Major Items of the Revised Medium-Term Management Plan (Overseas Business) ■Key Initiatives in the Revised Medium-Term Management Plan (Overseas Business)
23Key Initiatives in the Revised Medium-Term Management Plan

14Assuming that the situation will continue to be uncertain, we will prioritize profit generation in fiscal 2024 to fiscal 2025 in each keycompany while working to improve our management base and implementing growth strategies for the next medium-termmanagement planMajor Subsidiaries’ Initiatives1. Growing ECExpanding contact points with customers and achieving EC growth by promoting digitalstrategies (OMO, CRM, Asia EC platform)Growth strategies2. Developing and providing new products thatmeet market trendsExpanding contact points with new customers by developing and selling new products basedon market trend analyses in China and other countries in AsiaBasicStrategiesStrengthening supplychain managementReviewing strategiesfor inefficientbusinesses(1) Optimizing production and material procurement processes in overseas business(2) Reducing manufacturing costs by reorganizing the supply system within the Group(3) Expanding the supply network outside the Company to strengthen the affordable market inChina and Asia

1Wacoal America, Inc.
(Wacoal International Corp.)●Accelerating the transition to an EC-focused business modelAchieving continuous growth in the EC business by developing new competitive compensation product groups and strengthening CRM centered on digitalfitting services●Reviewing cost structureIn order to address the pressure of costs, we will review retail prices, promote automation of distribution operations (automatic picking, etc.), reduceprocurement costs, and begin reviewing our business model to optimize our cost structure

2Withdrawal of LIVELY brand (IO)After considering various possibilities for future business development, we determined thatit would be difficult to improve the performance of the business in the future, and decidedto withdrawWe will review the plan based on the current external environment. Whileworking to grow the EC business, we will begin to review our cost structure toaddress the decrease in profit ratio due to increased costs.

Wacoal Europe Ltd.

In addition to promoting brand strategies to meet the diverse values ofcustomers, we will also form and promote growth strategies in regions with roomfor growth, such as Germany and France.

●Accelerating the transition to an EC focused business modelImproving the efficiency of the Dutch warehouse, strengthening EC business outside the UK (development of Wacoal’s own EC, collaboration with othercompanies’ EC)●Increase sales in continental EuropeIn addition to cultivating existing areas, we will strengthen sales activities in Germany and France, where there is significant room for growthIn addition to expanding our sales network, including EC and brick-and-mortar stores, we will also consider alliances and M&As with other companies toachieve growth with quality and speedWithdrawing from the LIVELY business of Intimates Online, Inc., a U.S. subsidiary,and liquidating the companyIntimates Online, Inc. has developed its business since its acquisition in July 2019, using its own e-commerce as its primary sales channel and new digitalmedia, particularly social media, as a communication tool with its customers; however, sales fell short of the plan due to the entry of competitors into the digital

3Wacoal China Co., Ltd.

market and restrictions on targeted advertising due to increasing restrictions on the use of personal information. After considering various possibilities for futurebusiness development, we have determined that it will be difficult to improve the performance of this business in the future and have resolved to withdraw fromit. As a result of the withdrawal from this business, we will record a loss of approximately ¥7.3 billion, mainly consisting of impairment loss on goodwill related toWacoal International in the fiscal year ending March 31, 2024.
Sales(Unit: thousands of dollars)(Unit: thousands of dollars)100,00015,000Businessplan figuresat the time ofacquisition80,00010,000039,32140,00034,235FY202029,80629,366(10,000)(20,000)

41 ■ WACOAL HOLDINGSFY2021 FY2022FY2023FY2024(Estimate)86,041——26,82526,82586,04126,825112,866Company nameRepresentative(11,494)

0Acquisition pricesAddress(6,000)(15,000)

11,967BusinessdescriptionCapital(12,194)

Total86,041Summary of Intimates Online, Inc.

FY2024FY2023 (Estimate)(5,000)

20,000FY2020FY2021 FY2022FY2021Earnout paymentsTotal5,00060,000(Unit: thousands of dollars)FY2020Businessplan figuresat the time ofacquisition(12,885)(14,259)

In the medium-term management planannounced in June 2022, we plan toachieve the break even point in FY2024Date ofestablishmentDate ofacquisitionShareholders●Developing products that meet customer needs(1) Strengthening our ability to respond to changes in customer purchasing behavior, needs, and product trends. Conducting purchase analysis in major ECmarketplaces, formulating and executing brand strategies (product functions, prices, promotions), and aiming for EC growthAcquisition pricesOperating incomeThrough a brand strategies (product functions, prices, and promotions) thatachieve EC growth, we aim to return to sales and at the same time embark on abusiness model reform to improve profitability.

