Six Months Ended August 31, 2023

Materials for Financial Results Briefing
October 18, 2023
PAL GROUP Holdings CO., LTD.

Management dedicated to the happiness of all employees and shareholders

Securities code: 2726

Table of Contents

Financial Report
Review of Financial Results
for the Six Months Ended August 31, 2023
Full-year Financial Results Forecast
for the Fiscal Year Ending February 29, 2024

Management Vision
TopicsResponse to Shareholders
Initiatives for ESG

2
3
14
16
19

26
29

Financial Report
Review of Financial Results
for the Six Months Ended August 31, 2023
Full-year Financial Results Forecast
for the Fiscal Year Ending February 29, 2024

Review of Consolidated and Non-consolidated Financial Results of PAL GROUP
Holdings CO., LTD. + PAL CO., LTD. for the Six Months Ended August 31, 2023

Review on the first half of the fiscal year
With the movement restrictions caused by the COVID-19 crisis being fully lifted, personal consumption related to the apparel businessand the miscellaneous goods/accessories business is recovering strongly. As a result of this, net sales and profits achieved new record
highs in the first half, leading to upward revisions of the financial results forecast made at the beginning of the current fiscal year.
Net sales In addition to the significant growth of town (dress-up) brands in subsiding phase of COVID-19, casual brands on its way torecovery since last year drove sales without slowing down, thus leading to a big leap of the apparel business. The 3COINS
business has also brought about positive effects of existing and new stores due to the expansion of large-sized“3COINS+plus” stores and has grown at a pace far exceeding the net increase of ¥10 billion in the current fiscal year.

ProfitIn the apparel business, regular-priced sales increased both at stores and on e-commerce (EC) platforms, pushing profit
margins higher than expected and greatly contributing to achieving record profits.

Non-consolidated

Consolidated

Net Sales

Ordinary Profit(Millions of yen)

(PAL GROUP Holdings CO., LTD.
+ PAL CO., LTD.)Net Sales

Ordinary Profit(Millions of yen)
14,000100,000

78,19380,00063,19560,00094,145
10,384

7,710

45,16512,00012,000100,000

10,00080,0008,000

60,0006,000

40,00040,0002,000
0

0(2,000)(1,983)2020/82021/82022/82023/810,0008,000
6,000

36,742

4,000

2,793

20,00055,67370,513
7,108

83,782
9,137

4,000

2,759
20,0002,000
0

0(2,000)(1,145)2020/82021/82022/82023/8PAL GROUP Holdings Co., Ltd. 3

Consolidated Statements of Income of PAL GROUP Holdings CO., LTD.
for the Six Months Ended August 31, 2023
(Millions of yen)Six months ended August 31, 2023
Six months
Six months
ended August 31, ended August 31,
2021
2022

Forecast

Actual results
Changes fromthe previous
corresponding
periodCompared toforecast

108.1%
109.5%
0.7%
129.5%
1.8%
130.4%
1.9%

Gross profit

63,19534,80978,193
43,66987,09047,78094,14552,327(% of net sales)

55.1%

55.8%

54.9%

55.6%

Operating profit

2,838

7,582

7,950

10,299(% of net sales)

4.5%

9.7%

9.1%

10.9%

Ordinary profit

2,793

7,710

7,960

10,384(% of net sales)

4.4%

9.9%

9.1%

11.0%

120.4%
119.8%-0.2%
135.8%
1.2%
134.7%
1.1%

Profit attributable toowners of parent

1,444

4,808

4,930

7,001

145.6%

142.0%(% of net sales)

2.3%

6.1%

5.7%

7.4%

1.3%

1.7%

Net sales

At PAL CO., LTD., NICE CLAUP Co., LTD., and NOLLEY’S co., ltd., the apparel business grew significantly in both the store
and EC channels and became the driving force behind record highs in both net sales and profit.

The implementation of a short MD cycle of 4 weeks has improved the accuracy of demand forecasts and led to the company-wide
penetration of the management policy to not create or keep unnecessary inventory. We believe that the “PAL-style” sustainablebusiness model is producing an effect.

PAL GROUP Holdings Co., Ltd. 4

Non-consolidated Statements of Income of PAL GROUP Holdings CO.,LTD. and PAL CO., LTD. for the Six Months Ended August 31, 2023
(Millions of yen)Six months ended August 31, 2023
Six months ended
August 31, 2021

Six months ended
August 31, 2022

Actual results
Changes from the previous
corresponding period

Net sales
Gross profit

55,67330,91470,51340,40883,782
46,533(% of net sales)

55.5%

57.3%

55.5%

Operating profit

2,701

7,051

9,166

(% of net sales)

4.9%

10.0%

10.9%

Ordinary profit

2,759

7,108

9,137

(% of net sales)

5.0%

10.1%

10.9%

1,642

4,589

6,623

2.9%

6.5%

7.9%

Profit(% of net sales)

