Results Briefing: FY Ending Feb. 2020
2020.4.14

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I. Results Overview

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1

Consolidated Financial Highlights -Profit and Loss-

Unit:Million Yen
FY Ending Feb. 2019

Results

Composition
Rate (%)

FY Ending Feb. 2020

Results

Composition

Y/Y

Rate (%)

ChangeY/Y (%)

Against Plan

Against(Change)Plan(％)Net Sales

165,009100.0

170,068

100.0

5,058

103.1

Gross Profit

87,09352.8

89,382

52.6

2,288

102.6

-

-

SG&A Expenses

84,812

51.4

89,312

52.5

4,499

105.3

-

-

79,935

48.4

83,863

49.3

3,927

104.9

-

-

886

0.5

1,024

0.6

137

115.5

-

-

SG&A Expenses(excl. Goodwill Amortization, Depreciation and Amortization)

Goodwill Amortization
Depreciation and Amortization

▲932

99.5

3,990

2.4

4,424

2.6

434

110.9

-

-

Operating Income

2,280

1.4

70

0.0

-2,210

3.1

▲930

7.0

Ordinary Income

3,902

2.4

1,851

1.1

-2,051

47.4

▲649

74.0

Extraordinary Income

365

0.2

6,289

3.7

5,923

1719.6--Extraordinary Loss

3,208

1.9

4,281

2.5

1,072

133.4

-

-

Profit Before Taxes

1,059

0.6

3,859

2.3

2,800

364.3

-

-

Profit Attributable to Owners of Parent

-185

-0.1

2,181

1.3

2,367

-1173.2▲1,118

66.1

EBITDA ※

7,157

4.3

5,518

3.2

-1,638

77.1--*EBITDA＝Operating Income + Goodwill Amortization + Depreciation and Amortization

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2

Brands Overview

Unit:Million Yen
FY Ending Feb. 2019
Sales

Y/Y

FY Ending Feb. 2020

Composition

Gross Profit

Rate (%)

Ratio (%)

Sales

Composition

Gross Profit

Rate (%)

Ratio (%)

Sales (%)

Gross Profit
Ratio (pt)1.

nano・universe

28,34917.2

47.1

27,185

16.0

43.7

95.9

-3.4

2.

NATURAL BEAUTY BASIC

15,583

9.4

57.7

15,191

8.9

57.5

97.5

-0.2

3.

MARGARET HOWELL

14,361

8.7

58.4

14,034

8.3

58.0

97.7

-0.4

4.

PEARLY GATES

12,173

7.4

51.0

12,582

7.4

50.3

103.4

-0.7

5.

AVIREX ※1

2,438

1.5

60.5

8,495

5.0

60.7

348.4

+0.2

6.

ROSE BUD

6,869

4.2

43.7

5,949

3.5

48.5

86.6

+4.8

7.

STUSSY

5,607

3.4

69.2

5,263

3.1

70.3

93.9

+1.1

8.

UNDEFEATED

3,904

2.4

41.1

4,791

2.8

43.3

122.7

+2.2

9.

HUF

5,159

3.1

47.9

4,678

2.8

46.0

90.7

-1.9

10.

HUMAN WOMAN

4,849

2.9

55.8

4,557

2.7

55.1

94.0

-0.7

TOP10

99,296

60.2

52.4

102,729

60.4

52.1

103.5

-0.3

Other Brands

59,37736.0

54.6

67,130

39.5

53.4

113.1

-1.1

Continuing Brands

158,674

96.2

53.2

169,860

99.9

52.6

107.0

-0.6

6,335

3.8

41.3

207

0.1

4.4

3.3

-36.9

165,009

100.0

52.8

170,068

100.0

52.6

103.1

-0.2

Closed Brands
TOTAL*1 As we acquired the stock of UENO-SHOKAI Co., LTD. on October 26, 2018, we regarded the deemed acquisition date on November 30, 2018.
Therefore we count UENO-SHOUKAI CO., LTD on this sheet from December 1, 2018.

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3

Sales Figures for e-commerce
3rd party sales worsened substantially from October 2019 onward. As a result, EC sales, which
until now had continued to grow by double-digit, remained at 106.4％ YoY.
However,in-house EC sales,which has been strategically incorporating omnichannel, remainedrobust at 114.2％ YoY, due to the strategic enticement of customers to our website.

