Summary of Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 28, 2023
(Three Months Ended May 31, 2022)[Japanese GAAP]
July 8, 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:
July 15, 2022
Scheduled date of payment of dividend:
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 July 8, 2022 at 15:30 (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, 2023
(March 1, 2022 – May 31, 2022)(1) Consolidated results of operations (cumulative)
Net sales
Million yen(Percentages represent year-on-year changes)
Net income
Ordinary profit
attributable to ownersof the parent

Operating profit%

Million yen%

Million yen%

Million yen

Three months ended May 31, 2022
58,006
25.0
4,574
632.1
4,926
412.5
Three months ended May 31, 2021
46,38739.4
624
961
Note: Comprehensive income
Three months ended May 31, 2022: 3,988 million yen (up 846.2%)
Three months ended May 31, 2021:
421 million yen (-%)
Net income per share

Diluted net income per share

Yen

Yen

Three months ended May 31, 2022
Three months ended May 31, 2021

73.24
5.98

%

3,313
269

-

-

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of May 31, 2022
107,118
57,68452.8
As of Feb. 28, 2022
97,95754,963
55.1
Reference: Shareholders’ equity As of May 31, 2022: 56,514 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, forthe 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
Fiscal year ending Feb. 28, 2023 (forecast)
25.00
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, (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, 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 May 31, 2022:
3,484,393 shares

As of Feb. 28, 2022:

3,552,459 shares

3) Average number of shares outstanding during the period
Three months ended May 31, 2022: 45,244,312 shares

Three months ended May 31, 2021: 45,176,442 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 3 regarding preconditions or other related matters for the forecast shown above.

Adastria Co., Ltd. (2685) Summary of 1Q 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

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 the Scope of Consolidation or Application of the Equity Method

8

Changes in Accounting Policies

8

Segment Information

9

Business Combinations

10

3. Supplementary Information

12(1) Sales for Brands and Regions

12(2) Sales for Merchandise Categories

12(3) Number of Stores

13

- 1 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
Consolidated results(Million yen)First three months of FY2/22(Mar. 1, 2021 – May 31, 2021)

First three months of FY2/23(Mar. 1, 2022 – May 31, 2022)

46,387

Operating profit

58,006

YoY change(Amount)
11,619YoY change
(%)
25.0

624

4,574

3,949

632.1

Ordinary profit

961

4,926

3,965

412.5

Net income attributableto owners of the parent

269

3,313

3,043

1,127.5

Net sales

The spread of the COVID-19 pandemic stabilized in the first quarter (March 1 – May 31, 2022). As restrictions
on the movement of people were eased there was more flow of people and normalization of personal
consumption. On the other hand, 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.
Given these circumstances, the Group has formulated and promoted 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 25.0% year-on-year to 58,006 million yen, operating profit increased 632.1% to
4,574 million yen, ordinary profit increased 412.5% to 4,926 million yen, and net income attributable to ownersof the parent increased 1,127.5% to 3,313 million yen.
As a result of Zetton, Inc. becoming a consolidated subsidiary in February 2022, from the first quarter of thecurrent fiscal year, the Company started reporting the Apparel and Sundry Goods-related Business and Other(food and beverage business) as separate segments.
Domestic sales in the Apparel and Sundry Goods-related business segment were boosted by improved shop
operating conditions as the impact of the COVID-19 pandemic eased, as well as by strong sales of spring andsummer products due to rising temperatures, product development in response to increased demand for outings
after the easing of restrictions on movement of people, and promotional measures such as TV commercials andpoint redemption. As a result, sales were up 20.2% year-on-year.
In the Other segment, the consolidation of Zetton, Inc., which operates a food and beverage business in line withthe growth strategy, contributed to the growth in sales.
As a part of our digital strategy, TV commercials and other initiatives were launched to attract customers andincrease awareness of Adastria’s e-commerce site “.st”. As a result, number of members of the company's
e-commerce site increased to 14.1 million, a gain of 500,000 compared to the end of the previous fiscal year.
Supported also by recovery of demand at brick-and-mortar shops e-commerce sales increased 0.9% year-on-year.
In Mainland China the Company has been opening new stores, adding 4 stores from one year earlier to a total of
7 shops. Sales increased by 28.0% in Mainland China due to the contribution of new shops. In Taiwan, where theimpact of the COVID-19 pandemic was less severe, sales rose by 28.1%, while in the United States, sales rose by
59.8% thanks to the benefits of strong demand and growth in e-commerce. In Hong Kong, sales fell by 9.7% dueto the spread of the COVID-19 pandemic. As a result, total overseas sales were up 29.9% and overseas business
was profitable in the first quarter.
Despite the depreciation of the yen and rising raw material price, the gross profit margin of the Apparel and- 2 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

