Summary of Consolidated Financial Results
for the Third Quarter of the Fiscal Year Ending February 28, 2019
(Nine Months Ended November 30, 2018)[Japanese GAAP]
December 28, 2018

Company name: Adastria Co., Ltd.
Listing: TSE 1st section
Stock code:
2685
URL: http://www.adastria.co.jp
Representative: Michio Fukuda, Chairman of the Board
Contact:
Masayuki Kindo, Member of the Board of Directors
Tel: +81-3-5466-2010
Scheduled date of filing of Quarterly Report:
January 11, 2019
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 December 28, 2018 at 15:00 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending February 28, 2019
(March 1, 2018 – November 30, 2018)(1) Consolidated results of operations (cumulative)

Net sales(Percentages represent year-on-year changes)
Net income
Ordinary profit
attributable to ownersof the parent

Operating profit

Million yen%

Million yen%

Million yen%

Nine months ended Nov. 30, 2018
162,345(0.6)
5,700 (15.4)
5,832 (17.7)
Nine months ended Nov. 30, 2017
163,269
9.6
6,739 (50.6)
7,087 (48.6)
Note: Comprehensive income
Nine months ended Nov. 30, 2018: 2,841 million yen (down 18.3%)
Nine months ended Nov. 30, 2017: 3,480 million yen (down 59.5%)
Net income per share
Yen

Nine months ended Nov. 30, 2018
Nine months ended Nov. 30, 2017
Reference: EBITDA

Million yen

3,081
6,444

%

(52.2)(42.3)

Diluted net income per share
Yen

65.48
136.99Nine months ended Nov. 30, 2018: 11,787 million yen (down 13.2%)
Nine months ended Nov. 30, 2017: 13,587 million yen
Nine months ended Nov. 30, 2018:
Nine months ended Nov. 30, 2017:

EPS before goodwill amortization

91.61 yen (down 48.7%)
178.68 yen(*) For more details regarding definition, computational method and other matters of these indices, please refer to thesection “Explanation of Results of Operations” on page 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 nine months ended November 30, 2017 reflect a significant revision of the initial
allocation of the acquisition cost for the business combination.
(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Nov. 30, 2018
98,959As of Feb. 28, 2018
91,123
Reference: Shareholders’ equity As of Nov. 30, 2018: 52,284 million yen

Equity ratio

Million yen%

52,28451,030
As of Feb. 28, 2018: 51,030 million yen

52.8
56.0

2. Dividends
1Q-endYen

2Q-endYen

Dividend per share
3Q-endYen

Fiscal year ended Feb. 28, 2018
35.00
Fiscal year ending Feb. 28, 2019
20.00
Fiscal year ending Feb. 28, 2019 (forecast)
Note: Revision to the most recently announced dividend forecast: None-

Year-end
Yen

15.00

Total
Yen

50.00

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

%

60.3

(Percentages represent year-on-year changes)
Net income
Net income per
attributable to owners
shareof the parent
Million yen

4,400

%

409.4

Yen

93.54

Fiscal year ending Feb. 28, 2019 (forecast): 16,000 million yen (up 5.7%)
Fiscal year ending Feb. 28, 2019 (forecast):
121.17 yen (up 2.2%)

* 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 Nov. 30, 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 Nov. 30, 2018:
1,736,593 shares

As of Feb. 28, 2018:

1,759,875 shares

3) Average number of shares outstanding during the period
Nine months ended Nov. 30, 2018: 47,057,064 shares

Nine months ended Nov. 30, 2017: 47,041,654 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 3Q 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 3Q 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 nine months of FY2/18
First nine months of FY2/19(Mar. 1, 2017 – Nov. 30, 2017) (Mar. 1, 2018 – Nov. 30, 2018)

Net sales

YoY change(Amount)

YoY change
(%)

(924)

(0.6)

163,269

162,345

Operating profit

6,739

5,700

(1,038)(15.4)