EC sales (million Yen)FY Ending

FY Ending

FY EndingFeb. 2018

Feb. 2019Feb. 2020

Y/Y

28,932

34,13936,337106.4%EC ratio (%)

18.6

20.7

21.4

+0.7ptIn-house EC sales (million Yen)

7,547

10,01911,442114.2%

In-house EC ratio (%)

26.1

29.3

31.5

+2.2pt●Favorable factors of in-house EC sales

 Factors making the move to Omnichannel favorable

Number of Omnichannel members 110.4％ YoY

Sales through the app for the whole term

163.0％ YoY

Omnichannel sales

App profitability for the whole term

103.0％ YoY

114.6％ YoY

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4

The Previous Year Summary

Net Sales

Purchase
InventoryY/Y 97.7%, owing to thepoor sales of existing
apparel brands in Japan.
Not to absorb capacity inoverseas business was
one of the causes ofdecrease.

In spite of reducing
purchase and inventory,
the sales of winter clothes
didn’t work well becauseof disasters and warm
winter .
Inventory Y/Y 96.0％

ProfitGross profit ratio Y/Y -0.2%
Operating income Y/Y -2,210
Million Yen owing to giving
priority to reducing inventory,

・Too much confidence in earning power of existing businesses
・Underestimating the change of our Business Environment
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5Regarding the Impacts of the Novel Coronavirus (COVID-19)
Impacts on production and at stores began to be felt from February.
The effects rapidly spread from March; by the end of the month, on the 28th (Sat.) and 29th (Sun.),many stores in central Tokyo had closed. For the present, the road ahead remains extremely uncertain.
 Affected stores: Based on the government’s state of emergency, from April 8 to May 6, storesare due to be closed in the following prefectures: Tokyo, Saitama, Chiba,
Kanagawa, Osaka, Hyogo, and Fukuoka. (As of the end of February, there
were 607 stores operating in the above prefectures, equivalent to around
60% of all apparel stores in Japan.) HQ:
From March, encourage teleworking and hold meetings via teleconferencing, etc.
 Company-wide: Provide all employees with 14 days of paid special leave (100％ compensated).

Social contributions as TSI Holdings Group
Provision of hand cream to medical
professionals by cosmetics retailer Laline
JAPAN Co., Ltd. for free
From April 1 to April 30, all 27 Laline branches inJapan will provide all medical professionals
fighting against the novel coronavirus with handcream for free.

Production of washable masks at TSI
Sewing Co., Ltd., which possesses
factories in Yonezawa and Miyazaki
TSI Sewing is producing washable masks
by reusing scrap fabric. It will donate thesemasks to group employees and the local
municipalities where its factories are located.
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6

Ⅱ. Medium-Term Management Plan
Plan and policy for this term

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7

Medium-Term Management Plan
■Although strategic direction remains unchanged, we will lower of the break-evenpoint and boost our speed of restructuring.
■The numerical targets will be revised during the current fiscal year while we leave
the Medium to long term target of operating margin unchanged.
Group Structure Review
・Restructure common platform functions
・Improve efficiency and optimization ofGroup organizational system

Enhancing the Full-price Sales Business

継続・Shift to full-price sales model・Enhance premium nature of brands
・Turn own-brand customers into loyal customers

Reorganize the structure in order to improve theefficiency of our organization by introducing
company organization and establishing platform
department on this March.
Implementing the strategy of enhancing branding,credibility and royality.
In-house EC ratio 31.5%(Y/Y 114.2%)

Multinationalization
・Expand the number of countries with global
brands・Expand existing brands globally・Develop new M&A/Brand

Digitalization
・Expand brand E-Commerce/Omnichannel
・Develop E-Commerce native brands
・Develop new service models utilizing I.T.

Expanding MARGARET HOWELL and PEARLY GATES to US.
Planning to work with a Chinese company for HUF.
We will develop after recovering their market.

Investing in Lyra 30 Fund LP
Starting e-commerce service by salesperson at a real shop,
through “unified commerce”.
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8

Our plan and overall policy for 2021 Ending February
In response to the novel coronavirus (COVID-19), the Japanese government has requested people
to refrain from going outside for nonessential reasons, and to stop using certain facilities, etc., which
has had a severe impact on personal consumption. What is more, further effects are being felt
following the government’s issuance of a state of emergency on April 7. The outlook for the future isat present extremely uncertain, and is dependent on factors such as the length of time it takes for
infections to subside or the effectiveness of the government’s largest ever emergency economic
stimulus package. As it is extremely uncertain, our consolidated performance forecast has not been
determined. From now on, we will announce it promptly when a reasonable estimate is available.

The policy for this term
1. We will drastically restructure and change our business structure
aimed at all of our companies include a holding company.
2.We will give priority to Medium to long-term improvement of
the constitution over annual balance.

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9

Priority Measures for this term

(1) Reorganization

The point of the reorganization

TSI Holdings

1. Reorganize subsidiaries into four groups

The management team

Each “Company president” in HD, manages the business

Integration of management and executionof each group.

