Summary of Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 28, 2017
(Three Months Ended May 31, 2016)[Japanese GAAP]
June 30, 2016

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: +81-3-6895-6000
Scheduled date of filing of Quarterly Report:
July 15, 2016
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, 2016 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, 2017
(March 1, 2016 – May 31, 2016)(1) Consolidated results of operations (cumulative)
Net sales

Operating income

Million yen%

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

Million yen

Three months ended May 31, 2016
48,552
2.4
5,224
9.8
5,284
7.2
Three months ended May 31, 2015
47,394
8.7
4,759
231.6
4,928 233.4
Note: Comprehensive income
Three months ended May 31, 2016: 3,783 million yen (down 5.9%)
Three months ended May 31, 2015: 4,021 million yen (up 577.9%)
Net income per share

Diluted net income per share

Yen

Yen

Three months ended May 31, 2016
Three months ended May 31, 2015

61.95
48.13

Reference: EBITDA

27.6
811.5

-

Three months ended May 31, 2016:
Three months ended May 31, 2015:
Three months ended May 31, 2016:
Three months ended May 31, 2015:

EPS before goodwill amortization

%

2,983
2,337

7,113 million yen (up 4.9%)
6,778 million yen
73.29 yen (up 22.7%)
59.73 yen(*) For more details regarding definition, computational method and other matters of these indices, please refer to the section“Explanation of Results of Operations” on page 2.
Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Net income per share has been calculated as if this stock
split had taken place at the beginning of FY2/16.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Million yen

As of May 31, 2016
As of Feb. 29, 2016

87,03390,454

Reference: Shareholders’ equity

As of May 31, 2016:

Equity ratio%

54,88853,28254,888 million yen

As of Feb. 29, 2016:

63.1
58.9
53,282 million yen

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

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Feb. 29, 2016
Fiscal year ending Feb. 28, 2017
Fiscal year ending Feb. 28, 2017 (forecast)

-

40.00

-

90.00

130.00

35.00

-

40.00

75.00

Note: Revision to the most recently announced dividend forecast: None
Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Dividends per share for the fiscal year ended February 29,
2016 are the actual amounts before the stock split.

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2017 (March 1, 2016 – February 28, 2017)
Net salesFirst half
Full year

Operating income

Ordinary income
Million yen

Million yen%

Million yen

99,700208,900

2.7
4.4

8,100
17,000

%

(0.4)
6.2

8,200
17,300%(Percentages represent year-on-year changes)
Net income per
Net income attributableshare
to owners of the parent
Million yen

(1.5)
6.9

4,500
10,000

%

8.3
9.6

Yen

93.45
207.66

Note: Revision to the most recently announced consolidated forecast: None
Reference: EBITDA
EPS before goodwill amortization

Fiscal year ending Feb. 28, 2017 (forecast):
Fiscal year ending Feb. 28, 2017 (forecast):

24,900 million yen (up 1.2%)
253.34 yen (up 8.3%)

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
(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. Matters Related to Summary Information (Notes), (3) Changes in Accounting Policies
and Accounting-based Estimates, and Restatements” on page 3 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, 2016:
48,800,000 shares
As of Feb. 29, 2016:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of May 31, 2016:
646,785 shares

As of Feb. 29, 2016:

3) Average number of shares outstanding during the period
Three months ended May 31, 2016: 48,154,239 shares

Three months ended May 31, 2015: 48,563,624 shares

643,396 shares

Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Number of outstanding shares (common stock)has been calculated as if this stock split had taken place at the beginning of FY2/16.
Note 1: Indication of quarterly review procedure implementation status
The current quarterly financial statements are exempted from quarterly review procedures based on the Financial
Instruments and Exchange Act. At the time of disclosure, the review procedures for these quarterly financial statements
have not been completed.
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“Explanation of Consolidated Forecast and Other Forward-looking Statements” on page 3 regarding preconditions or otherrelated matters for the forecast shown above.

