I N T E G R AT E D
R E P O R T 2 019

CONTENTS

WHO WE ARE

FOUNDATION

02 Group Philosophy

42	A Message from the Director of the Administrative
Department

04	Wacoal’s Competitive Advantages

44 Human Resources Management

and the Provision of Value

10 Value Creation Process

46 Sustainability

12 Material Issues in Wacoal’s Business Activities

50 Corporate Governance
55 A Message from an Outside Director

VISION

56 Management Team

14 A Message from the Chairman

FACTS

16 A Message from the President
58 Consolidated Financial Highlights

STRATEGY

60 Financial Highlights by Segment

24	A Review of the Previous Medium-Term

62 11-Year Financial Summary

26	New Medium-Term Management Plan

70 Consolidated Balance Sheets

61 Share of Sales by Channel (Principal Subsidiaries)

Management Plan (Fiscal 2017–Fiscal 2019)(Fiscal 2020–Fiscal 2022)

28 A Message from the Director in Charge of Finance
34 Business Goals and Measures

72	Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

73 Consolidated Statements of Equity

34	Sustain the Growth and Enhance the74 Consolidated Statements of Cash Flows

Profitability of Wacoal Corp.

36

64 Management’s Discussion and Analysis

75 Notes to Consolidated Financial Statements
104 Principal Subsidiaries

Special FeatureBuilding Deeper,
Broader, and Longer
Relationships with
Each Customer		

106 Corporate Information
107 Investor Information

38	Revitalize Domestic Consolidated Subsidiaries
40 Expand and Grow the Overseas Business

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CONTENTS

Our Corporate Website
Wacoal Holdings Corp.’s Website
https://www.wacoalholdings.jp/en

To Our Stakeholders

CSR

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

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

Corporate Strategy

CSR Objectives

Corporate GovernanceRelations with Stakeholders

Financial Results

CSR Procurement Based on Mutual Trust

Monthly Sales Data

and Cooperation

IR News

Basic Policies (ISO 26000)

IR Schedule
For Personal Investors

WACOAL HOLDINGS CORP.
INTEGRATED REPORT 2019

I N T E G R AT E D
R E P O R T 2 019

Editorial Policy
In accordance with international norms for integrated reporting, the Wacoal Group has
been issuing integrated reports since FY2011 as part of its communication withshareholders 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’sbusiness.
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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WHO WE AREGroup Philosophy

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 refined corporate 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

02

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WHO WE ARE

Founder Koichi Tsukamoto“Wacoal was not founded merely as a for-profit company.
With a strong desire to devote the life bestowed upon me to work for society, I decided tostart a business. Through various situations, I considered the implications of what it is tolive in and be a part of society, and I finally realized that a relationship of mutual trust is themost important element of society and that it is absolutely the best foundation to support
community life. That is why a relationship of mutual trust has been built and maintained
throughout the long history and tradition of our company.”“With a strong desire to devote the life bestowed upon me to work for society,” Koichi Tsukamoto founded Wacoal
based on the belief that “a peaceful society is one where women can express their beauty.”
Calling on us to contribute to society by helping women to express their beauty, our mission remains unchanged nomatter what the era and encapsulates both our existential value and starting point.
In realizing our mission, business management based on mutual trust is indispensable. Across the generations, wehave maintained our founder’s strong commitment to creating a company trusted by all stakeholders. Consequently,
each Wacoal employee has inherited a mind-set that emphasizes mutual trust.

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WHO WE ARE

Wacoal’s Competitive Advantages
and the Provision of Value
Advantages cultivated through the manufacture of products loved by customers

Research & Development

Product Planning

A scientific perspective
supporting beauty creation

A passion
for manufacturing• Abundant physique measurement data
• Accumulated knowledge of the Human Science
Research Center• Unique designing for optimal wearing comfort• A n i n t e g r a t e d m a n u f a c t u r i n g s y s t e m r e s p o n s i ve
to market feedback

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P. 0 704

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WHO WE ARE

With a view to helping women to express their beauty, we have devoted ourselves to developing and manufacturing productsthat appeal to the aesthetic of each age and that inspire long-term loyalty among customers. The provision of quality productsthat foster long-term customer loyalty no matter what the era is central to our mission and the value we provide. The systems
that create these quality products are Wacoal’s greatest competitive advantage. Over our history, such systems have become
assets embedded in our organization.
In this section, we introduce some of the organizational assets we have established by systemizing our advantages.

Manufacturing / Quality Control

Sales

The provision ofreliability and safety

Closenessto each customer• Advanced sewing skills• A unique quality control system• Systemized sales training

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P. 0 9• Powerful brands

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WHO WE ARE

Research & Development
The findings of the Human Science Research Center form the basis of our creation of beauty. To realize products loved bycustomers, the center researches and formulates theories on beauty, comfort, and health in relation to women’s physiques.
The data that the center has accumulated over 55 years underpins our businesses. Wacoal leverages the data not only to develop
new products but also to maintain quality and make forays into new business fields.

A scientific perspective
supporting beauty creation• Abundant physique measurement data
• Accumulated knowledge of the Human Science
Research Center

Number of people from whom we havegathered physique measurement data

Approx.

45,000

Number of people from whom wegather physique measurement data on
a continuous basis (every five years)

Approx.

1,000

Number of coordinate values measured
by our 3D measuring equipment

Approx.

The Main Activities of the Human
Science Research Center
1. Physique research
Shape research
Movement research

Every year, the Human Science Research Center takes the measurements of about 1,000 people. Moreover, some of these subjects
conclude monitor contracts for product development cooperation.
Monitors participate in trial fittings and other product evaluation
activities as required.

Sensation physiology research

2. Product evaluation researchApparel pressure balanceevaluation
Figure enhancement evaluation
Muscle fatigue evaluation

3. New product development
Innerwear with new functionality
Sportswear
Footwear, etc.

06

40,000

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WHO WE ARE

Product PlanningWith the aim of helping women to express their beauty while catering to their current needs, more than 200 Wacoal innerwear
designers use creativity and physique measurement data to realize products that afford wearers physical and emotional comfort.
By repeatedly cycling through a process of fittings, analysis, and improvements, we realize optimal wearing comfort andfigure enhancement.

Brassiere planning process

Design concept

Material development and selection

Prototype
Material management(material development),
product testing center

Product composition andsize analysis(mass production analysis)

Technology design(mass production assurance)

Proposal preparation and material
pattern recipe preparation

Size grading

PrototypeTechnology-designing
factory

Fitting

A passion for
manufacturing• U n i q u e d e s i g n i n g fo r
optimal wearing comfort• A n i n t e g r at e d m a nu f a c t u r i n g s y s t e m
responsive to market feedback

To production factory

There is no dedicated institution for training innerwear designers.
For this reason, Wacoal develops and hones the skills of designers
in-house. Our investment in fostering personnel able to create
products loved by customers is a source of differentiation andcompetitive superiority.

Total number of fittings*1

900*1 Fittings at the basic analysis and mass
production analysis stages for Wacoal
brand products in each season

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Total number ofprototype analyses*2

Approx.

1,500*2 Basic analyses and mass
production analyses for
Wacoal brand products ineach season

07

WHO WE ARE

Manufacturing / Quality Control
For Wacoal, “product quality preservation” is part of the value that it provides and a significant social responsibility.
The quality of our products is supported by the handwork of highly skilled sewing personnel with years of experience anda quality control system that sets and ensures the implementation of stringent, painstaking standards for all processes,
from material procurement through to production.

The provision ofreliability and safety• Advanced sewing skills• A unique quality control system

Number of items checked in basic quality
testing

To ensure that we provide customers with safe,
quality products, we have prepared original guidelines and rules for specific types of products andmaterials. As well as checking the durability of
products, we test their individual components.

150 for each product variety
Number of types of stipulations andguidelines on the functional quality ofmaterials and products

21

Total number of meetings of the Quality
Assurance Inquiry Committee and the
Quality Control Committee per year

Approx.

100

Brassiere production process

Procuringrawmaterial

Stretching

Cutting

SewingInspecting

Shipping

For factory environments and all processes through to shipping, we haveestablished requirements for checking
frequencies and methods and set standards for quality control.

08

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WHO WE ARE

Sales
Beauty advisors play an important role in ensuring that customers receive the best-fitting products.
By using specialized knowledge and skills to help accentuate the beauty of each person, we build relationships with customers
that are deeper, broader, and longer.

Number of beauty advisors*

Approx.

3,500(Approx. 8,000 worldwide)

Store sales per beauty advisor (annual)*
Department stores

Approx. ¥26 million

General merchandise stores

Approx. ¥23 million

Number of inquiries received by the
Customer Service Center (annual)*Approx.

34,000* Coverage: Wacoal Corp.

Closeness to each customer• Systemized sales training• Powerful brands

Through such training programs as our original measurement and fitting technique examination and the
Nihon Body Fashion (NBF) Association standardized
examination, beauty advisors acquire skills thatheighten levels of customer satisfaction and learn about
the spirit of hospitality. During their day-to-day work,
our beauty advisors further develop these skills.

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WHO WE ARE

Value Creation Process

The most significant value that we provide is through the continued creation of products loved by customers and new products that meet current needs. Worldwide, Wacoal creates offerings with the aim of helping women to express their beauty.
To this end, we will maximize and optimize the various assets that we have developed, including financial, physical, trustrelated,* and organizational assets. By moving forward purposefully with medium- to long-term strategies, we will addressmaterial issues and further enhance enterprise value.
* 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 not dependent upon such relationships as employment or business transactions.

Six material issues in business activities

P.12

1. Contribute to society by helping women to express their beauty

2. Provide safe, dependable, high-quality products
and services

3. Create a businessorganization and culturethat are fair and in whichpeople are ambitious andenjoy their work

4. Ensure breast care
support for womenaround the world

5. Build CSR procurement
partnerships founded on
mutual trust andcooperation

Assets and competitive advantages developed

Further diversification of values

Customer feedback

Physical Assets

P.04

Financial Assets

Group factories in Japan and overseas

Abundant capital ppealing sales areas and a rich productAlineupStrong financial foundations
Tangible Assets

Trust-related Assets

Organizational Assets

 xtensive and diverse groups ofE
specialists
 rusted brands and relationships withT
customers

 bundant physique measurement dataAand accumulated knowledge of the
Human Science Research Center

Social contribution through businesses

 riginal design and manufacturingO
technologies and quality control system

Favorable business partnerships

The beauty advisor training system

Group Philosophy

Our Mission

P.02

Our Vision
Business management based on mutual trust
Helping women to express their beauty

10

6. Continue the enhancement of corporate
governance

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Our Value

Intangible Assets

WHO WE ARE

Business strategies
Implement the medium-term
management plan ake maximum advantage ofTmanagement resources
Deploy capital optimally
P.28

Focus areas in thecreation of added value

Value provided
by Wacoal

Beauty, comfort, healthResearch &Development
Customer
Service
CenterDesigner /Pattern
Maker
Research&
Development

Sales
Personnel

Merchandiser
Product
Planning

Sales

MarketingCommunications

Manufacturing

Distribution

Procure‑mentTechnology
Quality
Control

Products loved bycustomers
New products meetingcurrent needs

Factory

ESG activities
Toward sustainable development
 oward a society that leveragesTdiversity oward highly transparent
Torganizational systems
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11

WHO WE ARE

Material Issues in Wacoal’s Business Activities

Since its founding, Wacoal has emphasized business management based on mutual trust. Describing the type of relationshipthat we want to have with all stakeholders and society, mutual trust is at the core of our vision and business activities. For
Wacoal, in other words, sound business activities are inseparable from earning the trust and meeting the expectations ofsociety and are the starting point of the Company. Through concerted Groupwide efforts to address six material issues andbuild mutual trust with society, we will enhance enterprise value and contribute to the development of society as a whole.

Material issues

Principal measures

Advance the use ofinnovative technology torealize sustainability

2

Provide safe,
dependable,­high-quality­products andservices

1

Contribute tos­ ociety by helping
women to express
their beauty

4

Ensure breast care
support for womenaround the world
5

Build CSR procurement partnerships
founded on mutual
trust andcooperation

6

Continue theenhancement ofcorporate
governance

12

P.36~

Create innovative products • D eveloping brassieres that are both comfortable and figure enhancingthat solve customer issues • S trengthening the entry-level (teenage) customer groupand heighten levels of•S trengthening the rollout of products that cater to a variety of physiques
customer satisfaction—

Establish capabilities forthe supply of competitive
products and materials• Establishing bases for the supply of bonded whole-garment products• Reorganizing the underperforming divisions of raw materials factories
in Thailand—

Respond to changing
distribution channels• Developing e-commerce channels actively in respective countries• Improving the profitability of the domestic retail business—

Advance quality assurance • Conducting liaison meetings in relation to quality standards, data management,
efforts continuously
and other topics with the aim of enhancing quality control capabilities(providing unbiased
information based on facts)—

Reduce the environmental
burden of businessactivities•R educing greenhouse gas emissions•C onducting the Brassiere Recycling Campaign

P.49

Develop information
security systems further• Conducting an educational program on targeted e-mail attacks

Advance personnel
management• Developing an overseas training program with the aim of cultivating globallycompetent personnel• Advancing a system that encourages employees to submit proposals andinviting external instructors to conduct seminars on ideas and theirimplementation

Enhance productivity
through work-style reform•D eveloping employee-friendly environments through the reform of work styles
and methods of taking leave (telecommuting, leave systems, etc.)

3Create a businessorganization andculture that are fairand in which people
are ambitious andenjoy their work

Progress• Building a customer information database• Introducing 3D body scanners and AI-enabled customer services in stores

—

P.44~

Promote the empowerment • Acquiring certification as a special subsidiary for WACOAL I NEXT CORP., which wasof women and enableestablished with the aim of promoting the employment of persons with disabilities
various work styles
and creating opportunities for them to make important contributions
Promote health andproductivity management• Advancing Wacoal GENKI Project 2020 (receiving selection as a Health &Productivity Stock for four consecutive years)

Promote breast care
activities at operatingbases worldwide• Providing donations matching the number of products tried on by customers aspart of activities supporting the early detection of breast cancer• Developing the Breast Cancer Examination Support Project and the Remamma
Project

P.46~
Collaborate with NPOs and • S upporting the training of Pink Ribbon advisors
NGOs to contribute to the•H elping increase the percentage of women receiving screening for breast cancer
development of social
in Kyoto, Wacoal’s local area
infrastructure andcommunities
Develop CSR procurement
capabilities and systems• Establishing the CSR Procurement Committee under the Corporate Ethics andRisk Management Committee

Develop supply chain
management•A nalyzing the self-evaluations of contract manufacturers, providing feedback torespective companies, and submitting revision and improvement plans
P.48~•C onducting on-site audits

Disclose a list of contract
manufacturers• Disclosing the contract manufacturers of Wacoal Corp., Peach John Co., Ltd.,and Lecien Corporation

Improve profitability andenhance capital efficiency• Improving the operational efficiency and profitability of the domestic wholesale
business and retail business of Wacoal Corp.

Continue to develop
corporate governance(including risk management and compliancesystems)•D iscontinuing defensive measures against takeovers•D eveloping governance systems pursuant to corporate governance guidelines•C onducting training with the aim of ensuring Companywide complianceawareness

Ensure the Board of
Directors and the Audit &Supervisory Board arehighly effective• Continuing to conduct effectiveness evaluations and taking improvement
measures

Promote disclosure andcommunication• Holding proactive dialogues that include executives• Reporting to in-house divisions on opinions and requests received throughdialogue with shareholders and other investors

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WHO WE ARE

Six Material Issues	With a view to developing with society and helping it become sustainable, Wacoal has identified six material issues that are
particularly relevant to its businesses. (For details on the processes through which, as well as the basis upon which, we selectedmaterial issues, please see Integrated Report 2018.)
Target Profile

Sustainable Development
1

A Society That Values Diversity

2

3

4

Measures going forward• Build and strengthen digital marketing on a global basis• Accelerate the introduction of 3D body scanners and AI-enabled customer-consultation services in stores• Develop new products based on accumulated personal data
• Introduce high-value-added products that transcend boundaries between Japan and other countries

Highly Transparent
Organizational Structures
5

6

Value for stakeholders

Impact on the Wacoal Group roviding products andP
services that meet the diverse
needs and values ofcustomers
Building relationships between
customers and Wacoal thatare deeper, broader, and longer

 cquiring opportunities toAcreate new businesses andopportunities to generate
profitRealizing sustained growththrough the expansion andimprovement of the businessportfolio
Enhancing work efficiency
through the utilization of IT
Strengthening brand power trengthening the foundations
Sof mutual trust with customers
and all other stakeholders

 nhancing businessEfoundations
Strengthening the relationshipof mutual trust with societyReducing environmental
burden and avoiding environmental risk

 roviding environments inP
which diverse personnel canwork with vitality and realize
their talents

 nhancing corporate competiEtiveness through the empowerment of diverse personnel
Maintaining sound labor–
management relations
Enhancing labor productivity
Enhancing employees’
work–life balance reating a society in whichCpeople do not lose theirhappiness and aspirations as aresult of breast cancerIncreasing trust-related assets(customer assets)

 voiding or mitigating theAnegative effects of businessactivities through collaboration
with business partners andsuppliers
Providing sustainable products, including sustainableproduction processes ealizing mutual development
R
with business partners andsuppliers
Maintaining and guaranteeing
the reliability of products

 trengthening the foundations
Sof mutual trust with customers
and all other stakeholders
Optimizing the distribution ofvalue to all stakeholders

 ealizing business manageR
ment based on mutual trust
Acquiring growth opportunities
and reducing business risks
Reducing equity cost
Receiving appropriate evaluations from the market• Strengthen the Group’s production plans and management systems• Establish a material managers’ global meeting tasked with promoting the introduction of common materials• Collaborate with major e-commerce websites depending on the characteristics of countries and regions orstrengthen in-house e-commerce websites• Conduct growth investment and develop business foundations with the aim of strengthening small-scale
operations in certain countries and regions• Review the in-house system for the examination of labeling expressions with a view to eliminating serious
quality problems• Enhance compliance awareness in relation to advertising and communication expressions• Take steps to eliminate plastic from packaging• Reduce the disposal of unsold products• Advance data security and privacy protection further• Introduce a new personnel training system with an emphasis on specialization, global viewpoints, andcontinuous career growth• Rebuild personnel recruitment methods (analyzing and implementing mid-career hiring and year-round hiring)• Advance manpower management to enhance productivity• Extend the scope of the shorter working hours system for employees raising children (from April 2019, enable
the extension of the system until the end of the third grade of elementary school, subject to certain
conditions)• Promote health literacy and encourage healthy habits among all employees• Consider new breast care activities• Collaborate with NPOs and NGOs to support cancer education for elementary and junior high school students• Educate and heighten the awareness of procurement managers and suppliers• Continue to conduct on-site audits• Extend the coverage of CSR-focused procurement activities• Disclose the contract manufacturers of Ai Co., Ltd.
• Enhance profitability through business activities and reduce working capital (reform the businesses ofdomestic subsidiaries and other underperforming areas)• Reduce strategic shareholdings• Develop compensation systems that increase the effectiveness of plans and develop succession plans
further• Prepare business continuity plans• Ensure awareness of compliance and understanding of the management philosophy at subsidiaries in Japanand overseas• Continue to conduct effectiveness evaluations and improve evaluation methods and processes• Create further opportunities for dialogue with stakeholders, including individual investors• Hold meetings on ESG initiatives

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13

VISIONA Message from the Chairman

14

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VISION“Contributing to society by helping
women to express their beauty,”
Wacoal will pass on this unchanging
mission to the next generation.

Koichi Tsukamoto, my father, established Wacoal 70 years ago, in 1949. At the time, theJapanese public was transitioning from Japanese to Western apparel. Moreover, the economy was growing and, as a result, women were developing a greater interest in beauty andfashion. Against this historical backdrop, we established Western innerwear for women as
a new industry in Japan and made helping women to express their beauty our mission.
Soon after its founding, the Company set out “Global Wacoal” as an ambitious management goal. Based on an extremely long-term viewpoint, this management goal, which werefer to as the “decade-by-decade 50-year plan,” was partitioned into five 10-year phases.
From the initial Developing the Domestic Market phase in the 1950s, we progressed steadily
through to the final “Global Wacoal” phase in the 1990s. The Company laid the foundations
for a “Global Wacoal” by developing unique overseas businesses rooted in local markets.
For example, in 1970 we established bases in South Korea, Thailand, and Taiwan.
Subsequently, we made forays into the United States, China, and other markets in the 1980s.
Nonetheless, our journey toward becoming a global company continues. Recently, we
renewed our target profile to ensure that we pass on our unchanging mission to the next
generation and continue to take on ambitious initiatives.
At present, digital and IT technologies are driving the Fourth Industrial Revolution. To
sustain its progress, the Wacoal Group must pursue reforms that surpass this revolution
in terms of speed and dynamism. To this end, I believe that my role is to foster a corporate
culture in which changing, stopping, and beginning are commonplace matters. In this way,
I want all employees to embrace change and to maintain a strong appetite for challenges.
At the same time, I will concentrate efforts on developing the next generation of businessleaders so that they can inherit and pass on the aspirations and mind-set of our founder.
With an attitude that is at once ambitious in terms of not fearing failure and modest in
the sense of never resting on our laurels, we will continue to enhance enterprise value
while helping to realize a sustainable society.
September 2019

Yoshikata Tsukamoto
Chairman and Representative Director
Wacoal Holdings Corp.

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15

VISIONA Message from the President

Hironobu Yasuhara
President and Representative Director
Wacoal Holdings Corp.

16

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VISION

We will continually strive to make theCompany a global leader in the industry
and to enhance enterprise value.
Wacoal’s Next Destination

Having evolved over a 70-year period, Wacoal is embarking upon new initiatives to ensure that the Company con-

In November 2019, Wacoal will celebrate its 70th anniver-tinues to be a necessary presence in society throughoutsary. The mission of the Company has not changed since

the remainder of its first century and beyond. One suchits founder Koichi Tsukamoto created and popularized ainitiative has been to redefine the “Global Wacoal” target

Western innerwear culture in Japan during the turbulent

profile to incorporate perspectives stretching 10 to 20

period shortly after the Second World War. This mission isyears into the future. We announced the new target profile,

to contribute to society by helping women to express their

which includes specific goals, to coincide with thebeauty. As of 2019, Wacoal has businesses around theannouncement of a new medium-term management planworld. In the women’s innerwear market, we have becomein June 2019.

a global company that markets products in more than 50

Our Vision of a “Global Wacoal”

countries and regions and has local subsidiaries in 22
countries and regions. Worldwide, our workforce has surpassed 20,000 employees, with overseas sales accounting

We have clarified the five components of a “Global Wacoal”

for approximately 40% of our revenues. Over the years,(please see page 18). The first of these is the global mar-Wacoal has built a reputation as a high-quality brand loved

keting of Wacoal products and services and the implemen-by many women in North America and Europe, not to men-tation of social initiatives that consistently earn strong

tion women in Japan and other Asian countries.

trust. Another important component is the redoubling

This rapid progress stems from the vision that Wacoal
set out at the time of its listing in 1964. We, the employeesof efforts to create new areas of innerwear culture bydeveloping and marketing pioneering products.

and management of Wacoal, will maintain a refined corpo-

Wacoal has created a unique innerwear culture byrate culture based on mutual trust and will continually strive

adding new value to innerwear, an item once little more

to make the Company a global leader in the industry. As thethan a commodity. Among apparel, innerwear is worn

aforementioned vision illustrates, our business manage-

closest to the skin. We take pride in the fact that throughment has been focused on building a “Global Wacoal” forthe development and marketing of pioneering products

more than half a century. In addition, the vision calls onthat garner the love of customers in each era we have

Wacoal to maintain a refined corporate culture based onhelped create a society in which women are vital and radi-mutual trust. This refers to the pursuit of sustainable

ant. Sustaining this pioneering spirit, we will continue togrowth based on the creation of both economic andcreate new areas of innerwear culture. These efforts willsocial value and is precisely what we now refer to as “ESG

culminate in Wacoal becoming the most trusted company(environmental, social, and governance) management.”

among customers globally and realizing its vision of a“Global Wacoal.”

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17

VISION

Happily, Wacoal’s employees have inherited and internal-

employees is one of the Company’s advantages. I would

ized the founding spirit expressed by our mission and ourlike to accelerate progress toward realization of our visionvision. Working at Wacoal for more than 40 years hasof a “Global Wacoal” by encouraging s­ hareholders,given me a real sense of this continuity. It is often said thatinvestors, and other stakeholders to share and pursue it

people are a company’s greatest management resource.

in tandem with our senior management team andWacoal is no exception, and the team spirit among

employees.

Our Vision of a “Global Wacoal”
1. The Wacoal Group’s products and services and efforts to address social 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 to increase.
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 to lead the industry
of innerwear culture.
5. The Group mission and philosophy are instilled in employees across the world.

Risks and Opportunities
in an Evolving Environment

correct size of innerwear. Therefore, there is still plentyof scope to attract new customers and thereby growmarket share and expand our domestic businesses. I

At present, the business environment is changing in somebelieve that we can sustain growth going forward by

striking ways. In Japan, society is aging rapidly, casualbuilding deeper, broader, and longer relationships withfashion is emerging, e-commerce is expanding swiftly, andexisting customers while attracting as many newtechnological innovation is advancing. Each of these

Wacoal devotees as possible.

changes has the potential to become a risk or an opportu-

Looking overseas, the empowerment of women andnity for Wacoal. For this reason, the Company must care-further economic progress taking place in emerging andfully analyze the effect of future environmental changes ondeveloping countries are likely to heighten women’s inter-its businesses and take timely measures accordingly.

est in innerwear and increase demand. Having completed

For example, the aging of Japanese society will, inevita-

test marketing in the markets of India and Brazil, we arebly, shrink the women’s innerwear market. However,moving efforts up a gear with a view to expanding our

Wacoal’s share of the domestic market is still only 20% on

presence in these countries. Thus, I am confident thata monetary basis and a mere 10% in terms of customer

advancing bold measures in Japan as well as in markets

numbers. Moreover, only around 30% of women wear theworldwide will enable us to take large strides forward.

18

INTE GRATED RE PO RT 2 0 1 9

VISION

I would like to accelerate progress toward realization of our visionof a “Global Wacoal” by encouraging shareholders, investors, andother stakeholders to share and pursue it in tandem with oursenior management team and employees.

The Importance of Digitization
and Personalization

into “consultation areas.” At the same time, we willheighten the presence of both sales channels—brick-andmortar stores and e-commerce—by enabling customers to

The advancement of digitization and other technologicalinnovations is significantly changing consumer behaviorpurchase products via whichever sales channel suits them.
In addition, we are seeing growth in body positivity, aand necessitating reform of our business models. Oncesocial movement that emphasizes the importance ofthe mainstay sales channels of the retail industry, depart-

accepting the different physiques of human beings overment stores and general merchandise stores continue tofocusing on uniform standards of beauty. Reflecting thisflag, while the expansion of Internet-enabled e-commerce

trend, many customers now want to express their beauty

gathers pace. For many years, our strength lay in sales

in a more personalized way. Needless to say, Wacoal has

through brick-and-mortar stores, particularly department

the competence to offer products catering to the diverse

stores. Consequently, some of our stakeholders are anx-

values and physiques of customers. Unless we personalize

ious about the future. However, I do not think that brick-our products even further, however, our future will not be

and-mortar stores and e-commerce necessarily stand inbright. With marketing based on uniform values no longer

opposition to one another. Brick-and-mortar stores have

viable, we will build personalized marketing systems that

their own distinctive merits. For this reason, our focus

suggest and provide products specifically for each cus-should be on how to combine the merits of both sales

tomer. These efforts will transform us from “everyone’s

channels in ways that heighten customer convenience.

Wacoal” to “my Wacoal.”That said, the role of brick-and-mortar stores is certain

As part of these efforts, Wacoal is advancing an original

to change significantly. Until now, brick-and-mortar storesomni-channel strategy to establish a relationship with eachhave been places where customers purchased products.

customer that is robust, broad, and long term. For exam-

Going forward, however, they will increasingly become

ple, over the coming three years we will reflect customers’

places where customers feel free to try on products andgrowing preference for personalization by introducing 100

find those that best meet their needs through consulta-

digitally enabled customer service systems to major storestions with sales personnel. To fit the physique of each

in Japan. Combining a 3D body scanner and AI-enabledindividual, women’s innerwear needs to be available in an

customer service, the 3D smart & try system allows cus-

elaborate range of sizes. Given that our women’s innerwear

tomers to measure their own physiques without the stresscomes in a particularly extensive range of sizes andof consulting with sales personnel, pick out the optimal

includes unique functionality and fashion features, it isproduct, and then try on the actual item. Further, thedoubly important for our customers to have opportunities

system creates a digitized record of the customer’s mea-

to select products that fit them properly. For this reason,

surements and other personal information so that thebrick-and-mortar stores will continue to play an importantcustomer can shop more conveniently at other stores orrole. Rather than simply being “sales areas,” they will evolve

through e-commerce in the future. While verifying the new

IN TE GRATED RE PO RT 2 0 1 9

19

VISIONsystem, we plan to install it at even more stores.

physiques of more than 40,000 women of all ages. At the

Similarly, in the United States—our mainstay overseas

product planning and design stages, several hundred

market—customer preferences are diversifying, sales chan-

Wacoal designers and pattern makers effectively utilize

nels are changing from brick-and-mortar stores to e-com-such research findings in the development of Wacoal’s

merce, and new methods of communicating withdifferentiated, high-value-added products.

customers are developing. Within this market environment,

However, no matter how effectively we use humanemerging “digitally native vertical brands (DNVBs)” arescience data to develop innerwear with unmatched func-

garnering endorsement among millennials. In response totionality, comfort, and beauty, such efforts would bethis external environment, Wacoal recently acquired

meaningless without the advanced skills and technologies

Intimates Online, Inc., through U.S. subsidiary Wacoal

needed to manufacture new innerwear products. This isInternational Corp. (For a summary of Intimates Online andwhy we insist on manufacturing products at our own fac-

the reasons for its acquisition, please see page 41.)

tories. To preserve differentiated quality as the greatest

Looking ahead, if no measures are taken Wacoal would

value we provide, at our in-house factories in regions

be at risk of having its stable business foundations andworldwide we will continue manufacturing that is deserv-

overwhelming advantages in existing sales channels ining of our customers’ trust.

Japan become its weaknesses. Based on a strong aware-

Occasionally, stakeholders inquire about the necessity

ness of the potential for such crises, we will continue toof having our own factories, but these factories play an

pursue ambitious initiatives that convert future risk factors

essential role in maintaining the high quality of Wacoal

into business opportunities. Of course, we understand that

products. Passing on skills and securing personnel is cer-

this will not be an easy task. Nonetheless, we are deter-tainly not easy. Companies that devote the time and effort

mined to tirelessly take on challenges with the aim of real-

to do so and which can manufacture high-quality inner-izing a “Global Wacoal.”

wear have been disappearing in recent years. As a result,Wacoal’s competitive advantage is growing in the global

Competitive Assets andValue Creation Systems

market for midrange to high-end innerwear.
Wacoal has also built a unique system for sales. Given
that brassiere sizes comprise the underside and cup sizes

Wacoal has been fostering unique competitive assets andof the bust and that brassieres are available in multiple

value creation systems since its founding. In my view, thecolors, just a single item accounts for a large number ofCompany’s greatest asset is the trust of customers world-stock keeping units (SKUs). The system for managing

wide in our brand. This trust is underpinned by high quality.

aggregate inventories, sales, and production that Wacoal

Our pursuit of quality is not narrowly limited to the durabil-

has independently developed for appropriate inventory

ity and reliability of innerwear. Rather, we take a more

control would be challenging for others to replicate.

far-reaching approach that focuses on adding quality to

Another way in which we provide value is through the con-products to ensure that they reflect the lifestyles and life

sultations offered by our beauty advisors. Worldwide, there

stages of women and appeal to their sensibilities. Basedare currently more than 8,000 Wacoal beauty advisors,on this unique, multifaceted approach to quality, we have

who play an indispensable role in drawing customers’

established a long track record of helping women toattention to the merits of Wacoal products and in helping

express their beauty.

customers choose innerwear that is the perfect fit.

Further, we realize our unique quality through value

In addition, a distinctive feature of Wacoal’s businesscreation systems that enable the organic functioning ofmodel is the fine-tuning of all operations to suit the particu-

distinctive tangible and intangible assets. In productlar circumstances of each country or region. Innerwear

development, for example, we capitalize on human science

manufacturers cannot adopt the same approach to every

research. For more than 50 years, Wacoal has been con-market because in respective countries or regions women

ducting scientific research on women’s physiques. As

have different physiques, innerwear needs, values, andpart of this research, we have accumulated data on theaesthetics. This diversity is one of the challenges that20

INTE GRATED RE PO RT 2 0 1 9

VISION

The Company’s greatest asset isthe trust of customers worldwide
in our brand. This trust is underpinnedby high quality.

innerwear manufacturers face and acts as a significant

The Road Map for Sustained Growthbarrier to industry participation by newcomers. We havealso established planning and development bases andBy not reaching the targets of our previous medium-term

production bases outside Japan so that we can realize

management plan, we disappointed shareholders andproduct creation that is rooted in regions and closely

investors. I believe this shortfall was mainly due to a lackreflects the needs of women everywhere.

of aggressiveness with our reform measures. In particular,

Thus, the Wacoal Group’s business model is designed to

I am sincerely disappointed that our structural reforms

establish regionally rooted operations from product devel-

failed to turn around the sluggish business results ofopment and production through marketing and combines

certain domestic subsidiaries and business divisions.

differentiated business assets. Viewing our business

In June 2019, we released a new medium-term manage-

model purely from the perspectives of management effi-

ment plan covering the three-year period through fiscal

ciency and profitability, there is a tendency to see its fea-

2022 and announced medium- to long-term managementtures as cost factors. However, this business model has

targets for fiscal 2028. Specifically, we aim to achieve net

paved the way for Wacoal’s growth to date and underpins

sales including equity-method affiliated companies net

customers’ trust in and endorsement of the Wacoal brand.

sales of ¥300 billion, which breaks down into consolidated

At this point, let me stress that we are in no way compla-

net sales of ¥250 billion and equity-method affiliated com-cent about our current situation. We face two major tasks:

panies net sales of ¥50 billion, as well as an operating

the return to a growth trajectory and the strengthening of

margin and ROE of above 10% in fiscal 2028. Moreover,

our earning power. With those tasks in mind, we will redou-

to enable us to aim for an even higher level of growth, we

ble our efforts focused on structural reform and operational

have set a stretched target of ¥320 billion for net sales

efficiency and work unstintingly to achieve continuous

including equity-method affiliated companies net sales.

enhancement of enterprise value. Also, anticipating andAs well as serving as a milestone for achieving the manage-

reacting agilely to changes in the business environment,

ment targets for fiscal 2028, the new management planwe will deploy management resources based on current

calls on us to look squarely at reality, expedite reform, andmarket trends and boldly reform our business model.

realize robust growth in Japan and overseas during thethree-year period.

