Results Briefing Summary
Record-high gross profit margin, but profits drop onweaker sales and higher logistics costs
Summary of FY3/19 Consolidated Results
FY3/18

Consolidated(\ million)
ActualYoY

FY3/19Composition
ratio

ActualComposition
ratio

ChangeReference
ChangePct.
Change-4.8% 104,000(5,331)-5.1%

Pct. Change

10/31/18
forecast

103,589

100.0%

98,668100.0%(4,921)

Product Development
Model Business

49,95848.2%

50,161

50.8%

203

0.4%

52,000(1,838)-3.5%

Wholesale
Model Business

50,60648.9%

45,47446.1%(5,132)-10.1%48,900(3,425)-7.0%

Others

3,024

2.9%

3,032

3.1%

80.3%

3,100(68)-2.2%Gross profit

27,281

26.3%

26,16026.5%(1,121)-4.1%

28,000(1,839)-6.6%

SG&A expenses

19,512

18.8%

20,598

20.9%

1,086

5.6%

21,100(501)-2.4%Operating income

7,769

7.5%

5,561

5.6%

(2,207)-28.4%

6,900(1,338) -19.4%

Ordinary income

8,001

7.7%

6,065

6.1%

(1,935)-24.2%

7,000(934) -13.4%

Net income

5,490

5.3%

4,263

4.3%

(1,227)-22.4%

4,650(386)

Net sales-8.3%

Compared with FY3/19 forecasts revised on October 31, 2018, sales in the Product Development Model
Business were ¥1,838 million lower than projected (3.5% below forecast), mainly reflecting poor sales of
in-house brand TVs. In the Wholesale Model Business, the segment's famous brands business wasaffected by an adjustment in procurement volumes by a major retailer in the first half of the year, which led
to a sharp drop in the supply of certain luxury brand products, a key element of the segment’s sales plan in
the second half of the year. In response, the business increased sales of mid-range brands, but that wasinsufficient to offset the shortfall in famous brands. In the segment’s national brand (NB) gift processing
business, sales of gift sets declined year on year. That was mainly due to an increase in retail prices for giftsets to reflect higher delivery costs, and a record-low catch of crabs, the ingredient for canned crab, themain item in gifts sets. As a result, sales in the Wholesale Model Business were ¥3,425 million lower thanprojected (7.0% below forecast). In addition, operations in both business segments were affected by atyphoon that made landfall in September, the peak period for shipments of autumn and winter products.
Our proprietary logistics center in Sennan, Osaka took a direct hit from the storm, which also prevented
products from passing through Kansai Airport and the ports of Osaka and Kobe. The disruption to supply
chains had a negative impact on sales.
Operating income and other profit line items fell short of forecasts due to an increase in distribution costs.
That reflected higher transportation expenses and an increase in costs to tackle some operational issues
related to the startup of the Kanto Logistics Center.

Summary of FY3/19 Consolidated Results by Business Segment
Our operations are largely divided into two business segments: the Product Development Model Businessand the Wholesale Model Business. The former plans, manufactures and sells original Doshisha products,
while the latter is a comprehensive sales proposal business and mainly focuses on selling and planningsales promotions for leading domestic and overseas brands and products from major manufacturers inJapan. The product range in the Wholesale Model Business includes well-known brand watches, bags andother items, traditional mid-year and year-end gift assortments filled with items carefully selected fromleading domestic suppliers, and NB processed products.
(¥ billion)

140120

Product Development
Model BusinessFamousbrands

Wholesale
Model BusinessOthers* Figures in ( ) are composition ratio
Figures in [ ] are year on year change

107.0

103.5 [-3.2%]

100

80

NBprocessing

49.1(45.9%)

49.9(48.2%)[+1.7%]

98.6 [-4.8%]
50.1(50.8%)[+0.4%]

60

26.1

54.4
200

23.5

(24.4%)

40(50.8%)

28.2(26.4%)
2017/350.6(48.9%)[-7.0%]

19.3(22.7%)[-10.0%]27.0(26.1%)[-4.1%]

2018/3(19.6%)[-17.8%]45.4(46.1%)[-10.1%]26.1(26.5%)[-3.5%]

