well-balanced manner.
Capital policy
We provide shareholder returns generally in the form of stable and continuous dividends, taking our cash position and other fiscal aspects into account to ensure continuity.In the past two years, when our business model was in transition, we had difficulty rewarding shareholders by profit. Therefore, we focused on DOE (dividend on equity ratio) as an indicator for shareholder returns, and increased the dividend per share from 40 yen to 80 yen.In the fiscal year ended December 2017, we plan a dividend per share of 40 yen, based on the principle of stable and continuous shareholder returns and taking cash position and other fiscal aspects into account. We will keep a balance between dividends and investment in opening new stores, keeping the payout ratio in mind, based on the expected profit level.
Policy of shareholder returns
Corporate governance structure of Otsuka Kagu
Timely Disclosure Council(Special Committee on CR)
Nomination andCompensation Committee
Kumiko Otsuka Haruo Sano
Hitoshi Sugitani
Keiji Miyamoto
Satoshi Akutsu(outside director)
Governance Structure
Male
Strategy Management Marketing andbranding
Analysis of retailindustry trends
and environmentCompliance andrisk management
Finance andcapital markets
Skill set
Female
SatoshiAkutsu
Mr. Satoshi Akutsu has extensive knowledge as an expert in brand management research. ＊1
MichikoNagasawa
Ms. Michiko Nagasawa has knowledge and experience related to corporate legal affairs acquired through many years as a lawyer. ＊2
MiyakoNishiyama
Ms. Miyako Nishiyama is a Certified Public Accountant with deep knowledge in internal controls and corporate accounting. ＊3
MasahiroMitomi
Mr. Masahiro Mitomi is a Certified Public Accountant with expertise in corporate value creation, engaged in management of a management consulting firm.
KumikoOtsuka
Ms. Kumiko Otsuka is working to establish an agile and practical management organization, exercising leadership toward medium and long-term improvement of corporate value.
KeijiMiyamoto
Mr. Keiji Miyamoto is responsible for our new businesses and new store strategies with deep knowledge in management practices and marketing.
HaruoSano
Mr. Haruo Sano has deep experience in operations, including the administration of our sales division and the planning of sales activities.
HitoshiSugitani
Mr. Hitoshi Sugitani is responsible for the planning and administration of management strategies and fiscal strategies, with a broad perspective and knowledge in capital market and legal affairs.
＊All outside board directors and outside statutory auditors are designated as independent executives.＊1: The Company’s outside board director since 2010 ＊2: The Company’s outside board director since 2013 ＊3: The Company’s outside statutory auditor since 2013. The Company’s outside board director since 2017.
Directorswho are not
members of theAudit and
SupervisoryCommittee
2015 March
2016 March
outside directors / outside statutory auditors
Ratio of outside directors: 60.0% Ratio of outside statutory auditors: 100%
2014 March
Ratio of outside directors: 28.6% Ratio of outside statutory auditors: 100%
Statutory auditors
2017 March
Ratio of outside directors: 50.0%
Directors
Audit and supervisorycommittee members
Board of Directors
Masahiro Mitomi(outside director)
Michiko Nagasawa(outside director)
Miyako Nishiyama(outside director)
Directorswho are
members of theAudit and
SupervisoryCommittee
Audit and Supervisory Committee
● Company with a Board of Auditors
● Company with an Audit and Supervisory Committee
General Meeting of Shareholders
Appointment / Removal
Selection / Dismissal / OversightReport
Auditing / Oversight
Inquiry
Auditing
Internal Audit
Oversight
Auditing
Advice
Cooperation
Cooperation
Cooperation
Appointment / Removal
Appointment /Removal
Excecutive Officer
Business Execution Section
Advisory Committee
RepresentativeDirectors
Compliance&Risk ManagementCommittee(CR Committee)
Within the CompanyWhistleblowing Administrator
AccountingAuditor
CorporateLawyer
ANNUAL REPORT 2017 ● 2625 ● IDC OTSUKA
Capital policyShareholder returns
Corporate governance
Commitment to strengthening corporate governanceWe have announced full support for the principles of the Corporate Governance Code.As we are in transition, we seek to establish an organization with transparent, fair, fast, and decisive decision-making based on the Corporate Governance Code, keeping in mind the issues of rebuilding our business model and developing next-generation managers, while focusing on the functional enhancement of the Board of Directors, such as filling half of the board with independent outside directors.
Efforts to strengthen corporate governanceOur Board of Directors, half the members of which are independent outside directors, consists of experienced members with various backgrounds. We are supervising corporate management and working to improve corporate value through active discussion in meetings of the Board of Directors and other meeting bodies. To further strengthen the supervisory function of the Board of Directors and increase management’ s decision-making speed, we shifted from a company with a board of auditors to a company with an audit and supervisory committee in March 2017. For transparent and fair auditing, we appointed three audit and supervisory committee members with expertise from outside to strengthen the audit function. We will continue striving to build an effective corporate governance system.
Corporate governance policy
We will increase our corporate value by discussing strategies to maintain appropriate capital, enhance shareholder returns, and improve profitability in a well-balanced manner.
Capital policy
We provide shareholder returns generally in the form of stable and continuous dividends, taking our cash position and other fiscal aspects into account to ensure continuity.In the past two years, when our business model was in transition, we had difficulty rewarding shareholders by profit. Therefore, we focused on DOE (dividend on equity ratio) as an indicator for shareholder returns, and increased the dividend per share from 40 yen to 80 yen.In the fiscal year ended December 2017, we plan a dividend per share of 40 yen, based on the principle of stable and continuous shareholder returns and taking cash position and other fiscal aspects into account. We will keep a balance between dividends and investment in opening new stores, keeping the payout ratio in mind, based on the expected profit level.
Policy of shareholder returns
Corporate governance structure of Otsuka Kagu
Timely Disclosure Council(Special Committee on CR)
Nomination andCompensation Committee
Kumiko Otsuka Haruo Sano
Hitoshi Sugitani
Keiji Miyamoto
Satoshi Akutsu(outside director)
Governance Structure
Male
Strategy Management Marketing andbranding
Analysis of retailindustry trends
and environmentCompliance andrisk management
Finance andcapital markets
Skill set
Female
SatoshiAkutsu
Mr. Satoshi Akutsu has extensive knowledge as an expert in brand management research. ＊1
MichikoNagasawa
Ms. Michiko Nagasawa has knowledge and experience related to corporate legal affairs acquired through many years as a lawyer. ＊2
MiyakoNishiyama
Ms. Miyako Nishiyama is a Certified Public Accountant with deep knowledge in internal controls and corporate accounting. ＊3
MasahiroMitomi
Mr. Masahiro Mitomi is a Certified Public Accountant with expertise in corporate value creation, engaged in management of a management consulting firm.
KumikoOtsuka
Ms. Kumiko Otsuka is working to establish an agile and practical management organization, exercising leadership toward medium and long-term improvement of corporate value.
KeijiMiyamoto
Mr. Keiji Miyamoto is responsible for our new businesses and new store strategies with deep knowledge in management practices and marketing.
HaruoSano
Mr. Haruo Sano has deep experience in operations, including the administration of our sales division and the planning of sales activities.
HitoshiSugitani
Mr. Hitoshi Sugitani is responsible for the planning and administration of management strategies and fiscal strategies, with a broad perspective and knowledge in capital market and legal affairs.
＊All outside board directors and outside statutory auditors are designated as independent executives.＊1: The Company’s outside board director since 2010 ＊2: The Company’s outside board director since 2013 ＊3: The Company’s outside statutory auditor since 2013. The Company’s outside board director since 2017.