IN TE GRATED RE PO RT 2 0 1 9

21

VISION

Our Approach to Enterprise Valueand Equity Cost

Under the new plan, the Company will conduct a detailed
analysis of the prospects of underperforming businesses
and brands and—without making any special exceptions—move forward with decisive reform of the Group’s business

If we regard companies as public institutions, we have tostructure. This will entail Wacoal Holdings Corp. using its

view enterprise value as comprising both economic andoverall control of operating companies in Japan and over-social value. This philosophy is consistent with our vision,seas to exercise even greater initiative. Aiming to raise

which I touched on at the beginning of this message.

the enterprise value of the Group as a whole, the holding

The basic requirements for enhancing economic value

company will take into account overall optimization as it

are sustained growth and an approach to business man-promotes aggressive growth strategies and defensive

agement that is mindful of the profit margin and capital

structural reforms. In Japan, Wacoal Corp. will sustain

efficiency. Upon this foundation, we will adopt a medium-growth and enhance profitability while rebuilding the profit

to long-term viewpoint and actively seek out investment

foundations of other domestic subsidiaries. As for over-opportunities for the realization of rapid improvements inseas businesses, we will take steps to further expand thegrowth. Wacoal’s business activities provide society andscale of businesses and accelerate growth. In addition, thecustomers with value in the form of beauty, comfort, andGroup will heighten its overall management efficiency byhealth. With these facets as key themes, we will actively

reorganizing production and supply systems at home andconsider investments aimed at taking on new businesses.

abroad. The aforementioned measures will ensure sus-

For example, we will strengthen our e-commerce busi-

tained growth, improve the operating margin, and enhancenesses and expand our brand portfolio.
With respect to capital policy, we regard the achieve-

capital efficiency, thereby increasing the enterprise value ofment of ROE that surpasses equity cost and is 6% or

the Wacoal Group.

Medium- to Long-Term Road Map
Stretched target

Consolidated sales
CAGR
+2.8%
¥238.0 billion¥50.0billion¥50.0
billion¥43.8
billion¥250.0billion¥194.2billion¥320.0 billion¥300.0 billion

Consolidated
operatingmargin and
ROE to be
above 10%¥270.0billion(Actual*)Operating margin
5.5%
FY2019FY2028TargetFY2028目標
Consolidated sales of Wacoal HD

Sales of equity-method affiliates* These figures do not take into account impairment loss on intangible fixed assets and valuation gains and losses on marketable securities and investments.

22

INTE GRATED RE PO RT 2 0 1 9

VISIONhigher as essential. Achieving ROE that at least surpasses

Meanwhile, as for social value, we will advance people-

Wacoal’s equity cost of 5.6%–5.9% satisfies our minimum

and environment-friendly business management that takes

obligation to shareholders and investors and is a premise

ESG factors into consideration. Through its mainstay busi-

for enhancing enterprise value. Although ROE has yet tonesses, Wacoal will help create a richer society in whichreach a satisfactory level, we will work toward its further

women can express their personal beauty and live withenhancement through balance sheet-focused businessvitality. We will remain a company that addresses issues

management that improves earning power while reducing

related to beauty, comfort, and health and one that is

total assets. Also, to ensure that shareholders’ equity does

valued by women all over the world.

not swell beyond its current level, while giving priority toFurther, as a company that has built a value chain based

investment for future growth, we will appropriately control

on an independent network that encompasses productshareholders’ equity by paying stable dividends and pro-planning and development through to material procure-moting the acquisition of treasury stock.

ment, production, and sales, people are our greatest man-

Unfortunately, in recent years Wacoal’s price book-value

agement resource. With this in mind, we will focus onratio (PBR) has remained below the one-time level. To over-increasing job satisfaction and developing employee-

come this situation, first and foremost, we must improvefriendly workplaces. Moreover, we will collaborate closely

our earning power and profit margin, as I mentioned above.

with suppliers and business partners to ensure adherence

At the same time, I am strongly aware of the need to set out

to and respect for social norms related to human rights,

our vision and strategies more clearly to raise the expecta-

labor practices, the environment, and ethical matters.

tions of stakeholders for our future prospects. Accordingly,

By forging ahead unceasingly toward the “Global Wacoal”

the Company will highlight the management resources forgoal that has always been central to our vision, we willenterprise value enhancement that the Wacoal Group hasenhance our enterprise value and thereby meet theat its disposal while increasing the pace of initiatives

expectations of all stakeholders.

aimed at the effective utilization of these resources.
September 2019IN TE GRATED RE PO RT 2 0 1 9

23S T R AT E G Y

A Review of the Previous Medium-Term Management Plan
(Fiscal 2017–Fiscal 2019)
Basic Policy
Secure earnings in domestic
business

Continue to develop attractive new products with high added valueImprove the productivity of our wholesaling business and the profitability of our retailing business
Create original omni-channel services to enhance customer convenienceEnhance product added value through the reinforcement of planning and development systems

Generate further growthin overseas businessCollaborate across regions on product planning and production management
Improve our ability to keep pace with the accelerating global growth of e-commerce markets
Use global supply chains to develop highly competitive materials

Create Group synergies andstrengthen competitivenessAct on the management problems of individual companies

Expand our business portfolio

Expand our business portfolio using Wacoal’s tangible and intangible strengths

Improve our Group management
infrastructureContinually analyze society’s needs and expectations and reflect them in our management policies

Reciprocally use each company’s strengths to increase overall competitivenessImproving profitability
Improving business efficiency

Capital policy

Shareholder returns

Achievements under the Previous Plan and Tasks to Be Addressed

Wacoal Corp.
and domestic
subsidiaries

Overseasbusiness

ESG measures
Capitalstrategies

24

AchievementsTasks

 ebuilding conventional business models to depart fromR
an overdependence on the domestic wholesale businessEnhancing management efficiency through the­reorganization and reform of sales practices• Achieving the highest-ever sales margin (Reducing
product returns and discount sales)• Strengthening profitability by enhancing the brandvalue of the retail businessCompleting preparations for the introduction of digitaltechnology-enabled, next-generation customer services
in stores• Developing 3D body scanners and AI-enabled­customer services

 eform conventional business models (Improve theRcompetitiveness of Peach John, Lecien, Ai, and CW-X)
Implement an omni-channel strategy that competitors
cannot match
Reduce and optimize the number of brands and the
product mix

 rowing secondary brands that help support businessesGin North America, Europe, and China (elomi and PeachJohn)
Accelerating business growth through the proactive
development of e-commerce channels

Introduce high-value-added products that transcendboundaries between Japan and other countries
Collaborate with major e-commerce websites orstrengthen in-house e-commerce websites depending on
the characteristics of countries and regions
Conduct growth investment and develop businessfoundations with the aim of strengthening small-scale
operations in certain countries and regions
Build a value chain with competitive superiority and rebuild
supply chains on a Groupwide basis

 eginning CSR-focused procurement through collaboraBtion with contract manufacturers
Discontinuing defensive measures against takeovers
Maintaining a total payout ratio of 100%
	Developing employee-friendly environments throughreform of work styles and methods of taking leave educe the risk of being subject to criticism as a result ofRusing expressions in advertising that are not in the spirit ofdiversity
Strengthen the management of customer informationeven further
Reduce strategic shareholdings
Develop an inclusive organization that comprises diverse
personnel

INTE GRATED RE PO RT 2 0 1 9

S T R AT E G Y

A Review of the Previous Medium-Term Management Plan (Fiscal 2017–Fiscal 2019)
Consolidated
2017/3

2018/3Results

Results(¥ billion)

2019/3Results

In real terms*2

Targets(Announced in May 2016)

Comparison to targets

215.0

–20.8

195.9

195.7

194.2

Operating Income*(Operating Margin)

10.3(5.3%)

11.5(5.9%)

4.9(2.5%)

10.7(5.5%)

15.0(7.0%)–10.1(– 4.5 pts.)

Net Income
Attributable to
Wacoal Holdings
Corp.

12.5

9.7

0.3

9.6

11.0

–10.7

ROE

5.5%

4.2%

0.2%

4.2%

5% or more

Net Sales1*1 Beginning from fiscal 2019, components of net periodic pension costs and net periodic post-retirement benefit costs, other than the service cost component, will be recognized as otherincome or expenses. The above table has been retrospectively amended to reflect the application of this change.
*2 These figures do not take into account impairment loss on intangible fixed assets and valuation gains and losses on marketable securities and investments.

Causes
Net sales: Nonachievement of ¥20.8 billion(Nonachievement of ¥18.8 billion, excluding the effect of foreignexchange rates)

Operating income: Nonachievement of ¥10.1 billion(Nonachievement of ¥3.2 billion in real terms, excluding the effects ofaccounting standard changes and impairment)(1) Lackluster performances of three domestic consolidated subsidiaries(Peach John, Lecien, and Ai)(Total shortfall of three companies: –¥9.1 billion)(2) Change in the strategy of the retail business of Wacoal Corp. to emphasize profitability (Shortfall: –¥4.7 billion)(3) Slumping wholesale business of Wacoal Corp. (Shortfall: –¥3.6 billion)(1) Changes in U.S. GAAP accounting policies (–¥1.1 billion)(2) Sluggish sales of three domestic consolidated subsidiaries(Total shortfall of three companies: –¥2.2 billion)(3) Recognition of impairment loss on intangible fixed assets ofPeach John, etc. (–¥5.8 billion)
 perating margin of 5.5% in real terms, excluding the effect ofOimpairment loss
ROE of 4.2% in real terms, excluding the effects of impairment
loss and valuation gains and losses on marketable securities
and investments

Subsidiaries

WacoalPeach John
Nanasai
LecienAi
Wacoal International (U.S.)
Wacoal Europe
Wacoal China
Total

Net Sales(¥ billion)

2019/3Results

Targets(Announced
in May 2016)

Comparison
to targets

102.4
10.5
9.4
6.3
4.2
18.5
14.1
11.6
177.0

110.0
13.2
10.1
9.5
7.3
19.4
16.2
11.3
197.0

–7.6
–2.7
–0.7
–3.2
–3.1
–0.9
–2.1
0.3
–20.0

Operating Income(¥ billion)

2019/3Results

Targets(Announced
in May 2016)

Comparison
to targets

5.1
–0.2
0.3
–0.4
–0.3
2.1
1.4
0.9
8.9

5.2
0.8
0.5
0.3
0.2
2.2
1.4
1.0
11.6

–0.1
–1.0
–0.2
–0.7
–0.5
–0.1
0
–0.1
–2.7

Causes

Wacoal Corp.
Net sales: Nonachievement of ¥7.6 billion
Wholesale business:Effect of store closures and theflagging performance of
non-brassiere products
Retail business: Change in strategy aimed atreforming the business structure toemphasize profitability

Four domestic subsidiaries(Peach John, Nanasai, Lecien, and Ai)

Three overseas subsidiaries(United States, Europe, and China)

Net sales: Nonachievement of ¥9.7 billion
Lackluster performances reflecting an inability torespond to changes in consumer needs

Net sales: Nonachievement of ¥2.7 billion
United States:S luggishness of department store
sales and stagnating growth of the
CW-X business
Europe: Effect of foreign exchange rates andsluggishness of department store sales

Operating income: Nonachievement of ¥2.4 billion
Lower profit on sales due to a decrease in revenues

Operating income: Nonachievement of¥0.1 billion
Retail and online sales businesses:
Although an improvement in profitability, increases
in store rents, distribution costs, and other expenses

Operating income: Nonachievement of ¥0.2 billion
United States:D ecrease in revenues of the CW-X
business
China: S hort of target for reduction in cost of sales
as a percentage of net sales

IN TE GRATED RE PO RT 2 0 1 925

S T R AT E G Y

New Medium-Term Management Plan (Fiscal 2020–Fiscal 2022)

Aiming to realize our vision of a “Global Wacoal” that we have set out for the medium-to-long term, in the current fiscal year webegan a new three-year, medium-term management plan. Wacoal will evolve into a company that develops strong relationships
of mutual trust with stakeholders globally by taking maximum advantage of the Group’s management resources and network,
strengthening systems that consistently realize innovative products, and pioneering new fields in innerwear culture.
Target Profile

A Globalized Wacoal Group
Medium- to Long-Term Targets (Fiscal 2028 Targets)

Net Sales¥

Operating Margin and ROE

300.0 billion

Above(Including equity-method affiliated companies sales)

10 %Overview of the New Management Plan

Face reality, identify future demand, reform boldly, and focus on growth
Basic Policies and Priority Strategies
Basic Policies

Priority Strategies

1. Achieve strong growth in Japan and overseas
2. Analyze the growth potential of underperforming businesses and brands and thenreview and reform the structures of theGroup’s businesses without making any
special exceptions
3. Heighten enterprise value by enhancing both
economic and social value

1 Advance business measures ustain growth and enhance the profitability of Wacoal Corp.
SRevitalize domestic consolidated subsidiaries
Expand and grow overseas businesses
Reorganize the Group’s production and supply systems
Take on the challenges of business portfolio expansion
and new businesses

2 Enhance social value (Tackle ESG issues)
3 Conduct business management with anawareness of equity cost

Enhance profitability and capital efficiency while achieving appropriate shareholder returns,
reducing strategic shareholdings, and realizing a proper asset balance

Numerical
Targets

Fiscal 2022 targets

Net Sales¥

210.0 billion¥¥

Fiscal 2020 targets¥

200.0 billion

Fiscal 2019 results¥

194.2 billion

Operating Income

Net Income Attributable(Operating Margin)

to Wacoal Holdings Corp.

14.0 billion (6.7%)¥

12.0 billion

6%

9.0 billion―

0.3 billion

0.2 %11.0 billion (5.5%)¥

4.9 billion (2.5%)

¥

¥

ROE

Note: The above numerical targets do not take into account the effect on business results of valuation gains or losses on marketable securities and investments, which due to
U.S. GAAP amendments must be recognized as other income or expenses in the statements of income or loss.

26

INTE GRATED RE PO RT 2 0 1 9

S T R AT E G Y

Strategies, Tasks, and Measures
Priority Strategies

Core Tasks

Concrete Measures

Focus product planning, production,communication, and all other businessactivities on building deeper, broader, andlonger relationships with each customer,
thereby heightening brand value andensuring growth volve into one of the world’s leading companies in the aggregationEand utilization of data on customer physiques and preferences•D evelop differentiated stores throughout Japan based on theomni-channel strategy and strengthen service infrastructure•C reate new products and services by leveraging multifaceted
personal data on customers
Reduce product groups and product varieties and review termsof transactions with department stores in the wholesale businessEnhance the corporate brand by strengthening communication
Reform work styles and leave systems to heighten productivity
Advance personnel measures that heighten job satisfaction

1
Sustain the Growth andEnhance the Profitabilityof Wacoal Corp.
P.34

Peach John: Capture demand arising from behavior and trends among
young consumers and focus boldly on e-commerce
Revitalize Domestic
Consolidated
Subsidiaries

Reform and depart from conventional
business models

P.38

Ai: Combine research findings and data accumulated through thedevelopment of swimwear and innerwear to establish San-ai Resort
as a value-added brand that earns the endorsement of “adult” women
Lecien: Select and concentrate business fields with a strong focus ongross profit; develop a new business model through collaboration withgeneral merchandise stores; begin supplying overseas affiliates as an
original equipment manufacturer
Nanasai: Develop new value-added mannequins and acquire newcustomers in interior construction businesses
United States: Reinforce leading share of the department store market
even further and begin developing new distribution channels andbusiness opportunities; reform cost structure while solidifying foundations for net sales of ¥30 billion in the Americas

Expand and Grow theOverseas Business
P.40

Strengthen the e-commerce business

Europe: Realize stable growth and profit generation by strengthening
the development of products for the fuller figure, which is a category inwhich we have particular competence, and by expanding and enhancing
the brand portfolio and marketing activities based on the characteristics
of countries, regions, and sales channels
China: Foster younger customers and other undeveloped customer
groups by stepping up collaborative marketing and branding with Japanin the e-commerce market; establish business foundations that cansustain strong growth

Reform the Group’s
production and supply
systems
Pursue the expansion of
the business portfolio
and new business stablish a Groupwide production management system that supplies competitive products and materials in aEmanner that transcends the boundaries of brands and regional businesses
Build an optimal supply system in anticipation of overseas business growth(Increase production capacity in the ASEAN region and Dominica, etc.)Invest to realize rapid improvements in growth while staying focused on medium- to long-term viewpoints and theselection and concentration of business fields

Create a vibrant corporate culture basedon human rights, ethics, and diversity

 trengthen measures for CSR-focused procurement (Improve
S­continuously and extend coverage)
Enhance awareness of respect for value diversity in proposing
advertising expressions
Provide support related to breast care issues in regions worldwide
Offer job satisfaction and employee-friendly workplaces• Establish environments that enable various work styles• Promote diversity and inclusion to create new value

Coexist with the earth’s environment andlocal communities

Take steps to eliminate plastic from product packaging
Reduce the disposal of unsold products
Reduce resource wastage at the production stage by introducing
smart factories
Conserve the traditional townhouses and townscape of Kyoto

2

Enhance social value(Tackle ESG issues)
P.42

3
Conduct business­management with anawareness of equity cost
P.28

• Optimize the distribution of value to all
stakeholders• Increase shareholder value by enhancing
ROE• Achieve reform through business management focused on realizing a sound,appropriate balance sheet• Enhance measures for maintaining
shareholder returns

Invest for future growth and enhance shareholder returns• Realize ROE of 6%, above equity cost
• Maintain a total payout ratio of 100%
• Reduce strategic shareholdings (Target: 30% reduction)

IN TE GRATED RE PO RT 2 0 1 927

S T R AT E G Y

A Message from the Director in Charge of FinanceBy putting our management philosophy into
practice, we will benefit society and provide
stakeholders with substantive value.

Akira Miyagi
Managing Director, General Manager ofCorporate PlanningWacoal Holdings Corp.

28

INTE GRATED RE PO RT 2 0 1 9

S T R AT E G Y

Toward Sustained Enhancement of Enterprise Valuephilosophy. By putting this component of our management
philosophy into practice, we will earn greater trust from all“Mutual trust is not complicated. To put that anotherstakeholders.

way, all Wacoal employees should become individuals
who are trusted by Wacoal’s business associates and

Our Value Creation Process

other members of society.”

Aiming to enhance enterprise value, Wacoal is actively invest-

Our founder Koichi Tsukamoto used the above words to

ing to realize growth and strengthen management founda-

offer employees a straightforward explanation of mutualtions while stepping up the implementation of initiatives

trust, which was an integral part of his own management

focused on coexistence with the environment and society.

philosophy and is incorporated into our vision. Wacoal’s

Investment in people—the most important managementfounder repeatedly impressed upon employees that theresource for the advancement of business activities—is critical

Company should earn the trust of all stakeholders in orderfor the Company’s medium- to long-term growth. By continu-

to heighten its existential value. We believe that enterprise

ously developing and bringing to market high-value-added

value is the sum of the endorsement that Wacoal garners

products and services, we will work to generate a level offrom society and all stakeholders; in other words, enter-

profit that consistently is above equity cost. At the same time,prise value is aggregated mutual trust. Our mission, which

through the development of governance that maintains andis to contribute to society by helping women to express

upgrades our value creation process, we will realize sustained

their beauty, is also a core component of our management

enhancement of enterprise value.

Concept of Resource Allocation Toward Sustainable Corporate Value Improvement
9 Enhancing shareholder value

Shareholders

to all stakeholders• Increase net income per share + Dividends
Shareholder
returnInvestment

Business cycle for sustainable improvementof corporate value

8 	Optimizing value allocation

Dialogue

Dialogue

1

Funds entrusted by shareholders

2 anufacturing and sales in Japan andMoverseas, and business investments
including acquisitions

3

 trengthening the management baseSwith investments in human resource
development, R&D, and IT

Re-investment

11 	Further enhancing corporate

B/Sgovernance

P/L

7

• Highly transparent management
and organizational structure

Liabilities4 	 Coexistence with the global environment
and local communities

5 	 Provide high-value-added products
Total assets

1
Shareholders’equityInvestments forstrengthening theContribute to society by
management
helping women to expressbase

2 10 Business investments

and services

Net sales

3 10

their beauty• Assess risks and capital efficiency•R edesign and strengthen existing
businesses and expand the businessportfolio

5 Provide high-value-

added products andservices4 	Coexistence with the global

environment and local
communities


Realizationof a society that respects
diverse people (Resolving social issues
through our business)7

 enerate profit that exceeds capital
G
costs

8

Optimizing value allocation
to all stakeholders

9Enhancing shareholder value

10

 eallocating resources to furtherR
increase corporate value

ProfitGenerate profit thatexceeds capital costs

6 Realization of a society

Business activities

6

that respects diverse
people• Provide beauty, comfort, andwell-being

Check whether the business cycle isappropriately circulating

Resolving social issues
through our business

IN TE GRATED RE PO RT 2 0 1 9

11 Further enhancing corporate

governance

29

S T R AT E G Y

Profit Generation Aimed at ROE of 6%

the new management plan is a pressing task. Therefore, ourOur new medium-term management plan sets out the threefinancial targets are to increase ROE to at least 6.0% in fiscal

basic objectives of our capital policy.

2022, the year ending March 31, 2022, and the new plan’s final
fiscal year, and then to above 10% over the long term.
ROE has three components: profitability (profit margin),

Basic Objectives of Capital Policy

1 Increase shareholder value by improving ROE
2 Maintain a sound balance sheet (shareholders’equity levels)
3 Implement measures for enhanced shareholder
returns

capital efficiency (total asset turnover rate), and leverage.
The Ito Review* points out that the low ROE of Japanese companies is in large part due to the narrowness of profit margins
on sales—in other words, the weakness of earning power.
Improved profitability will produce the greatest impact on
Wacoal’s ROE. For this reason, we have selected the operating
margin as a key indicator in efforts to achieve our ROE goals.

The first basic capital policy objective calls for continuous

We aim to raise the operating margin from fiscal 2019’s level

enhancement of ROE through improved profitability and capi-of 5.5% (in real terms, excluding the effects of impairment andtal efficiency. While Wacoal’s equity cost is currently between

other factors) to around 7% in the final year of the new plan

5.6% and 5.9%, ROE in real terms, excluding the effects ofand then to above 10% over the long term.

impairment and other factors, was just 4.2% in fiscal 2019, theyear ended March 31, 2019. Also, our price book-value ratio(PBR) is below the one-time level. The improvement of ROE toa level above equity cost by realizing the growth strategies of* C ompiled by the Ministry of Economy, Trade and Industry, the Ito Review ofCompetitiveness and Incentives for Sustainable Growth—Building Favorable
Relationships between Companies and Investors—Final Report was released in August
2014. The review was chaired by Professor Kunio Ito, who was a professor at
Hitotsubashi University at the time of its undertaking. The final report is commonly
known as the Ito Review.

Numerical Targets for New Medium-Term Management Plan
Medium-Term Management Plan (FY2022)

Consolidated Net Sales¥

210.0 billion

Operating Income¥

14.0 billion

Net Income Attributable to
Wacoal Holdings Corp.
¥(Operating margin 6.7%)

FY2022 to FY2028(Actual)Operating income¥10.7 billion(5.5%)FY2019Results
Net sales

Operating income

Net sales¥210 .0
billionConsolidated
net sales
CAGR
+2.9%

Consolidated
operating income
CAGR+10.1%ROE 6%Net income attributable to
Wacoal Holdings Corp.

FY2025
TargetFY2028TargetROE 8%

ROE above 10%¥12.0 billion
Shareholders’ equity¥200.0 billion

30

Net sales¥250.0billionOperatingmarginabove 10%

Operatingincome¥14 billion(6.7%)FY2022
Target6%

12.0 billion(Actual)ROE 4.2%

Net sales¥194.2billionROE

INTE GRATED RE PO RT 2 0 1 9

S T R AT E G Y

Operating Margin Enhancement: Japan (Wacoal Corp.

deploying sales personnel to directly managed sales areas inand Domestic Subsidiaries)

department stores, the operating margin has improved to the

The domestic wholesale business for department stores and

6% level thanks to rapid expansion of the e-commerce

general merchandise stores has traditionally been the main-

business.

stay of Wacoal Corp. As consumer behavior changes, how-On the other hand, the department store business format isever, directly managed stores and e-commerce are accounting

in decline across all mainstay overseas markets. During thefor a larger share of our operations. Under the previous man-

period of the previous management plan, in North America,

agement plan, we were able to achieve improvements throughEurope, and China, the total net sales increases of e-com-

reorganization that increased the efficiency of our wholesale

merce businesses were larger in monetary terms than thebusiness and enhanced the profitability of our retail business.

total net sales increases of brick-and-mortar stores. During

One measure of the new plan is to raise productivity per

the period of the new management plan, we expect this trend

employee. Specifically, with a focus on back-office operations,

to continue. Consequently, our degree of success in strength-

we will reform work processes to realize operating income perening e-commerce businesses will be a major determinant ofoffice worker that is approximately 30% higher than at pres-overseas business growth.

ent. Further, we plan to improve sales per beauty advisor

Accordingly, during the three fiscal years of the new plan we(Wacoal sales assistant) by increasing the efficiency of inci-

will give priority to investment in e-commerce aimed at real-dental store work, such as product unpacking and stocktaking.

izing vigorous growth. The Company will bolster alliances with

Also, we will reduce product groups and product varieties withmajor business partners, reorganize in-house websites, andthe aim of lowering production and technology development

actively invest in advertising. Further, we will realign offices,

costs and improving inventory turnover rates.

logistics warehouses, core IT systems, and other businessIn the medium-to-long term, digitization will play a key role

infrastructure to embed e-commerce in our business models

in efforts to improve our profit margin. At present, we arein respective countries. While giving priority to this series ofdigitizing customer records and installing the 3D smart & try

investments for growth, we will maintain operating margins at

system, which combines a 3D body scanner and an

their current levels.

AI-enabled customer-consultation service. These initiatives
will not only provide added value that competitors cannot

Operating Margin Enhancement: Global Optimization

match but also contribute to cost reductions by improving

Wacoal’s overseas business operations are establishing optimal

work efficiency and lowering product return rates. We willplanning, production, and sales capabilities in each country andproceed with the verification of these initiatives so that weregion. Tasks going forward, however, include appropriate

can benefit from them as soon as possible.

deployment of factories that can provide effective supplies ofMeanwhile, domestic subsidiaries that fell significantly

high-value-added products, increased utilization of the raw

short of numerical targets during the previous plan andmaterials factory in Thailand, and the development of supply

recorded operating losses in fiscal 2019 have demonstrated

capabilities for such growth markets as China and India.

that conventional approaches to sales and marketing are no

Under the new management plan and with its sights set on

longer effective and that the time has come to reform theirenhancing management efficiency across the whole Group,business models. Through fundamental reform of the opera-

Wacoal will begin examining the establishment of a produc-tions of these subsidiaries, Wacoal will lay foundations thattion management system that transcends the boundaries ofenable them to begin posting operating income consistently

brands and regional businesses to supply these brands andduring the first half of the new three-year management plan.

businesses with competitive products and materials. We will
optimize supply capabilities by reorganizing factories based

Operating Margin Maintenance: Overseas

on the analysis of future supply and demand in relation to

Reflecting differences in trading conditions and businesseach business.

practices, our operating margins overseas vary depending on

Also, we have begun initiatives to strengthen the branding

the region. In North America and Europe, we have secured

and marketing of certain high-value-added products throughhigh operating margins that are above 10%. As for China,

collaboration among operations in Japan, China, and otherwhere we use the same sales system as in Japan by

Asian countries. Brassieres emphasizing comfort, such as

IN TE GRATED RE PO RT 2 0 1 931S T R AT E G Y

GOCOCi, overcome differences in physique and can be mar-

Based on the three aforementioned basic objectives, ourketed laterally because they have wider fit ranges. For exam-

capital policy for the three years of the new management planple, by enabling the introduction of popular products fromis as follows.

Japan, such collaboration promises to help businesses inOver three fiscal years, we will achieve an increase in cumu-

China appeal more to and thereby rapidly acquire younger

lative cash inflows of at least ¥50 billion (net income attribut-

customers. We will enhance business efficiency on a global

able to Wacoal Holdings Corp.: ¥31 billion; depreciation andlevel by further evolving our Think Globally, Act Locallyamortization: ¥19 billion) by enhancing profitability in businessapproach to valuation creation and strengthening ties among

activities and reducing working capital. Combined with theoperations in respective countries.

aforementioned disposal of strategic shareholdings, thesemeasures will generate total cash of ¥70 billion or more.

Reform through Balance Sheet-Focused

As for cash outflows, we have earmarked ¥21 billion for

Business Management

capital investment in such areas as IT system renewal and the

Our second basic capital policy objective is to maintain aestablishment of e-commerce sites in Japan and overseas.

sound balance sheet. In other words, we aim to maintain

Through stable dividend payments and the flexible purchaseshareholders’ equity at a level that is commensurate with risksof treasury stock, we will provide returns to shareholders ofattendant on business activities and that is needed for theabout ¥31 billion and maintain a total payout ratio of 100%.
Lastly, we plan to use the ¥20 billion generated from theimplementation of capital and growth investment.
The most significant issue in relation to Wacoal’s balancedisposal of strategic shareholdings to provide additional

sheet is that many years of internal reserve accumulation has

returns to shareholders. In using this cash, however, we will

resulted in strategic shareholdings that account for 20% ofgive priority to any investment opportunities that promise

total assets. Viewing the reduction of strategic shareholdings

return on investment in line with our ROE target and rapid

as a priority task, we plan to dispose of strategic sharehold-improvements in growth. We intend to use our own capital toings worth at least ¥20 billion—which represents one-third ofcover all the aforementioned initiatives. With respect to invest-

the total—during the period of the new management plan. In

ment opportunities, however, we will consider the use of debt

conjunction with these efforts, we will lower inventory levels

as required.
As a result of these initiatives, we forecast shareholders’by reducing product varieties.
Wacoal’s final basic capital policy objective is to enhanceequity of between ¥200 billion and ¥210 billion at the end of

shareholder returns even further. However, we will premisefiscal 2022. While curbing increases in total assets by doingthese measures on the securing of capital for growth invest-

our utmost to use our own capital, we will steadily reduce ourment and free cash flow levels.

own capital. Also, we will improve inventory turnover rates to

Improving Capital Efficiency and Enriching Shareholder Returns

Achieve an ROE of 6%, which exceeds
capital costs
Maintain a total return ratio of 100%
Reduce strategically held shares(Target: 30% reduction)

Cash generation during three years¥

31.0 billion or more

Investments in existing
businesses
Growth investments¥21.0 billion or more

3-year depreciation¥
expenses

19.0 billion or more

Additional returns(or investments in new
businesses)¥16.5 billion or more

32

A total of ¥¥20.0 billion or more

70.0 billion or more

216.5 billion
ROE 0.2%¥31.0 billion or more

3-year net income
attributable to
Wacoal Holdings ¥Corp.

Disposal ofstrategically held
shares

FY2019 shareholders’ equity

Stable dividends
Acquisition of treasury
stock

FY2022 shareholders’ equity¥(Reference) ROE in real terms: 4.2%

INTE GRATED RE PO RT 2 0 1 9

200.0 to 210.0 billion
ROE 6.0%

S T R AT E G Y

Estimate of the Balance Sheet at the End of FY2022
Total assets¥281.8 billion

Total assets

Around ¥265.0 billion

Liabilities
Cash¥39.0 billion

Current assets

Liabilities

Current assets

Cash reduction(Business investment)–¥21.0 billion

Fixed assets

Cash reduction(Additional returns or
new business
investments)–¥16.5 billion

Equity capital¥216.5 billion

Fixed assets(–¥16.5 billion)

Depreciation–¥19.0 billion
Fixed assets¥21.0 billion

Strategicallyheld shares

Strategically held
shares–¥20.0 billion

FY2019Equity capital¥200.0 billion

Net income
attributable to
Wacoal Holdings
Corp.
¥31.0 billion
Shareholder returns–¥31.0 billion
In case ofadditional returns:–¥16.5 billion

Strategicallyheld shares
FY2022

Note: Starting from FY2020, in line with the changes in U.S. Accounting Standards, the accounting method of lease transactions isscheduled to change. Accordingly, there will be an increase in fixed assets and liabilities. However, the above conceptual diagram
does not reflect it.

minimize increases in inventories. We are committed to step-

customers with a new side of Wacoal, the challenge of build-ping up the pace of initiatives aimed at realizing an optimized

ing such relationships will drive us into a new growth phase.

balance sheet that ensures we are able to expand businesses

Also, by further evolving the advantages that it has cultivated,

and that is both highly profitable and lean.

