Thank you very much for coming to today's briefing despite your busy schedule. First, take a look at slide page 1. Today, I'll give you an overview of the results of fiscal 2022, the first half and full year forecast for fiscal 2023, and progress on our midterm business plan. Page 3 shows the results of fiscal 2022. We've already communicated to you overall earnings result in a revision of our forecast released on March 23rd. We've posted an year-on-year growth of both gross sales and profit with business profit at JPY 24.8 billion and operating profit at JPY 19 billion. Net income attributable to owners of the parent stood at JPY 14.2 billion. Profit at all levels showed a significant increase.
Compared with our forecast released in October, gross sales was JPY 23.7 billion higher and business profit was JPY 800 million higher. Meanwhile, operating profit was JPY 4.4 billion lower due to losses from store close and impairment loss. Net profit attributable to owners of the parent was also down by JPY 1.7 billion. The year-end dividend is pretty much in line with the plan, JPY 1 higher than the same period last year at JPY 16 per share. Combined with the interim dividend, the annual dividend is JPY 31 per share, up JPY 2 year-on-year. Next, page 4 shows an overview of segment performance. In department store business, demand for luxury products such as high-end watches remained strong throughout the year thanks to renovations at main stores.
Inbound traveler sales has sharply rebounded after COVID travel restrictions were significantly eased in October. Easing of restrictions also helped an increase in people's movements in Japan. As a result, gross sales rose 18.4% year-on-year. SG&A costs increased year-on-year because of a JPY 1.2 billion rise in utility costs due to the soaring raw material costs. We've offset the increase with the structural reform and other measures. As a result, business profits soar to JPY 12.8 billion. We've returned to the black and generated operating profit of JPY 7.5 billion despite the following negative factors. Unlike the previous year, we did not have a COVID subsidy for store closure amounting to JPY 600 million, nor employment adjustment subsidies of JPY 200 million.
Page 5 shows the sales of the main stores of Daimaru Matsuzakaya department store for the second half. The quarterly figures are compared against fiscal 2021 and 2019. Main stores saw a steady improvement from the third to the fourth quarter. The second half sales at Kobe and Nagoya stores helped by regular shoppers topped the numbers for not just fiscal 2019, but also fiscal 2018. The Tokyo store, a terminal type store that had been lagging behind, has shown remarkable recovery in the second half thanks to increased in-movements of people. Umeda store, another terminal type store, had to record impairment loss. Its recovery is not as strong as the Tokyo store. Measures to boost recovery are urgently needed. Page 6.
We've seen a rapid growth in inbound sales due to relaxation of border control last October. Inbound sales undoubtedly turned the corner. We expect significant growth potential as direct flights to and from mainland China will greatly increase in number. Page 7 shows details of SG&A. The main factors driving up the cost in the second half of fiscal 2022 were JPY 800 million for increased bonuses mainly due to improved performance, JPY 900 million for additional ad expenses for intensive promotion campaigns, and JPY 800 million for higher utility costs due to rising material prices. Compared with our forecast in October, ad expenses are up JPY 400 million to promote inbound sales. Utilities increased by JPY 600 million. Commissions increased by JPY 400 million due to sales growth. Page 8 shows SC Business performance.
Total PARCO sales increased thanks to renovation work going on for its main stores and recovery in inbound demand, mainly at the Shibuya and Shinsaibashi stores. As a result, the total SC Business revenue grew by 3.4%. Business profits jumped 50% to JPY 5.3 billion. Operating profit rose only by JPY 3.7 billion because of loss on business liquidation of Matsumoto PARCO and impairment loss at Shizuoka PARCO. Next, page nine shows developer business. Revenue rose thanks to order increases at J. Front Design & Construction and PARCO SPACE SYSTEMS, or PSS. Business profit, on the other hand, dropped, affected by the termination of the operation of some N rental properties. Operating profit was affected by the absence of gains from fixed asset sales we posted the previous year. Both business and operating profits exceeded our October forecast.
Page 10 shows payment and finance business. Business and operating profits increased significantly to JPY 3.4 billion each. Both also outperformed our October forecast. Drivers for their good showings were steady increase of annual fee income, commission growth from the increase in transaction volume at the recovering Daimaru Matsuzakaya department store and external franchises, and a rise in insurance agency commission. Page 11 shows other business. Revenue declined despite improved profitability at our mainstay, Daimaru Kogyo. This is largely due to the consolidation of Zimpus following the partial transfer of its shares at the end of February 2022. Business and operating profits also dropped. Slide 12 shows our consolidated balance sheet. Total assets decreased by JPY 71.9 billion from the end of the previous year, mainly due to a reduction in cash and deposit and depreciation.
