TSI HOLDINGS CO., LTD.
Financial Results Briefing for the Fiscal Year Ended February 2024
April 15, 2024

Event Summary[Company Name]TSI HOLDINGS CO., LTD.

[Company ID]

3608-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for the Fiscal Year Ended February 2024

[Fiscal Period]

FY2024 Annual[Date]

April 15, 2024

[Number of Pages]

33[Time]

10:00 – 11:02(Total: 62 minutes, Presentation: 46 minutes, Q&A: 16 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

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Tsuyoshi Shimoji
Mitsuru Naito

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Representative Director and President
Director, Head of Corporate Headquarters

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Presentation
Moderator: Good morning. Thank you for taking time out of your busy schedule to join us today. The time
has arrived, so we will begin presenting the full-year financial results for the fiscal year ended February 2024
and the mid-term business strategy.

Shimoji: Hello, everyone. Thank you for all your help. Today, I would like to explain our full-year financial
results for the fiscal year ended February 2024 and our medium-term business strategy, “TSI Innovation
Program 2027,” a rolling new version of TIP25 that we have established.
The first will be a summary of the fiscal year ended February 2024.
Executive summary.
In the market environment, the sweltering summer and warm winter brought us various effects, but with therecovery in demand for outings and the increase in inbound visitors, we see consumer confidence exceedingthat of the previous year. On the other hand, the economic outlook remains uncertain due to the worsening
yen depreciation, soaring raw material prices, rising logistics costs, and the increasing tendency for consumers
to economize.
As for the domestic business, we benefited from the market recovery. In addition, the OMO strategy
implemented since the pandemic has successfully attracted new fans through customer sentiment andproduct initiatives, resulting in a significant increase in sales for womenswear and streetwear brands.
However, since we have been cautious in purchasing products as a result of the late delivery and excessive
inventory of the past seasons, shortages have occurred after narrowing down the list of products, and thishas put a brake on the speed of growth, left us an issue to tackle.
In the area of golf, golf wear, which experienced a surge in popularity during the pandemic, saw both
highlights and challenges. PING and New Balance Golf, both in the growth phase, exhibited good performance.
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2However, our core brand, PEARLY GATES, misjudged the demand, resulting in an excess of inventory.
Additionally, due to prioritizing the clearance of inventory, profitability declined.

Overseas business.
In our overseas business, the athleisure market, our primary focus in the US, including HUF and TACTICS, is
experiencing oversupply due to the contraction in the US industry as a response to the pandemic's uniquedemands. Price competition is very fierce, so we constantly have promotional sales. While the anniversary
capsule collection of HUF had been a sales driver in the fiscal year ended February 28, 2023, it experienced adecline due to the recession and the decrease in sales following the anniversary event.
Our team's lack of agility in responding flexibly and effectively to the discontinuous changes in theenvironment and market has emphasized the problem. It is necessary for us and the Company as a whole toreevaluate the situation once again in order to make a further leap forward.
This time, we have created a new medium-term business strategy as a rolling update of the TSI Innovation
Program 2025, announced in April 2022. We take one giant step back. After that, we will implement structuralreforms to further enhance profitability. By the fiscal year ending February 28, 2027, the entire company will
strive to exceed JPY10 billion in operating income through these structural reforms.

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3Performance highlights.
The golf business had performed very well in the past year and the previous year. However, as I mentioned
earlier, the situation was divided into two parts: some brands were performing well, and others wereexperiencing a drop in numbers due to product initiatives.
Overall, the streetwear business in the US was strong during the pandemic. However, it has converged in the
US and is now slightly underperforming. The impact of these two factors is very significant to the entire
company's profitability. This is a primary reason for the drop in the initially planned figures.
Additionally, we were able to uphold the revised plan due to the strong sales of particular brands and theunderlying strength of those performing well.
Full-year net sales were JPY155.38 billion. Net sales increased slightly to 100.6% of the previous year's level
despite the impact of last year's withdrawal from the business. This was due to our failure to focus on strongselling merchandise.
Next, operating income was JPY1.76 billion for the full year. Operating income amounted to 37.4% of theinitial plan, primarily due to the impact of discounted sales to clear inventories, alongside the soaring costs of
raw materials in the foreign exchange market.
I will explain later, but the net income for the full year was JPY4.84 billion.