Wacoal can continue catering to customers’ increasingly
diverse preferences, new demand associated with the

A New Growth Phase

increasing empowerment of women in society, and the desire

At the same time as releasing the new management plan, weof everyone for good health and self-realization.

announced our target profile for fiscal 2028. Specifically, look-

The three fiscal years of the new management planing ahead nine fiscal years we aim to achieve net sales, includ-

represent an important period in which we can bring the future

ing equity-method affiliated companies sales, of ¥300 billion

I have just outlined much closer to hand. We will rigorously

and to lift the operating margin and ROE above 10%.

optimize operations on a global basis and ensure that eachSome critics view the future of the domestic innerwear

region and each sales channel realize growth. With respect tobusiness pessimistically. However, I see things differently.

financial strategy, we aim to lift the PBR above the one-time

Admittedly, the innerwear industry is undergoing consolidationlevel as soon as possible by generating profit that surpasses

and sales channels are being transformed. Until now, theequity cost and continuously enhancing enterprise value. As

closure of a brick-and-mortar store has resulted in the loss of

we mark our 70th anniversary by embarking upon ambitious

customers; however, moving forward, we intend to leverage

initiatives to evolve and advance into a new growth phase, I

the full-fledged emergence of e-commerce and omni-channel

would like to ask all stakeholders for their continued support.

services to renew our customer relationships so that they are
not only more interactive but also deeper, broader, and longer.
As well as being an excellent opportunity for familiarizing

IN TE GRATED RE PO RT 2 0 1 9

September 201933

S T R AT E G Y

Business Goals and Measures

Sustain the Growth and Enhance the Profitability of Wacoal Corp.
In setting out a target profile for Wacoal Corp., the new medium-term management plan calls for all business activities tofocus on building deeper, broader, and longer relationships with each customer, thereby heightening brand value andensuring growth.
Although the market environment is challenging, trends that create business opportunities for us are becoming increasingly marked. We will cement our reputation in the market as the No. 1 brand and grow net sales at an average annual rateof 2.5% by continuing to implement our previous medium-term management plan’s measures for developing new distribution channels. At the same time, we will raise the operating margin above 6% by fiscal 2022 through the maximization oforganizational productivity.
Business Environment

Risks

Opportunities hanges in the business formats of department stores and generalCmerchandise stores and the closure of unprofitable stores
Increased presence of global specialty store retailers of private label
apparel as innerwear competitors
The proliferation of inexpensive items(nightwear, knit innerwear, and innerwear for infants,
children, and men) he energization of the brassiere market through the introduction ofT
comfort-focused products
Greater awareness of size due to digital technology and customized
apparelIncreased interest in sports due to the Tokyo 2020 Olympic andParalympic GamesGrowth in demand from customers in their 50s and 60s who want toextend their healthy lifespanAchievements in the previous three years

Measures over the coming three years

Enhanced the management efficiency of the wholesale business• Completed business reorganization(Increased the efficiency of back-office departments andenhanced flexibility in the deployment of marketing personnel andin-store sales personnel)• Lowered valuation loss through the reduction of product returns
and weeded out underperforming stores through store closures
Improved the profitability of the retail business• Improved the sales margin significantly(Reduced discount sales and increased the percentage of common
products among shop brand lineups)• Improved the profit and loss of stores (Took measures to eliminate
loss-making stores)
Implemented growth investment for the construction of infrastructure
for the omni-channel strategy and completed preparations for its
commercial introduction• Operated a unified information management system(Integrated data on inventories, products, and customer
purchases)• Developed a 3D body scanner and a next-generation, AI-enabledcustomer-consultation service

 reating distribution channels that competitors cannot match byC
implementing such measures as the use of digital technology to
evolve customer services
Optimizing mixes of brands, products, and channels with the aimof penetrating priority markets outside the innerwear market•R eformulating category strategies (women’s sportswear, men’s
innerwear, footwear, nightwear, and products for children)•R ebuilding the portfolio of innerwear brands and reducing productvarieties•C ultivating customer loyalty• Tackling the declining profitability of operations that serve department stores
Addressing the low profitability of businesses that enhance culture
and beauty (sensibility) in the fields of lifestyle, apparel, and innerwear• Moving into the black early based on time limits and preparing plansfor constructive exits

Focus product planning, production, communication, and all other business activities on building deeper,
broader, and longer relationships with each customer, thereby heightening brand value and ensuring growthCore task

Business Goals

1

Cement our positionin the market as the No. 1 brand

34

2
Return net sales to a trajectoryof sustained growth(Net sales CAGR of 2.0%–2.5%)

INTE GRATED RE PO RT 2 0 1 93Realize stable profit growthby maximizing organizational
productivity(Operating margin above 6%)

S T R AT E G Y

Key Performance Indicators (KPIs)

KPIs for Main Businesses

2019/3 (Results)
Net Sales

102.4

Operating
Income5.1

OperatingMargin5.0%(¥ billion)

2019/3(Results)

2020/3 (Targets)

110.2(CAGR +2.5%)

6.7(CAGR +9.5%)
Above 6%2020/3(Targets)

Wholesale
Business¥82.35billion

CAGR
+2.2%

¥88.00billionRetail Businessand Online Sales
Business¥24.62billion

+8.6%

CAGR

¥31.55billionTotal*¥106.96billion

CAGR
+3.8%

¥119.55
billion* These figures are the totals of the wholesale business and the retail and online sales
businesses and do not include eliminations and adjustments, etc.

Priority Strategies and Concrete Measures

Innovation(ONLY ONE Strategy)

 volve into one of the world’s leading companies in the aggregation and utilization of data on
Ecustomer physiques and preferences (page 36)• Develop differentiated stores throughout Japan based on the omni-channel strategy• Realize a customized wear business based on personal data and a health support-related
business educe product groups and product varieties and review terms of transactions with departR
ment stores in the wholesale business (select and concentrate)• Redefine brands and strengthen the power of each product group (reduce product groups
by 20%)• Review business practices and transaction terms with department stores to enhance
profitability
 trengthen corporate brand communication to convey “Wacoal’s focus on the humanS
physique”• Heighten awareness of the importance of wearing the correct size of innerwear andenhance the value of innerwear• Earn support from the entry-level (teenage) customer group and customers in their 50s
and 60s

Market penetration(NUMBER ONE Strategy)

Strengthening ofbusiness foundations(ALL FOR ONE Strategy)
and reform of investment
fields and businessstructure

Raise the basic level of sales growth through measures that strengthen each sales channel
and non-innerwear product category by leveraging their characteristics
Measures to strengthen women’s innerwear
sales channels

Measures to strengthen non-women’s innerwear
product groups

Department
storesEnhance the value of the Wacoal
brand by strengthening prestigious
and semi-order-made brassieres

CW-X

Focus on sports brassieres to acquire
new customers

Generalmerchandise
storesIncrease sales of self-service storesby stepping up rollouts of brassieres
that emphasize comfort

Nightwear

Enhance the added value of the Think
Sleeping brandDirectly managed
storesConduct advertising and sales
promotions to heighten brandprofilesInnerwear forjuniors

Expand the entry-level (teenage)
customer group by heightening the
profile of the Pulili brandIn-house
e-commerce

Develop an app that strengthens
collaboration with department storesand specialty stores

Men’s innerwear

Increase business efficiency by integrating brands

FootwearContinue to strengthen business
footwear products for women eform work styles and leave systems to heighten productivity
R(Improve the productivity of each office worker and beauty advisor)
 nhance the added value of productsE(Develop new materials and production technologies)
Reduce material disposal and logistics costs
Optimize inventories on a Companywide basis
Improve the profitability of businesses that enhance culture and beauty (sensibility)
in the fields of lifestyle, apparel, and innerwear

IN TE GRATED RE PO RT 2 0 1 935

S T R AT E G Y

Special Feature

Innovation Strategy

Building Deeper, Broader, and Longer Relationships
with Each Customer
Wacoal Corp. has identified the three years through to fiscal 2022 as a period for transforming into one of the world’s leading companies
in the aggregation and utilization of data on customer physiques and preferences. To cater flexibly and rapidly to our customers’ divers­
ifying purchasing behavior, we are using digital technology to establish innovative in-store services and to develop a differentiated­omni-channel strategy that seamlessly integrates stores and e-commerce.
Going forward, we will establish a service network that competitors cannot match by developing strategic omni-channel storesnationwide. We will also create new products and services based on the multifaceted personal data on customers that we have accumulated. Through these initiatives, we will build deeper, broader, and longer relationships with each customer; heighten our brand value;and ensure growth.

The Wacoal Omni-Channel Strategy

Expand the service network based on physique data
Create new products and services by leveraging multifaceted personal data on customers
Utilize data in research and development
Develop new products and services
Utilize data in co-creation with other companies

Provide personalized customer services
Increase the percentage of regular customers
Attract young customers
Maximize sales opportunities

Strengthening our competitive advantage

Improvement of business productivity

Creating the Innerwear Customer Experience of the Future

Operational Innovation in Physical Stores

Personalized
applications

3D body scanners

AI-enabledcustomer service

Digitization ofcustomer records

Customer-service tablets

Integrated Companywide database (Infrastructure for the omni-channel strategy)
Customer information

Product information

Inventory information

Next-Generation Innerwear Stores

The Inaugural Wacoal 3D smart & try Store Opens!
In May 2019, in Tokyu Plaza Omotesando Harajuku (Tokyo), we opened the first innerwear store
that gives customers the chance to experience our new, independently developed 3D smart & try
customer service. Through the use of multiple 3D body scanners and consulting rooms as well astablet computers installed with AI-enabled customer service functions, the new store allows customers to take measurements and search for, try on, and purchase products by themselves if they
prefer. Moreover, customers can request a consultation with oneof our highly knowledgeable beauty advisors, who offer recommendations in view of each customer’s wishes or concerns. We
are moving forward with initiatives to open Wacoal 3D smart & try
stores across Japan. In September 2019, for example, we
unveiled a second store, in Daimaru Shinsaibashi (Osaka).

36

INTE GRATED RE PO RT 2 0 1 9

Progress of the first 3D smart & try store
as of the end of September 2019

Number of customers using
3D body scanners

Approx. 1,200 per month
Percentage of measured
customers who made purchases

Approx. 30%

Percentage of measured­ ustomers who purchasedcWacoal products for the first time

Approx. 60%

S T R AT E G Y

Creating the Future of Innerwear Purchasing Experiences

Customer Service
3D smart & try is a new service that helps customers find the optimal brassiere from among the many varieties available. Through the useof a 3D body scanner and AI-enabled customer service, both of which were independently developed by Wacoal, the service suggests
products that reflect each customer’s size, physique, concerns, and design or silhouette preferences. Over the coming three years, we will
introduce into stores 100 3D body scanners, thereby creating an environment that closely reflects the needs of, and is perfectly suited tobuilding deeper, broader, and longer relationships with, each customer.

Our AI-Enabled Customer ServiceIncludes a large amount of product information and has learned the beauty advisor customer
service techniques that Wacoal has accumulated to date
 ecommends products based on size and physique characteristics that have been identified byR
the 3D body scanner nables the filtering of products to reflect each customer’s concerns or design or silhouetteE
preferences acilitates objective checking of changes in physique silhouette by enabling the comparison ofF
360-degree physique measurements with past 3D measurement data he stress of choosing a brassiere is diminished significantly, and customers experience aT
new way of purchasing brassieres.

Our Leading-Edge 3D Body Scanner easures the size of approximately 1.5
Mmillion points on the physique and identifies
physique characteristics in just five seconds
 nables the selection of the optimal brassiereEsize for each person by measuring not only thecircumference but also the volume of the bust

 s customers can take measurementsAthemselves, the scanner allows those who
would prefer not to interact with store
personnel to visit stores and determine
their sizes without any anxiety.

The 3D smart & try Measurement Process

1

2

3

4

Measurement using
the 3D body scanner

The use of a tablet
computer to check the
3D measurement data

AI-enabled recommendationof optimal products based on
the 3D measurement data

The printing out and keepingof data on measurements andrecommended products

In a private room, the customer puts
on a dedicated brassiere and takes
measurements by following the
instructions provided.

The measurement data can bechecked from a 360-degree range ofangles. The customer can view their
physique characteristics categorized
into six segments and compare thedata with past measurement data.

The customer selects preferences orconcerns, and AI uses these together
with the measurement data to recommend optimal products. If the customer
feels unsure about anything, it ispossible to receive a consultationfrom a beauty advisor.

Depending on the sales channels thatare convenient for the customer,
products best suited to the customer
can be purchased at stores other thanthe one where measurements weretaken or through e-commerce websites. Going forward, we will link the
3D smart & try service with personalized apps to offer a service that caters
to the customer’s needs even more
precisely.

IN TE GRATED RE PO RT 2 0 1 937S T R AT E G Y

Business Goals and Measures

Revitalize Domestic Consolidated Subsidiaries
Peach John Co., Ltd., Ai Co., Ltd., and Lecien Corporation fell significantly short of the previous medium-term management
plan’s numerical targets and recorded operating losses in fiscal 2019. The conventional approaches to sales and marketing that these subsidiaries have established are no longer effective, and the time has come to reform their businessmodels. Under the new medium-term management plan, we will dramatically reform the businesses of our domestic consolidated subsidiaries. Further, if the companies do not begin posting operating income consistently during the first half ofthe new three-year management plan, we will initiate action plans for their revitalization.
Business conditions facing domestic consolidated subsidiaries

Measures over the coming three years

 utdated sales and marketing approaches no longer effective andO
reform of business models urgently required

Selecting and concentrating businesses
Strengthening distribution channels (e-commerce, etc.) and allianceswith other companies
Bolstering collaboration and implementing reorganization within
the GroupReforming the structure of businesses and personnel deployment

1. Reform and depart from conventional business models
2. Initiate action plans for revitalization if operating income is not posted consistently during the first halfof the new three-year management plan
Basis for deciding on the initiation of revitalization action plans

Core tasks

Peach John

Ai and Lecien

Degree of progress in fiscal 2021
under the new management plan

Whether they break even on
an operating basis in fiscal 2020

Business Goals and KPIs 

Peach John

Ai

Business Goals• Lay the foundations for the early realization of a 5% operating margin
KPIs

(¥ million)

Business Goals•C hange to a business model that can achieve a 5% operating margin•B reak even on an operating basis in the first year of the new management plan (fiscal 2020)2019/3 (Results)

2022/3 (Targets)

Net Sales

10,50011,600 (CAGR +3.4%)

Operating Income(Loss)

(220)

350

—

2.5 % – 3.0 %Operating Margin

Operating Margin

KPIs

(¥ million)
2019/3 (Results)

2022/3 (Targets)

Net Sales

4,200

4,500 (CAGR +2.4%)

Operating Income(Loss)

(320)

170

—

3.0 % – 4.0 %LecienBusiness Goals• Establish business foundations that can consistently generate operating income• Break even on an operating basis in the first year of the new management plan (fiscal 2020)

Business Goals•A chieve numerical targets for sales margins in each business• Take on the challenge of achieving a 4% operating margin

KPIs

KPIs

38

(¥ million)
2019/3 (Results)

2022/3 (Targets)

Nanasai(¥ million)
2019/3 (Results)

Net Sales

6,300

6,700 (CAGR +2.0%)

Net Sales

Operating Income(Loss)(380)

140

Operating Income

280

Operating Margin—

1.0 % – 2.0 %Operating Margin

3.0%

INTE GRATED RE PO RT 2 0 1 99,400

2022/3 (Targets)

9,200 (CAGR –0.6%)330 (CAGR +5.4%)
3.5 % – 4.0 %S T R AT E G Y

Peach John

Ai

Peach John will liquidate and consolidate underperforming directly
managed stores and discontinue the publication of catalogs whilestrengthening in-house e-commerce in Japan. The company willrevise product planning based on an analysis of the behavior ofyoung consumers who prefer trying on a variety of “cute,” inexpensive
items. At the same time, Peach John will rebuild its marketing mix sothat brand strategies, retail pricing strategies, e-commerce channels,
and advertising become more cohesive. Also, it will reinforce growthin Greater China by accelerating business expansion in the Chinese
market based on coordination with third-party e-commerce websites.
Through such efforts, the company will establish foundations forrealizing an operating margin of 5%.



Ai is fully exploiting the research and development achievements ofthe Human Science Research Center of Wacoal Corp. and otherintangible assets of the Group to establish San-ai Resort as a brandthat garners the endorsementof “adult” women. In addition,
through such measures as
beginning e-commerce sales in
China, Ai will transform itself toestablish a business model that
achieves an operating marginof 5%.

Priority Strategies

Priority Strategies

Enhance profitability
Liquidate and consolidate underperforming directly managed storesand strengthen in-house e-commerce in Japan

Establish a business model offering “resort solutions” that combine
swimwear and innerwear•D evelop value-added swimwear that leverages the achievements ofthe Human Science Research Center•O pen up the Greater China market• Decrease the number of stores that carry seasonal and special-event
products• Improve profitability by increasing the percentage of products
developed in-house

Revise brands and product planning
Rebuild the marketing mix (brands × pricing × e-commerce channels ×advertising)Use the products of Wacoal Corp. strategicallyAccelerate growth in Greater China
Accelerate business expansion in the Chinese market (open stores in
key cities and coordinate with third-party e-commerce websites) andopen stores in Taiwan (Taichung City and Kaohsiung City)

LecienEstablish a new personnel system and enhance productivity
by introducing multitasking

Nanasai

Anticipating a decline in orders from clients that it supplies as an
original equipment manufacturer as well as a decline in demand formaterial supplies in Japan, Lecien will reorganize its businesses
accordingly. Meanwhile, the company will develop new businessmodels in collaboration with domestic general merchandise storesand begin supplying overseas affiliates as an original equipment
manufacturer. Lecien will build business foundations that consistently realize operating income
by discontinuing underperforming businesses—such as thebusiness that supplies embroidered lace for outerwear—andby coordinating with Wacoal
Corp. to ensure effective utilization of the supply capacity ofLecien’s factories.

Priority Strategies
Select and concentrate business fields with a strong focus on grossprofit• Develop new business models through collaboration with domestic
general merchandise stores• Begin supplying overseas affiliates as an original equipment manufacturer (Taiwan, South Korea, etc.)• Discontinue underperforming businesses (such as the business that
supplies embroidered lace for outerwear)• Coordinate with Wacoal Corp. to ensure effective utilization of the
supply capacity of Lecien’s factoriesIn fiscal 2019, Nanasai completed a project for the interior construction of the flagship store of one of Japan’s major department store
chains. Despite the effect that the absence of this project will have on
operations, in the coming three years the company will conductbusiness management with a greater emphasis on profit to realize an
operating margin of 4%. With respect to the business environment,
the mannequin business is experiencing an increase in demand due
to labor shortages and the spread of AI. Also, demand is growing foraesthetically sophisticated interior design for restaurants, bars, andsuch public facilities as airports and schools. Taking advantage ofthe favorable environment, Nanasai will acquire new clients for its
interior construction business not only from the department store
and apparel production industries but also from other industries.
Priority Strategies
Build new platforms (acquire new customers and develop new
products)• Acquire new clients for the interior construction business beyond thedepartment store and apparel production industries•D evelop service mannequins that enable unmanned customer
services and sales projections by evolving the interactive mannequinprogram•H elp address the social issue of environmental conservation by
popularizing mannequins made from biodegradable materials or
paper
Emphasize profit in conducting business management•L everage the construction quiet season to take steps to enhance
work efficiency•C onsolidate product varieties, implement joint delivery with industry
peers, and reform underperforming overseas operations
Realize work-style reform

IN TE GRATED RE PO RT 2 0 1 939S T R AT E G Y

Business Goals and Measures

Expand and Grow the Overseas Business
Across all mainstay overseas markets, the department store (brick-and-mortar store) business format is in decline. In the markets of theUnited States, Europe, and China, e-commerce accounts for between 20% and 30% of sales. We view the shift away from department
stores and toward e-commerce as a trend that is likely to become even more pronounced, and in response we will strengthen collaboration with the operators of e-commerce malls in many different countries and regions. We will advance our omni-channel strategy inJapan and begin initiatives to integrate customer relationship management with in-house e-commerce. Meanwhile, in India, Latin
America, the eurozone, and other countries and regions, we will implement growth investment with the aim of strengthening small-scale­businesses. We will ambitiously seek rapid improvements in growth through M&A and other initiatives and rigorously analyze the­compatibility of prospective business partners with our existing businesses.
Business conditions facing the overseas businessMeasures over the coming three years ecline of department store and specialty store
D
channels in mainstay markets
Accelerating digitization of the retail industry in manydifferent countries and regions

Introducing high-value-added products that transcend boundaries between Japanand other countries
Collaborating with major e-commerce websites or strengthening in-house e-commerce websites depending on the characteristics of countries and regions
Conducting growth investment and developing business foundations with the aim ofstrengthening small-scale businesses in certain countries and regions

Strengthen the e-commerce businessCore task

Business Goals and KPIs 
In North America and Europe, while operating margins are expected to edge down, we will reorganize business foundations. Aiming toaccelerate growth of the e-commerce business, we will reorganize in-house websites, invest in advertising, and give priority to investment in offices, logistics warehouses, and core IT systems.

Businesses in China

Businesses in Europe

Businesses in the United States

Business Goals

Business Goals

Business Goals• Grow net sales at an average annual rate of 9%• Ensure an operating margin of between 6% and
7% (higher than the current level)• Ensure an operating margin of between 8% and 9%•Invest in business infrastructure that promises
growth (renew in-house e-commerce websites,
introduce product life cycle management, andreorganize the head office, logistics warehouses, and factories)• Improve the sales margin (by between 2.0 and
2.5 percentage points)• Ensure an operating margin of between 9% and
10% (remain mindful of appropriately balancing
growth investment and operating income)

KPIs

KPIs

KPIs

(RMB million)
2019/3(Results)(£ million)

2020/3(Targets)

2019/3(Results)

900

Net Sales

97

44.6

54.5

Operating
Income6.4%

6.0 % – 7.0 %OperatingMarginNet Sales

695

Operating
IncomeOperatingMarginBusinesses in China(CAGR +9.0%)(US$ million)
2019/3(Results)

2020/3(Targets)

113

Net Sales

167

9.7

9.4

Operating
Income

18.9

17.9

10.0%

8.0 % – 9.0 %OperatingMargin11.3%

9.0% – 10.0%(CAGR +5.3%)

189(CAGR +4.3%)

Through increased collaboration with Japan-based operations(Wacoal Corp.), we will strengthen branding and marketing in the
e-commerce market, thereby attracting younger customers and other
undeveloped customer groups. We will maintain a high level ofgrowth potential by strengthening the ability of the e-commercebusiness to grow while investing in marketing that increases ourshare of sales in department stores. Also, we will establish an efficient business infrastructure through the strengthening of logistics
warehouses and core IT systems. Based on such initiatives, we willgrow net sales at an average annual rate of 9% and ensure an operating margin that is higher than the current level.

40

2020/3(Targets)

Priority Strategies
Strengthen the ability of the e-commerce business to grow• Bolster alliances with the operators of e-commerce malls• Implement strategic deployment of brands to attract young
customers
Strengthen the ability of brick-and-mortar stores to grow• Leverage the planning and development competence of Wacoal
Corp. to increase product appeal• Capture the middle-class customer group through the developmentof new business formats (outlet channels, etc.)
Establish a rational business infrastructure with scope for growth

INTE GRATED RE PO RT 2 0 1 9

S T R AT E G Y

Businesses in EuropeWe will expand and enhance brand portfolios and marketing basedon the characteristics of countries and distribution channels. For
example, we will foster brands for the fuller figure that follow on fromthe success of the elomi brand, which has grown into a second mainstay. Further, plans call for strengthening in-house e-commerce. We
will also concentrate efforts on expanding businesses in Germany,
Italy, and other eurozone countries. Our businesses in Europe will givepriority to growth investment. Initiatives will include implementing aplan to renew in-house e-commerce—which was postponed during
the previous management
plan—and reinforcing the appeal
of individual brands. Throughthese measures, the businesses
will achieve average annual net
sales growth of 5% and ensure
an operating margin of between
8% and 9%.

Businesses in the United States

VE
IA
TI
IT

Strengthen businesses in eurozone countries•A ccelerate the development of markets in Germany, Spain, and Italy
through stepped-up product rollouts at department stores
Establish business infrastructure• Increase the capacity and productivity of the joint venture factoryin Sri Lanka• Enhance the head office environment and strengthen the capabilities
of logistics warehouses•A dvance programs for developing the skills of employees

While steadily growing our No. 1 share of the department store
market, we will strengthen e-commerce. We will tackle ambitious
initiatives to achieve rapid improvements in growth through business
investment in growing markets. At the same time, we aim to solidify
our foundations with a view to realizing net sales of ¥30 billion in theAmericas in fiscal 2028. To this end, we will enhance product development capabilities, reform cost structures, and expand businesses
in surrounding countries. Meanwhile, we will increase e-commerce
sales as a percentage of net sales and improve the sales margin byenhancing business efficiency. In these ways, businesses in the
United States will focus on achieving an appropriate balance between
growth investment and operating income, thereby ensuring an operating margin of between 9% and 10%.

IN

Priority Strategies
Strengthen brand portfolios and marketing to reflect changes in themarket environment•F oster brands for the fuller figure(Strengthen the elomi and Goddess brands and enhance the value ofthe Wacoal brand)• Introduce, renew, and extend the regional coverage of in-house
e-commerce• Invigorate the specialty store channel(Boost support for specialty stores through business-to-businesssystems)

Priority Strategies
Develop new distribution channels and business opportunities• Strengthen e-commerce by revamping smartphone-friendly websites
and introducing customer relationship management•G row our No. 1 share of the U.S. market and the department store
market• Bolster businesses in Canada, Mexico, and Brazil and collaborate withbusinesses in Europe and India
Enhance product development capabilities and fitting quality• Introduce process engineering and product life cycle management•E xpand and reorganize the factory in Dominica and improve
productivity

The Acquisition of a Digitally Native Vertical Brand

In July 2019, U.S. subsidiary Wacoal International Corp. acquired all of the issued and outstanding shares of Intimates Online, Inc.,
which is headquartered in New York State and designs and retails women’s innerwear in the United States under the LIVELY brand.
With the ongoing expansion of e-commerce markets worldwide, the United States has seen digitally native vertical brands(DNVBs)* emerge rapidly in recent years. By incorporating one such brand into its operations, the Wacoal Group will gain millennial
customers—who are outside the Group’s traditional mainstay customer group. In addition, the new subsidiary’s e-commerce sales
and digital marketing methods will drive the Group’s growth in the market. Further, by leveraging our product planning and development capabilities, factories, and overseas business infrastructure, we will greatly increase the LIVELY brand’s sales growth.
Growth scenario for the LIVELY brand business

Website: https://www.wearlively.com/• In three years (fiscal 2022)
Move into the black
Achieve net sales of $100 million and an• In five years (fiscal 2024)
operating margin of 12%–15%
The LIVELY brand’s advantages and synergies with the Wacoal Group
Advantages of the LIVELY brand•U nique brand image and product lineup and millennial endorsement
Synergies with the Wacoal Group•A
 cceleration of the LIVELY brand’s growth by leveraging the Wacoal
Group’s business infrastructure•S trengthening of the entire Group’s digital marketing capabilities

Intimates Online, Inc. philosophy

Michelle Cordeiro Grant
Founder and CEO* DNVBs take responsibility for all stages of their value chains in a “vertical” manner, from upstream operations through to downstream operations, and directly hold customer
information. More specifically, DNVB products are manufactured by a single company, which is also responsible for manufacturing quality and retails its products directly tocustomers through an in-house e-commerce channel.

IN TE GRATED RE PO RT 2 0 1 9

41

F O U N D AT I O N

A Message from the Director of the Administrative Department

Tackling ESG Issues
While Achieving
Business Growth
The rapid evolution of digital technology, population aging
and decline, climate change, and an array of other social
issues are bringing about significant change in markets
and customer needs. Further, there is a growing tendency
among customers worldwide to favor the products ofcompanies that use sustainable materials and manufacturing processes.
One of our overriding management goals is the creationof products that are loved by customers. Wacoal has realized this goal by devoting itself to creating products thatearn the long-term loyalty of customers. As part of these
efforts, we have developed unique quality standards in thecourse of our long history. In such ways, we have provided
products loved by customers and established an approachto business management that is based on mutual trust. I
believe that we need to elevate both these features of ourbusiness even further so that we meet the needs of customers who want to make a greater contribution to therealization of a sustainable society. Given that business
management based on mutual trust is equivalent to business management that is responsive to ESG (environmental, social, and governance) requirements, theimplementation of business management based on
mutual trust will contribute to the sustainable development

we need to raise compliance awareness with respect toof society and Wacoal.

the expressions used in our advertising and communica-

For example, the Company has yet to tackle certain
ESG-related issues in its supply chain processes, from raw

tions activities.
For a company such as Wacoal that emphasizes busi-

material procurement through to manufacturing and sales.

ness management based on mutual trust, initiatives to

We have been strengthening activities to fulfill social

tackle ESG issues are extremely important for heightening

responsibilities in this regard since adopting the Wacoal

relationships of trust not only with customers but also withGroup CSR Procurement Guidelines in October 2017.

society. Therefore, we will enhance the quality of all

However, our monitoring does not yet cover all our con-­processes in our supply chain by maintaining a strong

tract manufacturers. Accordingly, we will continue working

awareness of compliance.

with contractors to heighten the transparency of ourAlso, in building strong relationships of mutual trust andsupply chain. Also, in 2018 we received a significant

sustaining growth, it is essential that we develop the capa-

amount of criticism for using expressions in advertisingbilities of individual employees, our greatest managementthat were not in the spirit of diversity. For this reason,

resource. Personnel development is an ESG task of

42

INTE GRATED RE PO RT 2 0 1 9

F O U N D AT I O N

fundamental importance to Wacoal. With that in mind, we

advance cohesive Companywide initiatives accordingly.

will foster personnel who will continue to implement our

Together with our more than 20,000 employees, I intend to

management philosophy. At the same time, we will realize

further develop ESG-focused management initiatives so

an appealing corporate culture by establishing systems

that we can create differentiated economic and social value.

and environments in operations worldwide that are evenmore employee friendly and that boost employee motiva-

September 2019tion. To ensure the realization of the aforementioned­measures as well as business management based on

Masashi Yamaguchi

mutual trust and transparency, we will steadily upgrade

Vice President and Director
Wacoal Holdings Corp.

and implement corporate governance.
Wacoal must ensure that it sustains growth and remains
a necessary presence in society throughout the remainderof the Company’s first century and beyond by continuing todevelop a vision founded on ESG requirements and to

IN TE GRATED RE PO RT 2 0 1 9

43

F O U N D AT I O N

Human Resources Management

Consistent with a management philosophy that emphasizes mutual trust, Wacoal manages employees’ health and 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 thetalents of individual employees can be fully realized.
Our Basic Approach to Human Resources
The Wacoal Group has built value chains that comprise proprietary networks, which span all stages from product planningand development through to material procurement, production,and sales. In these value chains, human resources are theGroup’s most important management resource. For thisreason, we believe that creating an appealing corporate culturethat is employee friendly and offers job satisfaction will lead tosustained growth.

A Human Resources Strategy Based on Diversity
and Inclusion
Wacoal employs and recognizes the individual differencesof a wide range of people, not just in terms of race, gender,
age, or whether they have disabilities but also in terms oflimitations on availability due to child-rearing or nursingcare commitments or lifestyle factors. With this in mind,
we have positioned diversity and inclusion at the center ofour human resources strategy with the aim of creating
new value by leveraging the individuality of employees andenabling them to fully realize their talents. In accordancewith this strategy, we are promoting human resources
development, work-style reform, health and productivity
management, and other initiatives.

2016/32017/3

2018/3

2019/3

109

119

120

131

130

Number of employees taking
child-rearing leave

108

118

119

127

129

Percentage of employees taking
child-rearing leave

99.1

99.2

99.2

96.9

99.2

Percentage of employees returning to work
after taking child-rearing leave

91.7

88.1

89.1

89.8

100

21

16

17

8

0

28.0

27.6

46.3

52.2

29.4

Number of employees resigning
after returning to work fromchild-rearing leave
Percentage of male employees taking
child-rearing leave

The Empowerment of Women

Although women account for a high percentage of Wacoal
Corp. employees, they are underrepresented in Wacoal Corp.’smanagement team. Therefore, we view empowering womenand thereby reflecting a greater diversity of viewpoints indecision-making as an important management goal. To thisend, we are cultivating workplace environments that are conducive to women utilizing their strengths and attributes to playprofessional roles of greater importance. We will continue
supporting the career development of women by expanding
and improving a variety of systems and training programs.
2015/3

2016/32017/3

2018/3

2019/3

Percentage of female employees

85.3

85.8

86.3

86.2

86.3

Percentage of female managers

16.6

18.6

19.8

20.3

22.6

Human Resources Development

Focus Areas of Our Initiatives
The Advancement of Work–Life Balance

2015/3

Number of employees giving birth

Wacoal Corp. is developing workplace environments thatenable employees to lead fulfilling lives and to make the bestuse of their skills. For example, as part of our initiatives to help
employees meet work and child-rearing commitments, we areestablishing programs and norms with a view to creating
environments that are convenient and fulfilling to work in not
only for employees with child-rearing commitments but also forcoworkers who support them. Further, as a result of preparing
an action plan based on Japan’s Act on Advancement of
Measures to Support Raising Next-Generation Children andtaking measures to implement the plan, in 2018 we received
Kurumin certification for the third time and Platinum Kurumin
certification.

We believe that our development as a company is dependent
upon efforts to enhance the qualifications of each employee.
Based on this belief and with the aim of fostering personnel
who can put our management philosophy into practice, we
provide and conduct training programs that support the development of employees’ careers and professional skills. We also
assist in career and personal development through programs
supporting employees’ self-study.
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 anddirection through technical experts dispatched from Japan tooverseas factories.

Platinum Kurumin
Wacoal Corp.

