Wacoal Holdings Corp. Financial Results Presentation

Review of
the Fiscal Year Ended March 31, 2021,
and Initiatives for the Fiscal Year Ending March 31, 2022
Hironobu Yasuhara
Representative Director, President and Corporate Officer
Wacoal Holdings Corp.
May 20, 2021
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FY2021 Review
Against a backdrop of rapid changes in distribution and customer needs
stemming from the COVID-19 pandemic, the initiatives we have been focusing
on for the past few years, such as strengthening EC and the CX strategy byintroducing 3D measurement technology, are starting to bear fruit.
Additionally, structural reforms aimed at improving the high cost structure areaccelerating.
Ensuring the “health and safety” of customers and employees:
prevent the spread of COVID-19

Providing services such as fitting while working toImplementing thorough cost reductions:excess inventory

Promoting the CX strategy: Making progress with “digitalization” and “personalization” efforts

Accelerating EC growth:Progressing with structural reforms:

Carrying our bold reviews of measures and spending plans, and avoiding

Growing the EC business globally in response to rising demand for EC due to COIVD-19
Accelerating structural reforms aimed at improving the high cost structure2

FY2021 Results (1) Promoting the CX Strategy
Making progress with “digitalization” and “personalization” efforts: Wacoal (Japan)
 Progress with centrally managing customer
data
24.6％

 The number of people trying 3D measuring
increased due to COVID 19
Changes in the number ofpeople trying 3D Smart & try

Active customer ratio trends

About 52,000

5,000

No. ofpeople4,000
makingnopurchase
within thelast 3,000
5years

About 38,000 people
Purchase rate during
period: 30%
Average customer
spending: ¥18,600
Cumulative no. of people（up to Mar 31, 2020）

About 14,000* Introduced to 9 stores as ofthe end of March

Aug

Sep

Oct

Nov

FY2020

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

FY2021

Nov（About 1.3 million)

Dec（About 1.6 million)

Members
About 6.6
millionMembers

25%
New
customers:
800,000
Existing
customers:
800,000
20%

About 5.8
millionMembers

FY2021 (Jan-Mar)

Jul

20.5％

6,000

*Introduced to 16 stores as of theend of March

Jun

20.9％

(No. of members making a（About 1 million)（About 920,000)
7,000
purchase in one year/Wacoal
members)

Cumulative no. of people（up to Mar 31, 2021）

May

22.8％

8,000

Jan

Feb

Mar

No. 2,000
ofpeoplemaking a
1,000
purchase
within thelast 50years

Members
About 4.4
million

About 4.9
million15%

WacoalMembers
10%

About
About

2.2
millionAbout

2.4
million

About

2.8

3.6
million5%

million0%
FY2018FY2019FY2020

FY2021

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Efforts Aimed at the CX Strategy to Date: Wacoal (Japan)
Growth of own EC
Introduction of avatar service
IT investment amount: FY2021 ¥2.4 billion
Cooperation/linkage between own EC anddirectly managed stores

Introduction of avatar counseling system

Introduction of 3D customer service

FY2017 IT infrastructure development
FY2018 Implementation of CX strategy(Omni-channel Strategy Promotion Department established)

IT investment amount: FY2017 ¥1.5 billion
FY2018 ¥1.9 billion

Information management system
operation

Start cooperation/linkage between directly
managed stores and EC
Launch “Wacoal Carnet” app
Sharing client (department store) customer
data(Migration to electronic records)

Develop omni-channel service infrastructure

Build omni-channel strategy infrastructure

FY2017 ～FY2018

Introduction of 3D body scanner system(Wacoal and Wing system integration)
IT investment amount: FY2019 ¥2.4 billion

Start trial introduction of RFID (electronictags) at directly managed stores- Digitalization of customer data management- Start operation of tablets for customer service
Core IT integration
Cross-brand products,
building inventory data management
systemIT investment amount: FY2020 ¥3.1 billion

Establish CX Design Department to utilize
customer data. Start integration of dept.
store, directly managed store, and own EC
customer data.
Start expansion work on distribution center(Complete practical use preparation)
・Operation of centralized data management
system(inventory, products, customer purchasing data)
・Development of next-generation customer
service using body scanners and AI

Implement marketing activities that actively
utilize customer data (directly managed stores,
own EC)FY2019FY2020Complete development of client (dept. store)
customer data infrastructure

FY2021

4

FY2021 Results (2) Growing the EC Business
Growing the EC business globally in response to rising demand for EC due to COIVD-19

 FY2021 EC business status at major business units (rate of increase/decrease)
Wacoal (Japan)

Wacoal International (US)Peach John (Japan)*Values for IO Inc. are for reference purposes only
since it was consolidated from Aug of last year.

