Enrich homesof people all over the world
New Phase, New Growth.

NITORI HOLDINGS
Integrated Report 2023
2022.2.21 - 2023.3.31

NITORI Group’s Mission Statement & Vision

Enriching homes of people
all over the world
New Phase, New Growth.

Vision 2032

3,000 stores Net Sales ¥3 trillion

NITORI Group’s Aspiration
The mission to “enrich homes of people all over theworld”, is what lies at the root of all actions of each andevery employee of NITORI Group. Moreover, ouractivities are guided by our commitment to do our utmost
to achieve the long-term vision by gathering the strengthof our employees.
With the mission as our root of all business activities, wewill achieve the vision, and will share a diverse range ofenrichment with our customers and all other stakeholders.

01

02

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Value Creation of NITORI Group

Sustainability

Data Center

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Message fromthe Chairperson

integrates manufacturing, logistics, IT and retail, with the
Asian countries and regions.
During the past several years, the world has been greatly
affected by the COVID-19 pandemic and the sudden
economic downturn caused by the invasion of Ukraine. In
the meantime, we have been striving to offer “enrichment tohomes” to as many customers as possible and have made aseries of preparations for the full-scale operation of ouroverseas business development. We have decided toconcentrate the management resources of our global sales
business in the Asian region, which is expected to achievesignificant economic growth over the long term and is thecore of the supply chain that supports the NITORI Group,and to fully accelerate the expansion of global chain store
operation. In the fiscal year ending March 31, 2023, we
opened stores in the ASEAN countries and regions, Malaysia
and Singapore, and including these, we have opened 36
stores overseas. In the fiscal year ending March 31, 2024,
we plan to open a total of 206 new stores in Japan andoverseas, 77 of which will be in Asia, including new countries
and regions such as Thailand, Hong Kong, Republic ofKorea, Vietnam and the Philippines, in addition to countries
and regions where we already have stores. We will further
accelerate the pace of new store openings to capture thegrowth of Asia and respond quickly to the needs of Asiancustomers.
Meanwhile, we will continue to actively open new stores ineach of our group businesses in Japan, including small
stores for the convenience of our customers, as well as
stores in suburban areas and small market areas. Within a
few years, we expect to open more than 300 stores per year.
We will strive to expand the number of stores and thenumber of customers, which are the barometer of ourcontribution to society.

Please look forward to
NITORI Group’s
continued growth anddevelopment alongwith the remarkable
growth of
Asian economy
Representative Director & Chairperson(Chief Executive Officer)

A Year of Strong Employee Growth ina Challenging Environment
Making a full-scale, concentrated
investment in Asia
The NITORI Group’s roots can be traced back to 1972,
when a chance to participate in an observation tour of chain
stores in the U.S. led to NITORI Group’s mission to “enrich
the lives of the Japanese people.” To grow as a chain store
is what leads to realization this mission. In order to realize
the mission, we have adopted a management approach inwhich we set a vision of “long-term targets of 30 years” interms of the number of stores and sales, and then worked

03

backwards to set specific targets for each short period oftime.
With the opening of the store in Taiwan in 2007, we
broadened our mission to “Enrich homes of people all over
the world” and expanded our overseas operations with afocus on the East Asian region. For more than 30 years, wehave established trading companies and other bases in Asia,
built close relationships with many partner companies, andestablished and strengthened many group companies,
including our own factories that play a key role in our supply
chain. As a result, we have grown as a business that

The earnings environment was unprecedentedly severe dueto the combination of the yen’s depreciation and soaring
logistics and crude oil prices. Despite these challenges, sales
and ordinary income both exceeded the previous year, and wehave achieved 33 consecutive years of sales and ordinary
income growth since our listing, coming first in the world
ranking alone. I believe this is the result of our employees
working together to reduce costs and to improve and reform
all aspects of our operations. It is said that “adversity is thebest opportunity for education,” and it was a year in which I
was able to experience the growth of our employees. I am
sincerely grateful and the fact that we were able to achieve
results in this difficult environment gave us a great deal of

confidence. I believe that we were able to do so because of
our vison and mission to “enrich homes of people all over theworld.”

Employee growth is NITORI Group’s
greatest strength
We have spent about five times the average training
expenditure of listed companies to train many specialists,
and we will further strengthen our efforts to develop humanresources who have their own mission and vision, think andact on their own to realize them, not for the company or their
managers. In addition to global human resources (P14:
Developing Global Human Resources), who is in charge ofoverseas expansion, we believe that IT human resources(P14: Developing IT Human Resources), who will support
our growth through our unique in-house IT infrastructure, arealso important. In April 2022, we established Nitori Digital
Base as a “base” where excellent IT personnel from Japanand overseas can come together to further accelerate
NITORI Group’s IT and DX. We plan to increase the numberof IT personnel with expertise in both business and IT fromthe current 400 to 1,000 by 2032.
We also continue to focus on strengthening our logistics
functions. In the domestic logistics network, we areproceeding with the reconstruction of our domestic logistics
centers network with a total investment of approximately 350
billion yen. The main focus will be on optimizing theallocation of bases and consolidating their functions, with theaim of expanding functions to accommodate the increased
volume of goods due to accelerated store openings andincreased demand for e-commerce, as well as to reduce CO2
emissions, improve efficiency and substantially reduce costs.
In addition, we are transferring our knowledge and expertiseto overseas logistics in order to respond to the accelerationof overseas store development.

Please look forward to the further
evolution of our business model andour global development
Going forward, we will enter a phase of expansion centeredon opening of new stores. NITORI Group will continue totake on the challenge of realizing the mission and vision ofproviding further “enrichment to homes” to more customers. I
would like to ask all of our stakeholders, including customers
who purchase our products, as well as our shareholders,business partners and group employees, for their continued
support and encouragement and to look forward to the future
development of the NITORI Group.

04

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Sustainability

Data Center

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the previous year) due to extraordinary losses, mainly from
impairment losses related to real estate under operatingleases. We would like to express our deepest gratitude to
our customers for their purchases as well as to ourshareholders and other stakeholders for their support.

Message from the President
Promoting acceleration of
global businessdevelopment and expansionof business fields toachieve Vision 2032

Various Challenges in Overcoming
Adversity
NITORI Group has promoted extensive and thorough cost
reductions and operational reforms by utilizing the businessmodel that integrates manufacturing, logistics, IT and retail,such as strengthening vertical merchandising by increasing
in-house purchase of raw materials, reducing costs throughpromoting in-house production and extending compressedpackaging that leads to distribution cost reductions. In
addition, we have made efforts to maintain and improve our
mission to “offer the unexpected” by changing productspecifications and introducing new products in response to
the necessity to revise the prices of some products. NITORIGroup also implemented various promotion campaigns suchas price cuts to support everyday life and home appliancesand delivery charges discounts, which were well received byour customers.

Toshiyuki Shirai
Representative Director & President(Chief Operating Officer)

Summary of Fiscal Year Ending
March 31, 2023
Despite adversity, the company has
achieved 36 consecutive terms ofsales and profit growth, achieved 33
consecutive years since our listing,
be coming first in the world ranking
alone.
As the global economy began to normalize from the effectsof the COVID-19 pandemic, it was hit by significant
inflationary pressures due to Russia’s invasion of Ukraine.
The sharp depreciation of the yen and the soaring prices ofraw materials and trade costs , along with a sudden shift totighter monetary policies in many countries and regions
outside of Japan, have resulted in an unprecedentedly harshbusiness environment. Even in such an environment, ouremployees worked together to achieve sales of 948 billion
yen (an 16.8% increase YOY) and ordinary income of 144
billion yen (an 1.6% increase YOY), despite an irregularperiod of 13 months and 11 days due to a change in the05

fiscal year end. This was our 36th consecutive year of sales
and profit growth on a sales and ordinary income basis, andthe 33rd consecutive year since the company was listed. On
the other hand, net income attributable to shareholders of
the parent company was 95.1 billion yen (down 1.6% from

Net sales/Ordinary income
Net sales

Ordinary income(billions of yen)(billions of yen)

Active investment, reinforcement anddevelopment of systems to improvegroup capabilities
Regarding store development, we achieved a net increase of
101 stores. Opening of more than 100 stores in one year was
the first time for NITORI Group. In Japan, we continued toactively open various type of new stores, including Deco Homeand N+, in addition to large-scale Nitori stores in central Tokyo,
such as the Meguro Dori Store and the Ikebukuro Sunshine
60 Dori Store. In the overseas market, we have decided totemporarily withdraw from the U.S. business, which washampered by high tariffs and other barriers, in order to focus
our resources on the Asian market, where significant growth isexpected, and our supply chain and human resources can bemost effectively utilized. In addition to accelerating store
openings in existing Asian countries and regions, we haveopened stores in Malaysia and Singapore, and have begun
store development in the Southeast Asian market. As a result,in the fiscal year ending March 31, 2023, we opened a net
total of 101 new stores in Japan and overseas, bringing our
total store count to 902.
Furthermore, we have worked on the following: established
Nitori Digital Base as a foundation for acquiring and training
IT personnel to strengthen our IT department, entered into a
capital and business alliance with EDION Corporation, whichhandles highly relatable products with of Nitoris’,
strengthened various human resource development
programs, including the resumption of U.S. seminars, which
had been suspended due to the COVID-19 pandemic, andimproved the work environment and such.

Strategy to Achieve Vision 2032
Direction of growth strategies andapproach to corporate growth
At NITORI Group, every employee shares the mission ofenriching homes around the world, which is at the heart ofeverything we do. The guiding principle of our activities is to
do our utmost to achieve our long-term vision of “3,000
stores, ¥3 trillion in sales by 2032,” by mobilizing the Group’s
strengths. We have formulated five medium- to long-term
management strategies based on two basic policies: toprovide more customers around the world with quality

200

Medium- to long-term management
strategies

1601) Expanding business fields and gaining customer
support1202) Accelerating expansion of global chain store
operation

400803) Business foundation reform through supply chain
management, IT and organizational strategies

200

40

1,000

948.0
811.5

800

716.9
600

608.1
103.0

0

FY endedin February
2019

642.2

138.4

141.8

144.0

109.5

FY endedin February
2020

FY endedin February
2021

FY endedin February2022

FY endedin March
2023

04) Promotion of M&A and alliances to expand
business fields
5) Sustainability management to both resolve
social issues and achieve our mission

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Message from the President
products at affordable prices by establishing a global chain,and to offer the joy of total coordination of living spaces.

1) Expanding business fields andgaining customer support
As customers’ purchasing behavior and values continue todiversify, we aim to expand our customer base and increase
the number of customers by offering more attractive andwide-ranging product lineup, “offering the unexpected” price,
quality, ease of purchase, and suggesting coordination than
before, and by using evolving technology to provide andpropose these to our customers. We will continue to build
strong relationships with customers by strengthening ourcustomer analysis functions and maximizing groupsynergies, with NITORI app at the core, in order to evolve
into a business that understands the needs and wants ofindividual customers and responds to them individually.

Gaining customer support and acceptance

Chongqing. We will continue to accelerate and focus on the
expansion of store opening. In Taiwan, we will expand ourbusiness with new formats in mind. Also, of the six major
ASEAN countries, where the middle-income class is sure to
grow rapidly along with economic growth, following the
opening of stores in Malaysia and Singapore we plan toopen a store in Thailand at the end of August. In addition, we
will begin opening stores in Hong Kong, Republic of Korea,
Vietnam and other countries and regions.

Countries and regions where we plan to open
new overseas branches in 2023 and beyond
Republic of Korea

Philippines

VietnamIndonesia

Customers
Change in Needs/
Wants

Change in
Buying Methods

Product Development
and Transformationof the sales floor

Sales Methods
and Transformationof Sales Promotion

Resolving customer
problems
Creating aneasy-to-buy,
attractive stores

Next Generation
E-commerce
Next Generation App
Live Commerce
TV Infomercials
Remote Customer
Service and etc.

2) Accelerating expansion of global
chain store operation
In order to provide “enriched homes” to more Asiancustomers, we will accelerate and expand our store openings
by concentrating investment of our management resourcesin Asia. In Mainland China, we have opened stores in all
direct-controlled cities with the opening of a store in07

We will seek strategic alliances and M&A that will lead tothe realization of synergies, such as realizing economies ofscale and strengthening businesses and functions.

5) Sustainability management to bothresolve social issues and achieve
our mission
We will pursue the realization of a better future for ourcustomers, all stakeholders, the environment and society.

NITORI Group’s Sustainability

Hong Kong
Thailand4) Promotion of M&A and alliances toexpand business fields

3) Business foundation reform
through supply chain management,
IT and organizational strategies
We have built a system to control the entire supply chain
with our own IT network, but as our global expansion
progresses, the complexity of our sales bases andmanufacturing and procurement sites increase, so that
efficient and stable supply chain management will become
more and more important. We will continue to evolve anddevelop further by utilizing the evolving IT technology.
With a total of approximately 350 billion yen investment in
the development of domestic logistics bases, we are working
to reduce costs, optimize inventory levels, and shorten leadtimes by consolidating functions and strategically andefficiently reallocating them through the privatization ofbases.
With regard to organizational structure and human resource
development, we are working backward from our vision andsystematically developing them necessary to achieve it, whileat the same time, building a personnel system that enables
each employee to balance self-realization and life events.

NITORI Group will connect
the hopes of our customers andWe have identified seven Materiality Issues forsustainability and are promoting initiatives to resolve
environmental and social issues. We are committed tosimultaneously offering comfortable lifestyles for ourcustomers and solving environmental and social issues bytaking advantage of our business model that integrates
manufacturing, logistics, IT and retail (see pages 29-30:
Sustainability of the NITORI Group).
In particular, we are actively working to promote theeffective use and recycling of resources and are striving to
reduce resource consumption and waste emissions. We aredeveloping products with an eye toward the effective use ofresources from the planning and design stages, even after
customers have used them, and are aiming to expand thenumber of products that can be recovered and recycled.
As part of this effort, the recycling collection of curtains anddown feather quilts was expanded to Nitori, Nitori EXPRESSand SHIMACHU in Japan. The collection of futon-mattresses
and carpets, which customers has had difficulty disposing of,
was undertaken on an experimental basis at some stores,
with three companies collaborating to establish an initiative
to recycle them by transforming them into cement products
through collection, intermediate treatment, and recycling
processes.
In response to Climate Change Issues, we have endorsed
the TCFD recommendations and are disclosing information
based on them, including greenhouse gas emission
reduction targets (see pages 49-50: Response to Climate
Change Issues).
With the participation and efforts of all employees in Japanand overseas, we will achieve sustainable growth throughthe NITORI Group’s unique approach to sustainability
management.

the limited resources to the future.

Collect

Customers

Recycling downfeather quilts

Wash

Reuse inproducts

Making new down-feather productswith love and sincerity.

Collect

Reuse

RecycleThe curtain that made you smile,
will make someone else smile.

Message to Stakeholders
NITORI Group will further strengthen and evolve its
business model to realize its mission and vision. We will
strive to meet the expectations of our stakeholders, and we
ask for your continued support.

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Introduction

01 NITORI Group’s Mission Statement & Vision
Top Message

03 Message fromthe Chairperson
05 Message fromthe President
10

Current status of
NITORI Group

Highlight
11
13
15
20

Overseas Strategy
NITORI Group’s Human Capital
Human Capital of NITORI Group
Discussion: Human Resource Development, the Key to Realizing NITORIGroup’s Mission
NITORI Group’s Financial Strategy

Value Creation of NITORI Group
23
25
27
29
31

NITORI Group’s History
Value Creation Model of NITORI GroupNITORI Group’s Sustainability
NITORI Group’s Evolution towards Value Creation

43
45

Materiality Issues and Sustainability Strategy

47
48
49
51
53
54
56

Reduce waste and expand recycling

NITORI Group’s Environmentally Friendly Manufacturing and Initiatives
Nitori’s ecology
Sustainable Procurement
Response to Climate Change Issues

09

Target Scope
We set as many domestic and foreign
NITORI Group companies subject toconsolidated ﬁnancial statements as
possible as the target of our reporting.
However, depending on the item, thereporting target may differ.

Target Period
February 21, 2022 to March 31, 2023
In this report, the fiscal year ended March
31, 2023, is referred to as fiscal 2022 or
FY2022.
The Activity Report also includes somerecent content.

Sustainability

NITORI Group has continued to provide products tailored to customer needs, based on its concept,
which has remained consistent since its founding – to bring the comfortable and enriched living of
the U.S. to Japan. NITORI Group of “today” is a midway point on its journey into “tomorrow,” as it
looks to achieve its vision.

Net sales

Number ofcustomers

948.0

billionApprox.

Number of
NITORI Members

369

Approx.

*Number of customers who visited the stores of the main sales businesses*Number of customers who have purchased our products

7

stores773

stores(Corporate governance, internal controls,
compliance, etc.)

storesJapan

BookletIntegrated ReportWEB
Sustainability
Information(Initiatives for key issues)

WEB
IR Information

Diversity
Creating a healthy and safe work environment
Promoting initiatives to address environmental and social issues atoverseas locations and NITORI’s own factories
Developing True Partnerships with Suppliers
Promotion of CSR activities
Strengthening Corporate Governance Structure
Discussion by Outside Directors
Ensuring the effectiveness of the Board of Directors

Transition of Key Management Indicators
Sustainability Data Book
Financial & Company Data

Disclaimer Regarding
Forward-Looking Statements
This report contains plans, strategies andforecasts, and forward-looking statements
regarding the business performance of
NITORI Holdings and afﬁliated companies.
These statements are not historical facts.
These forward-looking statements are
based on the current assumptions andbeliefs of NITORI Holdings in light ofcurrently available information. In addition,these statements contain risks anduncertainties related to economic trends,
personal consumption, market demandand supply, taxation systems, and othersystems. Therefore, please note that theactual business performance of NITORI
Holdings and its group companies may
differ from the forecasts.

1

Number of containers
handled annually

2.76(Strategies, financial
results information, etc.)

million173

thousand TEU*Highest in Japan*TEU: Unit of measure equivalent to a 20-foot container

store

U. S

store

53

storesTaiwanSingapore

Number ofannualdeliveries

1stores

Mainland China

Malaysia

million*Of which, 16.01 million are app members, 26.39 million
card members

67

Number of stores

902

42.4

millionThe significance of this reportWEB
Company Information

Data Center

Current status of NITORI Group

Promote human resource and organizational development

Data Center
69
71
75

We have issued the 2023 Integrated
Report to aid investors, shareholders, andother stakeholders’ understanding of ourprocesses and potential for achieving along-term, sustainable enhancement ofour corporate value. In planning andstructuring this Integrated Report, we havefocused on communicating “expansion of
our long-term sustainable growth andcontribution to environmental, social, andeconomic sustainability,” while also
referring to the disclosure frameworkprovided by the International Integrated
Reporting Council (IIRC).

Value Creation of NITORI GroupNITORI Group’s Strength (Business Model)

Sustainability

57
59
61
63
67

Editing Policy

Highlight

Number of
employees of
the Group

53,400* Number of non-regular employees converted to 8-hour equivalents is 37,329.
(Of these, the average annual number of non-regular employees is 18,420)*Numeric figures are from fiscal year ended March 31, 2023

Net sales(billions of yen)(billions of yen)

1,000

750

948.0 932.0
716.9

Net income attributable to owners of parent

Gross profit

811.5(billions of yen)

600

450

411.7 425.8

120

478.1

500.4
90

500

300

60

250

150

30

0

2021/2 2022/2 2023/3 2024/3(Forecast)

02021/2 2022/2 2023/3 2024/3(Forecast)

0

92.1

96.7 95.1 100.02021/2 2022/2 2023/3 2024/3(Forecast)

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Key measures for each country and region in FY2023

Overseas Strategy
Accelerate global expansion through concentrated
investment in Asia

Strengthening and dramatically growing the global business is one of NITORI Group’s mostimportant tasks in achieving Vision 2032. We will accelerate our overseas expansion together
with our employees in Japan and overseas by utilizing the structures, knowledge and systems
we have prepared and built for this purpose.