Reference: Summary of Non-consolidated Forecast
Non-consolidated Forecast for the Fiscal Year Ending February 28, 2017 (March 1, 2016 – February 28, 2017)
Net sales
Million yen%

Operating income

Ordinary income(Percentages represent year-on-year changes)
Net income
Net income per share

Million yen

Million yen

Million yen%%

First half
94,500
4.2
8,000
1.2
8,000
(2.8)
Full year
196,700
4.7
16,4006.7
16,3005.4
Note: Revision to the most recently announced non-consolidated forecast: None

4,100
9,200

%

(39.2)
10.3

Yen

85.14
191.04

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 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

2(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

3

2. Matters Related to Summary Information (Notes)

3(1) Changes in Significant Subsidiaries during the Period

3(2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements

3(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements

3

3. Quarterly Consolidated Financial Statements

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

Subsequent Events

8

4. 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 2017 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
During the first quarter (March 1-May 31, 2016), the Japanese economy continued to recover slowly due to thebenefits of government initiatives. However, the improvement in corporate earnings slowed and there were othersigns of weakness. The outlook remained unclear mainly because of concerns over increased uncertainty about
overseas economies and impact of volatility in financial markets. Consumer spending in Japan was generally flatas continuing improvements in jobs and personal income were offset by gloomy consumer sentiment.
Consolidated sales were 2.4% higher than in the first quarter of the previous fiscal year. This growth was
attributable primarily to upgrades in merchandise development and sales capabilities and strong sales of springand summer apparel backed by favorable weather. The GLOBAL WORK, niko and… and JEANASIS brands
recorded strong sales growth.
Regarding the store network, we opened 34 stores (including three overseas), and closed one, resulting in a total
network of 1,357 stores (including 107 overseas) at the end of May 2016.
The gross profit margin increased 0.5 percentage point from one year earlier to 61.2% as strong sales resulted insmaller price discounts.
The ratio of selling, general and administrative (SG&A) expenses to sales decreased 0.2 percentage point fromone year earlier to 50.5% and the operating margin increased 0.8 percentage point to 10.8%. During the firstquarter, SG&A expenses were mostly as planned, including substantial expenditures for TV commercials andother advertising activities.
In the first quarter, there were extraordinary losses of 18 million yen for the impairment of store assets and 61
million yen for damage caused by the April 2016 earthquake in Kumamoto prefecture.
As a result, consolidated net sales in the first quarter increased 2.4% year-on-year to 48,552 million yen,operating income increased 9.8% to 5,224 million yen, ordinary income increased 7.2% to 5,284 million yen, andnet income attributable to owners of the parent increased 27.6% to 2,983 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 4.9% to 7,113 million yen andearnings per share (EPS) before goodwill amortization rose 22.7% to 73.29 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 income 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 income. Furthermore, comparisons with foreign companies are difficult
because of differences in accounting standards of individual countries for recording goodwill amortization. As
a result, we are newly announcing EBITDA and EPS before goodwill amortization as reference financial
indicators.
EBITDA
Operating income + 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 loss) + Impairment losses (goodwill)) / Average number of shares outstanding during theperiod(2) Explanation of Financial Position
Total assets decreased 3,420 million yen from as of February 29, 2016 to 87,033 million yen as of May 31, 2016.
This was mainly due to increases in notes and accounts receivable-trade of 4,448 million yen and investment- 2 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 Fiscal Yearsecurities of 1,741 million yen, while there was a decrease of 10,389 million yen in cash and deposits.
Liabilities decreased 5,025 million yen to 32,145 million yen. This was mainly due to decreases of 2,369 million
yen in electronically recorded obligations-operating and 1,983 million yen in income taxes payable.
Net assets increased 1,605 million yen to 54,888 million yen. This was mainly due to increases in retained
earnings of 815 million yen and valuation difference on available-for-sale securities of 889 million yen.
(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, 2016.
2. Matters Related to Summary Information (Notes)(1) Changes in Significant Subsidiaries during the Period
Not applicable.
(2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements
Not applicable.
(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements
Application of the accounting standards for business combinations
The Company has adopted the “Accounting Standard for Business Combinations” (Accounting Standards Boardof Japan (ASBJ) Statement No. 21, issued on September 13, 2013), “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22, issued on September 13, 2013), “Accounting Standard forBusiness Divestitures” (ASBJ Statement No. 7, issued on September 13, 2013), etc. from the first quarter of thecurrent fiscal year. Accordingly, difference arising from changes in the Company’s ownership interests in
subsidiaries in cases where control is retained is recognized in capital surplus, and the acquisition costs inconnection with business combinations are recognized as expenses in the fiscal year in which they arise.
Regarding business combinations that take place on or after the beginning of the first quarter of the current fiscal
year, the Company has revised the method to reflect reviewed allocation of the acquisition costs arising fromdetermination of the provisional accounting treatment on the quarterly consolidated financial statements to which
the date of the business combination belongs. In addition, the presentation of net income and other items has
been revised, and the minority interests item has been renamed non-controlling interests. For consistency withthese changes, the consolidated financial statements for the first quarter of the previous fiscal year and theprevious fiscal year have been revised.
The Company has adopted these accounting standards, etc. from the beginning of the first quarter of the current
fiscal year, in accordance with the transitional accounting treatments set forth in Article 58-2 (4) of the
Accounting Standard for Business Combinations, Article 44-5 (4) of the Accounting Standard for Consolidated
Financial Statements, and Article 57-4 (4) of the Accounting Standard for Business Divestitures.
There is no impact on the quarterly consolidated financial statements for the first quarter.
Change in depreciation method of property, plant and equipment
Following tax law revisions, the Company has adopted the “Practical Solution on a Change in Depreciation
Method due to Tax Reform 2016” (ASBJ Practical Issue Task Force (PITF) No. 32, issued on June 17, 2016)
from the first quarter of the current fiscal year, and changed the method for the depreciation of facilities attached
to buildings and structures acquired on or after April 1, 2016, from the declining-balance method to thestraight-line method.

