Summary of Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 28, 2018
(Three Months Ended May 31, 2017)[Japanese GAAP]
June 30, 2017

Company name: Adastria Co., Ltd.
Listing: TSE 1st section
Stock code:
2685
URL: http://www.adastria.co.jp
Representative: Michio Fukuda, Representative Director, Chairman & CEO
Contact:
Mika Takano, General Manager of Corporate Planning Department
Tel: +81-3-5466-2060
Scheduled date of filing of Quarterly Report:
July 14, 2017
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:
None
Note: The original disclosure in Japanese was released on June 30, 2017 at 15:00 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending February 28, 2018
(March 1, 2017 – May 31, 2017)(1) Consolidated results of operations (cumulative)
Net sales(Percentages represent year-on-year changes)
Net income attributable
Ordinary profit
to owners of the parent

Operating profit

Million yen%

Million yen%

Million yen%

Million yen

Three months ended May 31, 2017
54,06611.4
3,996 (23.5)
4,056 (23.2)
Three months ended May 31, 2016
48,552
2.4
5,224
9.8
5,284
7.2
Note: Comprehensive income
Three months ended May 31, 2017: 2,440 million yen (down 35.5%)
Three months ended May 31, 2016: 3,783 million yen (down 5.9%)
Net income per share

Diluted net income per share

Yen

Yen

%

5,383
2,983

80.5
27.6

Three months ended May 31, 2017
Three months ended May 31, 2016
Reference: EBITDA

114.45
61.95
Three months ended May 31, 2017: 6,167 million yen (down 13.3%)
Three months ended May 31, 2016: 7,113 million yen
EPS before goodwill amortization
Three months ended May 31, 2017:
127.02 yen (up 73.3%)
Three months ended May 31, 2016:73.29 yen(*) For more details regarding definition, computational method and other matters of these indices, please refer to thesection “Explanation of Results of Operations” on page 2.
(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Million yen

As of May 31, 2017
As of Feb. 28, 2017
Reference: Shareholders’ equity

Million yen%

As of May 31, 2017:

95,58590,38957,108 million yen

57,10856,035
As of Feb. 28, 2017:

59.7
62.0

1Q-end2Q-endDividend per share
3Q-endYear-end

Total

Yen

Yen

Yen

Yen

Yen

56,035 million yen

2. Dividends

Fiscal year ended Feb. 28, 2017
Fiscal year ending Feb. 28, 2018
Fiscal year ending Feb. 28, 2018 (forecast)
Note: Revision to the most recently announced dividend forecast: None

35.00

-

40.00

75.00

35.00

-

40.00

75.00

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2018 (March 1, 2017 – February 28, 2018)
Net sales
Million yen

Operating profit%

Million yen%

Ordinary profit
Million yen%(Percentages represent year-on-year changes)
Net income attributable
Net income per
to owners of the parent
shareMillion yen%

Yen

First half
110,300 12.9
5,500 (31.7)
5,500 (31.7)
5,900
21.7
125.42
Full year
233,000 14.4
15,0000.6
14,900(1.5)
11,9002.8
252.96
Note: Revision to the most recently announced consolidated forecast: None
Reference: EBITDA
Fiscal year ending Feb. 28, 2018 (forecast): 23,600 million yen (up 2.5%)
EPS before goodwill amortization
Fiscal year ending Feb. 28, 2018 (forecast):
303.98 yen (up 5.5%)

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): Yes
Newly added: 1 (Velvet, LLC)

Excluded: -(2) Application of special accounting methods for presenting quarterly consolidated financial statements: None
(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: Yes
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None
Note: Please refer to the section “2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly
Consolidated Financial Statements, Changes in Accounting Policies” on page 8 for further information.

(4) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of the period (including treasury shares)
As of May 31, 2017:
48,800,000 shares
As of Feb. 28, 2017:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of May 31, 2017:
1,757,985 shares

As of Feb. 28, 2017:

1,757,425 shares

3) Average number of shares outstanding during the period
Three months ended May 31, 2017: 47,042,328 shares

Three months ended May 31, 2016: 48,154,239 shares

Note 1: The current quarterly financial report is not subject to quarterly review procedures.
Note 2: Cautionary statement with respect to forward-looking statements
Forward-looking statements in this report are based on currently available information and certain assumptions judged to bereasonable. Actual results may differ significantly from these forecasts for a number of factors. Please refer to the section “1.
Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecast and Other
Forward-looking Statements” on page 3 regarding preconditions or other related matters for the forecast shown above.

