Marui Group Co., Ltd. (8252) Earnings Call Transcript & Summary

This is Kato. Thank you. First of all, allow us to express heartfelt condolences to those who suffered damage from the new COVID-19. Our employees, taking important financial closing works, have switched to working from home under the spread of the virus. But then, there were more works required for the audit process, especially because this was the first year. We did the audit process with a new audit company. And that is why we had to extend today's announcement by 2 weeks. I apologize for any inconveniences. With that, I'd like to go over our financial results. First, highlights. First is that our major KPIs, including EPS, ROE and ROIC. They fell short versus plan due to impacts coming from, for example, COVID-19. We are sorry for this. Second is about consolidated operating profit. This also fell short versus plan due to JPY 1.3 billion impact from COVID-19, but still, we have been able to secure growth for 11 years in a row. The third is about segment income. Retailing business reduced profit for first-time in 3 terms, but FinTech increased for 8 years in a row. Fourth is about the dividend. We have reduced the dividend from our initial forecast due to profit decrease, but still, we have been able to mark a JPY 1 hind -- hike in the dividend payout. It is JPY 50. So first of all, consolidated performance. EPS has been able to mark JPY 117.6 versus -- JPY 1.6 increase versus last year. ROE and ROIC has been able to exceed cost of equity, capital and work. As for the operating profit, we have been able to increase this by 11 years in a row. It is a 2% increase, standing at JPY 41.9 billion. Net profit has also been able to mark 9 years of profit growth, even though we had extraordinary loss from costs related to COVID-19. Segment income. Retailing business has suffered JPY 1.5 billion loss from COVID-19, but still, we're able to mark JPY 10 billion. It is a reduction of JPY 1.4 billion. It is short versus plan by JPY 1.5 billion, and it is a reduction for first time in 3 years. FinTech has been able to increase by 10%. It has grown by 8 years in a row that fell short versus plan by JPY 600 million due to factors like additional costs related to interest payment. Now the real term operating profit, excluding special factors from consolidated operating profit increased by JPY 3.1 billion, marking up JPY 44.3 billion. Some of the special factors include carrying over card issuing cost from this Q4 for progressing LTV management, which pushed up profit by JPY 500 million, but there were also offsetting factors, such as amortization of liquidated accounts receivable and increasing provisions for interest payments as well as JPY 1.3 billion impact from COVID-19. These caused net reduction in profit by JPY 2.4 billion. Next, factors affecting Retailing segment. There was JPY 1.4 billion improvement in profit from fixed-term rental contract, but then consignment sales floors and EC struggled and there was also the COVID-19 impact. There were less operating time for stores. And so, therefore, the operating profit declined by JPY 1.4 billion. Next, balance sheet. FinTech transaction continuously grew and we increased liquidated accounts receivable by JPY 62.7 billion. And we tried to control the increase in interest-bearing debt. And so, therefore, the total asset stands at JPY 886 billion, which is almost flat as last year. Cash flow. Core operating cash flow increased by JPY 400 million versus last year with the increase of profit. Cash flows from investment activities increased the cash out by JPY 11.1 billion because we have been actively investing in start of companies and we had -- we did not have much-fixed asset to sell. Recurring revenue is a long-term revenue stream that we have with customers and transaction parties. This grew both in Retailing and FinTech segments. The proportion in gross profit is exceeding 65%. Deferred income already contracted is already 2.7x of the recurring revenue at 2020 March, offering stability. Finally, about shareholder return. This time, we're going to be offering JPY 1 hike. It is JPY 50 per share. It has been changed from JPY 57 per share amidst the impact of COVID-19. But still, it is a record high and an increase of 8 years in a row. We will keep on offering long-term stable increase in dividend. This is all for me. Thank you.

