Integrated Report 2023

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UNITED ARROWS LTD. Integrated Report 2023

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UNITED ARROWS LTD. Integrated Report 2023

Here at United Arrows, we help you grow wings.

The moment people find great clothing is magical.
Voices rise with excitement. Faces light up.
Even attitudes and behaviors transform.
In these moments, a person’s soul grows wings,
allowing them to take flight.

When we find great clothing, we grow lighter.
Brighter. More hopeful.
And this motivates us to explore
the world outside of ourselves.

Each day, United Arrows strives to weave
more of these miracles from clothing.
This starts with stepping beyond
our limits and borders.
We must continue to refine ourtastes and try new styles.
Stay true to what we love,rather than drift with the world’s tides and trends.

Our promise is to set forth and stay true.
Of course,that’s easier said than done.
But as lovers of clothing,
believers in its
power—we’ll make thatpromise a reality.
Because our biggest competition
today is who we were yesterday.

Step Beyond
Yourself

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UNITED ARROWS LTD. Integrated Report 2023

Contents

01 Introduction

09 Sources of Value Creation

27 Message from the CFO

45 Corporate Governance03 Contents

14 Financial and Non-Financial Highlights

29 Dialogue | Our Sustainability

54 Internal Control

04 Corporate Philosophy

15 Message from the President

33 Our Sustainability

55 Corporate Information

05 The Founder’s Thoughts

19 Review of Medium-Term
Management Plan 2020-2022

35 Circularity | Circular Fashion

56 Stock Information

06 Our History
07 Value Creation Process
08 Our Operating Markets

21 Long-Term Vision 2032

38 Carbon Neutrality |Toward a Carbon-Neutral World

22 Medium-Term
Management Plan 2023-2025

41 Humanity |Work and Live in a Healthy Way

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UNITED ARROWS LTD. Integrated Report 2023

Corporate Philosophy
Our Mission

Contents

Our Way01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

Value for Business Partners / Value for Society

09

Sources of Value Creation

Value for Shareholders

14

Financial and
Non-Financial Highlights

Our
Commitment

With sincerity and a sense of beauty,
we continually create new tomorrows
for our customers, setting the standard
for lifestyle culture.

All for the Customer

Through service, products, and places charged with sincerity

Our way describes the fundamental stance that all employees

Five kinds of stakeholders sustain the United Arrows Group:

15

Message from the President

and a sense of beauty, we help each of our customers dress for

who work at United Arrows should bear in mind in order tocustomers, employees, business partners, society, and19

the lives they lead today and for richer lives tomorrow.

achieve our mission.

Shareholders.

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

We believe that engaging daily in this way can create a richer,

We work to help our customers, to benefit our customers, andWe are committed to realizing our mission by increasing value

brighter world.

to fulfill our customers’ needs. Making our customers happy isfor each of these stakeholder groups, creating value for

22

Medium-Term
Management Plan 2023-2025

the essence of the United Arrows Group, and this must remain

customers, value for employees, value for business partners,

27

Message from the CFO

our fundamental stance.

value for society, and value for shareholders.

29

Dialogue | Our Sustainability

Helping, benefiting, and fulfilling the needs of customers

The most important of these is creating value for our33

Our Sustainability

sometimes takes longer, involves a greater number of hands,

customers; only by creating value for our customers can we

35

Circularity | Circular Fashion

and costs more than expected. This is why we pursue

create value for our other four stakeholder groups. In addition,

38

productivity, speed, and quality, looking beyond what is

we believe that balanced creation of the other four values also

Carbon Neutrality |Toward a Carbon-Neutral World

expected of us in our constant pursuit of customer service.

leads to improved value for our customers.

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governanceproper service can we provide fair value for our customers’

54Internal Control

money. Our customers’ happiness leads to our happiness. We

55

Corporate Information

are nothing without our customers.

56

Stock Information

By banding together, firm in this conviction, and speeding

Creating Five Values
Value for Customers / Value for Employees /forward like an arrow, we will continue to set an indispensable
standard for lifestyle culture.

Everything we do must be for our customers. Only by providing

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UNITED ARROWS LTD. Integrated Report 2023

The Founder’s Thoughts
Enrich your life
with selected“authentic items”

Contents
solve problems and provide satisfaction. Solving problems leads to a stress-free and richer mind.

01

Introduction

I grew up in an environment where I discovered the “authentic” things made in the U.S. in the

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

1950s and 1960s, a time known as the Golden Age. With the intention of bringing these “authentic”
items to the Japanese market, I began to buy products directly in the U.S. and sell them in Japan.
Then I broadened my procurement sources to a global scale, and this resulted in a select shop
format. We earnestly pursue customer satisfaction with what we consider to be “authentic” items
at the stores we create. That’s my idea of retailing.
Wearing and being surrounded by authentic items
makes for a rich life indeed, because we know there is

Helping our customers live a richer life is what I want tonothing better than them. Authentic items are

do through UNITED ARROWS’ activities. The absolute

comfortable, reassuring, and uplifting. I want people torequirement for a “richer life” is to be stress-free. That

see and know “authentic” items and incorporate themmeans a situation that is full of satisfaction and free

into their lives. Moreover, what we offer is not only highfrom displeasure.

quality but also the emotional experience ofFashion has three roles. One of them is to makediscovering authentic items. We offer the greatest

you feel comfortable when you wear something that

hospitality even if we never have a chance to see the

you like. This leads to a stress-free situation, which iscustomer again. That was the ambition behind thean absolute requirement for a richer life. The second

Company’s establishment and is something that’s stillrole is self-expression, and the third is the uplifting

etched in our DNA.

emotion felt when dressing. Through our service,

We are in a very difficult time with many social

products, and places, we express the power thatissues. That is why we should make great use of the33

Our Sustainability

fashion has to enrich people’s minds and lives andpower of fashion to find comfort or lift our spirits

35

Circularity | Circular Fashion

provide that power to our customers.

through the act of dressing.

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

problem. A customer may say “I don’t want anything, but I have some free time, so I came to the45

Corporate Governancestore.” We interpret that as a matter to solve. Since we in the retail business communicate directly

54Internal Control

55

Corporate Information

56

Stock Information

I often say to our members, “I want you to utilize
your best qualities, make them stand out from others, and use them to solve problems in society.”
For example, we hypothesize that every customer who comes to our store has some kind ofwith customers, we can get a real sense of “what problems does the customer have right now?”
And we’ll help the customer find something and make them feel happy. In other words, our role is to

Osamu Shigematsu
Founder and Honorary Chairman of UNITED ARROWS LTD.

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UNITED ARROWS LTD. Integrated Report 2023

3

Our History

Contents

Relaying the standard oflifestyle culture to new customers
in Japan and abroad
We want to convey to the world the standard

The UNITED ARROWS Group has expanded its range of valueof rich lifestyle culture cultivated in Japan.

offerings since its inception, based on its corporate philosophy

2With this in mind, we have opened a store inStandard only when
delivering value to more customers

full-scale operations in mainland China as

In order to realize our philosophy of “setting theincluding the development of new brands forstandard,” we are also working to provide products

young people.

of “setting the standard for lifestyle culture.”
We will continue to evolve in order to provide more customers
with a richer life.

1

Taiwan, our first store abroad, and will launchwell. In Japan, we will expand the field of value
offerings through business expansion,that are affordable to more customers, such as
UNITED ARROWS green label relaxing and coen. Our

Set the standard forlifestyle culture in Japan¥130,135 million

stores in outlets and fashion e-commerce malls andstarted our own e-commerce sites.

2013

FY2023 Sales (plan)

UNITED ARROWS TAIWAN LTD.
established“setting the standard for lifestyle culture in Japan.”¥138,300 million

2019

It started as a fashion specialty store with
top-notch attire in Japan and overseas under the
keywords of “richness and quality,” and after

2009

developing various lines, it gained acceptance

UNITED ARROWS LTD.
ONLINE STORE opened

2008

among fashion-conscious people and grew.

2006
2005
2003

UNITED ARROWS SHANGHAI LTD.
established
Moved to the Prime Marketof the Tokyo Stock Exchange

COEN CO., LTD. established

BEAUTY&YOUTH UNITED ARROWS
launched

Began offering products throughZOZOTOWN, a fashion e-commerce mall

Listed on the First Section of
the Tokyo Stock Exchange
2002
UNITED ARROWS green label relaxing launched
Listed on the Second Section
Registered at the Japan Securities Dealersof the Tokyo Stock Exchange
Association (later, JASDAQ), becoming an
2000
OTC traded company
Opened the first store
in an outlet mall

UNITED ARROWS LTD. established1989 1990

1991

1992 1993 1994 1995 1996 1997

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

2022

1999

1989

Introduction

FY2022 Sales

sales channels are expanding, as we have opened

UNITED ARROWS LTD. was born with the ambition of01

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2011

2012

2013 2014 2015 201620172018 2019 2020 2021 2022 2023 (FY)
Plan

Note 1) The Company’s accounts were presented on a consolidated basis beginning in FY2005. Note 2) From the beginning of FY2021, the “Accounting Standard for Revenue Recognition” has been applied.

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UNITED ARROWS LTD. Integrated Report 2023

Value Creation Process

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Protect human rights inthe supply chain

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

For society

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Our mission

With sincerity and a sense of beauty, we continually create new tomorrows for our customers,
setting the standard for lifestyle culture.
Socialenvironment

CapitalMedium-term
management plan

Strengths / Business model

UA Club, number ofactive memberships
Customerawareness(non-consolidated)

1.3 million

Number of employees(consolidated)

3,915

Socialtendencies

Service

High-end market

Corporate philosophy ×
Sense of beauty × Sales skills
for refined hospitality andadvanced customer service

Trend-conscious
market

The Company s
own brands(consolidated)

27

Brands carried(non-consolidated)

Approx.
LifestyleLaunch onto the
optimal market

1,700

Products

PlacesPrivate label brands ×
Selected brands

Physical stores ×
Online storesthat are optimally
produced or purchasedfrom a global perspectivethat offer products of ahigh quality andcomfortable spaces

Basictrend-conscious
marketNew basic
trend-conscious
marketNumber of business
partners’ plants(non-consolidated)

Approx.

400

Financial targets(consolidated)
FY2025

Sales¥160¥170 billion
Operating income¥9¥10 billion

298

SARROWS pursuit of sustainable fashion and lifestyle(As of March 31, 2023)

Foster a sense oftrust and reassurance
regarding prices

For employees

ROE

For shareholders

13.8-15.4%

Increase profit distribution
as corporate value
increases

For business partners

Sustainability activities

22,270For customers

5.6-5.9%

Operating marginp.22

Number of stores

Number of shareholders

Realization of abeautiful company

Increase profit
productivity = Improve
compensation andengagement(consolidated)

Environmental
awareness

Long-term vision

Circularity

Carbon Neutrality

Humanity

Circular fashion

Toward a carbon-neutral world

Work and live
in a healthy way

Non-financial
targets
FY2030p.33

Reduce environmentalload by controlling waste,
etc.

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UNITED ARROWS LTD. Integrated Report 2023

Our Operating
Markets
The UNITED ARROWS Group classifies the apparelmarket into two broad categories: theMarkets

High-end
Trend-conscious
market

UNITED ARROWS LTD.
Trend-conscious

trend-conscious market, which is for consumers whoCore business and subsidiaries

Numberof stores

UNITED ARROWS General Merchandise Store*1
UNITED ARROWSBEAUTY&YOUTH UNITED ARROWS
Others*2

14
24
37
29

Operating company

are highly sensitive to fashion trends, and the volume
market, which mainly consists of relatively
low-priced daily clothing. The Group targets theBasictrend-conscious

trend-conscious market and operates its business in

UNITED ARROWS LTD.

UNITED ARROWS green label relaxing
Others*3

84
1

the form of select shops.
New basic
trend-conscious

A select shop is a retail store that carries products
selected from around the world by buyers based on

COEN CO., LTD.
(Subsidiary company)

COEN

75

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

the brand concept. In Japan, select shops that offer
both select products and private label brand

Volume market

products are widely available, and our company is
one of those.
OutletOur customer base is made up of consumers who
have a strong interest in fashion and want to enrichtheir lives through it. Our operating activities are

Overseas

UNITED ARROWSTAIWAN LTD.
(Subsidiary company)

driven by an awareness of this customer segment.

*1 UNITED ARROWS General Merchandise Stores offer both UNITED
ARROWS and BEAUTY&YOUTH UNITED ARROWS products in thesame store.
*2 Others in trend-conscious market: DRAWER, Odette e Odile,
STEVEN ALAN, ROKU, BLAMINK, H BEAUTY&YOUTH, District
UNITED ARROWS, ASTRAET, California General Store*3 Others in basic trend-conscious market: CITEN

UNITED ARROWS LTD.

UNITED ARROWS LTD. OUTLET

26

UNITED ARROWS General Merchandise Store*1
UNITED ARROWS green label relaxing

3
1
3
1

COEN
UNITED ARROWS LTD. OUTLET

298

The Group Total
UNITED ARROWS LTD.
COEN CO., LTD.
UNITED ARROWS TAIWAN LTD.

215
75
8
As of March 31, 2023

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UNITED ARROWS LTD. Integrated Report 2023

Sources of Value
CreationContents

All for the customer

Our Way01

Introduction

03

Contents

The sources of the Company’s value creation are

04

Corporate Philosophy“power to create,” which builds the personality of05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

By continuing to pursue these powers, we are09

Sources of Value Creation

helping customers to live a richer life.

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

each brand, and “power to communicate” throughthree refined elements: service, products, andplaces.

Power to create

Planning

Power to communicate

Service

Selecting

Products

PlacesResearch

The Company has established a creative system for each

Service = Responsive customer service

35

Circularity | Circular Fashion

brand in the product department, which plans andProducts = Carefully made and selected products that

selects products. The director of each brand takes in theincorporate a broad global perspective

38

Carbon Neutrality |Toward a Carbon-Neutral World

information provided by the research department (social

Places = Facilities, spaces, and environments that are

41

tendencies, trends, artistic and cultural development,

genuinely comfortable and pleasant

Humanity |Work and Live in a Healthy Way

customer needs, etc.) and sets a direction, based on

Through these three elements, we provide excitement

45

Corporate Governancewhich the merchandisers (MDs) and buyers plan andfor customers.

54

Internal Control

55

Corporate Information

56

Stock Information

procure products.

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UNITED ARROWS LTD. Integrated Report 2023

Sources of Value Creation | Power to create

ResearchContents

Making creative use ofsocial tendencies andcustomer feedback

Planning

High-quality productplanning that reflects thelatest trends

SelectingFinding and deliveringhigh-quality products witha genuine sense of beauty

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

The Company’s creative activities are supported by thoroughOur buyers quickly share their on-the-spot information with

Over the years, the Company has accumulated excellent

research, incorporating social tendencies, trends, and artistic

MDs so that they can stay on top of the latest trends andselection skills and a wealth of product knowledge as a pioneer

07

Value Creation Process

and cultural development. The key to research is not just to

market tendencies and utilize this information in creativein Japanese-style select shops. Our sense of beauty in08

Our Operating Markets

collect data, but to make use of the customer opinions

activities. We also have an in-house atelier where we canselecting products is highly valued and has helped us earn

09

Sources of Value Creation

gleaned through communications at physical stores to drive

create high-precision samples. We use the high-precision

trust from the business partners from whom we buy products.

improvement in creative activities. With this approach, we

samples to instruct manufacturing plants about production

These insights and partnerships have borne fruit in terms of

14

Financial and
Non-Financial Highlights

create products that combine the latest trends with realplans, which leads to higher quality products. In addition, wethe breadth of products handled and advantages inneeds.

collaboration, resulting in the customers’ recognition that “if15

regularly hold Quality Control (QC) meetings with major

Message from the President

manufacturing plants to further improve quality.

we go to UNITED ARROWS, we can get something genuine.”

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

Brands’ uptake of trends
Designer
Pattern maker

Private label product planning

Before the start of the season
We thoroughly research not only information on
domestic and international collections but also awide range of social tendencies, trends, andmovements in art and culture. We also capturechanges in customer awareness and behavior
through in-store communication and utilize theinformation in creative activities.

Buyer
BuyingMD

Development of product planning

Store
Director

Brand direction

ResearchResearch on trends, art, and social tendencies

After the start of the season
We closely monitor the pre-order events and thesales at the start of rollout, thereby improving
the accuracy of demand forecasts. Furthermore,by quickly applying feedback from stores to
product planning and ordering, we achieve
optimal sales in line with customer needs.

Composition ratio of private label brands and selected brands
Major brands

Overall

Private label brands

Selected brands

50.5%

49.5%

Private label brands

Selected brands

50.3%

49.7%

41

Humanity |Work and Live in a Healthy Way

Private label brands

Selected brands

66.8%

33.2%

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information■ Private label brands

57.8%■ Selected brands

42.2%

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UNITED ARROWS LTD. Integrated Report 2023

Sources of Value Creation | Power to communicate

To provide an exciting
experience for our customers

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

We want to provide an exciting experience for our customers through interpersonal contact. For

06

Our History

this reason, we continue to pursue “responsive customer service grounded in refined hospitality”

07

Value Creation Process

while remaining close and attentive to our customers.

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

products, but also experience discoveries and delights that come from sincere dialogue.

21Long-Term Vision 2032

Thoroughly disseminate our philosophy

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Service

Value derived from person-to-person communication
In recent years, following the declaration of the state of emergency due to the COVID-19 pandemic, thecomposition ratio of online sales has increased rapidly. On the other hand, an increasing number of customers
are finding value in customer service at physical stores, which they count as a rich shopping experience. Our
goal is to offer service that makes customers happy. We hope that customers will not only purchase ourOur way: All for the customer. This is a basic attitude that every employee working in the Group must follow. In
order to nurture human resources who put this idea into practice, we have established a variety of systems,
including our in-house academy, the UNITED ARROWS University, a training program, and a sales master systemthat rewards outstanding sales staff. Through these opportunities of learning and awareness, we aredeveloping people who can provide “quality customer service” rather than “good customer service.”

Deliver the power of people through the Internet
The power of people is also effective in online sales. One example is store salespeople’s styling proposal on the
Company’s e-commerce sites. When shopping online, it can be difficult to imagine how you will look in theclothes and what items you should choose for coordination. This problem can be solved by providing realistic
styling information from a salesperson of a similar style and age. Purchasing through a salesperson’s styling
proposals accounts for approximately 28% of our e-commerce sales. In this way, the power of salespeople
contributes greatly not only to the sales of the stores they belong to, but also to the sales of our e-commercesites and other stores.