Competitive Advantage
Mission Statement and Vision

Business Model

Human Capital

Mission Statement“Enrich homes ofpeople all over theworld”

Product
Development
Product
PlanningImplementation of major total and additional floor
refurbishments
Preparation for opening new formats
Strengthening TV and SNS advertisingAdditional app features (to reach 1.35 million
members)

Other countries and regions in Asia

Offering
the Unexpected

Sales(Stores)

Sales(E-commerce)

Quality
Control

Trade

Overview of activities aimed at accelerating the opening of overseas branches.

11

TaiwanManufacturing

Logistics

ThemesOverview of initiatives

Support for overseas business by theJapan headquarters

Supporting issues related to developing business in all countries and regions outside
Japan. Encompasses human resources development, development of educational
tools, store creation, omni-channel development, store work standardization, productsupply and inventory management, etc.

Clariﬁcation of know-how and transferof explicit documentation

Providing systems and manuals in local languages for using the know-how employedin Japan throughout every aspect of overseas operations, including the creation ofsales floors that offer clear product suggestions, development of standards for
product displays and placement of promotional materials and faster and more
efﬁcient human resources development.

Product proposals based on lifestylestudies in new countries and regions

Using our understanding of lifestyles in each country and region to promote NITORI
products that resolve frustrations and inconveniences of local people in a clear way
using sales floors and POP and promotional materials in local languages, as analternative to conducting market research on best-selling lines.

Global omni-channel promotion(platform-building, global
standardization)

 ocusing on opening stores in Beijing, Suzhou,
F
Chengdu, Wuhan and Chongqing.
New shop openings on the e-commerce platform
Pinduodow.
Apps for our own websites within WeChat
Active recruitment of new graduates for the future(approx. 400)

Raw Material
Procurement

SystemDevelopment

Vison 2023

3,000 stores
Net Sales ¥3 trillion

Mainland China

Evolving from e-commerce deployed in each country and region to the developmentof a shared global platform. Pursuing cost reduction measures and faster expansion
to respond promptly to rapid changes in customers’ “purchase behavior.”

 pening of stores in Thailand, Hong Kong, RepublicOof Korea, Vietnam, Indonesia, the Philippines andother countries from 2023 onwards.
Improved sales efficiency through optimization of
product assortment
New openings on e-commerce platforms
Research on newly entering countries

Acceleration of store openings in FY2023 and beyond

NITORI Group will provide equal enrichment tocustomers all over the world.

Masanori Takeda

Director
General Manager of Global
Merchandising Division
General Manager of Global Sales
Promotion Ofﬁce
In charge of Overseas Sales Business

Following the opening of new stores in Malaysia and Singapore in FY2022, we will open
a store in Thailand at the end of August. We are also planning to open a new store in
Hong Kong, Republic of Korea and Vietnam, while at the same time we are conducting
research and considering opening stores in Indonesia, the Philippines and India, and willfurther accelerate the opening of new stores in Asia. The challenges of global expansion
include human resource development, establishing a supply chain network and pursuingeconomies of scale through the standardization of products. NITORI Group will work
together to establish a system that enables us to open stores anywhere in the world byutilizing the knowledge and strengths that we have cultivated in Japan.

12Top Message

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NITORI Group’s Human Capital
Working together to realize the mission andsupporting growth and evolution
Since its inception, NITORI Group has repeatedly rejected the status quo and has continued
to take on unprecedented challenges. The driving force behind this is our employees. Basedon the belief that ‘individual growth leads to corporate growth’, we have focused on thedevelopment of a wealth of elites and specialist personnel. We encourage and support eachindividual to proactively aim for growth towards what they want to become.

Related Page: P51-52 Promote human resource development and organizational development

Education that leads to the “ideal self” of employees

Transfer-based
education

In-house training
programs

Self-development

Develop diversified humanresources by transferring andexperiencing various departments.

Learning the necessary
knowledge and experience at
the NITORI Group to link thecompany’s mission with its
own mission.

Providing assistance, supportand educational materials to
help acquire qualifications
and knowledge to get closer
to the “ideal self”.

Developing Global Human Resources
Based on the mission of “Enriching homes of people all over
the world,” the chain store theory and by effectively utilizing
the capabilities of the NITORI Group, we are developing
global human resources who can solve problems and build
systems to provide products and services that suit customers
in each country and region.
To develop human resources who have a broad perspective
and can utilize diversity and work together with employees
around the world, we provide a variety of training programs
and study opportunities, including global training and diversity
management training, first in Japan. We also actively promote
global transfer-based education in the hope that ouremployees will grow as they expand the overseas business.
We also provide opportunities for employees to take on theirown challenges, such as an open recruitment system foroverseas assignments and the opportunity to be dispatched tooverseas stores as a ‘task force’. Overseas employees are
given training programs that help them understand NITORIGroup, such as seminars in Japan to see Nitori stores anddistribution centers, and learning about the chain store theory.

Development of IT human Resources
The concept and system of human resources development, which started with domestic employees, has now been expanded tocover all employees across the globe . We are also working to create an organization that values and nurtures people who continue totake on challenges, so that each and every employee of the NITORI Group, can make steady progress towards realizing their mission,and grow both as a company and as an individual.

Job shadowing training programs, in which participants
accompany employees in different departments to gain work
experience.

13

Interior coordination training programs, for selected members,
where participants learn from professional coordinators.

In April 2022, the NITORI Group established Nitori Digital
Base as a “base” for bringing together talented IT
personnels from Japan and overseas. We are focusing on
recruitment and training to increase the number of internal
IT personnel to 1,000 by 2032. In addition to specializedskills, on-site knowledge and the ability to solve problems
from a front-line perspective are essential for NITORIGroup’s IT personnel. For this reason, all of our IT
personnel will experience working at NITORI stores andlogistics departments. We are also promoting theconversion of employees from non-IT fields into IT
personnel through a step-by-step training program thatcovers everything from IT basics to the latest technologies.
They will support the growth of the NITORI Group by fully
utilizing the power of IT technology, from improving
customer convenience in shopping and services, tobuilding systems to support accelerated oversea
expansion, to reforming operational efficiency.

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Discussion

Sharing the best practices and developing aframework for the education system to develop
overseas human resources, which is the key torealizing NITORI Group’s mission.

Specialists are nurtured byan education systemdesigned backwards from themission.
Director Hiromi Abiko ITORI Group’s Approach and System for Human Resource
N
Development
Director Hiromi Abiko

Hiromi Abiko

H.I

15

K.K

Merchandising Division, Buyer ofKitchen & Dining TeamNITORI RETAIL (MALAYSIA) SDN.
BHD.

Joined the company in 2005. After working in
7 stores, has worked in 2 stores as a store
manager since 2014.In 2017, seconded toMainland China. After working as a store
manager and an area manager, engaged in
the education and training of local employees.
worked in the Merchandising Division since2021.After experiencing delivery/re-orderbuyer, has been in the current position since2022.

Joined the company in 2004. Worked in 4
stores before becoming a store manager
in 2012. worked in the Organizational
Development Office since 2013, in chargeof diversity promotion and internal public
relations. After working as a delivery/re-orderbuyer and a buyer, was seconded to Malaysia
in January 2023, to work in the Merchandising
Division tasks.

Director
General Manager of HR Education
Division
Director responsible for Sustainability
Management Promotion
Joined the company in 1984. After working in
the Corporate Business Department and theBusiness Systems Office, became the firstfemale store manager in 1999, and was
appointed to the Merchandise Department in2002. In 2015, was appointed manager of the
Merchandising Division, in charge of productdevelopment and sales floor proposals toenrich people’s lives through coordination.
Current position since 2021.

NITORI Group has always had its mission and vision at its
core. In human resource development, we envision the
future organization and human resources necessary torealize our mission and vision, and work backward fromthere to create the education system. For example, being
able to deliver a wider range of “unexpected” products andservices to people in more countries and regions, meansthat the scope of our business has expanded and evolved
beyond the current level. For this reason, we have madegreat efforts to educate our employees, including throughobservation tours to the U.S. (see p. 51: Promoting Human
Resource and Organizational Development). We believe thatthrough education consisting of a step-by-step curriculum
and work experience in a wide range of fields, we cannurture a wealth of elites who possess what we call the “4Cs”(Change, Challenge, Competition, Communication). A

specialist with the 4Cs is a person who responds to change,
aims for personal growth in a competitive environment while
repeatedly making improvements and reforms, and pursues
overall optimization through close cooperation with insideand outside the company. They are required to have a highlevel of expertise as well as an understanding of all aspectsof supply chain operations.
Through your own experiences, what is your impression of
NITORI Group’s approach and structure for human resource
development? When expanding overseas, communications
seems to be particularly important among the 4Cs. What do
you think?

K.K
I joined NITORI Group because I sympathized with its
mission and the consistency with which it focuses on training
human resources to realize the mission. When I first started
working at a store, I had a vague idea that I wanted to build
my career in the store operations and eventually become astore manager or an area manager. Unexpectedly, I wastransferred to the Organizational Development Office, where
I was involved in the production of the company newsletter,
which gave me many opportunities to interact with people in
the Merchandising Division, and I became fascinated with
manufacturing and began to pursue a career in the
Merchandising Division. In 2016, I was assigned to the16Top Message

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Discussion: Human Resource Development, the Key to Realizing NITORI Group’s Mission
Merchandising Division, which I had longed for, and gained
experience as a delivery/re-order buyer and a buyer. I was
seconded to Malaysia at the end of January this year, andthis was an unexpected posting as well. Currently, I am
involved in a wide range of operations, including preparationfor opening stores and human resource development,

making the most of my experience. Through transfer-based
education, I have become more and more clear about what I
want to do and my ideal self. I feel that the extensive
educational programs available to help me achieve this goal
have been very beneficial to my own career development.

H.I
I joined the NITORI Group because I sympathized with themission, and also saw potential in the business. I had beenworking in stores in Japan for a long time, but when the
chance to work in Mainland China came up, I thought itwould be a challenge for my personal growth. When I started
working overseas, I encountered many problems that I had
rarely experienced in Japan, such as the difficulty inreceiving supplies of equipment, products, etc., which could

be immediately arranged, if in Japan. I returned to Japan
with the desire to solve these problems. I then worked in the
Merchandising Division in delivery operations, where I
acquired the skills to understand and control the entire flowof products from the time they are produced, to the time they
are placed on store shelves.
Eventually, I would like to work overseas again and become
someone who can solve local problems.

K.K
I recognize that one of my roles in Malaysia is to sharewhat I have learned in Japan with the local employees.
Japan is a high context culture, but that may not be how it isin overseas, so I try to carefully explain and communicate indetail. However, it is not easy to do so. Whether it is thelanguage, communication method or structure problem, I try
to break down each issue and think about it before applying
it to the next. I feel that I have gradually acquired the skill ofcommunicating in a simple manner, without becoming
overloaded with information or becoming difficult tounderstand because I am so conscious of being careful. My
current mission is to support the growth of local buyers andwatch them become full-fledged professionals. I would like totake on challenges together with them so that their encounter
with the NITORI Group will give them a sense of excitement
about the future and help them move toward their own
personal mission.
We must further increase the speed of human resource
development in order to achieve our Vision 2032. Although
there are differences in language, culture, and other aspects,
I feel that it is important to carefully respond to each issue
one by one while sharing values.

Director Hiromi Abiko

Working experience overseas
helped me clarify how I want
to be in the future and myideal self.

I am aware of the same issues. In the past, NITORI Grouphas expanded into Taiwan, Mainland China and othercountries, creating new stores and training human resources.
I feel that there are aspects of what we have learned thatcan be shared and utilized more as best practices, and thateach of your experiences in opening stores in Malaysia willserve as a foundation for the future, and that we must createa system that will allow us to utilize these experiences in thenext country where we open new stores. This will also be agreat treasure for our company.

H.I

Issues and Directions for Overseas Human Resource
Development
Director Hiromi AbikoNITORI Group will accelerate opening stores in the Asian
region in order to achieve its Vision 2032. Therefore, thedevelopment of overseas human resources is an urgent
task. We would like to increase the number of local staff who
can share values and work together with us to realize
NITORI Group’s mission by standardizing and permeating
the domestic education system on a global scale.

17

On the other hand, each country and region has its own
unique lifestyle, culture, and way of thinking. We feel that weneed to be flexible in our approach, adopting methods thatare appropriate for each country and region, and devising
ways to communicate.
Could you please share your experiences and opinions
based on your overseas experiences?

I want to continue to takeon daily challenges together
with my co-workers working
overseas.
K.K

18

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Human Capital of NITORI Group
Discussion: Human Resource Development, the Key to Realizing NITORI Group’s Mission

NITORI Group’s Financial Strategy

We will accelerate
investment in future growthto achieve our vision while
maintaining a highly
profitable business model
Masaomi Zenji

Executive Officer
General Manager
Accounting & Finance Division

H.I
There are two things that I have found important throughmy experience in Mainland China. The first is to “listen
carefully” and the second is to “use local language.” Bylistening carefully to the opinions of the local people, rather
than unilaterally imposing Japanese rules, I was able todeepen my sense of unity. Also, by using local language,
even a little bit at a time, I felt closer to the people I was
meeting. I realize that these two things are the key to havingsmooth communications. My experiences in Mainland China
were a valuable experience in which I was able to growmyself together with the local employees.
Since joining the company, my mission has consistently
been to serve others as much as possible. I now have astronger desire to contribute not only to the achievement ofVison 2032, but also to the future.

Until now, information has mainly been provided fromJapan to overseas, but I believe that the flow of information
will become more multilayered, from overseas to Japan andfrom overseas to overseas, and that we should accelerate
our transformation to achieve further growth. We alreadyhave many excellent local human resources in our overseas
offices. I believe that sharing and utilizing the informationand knowledge they have with the entire Group will greatly
motivate local employees and will be the driving force toaccelerate the growth of the NITORI Group. I would like to
be one of the driving forces behind this.

Director Hiromi Abiko
Yes, I agree. In Japan, we have a system in place tocompile a detailed database of each individual’s personnel
data and list the most suitable personnel in the most suitable
positions. We recognize the need for a similar system foroverseas human resources and are already working on it.
However, I believe that it is necessary to establish a modelthat can be expanded overseas and become a true global
standard, rather than focusing on Japan and how to expandthat model overseas.
Therefore, the flow of information and human resourcesmust also be global and dynamic, and once that framework
is in place, we will be much closer to realizing our mission
and vision. One of Chairman words, with which I have great
sympathy is, “You are not here to sell furniture, but to createa system for a prosperous living.” The growth of each and19every employee is the core of the NITORI Group’s growth.
The strength of the NITORI Group lies in the fact that wehave many people who continue to grow while constantly
asking themselves what they can do to realize the mission,and in the fact that we have a system that supports andmakes the most of their growth. I would like to continue tofurther refine this system in the future.

1 Summary of Business Results for the Fiscal Year Ending March 31, 2023
Despite a challenging environment with weak yen and soaring raw material prices, the NITORIGroup achieved sales and ordinary income growth for the 36th consecutive year.
Please tell us about the key points of the business performance for the fiscal year ending
March 31, 2023.
While facing various headwinds such as the sharp depreciationof the yen and soaring logistics and raw material costs, NITORIGroup achieved its 36th consecutive year of sales and ordinary
income growth with net sales of 948.0 billion yen and ordinary
income of 144.0 billion yen.
The increase in ordinary income was also made possible by
the irregular accounting period, but we believe it was the resultof the persistence of all employees, a company-wide review ofall operations, cost reductions, and expense reductions.
Although the gross profit margin decreased to 50.4% (52.5% in
the previous year) due to the exchange rate and rising trade
costs, and the ordinary profit margin decreased to 15.2% (17.5%
in the previous year) due to increased shipping and delivery
costs and labor costs, we were able to secure ordinary income
growth as a result of the sales and profit growth effect. We feelthat we were able to demonstrate the strength of our businessmodel that integrates manufacturing, logistics, IT and retail,while dealing with the factors that deteriorated profitability. In
addition, we have made thorough efforts to improve theefficiency of logistics and delivery, including the use ofcompressed packaging for products. We believe that this would
not have been possible without our business model, in which allprocesses in the supply chain are controlled in a single
integrated manner.
Net sales grew steadily due to the expansion of the number ofstores (a net increase of 101 stores from the end of the previous

Net sales and year-on-year change
Net sales (Billions of yen)

106.3

105.6

Year-on-year change (%)

111.6

113.2

116.8
948.0

811.5
608.1

2018

642.2

2019

716.9

2020

2021

2022 (FY)fiscal year) and the growth of existing store sales (101.2%
year-on-year), and also due to the increase in the number of app
members and the success of new attempts in the e-commercebusiness, including the well-received live commerce. The
number of stores at the end of the period totaled 902, including
773 stores in Japan (net increase of 65 stores from the end of
the previous period) and 129 stores overseas (net increase of 36
stores from the end of the previous period).
Although sales per customer increased to 107.2% of theprevious year’s level, the number of customers decreased to94.4% of the previous year’s level. The Company intends to20

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NITORI Group’s Financial Strategy
increase the number of customers by strongly introducing new
products and changing product specifications, improving thevalue of “offering the unexpected” and strengthening its
approach to customers through TV commercials, various
promotion campaigns and individualized proposals to customers
using the NITORI app.
On the financial side, total assets increased 15.2% from theend of the previous fiscal year to 1,133.7 billion yen due toinvestments for the expansion of the number of stores and therestructuring of domestic distribution bases. Shareholders’ equity
increased 11.6% to 818.0 billion yen. As a result, the equity ratio
remained almost unchanged at 72.2% (74.5% at the end of theprevious period).

2 Financial Features
Could you describe the financial characteristics of your unique business model?
I would say the high level of profitability and productivity. We
secure a gross profit margin of more than 50% and an ordinary
income margin of more than 15%, and our gross profit per
employee on sales is approximately 2.5 times the national
average. The high level of profitability is the root of value creationthat enables bold investments, business expansion and businessmodel evolution.
The ever-increasing number of stores and customers are themetrics of social contribution and the key growth driver of its
performance. Compared to 30 years ago, the number of storeshas increased 43-fold and sales have increased by 53-fold.

Keys of financial strategy toachieve Vision 2032

3,000 stores Net Sales ¥3 trillion
Opening
storesOpening stores at an average of about
300 stores per year within the next few
years

Logistics

Reforming domestic logistics bases.
Total investment is approximately
350 billion yen.

Human
CapitalExpanding the number of IT personnel to
1,000 by 2032. As part of this plan, Nitori
Digital Base was established in April 2022.

M&A

Expanding the Group’s business fields
through M&A and alliances

Meanwhile, ordinary income has grown 107-fold. Although total
assets have expanded along with the number of stores, we havemaintained an equity ratio of over 70% and ROA and ROE,
which indicate investment efficiency, in excess of 12% without
significantly altering our financial balance.
Since the fiscal year ended February 2022, capital
expenditures have exceeded 100 billion yen annually, including
investments to rebuild the domestic logistics network, but havenot significantly exceeded the ample operating cash flow.
Financial risks include foreign exchange risk and impairment
risk for store assets and products inventory. Regarding foreignexchange risk, we will consider policies and methods for theutilization of forward exchange contracts, taking into account ourrecent reflections on this issue. However, as the ratio of overseas
sales increases in the future, the diversification of settlement
currencies will increase, and we expect to see a natural hedging
effect that will reduce foreign exchange risk.
On the other hand, there is limited risk of impairment on store
assets and products inventory. In addition to the number ofcustomers who make purchases, which we consider our mostimportant KPI, we have established various management
indicators to monitor profitability, financial ratios, and efficiency ofstore operations on a daily basis.
We have very few unprofitable stores due to our unique andrigorous research at the time of opening stores and our store
management capabilities. Moreover, we do not perceive productinventories as a major risk factor due to our development
capabilities and the stability of actual turnover rates.

3 Future financial strategies
What is NITORI Group’s financial strategy for the future to achieve the Vision 2032?
Investment for growth will be the core of our strategy. In
addition to opening more stores domestically and globally, we
will accelerate investments to strengthen and reform ourbusiness foundation by upgrading our logistics base network,
21

enhancing NITORI app functions and e-commerce, increasing
our Human Capital including global and IT personnel andpromoting DX.