Aoi speaking. Thank you very much for your attendance. First of all, I would like to introduce what I want to talk today. So the response to the COVID-19 crisis and the mid-term management plan, progress and the future direction. For the Retailing and FinTech, the business mid-term plan, on the 12th of June, we are going to hold our IR day, and I'm going to explain in more detail about this. First of all; a response to the COVID-19 crisis. On the 7th of April, since the announcement of the state of emergency declaration, all of the stores have closed on a temporary basis. On 14th of May, some of the stores have reopened. All of the stores were reopened on the 1st of June. For the equal Retailing transactional value, this is a provisional amount, but it has been a decline of 27%, a substantial decline in revenue. FinTech was 82%. In terms of a funding situation, most of the fund demands coming from the FinTech business, the actual result of the April was under a plan. So in terms of fund, actually, we have more than necessary. In terms of securing funds or expanding a credit line, we are not taking these type of emergency measures. We are engaged in co-creation management, which is co-creating profit and happiness for all our stakeholders. So in this time of crisis, we want to revisit our relationship with the stakeholders and strengthen our partnership. So I would like to talk about our response to our stakeholders. First of all, about our customers. In April, temporarily, there has been some inquiries that have increased from the apples card payment, but in May, things have settled down. The contents of these inquiries about the extension of the due date for the payment, but we are responding flexibly towards these inquiries. In terms of the payment situation, currently, there's no major changes. And in terms of inquiries related to rent payment, we actually sent out some introduction about the housing security benefits that the government has introduced. In terms of the cash advance usage, its 53%. So basically, it has halved. The people staying at home, it means that the customers' cash needs has declined. Next is about our employees. For the store staff, since the temporary closure, they are basically taking special paid leave. In terms of their wages during the special paid leave, this is supplemented through the government's employment adjustment subsidy and the company's subsidy and 100% will be paid. For the head office staff, as part of the work style reform, we have been distributing the mobile PC, and we have just ended the distribution for this. Since the declaration of the emergency, the penetration of kilowork has advanced. The kilowork ratio at April was 66%, so increased rapidly. So under the work style reform in 2020, initially our target was for the fiscal year 2020, but we have been able to achieve this target in 1 month. In this crisis, the stakeholder is facing the most harshest situation as our business partners. So they have to suddenly shut down their business. And there is no indication when the business is going to return. And the business partners are desperately seeking financing. What can we do and what should we do, the management discussed about this. So for this crisis, we should be able to go over this crisis together. So we offer the full exemptions of the rents and the payment of some utility cost to our partners. To strengthen our partnership, we introduced this on 24th of April. So this costs us about JPY 5 billion to take this measure. This is a high level of cost, but through strengthening our partnership, we want to secure profit and earnings from mid- to long-term. So I ask for your understanding about our action. Lastly, this is about the shareholders and investors. Although the business environment is unclear, but as I have been saying from before, the long-term and stable increase of dividend, this is a policy and this will continue. Next is about the impact of the COVID-19 on the 2020 March term. In the Retailing business, the store closures and these sales for the card members has been canceled. So the operating profit is minus JPY 1.5 billion. And FinTech, the transactions has gone down, but the expenses have gone down. So this is a plus JPY 20 million impact. So why is this positive impact on the FinTech? Maybe you should feel this as strange. So taking this opportunity, I would like to talk about the earning structure of the FinTech business. First, affiliate transactions. The variable cost that relates to the affiliate transactions is a point-related cost, but the ratio is 70%. This high level of variable costs means that it serves as a buffer when our profit goes down. So it means that to mitigate the impact of the decline in the profit. Going to the Revolving and Installment Payments Commission. This commission is in line -- is correlated to the balance of Revolving and Installment Payments. Even though the transactions go down, the balance will not go down immediately. So if the transaction decline period is short, basically, there is no impact. However, if the transactions continuously go down, the impact will show with a lag. The third is the card issuance cost for the acquisition of new customers or new members. So in terms of the new cards for the first 2 years, it is loss-making. So this cost is -- rather than calling it the cost, it is an investment in advance. So if the new card issuance goes down with the closure of the stores, this cost goes down. But for FinTech business, this means that it is a positive impact on the profit. So the COVID-19 impact for the March 2021 period until the end of May, after the close -- store closures, this is the most optimistic scenario, with the recovery happening in the following 3 months. And the most pessimistic scenario, the closure will continue until end of May. And then there will be a 1-month closure in -- for autumn. And then again, it will take a year for the recovery. So this will be scenario D. We have run through multiple scenarios. For the March 2021 Retailing operating profit, if we assume that it is about JPY 10 billion, that is the same as last year, the impact will be minus JPY 3 billion to minus JPY 9 billion year-over-year that this is the range for the FinTech operating profit, if we assume that it is JPY 4 billion more compared to the previous year at JPY 2.4 billion, the impact against the last year is plus JPY 500 million to minus JPY 500 million. However, currently, there is no way to see what's going to happen. So for the full year outlook, we will leave it undecided. Going forward, we will cautiously look at the impact on our earnings. And if details come out, we will rapidly announce the results. Next is the progress for the midterm management plan. This is the progress for the major KPIs. Our mid-term management plan started in March 2017, and we have been proceeding smoothly towards achieving our targets. However, March 2021, which is the last year of the mid-term plan, due to the impact of COVID-19, unfortunately, it is difficult to achieve these targets. So for the current mid-term plan, we will end this in March 2021 as planned. From March 2022, we would like to start the next mid-term management plan. So in terms of the current mid-term plan's major KPIs, we will strive to achieve this in early period in the next mid-term plan. So I ask for your understanding. Next, allow me to discuss our future directions based on the engagement