Directorswho are not
members of theAudit and
SupervisoryCommittee
2015 March
2016 March
outside directors / outside statutory auditors
Ratio of outside directors: 60.0% Ratio of outside statutory auditors: 100%
2014 March
Ratio of outside directors: 28.6% Ratio of outside statutory auditors: 100%
Statutory auditors
2017 March
Ratio of outside directors: 50.0%
Directors
Audit and supervisorycommittee members
Board of Directors
Masahiro Mitomi(outside director)
Michiko Nagasawa(outside director)
Miyako Nishiyama(outside director)
Directorswho are
members of theAudit and
SupervisoryCommittee
Audit and Supervisory Committee
● Company with a Board of Auditors
● Company with an Audit and Supervisory Committee
Corporate governance
Otsuka Kagu Corporate GovernanceSugitani (host) : Please tell us your impressions or ideas about the corporate governance system and its operation at Otsuka Kagu.
Akutsu : I have been a director of this company for seven years. Discussion in Board of Directors meetings is very active in recent years from a chronological point of view. Since we should overcome many difficult issues, I believe that it is important to further deepen discussion to help resolve problems.
Mitomi : I was first appointed a company director at the shareholders’ meeting in 2017. Though my career as a director has just begun, I feel that our Board of Directors has an atmosphere that encourages free and active discussion among specialists in various areas.
Nagasawa : I have been a director of this company for four years. Since we restarted as a new Otsuka Kagu in March 2015, professionals in a variety of fields have actively discussed issues and worked to restructure our business model, utilizing their respective strengths. A new and more effective organization has been started by shifting from a company with a board of auditors to a company with an audit and supervisory committee on March 24, 2017.
Nishiyama : Whereas I have been an auditor for four years, I will be involved in the management of this company through my supervision and advice, in addition to auditing as an audit and supervisory committee member and outside director. I believe that the shift to a company with an audit and supervisory committee may achieve faster decision-making in the Board of Directors, strengthen its supervisory function, and further enhance corporate governance.
Sugitani (host) : What do you think about the composition of our Board of Directors?
Nagasawa : Because the Board of Directors was streamlined, we can expect faster decision-making, which is essential. On the other hand, the Board still has a well-balanced skill set and can provide advice to executives on multiple aspects by utilizing the knowledge of professionals in various fields. I think this is a good organization that takes diversity into account.
Sugitani (host) : When we developed our management vision, the then outside directors, including Director Akutsu, provided their expertise and advice in various ways.
Akutsu : Absolutely, we had in-depth discussions on various things, particularly during the development of our management vision. This was also a good opportunity to exchange opinions with potential executives. I expect that this will help gradually develop people who can think and act independently, and will lead to the next generation.
Interview with Outside Directors
Four outside directors with different backgrounds discuss the corporate governance system of Otsuka Kagu and what initiatives to take to achieve the management vision and improve our medium and long-term corporate value.
Satoshi AkutsuBoard Director (outside)
Michiko NagasawaBoard Director, Audit and
Supervisory Committee member (outside)
Miyako NishiyamaBoard Director, Audit and
Supervisory Committee member (outside)
Masahiro MitomiBoard Director, Audit and
Supervisory Committee member (outside)
Hitoshi SugitaniBoard Director and Managing
Executive Officer andGeneral Manager,
Finance Division (host)
Sugitani (host) : How do you want to utilize this new organization to implement initiatives toward the achievement of the management vision?
Nishiyama : In order to survive severe competition, it is necessary to streamline and accelerate the decision-making process by setting up meeting bodies that can make decisions appropriately in a timely manner, delegate authority to them, and developing human resources that can assume management positions. Through this streamlined new organization with balanced skills, I’ m going to more quickly implement processes to resolve discussions in a meeting body incorporating diverse opinions and lead them to specific actions.
Mitomi : Enhancement of corporate value is the most important among the many roles the Board of Directors must play. I believe that directors should provide tangible support for the company to recover its performance soon and improve its medium and long-term corporate value by utilizing their respective expertise and presenting issues people inside the company may have difficulty identifying
Toward higher corporate valueSugitani (host) : What roles do you think you are expected to play toward the achievement of the management vision and medium and long-term growth? Please tell us your opinions based on your career.
Akutsu : As a business scholar, I have aimed to actively share my opinions and knowledge from outside when considering brand strategies, marketing activities and the organizations to implement them. As a result of the confusion caused by proxy fights, there was a misunderstanding that the company had shifted to a low price approach, or given up in-store services, resulting in our current positioning image being unclear. I think that it is most important to work on the four pillars of the management vision announced on March 10, 2017, restore our positioning image by increasing touch points through various initiatives, and rebuild our business model. While we are required to change in this situation, I am going to firmly support the company from outside so that we can stick to the core, which we need to seek consistently.
Nagasawa : I believe we are one of few companies that can help improve the quality of Japanese people’ s lifestyles and meet the needs of individuals who want to actually feel a higher quality in daily life. Under the current severe environment surrounding us, including our performance, we are on the way to achieving the management vision and rebuilding our business model. Therefore, we are required to make decisions more quickly. As a lawyer, I am always trying to actively provide opinions from the perspective of compliance and risk management, based on the knowledge and experience I have cultivated. In the future, as an outside director I will also work on close monitoring to avoid various risks caused by excessive speedup requirements and help improve our corporate value.
Nishiyama : As the company as a whole strives to achieve its management vision under the initiative of young leaders who will embody the next generation, I would like to contribute to improving the value of Otsuka Kagu by continuing close monitoring of our management system, compliance system and internal control system in this transition period based on my knowledge that I have cultivated through experience in consulting services for internal control as an accountant.
Mitomi : While we fortunately do not suffer from interest-bearing debts, we have no leeway to settle in this situation. We need to shift from the declining phase to the reversal phase as soon as possible. First of all, we should identify what is going well and what is not in the company. Companies that have experienced a long trend of growth are often not so interested in the improvement of corporate value while actively seeking sales. Today, however, we need to work on improving corporate value, especially under the initiative of the leaders, with our problems in mind. A company of this size always has profitable business areas. While repeatedly identifying them and taking specific action, the businesses will converge onto areas where the company has opportunity and strength. I would like to support action in business practices by utilizing my expertise in the creation of corporate value and corporate management.
Sugitani (host) : We will continue relying on your opinions and advice to promote the improvement of our corporate value on the executive side. Thank you very much for your time today.
ANNUAL REPORT 2017 ● 2827 ● IDC OTSUKA
Corporate governance
Otsuka Kagu Corporate GovernanceSugitani (host) : Please tell us your impressions or ideas about the corporate governance system and its operation at Otsuka Kagu.
Akutsu : I have been a director of this company for seven years. Discussion in Board of Directors meetings is very active in recent years from a chronological point of view. Since we should overcome many difficult issues, I believe that it is important to further deepen discussion to help resolve problems.
Mitomi : I was first appointed a company director at the shareholders’ meeting in 2017. Though my career as a director has just begun, I feel that our Board of Directors has an atmosphere that encourages free and active discussion among specialists in various areas.
Nagasawa : I have been a director of this company for four years. Since we restarted as a new Otsuka Kagu in March 2015, professionals in a variety of fields have actively discussed issues and worked to restructure our business model, utilizing their respective strengths. A new and more effective organization has been started by shifting from a company with a board of auditors to a company with an audit and supervisory committee on March 24, 2017.
Nishiyama : Whereas I have been an auditor for four years, I will be involved in the management of this company through my supervision and advice, in addition to auditing as an audit and supervisory committee member and outside director. I believe that the shift to a company with an audit and supervisory committee may achieve faster decision-making in the Board of Directors, strengthen its supervisory function, and further enhance corporate governance.
Sugitani (host) : What do you think about the composition of our Board of Directors?
Nagasawa : Because the Board of Directors was streamlined, we can expect faster decision-making, which is essential. On the other hand, the Board still has a well-balanced skill set and can provide advice to executives on multiple aspects by utilizing the knowledge of professionals in various fields. I think this is a good organization that takes diversity into account.
