Results Briefing: Q1ST (March to May 2020)
Results of 2021 Ending Feb.
2020.7.3

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I. Results Overview

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11. Measures against the novel coronavirus (COVID-19)■ Store: MarchIn addition to stay-at-home requests and shortening of business hours,
an increasing number of stores were temporarily closed in the last weekend.

April 7 A state of emergency was declared for seven prefectures, including Tokyo.
⇒ Many apparel stores, equivalent to about 60% of all such stores across the nation weretemporarily closed.
April 16 The state of emergency was extended to the entire nation.
⇒ Over 90% of apparel stores across the nation were temporarily closed.
May 14 The state of emergency was lifted for 39 prefectures.
⇒ Stores started to reopen, mainly in Hiroshima and other prefectures in the western partof it in the third week of May, and in Nagoya and Osaka in the fourth week.
⇒About 60% of stores reopened by May 24.
May 25 The state of emergency was lifted for all prefectures.
⇒Stores in the Kanto region reopened in the last week of May.
May 31 About 80% of stores reopened, except for 200 stores, which were located in Marui, Parcoand Lumine.
June 3 All our stores have reopened. (They still operate on shortened business hours. )■Production: Delivery of Chinese products and other products was delayed in March and April.
■Distribution: After the state of emergency was declared, distribution warehouses were near capacity.
■Whole company: All employees were granted 29 special paid holidays (with a guarantee of 100% of wages)

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22. Consolidated Financial Highlights -Profit and Loss-

Q1ST 2020 Ending Feb.
Composition

Results

Rate (%)

Q1ST 2021 Ending Feb.

Results

Composition

Y/YRate (%)

ChangeY/Y (%)Net Sales

42,870100.0

21,682100.0-21,187

50.6

Gross Profit

24,611

57.4

9,058

41.8

-15,553

36.8

SG&A Expenses

22,69852.9

15,504

71.5-7,194

68.3

21,35849.8

14,545

67.1-6,813

68.1

293

0.7

192

0.9-101

65.6

1,046

2.4

766

3.5-280

73.2

Operating Income

1,913

4.5-6,445-29.7-8,358-

Ordinary Income

2,182

5.1-6,094-28.1-8,276-

Extraordinary Income

1,294

3.0

670.3

-1,2265.2

Extraordinary Loss

390.1

3,320

15.3

3,2808352.6

Profit Before Taxes

3,437

8.0-9,346-43.1-12,784-

Profit Attributable to Owners of Parent

2,473

5.8

-10,454-48.2-12,927-

EBITDA ※

3,253

7.6

-5,486-25.3-8,739

-

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

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

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33. Net Sales Per Channel

Q1ST 2020 Ending Feb.

Q1ST 2021 Ending Feb.

Results

Composition

Results(Million yen)

Rate (%)(Million yen)

Y/Y (%)

Composition
Rate (%)

Composition
Rate

Y/Y Change

Department Stores

6,015

14.0

1,752

29.1

8.1

-5.9ptCommercial Facilities(*1)

22,509

52.5

7,033

31.2

32.4

-20.1pt

In-house EC

2,157

5.0

3,683

170.7

17.0

+12.0pt

3rd party

5,790

13.5

5,498

95.0

25.4

+11.9pt

E-Commerce

7,948

18.5

9,181

115.5

42.3

+23.8pt

Overseas

2,180

5.1

1,207

55.4

5.6+0.5pt

Others(*2)

4,216

9.8

2,508

59.5

11.6

+1.7ptTOTAL

42,870100.0

21,682

50.6

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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4

54. Priorities of the business structural reform

Sales(Businessstructure)

Issues forfirst half

Issues for second half and next year
(fundamental reforms to win competition)

C: Create new midterm management
plan (sales down

E: Digitalization(Digitalization 50％,Ratio of proper price sales 80%)and profits up)

Grossoperating
income(Cost price)

B: Reduce stocks(70% in secondhalf)

Operatingincome(SG&A)

A: Cut SG&A
costs (4 billionyen/annualized)

D: Organizational structurereformA and B were implemented in the first quarter, C will be done within the first half.
D and E will be materialized and implemented in the second half or later.
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55. Progress in key issues for this year

Basic Policy(1) Overhauling the business structure(2) Carefully selecting prospective businesses and making investment■Organizational restructuring〇 Business optimization: Launching a company-wide structural reform project to increase profitability■Reforming the earnings structure〇 Cutting SG&A costs (¥4 billion/annualized), starting the stock reduction project (70% in the secondhalf)■Carefully selecting prospective businesses〇Acquisition of shares of Efuego Corp. (From March 31, 2020)〇Acquisition of the “ETRÉ TOKYO” business (August 1, 2020)
Establishment of the D2C (direct-to-consumer) platform〇”Ping Apparel” store opened in the Odakyu Halc department store. (May 30, 2020)〇Omni app tool “HERO®” was introduced to allow sales staff to provide services for online shoppers inreal time. The service started at five “Laline” stores on June 4.
〇 Decision to withdraw from the “Natural Beauty”and Hong Kong business (TSI ASIA LIMITED).

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66. Progress in key issues for this year: Digital strategy
Laline JAPAN, which deals in cosmetics products, introduced an omni app tool “HERO®” to allow sales staff
at brick-and-mortar stores to provide services for e-commerce customers in real time.
Purchase rate is 10 times the size of ordinary ecommerce. Average customer spending is 130%.
Introduced on June 4, the new service seems to have made agood start.
・291 cases have been handled (as of June 30)

・Average spending 7,466 yen (110% of the ordinary ecommerce)
・Conversion (purchase rate after chatting) rate: 11.5%
・Average rating: 4.7 out of 5.0

What is ”HERO®” ?
Conversation app that uses text messages,chatting and video calls to connect brick-andmortar stores and online shoppers.
Participating stores
Sapporo Paseo store
Takashimaya Gate Tower Mall store
Yurakucho Marui store
Lumine Est store
LUCUA 1100 store“Live commerce” is a major
function that provides aseamless service of an actual
store ad e-commerce.

