Mid-year Results Briefing Material for the Fiscal Year …company.golfdigest.co.jp/files/topics/1299_ext_01_0.pdf2017/12/31 · Market Jan 2015 Apr OctJul Oct Jan 2016 Apr Jul Jan

Mid-year Results Briefing Material for the Fiscal Year Ending December 31, 2017 (19th Term)

TSE Stock Code ：3319

Copyright(c) Golf Digest Online Inc. All Rights Reserved

Golf Digest Online Inc. (GDO)

page

The Company’s plans, projections, strategies, etc., stated in these materials are

subject to potential risks and uncertainties excluding elements that have already

been confirmed, and there is no guarantee on their contents.

Potential risks and uncertainties could include, but are not limited to, economic

conditions mainly consisting of personal consumption trends, general trends in

the golf market and the Internet market that are the Group’s main business

domain, the status of market competition, and drastic technological innovations.

Please refrain from unauthorized reproduction of these materials and data.

Notes concerning these materials

Copyright(c) Golf Digest Online Inc. All Rights Reserved 2

page

The mid-term strategic plan (2016 - 2018)

Business development policies

Themes for Initiatives of the 2nd Year of the Mid-term Strategic Plan


Reinforcement of existing businesses

New business

Overseas business

Strengthening of database marketing Shift of IT infrastructure to the cloud Promotion of reciprocal use among services

Creating more points of contact for transactions with customers Enhancement of customer service Promotion of reciprocal use among services

Enhancement of services for smartphones Promotion of app downloads Optimization of each service

Development of alliances focusing on golf Keywords: Consumption

across three generations/Internet

Acceleration of initiatives targeting North America and Asia

3

page

Themes for Initiatives of the 2nd Year of the Mid-term Strategic Plan (by service)


Sales of golf equipment ・Reinforcement of sales of customized golf clubs

・Expansion of product line-up

Golf course booking ・Strengthening of planning capability ・Promotion of IT and automated systems in golf courses

Golf media ・Creating more channels for information distribution

・Improvement of contents

In-person golf lessons service ・Expand number of stores ・Differentiation from competitors ・Enhancement of functions as experience stores

4

page

Financial Highlights for the First Half


page

Financial Highlights for 2Q and the First Half of FY2017

Golf course booking on a robust trend

Implementation of expenditures based on growth themes


A 108% growth in net sales YoY for 2Q ∟ A 104% growth YoY for the first half

A 111% growth in gross profit YoY for 2Q ∟ A 108% growth YoY for the first half

6

page

A 108% growth YoY for 2Q in net sales of golf equipment led by a comeback in June despite the initial delay in recovery

A 111% growth YoY for 2Q in gross profit as a result of the commitment to provide high value-added services in the first half

Carried out advanced investments for future growth as planned

Consolidated Business Results for 2Q and the First Half of FY2017


*EBITDA = Ordinary profit + Depreciation + Amortization of goodwill + Interest expenses + Long-term prepaid expenses

(￥in millions)

前年比前年比

5,022 5,412 ＋390 9,232 9,645 ＋413(108%) (104%)

2,089 2,318 ＋229 3,735 4,025 ＋289(111%) (108%)

1,763 1,973 ＋210 3,350 3,715 ＋364(112%) (111%)

326 345 ＋19 384 309 △ 74(106%) (81%)

330 346 ＋16 390 314 △ 76(105%) (80%)

△ 3 △ 67(98%) (70%)

496 447 △ 48 714 512 △ 201(90%) (72%)

160

EBITDA

営業利益

経常利益

親会社株主に属する四半期純利益 207 203 227

売上高

売上総利益

販管費

2Q （4-6月）上期累計　（1-6月）

2016年 2017年

7

Net sales

Gross profit

SG&A expenses

Operating profit

Ordinary profit

Profit attributable to owners of parent

First half (Jan - Jun)

YoY 2016 2017 YoY

2Q (Apr - Jun)

5,022

2,089

1,763

326

330

207

496

5,412

2,318

1,973

345

346

203

447

+390

+229

+210

+19

+16

-3

-48

(108%)

(111%)

(112%)

(106%)

(105%)

(98%)

(90%)

9,232

3,735

3,350

384

390

227

714

9,645

4,025

3,715

309

314

160

512

+413

+289

+364

-74

-76

-67

-201

(104%)

(108%)

(111%)

(81%)

(80%)

(70%)

(72%)

page

Golf course booking on a robust trend, sales of golf equipment saw a comeback in June

Double-digit growth in gross profit for 2Q in all categories

due to the commitment to offering services at a fair price

Net Sales and Gross Profit by Quarter


Net sales

Gross profit

YoY

108%

YoY

111%

8 2016 2017

page

Expenditures to strengthen business and to enhance business base for the growth in the second half based on themes for initiatives (strengthening of database marketing, increase points of contact for transactions with customers, enhancement of services for smartphones, etc.)