118.8%
115.2%-1.8%
130.0%
0.9%
128.5%
0.8%
144.3%
1.4%

In the apparel business, dress-up brands such as BEARDSLEY and Whim Gazette have made a major recovery, achieving
figures higher than the pre-COVID level, while casual brands such as mystic and WHO’S WHO gallery have strongly advanced
regular-priced sales both on EC platforms and at stores. As a result, net sales and profit have remained strong since last year.
In the 3COINS business, a spate of new openings of large-scale stores “3COINS+plus” rushed, generating new store effects, andsince the second half of last year, sales at these large-scale stores have continued to have an effect of boosting sales at existing
stores. As such, we forecast a net increase of over ¥12 billion in the current fiscal year.
PAL GROUP Holdings Co., Ltd. 5

Financial Situation of NICE CLAUP Co., LTD.
for the Six Months Ended August 31, 2023
(Millions of yen)

Net sales
Operating profit
Ordinary profit

ProfitSix months ended
August 31, 2021

Six months ended
August 31, 2022

Six months ended
August 31, 2023

Changes from theprevious fiscal year

6,196
(60)
(46)
(40)

7,603
260
271
168

8,526
862
864
552

112%
331%
318%
328%

While our core brand, one after another NICE CLAUP, somewhat struggled, “natural couture” and the integrated “OUTLET”
business performed strongly, resulting in record net sales and record profit for the first half. This is the fruit of our continuous
efforts to strengthen EC, increase the utilization of SNS, and increase store sizes.
EC sales amounted to ¥3.2 billion, accounting for 36.7% share and representing 115% year-on-year increase, or a double-digit
increase. If we focus only on sales of regular-priced brands, the share of EC exceeded 50%, showing that strengthening EC
has progressed steadily.

The total number of followers of our staff’s personal SNS accounts has reached 1.24 million, an increase of 400,000 followers
from the previous fiscal year. SNS has promoted customer visits to physical stores and become lines to EC sites.
With regards to our efforts to increase store sizes, “one after another NICE CLAUP” opened 2 new stores: the HEP FIVE
branch in Osaka and the Sotetsu JOINUS branch in Yokohama. In the “OUTLET” business, large-scale stores integrating NICE
CLAUP and OLIVE were opened in SHISUI PREMIUM OUTLETS and MITSUI OUTLET PARK OSAKA KADOMA. We haveincreased the size of 4 stores in the current fiscal year. Our ongoing efforts to increase store sizes are progressing smoothly.
Without changing our basic policy, we will strive to maintain strong performance and achieve our budget goals.

PAL GROUP Holdings Co., Ltd. 6

Overview of Sales Results and E-commerce Net Sales by Segment(Millions of yen)Six months ended
August 31, 2021

Six months ended
August 31, 2022

Six months ended
August 31, 2023

Changes from the previous
corresponding period

Apparel

39,82449,86957,673115.6%

Composition %

63.0%

63.8%

61.3%

-2.5%

Operating profit

246

5,311

8,504

160.1%

Operating profit %

0.6%

10.6%

14.7%

4.1%

23,32528,26136,375128.7%

Composition %

36.9%

36.1%

38.6%

2.5%

Operating profit

2,597

2,258

1,784

-21.0%

Operating profit %

11.1%

8.0%

4.9%

-3.1%

Net sales

Miscellaneous Goods/Accessories
Net sales

Other

45

Net sales
Six months ended
August 31, 2021

62
Six months ended
August 31, 2022

96
Six months ended
August 31, 2023

154.8%
Changes from the previous
corresponding period

E-commerce net sales
ZOZO TOWNPAL CLOSET (Our online store)
Other

Total
Ratio to apparel net sales

7,874
5,429
1,834
15,137
38.0%

9,916
7,064
1,629
18,60937.3%

11,3909,211
2,104
22,70539.4%

114.9%
130.4%
129.2%
122.0%
2.1P

While the profit margin of the apparel business has increased significantly, the miscellaneous goods/accessories
business continues to face difficult conditions mainly due to rising costs and exchange rate factors.
E-commerce net sales, as the axis of our own website, continued to be strong. App membership also reached8.64 million at the end of August.
PAL GROUP Holdings Co., Ltd. 7

Main Brands
Net sales(Millions of yen)

2,956

114.3%

2022/8Net sales(Millions of yen)965
108.8%

2022/82021/8Net sales

23,6092022/83COINS

296 stores

Based on the concept “wardrobe for popularman,” we propose a mixed coordinate between
mode and street styles. We select products witha high regard for comfort, fabric cutting andmaterials and introduce them to both domestic
and overseas markets.

(Millions of yen)

133.3%

2021/812 stores

2023/831,47918,735

Lui’s

Based on the American classic, we offer
authentic styles beyond generations andgenders. Express yourself as you findyour own style.

2023/8887

728

27 stores

3,379

1,869

2021/8

KastaneWe have a wide range of products from basic lifestyle
goods to goods for interior space design and productswith intriguing designs. 3COINS, a miscellaneous
goods store where there are always new discoveries
whenever you visit, promises to bring you a spark of
excitement every time. We offer a wide variety of 300yen goods, everything from lifestyle goods to interior
goods, fashion accessories, mobile items, kids’ items
and more.