Sugitani (host) : When we developed our management vision, the then outside directors, including Director Akutsu, provided their expertise and advice in various ways.
Akutsu : Absolutely, we had in-depth discussions on various things, particularly during the development of our management vision. This was also a good opportunity to exchange opinions with potential executives. I expect that this will help gradually develop people who can think and act independently, and will lead to the next generation.
Interview with Outside Directors
Four outside directors with different backgrounds discuss the corporate governance system of Otsuka Kagu and what initiatives to take to achieve the management vision and improve our medium and long-term corporate value.
Satoshi AkutsuBoard Director (outside)
Michiko NagasawaBoard Director, Audit and
Supervisory Committee member (outside)
Miyako NishiyamaBoard Director, Audit and
Supervisory Committee member (outside)
Masahiro MitomiBoard Director, Audit and
Supervisory Committee member (outside)
Hitoshi SugitaniBoard Director and Managing
Executive Officer andGeneral Manager,
Finance Division (host)
Sugitani (host) : How do you want to utilize this new organization to implement initiatives toward the achievement of the management vision?
Nishiyama : In order to survive severe competition, it is necessary to streamline and accelerate the decision-making process by setting up meeting bodies that can make decisions appropriately in a timely manner, delegate authority to them, and developing human resources that can assume management positions. Through this streamlined new organization with balanced skills, I’ m going to more quickly implement processes to resolve discussions in a meeting body incorporating diverse opinions and lead them to specific actions.
Mitomi : Enhancement of corporate value is the most important among the many roles the Board of Directors must play. I believe that directors should provide tangible support for the company to recover its performance soon and improve its medium and long-term corporate value by utilizing their respective expertise and presenting issues people inside the company may have difficulty identifying
Toward higher corporate valueSugitani (host) : What roles do you think you are expected to play toward the achievement of the management vision and medium and long-term growth? Please tell us your opinions based on your career.
Akutsu : As a business scholar, I have aimed to actively share my opinions and knowledge from outside when considering brand strategies, marketing activities and the organizations to implement them. As a result of the confusion caused by proxy fights, there was a misunderstanding that the company had shifted to a low price approach, or given up in-store services, resulting in our current positioning image being unclear. I think that it is most important to work on the four pillars of the management vision announced on March 10, 2017, restore our positioning image by increasing touch points through various initiatives, and rebuild our business model. While we are required to change in this situation, I am going to firmly support the company from outside so that we can stick to the core, which we need to seek consistently.
Nagasawa : I believe we are one of few companies that can help improve the quality of Japanese people’ s lifestyles and meet the needs of individuals who want to actually feel a higher quality in daily life. Under the current severe environment surrounding us, including our performance, we are on the way to achieving the management vision and rebuilding our business model. Therefore, we are required to make decisions more quickly. As a lawyer, I am always trying to actively provide opinions from the perspective of compliance and risk management, based on the knowledge and experience I have cultivated. In the future, as an outside director I will also work on close monitoring to avoid various risks caused by excessive speedup requirements and help improve our corporate value.
Nishiyama : As the company as a whole strives to achieve its management vision under the initiative of young leaders who will embody the next generation, I would like to contribute to improving the value of Otsuka Kagu by continuing close monitoring of our management system, compliance system and internal control system in this transition period based on my knowledge that I have cultivated through experience in consulting services for internal control as an accountant.
Mitomi : While we fortunately do not suffer from interest-bearing debts, we have no leeway to settle in this situation. We need to shift from the declining phase to the reversal phase as soon as possible. First of all, we should identify what is going well and what is not in the company. Companies that have experienced a long trend of growth are often not so interested in the improvement of corporate value while actively seeking sales. Today, however, we need to work on improving corporate value, especially under the initiative of the leaders, with our problems in mind. A company of this size always has profitable business areas. While repeatedly identifying them and taking specific action, the businesses will converge onto areas where the company has opportunity and strength. I would like to support action in business practices by utilizing my expertise in the creation of corporate value and corporate management.
Sugitani (host) : We will continue relying on your opinions and advice to promote the improvement of our corporate value on the executive side. Thank you very much for your time today.
ANNUAL REPORT 2017 ● 2827 ● IDC OTSUKA
23,629
10,050［42.5］
9,849［41.6］
1,025［4.3］
1,143［4.8］
3,021［12.8］
3,117［13.2］
1,541［6.5］
200［0.9］
363［1.5］
108［0.5］
15,224
9,082
24,307
8,977
915
14,414
59.3
0.8
0.5
10,800
10.08
15.00
576
45,232
16
134
170
100
17.1
1994
20,720
8,360［40.4］
8,971［43.3］
1,018［4.9］
976［4.7］
2,931［14.1］
2,657［12.8］
1,387［6.7］
(610)［(2.9)］
128［0.6］
2［0.0］
13,545
9,046
22,592
5,928
2,196
14,467
64.0
0.0
0.0
10,800
0.21
15.00
573
44,488
18
201
180
20
6.4
1993
ANNUAL REPORT 2017 ● 3029 ● IDC OTSUKA
Trends in business performance
39,219
18,722［47.7］
14,496［36.9］
1,625［4.1］
2,344［6.0］
4,113［10.5］
3,880［9.9］
2,531［6.5］
4,226［10.8］
4,012［10.2］
1,338［3.4］
19,506
9,121
28,628
11,257
1,329
16,041
56.0
8.7
5.0
10,800
123.90
15.00
772
62,127
12
2,094
192
1,350
38.2
28,062
12,970［46.2］
11,619［41.4］
1,188［4.2］
1,887［6.7］
3,403［12.1］
3,284［11.7］
1,856［6.6］
1,350［4.8］
1,320［4.7］
631［2.2］
16,216
8,605
24,821
8,946
992
14,883
60.0
4.3
2.6
10,800
58.45
15.00
638
51,986
16
204
166
619
27.9
44,367
22,001［49.6］
17,948［40.5］
1,902［4.3］
3,052［6.9］
4,694［10.6］
4,945［11.1］
3,353［7.6］
4,053［9.1］
5,304［12.0］
2,382［5.4］
20,638
12,361
33,000
14,063
713
18,223
55.2
13.9
7.7
10,800
220.64
15.00
901
95,177
12
1,587
271
2,453
47.2
49,241
25,045［50.9］
21,333［43.3］
2,182［4.4］
4,023［8.2］
5,081［10.3］
6,112［12.4］
3,933［8.0］
3,712［7.5］
3,577［7.3］
1,992［4.0］
21,310
12,722
34,033
13,285
737
20,010
58.8
10.4
5.9
10,800
184.47
15.00
1,060
108,546
12
651
400
2,187
48.2
57,994
30,456［52.5］
24,078［41.5］
2,632［4.5］
3,718［6.4］
6,133［10.6］
7,590［13.1］
4,003［6.9］
6,378［11.0］
6,595［11.4］
3,255［5.6］
23,002
14,566
37,569
13,715
792
23,060
61.4
15.1
9.1
10,800
301.42
15.00
1,276
155,606
13
390
433
3,484
46.8
65,989
35,729［54.1］
28,297［42.9］
2,943［4.5］
4,288［6.5］
7,061［10.7］
9,506［14.4］
4,497［6.8］
7,432［11.3］
7,557［11.5］
4,071［6.2］
24,079
15,527
39,606
11,952
450
27,203
68.7
16.2
10.6
21,600
276.51
15.00
1,454
176,918
13
436
456
4,311
44.4
71,214
38,480［54.0］
30,961［43.5］
2,769［3.9］
3,694［5.2］
8,211［11.5］
11,307［15.9］
4,977［7.0］
7,518［10.6］
7,646［10.7］
3,869［5.4］
26,303
15,648
41,951
10,655
547
30,748
73.3
13.4
9.5
21,600
179.15
15.00
1,592
195,759
14
396
508
3,994
45.7
68,813
37,572［54.6］
31,811［46.2］
2,416［3.5］
4,238［6.2］
8,880［12.9］
11,616［16.9］
4,659［6.8］
5,760［8.4］
5,879［8.5］
3,410［5.0］
23,345
20,078
43,423
10,050
547
32,825
75.6
10.7
8.0
21,600
157.90
15.00
1,728
205,387
15
236
451
3,483
50.0
73,052
39,593［54.2］
33,539［45.9］
2,530［3.5］
5,325［7.3］
9,181［12.6］
12,054［16.5］
4,446［6.1］
6,054［8.3］
6,253［8.6］
3,626［5.0］
28,012
23,311
51,323
11,551
1,400
38,371
74.8
10.2
7.7
21,600
165.14
15.00
1,630
198,389
14
29
390
3,638
52.5
Net sales
Gross profit [% of sales]
Transportation [% of sales]
Advertising [% of sales]
Personnel [% of sales]
Rent [% of sales]
Others [% of sales]
Profit (loss) [% of sales]
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Net assets
Shareholders’ equity [%]
Return on equity [%]
Return on total assets [%]
Profit per share [¥]
Dividends per share [¥]
Number of employees
Store floor space [㎡]
Number of stores
Capital expenditures
Depreciation and amortization
Net cash flow
＊Showing the non-consolidated results of Otsuka Kagu, Ltd.