Sundry Goods-related Business was largely unchanged from the same period in the previous fiscal year because
we supplying the products at the right times, prices and volumes, held down discount sales, and increased theadded value of products. In addition, as the share of the food and beverage business increased due to theconversion of Zetton, Inc. into a consolidated subsidiary, the gross profit margin increased 0.5 percentage points
from the same period in the previous fiscal year to 57.4%.
Selling, general, and administrative expenses, personnel expenses, and store leasing expenses, which had been
suppressed due to store closures and shortened business hours in the previous fiscal year increased, but sales
recovered, and business operations became more efficient. Accordingly, the SG&A to sales ratio improved by 6.0
percentage points from the same period of the previous year to 49.5%, and operating profit significantly by
632.1%.
In addition, non-operating income included a subsidy of 129 million yen related to shortened operating hours
caused by the pandemic and employment adjustment subsidies of 50 million yen, as well as a foreign exchange
gains of 274 million yen. On the other hand, a loss on valuation of derivatives related to the withdrawal from theSouth Korean business of 106 million yen 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 55,945 million yen and segment profit was 4,848 million yen.
We opened 32 stores (including 8 overseas) and closed 18 stores (including 1 overseas), resulting in a total of
1,437 stores (including 80 overseas) at the end of the first quarter of the fiscal year.
2) Other (food and beverage business)
Sales were 2,070 million yen and segment profit was 78million yen.
The number of stores at the end of the first quarter was 79, a result of the increase of 73 stores due to theacquisition of Zetton, Inc. as a consolidated subsidiary at the end of the previous fiscal year and 1 new store
opening.
(2) Explanation of Financial Position
Total assets increased 9,161 million yen from as of February 28, 2022 to 107,118 million yen as of May 31,
2022. There were increases of 5,058 million yen in notes and accounts receivable-trade, 3,257 million yen inother, net under property, plant and equipment, partly because of right-of-use assets, etc., resulting from theapplication of the new lease accounting standard (ASC No. 842), etc., by the U .S. subsidiary, and 803 million
yen in goodwill.
Liabilities increased 6,440 million yen to 49,434 million yen. The provision of point card certificates decreased
by 1,620 million yen due to the application of the accounting standard for revenue recognition, but there wereincreases of 3,155 million yen in short-term borrowings, 2,173 million yen in accounts payable-other, and 2,344
million yen in other under current liabilities, including contract liabilities arising from the adoption of therevenue recognition accounting standard and lease liabilities resulting from the application of the new leaseaccounting standard (ASC No. 842) by the U.S. subsidiary, etc.
Net assets increased 2,720 million yen to 57,684 million yen. This was mainly due to a decrease of 240 million
yen in treasury shares (increase in net assets), and an increase of 1,768 million ye n in retained earnings.
(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.

- 3 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

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

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

16,976

17,045

Notes and accounts receivable-trade

9,878

14,936Inventories

19,25919,095

Other

2,126

2,756

Allowance for doubtful accounts

(71)

(117)

48,16953,715

4,404

5,144

Other, net

11,60014,857

Total property, plant and equipment

16,00520,002

922

1,726

Other

9,914

9,950

Total intangible assets

10,836

11,676

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

1,065

Leasehold and guarantee deposits

15,426

14,040

Other

6,866

6,969

Allowance for doubtful accounts

(351)

(351)

Total investments and other assets

22,94521,72449,78753,402

97,957

107,118

Notes and accounts payable-trade

11,282

11,089

Electronically recorded obligations-operating

Total non-current assets
Total assets
Liabilities
Current liabilities

6,620

7,133

Short-term borrowings

95

3,250

Current portion of long-term borrowings

455

405

Accounts payable-other

10,44912,623

Income taxes payable

3,247

2,093

Provision for bonuses

2,179

1,175

Provision for point card certificates

1,728

108

Other provisions

446

506

Other

1,910

4,255

Total current liabilities

38,416

42,639896

893

Non-current liabilities
Long-term borrowings
Provisions

322

200

Other

3,358

5,701

Total non-current liabilities

4,577

6,794

42,99449,434

Total liabilities- 4 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

(Million yen)First quarter of FY2/23(As of May 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

51,11452,882

Treasury shares(7,636)(7,395)

Total shareholders’ equity

53,351

55,360

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

8

53

45

418

Foreign currency translation adjustment

558

682

Total accumulated other comprehensive income

611

1,154

Non-controlling interests

1,000

1,169

Total net assets

54,963

57,684

97,957

107,118

Total liabilities and net assets- 5 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 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
Foreign exchange gains
Subsidy income
Subsidies for employment adjustment
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on valuation of derivatives
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on liquidation of subsidiaries and associates
Total extraordinary income
Extraordinary losses
Impairment loss
Total extraordinary losses
Net income before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

