Summary of Consolidated Financial Results
for the Third Quarter of the Fiscal Year Ending February 28, 2018
(Nine Months Ended November 30, 2017)[Japanese GAAP]
December 28, 2017

Company name: Adastria Co., Ltd.
Listing: TSE 1st section
Stock code:
2685
URL: http://www.adastria.co.jp
Representative: Michio Fukuda, Representative Director, Chairman & CEO
Contact:
Mika Takano, General Manager of Corporate Planning Department
Tel: +81-3-5466-2010
Scheduled date of filing of Quarterly Report:
January 12, 2018
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, 2017 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, 2018
(March 1, 2017 – November 30, 2017)(1) Consolidated results of operations (cumulative)
Net sales

Operating profit

Million yen

Nine months ended Nov. 30, 2017
Nine months ended Nov. 30, 2016
Note: Comprehensive income(Percentages represent year-on-year changes)
Net income attributable
Ordinary profit
to owners of the parent%

Million yen%

Million yen%

Million yen

163,2699.6
6,890 (49.5)
7,238 (47.6)
148,925
1.4
13,632(5.0)
13,800(5.9)
Nine months ended Nov. 30, 2017: 3,612 million yen (down 58.0%)
Nine months ended Nov. 30, 2016: 8,602 million yen (down 19.2%)
Net income per share

Diluted net income per share

Yen

Yen

Nine months ended Nov. 30, 2017
Nine months ended Nov. 30, 2016
Reference: EBITDA

%

6,594
11,172(41.0)
40.3

140.19232.92Nine months ended Nov. 30, 2017: 13,849 million yen (down 29.0%)
Nine months ended Nov. 30, 2016: 19,511 million yen
Nine months ended Nov. 30, 2017:182.88 yen (down 31.5%)
Nine months ended Nov. 30, 2016:
267.07 yen

EPS before goodwill amortization(*) 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

As of Nov. 30, 2017
As of Feb. 28, 2017
Reference: Shareholders’ equity

Million yen%

As of Nov. 30, 2017:99,312
90,38956,610 million yen

56,61056,035
As of Feb. 28, 2017:

57.0
62.0

1Q-end2Q-endDividend per share
3Q-endYear-end

Total

Yen

Yen

Yen

Yen

Yen

56,035 million yen

2. Dividends

Fiscal year ended Feb. 28, 2017
Fiscal year ending Feb. 28, 2018
Fiscal year ending Feb. 28, 2018 (forecast)
Note: Revision to the most recently announced dividend forecast: None

35.00
35.00

-

40.00

75.00

40.00

75.00

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2018 (March 1, 2017 – February 28, 2018)
Net sales
Million yen

Operating profit%

Million yen%

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

Yen

Full year
230,500 13.2
13,500(9.5)
13,500 (10.8)
11,000(5.0)
233.84
Note: Revision to the most recently announced consolidated forecast: None
Reference: EBITDA
Fiscal year ending Feb. 28, 2018 (forecast): 22,800 million yen (down 1.0%)
EPS before goodwill amortization
Fiscal year ending Feb. 28, 2018 (forecast):
291.23 yen (up 1.0%)

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

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, 2017:
48,800,000 shares
As of Feb. 28, 2017:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of Nov. 30, 2017:
1,759,215 shares

As of Feb. 28, 2017:

1,757,425 shares

3) Average number of shares outstanding during the period
Nine months ended Nov. 30, 2017: 47,041,654 shares

Nine months ended Nov. 30, 2016:

47,968,327 shares

Note 1: The current quarterly financial report is not subject to quarterly review procedures.
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 and Other
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 2018 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

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 2018 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
Consolidated results(Million yen)First nine months of FY2/17
First nine months of FY2/18(Mar. 1, 2016 – Nov. 30, 2016) (Mar. 1, 2017 – Nov. 30, 2017)

Net sales

148,925

163,269

YoY change(Amount)
14,344

YoY change(%)
9.6

Operating profit

13,632

6,890(6,742)(49.5)