- 3 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 Fiscal YearThe effect of this change on the quarterly consolidated financial statements for the first quarter is insignificant.

- 4 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 Fiscal Year

3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet(Million yen)First quarter of FY2/17(As of May 31, 2016)

FY2/16(As of Feb. 29, 2016)
AssetsCurrent assets
Cash and deposits

19,4609,070

Notes and accounts receivable-trade

7,668

12,116Inventories

15,076

16,602

Other

3,313

2,750

Allowance for doubtful accounts

(53)

(90)

45,46540,450Store interior equipment, net

6,933

7,465

Other, net

4,282

4,218

Total property, plant and equipment

11,215

11,684

Goodwill

5,493

4,947

Other

1,471

1,531

Total intangible assets

6,965

6,479

Investment securities

10,231

11,973

Lease and guarantee deposits

16,622

16,553

207

143

(253)

(250)

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

Intangible assets

Investments and other assets

Other
Allowance for doubtful accounts
Total investments and other assets

26,80728,41944,98846,58390,45487,033

Notes and accounts payable-trade

6,768

6,885

Electronically recorded obligations-operating

9,901

7,531

Total non-current assets
Total assets
Liabilities
Current liabilities

Short-term loans payable

1,867

1,743

Accounts payable-other

10,331

10,370

Income taxes payable

4,368

2,385

Provision for bonuses

2,212

1,111

412

407

Other provision
Other
Total current liabilities

563

716

36,42631,152

Non-current liabilities
Provision

94

94

Other

650

898

Total non-current liabilities
Total liabilities

- 5 -

745

993

37,17132,145

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 Fiscal Year

(Million yen)First quarter of FY2/17(As of May 31, 2016)

FY2/16(As of Feb. 29, 2016)
Net assets
Shareholders’ equity
Capital stock

2,660

2,660

Capital surplus

6,987

6,987

Retained earnings

39,70940,525

Treasury shares(1,824)(1,835)

Total shareholders’ equity

47,533

48,337

Valuation difference on available-for-sale securities

5,445

6,335

Deferred gains or losses on hedges

(263)

(186)

567

401

Accumulated other comprehensive income

Foreign currency translation adjustment
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

- 6 -

5,749

6,550

53,28254,88890,45487,033

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 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 FY2/16(Mar. 1, 2015 – May 31, 2015)(Million yen)First three months of FY2/17(Mar. 1, 2016 – May 31, 2016)

Net sales

47,39448,552

Cost of sales

18,607

18,824Gross profit

28,787

29,727

Selling, general and administrative expenses

24,02724,502

Operating income

4,759

5,224

44

58

Non-operating income
Dividend income
Foreign exchange gains

57

-

Other

162

89

Total non-operating income

264

147

Interest expenses

15

4

Loss on valuation of derivatives

67

49

Cost of lease revenue-

24

Non-operating expenses

Other

11

9

Total non-operating expenses

95

87

4,928

5,284

Impairment loss

134

18

Loss on disaster-

61

Ordinary income
Extraordinary losses

Total extraordinary losses

134

80

Net income before income taxes

4,794

5,204

Income taxes-current

1,879

2,184

Income taxes-deferred

577

36

Total income taxes

2,456

2,221

Net income

2,337

2,983

Net income attributable to owners of the parent

2,337

2,983

- 7 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY2/16(Mar. 1, 2015 – May 31, 2015)(Million yen)First three months of FY2/17(Mar. 1, 2016 – May 31, 2016)

Net income

2,337

2,983

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

1,726

889

28

77

Foreign currency translation adjustment

(71)