First three months of FY2/22(Mar. 1, 2021 – May 31, 2021)
46,38720,005
26,38225,757624(Million yen)First three months of FY2/23(Mar. 1, 2022 – May 31, 2022)
58,006
24,70333,30328,729
4,574

156
65
118
122
462

274
129
50
65
520

35
70
20
126
961

38
106
24
168
4,926

81
81

-

127
127
915
661
(15)
645
269
269

3
3
4,922
1,701
(228)
1,472
3,450
136
3,313

- 6 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

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

269

3,450

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

2

45

(8)

372

Foreign currency translation adjustment

158

120

Total other comprehensive income

151

538

421

3,988

421

3,819

-

169

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 2023 Fiscal Year

(3) 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 Compan y’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.
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 Group recorded a
provision for point card certificates in an amount that reflects the performance of obligation related to the
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 the 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 standar d resulted in
reductions of 637 million yen in sales, 31 million yen in cost of sales, 605 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 quarter 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 previously valued its merchandise mainly at cost based on the specific identification method (theamount shown on the balance sheet was calculated by writing down the book value based on a decline inprofitability). 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 the balance sheet is calculated bywriting 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 theopportunity of upgrade of its backbone IT system.

- 8 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal YearThe 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 applying 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 quarter 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 three months of FY2/22 (Mar. 1, 2021 – May 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 three months of FY2/23 (Mar. 1, 2022 – May 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
Segment profit

55,945

2,061

58,006-58,006

0

9

9

(9)

-

55,9452,070

58,016(9)58,006

4,848

78

4,926

-

4,926

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
increased.

- 9 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

Segment information for the first quarter of the previous fiscal year that was prepared by using the same segmentclassification method used for the first quarter of the current fiscal year is not presented because activities otherthan the planning and sales of clothing and related merchandise is immaterial.
In 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 quarter 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
Following the acquisition of shares in OPEN AND NATURAL Inc. through the Company’s consolidated
subsidiary BUZZWIT Co., Ltd., OPEN AND NATURAL became a consolidated subsidiary (sub -subsidiary) in
the first quarter of the current fiscal year. As a result, the Apparel and Sundry Goods-related Business recorded
goodwill of 854 million yen. Goodwill is calculated provisionally because the allocation of the acquisition cost
was incomplete at the end of the first quarter of the current fiscal year.
Significant gain on bargain purchaseNot applicable.
Business Combinations
Finalization of provisional accounting treatment of business combination
In the previous fiscal year, a provisional accounting treatment was used for the acquisition of Zetton, Inc. This
treatment was finalized in the first quarter of the current fiscal year.
Due to the finalization of the accounting treatment for this acquisition, comparisons with the previous fiscal year
included in the consolidated financial statements for the first quarter of the current fiscal year reflect significant
revisions to the initial allocations of the cost of this acquisition.
In the finalized accounting treatment, 1,405 million yen of the acquisition cost was allocated to other underintangible assets and 430 million yen to deferred tax liabilities. As a res ult, provisional goodwill of 1,835 million
yen decreased 975 million yen to 860 million yen.
Business combination through acquisition
The Adastria Board of Directors approved a resolution on March 18, 2022 to acquire shares in OPEN AND
NATURAL Inc. through the Company’s consolidated subsidiary BUZZWIT Co., Ltd. and to make it aconsolidated subsidiary (sub-subsidiary). The acquisition has been completed on March 31, 2022.
1. Summary of business combination(1) Acquired company and business activities
Acquired company: OPEN AND NATURAL Inc.
Business activities: Marketing of “pairmanon,” an EC brand for children’s clothing(2) Reasons for acquisition
As a part of our growth strategy for 2025, the Group is working to expand its digital customer communication
channels. Starting operations in 2018, BUZZWIT has grown steadily as a company engaged in thedevelopment of a dedicated e-commerce brands for the economically priced market. In this context,
BUZZWIT has sought out M&A opportunities to further expand its business and focused on the children’s
clothing category, which is an area of apparel that is a particularly suitable for e -commerce marketing.

- 10 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

OPEN AND NATURAL, the company being acquired, has been marketing “pairmanon,” an EC -only
children’s clothing brand since its establishment in 2017. The economically priced and high -quality brand ismoderately trend setting in the children’s clothing market. It has growing presence in the e -commerce market
for children’s clothing and as well as in the overall children’s clothing market.
The acquisition of the shares will enable BUZZWIT to share its know-how and business structure with OPEN
AND NATURAL and operational capabilities to further expand this business.
(3) Acquisition date
March 31, 2022 (stock acquisition date)
April 30, 2022 (assumed acquisition date)(4) Legal form of acquisition
Acquisition of shares with cash(5) Company name after acquisition
OPEN AND NATURAL’s name will not change.
(6) Percentage of voting rights acquired
100.0% (indirect ownership)(7) Basis for choosing the company to acquireBUZZWIT acquired the shares in exchange for consideration in cash.
2. Period of the acquired companies’ performance included in the quarterly statement of income
Results of operations of OPEN AND NATURAL are not included in the consolidated statement of income for the
first quarter of the fiscal year ending in February 2023 because the acquisition date of OPEN AND NATURAL is
the end of April 2022 for accounting purposes.
3. Acquisition cost of acquired companies and breakdown by type of consideration
Not disclosed due to a confidentiality agreement.
4. Details of major acquisition-related costs
Advisory fees, etc.:

14 million yen

5. Goodwill resulting from the acquisition(1) Amount
854 million yen
Goodwill is calculated provisionally because the allocation of the acquisition cost was incomplete at the endof the first quarter of the current fiscal year.
(2) Source
The source of goodwill is primarily the expectation of excess earnings power emerging from busin ess
development in the future.
(3) Amortization method and period
Goodwill will be amortized over 9 years by the straight-line method.

- 11 -

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

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

First three months of FY2/23

YoY change (%)

Sales (million yen)

Composition (%)

GLOBAL WORK

12,09920.9

34.4

niko and ...

7,319

12.6

22.7

LOWRYS FARM

5,403

9.3

17.6

studio CLIP

4,803

8.3

8.5

LEPSIM

3,407

5.9

12.0

BAYFLOW

2,481

4.3

15.9

JEANASIS

2,421

4.2

6.6

LAKOLE

1,866

3.2

96.9

Others

8,091

13.9

18.1

Total (Adastria)

47,894

82.6

22.1

BUZZWIT Co., Ltd.

1,718

2.9

0.7

ELEMENT RULE Co., Ltd.

2,375

4.1

1.3

49

0.1

626.3

52,038

89.7

20.2

Hong Kong

613

1.1

(9.7)

Mainland China

659

1.1

28.0

Taiwan

1,064

1.8

28.1

USA

1,568

2.7

59.8

3,906

6.7

29.9

55,945

96.4

20.8

1,941

3.4

-

ADASTRIA eat Creations Co., Ltd.

120

0.2

46.4

Total (Food and beverage business)

2,061

3.6

2,403.7

58,006

100.0

25.0

Other consolidated subsidiaries
Total (Japan)

Total (Overseas)
Total (Apparel and Sundry Goods-related
Business)
Zetton, Inc. (Note 3)

Total (Group)
Notes:

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. Sales of Zetton, Inc. include its consolidated subsidiary ZETTON, INC (USA Business).

(2) Sales for Merchandise Categories
Category

First three months of FY2/23

YoY change (%)

Sales (million yen)

Composition (%)

Men’s apparel (bottoms, tops)

8,968

15.5

33.6

Lady’s apparel (bottoms, tops)

36,704

63.3

19.7

Others12,33321.2

36.8

58,006

100.0

25.0

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.

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Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2023 Fiscal Year

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

As of Feb. 28,

First three months of FY2/23

As of May 31,

2022

Increase
Increase
Opened Changed Closed(Note 3)/decrease

2022

GLOBAL WORK

206

-

-

-

(1)

(1)

205

niko and ...

144

-

1

-

(1)

-

144

LOWRYS FARM

136

-

1

-

(1)

-

136

studio CLIP

184

-

1

-

(3)

(2)

182

LEPSIM

120

-

1

-

-

1

121

BAYFLOW

60

-

1

-

-

1

61

JEANASIS

73

-

-

-

(1)

(1)

72

LAKOLE

47

-

6

-

-

6

53

Others

275

-

6

-

(1)

5

280

Total (Adastria)

1,245

-

17

-

(8)

9

1,254

BUZZWIT Co., Ltd.

18

-

2

-

(2)

-

18

ELEMENT RULE Co., Ltd.

84

-

4

-

(7)

(3)

81

Other consolidated subsidiaries

3

-

1

-

-

1

4

1,350

-

24

-

(17)

7

1,357

Hong Kong

14

-

1

-

-

1

15

Mainland China

6

-

1

-

-

1

7

Taiwan

43

-

6

-

(1)

5

48

USA

10

-

-

-

-

-

10

73

-

8

-

(1)

7

80

1,423

-

32

-

(18)

14

1,437

-

73

1

-

-

74

74

5

-

-

-

-

-

5

5

73

1

-

-

74

79

1,428

73

33

-

(18)

88

1,516

Total (Japan)

Total (Overseas)
Total (Apparel and Sundry
Goods-related Business)
Zetton, Inc. (Note 4)
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 theend of FY2/22.
4. The number of stores of Zetton, Inc. includes its consolidated subsidiary ZETTON, INC (USA Business).
5. The number of stores does not include the stores of OPEN AND NATURAL Inc., which Adastria acquired during
the first quarter of FY2/23, because the last day of the first quarter is used as the acquisition date for accounting
purposes.

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.

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