we've had with our shareholders and investors. Ever since last year, we have received questions from our shareholders and investors in regards to our future mid-term plan. For example, what kind of company do you, Marui Group, want to become? How do you think about your capital allocation? Those are some of the questions that we receive. We would like to take this 1 year to think thoroughly about our next mid-term plan. But today, allow me to share with you some ideas or thoughts behind this. First, the macro environment change. One of the top megatrends that we focus, as we tried to think of our future, is the long-term shift from tangible to intangible investment. In the U.S., intangible investments surpassed tangible investments in the mid-1990s. This trend was also observed in the U.K. in the early 2000. This reversal has also been happening in countries like Sweden and Finland. What about Japan? Intangible investment is just 0.5x of tangible investment. It is less than half. And this trend seems to be close to countries like Italy and Germany. GAFA plus Microsoft, these are some of the companies that lead intangible investment. The size of their market cap is set to surpass the size of Japan's GDP. And where do we stand? It was 4 years ago when we started our current mid-term plan when we introduced this chart to you. It shows how tangible asset, like land or stores in our Retailing segment, be surpassed by operating receivables of FinTech and our growth driver transitions from our founding Retailing segment to FinTech segment. Here, we show our tangible investment and intangible investment. It reversed us ever since March 2019. Intangible investment of 2020 March period has expanded by 7.6x from 5 years ago, and the amount is double times double that of tangible investment. As the investment, the more fixed term rental contracts we have, we invest less to stores. But now we are investing more to software, human resource, R&D, and new business areas. Allow me to introduce more. As FinTech segment grows, we are investing more to softwares. We are able to internally develop about 230 development projects a year with our system subsidiary M&C being commissioned. And we're able to have a very fast development, 1 project every 2 days, we're able to control cost. The profit contribution to the JPY 3.2 billion amount of investment in 2020 March period stood at JPY 10 billion, with an ROI of 310%. Of course, personnel, R&D cost, investment would be cost items. But then this is something that we strategically try to enhance. In 2020 March period, it amounted to JPY 3.2 billion. And the proportion to our revenue is 1.3%. It exceeds 1%. We tried to train IT talents. We tried to have temporary assigning to venture companies that we invest. We try to train next-generation managers. The productivity of each employee in terms of operating profit has been continuously improving. It is 1.7x compared to 2015 March. The amount of investment to our new business areas amounts to JPY 15.7 billion for -- in year-to-date amount of 4 years. As for venture investment, we have tried to be careful in how we invest, trying to acquire the knowledge and trying to train people. We currently invest in 20 companies, amounting to JPY 7.1, billion. The total IRR, looking at the current market cap, including some of the recently listed companies, BASE and giftee, amounts to 34% amidst the COVID-19 crisis, which is already standing more than 10% level that we've set as a rule internally. So with that, what is our direction? Ever since the founding of the company, that growth driver has been Retail segment. But retail business is labor-intensive, and we try to rely on tangible investment and tangible asset. But then ever since we started our Epos Card in 2006, we have been able to shift gears to FinTech-led growth. FinTech segment is capital intensive and we financed through reliability, and we tried to enhance how we do the buybacks. We want to make sure that we progress our works in intangible investment. We want to progress into knowledge creation company so that we'd be able to enhance our corporate value more. To this end, this trinity of Retailing, FinTech and co-creation investment, with this, we want to create new business models. And by pursuing synergy, we will aim to create value that exceeds the simple sum of individual businesses. Co-creation investment is like side A and side B of an analog record. Side A is the investment for the growth -- to support growth. We will invest in venture companies that share our management, ideal and vision and can collaborate with us. The resource of Marui Group at its stores, human resources and the members Epos Card will be provided. And by collaborating, we will promote the growth of the companies that we have invested in and enhance the investment return. More specifically, we have EC-related companies like BASE, the D2C brands like the FABRIC TOKYO and BULK HOMME and the financial inclusion companies like Gojo and CROWD CREDIT. Currently, the venture investment yard stick is, overall, more than 10% of IRR, but the individual companies' IRR is more than 30% and the success ratio is about 1/3. By co-creating, we want to enhance the success ratio. And as the investment overall, we want to target more than 10% of IRR. Side B of co-creation investment is the investment that brings synergy to our main business. So we will invest in companies that have high level of intangible assets and new businesses. The investment in tangible assets will be introduced to Marui Group. And by proceeding on collaboration, it means that synergy will be provided to both sides. The return to investment will be the profit contribution to our main business. So the first tune of side B is actually already decided and that's the anime business. In the anime business, we are member of the production committee of a major movie company. And through our investment, we have been conducting various collaborations. From March 2016 to March 2020, the cumulative investment in animated movies is JPY 120 million. And the contribution to our consolidated operating profit is JPY 4.3 billion. So as a synergy to our main business, we have been able to realize a big return. For other investments, that will be Surugaya that is the e-commerce company for anime-related goods. And GTN, Minna-denryoku And Aikasa sustainable companies and new business as Tsumiki Securities, is a target of our investment. So when we can expect the major synergy to our main business, we will invest in venture companies without thinking about IPO, and we will invest in listed companies as well. This is the overall image of our investment. From March 2022 and onwards, the basic cash flow for 5 years, if we assume that it goes up by 20% from the current level. Let's assume that the investment for the existing business will go down, but the co-creation investment will double. In terms of shareholder return, the share buybacks will basically have, but the dividend will basically double. In the current mid-term plan, we have been able to achieve the ROIC that exceeds WACC and the ROE that exceeds capital cost. In the next mid-term plan, we will target more than 10% of ROE and the IRR exceeding that level. And by doing so, we will further heighten our corporate value. By creating this new business model, we will co-create the profit and happiness for all the stakeholders. That's all from me. Thank you for your attention.

