FY2020 to FY2022
Medium-Term Management
Plan Briefing Session Material(U.S. Accounting Standards)
June 2019
Wacoal Holdings Corp.

1

Goals and Specific Efforts（Management Strategy from FY2020 to FY2022)

Hironobu Yasuhara,
Representative Director and President

2

Hello, everyone.
I’d like to express my thanks, as many people are attending this session today.
First of all, I’ll talk about the management strategy of Wacoal Group for the coming 3 years until
the term ending March 2022.

Group Philosophy: Creation of Social Value 70th Anniversary: To be a company that is expected
to survive beyond 100 years
MissionWe will contribute to society by helping
women to express their beauty.

We, the employees and management of Wacoal,

Visionwill maintain a refined corporate culture based on
mutual trust and will continually strive to makethe Company a global leader in the industry.

When we rephrase “maintain a refined corporate culture based on mutual trust” in modern
words, it is nothing less than:・ being a company that is trusted by all stakeholders; and・ implementing management with an emphasis on ESG and creating social value, instead of
focusing only on economic value.

3

Please see page 3.
In November this year, our company will commemorate the 70th anniversary of establishment.
What I want to explain first to you is what kind of state Wacoal Group aims to achieve, tobecome “a company that is expected to survive beyond 100 years.”
Our mission and vision are written here.
These two were announced by the founding president Koichi Tsukamoto broadly inside andoutside our company in 1964, for the purpose of introducing his belief about businessadministration when our company was listed in the stock market, while commemorating the15th anniversary.
Our vision is “to maintain a refined corporate culture based on mutual trust.” This remains anessential concept for our company.
In terms of the present age, our company needs to be trusted by all stakeholders. In parallel,
we need to create social value in addition to economic value, by putting importance on ESG(environment, society, and governance) in our business administration.
I think that the founder Koichi Tsukamoto infused this ethos into the phrase: “a refinedcorporate culture.”Our Ideal Form
 Aiming for the global Wacoal as a Group“The vision of “global Wacoal” means:
1. The Wacoal Group's products, services and actions on social issues arehighly trusted by customers and all other stakeholders in the markets
worldwide.
2. The number of countries and regions in which we operate business keeps onincreasing.
3. Under the Group network, we are operating businesses in a coordinatedmanner on a global scale.
4. We always provide pioneering products to the world market and continue tolead the field of underwear culture.
5. Group mission and philosophy are instilled in employees across the world.

4

Next, please see page 4.
In the coming 3 years, our company will enhance our efforts to attain an ideal state, that is, a
global Wacoal as a group.
By utilizing our managerial resources and group network as much as possible, we will fortify thesystem for always supplying pioneering products to the global market. At the same time, we willkeep cultivating the domain of the underwear culture, by utilizing digital technology, etc.
We’d like to evolve our company, so that our stakeholders around the world will deeply trust
Wacoal Group’s products, services, and activities of tackling social issues.

Medium- and Long-Term Road Map (Business Targets)

The goals in 9 years (FY2028):
Sales combined with equity-method affiliates (overseas joint ventures):
To exceed ¥300 billion
Consolidated ratio of operating income/ROE: Both to exceed 10%.

¥300 billion, totaling Wacoal
HD and equity-method
affiliates

Stretched targets¥320 billion¥50 billion¥50 billion
Sales ofequity-method
affiliates

Consolidated
sales of
Wacoal HD¥43.8 billion¥194.2 billion

Consolidated
sales
CAGR
₊2.8%
（Actual)¥250 billion

Ratio ofoperatingincome:4.2%

FY2019(Reference) Converted to retail prices: About¥350 billion¥270 billion

Consolidated
ratio ofoperatingincome andROE to be
more than
10%(FY2028)
FY28(FY2028 stretchedtargets)
FY28(Reference) Converted to retail prices: About¥450 billion

5

Please see page 5.
Last year, it was decided that Expo Osaka is scheduled to be held in 2025 for the first time since
it was held in 1970, which was the historical year for our company, too.
In that year, we established joint ventures in South Korea, Thailand, and Taiwan, to start selling
the Wacoal brand in overseas markets. As the next year will see the 50th anniversary of start ofour overseas business, the total net sales in these three regions have exceeded 40 billion yen.
Wacoal brand’s market shares in these regions are equal to or larger than that in Japan.
As shown here, we’d like to aim to achieve net sales of 300 billion yen, including the sales ofoverseas joint ventures subject to the equity method, in the term ending March 2028, 9 years
from now, as a medium- and long-term business goal. In parallel, we’d like to aim to increase
consolidated ratio of operating income and ROE to over 10%.
It is still nearly 10 years ahead, so we plan to actively invest in new and promising businessdomains, to generate competitive advantage in the global market, while setting stretchedtargets. We’ll endeavor to achieve non-continuous growth and improve our corporate value
further.

Positioning and Basic Policy of the Next Three Years(Medium-Term Management Plan Period) Face the reality, identify future demand, boldly reform,
and focus on growth.
1. Achieve strong growth in Japan and overseas
2. Examine the potential of unprofitable businesses and brands, andpromote review and structural reform of group businesses where
no business will be safe from such review or structural reform
3. Enhance corporate value by improving economic and social values

With a focus on the above: We will respond quickly to individual business issues.
 We will establish sustainable business foundations such as CSR procurement, diversity and inclusion andfocus on creating new values.
 In addition to improving profitability and capital efficiency, we will carry out appropriate shareholder returnand reduction of strategically held shares, and build proper asset balance.

6

Next, please see page 6.
Considering the ideal business outcome 9 years from now, this page defines the coming 3 years
and describes our basic policy. In the coming 3 years, I’d like to “grasp the actual situation,
estimate future demand, and then implement drastic reform, while putting importance on
growth.”At the result briefing session last month, I talked about these 3 basic policies.
Under these policies, we’ll address each business issue in a swift manner. In addition, we’ll
improve profitability and capital efficiency, return profits to shareholders appropriately, reduce
strategically held shares, and realize a proper asset balance.

Management Results from the Past Three Years and Management Issues for the Next Three Years

Results from the past 3 years
1.

Breaking out of the business model thatoveremphasized domestic wholesale

2.

Improvement of management efficiency
through reorganization and sales policy review- Return reduction, discount sales reduction

3.

Completion of preparation forcommercialization of next-generation customer
service by digital technology

4.

Growth of the second brand that is a pillar in
Europe, America and China

5.

Accelerated growth potential by aggressively
developing e-commerce channels

6.

CSR procurement operation began incollaboration with manufacturing consignees

7.

Implementation of the total return ratio of over100%

Targets for the next 3 years
1. To reform the conventional business model:
improving the competitiveness of Peach John,
Lecien, Ai, and CW-X
2. To carry out omni-channel policy wherecompetitors cannot keep pace
3. To reduce and optimize brands and product lineup
4. To launch high value-added new products that cansell both domestically and internationally
5. To cooperate with major e-commerce websites orenhance our own e-commerce websites, with aneye on national and regional characteristics
6. Growth investment and business foundation
improvement for strengthening the businesses incountries and regions where the business scale issmall
7. Group-wide restructuring of competitive value
chain structure and supply chain network
7

Next, I’ll talk about the issues we should tackle first in the coming 3 years.
Firstly, conventional ways of sales and marketing are no longer effective, so we have to reformthe business models of domestic consolidated subsidiaries, which are facing a turning point.
Secondly, we’ll implement omni-channel policy that cannot be imitated by competitors. In
addition, we’ll downsize and optimize our brand and product compositions. Furthermore, we’ll
release new products with high added value around the world. We’ll also cooperate with major
third-party e-commerce websites inside and outside Japan, strengthen our own e-commerce
websites, and expand still immature business scales in some countries or regions.
Next, I’ll explain our strategies for dealing with individual management issues in the coming 3
years in detail.

New 3-Year Medium-Term Management Plan

8

Changes in the Environment Surrounding our Businesses(Changes and Trends in Consumption Behavior)

Change in the distribution channels■Stagnating
department store/GMS and supermarket sales
XXXXXXXXXXX■E-commerce and global SPA are making rapid progress.

1. XXXXXXXXXXXXXXXXXX

Accelerate technology reform (Informatization ・always spend time with a terminal)■Digitization at the time of consumption and experience is
XXXXXXXXXXXXXXXXXXX
accelerated.

• ■A
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
society where consumers can directly connect will
expand. (SNS community, C2C, D2C)

Further spread of diverse values- Consumers obtain information from various networks and make their own consumption choice -Change in consumers (globalization, urbanization)

Trend of industry and industrial structure■ Increasing number of women active in society■Increasing number of people who want to achieve their own
beauty (personalization)■Development of casual clothing■There is a continuous trend among the Japanese to savemoney with anxiety in the future.

■Disappearance of companies that can produce high quality
underwear■It is difficult to secure sales personnel.
■Social and ethical business activities are the challenge.