＊Since 2006, with the adoption of the “balance sheet of the accounting standard for presentation of net assets”, shareholders’ equity, shareholders’ equity ratio, shareholders’ equity ratio of net income, total capital gains rate of net assets, respectively, capital adequacy ratio, self It has been changed to capital ratio of net income.
＊Net cash flow = profit after tax + depreciation and amortization - liquidity outflows (dividends + bonuses)
(¥ Million)
1995 1996 1997 1998 1999 2000 2001 2002 2003
68,805
37,333［54.3］
33,306［48.4］
1,616［2.3］
5,215［7.6］
9,232［13.4］
12,583［18.3］
4,658［6.8］
4,027［5.9］
4,422［6.4］
1,295［1.9］
26,894
23,474
50,368
9,815
1,131
39,421
78.3
3.3
2.5
21,600
57.39
20.00
1,638
222,723
16
319
338
1,249
51.2
2004
69,649
38,591［55.4］
33,240［47.7］
1,648［2.4］
5,649［8.1］
9,551［13.7］
11,997［17.2］
4,393［6.3］
5,350［7.7］
5,471［7.9］
3,649［5.2］
29,403
29,079
58,483
11,399
3,960
43,123
73.7
8.8
6.7
21,600
171.29
25.00
1,611
207,060
16
209
258
3,420
52.3
2005
70,062
37,923［54.1］
32,686［46.7］
1,664［2.4］
5,529［7.9］
9,944［14.2］
11,427［16.3］
4,120［5.9］
5,236［7.5］
5,350［7.6］
3,397［4.8］
28,055
24,867
52,923
10,902
2,455
39,564
74.8
8.2
6.1
21,600
171.94
30.00
1,655
193,571
16
356
280
3,119
50.9
2006
72,769
39,337［54.1］
34,658［47.6］
1,884［2.6］
5,658［7.8］
10,591［14.6］
11,931［16.4］
4,591［6.3］
4,679［6.4］
4,780［6.6］
2,799［3.8］
29,945
23,857
53,803
11,209
1,764
40,830
75.9
7.0
5.2
21,600
144.31
35.00
1,767
206,816
19
586
311
2,529
50.8
2007
66,803
35,230［52.7］
33,960［50.8］
1,846［2.8］
5,021［7.5］
10,641［15.9］
12,229［18.3］
4,221［6.3］
1,269［1.9］
1,456［2.2］
(530)［(0.8)］
28,765
17,859
46,625
9,218
811
36,595
78.5
(1.4)
(1.1)
19,400
(27.32)
40.00
1,784
206,816
19
156
304
(904)
50.9
2008
57,925
30,605［52.8］
32,057［55.3］
1,616［2.8］
3,890［6.7］
10,514［18.2］
11,968［20.7］
4,068［7.0］
(1,451)［(2.5)］
(1,337)［(2.3)］
(1,490)［(2.6)］
25,354
18,353
43,707
8,286
765
34,655
79.3
(4.2)
(3.4)
19,400
(76.84)
40.00
1,747
197,719
18
418
275
(2,008)
52.5
2009
56,912
31,064［54.6］
31,197［54.8］
1,636［2.9］
3,524［6.2］
10,243［18.0］
11,743［20.6］
4,049［7.1］
(132)［(0.2)］
38［0.1］
(255)［(0.4)］
23,867
18,846
42,714
7,982
711
34,019
79.6
(0.7)
(0.6)
19,400
(13.18)
40.00
1,678
177,590
17
354
241
(790)
52.3
2010
54,366
30,551［56.2］
29,401［54.1］
1,537［2.8］
3,036［5.6］
10,150［18.7］
10,735［19.7］
3,940［7.2］
1,150［2.1］
1,304［2.4］
203［0.4］
25,393
16,358
41,751
8,069
1,015
32,666
78.2
0.6
0.5
19,400
10.51
40.00
1,673
156,796
16
110
249
(323)
51.9
2011
54,520
30,848［56.6］
29,664［54.4］
1,478［2.7］
3,138［5.8］
10,402［19.1］
10,492［19.2］
4,152［7.6］
1,183［2.2］
1,317［2.4］
640［1.2］
25,334
16,390
41,725
7,849
1,076
32,799
78.6
2.0
1.5
19,400
34.21
40.00
1,673
153,751
15
184
253
99
53.5
2012
56,230
31,069［55.3］
30,226［53.8］
1,521［2.7］
3,417［6.1］
10,686［19.0］
10,175［18.1］
4,425［7.9］
843［1.5］
1,004［1.8］
856［1.5］
26,595
21,062
47,657
8,433
2,973
36,250
76.1
2.5
1.8
19,400
46.19
40.00
1,749
153,751
15
187
226
330
54.0
2013
58,004
30,830［53.2］
30,392［52.4］
1,567［2.7］
2,795［4.8］
11,156［19.2］
10,143［17.5］
4,730［8.2］
437［0.8］
633［1.1］
359［0.6］
29,325
16,386
45,712
8,828
2,419
34,464
75.4
1.0
0.8
19,400
19.38
80.00
1,744
154,055
16
97
162
(219)
53.7
2015
46,307
24,720［53.4］
29,318［63.3］
1,497［3.2］
2,870［6.2］
10,312［22.3］
10,132［21.9］
4,505［9.7］
(4,597)［(9.9)］
(4,436)［(9.6)］
(4,567)［(9.9)］
22,094
15,591
37,685
7,633
4,027
26,024
69.1
(15.1)
(12.1)
19,400
(257.10)
80.00
1,662
158,654
18
509
229
(5,828)
52.9
2016
55,501
30,598［55.1］
31,000［55.9］
1,550［2.8］
3,860［7.0］
11,009［19.8］
10,161［18.3］
4,419［8.0］
(402)［(0.7)］
(242)［(0.4)］
473［0.9］
30,312
16,398
46,710
9,518
2,527
34,665
74.2
1.3
1.0
19,400
25.53
40.00
1,749
154,055
16
665
204
(64)
52.8
2014
Selling general and administrative expenses [% of sales]
Operating income (loss) [% of sales]
Ordinary income (loss) [% of sales]
Imports as a percentageof net sales [%]
Number of shares issued [1,000 shares]
23,629
10,050［42.5］
9,849［41.6］
1,025［4.3］
1,143［4.8］
3,021［12.8］
3,117［13.2］
1,541［6.5］
200［0.9］
363［1.5］
108［0.5］
15,224
9,082
24,307
8,977
915
14,414
59.3
0.8
0.5
10,800
10.08
15.00
576
45,232
16
134
170
100
17.1
1994
20,720
8,360［40.4］
8,971［43.3］
1,018［4.9］
976［4.7］
2,931［14.1］
2,657［12.8］
1,387［6.7］
(610)［(2.9)］
128［0.6］
2［0.0］
13,545
9,046
22,592
5,928
2,196
14,467
64.0
0.0
0.0
10,800
0.21
15.00
573
44,488
18
201
180
20
6.4
1993
ANNUAL REPORT 2017 ● 3029 ● IDC OTSUKA
Trends in business performance
39,219
18,722［47.7］
14,496［36.9］
1,625［4.1］
2,344［6.0］
4,113［10.5］
3,880［9.9］
2,531［6.5］
4,226［10.8］
4,012［10.2］
1,338［3.4］
19,506
9,121
28,628
11,257
1,329
16,041
56.0
8.7
5.0
10,800
123.90
15.00
772
62,127
12
2,094
192
1,350
38.2
28,062
12,970［46.2］
11,619［41.4］
1,188［4.2］
1,887［6.7］
3,403［12.1］
3,284［11.7］
1,856［6.6］
1,350［4.8］
1,320［4.7］
631［2.2］
16,216
8,605
24,821
8,946
992
14,883
60.0
4.3
2.6
10,800
58.45
15.00
638
51,986
16
204
166
619
27.9
44,367
22,001［49.6］
17,948［40.5］
1,902［4.3］
3,052［6.9］
4,694［10.6］
4,945［11.1］
3,353［7.6］
4,053［9.1］
5,304［12.0］
2,382［5.4］
20,638
12,361
33,000
14,063
713
18,223
55.2
13.9
7.7
10,800
220.64
15.00
901
95,177
12
1,587
271
2,453
47.2
49,241
25,045［50.9］
21,333［43.3］
2,182［4.4］
4,023［8.2］
5,081［10.3］
6,112［12.4］
3,933［8.0］
3,712［7.5］
3,577［7.3］
1,992［4.0］
21,310
12,722
34,033
13,285
737
20,010
58.8
10.4
5.9
10,800
184.47
15.00
1,060
108,546
12
651
400
2,187