(165)

Total other comprehensive income

1,683

800

4,021

3,783

4,021

3,783

-

-

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 1Q Financial Results for February 2017 Fiscal Year

(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Subsequent Events
Conclusion of a significant contract
The Adastria Board of Directors approved a resolution on June 22, 2016 to establish a company jointly with Cafe
Company Inc. A memorandum of understanding to establish this company was signed on June 29, 2016.
1. Purpose of establishing a jointly owned company and business model
Adastria has expertise concerning the operation of a chain of apparel stores and Cafe Company has expertise
concerning the café and restaurant business. The two companies plan to combine this knowledge for the creationand expansion of new business domains closely associated with the apparel retailing business and the café andrestaurant businesses. The goal is to use these activities to provide customers with more added value and to build
stronger relationships with customers. To establish this new company, Cafe Company will divest its WIREDCAFE, wired kitchen and certain other businesses to create a new company and then sell up to 49% of the stockof this company to Adastria.
2. Joint venture partner
Cafe Company Inc.
3. Timetable
Signing of memorandum of understanding:June 29, 2016

Signing of final contract:

July-August 2016 (planned)

Cafe Company extraordinary shareholders meeting to approvethe divestiture to create the new company:

August-September 2016 (planned)

Sale of stock to Adastria based on the final contract:

October 2016 (planned)

4. Significant effects of the contract on business activities
Adastria believes that the establishment of this jointly owned company will have only a negligible effect on
consolidated performance for the time being. However, Adastria expects this new company to contribute tomedium to long-term growth of consolidated sales and earnings.

- 9 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 Fiscal Year

4. Supplementary Information(1) Number of Stores
Number of stores
Store format / region

As of Feb. 29,
2016

First three months of FY2/17
Closed,Increase
OpenedRebrandedetc.
/decrease44

As of May 31,
2016

GLOBAL WORK184

LOWRYS FARM

157

3

(3)

-

-

157

niko and...

123

3

-

-

3

126

STUDIO CLIP

171

5

-

-

5

176

LEPSIM (Note 3)

130

5

-

-

5

135

JEANASIS

83

1

-

-

1

84

RAGEBLUE

59

2

-

-

2

61

HEATHER

67

2

9

(1)

10

77

Others

246

6

(6)

-

-

246

Total (Adastria)

188

1,220

31

-

(1)

30

1,250

Hong Kong

27

-

-

-

-

27

China

40

2

-

-

2

42

Taiwan

27

1

-

-

1

28

South Korea

10

-

-

-

-

10

104

3

-

-

3

107

Total (Group)
1,324
34
(1)
33
1. The number of stores is categorized by using brand operating divisions and geographic regions.

1,357

Total (Overseas)
Notes:

2. The number of stores includes e-commerce websites of other companies and e-commerce websites of Adastria.
3. The brand name of LEPSIM LOWRYS FARM has changed to LEPSIM in the first three months of FY2/17.

- 10 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2017 Fiscal Year

(2) Sales for Brands and Regions
Brand / region

First three months of FY2/17
Sales (million yen)
Composition (%)

YoY change (%)

GLOBAL WORK

8,992

18.5

10.7

LOWRYS FARM

6,137

12.6

(2.8)

niko and...

5,591

11.5

11.7

STUDIO CLIP

4,853

10.0

4.1

LEPSIM (Note 3)

3,842

7.9

3.2

JEANASIS

3,031

6.3

6.4

RAGEBLUE

2,190

4.5

(1.4)

HEATHER

1,969

4.1

(3.6)

Others

9,236

19.0

1.8

45,846

94.4

4.1

1,677

3.5

(10.5)

China

451

0.9

(8.4)

Taiwan

395

0.8

(2.6)

South Korea

181

0.4

(21.3)

2,705

5.6(15.3)

Total (Adastria)
Hong Kong

Total (Overseas)
Total (Group)

Notes:

48,552100.0
1. The number of stores is categorized by using brand operating divisions and geographic regions.

2.4

2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.
3. The brand name of LEPSIM LOWRYS FARM has changed to LEPSIM in the first three months of FY2/17.

(3) Sales for Merchandise Categories
Category

First three months of FY2/17
Sales (million yen)

Composition (%)

YoY change (%)

Men’s apparel (bottoms, tops)

7,087

14.6

12.1

Lady’s apparel (bottoms, tops)

32,327

66.6

0.8

9,136

18.8

1.5

48,552100.0

2.4

Others
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.

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.

- 11 -