9

Page 9 outlines the changes in the environment surrounding our businesses.
Needless to say, the changes and trends in consumption behavior are becoming noticeable, as“diverse values have spread, and consumers now get information via various networks, selectand consume things by themselves.”
The proposal for a stereotypical value is no longer accepted. Namely, we, Wacoal Group, arerequired to offer more personalized services to help individual consumers become more
beautiful in their own ways.
On the other hand, it is noteworthy that enterprises that can manufacture high-quality
underwear are on the verge of extinction around the world. Many underwear makers in Europe
and the U.S. have stopped manufacturing underwear in house.
We are well aware that customers around the world care for quality, including how comfortable
underwear is, in the end. Accordingly, our company needs to fulfill the roles as one of leading
high-quality underwear makers in the world, without making compromises. This is an essential
strategy for maintaining our advantage sustainably.

Expectations from the Stakeholders (Mainly Institutional Investors)

Negative comments

Positive comments
1.

Wacoal's business efficiency improvement
results are reflected in gross profit rate, and it
will continue to be positive.

2.

Wacoal’s development in next-generation
customer service using digital technology
cannot be imitated by the other companies. It
is promising.

3.

We are having a highest expectation in growthin the Chinese market. We are interested in
how Wacoal is strategically depicting businessexpansion in China in the long-term (10-20
years).

4.

We value the strengths including brand value,competitive advantage of Wacoal’s unique value
chain, and quality control in the own factories.

5.

Wacoal is prioritizing and working on social
issues such as CSR procurement faced by theapparel industry and employment of foreigntechnical interns, ahead of other companies.

1.

The domestic subsidiaries that cannot stop the
decline in business results need to be taken care of.

2.

We are concerned about the moral hazard of
Wacoal’s domestic subsidiaries. They not only
degrade corporate value, but also detract the
motivation of the employees in the Group.

3.

We feel that raising awareness at the subsidiary andbusiness unit levels is essential to improve capitalefficiency that falls short of the expected ROE level.

4.

We would like Wacoal to try to clarify medium- andlong-term growth investment areas that have not yet
reached the initial plans.

5.

Isn't the reduction of strategically held shares orcapital policy becoming a goal?

10

Page 10 summarizes institutional investors’ expectations toward our company they mentioned
during dialogue after reviewing the last 3 years.
They positively evaluated the outcomes of efforts made by Wacoal Corp. to streamline business
operation and development of services for attending to customers by utilizing digital technology.
In addition, they highly evaluated the business growth in the Chinese market, advantages ofbrand value and the value chain, and CSR procurement.
On the other hand, they considered that outcomes did not reach up to their expectations
regarding the sluggish performance of domestic consolidated subsidiaries, the businessadministration focused on capital cost, and the active investment for growth from the mediumand long-term viewpoint.

Priority Strategies

Basic Policies
Priority Strategies for the Medium-Term
Management Plan
FY2020 – FY2022

Achieve strong
growth in Japanand overseas

1. Sustainable growth and improved pro.fitability of Wacoal Corp
2. Revitalization of domestic consolidated subsidiaries
3. Acceleration of the expansion and growth of overseas businesses◎◎◎

4. Reform of Group’s production and supply systems
5. Challenge to the expansion of the business portfolio and new business◎

Review andstructural reformwhere no businesswill be safe fromsuch review or
structural reform

◎
◎
◎
◎

6. Enhancement of social value (work on ESG challenges)
7. Management with capital cost in mind

Improving
economic andsocial values

◎
◎
◎

◎
◎
11

Considering the situation of our company that I have described, we have set these 7 priority
strategies for the coming 3 years.
The first is “sustainable growth and improved profitability of Wacoal Corp.”
The second is “revitalization of domestic consolidated subsidiaries.”
The third is “acceleration of the expansion and growth of overseas businesses.”
The fourth is “reform of Group’s production and supply systems.”
The fifth is “challenge to the expansion of the business portfolio and new business.”
The sixth is “enhancement of social value.”
The seventh is “management with capital cost in mind.”1. Sustainable Growth and Improved Profitability of Wacoal Corp.

12

Then, please let me describe each priority strategy one by one in a little more detail.

Firstly, I’ll describe the strategy, “Sustainable growth and improved profitability of Wacoal Corp.”

Wacoal Corp.: Market Environment and Business Targets

 Through all business activities including product planning,production, communication and sales, we will establish “deeper,
wider, and longer” relationships with each customer, enhance brandvalue, and achieve solid growth.
1. Market Environment①

Conversion of business categories of the department storesand GMS and supermarkets, and closure of unprofitable stores②

Increasing presence of global SPA as innerwear competitors③

Diffusion of cheap items (i.e. pajamas and men’s underwear,
knit lingerie, baby and kids)④

Activation of the bra market in pursuit of comfortableproducts⑤

Increasing awareness of size behind digital technology andcustomized wear⑥

Increasing interest in sports as a result of the Tokyo Olympics⑦

Rising needs among the people over 50 years old who want toextend their healthy lifespan2. Business Targets①

To establish more solid market
valuation as the top brand.

Sales(Millions of yen)

To realize the sustainable sales
110,241

growth again.
(Sales CAGR: 2-2.5%)
②

CAGR
+2.5%

To achieve stable profit growth by
maximizing organizational
productivity (over 6% of ratio of
operating income)

102,356
Ratio ofoperatingincome:5.0%

19/3期
FY2019Ratio ofoperatingincome:Over 6%22/3期
FY2022

13

In the coming 3 years, Wacoal Corp. will aim to establish deeper, wider, and longer
relationships with each customer, enhance brand value, and achieve solid growth through all
business activities.
While there are severe market trends, such as the remodeling and closure of department
stores and GMS and supermarkets, the enhancement of the presence of competing global SPA,
and the spread of low-priced items, we can see some favorable trends for our company, such as
the energization of the market of bras and the enhancement of awareness of size.
As No.1 brand, we’ll ensure rock-solid market valuation, and achieve an annual sales growthrate of around 2.5% on average. In addition, we’ll try to maximize organizational productivity
and achieve over 6% of ratio of operating income in the term ending March 2022.

Priority Strategy of Wacoal Corp. (1): Innovation (Only One Strategy)
 Transforming into a company that holds and uses the world’s largest body and mind
(preference) data
- Nationwide development of strategic stores based on Wacoal’s omni-channel- Realization of customized wear business based on personal data and health support related businessTo create the “future” of the customer experiences for innerwear

To create new products and services based on personal data

Nationwide
development“3D body scanner + personalized app”
“Digitalization of customer records”“Customer-consultation AI”■”3D smart & try”
3D body scanner/Customerconsultation AI (Installing 100/3
years)■Floor reform＜Place to sell⇒ Place toexperience＞■Collaboration with e-commerce

Collaboration between “stores” and “e-commerce”

https://www.wacoal.jp/smart_try/

To provide
personalized
customer services atany sales floors
・To increase repeat customer
ratio
・To obtain young people
・To optimize sales
opportunities

Top line growth ofwholesale, retailand our own ecommerce

To be a company that
holds and uses theworld’s largest bodyand mind data
・ Use them for research anddevelopment
・ New product and service
development
・ Next-generation businessdevelopment, such as healtharea
14

The first priority strategy for attaining these business goals is “innovation.”
Wacoal Corp. recognizes the coming 3 years as the period for evolving into an enterprise that
holds and uses the world’s largest body and mind data.
On the 30th day of the previous month, we opened the first next-generation underwear shop
named “Wacoal 3D Smart & Try” on the 4th floor of Tokyu Plaza Omotesando Harajuku. The
number of visitors to the shop exceeds our estimate every day. In addition, customers can bookpersonal counseling in advance via our website, and the counseling service is fully booked until
the end of June, including weekdays.
We’ll open such shops with omni-channel strategy in a speedy fashion. Based on the personal
data accumulated by strategic shops and Human Science Research Center, we’ll develop new
products and customer services utilizing digital terminals. Furthermore, we plan to utilize suchdata for the new customized wear business and health support-related business.

Priority Strategy of Wacoal Corp. (2): Market Strategy (Number One Strategy)To reduce product brands and groups in the wholesale business, and review transaction conditions with department stores (selection and concentration)- To review the brand definition and strengthen the power of each product group, and, at the same time, make efforts to expand market share (from 63 to 50 groups (20% reduction))- To review the business practices and transaction conditions with department stores and improve profitabilityTo strengthen corporate brand communication that conveys “Wacoal's feelings for the body”- To enlighten the importance of size, raise the value of underwear, gain support among introductory population (teens) and mature population (in the 50s to 60s)



To enhance the growth potential by strengthening measures that take advantage of the characteristics of each channel and products other than innerwear

Strategies to strengthen by innerwear and channels
Department
stores
GMS andsupermarkets

To expand self-store sales by comfort bra "Date."

