INTEGRATEDREPORT

2021

Wacoal Holdings Corp.
29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan
https://www.wacoalholdings.jp/en/

CONTENTS

CONTENTS

02 VISION

38	STRATEGY52	ESG74	FACTS

	 02	Opening Remarks from the Chairman

	 40	Strategies by Business: The Wacoal Business	 54	Response to Climate Change	  76	Consolidated Financial Highlights	 55	Consumer- and Environment-Friendly

	 78	11-Year Financial Summary

and President(Domestic)
A Message from the Director in Charge of Sales

	 04	Interview with the President and	 42	Strategies by Business: The Wacoal Business

the Vice President(Domestic)
A Message from the Director in Charge of
Products

16 WACOAL STORY	 44	Strategies by Business: Wacoal’s Initiatives

Geared to Renewed Growth (1) Reorganization

	 16 The Origins of the Wacoal Group	 46	Strategies by Business: Wacoal’s Initiatives Geared	 17 Group Philosophy

to Renewed Growth (2) New Brand Strategy

	 18	Toward a New Chapter in Our History	 20	The Wacoal Group’s Business Environment and	 48	Strategies by Business: The Wacoal Business(Overseas)
A Message from the Director in Charge

Initiatives for Renewed Growth	 22	Evolving Our Organization’s Capabilities toGrow Enterprise Value

	 50	Strategies by Business: Global Initiatives of theBusiness Activities

	 80	Management’s Discussion and Analysis

	 56	Fulfilling Social Responsibilities along	 86	Consolidated Balance Sheets

Our Supply Chain

	 88	Consolidated Statements of Income

	 58	Strengthening Human Assets

		Consolidated Statements of Comprehensive
Income	 60	Management Team	 62	Corporate Governance	 89	Consolidated Statements of Equity

	 68	IR Interview Report	 72 Establishing Mutual Trust through Dialogues

	 90	Consolidated Statements of Cash Flows	 91	Notes to Consolidated Financial Statements
126	Corporate Information
127	Investor Information

Wacoal Business (Overseas)	 28	Evolving Our Value Creation Process	 30 Progress of Value Chain Reform Initiatives
	 32	Review of Fiscal 2021 and Overview
of Fiscal 2022 Plan

	 34	A Message from the Director in Charge ofFinanceOur Corporate Website
Wacoal Holdings Corp.’s Website
https://www.wacoalholdings.jp/en

Investor Relations

Sustainability

https://www.wacoalholdings.jp/en/ir

Investor Relations
 anagement Information
MFinancial Information/
Financial Highlights
Monthly Sales Data
IR Libraryhttps://www.wacoalholdings.jp/en/sustainability/

Sustainable Policy
 ividend and Share
D
RepurchaseShareholder BenefitsStock Information
IR News

 he Wacoal Group’s Basic Policies on
T
CSR and Relations with Stakeholders
Group Philosophy
A Message from the President
Material Issues in Wacoal’s Business
Activities
Integrated ReportESG Data Book

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Focus Areas of Our Initiatives(ESG Issues)
CSR Procurement
Corporate GovernanceCompliance
Risk Management

Editorial Policy
In accordance with international norms for integrated reporting, the Wacoal Group has
been issuing integrated reports since fiscal 2011 as part of its communication with shareholders and other investors. This integrated report explains the Wacoal Group’s value
creation activities not only through financial information but also through nonfinancial
information about unique, significant assets and other facets of the Group’s business.
Further, the website of Wacoal Holdings Corp. includes a wide range of information
about the Group. We hope that referring to this integrated report in conjunction with thewebsite will further understanding of the Group. Going forward, we will continue pursuing
an editorial policy that responds to changes in reader expectations.
Forward-Looking Statements
Statements contained in this integrated report that are not historical facts are forwardlooking statements, which reflect the Company’s plans and expectations at the time ofwriting. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, performance, or
achievements to differ materially from those anticipated in these statements.

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VISION

VISION

Opening Remarks from the Chairman and President

Faced with the greatest change in the business environment
since our founding, we will demonstrate a high level ofresilience and evolve into a sustainable company.
The global COVID-19 pandemic brought about significant changes in the values, attitudes toward health, andbehavior of consumers. Moreover, the pandemic has
added momentum to initiatives focused on realizing asustainable society, and the shift in consumers’ attitudes
toward sustainability seems likely to continue gatheringpace.
Based on “a strong desire to devote the life bestowed
upon me to work for society,” Koichi Tsukamoto decided
he would contribute to society through the provision of
beauty and founded Wacoal shortly after the end ofWorld War II, in 1946. As each era has further diversified
the norms of beauty, Wacoal has earned the long-term
trust of customers precisely because each of its employees
exemplifies the Company’s founding spirit by constantly
taking on the challenge of reforming themselves in
response to an evolving external environment. This mindset has enabled us to develop and market products thatexceed customer expectations and thereby help create asociety in which everyone feels vital and radiant.
The Wacoal Group’s business environment is rapidlytransforming and becoming more complex. To adapt tothe changes we face and achieve renewed growth, each
employee must return to the Group Philosophy as a starting point, reaffirm their understanding of our purpose02

and mission, and be prepared to identify and solve issues.
In addition, we must reform all manner of operations sothat we can adapt to realignments in markets and sales
channels, trends in technological innovation, and changes
among our customers and swiftly create new value thatearns customer endorsement.
To demonstrate a high degree of resilience and evolve
into a sustainable company, we will steadily move forwardwith existing structural reform initiatives. In conjunction
with these efforts, we will continue fostering personnel
who can put the Group Philosophy into practice throughthe creation of products loved by customers and thedevelopment of new products that meet the needs of thetimes. We will also continue developing an organizational
culture in which people enjoy their work.
In addition, we will step up efforts to addressenvironmental and social issues. By sincerely listening tostakeholders’ opinions and utilizing them in business
management, we will work with stakeholders both togrow as a corporate group and to help create a sustainable society where people worldwide have opportunities
to shine. As we evolve, I would like to ask for yourcontinued support.
September 2021

By combining employees’ savvy with the advantages of digitaltechnologies, we will contribute to the day-to-day health andwell-being of each and every one of our customers and create
the value sought by society in a new era.
The COVID-19 pandemic has transformed society. Evenin the new normal, post-pandemic era, consumer behavior is likely to continue evolving. In adapting to the dramatic changes in the business environment and achieving
renewed growth, we have positioned the two-year period
ending March 31, 2022 as a phase for accomplishing
structural reform to restore robust profitability.
Accordingly, we have been accelerating existing initiatives
to advance digital transformation and revamp underperforming businesses.
With respect to digital transformation, we are focusing
on a strategy of enhancing the customer experience byintegrating and coordinating online and off-line operations, utilizing customer data, and rolling out a new customer service system enabled by 3D body scanners. This
unique strategy will build relationships with customers
that are deeper, broader, and longer. In the new normalera, the realization of renewed growth will call for sensitivity to multifaceted changes in consumer attitudes aswell as responses that accurately reflect consumer viewpoints. To date, we have achieved growth by building
strong relationships with a range of different stakeholders
as we work with them to address their issues and achieve
results. Without the savvy of each employee, however,these efforts would not have been possible. With this inmind, while leveraging digital technologies, we will continue honing the communication, value judgment, andproblem-solving capabilities of our employees. This dual
approach will allow us to provide products and services
that contribute to the day-to-day health and well-being ofeach and every one of our customers.
Furthermore, viewing the increasing diversity andcomplexity of social issues as growth opportunities, we
aim to establish ESG (environmental, social, and governance) management as an important long-term strategy
for the creation of both social and economic value. To
this end, we launched the Sustainability Promotion
Project in April 2021. As part of the project, members of
the senior management team and employees have begun
discussions on key tasks for sustaining growth and enhancing enterprise value. At the same time, we are advancing
initiatives focused on governance, human rights, andclimate change. Over the medium to long term, thecumulative effect of these initiatives will sustain growthand increase our enterprise value. As we take on new
challenges, I would like to ask for your continued support.

Yoshikata Tsukamoto

Hironobu Yasuhara

Representative Director and Chairman
Wacoal Holdings Corp.

Representative Director, President andCorporate Officer
Wacoal Holdings Corp.

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September 2021

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VISION

VISIONInterview with the President and the Vice President

By providing unique value that reflects changes
in society’s priorities and issues, the Wacoal
Group will sustain growth.

Q Over the past year, how has the COVID-19 pandemic changed the environment and how
have these changes affected the Wacoal Group?

A Around the world, lifestyles, behavior, and consumption have changed dramatically, and management structure issues have become apparent. In addition to accelerating structuralreforms, we are making multifaceted preparations in anticipation of a post-COVID-19 society.

A Year That Revealed a Major Issue in Our Profit Structure
Yasuhara:	Since the COVID-19 pandemic began, we have been working on the assumption that rapid containment of the crisis
will be challenging. However, a 19.0% year-on-year decrease in consolidated net sales, to ¥152.2 billion, and an operating loss of ¥1.1 billion are not results that merit praise. Before the pandemic, we were aware that a profit structure inwhich an approximately 10.0% decrease in sales eliminates profit was an issue. In response to the dramatic changes
stemming from the pandemic, we accelerated measures focused on self-transformation. Nonetheless, we recorded
the first operating loss since our establishment, and I view this result very seriously. In fiscal 2022, the year ending
March 31, 2022, and the final fiscal year of the current medium-term management plan, we will continue giving firstpriority to structural reforms aimed at correcting the high level of cost in our profit structure.

	Significant Changes in Lifestyles and Consumption Patterns
Worldwide
Ito: 	From the perspective of consumers and ordinary citizens around the world, lifestyles, behavior, and consumption
patterns have changed significantly. At the root of these changes is the fact that the pandemic has made many people
more concerned about their immediate surroundings as well as about society and the environment generally. To takemasks as an example, until recently people wore them to protect themselves from infection, but now they also wear
them to protect others from infection. I believe that this change in thinking, coupled with the rapid progress of digitization, has brought about major shifts in how we live and act.
	 Pandemic-driven acceleration of the clock and significant changes in customer values and distribution channels arehampering the effective functioning of our organizational structure and unique value chain that comprises R&D, product planning, and sales through consultations with beauty advisors—which until now we have viewed as assets andadvantages. As the biggest issue that the Wacoal Group faces, this mismatch has led to a decline in sales and therecognition of an operating loss. Concluding that we had to change our organizational structure to address the issue,
we embarked on a bold reorganization of Wacoal Corp. in April 2021.

Adaptation to Trends after Vaccination Rollout Programs
Tomoyasu Ito

Hironobu Yasuhara

Director, Vice President Corporate Officer
Wacoal Holdings Corp.
Representative Director,
President and Corporate Officer
Wacoal Corp.

Representative Director,
President and Corporate Officer
Wacoal Holdings Corp.

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Yasuhara:	The difference from a year ago, immediately after the outbreak of the pandemic, is that business performance is
beginning to recover in some countries and regions as people are vaccinated in increasing numbers. Consequently,
the outlook is gradually becoming more predictable. While there are differences among countries and regions, on thewhole, vaccination programs will progress throughout fiscal 2022. As a result, we are likely to see the easing of behavioral restrictions and sudden spikes in consumption may occur in certain countries and regions. However, the future
trends after such phenomena have passed are the key consideration. Accordingly, we must carefully analyze the outlook for a range of factors, including the percentage of sales accounted for by e-commerce, which has risen in thepast year; whether consumption focuses on goods or on services, such as travel; and the balance between the consumption of goods and services. Whatever the outcomes are, as the choices of consumers are expected to diversify
further, being prepared to adapt to a range of possible scenarios is extremely important for us. By accurately responding to future changes in the environment, we will achieve new growth.

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VISION

VISIONInterview with the President and the Vice President

Q

Reforms to Enable Advances under the Next Plan
How are the structural reforms progressing, and what
results have they produced?

A

Certain benefits are emerging from cost structurereforms, which are focused on cost reduction, theimprovement of store profitability, and the optimizationof personnel expenses. We will continue revising andreforming our operations to improve profitability, which
will enable dramatic advances during the period of thenext medium-term management plan.

Yasuhara:	We have been pushing forward with structural reforms with the aim of achieving dramatic advances during the periodof the next medium-term management plan, which will begin in April 2022. Although progress and results differ fromcountry to country, the e-commerce business, which we are strengthening as part of our growth strategy, has seen
significant benefits, particularly in relation to Peach John and the United States. We have been able to accelerate
efforts aimed at correcting the high level of cost in our profit structure thanks to the strong sense of crisis shared by
all employees in the face of rapid changes in the external environment as well as the implementation of existing measures and expenditure plan reforms in all of our businesses. We have also achieved some positive results in improving
store profitability and optimizing personnel expenses, which were identified as tasks.

Digital Transformation: The Key to Structural Reform
Ito: 	At present, we are accelerating these reforms even further and moving forward one year earlier than expected withmeasures we had envisioned implementing during the next medium-term management plan. We had a sense of crisis
that, if we missed the current opportunity, officers and employees might revert to their previous mindset. This was amajor factor in our decision to undertake the large-scale reorganization of Wacoal Corp.
	 In achieving structural reform, the use of digital technologies is indispensable. First of all, we are now at a stage
where we can create digital customer records—based on data managed by in-house e-commerce and directly managed stores as well as data held by department stores—and share a variety of customer information in-house. Further,
we are making steady progress in improving the customer experience through the use of digital technologies. For
example, we are providing stress-free sales environments by integrating online and off-line operations and introducing
3D body scanners. Through the promotion of digital transformation, we will improve operational efficiency while building deeper, broader, and longer relationships with individual customers.

Reform of Employee Awareness and Behavior
Yasuhara:	Going forward, linking personnel evaluations to numerical targets for employees, including employees of subsidiaries
and overseas significantly, will be important. If targets change, awareness and behavior change. Until now, we haveset sales as a key performance indicator (KPI) for each division. For an employee responsible for certain department
stores, sales at these department stores were an important indicator. Given the increasing complexity of customers’
consumption behavior, however, it will become important to establish personnel evaluation systems that not only take
into account the stores and sales channels for which employees have responsibility but also reciprocal customer
referrals between other stores and sales channels, such as online
stores and specialty stores.
	 We are already in the process of introducing new evaluation systems. For example, we have introduced an evaluation system forbeauty advisors whereby they earn recognition if their introduction ofcustomers to online stores or other stores leads to a product purchase, even if the product is not carried by the store where the beauty
advisor works. As a result, beauty advisors have become more proactive in referring customers to other stores and sales channels, which
has strengthened coordination among sales channels and enhanced
customer satisfaction.

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VISION

VISIONInterview with the President and the Vice President

Q

Reorganization of Wacoal Corp.
What type of growth strategies will the domestic
business pursue?

A

We will rebuild our value chain to make it more customer
focused. By consolidating the value creation functions
we have developed, we will advance customer experience strategies, acquire new customers, and enhancecustomer life time value (LTV).

Ito: 	As I mentioned earlier, Wacoal Corp. reformed its organization on April 1, 2021. The purpose of the reorganization was
twofold. The first goal was to better meet the needs of customers, and the second was to streamline the organizationand optimize the allocation of management resources by reforming structurally overlapping functions and management resources within the company. Until recently, Wacoal Corp. conducted operations through discrete organizations
for respective sales channels, and each of these organizations had its own value chain that included product planningand sales teams. Our main purpose was to disassemble these organizations and reassemble product planning, sales,and marketing functions in an appropriately customer-focused manner. Also, we reorganized the brand groups into
three groups. Instead of the sales channel-based approach previously used, we will adopt the approach of a marketer
who focuses on what kind of value is being provided to which type of customer. In this way, we will evolve our manufacturing functions. Moreover, the reorganization has revealed overlapping functions as well as shortcomings. Wacoal
Corp. will bring together the value-creating functions scattered throughout its value chains to provide even more value
to customers and achieve structural reform.

	An LTV Strategy That Builds Deeper, Broader, and Longer
Relationships with Customers
Ito: 	Our customer experience strategy is a distinctive growth strategy that increases LTV by utilizing online stores andbrick-and-mortar stores in combination to acquire new customers and heighten the loyalty of existing customers.
	 The nature and role of brick-and-mortar stores will change significantly. We aim to achieve e-commerce sales of¥20.0 billion by fiscal 2025. If we reach this target, in-house e-commerce sales will account for 20.0% of our net sales.
Add 5.0% to this for the percentage of net sales contributed by other companies’ e-commerce, and brick-and-mortar
stores’ share of net sales is likely to decrease to 75.0%. As the percentage of customers using e-commerce is
expected to continue rising beyond fiscal 2026, the role of brick-and-mortar stores will be to increase the level ofengagement between customers and Wacoal.
	 We think of our customer group, which comprises new customers and loyal customers, as being a “customer pyramid.” The key to expanding the entire customer pyramid is to attract new customers and membership program participants by providing the products and services that meet the needs of the times as well as reflect changes in the pointsof contact themselves. With this in mind, we will leverage the 3D smart & try customer service system, which utilizes
3D body scanners and AI. Measures aimed at utilizing 3D smart & try to strengthen customers’ points of contact with
Wacoal through quality products and favorable customer experiences are being led by the Innovation Strategy Office,established in April 2021.
	 Another option for creating new points of contact with customers is through collaboration with other companies.
Already, we are partnering with Isetan Mitsukoshi Holdings Ltd. to roll out Match Palette powered by 3D smart & try, aservice for matching physique measurements with well-fitting women’s apparel. Similarly, at LaLaport CLOSET, a store opened by Mitsui
Fudosan Co., Ltd., in March 2021, we are offering the 3D CLOSET powered by 3D smart & try service, which uses physique measurements tosuggest well-fitting outerwear. We will continue collaborating withother companies to actively develop new points of contact. In this way,
the development of a range of measures focused on attracting newcustomers and enhancing LTV will form the core of our growthstrategy.

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VISION

VISIONInterview with the President and the Vice President

Q

Strengthening of E-Commerce Worldwide
What is your growth strategy for the overseas business?

A

We will focus on strengthening the e-commerce business and advancing our customer experience strategy.
By continuing to invest in the bolstering of in-house
e-commerce and taking advantage of digital technologies to provide new customer experience value, we will
increase brand recognition and achieve further growth.

Yasuhara:	With respect to our overseas business, while there are businesses in countries such as the United States that haveachieved significant growth through the utilization of digital technologies, there are also countries and regions wherebusinesses are struggling to make headway with our existing business model. In China, which has been a growth
driver, competition with emerging brands in the e-commerce market is intensifying, and I feel that we need to formulate a new growth strategy for the country. As for Europe, in addition to establishing a digital technology strategy forrenewed growth in mainstay markets, we must open up new markets.
	 One common theme globally is that strengthening e-commerce is the key to growth. Accordingly, we will advance
e-commerce strategies tailored to the circumstances of each country and invest in growth. Although the situation isdifferent in each country, the development of in-house websites, rather than reliance on other companies’ e-commerce
platforms, will be a major factor in realizing long-term growth.
	 For this reason, we have built an in-house e-commerce platform that can be used by all of our subsidiaries in Asia,
other than those based in China and Japan. The effect of this e-commerce platform has been promising. In Malaysia,
where the e-commerce platform first became available, our local subsidiary made a solid start, receiving 1.5 times
more orders than initially targeted. Due to the small scale of their operations, our subsidiaries in Asia have been unable
to establish e-commerce businesses. Through the Wacoal Group’s coordinated initiatives, however, these subsidiaries
will realize growth in Asia’s e-commerce market, which is expected to expand rapidly.

	A Customer Experience Strategy for Brand Enhancement andFurther Growth
Yasuhara:	At the same time as strengthening e-commerce, we will implement a customer experience strategy to heighten
customer experience value. Wacoal America, Inc. has developed an app that allows customers to measure their physiques with smartphones and is using physique measurement as a way of creating points of contact with customers.
In Europe, we are introducing 3D smart & try. When recruiting monitors in the region prior to the full-scale introductionof the service, we received more applications than expected. This response has alerted us to the possibility that
services taken for granted in Japan, such as size measurement and the recommendation of products based on trial
fittings, could meet with a favorable reception as novel services overseas, particularly in the United States and Europe.
The enhancement of customer experience through such new services promises to help us heighten brand value andachieve further growth.
	 Also, Intimates Online, Inc., which the Wacoal Group made a wholly owned subsidiary in July 2019, is steadily
drawing in more customers and realizing high growth, particularly
among the digital native generation. Moreover, the subsidiary’s growth isstimulating other operating companies, and we believe the realizationof even larger synergies among Group companies will be possible
going forward.

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VISION

VISIONInterview with the President and the Vice President

Q

Overseas Business Growth: A Critical Task
In which direction will the Wacoal Group proceed overthe medium to long term?

A

In the medium to long term, growth of the overseas
business is essential and will be an important factor for
the Group’s growth. In Japan, with a focus on the healthfield, we will build deeper, broader, and longer
relationships with customers.

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Yasuhara:	Approximately 30 years from now, in 2050, Japan is projected to have a population of around 100 million. With adeclining birth rate and an aging population, a structural decline in the population group aged between 15 and 65 isinevitable, and domestic consumption will decrease overall. In this environment, there is no way for the Group to continue growing domestically other than through the rigorous development of deeper, broader, and longer relationships
with its customers. To this end, the creation and fostering of new businesses is essential.
	 On the other hand, from a global perspective, increasing the scale of our overseas business is of great significance.
Our target is to grow net sales from their current level of ¥250.0 billion to ¥300.0 billion by fiscal 2028. Although thebalance between domestic and overseas sales has been slightly altered by the COVID-19 pandemic, the Group generates domestic net sales of approximately ¥150.0 billion and overseas net sales of roughly ¥100.0 billion (including
nonconsolidated sales). Given that a 50:50 ratio is envisioned between domestic and overseas sales, the Group
cannot grow without the growth of the overseas business. Therefore, the degree to which we can grow in suchcountries and regions as the United States, Europe, and China will be decisive over the medium to long term.

The Health Field: Our Next Growth Mainstay
Ito: 	The Group currently provides value in the areas of beauty, comfort, and health. How we renew each area of value tomeet consumers’ changing needs will significantly affect our next stage of growth. Even in the new normal era after
containment of the pandemic, consumer behavior is likely to evolve further. Expected to continue aspiring to healthy,safe lifestyles, consumers will probably favor high-value-added products and good services that offer genuine value.
To realize renewed growth in the new normal era, it will be essential to detect shifts in consumer outlook and takeappropriate measures that reflect consumer priorities.
	 In all overseas regions, I believe we must provide value in fields beyond innerwear. Among these additional fields,
the health field is set to become particularly important. Here, I am using the word “health” in a broad sense. In-house,
we use the term “wellness” when referring to health-related fields as a whole. For example, wellness for us encompasses everything from the development of new products in collaboration with medical institutions through to theprovision of services that help consumers live with greater vitality. Through initiatives to help women look and feel
more beautiful, our organization has built up a range of capabilities and assets that are highly compatible with thehealth field. Taking into consideration this advantage, the collaborations that the Innovation Strategy Office is advancing with other companies, and the type of external inquiries we arereceiving, health is one of the fields where we can create new growth.
 We are currently analyzing what types of businesses in the wellness
field to create and how to monetize them. We will build new businessmodels based on consumer needs and changes among consumers,
consideration of how best to establish a foothold in the wellness field,
and whether we can adapt and combine our management resources
to develop growth drivers.

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VISION

VISIONInterview with the President and the Vice President

Q

How will the Wacoal Group sustain growth amid the rapidlychanging needs of consumers and society?

A

The Values of Tomorrow
Yasuhara:	Environmental issues are becoming more serious, and consumers’ awareness of sustainability is changing significantly. Until now, mass production and mass consumption have supported economic growth, but we are on the cuspof an era in which consumers value high-quality products that last for a long time. In fact, Wacoal’s existing policy is toprovide quality products with long life spans. Our products must pass more than 100 wash tests before being put into
production. For us, this emphasis on quality and durability has always come naturally. Going forward, however, I feelthat we need to communicate this differentiating factor more energetically to the outside world.

Through engagement with customers, employees, andother stakeholders, we will clarify our purpose. We willsustain growth by establishing new business models
and creating value based on this purpose.

	The Direct Connection between Social Contributions andBusiness Growth
Ito: 	In the future, I believe that consumers will become more interested not only in products themselves but also in the
missions of the companies that provide them and companies’ relationships with suppliers. In other words, helping
consumers understand the philosophy and the story behind the creation of a product will become more important.
Recently, I had the opportunity to interact with Generation Z university students at a workshop that was also attended
by young employees. Talking with members of this generation really brought home to me the need to communicate
the backgrounds of products. From now on, I feel that “business = enhancing customer and employee satisfaction andcontributing to society” will be the norm and that the realization of this equation will become a direct driver of growth.
	 With this in mind, the first thing we need to do is to update our management philosophy to suit the coming era anddevelop our businesses under the guidance of new goals. We have already launched a project to further discussion onsuch topics. As part of this process, we are also conducting in-house engagement activities themed on the purpose of
the Company and its businesses. In the future, we must increase awareness among employees of the link between
the growth of the Company and its contributions to society and the environment. Furthermore, we must create conditions that encourage employees to view these contributions as something that concerns them personally. Similarly, in
our efforts to open up new areas and further develop existing areas in the health field, it is important that we clarify the
purpose of business ventures by sharing with employees the objectives of businesses and the reasons Wacoal isinvolved in them. Accordingly, the social purpose of our businesses will be a major theme of our next medium-term
management plan.

Increased Customer LTV as a Driver of Sustained Growth
Yasuhara:	The concept of LTV that we have adopted means a focus on motivating each customer to use our products and services throughout the customer’s life. The concept is also extremely significant from the perspective of sustainability
and ESG. As we build deeper, broader, and longer relationships with our customers, we expect to gain new insights
into the value they really want. We will use these insights to create new business models and further increase­customer satisfaction. By focusing on the fields of beauty, comfort, and health while providing value that addresses
the issues both of customers and society, the Wacoal Group will demonstrate its unique purpose and achieve­sustained growth.

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WACOA L STO RY

WACOA L STO RY

The Origins of the Wacoal Group

Group Philosophy

Our Mission

We will contribute to society
by helping women to express their beauty.

Our VisionWe, the employees and management of Wacoal,
Managing a business through the securing of profits is certainly key to business
continuity; however, that is not the ultimate goal. In each generation, the role ofcompanies within society is constantly called into question. Without a correct
answer to this, companies will likely not be accepted as a part of society.
(Excerpt taken from a material on our management policy released in February 1975)

The persistence to sustain a profitable business represents the fundamental spiritthat has existed since Wacoal’s establishment. What lies on top of this foundation

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

Our Value

is a series of management structures for our profit-oriented management policy,
financial standing, and a thorough and efficient accounting framework. Ourvarious business activities, including those for sales and human resources, arealso built on this basic philosophy. As the business environment undergoes

1. Create products loved by customers
2. Develop new products that meet the needs of the times

drastic changes throughout our world today, we will reflect back on our origins

3. Conduct business in a fair manner with a forward focus

in order to adapt accordingly to the changing circumstances going forward.

4. Build a better Wacoal through better human resources(Excerpt taken from a material on our management policy released in June 1976)

Founder

5. Fear not failure and boast not of success

Koichi Tsukamoto

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WACOA L STO RY

WACOA L STO RY

Toward a New Chapter in Our History
The Wacoal Group has built a long history by overcoming many changes and hardships since its founding in 1946.
Our success is attributable to a favorable reputation earned through efforts to contribute to society by helping women
to express their beauty. In other words, we have sought to realize our mission by earnestly developing products andservices that enrich and add comfort to daily life.
By continuing to take on ambitious initiatives based on our unchanging mission, we will overcome the unprecedented
crisis that has arisen from the COVID-19 pandemic and open the way to a new future.

Surmounting difficulties and growing
by building mutual trust withcustomers and employees

The Wacoal Group’s Ambitious Initiatives

1946

1970

 he Founding of Wacoal andT
Development of the Domestic Market
On June 15, 1946, the day he returned to his home in Kyoto aftersurviving grueling battles during World War II, our founder Koichi
Tsukamoto established a company for the wholesale of women’s
accessories. Subsequently, realizing that the dramatic change inwomen’s apparel from Japanese to Western clothing was anopportunity, he moved into the manufacture of Western innerwear
for women. The 1950 opening of a Wacoal sales area in the Kyoto
branch of the Takashimaya department store marked our entry
into the department store market.

Toward an
Outstanding
Future Basedon Mutual Trust

A History ofOvercoming
Challenges

Overcoming an unprecedented crisisand opening the way to the future
through ambitious new initiatives

Response to the No-Bra Movement
After emerging in the United States, the women’s liberation movement spread to Japan, taking the form of a no-bra movement in
1970. Tsukamoto delivered a stirring message to employees,
emphasizing that the Company would not be able to overcome
the crisis unless all employees worked as a team. The subsequent unification and mobilization of employees led to thecreation of a seamless cup bra, which became a major hit productthat captured the hearts of women seeking greater expression of
their identity.

Net Sales

2020

Operating Margin he COVID-19
T
Pandemic

Fiscal 2021

19% decreasein net sales YoY

The global COVID-19 pandemic, whichbegan at the start of 2020, has had aprofound impact on the business
management of the Wacoal Group, which
has operations in countries around theworld. We have launched ambitious,
forward-looking initiatives aimed atfulfilling our unchanging mission while
enhancing enterprise value throughadaptation to changes in distribution as
well as in customers’ values andconsumption patterns.

First operating loss
since establishment

A brassiere sales display in the Kyoto branch of
the Takashimaya department store

By having his hair cropped, our founder
expressed his determination to
overcome a management crisis.

1962

1985

 onflict between Labor andC
Management

Opening Up of the U.S. Market

In 1962, when labor relations became a major issue in Japan,
Koichi Tsukamoto responded to a speech given by Sazo Idemitsu,
the president of Idemitsu Kosan Co., Ltd., by resolving to adopt amanagement approach based on mutual trust. Under thisapproach, employees were given autonomy over such matters as
when their working day began and ended. By putting into practice
his belief that a company president who claimed to respecthuman rights must first trust the union, Tsukamoto energized thecorporate culture and enabled Wacoal to realize growth in thedomestic market.

To build a brand capable of winning out in markets worldwide, webegan developing overseas businesses in the 1970s. For many
years after Wacoal’s entry into the U.S. market in 1985, performance flagged due to over-stocking and soaring selling, generaland administrative expenses. Wacoal improved quality in its
plants while maintaining listed prices and a commitment to sales
through consultations with beauty advisors. In 1995, 15 years
after its establishment, our U.S. subsidiary achieved profitability
for the first time.

2012
Development of the European Market

An example of an infection
countermeasure that preserves
our relationship of mutual trustwith customers

Although we entered the European market with the establishmentof a local subsidiary in France in 1990, breaking into the market
proved to be extremely challenging. Determined to expand ourbusiness in Europe, in 2012 we acquired Eveden Group Limited(now Wacoal Europe Ltd.), a company that had multiple brands
suited to a wide range of physiques and sizes.

3D body scanners that enable contactless measurement

A Wacoal brand fashion show in Europe

Coverage of Wacoal in a U.S. newspaper

Our founder chatting with employees
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The Wacoal Group’s Business Environment and Initiatives for Renewed Growth

Due to the COVID-19 pandemic, in fiscal 2021 the Group recorded a consolidated operating loss for the first time since
its establishment. We believe this performance reflects a major shift in the position of our research, planning, and sales
capabilities relative to the external environment due to changes in it, which include changes in attitudes toward society
and the environment. We will respond to these changes by evolving our organization’s capabilities so that they once
again become strengths that create competitive advantages. In this way, we will achieve renewed growth.

Changes in the External Environment
Caused by the Pandemic

Issues We Must Resolve
to Renew GrowthDistribution channel trends xisting distribution channels
Edeclining1

Shift to e-commerce
accelerating

Update our organization’s
capabilities

Role of stores changing
Changes in lifestyle(R&D, product planning,production, quality control,and sales)Telecommuting spreadingDress becoming informal
Consumption becoming
budget-minded

Fiscal 2022 Initiatives

Digital Transformation

Key Performance Indicators
and Long-Term Vision

Page 22~Japan
Pursue innovation and expand business fields
Implement customer experience strategies- Digitization and personalization- Customer-driven value chain reform- Brand strategy reconstruction
Overseas
Advance digital technology strategies tailored
to regional characteristics
Implement customer experience strategies
in Asia

The Wacoal Group Now

Technological innovation
Digital transformation
accelerating

Fiscal 2021
consolidated
performanceImportance of customerfocused digital marketing
increasing
Industry and industry structure
trends idrange to high-end apparelMmarket slumping
Industry shakeout accelerating
Geopolitical risk increasing

Net sales

152.2 billion¥(–19% YoY)

2

300.0 billion

Net sales ¥Operating margin and ROE
above

10%

Utilize changes to regain
competitive advantages
and achieve profitable
growthImprove our high-cost
structure

1.1 billion¥

Page 24~

Japan
Implement management of personnel plans(improve productivity and lower personnel
expenses as a percentage of net sales)Improve profits per store
Take measures for underperforming businesses

Create economic andsocial value

Establish a highly
transparent businessmodel that is considerate
to people and the earth

Intensification of global
environmental problems
Business activities stagnating due
to the increased frequency ofabnormal weather caused by
global warming

3

Supply chain-related changes

Address environmental
and human rights issues
in supply chains

Awareness of human rights andthe environment in relation to
supply chains growing
Certain generations adopting
new consumption behavior
Contributions to addressing theSDGs and other social issues
becoming a key consideration for
consumer behavior (company
selection)

20(fiscal 2028)

Cost Structure Reform

Operating loss
Changes in Attitudes toward
Sustainability

Financial goals

INT EG R AT ED R EPORT 202 1

Implementation of Sustainability-Focused Management
Page 26~

OverallReduce greenhouse gas emissions
Establish human rights due diligence andaccess to remedy
Reidentify material issues for renewed growthand set medium- to long-term numerical targets

I N TEG RATE D RE P O RT 2021

Nonfinancial goals (2030)
Clarify management policies forsustainability issues as well as processes
and key performance indicators foraddressing them
(Plan to disclose in fiscal 2023)

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Evolving Our Organization’s Capabilities to Grow Enterprise Value

Wacoal Named a “Noteworthy DX Company” in 2021
In 2021, the Wacoal Group was chosen as a “Noteworthy
DX (digital transformation) Company” from among the “DX
Stock” companies selected by the Ministry of Economy,
Trade and Industry and the Tokyo Stock Exchange (TSE).
“DX Stock” companies are TSE listed companies that haveearned high general ratings for digital transformation
efforts in an industry category. Of these companies, thosemeriting high evaluation for extending the scope of digitaltransformation efforts or for implementing impressive
digital transformation initiatives are designated“Noteworthy DX Companies.”

Our selection recognized our development of the newcustomer-driven 3D smart & try service through the use ofdigital technologies to evolve differentiated expertisegarnered in such areas as physique measurement,
research, and customer services. Moreover, we earned
praise for boldly leveraging the new service to form
partnerships with a range of different companies andexpand our business field.

KEY 1

Digital Transformation
We will build deeper, broader, and longer relationships with each customer,
enhance enterprise value, and sustain growth by utilizing digital technologies to
evolve differentiated customer-driven services.

Consumers’ Changing Values

Wacoal Group Strengths

 rowth of the body positivity
Gsocial movement (increased
interest in own physique) uman Science Research
H
Center’s accumulated data andabundant knowledge in relation
to women’s physiques ise in demand for stress-freeRpurchasing experiences
Spread of diverse values

Brand power and customer
service skills
Manufacture of products to fit
diverse customers

Evolution of Digital Technologies
 ramatic advances in digitalD
technologies
Expansion of digital
infrastructurePromotion of cross-industry
collaboration

Utilize physique data to evolve the innerwear business and partner withother industries to expand business fields

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3D smart & try
This groundbreaking digital service uses a 3D bodyscanner and an AI-enabled avatar in combination to
select brassieres from our extensive lineup andsuggest products best suited to each customer’s size,
physique, concerns, and design or silhouette preferences. As 3D smart & try is the perfect solution to theneed for contactless services that has resulted fromthe pandemic, more than 50,000 people have tried theservice as of the end of March 2021. Of these, approximately 30.0% then proceeded to purchase products.

Ava.Counseling Parle, an Avatar-Based
Customer Service System
Ava.Counseling Parle is a virtual customer service
system developed to make innerwear selection moreconvenient and stress free for customers. Throughavatars that read and reproduce their facial expressions and movements, beauty advisors in remotelocations offer customers real-time counseling on theselection of innerwear. Furthermore, we are currently
conducting operational tests with the aim of enabling
beauty advisors to work from home.

My Aspirations as a Manager
The world we envision centers on people and enlivens them through the utilization of digitaltechnologies. We want customers, employees, and all consumers to be proud of themselves and have fulfilling daily lives. Our technology supports aspirations for new
encounters, new possibilities, and new ways of life.
The 3D physique measurement data that we have acquired through the 3D smart & try
service will help enrich the day-to-day lives of all our customers. At the same time, ouranalysis of this data promises to suggest a wide range of potential new applications. In
addition to creating a new future for innerwear-related customer services, the 3D smart &try system will enable Wacoal to diversify its business into an array of different fields. For
example, the system can be used in apparel-related counseling services—a field where wehave already begun introducing the system—the medical field, and other types of avatarenabled counseling services. Our goal is to evolve the business by using data as a basis forfostering co-creation and organic connections that transcend the boundaries of companies
and industries. In the near future, through the connection of data from domestic and overseas markets, we will accumulate big data on women around the world and establish a
new service network.
We will take the business to a new stage and become one of the world’s leading
platforms for insight into women’s physiques and sensibilities.

I N TEG RATE D RE P O RT 2021

Atsuko Shinoduka
Project Leader, 3D smart & try
Senior Fellow and Development Manager,
Innovation Strategy OfficeWacoal Corp.

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Evolving Our Organization’s Capabilities to Grow Enterprise Value

Enhancement of Productivity per Employee
Since 2000, the structure of distribution has been changing
dramatically due to the diversification of consumer values
and purchasing behavior. While global SPA (specialty store
retailer of private label apparel) brands and e-commercechannels have grown, department stores and generalmerchandise stores have struggled, being forced to close
stores or change business formats. Although our directly
managed store business has grown, this has not been
sufficient to compensate for declining sales in our mainstay distribution channels. As a result, our top line hastrended downward. Meanwhile, personnel costs and othercosts have remained relatively high.
The graph below shows operating income per Wacoal
Corp. employee, with 100 representing the subsidiary’s

operating income in fiscal 2000. Due to sluggish consumption after a consumption tax hike and a decrease in sales
resulting from the pandemic, in fiscal 2020 operating
income per employee was at about half of its level 20
years ago.
With structural reforms to correct the high-cost structureurgently required, we have introduced the management of
personnel plans as an initiative to resolve the issue. Whileforging ahead with customer experience strategies aimed
at business growth, we will heighten cost competitivenessand productivity by optimizing personnel deployment
through the management of personnel plans.

Operating Income per Wacoal Corp. Employee*1 (Fiscal 2000 Given a Benchmark Value of 100)
120

KEY 2

100

Management of Personnel Plans(Cost Structure Reform)

80

40

We will build a sound corporate culture and robust profitability by creating systems
that heighten the job satisfaction of each employee while optimizing human resources
quantitatively and qualitatively.

Wacoal Corp. Issues

 lumping midrange to high-end
Sapparel market

 otal personnel expenses as aTpercentage of net sales (including the labor costs of manufacturing operations) still high due
to lower net sales

Flagging existing distribution
channels and growth of
e-commerce channels
 hange in the role of brick-andC
mortar stores from shopping
locations to experiential
locations
 hange in behavior patterns dueCto the pandemicImbalanced business model(overdependence on the wholesale business and the innerwear
business)
Lack of adaptability to change

Wacoal Corp. Initiatives
 dvancement of digitalA
transformation
Implementation of customer
experience strategies to improve
lifetime value
Reorganization of sales channelbased organization( See page 44)
Consolidation and strengtheningof the marketing of core brands( See page 46)

Evolve into a highly productive and resilient organization through strategic managementof personnel plans that optimizes human resources quantitatively and qualitatively andenhances employee engagement
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Managementof personnel
plans

60

20

Changes in the External Environment

Operating income per
employee low as department stores and generalmerchandise storeswithdraw or change
business formats

Fiscal 2005
Implemented firstearly retirement
program0

Achieve operating
income per employee
above that of fiscal
2000 during the next
medium-term management plan

Advancementof customer
experiencestrategies

Lowest operating
income per employee
due to slumping sales
caused by a consumption tax hike

00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/3 21/3*

2*1 Up to fiscal 2004, the operating income of Wacoal Corp. is shown. From fiscal 2005, the total operating income of Wacoal Corp. and Wacoal Holdings Corp. is shown.
*2 The level for fiscal 2021 has not been shown as an operating loss was recorded in fiscal 2021 due to the effect of the COVID-19 pandemic.

My Aspirations as a Manager
The management of personnel plans determines the personnel required for the executionof operations. However, there have been significant differences between the plan figures
produced by frontline divisions and the management plan figures of the Personnel
Department. I feel that this disparity has arisen because we have not adequately
communicated the purpose of the management of personnel plans.
Rather than finding solutions for current problems, the management of personnel plans
is a forward-looking measure aimed at establishing resilient management foundations that
can adapt to change. I would like to share with employees an overall picture of appropriate
personnel deployment based on medium- to long-term management strategies, promotefurther understanding of personnel plans, and accelerate their implementation.
Once they understand the necessity of personnel plans, I believe employees will take theinitiative in reforming their work styles. At the same time, the operating company will
advance reforms throughout its organization so that division general managers can takeadvantage of digital technologies in efforts to maximize performance using the minimum
number of personnel. In addition, we will strategically allocate the personnel and time madeavailable through the management of personnel plans to new businesses and businessfields that require strengthening. In this way, we will visualize each employee’s level ofcontribution to the operating company and create an organizational culture in which
employees have a real sense that they are creating the future of Wacoal Corp.

I N TEG RATE D RE P O RT 2021

Naoko Ogawa
Corporate Officer
General Manager, Personnel Department,
Personnel and Administration Division
Wacoal Corp.