2023/8PAL GROUP Holdings Co., Ltd. 8

Selling, General and Administrative Expenses(Millions of yen)

Non-consolidated
PAL GROUP Holdings CO., LTD.
+ PAL CO., LTD.
Consolidated
SG&A ratio (consolidated)
Personnel expenses ratio
Rent expenses ratio
Advertising expenses ratio

Changes from theSix months ended
previous
August 31, 2023 corresponding period

Six months ended
August 31, 2021

Six months ended
August 31, 2022

28,21333,35637,367112.0%

31,970
50.6%
17.7%
13.3%
2.5%

36,087
46.2%
17.1%
12.2%
1.0%

42,027
44.6%
16.3%
11.6%
1.0%

116.5%
-1.6P
-0.8P
-0.6P
ー

The SG&A ratio has fallen significantly due to the growth of net sales and cost
reductions in major items. In terms of personnel expenses, we have worked on to
drastically reduce temporary staffing and overtime work. Also, the reduction inrents is starting to take effect, driven by 3COINS with the strong performance .

PAL GROUP Holdings Co., Ltd. 9

Number of Stores
Number of storesas of August 31, 2023: 947

Other regions
Kansai region
Kanto region(+20 compared to the end of the previous fiscal year)

1,000

940

920

933

947

900
800

289

297

324

330

222

205

209

700
600
500

235

Status of opening/closing stores
In the apparel business, we opened 13 newstores and closed 19 stores, resulting in a net
decrease of 6 stores. In the miscellaneous
goods/accessories business, we opened 35
new stores and closed 9 stores, resulting in a
net increase of 26 stores.

Status of new stores for each brand
400
300
200

416

401

404

408

2020/82021/82022/82023/8100

In the miscellaneous goods/accessories
business, 3COINS opened 23 new stores,
Lattice opened 5 new stores, and Salut! closed
7 stores. In the apparel business, there wereno major changes.

0

PAL GROUP Holdings Co., Ltd. 10

Extraordinary Income or Losses(Millions of yen)Six months ended
August 31, 2021

Six months ended
August 31, 2022

Six months ended
August 31, 2023

Loss on retirement of non-current assets

83

13

90

Impairment losses

381

446

143

465

459

233

Total extraordinary losses

Extraordinary losses decreased significantly due to a certain level of clear idea in reorganizing
stores during the COVID-19 crisis and a major recovery in financial results owing to the returnof customers to stores during the current fiscal year.

PAL GROUP Holdings Co., Ltd. 11

Consolidated Balance Sheets(Millions of yen)

As ofFebruary 28,
2022
Current assets
Cash and deposits
Accounts receivable - trade
Inventories

Other

Non-current assets
Property, plant andequipment
Intangible assets
Investments and otherassetsTotal assets
Current liabilities
Non-current liabilities
Total liabilities

Total net assets
Total liabilities and net assets

69,85952,2506,342
10,766
530
23,868
6,608
467
16,792
93,72836,33410,004
46,33947,38993,728As ofFebruary 28,
2023

85,496
63,8458,554
12,542554
27,0149,120
333
17,561
112,510
43,237
14,08257,31955,191
112,510

Changes
As offrom the end of
August 31, 2023
the previous
fiscal year

89,09961,903
10,32814,4892,378
28,64810,430337
17,879117,748
42,706
17,63760,34457,404
117,748

Remarks

3,603(1,942)
1,774
1,947
1,824
1,634
1,310
4
318
5,238
(531)
3,555
3,025
2,213
5,238
PAL GROUP Holdings Co., Ltd. 12

Consolidated Statements of Cash Flows(Millions of yen)

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Six months ended
August 31, 2021

Six months ended
August 31, 2022

Six months ended
August 31, 2023

(1,115)(413)(16,824)(18,352)
63,08844,735

7,229(1,433)(2,047)
3,748
52,25055,9985,525(2,336)(5,130)(1,941)
63,84561,903

While stabilizing financial cash flows by adjusting long-term and short-term borrowings,
we also used cash for purchasing treasury shares to enhance stock value.

PAL GROUP Holdings Co., Ltd. 13

Consolidated Full-year Financial Results Forecast
for the Fiscal Year Ending February 29, 2024
(Millions of yen)
Fiscal year ended Fiscal year ended
February 28, 2022 February 28, 2023

Net sales

Gross profit
SG&A expenses
Operating profit
Ordinary profit
Extraordinary
income or losses
Profit attributable toowners of parent
Gross profit ratio

First half ended Second half ending Fiscal year ending Changes from theAugust 31, 2023 February 29, 2024 February 29, 2024 previous fiscal year

134,200
74,314
66,794
7,520
7,660(1,590)164,482
90,221
74,39915,822
16,061(831)

94,14552,32742,027
10,29910,384(233)

90,13049,34040,670
8,670
8,760
(400)

184,270
101,667
82,697
18,97019,140(634)