Directly managed
retail stores

To actively implement advertising and promotion to raise brand recognition

Our own ecommerce site

To develop apps to strengthen cooperation with department stores and specialty stores

FY2019 Net Sales

To acquire female user centered on "sports bra"
To improve the added value of the “Think Sleeping” brandJuniorTo acquire introductory generation by expanding recognition of the "Pulili" brand

Men’s

To enhance business efficiency by brand integration

Shoes

To continuously strengthen pumps for work(100 millions of yen)

Wholesalebusiness
823.5
Retail and web
246.2
Other

Pajamas¥119.55 billion(+125.9)
CAGR 3.8%¥106.96 billion

Strategies to strengthen the range of products other than innerwear

CW-X

FY2022 Sales Plan

Wholesale business +Retail and web businesses
Net Sales

To enhance the Wacoal brand value by strengthening prestige and semi-order bras

Wellness
54.1

PW・FW
・Men’s
140.2

Wacoal brand
IW
402.6

Wing
brand IW
199.6

Retail and web
315.5(+69.3)
CAGR 8.6％

Wholesalebusiness
880.0（＋56.5）
CAGR 2.2%

Wacoal brand IW
416.2(+13・6)CAGR 1.1％

Other

Wellness
70.0 (+15.9)
CAGR 9.0％

PW・FW
・Men’s
141.2 (+1)
CAGR 0.2％

Wing brandIW
212.5(+12.9)CAGR 2.1％

15

Next, I’ll talk about the market strategy for improving our existing businesses.
As for the wholesale business, we’ll strive to downsize our product brand and group, andstrengthen the power of each group, to expand its market share. In addition, we’ll review theconventional business practices and transaction conditions at department stores, and improve
profitability.
In parallel, we’ll enhance corporate brand communication for conveying “Wacoal’s feelings forthe body” in order to diffuse the importance of appropriate size, re-recognize the value of
underwear, and gain support from introductory population and mature population.
Furthermore, we’ll enhance the growth potential by strengthening measures that takeadvantage of the characteristics of each channel and products other than innerwear. Throughthese measures, we aim to grow net sales of the wholesale business at an annual average rateof 2.2% and net sales of the retail and web businesses at an annual average rate of 8.6%.

Priority Strategy of Wacoal Corp. (3): To strengthen Business Foundations(All For One strategy) Investment Fields/Structural Reform To implement “work style and rest style reform” to increase output (To increase productivity per worker andbeauty advisor)
 To realize increased added value of products (new material development and manufacturing technologies),
reduction of material disposal and distribution costs, and optimization of company-wide inventory
 To improve profitability of the business that proposes culture and beauty (sensibility) (examination of tangible
and intangible asset value maximization)

Operating income per
office worker

Inventory turnover rate

3-year cumulative
investment

Up 60%

3.3 turnover¥11.5 billion(Comparison between FY2022
target and FY2019 result)(Comparison between FY2022 target and
FY2018 result + 0.4 turnover)Store sales per beauty
advisor at department store

3-year cumulative
advertisement expenses

Up 13%¥22.5 billion(Comparison between FY2022
target and FY2018 result)(Comparison with previous 3-year
cumulative +6%)•

Remodel of directly managed retailstores: ¥1 billion•••

3D body scanner installation:¥0.5 billion

IT system renewal: ¥7.5 billion

Building renovation: About ¥1 billion

Out of which, investment in corporate
brand communication: ¥2 billion

16

Next, I’ll talk about our efforts to fortify our business foundations.
In order to maximize productivity, we have set some goals.
The objective of work style and rest style reform is to boost output. For each business unit, we’ll
grasp the necessary number of workers, and strive to improve productivity per office worker orbeauty advisor.
In addition, we’ll enhance the added value of each product, and keep reducing discount sale. Byutilizing personal data and sales data, we’ll raise the precision of demand forecast, reducematerial disposal and distribution costs, and optimize inventory in the entire company, including
shops.
Furthermore, we’ll start discussions for maximizing the value of tangible and intangible assets,
and radically improve profitability of the business that proposes the culture and sensibility ofbeauty.

2. Revitalization of Domestic Consolidated Subsidiaries

17

Management Environment Surrounding the Business of Domestic Subsidiaries

 To implement transformation and reform from traditional business models• The old sales and marketing style is no longer valid, and urgent reform of our business model is required.
• There is no way that underwear and swimwear demand will improve dramatically in Japan.
• A key is to build a foundation that can be extended overseas and form alliances with other companies.
• In the first half of the next three years, if no path is established to generate a permanent business surplus, we will shift thebusiness to the action plan for revitalization.

Fundamental business reform

Decision to shift to the action plan forrevitalization• Selection and concentration of businesses

1. Peach John Business• Alliance with distribution channels (ecommerce, etc.) and other companies

Progress of the FY2021 business plan

• Strengthen intra-group collaboration,
reorganization of companies

2. Ai Business and Lecien Business• Review business structure and HR system

To achieve the equilibrium level of operating
profit and loss in FY2020.
18

I’ll talk about the revitalization of domestic consolidated subsidiaries, which is the second
priority strategy.
The results of Peach John, Ai, and Lecien fell below the mid-term goals in the last 3 years, andposted an operating loss in the term ended March 2019. This is considered because theconventional ways of sales and marketing developed by Peach John, Ai, and Lecien became oldfashioned, and now is the time to reform our business models.
In the Japanese market, the demand for underwear and swimwear won’t improve dramatically.
Therefore, in the coming 3 years, our performance will depend on whether we’ll be able todevelop a base for overseas business growth and whether we’ll be able to form successful
alliances with other companies. We’ll work on drastic business reform, and if we cannot pave
the way for earning an operating profit continuously in the first half of the 3 years, we’ll
implement a plan for revitalization.
As for the Peach John business, I’ll review the progress of our management plan together with
President Tochio, who was appointed in April. Considering the outcomes and issues in the firstyear, we’ll revise the action plan for the next year, to complete the management plan sufficiently
in the term ending March 2021, that is, the second year.
As for the Ai and Lecien businesses, we are expected to earn an operating profit, achieving theequilibrium level of operating profit and loss this term. But, if it becomes difficult to achieve it,
we’ll think of shifting to a more active plan.

Peach John Business Based on the current brand value and high profile, the company will capture theconsumption behavior and trends of young people, boldly focus on e-commerce, andregenerate into "a brand that can win in e-commerce.”
1. Market trends to achieve the growth

3. Priority strategies①

Rapid expansion of the e-commerce market in Japan andoverseas To organize and consolidate unprofitable directly managed retail storesin Japan②

Consumption behavior of young people who want to try
various inexpensive cute things

 To strengthen our own e-commerce website (collaboration between theflagship stores and omni-channel)③

Increasing fans in Greater China (China, Hong Kong,
Taiwan) To review product plans – Reestablishment of “Brand x Price x ecommerce channel x advertisement”

2. Business targets①

To form a basis for creating a

 To accelerate growth of business in China (opening stores +collaboration with third-party e-commerce websites)

Net sales To grow in Greater China - To open stores in Taiwan (Taichung,
Kaohsiung)(Millions of yen)

5% ratio of operating income②

11,600Milestone: To achieve the plans
CAGR
+3.4%

in the second year of themedium-term management

plan* (FY2021)

10,491*Modification of action plan based on
result and issues of the first year isanticipated.

 To use Wacoal products effectively

Operatingdeficit:-¥220
million

FY2019Ratio ofoperatingincome:2.5-3%FY202219

Please see page 19. I’ll explain the business targets and priority strategies for Peach John.
For Peach John, we’ll focus on e-commerce and revitalize it as a brand that can survive ecommerce competition in the coming 3 years.
While proceeding with the liquidation and integration of unprofitable directly managed retailstores in Japan, we’ll strengthen our e-commerce. In addition, we’ll study the consumption
behavior of young people who want to try a variety of cute things at low cost, and review our
product plans. Then, we’ll redesign our marketing while combining brand and retail pricestrategies as well as e-commerce channels and advertisements.
In addition, we’ll cement the cooperation with third-party e-commerce websites, and strive toaccelerate the growth of the business in China. While boosting growth potential in Greater
China, we’ll develop a foundation for achieving a ratio of operating income of 5%.

Ai Business The company will establish the high-value added “San-ai Resort” brand bycombining swimwear and underwear and gaining support from adult women. We
will also develop the Chinese market.
1. Market trends to achieve the growth

3. Priority strategies①

Swimwear needs among the adult population who want to cover
the body shape To effectively utilize the domestic customer database of Wacoal②

Lack of swimwear for the wealthy women in Asia

 To develop value-added swimwear utilizing the results of Human
Science Research Center③

Detailed size development that only the Wacoal Group canachieve To begin e-commerce sales in China

2. Business targets①

To review the business To improve profitability by reducing seasonal/special event stores andincreasing in-house product ratio

Net sales(Millions of yen)model to achieve a 5% ratio

4,490

of operating income
②

CAGR
+2.4%

Milestone:
Balance of operating profit
and loss in the first year of
the medium-term
management plan (FY2020)

4,181
Operatingdeficit:-¥321
million

FY2019Ratio ofoperatingincome:3-4%

FY202220

Next, I’ll talk about the business targets and priority strategies for Ai.
For Ai, we’ll strive to establish the Sai-ai Resort brand with high added value for gaining support
from adult women, and start the cultivation of the Chinese market.
The swimwear market, in which we conduct conventional sales promotion, is shrinking
inevitably, but there are not a few wealthy people who are looking for swimwear that can dispel
their worries about their body shapes or swimwear that fits their body shapes like personalizedone.
By taking full advantage of intangible assets of Wacoal Group, including the domestic customer
database and the results of R&D at Human Science Research Center, we’ll strengthen the San-ai
Resort brand. In addition, we’ll establish a business model that can soon achieve a ratio of
operating income of 5% by starting e-commerce in China, and so on.