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Evolving Our Organization’s Capabilities to Grow Enterprise Value

Realization of Sustained Growth while Addressing Social,
Environmental, and Consumer Issues
Since the establishment of the CSR Promotion Office in
2004, we have advanced CSR activities compliant with ISO
26000, formulated CSR policies, promoted diversity, implemented health and productivity management, conducted
such social contribution activities as our Pink Ribbon
activities, and moved forward with environmental activities. However, our emphasis has been on social contribution activities and public relations rather than onconnecting CSR activities with business growth. Goingforward, we will view initiatives addressing society’s
increasingly complex and diverse social and environmental
issues as growth opportunities. Aiming to sustain growthand enhance enterprise value, we will make a management
system that is focused on environmental, social, and governance (ESG) factors a pillar of our long-term strategy.

In April 2021, we launched the Sustainability Promotion
Project, which comprises members of the senior management team and employees. Under the project, we havebegun discussions on material issues for achieving sustained growth and enhanced enterprise value as well as
discussions on long-term numerical targets for the resolution of various issues. Currently, corporate officers andother future leaders as well as Group company employees
in their 20s and 30s are deliberating which nonfinancial
indicators need strengthening. Members of theManagement Issues Review Meeting are also analyzing
material issues and numerical targets, which are to be
integrated into long-term strategies and the next mediumterm management plan.

Toward aphase ofeconomic andsocial value
creation

Relationship between the Price Book-Value Ratio and CSR Activities(Times)

KEY 3

1.4

G

Establishment ofhighly effective
corporate
governance

1.2

Sustainability

S

1.0

Provision of productsthat meet consumer
expectations

0.8

Heightening of
employeeengagement

0.6

Construction of asocially responsible
supply chain

0.4

We will create economic and social value by viewing increasingly complex and diverse
social and environmental issues as opportunities for future growth.

E

Climate change
countermeasures

0.2

2004
Establishment of the
CSR Promotion Office
to meet society’s
expectations

0.0
0Development of CSR activities•E stablishment of systems pursuant toISO 26000•D iversity and women’s empowerment•H ealth and safety initiatives•S ocial contributions (Pink Ribbon
activities)•Q uantification of the Company’s CO2
emissions, etc.

2017
Identification by
an NGO of labor issues
at an external
contract manufacturer

Beginning of socially responsible procurement•E stablishment of the Wacoal Group CSR
Procurement Guidelines•C ommencement of self-assessment-based
monitoring•S urvey of non-Japanese technical interns•D isclosure of contract manufacturers, etc.

00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/3 21/3

Changes in Society and theEnvironment

Wacoal Group Strengths

Wacoal Group Initiatives

 ontributions to addressing theC
SDGs and other social issues a
key consideration for consumers(company selection)

 igh-quality manufacturing ofHlong-lasting products and sales
methods that minimize productwaste

Growing awareness of humanrights in relation to supply chains

Powerful brand and consumertrust reation of social value throughC
the advancement of digital transformation, creating opportunities
for contactless customer services enabled by 3D body scanners and AI

Increasing urgency of the global
warming issue

 mployees’ strong desire toE
realize a sustainable society

Strengthening of climate change
countermeasures and promotionof socially responsible
procurement
Development of environmentfriendly products

Meet consumer demand for long-lasting quality products that have highly transparent

My Aspirations as a Manager
Tasked with discussing the Group’s long-term goals and mission, the Sustainability
Promotion Project draws its members from across the Wacoal Group. We are having these
discussions because in achieving renewed growth driven by successful adaptation to anincreasingly complex, diverse society and to changes among consumers, we must instill
our mission—the foundation of business activities—in employees Groupwide so that they
advance together toward a shared goal. Since the Group’s consolidated subsidiaries arelocated in various countries and regions and have distinctive corporate cultures, our discussions are aimed at not only redefining our mission but also ensuring that it is readily
understandable for everyone.
Further, many of the activities that we have been engaged in are sustainable activities
that contribute to society or the environment. In considering corporate sustainability, however, we must have greater awareness of the connection between contribution activities
and business activities. For this reason, we are seeking in-house engagement whereby
each employee is aware of sustainability as value that is built both on the sustainableenhancement of enterprise value and the creation of social value. By encouraging employees to work with enjoyment and pride as they tackle innovations that address social issues,
this project will enable Wacoal to grow as a company that society needs.

Haruna TaniManager, Sustainability Promotion,
Corporate Communications Department
Wacoal Holdings Corp.

supply chains and increase consumer engagement
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Evolving Our Value Creation Process* Wacoal defines “trust-related assets” as assets that are comparable to human assets or customer assets because they increase or decrease depending on relationships of trust with
the Company. Trust-related assets differ from organizational assets, which are entrenched in our organization and are not dependent upon such relationships as employment orbusiness transactions.

Materiality
Business
Environment

Provide safe, dependable,
high-quality products andservices

Changes inexternal andbusiness
environments

Create a business organizationand culture that are fair and inwhich people are ambitious andenjoy their work

Diversification andcomplication ofcustomer issues

Contribute to society byhelping people to express
their beauty

ies

Digital transforma
Structural reformtion (DX)

Evolv ing Our Unique Capabilities as an Organization
Evolve our unique capabilities asan organization and enhance our technological capabilities

Enhance profitability and produc

tivity for all processes in the value chain

Product
Planning

R&D

Physical Assets

Group Philosophy
Our

VisionOur

Value

Social Value

Procurement

Production

Advancementof operations

Sales /
MarketingEconomic Value

Assets and Competitive Advantages Developed
Tangible

MissionMaximizationof value provided
Creation of
new value

Continue the enhancement ofcorporate governance

Our

E R
 einforce ability to respond to environmental issues
S Reinforce ability to respond to social issues
and develop personnel
G Reinforce corporate governance

Ensure breast care support forpeople around the world

Build CSR procurement
partnerships founded on mutual
trust and cooperation

Changes inperception ofsustainability

Reinforcement of Management Foundation

Business StrategG roup factories inJapan and overseasA ppealing sales areas
and a rich productlineup• Business management based on mutual trust• Helping people to express their beauty

AssetsFinancial AssetsA bundant capitalS trong financial
foundations

Intangible Assets
Trust-Related Assets
E xtensive and diverse
groups of specialistsT rusted brands andrelationships withcustomersS ocial contribution
through businessesF avorable business
partnerships

Organizational AssetsA bundant physique
measurement data andaccumulated knowledgeof the Human Science
Research CenterO riginal design andmanufacturing technologies and quality
control systemT he beauty advisor
training system

Achieve mutual trust between earth, society, and all our stakeholders

The Group will maximize and optimize the various assets that it has developed—including physical, financial, trustrelated,* and organizational assets—and advance medium- to long-term growth strategies to resolve material issues andenhance enterprise value even further. Through rigorous, customer-focused value chain reform as well as the evolution of
our value creation process, we will continue bringing products and services that enrich society to the market.

(To be announced in spring 2022)

Enhance Medium- to Long-Term
Value Creation

28

INT EG R AT ED R EPORT 202 1• Redefine our purpose, medium- to long -term mission, and vision• Reidentify our materiality aimed at cre

ating economic and social value and establish long-term numerical targets for resolving issues

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Progress of Value Chain Reform Initiatives
Anticipating the changes in consumer society that are likely to stem from the COVID-19 pandemic, we are reforming
our value chain to evolve our unique capabilities as an organization.
In advancing many different types of initiatives, the Wacoal Group is clearly establishing their connection to
six material issues, which it identified in light of the Group Philosophy and mutual trust-based business management—acore management approach since the Group’s foundation. As a result, the unique capabilities of our organization are
evolving in ways that enhance enterprise value and contribute to the overall progress of society.

Value Chain
Overall

R&D / Product Planning

Procurement / Production❶ Contribute to society by helping people to express their beauty❷

Provide safe, dependable,
high-quality products
and services❸

Create a businessorganization and culturethat are fair and in whichpeople are ambitious andenjoy their work❹

Ensure breast
care support for people
around the world❺

Build CSR procurement
partnerships foundedon mutual trust andcooperation

Related MaterialIssues

Initiatives to Reinforce

Reform organizational structure ofdomestic business to restore
growth and enhance profit

 dvance sales, manufacturing, and marketing functions and establish aAhighly effective organization

Implement reorganization that integrates the Wholesale Business Division and part of the Retail Operation Division (from April 2021)

 evelop and provide new products and services based on purchasing dataDand 3D data

Update the functions of the Bust Care Bra based on customer data from 3D smart & try

Reduce manufacturing costs and further enhance product value

Promote the manufacturing reform project and create a platform that aims to integrate product development processes evelop products and services catering to changes in customers’D­purchasing behavior

Continue research of products and services in the health field eorganize brands and optimize inventories to reflect changes in points
Rof contact with customers

Implement brand renewal for Wing and WACOAL SIZE ORDER
Reduce brands and product groups by approximately 30% (beginning from Wacoal Corp.’s 2021 autumn/winter season)

Introduce new high-value-added products that are borderlessContinue to develop the AMPHI brand in the Chinese market

 dvance business activities and product development that reduceA
environmental burden

 nalyze the quality standards for environmen-friendly materials and incidental materials
AAnalyze medium- to long-term goals for the proportion of environment-friendly materials usedPromote the development of products that use regenerated fiber and other materials

Strengthen quality assurance efforts continuously

Promote initiatives to eliminate inappropriate labeling and analyze the effectiveness of measures to prevent the recurrence of serious quality issues

Strengthen the information security system even further

Establish an IT Governance Division and advance data security and the protection of privacy even further trengthen production planning and management systems that span the
S
Group laterally

Analyze the establishment of a highly efficient production system through capacity management that spans factories

Coordinate the Group’s materials procurement capabilities

Analyze the procurement of common materials for the Group and unification of quality standards

 ake production processes more efficient through digitization andMautomation

Analyze initiatives for “smart” production and develop a system to visualize production efficiency

 dvance procurement activities that encourage the addressing of laborAissues and respect for human rights

Extend the coverage of CSR‐focused procurement activities and analyze remote audits

Reinforce environmental activities throughout the supply chain

Conduct research for calculating greenhouse gas emissions throughout the supply chain

Utilize customer data to increase the “lifetime value” of customers

Prepare customer data for the centralization of the Company’s customer baseCreate a sales platform capable of utilizing customer data tilize innovative technology to realize sustainable growth (strengthenUmeasures for the health and safety of customers and employees)

Accelerate the development of 3D body scanners and artificial intelligence (AI) and promote contactless customer service formats
Launch the new customer service system, Ava.Counseling Parle, which utilizes avatars

 trengthen measures in response to changes in distribution channels
S(expand directly managed sales areas)

Change the forms of transactions with department stores to increase in‐house e‐commerce sales and transition to directly managed sales areas

Expand the network of customer-focused services and maximize store value

Implement reciprocal customer transfers to connect and combine online and off‐line channels

Strengthen efforts to build digital marketing strategy on a global basis

Implement personalized marketing activities (Wacoal Corp.)
Implement marketing activities that lead to an increase in new customers through efficient use of buzz (Peach John Co., Ltd.)
Effectively use new digital media, including social media and apps (Intimates Online, Inc., United States)

 dvance activities that lower environmental burden and address socialA
issuesReduce the discarding of products, implement bra recycling activities, and respond to the shift to charging for shopping bags
Promote breast care activities at operating bases worldwide hift to highly profitable business management and increase capitalS
efficiency

Implement necessary growth investments and thorough cost controls
Analyze the business continuity of underperforming domestic subsidiaries, etc.

 evelop compensation systems that increase the effectiveness of plansDand develop succession plans further
Continue to conduct effectiveness evaluations and improve evaluation
methods and processesIntroduce a restricted stock compensation plan with the aim of motivating officers to contribute to the enhancement of enterprise value
Discuss the further review of the Companywide system for compensation of officers

 repare business continuity plansPUse the pandemic to prompt redevelopment of the risk management
systemEnsure widespread awareness of compliance and the management
philosophy at subsidiaries in Japan and overseas

Establish the COVID‐19 Task Force
Promote initiatives to maintain the safety and health of sales personnel (distribute masks, etc.)

 reate further opportunities for dialogue with stakeholders
CIncrease and enhance disclosure in relation to ESG initiatives

Hold results briefings every quarter for officers and enhance disclosure materials
Establish an officer in charge of sustainability promotion and publish an ESG data book evise the personnel evaluation system in accordance with the increase inR
telecommuting and build a new compensation system based on clearlydelineated job responsibilities

Consider an evaluation system based on new work styles and a compensation system that secures personnel with high market value

 anage and verify the effectiveness of a new personnel training systemMthat emphasizes specialization, global viewpoints, and continuous
career growthConduct next-generation management programs and hold cross-learning events with companies in other industries

Increase the use of mid-career hiring and secure diverse personnel throughreferral hiring

Strengthen mid-career employment

 ptimize personnel resources quantitatively and qualitatively by advancingOhuman resources planning and enhance productivity for each individual
employeeImprove efficiency of shop management by limiting the number of employees hired and implementing transfers across organizations and business types

Achieve diverse work styles and promote work–life balanceEstablish telecommuting environments and increase the number of eligible employees

Promote health literacy and encourage healthy habits among all employees

Promote Wacoal GENKI Project 2020

Evolve a customer-focusedvalue chain

Establish a global production andprocurement system
Advance responsible procurement
activities

Strengthen measures in responseto structural changes in
distribution❻

Continue theenhancement ofcorporate governance

Priority Tasks

Utilize innovative technology torealize sustainable growth

Sales / Marketing

Six Material Issues

Details

❶❷❸❻

❶❷

❶❷❺

❶❷❹

Foundations Underpinning Our Value Chain

Business Management

Shift to highly profitable business
management

Optimize human resources­quantitatively and qualitatively

Personnel

Heighten productivity per employee
Develop a corporate culture­conducive to job satisfaction

30

INT EG R AT ED R EPORT 202 1❶❷❸❹❺❻❶❷❸I N TEG RATE D RE P O RT 2021

31

WACOA L STO RY

WACOA L STO RY

Review of Fiscal 2021 and Overview of Fiscal 2022 Plan

Fiscal 2021 Performance Overview

Initiatives for Fiscal 2022
A year for completing structural reforms aimed at returning to a highly profitable business structure

Consolidated

152.2

Net sales ¥billionOperating loss ¥(YoY: –¥34.6 billion/versus revised target*: -¥3.8 billion)

1.1

1. Reduce fixed costs• Continue to optimize personnel through thorough staff planning and reduce the personnel expense ratio• Review cost effectiveness of fixed general expenses (review and reduce inefficient investment costs)

billion(YoY: –¥7.7 billion/versus revised target*: –¥0.1 billion)

Implementation of
profit structure reforms* Announced in October 2020

By Segment

Net Sales

Operating Income (Loss)(¥ billion)

(¥ billion)

180

120

158.0

156.0

14.4

152.2

13.5

12.5

10.1

41.5

11.0

42.0

3.0

12.2

0

41.4

(2.1)

60

–3.0

92.0

89.5

86.1

FY2021 target

FY2021 revised target*

FY2021 results

(5.0)

0

–6.0

1.0
(0.9)
(1.0)

1.6
(0.1)

0.6

3. Customer-oriented value chain reform• Verify the ideal form of operational management that improves effectiveness and identify problems in order togenerate results from fiscal 2022 onward• Verify the allocation of brands and products according to customer and area characteristics and implement flexible
personnel placement accordingly

Promotion of
growth strategy

4. Promote customer experience strategies• Wacoal: Promote customer experience strategy to build “deeper, broader, and longer” relationships with customers• Overseas: In addition to Europe, the U.S., and China, implement the customer experience strategy in Asia, whererapid e-commerce growth is expected

(2.6)
(0.7)

(1.8)
(1.3)
FY2021 target

Wacoal Business (Domestic)
Wacoal Business (Overseas)
Peach John Business
Other Businesses

0.2

(1.1)

(1.0)

FY2021 revised target*

5. Reidentify 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)

FY2021 results

Wacoal Business (Domestic)
Wacoal Business (Overseas)
Peach John Business
Other Businesses* Announced in October 2020

* Announced in October 2020

Promotion ofsustainable activities

Review of Fiscal 2021

6. Strengthen response to human rights and environmental issues• Calculate emissions and set reduction targets for greenhouse gases and establish management
processes accordingly• Examination and formulation of Groupwide human rights policy that is compatible with the National Action Plan for
Business and Human rights• Formulate environmental standards to guide product and materials development and establish a system to manage
the progress of each division• Continue promotion of CSR procurement activities

Against a backdrop of rapid changes in distribution and customer needs stemming from the COVID-19 pandemic, theinitiatives we have been focusing on for the past few years, such as strengthening e-commerce and our customer experiencestrategies by introducing 3D measurement technology, are starting to bear fruit. Additionally, structural reforms aimed
at improving the high-cost structure are accelerating.
Ensuring the health and safety of customers and employees:
	Providing services such as fittings while working to prevent the spread of
COVID-19
Implementing thorough cost reductions:	Carrying out bold reviews of measures and spending plans and avoiding
excess inventory
Promoting our customer experience strategies:	Making progress with digitization and personalization efforts
Growth of own e-commerce / introduction of avatar service
Number of people trying 3D measuring increased due to COVID-19
Cumulative no. of people (up to March 31, 2021): About 52,000Progress with centrally managing customer data
Number of Wacoal members increased to approximately 6.6 million,
including 24.6% of active customers** Active customer ratio trends = number of members making a purchase in one year /Wacoal members

Accelerating e-commerce growth:	Growing the e-commerce business globally in response to rising demandfor e-commerce due to COVID-19
Wacoal (Japan)
In-house e-commerce net sales: approximately ¥8.0 billion(56% increase year on year)
Peach John (Japan)
In-house e-commerce net sales: approximately ¥5.6 billion(43% increase year on year)
Wacoal International (U.S.)
E-commerce net sales: approximately ¥7.3 billion (Wacoal America Inc.’s
in-house e-commerce: ¥3.6 billion (55% increase year on year))
Progressing with structural reforms:
Accelerating structural reforms aimed at improving the high-cost structureImprove store profits: Switched about 30 department stores to
consumption-based transactions (Equivalent to about 23% of
department store over-the-counter sales)
Optimize personnel expenses: Through management of personnel plans,
reduced total personnel expenses by ¥1 billion (progress rate of 20%)
Optimize other costs: Executed thorough cost reductions in light ofdeteriorating business conditions

Issues Carried Forward to Fiscal 2022 Onward
1. Addressing and reforming domestic subsidiaries (Nanasai, Ai) whose business environments have deteriorated significantly
due to the impact of COVID-19
2. Establishing regrowth strategies in China, where the competitive environment for e-commerce is intensifying, and in Europe,
where the impact of COVID-19 is lingering

32

INT EG R AT ED R EPORT 202 1

2. Address and reform unprofitable businesses• Re-examine the profit structure for all businesses and determine the unprofitable businesses to be dealt with• Act on unprofitable businesses in fiscal 2022 so that they will not be carried over to the next medium-term
management plan (continue to implement business reforms)

Fiscal 2022 Full Year Plan
Consolidated

184.0

Net sales ¥billionOperating income ¥(YoY: +¥31.8 billion)

6.0

billion(YoY: +¥7.1 billion)

By Segment

Net Sales(¥ billion)

Operating Income (Loss)

(¥ billion)

FY2022 target

YoY

Wacoal Business (Domestic)

99.3

+13.2

Wacoal Business (Domestic)

4.0

+3.4

Wacoal Business (Overseas)

57.3

+15.9

Wacoal Business (Overseas)

1.1

+3.7

Peach John Business

12.5

+0.3

Peach John Business

1.1

–0.5

Other Businesses

15.0

+2.4

Other Businesses

(0.2)

+0.5

184.0

+31.8

Total

6.0

+7.1

Total

FY2022 target

I N TEG RATE D RE P O RT 2021

YoY

33

WACOA L STO RY

WACOA L STO RY

A Message from the Director in Charge of FinanceWith unwavering determination,
we will reform our profit structure andachieve a recovery in business results.
Akira Miyagi
Director and Managing Corporate Officer
Wacoal Holdings Corp.

Opening Comments
I regret to report that in fiscal 2021, the year ended March 31,
2021, we recorded the first operating loss since our establishment. As the director in charge of finance, I do not take thisresult lightly. Further, in fiscal 2021 we lowered dividends forthe second consecutive fiscal year, with dividends per shareof ¥40.00 representing a ¥20.00 year-on-year decline. In thisregard, I am acutely aware of the responsibility I bear for
failing to meet the expectations of shareholders.
We view fiscal 2022, the year ending March 31, 2022, as aperiod that will put us on track to return to our pre-COVID-19
performance level in fiscal 2019. Accordingly, with unwavering
determination, we will reform our profit structure and achievea recovery in business results.

Fiscal 2021 Business Environment andPerformance
As mentioned above, in fiscal 2021 Wacoal’s business results
were extremely disappointing. In response to the COVID-19
pandemic, telecommuting became widespread and consumers avoided crowded areas, causing a drop in customer visits
to large downtown commercial facilities. This steep decline
significantly affected the performance of the Wacoal Group,
which sells a high percentage of its products through brickand-mortar stores. Further, the pandemic brought to lightvarious issues in the Group, from the high level of cost in
its profit structure through to issues in the raw materials
supply chain.
On the other hand, there were positives amid this difficult
environment. As contactless shopping became predominant,e-commerce grew significantly in respective countries. The
e-commerce business of Peach John Co., Ltd. achieved robust
growth thanks to product planning and marketing thatmatched customer needs. Intimates Online, Inc., which was
acquired in 2019, together with the e-commerce of our businesses in the United States also posted strong growth.
In addition to the aforementioned growth of e-commerce,
the Group made progress in cutting costs through rigorous
cost control and benefited from government support, such as
employment adjustment subsidies received in Japan andoverseas. These factors lowered operating loss from theinitially expected level of ¥5.0 billion to ¥1.1 billion. Thus,
despite social and economic turmoil, we were able to keep
operating loss below projections.

Changes in the Business Environment and the
Wacoal Group’s Responses
Our most significant achievement in fiscal 2021 was growing
the e-commerce business. That said, the growth was largely
attributable to the tailwind provided by the COVID-19 pandemic. For this reason, we must remain vigilant and continue
steady efforts to grow the business. As the entire apparelindustry shifts toward e-commerce-centered sales formats,

34

INT EG R AT ED R EPORT 202 1

implementing measures to deepen relationships with existingcustomers while making efforts to acquire new loyal customers will be essential for the realization of stable growth. With
this in mind, we will use as templates and deploy Groupwide
the marketing and customer management methods andefficiency-enhancing advertising strategies of Peach John andIntimates Online, which have already proven so effective.
Another major change in the environment is the rapidly
growing awareness of sustainability in society as a whole.
Significant changes in interests and values related to socialand environmental issues, especially among the younger
generation, give me a strong sense of crisis with respect tothe fact that if we only pursue superiority in design, quality,and price, in both domestic and overseas markets, customers
will not choose our products in the coming era. Therefore,
going forward we must focus on the “stories” behind ourbrands and products, such as products that have long lifespans, manufacturing that minimizes waste, and supply
chains with guaranteed traceability. The empathy createdamong customers by communicating these stories will be ourbiggest differentiator, which in turn will help boost purchases
per customer, grow market share, and increase net sales.
Accordingly, we have recently launched an in-house projectfocused on sustainability. In addition to redefining our
purpose, the mission we should fulfill over the medium to longterm, and our target profile, the project’s members are discussing the numerical targets that we should set with a view
to addressing material issues and thereby creating social andeconomic value. We will evolve as a sustainable corporategroup by continuing to provide the comfort and quality that
we have emphasized since our founding while strengthening
initiatives to fulfill social responsibilities.

Benefits of Profit Structure Reform
Through reform that corrects the high level of cost in our profit
structure, we aim to achieve ¥10.0 billion in cost reductions byfiscal 2023. The first step in pursuing this target is to revamp
underperforming businesses. With this in mind, we will
Consolidated Performance Overview
Net Sales

Operating Income(Loss)[Operating Margin](¥ billion)

FY2021
results

FY2021 target[versus target]

FY2021 revised
target*[versus target]

152.2

158.0 [–5.8]

156.0 [–3.8](5.0) [+3.9](1.0) [–0.1](1.1)[(0.7%)]Net Income(Loss) Attributable
to Wacoal
Holdings Corp.

7.0(3.7) [+10.7](0.5) [+7.5]

ROE

3.3%

—

—

* Announced in October 2020

I N TEG RATE D RE P O RT 2021

35

WACOA L STO RY

WACOA L STO RY

A Message from the Director in Charge of Financeprepare revitalization plans for businesses and operatingcompanies. If revitalization is problematic, we will establish
and adhere to time limits for withdrawal. We believe that nothaving a negative legacy when we launch our new mediumterm management plan in April 2022 is important.
The second step in cost reduction efforts will entail Wacoal
Corp. lowering its total personnel expenses through the management of personnel plans. In fiscal 2021, the operatingcompany achieved an approximately ¥1.0 billion reduction in
total personnel expenses by curbing the hiring of sales
personnel and part-time personnel. Necessitated by a deterioration in the profitability of store sales, measures to revise
personnel mixes and transfer beauty advisors to other storesor sales channels also produced benefits in terms of cost. In
fiscal 2022, we expect that the significantly heightened efficiency resulting from the reassignment of personnel will
reduce total personnel expenses by roughly ¥2.0 billion compared with those of fiscal 2020. In April 2021, Wacoal Corp.
implemented a reorganization and began reforming its sales
system. Specifically, instead of clustering the sales system
around sales channels, we have transitioned to a systemorganized around operational functions, each of which has
control over all sales channels. This reorganization has
enabled increased flexibility in the assignment of personnel. In
the current fiscal year, we will identify any issues in the newsales system and consider the best management approaches
for further increasing its effectiveness. At the same time, wewill maximize the value provided by and increase theefficiency of work associated with brands, which face
increasingly complex customer issues. Also, functional
overlaps existed in marketing investment because it was
conducted separately for each business and sales channel.
Going forward, however, we will heighten the efficiency ofmarketing investment by only investing as necessary inbusinesses with growth potential.
Our third cost-curbing step will reduce the number of ourbrands. We have already completed preparations to reduce

the number of brands by about 30%, and we will launch a new
brand strategy beginning from the 2021 autumn/winterseason. Along with the reduction in brands, we will streamline
product varieties and stock keeping units (SKUs). A feature ofbrassieres is that they have an extremely large number of
SKUs compared with other apparel products because brassiere SKUs comprise a combination of the underside and cup
sizes of the bust and color varieties. Therefore, reducing product varieties and SKUs lowers the workloads associated withproduct planning, inventory control, and sales administrationand helps reduce the production costs arising from productvarieties and SKUs. Moreover, improved inventory efficiency
has the added benefit of mitigating product disposal and raw
material wastage. However, such reductions must not cause
any disadvantage or inconvenience to customers. In thisrespect, the role of e-commerce is extremely important, andwe will increase coordination between e-commerce and brickand-mortar stores to avoid inconveniencing customers.

Capital Policy
Our basic capital policy is to give priority to investments for
future growth while seeking to enhance shareholder returns.
Unfortunately, the ROE and profits that we initially envisioned
did not materialize. Nonetheless, we do not plan to adjust
numerical targets as we are determined to realize ROE andprofits comparable with their former levels. Our ROE of 3.3 infiscal 2021 was too low. Accordingly, we will continue advancing measures to raise ROE to a level that at least exceeds thecost of capital.
In efforts to improve ROE, our primary focus is on growing
profits, the numerator of ROE. At the same time, however, we
aim to improve the asset efficiency of the denominator bydisposing of at least ¥20.0 billion in strategic shareholdings
during the period of the current medium-term management
plan. In fiscal 2021, we disposed of ¥2.2 billion in strategic
shareholdings. In relation to the ¥20.0 billion target, we have

FY2021 Progress in Relation to Financial Policies

While striving to reduce costs against the backdrop of the COVID-19 pandemic, carry out growth investments
aimed at strengthening our customer experience strategies and e-commerce.
Dividend payout ratio on a real-term basis for this fiscal year: 100%

Net income for
FY2021*

FY2020 shareholders’ equity¥205.4 billion
ROE 1.6%(3.0% in real terms)

36¥2.5 billion

Depreciation for
FY2021¥6.1 billion

Sale of strategicallyheld shares for
FY2021¥2.2 billion

FY2021 total cash creation: ¥10.8 billion* Impairment loss on intangible fixed assets and valuation gains and losses on marketable securities andinvestments have not been taken into account in thecalculation of net income.

INT EG R AT ED R EPORT 202 1

Dividends• Investment in existing
businesses• Investment for growth¥2.5 billion¥5.6 billion

FY2021 shareholders’ equity¥215.6 billion
ROE 3.3%(1.2% in real terms)

FY2021 cash outflow:¥8.1 billion

disposed of a cumulative total of ¥17.0 billion in strategic
shareholdings to date, and we will continue actively disposingof such shareholdings.
In addition, with the aforementioned curbing of inventory
volume through reductions in the number of SKUs being
another important way of improving asset efficiency, initiatives to lower inventory volume are significant in relation tobalance sheet improvement. Therefore, we will rigorously
manage inventories and accounts receivable as they are themain balance sheet items that respective business divisions
are able to control.
Further, with a view to the introduction of directly managed
stores, we are in the process of changing over the format ofour transactions with department stores to shoka agreements,
whereby the manufacturer retains ownership of merchandise
until its retail sale. Consequently, we will need to manage not
only internal inventories but also retail inventories as part ofour balance sheet. As inventory-related indicators are key
performance indicators (KPIs) for the improvement of ROE, inthe new medium-term management plan we must set numerical targets for inventories and then manage them accordingly.

Cash Flows and Investment for Growth
Cash flows have not seen any substantial negative impact. In
the summer of 2020, we borrowed ¥40.0 billion to increasecash on hand, which enabled us to take appropriate measuresin response to the pandemic. As a result, although it wasapproximately ¥2.0 billion on a consolidated basis, net cashused in investing activities remained within an acceptable
range in fiscal 2021.
As for fiscal 2022, we plan to invest roughly ¥10.0 billion. Firstof all, we have earmarked approximately ¥3.0 billion for IT
investment aimed at advancing customer experience strategies
in Japan and digital technology strategies in the United States.
At Wacoal Corp., IT investment has been continuous in recent
years and has risen to account for around 5.0% of business
expenses compared with a level of about 3.0% until several
years ago. Depreciation is expected to remain at a high level forthe next few years, but we will continue to invest for growth.
With respect to human resources, Wacoal Corp. added 20
personnel to its IT Department through personnel redeployments in the spring of 2021. Furthermore, we have assigned
about 30.0% of new employees to the IT Department or to
departments related to digital transformation and the internet.
Our aim is to have these new employees garner experience indigital technology fields and growth fields. This type of experience will greatly benefit our efforts to integrate and coordinate
customer experience strategies with existing businesses. In
such ways, we will actively implement personnel development
measures as part of our growth investment initiatives.
In addition, to strengthen the growth of our e-commercebusiness and improve the efficiency of shipping operations, in2020 we began building a new logistics center that will expand
the Moriyama Distribution Center in Shiga Prefecture. The newlogistics center is scheduled to start up operations in theautumn of 2022. Construction work for the expansion is
expected to require an investment of roughly ¥3.0 billion,
which is likely to be the largest cash outflow in the current
fiscal year.

The Financial Impact of ESG-Focused
Management
At the present juncture, providing specific figures on the financial impact of a management approach that is focused on
environmental, social, and governance (ESG) factors is difficult.
Over the long term, however, ESG-focused management will
reduce risk and lower the cost of capital. As I mentioned earlier,for us, the core of ESG initiatives lies in conveying the stories
behind individual brands and our overall corporate brand.
The Wacoal Group’s business management philosophy
has always incorporated consideration for sustainability andhuman rights, and these aspects of the philosophy are put
into practice in daily business activities. Telling concrete
stories about our unique initiatives with regard to the environment, human rights, and socially responsible procurementand developing and highlighting products that symbolize ourefforts to address social issues will certainly have a positive
financial impact. One of my important roles is to ensure thatthe positive financial impact of ESG-focused management isrealized in ways that lower risk, mitigate share price volatility,
and reduce the cost of capital.
With the revision of Japan’s Corporate Governance Codeand the restructuring of the Tokyo Stock Exchange’s market
segmentation, companies will be required to meet increasingly
stringent sustainability standards. I intend to expedite theestablishment of capabilities and systems that allow us torespond adequately to such requirements. For example, in
fiscal 2021, with the cooperation of outside directors andthrough the use of a videoconferencing format, we held moremeetings of the Executive Nomination and Executive
Compensation advisory committees. By continuing to establish and improve our corporate governance capabilities andsystems as needed, we will meet the expectations of society.
As we transform, I would like to ask shareholders, investors,
and all of our other stakeholders for their continued support.

I N TEG RATE D RE P O RT 2021

37

STRATEGY	 40 Strategies by Business: The Wacoal Business (Domestic)
A Message from the Director in Charge of Sales	 42	Strategies by Business: The Wacoal Business (Domestic)
A Message from the Director in Charge of Products

	 44	Strategies by Business: Wacoal’s Initiatives Geared to Renewed Growth(1) Reorganization

	 46	Strategies by Business: Wacoal’s Initiatives Geared to Renewed Growth(2) New Brand Strategy

	 48	Strategies by Business: The Wacoal Business (Overseas)
A Message from the Director in Charge

	 50	Strategies by Business: Global Initiatives of the
Wacoal Business (Overseas)

38

INT EG R AT ED R EPORT 202 1

I N TEG RATE D RE P O RT 2021

39

ST R AT EG Y

ST R AT EG Y

Strategies by Business: The Wacoal Business (Domestic)
A Message from the Director in Charge of Sales
customers and enhance our product lineups to meet customers’ changing needs.
With respect to the off-line customer experience, we will
supplement the traditional value of being able to actually see,touch, and try on products with new experiences that matchchanges in customer needs. For example, we will provide
measurements based on the use of contactless 3D bodyscanners and AI-enabled customer services. Meanwhile, byusing an app, customers will be able check their purchasehistories, “favorited” products, and products tried on as well as
receive personalized information. Plans call for completing the
integration of all customer information during fiscal 2022. By
eliminating boundaries between online and off-line operations,
we will build fresh relationships with customers—regardless ofwhether they are existing or new customers.
As for products, we need to reexamine the extent to which
we are providing products loved by customers and new products that meet the needs of the times, which are basic tenetsof our Group Philosophy. Taking advantage of the recent reorganization has made collaborating with other divisions easier,the Sales Division will communicate intensively with the brandgroups and the Marketing Management Department toactively promote new methods of offering products.

Through customer-driven marketing in each region,
we will achieve renewed growth and meetstakeholders’ expectations.

Hidehiko Imaizumi
Director and Senior Managing
Corporate Officer in Charge ofSales and General Manager ofSales Division
Wacoal Corp.

Employee Awareness Reform: The Key to
Maximizing Value Provided
The achievement of business growth through the enhancement of customer experience value calls for changes not only
in organizational structures but also in the mindsets of all
employees, from beauty advisors through to the generalmanagers of divisions. Unless there is a shift away from theconventional mindset of having customers purchase products

Customer-Driven Organizational Reform
As a result of the rapid increase in the number of people
voluntarily staying at home or working from home due to the
COVID-19 pandemic, customers’ needs, purchasing behavior,
and values have diversified, and the structure of distribution
has changed significantly. To adapt to these changes andachieve renewed growth based on enhanced customer experience value, Wacoal Corp. drastically revamped its organizationin April 2021. We have changed from a sales system in whichsales channels were managed separately to a system thatgives regions control of all sales channels, including directly
managed stores. (As of fiscal 2022, Hokkaido and Kyushu
alone control sales systems in which all sales channels,
including directly managed stores, have been merged.)
To date, Wacoal Corp. has achieved growth by pursuing
brand strategies for discrete sales channels. In recent years,
however, there has been a lack of coordination between sales
channels, especially between brick-and-mortar stores and the
WACOAL WEB STORE e-commerce sales channel, which has
been growing rapidly. In addition, restructuring our organization to enable region-based marketing and increasing thepercentage of directly managed stores in sales channels

became pressing tasks due to pandemic-related changes in
distribution structures. Under the region-based sales system,
we are removing the boundaries between sales channels toreflect the customer’s point of view as we optimize productplacement and conduct region-based marketing. Also, we will
provide customers with the same experience value no matter
where they are by further integrating online and off-line
operations and utilizing customer data through the creation ofdigital customer records, an initiative that we have beenworking on for some time.
In the future, we will build a “multi-bound” system that
includes e-commerce, transcends the boundaries of all sales
channels and brick-and-mortar stores, and allows eachcustomer to access and purchase all Wacoal Group brands
and products in a stress-free manner, regardless of where thecustomer lives.

at stores to which employees belong and toward an attitude ofproviding products in ways that best suit customers, the neworganization’s effectiveness will not increase. With this inmind, since April 2021 we have been providing opportunities
for online and off-line discussions and for investigative interviews with Sales Division employees. These discussions andinterviews are aimed at sharing with the division employees
the processes for optimizing the division.
In addition, we have renewed the personnel evaluation
system, which previously only used sales at brick-and-mortar
stores as a criterion. Under the new system, online store sales
attributable to referrals from brick-and-mortar stores arereflected in the evaluations of beauty advisors and the brickand-mortar stores’ sales managers. By continuing to establish
systems that encourage beauty advisors and sales managers
to actively go beyond the boundaries between online andoff-line operations, we will heighten the value of the purchasing
experience for customers.
For me, the priority when conducting organizational reform
is to create an organization in which Sales Division department heads take the initiative in creating a work environment
where all employees can play active roles and therefore feel
fulfilled by their work and come to see Wacoal Corp. as theirown company. I believe that a good company is one in which
employees are happy and energetic and have a real sense that
their efforts are contributing to customer satisfaction andbenefiting society. Moreover, I am convinced that suchengagement will help maximize the value provided by Wacoal
Corp. By ensuring that all employees, from department heads
through to sales personnel, understand the reasons for the
reorganization, consider their own roles, and take action
accordingly, we will achieve renewed growth and meetstakeholders’ expectations without fail.

Reorganization to Create a Customer-Driven Sales System(Building a system that will enable customer experience strategies)

ワコールウェブストア ロゴ

Sales system until fiscal 2021

Weak linkage
between stores andthe e-commercechannels

Separate sales
channels

横組み

Sales system beginning from fiscal 2023
Separateregions
Department stores

二段組み

Customers
ワコールウェブストア ロゴ

Department stores

GMS

WACOAL WEB STORE LOGO

Specialty stores
Specialty stores

GMS

横組み

INT EG R AT ED R EPORT 202 1

Coordination andcollaboration
among stores, theapp, and the
e-commerce store

ワコールウェブストア ロゴ

二段組み

E-commerce store

Customers
ワコールウェブストア ロゴ

40

App

E-commerce store

Enhancement of Customer Experience Valueand Product Value
In realizing renewed growth under the next medium-term
management plan, due to begin from April 2022, we mustheighten experience value at every point of contact with

Enhancing customer
experience value by
utilizing purchase history,“favorited” products, andother customer data

WACOAL WEB STORE LOGO

Advancing customer experience strategies thattranscend the boundaries of regions and sales
channels with customers as the starting pointI N TEG RATE D RE P O RT 2021

41

ST R AT EG Y

ST R AT EG Y

Strategies by Business: The Wacoal Business (Domestic)
A Message from the Director in Charge of Products

We will help enrich our customers’ daily lives by enhancing
unique manufacturing processes and systems even further
and implementing customer-driven brand strategies.

bold reorganization in April 2021. Under the previous sales
channel-based organizational structure, each operation
division and business division had its own product planning,
sales, and other functions. Through the reorganization andstreamlining of these functions, we have transitioned to asystem that allows for more flexibility in decision-making,which helps us to resolve issues related to customers anddistribution.
Under the reformed organization, as the corporate officer incharge of products, I manage all brand groups (including theWellness Business Department), which are responsible for
manufacturing. The scope of my responsibilities also encompasses the Marketing Management Department, tasked with
conducting integrated marketing operations for the entire
Company. In addition to maximizing brand value by enhancing
the sophistication and efficiency of manufacturing—which is
our strength—and implementing better product and brandstrategies, my role in the new organization is to facilitatecross-divisional collaboration with the Sales Division, which is
responsible for sales operations, and to accelerate business
transformation throughout the Company.

Aiming to Maximize Brand Value

Mitsuru Sekiguchi

Director and Corporate Officer in Charge of Products
and General Manager of Brand Group No. 3
Wacoal Corp.

Evolving Long-Cultivated Manufacturing
Strengths
The lifestyles of many customers have changed due to agreater emphasis on health and safety brought on by the
COVID-19 pandemic. While on the one hand, an increase intime spent at home has boosted demand for wearing comfort
suited to relaxation, on the other, demand for products withgreater functionality is trending upward amid concerns over a42lack of exercise associated with long periods of selfquarantine. In addition, companies marketing midrange tohigh-end apparel are struggling as a result of the prolonged
COVID-19 pandemic, but the presence of global brands basedon specialty store retailer of private label apparel (SPA) business formats is growing.
With the aim of evolving into an organization that canswiftly adapt to the aforementioned changes in customer
priorities and market trends, Wacoal Corp. implemented a

INT EG R AT ED R EPORT 202 1

The three brand groups, which are engaged in product planningand manufacturing, are as shown in TABLE 1 .
For many years, Wacoal Corp. achieved strong growth byadopting a sales channel strategy and having in-house brands
compete with each other. As a strong sense of competition
drove the operating company’s growth, connections between
divisions were tenuous, and there was little cross-divisional
collaboration. Moreover, certain operational areas were
inefficient because in a given business department, planning,development, and materials procurement were conducted
separately for each brand, resulting in different development
processes and schedules among the brands.
As far as possible, we must standardize our distinctive
manufacturing processes and systems so that, in accordancewith Our Value, we can create products loved by customers
and new products that meet the needs of the times andthereby maximize the value of each brand. For example, weshould establish basic product designs common to all brands
and, where feasible, standardize certain materials andcomponents. Improving operational efficiency through theestablishment of a shared manufacturing infrastructure will
free up designers to concentrate on creating products that are
more innovative and of higher quality. For this reason, we will
establish shared systems and capabilities as soon as possible
so that we can enhance added value and brand value evenfurther. In preparation for the next medium-term management
plan (beginning from April 2022), we will first strengthen collaboration between the Wacoal brand of Brand Group No. 1
and the Wing brand of Brand Group No. 2 and build a platformthat unifies product development processes.