Interest-bearing liabilities, excluding lease liabilities, were reduced to JPY 249.1 billion, achieving the midterm plan target one year ahead of schedule. Page 13 shows our consolidated cash flow. Free cash flow of JPY 52.1 billion was secured through improvement in profitability and investment efficiency. We reduced cash and deposit on hand, which had been set aside to prepare for the impact of the infection, to JPY 39.8 billion. Page 15 shows consolidated forecast for the first half and full year of fiscal 2023. 2023 is the last fiscal year in the current midterm business plan. Page 15. COVID-19 will be reclassified in May as Class 5 in the Infectious Disease Act, the same category as seasonal flu. The move will prompt normalization and reactivation of business activities, and a phase shift from life with COVID to post-pandemic.
Substantial wage hikes not seen in recent years would help create positive consumer sentiment. It is said that Japan has savings in the order of JPY 60 trillion, which had bulged due to low consumption during the pandemic. The post-pandemic phase may prompt resolution of deferred purchases. On the other hand, global high inflation, coupled with the successive failures of U.S. banks in March, are creating uncertainties. We should once again closely watch their impact on the economy and consumer spending down the road. We should also watch changes in the quality of consumption brought about by the pandemic. We should analyze and determine which changes are temporary and which are permanent so that we can respond to them in a timely fashion. Page 16 shows a consolidated forecast for fiscal 2023.
Gross sales will increase by 11.6% to JPY 1.115 trillion. Business profit will add 60.9% to JPY 40 billion. Operating profit will rise by 102% to JPY 38.5 billion. Profit attributable to owners to the parent will grow by 79.1% to JPY 25.5 billion. All profits are expected to increase significantly. Page 17. Profit forecast by segment are compared against the midterm plan targets released in April 2021. We revised business profits downward by JPY 4 billion and did the same for operating profit by JPY 1.8 billion. This is because the recovery of middle-class consumer demand was delayed due to the longer than expected COVID impact and unexpected surges in utility costs.
We slashed consolidated business profit by JPY 4 billion and operating profit by JPY 1.8 billion. Look at the table for details by segment. Department store and SC businesses were revised downward, while developer and the payment and finance businesses were revised upward. I'll get to details by segment in a minute. Page 18 show key management indicators in comparison with the midterm plan targets. I've already talked about business and operating profits. We are still aiming for the 7% target for ROE in line with the midterm plan. Interest-bearing debt, excluding lease liabilities, had already attained the target levels by the end of the previous fiscal year. We are on track to achieve D/E ratio of 0.6 x by the end of this fiscal year. We will continue to work on strengthening our balance sheet. Page 19 describes dividend.
Interim dividend will be up JPY 1 to JPY 16 per share. Annual dividend will be JPY 33 per share, up JPY 2 from the previous year. Next, our forecast by segment, starting with department store business on page 20. Our assumptions are domestic consumption will be boosted by sales promotion for out of store sales and demand from wealthy consumers will remain strong. We also assume that the renovation that focuses on luxury and other areas will also begin to pay off. We anticipate many more visitors will come to Japan from mainland China from the mid to end of this fiscal year. On this assumption, full year inbound sales can rebound to more than 70% of the peak value or JPY 44 billion .
What's different from the midterm plans are our assumptions for gross margin, which is affected by consumption trend of the middle class and product mix changes. We also took into account larger than expected rise in costs based on the surges in utility cost. As a result, business and operating profit forecasts were lowered from those in the midterm plan. Still, business profit will increase 78.4% year-on-year to JPY 22.9 billion. Operating profit will soar by 185.6% to JPY 21.5 billion. Page 21 shows sales forecast by store. Many main stores are expected to top the 2019 pre-pandemic performance. The Tokyo store, which had been lagging behind, will also see a dramatic improvement. Page 22 shows SG&A for Daimaru Matsuzakaya Department Store.
Factors that drive up SG&A are JPY 600 million for livelihood support alliance to mitigate impact from rising prices, JPY 600 million for increased bonuses due to improved performance, JPY 1.5 billion for rising utility prices, JPY 1.3 billion in additional commission payments on sales growth, JPY 1.1 billion for additional computer system costs. Unlike fiscal 2019, we will not have the one-time expenses of retirement benefits totaling JPY 4.1 billion. We can expect net reduction in SG&A of JPY 3.9 billion. Next, please turn to page 23 for the SC Business. For revenue forecast, we expect sustained strong performance at Shibuya and Shinsaibashi PARCO, which have continued to evolve since their opening, as well as the effective flagship store renovations such as Ikebukuro and Nagoya PARCO.
In addition, the easing of tenant rent conditions is expected to end this fiscal year.
In comparison with the midterm plan, we have factored in a longer than expected delay in sales recovery at regional stores, a significant increase in cost of sales due to soaring utility costs, and increase of head office costs due to the spin-off of the developer business. As a result, business profit and operating profit have decreased from the midterm plan, but both items are expected to increase significantly year-on-year. Next, please turn to page 24 for the developer business. A new company, J. Front City Development, was established in March, and as its medium to long-term direction, it will actively engage in a circular model, which is not only developing properties but also selling development properties after upgrading their value and reinvesting the proceeds. Therefore, the gain on sales generated by this process will be recorded as business profit instead of other operating profit.