2. Form the new Platform department

Chief
Administrative
Officer

GeneralManager,
Platform
department

Company
president

Integrating four functions of SCM, e-commerce, IT
system and marketing into one platform department.

The purpose of the reorganization
1. Accelerate the decision-making and implement.
2. Improvement in profitability by utilizing common
platform.
3. Slim down the headquarters and break off theoverlapping function.
4. Improvement balance and transparency offunctional subsidiaries.

Four Companies
The 1stcompany

The 2ndcompany

C
o
.

C
C
業
o 会o
. 社.

C
o
.

事

C
o
.

The 3rdcompany

C
o
.

C
o
.

The 4thcompany

C
o
.

C
o
.

C
o
.

C
o
.

Speed and impact

Changing market and customer needs

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10

Priority Measures for the Current Term 2. Reforms to Profit Structures

Lowering of the break-even point

Revisions to selling andadministration costs in existing
businesses

Reduction of procurement costs

Over 3 years, aim to achieve SGA ratio of lessthan 50% (Previous term 52.5％)
Significant reduction in costs at HQ by revising
the appropriate allocation of human resources
Initiate a project to cut selling and administration
costs throughout the company

Over 3 years, aim to achieve a 2.0％ cut inprocurement costs*Includes partial selling and administration costs,
such as logistics costs

Implementing operational reforms for whole
existing supply chains

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11

Priority Measures for the Current Term 3. Careful Selection of Promising Businesses
Make a quick decision on policies for rooting out
low profit businesses

Domestic

Investment in brand business- High unit price, proper sales- Channel strategy that does not rely on thenumber of stores

Overseas- Regeneration of or withdrawal from domestic businesses- Closure of overseas dormant subsidiaries- Revision of functions of overseas subsidiaries- Restructuring of or withdrawal from overseas subsidiaries- Expansion of existing brands overseas, opening
up of stores- Partner contracts and opening up of stores overseas- Negotiations for the acquisition of licenses overseas

Investment to bring about evolution
in business structures- Streamlining and cost cutting through the introduction ofsystems- Investment in overseas settlement hubs
- Capital investments to reform domestic logistics hubs

Investment in future profitable fields- JV in growth fields such as EC, digital technologies, etc.
and expansion into investment business

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12

Priority Measures for the Current Term 3. Careful Selection of Promising Businesses

Priority Measures
for the Current
Termbusinesses③
Developmentof new
Control the opening of real stores and launch new apparel brands centering on high unit
price & proper sales which have prospects for overseas expansion.

Founded in 2011 in
California. Opened its
first Japan store in Nov.
2019 in Shibuya Parco.

Launch in 2020 in SS.
As of the end of Feb.,
had opened 2 stores:
one in JR Nagoya
Takashimaya and theother in LUMINE
Shinjuku.

Launch in 2020 in SS.
Opened in JR Nagoya
Takashimaya.

Founded in 1959 as a golfclub manufacturer. Will deal at
the HOUSE in April 2020.
decide to open a store in
Odakyu Shinjuku.

Expansion of FW
wholesale in 2020

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13

Priority Measures for the Current Term 3. Careful Selection of Promising Businesses

Investment in future profitable fields
1. Investment in Lyra 30 Fund LP - Investment strategy aimed at creating business  In order to expand new businesses, there is aneed to take initiatives with rising brands and techcompanies with business frameworks optimized
in terms of IT/digital technologies, and to build
relationships with such companies that include
investment.
 Targeting investment in global fashion tech, we
decided to invest in Lyra 30LP, a fund which
possesses an investment scheme (Key LP
Scheme) that apprehends items of strategicinterest for our company while being an LP
investment.

Investment

Investment

Negotiation

 This will lead to the creation of new businessvalues for us as TSI, such as the development of
new collaborative ventures with funded companies.

TSI will cultivate prospective global ventures throughthis fund, and will create new business pillars utilizing
our DNA, such as the fashion tech business.

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14

Priority Measures for the Current Term 3. Careful Selection of Promising Businesses

Investment in future profitable fields
2. Unified commerce - Stores and EC provide a unified customer service experience We aim to create systems inwhich sales staff take center
stage in providing brandexperiences and values
through a range of channels,
and create true engagementwith customers.

APP Enticement to visit stores and customer
service based on the customer’s online
behavior data

Commencement of [HERO] test introduction

Customers contact store
staff via a chat function
on the EC site

Store staff deal withcustomers via video chat,live chat, etc.

