Summary of Consolidated Financial Results
for the Second Quarter of the Fiscal Year Ending February 28, 2023
(Six Months Ended August 31, 2022)[Japanese GAAP]
October 7, 2022

Company name: Adastria Co., Ltd.
Listing: Tokyo Stock Exchange
Stock code:
2685
URL: https://www.adastria.co.jp
Representative: Osamu Kimura, Representative Director and President
Itsuo Iwakoshi, Senior Executive Officer,
Contact:
Head of Corporate Planning OfficeTel: +81-3-5466-2060
Scheduled date of filing of Quarterly Report:
October 14, 2022
Scheduled date of payment of dividend:
October 24, 2022
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:Yes (for investors)
Note: The original disclosure in Japanese was released on October 7, 2022 at 15:30 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending February 28, 2023
(March 1, 2022 – August 31, 2022)(1) Consolidated results of operations (cumulative)
Net sales

Operating profit

Million yen

Six months ended Aug. 31, 2022
Six months ended Aug. 31, 2021
Note: Comprehensive income(Percentages represent year-on-year changes)
Net income
Ordinary profit
attributable to ownersof the parent%

Million yen%

Million yen%

Million yen

112,578
21.6
5,570
781.6
6,157 296.5
92,611
16.3
631
1,552
Six months ended Aug. 31, 2022:
5,472 million yen (up 774.4%)
Six months ended Aug. 31, 2021:
625 million yen (-%)
Net income per share

Diluted net income per share

Yen

Yen

Six months ended Aug. 31, 2022
Six months ended Aug. 31, 2021

85.96
9.93

%

3,893
448

767.3
-

-

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of Aug. 31, 2022
108,451
59,333
53.4
As of Feb. 28, 2022
97,95754,963
55.1
Reference: Shareholders’ equity As of Aug. 31, 2022: 57,952 million yen
As of Feb. 28, 2022: 53,963 million yen
Note: At the end of the previous fiscal year, the provisional accounting treatment for the business combination was finalized, and,for the fiscal year ended February 2022, the initial allocation of acquisition costs due to the provisional finalization of
accounting treatment was significantly revised. The reported amounts reflect these changes.

2. Dividends
1Q-end2Q-endDividend per share
3Q-endYear-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Feb. 28, 2022
25.00
Fiscal year ending Feb. 28, 2023
25.00
Fiscal year ending Feb. 28, 2023 (forecast)
Note: Revision to the most recently announced dividend forecast: None

-

30.00

55.00

-

30.00

55.00

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 – February 28, 2023)
Net sales
Million yen

Operating profit%

Million yen%

Ordinary profit
Million yen

Full year
230,000
14.1
10,00052.3
10,000Note: Revision to the most recently announced consolidated forecast: None

(Percentages represent year-on-year changes)
Net income attributable Net income per
to owners of the parent
share

%

22.5

Million yen

6,300

%

28.1

Yen

139.23

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
Newly added: -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: Yes
3) Changes in accounting-based estimates: None
4) Restatements: None
Note: Please refer to the section “2. Quarterly Consolidated Financial Statements and Notes, ( 4) Notes to Quarterly
Consolidated Financial Statements, Changes in Accounting Policies” on page 10 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 Aug. 31, 2022:
48,800,000 shares
As of Feb. 28, 2022:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of Aug. 31, 2022:
3,448,795 shares

As of Feb. 28, 2022:

3,552,459 shares

3) Average number of shares outstanding during the period
Six months ended Aug. 31, 2022:
45,294,805 shares

Six months ended Aug. 31, 2021:

45,212,230 shares

Note 1: The current quarterly financial report is not subject to quarterly review procedures by certified public accountants or
auditing firms.
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 andOther Forward-looking Statements” on page 4 regarding preconditions or other related matters for the forecast shown above.

