Summary of Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 29, 2020(Three Months Ended May 31, 2019)[Japanese GAAP]
June 28, 2019

Company name: Adastria Co., Ltd.
Listing: TSE 1st section
Stock code:
2685
URL: https://www.adastria.co.jp
Representative: Michio Fukuda, Chairman of the Board
Kazushi Sekimori,Contact:
Deputy Executive General Manager, General Headquarters of Management Tel: +81-3-5466-2060
Scheduled date of filing of Quarterly Report:
July 12, 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 June 28, 2019 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 29, 2020
(March 1, 2019 – May 31, 2019)(1) Consolidated results of operations (cumulative)

Net sales

Operating profit

Million yen%

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

Three months ended May 31, 201956,290
9.5
5,221
308.4
5,119 276.9
Three months ended May 31, 2018
51,392 (4.9)
1,278 (66.6)
1,358 (65.1)
Note: Comprehensive income
Three months ended May 31, 2019: 3,372 million yen (-%)
Three months ended May 31, 2018:
46 million yen (down 98.0%)
Net income per share
Three months ended May 31, 2019
Three months ended May 31, 2018
Reference: EBITDA

YenMillion yen

%

3,267
239

(95.4)

Diluted net income per share
Yen

69.41
5.08
Three months ended May 31, 2019: 6,863 million yen (up 102.6%)
Three months ended May 31, 2018: 3,387 million yen
EPS before goodwill amortization
Three months ended May 31, 2019:70.43 yen (up 309.3%)
Three months ended May 31, 2018:17.21 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 2.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

As of May 31, 2019
96,55554,91956.9
As of Feb. 28, 201991,263
52,95958.0
Reference: Shareholders’ equity As of May 31, 2019: 54,919 million yen As of Feb. 28, 2019: 52,959 million yen
Note: Starting with the beginning of the first quarter of the current fiscal year, Adastria is applying “Partial Amendments to
Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Statement No. 28,
February 16, 2018). Figures as of Feb. 28, 2019 have been adjusted retroactively in accordance with these amendments.

2. Dividends
1Q-endYen

2Q-endYen

Dividend per share
3Q-endYen

Fiscal year ended Feb. 28, 2019
20.00
Fiscal year ending Feb. 29, 2020
Fiscal year ending Feb. 29, 2020 (forecast)
25.00
Note: Revision to the most recently announced dividend forecast: None-

Year-end
Yen

30.00
25.00

Total
Yen

50.00
50.00

3. Consolidated Forecast for the Fiscal Year Ending February 29, 2020 (March 1, 2019 – February 29, 2020)
Net sales
Million yen

Operating profit%

Million yen%

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

Yen

Full year
225,000
1.0
10,00039.1
10,000
36.1
6,000
54.2
127.49Note: Revision to the most recently announced consolidated forecast: None
Reference: EBITDA
Fiscal year ending Feb. 29, 2020 (forecast): 16,520 million yen (up 7.9%)
EPS before goodwill amortization Fiscal year ending Feb. 29, 2020 (forecast):
130.04 yen (up 17.8%)

* 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: None
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, 2019:
48,800,000 shares
As of Feb. 28, 2019:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of May 31, 2019:
1,691,422 shares

As of Feb. 28, 2019:

1,736,973 shares

3) Average number of shares outstanding during the period
Three months ended May 31, 2019: 47,070,278 shares

Three months ended May 31, 2018: 47,043,916 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 2020 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 Accounting Policies

8

Additional Information

8

Subsequent Events

9

3. Supplementary Information

10(1) Sales for Brands and Regions

10(2) Sales for Merchandise Categories

10(3) Number of Stores

11

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Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2020 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
Consolidated results(Million yen)First three months of FY2/19 First three months of FY2/20(Mar. 1, 2018 – May 31, 2018) (Mar. 1, 2019– May 31, 2019

YoY change(Amount)

YoY change(%)

Net sales

51,39256,2904,898

9.5

Operating profit

1,278

5,221

3,943

308.4

Ordinary profit

1,358

5,119

3,761

276.9

239

3,267

3,027

1,266.2

EBITDA

3,387

6,863

3,475

102.6

EPS before goodwill
amortization (Yen)