112.0%
112.7%
111.2%
119.9%
119.2%
76.3%

4,001
55.4%

9,955
54.9%

7,001
55.6%

5,450
54.7%

12,45055.2%

125.1%
0.3P

Regarding the business performance for the period under review, EC sales were strong due to the success ofvarious promotions aimed at strengthening them that we have conducted since the beginning of the outbreak of
COVID-19. Furthermore, both the number of customers visiting and sales at physical stores increased as theflow of people picked up in response to the relaxation of self-restraint restrictions, and there was improvement incommercial facilities generating customer traffic. As a result, ordinary profit and profit attributable to owners ofparent increased by 30% and 42%, respectively, than forecasted at the beginning of the current fiscal year.
From the third quarter onward, the operating environment remains difficult for retailers that operate stores, due tothe continuing impact of soaring utility costs and raw material prices as well as further price increases due to theweaker yen, coupled with rising wage costs resulting from labor shortages. Thus, we have decided to upwardly
revise the full-year financial results forecast for the fiscal year ending February 29, 2024, incorporating sales andprofits for the six months ended August 31, 2023, without changing the forecast for the second half.

PAL GROUP Holdings Co., Ltd. 14

Premises for Full-year Financial Results Forecast
for the Fiscal Year Ending February 29, 2024
1. Number of stores

Fiscal year ended
February 28, 2022

47
77
(30)
902

Number of new stores
Number of closed stores

Net increase in number of stores
Number of stores at the end of the period

2. Sales at existing stores(Total for the PAL Group companies)

Fiscal year ended
February 28, 2023

136.0
164.3
132.5

120.0
116.5
128.8

Of which, sales at existing retail stores
Of which, sales at existing stores via internet

March 2022

March 2023

111.1
104.0
139.9

110.9
108.5
114.2

Sales at existing stores
Of which, sales at existing retail stores
Of which, sales at existing stores via internet

March 2022

March 2023

113.7
142.6

118.4
111.6

Sales at all stores

Of which, E-commerce

4. Number of customers andaverage spending per customer
Apparel Business
Miscellaneous Goods/Accessories BusinessOverall

48
28
20
947

First half ended
August 31, 2023
Actual results

May

117.6
109.1
134.9

Fiscal year ending
February 29, 2024
Forecast

102.0
100.8
114.3

107.5
105.0
119.2

June

108.7
105.2
136.7

April

May

125.7
132.6

118.0
133.6

Average spending per customer compared to the fiscal year
ended February 28, 2023
(Accumulated figure for the first half)

110.2%
101.7%
107.8%

June

113.2
116.6

79
54
25
972

Second half ending
February 29, 2024
Forecast

113.1
109.1
124.1

April

Fiscal year ending
February 29, 2024
Forecast

As of August 31, 2023

92
67
25
927

Fiscal year ended
February 28, 2022

Sales at existing stores

3. Sales at all stores

Fiscal year ended
February 28, 2023

July

August

110.3
107.5
118.0

119.1
117.4
123.1

112.3
109.8
119.4

July

AugustFirst half total

128.3
121.4

120.2
117.7

120.6
122.0

Number of customers compared to the fiscal year
ended February 28, 2023
(Accumulated figure for the first half)

102.5%
105.0%
104.8%PAL GROUP Holdings Co., Ltd. 15

Management Vision
Business Results Trend
Medium- to Long-term Vision

Business Results Trend
(%)

80

80

80

56.3

55.7

80

56.8

56.0

80

56.5

(Millions of yen)

80

54.7

80

56.4

80

54.9

80

56.1

80

55.8

80

55.7

80

56.3

80

54.6

80

80

55.4

54.9

90
80
70
60
50
40

2007
SPA ratio: 80% achieved

180,000

120,000

Gross profit
ratio
Net sales

164,482

Ordinary
profit2006
Listed on the first section of
the Tokyo Stock Exchange

150,000

SPA ratio(Millions of yen)
132,163
20,000130,474
134,200
123,241
116,457
114,410
16,061
108,522108,089
15,000100,033
92,4792002
Acquired capital in
NICE CLAUP
85,36090,00077,39566,461

69,87960,0006,838
5,247
30,00010,000

9,168

7,963

7,848 7,542

6,967
6,013

7,832

7,660

5,741 6,044
5,000

4,243

1,052
0

2009/2 2010/2 2011/2 2012/2 2013/2 2014/2 2015/2 2016/2

2017/2 2018/2 2019/2 2020/2 2021/2 2022/2 2023/2

0

PAL GROUP Holdings Co., Ltd. 17

Medium-to Long-term Vision
Business strategies
Further penetration of “PAL-style” management to Group companies:
transition to a holding company structure
Creation of new brands (In-house proposals, external collaboration and M&A, etc.) ¥300.0 billion
Enhancement of infrastructure: IT, logistics, production

Promoting overseas business
Promoting online business¥150.0 billion

Delayed for 2
years due to theimpact of the
COVID-19 crisis¥100.0 billion

Fiscal year ended
February 28, 2014

Fiscal year ended
February 28, 2019

Fiscal year ending
February 28, 2026
PAL GROUP Holdings Co., Ltd. 18

Topics
1. Progress of the Reform of MD
2. Enhancement of E-commerce Sales
1). Trend in EC net sales
2). Trend in PAL App membership
3). Increased investment in automation of e-commerce
distribution warehouse

