A Message from the PresidentWe will build a foundation to restoregrowth for the Wacoal Group throughthe united efforts of executives andemployees based on the revisedmedium-term management planthat embodies our determination tosee things through, not put things offMasaaki YajimaRepresentative Director,President and CEOWacoal Holdings Corp.

Dramatically revising downward its net income forecast forthat this will cause major concerns for all stakeholders,sales, which led to a rapid deterioration in profitability. Forexpected of me, and although the environment is notfiscal 2024, the Wacoal Group announced on November 9,including shareholders.

various reasons, including changes in the people’s valuespromising, I realized that taking responsibility for putting thefollowing the pandemic, greater-than-expected inflation,company back on a firm footing is what I could do, and2023, that it projects to post a net loss for the secondWe revised the medium-term management plan as aconsecutive fiscal year. At the same time, the Groupresult of dramatic changes in the business environment andvolatile interest rates, and China’s weak economic growth, thedecided to accept the position. The current medium-termannounced that it would conduct an overall review of theconsumer needs. Since around 2015, the Group’sGroup continues to face a harsh business environment. In anmanagement plan with updated content (revisedmedium-term management plan formulated in April 2022performance has continued to gradually trend downwardera of growing uncertainty, we determined that unless wemedium-term management plan) was formulated withoutand implement fundamental structural reform. The forecastbecause of the closure of department stores and masschange our business model, we do not have a future, which isworrying about the pain and discord that will arise during theof a net loss for fiscal 2024 is the result of stagnant netretailers, our main sales channels for the Japanese business,why we are undertaking this structural reform.

reform nor putting off efforts to resolve the problems we face.

sales in major regions, expenses related to structural reformand changes in business conditions. Furthermore, theof the Japanese business, and impairment losses due toconsumption tax hike in 2019 and spread and extendedJune 2023. When asked about taking the position, Iwill move forward with structural reform with a determinationthe withdrawal from the U.S. business. I am keenly awareduration of the 2020 COVID-19 pandemic further undercutunderstood the perilous state of the company and the roleto see it through.

15 ■ WACOAL HOLDINGSI became Representative Director, President and CEO inWith an eye toward fiscal 2026, the final year of the plan, weINTEGRATED REPORT 2023■ 16A Message from the PresidentProcess for Formulating the Revised Medium-Term Management PlanAiming to Transition to a Structure that Steadily Generates Cash By Revisingthe Value Chain From a Customer Point of Viewthe greater-than-expected speed of changes in customersdemand, but also reduce the production lead time. I think thatand logistics. Through the SCM reform discussed in thethese measures will also contribute to improved capitalmedium-term management plan, we will not only optimizeefficiency. Based on thorough deliberations, which externalin-store product lineup and control and optimize inventorydirectors participated in, we have created an uncompromisinglevel through a shift to production methods appropriate formanagement plan.

In addition to continuing to record lackluster performance,unable to address problems and simply put off dealing withwhich has been true for many years, the Group has beenthem, which contributed to the protracted period of weakunable to fully implement its medium-term management planperformance. I think that a climate in which the managementand achieve its initial plans and is burdened with low capitalteam does not make firm decisions also impacts employees,efficiency. Although we have touted structural reformand results in employees trying to read what their superiorsnumerous times in the past, those attempts wereare thinking, not expressing their own opinions. Even thoughunsuccessful because we were unable to thoroughlywe should address customers’ needs, a corporate culture inimplement them and they lacked speed and ineffectiveness.

which we only focus on what is occurring in the companyThe Wacoal Group systematically compiled a corporatecapabilities and the trust we have built up with customersquickly took root.

philosophy in 2022. Having positioned Our Culture, Ourover the years. Our greatest competitive advantage is that wePromise, and Our Values, as elements of our Foundingpossess not only the various components of the value chain,The main problem is our slow response to changes incustomers. The Wacoal Group handles products that provideEven with this awareness and our strong efforts toConcrete Measures in the Revised Medium-Term Management PlanShift to Growth Trajectory by Implementing Cost Structure Reform and IncreasingBrand Power, Customer Royalty, and Workforce Capabilitieswearing comfort and are highly form-fitting, but a growingmaintain manufacturing based on past practices, these harshPrinciples, we newly created a Mission that the Group shouldincluding research, planning, production, and sales, but alsonumber of customers are also demanding ease-of-wear. Toconditions will not change. Furthermore, the externalachieve in modern society. “VISION 2030,” our medium- tothe ability to create high quality products based on body typehandle a customer, it takes about thirty minutes from whenenvironment is changing at a quicker pace than expected. It islong-term management strategy framework lists the issuesdata accumulated by the Human Science Research &staff ask them about their preference until the fitting isimportant that we rethink what is common sense at Wacoalthat we should tackle by 2030 in order to achieve our Mission,Development Center and 3D measuring service. However, wecompleted, which is too long for customers who place a highand review the value chain from a customer point of view.