In this fiscal year, we plan to sell residential properties under development now. In addition, J. Front Design & Construction expects to receive orders for large-scale projects, and PARCO SPACE SYSTEMS also expects sales increase by promoting collaboration with J. Front Design & Construction. As a result of these efforts, both business profit and operating profit are expected to increase significantly. Please turn to page 25 for Payment and finance business. We expect an increase in both sales and profit as we anticipate steady growth in commission income as a result of further performance recovery of department stores and promotion of credit card usage by external merchants. Payment and finance business have already achieved its midterm plan ahead of schedule last fiscal year and is expected to exceed the plan further this fiscal year. Please turn to page 26 for Other business.
We forecast increase in sales and profit for the entire segment as we expect improved performance at its mainstay, Daimaru Kogyo, mainly in its automotive department. Please refer to page 27 for the consolidated BS forecast. Total assets are expected to decrease by JPY 20.9 billion from the end of the previous fiscal year, mainly due to depreciation. Interest-bearing liabilities, excluding these liabilities, are expected to be reduced to JPY 225 billion, and the D/E ratio is estimated to be 0.6 times. Please refer to page 28 for cash flow. Free cash flow is expected to be JPY 55 billion due to further improvement in operating cash flow, and we intend to use it mainly to repay interest-bearing liabilities to strengthen our financial position. I will explain the progress of the medium-term business plan. Please turn to page 30.
The midterm plan, which started during the pandemic in FY 2021, aims to make a full recovery of PL and BS to the pre-COVID level in three years. We expect to achieve 7% for ROE, which is the most important management indicator as set forth in the midterm plan, the full recovery of business profit and operating profit is carried over to the next fiscal year or later. Needless to say, however, making a full recovery is only a transitional step. Our direction remains unchanged. That is to break away from the business portfolio overly dependent on existing retail business and transform ourselves, and to strive to grow again dramatically as a group over the medium to long term. Two years of the midterm plan have passed, while results for business model innovation and portfolio transformation have been steadily generated, pressing issues have been identified.
Please refer to page 31 for the progress of the transformation of the department store business. One of the key themes of the department store transformation is to digitize touchpoints with customers. Our department store app is highly regarded for its convenience and ease of use as touchpoints to connect to our customers 24 hours a day. The number of active users have grown to 1.77 million as of the end of February 2023. Sales from these app users over the past year have grown to JPY 237.1 billion.
The average spend per app user is 1.9 times higher than that of non-app users, indicating a significant increase of the spending of customers after the app registration. The app data usage has been successful so far in uncovering potential customers, mainly for Gaisho, and we are considering to expand the scope for deeper CRM in the future. Please turn to page 32. Currently, the growth of Gaisho sales is driving the department store business. In FY 2022, Gaisho sales in the department store business was up 16.7% year-on-year to show continuously strong growth. Compared to FY 2019, it recorded a double-digit growth of 10%, which is already well above the pre-COVID level. We are able to cultivate a relatively young customer base from their twenties to forties, and we believe this will be one of our strengths in the future.
Such digital and gaisho initiatives are the key to department store transformation. We will promote the transformation by making richer content. Next, please turn to page 33. GINZA SIX is a luxury mall that was born with a concept of operating no department store. It has evolved further after major innovation during the pandemic. Customers in their 20s and 30s account for almost half of its sales, which is a completely different structure from department stores. Last December, GINZA SIX recorded its highest sales ever since its opening. It was born from the combined wisdom of four companies, including us. It is one of the solid evidences to demonstrate that innovation comes from diversity. We believe it gives a great sense of anticipation for the future of our group that accelerates diversity. Please turn to page 34.
As I said, the SC Business has the largest deviation from the midterm plan. Drastic measures are required to address this situation. Shibuya PARCO and Shinsaibashi PARCO were opened as next-generation commercial spaces. They have been growing steadily while developing new customer segments. On the other hand, other flagship stores and regional stores are being renovated now, but they have not achieved sufficient results yet. Going forward, under the leadership of President Kawase, who assumed his new role this March, we will pursue steady results as we further clarify how to allocate our limited management resources optimally toward medium to long-term growth. At the same time, we will reform our management structure with a stern judgment about our businesses for the future. President Kawase will explain mid to long-term challenges and measures in the SC Business at the business strategy presentation to be held in July.