As for store openings, we will continue to actively open storesin Japan, while at the same time accelerating store openings in
Asian countries and regions, averaging about a total of 300
stores per year within the next few years.
The total amount of investment in the development of domestic
logistics bases, which has been underway since past fiscal
years, is expected to be approximately 350 billion yen, including
already executed investments. Of the eight logistics centers to
be built, Ishikari DC and Kobe DC have already started
operation, and construction of Nagoya DC, Satte DC, Sendai DC
and Fukuoka DC has already begun. We also expect this reform
to have the effect of reducing CO2 emissions. In addition, we willneed to develop overseas logistics bases as our overseas
business expands in the future.
Human Capital investment is another important theme. In
addition to global human resources, we will strengthen
recruitment and training of IT personnel with a plan to expand
our IT staff to 1,000 by 2032. As part of this plan, we established

Nitori Digital Base in April 2022. We will increase the ratio of
in-house system development and promote innovation.
In order to realize our mission and vision, NITORI Group has
been developing its own unique business model and at the sametime expanding its products and services. In pursuit of further
growth, we view M&A and alliances as important strategic tools,
and we will work to strengthen existing businesses as well as
those that contribute to the expansion of our business fields.
We will also expand our assets through active investment.
Depending on the external environment and the timing ofinvestments, we expect to temporarily raise external funds andexperience fluctuations in profitability, management efficiency,
and various financial indicators, but we will maintain financial
discipline and a business model that generates high profits,
thereby ensuring financial stability and efficiency over the
medium to long term. We will continue to aim to achieve ourtargets of an equity ratio of at least 60%, ROA of at least 15%,and ROE of at least 15%.

4 Forecast for Fiscal Year Ending March 2024
What is the outlook for the fiscal year ending March 2024, and what are the assumptions for that
outlook? Also, what are the plans for shareholder returns?
Regarding the forecast of consolidated results, we forecast net
sales of 932.0 billion yen and ordinary income of 147.0 billion
yen. Due to the irregular financial results of the previous fiscal
year, sales are expected to decrease, but ordinary income isexpected to increase.
Regarding the assumptions for the forecast, we plan acomparable store year-on-year ratio of 104.4%, capital
expenditures of 102.0 billion yen, and an assumed exchange
rate of 130 yen to the U.S. dollar.
Our basic policy for shareholder returns has been to maintainstable dividends based on business growth and profitability,

financial soundness (cash generation, cash holdings, and equity
ratio levels), investment conditions, and capital efficiency. The
annual dividend per share for the fiscal year ending March 31,
2023 was 146 yen, an increase of 6 yen over the previous year.
150 yen per share, an increase of 4 yen over the previous year,
is planned for the fiscal year ending March 31, 2024, which
would be the 20th consecutive year of dividend increase.
We are at a stage where we must prioritize investment ingrowth in order to achieve our 2032 Vision, and we intend tocontinue to steadily increase dividends in line with profit growth.

5 Message
What are your aspirations for constructive dialogue with stakeholders, including enhanced
disclosure of information, including non-financial information?
NITORI Group will expand its investment in growth to realize its
mission and vision. At the same time, we will strengthen thefunctions of our business model that integrates manufacturing,logistics, IT and retail, and further evolve our advantages.
We will also continue to identify and address issues at an earlystage by establishing appropriate management indicators andmonitoring them more thoroughly than ever before. Furthermore,in addition to the promotion of resource recycling, climatechange countermeasures and green logistics, we will also focus
on Sustainability Policy, which we must fulfill as a global

company, such as respect for human rights, diversity and theimprovement of the labor environment. We are committed todisclosing information and conducting investor relations activities
to communicate not only our financial information but also theprogress of our business model and strategies and the status of
our sustainability initiatives in an easy-to-understand manner, so
please do not hesitate to contact us with any questions orcomments that you may have.

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Sustainability

Data Center

Value Creation of NITORI GroupNITORI Group’s History [Our Value Creation Journey]

902
948.0
801

The driving force behind our growth is our mission to722“enrich homes of people all over the world.”576

We will continue to grow by responding flexibly tothe changes of the times, rejecting the status quo,

523
471
420
373

and working for reform.
Net sales (billions of yen)

Ordinary income (billions of yen)

Number of stores* Numeric figures are from the financial statement announcement, excluding 1967, when the company was founded(fiscal year ended February until FY2021, after FY2022 fiscal year ended March)

3

1

1967

7

18

15

21

29

24

73

0.4
0

2.9
0.1

9.0
0.4

13.2
0.9

17.5
1.2

19.3
1.5

25.6
1.8

34.8
2.0

48.9
3.5

63.2
3.8

1973

1979

1986

1990

1992

1994

1996

1998

2000

2001

Creation of Management Policy

73

78.7
7.1

88.2
8.9

2002

2003

100

108.7
13.0

2004

116

129.4
15.2

2005

156.7
19.0

2006

189.1
23.1

2007

162
217.2

188

286.1
244.0

47.4

314.2
53.5

268
331.0
59.1

331

458.1

387.6
348.7
62.1

63.4

2013

2014

417.2
67.9

87.5

103.0

138.4

141.8

144.0

2022

2023

109.5

94.8

75.0

33.9
26.5

2008

2009

2010

2011

2012

2015

Domestic nationwide development/
Overseas expansion

Establish a business model that will revolutionize the furniture industry

512.9

642.2

716.9

2016

2017

2018

2019

2020

2021

(ended February) (ended March)Globalization and expansion of business fields

1967

1973

1994

2005

2013

2017

2021

NITORI Furniture StoreestablishedDirect purchase frommanufacturers started

Began operating an overseas factory

Hanoi factory in
Vietnam began
operatingOpened the first store in the U.S.

The new factory in Ba Ria-Vung
Tau, Vietnam, began operation

Management integration withSHIMACHU CO., LTD.

2007

2014

2018

2022

¥100 billion in net sales

Opened KaohsiungDream Mall Store

1986

Opened Wuhan Star City Store
Launched NITORI app service

SIAM NITORI becomes wholly
owned subsidiary

2004

2008

Opened the first store in Malaysia
Opened the first store in Singapore
Nitori Digital Base establishedStarted direct import ofoverseas products

Established NITORI-net

Price Cut Declaration

2015

Founding spirit“To bring the comfortableand enriched livingof the U.S. to Japan”

Established factories overseas in order to achieve
Break through from being just a furniture store low prices for products with Japanese quality● Opened large stores which sold products
2003that make daily life more enjoyable
and convenient
Achieved 100 stores and● Achievement of total coordination

Adding cost competitiveness that is one
step ahead

23

50

37

82

130

145

217

244

300

572.0

608.1

611

811.5

Launched the online sales businessPrice cuts on 1,000 items
following the global financial
crisis

Aki-Home
Full-scale global business development

Opened Nitori Printemps Ginza Store as
the first store inside a department store

2019
Started apparel brand N+

24

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Value Creation of NITORI Group

Sustainability

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Value Creation of NITORI Group

Value Creation Model of NITORI GroupIn order to realize our mission, NITORI Group has built all functions in-house, from planning andmanufacturing to sales.
To maximize the creation of shared value and value creation of “offering the unexpected” in the
future, we will continue to challenge the evolution of our customer-oriented business model.

NITORI Group’s unique businessmodel provides value by“offering the unexpected”
P27-28

Product development thatconsiders total optimizationfrom planning and design
stages.

Product
Development
Coordination

In response to customer requests to takehome and use large products on the same
day they are purchased, the packaging,
especially bedding products, wascompressed. As a result, environmentallyand socially friendly effects were created.

Raw Material
Procurement

MissionStatement

SystemDevelopment

Sales (Stores)

Socialvalue
Quality Control

Sales(E-commerce)

Scan the QR code forother compressedpackaged products

Manufacturing

Enriching homes of people
all over the world

Environmental
value

NITORI Group’s business model that integrates manufacturing, logistics, IT and retail, was developed in the processof realizing the mission. The business model enables us to consider overall optimization in all phases frommanufacturing to logistics and sales.
Furthermore, at our stores, we are able to hear directly from our customers on a daily basis. The following are just a
few examples of how our efforts to address the problems and changing values of our customers has resulted ininitiatives that are good for our customers, the environment and society and NITORI Group.

Compressed packaged products

Economic
value

Product
Planning

How NITORI Group creates value
through its’ business model

Trade

Improvecustomerconvenience asy to takeE
home
Products that weredifficult to take home
due to their size, cannow be taken home on
the same day they arepurchased.

Product
Planning

Manufacturing

Sales (Stores)

Logistics

Transportation
Cost
Reduction
CO2 reduction

Logistics

IT/DX Foundation

Foundation of
Human Resources

Management System /Corporate Governance
NITORI Group Sustainability
for the creation of shared value
P29-3025Countermeasures against out-of-stock
products and reduction of store workloads
Increased amountof products on shelf
In addition to helping toprevent product shortages,
it also reduces the numberof times products need tobe put out, leading to a
reduction in store workload.

Improved loading andtransportation efficiency
The number of products that can be loaded
into a container or truck during transportation
is increased, greatly improving the efficiency
of products transportation, which also
contributes to improved driver productivity.
Furthermore, the reduction in the number ofcontainers and trucks leads to a reduction
not only in transportation costs but also in
CO2 emissions.

26Top Message

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Value Creation of NITORI GroupNITORI Group’s Strength (Business Model)
A manufacturing-distribution-IT-retail business: NITORI Group’s
unique business model provides value by “offering the unexpected”
Proposing interior coordination to enrich lifestyles
Product planning that creates customer satisfaction
We investigate and analyze products fromthe perspective of those using andpurchasing them. Our Merchandising
Department staff members travel to eachregion to study trends in addition to
conducting thorough market research and
we are developing original products in our
pursuit of comfortable lifestyles for ourcustomers.

Product Development
Coordination

Development andoperation of the core
IT system to support
the Group
The business model that comprises
the NITORI Group’s greatest
strength is supported by the IT
Division. Not only does the divisiondevelop, operate and maintain
NITORI’s core IT system, it also
provides other support such as
improving the efficiency of wide
range of tasks and developing tools
for enhancing standards ofcustomer service in stores

We develop products with unified colors,
designs and style from scratch so that ourcustomers can easily enjoy total
coordination in line with their preferences.
We are providing society with guidance fora new lifestyle that coordinates naturally.

We have built all the functions of a business model that integrates manufacturing, logistics, IT and retail within NITORI Group,utilizing our strong human resource foundation and global network of partner companies. We will continue to take on the challenge of
evolving our customer-oriented business model in order to “offer the unexpected.”

Sourcing that expands across the globe
In order to achieve low prices and adequate
quality, we promote vertical merchandisingthat extends all the way back to our raw
materials. We actually visit the sites
ourselves to gather information on production
localities and conduct negotiations andcontract with suppliers directly.

Building a solid production system with
our own and collaboration factories
NITORI Group provides direction andmanagement for all manufacturing
processes of the products we manufacture,even at partner factories. In addition, we
have our own factories where we areenhancing our manufacturing functions. This
production system is the cornerstone of
NITORI Group’s unique ability to develop
products with quality and functionality.

Raw Material
Procurement
Manufacturing

Product Planning

SystemDevelopment

We control everything in
an integrated manner, fromproduct planning to manufacturing,logistics and sales.
This is our system forcreating products thatthat “offers the unexpected.”

1 Affordability「お、ねだん以上。」

2 Quality

Quality Control

3 Coordination

Trade
Sales
(E-commerce)

Logistics

Creating stores that are easy
to visit and easy to shop at

27

Safety and quality are assessedfrom every angle to ensure that
customers can use our productswith peace of mind. Only productsthat meet stringent standards enter
commercial production.

These are our 3 commitments
to “offer the unexpected”

Sales (Stores)

We are making efforts to create attractive
stores and enhance standards of customer
service so that customers can fully
appreciate the enjoyment of shopping. We
are opening stores not only in the suburbs,
but also in city centers and in areas aroundstations to provide enriched lifestyles toeven more customers.

Taking responsibility
for the quality ofall products

Building our own customs clearance system
Proposing more convenient ways to shop
We are proposing more convenient ways to shop
to better suit customers’ lifestyles, such as the
NITORI app and our service that allows
customers to pick up orders they make online at
our stores. We are endeavoring to create aconvenient and comfortable service by engaging
in digital marketing, including by adding usefulfeatures to the app.

A distribution network that enablesdelivery to customers all over Japan
We have built our own distribution network fromimporting of products to their delivery tocustomers. We are pioneers in implementing theleading technology, such as the robot storage
system and devanning assist machine, toachieve greater work efficiency and lower costs.

By conducting all tasks related to importing,including applications, permits, approvals
and contracts, internally we are able tosignificantly cut costs, and at the same time
we are establishing a system that ensures
the smooth supply of products to domestic
distribution centers.

28

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Value Creation of NITORI GroupNITORI Group’s Sustainability
Sustainability of NITORI Group, supporting “Creation of Shared Value”

Sustainability Policy

Materiality Issues

Taking steps toward achieving our mission while resolving theNITORI Group positions Sustainability Management
Promotion as an important management strategy
and identifies materiality issues in order to realize its
mission and visionIn identifying environmental and social issues, we
examined them from the two aspects of “importanceto stakeholders” and “importance to the Company

issues of the world, aiming for a better future.
NITORI Group has been advancing to accomplish its mission of enriching homes around the world. The Group’s
unique business model that integrates manufacturing, distribution, IT and retail was developed in the course of thisprocess. By allowing us to achieve thorough efficiency enhancement and cost reductions, this business model
makes it possible for us to offer customers products and services that live up to the concept of “offering
the unexpected.” Furthermore, this business model enables us to take actions for total optimizationfrom the perspective of sustainability, leading to the creation of new value that contributes toresolving environmental and social issues. By repeating the process of rejecting the statusquo and promoting innovation, we will sincerely address each issue of the ever-changing
world. Aiming for and pursuing a “better future” for our customers and all of our
stakeholders, the environment, and society, we are committed to sustainability
management befitting NITORI Group.
SystemProduct
Planning

Representative Director& President

Director responsible
for Sustainability
Management Promotion

Director

Sustainability Management
Promotion Council

4

Promotion ofenvironmentallyfriendly business

Fair and honest
trade and respect forhuman rights in the
supply chain

5

6

7

MissionRaw Material
Procurement

Contribution to local
communities

Creation of arewarding work
environment andpromotion of diversity

Effective corporate
governancehomes ofpeople all

Manufacturing

over theEnvironmental
value

Sales
(E-Commerce)

Communication and Dialogue
Quality
Control

TradeSocial value

NITORI Group places great importance on dialogue with its various stakeholders,
including customers, local communities, employees, suppliers, shareholders andinvestors.
We will respond promptly to the opinions of our stakeholders in order to improve ourcorporate value and realize our mission and vision.

Secretariat

Endorsed Initiatives

External Evaluation

Sustainable
Development
Goals Promotion
OfficeSustainability Management
Promotion Subcommittee

The committee consists of division managers from operatingcompanies and sets specific sustainability targets and compiles
measures to address them

29

3

Product Planning
Coordination“To enrich

Logistics

Chairperson

Product safety andsecurity throughcomprehensive
quality control

P43 - 44

Board of Directors
Sustainability Management
Promotion Committee

Contribution toenriched lifestyles
by “offering theunexpected”

world”

Management Promotion System
The Sustainability Management Promotion Committee, chaired by the
Representative Director & President of Nitori Holdings, Co., Ltd., discusses
general sustainability matters relating to NITORI Group as a whole.

2

Economic
value

Development

Sales(Stores)1

Provide advice on the progress of
initiatives and determine thedirection and measures to be taken
by NITORI Group30

Top Message

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Value Creation of NITORI Group

Sustainability

Data Center

Value Creation of NITORI Group

Evolution of the NITORI Group toward Value Creation
We have created a unique business model to deliver value of “offering the unexpected” to our customers by providing
appropriate quality and a uniform assortment of colors and styles. This business model reduces intermediate costs as muchas possible and passes the savings on to our customers by bringing the entire process of manufacturing, logistics, IT andsales in-house. We will continue to invest in the future to improve and further strengthen each value chain issues.

By addressing environmental and social issues at each step of the value chain, we will promote shared value creation withstakeholders and respond to risks and opportunities, thereby enhancing the sustainability of the NITORI Group and society.

P33 - 34

P35

P36

P37 - 38

P11 - 12、P39

P40

P41 - 42

Product Planning/
Coordination

Manufacturing

Quality Control

Logistics

Sales(Global Nitori/Deco Home)

Sales(Shimachu)

Sales(E-commerce)

Value Chain

Medium- to longterm management
strategies

Expanding business fields
and gaining
customer support

Accelerating expansion of
global chain store operation

Business infrastructure reform through supply chain
management, IT, and organizational strategies

Expanding business fields and gaining customer support

Sustainability management that balances the resolution of social issues and the realization of mission

Initiatives

Compatibility with
Sustainability31

 horough market researchTDevelopment and expansionof private brand (PB) products
Conversion of Shimachu
Home Center products to PB
Deployment of numerous
room-type presentations andenhancement of proposal
capabilities

 xpansion of factories inE
Vietnam and Thailand: In
preparation for the increasing
numbers of stores bothin Japan and overseas,
strengthening production
system and improving
productivity thus enhancing“manufacturing capability” forstable supply of products
Establishment of systems forsafe and secure work

 igital transformation ofD
Quality Control
Expansion of the restricted
substances list
Further enhancement ofplanning and design evaluation
meetings for products with newmaterials and functions (rawmaterial safety, compliancewith regulations and standards
and monitoring and guidance offactory management systems)
Establishment of global
product evaluation and quality
control system estructuring of domesticRlogistics bases
Internalization of containertransporting business fromports to distribution centersin order to strengthen
distribution network
Digital transformation oflogistics operations, suchas introduction of AGVs
(Automatic Guided Vehicles) omestic:DExpansion of sales floors
where customers can see
and touch the products
Actively opening new storesin small commercial areas
and urban areas
Overseas:
Accelerate store openings in
Asia and market research in
new countries and regions
Investigation of businessexpansion in new formats in
Taiwan roduct development thatP
consider effective use ofresources from the planningand design stages (e.g.,
structures that are easy tosort, use of raw materials thatare easy to recycle, etc.)
Development of functional
products that lead to energy
savings

 reation of local employment
Cat the company’s overseas
factories. Contribution to
the development of local
communities. Introduction ofmachines and equipments thatare easy to work with, even atsites with a high percentage offemale workers.
Efficient use of materials
Use recycled raw materials
and conserve limited
resources

 onduct audits of prospectiveC
new suppliers and evaluationof existing suppliers.
Confirmation of quality-related
items as well as items that
address environmental andsocial issues.

 eduction of CO2 emissions
Rthrough more efficientlogistics (modal shift,introduction of swap-bodycontainers, expansionof compressed package
products, etc.). Improving
working environment fordrivers

 ollecting goods for recycling
C
Promoting efforts to recycle resources by free in-store collection service of items that customers
often say they are having trouble disposing of, regardless of the seller or condition.

P 57 Developing True
Partnerships with Suppliers

 trengthening PB
Sdevelopment of home
improvement products withNITORI Group’s productdevelopment capabilities.
Price reductions andimprovement of gross profit
marginIntegration of membershippoint reward programUse of Nitori membershippoints on SHIMAHO-net

Expansion of NITORI
app functions. Offering a
convenient and comfortable
shopping experience.
Utilizing the social media.
Active streaming of livecommerce and in otherforms of social networking.
Launch of “Net-exclusive
page” featuring only products
available on NITORI-net.

P47 Collecting goods for recycling

Curtains: reused as products and fabric materials, and recycled as automobile insulation materials,
etc.
Down feather quilts: feathers are removed, cleaned and processed into NITORI’s down feather
products
Carpets and futon mattresses: crushed and used as thermal energy, then turned into raw materials
for cement

32

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Value Creation of NITORI Group

Sustainability

Data Center

Value Creation of NITORI Group

Product Development

Coordination

Strength

Strength

Based on thorough market research, we provide unique private brand (PB) products that resolve customers’ discontent,With the philosophy of “Interior Design for Every Home,” NITORI Group will continue to develop and propose products

dissatisfaction and inconvenience. We plan, procure raw materials and develop products on our own, offering productsthat help our customers realize the enrichment of their lifestyle by naturally coordinating their rooms and making theirthat are high quality and high profit margins.

lives more enjoyable.