Lecien Business The company will be reorganized into a simple, flat business structure in anticipation ofshrinking business of domestic OEM destinations and declining demand from material
destinations. In addition, it will develop a new business model in collaboration with GMS
and supermarkets. At the same time, it will start OEM supply to overseas.

1. Business environment

3. Priority strategies①

Sales of PB innerwear for GMS and supermarkets in Japan,
which account for a majority of sales, will inevitably dwindle.

②

The Material Business producing clothing lace and the Art andHobby Business selling handicraft products will be lesscompetitive.

2. Business targets①②

To establish a foundationthat can create a businesssurplus on a regular basis
Milestone:
Balance of operating profit
and loss in the first yearof the medium-term
management plan
(FY2020)

 To develop a new business model for domestic GMS and supermarkets

 To begin overseas OEM supply (Taiwan, South Korea, etc.)
 To cancel unprofitable business (embroidered lace for outerwear, etc.)
 To utilize the supply capacity of affiliate factories in cooperation with
Wacoal Corp.

Net sales(Millions of yen)
6,663
CAGR
+2.0%

6,284
Operatingdeficit:-¥375
million

FY2019Ratio ofoperatingincome:1-2%

FY202221

Next, I’ll describe the Lecien business.
The sales of underwear account for about 70% of total sales of Lecien. Out of them, over 80%
are from OEM supply of the private brand for leading GMS and supermarkets. In addition, thesales from supply of clothing laces account for about 10%. Namely, Lecien earns over two thirds
of total sales from the business of supplying apparel materials to domestic clients. Accordingly,
it is difficult to be optimistic about our business environment.
In these circumstances, we’ll restructure our business and develop a new business model incooperation with domestic GMS and supermarkets. In addition, we’ll start overseas OEM supply
for equity-method affiliates in Taiwan and South Korea. In addition, we’ll discontinue
unprofitable businesses, such as the business of embroidered lace for outerwear. Furthermore,
we’ll strive to exert the supply capability of affiliated factories based on the cooperation with
Wacoal Corp. Through these activities, we’ll redevelop a business base for earning an operating
profit continuously.

Nanasai Business The company will enhance its position as an advanced mannequin company and develop
value-added products. At the same time, it will develop new industries as a customer of
construction business. Meanwhile, it will enhance the management with a focus on profit.
1. Market trends to achieve the growth

3. Priority strategies①

Increased needs for artificial intelligence (AI) as an alternative tohuman labor and eco compatible (eco-friendly) mannequins To develop service mannequins which enable unmanned customer service andsales forecast with evolved Interactive mannequin program (IMP), made frombiodegradable materials or paper②

Enhanced demands for interior finish work with refined taste forthe restaurant industry and pubic facilities

2. Business targets
To attain the gross profit
rate by business②

To challenge the ratio of
operating income of 4%

 To enhance business efficiency using the low construction period
 To strengthen the management with a focus on profit – Item number
consolidation, joint delivery within the same industry, review of unprofitableoverseas businessNet sales(Millions of yen)①

 To develop construction business customers in new industries in addition to
department stores and apparel manufacturers

 Working style reform (Reduction of total working hours by 20%, renewal of thecore ERP)

9,414

CAGR
-0.6%

based on ①
Ratio ofoperatingincome:3.0%

FY20199,240
Ratio ofoperatingincome:3.5-4%FY202222

Lastly, I’ll explain the business targets and priority strategies for Nanasai.
As for Nanasai, it undertook a project of renovating the headquarters of a leading department
store in the term ended March 2019, so sales growth cannot be expected, but by promoting
profit-oriented business administration, we’ll strive to achieve a ratio of operating income of 4%.
Due to the shortage of manpower and the popularization of AI, the business chances related tomannequins are increasing. In addition, there is growing demand for refined interior design forrestaurants and public facilities such as airports and schools. In addition to department stores
and apparel makers, we’ll increase clients in new construction fields, to grow further.

3. Acceleration of the Expansion and Growth of Overseas Businesses

23

Business Environment Surrounding Overseas Business, Growth Investment andStructural Reform Areas The key is to strengthen the e-commerce business.
• It is essential to strengthen collaboration with third-party e-commerce websites and integrate our own ecommerce websites and CRM like we did in Japan, taking into account China, which is the world's largest ecommerce market, and the US, where significant growth in e-commerce sales will continue.
• In addition, we will carry out growth investment to strengthen the countries and regions where businessscale is small including India, Latin America and Europe.
• We will try to gradually expand CSR procurement operations at overseas affiliates as well.
New growth investment amount (three-year cumulative total)(excluding production equipment)¥2.5 billion• US: To strengthen the directly managed retail store business• Europe: To develop our own e-commerce website and expand the region• Europe and US: PLM software• China: Logistics and other infrastructure development for e-commercebusiness• Asia: To establish a common e-commerce platform• India: Investment in growing businesses

24

Next, I would like to talk about “acceleration of the expansion and growth of overseas
businesses,” which is our third priority strategy.
It is no exaggeration to say that department stores are on a decline in all the major overseas
markets. The results of the last 3 years show the net increase in sales from e-commerce
exceeding those from real stores in the U.S., Europe and China.
This trend is expected to get stronger in the coming 3 years. The key to success is tostrengthen the e-commerce business. We are making efforts to strengthen collaboration withthird-party e-commerce websites in various regions and countries, or integrate our own ecommerce and CRM by following the omni-channel strategy in Japan.
On the other hand, we plan to enhance the directly managed retail store business in the U.S.
and invest in businesses in India for growth in addition to strengthening the e-commercebusiness, and the new growth investment amount is expected to be around 2.5 billion yen for a
3-year cumulative period.

Business in the US
 We will maintain the top market share in department stores in the U.S. and strive to improve the market
share. At the same time, we will strengthen e-commerce and directly managed retail stores, achieve noncontinuous growth through business investment in growing markets, and reform cost structure to solidify
the foundation for achieving net sales of ¥30 billion in the Americas.

1. Market environment

3. Priority strategies①

Sales of department stores in the United States are declining, while ecommerce market is rapidly expanding.

②

Exhaustion of stores that can provide high-quality service③

Increasing brand recognition in neighboring countries (Canada, Brazil)

2. Business targets①

Improvement of gross profit
rate (2-2.5 points)②

Appropriate balance between
growth investment andoperating income (*)(Ratio of operating income: 910％)③*Due to the rise of rents ofdirectly managed retail storesand offices as well as theincrease in upfront investment
for strengthening e-commerce,etc.

 To reform the mobile site, strengthening e-commerce by implementing CRM.
（towards e-commerce sales composition of 35％)
 To establish a business model of the directly managed retail stores and carry out
its test outside the US.
 To pursue product development ability and fitting quality (improvement ofsuperiority).

 Productivity improvement and cost structure reform coupled with processengineering, implementation of PLM, factory expansion, logistics maintenance,etc.

Net sales(US$1,000)

 To strengthen the business in Canada and Brazil and expand the business in
Chili.
CAGR+4.3%

166,679
Ratio ofoperatingincome:11.3%

FY2019189,147

 To start new management system led by President M. Kauffman.

Ratio ofoperatingincome:9-10%

FY2022

25

Then, I will talk about business in each region.
Page 25 shows the business targets and priority strategies in the Americas.
The declining of department stores in the U.S. is certainly a matter of concern, but we will
maintain the top market share of nearly 25% for department stores and we strive to improvethe market share. At the same time, we will strengthen e-commerce and directly managed
retail stores, and achieve non-continuous growth through business investment in growing
markets. Furthermore, we will enhance our product development ability, reform the cost
structure and expand our business in neighboring countries to solidify the foundation of net
sales of 30 billion in the Americas, which we aim to achieve in the fiscal year ending March2028.
Also, we strive to improve gross profit rate through a higher sales ratio of e-commerce andincreased business efficiency. In parallel, we aim to achieve a ratio of operating income of 9 to
10% by ensuring an appropriate balance between growth investments and operating income.

Business in Europe
 We will develop full-figured products that we excel at, expand brand portfolio
marketing according to country, region, and channel characteristics, and achieve
stable growth and profit generation.
1. Market environment

3. Priority strategies①

Trend to respect the diversity of beauty

 To strengthen full-figured brand "Goddess" after "elomi”②

Sluggish business or failure of UK department stores③

Accelerated expansion of the e-commerce market, while pricecompetition among third-party e-commerce websites prevails

 To expand the areas to use the renewed our own e-commerce website(B2C). To review partnership strategy with third-party e-commerce
websites.

