Message from President and CEO

When I was in my late twenties, I went to the United States for the first time and stayed there for three years.
I remember that I was truly overcome by the huge land, the cheerful spirit of the people, and the awesome presence of gigantic shopping malls operating at the height of prosperity at that time. There was also the very fresh and strange feeling that everywhere we went, the local people were friendly called out to our Asian family: “Enjoy!”

A quarter-century has passed since that time, and our daily lives have become tremendously convenient. It is also true, however, that I miss those days when things were less convenient and less abundant than they are today. Such a feeling may be deeply connected with the fact that capitalist societies, which continuously pursued economic rationality and increased reproduction, are facing a big turning point.

In 1975, nearly half a century ago, Shoya Honda, the Company’s founder, decided its name would be “Joyful Honda.” He was a striking person with creative ideas and the ability to act. Those are our roots. When society at the time regarded loyalty and working diligently to be the sole principle, our founder had the vision that work should be a joy and we should create dreams together through joy. In that way he incorporated his vision into the Company’s name.
Getting back to those roots, we will work on creating an organization that will not be a tiny, neat group, but will make every effort to achieve exceptional performance in unique ways.

Furthermore, we really want to be deeply rooted in local communities, so that local people in our operational areas can have a sense of attachment to us. We want to become a place that facilitates meeting, communicating, and caring for each other, and to make people feel relaxed. We also aim to serve as a store that can cheer customers up a little through a visit. While keeping our founding principle always in mind, we will take on new challenges every day. Welcome to Joyful Honda!

[Review of FYE 6/20/2021]

During FYE 6/20/2021, the prolonged COVID-19 impact caused serious damage to Japan’s economy, especially to the travel and restaurant industries, due to restrictions on going out and restaurants’ operations, etc. in order to slow economic activity. The pandemic made a clear difference between industries that benefited from demand for at-home consumption and those damaged by travel restrictions and operational hour restriction.

Although the central government and local governments have tried to curb the pandemic by organizing large-scale vaccination sites and encouraging workplaces to open vaccination sites, there still is a shadow over the future of economic activities.

The home center industry has also been deeply affected by the pandemic. Our performance has been underpinned by Pets & Leisure Group, Garden & Farm Group and Interior & Living Group, among others, thanks to the at-home consumption demand and the remote work demand as a result of a lifestyle change.

In these challenging circumstances, we have pursued this year’s basic policy to “encourage all the people to support essential workers” under the corporate mission: “Co-create the joy and dreams of communities by securing essential items and making proposals for a better life” and strengthened our initiatives to become the top “Living Space Innovator.”

As one of the initiatives, the Group implemented reorganization to boost competitiveness of the core businesses, by transferring part of the shares held in Joyful Athletic Club Co., Ltd., our non-consolidated subsidiary, to THINK FITNESS Corporation, an operator of a sports club Gold Gym in March. This improved revenues of Joyful Athletic Club Co., Ltd. and created further synergetic effects together with the home-center business.

In April, the Group also transferred all shares held in another non-consolidated subsidiary Joyful Shaken Tire Center Co., Ltd. to an operator of an automobile maintenance business, etc. Autobacs Seven Co., Ltd. The objective was to develop an alliance with Autobacs Seven Co., Ltd., while working to enhance corporate value by providing customers with new added value and developing and operating competitive stores.

Moreover, as part of the initiatives to strengthen the core businesses, we also endeavored to utilize and cultivate potential markets by opening two more Hondaya stores which specialize in fulfilling the needs for the professional use of tools, hardware and uniforms, etc. with a concept of Pro Shop. The second store Hondaya Funabashi Natsumidai Store opened in Funabashi-shi, Chiba last September, and the third store Hondaya Kashiwa Toyoshiki Store opened in Kashiwa-shi, Chiba in March this year. We will continue opening stores not only in Chiba Prefecture but also areas where there is favorable demand for professional tools and materials, while collaborating with our home centers for further dominance in the conventional areas.

As an effort to strengthen sales, we reviewed our sales floors and sales methods, and strove to, for example, sell products with high added-value and products of other business groups and divisions. As for sales promotion, we announced special event information, etc. as needed through SNS platforms, including Instagram, LINE, and Twitter, to attract more customers, and set up digital signage at sales floors of our 15 home centers in order to strengthen sales promotion in collaboration with the Company’s website and SNS, etc.

As for store operation, the number of total working hours was reduced thanks to our more efficient operations, and the advertisement costs were also reduced by shifting the sales promotion media to digital advertisement. To make year-end inventory taking more efficient, we adopted a new system operated by smartphones and shortened the inventory operation period to one day from two days to increase business days. We also adopted paperless inventory operations, leading to a reduction in both administrative burden and costs.

From an ESG perspective, in January, we started supporting an event to find a new owner of protected dogs and cats by providing an event space and operational assistance including event notifications, in cooperation with RENSA which has a track record of providing opportunities to find a new owner for protected dogs and cats, and SBI PRISM SSI Co., Ltd., a provider of pet insurance.