Thank you. Now we'd like to move on to Q&A.

[Operator Instructions] The first question comes from Takahashi-san from Mizuho Securities.

This is Takahashi from Mizuho Securities. Thank you for giving your details in spite of this critical situation. I have 3 questions. I'll just mention all the 3 questions all at once. The first question is for Mr. Kato. And next to Saitoh-san. And then finally, I'd like to ask Mr. Aoi. So my first question, I know you're not able to give the guidance. But then you have been able to give up what you have in mind, so I am very thankful for that. So what would trigger for you to be able to show you the guidance? And of course, if you just wait about when you'll be able to know when the second wave may come, you may never be able to really announce the guidance. But then, if you're going to be opening the stores from June 1, can you give a little more insights about when you'd be able to disclose the next guidance? Now I understand about the FinTech business, but what about the Retail segment? It is minus JPY 3 billion to minus JPY 9 billion. That is the range that you've shown versus last year. Do you have any plans for cost reduction in this? Just a brief image, can you share that with us? Is it just coming from the top line decline? Can you give us the flavor about what you have in mind behind that number range you gave? Now again, you meant Mr. Aoi, mentioned about FinTech, the revenue structure. But then, I'd also like to ask Mr. Saitoh more about this. I know there are a lot of uncertainties at this moment. But then, generally speaking, your basic consumers to be more younger people who would not have much high income, who's probably suffering more at this moment. And the other people are probably just bearing the time staying at home, not spending. But when things start to calm down, what do you expect? Maybe it's not just short-term, maybe it's more mid, long range. Do you want to make sure that people will be able to use more Epos Card? Do you want them to use more caching service? Or would you want to wait a little more before that? Do you think people would not want to use their credit cards or cards? What is the image that you have in mind? You can just give several scenarios you have in mind. If you'd be able to tell us a little more about your -- what you think. Now my third question, again, goes to Mr. Aoi. And I have been able to have better image of how you want to invest in the future. And it's a pretty simple question. But then, I also like to know more about what you have in mind. My simple question is about the next mid-term plan. Are you going to be looking at next 5-year span? You'll be investing in several items. And like what is the size of the investment you would have in mind, especially in new areas? I think it was just like 6 months ago when you were saying that it is quite difficult to accumulate the knowledge and you wanted to wait a little more. But now you're saying you're doubling the amount that you want to put in here. So what about the knowledge here? Do you think you've been able to acquire the knowledge here? Do you see more projects you want to invest? Why do you think you'd be doubling the amount you want to invest in these new areas? So I guess I want to know what discussions you have internally. But then can you share with us how you see the market environment? So those are my questions.