④

Opacity of Brexit

2. Business targets

 To expand the business in Europe (Germany, Italy and Spain)

Net sales To enhance capacity and productivity of the affiliate factory in Sri
Lanka (joint venture)(￡1,000)①②

To give top priority to growthinvestment(B2B, B2C site, office anddistribution warehouse, ERP
update, affiliated plants, etc.)
Appropriate balance between
growth investment andoperating income(Ratio of operating income: 89％)

CAGR
+5.3%

96,826
Ratio ofoperatingincome:10.0%

FY2019

 To implement support and strategic initiatives for revitalizing specialty
store channels. (strengthening B2B systems, proposal by data
analysis, review of incentives)

112,942

 Integration and modernization of offices and distribution warehouses

Ratio ofoperatingincome:8-9%

FY2022

26

Next, I will talk about the business targets and priority strategies in Europe.
In the coming 3 years, we will enhance the development of full-figured brands and products
after “elomi,” and expand the brand portfolio marketing according to the characteristics ofcountries and distribution channels.
In addition, we will renew our own e-commerce. Later, we will expand our business areas toimprove gross profit rate. Also, we will implement strategic initiatives for revitalizing specialty
store channels. Furthermore, we will be expanding the business in the euro area, including
Germany and Italy.
On the other hand, despite the smoldering uncertainty regarding the Brexit, our company
considers integration and modernization of the Wacoal Europe office and the distribution
warehouse located in England as an important mission. We believe that growth investments,
such as renewal of our own e-commerce and strengthening of each brand, which have beenrunning behind the previous 3-year plan, must be prioritized.
We strive to achieve an annual sales growth rate of 5% on average and a ratio of operating
income of around 8 to 9%.

Business in China
 We will strengthen branding and marketing in the e-commerce market by enhancing collaboration
with Japan, and make efforts to acquire young customers and new customers. At the same time, wewill carry out marketing investment and business foundation improvement that can sustain highgrowth.

1. Market environment

3. Priority strategies①

Consumption expansion among young people Flexible arrangement of the “Japanese origin” brand that captures the fastmoving young people②

Accelerated growth of the world's largest e-commerce market

 To shore up prestigiousness of "Salute“ (rebranding)③

Overwhelming competition by global brands, and early arrival of
the brand selection

 To strengthen growth capability of the e-commerce business (utilization ofcustomer database, increasing and strengthening information contents)
 To expand the in-store share of department stores, and make effective use ofoutlet channels

2. Business targets①

Prioritized investment to

Net sales
CAGR
+9.0%

secure growth②

Creation of the current ratio(1,000 RMB)

 To develop a rational business base that can respond to growth- Logistics base, backbone IT system, management system, mechanism ofwaste loss reduction

900,000
694,776of operating income(Ratio of operating income:
6-7％)

Ratio ofoperatingincome:6.4%

FY2019Ratio ofoperatingincome:6-7%

FY202227

Next, I will talk about the business targets and priority strategies in China.
In the coming 3 years, we will enhance brand development and marketing in the e-commercemarket by strengthening collaboration with Japanese companies, and make efforts to acquire
young customers and new customers. At the same time, we will invest in marketing tostrengthen the growth capability of the e-commerce business and expand the in-store share ofdepartment stores, to maintain a high level of growth potential.
In addition, we will develop an efficient business base, by enlarging distribution warehouses andimproving the backbone IT system, to tolerate growth. We hope to achieve an annual sales
growth rate of 9% on average and a higher ratio of operating income through these initiatives.

Other Businesses in Asia
 To achieve accelerated growth of the Indian business and balance of operating profit and loss
 In addition to strengthening our ability to respond to the growing e-commerce market, we will
enhance regional collaboration and improve business efficiency

1. Our business environment in Asia

3. Priority strategies①

Wacoal India (Sales corporation, Established in FY2016)- End of FY2019: Directly managed retail stores: 12; sales: ¥120 million②

Small-scale sales corporations (Hongkong, Singapore, the Philippines, etc.)

 To expand the business in India and achieve the balance of operating profit and loss
(FY2022 net sales: ¥1.8 billion)-Acceleration of opening stores (directly managed retail stores + department stores),strategic marketing investment③

Sewing factories (China, Vietnam and Myanmar), material factory (Thailand) To develop our own e-commerce platform common in Asia④

Equity-method companies that perform manufacturing and sales (Taiwan,
South Korea and Thailand) To enhance brand image and value in Asia and improve marketing efficiency

 New market development (Turkey, etc.)

2. Business targets①

To accelerate growth of the Indian To improve cost by enhancing technical quality and productivity of the ASEAN factories

Net sales(Millions of yen)business
②

CＡGR
+2.5%

To improve business efficiency bystrengthening regional

9,565

collaboration③

To get the material factory inThailand on track④

Ratio of operating income: Double
digits8,891
Ratio ofoperatingincome:3.7%

FY2019Ratio ofoperatingincome:Over 10%

FY2022*Including consolidated adjustment

28

Next, I will talk about the business targets and priority strategies in other Asian countries.
We started our business in India in the fiscal year ended March 2016, and after 3 years, wehave finally started to understand the local consumption trend and preferences. Therefore, we
strive to achieve accelerated growth in the Indian market in the coming 3 years through active
investment. Also, we will develop our own common e-commerce platform in Asia to strengthen
our capability of responding to the growing e-commerce market. Furthermore, we will enhance
regional collaboration and improve marketing efficiency and cost.
We aim to achieve the balance of operating loss and profit in the Indian business by the fiscal
year ending March 2022. Furthermore, we strive to attain a ratio of operating income of over
10% by getting the sewing factories in Myanmar and the material factory in Thailand on trackand making them help improve operating income.

4. Reform of Group’s Production and Supply Systems

29

Reform of Production and Supply Systems
 We will establish a Group-wide production management system that can supply competitive
products and materials beyond the boundaries of brands and regional businesses.
 Furthermore, we will identify the future supply and demand of each business and reorganize
the factory system in anticipation of optimal supply capacity (capacity, quality/cost, scrap
and build).
1. Environment and issues of the production and supply
business①

Production system emphasizing vertical division according to brand andregional business②

Regional arrangement of factories that effectively supply high value-added
products③

Expansion of utilization of the material factory in Thailand④

Organization of the supply system to the growing markets including China
and India⑤

Declining operating rate of the factories under Lecien

Capital investment amount (three-year cumulative total)

2. Priority strategies
 To reinforce the Group’s production planning and management system- To strengthen the ASEAN bases, facilitate in-house production, and use the capacityof the Lecien factories
 To expand supply bases for bonding and non-sewing products
 To develop high-quality, high-value-added production capacity for Europe and the US(Dominican Republic)
 To establish a global materials representative meeting (to improve material superiorityand promote standardization)
 To improve production technology such as molding and mass production, and conduct
standardization at domestic and overseas factories¥1.5 billion•

Material factory in Thailand (A Tech): ¥400 million(Dyeing machine, accessories for warp knitting, etc.)••

Vietnam: ¥300 million (e.g. increasing production facility)

Dalian: ¥200 million (increasing production facility including bonding machine)
In addition, building repair costs, equipment maintenance, etc.

30

Please see page 30.
I would like to explain about the 4th priority strategy, “reform of production and supply
systems.”
Firstly, I will be discussing the environment and issues of our company’s production and supply
business. Our company has a production system that emphasizes vertical division according tobrand and regional business, mostly due to the characteristics of products. In addition, regionalarrangement of factories that effectively supplies high value-added products, expansion ofutilization of the material factory in Thailand and organization of the supply system to thegrowing markets including China and India are some of the issues that the company must deal
with.
Therefore, we will establish a group-wide production management system that can supply
competitive products and materials beyond the boundaries of brands and regional businesses in
the coming 3 years. Furthermore, we will grasp the future supply and demand of each businessand reorganize the factory system in anticipation of optimal supply capacity.
In addition to these, we will expand supply bases for bonding and non-sewing products,
enhance the factory in Dominican Republic to improve production capacity for Europe and the
U.S., and establish a global materials representative meeting. The cumulative 3-year equipment
investment amount related to reorganization is expected to be around 1.5 billion yen.

5. Challenge to the Expansion of the Business Portfolio and New Business31Challenge to the Expansion of the Business Portfolio and New Business We will be aware of “selection and concentration” of the business areasand implement growth investment to achieve discontinuous growth froma medium- to long-term perspective.
1. “Selection and concentration” of the business areas

 Wacoal should have a trusted and fifty-fifty
relationship with consumers (customers) and be a“valued” presence that will support the realizationof their own beauty.

2. Growth investment①

Business/capital alliance②

Acquisition③

New business development

Existing
businesses
centering on
innerwear

 “Values” provided through the businesses①Beauty, ②Comfort, and ③Well-being

Strengthening
e-commercebusiness

Service toin-boundconsumers

Expandingthe brand
portfolio

Supportwear forposture andmovement

Realizing thecustomized
wear

32

Next, I will talk about the fifth priority strategy, “challenge to the expansion of the businessportfolio and new business.”
In the coming 3 years, we will be aware of “selection and concentration” of business domains
and actively implement growth investment to achieve non-continuous growth from a mediumto long-term perspective.
We think it is highly important that consumers acknowledge Wacoal Group as a “valued”
presence that will support the realization of their own beauty. In order to provide values such as“beauty,” “comfort” and “well-being” and become an irreplaceable existence, we mustencourage business collaboration as well as capital alliance with various companies, as we
consider more rational than starting from scratch by ourselves.
Furthermore, we are actively considering acquisition as one of the initiatives for enhancement of
new businesses such as expansion of the brand portfolio and strengthening of the e-commercebusiness.