3. Initiatives for Sustainability1). Opening of “Kuroshio Sou” in Shirahama
2). Launch of local revitalization project “KITO”

1. Progress of the Reform of MD
Concrete measures
2013

Stage 1
November
2013

Stage 2
2014

Stage 3
2015
2016

2017

2021

Final stage in establishing the MD Cycle (8 weeks) for best-selling products
Declaration of the bold reform of MD
Taking bold actions responding to the environmental changes
In light of the aspects including weakening sense of spring and autumn seasonsdue to global warming, diversifying period and waning popularity of bargain
sales, and penetration of fast fashion
Drastically shorten the MD Cycle for best-selling products to 4 weeks
Under harsh condition for apparel retailing largely due to yen depreciation
Improving the freshness of merchandise on sale at stores through the short cycle
boosts the regular sales ratio
Ensuring adequate number of styles and inventory control prevents the decline
in gross profit ratio during the sale

Gross profit
ratio

SPA ratio

56.5%

Maintain 80%

54.7%

Maintain 80%

56.4%

Maintain 80%

Establishment of the short MD Cycle of 4 weeks
Achieve 4W Order for all brands from the beginning of the fiscal year
Reinforcement of the production platform
Start the integration of production with the items for spring and summer seasons.
Leveraging the Group scale, full-fledged operation planned for autumn
and winter items while improving quality and slashing cost.
Launch of strategically priced basic-style products
Introduce products that are suited to the market where the traditional middle class
has collapsed / Foster major brands
Clarification of 5 measures(1) Further embedding of and promoting the 4-week MD(2) The move to online promotion (omni-channel)(3) Strengthening of E-commerce(4) Utilization and reinforcement of the production platform(5) Strengthening of the plus-one category business(6) Optimal shift arrangement
Increase store size to be a “proposal-based lifestyle business for discerning
customers”

Targeting 58%

PAL GROUP Holdings Co., Ltd. 20

2-1). Trend in EC net sales* Figures for the fiscal year ended February 28, 2023
and beyond reflect the application of the “AccountingStandard for Revenue Recognition”¥100.0 billion

Strategic schedule
Fiscal year ended February 28, 2017:

Fiscal year ended February 28, 2018:
Fiscal year ended February 28, 2019:
Fiscal year ended February 28, 2021:
Fiscal year ending February 29, 2024:
Fiscal year ending February 28, 2029

Enhance E-commerce
Achieve in-house operation of our website
Start to build up the omni-channel structure
Achieve E-commerce net sales of ¥10.0 billion
Full-fledged operation of the omni-channel structure
Achieve E-commerce net sales of ¥20.0 billion
Achieve E-commerce net sales of ¥50.0 billion
Achieve E-commerce net sales of ¥100.0 billion

E-commerce net sales¥90.0 billion¥80.0 billion¥70.0 billion¥60.0 billion

In-house E-commerce net sales¥50.0 billion¥50.0 billion¥45.0 billion¥40.0 billion¥39.6 billion¥35.0 billion¥32.8 billion¥30.0 billion¥23.7 billion¥17.6 billion¥15.0 billion¥23.0 billion¥22.7 billion¥18.6 billion¥15.1 billion¥11.0 billion¥7.2 billion¥15.6 billion¥10.8 billion¥8.7 billion¥12.8 billion¥5.5 billion¥9.2 billion¥5.2 billion ¥8.7 billion¥7.1 billion¥2.9 billion¥4.0 billion¥6.1
billion¥1.4 billion ¥1.8 billion¥2.3 billion¥4.1 billion
2Q
2Q
2Q
2Q
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
endingendingendingendingending
ended
ended
ended
ended
ended
ended
ended
ended
endingFebruary 29, February 28, February 28, February 28, February 29, February 28, February 28, February 28, February 29, February 28, February 28, February 28, February 29, February 28,
2029
2027
2028
2025
2026
2016
2017
2018
2019
2020
2021
2022
2023
2024

PAL GROUP Holdings Co., Ltd. 212-2). Trend in PAL App membership
Strategic schedule

20.00
millionFiscal year ended February 28, 2019:
Fiscal year ended February 29, 2020:
Fiscal year ended February 28, 2021:
Fiscal year ending February 29, 2024:
Fiscal year ending February 28, 2029

Commence customer membership at actual stores
Commence customer membership at 3COINS
Commence E-commerce at 3COINS
Achieve an App membership of 10 million
Achieve an App membership of 20 million

18.00
million16.00
million14.00
million*App membership= number of App downloads+ number of website-only members

12.00
million10.00
million5.83
million7.73
million August 31,
2023
8.64 million

4.17
million2.80
million0.45
million0.53
million0.64
million

1.21
millionFiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
endingendingendingendingending
ended
ended
ended
ended
ended
ended
ended
ended
endingFebruary 29, February 28, February 28, February 28, February 29, February 28, February 28, February 28, February 29, February 28, February 28, February 28, February 29, February 28,
2029
2027
2028
2025
2026
2016
2017
2018
2019
2020
2021
2022
2023
2024

PAL GROUP Holdings Co., Ltd. 222-3). Increased investment in automation of e-commerce distribution
warehouse
Major capacity expansion and productivity improvement through moving to a new“warehouse and introduction of logistics robots”
March 2024: Operation launch of new warehouse [DPL Hiratsuka] and deployment of Exotec’s*1
Skypod (picking robot)fObjective
In line with the plan to double the EC business compared to current sales (inthe fiscal year ending February 29, 2024) in the fiscal year ending February 28,
2029, we will move our warehouse to a new distribution center, “DPL
Hiratsuka,” and make capital invest in March 2024, expanding capacity andpromoting operation automation.