2019/3

FY3/19 Consolidated Results by Sales Channel
Sales in the hardware store channel fell by 3% year on year. In the discount store retailer channel, strong
sales of homewares were insufficient to offset weaker sales of TVs and famous brands, which account fora high share of sales in the discount retailer channel. As a result, sales declined by 3% year on year. Sales
increased by 2% in the online channel, supported by efforts with e-commerce retailers to grow sales. Sales
to single-price retailers increased by 20% year on year on the back of strong growth in accessories andgeneral merchandise. Sales to general merchandisers declined by 18%. While demand for household
goods and summer merchandise was strong, weak sales of mid-year gifts and famous brands had anegative impact. In addition, sales to large electronics retailers and watch and clothing specialty storesdeclined by 23% year on year amid weaker demand for luxury brand watches.

Consolidated Forecasts for FY3/20
FY3/19Consolidated(\ million)
1H

2H

48,47750,190

Product Development
Model Business

24,580Wholesale
Model Business

FY3/20
Full year

ChangePct.
Change1H2H98,66850,00053,000103,000

4,331

4.4%

25,58150,161

25,15027,75052,900

2,738

5.5%

22,38823,08545,47422,70023,00045,700225

0.5%

Others

1,508

1,524

3,032

2,150

2,250

4,400

1,367

45.1%

Gross profit

13,26812,891

26,16013,90014,40028,3002,1398.2%

SG&A expenses

10,51010,08820,59810,80010,80021,600

1,001

4.9%

Operating income

2,758

2,803

5,561

3,100

3,600

6,700

1,138

20.5%

Ordinary income

2,845

3,219

6,065

3,100

3,700

6,800

734

12.1%

Net income

1,861

2,402

4,263

2,150

2,500

4,650

386

9.1%

Net sales

Full year

YoY

We expect both sales and profits to increase in FY3/20. We forecast net sales of ¥103.0 billion (+4.4% on
a year-on-year basis), gross profit of ¥28.3 billion (+8.2%), selling, general and administrative expenses of¥21.6 billion (+4.9%), operating income of ¥6.7 billion (+20.5%), ordinary income of ¥6.8 billion (+12.1%)
and net income of ¥4.65 billion (+9.1%). By business segment, we forecast sales of ¥52.9 billion (+5.5%year on year) in the Product Development Model Business and ¥45.7 billion (+0.5%) in the Wholesale
Model Business.

Doshisha’s Value Creation Cycle (Ability to Generate Profits)Ourstrengths

areourbusiness base, which supports
our efforts to build a company
with aspirations that will neverfail,andthreebusinessmodels on which our businessportfolio is built.
Together,thesestrengths

supportadaptableriskmanagement, which allows us
to adapt to changes in themarket while spreading risk
and constantly taking on new
business challenges.
We

also

have

powerfulbusiness assets: the sales channels of 4,800 business partners in various industries and sectors and morethan 2,100 suppliers with proprietary and third-party factories supplying a wide range of products. Backed
by our product planning capabilities, we constantly keep a close eye on retail environments and play acentral role in handling business flow. We are involved in all parts of the retail process, from productplanning, development, procurement and sales area design to sales support and after-sales services. As
our product portfolio covers a wide range of different categories, we supply numerous different products inclothing, food and homewares, with more than 50,000 SKUs handled by our operations each year andproducts ranging in price from ¥100 merchandise to luxury watches.
Our vision to “create an unrivalled company worldwide” guides all our efforts. Predicting changes in theoperating environment and anticipating what consumers want is likely to become even more difficult in thefuture. That uncertain outlook means we need to develop our business with more emphasis on creating
new product concepts and ideas by asking ourselves three key questions – what do consumers want, whatis “new” and what is “interesting”? We also have to secure the No.1 position in the businesses and fields
that we target, no matter how small the market is and without leaning too much on either the clothing, foodor homewares categories. Our presence in such a wide range of product categories may make it hard toaccurately define our business, but it also means we have no direct competitors. That approach will help
us to “create an unrivalled company worldwide.” Through that process, we will strive to increase
Doshisha’s corporate value by helping consumers lead richer lives and by becoming a more appealing
company to all our stakeholders.