48.2
57,994
30,456［52.5］
24,078［41.5］
2,632［4.5］
3,718［6.4］
6,133［10.6］
7,590［13.1］
4,003［6.9］
6,378［11.0］
6,595［11.4］
3,255［5.6］
23,002
14,566
37,569
13,715
792
23,060
61.4
15.1
9.1
10,800
301.42
15.00
1,276
155,606
13
390
433
3,484
46.8
65,989
35,729［54.1］
28,297［42.9］
2,943［4.5］
4,288［6.5］
7,061［10.7］
9,506［14.4］
4,497［6.8］
7,432［11.3］
7,557［11.5］
4,071［6.2］
24,079
15,527
39,606
11,952
450
27,203
68.7
16.2
10.6
21,600
276.51
15.00
1,454
176,918
13
436
456
4,311
44.4
71,214
38,480［54.0］
30,961［43.5］
2,769［3.9］
3,694［5.2］
8,211［11.5］
11,307［15.9］
4,977［7.0］
7,518［10.6］
7,646［10.7］
3,869［5.4］
26,303
15,648
41,951
10,655
547
30,748
73.3
13.4
9.5
21,600
179.15
15.00
1,592
195,759
14
396
508
3,994
45.7
68,813
37,572［54.6］
31,811［46.2］
2,416［3.5］
4,238［6.2］
8,880［12.9］
11,616［16.9］
4,659［6.8］
5,760［8.4］
5,879［8.5］
3,410［5.0］
23,345
20,078
43,423
10,050
547
32,825
75.6
10.7
8.0
21,600
157.90
15.00
1,728
205,387
15
236
451
3,483
50.0
73,052
39,593［54.2］
33,539［45.9］
2,530［3.5］
5,325［7.3］
9,181［12.6］
12,054［16.5］
4,446［6.1］
6,054［8.3］
6,253［8.6］
3,626［5.0］
28,012
23,311
51,323
11,551
1,400
38,371
74.8
10.2
7.7
21,600
165.14
15.00
1,630
198,389
14
29
390
3,638
52.5
Net sales
Gross profit [% of sales]
Transportation [% of sales]
Advertising [% of sales]
Personnel [% of sales]
Rent [% of sales]
Others [% of sales]
Profit (loss) [% of sales]
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Net assets
Shareholders’ equity [%]
Return on equity [%]
Return on total assets [%]
Profit per share [¥]
Dividends per share [¥]
Number of employees
Store floor space [㎡]
Number of stores
Capital expenditures
Depreciation and amortization
Net cash flow
＊Showing the non-consolidated results of Otsuka Kagu, Ltd.
＊Since 2006, with the adoption of the “balance sheet of the accounting standard for presentation of net assets”, shareholders’ equity, shareholders’ equity ratio, shareholders’ equity ratio of net income, total capital gains rate of net assets, respectively, capital adequacy ratio, self It has been changed to capital ratio of net income.
＊Net cash flow = profit after tax + depreciation and amortization - liquidity outflows (dividends + bonuses)
(¥ Million)
1995 1996 1997 1998 1999 2000 2001 2002 2003
68,805
37,333［54.3］
33,306［48.4］
1,616［2.3］
5,215［7.6］
9,232［13.4］
12,583［18.3］
4,658［6.8］
4,027［5.9］
4,422［6.4］
1,295［1.9］
26,894
23,474
50,368
9,815
1,131
39,421
78.3
3.3
2.5
21,600
57.39
20.00
1,638
222,723
16
319
338
1,249
51.2
2004
69,649
38,591［55.4］
33,240［47.7］
1,648［2.4］
5,649［8.1］
9,551［13.7］
11,997［17.2］
4,393［6.3］
5,350［7.7］
5,471［7.9］
3,649［5.2］
29,403
29,079
58,483
11,399
3,960
43,123
73.7
8.8
6.7
21,600
171.29
25.00
1,611
207,060
16
209
258
3,420
52.3
2005
70,062
37,923［54.1］
32,686［46.7］
1,664［2.4］
5,529［7.9］
9,944［14.2］
11,427［16.3］
4,120［5.9］
5,236［7.5］
5,350［7.6］
3,397［4.8］
28,055
24,867
52,923
10,902
2,455
39,564
74.8
8.2
6.1
21,600
171.94
30.00
1,655
193,571
16
356
280
3,119
50.9
2006
72,769
39,337［54.1］
34,658［47.6］
1,884［2.6］
5,658［7.8］
10,591［14.6］
11,931［16.4］
4,591［6.3］
4,679［6.4］
4,780［6.6］
2,799［3.8］
29,945
23,857
53,803
11,209
1,764
40,830
75.9
7.0
5.2
21,600
144.31
35.00
1,767
206,816
19
586
311
2,529
50.8
2007
66,803
35,230［52.7］
33,960［50.8］
1,846［2.8］
5,021［7.5］
10,641［15.9］
12,229［18.3］
4,221［6.3］
1,269［1.9］
1,456［2.2］
(530)［(0.8)］
28,765
17,859
46,625
9,218
811
36,595
78.5
(1.4)
(1.1)
19,400
(27.32)
40.00
1,784
206,816
19
156
304
(904)
50.9
2008
57,925
30,605［52.8］
32,057［55.3］
1,616［2.8］
3,890［6.7］
10,514［18.2］
11,968［20.7］
4,068［7.0］
(1,451)［(2.5)］
(1,337)［(2.3)］
(1,490)［(2.6)］
25,354
18,353
43,707
8,286
765
34,655
79.3
(4.2)
(3.4)
19,400
(76.84)
40.00
1,747
197,719
18
418
275
(2,008)
52.5
2009
56,912
31,064［54.6］
31,197［54.8］
1,636［2.9］
3,524［6.2］
10,243［18.0］
11,743［20.6］
4,049［7.1］
(132)［(0.2)］
38［0.1］
(255)［(0.4)］
23,867
18,846
42,714
7,982
711
34,019
79.6
(0.7)
(0.6)
19,400
(13.18)
40.00
1,678
177,590
17
354
241
(790)
52.3
2010
54,366
30,551［56.2］
29,401［54.1］
1,537［2.8］
3,036［5.6］
10,150［18.7］
10,735［19.7］
3,940［7.2］
1,150［2.1］
1,304［2.4］
203［0.4］
25,393
16,358
41,751
8,069
1,015
32,666
78.2
0.6
0.5
19,400
10.51
40.00
1,673
156,796
16
110
249
(323)
51.9
2011
54,520
30,848［56.6］
29,664［54.4］
1,478［2.7］
3,138［5.8］
10,402［19.1］
10,492［19.2］
4,152［7.6］
1,183［2.2］
1,317［2.4］
640［1.2］
25,334
16,390
41,725
7,849
1,076
32,799
78.6
2.0
1.5
19,400
34.21
40.00
1,673
153,751
15
184
253
99
53.5
2012
56,230
31,069［55.3］
30,226［53.8］
1,521［2.7］
3,417［6.1］
10,686［19.0］
10,175［18.1］
4,425［7.9］
843［1.5］
1,004［1.8］
856［1.5］
26,595
21,062
47,657
8,433
2,973
36,250
76.1
2.5
1.8
19,400
46.19
40.00
1,749
153,751
15
187
226
330
54.0
2013
58,004
30,830［53.2］
30,392［52.4］
1,567［2.7］
2,795［4.8］
11,156［19.2］
10,143［17.5］
4,730［8.2］
437［0.8］
633［1.1］
359［0.6］
29,325
16,386
45,712
8,828
2,419
34,464
75.4
1.0
0.8
19,400
19.38
80.00
1,744
154,055
16
97
162
(219)
53.7
2015
46,307
24,720［53.4］
29,318［63.3］
1,497［3.2］
2,870［6.2］
10,312［22.3］
10,132［21.9］
4,505［9.7］
(4,597)［(9.9)］
(4,436)［(9.6)］
(4,567)［(9.9)］
22,094
15,591
37,685
7,633
4,027
26,024
69.1
(15.1)
(12.1)
19,400
(257.10)
80.00
1,662
158,654
18
509
229
(5,828)
52.9
2016
55,501
30,598［55.1］
31,000［55.9］
1,550［2.8］
3,860［7.0］
11,009［19.8］
10,161［18.3］
4,419［8.0］
(402)［(0.7)］
(242)［(0.4)］
473［0.9］
30,312
16,398
46,710