17.21

70.43

53.22

309.3

Net income attributableto owners of the parent

Consolidated net sales in the first quarter (March 1 - May 31, 2019) increased 9.5% year-on-year to 56,290
million yen, operating profit increased 308.4% to 5,221 million yen, ordinary profit increased 276.9% to 5,119
million yen, and net income attributable to owners of the parent increased 1,266.2% to 3,267 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 102.6% to 6,863 million yen
and earnings per share (EPS) before goodwill amortization rose 309.3% to 70.43 yen. (*)
Sales in Japan were 11.7% than one year earlier. The main reasons were a recovery in the sales of GLOBAL
WORK, LOWRYS FARM and other core brands that had difficulties in the previous fiscal year and generally
strong sales of niko and … and other brands. Sales of core brands are recovering primarily because of moreclearly defining targeted customer segments, which included rebranding measures, and a reexamination of themerchandise lineups of these brands.
In other countries, sales were steady in the United States in part because of the consistent performance of thewholesale business. In Hong Kong and China, sales were down following the closing of unprofitable stores in theprevious fiscal year.
We opened 20 stores (including one overseas) and closed seven stores (including three overseas), resulting in a
total network of 1,440 stores (including 83 overseas) at the end of May 2019.
Profitability continued to improve in the first quarter mainly due to the success of many activities aimed at
supplying merchandise that customers want at the right times, prices and volumes. In addition, there was an
improvement in the discounting ratio. As a result, the gross profit margin increased 1.0 percentage point from one
year earlier to 58.4%.
The ratio of selling, general and administrative (SG&A) expenses to sales decreased 5.9 percentage points to
49.1%, resulting in a 6.8 percentage point increase in the operating margin to 9.3%. SG&A expenses were 582
million yen less than one year earlier. One reason was a decrease in advertising expenses as e-commerce
promotion expenses were held down. The completion at the end of the previous fiscal year’s first half ofamortization of goodwill resulting from the consolidation of TRINITY ARTS (subsequently absorbed by
Adastria) also reduced SG&A expenses.
There were extraordinary losses of 32 million yen for the impairment of store assets.
(*) Since the fiscal year that ended on February 28, 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
subsequent levels of earnings. Furthermore, comparisons with foreign companies are difficult because ofdifferences in accounting 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 2020 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 and extraordinary
losses) + Impairment losses (goodwill)) / Average number of shares outstanding during the period(2) Explanation of Financial Position
Total assets increased 5,291 million yen from as of February 28, 2019 to 96,555 million yen as of May 31, 2019.
Cash and deposits decreased 1,404 million yen but there were increases of 3,818 million yen in notes andaccounts receivable-trade and 2,320 million yen in other, net under property, plant and equipment, partly becauseof right-of-use assets resulting from the application of IFRS 16.
Liabilities increased 3,331 million yen to 41,635 million yen. The provision for bonuses decreased 1,027 million
yen but there were increases of 2,333 million yen in accounts payable-other and 1,566 million yen in other undercurrent liabilities, including lease liabilities resulting from the application of IFRS 16.
Net assets increased 1,959 million yen to 54,919 million yen. This was mainly due to an increase in retained
earnings of 1,704 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,
2019.

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Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2020 Fiscal Year

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Million yen)First quarter of FY2/20(As of May 31, 2019)

FY2/19(As of Feb. 28, 2019)
AssetsCurrent assets
Cash and deposits

18,726

17,321

Notes and accounts receivable-trade

9,780

13,598Inventories

17,592

17,901

Other

2,016

1,736

Allowance for doubtful accounts

(65)

(92)

48,05050,466Store interior equipment, net

6,226

6,247

Other, net

7,214

9,534

Total property, plant and equipment

13,44015,781

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

Intangible assets
Goodwill

648

599

Other

5,241

5,523

Total intangible assets

5,889

6,123

828

747

Lease and guarantee deposits

16,947

16,824

Other

6,401

6,903

Allowance for doubtful accounts

(294)

(292)