Business Strategy for FY3/20<Product Development Model Business>
We aim to step up development of products with unique value, focusing on the following three themes: (1)Target niche markets: capture demand in niche markets ignored by major companies. Examples include
snow cone makers and steel storage racks. We aim to increase our sales areas to accommodate a broad
range of products, from price-competitive products to high value-added models with good functionality anddesign and appealing narratives that arouse the interest of consumers; (2) Transform niche markets intomarket segments: gain leading positions in large markets by focusing on narrow product categories andconcepts. One example is the stainless steel bottle market. Previously, high-performance bottles were themain category in the market and major manufacturers had a dominant position. However, we created aniche category of stainless steel bottles aimed at women by developing products based on a designconcept with a unique world-view. Another example is baked sweet potato makers, a new product categoryborn out of segmentation in the hot plate market; (3) Create niche products: develop products aimed atniche markets such as ceiling circulators, developed as a new type of product that combines two functions– a fan for air circulation and LED ceiling lights. This product was designed in reponse to unmet consumer
needs and will make life more comfortable and enjoyable for consumers.
<Wholesale Model Business: Famous Brands>
Leveraging our strengths in procurement, we handle a very large number of brands across a wide pricerange, from well-known names to up-and-coming labels. With this portfolio, we aim to expand our sales
further by supplying the right brands to the right sales areas and retail stores. We will offer acomprehensive sales support platform to retailers, from sales area and promotional support based on ourbrand portfolio to digital marketing strategies designed to influence consumer buying behaviour.
<Wholesale Model Business: NB gift processing>In NB gift processing, we supply gift assortments for the mid-year and year-end gift market. We source NB
products individually and arrange them into various gift sets at our own warehouses based on specificthemes and concepts that appeal to consumers. Going forward, we aim to increase market share by using
more accurate marketing strategies and by strengthening cooperation with retailers and NB manufacturers.
We also plan to expand our gift set lineup to cover events all year round, such as Mothers and Fathers Day
and family reunions, to create a broader market for occasions other than the traditional mid-year andyear-end gift-giving seasons. In addition, we will work with technology startups and local industries toactively develop new product ideas, applying new IT-based marketing approaches with regional

characteristics.
<Companywide Strategy: Logistics Reforms – Bring logistics in-house and increase efficiency totransform the earnings structure>
We expect distribution costs to rise even further in FY3/20 due to a labor shortage in the transportation
sector. In response to surging costs, we will use our dual-hub proprietary logistics network moreproactively to implement a number of measures: reduce warehouse storage fees by switching fromthird-party providers to our own logistics centers; cut outsourcing costs by using in-house assets for
product shipment and processing work; and reduce transportation costs by sharing and combining
shipments instead of distributing individual products from optimal locations.
<Companywide Strategy: Branding – Reinforce branding based on our "Doshisha’s here too!" message>
Based on the "Doshisha's
here too!" message, we will
run a promotional campaign
to reinforce our corporate
brand.
We renewed our corporatewebsite in April this year.
The design concept of thenew website is to promote
ongoingcommunication

with consumers through ourproducts. Consumers are
surroundedbyproductsthat make everyday life
more fun, interesting andcomfortable, often without even noticing those products. We aim to provide that kind of environment andbuild closer relationships with consumers to increase corporate value.
<Companywide Strategy: Enhance manufacturing capabilities – Orion to join Doshisha Group>
We established Orion Co., Ltd. in December 2018 to take over the professional services (PS) businessacquired from Orion Electric Co., Ltd., which owns the ORION TV brand. Orion’s main business isproviding PS for solution design, circuit board design and software development as part of productdevelopment. Leveraging those strengths in product development and technology, Orion and Doshisha will
work together to develop new technologies and reinforce quality assurance. We also aim to grow sales ofTVs, as the acquisition will again allow us to use the ORION brand.

FY3/20 Dividend Policy
We aim to pay a consistent and stable dividend based on a apayout ratio target of 30%. For FY3/20, weplan to pay a full-year dividend of ¥50 per share.
(May 29, 2019, Tokyo)