Next, I will explain the progress of the developer business and the payment and finance business, which are the keys to portfolio transformation. Please turn to page 35. As we have already announced, the developer business that had been led by PARCO was spun off from PARCO on March 1st of this year, and its business has made a fresh start as an independent company named J. Front City Development. At the same time, we established the CRE Strategy Unit in the holding company to optimize the developer business from a group perspective and maximize value creation, and I was appointed to also serve as the head of this unit. The new company has designated 8 areas in 7 cities where department stores and PARCO are located as key areas with high growth potential and is working to formulate development plans.
In the pipeline, plans for Sakae area in Nagoya and Shinsaibashi area in Osaka are taking shape. In the Tenjin area in Fukuoka, where the Tenjin Big Bang project finally started as a trigger, we'll promote a large-scale development project. These are only a few examples, and going forward, we'll introduce other initiatives in the pipeline for these key areas. We are confident that through these efforts, we'll make you fully realize the growth potential of our group. We hope you will look forward to it. Next, please turn to page 36. I will explain the progress and future direction of the payment and finance business. This business has already exceeded the midterm plan.
The main reason for this is that the fundamental renewal of the design of our credit card operation by incorporating a unique point system to benefit customers, as well as reviewing the revenue structure, including annual membership fees. Since customers with more frequent usage can enjoy more benefits, the average spend per account has significantly increased. In order to achieve medium to long-term growth in the future, it is essential to make the customer base even richer. Some credit cards used in the group are not issued by JFR Card, which leads the payment and finance business. Therefore, we have decided to work to consolidate credit cards in the group under JFR Card as the issuer.
By promoting this initiative and expanding the financial business in the holding company, we intend to establish a structure early to target operating profit of JPY 5 billion at first and even more growth over the medium to long term. Please turn to page 37 for the CVC initiative launched to strengthen R&D functions to promote business portfolio transformation. We have already started collaborations with startups with innovative technologies and business models in the areas of metaverse, art, and travel. We intend to foster movement for change by having members of the group participate in this initiative in a phased manner to create new businesses and innovate existing businesses in the entire group. Please turn to page 38. We have launched in-house projects specifically in the areas of metaverse and Web 3 to create new businesses.
We will aim to create new added value for customers and business partners, such as real metaverse, utilizing department stores and PARCO stores in the group. Please turn to page 39. Digital human resources are indispensable for future innovation. We have set a challenging goal of developing 1,000 digital human resources by 2030 for the entire group and have begun developing data analysts and digital designers who will serve as core human resources in this initiative. The image of this goal is to assign at least one digital human resource to each division of each group company. Through this initiative, we hope not only to bring new value and a change to day-to-day operations, but also to improve productivity through business innovation and synergy by mutual collaboration among digital human resources across divisions and companies. Please turn to page 40.
In November last year, we accelerated our effort toward the future by making XENOZ our subsidiary. It engages in the esports business, and esports is considered to have high affinity with digital-based businesses such as metaverse and NFT. We expect it will help us build a strong relationship with millennials and Generation Z as our new customer base. We'll create new experience value through collaboration with department stores, PARCO, and other group companies. Please turn to page 41. Every day, I feel that we are now in uncertain times where the future is so difficult to foresee. We must create the future by navigating through such uncertain times and providing the value society demands. To this end, enhancing the resilience of our portfolio is essential.
Department stores are the core business of our group, and they have finally started to make a full-fledged recovery, and they were the last one in the retail industry. Of course, I have a reasonable sense that our efforts have led to a specific outcome. At the same time, however, we should not overlook the aspect that not a small part of that recovery is supported by the special demand which had been postponed by COVID. We do not overestimate the current situation, and we believe now is a major turning point for the group and an opportunity to shift gears for change. Our mindset that a bright future can never be envisioned as an extension of the past remains unchanged. As we look ahead to the medium to long-term growth of our group, an unprecedented and determined new approach is essential to achieve the goal.
Establishment of the CVC fund, entry into the esports business, and challenging efforts to develop digital human resources are part of such context. Now is the time to gather and combine diverse wisdom of diverse human resources to create a chain of innovations in order to deepen existing markets and search for new markets and create customers in a new era.
Through these efforts, we'll realize our group vision, create and bring to life new happiness to demonstrate our value for the future. This fiscal year is positioned as an important year to ensure the successful handover to the next medium term business plan that aims for growing again. We are determined to achieve goals shared today and to make solid preparations for the future. Thank you.
I'm Takahashi from Mizuho Securities. Thank you very much for your explanation. Compared to six months ago, you seems to be more upbeat and confident about the prospects of your business. I am pleased. I have two questions. First, I'd like to ask President Sawada and President Kawase about the current situation with your respective businesses. I think you have better visibility six months on, and the consumption trend has changed since then.