Thank you very much. So this is Kato. Thank you very much for raising your questions. Your first question, I think I need to respond. First, what do we need to see before we be able to show you our guidance? So the way we show our scenarios, for example, scenario A, would say that we would be able to resume the operation from June. And in the second half, we'll be able to see the normalization of the market. Scenario B, we're going to wait till next April for things to normalize. Now things normalizing, how long it takes? Depends on which scenario we'll be relying on. Now at this moment, we don't really know when market would normalize. And that is why we have made several presumptions. Once we know -- have better image and when the market may normalize, we hope to be able to show you our guidance as soon as possible. But then at this moment, at the point when the first half ends, I do believe we'd be able to show you more about what we have in mind. And then also -- as for the Retail segment, some of the reasons behind profit reduction, you've asked about whether or not we're trying to do some cost control. Now yes, we tried to control variable costs. But then, for example, some of our measures or some of the cost associated with our measures -- it's not a large cost, but therefore, we don't -- have not really included in the assumptions. But then we have tried to factor in some of the controls in the variable cost.

So maybe I need to follow-up on my intention. Within Mr. Aoi's presentation, you talked about rents and some common service costs, and you'd be bearing that, which is really understandable, but that really impacts minus JPY 5 billion. Of course, most comes from less top line. Do you think you'd be able to reverse that? Because that's just going to cause a loss in JPY 5 billion of profit, but do you have any measures to offset that?

Well, yes. So at the moment, some of the space that we rent, we try to discuss with the owners, and we're going to be discussing about rent discount. So that's something that we'd be able to factor in. And also in terms of operating profit, as for reduction of fixed cost, we do believe we'd be able to put them into some of the fixed -- the loss -- and the loss -- as an extraordinary loss.

This is Saitoh. Thank you very much for your question. I think your question is really about mid- to long-term basis. How do we want to approach our users, the cardholders? Now of course, this is something that we experienced for the very first time. And in this unprecedented time, how can we expect a V-shaped return of the spending by cardholders? It's quite difficult for us to make that assumption. But then in this COVID-19, we look at our consumers, and a lot of people are talking about new way of lifestyle. And we do believe there's going to be a lot of changes in people's lifestyle. Through COVID-19, there were a lot of things that we were able to learn. And so from all of that, we need to sort out our thoughts. And first thing -- now this -- through this COVID-19, probably, there is going to be an acceleration of cashless society, that's something that we expect. And people are going out less, face-to-face discussions, of course, will decline. In other words, there's going to be an acceleration of e-commerce growth. In such situation, what's going to be important is how we'd be able to increase a digital way of approaching our consumers, we have to work more on that. E-commerce. We want to accelerate collaboration with a lot of partners, so that we'd be able to increase e-commerce transaction. So that's the first thing. Second, again, through this COVID-19, the transaction value has went up and down. There's great volatility at the moment. This also has another message. If we want stability, we have to be more immune to all the volatilities that may happen. We need to have measures for that. For example, recurring or rent, there's a lot of measures that we'd be able to embark on, so that we'd be able to have more stability in our performance. Now you talked about cashing service. People are staying at home. They don't visit ATMs to pull out cash. And that was quite prevalent in this April and May. But even in this cashing service, we may not want to rely on ATM network. We may want to have a more simple scheme where people will be able to pull out their money using their smartphones. I hope I'd be able to answer your question.

So I hope to be able to learn more from you on June 12 IR Day. I'm looking forward to hear more on that.

