GEO HOLDINGS CORPORATION

Financial Data

Qualitative Information on Quarterly Results

(1) Details of consolidated operating results

Consolidated Earnings (April 1, 2021 to June 30, 2021)

For three months ended June 30, 2021, economic activities were stagnant from continuous infections with COVID-19 and from the Japanese government requesting businesses to suspend operations and citizens to refrain from going out in order to prevent the spread of the infection.

In response to the declaration of a state of emergency and quasi-emergency measures, our group suspended operations at stores in the applicable regions, and shortened business hours at stores in the other regions. At the stores where we continued operations, we paid sufficient attention to safety by following guidelines from the relevant authorities, including wearing masks and disinfecting with alcohol, to provide our products and services, and has continued to pursue various challenges in an aim to “offer joy to your everyday life.”

As a result, for the Group’s results for three months ended June 30, 2021, sales resulted in 76,088 million yen (8.2% decrease from the same period of the previous year), operating profit resulted in 1,155 million yen (67.5% decrease from the same period of the previous year), ordinary profit resulted in 1,341 million yen (63.1% decrease from the same period of the previous year), and profit attributable to owners of parent resulted in 526 million yen (78.0% decrease from the same period of the previous year).

In changes in accounting principles, we applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan Statement No.29, March 31, 2020), etc. from the beginning of this first quarter. Accordingly, comparison of performance with the previous year is made with the amounts that are calculated based on a different calculation method. Please see “2. Consolidated Financial Statements for the Quarter (3) Notes on Consolidated Financial Statements (Changes in Accounting Principles)” for details.

In reuse (non-media) merchandise, sales for clothing, which is the core merchandise particularly for 2nd STREET, was sharply affected from voluntary restraint on going out, and still have not recovered. However, in view of the consumers’ rising consciousness to protect the environment and to spend less and save more, we opened 15 new 2nd STREET stores during this first quarter pursuant to our plan to open 60 new stores for 2nd STREET stores during this fiscal year in anticipation that the market scale for reuse merchandise will continue to expand.

In reuse (media) merchandise, we were able to secure stock for reuse game device due to gradual improvement in the balance between demand and supply for new game device. This stock enabled us to sell, thereby enhancing our business cycle. On the other hand, sales for reuse game software did not exceed the sale from the special demand that arose last year from the public staying home, and sales for reuse (media) merchandise overall declined.

In new (media) merchandise that comprises game device and game software, sales settled down from the sales attributable to the special demand that arose in the same period of the previous year from the public staying home. However, improvement was made on the situation of demand exceeding supply where demand and supply are better balanced now.

In our rental business where we mainly rent videos such as DVDs, the special demand that arose in the first quarter of the previous year from the public staying home due to voluntary restraint on going out contributed to our results. However, for this first quarter, the reduced supply of new titles that has been continuing from the postponement of release of movies in theatres that has been continuing from the previous year has sharply affected sales. This shortage in supply is anticipated to linger also from the spread of video streaming services.

The number of our stores as of June 30, 2021 is as follows. The figures in ( ) for “Total” show decrease from the end of the previous fiscal year.

Directly managed storesFC Stores and DistributorsTotal
Newly
opened
ClosedNewly
opened
Closed
Total number of
GEO group stores
and facilities
1,7592422197021,9560
GEO1,009213146011,155(12)
2nd STREET685154510173610
2nd STREET(overseas)1820182
OKURA TOKYO1621161
LuckRack1231122
WAREHOUSE100110(1)
Others9029(2)
Notes:
  1. The number of stores is counted based on each store name.
  2. GEO includes stores that sell and purchase home game related items, mobile phones, and smart phones, and rent DVDs where they operate under the store names of GEO and GEO mobile.
  3. 2nd STREET includes stores that sell and purchase clothing, home appliances and other items where they operate under the names of 2nd STREET, Super 2nd STREET, 2nd OUTDOOR, JUMBLE STORE, etc.
  4. 2nd STREET (overseas) which were counted as“Others”in the previous fiscal year, are separately indicated from this fiscal year.

(2) Details of consolidated financial position

[Assets]
The current assets as of June 30, 2021 resulted in 102,694 million yen which is a decrease of 10,993 million yen from the previous fiscal year end. This decrease is mainly due to a decrease of 10,378 million yen in cash and deposits, and a decrease of 2,927 million yen in notes and accounts receivable while there was an increase of 2,602 million yen in merchandise. The non-current assets resulted in 56,428 million yen, which is an increase of 377 million yen from the previous fiscal year end. This increase is mainly due to an increase of 561 million yen in buildings and structures (net) while there was a decrease of 277 million yen in investments and other assets.

As a result, the total assets as of June 30, 2021 resulted in 159,122 million yen which is a decrease of 10,615 million yen from the previous fiscal year end.

[Liabilities]
The current liabilities as of June 30, 2021 resulted in 32,689 million yen which is a decrease of 8,349 million yen from the previous fiscal year end. This decrease is mainly due to a decrease of 4,153 million yen in accounts payable and a decrease of 8,508 million yen in current liabilities-other while there was an increase of 4,000 million yen in short-term borrowings. Non-current liabilities resulted in 53,937 million yen, which is a decrease of 1,779 million yen from the previous fiscal year end. This decrease is mainly due to a decrease of 1,468 million yen in long-term borrowings.

As a result, total liabilities resulted in 86,627 million yen which decreased by 10,128 million yen from the previous fiscal year end.

[Net assets]
The net assets as of June 30, 2021 resulted in 72,495 million yen, which is a decrease of 487 million yen from the previous fiscal year end. This decrease is mainly due to 526 million yen in profit attributable to owners of parent and dividends of 720 million yen paid from retained earnings.

From the above, the equity ratio resulted in 45.3% (42.8% as of the previous fiscal year end).

(3) Explanation on forward-looking information including consolidated earnings forecast

With respect to consolidated earnings forecast, there were no changes from the full year forecast presented on May 14, 2021.