TABLE 1Name

Operations(brands and categories covered by planning)

Brand
Group
No. 1

Responsible for planning of
Wacoal, Salute, and theprestige brand Yue

Brand
Group
No. 2

Responsible for planning ofWing and non-innerwear
categories, including nightwear (pajamas), products forchildren, maternity products,
and men’s innerwear

Brand
Group
No. 3


Responsible for planning of
AMPHI

For details on brand concepts and price ranges, please see page 47.

Reflecting Changing Physiques and Sensibilities
In July 2021, we formulated new brand strategies aimed at thecreation of products that remain essential by catering to therapid changes in and diversification of values and mindsets
among individual customers that are accompanying the
pandemic and the spread of digital technologies. Specifically,
we have reformed existing brands and consolidated them intonine core brands with different brand concepts and priceranges based on a mission of continuing to establish deeper,
broader, and longer relationships with customers while
making day-to-day life healthier and richer for each customer.
By putting into practice the Group Philosophy—which calls on
us to create products loved by customers and develop new
products that meet the needs of the times—we will continue tostrengthen the market presence of the nine brands.
In heightening the value of our brands, we must emphasize
values and stories that customers can relate to. For the Wing
brand, which we renewed in spring 2021, we will broaden theprice range and implement a strategy designed to make thebrand a familiar, nearby presence for many consumers.
Meanwhile, the time has come to rebuild a consistent brandstory for the Wacoal brand given the extensive range of product categories it covers, including not only innerwear but alsonightwear, maternity products, and products for children.
During the current fiscal year, we will hold high-paced but
detailed discussions with the members of each brand groupto firmly establish stories for respective brands. The entire
Company will evolve cohesively by continuing to communicate the stories and purposes of brands in ways that reflectchanging physiques and sensibilities.

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43

ST R AT EG Y

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Strategies by Business: Wacoal’s Initiatives Geared to Renewed Growth (1)and the store’s location. In addition, by enabling the flexible
redeployment of personnel, we will establish an optimal sales
structure.

Reorganization
Enhancing Our Sales, Product Planning, and Marketing Functions in Pursuit of a Highly Resilient Organization
Able to Adapt to Changing Needs

With the aim of providing better solutions to changes in customersʼ purchasing behavior and to our distribution structure
while realizing renewed growth and a highly profitable management structure, on April 2021 Wacoal unveiled a neworganizational management system integrating the functions of sales, product planning, and marketing.
Aim of Business Restructuring

New Organizational Structure

On April 2021, Wacoal reorganized its business structure withthe aim of becoming a highly resilient organization that can
flexibly adapt to diversifying customer values andconsumption patterns as well as changes to our distribution
structure and of moving on from its unprofitable businessmodel. In light of the rapidly changing social environment,
we will continue to develop and provide competitive products
and services by constantly raising the standard of ourmanufacturing, personnel development, and organizational
management. In so doing, we will realize sustainable growthand contribute to the betterment of society.

Sales
In order to ensure that the right brands and products are inplace given the characteristics of our customers and that ourpersonnel can be redeployed in a flexible manner, the channelbased business structure that was in place until now has been
replaced with a region-based structure that manages all channels
under the direction of the Sales Division. We are seeing drasticchanges to the power relationships of distribution structuresdue to the prevalence of telecommuting and the execution oflarge-scale urban development projects. Against thisbackdrop, the new organization will be based on regional
marketing, which entails the placement of brands andproducts in accordance with the characteristics of the region

Product Planning
Aiming to maximize the value of our brands and enhancethe efficiency of planning activities, our product planningtasks, which were previously carried out by each businessdepartment, have been consolidated and will be undertakenby the respective brand groups. By discerning the changing
perspectives of the wide range of consumers, we will develop
products and services that accommodate new lifestyle needs.
Moreover, we are working to unify the infrastructure for our
product planning tasks that are already being undertaken forcertain brands and to improve operational efficiency byeliminating duplicate tasks.
Marketing
We have also consolidated our marketing tasks, which werepreviously carried out by each business department, as we
pursue a marketing strategy that cuts across all brands andchannels and optimize marketing investment. With a crosssectional support system in place for manufacturing, sales,
and in-house e-commerce functions, we will look to evolve
into an organization that can quickly respond to complex
issues.

Overview of Reorganization
Before Reorganization
Wholesale Business
Division

Sales(department stores, GMS
supermarkets, and specialty
stores)After Reorganization (from April 2021)
Sales Division
Innovation Strategy Office

Department stores
GMS
Specialty stores
Directly managed stores

Human Science Research Center

Retail Operation
Division

Online sales
business
departments

Customer
Database

MarketingManagement
Department

Technology/
Production Division

Brand groups
Product planning /merchandising

Sales

Marketing44Developa highly profitablestructure and strengthen
resilience

Integrate and coordinate off-line
and online operations(provide a stress-free shopping
experience)

Establish a sales structure thatstrikes a balance between selfmanaged business and wholesale business
Implement regional marketing(optimal deployment of personnel andproducts in each region)(directly managed stores)

Product planning cquire new customers andAenhance lifetime value (LTV)

Specific Initiatives

Product planning

Marketing

Aim of Reorganization

Establishment of Organizational Base
Underpinning Growth
Ensure healthand safety of
employees

Reformwork styles

Carry out humanresourcesdevelopment
strategy

Foster a highly
rewardingcorporate
cultureINT EG R AT ED R EPORT 202 1

Improve store revenue andcentralize management of
inventory
Consolidate core brands andstrengthen marketing

The Vision of Our New Organization
Under our new organizational structure, we will utilize
customer data to enhance the level of business activities of
the Sales Division, the brand groups, the Marketing
Management Department, the online sales businessdepartments, the Human Science Research Center, theTechnology/Production Division, Innovation Strategy Office,and other organizations related to the Company’s research,
manufacturing, production, marketing, and sales functions.
Meanwhile, information will be shared across the entire value
chain in order to resolve the increasingly complex and diverse
issues of customers and society collectively as a group. Also,
through the establishment of a sales structure that strikes abalance between self-managed operations and wholesale
operations, coordinates online and off-line operations, andemploys regional marketing, we will acquire new customers,
increase the number of loyal customers from our group of
existing customers, and emerge into a highly profitableorganization by improving store profits and consolidating ourrange of products. Furthermore, the Human Science ResearchCenter and the Innovation Strategy Office will team up to
broaden the scope of new businesses by making use of
research findings and newly acquired physique data ofcustomers and, in turn, provide new value to customers andsociety. To ensure that the new organization functions
effectively and consistently generates results under our new
medium-term management plan, in the fiscal year ending
March 31, 2022 we will uncover the issues that must be
addressed in order to successfully operate our consolidated
functions. Through these initiatives, we will move forward withour creation of a highly effective and resilient organization that
can adapt to a wide range of needs.

Shift Toward Directly Managed Retail Operations That Integrate and Coordinate Off-Line and Online Operations

25

Ratio

Have online operations account for% ofnet sales, and have directly managed storesaccount for% of the off-line portion

Businessmodel

40

OnlineOff-line

Approx. 15%

FY2020Approx. 85%

Approx.

FY2025

Approx. 75%

25%

Self-managed
business

ChannelDirectly managed
stores(Including tenant store
openings in department
stores)

FY2020

FY2025targetApprox.

Approx.

Approx.

Approx.

20%

40%Department stores

Off-line
Wholesalebusiness

GMS supermarkets

80%

60%

Specialty stores(maximize brand value)

I N TEG RATE D RE P O RT 2021

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Strategies by Business: Wacoal’s Initiatives Geared to Renewed Growth (2)Our Nine Core Brands
Brand

New Brand Strategy

Details

Through the fusion of its exceptional functionality and design made possible by our strengths in
research and technology, Wacoal has continued to deliver the value of “beauty” to women of all ages
since its establishment in 1952.

Rolling Out a New Customer-Minded Brand Strategy in Pursuit of Healthier, More Enriched Lifestyles

Established in 1975 and renewed in spring 2021 as a line of innerwear that harmoniously coexists withthe body, Wing will continue to grow as a brand that closely relates to the needs of consumers.

The proliferation of digital technology and COVID-19 has spurred changes in the values and purchasing behavior of customers.
To adapt to such changes and to contribute to healthier and more enriched lifestyles for all, Wacoal rolled out a new brandstrategy in autumn/winter 2021.
Backdrop to Execution of New Brand Strategy
Under the previous brand strategy, which was based on theneeds of its respective sales channels, the Company rolled out
approximately 60 brands (including sub-brands) by responding meticulously to the diversifying needs of customers since
the year 2000. Today, consumers are making purchases bothonline and off-line while the competition with global SPA (specialty store retailer of private label apparel) brands continues
to intensify. Having an excessive number of brands not only
creates stress for consumers when selecting the right productbut also results in inefficient business management, which is
why we decided to proceed with substantial revisions to ourbrand structure by establishing nine core brands, consisting of
27 sub-brands.
Issues Regarding Previous Brand Strategy
Difficult to select the right item due to multitude of brands andproduct types
Existence of untapped customer baseExistence of relatively unfamiliar brands
Dispersion of brand investment

Embracing our Group Philosophy of creating products loved
by customers and developing new products that meet theneeds of the times in all of our brands, we will continue tocustomer contacts byrelating closely to theneeds of consumers

High

address the issues and needs of each individual customer. At
the same time, we will evolve as a partner for both mind andbody by continuing to convey the significance of our brands
from a customer perspective. Moreover, the following brands
will play a prominent role in acquiring new customers, retaining existing customers, and expanding our group of loyal
customers, as outlined in our customer experience strategy.

Established in 1979, Salute offers sexiness and appeal through its exceptional design and functionalitythat exposes the elegance of body lines.

Reestablished as a brand in spring 2021, WACOAL SIZE ORDER provides customers with the perfectly
sized brassiere from the roughly 3,000 sizes available.

Expanding Our Group of Loyal Customers

An innerwear brand that provides “new and cute” value, AMPHI offers trendy designs and simple
features catering to a variety of tastes.

With Wacoal, WACOAL SIZE ORDER, Yue, and Salute, eachof which evokes an emotional attachment and is uniquely
designed in their own right, we will pursue their respective
brand missions to secure the type of customers who want
to be convinced that the product they have selected is theright one for them and to increase loyalty among existingcustomers.

A men’s innerwear brand established through the accumulation of know-how in analyzing
measurements and sewing technology through our development of women’s innerwear, WACOAL MEN
offers outstanding comfort and appearance.
A sportswear brand developed by employing the technologies of the Human Science Research Center,
CW-X is committed to aiding athletes of all levels.

 cquiring New Customers and Retaining ExistingA
Customers

Our Course of Action for Core Innerwear Brands

2. A brand aiming to widen

A new brand established in autumn/winter 2021, Yue offers the highest standards of comfort andrefinement and identifies with the values of customers of the current generation while enriching theirlifestyles.

With Wing, the Company will keenly seek to widen its pricerange while expanding the product mix in order to continue togrow the brand and increase the number of contact points
with customers who view innerwear as a daily necessity.
As for AMPHI, we will look to expand the range of contact
points with customers seeking cute looks and retain existingcustomers by rolling out products that offer trendy designs
and simple features catering to a variety of tastes.

1. S timulating brands inInformation and knowledge

pursuit of wider customer
bases and larger groups ofloyal customers

related to innerwear

Established in 1974, Remamma is a brand of specially designed mastectomy bras and other innerwear
and related products (including bra pads and swimwear).

Price Range of Major Products under Core Brands(Yen)
30,00020,00010,000

7,000

4,000

Regard and passion Low

High

for innerwear

Regard and passion
for innerwear

3. A brand seeking to widen
Low

46

Information and knowledge

1,000

customer contacts andretain existing customers
by providing “new and cute”
value

related to innerwear

INT EG R AT ED R EPORT 202 1

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Strategies by Business: The Wacoal Business (Overseas)
A Message from the Director in Charge

While respecting the distinctiveness of Group companies,
we will promote collaboration across organizationalboundaries to realize a “Global Wacoal.”

Masaaki Yajima

Corporate Officer in charge of Group International Business
Wacoal Holdings Corp.
Director and Managing Corporate Officer andGeneral Manager of Global Division
Wacoal Corp.

On My Appointment as the Corporate Officer
in Charge of Group International Business
In April 2021, I was appointed as the corporate officer incharge of Group international business. Until fiscal 2021, I was
responsible for our entire wholesale business in Japan. With
the exception of that position, however, I have been deeply
involved in overseas operations over the course of my career.
In my capacity as head of Group Technology and Production,
I was engaged in building production and procurement
systems on a global basis. Also, I have worked as the head of
businesses in China. My current role is to utilize the experience I have accumulated to connect each country and eachbase and lead the overseas business toward a new stage of
growth.

Changes in Customers’ Values and Purchasing
Behavior Due to the Pandemic
Consumer needs and purchasing behavior are changing globally because the COVID-19 pandemic has significantly altered48

lifestyles. Particularly in the United States, Europe, and China,
the share of consumption accounted for by e-commerce has
been rising more rapidly than in Japan. In addition, with theincrease in e-commerce purchases, demand is growing forapparel with simple and easy-to-understand sizes, such as
small, medium, and large, as well as for basic products thatoffer greater comfort.
Given that customer needs are becoming more diverse thanever, to grow the overseas business we must build a systemthat can cater to all kinds of customers. For example, as partof our efforts to use digital technologies for the provision of
optimal solutions, in the United States we are rolling out asmartphone app service that suggests suitable products
based on analysis of customers’ physiques.
Meanwhile, with respect to the high-end products that are
Wacoal’s forte, many customers still prefer to actually try on
products in-store and then decide whether to make a purchase. Therefore, while growing e-commerce, we will not allow
any decline in the value provided by brick-and-mortar stores.
As an important role of these stores is to foster a sense of
security, trust, and empathy in relation to Wacoal through

INT EG R AT ED R EPORT 202 1

face-to-face communication, we intend to keep a certain
number of brick-and-mortar stores. We will steadily integrate
online and off-line operations to build deeper, broader, andlonger relationships with customers globally.

Global Strategy for Further GrowthIn fiscal 2022, the year ending March 31, 2022, the main focus
of our growth strategies in the United States, Europe, China,
and Asia is on strengthening the e-commerce business whileadvancing customer experience strategies.
Wacoal America, Inc. aims to have e-commerce sales
account for more than 60% of its net sales by fiscal 2025. In
particular, the operating company will concentrate on expanding its in-house e-commerce business. Also, we have extended
the time frame for moving Intimates Online, Inc. into the blackby approximately one year to fiscal 2023 so that we can givepriority to pursuing our growth strategy for the operating company, which we acquired in 2019. In fiscal 2021, despite thepandemic, Intimates Online achieved strong growth. By
bolstering brand power and marketing, we will continue toincrease the number of the operating company’s ambassadors and customers, laying the foundations for dramatic progress from fiscal 2023 onward. In conjunction with these
efforts, we are moving forward with a project tasked withenhancing management efficiency through the crossdivisional sharing of expertise between Intimates Online andWacoal America. Amid the growth of the e-commerce business, we are consolidating the logistics functions of both
operating companies to enhance delivery efficiency. Goingforward, we will implement similar initiatives in manufacturing
operations, thereby driving the growth of the U.S. business asa whole.
As for businesses in Europe, we will further develop theGerman market, where sales remain relatively small, while
growing sales of the in-house e-commerce business, which
was established in September 2019. Also, we will introduce
the 3D body scanners developed in Japan to directly managed
stores and advance our customer experience strategy. The
advantage of the 3D body scanners is that, by linking theresults of physique analysis with optimal product suggestions,
we deliver a new customer experience. We expect 3D bodyscanners to become a very important tool. They will not only
be useful in acquiring new customers but will deepen therelationships customers form with the Wacoal Group byencouraging them to have an ongoing awareness of their
physiques and, as a consequence, heightening their interest
in innerwear.
Our businesses in China will acquire new customers tocontinue expanding the e-commerce business and increase
sales per brick-and-mortar store. Accompanying the growing
share of innerwear purchases accounted for by e-commercein the country, demand has become particularly strong forbasic products in terms of color, size, and design. As a result,
new manufacturers of low-end products are topping the sales

rankings in the country’s e-commerce market. In China, wehave traditionally offered midrange to high-end products, but
we see this shift in the market as an excellent opportunity toroll out reasonably priced products for the e-commerce market
and create sales synergies with our brick-and-mortar stores.
In Asian countries other than Japan and China, as the
e-commerce business has been slow to emerge, thepandemic led to a steep decrease in sales. To rectify thiscomparative lag in the expansion of our e-commerce in theregion, we have developed a common e-commerce platformthat is usable in each country, and the platform began hostinga Malaysian e-commerce service in March 2021. By steadily
enabling use of the platform in the Philippines, Singapore, andother countries, we will develop a full-scale e-commercebusiness throughout Asia. Further, we are planning to develop
a lineup of common products for Asia that caters to thegrowing need for comfortable products.

Customer-Driven Brand Communication and a“Global Wacoal”
Even though the values and behavior of consumers andcustomers are changing markedly, our goal of realizing a “Global
Wacoal” together with the goal of achieving overseas net salesof ¥150.0 billion by fiscal 2028 is unchanged. To achieve thesegoals, ensuring that customers encounter the same quality
and a consistent brand image worldwide is paramount.
Accordingly, to raise the value of Wacoal as a global brand, we
have launched a project that is tasked with standardizing boththe appearance of Wacoal sales areas as well as the message
conveyed to customers around the world. We will strengthen
customer-driven brand communication so that customers
immediately recognize Wacoal no matter which country they
are in.
I am often struck by the strong attachment that our personnel worldwide have to the Company and its brand. Based on
our shared commitment to making customers happy andmaking the Company better, I will collaborate with such
personnel to clarify what each country should do on its own
and what we should do in a uniform manner worldwide.
Through this process, we will realize a truly “Global Wacoal.”

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Strategies by Business: Global Initiatives of the Wacoal Business (Overseas)

Wacoal America, Inc.

14.4

¥

billion (incl. internal sales)(down ¥3.9 billion YoY)

25% Breakdown by 41％
Sales Channel

3.6

Third-party
EC sites Dept. stores

15%¥

EC site15%

Stores

EC

Other

5.6

¥

92%

billionNet Sales (Fiscal 2021)
billion9%50%(down ¥3.1 billion YoY)

Dept. stores
Specialty stores
Directly managed storesThird-party EC sites

Company Overview 
Wacoal Europe Ltd. handles multiple brands, including Wacoal and Elomi,
which are sold in the United States, Australia, and other countries acrossthe globe. In addition to manufacturing products that are of the right fit fora diverse range of consumers, the company boasts the ability to consolidate multiple brands, including innerwear and swimwear. The company iscurrently working to enhance its brand portfolio and marketing capabilities
in tune with the characteristics of each country and distribution channel
while reinforcing its in-house e-commerce channel and expanding
business in Germany and other European countries.

13.9 billion

Wacoal America, Inc.*2: ¥Asia,
Excluding
China

Nonconsolidated
Companies in Asia

(Incl. Oceania)*1(down ¥10.1 billion YoY)

7.5¥

39.6 billion¥

Wacoal China Co., Ltd.

5%27% Breakdown by

Sales Channel

Net Sales (Fiscal 2021)

8.8¥(down ¥0.9 billion YoY)

*1 Consists of Shinyoung Wacoal Inc., Taiwan Wacoal Co., Ltd., Thai Wacoal PublicCompany Limited, PT. Indonesia Wacoal, and Wacoal Malaysia Sdn. Bhd.
*2Figures do not include sales for South America and the Middle East.

Wacoal America, Inc.

Intimates Online, Inc.

Expanding the growth of in-house e-commerce business throughthe promotion of “Digital First” strategy

Expanding the scale of ambassador community and customer basethrough the strengthening of brand power and marketing capabilities

At Wacoal America, Inc., our “Digital First” strategy is proceeding forward as
we aim to increase sales in the U.S., our largest market overseas, by strengthening digital marketing activities andcontinuing to develop our e-commercebusiness as a part of this core project.
The company is also bolstering thefunctions of its distribution andsewing factories in an effort toenhance operating efficiency.

Through the sharing of information on social media and other digital media
platforms as well as unique marketing activities that evoke consumer
interest in chain reactions, Intimates Online, Inc. is working to increase its
number of ambassadors—loyal customers with an unwavering passion forthe brand—and users. Meanwhile, thecompany is also proceeding withmarketing strategies that underpin its
advancement toward a new growthphase and, in so doing, aims tobecome a highly profitable company.

(Fiscal 2021)

Launch of mybraFitTM smartphone app
in February 2021 as part of “DigitalFirst” strategy

68%billion(down ¥1.6 billion YoY)
Dept. storesThird-party EC sites

Other

Company Overview 
Wacoal China Co., Ltd. is a manufacturing and sales company for the
Wacoal brand in China, managing the entire supply chain process fromplanning and development through to production, inventory management,
and sales. The company has been pursuing the growth of its e-commercebusiness in recent years by targeting young consumers and otheruntapped customer bases as well as by strengthening its branding andmarketing activities through joint efforts with Wacoal Corp. in Japan. As
for its brick-and-mortar business, the company is working to maximize
store value by continuing to consolidate retailstores while renewing its membership systemand expanding its line of in-store services.

Geoff Embley

Koji Tsujimoto

CEO
Wacoal Europe Ltd.

President andRepresentative Director
Wacoal China Co., Ltd.

Sales companies: Wacoal Hong Kong Co., Ltd., Wacoal Singapore Private Limited, Philippine Wacoal Corp., and Wacoal India
Private Limited
Manufacturing companies: Guangdong Wacoal Inc., Dalian Wacoal Co., Ltd., Myanmar Wacoal Company Limited
Manufacturing and sales company: Vietnam Wacoal Corp.
Companies in charge of manufacturing materials and procuring products and raw materials for innerwear:
Wacoal International Hong Kong Co., Ltd., A Tech Textile Co., Ltd., G Tech Material Co., Ltd., etc.

LIVELY brand image

Wacoal Europe Ltd.

Asia / ASEAN Region

Promoting marketing activities through the use of 3D smart & try

Acquiring new customers through the development of auniversal e-commerce platform

Wacoal Europe Ltd. has begun undergoing trial experiments on the 3D smart& try body scanner system in pursuit of sales to local markets. This technology allows the company to provide customers with an unrivaled experience,
sparking greater brand recognition and closer ties with existing customers.
As a part of its business expansion in
Europe, the company will also look toramp up the level of its e-commerce
activities in the German market.

Meeting geared to the introduction of
3D smart & try body scanner

INT EG R AT ED R EPORT 202 1

3.3 billion

Wacoal Europe Ltd. *2: ¥(down ¥2.7 billion YoY)

Brands50(up ¥2.3 billion YoY)

billionBrandsOther

3.6 billion

Intimates Online, Inc.: ¥Implementation of Customer Experience Strategies

CEO
Intimates Online, Inc.

(Fiscal 2021)(down ¥2.2 billion YoY)

* A line of LIVELY brand products offering a blend of
lingerie, leisure, and activewear

CEO
Wacoal America, Inc.

Breakdown by
Sales Channel

20.8 billion¥(down ¥3.7 billion YoY)

Company Overview 
Established as a wholly owned Group subsidiary in 2019, Intimates Online,
Inc. conducts product planning and retail sales of women’s innerwear
under LIVELY, a brand that inspires women to live passionately, purposefully, and confidently. To reach out to customers who share thisphilosophy as well as the global views of Leisureé,* the company has
implemented marketing strategies that have earned the support of countless millennials, contributing to the ongoing growth of its business since2016. In February 2021, we began doing business with American retail
giant, Target Corporation, rolling out LIVELY brand products through bothonline and off-line domains.

Michelle Cordeiro Grant

16%

North America

billion(down ¥1.6 billion YoY)

billionIn-house EC site
Wholesale
Directly managed stores

Mitch Kauffman

25%¥(down ¥2.4 billion YoY)

Brand

Wacoal Europe Ltd.

China

8.8

Europe(Fiscal 2021)(up ¥2.3 billion YoY)

Brands9.9

Breakdown by
Sales Channel

Net Sales (Fiscal 2021)(Fiscal 2021)

Company Overview 
Wacoal America, Inc. is a manufacturing and sales company for the
Wacoal and b.tempt’d brands, for which it manages the entire supply chain
process from planning and development through to production, inventory
management, and sales. On the strength of its product planning, geared toproviding high quality and a perfect fit, Wacoal America boasts a highin-store share at department stores. The company has turned its attention
to e-commerce in recent years with the promotion of its “Digital-First”
strategy, which emphasizes online customer experiences, digital andvirtual fittings, distribution, and the redeployment of its fit consultant
team. The company is also focused on
improving product development capabilities,
reorganizing the cost structure, and expanding
business to neighboring companies.

¥

6%(Wacoal International Corp.)

In-house
EC site55%

Net Sales (Fiscal 2021)

Intimates Online, Inc.

4％

(Wacoal International Corp.)

Sales Volume of Overseas Business

2%

With the rising level of personal income and the growing number of digital
natives, the ASEAN region will likely see the growth of its e-commerce market
and sales climate. To expand our business in this region, we developed an
e-commerce platform that flexibly
adapts to the needs of customers
and markets in each country andregion and commenced sales activities at Wacoal Malaysia Sdn. Bhd. in
March 2021. Going forward, we willcontinue to expand our sales networkand e-commerce business in Asia
Universal e-commerce platform
and the ASEAN region.

Our Medium- to Long-Term Vision
1. Attain net sales of ¥150.0
billion or more in overseas
business (including
nonconsolidated sales)

2. Achieve growth inNorth American market

3. Coordinate online andoff-line operations andincrease the ratio of
e-commerce sales

I N TEG RATE D RE P O RT 2021

4. Strengthen ties withcustomers worldwide(increase lifetime value)

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54	Response to Climate Change	 55 Consumer- and Environment-Friendly
Business Activities	 56	Fulfilling Social Responsibilities along
Our Supply Chain

	 58	Strengthening Human Assets
	 60	Management Team	 62	Corporate Governance	 68	IR Interview Report	 72	Establishing Mutual Trustthrough Dialogues

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Response to Climate Change

Consumer- and Environment-Friendly Business Activities

Climate change, which has a significant impact on the earth and our business activities, presents both risks to the
Wacoal Group’s management and opportunities to acquire new business. The Group believes that the continuation of its
sound business growth and the realization of a sustainable society hinges on its ability to tackle environmental issues inpursuit of a better environment. Based on this belief, in September 2021 we announced our support for the recommendationsof the Task Force on Climate-related Financial Disclosures (TCFD) and are promoting information disclosure basedon the TCFD framework.

With increasing concerns over the environment and sustainability, we are seeing a growing demand among consumers
for high-quality products that can be used over the long term and products that pay due respect to the environment.
We at the Wacoal Group continue to manufacture products in a way that will earn the appreciation of consumers formany years to come while engaging in business activities that respect the environment based on our belief that it isour duty to protect the global environment.

Our Commitment to the Reduction of Greenhouse Gas Emissions

Reduction of Waste through Our Long-Cherished Manufacturing Capabilities and Unique Production, Inventory, and Sales System

With a view to firmly stabilizing the reduction of greenhouse gas (GHG) emissions throughout the supply chain and thereby
contribute to realizing a carbon-neutral society, in July 2021 the Wacoal Group measured the amount of GHG emissions (scope 3)
generated throughout the supply chain of the Wacoal Business (Domestic) for the first time, based on the Ministry of theEnvironment’s Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain (Ver. 2.3). In July
2021, we also responded to the climate change questionnaire of the CDP, an international nonprofit organization, for the first timein an effort to promote the disclosure of information on our climate change initiatives.

The Group’s value of creating products loved by customers is underpinned by its dedication to superior standards of quality andsafety and optimizing inventories. Our ISO 9001-based quality control system ensures the highest levels of quality at each phase,from materials procurement through to product planning, product design, and production, by adhering to strict standards.
Moreover, based on our framework of generating profits and minimizing waste throughout each stage of production, inventory
management, and sales, the disposal rate of Wacoal Corp. is currently around 1%.

Development of Environment-Friendly Products along Our Path to Realizing a Sustainable Global Environment
Greenhouse Gas Emissions Generated by the Wacoal Business (Domestic)
The majority of the total GHG emissions generated through the operations of the Wacoal Business (Domestic) are in the form of scope 3 (supply
chain) emissions, around 90% of which come from category 1: purchased goods and services. In regard to our GHG emissions reduction targets andreduction processes, we will discuss the matter over the course of fiscal 2022 and reveal the results together with our announcement of the new
medium-term management plan.
Scope/Category

Coverage

CO2 emissions(CO2e-t)

Percentage of total
GHG emissions

0.5%

Operating bases, plants, and distribution centers in Japan

1,833

Scope 2 emissions

Operating bases, plants, and distribution centers in Japan

4,719

1.4%

Scope 3 emissions

Wacoal Business (Domestic)

337,730

98.1%

Downstream

Upstream

Scope 1 emissions

Category 1

Purchased goods and services

307,195

91.0%

Category 2

Capital goods

13,507

4.0%

Category 3

Fuel- and energy-related activities not included as a partof scope 1 and scope 2 emissions

1,279

0.4%

Category 4

Upstream transportation and distribution

4,523

1.3%

Category 5

Waste generated in operations

289

0.1%

Category 6

Business travel

3,681

1.1%

Category 7

Employee commuting

1,027

0.3%

Category 8

Upstream leased assets

1,542

0.5%

Category 9

Downstream transportation and distribution

2,357

0.7%

Category 10 Processing of sold products

Excluded fromscope of calculation—

Category 11 Use of sold products

Excluded fromscope of calculation—

Category 12 End-of-life treatment of sold products

2,331

0.7%

Category 13 Downstream leased assets

Excluded fromscope of calculation—

Category 14 Franchises

Excluded fromscope of calculation—

Category 15 Investments

Excluded fromscope of calculation—

Overview of the CDP
The CDP is an international nonprofit organization that conducts research and analysis on the actions taken bycompanies and organizations worldwide to address environmental issues, such as climate change, water
security, and deforestation, and discloses the results. The CDP’s environmental disclosure and its evaluation
process is widely recognized as the global standard for corporate environmental disclosure.

DISCLOSURE INSIGHT ACTION

At Wacoal, we are constantly developing and expanding our line of environment-friendly products and materials in order toaddress the needs of consumers for more products that respect the environment and to contribute to the realization of a sustainable global environment. As a part of the Wacoal brand, in September 2021 we rolled out our line of Nature Couture products,
consisting of innerwear that is friendly to both users and the environment and utilizes washi, Japanese paper made primarily ofcellulose fiber taken from Manila hemp, and U.S.-grown organic cotton. The material uses dye derived from olive leaves, rose
petals, and other plants, as well as non-dyed colors and, by devising various designs and patterns, we were able to reduce theamount of material waste more than usual. Going forward, we will look to establish amaterial waste recycling system, which entails collecting the material waste generated
during the fabric-cutting process at our plants in Japan and reusing it to create yarn formaterials to be used in the next season and onward. In addition, our L∞Ping environmentfriendly bras made of recycled yarn, which are slated to be released mainly at directly
managed stores in spring/summer 2022, could also become a part of our material waste
recycling system in the future.
Nature Couture

Bra Recycling Initiatives
Established as a solution to the unwillingness of customers to discard their bras, the Wacoal Bra Recycling
Initiative is a program for collecting and recycling bras that are no longer needed. Through the participationof JEPLAN, INC. and its BRINGTM project, the collected bras are reused as materials for household goods andother products. The project was carried out during the period from October 1, 2020 to March 31, 2021, as aresult of which, 22.0 tons of bras were collected.

Issues to Address Going Forward
Supplier Engagement
With scope 3 (supply chain) emissions accounting for the majority of the Group’s total GHG emissions, we must work collectively
with our suppliers to reduce such emissions. While encouraging our suppliers to take the measures necessary to reduce GHG
emissions, we will seek to develop an action plan and determine the process for realizing this plan to address the issue of climatechange throughout the entire supply chain over the medium to long term.

Support for Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
In September 2021, the Wacoal Group announced its support for the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD). Moving forward, we will disclose information on the four thematic areas of governance, strategy,
risk management, and metrics and targets in accordance with the recommendations of the TCFD.
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Fulfilling Social Responsibilities along Our Supply Chain

The Wacoal Group engages in responsible procurement with its business partners around the world with the aimof fulfilling its social responsibilities throughout the entire supply chain. Realizing the importance of meeting the
expectations of society, establishing mutual trust, and working in unison, we believe that promoting CSR procurement
together with our contract manufacturers will maximize the interests and contribute to the sustainable growth of bothparties. As such, we will continue to engage proactively in this area going forward.
CSR Procurement Based on Mutual Trust and Cooperation
Wacoal’s supply chains for textiles and apparel begin withproduct planning and design in the countries and regions
where the products will be sold. Almost all of our products areshipped to their respective markets after processing throughinternational networks in which the production or procurementof raw materials and the production of finished products arecarried out in factories in China or emerging countries in the
ASEAN region.
Established in October 2017, the Wacoal Group CSR
Procurement Guidelines declare that “in order to fulfill oursocial responsibilities, we must build close partnerships withall suppliers involved in our product manufacturing activities,
and together with them we must comply with and respectsociety’s requirements with regard to not only quality, pricing,and delivery but also human rights, labor practices, the environment, and ethics.” Since February 2018, we have been
conducting a management cycle that continuously amends
and improves the guidelines in light of careful monitoring ofcompliance with the guidelines. Further, with the permissionof its contract manufacturers, Wacoal has been disclosing
their basic information on its website since May 2018.

Basic Information Disclosed on Contract Manufacturers(as of August 2021)
Name

Number offactories

Manufacturing output of factories covered bydisclosure as a percentage of products
procured in value terms

Number of
updatesWacoal Corp.

150

96.5%

Percentage of innerwear,nightwear (pajamas), babywear,
maternity wear, legwear, andsportswear procured

4

LecienCorporation

12

99.5%

Percentage of innerwear
procured4

Peach John
Co., Ltd.

31

Percentage of innerwear,
90% loungewear, and fashionwear
procured

4

Ai Co., Ltd.

12

Percentage of swimwear and78%
innerwear procured

3

Unenana Cool
Corp.

4

98.9%

Percentage of innerwear andnightwear (pajamas) procured1

32Percentage of innerwear
100%
procuredOverseas*

Monitoring and Assessing the Activities of Contract Manufacturers
Recognizing the importance of constantly improving its supply chain from the perspectives of respect for human rights,
workplace environment, and health and safety, the Group carries out activities to monitor the status of compliance withthe matters specified in the Wacoal Group CSR Procurement Guidelines.
Implementation Cycle for CSR-Focused Procurement Activities
In January 2018, the Group launched a mechanism that accurately measures the status of compliance with the mattersspecified in the Wacoal Group CSR Procurement Guidelines and constantly strives to make improvements in this area.
The system entails a series of cycles that include monitoring via self-assessments performed by contract manufacturers;
analysis, assessment, and feedback; improvement and corrective action plans; and follow-up. Whenever an issue isdetected, we work toward a solution with the contract manufacturer, constantly supporting one another.
Table 1 shows the aforementioned series of cycles for accurately assessing the status of compliance and constantly
revising and improving our compliance with the Wacoal Group CSR Procurement Guidelines.

Table 1STEP

1Monitoring

Our contract manufacturers assess the status of compliance by completing and submitting aself-assessment sheet (consisting of roughly 60 multiple-choice questions), prepared together
with an external third-party institution.

Analysis,
Assessment,
and Feedback

The self-assessment sheet submitted in step 1 is examined by the Company and any mattersof uncertainty are confirmed with the contract manufacturer. After assessing the confirmed
matters, the results and any areas for amendment or improvement are provided in the form of
feedback to the contract manufacturer. Whenever a matter needs to be addressed in an urgent
manner, the Company will notify the contract manufacturer of the need for an on-site audit.

STEP

2

1

* Wacoal America, Inc., Wacoal China Co., Ltd., and Wacoal Europe Ltd.

STEP

3

Improvement
and Corrective
Action Plan

Whenever amendments or improvements are warranted, the contract manufacturers design
an improvement or corrective action plan, which is submitted to the Company. In the case of
the need for an on-site audit, the Company will conduct such audit upon the issuance of aconfirmation sheet, prior to the formulation of an action plan by the contract manufacturer.

Fiscal 2021 Initiatives and Fiscal 2022 Plans
STEP

4

Fiscal 2021 Initiatives

Fiscal 2022 Plans

Extended coverage of CSR-focused procurement activities

Establish on-site auditing methods (remote audits) amid COVID-19 era

Added the contract manufacturers of Wacoal’s online sales businessdepartments, Unenana Cool Corp., and consolidated overseas subsidiaries(Wacoal America, Inc., Wacoal China Co., Ltd., and Wacoal Europe Ltd.) assurvey targets

Extend the coverage of CSR-focused procurement activities (planto add contract manufacturers of products other than apparel assurvey targets) erified the status of compliance with matters specified in theV
Wacoal Group CSR Procurement Guidelines via self-assessments
Conducted self-assessments for the second time with 115 supplier plants of
Wacoal (Wacoal and Wing brand innerwear), Lecien, Peach John, and Ai

On-site audits postponed due to COVID-19 (conducted at certain
plants in Japan upon the consent of contract manufacturers)

Verify the status of compliance with matters specified in the
Wacoal Group CSR Procurement Guidelines throughself-assessments
Conduct self-assessments for the second time with the supplier plants of
Wacoal (Wacoal and Wing brand products other than innerwear and Brand
Group No. 3 (AMPHI, etc.))

Follow-Up

A follow-up on the reports of amendments and improvements is made and self-assessments
are subsequently carried out on a regular basis. If amendments or improvements cannot be
confirmed on multiple, consecutive occasions during the follow-up stage, the possibilityof terminating or reviewing the contract will be taken into account.

Monitoring Results (Self-Assessment Results of Contract Manufacturers)
Held once every two years, the self-assessment was conducted for the second time at 115 plants in fiscal 2021.
Although health and safety was identified as an issue at many of the plants in our assessment two years ago,
improvements were observed in this area this time. Through such means, we will continue to enhance the transparencyof our business activities throughout the entire supply chain.

On-site audits slated to be held upon verifying the status of COVID-19

Self-Assessment Results (Assessment Criteria: Level 5 (High Rating)—Level 1 (Low Rating))
Issues to Address Going Forward
Establish a System for Implementing Human Rights Due Diligence
Due to the global nature of our business, we at the Wacoal Group believe that respect for human rights represents the foundationof business management based on mutual trust. Accordingly, over the years we have conveyed to all Group employees our basic
approach to human rights in conformity to international norms while stipulating a set of specific guidelines in the Wacoal Code of
Ethics and the Corporate Ethics: Wacoal’s Code of Conduct and proceeding with the measures necessary. However, the efforts ofcompanies to demonstrate their respect for human rights is becoming increasingly important in recent years. As such, we
recognize the need to reduce and prevent any negative impacts on human rights and strengthen our human rights initiatives basedon the United Nations Human Rights Due Diligence Policy compliant with the Guiding Principles on Business and Human Rights. In
fiscal 2022, the Group will revise its human rights policy and establish a system for implementing human rights due diligence.

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INT EG R AT ED R EPORT 202 1

Fiscal 2019

Fiscal 2021

Level 5Rating

Details

Level 5

Level 5

Exemplary level. Sustenance of high standards
expected going forward.

Level 4

Level 4

Level 4

Above-average level overall. Pursuit of higher
standards expected going forward.

Level 3

Level 3

Level 3

Improvements in all areas expected going forward.

Level 2

Level 2

Level 2

Improvements in all areas highly expected going
forward.

Level 1

Level 1

Level 1

Serious issues (high risk of contract termination)
exist and improvements must be made immediately.

合計

合計

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Strengthening Human Assets

Consistent with a management philosophy that emphasizes mutual trust, the Wacoal Group manages employees’ healthand safety, trains personnel, and is receptive to diversity in human resources and values in each workplace, thereby
deepening mutual trust with employees and developing workplace systems conducive to the creation of environments
where the talents of individual employees can be fully realized. We have built value chains that comprise proprietary
networks, which span all stages from product planning and development through to materials procurement, production,and sales. In these value chains, human resources are the Group’s most important management resource. For thisreason, we believe that creating an appealing corporate culture that is employee friendly and offers job satisfaction willlead to sustained growth.
Development of Human Resources with a View to Enhancing Corporate Value

New Personnel Development System
With the aims of fostering autonomous, innovative personnel who can put its management philosophy into practice andcreating a culture conducive to employees’ growth as individuals, Wacoal Corp. introduced the Wacoal Terakoya personnel
development system in April 2019. The new system helps employees take the initiative in building their careers and continuelearning by offering a wider selection of training options beyond rank-based training as well as more opportunities tovolunteer as a project participant. In addition to modifying our programs to increase the focus on productivity and practicaltraining, we are conducting joint training with other companies to expose employees to diverse viewpoints. By fostering
personnel who are able to create new value through the implementation of our management philosophy, we will sustain
growth in a changing business environment.
Highlights of Our Human Resources Development Programs
Annual number ofparticipants

Aim

Helps employees understand the roles and the mindset expected of them in
new ranks or positions and gives employees an opportunity to consider theircareer plans in the context of the Company’s strategies651

1–6 days(Differs according toemployee rank)

Business Skills

Enables employees to learn the skills needed by businesspeople throughexchanges with personnel inside and outside the Company and to acquire
universal business skills usable inside and outside the Company

96

7.5 hours

Shares in-house knowledge, passes on knowledge, and develops organizations
through training and seminars conducted by in-house and external instructors

324

7 hours or more

4

2 years

Global Talent
Development

Self-Study

Develops globally competent personnel who have international communication skills (the ability to execute
duties, language skills, and the ability
to work in and understand othercultures), underpinning the increasing
globalization of the business

Overseas job training

Supports the autonomous development and enhancement of employee
capabilities by providing e-learning
content that can be studied anywhereat any timeOverseas language training—*

5 months

Global mindset training10

3.5 hours

Self-study support program

43—

Distance learning / E-learning

307—* Program canceled due to the COVID-19 pandemic

58

Period/No. of hrs. of
training per person

Rank-Based
Training

Wacoal Academy

INT EG R AT ED R EPORT 202 1

Although women account for a high percentage of Wacoal Corp. employees, they are underrepresented in Wacoal Corp.’s management team. Therefore, we view empowering women and thereby reflecting a greater diversity of viewpoints in decision-making as
an important management goal. To this end, we are cultivating workplace environments that are conducive to women utilizing
their strengths and attributes to play professional roles of greater importance. We will continue supporting the career developmentof women by expanding and improving a variety of systems and training programs.
TOPICS
Women Account for over 60% of Our Leaders

We believe that our development as a company is dependent upon efforts to enhance the qualifications of each employee. Basedon this belief and with the aim of nurturing a corporate culture conducive to the growth of each individual and fostering a new typeof talent who are autonomous in their actions and can realize our management philosophy, we provide and conduct training
programs that support the development of employees’ careers and professional skills. In support of our employees’ careerdevelopment and continuous self-learning, we are enhancing the quality of our training programs, other than rank-based training,and promoting active participation through hand-raising.
In addition, we conduct human resources development based on the skills required in particular fields. For example, we provide
training on maintaining and enhancing the quality of Wacoal products as well as programs aimed at promoting customer
satisfaction by heightening employees’ consultative capabilities. Other key initiatives include passing on our highly competitive
manufacturing techniques and enhancing quality and productivity on a global basis by providing support and direction throughtechnical experts dispatched from Japan to overseas factories.