44

INTE GRATED RE PO RT 2 0 1 9

F O U N D AT I O NHealth and Productivity Management

A Sample of Our Human Resources Development Programs
Number ofAnnualhours ofnumber oftraining per
participants
personProgramAim

Rank-Based
Training

The acquisition of the knowledge and mind-set
needed as a result of a change in role orqualifications

260

1–6
days*

TerakoyaCollege

The sharing of knowledge in-house, the passing
on of knowledge, the fostering of the corporate
culture, and the development of organizations

111

7.5
hours

Overseas
work training

3

2–3
years

Global Talent
Development

The development of globallycompetent personnel who
have international communication skills (the ability to
execute work, language
skills, and the ability to workin and understand othercultures)

Overseas
language training

2

5
monthsGlobal mind-set
training

41

3.0
hours

Self-study
support program

35–

Distance
learning

178–

Self-Study

The utilization of e-learning
programs as the primarymeans of implementing
training and measures andproviding content that
supports the autonomous
development and enhancement of employee
capabilities

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 2020, the Wacoal GENKI Project
2020 (see Table below) establishes medium-term targets andaction plans for countermeasures to lifestyle diseases, cancer,
and mental health issues. Moreover, these initiatives havereceived external recognition. Wacoal Holdings Corp. has been
selected and certified as a Health & Productivity Stock and a“White 500” enterprise with outstanding health and productivity
management for four and three consecutive years, respectively. Further, subsidiary Wacoal Distribution Corp. hasreceived the latter certification for two consecutive years.

* Differs according to employee rank

Health & Productivity Stock
Wacoal Holdings Corp.

Excellent Enterprise of Health & Productivity
Management 2018 (White 500)
Wacoal Holdings Corp.
Wacoal Distribution Corp.

Table Wacoal GENKI Project 2020

Work-Style and Leave-Style Reform

Aiming to enhance productivity and job satisfaction, Wacoal
Corp. launched the Work-Style and Leave-Style Reform Projectin April 2017. Under this project, we are establishing employeefriendly working conditions by introducing a telecommuting
system, a leave system for self-improvement, and a systemthat helps families take leave at the same times. We plan toadvance personnel management with a view to raising productivity, and we will continue to take initiatives to heighten job
satisfaction.
2015/3

2016/32017/3

2018/3

2019/3

6.0

6.0

6.2

5.8

5.7

Total number of hours worked per month

150.2

150.0

148.5

145.5

144.0

Percentage of paid leave taken*

80.2

79.2

82.2

87.0

83.0

Percentage of employees taking more than
70% of their paid leave

62.0

60.6

63.9

70.4

65.6

Average number of hours of overtime
workedSummary

Numerical
target2015/3(Before project’s
countermeasures)2019/3(Results)

Lifestyle disease countermeasures
Reduce the percentage of
employees with lifestyle-diseaserelated conditions

25%
reduction

29.2%

29.8%

Lung

96.1%

96.5%

Stomach

79.3%

88.3%

90.5%

94.4%

Breast

81.0%

79.4%

Uterus

65.0%

65.8%

Cancercountermeasures
Increase the percentage of employees
screened for five major
cancers

Large
intestine

100%

Increase the percentage ofscreened high-risk employees(those requiring secondary tests)

100%

67.0%

79.4%

Reduce the percentage of
employees who smoke

15%
or lower

20.4%

17.6%

9,555

15,868

Mental health issue
countermeasures
Reduce the number of employeesabsent long term due to mental
health issues × the number of days
absent7,000

or lower* Number of days of paid leave taken by all employees ÷ Number of days of paid leave
granted to all employees

IN TE GRATED RE PO RT 2 0 1 945

F O U N D AT I O N

Sustainability

In pursuing our mission, which calls on us to contribute to society by helping women to express their beauty, and in helping address social issues, we continuously conduct social contribution activities through our mainstay business andremain mindful of the effect of our business activities on the environment and society.
Our Basic Approach to Sustainability
We believe that meeting the needs and expectations of society
and earning its trust are essential for the realization of soundcorporate activities and sustained growth. Wacoal procuresmany different types of resources from society, including land,
energy, personnel, and large amounts of raw materials.
However, we would be denied access to such resources if we
did not have a relationship of trust with society. Accordingly, as
we conduct our business activities, we will keep firmly in mind
the need to consider and benefit society, without which ourmarkets would not exist.

Pink Ribbon Fittings for Charity
As part of Pink Ribbon activities, which support the early detection of breast cancer, every October in the sales areas ofapproximately 1,600 stores across Japan we conduct Pink
Ribbon fittings for charity whereby we donate ¥10 for each
brassiere tried on.
Fitting Campaigns (➊ Number of people who tried on brassieresand ➋ Number of brassieres tried on)
2007/10(First campaign)

2017/10

2018/10

Cumulative total➊

111,989

167,432

186,670

1,718,135➋

273,288

457,451492,684

5,412,559

Participating companies in Japan: Wacoal Corp., Peach John Co., Ltd., Unenana Cool
Corp., and Linge Noel Co., Ltd.

Our Policy on CSR Activities
Wacoal’s fundamental social responsibility is to manufacture products that customers love, develop products thatmeet current needs, and conduct business fairly to pave
the way to a better future. In other words, we believe thatour basic corporate social responsibility (CSR) is to build
relationships of trust with customers and society throughthe development of businesses in an equitable mannerand an uncompromising approach to manufacturing thatprovides customers with the products they seek.
We advance CSR initiatives based on seven basic
principles and seven core subjects, all of which are inaccordance with the ISO 26000 standards published in
November 2010 (Japan Standards Association, 2010).
Our seven basic principles are accountability, transparency, ethical behavior, respect for stakeholders’ interests,
respect for the rule of law, respect for international codesof conduct, and respect for human rights. The seven core
subjects are organizational governance, human rights,
labor practices, the environment, fair operating practices,
consumer issues, and community involvement anddevelopment.

Focus Areas of Our Initiatives
Support for Breast-Care Activities Worldwide

Breast cancer is the most common type of cancer among
women. As a company whose core business manufactures
women’s innerwear, Wacoal views the increased incidence ofbreast cancer as a social issue that must be addressed if it is tocontinue growing. In 14 countries and regions, we conduct
breast-care activities that help develop social infrastructure
and communities and aim to alleviate the suffering and­sadness caused by breast cancer. In these activities, we promote prevention and screening, provide support for patientsand their families that includes post-surgery assistance, andencourage better understanding of breast cancer among thegeneral public.

The Remamma ProjectIn 1974, Wacoal Corp. began the Remamma Project to provide
innerwear and swimwear that offer women who have undergone breast surgery a sense of beauty. As part of the project’s
activities, we hold events all over Japan at which women canreceive expert consultation.
Nationwide Consultation Events (➊ Number of attendees and➋ Number of events)
1994/3(First campaign)

2017/3

2018/10

2019/3

➊

573

1,595

1,791

1,753

➋

4

32

36

33

The Remamma Project (Fiscal 2019)

610 million
Sales volume 120,000 items*
Net sales¥* Innerwear, swimwear, pads, etc.

The Breast Cancer Screening Support Project
To increase the opportunities of women to receive breast
cancer screening, Wacoal Corp. purchased a mobile breast
cancer screening unit. Since October 2009, we have been using
the unit to facilitate breast cancer screening. We are expanding
these activities with a focus on group screenings organized incollaboration with health insurance associations andcompanies.
Screenings Provided by the AIO Mobile Breast Cancer Screening Unit(➊ Number of people screened and ➋ Number of screening days)
2010/3(First campaign)

2018/3

2019/3Cumulative total

➊

369

6,520

5,440

45,344

➋

15

163

136

1,085

The AIO mobile breast cancer screening unit

46

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A Remamma consulting room

F O U N D AT I O NRespect for Value Diversity in Advertising

Advertising Criticized by Customers

As customers’ values diversify and social media and othertypes of media become more prominent, building sound,
positive relationships with all customers calls for the production of advertising and communication tools that are sensitive
to current trends and that speak to individuals who want to feelenriched and beautiful while being themselves.
In certain product advertising activities, Wacoal used inconsiderate expressions that made many customers feel uncomfortable. In response, we have established a guideline for the
proposal of expressions used in our public relations, advertising, and sales promotion activities to ensure ethical conduct
and respect for value diversity in relation to advertising expressions and their production processes. Based on this guideline,
we are proceeding with measures to ensure that we avoid
inappropriate expressions in the future.

PeriodCompany

Details

February 2018

The use of animal-related imagery in theexpressions of online advertising that
Taiwan Wacoal Co., Ltd.
highlighted features related to the movement of the bust during exercise

June 2018

Wacoal Corp.

The use of expressions that likened
product material to a woman’s skin in
online advertising of men’s innerwear

November 2018

Peach John Co., Ltd.

The use of inappropriate expressions in
the advertising of health supplements that
could have encouraged incorrect usage

Measures to Avoid Inappropriate Expressions
The Board of Directors analyzed the causes of the usage of
inappropriate expressions, discussed measures to avoid theusage of inappropriate expressions in the future, and established a guideline aimed at ensuring the propriety of public
relations, advertising, and sales promotion activities. Wacoal
Corp. and Peach John Co., Ltd., have begun following thisguideline. Moreover, Wacoal Corp. has introduced its measures
to Group companies in Japan and overseas, which have beentasked with establishing standards and systems suited to theirrespective businesses and regions by the end of March 2020.

Newly established guideline and management system for representations and expressions in the public relations, advertising,and sales promotion activities of Wacoal Corp.
Guideline

Points to keep in mind when proposing representations and expressions

With the aim of conducting public relations, advertising, and sales
promotion activities that are loved by everyone worldwide,
Wacoal Corp. will respond to society’s diversifying values by
being sensitive to current trends and by understanding individuals
who want to feel enriched and beautiful while being themselves.

Innovation and creativity
Ethics, morality, and trust
Human rights
Consideration for the environment
Compliance, fairness, propriety, and facts

Management system

Ongoing confirmation

System for determining whether representations and expressions are ethical
Person responsible
for executing work** Decide based on self-check sheet
If doubts entertained, promptly take steps toconfirm and decide

Department manager*
If doubts entertained, promptly take steps toconfirm and decideSelf-check sheet details
I.	Representations and expressions
in general (55 items in total)II.	Information distribution(10 items in total)
III.	Production procedures andinterpersonal relationships(13 items in total)

General manager*

Examination➀➁

Newly established
Representations andExpressions Ethicality
Examination Committee➀ If respective organizations cannot decide,seek a decision from the Representations
and Expressions Ethicality Examination
Committee➁ Take measures based on examination
findings

Secretariat

IN TE GRATED RE PO RT 2 0 1 9

47

F O U N D AT I O N

CSR Procurement Based on Mutual Trustand Cooperation

Contract Manufacturers Covered by Disclosure(As of the end of September 2019)

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 our products are shipped totheir respective markets after processing through international
networks in which the production or procurement of raw materials and the mass production of finished products are carriedout in factories in China or emerging countries in ASEAN.
Established in October 2017, the Wacoal Group CSR
Procurement Guidelines declare that “in order to fulfill oursocial responsibilities, we must build close partnerships with all
suppliers involved in our product manufacturing activities, andtogether with them we must comply with and respect society’s
requirements with regard to not only quality, pricing, and delivery but also human rights, labor practices, the environment, andethics.” Since February 2018, we have been conducting amanagement cycle that continuously amends and improves
the guidelines in light of careful monitoring of compliance withthe guidelines. Further, with the permission of its contract
manufacturers, Wacoal has been disclosing their basic information on its website since May 2018.

Manufacturing output
of factories covered byNumberdisclosure as a percentage
of updates
of products procured invalue terms

Name

Updated number offactories covered bydisclosure

Wacoal Corp.

72 factories; Contract
manufacturers for the
Wacoal and Wing brands

Suppliers of over 68% of
products procured by
Wacoal Corp. in value
terms

2

Peach John
Co., Ltd.

41 factories

81% of innerwear,
roomwear, and fashionwear products procured

2

LecienCorporation

22 factories

99% of innerwear andouter apparel products
procured2

Ai Co., Ltd.

15 factories

77% of swimwear andinnerwear products
procuredFirst time

CSR Procurement Initiatives

2017

2018

2019

Jan.

In response to concerns raised by an international NGO about working conditions at a sewing factory in
Myanmar that is contracted to manufacture products for Lecien Corporation, Wacoal conducts an on-site
investigation and informs the NGO about the results of the investigation and its policy going forward

Apr.

Launch of the CSR Procurement Project to provide guidance on the monitoring and resolution of social
responsibility activities in Wacoal’s procurement processes

Oct.

Establishment of the Wacoal Group CSR Procurement Guidelines, which set out common procurement
methods for the GroupFeb.

Start of monitoring based on self-assessment by contract manufacturers

Apr.

Establishment of the CSR Procurement Committee with the aim of increasing the effectiveness of CSR-based
procurement

May

Disclosure of contract manufacturers for the Wacoal and Wing brands

Jul.

Commencement of surveys on the acceptance of non-Japanese technical interns by Wacoal Corp.’s contract
manufacturers in Japan

Sep.

Disclosure of contract manufacturers for Peach John Co., Ltd. and Lecien Corporation

Sep.

Disclosure of contract manufacturers for Ai Co., Ltd.
Updating of the disclosure of contract manufacturers for the Wacoal and Wing brands, Peach John Co., Ltd.,and Lecien Corporation

Status of improvements at a factory of acontract manufacturer in Myanmar for
Lecien Corporation

Establishment of medical facility withfull-time qualified nurses

Installation of additional toilet stalls

Fiscal 2019 Initiatives and Fiscal 2020 Plans

48

Fiscal 2019
InitiativesImplemented monitoring through self-evaluations (examinations of documents) conducted by all contract manufacturers of Wacoal Corp.
(with respect to Wacoal and Wing brand innerwear), Peach John Co., Ltd., Lecien Corporation, and Ai Co., Ltd.
Analyzed self-evaluations and provided feedback to respective companies and completed submission of plans for amendments
and improvements
Conducted on-site audits of contract manufacturers (conducted on-site audits at approximately 10% of target factories)

Fiscal 2020Plans

 ontinue aforementioned on-site audits (plan to conduct on-site audits at approximately 20% of target factories)
CExtend the coverage of CSR-based procurement activities(add as survey targets the contract manufacturers of the Retail Business Department and operational areas beyond the innerwear-related
operations of Wacoal Corp.’s Wholesale Business Division)

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F O U N D AT I O N

Environmental Activities

Wacoal shall promote environment-friendly business activities
reflecting the view that protecting the environment is a corporate responsibility. Wacoal shall provide products that place
minimal burden on the environment and prevent pollution by
pursuing environment-friendly initiatives in a variety of processes related to its products, from design and materials
development through to manufacturing, distribution, and sales.
Aiming to realize operations that are in greater harmony withthe global environment and local communities, we will step up
initiatives focused on such areas as promoting the eliminationof plastic from packaging, reducing the disposal of unsold
products, and introducing smart factories.

The Advancement of Modal Shift
Wacoal Distribution Corp. is advancing modal shift (the conversion of the modes of transportation for freight and other goods)
with a view to compensating for the serious shortage of truck
drivers; ensuring the delivery of products when there are disasters or other emergencies through the diversification of delivery
routes; and being environment friendly. In April 2014, we
switched the transportation of goods for sale at department
stores in the Tokyo metropolitan area from trucks to railways.
Also, since May 2016 we have been transporting goods for salein Sapporo, Hokkaido, via ferries that operate on routes in the
Sea of Japan. These initiatives are helping to reduce the CO2
emissions produced when our goods are transported.

Results of Environmental Activities (Numerical results of the
Wacoal Group’s operating bases in Japan)
Electricity used
(1,000 kWh)

Modal shift benefits

2014/3

2015/3

2016/32017/3

2018/3

2019/3

11,27911,086

11,383

11,821

12,095

11,942

Gas used (1,000m )

687

673

620

685

688

700

CO2 emissions (t)

6,057

5,927

5,913

6,227

6,348

6,294

Water used (1,000m3)

121

114

112

112

113

120

OA paper used
(1 million sheetsof paper)

25.5

26.1

24.5

24.6

23.5

21.3

Total waste emissions
(t)

1,174

1,178

1,187

1,181

1,109

1,068

Incinerated waste (t)

86.5

80.1

72.3

73.8

80.8

75.4

Recycling rate (%)

93

93

94

94

93

93

3

(Coverage: Head Office Building, Spiral Building, Asakusabashi Building, Kojimachi
Building, Kyoto Building, Shin-Kyoto Building, Osaka Building, Moriyama Distribution
Center, Fushimi Distribution Center, Kyushu Wacoal Manufacturing Corp. [Nagasaki,
Kumamoto, Fukuoka], Hokuriku Wacoal Sewing Corp., Niigata Wacoal Sewing Corp., andFukuoka Branch Store and Sapporo Branch Store [both stores occupied by tenants])

Wacoal’s Original Self-Evaluation Indicator: Value-Added
Carbon Footprint*1 Ratio (Coverage: Wacoal Holdings Corp. andWacoal Corp.)

We measure effect by calculating how much value we haveadded per unit of CO2 emissions. This indicator is shown as the
product of value-added labor productivity (Value added*2 ÷ Total
number of hours worked) and CO2 emissions per work hour. We
aim to affect the actions of each individual by adopting a different approach that focuses on two areas: heightening the capabilities of individual employees so that they work efficiently andreducing environmental burden during operational hours.
Value-Added
Carbon Footprint

Value added

CFP

Total number ofhours worked

Total number ofhours worked

Value added¥29.13 billion

thousand
9,197 hours

Total number ofhours worked

CFP

9,197 thousand
hours

3,328t

FY20118.75 million/t

Total number ofhours worked

Value added

CFP

Total number ofhours worked

Value added¥29.72 billion

thousand
9,006 hours

Total number ofhours worked

CFP

9,006 thousand
hours
Down 1.49 million/t

1/8

CO2 emissionsof trucktransportation CO2 emissions

Acquisitions of the ISO 14001 Environmental Management
System Standard and the Kyoto Environmental Management
System Standard (KES) Certifications
Companies with ISO 14001 environmental management system
certification
Japan
Wacoal Corp., Wacoal Service Co., Ltd., Unenana
Cool Corp., Wacoal Distribution Corp., and Kyushu Wacoal
Manufacturing Corp.
OverseasGuangdong Wacoal Inc. and Vietnam Wacoal Corp.

Companies with KES environmental management system
certification

Niigata Wacoal Sewing Corp., Hokuriku Wacoal Sewing
Corp., Torica Co., Ltd., and Lecien Corporation.
Brassiere Recycling Activities
Questionnaires revealed that some customers find disposingof brassieres problematic. In response, Wacoal began collecting unneeded brassieres from customers in 2008. (In fiscal
2019, we collected unneeded brassieres from customers
between December 1, 2018 and March 31, 2019.)
The collected brassieres and the sealed recycling bags
containing them are processed into RPF (Refuse Paper &Plastic Fuel).
Number of Brassieres Collected
2008/3(First campaign)

2018/3

2019/3Cumulative total

30,000279,000

265,000

2,241,000

4,100t

FY20187.26 million/t*1 Carbon footprint (CFP) includes CO2 emissions resulting from the use of electricity,
fuel, and water and from the disposal of waste. For CO2 emissions resulting fromenergy use, equivalent values for each region are used.
*2 Value added = Operating income + Personnel expenses (sales and manufacturing) +Depreciation and amortization (sales and manufacturing)A brassiere recycling bag

IN TE GRATED RE PO RT 2 0 1 9

Processed RPF

49

F O U N D AT I O NCorporate Governance

Basic Policy and Purpose
The 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/en/ir/governance/index.html

Corporate Governance Structure
Summary of the Corporate Governance Systemand the Reasons for Its Adoption
The Company has adopted a governance system based on a
Board of Directors, comprising directors who are conversant
with respective businesses and outside directors with diverse
professional backgrounds, and an Audit & Supervisory Board,
including outside Audit & Supervisory Board members. This
governance system enables the holding company to effectively
supervise and audit the execution of operations at Group
companies and to realize and maintain high-quality business
management.
Comprising seven directors, three of whom are outside
directors and one of whom is a woman, the Board of Directors
deliberates and makes decisions on such issues as importantmanagement policies and strategies and items stipulated bystatutory laws and regulations or the Company’s articles ofincorporation. To clarify management responsibility, directors
are appointed for one year. Thus, we have built a business

management system that enables rapid responses to changes
in business conditions.
Comprising five Audit & Supervisory Board members, threeof whom are outside members, the Audit & Supervisory Board
supervises and audits business management. Also, the Grouphas established the Office of Corporate Auditors, which audits
and monitors the appropriateness and efficiency of the operational processes of Group companies.
Further, the Group has established the Group Management
Meeting, which considers Group management strategy andother important management issues and conducts prior deliberation of matters for consideration by the Board of Directors.
Overview of the Corporate Governance Structure (as of June 27, 2019)
FormatAudit & Supervisory Board system

Number of directors

7

Of whom, outside directors

3

Term of directors

1 yearNumber of Audit & Supervisory
Board members

5

 f whom, outside Audit & SupervisoryO
Board members

3

Number of independent officers

6

Participation of outside directors indetermination of remuneration

Yes

Organizations to assist in decision-making

Executive Nomination Advisory
Committee, Executive Compensation
Advisory Committee

Key committees

Independent Outside Officers Meeting,Group Management Meeting, Corporate
Ethics and Risk Management Committee

Results-linked remuneration

Yes

Corporate Governance Structure
General Meeting of Shareholders

2 Executive Nomination Advisory

Committee

Audit

Audit & Supervisory Board Cooperation

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

Chairman: Outside director
6 directors (of whom 3 are outside directors)
Reporting offindings

3 Executive Compensation Advisory

Committee

1 Board of Directors*

7 directors(of whom 3 are outside directors)

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

Secretariat Office for Audit &Supervisory Board

Assessment

Representative Director

Key Committees

7 Corporate Ethics and Risk Management Committee

5 Group Management Meeting*

6 Quarterly Business Results

Review Committee*

Give instructions to

Audit
OfficeCorporate Ethics Hotline

6 Group Strategy

Committee*

Report toCompliance Committee

CSR Procurement Committee

Give instructions toReport to* Both internal and outside Audit & Supervisory Board members attend meetings for the purpose of auditing the performance of duties by directors.

INTE GRATED RE PO RT 2 0 1 9

Cooperation
Accounting
audit

Operating department / Group company

50

Accounting Auditors

Audit

Election / Removal(Business execution)

Election /RemovalElection / RemovalElection / Removal
Reporting offindings

Internalaudit

F O U N D AT I O NOverview and Composition of the Board of Directors, Advisory Committees, and Other Meetings
Name

Description

Number of meetings
convened in FY2019

1

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.

142

 xecutive Nomination
E
Advisory Committee

An advisory body to the Board of Directors, the committee is chaired by an independent outside director and comprises threeoutside directors and three 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 Boardof Directors for approval. The attendance and approval of all committee members is required to pass resolutions.

13

 xecutive
E
Compensation
Advisory Committee

An advisory body to the Board of Directors, the committee is chaired by an independent outside director and comprises threeoutside directors and two internal directors. 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 is required to pass resolutions.

3

4Independent Outside
Officers Meeting

Comprising outside directors, outside Audit & Supervisory Board members, and the director of the Administrative
Department, the meeting evaluates the Board of Directors and discusses how to improve its administration and strengthens
collaboration among outside directors and outside Audit & Supervisory Board members.

25

 roup Management
G
Meeting

Comprising directors and key members of the management team, 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

7

Convening three times a year, these committees check business results and the progress of measures. Also, if targets are roup Strategy
G
not achieved, the committees consider improvement measures and revise targets as required.
Committee / Quarterly
Business Results
Review Committee

 orporate Ethics andCRisk Management
Committee

With the president and representative director acting as supervisor, the committee comprises the director of the
Administrative Department, internal directors, the directors of operating companies, corporate officers, and other members.
The committee strengthens and ensures the rigorous enforcement of systems for compliance with corporate ethics,
identifies risks related to the overall business management of the Group, and strengthens systems for managing such risks.

3(each committee)

4

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.
FY2017FY2018FY2019Issues identified

1. Inadequate reporting of medium- to long-term
management priorities and progress under the
medium-term management plan
2. Need for improved information sharing and collaboration between the internal audit organization (Office ofCorporate Auditors) and outside directors and outside
Audit & Supervisory Board members

Need for increased sharing of information
with outside directors and Audit &Supervisory Board members about important matters that are not subject to deliberations by the Board of Directors, such as
matters submitted to the GroupManagement Meeting

1. N eed for revision of both the regulations of the Board of
Directors and the establishment of agenda items in order toextend the scope of responsibilities entrusted to corporate
officers and to increase the opportunities for reporting on
agenda items that require continuous confirmation ofprogress
2. N eed to consider making meeting documents paperless

Improvement
measures

Assessments of the Effectiveness of the Board of Directors and Improvement Measures

1. Provided increased opportunities to report on deliberations about management priorities, progress under the
medium-term management plan, and other matters
2. Changed the venue for reporting by the internal audit
organization (Office of Corporate Auditors) to meetings of the Board of Directors

Modified administrative systems to ensurethat information about important mattersthat are not subject to deliberations by the
Board of Directors is distributed together
with materials in advance of Board
meetings

1. R
 evised regulations on the submission of agenda items to
the Board of Directors and revised the establishment ofagenda items
2. Advanced measures to make meeting documents paperless

Revisions in Wacoal’s Corporate Governance System
1977

Wacoal issues ADRs*(American Depositary Receipts)

Wacoal becomes the eighth Japanese company to issue ADRs. Upon issuance, the SEC(U.S. Securities and Exchange Commission) requires consolidated financial statements andaccounting reports in accordance with U.S. GAAP.

2002

Introduction of the corporate officer system
Number of directors: 13 9

In June 2002, the Company employs a corporate officer system in order to delegate authority andclarify responsibility more appropriately and efficiently. At the same time, the number of directors is
reduced.

Establishment of a pure holding company

The Company transfers to a pure holding company system to facilitate decision-making onGroupwide strategy, to optimize the allocation of resources, and to clarify the responsibilities andauthority of operating companies so that they can execute operations flexibly.

Appointment of outside officers

To promote the fairness and independence of the Board of Directors and the Audit & Supervisory
Board, the Group increases the number of outside directors by two members and the number ofoutside Audit & Supervisory Board members by one member.

Establishment of the Executive Compensation Advisory Committee
Number of committee members (including outside directors): 4

Regarding the appointment, promotion, and remuneration of the directors and executive officers,
the Executive Compensation Advisory Committee, chaired by the director of the Administrative
Department, is established with outside directors included as members.

2005

2007

2010

2015
2018

Registration of all outside officers with the Tokyo Stock Exchange as All outside directors and outside Audit & Supervisory Board members are registered with the Tokyo
Stock Exchange as independent officers.
independent officers
Number of independent officers registered: 6
Establishment of the Independent Outside Officers Meeting

The Independent Outside Officers Meeting is established with the intention of sharing information
about improving corporate governance, meetings of the Board of Directors, internal audits, etc. The
committee includes independent outside officers.

Establishment of the Executive Compensation Advisory Committee
and the Executive Nomination Advisory Committee

The Executive Compensation Advisory Committee, which was established in 2007, becomes the
Executive Compensation Advisory Committee and the Executive Nomination Advisory Committee.

* In 2013, Wacoal stopped listing ADRs on the U.S. NASDAQ market and de-registered with the SEC.

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F O U N D AT I O N

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 haveextensive experience and knowledge of corporate management. By providing objective, neutral advice based on theirextensive business experience and specialized knowledge in arange of fields, outside directors enhance the appropriatenessof directors’ decision-making. Further, the Group appoints as
outside Audit & Supervisory Board members certified public

accountants who have a high level of expertise with regard to
finance and accounting, attorneys who are independent fromthe Company, and individuals who have many years of experience of working at financial institutions and extensive knowledge of corporate management. While retaining a high degreeof 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/en/ir/pdf/governance_report.pdf

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

Reason for election

Expected field of expertise andknowledge

Attendance at Board of Directors’
meetings

Art, culture,and social insight

14/14

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

It is anticipated 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

13/14

Tsunehiko Iwai

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

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

10/10

Outside Audit &Supervisory Board
members

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

Reason for election

Board of Directors’ meetings

Audit & Supervisory Board meetings

Hiroshi Shirai

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 long experience in the financial
sector and his knowledge as a business manager, as well as hisoverseas experience.

9/10

9/10

Strengthening of the Functions of the Audit &Supervisory Board and Its Members
The Audit & Supervisory Board comprises two internal full-time
Audit & Supervisory Board members and three outside Audit &Supervisory Board members. Convening monthly to coincidewith the meetings of the Board of Directors, the Audit &Supervisory Board also holds extraordinary meetings as
required. Pursuant to auditing standards that are stipulated by
the Audit & Supervisory Board, Audit & Supervisory Board
members audit the status of duty execution and property,
receive reports and explanations from the independent auditor,and verify the appropriateness of financial statements and therelevance of the auditing of accounts. The Audit & Supervisory
Board members also monitor and verify the establishment ofinternal control systems and their operational status. In addition, the Company provides an independent, dedicated secretariat to assist the Audit & Supervisory Board and assigns one
employee to operate the secretariat.

52

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 and audit
internal control systems, including the appropriateness offinancial reporting. With a view to heightening the effectivenessof audits, outside Audit & Supervisory Board members engage
in a range of other activities. For example, they attend important meetings other than those of the Board of Directors in lightof discussions of the Audit & Supervisory Board and visit
subsidiaries to conduct audits and investigative interviews.

INTE GRATED RE PO RT 2 0 1 9

F O U N D AT I O NCompensation 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- tolong-term incentives. Given that they are not involved in theexecution of duties, independent outside directors and Audit &Supervisory Board members only receive fixed basic
remuneration.
For fiscal 2019, a breakdown of the fixed basic compensation, performance-based bonuses, and share-based stock
options as percentages of the compensation of officers isshown below.
Basic compensation

Performance-based bonuses

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 June 29, 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 theaggregate annual basic compensation of all Audit &Supervisory Board members.
• Performance-Based Bonuses
To increase the degree of the linkage between bonuses andconsolidated business performance, the aggregate amount of
performance-based bonuses is determined for each fiscal year
based on the percentage achievement of a reference value ofconsolidated operating income and, to a lesser extent, basedon certain other business results. With reference to past business results and other factors, the reference value of consolidated operating income has been set at ¥13.5 billion.

Share-based stock options

71%

18%

11%

• Basic Compensation
The amount of basic compensation is set according to thepositions of officers. With respect to officers in the same
position, however, the basic compensation of a particular
officer can be higher than that of other officers as a result of anincrease, within a certain range, in basic compensation thatreflects the officer’s degree of contribution to business resultsin the previous fiscal year.
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 forcompanies in the same industry as well as for companies of• 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 valueof stocks, which are determined based on reports issued by the
Executive Compensation Advisory Committee.
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.

Compensation of Officers in FY2019
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)

313

230

40

43

5

Audit & Supervisory Board members(excluding outside members)

38

38

―

―

2

Outside directors and outside Audit &Supervisory Board members

46

46

―

―

8

Number of eligible
recipients

Note: As of March 31, 2019, there were five directors, two Audit & Supervisory Board members, and six outside officers. The number of outside officers differs from the number of outside
officers in the above table because the number in the table includes two outside officers who retired upon the conclusion of the 70th Ordinary General Meeting of Shareholders,convened on June 28, 2018.

Policy on Strategic Shareholdings andStandards 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 andtransactional relationships with respect to business development; and maintaining stable financial transactions. Whether
strategic shareholdings are appropriate from a medium- tolong-term perspective and whether the attendant benefits andrisks of strategic shareholdings commensurate with equity
cost are verified, and the findings are periodically reported to
the Board of Directors. Based on the verification findings, theBoard of Directors analyzes whether strategic shareholdings
contribute to the enhancement of the Company’s enterprisevalue over the medium-to-long term and decides whether tocontinue 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.
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 to vote in favor of proposals based on com­prehensive consideration of whether they contribute to theenhancement of the enterprise value of both said companies
and the Company.
Reference: Shareholdings of Wacoal Corp.
FY2017FY2018FY2019Number of stocks

107

97

95

Monetary amount (¥ billion)

58.7

67.4

60.8

As a percentage of total assets

19.9%

22.6%

21.6%

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

IN TE GRATED RE PO RT 2 0 1 953

F O U N D AT I O NInternal 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 thecompliance and appropriateness of the execution of duties in
the Company and subsidiaries in Japan and overseas, evaluates the effectiveness of internal control, and periodicallyreports results of these activities to the president and representative director.
Further, the Office of Corporate Auditors comprises sevenpersonnel 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 activitiesof the Office of Corporate Auditors. The Company has established a system for sharing documents and other information
required for audits. To facilitate efficient, effective audits bothparties coordinate through such measures as mutual
exchanges and the verification of audit working papers.
Compliance StructureWith the president and representative director acting as supervisor and the director of the Administrative Department as its
chairperson, the Corporate Ethics and Risk Management
Committee identifies overall risks related to the Company’sbusiness management and develops and strengthens risk
management systems. Based on Group compliance and risk
policies formulated by the committee, the Company has established the Wacoal Code of Ethics and the Corporate Ethics:
Wacoal’s Code of Conduct to ensure that directors and employees perform their duties in compliance with laws, regulations,and the articles of incorporation and sound social norms.
Further, the Wacoal Code of Ethics and the Corporate Ethics:
Wacoal’s Code of Conduct stipulate resolute refusal of
demands from antisocial forces. In addition, the Company has
established an internal whistle-blowing system and othersystems that enable directors and employees to report

promptly if they discover issues that may violate the Wacoal
Code of Ethics or the Corporate Ethics: Wacoal’s Code of
Conduct.
Basic Policy on Information Disclosure
We see timely disclosure of accurate information as the foundation of “mutual trust” in relationships with all stakeholders.
We are also 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 ispositive or negative. Second, information must be expressed inlanguage that is easy for all stakeholders to understand anddisclosed using various methods to ensure ease of access andfairness. Third, organizational, personal, physical, and technicalsteps must be taken to prevent information leakage before
timely, appropriate disclosure.
Basic Policy on Constructive Dialogue with Shareholders
and Other Stakeholders
We have adopted a basic policy on constructive dialogue withshareholders and other stakeholders and published it on our
website. Company officers and employees attend meetings
with shareholders and other stakeholders, and managing
directors coordinate such meetings. Various factors are
considered in relation to requests for meetings with directors,
including the proposed subject matter of the meeting and theaffiliations of the person seeking the meeting. In addition to fair,timely, and accurate disclosure about our business management and financial situation to shareholders and other investors in Japan and overseas, we help them gain a better
understanding of our viewpoint and approach by actively
distributing information about the market environment and ourunique strengths.
Basic Policy on Constructive Dialogue with Shareholders
https://www.wacoalholdings.jp/en/ir/governance/guideline.html

Investor Relations Activities

The following investor relations activities were conducted in FY2019.
ActivityFrequency

Details

Results briefings

Twice

Full-year and interim results briefings (held in Tokyo)

Individual meetings with institutional
investors and analysts

101 times (companies intotal)

Interviews with the investor relations manager (including interviews
with the president and representative director and directors)

Business briefings (small meetings)

Twice (in June 2018)

Briefings by the president and representative director

Conferences

Two days of participation

Interviews with the president and representative director

Study tour of a sewing factory

Once

Interviews with the investor relations manager and a tour conductedby the factory manager

Seminars for individual investors

Four days

Seminars conducted by the investor relations manager(held in Kobe, Kochi, Kanazawa, and Fukui)Overseas

Meeting with analysts

Once

Meeting conducted by the investor relations manager and the president of a local subsidiary (held in China)

In-house

Feedback

Provided each time thatmeetings for investors areheld after full-year andinterim results briefings

Report on the activities of the investor relations manager(Targets: the president and representative director, directors,
managers of operating companies, outside Audit & Supervisory
Board members, etc.)