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UNITED ARROWS LTD. Integrated Report 2023

Sources of Value Creation | Power to communicate

Products that inspire
customers

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

We offer “carefully made and selected products that incorporate a broad global perspective and06

Our History

satisfy the five key criteria*.” For this reason, we strive every day to improve our sense of beauty

07

Value Creation Process

and create products that inspire customers.

08

Our Operating Markets* Five key criteria: Customers can purchase (1) the products they want, (2) when they want, (3) where theywant, (4) in the quantities they want, and (5) at the prices they want09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

maintain a high level of profitability with only purchased products, and with only private label brand products,

21

Long-Term Vision 2032

the selection of items tends to be similar. However, by combining both, it is possible to achieve both a rich

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

Balanced configuration based on experience and data

29

Dialogue | Our Sustainability

Our products are classified into “products with originality” that are not influenced by trends, “products that33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Products

Create and find beautiful items and good items
The special feature of Japanese-style select shops is that they produce private label brand products in addition
to selected products that buyers have carefully purchased from Japan and around the world. It is difficult toselection and high profitability. We hope to contribute to a richer life for customers by creating and finding“beautiful items” and “good items” based on our firm sense of beauty and our manufacturing philosophy.

capture the sense of the times” that reflect the trends of each season, and “cutting-edge products” that havethe potential to become the next trend. By adjusting the composition ratio of these three types of products
from season to season, we can not only change the appearance of our stores, but also create stores where
customers can discover and enjoy.

Full lineup created by trust and achievements
What is important in the management of select shops is to offer seasonal brands ahead of other shops.
Especially in the case of overseas brands that are planning to tap into Japan for the first time, they are careful inselecting a business partner to rollout their products. The reason we are chosen as their first business partner
in Japan is because of the trust and brand strength we have built over the years. This is also evident in the factthat we have developed exclusive products with a number of well-known brands.

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UNITED ARROWS LTD. Integrated Report 2023

Sources of Value Creation | Power to communicate

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

We place great importance on “facilities, spaces, and environments, including shops,

06

Our History

e-commerce, and other customer touchpoints, that are genuinely comfortable and pleasant.”

07

Value Creation Process

Our aim is to provide a place that can inspire customers.

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

For example, we produce a light luxury and classy atmosphere for UNITED ARROWS, and for BEAUTY&YOUTH,

27

Message from the CFO

simplicity and intelligence in a casual style. However, a space with too strong a brand presentation is not a

29

Dialogue | Our Sustainability

33

Our Sustainability

while enjoying the vision of the brand.

35

Circularity | Circular Fashion

Creating a new value for customer experience through OMO*

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

seamless shopping. In the future, we hope to provide a more optimal and accurate service that meets the

45

Corporate Governancechanging behavior of each customer.

54

Internal Control* OMO stands for Online Merges with Offline. It is a measure to provide the best possible customer experienceby combining online and offline benefits.

55

Corporate Information

56

Stock Information

PlacesEnrich customers’ minds

It is not just a place to sell items
Our stores are not just places to sell items. We view our stores as “places where we communicate value andculture” and “places where customers can have an inspiring experience.” Aiming to ensure a valuable shopping
experience at our stores, we strive to create a comfortable, aesthetically pleasing store environment suitable
for a place where customers can experience stylish products and high-quality customer service.

As a place to feel the brand’s philosophy
To communicate the philosophy of brands, our stores are designed by focusing on the concept of each brandand the taste of customers, while reflecting the trends in architecture and interiors and the sense of the times.

suitable place for customers to relax. We pay attention to every detail of the design, interiors, and display ofeach store so that it becomes a space where customers can choose and consider products in a natural way

In March 2022, we renewed our e-commerce site. Accordingly, we have switched to a fulfilment system, where
our own distribution center accepts orders, manages inventory, delivers and follows up, instead of an
outsourced system. This laid the groundwork for an OMO service that integrates online and offline for more

14

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UNITED ARROWS LTD. Integrated Report 2023

Financial and Non-Financial Highlights
Sales and gross margin

Operating income and operating margin(consolidated)

Sales (millions of yen)

Net income per share and ROE(consolidated)

Gross margin (%)

Operating income

Operating margin (%)

Net income per share(millions of yen)

158,918 157,412
121,712 118,384
51.4

7.0

49.9

2020

2021

6,362

18.0

5.6

1,683

51.6

(FY)

Greenhouse gas emissions

9.2

2019

2020

25.71

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO(non-consolidated)

29

Dialogue | Our Sustainability

Acquisition ratio (%)

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

20.0

2022

(FY)

2018

2019

2020

2021

2022

(FY)

Ratio of female managers

6,709

6,239

10,196

9,945

10,337

2018

2019

2020

2021

2022

Number and percentage of womenin managerial positions of section chief or above

69.8

(FY)

Percentage (%)
22.4

7,743

32,630 29,763 30,358

Ratio of consent forms acquired regarding
Code of Conduct for Business Partners(non-consolidated)

Average of positive response rate
for motivational factors (%)

25.4

22.6

26,336 29,217−252.74
2021

Composition ratioof online sales (%)

27.5

13.6

-21.0

(Persons)

8,126

Corporate Philosophy

2.4(non-consolidated)

Scope 2 (t-CO2)

04

Online sales (millions of yen)

152.37

4.9

Employee engagement score(consolidated)

Scope 1 (t-CO2)

2018

ROE (%)

124.15

1.4

2022

Contents

32.0−6,613
2019

03

226.2045.2

2018

Introduction

Sales through the Company’s
e-commerce sites (millions of yen)

8,758

50.8

01

Online sales and the composition ratioof online sales (non-consolidated)(yen)

11,063130,135

Contents

70.0

48.2

18.3
15.2
10.5

9.2

24
19

14
580
2021

8

584
2022

(FY)

2021

2022

(FY)

2018

6
2019

11.6

2020

2021

2022

(FY)

2021

2022

(FY)

15

I

UNITED ARROWS LTD. Integrated Report 2023

Contents

Message from the President

Becoming a “beautiful company”—Pride and strategy of UNITED ARROWS
Yoshinori Matsuzaki
Representative Director, President, and CEO

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

16

I

UNITED ARROWS LTD. Integrated Report 2023

Message from the President

Continue to pursue truth, goodness, and beauty

always aware of. The word “beauty” is used for something unique andOur mission is “With sincerity and a sense of beauty, we continually create

trip. The essence of this word encapsulates exactly the values that we want

new tomorrows for our customers, setting the standard for lifestyle culture.”

to express. In this vision, rather than comparing ourselves to others, we are

01

Introduction

Based on this mission, from our founding to the present, we have notcommitted to providing the best and the most unique by “doing good,”

03

wavered in our quest to promote the values that are the norm of Japanese life

“making good things,” and “doing good business” in earnest pursuit of truth,

Contents

and culture, to provide our customers with the fullness of heart and life, andgoodness, and beauty.

04

Corporate Philosophy

05

The Founder’s Thoughts

customer service, the way we sell, the way we interact with our business06

Our Historyof aesthetics, we value Service, Products, and Places. The trinity of highly

partners, and so on. A “beautiful company” can be seen when we build piece07

Value Creation Process

specialized customer service (Service), products selected from all over theby piece, paying attention to details such as creating unique products based08

Our Operating Markets

world that reflect the trends of each season, and that have the potential toon communication with our customers and seeking a more comfortable store

become the next trend (Products), and comfortable and pleasant store

environment and selling methods. There is no shortcut to this. Each09

Sources of Value Creation

spaces (Places) is how we help our customers dress comfortably, live

employee must express their own inherent inner “beauty” continually, day by

14

Financial and
Non-Financial Highlights

comfortably, and lead comfortable lives. This is our raison d’etre, and we aimday. We aspire for our customers to choose UNITED ARROWS because they

to become an “indispensable and irreplaceable company” for our customers

feel it has a value that only UNITED ARROWS can provide, and we will continue

15

Message from the President

by continuing to refine our Service, Products, and Places.

striving toward that goal.

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

Management Plan 2020 -2022,” we conducted a review of unprofitable

33

Our Sustainability

subsidiaries, businesses, and stores, as well as structural reforms of the

35

Circularity | Circular Fashion

headquarters organization. At the same time, we have laid the groundwork

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

driven by the desire to provide a shopping experience value that is close to45

Corporate Governancethe one customers would receive by actually visiting the stores.

54

Internal Control

55

Corporate Information

56

Stock Information

to pursue aesthetics ourselves.
In order to deliver our unique value to our customers through the pursuit

valuable that cannot be enjoyed anywhere else, such as art or scenery on a

The “beauty” we seek lies not only in our products, but also in our

In 2023, we formulated a long-term vision with a target of fiscal 2032 anddeclared our goal for UNITED ARROWS to be a “beautiful company. We willcontinue to pursue truth, goodness, and beauty in order to contribute to the

Lay the groundwork for our next growth

realization of a sustainable society and become a high-value-added group

We are self-conscious about the fact that some of the growth and expansionthat continues to be loved by customers.” As stated in our mission, whichthat we have experienced to date has not been consistent with our values. In

touts, “With sincerity and a sense of beauty,” “beauty” is something we areorder to correct such misalignment, during the period of the “Medium-TermContents

for our next growth by promoting OMO, including the renewal of our
e-commerce site, and activities that are focused on improving productivity.
This coincided with the time of the COVID-19 pandemic, and OMO was

By incorporating elements of a human touch such as chat-based
customer service and linking stores with e-commerce, we aim to provide

17

I

UNITED ARROWS LTD. Integrated Report 2023

Message from the President

satisfaction to more customers, including those who are not good atreceiving physical customer service at the stores.
As our employees experienced the COVID-19 pandemic and were unable

Sales at fair prices on a routine basis

Contents

The new medium-term management plan, which begins in fiscal 2023,

to open our stores at times, this served as an opportunity for each of us toconsists of three main strategies: “creativity,” “multi,” and “digital,” based on

01

Introduction

think about how we could improve customer satisfaction and focus ourfour categories. Above all, I am focusing on strengthening sales at fair prices,03

attention on our customers.

or fixed-price sales. It is natural to sell products that we are confident inContents

04

Corporate Philosophy

05

The Founder’s Thoughts

The slogan of the new medium-term management plan, “providing

offering at a fair price. For example, if you see that a product you bought at a

excitement,” was also born out of introspection during this period that what

fixed price is on sale, you will feel disappointed. Of course, not having sales at

we offer to our customers is an inspiring experience of “feeling excited by

all is not realistic at this point, but our aim is to be a “beautiful company” that06

Our History

good customer service” and “feeling energetic when wearing these clothes.”

ensures the same quality of services to everyone at any time. Over a long07

Value Creation Process

In that sense, it was an important period in which we were able to gain aperiod of time, we will enhance the creativity of Service, Products, and Places08

Our Operating Markets

sense of unity and gain a foothold for our next growth by reviewing what we

one by one and steadily improve our corporate image. We believe that this will

should do.

promote sales at fair prices, which in turn will lead to the realization of our09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

long-term vision. Therefore, the new medium-term management plan will

Refresh the overall image of the entire company

focus on strengthening fixed-price sales.

In drafting the new medium-term management plan, with our sights set on

Communicate our unique value overseas

realizing our long-term vision, we have organized the issues we currently
recognize into four categories: age axis, taste axis, business type, andThe strength of the select shop is the ability to combine items across brands

DX/infrastructure. All of these are important, but we recognize thatand expand the range of coordination. In addition, we are highly capable ofaddressing the “age axis” is an urgent issue. While we are supported mainly bydeveloping private label products, enabling us to catch up with ourbaby boomers’ children who want high quality, including store environments

customers’ real needs and provide trends that are half a step ahead. Striking

and customer service, we are currently not appealing enough to those in their

the optimum balance between select and private label products not only

teens and 20s. The aging of customers is a big challenge for fashion

increases our customers’ choices, but also increases our profits.

companies. Once a brand or corporate image has deteriorated, it is not easy to

To increase profit margins at all, sales expansion is essential. Overseas

recover. Therefore, we will refresh the image of the entire company by partiallystrategy becomes very important for that. In Europe, the United States,

rejuvenating existing brands and developing new brands for young people.

China, and other Asian countries, the polarization between expensive highOn the other hand, it is also essential to expand the “taste axis” and thebrands and inexpensive fast fashion is increasing, and there is no“business type” in line with changes in the lifestyles and values sought by

established market for the middle class. That’s where we have a chance tobaby boomers’ children. In addition, in order to achieve this, the development

win. Although not in the price range of a high brand, we would like to convey

45

Corporate Governanceof “DX/infrastructure” is essential to ensure steady profit generation. Since

our unique value as real clothes, something that can be used for a long time

54

Internal Control

these four category issues are all connected, we believe it is necessary to

and make people feel rich. We will start by strengthening our business in thebalance the overall process.

Asian region, where people are close in body shape to Japanese, and will55

Corporate Information

56

Stock Information

18

I

UNITED ARROWS LTD. Integrated Report 2023

Message from the President

eventually consider expanding into Europe and the United States.

serious and urgent matter that conflicts with human rights issues is
discovered at our business partners, transactions may be suspended.

Contents

Toward the realization of a sustainable society

However, our basic stance is that we will share our wisdom to solve problems
and “reduce negativity in the world.” We believe that the path to sustainable

01

Introduction

As stated in our long-term vision, sustainability initiatives are a must-havegrowth is not to fall into self-righteous profit-making, but to co-exist and03

agenda. Critics have pointed out, especially in the fashion industry, theco-prosper, and to avoid distortions anywhere.

Contents

04

Corporate Philosophy

Beyond the challenge lies our future

05

The Founder’s Thoughts

06

Our History

three perspectives of “Circularity,” “Carbon neutrality,” and “Humanity” to

The future is not a prediction or an extension of the past. The future is07

Value Creation Process

promote initiatives. These are issues that need to be addressed throughout

something that we create ourselves, something that we carve out with ourown hands. That is why we are determined going forward to challenge08

Our Operating Markets

the supply chain. Therefore, we must deepen our communication with ourcustomers and business partners even more than before. In particular, if aourselves more to new things for a better future.

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

environmental impact of mass production and mass consumption, as well as
child labor and human rights issues, etc. in some areas.
We are also tackling these issues head-on, setting targets from theSometimes we need to be flexible enough to change our strategy inresponse to ever-changing circumstances. As long as the mission that forms
the backbone of the company remains intact, I believe that the strategy canbe revised as needed. Strategy is a methodology for promoting our ideal
management, so it is rather natural to optimize it according to the situation.
We will not only enhance the value of our brand, but also promote activities
that lead to the realization of our mission of creating a standard of living
culture everywhere. As a fashion company, we want to create exciting value
and ways to provide it while our customers and we ourselves enjoy it.

Yoshinori Matsuzaki
Representative Director, President, and CEO

19

I

UNITED ARROWS LTD. Integrated Report 2023

Review of
Medium-Term
Management Plan
2020-2022

Under Theme 1, “Fundamental review of profit structure” of the Medium-Term Management Plan 2020 -2022, we conducted a fundamental review of therevenue structure, including reviewing unprofitable businesses, subsidiaries, and stores, restructuring the headquarters organization, changing
personnel policies, and improving gross margin by improving inventory efficiency. We believe that we have generally achieved the expected results foreach category. Theme 2, “Regain earning power,” included measures to improve earnings in our core businesses, improving gross margins, developing

01

Introduction

03

Contents

04

Corporate Philosophy

As a result of addressing each of the above themes, in fiscal 2022, operating income was ¥6.3 billion, ROE was 13.6%, and dividend payout ratio was

05

The Founder’s Thoughts

30.8%. Although we did not completely exceed the pre-COVID-19 pandemic level due to changes in our consolidation structure, etc., we were certainly06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

new brands to seed the new medium-term management plan, and promoting OMO with a focus on revamping our own e-commerce site.
When it was announced in November 2020, the final year target of the medium-term management plan was consolidated operating income of ¥7.0
billion to ¥8.0 billion and ROE of 12.0% to 14.0%. In May 2022, we revised our financial target to operating income of ¥4.8 billion, ROE of 9.6%, and dividend
payout ratio of 30.4% due to the longer than expected impact of the COVID-19 outbreak, especially in urban areas, which is the core of sales generation.

able to return to a level close to our previous level and laid the groundwork for our next growth.

1. Drastically review the revenue structure

Comparing plans and results
Targets
May 2022 forecast

OperatingincomeROE

Dividend
payout ratio

¥6.3

9.6%

13.6%

30.4%

30.8%

billionScrutinized unprofitable subsidiaries,
businesses, and stores• Number of stores down 17.0% from the end of March 2020, including those due to changes in
the consolidation structure

Structural reform of theheadquarters organization• Changed the organizational structure from business headquarters to functional headquarters

Changes in personnel measures• Changes in the consolidation structure and reduction in the number of employees due tonatural attrition: Decreased by 19.2% from the end of March 2020
• Corrected downward rigidity of personnel expenses:
Decreased by 3.6 billion yen (down 14.5%) from FY2019

Improvement of gross margin throughimproved inventory efficiency• Controlled inventory procurement: Inventory turnover 6.3 (+0.4pt from FY2019)• Strengthened regular price sales: Consolidated gross margin of 51.6% (+0.8 pt from FY2019)

Results¥4.8

billionContents

2. Regain our earnings power
Improved the revenue ofcore businesses

Promoted OMO• Product development fit for “with Coronavirus”:
Developed new brands for outdoor activities, yoga, and golf, etc.
• Business development in line with the new era:
Launched CITEN, a new brand with an eye on younger customers• Renewal of UNITED ARROWS (UA) ONLINE:
Sales: 10.3 billion yen, 34.0% of total sales (vs. FY2019 165.7%, +12.7pt)
Number of cross users* Approximately 170,000 (vs. FY2019 153.9%)• Strengthened staff content to digitalize the strengths of retail stores:
Sales via styling: about 28% of UA ONLINE sales* Customers who use both retail stores and UA ONLINE

20I

UNITED ARROWS LTD. Integrated Report 2023

Review of Medium-Term Management Plan 2020-2022

Contents

Current Situation and Issues

01

Introduction

03

Contents

04

Corporate Philosophy

1. Issue along the Age Axis

2. Issue along the Brand Axis

3. Issue in terms of business

The Company is supported by those who have relatively high sensitivity

The Company’s main brands are concentrated on traditional and

The third is the issue in terms of business. In offering lifestyles withand want service of high quality, including the store environment andconservative tastes, and there are still domains that we haven’t fullyhigh sensitivity, the area in which the Company has been able to make05

The Founder’s Thoughts

customer service. While our main customers are in their 30s and 40s,

captured, such as casual, mode, street, and feminine.

proposals is still limited to fashion. In recent years, we have been06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

4. Issue of efficiency improvement throughdigital technology and infrastructuredevelopment

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

There is still work to be done that involves a variety of infrastructure

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

Mode

45

Corporate Governance

Main businesses are concentrated on traditional,
conservative tastes
There is room to expand in other tastes including casual and mode

54

Internal Control

55

Corporate Information

56

Stock Information

our appeal to those in their teens and 20s is insufficient.