Background
Issues such as• Limits to expandability of the current warehouse capacity• Difficulty in securing warehouse personnel to meet increased volume of
shipments• Rising labor costs• Increases in fuel costs and logistics costs
have already emerged. Concerns are also rising for the 2024 problem.
→ Decided to move the warehouse and deploy robots with focusing attention
to the automation of an e-commerce distribution warehouse, thus solving theabove issues and enabling quick shipping to customers.

Expected effects

New distribution center: DPL Hiratsuka
Location: 3F, West Building, DPL Hiratsuka, 380-1
Okami, Hiratsuka, Kanagawa Prefecture
Start of operation: Scheduled for March 2024

We expect scalability that can support up to approx. three times the current
scale, operation productivity to approximately double, and inventory storage
efficiency to improve approx. 1.5 times.
*1 Exotec:
Established in 2015. Develops and manufactures robot picking systems forwarehouses.
A French robot manufacturer that develops and manufactures flexible automation
solutions for warehouses used by retail, e-commerce, and manufacturing industries.
Opened its office in Tokyo in 2019.
Exotec’s systems are being deployed by major retailers and SPA companies inJapan.
PAL GROUP Holdings Co., Ltd. 23

3-1). Opening of “Kuroshio Sou” in Shirahama, Wakayama Prefecture“Kuroshio Sou” - luxury accommodation business to promote the appeal of local areas
Diversification of PAL GROUP’s business: “Accommodation business”
On July 7, 2023, Kuroshio Sou opened after renewal as a hot spring inn with 11 rooms
in Nanki Shirahama, Wakayama Prefecture. Inspired by the 137th passage ofTsurezuregusa, we aimed to create an inn that resembles a flagship shop disseminating
the appeal of local areas, by placing importance on “enjoying beauty not with the eyes,
but with the heart” and using traditional crafts from Wakayama Prefecture and local
building materials throughout. Meals are supervised by chef Hayashi Ryohei of oneMichelin star “Tenoshima.” With a commitment to using local ingredients wheneverpossible, the inn serves modernized Japanese cuisine based on Wakayama’s local
specialties. We will work on new lifestyle proposals which PAL GROUP raises, with theform of the accommodation business which can express all aspects of food, clothing,and housing. We will aim for diversification to enable many staff who worked in apparelto demonstrate hospitality skills cultivated in apparel, thus providing new challenges andcareer advancement for employees.

The interior of thelobby uses a large
100-year-old
cedar
tree that was foundburied in the groundalong a local river.

Sustainability initiatives
In the dining room, tables made of “Akane wood” from Kishu, which has knots andinsect-eaten marks, harnessing the natural qualities of the wood, and sustainable chairs
made of “rush grass” from Shirahama, are used. In the lobby, “Yasuda paper,”handmade traditional paper made in Kishu with a history of over 350 years, is used.
For guest room amenities, a challenge for the accommodation business, we have also
introduced non-disposable amenities from “MiYO ORGANIC,” which use
environmentally friendly bamboo materials, and hotel socks and towels from “REPAC,”
which use yarn made from milk cartons and organic cotton. Vegetables and otheringredients harvested from “Smile Farm,” our own farm promoting agriculture-welfare
collaboration, are used for meals.

Hotelamenities
made from milk
cartons and organic
cotton are designed
to be taken andused at home byguests.
PAL GROUP Holdings Co., Ltd. 243-2). Launch of local revitalization project “KITO”
A new initiative begins in Shimoichi-cho, Yoshino-gun, Nara Prefecture
The project to reutilize a closed-down elementary school aims tostart operation in the summer of 2024
Background and history
Shimoichi-cho is located in the center of Nara Prefecture and is an attractive place
where nature and industry thrive. However, the population decreases by about 100
people per year, and the town particularly faces the series issues of young people
moving out of the town and the declining number of people moving into the town. To
help solve these issues, we aim to contribute to the development of Shimoichi-cho byproposing commercial facilities that will revitalize the town and increase its appeal. Thisinitiative is a new challenge that was born from the employees’ desire of revitalizing local
areas by the PAL GROUP and Chairman Inoue’s wish of giving back to his hometown.

Local revitalization that the PAL GROUP aims for
As a first step in working together to resolve the issues facing the town, we will start
making a commercial facility that will become a bustling place for locals to enjoy, and asymbolic facility for tourist destination with expectation of an increase of relevant
population. That facility is called “ KITO, ” a complex facility that reutilizes a closed-downschool.
Project members have visited the local area many times and repeated sincere
conversations with local residents to build relationships. Through these processes, they
have encountered many attractive contents (people, objects, and events) in Shimoichi,
and embodied the vision of “KITO” as a complex facility.
For opening in the summer of 2024, we will carry out PAL’s unique local revitalization byleveraging our strengths in planning, know-how, and promotion of diverse brands.