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 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

4

2. Quarterly Consolidated Financial Statements and Notes

5(1) Quarterly Consolidated Balance Sheet

5(2) Quarterly Consolidated Statements of Income and Comprehensive Income7(3) Quarterly Consolidated Statement of Cash Flows

9(4) Notes to Quarterly Consolidated Financial Statements

10

Going Concern Assumption

10

Significant Changes in Shareholders’ Equity

10

Changes in the Scope of Consolidation or Application of the Equity Method

10

Changes in Accounting Policies

10

Segment Information

11

Business Combinations

12

3. Supplementary Information

13(1) Sales for Brands and Regions

13(2) Sales for Merchandise Categories

13(3) Number of Stores

14

- 1 -

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
Consolidated results
First six months of FY2/22
First six months of FY2/23(Mar. 1, 2021 – Aug. 31, 2021) (Mar. 1, 2022 – Aug. 31, 2022)
92,611
112,578

Net sales
Operating profit
Ordinary profit
Net income attributableto owners of the parent

YoY change(Amount)
19,967(Million yen)
YoY change
(%)
21.6%

631

5,570

4,938

781.6%

1,552

6,157

4,604

296.5%

448

3,893

3,444

767.3%

During the first half (March 1 - August 31, 2022) of the current fiscal year, the spread of the COVID-19
pandemic stabilized in the first quarter and restrictions on the movement of people were eased there more outingsand normalization of personal consumption. However, the number of customers briefly declined because of anincrease in the number of Omicron cases that started in July. Supply chain disruptions caused by lockdowns inShanghai in May and June also had a negative effect on sales. In addition, the economic outlook remained
uncertain due to the rapid depreciation of the yen and soaring resource and energy prices caused by the
Russia-Ukraine crisis.
The Adastria Group is taking numerous actions based on the following growth strategies in its medium-term
management plan.
Growth Strategy Ⅰ