We see the two issues of age and fashion tastes as evidence thatOn the other hand, even for those in their teens and 20s,
per-customer spending is at a high level, ranging from the mid-10,000

working on outdoor activities, golf, wellness, living environment,

the Company has plenty of room to grow even within the domestic

corporate services, and others; however we have yet to reach the point

apparel market.

where we can offer complete lifestyles.

yen range to the mid-20,000 yen range. By expanding this age

Our overseas business is also limited to the Taiwan area, andsegment, we believe we can expand our business while maintaining

partly due to the COVID-19 pandemic, we are only now about to begin

high sensitivity and high added value.

our efforts in mainland China on a full scale. This is another area of

Number of purchasers

Per-customer
spending(men and women, total)(persons)

60,00040,000potential growth in the future.
Natural(yen)

20,0000

0

10,00020,000Cool

30,00070s

and older60s

investments, including review of the core product management system

50s

with a view to the medium to long term, digitalization of productprocurement, capital expenditure to promote OMO, and reorganization

40s

of distribution with an eye on future business expansion.
To achieve our long-term vision, we must make appropriate

30s

investments under the new Medium-Term Management Plan.
20s
10s
Expand young customers /Develop main customersof the next generation

Spending on fashion by
the Company’s young
customers is high

UNITED ARROWS non-consolidated store results

Main customers are those in the 30s to 40s,
with the potential to expand into the 20s

Concentrated on conservative

Feminine

21

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UNITED ARROWS LTD. Integrated Report 2023

Long-Term Vision
2032

Contents

UNITED ARROWS,a Beautiful Company

Long-Term Financial Targets

25.0

Overseas(Taiwan)

UA LTD. new businesses:
apparel –derived andother domains

130.1

25.0

1.5

UA LTD. new businesses:
apparel domain

40.0

COEN CO., LTD.

10.7

What we aspire tobe when weachieve thelong-term vision
Values to be held
toward thelong-term vision

UA LTD.
existing businesses

UA LTD.

118.4

150.0

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

Departure from an orientation toward sales expansion on the premise of mass
production and mass consumption, and switching to an orientation toward
broadening the customer base and expanding the scope of value provision

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

We aspire to be a high-value-added group with high sensitivity that can propose standards for lifestyleculture by expanding our business and broadening our customer base.

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

A group that offers high-value-added lifestyles with high sensitivity
We wish to be indispensable to living a life with high sensitivity in Japan= Procuring appropriate amounts of products properly and selling them without waste• For customers: Foster a sense of trust and reassurance in prices• For employees: Increase profit productivity = Improve compensation and engagement• For shareholders: Increase profit distribution as the corporate value increases• For business partners: Protect human rights in the supply chain• For society: Reduce environmental load by controlling disposal, etc.
In addition, the use of environmentally conscious materials, switching to renewable energy, and recycling of waste will bepromoted to achieve sustainability goals

FY2022
Results

FY2032
Plan

Corporate Philosophy

06“Creating the maximum corporate value with limited resources”
Approach tosustainability in thelong-term vision04

realization of a sustainable society and become a high-value-added group that

Overseas(Taiwan, China)

COEN CO., LTD.

Contents

The Founder’s Thoughts

10.0
CAGR

03

05

250.0
6.8%

Introduction

We will continue to pursue truth, goodness, and beauty in order to contribute to thecontinues to be loved by customers.

Sales (billions of yen)

01

22

I

UNITED ARROWS LTD. Integrated Report 2023

Medium-Term
Management Plan
2023-2025

Contents

The slogan of the Medium-Term Management Plan

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

The slogan of the Medium-Term Management Plan, which

06

Our History

serves as a starting to achieving the long-term vision, is

07

Value Creation Process“Providing excitement: connecting with customers widely08

Our Operating Markets

and deeply.” While deepening relationships with the09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

existing customers centered on the OMO initiatives, we

providing excitement - connecting with customers widely and deeply

will expand our business and customer base through new
business development.
Our financial targets for fiscal 2025, the last fiscal
year of the Medium-Term Management Plan, areconsolidated sales of 160 billion yen to 170 billion yen,

Financial Targets(consolidated)

Three Key Strategies

consolidated operating income of 9 billion yen to 10 billion
yen, consolidated operating income margin of 5.6% toSales

160-170

5.9%, and ROE of 13.8% to 15.4%. These represent thehighest profit level since the exclusion of CHROMEHEARTS JP, GK from the scope of consolidation, and this isBillions of yen

UA
CREATIVITY
Strategy

UA
MULTI

UA
DIGITAL

Strategy

Strategy

the level we aim to achieve.
The Medium-Term Management Plan consists ofthree main strategies. The UA CREATIVITY strategy aims tostrengthen brand appeal while continuing to work on the

Operating income

Billions of yen

growth and expansion of existing businesses. The UA
MULTI strategy is an effort to expand our business andcustomer base through new business development, while

Operating income
marginthe UA DIGITAL strategy is an effort to streamline
corporate operation by making capital expenditure in
anticipation of future growth.

9-10

ROE

5.6-5.9%

13.8-15.4%

Grow and expand existing
businesses• Top-line growth• Improvement of gross margin

Strengthen brand appeal• Expansion of investment in
human capital• Rebranding of the corporate
brand

Re-grow COEN

Develop non-apparelbusinesses
Global expansion

Promote OMO
Optimize thesupply chain

23

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UNITED ARROWS LTD. Integrated Report 2023

Medium-Term Management Plan 2023-2025

UA
CREATIVITY
StrategyContents
Grow and expand existing businesses

01

Introduction

We will strive to expand sales through OMO promotion and to resume new store openings. In March 2022, UA ONLINE was renewed to

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

quantities, improve the ratio of items sold at regular prices, and improve gross margin of online. In the face of rising costs, we will07

Value Creation Processcontinue to carefully set prices and implement cost control measures to maintain the cost ratio at an appropriate level. We will ensure08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

lay the groundwork to promote OMO measures. Since then, we have been working on various initiatives, such as linking with retailstores’ inventory and digitalizing customer service skills, including styling and online customer service. While evolving these initiatives,
we will renovate the membership program and renew the app for UA ONLINE to increase sales of both physical stores and online.
In terms of improving gross margin, we will continue to control cost of sales, ensure the procurement of inventory in appropriate

Grow and expand existing businesses
Top-line growth• Expand sales through the promotion of OMO• Resume new store openings

procurement in appropriate quantities, strengthen regular price sales, and improve gross margin. Moreover, we are curbing sales at
discount prices and promoting sales of private label products in order to increase the gross margin of online sales.

Strengthen brand appeal
We recognize that the Company’s competitiveness comes from the power of service with refined customer service skills, the power

Improvement of gross marginof attractive products, and the power of places to provide customers with an uplifting shopping experience. It is our employees, the• Control costs• Control inventory procurement and improve the ratio of
items sold at regular prices*• Improve gross margin of online sales

human capital of the Company, that support these and build the brand value. Under the Medium-Term Management Plan, we plan to* Ratio of sales at regular prices to total purchases

enhance the Company’s brand appeal by improving employee engagement. In order to encourage employees to learn and develop
their capabilities on their own initiative, we will enhance our educational system, including support for business school attendance
and the acquisition of certifications. We will make active use of our talent management system to visualize the experience, skills, andvision of each and every employee, and promote the assignment of the right talented people in the right positions for various future

Strengthen brand appeal
Expansion of investment in human capital• Improve employee engagement
Investment in employee education
Assignment of the right talented people in the right positions
through talent management

initiatives, creating an environment in which employees are highly motivated to carry out their tasks. At the same time, we will
strengthen new recruitment.
Rebranding of the corporate brand is an effort to reinvent the corporate entity itself by developing new brands that create a newcorporate image. We will maintain our existing positive image of being strong in business and formal, traditional, conservative, reliable,
and reassuring, while rebuilding the corporate brand to one that is even more active and appealing to a wide range of generations.

• Strengthen recruitment

Re-grow COEN

Rebranding of the corporate brand

As for the consolidated subsidiary COEN LTD. , we will strive for growth and expansion to secure a solid position in the new basic

45

Corporate Governance• Develop new brands that create a new UA image

trend-conscious market.

54

Internal Control

55

Corporate Information

56

Stock Information

Re-grow COEN

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UNITED ARROWS LTD. Integrated Report 2023

Medium-Term Management Plan 2023-2025

Spotlight

Contents

Improvement in gross margin by anincrease in the full-price sales ratio and adecrease in the cost ratio

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

distribution and centralize inventory information of physical stores, online stores, and distribution

21

Long-Term Vision 2032

centers. Through the evolution of the OMO initiatives, we aim to reduce sales opportunity losses and22

Medium-Term
Management Plan 2023-2025

Decrease of the cost ratio

27

Message from the CFO

Currency fluctuations, raw materials, manufacturing costs, and import costs are putting upward

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

The full-price sales ratio in fiscal 2022 improved significantly from the previous fiscal year, but there
is room for improvement of about 5 pt. to reach the target. We are planning to further improve the ratio
during the current Medium-Term Management Plan. The increase in the full-price sales ratio will not only
improve the gross margin of the regular business and curb the size and markdown ratio of discount sales,
but also improve the gross margin of outlet stores in the following fiscal year by reducing the remaining
inventory as well as reducing the risk of write-downs on merchandise.

Improvement of gross margin

It is essential to strengthen product appeal and sales capabilities. The company will enhance its

The improvement of gross margin is a major contributor to higher profitability. Approximately 80% of our

product appeal through concerted efforts by the product and sales departments to develop products

merchandise is imported from overseas, and currency fluctuations inevitably affect costs. However,that reflect the needs of customers, and by improving the accuracy of demand forecasts using pre-order

although the yen continued to weaken in fiscal 2022, gross margin increased 1.7 pt. to 51.6% due to priceevents for online sales. In terms of sales, we are promoting digitalization of customer service skills at

revisions and curbing of discount price sales. This is close to the level of fiscal 2014, when the dollar was

physical stores, such as posting sales staff’s comments and recommended styling on online stores, andaround 110 yen. In fiscal 2023, gross margin is planned to be 52.1%, an improvement of 0.5 pt. YoY, andexpanding chat services, thereby spreading our influence nationwide. Employee evaluations include notexpected to increase to 53% during the period of the current Medium-Term Management Plan. To

only face-to-face customer service, but also sales contributions in online stores, which helps motivate

improve the gross profit margin, we will improve the percentage of total purchases that are full-pricesales staff.

sales and curb the cost of sales ratio.

In addition to these efforts, we will revamp the current core product management system, which
covers everything from product planning to sales. Using the system will enable us to optimize inventory

Trends in gross margin and exchange rates
Gross margin (consolidated)

(%)

54

Exchange rate

53.3
51.9

52

50.8

50

51.0

51.5

51.4

50.8

48

(US dollar/yen)

52.1

51.6

130

49.9

120

45.2

46

110
100

44

90

42
40

140

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

forecast

80(FY)

establish infrastructure to improve inventory efficiency.

pressure on production costs. We have raised prices to a certain extent while strengthening our brandpower and guaranteeing the product quality to reduce the cost ratio. As a result of the price policy andthe curbing of discount sales, the average spend per customer increased by double digits in fiscal 2022,
while the number of purchasing customers remained at the same level as the previous year. Goingforward, we will continue to enhance the brand power and product appeal to fine-tune pricing andreduce cost ratios.
As stated in the UA DIGITAL strategy, we will also digitalize product procurement and centrally

Increase in the full-price sales ratio

manage material information, product order information, and business partner information that had

The Company is moving away from a sales-expansion approach based on mass production and masspreviously been individually managed, thereby enabling the Group companies to grasp the entire

consumption and switching to a strategy of increasing the full-price sales ratio by selling inventory

production process. Visualizing data on cost structure and collecting and analyzing them across the

procured in appropriate quantities at appropriate prices.

entire Group will help to reduce procurement costs.

25

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UNITED ARROWS LTD. Integrated Report 2023

Medium-Term Management Plan 2023-2025

Contents
Brand development for business expansion

01

Introduction

UA
MULTI

The Company’s coverage is still limited along the age and fashion tastes axes. To expand this, we will develop new brands, mainly with

03

Contents

04

Corporate Philosophy

Strategysame time, we will explore initiatives in domains other than apparel and proceed to implement them. We will further expand our efforts

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

stores in a wide range of categories, from luxury to outdoor. This pop-up store featured a well-balanced assortment of men’s and35

Circularity | Circular Fashion

women’s products, with a focus on private label products from brands such as UNITED ARROWS.

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

an eye on younger customers. In recent years, we embarked on a variety of initiatives, including yoga, golf, and outdoor activities.
During the period of this Medium-Term Management Plan, we will also step up the initiatives for these apparel-derived brands. At thein B to B business that leverages the Company’s brand appeal and product development capabilities.

Global expansion
In addition to growing our Taiwan business through new store openings, we will advance our China strategy, which was temporarily

Business development forbusiness expansion

suspended due to the COVID-19 pandemic. Moreover, we will also promote wholesale to other countries, as well as strengthening
cross-border E-commerce by making UA ONLINE multilingual.

• Develop new brands with an eye on younger customers• Strengthen apparel-derived brands• Explore and implement domains other than apparel• Expand B to B business

Global expansion• Expand Taiwan business• Launch initiatives for the Chinese market• Strengthen cross-border EC and wholesale

Spotlight

UNITED ARROWS opens
its ﬁrst pop-up store in Shanghai, China

We opened a pop-up store in Shanghai, China, for about 2 months beginning in May 2023. This was the first UNITED ARROWS store in
mainland China. Grand Gateway 66, the location of the new store, is a leading commercial facility in the western part of Shanghai, withIn December 2019, we established UNITED ARROWS SHANGHAI LTD., a Chinese corporation, as an overseas subsidiary. However, due
to the COVID-19 pandemic, we had to suspend the opening of physical stores in mainland China. Meanwhile, in March 2021, we opened astore on Tmall Global, China’s largest cross-border e-commerce platform. We have earned touchpoints with Chinese customers andhave worked to expand our visibility in the local market.
The opening of the recent pop-up store is aimed at capturing the needs of customers in mainland China, which is experiencing rapid
growth in the fashion market. Going forward, we will further increase our brand recognition and expand our overseas operation in
conjunction with the expansion of our Taiwan business.

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UNITED ARROWS LTD. Integrated Report 2023

Medium-Term Management Plan 2023-2025

Contents

Promote OMO
The Company will invest in an overhaul of the membership program and the Company’s e-commerce application, which are part of the
UA CREATIVITY strategy.

UA
DIGITAL
Strategy

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

Miles are also earned for non-shopping actions like adding items to favorites,

35

Circularity | Circular Fashion

posting a review, or declining a shopping bag. Customers can exchange those38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

Optimize the supply chain
We will invest in infrastructure with a view to future business expansion. We will revamp our existing product management coresystem, which covers everything from product planning to sales, to one that can handle long-term business expansion, including
non-apparel businesses.
In parallel, the company will also digitalize product procurement, visualizing the status of products from order to delivery andimproving the accuracy of inventory procurement, thereby enhancing operational efficiency. The distribution center will be
reorganized with a view to future business expansion. In addition, we will strengthen center facilities and develop a system optimized

Promote OMO

for OMO.

• Overhaul membership program• Change to a program that increases customer lifetime value

Redevelop the app for
UNITED ARROWS ONLINE• Steer more customers to retail stores and online storesusing the app as a touchpoint

Spotlight

Launched a new program toincrease lifetime value

In August 2023, we launched the UA Club, a new membership program. The aim is
to increase the number of contacts between our customers and us and to build

Optimize the supply chain
Upgrade the core product management system• Build infrastructure for future business expansion• Curtail lost sales opportunities and improve inventory
efficiency by centralizing inventory information• Strengthen cybersecurity measuresdeep and long relationships with each customer, thereby increasing their lifetime
value. With the UA Club, we will switch from the previous system where points
were rewarded to a miles and coupons system based on contact with customers.

miles for coupons that can be used for shopping. This will encourage ourcustomers to take voluntary action, raise their awareness of saving and spending

Digitalization of product procurement

miles, increase the frequency of contact and purchase, and build continuous• Visualize status information from order to delivery• Enhance efficiency in inventory management by improving
the precision of inventory procurement

relationships. The key to making this program work effectively is the smartphone
application (app), which is responsible for many of the actions that connect us to45

Corporate Governanceour customers. In addition to the revision of the membership program, we will also
revamp the smartphone app to strengthen contact points with our customers.

54

Internal Control

Reorganize distribution centers

55

Corporate Information

56

Stock Information• Build infrastructure for future business expansion

27

I

UNITED ARROWS LTD. Integrated Report 2023

Message from the
CFO

We recognize that maximizing shareholder value is an

2025, we will work toward an early recovery and regrowth ofimportant management issue. To achieve this goal, we aim toour business performance.

achieve sustainable corporate value by expanding our

We recognize that the targets for consolidated sales,

management base and enhancing shareholder equity

consolidated operating income, and ROE set forth in the new

through the balanced promotion of capital efficiency,

medium-term plan are not easy targets to achieve. However, we

strategic investment for sustainable growth, and stablebelieve that it is possible to achieve these targets through theshareholder returns.

various reforms we have undertaken during the COVID-19

During the previous medium-term management plan,

Aim to maximize shareholder
value by building a foundation
for medium- to long-term
growth through efficientinvestment
Takeo Nakazawa
Director, Executive Managing Officer, CFO

pandemic and by taking appropriate steps toward future growth.