Launch of product developmentusing specialty products
Shimoichi-cho is home to many producers
of fruits such as persimmons and peaches.
In the current fiscal year, we have started
developing original products that makebest use of these fruits and leverage PAL’s
planning capabilities. As a first product, wedeveloped strawberry smoothie beer,
which uses plenty of brand strawberries“Kotoka” and “Asuka Ruby.” It was sold out
in less than two months after sales began,resulting in an encouraging result for the
future.
PAL GROUP Holdings Co., Ltd. 25

Response to Shareholders
1. Policy for Return to Shareholders
2. Shareholder Benefit Program1. Policy for Return to Shareholders
Basic policy for return of profits is to continue providing stable dividends.
Year-end dividend per share for the fiscal year ended February 28, 2023 is ¥30(increased ¥5 from the previous fiscal year)
85
90
*2
75
80
75
70
70
60

*1

50

50

50

40

*3

25

30
20
10
0
2017/2

2018/2

2019/2

2020/22021/22022/22023/2*1 On March 1, 2020, the Company implemented a two-for-one share split. As a result, dividend per share, which was increased to¥100 per share at the end of the year in February was automatically converted to ¥50.
*2 The breakdown of the ¥75 dividend is an ordinary dividend of ¥60 and a commemorative dividend for our 50th anniversary of ¥15.
*3 On September 1, 2023, the Company implemented a two-for-one share split. As a result, dividend per common share, which wasincreased to ¥60 per share at the end of the year in February was automatically converted to ¥30.

PAL GROUP Holdings Co., Ltd. 27

2. Shareholder Benefit Program“Decided to enhance the shareholder benefit program,aiming to increase the attractiveness of investing in the Company’s shares”
We have enhanced the shareholder benefit program as below for the purpose of expanding the number of newindividual investors by increasing the attractiveness of investing in the Company’s shares and promoting theownership of the Company’s shares over the medium to long term.

Details of Benefit Program
Eligible shareholders
Shareholders recorded or registered on the Company’s shareholder registry as of the last day of February ofeach year who hold more than 100 shares (one unit) are eligible.

Details of Shareholder Benefits
Shareholders will receive common discount coupons which allow them to choose from the following two benefits according
to the number of shares they hold. The coupons can be used from June 1 every year to May 31 of the following year.
1) 50% discount on accommodation course charges at “Kuroshio Sou” and “Hostel no Asa,” which are accommodation
facilities operated by Freegate Shirahama Co., Ltd., an affiliated subsidiary of the Company, in Shirahama-cho,Nishimuro-gun in Wakayama Prefecture2) 50% discount on accommodation course charges at “Kinugawa Onsen Hotel” and ”Kinugawa Kanaya Hotel” owned by
Kanaya Hotel Kanko Co., Ltd. in the Nikko and Kinugawa area, in cooperation with the said company (Discount available
from June 1, 2023)

Number of coupons to be granted: Remains unchanged even after theshare split, which substantially doubled the number of coupons
Number ofshares held
Number of coupons
to be granted

100 sharesor more200 sharesor more500 sharesor more1,000 sharesor more

2

4

6

10

PAL GROUP Holdings Co., Ltd. 28

Initiatives for ESG
1. PAL’s initiatives for ESG
2. PAL Forest Project (Environment)3-1). Employment of people with disabilities (Social)3-2). Endowed courses at Kwansei Gakuin University(Social)3-3). Initiatives by PAL Inoue Scholarship Foundation(Social)
4. Gender equality and work style reform (Governance)

1. PAL’s initiatives for ESG
PAL’s initiatives for ESG (Environment, Social, Governance) are to strive for achieving its
management philosophy of “Management dedicated to the happiness of all employees
and shareholders” and “Management dedicated to society and the globe into the future”
through its daily corporate activities, i.e. continuously making profits, paying taxes, andmaintaining employment.

PAL GROUP Holdings Co., Ltd. 30

2. PAL Forest Project (Environnent)“PAL Forest Project” (Environment)
PAL has been engaged in tree-planting activities at the Yoshino Forest in Nara Prefecture, aWorld Heritage site, since 2012. Considering the origin of the wrapping materials we use in ourdaily operations, every year many employees and their families participate in these activities toshare valuable experiences that recognize the importance of maintaining the global environment
conservation.

PAL GROUP Holdings Co., Ltd. 31

3-1). Employment of people with disabilities (Social)

Providing full support to Japan’s first hotel and Japanese inn“operated by people with disabilities” (Social)
Since June 2011, PAL has acquired “ASA VILLAGE,” a hotel aimed at employing
people with disabilities, and neighboring accommodation facilities, which reopened as
Kuroshio Sou in July 2023 after extensive renovations.
The majority of employees at both facilities have disabilities. Employing such people inthe service sector to work at hotels and Japanese inns is still rare in Japan, but we impartour customer service know-how to employees with disabilities as they think forthemselves and complete their duties by themselves.
The interior of thelobby uses a large
100-year-old cedar
tree that was foundburied in the groundalong a local river.