Intimates Online, Inc.
136 Madison Avenue New York NY 10016 USAKristin DiCunzoloPlanning and sales of female innerwear433 dollarsMay 1, 2015July 30, 2019WACOAL INERNATIONAL CORP. (100% capital ratio)(2) Developing sports and athleisure products and expansion of high-end products●Improving management efficiencyReviewing our cost structure to improve profitabilityWithdrawing poorly-performing stores and reducing inventories

4Other Countries in AsiaCooperate among Asian subsidiaries under the Asian headquarters system. Wewill implement measures that take advantage of the strengths of our own EC andother companies’ EC to achieve growth.

Expanding customer contact points and improving LTV(1) Other companies’ EC: Focusing on acquiring new customers by strategically strengthening cooperation with EC marketplaces(2) Wacoal own EC: We will enhance our own content, such as membership programs, and accelerate collaboration with brick-and-mortar storesStrengthening business in India(1) In addition to the existing premium line, new affordable products will be developed to expand the customer base (24AW)(2) Implementation of product planning in India and improvement of domestic procurement ratioINTEGRATED REPORT 2023■ 42Main Items in Revised Plan (Overseas Business) ■Global InitiativesU.S.
Note: Results and targets arefor Wacoal America,Inc. only. Includesinternal sales revenue.
FY2026 targets arebased on internalmanagement figures.

FY2023FY2026 targetSales Revenue184.2 million198.7 millionBusiness Profit10.6 million9.4 millionBusiness ProfitratioUS dollarsChinaUS dollarsUS dollarsUS dollars5.8%4.7%Mitch KauffmanPresident & CEOWacoal America, Inc.

Note: Includes internal salesrevenue. FY2026targets are based oninternal managementfigures. Sales bydepartment stores(store prices) areincluded unchanged inthe totals.

FY2023FY2026 targetSales Revenue525.4 million660.0 millionBusiness Profit-34.9 million44.0 millionBusiness Profitratiorenminbirenminbirenminbirenminbi—6.8%Zhang MaoDirector and General ManagerWacoal China Co., Ltd.

Current Situation and Issues Faced by Each SubsidiarySpecific Initiatives for Achieving the Revised PlanCurrent Situation and Issues Faced by Each SubsidiarySpecific Initiatives for Achieving the Revised PlanSince the post COVID sales surge of FY 2021 Wacoal America has beenfaced with a very different business environment which has challenged bothsales growth and profitability. Consumer trends of casual dressing and theprioritization of spending on experiences over things, along with inflation hasresulted in declining sales for apparel and Department Stores. Digital privacyinitiatives and higher advertising costs have slowed the rate of online salesgrowth. Government mandated wage increases at our Wacoal Dominicanafactory along with higher freight and material costs continue to put pressureon gross margins. Wage and benefit inflation in the U.S. have also drivenother expense growth. These challenges together have resulted in areduction in historical Operating Profit levels. During the period of themedium-term management plan (Revise), we intend to focus on addressingthese issues.

To address the sales and profitability challenges and achieve our plan goals,a key strategy continues to be growing our DTC online business. WacoalDirect online is our fastest growing (107% of LY through H1 ’23) and mostprofitable business (19.7% Op. Inc through H1 ’23). During the period of themedium-term management plan (Revise), We will continue to invest ininfrastructure (CRM system, and Loyalty program) that will enable us torealize further growth of the DTC online business. In addition, to improveprofitability, we have taken wholesale and retail price increases this year andtook steps to reduce material costs. From now on, we are also diversifyingour production by placing more new programs with contractors that can offerneeded technical capabilities and/or better margins than we can achieve inWacoal Dominicana. Also, we will plan to optimize the cost structure byoptimizing staff in the Distribution Center and through a previously completedrestructure of the Sales Organization.

The recovery of China’s economy after the lifting of the country’s zero-COVIDpolicy has been slow, and consumer spending has been sluggish. Our saleshave not even reached 70% of the pre-pandemic level, and we continue toface a challenging situation in terms of bottom line. Under thesecircumstances, we face three challenges. The first is to improve theefficiency of brick-and-mortar stores, where the bottom line is deterioratingdue to diminished customer traffic. The second is the restructuring of oure-commerce business, which continues to underperform, despite the factthat the ratio of e-commerce to total retail sales in China has exceeded50%. The third is to improve the efficiency of our organization andoperations and respond to changes in our business structure. In particular,the e-commerce business is on the rise due to the diversification ofplatforms, while our sales remain stuck at a low level. We will step up ourresponse to new platforms, raise visibility among young people, who are ourmain consumer group, and accelerate the development of products thatmeet their needs, while at the same time transforming our business structureand returning to a growth trajectory.