and the medium-term management plan is one milestonemust evolve those strengths into a form appropriate for thevalue on time. Although it is necessary to consider whatWith the revised medium-term management plan, we aretoward VISION 2030.

current times. The value we provide will not change with thecustomers want and what is best for them, we lack a strongfacing the problems that were recognized in previousability to respond to changes because of an overemphasis onmedium-term management plans. We will work to transformreturn to growth through cost structure reform andevolved form. This will lead to customer satisfaction, and thus,our past strengths and service style. In addition, trying tothe structure of the company into one that can steadilystrengthening of brand power, customer loyalty, andall stakeholders, including employees, can benefit from thissolve problems causes discord and other issues, and I regretgenerate cash by fully implementing stated measures.

workforce capabilities while temporarily putting aside thevalue. I think that it is our mission to maintain this.

that the senior management team, including myself, wereissue of performance. At the same time, we will reinforce ourFormulating a Revised Medium-Term Management Plan Through CloseDeliberations with External DirectorsThe Group has external directors who possess diverse skills,Furthermore, employees in related departments played awhich includes ones with abundant knowledge andcentral role in formulating measures related to the key issuesexperience as managers, and ones with insight andof supply chain management (SCM) reform, cost structureknowledge of investing and financial capital markets (thereform, and growth strategy, but we also received advice fromGroup has two internal directors and five external directors).

various perspectives by having consulting companies andDuring the process of formulating the revised medium-termexternal directors with specialized knowledge participate inmanagement plan, we established a Group Strategythe process.

Committee, composed of internal and external directors, andUntil now, the Group has not thoroughly stressed capitalfor important agenda items, such as business strategy,efficiency at the business-department level. Although thegrowth investments, and asset holdings, we held repeatedsenior management team and management personnel shoulddiscussions from various perspectives, including the market,consider how to generate the most profit with the leastinvestors, importance for the company, and businessamount of capital, our inventory has become bloated becauseperformance, and fundamentally revised the current strategy.

we have not evolved our existing SCM system in response to17 ■ WACOAL HOLDINGSThe revised medium-term management plan outlines atimes but we will deliver that value to customers in a moreThe four main policies outlined in the revisedbusiness management infrastructure, increase managementmedium-term management plan are those listed below. Weefficiency, and improve capital efficiency by introducingwill work to improve profitability and capital efficiency byROIC management.

steadily implementing these measures in line with the plan.

I think that the Group’s strengths are its manufacturingBasic Policy of Revised Medium-Term Management Plan

Business model reforms toimprove profitability Reviewing brand strategies Focusing on growth markets Human resource development and organizationaldevelopment to enhance corporate value Reviewing supply chain management Cost structure reform Dealing with unprofitable businessesIntroducing ROIC management Monitoring profitability and strategy effectiveness Business portfolio managementGrowth strategy to achieve VISION 2030