Program

The Empowerment of Women

At Wacoal, although our working conditions are tailored to the specific life stages of women, our human resources development system isdesigned so that individuals are hired and trained based on skill and not gender. Meanwhile, our goal is to have women account for over 30%
of management positions (section chief or higher rank) over the medium to long term.
With many of our store managers serving as leaders, over 60% of our leaders are women. Going forward, we will continue to develop an
organization where each individual can gain a sense of personal and professional growth and feel a sense of pride and accomplishment.
Number of Women in Management Positions(Ratio of women in management positions =Number of women in management positions ÷
Total number of management personnel)

Number of Female Leaders(Ratio of female leaders = Number of female
leaders ÷ Total number of management personnel
and store managers)

Number of Store Managers

269

77 (27.3%)

346 (62.8%)

Women’s Empowerment Mentorship Program

Based on the Act on Promotion of Women’s Participation and Advancement in the Workplace, the Company has developed an action planthat entails increasing the number of women in management positions by creating an environment in which women can continue to workand pursue management positions. In line with this action plan, a mentorship program was established in fiscal 2022. This program provides
female employees in nonmanagement roles who are seeking management positions with opportunities to consult with female managers
other than their direct superiors about their career path and skill development. This experience allows our female employees to get a specificidea of what it would be like to balance childcare or nursing care with management duties and increases their motivation for considering arole in management as a part of their career development.

Health and Productivity Management
Viewing the health of employees as an important asset forsustained growth, Wacoal Corp. is advancing strategies forhealth and productivity management through close collaboration
with health insurance associations and labor unions. Covering
the period through to fiscal 2021, Wacoal GENKI Project 2020
TABLE 1 established medium-term targets and action plans forcountermeasures to the three categories of lifestyle diseases,
cancer, and mental health issues, and a variety of measures
were undertaken toward their achievement.
Despite showing signs of improvement in all categories, wewere unable to reach our targets in three such categories dueto the impact of COVID-19. As a consequence, discussions on
incorporating the measures aimed at ensuring the health of
our employees and a high level of health literacy into our next
medium-term management plan are currently ongoing. In
addition, Wacoal Holdings Corp. has been selected for the
Health & Productivity Stock Selection Program for six years
running since 2016 and certified as an Excellent Enterprise of
Health & Productivity Management (White 500) for five years
in a row since 2017. Meanwhile, Wacoal Distribution Corp.
has also been selected for the Health & Productivity Stock
Selection Program for the last four years since 2018 and wascertified as an Excellent Enterprise of Health & Productivity
Management (White 500) in 2021 for the third time.

TABLE 1

Wacoal GENKI Project 2020
Numerical
targetSummary
Lifestyle disease countermeasures
Reduce the percentage of employeeswith lifestyle ­disease-related conditions

Cancer countermeasures
Increase the percentage of
employees screened forfive major cancers

FY2021(Results)

29.2%

29.0%

Lung

96.1%

96.2%

Stomach

79.3%

93.9%

90.5%

96.6%

Breast

81.0%

90.8%

Uterus

65.0%

76.7%

100%

67.0%

84.4%

15% or

20.4%

12.7%

7,000 or

9,555

14,798Large
intestine

Increase the percentage of screened
high-risk employees (those requiring
secondary tests)
Reduce the percentage of employees who
smoke
Mental health issue countermeasures
Reduce the number of employees absent
long term due to mental health issues ×
The number of days absent

Health & Productivity Stock selection
Wacoal Holdings Corp.
Wacoal Distribution Corp.

I N TEG RATE D RE P O RT 2021

25% or

FY2015(Before project’s
countermeasures)

lower

100%

lower

lower

Excellent Enterprise of Health &Productivity Management 2021 (White 500)
Wacoal Holdings Corp.

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Management TeamAs of June 29, 2021

Directors

Audit & Supervisory Board Members
Representative Director and Chairman

Representative Director, President and Corporate Officer

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Yoshikata Tsukamoto

Hironobu Yasuhara

Shinichi Kitagawa

Katsuhiro Okamoto

Apr. 1972
Joined the Company
Nov. 1977 Director of the Company
Nov. 1981 Managing Director of the Company
Sep. 1984 Executive Vice President of the Company
Sep. 1984 Representative Director of the Company
Jun. 1987 President and Director of the Company
Oct. 2005 	Representative Director, President and Corporate
Officer of Wacoal Corp.
Apr. 2011
Representative Director and Chairman of Wacoal Corp.
Jun. 2018 	Representative Director and Chairman of the Company(present)Mar. 1975 Joined the Company
Apr. 1997
Director and General Manager of Wacoal China Co., Ltd.
Apr. 2005 	Corporate Officer/General Manager ofWing Brand Business Department of the Company
Jun. 2006 	Director and Managing Corporate Officer,
General Manager of Wing Brand Business Departmentof Wacoal Corp.
Apr. 2010 	Director and Senior Managing Corporate Officer, andGeneral Manager of Wacoal Brand Business
Department of Wacoal Corp.
Apr. 2011 	Representative Director, President andCorporate Officer of Wacoal Corp.
Jun. 2011 Director of the Company
Jun. 2013 Senior Managing Director of the Company
Jun. 2016 Vice President and Director of the Company
Apr. 2018 	Representative Director and Chairmanof Wacoal Corp. (present)
Jun. 2018 Representative Director and President of the Company
Apr. 2020	Representative Director, President and Corporate
Officer (present)

Mar. 1985 Joined the Company
Apr. 2008 	Director and General Manager of Accounting
and Administration Division of Studio Five Corp.
Apr. 2009 	Director and General Manager of Business Control
Division of Studio Five Corp.
Apr. 2013 	IR/Public Relations Officer of the Company
Apr. 2018 	General Manager of Accounting Department of
the Company
Jun. 2020 	Audit & Supervisory Board Member of the Company(present)
Jun. 2021	Audit & Supervisory Board Member of Wacoal Corp.
(present)Mar. 1986 Joined the Company
Apr. 2010	Materials Control Manager of Technology/
Production Division of Wacoal Corp.
May 2012	Representative Director and Presidentof Hokuriku Wacoal Sewing Corp.
Apr. 2014	Representative Director and Presidentof Kyusyu Wacoal Manufacturing Corp.
Apr. 2016	General Manager of Innerwear Merchandising
Supervisory Division, Wacoal Brand Operationsof Wacoal Corp.
Apr. 2018	Corporate Officer, General Manager of Wacoal Brand
Innerwear Products Supervisory Division,
Wholesale Division of Wacoal Corp.
Jun. 2021	Audit & Supervisory Board Member of Wacoal Corp.
(present)
Jun. 2021	Audit & Supervisory Board Member of the Company(present)

Director, Vice President Corporate Officer

Director and Managing Corporate Officer

Outside Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Tomoyasu Ito

Akira Miyagi

Hiroshi Shirai

Mitsuhiro Hamamoto

Apr. 1983
Joined the Company
Apr. 2006 	General Manager of Sales Planning Division,Wacoal Brand Operations
Apr. 2007
President of Studio Five Corp.
Apr. 2011 	General Manager of Innerwear Merchandising Division,Wacoal Brand Operations
Apr. 2014 	Director, Corporate Officer,
Head of Wacoal Brand Operations
Apr. 2015 	Director, Managing Corporate Officer,
Head of Wacoal Brand Operations
Apr. 2016 	Director, Senior Managing Corporate Officer,
Head of Wacoal Brand Operations
Apr. 2018 	Representative Director, President andCorporate Officer of Wacoal Corp. (present)
Apr. 2020 	Director, Vice President Corporate Officer of theCompany
Jun. 2020 	Director, Vice President Corporate Officer of theCompany (present)

Mar. 1984 Joined the Company
Oct. 2007 	Manager of Business Management and Administrationof Wacoal Brand Operation Division of Wacoal Corp.
Apr. 2011 	Director and Deputy General Manager of
Wacoal China Co., Ltd.
Apr. 2014 	General Manager of Corporate Planning of the Company
Apr. 2017
Corporate Officer of Wacoal Corp.
Jun. 2018 	Director and General Manager of Corporate Planningof the Company
Jun. 2019 	Managing Director and General Manager of Corporate
Planning of the Company
Apr. 2020 	Director and Managing Corporate Officer in chargeof Group Finance (present)
Jun. 2021	Director and Managing Corporate Officer in chargeof Group Business Management (present)

Nov. 1977	Joined Pricewaterhouse
Aug. 1982	Registered as Certified Public Accountant
Jul. 1992	Joined Aoyama Audit Corporation
Aug. 2007	Joined Deloitte Touche Tohmatsu
Jun. 2010	Vice Chairman of The Japanese Instituteof Certified Public Accountants Kinki Chapter
Sep. 2011	Left Deloitte Touche Tohmatsu
Oct. 2011	Established Shirai Public Accounting Firm,
Managing Partner (present)
Jun. 2015	Audit & Supervisory Board Member of the Company(present)

Oct. 2000

Outside Director

Outside Director

Outside Audit & Supervisory Board Member

Madoka Mayuzumi

Shigeru Saito

Minoru ShimadaAug. 1996 	Launched and organized monthly haiku magazine
Gekkan HepburnJan. 2001 	Member of National Language Subdivision of Council
for Cultural Affairs, Ministry of Education, Culture,
Sports, Science and Technology
Dec. 2004 	Member of Council for the Promotion of Cultural
Diplomacy, Cabinet Secretariat
Apr. 2010
Japan Cultural Envoy for Agency for Cultural Affairs
May 2013 	Member of Forum to Realize Culture andArts-Oriented Nation held by Minister of Education,
Culture, Sports, Science and Technology
Apr. 2014 	Member of Cultural Policy Subdivision of Council for
Cultural Affairs, Ministry of Education, Culture, Sports,
Science and Technology
Apr. 2014
Advisor of the Company
Jun. 2015 Director of the Company (present)

Nov. 1979

Apr. 1977 	Joined The Bank of Tokyo, Ltd.
(currently MUFG Bank, Ltd.)
Jun. 2004 	Corporate Officer, General Manager of Corporate
Banking Group No. 1, Corporate Banking Division
No. 4, The Bank of Tokyo Mitsubishi, Ltd.
(currently MUFG Bank, Ltd.)May 2005 Corporate Officer, Manager of New York Branch
Apr. 2008 	Managing Corporate Officer, General Manager ofCorporate Banking Group, Nagoya Branch, The Bank ofTokyo-Mitsubishi UFJ, Ltd. (currently MUFG Bank, Ltd.)
Jun. 2010 	Representative Director and Vice President,
SOTSU CORPORATION
Jun. 2011 	Representative Director and President,
NAIGAI Construction Co., Ltd.
Jun. 2012 	Representative Director and President,
SOTSU CORPORATION; Representative Director
and President, Sotsu Amenity Service Corporation
Jun. 2018 	Director and Chairman, SOTSU CORPORATION	Audit & Supervisory Board Member of the Company(present)

Joined TOSE CO., LTD.
General Manager of Development Department
Oct. 1985 Director of TOSE CO., LTD.
Feb. 1987 	Representative Director andPresident of TOSE CO., LTD.
Sep. 2004 	Representative Director and President,
and CEO of TOSE CO., LTD.
Dec. 2015 	Appointed Representative Director and Chairman,
and CEO of TOSE CO., LTD. (present)
Jun. 2017 Director of the Company (present)

Admitted to the Bar
Joined the Law Office of Tadashi Yamada
Oct. 2004 Joined the Kikkawa Law Office
Apr. 2008
Partner at the Kikkawa Law OfficeJun. 2017	Audit & Supervisory Board Member of the Company(present)
Feb. 2019 Managing Partner of Hamamoto Law Office (present)

Outside Director

Tsunehiko Iwai
Apr. 1979
Joined Shiseido Co., Ltd.
Apr. 2002 	General Manager of Product Commercialization,
Planning Department, Shiseido Co., Ltd.
Apr. 2008 	Corporate Officer, General Manager
of Technical Department, Shiseido Co., Ltd.
Jun. 2014 	Director, Corporate Executive Officer in chargeof Research & Development, Production andTechnical Affairs, Shiseido Co., Ltd.
Jan. 2016 	Representative Director, Executive Vice President,
Chief Technology & Innovation Officer, Shiseido Co., Ltd.
Mar. 2018 Senior Advisor, Shiseido Co., Ltd.
Jun. 2018 Director of the Company (present)

60

INT EG R AT ED R EPORT 202 1

Major concurrent positions
https://www.wacoalholdings.jp/en/ir/topics/files/governance_report20210601En.pdf

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Corporate GovernanceThe basic policy and purpose of the Wacoal Group’s corporate governance is to continuously enhance enterprise value by
increasing transparency and ensuring the fairness and independence of corporate management in order to build “mutual
trust” in relationships with every stakeholder, including shareholders, customers, employees, business partners, and local
communities.
Corporate Governance Guidelines
https://www.wacoalholdings.jp/group/files/governance_guideline_en.pdf

Overview and Composition of the Board of Directors, Advisory Committees, and Other Meetings
Description

Number of meetings
convened in FY2021

Board of Directors

Based on its regulations, the Board of Directors convenes regular meetings every month and convenes extraordinary
meetings as required. It makes decisions on management policy and strategy and other important business-related
matters as well as on matters stipulated by statutory laws and regulations or the Company’s articles of incorporation.

14

 xecutive Nomination
E
2
Advisory Committee

An advisory body to the Board of Directors, the committee is chaired by an independent outside director and comprises three outside directors and two internal directors. In principle, the committee convenes annually on the day of
the January meeting of the Board of Directors, considers the nomination or promotion of directors, and submits
proposals to the Board of Directors for approval. The attendance and approval of all committee members are required
to pass resolutions.

3 xecutive Compensation
E
3
Advisory Committee

An advisory body to the Board of Directors, the committee is chaired by an independent outside director and comprises three outside directors, one internal director, and one other member. In principle, the committee convenes on
the days of the April, July, and February meetings of the Board of Directors, considers the compensation of directors,
and submits proposals to the Board of Directors for approval. The attendance and approval of all committee members
are required to pass resolutions.

6

Name

1

Corporate Governance Structure
We have adopted an Audit & Supervisory Board system, whichenables the Board of Directors and the Audit & Supervisory Board
to supervise and audit the execution of operations to maintaincorporate governance in Group companies as a holding company.
Summary of the Corporate Governance System and the Reasonsfor Its Adoption
The Company has adopted a governance system based on a
Board of Directors, comprising directors who are conversant withrespective businesses and outside directors with diverse professional backgrounds, and an Audit & Supervisory Board, including
outside Audit & Supervisory Board members. This governancesystem enables the holding company to effectively supervise andaudit the execution of operations at Group companies and torealize and maintain high-quality business management.
The Board of Directors comprises seven directors, three ofwhom are outside directors and one of whom is a woman, whocarry out management decision-making and supervision from an
objective perspective. They aim to reinforce supervisory functions
and enhance decision-making. To clarify management responsibility, directors are appointed for one year. Thus, we have built abusiness management system that enables rapid responses tochanges in business conditions.

Comprising five Audit & Supervisory Board members, three ofwhom are outside members, the Audit & Supervisory Board aims tostrengthen their supervision and auditing of business management.
Further, the Group has established the Group Management
Meeting, comprising directors and principal members, which
considers Group management strategies and other importantmanagement issues and conducts prior deliberation of mattersfor consideration by the Board of Directors.
Overview of the Corporate Governance Structure (as of June 29, 2021)
Format4

Independent Outside Officers
MeetingPrimarily comprising independent officers, this meeting evaluates the Board of Directors by exchanging opinions.
Further, the details of these evaluations are reported to the Board of Directors and then disclosed through a corporate
governance report.

15Group Management Meeting

Comprising directors and key members of the management team, the meeting is convened twice every month inprinciple. The meeting considers items related to the Group’s management strategy and other important management
issues and conducts prior examinations of agenda items to be discussed by the Board of Directors.

22

6

 anagement Issues Review
M
Meeting

This meeting is convened as required to analyze medium- to long-term Companywide strategies and importantmanagement issues and to prepare drafts of management strategies and medium- to long-term plans.

16

7

 uarterly Business Results
Q
Review Committee

Convening three times a year, these committees check business results and the progress ofmeasures. Also, if targets are not achieved, the committees consider improvement measures and revise targets as
required.

3

With the president and representative director acting as the administrative manager and the director of the
Administrative Department acting as the chairperson, the committee comprises internal directors, the directors ofoperating companies, and corporate officers. The committee promotes the establishment of a compliance system,
consideration of compliance issues that have a serious impact on the Wacoal Group, enhancement of awareness andenlightenment on corporate ethics, and the effective control of any management risks to the Wacoal Group.

4

Audit & Supervisory Board system

Number of directors
Of whom, outside directors
Term of directors
Number of Audit & Supervisory Board
members
Of whom, outside Audit & Supervisory
Board members
Number of independent officers
Participation of outside directors indetermination of remuneration
Organizations to assist indecision-making

7
3
1 year5

 orporate Ethics and Risk
C
8Management Committee

3
6
Yes
Executive Nomination Advisory Committee,
Executive Compensation Advisory Committee
Independent Outside Officers Meeting, GroupManagement Meeting, Corporate Ethics andRisk Management Committee
Yes

Key committees
Results-linked remuneration

Diversity of the Board of Directors and the Audit & Supervisory Board
Directors
Independence(outside
directors
only)

Name

Corporate Governance Structure
General Meeting of Shareholders
Election / Removal
2 Executive Nomination Advisory

Committee

Cooperation
Audit & Supervisory Board
5 Audit & Supervisory Board
members(of whom 3 are outside Audit &Supervisory Board members)

Audit

Chairman: Outside director
5 directors (of whom 3 are outside directors)
3 Executive Compensation Advisory

Committee

Reporting offindings

Chairman: Outside director
5 directors (of whom 3 are outside directors)
4 Independent Outside Officers Meeting

1 Board of Directors*

7 directors(of whom 3 are outside directors)

Secretariat Office for Audit &Supervisory Board

Assessment

Accounting Auditors

Audit

Election / Removal(Business execution)

Representative Director, President and Corporate Officer

Key Committees

8 Corporate Ethics and Risk Management Committee

5 Group Management Meeting*

6 Management Issues

Review Meeting

Results Review Committee*

Give instructions to

Audit
OfficeCorporate Ethics Hotline

7 Quarterly Business

Report toElection /RemovalElection / Removal

Reporting offindings

Compliance Committee

1

Yoshikata Tsukamoto2

Hironobu Yasuhara

3

Tomoyasu Ito

4

Akira Miyagi

5

Madoka Mayuzumi

6

Shigeru Saito

7

Tsunehiko Iwai

Give instructions toReport to

Operating department / Group company* Both internal and outside Audit & Supervisory Board members attend meetings for the purpose of auditing the performance of duties by directors.

Internal
audit

Corporate
management,
operational
management

Finance,accounting

Law,complianceInternational
insight

Personnel
development

Art, culture, andsocial insight

Note: The above overview does not represent the entirety of directors’ expertise and experience

Audit & Supervisory Board Members

Name

Cooperation
Accounting
audit

CSR Procurement Committee

Expertise and experience beneficial to the Company

1

Shinichi Kitagawa

2

Katsuhiro Okamoto3

Hiroshi Shirai

4

Mitsuhiro Hamamoto

5

Minoru Shimada

Independence(outside Audit &Corporate
Supervisory
management,
Board
operational
members only) management

Expertise and experience beneficial to the Company
Finance,accounting

Law,complianceInternational
insight

Personnel
development

Art, culture, andsocial insight

Note: The above overview does not represent the entirety of Audit & Supervisory Board members’ expertise and experience.

62

INT EG R AT ED R EPORT 202 1

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Corporate Governance

Strengthening of the Functions of the Audit & Supervisory Board and Its Members

Measures to Strengthen the Effectiveness of Corporate GovernanceAnalysis and Assessment through the Independent Outside Officers Meeting
The Independent Outside Officers Meeting assesses the effectiveness of the Board of Directors, identifies issues,and promotes continuous improvement.
Assessments of the Effectiveness of the Board of Directors and Improvement Measures

Issuesidentified

Improvement
measures

FY2019FY2020

FY2021

1. Need for revision of both the regulations of the Board of Directors and theestablishment of agenda items inorder to extend the scope of responsibilities entrusted to corporate officers
and to increase the opportunities forreporting on agenda items that requirecontinuous confirmation of progress
2. Need to consider making meeting
documents paperless

1. Need to conduct on-site inspections of factories, stores, andother facilities to further understanding of the Group’sbusinesses
2. Need to facilitate constructive
discussions of growth strategies
by providing opportunities thatenable understanding of brandmerchandising strategies

1. F urther improve the efficiency of the Board of Directors by improving thecontent of the materials distributed in advance of Board of Directors’
meetings and accelerating the timing of their distribution
2. R econsider the agenda, meeting frequency, participating members, andmanagement methods of the Executive Nomination Advisory Committee,
the Executive Compensation Advisory Committee, and the Independent
Outside Officers Meeting
3. Increase contact points among executive management, such as executive
officers and general managers

1. Revised regulations on the submissionof agenda items to the Board of
Directors and revised the establishment of agenda items
2. Made documents used by the GroupManagement Meeting and the Boardof Directors paperless

1. Considered organizing on-site
inspections of stores that haveintroduced 3D body scanners andother facilities
2. Considered the establishment of
an inspection program for newly
appointed outside directors withthe aim of cultivating
understanding of the Group’sbusinesses

1. Implement a review of meeting management and regulations of theBoard of Directors (including agenda items and the application of internal
rules for agenda items)
2. C onvene the Executive Nomination Advisory Committee and Executive
Compensation Advisory Committee whenever appropriate to respond tomeeting agendas. Consider a review of the way the Independent Outside
Officers Meeting evaluates the Board of Directors, among other issues
3. Implement the expansion of contact points among executive
management, including establishing the agenda for the content ofbusiness strategies

Outside Directors and Outside Audit & Supervisory Board Members
The Company has three outside directors and three outside Audit& Supervisory Board members. The Company appoints outside
directors who have made wide-ranging contributions to the fields
of art and culture in Japan and overseas or who have extensive
experience and knowledge of corporate management. By providing
objective, neutral advice based on their extensive business experience and specialized knowledge in a range of fields, outside directors enhance the appropriateness of directors’ decision-making.
Further, the Group appoints as outside Audit & Supervisory Board
members certified public accountants who have a high level ofexpertise with regard to finance and accounting, attorneys whoare independent from the Company, and individuals who have many
years of experience of working in the financial industry and extensive knowledge of corporate management. While retaining a highdegree of independence, outside Audit & Supervisory Board members draw on their expertise to undertake strict auditing of thelegality of directors’ decision-making and operational execution.
Criteria to Ensure the Independence of Outside Officers
https://www.wacoalholdings.jp/group/files/governance_outsidedirectors_en.pdf

Reasons for Election of Outside Directors and Outside Audit & Supervisory Board Members
Reason for election

Expected field of expertise andknowledge

Attendance at Board of Directors’
meetings

Madoka Mayuzumi

As a haiku poet, Madoka Mayuzumi has made wide-ranging contributions to the fields of art and culture in Japan and overseas. Her
expertise and experience is expected to contribute to our efforts torealize business management that emphasizes diversity, making
her an appropriate outside director for the Group.

Art, culture, andsocial insight

13/14

Shigeru Saito

It is anticipated that Shigeru Saito will enhance management
supervisory functions by providing input from various perspectives
based on his extensive knowledge and experience as a representative director of another company.

Corporate management,
operational management,
and international insight

14/14

In addition to his extensive knowledge and experience as a business manager, Tsunehiko Iwai can also be expected to contribute to
management using his specialist knowledge relating to research,
production, and various fields of technology.

Corporate management,
operational management,
law, compliance, andinternational insight

14/14

Outside directors

Tsunehiko Iwai

Outside Audit &Supervisory Board
members

Reason for election

Attendance at Board of Directors’ meetings and Audit &Supervisory Board meetings
Board of Directors’ meetings

Audit & Supervisory Board
meetings

Specialized knowledge of accounting and finance as a certified
public accountant make Hiroshi Shirai an appropriate outside Audit& Supervisory Board member for the Group.

14/14

15/15

Mitsuhiro Hamamoto

Mitsuhiro Hamamoto’s experience and specialized knowledge as an
attorney make him an appropriate outside Audit & Supervisory
Board member.

14/14

15/15

Minoru Shimada

Minoru Shimada can be expected to contribute to our audit andsupervisory structure by using his extensive experience in thefinancial sector and his knowledge as a business manager, as wellas his overseas experience.

14/14

15/15

INT EG R AT ED R EPORT 202 1

At meetings of the Audit & Supervisory Board, outside Audit &Supervisory Board members communicate and coordinate
extensively with full-time Audit & Supervisory Board members.
For example, the latter provide the former with reports on thestatus of audits of operations and the details of discussions atimportant meetings. Outside Audit & Supervisory Board members
also receive various types of reports from the independent auditor
and departments engaged in internal control as well as audit
internal control systems, including the appropriateness of financial reporting. With a view to heightening the effectiveness ofaudits, outside Audit & Supervisory Board members engage in arange of other activities. For example, they attend important meetings other than those of the Board of Directors in light of discussions of the Audit & Supervisory Board and visit subsidiaries to
conduct audits and investigative interviews.

Internal Control
The Office of Corporate Auditors reports directly to the president
and representative director and conducts internal audits pursuant
to internal audit regulations. The office audits compliance withlaws and regulations and the appropriateness of the execution ofduties at the Company and subsidiaries in Japan and overseas,
evaluates the effectiveness of internal control, and periodicallyreports the results of these activities to the president andrepresentative director.

Further, the Office of Corporate Auditors comprises 9 personnel
and holds monthly report verification meetings with Audit &Supervisory Board members. These meetings primarily verify
reports on the main points of meetings that Audit & Supervisory
Board members attend and report on the activities of the Office ofCorporate Auditors. The Company has established a system forsharing documents and other information required for audits.
To facilitate efficient, effective audits, both parties coordinate
through such measures as mutual exchanges and the verificationof audit working papers.

Compensation of Officers
Under the Company’s system for the compensation of officers,
compensation comprises basic compensation, which is fixed;
bonuses linked to the Company’s performance in each fiscal year;
and share-based stock options, which provide medium- to longterm incentives. Given that they are not involved in the executionof duties, independent outside directors and Audit & Supervisory
Board members only receive fixed basic remuneration.
For fiscal 2021, a breakdown of the fixed basic compensation,
performance-based bonuses, and share-based stock options
as percentages of the compensation of officers is shown below.
Further, this breakdown assumes calculation methods for
performance-based bonuses that are in accordance withstandard values.
Basic compensation

Performance-based bonuses

71%

Hiroshi Shirai

64

The Audit & Supervisory Board comprises two internal full-time
Audit & Supervisory Board members and three outside Audit &Supervisory Board members. Convening monthly to coincide withthe meetings of the Board of Directors, the Audit & Supervisory
Board also holds extraordinary meetings as required. Audit &Supervisory Board members make decisions on matters concerning policies on the preparation of audit reports and the implementation of audits, methods of examining the statuses of businessperformance and assets, and other matters related to businessexecution, in accordance with the regulations of the Audit &Supervisory Board. In addition, the Company assigns an independent, dedicated secretariat to the Secretariat Office for the Audit &Supervisory Board to assist in their duties.

Share-based stock options

18%

11%

• Basic Compensation
The amount of basic compensation is designed to set a single
rate for each position in principle and is fixed as a monthly
payment. With reference to the results of a compensation survey
conducted by an external organization, every year the Company
verifies the range of appropriate levels of compensation for companies in the same industry as well as for companies of a similar
size and then sets a level of compensation commensurate with
the Company’s business results and size. Further, a resolution of
the Ordinary General Meeting of Shareholders convened on June29, 2005, set upper limits of ¥350 million for the aggregate annual
basic compensation of all directors (excluding employee salaries
of directors who concurrently serve as employees) and¥75 million for the aggregate annual basic compensation of
all Audit & Supervisory Board members.
• Performance-Based Bonuses
To increase the degree of linkage between bonuses and consolidated business performance, the aggregate amount of performance-based bonuses is determined for each fiscal year basedon the percentage achievement of a reference value of consolidated operating income and, to a lesser extent, based on certain
other business results (consolidated net sales, consolidated
income before taxes, etc.). The payment will be made once in themonth in question after the total amount has been approved at
the Ordinary General Meeting of Shareholders for the relevant
fiscal year.
• Share-Based Stock Options
The amount of share-based stock options is determined by aresolution of the Board of Directors in consideration of themonthly amount of the basic compensation and the fair value ofstocks, which are determined based on reports issued by the
Executive Compensation Advisory Committee, three of whom
are independent outside directors, and the number of sharesdecided upon is allocated once a year.

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Corporate Governance

Additionally, at the Ordinary General Meeting of Shareholders
held on June 29, 2021, the Company resolved to abolish theshare-based stock option incentive and introduce a new transferrestricted stock compensation plan for directors (excluding outside directors). This was done so that directors would share therisk of stock price fluctuations with shareholders and further
increase their motivation to improve the stock price and corporate
value. Further, a resolution of the Ordinary General Meeting of
Shareholders convened on June 27, 2008, set an upper limit of¥70 million for aggregate annual share-based stock options.

Reviewing the System for the Compensation of Officers witha View to Strengthening Its Effectiveness
The Executive Compensation Advisory Committee is engaged in an
ongoing review of the entire system for the compensation of officers.
Going forward, the committee will consider the following matters:
 onsideration and establishment of a basic policy on theCcompensation of officers

Risk Management Structure
Subject to the approval of the Board of Directors, the Corporate
Ethics and Risk Management Committee stipulates basic regulations for risk management. Pursuant to these regulations, thecommittee clarifies the responsibilities for each category of risk
and advances the construction of a risk management system thatcomprehensively encompasses the Wacoal Group’s overall risks.

Risk Management Structure
Representative Director, President
and Corporate Officer

The mix of basic compensation, performance-based bonuses, andmedium- to long-term incentives (review of monetary amounts andpercentages)
The calculation method for performance-based bonuses(strengthening linkage with the numerical targets of the mediumterm management plan)

Corporate Ethics andRisk Management Committee

Promotes the consideration of compliance issues that have aserious impact on the Wacoal Group, enhancement of awareness and enlightenment on corporate ethics, and the effective
control of any management risks to the Wacoal Group.

Compensation of Officers in FY2021
Total amount of remuneration, etc., by type (¥ million)

Classification

Total amount of
remuneration, etc.
(¥ million)

Basic compensation

Performance-based
bonuses

Share-based stock
options

Directors (excluding outside directors)

263

219

―

43

5

Audit & Supervisory Board members(excluding outside members)

32

32

―

―

3

Outside directors and outside Audit &Supervisory Board members

50

50

―

―

6

Number of eligible
recipients

Regarding the exercise of the voting rights of strategic shareholdings, the Company affords due respect to the management
strategies of investee companies and decides whether or not tovote in favor of proposals based on comprehensive considerationof whether they contribute to the enhancement of the enterprisevalue of both said companies and the Company.
Reference: Shareholdings of Wacoal Corp.
Number of stocks
Monetary amount(¥ billion)
As a percentage ofconsolidated total assets

CSR Procurement
Committee

Discusses and makes decisions on the compliancemanagement structure andother significant matters

Drafts and checks the progress of overall plans related toactivities for the promotion of
CSR procurement

Quality Assurance
Inquiry Committee

Accident and Disaster
Measures Committee

Environmental Committee

Promotes quality assurance
activities based on quality
assurance regulations

Takes measures to preventand respond to accidents,
disasters, and otheremergencies

Advances in-house activities
in response to society’s
environmental preservation
expectations

Risk Management during the COVID-19 Pandemic

Policy on Strategic Shareholdings and Standards for Exercising Voting Rights
The purpose of the Company’s strategic shareholdings is toenhance enterprise value over the medium to long term by maintaining and strengthening transactional relationships; establishing,
maintaining, and strengthening cooperative and transactional
relationships with respect to business development; and maintaining stable financial transactions. The Company determines
whether strategic shareholdings are appropriate from a medium
to long-term perspective and whether the attendant benefits andrisks of strategic shareholdings commensurate with equity costare verified, and the findings are periodically reported to the Boardof Directors. Based on the verification findings, the Board of Directors
analyzes whether strategic shareholdings contribute to theenhancement of the Company’s enterprise value over the medium
to long term and decides whether to continue or dispose of strategic shareholdings. Taking into consideration the circumstances of
its partner companies, the Company steadily disposes of or
reduces strategic shareholdings whose significance has lessened.

Compliance Committee

The worldwide COVID-19 pandemic is significantly affecting the Company’s sales and production. Based on our determination to
give first priority to the safety of customers, business partners, and employees and to the prevention of the further spread of
COVID-19, in fiscal 2020 we established the COVID-19 Task Force, which is a subcommittee of the Corporate Ethics and Risk
Management Committee and chaired by the director and managing corporate officer. The task force takes countermeasures inlight of developments in relation to the COVID-19 pandemic.

Basic Policy on Information Disclosure

FY2019FY2020

FY2021

95

84

73

60.8

42.2

50.1

21.6%

15.2%

15.5%

Note: The shareholdings of Wacoal Corp. for which the largest monetary amount isrecognized on the balance sheets in relation to investment in equity securities(the monetary amount of equity securities recognized) have been stated.

We see timely disclosure of accurate information as the foundation of “mutual trust” in relationships with all stakeholders. We arealso keenly aware that disclosure is essential for accurate assessments of our enterprise value. We actively disclose information
while complying with all related regulatory requirements.
We have identified three basic requirements for information
disclosure. First, important information must be disclosed accurately and in a timely manner, regardless of whether it is positiveor negative. Second, information must be expressed in languagethat is easy for all stakeholders to understand and disclosed
using various methods to ensure ease of access and fairness.
Third, organizational, personal, physical, and technical steps
must be taken to prevent information leakage before timely,
appropriate disclosure.
Basic Policy on Information Disclosure
https://www.wacoalholdings.jp/en/ir/management/discloser/

Compliance and Risk Management Structure
The Company’s Corporate Ethics and Risk Management
Committee has the president and representative director acting as
the administrative manager, supervisor, and director of Groupbusiness management as its chairperson. The committee istasked with developing the compliance structure, examining
compliance issues that could significantly affect the Wacoal
Group, ensuring all employees understand and internalize corporate ethics, and effectively promoting control of any management
risks to the Wacoal Group.

66

Compliance Structure
The Company has established the Wacoal Code of Ethics andthe Corporate Ethics: Wacoal’s Code of Conduct to ensure that
directors and employees perform their duties in compliance withlaws, regulations, and the articles of incorporation and soundsocial norms.
Further, the Wacoal Code of Ethics and the Corporate Ethics:
Wacoal’s Code of Conduct stipulates resolute refusal of demands
from antisocial forces. In addition, the Company has established
an internal whistleblowing system and other systems that enabledirectors and employees to report on any misconduct or inappropriate behavior.

INT EG R AT ED R EPORT 202 1

Basic Policy on Constructive Dialogue with Shareholders and Other Stakeholders
We have adopted and published a basic policy on constructive
dialogue with shareholders and other stakeholders. Dialogue withshareholders and other stakeholders is under the overall control ofthe director of the Administrative Department and is the responsibility of the division in charge of investor relations as well as theGroup officers and employees that said division designates.
Various factors are considered in relation to requests for meetings
with directors, including the proposed subject matter of the meeting and the affiliations of the person seeking the meeting. In addition to fair, timely, and accurate disclosure about our business

management and financial situation to shareholders and otherinvestors in Japan and overseas, we help them gain a better
understanding of our viewpoint and approach by actively
distributing information about the market environment andour unique strengths.
Basic Policy on Constructive Dialogue with Shareholders
and Other Stakeholders
https://www.wacoalholdings.jp/en/sustainability/talk_with_stockholder/I N TEG RATE D RE P O RT 2021

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IR Interview Report

To properly deliver Wacoal’s unique value to consumers, a brandstrategy that leverages the Company’s advanced manufacturing
capabilities is essentialcommittee that oversees such initiatives, I have an obligation toreport directly to the Board of Directors. Today, I am looking
forward to learning about the steps that Wacoal Holdings Corp.
is taking to incorporate ESG initiatives and thereby create integrated value.
Mr. Iwai, as representative director and executive vice president of Shiseido Co., Ltd., you led the company’s management
reforms before becoming an outside director of Wacoal
Holdings in 2018. Did you have any contact with the Wacoal
Group before then?
Iwai: No, none at all. I remember being surprised when
asked if I would become an outside director. However,Shiseido and Wacoal have a lot in common. Both companies
are focused on helping people to become beautiful, and bothare vertically integrated manufacturers. Since I have a background in research, I have always agreed with Wacoal’semphasis on data. In particular, the Human Science ResearchCenter’s physique data on about 45,000 people and the datafrom the regular measurement of more than 1,000 people,
which tracks changes in the physiques of the same group of
women as they age, are unique assets. I believe I was asked to
become an outside director because the senior management
team wanted me to use my experience and knowledge to takea hard look at Wacoal’s management and check whether
these strengths were being fully leveraged.

Hisashi Yatsuo

Senior Fund Manager, Equity Strategy Department
Chair, Rheos ESG Steering Committee
Rheos Capital Works Inc.

Tsunehiko Iwai

Outside Director
Chairman of Executive Nomination Advisory Committee
Chairman of Executive Compensation Advisory Committee

Changes in customers’ values and purchasing behavior accompanying the COVID-19 pandemic and the spread of digital technologies
are significantly impacting the business management of the Wacoal Group. Aiming to realize renewed growth and a highly profitable
management structure, the Group drastically reformed the structure of its domestic businesses in April 2021. Why is the Group moving
in a new direction through the consolidation of manufacturing and marketing functions and the reform of sales systems? What needs tobe done at this juncture for the Group to achieve renewed growth and increase corporate value? What roles should outside directors playduring a phase of corporate transformation?
Mr. Hisashi Yatsuo of Rheos Capital Works Inc. and Mr. Tsunehiko Iwai, an outside director of Wacoal Holdings Corp., held a frank
discussion on the aforementioned questions.
Note: For the purpose of inclusion in this report, the following is a summarized version of a discussion on investor relations held in June 2021.

Wacoal’s Manufacturing Strengths
Yatsuo: I am a senior fund manager at Rheos Capital Works
Inc., an asset management company in Japan. The company’s
total assets under management recently exceeded ¥1.0 trillion, and more than 30% of these assets are overseas stocks.
Our basic stance toward asset management is to look at
medium- to long-term growth, rather than quarterly results,
for example.
One reason we have adopted this stance is that the majority

68

of our customers are individual investors in their 30s or 40s,
an age when some begin focusing on asset formation.
Further, we receive more than half of our total assets undermanagement through installment investment. In other words,
as a certain amount of money enters the fund every month,
there tends to be a net inflow of money over the medium tolong term, and we can therefore readily take long positions.
Also, we place importance on environmental, social, andgovernance (ESG) initiatives both in our corporate activities andin the selection of investees. As the head of the internal

INT EG R AT ED R EPORT 202 1

Yatsuo: Having actually looked inside Wacoal, what is yourevaluation of the Company’s current situation? Also, in whatways do you intend to make use of your experience?
Iwai: First of all, as I have experienced both successes andfailures, I do not think that my past experience will necessarily
form the basis of arguments that are persuasive to Wacoal’s
senior management team. One thing I can say, however, isthat you cannot just look at things from a single standpoint.
Examining matters from different angles is important. For
proper risk management, you need to assume the worst.
Experience has taught me this way of thinking, and I always
take an all-around view of matters when making statements
at meetings of the Board of Directors and other bodies.
Overall, I think the Company deserves praise for its measures in response to the COVID-19 pandemic. Premised on
preventing the spread of infection, the Company made an
all-out effort to counter the decline in store sales.
Grounds for optimism going forward include the growth ofthe e-commerce business. Wacoal is also progressing withdigital transformation. The avatar-enabled Ava.Counseling
Parle system as well as measurement technology based on
3D body scanners are likely to become powerful marketing
tools given the demand for contactless interactions. Thinking
about the accumulation of data that enables such initiatives
and the talented personnel who can use it as the basis forinnovation gives me a renewed sense of Wacoal’s potential.