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4This is the full-year adjusted disclosure difference.
We had initially planned for an operating income of JPY4.7 billion, but due to the deteriorating performanceof several brands, we were unable to take adequate measures. We have revised our operating income
forecast downward to JPY1.4 billion.
Following that, promotional sales and other events contributed to the restoration of earnings, and we
managed to secure earnings from brands that had been growing steadily. Consequently, we achieved an
operating income of JPY1.76 billion, marking an increase of JPY360 million from the revised plan.

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5This is the net income impact item for the full year.
Net income was JPY4.84 billion, with a profit margin of 3.1%.
The breakdown is as follows: Operating income and JPY1.99 billion in non-operating income, such as dividends
received, real estate income, etc., resulting in an ordinary income of JPY3.75 billion; and in addition to
extraordinary gains and losses of JPY290 million, including gain on sales of investment securities andimpairment loss, the Company recorded a gain on adjustment for income taxes of JPY2.35 billion due to theincreased likelihood of recovering deductible temporary differences based on future earnings prospects,
resulting in net income of JPY4.84 billion and a profit margin of 3.1%, as reported earlier.

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Let's move on to the balance sheet.
Cash and cash equivalents, the decrease of JPY4.7 billion occurred mainly due to an increase in inventories.
As for inventory, some businesses have succeeded in improving their efficiency through careful inventory
control. However, some businesses have been significantly affected by the increase in inventories. In addition,in the area of licensed brands from overseas, we are making strategic upfront investments in purchasing tominimize the impact of foreign exchange rate fluctuations. Given this, the overall inventory is increasing.
However, our intention is not to sell this inventory through deeper discounts; instead, we will plan to carefully
manage its liquidation and balance our purchases accordingly.
The Company sold investment securities intending to optimize its financial balance and prepare for business
investments. The YoY ratio was 90.2%, a decrease of JPY2.7 billion from the previous year.
We will continue purchasing treasury stock as part of its capital and shareholder return policies. Income
increased by JPY2 billion. This income and the remainder will be canceled on April 30.

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7Brand overview. We will provide an individual overview of our leading brands for the full year.
First, sales of main brands remained steady, excluding stagnant brands. In particular, MARGARET HOWELL,
AVIREX, and STUSSY performed well throughout the year. In addition, brands other than the mainstay brands,
such as LE PHIL, ADORE, a curated boutique ROYAL FLASH, and Schott, which are differentiated by their uniqueproduct offerings, are strongly supported by domestic and international customers and are performing well.
As for the leading brands and their highlights, PEARLY GATES has been stagnant for a while. Although the sales
are higher than those of 2019, the Special demand for golfwear during the pandemic has run its course, andsales have leveled off. We have held promotional sales to adjust inventory for the first time in several years,
and we are now implementing measures to optimize our inventory.
For the NANO universe, there was a decrease from the previous year (96.6% YoY) attributable to the impactof a review of the SPI plan that prioritized profitability and the effects of store closures. However, existing
stores recovered to 123% compared to the previous year. We have high expectations that we will be able toenter another phase of growth with a narrower product lineup that will be well-accepted by customers.
NATURAL BEAUTY BASIC is 101% YoY. With the strong performance of LIMITED EDITION, which is offered atlimited stores, we saw an increase in profit. Additionally, it sold more than we had anticipated. The mismatch
between supply and demand couldn't keep up, resulting in numerous shortages. We were also affected by
the closure of some stores and could not cover our overall sales.
FY ended Feb 2024 left us with several issues to address and some matters to reflect on.

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8This is a summary of sales by channel for the full year.
Domestic physical store sales grew to 103.5% YoY or JPY3.07 billion. Although the number of stores decreased
by seven stores net, sales increased due to the rapid growth of urban street stores and department stores.
Wholesale sales and non-apparel businesses grew to 113.4% YoY or JPY2.16 billion. As labor shortages havebecome a social issue, S-Groove, one of our subsidiaries' human resources support services have been
expanding and contributing to sales growth and earnings.