6. Enhancement of Social Value (Work on ESG Challenges)

33

Enhancement of Social Value: Responsibility for Sustainable Growth To value people and the environment-

From product planning and development to material procurement, production, and sales, we have a unique network and build a value chain, and our
greatest management resource is human resources.

-

We will establish close partnerships with all suppliers and business partners, and comply with and respect social requirements such as “human rights,”“working practices,” “environment” and “ethics” together.

A vibrant climate based on human rights,
ethics and diversity• To improve CSR procurement efforts (continuous
improvement and expansion of the target areas)• Advertising expression respecting diverse values• To support breast care issues across the world(Contributing 1% level of final profit to the solution of
global breast care issues.)• To satisfy both “job satisfaction” and “ease of work” Development of an outcome-oriented environmentand diverse working environment- Creating new value by encouraging diversity andinclusion

Coexistence with the global environment
and local communities• Implementation of plastic removal for packaging
materials, etc.
• Reduction of discarded unsold products• Reduction of resource loss at the production stage by
creating smart factories• Conservation of kyo-machiya townhouses/townscapeand value improvement of local communities

34

Please see page 34.
Lastly, I will be talking about “enhancement of social value,” which is our sixth priority strategy.
To realize a sustainable society and develop with society, we must, needless to say, takeinitiatives to solve ESG issues. Our company has a unique network and built a value chain
through interaction with a large number of people, and our greatest management resources are
human resources.
In addition, we will establish close partnerships with all suppliers and business partners, andcomply with and respect social requirements such as “human rights,” “working practices,” and“environment.” In the coming 3 years, we will continue to improve CSR procurement efforts bycontinuously grasping the revision and improvement status and expanding the target areas.
Furthermore, we strive to improve the quality of diversity management by enhancing theawareness of ad and communication expressions that respect diverse values and addressing
breast care issues across the world, and foster a company culture for creating new value.
In parallel, we will strengthen initiatives for plastic removal for packaging materials, reduction of
discarded unsold products, promotion of smart factories, etc., and realize harmonious
coexistence with global environment and local communities.

Enhancement of Social Value: Transparent Management and Organizational Structures We will strive to work on trusted corporate activities based on active
dialogue with all stakeholders. At the same time, we will optimize thevalue allocation for each stakeholder.
Development of corporate governance•

To improve effectiveness according to the principles of the corporate governancecode- Analysis and evaluation of the effectiveness of the Board of Directors- Increasing transparency of appointment and remuneration of the directors- Reduction of strategically held shares (*To be described later)•

To develop Business Continuity Plan/Business Continuity Management (BCP/BCM)•

To strengthen measures against the information leakage risk of personal
information, etc.

•

To strengthen appropriate disclosure of information related to corporate value
improvement/corruption- Medium- to long-term vision, KPI, future risks- Succession plan

35

Please see page 35.
We will continue to improve our corporate governance further to strengthen the management
and organizational structures with higher transparency. In addition to enhancing theeffectiveness of governance, we will strengthen measures against the information leakage risk
and for appropriate disclosure of information.
In the coming 3 years, the management team, including myself, will strive to make decisions
based on active dialogue with all stakeholders and optimize the value allocation to eachstakeholder.

That’s it from me. Thank you for your attention.

Performance Objectives and Financial Strategy(Management Plan from FY2020 to FY2022)

Akira Miyagi,
Director, General Manager of Corporate Planning

36

Hello everyone, it’s nice to be here today.
As for me, I would like to speak about our 3-year management plan focusing on theperformance objectives and the financial strategy.

7. Management with Capital Cost in Mind37

Toward Sustainable Corporate Value Improvement: Concept of Resources Allocation⑨ [Enhancing the shareholders’ value] Shareholders⑧

 Increase net income per share+ dividends
Shareholder
returnInvestment

 Optimizing value allocation
to all stakeholders•

Employment•

Transactions•

Societycontribution•

Paying taxes

DialogRe-investment


B/S




⑪
Liabilities

Further enhancing corporate governance
Highly transparent management andorganizational structure

 P/L Business cycle for sustainable improvement ofcorporate value①

Funds entrusted by shareholders②

Manufacturing and sales in Japan and overseas, and business
investments such as acquisitions⑦③

Strengthening the management base including human resource
development, R&D, and IT

Total
assets①

Shareholders'equity

Net
sales

③ (⑩)
Contribute to society byhelping women to express
their beauty
Investments for

Profit④

Coexistence with the global environment and local communities⑤

Provide high value-added products and services⑥

Realization of a society that respects diverse people(Resolving social issues through our business)

strengthening themanagement base

② (⑩)

Generate profit
that exceeds
capital costs

Business investments⑤ Business activities Assess risks and capital efficiency

 Redesign and strengthen existing businesses
and expand the business portfolio④

Provide high valueadded products andservices Coexistence with the global
environment and local communities⑥

 Realization of asociety that respects
diverse people⑦Generate profit that exceeds capital costs⑧

Optimizing value allocation to all stakeholders⑨

Enhancing the shareholders’ value⑩

Reallocating resources to further increase the shareholder value

Provide beauty, comfort,
and well-being

Resolving social issues
through our business

Check whether the business plan cycle is appropriately circulating⑪

Further enhancing corporate governances

38

In the medium-term management plan, we raised “management with capital cost in mind” as
the 7th priority strategy.
First, I would like to briefly explain the resource allocation concept, on which our company isputting focus, to achieve a sustainable corporate value improvement.
We utilize the funds we receive from our shareholders and allocate them to make business
investments, namely, we invest in strengthening the management base, through which we
respond to the needs of our customers around the world by providing high-added-value
products and services. The basis for this concept is, as president Yasuhara mentioned in the
beginning, the key philosophy of “contribute to society by helping women to express theirbeauty”.
Moreover, we work towards achieving harmonious coexistence with the global environment andlocal communities and respect human rights and ethics for the realization of a society that
respects diverse people. In the coming 3 years, we will improve our initiatives for solving social
problems through our business. In addition, we will generate a profit that exceeds capital costs.
This is the core that defines the “management with capital cost in mind” we raised in ourpriority strategies.
As a result, we plan to optimize value allocation to all stakeholders and improve theshareholders’ value.

Management Objectives (1): Consolidated Net Sales, Operating Income, Net Income, and ROE in FY2022

Medium-Term Management
Plan (FY2022)

Consolidated net sales:¥210 billion

100 0

900

ROE: 6％800

Net sales
700

Operating income

Net income: ¥12 billion
Shareholders' equity:¥200 billion

ROE: Over 10％

ROE: 8％600

Operating income:¥14 billion(Ratio of operating income:
6.7％)

500

¥12 billion

CAGR
₊2.9%

200

100

Net
sales:¥194.2billion(In real terms)

Operatingincome:¥10.7 billion

0

ROE: 6%FY2022 to FY2028
consolidated net sales

400

300

Net income attributable to
Wacoal Holdings Corp.:

Actual ROE
4.2％

FY2019Net
sales:¥210
billionOperatingincome:¥14 billion（6.7％）FY2022Net
sales:¥250
billionFY2022 to FY2028
consolidated operating
incomeFY2025CAGR
₊10.1%

Ratio ofoperatingincome:Over 10%

FY202839

Please see page 39.
Considering the management strategy and the ideal business outcome 9 years from now, which
president Yasuhara talked about, the summary of the sales growth plan and the operating
income plan are like this.
In the term ending March 2022, 3 years from now, we plan to achieve consolidated net sales of
210 billion yen, an operating income of 14 billion yen, a net income of 12 billion yen, and an
ROE of 6%. After that, we will commit to the business administration focused on capital costand aim for an ROE of 10% in 9 years. However, we aspire to reach the 8% level in 6 years.
Furthermore, the figures I’ve raised here in the management plan do not reflect the effects ofbusiness performance fluctuations caused by valuation gain or loss on marketable securities andinvestments that became required to be posted as other income or expenses in the statementof income in the previous term, according to the change to U.S. accounting standards.