Multi-Brand, Multi-Category

Growth Strategy IⅠ Digital Customer Interactions and Services
Growth Strategy ⅠII Glocal
Growth Strategy ⅠV New BusinessGrouping of brands according to roles for improved
profitability and growth
Accelerate growth of our EC site and create a fun EC
community
Develop models in Mainland China and cultivate
Southeast Asia
Establish a food and beverage business and create new
appealConsolidated net sales increased 21.6% year-on-year to 112,578 million yen, operating profit increased 781.6%
to 5,570 million yen, ordinary profit increased 296.5% to 6,157 million yen, and net income attributable toowners of the parent increased 767.3% to 3,893 million yen.
As a result of Zetton, Inc. becoming a consolidated subsidiary in February 2022, Adastria is reporting theApparel and Sundry Goods-related Business and Other (Food and Beverage Business) as separate businesssegments beginning with the current fiscal year.
Domestic sales in the Apparel and Sundry Goods-related business segment were supported by the continuation of
the easing of restrictions on store operations, as well as by strong sales of spring and summer products due tofavorable weather, product development in response to increased demand for outings after the easing of
pandemic restrictions, and promotional measures such as TV commercials and point redemption. As a result,sales were up 15.7% year-on-year.
In the Other segment, sales increased due to the acquisition of Zetton, Inc., which operates a food and beveragebusiness in line with Adastria’s growth strategy.
As a part of our digital strategy, TV commercials and other initiatives were used to attract customers and increaseawareness of Adastria’s “Dot ST” e-commerce website. As a result, number of members of this website increased
to 14.5 million, 900,000 more than at the end of the previous fiscal year. E-commerce sales increased 3.3%
year-on-year as pace of sales growth was held down by the recovery demand for buying items at physical stores.
In Mainland China, sales were down 22.3% year-on-year because of lockdowns in response to the emergence of a
new COVID-19 variant. Sales increased 5.0% in Hong Kong as a second quarter recovery and the addition of a
new store offset the impact of pandemic restrictions in the first qu arter. In Taiwan, sales were up 48.4% due tothe success of a new brand. In the United States, sales rose 53.2% because of very strong demand for luxury- 2 -Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Yeargoods and a big increase in e-commerce sales. As a result, total overseas sales were up 27.4% and the o verseas
business was profitable in the first half. All overseas sales information is based on conversions to yen of sales inlocal currencies.
Although the depreciation of the yen and rising raw material price continues, the gross profit margin of the
Apparel and Sundry Goods-related Business was basically unchanged from the same period in the previous fiscal
year because we are supplying products at the right times, prices and volumes, holding down discount sales, andincreasing the added value of our products. In addition, as the share of the food and beverage business increased
due to the acquisition of Zetton, Inc. which is now a consolidated subsidiary, the gross profit margin increased
1.0 percentage point from one year earlier to 55.8%.
Selling, general, and administrative expenses, personnel expenses, and store leasing expenses, which had been
held down due to store closures and shortened business hours in the previous fiscal year, increased. But sales
recovered and business operations became more efficient. As a result, the SG&A to sales ratio improved by 3.3
percentage points from one year earlier to 50.8%, and operating profit significantly improved.
In addition, non-operating income included a subsidy of 182 million yen related to shortened operating hours
caused by the pandemic and employment adjustment subsidies of 37 million yen as well as a foreign exchange
gains of 460 million yen. On the other hand, a loss on valuation of derivatives of 106 million yen related to thewithdrawal from the South Korean business was recorded as non-operating expenses.
Business segment performance was as follows.
1) Apparel and Sundry Goods-related BusinessAs a result of the above, sales were 107,610 million yen and segment profit was 5,869 million yen.
7 stores were added to this business because OPEN AND NATURAL Inc. became a consolidated subsidiary in
the first quarter. In addition, we opened 39 stores (including 9 overseas) and closed 38 stores (including 3
overseas), resulting in a total of 1,431 stores (including 79 overseas) at the end of the first half of the current
fiscal year.
2) Other (Food and Beverage Business)
Sales were 4,985 million yen and segment profit was 288 million yen.
The number of stores at the end of the first half was 78, a result of the increase of 73 stores due to the acquisitionof Zetton, Inc. at the end of the previous fiscal year and opening of 3 stores and closing of 3 stores.
(2) Explanation of Financial Position
1) Balance sheet position
Total assets increased 10,493 million yen from as of February 28, 2022 to 108,451 million yen as of August 31,
2022. There were increases of 2,394 million yen in notes and accounts receivable-trade, 2,290 million yen in
inventories, 5,078 million yen in other, net under property, plant and equipment, partly because of right-of-use
assets, etc., resulting from the application of the new lease accounting standard (ASC No. 842), etc., by the U.S.
subsidiary, and 551 million yen in goodwill.
Liabilities increased 6,123 million yen to 49,117 million yen. The provision of point card certificates decreased
by 1,609 million yen due to the application of the accounting standard for revenue recognition, but there wereincreases of 2,454 million yen in notes and accounts payable-trade, 2,341 million yen in other under current
liabilities, including contract liabilities arising from the adoption of the revenue recognition accounting standard
and lease liabilities resulting from the application of the new lease accounting standard (ASC No. 842) by the
U.S. subsidiary, etc., and 3,149 million yen in other under non-current liabilities, including lease liabilities
resulting from the application of the new lease accounting standard (ASC No. 842) by the U.S. subsidiary, etc.
Net assets increased 4,370 million yen to 59,333 million yen. This was mainly due to increases of 2,348 million
yen in retained earnings, 684 million yen in deferred gains or losses on hedges and 526 million yen in foreign- 3 -Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Yearcurrency translation adjustment.
2) Cash flow position
Cash and cash equivalents (hereinafter “net cash”) as of August 31, 2022 amounted to 16,640 million yen, or 222
million yen less than as of February 28, 2022.
A summary of cash flows from each activity during the first half of the current fiscal year is as fol lows:
Cash flows from operating activities
Net cash provided by operating activities totaled 5,393 million yen (compared with 7,280 million yen used in thesame period of the previous fiscal year). The main positive factors include net income before income taxes of
6,146 million yen and depreciation of 3,935 million yen. Main negative factors include an increase in tradereceivables of 2,072 million yen and income taxes paid of 2,843 million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 3,734 million yen (compared with 3,448 million yen used in the same
period of the previous fiscal year). This was mainly due to the payments of 2,712 million yen for the purchase ofproperty, plant and equipment and 1,614 million yen for the purchase of intangible assets.
Cash flows from financing activities
Net cash used in financing activities totaled 2,491 million yen (compared with 1,593 million yen used in thesame period of the previous fiscal year). This was mainly due to repayments of long-term borrowings of 521
million yen, cash dividends paid of 1,369 million yen and repayments of lease obligations of 493 million yen.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements
There are no revisions to the consolidated forecast for the current fiscal year that was announced on April 13,
2022.

