Summary of Consolidated Financial Results
for the Third Quarter of the Fiscal Year Ending February 29, 2020
(Nine Months Ended November 30, 2019)[Japanese GAAP]
December 27, 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:
January 14, 2020
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 27, 2019 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 29, 2020
(March 1, 2019 – November 30, 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%

Million yen

Nine months ended Nov. 30, 2019
164,280
1.2
11,970110.0
11,871
103.5
Nine months ended Nov. 30, 2018
162,345(0.6)
5,700 (15.4)
5,832 (17.7)
Note: Comprehensive income
Nine months ended Nov. 30, 2019: 6,951 million yen (up 144.7%)
Nine months ended Nov. 30, 2018: 2,841 million yen (down 18.3%)
Net income per share

Diluted net income per share

Yen

Yen

%

6,908
3,081

124.2
(52.2)

Nine months ended Nov. 30, 2019
Nine months ended Nov. 30, 2018
Reference: EBITDA

146.6765.48
Nine months ended Nov. 30, 2019: 17,133 million yen (up 45.3%)
Nine months ended Nov. 30, 2018: 11,787 million yen
EPS before goodwill amortization
Nine months ended Nov. 30, 2019:
149.38 yen (up 63.1%)
Nine months ended Nov. 30, 2018:91.61 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

Equity ratio

Million yen

Million yen%

As of Nov. 30, 201999,91357,347
57.4
As of Feb. 28, 201991,263
52,95958.0
Reference: Shareholders’ equity As of Nov. 30, 2019: 57,347 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-end2Q-endDividend per share
3Q-endYear-end

Total

Yen

Yen

Yen

Yen

Yen

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

-

30.00

50.00

25.00

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
223,000
0.2
12,00066.9
12,000
63.4
6,500
67.1
137.94
Note: Revision to the most recently announced consolidated forecast: Yes
Reference: EBITDA
Fiscal year ending Feb. 29, 2020 (forecast): 18,870 million yen (up 23.2%)
EPS before goodwill amortization Fiscal year ending Feb. 29, 2020 (forecast):
141.55 yen (up 28.2%)

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): Yes
Newly added: 1

ADASTRIA (SHANGHAI) CO., LTD. (directly translated from Chinese)

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 Nov. 30, 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 Nov. 30, 2019:
1,679,257 shares

As of Feb. 28, 2019:

1,736,973 shares

3) Average number of shares outstanding during the period
Nine months ended Nov. 30, 2019: 47,102,625 shares

Nine months ended Nov. 30, 2018: 47,057,064 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 refe r 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 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

3. Supplementary Information

9(1) Sales for Brands and Regions

9(2) Sales for Merchandise Categories

9(3) Number of Stores

10

- 1 -

Adastria Co., Ltd. (2685) Summary of 3Q 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 nine months of FY2/19
First nine months of FY2/20(Mar. 1, 2018 – Nov. 30, 2018) (Mar. 1, 2019 – Nov. 30, 2019)

Net sales

YoY change(Amount)

YoY change(%)

162,345

164,280

1,935

1.2

Operating profit

5,700

11,970

6,269

110.0

Ordinary profit

5,832

11,871

6,038

103.5

Net income attributableto owners of the parent

3,081

6,908

3,827

124.2

EBITDA

11,787

17,133

5,345

45.3

EPS before goodwill
amortization (Yen)