Management Objectives (2): Net Sales and Operating Income of Each Business Segment for FY2022(Millions of yen)
FY2022 plan

Comparison between FY2019 and FY2022

FY2019 results
Distribution
ratio

Distribution
ratio

Amount%CAGR

Consolidated net sales

210,000

100

194,201100

15,799

+8.1%

+2.6%

Wacoal Business (Domestic)

119,700

57.0

113,400

58.4

6,300

+5.6%

+1.8%

Wacoal Business (Overseas)

61,60029.3

53,100

27.3

8,500

+16.0%+5.1%

Peach John Business

11,6005.5

10,4915.4

1,109+10.6%

+3.4%

Other

17,1008.1

17,2108.9- 110- 0.6%- 0.2%FY2022 plan

Operating income

Comparison between FY2019 and FY2022

FY2019 results% to Sales% to Sales

Amount%CAGR

14,000

6.7

4,879

2.5

9,121

+186.9%+42.1%

Wacoal Business (Domestic)

7,850

6.6

6,325

5.6

1,525

+24.1%+7.5%

Wacoal Business (Overseas)

5,300

8.6

4,581

8.6

719

+15.7%+5.0%

Peach John Business

350

3.0

- 5,859

ー

6,209

ー

ー

Other

500

2.9

- 168

ー

668

ー

ー

Exchange rate assumptions: 1USD = 110.00 yen; 1GBP = 145.00 yen; 1CNY = 16.50 yen

40

Page 40 shows estimated net sales and operating income for each business segment 3 years
from now.
In the domestic Wacoal business, centered around Wacoal Corp., we will achieve sustainable
and steady sales growth by accelerating the omni-channel strategy in the wholesale businessand increasing the sales of each store in the retail business. At the same time, we expect to see
improvements in the ratio of operating income by increasing the efficiency of business
operations.
As for the overseas Wacoal business, we will prioritize marketing investments for the realizationof robust growth in the coming 3 years. We will form alliances with other companies,
restructure our own e-commerce websites, and make advertising investments in order toaccelerate e-commerce growth in Europe, America, and China. Furthermore, it will be necessary
to upgrade the business bases including offices, distribution warehouses, and backbone IT in
accordance with the business model reforms that take the advancement of e-commerce into
account. As a result of prioritizing this series of growth investments, the ratio of operating
income is expected to plateau.

Management Objectives (3): Forecast for FY2020 (This Term) (Consolidated Statements of Income)(Millions of yen)
FY2020 plan

FY2019 results

YoY

Distribution
ratio

Distribution
ratio

Amount%Consolidated net sales

200,000

100.0

194,201

100

5,799

+3.0%

Cost of sales

92,10046.0

89,804

46.2

2,296

+2.6%

Sales profit

107,900

54.0

104,397

53.8

3,503

+3.4%

SG&A expenses

96,90048.5

93,684

48.2

3,216

+3.4%

ー

0.0

5,834

3.0

- 5,834

ーOperating income

11,000

5.5

4,879

2.5

6,121

+125.5%

Other profit or loss

A: Impairment charges on goodwill and other intangible assets

1,000

0.5

2,894

1.5

- 1,894- 65.4%

B: Valuation gain (loss) on marketable securities
and investments – netーー- 5,570

ー

5,570

ー

Income before income taxes and equity in
net income of affiliated companies

12,000

6.0

2,203

1.1

9,797

+444.7%

Net income attributable to Wacoal Holdings Corp.

9,000

4.5

341

0.2

8,659

ー

In real terms (reference figure)
Operating income not taking into account A

11,0005.5

10,713

5.5

287

+2.7%

Income before taxes and equity in net income ofaffiliated companies not taking into account A and B

12,0006.0

13,607

7.0- 1,607- 11.8%Net income not taking into account A and B

9,000

4.5

9,636

5.0

- 636

- 6.6%

Exchange rate assumptions: 1USD = 110.00 yen; 1GBP = 145.00 yen; 1CNY = 16.50 yen

41

Please see page 41. I’d like to talk about the business performance forecasts for this term.
We estimate that consolidated net sales will be 200 billion yen, up 3% year-on-year, operating income
will be 11 billion yen, up 125% year-on-year, income before income taxes and equity in net income ofaffiliated companies will be 12 billion yen, and net income attributable to Wacoal Holdings Corp. will be 9
billion yen.
As for the previous term, the impairment charges on other intangible assets referred to as “A”, andvaluation gain or loss on marketable securities and investments referred to as “B” in the table havelargely affected the profit; therefore, we showed the comparison data that excludes them, in real terms
outside the table.
Regarding the operating income plans, Wacoal Corp. estimates 800 million yen decrease due to theincrease in expenses for retirement benefits, distribution cost, and IT-related expenses. Also, in the U.S.
and Europe, we expect that it will drop by approximately 600 million yen due to the effects of theexpenses to restructure and strengthen the e-commerce platform, etc.
On the other hand, we aim to reach an equilibrium level of operating profit or loss for the businesses
that had fallen into an operating deficit in the previous term including Peach John, Ai, and Lecien. In thisperspective, we project about 300 million yen increase in profit overall in real terms.
The reason for the decline in income before income taxes and equity in net income of affiliatedcompanies and net income attributable to Wacoal Holdings Corp. is a large increase in expenses for
retirement benefits caused by the re-evaluation of liabilities for retirement benefits and the worsening ofoperating revenue.

Management Objectives (4): Net Sales and Operating Income of Each Business Segment for FY2020(Millions of yen)

FY2020 planYoY

FY2019 results
Distribution
ratio

Distribution
ratio

Amount%Consolidated net sales

200,000

100

194,201

100

5,799

+3.0%

Wacoal Business (Domestic)

116,200

58.1

113,400

58.4

2,800

+2.5%

Wacoal Business (Overseas)

55,50027.8

53,100

27.3

2,400

+4.5%

Peach John Business

11,6005.8

10,4915.4

1,109+10.6%

Other

16,7008.4

17,2108.9- 510- 3.0%FY2020 planYoY

FY2019 results% to Sales% to Sales

Amount%Operating income

11,000

5.5

4,879

2.5

6,121

+125.5%

Wacoal Business (Domestic)

6,600

5.7

6,325

5.6

275

+4.3%

Wacoal Business (Overseas)

4,000

7.2

4,581

8.6

- 581

- 12.7%Peach John Business

170

1.5

- 5,859

ー

6,029

ー

Other

230

1.4

- 168

ー

398

ー

Exchange rate assumptions: 1USD = 110.00 yen; 1GBP = 145.00 yen; 1CNY = 16.50 yen

42Page 42 shows the estimated net sales and operating income for each business segment for thisterm.
As for overseas businesses, in addition to strengthening the business bases in U.S. and Europe I
mentioned before, we plan to make aggressive marketing investments to accelerate businessgrowth in China and India this term. With this in mind, although operating income is projected
to decline, we plan to prioritize growth investments from a medium to long term perspective.

Financial Strategy (1): Basic Principles of the Capital Policy

1. Increasing the shareholders’ value by improving ROE- We will work toward the sustainable improvement of shareholders’ value and pursue continual profit growthand capital efficiency (ROE) improvement.
- In order to improve ROE, we will focus on improving “profitability (profit margin)” and “capital efficiency(turnover rate),” while maintaining a sound balance sheet.

2. Maintaining a sound balance sheet (shareholders’ equity levels)- In order to ensure capturing the expanding business opportunities, we will maintain the appropriate
shareholders’ equity levels from the perspectives below.
・Sufficient levels for business activities’ risks
・An adequate level to support continual capital investment and investment in growth that foresees futurebusiness opportunities

3. Policy for shareholder return- We view the returns to shareholders as one of the management’s most important issues; thus we plan toincrease shareholder returns, while paying attention to the free cash flow levels and maintaining financial
strength as well as the funds for strategic investments for future growth.
43

Please see page 43. I’d like to talk about capital policies.
The first policy is to work on increasing the shareholders’ value by improving ROE, throughimproving profitability and capital efficiency.
The second is to maintain a sound balance sheet. We will ensure an adequate level to support
sustainable capital investments and deal with business opportunities and risks that come along
the business activities.
The third one is about shareholder return. As I mentioned before, this policy presents plans toincrease shareholders returns, while paying attention to the free cash flow levels and securing
enough resources to cover investment opportunities.

Financial Strategy (2): Improving Capital Efficiency and Enriching Shareholder Returns



We will prioritize the investments for future growth, while pursuing enriching
shareholders returns
 Achieve an ROE of 6% which exceeds capital costs
 Maintain a total return ratio of 100%
 Reduce strategically held shares (target: 30% reduction)
Cash generation
during three years

Improve
profitability

Reducestrategicallyheld shares

Reduceworking
capital¥31 billion or more

3-yeardepreciation
expenses¥19 billion or more

Disposal ofstrategicallyheld shares¥31 billion or more

Investments inexisting businesses ¥21 billion or more
Growth investments¥20 billion or more

A total of ¥70 billion or more

FY2019 shareholders’equity:¥216.5 billion

ROE: 0.2％

3-yearnet
incomeStable dividends
Acquisition oftreasury stock(Reference)
ROE in real terms: 4.2% ratio

Additional returns(or investments innew businesses)¥16.5 billion or more

FY2022 shareholders’equity:¥200 to ¥210 billion

ROE: 6.0％
44

Page 44 outlines our concrete initiatives to improve capital efficiency and the concept
concerning shareholders returns in the coming 3 years.
Firstly, as for generating cash, we will work to achieve profitability through business activities
and reduce working capital. As a result, we estimate the increase in cash flow in 3 years to be
50 billion yen or more. At the same time, we plan to aggressively reduce strategically held
shares and aim to sell off 20 billion yen or more in the coming 3 years, which is equivalent tonearly 30% of all strategically held shares.
Please find the information related to returns and investments on the right of the table.
For the coming 3 years, we will continuously strive for stable dividends and swift acquisition oftreasury stock in order to achieve a total return ratio of 100%. To give a concrete figure, this isapproximately 31 billion yen.
Secondly, we estimated 21 billion yen as sustainable capital investment. This is due toupgrading of the domestic and international IT systems, establishment of the e-commerce
platform, etc.

