Last Updated: July 13, 2017  
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To Our Shareholders and Investors

Summary of operating results for the fiscal year ended March 31, 2017

I would like to express my genuine gratitude to our shareholders and investors for your continuing support and understanding.
I am pleased to announce a summary of operating results of our 40th fiscal term (April 1, 2016 to March 31, 2017).

During the fiscal year under review, the Japanese economy continued along a moderate recovery track, with increased corporate earnings, improvement in the employment situation, etc., driven by economic measures by the government and the Bank of Japan. Nevertheless, the outlook for the trend in personal consumption remained cloudy.

As for the Sanyodo Group's operating environment, shrinkage in market scale is continuing mainly due to stagnant sales of magazines, which includes sales of magazines falling below books in the published materials distribution industry.

Under this business environment, by offering a wide range of products such as stationery, fancy goods, toys, and used books, with a focus on new books and magazines, and with "Helping you encounter books" as the core concept, we operate "book variety stores" in which we are seeking to provide customers with the kind of enjoyable experience that is a characteristic of a real storefront and cannot be obtained through Internet downloading.

In the fiscal year under review, we opened the Hekinan store (Hekinan City, Aichi Prefecture) in April and Akutami store (Gifu City, Gifu Prefecture) in November. We are implementing new initiatives at the Akutami store such as expanding the sales space for stationery and fancy goods, and establishing a cafe corner for the first time. On the other hand, we closed two stores, and as a result the number of stores at the end of the fiscal year under review came to 83 stores. Also, in June, we opened the Human Academy CultureSchool at the Sanyodo Shidami School (opened in October 2015). In September, we opened the Sanyodo Irinaka School on the third floor of the Sanyodo Books Irinaka store (Nagoya City, Aichi Prefecture). Furthermore, in November, we opened the Fujitsu Open College in the Akutami store.

As a result of these efforts, for the fiscal year under review, sales declined 4.6% year on year to 22,124 million yen, operating profit declined 46.0% year on year to 258 million yen, and ordinary profit declined 42.9% year on year to 274 million yen. Profit attributable to owners of parent declined 58.4% year on year to 68 million yen.

Regarding returns to shareholders, amid a tough operating environment for the existing business, upon determining that prioritizing securing investment capital for future business transitions would lead to shareholder returns in the long-term, we have decided not to pay a year-end dividend. Dividends for the year amount to 4.0 yen per share (including an interim dividend of 4.0 yen per share).

At the Sanyodo Group, beyond the existing bookstore business, we are providing new value, enjoyment and convenience to our customers by responding to residents' need for education in local communities through the promotion of the education business, which includes education for infants and children, and culture schools, and by developing new business categories.

We ask for your continued support and cooperation in the future as we rise to new challenges.

June 2017

Chief Executive Officer, President
Kato, Kazuhiro

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