Ordinary profit

7,087

5,832

(1,255)(17.7)Net income attributableto owners of the parent

6,444

3,081

(3,362)(52.2)EBITDA

13,587

11,787(1,799)(13.2)EPS before goodwill
amortization (Yen)

178.6891.61(87.07)(48.7)

Consolidated net sales in the first nine months (March 1 – November 30, 2018) decreased 0.6% year-on-year to162,345 million yen, operating profit decreased 15.4% to 5,700 million yen, ordinary profit decreased 17.7% to
5,832 million yen, and net income attributable to owners of the parent decreased 52.2% to 3,081 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 13.2% to 11,787 million yen
and earnings per share (EPS) before goodwill amortization fell 48.7% to 91.61 yen. (*)
The small decrease of 0.6% in consolidated net sales was the result of an 11.6% increase in overseas sales and a
1.4% decrease in sales in Japan.
Overseas sales increased mainly because of the contribution to sales of Velvet, LLC, a U.S. company that wasconsolidated in the previous fiscal year. Sales in Hong Kong and China decreased due to ongoing businessrestructuring activities.
Sales in Japan were about the same as one year earlier. Sales were lackluster in April and May for all brands
other than niko and … because of slow sales of summer merchandise. Sales subsequently recovered because weheld summer discount sales in June earlier than initially planned and there was an upturn in sales of the core
GLOBAL WORK and LOWRYS FARM brands during the fall and winter apparel selling season. (Please refer tothe section “3. Supplementary Information, (1) Sales for Brands and Regions” for further information.)
We opened 85 stores (including 9 overseas) and closed 97 stores (including 30 overseas), resulting in a total
network of 1,490 stores (including 105 overseas) at the end of the first nine months of this fiscal year. In Hong
Kong and China, unprofitable stores were closed in accordance with the business revitalization policy establishedin the previous fiscal year. (Please refer to the section “3. Supplementary Information, (3) Number of Stores” forfurther information.)
The gross profit margin decreased 1.2 percentage points from one year earlier to 55.3%. The main cause wassales of merchandise at discounted prices in response to slow sales of summer merchandise as was explained
earlier.
The ratio of selling, general and administrative (SG&A) expenses to sales decreased 0.5 percentage point to51.8%, resulting in a 0.6 percentage point decrease in the operating margin to 3.5%. SG&A expenses were 1,388
million yen less than one year earlier. One reason was one-time expenses in the previous fiscal year forrelocating the head office. The completion at the end of the fiscal year’s first half of amortization of goodwill
resulting from the consolidation of TRINITY ARTS (subsequently absorbed by Adastria) also reduced SG&A
expenses.
There were extraordinary income of 201 million yen for gain on sales of investment securities and extraordinary
losses of 376 million yen for the impairment of store assets.

- 2 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2019 Fiscal Year(*) 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.
EBITDA
Operating profit + Depreciation + Amortization of goodwill (SG&A expenses)
EPS before goodwill amortization(Net income attributable to owners of the parent + Amortization of goodwill (SG&A expenses andextraordinary losses) + Impairment losses (goodwill)) / Average number of shares outstanding during theperiod(2) Explanation of Financial Position
Total assets increased 7,836 million yen from as of February 28, 2018 to 98,959 million yen as of November 30,
2018. This was mainly due to increases of 8,163 million yen in notes and accounts receivable-trade, 5,843
million yen in inventories and 2,345 million yen in net property, plant and equipment, which was mostly
attributable to the completion of the expansion of the Ibaraki Nishi Distribution Center. There were decreases of
8,020 million yen in cash and deposits and 1,228 million yen in goodwill.
Liabilities increased 6,583 million yen to 46,675 million yen. This was mainly due to increase of 2,019 million
yen in notes and accounts payable-trade, 2,957 million yen in short-term loans payable and 3,207 million yen inaccounts payable-other. There were decreases of 917 million yen in provision for bonuses and 888 million yen in
the provision for loss on business liquidation.
Net assets increased 1,253 million yen to 52,284 million yen. This was mainly due to an increase in retained
earnings of 1,415 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 3Q Financial Results for February 2019 Fiscal Year

