Financial Results Briefing for FY02/23 Q1- Q&A Summary Date:
July 8, 2022, Friday, 10:00-10.30 am (JST)
Presenter: Osamu Sato, Director in charge of Finance, Accounting,
Investor Relations

Q. Did the operating profit of ¥2.0 billion for the first quarter exceed what wasforecast? Also, if you have any concerns about the second quarter and beyond,could you please tell us what these are specifically for both domestic andoverseas operations?
A. We have not disclosed operating profit forecast figures for the first quarter. We wererelatively conservative in our forecast for the first half of the year, and were equally sofor the first quarter. In comparison to our forecast, the results for the first quarter werestrong.
Looking ahead to the second quarter, our concerns center around the increase in thenumber of COVID-19 cases and the sharp rise in prices of raw materials, which
includes the impact of exchange rates. These issues are predicted to gradually takeeffect in the second half of the fiscal year, and we intend to react by restricting productdiscounts on the sales front.
In addition, there were distribution disruptions in the first quarter as 60 to 70% of ourproducts are purchased from China.
While I believe we will see this improve in the future, the situation will likely be
influenced by the spread of COVID-19.
Q. Is it correct to assume that the results of measures to improve profitability for example, the overhaul of bulk outsourcing of production to trading
companies, visualization of raw materials, and so on - have taken effect in thefirst quarter?
A. We have been able to streamline the flow of goods due to the abolition of the branch
office system several years ago, bulk distribution, and the promotion of OMO services
that started last year. In sales, we are seeing improvements in gross profit margins
due to the restriction of discounts. We have been promoting reforms in supply chain
management (SCM), from procurement of raw materials to manufacturing anddistribution, which have also been producing results. In addition, we are promoting theintroduction of product lifestyle management (PLM).
Q. You mentioned that operating profit was strong relative to the forecast,though it only seems to have exceeded the forecast slightly. It will be difficult
for the market to reasonably evaluate these results if you leave the forecast
unchanged due to possible risks unless you state by how much it exceeded theforecast. Could you give us a sense of the scale?
A. It is difficult to give specific figures. The first quarter net sales provided in theSummary of Monthly Net Sales showed that net sales at like-for-like stores were 122%of last year’s level, while this was 115% at all stores. However, we had conservatively
forecast that net sales would be slightly above last year’s levels.

If July and August continue at the same levels as the first quarter, operating profit for
the first half will exceed our forecast by a considerable amount.
Q. Are you making organizational reforms to strengthen product developmentwith an aim to creating products that capture the interest of customers? Are you
making changes such as appointing new designers and pattern makers?
A. We have been developing products that are not part of a department store brand,such as uncrave and #NEWANS, under a new organization staffed by younger
employees. These products have been performing well.