Utilizing the customer service skills of the sales staff, which is
the Company Group’s strength, for e-commerce, we can offer acustomer service experience that integrates a brick-and-mortar
store and e-commerce.

About future developments
The service will be simultaneously expanded
to the apparel business, such as “PearlyGates” and “Margaret Howell”.
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77. Plan for this fiscal year
We plan to achieve net sales of 56.5 billion Yen (69.0% Y/Y) andoperating income of -13.5 billion Yen ( - Y/Y) in 1st Half.
Unit:Million Yen

Net Sales

1st Half
FY Ending Feb.
FY Ending Feb.
2020
2021
81,84756,500

Y/Y
(%)
69.0

Operating Income-164-13,500-Ordinary Income
Profit Attributable toOwners of Parent769-12,700-

1,053-16,200-■Preconditions of the plan

We do not assume a second wave of the coronavirus. We presume that the market conditions will slowly recover to a certain
extent.
Due to the impacts of COVID-19 , a proper and reasonable calculation of earnings forecast in 2nd half is difficult and we force
to modify 2nd half plan.
Therefore, the consolidated earnings estimate in 2nd half will not be announced at this time.
■Dividends for this year
We plan not to pay dividends for this year because of the unprecedented situation.
■Treasury shares
We acquired 2 million shares from March 12, 2020 through June 12, 2020.
We cancelled 10 million shares on June 30, 2020. We will not implement it for a while.
■FundsIn addition to the usual credit line, we secured a borrowing facility of 30 billion yen from a major partner bank.
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88. About CSR measures
CSR Basic Policy
Under our corporate philosophy, “We create value that shines the hearts of people through fashionand share the happiness of living tomorrow together with society,” our Company Group will create asustainable future society with all stakeholders through business activities.
Producing medical gowns at our plants

About 2 million gowns to be produced
at TSI Sewing (Yonezawa, Miyazaki)
by October

Producing washable masks
About 50,000 washable masks
were produced for employees
and local residents at the aboveplants.

Donating clothes to medical workers

Medical workers who havereceived our assistance

About 8,000 clothing products
were donated to medicalworkers via International
Medical Volunteers JapanHeart.

Free hand cream for medical workers
Laline JAPAN, which deals in cosmetics
products, offered free hand cream for all
medical workers fighting COVID-19.
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9Ⅲ. Reference Data

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10Brands Overview

Unit:Million Yen
Q1ST 2020 Ending Feb.
Sales

Q1ST 2021 Ending Feb.

Composition

Gross Profit

Rate (%)

Ratio (%)

Sales

Y/Y

Composition

Gross Profit

Rate (%)

Ratio (%)

Sales (%)

Gross Profit
Ratio (pt)1.

nano・universe

6,136

14.3

51.3

3,188

14.7

40.6

52.0

-10.7

2.

NATURAL BEAUTY BASIC4,486

10.5

63.4

2,031

9.4

34.0

45.3

-29.4

3.

PEARLY GATES

3,255

7.6

55.3

1,605

7.4

43.2

49.3

-12.1

4.

MARGARET HOWELL

3,459

8.1

62.1

1,269

5.9

53.4

36.7

-8.7

5.

HUF

1,082

2.5

50.6

901

4.2

43.6

83.3

-7.0

6.

AVIREX

1,952

4.6

63.6

892

4.1

56.3

45.7

-7.3

7.

UNDEFEATED

1,130

2.6

44.6

854

3.9

37.9

75.6

-6.7

8.

STUSSY

1,285

3.0

69.6

707

3.3

60.3

55.1

-9.3

9.

PROPORTION BODY DRESSING

1,009

2.459.4680

3.1

50.7

67.4

-8.7

10.

ROSE BUD

1,678

3.9

54.4

627

2.9

39.4

37.4

-15.0

TOP10

25,476

59.4

57.5

12,758

58.8

43.9

50.1

-13.6

Other Brands

17,190

40.1

57.7

8,917

41.1

38.8

51.9

-18.8

Continuing Brands

42,666

99.5

57.6

21,676

100.0

41.8

50.8

-15.8

203

0.5

27.7

5

0.0

34.7

2.7

+7.0

42,870

100.0

57.4

21,682

100.0

41.8

50.6

-15.6

Closed Brands
TOTAL

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11

Domestic Monthly Sales Information

Q1ST 2020 Ending Feb .
All Stores： 108.3%
Existing Stores： 101.2%
115.0

100.0

110.3
103.3

All Stores
Existing Stores

112.7
106.4

99.2

108.1 106.3
100.9

Q1ST 2021 Ending Feb.
All Stores： 48.7%
Existing Stores： 78.7%

99.4

111.0

99.2
94.3

110.6

105.5
101.9 101.2

85.0

93.0

91.5
95.8

92.6

105.7

91.9
90.8

83.4

91.7

88.8

70.0

66.6
65.4

55.0

43.3
40.0

33.7
25.0
3

4

5678

92020

10111212

3452021

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12

Store Distribution# of Stores

Q1ST 2020 Ending

FY Ending Feb.

StoreStoreQ1ST 2021 Ending

Feb. ※12020OpenClose※2Feb.

1,033998

Change+12-23# of Stores

9376

Change-50-67

1,126

1,074-38-90+25-23

1,000

Domestic+2+3-673

Overseas# of Stores-3+28-29

1,073

Total
Change-1*1 Number indicated on "Change" rows are comparison with the end of Q1ST 2019 Ending February.

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13

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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