9,518
2,527
34,665
74.2
1.3
1.0
19,400
25.53
40.00
1,749
154,055
16
665
204
(64)
52.8
2014
Selling general and administrative expenses [% of sales]
Operating income (loss) [% of sales]
Ordinary income (loss) [% of sales]
Imports as a percentageof net sales [%]
Number of shares issued [1,000 shares]
ANNUAL REPORT 2017 ● 3231 ● IDC OTSUKA
Current assets
Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Merchandise
Advance payments-trade
Prepaid expenses
Income taxes receivable
Deferred tax assets
Others
Noncurrent assets
Buildings
Structures
Vehicles
Land
Construction in progress
Intangible assets
Software
Others
Investment securities
Guarantee deposits
Others
Total assets
(¥ Million)
22,094
3,853
30
2,496
14,302
58
902
−
−
450
−
15,591
3,685
790
20
2
0
458
2,414
−
167
119
47
11,737
5,513
97
28
5,989
110
(1)
37,685
2016
29,325
10,971
98
2,932
14,035
108
901
−
196
80
−
16,386
2,781
830
14
2
1
399
1,107
426
168
143
25
13,436
7,232
97
2
5,996
109
(1)
45,712
2015
30,312
11,519
125
2,360
15,009
194
891
−
155
57
(1)
16,398
2,844
883
10
2
2
411
1,108
426
194
181
12
13,359
7,153
77
1
6,019
109
(1)
46,710
2014
26,595
7,431
165
3,077
14,801
49
867
−
144
60
(2)
21,062
2,855
1,012
14
3
2
569
1,252
−
120
33
86
18,086
11,767
77
1
6,127
114
(1)
47,657
2013
25,334
7,320
171
2,784
13,570
87
870
6
492
31
(1)
16,390
2,937
1,063
16
3
3
587
1,263
−
100
53
47
13,352
7,039
77
1
6,130
112
(8)
41,725
2012
Current liabilities
Notes payable-trade
Accounts payable-trade
Accounts payable-other
Accrued expenses
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Others
Noncurrent liabilities
Deferred tax liabilities
Total liabilities
(¥ Million) (¥ Million)
(¥ Million)
7,633
1,373
1,824
358
1,687
64
1,715
299
−
38
109
161
4,027
74
496
−
351
2,381
723
11,661
2016
8,828
1,395
2,292
520
1,653
−
2,318
354
102
41
−
149
2,419
106
485
507
345
−
974
11,247
2015
9,518
1,816
2,106
411
1,756
674
2,168
318
84
32
−
149
2,527
139
480
507
340
−
1,058
12,045
2014
8,433
1,429
2,158
155
1,648
202
2,222
337
88
33
−
156
2,973
174
481
−
348
−
1,969
11,407
2013
7,849
1,378
2,140
226
1,635
81
1,791
299
99
37
−
159
1,076
208
466
−
328
−
72
8,926
2012
24,091
1,080
3,772
3,690
21,550
270
25,820
(4,539)
(2,311)
1,932
1,932
26,024
37,685
2016
31,578
1,080
3,772
3,690
27,608
270
26,920
418
(882)
2,886
2,886
34,464
45,712
2015
31,960
1,080
3,690
3,690
27,991
270
27,220
501
(800)
2,704
2,704
34,665
46,710
2014
32,228
1,080
3,690
3,690
28,259
270
27,120
869
(800)
4,021
4,021
36,250
47,657
2013
32,113
1,080
3,690
3,690
28,144
270
27,220
654
(800)
685
685
32,799
41,725
2012
528
324
(741)
110
7,320
7,431
763
4,066
(742)
4,088
7,431
11,519
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
56,230
56,171
59
25,160
25,136
24
31,069
30,226
843
172
100
72
12
1
10
1,004
517
49
1,472
157
457
856
55,501
55,442
59
24,903
24,883
19
30,598
31,000
(402)
178
97
80
17
0
17
(242)
2,149
954
952
706
(227)
473
Net sales
Net sales of goods
Rent income of real estate
Cost of sales
Cost of goods sold
Cost of real estate rent
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest and dividends income
Others
Non-operating expenses
Loss on retirement of noncurrent assets
Others
Ordinary income (loss)
Extraordinary income
Extraordinary loss
Profit (loss) before income taxes
Income taxes-current
Income taxes-deferred
Profit (loss)
2013 2014
58,004
57,945
59
27,174
27,155
18
30,830
30,392
437
197
77
120
2
0
1
633
0
28
604
267
(22)
359
2015
46,307
46,241
66
21,587
21,565
21
24,720
29,318
(4,597)
174
83
90
13
5
8
(4,436)
637
309
(4,108)
31
427
(4,567)
2016
2013 2014
269
(75)
(741)
(547)
11,519
10,971
2015
(5,770)
(812)
(534)
(7,118)
10,971
3,853
2016
54,520
54,458
61
23,671
23,647
24
30,848
29,664
1,183
176
86
90
43
29
13
1,317
17
100
1,234
30
564
640
2012
1,384
388
(1,576)
197
7,123
7,320
2012
Balance sheets
Assets Liabilities
Net assets
Statements of cash flows
Statements of operationsStatements of cash f lows
(¥ Million)
Allowance for doubtful accounts
Property, plant and equipment
Machinery and equipment
Tools, furniture and fixtures
Shares of subsidiaries and associates
Investments and other assets
Allowance for doubtful accounts
Long-term prepaidexpenses
Provision for sales promotion expenses
Provision for point cardcertificates
Guarantee deposits receivedProvision for directors’ retirement benefits
Long term depositsreceived
Reserve for loss on dissolutionof employees’ pension fund
Asset retirement obligations
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Retained earnings
General reserve
Treasury stock
Total net assets
Valuation and translation adjustments
Total liabilities and net assets
Valuation difference on available-for-sale securities
Retained earnings brought forward
Legal retained earnings
Statements of operations
ANNUAL REPORT 2017 ● 3231 ● IDC OTSUKA
Current assets
Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Merchandise
Advance payments-trade
Prepaid expenses
Income taxes receivable
Deferred tax assets
Others
Noncurrent assets
Buildings
Structures
Vehicles
Land
Construction in progress
Intangible assets
Software
Others
Investment securities
Guarantee deposits
Others
Total assets
(¥ Million)
22,094
3,853
30
2,496
14,302
58
902
−
−
450
−
15,591
3,685
790
20
2
0
458
2,414
−
167
119
47
11,737
5,513
97
28
5,989
110
(1)
37,685
