FY2017 – FY2019

Medium-Term Management
Plan Summary
May 2016

Wacoal Holdings Corp.

Contents
Review of FY2014 – FY2016
Medium-Term Management Plan

4

The Wacoal Group’s Operating Environment

11

Medium-Term Management Plan and
Key Measures to Achieve It

14

Reference Data

23

2

Presentation Topics
Review of FY2014 – FY2016
Medium-Term Management Plan

The Wacoal Group’s Operating Environment
Medium-Term Management Plan and
Key Measures to Achieve It

Reference Data

3

Review: Sales Growth
Net sales reached plan target(Millions of yen)

Peach John
Other Businesses
Peach John
Other Businesses

CAGR:-0.8%

31,213Peach John
Other Businesses

30,47835,000Wacoal Business(Overseas)

Wacoal Business(Overseas)

Wacoal Business(Overseas)

51,86946,00030,284

Wacoal Business(Domestic)

Percentage
achieved

115,657

120,570

101.3%FY2013

FY2016Percentage
achieved

Wacoal Business(Domestic)

177,154

CAGR:1.4%

202,917101.5%

Wacoal Business(Domestic)

119,000

FY2016 target

200,000
4

Review: Operating Income
Operating income fell just short of the plan target(Billions of yen)160
168.0%
Operating income
営業利益7.2%

営業利益率
Operating margin

14140

Target figures:¥14 billion 7%

6.8%120127.0%
6.0%

6.0%

101005.0%
4.7%

880

3.7%

13.960
613.9

2.7%

3.0%

10.4
8.5404220

4.0%

7.1

2.0%

4.4

1.0%

00.0%

FY2011FY2012FY2013

FY2014FY2015FY2016

5

Review: Performance Indicators after the Shift to a Holding Company
In the medium term, we have improved profitability and strengthened our financial position. On
the other hand, decreasing investment opportunities led to a buildup of free cash flow.
Millions ofYen, %FY2006

FY2011FY2012FY2013

FY2014FY2015FY2016

Net sales

164,122165,548171,897

180,230

193,781

191,765

202,917

Operating income

1,333

4,401

10,377

8,499

13,860

7,082

13,865

Operating margin

0.8%

2.7%

6.0%

4.7%

7.2%

3.7%

6.8%

Net income

2,821

2,785

6,913

7,880

10,1068,444

11,159

Free cash flow
(Operating +investment)-1,350

8,508

6,593

-10,685

10,607

14,501

1,227

Total assets

242,296104

215,276

221,098

254,536

271,988

300,272

292,854

Shareholders’equity186,475

167,480

171,496

186,64671
205,106

228,857

224,375

EPS (yen)44

19.60

19.73

49.08

55.95

71.7559.95

79.23

Dividends per
share (yen)

20

2028

28

30+330

33

1.6%

1.6%

4.1%

4.4%

5.2%

3.9%

4.9%

12.5%

12.4%

13.0%

18.9%

22.7%

25.3%

25.7%

ROE
Overseas sales
ratio

85139

139

6Review: Progress of Priority Measures (1)Domestic wholesale operations contracted while retail business grew, but
profitability was an issue.
Response to diversification of domestic market
・Increased focus on first-time wearers and seniors
・Expansion of products in mid-price range
・Cultivation of regions where our share is relatively low・Diversification of directly managed store formats
Sales (Billions of yen)

120
RetailWholesale100¥83.6billion（15.1%）

80

FY13¥86.6billion（16.8%）FY16604020¥16.0 billion（6.7%）FY16

FY13 ¥12.4 billion（8.2%）

00.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Operating margin (before allocation of corporate expenses)

7

Review: Progress of Priority Measures (2)The overseas sales ratio increased and profit growth was significant, butissues emerged.
Sales and profit growth in each country and region

・In the Americas, recaptured share in high-end segment and expanded new sales
channels (e-commerce, neighboring countries)
・Built robust earnings foundation by restructuring operations in Europe
・Improved profitability in China and made inroads in growing middle-class segment