First half of 2016 First half of 2017

(￥in millions)

Operating profit 384

Operating profit 309

Gross profit +289

Selling, General and Administrative Expenses

Reinforcement of business +54 Promotion of reciprocal use among

services Improvement of customer

communications Enhancement of services for smartphones


Enhancement of business base +208 Shift of IT infrastructure to the cloud Expansion of head office and business offices

Labor cost +102 Enhancement of golf course

operations Additional coaches employed

at GolfTEC Acquisition of KIDS GOLF

9

page *Total app downloads as of the end of June, 2017

Progress in Measures to Strengthen Services for Smartphones


“GDO GOLF SHOP” app

Long-

awaited app released at end of June

Ratio of visitors via smartphone

First half of 2016 57%

First half of 2017

61% Total app downloads

Approx.

1.67 million

Number of visitors via “Booking” app

YoY

130%

page

Sales showed signs of a comeback in June due to the promotion of reciprocal use among services and other marketing initiatives despite the ongoing sluggishness in the market

The profit margin in all product categories improved YoY due to the commitment to offering products at a fair price

Growth in the sales of customized golf clubs with high added value

Sales of Golf Equipment


YoY comparison of order amount

*Golf equipment market (golf clubs, balls, accessories): “Year-on-year comparison of market scale estimated based on sales results of major retail stores handling golf equipment nationwide” calculated by GfK Lifestyle Tracking Japan 11

Market

Jan 2015

Apr Jul Oct Jan 2016

Apr Jul Oct Jan Feb Mar Apr May Jun 2017

page

Number of customers Purchase price

New golf clubs Used golf clubs Balls Apparel Accessories

KPI Analysis for the First Half

*All arrows indicate YoY changes.


*Sales by category *Accessories includes gloves, shoes, markers, etc.

Sales of golf equipment saw growth in the number of customers in 2Q due to the promotion of reciprocal use among services and other sales promotions

Sales of apparel with a high profit margin and new golf clubs recovered in 2Q despite the slump in 1Q

The profit margins improved in all product categories due to the commitment to sell at a fair price as well as to sell high-added value products such as used golf clubs, customized golf clubs, etc.

12

page

Satisfactory results in early bookings

Success in promotion measures for booking via GDO apps and publicity through Internet advertising resulted in an increase in the number of visitors via smartphone

Golf Course Booking on a Robust Trend

YoY comparison of customer referrals to golf courses

*GDO: YoY comparison of golfers booked on GDO *Market: Ministry of Economy, Trade and Industry, “Survey of Selected Service Industries,” *Comparison of eight prefectures’ total (Hokkaido, Miyagi, Tokyo, Aichi, Osaka, Hiroshima, Kagawa, Fukuoka)


Market

Jan Feb Mar Apr May Jun 2017

Jan 2015

Apr Jul Oct Jan 2016

Apr Jul Oct

page

Number of customers Fee unit price Cancellation rate

KPI Analysis


Increase in the number of customers due to:

• Effective publicity through Internet advertising (listing, display, etc.) which led to an increase in GDO website visitors

• Wide variety of services which meet the needs of customers

Fee unit prices were flat YoY, and cancellation rate was also lower thanks to good weather


14

page

Success in measures to strengthen the purchase of used golf equipment both at stores and via the Internet helped to secure a stable quantity of items in stock

Virtuous cycle from trade-in to new purchase contributed to the increase in the number of store visitors and the improvement of purchase price

Established the online workshop to enhance customized services in tandem with in-store workshops

Number of store visitors Purchase price

Strong Sales of Used Golf Equipment


Quantity of used golf equipment items in stock by month


30,000 items in stock

15

2016 2017

Jan Feb Mar Apr May Jun

page

Initiatives in the First Half


page

Launched a new membership system, “GDO Yard Program” in June

Integrated two membership systems, for sales of golf equipment and golf course booking respectively, to promote reciprocal use among services and continued membership

Commencement of Initiatives to Promote Reciprocal Use among Services in June


GDO services Non-users Loyal customers

Golfers

GDO users

Visitors to browse contents

Customers who purchased golf equipment

Customers who use in-person golf lessons service

Customers who made a booking of golf course

page

＋39

＋６ Brand Stores

Golf Wear Brands

Enhancement of Services at GDO Golf Shops

Golf Sports apparel

Apparel


Reinforcement of sales of customized golf clubs

Offering club fitting at training lesson centers, making suggestions to customers for the right clubs

Increase in golf wear brands offered

Began offering 39 newly acquired brands including well-known brands that will be the core of sales

Acquired brands: Approx. 320 brands in total

18

page

Increase in golf courses to which systems are provided

Courses adopting Yardage and Webpack: Approx. 270 courses in total

Increase in golf courses offering “HOT PRICE”

Courses offering HOT PRICE: Approx. 750 courses in total

Strengthening of campaign initiatives

Enhancement of measures to attract customers by offering value plans for a limited time via campaigns such as “Golden Fair” and “Summer Fair”