＋132％

IO Inc.
（Own EC）

Wacoal (Own EC)）

＋91％

Peach John （Own EC）＋43％

US Wacoal（Own EC）

＋32％

＋44％
＋34％

＋72％

＋74％

＋68％

＋56％

＋98％

＋62％

＋6％

US Wacoal（Specialty EC）

＋34％

＋63％
＋46％
＋33％
＋42％
＋31％

FY2021 Own EC Sales
About ¥5.6 billion（＋43％）

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

＋4％

FY2021 EC Sales
About ¥7.3 billion- 32％

About ¥3.9 billion for US Wacoal alone (＋27％）*Own EC ratio 50.5％（＋10.7pt）*Own EC ratio 9.8％（＋4.8pt）

＋19％

＋3％

US Wacoal（Specialty EC）

FY2021 Own EC Sales
About ¥8 billion（＋56％）＋48％*US Wacoal: EC ratio of 54.4％（＋20.7pt）
1Q

2Q

3Q

4Q

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TOPICS – Wacoal’s Own EC Site Growth
FY2021 Major KPI *Own EC only

Net Sales¥7.97 billion（YoY＋55.8％）*Own EC only

Start cooperation/linkage
with physical stores
Launch in-house project with directly
managed stores and web members to
study a system for mutual customertransfer

Strengthen to link/blend
between online and offline- Canceled secret sales at directly
operated stores and shifted to own
EC- Strengthen personalized actions via
marketing automation

Strengthen chat consulting services thatutilize experienced sales associates

Number ofCustomers Visiting
Our Website
Number of Purchases

Conversion Rate

Order AmountPrice per Order

Number of Purchases
by New Customers

Strengthen support for new lifestyles- Start of “Maternity Remote”
customer service- Increase the number of chatconsultants

Number of Purchases
by Existing
Customers
Number of Purchases
per Customer

FY2020

FY2021↗ YoY +20%
↗ YoY ＋50％
↗ 1.91（＋0.45pt）↗ YoY +50%
↘ About \10,500↗
↗
About 1.5times→

The number increased due tohigher demand fromconsumers staying home

*The percentage of customers whopurchased more than once increased

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TOPICS – Peach John’s Growth
FY2021 Major KPI *Own Domestic EC only

Net sales ¥5.63 billion（YoY＋43.5％）*Own EC Only

Own EC growth
April 2019～
Start structural reforms

Operating profit
margin over 15%
Implement marketing activities thatleverage our “strengths” as a mail-ordercompany

Issues(1) Worsening management efficiency- Continued investment in unprofitablebusinesses- Discounts becoming commonplace- Declining merchandising ability(2) Decrease in new customers‐ Unclear customer target

Number ofCustomers Visiting
Our Website
Number of Purchases

Conversion Rate

Order AmountPrice per Order

Number of Purchases
by New Customers

Measures- Suspend catalog, withdraw from
unprofitable businesses- Review sales methods, curb SALES- Initiatives to link “strengths” tobusiness performance- Increase in new customers- Increase the number of annual
purchases by retaining existingcustomers (CRM activities)

FY2020

FY2021

Number of Purchases
by Existing
Customers
Number of Purchases
per Customer↗ YoY +30%
↗ YoY +45%
↗ 1.91（＋0.16pt）↗ YoY +40%
→ About \9,000↗
↗
↗
The number increased due toour successful marketing
activities, etc.

The number increased due tothe purchases by customer after
a long absence, etc.
Altough the number of times
increased,it didn't reach theplan

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TOPICS – LIVELY’s Growth
Net sales $31.8 million（YoY＋94.1％）*Own EC only

Made subsidiary at
end of July 2019
(Consolidated from August 2019)LIVELY- A brand that encourages women tolive passionately and confidently

Intimates Online CEO
Michelle Cordeiro Grant

FY2020

FY2021 Major KPI

Aggressive marketinginvestment aimed
at growth
EC Site- Increase the ratio on comfort-orientatedproducts while at the same time introducing“bundle pack,” a system that allows
customers to purchase products with justtwo clicks- Transfer logistics operations to US Wacoal

Expand customer touch points- Launch business with the popular US
chain store “Target” from Feb 2021