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

although the effects of COVID-19 were felt for a long time, weFree cash flow for the term of this medium-term

improved our gross margin, operating income margin, and net

management plan is assumed to be ¥26.0 billion to ¥27.0

income margin by improving inventory efficiency and reviewing

billion. Based on this self-financing, in accordance with theunprofitable stores. We also believe that the reduction in

strategies and issues addressed in the medium-term

inventories and the improvement in cash flows from operating

management plan, we plan to use ¥6.0 billion to ¥7.0 billion in

09

Sources of Value Creation

activities have enabled us to improve our financial position forstrategic investments for top-line growth in existing

14

future regrowth, including the repayment of loans, whichbusinesses, opening new businesses, and investments in

Financial and
Non-Financial Highlights

temporarily increased due to the COVID-19 pandemic. We

brick-and-mortar stores including refurbishing; ¥1.0 billion to15

Message from the President

recognize that the recovery of the performance of our¥1.5 billion in improvements to our own e-commerce site for19

domestic Group subsidiaries has been slower than that of their

OMO promotion and investments in CRM-related businesses;

Review of Medium-Term
Management Plan 2020-2022

parent company and that we need to continue to work on it. As¥6.0 billion to ¥7.0 billion in various infrastructure investments

21Long-Term Vision 2032

one of the categories for the UA CREATIVITY key strategy in thefor digitalization of the supply chain; and approximately ¥1.0

new medium-term management plan, which ends in fiscalbillion in office capital investments.

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Capital allocation
Free cash ﬂows (plan)

26-27billion yen

Retail Stores

OMO

Infrastructure(new openings,
remodeling, etc.)(UA ONLINE,
CRM-related)(systems,
supply chain, etc.)(offices)(dividends, acquisition oftreasury stock)6-7 billion yen

1-1.5 billion yen

6-7 billion yen

1 billion yen

7-9 billion yen

OthersShareholder Returns

28

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UNITED ARROWS LTD. Integrated Report 2023

Message from the CFO

In order to maximize shareholder value, our basic policy is

In addition, we will actively invest in human capital andrising risks such as foreign exchange fluctuations andto pay stable dividends linked to business performance,

strengthen employee training, talent management, andinflation. Therefore, we will steadily implement each plan while

conduct share splits, and acquire and cancel treasury shares.

recruitment, etc.

monitoring and verifying the return on investment.

Therefore, as a shareholder return, we plan to allocate ¥7.0

Changes in the business environment surrounding us

We hope that our shareholders and investors will gain abillion to ¥9.0 billion to dividends and share acquisition, with ahave also accelerated significantly, with rapid and drastic

better understanding of our future growth strategy in light ofdividend payout ratio of approximately 30.0% during the termchanges in customer purchasing behavior due to the COVID-19

living with COVID-19, as well as our initiatives in new fields, andof this medium-term management plan. As of the end of July

pandemic and the evolution of digital technology. In addition, it

have a sense of hope for our growth potential.

2023, we had already acquired approximately ¥2.0 billion(831,200 shares) in stock.
Return on investment matrix

Store opening
OMO
Infrastructure
Human
capital01

Introduction

03

Contents

04

Corporate Philosophy

is important to maintain and ensure financial soundness in

05

The Founder’s Thoughtsorder to firmly support further growth of the business amid06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Top-line growth
Sales expansion
through thepromotion of OMO

Resumption of
new store opening

Development of
new brands

Improvement of gross margin
Development of
new businesses
other than apparel○

Existing businesses○

New brands
Overhaul themembership program○

Redevelop theapp for UA ONLINE○

Upgrade the productmanagement system○

Globalexpansion

Investment in education,
talent management

Cost control

Improvementin ratio offull-price sales

○

○

○

○

○

○

○
○

○

○

Improvement ofEC gross margin○○○

Enhancement of
inventory
efficiency○

Digitalization of
product procurement
Reorganize
distribution centers

Contents

○

○

○

○

○

29

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UNITED ARROWS LTD. Integrated Report 2023

DialogueContents

Our Sustainability

What
SARROWS
aims for

Tetsuya
Yamashita
Deputy Head chief,
ifs Future Design
Laboratory

In 1998, joined World Co., Ltd. He held positions inbrand business, company-wide strategic
development, and new business type development.
In 2017, joined itochu fashion system co., ltd.
Assumed the position of Head of Marketing. In 2022,
became the Deputy Head chief of ifs Future Design
Laboratory, a think tank division of the company.

Nao
Tamai
Department Manager,
Sustainability Department,
UNITED ARROWS LTD.

In 1999, joined UNITED ARROWS LTD. After being incharge of planning and operating communication tools
in the Information Systems Division, she has been
engaged in promoting the social and environmental
activities of the company since 2004. In 2021, she
assumed the post of Department Manager of the
Sustainability Department.

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

30

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UNITED ARROWS LTD. Integrated Report 2023

Dialogue | Our Sustainability

Increasing transparency is theﬁrst step in solving problems
Yamashita The most important and globally discussed

challenge for the fashion industry is to improve transparency.

Tamai

We also recognize that increasing transparency

I don’t think we can encourage behavior change if we don’t

and understanding the entire supply chain is the ﬁrst step inconvey the reasons for creating a given product, why thesolving various issues. About 80% of our company’s production

materials it’s made of were chosen, and what the intentions

is overseas, making it difficult to grasp the actual situation.

are for sustainability.

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

this is that there is a lack of awareness that what is happening

06

Our History

in the world right now is directly connected to our own

07

Value Creation Process

communities, and people think it has nothing to do with them08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

In order to continue to enjoy abundant fashion, it is an

Another point of view is that Japanese companies tend to

One factor may be that the supply chains are long andurgent issue to increase transparency and link it to actual

be very good at dealing with environmental issues compared

complex. In Japan, in particular, it is more difficult to ensure

action. I believe that the fashion industry as a whole isto other countries, while their awareness of social issues andtransparency, as 98% of production is overseas.

beginning to move in that direction. We also identiﬁed material

initiatives tend to be somewhat weak. I think the reason behind

issues in 2020 and began to work on them in the form of
SARROWS in 2022.

For example, at the time of expansion of production areasfrom China to Southeast Asia in the 2000s, attention was
focused on the beneﬁts of the sewing industry as an effectivemeans of solving poverty. However, as the economic
development of production areas and cost competition
heated up, problems with work environments and employment

The key to changing behavior is tohave a sense of ownershippersonally. But the environment and society are inseparable. It
is important to seriously address social issues as well as
environmental issues.

ethics became apparent. To determine whether a business is

Yamashita There is also a unique Japanese background that

healthy or not, it is necessary to review supply chains anew anddiffers from that of Western countries. For example, there is aand spreading, but from listening to our sales staff, I get theexamine the business from multiple perspectives. I think thesurvey showing that Japanese awareness of the terms

impression that awareness has yet to be reﬂected in the

fashion industry is at a turning point right now.

decarbonization and SDGs tends to be very high, at about

consumption behavior of many of our customers. As you

80%. However, the percentage of those taking action remains

pointed out, the reason for this is that we, as providers, are not

low compared to other countries. It is noteworthy, on the otherable to fully convey our thoughts to our customers, and thehand, that most people who recognize the terms

root cause of this may be a lack of our own sense of ownership.

decarbonization and SDGs are willing to act in the near future.

Yamashita It is said that the age at which children ﬁrst have

In other words, one more push and theContents

Tamai

Certainly, environmental awareness is growing

the right to make their own consumption decisions is around 18

whole situation changes. I think Japan isyears old. I think fashion is one of the ﬁrst trials, like buying

33

Our Sustainabilityon the brink of that now.

clothes with money from a part-time job. If a salesperson at

35

Circularity | Circular Fashion

your favorite shop casually says, “This item is made from38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

Tamai

What do you think are theFashion has the power tochange the world

barriers that prevent people from taking

organic cotton that doesn’t use pesticides that canaction?

contaminate soil in the production area and harm the health of

Yamashita The survey results included

the producers,” that alone will bring you closer to the issues

Tetsuya Yamashita

responses such as “I don’t know where tothat occur in other parts of the world. I believe that there is

45

Corporate Governancebuy such items” and “It’s expensive.” I feelsuch strength and value in fashion. And I think your company

54

Internal Control

that consumers need a more substantial

employees have the words and the power to speak to those

approach to “sustainable consumption.”

customers. I hope they will change the world from fashion.

55

Corporate Information

56

Stock Information

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UNITED ARROWS LTD. Integrated Report 2023

Dialogue | Our Sustainability

Issues emerging through materiality
identiﬁcation and the birth of
SARROWS
Tamai

In promoting sustainability, we rely on the material

issues identiﬁed in 2020. First, important social issues wereselected based on international frameworks such as the SDGs

brand, this item has a gentle, friendly feeling. However, in

special campaigns or other small steps, I believe that the mostterms of content, we aim to raise the accuracy of our activities

effective way for your message to get through to consumers is

by ﬁrmly setting numerical targets.

through your usual forms of communication, so that the

Integrating our original DNA andstrengths with sustainability

Contents

message slowly seeps out, even if it takes some time.

01

Introduction

The elements of value we provide to our

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

Tamai

customers are “service, products, and places,” or the people
who serve them, the products, and the store environments. I

and ISO 26000, the goals set by the domestic andYamashita When I ﬁrst read the SARROWS book, it struck me

believe that our approach of infusing each of these withinternational fashion industry, and items of ESG evaluationthat your company’s approach to sustainability is an extension

sustainability as a matter of course is the right approach. I

06

Our Historyorganizations. This was followed by an evaluation ofof its history. As I mentioned at the beginning, it is time forhope that SARROWS will become a part of the value we have07

Value Creation Processmateriality importance by 93 executives and managers of ourcompanies to rethink their past approaches, such as

been providing, and that both customers who are aware and08

Our Operating Markets

company as well as interviews with outside experts,

increasing transparency and integrating the concept of

those who are unaware of sustainability will be able toidentifying 5 themes and 16 material issues.

resource recycling into the core of their business, and it isnaturally connect with sustainable consumption and09

Sources of Value Creation

especially good that they are not leaving veriﬁcation of theseclothing choices.

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

We went through a thorough process, asked many people
inside and outside the company for their opinions, and heldthings to others, but rather are trying to do it themselves. It

Yamashita I agree. For example, in the case of circularity, if it

many discussions to create the report, but we were surprisedshows that the company is not taking a grandiose stance, but

is just a circular system, anyone could do it if the social system

when we were told that “if you hide the company name, no one

rather is truly sincere about what kind of value it can deliver,is in place. However, not creating waste in the ﬁrst place

will know whose it is” and “the content is the same as every

with the customer at the center.

causes the least burden on the environment. Providing thingsother company.” In retrospect, it was our ﬁrst time, so we may

The SARROWS Book (in Japanese)

have been too conscious of trying to make it perfect. Also, only
qualitative goals were set, and the issues were not things that

Tamai

That is the most wonderful thing for us to hear.

could be resolved overnight, making it difficult to make andOur fundamental principle is to make all decisions with themeasure progress.

customer as the absolute central axis, and we place the29

Dialogue | Our Sustainability

Yamashita It seems that in the pursuit of perfection, youutmost importance on not wavering from this principle.

33

Our Sustainability

prioritized completeness, and so were unable to convey the

We constantly remind ourselves that we

35

Circularity | Circular Fashion

essential part of what sustainability activities are for UNITED

must not become so involved in speciﬁc

38

ARROWS and why you are doing them.

measures and numerical targets that we

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Tamai

Can we carry on the founder’s belief that we will

forget or leave behind the original purpose

set a new standard for life culture and set a unique directionof what we are doing and why we arefor UNITED ARROWS in which the values of sustainability will

doing it.

naturally be included in the new life culture we are advancing?

Yamashita I think it is important to ﬁrmly

With this question in mind, “SARROWS” was born as a newlink your original DNA and strengths withmessage to stakeholders. With a logo typical of a fashion

sustainability. Rather than conducting

Subtly hiding sustainability
in value provided
Nao Tamai

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UNITED ARROWS LTD. Integrated Report 2023

Dialogue | Our Sustainability

Expectation of expanding sustainablebusiness models overseasthat can be used for a long time such as your company does is

our sustainability activities, but we feel that the launch of

not something that everyone can do. That strength is valued,

SARROWS has broadened the circle of activities. Now when weand I think it is recognized by consumers and has become aconduct business, our customers engage in consumption

shared value.

activities, and our business partners conduct their business as

Yamashita I feel that your company has taken leadership in

01

Introduction

We want to make it a shared value. In fact, the otherbusiness partners, it is based on the common desire to aim for

the Japanese fashion industry in the area of sustainability as

day, we calculated the carbon footprint (the greenhouse gases

a sustainable society. I believe that we can create something

03

well. As Japan’s population continues to decline, sustainable

Contents

emitted throughout the entire life cycle, from raw material

like a community that isn’t limited to just one company.

growth cannot be achieved using traditional methods. I hope04

Corporate Philosophy

05

The Founder’s Thoughts

Tamai

Contents

procurement to production, use, and disposal, converted into

Just like a fashion brand spreads around the world whencarbon dioxide) of one of our standard products, a T-shirt. And

people who sympathize with the brand’s philosophy buy it or

the next ﬁve years to South Asia, you will contribute to the06

Our History

we displayed the results in our shops. This was an attempt tobegin to like it. I also see the possibility that the number of people

world as one of Japan’s leading fashion companies.

07

Value Creation Processvisualize greenhouse gas emissions, including the actions of

who sympathize with SARROWS will increase and it will become

For example, I think there are ways to commercialize08

Our Operating Markets

customers themselves. It is also a way to show the relationshipa movement that goes beyond the framework of the company.

intangible asset value, not only in the form of store openings,

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

that by expanding the sustainability system you will build overbetween fashion and climate change, which some may not

but also by transplanting manufacturing mechanisms and ways

have been aware of until then.

to build relationships with customers to growing markets.

Yamashita In addition to functionality, whenTamai

I see. When a local company comes

you also display how environmentally friendly theup that wants to do a highly sensitive fashion

product is, consumers’ mindsets should change,business, we can team up and support them.

such as their wanting to wear the product for

Yamashita Yes. In particular, in the outboundas long as possible.

market, opportunities for monetization will

Tamai

In order to inﬂuence people

expand beyond product sales. South Asia is anenough to change behaviors, it is important toarea where fashion culture is about to growcommunicate information and also to tell it as asigniﬁcantly, so partnerships should be formed

story. In order to achieve this, we believe thatwith local companies to realize a circular

29

Dialogue | Our Sustainability

SARROWS must ﬁrst be ﬁrmly rooted in our

economy system. This will strengthen Japan’s

33

Our Sustainability

employees. Therefore, we have createdinternational competitiveness, and I think it is a

35

Circularity | Circular Fashion

educational videos, which are included in thegreat opportunity.

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

SARROWS in every part of our company.

45

Corporate Governance

What we had prior to the launch of

54

Internal Control

55

Corporate Information

56

Stock Information

training curriculum for new store managers,

TamaiYour thought-provoking comments

and added the SARROWS logo to the trashon the subject of sustainability were very

receptacles we use every day. We also include

helpful. Thank you very much for today.

SARROWS was more of an action guideline
explaining the themes and material issues of

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UNITED ARROWS LTD. Integrated Report 2023

Our Sustainability

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

ARROWS, the nickname of UNITED ARROWS, with the08

Our Operating Markets“S” of Sustainability. We have made SARROWS the09

Sources of Value Creation

watchword for our sustainability activities as we

14

Financial and
Non-Financial Highlights

with our customers and business partners and to15

Message from the President

give a sense of familiarity with the activities. In 2022,

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

UNITED ARROWS
Sustainability Activities
SARROWS is an original word coined by combining

want to promote sustainability activities together

we established three activity themes and related
numerical targets.
Our themes are Circularity, which pursues
circular fashion, Carbon Neutrality, which aims for abeautiful earth forever, and Humanity, which
supports these activities in a healthy manner. These
are topics of great interest to customers and otherstakeholders, which the Company and the fashionindustry must focus on.
We will promote the SARROWS initiative together
with everyone related to the Company, aiming for a
future where people live with a richer mind.

UNITED ARROWS Sustainability Activities

Circularity

Carbon Neutrality

Humanity

45

Corporate Governance

Circular fashion

Toward a carbon-neutral world

Work and live in a healthy way

54

Internal Control

55

Corporate Information

56

Stock Information

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UNITED ARROWS LTD. Integrated Report 2023

Our Sustainability

Identiﬁcation of material issues and development of promotion system

Contents

In 2020, the Company identified five themes and 16 material issues based on international frameworks and industry targets. Based on these material issues,
under SARROWS, the Company has selected three items that are of particular interest to customers and society and has defined them as activity themes.
To promote engagement with material issues, the Sustainability Committee was established in April 2020 as an organization subordinate to theManagement Committee. The Committee is chaired by the Representative Director, President, and Executive Officer and consists of executive directors
and executive officers. Standing Outside Directors also participate as observers. The committee holds regular meetings to discuss policies andmeasures and review progress. With this committee as a pillar, each division within the Company collaborates cross-sectionally to promote related
sustainability activities throughout the Company.
Sustainability management information

Identiﬁed material issues

Theme

Materiality

Supply chains• Traceability management of product procurement• Respect for human rights and the working environment in the
supply chain• Promotion of use of environmentally conscious materials• Procurement of raw materials with consideration given to
biodiversity and animal welfare• Promotion of low carbonization• Promotion of energy conservation and use of renewable energy

Responsible product procurement andsupply chain development

Resources

Realizing a waste reduction andrecycling-based model• Reduction of waste from business activities• Promotion of collection, reuse, and recycling of unnecessary
products

Communities

Continuing with activities aimed at thedevelopment of local communities• Support for local societies, communities, and disaster-stricken
areas

Human resources

Creating an environment that fosters
respect for individuals and work
motivation• Promotion of diversity and inclusion• Work style reform• Human resource development• Appropriate evaluation and compensation

Governance

Establishing a management platform
aimed at becoming a company that will
last 100 years• Corporate governance• Risk management/compliance• Personal information protection and information security

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

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UNITED ARROWS LTD. Integrated Report 2023

Thorough quality control
To minimize product waste, it is also important to reduce the number of substandard products that do not meet

Circularity

the quality requirements. In order to ensure product quality, we regularly hold quality control (QC) meetings
with overseas contract factories that manufacture our private label brands. Through such communication, we

01

Introduction

03

Contents

04

Corporate Philosophy

Contents of the ﬁscal 2022 QC meetings

05

The Founder’s Thoughts• Alerts to prevent product defects

06

Our History

07

Value Creation Process

08

Our Operating Markets

Utilization of in-stock and substandard products

09

Sources of Value Creation

Setting the key performance indicators (KPIs) for product disposal rates at two levels, one for textiles and the14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

Circular Fashion

will continue to advance mutual understanding between the Company and business partners to improve

Striving to make a positive impact on the earth with fashion, UNITED ARROWS LTD. aims

to be held in the same manner in fiscal 2023.

product quality. In fiscal 2022, a total of 10 companies participated in 10 online meetings. The QC meetings areto create fashion that is in harmony with nature and is continually reborn.
KPI
Disposal rateof textile
products
Disposal rateof allproducts

2022 Results

0.3
0.4

%
%

Contents

2030 Targets

0.0
0.1

%

Ratio ofenvironmentallyconscious
products

2022 Results

2030 Targets

16.2 50.0%%%

Minimization of product waste
Waste-free production and sales• Sharing good practices for product upgrades• Sharing information on future manufacturingother for overall products, we have established precise targets and are managing our progress closely. In fiscal
2022, the product disposal rate was 0.3% for textiles and 0.4% for overall products. With the target of zero for
textiles and 0.1% for overall products in fiscal 2030, we will continue to decrease the product disposal rate.
Considering, however, that it is virtually impossible to prevent the occurrence of a small percentage of productsthat cannot be sold, reused, or recycled, we are working in cooperation with other companies not to waste such
defective products.

