2Q FY2/20 Results Briefing
October 7, 2019 16:00 - 17:00

2Q FY2/20 Results Briefing Q&A Session Summary_____________Q&A Session
Q1: What trends have you witnessed as a result of the change in era name andconsumption tax rate hike? Moreover, December 23 will no longer be recognized as apublic holiday. What impact do you anticipate this will have on the peak Christmas period?
A1: We hear that the number of couples getting married is increasing substantially as aresult of the change in era name. The Company is enjoying a significant upswing in bridal
jewelry sales. Looking at existing store results for May 2019, sales of 4°C bridal jewelry
grew 7.5% and 14.5% through each of the specialty and department store channels,
respectively, compared with the corresponding period of the previous year.
We are also looking at a year-on-year pickup in existing stores sales for September
2019 on a standalone basis of 24.6% on the back of the rush in demand prior to theconsumption tax rate hike. While projecting difficult conditions due to a market correction
in October 2019, we expect to see a recovery from November.
As far as the busy Christmas period is concerned, sales have historically peaked on
December 23. Because this day is no longer recognized as a public holiday, we believethat traffic will be concentrated in the evening as customers visit stores after work. With
this in mind, we will work diligently to boost purchases by expanding televisioncommercials while undertaking various measures including promotional campaigns in abid to stimulate early demand. We will, for example, team up with a male entertainer for
the first time to push forward a series of plans.

Q2: What are your thoughts on monthly trends and the status of recovery?
A2: Buoyed by efforts to expand purchases for own use among our female clientele, 4°C
sales in the first half climbed 6.6% compared with the corresponding period of the previous
fiscal year. In specific terms, purchases by women for their own use climbed7.5% year onyear. There is a clear indication that women are finding our products increasingly attractive.
Turning to results in bridal jewelry, first half bridal jewelry sales at 4°C Bridal specialty
stores grew 3.4% compared with the corresponding period of the previous fiscal year, and4.1% year on year at department stores. On this basis, we believe we are enjoying arecovery trend.

Q3: You have identified efforts to control costs as one reason for the increase in profit.
What kind of cost control measures are you implementing?
A3: From a 4°C brand perspective, we have eliminated certain stores in such urban areas
as Sapporo, Ginza, and Shinjuku as well as regional areas including Hiroshima andSendai in a bid to improve profitability by optimizing the number of stores within each area.
As a result, we have lowered personnel, rent and other fixed costs while successfullyincreasing profit margins. In specific terms, personnel expenses and rent in the first half

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2Q FY2/20 Results Briefing
October 7, 2019 16:00 - 17:00

of the fiscal year under review declined 4% and 2%, respectively, compared with thecorresponding period of the previous fiscal year on a consolidated basis.
Depreciation fell approximately ¥50 million thanks largely to the closure ofunprofitable stores. This in turn has helped improve profitability.
The ratio of selling, general and administrative (SG&A) expenses also improved 1.3
percentage points year on year.
Moreover, positive steps were taken to lower the cost of sales ratio by cutting backthe AS’TY Group’s handling or unprofitable products in the Apparel Business. In the firsthalf of the fiscal year under review, the gross profit margin improved 1.7 percentage points
compared with the corresponding period of the previous fiscal year. Profit also increased
substantially.
age Co., Ltd. reported record high profit for the first half of FY2/20 on a nonconsolidated basis. In pushing forward the strategy of opening store that would further
entrench the company’s dominant position in the Kansai area, this record profit largely
reflected efforts to increase profit margins, including successful steps to improve the grossprofit margin and reduce distribution costs.

Q4: What is your outlook on purchases for own use trends? What kind of brand strategy
will you adopt for this market?
A4: Looking at trends in the Company’s current Jewelry Business, we believe gift-related
demand makes up 80% of the market, and purchases for own use the remaining 20%.
We will work to further expand purchases for own use demand while maintaining giftrelated sales, an area of inherent strength. We recognize that efforts to expand purchases
for own use demand will entail capturing a share from other brands. From our perspective,
we believe that all channels offer the potential for growth.
Expanding purchases for own use demand among women and also be interpreted
as increasing support from the female market. By attracting the increased support ofwomen, we also expect to reinforce gift-related demand.

Q5: How would you summarize the background behind the downturn in business resultsover the past three fiscal years? How will you make use of this knowledge whenrebranding the 4°C brand?
A5: Existing store sales continued to increase each period from the fiscal year ended
February 2011 to the fiscal year ended February 2016. From a profit perspective, we also
reported record high earnings in each fiscal year over this period. As a result of expanding
the number of stores, we over-sold items that were easy to market. Looking back, thismay have driven away certain customers as they grew bored of our product lineup.
Through rebranding, we will work to upgrade the status of the 4°C brand. We will also
take steps to lift average spending per customer while expanding the purchase for own
use market.

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2Q FY2/20 Results Briefing
October 7, 2019 16:00 - 17:00

Q6: What costs do you envisage may arise as a result of efforts to rebrand the 4°C brand?
A6: We have sought input from a well-known overseas creative director, which in turn is
projected to generate costs. In addition, we anticipate incurring promotional costs aimed
at enhancing our profile in the aftermath of rebranding. We intend to factor in all of theseprojected costs when formulating plans and forecasts for the next fiscal year.
We will implement rebranding initiatives while taking into consideration plans andforecasts to ensure that there is no major change to our earnings structure and platform.

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