- 4 -

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
Second quarter of FY2/23(As of Aug. 31, 2022)

FY2/22(As of Feb. 28, 2022)
AssetsCurrent assets
Cash and deposits

16,976

16,671

Notes and accounts receivable-trade

9,878

12,272Inventories

19,25921,550

Other

2,126

3,125

Allowance for doubtful accounts

(71)

(85)

48,16953,534

4,404

4,893

Other, net

11,60016,679Total property, plant and equipment

16,005

21,573

922

1,473

Other

9,914

10,371

Total intangible assets

10,836

11,844

Total current assets
Non-current assets
Property, plant and equipment
Store interior equipment, net

Intangible assets
Goodwill

Investments and other assets
Investment securities

1,003

1,130

Leasehold and guarantee deposits

15,426

14,066

Other

6,866

6,645

Allowance for doubtful accounts

(351)

(342)

Total investments and other assets

22,945

21,49949,78754,916

97,957

108,451

Notes and accounts payable-trade

11,282

13,737

Electronically recorded obligations-operating

Total non-current assets
Total assets
Liabilities
Current liabilities

6,620

6,885

Short-term borrowings

95

100

Current portion of long-term borrowings

455

395

Accounts payable-other

10,44911,129

Income taxes payable

3,247

2,370

Provision for bonuses

2,179

2,430

Provision for point card certificates

1,728

119

Other provisions

446

482

Other

1,910

4,251

Total current liabilities

38,416

41,903896

705

Non-current liabilities
Long-term borrowings
Provisions

322

-

Other

3,358

6,508

Total non-current liabilities

4,577

7,213

42,994

49,117

Total liabilities- 5 -Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

(Million yen)
Second quarter of FY2/23(As of Aug. 31, 2022)

FY2/22(As of Feb. 28, 2022)
Net assets
Shareholders’ equity
Share capital

2,660

2,660

Capital surplus

7,213

7,213

Retained earnings

51,11453,463

Treasury shares(7,636)(7,285)

Total shareholders’ equity

53,35156,051887

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

45

729

Foreign currency translation adjustment

558

1,084

Total accumulated other comprehensive income

611

1,901

Non-controlling interests

1,000

1,381

Total net assets

54,96359,333

97,957

108,451

Total liabilities and net assets- 6 -Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)(Million yen)First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

Net sales

92,611

112,578

Cost of sales

41,83349,797Gross profit

50,77762,780

Selling, general and administrative expenses

50,14657,210631

5,570

Foreign exchange gains

139

460

Subsidy income

269

182

Subsidies for employment adjustment

451

37

Other

199

140

1,060

819

Interest expenses

71

85

Loss on valuation of derivatives

23

106

Other

44

40

Operating profit
Non-operating income

Total non-operating income
Non-operating expenses

Total non-operating expenses

139

232

1,552

6,157

Gain on liquidation of subsidiaries and associates

81-

Total extraordinary income

81-

Impairment loss

179

10

Total extraordinary losses

179

10

Net income before income taxes

Ordinary profit
Extraordinary income

Extraordinary losses

1,454

6,146

Income taxes-current

598

1,962

Income taxes-deferred

406

1

Total income taxes

1,005

1,963

Net income

448

4,183

Net income (loss) attributable to non-controlling interests

(0)

289

Net income attributable to owners of the parent

448

3,893

- 7 -

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)First six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)(Million yen)First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

448

4,183

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

1

79

(28)

684

Foreign currency translation adjustment

204

526

Total other comprehensive income

177

1,289

625

5,472

626

5,091

(0)

381

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests- 8 -Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

(3) Quarterly Consolidated Statement of Cash FlowsFirst six months of FY2/22(Mar. 1, 2021 – Aug. 31, 2021)(Million yen)First six months of FY2/23(Mar. 1, 2022 – Aug. 31, 2022)

Net income before income taxes

1,454

6,146

Depreciation

3,187

3,935

Impairment loss

179

10

Amortization of goodwill

29

121

Interest and dividend income

(8)

(6)

Interest expenses

71

85

Increase (decrease) in allowance for doubtful accounts

25

5Cash flows from operating activities

Increase (decrease) in provision for bonuses

(374)

242

Increase (decrease) in provision for point card certificates

78

(139)

Loss (gain) on liquidation of subsidiaries and associates

(81)

-

Decrease (increase) in trade receivables

795(2,072)

Decrease (increase) in inventories(2,149)(1,690)