In the fashion industry, mass production based on the premise of mass consumption has become a major issue.
To minimize the number of products that need to be disposed of, we will employ appropriate product plans in aneffort to achieve production and sales that generate no waste.
In planning and development, we are pushing ahead with the development of products that can be used

Participated in KISARAZU CONCEPT STORE (Mitsui Fudosan Co., Ltd.)This site was opened in June 2023 as a testing
ground that spotlights substandard andacross seasons to meet diversifying customer needs. Seasonless products do not need to be replaced for eachin-stock products that could not be delivered toseason, which leads not only to an increase in sales opportunities but also to minimization of product disposal.

customers in the past and introduces new

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

In the production process, it is important to prevent a mismatch between supply and demand. With

manufacturing based on upcycling and new

production control based on precise sales forecasts, we are focusing on preventing the generation of inventory

technologies. We support this idea and are

surplus that leads to product disposal.

participating as a partner. We will create new

In sales, Digital Transformation (DX) has been applied to manage online and offline sales in an integrated

opportunities for customers to encountermanner in order to sell products at the right opportunity. We are also building and utilizing inventory

products, while minimizing product disposal andmanagement and distribution systems, which are essential for making sales at the right opportunity. Anotherreducing CO2 emissions.

important theme is to move away from a sales expansion approach based on mass production and massconsumption. We are working actively on selling durable and high-quality products at reasonable prices, as thiswill not only minimize product disposal but also improve the sustainability of the entire supply chain.

p.21 Long-term vision 2032

KISARAZU CONCEPT STORE(external site, in Japanese)

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UNITED ARROWS LTD. Integrated Report 2023

Circularity | Circular Fashion

Contents

Environmentally friendly product development and recycling

Collection, reuse/recycling, and circulation of unwanted clothing

01

Introduction

Product development using environmentally friendly materials

As part of our activities promoted together with customers, we collect and reuse/recycle unwanted garments.

03

Contents

Collected garments are recycled as clothing or used as materials for other products by the Company or in

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

Providing products and services that are loved
and used for a long time21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

Providing products that will be loved and used for a long time is one of the elements that make up our proposal

27

Message from the CFO

29

Dialogue | Our Sustainability

while seeking originality and creativity. In terms of design, our focus is to create products that will be loved and33

Our Sustainability

used for a long time.

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

We are engaged in the planning and production of eco-friendly products. We actively use a variety ofcooperation with its partner companies.

eco-friendly materials, such as organic cotton that has a reduced environmental impact during production and

Examplesmaterials recycled from plastic bottle waste.
In fiscal 2022, 16.2% of our products used eco-friendly materials. We will continue to make various efforts
to increase the rate to 50% in fiscal 2030. These initiatives are an important theme in sustainable management,• Support for the Green Down Project to collect and recycle feather products
Since 2015, old feather products have been collected at all GLR stores throughout the year.

and at the same time, we believe they provide an opportunity to create value that generates new demand for• UA RECYCLE ACTION, a clothing collection project
For a total of four weeks in February and August 2022, a clothing collection project UA RECYCLE ACTION was

our business activities.

implemented with the aim of raising awareness of recycling and cultivating recycling habits among custom-Eco-friendly products as deﬁned by UNITED ARROWS

ers. During the event, we collected a variety of clothing items, including garments of other companies at the

In principle, those that satisfy one or more of the following three categories.

stores of all UNITED ARROWS’ brands. A total of 26,116 kg of collected items will be reused by new users or• Body material: Using at least 20% eco-friendly material in outer fabric, or at least 20% in inner fabricsorted into materials and parts for recycling through JEPLAN INC.’s recycling platform BRING.

• Submaterial: Using one or more eco-friendly materials• Processing process: Environmentally friendly processing

The SARROWS tree
Environmentally friendly processing

Environmentally friendly raw material
Evidence
Organic raw
material

Recycled raw
material

Properly sourced
wood (cellulose)material

Newly developed
raw materials

Third-party
certification
documents
Third-party
certification
documents

Third-party
certification
documents

Inspection
agencyreportMaterial example
Cotton / Linen /Wool

Cupro / Polyester /Nylon / Wool /Leather

Rayon / Acetate /Lyocell

Polylactic acid fiber,
etc.

Less CO2 emissions
compared toconventional
processing process

Using less watercompared toconventional
processing process

Using less chemical
substances ofconcernof “high-quality living” and “rich lifestyle culture.”
In product development, we are conscientious about maintaining high standards of quality and function
Evidence
Inspection
agencyreportIn addition, we actively promote an after-sale repair service. To ensure convenience for a variety ofcustomers, an order for repair services can be placed at our physical stores or through our website.
Through these efforts, we are enhancing the value of using our products and contributing to theThird-party
certification
documents

establishment of a lifestyle of “using things carefully for a long time.”

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UNITED ARROWS LTD. Integrated Report 2023

Circularity | Circular Fashion

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

In the 1870s, denim pants originated as workwear for coal miners in the U.S., and now they have become

09

Sources of Value Creationa staple item for many people. As a massive amount of denim products are manufactured, cutting waste

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Spotlight

Recycling-based denim of
BEAUTY&YOUTH created in collaboration
with L∞PLUS

L∞PLUS is a product combining high environmental awareness with solid
technological capabilities

is generated in bulk, and this caught the eye of Kurabo (Kurabo Industries Ltd.). Having beenenvironmentally conscious from an early age, Kurabo developed a technology to recycle cutting waste
into yarn. L∞PLUS is a fabric woven using this yarn.
In response to Kurabo’s high awareness of the environment and advanced technology,
BEAUTY&YOUTH UNITED ARROWS (hereinafter, “BY”) decided to create denim pants featuring L∞PLUS.

With the texture and color of the original fabric
L∞PLUS is produced through material recycling that makes effective use of cutting waste and collected
products, rather than commonly used chemical recycling, which generally involves the chemical
decomposition of used resources into raw materials. Material recycling requires advanced silk-reelingtechnology that reclaims wool and fine-spins it while ensuring the quality of the original cutting waste.
In cooperation with Kurabo, BY experimented with various techniques such as adjusting the yarn
mixing ratio to create a product that will be loved and used by customers for a long time. After many trials
and errors, we succeeded in creating products that combine quality, design, durability, and❶❷❶ Denim cutting waste used as raw material❷ Process to form L∞PLUS yarn

Kurabo (Kurabo Industries Ltd.)sustainability while taking advantage of the L∞PLUS texture.

Kurabo is a major Japanese manufacturer founded in 1888 as a

To promote circular fashion

KD8, in 1973, it has consistently proved popular among famous denim

The denim products using L∞PLUS were launched in the spring/summer season of 2023. The response
from customers has been good, and we are producing more. Production is also scheduled to continue inthe fall/winter season of 2023.
We will continue to expand the products that are made from recycled raw materials in collaboration
with business partners, thereby promoting circular fashion.

textile company. Since the development of Japan’s first denim fabric,brands in Japan and overseas.
See other stories related to UNITED ARROWS’ Service, Products, and Places including
examples of the use of environmentally friendly materials.
Service, Products, and Places

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UNITED ARROWS LTD. Integrated Report 2023

Proactive introduction of renewable energy

Carbon Neutrality

Contents

The rate of renewable energy use in buildings where our stores or offices operate was 8.3% in fiscal 2022, anincrease of 5.1 percentage points from the previous fiscal year. Our target is to increase the rate of renewable

01

Introduction

03

Contents

04

Corporate Philosophy

16 stores: UNITED ARROWS HARAJUKU, MARUNOUCHI, DAIMARU KOBE WOMEN’S STORE, DAIMARU KOBE MEN’S

05

The Founder’s Thoughts

STORE, SHINSAIBASHI, OSAKA MEN’S STORE, BEAUTY&YOUTH MARUNOUCHI, MINATOMIRAI, MACHIDA, OSAKA,

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

Creating a rich forest together with customers

14

Financial and
Non-Financial Highlights

As part of our efforts to reduce CO2 emissions and create a sustainable environment, we are implementing the15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

The target for Scopes 1 and 2 was assessed as a level well below 2°C, and that55

Corporate Informationfor Scope 3 as a level below 2°C.

56

Stock Informationenergy use to 50% by fiscal 2030. Since we are a tenant at 99% of our business locations, we have begun to

Toward a Carbon-Neutral World

exchange opinions with developers on the proactive introduction of renewable energy.

To preserve our beautiful earth, UNITED ARROWS LTD. works to create a carbon-neutral
world in line with the Paris Agreement, an international framework.

KPI
Reduction rate of CO2 emissions
Scope: Stores and offices (Scope 1 & Scope 2)
vs. FY2019

Reduction rate of CO2 emissions
Scope: Supply chain (Scope 3) vs. FY2019

green label relaxing lumine machida, marunouchi, mark is minatomirai, grand front osaka, DRAWER UMEDA,
2022 Results

Scope: Stores and offices (Scope 1 & Scope 2)
Number of locations using renewable energy /Number of locations

2030 Targets

14.7

30.0

14.6

15.0

reduction

reduction

Ratio of renewable energy

Renewable energy introduction rate: 8.3% (as of March 31, 2023)

%

%

8.3

%

reduction

Obtained SBTi approval for greenhousegas emission reduction targets
Science Based Targets (SBT) are greenhouse gas emission reduction targets

reduction

reduction

2 offices: Nippon Life Akasaka Building, Akasaka Park Building

%

%

50.0
reduction

STEVEN ALAN OSAKA%SARROWS Reduce Action, an effort to grow rich forests together with our customers. If a customer brings
his/her own bag when shopping, the Company will donate ¥10 per instance of shopping to the Creating Diverse
Forest Project carried out by the General Incorporated Association More Trees. We also offer benefits throughour membership program to customers who take part in the action.
In fiscal 2022, 110,754 customers participated, and donations totaled ¥1,107,540. Information on these
activities is available at our stores and on our website.

set by companies with a target of 5 to 15 years ahead, consistent with thelevels required by the Paris Agreement. Under Carbon Neutrality, one of thethemes of our SARROWS activities, we formulated targets for reducing
greenhouse gas emissions (Scopes 1, 2, and 3) in line with the standard andsubmitted them to an international initiative, the Science Based Targets
initiative (SBTi), for target validation. We obtained SBTi approval in April 2023.

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UNITED ARROWS LTD. Integrated Report 2023

Carbon Neutrality | Toward a Carbon-Neutral World

Contents

Support for the TCFD recommendations
and information disclosure

our business. We will continue to proactively disclose information on climate change in order to realize a

01

Introduction

sustainable society and environment and to ensure the sustainable growth of UNITED ARROWS.

03

Contents

Climate change is an important management issue in our business activities. In order to tackle the issue in a

Scope 1 and Scope 2, and 15% for Scope 3 (consolidated, compared to fiscal 2019). In fiscal 2022, Scope 1 was

04

Corporate Philosophy

company-wide effort, the Sustainability Committee sets policies and targets related to climate change,

584 t-CO2, Scope 2 was 7,743 t-CO2, and Scope 3 was 260,250 t-CO2 (each on a consolidated basis).

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

UNITED ARROWS has set targets for reducing greenhouse gas (GHG) emissions in fiscal 2030: 30% forWe will continue working to reduce GHG emissions to achieve the targets.

deliberates on initiatives, and reviews progress.
In 2022, UNITED ARROWS endorsed recommendations by the Task Force on Climate-related Financial
Disclosures (TCFD), established by the Financial Stability Board, and analyzed the impact of climate change on

Disclosures based on the TCFD recommendations

Scenario analysis
Scenario assumption for 2030

4°C scenario

Below 1.5 to
2°C scenario

Temperature increase cannot be kept under control,
precipitation and weather patterns are changing
significantly, and damage from natural disasters isincreasing.
Farm crops and livestock products are also greatly affected.
Customers are becoming more mindful about disasterprevention, and demand is increasing for functional
products that respond to changes in the living environment
such as heat waves and hot weather.

Regulations on carbon emissions, introduction of a carbon
tax, policies on emission reduction targets, and energy
conservation policies have been strengthened.
Product procurement costs and store operation costs areaffected by taxation.
Although temperature increase is kept under control,
precipitation and weather patterns are undergoing certainchange.
Customers are becoming more environmentally conscious,and demand for sustainable products is increasing.

Risks and opportunities

Risk category

ImpactResponse strategies

1

Decrease in sales due to damage to product manufacturing sites, interruption of distribution,and closing of stores resulting from abnormal weather

Physical risks(acute)400
million yen

On-going BCP

2

Increase in costs due to impact on production of product raw materials resulting from abnormal
weather and average temperature increases

Physical risks(acute and chronic)

Large

Diversification of procurement risks
and verification of alternative
materials

3

Decrease in sales due to late response to change in customer needs resulting from abnormal
weather and average temperature increases

Transition risk
(market)Small

On-going marketing andverification of measures

4

Creation of demand for related products that accommodate environmental changes ineveryday life; enhancement of reputation

Market(*opportunities)

Large

On-going marketing andverification of measures

1

Increase in operational costs resulting from introduction of greenhouse gas emission
reduction policies, such as carbon tax and carbon pricing

Transition risk
(policy and regulation)

2,410
million yen

Promotion of CO2 emission
reduction2

Decrease in sales due to damage to product manufacturing sites, interruption of distribution,and closing of stores resulting from abnormal weather

Physical risks(acute)MediumOn-going BCP

3

Increase in costs due to impact on production of product raw materials resulting from abnormal
weather and average temperature increases

Physical risks(acute and chronic)

MediumDiversification of procurement risks
and verification of alternative
materials

4

Decrease in sales, deterioration of corporate image and reputation due to late response tochange in customer needs such as increasing demand for sustainable products arising fromheightened environmental consciousness

Transition risk
(market)Small

On-going marketing andverification of measures

5

Creation of new demand by offering sustainable products and conducting sustainable
activities that involve customers; enhancement of reputation

Market(*opportunities)

2,839
million yen

On-going marketing andverification of measures

No.

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UNITED ARROWS LTD. Integrated Report 2023

Carbon Neutrality | Toward a Carbon-Neutral World

Spotlight

Contents

Calculating carbon footprint of products

In 2022, as the first step toward reducing GHG emissions (Scope 3) and contributing to decarbonization ofcustomer lifestyles, we participated in the Ministry of the Environment’s initiative Model Projects for Carbon
Footprint of Products and Services.
Carbon Footprint (CFP) is a system that converts GHG emissions from the entire process of a product’s life
into CO2 and displays them clearly on products and services. Visualizing these figures enables us to identify theamount of CO2 emissions in each process and to take measures to reduce them.
For example, in the production and sales processes, we can implement measures to reduce GHG emissions
by selecting materials that emit fewer GHG from the product planning stage and by switching to using renewableenergy in manufacturing plants and stores. In the process of use, there are no GHG emissions from wearing the
product, but water and energy are consumed in washing the product and operating the washing machine anddryer. Therefore, customers can join the effort to reduce CO2 emissions with their efforts such as washing theirclothes fewer times and recycling bathwater.
For this initiative, we implemented a project to quantify and visualize CO2 emissions of a crewneck
short-sleeved cut-and-sew t-shirt, one of the standard products of UNITED ARROWS green label relaxing (Men’s).
The survey covers its entire life cycle, from raw material procurement to disposal. The results show the carbon
footprint of a crewneck short-sleeved cut-and-sew t-shirt to be 10.6476 kg CO2-eq. Based on the issues identified
in this project, we will consider calculating the actual value of emissions and acquire data for more items.
Recognizing the amount of emissions in each process will make it easier to plan and implement measures toreduce emissions in each process. In addition, in order to share information with customers, we posted apoint-of-purchase (POP) advertisement to introduce this initiative in our stores at the launch of this product. We
hope our initiatives will serve as a springboard for our customers to consider environmental issues and encouragethem to use CO2 emissions as a new indicator for selecting and purchasing products and to take proper care of
products. These efforts, we believe, will eventually lead to maximizing the value of use.
Carbon Footprint Report (in Japanese)

Brand
UNITED ARROWS green label
relaxing (Men’s)
Item
Crewneckshort-sleeved cut-and-sew
t-shirt11.5%

Material
100% cotton

Distribution

Target component
Cut-and-sew body:
Brand name tag, Laundry tag,
Hanging tag, etc.
Packaging and packing
materials: Plastic bag
attached to the body, etc.
Transportation materials:
Cardboard boxes used totransport goods, etc.
Note) Transportation materials
used for transportation of
raw materials are notincluded.

Use

10.1%

Disposal

0.1%

CFP

10.6476kgCO2-eq

Production

38.1%

Raw material
procurement

40.4%Note) Percentages are rounded to one decimal place, so the total exceeds
100%.

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

41

I

UNITED ARROWS LTD. Integrated Report 2023

Respect for human rights in the supply chain

Humanity

Aiming to “set the standard for lifestyle culture,” we are striving to realize a sustainable society and environment
through the “creation of five values.” To achieve this goal, it is necessary to share our philosophy across theWork and Live in a Healthy Way

entire supply chain, including our business partners, and to cooperate to implement it.

For every stakeholder of UNITED ARROWS LTD. to smile, we will protect everyone’s rights

share our philosophy and sought to obtain consent. We also conduct field audits of domestic plants and survey

We have established the Code of Conduct for Business Partners in Goods Procurement as a guideline toand create a healthy living environment.