Initiatives for Medium- andLong-term Strategies
We are expanding our product lineup to contribute to a more prosperous
home living than ever before. Especially since we believe that home
appliances, along with furniture and interior decorations, add color to our lives,
we offer home appliances that combine functionality and design, aiming tocreate a total coordinated product lineup. In addition to products for single
person households, we are also expanding our lineup of large-sized products
for families. NITORI Group will continue to develop products that combine
convenient functions with price advantages.

Initiatives for Medium- and Long-term Strategies
We will strengthen our ability to make proposals to make coordination more familiar and accessible. Our products must be available
in a variety of colors, shapes and styles, be affordable and have convenient functions. In addition, we will express ideas of how
enjoyable and different lifestyle can be by adding these products to the home. If our customers feel that their rooms are naturally andwonderfully furnished as a result of shopping at Nitori, that is the realization of the joy of coordination.

Approach to Sustainable Manufacturing
At NITORI Group, environmentally conscious manufacturing is positioned as “Nitori’s ecology”, in which we promote initiatives
in each of the phases of “manufacturing, transportation and using”. Furthermore, we are developing products with a view toeffective utilization of resources from the planning and design stages and expanding the number of products that can becollected and used as resources, considering “after use”.
P45-46 NITORI Group’s Environmentally Friendly Manufacturing and Initiatives -Nitori’s ecology-

33

34

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Value Creation of NITORI Group

Sustainability

Data Center

Value Creation of NITORI Group

Manufacturing

Quality Control

Strength

Strength

As part of vertical merchandising*, we have expanded manufacturing in our own overseas factories. We manufacture
approximately 40% of furniture and a portion of bedding, curtains and carpets in our overseas factories. Throughthorough quality control, reduction of manufacturing costs and optimization of supply volume, we support a stable supply
to our expanding store and e-commerce sales network.

We have established our own strict global quality standards based on official standards in the places where we open
stores, and conduct various tests, etc. from the product development stage. We audit quality assurance systems for new
suppliers and quality improvement for existing suppliers. Together with our suppliers, we are building a system to provide
safer and more reliable products.

*Vertical Merchandising: Designing the entire process from the procurement of raw materials to the delivery of products to the customer’s hands by itself.

Initiatives for Medium- and Long-term Strategies

Initiatives for Medium- and Long-term Strategies

The Hanoi factory, which manufactures mainly cupboards and other boxed furniture, beds and sofas, plans to start operation of thethird factory in 2024. The plant will promote quick delivery and strengthen the production system. The Ba Ria-Vung Tau factory
manufactures bedding, bed mattresses and curtains in an integrated production system. SIAM NITORI in Thailand manufactures
environmentally friendly carpets and rugs by using recycled raw materials such as plastic bottles and adopting waterless coloring
methods. At each of our factories, we are installing machinery to create a system that allows everyone to work safely and securely,
even in factories that manufacture large furniture and heavy products.

In line with the global standardization of products in conjunction with the acceleration of overseas opening stores, we have launchedinitiatives for the common operation of quality standards, tests and forms. Through the digital transformation of quality control management,
starting with the introduction of quality control management platform system, we will proceed to make operations seamless by coordinating
quality control activities between countries and regions by 2025. In addition, we will promote the transfer to overseas bases of operations
previously conducted mainly in Japan, such as development technology evaluation meetings and quality audits to confirm the safety of new
products, with the aim of establishing a global products evaluation system and quality control management promotion system.

Initiatives for Social Issues
Approximately 9,900 employees (of which 81% are women) work at our overseas
factories. NITORI Group creates local employment and contributes to the development oflocal communities. The factory promotes automation and labor saving in the productionlines for furniture and other large products. New machines, equipment and tools areconstantly being installed, such as the “vacuum lift” (*picture on the right), which enables
safe operation with less human power, even for large products. As a result, not only does
this improve production efficiency, but also creates a comfortable working environment atwork sites where there is a high ratio of female workers.
P56 Promoting initiatives to address environmental and social issues at NITORI’s overseas
locations and NITORI’s own factories

35

36

Top Message

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Value Creation of NITORI Group

Sustainability

Data Center

Value Creation of NITORI Group

Logistics

Strength

Initiatives for Environmental and Social Issues

NITORI Group provides integrated logistics services from drayage transportation*, operation and management, within its
own distribution centers to last-mile delivery. Overall optimization has realized lead-time reductions and cost reductions.
NITORI Group will develop overseas logistics infrastructure by spreading its knowledge and expertise in order to expand
its global business.
*Drayage Transportation: Transportation of containers arriving at major ports across Japan from overseas production factories to our inventory storage DCs (DC:Distribution Center).

Initiatives for Medium- and Long-term Strategies
As part of the restructuring of domestic logistics bases, a totalof approximately 350 billion yen is being invested to establish 8
new DCs nationwide (Ishikari, Kobe, Nagoya, Satte, Sendai,
Fukuoka, South Kanto and Kinki). Reforms are being promotedwith the development of a logistics network, digitaltransformation of operations and standardization of operations,centered on the optimal placement of bases and theconsolidation of functions. The Ishikari and Kobe DCs havealready begun operations, and construction and operation of
the Nagoya, Satte, Sendai and Fukuoka DCs will begin insequence. We will promote overall optimization. We will not
only rationalize inventory and lead time, but aloso reduce CO2
emissions by improving transportation efficiency.
37

Base A →Intermediate point

Intermediate point

Base B →Intermediate point

Base A

Base B
Intermediate point→ Base B

Intermediate point→ Base A

Changing cargo beds

It is now possible to exchange cargos at intermediate points in truck
transportation between long distance bases.

Improving logistics efficiency not only leads to costsavings, but also contributes to solving environmental andsocial issues.
In order to improve the long-distance transportation
efficiency and loading efficiency, NITORI Group has been
restructuring its logistics bases, implementing modal shifts
and introducing swap-body containers trucks. For example,
swap-body containers trucks, which are trucks that canseparate the body from the cargo bed, allow the bed to be
swapped at intermediate points over long distances,
thereby not only reducing empty transport after unloadingat the transportation destination, but also reducing theburden on drivers in cargo handling operations. Efficienttransportation leads to reduced CO2 emissions andimproved working conditions for drivers.
We will respond flexibly to the approaching 2024 overtime
cap for drivers, and at the same time actively work tocreate an environment where women and elderly drivers
can work with peace of mind.

38

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Value Creation of NITORI Group

Sustainability

Data Center

Value Creation of NITORI Group

Sales

Sales

(Domestic stores: Nitori/ Deco Home)(Domestic Stores: Shimachu)

Strength

Strength

Nitori is expanding its store network nationwide to make life more comfortable and convenient for more customers. We
seek to create stores that makes it easy for customers to try out products and make purchases in a short period of timeto ensure a pleasant shopping experience. It is also used as a place to receive products ordered through e-commerce
and is an important base for connecting customers with the NITORI Group.

With many stores in densely populated areas in the Tokyo metropolitan area and Kansai region, Shimachu offers a wide
range of products for the home, including daily necessities, DIY and garden products, as well as furniture and interior
furnishings. Shimachu is building stores that respond to all kinds of housing-related needs, including those of
professionals.

Initiatives for Medium- and Long-term Strategies

Initiatives for Medium- and Long-term Strategies

In order to enable customers to experience new lifestyles, ideas for coordination andthe appeal of our products, we have expanded sales floors where customers can see
and touch products, at Nitori stores such as Meguro and Ikebukuro, which we openedin 2022. In the category of home appliances, we are expanding the variety and size of
products we offer and emphasizing the coordination with our other products. Home
appliance products were sold at different shelves in the store grouped by purpose ofuse, but sales floor with an expanded area for home appliances have been madewhere all the home appliances are sold in the same area, so it is convenient to shop.
At the same time, to improve shopping convenience, we have installed self-checkoutmachines and introduced a new service in the “in-store mode*” of the NITORI app.

Shimachu is promoting reforms to develop private brand (PB)
products, create stores that are easy to shop at, and build efficient
distribution network by taking advantage of synergies within the
NITORI Group as key issues. Shimachu is working on remodelingexisting stores and creating standardized layouts in preparationfor opening new stores. In addition, Shimachu is working to
improve convenience through the introduction of a membershipprogram common to both Nitori and Shimachu stores and therenewal of the app.

*In-store mode: function in the NITORI app which allow customers to check the sales floor and inventory statusof products, order products and pay for them without the actually taking products to the cash register.

Deco Home accelerates store openings
Launched in 2011 as an interior goods store originating from Nitori, it offers cute feminine products selected from a woman’s
point of view, ranging from daily necessities to items that adds an accent to a room. Deco Home is focusing on expanding its
original products, which currently account for about 60% of the total products. The target for the fiscal year ending March 31,
2024 is to achieve 80%. Under the concept of “a store where you can stop by every day,” Deco Home is actively opening
stores near stations and in shopping centers.

39

Plans for Store Opening in FY2023

Total of902

stores［ Net increase of 129 stores ］

559 stores

229 stores 60 stores

54 stores(+36 stores)(+62 stores) (+30 stores)(+1 store)

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Top Message

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Value Creation of NITORI Group

Sustainability

Data Center

Value Creation of NITORI GroupA Wide Range of Business Fields

Sales (E-commerce)

Expanding business fields to realize NITORI Group’s mission and vision
NITORI Group operates a range of businesses to enable customers to experience enriched lifestyles.
Having supplemented its established business by launching the N+ apparel brand and the NITORI
Dining restaurant business, the Group is now able to offer proposals to customers in all areas ofclothing, food and the home. We will continue extending the strengths cultivated within the Group into
new business areas as we endeavor to achieve our mission and vision.

N+
Launched in 2019, N+ is NITORI Group’s apparel brand for women. Inspired by
the concept of “total coordinated clothing for adults,” the brand proposes fashion
at affordable prices that is comfortable to wear and can be easily coordinated.
Looking ahead, we will increase the number of N+ stores and further extend therange of PB (private brand) products to provide our customers with attractive
products at even more affordable prices.

Strength
In order to respond to diverse customer needs that cannot be covered by stores, the NITORI-net offers a wider selectionof products and provides information and proposals to each individual customer. At the same time, utilizing the store
network, NITORI Group will accelerate OMO and establish a competitive advantage by expanding our services andcontents, such as in-store pickup and nationwide after-sales service.
* OMO: Online Merges with Offline

Initiatives for Medium- and Long-term Strategies
NITORI app has reached more than 16 million members. It serves an important hub function that enables customers to have aconvenient and seamless shopping experience without any offline or online boundaries. Through the app, we have strengthened newinteractive points of contact and channels with customers, such as online consultation for curtains and interior design and livecommerce. We are working to create a framework for building ongoing relationships with our customers. To further improve
convenience, we plan to renew the app in 2024.

Number of
NITORIapp members

Reached16.01 million
members

Target for FY 2023
19 million members

13.14
9.08
5.22

41

NITORI has cultivated strengths in developing products andsuggesting coordination through its residential furniture andhome fashion businesses. The Corporate Sales and Interior
Renovation Businesses draw on these strengths to propose
interior design of business spaces for corporate customers
and total renovation services for households, respectively. We
will continue to take on the challenges of the rapidly
advancing digital age, such as online consultation for homerenovation, in pursuit of solutions to customer inconvenience.

To enable our customers to fully appreciate the NITORI MALL
concept of “an abundance of products and affordable prices,”
we created a mix of shops focused on large specialty stores ineach category with the ability to pull in a broad spectrum ofcustomers, including popular stores selling apparel or household
items, and restaurants. By developing the NITORI MALL
business, we will keep on contributing to enriched lifestyles for
local customers.

Nitori Facility Co., Ltd

Nitori Public Co., Ltd.

Nitori Facility is responsible for waste disposal, cleaning andsecurity, as well as for insurance services as an insurance
agency for NITORI Group. Our aim is not only to maintain andmanage facilities, but also to realize optimization for theGroup as a whole, by reducing costs and improve efficiency,
as well as enhance provision of benefits for employees.

As a general advertising company, Nitori Public provides
services to external client companies in a wide range of businessfields. Nitori Public plays its part in enhancing corporate value by
not only advertising and sales promotion business as an in-housecompany of NITORI Group, but by also running the restaurant
chain business, traveling business, operation of Ginrinso (Otaru)
a Japanese style hotel and gift stores of museums and exporting
business, utilizing the Group’s logistics network.

NITORI Dining Everyone’s Grill

16.01

FY 2020NITORI MALL Business

19.00

Unit: million

FY 2019

Corporate Sales and Interior Renovation Businesses

FY 2021

FY 2022

FY 2023NITORI Dining Everyone’s Grill is NITORI Group’s restaurant business, which
Nitori Public started in March 2021. The guiding concept is “to provide service
that offers the unexpected and ensuring customer satisfaction in terms of both
flavor and price.” It procures only carefully selected ingredients, and by ensuring
operational efficiency it has succeeded in developing menus that combine highquality with reasonable prices. The business will continue to develop new andupgrade the menu to achieve NITORI Group’s mission and vision.

42

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Materiality Issues and Sustainability Management Promotion Strategy
Materiality Issues

E

S

G

Shared ValueContributing to prosperous
home living by providing
products and services thatoffers the unexpected

Product safety and security
through comprehensive quality
control

Value creation forproviding enriched
lifestyles to customers

Simultaneous expansionof economic value andenvironmental and social
value

Fair and honest trade andrespect for human rights in the
supply chain

Creation of a rewarding work
environment and promotion ofdiversity

Effective corporate governance

Sustainability Management Issues(1) Pursue affordability, appropriate quality (functionality),
and coordination(2) Resolve customers’ frustrations and inconveniences(3) Offer new value that further enriche lifestyles (products
and services that can lead to solutions toenvironmental and social issues)

Promoting environmentally friendly
manufacturing/initiatives
P45 - 46(1) Quality control and product safety measures as amanufacturer(2) Share with suppliers ideas and initiatives to build aculture of product safety

Promotion of environmentallyfriendly businessContribution to local communities

NITORI Group’s Approach(1) Carry out all tasks more efficiently throughout theentire supply chain(2) Make effective use of all raw materials(3) Make effective use of recycled materials throughinnovation(4) Disclose and reduce greenhouse gas emissions frombusiness activities(1) Supplier contracts based on strict standards andon-site investigations(2) Establish true partnerships with suppliers
Fair and honest trade, respect for human rights, work
environment creation, etc.

Creation of social value
through store openings
and support in terms ofhuman resources, theenvironment, and culture s a company that offers lifestyle infrastructure, expand the(1) Astore network and create stores supported by customers(2) Expand into global business (open stores and create
employment)(3) Disaster assistance and social action programs infields other than the main lines of business

Simultaneously achieve
employees’ jobsatisfaction andenhancement ofcorporate value(1) Education system that allows employees to realize
self-growth(2) Transfer to a variety of job category in a wide range ofbusiness fields(3) Create a comfortable environment where everyone
can work in good health with peace of mind

Ensuring transparency andsoundness ofmanagement
Speedy decision-making
and business execution(1) Build a foundation that supports medium- to long-term
corporate growth
Create decision-making systems and a basis for active
discussions(2) Ensure compliance(3) Build a robust risk management system

Expand waste reduction
and recycling
P47 - 48

Objective

By 2030,(1) Reduce waste emissions (general and industrial waste) by 30% (Per 100 million yen ofdomestic sales, compared to FY2018) *(2) Achieve at least 95% recycling rate of industrial waste *(3) Promote “resource recycling” as an initiative to eliminate waste in the first place
Expand product development with an eye toward recycling at the planning and designingstages (circular economy)
Promote recycling (collection and recycling) of products and packaging materials*(1) and (2) are for domestic operations.

Response Climate Change Issues
P49 - 50

Greenhouse Gas Emissions Reduction Targets (Global, Scope 1.2)
FY2030: 50% reduction compared with FY2013 (emissions per 100 million yen of net sales)
FY2050: Become carbon neutral. (net zero emissions)Sustainable Procurement
P48

First, establish a traceability system together with suppliers to achieve “sustainable timber
procurement.”

Promoting Diversity
P53

Increase the percentage of women in management positions to around 40% in the 2030s.
Increase the percentage of non-Japanese employees in management positions by promoting
assignment of non-Japanese employees to management positions
Increase the percentage of mid-career hires in management positions by continuing
recruitment of specialists

Promote human resource development and organizational
development

P51 - 52

Creating a healthy and safe work environment

P54 - 55

Promotion of initiatives to address environmental andsocial issues at overseas sites and own factories

P56

Build true partnerships with suppliers

P57 - 58

Promotion of CSR activities

P59 - 60

Strengthen corporate governance structure

P61 - 66

Ensuring the Effectiveness of the Board of Directors

P67 - 68

NITORI Group’s Sustainability | Sustainability | NITORI Holdings Co., Ltd. (nitorihd.co.jp)
4344

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

NITORI Group’s Environmentally
Friendly Manufacturing and Initiatives

Under the slogan of “Good for the future. Good for everyone,” NITORI Group is promoting
environmentally friendly initiatives in each process of manufacturing, transportation and use,
positioning them as “Nitori’s ecology.”
Furthermore, we consider “after use” and aim to develop products with a view to effective utilizationof resources at the planning and design stages, and to expand the number of products that can becollected and recycled.
Compressed packaged products

Rugs and carpets madefrom recycled raw
materials

Recycled raw materials
procured from crushed
and chipped plastic
bottles, etc.

Pigments are dissolved and coloredby mixing directly with chips.
No water is used therefor no waste
water is produced.

Processed into
wadding and spun intofine yarns

Storage series using recycled raw materials

Processed into rugs andcarpets, and delivered
to customers.

Responding to customer requests forcolor variations, we have developed ablack color that contains
approximately 20% or more recycled
raw materials.
This series is a storage series thattakes advantage of the negatively
regarded characteristic of recycled
raw materials that “it is impossible toproduce pure white products when
they are used.”

NITORI Group’s unique compression technology has reduced the package sizeof bed mattresses to a quarter of the original size, and in recent years, we havebeen promoting downsizing further more, mainly bedding products such as
pillows and futon-mattresses. Downsize packaging improves loading efficiency
of containers and trucks, leading to reduction of CO2 emissions duringtransportation, while at the same time providing convenience to customers bymaking it easier for them to take their products home.

The company’s own factory in Thailand,
SIAM NITORI, manufactures carpets andrugs from recycled raw materials such as
plastic bottles.
In the coloring process, a waterlesscoloring method is used.

“Manufacturing”
×Conserve
Resources

Related Page: P26 NITORI Group’s unique approach“Transportation”
×
Reduce CO2

Functional lace curtains“after use”
×Conserve
Resources

Easy to disassemble for disposal:“Easy to Sort” pocket coil mattress
The expansion of products that can be easily disassembled andsorted after use will lead to the promotion of effective use ofresources. NITORI Group has developed an “Easy to Sort” pocket
coil mattress, which significantly reduces disassembly time fromapproximately 55 minutes to approximately 6 minutes compared toour previous products (according to our own research, with two
people working). In addition to reducing the disposal burden on
disposal companies and local governments, the mattresses can
now be disassembled by customers themselves.

45

“Use”
×
Save Energy

The ECONATURE™ series, which uses a
new material called “heat-blocking yarn,” is alace curtain with excellent functionalities in
cutting outdoor heat and cold and letting injust the right amount of light. It improves theheating and cooling efficiency of your home
without the need for extensive remodelingand contributes to reduced energy
consumption.

Collecting products forrecycling
Focusing on items that customers
often remark that they have trouble
disposing of (curtains, down feather
quilts, carpets, mattresses, etc.), weare promoting initiatives to turnthese items into resources bycollecting them free of charge at ourstores, regardless of their sellers orconditions.