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

Contents of Attachments

1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statements of Income and Comprehensive Income

6(3) Notes to Quarterly Consolidated Financial Statements

8

Going Concern Assumption

8

Significant Changes in Shareholders’ Equity

8

Changes in Accounting Policies

8

3. Supplementary Information

9(1) Number of Stores

9(2) Sales for Brands and Regions

10(3) Sales for Merchandise Categories

10

- 1 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
During the first quarter (March 1-May 31, 2017), the Japanese economy continued to recover slowly as
improvements in corporate earnings and jobs offset uncertainty about overseas economies, volatility in financial
markets and other reasons for concern. Consumer spending remained sluggish as consumption expenditures
declined year on year over the long term.
To advance to the next stage of growth, there were actions during the first quarter for creating and launching new
businesses.
One step was the transfer of operations involving PAGEBOY, misty woman and other young casual fashion brands
from the original ALICIA CO., LTD. to the new ALICIA CO., LTD., a consolidated subsidiary established in theprevious fiscal year, based on an absorption and divestiture contract.
In the United States, we acquired Velvet, LLC, making this company a wholly own ed consolidated subsidiary. In
addition, we established ELEMENT RULE Co., Ltd. in Japan to be a source of new fashion ideas for adults whoare into chic city fashion styles.
First quarter sales were 11.4% higher than one year earlier. One reason was the transfer of PAGEBOY and otherapparel brand operations to consolidated subsidiary ALICIA. Among current brands, GLOBAL WORK, niko
and…, STUDIO CLIP and BAYFLOW recorded sales growth.
Regarding the store network, the number of stores in Japan increased by 113 because of the inclusion of theoperations of ALICIA. In the United States, the acquisition of Velvet added nine stores. In addition, we opened
61 stores (including 1 overseas) and closed 11 stores (including four overseas), resulting in a total network of
1,523 stores (including 114 overseas) at the end of May 2017.
The gross profit margin decreased 1.8 percentage points from one year earlier to 59.4%. The main reason was ahigher discount rate on merchandise in order to sell off inventories of spring apparel and other pr oducts.
The ratio of selling, general and administrative (SG&A) expenses to sales increased 1.5 percentage point s to
52.0%. This was primarily the result of substantial advertising expenditures, including for TV commercials, andexpenses for relocating the Tokyo head office. As a result, the operating margin decreased 3.4 percentage points
to 7.4%.
There was a gain on sales of investment securities of 4,373 million yen as extraordinary income and an
extraordinary loss of 73 million yen for the impairment of store assets.
As a result, consolidated net sales in the first quarter increased 11.4% year-on-year to 54,066 million yen,operating profit decreased 23.5% to 3,996 million yen, ordinary profit decreased 23.2% to 4,056 million yen, andnet income attributable to owners of the parent increased 80.5% to 5,383 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 13.3% to 6,167 million yen
and earnings per share (EPS) before goodwill amortization rose 73.3% to 127.02 yen. (*)(*) Amortization of goodwill that mainly resulted from the consolidation of TRINITY ARTS INC. (subsequently
absorbed by the Company) has caused large declines in operating profit and all subsequent categories of
profits since the fiscal year that ended on February 28, 2014. Since goodwill amortization is not a cash
expense, this amortization created a large gap between changes in cash flows and changes at all levels of
profits starting with operating profit. Furthermore, comparisons with foreign companies are difficult becauseof differences in accounting standards of individual countries for recording goodwill amortization. As a result,
we disclose EBITDA and EPS before goodwill amortization as reference financial indicators.

