Summary of Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 28, 2019
(Three Months Ended May 31, 2018)[Japanese GAAP]
June 29, 2018

Company name:
Stock code:
Representative:

Adastria Co., Ltd.
2685
Michio Fukuda, Chairman of the Board

Listing: TSE 1st section
URL: http://www.adastria.co.jp

Contact:

Masayuki Kindo, Member of the Board of Directors

Tel: +81-3-5466-2010

Scheduled date of filing of Quarterly Report:
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results:
Holding of quarterly financial results meeting:

July 13, 2018
Yes
None

Note: The original disclosure in Japanese was released on June 29, 2018 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, 2019
(March 1, 2018 – May 31, 2018)(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, 2018
51,392(4.9)
1,278 (66.6)
1,358 (65.1)
Three months ended May 31, 2017
54,066
11.4
3,833 (26.6)
3,892 (26.3)
Note: Comprehensive income
Three months ended May 31, 2018:
46 million yen (down 98.0%)
Three months ended May 31, 2017: 2,277 million yen (down 39.8%)
Net income per share

Diluted net income per share

Yen

Yen

Three months ended May 31, 2018
Three months ended May 31, 2017
Reference: EBITDA

%

239
5,220

(95.4)
75.0

5.08
110.97
Three months ended May 31, 2018: 3,387 million yen (down 43.6%)
Three months ended May 31, 2017: 6,004 million yen
Three months ended May 31, 2018:17.21 yen (down 86.1%)
Three months ended May 31, 2017:123.55 yen

EPS before goodwill amortization(*) For more details regarding definition, computational method and other matters of these indices, please refer to thesection “Explanation of Results of Operations” on page 3.
Note: The provisional accounting treatment for a business combination was finalized at the end of fiscal year ended on February
28, 2018. As a result, figures for the three months ended May 31, 2017 reflect a significant revision of the initial
allocation of the acquisition cost for the business combination.
(2) Consolidated financial position

As of May 31, 2018
As of Feb. 28, 2018
Reference: Shareholders’ equity

Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of May 31, 2018:

90,21891,12350,439 million yen

50,43951,030
As of Feb. 28, 2018:

55.9
56.0
51,030 million yen

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

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Feb. 28, 2018
Fiscal year ending Feb. 28, 2019
Fiscal year ending Feb. 28, 2019 (forecast)
Note: Revision to the most recently announced dividend forecast: None

35.00

-

15.00

50.00

20.00

-

30.00

50.00

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2019 (March 1, 2018 – February 28, 2019)
Net sales
Million yen

Operating profit%

Million yen%

Ordinary profit
Million yen

Full year
227,000
1.9
8,400
67.8
8,700
Note: Revision to the most recently announced consolidated forecast: None
Reference: EBITDA
EPS before goodwill amortization%(Percentages represent year-on-year changes)
Net income attributable
Net income per
to owners of the parent
shareMillion yen

60.3

Fiscal year ending Feb. 28, 2019 (forecast):
Fiscal year ending Feb. 28, 2019 (forecast):

4,400

%

Yen

409.4

16,000 million yen (up 5.7%)
121.17 yen (up 2.2%)

93.54

* 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: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(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, 2018:
48,800,000 shares
As of Feb. 28, 2018:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of May 31, 2018:
1,736,409 shares

As of Feb. 28, 2018:

1,759,875 shares

3) Average number of shares outstanding during the period
Three months ended May 31, 2018: 47,043,916 shares

Three months ended May 31, 2017: 47,042,328 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 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 2019 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

3. Supplementary Information

8(1) Sales for Brands and Regions

8(2) Sales for Merchandise Categories

9(3) Number of Stores

9

- 1 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2019 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
Consolidated results(Million yen)First three months of FY2/18 First three months of FY2/19(Mar. 1, 2017 – May 31, 2017) (Mar. 1, 2018 – May 31, 2018)

Net sales

54,066

51,392

YoY change(Amount)(2,673)

YoY change
(%)
(4.9)

Operating profit

3,833

1,278

(2,554)(66.6)

Ordinary profit

3,892

1,358

(2,534)(65.1)Net income attributableto owners of the parent

5,220

239

(4,981)(95.4)EBITDA

6,004

3,387

(2,616)(43.6)EPS before goodwill
amortization (Yen)

123.5517.21(106.34)(86.1)