91.61

149.38

57.77

63.1

Consolidated net sales in the first nine months (March 1 – November 30, 2019) increased 1.2% year-on-year to164,280 million yen, operating profit increased 110% to 11,970 million yen, ordinary profit increased 103.5% to11,871 million yen, and net income attributable to owners of the parent increased 124.2% to 6,908 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 45.3% to 17,133 million yen
and earnings per share (EPS) before goodwill amortization rose 63.1% to 149.38 yen. (*)
Sales in Japan were 2.5% higher than one year earlier, despite the negative effects of unfavorable weather. The
main reasons were a solid recovery in the sales of core brands such as GLOBAL WORK, LOWRYS FARM that had
difficulties in the previous fiscal year and generally steady sales of niko and …, BAYFLOW and other brands.
Operation of our “.st” e-commerce site had been suspended since August 8 due to problems with the switch to the
new system. However, operation was restarted in September 12, 2019.
In other countries, sales in the wholesale and retailing businesses were steady in the United States. In Hong Kong
and China, sales were down following the closing of unprofitable stores in the previous fiscal year.
We opened 44 stores (including 5 overseas) and closed 49 stores (including 16 overseas), resulting in a total
network of 1,422 stores (including 74 overseas) at the end of the third quarter of this fiscal year.
In terms of profitability, consistent provision of products on a “proper timing, pricing and volumes” basis has
enabled stable management of operations and tighter control of sales at reduced prices with the result that thediscounting ratio has greatly improved. As a result, the gross profit margin increased 1.8 percentage points fromone year earlier to 57.1%.
The ratio of selling, general and administrative (SG&A) expenses to sales decreased 2.0 percentage points to
49.8%, resulting in a 3.8 percentage point increase in the operating margin to 7.3%. SG&A expenses were 2,213
million yen less than one year earlier. The main reasons were a decrease in advertising expenses as e-commerce
promotion expenses were held down and lower rent as the number of stores decreased year on year. The
completion at the end of the previous fiscal year’s first half of amortization of goodwill resulting from theconsolidation of TRINITY ARTS (subsequently absorbed by Adastria) also reduced SG&A expen ses.
There were impairment losses of 72 million yen on store assets and 1,511 million yen on software which there islittle potential for utilization due to changes in the system development plan . These losses are recorded as
extraordinary losses.
(*) 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 3Q 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 8,649 million yen from as of February 28, 2019 to 99,913 million yen as of November 30,
2019. Cash and deposits decreased 3,028 million yen but there were increases of 7,075 million yen in notes andaccounts receivable-trade, 3,950 million yen in inventories and 1,881 million yen in other, net under property,
plant and equipment, partly because of right-of-use assets resulting from the application of IFRS 16.
Liabilities increased 4,261 million yen to 42,565 million yen. Short-term loans payable decreased 2,552 million
yen but there were increases of 2,278 million yen in notes and accounts payable-trade, 3,511 million yen inaccounts payable-other and 1,177 million yen in other under current liabilities, including lease liabilities
resulting from the application of IFRS 16.
Net assets increased 4,387 million yen to 57,347 million yen. This was mainly due to an increase in retained
earnings of 4,155 million yen.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements
The Company has revised the full year forecasts for the fiscal year ending February 29, 2020 that wereannounced on April 4, 2019, based on the results of operations in the first nine months of the current fiscal year.
For more information about this revision, please see the December 27, 2019 press release concerning thisrevision (Japanese version only) or presentation material for the third quarter of the fiscal year ending February
29, 2020 posted on the corporate website.

- 3 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2020 Fiscal Year

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
Third quarter of FY2/20(As of Nov. 30, 2019)

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

18,726

15,698Notes and accounts receivable-trade

9,780

16,856Inventories

17,592

21,542

Other

2,016

1,577

Allowance for doubtful accounts
Total current assets

(65)

(136)

48,05055,538

6,226

5,748

Non-current assets
Property, plant and equipment
Store interior equipment, net
Other, net

7,214

9,095

Total property, plant and equipment

13,44014,844

648

515

Other

5,241

5,433

Total intangible assets

5,889

5,949

Intangible assets
Goodwill

Investments and other assets
Investment securities

828

244

Lease and guarantee deposits

16,947

16,552

Other

6,401

7,079

Allowance for doubtful accounts

(294)

(294)

Total investments and other assets

23,882

23,581

43,21344,37591,263

99,913

Notes and accounts payable-trade

9,267

11,545

Electronically recorded obligations-operating

9,635

8,788

Short-term loans payable

2,552

-

Accounts payable-other

9,703

13,214

Income taxes payable

1,376

2,613

Provision for bonuses

2,506

1,308

Provision for point card certificates

1,084

1,567

361

263

Total non-current assets
Total assets
Liabilities
Current liabilities

Other provision
Other
Total current liabilities

340

1,518

36,82940,820Non-current liabilities
Provision

314

296

Other

1,160

1,448

Total non-current liabilities

1,474

1,745

38,30342,565

Total liabilities- 4 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2020 Fiscal Year

(Million yen)
Third quarter of FY2/20(As of Nov. 30, 2019)

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

2,660

2,660

Capital surplus

7,227

7,213

Retained earnings

47,46951,625

Treasury shares(4,575)(4,371)

Total shareholders’ equity

52,781

57,126

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

(7)

1

(8)

18

Foreign currency translation adjustment

193

200

Total accumulated other comprehensive income

177

220

52,95957,347

91,263

99,913

Total net assets
Total liabilities and net assets- 5 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2020 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 FY2/19(Mar. 1, 2018 – Nov. 30, 2018)(Million yen)First nine months of FY2/20(Mar. 1, 2019 – Nov. 30, 2019)