Reorganization and the Strengthening of
Brand Marketing
Yatsuo: On the other hand, such strengths are not appreciated by capital markets, and the price book-value ratio has
been below 1.0 for a long time. This seems strange given
Wacoal’s brand profile and competitiveness. What are yourthoughts in this regard?
Iwai: In my view, Wacoal’s brand marketing is still not goodenough.
In 2018, when I assumed this position, my initial impression
was that Wacoal exuded the type of refinement and elegancethat reminded me of the atmosphere at Shiseido. I sensed anabsolute confidence in the manufacturing capabilities of theCompany and the unrivaled quality of its products, and there
was an assumption that consumers were sure to understandthe excellence of Wacoal’s products. However, products do
not sell just because they are good.
Wacoal is a corporate brand and a product brand that isfamiliar to everyone in Japan. On the other hand, if you lookbeyond the Wacoal brand there are no product brands thatcan stand on their own. Relying on the Wacoal brand as anumbrella, product brands only pursue fine degrees of differentiation. This kind of random approach is not an effective way
to use brand assets.
Peach John, however, is completely different.
Yatsuo: The products Peach John makes are different. Even
looking at Peach John’s promotional measures immediately
gives you the sense that the personnel involved probably havecompletely different sensibilities from those of personnel inother Wacoal businesses.
Iwai: Peach John has a business model that outsources the
manufacture of its products. Also, the operating company’s
development process is completely different from that of
Wacoal, which is vertically integrated. Peach John independently advances its own brand marketing activities and has
created its own unique worldview. Wing and other brands
should also have this type of distinctiveness.
The April 2021 reorganization of Wacoal Corp. wasdesigned to increase the overall sophistication of business
operations so that new brand strategies can be introduced.
Specifically, the Wholesale Business and Retail Operation
divisions have been reorganized into the Sales Division andthree brand groups, thereby consolidating sales and manufacturing functions, which were separate. At the same time, theperson who was the general manager of the Global Division
until the previous fiscal year has been appointed head of thebrand groups, while the person who was the head of the Retail
Operation Division until the previous fiscal year has been
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ESG

IR Interview Reportintention is to further promote sales and manufacturing thatare driven by markets and customer data. Another major
feature of the reorganization is the establishment of theMarketing Management Department between the Sales
Division and the brand groups.
Yatsuo: So, a department has been established that willserve as a hub for coordinating opinions from the sales andmanufacturing areas?
Iwai: That is right. Those engaged in manufacturing havetheir own particular logic, while those involved in sales havetheir priorities. The situation that must be avoided is when thetwo parties coexist in a half-hearted way, because this createsa culture of blaming others in which each thinks it is the other’s fault that things are not working out. The design of the
new organization is very well thought out as it clearly separates both functions while putting an organization between
them that can speak to either side.
The newly established Sales Division does not separate
such sales channels as directly managed stores, department
stores, general merchandise stores, and specialty stores, but
pursues integrated marketing in five regions. In addition, theformation of brand groups that are a clear departure from theprevious approach, which was based on the Wacoal and Wing
brands, shows a willingness to seek more strategic differentiation for the product brands while staying connected with
Wacoal as a corporate brand. In my opinion, to evolve
Wacoal’s manufacturing and reduce costs, we should introduce “chassis,” by which I mean we should standardize essential functions. I feel that if the new system works correctly, it
will strengthen manufacturing.

Toward Further Empowerment of Women
Yatsuo: Recently, effective governance has become an
eternal theme in capital markets. Looking at various cases
in Japan and overseas, I do not think it is simply a matter ofincreasing the number of outside directors. Members of
the Board of Directors need to have a sense of ownership.
In Wacoal’s case, however, the Company mainly deals withproducts for women, and 90% of its employees are women,
but there are no female internal directors. How do you view
this state of affairs?
Iwai: I think the Company still has not promoted enoughwomen. In a company with this many female employees, only
having a quarter of managerial positions occupied by women
is far too low a level. Given the percentage of women in thegeneral population, women should account for at least half ofmanagers. I have made statements to this effect at meetingsof the Board of Directors and other bodies. According to thecorporate officer responsible for human resources, the percentage of women among those who pass the managerial
promotion examination has been increasing, and the development of female candidates for the senior management positions is also progressing.
However, there is also a saying that “the position creates the
person.” I think that one option is to be a little forceful about
raising the percentage of women and boldly promote them tothe positions of corporate officer and director.
Yatsuo: Why are there no senior executives emerging fromthe bloc of female employees that represents 90% of theworkforce?
Iwai: I think the situation has actually changed a lot. In fact, I
know the woman who developed the 3D body scanner measurement service I mentioned earlier. One approach would be

You cannot just look at things from a single
standpoint. Examining matters from different
angles is important. For proper risk
management, you need to assume the worst.

I think that the reorganization of Wacoal
Corp. has pointed the operating company inan extremely favorable direction, so I am
interested in what the operating company will
be like in two years.

to rapidly promote such talented women. Incidentally, in 2021
she became the youngest person of either gender to be promoted to the position of manager in Wacoal’s history. I think
this is a symbolic example of how things are set to change agreat deal from now on.
Yatsuo: I hope the Company can bring such personnel tothe fore and attract media coverage.

Awareness Reform Resulting from
Structural ReformYatsuo: I have seen many different companies in Japan andoverseas. In general, the larger the company, the longer ittakes to transform. That said, as a rule of thumb, after a company sets off in a new direction it takes about two years
before the benefits begin to emerge. I think that the reorganization of Wacoal Corp. has pointed the operating company inan extremely favorable direction, so I am interested in what
the operating company will be like in two years.
Iwai: I believe in reforming structures before reforming
awareness. At Wacoal Corp., early this spring the generalmanager of the Sales Division traveled around Japan to holddiscussions with sales personnel and other personnel. These
discussions were possible precisely because under the neworganization the Sales Division has authority over integrated
marketing in each region. Real changes in awareness only
occur when each employee has understood the meaningof such structural reforms. People tend to be reluctant tochange.
Yatsuo: I really think that is true. The most important thing
going forward is how to increase employee engagement.

committed than ever. Just the other day, a regular quarterly
performance meeting was held in which the managers ofrespective regions and departments spent a whole day reporting on business results. Partly due to the prolonged COVID-19
pandemic, business results were below targets. President
Yasuhara singled out several underperforming departments
and issued strict instructions that require the departments to
prepare specific countermeasures by the end of the first halfof the current fiscal year.
In accelerating transformation, the formulation of the next
medium-term management plan will be important. I really
hope that the plan sets management goals that link mediumterm goals and long-term goals more clearly.
Yatsuo: In other words, rather than a plan that includes
statements such as “with an eye on fiscal 2028,” you would
like to see a plan that sets out goals for specific fiscal years?
Iwai: Yes, that is what I mean. Once such goals have been
established, the Company should then backcast from themand decide what is to be done at each juncture.
In any case, I think Wacoal has become more interestingsince April. As a result of the reorganization, the attitude not
only of the senior management team’s two leaders, President
Yasuhara and Vice President Ito, but also of other directors
and corporate officers has changed.
Yatsuo: I also have the impression that President Yasuhara’s
demeanor has changed considerably over the past few years.
He now speaks to us frankly about Wacoal’s problems, and I
think he is busy steadily pushing forward with internal
reforms.
Let me end by thanking you for the insights your comments
have provided me with today.

Iwai: My impression is that President Yasuhara and Vice
President Ito, who is the president of Wacoal Corp., are more

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ESG

ESG

Establishing Mutual Trust through Dialogues

Engaging in constructive dialogues toward the enhancement of enterprise value is critical to establishing a strong relationship of mutual
trust with all of our stakeholders. However, we have not been able to arrange sufficient opportunities for stakeholder engagementin our management activities thus far. Due in part to this and other factors, we have not been able to meet the expectations of themarket and, as a result, our price book-value ratio (PBR) has remained below 1.0 times for a number of years. In reflection of thisfact, we have taken a proactive approach to our engagement with all stakeholders, including shareholders and investors, by gaining theirvaluable input through results briefings and investor relations interviews and reflecting them in our management strategies withthe aim of achieving medium- to long-term increases in corporate value and establishing a highly effective management structure.

Views of Shareholders and Investors (Specific Examples)Strengths
Profit structure reform• I commend the fact that the presidents of both Wacoal Holdings Corp. and Wacoal Corp. are fully in charge of the profit structure reform.
• The profit structure is steadily showing signs of improvement, but the Company still has a poor reputation among investors. I would
like to see the Company regain their trust by generating results.

Business model• I sense a strong potential for growth based on the quality of its products and the progress of its global expansion.
• The right brands are in place and so are its unique production processes. 3D body scanners, sales personnel, directly managed stores,
and other resources that are necessary for improving customer relations are already in place. The Company should be able tocontinue to grow by making effective use of its assets.

The Wacoal Group’s Price Book-Value Ratio (PBR)(Times)

ESG

1.6
1.2

1.2

1.1

0.9

1.0

0.8

0.8

0.8

0.7

0.4
0
97/3

98/3

99/3

00/3

01/3

02/3

03/3

04/3

05/3

06/3

07/3

08/3

09/3

10/3

11/3

12/3

13/3

14/3

15/3

16/3

17/3

18/3

19/3

20/3

21/3

• I believe the Company is making progress on initiatives concerning the environment, society and so I would like to see a moreproactive disclosure of such efforts.

IssuesProfit structure reform• I am concerned about the lack of focus being placed on profit structure reform. Unless the reform is undertaken successfully,
I am worried that the Company would have to go back to square one. Speed is certainly an issue here.

Business model• I would like the Company to reflect its growth potential on business results and set high standards for its ROE and operating margin.
At the same time, I would like to see the Company develop a highly effective organization toward reaching those goals.
•M ore emphasis needs to be placed on sharing best practices within the Group.
• I do not see a central theme behind its brands, including the process for generating profits. It is a shame that its marketinginvestments are inefficient because of its poor branding.

Stakeholder Relations
At the Wacoal Group, we define corporate value as the integration of all value gained by customers, employees, shareholders,investors, and other stakeholders. Through our communication with all stakeholders, we strive to maintain a solid relationship andbuild deep mutual trust. Moreover, the details of our investor relations and ESG (environmental, social, and governance) activities
are communicated through the efforts of the Corporate Communications Department.

Issues regarding mediumto long-term vision andnext medium-term management plan

• The Company’s current medium- to long-term vision covering the period up to fiscal 2028 does not illustrate the process towardachieving its goals. It is not only the investors who are unaware of the process but also the employees, and it is a matter that should
be addressed in the next medium-term management plan.

ESG• I would like to see the Company transition to a structure in which the effectiveness of its governance can be viewed more objectively,
such as through the appointment of outside directors who are deemed familiar with the business and management and more
independent through the eyes of investors.
• The fact that the inadequacy of governance is to blame for the Company’s low price book-value ratio is a view shared throughout theentire stock market.

Communication Activities for Analysts and Institutional Investors (Results)
Activity

FY2019/3

FY2020/3

FY2021/3

Individual meetings with institutional investors and analysts

101 times

98 times

126 times

Results briefings (for analysts and institutional investors)

Twice

Twice

4 times

Business briefings (for analysts and institutional investors)

Twice

Once

3 times

Factory tours (for analysts and institutional investors)

Once

Twice

—

Conferences organized by securities companies

Twice

Once

Once

Overseas road shows

Once

Twice

—

Briefings for individual investors

4 times

3 times

Once

—

—

4 times

Individual meetings with outside directors (for analysts and institutional investors)

Views of All Other Stakeholders (Specific Examples)
Areas for improvement

Experts on Sustainability:• The future goals the Company has set out to achieve through digital transformation have not transpired into anything other thansimply an image and the numerical results it is trying to generate through the transformation of its business model are unclear.
•W hile materiality is an important matter that certainly must be taken into account, the Company does not seem to regard it as amatter that poses significant risks to its business activities or competitive advantages.
• The Company does not seem to be responding adequately to the issues along its supply chain in both Japan and overseas,
particularly when it comes to human rights issues in the fashion industry.
•M ore information needs to be communicated in regard to the impact of climate change on the Company’s business(in compliance with the disclosure requirements of the TCFD), with Japan declaring its goal of realizing carbon neutrality by 2050.
University Students Participating in Workshops:

Internal Communication Activities (Results)
Activity

Feedback on IR activities (for directors)

FY2019/3

FY2020/3

Twice a year

Twice a year

Quarterly

General employees

Management
personnel

Briefings on integrated report and discussions with the Company’s president (foremployees)

Message from the Corporate Communications Department
By actively engaging in dialogues and appropriately disclosing
information, the Corporate Communications Department works
to enhance awareness of the Company’s management andpolicies, such as the Group’s background and strengths, thepeople behind our business and how they (managers andemployees) work together, the results achieved, and the contributions we make to customers and society. We will continue toplay a pivotal role in enhancing enterprise value by incorporating
the valuable input of all of our stakeholders into our management activities.

72• I hope the Company does not postpone its profit structure reform or declare targets that may be viewed as being conservative inorder to avoid disappointing the stock market as well.

INT EG R AT ED R EPORT 202 1—•W e were not aware of 3D smart & try services, the Wacoal Bra Recycling Initiative, or Pink Ribbon activities.
The Company must put more emphasis on illustrating the merits of its initiatives aimed at realizing a sustainable society.

FY2021/3• I would like to develop a product with that allows me to feel better about my inadequacies. How about building a framework in which theCompany and consumers work together to ensure that the needs of customers are reflected accurately in its product development?

TOPIC	The Wacoal Group has teamed up with DEAR ME, a nonprofit organization (NPO) that seeks to realize a sustainable society through theworld of fashion, to launch sustainability-themed initiatives on engagements with future generations. In March 2021, university students
and junior employees of this NPO announced the outcomes of workshops that were held based on such themes as the role of consumer
society and companies in the future. Attended by the vice president, corporate officers, and the manager of the Personnel Division, theworkshops involved lively discussions and exchanges of opinions on social and environmental issues and other matters.

Improvements Made through the Input of Stakeholders and Issues to Address Going Forward
Improvements
madeIssues going
forward•D isclosed monthly sales data on corporate website(from January 2017)• Disclosed ESG Data Book on corporate website(from October 2020)•D isclosed list of contract manufacturers on corporate website(from May 2018)• Established the Wacoal Group Tax Code of Conduct(January 2021)•S pecified reduction targets for strategic shareholdings(from June 2019)• Introduced a compensation framework in the form of restricted
stock (June 2021)• Disclose the benefits of profit structure reform•D iscuss the details of discussions held by the Executive Compensation Advisory Committee and the Executive Nomination Advisory Committee• Disclose information on climate change in accordance with the TCFD or similar international frameworks, establish a Groupwide humanrights policy, and develop and disclose information on management processes

I N TEG RATE D RE P O RT 2021

73

FACTS	  76	Consolidated Financial Highlights
	 78	11-Year Financial Summary
	 80	Management’s Discussion and Analysis
	 86	Consolidated Balance Sheets	 88	Consolidated Statements of Income
		 Consolidated Statements of Comprehensive Income
	 89	Consolidated Statements of Equity
	 90	Consolidated Statements of Cash Flows	 91	Notes to Consolidated Financial Statements
126	
Corporate Information
127	
Investor Information

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FACTS

FACTS

Consolidated Financial Highlights
For the fiscal years as of/ended March 31

Net Sales

Operating Income (Loss) / Operating Margin*(¥ billion)(¥ billion)

210

12

(%)

Shareholders’ Equity per Share* /Net Income per Share Attributable to Wacoal Holdings Corp.*
(Yen)

195.7

195.9

8.0

11.5

194.2

9

5.3

5.9

180

6.6

6

4.9
3

152.2

150

3.6

0

(1.1)
(0.7)

–3
2019

2020

2021

2017

Operating income (loss)

2018

2019

6.0

2,800.00

4.0

2,100.00

2.0

1,400.000

700.00–2.0

03,454.18

8.2%

3,321.57 3,291.06

8.0%

1,658.53

2.5

0

2018

3,454.40

10.3
186.8

2017

3,500.00

Share of Sales by Business Segment

2020

2021

56.6%
90.13
2017

Operating margin

143.4620182019

112.57

54.26

5.16

2020

2021

Wacoal Business (Domestic)
Wacoal Business (Overseas)
Peach John Business
Other Businesses

Shareholders’ equity per share
Net income per share attributable to Wacoal Holdings Corp.

* New accounting guidance, Improving the Presentation of Net Periodic Pension Cost andNet Periodic Postretirement Benefit Cost (ASU No. 2017-07), was adopted at the beginning of the consolidated fiscal year ended March 31, 2019. Accordingly, key financial
data for the previous fiscal years are the amounts after the retroactive application ofsuch accounting guidance.

* The Company conducted a share consolidation of its common stock pursuant to which
two shares were consolidated into one share effective as of October 1, 2017. Per share
information was calculated as if the consolidation of shares (reverse stock split) had
been carried out at the beginning of the fiscal year ended March 31, 2018.

Net Income Attributable to Wacoal Holdings Corp. / Return on Equity (ROE)

Total Assets / Return on Assets (ROA)

Dividends per Share* / Dividend Payout Ratio(¥ billion)(%)(¥ billion)(%)(Yen)(%)

12.5

12.5

8.0

10.0

9.7

6.0

5.5
7.5

3.5

2.0

2019

0
2020

Net income attributable to Wacoal Holdings Corp.

277.7

3.6

250

8.0

2,000.0

72
6.0

60

4.0

40

2.0

20

2017

ROE

Total assets

2018

2019

0
2020

17.4%

72
1,395.360

1,500.0

40

36

10.7%

1,000.0

2021

500.0

71.9%

0.8

0

2021

Share of Sales by Geographic Segment

80

1.6

0.2
2018

281.8

1.6

0.3
2017

295.0

298.5
4.8

270

2.5

0

5.6

4.0

3.3

5.0

322.8

310

290

7.0

4.2

330

2021

27.2%

0

2021

39.9
2017

ROA

Dividends per share

110.6

50.2
2018

2019

2020

35.5

0

2021

Japan

Dividend payout ratio

Asia and Oceania

Americas and Europe* The Company conducted a share consolidation of its common stock pursuant to which
two shares were consolidated into one share effective as of October 1, 2017. Per share
information was calculated as if the consolidation of shares (reverse stock split) had
been carried out at the beginning of the fiscal year ended March 31, 2018.

Cash Flows

Total Shareholders’ Equity / Shareholders’ Equity Ratio(¥ billion)(¥ billion)

20

240

16.4
13.3

15.5

10

15.9

13.6

8.1

77.2

11.1

230

13.3

4.3
1.7

2.6

0

(3.0)
–10

232.7

66.8

216.5

215.6

CF from operating activities

2020

2021

CF from investing activities

5.8

5.6

5.6

4.3%

4.0

2021

80.7%

2.0

0
2017

Free CF

5.5

6.1

60.0

200

2019

5.0

6.0

3.5% 4.6%

0.5% 5.8%

7.0
5.9

70.0
65.0

Share of Sales by Product Category

0.6%

6.0

0
2018

8.0

75.0

74.0

205.4

–20
2017

80.0

7.4

210

(7.4)

(¥ billion)

76.8

227.6

220

(2.6)

(2.5)

78.0

Capital Expenditures / Depreciation and Amortization(%)

Total shareholders’ equity

2018

2019

2020

Shareholders’ equity ratio

2021

0
2017

Capital expenditures

2018

2019

2020

Depreciation and amortization

2021

Foundation garments and lingerieNightwear
Outerwear and sportswear*1
Hosiery
Textile products
Other*2

Children’s underwear*1 Including men’s underwear and swimwear*2 Mannequin rental, interior design and construction of stores, restaurants, culture,services, etc.

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FACTS

FACTS

11-Year Financial Summary
Wacoal Holdings Corp. and Subsidiaries
For the fiscal years as of/ended March 31(Millions of Yen)
2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

152,204
67,79844.5%
82,836
54.4%
2,685
5,013
(1,115)(0.7%)

186,760
84,95945.5%
94,69650.7%
473
12,661
6,632
3.6%

194,201
89,80446.2%
93,68448.2%
5,834
10,526
4,879
2.5%

195,725
92,03247.0%
91,99347.0%
206
16,986
11,494
5.9%

195,881
93,073
47.5%
92,52647.2%
015,314
10,282
5.3%

202,917
96,09447.0%
94,54946.6%
017,08912,274
6.0%

191,765
90,80447.4%
88,56346.2%
6,021
11,451
6,377
3.3%

193,781
91,00847.0%
88,95645.9%
018,853
13,817
7.1%

180,230
84,54846.9%
83,84446.5%
2,852
13,8748,986
5.0%

171,897
81,891
47.6%
79,14446.0%
015,522
10,862
6.3%

165,548
81,65949.3%
77,198
46.6%
1,772
9,604
4,919
3.0%

10,792

4,359

2,203

14,286

16,56914,957

11,342

15,033

10,940

10,207

3,927

7,025
3.3%
3.6%

3,472
1.6%
1.6%

341
0.2%
0.8%

9,745
4.2%
4.8%

12,5255.5%
5.6%

11,159
4.9%
5.0%

8,444
3.9%
4.0%

10,106
5.2%
5.7%

7,880
4.4%
4.6%

6,913
4.1%
4.7%

2,785
1.6%
1.8%

Financial Condition
Total assets
Total shareholders’ equity
Net property, plant and equipment
Inventories

322,761
215,61249,75843,250277,688
205,371
52,08343,427281,767
216,494
53,27042,508298,534
232,71254,33342,676294,958
227,568
55,28843,822292,854
224,374
53,93844,445300,272
228,857
49,18842,893271,988
205,106
48,97840,211

254,536
186,646
49,66537,807221,098
171,496
49,07832,847215,276
167,480
49,73430,956

Cash FlowsNet cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Free cash flow
Cash and cash equivalents

4,260(2,562)33,605
1,698
63,557

13,325
2,569(17,471)
15,89427,905

13,620(2,474)(10,872)
11,14630,133

15,493(7,362)(12,303)8,13129,487

16,351(3,032)(13,055)
13,31933,995

12,635(11,407)(4,547)1,228
34,05914,337164(8,391)
14,501
38,4108,949
1,658(5,554)
10,60730,65812,309(23,520)
5,379(11,211)24,514

10,060(3,467)(2,824)
6,593
29,985

10,441(703)(4,965)
9,738
26,316

Investment
Capital expenditures
Depreciation and amortization

5,604
6,128

6,981
6,029

5,783
5,647

5,884
5,492

7,445
5,032

8,978
4,815

4,478
5,074

3,464
5,036

3,330
4,888

3,554
4,660

3,323
4,685

3,454.18
112.57
40
2,496
1.6%
35.5%
21.81
0.71

3,291.06
54.26
60
3,808
2.6%
110.6%
43.25
0.71

3,321.57
5.16
72
4,732
2.6%
1,395.3%
533.330.83

3,454.40
143.46
72
4,871
2.3%
50.2%
21.47
0.89

1,658.53
90.13
36
4,940
2.6%
39.9%
15.24
0.83

1,592.90
79.23
33
4,648
2.5%
41.7%
16.95
0.84

1,624.93
59.95
30
4,225
2.2%
50.0%
22.55
0.83

1,456.32
71.75
33
4,648
3.1%
46.0%
14.68
0.72

1,325.19
55.95
28
3,944
2.8%
50.0%
18.11
0.76

1,217.57
49.08
28
3,944
2.9%
57.0%
19.99
0.81

1,189.08
19.73
20
2,817
1.9%
101.4%
53.12
0.88

86,13341,355
12,20012,516

109,70950,552
10,48016,019113,400
53,10010,491
17,210116,085
51,888
10,795
16,957

118,389
48,423
11,107
17,962

120,570
51,869
11,19019,288112,203
48,107
11,626
19,829118,085
43,636
12,482
19,578627(2,603)
1,591
(730)

5,782
1,493
(351)
(292)

6,325
4,581
(5,859)
(168)

6,845
3,852
441
356

6,176
3,055
374
677

7,219
4,433
258
364

7,739
4,776
(6,296)
158

9,241
4,037
83
456

19,824

20,984

20,662

20,904

21,13920,65518,986

18,912

18,65016,52416,013

Performance
Net sales
Cost of sales% of net sales
Selling, general and administrative expenses% of net sales
Impairment charges on goodwill and other intangible assets
EBITDA
Operating income (loss)% of net sales
Income before income taxes and equity in net income ofaffiliated companies
Net income attributable to Wacoal Holdings Corp.
Return on equity (ROE)
Return on assets (ROA)Per Share of Common Stock
Shareholders’ equity per share (yen)Net income per share attributable to Wacoal Holdings Corp. (yen)Dividends per share (yen)Total dividend amount
Dividend yield
Dividend payout ratio
Price earnings ratio (times)
Price book-value ratio (times)
Operating Segment Information
Net sales:
Wacoal Business (Domestic)
Wacoal Business (Overseas)
Peach John Business
Other
Operating income (loss):
Wacoal Business (Domestic)
Wacoal Business (Overseas)
Peach John Business
Other
Employees
Employees within Group (excluding the average number ofpart-time employees) (persons)Notes: 1. Consolidated financial statements for the fiscal year ended March 31, 2013 and prior fiscal years have been retroactively revised in accordance with the changes of the settlement
dates for certain consolidated subsidiaries that took place in the fiscal year ended March 31, 2014 in order to present in the consolidated financial statements periodic profit orloss that is more appropriate.
2. The Company conducted a share consolidation of its common stock pursuant to which two shares were consolidated into one share effective as of October 1, 2017. Per share
information was calculated as if the consolidation of shares (reverse stock split) had been carried out at the beginning of the fiscal year ended March 31, 2018.

78

INT EG R AT ED R EPORT 202 1

3. New accounting guidance, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU No. 2017-07), was adopted at the beginningof the consolidated fiscal year ended March 31, 2019. Accordingly, key financial data for the previous fiscal years are the amounts after the retroactive application of suchaccounting guidance.
4. Due to a review of certain management classifications of performance within the Group, the composition of the Wacoal Business (Domestic), Peach John Business, and Other
segments has been partially revised for the fiscal year ended March 31, 2020. No retroactive adjustments have been made as a result of these changes.

I N TEG RATE D RE P O RT 2021

79

FACTSFACTSManagement’s Discussion and Analysis
Wacoal Holdings Corp. and Subsidiaries

Financial information contained in this section is based on the consolidated financial statements included in this integrated report, prepared inaccordance with generally accepted accounting principles in the UnitedStates (U.S. GAAP).
The Wacoal Group consists of one holding company (the Company),
58 consolidated subsidiaries, and seven equity-method affiliates. The
Wacoal Group manufactures, wholesales, and—for certain products—retails women’s foundation garments and lingerie, nightwear, children’s
underwear, outerwear and sportswear, hosiery, and other textile products.
Other operations include restaurant businesses, cultural and servicerelated operations, and the construction of interiors for commercial
premises.
OVERVIEW
We are a leading designer, manufacturer, and marketer in Japan of
women’s intimate apparel, with the largest share of the Japanese market
for foundation garments and lingerie. Foundation garments (primarily
brassieres and girdles) and lingerie (primarily slips, bra-slips, andwomen’s briefs) accounted for 80.7% of our consolidated net sales forfiscal 2021. We also design, manufacture, and sell nightwear, children’s

underwear, outerwear, sportswear, hosiery and other apparel and textile
goods, and provide several other services.
OVERVIEW OF STATUS OF BUSINESS PERFORMANCE, ETC.
Status of Financial Position and Operation Results Status of Financial
Position
Our total assets as of March 31, 2021 were ¥322,761 million, an increaseof ¥45,073 million from the end of the previous fiscal year, mainly due toan increase in cash and cash equivalents in effort to ensure liquidity on
hand.
Our liabilities were ¥104,145 million, an increase of ¥35,905 million
from the end of the previous fiscal year, mainly due to increases inshort-term bank loans for reasons similar to those discussed withrespect to assets.
Shareholders’ equity was ¥215,612 million, an increase of ¥10,241
million from the end of the previous fiscal year, mainly due to recognitionof net income and changes in pension liability adjustments.
As a result of the above, our total shareholders’ equity ratio as ofMarch 31, 2021 was 66.8%, a decrease of 7.2% from the end of theprevious fiscal year.

Consolidated income before income taxes and equity in net incomeof affiliated companies was ¥10,792 million, an increase of 147.6% ascompared to such consolidated income for the previous fiscal year.
This significant increase was due to the recognition of a valuation gainon marketable securities and investments (net) of ¥10,390 million.
As a result of the above, net income attributable to Wacoal Holdings
Corp. and the ratio of net income attributable to Wacoal Holdings Corp.
to shareholders’ equity for the current fiscal year were ¥7,025 million (anincrease of 102.3% from such net income for the previous fiscal year)
and 3.3%, respectively.
The exchange rates used for the current fiscal year (previous fiscal
year) were: ¥106.06 (¥108.74) to the U.S. dollar; ¥138.68 (¥139.24) to theSterling pound; and ¥15.48 (¥15.78) to the Chinese yuan. (Under the U.S.
accounting standards that we use, we adopt the accounting policy thatan employment adjustment subsidy is deducted from cost of sales andselling, general and administrative expenses. Equity securities held by the(Millions of Yen)

2020
AmountTotal Net Sales
Wacoal Business (Domestic)

Results of Operation

Wacoal Business (Overseas)(Millions of Yen)

Net sales
Cost of sales
Sales profit
Selling, general and administrative expenses
Impairment charges on property, plant and equipment
A: Impairment charges on goodwill and otherintangible assets
Operating (loss) income
Other income/expenses
B: Valuation gain/(loss) on marketable securities
and investments - net
Income before income taxes and equity
in net income of affiliated companies
Net income attributable to Wacoal Holdings Corp.

2020

2021

186,760
84,959101,801
93,927769

80

Operating Income (Loss)

Amount%152,204
67,79884,40681,7001,136(34,556)(17,161)(17,395)(12,227)+367(18.5%)(20.2%)(17.1%)(13.0%)+47.7%

473

2,685+2,212+467.7%

6,632
1,487

(1,115)
1,517(7,747)
+30

—
+2.0%

(3,760)

10,390+14,150—

4,359

10,792+6,433+147.6%

3,472

7,025

+3,553+102.3%

Summary of Business Results
During the current fiscal year (from April 1, 2020 to March 31, 2021),
the global spread of the new coronavirus (“COVID-19”) has significantly
impacted people’s livelihoods and economic activities. Our business inJapan has continued to remain difficult due to a decrease in the number ofcustomers visiting stores and a decline in consumer confidence resulting
from the impact of temporary closings of retail stores and stay-at-homemeasures implemented during a state of emergency. In addition, ourbusiness in the overseas markets has also continued to remain difficult
due to a number of lockdown measures mainly in the major cities in
Europe and North America due to the prolonged impact of COVID-19.
Under such circumstances, we moved forward with our initiatives tocreate a management structure that leads to high profitability while
conducting business activities that prioritize the safety and well-being of
our customers, employees and partner companies and promoted ourunique CX strategies to build a deeper, broader and longer relationshipwith each customer (the “CX Strategy”, our digital strategies under which
we have promoted the installation of 3D body scanning and AI (artificial
intelligence)-based customer service system, and merger between online
and offline activities, has been renamed to “CX Strategies” to promote a
deeper relationship with each customer).
Our consolidated sales for the current fiscal year were ¥152,204 million,a decrease of 18.5% as compared to such consolidated sales for theprevious fiscal year. Despite growth in e-commerce sales in response tohigher demand from consumers staying home, revenue significantly
decreased due to the impact of temporary closings or shortened businesshours of retail stores due to stay home measures, as well as a decrease in
the number of customers visiting stores in the metropolitan areas.
We recorded a consolidated operating loss of ¥1,115 million (consolidated operating income of ¥6,632 million for the previous fiscal year).
Our efforts to reduce costs at our operating companies, as well as ouruse of an employment adjustment subsidy and other government
assistance in various countries were not enough to offset the impairment
charges recorded on goodwill related to Wacoal Europe and fixed assets
at other group companies due to the impact of COVID-19.
Wacoal Europe has continued to show stable growth since ouracquisition in 2012 by developing high value-added products andimplementing marketing activities that are tailored to the characteristics
of each country where we do business or operate distribution channels.
However, in light of the impact of COVID-19 in the United Kingdom andEurope and the customs clearance expenses incurred in connection with
Brexit, we reassessed the fair value of goodwill based on our outlook of
our business, and recorded the impairment charges of ¥2,673 million. As
a result, the residual value of goodwill with respect to Wacoal Europe was¥9,398 million (61.7 million pound) based on the exchange rate as of theend of the current fiscal year.

INT EG R AT ED R EPORT 202 1

Peach John Business
Other

YoY Change

Wacoal Holdings Corp. and consolidated subsidiaries are measured atfair value, and any change from the beginning of the period are recognized as valuation loss/gain on marketable securities and investments– net under other income/expenses.)
The following is a summary of operations by operating segment.
Since the current consolidated cumulative first quarter, information on
Ai Co., Ltd., which had previously been included in our “Wacoal Business(Domestic)” segment, and “Peach John Business” segment, has been
included in our “Other” segment following review of certain managementclassification of performance within our group. In addition, starting fromthe current consolidated cumulative second quarter, we have changed
our “Peach John Business” to be presented as a separate reporting
segment, which had been included in our “Other” segment, because it
satisfied the relevant quantitative criteria. The segment information forthe previous consolidated fiscal year has been prepared based on thesegments reported for the current consolidated fiscal year.

Wacoal Business (Domestic)
Wacoal Business (Overseas)
Peach John Business
Other

186,760
106,11249,808
11,224
19,616
6,632
6,083
1,493
(351)
(593)

2021
% to Sales

100.0%
56.8%
26.7%
6.0%
10.5%
3.6%
5.7%
3.0%
—
—

Wacoal Business (Domestic)
Sales attributable to our “Wacoal Business (Domestic)” segment were¥86,133 million (a decrease of 18.8% from such sales for the previous
fiscal year) and operating income was ¥627 million (a decrease of 89.7%
from such operating income for the previous fiscal year). Despite asignificant decrease in profit due to the impact of decreased revenue, werecorded an operating income as a result of our efforts to reduce costs
and our use of an employment adjustment subsidy and other government assistance.
Wacoal Corp.:
Sales from Wacoal Corp. decreased by 19.5% as compared to such sales
for the previous fiscal year as a result of weak sales from physical storesover the year due to the impact of COVID-19, while our e-commerce
website maintained high growth. Sales for the first half of the current
fiscal year (from April to September) decreased by 30.6% as compared tosuch sales for the corresponding period of the previous fiscal year due tothe absence of increased demand before the consumption tax increaseduring the previous fiscal year, in addition to the impact of temporary
closings of physical stores and stay-at-home measures implemented
during a state of emergency. Although sales recovered during the current
consolidated third quarter, sales for the second half of the current fiscal
year (from October to March) also decreased by 5.5% as compared tothe corresponding period of the previous fiscal year due to consumers
staying home during another state of emergency declared in the current
consolidated fourth quarter.
While sales from general merchandise stores in the suburbs werestrong, sales from physical stores located in the center of the metropolitan areas including outlet malls or other large-scale commercial facilities

Amount152,204
86,13341,355
12,20012,516(1,115)627(2,603)
1,591
(730)

YoY Change% to Sales

100.0%
56.6%
27.2%
8.0%
8.2%
—
0.7%
—
13.0%
—

Amount(34,556)(19,979)(8,453)+976(7,100)(7,747)(5,456)(4,096)+1,942(137)%(18.5%)(18.8%)(17.0%)+8.7%(36.2%)—(89.7%)———

were stagnant due to a decrease in the number of customers visiting our
retail stores reflectin efforts to promote remote work, as well as changes
in consumer attitudes and behavior that led to less travel and fewer
crowds.
Sales from our strategically strengthened e-commerce website
significantly increased since the previous fiscal year (an increase of
55.2% as compared to such sales for the previous fiscal year) as a resultof additional acquisition of new customers making purchases from
home, online-to-offline marketing initiatives such as redirecting our retailstore-registered members to our e-commerce website, as well as the
positive impact of expanded sales from existing customers whosepurchase rate increased due to our marketing utilizing automation
involving distribution of content tailored to each customers. Our virtual
one-on-one consultation by our store personnel also significantly
contributed to the acquisition of new customers in a new life style.
In efforts to improving CX (customer experience), we promoted theinstallation of our 3D body scanning and AI (artificial intelligence)-based
customer service system and are providing such service at sixteen shops
as of March 31, 2021 (addition of ten shops since the end of the previous
fiscal year). We are piloting an avatar counseling system, which we aredeveloping to introduce an online customer service by our store personnel during the current fiscal year, and are addressing issues towardcommercialization.
Our efforts to reduce costs were not enough to offset the impact ofthe decreased revenue and as a result, we recorded an operating loss of¥2,022 million (operating income of ¥3,140 million for the previous fiscal
year). An employment adjustment subsidy of ¥1,998 million is notincluded and reflected in such operating loss, because it is recognized as
non-operating income (which has been reclassified as operating loss
under the consolidated business results and segment information of
Wacoal Business (Domestic) based on the U.S. accounting standards).

I N TEG RATE D RE P O RT 2021

81

FACTS

FACTS

Wacoal Business (Overseas)
Sales attributable to our “Wacoal Business (Overseas)” segment on a
Japanese yen basis were ¥41,355 million (a decrease of 17.0% from suchsales for the previous fiscal year) due to temporary closing of physicalstores and stay-at-home efforts resulting from the spread of COVID-19,
as well as the impact of the appreciation of the Japanese yen (¥715
million). Sales of our Peach John brand products sold in China, whichwere previously recorded under this “Wacoal Business (Overseas)”segment, are now recorded under our “Peach John Business” segment
starting with the current fiscal year, and the business result for theprevious fiscal year has been revised retroactively (the effect following
such change (and one of the factors decreasing sales) is approximately¥507 million for the current fiscal year (approximately ¥744 million for theprevious fiscal year)).
We recorded an operating loss of ¥2,603 million (operating income of¥1,493 million for the previous fiscal year). This operating loss was due
to our continued strategic marketing investments to achieve rapid growthof Intimates Online Inc. (“Intimates Online”), which we acquired during theprevious fiscal year, as well as the recognition of impairment charges on
goodwill with respect to Wacoal Europe, in addition to the impact of
decreased revenue, despite our efforts to reduce costs and by using
government assistance provided by governments across the world.
Wacoal International Corp. (U.S.):
Sales from Wacoal International Corp. (U.S.) on a local currency basis
decreased by 5.7% (a decrease of 8.0% on a Japanese yen basis) as
compared to such sales for the previous fiscal year. Although there was apositive impact of the inclusion of sales from Intimates Online on our sales
for the first half of the current fiscal year, revenue decreased by 15.4% ascompared to such revenue for the corresponding period of the previous
fiscal year due to the weak sales from Wacoal America Inc., which
distributes “Wacoal” and “b.tempt’d” brand products at physical stores(department stores), resulting from the impact of COVID-19. On the other
hand, revenue for the second half of the current fiscal year increased by
5.4% as compared to such revenue for the corresponding period of theprevious fiscal year as a result of strong sales from Intimates Online, which
maintained a high purchase rate and average spending per customer, as
well as high growth in sales achieved from our e-commerce website andthird-party e-commerce websites, which offset declines in sales fromphysical stores. During the current consolidated fourth quarter, Intimates
Online commenced transactions with Target Corporation, a major retailer
in the United States, and is distributing LIVELY brand products throughe-commerce channels and physical stores.
We recorded an operating loss of $8.6 million on a local currency basis(¥914 million on a Japanese yen basis) (operating income of $3.7 million(¥401 million on a Japanese yen basis) for the previous fiscal year) due
to our continued strategic growth investments in our LIVELY brand
distributed by Intimates Online, as well as the impact of the decreased
revenue, despite our efforts to reduce costs and use of government
assistance.
Wacoal Europe Ltd.:Sales from Wacoal Europe on a local currency basis decreased by 24.0%(a decrease of 23.8% on a Japanese yen basis) as compared to suchsales for the previous fiscal year. Sales for the first half of the current
fiscal year decreased by 33.6% as compared to such sales for thecorresponding period of the previous fiscal year due to the significant
impact of the lockdown measures implemented in the United Kingdom
and major countries in Europe. While signs of recovery were visible
during the Christmas sale season, sales for the second half of thecurrent fiscal year decreased by 12.6% as compared to such sales for thecorresponding period of the previous fiscal year due to additional
lockdown measures implemented during the current consolidated
fourth quarter, which impacted our business operations. Sales from our82

e-commerce business, which we launched in the previous fiscal year,
exceeded our plan, and now accounts for 5.4% of sales from Wacoal
Europe for the current fiscal year.
Although operating income on a local currency basis significantly
decreased by 34.2% (a decrease of 33.9% on a Japanese yen basis) due
to the impact of decreased revenue, we were able to record profit as aresult of our efforts to reduce costs (excluding the impairment chargesof ¥2,673 million on goodwill with respect to Wacoal Europe).
Wacoal China Co., Ltd.:Sales from Wacoal China Co., Ltd. on a local currency basis decreased by
13.7% (a decrease of 15.3% on a Japanese yen basis) as compared tosuch sales for the previous fiscal year. Sales for the first half of thecurrent fiscal year (from January to June) decreased by 25.8% ascompared to such sales for the corresponding period of the previous
fiscal year due to temporary closings of physical stores following theimpact of COVID-19, despite strong sales from third-party e-commerce
websites from aggressive distribution of our AMPHI brand products. For
the second half of the current fiscal year (from July to December), while
we struggled to attract orders through a large-scale promotion campaign
conducted by e-commerce vendors in November, sales from physicalstores (department stores) recovered due to strong sales from our“WACOAL” and “Salute” brand products, and as a result, sales increasedby 2.6%.
Although operating income on a local currency basis significantly
decreased by 31.2% (a decrease of 32.3% on a Japanese yen basis) due
to the impact of decreased revenue, we recorded profit as a result of ourefforts to reduce costs.
Peach John Business
Sales attributable to our “Peach John Business” segment were ¥12,200
million (an increase of 8.7% as compared to such sales for the previous
fiscal year) as a result of our new product planning that met our consumer needs and development of trending content, as well as our
successful marketing activities that were efficient in increasing thenumber of new customers and annual purchase frequency. Sales of ourPeach John brand products sold in China, which were previously
recorded under the “Wacoal Business (Overseas)” segment, are now
recorded under this “Peach John Business” segment starting with thecurrent fiscal year, and the business result for the previous fiscal year has
been revised retroactively (the effect following such change (and one of
the factors increasing sales) is approximately ¥507 million for the current
fiscal year (approximately ¥744 million for the previous fiscal year)).
E-commerce sales through our website in Japan increased by 43.5%
from such sales for the corresponding period of the previous fiscal year
as a result of an increase in the number of new customers over the year,
as well as the steady sales of our regular products. Sales from our retailstores, however, decreased by 11.9% due to the impact of the temporary
closings of physical stores during the current consolidated first quarter,
although the reduction of cost and improvement in the purchase rate ofcustomers visiting our retail stores contributed to the strong sales after
the current consolidated second quarter.
We recorded an operating income of ¥1,591 million (operating loss of¥351 million for the previous fiscal year), a significant increase from theprevious fiscal year. This profit was attributable to the positive impact of
the increased revenue, the impact of improved gross profit rate fromincreased e-commerce sales through our website as a percentage of
total sales and a lower percentage of sales subject to discounts.
Other
Overall sales attributable to our “Other” business segment were ¥12,516
million (a decrease of 36.2% as compared to such sales for the previous
fiscal year), while we recorded an operating loss of ¥730 million (operating loss of ¥593 million for the previous fiscal year).