- 2 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

EBITDA
Operating profit + Depreciation + Amortization of goodwill (SG&A expenses)
EPS before goodwill amortization(Net income attributable to owners of the parent + Amortization of goodwill (SG&A expenses andextraordinary losses) + Impairment losses (goodwill)) / Average number of shares outstanding during theperiod(2) Explanation of Financial Position
Total assets increased 5,196 million yen from as of February 28, 2017 to 95,585 million yen as of May 31, 2017.
This was mainly due to increases in notes and accounts receivable-trade of 5,936 million yen, inventories of
2,603 million yen, store interior equipment of 1,790 million yen, goodwill of 3,896 million yen and lease andguarantee deposits of 1,900 million yen, while there were decreases in cash and deposits of 8,603 million yen andinvestment securities of 4,936 million yen.
Liabilities increased 4,123 million yen to 38,477 million yen. This was mainly due to increases of 2,550 million
yen in notes and accounts payable-trade and 2,835 million yen in accounts payable-other, while there was adecrease in income taxes payable of 1,147 million yen.
Net assets increased 1,073 million yen to 57,108 million yen. This was mainly due to an increase of 4,018
million yen in retained earnings, while there was a decrease of 2,996 million yen in valuation difference on
available-for-sale securities.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements
There are no revisions to the consolidated forecast for the first half and full fiscal year that was announced on
April 4, 2017.

- 3 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Million yen)First quarter of FY2/18(As of May 31, 2017)

FY2/17(As of Feb. 28, 2017)
AssetsCurrent assets
Cash and deposits

20,734

12,130Notes and accounts receivable-trade

7,860

13,797

Inventories

16,351

18,954

Other

3,285

3,343

Allowance for doubtful accounts

(53)

(148)

48,17848,078Store interior equipment, net

6,491

8,282

Other, net

3,952

4,254

Total property, plant and equipment

10,444

12,537

Goodwill

3,309

7,205

Other

2,242

2,698

Total intangible assets

5,552

9,904

Investment securities

7,677

2,741

Lease and guarantee deposits

17,237

19,137

Other

1,523

3,526

Allowance for doubtful accounts

(225)

(340)

Total investments and other assets

26,21325,06542,21047,507

90,38995,585

Notes and accounts payable-trade

6,361

8,912

Electronically recorded obligations-operating

8,919

7,941

Short-term loans payable

2,027

2,544

Accounts payable-other

8,941

11,776

Income taxes payable

4,470

3,322

Provision for bonuses

2,195

1,274

453

752

Total current assets
Non-current assets
Property, plant and equipment

Intangible assets

Investments and other assets

Total non-current assets
Total assets
Liabilities
Current liabilities

Other provision
Other
Total current liabilities

295

746

33,66537,269Non-current liabilities
Provision

241

208

Other

447

1,000

Total non-current liabilities

688

1,208

34,35338,477

Total liabilities- 4 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

(Million yen)First quarter of FY2/18(As of May 31, 2017)

FY2/17(As of Feb. 28, 2017)
Net assets
Shareholders’ equity
Capital stock

2,660

2,660

Capital surplus

7,227

7,227

Retained earnings

47,41351,431

Treasury shares(4,645)(4,647)

Total shareholders’ equity

52,65456,671

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

3,190

193

Deferred gains or losses on hedges

(19)

(43)

Foreign currency translation adjustment

209

286

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

- 5 -

3,380

437

56,035

57,10890,38995,585

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Dividend income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodLoss on valuation of derivatives
Cost of lease revenue
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on disaster
Total extraordinary losses
Net income before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Net income attributable to owners of the parent

First three months of FY2/17(Mar. 1, 2016 – May 31, 2016)
48,552
18,82429,72724,502
5,224(Million yen)First three months of FY2/18(Mar. 1, 2017 – May 31, 2017)
54,066
21,97632,08928,092
3,996

58
89
147

33
122
156

4

5

-

21

49
24
9
87
5,284

22
24
23
97
4,056

-

4,373
4,373

18
61
80
5,204
2,184
36
2,221
2,983
2,983

73
73
8,355
3,035
(64)
2,971
5,383
5,383

- 6 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY2/17(Mar. 1, 2016 – May 31, 2016)(Million yen)First three months of FY2/18(Mar. 1, 2017 – May 31, 2017)

Net income

2,983

5,383

Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

889(2,996)77(23)

Foreign currency translation adjustment

(165)

77

800

(2,943)