Increase (decrease) in trade payables

(421)

2,408

Increase (decrease) in accounts payable-other(1,037)(175)

Increase (decrease) in accrued consumption taxes(4,592)(59)

Other, net(1,295)(498)

Subtotal(4,138)

8,314

6

8

Interest and dividends received
Interest paid

(71)

(85)

Income taxes paid

(3,077)(2,843)

Net cash provided by (used in) operating activities(7,280)

5,393

Purchase of property, plant and equipment(1,991)(2,712)

Purchase of intangible assets

Cash flows from investing activities(1,443)(1,614)Purchase of investment securities

(201)

(20)

Payments of leasehold and guarantee deposits

(388)

(415)

597

1,890

-

(839)

(21)

(23)

(3,448)(3,734)

Increase (decrease) in short-term borrowings

-

(165)

Proceeds from long-term borrowings-

200

Repayments of long-term borrowings

-

(521)

(1,141)(1,369)

(0)

(92)

(451)

(493)

-

(49)

(1,593)(2,491)

195

609

Net increase (decrease) in cash and cash equivalents(12,127)(222)

Cash and cash equivalents at beginning of period

24,082

16,863

Cash and cash equivalents at end of period

11,955

16,640

Proceeds from refund of leasehold and guarantee deposits
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities

Dividends paid
Purchase of treasury shares
Repayments of lease obligations
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents- 9 -Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Changes in the Scope of Consolidation or Application of the Equity Method
Important changes in the scope of consolidation
Following the acquisition of shares in OPEN AND NATURAL Inc. through the Company ’s consolidated
subsidiary BUZZWIT Co., Ltd. on March 31, 2022, OPEN AND NATURAL became a consolidated subsidiary(sub-subsidiary) from the first quarter of the current fiscal year. However, only the balance sheet of OPEN AND
NATURAL was included in the consolidation as the deemed acquisition date was April 30, 2022 and the period
to date of the closure of quarterly consolidated accounts did not exceed three months. The statement of income ofthis company has been included in the consolidation since the second quarter of the current fiscal year .
Changes in Accounting Policies
Application of Accounting Standards for Revenue Recognition
The Company has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board ofJapan (ASBJ) Statement No. 29, March 31, 2020) and other standards from the beginning of the first quarter ofthe current fiscal year. Based on these standards, revenue expected to be received in exchange for the provisionof goods and services is recognized when the control of the goods and services is transferred to customers. In
prior years, to prepare for the redemption of the points granted on sales to customers, the Adastria Group
recorded a provision for point card certificates in an amount that reflects the performance of obligation related tothe expected redemption of points in the future. The Company has changed to a method that recognizes the points
granted as performance obligations, allocates the transaction price, and records it as contract liability.
The application of the Accounting Standard for Revenue Recognition is pursuant to the transitional treatment set
forth in the proviso of Paragraph 84 of this standard. The cumulative effect of the retrospective application,
assuming the new accounting policy had been applied to periods prior to the beginning of the first quarter of thecurrent fiscal year, was added to or subtracted from retained earnings at t he beginning of the first quarter of thecurrent fiscal year, and then the new accounting policy was applied beginning with this amount of retained
earnings.
As a result, compared with the previous accounting method, the application of the new standard res ulted in
reductions of 1,179 million yen in sales, 60 million yen in cost of sales, 1,119 million yen in selling, general andadministrative expenses. However, there were no effect on operating profit, ordinary profit and net income
attributable to owners of the parent. In addition, the new standard reduced retained earnings at the beginning of
the first half by 114 million yen.
In accordance with the transitional treatment set forth in Paragraph 89 -2 of the Accounting Standard for Revenue
Recognition, reclassification based on the new presentation method has not been carried out for the previous
fiscal year.
Changes in valuation of inventories
The Company and certain consolidated subsidiaries previously valued its merchandise mainly at cost based on
the specific identification method (the amount shown on the balance sheet was calculated by writing down thebook value based on a decline in profitability). However, from the first quarter of the current fiscal year, the cost
method has been changed to a cost method mainly based on the weighted average method (the value on thebalance sheet is calculated by writing down the book value based on a decline in profitability).
The valuation method was changed in view of further globalization of the Group ’s business and taking the- 10 -