 Settlement and productreceipt according to thecustomer's preferences Creation of online contents andonline customer services by store
staff

A solution that enables sales staff in real
stores to deal with customers via EC. It
allows staff to create engagement withcustomers, and for customers to also book avisit to the store. The creation of newvalues by store staff is a tool for
generating themes.
Many famous overseas brands haveintroduced this solution, but TSI is the first to
introduce it in Japan.
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15

Priority Measures for the Current Term 4. CSR Initiatives
Environmental initiatives
We are working to reduce our environmental footprint by streamlining our business activities
and constructing environmentally friendly supply chains.
In order to turn our vision into reality, we have set the following 3 core goals for the current term,
which all sectors of our group will work towards achieving.

Stamping out the practiceof sending products
to wasteTransition toenvironmentally friendly
shopping bags

As one of our basic policies, fromthe current term our group has
resolved to completely do awaywith the practice of sending
products to waste, and to makemore effective utilization ofreusing, recycling, etc.

We will make the transition to moreenvironmentally friendly materials inall our plastic and paper shoppingbags, including the use of materials
made from biomass or FSC-certified
materials. (Once our current stock
has been depleted, we will graduallyreplace our bags with those madefrom more environmentally friendly
materials, with the intention of
making a total transition within thecurrent fiscal year.)

Reuse of plastic hangers
We will promote the reuse of
distributed plastic hangers, withthe aim of cutting plastic hanger
use by around 50% during thecurrent fiscal year.

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16

Dividend Policy
 We will disclose dividend payment during the current term as soon as we canreasonably estimate.
 We will continue to implement the acquisition of treasury shares in a flexible manner.
Treasury stockacquired(Million Yen)

Dividend ratio (%)

4,985
4,236

4,008

3,382

1,334
4,000,000

5,968,200

6,000,000

5,000,000

2,000,000

 Regarding treasury sharesDate
1/31/2018
6/30/2020

Number of shares Content

10,000,000 Disposition by cancellation* 8,000,000 - 10,000,000

Disposition by cancellation*8 million of the treasury shares currently owned and all of the treasury shares currently being acquired

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17

Ⅲ. Reference Data

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18

Domestic Monthly Sales Information
FY 2019 Ending Feb .
All Stores： 101.8%
Existing Stores：100.6%
115%

全店

FY 2020 Ending Feb.
All Stores： 101.3%
Existing Stores：95.6%

既存店

115.3

112.7

111.9
110%

109.9
106.4

105%

111.0

110.3

105.2

104.0

103.1
100.4

98.6

102.6
100.5

100.9

100.7
101.2

94.3

97.1

101.9

101.2

99.4
99.2

99.2

95.8

97.9

94.9

93.0

95.0

93.6

105.5

103.3

102.2

97.0

95%

106.3

104.7
101.5

100%

108.1
106.4

94.3

92.6

92.9
91.5

90%

91.9 91.7
90.8
88.8

85%

83.4

0%

2018.3

4

5

6

7

8

9

10

11

12 2019.1

2

3

4

5

6

7

8

9

10

11

12 2020.1

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2
19

Net Sales Per Channel

FY Ending Feb. 2019

FY Ending Feb. 2020

Results

Composition

Results(Million yen)

Rate (%)(Million yen)

Y/Y (%)

Composition
Rate (%)

Composition
Rate

Y/Y Change

Department Stores

25,202

15.3

21,39384.9

12.6-2.7ptCommercial Facilities(*1)

80,203

48.6

86,028

107.3

50.6

+2.0pt

E-Commerce

34,13820.7

36,336

106.4

21.4

+0.7ptOverseas

10,367

6.3

8,499

82.0

5.0

-1.3ptOthers(*2)

15,0979.1

17,809

118.0

10.5

+1.4ptTOTAL

165,009100.0

170,068

103.1

100.0

-

*1 Fashion buildings, shopping centers, railroad station buildings, individual stores, outlet shops etc. except for department stores.
*2 Apparel businesses such as wholesale, in-company sales and non-apparel businesses of the group companies.

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20

Store Distribution

Domestic

Overseas

Total# of Stores

FY Ending Feb.

Store

Store

2019

Open

Close※2

1,021

Change-99# of Stores

143

Change-10# of Stores

1,164

Change

-109

+61

-84

FY Ending Feb. 2020
998
-23

+9

-76

76
-67

+70

-160

1,074
-90

*1 Number indicated on "Change" rows are comparison with the end of Q3ND 2019 Ending February.
*2 The number of the stores BEIJING TSUBOMI FASHION CO.,LTD. locates (50) is included.

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21

Disclaimer
Descriptions about future within this document are based on theinformation that the company obtains on the date of this report andcertain assumptions deemed to be reasonable. Actual earnings may
differ materially from various future factors.

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22