Ordinary profit

13,8007,238(6,562)(47.6)Net income attributableto owners of the parent

11,172

6,594(4,578)(41.0)EBITDA

19,511

13,849(5,661)(29.0)EPS before goodwill
amortization (Yen)

267.07182.88(84.19)(31.5)

Consolidated net sales in the first nine months (March 1-November 30, 2017) increased 9.6% year-on-year to163,269 million yen, operating profit decreased 49.5% to 6,890 million yen, ordinary profit decreased 47.6% to7,238 million yen, and net income attributable to owners of the parent decreased 41.0% to 6,594 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 29.0% to 13,849 million yen
and earnings per share (EPS) before goodwill amortization fell 31.5% to 182.88 yen. (*)
One reason for the 9.6% increase in first nine months sales was the steady increase in Adastria sales in Japan,
which was 3.6% higher than one year earlier. The transfer in the first quarter of PAGEBOY and other apparelbrand operations to consolidated subsidiary ALICIA Co. Ltd. and inclusion of the sales of U.S.-based Velvet,
LLC from the second quarter (this company was acquired in the first quarter) also contributed to the sales growth.
In Japan, the brands niko and…, STUDIO CLIP and BAYFLOW performed well in the first nine months. (Pleaserefer to the section “3. Supplementary Information, (1) S ales for Brands and Regions” for further information.)
The number of stores in Japan increased by 113 because of the inclusion of the operations of ALICIA. Overseas,
the acquisition of Velvet, LLC added nine stores. In addition, we opened 118 stores (including 15 overseas) andclosed 48 stores (including 12 overseas), resulting in a total network of 1,543 stores (including 120 overseas) at
the end of November 2017. (Please refer to the section “3. Supplementary Information, (3) Number of Stores” forfurther information.)
The gross profit margin decreased 2.2 percentage points from one year earlier to 56.5% because the pricediscount rate increased for reducing inventories.
The ratio of selling, general and administrative (SG&A) expenses to sales increased 2. 6 percentage points to
52.2%. This was attributable mainly to increased advertising expenditures for major brands, expenses forrelocating the Tokyo head office and investments in IT system for future growth. As a result, the operating
margin decreased 5.0 percentage points to 4.2%.
There was a gain on sales of investment securities of 4,373 million yen as extraordinary income . Extraordinary
losses of 207 million yen for the impairment of store assets and 129 million yen for loss on sales of shares ofsubsidiaries and associates.
(*) 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.

- 2 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2018 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 andextraordinary losses) + Impairment losses (goodwill)) / Average number of shares outstanding during theperiod(2) Explanation of Financial Position
Total assets increased 8,923 million yen from as of February 28, 2017 to 99,312 million yen as of November 30,
2017. This was mainly due to increases in notes and accounts receivable-trade of 7,988 million yen, inventoriesof 6,646 million yen, store interior equipment, net of 1,722 million yen, goodwill of 2,398 million yen and other
under investments and other assets (deferred tax assets, etc.) of 2,098 million yen, while there were decreases incash and deposits of 9,153 million yen and investment securities of 5,927 million yen.
Liabilities increased 8,347 million yen to 42,701 million yen. This was mainly due to increases in notes andaccounts payable-trade of 6,013 million yen and accounts payable-other of 4,014 million yen, while there was adecrease in income taxes payable of 2,699 million yen.
Net assets increased 575 million yen to 56,610 million yen. This was mainly due to an increase in retained
earnings of 3,563 million yen, while there was a decrease in valuation difference on available -for-sale securitiesof 2,919 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 September
29, 2017.

