News Release Dated June 19, 2024
Company: AOKI Holdings Inc.
Representative: Haruo Tamura, President
Stock code: 8214, TSE Prime
Contact: Satoshi Eguchi,
General Manager of IR/PR OfficeTel: +81-45-941-1388

Action to Implement Management that is Conscious of
Cost of Capital and Stock Price
The AOKI Holdings Board of Directors approved a resolution today concerning a policy for activities toanalyze and evaluate the current status of the company regarding management with consciousness of thecost of capital and stock price and improvements for implementing this management. The goal is thesustained growth of business operations and the medium to long-term growth of corporate value.
Please refer to attached documents “Action to Implement Management that is Conscious of Cost of Capitaland Stock Price” for details.

Action to Implement Management that is
Conscious of Cost of Capital and Stock Price

AOKI Holdings Inc.
June 19, 2024

Analysis of the Cost of Capital and Return on Equity

Current Status
vs.
Prior YearsIn FY3/14, Fashion Business earnings rose to a record high in part because of a surge in demand as people rushed to make purchases before aconsumption tax hike. The result was an ROE of 8.8% that was well above the cost of capital of 5.3% and a PBR of one.

In the following years, AOKI Group opened many stores to increase its market share. However, a decline in the operating margin caused in partby a change in the business climate brought down asset utilization efficiency as well as the ROE and PBR.

Although earnings fell even more during the pandemic, the ROE has been increasing due to measures to reflect changes in the business climate.

Currently, the PBR is below one, mainly because the operating margin is low and the ROE is below the cost of capital.

ROE and Cost of Capital
(%)

10.0

5.0

ROE

8.8

7.5

6.9

5.7

5.3

5.5

PBR

Cost of capital

5.7

6.0

5.1

5.1

6.2

6.1

4.3

3.2

0.0

6.4

6.3

5.8

6.5
5.6

2.0

1.2

1.1

1.0

PBR 1.0

1.0

1.0
0.9
0.9

0.7

0.7
0.8

0.5

0.6

0.3
-5.0

0.3
-9.0

-10.0

Net Sales/Operating Margin/No. of Stores Opened
Net sales

No. of stores opened

Operating margin100

FY3/20FY3/210.4

FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/22

FY3/23

FY3/24

Premise for the Cost of Capital(No. of stores)

200
1500.40.0

FY3/14 FY3/15 FY3/16 FY3/17 FY3/18 FY3/19 FY3/20 FY3/21 FY3/22 FY3/23 FY3/24(Billions of yen)

0.4

(Calculated by AOKI Holdings based on the CAPM as of the end of March 2024)

200

11.4%

150
10.4%

9.4%
7.4%

7.5%

6.9%

5.8%
3.7%

50

7.4%

3.5%

0100

Cost of capital

50

6.5％

0-4.0%(50)

FY3/14 FY3/15
FY3/15 FY3/16
FY3/16 FY3/17
FY3/17 FY3/18
FY3/18 FY3/19
FY3/19 FY3/20
FY3/20 FY3/21
FY3/21 FY3/22
FY3/22 FY3/23
FY3/23 FY3/24
FY3/24
FY3/14
FY3/14
FY3/15
FY3/16
FY3/17
FY3/18
FY3/19FY3/20FY3/21
FY3/22
FY3/23
FY3/24

Copyright © AOKI Holdings Inc. All Rights Reserved.

Cost of capital ＝ Rf ＋β×(Rm-Rf)

(50)

＞

ROE

5.6％

Rf(Risk-free rate) Current yield of 10-year Japanese government bondsβ(Beta value)
60-month average of AOKI Holdings stock historical beta vs. TOPIXRm-Rf (Risk Premiums) Average using the historical and implied methods

2Plan and Disclosure of Information (1) To provide guidelines for measures to improve return on equity, AOKI Holdings announced a medium-term plan on May 10, 2024, that covers thethree-year period ending in March 2027.
 In the plan’s third year, the goals are sales of ¥200 billion, operating profit of ¥18 billion, an operating margin of 9%, an ROE of 7%, and a PBR of one.
 To raise the PBR to one, AOKI Holdings plans to increase distributions to shareholders even more and allocate capital effectively.
*Please see our website for the Medium-Term Management Plan FY2024-2026 (https://ir.aoki-hd.co.jp/en/ir/irfiling/management-plan.html)

Consolidated Earnings Plan for FY2024–2026
Grow profits by approximately 10%
annually to achieve an operating profit of¥18 billion in three years.

Review each business and develop new
businesses to aim for an operating profit of¥30 billion in ten years.

Management Targets (FY2026 financial targets)
FY2023 results

FY2026 target

FY 2023 ▶ 2026

Net sales¥187.7 billion¥200.0 billion＋2.2%/yr*

Operating profit¥13.8 billion¥18.0 billion＋10.0%/yr*

Operating margin

7.4%

9.0%＋1.6pt

ROIC

5.2%

6.7%

＋1.5pt

ROE

5.6%

7.0%

＋1.4ptEPS

90 yen120 yen＋30 yen

PBR

0.7×

1.0×

＋0.3pt1,334 stores

1,434 stores＋100 storesGroup overall store numbers Directly managed stores*Compound Annual Growth Rate (CAGR)
Copyright © AOKI Holdings Inc. All Rights Reserved.

3

Plan and Disclosure of Information (2)Medium-term management plan (FY2024 to FY2026) targets to achieve a PBR of 1
Basic policy:
Continue to maintain

Dividend payout ratio

50% or more

Dividend payout ratio

DOE (Dividend on Equity)
Select whicheveris higher

3% or more

30% or more
Total return ratio

Total return ratio 70% or more

50% or more

Capital Allocation for the Medium-Term Management Plan Period
Cashflow
New and growth investments(M&A)¥10 billion

Anniversaire and Bridal Business¥2 billion

Shareholder returnmeasures
Operating CF¥20 billion¥60 billion
Store andcapital investments¥30 billion

Cash inCopyright © AOKI Holdings Inc. All Rights Reserved.

Entertainment Business

Fashion Business

Breakdown ofstore openings
and capital
investments¥8 billion¥20 billion

Cash out4Implementing Management that is Conscious of Cost of Capital and Stock Price

Business strategies/Financial strategies

IssuesHigher ROE

 New products and services that match changes in market conditions and revisions

Improvement in
profitability

PBR

Below one
FY3/24

Improvement inasset efficiency

0.7x

and upgrades to business models
 Appropriate responses to rising expenses, provision of value-added products andservices
 More efficient advertising and marketing and use DX to operate stores efficiently
 Rebuild store models in every business segment
 Reduce investments needed to open stores and improve sales area efficiency (salesper square meter)
 Use OMO (online-merge-offline) and other activities to increase inventory efficiency
 Reduce assets by selling real estate that is unused, investment securities and otherassets

ROE below
cost of capital

Appropriate
financial leverage

 Keep debt at an appropriate level Substantial distributions to shareholders, including repurchasing stock, inaccordance with the targets of the current medium-term plan

FY3/24
Cost of capital

Non-financial strategies

Higher PER

6.5%
ROE

5.6%
Copyright © AOKI Holdings Inc. All Rights Reserved.

More IR/SRactivities

 Increase constructive dialogues with More English-language materials forinvestors and shareholders
 Increase the volume and transparency
of information disclosed Increase the disclosure of non-financial

overseas investors

information5