So I, Aoi, would like to respond to your final question. So again, it was about the next mid-term plan. Like I shared with you earlier, I'd like to spend this 1 year to think thoroughly on what we want to have in the next mid-term plan. So today, what I shared with you is just a flavor of what I have in mind. So how many years span are we looking? We do believe it's going to be either 3-year or 5-year plan. And at the moment, I think 3-year plan may be better in trying to create the next mid-term vision. We are trying to invest in more start-up venture companies. We're doing that more. That's why I think we need to set a mid-term plan with a shorter time cycle. This enables us to come up with the next action. And we'd be able to show you the results. And this is going to be the baseline for the next mid-term plan. So the current mid-term plan, it took -- we were saying that it's going to take like 5 years before we'd be able to have more fixed-term rental contracts. And that was the baseline why we wanted to focus on 5-year plan. But next mid-term plan would change. We're going to go for co-creation schemes and investment. And I think the 3-year plan, would fit would better suit the need. Also about the size. For example, in the 5-year plan, we have been saying that it's going to be JPY 30 billion. But then at the moment, it's like JPY 17 billion. In the -- and in the previous session, I think I did say that our progress is a bit slow. And so that is why I want to spend another 2 years before we'd be able to achieve that JPY 30 billion. And my thoughts there has not changed. So the image of how we invest, again, this is just a rough image. Now the speed of investment would probably double. That's what I expect. So just a rough view, if you will. So that's all for me.

You're saying you will double the speed of investment, and I think this was very important for me. You need to accumulate knowledge coming from external parties. And you also are experiencing a lot of changes in the market. And then start-up companies probably are struggling in this situation. So what are you trying to do internally? And how are you looking at the external factors at the moment?

Well, first of all, internally, there's like 2 people whom we've been able to invite from outside as they're professionals on venture company, start-up company investment. And these 2 members are being very active at the moment. Otherwise, we have our employees, and we're trying to train them from scratch, and we're working as a big team. But because we have been able to invite professionals from outside, I think we've been able to really have a fast accumulation of knowledge required for investing in the startup companies. Next, how are the startup companies doing? I mentioned the current IRR is like 34%. Now initially, we were worried about COVID-19 impacts here, but out of the 20 companies, companies financially suffering seems to be just 1 out of that 20, and we are certainly talking a lot with this 1 company. So that -- and we already know they have better financing capability now. In other words, the remaining 19 companies, these are companies focusing on D2C. They are very online savvy companies. These are the companies who's actually seeing, for example, let me give you the example of BASE. Share price has really shot up after COVID-19. So COVID-19, maybe like this -- post-COVID-19 is really going to be a great tailwind for them. That's how I look at it. I hope I answered your question.

Let's go to the next question from Okasan Securities, Kanamori-san.

This is Kanamori speaking. So from my side, I have 2 questions. So March 2020 fiscal year, if you look at the results with the Retailing business or the OP, if you look at the analysis of the increase and decrease of operating profit, I would like to reconfirm your analysis. At the third quarter, for the Retailing segment, when you revise it downwards for the price or the EC, the consumption procurement, maybe the situation continues drastically because of COVID-19, but as of the third quarter, in terms of the consignment sales, so I think you have not been expecting that this will go down to minus JPY 100 million. So EC is minus JPY 9 billion. So the fourth quarter basically generated a certain level of loss. So in terms of the consignment sales and ECs, is there -- I think there's a gap in terms of your -- against your forecast. So please let me confirm the reason behind this. That's my first question.

Thank you for your question. This is Kato speaking. Let me answer your question. In terms of the consignment sales, so because of COVID-19, the number of visitors or traffic has gone down. And we terminated any type of sales promotion. And that actually served to reduce the cost. So that is the reason why the decline in the profit in this area has not been that large. In terms of EC, we are still struggling because people are not actually buying through our EC. And that, compared to the third quarter, the decline in its profit has been larger. Does that answer your question?

So -- yes. My second question is that a mid-term -- more a mid-term discussion. So in the Retailing business -- and with the correlation with the FinTech business is going to grow. So the Retailing business, especially for the consignment sales, basically, we have ended going to the fixed-term rent. So I think you have been saying that the future driver would be the EC business. And in terms of how the stores is going to be, this is going to change. I think you have been saying that from before. So this is a more qualitative question. But your physical stores that you have, do you really need this number going forward? The real estate value, after COVID-19, I think there will be a lot of change in the real estate value. So I think you talked about your mid-term asset allocation. But the assets, your stores, is it adequate? Or if you are going to -- if the EC is going to be the driver, what is the meaning of having this much physical stores? This is my personal opinion. So what is your view about this?