Total investments and other assets

23,882

24,182

43,21346,08891,26396,555

Notes and accounts payable-trade

9,267

8,822

Electronically recorded obligations-operating

9,635

8,753

Short-term loans payable

2,552

2,333

Accounts payable-other

9,703

12,036

Income taxes payable

1,376

2,485

Provision for bonuses

2,506

1,478

Provision for point card certificates

1,084

1,137

Investments and other assets
Investment securities

Total non-current assets
Total assets
Liabilities
Current liabilities

Other provision

361

331

Other

340

1,907

36,82939,286

Total current liabilities
Non-current liabilities

314

134

Other

Provision

1,160

2,215

Total non-current liabilities

1,474

2,349

38,303

41,635

Total liabilities- 4 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2020 Fiscal Year

(Million yen)First quarter of FY2/20(As of May 31, 2019)

FY2/19(As of Feb. 28, 2019)
Net assets
Shareholders’ equity
Capital stock

2,660

2,660

Capital surplus

7,227

7,227

Retained earnings

47,46949,174

Treasury shares(4,575)(4,426)

Total shareholders’ equity

52,781

54,636

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

(7)

(56)

(8)

(51)

Foreign currency translation adjustment

193

391

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

- 5 -

177

283

52,95954,91991,26396,555

Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2020 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 FY2/19(Mar. 1, 2018 – May 31, 2018)(Million yen)First three months of FY2/20(Mar. 1, 2019 – May 31, 2019)

Net sales
Cost of sales

51,392
21,87056,29023,408Gross profit

29,521

32,882

Selling, general and administrative expenses
Operating profit

28,243
1,278

27,6605,221

Non-operating income
Dividend income
Foreign exchange gains
House rent income
Gain on valuation of derivatives
Other

2
60
25
89

3
51
86

Total non-operating income

176

141

Non-operating expenses
Interest expenses
Foreign exchange losses
Loss on valuation of derivatives
Cost of lease revenue
Other

8
59
23
5

32
203
6

Total non-operating expenses

96

243

1,358

5,119

240
-

32
4

240

36

Net income before income taxes

1,117

5,083

Income taxes-current
Income taxes-deferred

1,138
(259)

2,253
(437)

Ordinary profit
Extraordinary losses
Impairment loss
Loss on sales of investment securities
Total extraordinary losses

Total income taxes

878

1,816

Net income

239

3,267

Net income attributable to owners of the parent

239

3,267

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Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2020 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY2/19(Mar. 1, 2018 – May 31, 2018)(Million yen)First three months of FY2/20(Mar. 1, 2019 – May 31, 2019)

Net income

239

3,267

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

(69)

(49)

80

(42)

Foreign currency translation adjustment

(204)

197

Total other comprehensive income

(193)

105

46

3,372

46

3,372

-

-

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 2020 Fiscal Year

(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Changes in Accounting Policies
Application of IFRS 16 “Leases”
Starting with the first quarter of the current fiscal year, some consolidated subsidiaries are using IFRS 16. To
begin applying this standard, Adastria is using the approved transitional treatment of recognizing the cumulative
effect of applying this standard on the first day that this standard was applied. Consequently, there were
adjustments to retained earnings, right-of-use assets and lease liabilities at the beginning of the first quarter. The
effect of this change on profit or loss in the first quarter of the current fiscal year is insignificant.
Additional Information
Application of the “Partial Amendments to Accounting Standard for Tax Effect Accounting,” etc.
Starting with the beginning of the first quarter of the current fiscal year, Adastria is applying “Partial
Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ No. 28, February 16, 2018) and otherrelated pronouncements. Accordingly, deferred tax assets and deferred tax liabilities have been presented in theinvestments and other assets section and the non-current liabilities section of the balance sheet, respectively.

