FY2/18 Results Briefing
April 9, 2018 16:00 - 17:00

Q&A Session
Q1
Will YONDOSHI (4°C) Bridal Jewelry return to its original approach of enhancing bridal fairstrategies?

A1
As we successively progress with renovations to our shop formats, in addition to enhancing thesense of luxury, we are changing the stage on which we exhibit our products in order to appeal to
our customers in a visual manner as well. Moreover, we are aiming to recuperate business results
by offering new products and new bridal fairs.

Q2
What kinds of initiatives are you taking during the first half in terms of extending the duration ofbridal fairs and enhancing promotions while keeping down selling, general, and administrative
expenses?

A2
We have extended the duration of our bridal fairs compared with the previous fiscal year by morethan 40 days, and have consistently rolled-out various novelty items. In terms of bridal fair content,
we are investigating services that are more likely to remain in the hearts of our customers, suchas new diamond upgrades.

Q3
What is the current market environment for jewelry in Japan?

A3According to one think tank, the market is flat, and is expected to grow gradually until the Tokyo
Olympic Games. Although sales of foreign luxury brand items exceeding ¥10 million in price havebeen very healthy, this is likely due to the contribution of purchases made by higher
socioeconomic groups that are supported by stocks and the purchasing activities of Japan-boundforeign travelers from wealthier classes. Expensive jewelery in Japan centered on the price rangeof ¥300,000 to ¥1 million has struggled. Meanwhile, we interpret this situation as meaning there
has not been a significant change in the flow of customers within the accessory sales floors

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April 9, 2018 16:00 - 17:00

located on the first floors of department stores.

Q４
Will you be taking your price strategies in the direction of strengthening the middle and upper
price ranges?

A４
Starting in the current fiscal year, we have been implementing roll-outs by price range. We have
set the 1st Line as ¥10,000 to ¥30,000, the 2nd Line as ¥30,000 to ¥70,000, and the 3rd Line as¥70,000 and higher. In terms of the 2nd Line, captive demand from women is strong. Thecustomers of the 3rd Line are primarily in their 30s, 40s, and 50s, and often purchase such items
for important events, like anniversaries.
The sales composition by price range for FY2/18 was roughly 48% for the 1st Line androughly 35% for the 2nd Line, with the remainder accounted for by the 3rd Line. We foresee roomfor growth in both the 2nd and 3rd Lines, so we are placing our energy into maintaining our existingcustomers and creating new customers by increasing the sales efficiency of the 1st Line andexpanding the sales floor area for the 2nd and 3rd Lines.

Q5
In terms of new store formats, how many store openings have you scheduled for each brandduring FY2/19 and during the three years of the new Medium-Term Management Plan?

A5
By the end of FY2/19, we hope to roll-out the new store formats to a total of 11 stores, including
two new store openings. Moreover, we also attempted to develop a new format specifically for thecanal4°C brand, which we rolled-out for one new store opening. At present, future renovationplans for the new canal4°C store format are still undecided.
In terms of the three-year period of the new Medium-Term Management Plan, at present wewould like to refrain from providing a specific answer.

Q6
What are your base assumptions for the three-year period from FY2/19 to FY2/21 in regard toexisting stores in the Jewelry Business?

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April 9, 2018 16:00 - 17:00

A6
For FY2/19, we have planned a budget based on a 104% increase over the previous fiscal yearfor all existing stores throughout the company. As for FY2/20 and FY2/21, the Medium-Term
Management Plan places maximum emphasis on enhancing brand value, so the budgets forthese years are built upon on an a base assumption of a 102% increase over the previous fiscalyears.

Q7
In addition to the trend towards a stronger yen, in FY2/19 material prices are expected to decline,
which is seen as making for a business environment that will allow you to easily secure a grossprofit margin. What are your base assumptions for the gross profit margin?

A7
Our base assumption for the gross profit margin is a forecast increase of 0.4 points over theprevious fiscal year in the Jewelry Business during FY2/19. On a consolidated basis, we haveforecast an increase of 0.7 points, which stems from the change in the segment mix resulting fromthe larger part of the sales composition accounted for by the Jewelry Business.

Q8The numerical forecast for the Jewelry Business as part of the Fifth Medium-Term Management
Plan is built upon a forecast increase in sales of approximately 6% and an operating income rateof 17.6%, the same rate as the final fiscal year of the previous Medium-Term Management Plan.
How are the results of each of the Jewelry Business strategies included in the numerical forecast
for the Fifth Medium-Term Management Plan?

A8During the three years of the Fifth Medium-Term Management Plan, we will not pursue immediate
sales and income, but will enhance brand value by investing aggressively in human resources
and promotional activities, for example. We see this as an important three years in order to onceagain trace a growth trajectory in the next Medium-Term Management Plan and beyond.

Q93

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April 9, 2018 16:00 - 17:00

MAISON JEWELL has built up know-how over the past few years, and it seemed as though youwere approaching a period of more store openings, but you have not scheduled any new store
openings for the current fiscal year. Please tell us your thoughts in this respect.

A9In part because the degree of brand awareness regarding MAISON JEWELL is still not very high,we feel that we still require some more time to establish operations. Originally, we wanted toexpand store openings in the Fifth Medium-Term Management Plan, but we need a little moretime. We did open a new store at AEON MALL Miyazaki in March 2018 and have received offers
for other store openings, so we will watch the trends and hope to investigate transitioning to astage of more store openings when the timing is right.

Q10In contrast to 4°C Jewelry, which is working to increase spending per customer, canal4°C isworking to increase the number of customers, but what strategies are you taking for this purpose?

A10As for canal4°C, at present we are focusing on product development using 10 carat gold, inparticular. Since the spring, customer growth has led to a positive trend, so we will continue towork on product development and promotional activities into the future.

Q11
What is the price range for the expanded lineup of Luria 4°C bags?

A11
Luria 4°C was launched in 2014 as a purse-oriented brand, but at present we are also
aggressively proceeding with product development of bags. Sales of bags at existing stores grewsignificantly over the previous fiscal year in part due to a greater number of items. In terms of theprice range, products made of assorted materials sell for around ¥20,000, while products madeof leather sell from the upper ¥20,000 range to the ¥30,000 range.

Q12
What are the specific details and introduction period for introducing AI to the e-commerce4

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April 9, 2018 16:00 - 17:00

business?

A12
As one use of AI, we are moving forward with the introduction of a conversation tree type chatbot
that proposes products suited to the customer's needs after customers have answered a seriesof multiple-choice questions displayed on our e-commerce site. We plan to introduce this system
during April.

Q13
Although you have taken a direction that also includes rolling out TV commercials for BridalJewelry, are you also implementing strategies like online advertising to capture customers in theyounger generation?

A13
The goal of our TV commercials is to promote brand awareness and to promote access to oursite. Our consumers acquire various type of information through multiple sites, including Mynavi
Wedding, zexy.net, and Hanayume.net. So as we consider the balance between brand image andonline advertising, we have also been moving forward on collaborations with Mynavi Weddingand Hanayume, for example, since February and March in order to bring people to our sitethrough various platforms. Meanwhile, 4°C Bridal also began using LINE from the second half oflast year. And 4°C Jewelry has been working to enhance its use of Instagram, Twitter, andFacebook, and will place greater emphasis on online advertising.

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