N Cool/N Warm
In response to the need for bedding that allows people to sleep comfortably without
using air conditioning, we have developed the “N Cool” series of contact-coolingmaterials and the “N Warm” series of moisture-absorbing and heat-generating
materials, which have been well received by many customers and contribute to
reducing energy consumption by reducing the use of air conditioning when sleeping.

P47 Collecting products for recycling46

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Reduce waste and expand recycling
Reviewing plastic-based packaging materials

PolicyNITORI Group recognizes the finite nature of resources and strives to reduce the amounts of resources used and the amounts ofwaste discharged by making effective use of resources and promoting resource circulation, not only within the Group but also
throughout the entire supply chain, including suppliers. Specifically, aiming to be an enterprise that reduces waste, ideally generating nowaste and recycles waste as resources, we strive to reduce the amounts of waste discharged while at the same time reducing theamount of waste that is not recycled but discharged by means of landfill or simple incineration. We will promote activities both before
and after discharge of waste.

TargetsBy FY2030,

30(1)  % reduction* in the amount of waste discharged (general waste and industrial waste) compared with FY2018 (per 100 million
yen of net sales in Japan)(2) At least

95%* recycling of industrial waste(3) P romote “conversion of waste into resources” as an initiative to eliminate waste in the first place.
Expand development of products with an eye toward recycling from the planning and design stages (circular economy)
Promotion of collecting products for recycling (collecting products and packaging materials)

Plastic packaging materials (cushioning materials, packages, etc.), which have a high environmental impact, are being reviewed interms of both “reducing plastic waste” and “deciding which materials not to use.
In terms of “reducing plastic waste,” we are working to “eliminate,” “reduce,” or “replace (with alternative materials that are easily
recyclable)” plastic-based packaging materials. In addition, we are labeling the materials with their material names to make it easierfor them to be used as resources rather than waste.
As for “deciding which materials not to use,” our policy is to not use polyvinyl chloride (PVC), Styrofoam, or multilayer composite
sheets made of different materials, etc. We began our efforts in 2015,
starting with large furniture for delivery and installation and havecompleted 100% of the switchover from Styrofoam to alternative
materials. However, we will continue to switch to alternative materials
for some of our take-out assembled furniture and mirrors, which are
not yet compliant with this policy.
Conventional Styrofoam
cushioning material* (1) and (2) are for domestic operations.

Recyclable cushioning
material

Promotion of sorting at disposal

Become a company that considers “after use”
NITORI Group has established the system consisting of three recycling mechanisms (“reprocessing,” “materialization” and “resource
recycling”) as part of its resource recycling efforts. We will continue to utilize this system to expand the number of products that can becollected and recycled.
Collecting products for recycling
Product
Product

Material

Alternative
Resources

Down feather quilts

Curtain

Carpets and futon-mattresses

Collect

Collect

NITORI Group hopes to promote sorting at the disposal stage to reduce the amount of waste and disposal costs by turning them into
resources instead of waste, as well as to make effective use of limited resources. We are currently conducting various verifications at
our stores and distribution centers to convert waste into resources.
For example, at some distribution centers, large furniture and bed mattresses
that are difficult to dispose of are dismantled by hand and sorted into metaland scrap materials. These materials are collected by a processor andrecycled as resources or solid fuel. In addition, stretch film (packaging wrap)
used at distribution centers is collected and recycled by a processor after
sorting, and is converted into garbage bags for use as in-house supplies. This
contributes to resource recycling within the Group. NITORI Group will continue
to strive to establish a disposal flow that makes the most of its unique,integrated business model.
Dismantle discarded bed mattresses and sort
metal parts → recycle as resources(1) Collecting
process

Collect

cementCustomers

Recycling downfeather quilts

Reuse

RecycleIn October 2022, we began selling“recycled down feather quilts” made ofapproximately 30% recycled down atpart of our stores and on the NITORInet. In fiscal 2022, stores collecting
down quilts expanded nationwide.

Reuse as thermal energy
and raw materials
Incineration

Reuse inproducts

47

pulverization

Wash(2) Intermediate
treatment process(3) Recycling
Process

In fiscal 2022, we expanded stores
collecting curtains nationwide andreused them as products and fabricmaterials, as well as recycled them asheat insulators for automobiles. In June
2023, we began collecting curtains ona regular basis, establishing a system
to reuse and recycle curtains at any
time.

We have experimented andestablished a new mechanism throughcollaboration among the threecompanies to collect carpets andfuton-mattresses at some of our storesand utilize them as heat energy andcement material. We aim to implement
this initiative nationwide in the future,
as we have done with the collection of
curtains and down feather quilts.

Sustainable Procurement
NITORI Group promotes “sustainable procurement” throughout its supply chain, with the aim of procuring products withconsideration for environmental and social issues. In particular, in the area of sustainable timber procurement, we aim to build asupply chain that is free from deforestation, illegal logging and human rights abuses.
We are also working with our suppliers to create a traceability system that also takes biodiversity into consideration. With thecooperation of our suppliers, we have completed a trial program for traceability of timber procurement, and plan to perform full-scale
operation in fiscal 2023. In order to ensure objectivity, we utilized the “Responsible Purchasing Checklist for Forest Products“published by WWF Japan, a global environmental NGO, to confirm and evaluate “traceability to the origin” and “appropriateness offorest management” in consideration of the environment and society.
In order to ensure that the entire supply chain is working in the same direction, we communicate and share the necessity of“sustainable timber procurement” at the annual management policy briefing for overseas suppliers.

48

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Response to Climate Change Issues

Significant Changes
and Alterations

Principal Risks

Main Initiatives

4°C scenario
Impact of“physical risk”

Intensification of
extreme weather suchas typhoons and floods(acute risk)
Increase in averagetemperature (chronicrisk) roduction suspension and increased
P
restoration costs due to plant damage
Disruption of the supply chain of products
and raw materials
Decrease in the value of seasonal products
due to the unusual seasonal changes ofweather
Business continuity risk and rising insurance
premiums and operating costs
Opportunity losses due to store closurescaused by the disasterThreats to employee safety ourcing from multiple suppliersS
Diversification of production areas, global
merchandisingOptimize timing of products sales and improvedigestion rate
Review of Business Continuity Plan (BCP)Review safety confirmation system, conductperiodic drills, secure disaster supplies

2°C scenario
Impact of“transition risk”

Decarbonization
Policies
Tightening of
regulations
Technologicalinnovations

 ising energy costsRIncreased capital investments for renewableenergy and energy conservation
Increased operating costs due to theintroduction of a “carbon tax” and “carbon
pricing”
Soaring raw material prices
Loss of market valuation and reputation

 xpand utilization of renewable energyEsourcesMore efficient energy use, use of low emission
technologies
Promote green logistics (joint transport, modal
shift)
Decarbonization of raw materials
Utilization of recycled raw materials

Risk

PolicyNITORI Group recognizes a range of risks caused by the impact of climate change, and by taking advantage of our unique businessmodel, we pursue total optimization of all stages of our supply chain to improve efﬁciency, thereby reducing greenhouse gas emissions
and mitigating the impact of climate change. In order to further effectively address climate change, which is an important management
issue, NITORI Group has endorsed the recommendations of the TCFD (Task Force on Climate-related Financial Disclosure) and isparticipating in the TCFD Consortium, a forum for discussion among companies and financial institutions that support the TCFD. We
also recognize the finite nature of energy essential to our business activities, and by leveraging our unique business model, we will work
to reduce our use of energy through more efficient energy use throughout our supply chain.

GovernanceOur approach to addressing climate change is part of our“Promotion of environmentally friendly business” activities,
which is one of our materiality Issues.
The Sustainability Management Promotion Council sets
specific targets for sustainability and compiles
countermeasures. The Sustainability Management Promotion
Committee discusses overall sustainability matters for theentire group. Based on these discussions, the Board of
Directors provides advice on the progress of the initiatives anddetermines the direction and measures to be taken by the
NITORI Group.
The progress of NITORI Group’s sustainability initiatives,
including those related to climate change, are reported to theBoard of Directors at least once a year.

Opportunity

Significant Changes
and Alterations

Key Opportunities

Main Initiatives

4°C scenario
Impact of“physical risk”

Intensification of
extreme weather suchas typhoons and floods(acute risk)
Increase in averagetemperature (chronicrisk) nsure resilience of products supply systemEEstablishment of BCP to have a resilient
operating system for stores in the event of adisaster iversification of production areas, globalDmerchandisingEstablishment of supply chain management
Review of Business Continuity Plan (BCP)

2°C scenario
Impact of“transition risk”

Decarbonization
Policies
Tightening of
regulations
Technologicalinnovations

 esponding to new and growing customerRneeds such as changing values (ethicalconsumption, energy and resource
conservation needs, etc.)
Improvement and differentiation of production
capacity and asset value
Use of public support (tax breaks, etc.)
Improve market valuation and reputation

 romote the creation of environmentallyP
friendly functional products
Promotion of recycling-oriented products(circular economy)
Unique business model and expansion ofbusiness areas (fields)
Commercialization of knowledge for solvingsocial issues

Board of Directors
Sustainability Management
Promotion Committee
Chairperson

Representative Director& President

Director responsible for
Sustainability Management
Promotion

Director

Sustainability Management Promotion Council(Constituents: Division heads of operatingcompanies)

Secretariat

Sustainable
Development
Goals Promotion
OfficeSustainability Management
Promotion Subcommittees

Business domain: NITORI Group’s main sectors (manufacturing, logistics, retail) including overseas bases *Time frame: 2050 *Analysis of impact on existing business portfolio

Indicators and targets
Risk Management
NITORI Group collects and analyzes information on a wide range of risk factors, including climate change-related regulations andtheir effects and consequences on our business. Significant opportunities and risks that require attention are evaluated and identified
by the Sustainability Management Promotion Council, which is attended by the division heads of each business unit.
The evaluated and identified risks and opportunities are supervised and monitored under the Sustainability Management Promotion
System, and issues are shared with the Risk Compliance Committee to integrate the organization’s comprehensive risk management.

We aim to reduce Scope 1+2 greenhouse gas emissions (including overseas sites) as follows.
Fiscal 2030:

50% reduction compared with fiscal 2013 (emissions per 100 million yen of net sales)

Fiscal 2050: Become carbon neutral (net zero emissions)

We will promote the development of products with environmentally friendly functions, including reduction of greenhouse gas
emissions at the stage of product use by customers, and initiatives for waste reduction and recycling. We will also consider disclosing
information on reductions of Scope 3 greenhouse gas emissions.

Strategies (risk and opportunity analysis)

MeasuresAmong various possible climate change scenarios, depending on the state of global warming prevention, NITORI Group examined
the 4°C scenario and the 2°C scenario, which are considered representative, under the Sustainability Management Promotion
System. In the 4°C scenario, we focused on the impact of physical risks, since extreme heat and severe storms may occur with noadequate countermeasures. In the 2°C scenario, the study focused on the impact of transition risks, because society is expected tochange as technological innovation progress and regulations are strengthened to curb global warming.

To achieve the above targets, we are pursuing several measures, including the utilization of renewable energy, the introduction ofenergy-efficient electric and gas facilities, and adoption of thermal barrier construction methods and use of materials with thermal
insulation properties for our facilities. In addition, to promote these capital investments, we aim to introduce “Internal Carbon Pricing(ICP: internal carbon tax)” by the end of FY2023 and will make investment decisions based on future carbon costs (carbon tax,
emissions trading, etc.). Regarding the utilization of renewable energy, we plan to start and expand solar power generation on therooftop of our facilities. Furthermore, by the end of 2024, NITORI Group plans to install EV charging infrastructure that is virtually
100% powered by renewable energy at approximately 300 NITORI Group stores.
Details: Press Releases > Expansion of EV Charging Infrastructure at Domestic Stores (as of July 2023, Japanese Only)

49

50

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Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Promote development of human resources and organization
Education system

PolicyNITORI Group aims to realize an organization with wealth of elites through human resource development based on transfer-based
education, which allows employees to experience a variety of occupations every two to three years in a wide range of business fields and byproviding a variety of training programs at NITORI University that is tailored to the individual. In order to achieve this goal, we will continue
to create an organization and corporate culture that values and nurtures people who continue to take on new challenges.

In order to nurture true specialists who can contribute to the society, we have an education system that allows each employee to
explore his or her own potential through various educational opportunities, and to move forward with an eye on your “ideal sef”.
Number ofyears ofemployment

50’s

Administration

GlobalCoordinate

Policy Seminar/
JRC Dispatch

Numerical Table Utilization
Seminar for Quantitative Analysis

Overseas
Training for
new employees

Chain I
Mid-careerdevelopment seminar
Chain training for
new employees

Digital Literacy
Training I

Store Comparison
Training

Coordination Training

Overseas Overseas
In-store
operations Chain I

U.S. seminar(Introductory Course)

Personal Growth

Chain II
Seminar about in-store
operations

Digital Literacy
Training II

Chain III
Basic seminar on thesales floor and products

IT

Digital Literacy
Training III

Chain IV
Seminar on how tostrengthen products

Coordinate MateCreative Line
Training
ProgramLine Staff
Training
Program

ASEAN Seminar

NITORI Coordination Training Programs (NCS) Basic Course /Advisor Course / Planning Course / Specialized Course

U.S. seminar(Trainee Course)

Overseas
VisionaryTraining I

1st yearTraining for 1st to 3rd year employees

Small-group selective
training programs

2nd year

Chain store theory

Overseas
Basics of thesales floor
and products

3rd year

GlobalTraining I

Visionary Leader Development Training I

Core competency

Innovative organization
training

OverseasJapan
Training I

Visionary Leader Development Training II

GlobalTraining II

Visionary Leader Development Training III

Overseas

Overseas
VisionaryTraining II

Visionary Leader Development Training IV

GlobalTraining III

4th-6thyear

Fresh NWC

Transfer-based education

Work experience in a variety ofdepartments, with a focus on
storesDefining anddeepening one’s
expertise

TheoryVisionary Leader Development Training V

From
11th year
onward6th-10thyear

Transferring through a wide
range of departments andbuilding expertise in thoseareas.

Career support

Japan

Career planning, Open recruitment and Self-development

Acquisition ofcomprehensive
skills required for
management-level
positions

Achievement
orientation

Global Training IV

Management Specialist
Talent Specialist

Competitive
Leadership /Communication
growth capabilities
HR development

Seminars by Chairperson, President, and Other Executives (Mission / Vision)

40’s

30’s

Control • Manage

Analyticalthinking skills

General / matching Nitori World Circle (NWC)

20’s

Operation

Overseas

Data Analysis
Human Resource
Development

Related Page: P13-19 Human Capital of NITORI Group Trilogy: Human Resource Development, the Key to Realizing NITORIGroup’s Mission

Base
Competency

Related Page: P74 Sustainability Data book (Human Resource Development)
store

PICK UP

Training
programs

51

Mass education

Specialized
education

Mass
education

Specialized education

Career support to realize your “ideal self”

For Global and IT Human Resource Development

At NITORI Group, all employees have the opportunity twice ayear to think about your “ideal self” in the next 30 years andsubmit it to the company in the form of a “30-year career
design sheet”. The responses, learning status, counselinghistory and all other information are stored in the talentmanagement system and by identifying individual interests,
skills and aptitude, we design job assignments in line withbusiness plans.
Furthermore, from FY2022, we have introduced companywide 1-on-1 meetings at least once a month. By deepening therelationship between managers and their subordinates andextracting learning from day-to-day work, we encourage
proactive employee behaviors and improve productivity for theentire organization.

To develop global human resources, we have an internal
open recruitment system for overseas assignments anddispatch task forces to overseas, and actively promote
employees who voluntarily raise their hands in their desired
careers. In addition, we provide specialized IT training toenable employees who do not have IT backgrounds to become
IT personnel, including
basic education, cloudtechnology and data
science.

U.S. seminar (Introductory Course)

The U.S. seminar is one of the NITORI Group’s unique educational curriculums. All employees in their third year of
employment participate in the introductory course, where they experience the “joy of shopping” and the “enriched life” in the
United States, the starting point of NITORI Group’s mission. In order to maximize the learning experience, we haveestablished an education system whereby employees are exposed to chain store theory through various training programsfrom their first year, and after gaining knowledge, they participate in the U.S. seminar in which they establish a structure where
they continue to learn even after returning from the U.S. seminar.
Chain training for new
employees

Learn about the fundamentals of chain store
theoryChain I Mid-careerdevelopment seminar

Understand the principles (ideal vision) of thechain store and reaffirm NITORI’s mission
and vision.

Store Comparison Training

Understanding NITORI’s strengths andweaknesses based on research of domestic
competitors.

U.S. seminar(Introductory Course)

Based on what was learned, experiencing the“enriched life” in the U.S. with all five senses.


RelatedPage: P14 Global Human Resource
Development, IT Human Resource Development
52

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Diversity

Creating a healthy and safe work environment

PolicyPolicyNITORI Group promotes diversity & inclusion, considering that fostering a corporate culture where employees in different
circumstances and with different backgrounds, in terms of childbirth, childcare, nursing care, nationality etc., acknowledge and respect
each other creates an empowered work environment and leads to the company’s growth.

Promotion of work-life balance
We are creating an environment in which employees can build their careers while balancing work and childbirth, childcare, nursing
care and injury or illness.
My Area System

NITORI Group strives to ensure workplace safety and aims to create a comfortable work environment where all our employees workin good health.

At NITORI Group, convinced that creating a comfortable work environment andensuring the physical and mental health of our employees are essential for corporate
growth, we are promoting health and productivity management. The company, labor
union, and health insurance society work together to support the health of employees
and their families by proactively promoting theimprovement of the work environment, diversity, andemployees’ health.
Mitsuru Ohki, Managing Executive Officer, President, NITORI Health Insurance Society

In March 2023, we introduced “My Area System” which allows employees to commute to work without having to relocate,
limiting the area in which they work in. There are no restrictions on the period of use of this system, and employees who use
this system will not receive a reduction in compensation. We are also implementing measures to increase incentives forrelocation, such as expanding benefits for employees who relocate, so that each employee can make choices that match theircareer path and life stage.
Key points ofthe system reas covered: Tokyo metropolitan area and Kansai areaA
*expansion planned in the future
Term of use: Unlimited (can be applied for or cancelled at any time)

Compensation: No reduction
Position: Unlimited

Health Management Promotion System
The Health Management Promotion Committee, which is a
joint effort between the company and the NITORI Health
Insurance Society, actively plans, proposes and implements
collaborative health projects and makes repeated improvements
every year. We are striving to improve the health literacy of theorganization and its employees.

Other support systems for balancing life and work
We are working to develop a culture that allows both men andwomen to take childcare leave. The number of male employees
who have taken childcare leave has increased significantly overthe past three years. In addition, the special paid leave for
personal injury or illness, which allows employees to accumulate
expired annual paid leave, can be used not only for injury orillness, pregnancy, childcare or nursing care, but also for the
purpose of infertility treatment from 2020. The range of coverage
is being expanded to meet the needs of employees.
(Other major systems)
Maternity and childcare support leave / Shorter working hours /Childcare expense subsidy system on Sundays and holidays /Teleworking system / Spouse maternity leave

(%)

45.3

40
30
20
10

19.1
11.7

0

2020

2021

2022

*NITORI Holdings, NITORI, Home Logistics, Home Cargo, NITORI Facility,
and N+ 6 company figures

Building the Alumni Network
We have introduced the Alumni Network, which provides regular opportunities for interactive information exchange and events tobuild lasting amicable relationships between alumni (retirees) who are active in new fields, as well as between alumni and current
employees. We expect that continued connection with alumni will not only lead to the activation of the use of the re-employment
system (job return system), but also to the creation of ideas and opportunities to provide new added value to our customers.

53

NITORI Group promotes health support for employees andtheir families, offering free health checkups and gynecologicalexaminations for employees and their dependents.
In addition, NITORI Group is a member of the Association for
Health and Management, a general incorporated association,and is involved in discussions and deliberations on healthmanagement issues in cooperation with other companies,
seeking better health management methods and specificmeasures.