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9Full-year EC sales results.
E-commerce sales were JPY39.7 billion due to the overseas business, which continues to face a sluggish market
and the withdrawal of some of the brands. Compared to the previous fiscal year, sales were sluggish at 92.7%.
In the existing business in Japan, sales were at 98.1% YoY. Streetwear brands, which had been performing
well from special projects and collaborative sneakers in the previous year, have seen a decline in popular
products, and the sneaker trend has considerably dwindled. Additionally, the need for high-profile products
to attract consumers who tend to make impulsive purchases stimulated by the shopping environment has
posed a significant challenge.
Excluding these factors, the decrease in sales, and the withdrawal from the business, the results exceeded
those of the previous year.
In addition, to further advance our growth phase, we have teamed up with ZOZO, a third party, to launch a
new brand under the NANO universe, which customers have very well received. The Company would like tofocus efforts on gradually emerging new buds in such areas.

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10This is the consolidated financial plan for the fiscal year ending February 2025.
Net sales for the current fiscal year are expected at JPY160 billion, considering the increase in sales due tostructural reforms. We expect a decrease in sales due to the withdrawal of the underachieving brands fromthe market. Both factors are included in the plan of JPY160 billion or 103% YoY.
Operating income is expected to be JPY2 billion, including a temporary decrease due to expenses incurred in
the first year of the reform. It will be 113.6% YoY. Ordinary income is expected to be JPY2.5 billion, 66.7% YoY,
and profit at JPY4 billion.

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I would like to talk about our full-year profit-and-loss plan and operating profit margin.
TSI is undergoing significant structural reform to break away from the current low profitability and improveoverall profitability.
However, regarding the operating profit margin and the profit and loss plan, we anticipate a deterioration ingross profit by approximately JPY1.4 billion. This is due to several factors, including the adverse impact ofdeteriorating foreign exchange rates, soaring raw material costs, and the effects of inventory adjustment.
However, we will improve profit by JPY1.44 billion by growing the business and reducing SG&A expenses.
As the medium-term business strategy outlines, we anticipate improving profit by JPY3 billion throughstructural reforms. Based on the actual profit of JPY1.76 billion in the fiscal year ended February 29, 2024, we
project actual profit to increase to JPY4.8 billion.
From this point, including one-time expenses associated with structural reforms, we have set operating
income at JPY2 billion for the fiscal year ending February 28, 2025.
This concludes the presentation of the financial results for the full fiscal year ended February 29, 2024. Thankyou very much.

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12Next, I would like to explain our medium-term business strategy, TSI Innovation Program 2027.
The medium-term business strategy I am about to explain is a program to thoroughly identify and reform theissues TSI has been facing since its inception. We have already begun the proecess by establishing several
subcommittees to resolve problems. We, the management team, will work together to make a company-widecommitment.

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First, a look back at TIP25. In the second year of TIP25, sales and operating income did not reach the target.
While it's undisputable that the EC sales ratio has declined as physical store sales rebounded following the
pandemic's end, the more significant issue is that EC sales have decreased. Under these circumstances, the
SG&A ratio was kept down with tighter control.
However, business investment is delayed. While the target investment was JPY30 billion in three years,
JPY11.1 billion was invested in two years. The remaining balance was allocated to the return to theshareholders through repurchase of treasury stock amounting to 9.0 billion yen.

Outline of the medium-term business strategy and the background of its formulation:
TSI has managed business by emphasizing each brand's uniqueness. However, even after the merger in 2021,
when individual brand optimization progressed, we could not fully optimize the entire company. This time,
we recognize that the inefficient cost structure caused by this is a significant issue, and we will implement
drastic structural reforms.
Without sacrificing the brands' uniqueness and fun, we will work to share each business function acrossbrands to the maximum extent possible, with the aim of building an optimal company-wide structure.