INT EG R AT ED R EPORT 202 1

Lecien Corporation:
Sales from Lecien Corporation decreased by 19.9% as compared to suchsales for the previous fiscal year due to the weak sales of our private
products sold by general merchandise stores, which were impacted byour clients’ expense control efforts over purchases. We recorded an
operating income of ¥221 million (operating loss of ¥478 million for theprevious fiscal year) due to our efforts to withdraw from underperforming
businesses in the consolidated fourth quarter of the previous fiscal year
and to reduce costs.
Nanasai Co., Ltd.:Sales from Nanasai Co., Ltd. decreased by 39.1% as compared to suchsales for the previous fiscal year due to our construction businessweakened by the cancellation and postponement of new shop openings
and various events following the spread of COVID-19. We recorded an
operating loss of ¥358 million (operating income of ¥218 million for theprevious fiscal year) due to a significant impact of decreased revenue,
despite our efforts to reduce costs.
UNDERSTANDING, ANALYSIS AND CONSIDERATION WITHRESPECT TO STATUS OF BUSINESS PERFORMANCE, ETC., FOR
FISCAL 2021
The management’s understanding, analysis and consideration withrespect to our group’s business performance etc. are as follows. Any
forward-looking statements contained below are based on our judgment
as of the end of the current fiscal year.
(1) Basic Business Policy
Our business activities are built upon “relationships founded in mutual
trust,” which are based on our listening to the voice of each and every oneof our customers, and continuously transforming our business with asense of humility. This spirit of mutual trust and respect for humanity
serves as the starting point for all of our business activities and has been
our management philosophy since our establishment. Our group willcontinuously enhance our corporate value by making efforts to increasetransparency in our corporate management and ensuring fairness andindependence of our corporate management in order to build “mutual
trust” in relationships with every stakeholder, including shareholders,customers, employees, business partners and the local community.
• Our Mission
We will contribute to society by helping women to express their beauty.
• Our VisionWe, the employees and management of Wacoal, will maintain a refinedcorporate culture based on mutual trust and will continually strive to
make the Company a global leader in the industry.
• Our Value
1. Create products loved by customers
2. Develop new products that meet the needs of the times
3. Conduct business in a fair manner with a forward focus
4. Build a better Wacoal through better human resources
5. Fear not failure and boast not of success(2) O ur Medium- and Long-term Business Strategy and Measures for
Business Targets(i) Long-Term Vision
We continue to move forward with efforts to become “Global Wacoal asa Group”, that is, to continue to offer pioneering products to the global
markets by taking full advantage of our management resources and ourgroup’s network, and to gain reputation for our reliability from stakeholders around the world with our group’s products and services as well as
our commitments to social issues by cultivating new market opportunities for the undergarment industry.
Furthermore, in order to achieve a competitive edge in the global
markets, we will invest in new business areas and growth opportunities

and rise to the challenge of realizing unprecedented growth. In addition,
we will make efforts to continuously improve our management foundation, generate greater results, and thereby aim to achieve sustainablegrowth and enhance our corporate value, and make progress toward
becoming a global company that is expected to continue to exist in
100 years.
Our goals of a “Global Wacoal”
1. The Wacoal Group’s products and services and efforts to addresssocial issues are highly trusted by customers and all other stakeholders in markets worldwide.
2. The number of countries and regions in which we operate continues toincrease.
3. Under our Group network, we are operating businesses in a coordinated manner on a global scale.
4. We always provide pioneering products to the world and continue tolead the industry of innerwear culture.
5. The Group mission and philosophy are instilled in employees acrossthe world.
Fiscal 2028 Targets- Net sales: ¥300.0 billion (including sales through equity-method
affiliated companies)- Consolidated operating income and ROE: above 10%(ii) Medium-Term Management Plan
To realize our vision to become “Global Wacoal as a Group”, we will
engage in efforts to achieve strong growth domestically and globally
under the three-year medium-term management plan (FY2020-FY2022)
by confronting reality and implementing fast reforms.
Basic policy
Understand the actual situation, estimate future demand and implement
drastic reform, while emphasizing growth- Achieve strong growth in Japan and overseas- Examine the potential of unprofitable businesses and brands, andpromote review and structural reform of group businesses where nobusiness will be safe from such review or structural reform- Enhance corporate value by improving economic and social values
Based on these goals, the medium-term management plan will pick up
pace to address operational issues by expanding our customer service
advanced by digital technology; implementing plans for unrivaled CX
strategies* ; launching new high-value added products without regionalboundaries; strengthening cooperation with key third-party EC websites
and building our EC websites that match country and geographicalcharacteristics; making investments in growth for business expansion incountries and regions where we have a market presence but our business remains small; reforming business models suffering from systemic
fatigue; and building a highly competitive supply chain network.
To realize a sustainable society, we will make efforts to achieveadvanced CSR procurement in cooperation with manufacturers that weoutsource to, better live within the global environment through efforts to
reduce plastic use and unsold inventory, and build an organization thatencourages diversity and inclusion by taking advantage of diverse humanresources. We will commit in a responsible manner to create new value
through cultivation of a sustainable business foundation.
We will make stable distributions and make repurchases in a flexible
manner, and will make efforts to improve profitability and capital efficiency through our business activities. We will also make efforts tomaintain a real total return ratio of 100% excluding any gain (loss) on
valuation of marketable securities and investments (recognized as otherincome (expenses) under the statements of income under the U.S.
accounting standards). In addition, while we prioritize investments thatI N TEG RATE D RE P O RT 2021

83

FACTS

FACTS

support sustainable growth of our business, we will seek to hold an
adequate cash balance by reducing, as appropriate, cross-shareholdings
with other companies.
* The “Wacoal Omni-Channel Strategy”, our digital strategies under which we have promoted the installation of our 3D body scanning and AI (artificial intelligence)-based
customer service system and integration between online and offline activities, has beenrenamed to “CX Strategies” to promote customer-oriented strategies and build a deeper
relationship with each customer.

(iii) G roup policies in response to spread of the new coronavirus
pandemic
The business environment surrounding our group continues to remaindifficult due to economic stagnation resulting from the global coronavirus pandemic (“COVID-19”). While vaccination has started in many
countries and regions and we see progress toward the end of COVID-19,
we must remain vigilant of the impact of COVID-19 spreading further
especially in Japan, and the future remains uncertain.
Under such circumstances, we are moving forward with our initiatives
to create a management structure that leads to high profitability basedon the following policies for regrowth, while conducting business byprioritizing the safety and well-being of our customers, employees andpartner companies.
<Basic Policies>
To prioritize the health and well-being of our customers, employees andpartner companies<Short-Term Policies>
To implement cost reduction in response to deterioration in businessconditions and to secure a stable financial foundation• to reassess our current initiatives and spending plans in all business• to strengthen liquidity on hand in preparation for the prolonged impact
of COVID-19• to adjust production to avoid having excess inventory resulting fromdecreased sales<Mid- and Long-Term Policies>
To conduct thorough inspection and renovation of the value chain– opportunity to create management structure toward high profitability• to reassess current cost structure (promote initiatives to reduce fixed
costs)• to accelerate initiatives on digital transformation• to review and rebuild customer touchpoints (in response to changes in
key sales channels)• to develop products and services that our customers want to buy for
their new lifestyle and to strengthen our capability to address new
customer service and sale styles
Due to the impact of COVID-19, it has become difficult to achieve thebusiness targets that we have initially planned under our medium-term
management plan. During the fiscal year 2022, which is the last year of
our current medium-term management plan, we will be in a phase to
conduct structural reform to create a management structure that leads
to high profitability, and will move forward with initiatives to correct thehigh-cost structure, the underlying issue we face. At the same time, weplan to continue to make investments in growth in the digital, IT andlogistics business to maximize corporate value.
Under the above-described initiatives, our target for fiscal year 2022,
which is the last of our current medium-term management plan, is toachieve net sales of ¥184.0 billion, operating income of ¥6.0 billion (ratioof operating income to net sales of 3.3%), and net income attributable to
Wacoal Holdings Corp. of ¥5.5 billion.

84(3) Issues to Address
The global COVID-19 pandemic has changed the values and awarenessof well-being, and has brought significant changes to consumer behavior.
The threat of COVID-19 continues to unfold, and while vaccination has
started in certain countries and regions, we believe that full-scale
recovery will take a long time as economic activities may continue to be
restricted by infection prevention measures, in certain aspects, including
on social outings.
We expect that consumer behavior will further change in the newnormal after COVID-19. Consumers will likely continue to aspire to have alifestyle that focuses on well-being and safety, and to select high-value
added products or better services with real value. It is essential to be
responsive to various changes in the awareness of consumers and to
take appropriate measures that meet consumers’ perspective in order toachieve regrowth in the “new normal.
Under such circumstances, we will move forward with our initiatives tocreate a management structure that leads to high profitability while
conducting business activities that prioritize the safety and well-being of
our customers, employees and partner companies. We will aim to build adeeper, broader and longer relationship with each customer by continuing to develop and provide products and services that consumers expect
in their new lifestyles, which have significantly changed as a result of
COVID-19, and by promoting our unique CX strategies, including on themerger between online and offline activities and utilization of a customer
database, in efforts to improve customer experience.
In addition, as environmental problems continue to worsen, consumers’ awareness of sustainability is evolving. We plan to move forwardwith our ESG (Environment, Social and Governance) management, whichaims to grow by enhancing social and economic values, and to further
address important issues such as governance, human rights andenvironmental issue. At the same time, we will promote establishment ofan operating base that achieves sustainable growth through work-stylereform (including teleworking), cultivation of human resources supporting business growth and creation of a corporate culture that offers job
satisfaction.

CASH FLOW STATUS
The balance of cash and cash equivalents at the end of fiscal year 2021
was ¥63,557 million, an increase of ¥35,652 million as compared to theend of the previous fiscal year.

CAPITAL RESOURCES AND LIQUIDITY
Our current policy is to fund our cash needs from cash flows fromoperating activities, which allows us to secure most of working capital,
make capital investments, and pay dividends without relying on substantial borrowings or other financing from outside of our group companies.
As of March 31, 2021, we had credit facilities at financial institutions
totaling ¥80,464 million, and the balance of loan which established line ofcredit amounted to ¥42,204 million. Of these loans, ¥40,000 million isavailable to the Company, ¥1,218 million is available to Wacoal
International Corp. and ¥671 million is available to Wacoal Europe Ltd.
In general, most of our credit facilities have automatically renewed
terms, and we are not aware of any issues with respect to any of ourlenders that could cause these facilities to become unavailable. Even if
any of our subsidiaries loses access to funds from our credit facilities,
we believe that it is possible for other companies in our group to provide
any necessary funds. Our borrowing requirements are not affected byseasonality.
We are not aware of any restrictions on the transfers of funds from a
subsidiary to a parent company in the form of a cash dividend.
Our group’s business activities have been impacted by COVID-19 andour cash flows from operating activities may significantly decrease on ashort-term basis. For this reason, we have set up new borrowing facilities
with financial institutions after April 2020 to ensure liquidity on hand. We
will reduce the cash outflow that had been planned for operating
activities by reassessing it from scratch, and review the timing of new
investments in order to ensure liquidity.

DIVIDEND POLICY
Our basic policy on profit distribution to shareholders is to make stable
distributions based on consideration of our consolidated performance,
while seeking to increase our enterprise value through active investment
aimed at higher profitability and to increase net income per share.
Our basic policy is to distribute earnings twice a year in the form ofinterim and year-end dividends and the Board of Directors is the decisionmaking body for distribution of earnings.
Based on such policy, we plan to distribute a year-end dividend of¥20.00 per share as a distribution of earnings for the current fiscal year.
As a result, the annual cash dividend per share, including an interim
dividend of ¥20.00 per share, is ¥40.00 for the current fiscal year.
As for retained earnings, with the aim of improving our corporate
value, we have actively invested in expanding new points of contact with
consumers for our domestic business and our overseas businesses. We
also plan to use our retained earnings in our strategic investments formaintaining competitiveness and reinforcing growth. With these efforts,
we seek to benefit our shareholders by improving future profitability.
We also provide that the Company may distribute earnings subject tothe resolution of the Board of Directors pursuant to the provisions ofParagraph 1, Article 459 of the Companies Act.

INT EG R AT ED R EPORT 202 1(Cash flow from operating activities)
Cash flow provided by operating activities was ¥4,260 million, a decreaseof ¥9,065 million as compared to the previous fiscal year, after adjustments for changes in assets and liabilities to our net income of ¥6,804
million plus adjustments for depreciation expenses and deferred taxes.
(Cash flow from investing activities)
Cash flow used in investing activities for this current fiscal year was¥2,562 million, as compared to cash flow provided by investing activities
in the amount of ¥2,569 million for the previous fiscal year, due topayments made to acquire tangible and intangible assets.
(Net cash used in financing activities)
Cash flow provided by financing activities for this current fiscal year was¥33,605 million, as compared to cash flow used in financing activities in
the amount of ¥17,471 million for the previous fiscal year, due to procurements of short-term loan and long-term debt, despite cash dividend
payments, payments to acquire interests in subsidiaries from noncontrolling interests and contingent consideration payment.
SUMMARY OF CAPITAL INVESTMENT, ETC.
The amount of capital investment for the fiscal year ended March 31,
2021, was ¥5,604 million, mainly including expenditures for expansion of
our Moriyama Distribution Center, information system investments
incurred by our subsidiaries, and expenditures for the maintenance andrepair of real estate.
The amounts of capital investment made in Wacoal Business(Domestic), Wacoal Business (Overseas), Peach John Business, andOther were ¥4,203 million, ¥1,097 million, ¥122 million, and ¥182 million,
respectively.

RESEARCH AND DEVELOPMENT
Our research and development activities are mainly conducted by our
Human Science Research Center to achieve harmony between thehuman body and clothing and to support better product making.
Since 1964, we have been conducting research into the female body inorder to accurately understand the Japanese woman’s physique. In
particular, we have developed a silhouette analysis system and introduced a three-dimensional measuring system. We are also working onan even more advanced measurement of sensory comfort. Our researchand development activities focus on addressing the proportional,
physiological, and mental aspects of garment design. One of our mostimportant research results was the enrichment of our research on
sensory comfort through our participation in a project led by the Ministryof Trade and Industry (presently the Ministry of Economy, Trade andIndustry) from 1995 to 1998. Based on this research, we have been
focusing on developing new products that are not only comfortable forthe wearer, but also have a positive physiological effect based on thebasic study from three factors, which are pressure, heat, and touch. In
2005, we developed and created a new market for our breakthrough Style
Science series products, which support the creation of a healthy andbeautiful body by changing the idea of everyday walking to walking forexercise. In 2010, we conducted an analysis and announced principles on
the physiological changes associated with the aging period from aperson’s 20s to their 50s. We also strengthened the development of new
products coping with aging and have been working on developing new
functional products based on the lifestyle habits of people as they
undergo small physical changes associated with aging.
Our Human Science Research Center is promoting research anddevelopment, which is based on a survey analysis of the body shapes
and needs of young customers including customers of an age of which
the products for the first time are introduced, and a senior generation.
During the current fiscal year, we conducted research and development focused on our body care products including wireless brassieres
and bottoms that protect against gravity and on our body make products
including size adjustable brassieres using new materials, thermostaticand flexible resin.
As a result of the above, we recorded ¥463 million for our research anddevelopment during the fiscal year ended March 2021.
Our research and development activities cover a wide range of
research from basic research to product development, mainly of women’s innerwear. Therefore, it is difficult to relate each of such activities toa specific segment, and thus, we do not provide information regarding
such research and developments by segment.
In order to promote “the realization of an industry supporting womenwith unbounded living beauty,” we will make efforts to enrich researchand development activities that contribute to the improvement ofcustomer satisfaction and corporate value based on the key concepts ofbeauty, comfort, and health. We will also work toward strengthening
product appeal and developing new products or services that can gain
support from and satisfy our customers.

I N TEG RATE D RE P O RT 2021

85

FACTS

FACTS

Consolidated Balance Sheets
Wacoal Holdings Corp. and Subsidiaries
March 31, 2021 and 2020

2021

March 31, 2021 and 2020

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2020

2021

ASSETS

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2021

2020

2021

¥ 40,672¥$ 367,706

LIABILITIES AND EQUITYCURRENT ASSETS:

CURRENT LIABILITIES:Cash and cash equivalents
Time deposits¥ 63,557¥ 27,905$ 574,604

1,443

797

13,046

Marketable securities (Notes 3, 20 and 21)

253

656

2,287

Notes and accounts receivable (Note 6)

17,571

20,062

158,856

Allowance for doubtful receivables (Note 4)Inventories (Note 5)
Return assets
Other current assets (Notes 6, 21 and 22)
Total current assets

Short-term bank loans (Note 9)

3,364

Notes and accounts payable:
Trade notes payable

712

1,112

6,437

Trade accounts payable (Note 6)

8,734

9,588

78,962Other payables (Notes 7 and 21)

(346)

(489)

(3,128)

6,610

7,107

59,76043,25043,427

391,014

Accrued payroll and bonuses

6,822

6,734

61,676

600

868

5,424

Income taxes payable (Note 17)

1,025

4,878

9,267

7,794

4,964

70,464

Refund liabilities

2,266

2,645

20,486

134,122

98,1901,212,567

Short-term operating lease liabilities (Note 10)

4,411

4,600

39,879Other current liabilities (Notes 9, 12, 18, 20, 21 and 22)

4,819

4,079

43,56876,071

44,107

687,741

13,543

Total current liabilities
PROPERTY, PLANT AND EQUIPMENT:Land (Notes 9, 10, and 21)

20,56921,460185,960

Buildings and structures (Notes 9, 10, 11 and 21)

72,97874,039659,778

Long-term debt (Notes 9 and 20)

1,498

35

Machinery and equipment (Note 21)

19,356

18,782

174,993

Liability for termination and retirement benefits (Note 12)

1,942

2,069

17,557

Construction in progress

1,264

1,090

11,427

Deferred income taxes (Note 17)

12,292

7,911

111,129

Total

LONG-TERM LIABILITIES:

114,167

115,371

1,032,158

Long-term operating lease liabilities (Notes 1 and 10)

8,520

9,101

77,028

Accumulated depreciation (Note 10)(64,409)(63,288)(582,307)

Contingent consideration (Notes 7 and 21)

1,639

2,786

14,818Net property, plant and equipment

49,75852,083449,851

Other long-term liabilities (Notes 11, 12 and 17)

2,183

2,231

19,73528,074

24,133

253,810

13,26013,260119,881

Total long-term liabilities
OTHER ASSETS:COMMITMENTS AND CONTINGENCIES (Notes 9, 10 and 13)

Operating leases right-of-use assets (Note 10)12,72913,540115,080

Investments in affiliated companies (Note 6)

21,207

21,595

191,728

EQUITY:

Investments (Notes 3, 20 and 21)

51,60343,904

466,531WACOAL HOLDINGS CORP. SHAREHOLDERS’ EQUITY:

Goodwill (Notes 7, 8 and 21)

21,16922,371

191,384

Other intangible assets (Notes 7, 8 and 21)

15,22014,547

137,600

Prepaid pension expense (Note 12)

9,533

4,974

86,186

Deferred income taxes (Note 17)

1,649

1,118

14,908Other (Note 6)
Total other assets

5,771

5,366

52,174

138,881

127,415

1,255,591

Common stock, no par value –authorized, 250,000,000 shares in 2021 and 2020;
issued 65,589,042 shares and 68,589,042 shares in 2021 and 2020, respectively
Additional paid-in capital (Note 14)

29,12029,836263,267

Retained earnings

181,346

185,233

1,639,508

Foreign currency translation adjustments

1,770(1,033)16,002

Pension liability adjustments(1,008)(4,594)(9,113)

Total accumulated other comprehensive loss

762

(5,627)

6,889

Treasury stock, at cost – 3,168,353 shares and
6,186,410 shares in 2021 and 2020, respectively(8,876)(17,331)(80,246)

215,612205,371

1,949,299

3,004

4,077

27,159218,616

209,448

1,976,458¥322,761¥277,688$2,918,009

Accumulated other comprehensive (loss) income (Notes 12 and 16):

Total Wacoal Holdings Corp. shareholders’ equity (Note 15)
NONCONTROLLING INTERESTS
Total equity
TOTAL¥322,761¥277,688$2,918,009

TOTAL

See notes to consolidated financial statements.

86

INT EG R AT ED R EPORT 202 1

I N TEG RATE D RE P O RT 2021

87

FACTS

FACTS

Consolidated Statements of Income

Consolidated Statements of Equity

Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2021, 2020 and 2019

Wacoal Holdings Corp. and Subsidiaries

Thousands of
U.S. Dollars(Note 2)Millions of Yen
Years Ended March 31, 2021, 2020 and 2019

NET SALES (Notes 6, 10 and 18)
OPERATING COSTS AND EXPENSES:
Cost of sales (Notes 6 and 12)
Selling, general and administrative expenses (Notes 7, 10, 11, 12 and 14)
Impairment charges on property, plant and equipment (Note 21)
Impairment charges on goodwill (Notes 8 and 21)
Impairment charges on other intangible assets (Notes 8 and 21)
Total operating costs and expenses
OPERATING (LOSS) INCOME
OTHER INCOME (EXPENSES):Interest income (Note 6)
Interest expense
Dividend income (Note 6)
Gain (loss) on sale, exchange and valuation of marketable securities
and investments – net (Notes 3 and 21)
Other – net (Notes 10, 12, 16 and 22)
Total other income (expenses) – net
INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME
OF AFFILIATED COMPANIESINCOME TAXES (Note 17):
Current
Deferred
Total income taxes
INCOME (LOSS) BEFORE EQUITY IN NET INCOME OF AFFILIATED COMPANIESEQUITY IN NET INCOME OF AFFILIATED COMPANIES (Note 6)
NET INCOME
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.

2021¥152,2042020¥186,760

2019¥194,2012021$1,376,042

67,79881,700
1,136
2,673
12
153,319(1,115)84,95993,927769
217
256
180,128
6,632

89,804
93,517
167
4,325
1,509
189,322
4,879

612,946
738,632
10,27024,166108
1,386,122(10,080)

61
(78)
1,126

177
(19)
1,506

289
(11)
1,429

551
(705)
10,180

10,390(3,760)(5,430)93,933408
11,907(177)(2,273)

1,047(2,676)

3,689
107,648

10,792

4,359

2,203

97,568

1,803
2,278
4,081
6,711
93
6,804
221
7,025

7,126
(5,673)
1,453
2,906
62
2,968
504
¥ 3,472

5,350(2,817)
2,533
(330)
725
395
(54)
¥
341

16,30020,59536,89560,673840
61,513
1,998
63,511

2020

2019

¥

Yen

2021

Years Ended March 31, 2021, 2020 and 2019

NET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.
PER SHARE (Note 19):
Basic
DilutedNET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.
PER AMERICAN DEPOSITARY RECEIPT (5 shares of common stock) (Note 19):
Basic
Diluted$U.S. Dollars (Note 2)

2021¥112.57¥112.09¥ 54.26¥ 54.05¥ 5.16¥ 5.14

$1.02
$1.01

¥562.84¥560.47¥271.29¥270.25¥25.78¥25.68

$5.09
$5.07

See notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2021, 2020 and 2019Years Ended March 31, 2021, 2020 and 2019

NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX (Note 16):
Foreign currency translation adjustments:
Amounts arising during the year
Total foreign currency translation adjustments
Unrealized gain (loss) on securities:
Amounts arising during the year
Reclassification adjustments
Total unrealized gain (loss) on securities
Pension liability adjustments:
Amounts arising during the year
Reclassification adjustments
Total pension liability adjustments
OTHER COMPREHENSIVE INCOME (LOSS)COMPREHENSIVE INCOME (LOSS)COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TONONCONTROLLING INTERESTSCOMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TOWACOAL HOLDINGS CORP.

Millions of Yen

Thousands of
U.S. Dollars(Note 2)2021
¥ 6,8042020¥ 2,968

2019
¥ 395

2021
$ 61,513

2,648
2,648

(2,532)(2,532)

(750)
(750)

23,94023,940

2,838
753
3,591
6,239
13,043

125
960
1,085
(1,447)
1,521(4,787)200(4,587)(5,441)(5,046)25,6586,808
32,46656,406
117,919

371

452

(18)

3,354

¥(5,064)

BALANCE, APRIL 1, 2018
Cumulative effects (net of tax) ofadoption of new accounting standards
Net income
Foreign currency translation
adjustments
Unrealized loss on securities
Pension liability adjustments
Cash dividends paid to Wacoal
Holdings Corp. shareholders,¥360 per 5 shares of common stockCash dividends paid to noncontrollinginterests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stockShare-based compensation granted(exercised) (Note 14)Equity transactions with noncontrollinginterests
BALANCE, MARCH 31, 2019Cumulative effects (net of tax) ofadoption of new accounting standards(Note 1)
Net income
Foreign currency translation
adjustments
Pension liability adjustments
Cash dividends paid to Wacoal
Holdings Corp. shareholders, ¥300
per 5 shares of common stockCash dividends paid to noncontrollinginterests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stockShare-based compensation granted(exercised) (Note 14)Equity transactions with noncontrollinginterests
BALANCE, MARCH 31, 2020
Net incomeForeign currency translation
adjustments
Pension liability adjustments
Cash dividends paid to Wacoal
Holdings Corp. shareholders, ¥200
per 5 shares of common stockCash dividends paid to noncontrollinginterests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stockShare-based compensation granted(exercised) (Note 14)Equity transactions with noncontrollinginterests
BALANCE, MARCH 31, 2021

¥67,367$121,273

CommonStock

Additional
Paid-in
Capital¥13,260¥29,765

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock,
at CostTotal Wacoal
Holdings Corp.
Shareholders’EquityNoncontrolling
Interests

Total Equity¥172,418¥28,597¥(11,328)¥232,712¥4,785¥237,497

27,834(27,320)

514

341

514

341

54

395

(723)

(723)

(27)

(750)

(104)
(4,578)(104)(4,578)(9)(104)(4,587)(4,811)(4,811)(4,811)(191)(2,200)011

65,17813,260(2,631)(6,919)
0
2,631

42

(12)

32

62

29,807

193,139(15,584)

216,494(4,128)(515)(6,919)
0
62
38

38

4,650

221,144

(515)

3,472

(515)

3,472

(504)

2,968

(2,584)(2,584)52(2,532)

1,085

1,085

1,085

(4,907)(4,907)(4,907)(237)(2,798)0
23

62,403

13,260(0)(5,935)(7,745)0(7,745)
0

29

(21)

63

71

71
116

116

29,836

185,233
7,025(17,331)205,371
7,025

4,077
(221)

209,448
6,804

2,803

2,803

(155)

2,648

3,586

3,586

5

3,591

(5,627)(2,496)(2,496)
(81)

(0)

(1)

24

¥13,260¥29,120

(81)

(1)

(1)

64

(8,404)

8,404

(12)

52

64
(740)

(621)

(1,361)¥ (8,876)¥215,612¥3,004¥218,616

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock,
at CostTotal Wacoal
Holdings Corp.
Shareholders’EquityNoncontrolling
Interests

Total Equity$(50,872)$(156,686)$1,856,713
63,511
25,341
32,420$36,859(1,998)(1,401)45$1,893,572
61,51323,94032,465(740)¥62,421(237)(7,745)0
5,935(2,496)18(191)(6,919)0¥181,346¥

762

Thousands of U.S. Dollars (Note 2)

BALANCE, MARCH 31, 2020
Net incomeForeign currency translation adjustments
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp.
shareholders, $1.8 per 5 shares of common stockCash dividends paid to noncontrolling interests
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stockShare-based compensation granted (exercised)(Note 14)Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2021

CommonStock

Additional
Paid-in
Capital$119,881$269,740

Retained
Earnings$1,674,650
63,511

25,341
32,420(22,566)(22,566)(9)217$119,881(6,690)$263,267

75,979

(108)

470

579

$ (80,246)(6,690)$1,949,299$ 6,889(732)(9)(5,614)$27,159(12,304)$1,976,458(9)(75,979)$1,639,508(22,566)
(732)

579

See notes to consolidated financial statements.

See notes to consolidated financial statements.

88¥ 1,973

Years Ended March 31, 2021, 2020 and 2019Years Ended March 31, 2021, 2020 and 2019

(7)
(97)
(104)

¥13,414

Millions of Yen
Shares of
Outstanding
Common Stock(Thousands)

INT EG R AT ED R EPORT 202 1

I N TEG RATE D RE P O RT 2021

89

FACTS

FACTS

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2021, 2020 and 2019

Wacoal Holdings Corp. and Subsidiaries

Millions of Yen
Years Ended March 31, 2021, 2020 and 2019

OPERATING ACTIVITIES:Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation (Note 14)
Allowance for returns and doubtful receivables – net
Deferred income taxes(Gain) loss on sales or disposal of property, plant and equipment – net
Impairment charges on property, plant and equipment (Note 21)
Impairment charges on goodwill (Notes 8 and 21)
Impairment charges on other intangible assets (Notes 8 and 21)(Gain) loss on sale, exchange and valuation of marketable securities andinvestments – net (Note 3)
Equity in net loss (income) of affiliated companies, less dividends received
Changes in assets and liabilities:
Decrease in notes and accounts receivable
Decrease (increase) in inventories
Decrease (increase) in return assets
Increase in other current assets(Decrease) increase in notes and accounts payable(Decrease) increase in refund liabilities
Increase (decrease) in liability for termination and retirement benefits(Decrease) increase in accrued expenses, income taxes payable andother current liabilities
Other
Net cash provided by operating activities

2021

2020

2019

2021

¥ 6,804¥ 2,968¥

395$ 61,513

6,128
63
(199)
2,278
(365)
1,136
2,673
12

6,029
71
299
(5,673)
103
769
217
256

5,647
62
(2,263)(2,817)
48
167
4,325
1,509

55,402570(1,799)20,595(3,300)10,27024,166108(10,390)

3,760

5,430

(93,934)

469

480

(211)

4,240

2,767
972
268
(2,632)
(859)
(379)
226

4,685
(1,350)
312
(29)
(373)
(837)
776

822
(76)
(1,180)(653)(1,640)
3,482
(620)

25,016
8,788
2,423(23,795)(7,766)(3,426)
2,043(4,485)

665

1,075

(40,548)

(227)
4,260

197
13,325

118
13,620(2,052)38,514

(941)
291
2,340
(7)
742

(438)
3,576
15,252
(339)
544

889
(2,764)(2,840)104(3,442)(3,539)(9,181)(4,783)
5,226
2,497
(323)
1,008
(900)
276
(2,603)(3,180)(8,507)
2,631
21,156
(63)
6,708
0
8,037
(24,989)(25,676)

INVESTING ACTIVITIES:
Increase in time deposits
Decrease in time deposits
Proceeds from sales and redemption of equity securities
Payments to acquire equity securities
Proceeds from redemption of debt securities
Payments to acquire debt securities
Compensation income
Proceeds from sales of property, plant and equipment
Payments to acquire property, plant and equipment
Payments to acquire intangible assets (Note 8)
Acquisition of a subsidiary (net of cash acquired) (Note 7)
Proceeds from sales of shares of affiliated companies
Other
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES:
Increase (decrease) in short-term bank loans
with original maturities of three months or less – net
Procurement of short-term loan (over 3 months)
Repayment of short-term loan (over 3 months)
Procurement of long-term debt
Repayments of long-term debt
Purchase of treasury stock
Disposal of treasury stock
Dividends paid on common stock
Dividends paid to noncontrolling interests
Proceeds from share issuance of noncontrolling interests
Payments to acquire interests in subsidiaries from noncontrolling interests
Payments of contingent consideration (Note 7)
Net cash provided by (used in) financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEARADDITIONAL CASH FLOW INFORMATION:
Cash paid for:
Interest
Income taxes
NONCASH INVESTING ACTIVITIES:Acquisition of a subsidiary (contingent consideration) (Note 7)
Acquisition of property, plant and equipment by assuming payment obligation

270

(315)
43
(2,562)

32
2,569

38
(2,474)(2,848)389(23,162)

17,208(4,645)

1,061

155,573

20,424
(424)
1,447
(50)
(1)
(2,496)(81)(1,361)(1,061)33,605349
35,652
27,905¥ 63,557(53)(7,745)0(4,907)
(237)
116

(50)
(6,919)0(4,811)(191)
38(17,471)(651)(2,228)30,133¥ 27,905(10,872)372
646
29,487¥ 30,133

¥

72
8,643

¥20
4,758

¥

704

¥ 4,172751

See notes to consolidated financial statements.

90

Thousands of
U.S. Dollars(Note 2)INT EG R AT ED R EPORT 202 1

¥

1
5,068

¥

954

184,649(3,833)13,082(452)(9)(22,567)(732)(12,304)(9,592)
303,8153,155
322,322
252,283$574,605$651
78,139$6,365

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
Basis of Financial Statements—Wacoal Holdings Corp. (the “Company”)
and subsidiaries are predominantly engaged in one industry, the manufacturing and sale of apparel, including foundation garments, lingerie,nightwear, and outerwear in Japan, the United States of America, Europe,and certain other countries in Asia.
The accompanying consolidated financial statements, stated inJapanese yen, have been prepared on the basis of accounting principles
generally accepted in the United States of America (“U.S. GAAP”).
Consolidation—The consolidated financial statements include theaccounts of the Company and its majority-owned subsidiaries (collectively, the “Companies”). All intercompany transactions and balances
have been eliminated.
Some foreign subsidiaries of the Company have a fiscal year ending
December 31. The accounts of those subsidiaries are included in the
Company’s consolidated financial statements based on the subsidiaries’
fiscal year-end. Necessary adjustments have been made for significant
events related to subsidiaries that occurred during the period between
their fiscal year-ends and March 31.
Investments in affiliated companies where the Companies’ ownershipis 20% to 50% are accounted for using the equity method.
Significant influence is generally deemed to exist if the Companies
have an ownership interest in the voting stock of the investee from 20%
to 50%, although other factors are considered in determining whether theequity method of accounting is appropriate.
Use of Estimates—The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could
differ from those estimates.
The Companies reflected the impact of the COVID-19 outbreak in such
estimates. The official views of when the outbreak will be contained havenot been announced by public institutions. The Companies are anticipatingthat COVID-19 will continue to have an impact on our business results until
September 2021, and that our results in October 2021 will recover to thelevel before the outbreak. The Companies developed future business plans
and used them for the estimates of impairment charges on property, plantand equipment, goodwill and other intangible assets based on thisassumption. Significant account estimate is ¥9,398 million valuation of
goodwill arising from the acquisition of WACOAL EUROPE LTD.
To test for goodwill impairment, the carrying amount of each reporting
unit is compared with its fair value. If the carrying amount of a reporting
unit exceeds its fair value, an impairment charge is recognized in an
amount equal to that excess.
Such assumptions include recovery from the recession in businessactivities caused by COVID-19, tax rates and risk-adjusted discount rates.
There is a possibility that impairment charges would be recognized if theforecast of business results deteriorates or the tax rates or risk-adjusted
discount rates increase.
See Note 21 for further information about measurement of fair value.
Cash and Cash Equivalents—Cash and cash equivalents include all
highly liquid investments with original maturities of three months or less.
Foreign Currency Translation—Assets and liabilities of foreign subsidiaries have been translated to Japanese yen at period-end exchange rates
and income and expenses have been translated using average exchange
rates for the period. Translation adjustments resulting from the processof translating consolidated financial statements, net of tax, are includedin accumulated other comprehensive income (loss), which is a separate
component of equity. Exchange gains and losses resulting from foreign
currency transactions and the conversion of monetary assets andliabilities denominated in foreign currencies are included in other income(expenses) in the consolidated statements of income.
Foreign currency translation gains (losses) for the years ended March
31, 2021, 2020 and 2019 were ¥168 million, ¥36 million and ¥76 million,
respectively. They have been included in other – net of other income(expenses).
Marketable Securities and Investments—The Companies classify theirmarketable securities and investments in debt securities into one of two
categories: available-for-sale or held-to-maturity. Available-for-salesecurities are recorded at fair value with a corresponding recognition of
unrealized holding gain or loss (net of tax) in accumulated other comprehensive (loss) income, which is a separate component of equity, until
realized. Held-to-maturity securities are measured at amortized cost. The
Companies classify debt securities as held-to-maturity only if theCompanies have the positive intent and ability to hold those securities tomaturity. Gains and losses on sales of debt securities are computed
based on cost determined using the average cost method. The Company
periodically determines whether any decline in the value of debt securities is temporary, based on the period and extent of the decline, theissuer’s financial position and prospects, and the intention to hold it for a
sufficient period of expected recovery of fair value. If it is determined thatthe decline is not temporary, the difference between the carrying amountand its fair value is recognized as a valuation loss.
Equity securities are measured at fair value and unrealized holding
gain or loss is recorded in net profit or loss.
Allowance for Doubtful Receivables—An allowance for doubtful notes
and receivables is estimated based on historical collection experienceand additional information including current economic conditions andthe creditworthiness of each applicable customer.
Inventories—Inventories are stated at the lower of cost or net realizablevalue, cost being determined by the first-in, first-out method for raw
materials and the average cost method for work in process and finishedproducts. Cost includes net prices paid for materials purchased, production labor cost, factory overhead and charges for customs duties.
Property, Plant and Equipment—Property, plant and equipment is statedat cost less impairment charges. Property, plant and equipment areamortized over their estimated useful lives mainly using the straight-line
method. The estimated useful lives are as follows:Buildings and structures
2 to 50 years (mainly 38 years)
Machinery and equipment (except for the part of the paintings)
2 to 20 years (mainly 5 years)
Depreciation expenses for the years ended March 31, 2021, 2020 and2019 were ¥3,139 million, ¥3,545 million and ¥3,538 million, respectively.
Impairment of Property, Plant and Equipment—The carrying amount oflong-lived assets held and used by the Companies is evaluated for
impairment whenever there is an event or change in circumstances thatindicates that such assets have been impaired or that the carrying
amounts of such assets might not be recoverable. The carrying amount ofproperty, plant and equipment is not recoverable if it exceeds the sum of
the undiscounted cash flows expected to result from the use and eventual
disposition of the asset. That assessment is based on the carrying amountof the asset at the date it is tested for recoverability, whether in use orunder development. The impairment charge is measured as the amount bywhich the carrying amount of property, plant and equipment exceeds its
fair value.
Goodwill and Other Intangible Assets—Goodwill represents the excessof the purchase price of an acquired entity over the fair value of assets
acquired and liabilities assumed.
Goodwill and other intangible assets with indefinite useful lives aretested for impairment annually, or more frequently if conditions indicate
an earlier review is necessary. The goodwill is allocated to the reporting
unit in which the business that the goodwill resides. To test for goodwill

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FACTS

FACTS

impairment, the carrying amount of each reporting unit is compared with
its fair value. If the carrying amount of a reporting unit exceeds its fairvalue, an impairment charge is recognized in an amount equal to that
excess. To test for impairment of other intangible assets with indefinite
useful lives, the carrying value of an intangible asset is compared with its
fair value. If the carrying amount of an intangible asset with indefinite
useful life exceeds its fair value, an impairment charge is recognized in
an amount equal to that excess.
Other intangible assets with finite useful lives consist primarily ofbrands, customer relationships and software are amortized over theirestimated useful lives using the straight-line method. The estimateduseful lives are as follows:
Brands10, 20 and 25 years (mainly 25 years)
Customer relationships 5 years
Software5 years
Asset Retirement Obligations—The Companies have obligations arisingfrom contractual commitments to remove leasehold improvements fromleased facilities and return the property to a specified condition when thelease terminates. The Companies recognize asset retirement obligations
at the inception of a lease. The asset retirement obligations are measured with an expected present value technique based on historicalexperience and recorded in other long-term liabilities in the consolidatedbalance sheets and subsequently adjusted for changes in estimateddisposal costs. The difference between the gross expected future cash
flow and its present value is accreted over the life of the related lease,which is determined using best estimates because the Companies’ lease
contracts generally have automatic renewal provisions. The estimatedasset retirement costs are capitalized as part of the carrying amount of
the associated long-lived asset and depreciated over its useful life. For
some lease contracts that are automatically renewed at the end of thecontract, asset retirement obligations are calculated based on a reasonable estimate of the end of the contract.
Termination and Retirement Plans—Termination and retirement benefits
are accounted for in accordance with the guidance for retirement
benefits. The Companies amortize net actuarial gains and losses andprior service cost over the average employees’ remaining service periodby the declining-balance method and by the straight-line method,respectively.
Leases—As for lessor accounting, the Companies recognized revenue
mainly from contracts consisting of leasing mannequins, display
furniture and real estate owned by the Companies to our customers.
These lease arrangements are classified as operating leases and related
revenue is recognized ratably over the lease term. Options to extend or
terminate the leases are included in some of the contracts. The
Companies take such options into account to determine the lease termwhen it is probable that these options will be exercised. Moreover, almost
all of the contracts do not contain variable consideration and purchase
options for their customers. Some of the contracts contain lease andnon-lease components and the consideration in the contracts areallocated based upon estimated standalone selling prices of the leaseand non-lease components.
As for lessee accounting, the Companies have leases for assets suchas retail stores, warehouses, offices, corporate housing, vehicles,machinery, and equipment, which are classified as an operating lease.
The Companies determine whether a contract is, or contains a lease at
the inception of the contract. Options to extend or terminate the lease
contracts are included in some of the contracts. The Companies takesuch options into account in order to determine the lease term when it isprobable that these options will be exercised. Some of the contracts
contain variable lease payments. Most of the variable lease payments
are for our retail stores, which depend on their sales. Material residual
value guarantees and restriction or covenants imposed by leases do notexist in the contracts.