Kuroshio Sou

https://kuroshio-sou.com/

PAL GROUP Holdings Co., Ltd. 32

3-2). Endowed courses at Kwansei Gakuin University (Social)
Endowed courses for the School of International Studies,
Kwansei Gakuin University (Social)
Following the endowed courses provided at Osaka University for five years from 2013, PAL started acourse for the School of International Studies, Kwansei Gakuin University in 2019. In addition toacademic knowledge, we offer frontline experiences in management and distribution, aiming tocontribute to developing future talents.

Kwansei Gakuin campus with a beautiful clock tower

PAL GROUP Holdings Co., Ltd. 33

3-3). Initiatives by PAL Inoue Scholarship Foundation (Social)
Human resources development throughthe “PAL Inoue Scholarship Foundation” (1) (Social)
PAL established the “PAL Inoue Scholarship Foundation” together with the Inouefamily, the founder of the Company. After its establishment in 2013, it has been
approved as a public interest incorporated foundation by the Cabinet Office, andoperates public services.
Specifically, the foundation has been set up to offer scholarships to students withexcellent academic records and personality who have financial difficulties in attending
school, with the aim of developing promising human resources capable of contributing
to the fashion industry and related fields in the future.
Currently, we offer scholarships to approximately 50 students at universities, colleges
and technical schools studying fashion throughout Japan (including international
students).

Website of the “PAL Inoue
Scholarship Foundation”
Front page

About the PAL Inoue
Scholarship Foundation
PAL GROUP Holdings Co., Ltd. 343-3). Initiatives by PAL Inoue Scholarship Foundation (Social)
Human resources development throughthe “PAL Inoue Scholarship Foundation” (2) (Social)
In addition to the scholarship program, from 2018 PAL Inoue Scholarship Foundation holds a
roleplaying contest participated by students majoring in distribution courses at fashion schools.

The event named PAL FOUNDATION CUP is a venue for students selected from fashion schools
nationwide from Hokkaido to Kyushu, where they demonstrate their extraordinary role-playing
performance in their own manner. PAL intends to make this event a goal for the students aiming for
fashion business in the future.

PAL GROUP Holdings Co., Ltd. 35

4. Gender equality and work style reform (Governance)
Thorough “gender equality” and “work style reform” (Governance)(1) Gender equality
PAL has a solid “Equal treatment for equal work” guideline for a transparent personnel
evaluation system, creating an environment where each and every employee can work with asense of security while being motivated.
Sales

Gross Personnel
Inventory Capital Stocktaking
profit expenses
116
84
71
・・・
・・・

Out of 100
points
98
・・・

Total

1st Division396

2nd Division

353

78

77

・・・

・・・

・・・

・・・

86

3rd Division

310

93

・・・

・・・

・・・

・・・

・・・

・・・

4th Division

378

・・・

・・・

・・・

・・・

・・・

・・・

・・・

5th Division

・・・

・・・

・・・

・・・

・・・

・・・

・・・

・・・

6th Division

・・・

・・・

・・・

・・・

・・・

・・・

・・・

・・・

7th Division

・・・

・・・

・・・

・・・

・・・

・・・

・・・

・・・

Development
Division

・・・

・・・

・・・

・・・

・・・

・・・

・・・

・・・

Corporate
total

382

82

66

61

・・・

・・・

・・・

85

(2) Work style reform
PAL is working to foster a vibrant work environment by starting operations that allow flexible
working hours not bound by the “8-hour system” and make it easier for the employees to takepaid and long-term leaves.
PAL GROUP Holdings Co., Ltd. 36

About the PAL GROUP
Company “Contributing to society by
constantly proposing new
motto
fashionable ways of life”

Group“Management dedicated to the
management happiness of all employees
philosophy and shareholders”

Company name PAL GROUP Holdings CO., LTD.

Location(Head Office) Keihanshin Midosuji Bldg. 10F, 3-6-1 Doshomachi, Chuo-ku, Osaka-shi,
Osaka(Tokyo Office) Akita Bldg. 4F, 12-22 Jingumae 6-chome, Shibuya-ku, Tokyo

Representative

Ryuta Inoue

Capital¥3,181,200,000

Establishment

October 1973

Description ofbusiness

Planning, manufacturing, and wholesale and retail sale of women’s clothing, men’s
clothing, miscellaneous goods and accessories, etc.

Number ofstores947

PAL GROUP Holdings Co., Ltd. 37

IR contact

Public Affairs
OfficeTEL+81-6-6227-0308
FAX+81-6-6231-1056

The plans, strategies, predictions, etc., contained in this document which are not matters ofhistorical fact are forecasts related to future business results, etc., and include elements ofrisk and uncertainty. Please be advised that for various reasons actual results may differ
from the results forecast herein.
In addition, this document has been produced for further understanding of the PAL GROUP,
not for the purpose of soliciting investment in the Company. Readers are asked to rely on
their own judgment when making decisions related to investment.
PAL GROUP Holdings Co., Ltd. 38