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The current status of TSI HOLDINGS CO., LTD.
The graph shows the trends in crucial management indicators over the past five years. Low profitability poses
one of our most significant challenges. We will promote structural reforms based on the three critical issues
shown in the diagram on the right.

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A reform plan was formulated to enhance TSI's corporate value. First, while reviewing and strengthening themanagement base, we will also focus on reforming the profit structure as the most critical pillar of our efforts
to increase the ability to earn throughout the Company. We will use the funds generated to invest in growth
and accelerate our growth. We would also like to promote reforms to realize our purpose of creating fashionentertainment.

We have been conducting individual optimization based on brands, which has led to many losses and inflated
SG&A expenses. We are committed to developing optimal business operations for the entire company.
In design and planning, the creation of designs plays a pivotal role in developing a brand with individuality.
We believe that establishing an environment conducive to continuous learning and communication for thispurpose will contribute to realizing the fashion entertainment that TSI aims for.
We will quickly change to a unified system in business management. In sales, we will promote an efficient
strategy of opening new stores in each area instead of individually operated stores. Reinvestment of humanresources will be included in this. We are currently operating more than 30 e-commerce sites. We will
integrate the e-commerce sites of TSI Inc., which accounts for 70% of the sales, by the end of the current fiscal
year.

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Profit structure reform. In the fiscal year ending February 2027, we will improve our profit by approximately
JPY10 billion. We have identified five major themes of the profit structure reform. The completion dates andimpact of each measure are shown on the right.
First, to reduce purchasing costs, we will shift from selecting suppliers for each individual brand to an optimal
form across brands and take advantage of order volume. We currently have about 1,500 suppliers, and weare considering reducing the number to maximize efficiency.
Next is supply and demand management. Our priority will be to verify the market situation and competitors'
retail prices and set an appropriate price accordingly. Simultaneously, we will increase the sell-through rate
and optimize the inventory by developing uniform regulations focused on the required production volume.
We believe that the unification will contribute to improving profits.
Retail operation reform. We will review our store staffing and build a system that will allow us to operate
more efficiently. One way to do so is to group them based on locations, such as metropolitan or rural areas,
and the other is to do so based on the divisions those stores belong to, including e-commerce & digital
operations, and supply chain management. As such, we will enhance efficiency by consolidating and closing
low-profit stores while expanding the scale of successful stores across different areas.
Next is the e-commerce site. The first step will be to merge TSI Inc.'s websites which have been integrated
system-wise already into a single site. This will help to improve cost efficiency. There are approximately 15
sites, and they will be integrated into one within the FY ending February 2025. By integrating each ecommerce site and each brand's loyalty program members, we hope to reduce SG&A expenses, increaseloyalty by strengthening the customer base, and further enhance customer service.
The next major investment will be in the next generation of core systems, which isn't achievable within asingle year. In preparation, we will renew our core system over a two-year period to standardize andstreamline our core business operations, encompassing various business forms.
Cost efficiency in SG&A expenses. We will standardize the management method for major expenses acrossbrands from the previous brand-by-brand approach, and we will be more cost-effective and accurate thanSupportJapan
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17ever before. We have now also formed task force teams for each individual objective, from logistics andaccessories to human resources. Through this, we have begun efforts to optimize the entire company.

We have selected brands to strengthen and clarify the brand portfolio. On this basis, we will aggressively
invest in brands with high growth and profitability potential. TSI carries about 57 brands, and the lack of aclear portfolio has been a major issue. While making investments, we will evaluate brands with weak growthpotential and make decisions including withdrawals in H1 (target) of the current fiscal year, and makedecisions to be implemented by the end of the current fiscal year.

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We believe that our existing brands have the potential to grow based on their current strengths. Since thedirection of growth differs for each brand and business domain, we will examine it in detail on an individual
basis. However, we would like to try various things, including having existing brands go into other areas.
For example, PEARLY GATES and PGG will be leveraged to strengthen peripheral areas, including leisure andsports outside of golf. Also, in the streetwear domain, we are expanding into department stores and otherareas. We would also like to attempt to create a playground that embodies playfulness and challenges thewomen’s and premium price points of fashion capitals.