Japan

54

INTE GRATED RE PO RT 2 0 1 9

F O U N D AT I O N

A Message from an Outside Director

While furthering my understanding of the Wacoal Group,
I will do my utmost to help the Company growcontinuously and thereby enhance its enterprise value.
became an outside director of Wacoal Holdings Corp. one year ago. In theprevious fiscal year, against the backdrop of a revision of Japan’s Corporate
Governance Code, the Board of Directors devoted considerable time to discussions
on strengthening its governance.
At the Independent Outside Officers Meeting, meanwhile, I participated in candid
discussions focused on strengthening the effectiveness of the Board of Directors andimproving the conduct of its proceedings. Recently, I not only requested a review ofthe details of the agenda items of the Board of Directors but also requested cooperation on issues that the Board of Directors does not discuss. I submitted the latter
request through participation in the Quarterly Business Results Review Committee
and the Group Strategy Committee, which examine matters related to execution.
As a result, information sharing has become timelier. Also, I have gained insight into
how corporate officers and employees approach the execution of their duties.
I serve as the chairperson of the Executive Nomination Advisory Committee andthe Executive Compensation Advisory Committee. In these capacities, I believe thatmy mission is to help enhance the transparency, objectivity, and fairness of business
management. In particular, we have begun reviewing the executive compensation
system, which is an important component of corporate governance. I intend to meet
my responsibilities by facilitating the redesigning of the system so that it encourages
the implementation and realization of Wacoal’s management philosophy, mission,and strategies and strongly motivates officers to grow the Company over the
medium-to-long term.
I am not an expert in matters specific to innerwear. However, one of my roles is tooffer views on the profile that Wacoal should aspire to over the medium-to-long termwith respect to research and development, production re-engineering, and the growing global emphasis on efforts to heighten the beauty of people and the environment.
Under the leadership of President and Representative Director Hironobu
Yasuhara, Wacoal is committed to reforming its businesses without making any
special exceptions. In any company, the process of decisive reform can give rise toconflicting interests across business divisions and brands and, on occasion, withbusiness partners and customers. With this in mind, an important role of an outside
director is to ensure that in making decisions the Board of Directors fairly reflects
the expectations of all stakeholders as it boldly implements the changes needed forvalue creation.
Wacoal’s approach to business management is becoming increasingly “hands on.”
Stakeholders expect the Company to establish global competitiveness, heighten
profitability, and sustain growth, and accordingly Wacoal must proactively discoverand appropriately exploit opportunities for growth investment.
I intend to concentrate my efforts on fulfilling my responsibilities to shareholders
and other investors by visiting bases and factories in Japan and overseas to further
my understanding of on-site operations, by providing firm support to the senior
management team as they advance management strategies, and by offering advice inthe making of decisions.

I

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

IN TE GRATED RE PO RT 2 0 1 955

F O U N D AT I O NManagement TeamAs of June 27, 2019

7

6

3

8

1

9

Directors
1

2

Representative Director and Chairman

3

Director and Vice President

5

Director

Yoshikata Tsukamoto

Masashi Yamaguchi

Madoka Mayuzumi

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 (present)
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)

Apr. 1981 Joined the Company
Apr. 2006	Business Administration Manager of Wing Brand
Operation Division of Wacoal Corp.
Apr. 2011	Corporate Officer and Manager of Personnel Divisionof Wacoal Corp.
Apr. 2013	Director and Corporate Officer, and General Manager of
Personnel and Administration Division of Wacoal Corp.
Apr. 2014	Director and Managing Corporate Officer, and General
Manager of Personnel and Administration Division of
Wacoal Corp.
Apr. 2015	Director and Senior Managing Corporate Officer in chargeof Administration, and General Manager of Personnel and
Administration Division of Wacoal Corp.
Jun. 2015	Director in charge of Personnel and Administration of
the Company
Apr. 2017	Director, Vice President Corporate Officer in charge of
Administration, and General Manager of Personnel and
Administration Division of Wacoal Corp.
Jun. 2017	Managing Director and Supervisor of Personnel and
Administration and Future Business of the Company
Apr. 2019	Appointed Director, Vice President and Corporate Officer
in charge of Administration of Wacoal Corp.
Jun. 2019	Director and Vice President and Supervisor of Group
Business Management of the Company (present)

Aug. 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
May 2013	Member of “Forum to Realize Culture and Arts-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)

Representative Director and President

Hironobu YasuharaMar. 1975	Joined the Company
Apr. 1997	Director and General Manager of Wacoal China Co., Ltd.
Apr. 2005	Corporate Officer/General Manager of Wing Brand
Business Department of the Company
Jun. 2006	Director and Managing Corporate Officer, General
Manager of Wing Brand Business Department,of 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 and Corporate 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 Chairman of Wacoal Corp.
(present)
Jun. 2018	Representative Director and President of the Company(present)

56

4Managing Director

Akira Miyagi
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(present)
Apr. 2017 Corporate Officer of Wacoal Corp.
Jun. 2018 Director of the Company
Jun. 2019 Managing Director of the Company (present)

INTE GRATED RE PO RT 2 0 1 9

6

Director

Shigeru Saito
Nov. 1979 Joined TOSE CO., LTD.
		
General Manager of Development Department
Oct. 1985 Director of TOSE CO., LTD.
Feb. 1987 Representative Director and President of TOSE CO., LTD.
Sep. 2004	Representative Director and President, and CEO of
TOSE CO., LTD.
Dec. 2015	Appointed Representative Director and Chairman, andCEO of TOSE CO., LTD. (present)
Jun. 2017 Director of the Company (present)

F O U N D AT I O N

4
2

11
5

12
10

7 Director

9 Standing Audit & Supervisory Board Member

11 Audit & Supervisory Board Member

Tsunehiko Iwai

Kiyotaka Hiroshima

Mitsuhiro Hamamoto

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 charge of
Research & Development, Production and TechnicalAffairs, Shiseido Co., Ltd.
Jan. 2016	Representative Director, Executive Vice President, Chief
Technology & Innovation Officer, Shiseido Co., Ltd.
Mar. 2018 Senior Advisor, Shiseido Co., Ltd. (present)
Jun. 2018 Director of the Company (present)

Apr. 1981 Joined the Company
Apr. 2008	Materials Control Manager of Technology/Production
Division of Wacoal Corp.
Apr. 2009	Production Control Manager of Technology/Production
Division of Wacoal Corp.
Apr. 2010	Corporate Officer and General Manager of Technology/
Production Division of Wacoal Corp.
Apr. 2011	Director and Corporate Officer and General Manager
of Technology/Production Division of Wacoal Corp.
Apr. 2015	Director and Corporate Officer and Supervisor ofTechnology/Production of Wacoal Corp.
Jun. 2015	Audit & Supervisory Board Member of Wacoal Corp.
(present)
Jun. 2015	Audit & Supervisory Board Member of the Company(present)

Oct. 2000 Admitted to the Bar
Oct. 2000 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)

Audit & Supervisory Board Members

10 Audit & Supervisory Board Member
8 Standing Audit & Supervisory Board Member

Tomoki Nakamura
Apr. 1980 Joined the Company
Oct. 2007 Accounting Manager of Wacoal Corp.
Apr. 2008 Accounting Manager of the Company
Apr. 2012	Audit & Supervisory Board Member/Secretariat ofAudit & Supervisory Board
Jun. 2012	Audit & Supervisory Board Member of the Company(present)

Hiroshi ShiraiNov. 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 Institute of Certified
Public Accountants Kinki Chapter
Oct. 2011	Established Shirai Public Accounting Firm, Managing
Partner (present)
Jun. 2012	Audit & Supervisory Board Member, ALTECO INC.
(present)
Jun. 2015	Audit & Supervisory Board Member of the Company(present)Mar. 2016 Audit & Supervisory Board Member, Noritz Corporation
Apr. 2016	Executive Director of Public University Corporation,
Osaka City University
Apr. 2019	Inspector of University Public Corporation Osaka(present)

IN TE GRATED RE PO RT 2 0 1 9

12 Audit & Supervisory Board Member

Minoru Shimada

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 Bankof 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 (present)
Audit & Supervisory Board Member of the Company(present)

57

FACTS

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

Net Sales

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

(%)

210

15

10.0

202.9
195.9
190

12.3

12

200

195.7

194.2

191.8

8.0

11.5
10.3

6.0

9

6
180

3

0

5.9

6.0

5.3

6.4

4.9
3.3

2.5

0
2015

2016

2017

2018

2019

4.0

2.0

0
2015

Operating Income

2016

2017

2018

2019

Operating Margin*N ew accounting guidance, Improving the Presentation of Net Periodic Pension Cost andNet Periodic Postretirement Benefit Cost (ASU No. 2017-07), has been adopted from the
beginning of the current consolidated fiscal year. Accordingly, key financial data for theprevious fiscal years are the amounts after the retroactive application of such accounting guidance.

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

Total Assets / Return on Assets (ROA)(¥ billion)

(%)(¥ billion)

8.0

300

12.5

12.5

(%)

300.3

10.0

8.4

6.0

5.5

4.9

7.5

5.0

292.9

9.7

290

295.0

4.0

280

2.0

270

0

0

6.0

5.6
5.0

4.2

8.0

298.5

11.2

4.8

4.0

281.8

4.0

3.9

2.5

0.3
0.2

0
2015

2016

2017

2018

Net Income Attributable to Wacoal Holdings Corp.

2019

2.0

0.8
2015

ROE

Total Assets

2016

2017

2018

0

2019

ROA

Cash Flows

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

(%)

240

90.0

20

10

14.5
14.3

16.4
13.3

12.6

15.5
8.1

13.6
11.1

232.7
230

228.9
224.4

1.2
0

85.0

227.6

0.2

220

–2.5

–3.0
–10

76.2

76.6

77.2

78.0

216.5
76.8

210

–7.4

80.0

75.0

–11.4
–20

0
2015

CF from Operating Activities

58

2016

2017

2018

2019

CF from Investing Activities

0
2015

Free CF

Total Shareholders’ Equity

INTE GRATED RE PO RT 2 0 1 9

2016

2017

2018

Shareholders’ Equity Ratio

2019

FACTS

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

Share of Sales by Business Segment(Yen)
3,500.00

3,454.40

8.9%

3,321.57

5.4%

2,800.00

2,100.00

1,400.00

1,624.93 1,592.90 1,658.53

2019

27.3%

58.4%

700.002015

2016

Shareholders’ Equity per Share

143.46

90.13

79.23

59.95

0

2017

2018

5.16
2019

Net Income per Share Attributable to Wacoal Holdings Corp.

* 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.

Dividends per Share* / Dividend Payout Ratio

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

Share of Sales by Geographic Segment(Yen)(%)
80

2,000

72
60

1,395.3

40

30

33

16.2%

72
1,500

11.6%

1,000

36

20

2019

500

72.2%
0

50.0

41.7

39.9

2015

2016

2017

Dividends per Share

50.2

0

2018

2019

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.

Capital Expenditures / Depreciation and Amortization

Share of Sales by Product Category(¥ billion)

4.9%

10.0

9.0

1.0%
7.6%

7.4

7.5

5.9
5.0

5.1
4.5

6.2%

4.8

5.0

5.5

0.6%
4.3%

5.8 5.6

2019

75.4%

2.5

0
2015

Capital Expenditures

2016

2017

2018

Depreciation and Amortization

2019Foundation garments and lingerieNightwear
Children’s underwear
Outerwear and sportswear*1
Hosiery
Textile products
Other*2*1 Including men’s underwear and swimwear*2 Mannequin rental, interior design and construction of stores, restaurants, culture,services, etc.

IN TE GRATED RE PO RT 2 0 1 959

FACTS

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

Net Sales

Operating Income (Loss)*(¥ billion)(¥ billion)

200

191.8

202.9

195.9

195.7

194.2

15.0

150

7.5

100

0

50

–7.5

0

6.4

12.3

2015

2016

10.3

11.5

4.9

2018

2019

–15.0
2015

2016

2015

 acoal Business
W(Domestic)Wacoal Business(Overseas)
Peach John Business
Other Businesses

2017

2016

2018

2019

2017

2018

2019

112.2

120.6

118.4

116.1

113.4

48.1

51.8

48.4

51.9

53.1

11.6
19.9

11.2
19.3

11.1
18.0

10.8
16.9

10.5
17.2

 acoal Business
W(Domestic)Wacoal Business(Overseas)
Peach John Business
Other Businesses

2017

2015

2016

2017

2018

2019

7.7

7.2

6.2

6.8

6.3

4.8

4.4

3.1

3.9

4.6

–6.3
0.2

0.3
0.4

0.4
0.6

0.4
0.4

–5.8
–0.2

* New accounting guidance, Improving the Presentation of Net Periodic Pension Cost
and Net Periodic Postretirement Benefit Cost (ASU No. 2017-07), has been adopted
from the beginning of the current consolidated fiscal year. Accordingly, key financial
data for the previous fiscal years are the amounts after the retroactive application ofsuch accounting guidance.

Share of Sales by Geographic Segment

Share of Sales by Principal Subsidiaries*(¥ billion)(¥ billion)

250

200

178.5
200

191.8

202.9

195.9

195.7

194.2

189.2

179.8

179.2

177.0

2017

2018

2019

150

150
100
100
50

50

0

0
2015

2016

2017

2018

2019

2015

2015

2016

2017

2018

2019

143.2
Asia and Oceania
16.3
Americas and Europe
32.3

150.7
17.9
34.3

147.1
19.2
29.6

143.2
21.1
31.5

140.2
22.5
31.5

Japan

WacoalAi
Peach John
LecienNanasaiWacoal International(U.S.)
Wacoal Europe
Wacoal China

2016

2015

2016

2017

2018

2019

105.5
0
11.6
9.4
9.1

107.9
5.7
11.2
8.9
8.9

106.5
5.5
11.1
8.4
8.1

104.6
5.1
10.8
7.2
8.3

102.4
4.2
10.5
6.3
9.4

17.5

19.6

17.7

18.6

18.5

15.9
9.5

15.9
11.1

13
9.5

14
10.6

14.1
11.6

* Calculated based on net sales to external customers

60

INTE GRATED RE PO RT 2 0 1 9

FACTS

Share of Sales by Channel (Principal Subsidiaries)

Wacoal

Wacoal China

(%)

(%)

100

100

75

75

50

50

25

25

0

0
2015

2016

Department Stores
General MerchandiseStoresSpecialty Stores
Directly Managed
StoresEC and Catalog
Mail-order
Others

2017

2018

2019

2015

2015

2016

2017

2018

2019

28.6

27.8

27.4

27.2

26.8

33.5

32.9

31.6

31.3

31.4

8.8

8.3

8.1

7.6

7.5

13.6

13.9

14.6

15.1

14.9

8.4

9.1

9.4

12.2

12.2

7.1

8.0

8.9

6.6

7.2

Department Stores
Agent(Specialty Stores)
Third-Party EC Site
Peach John
ExportWacoal International (U.S.)

Wacoal Europe

(%)

(%)

100

2016

2017

2018

2019

2015

2016

2017

2018

2019

77.7

76.1

75.9

72.1

70.0

8.2

9.4

7.4

6.9

6.4

8.9
5.0
0.2

9.1
5.1
0.3

9.3
7.4
0.0

10.8
10.1
0.1

14.5
9.0
0.1

100

75

75

50
69.4

–1.5

50
25
25

0

–25

0
2016

StoresDirectly Managed
Stores and Outlet
Department Store EC
Third-Party EC Site
Own EC Site
Export(excluding Canada)
Others

2017

2018

2019

2015

2016

2017

2018

2019

72.3

69.8

69.4

66.6

Department Stores
IndependentDirectly Managed
Stores (including
Own EC Site)
Third-Party EC Site

0.6

0.6

0.5

0.7

8.2
5.6
5.8

8.9
7.2
7.5

9.2
7.8
8.6

9.5
9.1
9.9

4.9

4.7

4.0

5.0

2.6

1.3

–0.5

–0.8

IN TE GRATED RE PO RT 2 0 1 9

2016

2017

2018

2019

2015

2016

2017

2018

2019

27.4
52.3

28.0
51.0

26.7
51.4

25.1
51.7

23.0
52.7

7.1

7.8

7.6

8.0

6.3

13.2

13.2

14.3

15.2

18.0

61

FACTS

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

2019

2018

2017

2016

194,201

195,725

195,881

202,91789,80446.2%
93,68448.2%
10,526
4,879
2.5%

92,03247.0%
92,701
47.4%
16,986
11,494
5.9%

93,073
47.5%
92,52647.2%
15,314
10,282
5.3%

96,09447.4%
94,54946.6%
17,08912,2746.0%

2,203

14,286

16,56914,957

341
0.2%
0.8%

9,745
4.2%
4.8%

12,5255.5%
5.6%

11,1594.9%
5.0%

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

281,767
216,494
53,27042,508298,534
232,71254,33342,676294,958
227,568
55,28843,822292,854
224,374
53,93844,445

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

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
34,059

5,783
5,647

5,884
5,492

7,445
5,032

8,978
4,815

3,321.57

3,454.40

1,658.53

1,592.90

5.16

143.46

90.13

79.23

72
4,732
2.6%
1,395.3%
533.33
0.83

72
4,871
2.3%
50.2%
21.47
0.89

36
4,940
2.6%
39.9%
15.24
0.83

33
4,648
2.5%
41.7%
16.95
0.84

113,400
53,10010,491
17,210116,085
51,888
10,795
16,957

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

120,570
51,869
11,19019,2886,325
4,581(5,859)
(168)

6,845
3,852
441
356

6,176
3,055
374
677

7,219
4,433
258
364

20,662

20,904

21,13920,655

Performance
Net sales
Cost of sales% of net sales
Selling, general and administrative expenses% of net sales
EBITDA
Operating income% 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)

Investment
Capital expenditures
Depreciation and amortization
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 (Persons)Notes: 1. Consolidated financial statements for the fiscal year ended March 31, 2011, and prior fiscal years have been retroactively revised in accordance with the changes of the settlement dates forcertain consolidated subsidiaries that took place in the fiscal year ended March 31, 2012.
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.
3. New accounting guidance, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU No. 2017-07), has been adopted from the beginning of thecurrent consolidated fiscal year. Accordingly, key financial data for the previous fiscal years are the amounts after the retroactive application of such accounting guidance.

62

INTE GRATED RE PO RT 2 0 1 9

FACTS(Millions of Yen)

2015

2014

2013

2012

2011

2010

2009

191,765

193,781180,230

171,897

165,548

163,548

170,960

90,72247.4%
88,45346.1%
11,451
6,377
3.3%

91,00847.0%
88,95645.9%
18,853
13,817
7.1%

84,54846.9%
83,844
46.5%
13,8748,986
5.0%

81,891
47.6%
79,14446.0%
15,522
10,862
6.3%

81,65949.3%
77,198
46.6%
9,604
4,919
3.0%

80,10149.0%
77,342
47.3%
9,776
5,011
3.1%

83,87949.1%
77,04345.1%
14,582
10,038
5.9%

11,342

15,033

10,940

10,207

3,927

3,155

7,329

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%

2,475
1.5%
1.4%

5,062
2.9%
3.2%

300,272
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

222,889
171,860
51,804
32,103

213,827
166,767
49,16531,153

14,337164(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

9,463(3,573)(5,363)5,890
22,3288,202(4,759)(7,448)3,443
21,954

4,478
5,074

3,464
5,036

3,330
4,888

3,554
4,660

3,323
4,685

5,736
4,765

4,216
4,544

1,624.93

1,456.32

1,325.19

1,217.57

1,189.08

1,215.17

1,187.37

59.95

71.75

55.95

49.08

19.73

17.51

35.57

30
4,225
2.2%
50.0%
22.55
0.83

33
4,648
3.1%
46.0%
14.68
0.72

28
3,944
2.8%
50.0%
18.11
0.76

28
3,944
2.9%
57.0%
19.99
0.81

20
2,817
1.9%
101.4%
53.12
0.88

20
2,824
1.7%
114.2%
66.7
0.96

25
3,511
2.2%
70.3%
32.05
0.96

112,203
48,107
11,626
19,829118,085
43,636
12,482
19,578

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

9,241
4,037
83
456

18,986

18,912

18,65016,52416,013

15,686

14,382IN TE GRATED RE PO RT 2 0 1 963

FACTSManagement’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),
57 consolidated subsidiaries, and eight 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 75.5% of our consolidated net sales forfiscal 2019. 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 Statusof Financial Position
Total assets at the fiscal year ended March 31, 2019 (fiscal 2019) was¥281,767 million, a decrease of ¥16,767 million compared with the endof the previous fiscal year, due to a decrease in investments resulting
from a decrease in market value and impairment charges on goodwill.
Total liabilities at the end of fiscal 2019 was ¥60,623 million, adecrease of ¥414 million compared with the end of the previous fiscal
year, due to decreases in trade payables and deferred tax liabilities,
despite an increase in short-term bank loans and a recognition ofrefund liabilities.
Total Wacoal Holdings Corp. shareholders’ equity at the end of fiscal
2019 was ¥216,494 million, a decrease of ¥16,218 million comparedwith the end of the previous fiscal year, due to cash dividend payments,
repurchase of treasury stock, and decreases in pension liability
adjustments.
As a result of the above, shareholders’ equity ratio at the end of fiscal
2019 was 76.8%, a decrease of 1.2 percentage points compared with theend of fiscal 2018.

Results of Operation(Millions of Yen)

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

2018

2019

195,725
92,032
103,693
92,701(708)

194,201
89,804
104,397
93,684—

Amount%–1,524–2,228
+704
+983
+708

–0.8%
–2.4%
+0.7%
+1.1%
—

206

5,834

+5,628—

11,494
2,789

4,879
2,894

–6,615+105–57.6%+3.8%

3(5,570)–5,573—

14,2862,203–12,083–84.6%

9,745

341–9,404–96.5%

Summary of Business Results
During the fiscal year under review (from April 1, 2018 to March 31,2019), which is the last year of our current mid-term (three-year) business plan (from fiscal 2017 to fiscal 2019), in order for our business toreturn to growth during the period covered by our next mid-term businessplan, the Wacoal Group proceeded to build a foundation to enhance its
business efficiency and to invest in fields where it can expect growth.
Wacoal Corp. improved business efficiency in its wholesale businessthrough reorganization and profitability in its retail business on improved
brand value, and completed preparation for the introduction of 3D body64

YoY Change

scanning and AI (artificial intelligence)-based customer service as a partof its omni-channel strategy. In overseas markets, we strengthened ourbusiness framework in response to e-commerce channels, which
continue to show a high rate of growth in sales, and expanded our brandawareness in Chinese, North American, and European markets. On theother hand, in our efforts to improve our production base, we weresuccessful in enhancing the production capabilities of highly competitive
products in Dalian and Vietnam, while structural reform in our raw
materials factory in Thailand is requiring time.

INTE GRATED RE PO RT 2 0 1 9

FACTS

While e-commerce sales from our business in China expanded andsales from Nanasai showed significant growth resulting from its active
construction business, overall sales were affected by the slow growth inour domestic wholesale business of Wacoal Corp. due to weak sales
from department stores and decreased revenue from our domestic
consolidated subsidiaries, including Lecien Corporation (“Lecien”), Ai Co., Ltd.,and Peach John Co., Ltd. (“Peach John”), due to delays in addressing
market changes. While Wacoal Corp. recorded an increase in profit as aresult of a record-high gross profit rate and our overseas business recorded
an increase in profit as a result of an increase in revenue, operating
income was affected by the impairment charges on goodwill and otherintangible assets with respect to Peach John.
Although we have recorded impairment charges on goodwill, etc., withrespect to Peach John several times in the past, we took one step further
in examining the future potential of our Peach John brand, as the current
fiscal year was the last year of our current mid-term (three-year) businessplan for completing the building of our business foundation. Accordingly,
we recorded impairment charges of ¥5,639 million as a result of ourreevaluation of fair value of goodwill and trademarks.
Our Peach John brand products are well known among influencers in
China and East Asia as a Japan-originated high fashion brand and havehigh brand equity when compared to competitive brands. Peach John
has a fan base and strong name recognition all over Japan, and in fact itremains as an important brand in our Group in terms of creating fashion
trends. It has the potential to be recognized as one of the “Cool Japan”
products in Asian markets. We plan to focus on strategies aimed atrevitalizing Peach John, based on the current brand value, by confronting
bold and unprecedented challenges, with an understanding of thechanges in consumer consciousness and trends.
Our consolidated net sales for the fiscal year under review was¥194,201 million, a decrease of 0.8%, or ¥1,524 million, from consolidated net sales for the previous fiscal year. Consolidated operating
income was ¥4,879 million, a decrease of 57.6%, or ¥6,615 million, fromconsolidated operating income for the previous fiscal year, and consolidated income before income taxes and equity in net income of affiliatedcompanies was ¥2,203 million, a decrease of 84.6%, or ¥12,083 million,
from consolidated income for the previous fiscal year.

Our Group uses U.S. accounting standards, and we are required torecord impairment charges on goodwill and other intangible assets of¥5,834 million as operating costs and expenses.
As a result, operating income decreased significantly. Consolidated
income before income taxes and equity in net income of affiliatedcompanies also decreased significantly due to recognition of valuation
loss of ¥5,570 million following the changes in U.S. accounting standards
that required us to record “gain (loss) on valuation of marketable securities and investments” as “Other income (expenses)” starting from thefiscal year under review.
As a result of the above, net income attributable to Wacoal Holdings
Corp. was ¥341 million, a decrease of 96.5%, or ¥9,404 million, from theprevious fiscal year. The ratio of operating income to net sales and theratio of net income attributable to Wacoal Holdings Corp. to shareholders’equity for the fiscal year under review were 2.5% and 0.2%, respectively.
As references, we have provided in the above statements of income
the real operating income and income before income taxes and equity in
net income of affiliated companies not taking into account this series of
impairment charges and valuation loss on marketable securities andinvestments, which were not accompanied by decreases in cash flows.
Both operating income and income before income taxes and equity in net
income of affiliated companies decreased from the previous fiscal year
but exceeded the respective estimates that we provided at the beginningof the fiscal year under review, i.e., ¥10,000 million in operating incomeand ¥13,000 million in income before income taxes and equity in net
income of affiliated companies. Accordingly, the real ratio of operating
income to net sales and the real ratio of net income attributable to
Wacoal Holdings Corp. to shareholders’ equity were 5.5% and 4.2%,
respectively.
The key exchange rates used for the fiscal year under review were:¥110.91 to the U.S. dollar; ¥145.68 to the British pound sterling; and¥16.72 to the Chinese yuan.
The following is a summary of operations by operating segment.

(Millions of Yen)

2018
AmountTotal 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

195,725
116,085
51,888
10,795
16,957
11,494
6,845
3,852
441
356

2019
% to Sales

100.0%
59.3%
26.5%
5.5%
8.7%
5.9%
5.9%
7.4%
4.1%
2.1%

Amount194,201
113,400
53,10010,491
17,210
4,879
6,325
4,581
(5,859)(168)

IN TE GRATED RE PO RT 2 0 1 9

YoY Change% to Sales

100.0%
58.4%
27.3%
5.4%
8.9%
2.5%
5.6%
8.6%
—
—

Amount–1,524–2,685+1,212–304+253–6,615–520+729–6,300
–524

%

–0.8%
–2.3%
+2.3%
–2.8%
+1.5%
–57.6%–7.6%+18.9%——

65

FACTS

Wacoal Business (Domestic)
Sales attributable to our “Wacoal Business (Domestic)” segment­decreased by 2% compared with sales for the previous fiscal year. As
a result of developing high-value-added products that are comfortable
and well designed for both the Wacoal and Wing brands, sales of ourcore brassiere products in our wholesale business of Wacoal Corp. werestrong. However, overall sales from our wholesale business decreased
due to weak sales of nightwear, maternity innerwear, and junior innerwear,
as well as weak sales of CW-X brand products. In our retail business,
although overall sales were driven by sales of our wireless brassiere
BRAGENIC, which showed significant growth throughout the year,
sales increased only slightly in our retail business as a result of a reduced
volume of discount sales intended to improve profitability and a decreasein sales due to the expiration period for points earned under the customer
loyalty program. Sales from Ai Co., Ltd. decreased by 18% compared withsales for the previous fiscal year, as we were significantly affected by the
weak sales from our core swimwear business in the summer season,
which is the period of peak demand.
Operating income decreased by 8% compared with operating income
for the previous fiscal year. While Wacoal Corp. recorded an increase inoperating profit as a result of improving the gross profit rate, operating
income was affected by the increase in profit recorded in the previous
fiscal year in respect of one-time compensation income from leaving afactory space occupied by our subsidiary.
Wacoal Business (Overseas)
Overall sales attributable to our “Wacoal Business (Overseas)” segment
on a Japanese yen basis increased by 2% compared with sales for theprevious fiscal year. Sales on a local currency basis decreased by 1%
from Wacoal International Corp. (United States), increased by 2% from
Wacoal Europe, and increased by 10% from Wacoal China Co., Ltd.
compared with corresponding sales for the previous fiscal year. In the
United States, while e-commerce sales through our e-commerce website
and third-party e-commerce websites were strong, sales were affectedby weak over-the-counter sales at department stores (physical stores)
and closings of certain department stores that went bankrupt.
E-commerce sales in Europe showed significant growth along withstrong sales of our plus-size brand elomi, despite the impact of inventory
adjustments at certain department stores in the United Kingdom, wherebusiness conditions deteriorated. In China, we enhanced our customer
data marketing and distribution system, and expanded growth throughthird-party EC websites. Over-the-counter sales at department stores
were also strong as a result of our successful sales promotion
conducted during China’s high-demand seasons.

66

Operating income on a Japanese yen basis increased by 19% compared with operating income for the previous fiscal year. Positive factors
attributable to the increase in operating income include: increased
revenue, an improvement in inventory efficiency, and an improvement in
the gross profit rate resulting from a higher percentage of e-commerce
sales in China; reevaluation of suggested retail prices, and closings of
our unprofitable directly managed retail stores in the United Kingdom;
productivity enhancement in our factory in Vietnam; gain on sale ofproperty related to a raw materials factory and the absence of one-time
impairment charges recorded during the previous fiscal year in Thailand.
Peach John BusinessOverall sales attributable to our “Peach John Business” segment fell by
3% compared with sales for the previous fiscal year. This decrease wasdue to poor sales from our own EC website and failure to expand thenumber of customers visiting our domestic retail stores, although we
made efforts to develop products and cultivate sales channels that
respond to changes in the market trend. On the other hand, sales in
Taiwan, where we commenced operations in May 2017, increased by
34% for the fiscal year under review as a result of the expansion ofbrand awareness through events and blogs.
Operating income was affected by decreased revenue from ourdomestic business, weak growth from our Chinese business resulting
from aggressive competition, an increase in labor costs to retain personnel and distribution expenses, as well as the impact of non-recurring
expenses incurred for the relocation of the head office. As a result,
we recorded an operating loss of ¥220 million, as well as impairment
charges of ¥5,639 million on goodwill and other intangible assets.
Other
Overall sales attributable to our “Other” segment increased by 2% fromsuch sales for the previous fiscal year. Sales from Lecien decreased by
10% from sales for the previous fiscal year. This was due to weak salesof our core innerwear business, which was affected by a decrease in thenumber of our private products handled at general merchandise stores,
as well as sales from our material business, art & hobby business, andapparel business, which were also weak. On the other hand, Nanasai
was successful in receiving new orders for interior finishes, in addition
to renovating a major department store’s headquarters, and as a result,sales from Nanasai increased by 14% compared with sales for theprevious fiscal year due to significant growth in our construction­business, along with an expansion in our sales business.
Although the gross profit rate decreased due to a higher percentage of
construction business at Nanasai, we recorded an increase in operating
income resulting from increased revenue. However, we recorded an
operating loss for our “Other” segment as the amount of operating
income from Nanasai was not enough to offset the amount of operating
loss recorded with regard to Lecien.