92

Some of the contracts contain lease and non-lease components.
Considerations in the contracts for which underlying assets are land andbuildings and structures are allocated based upon the estimatedstandalone selling prices of the lease and non-lease components, which
are accounted for separately. On the other hand, the Companies elect thepractical expedient and did not separate lease components from
non-lease components for leases for which underlying assets aremachinery and equipment. The Companies use the incremental borrowing rate based on the information available at commencement date todetermine the present values of lease payments, unless the implicit rate
is readily determinable. The Companies also elect the practical expedient
which allows entities to expense leases with a term of 12 months or lessat the commencement date as incurred. Operating lease cost is recognized on a straight-line basis over the lease term.
The Financial Accounting Standards Board (“FASB”) guidance issued
in April 2020 allows a lessee of a lease subject to a rent concession
occurring as a direct consequence of the COVID-19 pandemic to elect toapply a simplified accounting treatment. Under this guidance, the lessee
may elect to apply the practical expedient and not assess whether a
COVID-19-related rent concession that meets certain prescribed conditions is a “lease modification,” as stipulated in Accounting Standard
Codification 842, “Leases” (“ASC 842”). The Companies have elected toapply this practical expedient for rent concessions that meet thosecertain prescribed conditions referred to above and the rent concessions
are accounted for as variable lease payments rather than being treatedas lease modifications.
Treasury Stock—The Companies account for treasury stock under thecost method and include treasury stock as a component of equity.
Acquisitions—The Companies account for acquisitions using theacquisition method in accordance with the guidance for businesscombinations. The Companies allocate the purchase price to the assets
acquired and liabilities assumed based on the estimated fair values atthe date of acquisition, including intangible assets that can be identified
and named. The purchase price in excess of the fair value of the net
assets is recorded as goodwill. In the case where the purchase price isbelow the fair value of the net assets, the Companies recognize theexcess of fair value of the net assets over the purchase price in earnings
as a gain on bargain purchase in the consolidated statements of income.
The Companies measure contingent consideration classified as liabilities
at the fair value as of the date of acquisition and remeasure them to fairvalues at each reporting date until the contingencies are resolved.
Fluctuations of the fair values due to the remeasurement are recognized
in income or expenses as incurred.
Revenue Recognition—The Companies recognize revenue when control
of promised products is transferred to customers and performanceobligations are satisfied. The Companies’ revenue is recognized fortransactions, net of any trade discounts or rebates given. In addition,
provision for expected returns is deducted from revenue based on
historical return.
Shipping and Handling Costs—Shipping and handling costs are expensed as incurred.
Advertising Expenses—Advertising costs are expensed as incurred.
Advertising expenses for the years ended March 31, 2021, 2020 and2019 were ¥11,239 million, ¥13,169 million and ¥12,329 million, respectively, and have been included in selling, general and administrative
expenses.
Research and Development Costs—Research and development costs
are expensed as incurred. Research and development costs for the years
ended March 31, 2021, 2020 and 2019 were ¥463 million, ¥508 millionand ¥739 million, respectively, and have been included in selling, generaland administrative expenses.
Consumption Taxes—Consumption taxes are excluded from sales, costs,
and expenses in the consolidated statements of income.

INT EG R AT ED R EPORT 202 1

Income Taxes—The provision for income taxes is determined under theasset and liability method in accordance with the guidance for income
taxes. Under this method, deferred tax assets and liabilities are determined for temporary differences between the carrying amounts of assets
and liabilities in the financial statements and tax bases of assets andliabilities and tax loss carryforwards at presently enacted tax rates. A
valuation allowance is recorded when it is more likely than not that some
portion or all of the deferred tax assets will not be realized in the future.
The Companies assess their income tax positions and record tax
benefits for all years subject to examination based upon their evaluationof the facts, circumstances, and information available as of the end of
the fiscal year. For those tax positions only where there is greater than a
50% likelihood that the tax position will be sustained, the Companies
record the largest amount of tax benefit that may potentially be realized
upon ultimate settlement with a taxing authority that has full knowledgeof all relevant information. Interest and penalties related to income taxes
are included in the consolidated statements of income.
Share-Based Compensation—Share-based compensation is accounted
for in accordance with ASC 718, “Compensation – Stock Compensation”.
The Company measures share-based compensation cost at the grantdate, based on the fair value of the award and recognizes the cost over
the requisite service period, which is the vesting period. The fair value ofthe award is estimated using the Black-Scholes option-pricing model.
Derivatives—Derivative instruments, including certain derivative instruments embedded in other contracts, are accounted for in accordancewith the guidance for derivatives and hedging. Because such derivative
instruments are not designated as hedges, changes in the fair value ofthe derivatives are recorded in earnings or losses.
Government Grant—Government grants are recognized when there isreasonable assurance that the Companies will comply with the conditions attached to the grant and that the grant will be received.
Government grants are recognized as reductions from operating costs
and expenses. The amounts of reductions from cost of sales and selling,
general and administrative expenses for the year ended March 31, 2021
were ¥1,049 million and ¥2,922 million, respectively.
Subsequent Events–In accordance with the guidance for subsequent
events, the Company has evaluated subsequent events throughJune 29, 2021.
Reclassifications—Certain reclassifications have been made to the prioryears’ consolidated financial statements to conform to the current year’s
presentation.
Recent Accounting Pronouncements:
Recently Adopted Accounting GuidanceInternal-Use Software—In August 2018, the FASB issued guidance
related to internal-use software. This guidance clarifies the accounting
for costs of implementation activities performed in a cloud computing
arrangement that is a service contract. This guidance is effective forfiscal years beginning after December 15, 2019 and interim periods
within that annual period. The Companies have adopted the guidancefrom the quarter beginning April 1, 2020. The adoption of this guidance
did not have a material impact on the Company’s balance sheets andstatements of income.
Disclosure on Fair Value Measurement—In August 2018, the FASB
issued guidance related to the fair value measurement disclosure. This
guidance removes, modifies, and adds some of the disclosure requirements on fair value. This guidance is effective for fiscal years beginning
after December 15, 2019 and interim periods within that annual period.
The Companies have adopted the guidance from the quarter beginning
April 1, 2020. The adoption of this guidance did not have a material
impact on the Company’s balance sheets and statements of income.

Disclosure on Defined Benefit Plans—In August 2018, the FASB issued
guidance related to disclosure on defined benefit plans. This guidance
removes, modifies, and adds the disclosure requirements on defined
benefit pension. This guidance is effective for fiscal years ending after
December 15, 2020 and interim periods within that annual period. The
Companies have adopted the guidance from the quarter beginning April
1, 2020. The adoption of this guidance did not have a material impact on
the Company’s balance sheets and statements of income.
Recent Accounting Guidance Not Yet Adopted
Measurement of Credit Losses on Financial Instruments—In June 2016,
the FASB issued a new accounting guidance related to measurement ofcredit losses on financial instruments. This guidance introduces a new
impairment model based on expected losses rather than incurred losses.
Using this model will result in more timely recognition of losses than under
the current incurred approach. In November 2019, the FASB issued additional guidance related to the change in the effective date of the above
guidance. As a result, the guidance is effective for fiscal years beginning
after December 15, 2022 and interim periods within those fiscal years. The
Company is currently evaluating the impact of adoption on the Company’s
consolidated financial position, results of operations or cash flows.

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2. TRANSLATION INTO U.S. DOLLAR STATEMENTS 
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which the Company is incorporated andoperates. The translation of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside ofJapan and has been made at the rate of ¥110.61 to $1, the noon buying
rate for yen in New York City as of March 31, 2021. Such translation should
not be construed as representations that the Japanese yen amounts could
be converted into U.S. dollars at the above or any other rate.

3. MARKETABLE SECURITIES AND INVESTMENTS 
Debt Securities—The fair value of debt securities is based on quoted market prices as of March 31, 2021 and 2020. The cost, gross unrealized gain andloss, and the fair value by major security type were as follows:
Millions of Yen

2021
Held-to-maturity securities:

Cost

Gross
Unrealized Gain

Gross
Unrealized Loss

¥222

¥2

Cost

Gross
Unrealized Gain

Gross
Unrealized Loss

Fair Value

¥656

¥2

¥1

¥657

¥329

¥4

Fair Value

Current:
Corporate debt securities¥224
Millions of Yen

2020
Held-to-maturity securities:

The Companies periodically determine whether a decline in the fair value of debt securities is deemed to be other than temporary based on criteria that
include the duration of the market decline, the extent to which cost exceeds fair value, the financial position and business outlook of the issuer, and theintent and ability of the Companies to retain the impaired held-to-maturity securities for a sufficient period of time for anticipated recovery in fair value.
No debt securities were identified that meet the Companies’ criteria for recognition of an impairment charge on debt securities in an unrealized loss
position presented above. Therefore, the Companies do not believe the unrealized losses represent an other-than-temporary impairment as of March 31,
2021 and 2020.
Future maturities of debt securities classified as held-to-maturity
securities as of March 31, 2021, were as follows:
Millions of Yen

Due within one year
Total

Cost

Fair Value

¥222

¥224

¥222

¥224

Equity Securities—Realized and unrealized gains and losses on equity
securities during the years ended March 31, 2021 and 2020, were as
follows:

As a result of the conversion of convertible bonds into equity securities,
the Company recorded gains on exchange of marketable securities of¥140 million for the year ended March 31, 2019. There were no exchangeof marketable securities and investments during the years ended March
31, 2021 and 2020.

Millions of Yen

2021

2020

2019

91

¥ 1,620¥

Unrealized gains (losses) recognized
during the period on equity securities
still held at March 31

10,299(5,380)(5,493)Net gains (losses) recognized during
the period on equity securities¥10,390¥(3,760)¥(5,570)Realized gains (losses) recognized
during the period on equity securities
sold during the period

¥

(77)

Current:
Corporate debt securities
Noncurrent:
Corporate debt securities¥333

4. ALLOWANCES FOR DOUBTFUL RECEIVABLES 
Information related to the Companies’ allowance for doubtful receivables as of March 31, 2021, 2020 and 2019 was as follows:
Millions of Yen

Gross unrealized losses and fair values of debt securities, for those that have been in a continuous unrealized loss position for more than 12 months asof March 31, 2021 and 2020, were as follows:
Millions of Yen

2021
Fair Value

2020
Gross
Unrealized Loss

Fair Value

Gross
Unrealized Loss

¥109

¥1

2021

Balance at the beginning of the year

2020

2019

¥ 489

¥229

33

270

36

Balances written off/reversed

(176)

(10)

(14)

Balance at the end of the year

¥ 346

¥489

¥229

Charged to expenses¥207

Held-to-maturity securities:
Marketable securities:
Corporate debt securities

Gross unrealized losses and fair values of debt securities, for those that have been in a continuous unrealized loss position for less than 12 months as ofMarch 31, 2021 and 2020, were as follows:
Millions of Yen

2021
Fair Value

2020
Gross
Unrealized Loss

Fair Value

Gross
Unrealized Loss

¥220

¥0

5. INVENTORIES 
The components of inventories as of March 31, 2021 and 2020 were as follows:
Millions of Yen

2021

2020

Finished products¥37,217¥37,224

Work in process

3,748

3,938

Raw materials

2,285

2,265

¥43,250¥43,427

Total

Held-to-maturity securities:
Marketable securities:
Corporate debt securities

94

INT EG R AT ED R EPORT 202 1

I N TEG RATE D RE P O RT 2021

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FACTS

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6. INVESTMENTS IN AFFILIATED COMPANIES 

7. ACQUISITIONS 

Certain investments are accounted for using the equity method if theCompanies have the ability to exercise significant influence over aninvestee. Significant influence is generally deemed to exist if theCompanies have an ownership interest in the voting stock of the investee
between 20% and 50%, although other factors are considered in determining whether the equity method of accounting is appropriate. The
Companies record investments in equity method investees meetingthese characteristics as “Investments in affiliated companies.” Under theequity method, the Companies record their proportionate share of anaffiliated company’s income or loss based on the most recently available
financial statements.

Percentage of Ownership (%)

2021

2020

2019

Net sales¥62,676¥63,066

Gross profit

32,455

32,105

Income before income taxes

1,654

3,458

860

2,714

Net income

The balance of receivables and payables to affiliated companies as ofMarch 31, 2021 and 2020 were as follows:
Millions of Yen

2021

The primary affiliated companies and percentage of ownership as ofMarch 31, 2021 and 2020 were as follows:
Name of Investee

Millions of Yen

2020

Shinyoung Wacoal Inc.

25

25

Taiwan Wacoal Co., Ltd.

50

50

Thai Wacoal Public Co., Ltd.

34

34

PT. Indonesia Wacoal

4242House of Rose Co., Ltd.

21

21

Aggregate carrying amounts and fair values of investments in affiliatedcompanies which have a quoted market price as of March 31, 2021 and2020 were as follows:

2020

Accounts receivable

¥372

¥618

Accounts payable

501

509

Other receivable

173

329

Long-term loan

315

The amounts for transactions with affiliated companies for the years
ended March 31, 2021, 2020 and 2019 were as follows:
Millions of Yen

2021

2020

2019

Sales

¥1,636¥2,838¥3,257Cost of sales corresponding
to sales of material
and products

1,751

2,826

3,175

Millions of Yen

Purchases

3,681

5,302

5,612

2021

2020

Royalties

203

330

299

Carrying amount¥13,652¥14,431

Interest income

Aggregate value of quoted market price

10,034

9,421

The following tables represent the affiliated companies' summarizedbalance sheets and statements of income as of and for the years ended
March 31, 2020 and 2019. Such information as of and for the year ended
March 31, 2021 were not disclosed as they were immaterial.

Dividends received from affiliated companies were ¥602 million, ¥542
million and ¥514 million for the years ended March 31, 2021, 2020 and
2019, respectively.

Millions of Yen

Current assets

2020

2019

¥43,974¥41,929

Noncurrent assets

42,161

44,635

Total¥86,135¥86,564

Current liabilities¥ 9,048¥ 8,569

Long-term liabilities

7,583

7,145

Equity69,50470,850Total¥86,135¥86,564

96

3

INT EG R AT ED R EPORT 202 1

The Company decided to enter into a share purchase agreement
pursuant to which the Companies acquired through our U.S. subsidiary
Wacoal International Corp. (“Wacoal International”) all of the issued andoutstanding shares of Intimates Online, Inc. (“Intimates Online”), a
women’s innerwear design and sales company in the U.S. at the meetingof our board of directors held on July 30, 2019. Wacoal International
entered into the share purchase agreement on the same day (U.S. time)and acquired all of the issued and outstanding shares of Intimates Online
on July 31, 2019 (U.S. time).
Intimates Online designs and sells women’s innerwear products underits “LIVELY” brand in the U.S. through its e-commerce website and directly
managed retail stores. The Companies expect discontinuous growth in
the U.S. by acquiring its customer base mainly for millennials and its
unique marketing method to spread its reputation and online reviews byorganizing its customers as its ambassador.
Consideration for the acquisition was ¥13,520 million and is consistedof ¥9,348 million (USD 86 million) of cash and ¥4,172 million (USD 38 million)of contingent consideration.
The contingent consideration was agreed with previous shareholders
upon the share purchase agreement and will be paid to them over a
period of four fiscal years. Payment is contingent on Intimate Online’s
performance achieving certain goals such as sales targets. The total
contingent payment amount will be within the range of USD 20 million
and USD 55 million.
The fair value of the contingent consideration was ¥2,901 million (USD
26 million) and ¥3,874 million (USD 36 million) as of March 31, 2021 and2020, respectively. The changes in fair value were recognized in selling,
general and administrative expenses. The contingent consideration of¥1,262 million (USD 11 million) and ¥1,088 million (USD 10 million), forwhich the consideration has been fixed, was recognized in Notes andaccounts payable as of March 31, 2021 and 2020, respectively.
For the year ended March 31, 2020, acquisition-related costs were¥245 million and had been included in selling, general and administrative
expenses. For the year ended March 2021, acquisition-related cost did
not occur.
As a result of the purchase price allocation, the Company recognized¥11,551 million of goodwill and ¥1,923 million of other intangible assets
in Wacoal Business (Overseas). The goodwill arising from the acquisition
consists largely of the expected growth of Intimates Online, synergies
and economies of scale expected from combining the operations with
Wacoal International. Other intangible assets were composed of ¥1,097
million brands, ¥793 million customer relationships, and ¥33 million of
noncompetition agreements, respectively. Goodwill is not deducted fortax purposes. The amount of brands, customer relationships andnoncompetition agreements are amortized based on the estimateduseful lives of 10 and 5 years, respectively.
The Company adjusted the fair values of assets acquired and liabilities
assumed as of the acquisition date based on the information the
Company obtained subsequent to the acquisition date. These adjustments are reflected retrospectively to the fair value of assets acquired
and liabilities assumed as of the acquisition date.
The fair values of assets acquired and liabilities assumed as of theacquisition date were as follows:

Millions of Yen

July 31, 2019
BeforeAdjustment

Cash and cash equivalents

¥

167

After
Adjustment¥

167

Notes and accounts receivable

14

14

Inventories

341

383

Other current assets

16

12Property, plant and equipment

1417

Operating leases right-of-use assets

295

290

13,505

11,551

Goodwill
Other intangible assets

1,923

Other assets

18

18

Total assets

14,37014,375

Notes and accounts payables

222

228

Short-term operating lease liabilities

47

47

Other current liabilities

42

Deferred income taxes

43
288

Long-term operating lease liabilities

249

Total liabilities

560

855

¥13,810¥13,520

Total equity

249

Pro Forma Financial Information (Unaudited)
Unaudited supplemental pro forma information for the combined
result of operation of the Company and its subsidiary as though theacquisition had occurred as of April 1, 2018 were as follows:
Millions of Yen

2020

2019

¥187,482¥195,684

Operating income

6,338

4,346

Net income (loss) attributable to Wacoal
Holdings Corp.

3,172

(193)

Net sales

Net sales and operating loss of Intimates Online included in the
Company’s consolidated statements of income for the year ended March
31, 2020 are ¥1,301 million and ¥1,250 million, respectively.

I N TEG RATE D RE P O RT 2021

97

FACTS

FACTS

8. GOODWILL AND OTHER INTANGIBLE ASSETS 

Other Intangible Assets—The components of intangible assets excluding goodwill as of March 31, 2021 and 2020 were as follows:

Goodwill—Changes in the carrying amount of goodwill by operating segments for the years ended March 31, 2021, 2020 and 2019 were as follows.
Millions of Yen

Millions of Yen

2021

Years Ended March 31

Gross Carrying
AmountAccumulated
Amortization andImpairment Charges

Gross Carrying
AmountAccumulated
Amortization andImpairment Charges

Brands¥ 7,479¥ 2,748¥ 6,670¥ 2,076

Software

17,910

9,273

16,0398,163

Others

2,544

1,256

2,534

1,022

¥27,933¥13,277¥25,243¥11,261¥ 5,316¥ 4,827¥ 5,316¥ 4,8272021
Wacoal Business(Overseas)

Peach John

Total

Balance at the beginning of the year:
Acquisition cost

¥22,371¥¥22,371

Accumulated impairment charges
Carrying amount

22,371

22,371

Impairment charges(2,673)(2,673)Foreign currency translation adjustments

1,471

1,471

24,103

24,103Acquisition during the year

Balance at the end of the year:
Acquisition cost
Accumulated impairment charges(2,934)

Carrying amount¥21,169(2,934)¥¥21,169
Millions of Yen

2020
Wacoal Business(Overseas)

Peach John

Total

Balance at the beginning of the year:
Acquisition cost

¥11,954¥¥11,954

Accumulated impairment charges
Carrying amount
Acquisition during the year

11,954

11,954

11,551

11,551

Impairment charges

(217)

(217)

Foreign currency translation adjustments

(917)

(917)

Balance at the end of the year:
Acquisition cost
Accumulated impairment charges
Carrying amount

22,594

22,594

(223)

(223)

¥22,371¥¥22,3712020

Amortized intangible assets:

Total
Unamortized intangible assets:
Trademarks
Other

75

Total

¥ 5,391

Other intangible assets acquired during the year ended March 31, 2021
totaled ¥3,073 million, which primarily consist of software. Other intangible assets acquired during the year ended March 31, 2020 totaled¥5,313 million, which primarily consist of brands and software. Other
intangible assets acquired during the year ended March 31, 2019 totaled¥3,266 million, which primarily consist of software. Estimated useful life
for brands and software are ten and five years, respectively.
During the year ended March 31, 2021, the Companies recorded
impairment charges on software of Taiwan Peach John of ¥12 million,
which was included in operating costs and expenses of the Peach John
Business. During the years ended March 31, 2020 and 2019, theCompanies recorded impairment charges on the trademark of PeachJohn of ¥191 million and ¥1,314 million, which was included in operating
costs and expenses of the Peach John Business. During the year ended
March 31, 2020, the Companies also recorded ¥65 million of impairment
charges on software of the A Tech Textile Co., LTD. (“A Tech”), which was
included in operating expenses of the Wacoal Business (Overseas).

76¥ 4,827¥ 5,392¥ 4,827

During the year ended March 31, 2019, the Companies recorded ¥195
million of impairment charges on software of Ai Co., Ltd., which was
included in operating expenses of the Other segment. See Note 21 forfurther information.
Aggregate amortization expenses for the years ended March 31, 2021,
2020 and 2019 related to other intangible assets were ¥2,989 million,¥2,484 million and ¥2,109 million, respectively. Future estimated amortization expenses as of March 31, 2021 were as follows:
Years Ending March 31

Millions of Yen

Estimated amortization expenses
2022¥ 2,912

2023

2,834

2024

2,416

2025

1,782

2026

1,040

Total

¥10,984

Millions of Yen

9. SHORT-TERM BANK LOANS AND LONG-TERM DEBT 

2019
Wacoal Business(Overseas)

Peach John

Total

¥12,269¥ 11,203¥ 23,472(6,878)(6,878)

4,325

16,594(4,325)(4,325)

Balance at the beginning of the year:
Acquisition cost
Accumulated impairment charges
Carrying amount

12,269Impairment charges
Foreign currency translation adjustments

(315)

(315)

Balance at the end of the year:
Acquisition cost

11,954

Accumulated impairment charges
Carrying amount¥11,954

11,20323,157(11,203)(11,203)¥¥ 11,954

The Company recorded impairment charges on goodwill of ¥2,673 million for the WACOAL EUROPE LTD. in the year ended March 31, 2021, which was
included in operating costs and expenses of Wacoal Business (Overseas). The Company recorded impairment charges on goodwill of ¥217 million for
the G Tech Material Co., LTD. (“G Tech”) in the year ended March 31, 2020, which was included in operating costs and expenses of Wacoal Business(Overseas). The Company recorded impairment charges on goodwill of ¥4,325 million for the Peach John Business in the year ended March 31, 2019,
which was included in operating costs and expenses of the Peach John Business. See Note 21 for further information about measurement of fair value.

Short-term bank loans as of March 31, 2021 and 2020 consisted of thefollowing:
Millions of Yen

Unsecured bank loans

2020

2022

¥40,672¥3,3642023

The weighted-average annual interest rates on short-term bank loans asof March 31, 2021 and 2020 were 0.2% and 0.3%, respectively.
Unused lines of credit for short-term financing as of March 31, 2021 and2020 aggregated to ¥37,614 million and ¥28,657 million, respectively.
Long-term debt as of March 31, 2021 and 2020 was summarized
below. The interest rates and maturities were for loans as of March 31,
2021.

Millions of Yen

¥35

2025
2026

1,498

Total

¥1,533A subsidiary has pledged assets as security for loans. As of March 31,
2021 and 2020, assets pledged as collateral for bank loans were as
follows:

Millions of Yen

2021

Collateralized bank loans, with fixed interest
at 0.6%, maturing through 2022

Total
Less current portion of long-term portionLong-term debt, less current portion

INT EG R AT ED R EPORT 202 1

Years Ending March 31

2021

2024

Unsecured bank loans, with fixed interest at
0.0 ~ 1.8%, maturing through 2026

98

The annual maturities of long-term debt as of March 31, 2021 were as
follows:¥

Millions of Yen

2020

2021

2020

15

¥ 35

Land

¥150

Buildings

124

146

1,518

50

Total

¥274

¥296

1,533

85

(35)

(50)

¥1,498¥ 35¥150

As is customary in Japan, both short-term and long-term loans are madeunder general agreements which provide for security and guarantees for
future and present indebtedness to be given upon request of the bank.
The bank has the right to offset cash deposits against obligations thathave come due or, in the event of default, against all obligations due tothe bank.

I N TEG RATE D RE P O RT 2021

99

FACTS

FACTS

10. LEASES 

12. TERMINATION AND RETIREMENT PLANS 

Lessor Accounting
Operating lease income for the year ended March 31, 2021 and 2020 was

Supplemental cash flow information related to operating leases for theyears ended March 31, 2021 and 2020 was as follows.

as follows. Lease income was included in net sales and other net income.
Millions of Yen

Operating lease income

2021

2020

¥1,741¥2,392

The acquisition costs of equipment leased to customers under operatingleases were ¥2,756 million and ¥2,756 million of land and ¥513 millionand ¥516 million of building and building improvements. Accumulated
depreciation on these equipment was ¥416 million and ¥413 million asof March 31, 2021 and 2020. These are included in net property, plantand equipment.
Future minimum lease income classified as operating leases asof March 31, 2021 were as follows. Note that lease payments related
to mannequins and display furniture which were mainly part of theCompanies’ lease income were not included in the below table because
the contracts terms were not material.
Years Ending March 31

Millions of Yen

2022

¥ 249

2023

187

2024

186

2025

127

2026

93

Thereafter

1,204

Total

¥2,046Lessee accounting
Operating lease costs for the years ended March 31, 2021 and 2020 wereas follows. Lease expenses were included in cost of sales and selling,
general and administrative expenses.
Gain or loss recognized as a result of not being treated as leasemodifications are ¥550 million and these are reduced from variable lease
cost.

Millions of Yen

2021

2020

Cash paid for amounts included in themeasurement of lease liabilities¥4,542¥4,798Non-cash activities concerning right-of-use
assets obtained in exchange for new
operating lease liabilities

4,523

5,483

Weighted-average remaining lease term and discount rate for operatingleases were as follows:

Weighted-average remaining lease term

2021

2020

60.1
months63.0
months1.7%

1.7%

Weighted-average discount rate2022

¥ 4,602

2023

2,841

2024

1,682

2025

1,223

2026

866

Thereafter

2,466

Total minimum lease payments

13,680(749)

Total lease liabilities

Millions of Yen

2021

2020

¥12,931

Benefit obligations at the beginning of the year

¥37,674¥38,681¥34,580

Service cost

1,109

1,243

1,196

Interest cost

180

176

178

Participants’ contributions

59

60

62

(902)

(217)

4,937

Benefits paid from plan assets

(950)

(961)

(961)

Settlement paid from plan assets(1,097)(1,275)

(976)

(301)

(289)

(339)

(5)

3

4

35,76737,67438,681¥40,464¥40,680¥42,736

4,121

1,375

(846)

Employer contributions

594

579

657

Participants’ contributions

59

60

62

(950)

(961)

(961)

(1,097)(1,275)

(976)

24

6

8

43,21540,464

40,680¥ 7,448¥ 2,790¥ 1,999

253

Settlement paid by the Company and certain subsidiaries
Changes in foreign currency exchange rates
Benefit obligations at the end of the year
Change in plan assets:
Fair value of plan assets at the beginning of the year
Actual return on plan assets

Benefit payments
Settlement payments

Any material leases commenced after April 1, 2021 were not recognized
as of March 31, 2021.

2019

Change in benefit obligations:

Loss based on prior service benefits

Millions of Yen

Less interest costsum at the earlier of termination or retirement, although periodic payments are available under certain conditions. Benefits under the othertermination and retirement benefit plan are paid either as lump-sum
payments or periodic payments under certain conditions. The benefits
are usually paid as a lump-sum payment, if the employee resigns before
the mandatory retirement age.
Contributory Defined Retirement Benefit Plan—The following provides
a reconciliation of benefit obligations, plan assets, and funded status of
the plans:

Actuarial (gain) loss

Future minimum lease payments classified as operating leases as ofMarch 31, 2021 were as follows:
Years Ending March 31

Employee Retirement Plans—Certain subsidiaries of the Company
sponsor termination and retirement benefit plans that cover substantiallyall employees. Benefits are based on the employee’s years of service,position and performance. If the termination is involuntary or caused bydeath, the employee is usually entitled to greater payments than in thecase of voluntary termination.
Certain subsidiaries of the Company have contributory defined
retirement benefit plans and several unfunded termination plans administered by certain subsidiaries of the Company. Benefits under thecontributory defined retirement benefit plan are usually paid in a lump

Changes in foreign currency exchange rates
Fair value of plan assets at the end of the year
Funded status at the end of the year

Millions of Yen

2021

2020

Operating lease costs¥5,121¥4,945

Short-term lease costs

535

635

Variable lease costs
Total

Amounts recognized in the consolidated balance sheets as of March 31, 2021 and 2020 consisted of:Millions of Yen

2021

424

1,295

Prepaid pension expense¥6,080¥6,875

Other current liabilities2020¥ 9,533

Liability for termination and retirement benefits
Total¥ 4,974

(143)

(115)

(1,942)(2,069)¥ 7,448¥ 2,790

11. ASSET RETIREMENT OBLIGATIONS 
The Companies recorded the fair value of asset retirement obligations in order to recognize legal obligations associated with the removal of leasehold
improvements from leased facilities and return of the property to a specified condition when the lease terminates.
A reconciliation of the beginning and ending aggregate carrying amount of the asset retirement obligation is as follows:
Millions of Yen

2021

Balance at the beginning of the year

2020

¥827

2019

¥813

¥ 825

Accretion expense

3

3

2

Liabilities incurred

38

63

92

Liabilities settled

(41)

(52)

(106)

Change due to foreign currency translation

(1)

0

0

¥826

¥827

¥ 813

Balance at the end of the year

10 0

INT EG R AT ED R EPORT 202 1

Amounts recognized in accumulated other comprehensive income, as of March 31, 2021 and 2020 were as follows:
Millions of Yen

2021

2020

Actuarial loss¥(164)

Prior service cost

(232)¥(5,048)
(253)

Total

¥(396)¥(5,301)

The accumulated benefit obligations for all defined retirement benefit plans as of March 31, 2021 and 2020 were as follows:
Millions of Yen

2021

Accumulated benefit obligations¥35,658

I N TEG RATE D RE P O RT 2021

2020

¥37,532101

FACTSFACTS

The projected benefit obligations and the fair value of the plan assets for certain subsidiaries’ of the Company with projected benefit obligations inexcess of the fair value of plan assets, and the accumulated benefit obligations and the fair value of the plan assets for certain subsidiaries’ pension
plans with accumulated benefit obligations in excess of the fair value of plan assets were as follows:

The asset allocation as of March 31, 2021 and 2020 was as follows:

Millions of Yen

2021

2020

Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations¥2,971¥3,075

735

738

2,971

3,075

735

738

Fair value of plan assets

2021

2020

Equity securities

48.8%

44.7%

Debt securities

28.6%

31.1%

Life insurance company general accounts

7.5%

9.3%

Real estate

6.5%

3.2%

Other short-term investments

8.6%

11.7%

Plans with accumulated benefit obligations in excess of the fair value of plan assets:
Accumulated benefit obligations
Fair value of plan assets

Net periodic benefit costs for plans of certain subsidiaries’ of the Company consisted of the following for the years ended March 31, 2021, 2020
and 2019:
2020

2019

¥ 1,109¥ 1,243¥ 1,196

Interest cost

180

176

178

(1,015)(1,006)(1,007)

Amortization of actuarial loss (gain)

876

1,186

5

Amortization of prior service benefits21¥ 1,171

2021
Assets evaluated by other than net asset value per share
Japanese companies

Level 2

Level 3

Total

¥ 372

¥10,934¥10,934

Foreign companies
Debt securities:
Corporate bonds
Foreign government bonds¥ 1,599

Level 1Equity securities:

Service cost
Expected return on plan assets

The following tables present the plan assets of certain subsidiaries of the Company using the fair value hierarchy as of March 31, 2021 and 2020. The
fair value hierarchy has three levels based on the reliability of the inputs used to determine the fair value. For references to each level, see Note 21.
Millions of Yen

Millions of Yen

2021

The target allocation percentages are reviewed and approved by thePension Committee. The actual allocations for 2021 and 2020 are
different from the target allocation percentages primarily because
Wacoal Corp. maintained additional equity securities within a separate
plan asset, which is assigned to the plan based on an agreement between
Wacoal Corp. and its employees and is not governed by the Pension
Committee. As such, the actual allocation percentage of equity securities
to the total plan assets is higher than the target allocation and, similarly,
the actual allocation for some other types of assets is lower than thetarget allocation.

¥

81

81

112

Life insurance company general accounts

112
3,255

3,255

1,828

1,828

Other types of investments:
The unrecognized net actuarial gain or loss and prior service benefits are amortized within 12 years (the average remaining service life of active participants) using the declining-balance method and the straight-line method, respectively.
Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended March 31, 2021, 2020 and 2019were as follows:
Millions of Yen

2021

Actuarial gain (loss)
Amortization of actuarial loss (gain)2020¥4,008¥ 586¥(6,790)

876

1,186

5

Prior service benefits(253)

Amortization of prior service benefits

Certain subsidiaries of the Company use a measurement date of March
31 for their plans. The weighted-average assumptions used as of March
31, 2021 and 2020 in computing the benefit obligations shown above
were as follows:
2021

2020

Discount rate

0.6%

0.5%

Expected revaluation rate for cash balance plan

0.9%

0.9%

The weighted-average assumptions used as of March 31, 2021, 2020
and 2019 in computing the net periodic benefit costs shown above wereas follows:
2021

2020

2019

Discount rate

0.5%

0.5%

0.5%

Rate of increase in futurecompensation

5.3%

5.3%

5.3%

Expected long-term rateof return on plan assets

2.5%

2.5%

2.5%

1 02

0.9%

0.9%

0.9%

¥1,519Pooled funds (b)7,084Debt securities:
Pooled funds (c)7,526Other types of investments:
Hedge funds (d)3,671Pooled funds (e)8,724¥11,046¥5,164

Level 1

Level 2

¥43,215¥(6,785)

Certain subsidiaries’ of the Company approach to establishing thediscount rate is based upon corporate bond indices. The discount rate
assumption is based upon effective yields as of March 31, 2021 on thecorporate bond indices for which maturity dates approximate the timingof the expected future benefit payments.
The retirement benefit plan of certain subsidiaries of the Company is apoint-based benefits system, and, therefore, the rate of compensation
increase has not been included in computing the benefit obligations.
The expected long-term rate of return on plan assets is derived
proportionally from return assumptions determined for each of the major
asset classes. The return expectations for each of the asset classes are
based largely on assumptions about economic growth and inflation,
which are supported by long-term historical data. The estimated longterm rate of return is based on an asset allocation of equity securities of
26.0%, debt securities of 54.0%, life insurance company general accountsof 18.0%, and other short-term investments of 2.0%.
The plan investment strategy of certain subsidiaries of the Company
is to maintain actual asset weightings within a preset range of target
allocations. The plan investment strategy of certain subsidiaries of theCompany is broadly diversified, consisting primarily of equity and debt
securities. Certain subsidiaries of the Company believe these ranges
represent an appropriate risk profile for the planned benefit payments ofthe plans based on the timing of the estimated benefit payments.

INT EG R AT ED R EPORT 202 1

Equity securities:

Total

21
¥4,905Expected revaluation rate forcash balance plan

2019

Other short-term investments
Assets evaluated by net asset value per share (a)Millions of Yen

2020
Assets evaluated by other than net asset value per share

Level 3Total

Equity securities:
Japanese companies
Foreign companies¥9,707¥ 9,70743

43

Debt securities:
Foreign government bonds

216

Life insurance company general accounts

216¥3,773

3,773

2,209

2,209

Other types of investments:
Other short-term investments
Assets evaluated by net asset value per share (a)Equity securities:
Pooled funds (b)5,227Debt securities:
Pooled funds (c)8,145Other types of investments:
Hedge funds (d)3,634Pooled funds (e)
Total

7,510
¥9,966¥5,982¥40,464(a) Certain assets evaluated by net asset value per share (or its equivalent) are not categorized in the fair value hierarchy. Total amounts in the above table are presented to reconcile the amounts in the fairvalue hierarchy to the amounts stated on the consolidated balance sheets.
(b) This class includes common stock of approximately 51% Japanese companies and 49% foreign companies as of March 31, 2021 and 52% and 48%, respectively, as of March 31, 2020.
(c) This class includes approximately 89% of foreign government bonds and 11% of corporate bonds investments as of March 31, 2021 and 83% and 17%, respectively, as of March 31, 2020.
(d) This class consists of hedge funds that invest in both securities and equity securities as of March 31, 2021 and 2020.
(e) This class includes approximately 22% corporate bonds, 1% common stock of Japanese companies, 24% common stock of foreign companies, 32% real estate and 21% other short-term investments
as of March 31, 2021. This class includes approximately 20% corporate bonds, 0% common stock of Japanese companies, 29% common stock of foreign companies, 17% real estate and 34% othershort-term investments as of March 31, 2020.

I N TEG RATE D RE P O RT 2021

103

FACTS

FACTS

Equity securities and debt securities presented in Level 1 are primarily
valued using a market approach based on the quoted market prices
of identical instruments. Life insurance company general accounts
categorized in Level 2 include contracts with insurance companies withguaranteed rates of return and capital, and those values are based on thesum of principal amount and return. Pooled funds are valued using the
net asset, value per share provided by the administrator of the fund.
The funding policy for the funded plans of certain subsidiaries of
the Company is to contribute amounts computed in accordance withactuarial methods accepted by Japanese tax law. Certain subsidiariesof the Company expect to contribute ¥571 million to their plans in thefiscal year ending March 31, 2022.
The following benefit payments, which reflect expected futureservices, are expected to be paid:
Years Ending March 31

Millions of Yen

2022¥ 2,194

2023

2,404

2024

2,129

2025

2,184

2026

2,198

Thereafter

10,764

Defined Contribution Plan—Certain subsidiaries of the Company havedefined contribution plans. The amounts of cost recognized for theircontributions to the plan were ¥327 million, ¥407 million and ¥394 million
for the years ended March 31, 2021, 2020 and 2019, respectively.
Termination Plan for Directors—The Company previously had, andcertain subsidiaries of the Company currently have, termination plansfor directors. Payment of termination benefits to directors is made in alump sum upon termination and requires the approval of the shareholders
before payment. In June 2005, the Company rescinded its termination
plan for directors upon the approval of its shareholders. The amount ofbenefits for each individual was fixed as of June 29, 2005 and will remainfrozen until the retirement of each respective director. Outstanding
liabilities of ¥346 million and ¥344 million as of March 31, 2021 and2020, respectively, were recorded in other long-term liabilities. A certain
subsidiary has plans for its directors and recorded a liability for termination benefits for directors at the amount that would be needed if all
directors were to resign at each balance sheet date in accordance withthe guidance for determination of vested benefit obligations for a defined
benefit pension plan.

13. COMMITMENT AND CONTINGENT LIABILITIES 
The Company entered into a construction supervision and construction
contract in the amount of ¥4,290 million, in connection with a new logistics
center that will be built next to the Moriyama Distribution Center inMoriyama, Shiga on March 16, 2020.
The Company had contractual obligations of ¥3,390 million as of March
31, 2021.

Future payments of contractual obligations as of March 31, 2021 wereas follows:
Years Ending March 31

Millions of Yen

2022

190

Total

¥3,390The fair value of the options is estimated by using the Black-Scholes
option-pricing model with the following assumptions.
Expected dividend yield is based on the actual payout of dividends inthe last fiscal year and the closing price of the Company’s common stockon the grant date. Expected volatility is based on the historical volatility of
the Company’s share price over the most recent period commensuratewith the expected term of the Company’s stock options. The risk-freeinterest rate is based on the Japanese government bond yield curve in
effect at the time of grant for a period commensurate with the expected
term of the Company’s share options. The expected term of options
granted is based on the average remaining service period of directors,
assuming that those who are granted options will render service until thestated retirement and they will exercise options immediately after theirretirement.

2021

2020

2019

Expected dividend yield

3.0%

2.6%

2.2%

Expected volatility

23.6%

25.0%

24.6%

Risk-free interest rate(0.2)%

Expected term

10 4

3.6 years

INT EG R AT ED R EPORT 202 1

Yen

Years
Weighted-Average
Remaining
Contractual Term

Millions of Yen

Shares

Weighted-Average
Exercise Price

Outstanding as of April 1, 2020

255,900¥1

Granted

35,700

1

Exercised

18,5001

Outstanding as of March 31, 2021

273,100

1

13.61 years¥670

Exercisable as of March 31, 2021

18,30012.84 years

45

Yen

Years
Weighted-Average
Remaining
Contractual Term

Aggregate
Intrinsic Value

Millions of Yen

Shares

Weighted-Average
Exercise Price

Outstanding as of April 1, 2019249,900¥1

Granted

28,500

1

Exercised

22,5001

Outstanding as of March 31, 2020

255,900

1

12.95 years¥600

Exercisable as of March 31, 2020

36,8001

3.23 years

86

The total intrinsic value of options exercised was ¥41 million, ¥62 millionand ¥33 million as of the years ended March 31, 2021, 2020 and 2019,respectively.
The total compensation costs recognized for the years ended March
31, 2021, 2020 and 2019 were ¥63 million, ¥71 million and ¥62 million,
respectively. The total recognized tax benefits related thereto for theyears ended March 31, 2021, 2020 and 2019 were ¥19 million, ¥22 millionand ¥19 million, respectively.

Aggregate
Intrinsic Value

The weighted-average grant date fair values of options granted for theyears ended March 31, 2021, 2020 and 2019 were ¥1,768, ¥2,516 and¥3,005, respectively.
As of March 31, 2021, there was ¥11 million in total unrecognizedcompensation cost related to nonvested share-based compensation
arrangements granted under the plan. That cost is expected to berecognized over three months.

¥3,2002023

14. SHARE-BASED COMPENSATION The Company adopted an annual stock option plan in the fiscal year ended
March 31, 2009. Under the stock option plan, the Company granted sharesof its common stock to directors of the Company, excluding outside
directors and directors of the Company’s wholly-owned subsidiary,
Wacoal Corp., in the fiscal years ended March 31, 2021, 2020 and 2019.
The Company believes that such awards better align the interests of its
directors with those of its shareholders by sharing both risk and returnfrom fluctuations in stock prices and giving motivation to enhance
corporate value. Each stock option is exercisable to acquire 100 shares of
the Company’s common stock at ¥1 per share (for stock option granted
prior to September 1, 2017, it is exercisable to acquire 500 shares of theCompany’s common stock). The compensation cost is measured at fairvalue on the grant date. Options vest over one year in proportion to theservices rendered by the directors, and are exercisable from the day after
the date of retirement up to (i) 20 years from the grant date or (ii) 5 years
from the day after the date of retirement, whichever is earlier.