- 8 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2020 Fiscal Year

Subsequent Events
Establishment of subsidiary
The Adastria Board of Directors approved a resolution on June 19, 2019 to establish a subsidiary as follows.
1. Reason for establishment
In prior years, the COLLECT POINT multi-brand shop business was the primary component of operations in
China. To improve the ability to grow along with the Chinese market and meet customers’ changing needs, thedecision was made to increase emphasis on operations that focus on individual brands. In accordance with thisstrategy, we plan to open a global flagship store for niko and …, which is one of our core brands, in Shanghai latein 2019.
Adastria is establishing this subsidiary for the purposes of moving rapidly for the successful implementation of
the new strategy and strengthening operations in the growing markets of Asia.
2. Outline of the subsidiary(1) Company name

Adastria Shanghai Co., Ltd. (tentative name)(2) Location

No. 775, Huaihai Middle Road, Huangpu District, Shanghai(3) Representative

Kohei Ogawa(4) Business

Planning, production and sale of apparel and other merchandise; food andbeverage services(5) Capital

1,000 million yen(6) Establishment

Between July and September 2019 following the receipt of regulatory approval(7) Relationship with Adastria

1) Capital:

Wholly owned by Adastria

2) Personnel: Two Adastria directors and three executives are to serve
concurrently as directors of the new subsidiary3) Business: Currently there is no applicable information* Some of the information in this outline may be revised during the regulatory approval process.

- 9 -Adastria Co., Ltd. (2685) Summary of 1Q Financial Results for February 2020 Fiscal Year

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

First three months of FY2/20
Sales (million yen)

YoY change (%)

Composition (%)

GLOBAL WORK

10,634

18.9

14.0

niko and ...

7,850

13.9

6.2

LOWRYS FARM

6,146

10.9

15.4

STUDIO CLIP

5,635

10.0

4.9
7.1

LEPSIM

3,708

6.6

JEANASIS

2,959

5.3

6.3

BAYFLOW

2,411

4.3

25.5

RAGEBLUE

1,863

3.3

1.3

Others (Note 3)

8,298

14.7

27.5

Total (Adastria)

49,51087.9

12.7

BUZZWIT Co., Ltd. (Note 3)

1,187

2.1

(42.6)ELEMENT RULE Co., Ltd.

2,471

4.4

55.2

1

0.0

139.1

Other consolidated subsidiaries
Total (Japan)

53,170

94.4

11.7

Hong Kong

884

1.6

(40.7)

China

149

0.3

(65.0)

Taiwan

623

1.1

(0.1)

274

0.5

0.6

1,186

2.1

21.1

South Korea
USA

Notes:

Total (Overseas)

3,119

5.6

(17.9)

Total (Group)

56,290100.0

9.5

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. In the first half of FY2/19, three business units including the PAGEBOY business unit of BUZZWIT Co., Ltd.
(formerly ALICIA CO., LTD.) were transferred to Adastria. The YoY change on BUZZWIT are calculated basedon sales for the first three months of FY2/19 that include the three business units.

(2) Sales for Merchandise Categories
Category

First three months of FY2/20
Sales (million yen)

Composition (%)

YoY change (%)

Men’s apparel (bottoms, tops)

7,921

14.1

10.0

Lady’s apparel (bottoms, tops)

38,007

67.5

11.0

Others

10,361

18.4

4.3

56,290

100.0

9.5

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 2020 Fiscal Year

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

First three months of FY2/20

As of Feb.
28, 2019

OpenedAs of May31, 2019

Increase/decrease

ClosedChangedGLOBAL WORK

213

1

-

-

1

214

niko and ...

139

2

-

-

2

141

LOWRYS FARM

139

-

-

-

-

139

STUDIO CLIP

190

2

-

(1)

1

191

LEPSIM

132

1

-

-

1

133

JEANASIS

73

-

-

-

-

73

BAYFLOW

49

5

-

-

5

54

RAGEBLUE

58

-

-

-

-

58

Others

269

2

-

(2)

-

269

1,262

13

-

(3)

10

1,272

BUZZWIT Co., Ltd.

5

1

-

-

1

6

ELEMENT RULE Co., Ltd.

75

4

-

(1)

3

78

Total (Adastria)

Other consolidated subsidiaries

-

1

-

-

1

1

1,342

19

-

(4)

15

1,357

Hong Kong

20

-

-

(2)

(2)

18

China

10

-

-

-

-

10

Taiwan

34

1

-

(1)

-

34

South Korea

12

-

-

-

-

12

Total (Japan)

USA

Notes:

9

-

-

-

-

9

Total (Overseas)

85

1

-

(3)

(2)

83

Total (Group)

1,427

20

-

(7)

13

1,440

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.

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 -