For the seventh consecutive year, NITORI Grouphas been recognized by the Ministry of Economy,
Trade and Industry (METI) and the Japan HealthCouncil as one of the “2023 Excellent
Corporations for Health Management (Large
Corporations)”.

NITORI Group Rate of Male Employees
Taking Childcare Leave50

 mployee Family Health Support andECommunity Involvement

Health Education

Raising health awareness through events

To improve health literacy and health awareness among
employees, we provide health education through original
booklets and e-learning programs. NITORI Group creates anddistributes the “Women’s Health Support” booklet, which
focuses on health issues such as lifestyle, menopause, andcancer specific to women, and the “NITORI Heart Supplement”
booklet, which introduces self-care
to improve mental and physicalconditions and enhance
performance.

As part of the collaborative health program between the
NITORI Group and the NITORI Health Insurance Society,various health events are held annually within the Group. One
example is the “Health Checkup Challenge,” an event in which
employees are challenged to improve from the results of lastyear’s health checkup, the “Walking Campaign,” in which
employees aim to walk 8,000 steps a day while having fun
together in a team competition format and the “Anti-smoking
Campaign” to support employees who want to quit smoking
right now. We will continue to strive to plan events in which
employees canactively participate
and which will
provide an
opportunity tochange theirmindsets.

54Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Measures to prevent harassment
To ensure proper understanding and prevention of any kind of harassment, NITORIGroup is promoting the creation of workplaces where harassment is neither tolerated
nor allowed to occur, through such measures as the establishment of a month tostrengthen the understanding of harassment and the implementation of practicaltraining programs in communications and dialogue for managers*. In addition, we haveestablished an internal reporting environment by setting up a harassment consultation
desk and making it known through internal newsletters and posters.
*During company-wide compliance training programs for all employees, including managers, a video on “Harassment Prevention”
is distributed and a confirmation test is administered. Individuals can also learn through an original video “Is this or could this bean abuse of authority?”, with specific examples and careful explanations to help individuals correctly understand harassment andpreventative measures.

Ensuring appropriate working hours
NITORI Group promotes work-life balance and has created a system to prevent employees fromworking long hours. For example, we aim to ensure employee health, enhance work-life balance andimprove productivity through time-conscious work by introducing a work interval system between work
hours and turning off all lights at the head office and headquarters simultaneously. In recognition ofthese efforts, we have been certified as a “White Company” since 2018, and have been awarded thehighest level, Platinum, since 2021.

Promoting initiatives to address environmental and social issues
at overseas locations and NITORI’s own factories
Local Employees overseas
NITORI Group has stores, offices and its own factories overseas, where 12,869 local employees work (*as of March 31, 2023).
Many of these local employees not only support the stable supply of products as NITORI Group’s overseas bases, but also contributeto the enrichment of local homes. The presence of stores and our own factories, etc. in those areas also creates local employment
and contributes to the development of local communities.
Total number of
local employees:

12,869Mainland
China

1,755

U.S.

17

Taiwan917

Southeastern
Asia

Recruitment

10,180Initiatives of our own factories overseas to address environmental and social issues

New graduate recruitment
Based on our recruiting philosophy of “Your dream creates who you are,” NITORIGroup provides support from the standpoint of each student. Based on thisphilosophy, our recruiters provide support from the student’s perspective by working
closely with each student so that the student can make a decision to join ourcompany after carefully considering his or her own career objectives and dreams.
N
 ITORI was ranked No. 1 overall in the humanities in the “My Navi/Nikkei Ranking of
the Most Popular Companies for University Students Graduating in 2024 (liberal arts).”

VietnamNITORIFURNITURE
Hanoi Factory,
Ba Ria-Vung Tau
Factory

Recruitment from overseas
In order to further accelerate our overseas business development, we are actively
recruiting global human resources. In addition to recruiting by participating in the
Boston Career Forum, a job hunting event for Japanese students studying abroad, inrecent years we have been strengthening our efforts to recruit overseas students inJapan, thereby promoting the globalization of our company.

Thailand
SIAM NITORI

Initiatives to address environmental issues

Initiatives to address social issues“ Easy to Sort” pocket coil mattresses will be made eveneasier to disassemble in the future by reviewing the way
the components are joined together.
Review of painting methods to eliminate wasteful use ofpaintRecycling waste paint and reusing it as cleaning
detergent for equipment and parts
Effective use of scrap (lumber, urethane, fabric)

 actory cafeterias (free meals are served)
FDormitory (free of charge, to support employees who otherwise
need to commute long distances)
Creation of a safe and secure work environment*Monitoring of safety management (for prevention of accidents,etc.), attendance management (securing of breaks), etc.
Widely recruiting and actively hiring Vietnamese who used to workin Japan (including those who can speak Japanese and technicalintern trainees) arpet and rug manufacturing using recycled raw
Cmaterials such as plastic bottles* and waterless coloring
methods
Use of plastic bags made of recycled materials (forpacking products)
Reduction of exhaust emissions by switching toelectronic forklifts
Construction of a new factory with an energy-saving
structure with high heat shielding effectRenovatedcafeteria and newly equipped in-house kitchen (freemeals are served)
Review of labor environment and education system (initiatives toreduce overtime)(comfortable workplace / benefits)*The equivalent of approximately 66 million plastic bottles* are recycled annually.
* Calculated based on the amount of PET bottles collected, etc. published by the Council for PET Bottle Recycling Promotion. Number of PET bottles converted as one 500ml PET bottle (23g).

Internship
The NITORI Group’s internship program aims for “zero stranded job-hunting
students” and supports students to think about their own “purpose of work” and makea positive start in their job-hunting activities. In FY2022, approximately 24,000
students participated in our internship program. In the newly launched program for firstand second-year university students, in which more than 500 students participated,participants thought and discussed about what it is to “work” with the recruiters.
N ITORI was ranked No. 1 in the overall category in the “Rakuten Minshu
Internship Ranking of the Most Popular Companies” for fourth consecutive years.
Waste paint recycling facility

55

Cafeteria inside the factory

56

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Developing True Partnerships with Suppliers

Supplier Interview
This overseas supplier is responsible for the manufacture of many of
NITORI’s products, especially “N Polda”, NITORI’s suspension wallstorage, and has been a supplier to us for more than 10 years. The
company is highly conscious of quality and has been participating in
NITORI Group’s NWC activities since 2015, with “zero defect rate” as its
ultimate target. They are a company that is always actively improving andevolving in quality control and environmental considerations.

PolicyNITORI Group calls upon our suppliers to not only comply with laws and regulations, but also to build what NITORI Group calls “truepartnerships” with suppliers, with the aim of realizing sustainable growth throughout the entire supply chain.

True partnership(1) A relationship where both sides aspire to learn about the most advanced topics, including those relevant tocorporate management, share the knowledge and work hard together.
(2) A fair, honest, highly transparent and open relationship where both sides can engage in active exchange of opinions.
(3) A relationship where both sides share not only ideas and management methods for the creation of a culture of
product safety but also the importance of fulﬁlling social responsibilities, such as being environmentallyconscious*1, respecting human rights*2, and maintaining an appropriate work environment*3 and grow together toachieve the mission.

*1 Being environmentally conscious in accordance with NITORI Group’s Environmental Policy*2 Prohibition of forced labor, child labor and discrimination, etc.
*3 Preventing overwork, ensuring more leave than statutory requirements, paying the statutory minimum wage, ensuring workplace safety, maintaining a comfortable workplace environment where
employees work in good health, etc.

Audit of potential new suppliers

Endorsement and Signature to
the Supplier Code of Conduct

In order to deliver safe and secure products tocustomers, NITORI Group audits potential new suppliers
to check eligibility requirements. We conclude contracts
only with suppliers that have passed a rigorous on-site
investigation covering a total of 244 items, including
quality assurance items and responses to environmental
and social issues.

In order to fulfill our social responsibility with our
suppliers, we have established a Supplier Code of
Conduct. This Code of Conduct is clearly stated to all
suppliers and has been endorsed and signed by them.
In the event that a violation of this Code of Conduct is
identified, we encourage our suppliers to improve theirperformance and, if necessary, provide them withguidance to remedy the situation.

Related Page: P74 Sustainability Data Book “Statusof Performance of Audits of New Overseas
Suppliers”

Communication and dialogue with suppliers

Supplier Evaluation

We shared the current situation and future challenges
as well as the direction of product development thattakes into account environmental and social issues* at
the Management Policy Briefing for Overseas Suppliersfor FY2022.

We conduct Audits of existing suppliers twice a year tounderstand the actual status of existing suppliers and to
identify risks. The audit items are reviewed on a caseby-case basis and are mainly in the five categories of“development,” “quality,” “logistics and trade,” “corporate
stance” and “sustainability (items addressing
environmental and social issues)” (46 items in total).
431 suppliers were audited in the second half of
FY2022.
Related Page: P74 Sustainability Data Book “Statusof Performance of Audits of New Overseas
Suppliers”

57

NITORI has high awareness of quality and a strong desire for development, and through our partnership, we have also been able tofurther enhance our awareness and level of quality control and improve our production technology. In particular, our main product,
NITORI’s “N Polda” series, has given us opportunities to propose peripheral products, improve quality, research and upgrade
manufacturing facilities and improve production efficiency, which led to enhanced competitiveness by embodying our management
philosophy of “Quality + Delivery Date = Trust, Trust + Innovation = Development” which led to improvement of our competitiveness.
What do you emphasize in manufacturing?
In product development, we strive to address environmental and social issues as well as safety. In our efforts to reduce
environmental impact, we strive to reduce waste in the manufacturing process, convert to natural gas which leads to CO2 reduction,and utilize recycled raw materials. In addition, to ensure that our employees can work with peace of mind, we pay attention to thestability of their lives and strive to create a safe work environment. As a result, our retention rate has improved, with more than 80% of
our employees having been with us for more than 10 years, and 30% of them for more than 20 years. We believe that it is an
important social responsibility to maintain a high level of engagement and cohesion, and to be a company where the company and its
employees can mutually strive and grow.
What prompted you to participate in NWC?
We have been in business for more than 30 years, and we joined NWC in 2015 because we thought we should always be exposed
to new ideas and example cases for further growth in the future. I learned the importance of continuing these steps.
Please tell us about the changes you have made through your participation in NWC.

Initiatives for Building True Partnerships

 evelop products that can be* Dsorted after use and recycled.
Promotion of compression
packagingPromotion of environmental
certification etc.

Please tell us how your company has grown through the relationship with NITORI Group.

The first is a change in employee awareness. Management has taken the initiative in visiting manufacturing sites to discuss andverify improvement measures with on-site employees, thereby raising each employee’s awareness and sense of responsibility for
quality. Second, analytical skills were improved. By conducting daily analysis, summarizing it weekly, checking it monthly andconstantly repeating the PDCA cycle, on-site employees improved their accuracy in identifying issues and considering solutions in the
manufacturing process. As a result, both production efficiency and sales improved significantly, and the company won the Gold Awardat the NWC in 2022. Employees are now more confident in their quality improvement activities, leading to a revitalization of theworksite. Currently, we are taking on the challenge of further improvement of quality control by spreading the learning from the NWC
to all of our suppliers.

Nitori World Circle (NWC) activities
NITORI Group members of both Japan and overseas, form groups of like-minded
individuals to identify problems in day-to-day operations and promote improvements andreforms which can be directly delivered to the management. In fiscal year 2022, a total of 371
teams participated, 33 of which were from overseas suppliers and many cases of supplierled improvement and reform activities were presented.

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Promotion of CSR activities
Zero Carbon Challenge Cup

PolicyAiming to become a company that people will feel in need of, we implement a wide variety of local contribution activities, with particularfocus on “support for human resources,” “environmental support” and “cultural support,” to give back to all of the countries, local
communities and society members that nurture and support NITORI Group.

Development of “Future IT Human Resources”
We have signed a partnership agreement with Hokkaido, Sapporo City and Hokkaido University, and are working to develop “Future
IT Human Resources” who can use the power of digital technology and data to solve problems in local communities and create thesociety of the future. We will continue our efforts with the aim of producing many future leaders from Hokkaido, the place of our
founding, who will play an active role in the local community, thereby creating vitality for the entire town and furthermore, becoming abridge to the world.
Examples of initiatives
IT human resources development for each level of education, including
elementary, junior high school, high school, university and graduate school
students
Hokkaido University “NITORI Future Society Design Course”
Cutting-edge research making use of actual stores
Research outcomes are published in journals. Patent applications are filed
for certain research outcomes.
Invitation of public applications for research using data and assignments
provided by NITORIResearch activities by high school students (Hokkaido Board of Education’s
project)
NITORI offers insights into practical IT utilization through classes, etc.

LEARN with NITORIThe Research Center for Advanced Science and Technology of the University of Tokyo and NITORI Group jointly launched LEARN
with NITORI, a new education support project, in 2021. LEARN, a program giving children the opportunity to discover the joy oflearning while demonstrating their individuality through various activities and experiences, is run by Senior Research Fellow Kenryu
Nakamura of the Research on Individually Optimal Learning as part of Corporate Sponsored Research Programs. Making use of
NITORI Group facilities as well as other facilities, NITORI Group provides a “learning” program that only the Group can offer. During
the year of 2022, the program was held 14 times in 11 cities across Japan, with 339 children and 343 parents participating. The
Chairman himself actively participated in the programs, sharing his own experiences and deepening exchanges with children and theirparents during lectures and question-and-answer sessions. In recognition of these activities, the Chairman received the “University ofTokyo Shokumon Award” in 2022.
Examples of initiatives
Hunting at the Museum: You Seize the Evidence of History
Otaru Art Village Western Art Museum (Hokkaido)
Find the best cherries in the orchard
NITORI Kanko Orchard, Hokkaido, Japan
Insects in the mountains of Oita Prefecture
Yufuin Recreation Center (Oita Prefecture)
The secret of bamboo shoots
Atami Ginzan Silver Mine (Shizuoka Prefecture)What is a part-time job? ~Let’s try it first before feeling uneasy about it~
NITORI store (Miyagi Prefecture)Find the secrets of the mansion! ~Learn Japanese Culture~
Shikousou (Tokyo, Japan)
59

NITORI Group has been supporting the Zero Carbon Challenge Cup since2015. In the main event, finalists from diverse organizations (schools,
companies, local governments, NPOs, etc.) and of all ages from around Japan
present their activities that are leading to the creation of a zero carbon society.
The Zero Carbon Challenge Cup is a venue for sharing and disseminatingknowledge and information on initiatives and for facilitating further collaborationand motivation, all with the ultimate aim of achieving a zero carbon society thatdelivers a prosperous future for everyone. From among some 30 finalists,
NITORI Group selects a winner of the NITORI Best Dream for the FutureAward. This award reflects our desire to join with others in building a bright
future, filled with dreams and hopes, through decarbonization initiatives.

Supporting sports
NITORI Group is committed to contributing to local communities and society by encouraging healthy and fulfilling lifestyles, both
physically and mentally, through various sports.
 ITORI Ladies Golf TournamentN
We have been organizing a women’s professionalgolf tournament in Hokkaido since 2010 to vitalize
Hokkaido through sports. Moreover, we support female
professional golfers. At present, NITORI has
sponsorship agreements with ten players.
 ITORI JD. LEAGUEN
Under a three-year contract from 2022 to 2024, weare the title partner of the NITORI JD. LEAGUE, theJapanese women’s softball league, to support thepromotion and development of softball in Japan.

 ITORI Women’s Running TeamN
Established in April 2015, the team began its activities with theambition to win medals in the Olympics. Since 2020, the team’s target
has been to come within
the top eight teams in the
All Japan Industrial
Teams Women’s Ekiden(relay race) in addition to
training for marathons.

*As of March 31, 2023

Supporting human resources development / Supporting culture, arts, and tradition
NITORI Group is supporting the following two foundations
NITORI International Scholarship Foundation
The NITORI International Scholarship Foundation, launched in March
2005, is a way of expressing our appreciation to people in Asian
countries for their tremendous support that is contributing so much to
NITORI Group’s accomplishment of its mission. So far, the foundation
has supported a total of 9,254 students in 46 countries and regions inJapan and overseas by offering non-repayable benefit-type scholarships.
In addition, from FY2023, we will begin operating a new “student
dormitory” for scholarship students. In order to contribute to friendshipand human resource development in countries around the world, we will
expand our support to the young generation that bears the future.
NITORI Culture Foundation
The NITORI Culture Foundation was founded in April 2011, to support the development and succession of culture, arts, and tradition
and to be a bridge for the formation of a new culture. Otaru Art Village, a group of museums in Otaru City, Hokkaido, operated by thefoundation, opened its fourth museum, the Museum of Western Art, in 2022. With a total of 400,000 visitors a year, the museum is
attracting attention as a tourist attraction in Otaru.
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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Strengthening Corporate Governance Structure
The Aspirations of Newly Appointed Director

PolicyI am very pleased to have recently assumed the position of outside director at NITORI Holdings. I joined
the National Police Agency in 1978 and was involved in police administration for nearly 40 years until I
retired as Commissioner General of the National Police Agency in 2016, working to ensure the safety andsecurity of all citizens. During my tenure as Commissioner General of the National Police Agency, I was incharge of the Japanese police force, dealing with crimes that are becoming more international and IToriented, and directing police forces nationwide to contribute to the realization of the world’s best public
safety. From 2016, as President of the Police Mutual Aid Association, I was responsible for social security for
approximately 1 million police personnel and their families nationwide. Through these experiences, I have
deepened my experience and knowledge not only in criminal justice but also in organizational management
and crisis management in various situations. Although I have no experience in corporate management, I
would like to contribute to the realization of the NITORI Group’s mission and vision as an outside director of
NITORI Holdings based on the experience and knowledge I have acquired so far, and to do my utmost tocontinuously enhance corporate value. I look forward to serving the Nitori Holdings.

NITORI Group places top priority on sustainable growth and the medium- to long- term improvement of corporate value in its
management. The Group believes that enhancing its corporate governance system is necessary for achieving these goals. To enhance
corporate governance, the Group aims to build an organizational structure to respond promptly to any changes in the businessenvironment, practice fair and transparent management as a listed company, and disclose accurate information to all stakeholders in atimely manner. Meanwhile, the Group will develop an internal system to establish its corporate social responsibility and corporate ethics.