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
Third quarter of FY2/19(As of Nov. 30, 2018)

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

19,446

11,425

Notes and accounts receivable-trade

8,810

16,974Inventories

18,07323,917

Other

3,570

3,776

Allowance for doubtful accounts

(116)

(111)

Total current assets

49,78555,983

Store interior equipment, net

7,301

7,570

Other, net

5,022

7,368

Total property, plant and equipment

12,324

14,938Non-current assets
Property, plant and equipment

Intangible assets
Goodwill

1,959

730

Other

4,255

5,033

Total intangible assets

6,214

5,763

Investment securities

1,101

909

Lease and guarantee deposits

18,263

17,626

Other

3,711

4,052

Allowance for doubtful accounts

(278)

(313)

Total investments and other assets

22,79922,274

41,33842,976

91,123

98,959Investments and other assets

Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade

10,227

12,247

Electronically recorded obligations-operating

9,898

10,081

Short-term loans payable

2,657

5,615

Accounts payable-other

9,418

12,626

Income taxes payable

1,322

1,202

Provision for bonuses

2,413

1,496

698

1,022

1,141

253

140

264

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

527

495

38,44645,305

Non-current liabilities
Provision
Other
Total non-current liabilities
Total liabilities

- 4 -

346

316

1,299

1,054

1,645

1,370

40,092

46,675

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2019 Fiscal Year

(Million yen)
Third quarter of FY2/19(As of Nov. 30, 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

45,24546,661

Treasury shares(4,652)(4,574)

Total shareholders’ equity

50,48051,973

235

72

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

(76)

(0)

Foreign currency translation adjustment

391

237

Total accumulated other comprehensive income

550

310

Total net assets
Total liabilities and net assets- 5 -51,03052,284

91,123

98,959

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2019 Fiscal Year

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Nine-month Period)First nine months of FY2/18(Mar. 1, 2017 – Nov. 30, 2017)(Million yen)First nine months of FY2/19(Mar. 1, 2018 – Nov. 30, 2018)

Net sales

163,269

162,345

Cost of sales

71,09372,596Gross profit

92,17689,749Selling, general and administrative expenses

85,436

84,048Operating profit

6,739

5,700

Dividend income4512Foreign exchange gains

147-

House rent income

81

65

Other

349

295

Total non-operating income

624

373

14

34

66

-

-

55

Non-operating income

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodForeign exchange losses
Loss on valuation of derivatives

85

71

Cost of lease revenue

70

59

Other

39

20

Total non-operating expenses

275

241

7,087

5,832

Gain on sales of non-current assets

25-

Gain on sales of investment securities

4,373

201

Total extraordinary income

4,398

201

Impairment loss

207

376

Loss on valuation of investment securities

38-

Loss on sales of shares of subsidiaries and associates

129-

Total extraordinary losses

375

376

Net income before income taxes

11,111

5,657

Income taxes-current

4,962

3,213

Income taxes-deferred

(295)

(637)

Total income taxes

4,666

2,576

Ordinary profit
Extraordinary income

Extraordinary losses

Net income

6,444

3,081

Net income attributable to owners of the parent

6,444

3,081

- 6 -

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2019 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Nine-month Period)(Million yen)First nine months of FY2/18(Mar. 1, 2017 – Nov. 30, 2017)

First nine months of FY2/19(Mar. 1, 2018 – Nov. 30, 2018)

Net income

6,444

3,081

Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges(2,919)

(163)

(5)

76

Foreign currency translation adjustment

(39)

(153)

(2,964)

(239)

3,480

2,841

3,480

2,841

-

-

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests- 7 -Adastria Co., Ltd. (2685) Summary of 3Q 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 nine months of FY2/19
Sales (million yen)

YoY change (%)

Composition (%)

GLOBAL WORK

29,641

18.3

niko and ...