- 3 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2018 Fiscal Year

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
Third quarter of FY2/18(As of Nov. 30, 2017)

FY2/17(As of Feb. 28, 2017)
AssetsCurrent assets
Cash and deposits

20,734

11,580Notes and accounts receivable-trade

7,860

15,849Inventories

16,351

22,998

Other

3,285

3,304

Allowance for doubtful accounts

(53)

(178)

48,17853,553

Store interior equipment, net

6,491

8,213

Other, net

3,952

4,286

Total property, plant and equipment

10,444

12,500Goodwill

3,309

5,707

Other

2,242

4,080

Total intangible assets

5,552

9,788

Investment securities

7,677

1,750

Lease and guarantee deposits

17,237

18,404

Other

1,523

3,621

Allowance for doubtful accounts

(225)

(308)

Total investments and other assets

26,213

23,46942,21045,75890,38999,312

Notes and accounts payable-trade

6,361

12,375

Electronically recorded obligations-operating

8,919

9,055

Short-term loans payable

2,027

2,862

Accounts payable-other

8,941

12,955

Income taxes payable

4,470

1,770

Provision for bonuses

2,195

1,117

453

821

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

Intangible assets

Investments and other assets

Total non-current assets
Total assets
Liabilities
Current liabilities

Other provision
Other

295

634

33,66541,593

Provision

241

356

Other

447

751

Total current liabilities
Non-current liabilities

Total non-current liabilities
Total liabilities

- 4 -

688

1,107

34,35342,701

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2018 Fiscal Year

(Million yen)
Third quarter of FY2/18(As of Nov. 30, 2017)

FY2/17(As of Feb. 28, 2017)
Net assets
Shareholders’ equity
Capital stock

2,660

2,660

Capital surplus

7,227

7,227

Retained earnings

47,41350,976

Treasury shares(4,645)(4,650)Total shareholders’ equity

52,65456,213

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

3,190

271

Deferred gains or losses on hedges

(19)

(25)

Foreign currency translation adjustment

209

151

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

- 5 -

3,380

397

56,03556,61090,38999,312

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2018 Fiscal Year

(2) Quarterly Consolidated Statements of Income and Comprehensiv e Income
Quarterly Consolidated Statement of Income(For the Nine-month Period)First nine months of FY2/17(Mar. 1, 2016 – Nov. 30, 2016)(Million yen)First nine months of FY2/18(Mar. 1, 2017 – Nov. 30, 2017)

Net sales

148,925

163,269

Cost of sales

61,46871,093Gross profit

87,456

92,176

Selling, general and administrative expenses

73,82385,286

Operating profit

13,632

6,890

125

45

Foreign exchange gains

0147House rent income

84

81

Other

166

349

Total non-operating income

376

624

Interest expenses
Share of loss of entities accounted for using equity
methodLoss on valuation of derivatives

10

14

-

66

97

85

Cost of lease revenue

69

70

Other

31

39

Total non-operating expenses

209

275

13,8007,238

Non-operating income
Dividend income

Non-operating expenses

Ordinary profit
Extraordinary income
Gain on sales of non-current assets

-

25

3,763

4,373

77

-

3,841

4,398

Impairment loss

38

207

Loss on disaster

85-

Loss on valuation of investment securities-

38

Loss on sales of shares of subsidiaries and associates-

129

Loss on liquidation of subsidiaries and associates

10-

Gain on sales of investment securities
Gain on liquidation of subsidiaries and associates
Total extraordinary income
Extraordinary losses

Total extraordinary losses

134

375

Net income before income taxes

17,507

11,261

Income taxes-current

6,592

4,962

Income taxes-deferred

(257)

(295)

Total income taxes

6,334

4,666

Net income

11,172

6,594

Net income attributable to owners of the parent

11,172

6,594

- 6 -

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2018 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Nine-month Period)First nine months of FY2/17(Mar. 1, 2016 – Nov. 30, 2016)(Million yen)First nine months of FY2/18(Mar. 1, 2017 – Nov. 30, 2017)

Net income

11,172

6,594

Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges(2,587)(2,919)474(5)Foreign currency translation adjustment

(457)

(57)

(2,570)(2,982)