Directors and Executive Officers

Masahito
Kanetaka

Directors (As of June 22,2023)

Director* Independent Outside Director

Akio Nitori

Toshiyuki Shirai

Fumihiro Sudo

Representative Director &Chairperson (Chief Executive
Officer)

Representative Director & President(Chief Operating Officer)

Director, Executive Ofﬁcer & Vice
President

Member of the Nominating andCompensation Committee

Member of the Nominating andCompensation Committee

Fumiaki Matsumoto

Masanori Takeda

Hiromi Abiko

Director, Executive Ofﬁcer & Vice
President

Director
General Manager of Global
Merchandising Division
General Manager of Global Sales
Promotion Ofﬁce
In charge of Overseas Sales
Business

Director
General Manager of HR Education
Division

Member of Audit &Supervisory Committee

Skills Matrix
Of the skills, etc. held by each Director, maximum of six main skills are marked with ●.
Knowledge and experience the Company expects of Directors

Takaaki Okano

Takao Kubo

Director

Director

Naoko Yoshizawa

Yoshiyuki Izawa

Director

Director

Director* Independent Outside Director

Member of the Nominating andCompensation Committee

Hisayoshi Ando

Masahito Kanetaka

Director

Director* Independent Outside Director

Member of Audit & Supervisory
Committee
Member of the Nominating andCompensation Committee* Independent Outside Director

Member of the Nominating andCompensation Committee

Executive Vice Presidents

Senior Executive Officers

Executive Officers

Fumihiro Sudo / Fumiaki Matsumoto

Isao Arai / Tsuyoshi Okamura /Hiroki Murabayashi / Yoshihisa Sato /Kenichiro Aoya/ Soichi Oda,
Kazuya Tsukada

Tadashi Kudo, Akio Igarashi, Toshinao Matsushima, Ei Sugiura,
Harumi Sawai, Akihiro Kushida, Toshinori Arai, Masaomi Zenji,
Tetsuya Okuda, Takuya Ono, Tetsuo Yamamoto, Masatoshi Sano,
Yuichi Maruhashi, Hiroyuki Tajiri, Noriaki Hase, Hideki Sasaki,
Ryo Takahashi, Katsunori Kobayashi

Mitsuru Ohki / Naoshi Takei / Manabu
Nakamura / Hiroshi Nagai / Kazuyuki
Hashimoto / Junichi Yoshima
61

Toshiyuki Shirai

Representative Director &President (COO)(3) ProductDevelopment(4) Supply chain
Management(5) IT/DX(6) Global(7) HR
Development(8) Legal Affairs
RiskManagement(9) Finance(10) Sustainability

Masanori Takeda

Director

Hiromi Abiko

Director

Takaaki Okano

Director

Naoko Yoshizawa

Outside Director

Director
Full-time Member of Audit &Supervisory Committee
Outside Director
Yoshiyuki Izawa Member of Audit & Supervisory
Committee (Chairperson)
Outside Director
Hisayoshi Ando Member of Audit & Supervisory
Committee
Outside Director
Masahito Kanetaka Member of Audit & Supervisory
Committee

Takao Kubo

See the table below for a summary of the skills possessed by each director.
Member of Audit & Supervisory
Committee

Executive Officers (As of July 1, 2023)

Managing Executive Officers

Representative Director &Chairperson (CEO)(2) Rejecting
Status Quo

Yoshihiko Miyauchi Outside Director

Yoshihiko Miyauchi

Member of Audit & Supervisory
Committee

Akio Nitori(1) Corporate
Management

Director
Executive Officer & Vice
President
Director
Fumiaki Matsumoto Executive Officer & Vice
President

Outside Directors (As of June 22, 2023)* Independent Outside Director

Title

Fumihiro Sudo

Member of Audit & Supervisory
Committee (Full-time)* Independent Outside Director

Name(1) Corporate Management

Has had experience in managing companies as a business owner.

(2) Rejecting Status Quo

Equipped with a mindset essential for NITORI Group’s management team, which constantly rejects the status quo and repeatedly
observes, analyzes, and judges in order to make improvements and reforms.

(3) Product Development

Skilled in developing attractive products that “offers the unexpected” to achieve total coordination.

(4) Supply chain Management

Skilled in evolving our unique business model that integrates manufacturing, logistics, IT, and retai, and in optimizing the structure fromprocurement to sales.

(5) IT/DX

Skilled in driving company-wide business process improvements through IT utilization and DX.

(6) Global

Skilled in driving overseas business with a macroeconomic perspective and knowledge of global business.

(7) HR Development

Skilled in enhancing human capital, with extensive experience in organizational development and human resource training anddevelopment.

(8) Legal Affairs Risk Management

Skilled in identifying and controlling potential risks to the business, with knowledge of legal affairs, governance, compliance, etc.

(9) Finance

Skills to support corporate management from a financial perspective, with knowledge of accounting, finance, taxation, etc.

(10) Sustainability

Equipped with a sustainability management perspective, which is essential for the sustainable development and growth of a company.

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Discussion by Outside Directors
Ando: In my case, what is expected of me as an outside
director of the Company is to provide “quality meddling”
based on my long experience in public administration

Evaluation of NITORI Holdings

regarding opportunities and risks that may be difficult for

Izawa: We are not a so-called dictatorial company. It is true

people within the Company to recognize, specifically, I

that Chairman leads the group with his charisma and strong

believe that I should communicate to executive directors so

leadership as the founder, but at the same time, he always

that they can have a bird’s eye view and awareness of thelistens to the opinions of others in the company, and themacro environment that will bring about changes in theinternal board members also actively express their own

industrial structure, such as carbon neutrality andopinions. I think this is a different type of company fromdigitalization.

others and can be said to be very unique.

Izawa: Indeed, you explain things from a completely

Ando: I also feel that everyone in the company, including

different angle than the other members and in very easy-to-

the board members, expresses their opinions openly andunderstand language.

without any sense of judgment, and that this culture
permeates down to the very bottom of the organization.

Hisayoshi Ando

Yoshiyuki Izawa

Independent Outside Director(Member of Audit & Supervisory Committee)

Independent Outside Director(Member of Audit & Supervisory Committee)

1983 Joined the Ministry of International Trade and Industry(currently the Ministry of Economy, Trade and Industry)
2009 Secretary to the Prime Minister2010 Director-General, Resources and Fuels Department, Agency
for Natural Resources and Energy, METI2017 Director-General, Small and Medium Enterprise Agency, METI2019 Administrative Vice Minister, METI
2022 Outside Director of the Company (current position).

1970 Joined Mitsui & Co., Ltd.
2008 Representative Director and Executive Vice President (CEO)of Mitsui & Co.
2009 Director and Representative Executive Officer (CEO) of
Japan Post Bank, Ltd.
2015 Representative Director, Chairman and CEO of BlackRock
Japan K.K.
2022 Outside Director of the Company (to date).

Ando: In terms of the effectiveness of the Board of

When I attend internal meetings and see the expressions

Directors, it’s you who always initiates discussions andon the faces of the members, I can clearly see that they are

elicits comments from the members.

not waiting for instructions from the top, but are taking theinitiative.

Izawa: I believe that it is important to go through a quality
debate before making a resolution and I try to encourage a

Izawa: I think the corporate governance is also highly

lively discussion on all agenda items. For example, lasteffective. I think the Board of Directors is highly effective

year’s withdrawal from the U.S. market was the subject ofand most appropriate in the selection of Directors, theheated debate within the Board of Directors, but in the end

operation of the Board of Directors, as well as the selection

everyone agreed on the resolution, and I believe I was ableof the agenda.

to fulfill my function as a Board member. Leading thediscussion in such a direction is one of the roles a director

Ando: Along with the selection of the agenda, I also thinkshould fulfill.

highly of the way in which the Board of Directors decides
when the discussion reaches a point where it is ready for a

Establish a risk management system covering

Ando: Since it is the executive directors who actuallyresolution. At our company, it is not uncommon for

the entire group to realize the vision 2032.

develop practical operations in corporate management,

discussions to be sent back to the board if they are deemedoutside director is required to obtain sufficient

to be inconclusive and insufficient . It can be said that theunderstanding of his or her own opinion from the executive

discussions are firmly grounded.

directors through discussions and to see through to actual
actions afterwards. As a move in line with such a role,

Izawa: Another thing that I think is commendable is financial

during the period under review, as an outside director I

discipline. The accounting approach regarding impairment

my experience at the world’s largest asset management

proposed the need for verification work on supply chain

is very conservative, and I think it is wonderful that evencompany over the past seven years. In particular, withcybersecurity measures, and through careful discussions

with this accounting policy, the company has achieved 36

regard to overseas operations, I would like to makewithin the company, I was able to share my understanding

consecutive years of sales and profit growth.

Izawa: I recognize that my role as an outside director is tosuggestions and provide advice as deemed necessary with

with the executive directors. The project has alreadycontribute to the enhancement of corporate value by

regard to recognizing and responding to risks that thestarted, and we will continue to monitor its progress.

influencing the executive divisions from two perspectives,

Company may face in the future as it accelerates its global

by 2032, I have the impression that, in a positive sense, thethat of an investor and that of a global manager, based on

expansion.

people on the front lines are very firm and disciplined inRole as the Outside Director

63

Ando: While pursuing the challenging target of 3 trillion yen

64Top Message

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Discussion by Outside Directors

What is required of the outside
directors is to provide “quality
meddling” regarding possibilities
and risks that executive officers
may not be aware of.

their approach. It is difficult to maintain discipline under theJapan. If we can establish products and services for seniors

Izawa: What is needed is to recognize all risks, not only

theme of co-creation with consumers, such as “resourcepressure of achieving the targets, but this perfect balancethat are viable in Japan, there will be room for global

overseas and in Japan, but for the entire group, minimize

recycling with our customers,” in addition to offeringof vision and firmness is one of the strengths of our group,

expansion.

them and determine the extent to which we can respond to

products with built-in 3R (recycle, reuse, and reduce) bythem. I would like to see the Company establish a global

taking advantage of the unique business model that

Izawa: While the expansion of overseas operations will berisk management system as soon as possible, while

integrates manufacturing logistics, logistics, IT and retail.

essential to achieve our vision, overseas is a very difficult

utilizing external organizations as well.

and I feel that the strong awareness of top management is
at work.

Responding to changes in theenvironment (risks andopportunities)

market to conquer because of the numerous individual

Izawa: I think we should continue to strengthenrisks. First, as an urgent task, it is necessary to identify andenvironmental disclosure in this area, not only in terms ofspecify where the risks lie.

Sustainability

Ando: My top priority for our company, including global

Izawa: In terms of sustainability, we are clearly more

Ando: As SDGs and ESG initiatives become indispensable

Izawa: I believe that the first challenge for the future is toexpansion, is to ensure cyber resilience. We have built aadvanced than our competitors in terms of ESG’s E

to enhance corporate value, open disclosure of information

respond to the declining population in Japan. Even the best

unique business model in which the entire function is(Environment), especially in CO2 reduction and recycling.

on environmental initiatives is already part of a company’sbusiness model will eventually become obsolete as theperformed in-house and we have built up a successful track

In CO2 reduction, we have just initiated a plan to installsales strategy. I hope that the Company will continue to bemarket changes. Our company is no exception. To survive

record by maintaining a “risk is all within ourselves” attitude.

solar panels at our stores and distribution warehouses, andmore aggressive in communicating their “Promotion ofin the domestic market, we need to review and restructure

However, continuing this model going forward means thathave established a low-cost system that enables stableenvironmentally friendly business” to their stakeholders.

our business model in response to changes in consumer

the risks we take on as our business expands will be of a

procurement of renewable energy and the novelty of thisvalues and purchasing behavior.

different scale. The most significant of these would be

system has been highly evaluated by investors.

cybersecurity. This is not to say that we should stop doing

In the area of recycling, we are also actively promoting

Ando: With the declining birthrate and aging population, thethings ourselves, but we must examine and determine at an

various initiatives, including the manufacture and sale ofdemand for seniors will expand while the overall population

early stage whether and to what extent we can expand thecarpets made from recycled raw materials such as PET

will decrease, so it is important to take this as an opportunity

scale of our business through in-house production, orbottles.

to respond to new needs through marketing to seniors.

whether we need to consider outsourcing at some point in

In addition, the birthrate is expected to decline and thethe future.

population is aging rapidly in Asian countries as well as in65

I think NITORI Group is a different
type of company from others andcan be said to be very unique.

promotion, but also in TCFD and IR.

Ando: I believe that the company is effectively promoting
the environmental characteristics of its products under the66

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Ensuring the Effectiveness of the Board of Directors
Board of Directors’ effectiveness evaluation(1) Size and composition

3.47

4

(8) One’s own
efforts

3.68

3.5(2) Management
status3.74

3(7) Responsetostakeholders(3) Matters
discussed

3.51

3.47

(6) Riskmanagement
Options

3.50(5) Materials

4. Appropriate
3. Acceptable
2. Insufficient
1. Needs improvement

In analyzing and evaluating the effectiveness offiscal 2022 Board of Directors, we confirmed thestatus of improvements and progress of the issues
identified in the effectiveness evaluation conductedin the previous fiscal year. The Board of Directors
also compiled the evaluations and candid opinionsof each director in the form of a questionnaire, andbased on the results, the Board of Directors
conducted an analysis and discussion on eachissue to improve the functioning of the Board of
Directors.
Evaluation categories of the questionnaire(4) Support
systems

3.49

Executive compensation system

3.64

FY2021
FY2022(1) Size and composition of the Board of Directors(2) Management status of the Board of Directors(3) Matters discussed by the Board of Directors(4) Support systems for the Board of Directors(5) Materials for the Board of Directors meetings(6) Risk management(7) Response to stakeholders(8) One’s own efforts

Performance-based
compensation
31.8%*

Performance-based stockcompensation system(medium- to long-term incentives)
Performance-based
monetary compensation(short-term incentives)

Basiccompensation
68.2%**The ratio is based on a pay structure where
basic compensation accounts for 75% andshort-term incentives 25%, and medium- tolong-term incentives are 10% of acumulative total of compensation for the
relevant two fiscal years.

Basic compensation

Calculated based on the achievement of thetargets for the Company’s performance, suchas consolidated net income, for the target
period of every two fiscal years. Variable
between 0% and 200% of the basic amountof stock granted to each executive director.
Calculated based on the achievement of thetargets for the Company’s performance, suchas consolidated operating income, for eachfiscal year. Variable between 0% and 150%of the standard amount for each executive
director.
Compensation for non-executive directors, inprinciple, consists of fixed basic compensation.
Performance-based compensation as short-term or
medium- to long-term incentive is not provided for
non-executive directors.

Performance-based stock compensation system
Target period of every two fiscal years esults of the assessment of the effectiveness of the Board of Directors in fiscal yearR
2022 and priorities for the Board of Directors in fiscal year 2023
The results of the analysis by the NITORI Group Board of Directors showed that the Board of Directors is composed of a wellbalanced group of directors with diverse knowledge and experience, that all directors, including outside directors, participate in active
and free discussions at the Board of Directors meetings, that the frequency of Board of Directors meetings is appropriate and that theagenda of the Board of Directors meetings is properly managed.
On the other hand, although the current composition of the Board of Directors is not necessarily a major issue, the percentage ofoutside directors has decreased compared to the previous year, and it can be said that the discussion on the expansion of diversity
and the appropriateness of the composition should be further deepened. There is still room for improvement in such areas as“enhancement of discussions on risk management” and “enhancement of provision of important information to outside directors,”
which were issues in the previous year’s effectiveness evaluation, and further promotion of “deepening discussions on NITORIGroup’s growth strategy” is strongly required through the resolution of these issues.
Based on the issues identified through the evaluation of the effectiveness of the Board of Directors and the opinions of the directors,
the Board of Directors has decided that the most important issue is to “deepen discussions on the NITORI Group’s growth strategy”
and will work on each issue to achieve further improvement. (Figure below)

Enhance discussion on NITORI Group’s growth strategy[Top Priority Issues]
Enrichment of information
provision to the outside directors[Ongoing issue since
the previous fiscal year]

67

Ensure appropriate deliberation
time for important agenda items[New issue]

Consideration of the appropriate
size and composition of
the Board of Directors[New issue]

Strive to achieve the targets

Continue to hold the stock for three more years

Achieved
Up to 200%

Met targets
100%★

Not achieved
Down to 0%

Encourage further efforts toincrease stock price (corporate value)(1) Set numerical targets(2) Grant common shares

Performance Share Unit

Restrictions on transfer
after delivery

To strengthen the link between thecompensation structure and medium- tolong-term increase in corporate value,
the Company has adopted aperformance-based compensation
system (Performance Share Unit) inwhich compensation is provided inaccordance with the achievement ofconsolidated performance targets forevery two fiscal years.

To promote medium- to long-term proﬁtsharing with shareholders, theCompany’s shareholding guidelines set
forth that a three-year restriction shall be
imposed on the transfer of stock granted
as performance-based stockcompensation.

Clawback provisions
The Company’s shareholding guidelines
set forth that the Company may request
an eligible director to return the
incentives (clawback) if misconduct orillegal conduct causes a material breachregarding ﬁnancial reports.

68Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Data CenterTransition of Key Management Indicators(Million yen)(Thousand USD)FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2022

¥

¥

¥

¥

¥

¥

¥

¥

¥

¥

948,094$ 7,099,706

Income/Loss
Net sales

387,605

417,285

458,140

512,958

572,060

608,131642,273

716,900

811,581

Gross profit

201,656

218,337

243,543

278,274

314,778

331,421354,364

411,791

425,897478,106

3,580,247

Selling, general and administrative expenses

138,583

152,029

170,503

192,497

221,400

230,642

246,886

274,104

287,627

338,029

2,531,300

Operating income

63,073

66,30773,03985,776

93,378100,779

107,478

137,687

138,270

140,076

1,048,946

Ordinary income

63,47467,92975,00787,563

94,860103,053

109,522

138,426

141,847

144,085

1,078,966

Net income attributable to owners of parent

38,42541,45046,96959,99964,21968,18071,395

92,11496,724

95,129712,367

Cash flow from operating activities

46,15452,92357,34377,93076,84081,664

99,337150,879

85,56591,398684,425

Cash flows from investing activities(32,376)(43,023)(35,899)(42,047)(82,751)(30,424)(44,486)(195,985)(119,980)(132,538)(992,499)

Cash flows from financing activities(10,540)(6,654)(9,943)(6,414)655(11,340)(13,862)

30,30917,72936,903276,347

Cash and cash equivalents at the end of the year

21,17925,71336,794

66,03560,923100,053

140,791

125,487

127,076

125,115

936,916

Depreciation and amortization

8,850

8,921

9,398

10,406

11,357

12,311

14,57516,024

20,407

22,272

166,784

Capital expenditure

30,08345,033

26,60542,82864,172

32,237

26,191

22,323

101,454

117,328

878,598

Total assets

321,703404,793414,541

487,814550,507619,286

683,247

930,884

983,840

1,133,771

8,490,125

Net assets

247,898

310,531

330,968

394,778441,668

500,192

560,861

685,392

732,813

818,096

6,126,230

Equity247,099

309,413329,695

393,693

440,991

499,721560,571642,096

732,813

818,096

6,126,230

Gross profit to net sales ratio (%)

52.0

52.3

53.2

54.2

55.0

54.5

55.2

57.4

52.5

50.4

50.4

SG&A expenses to net sales ratio (%)

35.8

36.4

37.2

37.5

38.7

37.9

38.4

38.2

35.4

35.7

35.7

Operating income to net sales ratio (%)

16.3

15.9

15.9

16.7

16.3

16.6

16.7

19.2

17.0

14.8

14.8

Rate of return on equity (ROE) (%)

16.8

14.9

14.7

16.6

15.4

14.5

13.5

15.3

14.1

12.3

12.3

Equity ratio (%)

76.8

76.4

79.5

80.7

80.1

80.7

82.0

69.0

74.5

72.2

72.2

Ordinary income to total assets ratio (ROA) (%)

20.9

18.7

18.3

19.4

18.3

17.6

16.8

17.2

14.8

13.6

13.6

Payout ratio (consolidated) (%)

14.3

14.6

15.3

15.2

16.0

16.0

17.0

15.1

16.3

17.3

17.3

Price earnings ratio (PER)

13.3

20.2

19.4

22.7

30.7

23.1

26.1

25.7

19.1

18.9

18.9

Net income per share (EPS) (Yen, USD)

350.27376.14425.10540.93574.49608.05635.42817.01856.71841.906.30

Net assets per share (BPS) (Yen, USD)

2,248.80

2,806.99

2,981.27

3,530.51

3,938.89

4,452.99

4,984.29

5,691.11

6,489.57

7,239.04

54.21

50

55

65

82

92

97

108

123

140

146

1.09

57,221,748

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

9,340

7,600

8,260

12,25017,625

14,05016,56020,97016,35015,930119.29534,451

869,771945,3031,401,933

2,017,067

1,607,931

1,895,184

2,399,880

1,871,151

1,823,084

13,651,976

Number of stores in Japan

312

346

383

428

467

505

545

651

708

773

773

Number of stores overseas

19

27

37

43

56

71

66

71

93

129

129

Net increase in number of stores

31

42

47

51

52

53

31

111

79

101

101

1,478,205

1,568,596

1,678,835

1,806,666

1,928,461

2,037,213

2,099,997

2,726,935

2,828,992

2,961,391

2,961,391

16,88419,092

20,75922,111

24,81627,50629,936

36,66937,22937,32937,329Financial Position

Key Management Indicators

Per Share Information

Dividend per share (Yen, USD)

Other Data
Number of shares issued at the end of the year
Stock price at the end of the year (Yen, USD)
Total market value

Total sales floor area ( )Total number of employees(Notes) 1. The Company conducted a two-for-one stock split of its common shares effective February 21, 2014. The above per share information is calculated under theassumption that the stock split was conducted at the beginning of FY2011.
2. Translation into US dollars has been made at the exchange rate of 1 USD to 133.54 yen.
3. The total number of employees includes the average number of temporary employees (calculated on the basis that one day is eight hours).
4. The fiscal year ending March 31, 2023 is 13 months and 11 days from February 21, 2022 to March 31, 2023 due to a change in the fiscal year-end.