President Sawada, in what area are you seeing a bright spot? President Yoshimoto earlier said that the Tokyo store has also improved considerably. I would like to hear exactly what has improved. Which businesses, stores, or consumer groups do you expect to recover most in this new fiscal year? President Kawase, as a new president, what would you like to accomplish at PARCO? In what area do you see notable improvements at PARCO? What does it take for PARCO Business to apply its innovative power to entire J. Front organization? What kind of management policy do you have to make that happen? This is my first question to the two president. My second question is directly to President Yoshimoto. This fiscal year is the final year of the midterm business plan, and a new midterm business plan starts next year.
I think you said there are areas that are considerably promising, while you also see some risks. It might be premature to ask this question now, but I would like to know what areas you need to focus on in the next midterm plan? Do you feel confident about the existing businesses to remain the driver of your companies since they have made a remarkable recovery? Are you going to strongly push for new businesses as soon as you go into a new plan? I'd like to see more details of the plan, including the timeline.
Thank you very much for your question. I believe that October was a turning point for department store business. I felt things are turning for the better around that time. That was when almost all restrictions on people's movement in Japan were lifted.
That was also when many inbound travelers began landing on Haneda and Narita airports, both in eastern Japan, thanks to easing of international travel restrictions. In the 4th quarter, the pace of recovery quickened. The Tokyo store had been recovering slower than other stores in 2020 and 2021, but it began rapid recovery in the latter half of the 3rd quarter as the number of passengers at Tokyo Station, including those using bullet trains, increased. In fact, the Tokyo store's March sales growth was higher than any of our stores. We have been strategically investing in the Kobe store since the past fiscal year. Sales are growing as we intended, helped by the opening of a large Louis Vuitton store in the spring, as well as an addition of several strong luxury brands.
The Sapporo and Kyoto stores are also benefiting from strategic investment in their stores. Their performance was also boosted by increased foot traffic and the appeal of strong brands. These are some of the areas I now feel confident about.
I'm Kawase, the President of PARCO Business. Thank you for your question. I took this post in March. We started calling what was known as SC Business as PARCO Business in-house starting this fiscal year. The intent is PARCO should not be simply defined as a store or a shopping center. Rather, we should further fuse a variety of contents in culture, entertainment, games, anime, and such in a commercial space. We've been doing that, but we will push harder. We'd like to develop a unique value for PARCO that no other businesses can offer.
I build up my career in entertainment, digitalization, business development, and M&A, not so much in running stores or shopping centers. I would like to incorporate these experiences into PARCO Business and shape its fate future. President Sawada earlier talked about the bright spot into his department store business. PARCO Business also saw a turning point in October. The business has been improving at an accelerated pace since then. Apparel sales, too, have been recovering. From March to the beginning of April, the flow of people has almost returned to the pre-pandemic levels. The size of foot traffic has increased by about 20% year-on-year. Sales and transaction volume have also increased by about 20% from the previous year. That's where we feel positive about. Inbound sale is another bright spot.
Shibuya PARCO and Shinsaibashi PARCO opened during the pandemic. They had had few customers from overseas until October. After October, some travelers from overseas started to coming to Japan, later focusing on Shibuya PARCO. We are renovating Ikebukuro, Sapporo, and other stores to create experience-oriented spaces that incorporate culture and other contents, just like the Shibuya store. We are combining cultural and shopping experiences in our stores. I hope to use this innovative power to revitalize J. Front Retailing as a whole.
Thank you, Mr. Takahashi, for your question. What's most encouraging to me is that as Presidents Sawada and Kawase said earlier, our two main businesses are regaining momentum, and we have confidence in them. We are discussing where we want to be in 2030 and back casting from there to decide what we should do now. This is something our management has been discussing.
It's obvious that our current strength, like goodwill, our brands, customers, and good geographical locations, will not be good enough for us to remain competitive. What additional strengths we need is something we are thinking hard about with young people. What we are considering now is that we should have more things to generate excitement, or we should have a better positioning in the community. We have been addressing environmental issues as part of our ESG initiatives. It is time to turn such efforts into business. That's the job of the holding company. We appreciate ongoing recovery of our mainstay businesses most. Mr. Kawase has been with us at J. Front for the past year as PARCO's new business new president. With the hiring of career track employees and mixing with PARCO personnel, probably over 40% of those on payroll are from outside the Daimaru Matsuzakaya Department Store.
We've become a diverse company in that regard. Diverse resources have been taking initiative in making our company a new organization worthy of the coming era. As I said, when I was referring to the CVC fund, in the past, the holding company, nor business operating companies, could not help ideas of individual employees materialize. Now we strongly feel that we are taking proactive moves and making progress through collaboration of diverse talents. Our responsibility as a holding company is to invest in the right areas with an eye on a new era.
Thank you. I look forward to the next medium-term business plan. Keep me posted. Thank you.
This is Yamaoka from Nomura Securities. I'd like you to clarify a couple of points. President Yoshimoto earlier said that there are temporary changes and permanent changes caused by the pandemic.