A summary of stock option activities under the plan for the years ended March 31, 2021 and 2020 was as follows:(0.2)%(0.1)%

4.0 years

3.7 years

15. EQUITY 
Japanese companies are subject to the Companies Act of Japan (the“Companies Act”). The significant provisions in the Companies Act that
affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time
during the fiscal year in addition to the year-end dividend upon resolution
at the shareholders’ meeting. Additionally, for companies that meet certain
criteria including (1) having a Board of Directors, (2) having independent
auditors, (3) having an Audit and Supervisory Board, and (4) the term ofservice of the directors being prescribed as one year rather than thenormal two-year term by its articles of incorporation, the Board of Directors
may declare dividends (except for dividends-in-kind) at any time during the
fiscal year if the company has prescribed so in its articles of incorporation.
The Company meets all the above criteria and, accordingly, the Board of
Directors may declare dividends (except for dividends-in-kind) at any time
during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind(noncash assets) to shareholders subject to a certain limitation andadditional requirements.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of thecompanies so stipulate. The Companies Act provides certain limitations
on the amounts available for dividends or the purchase of treasury stock.

The limitation is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
(b) Increases/Decreases and Transfer of Common Stock,
Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends
must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus),depending on the equity account charged upon the payment of such
dividends, until the total of the aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock. Under theCompanies Act, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in capital, othercapital surplus and retained earnings can be transferred among theaccounts under certain conditions upon resolution of the shareholders.
(c) Treasury Stock
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders, which is determinedby a specific formula.

I N TEG RATE D RE P O RT 2021

105

FACTS

FACTS

16. OTHER COMPREHENSIVE (LOSS) INCOME 

17. INCOME TAXES 

Changes in the components of accumulated other comprehensive income, including amounts attributable to noncontrolling interests, were as follows:

The Companies are subject to a number of different taxes based on income. The effective income tax rates differed from the normal effective statutory
tax rates for the following reasons for the years ended March 31, 2021, 2020 and 2019:

Millions of Yen

2021

Balance at the beginning of the year (after-tax)

2020

Foreign
Currency
Translation
Adjustments

Unrealized Gainon Securities¥(1,033)¥

Pension Liability
Adjustments

Foreign
Currency
Translation
Adjustments

Unrealized Gainon Securities¥(4,594)¥ 1,551¥

2021

Normal Japanese effective statutory tax rates
Pension Liability
Adjustments¥(5,679)Cumulative effects (net of tax) of the adoption of
ASU No. 2016-01 and 2018-03
Amount arising during the year:
Pre-tax amount

2,685

4,067

(2,529)265

Tax credit(37)(1,229)

(3)

(140)

Net amount

2,648

2,838

(2,532)125

Reclassification adjustments:
Pre-tax amount(1,056)

1,357

Tax credit

(303)

(397)

Net amount

753

960

Other comprehensive loss (income) attributable
to noncontrolling interests (after-tax)
Balance at the end of the year (after-tax)

155¥1,770

¥

(5)

(52)

¥(1,008)¥(1,033)

Balance at the beginning of the year (after-tax)

Pension Liability
Adjustments¥2,274¥ 27,424¥(1,101)Cumulative effects (net of tax) of the adoption of
ASU No. 2016-01 and 2018-03

2.4

7.3

22.9

Change in valuation allowance

(1.8)

10.3

25.5

Undistributed earnings of associated companies

(0.2)

2.3

3.9

Differences in foreign subsidiaries’ tax rate

0.1

(7.2)

(27.3)Tax exemption

(0.7)

(2.0)

(2.9)

Unrecognized tax benefits

(0.6)

(1.0)

1.4

Impairment losses on goodwill

7.4

1.3

60.1

Changes in Japanese income tax rates

(0.2)

(0.1)

(0.4)

Other – net

0.8

(8.2)

1.2

Effective tax rates

37.8%

33.3%

115.0%

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances as of March 31, 2021 and 2020 wereas follows:¥¥(4,594)

Millions of Yen

2021
Deferred Tax
AssetsRefund liabilities(27,320)
(795)

(10)

(6,866)

Tax credit

45

3

2,079

Net amount

(750)

(7)

(4,787)

(140)

202

43

(2)

(97)

200

Reclassification adjustments:
Pre-tax amountTax credit
Net amountOther comprehensive loss (income) attributable
to noncontrolling interests (after-tax)
Balance at the end of the year (after-tax)¥
27¥1,551

9¥¥(5,679)

Reclassification adjustments (pre-tax) of unrealized gain or loss on securities are included in “Gain (loss) on sales, exchange and valuation of marketablesecurities and investments – net” in the consolidated statements of income.
Reclassification adjustments (pre-tax) of pension liability adjustments are included in “Other – net” in the consolidated statements of income as thenet periodic benefit costs.

598

Deferred Tax
Assets¥Deferred Tax
Liabilities

734
15

Accruals not currently deductible

167

205

Inventory valuation

1,176

1,089

Accrued bonuses

790

882
¥ 1,842¥ 1,839

Undistributed earnings of associated companies

2,496

2,485

Net unrealized gain on marketable securities and investments

8,841

5,848

Net realized gain on exchange of investments
Capitalized supplies

416

416

94

137

Enterprise taxes

62

352

Accrued vacation

774

Operating leases right-of-use assets
4,159

Asset retirement obligation

257

Prepaid pension expense
Liability for termination and retirement benefit

250

646

720
611

184

Property, plant and equipment

1,517

Tax loss carryforwards

3,025

Intangible assets

Total

3,580
3,616

2,140

Return assets

Other temporary differences

741
4,069

Operating lease liabilities

Valuation allowance

INT EG R AT ED R EPORT 202 1

Deferred Tax
Liabilities

26

Total

10 6

¥

2020

Allowance for doubtful receivables

Advanced depreciation on property, plant and equipment

Amount arising during the year:
Pre-tax amount

30.6%

Permanently nondeductible expenses

Millions of Yen

Unrealized Gainon Securities

2019

30.6%

Increase (decrease) in taxes resulting from:2019
Foreign
Currency
Translation
Adjustments

2020

30.6%

266
1,591
2,388

1,213

1,151

677

463

36

277

13,96821,664

12,647

16,582¥21,664¥ 9,789(2,947)¥11,021I N TEG RATE D RE P O RT 2021

(2,858)¥16,582

1 07

FACTSFACTS

The valuation allowance decreased by ¥89 million and decreased by¥681 million for the years ended March 31, 2021 and 2020, respectively.
The Companies also utilized ¥413 million and ¥245 million of tax loss
carryforwards, and recognized tax benefits of ¥77 million and ¥29 million
for the years ended March 31, 2021 and 2020, respectively.
As of March 31, 2021, certain subsidiaries had tax loss carryforwards
which are available to offset future taxable income of such subsidiaries
and expire as follows:
Years Ending March 31

Millions of Yen

2022

¥396

2023

526

2024

355

2025

709

2026

1,417

2027

570

2028

155

2029

1,005

2030

888

2031

1,029

Thereafter

3,260

Total

¥10,310

There was no portion of undistributed earnings of foreign subsidiaries
and foreign corporate joint ventures which was deemed to be permanently reinvested as of March 31, 2021 and 2020.

A reconciliation of beginning and ending amounts of unrecognized tax
benefits is as follows:
Millions of Yen

2021

2020

2019

Balance at the beginningof the year

¥2

¥ 101

Additions based on tax
positions related to thecurrent year

1

1Additions based on tax
positions related tothe previous years

5
60

10 8

Corp. per share was 62,406,826 shares, 63,989,561 shares and66,143,405 shares for the years ended March 31, 2021, 2020 and 2019,respectively. The weighted-average number of diluted common shares
outstanding used in the computations of diluted net income attributable
to Wacoal Holdings Corp. per share was 62,670,759 shares, 64,242,244
shares and 66,393,127 shares for the years ended March 31, 2021, 2020
and 2019, respectively.

20. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK 

(100)
¥3

¥

2

¥101

Fair Value of Financial Instruments
The carrying amounts and fair values of financial instruments as of March 31, 2021 and 2020 were as follows:
Millions of Yen

The total amount of unrecognized tax benefits that, if recognized, would
affect the effective tax rate is ¥3 million, ¥2 million and ¥101 million as ofMarch 31, 2021, 2020 and 2019, respectively.
The Companies recognize interest and penalties accrued related tounrecognized tax benefits in income taxes in the consolidated statements of income. Total amounts of interest and penalties recognized in
the consolidated statements of income for the years ended March 31,
2021, 2020 and 2019 were not material.
The Companies file income tax returns in Japan and various foreign
tax jurisdictions. In Japan, the Companies are no longer subject toregular income tax examinations by the tax authorities for years before
2017, with few exceptions. For other countries, the Companies are nolonger subject to regular income tax examinations by the tax authorities
for years before 2010, with few exceptions. For certain subsidiaries inJapan, the United States, and Asia, the transfer pricing examinations forthe fiscal years ended March 31, 2007, 2010 and 2016 were completed
respectively.

18. REVENUE 
The Companies focuses on sales of innerwear (women’s foundation
garments and lingerie, nightwear and children’s underwear), sportswear,
and other textile products and related products (“Products”), and ourcustomers include retail and wholesale distributors and consumers inJapan and overseas. See Note 23 for revenue information for eachsegment, by each product and service, and by geographic area.
Revenue from sales of our products is recognized when performanceobligations are satisfied, which is upon delivery of the products. We
invoice when we satisfy the performance obligation and receive cash
payment shortly thereafter.
The Companies’ revenue is recognized for transactions, net of any
trade discounts or rebates given. We generally provide a right of return toour customers. In order to estimate the transaction price, provision for
expected returns is deducted from revenue based on historical returns.
Contract liabilities from contracts with customers consists mainlyof customer loyalty points. Some of subsidiaries have customer loyalty
programs as part of the promotion and provide loyalty points to

Basic net income attributable to Wacoal Holdings Corp. per share has
been computed by dividing net income attributable to Wacoal Holdings
Corp. by the weighted-average number of common shares outstanding
during each year. Diluted net income attributable to Wacoal Holdings
Corp. per share assumes the dilution that would occur if share-based
options to issue common stock were exercised.
The weighted-average number of common shares outstanding used in
the computations of basic net income attributable to Wacoal Holdings

36

Reductions for tax positionsof previous years
Balance at the end of the year¥

19. EARNINGS PER SHARE 

customers when they purchase the products. The points provided tocustomers are identified as performance obligations, which are satisfied
when the points are redeemed for the products. The unredeemed points
as of the end of years are recorded as contract liabilities, which are
estimated based on actual redemption amounts from previous fiscal
year. Contract liability is included in other current liabilities, and the amountof contract liabilities as of March 31, 2021 and 2020 are as follows:
Millions of Yen

2021

Contract liabilities¥1,275

2020¥917

Revenue recognized for the years ended March 31, 2021 and 2020, which
had been included in the contract liabilities balance at beginning of year
were ¥661 million and ¥494 million.

INT EG R AT ED R EPORT 202 1

2021
Carrying Amount2020
Fair Value

Carrying Amount

Fair Value

Assets:Marketable securities¥

Investments
Total assets

253

¥

255

¥

656

¥

657

51,60351,60343,90443,908¥51,856¥51,858¥44,560¥44,565¥ 1,533¥ 1,532

¥

85

¥

85

¥ 1,533¥ 1,532

¥

85

¥

85

Liabilities:
Long-term debt including current portion
Total liabilities
The carrying amounts of all other financial instruments approximate theirestimated fair values because of the short maturity of those instruments.
For information about fair values of foreign exchange contracts andcurrency swaps, see Note 21.
Marketable Securities and Investments—The fair value of these held-tomaturity debt securities are based on Level 1 inputs. For all other investments included in marketable securities and investments, see Notes 3
and 21.
Long-Term Debt—The fair values for long-term debt are estimated bydiscounted cash flow analysis, using rates currently available for similartypes of borrowings with similar terms and remaining maturities. The
estimated fair value is based on Level 2 inputs.

Limitations—Fair value estimates are made at a specific point in time
based on relevant market information and information about the financial
instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be
determined with precision. Changes in assumptions could significantly
affect the estimates.
Concentration of Credit Risk—The Companies’ business consists primarily of sales of women’s intimate apparel to a large number of diverse
customers in the Japanese retail industry, which include well-establisheddepartment stores, general merchandise stores, and other general retailers and specialty stores.

21. FAIR VALUE MEASUREMENTS 
The guidance for fair value measurements defines fair value as the pricethat would be received to sell an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants at the measurement
date. The guidance establishes a three-level fair value hierarchy thatprioritizes the inputs used to measure fair value as follows:

Level 1—Inputs are quoted prices in active markets for identicalassets or liabilities.
Level 2—Inputs are quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted
prices that are observable, and inputs that are derived principallyfrom or corroborated by observable market data by correlation orother means.
Level 3—Inputs are unobservable.

I N TEG RATE D RE P O RT 2021

109

FACTS

FACTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and 2020 were as follows:

The tables below show the change in assets presented in Level 3 that are continuously assessed at fair value as of March 31, 2021 and 2020:
Millions of Yen

2021

Millions of Yen

2021
Assets:Level 1

Level 2

Level 3

Total

Investment

Contingent
Consideration¥2,561¥ 3,874(18)(1,061)

Balance at the beginning of the year

Marketable securities
Mutual funds

¥

31

¥

31

Investments:
Equity securities

48,920

Mutual funds¥2,59251,512

91

Total

91

49,011

2,592

51,603

Derivative instruments:
Foreign exchange contracts¥53

Total assets¥49,042¥53

53¥2,592¥51,687

Sell/payment
Purchase/assumed in acquisition
Total gains or losses for the period:(Loss) gain on sale, exchange and valuation of marketable securities and investments – net

49

Selling, general and administrative expenses

64

Foreign currency translation adjustments

24

Balance at the end of the year
Unrealized (loss) gain included in earnings for assets and liabilities still held as of March 31, 2021

¥2,592¥ 2,901

¥

¥

49

64

Millions of Yen

Liabilities:

2020

Derivative instruments:
Foreign exchange contracts

¥23

¥

23

Currency swap
Total
Contingent consideration
Total liabilities¥23¥2,901¥ 2,901¥2,901¥ 2,924
Millions of Yen

2020
Assets:Level 1

Level 2

Level 3

Total

Investments:
Equity securities¥40,920

Mutual funds¥2,561¥43,481

2,561

43,575

94

Total

94

41,014

Derivative instruments:
Foreign exchange contracts¥57

Total assets¥41,014¥57

57¥2,561¥43,632

Liabilities:

Investment

Balance at the beginning of the year

¥2,287Purchase/assumed in acquisition

276(Loss) gain on valuation of marketable securities and investments – net(2)

Selling, general and administrative expenses(304)

Foreign currency translation adjustments

6

Balance at the end of the year

¥2,561¥3,874Unrealized (loss) gain included in earnings for assets and liabilities still held as of March 31, 2020¥

¥ (304)Currency swap

72

72

96

96

Total
Contingent consideration
Total liabilities¥96

Investments presented in Level 1 are valued using unadjusted quoted
market prices in active markets with sufficient volume and frequency oftransactions. Bonds presented in Level 2 are valued by financial institutions using quoted market prices for identical instruments in markets
that are not active. Mutual funds presented in Level 2 are valued byfinancial institutions based on quoted prices in an inactive market for
identical instruments which are included in the mutual funds.
As discussed in Note 3, the Companies record impairment charges on
debt securities if a decline in fair value of debt securities is determined tobe other than temporary.
Foreign exchange contracts and currency swaps presented in Level 2
are valued by financial institutions based on market data in both active
and inactive markets.

¥

Millions of Yen

March 31, 2021

Fair Value

Valuation Technique¥2,901Monte Carlosimulation

24¥3,874

3,874¥3,874¥ 3,970

Equity securities in Level 3 are non-marketable equity securities andare valued by the comparable multiple valuation method using financial
indicators as inputs or other appropriate valuation methods. If unobservable inputs were changed to reflect reasonably possible alternative
assumptions, fair values would not change significantly. Contingent
consideration is valued by the Monte Carlo simulation using unobservable inputs. If discount rates or volatility fall, the debt will increase. Out of
the contingent consideration, ¥1,262 million in consideration that has
been fixed is included in the accounts payable on the consolidatedbalance sheet.

(2)

Information about valuation techniques and significant unobservable inputs used for Level 3 assets continuously measured at fair value for the years
ended March 31, 2021 and 2020 is as follows:

Contingent consideration¥24¥4,172

Total gains or losses for the period:

Derivative instruments:
Foreign exchange contracts

Contingent
Consideration

Principal
Unobservable Input

Range

Discount rate

4.5%

Volatility

20.0%
Millions of Yen

March 31, 2020
Contingent consideration

Fair Value

Valuation Technique¥3,874Monte Carlosimulation

Principal
Unobservable Input

Range

Discount rate

5.2%

Volatility

15.0%

Assets Measured at Fair Value on a Non-recurring Basis
Assets measured at fair value on a non-recurring basis as of March 31, 2021 and 2020 were as follows:
Millions of Yen

2021
Land

Level 1

Level 2

Buildings and structures

Level 3

Total

Impairment Losses

¥ 172

¥ 172

¥ (526)

38

38

(559)

9,398

9,398

(2,673)

Machinery and equipment(51)

Goodwill (Note 8)
Software (Note 8)(12)¥(3,821)
Millions of Yen

2020
Buildings and structures

Level 1

Level 2

Level 3

Total

Impairment Losses

¥109

¥109

¥ (162)

324

324

(607)

Trademarks (Note 8)

489

489

Software (Note 8)14

14

Machinery and equipment
Goodwill (Note 8)

(217)
(191)
(65)
¥(1,242)110

INT EG R AT ED R EPORT 202 1

I N TEG RATE D RE P O RT 2021

111

FACTSFACTS

As of the end of March 31, 2020, the carrying amount of A Tech’sbuildings, machinery and equipment, and software under the Wacoal
Business (Overseas) were written down to their fair values, resulting in
the recognition of an impairment charge of ¥162 million, ¥607 million,and ¥65 million, respectively. The impairment arose due to the revision of
the future business plan made in response to a decrease in sales. To
measure the fair values of A Tech’s reporting units, the Companies usedthe discounted cash flows method and incorporated relevant unobservable inputs, such as management’s assumptions about future cash flows
and an appropriately risk-adjusted discount rate, which reflected management’s estimate of assumptions that market participants would use
in pricing the asset in an arm’s length transaction as of the measurement
date. Future cash flows were based on management’s cash flow
projections for the future five years, and after five years, future cash
flows were estimated using a growth rate of 2.0%. Management’s cash
flow projections were developed using estimates for expected future
revenue growth rates, profit margins and working capital levels of thereporting units. The risk-adjusted discount rate represents the weightedaverage cost of capital (WACC).
As of the end of March 31, 2020, the carrying amount of G Tech’s
goodwill under the Wacoal Business (Overseas) was fully written off,
resulting in an impairment charge of ¥217 million. The impairment is dueto the revision of the future business plan made in response to a decrease in sales. To measure the fair values of G Tech’s reporting units,
the Companies used discounted cash flows method and incorporated
relevant unobservable inputs, such as management’s internal assumptions about future cash flows and appropriately risk-adjusted discountrates, which reflected management’s estimate of assumptions thatmarket participants would use in pricing the asset in an arm’s lengthtransaction as of the measurement date.
As of the end of March 31, 2020, Peach John’s trademarks with acarrying amount of ¥680 million were written down to their fair values of¥489 million, resulting in the recognition of an impairment charge of ¥191
million for the year ended March 31, 2020. The impairment is due to thedecline in their fair value, which was caused by a downturn in consumption due to general market conditions. To measure the fair value of the
trademarks, the Companies used the relief-from-royalty method andincorporated relevant unobservable inputs, such as management’s
assumptions about future cash flows, the rate of royalty, and an appropriately risk-adjusted discount rate, which reflected management’s estimate
of assumptions that market participants would use in pricing the asset inan arm’s length transaction as of the measurement date. Future cash
flows were based on management’s cash flow projections for the future
three years, and after three years, future cash flows were estimated using
a perpetuity growth rate from 0% to 3.0%. Management’s cash flow
projections were developed using estimates for expected future revenue
growth rates, profit margins and working capital levels of the reporting
units. The royalty rate used for the valuation was based on the actual
royalty ratio used in transactions. The risk-adjusted discount rate
represents a weighted-average cost of capital (WACC) adjusted for
inherent risk spread.
As of the end of March 31, 2021, the carrying amount of theCompany’s land, buildings and structures under the Wacoal Business

112(Domestic) were written down to their fair values, resulting in therecognition of an impairment charge of ¥526 million and ¥99 million,
respectively. This is due to the fact that, as a result of determining thenecessity of impairment of fixed assets due to a change in the purposeof ownership of some asset groups owned, it was determined that thefair value was lower than the carrying amount. To measure the fairvalues of the Company’s reporting units, the Company used appraisals
prepared by independent third party appraisers based on recent transactions involving sales of similar assets.
As of the end of March 31, 2021, the carrying amount of Wacoal
Corp.’s buildings and structures, machinery and equipment, subsidiaries’
buildings and structures, machinery and equipment under the Wacoal
Business (Domestic) were fully written off, resulting in an impairment
charge of ¥394 million, ¥29 million, ¥41 million and ¥21 million, respectively. The impairment is due to the decline in their fair value, which wascaused by a downturn in sales. To measure the fair values of Wacoal
Corp. and subsidiaries’ reporting units, the Companies used discounted
cash flows method and incorporated relevant unobservable inputs, suchas management’s internal assumptions about future cash flows andappropriately risk-adjusted discount rates, which reflected management’s
estimate of assumptions that market participants would use in pricing
the asset in an arm’s length transaction as of the measurement date.
As of the end of March 31, 2021, the carrying amount of WACOALEUROPE LTD.’s goodwill under the Wacoal Business (Overseas) was
written off, in light of the impact of COVID-19 and the customs clearance
expenses incurred in connection with Brexit in the United Kingdom, wereassessed the fair value of goodwill based on our outlook of ourbusiness, and recorded the impairment charges of ¥2,673 million.
To measure the fair values of WACOAL EUROPE LTD.’s reporting units,
the Companies used discounted cash flows method and incorporated
relevant unobservable inputs, such as management’s internal assumptions about future cash flows and appropriately risk-adjusted discountrates, which reflected management’s estimate of assumptions thatmarket participants would use in pricing the asset in an arm’s lengthtransaction as of the measurement date. Future cash flows were basedon the management’s cash flow projections for the future five years, andafter five years, future cash flows were estimated using the perpetuity
growth rate of 2.0%.
Valuation process:
The valuation process involved in Level 3 measurements for applicable
assets and liabilities is governed by the valuation policies and procedures, including evaluation method for fair value measurements, preapproved by the Companies. Based on the policies and procedures,
either personnel from the accounting division or personnel in charge ofvaluation determine the valuation model to be utilized to measure each
asset and liability at fair value. We engage independent external valuation
experts to assist us in the valuation process for certain assets over a
specific amount, and the results of their valuations are reviewed by the
responsible personnel. All of the valuations, including those performed by
the external experts, are reviewed and approved by management of theCompany before being recorded in the general ledger.

INT EG R AT ED R EPORT 202 1

Information about valuation techniques and significant unobservable inputs used for Level 3 assets measured at fair value on a nonrecurring basis forthe year ended March 31, 2020 is as follows:
March 31, 2020

Millions of Yen
Fair Value

Buildings and structures¥109

Machinery and equipment

324

Software14

Trademarks¥489

Valuation Technique

Expected present value
methodRelief-from-royalty method

Principal Unobservable Input

Range

Discount rate

10.0%

Short-term revenue growth rates (within five years)(31.1)% – 102.5%

Growth rate (over five years)

2.0%

Discount rate

10.3% – 13.9%

Royalty rate

3.0%

Short-term revenue growth rates (within three years)(14.8)% – 24.3%

Perpetuity growth rate (over three years)

0% – 3.0%

22. DERIVATIVE INSTRUMENTS 
Risk Management Policy—The Companies are exposed to the risk ofchanges in foreign currency exchange rates. Derivative instruments areused to manage such risk. Derivative instruments are used based on
Company policy and administrative provisions. There were no derivative
instruments used for the purpose of speculative trading. The Companies
consider the related credit risk to be low since these derivative instruments are provided by financial institutions with international credibility.
Foreign Exchange Risk—Assets and liabilities denominated in foreign
currencies, which are primarily related to international business, areexposed to the risk of changes in foreign currency exchange rates.

Foreign exchange contracts and currency swaps are used to mitigate
such risk.
Derivative Instruments Not Designated as a Hedge—Foreign exchange
contracts and currency swaps are classified as derivative instruments,
which are not designated as a hedge since these derivative instruments
do not qualify for hedge accounting. These derivative instruments areused to mitigate the risk of changes in foreign currency exchange rates,
and the changes in fair value of such derivative instruments are recordedin earnings immediately.

Notional contract amounts of derivative instruments that are not designated as hedges as of March 31, 2021 and 2020 were as follows:
Millions of Yen

2021

2020

Foreign currency exchange¥713¥2,786

Currency swaps

332

695

The amounts of derivative instruments at fair value in the consolidated balance sheets in consolidated balance sheets as of March 31, 2021 and 2020
were as follow:
Millions of Yen

2021

Balance Sheets Location

2020

Assets:Foreign currency exchange

Other current assets

¥53

¥57

Liabilities:
Foreign currency exchange

Other current liabilities

Currency swaps

Other current liabilities

¥24
¥23

72

The effect of derivative instruments in consolidated statements of income for the years ended March 31, 2021, 2020 and 2019 were as follow:
Millions of Yen
Statements of Income Location

2021

2020

2019

Foreign currency exchange

Other – net

¥61

¥ 57

¥45

Currency swaps

Other – net

20

(36)

(5)

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23. SEGMENT INFORMATION 

Millions of Yen

Operating Segment Information
The Companies have three reportable segments: “Wacoal Business(Domestic),” “Wacoal Business (Overseas),” and “Peach John,” Business
which are based on their locations and brands. These segments represent components of the Companies for which separate financial information is available and for which operating income (loss) is reviewed
regularly by the chief operating decision-maker in deciding how toallocate the Companies’ resources and in assessing their performance.
The accounting policies used for these reportable segments are thesame as those described in the summary of significant accounting
policies in Note 1.
Starting from the current consolidated first quarter, information on
Ai Co., Ltd., which was previously presented in our “Wacoal Business(Domestic)” segment and “Peach John Business” segment, is now
reflected and presented in our “Other” segment following review ofcertain management classification of performance within the
Companies. As a result of our assessment on quantitative criteria,“Peach John Business,” which had been previously presented in our“Other” segment, has satisfied the criteria and accordingly has beenpresented as a separate operating segment from the current consolidated second quarter. Part of sales of our Peach John brand products
sold in China, which were previously recorded under this “Wacoal
Business (Overseas)” segment, are now recorded under our “Peach John
Business” segment starting with the current fiscal year. The segment
information for the previous fiscal year has been prepared based on thesegments reported for the current fiscal year.
The “Wacoal Business (Domestic)” segment primarily produces andsells innerwear (consisting of foundation, lingerie, nightwear, and children’s
innerwear), outerwear, sportswear, and hosiery. The “Wacoal Business(Overseas)” segment produces and sells innerwear (consisting of foundation, lingerie, nightwear, and children’s innerwear), outerwear, sportswear,
and other textile-related products. The “Peach John Business” segment
produces and sells innerwear (consisting of foundation, lingerie, andnightwear), outerwear, and other textile-related products, which are soldunder the Peach John brand. The “Other” produces and sells innerwear(consisting of foundation, lingerie, nightwear, and children’s innerwear),outerwear, other textile-related products, and mannequins and also
engages in construction of stores and interior design.

Information about operating results and assets for each segment as of and for the years ended March 31, 2021, 2020 and 2019 is as follows:
Millions of Yen

2021
Net sales:
External customers

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John
Business

Other¥ 86,133¥41,355¥12,200¥12,516

Elimination

Consolidated¥152,204

Intersegment

754

8,769

219

3,827

¥(13,569)

Total

86,88750,124

12,41916,343(13,569)

152,204

Operating costs and expenses

81,461

48,086

10,491

16,901(13,569)

143,370

Depreciation and amortization

3,711

1,943

325

149

6,128

Impairment charges on property, plant and equipment

1,088

25

23

1,136

Operating costs and expenses:

Impairment charges on goodwill

2,673

Impairment charges on other intangible assets
Total
Operating income (loss)

2,673
12

12

86,26052,727

10,82817,073627(2,603)

1,591

(730)

(13,569)

153,319(1,115)

Total assets and capital expenditures:
Total assets
Capital expenditures

285,421

87,252

11,094

15,724

4,203

1,097

122

182

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)(76,730)

322,761
5,604
Millions of Yen

2020
Net sales:
External customers

Peach John
Business

Other

Elimination¥106,112¥49,808¥11,224¥19,616

Intersegment

1,107

10,570214

5,110¥(17,001)

Total

107,219

60,378

11,43824,726(17,001)

97,561

55,912

11,21525,170¥186,760

Depreciation and amortization

3,575

1,922

383

149

(17,001)

186,760
172,857
6,029

Impairment charges on property, plant and equipment

769

769

Impairment charges on goodwill

217

217

Impairment charges on other intangible assets

65

191

101,136

58,885

11,78925,319

6,083

1,493

(351)

(593)

Total
Operating income (loss)

256(17,001)

180,128
6,632

Total assets and capital expenditures:
Total assets
Capital expenditures

114

237,394

86,292

9,751

18,435

4,594

2,106

129

152

INT EG R AT ED R EPORT 202 1(74,184)

External customers

WacoalBusiness(Overseas)

Peach John
Business

Other

Elimination

277,688

Consolidated¥109,219¥52,048¥11,543¥21,391

Intersegment

1,170

10,121

268

5,363¥(16,922)¥194,201

Total

110,389

62,16911,811

26,754(16,922)

194,201

Operating costs and expenses

100,186

56,025

11,61526,937(16,922)

177,841

Depreciation and amortization

3,465

1,585

394

203

Operating costs and expenses:
5,647

Impairment charges on property, plant and equipment
Impairment charges on goodwill

4,325

Impairment charges on other intangible assets

1,314

195

Total
Operating income (loss)

4,325
1,509

103,651

57,61017,64827,335(16,922)

6,738

4,559

(5,837)(581)

249,574

78,912

8,038

18,876

3,373

1,837

494

79

189,322
4,879

Total assets and capital expenditures:
Total assets
Capital expenditures(73,633)

281,767
5,783

The sum of the operating (loss) income of the reportable segments agrees to the operating income on the consolidated statements of income. For areconciliation from operating (loss) income to income before income taxes and equity in net income of affiliated companies, see other income(expenses) on the consolidated statements of income.
The Companies account for intersegment sales and transfers at cost plus a markup. Operating (loss) income represents net sales less operating
costs and expenses.
Products and Services Information
Net sales information by product and service for the years ended March 31, 2021, 2020 and 2019 is as follows:
Millions of Yen

2021

2020

2019

¥122,776¥144,933¥146,525

6,522

7,459

8,296

749

1,014

1,213

130,047

153,406

156,034¥

8,836¥ 12,746¥ 14,733

918

1,563

1,881

Other textile goods and related products

5,354

7,545

9,428

Others

7,049

11,50012,125¥152,204¥186,760¥194,201

2021

2020

2019

Innerwear:
Foundation and lingerieNightwear
Children’s underwear
Subtotal
Outerwear/sportswear and others
Hosiery

Total

Geographic Information
Information by major geographic area as of and for the years ended March 31, 2021, 2020 and 2019 is as follows:

Consolidated

Operating costs and expenses:
Operating costs and expenses

2019
Net sales:

WacoalBusiness(Domestic)

Millions of Yen

Net sales:Japan¥109,464¥135,273¥140,189

Asia and Oceania

16,301

20,59622,509Americas and Europe

26,43930,891

31,503

Consolidated¥152,204¥186,760¥194,201

Long-lived assets:Japan¥ 41,198¥ 44,014¥ 45,257

Asia and Oceania

3,536

4,034

4,810

Americas and Europe

4,304

4,035

3,203

¥ 49,758¥ 52,083¥ 53,270

Consolidated

Countries or areas are classified according to their geographical proximity. Asia and Oceania includes East Asia, Southeast Asia, West Asia, and Australia.
Net sales are attributed to countries or areas based on the location where sold. Long-lived assets represent property, plant and equipment.

6,981

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Independent Auditors’ Report

24. SUBSEQUENT EVENTS (Dividend Declaration)
On May 14, 2021, the Board of Directors resolved to pay a cash dividend of ¥100 per 5 shares of common stock to holders of record as of March 31,
2021 (aggregate amount of ¥1,248 million).

Deloitte Touche Tohmatsu LCC
Shijokarasuma FT Square,
20 Naginataboko-cho,Karasuma-higashiiru, Shijo-doriShimogyo-ku, Kyoto 600-8008
Japan
Tel: +81 (75) 222 0181
Fax: +81 (75) 231 2703
www.deloitte.com/jp

To the Board of Directors of Wacoal Holdings Corp.:

OpinionWe have audited the consolidated financial statements of Wacoal Holdings Corp. and its consolidated subsidiaries (the “Group”), which
comprise the consolidated balance sheet as of March 31, 2021, and the consolidated statement of income, consolidated statement ofcomprehensive income, consolidated statement of equity and consolidated statement of cash flows for the year then ended, and notes tothe consolidated financial statements, including a summary of significant accounting policies, all expressed in Japanese yen.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Group as of March 31, 2021, and its consolidated financial performance and its consolidated cash flows for the year thenended in accordance with accounting principles generally accepted in the United States of America pursuant to the provisions of Article 95of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements.

Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made in accordance with the basis stated in Note 2 to the consolidated financial statements. Such U.S. dollar amounts are presented
solely for the convenience of readers outside Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards arefurther described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our otherethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.

Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the current period. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, andin forming our opinion thereon, and we do not provide a separate opinion on the matter.

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Valuation of goodwill arising from the acquisition of WACOAL EUROPE LTD.
How the Key Audit Matter Was
Addressed in the Audit

Key Audit Matter Description

As of March 31, 2021, the goodwill in the amount of ¥21,169 million We performed the following audit procedures on key assumptions
recorded on the consolidated balance sheet includes goodwill of
used by management included in the business plan:¥9,398 million, or 2.9% of total assets, arising from the acquisition of • We read a report related to impairment tests of goodwill prepared
WACOAL EUROPE LTD. Also, as described in Notes 8 and 21, theby management. We examined the consistency of assumptions
Group recognized ¥2,673 million of impairment charges on goodwill
with the business plan approved by management, and discussed
related to WACOAL EUROPE LTD. in the current fiscal year.
the business plan with management.
• We read the economic reports published by external organizations
Based on Accounting Standard Codification 350, “Intangibles—
regarding the estimation of the timing of recovery from COVID-19,
Goodwill and Other,” goodwill of a reporting unit shall be tested forand evaluated management’s assumptions about the timing of
impairment on an annual basis and between annual tests in certain
recovery and market trends.
circumstances. The Group used an expected present value method • We obtained an understanding on various measures to expand theto calculate fair value and performed an impairment test. Future
sales volume through discussions with management, comparedcash flows used to calculate fair value were based on a five-yearbusiness plans prepared in the prior periods with actual results inbusiness plan with the terminal value reflecting the average longthe corresponding periods, and evaluated the accuracy of manterm growth rate in the relevant market, including an assumption onagement’s estimation ability regarding the possibility of achieverecovery from the recession in business activities caused byment of expected sales volumes.
COVID-19. The plan was approved by management and includes• We compared the market growth rate in the regions where
significant assumptions such as the possibility of achievement of
WACOAL EUROPE LTD. operates with the forecasts based on data
expected sales volumes and market growth rate in the regions
from the retail industry published by external organizations, as wellwhere WACOAL EUROPE LTD. operates. These significant assumpas involved our specialist on valuation of corporate value.
tions involve high uncertainty, and the business plan based on theseassumptions involve significant judgment by management.
Based on the above, we identified the valuation of goodwill arisingfrom the acquisition of WACOAL EUROPE LTD. as a key audit matter.

Responsibilities of Management and Audit & Supervisory Board Members and the Audit & Supervisory Board for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in United States of America, and for such internal control as management determines is necessary toenable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in UnitedStates of America and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing the Directors’ execution of duties
relating to the design and operating effectiveness of the controls over the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high levelof assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.

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INT EG R AT ED R EPORT 202 1

As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks. The procedures selected depend on the auditor’s judgment. In addition, we obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures madeby management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause theGroup to cease to continue as a going concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordance with accounting
principles generally accepted in United States of America, as well as the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of thegroup audit. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with Audit & Supervisory Board members and the Audit & Supervisory Board, we determine those mattersthat were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.

Audit of Internal Control
OpinionPursuant to the second paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited management’s report oninternal control over financial reporting of Wacoal Holdings Corp. as of March 31, 2021.
In our opinion, management’s report on internal control over financial reporting referred to above, which represents that the internal control
over financial reporting of Wacoal Holdings Corp. as of March 31, 2021, is effectively maintained, presents fairly, in all material respects, theresults of the assessment of internal control over financial reporting in accordance with assessment standards for internal control overfinancial reporting generally accepted in Japan.

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Independent Auditors’ Report

Basis for Opinion

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan

We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting generally accepted inJapan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Internal Control Audit section of ourreport. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled ourother ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.

Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Responsibility of Management and Audit & Supervisory Board for Report on Internal Control

Notes to the Readers of Independent Auditor’s Report
This is an English translation of the independent auditor’s report as required by the Financial Instruments and Exchange Act of Japan for theconvenience of the reader.

Management is responsible for designing and operating effective internal control over financial reporting and for the preparation and fair presentation of its report on internal control in accordance with assessment standards for internal control over financial reporting generally accepted inJapan. Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing and verifying the design andoperating effectiveness of internal control over financial reporting. There is a possibility that misstatements may not be completely prevented or
detected by internal control over financial reporting.

Auditor’s Responsibilities for the Internal Control Audit

June 29, 2021

Our objectives are to obtain reasonable assurance about whether management’s report on internal control over financial reporting is free frommaterial misstatement and to issue an auditor’s report that includes our opinion.
As part of an audit in accordance with auditing standards for internal control over financial reporting generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Perform audit procedures to obtain audit evidence regarding the results of the assessment of internal control over financial reporting in management’s report on internal control. The procedures selected depend on the auditor’s judgment, including the significance of effects on reliability offinancial reporting.
• Examine representations on the scope, procedures and results of the assessment of internal control over financial reporting made by management, as well as evaluating the overall presentation of management’s report on internal control.
• Obtain sufficient appropriate audit evidence regarding the results of the assessment of internal control over financial reporting. We are responsible for the direction, supervision and performance of the internal control audit. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding, among other matters, the planned scope
and timing of the internal control audit, result of the internal control audit, including any identified material weakness which should be disclosed
and the result of remediation.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought tobear on our independence, and where applicable, related safeguards.

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Corporate Information

Investor Information

As of March 31, 2021

As of March 31, 2021

Company Name

Wacoal Holdings Corp.

Stock Listing

Tokyo Stock Exchange

Head Office

29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan

Fiscal Year-end

March 31Founding

June 15, 1946

Securities Code3591

Establishment

November 1, 1949

Fiscal Year

From April 1 to March 31

Capital¥13,260 million

Number of Shares Issued

65,589,042 (Treasury Stock: 3,168,353)

Representative Director,
Predident andCorporate Officer

Yoshikata Tsukamoto

Trading Unit

100 shares

Representative Director
and President

Hironobu Yasuhara

Shareholder Register Agentfor Common Stock

Mitsubishi UFJ Trust and Banking Corporation,
1-4-5, Marunouchi, Chiyoda-ku, Tokyo
100-8212, Japan

Line of Business

Wacoal’s mainstay business is the manufacture, wholesale, and direct sales to
consumers (for some products) of intimate apparel (mainly women’s foundation
garments, lingerie, nightwear, and children’s underwear), outerwear, sportswear,
and other textile products and accessories. In addition, Wacoal operates otherbusinesses related to food, culture, services, and interior furnishing of shops.

American Depositary
Receipts

Cusip No.: 930004205
Ratio (ADR:ORD): 1:5Market: OTCQX
Symbol: WACLY

Depositary

The Bank of New York Mellon, 101 Barclay Street, New York, NY 10286, U.S.A.
Tel: 1-212-815-8161
U.S. toll free: 888-269-2377 (888-BNY-ADRS)
https://www.adrbnymellon.com/

Number of Shareholders

17,868

Number of Employees(Excluding the average
number of part-time
employees)

19,824 (Consolidated)

Stock Price / Trading Volume
Stock Price (¥)
4,000

Ownership and Distribution of Shares

3,000

Securities firms
1.77%

2,000

Financial
institutions
46.01%

1,000

Name
Individuals and others
21.68%

0

Trading Volume (Thousand shares)

Other Japanesecompanies
16.96%

8,000

6,000

Foreign institutions
and individuals
13.57%

4,000

2,000

Major Shareholders
Number ofPercentage ofshares held
shares(Thousand shares) outstanding (%)

Custody Bank of Japan, Ltd. (Trust Account)

4,000

6.41

The Master Trust Bank of Japan, Ltd. (Trust Account)

3,938

6.31

MUFG Bank, Ltd.

3,095

4.96

Meiji Yasuda Life Insurance Company

3,050

4.89

The Bank of Kyoto, Ltd.

2,352

3.77

Nippon Life Insurance Company

1,836

2.94

The Shiga Bank, Ltd.

1,775

2.84

Mitsubishi UFJ Trust and Banking Corporation

1,525

2.44

The Dai-ichi Life Insurance Company, Ltd.

1,366

2.19

Asahi Kasei Corp.

1,241

1.99

Note: The percentages exclude treasury stock.
0
2010/4

2011/4

2012/42013/4

2014/4

2015/4

2016/42017/42018/4

2019/42020/42021/3

Note: As of October 1, 2017, Wacoal Holdings Corp. conducted a one-for-two ordinary share reverse stock split. The figures for the graph above have been calculated based on theassumption that the stock split was conducted in April 2010.

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