Net sales

162,345

164,280

Cost of sales

72,59670,475Gross profit

89,74993,805

Selling, general and administrative expenses

84,04881,834

Operating profit

5,700

11,970

Dividend income

1213House rent income

65-

Non-operating income

Gain on valuation of derivatives

-

29

Other

295

293

Total non-operating income

373

336

Interest expenses

34

89

Foreign exchange losses

55

308

Loss on valuation of derivatives

71-

Cost of lease revenue

59

-

Other

20

38

Total non-operating expenses

241

435

5,832

11,871Gain on sales of investment securities

201-

Total extraordinary income

201-

Impairment loss

376

1,584

Loss on disaster-23

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary losses

Loss on sales of investment securities-

75

Total extraordinary losses

376

1,684

Net income before income taxes

5,657

10,187

Income taxes-current

3,213

3,933

Income taxes-deferred

(637)

(655)

Total income taxes

2,576

3,278

Net income

3,081

6,908

Net income attributable to owners of the parent

3,081

6,908

- 6 -

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2020 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Nine-month Period)First nine months of FY2/19(Mar. 1, 2018 – Nov. 30, 2018)(Million yen)First nine months of FY2/20(Mar. 1, 2019 – Nov. 30, 2019)

Net income

3,081

6,908

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

(163)

9

76

27

Foreign currency translation adjustment

(153)

6

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests

- 7 -

(239)

43

2,841

6,951

2,841

6,951

-

-

Adastria Co., Ltd. (2685) Summary of 3Q 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 nine months 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 3Q Financial Results for February 2020 Fiscal Year

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

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

YoY change (%)

Composition (%)

GLOBAL WORK

30,599

18.6

3.2

niko and ...

23,70314.4

3.4

LOWRYS FARM

17,642

10.7

9.5

STUDIO CLIP

16,789

10.2

(4.8)

LEPSIM

10,7556.6(2.8)

JEANASIS

8,778

5.4

(1.9)

BAYFLOW

7,258

4.4

15.1

RAGEBLUE

5,491

3.4

(1.0)

Others (Note 3)

23,053

14.0

6.2

Total (Adastria)

144,073

87.7

3.0

BUZZWIT Co., Ltd. (Note 3)

3,653

2.2

(25.1)ELEMENT RULE Co., Ltd.

7,066

4.3

13.5

31

0.0

1,281.7

154,825

94.2

2.5

2,582

1.6

(34.9)

China

336

0.2

(70.3)

Taiwan

1,796

1.1

3.3

871

0.5

(3.9)

3,869

2.4

7.2

Other consolidated subsidiaries
Total (Japan)
Hong Kong

South Korea
USA

Notes:

Total (Overseas)

9,455

5.8

(16.8)

Total (Group)

164,280

100.0

1.2

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 August 2018, three business units including the PAGEBOY business unit of BUZZWIT Co., Ltd. (formerly
ALICIA CO., LTD.) were transferred to Adastria. As a result, the rate of YoY change was calculated based on thesales of the three business units prior to the transfer, which were included in BUZZWIT sales.

(2) Sales for Merchandise Categories
Category

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

Composition (%)

YoY change (%)

Men’s apparel (bottoms, tops)

23,40714.2

6.0

Lady’s apparel (bottoms, tops)

109,36266.6

1.1

31,511

19.2

(1.6)

164,280

100.0

1.2

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.

- 9 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2020 Fiscal Year

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

First nine months of FY2/20

As of Feb.
28, 2019

OpenedAs of Nov.
30, 2019

Increase/decrease

ClosedChangedGLOBAL WORK

213

3

-

(3)

-

213

niko and ...

139

8

-

(2)

6

145

LOWRYS FARM

139

-

-

(2)

(2)

137

STUDIO CLIP

190

3

-

(3)

-

190

LEPSIM

132

2

-

(2)

-

132

JEANASIS

73

-

-

-

-

73

BAYFLOW

49

7

-

(2)

5

54

RAGEBLUE

58

-

-

(3)

(3)

55

Others

269

6

-

(13)

(7)

262

1,262

29

-

(30)

(1)

1,261

BUZZWIT Co., Ltd.

5

3

-

-

3

8

ELEMENT RULE Co., Ltd.

75

6

-

(3)

3

78

Other consolidated subsidiaries

-

1

-

-

1

1

1,342

39

-

(33)

6

1,348

Hong Kong

20

-

-

(4)

(4)

16

China

10

-

-

(9)

(9)

1

Taiwan

34

4

-

(3)

1

35

South Korea

12

1

-

-

1

13

USA

9

-

-

-

-

9

Total (Overseas)

85

5

-

(16)

(11)

74

Total (Group)

1,427

44

-

(49)

(5)

1,422

Total (Adastria)

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.

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.

- 10 -