Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Top Message

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

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Top Message

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

06

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Top Message

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.

08