2016
29,325
10,971
98
2,932
14,035
108
901
−
196
80
−
16,386
2,781
830
14
2
1
399
1,107
426
168
143
25
13,436
7,232
97
2
5,996
109
(1)
45,712
2015
30,312
11,519
125
2,360
15,009
194
891
−
155
57
(1)
16,398
2,844
883
10
2
2
411
1,108
426
194
181
12
13,359
7,153
77
1
6,019
109
(1)
46,710
2014
26,595
7,431
165
3,077
14,801
49
867
−
144
60
(2)
21,062
2,855
1,012
14
3
2
569
1,252
−
120
33
86
18,086
11,767
77
1
6,127
114
(1)
47,657
2013
25,334
7,320
171
2,784
13,570
87
870
6
492
31
(1)
16,390
2,937
1,063
16
3
3
587
1,263
−
100
53
47
13,352
7,039
77
1
6,130
112
(8)
41,725
2012
Current liabilities
Notes payable-trade
Accounts payable-trade
Accounts payable-other
Accrued expenses
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Others
Noncurrent liabilities
Deferred tax liabilities
Total liabilities
(¥ Million) (¥ Million)
(¥ Million)
7,633
1,373
1,824
358
1,687
64
1,715
299
−
38
109
161
4,027
74
496
−
351
2,381
723
11,661
2016
8,828
1,395
2,292
520
1,653
−
2,318
354
102
41
−
149
2,419
106
485
507
345
−
974
11,247
2015
9,518
1,816
2,106
411
1,756
674
2,168
318
84
32
−
149
2,527
139
480
507
340
−
1,058
12,045
2014
8,433
1,429
2,158
155
1,648
202
2,222
337
88
33
−
156
2,973
174
481
−
348
−
1,969
11,407
2013
7,849
1,378
2,140
226
1,635
81
1,791
299
99
37
−
159
1,076
208
466
−
328
−
72
8,926
2012
24,091
1,080
3,772
3,690
21,550
270
25,820
(4,539)
(2,311)
1,932
1,932
26,024
37,685
2016
31,578
1,080
3,772
3,690
27,608
270
26,920
418
(882)
2,886
2,886
34,464
45,712
2015
31,960
1,080
3,690
3,690
27,991
270
27,220
501
(800)
2,704
2,704
34,665
46,710
2014
32,228
1,080
3,690
3,690
28,259
270
27,120
869
(800)
4,021
4,021
36,250
47,657
2013
32,113
1,080
3,690
3,690
28,144
270
27,220
654
(800)
685
685
32,799
41,725
2012
528
324
(741)
110
7,320
7,431
763
4,066
(742)
4,088
7,431
11,519
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
56,230
56,171
59
25,160
25,136
24
31,069
30,226
843
172
100
72
12
1
10
1,004
517
49
1,472
157
457
856
55,501
55,442
59
24,903
24,883
19
30,598
31,000
(402)
178
97
80
17
0
17
(242)
2,149
954
952
706
(227)
473
Net sales
Net sales of goods
Rent income of real estate
Cost of sales
Cost of goods sold
Cost of real estate rent
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest and dividends income
Others
Non-operating expenses
Loss on retirement of noncurrent assets
Others
Ordinary income (loss)
Extraordinary income
Extraordinary loss
Profit (loss) before income taxes
Income taxes-current
Income taxes-deferred
Profit (loss)
2013 2014
58,004
57,945
59
27,174
27,155
18
30,830
30,392
437
197
77
120
2
0
1
633
0
28
604
267
(22)
359
2015
46,307
46,241
66
21,587
21,565
21
24,720
29,318
(4,597)
174
83
90
13
5
8
(4,436)
637
309
(4,108)
31
427
(4,567)
2016
2013 2014
269
(75)
(741)
(547)
11,519
10,971
2015
(5,770)
(812)
(534)
(7,118)
10,971
3,853
2016
54,520
54,458
61
23,671
23,647
24
30,848
29,664
1,183
176
86
90
43
29
13
1,317
17
100
1,234
30
564
640
2012
1,384
388
(1,576)
197
7,123
7,320
2012
Balance sheets
Assets Liabilities
Net assets
Statements of cash flows
Statements of operationsStatements of cash f lows
(¥ Million)
Allowance for doubtful accounts
Property, plant and equipment
Machinery and equipment
Tools, furniture and fixtures
Shares of subsidiaries and associates
Investments and other assets
Allowance for doubtful accounts
Long-term prepaidexpenses
Provision for sales promotion expenses
Provision for point cardcertificates
Guarantee deposits receivedProvision for directors’ retirement benefits
Long term depositsreceived
Reserve for loss on dissolutionof employees’ pension fund
Asset retirement obligations
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Retained earnings
General reserve
Treasury stock
Total net assets
Valuation and translation adjustments
Total liabilities and net assets
Valuation difference on available-for-sale securities
Retained earnings brought forward
Legal retained earnings
Statements of operations
ANNUAL REPORT 2017 ● 3433 ● IDC OTSUKA
Stock information
＊As of December 31, 2016
No. of shares (unit) % of issued shares held
% of shareholding
43,000,000
19,400,000 (1,760,054 shares of which are treasury stock)
100
14,331
Tokyo Stock Exchange,Inc. (JASDAQ[Standard])
8186
Number of shares authorized
Number of shares issued
Number of shares per trading unit
Number of shareholders
Stock exchange listing
Securities code
1,265
751
1,174
870
High (¥)
Low (¥)
＊As of December 31, 2016＊1,760,054 shares of treasury stock are included under “Individuals, others.”
＊As of December 31, 2016＊The percentage of shareholding represents the ratio of the number of shares held to the total number of shares outstanding.＊In addition to the above, the Company owns 1,760,054 (9.07%) shares of treasury stock.
51,760
3,722
22,593
5,324
100,531
26.69
1.92
11.65
2.74
57.00
Financial institutions
Securities companies
Other companies and corporations
Non-Japanese investors
Individuals, others
1,488
1,292
1,140
570
520
495
480
351
342
300
7.67
6.66
5.88
2.94
2.68
2.56
2.47
1.81
1.76
1.55
No. of shares (in thousands)
Non-Japaneseinvestors
2.74%
Japanesefinancial
institutions
26.69%
Japanesesecurities
companies
1.92%
Japaneseindividuals,
others
57.00%
2013 20142,488
987
20151,559
895
2016
Name or trade name
Trust account with Japan Trustee Services Bank, Ltd.