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19Strengthen customer touchpoints. We will provide and propose new value across brands that suit ourcustomers through the integration of the e-commerce sites and customer data. TSI has many unique brands,
and we would like to connect with our customers in a multifaceted way. We want to provide more
personalized services at points of contact, such as stores and e-commerce sites, with the customers at thecore.
We will also develop digital marketing from new perspectives, such as introducing our brands, which ourclients did not know about, and proposing brand experiences that have never existed before. Our brand,which has already created communities will continue to offer entertaining live events while incorporating new
digital marketing to expand its appeal to new/potential customers as well as existing customers.

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Next is a venture into a new area. We will enter new areas based on market trends and TSI's strengths. The
first is advancement into the high-end area through the value of providing simple, high-quality living. We will
utilize existing brands and create a form of lifewear that extends their concepts. Including the introduction of
new brands and M&A, we would like to create new concepts and high-end zones.
Second, we will also expand into fashionable yet reasonable price-oriented markets. Naturally, strong
competitors exist in this area, but not all are oligopolies. Therefore, if we can clearly define a differentiation
strategy for each target trend and advance into the market by emphasizing that TSI possesses the resources
and capability to create more intriguing products, we believe we stand a good chance of success.
In addition, there are already a number of new concepts and M&A projects in the pipeline. We are still in theprocess of examining them closely. From this fiscal year, we organized a section that specifically focuses on
new business development to expedite research, selection, and commercialization.

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Expansion into overseas markets.
We will give priority to profit improvement and other growth strategies. We will simultaneously identify thepotential for overseas market development and lay the groundwork.
The announcement will include figures, but we are still firmly committed to building the foundation now andformulating our strategy, including for the current fiscal year.

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TSI's strength lies in its many unique brands, which combine fashion, design, and hospitality. At the core ofthis is our hospitality to customers, which is also our asset. We aim to utilize this asset as a driving force toadvocate for fashion that contributes to society.
For instance, we aim to create spaces to learn and play and to expand the communities. We present productsthat promote health and happiness through wearing, along with functional designs suitable for people withdisabilities. Additionally, we will deepen and enhance the quality of TSI's branding by encouraging individuals
to embrace their beauty and express themselves more uniquely.

The quantitative targets of the medium-term business strategy.
We will achieve JPY165 billion in net sales, JPY10 billion in operating income, and 8% ROE in the fiscal year
ending February 2027, as our most important quantitative targets through profit structure reforms andgrowth strategies.

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23This is the policy for resource allocation in the three years of medium-term business strategy. We will generate
JPY30 billion through structural reforms and improvement of inventory levels and JPY10 billion through the
reduction of non-business assets. We will use the cash we generate to invest in new businesses, EC
consolidation, M&A, growth, and foundation building while enhancing shareholder returns. In addition, theCompany expects to borrow approximately JPY10 billion from external sources, as needed, in a flexible
manner.

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Major strategic policies
In order to improve operating cash flow and generation capability, we will execute profit improvement
projects and improve inventory efficiency. The idea is to generate JPY30 billion in cash over the next three
years.
Secondly, to reduce non-operating assets, we will sell investment securities and investment properties. The
sales will generate a total of JPY10 billion in cash over the next three years.
For the procurement of external assets, we will also borrow a cumulative total of JPY10 billion over a threeyear period. This investment will be directed towards building stores for our growth strategy, aligning with
our portfolio strategy.

Allocation of the cash resources.
Growth investment will be soaked out by existing brands that have strong customer loyalty. We have also
explained the establishment of new business models in the stipulated price range, including M&A, and in thevalue price range. We intend to invest approximately JPY20 billion over three years to strengthen customer
touch points, including in-store and e-commerce.
Investment in infrastructure efficiency includes updates to existing stores and IT infrastructure development
including core systems, etc. We will also invest approximately JPY12 billion over the next two to three years
in logistics and supply chain as part of our digital transformation efforts.
In terms of shareholder returns, we will maintain a dividend payout ratio of 30% or more. As for treasury stock,
we will implement JPY10 billion over the next three years to strengthen shareholder returns.
For ROE, we will set an internal hurdle rate of 8% as the standard for deciding individual investment projects.
Through a combination of profitability improvement and net asset control, we will aim to achieve an ROE of
8% for the fiscal year ending February 2027.