22,914

14.1

10.1

STUDIO CLIP

17,628

10.9

(2.2)

LOWRYS FARM

16,1099.9(10.1)LEPSIM

11,0706.8(3.0)

JEANASIS

8,949

5.5

(2.1)

BAYFLOW

6,307

3.9

9.3

0.0

RAGEBLUE

5,549

3.4

(12.0)

Others (Notes 3 and 4)

21,711

13.4(19.9)

Total (Adastria)

139,884

86.2

(4.3)

BUZZWIT Co., Ltd. (Note 3)

4,875

3.0

(30.0)ELEMENT RULE Co., Ltd. (Note 4)

6,225

3.8

-

2

0.0

-

Other consolidated subsidiaries
Total (Japan)

150,987

93.0

(1.4)

Hong Kong

3,967

2.4

(12.2)

China

1,133

0.7

(19.7)

Taiwan

1,739

1.1

44.1

South Korea

907

0.6

29.7

USA (Note 5)

3,610

2.2

54.4

Notes:

Total (Overseas)

11,3577.0

11.6

Total (Group)

162,345

100.0

(0.6)

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. On August 1, 2018, Adastria conducted an absorption-type split where three business units including the
PAGEBOY business unit of ALICIA CO., LTD. were divested and then transferred to Adastria. On the same day,
ALICIA CO., LTD changed its name to BUZZWIT Co., Ltd.
4. 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.
5. As Velvet, LLC (USA) became a consolidated subsidiary at the end of the first quarter of FY2/18, YoY change on
USA is the comparison of nine months (January to September) of FY2/19 to six months (April to September) of
FY2/18.

- 8 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2019 Fiscal Year

(2) Sales for Merchandise Categories
Category

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

YoY change (%)

Composition (%)

Men’s apparel (bottoms, tops)

22,090

13.6

(1.1)

Lady’s apparel (bottoms, tops)

108,223

66.7

(0.1)

Others32,031

19.7

(1.9)

162,345

100.0

(0.6)

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.

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

First nine months of FY2/19

As of Feb.
28, 2018

As of Nov.
30, 2018

GLOBAL WORK

Absorption-type split
210
-

8

-

(3)

5

215

niko and ...

132

-

8

-

(1)

7

139

STUDIO CLIP

195

-

3

-

(4)

(1)

194

LOWRYS FARM

149

-

3

-

(8)

(5)

144

LEPSIM

138

-

2

-

(4)

(2)

136

JEANASIS

76

-

1

-

(3)

(2)

74

BAYFLOW

39

-

10

-

-

10

49

RAGEBLUE

57

-

4

-

(2)

2

59

Others (Notes 3 and 4)

279

14

23

(1)

(22)

14

293

Total (Adastria)

OpenedChangedClosedIncrease/decrease

1,275

14

62

(1)

(47)

28

1,303

BUZZWIT Co., Ltd. (Note 3)

100

(82)

4

2

(19)

(95)

5

ELEMENT RULE Co., Ltd.
(Note 4)

-

68

10

-

(1)

77

77

1,375

-

76

1

(67)

10

1,385

Hong Kong

24

-

2

-

(2)

-

24

China

49

-

-

-

(24)

(24)

25

Taiwan

31

-

7

-

(3)

4

35

South Korea

11

-

-

-

-

-

11

USA

11

-

-

-

(1)

(1)

10

Total (Overseas)

126

-

9

-

(30)

(21)

105

Total (Group)

1,501

-

85

1

(97)

(11)

1,490

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. On August 1, 2018, Adastria conducted an absorption-type split where three business units including the
PAGEBOY business unit of ALICIA CO., LTD. were divested and then transferred to Adastria. On the same day,
ALICIA CO., LTD changed its name to BUZZWIT Co., Ltd.
4. 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.

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 -