Consolidated net sales in the first quarter (March 1 - May 31, 2018) decreased 4.9% year-on-year to 51,392
million yen, operating profit decreased 66.6% to 1,278 million yen, ordinary profit decreased 65.1% to 1,358
million yen, and net income attributable to owners of the parent decreased 95.4% to 239 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 43.6% to 3,387 million yen
and earnings per share (EPS) before goodwill amortization fell 86.1% to 17.21 yen. (*)
Overseas sales increased 44.8% due to the sales of Velvet, LLC, a U.S. company acquired in the previous fiscal
year, and the start of niko and …. operations in Taiwan. Sales in Japan decreased 7.5% because of weak sales atbrands other than niko and … The result was a 4.9% decrease in consolidated net sales. Slow sales of summer
merchandise that was launched in the middle of April was one reason for lower sales in Japan. A brief period of
unfavorable weather in May also had a negative impact on sales. (Please refer to the section “3. Supplementary
Information, (1) Sales for Brands and Regions” for further information.)
We opened 39 stores (none overseas) and closed 24 stores (including 10 overseas), resulting in a total network of
1,518 stores (including 116 overseas) at the end of May 2018. (Please refer to the section “3. Supplementary
Information, (3) Number of Stores” for further information.)
The gross profit margin decreased 2.0 percentage points from one year earlier to 57.4% mainly because of higher
price discount rate to reduce inventories.
The ratio of selling, general and administrative (SG&A) expenses to sales increased 2.7 percentage points to
55.0%. SG&A expenses were about the same as one year earlier in part because of an increase in e-commerce
sales promotion expenses and higher delivery expenses caused by an increase in delivery fees. As a result, theoperating margin decreased 4.6 percentage points to 2.5%.
There were extraordinary losses of 240 million yen for the impairment of store assets.
On March 1, 2018, Adastria conducted an absorption-type split where the BARNYARDSTORM and BABYLONE
business units of Adastria were divested and then transferred to consolidated subsidiary ELEMENT RULE Co.,
Ltd. BARNYARDSTORM and BABYLONE both target market sectors that are similar to the “select market” that isthe core market sector of ELEMENT RULE. Consolidating these two business units to ELEMENT RULE is
therefore expected to further strengthen the Adastria’s position in the select market.
(*) Since the fiscal year that ended in February 2014, the amortization of goodwill, which is not a cash expense,
has created a large gap between changes in cash flows and changes in operating profit and all subsequentlevels of earnings. Furthermore, comparisons with foreign companies are difficult because of differences inaccounting 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 2019 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 decreased 904 million yen from as of February 28, 2018 to 90,218 million yen as of May 31, 2018.
This was mainly due to a decrease in cash and deposits of 7,036 million yen, while there were increases in notes
and accounts receivable-trade of 3,564 million yen, inventories of 1,835 million yen, and store interior equipmentof 682 million yen.
Liabilities decreased 313 million yen to 39,778 million yen. This was mainly due to decreases in electronicallyrecorded obligations-operating of 1,585 million yen and provision for bonuses of 953 million yen, while there
was an increase in accounts payable-other of 2,187 million yen.
Net assets decreased 590 million yen to 50,439 million yen. This was mainly due to a decrease in retained
earnings of 474 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 4,
2018.

- 3 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2019 Fiscal Year

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Million yen)First quarter of FY2/19(As of May 31, 2018)

FY2/18(As of Feb. 28, 2018)
AssetsCurrent assets
Cash and deposits

19,446

12,409Notes and accounts receivable-trade

8,810

12,375Inventories

18,073

19,908

Other

3,570

3,642

Allowance for doubtful accounts

(116)

(140)

Total current assets

49,78548,195Store interior equipment, net

7,301

7,983

Other, net

5,022

5,423

Total property, plant and equipment

12,324

13,406

Goodwill

1,959

1,373

Other

4,255

4,537

Total intangible assets

6,214

5,910

Investment securities

1,101

1,030

Lease and guarantee deposits

18,263

18,122

Other

3,711

3,822

Allowance for doubtful accounts

(278)

(270)

Total investments and other assets

22,79922,70541,33842,022

91,12390,218Notes and accounts payable-trade

10,227

9,970

Electronically recorded obligations-operating

9,898

8,313

Short-term loans payable

2,657

2,775

Accounts payable-other

9,418

11,605

Income taxes payable

1,322

1,337

Provision for bonuses

2,413

1,460

698

995

1,141

1,072

140

297

Non-current assets
Property, plant and equipment

Intangible assets

Investments and other assets

Total non-current assets
Total assets
Liabilities
Current liabilities

Provision for point card certificates
Provision for loss on business liquidation
Other provision
Other
Total current liabilities

527

609

38,44638,437

Non-current liabilities
346

218

Other

Provision

1,299

1,121

Total non-current liabilities

1,645

1,340

40,092

39,778

Total liabilities- 4 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2019 Fiscal Year

(Million yen)First quarter of FY2/19(As of May 31, 2018)

FY2/18(As of Feb. 28, 2018)
Net assets
Shareholders’ equity
Capital stock

2,660

2,660

Capital surplus

7,227

7,227

Retained earnings

45,24544,770Treasury shares(4,652)(4,575)

Total shareholders’ equity

50,48050,082235

166

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

(76)

4

Foreign currency translation adjustment

391

186

Total accumulated other comprehensive income

550

357

Total net assets
Total liabilities and net assets- 5 -51,03050,43991,12390,218Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2019 Fiscal Year

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)First three months of FY2/18(Mar. 1, 2017 – May 31, 2017)(Million yen)First three months of FY2/19(Mar. 1, 2018 – May 31, 2018)