FY2021

Number ofCustomers Visiting
Our Website↗

YoY +40%

Number of Purchases↗

New Costomers
75％
Existing Costomers 25％

Conversion Rate↗

3.44（＋0.58pt）

Price per Order↗

About $72（＋$4.3）

Cost of Marketing↗ $18.6million（+15％）

Note: YoY comparisons are against the cumulative results for the last 12 months（Since IO Inc. was newly consolidated from Aug 2019, the values listed are
for reference purposes only)

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FY2021 Results (3) Progress on structural reforms
Accelerating structural reforms aimed at improving the high cost structure: Wacoal (Japan)

FY2021 Status

Improve store
profits

Optimize
personnel
expenseOptimizeother costs

Switched about 30 dept. stores
to consumption-basedtransactions（Equivalent to about 23% of department
store over-the-counter sales)

Through personnel planning
management, reduce total
personnel expense by-¥1 billion(progress rate 20%)

Execute thorough cost reductions
in light of deteriorating
business conditions

Specific initiatives for FY2021
 Convert to self-managed stores
 Review sales floor environments（From displays on multiple floors to centralized sales
corners)

 Review business conditions, etc.

（Revise multiplier rates, introduce personnel/store
manager systems)

 Curb hiring of sales associates and parttime workers
 Internal: Transfers/assignments based on
personnel planning External: Start drafting and executing
personnel plans
 Review existing measures and spendingplans across all business areas
 Reduce business trip expenses byintroducing and using audio/videoconferencing systems

Future targets
Aiming to convert
all dept. stores to
consumption-basedby the end of
FY2024

Continue to promote
initiatives（KPIs noted on P14)

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FY2021 Review (4)Issues continuing into the current fiscal year and beyond
1. Addressing and reforming domestic subsidiaries (Nanasai, Ai) whose business environments have deteriorated
significantly due to the impact of COVID-19
2. Establish re-growth strategies in China, where the competitive environment for EC is intensifying, and in Europe,
where the impact of COVID-19 is lingering FY2021 performance (rate of increase/decrease)
Wacoal Europe, China Wacoal

Ai

Nanasai

China Wacoal
EC sales（excl. Peach John)
Underwear business

Product sales business

- 39％
- 41％
- 41％
- 43％

- 10％

- 6％

- 5％

- 26％

- 23％

- 19％

- 41％

- 38％

Rental business

±0％

- 56％

3Q

Ai overall

＋4％
- 10％

- 21％

Wacoal Europe
Wholesale sales- 54％
Resort wear
(swimsuits)business

- 70％

1Q

- 51％

- 16％

- 42％

- 66％
- 60％

4Q

＋4％
- 16％

Nanasai overall

- 80％

- 80％
2Q

- 13％

- 25％

- 37％

Construction business

1Q

＋7％

- 15％

- 37％

- 50％

＋9％

＋15％

±0％

- 57％
- 50％

China Wacoal
Physical store sales（excl. Peach John）

2Q

3Q

4Q

*China Wacoal settles accounts at the end of Dec
1Q

2Q

3Q

4Q

10

FY2022 Roles andInitiatives

11

FY2022 Roles and Initiatives- A year for “completing structural reforms” aimed at returning to ahighly profitable business structure
Implementationof profit
structurereforms
Promotion of
growth strategy

Promotion ofsustainable
activities

1. Reduce fixed costs
2. Address and reform unprofitable businesses
3. Customer-oriented value chain reform
4. Promote CX strategy
5. Re-identify key business growth issues
6. Strengthen response to human rights
and environmental issues

12

FY2022 Initiatives - Implementation of profit structure reforms

1. Reduce fixed costs
 Continue to optimize personnel through thorough staff planning andreduce the personnel expense ratio Review cost effectiveness of fixed general expenses（Review/reduce inefficient investment costs)

2. Address and reform unprofitable businesses Re-examine the profit structure for all businesses, and determine theunprofitable businesses to be dealt with
 Act on unprofitable businesses in FY2022 so that they will not be carriedover to the next medium-term management plan（Continue to implement business reforms)

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FY2022 Initiatives - Implementation of profit structure reforms
Reduce fixed costs and improve profits of existing businesses (KPIs)
Review general expenses (Wacoal)

About ¥2 billion

Amount of
reduction excluding
growthinvestments

Optimize personnel expenses(Wacoal)About ¥2 billion

Progress rate
about 40%

Effect of profit improvement on
unprofitable businesses
Peach John: ¥1 billion

About ¥1.5 billion Other businesses:¥500 million

Improving sales profit ratioBrand consolidation, decrease in no. of item codes
Curb valuation loss by reducing inventory andreturns