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

opportunity of upgrade of its backbone IT system.
The effect of this change is insignificant.
Accounting for leases: Application of ASC No. 842 [Leases]
Foreign subsidiaries, that have adopted the U.S. accounting standards, have started app lying US GAAP ASC No.
842, Leases (ASC No. 842) standard from the first quarter of the current fiscal year. The cumulative effect of the
adoption of ASC No. 842 is recognized at the date of adoption and is an adjustment to retained earnings and leaseliabilities related to the right-of-use assets at the beginning of the first quarter of the current fiscal year.
The effect of this change on profit in the first half of the current fiscal year is insignificant.
Application of the Accounting Standard for Measurement of Fair Value
The Company has applied the Accounting Standard for Measurement of Fair Value, etc. (ASBJ Statement No. 30,
July 4, 2019) from the beginning of the first quarter of the current fiscal year, and has applied the new accounting
policies set forth by the Accounting Standard for Measurement of Fair Value, etc. prospectively in accordancewith the transitional treatment in Paragraph 19 of the Accounting Standard for Measurement of Fair Value andParagraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019).
There is no effect of the application of these standards on the quarterly consolidated financial statements.
Segment Information
I. First six months of FY2/22 (Mar. 1, 2021 – Aug. 31, 2021)

The Adastria Group has only a single business segment, which is the planning and sales of clothing and related
merchandise. There is no others segment because the levels of sales and earnings of other activities are
insignificant.
II. First six months of FY2/23 (Mar. 1, 2022 – Aug. 31, 2022)

1. Information related to net sales and profit or loss for each reportable segment(Million yen)
Reportablesegment
Apparel andSundryGoods-related
Business

Other(Note 1)

Amounts shown onquarterly
consolidated
statement of income(Note 3)Adjustment(Note 2)Total

Net sales
External sales
Inter-segment sales and transfers
Total

107,610

4,968

112,578-

112,578

0

17

18

(18)

-

107,610

4,985

112,596(18)

112,578

Segment profit
5,869
288
6,157
6,157
Notes: 1. “Other” represents the businesses which are not included in the reportable segment and mainly consists of Food andBeverage Business.
2. The amount of adjustment to segment profit is an adjustment to unrealised profit related to inter -segment
transactions.
3. The segment profit is consistent with the ordinary profit of the Quarterly Consolidated Statement of Income.
4. The segment profit includes corporate expenses that are allocated to each reportable segment.

2. Information related to revisions for reportable segments
In prior years, there was no segment information because the Adastria Group had only the single reportablesegment of planning and sales of clothing and related merchandise. There was no “other” segment because thisinformation was immaterial. Beginning with the first quarter of the fiscal year ending in February 2023, segment
information is presented because the importance of the food and beverage business within the Adastria Group has- 11 -

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

increased.
Segment information for the first six months of the previous fiscal year that was prepared by using the same
segment classification method used for the first six months of the current fiscal year is not presented because
activities other than the planning and sales of clothing and relate d merchandise is immaterial.
In the first six months of the previous fiscal year, the planning and sales of clothing and related material was the
only significant segment. As a result, segment information prepared by using the same segment classification
method used for the first six months of the previous fiscal year is not presented.
3. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Impairment losses related to non-current assets
Not applicable.
Significant change in goodwill
Not applicable.
Significant gain on bargain purchaseNot applicable.
Business Combinations
Finalization of provisional accounting treatment of business combination
In the first quarter, a provisional accounting treatment was used for the acquisition of OPEN AND NATURAL
Inc., which has been completed on March 31, 2022. This treatment was finalized in the second quarter of thecurrent fiscal year.
In the finalized accounting treatment, 280 million yen of the acquisition cost was allocated to other underintangible assets and 97 million yen to deferred tax liabilities. As a result, provisional goodwill of 854 million
yen decreased 183 million yen to 670 million yen.

- 12 -

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

3. Supplementary Information(1) Sales for Brands and Regions
Brand / region

First six months of FY2/23

YoY change (%)

Sales (million yen)

Composition (%)

GLOBAL WORK

21,58719.2

26.2

niko and ...