Sales (Billions of yen)

25
U.S.
EuropeChina

20¥16.1 billion（7.7%）

15 ¥11.1 billion

FY16139（4.4%）FY161041044¥6.6 billion（-5.2%）-10.00%-5.00%FY16139

FY13

FY138571¥11.5 billion（6.5%）

FY13¥20.2 billion（12.3%）¥11.6 billion（12.3%）

500.00%5.00%

10.00%

15.00%20.00%
Operating margin8

Review: Progress of Priority Measures (3)Peach John and Lecien could not fully absorb the rise in costs due to theyen’s depreciation.
Rebuilding of customer base (Peach John)• Maintained and expanded number of customers by reorganizing brands,
reopening stores and reorganizing the EC infrastructure• Re-examined China businessSupporting Group strategy while maintaining profitability (Lecien)• Secured sales and gross profit by strengthening proposal of OEM solutions• Contributed to Group as a supplier of products in mid-price range

Sales: ¥12.0 billion (98%)
Operating income: ¥260
million (77%)

Sales: ¥11.6 billion (99%)
Operating loss: ¥40 million (-)

Began building production operations primarily in ASEAN to prepare forfuture growth139
104 Wacoal
Establishment of Myanmar• JV with Thai Wacoal scheduled to begin operationsin Sept. 201685
• Will start with production for Thai market, then develop as a global supply base44
Establishment
of A Tech Textile and G Tech Material• JVs with Japanese supplier, Saha Group and Thai Wacoal• Enable local procurement of high-value-added materials• Secure competitive edge in quality and cost by handling knitting and dyeing in
an integrated process

9Presentation Topics
Review of FY2014 – FY2016
Medium-Term Management Plan

The Wacoal Group’s Operating Environment
Medium-Term Management Plan andKey Measures to Achieve It

Reference Data

10

The Wacoal Group’s Operating Environment—Domestic
The environment will remain challenging, but we can face thechanges and seize new opportunities.
Market contraction scenario until now

Sales
volume ↓Marketcontraction
risks

Falling unit
pricesOpportunities for Wacoal Group

Declining
population

・Demand stimulated by promotion ofwomen in the workplace・Increase in “active seniors”
・Increase in foreign visitors to Japan

Reducedpurchasingpower

・Economic buoyancy from 2020 TokyoOlympics

Overseassuppliers

・Bottoming out due to rising wages in Asia
→ Relative superiority of our products

Emergenceof new sales
channels・Room for entry into new sales channels→Utilize our strengths combining ourstore network and EC

11

The Wacoal Group’s Operating Environment—Overseas
Increasing our presence in each country and region will be key.
Previous conditions• High growth in emerging
countries• Excess money supplyworldwide• Rising resource prices• Global population increase

Could expect broad-based
growth backed by macroeconomic expansion

Current and future conditions• Slowing growth in emerging countries, concerns about
Chinese economy• Rising political and geopolitical risk
• Increasing volatility in financial markets, resource prices• Population increase will continue, but aging will proceed inadvanced countries• Accelerating move toward regional economic cooperation/
integration

Need to deal with structural changes in the global
economy and adopt individual strategies

Our integrated business model in each country andregion will be a strength and will present
opportunities to establish a solid foothold

12

Presentation Topics
Review of FY2014 – FY2016
Medium-Term Management Plan

The Wacoal Group’s Operating Environment
Medium-Term Management Plan andKey Measures to Achieve It

Reference Data

13

Medium-Term Management Plan—Quantitative Targets

Net sales:¥215 billion
Operating income: ¥15 billion（Operatingmargin 7%）

Net income:ROE:¥11 billion

5.0% or higher＊Exchange rate assumptions

1USD = 110 yen
1GBP = 160 yen
1CNY = 17 yen

14

Medium-Term Management Plan—Basic Policies

Secure earnings in domesticbusiness

Generate further growth in overseas
business

Create Group synergies andstrengthen competitiveness

Expand our business portfolio

Improve our Group management infrastructure

Improved
profitability
Improvedbusiness efficiency

Effective
financialstrategy

Improved
capital efficiency
(ROE)