Number of companies consenting/Number of companies
with which we have transaction records

Employee engagement scores
Average positive response rate for motivational factors(feelings of accomplishment, approval, work itself,delegation of authority, satisfaction with the evaluation, anddevelopment)

Percentage of females in managerial positionsof section chief or above
Targets based on the Act on the Promotion of Women’s
Active Engagement in Professional Life

Percentage of females in managerial positionsof store manager or above
Targets based on the Act on the Promotion of Women’s
Active Engagement in Professional Life

2022 Results

48.2
70.0

%
%

2022 Results

22.4
29.2

%

%

2030 Targets

100.0
80.0

%

%

30.0
40.0
or moreFollowing the formulation of UNITED ARROWS LTD.’s CSR Guideline in 2017, which includes provisions pertaining
to child labor, discrimination, and legal compliance, we have obtained consent forms from contract factories
that manufacture our private label brands.
In 2021, the Code of Conduct for Business Partners in Goods Procurement was newly formulated to enhance%%domestic and overseas business partners to whom we outsource the production of our private label brands.

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

Field audits on business partners’ factories in Japan

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

In line with the CSR Factory Audit Requirements announced by the Japan Apparel Fashion Industry Council, we
commission a third-party organization to conduct field audits on human rights. In 2022, we audited two
domestic garment factories to which we outsource the production of private label brands. We plan to audit fivecompanies in 2023.

Questionnaire for foreign technical intern trainees

Formulation of UNITED ARROWS Group Human Rights Policy

One of the issues to be addressed by Japanese society is the protection of human rights of non-Japanese

In 2023, we formulated the UNITED ARROWS Group Human Rights Policy based on the Universal Declaration of

because many foreign technical interns are enrolled at our business partners’ factories. Therefore, we conduct

Human Rights, the International Labour Organization (ILO) core labor standards, and the United Nations

annual surveys in the form of questionnaires on the acceptance and working status of foreign technical interns

Guiding Principles on Business and Human Rights. We encourage each officer and each employee of the Groupto prevent human rights violations and ensure a fair work environment. In 2022, the survey was implemented at

to understand and comply with this policy, respect the human rights of all stakeholders involved in our business

413 locations, including companies and factories of domestic business partners. We will continue to conduct

activities, and take the initiative in acting for human rights.

field audits to monitor the workplace environment.

UNITED ARROWS Group Human Rights Policy

01transparency in the supply chain and prevent human rights violations. We aim to obtain consent forms from all

Code of Conduct for Business Partners

2025 Targets

or moreforeign technical interns.

Formulation of Code of Conduct for Business Partners and acquisition ofconsent forms

KPI
Ratio of consent forms acquired regarding
Code of Conduct for Business Partners

Contents

nationals working as technical interns in Japan. We recognize it as an important issue for UNITED ARROWS LTD.

42

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UNITED ARROWS LTD. Integrated Report 2023

Humanity | Work and Live in a Healthy Way

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

With regard to salary increases, we intend to increase the degree of return to employees who contribute to33

Our Sustainability

achieving our goals and creating customer satisfaction. For promotion, in addition to conventional quantitative

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Creating a workplace where employees areengaged and thrive

employee awareness survey since 2012 as well as an engagement survey since 2019. We apply the employee

We view our employees as “associates who agree with our corporate philosophy and work with us to realize it.” Ourfiscal 2030.

In order to properly grasp employee engagement as the starting point of this cycle, we have conducted an
engagement score as the KPI for this initiative. The survey result in fiscal 2022 was 70%. The target is 80% bycorporate name, UNITED ARROWS, embodies arrows that fly straight toward the same target together. UNITED

We have also introduced the Employee Net Promoter Score (eNPS) to further refine our research and

ARROWS represents a group of individual members with various personalities working together to realize theensure an objective perspective. The eNPS refers to the employee version of the Net Promoter Score (NPS),

same corporate philosophy (goal). With this policy in mind, we aim to manage our human resources well.

which quantitatively measures how much affection and trust the employees have for the workplace.

For the Group, creating value for employees is also an important theme. That means making sure that ouremployees improve their abilities, reach their full potential, and feel happy in their work at our Group. To achieve

By combining the employee awareness survey and eNPS, we will focus our personnel policies on items thathave a high correlation with engagement, thereby further sophisticating human capital management.

this goal, we believe that it is important to provide our employees with opportunities to upgrade their abilities
and to reward them according to their performance. As specific guidelines for incorporating these ideas into thecorporate system, we have established resources such as the Handbook for a Management System for Human

Operation and improvement of personnel evaluation system

Resources and the Compliance Manual.

We have established various personnel evaluation systems aiming to foster a corporate culture in which all
employees are empowered to exercise their talents. To ensure appropriate career path designing andpersonnel allocation, we have a Target Management System, which serves as the basis of the personnel

Improve employee engagement

appraisal; a Talent Management System for the centralized management of records of personnel assessment,

In human capital management, employees’ understanding of the company, their trust in the company, and theirchanges, and future career aspirations; and a 360-Degree Assessment “Multifaceted Observations” wheresense of satisfaction at work are important factors, and we believe that employee engagement cycles throughseveral relevant parties assess the speech and behavior of managers above a certain class.

customer loyalty and business performance.

Furthermore, we examine and review the personnel evaluation system based on the results of theemployee awareness surveys to reflect the opinions of employees in our management. The result of the 2021

Cycle of employee engagement, customer loyalty, and performance

employee awareness survey showed low scores on items related to salary increases and the promotion system.
To improve these items, we reviewed the operation of the system based on the correlation between pastmeasures and results.

Gratitude and trust
for the person in charge

Trust in a company

Customer
Contributionoriented

NPS*

Customeroriented

items such as sales achievement, we now refer to multifaceted information such as thank-you notes from
customers and styling proposal records when selecting candidates for promotion, and we certify promotion
after rigorous screening.

EmployeeeNPS

Trust in a company

Respect for individuals* NPS stands for Net Promoter Score
Source: beBit, Inc. “What drives eNPS?—16 industry eNPS survey results” (released in 2017)Management
Profit on sales

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UNITED ARROWS LTD. Integrated Report 2023

Humanity | Work and Live in a Healthy Way

Contents

Incorporating employee engagement survey results in human resource strategy
The employee awareness surveys carried out show that employee engagement changes over time anddepending on the business environment. In recent years, the COVID-19 pandemic has had significant impacts

01

Introduction

03

Contents

04

Corporate Philosophy

significant changes in engagement. Clarifying individual career visions in the Company is expected to have05

The Founder’s Thoughts

positive effects on employee retention.

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

We believe that our career consulting will inspire and motivate our employees and foster their self-driven
career mindset.
In 2022, we also introduced a career self-checkup system. In the first year of implementation, theemployees in their third year of employment were the targets, as the third-year employees tend to experienceon employee engagement.
Prior to the pandemic, employees tended to be more interested in the content of work, workload, andcompensation, while since the pandemic, they have been more concerned with job satisfaction, educational

In addition, in order to promote self-motivated career development, we have renewed the system toopportunities, and dialogue with the Company and their superiors.
These results have been flexibly reflected in our human resource strategies, as we are focusing on the

support qualification acquisition and expanded eligibility and financial incentives. Going forward, we plan tocreation of more opportunities for mutual communication after the pandemic, including clarifying company

present samples of career models by job type, thereby creating an environment in which individuals can create

policies, providing educational opportunities, and holding online meetings between management and employees.

their own career visions in detail, resolve concerns, and pursue self-driven career development.

Promoting and supporting self-driven career development

Providing educational programs for skill improvement

To improve employee engagement, it is important for employees to have a clear idea of what career path they

All of our business activities are based on the foundation of our corporate philosophy. To promote

want to pursue and to acquire the skills necessary for it. We provide career consulting to help employees

understanding, dissemination, and implementation of our mission, we have actively introduced various

develop their career.

educational programs.

To ensure that everyone has fair access to career consulting opportunities, appointments are available via

Within the Company, we have established our own educational institution called the UNITED ARROWS

the intranet, which is easily accessible wherever employees are and whenever they like. The Company’s own

University, which offers a variety of programs to employees working at the head office or the stores acrossemployees who have obtained national qualifications provide consultation as a counselor. Since theyJapan in the most appropriate formats, including in-person and online. The programs cover a wide range ofunderstand the front-line services and operations, appropriate and personalized advice can be expected.

topics, including training to improve customer service skills and product knowledge, new employee onboarding
for new hires, and management training for managers. New employee onboarding, on which we place special

Providing a set of career development and educational opportunities

emphasis for human resource development, is designed to help new hires understand and internalize our
mission through lectures and group work.

Careerinterview

Careerconsulting

Achieving work-life balance
We have established short working hours and various types of leave, including maternity and postpartum leave,

Continuous follow-up
after career training

parental leave, nursing leave to care for children, and family care leave, so that our employees can enrich their

Career development
supportlife events and work and strike a balance between them.
Booking for consultation(at any time)

Careertraining
Conducted at career milestones such as the third year after
graduation, age 30, age 40, and age 50

In fiscal 2022, 100% of women and 29.9% of men took parental leave. As a company that actively promotes
child-rearing support, we have received “Kurumin Certification” from the Ministry of Health, Labour and Welfare.

44

I

UNITED ARROWS LTD. Integrated Report 2023

Humanity | Work and Live in a Healthy Way

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

increase include a growing awareness of career development among women and an increase in the proportion

05

The Founder’s Thoughtsof women in the middle grade and the top grade, who are candidates for management positions.

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

Creating a diverse work environment

percentage points from the previous fiscal year.

UNITED ARROWS Group is committed to creating a working environment where everyone can work fairly andmanagement positions of section chief or above was 22.4%, an increase of 4.1 percentage points from theequitably, regardless of age, gender, nationality, religion, or gender identity, and offers every employee

previous fiscal year. The target is to reach 30% or more by the end of March 2026. Factors contributing to theopportunities to grow and realize their full potential.
In creating a society where everyone is empowered to play an equal and active role, one of the major issues

We are also working to increase the number of women in management. In fiscal 2022, the ratio of women inis women’s career break due to life events such as childbirth and childcare. In order to resolve this issue, we

In terms of the gender wage gap in fiscal 2022, if men’s salaries are equated to 100%, women’s stand at

began working early on to improve our working systems, such as with short working hours. Because of our

75.3%*. We will continue to promote personnel management in an objective, fair, and equitable manner throughefforts, the career break for caring responsibilities is limited, and the percentage of women who return to work

the creation of career development awareness and the review of systems, and work to create a diverse work

after parental leave remains close to 100%. At the same time, we have established a system in which men canenvironment.

take paternity leave and divide leave into separate terms so that men can actively participate in childcare andother life events. As a result, the percentage of men taking parental leave in fiscal 2022 increased by 16.5

Spotlight

Listening to employees and developing
individual strengths to increase value* The gender wage gap also includes the effect that about one-fourth of female full-time employees use the short working hours
system for childcare.

develop their own professional abilities, and contribute to theCompany’s reconstruction and regrowth, and that many of these
employees want to know management’s true feelings, not a facade. In
response to their desire, we are currently focusing on two strategic
issues: “sending messages and dialogue from management” and“providing educational opportunities that lead to functional

In planning of our human resource policies, we identify the sources of employee engagement

development.” In fiscal 2023 in particular, we will focus on enhancing

through surveys, set high-impact items as strategic issues, and formulate investment plans. UNITED

education and training programs that enable employees to learn what

ARROWS LTD. has more than 3,500 employees, including minorities and the silent majority. In order

they are interested in and develop the job skills required for their

not to be biased by opinions that have surfaced, we emphasize decision-making based ondesired job, regardless of their current duties.

quantitative verification, taking into consideration the insights of all employees and those subject to

Respecting employees as individuals who have their own

being rewarded. We apply data-driven decision-making for major strategies and measures, but at theinterests, not as a workforce, I, as a Chief Human Resource Officersame time, we focus on communication with employees to respond to individual concerns. For this

(CHRO), will pursue the right business, the right management, and thereason, we have expanded our consultation service for career, health, and labor.

right human resource management. Based on our corporate philosophy

We had no choice but to reduce the number of staff and personnel expenses during the hard timeof Creating Five Values, we will increase employee value by continuingof COVID-19 and the subsequent rebuilding period. As a result, although short-term cost savings wereto invest in human capital. With a mission of translating that into value

realized, employee engagement decreased and the number of people quitting increased. Thoughcreation for customers, business partners, society, and shareholders,business has recovered and compensation levels are almost back to the pre-COVID levels, there are still

we will engage in compassionate human resource management.

challenges. We recognize that what we have lost in exchange for costs is not manpower but trust. On
the other hand, our surveys suggested that there are employees who want to learn at the Company,

Mariko Yamasaki
Executive Officer, CHRO, General Manager of Human Resources Division

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UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Outline of the corporate governance framework as of June 26, 2023
Organizational format

Company with an Audit and Supervisory Committee

Chairman of the Board of Directors

Representative Director, President, and CEO

Our basic stance on corporate governanceDirectors (excluding directors who are Audit andSupervisory Committee members)

Four (none of whom are outside directors)

At the time of its founding in October 1989, UNITED ARROWS LTD. defined its founding spirit as “contributing to

Directors who are Audit and Supervisory Committee
members

Three (all of whom are outside directors)

Independent officers

Three outside directors (including two females)

Average age
Number of Board of Directors’ meetings held during
fiscal 2022
Number of Audit and Supervisory Board meetings held
during fiscal 2022
Number of Nomination and Compensation Committee
meetings held during fiscal 2022

5

society by setting the standard for lifestyle culture in Japan.” The essence of this spirit has been maintained
and its expressions updated to better match the times so that it can continue to function as the basis for theactions of all directors and employees as our Company Policy. In addition, we have defined our promise tosociety and the creation of value for five distinct stakeholders as key features of our Policy Structure. The five
distinct stakeholders for which value is to be created are customers, employees, business partners, society,and shareholders. In this regard, the Company’s mission is to increase value for all stakeholders.
In order to maintain the proper mindset that will allow us to realize our Company Policy, we put in place theCode of Conduct. This code expresses how we should think and act to achieve our stated goals.
Recognizing the critical need to build a transparent and fair management framework, along with aContents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

51.3 years old

06

Our History

17

07

Value Creation Process

1308

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

structure under which we are capable of making timely and bold decisions, we are committed to continuously
strengthening and expanding our corporate governance capabilities and functions in order to realize ourcorporate philosophy, fulfill our promise to society, and create value for the five distinct stakeholders. ThroughCorporate governance framework
Shareholders’ Meetingsthese means, we are working to enhance our corporate value on a long-term and continuous basis.
Corporate Philosophy

Our Values

Election / Dismissal

Corporate Governance ReportElection / Dismissal

Election / Dismissal

Auditing / Supervise and oversee

Audit and Supervisory Committee

Cooperation

Consultation

Nomination andCompensation Committee

Trends in strengthening governance2022
Appointed two
female directors

Reporting / Instruction

Sustainability Committee
Reporting / Auditing

Cooperation

Recommendation/
Instruction

Internal
reporting

Risk Management Committee
Reporting

Reporting / Instruction

Election / Dismissal

Reporting / I nstruction

Representative Director,
President and CEO

ReportingInternal Auditing OfficeInternal auditing

Divisions (including stores) / Subsidiaries

Monitoring

Compliance Committee

Recommendation/
Instruction

Certiﬁed Tax
Accountant

2020
Increased the number of independent
officers to three
Appointed two female directors

Reporting / Auditing

Reporting / Instruction

Monitoring

2016
Transitioned to a company with an Audit
and Supervisory Committee structure
Established the Nomination andCompensation Committee
Appointed three outside directors
Undertook an evaluation of theeffectiveness of the Board of Directors
and disclosed results

Management Committee

Legal
Counsel2013
Appointed one
outside director

2017
Adopted a restricted stockcompensation plan
Abolished measures to prevent
hostile takeovers

Reporting / Cooperation

2008
Adopted an
executive
officer system

2015
Appointed two outside directors
Formulated and disclosed the Corporate
Governance Policy
Sold all cross-shareholdings

Auditing /Supervise and oversee

Reporting / Auditing

2007
Abolished retirement
benefits for officers

Proposals / Suggestions

Auditing/
Recommendation/
Instruction

Accounting
AuditorBoard of Directors

Cooperation

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UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Board of Directors (As of June 26, 2023)

Contents

Directors

YoshinoriMatsuzaki

Tatsuya
KimuraTakeo
Nakazawa

Kazuyasu
TanakaRepresentative
Director, President,
Chief Executive Officer(CEO)

Director, Executive
Vice President,
Chief Operating
Officer (COO)

Director, Executive
Managing Officer,
Chief Financial Officer(CFO)

Director, Executive
Managing Officer,
Chief Merchandising
Officer (CMO)

Apr. 1998: Joined the Company
Oct. 2005: Department Manager, Sales Department, UA Division of theCompany
Apr. 2008: Deputy General Manager, BY Division and Department
Manager, Business Strategy Department, BY Division of theCompany
Apr. 2012: General Manager, BY Division, Business Unit I of the Company
Jul. 2012: Executive Officer and General Manager, BY Division, Business
Unit I of the Company
Apr. 2014: Senior Executive Officer and General Manager, BY Division,
Business Unit I of the Company
Apr. 2018: Senior Executive Officer and General Manager, Business Unit Iof the Company
Jun. 2018: Director, Executive Managing Officer, General Manager,
Business Unit I of the Company
Nov. 2020: Director, Senior Executive Vice President, General Manager,
Business Unit I of the Company
Apr. 2021: Representative Director, President, and CEO of the Company(current)
Yoshinori Matsuzaki built his career as Store Manager and contributed tothe development of the BY business. Subsequently, he led the Company’s
mainstay business and supervised all businesses targeting thetrend-consciousness market. He assumed the position of Representative
Director and President in April 2021. As Chief Executive Officer (CEO) sincethen, he has been playing the role of the highest level decision-maker andsupervisor of business execution within the Group’s management.
Demonstrating strong leadership, he executed the divesture of
unprofitable businesses and stores, which led to an improvement in grossmargin due to higher inventory efficiency, thereby achieving a recovery of
the Group’s performance, which had been sluggish during the COVID-19
pandemic. He is in charge of the overall management of the Group for theachievement of the medium-term management plan.
Attendance at Board of Directors meetings：
17/17 times (100%)Jan. 2002: Joined the Company
Apr. 2008: Department Manager, Sales Supervising Department, GLR
Division of the Company
Jul. 2011:
Deputy General Manager, Business Unit II and GLR Division
and Department Manager, Sales Supervising Department of
the Company
Apr. 2016: Executive Officer and General Manager, GLR Division of theCompany
Apr. 2017: Senior Executive Officer and General Manager, GLR Division of
the Company
Apr. 2018: Senior Executive Officer and General Manager, Business Unit
II of the Company
Jun. 2018: Director, Executive Managing Officer, General Manager,
Business Unit II of the Company
Nov. 2020: Director, Executive Vice President, General Manager,
Business Unit II of the Company
Apr. 2021: Director, Executive Vice President, and COO of the Company(current)
Tatsuya Kimura built his career as Store Manager and contributed to thedevelopment of the GLR business. He led the Company’s mainstay
business and supervised all businesses targeting the basic
trend-conscious market. As Chief Operating Officer (COO), he has been
responsible for the supervision of business execution related to theCompany’s supply chain. He has been promoting digital transformation(DX) of the Company’s infrastructure, including the construction of a new
e-commerce site, digitalization of product procurement, and modificationof the core system for product control, and contributing to improved
operational efficiency and business productivity. He is in charge ofbuilding the value chain of the Group for the achievement of themedium-term management plan.
Attendance at Board of Directors meetings：
17/17 times (100%)