He said you should discern what are temporary and what are permanent changes. In the current environment, what are temporary and permanent changes? Could you give me examples? That's my first point. My second point is about department store business. My impression on the performance at the end of the last fiscal year is that the profits did not outperform as much as the top line did. Could you tell me how you are developing this year's plan? Are you considering measures to keep expenses in check while working to grow the top line? What thoughts do you have in mind in forecasting department store sales? One last point, I read the developer business will record a gain on property sales this fiscal year. May I ask how much that is, if I may?
Let me explain the first and the last question.
It's becoming a lot clearer now what are temporary changes and permanent changes triggered by the pandemic. For the first six months to 18 months of the pandemic, especially around 2020, we were struggling to find ways to generate future growth. Even during this period, sales of luxury products and the market for wealthy people steadily grew. The pandemic was, in fact, the tailwind for this market segment. When people were essentially told not to move around both at home and abroad, luxury items ended up in the Japanese market. Under these circumstances, having a network of customers that include out-of-store sales clients and credit card customers was a great advantage that kept us going. We need to closely watch whether strong demand in the areas that have supported us during the height of pandemic will continue.
An expected increase in the number of people going overseas may change the market landscape. By category, sales of women's apparel temporarily dropped to almost half of the pre-pandemic levels, they are now quickly recovering. Apparel companies had been financially strapped even before fiscal 2019 when the COVID hit. Their performance further deteriorated in 2020 and 2021. After great efforts, their profit and sales are now on track to returning to normal. In the process, they probably changed the way of doing business. I believe that they are perfecting a business model with brilliant inventory management to maintain the right color and size lineup while serving customers at store better. I believe that sales, which had fallen to nearly half of the pre-pandemic levels, have returned to nearly 70%.
Even if sales do not return to 100, I believe that they are now able to add more value to their transactions and business. I think these are examples of the temporary changes and the permanent changes. By store, demand at the Tokyo store is quickly coming back. We are also investing in the Umeda store. We've added Japan's second-largest Nintendo shop, Nintendo OSAKA, there. We've also expanded the luxury watch brand shop that carries brands like Rolex. We've also invested in something with more value in the post-COVID age to boost performance of stores. We are already seeing the fruit of such investment. There are certain changes that are permanent, but we can create new things that can substantially contribute to our stores. That's very important. Responding to your last question about the developer business, some properties for sale were included in the midterm plan from the outset.
The amount of gain is just over JPY 3 billion. Thank you for your question. Sawada will answer your second question. Your impression was that the profit did not grow in proportion to sales growth. For one thing, during the pandemic, our product mix has changed. The percentage of luxury items has increased. The proportion of cosmetic declined due to almost no demand for inbound travelers. Such changes in product mix pushed down our profit by about 0.3 percentage points in fiscal 2022. In addition, the soaring energy prices more than offset a considerable saving in total labor costs through structural reforms. That's another reason.
Given the lower break-even point for the department store business, we can expect business profit will jump, keeping pace with sales growth. Our sales forecast for fiscal 2023 is in excess of JPY 700 billion, and we expect business profit to grow significantly along with sales growth over fiscal 2022. In other areas, cosmetic sales are bound to increase in fiscal 2023 over 2022, 2021, and 2020. We expect volume fashion sales to return to 85%-90% of the 2019 levels as people's movement, including traveling, become more active. However, we don't think it will return to 100% of the pre-pandemic levels due to changes in the market. The resulting changes in product mix and sales can improve the gross profit to sales ratio of our merchandise. Our cost forecast is a little conservative.
For example, we assume the rate of energy cost increase about what is reasonably expected based on the situation in March. Looking at the latest figures for March, as we showed in the slide, we saw an increase of 16.7% for March against a 9.5% top-line gross target for this fiscal year. The performance was better than expected. Our focus for growth is set higher in the first half than the second half, an increase of 13.7%. Against this relatively high target figure, 16.7% is laudable. That means we got off to a pretty decent start.
Thank you for the detailed explanation. Thank you.
I'm Kanamori from Nikko Securities. I'd like to ask three points about your forecast. First, on slide 23 about the SC Business. It says that easing of rent conditions for tenants is expected to end. According to the plan for the first and second half, it seems you assume the termination of the rent discount in the second half. You mentioned earlier that you have a good sense of improvement for tenants' business. I'd like to know if the termination of the rent discount has already started regardless of the plan, or if you still expect it in the second half due to negotiations with tenants. This is my first question.
Thank you for your question, Kanamori-san. Kawase from PARCO will answer your question. We do not disclose the plan about the easing separately for the first and the second half. The revision of conditions is done mainly at the timing of contract renewals for each store space. Recently, tenants' business is fairly improving. Under this circumstance, we intend to end the easing of rent conditions by the end of this fiscal year. As for renovations, we normally renovate more space in the second half. However, in FY 2023, more space will be renovated in the first half to maximize the effect. That is why the number for the second half is larger. I hope I answered your question.