In addition, we agreed to the concept of Ibaraki Disaster Prevention Campaign 2021, an event to mark the 130th anniversary of Ibaraki Shimbun Co., Ltd. As a sponsor, we always have an emergency supplies shelf at all of our stores with an expanded line-up of emergency supplies for taking out and for stock in preparation for natural disasters such as earthquakes and floods, while sharing details of useful items and how to use them on our official website.

In terms of overall business, economic activity has been heavily affected by the COVID-19 pandemic, but we succeeded in strengthening our merchandising capabilities to find new demand, rationalizing operations by utilizing DX (digital transformation)-driven marketing and IT, improving the revenue structure through consolidating and streamlining the headquarter functions, while opening new Pro Shop stores by utilizing and deeply cultivating potential markets. Accordingly, the performance continued to be favorable.

As a result of these efforts, net sales for FYE 06/20/2021 increased 6.1% (up 7,589 million yen year-on-year) to 132,499 million yen, due mainly to a change in the accounting period of Remodeling Division and Arts & Crafts Division to 12 months for the current fiscal year from 3 months for the previous fiscal year.

Gross profit increased by 6,906 million yen (up 19.8%) to 41,846 million yen, operating income rose 2,319 million yen (up 25.2%) to 11,506 million yen, and ordinary income increased 2,180 million yen (up 20.6%) to 12,773 million yen, year on year respectively.

As a result of improving the revenue structure by strengthening our merchandizing capabilities, etc., gross profit margin, operating income ratio, and ordinary income ratio improved by 3.6 percentage points to 31.6%, 1.3 percentage points to 8.7%, and 1.2 percentage points to 9.6%, year on year respectively.

Profit decreased by 1,963 million yen (down 17.9% year on year) to 8,985 million yen, due to a gain on extinguishment of tie-in shares and gain on transferring the fuel business, etc. recorded as extraordinary profit.

Sales by major segments and product groups for FYE 06/20/2021 are as follows:

Housing-related segment
Net sales of the Housing-related segment increased by 13,911 million yen year on year. Orders received at the Remodeling Division, which was taken over through an absorption-type merger on March 21, 2020, fell sharply due to the impact of the COVID-19 pandemic. However, net sales increased by 12,499 million yen year on year due to the difference of accounting periods. Materials & Professional Tools Group saw a slight decline in demand from the previous fiscal year when restructuring demand from the areas hit by a mega-typhoon contributed to sales. On the other hand, however, at-home consumption demand due to the COVID-19-related restrictions on going out boosted home electronics demand, etc. for Interior & Living Group and demand for green, external gardening, and garden materials, etc. for Garden & Farm Group.
As a result, net sales increased by 26.0% year-on-year to 67,360 million yen.

Life-related segment
Net sales of the Life-related segment decreased by 6,322 million yen year on year.Sales of gasoline and heating oil decreased by 10,818 million yen year on year as a result of a business transfer in the previous fiscal year. Sales of Daily Goods Group decreased due to the rebound from front-loaded demand ahead of the consumption tax hike, increased sales of masks and disinfectant liquid, etc. to protect against the spread of COVID-19, the hoarding of toilet tissues and boxed tissues, etc. due to the stay-at-home restrictions. In contrast, sales of Pets & Leisure Group increased, boosted by steady sales of live animals, pet-related products, and outdoor-related products. Sales of Arts & Crafts Division, transferred to the Company by way of a merger on March 21, 2020, increased by 6,273 million yen year on year due to the difference of accounting period.
As a result, net sales were 65,138 million yen (down 8.8% year on year).

Full-year earnings forecasts for FYE 06/20/2022 (06/21/2021 – 06/20/2022)

Despite the prolonged COVID-19 pandemic, the Company’s current earnings have been steady, boosted by our ability to meet new demand by strengthening our merchandizing capabilities and improving the revenue structure continuously. The Company expects an increase in revenue and profit by making aggressive investments for future so that we become the “Living Space Innovator” that we aim for.

Taking these into consideration, the Company expects net sales of 131,000 million yen (up 0.4%), operating income of 11,800 million yen (up 2.6%), ordinary income of 12,900 million yen (up 1.0%), and profit of 9,000 million yen (up 0.2%), year on year respectively.

  Net sales Operating income Ordinary income Profit Profit per share
  million yen % million yen % million yen % million yen % yen
1Q + 2Q 67,000 1.3 6,200 8.1 6,600 5.8 4,600 13.7 66.41
Full year 131,000 0.4 11,800 2.6 12,900 1.0 9,000 0.2 129.93

Note: The Company has adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020) and other standards since the beginning of the FYE 06/20/2022, and that the respective earnings estimates reported above show the amounts after which the above-mentioned accounting standard is applied. In addition, the rates of increase and decrease in the respective figures compared with the same period and the same quarter of the previous fiscal year are calculated on the assumption that the above-mentioned standard, etc. are applied to FYE 06/20/2021.