INTE GRATED RE PO RT 2 0 1 9

FACTSUNDERSTANDING, ANALYSIS AND CONSIDERATION WITH RESPECT TOSTATUS OF BUSINESS PERFORMANCE, ETC., FOR FISCAL 2019
Our understanding on the management accomplishments and issues in
the medium-term management plan for the three-year period, the lastyear of which is the fiscal year under review, is as follows.
The management accomplishments in our domestic business include
the successful exit from and rebuilding of our wholesale-oriented
business model, and the completion of introducing next-generation
customer service using digital technology. On the other hand, issues that
we faced include increased customer defection as a result of reduced
competitiveness of our Peach John brand products, as well as that ofLecien’s private products handled at general merchandise stores, fashion
swimwear products from Ai Co., Ltd., and CW-X sports leggings in our
major markets, as a result of failure to adapt to changes in the competitive environment of their major market.
In the new medium-term management plan period, we believe that
we need to push forward to implement unrivaled plans for distribution
channels by providing customer service advanced by digital technology,
and to pursue maximization of organizational productivity throughout
the entire Group or business collaboration by promoting structuralreform of and cooperation within the value chain, as well as making
efforts to reduce the number of, and/or optimize the composition of,brands and products.
As a result of promoting brand portfolio strategies that match thegeographical characteristics in our overseas business, we improved
brand awareness of elomi products in Europe and Peach John products
in China, each as our second signature brand after Wacoal brandproducts. In addition, we actively cultivated e-commerce sales channels
and reinforced growth. Sales from our e-commerce business now
account for 20%–30% of entire sales in the United States, Europe, andChina. On the other hand, the issue that we face in our overseas businessis the declining business of department stores and specialty stores in key
countries as has been the case in Japan. Also, we need to acceleratebuilding of the supply chain for the raw materials factory in Thailand as
we are behind schedule. We also need to enhance the competitivenessof our sewing factory in Myanmar with respect to quality, cost,
and technology.
Under the new medium-term management plan, we need to strengthen our business framework so that we can flexibly adapt to changing
market conditions where digital transformation is accelerating andaccelerate our growth rate. At the same time, we need to make investments and build our operating foundation for business expansion incountries and regions where our business remains small, and establish
a more competitive ASEAN supply chain network.

We also believe that our Group needs to aim for higher social value
and not only pursue the enhancement of economic value, by committing
ourselves to achieving sustainable growth along with the communities
surrounding our businesses. “Wacoal Group CSR-based Procurement
Guidelines” were established in October 2017, and we established andbegan operation of a series of CSR procurement cycles that include
cooperation with manufacturing outsourcees, and identify, correct and/or
improve the outsourcees’ compliance with respect to human rights andlabor practices. Through each dialogue, we have gained an understanding of society’s expectations of us and the highly important social issues
from our stakeholders’ perspectives and confirmed which important
issues should be addressed by our CSR activities in light of their importance to our business. We are also facing new challenges along with thechanges in trends. We need to reduce and avoid reputational risk ofcontroversial social media posts from advertisement, and address theincreasing risk of information leakage while digital transformation ofcustomer information continues to accelerate. We also need to work
harder on reducing plastic use and unsold inventory to better live within
the global environment.
We also made efforts to establish a system to enhance corporate
governance with a high degree of transparency. We decided to discontinue our defensive measures against takeovers during the fiscal year
ended March 31, 2018. In addition, in line with the enforcement of theamended Corporate Governance Code, we revised our corporate governance guidelines to reflect such amendments. We also established apolicy of reducing cross-shareholdings, and we revised the committees
for the appointment and remuneration of officers. As one of the challenges
that we face, we believe that we need to make appropriate disclosure interms of both quality and quantity regarding our medium- to long-term
vision that contributes to the enhancement of corporate value, KPIs thatenhance both economic and social value, and succession plans. We alsoplan to make appropriate disclosure about targets for reducing
cross-shareholdings.
In order to achieve a vital corporate culture that respects diversity, we
promoted a friendly working environment through the introduction of aleave policy for self-education and accompanying their family members,in addition to the introduction of teleworking. Our challenge is to build an
inclusive organizational system with more diverse human resources byrecruiting personnel at core career levels to create new value and createa results-oriented environment where everyone is proud to work.
The understanding, analysis, and consideration with respect toimprovement of capital efficiency through implementation of our
financial strategies and initiatives regarding shareholder returns are
as follows:

IN TE GRATED RE PO RT 2 0 1 967

FACTS

Under the medium-term management plan, which concluded at theend of the fiscal year under review, our target was to reduce shareholders’ equity to ¥220,000 million and to increase consolidated ROE (i.e.,
return on Wacoal Holdings Corp. shareholders’ equity for the fiscal year
under review) to 5% or higher, by the end of the fiscal year under review,
based on the business results for the fiscal year ended March 31, 2016.
However, we achieved very low levels of net income attributable to
Wacoal Holdings Corp. and consolidated ROE for the fiscal year underreview, at ¥341 million and 0.2%, respectively, due to the impact of theimpairment charges on intangible assets and valuation loss on marketable securities and investments. Real net income attributable to Wacoal
Holdings Corp. not taking into account the impact of these impairment
charges and valuation loss, which were not accompanied by decreases
in cash flows, was ¥9,636 million. Accordingly, real consolidated ROE
was 4.2%, which was lower than our target.
Our basic policy on profit distributions to shareholders is to provide
stable distributions based on our consolidated results, while seeking toincrease our enterprise value through active investment for improving
profitability, and to increase net income per share attributable to Wacoal
Holdings Corp. With respect to retained earnings, in addition to actively
investing in expanding customer contacts in domestic business andexpanding overseas business, from the viewpoint of enhancing ourenterprise value, we will make strategic investments to maintain ourcompetitiveness and strengthen our growth potential. With these efforts,
we aim to maximize shareholder returns through improved earnings. In
addition, we will acquire treasury shares flexibly while taking into accountthe free cash flow level and market environment, and improve capitalefficiency and returns to our shareholders. The amount of capital
investment for the fiscal year ended March 31, 2019 was ¥5,783 million.
Our capital investment was used in IT infrastructure for omni-channel
services in Japan, and the introduction of a management system forplanning and designing operations, as well as construction of overseas
factory facilities. We will return profits to our shareholders in the amountof ¥11,730 million in total, ¥4,811 million in the form of dividends, and¥6,919 million in the form of repurchases.
We will continue to work to improve our potential business profitability by prioritizing our efforts to make optimal growth investment choices.
We will also implement an active capital policy and shareholder returns
in anticipation of an increase in the ROE level on a medium- to long-term
perspective.
CAPITAL RESOURCES AND LIQUIDITY
Our current policy is to fund our cash needs from cash flows fromoperating activities, which allows us to secure the majority of our 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, 2019, we had credit facilities at financial
institutions totaling ¥31,336 million, and the balance of short-term loansthat established a line of credit amounted to ¥8,253 million. Of theseshort-term loans, ¥4,000 million was available to Wacoal Holdings Corp.,¥1,505 million was available to Wacoal Europe Ltd., ¥2,611 million wasavailable to Wacoal Service Co., Ltd., and ¥137 million was available
to Nanasai.

68

In general, most of our credit facilities have automatically renewed terms,
and we are not aware of any issues with respect to any of our lenders that
could cause these facilities to become unavailable. Even if any of our
subsidiaries loses access to funds from our credit facilities, we believethat it is possible for other companies in our Group to provide thenecessary funds. Our borrowing requirements are not affected by season.
We are not aware of any restrictions on the transfer of funds from a
subsidiary to a parent company in the form of a cash dividend. We
believe our working capital is adequate for our present requirements
and for our business operations in the short-to-long term.
CASH FLOW STATUS
The balance of cash and cash equivalents at the end of fiscal 2019 was¥30,133 million, an increase of ¥646 million compared with the end of
the previous fiscal year.
(Cash flow from operating activities)
Net cash provided by operating activities during fiscal 2019 was ¥13,620
million, a decrease of ¥1,873 million compared with the previous fiscal
year. This was the result of net income of ¥395 million being adjusted for
depreciation expenses, deferred taxes, and changes in assets andliabilities.
(Cash flow from investing activities)
Net cash used in investing activities during fiscal 2019 was ¥2,474
million, a decrease of ¥4,888 million compared with the previous fiscal
year due to acquisition of property, plant and equipment and intangible
assets, despite proceeds from the sale of equity securities.
(Cash flow from financing activities)
Net cash used in financing activities during fiscal 2019 was ¥10,872
million, a decrease of ¥1,431 million compared with the previous fiscal
year, due to cash dividend payments and repurchase of treasury stock.
SUMMARY OF CAPITAL INVESTMENT, ETC.
The amount of capital investment for the fiscal year ended March 31,
2019, was ¥5,783 million. A majority of our capital investment was used
in information system investment for our subsidiaries and maintenanceand repair work implemented for real properties held by the Company.
The amounts of capital investment made in Wacoal Business (Domestic),
Wacoal Business (Overseas), Peach John Business, and Other were
¥3,382 million, ¥1,837 million, ¥494 million, and ¥70 million, respectively.
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.

INTE GRATED RE PO RT 2 0 1 9

FACTS

Our basic policy is to distribute earnings twice a year in the formof interim and year-end dividends, and the Board of Directors is thedecision-making body for distribution of earnings.
Based on such policy, we plan to distribute a year-end dividend of¥36.00 per share as a distribution of earnings for the fiscal year underreview. As a result, the annual cash dividend per share, including aninterim dividend of ¥36.00 per share, will be ¥72.00 for the fiscal year
under review.
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 intend to acquire treasury stock in a flexible manner and will makeefforts to improve capital efficiency and return profits to our shareholders.
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.
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 bodyin order 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 (currently 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 basic
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 at which
products are introduced for the first time, and the senior generation.
During the fiscal year ended March 31, 2019, we worked on researchand development focusing on “anti-gravity” to target the market for
comfort products and on research and development of high-value-added
products, to cultivate new market opportunities.
As a result of the above, we recorded ¥739 million for our researchand development during the fiscal year ended March 31, 2019.
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 development 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 and services that can gain
support from and satisfy our customers.

IN TE GRATED RE PO RT 2 0 1 969

FACTS

Consolidated Balance Sheets
Wacoal Holdings Corp. and Subsidiaries
March 31, 2019 and 2018

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2019

2018

2019

¥ 30,133¥ 29,487$ 272,253

4,004

4,296

36,177

Marketable securities (Notes 3, 18 and 19)

446

1,567

4,030

Notes and accounts receivable (Note 6)

24,98925,873

225,777

March 31, 2019 and 2018ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Time deposits

Allowance for returns and doubtful receivables (Note 4)Inventories (Note 5)(229)(2,459)(2,069)42,50842,676

384,062

Return assets (Note 1)

1,180

Other current assets (Notes 6, 19 and 20)

4,985

4,372

45,040108,016

105,812975,931Land (Note 8)

21,54921,561

194,696

Buildings and structures (Notes 8 and 10)

74,03373,618668,892

Machinery and equipment (Note 19)

18,914

18,268170,889

Total current assets

10,661PROPERTY, PLANT AND EQUIPMENT:

Construction in progress

478

254

4,319

114,974

113,701

1,038,796(61,704)(59,368)(557,499)

53,27054,333

481,297

Investments in affiliated companies (Note 6)

21,85922,512

197,497

Investments (Notes 3, 18 and 19)

63,372

69,318572,570

Goodwill (Notes 7 and 19)

11,954

16,594

108,005

Other intangible assets (Notes 7 and 19)

12,297

12,859111,104

Prepaid pension expense (Note 11)

3,990

10,17836,050

Deferred income taxes (Note 15)

1,362

1,194

12,306

Total
Accumulated depreciation
Net property, plant and equipment

OTHER ASSETS:

Other
Total other assets

TOTAL
See notes to consolidated financial statements.

70

INTE GRATED RE PO RT 2 0 1 9

5,647

5,734

51,021

120,481

138,389

1,088,553¥281,767¥298,534$2,545,781

FACTS

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2019

2018

2019

¥

¥

$

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term bank loans (Note 8)

8,116

7,104

73,329Notes and accounts payable:
Trade notes payable

1,155

1,174

Trade accounts payable (Note 6)

10,638

11,393

10,435
96,115

Other payables

6,548

7,053

59,161

Accrued payroll and bonuses

7,209

7,213

65,134

Income taxes payable (Note 15)

2,759

1,979

24,928

Refund liabilities (Note 1)

3,482

31,460Current portion of long-term debt (Notes 8 and 18)

50

50

452

Other current liabilities (Notes 11, 16, 19 and 20)

3,905

3,666

35,282

43,862

39,632396,296

Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Notes 8 and 18)

88

138

795

Liability for termination and retirement benefits (Note 11)

1,828

1,852

16,516

Deferred income taxes (Note 15)

12,567

17,231

113,544

Other long-term liabilities (Notes 10, 11 and 15)

2,278

2,184

20,582

16,761

21,405

151,437

13,26013,260119,805

Total long-term liabilities
COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)
EQUITY:WACOAL HOLDINGS CORP. SHAREHOLDERS’ EQUITY:Common stock, no par value –authorized 250,000,000 shares in 2019 and 2018;
issued 70,689,042 shares and 71,689,042 shares in 2019 and 2018, respectively
Additional paid-in capital (Note 12)29,807

29,765

269,307

Retained earnings

193,139

172,418

1,745,021

2,274

14,013

Accumulated other comprehensive income (Note 14):
Foreign currency translation adjustments

1,551

Unrealized gain on securities

27,424

Pension liability adjustments (Note 11)
Total accumulated other comprehensive (loss) income
Treasury stock, at cost – 5,510,891 shares and
4,322,121 shares in 2019 and 2018, respectively
Total Wacoal Holdings Corp. shareholders’ equity (Note 13)
NONCONTROLLING INTERESTS
Total equityTOTAL

IN TE GRATED RE PO RT 2 0 1 9(5,679)(1,101)(51,310)(4,128)28,597(37,297)(15,584)(11,328)(140,802)

216,494

232,712

1,956,035

4,650

4,785

42,013

221,144

237,497

1,998,048¥281,767¥298,534$2,545,781

71

FACTS

Consolidated Statements of Income
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2019, 2018 and 2017

Thousands of
U.S. Dollars(Note 2)Millions of Yen
Years Ended March 31, 2019, 2018 and 2017

NET SALES (Notes 6 and 16)
OPERATING COSTS AND EXPENSES (REVENUE):
Cost of sales (Notes 6 and 11)
Selling, general and administrative expenses (Notes 1, 9, 10, 11, 12 and 19)
Compensation income
Impairment charges on goodwill (Notes 7 and 19)
Impairment charges on other intangible assets (Notes 7 and 19)
Total operating costs and expenses
OPERATING INCOME
OTHER INCOME (EXPENSES):Interest income
Interest expense
Dividend income (Note 6)(Loss) gain on sale, exchange and valuation of marketable securities
and investments – net (Note 3)
Gain on sale of assets classified as held for sale (Note 21)
Other – net (Notes 1, 11 and 20)
Total other (expenses) income – net
INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME
OF AFFILIATED COMPANIESINCOME TAXES (Note 15):
Current
Deferred
Total income taxes(LOSS) INCOME BEFORE EQUITY IN NET INCOME
OF AFFILIATED COMPANIESEQUITY IN NET INCOME OF AFFILIATED COMPANIES (Note 6)
NET INCOME
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.

2019¥194,2012018¥195,725

2017¥195,881

2019$1,754,617

89,804
93,684

92,95091,866

811,384
846,440

4,325
1,509
189,322
4,879

92,032
92,701(708)
206
184,231
11,494

184,816
11,06539,077
13,634
1,710,535
44,082

289
(11)
1,429

194
(10)
1,329

157
(27)
1,176

2,611
(100)
12,911(5,430)206

442(49,060)

1,047(2,676)

1,073
2,792

3,770
769
6,287

9,460
(24,178)

2,203

14,286

16,56919,9045,350(2,817)
2,533

4,880
662
5,542

4,830
450
5,280

48,338(25,452)
22,886

(330)

8,744

11,289(2,982)

725
395
(54)
341

916
9,660
85
9,745

1,359
12,648(123)¥ 12,525

6,551
3,569
(488)
3,081

¥

¥

Yen
Years Ended March 31, 2019, 2018 and 2017

NET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.
PER SHARE (Note 17):
Basic
DilutedNET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.
PER AMERICAN DEPOSITARY RECEIPT (5 shares of common stock) (Note 17):
Basic
Diluted$U.S. Dollars (Note 2)

2019

2018

2017

2019

¥ 5.16¥ 5.14¥143.46¥142.98¥180.26¥179.71

$0.05
$0.05

¥25.78¥25.68¥717.30¥714.89¥901.30¥898.55

$0.23
$0.23

The Company conducted a one-for-two ordinary share reverse stock split as of October 1, 2017. The number of outstanding shares was calculated assuming that the reverse stock split had occurred at
the beginning of the earliest fiscal year presented in the consolidated financial statements.
See notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2019, 2018 and 2017

Years Ended March 31, 2019, 2018 and 2017

NET INCOME
OTHER COMPREHENSIVE INCOME, NET OF TAX (Note 14):
Foreign currency translation adjustments:
Amounts arising during the year
Total foreign currency translation adjustments
Unrealized (loss) gain on securities:
Amounts arising during the year
Reclassification adjustments
Total unrealized (loss) gain on securities
Pension liability adjustments:
Amounts arising during the year
Reclassification adjustments
Total pension liability adjustments
OTHER COMPREHENSIVE (LOSS) INCOME
COMPREHENSIVE (LOSS) INCOME
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TONONCONTROLLING INTERESTSCOMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TOWACOAL HOLDINGS CORP.

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2019
¥ 395

2018
¥ 9,660

2017¥12,6482019$ 3,569

(750)
(750)

1,113
1,113

(4,079)(4,079)(6,776)(6,776)

(7)
(97)
(104)

6,494
(139)
6,355

3,413
(304)
3,109

(63)
(877)
(940)

(4,787)200(4,587)(5,441)(5,046)

(487)
(193)
(680)
6,788
16,448

619
(1)
618
(352)
12,296(43,251)
1,807(41,444)(49,160)(45,591)

(18)

21

(6)

(163)

¥(5,064)¥16,469¥12,290$(45,754)

See notes to consolidated financial statements.

72

INTE GRATED RE PO RT 2 0 1 9

FACTS

Consolidated Statements of Equity
Wacoal Holdings Corp. and Subsidiaries

Millions of Yen

BALANCE, APRIL 1, 2016
Net incomeForeign currency translation
adjustments
Unrealized loss on securities
Pension liability adjustments
Cash dividends paid to Wacoal
Holdings Corp. shareholders,¥165 per 5 shares of common stockCash dividends paid to noncontrollinginterests
Purchase of treasury stockShare-based compensation granted(exercised) (Note 12)Equity transactions with noncontrollinginterests
BALANCE, MARCH 31, 2017
Net incomeForeign currency translation
adjustments
Unrealized gain on securities
Pension liability adjustments
Cash dividends paid to Wacoal
Holdings Corp. shareholders,¥270 per 5 shares of common stockCash dividends paid to noncontrollinginterests
Purchase of treasury stock
Disposal of treasury stockShare-based compensation granted(exercised) (Note 12)Equity transactions with noncontrollinginterests
BALANCE, MARCH 31, 2018
Cumulative effects (net of tax) of the
adoption of ASU 2016-01 and2018-03 (Note 1)
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 12)Equity transactions with noncontrollinginterests
BALANCE, MARCH 31, 2019

Shares of
Outstanding
Common Stock(Thousands)

CommonStock

Additional
Paid-in
Capital70,429¥13,260¥29,686

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock,
at Cost¥22,108¥ (2,876)¥162,196
12,525

Total Wacoal
Holdings Corp.
Shareholders’EquityNoncontrolling
Interests

Total Equity¥224,374
12,525¥5,027
123¥229,401
12,648(3,965)(3,965)(114)(4,079)

3,109
621

3,109
621

0
(3)

3,109
618

(4,648)(4,648)(4,648)(167)(1,851)
27

68,605

13,26021(11)29,707

170,062
9,745(4,522)(4,522)

64

74

74
48

48

(7,334)

227,568
9,745

4,914
(85)

232,482
9,660

1,062

1,062

51

1,113

6,349
(687)

6,349
(687)

6
7

6,355
(680)

21,873(7,386)(7,386)(7,386)(194)(1,243)0
567,367

13,260(4,007)0(4,007)
0

13

68

68

(11,328)

232,71258(3)29,765

172,418

28,597

27,834(27,320)

514
341

54

395

(723)

(723)

(27)

(750)

(104)
(4,578)(104)(4,578)(9)(104)(4,587)(4,811)

86

86

4,785

237,497514(4,811)(4,811)(191)(2,200)065,178¥13,260(194)(4,007)
0

341

11

(167)

(4,522)(2,631)(6,919)
0
2,631

42

(12)

32

62

¥29,807¥193,139¥(15,584)¥216,494¥ (4,128)(191)(6,919)0(6,919)
0
62
38

38

¥4,650¥221,144

The Company conducted a one-for-two ordinary share reverse stock split as of October 1, 2017. The number of outstanding shares was calculated assuming that the reverse stock split had occurred at
the beginning of the earliest fiscal year presented in the consolidated financial statements.

Thousands of U.S. Dollars (Note 2)

BALANCE, MARCH 31, 2018
Cumulative effects (net of tax) of the adoption of ASU
2016-01 and 2018-03 (Note 1)
Net income
Foreign currency translation adjustments
Unrealized loss on securities
Pension liability adjustments
Cash dividends paid to Wacoal Holdings Corp.
shareholders, $3.25 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 12)Equity transactions with noncontrolling interests
BALANCE, MARCH 31, 2019

CommonStock

Additional
Paid-in
CapitalRetained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock,
at CostTotal Wacoal
Holdings Corp.
Shareholders’EquityNoncontrolling
Interests$119,805$268,928$1,557,805$ 258,375

Total Equity$(102,349)$2,102,564$43,234$2,145,798

251,482(246,838)

4,644(6,532)(940)(41,362)

3,081(6,532)(940)(41,362)

3,081(43,467)

4,644
488
(244)
(82)

(43,467)(43,467)(1,726)379$119,805$269,307(62,513)
0(23,771)(62,513)0
23,771

(108)

289

560

$1,745,022$ (37,297)$(140,802)$1,956,035

3,569(6,776)(940)(41,444)(1,726)(62,513)0560

343$42,013343$1,998,048

See notes to consolidated financial statements.

IN TE GRATED RE PO RT 2 0 1 973

FACTS

Consolidated Statements of Cash Flows
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2019, 2018 and 2017

Millions of Yen
Years Ended March 31, 2019, 2018 and 2017

OPERATING ACTIVITIES:Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation (Note 12)
Allowance for returns and doubtful receivables – net
Deferred income taxes
Loss (gain) on sales or disposal of property, plant and equipment – net
Impairment charges on property, plant and equipment (Note 19)
Compensation income
Impairment charges on goodwill (Notes 7 and 19)
Impairment charges on other intangible assets (Notes 7 and 19)
Loss (gain) on sale, exchange and valuation of marketable securities
and investments – net (Note 3)
Equity in net income of affiliated companies, less dividends received
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories
Increase in return assets(Increase) decrease in other current assets(Decrease) increase in notes and accounts payable
Increase in refund liabilities
Decrease in liability for termination and retirement benefits
Increase (decrease) in accrued expenses, income taxes payable
and other current liabilities
Other
Net cash provided by operating activities

2019

2018

2017

2019

¥

395

¥ 9,660¥ 12,648

$

5,647
62
(2,263)(2,817)
48
167

5,492
68
18
662
250

5,032
74
264
450
(3,374)NONCASH INVESTING ACTIVITIES:Acquisition of property, plant and equipment by assuming payment obligation

(206)

(442)

49,059

(211)

(397)

(837)

(1,906)822(76)(1,180)(653)(1,640)
3,482
(620)

(232)
1,012

882
(378)

270
676

475
(95)

(833)

(417)

7,427
(687)
(10,661)(5,900)(14,818)
31,460(5,602)

1,075

(518)

1,615

9,713

118
13,62073
15,493454
16,351

1,066
123,057(4,783)
5,226
2,497
(323)
1,008
(900)

(5,129)
3,368
394
(22)
567
(1,605)708
159(3,429)(2,455)(4,336)
3,717
1,574
(356)
516
(329)

(43,215)
47,21722,561(2,918)9,107(8,132)

82(7,362)

3,585(5,504)(1,941)
4
33(3,032)

2,494(23,518)(28,731)2,439
343(22,353)

1,061

(755)

(3,613)

9,586

(50)
(6,919)0(4,811)(191)
38(10,872)372
646
29,487¥ 30,133(47)(4,007)0(7,386)(194)
86(12,303)(336)(4,508)33,995¥ 29,487(4,648)(167)
48(13,055)(328)(64)
34,059¥ 33,995(452)(62,513)0(43,467)(1,726)343(98,229)
3,361
5,836
266,417$272,253

¥

11
5,068

¥

11
5,853

¥

27
2,812

$

99
45,790

¥

954

¥

583

¥

795

$

8,619

See notes to consolidated financial statements.

74

39,077
13,6345,430

276(2,603)(3,180)270
38(2,474)

ADDITIONAL CASH FLOW INFORMATION:
Cash paid for:
Interest
Income taxes

3,569
51,021
560(20,446)(25,452)
434
1,509

(708)
206

4,325
1,509

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 7)
Proceeds from sales of shares of affiliated companies
Other
Net cash used in investing activities
FINANCING ACTIVITIES:
Increase (decrease) in short-term bank loans
with original maturities of three months or less – net
Proceeds from issuance 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 to noncontrolling interests
Net cash 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 YEAR

Thousands of
U.S. Dollars(Note 2)

INTE GRATED RE PO RT 2 0 1 9

250
(403)
(4,522)

FACTS

Notes to Consolidated Financial Statements
Wacoal Holdings Corp. and Subsidiaries

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.
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, 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(expenses) income in the consolidated statements of income.
Foreign currency translation gains (losses) for the years ended March
31, 2019, 2018 and 2017 were ¥76 million, ¥(189) million and ¥(175)
million, respectively. They have been included in other – net of otherincome (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 income or loss, 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. Depreciation of property, plant andequipment is computed by the declining-balance method, except forbuildings acquired on or after April 1, 1998 as well as building improvements and structures acquired on or after April 1, 2016, which are
depreciated using the straight-line method based upon the estimateduseful lives of the assets. The estimated useful lives are as follows:Buildings and structures
2 to 50 years (mainly 38 years)
Machinery and equipment (excluding certain paintings)
2 to 20 years (mainly 5 years)
Depreciation expenses for the years ended March 31, 2019, 2018 and2017 were ¥3,538 million, ¥3,681 million and ¥3,443 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. Impairment charges of ¥167 million on property, plant andequipment were included in selling, general and administrative expenses in
the consolidated statement of income for the fiscal year ended March 31,
2019. The Companies recorded no impairment charges on long-lived
assets for the fiscal years ended March 31, 2018 and 2017.
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 created the goodwill resides. To test for
goodwill impairment, the carrying amount of each reporting unit iscompared with its fair value. If the carrying amount of a reporting unit
exceeds its fair value, an impairment charge is recognized in an amountequal to that excess. To test for impairment of other intangible assets
with indefinite useful lives, the carrying value of an intangible asset iscompared with its fair value. If the carrying amount of an intangible asset
with indefinite useful life exceeds its fair value, an impairment charge isrecognized in an amount equal to that excess.
Other intangible assets with finite useful lives consist primarily of

IN TE GRATED RE PO RT 2 0 1 975

FACTSbrands and software and are amortized over their estimated useful lives
using the straight-line method. The estimated useful lives are as follows:
Brands
20 to 25 years (mainly 25 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 on 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.
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—Certain noncancelable leases are classified as capital leases
and the leased assets are included as part of property, plant and equipment. Other leases are classified as operating leases and are notcapitalized.
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.
Revenue Recognition—The Companies recognize revenue when control
of promised products is transferred to customers and performanceobligations are satisfied. The Group’s revenue is recognized for transactions, net of any trade discounts or rebates given. In addition, provision
for expected returns is deducted from revenue based on actual returnamounts from the previous fiscal year.
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, 2019, 2018 and2017 were ¥12,329 million, ¥12,719 million and ¥12,694 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, 2019, 2018 and 2017 were ¥739 million, ¥781 millionand ¥810 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.

76

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 financial statements andtax bases of assets and liabilities 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 Accounting Standard Codification 718,
“Compensation – Stock Compensation” (“ASC 718”). The Company
measures share-based compensation cost at the grant date, 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 of the award isestimated 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.
Subsequent Events—In accordance with the guidance for subsequent
events, the Company has evaluated subsequent events through June27, 2019.
Reclassifications—Certain reclassifications have been made to the prioryears’ consolidated financial statements to conform to the current year’s
presentation. And as of October 1, 2017, the Company conducted a
one-for-two ordinary share reverse stock split. The number of ordinary
shares, outstanding shares, shares of treasury stock, and net income
attributable to Wacoal Holdings Corp. per share were calculated assumingthat the reverse stock split had occurred at the beginning of the earliest
fiscal year presented in the consolidated financial statements.
Recent Accounting Pronouncements:
Recently Adopted Accounting Guidance
Revenue Recognition—In May 2014, the Financial Accounting Standards
Board (the “FASB”) issued new accounting guidance related to revenue
recognition. This guidance is based on the principle that revenue isrecognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. This standard provides comprehensive guidance, and requires the disclosure of
information to enable users of financial statements to understand thenature, amount, timing, and uncertainty of revenue and cash flows arisingfrom contracts with customers. In August 2015, the FASB issued additional
guidance and deferred the effective date of the guidance for a year. In
May 2016, the FASB also issued additional guidance to improve theabove guidance by reducing the potential for diversity in practice upon
initial application and the cost and complexity of applying the new guidance both upon transition and on an ongoing basis. This guidance iseffective for fiscal years beginning after December 15, 2017 and interim
periods within that annual period. The Company has applied this guidancefrom the first quarter commencing on April 1, 2018, using the modified
retrospective method of adoption to contracts that were not completed asof the adoption. The cumulative effect of applying this guidance was not

INTE GRATED RE PO RT 2 0 1 9

FACTS

recognized as adjustment to retained earnings at the beginning of the
fiscal year under review as its impact was not material. Due to the adoption of this guidance, liabilities related to returns, which were included in“Allowance for returns and doubtful receivables” under Current Assets
through the previous consolidated fiscal year, are classified as “Refund
liabilities” under Current Liabilities and rights to recover products from
customers as “Return assets” under Current Assets from the current
consolidated fiscal year. The adoption of this guidance did not have amaterial impact on the Company’s consolidated balance sheets andstatements of income except as set forth above.
Recognition and Measurement of Financial Instruments—In January
2016, the FASB issued new accounting guidance related to recognition andmeasurement of financial assets and financial liabilities. This guidance
requires an entity to measure equity investments (except those accounted
for under the equity method of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in
net income and change of related disclosures. In February 2018, the FASB
issued new accounting guidance related to recognition and measurementof financial assets and financial liabilities. This guidance requires the
cumulative effect of equity investments (except those accounted for underthe equity method of accounting or those that result in consolidation of theinvestee) to reflect their fair values to be adjusted to beginning retained
earnings. The guidance is effective for fiscal years beginning after
December 15, 2017 and interim periods within those fiscal years. The
Company has applied this guidance from the first quarter commencing on
April 1, 2018. As a result of this adoption, unrealized gains on equity
securities of ¥27,320 million (net of tax), which were recognized underaccumulated other comprehensive income (loss) as of the previous fiscal
year-end, and unrealized gains on equity securities of ¥514 million (net oftax), which were recorded at cost in the prior years, are now recognized asa cumulative effect adjustment of beginning retained earnings. In addition,
an unrealized loss on equity securities of ¥5,495 million recognized during
the fiscal year under review was included in “(Loss) gain on sale, exchange
and valuation of marketable securities and investments – net” in the
consolidated statement of income.
Classification of Certain Cash Receipts and Cash Payments—In August
2016, the FASB issued new accounting guidance related to classificationof certain cash receipts and cash payments. This guidance is intended toreduce existing diversity in practice with respect to classification ofcertain cash receipts and payments in the statement of cash flows. This
guidance is effective for fiscal years beginning after December 15, 2017and interim periods within that annual period. The Company has applied
this provision from the first quarter commencing on April 1, 2018. The
adoption of this guidance did not have a material impact on the
Company’s balance sheets and statements of income.
Income Taxes—In October 2016, the FASB issued new accounting
guidance related to income taxes. This guidance requires an entity torecognize income tax consequences of intra-entity transfers of assets
other than inventory. This guidance is effective for fiscal years beginning
after December 15, 2017 and interim periods within that annual period.
The Company has applied this provision from the first quarter commencing on April 1, 2018. The adoption of this guidance did not have a material
impact on the Company’s balance sheets and statements of income.
Simplifying the Test for Goodwill Impairment—In January 2017, the
FASB issued new accounting guidance related to goodwill and otherintangible assets. This guidance simplifies the goodwill impairment test
by eliminating Step 2 from the test. This guidance is effective for fiscal
years beginning after December 15, 2020 and interim periods within thatannual period. Early adoption is permitted and the Company has applied
this provision from the first quarter commencing on April 1, 2018. The
adoption of this guidance did not have a material impact on the
Company’s balance sheets and statements of income.