Expected progress for FY2022 profit
structure reforms (vs FY2020)

About ¥5.5
billion～Target value of profit
structure reforms by end
of FY2023 (vs FY2020)

About ¥10 billion*Comparison between FY2022 plan figures and FY2020 results*Growth investments for Wacoal, IO Inc., US Wacoal, etc. will increase by about ¥5 billion vs FY2020

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FY2022 Initiatives - Promotion of growth strategy
3. Customer-oriented value chain reform: Wacoal reorganization
Implement organizational restructuring to strengthen the ability to respond to customer
purchasing behavior and distribution structures, realize renewed growth, and build a highly
profitable management structure (from April 1, 2020）(1) Review the organization by channel, and shift to a system in which each area has control of all sales channels in its area(2) Integrate product planning to maximize the value provided by each brand and improve the efficiency of planning operations(3) Integrate marketing operations to realize cross-brand/channel advertising strategies and optimize investment

FY2022 Initiatives (Organizational integration issues and processes for solving them)

Verify the ideal form of operational management that improves effectiveness and identify problems in order to generate

results from FY2022 onwardVerify the allocation of brands and products according to customer and area characteristics, and implement flexible personnel
placement accordingly
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FY2022 Initiatives - Promotion of growth strategy

What Wacoal’s new organization aims to achieve
Implement area marketing(Optimal personnel and product placement
for each area)

Reorganization/newly established (from April 2021）

Sales Division

Improve store profits and centralize

Directly managed stores

inventory management

Department stores
Mass retailers
Specialty stores

LTV improvement
Ensure loyalty ofexisting customers

Acquire newcustomers

Link/blend online and offline channels(Offer a stress-free shopping experience)
Establish a sales system that balances the selfmanaged business and the wholesale business
Consolidate core brands and strengthen marketing(Maximize the value offered by the brand)

Utilizecustomer
data

Human
ChemicalResearch
Institute

Customerdata base

Web Sales
Division

Developorganizational
infrastructure to
support growth
Ensureemployeehealth & safety
Work style reform

Technology
andProduction
Division

Work style reform
including DX andremote work
Human resource
development strategy
Review of skills/roles
Promote transfer ofauthority

Brand
Group
Linked planning /MD / marketing

Develop products
customers want
Improve manufacturing
profitability

Reorganization/newly established (from April 2021）

Foster a highly
rewardingorganizational
culture16

FY2022 Initiatives - Promotion of growth strategy
4. Promote CX strategy
Wacoal: Promote CX strategy to build “deep, broad, and long-lasting”
relationships with customers
 Improve customer experiences via “integration of on/offline services” and “customer data utilization,” etc.
 Expand new areas of business via the development of new technology and collaboration with othercompanies, etc.

Overseas: In addition to Europe, the US, and China, implement the CX
strategy in Asia, where rapid EC growth is expected US Wacoal: Expand own EC by promoting “Digital First Strategy”

 IO Inc.: Verify optimal marketing mix and improve efficiency of advertising investment
 Wacoal Europe: Promote marketing using 3D Smart & Try
 China: Improve sales per physical store and continue EC expansion by acquiring new customers

 Asia: Expand business in India and develop new customers through a common EC platform

17

FY2022 Initiatives - Promotion of sustainable activities

5. Re-identify key business growth issues
 Promote “ESG Management” to create future “growth opportunities” by addressing increasingly complex social
issues Identify key ESG issues to achieve sustainable growth and enhance corporate value Set long-term targets aimed at solving problems(Launched the “Sustainability Promotion Project” with the participation of both management and employees)

6. Strengthen response to human rights and environmental issues
 Calculate emissions and set reduction targets for greenhouse gases, and establish management processes
accordingly

 Examination/formulation of Group-wide human rights policy that is compatible with the “Action Plan for
Business and Human rights”
 “Formulate Environmental Standards to Guide Product and Material Development,” and “Establish a System
to Manage the Progress of Each Division”

 Ongoing promotion of CSR procurement activities

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New Medium-Term Management Plan (FY2023～)

To be announced around May 2022 (planned)

19

Information within this document with respect to future business performance
figures is based on Wacoal’s assumptions in the light of the information currently
available, but in no way guarantees or promises actualization or achievements
thereof. Furthermore, the information is subject to change without notice. Although
the information is published with the greatest care, our company will not take any
responsibility whatsoever regarding any error in the published information.

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