Financial Strategy (3): Estimate of the Balance Sheet at the End of FY2022

Continue reducing total assets, and innovate for management with a sound andappropriate balance sheet
Total assets: ¥281.8 billion
Total assets: Around ¥265 billion
Liabilities
Current
assetsCash¥39 billion

ROA
6.4％

Cash reduction(Businessinvestment):-¥21 billion

Equitycapital:¥216.5billionFixed
assetsLiabilities
Current
assetsCash reduction(additional returns
or new business
investments):-¥16.5 billion

Depreciation:-¥19 billion

Fixed assets

Fixed assets:¥21 billion

Strategicallyheld shares

FY2019Strategicallyheld shares:-¥20 billion

Equitycapital:¥200 billion(-¥16.5billion)Strategically
政策保有株式
held shares

Net income:¥31 billion
Shareholder returns:-¥31 billion
In case of additional
returns:-¥16.5 billion

FY2022

Note: Starting from FY2020, in line with the changes in U.S. Accounting Standards, the accounting method of leasetransactions is scheduled to change. Accordingly, there will be the increase in fixed assets and liabilities. However, theabove conceptual diagram does not reflect it.

45

Lastly, we included the expected balance sheet as of the end of the term ending March 2022.
We plan to conduct capital and growth investments by using our own funds; thus, this plan will
curb the increase in total assets.
On the other hand, we plan to reduce equity capital by enriching shareholders returns.
In addition, we will try to improve inventory turnover; however, while the proportion of directly
managed business will increase as distribution channels will change, we are not planning for amajor increase in inventory assets.
For the coming 3 years, we aspire to be the kind of group company that not only manages thestatement of income, but also the balance sheet, cash flow, etc. for both domestic and overseas
consolidated subsidiaries.
We will continue our business endeavors aiming for sustainable growth, and we hope to haveyour support.

This is all from me today. Thank you very much for your attention.

Reference Figures

46

Business goals of major subsidiaries：Sales and operating income [external]
Net Sales

Operating Income
Year on YearFY2020targetFY2022targetWacoal102,356

105,327

110,241

7,885

+7.7%

+2.5%

5,099

4,300

6,694

1,595

+31.3%+9.5%

Peach John

10,491

11,60011,6001,109+10.6%

+3.4%

-220

170

350

570

ー

ー

Nanasai

9,414

8,800

9,240

-174

- 1.8%- 0.6%

282

230

330

48

+17.0%+5.4%

Lecien

6,284

6,528

6,663

379

+6.0%

+2.0%

-375

-9

140

515

ー

ー

Ai

4,181

4,290

4,490

309

+7.4%

+2.4%

-321

53

170

491

ー

ー

Wacoal International Corp.
(U.S.)

18,48618,75020,8072,321+12.6%

+4.0%

2,095

1,667

1,969

-126

- 6.0%- 2.0%

Wacoal Europe Ltd.

14,106

14,655

16,3772,271+16.1%

+5.1%

1,407

1,189

1,358

-49

- 3.5%- 1.2%

Wacoal China Co., Ltd.

11,617

12,507

14,8503,233+27.8%

+8.5%

746

758

899

153

+20.5%+6.4%

Change% ChangeCAGR

FY2019results

FY2020targetYear on Year

FY2019results

FY2022targetChange% Change

CAGR

Major Subsidiaries (Local Currency Basis)
Wacoal International Corp.
(U.S.)

166,679

170,465

189,147

22,468+13.5%+4.3%

18,90015,15017,900-1,000- 5.3%- 1.8% (USD'000)

Wacoal Europe Ltd.

96,826

101,062

112,942

16,116+16.6%

+5.3%

9,658

8,198

9,368

-290

- 3.0%- 1.0% (GBP'000)

Wacoal China Co., Ltd.

694,776

758,000

900,000

205,224+29.5%+9.0%

44,59445,90054,5009,906+22.2%+6.9% (CNY'000)【Exchange rate】

USD

GBP

CNY

110.00 yen

145.00 yen

16.50 yen47

FY2020 Increase/Decrease plan in sales

Retail and
WEB

Other
businesses
Deletion ofinterdepartment
transactions

+5.3

PJ
Other
+11.1
overseas
corporations
China
EuropeThe U.S.

+8.9

Lecien

Ａｉ

+2.4

+1.1

Nanasai

+7.0

-6.1

Other

-4.2

+5.5

+2.6

+14.9
Wholesale＋9.5

FY2020¥200.0billion
FY2019¥194.2billion48

FY2020 Increase/Decrease plan in operating income
Wholesale＋1.0

The impactof
impairment
charges＋58.3

Retail andWEB-0.3 back-office
SG&A
-8.7

Other
PJ
overseas
China corporations +3.9
+0.1
+0.5
The
U.S.
-4.3

Ａｉ
+3.7

Other
+6.1

Lecien+3.7
Nanasai-0.5

Europe-2.2

FY2020¥110
billion
FY2019(in realterms)FY2019¥48¥107
billionbilion49

FY2022 Increase/Decrease plan in sales

China
+32.3

Other
Overseas
corporations
+6.7

PJ
+11.1

Ａｉ
+3.1

Lecien+3.8

Nanasai-1.7

Europe
+22.7

Other
-22.0

The U. S.
+23.2
Retail and
WEB
+69.4

Wholesale
＋56.5

Other
Businesses
Deletion ofinter-department
transactions-47.1

FY2022¥2100
billion

FY2019¥194.2billion50

FY2020 Increase/Decrease plan in operating income

Retail andWEB
Wholesale +7.1

China
＋1.5

＋16.3
Back-office
The
SG&A
U.S.
-7.5
-1.3

The impactof
impairment
charges

＋58.3

Other
PJ
overseas
corporations +5.7
+7.4

Ａｉ
+4.9

Lecien+5.2

Nanasai
+0.5
Other
-6.3

Europe-0.5

FY2022¥140
billion
FY2019(in realterms)FY2019¥48¥107
billionbillion51

要確認

Innerwear market size
Five-year market size・Growth rate forecast

Source: Euromonitor International Limited [2019] © All rights reserved
and Yano Research Institute Ltd.(Japan only）（Based on retail prices）
Japan

CAGR
-0.9％

¥628

China

¥600

Billion

FY201717年

18年
FY201823年
FY2023年

Asia(excluding Japan,
China and India),
Australia and New Zealand

CAGR
15.2％
¥616
BillionEurope18年
FY2018Centraland South CAGR
America
6.3％

¥1.91

Trillion

23年
FY202318年
FY2018¥2.55
Trillion

FY2023
23年

Total of the whole world（All areas including the Middle East and Africa）

CAGR
5.4％
¥778

¥1.01
Trillion¥833

23年
FY202318年
FY2018¥1.13
Trillion

BillionBillion

23年
FY2023¥2.13

Trillion

Billion

18年
FY2018CAGR（Russia included）3.7％

TrillionAsia-Pacific

¥303

¥1.53

Trillion

Trillion

22年
FY2022

India

¥3.66

¥2.77

BillionNorth
CAGR
America 4.6％

CAGR
5.7％

18年
FY201823年
FY2023¥12.0Trillion（＋¥2.7Trillion ）CAGR 5.1％※Only Japanese data are tabulatedusing Yano Research Institute Ltd.
Data.

52

Sales of overseas equity method affiliates（Excluding export sales）
Company name

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019Shinyoung Wacoal

13,584

18,61918,27818,815

16,471

17,79017,013

Thai Wacoal

7,983

9,066

9,007

11,536

8,694

11,386

12,972

Taiwan Wacoal

8,899

10,846

11,332

11,80910,12910,721

10,338Indonesia Wacoal

1,404

1,925

2,229

2,418

2,199

2,309

2,249

Wacoal Malaysia

1,026

1,273

1,370

1,258

1,085

1,186

1,253

32,896

41,72942,21645,836

38,57843,392

43,825

58.8%

48.9%

46.7%

46.9%

44.3%

45.5%

45.2%

23,081

43,636

48,10751,86948,42351,88853,100

41.2%

51.1%

53.3%

53.1%

55.7%

54.5%

54.8%

Equity method affiliates total
ratio[%]

Wacoal businness(overseas)
ratio[%]

53

Information within this document with respect to business plans, forecasts, strategies and other statements, including
business performance figures, is based on Wacoal’s assumptions in the light of the information currently available, andin no way precludes the uncertainties and risks inherent in these forward-looking statements. Furthermore, actual
business results may, as a result of numerous factors, differ significantly from those expressed in statements in thisdocument.

54