Periodic Pension Cost—In March 2017, the FASB issued new accounting
guidance related to periodic pension cost and net periodic post retirement benefit cost. This guidance requires an entity to disaggregate theservice cost component from the other components of net periodic
benefit costs. This guidance is effective for fiscal years beginning after
December 15, 2017 and interim periods within that annual period. The
Company has applied this provision from the first quarter commencing
on April 1, 2018. The guidance is applied retrospectively for the presentation of the service cost and the other components of net periodic pension
costs. The adoption of the guidance decreased operating income by¥1,040 million and ¥783 million for the years ended March 31, 2018 and2017, respectively, and increased other (expenses) income by the sameamounts. In addition, due to the adoption of this guidance, operating
income during the current year decreased by ¥808 million, and other(expenses) income increased by ¥843 million. The adoption of theguidance that only the service cost is eligible for capitalization did nothave a material impact on the Company’s balance sheets and statements of income.
Recent Accounting Guidance Not Yet Adopted
Leases—In February 2016, the FASB issued new accounting guidance
related to leases, Accounting Standard Codification 842, “Leases” (“ASC842”). This guidance requires an entity to recognize lease assets andlease liabilities on the balance sheet for those leases classified as
operating leases under current U.S. GAAP (“ASC 840”) with a few
exceptions.
In January 2018, the FASB also issued new accounting guidance
related to land easements. This guidance clarifies that land easements
are within the scope of ASC 842 and introduces a transition practical
expedient allowing the Company to forgo assessment as to whether
existing or expired land easements that were not previously accounted
for as leases under ASC 840 are or contain leases under ASC 842. The
guidance is effective for fiscal years beginning after December 15, 2018
and interim periods within those fiscal years. The Company is currently
evaluating the impact of adoptions on the Company’s consolidated
financial position, results of operations or cash flows.
Internal-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 adoption of this guidance is not expected
to have a material impact on the Company’s balance sheets and statements 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 adoption of this guidance is not expected to 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 beginning
after December 15, 2019 and interim periods within that annual period.
The adoption of this guidance did not have a material impact on the
Company’s balance sheets and statements of income.

IN TE GRATED RE PO RT 2 0 1 977

FACTS

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 ¥110.68 to $1, the noon buying

rate for Japanese yen in New York City as of March 31, 2019. Suchtranslation should not be construed as representations that theJapanese yen amounts could be converted into U.S. dollars at the
aforementioned 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, 2019 and 2018. The cost, gross unrealized gain andloss, and the fair value by major security type were as follows:
Millions of Yen

2019
Held-to-maturity securities:

Cost

Gross
Unrealized Gain

Gross
Unrealized Loss

Fair Value

¥ 446

¥0

¥1

¥ 445

¥1,124¥1¥4¥1,121

Cost

Gross
Unrealized Gain

Gross
Unrealized Loss

Current:
Corporate debt securities
Noncurrent:
Corporate debt securities

Millions of Yen

2018
Available-for-sale securities:

Fair Value

Current:
Municipal bonds

¥ 10

¥

0

¥ 10

¥464

¥150

¥614

Noncurrent:
Corporate debt securities
Held-to-maturity securities:
Current:
Corporate debt securities

¥967

¥ 8

¥959

¥646

¥12

¥634

Noncurrent:
Corporate debt securities

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, 2019 and 2018, were as follows:
Millions of Yen

2019

2018

Fair Value

Gross
Unrealized Loss

Fair Value

Gross
Unrealized Loss

¥332

¥1

¥424

¥3

¥446

¥3

¥105

¥2

Held-to-maturity securities:
Marketable securities:
Corporate debt securities
Investment:
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, 2019 and 2018, were as follows:
Millions of Yen

2019
Fair Value

2018
Gross
Unrealized Loss

Fair Value

Gross
Unrealized Loss

¥535

¥ 5

¥529

¥10

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

78

¥228

INTE GRATED RE PO RT 2 0 1 9¥1FACTS

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 as
described in Note 1. 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, 2019 and 2018.
Equity Securities—Realized and unrealized gains and losses on equity
securities during the fiscal year ended March 31, 2019, are as follows:

Future maturities of debt securities classified as held-to-maturity
securities as of March 31, 2019, were as follows:
Millions of Yen
Cost

Fair Value

Due within one year

¥ 446

¥ 445

Due after one year through five years

1,124

1,121

¥1,570¥1,566

Total

There were no realized gains or losses from sales of debt securities
classified as available-for-sale during the years ended March 31, 2019and 2018.
There were no unrealized losses on debt securities classified asavailable-for-sale for which a decline in fair value was deemed to be otherthan temporary for the fiscal years ended March 31, 2019 and 2018.
As a result of the conversion of convertible bonds into marketablesecurities, the Company recorded gains on exchange of marketablesecurities of ¥140 million for the fiscal year ended March 31, 2019. There
was no exchange of marketable securities and investments during the
fiscal year ended March 31, 2018.

Millions of Yen

2019Net losses recognized during the period on equity
securities¥(5,570)

Less: Net losses recognized during the period on equity
securities sold during the period(77)

Unrealized losses recognized during the period on equity
securities still held at March 31¥(5,493)

4. ALLOWANCES FOR DOUBTFUL RECEIVABLES AND SALES RETURNS 
Information related to the Companies’ allowance for doubtful receivables was as follows:
Millions of Yen

2019

Balance at the beginning of the year

2018

2017

¥207

¥219

Charged to expenses

36

28

¥196
68

Balances written off/reversed

(14)

(40)

(45)

Balance at the end of the year

¥229

¥207

¥219

Information related to the Companies’ allowance for sales returns was as follows:
Millions of Yen

2018

Balance at the beginning of the year

¥ 2,2582017¥ 2,033

Charged to cost

2,252

2,258

Balances utilized(2,258)(2,033)

Balance at the end of the year

¥ 2,252¥ 2,258

5. INVENTORIES 
The components of inventories as of March 31, 2019 and 2018 were as follows:
Millions of Yen

2019

2018

Finished products¥36,358¥36,635Work in process

3,793

3,678

Raw materials

2,357

2,363

¥42,508¥42,676

Total

IN TE GRATED RE PO RT 2 0 1 979

FACTS6. INVESTMENTS IN AFFILIATED COMPANIES 
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 (%)

2019

Millions of Yen

2019

2018

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

24

Aggregate carrying amounts and fair values of investments in affiliatedcompanies that have a quoted market price as of March 31, 2019 and2018 were as follows:

¥927

¥598

Accounts payable

665

472

Other receivable

286

272

The amounts for transactions with affiliated companies for the fiscal
years ended March 31, 2019, 2018 and 2017 were as follows:
2019

2018

2017

Sales

¥3,257¥2,700¥1,898Cost of sales corresponding
to sales of material
and products

3,175

2,675

1,753

Purchases

5,612

5,744

2,646

Royalties

299

300

263

Dividends received from affiliated companies were ¥514 million, ¥519
million and ¥522 million for the fiscal years ended March 31, 2019, 2018and 2017, respectively.

Millions of Yen

2019

2018

Carrying amount¥14,523¥15,191

Aggregate value of quoted market price

11,075

11,445

The following tables represent the affiliated companies’ summarizedbalance sheets and statements of income as of and for the fiscal years
ended March 31, 2019 and 2017. Such information as of and for the
fiscal year ended March 31, 2018 was not disclosed as it was immaterial.
Millions of Yen

Current assets

2019

2017

¥41,929¥40,589

Noncurrent assets

44,635

41,773

Total¥86,564¥82,362

Current liabilities¥ 8,569¥ 8,538

Long-term liabilities

7,145

7,366

Equity70,85066,458

Total¥86,564¥82,362
Millions of Yen

2019

2017

Net sales¥63,066¥59,172

Gross profit

32,10530,200

Income before income taxes

3,458

5,105

Net income

2,714

4,089

80

2018

Accounts receivable

Millions of Yen

The primary affiliated companies and percentage of ownership as ofMarch 31, 2019 and 2018 were as follows:
Name of Investee

The balance of receivables and payables to affiliated companies as ofMarch 31, 2019 and 2018 was as follows:

INTE GRATED RE PO RT 2 0 1 9

FACTS

7. GOODWILL AND OTHER INTANGIBLE ASSETS 
Goodwill—Changes in the carrying amount of goodwill by operating segments for the fiscal years ended March 31, 2019, 2018 and 2017 were as follows.
Millions of Yen

2019
Wacoal Business(Overseas)

Peach John

Total

¥12,269¥ 11,203¥ 23,472

Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total

12,269Impairment charges
Foreign currency translation adjustments(6,878)(6,878)

4,325

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

(315)

(315)

Balance at the end of the year:
Goodwill

11,954

Accumulated impairment charges
Total

11,20323,157¥(11,203)(11,203)¥11,954¥ 11,954
Millions of Yen

2018
Wacoal Business(Overseas)

Peach John

Total

¥11,746¥11,203¥22,949

Balance at the beginning of the year:
Goodwill
Accumulated impairment charges(6,878)(6,878)

4,325

16,071

Total

11,746

Impairment charges

(206)

(206)

Foreign currency translation adjustments

736

736

Balance at the end of the year:
Goodwill
Accumulated impairment charges
Total

12,482

11,203(213)(6,878)23,685(7,091)¥12,269¥ 4,325¥16,594
Millions of Yen

2017
Wacoal Business(Overseas)

Peach John

Total

¥13,586¥11,203¥24,789

Balance at the beginning of the year:
Goodwill
Accumulated impairment charges
Total

13,586

Adjustments during the measurement period
Foreign currency translation adjustments(6,878)(6,878)

4,325

17,911(57)(57)(1,783)(1,783)

Balance at the end of the year:
Goodwill

11,746

Accumulated impairment charges
Total¥11,746

11,203

22,949(6,878)(6,878)¥ 4,325¥16,071

The Company recorded impairment charges on goodwill of ¥4,325 million for the Peach John Business in the fiscal year ended March 31, 2019, which
was included in operating costs and expenses of the Peach John Business. The Company recorded impairment charges on goodwill of ¥206 million for
A Tech in the fiscal year ended March 31, 2018, which was included in operating costs and expenses of the Wacoal Business (Overseas). During the
fiscal year ended March 31, 2017, the Companies recorded no impairment charge on goodwill. See Note 19 for further information about measurementof fair value.

IN TE GRATED RE PO RT 2 0 1 981

FACTS

Other Intangible Assets—The components of intangible assets excluding goodwill as of March 31, 2019 and 2018 were as follows:
Millions of Yen

2019Years Ended March 31

2018

Gross Carrying
AmountAccumulated
Amortization andImpairment Charges

Gross Carrying
AmountAccumulated
Amortization andImpairment Charges

Brands¥ 6,058¥ 1,899¥ 6,219¥1,671

Software

14,060

7,542

11,777

6,434

Others

1,732

868

1,703

805

¥21,850¥10,309¥19,699¥8,910¥ 5,316¥ 4,636¥ 5,316¥3,322

Amortized intangible assets:

Total
Unamortized intangible assets:
Trademarks
Other

76

Total

¥ 5,392

Other intangible assets acquired during the years ended March 31, 2019,2018 and 2017 totaled ¥3,266 million, ¥2,569 million and ¥1,941 million,
respectively, which primarily consist of software with an estimated usefullife of five years.
The gross carrying amounts of brands include foreign currencytranslation adjustments.
During the fiscal year ended March 31, 2019, the Companies recorded
impairment charges on the trademark of Peach John of ¥1,314 million,
which was included in operating costs and expenses of the Peach John
Business. In addition, the Companies recorded ¥195 million of impairment charges on software of Ai, which was included in operating
expenses of the Wacoal Business (Domestic). During the fiscal years
ended March 31, 2018 and 2017, the Companies recorded no impairment
charge on other intangible assets. See Note 19 for further information.

76¥ 4,636¥ 5,392¥3,322Aggregate amortization expenses for the fiscal years ended March 31,
2019, 2018 and 2017 related to other intangible assets were ¥2,109
million, ¥1,811 million and ¥1,589 million, respectively. Future estimatedamortization expenses as of March 31, 2019 were as follows:
Years Ending March 31

Millions of Yen

Estimated amortization expenses
2020¥1,977

2021

1,885

2022

1,673

2023

1,385

2024

941

Total

¥7,861

8. SHORT-TERM BANK LOANS AND LONG-TERM DEBT 
Short-term bank loans as of March 31, 2019 and 2018 consisted of thefollowing:
Millions of Yen

Unsecured bank loans

2020

¥ 50

¥8,116¥7,104

2021

50

2019

2018

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

¥ 55

¥ 75

Unsecured bank loans, with fixed interest at
0.4%, maturing through 2022

83

113

138

188

Long-term debt, less current portion

82

Millions of Yen

2018

Millions of Yen

Less current portion of long-term portion

Years Ending March 31

2019

The weighted-average annual interest rates on short-term bank loans asof March 31, 2019 and 2018 were 0.2% and 0.3%, respectively.
Unused lines of credit for short-term financing as of March 31, 2019and 2018 were aggregated to ¥22,935 million and ¥23,511 million,
respectively.
Long-term debt as of March 31, 2019 and 2018 is summarized below.
The interest rates and maturities were for loans as of March 31, 2019.

Total

The annual maturities of long-term debt as of March 31, 2019 were as
follows:

(50)

(50)

¥ 88

¥138

2022

38

Total

¥138

A subsidiary has pledged assets as security for loans. As of March 31,
2019 and 2018, assets pledged as collateral for bank loans were as
follows:
Millions of Yen

2019

2018

Land

¥150

Buildings

169

¥150
191

Total

¥319

¥341

As is customary in Japan, both short-term and long-term loans are madeunder general agreements that 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.

INTE GRATED RE PO RT 2 0 1 9

FACTS

9. LEASES 
The Companies lease most of their store premises and certain equipment.

Years Ending March 31

Most leases have automatic renewal provisions and allow the Companies

2020

¥ 695

to extend the lease term beyond the initial base period, subject to the

2021

652

terms agreed at lease inception. Future minimum rental commitments

2022

497

2023

454

on operating leases as of March 31, 2019 were presented below:

Millions of Yen

2024

454

Thereafter

2,266

Total

¥5,018

Rental expenses were ¥8,062 million, ¥7,830 million and ¥7,862 million
for the years ended March 31, 2019, 2018 and 2017, respectively, andhave been included in selling, general and administrative expenses.

10. 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

2019

Balance at the beginning of the year

2018

2017

¥ 825

¥855

Accretion expense

2

1

2

Liabilities incurred

92

62

84

Liabilities settled

(106)

(91)

(111)

0

(2)

2

¥ 813

¥825

¥ 855

Change due to translation of foreign currencies
Balance at the end of the year

IN TE GRATED RE PO RT 2 0 1 9

¥ 878

83

FACTS

11. TERMINATION AND RETIREMENT PLANS 
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 lumpsum 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:Millions of Yen

2019

2018

2017

Change in benefit obligations:Benefit obligations at the beginning of the year

¥34,580¥34,935¥35,777

Service cost

1,196

1,086

1,103

Interest cost

178

205

183

Participants’ contributions

62

63

65

4,937

432

(509)

(961)

(1,007)(958)

Settlement paid from plan assets(976)(1,003)(865)

Settlement paid by the Company and certain subsidiaries

(339)

(138)

(125)

4

7

(7)

38,681

34,58034,935

Actuarial gain (loss)
Prior service cost arising during the year271

Benefits paid from plan assets

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

¥42,736¥43,203¥42,156

Actual return on plan assets

(846)

878

2,176

Employer contributions

657

612

633

Participants’ contributions

62

63

65

Benefit payments(961)(1,007)(958)

Settlement payments(976)(1,003)

(865)

8

(10)

(4)

40,68042,736

43,203¥ 1,999¥ 8,156¥ 8,268

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
Amounts recognized on the consolidated balance sheets as of March 31, 2019 and 2018 consist of:Millions of Yen

2019

Prepaid pension expense2018¥ 3,990

Other current liabilities
Liability for termination and retirement benefits
Total¥10,178

(163)

(170)

(1,828)(1,852)¥ 1,999¥ 8,156

Amounts recognized in accumulated other comprehensive income as of March 31, 2019 and 2018 were as follows:
Millions of Yen

2019

Actuarial loss

2018¥(6,820)¥(35)

The accumulated benefit obligations for all defined retirement benefit plans as of March 31, 2019 and 2018 were as follows:
Millions of Yen

2019

Accumulated benefit obligations

84¥38,531

INTE GRATED RE PO RT 2 0 1 9

2018¥34,580

FACTS

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

2019

2018

Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations¥2,856¥2,838

865

815

2,856

2,838

865

815

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

Net periodic benefit costs for certain subsidiaries’ of the Company plans consisted of the following for the years ended March 31, 2019, 2018 and 2017:
Millions of Yen

2019

2018

2017

Service cost

¥ 1,196¥1,086

Interest cost

178

205

183

(1,007)

(991)

(967)

5

(157)

213

(121)

(215)

22

¥ 317

Expected return on plan assets
Amortization of actuarial loss (gain)
Amortization of prior service benefits

¥

372

¥

¥1,103The 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, 2019, 2018 and 2017
were as follows:
Millions of Yen

2019

Actuarial (loss) gain
Amortization of actuarial loss (gain)

2018

2017

¥(6,790)¥(545)

5(157)

Prior service cost arising during the year¥(6,785)
The estimated amounts that will be amortized from accumulated othercomprehensive income into net periodic benefit costs over the next year
were summarized as follows:
Millions of Yen

Actuarial loss

¥1,185Certain subsidiaries of the Company use a measurement date of March
31 for their plans. The weighted-average assumptions used as of March
31, 2019 and 2018 in computing the benefit obligations shown above
were as follows:
2019

0.5%

2018

0.5%

The weighted-average assumptions used as of March 31, 2019, 2018and 2017 in computing the net periodic benefit costs shown above wereas follows:
2019

213
(271)

Amortization of prior service benefits

Discount rate

¥1,7182018

2017

Discount rate

0.5%

0.6%

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%

(121)

(215)

¥(823)¥1,445Certain 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, 2019 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.

IN TE GRATED RE PO RT 2 0 1 985

FACTS

The asset allocation as of March 31, 2019 and 2018 was as follows:
2019

2018

Equity securities

42.3%

41.1%

Debt securities

34.9%

37.2%

Life insurance company general accounts

9.7%

10.3%

Real estate

3.4%

3.2%

Other short-term investments

9.7%

8.2%

The target allocation percentages are reviewed and approved by thePension Committee. The actual allocations for 2019 and 2018 aredifferent 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.

The following tables present the plan assets of certain subsidiaries of the Company using the fair value hierarchy as of March 31, 2019 and 2018. 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 19.
Millions of Yen

2019
Assets evaluated by other than net asset value per share

Level 1

Level 2

Level 3Total

Equity securities:
Japanese companies
Foreign companies¥8,138¥ 8,138

58

58

Debt securities:
Foreign government bonds

152

Life insurance company general accounts

152¥3,928

3,928

2,943

2,943

Other types of investments:
Other short-term investments
Assets evaluated by net asset value per share (a)Equity securities:
Pooled funds (b)5,955Debt securities:
Pooled funds (c)8,912Other types of investments:
Hedge funds (d)3,832Pooled funds (e)
Total

6,762
¥8,348¥6,871

Level 1

Level 2

¥40,680
Millions of Yen

2018
Assets evaluated by other than net asset value per share

Level 3Total

Equity securities:
Japanese companies
Foreign companies¥9,423¥ 9,423

17

17

Debt securities:
Foreign government bonds

69

Life insurance company general accounts

69¥4,403

4,403

2,403

2,403

Other types of investments:
Other short-term investments
Assets evaluated by net asset value per share (a)Equity securities:
Pooled funds (b)6,030

Debt securities:
Pooled funds (c)11,095

Other types of investments:
Hedge funds (d)3,870Pooled funds (e)
Total

5,426
¥9,509¥6,806¥42,736(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 50% Japanese companies and 50% foreign companies as of March 31, 2019 and 52% and 48%, respectively, as of March 31, 2018.
(c) This class includes approximately 79% of foreign government bond and 21% of corporate bond investments as of March 31, 2019 and 73% and 27%, respectively, as of March 31, 2018.
(d) This class consists of hedge funds that invest in both long- and short-term debt securities and equity securities as of March 31, 2019 and 2018.
(e) This class includes approximately 34% of corporate bonds, 1% of common stock of Japanese companies, 30% of common stock of foreign companies, 20% of real estate and 15% of other short-term
investments as of March 31, 2019. This class includes approximately 34% of corporate bonds, 4% of common stock of Japanese companies, 16% of common stock of foreign companies, 26% of realestate, and 20% of other short-term investments as of March 31, 2018.

86

INTE GRATED RE PO RT 2 0 1 9

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 ¥572 million to their plans in thefiscal year ending March 31, 2020.
The following benefit payments, which reflect expected futureservices, are expected to be paid:
Years Ending March 31

Millions of Yen

2020¥ 2,335

2021

2,220

2022

2,161

2023

2,349

2024

2,094

Thereafter

10,825

Defined Contribution Plan—Certain subsidiaries of the Company havedefined contribution plans. The amounts of cost recognized for theircontributions to the plan were ¥394 million, ¥327 million and ¥249
million for the years ended March 31, 2019, 2018 and 2017, respectively.
Employee Early Retirement Program—The Company and certain
subsidiaries of the Company provide additional benefits to employeesthat elect to participate in certain subsidiaries’ of the Company early
retirement program. Retirement benefits of ¥230 million, ¥210 millionand ¥143 million were paid in addition to normal benefits and charged toselling, general and administrative expenses for the years ended March
31, 2019, 2018 and 2017, 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 ¥349 million and ¥348 million as of March 31, 2019 and2018, 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.

12. 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, 2019, 2018 and 2017.
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.

The 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.

2019

2018

2017

Expected dividend yield

2.2%

2.3%

2.9%

Expected volatility

24.6%

23.7%

25.1%

Risk-free interest rate(0.1)%

Expected term

3.7 years

IN TE GRATED RE PO RT 2 0 1 9(0.2)%(0.2)%

3.4 years

2.5 years

87

FACTS

A summary of stock option activities under the plan for the years ended March 31, 2019 and 2018 is as follows:
Yen

Years
Weighted-Average
Remaining
Contractual Term

Millions of Yen

Shares

Weighted-Average
Exercise Price

Outstanding as of April 1, 2018

240,500¥1

Granted20,900

1

Exercised

11,5001

Outstanding as of March 31, 2019249,900

1

13.09 years¥687

Exercisable as of March 31, 201940,5001

3.68 years

111

Yen

Years
Weighted-Average
Remaining
Contractual Term

Aggregate
Intrinsic Value

Millions of Yen

Shares

Weighted-Average
Exercise Price

Outstanding as of April 1, 2017

222,500¥1

Granted

23,000

1

Exercised

5,000

1

Outstanding as of March 31, 2018

240,500

1

14.39 years¥740

Exercisable as of March 31, 2018

21,00012.30 years

65

The total intrinsic value of options exercised was ¥33 million, ¥16 millionand ¥69 million as of the years ended March 31, 2019, 2018 and 2017,
respectively.
The total compensation costs recognized for the years ended March
31, 2019, 2018 and 2017 were ¥62 million, ¥68 million and ¥74 million,
respectively. The total recognized tax benefits related thereto for theyears ended March 31, 2019, 2018 and 2017 were ¥19 million, ¥21
million and ¥23 million, respectively.

Aggregate
Intrinsic Value

The weighted-average grant date fair values of options granted for theyears ended March 31, 2019, 2018 and 2017 were ¥3,005, ¥2,918 and¥2,088, respectively.
As of March 31, 2019, 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.

13. 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.

88

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.

INTE GRATED RE PO RT 2 0 1 9

FACTS

14. OTHER COMPREHENSIVE INCOME (LOSS) 
Changes in the components of accumulated other comprehensive income, including amounts attributable to noncontrolling interests were as follows:
Millions of Yen

2019

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

2018

Foreign
Currency
Translation
Adjustments

Unrealized Gainon Securities

Pension Liability
Adjustments

Foreign
Currency
Translation
Adjustments

Unrealized Gainon Securities

Pension Liability
Adjustments¥2,274¥ 27,424¥(1,101)¥1,212¥21,075¥ (414)(655)

Cumulative effects (net of tax) of the adoption of
ASU 2016-01 and 2018-03 (Note 1)(27,320)

Amount arising during the year:
Pre-tax amount

(795)

(10)

(6,866)

1,158

9,309

Tax credit

45

3

2,079

(45)

(2,815)168

Net amount

(750)

(7)

(4,787)

1,113

6,494

(487)

(140)

202

(201)

(278)

43

(2)

62

85

(97)

200

(139)

(193)

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

¥
27

9

(51)

(6)

(7)

¥1,551¥(5,679)¥2,274¥27,424¥1,101Millions of Yen

2017

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

Foreign
Currency
Translation
Adjustments

Unrealized Gainon Securities

Pension Liability
Adjustments¥ 5,177¥17,966¥(1,035)Cumulative effects (net of tax) of the adoption of
ASU 2016-01 and 2018-03 (Note 1)
Amount arising during the year:
Pre-tax amount(4,109)

4,905

1,062

Tax credit30(1,492)(443)

Net amount(4,079)

3,413

619

Pre-tax amount

(438)

(2)

Tax credit

1341

Net amount

(304)

(1)

114

(0)

3

¥ 1,212¥21,075¥ (414)

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

Reclassification adjustments (pre-tax) of unrealized gain or loss on securities are included in “(Loss) gain on sale, 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
net periodic benefit costs.

IN TE GRATED RE PO RT 2 0 1 989

FACTS

15. INCOME TAXES 
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, 2019, 2018 and 2017:2019

Normal Japanese effective statutory tax rates

2018

2017

30.6%

30.9%

30.9%

Permanently nondeductible expenses

22.9

3.0

2.4

Change in valuation allowance

25.5

2.8

3.1

Undistributed earnings of associated companies

3.9

0.7

(2.1)

Differences in foreign subsidiaries’ tax rate

(27.3)

(1.3)

(0.5)

Tax exemption

(2.9)

(0.9)

(0.4)

Unrecognized tax benefits

1.4

(0.1)

(1.8)

Impairment losses on goodwill

60.1

0.1

Changes in Japanese income tax rates

(0.4)

2.0

Other – net

1.2

1.6

0.1

Effective tax rates

115.0%

38.8%

31.9%

Increase (decrease) in taxes resulting from:

0.2

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was enacted into law, which significantly reduced corporate tax rates in the United States.
As a result of the TCJA, deferred tax assets of foreign subsidiaries in the United States decreased and income tax expenses increased by ¥290 million.
The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances as of March 31, 2019 and 2018 was
as follows:
Millions of Yen

2019
Deferred Tax
Assets

2018
Deferred Tax
Liabilities

Allowance for returns

Deferred Tax
AssetsDeferred Tax
Liabilities¥ 600

Refund liabilities¥ 963

Allowance for doubtful receivables

915

Accruals not currently deductible

226

213

Inventory valuation

837

840

Accrued bonuses

990

999

Impairment charges on marketable securities and investments

934

Advanced depreciation on property, plant and equipment¥ 1,912¥ 1,981

Undistributed earnings of associated companies

2,400

2,355

Net unrealized gain on marketable securities and investments

10,394

13,443

Net realized gain on exchange of investments

792

818

Capitalized supplies

172

175

Enterprise taxes

245

216

Accrued vacation

739

727

Asset retirement obligation

250

Prepaid pension expense
Liability for termination and retirement benefit

430

Return assets
1,393

Tax loss carryforwards

1,838

Intangible assets
Total

1,370
1,861
1,261

1,762

602

245

382

5

8,694

17,722

9,066

22,766¥17,722¥ 6,729

Valuation allowance(2,177)

Total¥ 6,517

90

2,402
479

361

Property, plant and equipment

Other temporary differences

255
357

INTE GRATED RE PO RT 2 0 1 9(2,337)¥22,766

FACTSThe valuation allowance decreased by ¥160 million and increased by¥492 million for the years ended March 31, 2019 and 2018, respectively.
The Companies also utilized ¥661 million and ¥333 million of tax loss
carryforwards, and recognized tax benefits of ¥215 million and ¥87
million for the years ended March 31, 2019 and 2018, respectively.
As of March 31, 2019, certain subsidiaries had tax loss carryforwards
that are available to offset future taxable income of such subsidiaries
and expire as follows:
Years Ending March 31

Millions of Yen

2020

¥ 795

2021

220

2022

400

2023

532

2024

390

2025

70

2026

660

2027

585

2028

36

2029

1,075

Thereafter

1,765

Total

¥6,528There was no portion of undistributed earnings of foreign subsidiaries
and foreign corporate joint ventures that was deemed to be permanently
reinvested as of March 31, 2019 and 2018.

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

2019

Balance at the beginningof the year

¥

2018

2017

5

¥4

¥ 300

Additions based on tax
positions related to thecurrent year

60

1

1

Additions based on tax
positions related toprevious years

36Reductions for tax positionsof previous years
Balance at the end of the year

(297)
¥101

¥5

¥

4

The total amount of unrecognized tax benefits that, if recognized, would
affect the effective tax rate is ¥101 million, ¥5 million and ¥4 million as ofMarch 31, 2019, 2018 and 2017, 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,
2019, 2018 and 2017 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, 2016, 2010 and 2007 were completed.

16. REVENUE 
The Group focuses on sales of innerwear (women’s foundation garments
and lingerie, nightwear and children’s underwear), sportswear, and othertextile products and related products (“products”), and our customers
include retail and wholesale distributors and consumers in Japan andoverseas. See Note “22. Segment Information” for revenue informationfor each segment, 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 Group’s revenue is recognized for transactions, net of any trade
discounts or rebates given. We generally provide a right of return to ourcustomers. In order to estimate the transaction price, provision for
expected returns is deducted from revenue based on actual returnamounts from the previous fiscal year.
Contract liabilities from contracts with customers consist mainlyof customer loyalty points. Some subsidiaries have customer loyalty

programs as part of their promotion and provide loyalty points tocustomers 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 year are recorded as contract liabilities, which are
estimated based on actual redemption amounts from the previous fiscal
year. Contract liability is included in other current liabilities, and the amountof contract liabilities as of March 31, 2019 and 2018 are as follows:
Millions of Yen

2019

Contract liabilities

¥873

2018

¥542

Revenue recognized for the fiscal year ended March 31, 2019, which had
been included in the contract liabilities balance at March 31, 2018,was ¥324 million.

IN TE GRATED RE PO RT 2 0 1 991

FACTS

17. EARNINGS PER SHARE 
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
Corp. per share was 66,143,405 shares, 67,928,557 shares and69,483,315 shares for the fiscal years ended March 31, 2019, 2018 and2017, respectively. The weighted-average number of diluted commonshares outstanding used in the computations of diluted net income
attributable to Wacoal Holdings Corp. per share was 66,393,127 shares,
68,157,430 shares and 69,696,631 shares for the fiscal years ended
March 31, 2019, 2018 and 2017, respectively.
Note: The Company conducted a one-for-two ordinary share reverse stock split as of October 1,
2017. Net income attributable to Wacoal Holdings Corp. per share was calculated assumingthat the reverse stock split had occurred at the beginning of the earliest fiscal year presented
in the consolidated financial statements.

18. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK 
Fair Value of Financial Instruments
The carrying amounts and fair values of financial instruments as of March 31, 2019 and 2018 were as follows:
Millions of Yen

2019
Carrying Amount2018
Fair Value

Carrying Amount

Fair Value¥ 1,559

Assets:Marketable securities¥445¥ 1,567

63,372

63,36968,05768,045¥63,818¥63,814¥69,624¥69,604

¥

138

¥

138

¥

188

¥

188

¥

138

¥

138

¥

188

¥

188

Investments
Total assets

446¥

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 19.
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 19.
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.

92

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.

INTE GRATED RE PO RT 2 0 1 9

FACTS

19. 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.

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, 2019 and 2018 were as follows:
Millions of Yen

2019
Assets:Level 1

Level 2

Level 3

Total

¥2,287¥62,198

2,287

62,248¥2,287¥62,275

Investments:
Equity securities
Mutual funds
Total¥59,91150

50

59,961

Derivative instruments:
Foreign exchange contracts
Total assets¥27¥59,961¥27

27

Liabilities:
Derivative instruments:
Foreign exchange contracts¥18

Currency swap

36

Total liabilities

¥

18

¥

54

36

¥54

Millions of Yen

2018
Assets:Level 1

Level 2

Level 3

Total

Marketable securities:
Municipal bonds¥

Mutual funds
Total

10

¥

10

590

590

600

600

Investments:
Equity securities¥66,751

66,751

Corporate debt securities
Mutual funds
Total

614

614

66,797614

67,411

6

6¥66,797¥1,220¥ 68,017

¥

¥

13

¥

44

46

46

Derivative instruments:
Foreign exchange contracts
Total assets
Liabilities:
Derivative instruments:
Foreign exchange contracts
Currency swap

13
31

Total liabilities¥

IN TE GRATED RE PO RT 2 0 1 9

44

31

93

FACTS

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 that 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.
Equity securities in Level 3 are non-marketable equity securities andare valued by the comparable multiple valuation method using financial
indicators, etc., as inputs or other appropriate valuation methods.