3,783

2,440

3,783

2,440

-

-

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests- 7 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Changes in Accounting Policies
The Company has adopted the “Implementation Guidance on Recoverability of Deferred Tax Assets”(Accounting Standards Board of Japan (ASBJ) Statement No. 26, March 28, 2016) from the first quarter of thecurrent fiscal year and partially revised its accounting method for determining the recoverability of deferred tax
assets.
The Company has applied this implementation guidance in accordance with the transitional accounting
treatments set forth in Paragraph 49 (4) of this implementation guidance. Accordingly, the differences between
deferred tax assets and deferred tax liabilities determined by applying the applicable provisions of Paragraph 49(3), Items 1 through 3 of the implementation guidance at the beginning of the first quarter of the current fiscal
year and deferred tax assets and deferred tax liabilities at the end of the previous fiscal year are added to retained
earnings at the beginning of the first quarter of the current fiscal year.
The effect of this matter on the quarterly consolidated financial statements at the beginning of the first quarter isinsignificant.

- 8 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

3. Supplementary Information(1) Number of Stores

Brand / region

As of Feb. 28,
2017

Number of storesFirst three months of FY2/18
Increase(Note 3)

ClosedOpenedAs of May 31,
2017

Increase/decrease

GLOBAL WORK

192

-

9

(1)

8

200

niko and ...

129

-

6

(1)

5

134

LOWRYS FARM

152

-

4

-

4

156

STUDIO CLIP

182

-

8

-

8

190

LEPSIM

134

-

7

-

7

141

JEANASIS

80

-

2

-

2

82

RAGEBLUE

58

-

-

-

-

58

BAYFLOW

32

-

4

-

4

36

Others

284

-

19

(3)

16

300

1,243

-

59

(5)

54

1,297

-

113

1

(2)

112

112

60

(7)

166

1,409

Total (Adastria)
ALICIA CO., LTD.
Total (Japan)

1,243

113

Hong Kong

25

-

-

(1)

(1)

24

China

45

-

1

(3)

(2)

43

Taiwan

29

-

-

-

-

29

South Korea

9

-

-

-

-

9

USA

-

9

-

-

9

9

108

9

1

(4)

6

114

1,351
122
61
(11)
172
1. The number of stores is categorized by using brand operating divisions and geographic regions.

1,523

Total (Overseas)
Total (Group)

Notes:

2. The number of stores includes e-commerce websites of other companies and e-commerce websites of Adastria.
3. “Increase” represents the increase in the number of stores resulting from the transfer of the operations of
ALICIA and the consolidation of Velvet in the United States.

- 9 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2018 Fiscal Year

(2) Sales for Brands and Regions
Brand / region
GLOBAL WORKFirst three months of FY2/18
Sales (million yen)
Composition (%)
9,871
18.3

YoY change (%)
9.8

niko and ...

6,584

12.2

17.8

LOWRYS FARM

6,055

11.2

(1.3)

STUDIO CLIP

5,444

10.1

12.2

LEPSIM

3,759

6.9

(2.2)

JEANASIS

3,030

5.6

(0.1)

RAGEBLUE

2,123

3.9

(3.0)

BAYFLOW

1,965

3.6

63.3

Others

10,09018.7

0.9

48,925

90.5

6.7

2,517

4.7

-

51,443

95.2

12.2

Total (Adastria)
ALICIA CO., LTD.
Total (Japan)
Hong Kong

1,578

2.9

(5.9)

China

437

0.8

(3.2)

Taiwan

420

0.8

6.4

South Korea

Notes:

186

0.3

2.8

Total (Overseas)

2,623

4.8

(3.1)

Total (Group)

54,066

100.0

11.4

1. The number of stores is categorized by using brand operating divisions and geographic regions.
2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.
3. Velvet, a U.S. company acquired in the first quarter, is included only in the consolidated balance sheet in the firstquarter and is not included in the consolidated income statement.

(3) Sales for Merchandise Categories
Category

First three months of FY2/18
Sales (million yen)

Composition (%)

YoY change (%)

Men’s apparel (bottoms, tops)

7,676

14.2

8.3

Lady’s apparel (bottoms, tops)

35,924

66.4

11.1

Others

10,46519.4

14.5

Notes:

Total
54,066100.0
1. The others category includes additions to the provision for point card certificates and other items.

11.4

2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.

This financial report is solely a translation of the Company’s Kessan Tanshin (including attachments) in Japanese, which
has been prepared in accordance with accounting principles and practices generally accepted in Japan, for theconvenience of readers who prefer an English translation.

- 10 -