Promoting asset reduction Reducing inventories Reducing cross-shareholdings Streamlining real estate holdingsINTEGRATED REPORT 2023■ 18A Message from the PresidentRebuilding the Supply Chain and Meeting Diverse Customer NeedsImplementing SCM reforms that make it possible toAs for the brand strategy for Japan, we organized marketDealing with Unprofitable Businesses and Shifting Resources to Growth FieldsFor the revised medium-term management plan, we decidedUnder these conditions, we examined various possibilitiesaccurately respond to changes in customer needs is ansegments from a unique perspective and created a brandto liquidate or review unprofitable businesses throughout thefor the business in the future but decided to withdraw fromimportant initiative to achieve the Group’s mission toportfolio for segments we are strong in. In fields other thancompany as one part of our business model reform. We havethe business after determining it would be difficult to improve“empower people with the confidence that comes frominnerwear, we also aim to expand the “beauty, comfort, andalready announced that we will withdraw from the LIVELYfuture performance. As for the decision to acquire thelooking and feeling their best and welcome everyone into ourhealth” business, and this will involve such activities asbusiness operated by U.S.-based Intimates Online, Inc. (IO)company, we conducted an analysis of various factors,caring community built on mutual respect, diversity, andreinforcing 3D measurement services, personalized servicesand liquidate the company. Since our acquisition of theincluding the market, competition, profitability, business plans,inclusion.” However, at the current time, we are unable tothat leverage customer data, and sports businesses, includingcompany in July 2019, IO has operated a business thatand risks, and while there were changes in the externalsmoothly provide products that meet consumer changesCW-X. I try to closely communicate my intentions to Wacoalemploys its own EC platform as its main sales channel andenvironment, we regret that we did not conduct appropriatebecause the development lead time for products is more thanCorp. President Kawanishi on a regular basis. As the holdingmakes use of new digital media to communicate withpost-acquisition supervision of management by theone year. Through SCM reform, we will work to strength ourcompany, we will clearly indicate such items as policies andcustomers, but the company’s sales have fallen short of planscharismatic founder of the company. As of now, IO is the onlyability to meet changing needs by optimizing in-store productexpectations while Wacoal Corp. takes responsibility foras a result of the entry of new competitors and limits onunprofitable business that we have settled on a response, butlineup, shifting to production methods appropriate forimplementing the reforms. Furthermore, I consider monitoringtargeted ads due to stricter restrictions on the use of personalwe will carefully ascertain conditions for other businesses bydemand, and shortening production lead time. The Group’sprogress in implementing these reforms as important forinformation. During the COVID-19 pandemic, there was also achecking them in terms of such aspects as sustainability ofSCM was constructed over its long history, and in order toincreasing the effectiveness of related efforts. Externaldramatic decline in opportunities for ambassadors,* whothe business’s strengths, exposure to excess competition,implement these measures to update our methods, we mustdirectors, too, have expressed the opinion that reinforcing oursupport the brand, to communicate information, making itmarket growth potential, and certainty of profitability.

change how we think. To evolve into an organization thatsupervision functions is necessary to increase effectiveness,impossible to achieve expected results.

takes into consideration overall optimization, starting withand we will confirm progress of initiatives so that our plans arecustomers, and makes it possible to undertake improvementnot a mere pipe dream.

activities that are not limited to a particular department, we* The ambassador system positions core brand supporters who communicate information through social media and other media types as ambassadors and aims to raiseawareness and promote product sales.

As for the overseas business, we expect conditions,will support employees’ efforts to acquire new skills.

including geopolitical risks and high inflation, to remainFurthermore, we think that we should listen more carefully touncertain for some time. Therefore, through fiscal 2025, wethe opinion of not only beauty advisors (BA) who work hardwill work with each country to build a management foundationevery day at stores but also customers, and we will analyzeand implement the growth strategy with an eye toward thethose opinions with digital technology and use them to evolvenext medium-term management plan.

Initiatives to Increase Capital EfficiencyFostering Awareness of Capital Efficiency by Introducing ROIC Managementthe value we provide.
As explained at the beginning, the Wacoal Group is plaguedset a basic policy of liquidating assets that do not enhanceby a low ROE as it has been unable to achieve initial plans forcorporate value, and as we liquidate those assets, we willmany years. We consider this the result of a deterioration insearch for investment opportunities that contribute toour business management infrastructure, and have decided tobusiness growth, and those investment decisions will beintroduce ROIC management in order to increase capitalbased on ROIC. Moreover, in order to reduce assets, we willefficiency and achieve a robust corporate structure. It is theprimarily look at inventories, cross-shareholdings, and realGroup’s mission to deliver products that support the “beauty,estate holdings when examining and revising asset holdings.

comfort, and health of each customer,” and allocate cashthe revised medium-term management plan by movinghuman resources who support those activities and to pay allforward with our business and financial strategies. We areshareholders an appropriate return. Using ROIC as aaware that our cost of shareholder equity is around 6%, whichmanagement indicator that supports sustainable growth andhas resulted in a PBR less than one, and want to correct thisrecognizes multiple stakeholders will lead to the creation ofsituation. I do not want to be satisfied with a PBR thatcorporate value.

exceeds 1 but want to continually strive to raise our PBRWe will also move forward with reducing assets through19 ■ WACOAL HOLDINGSOur aim is to achieve an ROE of 7% during the period ofobtained from that activity to investments in growth fields andthrough sustained initiatives to improve profitability and capitalthe revised medium-term management plan. With an eyeefficiency starting with the next medium-term managementtoward improving the efficiency of assets and capital, we haveplan in order to achieve VISION 2030.