The table below shows the change in assets presented in Level 3 thatare continuously assessed at fair value as of March 31, 2019:
Millions of Yen

2019

Balance at the beginning of the year

¥2,002

Total gains or losses for the period:(Loss) gain on sale, exchange and valuation of marketable securities and investments – net

84

Purchase

201

Balance at the end of the year

¥2,287

Assets Measured at Fair Value on a Nonrecurring Basis
Assets measured at fair value on a nonrecurring basis as of March 31, 2019 and 2018 were as follows:
Millions of Yen

2019
Buildings and structures

Level 1

Level 2

Level 3

Total

Impairment Losses¥

Machinery and equipment

(43)
(124)

Goodwill (Note 7)(4,325)Trademarks (Note 7)

¥680

¥680

Software (Note 7)(1,314)(195)¥(6,001)
Millions of Yen

2018
Goodwill (Note 7)

Level 1

Level 2

Level 3

Total

Impairment Losses¥(206)¥(206)

As of March 31, 2019, the carrying amount of A Tech’s machinery was
fully written off, resulting in an impairment charge of ¥105 million, whichis included as a charge to earnings for the fiscal year ended March 31,
2019. The impairment arose due to the close of the unprofitable businessand the assets associated with it are considered to be non-recoverable.
In addition, all the carrying amounts of Ai’s buildings, equipment, andsoftware were written off resulting in impairment charges of ¥43 million,¥19 million, and ¥195 million, respectively. To measure their fair values,
the Companies used the expected present value of future cash flows andthe prices calculated based on market data for comparable assets andincorporated relevant unobservable inputs, such as management’s
internal assumptions about future cash flows and appropriately riskadjusted discount rates, which reflected management’s estimate ofassumptions that market participants would use in pricing the asset inan arm’s length transaction as of the measurement date.
As of March 31, 2018, all the carrying amount of A Tech’s goodwill was
written off, resulting in an impairment charge of ¥206 million, which isincluded as a charge to earnings for the fiscal year ended March 31, 2018.
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 ofA Tech’s reporting units, the Companies used the expected present valueof future cash flows 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, 2019, the carrying amount of goodwill in
Peach John Business was fully written off, resulting in an impairment
charge of ¥4,325 million, which is included in earnings for the fiscal year
ended March 31, 2019. The impairment arose due to the decline in its fair94

value, which was caused by a downturn in consumption due to generalmarket conditions. To measure the fair values of the reporting units, theCompanies used the expected present value of future cash flows andincorporated relevant unobservable inputs, such as management’s
internal assumptions about future cash flows and appropriately riskadjusted discount rates, which reflected management’s estimate ofassumptions that market participants would use in pricing the asset inan arm’s length transaction as of the measurement date.
Peach John’s trademarks with a carrying amount of ¥1,994 million asof March 31, 2019, were written down to their fair values of ¥680 million,
resulting in recognition of an impairment charge of ¥1,314 million for the
fiscal year ended March 31, 2019. The impairment arose due to the decline
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 and incorporated
relevant unobservable inputs, such as management’s internal assumptions about future cash flows, the rate of royalty, and appropriately
risk-adjusted discount rate, which reflected management’s estimate ofassumptions 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
the 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 rate of royalty 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.

INTE GRATED RE PO RT 2 0 1 9

FACTS

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.

Quantitative information regarding Level 3 fair value measurements:
Information about valuation techniques and significant unobservable inputs used for Level 3 assets measured at fair value for the fiscal year ended
March 31, 2019 is as follows:
March 31, 2019

Millions of Yen
Fair Value

Trademarks¥680

Valuation TechniqueRelief-from-royalty method

Principal Unobservable Input

Discount rate

Range

9.9%–13.4%

Royalty rate

3.0%

Short-term revenue growth rates (within three years)

2.3%–7.0%

Perpetuity growth rate (over three years)

0%–3.0%20. 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, 2019 and 2018 were as follows:
Millions of Yen

2019Foreign currency exchange

2018¥1,837¥1,598663

328

Currency swaps

The amounts of derivative instruments at fair value on the consolidated balance sheets as of March 31, 2019 and 2018 were as follows:
Millions of Yen

Balance Sheet Location

2019

2018

Assets:Foreign currency exchange

Other current assets

¥27

¥ 6

Foreign currency exchange

Other current liabilities

¥18

¥13

Currency swaps

Other current liabilities

36

31

Liabilities:

The effect of derivative instruments in the consolidated statements of income for the fiscal years ended March 31, 2019, 2018 and 2017 was as follows:
Millions of Yen

Statements of Income Location

2019

2018

2017

Foreign currency exchange

Other – net

¥45

¥ 60

Currency swaps

Other – net

(5)

(31)

IN TE GRATED RE PO RT 2 0 1 9

¥295

95

FACTS

21. GAIN ON SALE OF ASSETS PREVIOUSLY CLASSIFIED AS HELD FOR SALE 
The Companies sold land, located at the sold Nagoya branch, on April 27, 2016 to make effective use of resources because it was unlikely that theCompanies would use this site for future business.
As a result of the sale, the Companies recorded a gain on sale of property, plant and equipment of ¥3,770 million in the consolidated statement ofincome for the fiscal year ended March 31, 2017.

22. SEGMENT INFORMATION 
Operating Segment Information
The Companies have three reportable segments: “Wacoal Business(Domestic),” “Wacoal Business (Overseas),” and “Peach John,” which are
based on their locations and brands. These segments represent components of the Companies for which separate financial information isavailable and for which operating income (loss) is reviewed regularly
by the chief operating decision-maker in deciding how to allocate theCompanies’ resources and in assessing their performance. The accounting policies used for these reportable segments are the same as thosedescribed in the summary of significant accounting policies in Note 1.

The “Wacoal Business (Domestic)” segment primarily produces andsells innerwear (consisting of foundation, lingerie, nightwear, andchildren’s innerwear), outerwear, sportswear, and hosiery. The “Wacoal
Business (Overseas)” segment produces and sells innerwear (consistingof foundation, lingerie, nightwear, and children’s innerwear), outerwear,
sportswear, and other textile-related products. The “Peach John” segment produces and sells innerwear (consisting of foundation, lingerie,and nightwear), outerwear, and other textile-related products, which aresold under the Peach John brand. “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 fiscal years ended March 31, 2019, 2018 and 2017 is as follows:
Millions of Yen
WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

¥113,400¥53,100¥10,491¥17,210905

10,121

1,083

5,543

¥(17,652)

114,305

63,221

11,57422,753(17,652)

194,201

Operating costs and expenses

104,286

57,055

11,40022,752(17,652)

177,841

Depreciation and amortization

3,499

1,585

394

169

2019
Net sales:
External customers
Intersegment
Total

Elimination

Consolidated¥194,201

Operating costs and expenses:

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

5,647

4,325
195

4,325

1,314

1,509

107,980

58,64017,43322,921

6,325

4,581

(5,859)(168)

249,141

78,912

8,038

17,395

3,382

1,837

494

70

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

(17,652)

189,322
4,879

Total assets and capital expenditures:
Total assets
Capital expenditures(71,719)

281,767
5,783
Millions of Yen

2018
Net sales:
External customers

Elimination

Consolidated¥116,085¥51,888¥10,795¥16,957

Intersegment

1,051

10,180

1,281

5,283

¥(17,795)¥195,725

Total

117,136

62,06812,07622,240(17,795)

195,725

Operating costs and expenses

106,82256,504

11,29021,712(17,795)

178,533

Depreciation and amortization

3,469

1,506

345

172

Operating costs and expenses:

Impairment charges on goodwill

5,492

206

206

Total

110,291

58,216

11,63521,884

Operating income

6,845

3,852

441

356

260,582

77,374

13,825

18,261

3,649

1,752

365

118

(17,795)

184,231
11,494

Total assets and capital expenditures:
Total assets
Capital expenditures

96

INTE GRATED RE PO RT 2 0 1 9(71,508)

298,534
5,884

FACTS

Millions of Yen

2017
Net sales:
External customers

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination

Consolidated¥118,389¥48,423¥11,107¥17,962Intersegment

1,098

9,236

1,006

5,947

¥(17,287)¥195,881

Total

119,487

57,65912,11323,909(17,287)

195,881

Operating costs and expenses

110,063

53,32011,42723,044(17,287)

180,567

Depreciation and amortization

3,248

1,284

312

188

Total

113,31154,604

11,73923,232(17,287)

185,599

Operating income

6,176

3,055

374

677

259,531

77,313

11,882

18,684

5,233

1,799

355

58

Operating costs and expenses:
5,032
10,282

Total assets and capital expenditures:
Total assets
Capital expenditures(72,452)

294,958
7,445

The sum of the operating income (loss) of the reportable segments agrees in the operating income in the consolidated statements of income. For areconciliation from operating income to income before income taxes and equity in net income of affiliated companies, see other (expenses) income inthe consolidated statements of income.
The Companies account for intersegment sales and transfers at cost plus a markup. Operating income (loss) represents net sales less operating
costs and expenses.
Products and Services Information
Net sales information by product and service for the fiscal years ended March 31, 2019, 2018 and 2017 is as follows:
Millions of Yen

2019

2018

2017

Innerwear:
Foundation and lingerie¥146,525¥146,970¥145,188

Nightwear

8,296

8,758

9,154

Children’s underwear

1,213

1,376

1,429

Subtotal

156,034

157,104

155,771¥ 14,733¥ 16,128¥ 17,189

Hosiery

Outerwear/sportswear and others

1,881

1,983

2,235

Other textile goods and related products

9,428

8,907

9,346

Others12,125

11,603

11,340¥194,201¥195,725¥195,881

2019

2018

2017

Total

Geographic Information
Information by major geographic area as of and for the fiscal years ended March 31, 2019, 2018 and 2017 is as follows:
Millions of Yen

Net sales:Japan¥140,189¥143,196¥147,061

Asia and Oceania

22,50921,057

19,187

Americas and Europe

31,50331,472

29,633

Consolidated¥194,201¥195,725¥195,881

Long-lived assets:¥ 45,257¥ 46,367¥ 47,452

Asia and Oceania

Japan

4,810

4,916

4,661

Americas and Europe

3,203

3,050

3,175

¥ 53,270¥ 54,333¥ 55,288

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.

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FACTS

23. SUBSEQUENT EVENTS (Purchase of Treasury Stock)
On May 15, 2019, the Board of Directors resolved to purchase treasury
stock as described below pursuant to the provisions of Paragraph 1,
Article 459 of the Companies Act as follows.

(Cancellation of Treasury Stock)
On May 15, 2019, the Board of Directors resolved to retire treasury stock
as described below pursuant to the provisions of Article 178 of theCompanies Act as follows.

a. Reason for Purchase:	To return capital to shareholders in addition to promoting capitalefficiency and agile capital policy in view of the business environment

a. Type of Shares to Be Retired:
Common stock of the Company

b. Type of Shares to Be Purchased:
Common stock of the Company
c. Total Number of Shares to Be Purchased:
1,900,000 shares (at maximum)d. Total Amount to Be Purchased:¥5,000 million (at maximum)b. Total Number of Shares to Be Retired:
2,100,000 sharesc. Date for Retirement:
May 24, 2019
(Dividend Declaration)
On May 15, 2019, the Board of Directors resolved to pay a cash dividendof ¥180 per 5 shares of common stock to holders of record as of March 31,
2019 (aggregate amount of ¥2,346 million).

e. Purchase Period:
From May 16, 2019 through December 31, 201998

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FACTS

Independent Auditors’ Report

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 and Stockholders of Wacoal Holdings Corp.
Kyoto, Japan
We have audited the accompanying consolidated financial statements of Wacoal Holdings Corp. and its subsidiaries (the “Company”), which
comprise the consolidated balance sheets as of March 31, 2019 and 2018, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended March 31, 2019 (all expressed in Japanese yen), and therelated notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance ofinternal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the Company’s preparation and fair presentation of the consolidated financial statements 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 theCompany’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Wacoal
Holdings Corp. and its subsidiaries as of March 31, 2019 and 2018, and the results of their operations and their cash flows for each of thethree years in the period ended March 31, 2019, in accordance with accounting principles generally accepted in the United States ofAmerica.

Convenience Translation
Our audit for the year ended March 31, 2019 also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in
our opinion, such translation has been made in conformity with the basis stated in Note 2. The translation of the financial statement
amounts into U.S. dollars has been made solely for the convenience of readers outside of Japan.

Report on Management’s Report on Internal Control over Financial Reporting
Notwithstanding the second paragraph of the “Auditors’ Responsibility” section, we have performed an audit of management’s report oninternal control over financial reporting (“ICFR”) under the Financial Instruments and Exchange Act of Japan. A translated copy of management’s report on ICFR along with a translated copy of our report is included within this Annual Securities Report as information for readers.

June 27, 2019
Member of
Deloitte Touche Tohmatsu Limited

IN TE GRATED RE PO RT 2 0 1 999

FACTSManagement’s Annual Report on Internal Control Over Financial Reporting(Translation)

NOTE TO READERS
Following is an English translation of management’s report on internal control over financial reporting (“ICFR”) filed under the Financial
Instruments and Exchange Act of Japan. This report is presented merely as supplemental information.
There are differences between management’s assessment of ICFR under the Financial Instruments and Exchange Act (“ICFR under FIEA”) and
one conducted under the attestation standards established by the American Institute of Certified Public Accountants (“AICPA”).
In management’s assessment of ICFR under FIEA, there is detailed guidance on the scope of management’s assessment of ICFR, such as
quantitative guidance on business unit selection and/or account selection. In management’s assessment of ICFR under the attestation standards
established by the AICPA, there is no such detailed guidance. Accordingly, based on the quantitative guidance which provides an approximate
measure of the scope of the assessment of internal control over business processes, we designated the business units that accounted forapproximately two-thirds of the aggregated sales for the previous fiscal year on a consolidated basis as “significant business units” which should
be subject to management’s assessment of the process-level controls.

1. Matters Relating to the Basic Framework for Internal Control over Financial Reporting
Hironobu Yasuhara, President and Representative Director, and Masashi Yamaguchi, Director and Vice President, are responsible for designing andoperating effective ICFR of Wacoal Holdings Corp. (the “Company”), and have designed and operated ICFR in accordance with the basic framework for internal control set forth in “On the Revision of the Standards and Practice Standards for Management Assessment and Audit concerning
Internal Control Over Financial Reporting (Council Opinions)” published by the Business Accounting Council.
The internal control is designed to achieve its objectives to the extent reasonable through the effective function and combination of its basic
elements. Therefore, there is a possibility that misstatements may not be completely prevented or detected by ICFR.

2. Matters Relating to Scope of Assessment, the Assessment Date, and Assessment Procedures
The assessment of ICFR was performed as of March 31, 2019. The assessment was performed in accordance with assessment standards for
ICFR generally accepted in Japan.
In conducting this assessment, we evaluated internal controls which may have a material effect on the entire financial reporting in a consolidation (“company-level controls”) and, based on the result of this assessment, we appropriately selected business processes to be evaluated,
analyzed these selected business processes, identified key controls that may have a material impact on the reliability of our financial reporting,and assessed the design and operation of these key controls. These procedures have allowed us to evaluate the effectiveness of the internal
controls.
We determined the required scope of the assessment of ICFR for the Company, as well as its consolidated subsidiaries and equity method
affiliated companies, from the perspective of the materiality that may affect the reliability of our financial reporting. We determined the materialitythat may affect the reliability of the financial reporting taking into account the materiality of quantitative and qualitative impacts. We confirmedthat we had reasonably determined the scope of assessment of internal controls over business processes in light of the results of the assessmentof company-level controls conducted for the Company, its consolidated subsidiaries and equity method affiliated companies. We did not include
those consolidated subsidiaries and equity method affiliated companies which do not have any quantitatively or quantitatively material impact on
the consolidated financial statements in the scope of the assessment of company-level controls.
Regarding the scope of assessment of internal control over business processes, we selected business units for testing as “significant business
units,” whose combined sales were at least two-thirds of total consolidated sales for the prior year on a consolidated basis.
At the selected significant business units, we included in the scope of our assessment those business processes leading to sales or accounts
receivable and inventories as significant accounts that may have a material impact on our business objectives. Further, not only at selectedsignificant business units, but also at other business units, we added to the scope assessment the following as business processes with greater
materiality considering their impact on financial reporting:(1) those business processes relating to greater likelihood of material misstatements and significant accounts involving estimates and management’s judgment, and (2) those business processes relating to businesses or operations dealing with high-risk transactions.

10 0

INTE GRATED RE PO RT 2 0 1 9

FACTS

3. Matters Relating to the Results of Assessment
As a result of the assessment above, we concluded that our ICFR was effective as of March 31, 2019.

4. Supplementary Matters
Not applicable.

5. Special Information
Not applicable.

IN TE GRATED RE PO RT 2 0 1 9101

FACTS

Independent Auditors’ Report

NOTE TO READERS:
Following is an English translation of the Independent Auditors’ Report filed under the Financial Instruments and Exchange Act of Japan. This
report is presented merely as supplemental information.
There are differences between an audit of internal control over financial reporting (“ICFR”) under the Financial Instruments and Exchange Act(“ICFR under FIEA”) and one conducted under attestation standards established by the American Institute of Certified Public Accountants(“AICPA”).
In an audit of ICFR under FIEA, the auditors express an opinion on management’s report on ICFR, and do not express an opinion on the
Company’s ICFR directly. In an audit of ICFR under attestation standards established by the AICPA, the auditors express an opinion on the
Company’s ICFR directly. Also, in an audit of ICFR under FIEA, there is detailed guidance on the scope of an audit of ICFR, such as quantitative
guidance on business unit selection and/or account selection. In an audit of ICFR under attestation standards established by the AICPA, there is nosuch detailed guidance. Accordingly, based on the quantitative guidance which provides an approximate measure for the scope of assessment ofinternal control over business processes, we used a measure of approximately 70% of total assets on a consolidated basis and income before
income taxes on a consolidated basis for the selection of significant business units.

(TRANSLATION)
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Wakyu Shinmen
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Hiroaki Sakai
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Seiichiro Nakashima
To the Board of Directors of Wacoal Holdings Corp.

Audit of Financial Statements
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited the consolidated financial
statements included in the Financial Section, namely, the consolidated balance sheet as of March 31, 2019 of Wacoal Holdings Corp. and its
consolidated subsidiaries (the “Company”), and the consolidated statements of income, comprehensive income, equity and cash flows for the
fiscal year from April 1, 2018 to March 31, 2019, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America pursuant to the third paragraph of the Supplementary Provisions of the Cabinet
Office Ordinance for Partial Amendment of the Regulations for Terminology, Forms and Preparation Methods of Consolidated Financial
Statements (No. 11 of the Cabinet Office Ordinance in 2002), and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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FACTS

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordancewith auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements 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 entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Wacoal
Holdings Corp. and its consolidated subsidiaries as of March 31, 2019, and the results of their operations and their cash flows for the year thenended, in accordance with accounting principles generally accepted in the United States of America.

Audit of Internal Control
Pursuant 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 the Company as of March 31, 2019.

Management’s Responsibility for the Report on Internal Control
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. There is a possibility that misstatements may not be completely prevented or detected by internal control over financial reporting.

Auditors’ Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our internal control audit. We conducted ourinternal control audit in accordance with auditing standards for internal control over financial reporting generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether management’s report on internal control isfree from material misstatement.
An internal control audit involves performing procedures to obtain audit evidence about the results of the assessment of internal control overfinancial reporting in management’s report on internal control. The procedures selected depend on the auditors’ judgment, including the significance of effects on reliability of financial reporting. An internal control audit includes examining representations on the scope, procedures andresults of the assessment of internal control over financial reporting made by management, as well as evaluating the overall presentation ofmanagement’s report on internal control.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Audit Opinion
In our opinion, management’s report on internal control over financial reporting referred to above, which represents that the internal control overfinancial reporting of Wacoal Holdings Corp. and its consolidated subsidiaries as of March 31, 2019 is effectively maintained, presents fairly, in allmaterial respects, the results of the assessment of internal control over financial reporting in accordance with assessment standards for internal
control over financial reporting generally accepted in Japan.

Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required under the provisions of theCertified Public Accountants Act.
June 27, 2019
Member of
Deloitte Touche Tohmatsu Limited

IN TE GRATED RE PO RT 2 0 1 9103

FACTS

Principal Subsidiaries
As of March 31, 2019

Wacoal Business (Domestic)

Wacoal Business (Overseas)

Eveden Inc. Sales company

Wacoal Corp. Manufacturing and sales company

Wacoal America, Inc. Manufacturing and sales company

29 Nakajima-cho, Kisshoin, Minami-ku,

136 Madison Avenue, New York, N.Y. 10016, U.S.A.

Distribution of innerwear

Kyoto 601-8530, Japan

Product design and distribution of innerwear

R&D, product design and distribution of innerwear, etc.

Wacoal China Co., Ltd. Manufacturing and sales company

65 Sprague Street, Hyde Park, MA 02136, U.S.A.

Eveden Canada Ltd. Sales company

181 Bay Street, Suite #4400, Toronto, Ontario,
Canada, M5J 2T3

Unenana Cool Corp. Sales company

Jia 16 Tongji North Road, Beijing, Economic &Wacoal New Kyoto Bldg. 5F, 6 Kitanouchi-cho,Technological Development Area Beijing 100176,

Nishikujo, Minami-ku, Kyoto 601-8506, Japan

P.R. of China

Wacoal India Private Limited Sales company

Product design and distribution of innerwear, etc.

Product design, manufacturing and distribution

403/4th floor, Ackruti Star Building, Central Road,of innerwear

MIDC, Andheri (East), Mumbai, Maharashtra,

Wacoal Minette Co., Ltd. Sales company

Distribution of innerwear

400093, India

Wacoal Sapporo Branch 1F, 27-1-20 Minami Ichijo-

Wacoal EMEA Ltd. Manufacturing and sales company

Nishi Chuo-ku, Sapporo, Hokkaido 064-0801, JapanThe Corsetry Factory, Rothwell Road, Desborough,Distribution of innerwear, etc.

Northamptonshire, NN14 2PG, UK

Guangdong Wacoal Inc. Manufacturing company

Product design and distribution of innerwear

Huahai Industrial District, Xinhua Town, Huadu Qu,

Linge Noel Co., Ltd. Sales company

Distribution of innerwear

Guangzhou City, Guangdong, P.R. of China

Wacoal New Kyoto Bldg. 5F, 6 Kitanouchi-cho,

Wacoal Hong Kong Co., Ltd. Sales company

Nishikujo, Minami-ku, Kyoto 601-8506, Japan

8th Floor, EGL Tower, No. 83 Hung To Road,

Distribution of innerwear, etc.

Kwun Tong, Kowloon, Hong Kong

Dalian Wacoal Co., Ltd. Manufacturing company

Distribution of innerwear

No. 6 Fu An Street Economic and TechnicalAi Co., Ltd. Sales company

Wacoal Asakusabashi Bldg. 8F, 1-23-6 Yanagibashi,

Wacoal Singapore Private Limited Sales company

Taito-ku, Tokyo 111-8540, Japan

215 Henderson Road, #01-08

Product design and distribution of swimwear

Henderson Industrial Park, Singapore 159554

and innerwear

Distribution of innerwear

Kyusyu Wacoal Manufacturing Corp.

Philippine Wacoal Corp. Sales company

Manufacturing company

3F, 6788 Ayala Avenue, Oledan Square,

1572, Saigoshin, Mizuho-cho, Unzen-shi, Nagasaki

Makati City 1226, Philippines

859-1206, Japan

Distribution of innerwear

Contract manufacturing of innerwear

Wacoal Direct Corp. Sales company

Niigata Wacoal Sewing Corp. Manufacturing company

136 Madison Avenue, New York, N.Y. 10016, U.S.A.

263, Hataya, Niigata-shi, Niigata 959-0423, Japan

Distribution of innerwear

Contract manufacturing of innerwear

Wacoal Canada Inc. Sales company

Hokuriku Wacoal Sewing Corp. Manufacturing company

1000 de la Gauchetiere Street West,254-31-1 Shimohyogo, Sakai-cho, Sakai-shi,Suite 2400 Montreal, QC, Canada, H3B 4W5

Fukui 919-0527, Japan

Distribution of innerwear

Contract manufacturing of innerwear

Adden Limited Sales company

Torica Inc. Manufacturing company

The Corsetry Factory, Rothwell Road, Desborough,

3-2-10 Higashi-Oota, Ibaraki-shi,

Northamptonshire, NN14 2PG, UK

Osaka 567-0012, Japan

Distribution of innerwear

Contract manufacturing of innerwear

Wacoal Europe SAS Sales company

Wacoal Distribution Corp. Other company

81 Rue Saint Lazare, 75009 Paris, France

1-1 Chishiro-cho, Moriyama-shi,

Distribution of innerwear

Shiga 524-0034, Japan
Logistics

Wacoal Australia Pty Ltd. Sales company

Wacoal Art Center Co., Ltd. Other company

VIC 3039, Australia

5-6-23 Minami-Aoyama, Minato-ku,

Distribution of innerwear

Tokyo 107-0062, Japan

Suite 3, 169 Pascoe Vale Road, Moonee Ponds,

Food service, culture, service business

Eveden Israel Limited Sales company

Wacoal I Next Corp. Other company

Distribution of innerwear

11 Kehilat Saloniki St., Tel Aviv 69513, Israel

29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto
601-8530, Japan
Office service business

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Contract manufacturing of innerwear

Development Zone, Dalian, Liaoning,
P.R. of China 116600
Contract manufacturing of innerwear
Vietnam Wacoal Corp. Manufacturing and sales company

110 Amata Road, Amata Modern Industrial Park,
Long Binh Ward, Bien Hoa City, Dong Nai Province,
Socialist Republic of Vietnam
Contract manufacturing and distributionof innerwear
Wacoal Dominicana Corp. Manufacturing company

Las Americas Industrial Free Zone,
KM. 22, aut. Las Americas Santo Domingo,
Dominican Republic
Contract manufacturing of innerwear
Myanmar Wacoal Company Limited
Manufacturing company

Lot No. B2, Thilawa SEZ Zone A, Yangon,
Republic of the Union of Myanmar
Contract manufacturing of innerwear
Wacoal Timex Limited Manufacturing company“Wepz” Nittambuwa Wathupitiwela Sri Lanka
Contract manufacturing of innerwear
A Tech Textile Co., Ltd. Manufacturing company

241, 243, 245, 247, Soi Charoenrat 7, Bangklo,
Bangkholaem, Bangkok 10120, Thailand
Manufacturing of raw materials
G Tech Material Co., Ltd. Manufacturing company

241, 243, 245, 247, Soi Charoenrat 7, Bangklo,
Bangkholaem, Bangkok 10120, Thailand
Manufacturing of raw materials

FACTS

Wacoal International Hong Kong Co., Ltd.

Other Businesses

Equity-method Affiliates

Lecien Corp. Manufacturing and sales company

Shinyoung Wacoal Inc. Manufacturing and sales company

1-7-51 6F, 7F, Nishimiyahara, Yodogawa-ku,

104, Gasandigital 1-ro, Geumcheon-gu,

Osaka-shi, Osaka 532-0004, Japan

Seoul, South Korea 08590

Product design and wholesale distribution

Manufacturing and wholesale distributionof innerwearof innerwear

Procurement company

8th Floor, EGL Tower, No. 83 Hung To Road,
Kwun Tong, Kowloon, Hong Kong
Procurement of products and raw materials of
innerwear, subsidiary management
Wacoal International Corp. Other company

Lecien Nagasaki Corporation Manufacturing company

Taiwan Wacoal Co., Ltd. Manufacturing and sales company

Investment and funding in U.S. affiliates

1588 Nakagumi-go, Kawatana-cho,

15, Ching Kuo Road, Taoyian, Taiwan R.O.C.

Higashisonogi-gun, Nagasaki-ken, Japan

Manufacturing and wholesale distribution

Wacoal Investment Co., Ltd. Other company

Manufacturing and wholesale distributionof innerwear

8F, No. 2 Fusing N. Rd., Jhongshan Dist., Taipei,

of innerwear

One Wacoal Plaza, Lyndhurst, N.J. 07071, U.S.A.

Taiwan R.O.C.

Thai Wacoal Public Company Limited

Investment in Taiwan affiliates

Dalian Lecien Fashion Co., Ltd. Manufacturing company

Manufacturing and sales company

Dalian Hai Na Chuang Ye Yuan, No. 75 Double D2

132 soi Charoenrat 7, Bangklo, Bangkholaem,

Wacoal Europe Ltd. Other company

Street, Double D Port, Dalian Economic and

Bangkok, Thailand

The Corsetry Factory, Rothwell Road, Desborough,Technological Development Zone

Manufacturing and wholesale distribution

Northamptonshire, NN14 2PG, UK

Contract manufacturing of innerwearof innerwear

Investment in affiliates

Zhe Jiang Jiaxing Lecien Co., Ltd. Manufacturing company

PT. Indonesia Wacoal Manufacturing and sales company

WACOAL VENTURES LIMITED361 Heping St. Xiuzhou, Jiaxing, Zhejiang

Jl. Tarikolot Rt. 01/Rk. 001 No. 59 Citeureup-Bogor,

Investment in affiliates

Contract manufacturing and distribution

16810 Indonesia

of lace

Manufacturing and wholesale distribution

OPTIONHUNT LIMITEDManagement services of pension assets

Lecien (Cambodia) Co., Ltd. Manufacturing company

of innerwear

PLOT P1-021, 022, Phnom Penh Special Economic

House of Rose Co., Ltd. Other company

Zone (Sangkat Kantouk, Sangkat Phleung Chhes

2-21-7 Akasaka, Minato-ku, Tokyo 107-8625, Japan

Peach John BusinessRotes and Sangkat Beung Thom), National Road

Development and sales of cosmetics,

No. 4, Khan Posenchey, Phnom Penh, Cambodia

hair-care products

Peach John Co., Ltd. Sales company

Contract manufacturing of innerwear

AOYAMA St. SHION BLDG., 3-1-2 Kitaaoyama,

Wacoal Malaysia Sdn. Bhd. Sales company

Lecien (Vietnam) Co., Ltd. Manufacturing company

5th Floor, Plaza Hamodal, Lot 15, Jalan 13/2,

Product design and retail sales of innerwear(TAN THUAN EXPORT P.Z) TAN THUAN DONG

(Section 13) 46200 Petaling Jaya, Selangor,

WARD, District 7 Ho Chi Minh City,

Malaysia

Peach John Shanghai Co., Ltd. Sales company

Socialist Republic of Vietnam

Distribution of innerwear#2306 Jiangnan Bldg., No. 600 Luban Road,

Contract manufacturing of innerwear

Minato-ku, Tokyo 107-0061, Japan

Huangpu District, Shanghai, P.R. of China, 200023

Pattaya Myanmar Co. Ltd. Manufacturing company

Distribution of innerwear

Shanghai Lecien Co., Ltd. Procurement company

16 Panchatun U Shwe Road,#2407 Jiangnan Bldg., No. 600 Luban Road,

Hlaing Tharyar Industrial Zone 2 Hlaing Tharyar

Taiwan Peach John Ltd. Sales company

Huangpu District, Shanghai, P.R. of China, 200023

Township Yangon, Republic of the Union

3F, No. 2 Fusing N. Rd., Jhongshan Dist., Taipei,

Procurement of innerwearof Myanmar

Taiwan R.O.C.
Distribution of innerwear

Nanasai Co., Ltd. Other company

Peach John Hong Kong Company Limited

Osaka-shi, Osaka 532-0004, Japan

Procurement company Sales company

Manufacture and sale of mannequins and display

8th Floor, EGL Tower, No. 83 Hung To Road,

fixtures & interior design and construction of stores

Contract manufacturing of innerwear

1-7-51 2F, Nishimiyahara, Yodogawa-ku,

Kwun Tong, Kowloon, Hong Kong
Procurement and distribution of innerwear

Nanasai Shanghai Co., Ltd. Other company#808 8th Floor Jiangnan Bldg., No. 600 Luban Road,
Huangpu District, Shanghai, P.R. of China, 200023
Rental of mannequins, design and constructionof stores
Wacoal Service Co., Ltd. Other company

29 Nakajima-cho, Kisshoin, Minami-ku,
Kyoto 601-8530, Japan
Sale of products, travel agency, real estate business,insurance agency
Wacoal Career Service Corp. Other company

Sumitomoseimei Bldg. 8F, 62 Shijodori Shin-machi,
Higashiiru Tsukihokocho, Shimogyo-ku,
Kyoto 600-8492, Japan
Temporary employment agency

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FACTS

Corporate Information
As of March 31, 2019

Company Name

Wacoal Holdings Corp.

Head Office

29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, JapanFounding

June 15, 1946

Establishment

November 1, 1949

Capital¥13,260 million

Representative Director andChairman

Yoshikata Tsukamoto

Representative Director andPresident

Hironobu YasuharaLine of Business acoal’s mainstay business is the manufacture, wholesale, and direct sales toWconsumers (for some products) of intimate apparel (mainly women’s foundation
garments, lingerie, nightwear, and children’s underwear), outerwear, sportswear, andother textile products and accessories. In addition, Wacoal operates other business
related to food, culture, services, and interior furnishing of shops.

Number of Employees

20,662 (Consolidated)

Stock Price / Trading Volume
Stock Price (¥)
4,000

3,000

2,000

1,000

0

Trading Volume (Thousand shares)
8,000

6,000

4,000

2,000

0
2009/4

2010/4

2011/4

2012/42013/4

2014/4

2015/4

2016/42017/42018/4

2019/3

Note: As of October 1, 2017, Wacoal Holdings Corp. conducted a one-for-two ordinary share reverse stock split. For relative comparison, periods prior to the split have been adjusted in
the graphs above.

10 6

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FACTS

Investor Information
As of March 31, 2019

Stock Listing

Tokyo Stock Exchange

Fiscal Year-end

March 31

Securities Code3591

Fiscal Year

From April 1 to March 31

Number of Shares Issued

70,689,042 (Treasury Stock: 5,510,891)

Trading Unit

100 shares

Shareholder Register Agentfor Common StockMitsubishi UFJ Trust and Banking Corporation, 1-4-5,
Marunouchi, Chiyoda-ku, Tokyo 100-8212, Japan

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

14,597

Ownership and Distribution of Shares

Major Shareholders

Securities firms
1.04%
Financial
institutions
41.12%

Individuals and others
22.01%

Other Japanesecompanies
19.04%

Foreign institutions
and individuals
16.79%

Number ofshares held(Thousandshares)Percentage ofshares outstanding (%)

4.90

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

3,195

Meiji Yasuda Life Insurance Company

3,050

4.68

Japan Trustee Services Bank Ltd. (Trust Account)

2,870

4.40

The Master Trust Bank of Japan, Ltd. (Trust Account)

2,851

4.38

The Bank of Kyoto, Ltd.

2,352

3.61

Nippon Life Insurance Company

1,836

2.82

The Shiga Bank, Ltd.

1,823

2.80

Mitsubishi UFJ Trust and Banking Corporation

1,525

2.34

The Dai-ichi Life Insurance Company, Ltd.

1,366

2.10

Asahi Kasei Fibers Corp.

1,241

1.90

Note: The percentages exclude treasury stock.

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Printed in Japan