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We will aim for a DOE of 4% for the fiscal year ending February 2027 as the level of shareholder return during
the medium-term business strategy period.

This is the figure we aim for through our capital policy. Enhancing TSI's corporate value is our goal. To achievethis, we focus on creating good fashion and quality clothing, coupled with excellent hospitality. We ensurethat our customers have a pleasant experience in our stores. In order to do so, we strongly feel that we mustachieve a PBR of over 1x during the period of this medium-term business strategy.
We will aim to manage the current cost of shareholders' equity. We will achieve ROE above cost ofshareholders' equity and increase the equity spread to achieve a PBR of 1x. We hope to improve ROE by
improving profitability, strengthening stock price relationships, or reducing non-business assets.

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Our sustainability management.
First, our corporate philosophy. We will implement a one-stop strategy from Purpose in line with oursustainability policy. In the area of sustainability, we have established four key areas to work toward asustainable business model. We are determined to realize the TSI Group's materiality by building a solidorganization and management system.

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These are the major initiatives to date. SBT has certified our greenhouse gas emission reduction target. We
received a B score, the third highest in CDP's climate change assessment. The efforts made to date in each of
the four key areas are steadily taking shape.
Firstly, for the global environment, we have initiated the cultivation and harvesting of organic cotton. We are
expanding our plantations through a business partnership with a company that utilizes this material. We arenearing the time when our products will be released using these sustainable materials.
In the area of human rights, we conduct employee satisfaction surveys. I am happy to say that this year, we
received a 100% response from all employees. I also read the eNPS for all employees and am in the processof reevaluating their requests, our way of thinking, and our organizational structure.
In terms of social issues, we are working with the industry and academia to foster the next generation of
fashion industry workers.
We have established various governance and policy formulations, including the addition of sustainability andmateriality, governance policies, environmental policies, committees, human rights and social policies, and acode of conduct for our business partners.

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As for materiality and future policies, we have set materiality targets in line with the four crucial areas andwill further evolve our efforts. Please refer to our website for details.

Last but not least, I would like to talk about TSI's Purpose and what we are aiming for. “Creating empathy andsocial value across the world through the power of fashion entertainment” is our purpose. All employees workwith this in mind and are determined to make great strides as creators of fashion entertainment.

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The direction in which TSI is heading: “the ability to create innovative fashion,” which is written on the far leftof this page. This came very much from my own ideology: design contributes to society. And “diverse andcutting-edge brand portfolio” can be created through rich imagination. Therefore, we would like to thoroughly
invest in this area.
In addition, we are also looking for new creative opportunities in the expanding fashion market, such as danceand education. There are all kinds of things, including sports, golf, snowboarding, and skateboarding, and byhanding them down to the next generation, we can create new communities.
We aspire to present our collection brands in esteemed settings, and we are working towards gaining theability to showcase them in Europe, including Paris and London, not only in Tokyo.
We would also like to develop items for hobbyists, such as fishers and hikers. By contributing to their wellbeing, we aim to create a business that brings enjoyment and excitement to all our stakeholders.
We would also like to develop a new type of clothing that can be worn together with pets and other family
members, offering a new way to experience family bonding. Our aim is to create value that will be widely
recognized as highly beneficial to both society and you.
Hospitality is TSI's strength. We offer products that enhance your well-being, excitement, and fun. Throughthis, we aim to expand, bring color to the city, and instill power and passion in people driven by fashion—the
final component of our mission. We strive to be a company that creates fashion entertainment, and we will
persist in this endeavor.

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Document Notes
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TollfreePortions of the document where the audio is unclear are marked with [Inaudible].
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides ananswer from the Company, or [M] neither asks nor answers a question.
This document has been translated by SCRIPTS Asia.

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