Jul. 2004:
Apr. 2010:

Joined the Company
Department Manager, Finance and Accounting Department,
Administration Division of the Company
Apr. 2020: Executive Officer responsible for Finance and Accounting
Department, and Planning and Management Department of
the Company
Apr. 2021: Executive Officer, CFO, General Manager, Administration
Division of the Company
Jun. 2023: Director, Executive Managing Officer, and CFO of theCompany (current)
After joining the Company, Takeo Nakazawa built his career in the Financeand Accounting Department and contributed to the improvement of theCompany’s financial infrastructure, including accurate investment
decision-making and risk control. Subsequently, he has contributed to theenhancement of the corporate value of the entire Group through theaccurate allocation of investment in growth engines as Executive Officer
responsible for the Finance and Accounting Department and the Planningand Management Department. Since his appointment as Chief Financial
Officer (CFO), he has been responsible for the supervision of theadministrative functions throughout the Company, including theCompany’s risk management and business accounting. Based on his
experience and expertise in finance, he was instrumental in maintaining
the Company’s financial stability and overcoming the deterioration of its
financial performance caused by the COVID-19 pandemic. He is in chargeof finance and governance throughout the Group for the achievement of
the medium-term management plan.
Attendance at Board of Directors meetings：-

Nov. 2008: Joined the Company. Deputy General Manager, UA Division,and Department Manager, Women’s Merchandising
Department, UA Division of the Company
Apr. 2013: Executive Officer, General Manager, SBU Division I, Business
Unit I of the Company
Apr. 2015: Executive Officer, General Manager, SBU Division I, Business
Unit I and Deputy General Manager, UA Division of theCompany
Apr. 2016: Executive Officer, General Manager, UA Division of theCompany
Apr. 2018: Executive Officer, Deputy General Manager, Business Unit I of
the Company
Apr. 2019: Senior Executive Officer, Deputy General Manager, Business
Unit I of the Company
Apr. 2021: Executive Officer, General Manager, Sales Management
Division of the Company
Apr. 2022: Executive Officer, CMO of the Company
Jun. 2023: Director, Executive Managing Officer, and CMO of theCompany (current)
Kazuyasu Tanaka has greatly contributed to the development of theCompany’s women’s label, utilizing his experience as general manager atother companies in the industry and managerial experience at an affiliateof the Company. In 2021, he assumed the position of Executive Officer,
General Manager, Sales Management Division, and he led the Company’s
mainstay business by improving the supply chain and pursuingorganizational reform and other measures. Since 2022, as Chief
Merchandising Officer (CMO), he has been responsible for thesupervision of merchandising functions and shown leadership in productprocurement. He is in charge of merchandising throughout the Group forthe achievement of the medium-term management plan.
Attendance at Board of Directors meetings：-

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

47

I

UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Board of Directors (As of June 26, 2023)

Contents

Directors (Audit and Supervisory Committee Members)

Yukari
Sakai

YusakuKurahashi

Shiho
TakanoOutside Director

Outside Director

Outside Director

Apr. 1991: Joined Nomura Securities Co., Ltd.
Jan. 2005: Director of Corporate Tune Co., Ltd.
Jun. 2005: Standing Outside Audit and Supervisory Board Member of theCompany
Jun. 2008: Outside Audit & Supervisory Board Member of REPROCELL Inc.
Jun. 2016: Outside Director (Standing Audit and Supervisory Committee
Member) of the Company (current)
Mar. 2019: Outside Director (Audit and Supervisory Committee Member)of Uzabase, Inc.
Jun. 2021: Outside Director of Pacific Metals Co., Ltd. (current)
Jun. 2022: Outside Director of TOYO KANETSU K.K. (current)
Yukari Sakai has experience as director and audit and supervisory board
member at other companies, abundant finance-related knowledge,
including expertise in financing and accounting matters, and various
viewpoints from the perspective of diversity. The Company appointed her
as outside director (Audit and Supervisory Committee members) in the
belief that she would leverage her abundant experience and knowledge to
execute the Company’s business and fulfill the function of control andoversight over management. She satisfies the Independence
Determination Standards for Independent Officers set forth by theCompany.
Attendance at Board of Directors meetings：17/17 times (100%)
Attendance at Audit and Supervisory Committee meetings：13/13 times(100%)
Attendance at Nomination and Compensation Committee meetings：
5/5times (100%)

Dec. 2007: Registered as an attorney at law and joined Nakamura,Tsunoda & Matsumoto Law Office
Oct. 2013: Graduated from University of Oxford (Masters in Law and
Finance)Jan. 2015: Partner of Nakamura, Tsunoda & Matsumoto Law OfficeJun. 2019: Outside Audit & Supervisory Board Member of Kanematsu
Corporation (current)
Jun. 2020: Outside Director (Audit and Supervisory Committee Member)of the Company (current)
Apr. 2023: Representative Partner, Kurahashi Law Office (current)
Yusaku Kurahashi has been engaged in lawsuits and other dispute cases,
M&A, corporate restructuring, and corporate legal affairs as a lawyer andhas broad experience, including participating in third-party committees incorporate scandal cases. The Company appointed him as outside director(Audit and Supervisory Committee member) in the belief that he would
leverage his extensive specialized knowledge to enhance the Company’s
corporate governance and other matters. He satisfies the Independence
Determination Standards for Independent Officers set forth by theCompany.
Attendance at Board of Directors meetings：17/17 times (100%)
Attendance at Audit and Supervisory Committee meetings：13/13 times(100%)
Attendance at Nomination and Compensation Committee meetings：
5/5times (100%)

Apr. 1987:
Sep. 1990:
Sep. 1996:
Apr. 1998:
Feb. 2001:

Joined Meiji Dairies Corporation (current Meiji Co., Ltd.)
Joined Parfums Yves Saint Laurent Japan Ltd.
Joined Coca-Cola (Japan) Company, Limited
Joined Boots MC Company Limited.
General Manager and Head of Japan operations of
L’OCCITANE JAPON K.K
Jan. 2004: Representative Director and President of L’OCCITANE JAPON K.K
Apr. 2015: Representative Director and Chairman of L’OCCITANE JAPON K.K
Apr. 2016: Senior Advisor of L’OCCITANE JAPON K.K
Mar. 2017: Representative Director and President of Etowa Co., Ltd.
(current)
Jun. 2018: Outside Director of MORINAGA & CO., LTD.
Mar. 2019: Outside Director of FUJITA KANKO INC. (current)
Jul. 2021: Senior Advisor of Carlyle Japan LLC (current)
Jun. 2022: Outside Director (Audit and Supervisory Committee Member)of the Company (current)
Shiho Takano has a wealth of experience in marketing, branding, newproduct development and more, as well as extensive knowledge as amanagement executive for many years, acquired through her tenure inseveral operating companies in the food and cosmetics industries. The
Company appointed her as outside director (Audit and Supervisory
Committee member) in the belief that she would leverage her extensive
experience and knowledge to offer objective and neutral advice, etc. on
overall corporate management from a broad range of viewpoints that are
not bound by the industry in which the Company operates and that she
would help further strengthen the sound and effective management of
the Company. She satisfies the Independence Determination Standards
for Independent Officers set forth by the Company.
Attendance at Board of Directors meetings：13/13 times (100%)
Attendance at Audit and Supervisory Committee meetings：10/10 times (100%)
Attendance at Nomination and Compensation Committee meetings：
4/4times (100%)Note) This is the attendance status after assuming office as a Director onJune 27, 2022.

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

48

I

UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Board of Directors (As of November 1, 2023)

Contents

Executive Officers

Apr. 1996:
Apr. 2018:
Apr. 2021:
Apr. 2022:

Dec. 1998:
Feb. 2003:
Apr. 2009:
Apr. 2014:
Apr. 2018:

ShinyaMatsumoto

YoshiakiFujihara

Yuji
Suzumura

Executive Officer,
Chief Creative Officer(CCO)

Executive Officer,
Chief Digital Officer(CDO)

Executive Officer,
Chief Information
Officer (CIO)

Joined the Company
Executive Officer, Creative Director, Business Unit I of theCompany
Executive Officer, CCO responsible for all creative efforts of
the Company
Executive Officer, CCO of the Company (current)

Apr. 2021:

Apr. 2022:
Apr. 2023:

Joined the Company. Executive Officer, General Manager,
Digital Transformation Promotion Center, and Department
Manager, Digital Marketing Department of the Company
Executive Officer, CDO, General Manager, Marketing Divisionof the Company
Executive Officer, CDO, General Manager, OMO Division of theCompany (current)

SatoshiTan

MarikoYamasakiExecutive Officer,
Chief Sustainability
Officer (CSO)

Executive Officer,
Chief Human Resource
Officer (CHRO)

Joined the Company
Department Manager, IR/PR Department of the Company
Manager, Planning and Management Office of the Company
Manager, IR Office of the Company
Executive Officer, Department Manager, IR/PR Department,
and responsible for Planning and Management Department of
the Company
Apr. 2020: Executive Officer responsible for IR/PR Department,
Administration and Legal Department, Corporate Planning
Department, Sustainability Promotion Department, andDepartment Manager of Sustainability Promotion
Department of the Company
Apr. 2021: Executive Officer, General Manager, CEO’s Office, andDepartment Manager, IR and Corporate Planning Departmentof the Company
Apr. 2022: Executive Officer, CSO, General Manager, Corporate Strategy
Division of the Company (current)

Apr. 1996:
Jul. 2006:

Joined the Company
Department Manager, Public Relations Department of theCompany
Apr. 2008: Department Manager, Corporate Planning Department of theCompany
Apr. 2012: Manager, Fashion Marketing Office of the Company
Apr. 2014: Deputy General Manager, Corporate Strategy Division, andDepartment Manager, Corporate Planning Department of theCompany
Apr. 2016: Deputy General Manager, United Arrows Division of theCompany
Apr. 2018: Department Manager, Human Resources Department of theCompany
Apr. 2021: General Manager, Human Resources Division, andDepartment Manager, Human Resources Department of theCompany
Apr. 2023: Executive Officer, CHRO, General Manager, Human Resources
Division of the Company (current)

Jan. 2021:
Apr. 2021:

Joined the Company
Deputy General Manager, Digital Transformation Promotion
Center, and Department Manager, Information System
Department of the Company
Apr. 2022: General Manager, IT Solution Division, and IT Service Platform
Department of the Company
Apr. 2023: Executive Officer, CIO, General Manager, IT Solution Division,and IT Service Platform Department of the Company
Oct. 2023: Executive Officer, CIO, General Manager, IT Solution Divisionof the Company (current)

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

49

I

UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Composition of Officers and Committees and skills matrix
Composition

●

●

◎

●

●

●

◎

●

●

●

○
○

CFO

Takeo
Nakazawa

●

●

CMO

Kazuyasu
Tanaka●YusakuKurahashi●

Shiho
Takano●●Chairperson Chairperson

●
●

●

●

●

●

●

●

●

●

Executive Officers

CCO

ShinyaMatsumoto

●

●

CDO

YoshiakiFujihara

●

●

CIO

Yuji
Suzumura

●

●

CSO

SatoshiTan●●

MarikoCHRO
Yamasaki

●

○

◎

◎

◎

○

◎

○

○
◎

○

◎

Sustainability

○

●

○

Global○●◎Finance/
Accounting/Taxation○●

Legal affairs/
Riskcompliance/
Governance
Personnel/
Humanresourcesdevelopment◎

Tatsuya
KimuraChairperson Chairperson Chairperson

ICT/DX

Branding/
Marketing

●

COO

●

Logistics

Procurement/
SCM

○

●

E-commerceStore
operation/
Customer
relations○

YoshinoriMatsuzaki

R&D/
New businessdevelopment

Corporate
management○

CEO

Compliance
Committee

Risk
Management
Committee

Sustainability
Committee

Nomination
andCompensation
Committee

Audit andSupervisory
Committee

Male

FemaleOutsideDirector

Directors

◎

Name

●

Skills (◎Main areas of responsibility 〇 Areas with knowledge)

Committees (●Committee members ●Observers)

Role

Yukari
Sakai

Contents

◎

○
○

○

○
○

◎

◎

○

◎

○

◎
◎
○

○

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

○
○

◎
○

●

01

○

◎

◎

Reasons for skill selection
Based on discussions for the formulation of the long-term vision and the medium-term management plan, we

responsibility; presented as “◎” in the table) and one with high experience (area with knowledge; presented as

took inventory of the necessary skill items. As a result, in June 2023, we reselected skills that will be particularly“○” in the table).

important in our future management. We narrowed down the number of items and changed some of the skill
descriptions. In the development of the skills matrix, items of particular importance, such as store operations,

We will maintain a balance of 12 officers, including executive officers, and strive to fulﬁll their skills as themedium-term management plan progresses.

product procurement, branding, and new business development, are placed on the left.
We also reviewed and re-evaluated our skill evaluation methods. The previous evaluation method based on
the number of years of experience as a responsible person was changed to a role as a CXO (main area of* The above table does not represent all the knowledge and experience of each individual.

50

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UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Board of Directors

Nomination and Compensation Committee

By streamlining matters for resolution at the Board of Directors meetings, we have established a system to

In order to strengthen the independence, objectivity, and accountability of the functions of the Board of

ensure that discussion time is available for important management issues such as management policies andDirectors in relation to the nomination and compensation of Directors, the Nomination and Compensation

medium- to long-term strategies.

Committee has been established, and it consists of all independent outside directors and the Representative
Director, President, and CEO, with the majority of members being independent outside directors. In principle,

FY2022 Deliberation summary

this meeting is held once a quarter, and opinions are expressed to the Board of Directors regarding theFirst half

Second half

• Discussion on the new customer membershipprogram, resolution on related contracts, etc.
• Report and approval on annual conﬂict-of-interest
transactions• Discussion on the Board of Directors’ effectivenessevaluation• Discussion on interviews with ESG-related
institutional investors• Report and approval on internal control• Discussion on setting sustainability goals• Report on audit plan of internal audit and Audit andSupervisory Committee• Discussion on the new medium-term management plan

• Discussion on the new medium-term management plan
• Approval for the disclosure of results of the Board of
Directors’ effectiveness evaluation• Discussion on the development of the next coresystem and resolution on related contracts, etc.
• Discussion on management of the FY2022 Annual
General Meeting of Shareholders• Discussion on FY2023 management policy• Discussion on FY2023 Group management structure• Summary report on the Board of Directors’
effectiveness evaluation questionnaire

Audit and Supervisory Committee
The effectiveness of the execution of duties by Directors is conﬁrmed and evaluated, and the legality andappropriateness are audited.

individual nomination and dismissal of Director candidates, the appointment and dismissal of senior
management, the compensation of Directors excluding Audit and Supervisory Committee members, and thesuccession plan.

FY2022 Deliberation summaryFirst half

Second half

• Consultation on Director candidates who are not Audit
and Supervisory Committee members(reappointment)• Consultation on Director candidates who are Audit
and Supervisory Committee members (new andreappointment)• Consultation on allocation of compensation to
Directors other than Audit and Supervisory Committee
members• Consultation on performance-linked bonuses• Exchange of opinions on the consideration of the newstock compensation system• Exchange of opinions on the FY2023 UNITED ARROWSGroup management structure• Exchange of opinions on evaluation of Directors andexecutive officers• Exchange of opinions on the consideration of the newstock compensation system• Consultation on FY2023 group management structure• Consultation on the FY2023 election of executive
officers

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

In addition, in order to carry out and provide accurate audits, supervision, and advice, the Committee
meetings are held regularly with each officer in charge of execution to identify issues and grasp the progress ofTraining for Directors

initiatives for improvement.

As appropriate, we provide training to Directors and other members of the management team by experts on

FY2022 Deliberation summaryFirst half
• Discussion on the status of development andoperation of internal control systems• Report and exchange of opinions from the internal
audit division• Discussion on evaluation of accounting auditors• Discussion with Representative Director (newmedium-term management plan, motivation, andgovernance)• Discussion with executive directors (logistics, DX,
SCM, subsidiary-related)economic, ﬁnancial, and legal matters necessary for our business operations.

Second half
• Report and exchange of opinions from the internal
audit division• Discussion with executive directors (human resource
issues, organizational issues, overseas subsidiaries)• Discussion with executive officers (sustainability
initiatives, disclosure, etc.)• Discussion with the risk management division (riskinterview evaluation)• Discussion with Representative Director (issues in theimplementation of the new medium-term
management plan and new business investment)

In ﬁscal 2022, we invited external experts to give lectures to Directors and executive officers on“expectations and unrest from the perspective of capital markets,” “business and human rights: sustainability
in the age of globalization,” “current status and future prospects of sustainability in the fashion industry,” and“legal issues to keep in mind now as an executive of the Company.”

51

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UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Executive compensation

Compensation for directors in FY2022

Our basic policy for executive compensation is to contribute to sustainable growth and medium- to long-term
improvement in corporate value through improved business performance. The compensation standard andGroupcompensation structure are designed to match roles, duties, and positions. Compensation for executive
directors, including the Representative Director, among Directors excluding Audit and Supervisory Committee

Directors(excluding Directors
who are Audit
and Supervisory
Committee members)

members, consists of ﬁxed compensation established based on compensation standards for roles, duties, andpositions, executive bonuses reﬂecting short-term performance such as company performance for eachbusiness year and achievement of individual business goals, and stock compensation reﬂecting medium- tolong-term performance.