In terms of brick-and-mortar stores, we will focus on increasing sales perstore by encouraging customers to return to the store by improving CRM.
Additionally, we will strive to increase the number of customers by improvingthe loyalty program and increasing convenience, such as by standardizingmembership measures with our own e-commerce site. In terms ofunprofitable stores, we plan to improve business efficiency by optimizing thenumber of employees per store, while also restructuring. In the e-commercebusiness, we plan to increase the number of new customers among youngpeople by raising our visibility and renewing the brand image throughimproved sales promotion measures while opening stores on new platforms.
In addition, we will develop competitive products and strive to cultivate hitproducts in conjunction with intensive promotions. Through these measures,we will bring our e-commerce ratio up to the 30% level during the period ofthe revised Medium-Term Management Plan. With regard to the issue ofprofitability, we intend to improve our operating profit margin by expandingsales through the above measures and reducing costs and SG&A ratio.

EuropeNote: Includes internal salesrevenue. Businessprofit includes branddepreciation expense.
FY2026 targets arebased on internalmanagement figures.

FY2023FY2026 targetSales Revenue117.7 million132.5 millionBusiness Profit16.3 million14.5 millionBusiness ProfitratioGB poundsGB poundsAsiaGB pounds13.8%GB pounds10.9%Geoff EmbleyCEOWacoal Europe Ltd.

Note: Results and targets arefor Wacoal India only.
Includes internal salesrevenue. FY2026targets are based oninternal managementfigures.

FY2023FY2026 targetSales Revenue402.3 million733.1 millionBusiness Profit-91.1 million-89.0 millionBusiness ProfitratioIndian rupeesIndian rupeesIndian rupees—Indian rupees—Takehiko YonekawaCEOResponsible for Asia Sales HeadquartersWacoal Singapore Private LimitedCurrent Situation and Issues Faced by Each SubsidiarySpecific Initiatives for Achieving the Revised PlanCurrent Situation and Issues Faced by Each SubsidiarySpecific Initiatives for Achieving the Revised PlanOver the past year, most Western economies have experienced high inflationrates, which has prompted central banks to raise interest rates.
Consequently, there has been a discernible reduction in consumer spending,with a notable shift toward risk aversion among retailers who are reluctant toinvest in inventory or commit to forward orders. The growth in e-commerce,which witnessed an unprecedented rise during the COVID-19 pandemic, hasmarkedly decelerated with the relaxation of restrictions and the resurgence ofconsumers patronizing brick-and-mortar establishments. In addition,businesses within the e-commerce sector, are contending with escalatingdigital advertising costs and the necessity to modify their operational modelsin response to the impact of privacy initiatives on digital advertising.

To address these challenges related to market access and inventorymanagement, our strategic approach consists of three key initiatives. Firstly,we aim to assert control over the route to market by expanding ourproprietary e-commerce platforms into new territories. Secondly, whereadvantageous, we intend to adapt the traditional wholesale model tobroaden our reach to a larger audience. Additionally, we are willing to takecalculated risks on what we perceive as key performing styles. Thirdly, Weare also focused on reducing lead times for products, thereby enhancing thebusiness’s responsiveness to market changes. This, combined with morestringent inventory collections, empowers us to deliver excellent service toour customers. This strategic approach underscores our dedication toresilience and adaptability in navigating the ever-evolving landscape,reflecting our commitment to sustained growth and operational excellence.

Our subsidiaries in Asia recovered well after the pandemic was broughtunder control, but the situation remains challenging due to the subsequentsurge in inflation and the slowdown in China’s economic growth. In responseto rapid fluctuations in sales, it is becoming more difficult to secure profitsthan before due to the increasing difficulty of inventory management andlarger SG&A expenses, such as labor costs and increased costs for storeand office rent. We are also seeing changes in customer buying channelsand product trends. As in Japan, e-commerce usage is increasing in Asiancountries, and demand for conventional highly molded or fitted innerwear hasdecreased due to changes in values after the pandemic, and moreconsumers are seeking products with comfort in mind. This trend was alsoevident in our analysis of the characteristics of the best-selling products ofmajor e-commerce marketplaces in China and Asia conducted in May 2023.
Delays in responding to changes in customers have become a commonissue for our subsidiaries in Asia.

In order to strengthen our sales structure and improve business efficiency inAsia, we established a headquarters to oversee sales in Asia in April 2022.
The target is five companies in Singapore, Hong Kong, Malaysia, thePhilippines, and Vietnam. Under this new structure, we are also promotinginformation sharing and coordination of measures among each companywhile maintaining a basic policy of locally-led management. In order torespond to the growing e-commerce market, we have developed a commonplatform for our own e-commerce and have started rolling it out in eachcountry. In the future, we plan to strengthen cooperation withbrick-and-mortar stores centered on CRM. We will also conduct promotionsin cooperation with other companies' e-commerce companies in Asiancountries to raise brand visibility and acquire new customers. With regard tothe value we provide, which is an issue, we will develop products that meetconsumer needs based on “comfort of wear,” “affinity with fashion trends,”and “solutions tailored to the climate of Southeast Asia.” In addition, we willshare measures related to inventory and expense management in an effort toimprove the growth and profitability of our operations in Asia as a whole.

43 ■ WACOAL HOLDINGSINTEGRATED REPORT 2023■ 44