Golf Course Booking: Booking Options Expanded and Enhanced

＋30

＋12 Courses with systems

19

Courses Offering HOT PRICE


page

Enhancement of News Distribution and Contents to Attract Customers


Launched GDO news distribution service using Facebook Messenger, Chatbot* as a measure to create more opportunities to connect with customers and lead more customers to GDO services

Launched a web magazine “BRUDER” that offers various golf-related information

20

*Chatbot is an automated interactive chat program using artificial intelligence. The term “Chatbot” is a compound of “chat” and “bot (robot).”

page

Established New Lesson Studios in Shinjuku and Osaka


Mar. Established Shinjuku studios, the eighth in the Kanto Region, networking the metropolitan area

May. Established Osaka Umeda studios, the first in the Kansai Region

Pursuing differentiation from competitors with know-how, the latest technologies, and higher service quality of the best training service in the U.S. and more

Oriented toward interactive services such as club fitting that go along with product sales

Creating a total experience store not limited to golf lessons

Shinagawa

21

Shibuya

Ueno

Yokohama Sakuragicho

Ebisu

Shinjuku

Ikebukuro

Kanda

Roppongi Ginza

Ginza ANNEX

Kansai area Osaka Umeda

page

Proposal for a Delightful Golf Life


Launched storage and delivery service for golf bags in collaboration with DUFL JAPAN

Undertaking various initiatives to offer a delightful golf life such as commencing sales of the industry’s first smartphone specializing in golf-related activities

22

page

Collaboration with JTB Western Japan, Corp

Started the offering of coupons usable for booking GDO golf courses on the “furu-po” and “furusato-choice” websites for hometown contribution taxation operated by JTB Western Japan


page

Golf Links the World

“GDO Score Management” http://lesson.golfdigest.co.jp/score/opening/ “Golf Garden Project” http://company.golfdigest.co.jp/ir/policies/csr/

GDO’s “Golf Garden Project” (continued from last year) When you play golf using the “GDO Score Management” app, a donation of ¥10 per birdie will be made to support agriculture in developing countries

Total no. of birdies/1.25 million!! Total contribution/¥12 million!! No. of gardens donated/83 (as of Jul. 2017)


Setup of Golf Gardens

You only have to record your score on the “GDO Score

Management” app!

¥10 donated per birdie

¥150,000 = 1 garden The better you are at golf,

the more gardens are created in developing countries

http://lesson.golfdigest.co.jp/score/opening/

http://company.golfdigest.co.jp/ir/policies/csr/

page

Implemented interim dividends (¥4.0 per share) again this period We plan to implement a year-end dividend of ¥5.0 per share

Enhanced Shareholder Returns

Interim Dividend Year-end Dividend Total

2015 ¥0.0 ¥5.5 ¥5.5

2016 ¥3.0 ¥4.0 ¥7.0

2017 ¥4.0 ¥5.0

(Planned) ¥9.0

(Planned)

Continued shareholder benefit program


We distribute coupons usable for the shopping at GDO Golf Shops and the booking of GDO golf courses twice a year to shareholders in order for them to learn about and experience first handedly the services of GDO

25

page

Outlook for FY2017


page

Aim to increase the market share of the Internet and GDO by thoroughly pursuing growth in existing businesses

Promote the development of new businesses and overseas businesses with a view to realizing the mid-term strategic plan, and aim for a new stage of growth beyond traditional frameworks

Performance Outlook for FY2017

Theme for the fiscal year ending December 31, 2017 “Adventure”

(￥in millions)

前年比

＋2,990(115%)

＋126(112%)

＋110(110%)

＋188(131%)

2017年度見通し

９円00銭＋２円１株当たり

配当金７円00銭

当期純利益 611 800

経常利益 1,089 1,200

営業利益 1,073 1,200

売上高 19,309 22,300

2016年度実績


FY2016 Actual FY2017 Outlook

Net income

Net sales

Operating profit

Ordinary profit

Dividends per share

19,309

1,073

1,089

611

¥7.00 ¥9.00

22,300

1,200

1,200

800

YoY

+2,990

+126

+110

+188

(115%)

(112%)

(110%)

(131%)

+ ¥2

page

Largest demographic of golfers is in the seniors

The only major sport that can be enjoyed across three generations = Golf Spending by seniors on grandchildren is said to amount to ¥3.8 trillion Increasing use of the Internet and smartphones by golfers

GDO’s Growth Potential in the Golf Market

Internet (smartphones) Consumption across three generations

Keywords for GDO’s strategy to expand market share

Distribution of golfing population by age

Ratio of households owning information and communication terminals

PC

Smartphone

Tablet


75 and up

65 - 74

55 - 64

45 - 54

35 - 44

25 - 34

15 - 24

page Copyright(c) Golf Digest Online Inc. All Rights Reserved 29

Documents

Mid-year Results Briefing Material for the Fiscal Year …company.golfdigest.co.jp/files/topics/1299_ext_01_0.pdf2017/12/31 · Market Jan 2015 Apr OctJul Oct Jan 2016 Apr Jul Jan