15

Secure Earnings in Domestic Business
Focus on “how customers want to buy,” and build a mix of sales channels
Stage I

Stage II

Stage III

(from FY2017)(from FY2018)(from FY2019)

Increase profitability ofwholesale operations-Expand regional sales system-Pursue efficiency ofmanpower and materialsIncrease profitability ofretail operations-Expand stores-Reduce costs

Improve business
infrastructure

Customer-oriented
channel mix-Refine internal systems andrules-Integrate mission-critical ITsystems-Develop customer contact
points-Directly managed stores andour own EC-Partner with retailers-New customer acquisition
and reciprocal customer
referralDevelopment of high-value-added new products and product strategies geared totarget customer segments
Wholesale
Retail

FY2016¥33.8 billion
28%¥86.8billion
72%

Sales: ¥120.6 billion
Operating income: ¥8.8 billion

FY2019・Wholesale
・RetailCAGR: -2.5%
CAGR: 7.6%

・Profit decline due toincreased expenses¥42.1billion
34%

¥80.4
billion
66%

Sales: ¥122.5 billion
Operating income: ¥8.0 billion

16Generate Further Growth in Overseas Business
Build a robust operating foundation in the three largest markets
Europe• Complete organizational restructuring• Review brand portfolio• Conduct development trial based on humanscience research
Sales: ¥16.4 billion (102%)
Operating income: ¥1,650 million (133%)

U.S.
• Defend mid-range and high-end market• Cultivate business in neighboring
countries and new sales channels• Develop management successor
Sales: ¥20.1 billion (99%)
Operating income: ¥2,220 million (88%)

China• Use dominant product appeal in high-end market• Improve LA ROSABELLE profitability• Use other companies’ EC, sales promotion
development
Sales: ¥11.3 billion (102%)
Operating income: ¥1,020 million (209%)

17

Create Group Synergies and Strengthen Competitiveness
Peach John・Rebuild the brand image
・Enhance O2O communication
・Expand store network andstrengthen customer baseGroup Synergies
Sales: ¥14.6 billion (123%)
Operating income: ¥800 million (310%)

Lecien・Concentrate on core business・Streamline planning and production
・Develop high-value-added products
Sales: ¥13.0 billion (112%)
Operating income: ¥250 million (returnto profitability)

Ai・Enhance year-round stores
・Expand resort wear products
・Overhaul business infrastructure

・Sharing of O2O Method of Wacoal and Peach John・Sale of Peach John and Ai products in Wacoal’s
domestic & overseas sales channels
・Swimwear co-development by Ai and Wacoal
・Adoption of Ai’s distribution functions at Wacoal
・Supply to companies using Lecien’s OEM
functions・Development and internal use of ASEAN
procurement basesSales: ¥7.3 billion (129%)
Operating income: ¥200 million (20times)

18

Expand Our Business Portfolio
Seek new business areas and markets base on our strengths
Knowledge ofhuman science• Quality control• Manufacturing
technology

Internal
proposals

Our own global
production
network

Our own
resources

Dominant sharein Japan andAsia

Open
innovation

Diverse storechannels

Value Offerings

BeautyComfortIntroduce our textile
products into newmarkets

M&A

Well-trained
beauty advisors
Marketing rooted
in countries andregions

Outsideoffers

Take on newbusinesses(other than innerwear)

Health19Improve Our Group Management Infrastructure
Sincerely engage with stakeholders to achieve sustainable growth
Fulfillment of our management
philosophy“We will contribute to society by helping women to express their beauty.”