14,44212.8

15.7

LOWRYS FARM

10,017

8.9

9.6

studio CLIP

9,854

8.8

4.3

LEPSIM

6,267

5.6

10.3

BAYFLOW

4,845

4.3

13.5

JEANASiS

4,707

4.2

2.0

LAKOLE

3,541

3.1

79.4

Others

15,664

13.9

13.8

Total (Adastria)

90,92780.8

15.8

BUZZWIT Co., Ltd. (Note 3)

4,085

3.6

21.2

ELEMENT RULE Co., Ltd.

4,929

4.4

7.6

103

0.1

419.6

100,045

88.9

15.7

1,366

1.2

5.0

869

0.8

(22.3)

Taiwan

1,831

1.6

48.4

USA

3,497

3.1

53.2

7,565

6.7

27.4

107,610

95.6

16.5

4,683

4.2

-

Other consolidated subsidiaries
Total (Japan)
Hong Kong
Mainland China

Total (Overseas)
Total (Apparel and Sundry Goods-related
Business)
Zetton, Inc. (Note 4)
ADASTRIA eat Creations Co., Ltd.

284

0.2

36.6

Total (Food and Beverage Business)

4,968

4.4

2,287.3

Total (Group)

112,578

100.0

21.6

Notes:

1. The number of stores is categorized by using brand operating divisions an d geographic regions.
2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.
3. Sales of BUZZWIT Co., Ltd. include its consolidated subsidiary OPEN AND NATURAL, Inc.
4. Sales of Zetton, Inc. include its consolidated subsidiary ZETTON, INC (USA Business).

(2) Sales for Merchandise Categories
Category

First six months of FY2/23

YoY change (%)

Sales (million yen)

Composition (%)

Men’s apparel (bottoms, tops)

16,89915.0

26.0

Lady’s apparel (bottoms, tops)

69,362

61.6

17.4

Others26,31623.4

31.0

112,578

100.0

21.6

Total
Notes:

1. The others category includes additions to the provision for point card certificates and other items.
2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.

- 13 -

Adastria Co., Ltd. (2685) Summary of 2Q Financial Results for February 2023 Fiscal Year

(3) Number of Stores
Number of stores
Brand / region

As of Feb. 28,

First six months of FY2/23

As of Aug.

2022

Increase
Increase
Opened Changed Closed(Note 3)/decrease31, 2022

GLOBAL WORK

206

-

1

-

(1)

-

206

niko and ...

144

-

2

-

(1)

1

145

LOWRYS FARM

136

-

1

-

(3)

(2)

134

studio CLIP

184

-

2

-

(6)

(4)

180

LEPSIM

120

-

1

-

(4)

(3)

117

BAYFLOW

60

-

1

-

-

1

61

JEANASiS

73

-

1

-

(2)

(1)

72

LAKOLE

47

-

6

-

-

6

53

Others

275

-

6

-

(9)

(3)

272

Total (Adastria)

1,245

-

21

-

(26)

(5)

1,240

BUZZWIT Co., Ltd. (Note 4)

18

7

4

-

(2)

9

27

ELEMENT RULE Co., Ltd.

84

-

4

-

(7)

(3)

81

Other consolidated subsidiaries

3

-

1

-

-

1

4

1,350

7

30

-

(35)

2

1,352

Hong Kong

14

-

1

-

-

1

15

Mainland China

6

-

1

-

-

1

7

Taiwan

43

-

7

-

(2)

5

48

USA

10

-

-

-

(1)

(1)

9

73

-

9

-

(3)

6

79

1,423

7

39

-

(38)

8

1,431

-

73

3

-

(3)

73

73

5

-

-

-

-

-

5

5

73

3

-

(3)

73

78

1,428

80

42

-

(41)

81

1,509

Total (Japan)
1

Total (Overseas)
Total (Apparel and Sundry
Goods-related Business)
Zetton, Inc. (Note 5)
ADASTRIA eat Creations Co., Ltd.
Total (Food and Beverage Business)
Total (Group)
Notes:

1. The number of stores is categorized by using brand operating divisions and geographic regions.
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 consolidation of Zetton, Inc. at t heend of FY2/22 and OPEN AND NATURAL Inc. during the first quarter of FY2/23.
4. The number of stores of BUZZWIT Co., Ltd. includes its consolidated subsidiary OPEN AND NATURAL Inc.
5. The number of stores of Zetton, Inc. includes its consolidated subsidiary ZETTON, INC (USA Business).

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.

- 14 -