69

70Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Data Center

Sustainability Data Book

Amount of waste from NITORI Group’s domestic operations

Environment

Greenhouse gas emissions from NITORI GroupInterim target: 50% reduction in FY2030 compared with FY2013 (emissions per 100 million yen of net sales)
Progress in FY2022: 29.0% reduction compared to FY2013 (33.60 t-CO2 per 100 million yen in sales)

Target (1): FY2030 Amount of waste discharged (general waste and industrial waste)
30% reduction compared with FY2018 (amount of waste per 100 million yen of net sales in Japan)
Target (2): FY2030 At least 95% recycling of industrial waste
Progress in FY2022: Target (1) 32.0% reduction compared with FY2018 (amount of waste per 100 million
yen of net sales: 7.6 t)
Target (2): 88.8% recycling of industrial waste*(1) and (2) are for domestic operations

FY2013

Greenhouse gas emissions

Unit(Reference year)

FY2018FY2019FY2020

FY2021

FY2022NITORI Group

t-CO2

183,904

224,778

226,478

238,433

215,014226,082

Japan

t-CO2

33,98036,01435,38939,92523,66026,166

Amount of waste discharged

Overseas

t-CO2

244

3,780

2,783

2,102

4,472

5,831

NITORI Group

Japan

t-CO2

143,533

151,347

149,736

154,000

138,454

141,133

t-CO2

6,147

33,637

38,57042,40648,42852,952t-CO2 per
100 million yen

33.60

29.80

28.72

27.39

26.49

23.85

Scope 1
Scope 2

Overseas
per unit*This target was achieved ahead of schedule due to ongoing efforts to reduce waste. We will work on further reduction to maintain this level in the future.

*Japan: Stores (NITORI, Deco Home, N+, SHIMACHU, Everyone’s Grill), Home Logistics, Head Office and Headquarters (Sapporo, Tokyo, Osaka, Omiya), and HOME DECO*Overseas: Stores (Mainland China, Taiwan, Malaysia, etc.), Offices (NTI, NTL), warehouses, and factories (NITORI FURNITURE, SIAM NITORI)*NITORI Group’s greenhouse gas emissions: Total of Scope 1 + Scope 2 emissions (including overseas operations)*Greenhouse gas emissions associated with electricity consumption in Japan are calculated using the adjusted emission factor for each electric utility as stipulated in the
Act on Promotion of Global Warming Countermeasures.
*Greenhouse gas emissions in FY2022 from overseas electricity use are calculated using the latest (2020) emission factors for each country in IEA Emission Factors 2022
published by the International Energy Agency (IEA).
*Emissions have been recalculated since FY2016 due to a review of target sites and revisions to energy types.

Greenhouse Gas Emissions Transition
300,000

33.60

250,000
200,000
150,000

0

28.72

224,778

226,478
38,172

Scope 1

per unit (per 100 million yen in sales)

27.39

30

26.49

238,433

215,014
28,13242,02723.85
226,082
31,997

188,306

184,984

149,680

2013

2018

2019

FY2013

FY2018

196,406

186,882

2020

194,085

2021

FY20192022

FY2020

FY2021

Reduction rate per unit of sales(compared to FY2013)−-11.3%-14.5%-18.5%

Total emission reduction rate(compared to FY2013)−+22.2%+23.2%+29.7%20

NITORI GroupJapan

Overseas
per unit

FY2019FY2020

FY2021

FY2022t

103,061

106,686

107,825

94,19396,599Waste with value and othert

47,09048,06349,85946,66549,216

Total amount of general waste andindustrial wastet

55,971

58,62357,96647,52847,383General waste

t

4,110

4,213

4,139

4,333

4,610

Industrial wastet

51,861

54,41053,82743,19542,773*Simple incineration andlandfill disposal

t

−

−

−

5,010

4,778

*Recycling rate

%

−

−

−

88.4

88.8

General waste and industrial
waste per unitt per 100
million yen

7.60

7.62

6.81

6.03

5.17

Waste Emissions Transition
80,000(Unit: ton)

Industrial waste

60,00050,000040,00030,000

FY202220,000-21.2%-29.0%

10,000+16.9%+22.9%

06.81
58,623
4,213

55,971
4,110

2018

2019

2020

FY2021

FY2022-15.1%-15.3%

4,727.6(Crude oil equivalent)

TJ

3,951.5

3,986.3

4,321.5

3,542.1

3,735.1

Electricity

Mwh

303,004

307,138

327,597

310,297

325,640

Gas

1,000

11,750

11,58313,063

7,876

8,383

Gasoline / diesel oil

kℓ

575

588

552

507

623

Amount of water used

Fuel oil (kerosene, etc.)

kℓ

139

170

211

336

366

NITORI Group

0.50

FY2020

0.00

+3.6%

4,404.8

0.54

FY2019

2022

+4.7%

5,088.9

0.58

2021

−

4,742.1

0.60

2.00

Percentage of total waste reduced(compared to FY 2018)

4,692.5

0.62

42,773-32.0%TJ

TJ per 100
million yen

43,195-20.7%(Crude oil equivalent)(Crude oil equivalent)

3.00

53,827-10.4%FY2022

992.5

4.00

+0.3%

FY2021

862.7

5.00

−

FY2020767.4

47,5284,333

6.00

Reduction rate per unit of sales(compared to FY2018)
FY2019755.8

5.17
47,3834,610

1.00

FY2018

741.0

7.00

6.03

57,966
4,139

54,41051,861

Unit

TJ

Unit (per 100 million yen in sales)

8.00

FY2018(Crude oil equivalent)

General waste

7.62

7.60

70,0005*Japan: Stores (NITORI, Deco Home, N+, SHIMACHU, Everyone’s Grill), Home Logistics, Head Office and Headquarters (Sapporo, Tokyo, Osaka, Omiya), and HOME DECO*Overseas: Stores (Mainland China, Taiwan, Malaysia, etc.), Offices (NTI, NTL), warehouses, and factories (NITORI FURNITURE, SIAM NITORI)

71

FY2018*Japan: Stores (NITORI, Deco Home, N+, SHIMACHU, Everyone’s Grill), Home Logistics, Head Office and Headquarters (Sapporo, Tokyo, Osaka, Omiya), and HOME DECO
*Waste for which the Company is a waste generator is covered.
*Industrial waste includes mixed waste including sofas, chests of drawers, cabinets, etc., waste plastics, and Styrofoam.
*Waste with value and other includes corrugated cardboard, metals (with value), mixed paper, etc. Corrugated cardboard is 100% recycled.

10

Energy consumption in the NITORI Group
Energy consumption(Reference year)25

15

100,000
50,00029.80

39,794

183,904
34,224

Scope 2

(Unit: t-CO2)

Unit

Water consumption in the NITORI Group
Unit

Japan
Overseas
per unit

per 100
million yen

FY2019FY2020

FY2021

FY2022

1,369,647

1,341,571

1,399,167

1,393,469

911,642923,444857,824

712,861

458,005

418,127

541,343

680,608173.67154.13172.40146.98*Japan: Stores (NITORI, Deco Home, N+, SHIMACHU, Everyone’s Grill), Home Logistics, Head Office and Headquarters (Sapporo, Tokyo, Osaka, Omiya), and HOME DECO*Overseas: Stores (Taiwan, Malaysia, etc.), Offices (NTI, NTL), warehouses, and factories (NITORI FURNITURE, SIAM NITORI)

72

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Data Center

Sustainability Data Book

Human Resources Development

SocialEmployee data
Total number of employees *Based on actual numberof persons

Total number of employees *Number of non-regular
employees on an hourly basis

Number of regular employees
Number of non-regular employees*Annual average (calculated on the basis that one day iseight hours)

FY2022

52,69553,40037,22937,32918,98418,90918,245

18,420Target scope

NITORI Group as a whole

FY2022

Target scope

65.3

65.9

NITORI Holdings, NITORI, Home
Logistics, Home Cargo, Nitori Facility,
N+, and SHIMACHU

461

Percentage of female new graduates hired

47.7

46.2

Percentage of employment of persons withdisabilities (%)

2.75

2.99

Number of women in management positions *1

395

481

Percentage of women in management positions (%)

15.0

16.8

Number of non-Japanese nationals in management
positions41

58

Number of employees taking childcare leave

165

226

Number of male employees taking childcare leave

43

105

Male childcare leave utilization rate *2*4*7

−

46.3

Number of employees taking spousal maternity leave

50

105

Number of employees taking nursing care leave

5

5

Number of employees working shorter working hours(pregnancy, childcare, nursing care)

258

294

Average days of paid leave taken

9.6

12.3

Average percentage of paid leave taken

57.7

71.9

Average overtime hours (hours per month)

9.5

12.4

Difference in wages between male and female
workers*1*3*7 Total *5

−

61.8

Difference in wages between male and female
workers*1*3*7 Regular employment *6

−

73.6

Difference in wages between male and female
workers*1*3*7 Part-time employment

−

93.3

Difference in wages between male and female
workers*1*3*7 Total*5

−

51.3

Difference in wages between male and female
workers*1*3*7 Regular employment*6

−

73.0

Difference in wages between male and female
workers*1*3*7 Part-time employment

−

105.2

Full-time employees of NITORI, Home
Logistics, Nitori Public, and SHIMACHU
NITORI Holdings, NITORI, Home
Logistics, Nitori Facility, N+, andSHIMACHU

115.4

Average days of education per employee

6.3

14.4

Details: P52 Education System

Number of staff trained in health and safety standards
during the previous year
FY2020Frequency rate of lost time injuries (%)

2.20*Absence from work for 4 days or more

FY2022

Target scope

1,656

1,768

420

354

NITORI Holdings, NITORI, Home
Logistics, Home Cargo, Nitori Facility,
N+, and SHIMACHU

FY2021

FY2022

Target scope

3.18

NITORI Holdings, NITORI, Home
Logistics, Home Cargo, Nitori Facility,
N+, and SHIMACHU

2.62

Status of Performance of Audits of New Overseas Suppliers (*Including quality assurance
items and response to environmental and social issues)

FY2021
Full-time employees of NITORI Holdings,
NITORI, Home Logistics, Home Cargo,
Nitori Facility, N+, and SHIMACHU

FY2021*Calculation formula: Frequency rate = Cumulative number of births per year ÷ Total number of person-hours per year × 1,000,000

Number of cases

Composition ratio
FY2022Composition ratio

Accepted

Conditional Acceptance(Improvement Request)

Rejected(no transactions
permitted)

99

12

76

11

100.0%

12.1%

76.8%

11.1%

234

18

189

27

100.0%

7.7%

80.8%

11.5%

Audit items for potential new overseas suppliers (*selected items)

NITORI Holdings, NITORI, Home
Logistics, Home Cargo, Nitori Facility,
and N+

Pollution prevention measures (including compliance with laws and regulations regarding air, water, and soil pollution)
Compliance with Laws and Regulations for Hazardous Substance Disposal Promotion of resource reuse
Periodic safety training as required by law Installation of fire extinguishing equipment
Hazardous materials handling training Safety measures when working with hazards
First Aid System for Accidents Improved working environment Leave/break time beyond what is required by law
Ensure minimum wages as required by law
Overtime hours within the stipulated hours / payment of overtime as stipulated by law
Installation, maintenance and management of cafeteria/restroom facilities Enrollment in legally mandated benefits
Establishment of labor unions Prohibit child labor/forced labor/discrimination
Acquisition of Environmental/Labor Certifications

Status of evaluation of existing overseas suppliers
SHIMACHU*1 Calculated in accordance with the provisions of the “Law Concerning the Promotion of Active Roles for Women in Their Professional Lives” (Law No. 64, 2015).
*2 Based on the provisions of the “Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care
Leave (hereinafter referred to as “Child Care and Family Care Leave Law”)” (Law No. 76, 1991), the percentage of employees who took child care leave, etc. as per
Article 71-4-1 of the “Enforcement Regulations of the Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members Including Child
Care and Family Care Leave (Ministry of Labor Ordinance No. 25, 1991)” was calculated.
*3 Number of workers is calculated based on working hours.
*4 Of the employees who confirmed their intention to take childcare leave in accordance with the revision of the Child Care and Family Care Leave Law in April 2022, allemployees who wished to take such leave (excluding those who had not yet reached the desired time to take leave) have taken childcare leave.
*5 The percentage of non-regular workers is high among all workers, and the percentage of women among them is also high.
*6 The regular employees include employees who converted from fixed-term labor contracts to permanent contracts, and the percentage of women among them is high.
The regular employees include those who chose various work styles such as shorter working hours, and a higher percentage of them are women.
*7 Disclosure began in fiscal year 2022.

73

745,802

50.7

Occupational Health & Safety

FY2021635

Full-time employees of NITORI
Holdings, NITORI, Home Logistics,
Home Cargo, Nitori Facility, N+, andSHIMACHU

348,508

Number of qualified health managers

Number of new graduates hired

Target scope*Types of training programs applicable to the above hours: training programs for first to third year employees, training programs for visionary leaders,
global training programs, U.S. seminar, chain store theory training programs, coordination training programs, digital literacy training programs, etc.

Diversity & Inclusion

Percentage of female employees (%)

FY2022Average hours of education per employee

Total training hours
FY2021

FY2021

Number of cases

First half of FY2021

Second half of FY2021

First half of FY2022

Second half of FY2022

441

460

415

431

Existing overseas suppliers evaluation factors (*Some of the 46 items in the five categories of “Development,” “Quality,” “Logistics/
Trade,” “Corporate Stance,” and “Sustainability (items addressing environmental and social issues)” are excerpted from a total of 46 items.)

Risk of factory shutdown Status of secondary supplier management Respect for Human Rights
Creating a Safe Working Environment
Compliance with international standards for assessment of working environment (prohibition of child labor, forced labor, anddiscrimination; assurance of health and safety; observance of appropriate working hours; fair compensation; freedom of
association and possession of the right to collective bargaining, etc.) Sustainable forest utilization and conservation
Understanding CO2 emissions Amount (percentage) of recycled materials used
Visualization of Chemical Substances Acquisition of Environmental Certifications
Acquisition of other international certifications
74

Top Message

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Value Creation of NITORI Group

Sustainability

Data Center

Data Center

Financial & Company Data
Company Stock Information (As of March 31, 2023)
Outline of Shares

Total number of authorized shares: 288,000,000
Total number of issued shares: 114,443,496
Number of shareholders: 27,464
Listed markets: P rime of the Tokyo Stock Exchange
Sapporo Securities Exchange
Securities code: 9843
Fiscal Year: April 1st of every year to March 31st of thefollowing year
* The fiscal year ending March 31, 2023 is from February 21, 2022 toMarch 31, 2023.

Annual General Meeting of Shareholders: within 3months from the day after the last day of the fiscal year
Administrator of shareholder registry: Sumitomo Mitsui
Trust Bank, Limited

Distribution of Shares by Type of Shareholder
Treasury
stock

Financial
institutions

0.91%

31.61%

Individual
shareholders
and Others

12.39%

Securities
companies

1.20%

Other
corporationsin JapanForeigncorporations, etc.

23.48%

30.41%

Company Information (As of March 31,2023)
Major Shareholders
Name(As of March 31, 2023)

Company Name

Nitori Holdings Co., Ltd.

Number of
Ratio to the total
sharesnumber of issued
owned
shares (%)(thousands)

Representative

Akio Nitori, Representative Director & Chairperson (Chief Executive Officer)
Toshiyuki Shirai, Representative Director & President (Chief Operating Officer)

Address

Sapporo Head Office: 1-2-39 Shinkotoni 7-jo, Kita-ku, Sapporo, Hokkaido 001-0907;
TEL: +81-11-330-6200
Tokyo Headquarters: 3-6-20, Kamiya, Kita-ku, Tokyo 115-0043;
TEL: +81-3-6741-1235

Establishment

Established December 1967

Incorporated

March 1972

Revenues(Consolidated)

948,094 million yen

Ordinary Income(Consolidated)

144,085 million yen

Capital Stock

13,370 million yen

Number of Employees(Consolidated)

37,329 (including 18,420 average part-time employees)

NITORI Trading Ltd.

20,79918.34

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

15,518

13.68

Custody Bank of Japan, Ltd.
(Trust Account)

6,593

5.81

NITORI International
Scholarship Foundation

4,000

3.53

North Pacific Bank, Ltd.

3,860

3.40

Akio Nitori

3,410

3.01

Momoyo Nitori

3,078

2.71

National Mutual Insurance
Federation of Agricultural
Cooperatives

2,411

2.13

Nippon Life Insurance Company

2,056

1.81

STATE STREET BANK WEST
CLIENT-TREATY 505234

1,844

1.63

Notes:
1. T he numbers presented in “Number of shares held” above are calculated
based on the list of shareholders.
2. The Company’s 1,044,307 shares of treasury stock are excluded fromthe above list of major shareholders.
3. Calculations of equity positions exclude holdings of treasury stock.
4. The number of shares owned by The Master Trust Bank of Japan, Ltd.
and Custody Bank of Japan, Ltd. are shares held in securities
investment trusts and retirement benefit trusts.

NITORI Group List
Curtain Manufacturing Factory

Import Agent Companies

HOME DECO CO., LTD.

NITORI (China) Co., Ltd.
NITORI (Taicang) Trading & Logistics Co., Ltd
NITORI TRADING VIETNAM COMPANY LIMITEDNITORI TRADING (MALAYSIA) SDN.BHD.
NITORI TRADING THAILAND CO., LTD.
NITORI INDIA PRIVATE LIMITED

Overseas Manufacturing
Companies
NITORI FURNITURE
VIETNAM EPE

Trading, Planning & Development,
and Logistics Functions

Logistics Companies
Home Logistics Co., Ltd.
Home Cargo Co., Ltd.

Advertising Agency
Nitori Public Co., Ltd.

Stock Price and Turnover
Stock price (yen)Facility Management Insurance
Agent Business

Turnover (Thousand shares)

18,0003,500,000

17,000

Manufacturing
Functions

3,000,000

Nitori Facility Co., Ltd.

株式会社
ニトリ
ホールディングス

Advertising andPublicity Functions［持株会社］

16,0002,500,000

Facility Management
Functions

IT Functions
15,0002,000,000

14,0001,500,000

Store Management Companies
Nitori Co., Ltd.
-HOME FURNISHING STORE-HOME FASHION STORE-NITORI MALL
-DECO-HOME-Online Shopping Business-Renovation Business-Corporate Sales Business, etc.
SHIMACHU CO., LTD.
-SHIMACHU-SHIMACHU HOME’S-NITORI HOME’S

Sales Functions
Apparel Sales Company
N Plus Co., Ltd

13,0001,000,000

12,00011,00075

500,000

2022/42022/52022/62022/72022/82022/92022/102022/112022/122023/12023/22023/30Overseas Sales Companies
IT / Digital Company

Nitori Digital Base CO., LTD.

Carpet and Rug Manufacturing Company

NITORI TAIWAN CO., LTD.
NITORI (CHINA) HOLDINGS CO., LTD.
DECO HOME CHINA CO., LTD
NITORI (SHANGHAI) HOME FURNISHING CO., LTD
NITORI (SHANGHAI) HOME FURNISHING SALES CO., LTD
NITORI USA, INC.
NITORI RETAIL (MALAYSIA) SDN.BHD.
NITORI RETAIL SINGAPORE PTE.LTD.

SIAM NITORI CO., LTD.

76

NITORI Holdings Co., Ltd.
Sapporo Head Office
1-2-39 Shinkotonoi 7-jo, Kita-ku, Sapporo,
Hokkaido 001-0907
Tokyo Headquarters
3-6-20, Kamiya, Kita-ku, Tokyo 115-0043
Osaka Headquarters
1-1, Kamisu-cho, Toyonaka, Osaka 561-0823

https://www.nitorihd.co.jp/en/
2023086200