Thank you. In the past, there was a case you suggested rent discount would end, but it did not happen. Can I assume the current environment for tenants is different from before?
Yes, the easing of conditions will end. The first thing we need to do is to provide right environment for tenants to operate. I mean, lively shopping floors. For such environment, we set appropriate rent. For existing tenants, we'll ask them to reinstate their rent to the appropriate level. For spaces we are going to renovate, we expect to receive appropriate rent without discount. We'll proceed with this plan in this fiscal year.
Okay, thank you. My second question is about the profit plan for the developer business on page 24. Earlier, you mentioned this includes a gain on sale of about JPY 3 billion. Can you tell me how frequent you expect to record such gain on sale in the future? Like every year or every few years? Is this JPY 3 billion a standard amount of gain on sale in the future? Or this is exceptionally a large amount for this fiscal year only? About the consolidated capital investment for the developer business, it is about JPY 20 billion for FY 2022 and FY 2023. It seems the developer business will be conducted without increasing the capital investment so much. If you intend to activate this business, assume you might plan to have more capital investment.
If that will be explained in the new midterm business plan, I will wait for the answer until next fiscal year, but I appreciate if you can share something with us now. Yoshimoto will answer this question. I have assumed a role to supervise the developer business in the CRE Strategy Unit in the holding company. This is because we value to accelerate to make best use of all the management resources we have now in the group, including Daimaru Matsuzakaya, PARCO, JFR Card, and newly established J. Front City Development, instead of operating it in PARCO.
As I mentioned in my answer to Yamaoka-san's question earlier, we include a gain on sale of slightly over JPY 3 billion in the forecast. This is not from a simple sale of properties as we did in the past.
They are mainly residential properties. We add value by development to sell them at higher prices than before. This is the way we'll continue to implement as a real estate developer. Having said that, this JPY 3 billion forecast for this fiscal year is slightly high because one or two properties among the residential properties planned for this fiscal year had already been planned and included in the midterm plan. Now we can expect to sell them with more added value than we originally expected. We'll increase such businesses going forward, so we will be engaged in not only renting properties, but also building maintenance, property management, as well as such property sales. We will explain about the developer business in the next midterm plan, including its pipeline and capital investment amount. This is what I can tell you for now.
I understood. Thank you.
My last question is about the finance business on page 25. You forecast increases of 11% for revenue and 2% for business profit. This forecast seems very conservative or even weak for profit. You expect increasing SG&A. Can you tell us about the background of it and if that will be a transient increase?
The payment and the finance business made a significant growth from FY 2021 to FY 2022. This was due to the successful credit card renewal. Now we should work hard to realize next growth. Going forward, as I said in the presentation, we need to work on the issuing platform firmly and expansion to the finance business. These are the two major points. Of course, we need to do more for customers of department stores and PARCO as well.
For the finance business, we need to develop different type of human resources and different know-how. Investment is required now for the next growth. In this context, in this fiscal year, we expect slightly lower profit growth.
Thank you. Can I assume the profit growth is expected to be weak only for this fiscal year and higher profit increase is expected in the next fiscal year onward?
Yes. Otherwise, there is no point of this investment. Earlier, I said we'll target operating profit of JPY 5 billion at first, we must start striving for that goal in the next fiscal year onward. Thank you.
Thank you. Let me ask three questions. My first question is related to the earlier question by Kanamori-san.
Your condominium development has already been reported by media, is that CRE type development which is easier to make profit, or is this development you've started from scratch?
I remember at the midterm plan briefing, you said in the developer business, ROIC and hurdle rates were different between CRE and development from scratch, so you would implement rigorous risk management. Let me confirm this point as my first question.
Shall I continue to the next question?
Okay, let me answer this question first. They are properties we already had. I mean, they were developed by the projects after we had transferred the group assets to PARCO. They were in our plan from the beginning, and they were completed as planned, and now we are selling them. If they are CRE properties, we can feel safe.
If they are developed from scratch, there is a slight concern about the profit rate considering competition against other developers. Can I assume you will have good control over it? The three main properties on sale this time are all CRE properties. You have three properties on sale, not one? Yes. Three are the major properties on sale.
Okay, thank you. My second question is a little more detail about Daimaru Matsuzakaya Department Stores Co., Ltd.. Its sales of corporations, head office, et cetera, grew significantly in the previous fiscal year, and you forecast a double-digit decrease in this fiscal year. Can you tell me the background about it?
This is Sawada. I don't have the exact data on hand now, but its account includes both corporate gaisho and GINZA SIX. I think that is reflected in the figure.