Kikyo Kikaku K.K.
Nippon Life Insurance Co.
Trust account with Japan Trustee Services Bank, Ltd.
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Haruo Otsuka
JACCS CO., LTD.
Sumitomo Mitsui Banking Corporation
Employee shareholding body
Mizuho Securities Co., Ltd
997
610
2012
＊As of April.30, 2017
President and Representative Director
Director, Assistant to the President
Board Director and Senior ManagingExecutive Officer and General Manager, Sales Headquarters
Board Director and Managing ExecutiveOfficer and General Manager, Finance Division
Outside Board Director
Outside Board DirectorAudit & Supervisory Committee Member
Outside Board DirectorAudit & Supervisory Committee Member
Outside Board DirectorAudit & Supervisory Committee Member
Executive Officerand General Manager, President's Office
Executive Officerand General Manager, Personnel Division
Executive Officerand General Manager, Corporate PlanningOffice
Executive Officerand General Manager, General AffairsDivision
Executive Officerand Deputy Director-General, Sales Headquartersand General Manager, Merchandising Division
Executive Officerand General Manager, DistributionHeadquarters
Executive Officerand General Manager, Out-of-Store SalesDepartment
Executive Officerand General Manager, Marketing Division
Kumiko Otsuka
Keiji Miyamoto
Haruo Sano
Hitoshi Sugitani
Satoshi Akutsu
Michiko Nagasawa
Miyako Nishiyama
Masahiro Mitomi
Masayuki Otsuka
Yoshiya Yoshida
Yoshinobu Fujino
Takanori Kita
Naoto Sugimoto
Yutaka Kazamaki
Ichiro Ueno
Kenichi Ueno
Director
Executive Officer
Otsuka Kagu,Ltd.
3-6-11,Ariake,Koto-ku,Tokyo
¥1,080 million
March 1969
August 1972
AKITA MOKKO Co., Ltd.
Yuzawa, Akita
September 2006
Product development, manufacturing
RE-INTERIA, LTD.
Koto-ku,Tokyo
October 2015
Acquisition, repair, sale and wholesale of used goods
Name of Company
Location
Capital
Founded
Established
Subsidiary
Name of Company
Location
Established
Main business
Name of Company
Location
Established
Main business
Corporate profi le
General Stock Information
Breakdown of Shares by Type of Shareholder
Main Shareholders
Breakdown of Sharesby Type of Shareholder (%)
Stock Price Highs and Lows
Other Japanesecompanies and
corporations11.65%
＊The Company has taken every care in preparing this booklet, but cannot guarantee the accuracy and completeness of the information contained herein.
●For information regarding this brochure,please contact
Finance DivisionTEL：03-5530-5522
●IDC Otsuka Homepage URL
http://www.idc-otsuka.jp/
ANNUAL REPORT 2017 ● 3433 ● IDC OTSUKA
Stock information
＊As of December 31, 2016
No. of shares (unit) % of issued shares held
% of shareholding
43,000,000
19,400,000 (1,760,054 shares of which are treasury stock)
100
14,331
Tokyo Stock Exchange,Inc. (JASDAQ[Standard])
8186
Number of shares authorized
Number of shares issued
Number of shares per trading unit
Number of shareholders
Stock exchange listing
Securities code
1,265
751
1,174
870
High (¥)
Low (¥)
＊As of December 31, 2016＊1,760,054 shares of treasury stock are included under “Individuals, others.”
＊As of December 31, 2016＊The percentage of shareholding represents the ratio of the number of shares held to the total number of shares outstanding.＊In addition to the above, the Company owns 1,760,054 (9.07%) shares of treasury stock.
51,760
3,722
22,593
5,324
100,531
26.69
1.92
11.65
2.74
57.00
Financial institutions
Securities companies
Other companies and corporations
Non-Japanese investors
Individuals, others
1,488
1,292
1,140
570
520
495
480
351
342
300
7.67
6.66
5.88
2.94
2.68
2.56
2.47
1.81
1.76
1.55
No. of shares (in thousands)
Non-Japaneseinvestors
2.74%
Japanesefinancial
institutions
26.69%
Japanesesecurities
companies
1.92%
Japaneseindividuals,
others
57.00%
2013 20142,488
987
20151,559
895
2016
Name or trade name
Trust account with Japan Trustee Services Bank, Ltd.
Kikyo Kikaku K.K.
Nippon Life Insurance Co.
Trust account with Japan Trustee Services Bank, Ltd.
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Haruo Otsuka
JACCS CO., LTD.
Sumitomo Mitsui Banking Corporation
Employee shareholding body
Mizuho Securities Co., Ltd
997
610
2012
＊As of April.30, 2017
President and Representative Director
Director, Assistant to the President
Board Director and Senior ManagingExecutive Officer and General Manager, Sales Headquarters
Board Director and Managing ExecutiveOfficer and General Manager, Finance Division
Outside Board Director
Outside Board DirectorAudit & Supervisory Committee Member
Outside Board DirectorAudit & Supervisory Committee Member
Outside Board DirectorAudit & Supervisory Committee Member
Executive Officerand General Manager, President's Office
Executive Officerand General Manager, Personnel Division
Executive Officerand General Manager, Corporate PlanningOffice
Executive Officerand General Manager, General AffairsDivision
Executive Officerand Deputy Director-General, Sales Headquartersand General Manager, Merchandising Division
Executive Officerand General Manager, DistributionHeadquarters
Executive Officerand General Manager, Out-of-Store SalesDepartment
Executive Officerand General Manager, Marketing Division
Kumiko Otsuka
Keiji Miyamoto
Haruo Sano
Hitoshi Sugitani
Satoshi Akutsu
Michiko Nagasawa
Miyako Nishiyama
Masahiro Mitomi
Masayuki Otsuka
Yoshiya Yoshida
Yoshinobu Fujino
Takanori Kita
Naoto Sugimoto
Yutaka Kazamaki
Ichiro Ueno
Kenichi Ueno
Director
Executive Officer
Otsuka Kagu,Ltd.
3-6-11,Ariake,Koto-ku,Tokyo
¥1,080 million
March 1969
August 1972
AKITA MOKKO Co., Ltd.
Yuzawa, Akita
September 2006
Product development, manufacturing
RE-INTERIA, LTD.
Koto-ku,Tokyo
October 2015
Acquisition, repair, sale and wholesale of used goods
Name of Company
Location
Capital
Founded
Established
Subsidiary
Name of Company
Location
Established
Main business
Name of Company
Location
Established
Main business
Corporate profi le
General Stock Information
Breakdown of Shares by Type of Shareholder
Main Shareholders
Breakdown of Sharesby Type of Shareholder (%)
Stock Price Highs and Lows
Other Japanesecompanies and
corporations11.65%
＊The Company has taken every care in preparing this booklet, but cannot guarantee the accuracy and completeness of the information contained herein.
●For information regarding this brochure,please contact
Finance DivisionTEL：03-5530-5522
●IDC Otsuka Homepage URL
http://www.idc-otsuka.jp/
AN
NU
AL
REPO
RT 2
017
Otsuka Kagu, Ltd.
Head Office : PO BOX2004, Tokyo Fashion Town Building, East Wing, 3-6-11, Ariake, Koto-ku,Tokyo 135-8071 TEL.03-5530-4321 FAX.03-5530-5550
"IDC Otsuka" is the corporate brand name of Otsuka Kagu, Ltd.
2017.5
ANNUAL REPORT 2017