INTEGRATED REPORT 2023■ 20A Message from the PresidentStrengthening Sustainability-related InitiativesTo StakeholdersReinforcing Response to Human Rights and Environmental IssuesResolutely Moving Forward By Taking a New Look at Customers and Changing ourCorporate CultureEnvironment problems, such as climate change, and humanthroughout the supply chain and work to reinforce initiativesrights problems are growing more serious, and therelated to respect for human rights based on the idea ofHaving positioned the period of the revised medium-termmeetings. The role of the executive management team is tointernational community and customers are calling loudly forhuman rights due diligence compliant with UN Guidingmanagement plan as a reform period, we will work to improveprovide leadership so that all employees view the revisedinitiatives to achieve a sustainable society. To reinforce ourPrinciples on Business and Human Rights.

profitability and capital efficiency by steadily implementing themedium-term management plan as our code, possess theirresponse to important sustainability problems, the Group notAs for the environment, we announced in Septembervarious measures in line with the plan. Starting with the nextown opinions, and can propose improvements. I would like toonly established the Sustainability Committee, an advisory2021 that we support the recommendations of the Task Forcemedium-term management plan, we plan to reap the benefitscontinue to dialogue with all employees until they have abody to the Board of Directors, and four promotionon Climate-Related Financial Disclosures (TCFD) andof these reforms in the foundation and growth period andproactive attitude toward what they must do to address thesubcommittees, but also formulates concrete measure todisclosed related information in June 2022. We are nowimplement a strategy to generate additional growth. Whencrisis that the company faces.

address those problems, monitors the state of progress inmoving forward with formulating a concrete action plan toformulating the revised medium-term management plan, weMy vision for the company is for it to become a companyimplementing those measures, and evaluates the state ofreduce greenhouse gas emissions and promoting suchheld deliberations from various perspectives. It is clear whatin which its employees throughout the world enthusiasticallyachieving those.

initiatives as increasing the percentage of materials that arethe Group needs to tackle, and the only thing left is for alltake on challenges and provide new value while staying closeIn terms of human rights, we revised the Wacoal Groupenvironmentally friendly, reducing the disposal of old products,executives and employees to see related initiatives through.

to customers and society I envision a company that wins theHuman Rights Policy in April 2022 so that it complies with theand conducting recycling activities. It can be argued that ourFor twenty years, we posted weak performance, and in thetrust of diverse people throughout the world and providesGuiding Principles on Business and Human Rights stipulatedinitiatives to increase sustainability is one part of implementingbusiness environment at that time, we tended to have aproducts and services that make people throughout theby the UN. While already accurately ascertaining the state ofour corporate philosophy. In addition to increasing profitabilitynegative attitude toward everything, and it is important thatworld happy. That is precisely why we have to change. Wecompliance with items stipulated in the Wacoal Group CSRand implementing our growth strategy, we will transition to awe establish a cycle that boosts motivation for routinewill take a new look at customers, change our corporateProcurement Guidelines and running through a cycle thatstructure that can achieve sustainable growth by reinforcingoperations. It is also important that we actually feel that weculture, and work to implement the revised medium-termleads to continuous corrections and improvements, we willinitiatives related to human rights and the environment.

are making forward progress, and if that is possible, we canmanagement plan with determination.

maintain motivation to accomplish everything we want. Sinceprevent and mitigate negative impacts on humans rightsannouncing the revised medium-term management plan, weI truly hope that all stakeholders continue to supportthe Group.

have held briefing sessions for employees and townhallNext medium-termmanagement planFY2027 to FY2031● In addition to continuousRevised medium-termmanagement planimprovements, we will striveto achieve the goals ofVISION 2030 by implementingnew growth investmentsFY2024 to FY2026● Shifting to a structure that cansteadily generate cash(Promoting business modelreform and asset reduction)

Sustainablegrowth Foundation andgrowth periodGoals to aim for in FY2031VISION 2030Improving profitabilityand capital efficiency  Reform period21 ■ WACOAL HOLDINGSTo evolve and grow as “Wacoal Groupof the World” by providing both physicaland emotional beauty and richness toindividuals through high sensitivity andpremium quality.

INTEGRATED REPORT 2023■ 22