For instance, isn't it because of the absence of orders from local governments for COVID patients? Regarding this point, corporate gaisho had received large orders from local governments, mainly the Tokyo Metropolitan Government, to deliver meal kits to COVID patients staying at home. We do not receive such orders in this fiscal year. I suppose that is one factor to be counted. Did this meal kit have a large impact on profit? I heard it affected other companies significantly. How much impact did it have on your business profit? In terms of sales, it was about JPY 3 billion. If we take sales profit ratio of 20%, I guess there would be JPY 500 million-JPY 600 million impact. Okay. My third question is about the profit ratio mentioned earlier.
Compared to the pre-COVID period, the profit ratio declined to almost in the high one point in the actual result of FY 2022, that is over JPY 10 billion decline in gross profit. Do you expect the decline in the department store profitability will recover when your sales of cosmetics or clothes make a reasonable recovery? By other measures such as structural reform, sales method reform, and cost control, do you think sales recovery will lead to profit recovery, or the profit ratio decline cannot be fully recovered? The profit ratio is expected to decline, but it will not like the decline we experienced in FY 2020, 2021, or 2022, and we expect more positive factors in FY 2023. As the sales mix is changed, we expect the profit ratio will be lower than FY 2018.
Sales mix is changed, means items that match the current demand are selling well. We expect the profit decline will be covered by increased top line rather than cost reduction. Regarding cost, fixed cost has been reduced by almost JPY 8 billion compared to FY 2019. This also contributes to the profit recovery. You mean fixed cost is significantly reduced by the structural reform and profit is expected to be generated easier by the sales that exceed break-even point. In general, can I assume when sales grow, the decrease of gross margin ratio can be covered by fixed cost reduction and top line growth? Yes, that is correct. Thank you. That's all from me. I am Kawano from Goldman Sachs. I have two questions. My first question is about the explanation on the top line by President Yoshimoto at the beginning of the presentation.
I suppose affluent customers and Gaisho sales are quite steady at this moment, considering risks in traveling abroad. If there are any factors that could slow down your business, what are they? Is it possible to have a positive viewpoint which will last long? I'd like to know how I should understand the current situation. Another question is about the sales forecast by department store for this fiscal year. This is just my personal impression, but the sales assumption for the forecast seems a little too high for Shinsaibashi store and Sapporo store. You may be based on last one or two month sales results to develop this forecast. I appreciate if you explain what can be expected for these two stores respectively. Thank you. Let me answer the first question by sharing my thought.
In the past three years, our business has been supported by Gaisho with luxurious goods. Customers have been more active than we expected. What I can say for sure is they did not go overseas for shopping, and items that sell well were supplied to the Far East region, mainly in Japan, where the situation was relatively stable during the pandemic. During that period, what happened is things we had not expected was, as I said earlier about GINZA SIX, many young people came into the luxury goods market. They do not buy luxury items for all of their belongings. Rather, they buy expensive goods for specific items. That is obvious behavior in their consumption. Earlier I said, customers in their twenties and thirties account for more than half for GINZA SIX, and we did not expect this at all.
We are also seeing more younger customers are registered for Gaisho now. Given this situation, I believe there is still more potential market. Having said that, we must be careful about is the fact that most of such luxury brands or famous watch brands are import items, and they are made overseas and distributed to us. They are affected by foreign exchange rates, and we cannot control their decision to supply which products to which region. As I have been saying so far, we have invested in our flagship stores, such as GINZA SIX, stores in Kobe and Shinsaibashi and their surrounding areas where many customers come. We are acquiring new market there, but still it is possible the factors we cannot control will affect our business, like exchange rates or product supply.
We must always watch carefully such potential risks, but we see the market itself has been substantially expanding anyway. President Sawada will take your second question. This is Sawada. Thank you for your question about why the sales forecast of Sapporo and Shinsaibashi stores are high. The answer is very simple. Both are strong with sales from overseas tourists, so we expect growth and such sales for these two stores. Especially Shinsaibashi store expects over JPY 10 billion sales increase from overseas tourists, and Sapporo store expects to increase its sales by almost JPY 5 billion from overseas tourists. In addition, for Sapporo store, we plan to introduce two powerful major brands by the end of this fiscal year, so we expect sales increase with this plan. Thank you. Regarding import items, you said you cannot control exchange rates and supply decisions.
Do you mean those items are only supplied to larger stores or difficult to be supplied to stores that are not placed first or second, as it has been said for a long time in the department store industry? Are you seeing such a tendency recently? Specifically for the top brand, the number of stores carrying their items is declining in Japan, those items concentrate on large stores. Japan is a country that is stable and secure, and because of this, luxury brands have set relatively stable and competitive pricing for Japan in their pricing policies. I expect Japan will continue to be positioned like this, we believe we can continue to operate stable luxury brand business under this circumstance as long as we continue to have strong and stable relationship with those brands and implement store development appropriate for them.
If we want to make further growth than the growth in the past few years, we'll probably need to develop new markets. Thank you.