Response to social demands and issues• Comply with laws, regulations and voluntary standards, and respect international
standards of conduct• Strictly adhere to our code of conduct• Foster our ability to listen to and perceive the views of society

Ongoing improvement of corporate
governance・Improve the governance framework to enhance the Board of Directors
・Practice appropriate disclosure and engage in constructive dialogue withshareholders

Development of human resources
・Respect diversity and promote opportunities for women to succeed
・Cultivate global-minded human resources

20Capital Policy and Shareholder Returns
Invest in future growth and enhance returns to shareholders while
maintaining a strong financial position
Investment in existing
businesses
New businesses
Profitability
improvement

Cash
Generation

Working
capitalreduction

Net income＋Depreciation＋¥25.0 billion
or moreStable dividends(Asset impairment)

Shareholders’equityReview ofstrategic
shareholdings¥45.0 billion ormoreFlexible share
repurchases

Shareholders’equityFY2016FY2019¥224 billion¥220 billion

ROE
4.9%

We will reinvest and allocate to shareholder returns atleast the amount of cash generated during the period

ROE
5% orhigher

21

Presentation Topics
Review of FY2014 – FY2016
Medium-Term Management Plan

The Wacoal Group’s Operating Environment
Medium-Term Management Plan andKey Measures to Achieve It

Reference Data

22

Reference Data: Sales and Operating Income Targets by Segment(Millions of yen)
FY2016Net Sales
FY2019Operating IncomeFY2019
FY2016

Differencevs. FY2016

ComparedwithFY2016

122,5001,930

102%

8,810

8,000

-810

91%

51,86958,000

6,131

112%

4,433

5,300

867

120%

Peach John Business

11,19013,200

2,010

118%

258

800

542

310%

Other Businesses

19,28821,300

2,012

110%

364

900

536

247%

202,917215,000

12,083106%

13,86515,000

1,135

108%

Wacoal Business(Domestic)
Wacoal Business(Overseas)

TotalResults

Target120,570

Results

TargetDifference Comparedvs.
withFY2016
FY201623

Reference Data: Sales and Operating Income Targets of Main Subsidiaries(Millions of yen)
Net Sales
FY2016

Operating IncomeFY2019

FY2016Comparison
with FY2016

ResultsFY2019
TargetComparison
with FY2016

Results

TargetWacoal110,123

112,000

102%

6,743

5,200

77%

Peach John

11,965

14,600

122%

258

800

310%

Lecien11,64513,000

112%

-41

250

-

Nanasai

10,50412,000

114%

306

450

147%

Ai

5,715

7,350

129%

11210

1909%

Wacoal International (U.S.)

20,222

20,100

99%

2,491

2,200

88%

Wacoal Europe

16,096

16,400

102%

1,238

1,650

133%

Wacoal China

11,067

11,300

102%

487

1,020

209%

【Performance of Major Subsidiaries (Local Currency Basis)】Currency

Wacoal International (U.S.)

168,323

182,700

109%

20,731

19,900Wacoal Europe

88,771

102,200

115%

6,828

10,220Wacoal China

575,820

667,000

116%

25,341

59,900Thousands of
US$Thousands of150%
PoundsThousands of
236% Yuan

96%

Note: Figures are before adjustment for consolidation.

24

Reference Data: Sales Targets for Business Divisions of Wacoal Corp.

(Millions of yen)

FY2016
Results

FY2019 Net Sales
TargetCompared Differencewith FY2016 vs. FY2016

Wacoal Brand Business

58,24155,00094%-3,241

Wing Brand Business

25,416

24,40096%-1,016

Retail Business

15,80919,900

126%

4,091

Wellness Business

7,135

8,050113%915

Catalog Sales Business

5,164

6,620

128%

1,456

Intersegment transactions, etc.

-1,642-1,970--Total110,123

112,000

102%

1,877

Note: Figures are before adjustment for consolidation.

25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, and in no way precludes the uncertainties and risks inherent in these forward-lookingstatements. Furthermore, actual business results may, as a result of numerous factors, differ significantly
from those expressed in statements in this document.