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 President2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

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

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

Consolidated
ratio ofoperatingincome andROE to be
more than
10%(FY2028)
FY28(Reference) Converted to retail prices: About¥450 billion¥270 billion(FY2028 stretchedtargets)
FY28
5

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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

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Expectations from the Stakeholders (Mainly Institutional Investors)

Negative comments

Positive comments
1.

2.

3.

Wacoal's business efficiency improvement
results are reflected in gross profit rate, and it
will continue to be positive.
Wacoal’s development in next-generation
customer service using digital technology
cannot be imitated by the other companies. It
is promising.
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

Priority Strategies

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

Achieve strong
growth in Japanand overseas◎◎◎

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

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

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

◎
◎
◎
◎

Improving
economic andsocial values

◎
◎
◎
◎
◎
11

1. Sustainable Growth and Improved Profitability of Wacoal Corp.

12

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
FY202213

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

Nationwide
development“3D body scanner + personalized app”
“Digitalization of customer records”“Customer-consultation AI”
Collaboration between “stores” and “e-commerce”

https://www.wacoal.jp/smart_try/■”3D smart & try”
3D body scanner/Customerconsultation AI (Installing 100/3
years)■Floor reform＜Place to sell⇒ Place toexperience＞■Collaboration with e-commerce

To create new products and services based on personal data

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

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"

PajamasTo improve the added value of the “Think Sleeping” brandJuniorTo acquire introductory generation by expanding recognition of the "Pulili" brandTo 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

Men’s

¥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

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

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•

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

3D body scanner installation:¥0.5 billion

IT system renewal: ¥7.5 billion

Building renovation: About ¥1 billion

16

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

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

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

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

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%
based on ①

 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%

Ratio ofoperatingincome:3.0%

FY20199,240
Ratio ofoperatingincome:3.5-4%FY202222

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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%

FY202225

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%

FY202226

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

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 adjustment28

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

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

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

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 plan35Performance Objectives and Financial Strategy(Management Plan from FY2020 to FY2022)

Akira Miyagi,
Director, General Manager of Corporate Planning36

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

ProfitGenerate 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 communities

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)

④

⑥

 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

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

Medium-Term Management

Plan (FY2022)

Consolidated net sales:¥210 billion

1000

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

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
% to Sales

Operating income

Comparison between FY2019 and FY2022

FY2019 results% 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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%

Selling, general and administrative expenses

96,90048.5

93,684

48.2

3,216

+3.4%

A: Impairment charges on goodwill and other intangible assets

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 income (expenses)

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

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%In real terms (reference figure)

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

41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

42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

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)

Improve
profitability

Reducestrategicallyheld shares

Reduceworking
capital

FY2019 shareholders’equity:¥216.5 billion

ROE: 0.2％

Cash generation
during three years
3-yearnet
income¥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

(Reference)
ROE in real terms: 4.2% ratio

Stable dividends
Acquisition oftreasury stock

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

FY2022 shareholders’equity:¥200 to ¥210 billion

ROE: 6.0％
44

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

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

政策保有株式
held shares

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

Reference Figures46

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

Net SalesYear on Year

FY2019results

FY2020targetYear on YearFY2022target

FY2019results

FY2020targetFY2022targetWacoal102,356

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% Change

CAGR

Change% 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
PJ

Retail and
WEB

Other
businesses
Deletion ofinterdepartment
transactions

+5.3

Other
+11.1
overseas
corporations
China
EuropeThe U.S.

+5.5

+8.9

+7.0

Ａｉ

+1.1

Lecien+2.4
Nanasai

-6.1

Other

-4.2

+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+3.9
China corporations
+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
Europe+22.7

OtherOverseas
corporations
+6.7

PJ
+11.1

Ａｉ
+3.1

Lecien+3.8
Nanasai
-1.7

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+5.7
corporations
+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

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
Billion

FY2017
17年¥600
Billion

22年
FY2022

India

China

North
CAGR
America 4.6％

CAGR
5.7％

¥3.66

¥2.77

Trillion

18年
FY201823年
FY2023年

Asia(excluding Japan,
China and India),
Australia and New Zealand¥303

Billion

18年
FY2018¥1.01
Trillion

Billion

23年
FY202318年
FY2018¥2.13
Trillion

23年
FY202318年
FY2018¥2.55
Trillion

FY2023
23年

Total of the whole world

¥833

¥1.13
Trillion

BillionBillion

18年
FY2018CAGR（All areas including the Middle East and Africa）

CAGR
5.4％
¥778

TrillionCentraland South CAGR
America 6.3％

Asia-Pacific

¥616

¥1.91

Trillion

Trillion

CAGR
15.2％

¥1.53

Europe（Russia included）3.7％

23年
FY202318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