Directors(who are Audit
and Supervisory
Committee members)

In June 2023, we introduced a new performance-linked stock compensation plan, the “Board Beneﬁt Trust(BBT-RS),” in addition to the existing restricted stock compensation. By introducing this system, the link

Number of
Directors

Contents

Amount of compensation by type
Fixedcompensation

Executive
bonuses

Stockcompensation

Total

3

¥90
million¥48
million¥21
million¥160
million4¥34
million―¥34
million―between the compensation of Directors and our performance and stock value is made clearer, and Directors
can share not only the beneﬁts of rising stock prices but also the risks of falling stock prices with shareholders.
We believe this will raise awareness of the need for good medium- to long-term business performance andcorporate value improvement.

Note 1) The number of Directors (who are Audit and Supervisory Committee members) includes one Director (who is an Audit andSupervisory Committee member) who retired at the 33rd Annual General Meeting of Shareholders held on June 27, 2022.
Note 2) The amount of compensation for Directors does not include employee compensation for Directors who also serve as
employees.

Overview of the executive compensation system (revised in ﬁscal 2023)*1

Type
Fixed
compensation
Executive
bonuses

Percentage*2

Restricted
stockcompensation• Monthly payment of a ﬁxed amount20-22%• Calculated by multiplying the basic bonus amount speciﬁed in the compensation table by the degree of achievementof planned consolidated operating income for the target business year*3• Taking into account the individual evaluation of each executive director• Paid within a certain period after the last day ofthe business year following consultation by the
Nomination and Compensation Committee

11-15%• The number of shares to be granted will be determined based on the compensation standards for roles, duties, andpositions• Restrictions on transfer pending retirement as a Director and executive officer of our Group• If certain illegal or improper acts have caused damage, the Board of Directors may request a refund in shares or money
by resolution

Stockcompensation
Performancelinked stockcompensation

Timing• Determined based on compensation standards for roles, duties, and positions, taking into account businessperformance and employee salary levels

48-58%
Monetary
compensation

Summary

11-15%• Points are granted based on the degree of achievement of the medium-term management plan, in accordance withthe compensation standards for roles, duties, and positions stipulated in the Directors’ Share Beneﬁt Regulations(may not be granted depending on the status of achievement of the medium-term management plan)• Calculate the number of shares to be granted according to the number of points granted• Shares are granted in line with the term of office during the target period of the medium-term management plan
• If certain illegal or improper acts have caused damage, the Board of Directors may request a refund in shares or money
by resolution*1 The compensation for Directors (who are Audit and Supervisory Committee members) is ﬁxed monthly compensation only and is not presented in the table.
*2 Percentage of executive compensation and stock compensation in the standard amount.
*3 If consolidated operating income falls below a certain level relative to the initial forecast, it will not be paid in principle.

• Granted every time they are elected at theannual general meeting of shareholders• Granted within a certain period after the end of
the target period of the medium-term
management plan

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

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UNITED ARROWS LTD. Integrated Report 2023

Corporate GovernanceAnalysis and evaluation of the effectiveness of the board as a whole

Message from Outside Directors

The Company annually conducts a questionnaire on the effectiveness of the Board of Directors that includes

Contents

the composition of the Board, deliberations, the quality of the information provided to the Board, and otheraspects. Through this self-evaluation by directors, the Company periodically verifies the effectiveness of theBoard and take measures to improve issues and reinforce the operation. An overview of the results is disclosed.
First, based on the outcome of the questionnaire concerning fiscal 2021, the Board of Directors positioned
the following as tasks to undertake: (i) continuously review necessary skills and update the skill matrix in light ofthe business environment, (ii) deepen discussions on formulation of new medium-term management plans,and (iii) consider measures for effectively implementing a succession plan for senior management members,
including executive officers, in order to realize the management strategy. In response, during fiscal 2022, theCommittee for Formulation of the Medium-term Management Plan, which consists mainly of executive
directors, gave a report to the Board of Directors each time progress was made during the review phase, and theopinions of outside directors with diverse perspectives served to deepen discussions aimed at developing a
new medium-term management plan. At the same time, the need for the succession of directors and executive
officers was confirmed, and although there is still a sense that more discussion is needed on specificimplementation methods and measures, two new directors were elected to examine the skills needed toGreater organizational
strength to support
growth strategy isimportant in these
unpredictable times
Yukari Sakai
Outside Director

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

steadily implement the medium- to long-term management plan and to build a management structure that willrealize solid growth.
Subsequently, in a questionnaire concerning fiscal 2022 conducted in April 2023, although no major

I recognize that it is my role to develop an environment that supports appropriate risk-taking

problems were pointed out with regard to the operation and effectiveness of the Board of Directors, an opinion

while providing a broad direction for corporate strategy, which is the responsibility of the Board

was expressed that the skills required of members should continue to be examined and measures to fulfill themof Directors, and to contribute to the establishment of a system and governance that enables

should be considered and discussed in the execution phase of the newly established medium-term

decision-making in line with the times.

management plan. In addition, in order to achieve the medium- to long-term management plan and to make the

Our Board of Directors has been devising deliberation matters year by year, and active

management system more robust, opinions were expressed on the need for a plan to appoint members who will

discussions are under way under the chairpersonship of CEO Matsuzaki. In May 2023, welead the next generation of management and to develop target members, and on how to utilize the “agenda

announced our long-term vision and new medium-term management plan. In this era of rapid

items” of the Board of Directors as an opportunity to discuss these important management issues.

change and difficult forecasting, we need to make increasingly sophisticated decisions. I believe

27

Message from the CFO

it is important to promote diversity not only among board members but also throughout the29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control“Humanity,” we formulated a human rights policy.

55

Corporate Information

p. 34 Sustainability Committee

56

Stock Information

In the future, based on the opinions submitted, the Company will consider and implement initiatives tofurther enhance the effectiveness of the system.

178.618

company, and to further promote the organizational foundation that supports our growthstrategy by enhancing discussions on the CEOs’ and CXOs’ succession plans.
Since our founding, we have maintained our unchanging aspirations and values, aiming toConsideration of sustainability themes“provide our customers with richness in their hearts and richness in their lives” and “continue to

In April 2020, we established the Sustainability Committee as a subsidiary body of the Management

be an indispensable part of living a refined life in Japan.” We believe that the ultimate sustainable

Committee, and it establishes policies and goals on overall sustainability, deliberates initiatives and othermanagement for us is to continue to enhance our brand and gain support from our customers. I

matters, and reviews progress.

hope that we will continue to work tirelessly to improve our management and that we will work

In fiscal 2022, we set targets for our sustainability activities, “SARROWS.” In order to achieve our goals, we
set three themes for our activities, and deliberations were held on the following themes: under “Circularity,” weset our own standards for environmentally friendly products, under “Carbon Neutrality,” we formulated a policy
to respond to climate change based on TCFD recommendations and applied for SBT certification, and under

together as one.

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UNITED ARROWS LTD. Integrated Report 2023

Corporate Governance

Message from Outside Directors

Support sustainablegrowth with an
optimal skills matrixand “good discussions”

Contents

Promoting diversity for
growth by leveraging theenvironment for free andopen discussion

Yusaku Kurahashi

Shiho Takano

Outside Director

Outside Director

I recognize that a solid structure for governance is in place, and plenty of internal discussion is

Based on my many years of experience in corporate management and consumer-facing

taking place. In order to enhance the effectiveness of the Board of Directors, CEO Matsuzaki, as

marketing, I am involved in the management of UNITED ARROWS LTD. from both a consumer

the Board’s chairperson, has encouraged open discussion and made use of it in management. In

perspective and a management perspective. As customer satisfaction increases, business

addition, all those concerned are working hard, with the secretariat improving deliberation

performance will naturally improve, and this is the essence of “providing excitement” as stated inmatters as well as the business and administration divisions carefully analyzing proposals, for

our medium-term management plan.

example. The results of these efforts are steadily becoming apparent. In our case, in particular,

Looking at the stores, I had the impression that the corporate culture is free and frank, but

01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

the philosophy that “providing value to our customers and enhancing employee well-being leads

governance as a company is also very solid, and there is no problem regarding the effectivenessto increased corporate value, which in turn leads to meeting the expectations of shareholders” isof the Board of Directors. Furthermore, I believe that if we take advantage of an environment

27

Message from the CFO

pervasive, and I feel that this is the basis for governance.

where not only the Board of Directors but also people from diverse positions can discuss matters

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

178.618

As the apparel market matures, management challenges such as how to meet thefreely and openly, we will be able to accelerate growth. Innovation comes from a clash of different

expectations of various stakeholders, how to utilize DX in business, and how to address

opinions, and I hope to improve this environment. The biggest challenge now is to create ansustainability issues themselves are important governance issues for us. To address them, it isenvironment and implement specific strategies so that all employees can fully engage in theessential to continue optimizing the skills matrix of the Board of Directors members and to havemedium-term management plan, but we will also do our best to promote diversity for growth ingood discussions of management issues for sustainable growth. I anticipate that, as a company

the long term.

where all the employees understand that and work hard every day, we will be uniquely able tocreate the cutting edge of that value.

Living and dressing beautifully is very important for people. I think our mission is to createthat new value. I expect that we will be able to create the cutting edge of this value because all
employees understand it and work hard every day.

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UNITED ARROWS LTD. Integrated Report 2023

Internal Control

Compliance
We have established the Compliance Regulations to ensure the soundness of our operations, thereby enhancing

Contents

our Group’s social trust and contributing to the realization of our management philosophy. We adhere to the
UNITED ARROWS Group’s Code of Conduct when ensuring compliance.

01

Introduction

activity plans, and educational plans, and to review compliance issues. In addition, for compliance purposes, we

03

Contents

have established an internal reporting system that allows us to anonymously report suspicious activities to

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

time, we promoted security education for employees, such as information security training and targeted attack

27

Message from the CFO

email training, and security measures, such as changing the login password of business PCs.

29

Dialogue | Our Sustainability

information, and that managing it is a serious responsibility. In addition, the Management Committee has

33

Our Sustainability

established the Personal Information Protection Regulations in accordance with the Act on the Protection of

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

To promote compliance, the Compliance Committee has been established to review and approve policies,

Risk management
We have established a Risk Management Committee to identify risks associated with business activities on aregular basis, as well as to evaluate and select important risks every year to be considered for management issues

external organizations.

in the coming fiscal year. We are actively studying and implementing measures to address risks in each division.
The foundation of our business is to maintain customer satisfaction, and the ultimate risk is not being able

In fiscal 2022, compliance education and testing were conducted for all employees, and the Internal
Reporting Regulations were revised in accordance with the revised Whistleblower Protection Act.

to continue to respond to the changing social environment and customer needs over time—in other words, an“inability to respond to the times.” Therefore, in the process of risk identification, we are considering measures
to respond to the following risks, which we consider particularly important: human resources, ability to respond

Information security

to changes in customer preferences and propensity to consume, digital transformation, and sustainability, as

We take measures to maintain and improve the required level of security in order to continuously and stably

well as the following, which we consider important risks: changes in economic conditions and the businessprovide services based on our customers’ trust. To respond to a case of information leakage due to computer

environment, store development, distribution and logistics, political instability in the countries where weviruses, cyber terrorism, or the like, we have built highly secure systems and implemented risk management

operate, climate change, quality, information management, and business infrastructure.

with security companies in accordance with the Information Security Regulations revised in 2021. In addition,

In fiscal 2022, in addition to identifying internal incidents and formulating measures to prevent recurrence,
we discussed sustainability issues that are of particular public interest and potential downside risks.

we have established the Basic Policy on Information Security, which is disclosed on our website, and we areproviding Information Security Training to employees. Further, since fiscal 2021, the Information Security
Subcommittee established within the Risk Management Committee has been working to reduce risks related to
information management by establishing a system for making decisions on early planning and implementationof countermeasures through discussions with management.

Board of Directors

Audit and Supervisory Committee

Formulation of “Basic Policy on
Creation of Internal Control Systems”
Instruction/
oversight

Reporting

Auditing

Chair: President
Committee members: Directors
Attendees: Executive Officers /General Managers
Secretariat: Risk Management andCompliance Dept.

Reporting• Determination of risk management policies• Determination of risk management activity plans• Determination of “key risks”• Risk identiﬁcation / countermeasure
analysis/follow-up• Decisions concerning establishment/
dissolution of task forces / working groups, etc.
Instruction

Each Division

Task Forces
Establishment

General Manager: President
Members: Directors
Secretariat: Risk Management andCompliance Dept.
Divisions overseen: Determined dependingon type of crisis• Analysis/approval of countermeasuresfor emergencies, etc.

Establishment

Reportingsystems and our e-commerce sites from outside the company, and we implemented technical security
measures, including measures to prevent information leakage from the Web and cloud services. At the same

Reporting

Risk Management Committee

In fiscal 2022, we continued to take measures to prevent unauthorized access to our internal businessWorking Groups (WG)
WG Head: Determined dependingon type of risk/incident

Reporting• Responses to speciﬁc risks / incidents, etc.

We are also fully aware that the Company handles a lot of sensitive information, including personal

Personal Information, and we have established, evaluated and reviewed the management system for personal
information. Furthermore, we have formulated a Privacy Policy, which defines the basic concept of personal
information protection and the content to be observed, and disclosed it externally.
Basic Policy on Information Security

Privacy Policy

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I

UNITED ARROWS LTD. Integrated Report 2023

Corporate
Information

Name of the Company

UNITED ARROWS LTD.

(as of March 31, 2023)

Head Office8-1-19 Akasaka, Minato-ku, Tokyo, Japan

Registered Office

Established

CapitalRepresentative Director,
President, and CEO

Business Outline

3-28-1 Jingumae, Shibuya-ku, Tokyo Japan

October 2, 1989

¥3.03 billion

Yoshinori MatsuzakiPlan, buy, and sell men’s and women’s apparel, accessories, and other products

Number of Stores(consolidated)

298

Number of Employees(consolidated)

3,915

Subsidiary Companies

COEN CO., LTD.
UNITED ARROWS TAIWAN LTD.
UNITED ARROWS SHANGHAI LTD.

Affiliated Company

CHROME HEARTS JP, GK

Contents
01

Introduction

03

Contents

04

Corporate Philosophy

05

The Founder’s Thoughts

06

Our History

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance

54

Internal Control

55

Corporate Information

56

Stock Information

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I

UNITED ARROWS LTD. Integrated Report 2023

Stock
Information(as of March 31, 2023)

Stock listing

The Prime Market of
the Tokyo Stock Exchange

Type of business

Retail sales

Securities code

7606

Number of shares per unit

100

Number of authorized shares

190,800,000

Number of common shares issued

30,213,676

Number of shareholders

22,270Share registrar

Mitsubishi UFJ Trust andBanking Corporation

Major shareholders

Contents

Shareholder composition
Individuals
and others

Financial
institutions

34.39%

Percentage of
number ofshares held
Foreigncorporations

26.03%

01

Introduction

03

Contents

Financial
instruments
firms

04

Corporate Philosophy

05

The Founder’s Thoughts

2.82%

06

Our History

Other domestic
corporations

07

Value Creation Process

08

Our Operating Markets

09

Sources of Value Creation

14

Financial and
Non-Financial Highlights

15

Message from the President

19

Review of Medium-Term
Management Plan 2020-2022

21

Long-Term Vision 2032

22

Medium-Term
Management Plan 2023-2025

27

Message from the CFO

29

Dialogue | Our Sustainability

33

Our Sustainability

35

Circularity | Circular Fashion

38

Carbon Neutrality |Toward a Carbon-Neutral World

41

Humanity |Work and Live in a Healthy Way

45

Corporate Governance27.14%

9.62%

Number of Shares

Custody Bank of Japan, Ltd. (Trust Account)

4,390,600

The Master Trust Bank of Japan, Ltd. (Trust Account)

2,695,800

Osamu Shigematsu

2,488,400

ADS Co., Ltd.

2,000,000

NORTHERN TRUST CO. (AVFC) RE THE HIGHCLERE INTERNATIONAL INVESTORSSMALLER COMPANIES FUND Standing proxy:
Tokyo Branch, The Hongkong and Shanghai Banking Corporation Limited (HSBC)

946,600

STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST, BOSTON SSBTC
A/C UK LONDON BRANCH CLIENTS-UNITED KINGDOM Standing proxy:
Tokyo Branch, The Hongkong and Shanghai Banking Corporation Limited (HSBC)

765,000

STATE STREET BANK AND TRUST COMPANY 505001 Standing proxy: Mizuho Bank, Ltd.

471,050

Mitsubishi UFJ Trust and Banking Corporation

428,000

TAKISADA-NAGOYA CO., LTD.

428,000

54

Internal Control

JP MORGAN CHASE BANK 385781 Standing proxy: Mizuho Bank, Ltd.

282,478

55

Corporate Information

56

Stock Information

Editorial Policy

This report systematically summarizes and explains business strategies and sustainability activities, suchas the Long-Term Vision 2032 and the Medium-Term Management Plan 2023-2025, based on the
management philosophy that is the foundation of our activities. Our aim is for this to encourage our
stakeholders to understand our value creation story and to lead to better dialogue. In putting together thisreport, we have referred to the International Integrated Reporting Framework released by the IFRSFoundation as well as the Guidance for Integrated Corporate Disclosures and Company-Investor Dialogues
for Collaborative Value Creation, released by the Ministry of Economy, Trade and Industry.

Period covered

In principle, the period is from April 1, 2022, to March 31, 2023 (fiscal 2022).

Scope

UNITED ARROWS LTD. and UNITED ARROWS Group

Date of issue

August 2023
* Updated in November 2023

About notations

Company names and brand abbreviations• UA: UNITED ARROWS LTD. or UNITED ARROWS• BY: BEAUTY&YOUTH UNITED ARROWS• GLR: UNITED ARROWS green label relaxing

Forward-looking
disclaimer

The forecasts and other forward-looking statements presented in this report are based on information
currently available to us and certain assumptions deemed reasonable. Actual results may differ materiallyfrom those anticipated in this report due to a variety of factors and are not guarantees of the future.

External
evaluation

UNITED ARROWS LTD. has been selected as one of the following:

Relatedinformation

UNITED ARROWS LTD. : https://www.united-arrows.co.jp/en/
IR site : https://www.united-arrows.co.jp/en/ir/
Sustainability site : https://www.united-arrows.co.jp/en/sustainability/