8,602

3,612

8,602

3,612

-

-

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 2018 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
The Company has adopted the “Implementation Guidance on Recoverability of Deferred Tax Assets”(Accounting Standards Board of Japan (ASBJ) Statement No. 26, March 28, 2016) from the first quarter of thecurrent fiscal year and partially revised its accounting method for determining the recoverability of deferred tax
assets.
The Company has applied this implementation guidance in accordance with the transitional accounting
treatments set forth in Paragraph 49 (4) of this implementation guidance. Accordingly, the differences between
deferred tax assets and deferred tax liabilities determined by applying the applicable provisions of Par agraph 49(3), Items 1 through 3 of the implementation guidance at the beginning of the first quarter of the current fiscal
year and deferred tax assets and deferred tax liabilities at the end of the previous fiscal year are added to retained
earnings at the beginning of the first quarter of the current fiscal year.
The effect of this matter on the quarterly consolidated financial statements at the beginning of the first quarter ofthe current fiscal year is insignificant.

- 8 -Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2018 Fiscal Year

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

First nine months of FY2/18
Sales (million yen)

YoY change (%)

Composition (%)

GLOBAL WORK

28,806

17.7

1.5

niko and ...

20,820

12.8

16.5

STUDIO CLIP

18,024

11.0

10.2

LOWRYS FARM

17,030

10.4

(9.3)

LEPSIM

11,4137.0(2.6)

JEANASIS

9,140

5.6

(0.9)

RAGEBLUE

6,270

3.8

(4.6)

BAYFLOW

5,769

3.5

45.3

OthersTotal (Adastria)
ALICIA CO., LTD.
Total (Japan)

28,855

17.7

2.3

146,132

89.5

3.6

6,961

4.3

-

153,093

93.8

8.5

Hong Kong

4,519

2.8

(6.7)

China

1,410

0.9

5.1

Taiwan

1,207

0.7

9.5

South Korea

699

0.4

21.9

USA (Note 3)

2,338

1.4

-

10,175

6.2

29.4

Total (Overseas)
Total (Group)

Notes:

163,269
100.0
1. The number of stores is categorized by using brand operating divisions and geograph ic regions.

9.6

2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.
3. The USA figures include the second quarter sales of Velvet, LLC, a consolidated subsidiary acquired at the end of
the first quarter.

(2) Sales for Merchandise Categories
Category

First nine months of FY2/18
Sales (million yen)

Composition (%)

YoY change (%)

Men’s apparel (bottoms, tops)

22,326

13.7

4.3

Lady’s apparel (bottoms, tops)

108,286

66.3

10.8

Others32,65620.0

9.6

Notes:

Total
163,269
100.0
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 -

9.6

Adastria Co., Ltd. (2685) Summary of 3Q Financial Results for February 2018 Fiscal Year

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

First nine months of FY2/18

As of Feb.
28, 2017

As of Nov.
30, 2017

GLOBAL WORK

192

Increase(Note 3)
-

11

12

(2)

21

213

niko and ...

129

-

9

-

(2)

7

136

STUDIO CLIP

182

-

15

-

(1)

14

196

LOWRYS FARM

152

-

7

-

(2)

5

157

LEPSIM

134

-

11

-

(3)

8

142

JEANASIS

80

-

4

-

(2)

2

82

RAGEBLUE

58

-

3

1

(1)

3

61

BAYFLOW

32

-

7

-

-

7

39

Others

284

-

31

(13)

(11)

7

291

1,243

-

98

-

(24)

74

1,317

-

113

5

-

(12)

106

106

1,243

113

103

-

(36)

180

1,423

Hong Kong

25

-

-

-

(1)

(1)

24

China

45

-

12

-

(11)

1

46

Taiwan

29

-

-

-

-

-

29

South Korea

9

-

2

-

-

2

11

USA

-

9

1

-

-

10

10

Total (Overseas)

108

9

15

-

(12)

12

120

Total (Group)

1,351

122

118

-

(48)

192

1,543

Total (Adastria)
ALICIA CO., LTD.
Total (Japan)

Notes:

OpenedChangedClosedIncrease/decrease

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 transfer of the operations of
ALICIA and the consolidation of Velvet, LLC in the United States.

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 -