Net sales

54,066

51,392

Cost of sales

21,976

21,870Gross profit

32,08929,521

Selling, general and administrative expenses

28,25528,243Operating profit

3,833

1,278

33

2

Non-operating income
Dividend income
Foreign exchange gains-

60

House rent income

28

25

Other

94

89

Total non-operating income

156

176

5

8

21

-

22

59

Cost of lease revenue

24

23

Other

23

5

Total non-operating expenses

97

96

3,892

1,358

Gain on sales of investment securities

4,373

-

Total extraordinary income

4,373

-

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodLoss on valuation of derivatives

Ordinary profit
Extraordinary income

Extraordinary losses
Impairment loss

73

240

Total extraordinary losses

73

240

Net income before income taxes

8,191

1,117

Income taxes-current

3,035

1,138

Income taxes-deferred

(64)

(259)

Total income taxes

2,971

878

Net income

5,220

239

Net income attributable to owners of the parent

5,220

239

- 6 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2019 Fiscal Year

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

First three months of FY2/19(Mar. 1, 2018 – May 31, 2018)

5,220

239

(2,996)(69)

Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests

- 7 -

(23)

80

77

(204)

(2,943)

(193)

2,277

46

2,277

46

-

-

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2019 Fiscal Year

(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.

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

First three months of FY2/19
Sales (million yen)

YoY change (%)

Composition (%)

GLOBAL WORK

9,325

18.1

niko and ...

7,393

14.4

12.3

STUDIO CLIP

5,372

10.5

(1.3)

LOWRYS FARM

5,324

10.4

(19.1)LEPSIM

3,461

6.7

(7.9)

JEANASIS

2,784

5.4

(8.1)

BAYFLOW

1,921

3.7

(2.2)

RAGEBLUE

1,839

3.6

(14.2)

Others

6,510

12.7

(28.3)

Total (Adastria)(9.8)

43,93385.5(10.2)ALICIA CO., LTD.

2,067

4.0

(17.9)ELEMENT RULE Co., Ltd. (Note 3)

1,592

3.1

-

Other consolidated subsidiaries
Total (Japan)
Hong Kong

0

0.0

-

47,593

92.6

(7.5)

1,492

2.9

(5.4)

China

428

0.9

(1.9)

Taiwan

624

1.2

48.3

South Korea

273

0.5

46.4

979

1.9

-

3,798

7.4

44.8

USA
Total (Overseas)
Total (Group)

Notes:

51,392100.0
1. The number of stores is categorized by using brand operating divisions and geographic regions.

(4.9)

2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.
3. On March 1, 2018, Adastria conducted an absorption-type split where the BARNYARDSTORM and BABYLONE
business units of Adastria were divested and then transferred to consolidated subsidiary ELEMENT RULE Co.,
Ltd. As a result, the sales of these two brands, which were included in “others” for Adastria in prior years, areincluded in the sales of ELEMENT RULE beginning with the first quarter of the fiscal year ending in February
2019.

- 8 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2019 Fiscal Year

(2) Sales for Merchandise Categories
Category

First three months of FY2/19
Sales (million yen)

YoY change (%)

Composition (%)

Men’s apparel (bottoms, tops)

7,203

14.0

(6.2)

Lady’s apparel (bottoms, tops)

34,251

66.7

(4.7)

Others

9,937

19.3

(5.0)

Total
51,392100.0
1. The others category includes additions to the provision for point card certificates and other items.

Notes:(4.9)

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

(3) Number of Stores
Number of storesFirst three months of FY2/19
Brand / region

As of Feb.
28, 2018

GLOBAL WORK

Absorption-type split(Note 3)
210-

niko and ...

132

-

3

-

STUDIO CLIP

195

-

1

-

LOWRYS FARM

149

-

2

-

(1)

LEPSIM

138

-

2

-

JEANASIS

76

-

1

-

BAYFLOW

39

-

6

-

OpenedChanged5-

Increase/decrease

Closed-As of May31, 2018

5

215

-

3

135

(2)

(1)

194

1

150

(1)

1

139

-

1

77

-

6

45

RAGEBLUE

57

-

3

-

-

3

60

Others

279

(68)

7

-

(1)

(62)

217

1,275

(68)

30

-

(5)

(43)

1,232

100

-

1

2

(9)

(6)

94

-

68

8

-

-

76

76

1,375

-

39

2

(14)

27

1,402

Hong Kong

24

-

-

-

(1)

(1)

23

China

49

-

-

-

(7)

(7)

42

Taiwan

31

-

-

-

(2)

(2)

29

South Korea

11

-

-

-

-

-

11

USA

11

-

-

-

-

-

11

Total (Overseas)

126

-

-

-

(10)

(10)

116

Total (Group)

1,501

-

39

2

(24)

17

1,518

Total (Adastria)
ALICIA CO., LTD.
ELEMENT RULE Co., Ltd.
Total (Japan)

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. The figures in “Absorption-type split” show the change in the number of stores resulting from theabsorption-type split conducted on March 1, 2018, where the BARNYARDSTORM and BABYLONE business unitsof Adastria were divested and then transferred to consolidated subsidiary ELEMENT RULE Co., Ltd.

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.

- 9 -